<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1998
REGISTRATION NO. 333-46435
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
REGENT COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4830 31-1492857
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
50 EAST RIVERCENTER BOULEVARD
SUITE 180
COVINGTON, KENTUCKY 41011
(606) 292-0030
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
TERRY S. JACOBS
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
REGENT COMMUNICATIONS, INC.
50 EAST RIVERCENTER BOULEVARD, SUITE 180
COVINGTON, KENTUCKY 41011
(606) 292-0030
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
Copies to:
<TABLE>
<S> <C>
ALAN C. ROSSER, ESQ. ANTHONY PANTALEONI, ESQ.
STRAUSS & TROY, FULBRIGHT & JAWORSKI L.L.P.
A LEGAL PROFESSIONAL ASSOCIATION 666 FIFTH AVENUE
2100 PNC CENTER, 201 EAST FIFTH STREET NEW YORK, NEW YORK 10103-3198
CINCINNATI, OHIO 45202-4186 (212) 318-3000
(513) 621-2120
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and
effectiveness of the merger (the "Merger") of Faircom Inc. ("Faircom") with and
into Regent Merger Corp., a wholly-owned subsidiary of the Registrant ("Merger
Subsidiary") pursuant to the Agreement of Merger dated as of December 5, 1997,
as amended, attached as an appendix to the accompanying Proxy
Statement/Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
TITLE OF EACH AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
============================================================================================================================
<S> <C> <C> <C> <C>
Series C Convertible Preferred
Stock, par value $.01 per
share............................ 4,300,000 Shares(1) $5.8684(2) $25,234,170(2) $7646.72(2)
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per
share............................ 4,300,000(3) (3) (3) (3)
============================================================================================================================
</TABLE>
(1) Represents the estimated maximum number of shares issuable to the
stockholders of Faircom pursuant to the Merger.
(2) Solely for the purpose of calculating the registration fee, the maximum
offering price of the Series C Convertible Preferred Stock to be issued in
the Merger is based upon, pursuant to Rule 457(f)(1), the average of the bid
and asked prices on April 2, 1998 ($..8906) of the common stock of Faircom
to be canceled in the Merger. A registration fee of $7,705.50 was paid on or
before February 17, 1998 with the initial filing of this Registration
Statement, resulting in no additional fee due with the filing of this
Amendment.
(3) There are also registered hereunder 4,300,000 shares of Registrant's Common
Stock issuable upon conversion of the Series C Convertible Preferred Stock
being registered hereunder and, pursuant to Rule 416 under the Securities
Act of 1933, as amended, such indeterminate number of additional shares of
Common Stock as may be issuable as a result of the anti-dilution provisions
thereof.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
REGENT COMMUNICATIONS, INC.
CROSS-REFERENCE SHEET SHOWING LOCATION IN THE
PROXY STATEMENT/PROSPECTUS OF INFORMATION REQUIRED
BY PART I OF FORM S-4 PURSUANT TO ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
CAPTION IN PROXY
ITEM STATEMENT/PROSPECTUS
---- --------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus.............................. Forepart of Registration Statement;
Cross Reference Sheet; Outside Front
Cover Page of Proxy
Statement/Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus............................................ Available Information; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information..................................... Summary; Risk Factors; Certain Market
Price and Dividend Information
Regarding Faircom
4. Terms of the Transaction.............................. Summary; The Merger; The Merger
Agreement; Description of Regent
Securities; Material Federal Income
Tax Consequences; Comparison of
Stockholder Rights
5. Pro Forma Financial Information....................... Summary; Unaudited Pro Forma Condensed
Combined Financial Statements
6. Material Contacts with the Company Being Acquired..... Summary; Risk Factors; The Merger
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters......... *
8. Interests of Named Experts and Counsel................ Legal Matters; Experts
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities........................ *
10. Information with Respect to S-3 Registrants........... *
11. Incorporation of Certain Information by Reference..... *
12. Information with Respect to S-2 or S-3 Registrants.... *
13. Incorporation of Certain Information by Reference..... *
14. Information with Respect to Registrants Other Than S-3
or S-2 Registrants.................................... Summary; Information Concerning Regent;
Description of Regent Securities;
Index to Financial Statements
15. Information with Respect to S-3 Companies............. *
16. Information with Respect to S-2 or S-3 Companies...... *
17. Information with Respect to Companies Other than S-3
or S-2 Companies...................................... Summary; Certain Market Price and
Dividend Information Regarding
Faircom; Information Concerning
Faircom; Information Concerning
Regent -- Security Ownership of
Certain Beneficial Owners and
Management of Regent Stock; Index to
Financial Statements
18. Information if Proxies, Consents or Authorizations are
to be Solicited....................................... Outside Front Cover Page of Proxy
Statement/Prospectus; Available
Information; Summary; General
Information Regarding Proxies and the
Special Meeting; The Merger;
Stockholder Proposals
19. Information if Proxies, Consents or Authorizations are
not to be Solicited or in an Exchange Offer........... *
</TABLE>
- ---------------
* Not Applicable
<PAGE> 3
FAIRCOM INC.
333 GLEN HEAD ROAD
OLD BROOKVILLE, NEW YORK 11545
April , 1998
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of Faircom Inc. ("Faircom") to be held at at
, local time, on April , 1998.
At the Special Meeting, you will be asked to consider and take action upon
a proposal to approve an Agreement of Merger, dated as of December 5, 1997, as
amended (the "Merger Agreement"), among Faircom, Regent Communications, Inc., a
Delaware corporation ("Regent"), Regent Merger Corp., a Delaware corporation
which is a wholly-owned subsidiary of Regent ("Merger Subsidiary"), Blue Chip
Capital Fund II Limited Partnership and Miami Valley Venture Fund L.P., pursuant
to which, among other things, (a) Faircom would merge with and into Merger
Subsidiary (the "Merger"), (b) based on the number of Faircom shares currently
outstanding and issuable pursuant to outstanding options, and assuming
conversion in full of Faircom's convertible subordinated promissory notes prior
to the Merger, each share of Faircom common stock, $.01 par value per share
("Faircom Common Stock"), outstanding on the date of the Merger would be
converted into the right to receive approximately .145 of a share of $5 Series C
Convertible Preferred Stock, $.01 par value per share, of Regent ("Series C
Preferred Stock"), and (c) each option outstanding on the date of the Merger
entitling the holder to acquire Faircom Common Stock would be converted into an
option entitling the holder to acquire, on equivalent terms, the same number of
shares of Regent's Series C Preferred Stock as the holder would have been
entitled to receive in the Merger if such option had been exercised in full on
or before the date of the Merger. The Merger is structured to qualify as a
reorganization for federal income tax purposes.
Details of the proposed Merger and the Merger Agreement are set forth in
the accompanying Proxy Statement/Prospectus, which you are urged to review
carefully. A copy of the Merger Agreement is included in the Proxy
Statement/Prospectus as Appendix A.
Your Board of Directors has carefully considered and unanimously approved
the Merger proposal and has determined that the Merger is in the best interests
of Faircom and its stockholders. ACCORDINGLY, YOUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT. The Board of Directors has been advised by Hoffman Schutz Media
Capital, Inc. that, in its opinion, the consideration to be received by the
stockholders of Faircom in the Merger is fair, from a financial point of view,
to the Faircom stockholders as of the date of such opinion. A copy of such
opinion is attached to the Proxy Statement/Prospectus as Appendix D.
Your Board of Directors appreciates and encourages stockholder
participation. However, whether or not you plan to be with us at the Special
Meeting, it is important that your shares be represented. Accordingly, we
request that you sign, date and mail the enclosed proxy in the envelope provided
at your earliest convenience. If you attend the Special Meeting, you may vote in
person at that time if you so desire.
Sincerely,
JOEL M. FAIRMAN
Chairman of Board, President and
Treasurer
<PAGE> 4
FAIRCOM INC.
333 GLEN HEAD ROAD
OLD BROOKVILLE, NEW YORK 11545
------------------------
NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
------------------------
A Special Meeting of Stockholders (the "Special Meeting") of Faircom Inc.,
a Delaware corporation ("Faircom"), will be held at
on April , 1998 at , local time, for the following
purpose:
1. To consider and vote upon a proposal to approve an Agreement of
Merger dated as of December 5, 1997, as amended (the "Merger Agreement"),
among Faircom, Regent Communications, Inc., a Delaware corporation
("Regent"), Regent Merger Corp., a Delaware corporation which is a
wholly-owned subsidiary of Regent ("Merger Subsidiary"), Blue Chip Capital
Fund II Limited Partnership and Miami Valley Venture Fund L.P., pursuant to
which, among other things: (a) Faircom would merge with and into Merger
Subsidiary (the "Merger"); (b) based on the number of Faircom shares
currently outstanding and issuable pursuant to outstanding options, and
assuming conversion in full of Faircom's convertible subordinated
promissory notes prior to the Merger, each share of Faircom common stock,
$.01 par value per share ("Faircom Common Stock"), outstanding on the date
of the Merger would be converted into the right to receive approximately
.145 of a share of $5 Series C Convertible Preferred Stock, $.01 par value
per share, of Regent ("Series C Preferred Stock"); and (c) each option
outstanding on the date of the Merger entitling the holder to acquire
Faircom Common Stock would be converted into an option entitling the holder
to acquire, on equivalent terms, the same number of shares of Regent's
Series C Preferred Stock as the holder would have been entitled to receive
in the Merger if such option had been exercised in full on or before the
date of the Merger; and
2. To consider and vote upon such matters as may properly come before
the Special Meeting which are incident to the conduct of the Special
Meeting, or any adjournment or adjournments thereof.
The Board of Directors of Faircom (the "Faircom Board") has unanimously
approved the Merger and has determined that the Merger is in the best interests
of Faircom and its stockholders. Accordingly, the Faircom Board unanimously
recommends that you vote FOR approval of the Merger Agreement.
Stockholders of record at the close of business on March 26, 1998 are
entitled to notice of, and to vote at, the Special Meeting, or any adjournment
or postponement thereof.
Details of the Merger and other important information concerning Faircom
and Regent are described in the accompanying Proxy Statement/Prospectus. Please
give this information your careful consideration.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO
FILL IN, DATE AND SIGN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS OF FAIRCOM, AND TO MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU
DO ATTEND THE SPECIAL MEETING AND WISH TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR
PROXY AND VOTE YOUR SHARES PERSONALLY.
By Order of the Board of Directors
ANTHONY PANTALEONI
Secretary
Old Brookville, New York
April , 1998
<PAGE> 5
PRELIMINARY COPY
PROXY STATEMENT
OF
FAIRCOM INC.
FOR A SPECIAL MEETING OF ITS STOCKHOLDERS
TO BE HELD APRIL , 1998
AND
PROSPECTUS
OF
REGENT COMMUNICATIONS, INC.
COVERING SHARES OF ITS SERIES C CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.01 PER SHARE,
TO BE ISSUED IN CONNECTION WITH A PROPOSED MERGER OF FAIRCOM INC.
INTO A WHOLLY-OWNED SUBSIDIARY OF
REGENT COMMUNICATIONS, INC.
This Proxy Statement/Prospectus is being furnished by Faircom Inc., a
Delaware corporation ("Faircom"), to the holders of shares of its common stock,
par value $.01 per share ("Faircom Common Stock"), in connection with the
solicitation of proxies by the Board of Directors of Faircom ("Faircom Board")
for use at a Special Meeting of Stockholders of Faircom to be held on April ,
1998 at , , commencing at
.M., local time, and at any adjournments or postponements thereof ("Special
Meeting"). This Proxy Statement/Prospectus is also being furnished to holders of
Faircom's Class A Convertible Subordinated Promissory Notes and Class B
Convertible Subordinated Promissory Notes (together with Faircom's Class C
Subordinated Promissory Note, the "Faircom Subordinated Notes") and to the
holders of outstanding options to purchase shares of Faircom Common Stock
("Faircom Options"). See "General Information Regarding Proxies and the Special
Meeting."
The Special Meeting is being called to consider and vote upon the approval
and adoption of an Agreement of Merger dated as of December 5, 1997, as amended
(the "Merger Agreement"), among Faircom, Regent Communications, Inc., a Delaware
corporation ("Regent"), Regent Merger Corp., a Delaware corporation formed as a
wholly-owned subsidiary of Regent ("Merger Subsidiary"), Blue Chip Capital Fund
II Limited Partnership ("Blue Chip") and Miami Valley Venture Fund L.P. ("Miami
Valley"). Pursuant to the Merger Agreement, Faircom would be merged with and
into Merger Subsidiary, which would be the surviving corporation and which would
continue to be a wholly-owned subsidiary of Regent (the "Merger"). See "The
Merger."
This Proxy Statement/Prospectus also constitutes the prospectus of Regent
with respect to shares of Regent's Series C Convertible Preferred Stock, par
value $.01 per share ("Series C Preferred Stock"), to be issued in the Merger in
exchange for outstanding shares of Faircom Common Stock. The Series C Preferred
Stock has full voting rights, provides for annual cumulative dividends of 7%,
and is convertible on a one-for-one basis (subject to adjustment in certain
events) into the common stock, $.01 par value per share, of Regent ("Regent
Common Stock"). The Series C Preferred Stock is subject to mandatory conversion
under certain circumstances. In the event of a liquidation of Regent, the Series
C Preferred Stock has a preference over Regent Common Stock in the amount of its
stated value of $5.00 per share, together with accrued and unpaid dividends. See
"Description of Regent Securities." In the Merger, the outstanding shares of
Faircom Common Stock will be exchanged for fully paid and nonassessable shares
of Series C Preferred Stock, and each outstanding Faircom Option will be
converted into an option ("Regent Option") entitling the holder to acquire, on
equivalent terms, the same number of shares of Series C Preferred Stock as the
holder would have been entitled to receive in the Merger if such Faircom Option
had been exercised in full on or before the date of the Merger. The aggregate
consideration to be paid by Regent to the Faircom stockholders and holders of
the Faircom Options in the Merger is based upon a price of $33,162,000, adjusted
by the amount of Faircom's net working capital and decreased by its senior debt
and by one-half of the prepayment premium on such senior debt to be paid at the
closing of the Merger, all as computed as of the last day of the month
immediately preceding the closing date of the Merger ("Closing Date"). See "The
Merger Agreement."
Continued on next page
SEE "RISK FACTORS" BEGINNING ON PAGE 23 HEREOF FOR A DISCUSSION OF RISK
FACTORS WHICH SHOULD BE CONSIDERED WHEN EVALUATING THE TRANSACTIONS PRESENTED IN
THIS PROXY STATEMENT/PROSPECTUS.
This Proxy Statement/Prospectus is first being mailed to stockholders of Faircom
on or about April , 1998.
THE SECURITIES OF REGENT COMMUNICATIONS, INC. OFFERED IN CONNECTION WITH THE
MERGER DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is April , 1998
<PAGE> 6
Continued from page 1
Upon consummation of the Merger, approximately 13.4% of the outstanding
common stock of Regent on a fully-diluted, as converted, basis would be owned by
those persons who are holders of Faircom Common Stock and Faircom Options on the
date of this Proxy Statement/Prospectus, and approximately 27.4% would be owned
by holders of the Faircom Subordinated Notes or their assignees on the date of
this Proxy Statement/Prospectus, based upon the financial statements of Faircom
as of December 31, 1997, adjusted to reflect the acquisition by Faircom of
WSWR(FM) in Shelby, Ohio (the "Shelby Station") in January 1998 and Faircom's
share of debt prepayment premiums and brokerage commissions related to the
Merger, and assuming (i) no other changes to the amount of Faircom's net working
capital and indebtedness as of the end of the month preceding the Closing Date;
(ii) the conversion in full of the Class A and Class B Faircom Subordinated
Notes prior to effectiveness of the Merger; (iii) the issuance of additional
shares of the respective series of Regent's Preferred Stock pursuant to existing
agreements and commitments; and (iv) the exercise, prior to effectiveness of the
Merger, of all outstanding Faircom Options and all options and warrants for the
acquisition of Regent capital stock that are either outstanding or to be issued
pursuant to existing agreements and commitments (other than options or warrants
that are not exercisable prior to or within 60 days following effectiveness of
the Merger). See "The Merger -- Interests of Certain Persons in the Merger;
Certain Relationships," "The Merger Agreement -- The Merger," "Information
Concerning Regent -- Recent and Pending Transactions" and "Information
Concerning Regent -- Security Ownership of Certain Beneficial Owners and
Management of Regent Stock."
<PAGE> 7
AVAILABLE INFORMATION
Faircom is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. In addition, the Commission maintains a Web site that
contains reports, proxy statements and other information regarding Faircom. The
address of such site is http://www.sec.gov.
Regent has filed a Registration Statement on Form S-4 (herein, together
with all amendments thereto, called the "Registration Statement") with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities to be issued pursuant to the Merger Agreement.
This Proxy Statement/Prospectus does not contain all of the information and
undertakings set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to Regent and the
securities of Regent to be issued pursuant to the Merger Agreement, reference is
made to the Registration Statement and the exhibits and schedules thereto.
Certain statements contained in this Proxy Statement/Prospectus as to the
contents of contracts or other documents that are set forth as an Appendix to
this Proxy Statement/Prospectus, or filed or incorporated by reference as an
exhibit to the Registration Statement are summaries of the terms thereof and, as
such, are not complete. In each such instance, reference is made to the copies
of such contracts or other documents either set forth as an Appendix to this
Proxy Statement/Prospectus or filed or incorporated by reference as an exhibit
to the Registration Statement, and each such statement contained in this Proxy
Statement/Prospectus shall be deemed qualified in all respects by such
reference. The Registration Statement and the exhibits and schedules thereto may
be inspected at the Commission's office at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies thereof may be obtained from the Public Reference Section
of the Commission at such address at prescribed rates.
If the Merger is consummated, Regent will become subject to the reporting
requirements of the Exchange Act, and Faircom will cease to be subject to the
reporting requirements of the Exchange Act. Regent intends to furnish its
stockholders with annual reports containing financial statements audited by
Regent's independent public accountants and quarterly reports for the first
three quarters of each fiscal year containing unaudited interim financial
information.
FORWARD-LOOKING STATEMENTS
This Proxy Statement/Prospectus includes or may include certain
forward-looking statements with respect to Faircom, Regent and Merger Subsidiary
that involve risks and uncertainties. This Proxy Statement/Prospectus contains
certain forward-looking statements concerning financial position, business
strategy, budgets, projected costs, and plans and objectives of management for
future operations, as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend," and other
similar expressions. Although Faircom, Regent and Merger Subsidiary each
believes its expectations reflected in such forward-looking statements are based
on reasonable assumptions, readers are cautioned that no assurance can be given
that such expectations will prove correct and that actual results and
developments may differ materially from those conveyed in such forward-looking
statements. Important factors that could cause actual results to differ
materially from the expectations reflected in the forward-looking statements
herein include changes in general economic, business and market conditions, as
well as changes in such conditions that may affect the radio broadcast industry
or the markets in which Faircom and Regent operate in particular, increased
competition for attractive radio properties and advertising dollars,
fluctuations in the costs of operating radio properties, and changes in the
regulatory climate affecting radio broadcast companies. Such forward-looking
statements speak only as of the date on which they are made, and neither
Faircom, Regent nor Merger Subsidiary undertakes any obligation to update any
forward-looking statement to reflect events or circumstances after the date of
this Proxy
2
<PAGE> 8
Statement/Prospectus. If Faircom, Regent or Merger Subsidiary does update or
correct one or more forward-looking statements, readers should not conclude that
Faircom, Regent or Merger Subsidiary will make additional updates or corrections
with respect thereto or with respect to other forward-looking statements. See
"Risk Factors."
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS WITH RESPECT TO MATTERS DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE
HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER FAIRCOM, REGENT OR MERGER
SUBSIDIARY. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, NOR DOES IT CONSTITUTE
THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
SECURITIES HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FAIRCOM, REGENT OR MERGER SUBSIDIARY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
ALL INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS RELATING TO
FAIRCOM HAS BEEN SUPPLIED BY FAIRCOM, AND ALL INFORMATION RELATING TO REGENT HAS
BEEN SUPPLIED BY REGENT. FAIRCOM DOES NOT HAVE INDEPENDENT KNOWLEDGE OF THE
MATTERS SET FORTH HEREIN CONCERNING REGENT, AND REGENT DOES NOT HAVE INDEPENDENT
KNOWLEDGE OF THE MATTERS SET FORTH HEREIN CONCERNING FAIRCOM.
3
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION....................................... 2
FORWARD-LOOKING STATEMENTS.................................. 2
SUMMARY..................................................... 7
General................................................... 7
Parties to the Merger..................................... 7
The Special Meeting....................................... 8
The Merger................................................ 9
Background of the Merger; Faircom's Reasons for the
Merger................................................. 10
Reasons of Regent for Engaging in the Merger.............. 13
Recommendation of the Faircom Board....................... 13
Opinion of Financial Advisor to Faircom................... 13
Interests of Certain Persons in the Merger; Certain
Relationships.......................................... 14
Regulatory Approvals...................................... 16
Accounting Treatment...................................... 17
Tax Treatment............................................. 17
Business and Management of Regent and Faircom Following
the Merger............................................. 17
Appraisal Rights.......................................... 17
Certain Expenses of the Merger............................ 18
Certain Conditions to the Merger; Waiver.................. 18
Termination............................................... 18
Effect of Termination..................................... 18
Comparison of Stockholder Rights.......................... 19
Market Price and Dividend Information..................... 19
Faircom Selected Consolidated Financial Data.............. 20
Selected Historical and Pro Forma Condensed Combined
Financial Data of Regent............................... 21
Ratio of Earnings to Combined Fixed Changes and Preferred
Stock Dividends........................................ 23
Comparative Per Share Data................................ 23
RISK FACTORS................................................ 24
Limited Operating History................................. 24
Risk of Inability to Combine Operations Successfully...... 24
Uncertainty for Faircom Stockholders If Merger Not
Approved............................................... 24
Risks Related to Additional Acquisitions.................. 24
Risk of Inability to Finance Additional Acquisitions...... 25
Possible Dilution of Ownership............................ 25
Possible Scarcity of Attractive Radio Station
Acquisitions........................................... 25
Ability to Meet Obligations............................... 25
Redemption Rights of Series F Preferred Stock............. 26
Preference of Series B Preferred Stock.................... 26
Conversion Events and Possible Redemption of Series C
Preferred Stock........................................ 26
Absence of Existing Trading Market for Regent Stock....... 27
Restrictive Covenants under Credit Agreement.............. 27
Dependence on Key Personnel............................... 27
No Cash Dividends......................................... 28
Competition............................................... 28
Future Sales of Shares.................................... 29
Restrictions on Resale.................................... 29
Interests of Certain Persons in the Merger................ 29
GENERAL INFORMATION REGARDING PROXIES AND THE SPECIAL
MEETING................................................... 30
</TABLE>
4
<PAGE> 10
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE MERGER.................................................. 31
General................................................... 31
Background of the Merger.................................. 31
Reasons of Faircom for Engaging in the Merger;
Recommendation of the Faircom Board.................... 33
Reasons of Regent for Engaging in the Merger.............. 34
Opinion of Financial Advisor to Faircom................... 35
Explanation of Methodology for Fairness Opinion........... 35
Interests of Certain Persons in the Merger; Certain
Relationships.......................................... 38
Regulatory Approvals...................................... 41
Certain Federal Securities Law Consequences............... 41
THE MERGER AGREEMENT........................................ 42
The Merger................................................ 42
Representations and Warranties............................ 45
Certain Covenants......................................... 45
Termination............................................... 47
Effect of Termination..................................... 47
Certain Fees and Expenses of the Merger................... 48
Appraisal Rights.......................................... 48
Registration Rights....................................... 50
Management of Regent Following the Merger................. 50
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................... 52
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
OF REGENT COMMUNICATIONS, INC............................. 54
CERTAIN MARKET PRICE AND DIVIDEND INFORMATION REGARDING
FAIRCOM................................................... 62
THE RADIO BROADCASTING INDUSTRY............................. 62
Operations................................................ 62
Competition............................................... 63
FCC Regulation............................................ 64
INFORMATION CONCERNING FAIRCOM.............................. 66
The Company............................................... 66
Operating Strategy........................................ 66
Licenses.................................................. 67
Employees................................................. 67
Properties................................................ 67
Legal Proceedings......................................... 68
Security Ownership of Certain Beneficial Owners and
Management of Faircom.................................. 68
Management's Discussion and Analysis of Financial
Condition and Results of Operations of Faircom......... 71
INFORMATION CONCERNING REGENT............................... 74
Introduction.............................................. 74
Description of Business................................... 74
Description of Property................................... 77
Recent and Pending Transactions........................... 77
Business of Merger Subsidiary............................. 80
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 81
Directors and Executive Officers.......................... 87
Election of Directors..................................... 89
Committees of the Board of Directors...................... 89
Compensation of Directors................................. 89
</TABLE>
5
<PAGE> 11
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Compensation of Executive Officers........................ 89
Security Ownership of Certain Beneficial Owners and
Management of Regent................................... 92
DESCRIPTION OF REGENT SECURITIES............................ 97
General................................................... 97
Capital Stock............................................. 97
Common Stock.............................................. 97
Preferred Stock........................................... 97
Ranking of Series of Regent Preferred Stock............... 99
Series A Preferred Stock.................................. 99
Series B Preferred Stock.................................. 102
Series C Preferred Stock.................................. 104
Series D Preferred Stock.................................. 107
Series E Preferred Stock.................................. 110
Series F Preferred Stock.................................. 112
COMPARISON OF STOCKHOLDER RIGHTS............................ 114
STOCKHOLDER PROPOSALS....................................... 115
LEGAL MATTERS............................................... 115
EXPERTS..................................................... 115
INDEX TO FINANCIAL STATEMENTS............................... 116
APPENDICES:
Appendix A -- Agreement of Merger, as amended............... A-1
Appendix B -- Amended and Restated Certificate of
Incorporation of Regent................................... B-1
Appendix C -- Amended and Restated By-Laws of Regent........ C-1
Appendix D-1 -- Opinion of Hoffman Schutz Media Capital,
Inc. dated March 25, 1998................................. D-1.1
Appendix D-2 -- Opinion of Hoffman Schutz Media Capital,
Inc. dated December 4, 1997............................... D-2.1
Appendix E -- Delaware General Corporation Law Section
262 ...................................................... E-1
Appendix F -- Form of Proxy................................. F-1
</TABLE>
6
<PAGE> 12
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. Certain capitalized terms used in this Summary
are defined elsewhere in this Proxy Statement/Prospectus. Reference is made to,
and this Summary is qualified in its entirety by, the more detailed information
contained in this Proxy Statement/Prospectus, including the appendices hereto.
GENERAL
This Proxy Statement/Prospectus is furnished in connection with the
solicitation by the Faircom Board of proxies to be voted at the Special Meeting
of Faircom's stockholders to be held on April , 1998, and at any adjournments
thereof. At the Special Meeting, the Faircom stockholders will be asked to
approve and adopt the Merger Agreement.
PARTIES TO THE MERGER
Regent. Regent, a Delaware corporation, is headquartered in Covington,
Kentucky. It was founded in 1996 by Terry S. Jacobs and William L. Stakelin.
Regent, through one of its wholly-owned subsidiaries, currently owns and
operates radio station KCBQ(AM) located in San Diego, California, and operates
24 other stations in 8 markets under time brokerage agreements. Regent has
entered into a letter of intent for the sale of KCBQ(AM) and has pending a
number of transactions for the acquisition of radio stations (the "Pending
Transactions"). If the Merger Agreement and the Pending Transactions are
consummated, Regent would own a total of 31 stations in nine markets. See
"Information Concerning Regent -- Recent and Pending Transactions."
The outstanding capital stock of Regent is owned by Mr. Jacobs, who owns
132,568 shares (or approximately 55%) of Regent Common Stock and 300,000 shares
(or 50%) of Regent's Series A Convertible Preferred Stock ("Series A Preferred
Stock"); Mr. Stakelin, who owns 107,432 shares (or approximately 45%) of Regent
Common Stock (Mr. Stakelin has also agreed to purchase, on or before
effectiveness of the Merger, 20,000 shares (or approximately 3%) of Regent's
Series A Preferred Stock); River Cities Capital Fund Limited Partnership, a
Delaware limited partnership ("River Cities"), which owns 300,000 shares (or
50%) of Regent's Series A Preferred Stock (River Cities is entitled to receive,
upon effectiveness of the Merger, warrants for the purchase of 80,000 shares of
Regent Common Stock); General Electric Capital Corporation, a New York
corporation ("GE Capital"), which owns 1,000,000 shares of Regent's Series B
Senior Convertible Preferred Stock ("Series B Preferred Stock") (GE Capital is
also to receive, upon issuance of Series F Preferred Stock to Waller-Sutton as
described below, five-year warrants for the purchase of 50,000 shares of Regent
Common Stock); and BMO Financial, Inc., a Delaware corporation and an affiliate
of Bank of Montreal, which owns 220,000 shares of Regent's Series D Convertible
Preferred Stock ("Series D Preferred Stock"). BMO Financial, Inc. has also
agreed to purchase an additional 780,000 shares of Series D Preferred Stock on
or before effectiveness of the Merger. In addition, Regent expects to issue at
or around consummation of the Merger approximately 600,000 shares of Regent's
Series E Convertible Preferred Stock ("Series E Preferred Stock") in connection
with acquisitions of radio stations and 2,000,000 shares of Regent's Series F
Convertible Preferred Stock ("Series F Preferred Stock") with detachable
warrants for the purchase of 820,000 shares of Regent's Common Stock in
connection with an expected equity investment in Regent by Waller-Sutton Media
Partners, L.P. ("Waller-Sutton") and others, including entities that are
partners or affiliates of partners of Waller-Sutton. See "Information Concerning
Regent -- Security Ownership of Certain Beneficial Owners and Management of
Regent" and "Information Concerning Regent -- Recent and Pending Transactions."
Messrs. Jacobs and Stakelin together have over 50 years experience in
owning and operating radio broadcast companies, having founded or co-founded,
developed and operated three significant radio companies. Mr. Jacobs served as
President and Chief Executive Officer of a privately-held radio broadcast
company which he co-founded in 1993 under the name "Regent Communications, Inc."
(a Kentucky corporation unrelated to Regent and referred to herein as "Regent
I"), and which acquired and operated 16 radio stations until its merger into
Jacor Communications, Inc. in 1997. Prior to 1993, Mr. Jacobs was Chairman and
Chief Executive Officer of Jacor Communications, Inc., a radio broadcast company
which he founded in 1979 and which, during his tenure, grew to become the then
ninth largest radio company in the U.S. in terms of revenue. Mr. Stakelin served
as Executive
7
<PAGE> 13
Vice President and Chief Operating Officer of Regent I from 1995 until its
merger into Jacor Communications, Inc. In 1988, Mr. Stakelin co-founded Apollo
Radio, Ltd., a privately-held radio broadcast company which acquired and
operated nine radio stations until its sale to Regent I in 1995. See
"Information Concerning Regent -- Directors and Executive Officers."
The principal executive offices of Regent are located at 50 East
RiverCenter Boulevard, Suite 180, Covington, Kentucky 41011, and the telephone
number of Regent at such offices is (606) 292-0030. Regent's operations are
conducted through subsidiary corporations, and references to the term "Regent"
herein include such subsidiaries unless the context otherwise requires.
Merger Subsidiary. Merger Subsidiary, a Delaware corporation, was
organized by Regent in connection with the proposed Merger, and has not
conducted any business. All of the issued and outstanding shares of capital
stock of Merger Subsidiary are owned by Regent. Merger Subsidiary's assets as of
effectiveness of the Merger will consist solely of the number of shares of
Series C Preferred Stock and Regent Options sufficient to fund the consideration
to be paid for the shares of Faircom Common Stock and the Faircom Options in the
Merger. Because Merger Subsidiary has no operating history and only nominal
assets at present, no historical financial statements for Merger Subsidiary are
included herein.
Faircom. Faircom was founded by Joel M. Fairman in April 1984 and began
operations with the objective of acquiring broadcasting properties at prices
considered attractive by Faircom, financing them on terms satisfactory to
Faircom, managing them in accordance with Faircom's operating strategy and
building a broadcasting group. Faircom has sought to acquire radio properties
which have a history of growing revenues and broadcast cash flow, have capable
operating management and are in communities with good growth prospects or which
have attractive competitive environments. Faircom focuses its acquisition
efforts on medium and smaller radio markets, particularly where there may be an
opportunity to achieve a significant cluster of stations in the market or to add
additional stations in surrounding communities. Faircom does not purchase
properties with negative cash flows, or so-called "under-performing" or
"turnaround" properties, unless they complement or can be combined with the
operations of positive cash flow properties in a market or regional cluster.
Faircom's strategy is to have at least $1,000,000 in broadcast cash flow and be
among the top three operators in each of its markets.
Faircom owns and operates six radio stations: WFNT(AM) and WCRZ(FM) in
Flint, Michigan; WWBN(FM) in Tuscola, Michigan, a community north of Flint;
WMAN(AM) and WYHT(FM) in Mansfield, Ohio; and WSWR(FM) in Shelby, Ohio,
adjoining Mansfield.
Faircom is a Delaware corporation whose executive offices are located at
333 Glen Head Road, Suite 220, Old Brookville, New York 11545 and its telephone
number is (516) 676-2644. All of Faircom's properties are owned and operated
through subsidiary corporations, and references to the term "Faircom" herein
include such subsidiaries unless the context otherwise requires.
THE SPECIAL MEETING
Date, Time and Place. The Special Meeting will be held on April , 1998
at .M., local time, at , to
consider and vote upon approval and adoption of the Merger Agreement.
Record Date; Quorum. The Faircom Board has fixed the close of business on
March 26, 1998 as the record date ("Record Date") for the determination of
holders of the Faircom Common Stock entitled to notice of and to vote at the
Special Meeting. Only the holders of Faircom Common Stock as of the Record Date
are entitled to notice of and to vote at the Special Meeting. The presence, in
person or by proxy, of the holders of shares of Faircom Common Stock possessing
a majority of the votes entitled to be cast at the Special Meeting will
constitute a quorum at the Special Meeting.
Vote Required. As of the Record Date, there were issued, outstanding and
entitled to vote 7,378,199 shares of Faircom Common Stock. Each share of Faircom
Common Stock outstanding on the Record Date is entitled to one vote on each
matter to be presented at the Special Meeting. The affirmative vote of the
holders of shares possessing a majority of the votes entitled to be cast by the
holders of record of Faircom Common Stock on the
8
<PAGE> 14
Record Date is required to adopt and approve the Merger Agreement. All of the
members of the Faircom Board and officers of Faircom who are also Faircom
stockholders (and who, as such, hold approximately 18% of the Faircom Common
Stock outstanding on the Record Date) have indicated it is their intention to
vote in favor of the Merger.
THE MERGER
Terms of the Merger. Subject to approval and adoption of the Merger
Agreement by the stockholders of Faircom at the Special Meeting and the
satisfaction or waiver of the other conditions contained in the Merger
Agreement, Faircom will be merged into Merger Subsidiary, with Merger Subsidiary
continuing as the surviving corporation (the "Surviving Corporation"). Upon
effectiveness of the Merger, based upon the number of shares of Faircom Common
Stock currently outstanding and issuable pursuant to outstanding Faircom
Options, and assuming conversion in full of the Class A and Class B Faircom
Subordinated Notes, each outstanding share of Faircom Common Stock will be
exchanged for approximately .145 of a share of the Series C Preferred Stock, on
the basis of the financial statements of Faircom as of December 31, 1997,
adjusted to reflect the acquisition by Faircom of the Shelby Station in January
1998 and Faircom's share of debt prepayment premiums and brokerage commissions
related to the Merger, and assuming no other changes to the amount of Faircom's
net working capital and indebtedness as of the end of the month immediately
preceding the Closing Date (the "Compilation Date"). Holders of Faircom Common
Stock otherwise entitled to fractional shares of Series C Preferred Stock will
be paid cash in lieu of such fractional shares determined as described herein.
The outstanding Faircom Options will be converted into Regent Options entitling
the holder to acquire, on equivalent terms, the same number of shares of Series
C Preferred Stock as the holder would have been entitled to receive in the
Merger if such Faircom Options had been exercised in full prior to the date of
the Merger. See "The Merger Agreement."
Effectiveness of the Merger. The Merger will become effective upon the
filing of a Certificate of Merger with the Secretary of State of the State of
Delaware ("Effectiveness"). Such filing will be made as soon as practicable
after the approval and adoption of the Merger Agreement by the stockholders of
Faircom have been obtained. See "The Merger Agreement -- Effectiveness."
Consideration to be Paid for the Faircom Stock. The aggregate
consideration to be paid by Regent to the Faircom stockholders and holders of
the Faircom Options in the Merger is based upon a price of $33,162,000, adjusted
by the amount of Faircom's net working capital and decreased by the outstanding
principal amount of and accrued interest on Faircom's senior debt, and by
one-half of the prepayment premium required to be paid upon payment of Faircom's
senior debt at the closing of the Merger, all as determined as of the
Compilation Date. This would result in the issuance of approximately 4,114,350
shares of Series C Preferred Stock and Regent Options (representing
approximately 40.8% of the outstanding capital stock of Regent on a fully
diluted, as converted, basis) based on an adjusted price of approximately
$20,571,750, derived from the financial statements of Faircom as of December 31,
1997, adjusted to reflect the acquisition by Faircom of the Shelby Station in
January 1998 and Faircom's share of debt prepayment premiums and brokerage
commissions related to the Merger, and assuming (i) no other changes to the
amount of Faircom's net working capital and indebtedness as of the Compilation
Date; (ii) the conversion in full of the Class A and Class B Faircom
Subordinated Notes prior to effectiveness of the Merger; (iii) the exercise,
prior to effectiveness of the Merger, of all outstanding Faircom Options and all
options and warrants for the acquisition of Regent capital stock that are either
outstanding or to be issued pursuant to existing agreements and commitments
(other than options or warrants that are not exercisable prior to or within 60
days following effectiveness of the Merger); and (iv) the issuance of additional
shares of the respective series of Regent's Preferred Stock pursuant to existing
agreements and commitments. The adjusted price and the actual number of shares
of the Series C Preferred Stock to be issued in exchange for each share of
Faircom Common Stock and pursuant to the exercise of Regent Options issued in
exchange for Faircom Options in the Merger will vary from the above estimates to
the extent Faircom's net working capital and indebtedness as of the Compilation
Date differ from that at December 31, 1997, adjusted as set forth above. See
"The Merger Agreement -- Consideration to be Paid for Faircom Stock."
The number of shares of Series C Preferred Stock available for distribution
to the Faircom stockholders will be affected by the following: Blue Chip and
Miami Valley will have the right, at the closing of the Merger ("Closing"), (a)
to require the repayment in cash by Regent of up to $2,500,000 aggregate
principal amount of
9
<PAGE> 15
Faircom's Class A and Class B Convertible Subordinated Promissory Notes (the
"Optional Faircom Subordinated Notes") or (b) to convert all or any portion of
the principal amount of the Optional Faircom Subordinated Notes into Faircom
Common Stock. Although holders of the Faircom Subordinated Notes have indicated
in writing their intention to convert all of the Class A and Class B Faircom
Subordinated Notes into Faircom Common Stock, if any portion of the principal of
the Optional Faircom Subordinated Notes were not so converted at Closing, then
the number of shares of Series C Preferred Stock to be issued in the Merger
would be reduced to the extent of one share of Series C Preferred Stock for
every $5.00 so repaid by Regent. Of the shares of the Series C Preferred Stock
issued as a result of the conversion of the Faircom Subordinated Notes (other
than the Optional Faircom Subordinated Notes) into Faircom Common Stock, 300,000
shares will be subject to the right of Blue Chip and Miami Valley to put such
shares to Regent for redemption in accordance with the terms of a certain
Amended and Restated Redemption and Warrant Agreement dated as of March 31, 1998
among Blue Chip, Miami Valley, Regent and Faircom (the "Redemption and Warrant
Agreement"). If however, Waller-Sutton makes its equity investment in Regent in
accordance with the terms of its commitment, part of Waller-Sutton's investment
will include the purchase from Blue Chip and Miami Valley of a total of
$1,500,000 of the Class A and Class B Faircom Subordinated Notes. In this event,
this put right would not be transferred to Waller-Sutton, and, instead, would
terminate by its terms. See "Information Concerning Regent -- Recent and Pending
Transactions." The Merger Agreement does not specify a maximum or minimum number
of shares of Series C Preferred Stock to be issued in the Merger, and the exact
number of shares to be issued in the Merger will not be able to be determined
until the Compilation Date. See "The Merger Agreement -- Consideration to be
Paid for Faircom Common Stock."
Effect of the Merger on Faircom Stock Options. At Effectiveness, the
holders of the Faircom Options will receive substitute Regent Options under the
Regent Communications, Inc. Faircom Conversion Stock Option Plan. Each Faircom
Option will be deemed to constitute an option to acquire the same number of
shares of Series C Preferred Stock as the holder of such Faircom Option would
have been entitled to receive pursuant to the Merger had such holder exercised
such Faircom Option in full immediately prior to the consummation of the Merger.
Otherwise, the terms of each Regent Option to be issued in the Merger will be
the same in all material respects as the terms of the Faircom Option in respect
of which it is issued. See "The Merger Agreement -- Treatment of Options."
BACKGROUND OF THE MERGER; FAIRCOM'S REASONS FOR THE MERGER
Background of the Merger. With the enactment of the Telecommunications Act
in February 1996, it rapidly became clear that radio station ownership would
consolidate dramatically. Faircom accelerated its objective of acquiring
additional radio stations to obtain operational benefits of scale and additional
financial strength resulting from a larger corporate structure. In addition,
Faircom believed that this strategy, if successfully consummated, would make it
a more attractive partner for combination with another broadcasting group owner.
In April 1996, Faircom retained Crisler to provide investment banking
services in connection with negotiation and financing of radio station
acquisitions, with particular emphasis on smaller market stations. In October
1996, the focus of these activities became radio stations WMAN(AM) and WYHT(FM)
in Mansfield, Ohio owned by Treasure Radio Associates Limited Partnership.
During October 1996 a number of meetings took place with possible financing
sources for this acquisition. In this connection, a meeting was held in New York
City on October 30, 1996 among Joel M. Fairman, Chairman of Faircom, R. Dean
Meiszer, President of Crisler, and Terry S. Jacobs and William L. Stakelin,
Chairman and President, respectively, of the subsequently formed Regent. Since
Messrs. Jacobs and Stakelin were then in the process of planning their own radio
station acquisitions and attendant financing, this meeting was exploratory only
and ended with no conclusive or even preliminary understandings, other than to
continue to communicate the progress of each company.
In January 1997, Faircom Mansfield Inc., a wholly-owned subsidiary of
Faircom, entered into an asset purchase contract to acquire the Mansfield
stations for $7,650,000 in cash. Thereafter, a series of negotiations ensued
with various capital sources to finance the acquisition and also to purchase the
interests then owned by Citicorp Venture Capital, Ltd. in Faircom for
$6,400,000.
10
<PAGE> 16
On May 21, 1997, a meeting was held in Cincinnati, Ohio among Messrs.
Fairman and Meiszer, John E. Risher, Senior Vice President of Faircom, John H.
Wyant, a manager of the general partner of Blue Chip and a special limited
partner of Miami Valley and Mr. Wyant's associate, Z. David Patterson. At this
meeting there was discussed an investment in Faircom by Blue Chip and Miami
Valley. In addition, Mr. Wyant stated that Regent was entering into a contract
to acquire a group of radio stations in California and Arizona owned by The Park
Lane Group (the "Park Lane Stations") and he believed that a merger with Regent
attractive to the stockholders of Faircom could be negotiated. Faircom
stockholders, including Blue Chip and Miami Valley, would retain significant
equity positions in the merged companies. Mr. Wyant emphasized that an
affiliated fund had been an investor in Regent I, a radio operating company
previously managed by Messrs. Jacobs and Stakelin which had been merged into
Jacor Communications, Inc. in a transaction that closed in February 1997. The
investment in that prior company had been highly profitable for its equity
investors and the experience with Messrs. Jacobs and Stakelin had been
exceptionally favorable, according to Mr. Wyant. Messrs. Jacobs and Stakelin
were known most favorably to Messrs. Fairman, Risher and Meiszer based on their
historic performance and reputation in the radio industry.
Following this meeting, the group met in the offices of Regent with Messrs.
Jacobs and Stakelin and Matthew A. Yeoman, Regent's Vice-President--Finance, and
engaged in a general discussion of the properties and operations of Faircom and
Regent and the possible advantages of a merger. The concept of the proposed
transaction with Regent appeared attractive to Messrs. Fairman, Risher and
Meiszer. Over the next few days the proposed transaction was discussed
individually with the other directors of Faircom. It was determined that Faircom
should attempt to negotiate specific terms of a merger transaction with Regent.
As a result of the May meeting and the conversations with directors that
followed, work commenced on a letter of intent between Faircom and Regent. As of
June 30, 1997, the Mansfield acquisition and the purchase of the Citicorp
interests in Faircom were consummated through a new investment aggregating
$10,000,000 in the form of Class A and Class B Faircom Subordinated Notes
purchased by Blue Chip and Miami Valley and additional senior debt from
Faircom's senior lender. In addition, a non-binding letter of intent containing
general terms and a number of contingencies relating to the proposed merger was
signed on June 30, 1997. Thereafter, the parties determined that modification to
the terms and conditions stated in the letter of intent were needed, and on July
21, 1997 Messrs. Fairman, Meiszer and Wyant met in New York City to discuss the
formulation of a new letter of intent for a merger with Regent. Work followed on
a draft of a new letter of intent.
A meeting was held on September 10, 1997, in Cincinnati, Ohio to discuss
outstanding issues on the letter of intent. Attending the meeting were Messrs.
Fairman, Jacobs, Stakelin, Wyant, Meiszer, Steven J. Kaufmann, Vice President of
Crisler, and counsel for Regent and Blue Chip. Most of the remaining issues in
the letter of intent were resolved at this meeting.
By September 16, 1997, all remaining issues of the letter of intent had
been resolved and copies were prepared for execution by Faircom and Regent. The
Faircom Board met to consider the proposed transaction with Regent, including
the draft letter of intent. At this meeting, Mr. Wyant was elected a Director of
Faircom. The Faircom Board then reviewed the proposed transaction with Regent,
and those present unanimously authorized execution of the letter of intent and
all steps necessary to prepare and execute a definitive merger agreement with
Regent, subject to obtaining an opinion from an independent financial advisor,
addressed to the Faircom Board, to the effect that the consideration to be
received by the stockholders of Faircom in connection with the proposed merger
would be fair to them from a financial point of view ("Fairness Opinion"). On
September 16, 1997, a non-binding letter of intent with respect to the proposed
merger was signed by Faircom and Regent.
The Faircom Board thereafter contacted a number of financial advisors to
discuss their providing a Fairness Opinion. After considering a number of
proposals, Faircom executed an engagement letter dated November 6, 1997 with
HSMC, providing for HSMC to review the proposed transaction and determine
whether HSMC could deliver such a Fairness Opinion.
During November 1997, preparation and negotiation of a definitive merger
agreement continued. On December 4, 1997, HSMC delivered a Fairness Opinion to
the Faircom Board.
11
<PAGE> 17
On December 5, 1997, Faircom and Regent executed the Merger Agreement. See
"The Merger -- Background of the Merger."
After HSMC rendered its fairness opinion to the Faircom Board on December
4, 1997, more current financial results for most of the radio properties to be
acquired by Regent in the Merger and the other Pending Transactions became
available, and there were changes made to certain aspects of Regent and the
Merger. Specifically, HSMC was advised that it is the intention of the holders
of the Class A and Class B Faircom Subordinated Notes to convert the entire
principal amount of such Notes to Faircom Common Stock prior to consummation of
the Merger. In addition, HSMC was advised that Regent intends to issue a new
series of Preferred Stock to Waller-Sutton, which has agreed to make an equity
investment in Regent subject to the satisfaction of certain conditions, and to
use the proceeds of such equity investment to finance a portion of the Merger,
the purchase of the stock of The Park Lane Group and the other Pending
Transactions. At the request of Faircom, HSMC updated its fairness evaluation to
take into account the more recent station financials and the foregoing changes.
In addition, HSMC conducted site visits to the stations Regent has agreed to
acquire in Apple Valley and Lucerne Valley, California. The use of the updated
information had no effect on HSMC's original opinion that the consideration to
be paid to the Faircom stockholders in the Merger was fair to the Faircom
stockholders from a financial standpoint. This confirmation of HSMC's original
fairness opinion was delivered orally to the Faircom Board on March 25, 1998
with a written opinion subsequently delivered to Faircom by mail.
Faircom's Reasons for the Merger. The Faircom Board has unanimously
approved the proposed Merger and believes the Merger is in the best interests of
Faircom and its stockholders. In reaching their decision, the directors
considered, with the assistance of management and its legal and financial
advisors, the following factors:
(i) In the Merger, each share of Faircom Common Stock will be
exchanged for a proportionate share of Series C Preferred Stock with a
liquidation preference amount of $5.00 per share. The liquidation
preference amount of the Series C Preferred Stock received for each share
of Faircom Common Stock represented a substantial premium over the then
historical market prices for each share of Faircom Common Stock to be
exchanged therefor;
(ii) The Merger offers Faircom stockholders an opportunity to acquire
equity ownership in what would be a significantly larger company upon
completion of the Merger and the Pending Transactions and at the same time
retain the opportunity to participate in the long-term growth and
appreciation of Faircom's business through their ownership interest in
Regent;
(iii) The complementary nature of the strategic goals of management of
Faircom and Regent, particularly with respect to focusing on acquisitions
of radio stations in small- and medium-sized markets and acquiring clusters
of stations in such markets with combined broadcast cash flow of at least
$1,000,000 and with a strategy of becoming one of the top three operators
in each such market;
(iv) The increased diversification of the resulting company's
ownership of radio stations, both in the number of stations owned and in
the markets served;
(v) Potential operating synergies and cost savings, including possible
synergies and cost savings with respect to the consolidation of
administrative and support functions, group discount pricing for
programming services, computer programming services, insurance premiums,
and legal and accounting services;
(vi) The attractiveness to the stockholders of Faircom of the
valuation placed on the business of Faircom with respect to the proforma
total enterprise value of Regent upon consummation of the Merger, and the
opinion of HSMC that, as of December 4, 1997, the consideration to be
received by the Faircom stockholders was fair, from a financial point of
view, to such stockholders (see "The Merger -- Opinion of Financial Advisor
to Faircom");
(vii) The terms of the Series C Preferred Stock, including full voting
rights, a $5.00 preference on liquidation of Regent together with full
equity participation in any remaining assets if converted to common stock,
and an accruing 7% annual dividend to be paid in cash in the event of
liquidation or conversion to
12
<PAGE> 18
common stock at any time at the option of the holder or where the Board of
Directors of Regent requires conversion in the case of a specified
conversion event; and
(viii) Information with respect to Regent's Pending Transactions
including, among other things, the recent and historical earnings
performance of the radio stations involved in the Pending Transactions, and
what the Faircom Board believes to be the potential earnings capability of
such stations, and the historical ability of Regent's executives in prior
businesses to implement successfully a growth strategy by acquisition and
operation of radio stations in small- and medium-sized markets.
In the course of its deliberations, the Faircom Board reviewed the
following additional factors relevant to the Merger: (i) the capital structure
of Regent; (ii) the financial analysis of HSMC prepared in connection with its
Fairness Opinion; (iii) reports from management and legal advisors on specific
terms of the Merger Agreement; and (iv) the proposed terms, timing and structure
of the Merger.
The Faircom Board also considered the following potentially negative
factors in its deliberations concerning the Merger: (i) the possibility of
management disruption associated with the Merger and the risk that, despite the
efforts of the combined company, key management personnel of Faircom might not
continue their employment with the combined company; (ii) the possibility that
certain of the operating economies of scale such as the elimination of redundant
administrative cost sought to be achieved as a result of the Merger might not be
achieved; (iii) the possibility of Faircom's failure to be successfully
integrated into Regent; and (iv) the possibility that Faircom's business will
outperform the other business activities of Regent. In the event that any or all
of the foregoing factors should occur, it is possible that the value of the
Faircom stockholders' interest in Regent as a result of the Merger would be less
than the value of such Faircom stockholders' interest in Faircom in the absence
of the Merger.
The foregoing discussion of information and factors considered by the
Faircom Board is not intended to be exhaustive but is intended to include the
material factors considered. In view of the wide variety of factors considered,
the Faircom Board did not find it practical to, and did not, quantify or
otherwise assign relative weight to the specific factors considered, and
individual directors may have given differing weights to different factors.
See "The Merger -- Faircom's Reasons of Faircom for Engaging in the Merger;
Recommendations of the Faircom Board."
REASONS OF REGENT FOR ENGAGING IN THE MERGER
The management of Regent believes the Faircom stations fit well within
Regent's operational and acquisition strategies. The stations are cash flowing
properties located in medium-sized markets which meet the criteria of Regent's
targeted markets, provide Regent with geographic diversity, and have good
potential for growth. The stations hold good competitive positions in their
markets with well-established formats, strong historical revenues, and positive
cash flows, which Regent expects will be factors attractive to broadcast lenders
and equity investors. The Merger also brings with it Faircom's management team
and the stations' technical facilities, which Regent believes can be utilized
effectively to establish a sound structure for Regent's plans for future growth.
RECOMMENDATION OF THE FAIRCOM BOARD
THE FAIRCOM BOARD HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS IN THE BEST
INTERESTS OF FAIRCOM AND ITS STOCKHOLDERS AND HAS APPROVED THE MERGER AGREEMENT.
THE FAIRCOM BOARD RECOMMENDS TO THE STOCKHOLDERS OF FAIRCOM THAT THEY VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISOR TO FAIRCOM
HSMC, Faircom's independent financial advisor, delivered its written
opinion dated December 4, 1997, as supplemented by its opinion dated March 25,
1998, to the Faircom Board to the effect that, as of such date, the
consideration to be received by the stockholders of Faircom in connection with
the Merger is fair, from a financial
13
<PAGE> 19
point of view, to the stockholders of Faircom. Copies of the opinions, which set
forth the assumptions made, matters considered and limitations on the review
undertaken by HSMC are attached to this Proxy Statement/ Prospectus as
Appendices D-1 and D-2 and should be read in their entirety. See "The
Merger -- Background of the Merger" and "The Merger -- Opinion of Financial
Advisor to Faircom."
Subsequent to the issuance by HSMC of its opinions to the Faircom Board,
Regent engaged the services of HSMC to provide an appraisal of Regent upon which
could be based a purchase price value for accounting purposes. Regent believes
HSMC was the logical choice to provide such valuation given the groundwork and
analysis previously undertaken by HSMC in connection with preparing its Fairness
Opinion. Faircom provided to HSMC its consent to the rendering of such an
appraisal to Regent.
INTERESTS OF CERTAIN PERSONS IN THE MERGER; CERTAIN RELATIONSHIPS
In considering the recommendations of the Faircom Board with respect to
adopting the Merger Agreement and the transactions contemplated thereby,
stockholders of Faircom should be aware that certain employees, officers and
directors of Faircom and the holders of the Faircom Subordinated Notes have
interests in the Merger that are in addition to the interests of stockholders of
Faircom generally.
There are currently $11,100,000 in original principal amount of Class A,
Class B and Class C Faircom Subordinated Notes outstanding. Of the Faircom
Subordinated Noteholders, Blue Chip holds $8,750,000 in original principal
amount; Miami Valley holds $1,350,000 in original principal amount; and PNC
Bank, National Association, Trustee ("PNC Trustee"), by assignment from Blue
Chip and Miami Valley, holds $1,000,000 in original principal amount. Under
terms of the Securities Purchase Agreement applicable to the Class A and Class B
Faircom Subordinated Notes, as amended, the Faircom Subordinated Noteholders
will have the right to require the liquidation of Faircom and each of its
subsidiaries if Faircom does not consummate a merger of Faircom with another
corporation on or before April 1, 1999. The Faircom Subordinated Noteholders
will not be voting on the proposed resolution to approve the Merger with Regent
but have consented to it and expressed in writing their intent to convert all
$10,000,000 of Class A and Class B Faircom Subordinated Notes into Faircom
Common Stock immediately prior to the Closing Date. If the Merger is not
approved by the Faircom stockholders, unless a merger of Faircom with another
corporation is consummated by April 1, 1999 the Faircom Subordinated Noteholders
may require the assets of Faircom be sold and Faircom liquidated.
Blue Chip and Miami Valley are venture capital funds managed by Blue Chip
Venture Company, Ltd. and one of its affiliates, respectively. John H. Wyant is
a principal in and a manager of Blue Chip Venture Company, Ltd. and such
affiliate. An affiliate fund of Blue Chip Venture Company, Ltd. previously
invested funds managed by it in Regent I, a radio broadcasting company formerly
operated by Messrs. Jacobs and Stakelin. As a member of the Faircom Board, Mr.
Wyant has voted in favor of the Merger, and under the terms of the Merger
Agreement, upon consummation of the Merger, Mr. Wyant will become a member of
the Board of Directors of Regent.
In January 1998, Blue Chip made a loan to Faircom of $1,100,000 to finance,
in part, the purchase of the Shelby Station, and in connection with that loan,
Faircom issued to Blue Chip the Class C Subordinated Promissory Note ("Class C
Subordinated Note"). The Class C Subordinated Note bears interest at a rate of
14% per annum, payable at maturity, and becomes due and payable on the earlier
of the Closing of the Merger or April 1, 1999.
The Merger Agreement provides the Faircom Subordinated Noteholders with
certain demand and piggyback registration rights with respect to registration
for sale under the Securities Act of the shares of Regent Common Stock into
which their shares of Series C Preferred Stock are then convertible. The holders
of Regent's Series A, Series B and Series D Preferred Stock also have certain
registration rights with respect to their shares. See "The Merger
Agreement -- Registration Rights." Registration rights will also be granted to
holders of Regent's Series F Preferred Stock and detachable warrants issued in
connection with the sale thereof as well as to GE Capital in respect of warrants
it would receive upon issuance of the Series F Preferred Stock. Registration
rights are not being granted in connection with the Merger to any of the Faircom
securityholders other than the Faircom Subordinated Noteholders and their
assignees.
14
<PAGE> 20
Pursuant to the terms of the Redemption and Warrant Agreement, at such time
as Regent has raised additional equity capital of at least $1,500,000, Blue Chip
and Miami Valley may require Regent to repurchase up to $1,500,000 of the shares
of Series C Preferred Stock issued to Blue Chip and Miami Valley upon
effectiveness of the Merger in exchange for their Faircom Common Stock, at its
stated value of $5.00 per share plus the amount of any accrued and unpaid
dividends on such Series C Preferred Stock being repurchased. Until such
additional equity has been raised, Blue Chip and Miami Valley will be issued
each month five-year warrants to acquire an aggregate of 375 shares of Series C
Preferred Stock at a price of $1.00 per share. See "The Merger Agreement --
Consideration to be Paid for Faircom Stock." These redemption and warrant rights
are not being granted to any Faircom securityholder other than Blue Chip and
Miami Valley. If Waller-Sutton makes its equity investment in Regent in
accordance with the terms of its commitment, part of Waller-Sutton's investment
will include the purchase from Blue Chip and Miami Valley of $1,500,000 of the
Faircom Subordinated Notes. In this event, the put and warrant rights associated
with this portion of the Faircom Subordinated Notes would not be transferred to
Waller-Sutton, and, instead, would terminate by their terms. See "Information
Concerning Regent -- Recent and Pending Transactions."
Concurrently with its approval in June 1997 of the $10,000,000 investment
in Faircom of Blue Chip and Miami Valley, the Faircom Board authorized the
issuance to Joel M. Fairman and John E. Risher, President and Senior Vice
President of Faircom, respectively, of stock options entitling Mr. Fairman to
purchase up to 958,886 shares, and entitling Mr. Risher to purchase up to
159,814 shares, of Faircom Common Stock, or such greater number of shares as may
be necessary for them to maintain their then existing percentage ownership
interest in Faircom. These options are in the nature of preemptive rights
inasmuch as (a) they are exercisable only if the Class A and Class B Faircom
Subordinated Notes are converted to Faircom Common Stock, and (b) they enable
Messrs. Fairman and Risher to acquire additional Faircom Common Stock at the
same price per share at which the Class A and Class B Faircom Subordinated
Noteholders could acquire Faircom Common Stock by conversion of the Class A and
Class B Faircom Subordinated Notes. The number of shares of Faircom Common Stock
Messrs. Fairman and Risher may purchase, and the exercise price of these
options, are dependent upon the amount of the Faircom Subordinated Notes that is
converted to Faircom Common Stock. If the full amount of the $10,000,000 of
Class A and Class B Faircom Subordinated Notes is converted to Faircom Common
Stock, then Messrs. Fairman and Risher will be entitled to purchase the full
number of 1,118,700 shares at a purchase price per share of approximately $.53
per share. As a result, these options would allow Messrs. Fairman and Risher the
right to preserve their percentage stock ownership position in Faircom and to
realize a gain in value on those option shares as a result of the conversion of
the Faircom Subordinated Notes in connection with the Merger. See "The
Merger -- Interests of Certain Persons in the Merger; Certain Relationships."
It is contemplated that the employees of Faircom generally will continue to
be employed by the Surviving Corporation following the Merger, including
specifically Messrs. Fairman and Risher. Mr. Fairman's continued employment will
be governed by a two-year employment agreement followed by a one-year consulting
agreement, providing annual compensation of $190,000, discretionary annual
bonuses, discretionary stock option awards, ownership of a term life insurance
policy paid for by Regent, an automobile allowance and certain other benefits.
See "Information Concerning Regent -- Compensation of Executive Officers." The
Merger Agreement also provides for the appointment of Mr. Fairman to the Board
of Directors of Regent as Vice Chairman. See "The Merger -- Interests of Certain
Persons in the Merger; Certain Relationships."
Terry S. Jacobs, Regent's Chairman and Chief Executive Officer, and William
L. Stakelin, Regent's President and Chief Operating Officer, have signed
employment agreements which provide for the issuance to each of them under
Regent's 1998 Management Stock Option Plan of incentive and non-qualified stock
options to purchase, during a ten-year period following the date of grant (or
such shorter period as may be required to preserve the nature of the options as
incentive stock options), at an exercise price determined by the Board of
Directors of Regent (but not less than the greater of the fair market value per
share of the Regent Common Stock on the date of grant and $5.00 per share), that
number of shares of the common stock of Regent which constitutes 5.5% of
Regent's capital stock outstanding from time to time, on a fully-diluted, as
converted, basis; provided, however, that such number shall not exceed 733,333
without further approval of the Board of Directors (and Waller-Sutton if the
Series F Preferred Stock is issued). The initial grant of these options is to be
made upon effectiveness of the Merger, at which time it is estimated that
options to purchase approximately 616,400 shares
15
<PAGE> 21
of Regent Common Stock will be granted to each of Mr. Jacobs and Mr. Stakelin at
an exercise price of $5.00 per share, assuming all of the Pending Transactions
and the issuance of at least $10,000,000 of the Series F Preferred Stock are
completed concurrently with the Merger. See "Information Concerning
Regent -- Compensation of Executive Officers."
In order to induce River Cities, as a holder of Regent's Series A Preferred
Stock, to approve the Merger, Regent agreed to issue to River Cities, upon
consummation of the Merger, five-year warrants to purchase 80,000 shares of
Regent Common Stock at an exercise price of $5.00 per share. R. Glen Mayfield, a
member of Regent's Board of Directors, serves as the general partner of River
Cities Management Limited Partnership, which is the general partner of River
Cities.
In order to induce GE Capital, as a holder of Regent's Series B Preferred
Stock, to approve the addition of mandatory conversion rights to the terms of
the Series B Preferred Stock in conjunction with issuance of the Series F
Preferred Stock, Regent has agreed to issue to GE Capital, upon issuance of the
Series F Preferred Stock, five-year warrants to purchase 50,000 shares of Regent
Common Stock at an exercise price of $5.00 per share. It is contemplated that
the terms of these warrants will be substantially the same as those which are to
be issued to River Cities upon consummation of the Merger.
Waller-Sutton has entered into a commitment letter with Regent dated March
19, 1998 (the "Waller-Sutton Commitment") which provides for the investment by
Waller-Sutton, subject to negotiation of definitive agreements and the
satisfaction of certain conditions, of at least $11,500,000 in convertible
preferred stock of Regent. This investment would consist of the purchase from
Regent of $10,000,000 of its Series F Preferred Stock and the acquisition from
Blue Chip and Miami Valley of $1,500,000 in principal amount of Class A and
Class B Faircom Subordinated Notes that would be converted to Faircom Common
Stock and exchanged for Series C Preferred Stock in the Merger. Waller-Sutton
would receive, as part of this investment, warrants to purchase 820,000 shares
of Regent Common Stock at an exercise price of $5.00 per share. Waller-Sutton
has reserved the right to assign up to $3,500,000 of its investment commitment
and an unspecified portion of its warrant rights to partners or affiliates of
Waller-Sutton and/or other purchasers of Series F Preferred Stock and to so
reduce its investment commitment in respect of the first $3,500,000 of Series F
Preferred Stock purchased by others. One of the conditions precedent to
Waller-Sutton's investment in Regent is the consummation of the Merger. Upon
making its investment, Waller-Sutton will have the right to elect two members to
Regent's Board of Directors, who will initially be Messrs. William H. Ingram and
Richard H. Patterson. See "Information Concerning Regent--Recent and Pending
Transactions."
The Waller-Sutton Commitment provides that the terms of the Series F
Preferred Stock to be acquired by it will include the right of the holders to
require Regent to repurchase the Series F Preferred Stock at any time after five
years at a price equal to the greater of its fair market value or the sum of its
stated value of $5.00 per share and all accrued but unpaid dividends thereon (as
well as any warrants held by such holders at a price equal to the fair market
value of the Regent Common Stock less the warrant exercise price). Holders of
Regent's Series A, Series B and Series D Preferred Stock would have similar
"put" rights exercisable, however, only if the holders of the Series F Preferred
Stock were to exercise their "put" rights. The Series C and Series E Preferred
Stock will not have these tag-along "put" rights. Such rights could jeopardize
qualification of the transactions in which they are being issued as
reorganizations within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended. See "Risk Factors -- Redemption Rights of Series F
Preferred Stock" and "Information Concerning Regent -- Recent and Pending
Transactions."
REGULATORY APPROVALS
Consummation of the Merger and the resulting transfers of control are
subject to the prior approval of the Federal Communications Commission (the
"FCC"). On February 2, 1998, Regent and Faircom obtained a final order from the
FCC approving the transfers of control which will result from the Merger.
Issuance of the Series C Preferred Stock in connection with the Merger is
subject to registration under the Securities Act and qualification or exemption
under applicable state securities laws.
16
<PAGE> 22
ACCOUNTING TREATMENT
The Merger is intended to be treated as a "purchase" for accounting
purposes with Regent treated as the acquired company. See "The Merger" and
"Unaudited Pro Forma Condensed Combined Financial Statements."
TAX TREATMENT
Faircom has received the opinion of its counsel, Fulbright & Jaworski
L.L.P. (the "Tax Opinion"), and on the Closing Date will receive an opinion from
Strauss & Troy, counsel for Regent, to the effect that, for federal income tax
purposes and based upon certain assumptions, representations and warranties, the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"). See "Material
Federal Income Tax Consequences."
THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES MAY VARY FOR EACH HOLDER OF
SHARES OF FAIRCOM COMMON STOCK. EACH FAIRCOM STOCKHOLDER IS URGED TO CONSULT
SUCH STOCKHOLDER'S OWN TAX AND FINANCIAL ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER.
BUSINESS AND MANAGEMENT OF REGENT AND FAIRCOM FOLLOWING THE MERGER
Upon consummation of the Merger, approximately 13.4% of the outstanding
common stock of Regent on a fully-diluted, as converted, basis would be owned by
those persons who are holders of Faircom Common Stock and Faircom Options on the
date of this Proxy Statement/ Prospectus, and an additional approximately 27.4%
would be owned by holders of the Faircom Subordinated Notes as of the date of
this Proxy Statement/Prospectus or their assignees, based upon the financial
statements of Faircom as of December 31, 1997, adjusted to reflect the
acquisition by Faircom of WSWR(FM) in Shelby, Ohio (the "Shelby Station") in
January 1998 and Faircom's share of debt prepayment premiums and brokerage
commissions related to the Merger, and assuming (i) no other changes to the
amount of Faircom's net working capital and indebtedness as of the Compilation
Date; (ii) the conversion in full of the Class A and Class B Faircom
Subordinated Notes prior to effectiveness of the Merger; (iii) the issuance of
additional shares of the respective series of Regent's Preferred Stock pursuant
to existing agreements and commitments; and (iv) the exercise, prior to
effectiveness of the Merger, of all outstanding Faircom Options and all options
and warrants for the acquisition of Regent capital stock that are either
outstanding or to be issued pursuant to existing agreements (other than options
or warrants that are not exercisable prior to or within 60 days following
effectiveness of the Merger). See "The Merger -- Interests of Certain Persons in
the Merger; Certain Relationships," "The Merger Agreement -- The Merger,"
"Information Concerning Regent -- Recent and Pending Transactions" and
"Information Concerning Regent -- Security Ownership of Certain Beneficial
Owners and Management of Regent."
Regent will operate as a holding company for the operation of the Surviving
Corporation, as well as the operations of the other subsidiaries of Regent.
Following the Merger, the Board of Directors of Regent will be those persons
serving as Directors of Regent prior to Effectiveness, with the addition of
Messrs. Joel M. Fairman and John H. Wyant, as well as Messrs. William H. Ingram
and Richard H. Patterson, as representatives of Waller-Sutton, assuming its
equity investment in Regent has been made by that time. See "Information
Concerning Regent -- Recent and Pending Transactions." The officers of Regent
will be those persons serving as officers of Regent prior to Effectiveness, with
the addition of Mr. Fairman, who will serve as Vice Chairman of Regent. See
"Information Concerning Regent -- Directors and Executive Officers."
APPRAISAL RIGHTS
Under the Delaware General Corporation Law (the "DGCL"), holders of Faircom
Common Stock who comply with the applicable statutory procedures will be
entitled to appraisal rights. Stockholders entitled to appraisal rights will
receive cash from the Surviving Corporation equal to the fair value of their
shares as established by judicial appraisal, exclusive of any element of value
arising from the accomplishment or expectation of the Merger, together with a
fair rate of interest, if any, as determined by such court.
17
<PAGE> 23
Under the DGCL, where a proposed merger is to be submitted for approval at
a meeting of stockholders, the corporation must notify each of its stockholders
who was such on the record date for such meeting, not less than 20 days prior to
the meeting, that appraisal rights are available. This Proxy
Statement/Prospectus constitutes such notice to the Faircom stockholders. Any
stockholder who wishes to exercise such appraisal rights or who wishes to
preserve his right to do so should carefully review the discussion set forth
herein, including the applicable statutory provisions of the DGCL attached to
this Proxy/Statement Prospectus as Appendix E, because failure timely and
properly to comply with the procedures specified will result in the loss of
appraisal rights under the DGCL. See "The Merger Agreement -- Appraisal Rights."
CERTAIN EXPENSES OF THE MERGER
The Merger Agreement provides that, except with respect to commissions
payable to Crisler (of which Regent will pay $150,000 and will be entitled to a
reduction of the consideration to be paid for the Faircom Common Stock for the
balance of $50,000 to be paid by Faircom), each party is required to bear its
own legal fees and other costs and expenses with respect to the Merger. The cost
of filing fees and grant fees, if any, imposed by the FCC will be borne equally
by Faircom and Regent. All fees and expenses payable by Faircom but not paid
prior to Closing will be treated as a current liability of Faircom at Closing
(so as to reduce Faircom's net working capital and thus, the consideration to be
received by the Faircom stockholders in the Merger) and will be paid by the
Surviving Corporation at Closing. See "The Merger Agreement -- Certain Fees and
Expenses of the Merger."
CERTAIN CONDITIONS TO THE MERGER; WAIVER
The respective obligations of Regent, Merger Subsidiary and Faircom to
consummate the Merger are subject to the satisfaction or waiver of certain
conditions, including, among others, the approval and adoption of the Merger
Agreement by the requisite vote of the Faircom stockholders and certain other
conditions customary in transactions of this kind. See "The Merger
Agreement -- Certain Covenants."
TERMINATION
The Merger Agreement may be terminated or abandoned by the mutual consent
of the Boards of Directors of Faircom and Regent; by the Board of Directors of
either Regent or Faircom in accordance with the respective rights of Regent and
Faircom in the case of loss, damage or destruction of the assets of the other or
the loss of broadcast transmission of their respective radio stations; by the
Board of Directors of either Faircom or Regent after June 1, 1998, if any of the
conditions set forth in the Merger Agreement have not been fulfilled or waived,
unless such fulfillment has been frustrated or made impossible by act or failure
to act of the party seeking termination; and by the Faircom Board if in the
exercise of good faith and reasonable business judgment, as a result of its
fiduciary duties to the stockholders of Faircom imposed by law, the Faircom
Board determines that such termination is required.
EFFECT OF TERMINATION
If the Merger Agreement is terminated by the Faircom Board pursuant to a
decision made in the exercise of good faith and reasonable business judgment as
a result of its fiduciary duties to the stockholders of Faircom imposed by law
that such termination is required, or if the Merger Agreement is not terminated
but the Faircom stockholders do not approve the Merger and, within one year from
the date of the Special Meeting, Faircom consummates a transaction pursuant to a
bona fide takeover proposal made by a third party, Faircom is required promptly
to pay to Regent a fee of $1,650,000.
The Merger Agreement provides that if the Merger Agreement is terminated by
Faircom solely because of a material breach by Merger Subsidiary or Regent prior
to Closing and Faircom has complied with the notice provisions set forth in the
Merger Agreement, Regent is required promptly to pay to Faircom $300,000 plus
any out-of-pocket expenses incurred by Faircom in connection with the Merger in
excess of $300,000, provided that such expenses are properly documented by
Faircom, reasonable and charged at customary hourly rates. The
18
<PAGE> 24
Merger Agreement further provides that Regent will in no event be required to
pay to Faircom more than $823,000 in the aggregate.
COMPARISON OF STOCKHOLDER RIGHTS
If the Series C Preferred Stock received by the Faircom stockholders in the
Merger is converted into Regent Common Stock, the stockholder rights of the
Faircom stockholders as holders of Regent Common Stock will generally be the
same as they were as holders of Faircom Common Stock. Until such conversion,
however, the Faircom stockholders, as holders of Series C Preferred Stock, will
have rights not currently held by them in Faircom. As holders of Series C
Preferred Stock, the Faircom stockholders will be entitled to receive, in
preference to the holders of Regent Common Stock and to the holders of stock
ranking junior to the Series C Preferred Stock, annual dividends at the rate of
7% and a distribution upon liquidation of Regent equal to the stated value of
the Series C Preferred Stock plus any amount of accumulated, accrued or unpaid
dividends. Holders of the Series C Preferred Stock will not participate with the
holders of Regent Common Stock in any increase in the market value of Regent's
equity in excess of the 7% yield provided by the fixed dividend rate unless the
holders of the Series C Preferred Stock elect to convert their preferred shares
into Regent Common Stock. Upon such conversion, however, the Faircom
stockholders would still be entitled to receive the dividend yield of 7% per
year on the shares to the date of conversion. Consequently, if the Merger is
consummated, the Faircom stockholders will receive for their Faircom Common
Stock securities in Regent that would give them a preference over Regent Common
Stock with respect to dividends at 7% per annum and upon liquidation of Regent,
while at the same time allowing them, through conversion of their preferred
shares, to participate in the growth, if any, of Regent's equity market value on
the same basis as any holder of Regent Common Stock.
In addition to the right to vote with holders of Regent Common Stock and
with other classes of Regent Preferred Stock with voting rights, on matters
presented for a vote by Regent stockholders, holders of Series C Preferred Stock
are entitled to elect to the Board of Directors of Regent one person nominated
only by them, as a class, thereby assuring them of Board representation, which
assurance they would not necessarily have as holders of Regent Common Stock. The
initial Series C Preferred Stock Director will be John H. Wyant. Delaware law
also gives to the holders of Series C Preferred Stock the right to vote as a
separate class (instead of as part of a class consisting of holders of Series C
Preferred Stock and holders of Regent Common Stock) on matters which could
materially impact their rights as holders of the Series C Preferred Stock. See
"Comparison of Stockholder Rights."
MARKET PRICE AND DIVIDEND INFORMATION
Faircom Common Stock is quoted on the OTC Bulletin Board under the symbol
"FXCM" and is traded on the over-the-counter market.
On October 21, 1997, the last trading day preceding the announcement of the
proposed Merger, the bid and asked prices of the Faircom Common Stock on the OTC
Bulletin Board were $.56 and $.75, respectively. On April 2, 1998, the bid and
asked prices of the Faircom Common Stock as quoted on the OTC Bulletin Board
were $.84 and $.94, respectively. There were 329 holders of record of Faircom
Common Stock on April 2, 1998. Faircom has never paid dividends on the Faircom
Common Stock. Faircom and its subsidiaries are subject to certain restrictions
under existing agreements with their lenders, which limit cash dividends on
Faircom Common Stock.
19
<PAGE> 25
FAIRCOM SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data for Faircom presented below for,
and as of the end of each of the years in the five-year period ended December
31, 1997, is derived from Faircom's Consolidated Financial Statements which have
been audited by BDO Seidman LLP, independent certified public accountants. The
consolidated financial statements at December 31, 1996 and 1997 and for each of
the three years in the period ended December 31, 1997 and the auditors' report
thereon are included elsewhere in this Proxy Statement/ Prospectus. This
selected consolidated financial data should be read in conjunction with the
"Unaudited Pro Forma Condensed Combined Financial Statements." Comparability of
Faircom's historical consolidated financial data has been significantly impacted
by acquisitions and the refinancing completed in 1997.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Broadcasting Revenues..... $ 5,993,291 $4,873,954 $ 5,113,582 $ 4,983,513 $ 5,015,265
Income from Operations........ 1,015,144 1,222,829 1,511,481 1,470,355 854,514
Income (Loss) Before
Extraordinary Items......... (362,537) 278,840 244,816 992,079 (796,843)
Extraordinary Items(a)........ (4,333,310) 787,201 3,216,605
Net Income (Loss)............. (4,695,847) 278,840 244,816 1,779,280 2,419,762
Basic Income (Loss) Per Common
Share:
Income (Loss) Before
Extraordinary Items....... (.05) .04 .03 .13 (.11)
Extraordinary Items......... (.59) .11 .44
Basic Net Income (Loss) Per
Common Share.............. (.64) .04 .03 .24 .33
Diluted Income (Loss) Per
Common Share:
Income (Loss) Before
Extraordinary Items....... (.05) .02 .02 .06 (.11)
Extraordinary Items......... (.59) .05 .44
Diluted Net Income (Loss)
Per Common Share.......... (.64) .02 .02 .11 .33
BALANCE SHEET DATA AT PERIOD
END:
Total Current Assets.......... 1,919,232 1,305,585 1,311,916 1,246,104 1,771,069
Total Current Liabilities..... 859,631 1,068,021 1,037,239 1,150,537 2,771,126
Total Assets.................. 13,010,554 4,326,453 4,546,508 4,488,913 4,515,236
Long-Term Debt, Less Current
Portion..................... 21,911,661 7,276,884 7,828,883 8,367,345 6,010,018
Redeemable Preferred Stock of
Subsidiaries at Liquidation
Value....................... 1,968,544
Total Capital Deficit......... (10,181,788) (5,485,941) (5,764,781) (6,009,597) (11,624,571)
</TABLE>
- ---------------
(a) The extraordinary loss in the year ended December 31, 1997 was the result
of a $4,703,000 extraordinary loss from debt extinguishment, offset in part
by an extraordinary gain of $370,000 from debt extinguishment.
20
<PAGE> 26
SELECTED HISTORICAL AND PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF REGENT
The following tables set forth selected historical financial data of
Regent, Faircom and the Pending Transactions other than KIXA(FM), WSWR(FM),
KIXW(AM) and KZXY(FM) as specified below (the Pending Transactions with such
exceptions are referred to as the "Included Transactions") and pro forma
condensed combined financial data of Regent as of and for the periods presented.
The "Pro Forma Merger" condensed combined financial data give effect to the
acquisition of Regent by Faircom in the Merger, with Faircom as the accounting
acquiror and Regent as the accounting acquiree, and the effect of Faircom's
acquisition of stations WMAN(AM) and WYHT(FM). The "Pro Forma Combined"
condensed combined financial data give effect to the Merger, the closing of the
Included Transactions, Regent's divestiture of stations KCBQ(AM) and WXZZ(FM)
(the "Divestitures"), incremental borrowing of approximately $7,300,000 under
Regent's bank credit facility and the application of the proceeds from the
issuance of additional preferred stock in conjunction with the Merger and the
Included Transactions.
Pro forma adjustments have been made to the combined statements of
operations as if they occurred January 1 1997, to: (i) reflect the depreciation
and amortization expense associated with the purchase price of the Merger and
the Included Transactions; (ii) reflect the historical operating results of
stations WMAN(AM) and WYHT(FM) from January 1, 1997 through the date of
acquisition, adjusted for the effect of the purchase and the related financing
transactions; (iii) modify interest expense to reflect the borrowing under
Regent's bank facility; (iv) reflect the effect of the Divestitures; and (v)
reflect the effect of provisions of new employment agreements that become
effective upon the Merger and the issuance of additional stock options to
certain Faircom executives.
Pro forma adjustments have been made to the combined balance sheet as if
they occurred on December 31, 1997 to: (i) reflect the Merger and the Included
Transactions, including the incremental borrowing under Regent's bank facility;
(ii) record the conversion of Class A and Class B Faircom Subordinated Notes
into Faircom Common Stock; (iii) record the Divestitures; and (iv) record the
issuance of additional preferred stock and common stock purchase warrants in
conjunction with the Merger and the Included Transactions.
The Unaudited Pro Forma Condensed Combined Data of Regent have been derived
from the historical financial statements of each of the stations' owners. The
pro forma combined statement of operations and balance sheet data set forth
below do not purport to be indicative of the combined results of operations or
the combined financial position that would have occurred had the Merger and the
Included Transactions been completed on January 1, 1997 or on December 31, 1997
or which may be expected to occur in the future.
No historical financial data have been presented for Regent's pending
acquisitions of KIXA(FM) and KIXW (AM) and Faircom's recent acquisition of
WSWR(FM) and no pro forma adjustments have been made to reflect the effects of
these acquisitions because Regent and Faircom have determined that the impact of
such transactions was not material to Regent's or Faircom's respective results
of operations or financial condition for the period presented. Historical
balance sheet data has not been included in the Pro Forma Condensed Combined
Balance Sheet to reflect Regent's pending acquisition of radio station KZXY(FM)
because the required financial information cannot be obtained. However, the Pro
Forma Condensed Combined Balance Sheet does reflect the fair value of assets of
KZXY (FM) to be acquired.
See "Information Concerning Regent -- Recent and Pending Transactions" and
"Information Concerning Regent -- Management's Discussion and Analysis of
Financial Condition and Results of Operations."
21
<PAGE> 27
The following tables should be read in conjunction with the historical and
Pro Forma Condensed Combined Financial Statements and notes thereto appearing
elsewhere in this Proxy Statement/Prospectus, except as described below.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------------------------------------
HISTORICAL
HISTORICAL HISTORICAL PRO FORMA HISTORICAL ALTA HISTORICAL
REGENT(A) FAIRCOM MERGER PARK LANE (UNAUDITED) POWER SURGE
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA
Net Revenue................ $ 4,916,005 $ 5,993,291 $12,069,875 $ 6,216,039 $ 996,278 $ 68,811
Income (loss) from
continuing operations.... (1,103,425) (362,537) (2,556,116) (1,014,131) 574,283 (29,781)
Loss per common share...... (5.21) (16.85)
Weighted average shares
outstanding.............. 240,000 240,000
BALANCE SHEET DATA AT
DECEMBER 31, 1997:
Total assets............... $13,365,843 $13,010,554 $26,376,397 $ 9,008,281 $1,458,903 $1,174,969
Long term debt, less
current portion.......... 21,911,661 11,911,661 5,607,199 604,171
Redeemable preferred
stock.................... 2,226,907 2,226,907 6,558,251
Shareholders' equity
(deficit)................ 2,457,854 (10,181,788) 2,276,066 (4,454,837) (141,699) 1,172,719
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------------
HISTORICAL
HISTORICAL KZXY PRO FORMA
CONTINENTAL (FM)(B) COMBINED
----------- ---------- -----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA
Net Revenue................ $1,021,856 $1,191,586 $20,986,029
Income (loss) from
continuing operations.... (263,771) 319,458 (3,724,561)
Loss per common share...... (31.55)
Weighted average shares
outstanding.............. 240,000
BALANCE SHEET DATA AT
DECEMBER 31, 1997:
Total assets............... $1,564,241 $62,669,279
Long term debt, less
current portion.......... 90,000 37,881,965
Redeemable preferred
stock.................... 19,306,907
Shareholders' equity
(deficit)................ (320,458) 236,066
</TABLE>
- ---------------
(a) The selected consolidated financial data for Regent for, and as of the year
ended December 31, 1996 is as follows:
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS DATA
Net Revenue................................................. $ 0
Loss from continuing operations............................. (12,406)
Loss per common share....................................... (.05)
Weighted average shares outstanding......................... 240,000
BALANCE SHEET DATA AT DECEMBER 31, 1996:
Total assets................................................ $ 592
Long term debt.............................................. 0
Redeemable preferred stock.................................. 0
Shareholders' deficit....................................... (11,814)
</TABLE>
(b) Certain non-operating income and balance sheet data was not available from
the prior station owners.
22
<PAGE> 28
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to combined fixed charges and preferred stock
dividends for Regent for the periods indicated below was as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------------
PRO FORMA
1997 1996 1997
---- ---- ---------
<S> <C> <C> <C>
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................... (1) (1) (1)
</TABLE>
- ------------
(1) For the years ended December 31, 1997 and 1996, earnings, as defined, were
inadequate to cover fixed charges by $1,249,600 and $12,406, respectively.
On a pro forma basis, 1997 earnings, as defined, would be inadequate to
cover fixed charges by $6,827,971.
For purposes of calculating the above ratio, earnings consist of income
from continuing operations to which have been added income taxes and fixed
charges. Fixed charges consist of interest on all indebtedness and one-third of
rental expense (approximate portion representing interest). Preferred stock
dividends represent an amount equal to income, before income tax, which would be
required to meet the dividends on preferred stock.
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical and pro forma per share
data for Regent and Faircom. Pro forma income (loss) from continuing operations
per share data gives effect to the Merger as if it had been consummated as of
January 1, 1997, and book value per share data gives effect to the Merger as if
it had been consummated as of December 31, 1997. See "Summary -- Selected
Historical and Pro Forma Condensed Combined Financial Data of Regent," "Summary
- -- Faircom Selected Financial Data," and "Unaudited Pro Forma Condensed Combined
Financial Statements."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-------------------------------------------
HISTORICAL
------------------- PRO FORMA PRO FORMA
REGENT FAIRCOM(1) MERGER COMBINED
------ ---------- --------- ---------
<S> <C> <C> <C> <C>
Loss from continuing operations per common share...... $(5.21) $(0.05) $(16.85) $(31.55)
Book value per common share........................... $10.24 $(1.38) $ 9.48 $ 0.98
Cash dividends declared per common share.............. $ 0.00 $ 0.00 $ 0.00 $ 0.00
</TABLE>
- ------------
(1) In the Merger, the outstanding shares of Faircom Common Stock will be
exchanged for shares of Regent Series C Preferred Stock. Consequently, an
exchange ratio cannot be derived for purposes of presenting equivalent pro
forma per common share amounts for Faircom.
23
<PAGE> 29
RISK FACTORS
Ownership of the Series C Preferred Stock to be issued to the Faircom
stockholders in the Merger will involve certain investment risks. In deciding
how to vote their shares at the Special Meeting, holders of shares of Faircom
Common Stock should carefully consider all of the information contained in this
Proxy Statement/ Prospectus and, in particular, the following factors:
LIMITED OPERATING HISTORY
Although Regent's management has significant prior experience in the radio
business, Regent is a start-up venture with a very limited operating history and
no history of generating profits. Since its formation in November 1996, Regent
has incurred substantial costs to develop, negotiate and enter into definitive
agreements for the acquisition of 31 radio stations. As a consequence, Regent
incurred operating losses during 1997 as its first full year of activity of
approximately $1,100,000. The time required to reach profitability is highly
uncertain and there can be no assurance Regent will be able do so on a sustained
basis, if at all. The failure of Regent to achieve profitability could have a
material adverse effect on Regent's business and financial condition and the
value of Regent's stock. See "Information Concerning Regent -- Management's
Discussion and Analysis of Financial Condition and Results of Operations."
RISK OF INABILITY TO COMBINE OPERATIONS SUCCESSFULLY
Consummation of the Merger and the Pending Transactions will result in the
combination of the operations of radio broadcast groups that have not previously
been operated together. There can be no assurance that these operations can
successfully be combined, or that any cost efficiencies, competitive advantages
or other benefits will be realized from the combination. The inability of
management to integrate successfully the operations of Regent and Faircom could
have a material adverse effect upon the business, operating results and
financial condition of the combined companies and the value of Regent's stock.
UNCERTAINTY FOR FAIRCOM STOCKHOLDERS IF MERGER NOT APPROVED
Under the terms of the Securities Purchase Agreement applicable to the
Class A and Class B Faircom Subordinated Notes, as amended, the Faircom
Subordinated Noteholders possess the right to force a liquidation of Faircom if
Faircom does not consummate a merger of Faircom with another corporation on
terms acceptable to them on or before April 1, 1999. If the Merger is not
approved and consummated, there can be no assurance that Faircom will be able to
consummate a merger with another company on terms acceptable to the Faircom
Subordinated Noteholders by April 1, 1999, or that the Faircom Subordinated
Noteholders will not exercise their right to force the liquidation of Faircom;
or if they do exercise that right, that a sale of Faircom's assets and a
liquidation of Faircom could be achieved on terms that would provide Faircom
stockholders with results comparable to those under the Merger. See "The
Merger -- Reasons of Faircom for Engaging in the Merger; Recommendation of the
Faircom Board" and "The Merger -- Interests of Certain Persons in the Merger;
Certain Relationships."
RISKS RELATED TO ADDITIONAL ACQUISITIONS
During 1997, Regent entered into or consummated agreements, exclusive of
station asset swaps and agreements that have been terminated, for the
acquisition of radio stations for an aggregate consideration in excess of
$75,000,000. Regent intends to seek additional radio station acquisitions.
Inherent in such a strategy are certain risks, such as increasing leverage and
debt service requirements, combining disparate company cultures and facilities,
and operating stations in geographically diverse markets, which could adversely
affect ratings and operating results in a given market. Accordingly, there can
be no assurance that Regent's recent, pending or future transactions may not
have an adverse effect on its business and, accordingly, the value of its stock.
See "Information Concerning Regent -- Description of Business."
24
<PAGE> 30
RISK OF INABILITY TO FINANCE ADDITIONAL ACQUISITIONS
Regent's Credit Agreement with Bank of Montreal, Chicago Branch, as Agent,
and certain lenders listed therein (the "Credit Agreement") contains borrowing
limits which are tied to a multiple of Regent's combined trailing 12-month
period level of earnings before interest, taxes, depreciation and amortization.
This multiple reduces from 6 times down to 3.5 times over the term of the credit
facility. Consequently, unless such earnings can be increased, the amount
available for borrowing will decrease. There can be no assurance that Regent's
lenders will consent to increased borrowing limits that may be necessary to
enable Regent to finance its acquisition strategy, that Waller-Sutton will
complete its investment in Regent pursuant to the Waller-Sutton Commitment or
that Regent will be able to obtain suitable financing from other sources. See
"Information Concerning Regent -- Management's Discussion and Analysis of
Financial Condition and Results of Operations of Regent."
POSSIBLE DILUTION OF OWNERSHIP
To the extent that any future acquisitions are financed, in whole or in
part, through the issuance of additional equity, the stockholders of Regent may
suffer a dilution in their holdings.
POSSIBLE SCARCITY OF ATTRACTIVE RADIO STATION ACQUISITIONS
As a result of the passage of the Telecommunications Act in February 1996
(the "Telecommunications Act"), the ownership of radio stations has experienced
dramatic consolidation. The Telecommunications Act permits a single entity to
own as many as eight radio stations in markets where 45 or more stations compete
and also removed all national numerical ownership restrictions. Prior to the
Telecommunications Act, in general a single owner could not own more than two AM
and two FM stations in any market, nor more than a total of 20 AMs and 20 FMs,
nationwide. Since this deregulation, prices for radio stations have increased
sharply, as well-financed groups have aggressively pursued stations and groups
of stations for purchase. Although management of Regent believes that its
relationships in the industry, including those with existing and leading media
brokers, make it a competitive and viable potential purchaser of radio
properties and that stations are still available in smaller markets at
attractive prices for strategic purchases, no assurance can be given that Regent
will be able to purchase additional radio properties on a basis that will
produce an attractive financial return for Regent and its stockholders. See
"Information Concerning Regent -- Description of Business."
ABILITY TO MEET OBLIGATIONS
Regent expects to incur indebtedness in the aggregate principal amount of
approximately $31,000,000 in connection with consummation of the Merger and the
Pending Transactions. In addition, the holders of Regent's Preferred Stock are
entitled to convert such Preferred Stock to Regent Common Stock at any time and
to receive accrued dividends in cash at the time of conversion. There can be no
assurance that Regent's future cash flow will be sufficient to cover its fixed
charges for principal and interest payments on its debt and to pay such accrued
dividends in the event of a conversion of Regent's Preferred Stock. In order to
fund future debt service and dividend payments and its other obligations from
operating income, Regent will have to improve the operating results of the radio
stations to be acquired in the Pending Transactions. Regent's ability to make
these improvements will be subject to prevailing economic conditions and to
legal, financial, business, regulatory, industry and other factors such as the
competitive environment in the specific geographic markets of Regent's stations
and the ability to retain and attract key management, sales, programming and
on-air personnel, many of which are beyond Regent's control. If cash flow is
insufficient, Regent would be required to refinance its obligations, sell
additional equity securities or dispose of all or a portion of its properties in
order to meet its obligations. There can be no assurance that Regent would be
able to effect any such transaction on favorable terms to its stockholders, if
at all. See "Information Concerning Regent -- Management's Discussion and
Analysis of Financial Condition and Results of Operations."
25
<PAGE> 31
REDEMPTION RIGHTS OF SERIES F PREFERRED STOCK
Waller-Sutton has committed, subject to negotiation of definitive
agreements and the satisfaction of certain conditions, to purchase, at or about
effectiveness of the Merger, 2,000,000 shares of the Series F Preferred Stock
for an aggregate purchase price of $10,000,000 and to act as a financial advisor
to Regent with respect to the sale of an additional $8,500,000 of the Series F
Preferred Stock. The terms of the Waller-Sutton Commitment provide for the
holders of the Series F Preferred Stock to have the right to put the Series F
Preferred Stock to Regent at any time commencing five years after the first
shares of Series F Preferred Stock are issued at the greater of (i) $5.00 per
share plus accrued and unpaid dividends or (ii) fair market value (as well as
any warrants held by such holders at a price equal to the fair market value of
the Regent Common Stock less the warrant exercise price). In order to obtain the
consent of the holders of Regent's Series A, B and D Preferred Stock to the
issuance of the Series F Preferred Stock pursuant to the Waller-Sutton
Commitment, Regent has agreed that if holders of the Series F Preferred Stock
were to exercise their put rights, the holders of its Series A, B and D
Preferred Stock would be entitled to "tag along" put rights entitling them to
put their respective shares of Preferred Stock to Regent on the same terms and
conditions. The Series C and E Preferred Stock will not have these "tag along"
put rights. Such rights could jeopardize qualification of the transactions in
which they are being issued as reorganizations within the meaning of Section
368(a) of the Code.
The contemplated investment of up to $18,500,000 in the Series F Preferred
Stock described in the Waller-Sutton Commitment could expose Regent to potential
obligations in excess of $31,000,000 by virtue of the put rights and "tag along"
put rights. If holders of the Series F Preferred Stock were to exercise their
put rights, it is likely that holders of the Series A, B and D Preferred Stock
would exercise their "tag along" put rights. Based on a minimum put price of
$5.00 per share, Regent would face an immediate obligation of as much as
$31,600,000 plus the amount of all accrued and unpaid dividends. In the event
Regent would be unable to meet its redemption obligations for a period beyond
one year after the date the put right is exercised (during which period Regent
must be taking active steps to raise funds necessary to meet those obligations),
holders of the Series F Preferred Stock would then be entitled while such
default continues to elect and control a majority of the Board of Directors of
Regent. If Regent were unable to finance its redemption obligations, the
exercise of such rights would force Regent to sell some or all of its
properties. There can be no assurance that Regent would be able to do so on
favorable terms or without forcing a liquidation of the company. In the event of
a liquidation, holders of the Series B Preferred Stock would be entitled to
receive a payment of $5 per share, plus accrued dividends, before any
distribution can be made to the holders of Series A, C, D, E and F Preferred
Stock, each of whom ranks on a parity with the others, regardless of the
exercise of the put rights and "tag along" put rights by the holders of Series F
Preferred Stock and the Series A and D Preferred Stock, respectively. There can
be no assurance that Regent would have sufficient funds remaining to cover the
accrued dividends and liquidation preference of the Series A, C, D, E and F
Preferred Stock.
PREFERENCE OF SERIES B PREFERRED STOCK
The Series C Preferred Stock to be received by the Faircom stockholders in
the Merger ranks junior to Regent's Series B Preferred Stock, of which 1,000,000
shares will be outstanding upon consummation of the Merger. The terms of the
Series B Preferred Stock provide for the holders to receive a payment on
liquidation of $5.00 per share, plus accrued dividends of as much as $350,000
per year, to receive cumulative dividends on a preferential basis before any
distribution can be made to other stockholders, including holders of the Series
C Preferred Stock. In the event of a liquidation of Regent or a conversion of
the Series C Preferred Stock, Regent may not have sufficient funds remaining for
payment to holders of the Series C Preferred Stock in full after holders of the
Series B Preferred Stock have received payment in full of their liquidation
preference and all accrued dividends. See "Risk Factors -- Redemption Rights of
Series F Preferred Stock" and "Description of Regent Securities."
CONVERSION EVENTS AND POSSIBLE REDEMPTION OF SERIES C PREFERRED STOCK
The terms of the Series C Preferred Stock to be received by the Faircom
stockholders in the Merger provide that such stock will be converted into Regent
Common Stock, at the option of Regent's Board of Directors (if all other
outstanding shares of Preferred Stock of Regent, other than those which are
senior to the Series C Preferred
26
<PAGE> 32
Stock as to dividends or upon liquidation, are concurrently redeemed or
converted), upon the happening of any of the following events (each a"Conversion
Event"): (a) a public offering of equity securities of Regent of at least
$10,000,000, (b) a private placement of equity securities of Regent of at least
$25,000,000 (or at least $10,000,000 under circumstances where the investor
reasonably believes the conversion is necessary to achieve its investment
objectives), (c) a merger of Regent with another corporation or other entity,
whether or not Regent is a survivor of such transaction, whereby as a result the
stockholders of Regent hold less than 50% of the outstanding capital stock of
the surviving entity; or (d) an acquisition of equity securities of Regent in
one transaction or in a series of related transactions which results in a
transfer of majority voting control of Regent. If such conversion is required,
holders of the Series C Preferred Stock will receive in cash any accrued but
unpaid dividends, but will lose the preferences provided for under the terms of
the Series C Preferred Stock, including the $5.00 per share liquidating
preference and any further accrual of the 7% cumulative annual dividend. See
"Description of Regent Securities." The proposed investment by Waller-Sutton
will not be a Conversion Event since Waller-Sutton has determined that such
conversion is not necessary to obtain its investment objectives.
Although the Series C Preferred Stock is generally not redeemable, all
Regent Preferred and Common Stock is subject to Regent's right to redeem any of
such securities at fair market value to prevent the loss of any of Regent's FCC
licenses. Such a circumstance might arise, for example, where foreign ownership
of such securities exceeds amounts permitted by the FCC. See "Description of
Regent Securities" and "Information Concerning Regent -- Description of
Business -- FCC Regulation."
ABSENCE OF EXISTING TRADING MARKET FOR REGENT STOCK
There is currently no public market for the Series C Preferred Stock or the
Regent Common Stock into which it is convertible. Regent intends to apply for
quotation on NASDAQ of the Series C Preferred Stock. Based on information
currently available to it, Regent believes the Series C Preferred Stock may
qualify for NASDAQ quotation; however, there can be no assurance that such
quotation privileges can be obtained. If the Merger is consummated, Faircom
stockholders may have difficulty selling their shares of Series C Preferred
Stock received in the Merger, or any Regent Common Stock issued on conversion
thereof, if an active trading market does not develop in such securities. Regent
will not apply for listing or quotation on any exchange or NASDAQ of the Regent
Common Stock into which the Series C Preferred Stock is convertible, nor will a
trading market be able to be developed in the Regent Common Stock, unless and
until such number of shares of Regent Common Stock are issued and freely
tradable so as to constitute a sufficient public float.
RESTRICTIVE COVENANTS UNDER CREDIT AGREEMENT
Regent's Credit Agreement contains restrictive covenants that prohibit
Regent from, among other things, (a) incurring additional indebtedness except
within specified limits; (b) merging with any other company; (c) incurring lease
obligations in excess of specified limits; (d) making any investments or selling
assets except within specified limits; (e) making capital expenditures in excess
of specified limits; (f) paying corporate overhead in excess of specified
limits; (g) selling or discounting accounts receivable for less than face value;
and (h) investing in new lines of business. Accordingly, these types of
decisions will be subject to the prior approval of Regent's lenders, who,
because of differing interests, may make decisions which are not consistent with
the interests of Regent stockholders. See "Information Concerning
Regent -- Management's Discussion and Analysis of Financial Condition and
Results of Operations of Regent."
DEPENDENCE ON KEY PERSONNEL
Regent's success will depend significantly upon the performance of its
Chairman and Chief Executive Officer, Terry S. Jacobs, its President and Chief
Operating Officer, William L. Stakelin, and its Vice Chairman, Joel M. Fairman,
in acquiring, managing and operating radio stations. Mr. Jacobs and Mr. Stakelin
are expected to play major roles in most facets of Regent's business, including
the identification and negotiation of radio station acquisitions. While Regent
has, or will have upon consummation of the Merger, three-year employment
agreements with Mr. Jacobs, Mr. Stakelin and Mr. Fairman, there can be no
assurance that these agreements will ensure their continued service. The loss of
the services of Mr. Jacobs, Mr. Stakelin or Mr. Fairman could have a material
adverse effect on Regent and the value of its stock. The Board of Directors may
not obtain key man life
27
<PAGE> 33
insurance on Mr. Jacobs, Mr. Stakelin or Mr. Fairman after consummation of the
Merger. See "Information Concerning Regent -- Directors and Executive Officers."
NO CASH DIVIDENDS
Regent presently intends to retain all future earnings, if any, for use in
its business and does not anticipate paying any cash dividends on its Series C
Preferred Stock or on any other class or series of its presently outstanding
stock. In addition, Regent's Credit Agreement prohibits Regent from paying
dividends on, or redeeming, purchasing, retiring or otherwise acquiring any
shares of, Regent Common Stock, and permits the payment of cash dividends on
Regent Preferred Stock only (a) if Regent is not in default under the Credit
Agreement, (b) if the ratio of Regent's outstanding indebtedness to its
operating cash flow is below specified limits both on an historical and a pro
forma basis, and (c) if and to the extent the total amount of the annual
aggregate cash dividend does not exceed certain specified limits based on
Regent's cash flow for the prior fiscal year. Consequently, any gain which may
be realized by the stockholders of Regent will be from the appreciation of their
stock over time and will not include any return derived from periodic payments
of cash dividends.
COMPETITION
Radio broadcasting is a highly competitive business. Each of Regent's and
Faircom's radio stations competes for audience share and advertising revenue
directly with other radio stations, as well as with other media, such as
billboards, newspapers and television, within their respective markets. There
are typically other well-capitalized firms competing in the same geographic
markets as Regent and Faircom, many of which have substantial financial
resources. With the elimination of any restrictions on the number of radio
stations which may be owned nationally by a single operator and the
liberalization of local ownership restrictions effected by the
Telecommunications Act, and the resulting consolidation of ownership in the
radio industry, competition can be expected to continue to intensify as
companies with substantial resources continue to emerge.
The financial success of each of Regent's and Faircom's radio stations is
dependent principally upon each such station's share of the overall advertising
revenue within its geographic market, its promotion and other expenses incurred
to obtain that revenue and the economic health of the geographic market. Radio
advertising revenues are, in turn, highly dependent upon audience share. Radio
station operators are subject to the possibility of another station changing
programming formats to compete directly for listeners and advertisers or
launching an aggressive promotional campaign in support of an already existing
competitive format. If a competitor were to attempt to compete in either of
these fashions, the broadcast cash flow of Regent's or Faircom's affected
station could decrease due to increased promotion and other expenses and/or
lower advertising revenues resulting from lower ratings. There can be no
assurance that any of Regent's or Faircom's radio stations will be able to
maintain or increase its current audience ratings and revenue market share.
In addition to management expertise, factors that may materially influence
a station's competitiveness include the station's ratings rank in its market,
its signal strength, audience characteristics, local program acceptance and the
characteristics of other stations in the market area. Radio broadcasting is also
subject to competition from new media technologies that are being developed or
introduced, such as the delivery of audio programming by cable television
systems or the introduction of digital audio broadcasting ("DAB"). DAB may
deliver by satellite to nationwide and regional audiences, multi-channel,
multi-format digital radio services with sound quality equivalent to compact
discs. One form of DAB is In Band On Channel ("IBOC") digital radio. IBOC could
provide multichannel, multi-format digital radio services in the same band
currently occupied by traditional AM and FM radio services. Regent cannot
predict the effect, if any, that new technologies may have on the radio
broadcasting industry.
If Regent were unable to compete effectively with the other stations in its
markets, there may be a material adverse effect on Regent's business, results of
operations, and financial condition and the market value of Regent stock.
28
<PAGE> 34
FUTURE SALES OF SHARES
Assuming consummation of the Merger and the Pending Transactions, 240,000
shares of Regent Common Stock and approximately 2,646,200 shares of the Series C
Preferred Stock will have been issued to affiliates of Regent and to other
persons whose resales are subject to the one-year holding period and other
requirements of Rule 144 under the Securities Act ("Rule 144"). Up to
approximately 11,502,200 additional shares of Regent Common Stock are or will
become issuable upon conversion of the Series C Preferred Stock and all other
series of Regent Preferred Stock and upon exercise of options and warrants
currently outstanding or expected to be granted to Regent's management or
pursuant to existing agreements and commitments. See "Information Concerning
Regent -- Security Ownership of Certain Beneficial Owners and Management of
Regent." The Merger Agreement provides the Faircom Subordinated Noteholders with
certain registration rights with respect to Regent Common Stock issued on
conversion of the Series C Preferred Stock. The holders of Regent's Series A,
Series B, Series D and Series F Preferred Stock will have registration rights
with respect to Regent Common Stock issued on conversion of their respective
series of Preferred Stock or exercise of the warrants associated with the Series
F Preferred Stock (including those warrants which may be issued to GE Capital).
Should an active trading market develop in the Series C Preferred Stock or
Regent Common Stock, the sale of a large number of shares in the public market
could depress the prevailing market price to the detriment of the remaining
stockholders.
RESTRICTIONS ON RESALE
Shares of the Series C Preferred Stock issued in connection with the
Merger, and any shares of Regent Common Stock issued on conversion thereof, to
stockholders of Faircom who are also "affiliates" of Faircom for purposes of
Rule 145 under the Securities Act will be subject to the resale restrictions of
Rule 144 of such Act. With the exception of the registration rights available to
the Faircom Subordinated Noteholders pursuant to the terms of the Merger
Agreement, holders of the Series C Preferred Stock issued in the Merger or the
Regent Common Stock into which it is convertible are not entitled to
registration rights with respect to such stock. See "The Merger -- Federal
Securities Law Consequences."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Faircom management and the Faircom Subordinated
Noteholders have interests in the Merger that are in addition to and potentially
in conflict with the interests of the stockholders of Faircom generally. The
Faircom Board was aware of these interests and considered them, among other
matters, in approving the Merger Agreement and the transactions contemplated
thereby. See "The Merger -- Interests of Certain Persons in the Merger; Certain
Relationships."
29
<PAGE> 35
GENERAL INFORMATION REGARDING PROXIES AND THE SPECIAL MEETING
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Faircom Board for the Special Meeting to be held
April , 1998 at the time and place and for the purpose set forth in the
accompanying Notice of Special Meeting.
Any Faircom stockholder who has previously delivered a properly executed
proxy may revoke such proxy at any time before its exercise. A proxy may be
revoked either by (i) delivering to the Secretary of Faircom prior to the
Special Meeting either a written revocation of such proxy or a duly executed
proxy bearing a later date or (ii) attending the Special Meeting and voting in
person, regardless of whether a proxy has previously been given. All valid,
unrevoked proxies will be voted as directed. In the absence of any contrary
directions, proxies will be voted in favor of the proposal set forth in the
Notice of Special Meeting and, with respect to such other matters as may
properly come before the Special Meeting, in the discretion of the appointed
proxies.
Only holders of record of Faircom Common Stock as of the close of business
on March 26, 1998 will be entitled to vote at the Special Meeting. As of the
Record Date, there were 7,378,199 shares of Faircom Common Stock outstanding, of
which approximately 18% were beneficially owned by directors and officers of
Faircom, all of whom intend to vote in favor of the Merger. Each share of
Faircom Common Stock is entitled to one vote on all matters on which
stockholders may vote. The presence at the Special Meeting, in person or by
proxy, of the holders of a majority of the issued and outstanding shares of
Faircom Common Stock entitled to vote at the Special Meeting will constitute a
quorum for the transaction of business. The Merger Agreement must be approved by
holders of a majority of the issued and outstanding shares of Faircom Common
Stock. Abstentions will be counted in determining whether a quorum is present,
will be considered present and entitled to vote, and will thus have the effect
of a negative vote. If a proxy is returned by a broker or other stockholder who
does not have authority to vote, does not give authority to a proxy to vote, or
withholds authority to vote as to any shares, such shares will be considered
present at the Special Meeting for purposes of determining a quorum, but will
not be considered for purposes of calculating the vote with respect to such
matters.
Proxies are being solicited by the Faircom Board. The form of proxy is
attached to this Proxy Statement/Prospectus as Appendix F. The proxy
solicitation is being made primarily by mail, although proxies may be solicited
by personal interview, facsimile or other means of communication. Faircom will
pay the cost of this solicitation, including the charges and expenses of
brokerage firms and others who forward solicitation materials to beneficial
owners of the Faircom Common Stock. Faircom has arranged for MacKenzie Partners,
Inc. to serve as its proxy solicitation agent. In such capacity, MacKenzie
Partners, Inc. will coordinate and oversee the distribution of the proxy
materials to, and the return of the proxy cards by, registered stockholders and
beneficial owners. The fee for such services is estimated to be $5,000, plus the
solicitor's out-of-pocket expenses.
30
<PAGE> 36
THE MERGER
GENERAL
Regent and Faircom have entered into a Merger Agreement, which provides for
the acquisition by Regent of all the outstanding capital stock of Faircom, to be
accomplished by a merger of Faircom with and into a wholly-owned subsidiary of
Regent. The holders of Faircom Common Stock will be issued, in exchange for
their Faircom Common Stock, shares of the Series C Preferred Stock upon
consummation of the Merger. The Merger is intended to qualify as a
reorganization for federal income tax purposes. See "Material Federal Income Tax
Consequences." The Series C Preferred Stock has full voting rights, provides for
annual cumulative dividends of 7%, and is convertible on a one-for-one basis
into Regent Common Stock (subject to adjustment in certain events). See
"Description of Regent Securities." The discussion in this Proxy
Statement/Prospectus of the Merger and the description of the Merger's principal
terms are subject to and qualified in their entirety by reference to the Merger
Agreement, a copy of which is attached to this Proxy Statement/Prospectus as
Appendix A and incorporated herein by reference. The following is a brief
discussion of the background of the negotiations culminating in the Merger
Agreement.
BACKGROUND OF THE MERGER
With the enactment of the Telecommunications Act in February 1996, it
rapidly became clear that radio station ownership would consolidate
dramatically. Faircom accelerated its objective of acquiring additional radio
stations to obtain operational benefits of scale and additional financial
strength resulting from a larger corporate structure. In addition, Faircom
believed that this strategy, if successfully consummated, would make it a more
attractive partner for combination with another broadcasting group owner.
In April 1996, Faircom retained Crisler to provide investment banking
services in connection with negotiation and financing of radio station
acquisitions, with particular emphasis on smaller market stations. In October
1996, the focus of these activities became radio stations WMAN(AM) and WYHT(FM)
in Mansfield, Ohio owned by Treasure Radio Associates Limited Partnership.
During October 1996 a number of meetings took place with possible financing
sources for this acquisition. In this connection, a meeting was held in New York
City on October 30, 1996 among Joel M. Fairman, Chairman of Faircom, R. Dean
Meiszer, President of Crisler, and Terry S. Jacobs and William L. Stakelin,
Chairman and President, respectively, of the subsequently formed Regent. Since
Messrs. Jacobs and Stakelin were then in the process of planning their own radio
station acquisitions and attendant financing, this meeting was exploratory only
and ended with no conclusive or even preliminary understandings, other than to
continue to communicate the progress of each company.
In January 1997, Faircom Mansfield Inc., a wholly-owned subsidiary of
Faircom, entered into an asset purchase contract to acquire the Mansfield
stations for $7,650,000 in cash. Thereafter, a series of negotiations ensued
with various capital sources to finance the acquisition and also to purchase the
interests then owned by Citicorp Venture Capital, Ltd. in Faircom for
$6,400,000.
On May 21, 1997, a meeting was held in Cincinnati, Ohio among Messrs.
Fairman and Meiszer, John E. Risher, Senior Vice President of Faircom, John H.
Wyant, a manager of the general partner of Blue Chip and a special limited
partner of Miami Valley and Mr. Wyant's associate, Z. David Patterson. At this
meeting there was discussed an investment in Faircom by Blue Chip and Miami
Valley. In addition, Mr. Wyant stated that Regent was entering into a contract
to acquire a group of radio stations in California and Arizona owned by The Park
Lane Group (the "Park Lane Stations") and he believed that a merger with Regent
attractive to the stockholders of Faircom could be negotiated. Faircom
stockholders, including Blue Chip and Miami Valley, would retain significant
equity positions in the merged companies. Mr. Wyant emphasized that an
affiliated fund had been an investor in Regent I, a radio operating company
previously managed by Messrs. Jacobs and Stakelin which had been merged into
Jacor Communications, Inc. in a transaction that closed in February 1997. The
investment in that prior company had been highly profitable for its equity
investors and the experience with Messrs. Jacobs and Stakelin had been
exceptionally favorable, according to Mr. Wyant. Messrs. Jacobs and Stakelin
were known most favorably to Messrs. Fairman, Risher and Meiszer based on their
historic performance and reputation in the radio industry.
31
<PAGE> 37
Following this meeting, the group met in the offices of Regent with Messrs.
Jacobs and Stakelin and Matthew A. Yeoman, Regent's Vice-President--Finance, and
engaged in a general discussion of the properties and operations of Faircom and
Regent and the possible advantages of a merger. The concept of the proposed
transaction with Regent appeared attractive to Messrs. Fairman, Risher and
Meiszer. Over the next few days the proposed transaction was discussed
individually with the other directors of Faircom. It was determined that Faircom
should attempt to negotiate specific terms of a merger transaction with Regent.
As a result of the May meeting and the conversations with directors that
followed, work commenced on a letter of intent between Faircom and Regent. As of
June 30, 1997, the Mansfield acquisition and the purchase of the Citicorp
interests in Faircom were consummated through a new investment aggregating
$10,000,000 in the form of Class A and Class B Faircom Subordinated Notes
purchased by Blue Chip and Miami Valley and additional senior debt from
Faircom's senior lender. In addition, a non-binding letter of intent containing
general terms and a number of contingencies relating to the proposed merger was
signed on June 30, 1997. Thereafter, the parties determined that modification to
the terms and conditions stated in the letter of intent were needed, and on July
21, 1997 Messrs. Fairman, Meiszer and Wyant met in New York City to discuss the
formulation of a new letter of intent for a merger with Regent. Work followed on
a draft of a new letter of intent.
A meeting was held on September 10, 1997, in Cincinnati, Ohio to discuss
outstanding issues on the letter of intent. Attending the meeting were Messrs.
Fairman, Jacobs, Stakelin, Wyant, Meiszer, Steven J. Kaufmann, Vice President of
Crisler, and counsel for Regent and Blue Chip. Most of the remaining issues in
the letter of intent were resolved at this meeting.
By September 16, 1997, all remaining issues of the letter of intent had
been resolved and copies were prepared for execution by Faircom and Regent. The
Faircom Board met to consider the proposed transaction with Regent, including
the draft letter of intent. At this meeting, Mr. Wyant was elected a Director of
Faircom. The Faircom Board then reviewed the proposed transaction with Regent,
and those present unanimously authorized execution of the letter of intent and
all steps necessary to prepare and execute a definitive merger agreement with
Regent, subject to obtaining an opinion from an independent financial advisor,
addressed to the Faircom Board, to the effect that the consideration to be
received by the stockholders of Faircom in connection with the proposed merger
would be fair to them from a financial point of view ("Fairness Opinion"). On
September 16, 1997, a non-binding letter of intent with respect to the proposed
merger was signed by Faircom and Regent.
The Faircom Board thereafter contacted a number of financial advisors to
discuss their providing a Fairness Opinion. After considering a number of
proposals, Faircom executed an engagement letter dated November 6, 1997 with
HSMC, providing for HSMC to review the proposed transaction and determine
whether HSMC could deliver such a Fairness Opinion.
During November 1997, preparation and negotiation of a definitive merger
agreement continued. On December 4, 1997, HSMC delivered a Fairness Opinion to
the Faircom Board.
On December 5, 1997, Faircom and Regent executed the Merger Agreement.
After HSMC rendered its fairness opinion to the Faircom Board on December
4, 1997, more current financial results for most of the radio properties to be
acquired by Regent in the Merger and the other Pending Transactions became
available, and there were changes made to certain aspects of Regent and the
Merger. Specifically, HSMC was advised that it is the intention of the holders
of the Class A and Class B Faircom Subordinated Notes to convert the entire
principal amount of such Notes to Faircom Common Stock prior to consummation of
the Merger. In addition, HSMC was advised that Regent intends to issue a new
series of Preferred Stock to Waller-Sutton, which has agreed to make an equity
investment in Regent subject to the satisfaction of certain conditions, and to
use the proceeds of such equity investment to finance a portion of the Merger,
the purchase of The Park Lane Group and the other Pending Transactions. At the
request of Faircom, HSMC updated its fairness evaluation to take into account
the more recent station financials and the foregoing changes. In addition, HSMC
conducted site visits to the stations Regent has agreed to acquire in Apple
Valley and Lucerne Valley, California. The use of the updated information had no
effect on HSMC's original opinion that the consideration to be paid to the
Faircom stockholders in the Merger was fair to the Faircom stockholders from a
32
<PAGE> 38
financial standpoint. This confirmation of HSMC's original fairness opinion was
delivered orally to the Faircom Board on March 25, 1998 with a written opinion
subsequently delivered to Faircom by mail.
REASONS OF FAIRCOM FOR ENGAGING IN THE MERGER; RECOMMENDATION OF THE FAIRCOM
BOARD
The Faircom Board has unanimously approved the proposed Merger and believes
the Merger is in the best interests of Faircom and its stockholders. In reaching
their decision, the directors considered, with the assistance of management and
its legal and financial advisors, the following factors:
(i) In the Merger, each share of Faircom Common Stock will be
exchanged for a proportionate share of Series C Preferred Stock with a
liquidation preference amount of $5.00 per share. The liquidation
preference amount of the Series C Preferred Stock received for each share
of Faircom Common Stock represented a substantial premium over the then
historical market prices for each share of Faircom Common Stock to be
exchanged therefor. On September 16, 1997, the day the non-binding letter
of intent with respect to the Merger was signed by Faircom and Regent, the
bid and asked prices of the Faircom Common Stock as quoted on the OTC
Bulletin Board were $.47 and $.63, respectively, and for the four quarters
immediately preceding that date the low and high bid quotations for Faircom
Common Stock on the OTC Bulletin Board were $.13 and $.28. The liquidation
preference amount of the Series C Preferred Stock to be received in
exchange for each share of Faircom Common Stock was calculated to be
approximately $.76, based on the net working capital and long-term debt of
Faircom at August 31, 1997, the estimated net equity value of the
then-proposed Shelby Station acquisition and assuming the then anticipated
conversion of $7,500,000 of the Class A and Class B Faircom Subordinated
Notes.
(ii) The Merger offers Faircom stockholders an opportunity to acquire
equity ownership in what would be a significantly larger company upon
completion of the Merger and the Pending Transactions and at the same time
retain the opportunity to participate in the long-term growth and
appreciation of Faircom's business through their ownership interest in
Regent;
(iii) The complementary nature of the strategic goals of management of
Faircom and Regent, particularly with respect to focusing on acquisitions
of radio stations in small- and medium-sized markets and acquiring clusters
of stations in such markets with combined broadcast cash flow of at least
$1,000,000 and with a strategy of becoming one of the top three operators
in each such market;
(iv) The increased diversification of the resulting company's
ownership of radio stations, both in the number of stations owned and in
the markets served;
(v) Potential operating synergies and cost savings, including possible
synergies and cost savings with respect to the consolidation of
administrative and support functions, group discount pricing for
programming services, computer programming services, insurance premiums,
and legal and accounting services;
(vi) The attractiveness to the stockholders of Faircom of the
valuation placed on the business of Faircom with respect to the pro forma
total enterprise value of Regent upon consummation of the Merger, and the
opinions of HSMC that, as of December 4, 1997 and as of March 25, 1998, the
consideration to be received by the Faircom stockholders was fair, from a
financial point of view, to such stockholders (see "The Merger -- Opinion
of Financial Advisor to Faircom"). The value upon which the consideration
to be paid is based, $33,162,000, before working capital and prepayment
premium adjustment, represents approximately 12.7 times Faircom's 1997
broadcast cash flow, which the Faircom Board believes is an attractive
valuation for Faircom's business;
(vii) The terms of the Series C Preferred Stock, including full voting
rights, a $5.00 preference on liquidation of Regent together with full
equity participation in any remaining assets if converted to common stock,
and an accruing 7% annual dividend to be paid in cash in the event of
liquidation or conversion to common stock at any time at the option of the
holder or where the Board of Directors of Regent requires conversion in the
case of specified conversion events; and
(viii) Information with respect to the Pending Transactions of Regent
including, among other things, the recent and historical earnings
performance of the radio stations involved in the Pending Transactions,
33
<PAGE> 39
and what the Faircom Board believes to be the potential earnings capability
of such stations, and the historical ability of Regent's executives in
prior businesses to implement successfully a growth strategy by acquisition
and operation of radio stations in small-and medium-sized markets.
In the course of its deliberations, the Faircom Board reviewed the
following additional factors relevant to the Merger: (i) the capital structure
of Regent; (ii) the financial analysis of HSMC prepared in connection with its
Fairness Opinion; (iii) reports from management and legal advisors on specific
terms of the Merger Agreement; and (iv) the proposed terms, timing and structure
of the Merger. The financial analysis of HSMC reviewed by the Faircom Board
included estimates of relevant future market revenues, audience shares, station
revenues and operating expenses, calculations of projected broadcast cash flow
and calculations of fair market value for all of the business components of the
Merger. The Faircom Board reviewed the analysis by HSMC of the relative
contribution of each of the parties to the Merger with such party's relative
share of the fully diluted common stock equivalents the parties will receive in
the Merger. Using the fair market values of the Park Lane and the Faircom
Stations (as described above) and valuations of other assets and liabilities
contributed to the Merger, HSMC first calculated each party's contribution
relative to the aggregate contribution made by all of the parties. Similarly,
HSMC calculated each party's relative share of equity ownership they will
receive as a result of the merger. HSMC then divided each party's relative share
of proceeds received (expressed as a percentage) by such party's relative share
of contribution made (expressed as a percentage) and converted the resulting
number to an index (based on 100). Using this convention, an index greater than
100 means that a party to a merger is receiving a greater share of the ownership
of the surviving company than its contribution of assets in such merger. HSMC
has determined that the index for the Faircom stockholders is larger than 100
and larger than the ratio for the other Merger participants and, thus, has
concluded that the consideration to be paid to the Faircom stockholders in the
Merger is fair to the Faircom stockholders, from a financial point of view.
The Faircom Board also considered the following potentially negative
factors in its deliberations concerning the Merger: (i) the possibility of
management disruption associated with the Merger and the risk that, despite the
efforts of the combined company, key management personnel of Faircom might not
continue their employment with the combined company; (ii) the possibility that
certain of the operating economies of scale such as the elimination of redundant
administrative cost sought to be achieved as a result of the Merger might not be
achieved; (iii) the possibility of Faircom's failure to be successfully
integrated into Regent; and (iv) the possibility that Faircom's business will
outperform the other business activities of Regent. In the event that any or all
of the foregoing factors should occur, it is possible that the value of the
Faircom stockholders' interest in Regent as a result of the Merger would be less
than the value of such Faircom stockholders' interest in Faircom in the absence
of the Merger.
The foregoing discussion of information and factors considered by the
Faircom Board is not intended to be exhaustive but is intended to include the
material factors considered. In view of the wide variety of factors considered,
the Faircom Board did not find it practical to, and did not, quantify or
otherwise assign relative weight to the specific factors considered, and
individual directors may have given differing weights to different factors.
After taking into consideration all of the factors set forth above,
together with an analysis of the presentations of management, HSMC and legal
counsel, the Faircom Board unanimously approved the Merger. ACCORDINGLY, THE
FAIRCOM BOARD UNANIMOUSLY RECOMMENDS THAT FAIRCOM'S STOCKHOLDERS VOTE FOR
APPROVAL OF THE MERGER AGREEMENT.
REASONS OF REGENT FOR ENGAGING IN THE MERGER
The management of Regent believes the Faircom stations fit well within
Regent's operational and acquisition strategies. The stations are cash flowing
properties located in medium-sized markets which meet the criteria of Regent's
targeted markets, provide Regent with geographic diversity, and have good
potential for growth. The stations hold good competitive positions in their
markets with well-established formats, strong historical revenues, and positive
cash flows, which Regent expects will be factors attractive to broadcast lenders
and equity investors. The Merger also brings with it Faircom's management team
and the stations' technical
34
<PAGE> 40
facilities, which Regent believes can be utilized effectively to establish a
sound structure for Regent's plans for future growth.
OPINION OF FINANCIAL ADVISOR TO FAIRCOM
HSMC has delivered its written opinion dated December 4, 1997, as
supplemented by its opinion dated March 25, 1998, to the Faircom Board to the
effect that, as of such dates, the consideration to be received by the holders
of the Faircom Common Stock pursuant to the Merger Agreement is fair, from a
financial point of view, to such holders. Copies of the opinions of HSMC are
attached hereto as Appendices D-1 and D-2 and incorporated herein by reference.
Stockholders of Faircom are urged to read the opinions in their entirety for
assumptions made, matters considered and limits of the review of HSMC. The
summary of the opinions of HSMC set forth in this Proxy Statement/Prospectus is
qualified in its entirety by reference to the full text of such opinions. The
HSMC opinions are addressed only to the Faircom Board, do not address the
relative merits of the Merger and other transactions or business strategies, if
any, that may have been discussed by the Faircom Board as alternatives to the
Merger or the decision of the Faircom Board to proceed with the Merger, and do
not constitute a recommendation to any stockholder as to how such stockholder
should vote at the Special Meeting.
In connection with the preparation of its opinions, HSMC, among other
things: (i) reviewed Faircom's annual reports on Form 10-K and related financial
information for the three fiscal years ended December 31, 1996 and Faircom's
Form 10-Q for the first three quarters of 1997; (ii) conducted discussions with
Faircom management concerning the company's business and prospects for each of
Faircom's stations; (iii) conducted discussions with the senior management of
Regent concerning certain strategic, financial and operational issues relating
to the combination of the Regent and Faircom stations; (iv) reviewed the terms
and conditions of the proposed Merger as set forth in the Plan of Acquisition
and Capitalization dated December, 1997 prepared by Crisler (the "Acquisition
and Capitalization Plan"), with particular attention to the value of the
contribution of each of the Merger participants relative to the consideration
each is proposed to receive under the terms of the Merger Agreement; (v)
compared the financial terms of the Merger with the financial terms of certain
other business combinations which HSMC deemed relevant; (vi) visited and
inspected the radio stations owned by Faircom in Michigan and Ohio (including
the Shelby Station), reviewing their current operations with Faircom's local
management to determine current business activity and future prospects
(including a review of local competition, projections for local radio
advertising expenditures, and anticipated future financial performance for the
stations in 1998 and beyond); (vii) visited and inspected each of the Park Lane
Stations (including extensive meetings with Regent's local station managers to
assess current and future business prospects in a manner identical to that done
with the stations owned by Faircom); (viii) inspected the studios and the
offices of the radio stations Regent is proposing to acquire in Bullhead City,
Arizona, and Apple Valley, Lucerne Valley and Victorville, California; (ix)
reviewed audited and unaudited financial operating information for the full
years 1995 and 1996, as well as interim operating statements for the first nine
months of 1997 and operating budgets for the last three months of 1997, for each
of Faircom's stations and each of the Park Lane Stations; (x) created financial
operating models for each of the station groups in the nine radio markets where
Regent and Faircom stations then operated, calculating the current fair market
value of the operating assets of each station combination using the discounted
cash flow valuation method; (xi) compared the computed fair market values of the
assets contributed by Faircom and Regent, with allowances for existing
liabilities of Faircom and proposed liabilities of Regent as outlined in the
Acquisition and Capitalization Plan, and compared the consideration to be
received by each of the participants in accordance with such plan; and (xii)
reviewed such other financial studies and analyses and performed such other
investigations and took into account such other matters as HSMC deemed
necessary, including its assessments of likely changes in regulatory, general
economic and monetary conditions.
EXPLANATION OF METHODOLOGY FOR FAIRNESS OPINION
Estimation of Future Market Revenues. In four of the Faircom and Park Lane
markets, audits of market revenues are performed by the accounting firm of
Miller Kaplan & Arase. In these markets, historical audit data for 1996 and
partial year data (through the third quarter) for 1997 were used to estimate the
full year 1997. If available, HSMC used metro county retail sales growth
projections from Market Statistics, Inc. to establish the
35
<PAGE> 41
predicted growth rate for the market's radio revenues through 2001. HSMC also
used the same growth rate for the period from 2001 to 2007.
Estimation of Audience Shares and "Oversell Factor." As it is impossible
to estimate with any precision the future course for a given station's audience
levels, HSMC assumed that each station's share of the in-market audience will
remain at essentially the level it achieved during 1997. For purposes of this
analysis, HSMC considered multiple properties operating in the same market under
Regent's control to be a single station. From projected station and market
revenues for 1997, it is possible to calculate the relationship between the
station's share of the market's revenues and the station's share of the overall
audience accounted for by all stations operating within the market. The
station's "oversell factor," which is often called the "power ratio" by radio
station operators and industry analysts, is derived by dividing the share of
revenues by the share of audience.
Estimation of Station Revenues. Actual financial performance for the
period January through September 1997 (the latest available at the time of the
valuation of the properties) was combined with station budgets for the remaining
three months of the year to create the best available estimate of 1997 full-year
results for each station combination in the seven Park Lane and two Faircom
markets. The station's predicted share of the revenues in the radio market is
derived by multiplying the predicted audience share for each station by the
"oversell factor." These revenue share projections, multiplied by the predicted
market revenues for each year yield an estimate of the station's revenues for
each year in the projection series.
In cases where neither ratings information nor audited market revenues
exist, HSMC forecast station revenues by applying a constant annual growth rate
to the station's 1997 revenue level. The growth rate used in each case is
representative of the annual rate predicted from 1996 to 2001 by Market
Statistics, Inc. for the major counties in the market served by the station.
Estimation of Operating Expenses. As with revenues, actual results for the
first nine months of 1997 have been combined with station budgets for the
balance of the year to produce an estimate for 1997. Each of the major
categories of expense is forecast separately. Sales expense is determined
largely by sales commission rates and tends to be a relatively stable percentage
of annual revenues for each station, although such percentage varies somewhat
from station to station. Using the 1997 projected results, HSMC calculated that
sales expense percentage and held it constant throughout the projection series.
Other expense categories tend to grow by a relatively constant amount each year
and HSMC projected them forward from 1997 at constant annual rates which are
consistent with both the growth rate of the market and the past history of the
subject station. In general, programming and general and administrative expenses
tend to grow at rates close to that of market revenues while technical expenses,
of which utility costs are a major component, tend to grow more slowly.
Calculation of Projected Broadcast Cash Flow. The subtraction of total
expenses from revenues yields an estimate of the operating cash flow of the
Regent properties in each radio market. HSMC then calculated for each year the
station's operating margin, which was then reviewed for reasonableness based on
HSMC's experience with stations of similar size and type.
Calculation of Fair Market Value. In the broadcast industry, stations are
valued by appraisers using the "discounted cash flow method." This process
utilizes a ten-year series of cash flow estimates generated by the appraiser in
a manner which is similar to that described above. The "fair market value" is
the present value to a prospective buyer of cash flows received from its
operation in each of the ten years of the analysis period and the present value
of the most likely sale price of the property at the end of the analysis period.
HSMC has concluded that a discount rate of 16% most closely approximates the
threshold pretax rate of return required by acquirers of broadcast properties.
Thus, the annual cash flows of each station are discounted to a present
value using a 16% discount rate. These present values are then accumulated and
added to the present value of HSMC's best estimate of each station's fair market
value as of the end of the analysis period (2007). HSMC's estimate of this
"terminal value" is derived by multiplying the station's cash flow in 2007 by a
multiple of 10, which HSMC believes to be most representative of what the
average property of similar type would be valued under normal market conditions.
Using the discounted cash flow valuation method, the sum of the present values
of each year's cash flow and the present value of the terminal value represents
the station's fair market value at the present time.
36
<PAGE> 42
Fairness Analysis. Although Regent is not publicly traded and has a
limited operating history, it will be the surviving company following
consummation of the Merger. Regent will acquire the assets of the Park Lane
Group (including its net operating loss ("NOL") immediately prior to the Merger
with Faircom. Faircom's stockholders will receive Series C Preferred Stock of
Regent in return for their shares of Faircom Common Stock. Thus, Regent will
acquire the Faircom stations, Faircom's NOL and working capital, as well as most
of Faircom's liabilities.
Certain members of Regent's management currently own shares of Regent
Common Stock and Preferred Stock for which they paid cash. In addition, certain
institutional investors providing capital for the Merger and the Pending
Transactions will also receive Regent Preferred Stock upon consummation of the
Merger.
To determine the fairness of the consideration to be paid to the Faircom
stockholders in the Merger, HSMC compared the relative contribution of each of
the parties to the Merger with such party's relative share of the fully diluted
common stock equivalent the parties will receive in the Merger. Using the fair
market values of the Park Lane and Faircom Stations (as described above) and
valuations of other assets and liabilities contributed to the Merger, HSMC first
calculated each party's contribution relative to the aggregate contribution made
by all of the parties. Similarly, HSMC calculated each party's relative share of
equity ownership they will receive as a result of the merger. HSMC then divided
each party's relative share of proceeds received (expressed as a percentage) by
such party's relative share of contribution made (expressed as a percentage) and
converted the resulting number to an index (based on 100). Using this
convention, an index greater than 100 means that a party to a merger is
receiving a greater share of the ownership of the surviving company than its
contribution of assets in such merger. HSMC has determined that the index for
the Faircom stockholders is larger than 100 and larger than the ratio for the
other Merger participants and, thus, has concluded that the consideration to be
paid to the Faircom stockholders in the Merger is fair to the Faircom
stockholders, from a financial point of view.
In preparing its opinions, HSMC relied on the accuracy and completeness of
all information that was available to it, including that supplied to it by
Regent, Faircom and the radio stations involved in the Merger. HSMC assumed no
responsibility for the independent verification of such information.
Where HSMC used projections, estimates or budgets not prepared by it, HSMC
assumed that they had been reasonably prepared to reflect the best available
estimates of the future performance of the subject stations. HSMC did not
undertake an independent verification of the outstanding indebtedness of
Faircom, Regent or any of the individual companies that currently own the
stations proposed to be acquired by Regent. HSMC assumed that (i) all material
assets and liabilities of Faircom and Regent are as set forth in their
respective financial statements, and (ii) the Merger will qualify as a
reorganization under the Internal Revenue Code with respect to the stockholders
of Faircom. HSMC's opinions indicate that they are based upon regulatory,
economic and monetary conditions existing as of the dates of its opinions. HSMC
expressed no opinion as to the price or trading ranges at which Regent's Series
C Convertible Preferred Stock (or the Regent Common Stock into which the Series
C Preferred Stock is convertible) will trade after the effective date of the
Merger.
In arriving at its opinions, HSMC was not requested to solicit, and did not
solicit, third party indications of interest in acquiring all or any portion of
the stock or assets of Faircom.
While the foregoing summary describes certain analyses and factors that
HSMC deemed material in its presentation to the Faircom Board, it is not a
comprehensive description of all analyses and factors considered by HSMC. The
preparation of a fairness opinion is a complex process that involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, such opinion is not readily susceptible to summary description.
HSMC believes that its analyses must be considered as a whole and that selecting
portions of its analyses and of the factors considered by it, without
considering all analyses and factors would create an incomplete view of the
evaluation process underlying the HSMC fairness opinions. Several analytical
methodologies were considered and elements of such alternative methodologies had
an effect on the implementation of the valuation method selected, as well as on
the overall conclusion reached by HSMC. Each analytical technique has inherent
strengths and weaknesses, and the nature of the available information may
further affect the value of particular techniques. The conclusion reached by
HSMC is based on all analyses and factors taken as a whole and also on
application of HSMC's own experience and judgment. Such conclusion may involve
significant elements of subjective judgment and
37
<PAGE> 43
qualitative analysis. HSMC therefore gives no opinion as to the value or merit
standing alone of any one or more parts of the analysis it performed. In
performing its analyses, HSMC considered general economic, market and financial
conditions. The analyses performed by HSMC are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than those suggested by such analyses. Accordingly, analyses relating
to the value of a business do not purport to be appraisals or to reflect the
prices at which the business actually may be purchased. Furthermore, no opinion
is being expressed as to the prices at which shares of Regent Series C Preferred
Stock or Common Stock may trade at any future time.
HSMC's opinions were prepared at the request and for the use of the Faircom
Board and may not be reproduced, summarized, described, referred to or given to
any other person or otherwise be made public without the prior written consent
of HSMC (other than to reproduce such opinions in full in this Proxy
Statement/Prospectus).
HSMC received a flat fee in the amount of $75,000 at the time of the
delivery of its original fairness opinion and was reimbursed for its
out-of-pocket expenses. In consideration of the additional analysis undertaken
by HSMC as set forth in its supplemental opinion to Faircom dated March 25,
1998, HSMC is entitled to receive a flat fee in the amount of $7,000 and
reimbursement for its travel expenses incurred in connection with its site
visits to the Apple Valley and Lucerne Valley, California stations. These fees
and reimbursements are in no way dependent upon the results of HSMC's analyses
or conclusions or upon the consummation of the Merger.
Subsequent to the issuance by HSMC of its opinions to the Faircom Board,
with the consent of Faircom, Regent engaged the services of HSMC to provide an
appraisal of Regent upon which could be based a purchase price value for
accounting purposes. Regent believes HSMC was the logical choice to provide such
valuation given the groundwork and analysis previously undertaken by HSMC in
connection with preparing its opinion for the Faircom Board.
INTERESTS OF CERTAIN PERSONS IN THE MERGER; CERTAIN RELATIONSHIPS
The Faircom Subordinated Noteholders currently hold in the aggregate
$11,100,000 in original principal amount of Class A, Class B and Class C Faircom
Subordinated Notes, of which $8,750,000 in original principal amount is held by
Blue Chip, $1,350,000 in original principal amount is held by Miami Valley and
$1,000,000 in original principal amount is held by PNC, Trustee pursuant to an
assignment from Blue Chip and Miami Valley. Under terms of the Securities
Purchase Agreement applicable to the Class A and Class B Faircom Subordinated
Notes, as amended, the Faircom Subordinated Noteholders have the contractual
right to require the liquidation of Faircom and each of its subsidiaries if
Faircom does not consummate a merger of Faircom with another corporation on or
before April 1, 1999. The Faircom Subordinated Noteholders will not be voting on
the proposed resolution to approve the Merger with Regent but have consented to
it and expressed in writing their intent to convert all $10,000,000 of Class A
and Class B Faircom Subordinated Notes into Faircom Common Stock immediately
prior to the Closing Date. If the Merger is not approved by the Faircom
stockholders, unless a merger of Faircom with another corporation is consummated
by April 1, 1999 the Faircom Subordinated Noteholders may require the assets of
Faircom be sold and Faircom liquidated.
Blue Chip and Miami Valley are venture capital funds managed by Blue Chip
Venture Company, Ltd. and one of its affiliates. Mr. John H. Wyant is a
principal in and a manager of Blue Chip Venture Company, Ltd. and such
affiliate. An affiliate fund of Blue Chip Venture Company, Ltd. previously
invested funds managed by it in Regent I, a radio broadcasting company formerly
operated by Messrs. Jacobs and Stakelin. As a member of the Faircom Board, Mr.
Wyant has voted in favor of the Merger, and under the terms of the Merger
Agreement, upon consummation of the Merger, Mr. Wyant will become a member of
the Board of Directors of Regent.
In January 1998, Blue Chip made a loan to Faircom of $1,100,000 to finance,
in part, the purchase of the Shelby Station, and in connection with that loan,
Faircom issued to Blue Chip a Class C Subordinated Note. The Class C
Subordinated Note bears interest at a rate of 14% per annum, payable at
maturity, and becomes due and payable on the earlier of the Closing of the
Merger and April 1, 1999.
The Merger Agreement provides the Faircom Subordinated Noteholders with
certain demand and piggyback registration rights with respect to registration
for sale under the Securities Act of the shares of Regent Common
38
<PAGE> 44
Stock into which their shares of Series C Preferred Stock are then convertible.
The holders of Regent's Series A, Series B and Series D Preferred Stock also
have certain registration rights with respect to their shares. See "The Merger
Agreement -- Registration Rights." Registration rights will also be granted to
holders of Regent's Series F Preferred Stock and detachable warrants issued in
conjunction with the sale thereof, as well as to GE Capital in respect of
warrants it would receive upon issuance of the Series F Preferred Stock.
Registration rights are not being granted in connection with the Merger to any
Faircom securityholder other than the Faircom Subordinated Noteholders.
Pursuant to the Redemption and Warrant Agreement, at such time as Regent
has raised additional equity capital of at least $1,500,000, Blue Chip and Miami
Valley may require Regent to repurchase up to $1,500,000 of the Series C
Preferred Stock issued to Blue Chip and Miami Valley upon consummation of the
Merger in exchange for their Faircom Common Stock, at its stated value of $5.00
per share plus the amount of any accrued and unpaid dividends on such Series C
Preferred Stock being repurchased. Until such additional equity has been raised,
Blue Chip and Miami Valley will be issued each month five-year warrants to
acquire an aggregate of 375 shares of the Series C Preferred Stock at a price of
$1.00 per share. See "The Merger Agreement -- Consideration to be Paid for
Faircom Stock." These redemption and warrant rights are not being granted to any
Faircom securityholder other than Blue Chip and Miami Valley. If, however,
Waller-Sutton makes its equity investment in Regent in accordance with the terms
of the Waller-Sutton Commitment, part of Waller-Sutton's investment will include
the purchase from Blue Chip and Miami Valley of $1,500,000 of the Faircom
Subordinated Notes. In this event, the put and warrant rights associated with
this portion of the Faircom Subordinated Notes would not be transferred to
Waller-Sutton, and, instead, would terminate by their terms. See "Information
Concerning Regent -- Recent and Pending Transactions."
Concurrently with its approval of the $10,000,000 investment in Faircom of
Blue Chip and Miami Valley, the Faircom Board authorized the issuance to Joel M.
Fairman and John E. Risher, President and Senior Vice President of Faircom,
respectively, of stock options entitling Mr. Faircom to purchase up to 958,886
shares, and entitling Mr. Risher to purchase up to 159,814 shares, of Faircom
Common Stock, or such greater number of shares as may be necessary for them to
maintain their then existing percentage ownership interest in Faircom. These
options are in the nature of preemptive rights inasmuch as (a) they are
exercisable only if the Faircom Subordinated Notes are converted to Faircom
Common Stock, and (b) they enable Messrs. Fairman and Risher to acquire
additional Faircom Common Stock at the same price per share at which the Faircom
Subordinated Noteholders could acquire Faircom Common Stock by conversion of the
Faircom Subordinated Notes. The number of shares of Faircom Common Stock Messrs.
Fairman and Risher may purchase, and the exercise price of these options, are
dependent upon the amount of the Faircom Subordinated Notes that is converted to
Faircom Common Stock. If the full amount of the $10,000,000 of Class A and Class
B Faircom Subordinated Notes is converted to Faircom Common Stock, then Messrs.
Fairman and Risher will be entitled to purchase the full number of 1,118,700
shares at a purchase price per share of approximately $.53 per share. As a
result, these options would allow Messrs. Fairman and Risher the right to
preserve their percentage stock ownership position in Faircom and to realize a
gain in value on those option shares as a result of conversion of the Class A
and Class B Faircom Subordinated Notes in connection with the Merger.
It is contemplated that the employees of Faircom generally will continue to
be employed by the Surviving Corporation following the Merger, including
specifically Messrs. Fairman and Risher. Mr. Fairman's continued employment will
be governed by a two-year employment agreement followed by a one-year consulting
agreement, providing annual compensation of $190,000, discretionary annual
bonuses, discretionary stock option awards, ownership of a term life insurance
policy paid for by Regent, an automobile allowance and certain other benefits.
See "Information Concerning Regent -- Compensation of Executive Officers." The
Merger Agreement also provides for the appointment of Mr. Fairman to the Board
of Directors of Regent as Vice-Chairman upon effectiveness of the Merger.
Terry S. Jacobs, Regent's Chairman and Chief Executive Officer, and William
L. Stakelin, Regent's President and Chief Operating Officer, have signed
employment agreements which provide for the issuance to each of them under
Regent's 1998 Management Stock Option Plan of incentive and non-qualified stock
options to purchase during a ten-year period following the date of grant (or
such shorter period as may be required to preserve the nature of the options as
incentive stock options), at an exercise price determined by the Board of
39
<PAGE> 45
Directors of Regent (but not less than the greater of the fair market value per
share of the Regent Common Stock on the date of grant and $5.00 per share), that
number of shares of the common stock of Regent which constitutes 5.5% of
Regent's capital stock outstanding from time to time, on a fully-diluted, as
converted, basis; provided, however, that such number shall not exceed 733,333
without further approval of the Board of Directors (and Waller-Sutton if the
Series F Preferred Stock is issued). The initial grant of these options is to be
made upon effectiveness of the Merger, at which time it is estimated that
options to purchase approximately 616,400 shares of Regent Common Stock will be
granted to each of Mr. Jacobs and Mr. Stakelin at an exercise price of $5.00 per
share, assuming all of the Pending Transactions and the issuance of at least
$10,000,000 of the Series F Preferred Stock are completed concurrently with the
Merger. See "Information Concerning Regent -- Compensation of Executive
Officers."
In order to induce River Cities, as a holder of Regent's Series A Preferred
Stock, to approve the Merger, Regent agreed to issue to River Cities, upon
consummation of the Merger, five-year warrants to purchase 80,000 shares of
Regent Common Stock at an exercise price of $5.00 per share. R. Glen Mayfield, a
member of Regent's Board of Directors, serves as the general partner of River
Cities Management Limited Partnership, which is the general partner of River
Cities.
In order to induce GE Capital, as a holder of Regent's Series B Preferred
Stock, to approve the addition of mandatory conversion rights to the terms of
the Series B Preferred Stock in conjunction with issuance of the Series F
Preferred Stock, Regent has agreed to issue to GE Capital, upon issuance of the
Series F Preferred Stock, five-year warrants to purchase 50,000 shares of Regent
Common Stock at an exercise price of $5.00 per share. It is contemplated that
the terms of these warrants will be substantially the same as those which are to
be issued to River Cities upon consummation of the Merger.
The Waller-Sutton Commitment provides for the investment by Waller-Sutton,
subject to negotiation of definitive agreements and the satisfaction of certain
conditions, of at least $11,500,000 in convertible preferred stock of Regent.
This investment would consist of the purchase from Regent of $10,000,000 of its
Series F Preferred Stock and the acquisition from Blue Chip and Miami Valley of
$1,500,000 in principal amount of Class A and Class B Faircom Subordinated Notes
that would be converted to Faircom Common Stock and exchanged for Series C
Preferred Stock in the Merger. Waller-Sutton would receive as part of this
investment warrants to purchase 820,000 shares of Regent Common Stock at an
exercise price of $5.00 per share. Waller-Sutton has reserved the right to
assign up to $3,500,000 of its investment commitment and an unspecified portion
of its warrant rights to partners or affiliates of Waller-Sutton and/or other
purchasers of Series F Preferred Stock and to so reduce its investment
commitment in respect of the first $3,500,000 of Series F Preferred Stock
purchased by others. One of the conditions precedent to Waller-Sutton's
investment in Regent is the consummation of the Merger. Upon making its
investment in Regent's Series F Preferred Stock, Waller-Sutton will have the
right to elect two members to Regent's Board of Directors, who will initially be
Messrs. William H. Ingram and Richard H. Patterson. See "Information Concerning
Regent--Recent and Pending Transactions."
The Waller-Sutton Commitment provides that the terms of the Series F
Preferred Stock to be acquired by it will include the right of the holders to
require Regent to repurchase the Series F Preferred Stock at any time after five
years at a price equal to the greater of its fair market value or the sum of its
stated value of $5.00 per share and all accrued but unpaid dividends thereon (as
well as any warrants held by such holders at a price equal to the fair market
value of the Regent Common Stock less the warrant exercise price). Holders of
Regent's Series A, Series B and Series D Preferred Stock would have similar
"put" rights exercisable, however, only if the holders of the Series F Preferred
Stock were to exercise their "put" rights. The Series C and Series E Preferred
Stock will not have these tag-along "put" rights. Such rights could jeopardize
qualification of the transactions in which they are being issued as
reorganizations within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended. See "Risk Factors -- Redemption Rights of Series F
Preferred Stock" and "Information Concerning Regent -- Recent and Pending
Transactions."
40
<PAGE> 46
REGULATORY APPROVALS
Consummation of the Merger and the resulting transfers of control are
subject to the prior approval of the FCC. On February 2, 1998, Regent and
Faircom obtained a final order of the FCC approving the transfers of control
which will result from the Merger.
Issuance of the Series C Preferred Stock in connection with the Merger is
subject to registration under the Securities Act and qualification or exemption
under applicable state securities laws.
CERTAIN FEDERAL SECURITIES LAW CONSEQUENCES
All shares of the Series C Preferred Stock received by Faircom's
stockholders in the Merger will be freely transferable, except that shares of
the Series C Preferred Stock received by "affiliates" of Faircom may be resold
by them only in transactions permitted by the resale provisions of Rule 145
promulgated under the Securities Act (or Rule 144 in the case of such persons
who become "affiliates" of Regent), or as otherwise permitted under the
Securities Act. Persons who may be deemed to be "affiliates" of Faircom
generally include individuals or entities that control, are controlled by, or
are under common control with, Faircom and may include certain officers and
directors of Faircom as well as principal stockholders of Faircom. The Merger
Agreement requires Faircom to use its reasonable best efforts to cause each of
its "affiliates" to execute a written agreement to the effect that such
"affiliate" will not sell, pledge, transfer or otherwise dispose of any shares
of the Series C Preferred Stock issued to such "affiliate" pursuant to the
Merger, except pursuant to an effective registration statement or in compliance
with Rule 145 or another exemption from the registration requirements of the
Securities Act.
The Merger Agreement provides the Faircom Subordinated Noteholders with
certain demand and piggyback registration rights with respect to registration
for sale under the Securities Act of the shares of Regent Common Stock into
which their shares of Series C Preferred Stock are then convertible. The holders
of Regent's Series A, Series B, Series D and Series F Preferred Stock and
certain warrantholders will also have certain registration rights with respect
to their shares. Registration rights are not being granted in connection with
the Merger to any Faircom securityholder other than the Faircom Subordinated
Noteholders and their assignees.
41
<PAGE> 47
THE MERGER AGREEMENT
The following is a brief summary of the material provisions of the Merger
Agreement, a copy of which is attached as Appendix A to this Proxy
Statement/Prospectus and is incorporated herein by reference. The summary is
qualified in its entirety by reference to the Merger Agreement. Unless otherwise
stated, capitalized terms have the same meaning as in the Merger Agreement. All
stockholders are urged to read the Merger Agreement in its entirety.
THE MERGER
General. The Merger Agreement provides that, subject to satisfaction of
the terms and conditions contained in the Merger Agreement, including without
limitation approval of the Merger Agreement by the stockholders of Faircom and
the consent of the FCC to all transfers of control as a result of the Merger,
Faircom will be merged with and into Merger Subsidiary, with Merger Subsidiary
continuing as the Surviving Corporation, effective upon the due and proper
filing by the Surviving Corporation of a Certificate of Merger with the Delaware
Secretary of State ("Effectiveness").
The Merger Agreement provides that, at the Closing, Regent will deliver to
The Fifth Third Bank (the "Trustee") the number of shares of Series C Preferred
Stock as calculated below, and cash in respect of fractional shares. The Trustee
will be responsible for distributing the Series C Preferred Stock and cash in
respect of fractional shares to the stockholders of Faircom in accordance with
the terms of the Merger Agreement.
Allocation and Distribution of Consideration Among Faircom
Stockholders. Each stockholder of Faircom will be allocated an amount equal to
the product of the Consideration Per Share Before Appraisal Rights times the
number of shares of Faircom Stock held by such stockholder immediately prior to
the Closing. The amount determined as provided above to be allocable to each
Faircom stockholder, as a percentage of the total amount allocable to all
Faircom stockholders, is referred to as that person's "Pro-Rata Percentage
Interest."
The Pro-Rata Percentage Interest of each Faircom stockholder (other than
dissenting stockholders) will be distributed as follows: each such stockholder
will receive as soon as practicable after the Closing (A) the number of shares
of the Series C Preferred Stock (or, if the stockholder is a resident or
otherwise located in a state in which the issuance of the shares of the Series C
Preferred Stock is prohibited or conditioned upon terms unacceptable to Regent
under the securities laws of such state, then the cash paid in lieu of such
shares of the Series C Preferred Stock) equal to the product of the total number
of shares of Series C Preferred Stock to be issued in the Merger multiplied by
such stockholder's Pro-Rata Percentage Interest; and (B) cash as payment for any
fractional shares of the Series C Preferred Stock.
Consideration to be Paid for Faircom Stock. The number of shares of Series
C Preferred Stock to be issued in the Merger and issuable pursuant to Regent
Options to be received in exchange for Faircom Options in the Merger will be
based upon a price of $33,162,000 (a) adjusted by the amount of Faircom's net
working capital and (b) decreased by the outstanding principal amount of and
accrued interest on Faircom's senior debt and by one-half of the prepayment
premium required to be paid upon payment of Faircom's senior debt at Closing.
The foregoing amount, as so adjusted, is referred to as the "Consideration After
Adjustments." This would have resulted in the issuance of approximately
4,114,350 shares of Series C Preferred Stock and Regent Options (representing
approximately 40.8% of the outstanding capital stock of Regent on a fully
diluted, as converted, basis) based on an adjusted price of approximately
$20,571,750, derived from the financial statements of Faircom as of December 31,
1997, adjusted to reflect the acquisition by Faircom of the Shelby Station in
January 1998 and Faircom's share of debt prepayment premiums and brokerage
commissions related to the Merger, and assuming (i) no other changes to the
amount of Faircom's net working capital and indebtedness as of the Compilation
Date; (ii) the conversion in full of the Class A and Class B Faircom
Subordinated Notes prior to effectiveness of the Merger; (iii) the exercise,
prior to effectiveness of the Merger, of all outstanding Faircom Options and all
options and warrants for the acquisition of Regent capital stock that are either
outstanding or to be issued pursuant to existing agreements and commitments
(other than options or warrants that are not exercisable prior to or within 60
days following effectiveness of the Merger); and (iv) the issuance of additional
shares of the respective series of Regent's Preferred Stock pursuant to existing
agreements and commitments. The adjusted price and the actual number of shares
of the Series C Preferred Stock to be issued in exchange for each share of
Faircom Common
42
<PAGE> 48
Stock and pursuant to the exercise of Regent Options issued in exchange for
Faircom Options in the Merger will vary from the above estimates to the extent
Faircom's net working capital and indebtedness as of the Compilation Date differ
from that at December 31, 1997, adjusted as set forth above.
As soon as practicable, but no later than 10 days following the last to
occur of the following, (A) the Registration Statement is declared effective;
(B) a final order has been obtained from the FCC; and (C) the Faircom
stockholders have approved the Merger, a worksheet ("Closing Worksheet") will be
prepared by Faircom setting forth as of the Compilation Date the amount of
Faircom's net working capital.
As used in the Merger Agreement, "Net Working Capital" means current assets
of Faircom (defined as 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 asset properly classified as
current) minus current liabilities. As used in the Merger Agreement, the term
"current liabilities" means the amount of all the liabilities of Faircom at the
Compilation Date that should be classified as such on a balance sheet or
disclosed in the notes to the financial statements as of that date prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with those followed in the preparation of Faircom's financial
statements and includes (i) accounts payable, (ii) all indebtedness (other than
Faircom's senior debt and the Class A and Class B Faircom Subordinated Notes,
but including the Class C Faircom Subordinated Notes), (iii) any unpaid bonuses,
severance or vacation pay accrued to employees for the period ending on the day
prior to the Compilation Date, and (iv) trade and barter obligations not offset
by corresponding amounts of trade and barter receivables.
If Regent and/or its representatives object to Faircom's computation of Net
Working Capital, Regent and Faircom have agreed to use their best efforts to
resolve such objections through negotiation as expeditiously as possible and,
absent such resolution, to designate a mutually agreeable independent national
accounting firm to act as an arbitrator ("Arbitrator"). The Arbitrator will
determine all issues in disagreement and make any further adjustments required
to the Consideration After Adjustments ("Final Consideration"), which will be
final, conclusive and binding upon all parties to the Merger Agreement. The fees
and expenses of Regent's accountants, if any, and the Arbitrator will be paid
one-half by Regent and one-half by Faircom (as a reduction in Net Working
Capital at Closing).
The number of shares of the Series C Preferred Stock available for
distribution to the Faircom stockholders will be computed by dividing the Final
Consideration by $5.00 (the "Initial Number") less the number derived by
multiplying the Initial Number by a fraction, the numerator of which is the
number of shares of Faircom Common Stock issuable pursuant to options
outstanding and not exercised on the Closing Date (the "Option Shares") and the
denominator of which is the number of shares of Faircom Common Stock outstanding
on the Closing Date (including shares issued on conversion of the Class A and
Class B Faircom Subordinated Notes on or before the Closing Date) plus the
Option Shares. The Merger Agreement does not specify a maximum or minimum number
of shares of Series C Preferred Stock to be issued in the Merger, and the exact
number of shares to be issued in the Merger will not be able to be determined
until the Compilation Date.
The number of shares of Series C Preferred Stock to be issued to the
Faircom stockholders in the Merger will be affected by the following: Blue Chip
and Miami Valley will have the right, at Closing, to require the repayment in
cash by Regent of up to $2,500,000 principal amount of the Class A and Class B
Faircom Subordinated Notes in the aggregate (the "Optional Faircom Subordinated
Notes") or to convert all or any portion of the principal amount of the Optional
Faircom Subordinated Notes into Faircom Common Stock. Although holders of the
Faircom Subordinated Notes have indicated in writing their intention to convert
all of the Class A and Class B Faircom Subordinated Notes into Faircom Common
Stock, if any portion of the Optional Faircom Subordinated Notes were not so
converted at Closing, then the number of shares of Series C Preferred Stock to
be issued in the Merger would be reduced to the extent of one share of the
Series C Preferred Stock per $5.00 so repaid by Regent. All accrued interest on
the Faircom Subordinated Notes will be treated as a current liability of Faircom
at Closing (so as to reduce Net Working Capital) and paid in cash to the holders
of such Notes at Closing. Of the shares of the Series C Preferred Stock issued
as a result of the conversion of Faircom Subordinated Notes into Faircom Common
Stock (other than the Optional Faircom Subordinated Notes), 300,000 of such
shares of Series C Preferred Stock (having a liquidation value of $5.00 per
share) will be subject to the right of Blue Chip and Miami Valley to put such
shares to Regent for redemption in accordance with the terms of
43
<PAGE> 49
the Redemption and Warrant Agreement. A copy of the Redemption and Warrant
Agreement is attached as Exhibit 13(b)(3) to the Merger Agreement, attached
hereto as Appendix A. Pursuant to the terms of the Redemption and Warrant
Agreement, such right may be exercised by Blue Chip and Miami Valley during the
60-day period after receipt by such parties of notice from Regent that Regent
has raised additional equity after the Merger of at least $1,500,000. On the
last day of each month after the Closing of the Merger until Regent provides
such notice, Regent is required to deliver to Blue Chip and Miami Valley
five-year warrants to purchase an aggregate of 375 shares of Series C Preferred
Stock at an exercise price of $1.00 per share. If, however, Waller-Sutton makes
its equity investment in Regent in accordance with the terms of the
Waller-Sutton Commitment, part of Waller-Sutton's investment will include the
purchase from Blue Chip and Miami Valley of a total of $1,500,000 of the Class A
and Class B Faircom Subordinated Notes. In this event, the put and warrant
rights associated with the Class A and Class B Faircom Subordinated Notes would
not be transferred to Waller-Sutton, and, instead, would terminate by their
terms. See "Information Concerning Regent -- Recent and Pending Transactions."
Effectiveness. Effectiveness of the Merger is expected to occur as soon as
practicable after the approval of the Faircom stockholders has been obtained.
Exchange of Faircom Common Stock. At Effectiveness, based upon the number
of shares of Faircom Common Stock currently outstanding and issuable pursuant to
outstanding Faircom Options, and assuming conversion in full of the Class A and
Class B Faircom Subordinated Notes, each share of Faircom Common Stock issued
and outstanding immediately prior to Effectiveness, other than shares owned or
held by dissenting stockholders, will, by virtue of the Merger and without any
action on the part of the holder thereof, automatically be converted into and
become exchangeable for approximately .145 of a share of Series C Preferred
Stock, on the basis of the financial statements of Faircom as of December 31,
1997, adjusted to reflect the acquisition by Faircom of the Shelby Station in
January 1998 and Faircom's share of debt prepayment premiums and brokerage
commissions related to the Merger, and assuming no other changes to the amount
of Faircom's net working capital and indebtedness as of the Compilation Date.
Each share of Faircom Common Stock held in Faircom's treasury immediately prior
to Effectiveness will, by virtue of the Merger, cease to be outstanding, will be
canceled and retired without payment of any consideration therefor and will
cease to exist. The holders of shares of Faircom Common Stock outstanding
immediately prior to the consummation of the Merger will own 100% of the
outstanding shares of the Series C Preferred Stock immediately following
consummation of the Merger.
No Fractional Shares. No fractional shares of the Series C Preferred Stock
will be issued in the Merger. In the event any holder of Faircom Common Stock is
allocated an interest in a fractional share of the Series C Preferred Stock,
said fractional amount will be rounded down to the nearest whole share and the
stockholder will be paid in cash, without interest, an amount equal to the
product of the fraction multiplied by $5.00.
Treatment of Options. At Effectiveness, the holders of Faircom Options
will receive Regent Options as substitute stock options under the Regent
Communications, Inc. Faircom Conversion Stock Option Plan. Each Faircom Option
will be deemed to constitute an option to acquire the same number of shares of
the Series C Preferred Stock as the holder of such Faircom Option would have
been entitled to receive pursuant to the Merger had such holder exercised such
Faircom Option in full immediately prior to the consummation of the Merger. The
terms of the Regent Options will be the same as those of the existing Faircom
Options, and will run from the date of grant of the Faircom Options. The Regent
Options will be immediately exercisable at the same aggregate exercise price as
the Faircom Options surrendered in exchange therefor.
Merger Subsidiary Continues as a Wholly-Owned Subsidiary of Regent. At
Effectiveness, each share of common stock of Merger Subsidiary issued and
outstanding immediately prior to Effectiveness will be held by Regent. Each such
share will, by virtue of the Merger and without any action on the part of Merger
Subsidiary or Regent, be converted into the same number of shares of common
stock of the Surviving Corporation. At Effectiveness, the Surviving Corporation
will continue as a wholly-owned subsidiary of Regent.
Exchange of Share Certificates after Effectiveness. Promptly after
Effectiveness, the Trustee will mail to each record holder of Faircom Common
Stock (as of Effectiveness) a letter of transmittal to be used by each such
holder in forwarding such holder's certificates evidencing the shares of Faircom
Common Stock. Shares of Faircom Common Stock will be surrendered and exchanged
for certificates evidencing the shares of Series C
44
<PAGE> 50
Preferred Stock to which such holder has become entitled. Each holder of
certificates formerly representing shares of Faircom Common Stock shall, upon
surrender of such certificates to the Trustee together with such transmittal
form, be entitled to receive in exchange therefor certificates evidencing the
number of shares of Series C Preferred Stock to which such holder is entitled.
Such transmittal forms will be accompanied by instructions specifying other
details of the exchange. FAIRCOM'S STOCKHOLDERS SHOULD NOT SEND IN ANY SHARE
CERTIFICATES UNLESS AND UNTIL THEY RECEIVE A TRANSMITTAL FORM. After
Effectiveness, each certificate evidencing shares of Faircom Common Stock, until
so surrendered, will represent solely the right to receive the number of shares
of Series C Preferred Stock which the holder of such certificate is entitled to
receive.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties relating to, among other things, (a) each of Regent's and each of its
subsidiaries' (including Merger Subsidiary), and each of Faircom's and each of
its subsidiaries', organization and similar corporate matters; (b) each of
Regent's and Faircom's capital structure; (c) approval of the Merger Agreement
by the Board of Directors of each of Regent, Merger Subsidiary, and Faircom; (d)
authorization, execution, delivery, performance and enforceability of the Merger
Agreement and related matters; (e) the absence of conflicts under charters or
bylaws, or regulatory or governmental consents or approvals, and the absence of
violations of any agreements, obligations, instruments and laws; (f) pending or
threatened litigation; (g) the accuracy of information contained in documents
filed with the Commission by each of Regent and Faircom; (h) absence of certain
material events, changes or effects; (i) the accuracy of information supplied by
each of Regent, Merger Subsidiary and Faircom in connection with the
Registration Statement and this Proxy Statement/Prospectus; (j) taxes; (k)
retirement and other employee plans and matters relating to the Employee
Retirement Income Security Act of 1974, as amended; (l) title to and condition
of assets; (m) the absence of undisclosed material liabilities and certain
contracts; (n) compliance with environmental and other laws; (o) related party
transactions; (p) compliance with FCC regulations and other regulatory matters;
(q) insurance; and (r) personnel and compensation. In addition, the Merger
Agreement contains certain representations and warranties relating, in the case
of Regent, to the issuance and transferability of the Series C Preferred Stock.
CERTAIN COVENANTS
The Merger Agreement contains additional covenants and agreements, certain
of which are summarized below.
Conduct of Business. The Merger Agreement provides that, during the period
of time from the date of the Merger Agreement and Effectiveness, except as
permitted by the Merger Agreement, each of Regent and Faircom will conduct the
business and operations of its stations in good faith in substantially the same
manner as before the date of the Merger Agreement. Each of Regent and Faircom
will use its reasonable best efforts (based upon the exercise of reasonably
prudent business judgment) to maintain and preserve the present character of its
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. Without limiting the
generality of the foregoing, except for changes or actions relating to issuance
of the Series F Preferred Stock and the detachable warrants related thereto
pursuant to the Waller-Sutton Commitment or in the ordinary course of business
consistent with past practices, neither Regent nor Faircom shall, without the
prior written consent of the other: (a) increase the compensation payable or to
become payable to any of the employees of such entities except as otherwise
permitted by the Merger Agreement; (b) enter into any contract, lease or
commitment or engage in any transaction relating to any of its stations; (c)
cancel, modify, or amend in any material manner, or in any manner within its
reasonable control, impair any contracts, leases or other agreements relating to
its stations; (d) create any mortgage, pledge, lien or encumbrance affecting any
of its assets (except, in the case of Faircom, any which can be repaid
concurrently with the Closing by Faircom or Regent); (e) sell, assign, lease or
otherwise transfer or dispose of any of its assets; (f) consolidate with, merge
into, or acquire any other person or entity or permit any person to acquire,
merge into or consolidate with it (with the exception, in the case of Faircom,
of the acquisition
45
<PAGE> 51
of the Shelby Station, and except that, in the case of Regent, the consent of
either the president of Faircom or the general partner of Blue Chip will
constitute the consent of Faircom, and that the consent of Faircom will not be
required for certain transactions listed in the Merger Agreement); (g) declare,
make or incur any liability to make any dividends or other distributions on its
capital stock; (h) redeem or otherwise acquire any shares of its capital stock;
(i) issue or sell any shares of its capital stock, warrants, options or other
rights to acquire any shares of its capital stock (except, in the case of
Faircom, for shares issued pursuant to the exercise of options or the conversion
of the Faircom Subordinated Notes, and in the case of Regent, pursuant to the
conversion of the outstanding Preferred Stock and except for shares issued
pursuant to the exercise of options which may be granted to management up to but
not to exceed 15% of the outstanding shares of Regent's capital stock, assuming
conversion to Regent Common Stock of all outstanding shares of Series A, Series
B, Series C, Series D and Series E Preferred Stock, and any series of preferred
stock created after the date of the Merger Agreement on a fully diluted basis;
(j) amend its Certificate of Incorporation or bylaws; (k) borrow or incur any
indebtedness (except, in the case of Faircom, that which can be repaid by
Faircom or Regent concurrently with or prior to Closing).
Acquisition Proposals. Faircom has agreed that it will not, and will use
its reasonable best efforts not to permit, any of its directors, officers,
employees and agents or those of any of its subsidiaries to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing information) any proposal or offer, or any extension of interest by
any third party relating to Faircom's willingness or ability to receive or
discuss a proposal or offer, in each case prior to the Special Meeting, for a
merger, consolidation or other business combination involving, or any purchase
of, all or substantially all of the assets or more than 50% of the voting
securities of Faircom; provided that Faircom may engage in unsolicited
discussions or negotiations with, and furnish information concerning Faircom and
its business, property and assets to, any third party which makes any proposal
or offer as described above if the Faircom Board concludes in good faith and in
the exercise of its reasonable judgment after consultation with its outside
counsel that the failure to take such action would present a reasonable
probability of violating the obligations of such Board to Faircom's stockholders
under applicable law.
Conditions. The respective obligations of Regent and Merger Subsidiary, on
the one hand, and Faircom on the other hand, to effect the Merger are subject to
the following conditions, among others: (a) the representations and warranties
of the other party as set forth in the Merger Agreement or any other writing
delivered by the other party shall be true and correct in all material respects
as of the date of the Merger Agreement and as of and at the Closing Date as if
made on such Closing Date except for changes (i) expressly permitted or
contemplated by the terms of the Merger Agreement; or (ii) in the ordinary
course of business which are not individually or in the aggregate, material and
adverse, and such party shall have performed and complied with all of its
obligations and covenants required by the Merger Agreement required to be
performed or complied with on or prior to the Closing Date and the other party
shall have delivered a certificate to such effect dated the Closing Date and
executed by an officer of such party; (b) the Merger Agreement and the Merger
shall have been duly approved by the stockholders of Faircom; (c) no suit,
action, claim or governmental proceeding or investigation shall be pending or
shall have been instituted, taken, presented or threatened against either
Faircom or Regent which makes unlawful the carrying out of the Merger Agreement,
causes it to be rescinded, or, in the case of Regent, imposes a lien on or
requires Regent to divest itself of, any of Faircom's assets; (d) the FCC's
Order shall have become a Final Order, unless the Final Order is caused by the
action or inaction of the party claiming applicability of the condition; (e) on
the Closing Date, each person, association, corporation or other entity, the
consent or approval of which to the surrender and exchange of the Faircom Common
Stock, the issuance and delivery of the Series C Preferred Stock, and the merger
of Faircom into Merger Subsidiary, is then required shall have duly consented
thereto, and all other consents required under the terms of the material
contracts, leases and agreements identified in the Merger Agreement shall have
been obtained; (f) each of Regent and Faircom shall have conducted and/or
obtained a satisfactory review and examination of the title to and condition of
the real property owned by the other (including such environmental assessments
of said properties as may be currently in existence or as either party may elect
to have conducted at its expense, to be completed within sixty (60) days after
execution of the Merger Agreement); (g) Regent shall have raised and/or shall
have commitments for at least $13,700,000 of cash equity and additional bank
financing sufficient to finance the acquisition of the assets of the Park Lane
Stations, and the closing of such acquisition shall have occurred prior to or
concurrently with the Closing; (h) each of Regent and Faircom shall be the
holder of their respective FCC licenses and such licenses
46
<PAGE> 52
shall be free and clear of all conditions, competing applications, petitions to
deny, complaints, appeals or any restrictions as may materially limit the
operation or prospects of the parties' stations as presently authorized; (i) the
Registration Statement of which this Proxy Statement/Prospectus is a part shall
have been declared effective; and (j) each of Faircom and Regent shall have
received an opinion from Regent's counsel that the Merger will qualify as a
reorganization under the Code, and Faircom shall have received an opinion from
its counsel to the same effect.
The obligations of Regent and Merger Subsidiary to effect the Merger are
subject to the following additional conditions: (a) holders of no more than ten
percent (10%) (excluding Blue Chip or Miami Valley) of the outstanding Faircom
Common Stock shall have taken all necessary steps to be entitled pursuant to
Delaware law to make a written demand for payment of the fair value for their
shares; (b) Faircom shall have provided to Regent all of the information
required to be submitted by Faircom for inclusion in the Registration Statement
and this Proxy Statement/Prospectus; and (c) the holders of the Faircom
Subordinated Notes shall have converted such Notes (other than the Optional
Faircom Subordinated Notes) into Faircom Common Stock on or before the Closing
Date.
The obligations of Faircom to effect the Merger are subject to the
following additional conditions: (a) all consideration which is due on the
Closing Date shall have been paid in accordance with the terms of the Merger
Agreement; (b) the issuance of the Series C Preferred Stock shall be legally
permitted by all applicable laws and regulations and shall be issued pursuant to
an effective registration statement and pursuant to applicable state securities
laws; (c) the Tax Opinion and the Fairness Opinion shall not have been withdrawn
with reasonable justification, unless such withdrawal is caused by the action or
inaction of Faircom.
TERMINATION
The Merger Agreement may be terminated or abandoned only as follows: (a) by
the mutual consent of the Boards of Directors of Faircom and Regent,
notwithstanding prior approval by the stockholders of either or both of such
corporations; (b) by the Board of Directors of either Regent or Faircom in
accordance with the respective rights of Regent or Faircom in the case of loss,
damage or destruction of the assets of the other or the loss of broadcast
transmission of the stations, all as provided in the Merger Agreement; (c) by
the Board of Directors of either Faircom or Regent after June 1, 1998, if any of
the conditions set forth in the Merger Agreement, to which the obligations of
such parties are subject, have not been fulfilled or waived, unless such
fulfillment has been frustrated or made impossible by act or failure to act of
the party seeking termination; (d) by the Faircom Board if in the exercise of
good faith and reasonable business judgment, as set forth in the Merger
Agreement, as to its fiduciary duties to the stockholders of Faircom imposed by
law, the Faircom Board determines that such termination is required; and (e) by
the Board of Directors of either Regent or Faircom if the FCC fails, on its own
and through no breach on the part of Regent or Faircom, to give its consent to
the transfers of control contemplated in the Merger Agreement.
EFFECT OF TERMINATION
If the Merger Agreement is terminated by the Faircom Board, which has
decided, in the exercise of good faith and reasonable business judgment as to
its fiduciary duties to the stockholders of Faircom imposed by law, such
termination is required, or if the Merger Agreement is not terminated but the
Faircom stockholders do not approve the Merger and, within one year from the
date of the Special Meeting, Faircom consummates a transaction pursuant to a
bona fide takeover proposal made by a third party, Faircom is required promptly
to pay to Regent a fee of $1,650,000.
If the Merger Agreement is terminated by Faircom solely because of a
material breach by Merger Subsidiary or Regent prior to Closing and Faircom has
complied with the notice provisions set forth in the Merger Agreement, Regent is
required promptly to pay to Faircom $300,000 plus any out-of-pocket expenses
incurred by Faircom in connection with the Merger in excess of $300,000,
provided that such expenses are properly documented by Faircom, reasonable and
charged at customary hourly rates. The Merger Agreement further provides that
Regent will in no event be required to pay to Faircom more than $823,000 in the
aggregate.
47
<PAGE> 53
CERTAIN FEES AND EXPENSES OF THE MERGER
Except with respect to commissions payable to Crisler (of which Regent will
pay $150,000 and will be entitled to a reduction of the consideration to be paid
for the Faircom Common Stock for the balance of $50,000 to be paid by Faircom,
as a reduction of Net Working Capital), each party to the Merger Agreement is
required to bear its own legal fees and other costs and expenses with respect to
the Merger, including preparation and prosecution of FCC applications. The cost
of filing fees and grant fees, if any, imposed by the FCC will be borne equally
by the parties. All fees and expenses payable by Faircom but not paid prior to
Closing will be treated as a current liability of Faircom at Closing (so as to
reduce Net Working Capital) and will be paid by the Surviving Corporation at
Closing.
APPRAISAL RIGHTS
Under the Delaware General Corporation Law (the "DGCL"), stockholders of
corporations being acquired pursuant to a merger generally have the right to
serve upon the corporation a written demand for appraisal of their shares.
Stockholders entitled to appraisal rights subsequently receive cash from the
corporation equal to the value of their shares as established by judicial
appraisal. The holders of Faircom Common Stock will be entitled to such
appraisal rights pursuant to Section 262 of the DGCL in connection with the
Merger.
Holders of record of Faircom Common Stock who comply with the applicable
statutory procedures summarized herein will be entitled to appraisal rights
under Section 262 of the DGCL. A person having a beneficial interest in any
Faircom Common Stock held of record in the name of another person, such as a
broker or nominee, must act promptly to cause the record holder to follow the
steps summarized below properly and in a timely manner to perfect appraisal
rights.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING
TO APPRAISAL RIGHTS UNDER THE DGCL AND IS QUALIFIED IN ITS ENTIRETY BY THE FULL
TEXT OF SECTION 262 WHICH IS REPRINTED IN ITS ENTIRETY AS APPENDIX E TO THIS
PROXY STATEMENT/PROSPECTUS. ALL REFERENCES IN SECTION 262 AND IN THIS SUMMARY TO
A "STOCKHOLDER" ARE TO A RECORD HOLDER OF FAIRCOM COMMON STOCK AS TO WHICH
APPRAISAL RIGHTS ARE ASSERTED.
Under the DGCL, holders of Faircom Common Stock who follow the procedures
set forth in Section 262 will be entitled to have their shares of Faircom Common
Stock appraised by the Delaware Chancery Court and to receive payment in cash of
the "fair value" of such shares of Faircom Common Stock exclusive of any element
of value arising from the accomplishment or expectation of the Merger, together
with a fair rate of interest, if any, as determined by such court.
Under Section 262, where a proposed merger is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, must notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal rights are
available, that appraisal rights are so available, and must include in such
notice a copy of Section 262.
This Proxy Statement/Prospectus constitutes such notice to the holders of
Faircom Common Stock and the applicable statutory provisions of the DGCL are
attached to this Proxy Statement/Prospectus as Appendix E. Any stockholder who
wishes to exercise such appraisal rights or who wishes to preserve his right to
do so should review the following discussion and Appendix E carefully, because
failure to timely and properly comply with the procedures specified will result
in the loss of appraisal rights under the DGCL.
A HOLDER OF FAIRCOM COMMON STOCK WISHING TO EXERCISE SUCH HOLDER'S
APPRAISAL RIGHTS (I) MUST NOT VOTE IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT
AND (II) MUST DELIVER TO FAIRCOM PRIOR TO THE VOTE ON THE MERGER AGREEMENT AT
THE SPECIAL MEETING TO BE HELD ON APRIL , 1998 A WRITTEN DEMAND FOR APPRAISAL
OF SUCH HOLDER'S SHARES OF FAIRCOM COMMON STOCK. A PROXY OR VOTE AGAINST THE
MERGER WILL NOT CONSTITUTE SUCH A DEMAND. A HOLDER OF FAIRCOM COMMON STOCK
WISHING TO EXERCISE SUCH HOLDER'S APPRAISAL RIGHTS MUST BE THE RECORD HOLDER OF
SUCH FAIRCOM COMMON STOCK ON THE DATE THE WRITTEN DEMAND FOR APPRAISAL IS MADE
AND MUST CONTINUE TO HOLD SUCH FAIRCOM COMMON STOCK OF RECORD UNTIL THE TIME OF
THE MERGER (THE "EFFECTIVE DATE"). ACCORDINGLY, A HOLDER OF FAIRCOM COMMON STOCK
WHO IS THE RECORD HOLDER OF FAIRCOM COMMON STOCK ON THE DATE THE WRITTEN DEMAND
FOR APPRAISAL IS MADE, BUT WHO THEREAFTER TRANSFERS SUCH
48
<PAGE> 54
FAIRCOM COMMON STOCK PRIOR TO EFFECTIVENESS, WILL LOSE ANY RIGHT TO APPRAISAL IN
RESPECT OF SUCH FAIRCOM COMMON STOCK.
Only a holder of record of Faircom Common Stock is entitled to assert
appraisal rights for the Faircom Common Stock registered in that holder's name.
A demand for appraisal should be executed by or on behalf of the holder of
record, fully and correctly, as such holder's name appears on such holder's
stock certificates. If the Faircom Common Stock is owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, execution of
the demand should be made in that capacity, and if the Faircom Common Stock is
owned of record by more than one person as in a joint tenancy or tenancy in
common, the demand should be executed by or on behalf of all joint owners. An
authorized agent, including one or more joint owners, may execute a demand for
appraisal on behalf of a holder of record; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, the agent is agent for such owner or owners. A record holder such as a
broker who holds Faircom Common Stock as nominee for several beneficial owners
may exercise appraisal rights with respect to the Faircom Common Stock held for
one or more beneficial owners while not exercising such rights with respect to
the Faircom Common Stock held for other beneficial owners; in such case, the
written demand should set forth the number of shares of Faircom Common Stock as
to which appraisal is sought and where no number of shares of Faircom Common
Stock is expressly mentioned the demand will be presumed to cover all shares of
Faircom Common Stock held in the name of the record owner. Stockholders who hold
their Faircom Common Stock in brokerage accounts or other nominee forms and who
wish to exercise appraisal rights are urged to consult with their brokers to
determine the appropriate procedures for the making of a demand for appraisal by
such a nominee.
ALL WRITTEN DEMANDS FOR APPRAISAL SHOULD BE SENT OR DELIVERED TO FAIRCOM
INC., 333 GLEN HEAD ROAD, OLD BROOKVILLE, NEW YORK 11545, ATTENTION: PRESIDENT.
Within 120 days after Effectiveness, but not thereafter, Faircom or any
stockholder who has complied with the statutory requirements summarized above
may file a petition in the Delaware Chancery Court demanding a determination of
the fair value of the Faircom Common Stock. Faircom is under no obligation to
and has no present intention to file a petition with respect to the appraisal of
the fair value of the Faircom Common Stock. Accordingly, it is the obligation of
the stockholders to initiate all necessary action to perfect their appraisal
rights within the time prescribed in Section 262.
Within 120 days after Effectiveness, any stockholder who has complied with
the requirements for exercise of appraisal rights will be entitled, upon written
request, to receive from the Surviving Corporation a statement setting forth the
aggregate number of shares of Faircom Common Stock not voted in favor of
adoption of the Merger Agreement, the aggregate number of shares of Faircom
Common Stock with respect to which demands for appraisal have been received and
the aggregate number of holders of such Faircom Common Stock. Such statements
must be mailed within ten days after a written request therefor has been
received by the Surviving Corporation.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights and will appraise the "fair value" of their Faircom Common
Stock exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. Stockholders considering
seeking appraisal should be aware that the fair value of their Faircom Common
Stock as determined under Section 262 could be more than, the same as or less
than the consideration they would receive pursuant to the Merger Agreement if
they did not seek appraisal of the Faircom Common Stock and that investment
banking opinions as to fairness from a financial point of view are not
necessarily opinions as to fair value under Section 262. The Delaware Supreme
Court has stated that "proof of value by any techniques or methods that are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in the appraisal proceedings.
The Court will determine the amount of interest, if any, to be paid upon
the amounts to be received by a person whose Faircom Common Stock has been
appraised. The costs of the action may be determined by the Court and taxed upon
the parties, as the Court deems equitable. The Court may also order that all or
a portion of the expenses incurred by any stockholder in connection with an
appraisal, including, without limitation,
49
<PAGE> 55
reasonable attorneys' fees and the fees and expenses of experts utilized in the
appraisal proceeding, be charged pro rata against the value of all of the
Faircom Common Stock entitled to appraisal.
Any holder of shares of Faircom Common Stock who has duly demanded an
appraisal in compliance with Section 262 will not, after Effectiveness, be
entitled to vote the shares of Faircom Common Stock subject to such demand for
any purpose. Any holder of Faircom Common Stock who has duly demanded an
appraisal in compliance with Section 262 will not, after Effectiveness, be
entitled to the payment of dividends or other distributions on those shares of
Faircom Common Stock (except dividends or other distributions payable to holders
of record of Faircom Common Stock as of a record date prior to Effectiveness).
If any stockholder who properly demands appraisal of his Faircom Common
Stock under Section 262 fails to perfect, or effectively withdraws or loses, his
right to appraisal, as provided in the DGCL, the shares of Faircom Common Stock
of such stockholder will be converted into the right to receive the
consideration receivable with respect to such Faircom Common Stock in accordance
with the Merger Agreement. A stockholder will fail to perfect, or effectively
lose or withdraw, his right to appraisal if, among other things, no petition for
appraisal is filed within 120 days after Effectiveness, or if the stockholder
delivers to Faircom a written withdrawal of his demand for appraisal and
acceptance of the Merger. Any such attempt to withdraw an appraisal demand more
than 60 days after Effectiveness will require the written approval of Faircom.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS (IN WHICH
EVENT A STOCKHOLDER WILL BE ENTITLED TO RECEIVE THE CONSIDERATION RECEIVABLE
WITH RESPECT TO SUCH FAIRCOM COMMON STOCK IN ACCORDANCE WITH THE MERGER
AGREEMENT).
REGISTRATION RIGHTS
The Merger Agreement provides the Faircom Subordinated Noteholders with
certain demand and piggyback registration rights with respect to registration
for sale under the Securities Act of the shares of Regent Common Stock into
which their shares of Series C Preferred Stock are then convertible ("Conversion
Stock"). The Faircom Subordinated Noteholders will have demand rights to require
Regent to register their shares of Conversion Stock. In addition, the Faircom
Subordinated Noteholders will have certain piggyback registration rights to
register their shares of Conversion Stock in the event Regent files a
registration statement under the Securities Act. The registration rights of the
Faircom Subordinated Noteholders under the Merger Agreement are subject to a
number of customary conditions and limitations.
The Merger Agreement provides that the provisions of the Merger Agreement
relative to the Faircom Subordinated Noteholders' registration rights will be
deemed amended, at the option of the Faircom Subordinated Noteholders, to grant
to the Faircom Subordinated Noteholders rights equivalent to the most favorable
registration rights granted to any other person. The holders of Regent's Series
A, Series B Senior and Series D Convertible Preferred Stock have also been
granted registration rights with respect to Regent Common Stock issued on
conversion of their respective series of Preferred Stock. In addition, it is
contemplated that registration rights will be granted to holders of Series F
Preferred Stock and the detachable warrants related thereto.
MANAGEMENT OF REGENT FOLLOWING THE MERGER
Directors. The following will be the directors of Regent as of and after
Effectiveness:
Joel M. Fairman
Terry S. Jacobs
R. Glen Mayfield
William L. Stakelin
John H. Wyant
William H. Ingram*
Richard H. Patterson*
50
<PAGE> 56
Officers. The following will be the executive officers of Regent as of and
after Effectiveness:
<TABLE>
<S> <C>
Chairman of the Board, Chief Executive Officer and Treasurer......Terry S. Jacobs
Vice Chairman.....................................................Joel M. Fairman
President, Chief Operating Officer and Secretary..............William L. Stakelin
Senior Vice President................................................Fred L. Murr
Vice President-Finance, Assistant Secretary.....................Matthew A. Yeoman
</TABLE>
- ---------------
* Messrs. Ingram and Patterson will join the Board of Directors of Regent only
upon Waller-Sutton's having made its initial equity investment in Regent,
which Regent expects will occur concurrently with consummation of the Merger.
51
<PAGE> 57
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
consequences of the Merger that are generally applicable to Faircom and the
holders of Faircom Common Stock. The discussion is based upon the Code, treasury
regulations thereunder and administrative rulings and court decisions as of the
date hereof. All of the foregoing are subject to change, possibly with
retroactive effect, and any such change could affect the continuing validity of
this discussion. This discussion does not address all aspects of federal income
taxation that may be important to a holder of Faircom Common Stock in light of
such stockholder's particular circumstances, or to holders of Faircom Common
Stock subject to special treatment under certain federal income tax laws, such
as stockholders who are not citizens or residents of the United States,
financial institutions, tax-exempt organizations, insurance companies, dealers
in securities or stockholders who acquired their Faircom Common Stock pursuant
to the exercise of options or similar derivative securities or otherwise as
compensation. This discussion does not address any tax consequences arising
under the laws of any state, locality or foreign jurisdiction. Moreover, the tax
consequences to holders of Faircom Options, and to those exercising dissenters'
rights under state law, are not discussed. In addition, the tax consequences of
the Merger to the Faircom Subordinated Noteholders, including, without
limitation, as holders of Faircom Subordinated Notes and Faircom Common Stock,
are not discussed herein. This discussion assumes that Faircom stockholders hold
their respective shares of Faircom Common Stock as capital assets within the
meaning of Section 1221 of the Code.
THE FOLLOWING DISCUSSION IS INTENDED ONLY AS A GENERAL SUMMARY OF THE
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. IT IS NOT A SUBSTITUTE
FOR INDEPENDENT TAX ADVICE AND CAREFUL TAX PLANNING BASED UPON A HOLDER'S
INDIVIDUAL CIRCUMSTANCES. FAIRCOM'S STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF THE MERGER TO THEM.
Tax Opinion. It is a condition to the obligations of Faircom and Regent to
consummate the Merger that Faircom receive an opinion from Fulbright & Jaworski
L.L.P. and from Strauss & Troy, a legal professional association, and that
Regent receive an opinion from Strauss & Troy, to the effect that, based on the
facts, representations and assumptions set forth in such opinions, the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Code ("Tax Opinions"). Regent and Faircom believe, based upon the Tax Opinions,
that the Merger will have the federal income tax consequences discussed below.
The Tax Opinions will assume the absence of changes in existing facts and will
rely on certain assumptions, representations and warranties of Faircom, Regent,
Merger Subsidiary and others. Neither Faircom nor Regent intends to request a
ruling from the Internal Revenue Service ("IRS") with respect to the Merger. The
Tax Opinions neither bind nor preclude the IRS from adopting a contrary
position. An opinion of counsel sets forth such counsel's legal judgment and has
no binding effect or official status of any kind, and no assurance can be given
that contrary positions will not be successfully asserted by the IRS or adopted
by a court if the issues are litigated.
Tax Implications to Faircom Stockholders. Except as discussed below, (a)
no gain or loss will be recognized for federal income tax purposes by holders of
Faircom Common Stock who exchange their Faircom Common Stock for Series C
Preferred Stock, except to the extent of cash received in lieu of fractional
shares, and (b) the aggregate tax basis of Series C Preferred Stock received in
exchange for Faircom Common Stock as a result of the Merger will be the same as
the stockholder's aggregate tax basis in the Faircom Common Stock surrendered in
the exchange (reduced by any tax basis allocable to fractional shares for which
cash is received). The holding period for the Series C Preferred Stock held by a
former Faircom stockholder as a result of the exchange will include the period
during which such stockholder held the Faircom Common Stock exchanged.
Cash received by a holder of Faircom Common Stock in lieu of a fractional
interest in the Series C Preferred Stock will result in the recognition of gain
or loss for federal income tax purposes, measured by the difference between the
amount of cash received and the portion of the tax basis of the share of Faircom
Common Stock allocable to such fractional share interest. Such gain or loss
generally will be capital gain or loss. However, it is possible that, under
certain circumstances, the receipt of cash in lieu of a fractional share
interest in the Series C Preferred Stock could be treated as dividend income. On
the basis of a published ruling of the IRS, in the case of a holder of Faircom
Common Stock whose stock interest in Regent (relative to the total number of
Regent shares
52
<PAGE> 58
outstanding) is minimal and who exercises no control over the affairs of Regent,
any cash received in lieu of a fractional share generally will result in the
recognition of capital gain or loss. Noncorporate holders of Faircom Common
Stock are urged to consult with their own tax advisors concerning changes with
respect to the taxation of capital gains contained in the Taxpayer Relief Act of
1997.
Tax Implications to Faircom. No gain or loss will be recognized for
federal income tax purposes by Faircom as a result of the Merger.
Possible Treatment of Series C Preferred Stock as Section 306 Stock. In
general, if the Series C Preferred Stock received by holders of Faircom Common
Stock were treated as "Section 306 stock" for federal income tax purposes,
unless an exception applies, the proceeds received by a stockholder upon the
subsequent disposition of such stock would be treated as either dividend income
(if the disposition is a redemption) or ordinary income (if the disposition is
other than by redemption); and a stockholder would not be entitled to offset the
amount realized on a disposition of Section 306 stock with such stockholder's
basis, if any, in such Section 306 stock. No loss would be recognized on a
disposition of Section 306 stock. However, Regent Common Stock received upon the
conversion of the Series C Preferred Stock would not be treated as Section 306
stock.
The Series C Preferred Stock received by a holder of Faircom Common Stock
will not be treated as Section 306 stock if such stockholder had received cash
in lieu of such Series C Preferred Stock and the receipt of such cash would not
have been treated as a dividend pursuant to Section 302 of the Code. On the
basis of a published ruling of the IRS, the Series C Preferred Stock received by
a holder of Faircom Common Stock whose stock interest in Regent (relative to the
total number of Regent shares outstanding) is minimal (taking into account
Regent stock owned under certain constructive ownership rules that generally
attribute ownership of stock to or from corporations, partnerships, estates,
trusts and certain family members, and to holders of options or other
convertible securities) and who exercises no control over the affairs of Regent
should not be treated as Section 306 stock. In addition, Series C Preferred
Stock received by a holder of Faircom Common Stock should not be treated as
Section 306 stock provided that such holder does not own any other Regent stock,
or options to acquire Regent stock, either directly, indirectly or
constructively.
Whether a Faircom stockholder will receive Section 306 stock in the Merger
is a question of fact dependent upon the facts and circumstances applicable to
such stockholder. Because of the complexity of these rules, Faircom stockholders
should consult their personal tax advisors to determine whether the Series C
Preferred Stock they will receive in the Merger will be Section 306 stock.
Subsequent Conversion of the Series C Preferred Stock into Regent Common
Stock. In general, a holder of Faircom Common Stock who, pursuant to the
Merger, receives Series C Preferred Stock will not recognize any gain or loss
upon any subsequent conversion of such Series C Preferred Stock into shares of
Regent Common Stock. The tax basis for the shares of Regent Common Stock
received upon conversion generally should be equal to the tax basis of the
Series C Preferred Stock converted, and the holding period of the Regent Common
Stock received generally should include the period during which the converted
Series C Preferred Stock was held.
Adjustment of Conversion Price. The conversion price of the Series C
Preferred Stock is subject to adjustment under certain circumstances. Section
305 of the Code treats as a distribution taxable as a dividend (to the extent of
Regent's current or accumulated earnings and profits) certain actual or
constructive distributions of stock with respect to stock or convertible
securities. Under Treasury regulations, an adjustment may, under certain
circumstances, be treated as a constructive dividend. Similarly, a failure to
adjust the conversion price of Series C Preferred Stock to reflect a stock
dividend or similar event could in some circumstances give rise to constructive
dividend income to holders of Regent stock or convertible securities.
53
<PAGE> 59
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
OF REGENT COMMUNICATIONS, INC.
INTRODUCTION
The following unaudited pro forma condensed combined financial statements
reflect the effect of the Merger between Regent and Faircom, including the
effect of Faircom's acquisition of stations WMAN(AM) and WYHT(FM) in June 1997,
and the effects of Regent's significant pending acquisition of radio stations
owned by The Park Lane Group ("Park Lane"), Alta California Broadcasting, Inc.
("Alta"), Power Surge, Inc. ("Power Surge"), Continental Radio Broadcasting
L.L.C. ("Continental") and Ruby Broadcasting, Inc. ("Ruby" or "KZXY(FM)") (the
"Included Transactions"), and the related financing transactions. Regent will
acquire all of the outstanding common stock of Faircom in the Merger. For
accounting purposes, the Merger will be accounted for under the purchase method
of accounting as a reverse merger since the shareholders of Faircom are
receiving the larger shareholding in the merged company. The Included
Transactions will also be accounted for under the purchase method of accounting
with Regent being identified as the acquiror.
The unaudited pro forma condensed combined balance sheet gives effect to
the Merger and the Included Transactions as if they had occurred on December 31,
1997. The unaudited pro forma condensed combined statements of operations gives
effect to these transactions as if they had occurred on January 1, 1997. The
purchase price of each acquisition has been allocated to the acquirees'
historical assets and liabilities based on their respective carrying values,
with the exception of station licenses, as these carrying values are deemed to
materially represent the fair market value of these assets and liabilities. The
fair value of station licenses was determined based on a detailed analysis
prepared by Regent. Regent has not allocated any of the purchase price to other
intangible assets as these assets, if any, are deemed to have nominal value and
are not considered material to the pro forma financial statements. The
allocation of the purchase price is considered preliminary until such time as
the Closing of the Merger and consummation of the Included Transactions. At such
time, an independent appraisal will be performed for each consummated
transaction to ascertain the fair market value of all assets acquired.
The unaudited pro forma condensed combined financial statements do not
purport to present the actual financial position or results of operations of
Regent had the transactions and events assumed therein in fact occurred on the
dates specified, nor are they necessarily indicative of the results of
operations that may be achieved in the future. The unaudited pro forma financial
information is based on certain assumptions and adjustments described in the
notes to the unaudited pro forma condensed combined financial statements and
should be read in conjunction therewith.
No pro forma adjustments have been made to reflect Regent's pending
acquisitions of radio stations KIXA(FM) in Lucerne Valley, California and
KIXW(AM) in Apple Valley, California because Regent has determined that the
impact of such transactions was not material to Regent's results of operations
or financial condition. In addition, no pro forma adjustments have been made to
reflect Faircom's recent acquisition of radio station WSWR(FM) in Shelby, Ohio
because Faircom has determined that the impact of such transaction was not
material to Faircom's results of operations or financial condition. Historical
balance sheet data has not been included in the Condensed Combined Balance Sheet
to reflect Regent's pending acquisition of radio station KZXY(FM) in Apple
Valley, California because the required financial information cannot be
obtained. However, the Pro Forma Condensed Combined Balance Sheet does reflect
the fair value of assets to be acquired for KZXY(FM).
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the other financial statements and notes thereto
included elsewhere in this Proxy Statement/Prospectus. See "Risk Factors" and
"Information Concerning Regent -- Management's Discussion and Analysis of
Financial Condition and Results of Operations."
54
<PAGE> 60
REGENT COMMUNICATIONS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA INCLUDED TRANSACTIONS
ADJUSTMENTS REGENT -------------------------
FOR THE AS ADJUSTED
HISTORICAL HISTORICAL MERGER FOR THE HISTORICAL HISTORICAL
REGENT FAIRCOM (NOTE 3) MERGER PARK LANE ALTA
----------- ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash........................ $ 1,013,547 $ 535,312 $ 1,548,859 $ 431,466 $ 11,261
Accounts receivable......... 1,507,623 1,358,002 2,865,625 53,009 241,543
Prepaid expenses and
other..................... 9,701,419 25,918 9,727,337 83,474 16,113
----------- ------------ ------------ ------------ ------------ ----------
Total current
assets.............. 12,222,589 1,919,232 14,141,821 567,949 268,917
Property and equipment, net... 53,792 2,156,244 2,210,036 2,502,766 208,523
Intangible assets, net........ 7,701,341 $ 525,668 8,227,009 5,937,566 935,933
Deferred charges and other.... 1,089,462 1,233,737 (525,668) 1,797,531 45,530
----------- ------------ ------------ ------------ ------------ ----------
Total assets.......... $13,365,843 $ 13,010,554 $ 0 $ 26,376,397 $ 9,008,281 $1,458,903
=========== ============ ============ ============ ============ ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Account payable, accrued
liabilities and other..... $ 1,181,082 $ 429,626 $ 1,610,708 $ 346,178 $ 934,650
Notes payable............... 7,500,000 7,500,000 190,526
Current portion of long-term
debt...................... 430,005 430,005 760,964 61,781
----------- ------------ ------------ ------------ ------------ ----------
Total current
liabilities......... 8,681,082 859,631 9,540,713 1,297,668 996,431
Long-term debt, net of current
maturities.................. 21,911,661 $(10,000,000) 11,911,661 5,607,199 604,171
Other......................... 421,050 421,050
----------- ------------ ------------ ------------ ------------ ----------
Total liabilities..... 8,681,082 23,192,342 (10,000,000) 21,873,424 6,904,867 1,600,602
Redeemable preferred stock 2,226,907 2,226,907 6,558,251
Shareholders' equity:
Preferred stock............. 3,000,000 2,457,854 5,457,854 5,595,875
Common stock................ 2,400 73,782 (73,782) 2,400 1,633,729 225,000
Additional paid-in
capital................... 571,285 2,605,813 6,500,097 9,677,195 (2,680)
Retained earnings
(deficit)................. (1,115,831) (12,861,383) 1,115,831 (12,861,383) (11,681,761) (366,699)
----------- ------------ ------------ ------------ ------------ ----------
Total shareholders'
equity (deficit).... 2,457,854 (10,181,788) 10,000,000 2,276,066 (4,454,837) (141,699)
----------- ------------ ------------ ------------ ------------ ----------
Total liabilities and
shareholders'
equity.............. $13,365,843 $ 13,010,554 $ 0 $ 26,376,397 $ 9,008,281 $1,458,903
=========== ============ ============ ============ ============ ==========
<CAPTION>
PRO FORMA PRO FORMA
INCLUDED TRANSACTIONS ADJUSTMENTS ADJUSTMENTS
------------------------ FOR THE FOR
HISTORICAL INCLUDED FINANCING
POWER HISTORICAL TRANSACTIONS TRANSACTIONS COMBINED
SURGE CONTINENTAL (NOTE 3) (NOTE 3) PRO FORMA
---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash........................ $ 82 $ 373 $(1,000,373) $ 991,668
Accounts receivable......... 65,137 172,465 (172,465) 3,225,314
Prepaid expenses and
other..................... 4,000 11,669 (7,930,234) 1,912,359
---------- ---------- ------------ ------------ ------------
Total current
assets.............. 69,219 184,507 (9,103,072) 6,129,341
Property and equipment, net... 152,273 303,560 237,157 5,614,315
Intangible assets, net........ 953,477 948,647 31,604,359 48,606,991
Deferred charges and other.... 127,527 348,044 2,318,632
---------- ---------- ------------ ------------ ------------
Total assets.......... $1,174,969 $1,564,241 $23,086,488 $ 0 $ 62,669,279
========== ========== ============ ============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Account payable, accrued
liabilities and other..... $ 2,250 $ 124,699 $ (124,699) $ 2,893,786
Notes payable............... (6,190,526) 1,500,000
Current portion of long-term
debt...................... 1,670,000 (2,492,745) 430,005
---------- ---------- ------------ ------------ ------------
Total current
liabilities......... 2,250 1,794,699 (8,807,970) 4,823,791
Long-term debt, net of current
maturities.................. 90,000 33,708,434 $(16,500,000) 35,421,465
Other......................... 2,460,000 2,881,050
---------- ---------- ------------ ------------ ------------
Total liabilities..... 2,250 1,884,699 24,900,464 (14,040,000) 43,126,306
Redeemable preferred stock (6,558,251) 17,080,000 19,306,907
Shareholders' equity:
Preferred stock............. (4,595,875) (3,000,000) 3,457,854
Common stock................ 1,202,500 (3,061,229) 2,400
Additional paid-in
capital................... 10,000 (7,320) (40,000) 9,637,195
Retained earnings
(deficit)................. (29,781) (330,458) 12,408,699 (12,861,383)
---------- ---------- ------------ ------------ ------------
Total shareholders'
equity (deficit).... 1,172,719 (320,458) 4,744,275 (3,040,000) 236,066
---------- ---------- ------------ ------------ ------------
Total liabilities and
shareholders'
equity.............. $1,174,969 $1,564,241 $23,086,488 $ 0 $ 62,669,279
========== ========== ============ ============ ============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
55
<PAGE> 61
REGENT COMMUNICATIONS, INC.
CONDENSED COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS REGENT INCLUDED TRANSACTIONS
FOR THE MERGER AS ADJUSTED ------------------------
AND HISTORICAL FOR THE MERGER
HISTORICAL HISTORICAL ACQUISITION AND HISTORICAL HISTORICAL HISTORICAL
REGENT FAIRCOM (NOTE 4) ACQUISITION PARK LANE ALTA
----------- ----------- -------------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue............................. $ 4,916,005 $ 5,993,291 $ 1,160,579 $12,069,875 $ 6,216,039 $ 996,278
Broadcast operating expenses............ 4,167,002 1,590,531 263,868 6,021,401 2,659,735 496,313
Time brokerage fees, net................ 1,223,054 1,223,054
Depreciation and amortization........... 655 726,564 384,000 1,111,219 1,421,198 184,629
Corporate general and administrative
expenses.............................. 517,486 2,661,052 1,335,148 4,513,686 2,427,760 528,162
----------- ----------- ----------- ----------- ----------- ---------
Operating income (loss)............. (992,192) 1,015,144 (822,437) (799,485) (292,654) (212,826)
Interest expense........................ 73,901 1,330,676 353,736 1,758,313 678,315 61,915
Other income (expense), net............. (37,332) 24,537 14,477 1,682 (43,162) 849,024
----------- ----------- ----------- ----------- ----------- ---------
Loss from continuing operations before
income taxes.......................... (1,103,425) (290,995) (1,161,696) (2,556,116) (1,014,131) 574,283
Provision (benefit) for income taxes.... 71,542 (71,542)
----------- ----------- ----------- ----------- ----------- ---------
Loss from continuing operations......... $(1,103,425) $ (362,537) $(1,090,154) $(2,556,116) $(1,014,131) $ 574,283
=========== =========== =========== =========== =========== =========
Earnings per share data:
Loss from continuing operations..... $(1,103,425) $(2,556,116)
=========== ===========
Preferred stock dividends
requirements...................... (146,175) (1,487,410)
Preferred stock accretion...........
----------- -----------
Loss applicable to common
shares.......................... (1,249,600) (4,043,526)
=========== ===========
Basic and diluted loss per common
share............................. $ (5.21) $ (16.85)
=========== ===========
Weighted average shares
outstanding....................... 240,000 240,000
=========== ===========
<CAPTION>
PRO FORMA
INCLUDED TRANSACTIONS ADJUSTMENTS
------------------------------------- FOR THE
HISTORICAL INCLUDED
POWER HISTORICAL HISTORICAL TRANSACTIONS COMBINED
SURGE CONTINENTAL KZXY(FM) (NOTE 4) PRO FORMA
---------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenue............................. $ 68,811 $1,021,856 $1,191,586 $(578,416) $ 20,986,029
Broadcast operating expenses............ 20,622 438,482 500,486 (493,659) 9,643,380
Time brokerage fees, net................ 1,223,054
Depreciation and amortization........... 106,314 241,744 26,467 234,000 3,325,571
Corporate general and administrative
expenses.............................. 66,410 346,055 345,175 8,227,248
--------- ---------- ---------- --------- ------------
Operating income (loss)............. (124,535) (4,425) 319,458 (318,757) (1,433,224)
Interest expense........................ 186,127 431,746 3,116,416
Other income (expense), net............. 90,754 (73,219) 825,079
--------- ---------- ---------- --------- ------------
Loss from continuing operations before
income taxes.......................... (33,781) (263,771) 319,458 (750,503) (3,724,561)
Provision (benefit) for income taxes.... (4,000) 4,000
--------- ---------- ---------- --------- ------------
Loss from continuing operations......... $ (29,781) $ (263,771) $ 319,458 $(754,503) $ (3,724,561)
========= ========== ========== ========= ============
Earnings per share data:
Loss from continuing operations..... $ (3,724,561)
============
Preferred stock dividends
requirements...................... (3,103,410)
Preferred stock accretion........... (744,000)
------------
Loss applicable to common
shares.......................... (7,571,971)
============
Basic and diluted loss per common
share............................. $ (31.55)
============
Weighted average shares
outstanding....................... 240,000
============
</TABLE>
- ---------------
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
56
<PAGE> 62
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
OF REGENT COMMUNICATIONS, INC.
1. GENERAL
The Merger will be accounted for under the purchase method of accounting as
a reverse merger since the shareholders of Faircom are receiving the larger
shareholding in the merged company. The Included Transactions will also be
accounted for under the purchase method of accounting with Regent being
identified as the acquiror.
The historical financial statements reflect the financial position and
results of operations of Regent, Faircom, and the other Included Transactions
(the "Pro Forma Companies") and were derived from the respective entities
financial statements included elsewhere in this Proxy Statement/Prospectus.
Faircom's acquisition of Treasure Radio Associates Limited Partnership
("Treasure") (WMAN(AM) and WYHT(FM)) in June 1997, accounted for under the
purchase method of accounting, was previously reported in Faircom's Form 8-K/A,
dated June 30, 1997, and Form 10-K filed for the year ended December 31, 1997.
2. THE MERGER AND INCLUDED TRANSACTIONS:
The following table sets forth the consideration to be paid in cash and
shares of Regent's Preferred Stock to the common stockholders of Faircom and the
owners of each of the Included Transactions, the allocation of the consideration
to net assets acquired, station licenses and the resulting goodwill. For
purposes of computing the estimated purchase price for accounting purposes, the
value of shares issued is determined using the estimated fair value of net
assets received.
The purchase price of each acquisition has been allocated to the acquirees'
historical assets and liabilities based on their respective carrying values,
with the exception of station licenses, as these carrying values are deemed to
materially represent the fair market value of these assets and liabilities. The
fair value of station licenses was determined based on a detailed analysis
prepared by Regent. Regent has not allocated any of the purchase price to other
identified intangible assets such as contracts and noncompete agreements, as
these assets are deemed to have nominal value and are not considered material.
The allocation of the purchase price is considered preliminary until such time
as the Closing of the Merger and the Included Transactions. At such time, an
independent appraisal will be performed for each consummated transaction to
ascertain the fair market value of all assets acquired.
<TABLE>
<CAPTION>
TOTAL CONSIDERATION
-----------------------------------------
FAIR
MARKET VALUE ADJUSTED STATION
ACQUISITION SHARES OF STOCK CASH TOTAL NET ASSETS(A) LICENSES GOODWILL
----------- --------- ------------ ----------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Merger:
Regent.................... 3,832,100 $ 2,457,854(b) $ 2,457,854 $ 1,932,186 $ 525,668
Pending Transactions:
Park Lane................. $23,500,000 23,500,000 (3,834,152) $20,421,375 6,912,777
Alta/Power Surge.......... 200,000 1,000,000 2,650,000 3,650,000 (858,390) 3,097,500 1,410,890
Continental............... 3,792,000 3,792,000 303,560 3,097,500 390,940
KZXY(FM).................. 5,286,000 5,286,000 237,000 4,725,837 323,163
--------- ----------- ----------- ----------- ----------- ----------- ----------
4,032,100 $ 3,457,854 $35,228,000 $38,685,854 $(2,219,796) $31,342,212 $9,563,438
========= =========== =========== =========== =========== =========== ==========
</TABLE>
- ---------------
(a) Net of certain assets which will not be acquired and certain liabilities
which will not be assumed, including pre-existing intangible assets. See
Note 3.
(b) Represents the assigned value under reverse merger purchase accounting based
on the estimated fair value of Regent's net assets as of December 31, 1997.
57
<PAGE> 63
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
OF REGENT COMMUNICATIONS, INC. -- (CONTINUED)
3. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ADJUSTMENTS
The following table summarizes unaudited pro forma condensed combined
balance sheet adjustments:
<TABLE>
<CAPTION>
PRO FORMA
MERGER ADJUSTMENTS ADJUSTMENTS INCLUDED TRANSACTIONS ADJUSTMENTS
--------------------------- FOR THE ----------------------------------------
(A) (B) MERGER (C) (D) (E)
------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................... $ (1,000,373)
Accounts receivable................ (172,465)
Prepaid expenses and other......... (1,936,669) $ 6,435 $(6,000,000)
------------ ------------ ------------ ------------ ----------- -----------
Total current assets............. (3,109,507) 6,435 (6,000,000)
Property and equipment, net........ 237,157
Intangible assets, net............. $ 525,668 $ 525,668 26,562,522 5,041,837
Deferred charges and other
assets........................... (525,668) (525,668) 347,473 571
------------ ------------ ------------ ------------ ----------- -----------
Total assets..................... $ 0 $ 0 $ 0 $ 23,800,488 $ 5,286,000 ($6,000,000)
============ ============ ============ ============ =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued
liabilities and other current
liabilities...................... $ (124,699)
Notes payable...................... (190,526) $(6,000,000)
Current portion of long term
debt............................. (2,492,745)
------------ ------------ ------------ ------------ ----------- -----------
Total current liabilities........ (2,807,970) (6,000,000)
Long-term debt, net of current
maturities......................... $(10,000,000) $(10,000,000) 28,422,434 $ 5,286,000
Other...............................
------------ ------------ ------------ ------------ ----------- -----------
Total liabilities................ (10,000,000) (10,000,000) 25,614,464 5,286,000 (6,000,000)
Redeemable preferred stock.......... (6,558,251)
Shareholders' equity:
Preferred stock.................... $ 2,457,854 2,457,854 (4,595,875)
Common stock....................... 190,120 (263,902) (73,782) (3,061,229)
Additional paid-in capital......... 9,809,880 (3,309,783) 6,500,097 (7,320)
Retained earnings (deficit)........ 1,115,831 1,115,831 12,408,699
------------ ------------ ------------ ------------ ----------- -----------
Total shareholders' equity
(deficit)...................... 10,000,000 10,000,000 4,744,275
------------ ------------ ------------ ------------ ----------- -----------
Total liabilities and
shareholders' equity
(deficit)...................... $ 0 $ 0 $ 0 $ 23,800,488 $ 5,286,000 $(6,000,000)
============ ============ ============ ============ =========== ===========
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
FOR THE FINANCING TRANSACTIONS FOR
PENDING ------------------------- FINANCING
TRANSACTIONS (F) (G) TRANSACTIONS
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................... $ (1,000,373)
Accounts receivable................ (172,465)
Prepaid expenses and other......... (7,930,234)
------------ ----------- ----------- ------------
Total current assets............. (9,103,072)
Property and equipment, net........ 237,157
Intangible assets, net............. 31,604,359
Deferred charges and other
assets........................... 348,044
------------ ----------- ----------- ------------
Total assets..................... $ 23,086,488 $ 0 $ 0 $ 0
============ =========== =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued
liabilities and other current
liabilities...................... $ (124,699)
Notes payable...................... (6,190,526)
Current portion of long term
debt............................. (2,492,745)
------------ ----------- ----------- ------------
Total current liabilities........ (8,807,970)
Long-term debt, net of current
maturities......................... 33,708,434 $(7,800,000) $(8,700,000) $(16,500,000)
Other............................... 2,460,000 2,460,000
------------ ----------- ----------- ------------
Total liabilities................ 24,900,464 (7,800,000) (6,240,000) (14,040,000)
Redeemable preferred stock.......... (6,558,251) 7,800,000 9,280,000 17,080,000
Shareholders' equity:
Preferred stock.................... (4,595,875) (3,000,000) (3,000,000)
Common stock....................... (3,061,229)
Additional paid-in capital......... (7,320) (40,000) (40,000)
Retained earnings (deficit)........ 12,408,699
------------ ----------- ----------- ------------
Total shareholders' equity
(deficit)...................... 4,744,275 (3,040,000) (3,040,000)
------------ ----------- ----------- ------------
Total liabilities and
shareholders' equity
(deficit)...................... $ 23,086,488 $ 0 $ 0 $ 0
============ =========== =========== ============
</TABLE>
58
<PAGE> 64
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS OF REGENT COMMUNICATIONS, INC. -- CONTINUED
- ---------------
(A) Records the conversion of Class A and Class B Faircom Subordinated Notes
into Faircom Common Stock immediately precedent to the Merger in the
aggregate amount of $10,000,000.
The assumption that the Class A and Class B Faircom Subordinated Notes
will be converted in full into Faircom Common Stock prior to the Merger is
based on the facts that: (i) such conversion of $7,500,000 of the
$10,000,000 principal amount is mandatory pursuant to the terms of the
Merger Agreement; and (ii) holders of the Class A and Class B Faircom
Subordinated Notes have expressed their intent in writing to convert 100%
of the principal amount of those notes.
(B) Records the reverse merger transaction, consisting of approximately
3,832,100 shares of preferred stock valued based on Regent's fair value of
approximately $2,458,000 at December 31, 1997, including acquisition costs.
The excess purchase price over the fair value of the net assets acquired is
approximately $526,000.
(C) Records the purchase transactions, consisting of approximately $29,942,000
in cash and 200,000 shares of preferred stock valued at $1,000,000, for a
total estimated purchase price of $30,942,000. Adjustment reflects $312,034
of certain assets which will not be acquired and $1,884,699 of certain
liabilities which will not be assumed in the Included Transactions.
Adjustment also reflects the elimination of existing goodwill and other
intangible assets. The excess purchase price over the fair value of the net
assets acquired is $35,043,982. The cash portion of the purchase price will
be funded through the use of existing cash, that is in excess of operating
needs, a bank credit facility and the issuance of additional equity
securities. See Notes F and G. Adjustment also includes a credit facility
fee of $475,000, which is reflected in Deferred Charges and Other in the
Pro Forma Condensed Combined Balance Sheet. See Note E.
(D) Records the purchase transaction of KZXY(FM) from Ruby for a total
estimated purchase price of $5,286,000. Adjustment reflects the appraised
values of assets to be acquired. A historical balance sheet does not appear
in the Condensed Combined Balance Sheet nor elsewhere in this Proxy
Statement/Prospectus because the required financial information cannot be
obtained. Unaudited assets to be acquired, on a historical basis, are as
follows:
<TABLE>
<CAPTION>
AS OF DECEMBER 31: 1997 1996
------------------ ------- -------
<S> <C> <C>
Prepaid expenses.......................................... $13,042 $13,042
Property and equipment, net............................... 38,783 32,182
Intangible assets, net.................................... 10,875 16,676
------- -------
Net assets to be acquired............................... $62,700 $61,900
======= =======
</TABLE>
(E) Records the effects of Regent's pending divestiture of a radio station in
San Diego, California, (KCBQ/AM). Regent has entered into a letter of
intent to dispose of the San Diego station during 1998.
(F) Records the collection of the promissory note for $3,900,000 related to
the issuance of 1,000,000 shares of Series B Preferred Stock and the
issuance of 780,000 shares of Series D Preferred Stock in the amount of
$3,900,000 in conjunction with the Included Transactions. Proceeds from
the issuances will be used to reduce bank credit facility borrowings. See
Note G.
(G) Records the issuance of Series F Preferred Stock in the aggregate amount of
$10,000,000 and the issuance of 820,000, 80,000, and 50,000 warrants to the
holders of Series F Preferred Stock, Series A Preferred Stock, and Series B
Preferred Stock, respectively, in conjunction with the Included
Transactions. Holders of Series F Preferred Stock (and warrants related
thereto) may put their respective shares of Series F Preferred Stock to
Regent; therefore, the Series F Preferred Stock has been classified outside
of equity. Shares of the Series A, B and D Preferred Stock (but not the
Series C and E Preferred Stock) will be entitled to put to Regent for
mandatory redemption on the same basis if the put rights related to the
Series F Preferred Stock are exercised. Consequently, the Series A
Preferred Stock has been reclassified to be excluded from equity to reflect
such anticipated "put rights." The 820,000 Put Warrants issued to holders
of Series F Preferred Stock have been assigned a fair value of $2,460,000
and have been classified as a long-term liability. The 80,000 and 50,000
Warrants issued to holders of Series A and Series B Preferred Stock have
been assigned a fair value of $160,000 and $100,000, respectively. Both
amounts have been classified as additional paid-in capital. Issuance fees
of approximately $1,000,000 related to the Series A, B, D, and F Preferred
Stock have been deducted from the proceeds. Issuance fees of approximately
$300,000 related to Series C Preferred Stock have been presented as a
reduction of Shareholders' Equity.
59
<PAGE> 65
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS --
CONTINUED
OF REGENT COMMUNICATIONS, INC.
4. UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS ADJUSTMENTS
The following table summarizes unaudited pro forma condensed combining
statement of operations adjustments:
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
MERGER ADJUSTMENTS FOR THE MERGER INCLUDED TRANSACTIONS
-------------------------------------------- AND HISTORICAL ---------------------
(A) (B) (C) (D) ACQUISITION (E) (F)
-------- -------- ---------- --------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue............................... $1,160,579 $ 1,160,579
Broadcast operating expenses.............. 263,868 263,868
Time brokerage agreement fees, net........
Depreciation and amortization............. $ 13,000 371,000 384,000 $ 234,000
Corporate general and administrative
expenses................................ 465,148 $ 870,000 1,335,148
-------- -------- ---------- --------- ----------- --------- ---------
Operating income (loss)............... (13,000) 60,563 (870,000) (822,437) (234,000)
Interest expense.......................... 353,736 353,736 $ 494,000
Other income (expense), net............... 14,477 14,477
-------- -------- ---------- --------- ----------- --------- ---------
Loss from continuing operations before
income taxes............................ (13,000) (278,696) (870,000) (1,161,696) (234,000) (494,000)
Provision (benefit) for income taxes...... $(71,542) (71,542)
-------- -------- ---------- --------- ----------- --------- ---------
Loss from continuing operations........... $(13,000) $ 71,542 $ (278,696) $(870,000) $(1,090,154) $(234,000) $(494,000)
======== ======== ========== ========= =========== ========= =========
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE
INCLUDED
(G) (H) TRANSACTIONS
------- --------- ------------
<S> <C> <C> <C>
Net revenue............................... $(578,416) $(578,416)
Broadcast operating expenses.............. (493,659) (493,659)
Time brokerage agreement fees, net........
Depreciation and amortization............. 234,000
Corporate general and administrative
expenses................................
------- --------- ---------
Operating income (loss)............... (84,757) (318,757)
Interest expense.......................... (62,254) 431,746
Other income (expense), net...............
------- --------- ---------
Loss from continuing operations before
income taxes............................ (22,503) (750,503)
Provision (benefit) for income taxes...... $ 4,000 4,000
------- --------- ---------
Loss from continuing operations........... $(4,000) $ (22,503) $(754,503)
======= ========= =========
</TABLE>
- ---------------
(A) Reflects the amortization of intangible assets to be recorded as a result of
the Merger over 40 year estimated lives.
(B) Reflects the reduction in federal and state income taxes assuming a
consolidated return basis of reporting. No deferred income tax assets have
been recorded due to the uncertainty of the ultimate realization of future
benefits from such assets.
(C) Reflects the historical operating results of Treasure Radio Associates
Limited Partnership from the beginning of the period through the date of
acquisition (June 1997), adjusted for the effect of the purchase transaction
and the related financing transaction assuming that the acquisition took
place on January 1, 1997. The purchase transaction consisted of $7,650,000
in cash, including $300,000 in consideration of a five year non-compete
agreement. The excess purchase price over the fair value of the net assets
acquired was approximately $4,600,000. Adjustment reflects the amortization
of intangible assets recorded as a result of the acquisition over 5-15
years. Adjustment also reflects the additional interest expense attributable
to financing of the acquisition.
(D) Reflects the incremental compensation expense related to certain employment
agreements effective upon the Merger. Also reflects a nonrecurring charge to
reflect the issuance of additional stock options to certain Faircom
executives to purchase 1,118,700 shares of Faircom Common Stock conditional
on the conversion of Class A and Class B Faircom Subordinated Notes into
Faircom Common Stock in conjunction with the Merger. The total estimated
nonrecurring charge is approximately $350,000.
(E) Reflects the amortization of intangible assets to be recorded as a result of
the Pending Transactions over 40-year estimated lives less historical
amortization of goodwill and other intangible assets.
(F) Reflects the additional interest expense associated with the borrowings
under a bank credit facility necessary to complete the Included Transactions
using an assumed rate of 8.25%. A 1/8% change in the interest rate under the
Credit Agreement would result in changes in interest expense of $20,000 for
the year ended December 31, 1997. Adjustment also reflects amortization of
estimated deferred financing costs over the seven year loan period of
approximately $107,000 for the year ended December 31, 1997. In conjunction
with refinancing existing debt obligations related to the Merger, Regent
will incur a prepayment penalty of approximately $370,000 which will be
accounted for as an extraordinary loss in the debt extinguishment period.
The Unaudited Pro forma Condensed Combined Balance Sheet as of December 31,
1997 reflects the issuance of 820,000 Put Warrants to the holders of Series
F Preferred Stock. Due to the absence of a fair value for the Warrants as of
January 1, 1997, interest expense has not been adjusted to reflect any
potential change in fair value for such warrants during 1997 as required by
EITF Issue No. 96-13. Once such Warrants have been issued, a valuation will
be obtained on a quarterly basis and any resulting change in value will be
properly treated as an adjustment to interest expense. See 'Information
Concerning Regent -- Management's Discussion and Analysis of Financial
Conditions and Results of Operations.'
(G) Reflects the increase in federal and state income taxes assuming a
consolidated return basis of reporting. No deferred income tax assets have
been recorded due to the uncertainty of the ultimate realization of future
benefits from such assets.
(H) Reflects the effect of Regent's completed and pending divestitures of one
radio station located in Lexington, Kentucky (WXZZ/FM) and one station in
San Diego, California (KCBQ/AM), respectively, at no gain or loss. The
station in Lexington was disposed of in November 1997, and Regent has
entered into a letter of intent to dispose of the San Diego station during
1998.
60
<PAGE> 66
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS OF REGENT COMMUNICATIONS, INC. -- CONTINUED
5. UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS ADJUSTMENTS
The pro forma earnings per share calculation is based on the
weighted-average number of shares of common stock of Regent outstanding as of
December 31, 1997. The preferred shares to be issued in conjunction with the
Merger and the Included Transactions have not been considered since their effect
would be antidilutive. The preferred stock dividend used in computing loss
applicable to common shares is based on the following Regent preferred shares
being issued in conjunction with the Merger and the Included Transactions as of
January 1, 1997: (i) 3,832,100 shares of Series C Preferred Stock in conjunction
with the Merger; and (ii) 780,000 shares each of Series B and D Preferred Stock,
200,000 shares of Series E Preferred Stock and 2,000,000 shares of Series F
Preferred Stock in conjunction with the Included Transactions. Loss applicable
to common shares has been adjusted to reflect the accretion of Series A, B, D
and F Preferred Stock to their redemption value based on the earliest redemption
date for each respective Series of Preferred Stock.
61
<PAGE> 67
CERTAIN MARKET PRICE AND DIVIDEND INFORMATION
REGARDING FAIRCOM
Faircom Common Stock is quoted on the OTC Bulletin Board under the symbol
"FXCM" and is traded on the over-the-counter market. The following table
reflects the reported high and low bid quotations for Faircom Common Stock on
the OTC Bulletin Board for the periods indicated. Such quotations reflect
interdealer prices, without retail mark-up, markdown or commission and may not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
----------- ---- ---
<S> <C> <C>
1996
First Quarter............................................. $.25 $.13
Second Quarter............................................ $.25 $.13
Third Quarter............................................. $.25 $.13
Fourth Quarter............................................ $.19 $.13
1997
First Quarter............................................. $.22 $.13
Second Quarter............................................ $.28 $.22
Third Quarter............................................. $.63 $.28
Fourth Quarter............................................ $.94 $.56
1998
First Quarter............................................. $.94 $.81
Second Quarter through April 2, 1998...................... $.84 $.84
</TABLE>
On October 21, 1997, the last trading day preceding the announcement of the
proposed Merger, the bid and asked prices of the Faircom Common Stock on the OTC
Bulletin Board were $.56 and $.75, respectively. On April 2, 1998, the bid and
asked prices of the Faircom Common Stock on the OTC Bulletin Board were $.84 and
$.94, respectively. There were 329 holders of record of Faircom Common Stock on
April 2, 1998. Faircom has never paid dividends on the Faircom Common Stock.
Faircom and its subsidiaries are subject to certain restrictions under existing
agreements with their lenders, which limit cash dividends on Faircom Common
Stock.
THE RADIO BROADCASTING INDUSTRY
At December 31, 1997, there were 4,762 commercial AM and 5,542 commercial
FM stations authorized and operating in the United States. An increasing number
of persons listen to FM radio because of clearer sound characteristics and
stereo transmission. In the spring of 1997, FM listenership was about 78% of
total radio audience.
OPERATIONS
Radio station revenue is derived predominantly from local and regional
advertising and to a lesser extent from national advertising. Network
compensation also provides some revenue. For example, in the year ended December
31, 1997, approximately 77% of Faircom's consolidated station advertising
revenues were from local and regional sales, 22% from national sales and about
1% from network or syndication compensation. Local and regional sales generally
are made by a station's sales staff. National sales generally are made by
"national rep" firms, specializing in radio advertising sales on the national
level. These firms are compensated on a commission-only basis. Local and
regional sales are made primarily to businesses in the market covered by a
station's broadcast signal and to some extent to businesses in contiguous or
nearby markets. Such businesses include auto dealers, soft drink, beer and wine
distributors, fast food outlets and financial institutions. National sales are
made to larger, nationwide advertisers, such as soft drink producers, automobile
manufacturers and airlines. Most advertising contracts are short-term, generally
running only for a few weeks. Advertising rates charged by a radio station are
based primarily on the station's ability to attract audiences in the demographic
groups which advertisers wish to reach and on the number of stations competing
in the market area. Rating service surveys quantify the number of listeners
tuned to the station at various times. Rates are generally highest during
morning and evening drive-time hours. Faircom's and Regent's stations'
advertising sales are made by their respective sales staffs under the direction
of a general manager or sales managers. Television, billboard, newspaper and
62
<PAGE> 68
direct mail advertising, as well as special events and promotions, can be used
to supplement direct contact by the sales staff in developing advertising
clients.
The primary costs incurred in operating a radio station are salaries,
programming, promotion and advertising expenditures, occupancy costs of premises
for studios and offices, transmitting and other equipment expenses and music
license royalty fees.
Radio broadcasting revenues are spread over the calendar year. The first
quarter generally reflects the lowest and the third and fourth quarters the
highest revenues for the year, due in part to increases in retail advertising in
the summer and in the fall in preparation for the holiday season and, in
election years, to political advertising.
The radio industry is continually faced with technological changes and
innovations, the possible rise in popularity of competing entertainment and
communications media, changes in labor conditions, governmental restrictions and
actions of federal regulatory bodies, including the FCC, any of which could have
a material effect on Faircom's or Regent's business. However, broadcasting
stations have generally enjoyed growth in listeners and value within the past
several decades. Population increases and greater availability of radios,
particularly car and portable radios, have contributed to this growth.
COMPETITION
The radio broadcasting industry is a highly competitive business. Faircom's
and Regent's radio broadcasting stations compete for audience share and revenue
directly with the other AM and FM radio stations in their respective market
areas, as well as with other advertising media such as newspapers, television,
magazines, outdoor advertising, transit advertising and mail marketing.
Competition within the radio broadcasting industry occurs primarily in the
individual market areas so that a station in one market does not generally
compete with stations in other market areas. In addition to management
experience, factors which are material to competitive position include the
station's ratings in its market, rates charged for advertising time, broadcast
signal coverage, assigned frequency, audience characteristics, the ability to
create and execute promotional campaigns for clients and for the station, local
program acceptance and the number and characteristics of other stations in the
market area. Both Faircom and Regent attempt to improve their competitive
positions by reviewing programming and the programming of competitors, upgrading
technical facilities where appropriate, attempting to expand sales to existing
advertising clients and developing new client relationships, and by promotional
campaigns aimed at the demographic groups targeted by their respective stations.
In order to provide additional opportunity for persons interested in
obtaining radio broadcasting licenses, including minorities, the FCC in 1984
proposed new licenses for new full service FM broadcast stations in 684
communities. This FCC program is referred to as the "Docket 80-90" proceeding.
Where these stations have commenced commercial broadcasting, they have increased
competition in these markets. Also, it has been customary in the industry for
experienced operators to buy stations in markets they consider attractive and
attempt to improve the performance of these stations by additional investment
and better management, thus increasing competition in these markets.
The FCC recently has allocated spectrum to a new technology, digital audio
broadcasting ("DAB"), to deliver satellite-based audio programming to a national
or regional audience and has adopted regulations for a DAB service. DAB may
provide a medium for the delivery by satellite or terrestrial means of multiple
new audio programming formats with compact disc quality sound to local and
national audiences. Another form of DAB, known as In-Band On Channel ("IBOC"),
could provide DAB in the present FM radio band. It is not known at this time
whether this technology also may be used in the future by existing radio
broadcast stations either on existing or alternate broadcasting frequencies. In
addition, three applications have been granted by the FCC for authority to offer
multiple channels of digital, satellite-delivered S-Band aural services that
could compete with conventional terrestrial radio broadcasting. These satellite
radio services use technology that may permit higher sound quality than is
possible with conventional AM and FM terrestrial radio broadcasting.
Implementation of DAB or IBOC would provide an additional audio programming
service that could compete with Faircom's and Regent's radio stations for
listeners, but the effect upon Faircom and Regent cannot be predicted.
63
<PAGE> 69
FCC REGULATION
The FCC regulates radio stations under the Communications Act of 1934, as
amended (the "Communications Act") which, together with FCC rules and policies
promulgated thereunder, governs the issuance, renewal and assignment of
licenses, technical operations, employment practices and, to a limited extent,
business and program practices of radio stations and other communications
entities.
The rules also generally prohibit the acquisition of ownership in, or
control of, a television station and either an AM or a FM radio station serving
the same market. Such so-called "cross-ownership" prohibition is subject to
waiver for stations in the 25 largest television markets under certain
conditions. There are also prohibitions relating to ownership in or control of a
daily newspaper and a broadcast station in the same market and limitations on
the extent to which aliens may own an interest in broadcast stations.
Over the past five years, broadcasters such as Regent and Faircom have
entered into what have commonly been referred to as "Local Market Agreements",
or "LMAs". While these agreements may take varying forms, under a typical LMA,
separately owned and licensed radio stations agree to enter into cooperative
arrangements of varying sorts, subject to compliance with the requirements of
antitrust laws and with the FCC's rules and policies. Under these types of
arrangements, separately owned stations could agree to function cooperatively in
terms of programming, advertising sales, etc., subject to the licensee of each
station maintaining independent control over the programming and station
operations of its own station. One typical type of LMA is a programming
agreement among two separately owned radio stations serving a common service
area, whereby the licensee of one station programs substantial portions of the
broadcast day on the other licensee's station, subject to ultimate editorial and
other controls being exercised by the latter licensee, and sells advertising
time during such program segments. Such arrangements are an extension of the
concept of "time brokerage" agreements, under which a licensee of a station
sells blocks of time on its station to an entity or entities which program the
blocks of time and which sell their own commercial advertising announcements
during the time periods in question.
In the past, the FCC has determined that issues of joint advertising sales
should be left to antitrust enforcement and has specifically revised its
so-called "cross-interest" policy to make that policy inapplicable to time
brokerage arrangements. Under the cross-interest policy, the FCC may prohibit
one party from acquiring certain economic interests in two broadcast stations in
the same market. Furthermore, the staff of the FCC's Mass Media Bureau has, over
the past five years, held that LMAs are not contrary to the Communications Act
provided that the licensee of the station which is being substantially
programmed by another entity maintains complete responsibility for and control
over operations of its broadcast station and assures compliance with applicable
FCC rules and policies. However, LMAs in which one station programs more than
15% of the weekly broadcast time of another local radio station are prohibited
under FCC rules if the programming station could not own the programmed station
under the FCC's so-called "multiple ownership" rules.
On February 8, 1996, the President signed into law the Telecommunications
Act of 1996. This legislation (a) permits foreign nationals to serve as officers
and directors of broadcast licensees and their parent companies, (b) directs the
FCC to eliminate its national ownership limits on radio station ownership, (c)
requires the FCC to relax its numerical restrictions on local radio ownership,
(d) extends the FCC's radio and television cross ownership waiver policy to the
top 50 markets, (e) extends the license renewal period for radio and television
stations to eight years and (f) affords renewal applicants significant new
protections from competing applications for their broadcast licenses.
The Telecommunications Act's provisions regarding local radio ownership
limits create a sliding scale of permissible ownership, depending on market
size. In radio markets with 45 or more commercial radio stations, a licensee may
own up to eight stations, no more than five of which can be in a single radio
service (i.e. no more than five AM or five FM). In radio markets with 30 to 44
commercial radio stations, a licensee may own up to seven stations, no more than
four of which are in a single radio service. In radio markets having 15 to 29
commercial radio stations, a licensee may own up to six radio stations, no more
than four of which are in a single radio service. Finally, with respect to radio
markets having 14 or fewer commercial radio stations, a licensee may own up to
five radio stations, no more than three of which are in the same service;
provided that the licensee may not own more than one half of the radio stations
in the market.
64
<PAGE> 70
The Telecommunications Act affords renewal applicants additional protection
from renewal challenges by (a) changing the standard for grant of license
renewal and (b) precluding the FCC from considering the relative merits of a
competing applicant in connection with making its determination on a licensee's
renewal application. The new standard for license renewal is that a station's
license will be renewed if (x) the station has served the public interest,
convenience and necessity, (y) there have been no serious violations of the
Communications Act or FCC rules by the licensee and (z) there have been no other
violations of the Communications Act or FCC rules which, taken together, would
establish a pattern of abuse by the licensee.
The Communications Act limits the ownership of broadcast licenses by
"aliens." Regent's voting securities contain a legend which states that the
securities are subject to restrictions contained in the Communications Act.
Regent's Amended and Restated Certificate of Incorporation provides that
Regent's Common Stock and Preferred Stock are subject to redemption by Regent,
to the extent necessary to prevent the loss of any licenses held by Regent or to
reinstate such licenses, for cash, property or rights, including other
securities of Regent, at such time or times as the Board of Directors of Regent
determines. See "Description of Regent Securities."
The foregoing does not purport to be a complete summary of all of the
provisions of the Communications Act, the Telecommunications Act or the
regulations or policies of the FCC thereunder. Reference is made to such Acts,
regulations, and policies for further information.
65
<PAGE> 71
INFORMATION CONCERNING FAIRCOM
THE COMPANY
Faircom owns and operates six radio stations, WFNT(AM) and WCRZ(FM) in
Flint, Michigan; WWBN(FM) in Tuscola, Michigan, a community north of Flint;
WMAN(AM) and WYHT(FM) in Mansfield, Ohio, and WSWR(FM) in Shelby, Ohio,
adjoining Mansfield.
Faircom was founded by Joel M. Fairman in April 1984 and began operations
with the objective of acquiring broadcasting properties at prices considered
attractive by Faircom, financing them on terms satisfactory to Faircom, managing
them in accordance with Faircom's operating strategy and building a broadcasting
group. Faircom has sought to acquire radio properties which have a history of
growing revenues and broadcast cash flow, have capable operating management and
are in communities with good growth prospects or which have attractive
competitive environments. Faircom focuses its acquisition efforts on medium and
smaller radio markets, particularly where there may be an opportunity to achieve
a significant cluster of stations in the market or to add additional stations in
surrounding communities. Faircom has not purchased, and does not foresee
purchasing in the near future, properties with negative cash flows, or so-called
"under-performing" or "turnaround" properties, unless they complement or can be
combined with the operations of positive cash flow properties in a market or
regional cluster. Faircom's strategy is to have at least $1,000,000 in broadcast
cash flow and be among the top three operators in each of its markets.
In August 1994, Faircom sold WHFM(FM), its station in Southampton, Long
Island, New York for $1,860,000 cash, reduced by credits of $150,000 for certain
payments made by the purchaser prior to closing, and purchased WWBN(FM) for
$450,000, consisting of $400,000 cash and an 8% note to the seller for $50,000,
paid in full December 1995.
In June 1997, Faircom, through its wholly-owned subsidiary, Faircom
Mansfield Inc. ("Faircom Mansfield"), purchased substantially all of the assets
of WMAN(AM) and WYHT(FM) for total cash consideration of $7,650,000. Faircom
also negotiated the refinancing of all its existing indebtedness, increased such
indebtedness and obtained additional equity capital in connection with the
acquisition.
In January 1998, Faircom purchased substantially all of the assets and
operations of radio station WSWR(FM) in Shelby, Ohio for $1,125,000 in cash. The
acquisition was financed with internal funds and a bridge loan from Blue Chip to
Faircom of $1,100,000. This bridge loan is expected to be refinanced from term
loans to Regent at the closing of the Merger. The bridge loan is in the form of
a subordinated note, matures on the first to occur of May 22, 1998 or the
closing of the Merger and bears accrued interest at 14% per annum, payable at
maturity.
Faircom continuously reviews radio properties for possible acquisition, and
several acquisitions are currently being actively pursued. No assurance can be
given that Faircom will successfully consummate any of such acquisitions.
Faircom's executive offices are located at 333 Glen Head Road, Suite 220,
Old Brookville, New York 11545 and its telephone number is (516) 676-2644. All
of Faircom's properties are owned and operated through subsidiary corporations,
and references to "Faircom" herein include such subsidiaries unless the context
otherwise requires.
OPERATING STRATEGY
Faircom's strategy has been to purchase radio properties that exhibit
growing revenues and broadcast cash flow, and have experienced, in-place
operating personnel. After acquiring a radio station, Faircom reviews the
station's operations and attempts to realize economies associated with ownership
of multiple stations by centralizing such functions as accounting and other
administrative activities. A minimal staff is maintained at the corporate level
reflecting Faircom's strategy of minimizing corporate expenses while giving
considerable autonomy to its station managers.
Faircom relies on experienced station managers who are given the authority
for decision making at the station level, subject to guidance by Faircom's
management. Faircom's station managers are partially compen-
66
<PAGE> 72
sated on the basis of their ability to meet or exceed budgeted operating
results. Consequently, operating personnel can benefit by meeting the revenue
and expense objectives of Faircom.
Each station targets specific demographic groups based upon advertiser
demand, the format of the station and the competition in the market. Through
program selection, promotion, advertising and the use of selected on-air
personnel, each station attempts to attract a target audience that it believes
is attractive to advertisers. Faircom retains consultants to assist the its
programming personnel by evaluating and suggesting improvements for programming.
Faircom also conducts research through outside consultants to evaluate and
improve its programming and also uses its own personnel for such research.
LICENSES
Faircom's license for its Tuscola station, WWBN(FM), was to expire October
1, 1996, and was renewed for a term through October 1, 2003. Pursuant to
regulations adopted by the FCC in January 1997, as provided by the Telecom Act,
the license renewal term was extended to October 1, 2004, a period of eight
years. Faircom's licenses for its Flint stations, WCRZ(FM) and WFNT(AM), also
were to expire on October 1, 1996. Timely license renewal applications for the
stations were filed, and, as part of the FCC's review process, the Equal
Employment Opportunity ("EEO") Branch of the FCC's Mass Media Bureau requested
additional written information regarding Faircom's EEO recruitment efforts at
these stations. Such additional information was furnished, and on September 30,
1997, the FCC released a Memorandum Opinion and Order and Notice of Apparent
Liability. The Opinion found that there was no evidence that the licensee
engaged in employment discrimination, but that the overall EEO recruitment
effort was deficient because the licensee failed to recruit actively for some of
its vacancies and to engage in meaningful self-assessment of its EEO program.
The Order granted renewal of the stations licenses for a term expiring October
1, 2004, subject to an admonishment and reporting requirements with respect to
EEO recruitment performance for the 12 month periods ending June 1, 1998, 1999
and 2000. A Notice of Apparent Liability was issued in the amount of $11,000.
The management of Faircom and its FCC counsel believe that the factual
assumptions on which the FCC Opinion, Order and Notice are based are incorrect
and incomplete. On October 30, 1997, Faircom filed with the FCC a Petition for
Reconsideration in this matter. Faircom and its FCC counsel are unable to
predict the ultimate outcome of this matter, but in the opinion of both a
rejection of Faircom's Petition would not have a material adverse effect on
Faircom. The licenses of WMAN(AM) and WYHT(FM) in Mansfield, Ohio, and WSWR(FM),
in Shelby, Ohio, were renewed October 1, 1996 and expire October 1, 2004.
EMPLOYEES
At the corporate level, Faircom employs its President and Treasurer, Joel
M. Fairman, and John E. Risher, its Senior Vice President, who also utilize the
services of consultants, a bookkeeping service and Faircom's attorneys.
Faircom's President and Senior Vice President assist the general managers of
Faircom's stations in developing strategies to increase the profitability of
Faircom's broadcasting properties and in the operation of the stations. Faircom
plans to continue its present policy of utilizing only a small number of persons
at the corporate level. Each market in which Faircom owns and operates radio
stations has its own complement of employees, including a general manager, a
sales manager, a business manager, advertising sales staff, on-air personalities
and engineering and operating personnel. In the aggregate, Faircom's
subsidiaries employ 63 people on a full-time basis and 31 people on a part-time
basis.
Faircom has never experienced a strike or work stoppage and believes that
its relations with its employees are good.
PROPERTIES
Faircom leases an aggregate of approximately 780 square feet of office
space for its corporate offices in Old Brookville, New York. The lease expires
February 28, 2001. Annual rental is currently $22,200.
The Flint stations occupy studio and office space in a building of
approximately 6,000 square feet located on 10 acres in southeastern Flint,
Michigan. The AM towers and antennas are also located on this land. A FM tower,
antenna and transmitter building and equipment are located on 19 acres of land
located nearby. The land, buildings, towers, antennas and equipment are owned by
a subsidiary of Faircom.
67
<PAGE> 73
The Tuscola station occupies studio and office space in leased premises in
Frankenmuth, Michigan, at an annual rental of $1,800 under a lease that expires
in September 1998. The station's tower, antenna and transmitter building and
equipment are owned by a subsidiary of Faircom. Those facilities are located on
leased land in Millington, Michigan. The lease expires in June 2002 and has
renewal options through June 2042. Current rental is $2,112 annually.
The Mansfield stations occupy studio and office space in a building of
approximately 6,600 square feet located on six acres in Mansfield, Ohio. An
auxiliary AM tower is located at this site. An adjoining property of
approximately 10 acres is the site of a building of approximately 6,000 square
feet that contains AM and FM transmitters and equipment and storage space. The
AM and FM towers and antenna are located on this property. The land, buildings,
towers, antennas and equipment are owned by a subsidiary of Faircom.
All operations of WSWR(FM) have been moved from Shelby to the Mansfield
studio and office space. The tower, antenna and transmitter building and
equipment of WSWR(FM) are located on approximately one-half acre in Plymouth
Township, Ohio, northeast of Shelby. The tower site is leased through September
2002 at a current rental of $1,200 annually, with four five-year term renewal
options, each at a 10% increase in annual rent over the prior term. WSWR(FM)
also leases approximately 1,000 square feet for office, sales and broadcast use
in Willard, Ohio. The lease is at a current annual rental of $3,600 and expires
in August 2002. The lease contains an option to renew for an additional
five-year term at an annual rental of $4,200.
Faircom owns substantially all of its studio and general office equipment.
Faircom believes that its properties are in good condition and are adequate for
its operations, although opportunities to upgrade facilities are constantly
reviewed.
All the tangible and intangible property of Faircom's subsidiaries is
pledged as security for senior debt of the subsidiaries.
LEGAL PROCEEDINGS
Faircom is not a party to any lawsuit or legal proceeding that, in the
opinion of Faircom, is likely to have a material adverse effect on Faircom.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF FAIRCOM
The following table sets forth, as of the date of this Proxy
Statement/Prospectus, certain information with respect to all stockholders known
to Faircom to beneficially own more than 5% of the Faircom Common Stock, and
information with respect to Faircom Common Stock beneficially owned by each
director of Faircom, the President of Faircom and all directors and executive
officers of Faircom as a group. Except as otherwise specified, the stockholders
listed in the table have sole voting and investment power with respect to
Faircom Common Stock owned by them. Shares issuable upon conversion of
convertible securities or upon exercise of options are deemed to be outstanding
for the purpose of computing the percentage ownership and overall voting power
of persons
68
<PAGE> 74
believed to beneficially own such securities, but have not been deemed to be
outstanding for the purpose of computing the percentage ownership or overall
voting power of any other person.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES
BENEFICIAL OWNERS BENEFICIALLY OWNED(A) PERCENT OF CLASS
------------------- --------------------- ----------------
<S> <C> <C>
Blue Chip Capital Fund II Limited........................... 14,492,085(b) 66.3%
Partnership
2000 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Miami Valley Venture Fund L.P............................... 2,557,427(c) 25.7%
2000 PNC Center
201 East Fifth Street
Cincinnati, Ohio 4520
John H. Wyant............................................... 17,049,512(d) 69.8%
c/o Blue Chip Venture Company, Ltd.
2000 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
PNC Bank, National Association, Trustee..................... 1,962,488(e) 21.0%
201 East Fifth Street
Cincinnati, Ohio 45202
Joel M. Fairman............................................. 2,458,886(f) 28.5%
333 Glen Head Road
Old Brookville, New York 11545
Don G. Hoff and Sandra Hoff................................. 430,000 5.8%
1 Via Capistrano
Tiburon, California 94920
Ido Klear................................................... 380,000 5.2%
111 Great Neck Road
Great Neck, New York 11021
Anthony Pantaleoni.......................................... 110,000(g) 1.5%
666 Fifth Avenue
New York, New York 10103
Stephen C. Eyre............................................. 139,500(g) 1.9%
69 Dogwood Lane
Locust Valley, New York 11560
John C. Jansing............................................. 153,500(g) 2.1%
162 South Beach Road
Hobe Sound, Florida 33455
All officers and directors as a group (6 persons)........... 20,256,212(h) 77.0%
</TABLE>
- ---------------
(a) The Securities and Exchange Commission has defined "beneficial ownership"
to include sole or shared voting or investment power with respect to a
security or the right to acquire beneficial ownership within 60 days. The
number of shares indicated are owned with sole voting and investment power
unless otherwise noted and includes certain shares held in the name of
affiliated companies as to which beneficial ownership may be disclaimed.
(b) Represents: (A) 8,431,875 shares issuable upon conversion of Faircom's
Class A Subordinated Promissory Note held by Blue Chip Capital Fund II
Limited Partnership in the principal amount of $3,750,000; and (B)
6,060,210 shares issuable upon conversion of Faircom's Class B Subordinated
Promissory Note held by Blue Chip Capital Fund II Limited Partnership in
the aggregate principal amount of $3,900,000. See note (d) below. Under
certain circumstances, PNC Bank, National Association, Trustee, has the
right to
69
<PAGE> 75
require Blue Chip Capital Fund II Limited Partnership to purchase up to $500,000
in principal amount of Class A Faircom Subordinated Notes convertible into
1,124,249 shares of Faircom Common Stock and up to $350,000 in principal amount
of Class B Faircom Subordinated Notes convertible into 543,865 shares of
Faircom Common Stock. It is contemplated that at or prior to consummation
of the Merger, Blue Chip Capital Fund II Limited Partnership will sell to
Waller-Sutton $625,000 in principal amount of Class A Faircom Subordinated
Notes convertible into 1,405,313 shares of Faircom Common Stock and
$650,000 in principal amount of Class B Faircom Subordinated Notes
convertible into 1,010,035 shares of Faircom Common Stock.
(c) Represents: (A) 1,487,979 shares issuable upon conversion of Faircom's
Class A Subordinated Promissory Note held by Miami Valley Venture Fund L.P.
in the principal amount of $661,765; and (B) 1,069,448 shares issuable upon
conversion of Faircom's Class B Subordinated Promissory Note held by Miami
Valley Venture Fund L.P. in the principal amount of $688,235. See note (d)
below. Under certain circumstances, PNC Bank, National Association,
Trustee, has the right to require Miami Valley Venture Fund L.P. to
purchase up to $88,235 in principal amount of Class A Faircom Subordinated
Notes convertible into 198,397 shares of Faircom Common Stock and $61,765
in principal amount of Class B Faircom Subordinated Notes convertible into
95,977 shares of Faircom Common Stock. It is contemplated that, at or prior
to consummation of the Merger, Miami Valley Venture Fund L.P. will sell to
Waller-Sutton $110,294 in principal amount of Class A Faircom Subordinated
Notes convertible into 247,996 shares of Faircom Common Stock and $114,706
in principal amount of Class B Faircom Subordinated Notes convertible into
178,241 shares of Faircom Common Stock.
(d) John H. Wyant, a director of Faircom, is a beneficial owner and manager of
Blue Chip Venture Company Ltd., which is the general partner of Blue Chip
Capital Fund II Limited Partnership, and Blue Chip Venture Company of
Dayton, Ltd., an investment manager for Miami Valley Venture Fund L.P. Mr.
Wyant disclaims beneficial ownership of the securities held by Blue Chip
Capital Fund II Limited Partnership and Miami Valley Venture Fund L.P. See
notes (b) and (c) above.
(e) Represents: (A) 1,322,646 shares issuable upon conversion of Faircom's
Class A Subordinated Promissory Notes held by PNC Bank, National
Association, Trustee in the principal amount of $588,235; and (B) 639,842
shares issuable upon conversion of Faircom's Class B Subordinated
Promissory Notes held by PNC Bank, National Association, Trustee in the
principal amount of $411,765. But see notes (b) and (c) above.
(f) Includes 1,258,886 shares issuable pursuant to stock options held by Mr.
Fairman, including options granted under Faircom's Stock Option Plan (the
"Plan") and outside the Plan. See "The Merger -- Interests of Certain
Persons in the Merger; Certain Relationships."
(g) Includes 100,000 shares issuable pursuant to stock options held by each of
Messrs. Pantaleoni, Eyre and Jansing under the Plan.
(h) Includes 1,878,700 shares issuable pursuant to stock options held by
officers and directors of Faircom, including options granted under the Plan
and outside the Plan, and 17,049,512 shares issuable upon conversion of
Faircom's Class A and Class B Subordinated Promissory Notes held by Blue
Chip Capital Fund II Limited Partnership and Miami Valley Venture Fund L.P.
See note (d) above.
70
<PAGE> 76
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF FAIRCOM
RESULTS OF OPERATIONS
Year ended December 31, 1997 compared to the year ended December 31, 1996
The results of Faircom's operations for the year ended December 31, 1997
compared to the year ended December 31, 1996 are not comparable or necessarily
indicative of results in the future due to the significance of acquisitions. As
of June 30, 1997, Faircom, through a wholly-owned subsidiary, Faircom Mansfield
Inc. ("Faircom Mansfield"), acquired the assets and operations of two radio
stations, WMAN(AM) and WYHT(FM), both located in Mansfield, Ohio (the "Mansfield
Stations") for aggregate cash consideration of $7,650,000. The acquisition has
been accounted for as a purchase, and accordingly the operating results of the
Mansfield Stations have been included in the Consolidated Statements of
Operations from the acquisition date.
The increase in Faircom's net broadcasting revenues in 1997 as compared
with 1996 resulted principally from the ownership and operation of the Mansfield
Stations during 1997. Net broadcasting revenues increased to $5,993,000 from
$4,874,000, or 23.0%, in 1997 as compared with 1996.
Programming and technical expenses and selling, general and administrative
expenses increased in 1997 as compared with 1996, principally as a result of the
acquisition of the Mansfield Stations. Such increases were to $1,591,000 from
$1,218,000, or 30.6%, and to $2,270,000 from $1,775,000, or 27.9%, respectively.
Operating expenses before depreciation, amortization and corporate expenses
also increased in 1997 as compared with 1996, primarily as a result of the
acquisition of the Mansfield Stations. Such increase was to $3,860,000 from
$2,993,000, or 29.0%, in 1997 as compared with 1996.
Net broadcasting revenues in excess of operating expenses before
depreciation, amortization and corporate expenses ("broadcast cash flow")
increased 13.4% to $2,133,000 in 1997 from $1,881,000 in 1996. This increase
resulted primarily from the acquisition of the Mansfield Stations as described
above offset in part by lower broadcast cash flow from Faircom's radio stations
in Flint, Michigan.
Depreciation and amortization and interest expense increased in 1997 as
compared with 1996 as a result of the addition of assets and debt incurred in
connection with the acquisition of the Mansfield Stations.
Taxes on income for both 1997 and 1996 related principally to state income
taxes. There were no current federal income taxes in 1997, as a result of a
taxable loss. Current federal income taxes in 1996 were offset in full by the
utilization of net operating loss carryforwards. Faircom has provided valuation
allowances equal to its deferred tax assets because of uncertainty as to their
future utilization. The deferred tax assets relate principally to net operating
loss carryforwards. Although Faircom was marginally profitable in 1994 through
1996, the loss in 1997 along with substantial historical losses caused
management to conclude that it was still premature to reduce the valuation
allowance.
As a result principally of an extraordinary loss from debt extinguishment
of $4,703,000, offset in part by an extraordinary gain from debt extinguishment
of $370,000, net loss was $4,696,000 for 1997 compared to net income of $279,000
in 1996.
Year ended December 31, 1996 compared to year ended December 31, 1995
Faircom's net broadcasting revenues decreased 4.7% in 1996 compared to 1995
(to $4,874,000 from $5,114,000), primarily due to lower regional and national
advertising activity in the Flint, Michigan radio market and resulting lower
regional and national advertising revenues in the Flint radio stations.
Programming and technical expenses decreased by 0.9% in 1996 compared to
1995 (to $1,218,000 from $1,229,000) and selling, general and administrative
expenses increased by 3.4% (to $1,775,000 from $1,717,000).
Operating expenses before depreciation, amortization and corporate expenses
increased by 1.6% in 1996 compared to 1995 (to $2,993,000 from $2,946,000).
Net broadcasting revenues in excess of operating expenses before
depreciation, amortization and corporate expenses ("broadcast cash flow")
decreased 13.2% (to $1,881,000 from $2,167,000) in 1996 compared to 1995,
principally as a result of the lower net broadcasting revenues in Flint.
71
<PAGE> 77
Corporate expenses increased by 10.5% in 1996 from 1995 (to $337,000 from
$305,000) primarily as a result of higher employee compensation, professional
fees and related expense. Such employee compensation in 1996 included incentive
payments indexed to 1995 operating results.
Interest expense decreased by 26.9% in 1996 from 1995 (to $914,000 from
$1,249,000) due to lower principal amounts of interest bearing debt outstanding,
lower interest rates during 1996 and a lower provision for appraisal rights.
Taxes on income for both 1996 and 1995 related principally to state income
taxes. Current federal income taxes in 1996 and 1995 and a portion of state
income taxes in 1995 were offset by the utilization of net operating loss
carryforwards. Faircom has provided valuation allowances equal to its deferred
tax assets because of uncertainty as to their future utilization. The deferred
tax assets relate principally to net operating loss carryforwards. Although
Faircom was marginally profitable in 1994 through 1996, substantial historical
losses caused management to conclude that it was still premature to reduce the
valuation allowance.
As a result principally of lower provision for appraisal rights and
interest expense in 1996 compared with 1995, offset by lower income from
operations, net income increased to $279,000 in 1996 from $245,000.
LIQUIDITY AND CAPITAL RESOURCES
In 1997, net cash provided by operating activities was $418,000 compared
with $379,000 provided by operating activities in 1996. Net increase in cash and
cash equivalents was $412,000 in 1997 compared with a net decrease of $240,000
in 1996.
In January 1998, Faircom Mansfield purchased substantially all of the
assets and operations of radio station WSWR-FM in Shelby, Ohio for $1,125,000 in
cash. The acquisition was financed with internal funds and a loan to Faircom of
$1,100,000. The loan is in the form of a subordinated note, matures on the first
to occur of April 1, 1999 or the closing of the Merger with Regent and bears
accrued interest at 14% per annum, payable at maturity.
Based upon current interest rates, and assuming the Merger with Regent is
not consummated, Faircom believes its interest payments for 1998 will be
approximately $1,213,000. Scheduled debt principal payments are $430,000.
Corporate expenses and capital expenditures for 1997 are estimated to be
approximately $410,000 and $200,000, respectively. Faircom expects to be able to
meet such interest expense, debt repayment, corporate expenses and capital
expenditures, aggregating $2,253,000, from net cash provided by operations and
current cash balances. For the years 1999 through 2001, currently scheduled debt
principal payments average $685,000 yearly. Interest payments, corporate
expenses and capital expenditures are expected to be approximately the same as
projected for 1998, adjusted for inflation. Faircom expects to be able to meet
such cash requirements from net cash provided by operations and cash balances.
Faircom believes its $1,100,000 loan maturing April 1, 1999, and the balance of
its long-term debt in the amount of $19,858,000, maturing July 1, 2002, will be
refinanced at their respective maturity dates either from its current lenders or
from other sources, if still outstanding.
The terms of the Securities Purchase Agreement applicable to the Class A
and Class B Faircom Subordinated Notes, as amended, provide that if Faircom does
not, on or before April 1, 1999, consummate a merger of Faircom with another
corporation on terms acceptable to the holders of the Class A and Class B
Faircom Subordinated Notes, then upon notice from such holders, Faircom shall
take all action necessary to liquidate Faircom and each of its subsidiaries on
terms and conditions acceptable to such holders, such approval not to be
unreasonably withheld. If the Merger does not occur, Faircom believes there are
a number of alternatives available to it which would be acceptable to the
holders of the Class A and Class B Faircom Subordinated Notes.
Faircom estimates the fees and expenses relating to the Merger for which
Faircom is responsible to be approximately $543,000. Of this amount,
approximately $233,000 is payable only if the Merger is consummated. Of the
balance of $310,000, Faircom expects to pay such fees and expenses from net cash
provided by operations and current cash balances, and, with respect to the
amount payable on consummation of the Merger, from such balances at the time of
the closing of the Merger.
INFLATION
Faircom does not believe the effects of inflation have had a significant
impact on its consolidated financial statements.
72
<PAGE> 78
COMPLIANCE WITH YEAR 2000
Faircom management has initiated a company-wide program to prepare
Faircom's computer systems and applications for year 2000 compliance. Faircom
expects to incur internal staff costs as well as other expenses necessary to
prepare its systems for the year 2000. Faircom expects to both replace some
systems and upgrade others. Maintenance or modification costs will be expensed
as incurred. The total cost of this effort is still being evaluated, but is not
expected to be material to Faircom.
73
<PAGE> 79
INFORMATION CONCERNING REGENT
INTRODUCTION
The discussion set forth below under the heading "Description of Business"
describes the business of Regent as conducted by Regent and its subsidiaries
prior to Effectiveness. The discussion set forth below under the heading "Recent
and Pending Transactions" describes all recent transactions with respect to
which Regent or its subsidiaries acquired or disposed of properties and all
transactions with respect to which Regent has entered into definitive agreements
or letters of intent for the purchase of additional radio station properties,
the sale of certain of its assets, or issuance of equity securities.
DESCRIPTION OF BUSINESS
General. Regent is a holding company engaged in the radio broadcasting
business. Regent was incorporated under the laws of the State of Delaware in
1996 under the name "JS Communications, Inc." and, in 1997, changed its name to
"Regent Communications, Inc." Regent, through its wholly-owned subsidiary,
currently owns and operates radio station KCBQ(AM) located in San Diego,
California. Regent also provides programming and other services to 24 other
stations under time brokerage agreements which Regent has agreed to acquire
concurrently with the closing of the Merger.
The following table sets forth certain information regarding KCBQ-AM and
the radio stations which Regent has agreed to acquire:
<TABLE>
<CAPTION>
LICENSE
STATION CALL CITY OF POWER EXPIRATION
MARKET AREA LETTERS LICENSE FREQUENCY (KW) FORMAT DATE
----------- ------------ ------- --------- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
San Diego, California
KCBQ(AM)* San Diego, CA 1170 KHz 50.0(day) Talk/Information 12/01/2005
1.5(night)
Chico, California
KFMF(FM)+ Chico, CA 93.9 MHz 2.0 Album Oriented 12/01/2005
Rock
KALF(FM)+ Red Bluff, CA 95.7 MHz 7.0 Country 12/01/2005
KPPL(FM)+ Colusa, CA 107.5 MHz 28.0 Lite Rock 12/01/2005
Redding, California
KQMS(AM)+ Redding, CA 1400 KHz 1.0 News/Talk/Sports 12/01/2005
KSHA(FM)+ Redding, CA 104.3 MHz 100.0 Lite Rock 12/01/2005
KNNN(FM)+ Central Valley, CA 99.3 MHz 4.2 Adult Contemporary 12/01/2005
KRDG(FM)+ Shingletown, CA 105.3 MHz 9.9 Oldies 12/01/2005
KRRX(FM)+ Burney, CA 106.1 MHz 100.0 Classic Rock 12/01/2005
KNRO(AM)+ Redding, CA 600 KHz 1.0 News/Talk/Sports 12/01/2005
Palmdale, California
KTPI(FM)+ Tehachapi, CA 103.1 MHz 6.0 Country 12/01/2005
KVOY(AM)+ Mojave, CA 1340 KHz 1.0 Country/Talk 12/01/2005
Victorville, California
KZXY(FM)+ Apple Valley, CA 102.3 MHz 3.0 Adult Contemporary 12/01/2005
KIXW(AM)+ Apple Valley, CA 960 KHz 5.0 Country/Adult 12/01/2005
Contemporary 12/01/2005
KATJ(FM)+ George, CA 100.7 MHz 260w Country 12/01/2005
KROY(AM)+ Victorville, CA 1590 KHz 500w Country 12/01/2005
KIXA(FM)+ Lucerne Valley, CA 106.5 MHz 150w Classic Rock 12/01/2005
South Lake Tahoe, California
KRLT(FM)+ South Lake Tahoe, CA 93.9 MHz 6.0 Classic Rock 12/01/2005
KOWL(AM)+ South Lake Tahoe, CA 1490 KHz 1.0 News/Talk/Sports 12/01/2005
Flagstaff, Arizona
KZGL(FM)+ Cottonwood, AZ 95.9 MHz 9.0 Classic Rock 10/01/2005
KVNA(AM)+ Flagstaff, AZ 600 KHz 5.0 News/Talk/Sports 10/01/2005
KVNA(FM)+ Flagstaff, AZ 97.5 MHz 100.0 Adult Contemporary 10/01/2005
Kingman, Arizona
KFLG(AM) Bullhead City, AZ 1000 KHz 5.0 American Standards 10/01/2005
KFLG(FM) Bullhead City, AZ 102.7 MHz 53.0 Country 10/01/2005
KAAA(AM)+ Kingman, AZ 1230 KHz 1.0 News/Talk 10/01/2005
KZZZ(FM)+ Kingman, AZ 94.7 MHz 100.0 Adult Contemporary 10/01/2005
</TABLE>
74
<PAGE> 80
<TABLE>
<CAPTION>
LICENSE
STATION CALL CITY OF POWER EXPIRATION
MARKET AREA LETTERS LICENSE FREQUENCY (KW) FORMAT DATE
----------- ------------ ------- --------- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Flint, Michigan
WCRZ(FM) Flint, MI 107.9 MHz 50.0 Adult Contemporary 10/01/2004
WWBN(FM) Tuscola, MI 101.5 MHz 6.0 Album Oriented 10/01/2004
Rock
WFNT(AM) Flint, MI 1470 KHz 5.0(day) News/Talk/Sports 10/01/2004
1.0(night)
Mansfield/Shelby, Ohio
WMAN(AM) Mansfield, OH 1400 KHz 1.0 News/Talk/Sports 10/01/2004
WYHT(FM) Mansfield, OH 105.3 MHz 50.0 Hot Adult 10/01/2004
Contemporary
WSWR(FM) Shelby, OH 100.1 MHz 3.0 Oldies 10/01/2004
Charleston, South Carolina
WSSP(FM)+# Goose Creek, SC 94.3 MHz 5.8 Nostalgia 12/01/2003
</TABLE>
- ---------------
* Regent has entered into a letter of intent for the sale of KCBQ(AM).
+ Regent provides programming and sells advertising as a "time broker" to these
stations for a monthly fee pending their acquisition.
# Regent has an option expiring in November 1998 for the purchase of WSSP(FM),
which option may be put to Regent if not exercised prior to its expiration.
See "Information Concerning Regent -- Recent and Pending Transactions."
Acquisition Strategy. Given deregulation and subsequent industry
consolidation, Regent believes it is prudent to acquire a sufficient number of
stations in each market to form competitive station clusters. Operating a number
of stations in a single market should allow Regent to reduce overhead and
marketing expenses, create a strong identity among advertisers, attract superior
operating and on-air talent, and build a strong position with demographically
attractive listeners, thereby creating operating leverage that should give
Regent the opportunity to enhance revenue generation.
Initially, Regent intends to focus on the acquisition of properties or
combining with operators with existing cash flow (such as Park Lane and Faircom)
to provide a corporate base for future growth. As Regent expands, it may
consider opportunities involving underperforming stations, which will benefit
from management's experience, thereby positioning itself to increase return on
investment.
Management does not have a specific inflexible acquisition formula,
believing that what may be an attractive cash flow multiple in one situation may
be a very poor investment in other circumstances. Factors which may influence
pricing include actual and potential revenue growth rates, competitive factors,
the potential to improve or add to existing in-market operations, the quality of
technical facilities, and hidden values such as high overhead, poor sales
conversion, or real estate or other assets that can be sold.
Regent plans to utilize its management's experience in the industry and
relationships with both independent owners and larger corporate entities to
create opportunities for purchases that may not be available to others. Regent
expects to be flexible with respect to its acquisition policies, offering
certain sellers the opportunity to receive shares of Regent in partial payment
for their stations. Regent believes the availability of a publicly-traded equity
as a payment medium may be useful to Regent in accommodating sellers' financial
and tax objectives. In the past this has proven to be helpful when negotiating
with sellers who wish to maintain an investment in the industry while achieving
some liquidity. As an additional inducement, Regent may also offer qualified
sellers the opportunity to continue to manage the properties subsequent to a
sale, providing continued stability within its operations.
Operating Strategy. Regent's strategies for operating broadcasting
properties and creating value have been developed from its management's years of
experience in the industry.
Critical elements of Regent's operating strategies include a continual
focus on improving ratings, revenues and operating effectiveness in each
station; an emphasis on developing superior local and corporate management; the
sharing of financial rewards with this management; operating multiple station
clusters for maximum efficiency; the development of strong ratings or format
positions within its markets; establishing the first, second
75
<PAGE> 81
or third revenue position in each of its markets; improving the performance of
developmental stations; utilization of management information systems and
controls; ongoing programming research; and effective implementation of the
results of this research.
Regent management has experience building and operating profitable
in-market station clusters with strong ratings or format positions and believes
that the opportunities created by deregulation can only be realized by owning
well designed and executed clusters. Maximizing performance of an in-market
cluster requires musical formats that work well together to draw attractive
demographics and create a market position less vulnerable to competitive attack.
An example of such a cluster might include ownership of a Modern Rock, Classic
Rock and a Sports/Talk station. Such a grouping would tend to attract an
audience with strength among male demographics. This audience would be of
interest to particular advertisers (e.g., brewers, certain automobile
manufacturers or retailers oriented toward a male clientele) and allow the
broadcaster to create attractive packages for these advertisers.
Strong station clusters are also critical to establishing a competitive
revenue position. Consolidation results in a smaller number of broadcasters
controlling larger revenue shares. In most markets, holding a top three position
generally provides the ability to compete for advertisers seeking broad
visibility in the market. Moreover, clusters with larger revenue shares will be
in a position to spread overhead and other costs over this larger base, thereby
increasing margins relative to smaller competitors.
Regent's plan is to seek to build market share and create high returns on
investment by purchasing a mixture of cash flowing and developmental properties
and improving their operating and financial performance. In general, these types
of properties are enhanced by research driven improvements in musical format,
followed by operational improvements. At a minimum, such operating improvements
include ensuring that superior station management, systems and controls, and
aggressive budgets are in place. Corporate management may temporarily take over
day-to-day management of such properties until the improvements are soundly
established. While industry dynamics have changed and broadcasting prices have
risen, management believes that the fundamental skills required to improve
station operations have remained largely the same.
In running the geographically diverse operations and rapidly changing
businesses that are typical of broadcasting companies, management has found that
effective management information systems and controls are an important element
of success. For Regent, these consist of:
- - Daily and weekly detailed sales reports that allow for the control of
advertising unit pricing based on available inventory.
- - Detailed monthly financial statements which track "actual" versus "budget"
versus "prior year" performance on a "monthly," "quarterly" and/or
"year-to-date" basis. These reports provide detail on all revenue and expense
categories by department, station, market and on a corporate, consolidated
basis.
- - Detailed daily cash management reports with all cash collected swept into a
central interest-bearing account each day.
- - Monthly tracking of Arbitrend ratings by station, where available, to monitor
performance.
- - Monthly tracking, by market, of market and station revenue data, where
available, to track each station and market to determine if audience share is
being properly converted to revenue share.
- - Constant monitoring of competition by station and market.
Assembling talented and aggressive operating management is critical to
success for radio companies. Messrs. Jacobs and Stakelin have always endeavored
to create positive work environments in order to attract and retain talented
personnel. In addition, Regent intends to provide incentives to key employees by
creating financial rewards, including making equity available to certain key
employees based on performance.
In summary, Regent's strategy is to attempt to create solid and growing
cash flows, profitable and well thought out local clusters, reasonable
geographic and formatic diversity and an experienced management team at both the
corporate and station levels. It is believed that the implementation of this
strategy will position Regent as a relatively attractive public or private
acquisition target or as a merger partner.
76
<PAGE> 82
Dividend Policy. In addition to restrictions on the payment of dividends
imposed under Delaware General Corporation Law and the terms of Regent's Credit
Agreement, Regent presently intends to retain all of its earnings, if any, for
the future operation and growth of its business and does not intend to pay cash
dividends on shares of its capital stock in the foreseeable future. The payment
of any cash dividends on any class of capital stock in the future will be
dependent upon Regent's results of operations, earnings, capital requirements,
contractual restrictions and other factors considered relevant by the Board of
Directors.
Regent's Credit Agreement permits the payment of cash dividends on Regent
Preferred Stock only (a) if Regent is not in default under the Credit Agreement,
(b) if the ratio of Regent's outstanding indebtedness to its operating cash flow
is below specified limits both on an historical and a pro forma basis, and (c)
to the extent the total amount of the annual aggregate cash dividend does not
exceed certain specified limits based on Regent's cash flow for the prior fiscal
year.
Regent's Credit Agreement also prohibits Regent from paying dividends on,
or redeeming, purchasing, retiring or otherwise acquiring any shares of, Regent
Common Stock.
Personnel. At the corporate level, Regent employs six full-time employees
and one part-time employee. Each station has its own complement of employees,
which may include a general manager, a sales manager, an operations manager,
advertising staff, on-air personalities and secretarial personnel. In the
aggregate, Regent's subsidiaries employ 125 persons on a full-time basis and 101
persons part-time.
DESCRIPTION OF PROPERTY
Regent, through its subsidiary, Regent Broadcasting of San Diego, Inc.,
owns a leasehold interest in approximately 20 acres of land in Santee,
California for the radio transmitter and broadcast towers for KCBQ(AM). A
two-story building used for studio and operations containing approximately 8,600
square feet and a one-story storage facility containing approximately 900 square
feet are also located on this property. The lease for this property expires in
September 1998. Regent has an option to renew the lease for one five-year term.
Annual rental is approximately $70,000, subject to adjustment based on the
annual average percentage increase in the Gross National Product Implicit Price
Deflator.
Regent leases approximately 3,060 square feet of office space in Covington,
Kentucky for its corporate offices under a lease, which expires in March 1999.
Regent has the option to renew the lease for two five-year terms at market
rates. Current rental is $44,304 annually.
Regent believes that its properties are generally adequate for its current
operations.
RECENT AND PENDING TRANSACTIONS
The following is a summary of all recent transactions with respect to which
Regent and its subsidiaries acquired or disposed of radio stations and all of
the Pending Transactions. Regent anticipates that, subject to its receipt of the
required FCC approvals, it will consummate the Pending Transactions concurrently
with or following the consummation of the Merger; however, there can be no
assurance that Regent will successfully complete any of the Pending
Transactions.
Radio Station Acquisitions and Sales. In April 1997, in conjunction with
agreements to acquire radio stations in other markets, Regent entered into an
agreement to acquire substantially all of the assets of radio station KCBQ(AM)
in San Diego, California for $6,000,000 on the condition that the seller
reimburse Regent for all operating losses during the period it owned or operated
the station. Since the date of acquisition, Regent has held the station for sale
with all operating losses being reimbursed by the seller. In December 1997,
Regent signed a letter of intent with a third party to sell the station for
$6,500,000 in cash. Regent is currently negotiating a definitive agreement and
anticipates the closing of this sale will take place during the third quarter of
1998. KCBQ(AM) was operated by the prior owners on a shared simulcast basis with
no stand-alone operations or staff of its own. Due to FCC restrictions, Regent
could not acquire the right to continue operating KCBQ(AM) on a shared simulcast
basis and it has operated the station primarily with satellite delivered
programming until it can be sold, without significant revenue or expense. Based
on the consideration that the prior owners did not operate KCBQ(AM) as a
stand-alone business, Regent's strategic intent never to hold and operate the
station as a business and Regent's active efforts to negotiate with a specific
buyer a contract to sell the station, Regent
77
<PAGE> 83
believes that historical financial information for the periods preceding the
date of acquisition would neither be meaningful nor relevant to Regent's future
performance.
In June 1997, Regent entered into an agreement to purchase all of the
outstanding capital stock of The Park Lane Group ("Park Lane"), a California
corporation which, through its wholly-owned subsidiaries, owns radio stations
KQMS(AM) and KSHA(FM) in Redding, California, KPPL(FM), KFMF(FM) and KALF(FM) in
Chico, California, KVOY(AM) and KTPI(FM) in Palmdale, California, KROY(AM) and
KATJ(FM) in Victorville, California, KAAA(AM) and KZZZ(FM) in Kingman, Arizona,
KOWL(AM)and KRLT(FM) in South Lake Tahoe, California and KVNA(AM), KVNA(FM) and
KZGL(FM) in Flagstaff, Arizona. The purchase price for the stock under the
original agreement was approximately $23,500,000 in cash, subject to certain
closing adjustments. In February 1998, Regent and the shareholders of Park Lane
entered into a First Amendment to Stock Purchase Agreement, which, among other
things, extended the closing date to the earlier of March 31, 1998 (but subject
to a built-in 30-day grace period) or the date of the Merger, and decreased the
purchase price to $23,075,000. The Merger Agreement provides that the closing of
the acquisition of the Park Lane Stations must occur prior to or concurrently
with the Closing of the Merger. Accordingly, if the Park Lane acquisition has
not been consummated prior to the Closing Date and cannot be consummated
concurrently with the Closing, the Merger may not be consummated unless this
condition is waived by both Regent and Faircom. Pending such acquisition, Regent
is providing programming and other services to the Park Lane Stations under a
time brokerage agreement. Upon consummation of this transaction, Regent and
James H. Levy, the President of Park Lane, will enter into a one-year Consulting
and Non-Competition Agreement, providing for the payment of a consulting fee of
$200,000 to Mr. Levy.
In October 1997, Regent and its wholly-owned subsidiary, Regent Acquisition
Corp., entered into an Agreement of Merger, pursuant to which Regent will
acquire all of the outstanding capital stock of Alta California Broadcasting,
Inc. ("Alta") by virtue of a merger of Alta with and into Regent Acquisition
Corp. The purchase price for the stock is $2,000,000, subject to certain
adjustments to be made at Closing. The purchase price will be paid in the form
of $1,000,000 in cash and 200,000 shares of Regent's Series E Preferred Stock.
Alta is the owner, operator and licensee of radio station KRDG(FM) in
Shingletown, California and, through its subsidiary, Northern California
Broadcasting, Inc., KNNN(FM) in Central Valley, California. In addition, Alta
intends to acquire from Power Surge, Inc., prior to the closing of the merger
between it and Regent Acquisition Corp., all of the assets used in the operation
of radio stations KRRX(FM) (formerly KARZ(FM)) in Burney, California and
KNRO(AM) in Redding, California.
In December 1997, Regent Broadcasting of Kingman, Inc., a wholly-owned
subsidiary of Regent, entered into an Asset Purchase Agreement with Continental
Radio Broadcasting, L.L.C. ("Continental") to purchase the FCC licenses and
related assets used in the operation of radio stations KFLG(AM) and KFLG(FM) in
Bullhead City, Arizona. The purchase price for these assets is $3,600,000 in
cash.
In December 1997, Regent and its wholly-owned subsidiary, Regent
Broadcasting of Victorville, Inc. ("Regent-Victorville"), entered into an
Agreement of Merger, pursuant to which Regent will acquire all of the
outstanding capital stock of Topaz Broadcasting, Inc. ("Topaz") by virtue of a
merger of Topaz with and into Regent-Victorville. Topaz is currently a party to
an Asset Purchase Agreement to purchase the assets used or held by RASA
Communications, Inc. for use in the operation of radio station KIXA(FM) in
Lucerne Valley, California. The consideration to be paid for the Topaz stock is
400,000 shares of Regent Series E Preferred Stock, subject to certain
adjustments at closing. Pending closing of the Merger, Regent is providing
programming and other services to KIXA(FM) pursuant to the terms of a time
brokerage agreement with Topaz.
In December 1997, Regent-Victorville also entered into an Asset Purchase
Agreement with Ruby Broadcasting, Inc. ("Ruby"), a sister corporation and
affiliate of Topaz, to purchase the FCC licenses and related assets used in the
operation of radio stations KIXW(AM) and KZXY(FM) in Apple Valley, California.
The purchase price for the stations is $6,000,000 in cash. Pending closing of
this acquisition, Regent is providing programming and other services to the
stations pursuant to the terms of a time brokerage agreement with Ruby. KIXW(AM)
is currently a shared simulcast with two unrelated stations and it has no
operations of its own. As a result, Regent is acquiring KIXW(AM) only for its
FCC license and it will develop a new format for the station immediately upon
acquisition. Based on the consideration that the prior owners did not operate
KIXW(AM) as a
78
<PAGE> 84
business, Regent believes that historical financial information with respect to
the station would neither be meaningful nor relevant to Regent's future
performance.
In December 1997, Wicks Broadcast Group Limited Partnership and WBG License
Co., L.L.C. (collectively, "Wicks") assigned to Regent an option to purchase the
FCC licenses and certain assets used in the operations of radio station WSSP(FM)
in Goose Creek, South Carolina from Southwind Broadcasting, Inc. ("Southwind").
In connection with this transaction, Regent made a $1,500,000 loan to Southwind,
which was financed through a non-recourse loan to Regent from a third party. The
term of the option is approximately one year. If Regent exercises the option,
the $1,500,000 debt obligation of Southwind to Regent will be cancelled in
payment of the purchase price. If the option is not exercised prior to the
expiration of its term, Southwind has the right to put the option to Regent in
satisfaction of its debt obligation. Regent is currently seeking to sell the
option to a third party. If Regent is not able to consummate a sale of the
option prior to expiration of the term of the option, Regent will exercise the
option. Payment on Regent's $1,500,000 non-recourse obligation incurred to
finance its loan to Southwind is due on the earlier of the eventual sale of the
station or December 3, 2002. Regent is currently providing programming and other
services to WSSP(FM) pursuant to a time brokerage agreement.
Additional Equity Capitalization. On March 19, 1998, Regent entered into
the Waller-Sutton Commitment whereby, subject to negotiation of definitive
documentation and satisfaction of certain other conditions, Waller-Sutton has
committed to purchase at $5.00 per share $10,000,000 of the Series F Preferred
Stock, together with $1,500,000 of Class A and Class B Faircom Subordinated
Notes from Blue Chip and Miami Valley (which would be converted into
approximately 2,841,600 shares of Faircom Common Stock and then exchanged in the
Merger for shares of the Series C Preferred Stock). Waller-Sutton has reserved
the right, however, to assign up to $3,500,000 of its investment commitment to
partners or affiliates of Waller-Sutton and/or other purchasers of Series F
Preferred Stock and to reduce its investment commitment in respect of the first
$3,500,000 of Series F Preferred Stock purchased by others. Waller-Sutton has
also agreed to act as financial advisor to Regent in connection with the sale of
an additional $8,500,000 of the Series F Preferred Stock.
In conjunction with its purchase of the Series F Preferred Stock,
Waller-Sutton would receive warrants to purchase 820,000 shares of Regent Common
Stock at $5.00 per share. These warrants would be detachable and exercisable
over a period of up to ten years. The purchase of the Series C and Series F
Preferred Stock and the exercise of all of the warrants would give Waller-Sutton
a fully-diluted ownership interest in Regent of approximately 27.4%, assuming
(a) Waller-Sutton does not reduce its investment below $10,000,000, (b) the
exercise of all outstanding warrants (including those granted to Waller-Sutton
and to GE Capital), and (c) the exercise of all options to be granted in the
Merger and contemplated to be granted to management under the 1998 Management
Stock Option Plan, based upon the capitalization of Regent expected to exist as
of the completion of the Merger and all of the Pending Transactions (but
excluding the impact of the sale of more than $10,000,000 of Series F Preferred
Stock).
The terms of the Series F Preferred Stock are expected to be similar in
various respects to the terms applicable to the other existing series of
Regent's preferred stock. The Series F Preferred Stock (a) will have a stated
value of $5.00 per share; (b) will have dividends that accrue quarterly; (c)
will be junior to the Series B Preferred Stock as to the payment of dividends
and the distribution of assets and rights upon liquidation, dissolution and
winding up of Regent and on a parity as to such matters with the other series of
Regent's Preferred Stock; (d) will generally vote with the other series of
Regent's Preferred Stock and with the Regent Common Stock on all matters
submitted to a vote of the stockholders; and (e) will be convertible like the
Series A, Series B and Series D Preferred Stock on a one-for-one basis (subject
to adjustment in certain events) into shares of Regent Common Stock.
The terms of the Series F Preferred Stock and rights of the holders
thereof, however, would be distinctive from the other series in several
respects: (a) the Series F Preferred Stock would be entitled to an annual
dividend rate of 10%, compounding quarterly until paid, instead of the 7%
non-compounding annual dividend rate applicable to the other series of Preferred
Stock; (b) the Series F Preferred Stock would not be redeemable by Regent (other
than as may be required to maintain its licenses under FCC regulations) but
would be subject to mandatory conversion under certain circumstances, while
shares of other Series of Regent Preferred Stock are redeemable by Regent and/or
subject to mandatory conversion under either the same or similar circumstances;
(c) holders of the Series F Preferred Stock would be entitled to require Regent
to repurchase the Series F
79
<PAGE> 85
Preferred Stock at any time after five years at a price equal to the greater of
the fair market value of the stock or the sum of its stated value and all
accrued and unpaid dividends thereon (as well as any warrants held by such
holders at a price equal to the fair market value of Regent Common Stock less
the warrant exercise price), while holders of the Series A, B and Series D
Preferred Stock would have similar "put" rights which would be exercisable,
however, only if the Series F Preferred Stock were exercised; (d) holders of the
Series F Preferred would be entitled to two seats on the Board of Directors
(subject to increase to a majority if Regent has failed to honor the "put"
rights associated with the Series F Preferred Stock) as compared to the one seat
provided to the holders of each of the Series A Preferred Stock and Series C
Preferred Stock; and (e) holders of the Series F Preferred Stock would hold a
right not held by holders of any other series to approve as a separate class
certain corporate actions, such as changes to the liquidation preference,
conversion rate, dividend rate, or voting, put or redemption rights of any
series of Regent's Preferred Stock, and amendments to the existing terms of
either the Series B or Series D Preferred Stock. In addition, other corporate
actions, such as mergers, acquisitions, changes of control, issuances of equity
or debt securities (including options and warrants other than options issued
under the 1998 Management Stock Option Plan), sales of assets, and amendments to
the 1998 Management Stock Option Plan or adoption of any similar plan would be
subject to the express approval of Waller-Sutton if Waller-Sutton, its direct or
indirect partners, and other investors in Regent introduced by Waller-Sutton
(and their respective affiliates), collectively beneficially own more than 10%
of the outstanding Common Stock of Regent.
The Waller-Sutton Commitment provides for the existing stockholders of
Regent to sign a stockholders' agreement with the holders of the Series F
Preferred, Blue Chip, Miami Valley and Joel M. Fairman, and any other holder of
more than 10% of the outstanding Faircom Common Stock. This new stockholders'
agreement would, among other things, provide for Waller-Sutton to receive some
of the distinctive rights described above as well as provide for the agreement
of all parties to vote on the election of directors for the two nominees of
management, the two nominees of Waller-Sutton, the nominee of the Series A
Preferred Stock, the nominee of the Series C Preferred Stock, and for Mr.
Fairman according to the terms of his employment agreement with Regent. Under
this stockholders' agreement, General Electric Capital Corporation and BMO
Financial, Inc. (as holders of the Series B Preferred Stock and Series D
Preferred Stock) would relinquish their rights to elect a Board representative
in favor of the right of each to have a non-voting observer present at each
Board meeting.
The Waller-Sutton Commitment provides that at least $10,000,000 of the
Series F Preferred Stock will be purchased at the time of the initial funding to
help finance the Pending Transactions. The balance of $8,500,000, if procured,
will be invested in Series F Preferred Stock in intervals as needed over the
period of two years following the initial funding to fund future acquisitions or
certain capital expenditures approved by Regents' Board of Directors. All
committed purchasers of Series F Preferred Stock will participate in the
purchase of shares on the initial funding and each subsequent funding date on a
pro rata basis, based on their respective commitment percentages.
While Regent anticipates the investment of Waller-Sutton will occur, the
investment is subject to certain conditions, including the negotiation and
execution of definitive documentation; completion to Waller-Sutton's
satisfaction of its due diligence; approval by Waller-Sutton of the Registration
Statement; procurement by Regent of liability insurance of at least $5,000,000
covering Regent's officers and directors which is acceptable to Waller-Sutton
and its counsel; full payment by the current holders of the remaining amounts
due with respect to the purchase of Series B Preferred Stock and Series D
Preferred Stock, such payments in the aggregate amount of $7,800,000 to be made
concurrently with the consummation of the Merger and the Park Lane acquisition;
and consummation of the other Pending Transactions. There can be no assurance
that all such conditions will be satisfied and that the issuance of the Series F
Preferred Stock will occur. If the Series F Preferred Stock is not issued, the
fully-diluted ownership interests in Regent of the current Faircom stockholders
and of the holders of the Faircom Subordinated Notes upon consummation of the
Merger would be expected to be as high as approximately 18.8% and 38.4%,
respectively.
BUSINESS OF MERGER SUBSIDIARY
Merger Subsidiary, a wholly-owned subsidiary of Regent, has not conducted
any business activities to date, other than those incident to its formation, and
its participation in the preparation of this Proxy Statement/Prospectus. Upon
the consummation of the Merger, Merger Subsidiary will own all of the
outstanding
80
<PAGE> 86
capital stock of Faircom's subsidiaries. Accordingly, the business of Merger
Subsidiary will be the business currently conducted by Faircom and its
subsidiaries. See "Business of Faircom."
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF REGENT
INTRODUCTION
Regent was formed in November of 1996 to acquire, own and operate groups of
radio stations in medium and small-sized markets. Upon the consummation of the
Merger and the Pending Transactions, which were entered into during 1997, Regent
will own 31 stations in nine markets located in California, Arizona, Michigan
and Ohio. During 1997, Regent provided programming and other services to 24 of
these stations pursuant to time brokerage agreements and to KCBQ(AM) in San
Diego. Regent acquired the FCC license and certain limited assets useful for its
operation of KCBQ(AM) in June 1997 and has subsequently entered into a letter of
intent to sell those assets.
The performance of a radio station group, such as Regent, is customarily
measured by its ability to generate Broadcast Cash Flow. Broadcast Cash Flow is
defined by Regent as net revenues less station operating expenses, excluding
depreciation, amortization, interest, taxes and corporate expenses. Although
Broadcast Cash Flow is not recognized under generally accepted accounting
principles, it is accepted by the broadcasting industry as a generally
recognized measure of performance and is used by analysts who report publicly on
the condition and performance of broadcasting companies. For the foregoing
reasons, Regent believes that Broadcast Cash Flow will be a useful measurement
for investors. However, other companies may define Broadcast Cash Flow
differently; consequently, investors should be aware of the possibility that the
Broadcast Cash Flow measure presented may not be comparable to other similarly
titled measures of other companies. Further, investors should not consider
Broadcast Cash Flow to be an alternative to operating income as determined in
accordance with generally accepted accounting principles, an alternative to cash
flows from operating activities (as a measure of liquidity) or an indicator of
Regent's performance under generally accepted accounting principles.
The primary source of Regent's revenues is the sale of broadcasting time on
its radio stations for advertising. Regent's most significant station operating
expenses are employee salaries and commissions, programming expenses and
advertising and promotional expenditures. Regent strives to control these
expenses by working closely with local station management. See "Information
Concerning Regent -- Description of Business."
Regent's revenues are primarily affected by the advertising rates charged
by radio stations. Regent's advertising rates are in large part based on a
station's ability to attract audiences in the demographic groups targeted by its
advertisers, as measured in the larger markets principally by Arbitron on a
quarterly basis. Because audience ratings in local markets are crucial to a
station's financial success, Regent endeavors to develop strong listener
loyalty.
The number of advertisements that can be broadcast without jeopardizing
listening levels (and the resulting ratings) is limited in part by the format of
a particular station. Regent strives to maximize station revenue by managing the
number of commercials available for sale and adjusting prices based upon local
market conditions. In the broadcasting industry, radio stations often utilize
trade (or barter) agreements which exchange advertising time for goods or
services (such as travel or lodging), instead of for cash. Regent seeks to
minimize its use of trade agreements.
Regent's advertising contracts are generally short-term. Regent generates
most of its revenue from local advertising, which is sold primarily by a
station's sales staff. To generate national advertising sales, Regent engages
independent advertising sales representatives that specialize in national sales
for each of its stations.
A broadcaster's revenues generally vary through the year. As is typical in
the radio broadcasting industry, Regent's first calendar quarter generally will
be expected to produce the lowest revenues for the year, and the fourth calendar
quarter generally will be expected to produce the highest revenues for the year.
Regent's operating results in any period may be affected by the incurrence of
advertising and promotion expenses that do not necessarily produce commensurate
revenues until the impact of the advertising and promotion is realized in future
periods.
81
<PAGE> 87
Regent may experience continuing net losses due to anticipated high levels
of interest and depreciation and amortization expenses arising under the Credit
Agreement and any future borrowings and resulting from station acquisitions and
financing therefor.
ACQUISITIONS AND DISPOSITIONS DURING 1997
In June 1997, Regent completed the acquisition of the FCC license and
certain operating assets of KCBQ(AM) in San Diego, California for $6,000,000.
The acquisition was funded through the issuance of a 5-year promissory note to
the seller. Pursuant to the Asset Purchase Agreement, the seller agreed to
reimburse Regent for operating losses incurred from the effective date of the
time brokerage agreement and the acquisition date through the eventual date of
resale of the station assets. During 1997, such operating loss reimbursements
amounted to approximately $136,000. In December 1997, Regent signed a letter of
intent with a third party to sell the assets for $6,500,000 in cash. Regent is
currently negotiating a definitive agreement and anticipates closing the sale
during the third quarter of 1998. The effect of the acquisition and pending
disposition to Regent's financial condition, results of operations, liquidity
and capital resources is immaterial. The acquired assets which are classified as
held for sale are not being depreciated and are offset by a nonrecourse note
payable to the seller which will be settled in conjunction with the pending
disposition at no gain or loss to Regent. Further, the revenues and expenses
related to the station held for sale are also immaterial to Regent's operations
and the net operating loss is being reimbursed to Regent during the period held
for sale. See "Information Concerning Regent -- Recent and Pending
Transactions."
In August, 1997, Regent acquired the FCC licenses and certain assets of
WXZZ(FM) located in Georgetown, Kentucky from a third-party for $3,450,000. The
acquisition was funded through a note payable to HMH Broadcasting. In November
1997, Regent sold the station assets to HMH Broadcasting in exchange for
cancellation of the aforementioned note payable.
In December 1997, Regent acquired radio stations WRFQ(FM) and WSUY(FM) in
Charleston, South Carolina for approximately $4,500,000 in cash. Regent
consummated this transaction and immediately transferred control of these assets
to a third party for $4,500,000 in cash, which was used to pay the purchase
price for the assets. See "Information Concerning Regent -- Recent and Pending
Transactions."
PENDING RADIO STATION ACQUISITIONS
Regent has also entered into agreements which have not yet been consummated
to acquire (by merger, by purchase of capital stock or by purchase of the FCC
licenses and substantially all of the broadcast assets) 31 stations in the
following broadcast areas:
<TABLE>
<CAPTION>
CONSIDERATION TOTAL ESCROW
------------------------- PURCHASE AMOUNT
LOCATION STOCK CASH(A) PRICE PAID
-------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Redding, California; Chico, California;
Palmdale, California; Victorville,
California; Kingman, Arizona; South Lake
Tahoe, California; and Flagstaff,
Arizona................................. $23,500,000 $23,500,000 $1,200,000
Shingletown, California; Burney,
California; Redding, California; and
Central Valley, California.............. $ 1,000,000 2,650,000 3,650,000 175,000
Bullhead City, Arizona.................... 3,792,000 3,792,000 175,000
Lucerne Valley, California................ 2,000,000 2,000,000 100,000
Apple Valley, California(b)............... 6,286,000 6,286,000 300,000
Mansfield, Ohio; Shelby, Ohio; Flint,
Michigan; and Tuscola, Michigan......... 2,458,000(c) 2,458,000
----------- ----------- ----------- ----------
$ 5,458,000 $36,228,000 $41,686,000 $1,950,000
=========== =========== =========== ==========
</TABLE>
82
<PAGE> 88
- ---------------
(a) Includes estimated acquisition costs.
(b) Acquisition consists of stations KIXW(AM) and KZXY(FM). KIXW(AM) is
currently a shared simulcast with two unrelated stations and it has no
operations or staff of its own. As a result, Regent is acquiring KIXW(AM)
only for its FCC license and it will develop a new format for the station
immediately upon acquisition.
(c) Represents the assigned value under reverse merger purchase accounting
based on the estimated fair value of Regent's net assets as of December 31,
1997.
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the Report on Audits of
Consolidated Financial Statements, the Pro Forma Financial Statements and
related financial statements and notes appearing elsewhere in this Proxy
Statement/Prospectus. This discussion reflects the consolidated financial data
of the properties operated by Regent since its initiation of broadcasting
activities during the year 1997. Regent's activities, changes in financial
conditions and results of operations during the year 1996 were nominal since the
company was in the initial start-up phase.
Regent began its broadcasting activities on March 1, 1997 by providing
programming and other services to radio station KCBQ(AM) in San Diego under a
time brokerage agreement and has continued to operate it as an owned station
from and after June 6, 1997. Throughout the year, Regent also provided
programming to 26 other stations over different periods of time (WEZL(FM) and
WXLY(FM) in Charleston, South Carolina from June 1 to August 31; WXZZ(FM) in
Lexington, Kentucky from July 1 to August 22; WLRO(FM) and WLTO(FM) in
Lexington, Kentucky from September 1 to November 18; the 16 stations of The Park
Lane Group from August 18 forward; KRDG(FM), KNNN(FM), KRRX(FM) and KNRO(AM) in
Redding, California from October 10 forward; and WSSP(FM) in Charleston, South
Carolina from December 5 forward). The brokerage fees of these time brokerage
agreements were structured on a basis designed to pass through to the owners
much, if not all, of the Broadcast Cash Flow generated at the stations by
Regent.
The operating results of all of the above stations for the periods
indicated are included in the financial data as of December 31, 1997. The
stations included in the financial data were owned by eight different owners and
as a result of a number of factors, including the different capital structures
and accounting basis of the various owners of the stations, the historical
financial results are not meaningful for period-to-period comparisons. In
addition, due to the significance of pending acquisitions and dispositions, the
results of Regent's operations are not necessarily indicative of results in the
future.
Year Ended December 31, 1997 Compared to the Period November 5, 1996
(inception) through December 31, 1996
Net revenues (total revenues less agency commissions) for the stations
operated by Regent for the year ended December 31, 1997, were $4,916,005
compared to no revenues in 1996. Substantially all revenues were generated by
Stations operated under time brokerage agreements.
The operating expenses for the year ended December 31, 1997, corresponding
to the above revenues, were $4,167,002 compared to $12,406 in 1996.
Interest expense in 1997 was $97,254 compared to zero interest expense in
1996. Time brokerage agreement fees in 1997 were $1,223,054, compared to zero
time brokerage agreement fees in 1996. Net loss for 1997 was $1,103,425 compared
to a net loss of $12,406 in 1996.
Broadcast cash flow for the year ended December 31, 1997, was $749,003.
After reflecting additional expenses for depreciation, amortization, corporate
general and administrative expenses, time brokerage agreement fees, and interest
expense and income, the net loss was $1,103,425. After reflecting preferred
stock dividend requirements of $146,175, the loss applicable to common shares
(240,000) was $1,249,600, or a loss of $5.21 per common share.
83
<PAGE> 89
Cash Flows
Cash flows used in operating activities, inclusive of working capital, were
approximately $1,668,000 for the year ended December 31, 1997 and zero for the
period November 5, 1996 (inception) through December 31, 1996. Cash flows used
in operating activities of the year ended December 31, 1997 resulted primarily
from the $1,100,000 net loss from operations and the $591,000 net change in
working capital.
Cash flows used by investing activities were approximately $2,821,000 for
the year ended December 31, 1997. Investing activities include acquisition costs
of approximately $775,000 and deposits held in escrow for station acquisitions
of approximately $1,975,000. There were no investing activities in 1996.
Cash flows provided by financing activities were approximately $5,503,000
and $592 for 1997 and 1996, respectively. Cash flows provided by financing
activities during 1997 resulted primarily from issuance of $5,200,000 in
preferred stock and contributions from common shareholders of $600,000 offset by
approximately $300,000 of paid finance costs. Cash flows provided by financing
activities in 1996 resulted from issuance of common stock.
LIQUIDITY AND CAPITAL RESOURCES
Regent's principal source of funds has been the net proceeds of
approximately $5,800,000 from private placements of Regent Common Stock and
Regent's Series A, Series B Senior and Series D Convertible Preferred Stock.
Concurrently with consummation of the Merger and the acquisition by Regent of
The Park Lane Group, purchasers of the Series A, Series B Senior and Series D
Preferred Stock are obligated to invest an additional $7,900,000, which would
bring Regent's equity capitalization up to approximately $13,700,000. Regent's
equity capitalization would increase to in excess of $22,500,000, net of
expenses, upon completion of the contemplated minimum amount of investment in
the Series F Preferred Stock by Waller-Sutton. In addition, Regent has in place
a $55,000,000 credit facility under the terms of a Credit Agreement, dated as of
November 14, 1997, with Bank of Montreal, Chicago Bank as Agent, General
Electric Capital Corporation as Documentation Agent, and the lenders listed
therein.
With respect to the Pending Transactions, Regent has deposited in escrow to
be applied toward the purchase prices an aggregate of $1,950,000, utilizing for
this purpose that amount of the proceeds from the private placement of its
equity securities. Regent also used a portion of the private placement proceeds
to fund operating, financing and investing activities during 1997. At December
31, 1997, Regent's working capital position was $1,341,527, net of deposits held
in escrow.
Regent estimates that approximately $38,775,000 of cash will be needed to
complete the Merger and the Park Lane acquisition. This includes cash payments
to acquire the Park Lane stock, to retire existing indebtedness of the Park Lane
and Faircom entities, and to pay other estimated acquisition costs and brokerage
and investment banking fees. Actual cash required will depend on adjustments
that take into account the actual amount of Faircom's and Park Lane's net
working capital as of the closing date.
Subject to the terms and conditions of the Credit Agreement, the amount of
funding initially available to Regent will be limited to an amount which equals
6.0 times the combined historical twelve-month trailing EBITDA (defined as
earnings before interest, taxes, depreciation and amortization). This multiple
(i.e., leverage ratio) is to decline in stages over the term of the credit
facility to 3.5 by April 1, 2001, with the first reduction to 5.5 required by
October 1, 1998. The calculation of such EBITDA is to be made on a pro forma
basis which includes the trailing twelve-month operating cash flow of the
stations currently owned and/or operated by Regent and the stations to be
acquired pursuant to the Pending Transactions and excludes that of the stations
to be sold pursuant to the Pending Transactions.
The following is a summary of other material terms of the Credit Agreement.
Interest. All loans will be an obligation of Regent and each of its
subsidiaries and will bear interest, which is payable quarterly in arrears,
generally at a floating rate equal to either a Base Rate (the higher of the
Prime Rate or 1/2 of 1% in excess of the Federal Funds Effective Rate, as such
terms are defined in the Credit Agreement), plus a margin of up to 1.25%
depending upon Regent's ratio of total debt to operating cash flow, or an
Adjusted Libor Rate, as defined in the Credit Agreement plus a margin of from
1.25% to 2.50% depending upon Regent's ratio of total debt to operating cash
flow.
84
<PAGE> 90
Amortization. Principal is payable in 25 consecutive quarterly
installments on the last day of each quarter commencing on March 31, 1999 in
amounts which increase incrementally from $687,500 per quarter through December
31, 1999 to $2,750,000 per quarter during the seventh year of the loan. The
balance of the principal of $6,875,000 is due on March 31, 2005.
Security. The assets and obligations under the loans are collateralized by
a first priority security interest in all existing and after-acquired property
of Regent and its subsidiaries and all issued and outstanding capital stock of
Regent's subsidiaries.
Covenants. The Credit Agreement contains financial leverage and coverage
ratios, limitations on corporate overhead, and restrictions on capital
expenditures in excess of $1,500,000 in the aggregate annually. Beginning on the
initial funding date under the Credit Agreement, which will not occur until the
closing of the Merger and Park Lane acquisition, Regent is obligated to maintain
an interest coverage ratio (i.e., EBITDA to annual interest cost) of at least
2.0 to 1.0 (except 1.75:1.00 prior to September 30, 1998), a fixed charge
coverage ratio (i.e., EBITDA to annual fixed charges) of at least 1.10 to 1.00,
and a financial leverage ratio (i.e., total debt to EBITDA) starting at 6.0 to
1.0 and decreasing over time to 3.5 to 1.0 as follows:
<TABLE>
<CAPTION>
TIME PERIOD MAXIMUM LEVERAGE RATIO
----------- ----------------------
<S> <C>
Funding Date -- September 30, 1998.......................... 6.00:1.00
October 1, 1998 -- December 31, 1998........................ 5.50:1.00
January 1, 1999 -- March 31, 1999........................... 5.25:1.00
April 1, 1999 -- September 30, 1999......................... 5.00:1.00
October 1, 1999 -- March 31, 2000........................... 4.75:1.00
April 1, 2000 -- September 30, 2000......................... 4.50:1.00
October 1, 2000 -- March 31, 2001........................... 4.00:1.00
April 1, 2001 and thereafter................................ 3.50:1.00
</TABLE>
Prepayment. Regent is entitled to prepay the outstanding principal at any
time, in integral multiples of $500,000, without prepayment premium or penalty
(other than breakage and other costs with respect to LIBOR rate loans if the
prepayment is not made on specified dates).
Based on the current operations of the Park Lane and Faircom stations and
assuming the purchase of $10,000,000 of the Series F Preferred by Waller-Sutton
and others is completed, Regent plans to utilize approximately $24,000,000 of
the funds available to it under the Credit Agreement toward completion of the
Park Lane acquisition and the Merger. To cover the balance of approximately
$13,575,000 (taking into account the deposit already in escrow) plus additional
working capital needed, if any, Regent will utilize its cash on hand, plus the
$7,900,000 committed to be invested by purchasers of its Series A, B and D
Preferred Stock, and approximately $5,500,000 of the proceeds from the issuance
of the Senior F Preferred Stock.
Use of proceeds from the issuance of the Series F Preferred Stock to
complete the Merger and the Park Lane acquisition has been necessitated by
nearly $4,000,000 of increased cash requirements related to those transactions.
The debt incurred by Faircom to acquire WSWR(FM) in January 1998, while having
the effect of reducing the number of shares of Series C Preferred Stock issuable
in the Merger, will require from Regent an additional $1,100,000 of cash to
retire that debt at closing. The closing of the Park Lane acquisition later than
anticipated and the inability of Regent to implement earlier certain cost
savings that will be put in place following the closing have increased the Park
Lane transactions costs by an estimated $750,000. Lastly, the failure of the
Park Lane and Faircom stations to achieve projected cash flow levels during 1997
will allow Regent to utilize toward the acquisitions as much as $2,000,000 less
of its credit facility than had been previously anticipated.
Regent projects that approximately $13,000,000 of cash will be needed to
complete the other Pending Transactions. Based on the current operations of the
stations being acquired and assuming the purchase of $10,000,000 of the Series F
Preferred by Waller-Sutton and others is completed, Regent plans to utilize
approximately $7,500,000 of the funds available to it under the Credit
Agreement. To cover the balance of $4,750,000 (taking into account deposits
already in escrow), Regent will utilize its cash on hand in excess of operating
needs, plus the balance of the proceeds from the issuance of the Series F
Preferred Stock.
85
<PAGE> 91
While there can be no assurance that the stations being acquired will, as
of the closings of those transactions, achieve the requisite cash flow levels
required to obtain the $31,500,000 of bank financing earmarked to fund the
acquisitions, management of Regent believes the credit facility and the proceeds
from the issuance of its Preferred Stock, including the Series F Preferred Stock
to Waller-Sutton and others, will be sufficient to fund the acquisitions and
on-going operations for the next twelve months and foreseeable future.
It is expected the purchase of the Series F Preferred Stock will take place
simultaneously with the Park Lane and Faircom closings. If this should not
occur, however, Regent would attempt to negotiate with its senior lenders for
the right to utilize more of its existing credit facility on those transactions
by the relaxation of borrowing limitations and for an increase to the level of
permissible subordinated debt under the Credit Agreement. With these
modifications, the balance would be provided by increased utilization of the
credit facility and, to the extent necessary, short-term borrowings from
management and/or other shareholders. Regent believes that the borrowing limits
in its Credit Agreement may be somewhat more restrictive than terms currently
being offered by lenders to other borrowers in comparable transactions and that
Regent's senior lender may, therefore, be amenable to Regent's requests. In the
absence of the expected funding from the issuance of the Series F Preferred
Stock or a willingness of Regent's senior lenders to modify borrowing
limitations in the Credit Agreement, Regent would have to seek additional equity
financing of up to approximately $5,000,000 to complete the Merger and the Park
Lane acquisition.
In the event the purchase of the Series F Preferred Stock by Waller-Sutton
does not occur, even with a closing of the Merger and Park Lane acquisition,
Regent would need to pursue discussions with other interested parties to secure
an additional $10,000,000 to $20,000,000 in debt and/or equity financing to
complete the other pending transactions as well as any future acquisitions. To
assist it in these matters, Regent has retained the services of The Crisler
Company, a financial services firm that specializes in arranging debt and equity
financing for members of the broadcasting industry. In the event Regent is
unsuccessful in securing alternative equity capital in the absence of the
Waller-Sutton investment, it may forfeit escrow deposits of $750,000 (to as much
as $1,950,000 if the Merger and Park Lane acquisition are not consummated) and
incur other expenses related to defaulting under the pending acquisition
agreements.
Waller-Sutton is also acting as a financial adviser to Regent in its
efforts to raise an additional $8,500,000 through the sale of other shares of
the Series F Preferred Stock to fund future acquisitions and certain capital
expenditures approved by Regent's Board of Directors.
Regent does not currently have any material commitments with respect to
capital expenditures, but it intends to build new studios to consolidate
operations in several markets and will upgrade tower and transmitter locations
in at least two other markets. The total cost of these expenditures is expected
to be approximately $1,300,000. Regent anticipates that such expenditures would
be funded from the proceeds out of Regent's credit facility and cash on hand in
excess of operating needs.
With the first principal debt repayment not due until March 31, 1999, it is
anticipated that Regent will be able to meet its debt service requirements from
net cash provided by operations over at least the next twelve months. As stated
above, however, under the terms of its Credit Agreement, there is no assurance
that Regent will be able to borrow enough to fund all of the Pending
Transactions. In addition, it is anticipated that through this period dividend
payments on the Preferred Stock will be deferred. In order to fund future
dividend payments from operating income, Regent will have to improve the
operating results of the radio stations to be acquired in the Pending
Transactions. Regent's ability to make these improvements will be subject to
prevailing economic conditions and to legal, financial, business, regulatory,
industry and other factors, such as the competitive environment in the specific
geographic markets of Regent's stations and the ability to retain and attract
key management, sales, programming and on-air personnel, many of which are
beyond Regent's control.
Regent will be required to incur additional indebtedness or raise
additional equity financing in connection with future acquisitions of radio
properties and is likely to need to incur or raise such additional financing
when the final payment is due in 2005 under the Credit Agreement. There can be
no assurance that Regent will be able to incur such additional indebtedness or
raise additional equity on terms acceptable to Regent. Regent's ability to make
future acquisitions and incur additional indebtedness will also be restricted by
the Credit Agreement. Without such sources of funding, it is unlikely that
Regent will be able to carry out its acquisition strategy. See "Risk Factors."
86
<PAGE> 92
YEAR 2000
Regent is aware of the issues associated with preparing its computer
systems for the year 2000. The "year 2000" problem is pervasive and complex as
virtually every computer operation will be affected in some way by the rollover
of the two digit year value to "00". The issue is whether the computer systems
will properly recognize date-sensitive information when the year changes to
2000. Systems that do not properly recognize such information could generate
erroneous data or cause a system to fail.
Regent has addressed the year 2000 issue with a consultant and its vendors
and has recently upgraded certain of its relevant systems. Although there can be
no assurance that Regent will be able to identify all aspects of its business
that are subject to year 2000 problems, or identify year 2000 problems of
suppliers that affect Regent's business, Regent believes, based on current
available information, that its systems are year 2000 compliant and that there
will be no material adverse effect on its business, operations or financial
results.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information as to each person who will serve as a
director or executive officer of Regent upon consummation of the Merger:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH REGENT
- ---- --- -----------------------
<S> <C> <C>
Terry S. Jacobs................... 55 Chairman of the Board, Chief Executive Officer,
Treasurer, Director
Joel M. Fairman................... 69 Vice Chairman, Director
William L. Stakelin............... 55 President, Chief Operating Officer, Secretary, Director
Fred L. Murr...................... 50 Senior Vice President
Matthew A. Yeoman................. 32 Vice President, Finance, Assistant Secretary
R. Glen Mayfield.................. 56 Director
John H. Wyant..................... 51 Director
William H. Ingram................. 58 Director*
Richard H. Patterson.............. 39 Director*
</TABLE>
- ---------------
* Messrs. Ingram and Patterson have consented to serve as directors of Regent
upon and subject to the closing of the initial equity investment of
Waller-Sutton in Regent.
Mr. Jacobs has been Chairman of the Board, Chief Executive Officer,
Treasurer and a Director of Regent since its organization in November 1996. Mr.
Jacobs served as President and Chief Executive Officer of a privately held radio
broadcast company which he co-founded in 1993 under the name "Regent
Communications, Inc." (Regent I) and which acquired and operated 16 radio
stations until its merger into Jacor Communications, Inc. in February 1997.
Prior to 1993, Mr. Jacobs was Chairman and Chief Executive Officer of Jacor
Communications, Inc., a radio broadcast company which he founded in 1979 and
which, during his tenure, grew to become the then ninth largest radio company in
the U.S. in terms of revenue. From 1974 to 1980, Mr. Jacobs was Senior Vice
President and Actuary and a member of the Board of Directors of Great American
Insurance Company, the insurance group of American Financial Group, Inc.,
Cincinnati, Ohio. Mr. Jacobs currently serves as a director of National Grange
Mutual Insurance Company.
Mr. Fairman has been Chairman of the Board, Chief Executive Officer and
Treasurer of Faircom since its founding and organization by him in April 1984.
Prior thereto he was an investment banking executive, and a practicing attorney
focusing on corporate transactions. From 1965 through 1983, he was employed by
Prudential-Bache Securities, Inc., and its predecessor firms. He was the founder
and Managing Director of Prudential-Bache's Communications Group, which provided
investment banking services to a wide variety of communications companies. Mr.
Fairman has been a director of a number of public and private companies,
including Barton's Candy Corp., Microwave Semiconductor Corp. and Great Scott
Supermarkets, Inc.
Mr. Stakelin has been President, Chief Operating Officer and a Director of
Regent since its organization in November 1996. He served as Executive Vice
President and Chief Operating Officer of Regent I from 1995 until its merger
into Jacor Communications, Inc. in February 1997. Mr. Stakelin served as
President and Chief Executive Officer of Apollo Radio, Ltd., a privately-held
radio broadcast company which he co-founded in 1988 and which acquired and
operated nine radio stations until its sale to Regent I in 1995. Mr. Stakelin
has held
87
<PAGE> 93
numerous industry offices, including Chairman of the Board of the National
Association of Broadcasters. From 1983 to 1988, Mr. Stakelin was President and
Chief Executive Officer of the Radio Advertising Bureau. He currently serves as
a member of the Board of Directors of the National Advertising Council, the
Associated Press and the Radio Advertising Bureau.
Mr. Murr has been employed by Regent as Senior Vice President since June
1997. Mr. Murr entered broadcasting in 1972 as a sales representative for radio
station WINN in Louisville, Kentucky, which at that time was owned by Bluegrass
Broadcasting Co., a company operated by Mr. Stakelin. Mr. Murr became general
sales manager for radio station WAVE in Louisville, Kentucky in 1974 and then
rejoined Bluegrass Broadcasting in 1980 as General Sales Manager in Orlando,
Florida. Mr. Murr joined Apollo Radio Ltd. when that company was formed by Mr.
Stakelin in 1988, serving in the capacity as Vice President/General Manager of
KUDL/KMXV in Kansas City, Missouri. In October 1995, he joined Regent I upon the
sale of Apollo to that company and became Vice President/General Manager of a
five-station group in Las Vegas, where he served until Regent I was acquired by
Jacor Communications, Inc. in February 1997.
Mr. Yeoman has been Vice President, Finance and Assistant Secretary of
Regent since March 1997. In 1993, he left his position with Jacor
Communications, Inc. to assist Mr. Jacobs in the formation and operation of
Regent I, where he held the position of Controller until its merger into Jacor
Communications, Inc. in February 1997.
Mr. Mayfield has served as a Director of Regent since May 1997, elected
pursuant to the terms of Regent's Series A Convertible Preferred Stock to
represent the holders of such stock. Since 1978, he has been President of
Mayfield & Robinson, Inc., a management and financial consulting firm in
Cincinnati, Ohio. Since August 1994, Mr. Mayfield has served as Vice President
and a director of Mayson, Inc., a corporation 50% owned by him which serves as
the general partner of River Cities Management Limited Partnership, the general
partner of River Cities Capital Fund Limited Partnership, which holds 50% of the
outstanding shares of Regent's Series A Preferred Stock. Mr. Mayfield is also a
director of NS Group, Inc.
Mr. Wyant has served since its formation in 1992 as President of Blue Chip
Venture Company, a venture capital investment firm which, together with its
affiliates, manages an aggregate of approximately $180 million of committed
capital for investment in privately held high growth companies. From 1991 to
1992, Mr. Wyant served as Executive Vice President, Corporate Finance, of
Gradison & Co., a financial services firm, where his primary activity was the
development and formation of Blue Chip Venture Company. Mr. Wyant was initially
trained in marketing with The Procter & Gamble Company and served in marketing
and general management positions with Taft Broadcasting Company. Subsequently,
he was Chief Executive Officer of Home Entertainment Network and Nutrition
Technology Corporation, both venture capital-backed companies. He has been a
director of Faircom since September 1997 and also is a director of Zaring
National Corporation, Ciao Cucina Corporation and a number of privately held
companies.
William H. Ingram is Chairman of the Board of Directors of Waller-Sutton
Management Group, Inc., which manages Waller-Sutton, an investment partnership
focused on the media, communications, and entertainment industries. In 1973, Mr.
Ingram co-founded Sutton Capital Associates, Inc., an investment management firm
specializing in cable television, wireless telephony and related industries,
serving as its President and Chief Executive Officer. Mr. Ingram had
responsibility for all the company's activities, including identifying
investments and determining and securing the financing needs of such
investments. Before co-founding Sutton Capital, Mr. Ingram was head of the
Corporate Finance Department for a Wall Street investment bank and a CPA with
Touche Ross & Co. Mr. Ingram has a Master of Business Administration degree in
marketing from the Wharton School of Finance and Commerce of the University of
Pennsylvania and a Bachelor's degree in accounting from Ohio State University.
Richard H. Patterson is a Vice President of Waller-Sutton Management Group,
Inc. and a partner of Waller Capital Corporation, which he joined in 1986. Prior
to joining Waller Capital Corporation, Mr. Patterson was a banking officer at
Mellon Bank, where he handled cable television loans and larger corporate
accounts in the Rocky Mountain region. Mr. Patterson received a Master of
Business Administration degree in Finance and International Business from
Columbia University and a Bachelor's degree in economics from Holy Cross
College. Mr. Patterson also serves as a director of KMC Telecom, Inc.
88
<PAGE> 94
ELECTION OF DIRECTORS
Messrs. Jacobs and Stakelin were re-elected on May 20, 1997 as directors of
Regent to serve until the 1998 annual meeting of stockholders of Regent and
until their respective successors are elected and qualified. Pursuant to the
terms of Regent's Series A Preferred Stock, Mr. Mayfield was elected on May 20,
1997 as a director of Regent to represent the holders of such stock, to serve
until the 1998 annual meeting of stockholders and until his successor is elected
and qualified.
Pursuant to the Agreement of Merger, Messrs. Fairman and Wyant will become
directors of Regent at effectiveness of the Merger, to serve until the 1999
annual meeting of stockholders and until their respective successors are elected
and qualified.
Messrs. Ingram and Patterson have consented to serve as directors of Regent
upon and subject to closing of the equity investment of Waller-Sutton in Regent.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Regent intends to establish an Audit Committee
and a Compensation Committee following the Merger. It is intended that Messrs.
Mayfield and Wyant will serve as initial members of both committees. If Messrs.
Ingram and Patterson join the Regent Board of Directors, it is intended Mr.
Ingram will serve as a member of the Audit Committee and Mr. Patterson will
serve as a member of the Compensation Committee.
COMPENSATION OF DIRECTORS
Each of the directors of Regent currently serving as such, and each of the
individuals who is to become a director of Regent upon effectiveness of the
Merger, either is or will become an employee of Regent, or serves or will serve
as a director pursuant to the terms of a series of Regent Preferred Stock
representing the holders thereof and, as such, will not receive compensation for
his service as a director of Regent.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual compensation of the executive
officers of Regent for the fiscal year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION SALARY OTHER
--------------------------- ------- ------
<S> <C> <C>
Terry S. Jacobs............................................. $10,500 $1,050(a)
Chairman of the Board and Chief Executive Officer
William L. Stakelin......................................... $10,500 $1,050(a)
President and Chief Operating Officer
Fred L. Murr................................................ $34,615(b) 0
Senior Vice President
Matthew A. Yeoman........................................... $56,539 0
Vice President, Finance
</TABLE>
- ---------------
(a) Automobile allowance paid in 1997.
(b) Mr. Murr joined Regent in June 1997.
Employment Agreements. Regent has entered into employment agreements with
Terry S. Jacobs and William L. Stakelin pursuant to which Mr. Jacobs is employed
as Chairman and Chief Executive Officer of Regent and Mr. Stakelin is employed
as President and Chief Operating Officer of Regent, each for an initial term of
three years commencing March 1, 1998 and ending April 30, 2001. Under their
employment agreements, Mr. Jacobs and Mr. Stakelin are entitled to base salaries
of $250,000 and $225,000, respectively, which amounts are subject each 12-month
period to an increase in the discretion of the Board of Directors and to a
mandatory cost-of-living increase tied to the Consumer Price Index-All Items.
The employment agreements also provide for Messrs. Jacobs and Stakelin to
receive a discretionary annual bonus. Such bonus, if any, is to be determined by
89
<PAGE> 95
the Board of Directors of Regent and based on performance of the employee and
Regent and the achievement of certain goals established for each year. As a
guideline, the employment agreements reflect the expectation of the parties that
performance during a fiscal year that is rated as "good" should merit a
discretionary bonus equal to 50% of the employee's base salary for that fiscal
year, with an unspecified higher percentage for performances of "excellent" or
"outstanding," an unspecified lower percentage for performances of only
"satisfactory," and no bonus for performances of "poor." In addition, the
employment agreements entitle Messrs. Jacobs and Stakelin each to receive grants
of incentive and non-qualified options to acquire capital stock of Regent in the
discretion of the Board of Directors to purchase such number of shares of Regent
Common Stock as would equal 5.5% of Regent's common stock outstanding from time
to time (assuming the exercise of all then outstanding warrants and options
covering Regent capital stock and the conversion of all securities then
convertible into Regent capital stock) provided, however, that such number shall
not exceed 733,333 without further approval of the Board of Directors (and
Waller-Sutton if the Series F Preferred Stock is issued). All options are to
have an exercise price per share determined by the Board of Directors of Regent
(but not less than the greater of the per share fair market value of the
underlying Regent Common Stock on the date of grant and $5.00 per share). Grants
of incentive stock options are to vest over a period of ten years (10% per year)
and are to be exercisable for ten years from the date of grant. Grants of
non-qualified stock options are to vest over a period of three years (33% per
year) and have an exercise period of ten years from the date of grant. All
unvested options will fully vest immediately upon a change of corporate control
of Regent or a sale of substantially all of its assets. The employment
agreements also provide for Messrs. Jacobs and Stakelin to receive use of an
automobile, parking and automobile insurance coverage at Regent's expense and
other benefits available to key management employees generally.
The employment agreements of Messrs. Jacobs and Stakelin are terminable by
them upon 90 days' prior written notice (provided if the Series F Preferred
Stock is issued, the agreements will be modified to require at least six months'
notice which could not be given until after 18 months following the Merger) and
are terminable by Regent at any time. In the event of a termination by reason of
the employee's death or disability or in the event of a termination by Regent
without cause, then (a) Regent is required to purchase, and the employee is
required to sell to Regent, (i) all shares of Regent stock owned by him at a
price equal to its fair market value as of the date of termination (provided
that the valuation date may not be earlier than September 30, 1998) and (ii) all
vested stock options held by him at a price equal to the excess of the fair
market value of the underlying stock over the exercise price, (b) all unvested
options will terminate, and (c) the employee is entitled to receive his base
salary through the termination date and, in the event of disability, for up to
one year after termination during the continuation of disability. In the case of
termination due to death or disability, the employee is also entitled to a
prorated portion of any bonus to which he otherwise would have been entitled. If
employment is terminated by Regent without cause, the employment agreements
entitle Mr. Jacobs or Mr. Stakelin, as the case may be, to receive, in addition
to base salary and bonus prorated through the date of termination, the greater
of his current base salary for an additional 12-month period or his current base
salary throughout the remaining portion of the current three-year term of the
employment agreement. Messrs. Jacobs and Stakelin are subject to customary non-
competition and non-solicitation covenants during their period of employment
with Regent and for an 18-month period thereafter (12 months in the case of a
termination of employment by Regent without cause where severance is being paid)
as well as customary confidentiality covenants.
Pursuant to the terms of the Merger Agreement, at Effectiveness, Regent has
agreed to enter into an employment agreement with Joel M. Fairman providing for
Mr. Fairman to be employed by Regent as Vice Chairman of the Board for a
two-year term and as a consultant for the one-year period thereafter in
accordance with the terms of a standard consulting agreement to be entered into
between Regent and Mr. Fairman at that time. During the term of the employment
agreement and the consulting agreement, Mr. Fairman will be entitled to receive
annual base compensation equal to $190,000.
The employment and consulting agreements will provide for Mr. Fairman to
receive a discretionary annual bonus which, if awarded, would be in such amount
as may be determined by the Board of Directors of Regent and would be based on
the performance of Mr. Fairman and of Regent and the achievement of certain
goals established for each year. In addition, Mr. Fairman will be entitled to
receive grants of incentive or non-qualified options to acquire capital stock of
Regent under Regent's 1998 Management Stock Option Plan in the discretion of the
Board of Directors. The employment agreement will also contain Regent's
agreement to seek to cause
90
<PAGE> 96
Mr. Fairman to be elected and re-elected to the Board of Directors of Regent to
serve throughout the term of his employment and consultancy with Regent and for
two years thereafter, except if his employment has been terminated for cause.
The employment agreement will obligate Regent to continue the existing lease
currently utilized by Faircom at Suite 220, Old Brookville, New York, pursuant
to the existing lease terms through the end of the employment and consultation
periods. The employment and consulting agreements will also provide for Mr.
Fairman to own a term life insurance policy paid for by Regent and to receive
use of an automobile and automobile insurance coverage at Regent's expense and
other benefits available to key management employees generally.
The employment agreement of Mr. Fairman will be terminable by him upon 90
days' prior written notice and will be terminable by Regent at any time. In the
event of a termination by reason of Mr. Fairman's death or disability or in the
event of a termination by Regent without cause, then Mr. Fairman would be
entitled to receive his base salary through the termination date and, in the
event of disability, for up to one year after termination during the
continuation of disability. In the case of termination due to death or
disability, Mr. Fairman would also be entitled to a prorated portion of any
bonus to which he otherwise would have been entitled. If employment is
terminated by Regent without cause, the employment and consulting agreements
would entitle Mr. Fairman to receive, in addition to his base salary and any
bonus prorated through the date of termination, the greater of his base salary
for an additional 12-month period or his base salary throughout the remaining
portion of the current term of his employment and consulting agreements. Mr.
Fairman will be subject to customary non-competition and non-solicitation
covenants during his period of employment and consultancy with Regent and for an
18-month period thereafter (12 months in the case of a termination of employment
by Regent without cause where severance is being paid), as well as customary
confidentiality covenants.
Management Stock Options. An employee stock option plan known as the
Regent Communications, Inc. 1998 Management Stock Option Plan (the "Plan") has
been was adopted by Regent's Board of Directors and approved by its
stockholders, effective January 1, 1998. The Plan provides for the issuance of
stock options for not more than 2,000,000 shares of Regent Common Stock to
full-time, salaried employees of Regent and its subsidiaries who are determined
by the Compensation Committee of the Board of Directors to be key management
employees whose performance merits special recognition. As of the date of this
Proxy Statement/Prospectus, 20 employees were eligible to participate in the
Plan.
The Plan permits the granting of incentive stock options under Section 422
of the Internal Revenue Code, as well as non-qualified stock options. Under the
Plan, the exercise price of incentive stock options that may be granted cannot
be less than the fair market value of the underlying stock on the date of grant
(110% of the fair market value for incentive stock options granted to any 10%
stockholder). Regent Common Stock underlying options that expire or are
surrendered unexercised become available for reissuance under the Plan. Options
granted under the Plan may be exercisable for up to ten years following the date
of grant, except that incentive stock options granted to employees who own more
than 10% of the voting shares of Regent may not be exercisable beyond five years
from the date of grant. Unless earlier terminated by the Board of Directors, the
Plan will terminate in 2007.
The Board of Directors of Regent has authorized the grant upon
effectiveness of the Merger of incentive and non-qualified stock options under
the Plan to Mr. Jacobs and Mr. Stakelin in accordance with the terms of their
employment agreements. Those agreements provide for the issuance to Messrs.
Jacobs and Stakelin in intervals as equity securities are issued by Regent of
options to acquire up to 5.5% each of the outstanding capital stock of Regent,
on a fully-diluted, as converted, basis, subject to a maximum number of 733,333
without further approval of the Board of Directors (and Waller-Sutton if the
Series F Preferred Stock is issued). It is anticipated the grants to be made
upon effectiveness of the Merger will entitle Mr. Jacobs and Mr. Stakelin each
to purchase approximately 616,400 shares of Regent Common Stock, assuming all of
the Pending Transactions and the issuance of at least $10,000,000 of the Series
F Preferred Stock are completed concurrently with the Merger. The exercise price
per share is to be $5.00 per share (assuming such price is not less than the
fair market value per share of the Regent Common Stock on the date of grant).
Additional options will be granted to Messrs. Jacobs and Stakelin as additional
shares of capital stock of Regent are issued. Of the options to be granted to
each of Mr. Jacobs and Mr. Stakelin, the maximum allowable will be issued as
incentive stock options (expected to be at least 200,000) that will vest over
ten years (10% per year) and will be exercisable in equal one-tenth increments
91
<PAGE> 97
commencing on the date of grant and continuing on each anniversary of the date
of grant. The balance of the options will be non-qualified stock options that
will vest over three years (33% each year) and will become exercisable in equal
one-third increments commencing at the end of each of the first three years
following grant. All unvested options granted to Messrs. Jacobs and Stakelin
will also fully vest immediately upon a change of majority control of Regent or
sale of substantially all of its assets. All options granted will expire at the
end of ten years from the date of grant (or such shorter period as may be
required to preserve qualified tax treatment). Options granted to a participant
under the Plan shall terminate when a participant ceases to be an employee of
Regent, but may be exercised, to the extent exercisable on the date of
termination, within one year thereafter if termination is due to disability,
within six months after death, and within three months after termination for all
other reasons, provided that the options have not then expired. As of the date
of this Proxy Statement/Prospectus, no options have been granted under the Plan.
Pursuant to the anti-dilution provisions of the various series of Regent's
Preferred Stock, the number of shares of Regent Common Stock into which the
Regent Preferred Stock is convertible is to be adjusted to preserve the relative
ownership position of the holder in certain events, including the issuance of
options for the purchase of Regent Common Stock with certain exceptions. One
exception is the issuance of incentive stock options to management of Regent
exercisable for up to 15% of the equity securities of Regent on a fully diluted
basis. In order to avoid triggering the anti-dilution provisions of the various
series of Regent's Preferred Stock, it is the present intention of the Regent
Board of Directors that any options granted under the Plan will be limited in
number such that, at any time, the number of shares of Regent capital stock
issued or issuable pursuant to the exercise of options granted under the Plan
will not, in the aggregate, exceed 15% of the number of shares of Regent capital
stock outstanding (assuming and giving effect to the exercise of all then
outstanding warrants and options and the conversion of all then outstanding
securities convertible into Regent capital stock).
Retirement Plan. Effective January 1, 1997, Regent established the Regent
Communications, Inc. 401(k) Profit Sharing Plan and Trust, a cash or deferred
profit sharing plan, for the benefit of its nonunion employees. For the initial
Plan Year, eligible employees age 21 or older on December 15, 1997 became
participants in the plan. For all subsequent years, eligible employees who meet
the minimum eligibility requirements of age 21, 12 consecutive months of
employment and 1,000 hours of service in such 12-month period will become
participants. The retirement plan is a qualified plan under Section 401(a) of
the Internal Revenue Code. Three types of contributions may be made to the
retirement plan: elective contributions, non-elective contributions and profit
sharing contributions. Regent has no obligation to make profit sharing
contributions under the plan. As of December 31, 1997, no non-elective or profit
sharing contributions had been made to the plan, and none of Regent's officers
or directors had made any salary deferral elections under the plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF REGENT
The following table sets forth, as of the date of this Proxy
Statement/Prospectus and following Effectiveness, the approximate number and
percentage by class of Regent's securities held by (i) beneficial owners of more
than 5% of Regent's respective classes of securities, (ii) Regent's directors
and individuals who are to become directors of Regent at Effectiveness, (iii)
Regent's executive officers and individuals who are to become executive officers
of Regent at Effectiveness, and (iv) all such executive officers and directors
of Regent, as a group.
<TABLE>
<CAPTION>
AS OF APRIL 2, 1998 FOLLOWING EFFECTIVENESS (B)
------------------------ ----------------------------
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
TITLE NAME AND ADDRESS OF BENEFICIAL PERCENT BENEFICIAL PERCENT
OF CLASS BENEFICIAL OWNER OWNERSHIP(A) OF CLASS OWNERSHIP(A) OF CLASS
-------- ------------------- ------------ -------- --------------- --------
<S> <C> <C> <C> <C> <C>
Common Stock............ Terry S. Jacobs 432,568(c) 80.1% 440,000(c)(d) 78.6%
Common Stock............ William L. Stakelin 107,432 44.8% 160,000(d)(e) 57.1%
Common Stock............ R. Glen Mayfield (f) (f) (f)(g) (f)(g)
Common Stock............ River Cities Capital Fund
Limited Partnership 300,000(f) 55.6% 380,000(f)(g) 61.3%
Common Stock............ General Electric Capital
Corporation 500,000(h) 67.6% 550,000(h) 69.6%
Common Stock............ John H. Wyant 0 0% (i)(j) (i)(j)
</TABLE>
92
<PAGE> 98
<TABLE>
<CAPTION>
AS OF APRIL 2, 1998 FOLLOWING EFFECTIVENESS (B)
------------------------ ----------------------------
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
TITLE NAME AND ADDRESS OF BENEFICIAL PERCENT BENEFICIAL PERCENT
OF CLASS BENEFICIAL OWNER OWNERSHIP(A) OF CLASS OWNERSHIP(A) OF CLASS
-------- ------------------- ------------ -------- --------------- --------
<S> <C> <C> <C> <C> <C>
Common Stock............ Blue Chip Capital Fund II
Limited Partnership 0 0% 1,751,127(i) 88.0%
Common Stock............ Miami Valley Venture Fund
L.P. 0 0% 308,878(j) 56.3%
Common Stock............ PNC, National
Association, Trustee 0 0% 284,561(k) 54.3%
Common Stock............ Joel M. Fairman 0 0% 356,538(l) 59.8%
Common Stock............ William H. Ingram 0 0% (m) (m)
Common Stock............ Richard H. Patterson 0 0% (m) (m)
Common Stock............ Waller-Sutton
Media Partners, L.P. 0 0% 3,232,030(m) 93.1%
Common Stock............ Thomas Gammon 0 0% 400,000(n) 62.5%
Common Stock............ Redwood Broadcasting,
Inc. 0 0% 200,000(o) 45.5%
Common Stock............ All executive officers
and directors as a group
(5 persons; 9 persons at
Effectiveness) 980,000(p) 100.0% 6,628,573(p) 100.0%
Preferred Stock......... Terry S. Jacobs 300,000(c) 16.5% 300,000(c) 3.4%
Preferred Stock......... William L. Stakelin 0 0% 20,000(e) *%
Preferred Stock......... R. Glen Mayfield (f) (f) (f) (f)
Preferred Stock......... River Cities Capital Fund
Limited Partnership 300,000(f) 16.5% 300,000(f) 3.4%
Preferred Stock......... General Electric Capital
Corporation 1,000,000(h) 55.0% 1,000,000(h) 11.4%
Preferred Stock......... John H. Wyant 0 0% (i)(j) (i)(j)
Preferred Stock......... Blue Chip Capital Fund II
Limited Partnership 0 0% 1,751,127(i) 20.0%
Preferred Stock......... Miami Valley Venture Fund
L.P. 0 0% 308,878(j) 3.5%
Preferred Stock......... PNC, National
Association, Trustee 0 0% 284,561(k) 3.3%
Preferred Stock......... Joel M. Fairman 0 0% 356,538(l) 4.0%
Preferred Stock......... BMO Financial, Inc. 220,000(q) 12.1% 1,000,000(q) 11.4%
Preferred Stock......... Waller-Sutton
Media Partners, L.P. 0 0% 2,412,030(m) 27.5%
Preferred Stock......... Thomas P. Gammon 0 0% 400,000(n) 4.6%
</TABLE>
93
<PAGE> 99
<TABLE>
<CAPTION>
AS OF APRIL 2, 1998 FOLLOWING EFFECTIVENESS (B)
------------------------ ----------------------------
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
TITLE NAME AND ADDRESS OF BENEFICIAL PERCENT BENEFICIAL PERCENT
OF CLASS BENEFICIAL OWNER OWNERSHIP(A) OF CLASS OWNERSHIP(A) OF CLASS
-------- ------------------- ------------ -------- --------------- --------
<S> <C> <C> <C> <C> <C>
Preferred Stock......... Redwood Broadcasting,
Inc. 0 0% 200,000(n) 2.3%
Preferred Stock......... All executive officers
and directors as a group
(5 persons; 9 persons at
Effectiveness) 600,000(r) 33.0% 5,448,573(r) 61.0%
</TABLE>
- ---------------
* Less than 1%.
(a) The Securities and Exchange Commission has defined "beneficial ownership"
to include sole or shared voting or investment power with respect to a
security or the right to acquire beneficial ownership within 60 days. The
number of shares indicated are owned with sole voting and investment power
unless otherwise noted and includes certain shares held in the name of
affiliated companies as to which beneficial ownership may be disclaimed.
Shares issuable upon conversion of convertible securities or upon exercise
of options or warrants are deemed to be outstanding for the purpose of
computing the percentage ownership and overall voting power of persons
believed to own beneficially such securities, but have not been deemed to
be outstanding for the purpose of computing the percentage ownership of
overall voting power of any other person.
(b) Reflects the number of shares of each class of Regent's capital stock as to
which beneficial ownership will be held or may be acquired within 60 days,
as of Effectiveness of the Merger, based upon the financial statements of
Faircom as of December 31, 1997, adjusted to reflect the acquisition by
Faircom of the Shelby Station in January 1998 and Faircom's share of debt
prepayment premiums and brokerage commissions related to the Merger, and
assuming (i) the conversion in full of the Class A and Class B Faircom
Subordinated Notes into 19,012,000 shares of Faircom Common Stock prior to
Effectiveness; (ii) the issuance of approximately 3,832,100 shares of
Series C Preferred Stock to Faircom stockholders in the Merger; (iii) the
issuance of approximately 3,400,000 additional shares of Regent Preferred
Stock pursuant to existing agreements and commitments; and (iv) the
issuance of approximately 990,000 shares of Regent Common Stock and
approximately 282,244 shares of Regent Preferred Stock pursuant to the
conversion and exercise of all outstanding Faircom Options, and the
exercise of all options and warrants for the acquisition of Regent Common
Stock or Regent Preferred Stock which are either outstanding or to be
issued pursuant to existing agreements and commitments and which are
exercisable within 60 days following Effectiveness (assuming the
acquisition by Waller-Sutton from Blue Chip and Miami Valley of $1,500,000
aggregate principal amount of Class A and Class B Faircom Subordinated
Notes pursuant to the Waller-Sutton Commitment). See "Information
Concerning Faircom--Security Ownership of Certain Beneficial Owners and
Management."
(c) Includes 300,000 shares of Regent's Series A Preferred Stock held by Mr.
Jacobs, which shares are convertible into shares of Regent Common Stock at
any time on a one-for-one basis. Following Effectiveness, also includes
options to purchase 20,000 shares of Regent Common Stock estimated to
become exercisable upon consummation of the Merger. See "The
Merger--Interests of Certain Persons in the Merger; Certain Relationships"
and "Information Concerning Regent--Compensation of Executive Officers."
Mr. Jacobs's address is c/o Regent Communications, Inc., 50 E. RiverCenter
Boulevard, Suite 180, Covington, Kentucky 41011.
(d) Mr. Jacobs has agreed to transfer 12,568 shares of Regent Common Stock to
Mr. Stakelin upon Effectiveness.
(e) Includes 20,000 shares of Regent's Series A Preferred Stock which Mr.
Stakelin has the obligation to purchase at any time prior to Effectiveness
and which shares, when issued to Mr. Stakelin, will be convertible into
shares of Regent Common Stock at any time on a one-for-one basis. Following
Effectiveness, also includes options to purchase 20,000 shares of Regent
Common Stock estimated to become exercisable upon consummation of the
Merger. See "The Merger--Interests of Certain Persons in
94
<PAGE> 100
the Merger; Certain Relationships" and "Information Concerning
Regent--Compensation of Executive Officers." Mr. Stakelin's address is c/o
Regent Communications, Inc., 50 E. RiverCenter Boulevard, Suite 180,
Covington, Kentucky 41011.
(f) Includes 300,000 shares of Regent's Series A Preferred Stock held by River
Cities Capital Fund Limited Partnership, which shares are convertible at
any time into Regent Common Stock on a one-for-one basis. R. Glen Mayfield,
a director of Regent, is the Vice President, a director and a 50%
stockholder of Mayson, Inc., the general partner of River Cities Management
Limited Partnership, which is the general partner of River Cities Capital
Fund Limited Partnership. Mr. Mayfield disclaims beneficial ownership of
the securities held by River Cities Capital Fund Limited Partnership. The
address of River Cities Capital Fund Limited Partnership and Mr. Mayfield
is 221 E. Fourth Street, Suite 2250, Cincinnati, Ohio 45202.
(g) Includes warrants to purchase 80,000 shares of Regent Common Stock, which
River Cities Capital Fund Limited Partnership is entitled to receive at
Effectiveness.
(h) General Electric Capital Corporation holds 1,000,000 shares of Regent
Series B Preferred Stock, which shares are convertible into Regent Common
Stock on a one-half-for-one basis. The share number shown includes warrants
to purchase 50,000 shares of Regent Common Stock which General Electric
Capital Corporation is to receive upon issuance of 2,000,000 shares of
Series F Preferred Stock to Waller-Sutton and others. The address of
General Electric Capital Corporation is 3379 Peachtree Road N.E., Suite
600, Atlanta, Georgia 30326.
(i) Represents approximately 1,751,127 shares of Series C Preferred Stock that
would be issued in the Merger in respect of the Faircom Common Stock
issuable to Blue Chip Capital Fund II Limited Partnership upon conversion
of the Class A and Class B Faircom Subordinated Notes. See also notes (k)
and (m) below. John H. Wyant, a director of Faircom, is a beneficial owner
and manager of Blue Chip Venture Company Ltd., which is general partner of
Blue Chip Capital Fund II Limited Partnership. Mr. Wyant disclaims
beneficial ownership of the securities held by Blue Chip Capital Fund II
Limited Partnership. The address of Blue Chip Capital Fund II Limited
Partnership and Mr. Wyant is 2000 PNC Center, 201 East Fifth Street,
Cincinnati, Ohio 45202. See "Information Concerning Faircom -- Security
Ownership of Certain Beneficial Owners and Management of Faircom."
(j) Represents approximately 308,878 shares of Series C Preferred Stock that
would be issued in the Merger in respect of the Faircom Common Stock
issuable to Miami Valley Venture Fund L.P. upon conversion of the Class A
and Class B Faircom Subordinated Notes. See also note (b) above and notes
(k) and (m) below. John H. Wyant, a director of Faircom, is a beneficial
owner and manager of Blue Chip Venture Company of Dayton, Ltd., an
investment manager for Miami Valley Venture Fund L.P. Mr. Wyant disclaims
beneficial ownership of the securities held by Miami Valley Venture Fund
L.P. The address of Miami Valley Venture Fund L.P. and Mr. Wyant is 2000
PNC Center, 201 East Fifth Street, Cincinnati, Ohio 45202. See "Information
Concerning Faircom -- Security Ownership of Certain Beneficial Owners and
Management of Faircom."
(k) Represents approximately 284,561 shares of Series C Preferred Stock that
would be issued in the Merger in respect of the Faircom Common Stock
issuable to PNC Bank, National Association, Trustee, upon conversion of the
Class A and Class B Faircom Subordinated Notes. PNC Bank, National
Association, Trustee, has the right to require Blue Chip and Miami Valley
to purchase such shares under certain circumstances. See "Information
Concerning Faircom -- Security Ownership of Certain Beneficial Owners and
Management of Faircom." The address of PNC Bank, National Association,
Trustee, is PNC Center, 201 East Fifth Street, Cincinnati, Ohio 45202.
(l) Represents approximately 356,538 shares of Series C Preferred Stock (A) to
be issued in the Merger in respect of the shares of Faircom Common Stock
held by Mr. Fairman and (B) issuable pursuant to Regent Options into which
Faircom Options held by Mr. Fairman would be converted in connection with
the Merger, which shares would be convertible at any time into Regent
Common Stock on a one-for-one basis. Mr. Fairman's address is 333 Glen Head
Road, Old Brookville, New York 11545. See "The Merger -- Interests of
Certain Persons in the Merger; Certain Relationships" and "Information
Concerning Faircom -- Security Ownership of Certain Beneficial Owners and
Management of Faircom."
95
<PAGE> 101
(m) Waller-Sutton is expected to acquire the following securities concurrently
with consummation of the Merger pursuant to its commitment letter: (A)
2,000,000 shares of Series F Preferred Stock, which would be issued by
Regent to Waller-Sutton and would be convertible at any time into Regent
Common Stock on a one-for-one basis; (B) approximately 412,030 shares of
Series C Preferred Stock that would be issued to Waller-Sutton in the Merger
in respect of the Faircom Common Stock issuable to Waller-Sutton upon
conversion of the Class A and Class B Faircom Subordinated Notes that
Waller-Sutton would acquire from Blue Chip and Miami Valley, which Series C
Preferred Stock would be convertible at any time into Regent Common Stock on
a one-for-one basis; and (C) warrants for the purchase of 820,000 shares of
Regent Common Stock. William H. Ingram and Richard H. Patterson, who are
managing members of Waller-Sutton Media, LLC, the general partner of
Waller-Sutton and directors, executive officers and stockholders of
Waller-Sutton Management Group, Inc., the managing agent of Waller-Sutton,
will join the Board of Directors of Regent upon completion of
Waller-Sutton's initial equity investment in Regent. Messrs. Ingram and
Patterson disclaim beneficial ownership of the securities to be acquired by
Waller-Sutton Media Partners, L.P. The address of Waller-Sutton is 18 Bank
Street, Suite 202, Summit, New Jersey 07901. Mr. Ingram's address is One
Rockefeller Plaza, New York, New York 10112, and Mr. Patterson's address is
30 Rockefeller Plaza, New York, New York 10112. See "Information Concerning
Regent -- Recent and Pending Transactions."
(n) Represents the estimated number of shares of Regent's Series E Convertible
Preferred Stock expected to be issued to Thomas Gammon, the sole
stockholder of Topaz Broadcasting, Inc., pursuant to the Agreement of
Merger dated as of December 17, 1997 among Topaz Broadcasting, Inc., Regent
and Regent Broadcasting of Victorville, Inc. Such number of shares (subject
to further adjustment based upon certain assets and liabilities of Topaz
Broadcasting, Inc. at the time of closing) would be convertible at any time
into shares of Regent Common Stock on a one-for-one basis. Mr. Gammon's
address is 1476 Waterfront Road, Suite 100, Reston, Virginia 22094. See
"Information Concerning Regent -- Recent and Pending Transactions."
(o) Represents the estimated number of shares of Regent's Series E Preferred
Stock expected to be issued to Redwood Broadcasting, Inc., the sole
stockholder of Alta California Broadcasting, Inc., pursuant to the
Agreement of Merger dated as of October 10, 1997 among Alta California
Broadcasting, Inc., Regent and Regent Acquisition Corp. Such number of
shares (subject to further adjustment based upon certain assets and
liabilities of Alta California Broadcasting, Inc. at the time of the
closing) would be convertible at any time into shares of Regent Common
Stock on a one-for-one basis. The address of Redwood Broadcasting, Inc. is
7518 Elbow Bend Road, Carefree Arizona 85377. See "Information Concerning
Regent -- Recent and Pending Transactions."
(p) Includes the shares of Series A Preferred Stock held by Mr. Jacobs and
River Cities Capital Fund Limited Partnership. See notes (c) and (f) above.
Following Effectiveness, also includes certain options to purchase Regent
Common Stock held by Messrs. Jacobs and Stakelin described in notes (c) and
(e) above and the other securities described in notes (e), (g), (i) and (j)
above.
(q) BMO Financial, Inc. currently holds 220,000 shares of Regent's Series D
Preferred Stock, which shares are convertible into shares of Regent Common
Stock on a one-for-one basis provided that, except in certain limited
circumstances, the shares of Regent Common Stock acquired by BMO Financial,
Inc. on conversion may not exceed 4.99% of the total shares of Regent
Common Stock then outstanding. See "Description of Regent Securities." BMO
Financial, Inc. has agreed to purchase, on or before Effectiveness, an
additional 780,000 shares of Series D Convertible Preferred Stock. The
address of BMO Financial, Inc. is 430 Park Avenue, New York, New York
10022.
(r) Includes the shares of Series A Preferred Stock held by Mr. Jacobs and
River Cities Capital Fund Limited Partnership. See notes (c) and (f) above.
Following Effectiveness, also includes the securities described in notes
(e), (g), (i), (j), (l) and (m) above.
96
<PAGE> 102
DESCRIPTION OF REGENT SECURITIES
GENERAL
The discussion in this Proxy Statement/Prospectus of the terms of the
capital stock of Regent is subject to and qualified in its entirety by reference
to the Amended and Restated Certificate of Incorporation of Regent, a copy of
which is attached to this Proxy Statement/Prospectus as Appendix B and
incorporated herein by reference.
Various portions of the following discussion refer to the rights of holders
of Regent's Preferred Stock under certain circumstances, including the sale of
all or substantially all of Regent's properties or assets. Under Delaware common
law, the phrase "substantially all" as used in the context of the sale of a
corporation's assets is not generally subject to quantification. The Delaware
courts have held that a critical factor in determining the character of a sale
of assets is generally considered not to be the amount of property sold but
whether the sale is in fact an unusual transaction or one made in the regular
course of business. More specifically, the courts have held that if the sale is
of assets quantitatively vital to the operation of the corporation and is out of
the ordinary and substantially affects the existence and purpose of the
corporation, then it is beyond the power of the Board of Directors to act
without stockholder approval.
CAPITAL STOCK
The authorized capital stock of Regent consists of 50,000,000 shares of
capital stock, consisting of 30,000,000 shares of Common Stock, par value $.01
per share, and 20,000,000 shares of Preferred Stock, par value $.01 per share
("Regent Preferred Stock"), of which 620,000 shares have been designated Series
A Convertible Preferred Stock, 1,000,000 shares have been designated Series B
Senior Convertible Preferred Stock, 4,300,000 shares have been designated Series
C Convertible Preferred Stock, 1,000,000 shares have been designated Series D
Convertible Preferred Stock, and 5,000,000 shares have been designated Series E
Convertible Preferred Stock. An additional series of 3,700,000 shares is
intended to be designated as Series F Convertible Preferred Stock for issuance
pursuant to the Waller-Sutton Commitment.
The following summary description of Regent's capital stock is not intended
to be complete and is subject to and qualified in its entirety by reference to
the terms of instruments and agreements relating thereto, each of which has been
filed as an exhibit to the Registration Statement of which this Proxy
Statement/Prospectus is a part. Unless otherwise stated, capitalized terms have
the same meaning as in Regent's Amended and Restated Certificate of
Incorporation ("Certificate of Incorporation").
Regent holds (directly or indirectly) licenses from the FCC to conduct its
business and such licenses are conditioned upon some or all of the holders of
Regent's capital stock possessing prescribed qualifications. The Regent Common
Stock and Regent Preferred Stock are subject to redemption by Regent, to the
extent necessary to prevent the loss of any such license held by Regent or to
reinstate it, for cash, property or rights, including other securities of
Regent, at such time or times as the Board of Directors of Regent determines,
upon notice and following the same procedures as are applicable to redemption of
Regent Preferred Stock, at a redemption price equal to its fair market value.
COMMON STOCK
Regent Common Stock has full voting rights and other characteristics of
common stock recognized under the General Corporation Law of the State of
Delaware subject to the foregoing paragraph and subject to the rights and
preferences of Regent Preferred Stock.
PREFERRED STOCK
The Board of Directors of Regent has the authority, subject to the
limitations prescribed by law and the provisions of Regent's Certificate of
Incorporation, to provide for the issuance of the shares of Regent Preferred
Stock in series, and to establish from time to time the number of shares to be
included in each such series, and to fix the designations, powers, preferences
and rights of the shares of each series and the qualifications, limitations or
restrictions thereof. Among the specific matters that may be determined by the
Board of Directors are the number of shares constituting each series and the
distinctive designation thereof; the dividend rate, whether dividends will be
cumulative, and the relative rights of priority, if any, on the payment of
dividends; whether the
97
<PAGE> 103
series will have voting rights in addition to the voting rights provided by law,
and, if so, the terms of such voting rights; whether the series will have
conversion privileges, and if so, the terms of such conversion, including
provision for adjustment of the conversion rate; redemption rights and the terms
thereof; whether the series will have a sinking fund and if so, the terms and
amount of such sinking fund; and the rights of the shares of the series in the
event of voluntary or involuntary liquidation, dissolution or winding up of
Regent, and the relative rights of priority, if any, of payment of shares of
such series.
Pursuant to this authority, the Board of Directors has established to date
five different series of Regent Preferred Stock, and intends to establish a
sixth series, with different characteristics as summarized in the following
chart:
CHARACTERISTICS OF THE DIFFERENT SERIES
OF REGENT PREFERRED STOCK
<TABLE>
<CAPTION>
DIVIDEND VOTING LIQUIDATION CONVERSION REDEMPTION BOARD
SERIES RATE RIGHTS PREFERENCE RIGHTS RIGHTS REPRESENTATION
- ------ -------- ------ ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
1:1 optional by
holder at any
Junior to time and 1:1 Redeemable by
A 7% Full Series B mandatory under Regent at any One director
certain time
circumstances
One director,
Non-voting except Senior to .5:1 by holder Redeemable by if no FCC
B 7%* under limited all Series at any time** Regent at any regulatory
circumstances time issues***
1:1 optional by
holder at any
Junior to time and 1:1
C 7% Full Series B mandatory under No One director
certain
circumstances
1:1 optional by
Generally limited holder at any Redeemable by None, without
D 7% to 4.9% with common Junior to time subject to Regent at any change to bank
stock Series B certain time holding company
conditions**** rules***
1:1 optional by
holder at any
Junior to time and 1:1
E 7% Full Series B mandatory under No None
certain
circumstances
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
1:1 optional by
holder at any
Junior to time and 1:1
F***** 10% Full Series B mandatory under No Two directors
certain
circumstances
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
</TABLE>
* Upon issuance of the contemplated Series F Preferred Stock, the terms of
the Series B Preferred Stock would be modified to impose a restriction to
limit the ratio of Regent's total debt plus Stated Value of the Series B
Preferred Stock to EBITDA to 7.75 to 1.00. In the event such ratio is
exceeded as a result of the incurrence by Regent of additional debt,
while such ratio remains in excess of such limit the dividend rate on the
Series B Preferred Stock would increase to 9%.
98
<PAGE> 104
** One-half share of Regent Common Stock for each share of Series B Preferred
Stock. Upon issuance of the contemplated Series F Preferred Stock, each
share of Series B Preferred Stock would also become subject to mandatory
conversion into one-half share of Regent Common Stock under the same
conditions applicable to the Series F Preferred Stock. See "Interests of
Certain Persons in the Merger; Certain Relationships."
*** Upon issuance of the contemplated Series F Preferred Stock, Board
representation would be limited to an observer seat only, with no voting
power.
**** Upon issuance of the contemplated Series F Preferred Stock, each share of
Series D Preferred Stock would also become subject to mandatory conversion
into one share of Regent Common Stock under the same conditions applicable
to the Series F Preferred Stock, subject, however, to compliance with
conditions applicable to optional conversion by the holders referred to
below in the discussion of the terms of the Series D Preferred Stock.
***** Pursuant to the terms of the Waller-Sutton Commitment, a new Series F
Convertible Preferred Stock is intended to be issued, subject to
negotiation of definitive documentation and satisfaction of certain other
conditions. While the terms of the Series F Preferred Stock are expected
to be comparable to the terms of other series of Regent Preferred Stock,
the Series F Preferred Stock would be distinctive in several respects. See
"Information Concerning Regent -- Recent and Pending Transactions."
A more detailed summary description of the authorized Regent Preferred Stock and
the contemplated Series F Preferred Stock follows. If Regent issues the Series F
Preferred Stock, the terms of the Series F Preferred Stock as ultimately agreed
upon are expected to require certain modifications to the terms relating to the
Series A through E Preferred Stock, primarily for purposes of adapting the
existing terms of those series to allow for the additional series in accordance
with the terms of the Waller-Sutton Commitment. Although informally approved in
concept, these modifications must be formally approved by the holders of the
Series A, Series B and Series D Preferred Stock, and pursuant to the conditions
of the Merger Agreement, by the Board of Directors of Faircom. See "Information
Concerning Regent -- Recent and Pending Transactions."
RANKING OF SERIES OF REGENT PREFERRED STOCK
With respect to the payment of dividends and the distribution of assets and
rights upon liquidation, dissolution or winding up of Regent: (i) The Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, and the Series E Preferred Stock rank senior to the
Regent Common Stock, as will the Series F Preferred Stock if issued; (ii) the
Series B Preferred Stock ranks senior to the Series A Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred
Stock, and any other series, including the Series F Preferred Stock, of Regent
Preferred Stock hereafter created; and (iii) the Series A Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock and the Series E
Preferred Stock rank equal to each other, as will the Series F Preferred Stock
if issued, regardless of the exercise of the put rights and "tag along" put
rights by the holders of the Series F Preferred Stock and the Series A and D
Preferred Stock, respectively.
SERIES A PREFERRED STOCK
General. Regent currently has authority to issue 620,000 shares of Series A
Preferred Stock. The stated value ("Stated Value") of the Series A Preferred
Stock is $5.00 per share. As of the date of this Proxy Statement/Prospectus,
there were issued and outstanding 600,000 shares of Series A Preferred Stock.
Dividends. The holders of shares of the Series A Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of
Regent out of funds legally available for such purpose, cumulative dividends
payable quarterly in cash on the first business day of January, April, July and
October, accruing commencing with the date of issue of such shares, at the rate
of $.35 per share per annum. No interest is payable on accrued but unpaid
dividends.
Voting Rights. In addition to voting rights required by law or by the
Certificate of Incorporation, subject to restrictions contained in the
Certificate of Incorporation, the holders of the Series A Preferred Stock are
entitled to vote on all matters submitted to a vote of Regent's stockholders.
Except as otherwise required by law or provided by Regent's Certificate of
Incorporation, the holders of the Series A Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock (under certain conditions), the
Series E Preferred Stock, and the
99
<PAGE> 105
Regent Common Stock vote together as one class with one vote per share (in the
case of Regent Preferred Stock, subject to certain adjustments as provided in
Regent's Certificate of Incorporation, and if convertible into Regent Common
Stock, one vote per share of Common Stock into which such convertible Preferred
Stock is then convertible) on all matters submitted to a vote of Regent's
stockholders.
Certain Restrictions. Whenever dividends payable on the Series A Preferred
Stock are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series A Preferred Stock outstanding shall have been
paid in full or declared and set apart for payment, Regent may not: (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, provided that Regent may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for, or out of the
shares of any such junior stock, (B) pay dividends on or make any other
distributions on any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock except
dividends paid ratably on the Series A Preferred Stock and all such parity stock
on which dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled, (C) redeem or
purchase or otherwise acquire for consideration any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that Regent may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of Regent ranking junior to the Series A Preferred Stock or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series A Preferred
Stock (as well as mandatory redemption rights of holders of Regent Preferred
Stock created in conjunction with the issuance of the Series F Preferred Stock),
or (D) purchase or otherwise acquire for consideration any shares of the Series
A Preferred Stock, or any shares of stock ranking on a parity with the Series A
Preferred Stock except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series of classes.
Liquidation, Dissolution or Winding Up. In the event of a liquidation,
dissolution or winding up of Regent, no distribution may be made (A) to the
holders of the Series A Preferred Stock unless, prior thereto, the holders of
the Series B Preferred Stock have received the Stated Value per share of the
Series B Preferred Stock, plus an amount equal to unpaid dividends (including
accrued dividends), whether or not declared, to the date of such payment, or (B)
to the holders of stock ranking junior to the Series A Preferred Stock unless,
prior thereto, the holders of Series A Preferred have received the Stated Value
per share of the Series A Preferred Stock, plus an amount equal to unpaid
dividends (including accrued dividends), whether or not declared, to the date of
such payment, or (C) to the holders of stock ranking on a parity with the Series
A Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.
Conversion Rights. Each share of the Series A Preferred Stock is
convertible into one (1) share of Regent Common Stock at the option of the
holder, at any time, and at the option of Regent's Board of Directors in
preparation for or upon any of the following events (each a "Conversion Event"):
(a) a public offering of equity securities of Regent of at least $10,000,000,
(b) a private placement of equity securities of Regent of at least $25,000,000,
(c) a private placement of equity securities of Regent of at least $10,000,000
under circumstances where the investor(s) reasonably believe the conversion is
necessary to achieve its (their) investment objectives, (d) a merger of Regent
with another corporation or other entity, whether or not Regent is a survivor of
such transaction, whereby as a result the stockholders of Regent hold less than
50% of the outstanding capital stock of the surviving entity, or (e) an
acquisition of equity securities of Regent in one transaction or in a series of
related transactions which results in a transfer of majority voting control of
Regent.
The number of shares of Regent Common Stock into which each share of Series
A Preferred Stock is convertible is subject to adjustment in certain events,
including (A) the issuance of Regent Common Stock as a dividend; (B)
subdivisions, combinations, or consolidations of Regent Common Stock; (C) the
issuance of options, warrants or other rights (excluding those to Blue Chip and
Miami Valley as a holder of Series C
100
<PAGE> 106
Preferred Stock pursuant to the terms of the Redemption and Warrant Agreement,
excluding those to certain Faircom officers and directors pursuant to the terms
of the Merger Agreement, and excluding incentive stock options to management of
Regent exercisable for up to 15% of the equity securities of Regent on a fully
diluted basis) entitling the holder to subscribe for or purchase Regent Common
Stock at a price per share which, when added to the consideration received or
receivable by Regent for such options, warrants or other rights, is less than
the then fair market value of such Regent Common Stock at the date of such
issuance; (D) the issuance or sale of Regent securities convertible into, or
exchangeable for, Regent Common Stock at a price per share which, when added to
the consideration received or receivable by Regent for such exchangeable or
convertible securities, is less than the then fair market value of the Regent
Common Stock at the date of such issuance; (E) the issuance or sale of Regent
Common Stock for consideration representing less than the then fair market value
of the Regent Common Stock at the date of such issuance; (F) recapitalizations,
reclassifications or other transactions resulting in the change of Regent Common
Stock into the same or a different number of shares of any class or classes of
stock; and (G) the capital reorganization, merger or consolidation of Regent
with or into another corporation, or the sale of all or substantially all, of
Regent's properties and assets to another person.
If the adjustment would require a change of less than one percent (1%) in
the number of shares of Regent Common Stock into which each share of Series A
Preferred Stock may be converted, the amount of any such adjustment will be
carried forward and adjustment with respect thereto will be made at the time of
and together with any subsequent adjustment which, together with all amounts so
carried forward, aggregates 1% of the number of shares of Regent Common Stock
into which each share of Series A Preferred Stock is then convertible.
Upon conversion of any shares of the Series A Preferred Stock, the holder
will be entitled to receive any accumulated, accrued or unpaid dividends in
respect of the shares so converted, including any dividends on such shares of
the Series A Preferred Stock declared prior to such conversion if such holder
held such shares on the record date fixed for the determination of holders of
the Series A Preferred Stock entitled to receive payment of such dividend.
Shares of the Series A Preferred Stock may not be converted after the close
of business on the third business day preceding the Redemption Date (as defined
below).
Redemption. Regent may, at the election of its Board of Directors, at any
time or from time to time, redeem the whole or part of the Series A Preferred
Stock, at the Stated Value, plus an amount equal to all unpaid dividends
(including accrued dividends), whether or not declared, to the date fixed for
redemption (the "Redemption Date"). In the event Regent elects to redeem less
than all of the Series A Preferred Stock, Regent will select pro rata the shares
to be so redeemed, except that if the Board of Directors determines in its
reasonable business judgment that to do so by lot would be in the best interests
of Regent, then the shares to be so redeemed will be selected by lot in such
manner as prescribed by the Board of Directors. Shares of the Series A Preferred
Stock are also expected to be able to be put to Regent for mandatory redemption
after five years following issuance of the Series F Preferred Stock if similar
rights applicable to the Series F Preferred Stock are exercised.
All dividends on the shares of Series A Preferred Stock put or called for
redemption shall cease to accrue, said shares shall no longer be deemed
outstanding, and all rights of the holders thereof as stockholders of Regent
(except the right to receive payment for the shares, the right to receive
declared dividends, and the right to convert such shares into shares of Regent
Common Stock until the close of business on the third business day preceding the
Redemption Date) will cease from and after the Redemption Date.
Directorship. The holders of the Series A Preferred Stock, as a class, are
entitled to be represented on the Board of Directors of Regent by one Director
(the "Series A Director") who, upon nomination by such holders, as a class, will
stand for election by voting by the holders of the Series A Preferred Stock, the
Series B Preferred Stock (subject to limitations contained in Regent's
Certificate of Incorporation), the Series C Preferred Stock, the Series D
Preferred Stock (subject to limitations contained in Regent's Certificate of
Incorporation), the Series E Preferred Stock, and the holders of Regent Common
Stock, except where the number of individuals nominated for election exceeds the
number of Directors to be elected, in which case the holders of the Series A
Preferred Stock will have the sole right to vote for, elect and remove the
individual nominated by them, as a class, to serve as the Series A Director, and
in such event no right to vote for, elect or remove any of the other Directors.
The Series A Director, upon being elected, will serve for the same term and have
the same voting powers as other Directors. In addition, the Series A Director
will serve as a member of the Compensation, Audit, and Nominating
101
<PAGE> 107
Committees of the Board of Directors (or any other committee of the Board
performing such functions), which Committees will be composed of at least one
Director, in addition to the Series A Director, who is not an employee of
Regent. The current holders of the Series A Preferred Stock have agreed among
themselves to vote a majority of the votes to be cast for the Series A Director
as directed by River Cities Capital Fund, which currently owns 50% of the
outstanding shares of Series A Preferred Stock.
SERIES B PREFERRED STOCK
General. Regent currently has authority to issue 1,000,000 shares of Series
B Preferred Stock, all of which are issued and outstanding. The Stated Value of
the Series B Preferred Stock is $5.00 per share.
Dividends. The holders of shares of the Series B Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of
Regent out of funds legally available for such purpose, cumulative dividends
payable quarterly in cash on the first business day of January, April, July and
October, accruing commencing with the date of issue of such shares, at the rate
of $.35 per share per annum (subject to increase to $.45 per share per annum
during the period of a breach of debt restrictions discussed below which would
be added to the terms of the Series B Preferred Stock upon issuance of shares of
the Series F Preferred Stock). No interest is payable on accrued but unpaid
dividends.
Voting Rights. Except as provided in Regent's Certificate of Incorporation
or otherwise required by law, the voting power of Regent is vested in the
holders of shares of Regent Common Stock, Series A Preferred Stock, Series C
Preferred Stock, Series E Preferred Stock, and such other series of voting
preferred stock as are from time to time designated, and the holders of shares
of Series B Preferred Stock and Series D Preferred Stock have no voting power,
except that with respect to the events described below, the holders of the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock, and the
Regent Common Stock vote together as a class with one vote per share (in the
case of Preferred Stock, subject to adjustments as provided in the Certificate
of Incorporation and if convertible into Regent Common Stock, one vote per share
of Regent Common Stock into which such convertible Preferred Stock is then
convertible) to the extent such of the following events are otherwise subject to
the vote of any holders of capital stock of Regent:
(a) any amendment of the Certificate of Incorporation;
(b) a sale of all or substantially all of the assets of Regent;
(c) the dissolution, liquidation or termination of Regent;
(d) any acquisition of or merger of Regent with another corporation or
other entity, whether or not Regent is a survivor of such transaction;
(e) any change in the fundamental nature of the business of Regent;
(f) any transaction with affiliates, except upon fair and reasonable
terms comparable to an arms-length transaction; or
(g) any change in Regent's capital structure in a manner that dilutes
the ownership interest of the holders of Series B Preferred Stock.
Certain Restrictions. Whenever dividends payable on the Series B Preferred
Stock are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series B Preferred Stock outstanding shall have been
paid in full or declared and set apart for payment, Regent may not: (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock, provided that Regent may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for, shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred Stock, except dividends
paid ratably on the Series B Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred Stock, provided that Regent
102
<PAGE> 108
may at any time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of Regent ranking junior to the Series
B Preferred Stock or in satisfaction of contractual obligations to do so entered
into with the written consent of the holders of a majority of outstanding shares
of Series B Preferred Stock, or (D) purchase or otherwise acquire for
consideration any shares of the Series B Preferred Stock, or any shares of stock
ranking on a parity with the Series B Preferred Stock except in accordance with
a purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series of classes. In conjunction with the issuance of the Series F
Preferred Stock, the terms of the Series B Preferred Stock would be modified to
impose an additional restriction to limit the ratio of Regent's total debt plus
Stated Value of the Series B Preferred Stock to EBITDA to 7.75 to 1.0. In the
event such ratio is exceeded as a result of the incurrence by Regent of
additional debt, while such ratio remains in excess of such limit the dividend
rate on the Series B Preferred Stock would increase to an annual rate of 9%.
Liquidation, Dissolution or Winding Up. In the event of a liquidation,
dissolution or winding up of Regent, no distribution may be made (A) to the
holders of stock ranking junior to the Series B Preferred Stock unless, prior
thereto, the holders of Series B Preferred Stock have received the Stated Value
per share, plus an amount equal to unpaid dividends (including accrued
dividends), whether or not declared, to the date of such payment, or (B) to the
holders of stock ranking on a parity with the Series B Preferred Stock, except
distributions made ratably on the Series B Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up.
Conversion Rights. Each share of the Series B Preferred Stock is
convertible into one-half ( 1/2) share of Regent Common Stock at the option of
the holder at any time (and will become, upon issuance of the Series F Preferred
Stock, subject to mandatory conversion at the option of Regent's Board of
Directors in the event of a public offering of Regent Common Stock at a per
share price of at least $12.00 with gross proceeds of at least $10,000,000). The
number of shares of Regent Common Stock into which each share of Series B
Preferred Stock is convertible is subject to adjustment in certain events,
including (A) the issuance of Regent Common Stock as a dividend; (B)
subdivisions, combinations, or consolidations of Regent Common Stock; (C) the
issuance of options, warrants or other rights to subscribe for or purchase
Regent Common Stock (whether or not at the time exercisable) to Blue Chip and
Miami Valley as a holder of Series C Preferred Stock; (D) the issuance of
options, warrants, or other rights entitling the holder to subscribe for or
purchase Regent Common Stock at a price per share which, when added to the
consideration received or receivable by Regent for such options, warrants or
other rights, is less than the then fair market value of such Regent Common
Stock at the date of such issuance (other than those to Blue Chip and Miami
Valley as a holder of Series C Preferred Stock pursuant to the terms of the
Redemption and Warrant Agreement, the grant of stock options to management of
Regent exercisable for up to 15% of the equity securities of Regent on a fully
diluted basis, and the issuance of stock options to certain Faircom officers and
directors pursuant to the terms of the Merger Agreement); (E) the issuance or
sale of Regent securities convertible into, or exchangeable for, Regent Common
Stock at a price per share which, when added to the consideration received or
receivable by Regent for such exchangeable or convertible securities, is less
than the then fair market value of the Common Stock at the date of such
issuance; (F) the issuance or sale of Regent Common Stock for consideration
representing less than the then fair market value of the Regent Common Stock at
the date of such issuance; (G) recapitalizations, reclassifications or other
transactions resulting in the change of Regent Common Stock into the same or a
different number of shares of any class or classes of stock; and (H) the capital
reorganization, merger or consolidation of Regent with or into another
corporation, or the sale of all or substantially all, of Regent's properties and
assets to another person.
If the adjustment would require a change of less than one percent (1%) in
the number of shares of Regent Common Stock into which each share of Series B
Preferred Stock may be converted, the amount of any such adjustment will be
carried forward and adjustment with respect thereto will be made at the time of
and together with any subsequent adjustment which, together with all amounts so
carried forward, aggregates 1% of the number of shares of Regent Common Stock
into which each share of Series B Preferred Stock is then convertible.
103
<PAGE> 109
Upon conversion of any shares of the Series B Preferred Stock, the holder
will be entitled to receive any accumulated, accrued or unpaid dividends in
respect of the shares so converted, including any dividends on such shares of
the Series B Preferred Stock declared prior to such conversion if such holder
held such shares on the record date fixed for the determination of holders of
the Series B Preferred Stock entitled to receive payment of such dividend.
Shares of the Series B Preferred Stock may not be converted after the close
of business on the third business day preceding the Redemption Date.
Redemption. Regent may, at the election of its Board of Directors, at any
time or from time to time, redeem the whole or part of the Series B Preferred
Stock at the Stated Value, plus an amount equal to all unpaid dividends
(including accrued dividends), whether or not declared, to the Redemption Date.
In the event Regent elects to redeem less than all of the Series B Preferred
Stock, Regent will select pro rata the shares to be so redeemed, except that if
the Board of Directors determines in its reasonable business judgment that to do
so by lot would be in the best interests of Regent, then the shares to be so
redeemed will be selected by lot in such manner as prescribed by the Board of
Directors. Shares of the Series B Preferred Stock are expected to be able to be
put to Regent for mandatory redemption after five years following issuance of
the Series F Preferred Stock if similar rights applicable to the Series F
Preferred Stock are exercised. Regent is also obligated by contract to redeem
all of the Series B Preferred Stock in the event the Merger Agreement is
terminated or the Merger and Park Lane acquisition are not completed by June 30,
1998.
All dividends on the shares of Series B Preferred Stock put or called for
redemption shall cease to accrue, said shares shall no longer be deemed
outstanding, and all rights of the holders therefor as stockholders of Regent
(except the right to receive payment for the shares, the right to receive
declared dividends, and the right to convert such shares into shares of Regent
Common Stock until the close of business on the third business day preceding the
Redemption Date) will cease from and after the Redemption Date.
Directorship. The holders of the Series B Preferred Stock, as a class, are
entitled to be represented on the Board of Directors by one Director (the
"Series B Director") who, upon nomination by such holders, as a class, will
stand for election by voting by the holders of the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock (subject to limitations contained in Regent's Certificate of
Incorporation), the Series E Preferred, and the holders of Regent Common Stock,
except under circumstances (a) where the right to nominate and vote for the
Series B Director would (i) result in attribution of the media interests of
Regent to, or present any other FCC regulatory issue for, the holders of the
Series B Preferred Stock under the rules and written policies of the FCC for so
long as the holders of the Series B Preferred Stock seek to have their ownership
interest in Regent deemed non-attributable under such rules and policies or (ii)
in the opinion of FCC counsel to Regent, the form of such opinion and the
identity of such counsel to be reasonably satisfactory to the holders of the
Series B Preferred Stock, present any regulatory issues for Regent or (b) where
the number of individuals nominated for election exceeds the number of Directors
to be elected. In the event the holders of the Series B Preferred Stock have
nominated and can vote on an individual for election to the Board of Directors
and the number of individuals nominated for election exceeds the number of
Directors to be elected, then the holders of the Series B Preferred Stock will
have the sole right to vote for, elect and remove the individual nominated by
them, as a class, to serve as the Series B Director, and in such event no right
to vote for, elect or remove any of the other Directors. The Series B Director,
upon being elected, will serve for the same term and have the same voting powers
as other Directors. The right to elect the Series B Director is exercisable by
the holders of a majority of the Series B Preferred Stock at their option upon
at least 60 days notice to Regent; provided, however, if Regent is subject to
the reporting requirements of the Exchange Act, such notice must be provided on
or before the date established by Regent for the submission of proposals
pursuant to the proxy rules promulgated under the Exchange Act. The holders of a
majority of the Series B Preferred Stock have informed Regent that they have no
present intention of designating a Class B Director.
SERIES C PREFERRED STOCK
General. Regent currently has authority to issue 4,300,000 shares of Series
C Convertible Preferred Stock ("Series C Preferred Stock"). The Stated Value of
the Series C Preferred Stock is $5.00 per share. There are no issued and
outstanding shares of Series C Preferred Stock.
104
<PAGE> 110
Dividends. The holders of shares of the Series C Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of
Regent out of funds legally available for such purpose, cumulative dividends
payable quarterly in cash on the first business day of January, April, July and
October, accruing commencing with the date of issue of such shares, at the rate
of $.35 per share per annum. No interest is payable on accrued but unpaid
dividends.
Voting Rights. In addition to voting rights required by law, subject to
restrictions contained in Regent's Certificate of Incorporation, the holders of
the Series C Preferred Stock are entitled to vote on all matters submitted to a
vote of Regent's stockholders. Except as otherwise required by law or provided
by Regent's Certificate of Incorporation, the holders of the Series A Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock (under certain
conditions), the Series E Preferred Stock, and the Regent Common Stock vote
together as one class with one vote per share (in the case of Preferred Stock,
subject to certain adjustments provided in the Certificate of Incorporation, and
if convertible into Regent Common Stock, one vote per share of Regent Common
Stock into which such convertible Preferred Stock is then convertible) on all
matters submitted to a vote of Regent's stockholders.
Certain Restrictions. Whenever dividends payable on the Series C Preferred
Stock are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series C Preferred Stock outstanding shall have been
paid in full or declared and set apart for payment, Regent may not: (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series C
Preferred Stock, provided that Regent may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for, or out of the
shares of any such junior stock, (B) pay dividends on or make any other
distributions on any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Preferred Stock,
except dividends paid ratably on the Series C Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled, (C)
redeem or purchase or otherwise acquire for consideration any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series C Preferred Stock, provided that Regent may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of Regent ranking junior to the Series C Preferred Stock or
in satisfaction of contractual obligations to do so entered into with the
written consent of the holders of a majority of outstanding shares of Series C
Preferred Stock (as well as mandatory redemption rights of holders of Regent
Preferred Stock created in conjunction with the issuance of the Series F
Preferred Stock), or (D) purchase or otherwise acquire for consideration any
shares of the Series C Preferred Stock, or any shares of stock ranking on a
parity with the Series C Preferred Stock except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series of classes.
Liquidation, Dissolution or Winding Up. In the event of a liquidation,
dissolution or winding up of Regent, no distribution may be made (A) to the
holders of the Series C Preferred Stock unless, prior thereto, the holders of
the Series B Preferred Stock have received the Stated Value per share of the
Series B Preferred Stock, plus an amount equal to unpaid dividends (including
accrued dividends), whether or not declared, to the date of such payment, or (B)
to the holders of stock ranking junior to the Series C Preferred Stock unless,
prior thereto, the holders of Series C Preferred Stock have received the Stated
Value per share of the Series C Preferred Stock, plus an amount equal to unpaid
dividends (including accrued dividends), whether or not declared, to the date of
such payment, or (C) to the holders of stock ranking on a parity with the Series
C Preferred Stock, except distributions made ratably on the Series C Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.
Conversion Rights. Each share of the Series C Preferred Stock is
convertible into one (1) share of Regent Common Stock at the option of the
holder, at any time, and at the option of Regent's Board of Directors upon the
occurrence of a Conversion Event if all other outstanding shares of Preferred
Stock of Regent, other than those which are senior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series C Preferred
105
<PAGE> 111
Stock, are concurrently either redeemed or converted. The number of shares of
Regent Common Stock into which each share of Series C Preferred Stock is
convertible is subject to adjustment in certain events, including (A) the
issuance of Regent Common Stock as a dividend; (B) subdivisions, combinations,
or consolidations of Regent Common Stock; (C) the issuance of options, warrants
or other rights (excluding those to Blue Chip and Miami Valley as a holder of
Series C Preferred Stock pursuant to the terms of the Redemption and Warrant
Agreement, excluding those to certain officers and directors of Faircom pursuant
to the terms of the Merger Agreement and excluding incentive stock options to
management of Regent exercisable for up to 15% of the equity securities of
Regent on a fully diluted basis) entitling the holder to subscribe for or
purchase Regent Common Stock at a price per share which, when added to the
consideration received or receivable by Regent for such options, warrants or
other rights, is less than the then fair market value of such Regent Common
Stock at the date of such issuance; (D) the issuance or sale of Regent
securities convertible into, or exchangeable for, Regent Common Stock at a price
per share which, when added to the consideration received or receivable by
Regent for such exchangeable or convertible securities, is less than the then
fair market value of the Regent Common Stock at the date of such issuance; (E)
the issuance or sale of Regent Common Stock for consideration representing less
than the then fair market value of the Regent Common Stock at the date of such
issuance; (F) recapitalizations, reclassifications or other transactions
resulting in the change of Regent Common Stock into the same or a different
number of shares of any class or classes of stock; and (G) the capital
reorganization of Regent Common Stock, merger or consolidation of Regent with or
into another corporation, or the sale of all or substantially all, of Regent's
properties and assets to another person.
If the adjustment would require a change of less than one percent (1%) in
the number of shares of Regent Common Stock into which each share of Series C
Preferred Stock may be converted, the amount of any such adjustment will be
carried forward and adjustment with respect thereto will be made at the time of
and together with any subsequent adjustment which, together with all amounts so
carried forward, aggregates 1% of the number of shares of Regent Common Stock
into which each share of Series C Preferred Stock is then convertible. Upon
conversion of any shares of the Series C Preferred Stock, the holder will be
entitled to receive any accumulated, accrued or unpaid dividends in respect of
the shares so converted, including any dividends on such shares of the Series C
Preferred Stock declared prior to such conversion if such holder held such
shares on the record date fixed for the determination of holders of the Series C
Preferred Stock entitled to receive payment of such dividend.
Redemption. Shares of the Series C Preferred Stock are not subject to any
right of Regent contained in Regent's Certificate of Incorporation to redeem
such shares, except where necessary to prevent the loss of any Regent FCC
license.
Directorship. The holders of the Series C Preferred Stock, as a class, are
entitled to be represented on the Board of Directors by one Director (the
"Series C Director") who, upon nomination by such holders, as a class, will
stand for election by voting by the holders of the Series A Preferred Stock, the
Series B Preferred Stock(subject to certain limitations contained in Regent's
Certificate of Incorporation), the Series C Preferred Stock, the Series D
Preferred Stock (subject to certain limitations contained in Regent's
Certificate of Incorporation), the Series E Preferred Stock, and the holders of
Regent Common Stock, except that, where the number of individuals nominated for
election exceeds the number of Directors to be elected, the holders of the
Series C Preferred Stock will have the sole right to vote for, elect and remove
the individual nominated by them, as a class, to serve as the Series C Director,
and in such event no right to vote for, elect or remove any of the other
Directors. The Series C Director, upon being elected, will serve for the same
term and have the same voting powers as other Directors. The right to elect the
Series C Director is exercisable by the holders of a majority of the Series C
Preferred Stock at their option upon at least 60 days notice to Regent;
provided, however, if Regent is subject to the reporting requirements of the
Exchange Act, such notice must be provided to Regent on or before the date
established by Regent for the submission of proposals pursuant to the proxy
rules promulgated under the Exchange Act. The Series C Director, if not an
employee of Regent, will serve as a member of the Compensation, Audit, and
Nominating Committees of the Board of Directors (or any other Committee of the
Board performing such functions), which Committees will be composed of at least
one Director, in addition to the Series C Director, who is not an employee of
Regent.
106
<PAGE> 112
SERIES D PREFERRED STOCK
General. Regent currently has authority to issue 1,000,000 shares of Series
D Preferred Stock. The Stated Value of the Series D Preferred Stock is $5.00 per
share. As of the date of this Proxy Statement/Prospectus, there were 220,000
shares of Series D Preferred Stock issued and outstanding. Prior to
Effectiveness, 1,000,000 shares of Series D Preferred Stock may be issued and
outstanding.
Dividends. The holders of shares of the Series D Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of
Regent out of funds legally available for such purpose, cumulative dividends
payable quarterly in cash on the first business day of January, April, July and
October, accruing commencing with the date of issue of such shares, at the rate
of $.35 per share per annum. No interest is payable on accrued but unpaid
dividends.
Voting Rights. Except as otherwise required by law or provided by Regent's
Certificate of Incorporation, the voting power of Regent is vested in the
holders of shares of Regent Common Stock, Series A Preferred Stock, Series C
Preferred Stock, Series E Preferred Stock, and such other series of voting
preferred stock as are from time to time designated, and the holders of shares
of Series D Preferred Stock and Series B Preferred Stock have no voting power,
except that with respect to the events described below, the holders of the
Series A Preferred, the Series B Preferred, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock, and the Regent Common
Stock vote together as a class with one vote per share (in the case of Preferred
Stock, subject to adjustments as provided in the Certificate of Incorporation
and if convertible into Regent Common Stock, one vote per share of Regent Common
Stock into which such convertible Preferred Stock is then convertible) to the
extent such of the following events are otherwise subject to the vote of any
holders of capital stock of Regent:
(a) any amendment of the Certificate of Incorporation which (i)
authorizes or modifies the rights, preferences or terms of any security
that is or would be senior in any respect to the Series D Preferred Stock,
(ii) modifies any of the rights, preferences or terms of the Series D
Preferred Stock, or (iii) would otherwise significantly and adversely
affect the Series D Preferred Stock;
(b) a sale of all or substantially all of the assets of Regent;
(c) the dissolution, liquidation or termination of Regent;
(d) any acquisition of or merger of Regent with another corporation or
other entity, whether or not Regent is a survivor of such transaction;
(e) any material change in the fundamental nature of the business of
Regent;
(f) any transaction with affiliates, except upon fair and reasonable
terms comparable to an arms-length transaction; and
(g) any change in Regent's capital structure in a manner that dilutes
the economic interest of the holders of Series D Preferred Stock.
Notwithstanding the foregoing, at such time as the holders of the Series D
Preferred Stock shall have obtained the consent of the FCC to the exercise by
the holders of the Series D Preferred of the voting rights set forth below or at
such time as the consent of the FCC is not necessary under applicable law, rule
or regulation, then on the election of a majority of the holders of the Series D
Preferred Stock in addition to voting rights required by law, the holders of the
Series D Preferred Stock shall be entitled to vote on all matters submitted to a
vote of Regent stockholders with the holders of Regent's Common Stock together
as part of the same class; provided, however, the aggregate number of votes
which may be cast by the holders of the Series D Preferred Stock may not exceed
4.9% of the entire number of votes entitled to be cast by all of Regent's
stockholders, as derived in accordance with a formula set forth in the
Certificate of Incorporation intended to comply with the limitations imposed on
bank holding companies and foreign banks treated as bank holding companies by
the Bank Holding Company Act of 1956, as amended.
Certain Restrictions. Whenever dividends payable on the Series D Preferred
Stock are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series D Preferred Stock outstanding shall have been
paid in full or declared and set apart for payment, Regent may not: (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series D
Preferred Stock, provided
107
<PAGE> 113
that Regent may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for, shares of any such junior stock, (B) pay
dividends on or make any other distributions on any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series D Preferred Stock, except dividends paid ratably on the Series D
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled, (C) redeem or purchase or otherwise acquire for
consideration any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series D Preferred Stock,
provided that Regent may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of Regent
ranking junior to the Series D Preferred Stock or in satisfaction of contractual
obligations to do so entered into with the written consent of the holders of a
majority of outstanding shares of Series D Preferred Stock (as well as mandatory
redemption rights of holders of Regent Preferred Stock created in conjunction
with the issuance of the Series F Preferred Stock), or (D) purchase or otherwise
acquire for consideration any shares of the Series D Preferred Stock, or any
shares of stock ranking on a parity with the Series D Preferred Stock except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series of classes.
Liquidation, Dissolution or Winding Up. In the event of a liquidation,
dissolution or winding up of Regent, no distribution may be made (A) to the
holders of the Series D Preferred Stock unless, prior thereto, the holders of
the Series B Preferred Stock have received the Stated Value per share, plus an
amount equal to unpaid dividends (including accrued dividends), whether or not
declared, to the date of such payment, or (B) to the holders of stock ranking
junior to the Series D Preferred Stock unless, prior thereto, the holders of
Series D Preferred Stock have received the Stated Value per share, plus an
amount equal to unpaid dividends (including accrued dividends), whether or not
declared, to the date of such payment, or (C) to the holders of stock ranking on
a parity with the Series D Preferred Stock, except distributions made ratably on
the Series D Preferred Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Conversion Rights. Subject to the limitations set forth below, each share
of the Series D Preferred Stock is convertible at the option of the holder (and
will become, upon issuance of the Series F Preferred Stock, subject to mandatory
conversion at the option of Regent's Board of Directors in the event of a public
offering of Regent Common Stock at a per share price of at least $12.00 with
gross proceeds of at least $10,000,000) into shares of Regent Common Stock, on
the terms and conditions set forth below:
(a) Shares of Series D Preferred Stock may be converted only: (A) to
acquire a number of shares of Regent Common Stock which, when added to all
of the shares of Regent Common Stock previously acquired on conversion of
Series D Preferred Stock under this provision (fully adjusted to reflect
the events described in paragraph (b) immediately below, does not exceed
4.99% of the total shares of Regent Common Stock then outstanding; or (B)
in a widely dispersed public distribution of the resulting Regent Common
Stock; or (C) in connection with a private placement in which no one party
directly or indirectly acquires the right to purchase in excess of 2% of
the Regent Common Stock; or (D) in an assignment to one or more financial
intermediaries (e.g., broker-dealer or investment banker) for the purpose
of conducting a widely dispersed distribution of the resulting Regent
Common Stock on behalf of the holder; or (E) on effectiveness of an
amendment to or repeal of the Bank Holding Company Act of 1956, as amended
(including any replacement law, "BHCA"), or the International Banking Act
of 1978, as amended ("IBA"), as a result of which a bank holding company
(as defined in the BHCA) and a foreign bank with a U.S. branch or agency
may acquire the resulting shares of Regent Common Stock without limitation;
or (F) on receipt and finality of an order approving the transaction from
the Board of Governors of the Federal Reserve System ("FRB"), including any
successor agency responsible for supervision and enforcement under the BHCA
or the IBA.
(b) Subject to the provisions for adjustment set forth below, each
share of the Series D Preferred Stock is convertible into one (1) fully
paid and nonassessable share of Regent Common Stock. The number of shares
of Regent Common Stock into which each share of Series D Preferred Stock is
convertible is subject
108
<PAGE> 114
to adjustment in certain events, including (A) the issuance of Regent
Common Stock as a dividend; (B) subdivisions, combinations, or
consolidations of Regent Common Stock; (C) the issuance of options,
warrants or other rights (excluding those to Blue Chip and Miami Valley as
a holder of Series C Preferred Stock pursuant to the terms of the
Redemption and Warrant Agreement, excluding those to certain Faircom
officers and directors pursuant to the terms of the Merger Agreement, and
excluding incentive stock options to management of Regent exercisable for
up to 15% of the equity securities of Regent on a fully diluted basis)
entitling the holder to subscribe for or purchase Regent Common Stock at a
price per share which, when added to the consideration received or
receivable by Regent for such options, warrants or other rights, is less
than the then fair market value of such Regent Common Stock at the date of
such issuance; (D) the issuance or sale of Regent securities convertible
into, or exchangeable for, Regent Common Stock at a price per share which,
when added to the consideration received or receivable by Regent for such
exchangeable or convertible securities, is less than the then fair market
value of the Regent Common Stock at the date of such issuance; (E) the
issuance or sale of Regent Common Stock for consideration representing less
than the then fair market value of the Regent Common Stock at the date of
such issuance; (F) recapitalizations, reclassifications or other
transactions resulting in the change of Regent Common Stock into the same
or a different number of shares of any class or classes of stock; and (G)
the capital reorganization, merger or consolidation of Regent with or into
another corporation, or the sale of all or substantially all, of Regent's
properties and assets to another person.
If the adjustment would require a change of less than one percent (1%) in
the number of shares of Regent Common Stock into which each share of Series D
Preferred Stock may be converted, the amount of any such adjustment will be
carried forward and adjustment with respect thereto will be made at the time of
and together with any subsequent adjustment which, together with all amounts so
carried forward, aggregates 1% of the number of shares of Regent Common Stock
into which each share of Series D Preferred Stock is then convertible.
Upon conversion of any shares of the Series D Preferred Stock, the holder
will be entitled to receive any accumulated, accrued or unpaid dividends in
respect of the shares so converted, including any dividends on such shares of
the Series D Preferred Stock declared prior to such conversion if such holder
held such shares on the record date fixed for the determination of holders of
the Series D Preferred Stock entitled to receive payment of such dividend.
Shares of the Series D Preferred Stock may not be converted after the close
of business on the third business day preceding the Redemption Date.
Redemption. Regent may, at the election of its Board of Directors, at any
time or from time to time, redeem the whole or part of the Series D Preferred
Stock, at the Stated Value, plus an amount equal to all unpaid dividends
(including accrued dividends), whether or not declared, to the Redemption Date.
In the event Regent elects to redeem less than all of the Series D Preferred
Stock, Regent will select pro rata the shares to be so redeemed, except that if
the Board of Directors determines in its reasonable business judgment that to do
so by lot would be in the best interests of Regent, then the shares to be so
redeemed will be selected by lot in such manner as prescribed by the Board of
Directors. Shares of the Series D Preferred Stock are expected to be able to be
put to Regent for mandatory redemption after five years following issuance of
the Series F Preferred Stock if similar rights applicable to the Series F
Preferred Stock are exercised. Regent is also obligated by contract to redeem
all of the Series D Preferred Stock in the event the Merger Agreement is
terminated or the Merger and Park Lane acquisition are not completed by June 30,
1998.
All dividends on the shares of Series D Preferred Stock put or called for
redemption shall cease to accrue, said shares shall no longer be deemed
outstanding, and all rights of the holders thereof as stockholders of Regent
(except the right to receive payment for the shares, the right to receive
declared dividends, and the right to convert such shares into shares of Regent
Common Stock until the close of business on the third business day preceding the
Redemption Date) will cease from and after the Redemption Date.
Directorship. After the occurrence of one or more of the events described
in the paragraph immediately following below, the holders of the Series D
Preferred Stock, as a class, are entitled to be represented on the Board of
Directors by one Director (the "Series D Director") who, upon nomination by such
holders, as a class, will stand for election by voting by the holders of the
Series A Preferred Stock, the Series B Preferred Stock (subject to limitations
contained in Regent's Certificate of Incorporation), the Series C Preferred
Stock, the
109
<PAGE> 115
Series D Preferred Stock (subject to limitations contained in Regent's
Certificate of Incorporation), the Series E Preferred Stock, and the holders of
Regent Common Stock, except under circumstances where the number of individuals
nominated for election exceeds the number of Directors to be elected. In the
event the number of individuals nominated for election exceeds the number of
Directors to be elected, then the holders of the Series D Preferred Stock will
have the sole right to vote for, elect and remove the individual nominated by
them, as a class, to serve as the Series D Director, and in such event no right
to vote for, elect or remove any of the other Directors. The Series D Director,
upon being elected, will serve for the same term and have the same voting powers
as other Directors. The right to elect the Series D Director pursuant to the
terms hereof will be exercisable by the holders of a majority of the Series D
Preferred Stock at their option upon at least 60 days notice to Regent;
provided, however, if Regent is subject to the reporting requirements of the
Exchange Act, such notice must be provided on or before the date established by
Regent for the submission of proposals pursuant to the proxy rules promulgated
under the Exchange Act.
The right set forth in the immediately preceding paragraph may be exercised
only after: (i) (A) effectiveness of an amendment to or repeal of the BHCA or
IBA, as a result of which amendment or repeal a bank holding company (as defined
in the BHCA) and a foreign bank with a U.S. branch or agency may appoint a
director of Regent without limitation or (B) on receipt and finality of an order
approving the transaction from the FRB under the BHCA or the IBA; and (ii) on
receipt and finality of an order of the FCC consenting thereto, if such consent
is then required under applicable law, rule or regulation.
SERIES E PREFERRED STOCK
General. Regent currently has authority to issue 5,000,000 shares of Series
E Preferred Stock. The Stated Value of the Series E Preferred Stock is $5.00 per
share. As of the date of this Proxy Statement/Prospectus, there were no issued
and outstanding shares of Series E Preferred Stock. Prior to Effectiveness, as
many as 650,000 shares of Series E Preferred Stock may be issued and
outstanding.
Dividends. The holders of shares of the Series E Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of
Regent out of funds legally available for such purpose, cumulative dividends
payable quarterly in cash on the first business day of January, April, July and
October, accruing commencing with the date of issue of such shares, at the rate
of $.35 per share per annum. No interest is payable on accrued but unpaid
dividends.
Voting Rights. In addition to voting rights required by law or by Regent's
Certificate of Incorporation, subject to restrictions contained in the
Certificate of Incorporation, the holders of the Series E Preferred Stock are
entitled to vote on all matters submitted to a vote of Regent's stockholders.
Except as otherwise required by law or by Regent's Certificate of Incorporation,
the holders of the Series A Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock (under certain conditions), the Series E Preferred
Stock, and the holders of Regent's Common Stock vote together as one class with
one vote per share (in the case of Preferred Stock, subject to certain
adjustments contained in Regent's Certificate of Incorporation and if
convertible into Regent Common Stock, one vote per share of Regent Common Stock
into which such convertible Preferred Stock is then convertible) on all matters
submitted to a vote of Regent's stockholders.
Certain Restrictions. Whenever dividends payable on the Series E Preferred
Stock are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series E Preferred Stock outstanding shall have been
paid in full or declared and set apart for payment, Regent may not: (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series E
Preferred Stock, provided that Regent may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for, or out of the
shares of any such junior stock, (B) pay dividends on or make any other
distributions on any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series E Preferred Stock,
except dividends paid ratably on the Series E Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled, (C)
redeem or purchase or otherwise acquire for consideration any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series E Preferred Stock, provided that Regent may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange for
110
<PAGE> 116
shares of any stock of Regent ranking junior to the Series E Preferred Stock or
in satisfaction of contractual obligations to do so entered into with the
written consent of the holders of a majority of aggregate outstanding shares of
Series A Preferred Stock and Series E Preferred Stock outstanding as of the date
of the creation of such contractual obligations, or (D) purchase or otherwise
acquire for consideration any shares of the Series E Preferred Stock (as well as
mandatory redemption rights of holders of Regent Preferred Stock created in
conjunction with the issuance of the Series F Preferred Stock), or any shares of
stock ranking on a parity with the Series E Preferred Stock except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series of classes.
Liquidation, Dissolution or Winding Up. In the event of a liquidation,
dissolution or winding up of Regent, no distribution may be made (A) to the
holders of the Series E Preferred Stock unless, prior thereto, the holders of
the Series B Preferred Stock have received the Stated Value per share of the
Series B Preferred Stock, plus an amount equal to unpaid dividends (including
accrued dividends), whether or not declared, to the date of such payment, or (B)
to the holders of stock ranking junior to the Series E Preferred Stock unless,
prior thereto, the holders of Series E Preferred Stock have received the Stated
Value per share of the Series E Preferred Stock, plus an amount equal to unpaid
dividends (including accrued dividends), whether or not declared, to the date of
such payment, or (C) to the holders of stock ranking on a parity with the Series
E Preferred Stock, except distributions made ratably on the Series E Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.
Conversion Rights. Each share of the Series E Preferred Stock is
convertible into one (1) share of Regent Common Stock at the option of the
holder, at any time, and at the option of Regent's Board of Directors upon the
occurrence of a Conversion Event. The number of shares of Regent Common Stock
into which each share of Series E Preferred Stock is convertible is subject to
adjustment in certain events, including (A) the issuance of Regent Common Stock
as a dividend; (B) subdivisions, combinations, or consolidations of Regent
Common Stock; (C) the issuance of options, warrants or other rights (excluding
those to Blue Chip and Miami Valley as a holder of Series C Preferred Stock
pursuant to the terms of the Redemption and Warrant Agreement, excluding those
to certain Faircom officers and directors pursuant to the terms of the Merger
Agreement, and excluding incentive stock options to management of Regent
exercisable for up to 15% of the equity securities of Regent on a fully diluted
basis) entitling the holder to subscribe for or purchase Regent Common Stock at
a price per share which, when added to the consideration received or receivable
by Regent for such options, warrants or other rights, is less than the then fair
market value of such Regent Common Stock at the date of such issuance; (D) the
issuance or sale of Regent securities convertible into, or exchangeable for,
Regent Common Stock at a price per share which, when added to the consideration
received or receivable by Regent for such exchangeable or convertible
securities, is less than the then fair market value of the Regent Common Stock
at the date of such issuance; (E) the issuance or sale of Regent Common Stock
for consideration representing less than the then fair market value of the
Regent Common Stock at the date of such issuance; (F) recapitalizations,
reclassifications or other transactions resulting in the change of Regent Common
Stock into the same or a different number of shares of any class or classes of
stock; and (G) the capital reorganization, merger or consolidation of Regent
with or into another corporation, or the sale of all or substantially all, of
Regent's properties and assets to another person.
If the adjustment would require a change of less than one percent (1%) in
the number of shares of Regent Common Stock into which each share of Series E
Preferred Stock may be converted, the amount of any such adjustment will be
carried forward and adjustment with respect thereto will be made at the time of
and together with any subsequent adjustment which, together with all amounts so
carried forward, aggregates 1% of the number of shares of Regent Common Stock
into which each share of Series E Preferred Stock is then convertible.
Upon conversion of any shares of the Series E Preferred Stock, the holder
will be entitled to receive any accumulated, accrued or unpaid dividends in
respect of the shares so converted, provided that such holder will be entitled
to receive any dividends on such shares of the Series E Preferred Stock declared
prior to such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series E Preferred Stock entitled
to receive payment of such dividend.
111
<PAGE> 117
Redemption. Shares of the Series E Preferred Stock are not subject to any
right of Regent contained in Regent's Certificate of Incorporation to redeem
such shares.
SERIES F PREFERRED STOCK
The terms applicable to the contemplated Series F Preferred Stock to be
issued to Waller-Sutton are subject to negotiations and agreement among the
parties consistent with the provisions of the Waller-Sutton Commitment. As
summarized earlier, it is contemplated the terms of the Series F Preferred Stock
will be similar in various respects to the terms applicable to the other
existing series described above. There also will be certain differences. See
"Information Concerning Regent -- Recent and Pending Transactions." Although the
precise terms of the Series F Preferred Stock are still subject to agreement and
documentation, the following provides a summary of the terms currently
contemplated.
General. Upon and subject to the closing of the equity investment of
Waller-Sutton, Regent will authorize the issuance of 3,700,000 shares of Series
F Preferred Stock. The stated value ("Stated Value") of the Series F Preferred
Stock will be $5.00 per share.
Dividends. The holders of shares of the Series F Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors of
Regent out of funds legally available for such purpose, cumulative dividends
payable quarterly in cash on the first business day of January, April, July and
October, accruing commencing with the date of issue of such shares, at the rate
of $.50 per share per annum. Cash dividends not paid on any dividend payment
date will be cumulative and will accrue, whether or not declared, from and after
such date dividends on a daily basis at a rate of 10% per annum. No interest is
payable on accrued but unpaid dividends.
Voting Rights. In addition to voting rights required by law or by the
Certificate of Incorporation, subject to restrictions contained in the
Certificate of Incorporation, the holders of the Series F Preferred Stock will
be entitled to vote on all matters submitted to a vote of Regent's stockholders.
Except as otherwise required by law or provided by Regent's Certificate of
Incorporation, the holders of the Series F Preferred Stock will vote together
with the holders of all other series of Regent's voting preferred stock and the
holders of Regent's Common Stock as one class with one vote per share (in the
case of Regent Preferred Stock, subject to certain adjustments as provided in
Regent's Certificate of Incorporation, and if convertible into Regent Common
Stock, one vote per share of Common Stock into which such convertible Preferred
Stock is then convertible) on all matters submitted to a vote of Regent's
stockholders. Regent's Certificate of Incorporation will provide that it may not
be amended to change the liquidation preference, conversion rate, dividend rate
or voting, put or redemption rights of any series of Regent's Preferred Stock
without the approval of the holders of a majority of the outstanding shares of
the Series F Preferred, voting as a class.
Certain Restrictions. Whenever dividends payable on the Series F Preferred
Stock are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series F Preferred Stock outstanding shall have been
paid in full or declared and set apart for payment, Regent will not be able to:
(A) pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series F
Preferred Stock, provided that Regent will at any time be able to redeem,
purchase or otherwise acquire shares of any such junior stock in exchange for,
or out of the shares of any such junior stock, (B) pay dividends on or make any
other distributions on any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series F Preferred Stock,
except dividends paid ratably on the Series F Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled, (C)
redeem or purchase or otherwise acquire for consideration any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series F Preferred Stock, provided that Regent will at any time be able
to redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of Regent ranking junior to the Series F
Preferred Stock or in satisfaction of contractual obligations to do so entered
with the written consent of the holders of a majority of outstanding shares of
Series F Preferred Stock, or (D) purchase or otherwise acquire for consideration
any shares of the Series F Preferred Stock, or any shares of stock ranking on a
parity with the Series F Preferred Stock except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
112
<PAGE> 118
Directors) to all holders of such shares on a pro rata basis or upon such other
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall unanimously determine in good faith will result in
fair and equitable treatment among the respective series of classes.
Liquidation, Dissolution or Winding Up. In the event of a liquidation,
dissolution or winding up of Regent, no distribution will be able to be made (A)
to the holders of the Series F Preferred Stock unless, prior thereto, the
holders of the Series B Preferred Stock have received the Stated Value per share
of the Series B Preferred Stock, plus an amount equal to unpaid dividends
(including accrued dividends), whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior to the Series F Preferred
Stock unless, prior thereto, the holders of Series F Preferred have received the
Stated Value per share of the Series F Preferred Stock, plus an amount equal to
unpaid dividends (including accrued dividends), whether or not declared, to the
date of such payment, or (C) to the holders of stock ranking on a parity with
the Series F Preferred Stock, except distributions made ratably on the Series F
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Conversion Rights. Each share of the Series F Preferred Stock will be
convertible into one (1) share of Regent Common Stock at the option of the
holder, at any time and at the option of Regent's Board of Directors in the
event of a public offering of Regent Common Stock at a per share price of at
least $12.00 with gross proceeds of at least $10,000,000. The number of shares
of Regent Common Stock into which each share of Series F Preferred Stock is
convertible will be subject to adjustment in certain events, including (A) the
issuance of Regent Common Stock as a dividend; (B) subdivisions, combinations,
or consolidations of Regent Common Stock; (C) the issuance of options, warrants
or other rights (excluding those to certain Faircom officers and directors
pursuant to the terms of the Merger Agreement, and excluding incentive stock
options to management of Regent pursuant to the 1998 Management Stock Option
Plan exercisable for up to 15% of the equity securities of Regent on a fully
diluted, as converted, basis) entitling the holder to subscribe for or purchase
Regent Common Stock at a price per share which, when added to the consideration
received or receivable by Regent for such options, warrants or other rights, is
less than the then fair market value of such Regent Common Stock at the date of
such issuance; (D) the issuance or sale of Regent securities convertible into,
or exchangeable for, Regent Common Stock at a price per share which, when added
to the consideration received or receivable by Regent for such exchangeable or
convertible securities, is less than the then fair market value of the Regent
Common Stock at the date of such issuance; (E) the issuance or sale of Regent
Common Stock for consideration representing less than the then fair market value
of the Regent Common Stock at the date of such issuance; (F) recapitalizations,
reclassifications or other transactions resulting in the change of Regent Common
Stock into the same or a different number of shares of any class or classes of
stock; and (G) the capital reorganization, merger or consolidation of Regent
with or into another corporation, or the sale of all or substantially all, of
Regent's properties and assets to another person.
If the adjustment would require a change of less than one percent (1%) in
the number of shares of Regent Common Stock into which each share of Series F
Preferred Stock may be converted, the amount of any such adjustment will be
carried forward and adjustment with respect thereto will be made at the time of
and together with any subsequent adjustment which, together with all amounts so
carried forward, aggregates 1% of the number of shares of Regent Common Stock
into which each share of Series F Preferred Stock is then convertible.
Upon conversion of any shares of the Series F Preferred Stock, the holder
will be entitled to receive any accumulated, accrued or unpaid dividends in
respect of the shares so converted, including any dividends on such shares of
the Series F Preferred Stock declared prior to such conversion if such holder
held such shares on the record date fixed for the determination of holders of
the Series F Preferred Stock entitled to receive payment of such dividend.
Shares of the Series F Preferred Stock will not be convertible after the
close of business on the third business day preceding the Redemption Date (as
defined below).
Redemption. Shares of the Series F Preferred Stock will not be subject to
any right of Regent contained in Regent's Amended and Restated Certificate of
Incorporation to redeem such shares, except where necessary to prevent the loss
of any Regent FCC license.
113
<PAGE> 119
Shares of the Series F Preferred Stock (and warrants related thereto) will
be subject, however, to mandatory redemption by Regent at the option of the
holders at any time after five years following the initial issuance of shares of
the Series F Preferred Stock at a redemption price equal to the greater of (a)
fair market value or (b) the Stated Value plus the amount of all unpaid
dividends (including accrued dividends), whether declared or not, to the date
fixed for redemption (and, with respect to the warrants, at the price equal to
the fair market value of Regent Common Stock less the warrant exercise price).
Shares of the Series A, B, and D Preferred Stock (but not the Series C and E)
will be entitled to be put to Regent for mandatory redemption on the same basis
if the put rights related to the Series F Preferred Stock are exercised.
All dividends on the shares of Series F Preferred Stock put or called for
redemption will cease to accrue, said shares will no longer be deemed
outstanding, and all rights of the holders thereof as stockholders of Regent
(except the right to receive payment for the shares, the right to receive
declared dividends, and the right to convert such shares into shares of Regent
Common Stock until the close of business on the third business day preceding the
Redemption Date) will cease from and after the Redemption Date.
Directorship. The holders of the Series F Preferred Stock, as a class, will
be entitled to be represented on the Board of Directors of Regent by two
Directors (the "Series F Directors") who, upon nomination by such holders, as a
class, will stand for election by voting by the holders of the Regent Preferred
Stock (subject to limitations contained in Regent's Certificate of
Incorporation), and the holders of Regent Common Stock. In the event Regent
would be unable to meet its obligation to redeem the Series F Preferred Stock
for a period beyond one year after the date the redemption right is exercised
(during which period Regent must be taking active steps to raise funds necessary
to meet those obligations), holders of the Series F Preferred Stock would then
be entitled while such default continues to elect a majority of the Board of
Directors. A stockholders' agreement among those stockholders with the larger
stock holdings in Regent will contain voting agreements to assure election of
the directors nominated by the various series of Preferred Stock. The Series F
Directors, upon being elected, will serve for the same term and have the same
voting powers as other Directors. In addition, one Series F Director will serve
as a member of the Compensation Committee and the other will serve as a member
of the Audit and Nominating Committees of the Board of Directors (or any other
committee of the Board performing such functions), which Committees will be
composed of at least one Director, in addition to the Series F Director, who is
not an employee of Regent.
COMPARISON OF STOCKHOLDER RIGHTS
If the Series C Preferred Stock held by the Faircom stockholders is
converted into Regent Common Stock, the stockholder rights of the Faircom
stockholders as holders of Regent Common Stock will generally be the same as
they were as holders of Faircom Common Stock. Until such conversion, however,
the Faircom stockholders, as holders of Series C Preferred Stock, will have
rights not currently held by them in Faircom. As holders of Series C Preferred
Stock, the Faircom stockholders will be entitled to receive, in preference to
the holders of Regent Common Stock and to the holders of stock ranking junior to
the Series C Preferred Stock, annual dividends at the rate of 7% and a
distribution upon liquidation of Regent equal to the Stated Value of the Series
C Preferred Stock plus any amount of accumulated, accrued or unpaid dividends.
Holders of the Series C Preferred Stock will not participate with the holders of
Regent Common Stock in any increase in the market value of Regent's equity in
excess of the 7% yield provided by the fixed dividend rate unless the holders of
the Series C Preferred Stock elect to convert their preferred shares into Regent
Common Stock. Upon such conversion, however, the Faircom stockholders would
still be entitled to receive the dividend yield of 7% per year on the shares to
the date of conversion. Consequently, if the Merger is consummated, the Faircom
stockholders will receive for their Faircom Common Stock securities in Regent
that would give them a preference over Regent Common Stock with respect to
dividends at 7% per annum and upon liquidation of Regent, while at the same time
allowing them, through conversion of their preferred shares, to participate in
the growth, if any, of Regent's equity market value on the same basis as any
holder of Regent Common Stock.
In addition to the right to vote together with holders of Regent Common
Stock and with other classes of Regent Preferred Stock with voting rights, on
matters presented to a vote of the Regent stockholders, holders of Series C
Preferred Stock are entitled to elect to the Board of Directors of Regent one
person nominated only by them, as a class, thereby assuring them of Board
representation, which assurance they would not necessarily have
114
<PAGE> 120
as holders of Regent Common Stock. Delaware law also gives to the holders of
Series C Preferred Stock the right to vote as a separate class (instead of as
part of a class consisting of holders of Series C Preferred Stock, holders of
Regent Common Stock and holders of other series of Regent Preferred Stock) on
matters which could materially impact their rights as holders of the Series C
Preferred Stock.
STOCKHOLDER PROPOSALS
If the Merger is not consummated, the stockholders of Faircom will have the
right to have proposals presented at Faircom's 1998 Annual Meeting of
Stockholders. Such proposals must comply with the rules of the U.S. Securities
and Exchange Commission then in effect and be received by the Secretary of
Faircom, at its principal offices, by June 30, 1998. Such proposals should be
submitted by certified U.S. mail, with return receipt requested.
LEGAL MATTERS
The validity of the shares of Series C Preferred Stock to be issued in
connection with the Merger will be passed upon for Regent by Strauss & Troy, a
Legal Professional Association, Cincinnati, Ohio. Certain legal matters relating
to the Merger will be passed upon, on behalf of Faircom, by Fulbright & Jaworski
L.L.P., New York, New York, and for Regent, by Strauss & Troy. In addition to
the tax opinion previously rendered to Faircom by Fulbright & Jaworski L.L.P.,
each of Strauss & Troy and Fulbright & Jaworski L.L.P. will also render a tax
opinion to Faircom at the Closing of the Merger, and Strauss & Troy will render
a tax opinion to Regent at the Closing. Anthony Pantaleoni, a member of the firm
of Fulbright & Jaworski L.L.P., is the beneficial owner of 110,000 shares of
Faircom Common Stock (which includes options for the purchase of 100,000 shares)
and serves as Secretary of Faircom and its subsidiaries. Alan C. Rosser, a
member of the firm of Strauss & Troy, serves as Assistant Secretary of Regent
and its subsidiaries.
EXPERTS
The consolidated balance sheets of Regent as of December 31, 1997 and 1996
and the related consolidated statements of operations, shareholders' equity
(deficit) and cash flows for the year ended December 31, 1997 and for the period
from November 5, 1996 (inception) through December 31, 1996, included in this
Proxy Statement/Prospectus, have been included herein in reliance on the report
of Coopers & Lybrand, L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The consolidated balance sheets of The Park Lane Group and its subsidiaries
as of December 31, 1997 and 1995 and the related consolidated statements of
operations, shareholders' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1997, included in this Proxy
Statement/Prospectus, have been included herein in reliance on the report of
Coopers & Lybrand, L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The balance sheet of Continental Radio Broadcasting, L.L.C. as of December
31, 1997 and the related statement of operations, shareholders' equity (deficit)
and cash flows for the year then ended, included in this Proxy
Statement/Prospectus, have been included herein in reliance on the report of
Coopers & Lybrand, L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The consolidated balance sheets of Faircom as of December 31, 1997 and 1996
and the related consolidated statements of operations, capital deficit and cash
flows for the three years in the period ended December 31, 1997, included in
this Proxy Statement/Prospectus, have been included herein in reliance on the
report of BDO Seidman, LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The balance sheets of Treasure Radio Associates Limited Partnership as of
November 30, 1996 and 1995 and the related statements of operations, partners'
deficit and cash flows for the years then ended, included in this Proxy
Statement/Prospectus, have been included herein in reliance on the report of
Kopperman & Wolf Co., independent accountants, given on the authority of that
firm as experts in accounting and auditing.
The consolidated financial statements of Alta California Broadcasting, Inc.
and its subsidiary as of March 31, 1997 and for the year then ended, the
financial statements of KARZ/KNRO (a division of Merit Broadcasting Corporation)
as of December 31, 1996 and for the year then ended, and the financial
statements of
115
<PAGE> 121
Power Surge, Inc. as of December 31, 1997 and for the year then ended, included
in this Proxy Statement/Prospectus, have been audited by Stockman Kast Ryan &
Scruggs, P.C., independent auditors, as stated in their reports herein, and have
been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The statement of revenues and direct expenses of Radio Station KZXY(FM) for
the years ended December 31, 1997 and 1996, included in this Proxy
Statement/Prospectus, have been audited by Coopers & Lybrand, L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
116
<PAGE> 122
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
FAIRCOM INC.
AUDITED --
Report of Independent Accountants......................... F-1
Consolidated Balance Sheets at December 31, 1997 and
1996................................................... F-2
Consolidated Statements of Operations for the years ended
December 31, 1997, 1996 and 1995....................... F-4
Consolidated Statements of Capital Deficit for the years
ended December 31, 1997, 1996 and 1995................. F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995....................... F-6
Notes to Consolidated Financial Statements................ F-8
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP (WYHT (FM) AND
WMAN (AM))
AUDITED --
Report of Independent Accountants......................... F-30
Balance Sheets at November 30, 1996 and 1995.............. F-31
Statement of Partners' Deficit for the years ended
November 30, 1996 and 1995............................. F-33
Statement of Income for the years ended November 30, 1996
and 1995............................................... F-34
Statement of Cash Flows for the years ended November 30,
1996 and 1995.......................................... F-35
Notes to Financial Statements............................. F-37
UNAUDITED
Balance Sheets at May 31, 1997 and 1996................... F-46
Statements of Operations for the six months ended May 31,
1997 and 1996.......................................... F-47
Statements of Cash Flows for the six months ended May 31,
1997 and 1996.......................................... F-48
Note to Financial Statements.............................. F-49
REGENT COMMUNICATIONS, INC.
AUDITED --
Report of Independent Accountants......................... F-50
Consolidated Balance Sheets at December 31, 1997 and
1996................................................... F-51
Consolidated Statements of Operations for the year ended
December 31, 1997 and the period from November 5, 1996
(inception) through December 31, 1996.................. F-52
Consolidated Statements of Shareholders' Equity for the
year ended December 31, 1997 and the period from
November 5, 1996 (inception) through December 31,
1996................................................... F-53
Consolidated Statements of Cash Flows for the year ended
December 31, 1997 and the period from November 5, 1996
(inception) through December 31, 1996.................. F-54
Notes to Consolidated Financial Statements................ F-55
THE PARK LANE GROUP AND SUBSIDIARIES
AUDITED --
Report of Independent Accountants......................... F-67
Consolidated Balance Sheets at December 31, 1997 and
1996................................................... F-68
Consolidated Statements of Operations for the years ended
December 31, 1997, 1996 and 1995....................... F-69
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended December 31, 1997, 1996 and 1995... F-70
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995....................... F-71
Notes to Consolidated Financial Statements................ F-72
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
AUDITED --
Independent Auditors' Report.............................. F-89
Consolidated Balance Sheet at March 31, 1997.............. F-90
Consolidated Statement of Operations for the year ended
March 31, 1997......................................... F-91
Consolidated Statement of Stockholder's Equity
(Deficiency) for the year ended March 31, 1997......... F-92
</TABLE>
117
<PAGE> 123
<TABLE>
<S> <C>
Consolidated Statement of Cash Flows for the year ended
March 31, 1997......................................... F-93
Notes to Consolidated Financial Statements................ F-95
UNAUDITED --
Consolidated Balance Sheet at December 31, 1997........... F-94
Consolidated Statements of Operations for the nine months
ended December 31, 1996 and 1997....................... F-95
Consolidated Statement of Stockholder's Equity
(Deficiency) for the nine months ended December 31,
1997................................................... F-96
Consolidated Statements of Cash Flows for the nine months
ended December 31, 1996 and 1997....................... F-97
Notes to Consolidated Financial Statements................ F-99
KARZ/KNRO (A DIVISION OF MERIT BROADCASTING CORPORATION)
AUDITED --
Independent Auditors' Report.............................. F-103
Balance Sheet at December 31, 1996........................ F-104
Statement of Operations and Net Liabilities of Division
for the year ended December 31, 1996................... F-105
Statement of Cash Flows for the year ended December 31,
1996................................................... F-106
Notes to Financial Statements............................. F-107
POWER SURGE, INC.
AUDITED --
Independent Auditors' Report.............................. F-109
Balance Sheet at December 31, 1997........................ F-110
Statement of Operations for the year ended December 31,
1997................................................... F-111
Statement of Stockholders' Equity for the year ended
December 31, 1997...................................... F-112
Statement of Cash Flows for the year ended December 31,
1997................................................... F-113
Notes to Financial Statements............................. F-114
CONTINENTAL RADIO BROADCASTING L.L.C.
AUDITED --
Report of Independent Accountants......................... F-118
Balance Sheet at December 31, 1997........................ F-119
Statement of Operations for the year ended December 31,
1997................................................... F-120
Statement of Changes in Partners' Deficit for the year
ended December 31, 1997................................ F-121
Statement of Cash Flows for the year ended December 31,
1997................................................... F-122
Notes to Financial Statements............................. F-123
RADIO STATION KZXY(FM)
AUDITED --
Report of Independent Accountants......................... F-127
Statement of Revenues and Direct Expenses for the years
ended December 31, 1997 and 1996....................... F-128
Notes to Statement of Revenues and Direct Expenses........ F-129
</TABLE>
118
<PAGE> 124
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Faircom Inc.
We have audited the consolidated balance sheets of Faircom Inc. as of December
31, 1997 and 1996 and the related consolidated statements of operations,
capital deficit, and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Faircom Inc. at
December 31, 1997 and 1996 and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
Mitchel Field, New York /s/ BDO Seidman, LLP
January 21, 1998 ---------------------
BDO Seidman, LLP
F-1
<PAGE> 125
FAIRCOM INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (NOTE 3)
CURRENT ASSETS:
Cash and cash equivalents $ 535,312 $ 123,221
Accounts receivable, less allowance of $32,000 and $20,000
for possible losses 1,358,002 1,169,772
Prepaid expenses 25,918 12,592
- ---------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,919,232 1,305,585
- ---------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, less accumulated depreciation and
amortization (Note 1) 2,156,244 1,184,554
- ---------------------------------------------------------------------------------------------------------------------
INTANGIBLE ASSETS, net of accumulated amortization of $784,791
and $515,670 (Note 2) 7,701,341 1,627,767
OTHER ASSETS:
Deferred financing costs 837,411 167,222
Escrow deposit for purchase of radio station (Note 13) 100,000 -
Other 296,326 41,325
- ---------------------------------------------------------------------------------------------------------------------
8,935,078 1,836,314
- ---------------------------------------------------------------------------------------------------------------------
$13,010,554 $4,326,453
=====================================================================================================================
LIABILITIES AND CAPITAL DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 87,280 $ 76,853
Accrued expenses and liabilities 163,805 199,054
Taxes payable 70,150 10,150
Current portion of interest payable (Note 3 (a)) 108,391 226,417
Current portion of long-term debt (Note 3) 430,005 552,000
Current portion of obligations under capital leases - 3,547
- ---------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 859,631 1,068,021
LONG-TERM DEBT, less current portion (including $10,000,000 to
a related party in 1997) (Note 3) 21,911,661 7,276,884
INTEREST PAYABLE, less current portion (Note 3 (a)) 353,063 350,494
DEFERRED RENTAL INCOME (Note 4) 67,987 101,995
APPRAISAL RIGHT LIABILITY (Note 3 (b)) - 1,015,000
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 23,192,342 9,812,394
- ---------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 3 (b) and 5)
</TABLE>
F-2
<PAGE> 126
<TABLE>
<CAPTION>
<S> <C> <C>
CAPITAL DEFICIT (Notes 3 (b), 7 and 8):
Common stock - $.01 par value, 35,000,000 shares
authorized; 7,378,199 shares issued and outstanding 73,782 73,782
Additional paid-in capital 2,605,813 2,605,813
Deficit (12,861,383) (8,165,536)
- ----------------------------------------------------------------------------------------------------------
TOTAL CAPITAL DEFICIT (10,181,788) (5,485,941)
- ----------------------------------------------------------------------------------------------------------
$ 13,010,554 $ 4,326,453
==========================================================================================================
</TABLE>
See accompanying summary of accounting policies
and notes to consolidated financial statements.
F-3
<PAGE> 127
FAIRCOM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BROADCASTING REVENUES:
Gross broadcasting revenues $ 6,696,564 $5,517,586 $5,785,963
Less: agency commissions (703,273) (643,632) (672,381)
- -----------------------------------------------------------------------------------------------------------------------------------
NET BROADCASTING REVENUES 5,993,291 4,873,954 5,113,582
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Programming and technical expenses 1,590,531 1,218,160 1,229,333
Selling, general and administrative expenses 2,269,800 1,775,059 1,716,858
Depreciation and amortization 726,564 321,263 351,257
Corporate expenses 391,252 336,643 304,653
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 4,978,147 3,651,125 3,602,101
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 1,015,144 1,222,829 1,511,481
Interest expense (including provision for appraisal rights of
$215,000 in 1996 and $438,000 in 1995 (Note 3(b)) (1,330,676) (913,643) (1,249,298)
Other income 24,537 7,346 10,633
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE TAXES ON INCOME AND EXTRAORDINARY ITEMS (290,995) 316,532 272,816
TAXES ON INCOME (Note 9) 71,542 37,692 28,000
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS (362,537) 278,840 244,816
- -----------------------------------------------------------------------------------------------------------------------------------
EXTRAORDINARY ITEMS:
Gain from debt extinguishment (Note 3(a)) 370,060 - -
Loss from debt extinguishment (Note 3(b)) (4,703,370) - -
- -----------------------------------------------------------------------------------------------------------------------------------
Extraordinary items - net (4,333,310) - -
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $(4,695,847) $ 278,840 $ 244,816
===================================================================================================================================
BASIC INCOME (LOSS) PER SHARE OF COMMON STOCK - ASSUMING NO
DILUTION (Note 10):
Income (loss) before extraordinary items $(.05) $.04 $.03
Extraordinary items (.59) - -
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC NET INCOME (LOSS) PER COMMON SHARE $(.64) $.04 $.03
===================================================================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 7,378,199 7,378,199 7,378,199
===================================================================================================================================
DILUTED INCOME (LOSS) PER COMMON SHARE - ASSUMING ISSUANCE OF ALL DILUTIVE
CONTINGENT SHARES (Note 10):
Income (loss) before extraordinary items $(.05) $.02 $.02
Extraordinary items (.59) - -
- -----------------------------------------------------------------------------------------------------------------------------------
DILUTED NET INCOME (LOSS) PER COMMON SHARE $(.64) $.02 $.02
===================================================================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 7,378,199 16,459,701 16,459,701
===================================================================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to consolidated financial statements.
F-4
<PAGE> 128
FAIRCOM INC.
CONSOLIDATED STATEMENTS OF CAPITAL DEFICIT
FOR THE THREE YEARS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Common Stock
---------------------------------
Additional
Shares Amount paid-in capital Deficit Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1994 7,378,199 $73,782 $2,605,813 $(8,689,192) $(6,009,597)
Net income for the year
ended December 31,
1995 - - - 244,816 244,816
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,
1995 7,378,199 73,782 2,605,813 (8,444,376) (5,764,781)
Net income for the year
ended December 31,
1996 - - - 278,840 278,840
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,
1996 7,378,199 73,782 2,605,813 (8,165,536) (5,485,941)
NET LOSS FOR THE
YEAR ENDED
DECEMBER 31,1997 - - - (4,695,847) (4,695,847)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
1997 7,378,199 $73,782 $2,605,813 $(12,861,383) $(10,181,788)
===================================================================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to consolidated financial statements.
F-5
<PAGE> 129
FAIRCOM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(NOTE 12)
<TABLE>
<CAPTION>
Year ended December 31, 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (4,695,847) $278,840 $244,816
- -------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization 726,564 323,474 351,257
Amortization of deferred rental income (34,008) (34,005) (34,000)
Provision for doubtful accounts 46,308 23,449 16,428
Provision for appraisal rights - 215,000 438,000
Net loss from debt extinguishments 4,333,310 - -
Increase (decrease) in cash flows from changes in
operating assets and liabilities, net of effects of
purchase of radio stations:
Accounts receivable (234,538) (250,620) (2,708)
Prepaid expenses (13,326) (6,809) 31,724
Other assets - (1,325) -
Accounts payable 10,427 17,907 13,907
Accrued expenses and liabilities (35,249) (9,581) (77,016)
Taxes payable 60,000 (10,000) (100,918)
Interest payable 254,603 (167,714) (61,978)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 5,114,091 99,776 574,696
- -------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 418,244 378,616 819,512
- -------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Assets related to purchase of radio stations (7,650,000) - -
Capital expenditures (131,701) (63,440) (172,805)
Acquisition of intangible assets (81,180) - -
Escrow deposit for purchase of radio station (100,000) - -
- -------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (7,962,881) (63,440) (172,805)
- -------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for deferred financing costs (834,137) (44,985) (235)
Proceeds from long-term debt 23,000,000 - -
Principal payments on long-term debt (7,805,588) (493,249) (515,556)
Purchase of convertible and exchangeable debt (5,385,000) - -
Payment of appraisal right liability (1,015,000) - -
Principal payments under capital lease obligations (3,547) (17,253) (19,660)
- -------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 7,956,728 (555,487) (535,451)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 412,091 (240,311) 111,256
CASH AND CASH EQUIVALENTS, beginning of year 123,221 363,532 252,276
</TABLE>
F-6
<PAGE> 130
<TABLE>
<CAPTION>
Year ended December 31, 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS, end of year $ 535,312 $123,221 $363,532
===============================================================================================================================
</TABLE>
See accompanying summary of accounting policies
and notes to consolidated financial statements.
F-7
<PAGE> 131
FAIRCOM INC.
SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION AND Faircom Inc. (the "Company") owns and operates
BUSINESS radio stations through its wholly-owned
subsidiaries in Flint, Michigan and, effective
June 30, 1997, in Mansfield, Ohio.
PRINCIPLES OF The consolidated financial statements of the
CONSOLIDATION Company include the accounts of Faircom Inc.
and its subsidiaries, Faircom Flint Inc.
("Flint"), and Faircom Mansfield Inc.
("Mansfield"), all of whose common stock is
owned by the Company. All intercompany
accounts and transactions are eliminated.
Prior to January 1997, Mansfield was named
Faircom Evansville Inc. and was inactive.
USE OF ESTIMATES In preparing financial statements in conformity
with generally accepted accounting principles,
management is required to make estimates and
assumptions that may affect the reported
amounts of assets and liabilities and
the disclosure of contingent assets and
liabilities at the date of the financial
statements and revenues and expenses during
the reporting period. Actual results could
differ from those estimates.
CASH AND CASH For purposes of the statement of cash flows,
EQUIVALENTS the Company considers all highly liquid
financial instruments purchased with an
original maturity of three months or less to
be cash equivalents. The carrying amount
reported in the consolidated balance sheets
for cash and cash equivalents approximates its
fair value.
PROPERTY AND Property and equipment are stated at cost.
EQUIPMENT For financial reporting purposes, depreciation
is determined using the straight-line method
based upon the estimated useful lives of the
various classes of assets, ranging from three
to fifteen years. Leasehold improvements are
amortized over the shorter of their useful
lives or the terms of the related leases. Both
straight-line and accelerated methods are used
for federal and state income tax purposes.
F-8
<PAGE> 132
FAIRCOM INC.
SUMMARY OF ACCOUNTING POLICIES
INTANGIBLE ASSETS Intangible assets consist principally of the
excess of the purchase price (including
related acquisition costs) over the fair value
of tangible assets of acquired radio stations,
a substantial portion of which represents the
value of Federal Communications Commission
licenses. These assets are amortized on a
straight-line basis over lives ranging from
15 to 40 years. Management evaluates the
continuing realizability of the intangible
assets by assessing projected future
undiscounted cash flows of its radio stations.
LONG-LIVED ASSETS The Company follows Statement of Financial
Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ("SFAS
No. 121"). SFAS No. 121 requires, among other
things, that losses resulting from impairment
of assets expected to be held, and gains or
losses from assets expected to be disposed of,
be included as a component of income from
continuing operations before taxes on income.
DEFERRED FINANCING Deferred financing costs are amortized on a
COSTS AND OTHER straight-line basis over the term of the
ASSETS related debt. Non-compete agreements,
comprising substantially all of the category
"other assets", are amortized over the terms
of the related agreements.
APPRAISAL RIGHT The value of the appraisal right given to
Citicorp Venture Capital, Ltd. ("CVC") in
connection with its subordinated exchangeable
note (see Note 3 (b)) was accrued at a
discounted amount, based on the interest rate
of the related note and the date on which the
appraisal right was to become exercisable.
Adjustments were made to this accrual based on
the passage of time and changes in appraisal
values. The appraisal right liability was
extinguished as of June 30, 1997, the time
that the related underlying debt was purchased
(see Note 3(b)).
TAXES ON INCOME Income taxes are calculated using the
liability method specified by Statement
of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes".
F-9
<PAGE> 133
FAIRCOM INC.
SUMMARY OF ACCOUNTING POLICIES
REVENUE Revenue from radio advertisements, including
RECOGNITION barter transactions (advertising provided in
exchange for goods and services), is recognized
as income when the advertisements are
broadcast. Revenue from barter transactions is
recorded based on the estimated fair value of
the goods and services received. The
merchandise or services received as barter for
advertising are charged to expense when used
or provided. Any merchandise or services
received prior to the broadcast of the related
advertisements are recorded as a liability; if
the advertisement is broadcast first, a
receivable is recorded. Barter liabilities and
receivables were not material at December 31,
1997 and 1996.
STOCK-BASED In 1996, the Company adopted the disclosure
COMPENSATION provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123").
SFAS No. 123 establishes a fair value method
of accounting for stock-based compensation,
through either recognition or disclosure.
The disclosure provisions require the Company
to disclose pro forma information regarding
net income (loss) and net income (loss) per
share as if compensation cost for stock
options granted by the Company had been
determined in accordance with the fair value
method prescribed by SFAS No. 123.
ADVERTISING COSTS Advertising costs are charged to expense
as incurred and amounted to $75,858, $68,345
and $149,469 for the years ended December 31,
1997, 1996 and 1995, respectively.
NET INCOME (LOSS) In February 1997, the Financial Accounting
PER COMMON SHARE Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share." SFAS No. 128
establishes a different method of computing
earnings per share than was previously
required under the provisions of Accounting
Principles Board Opinion No. 15 ("APB 15").
Under SFAS No. 128, the Company is required to
report both basic net income (loss) per common
share and diluted net income (loss) per common
share for all periods presented. The adoption
of SFAS No. 128 had no effect on the per share
amounts previously reported by the Company
under APB 15.
F-10
<PAGE> 134
FAIRCOM INC.
SUMMARY OF ACCOUNTING POLICIES
Net income (loss) per common share is based on
the weighted average number of shares of
common stock outstanding during each period.
The effects of the assumed conversion of
convertible debt on per share data have been
reflected in the diluted calculation only for
1996 and 1995; such effects were not dilutive
for 1997 (see Note 3 (b)). The effects of the
assumed exercise of outstanding options were
not dilutive and, accordingly, have been
excluded from the diluted per share
calculations (see Notes 7 and 8).
RECENT ACCOUNTING In June 1997, the FASB issued SFAS No. 130,
PRONOUNCEMENTS "Reporting Comprehensive Income." This
Statement establishes standards for reporting
and displaying comprehensive income and its
components in the financial statements. It
does not, however, require a specific format
for the statement, but requires the Company to
display an amount representing total
comprehensive income for the period of the
financial statement. The Company is in the
process of determining its preferred format.
This Statement is effective for fiscal years
beginning after December 15, 1997.
Also in June 1997, the FASB issued SFAS No.
131, "Disclosures about Segments of an
Enterprise and Related Information." The
Statement establishes standards for the manner
in which public business enterprises report
information about operating segments in annual
financial statements and requires those
enterprises to report selected information
about operating segments in interim financial
reports issued to stockholders. This Statement
is effective for financial statements for
periods beginning after December 15, 1997, and
the Company has not yet determined the impact,
if any, of the Statement on its financial
reporting.
<TABLE>
<CAPTION>
1. PROPERTY AND Property and equipment consist of the following:
EQUIPMENT
1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 285,000 $ 116,000
Buildings and improvements 958,583 636,581
Towers and antenna systems 1,457,564 1,182,526
Studio, technical and transmitting
equipment 3,819,910 3,467,747
Office equipment, furniture and fixtures 1,043,648 941,665
</TABLE>
F-11
<PAGE> 135
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
<S> <C> <C>
7,564,705 6,344,519
Less: accumulated depreciation and
amortization (5,408,461) (5,159,965)
- -----------------------------------------------------------------------------------------
Net property and equipment $2,156,244 $1,184,554
=========================================================================================
</TABLE>
2. INTANGIBLE ASSETS Intangible assets consist of the
following:
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Excess of purchase price over fair value of
tangible assets of acquired radio stations
(substantially related to the value of
Federal Communications Commission
licenses) $8,255,940 $1,994,425
Related acquisition costs 216,209 135,029
Other 13,983 13,983
- -----------------------------------------------------------------------------------------
8,486,132 2,143,437
Less: accumulated amortization (784,791) (515,670)
- -----------------------------------------------------------------------------------------
$7,701,341 $1,627,767
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
3. LONG-TERM DEBT Long-term debt consists of the following:
AND FAIR VALUE
DISCLOSURES
1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Senior secured term and time notes
(see (a) below) $12,341,666 $7,147,254
Convertible and exchangeable
subordinated promissory notes (see
(b) below) 10,000,000 681,630
- ---------------------------------------------------------------------------------------
22,341,666 7,828,884
Less: Current portion of long-term
debt (430,005) (552,000)
</TABLE>
F-12
<PAGE> 136
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
<S> <C> <C>
$21,911,661 $7,276,884
=======================================================================================
</TABLE>
(a) Senior secured term and time notes
In connection with the June 1997 Mansfield
acquisition described in Note 12, the Company
repaid its outstanding senior secured term
and time notes, which had an aggregate
principal balance of $7,371,000 at that time,
and borrowed $12,500,000 from the same lender
under an amended and restated loan agreement
(the "1997 loan agreement"). The term notes
under the 1997 loan agreement mature July 1,
2002 with optional renewal by the Company
under certain circumstances for an additional
five years. The principal balance is payable
in varying monthly installments, ranging from
$31,667 to $72,500, from August 1, 1997
through June 1, 2002, with the balance due on
the maturity date. Interest on the term notes
initially is at the rate of 4.50% over 30 day
commercial paper rates.
The borrowings are secured by all tangible
and intangible property of Flint and
Mansfield and all outstanding Flint and
Mansfield common stock held by the Company,
and are guaranteed by the Company.
F-13
<PAGE> 137
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 1997 loan agreement contains certain
financial and restrictive covenants,
including maintenance of minimum operating
income levels and debt coverage ratios, and
limitations on capital expenditures,
corporate expenses, additional indebtedness,
mergers and dividend payments.
As of the date that the Company entered into
the 1997 loan agreement, certain accrued
interest was extinguished, resulting in an
extraordinary gain of $370,060.
(b) Convertible and exchangeable subordinated
promissory notes
As of June 30, 1997, the Company completed
the sale of $10,000,000 aggregate principal
amount of its convertible subordinated
promissory notes due July 1, 2002 (the
"Notes"). The Notes consist of Class A and
Class B convertible subordinated promissory
notes, each in the aggregate principal amount
of $5,000,000.
The Class A Notes are convertible into
11,242,500 shares of the Company's common
stock, and the Class B Notes into
7,769,500 shares of common stock. The
aggregate 19,012,000 of such shares on full
conversion of the Notes would represent 67.1%
of the Company's outstanding common stock on
a fully diluted and adjusted basis. The Notes
bear interest at 7% per annum, compounded
quarterly, payable at the maturity of the
Notes. The terms of the Securities Purchase
Agreement applicable to the Class A and Class
B Notes, as amended, provide that if the
Company does not, on or before April 1, 1999,
consummate a merger of the Company with
another corporation on terms acceptable to
the holders of the Notes, then upon notice
from such holders, the Company shall take all
action necessary to liquidate the Company and
each of its subsidiaries on terms and
conditions acceptable to such holders, such
approval not to be unreasonably withheld.
Subsequent to the sale of the Notes, an
individual who is a beneficial owner and
manager of the general partner of one of the
holders of the Notes and of the investment
manager of the other holder of the Notes
became a director of the Company.
F-14
<PAGE> 138
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The proceeds from the sale of the Notes were
used (i) to purchase for $6,400,000 from
Citicorp Venture Capital, Ltd. ("Citicorp")
the Company's 8.65% Senior Convertible Note
("Convertible Note") in the principal amount
of $181,630 due December 1, 2004 and the
Company's 10% Senior Exchangeable Note
("Exchangeable Note") in the principal amount
of $500,000 due December 1, 2004,
representing all of Citicorp's interests in
the Company, and (ii) to pay a portion of the
purchase price for the Mansfield acquisition,
described in Note 12, and the legal and other
fees and expenses of such acquisition. The
Convertible Note was convertible into
9,081,502 shares of Common Stock, which would
have represented 52.5% of the Company's fully
diluted outstanding Common Stock prior to the
acquisition and the financing activities
described herein. The Exchangeable Note gave
Citicorp the right to request, at any time
after December 1, 1999, that $350,000
principal amount of such Note be exchanged
for a payment equal to 19.99% of the
appraised value, as defined, of the Company's
subsidiary which owns and operates radio
stations in Flint, Michigan.
In connection with the purchase for
$6,400,000 of the Citicorp notes, which had a
principal amount aggregating $681,630, the
Company's appraisal right liability of
$1,015,000 was also extinguished. This debt
extinguishment resulted in an extraordinary
loss of $4,703,370.
Minimum annual maturities of the Company's
long-term debt for the next five years are
approximately as follows: 1998 - $430,000;
1999 - $554,000; 2000 - $688,000; 2001 -
$812,000; and 2002 - $19,858,000.
F-15
<PAGE> 139
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company estimates that the carrying
amounts of its senior secured term and time
notes, $12,341,666 and $7,147,254 at December
31, 1997 and 1996, respectively, approximated
their fair values at those dates, based on
rates available to the Company for debt with
similar terms and remaining maturities. The
fair values of the convertible and
exchangeable subordinated promissory notes
are not readily determinable. Such debt was
carried at $10,000,000 at December 31, 1997
and $1,696,630 (including a related appraisal
right liability of $1,015,000) at December
31, 1996. The 1997 debt is convertible into
common stock with a market value of
approximately $16,000,000 at December 31,
1997. The 1996 debt was convertible into
common stock with a market value of
approximately $1,540,000 at December 31,
1996, and $350,000 of the debt was
exchangeable into the aforementioned
appraisal right. The Company believes that an
undetermined discount for lack of liquidity
would be appropriate due to the large amounts
of stock that would be issuable upon
conversion.
4. DEFERRED RENTAL Effective January 1995, Flint, as lessor,
INCOME entered into an operating lease agreement
with a telecommunications company. The
lessee agreed to arrange for the construction
of a new radio tower and antenna at one
of Flint's tower sites, at lessee's expense,
and transfer title to those assets to
Flint, in exchange for the right to use a
portion of the new tower and related building
facilities in its operations on a rent-free
basis for five years. The lessee has three
successive five-year renewal options,
providing for no rent in the sixth year, a
total of $18,000 rent in the seventh year,
and annual increases of 4% beginning with the
eighth year.
Flint has recorded as an advance minimum
lease payment an amount equal to the fair
value of the tower and antenna constructed
for its benefit, based on the lessee's
construction costs, aggregating approximately
$170,000. The assets received were
capitalized, the advance lease payment is
being amortized as rental income on a
straight-line basis over the five year
initial lease term, and the unamortized
portion of the lease payment is recorded as
deferred rental income.
F-16
<PAGE> 140
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS The Company has entered into an operating
lease agreement for office space.
The following is a schedule of approximate
future minimum lease payments required under
this lease:
<TABLE>
<S> <C>
1998 $22,200
1999 22,200
2000 22,200
2001 3,700
-------------------------------------------
$70,300
===========================================
</TABLE>
Rent expense was approximately $56,000,
$46,000 and $32,000 for the years ended
December 31, 1997, 1996 and 1995,
respectively.
6. RETIREMENT PLANS Effective January 1, 1995, the Company
established a qualified salary reduction plan
under Section 401(k) of the Internal Revenue
Code for eligible employees. Under the plan,
the Company may, but is not required to, make
matching and discretionary contributions to
participants' accounts. Matching
contributions charged against operations
amounted to $6,800 and $4,600 for the years
ended December 31, 1996 and 1995,
respectively. No matching contributions were
made for the year ended December 31, 1997.
F-17
<PAGE> 141
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. STOCK OPTION PLAN The Company has a stock option plan (the
AND OTHER STOCK "Plan") under which 900,000 shares of common
OPTIONS stock have been reserved for issuance. Under
this Plan, the Company may grant options to
purchase up to 900,000 shares of common stock
in the form of either nonqualified stock
options or incentive stock options ("ISOs").
The Plan provides that the option price for
the nonqualified options be determined by the
Board of Directors at or prior to the time
the option is granted (but in no event at a
price below par value of the common stock)
and for ISOs, at a price not less than 100%
of the fair market value of the common stock
at the date the option is granted, except for
those individuals possessing more than 10% of
the total combined voting power of all
classes of stock of the Company or its
subsidiaries, for whom the price is not less
than 110% of the fair market value of the
common stock.
The term of each option granted shall be
determined by the Board of Directors,
provided that the term for each ISO granted
under the Plan not be more than 10 years from
the date of the grant and the term for each
option granted to an individual owning more
than 10% of the combined voting power, as
described above, not be more than five years.
Under the terms of the Plan, the Company's
right to grant additional ISOs terminated
September 18, 1994, 10 years from the date
the Plan was adopted by the Company's Board
of Directors.
The Company applies APB Opinion 25,
"Accounting for Stock Issued to Employees",
and related Interpretations in accounting for
the Plan. Under APB 25, for options granted
to employees at exercise prices equal to the
fair market value of the underlying common
stock at the date of grant, no compensation
cost is recognized.
F-18
<PAGE> 142
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 1997, in connection with the
issuance of its Class A and Class B
Convertible Subordinated Notes ("Notes"), the
Company issued options to purchase 958,886
and 159,814 shares of its common stock at an
exercise price of $.53 per share to its
President and Senior Vice President,
respectively. These options are exercisable
through July 1, 2002 to the extent the Notes
are converted to common stock. If less than
all of the Notes are ultimately converted,
the number of options will be reduced
proportionately. At the time when any portion
of the Notes is converted and the
proportionate number of options become
exercisable, the Company will record a
nonrecurring charge to operations based on
the difference between the exercise price and
the market value of the Company's common
stock at that time. If all of the Notes had
been converted and all of the options had
been exercised at December 31, 1997, the
charge to operations would have been
approximately $355,000.
Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123") requires the
Company to provide, beginning with 1995
grants, pro forma information regarding net
income and net income per common share as if
compensation costs for the Company's stock
option plans had been determined in
accordance with the fair value based method
prescribed in SFAS No. 123. Such pro forma
information is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro forma net income
(loss) $(4,865,688) $257,255 $220,071
Pro forma basic net
income (loss) per
common share $(.66) $.03 $.03
- -----------------------------------------------------------------------------------------
</TABLE>
F-19
<PAGE> 143
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted-average fair value per share for
options granted was $.08, $.09 and $.08 in
1997, 1996 and 1995, respectively. The fair
value of each option grant is estimated on
the date of grant using the Black-Scholes
option-pricing model with the following
assumptions for 1997, 1996 and 1995 grants:
Dividends: None
Volatility: 46.5%
Risk-free interest rate: Ranging from
6.28% to 6.38%
Expected term: 5 years
Transactions involving options are summarized below:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------------------------------------------------
WEIGHTED- Weighted- Weighted-
AVERAGE Average Average
EXERCISE Exercise Exercise
SHARES PRICE Shares Price Shares Price
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, January 1 825,000 $.16 800,000 $.14 533,882 $.11
Granted 1,187,700 .53 234,182 .19 309,318 .16
Cancelled 69,000 .13 209,182 .13 43,200 .31
</TABLE>
F-20
<PAGE> 144
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, December 31 1,943,700 $.37 825,000 $.16 800,000 $.14
===============================================================================================================
Exercisable, December 31 721,000 $.20 676,000 $.16 661,000 $.14
===============================================================================================================
</TABLE>
F-21
<PAGE> 145
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information about
stock options outstanding at December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------- ----------------------
Weighted-
Number Average Weighted- Weighted-
Outstanding Remaining Average Number Average
Exercise at Contractual Exercise Exercisable Exercise
Price 12/31/97 Life (years) Price at 12/31/97 Price
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
.13 112,500 .5 $.13 105,000 $.13
.16 409,318 2.1 .16 352,818 .16
.17 139,182 3.9 .17 139,182 .17
.22 95,000 3.2 .22 55,000 .22
.53 1,187,700 4.5 .53 69,000 .53
- -------------------------------------------------------------------------------------------------
1,943,700 2.8 $.37 721,000 $.20
=================================================================================================
</TABLE>
Of the 1,943,700 options outstanding at December 31, 1997,
1,866,200 are nonqualified options and 77,500 are ISOs.
8. COMMON STOCK At December 31, 1997, shares of the Company's
SHARES RESERVED authorized and unissued common stock were
reserved for issuance upon conversion of
convertible subordinated promissory notes and
exercise of options, as follows:
<TABLE>
<S> <C>
Convertible subordinated promissory notes (Note 3 (b)) 19,012,000
Stock options (Note 7) 1,943,700
- -----------------------------------------------------------------------------
20,955,700
=============================================================================
</TABLE>
F-22
<PAGE> 146
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
9. TAXES ON INCOME The provision for federal and state income
taxes consists of the following:
1997 1996 1995
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ - $152,000 $157,000
State 71,542 37,692 70,000
- --------------------------------------------------------------------------------------
71,542 189,692 227,000
Benefits of net operating loss
carryforwards - 152,000 199,000
- --------------------------------------------------------------------------------------
$71,542 $ 37,692 $ 28,000
======================================================================================
</TABLE>
The net deferred tax asset consists of the
following:
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Gross deferred asset for:
Net operating loss carryforwards $2,448,000 $2,311,000
Excess gain on debt restructuring for tax
reporting purposes - 186,000
Alternative minimum tax credit
carryforwards 35,000 35,000
- ----------------------------------------------------------------------------------------
Subtotal 2,483,000 2,532,000
Less: valuation allowance (2,483,000) (2,532,000)
- ----------------------------------------------------------------------------------------
Net $ - $ -
- ----------------------------------------------------------------------------------------
</TABLE>
The Company has provided valuation allowances
equal to its deferred tax assets because of
the uncertainty as to future utilization.
The Company and its subsidiaries file
consolidated federal and separate state
income tax returns. At December 31, 1997,
consolidated net operating loss carryforwards
("NOLs") for income tax purposes were
approximately $6,800,000. Such NOLs may be
limited as to use upon a significant change
in the Company's ownership. The tax NOLs
expire during the years 2002 to 2012.
F-23
<PAGE> 147
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The difference between the Company's effective tax rate on income before taxes
on income and the federal statutory tax rate arises from the following:
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal tax expense at
statutory rate 34.0% 34.0% 34.0%
Federal taxes, based on
alternative minimum
calculation - - 1.8
Loss from debt
extinguishment - non-deductible (34.6) - -
Amortization of
intangibles and other
non-deductible
expenses (1.0) 31.9 47.6
Benefit of net operating
losses - (48.0) (72.8)
Changes in valuation
allowance 1.1 (13.9) -
State taxes, net of
federal benefit (1.0) 7.9 16.9
Prior year's federal tax
overaccrual - - (17.2)
- -----------------------------------------------------------------------------------------
Effective tax rate (1.5)% 11.9% 10.3%
=========================================================================================
</TABLE>
There was no material income tax effect related to the extraordinary items
described in Note 3.
F-24
<PAGE> 148
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. NET INCOME (LOSS) PER
COMMON SHARE The following table sets forth the
computation of basic and diluted net income (loss) per common
share:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NUMERATOR:
Income (loss) before extraordinary items -
basic $(362,537) $278,840 $244,816
Addback:
Interest from subordinated senior
convertible note (net of tax effect) - 13,840 14,093
- --------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS -
DILUTED $(362,537) $292,680 $258,909
==========================================================================================================================
EXTRAORDINARY ITEMS - BASIC AND DILUTED $(4,333,310) $ - $ -
==========================================================================================================================
DENOMINATOR:
Weighted average shares outstanding
Common stock - basic 7,378,199 7,378,199 7,378,199
Shares issuable upon assumed conversion of
subordinated senior convertible note - 9,081,502 9,081,502
- --------------------------------------------------------------------------------------------------------------------------
Common shares - diluted 7,378,199 16,459,701 16,459,701
==========================================================================================================================
BASIC INCOME (LOSS) PER SHARE OF COMMON
STOCK - ASSUMING NO DILUTION:
Income (loss) before extraordinary items $(.05) $.04 $.03
Extraordinary items (.59) - -
- --------------------------------------------------------------------------------------------------------------------------
BASIC NET INCOME (LOSS) PER COMMON
SHARE $(.64) $.04 $.03
==========================================================================================================================
DILUTED INCOME (LOSS) PER COMMON SHARE ASSUMING ISSUANCE OF ALL DILUTIVE
CONTINGENT SHARES:
Income (loss) before extraordinary items $(.05) $.02 $.02
Extraordinary items (.59) - -
- --------------------------------------------------------------------------------------------------------------------------
DILUTED NET INCOME (LOSS) PER COMMON
SHARE $(.64) $.02 $.02
==========================================================================================================================
</TABLE>
Note: The effects of the assumed exercise of outstanding options were not
dilutive and, accordingly, have been
F-25
<PAGE> 149
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
excluded from the diluted per share calculations. The effects of the
assumed conversion of convertible debt were not dilutive for 1997.
F-26
<PAGE> 150
<TABLE>
<CAPTION>
11. SUPPLEMENTAL CASH (a) Supplemental disclosure of cash flow information:
FLOW INFORMATION
Year ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid during the year $1,076,073 $ 866,357 $ 873,276
=========================================================================================
Income taxes paid during
the year $ 71,542 $ 43,592 $ 133,257
=========================================================================================
</TABLE>
(b) Supplemental disclosures of
non-cash investing and financing
activities:
In January 1995, Flint received a
tower and antenna, valued at
$170,000, as an advance lease
payment under the terms of an
operating lease agreement (see
Note 4).
In June 1997, certain accrued
interest was extinguished,
resulting in an extraordinary
gain of $370,060 (see Note 3
(a)).
12. ACQUISITION OF RADIO As of June 30, 1997, Mansfield
STATIONS acquired the assets and operations
of two commercial radio stations
located in Mansfield, Ohio (the
"Stations"), from an unrelated
company and its principals, pursuant
to the terms of an Asset Purchase
Agreement, made as of May 20, 1997
(the "Agreement"). Under the terms
of the Agreement, the selling
company received aggregate
consideration of $7,350,000 in cash,
which included $1 in consideration
of a five-year non-compete
agreement. In addition, the Company
paid $300,000 in cash to one of the
selling company's principals in
consideration of a five year
non-compete agreement. A substantial
portion of the purchase price for
the Stations was allocated to
intangible assets, representing
principally the value of the Federal
Communications Commission licenses
acquired. The acquisition of the
Stations has been accounted for by
the purchase method of accounting
and, accordingly, the operating
results of the Stations are included
in the Company's consolidated
results of operations from June 30,
1997, the date of acquisition.
F-27
<PAGE> 151
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following are the Company's estimates of selected pro forma unaudited
consolidated results as if the Stations had been acquired as of the beginning
of 1996:
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C>
($000s except per share
amounts)
Net broadcasting revenues $7,154 $7,152
=====================================================================================
Loss before extraordinary
items $ (570) $ (168)
=====================================================================================
Basic loss before
extraordinary items, per
common share $ (.08) $ (.02)
=====================================================================================
</TABLE>
13. SUBSEQUENT (a) On September 25, 1997, Mansfield filed an
ACQUISITION AND application with the Federal Communications
PENDING MERGER Commission ("FCC") to acquire the assets
and operations of radio station WSWR-FM,
Shelby, Ohio, for $1,125,000. The net
broadcasting revenues and results of
operations of the Shelby station for 1997
were not material in relation to the
Company's comparable amounts. Mansfield
deposited $100,000 in escrow pursuant to
the contract to acquire the Shelby station.
The closing of this acquisition occurred in
January 1998. In connection with the
closing, the Company borrowed $1,100,000
from a holder of the Class A and Class B
convertible subordinated promissory notes
described in Note 3(b). To evidence this
loan, the Company issued its Class C
Subordinated Promissory Note, which bears
interest at a rate of 14% per annum payable
at maturity, and is payable on the earlier
of April 1, 1999 or the closing of the
merger described in the following
paragraph.
F-28
<PAGE> 152
FAIRCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(b) On December 5,1997, the Company signed an
agreement to merge with Regent
Communications, Inc., another group radio
broadcaster. Under the terms of the
agreement, Faircom will merge with and into
a subsidiary of Regent. The shareholders of
Faircom will receive shares of Regent
Series C Convertible Preferred Stock, par
value $.01 per share ("Series C Preferred
Stock"). The Series C Preferred Stock has
full voting rights, provides for annual
cumulative dividends of 7%, and is
convertible on a one-for-one basis (subject
to adjustment in certain events) into the
common stock, $.01 par value per share, of
Regent. The Series C Preferred Stock is
subject to mandatory conversion under
certain circumstances. In the event of a
liquidation of Regent, the Series C
Preferred Stock has a preference in the
amount of its stated value of $5.00 per
share, together with accrued and unpaid
dividends. In the merger, the outstanding
shares of Faircom Common Stock will be
exchanged for fully paid and nonassessable
shares of Series C Preferred Stock, and
each outstanding Faircom option will be
converted into a Regent option entitling
the holder to acquire, on equivalent terms,
the same number of shares of Series C
Preferred Stock as the holder would have
been entitled to receive in the merger if
such Faircom option had been exercised in
full prior to the date of the merger. The
number of shares of Series C Preferred
Stock to be issued in the merger and
issuable pursuant to Regent options to be
received in exchange for Faircom options in
the merger will be based upon an aggregate
liquidation preference amount of
$33,162,000, adjusted by the amount of
Faircom's net working capital and decreased
by its senior debt and by one-half of the
prepayment premium on such senior debt to
be paid at the closing of the merger, all
as computed as of the last day of the month
immediately preceding the closing date of
the merger.
As of the date of issuance of this report,
the closing of the merger is still pending,
subject to shareholder approval and
satisfaction of certain other conditions.
F-29
<PAGE> 153
INDEPENDENT AUDITORS' REPORT
Partners
Treasure Radio Associates
Limited Partnership
Cleveland, Ohio
We have audited the accompanying balance sheets of Treasure Radio
Associates Limited Partnership as of November 30, 1996 and 1995 and the
related statements of income, partners' deficit, and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Treasure Radio Associates
Limited Partnership as of November 30, 1996 and 1995, and the results of its
operations and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ Kopperman & Wolf Co.
Cleveland, Ohio
January 9, 1997
F-30
<PAGE> 154
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET
NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS (Note 5)
Cash and cash equivalents............................................. $ 233,827 $ 332,174
Accounts receivable, net of allowance for doubtful accounts of
$15,000 for 1996 and 1995............................................ 265,353 257,909
Investments........................................................... 345,308 0
Prepaid expenses...................................................... 13,234 6,943
------------ -----------
TOTAL CURRENT ASSETS............................................... 857,722 597,026
PROPERTY AND EQUIPMENT--AT COST (Notes 3 and 5)
Land.................................................................. 160,713 160,713
Office furniture and equipment........................................ 316,017 303,441
Technical equipment................................................... 917,926 914,096
Buildings and antenna systems......................................... 1,265,008 1,246,781
Music, records and tapes.............................................. 295,116 295,116
Vehicles.............................................................. 15,421 15,421
------------ -----------
2,970,201 2,935,568
Less accumulated depreciation......................................... 2,020,508 1,855,542
------------ -----------
949,693 1,080,026
OTHER ASSETS (Note 5)
Radio station licenses, call letters and goodwill..................... 323,336 354,175
Loan fees............................................................. 48,981 29,845
------------ -----------
372,317 384,020
------------ -----------
$2,179,732 $2,061,072
============ ===========
</TABLE>
See Notes to the Financial Statements
F-31
<PAGE> 155
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET (CONTINUED)
NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES
Accounts payable--trade......................................... $ 11,409 $ 27,240
Accrued payroll and related taxes............................... 85,673 65,689
Current portion of long-term liabilities (Note 5)............... 343,822 241,495
Accrued interest................................................ 40,530 60,421
Advance payable--Interstate Management Consultants, Inc.
(Note 8)....................................................... 15,670 15,670
Accrued management fee (Note 8)................................. 39,900 39,900
Other accrued expenses.......................................... 29,078 13,183
------------- -------------
TOTAL CURRENT LIABILITIES.................................... 566,082 463,598
LONG-TERM LIABILITIES, Net of Current Portion (Note 5) .......... 2,816,463 3,151,566
COMMITMENTS AND CONTINGENCIES (Notes 3, 4, 5, 6 and 10)
PARTNERS' DEFICIT................................................ (1,202,813) (1,554,092)
------------- -------------
$ 2,179,732 $ 2,061,072
============= =============
</TABLE>
See Notes to the Financial Statements
F-32
<PAGE> 156
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' DEFICIT
YEARS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Balance, Beginning $(1,554,092) $(1,689,791)
Net Income 351,279 135,699
-------------- --------------
Balance, Ending $(1,202,813) $(1,554,092)
============== ==============
</TABLE>
See Notes to the Financial Statements
F-33
<PAGE> 157
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF INCOME
YEARS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
BROADCAST REVENUES, NET OF AGENCY COMMISSIONS $2,256,075 $1,934,983
OPERATING EXPENSES
Administrative 450,466 395,120
Program 425,053 409,925
Sales 468,572 388,660
Technical 53,734 58,403
Depreciation 164,966 165,688
Amortization 66,561 57,724
Management fee (note 8) 30,000 30,000
------------ ------------
Total Operating Expenses 1,659,352 1,505,520
------------ ------------
Operating Income 596,723 429,463
OTHER INCOME
Rental (note 6) 4,968 3,196
Miscellaneous 10,810 7,403
------------ ------------
15,778 10,599
OTHER EXPENSES
Interest 261,222 304,363
------------ ------------
NET INCOME $ 351,279 $ 135,699
============ ============
</TABLE>
See Notes to the Financial Statements
F-34
<PAGE> 158
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $2,158,769 $1,839,543
Cash paid to employees (771,953) (688,963)
Cash paid for services and supplies (552,253) (502,524)
Interest paid (280,914) (275,995)
Rent and interest received 15,579 5,974
------------ ------------
Net Cash Provided by Operating Activities 569,228 378,035
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of investments (455,308) 0
Proceeds from redemption of investments 110,000 0
Payments for purchases of property and equipment (24,370) (13,426)
------------ ------------
Net Cash Used by Investing Activities (369,678) (13,426)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term liabilities - net (243,039) (179,467)
Payments for loan refinancing (54,858) 0
------------ ------------
Net Cash Used by Financing Activities (297,897) (179,467)
------------ ------------
(Decrease) Increase in Cash (98,347) 185,142
Cash and Cash Equivalents, Beginning 332,174 147,032
------------ ------------
Cash and Cash Equivalents, Ending $ 233,827 $ 332,174
============ ============
</TABLE>
(Continued)
See Notes to the Financial Statements
F-35
<PAGE> 159
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $351,279 $135,699
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 164,966 165,688
Amortization 66,561 57,724
Barter transactions (595) 2,419
Changes in assets and liabilities:
Increase in accounts receivable (6,849) (36,548)
(Increase) decrease in prepaid expenses (6,291) 5,551
(Decrease) increase in accounts payable (15,831) 1,744
Increase in accrued payroll and related
taxes 19,984 18,366
(Decrease) increase in accrued interest (19,891) 28,368
Increase (decrease) in other accrued
expenses 15,895 (976)
---------- ----------
Net Cash Provided by Operations $569,228 $378,035
========== ==========
OTHER TRANSACTIONS NOT AFFECTING CASH:
Revenues recognized from barter activities $ 90,457 $ 64,697
========== ==========
Expenses recognized from barter activities $ 89,862 $ 67,116
========== ==========
Assets acquired from barter activity $ 0 $ 5,448
========== ==========
Decrease in barter receivables $ (595) $ (2,419)
========== ==========
Assets acquired under capital lease $ 10,263 $ 0
========== ==========
</TABLE>
See Notes to the Financial Statements
F-36
<PAGE> 160
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 1--NATURE OF OPERATIONS
Treasure Radio Associates Limited Partnership (the Partnership) was
organized as an Ohio limited partnership on January 5, 1987, with Treasure
Radio, Inc. as its general partner. The Partnership operates both an AM radio
station, WMAN, and an FM radio station, WYHT, in Mansfield, Ohio.
WYHT-FM and WMAN-AM are currently operating under licenses from the
Federal Communications Commission that must be renewed prior to October 1,
2003.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Partnership are as follows:
Cash and Cash Equivalents--Included in cash and cash equivalents in 1995
is a certificate of deposit with a maturity of less than three months. In
1996, a highly liquid money market fund is also included in cash and cash
equivalents.
Accounts Receivable and Bad Debts--Provisions for bad debts on accounts
receivable are made in amounts required to maintain an adequate allowance to
cover potential losses. Accounts determined to be uncollectible during the
year are charged against this allowance or directly to bad debt expense in a
manner to maintain an adequate allowance. Bad debt expense was $23,932 and
$9,814 for the years ended November 30, 1996 and 1995, respectively.
Investments--Investments consist of three United States Treasury Notes
maturing in February, April and August 1997. Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Debt and Equity
Securities," requires that these investments be recorded at market value;
however, the difference between the cost and market value of these
investments is immaterial.
Depreciation--Depreciation of property and equipment is computed on the
straight-line method at rates based on the expected useful lives of the
assets, as follows:
<TABLE>
<CAPTION>
ASSETS LIFE
- ---------------------------------- ------------
<S> <C>
Office furniture and equipment 5 years
Technical equipment 10 years
Buildings and antenna systems 20 years
Music, records and tapes 5 years
Vehicles 3 years
</TABLE>
F-37
<PAGE> 161
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Amortization--Amortization of other assets is computed on the
straight-line method at appropriate rates, based on the stated or expected
lives of the related assets, as follows:
<TABLE>
<CAPTION>
OTHER ASSETS LIFE
- ------------------------------------------------ ------------
<S> <C>
Radio station licenses, call letters and goodwill 20 years
Loan fees 7 years
</TABLE>
Barter Contracts--The Partnership provides commercial air time in exchange
for goods and services. All transactions are recorded based on the fair
market value of the goods and services received. Revenue is recognized when
the advertising is broadcast and the value of the goods and services is
recorded when they are received or used.
Taxes on Income--The individual partners are required to report their
share of the Partnership's taxable income or loss on their respective tax
returns. Therefore, no provision for taxes on income is made in the
accompanying financial statements (Note 7).
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
NOTE 3--ASSETS ACQUIRED BY CAPITAL LEASE
The Partnership leases various assets that have been capitalized in
accordance with Financial Accounting Standards Board Statement No. 13 (Note
5). Following is a schedule of the assets acquired under capital leases which
are included under property and equipment on the balance sheet.
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Office equipment $ 19,995 $ 9,732
Technical equipment 19,096 19,096
Buildings and antennas 384,465 384,465
---------- ---------
423,556 413,293
Less accumulated depreciation 192,435 168,330
---------- ---------
$231,121 $244,963
========== =========
</TABLE>
F-38
<PAGE> 162
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 4--COVENANTS NOT TO COMPETE
As part of the purchase agreements for the radio stations, the Partnership
agreed to make specified future payments to the sellers in return for their
covenants not to compete. These payments were discounted at the Partnership's
incremental borrowing rate to determine the values of the intangible assets
and the related liabilities (Note 5) that were recorded on the balance sheet.
Both of the covenants were restructured during the year ended November 30,
1993. One of the covenants not to compete had an original term of five years
which expired May 8, 1992. The remaining unpaid obligation under this
non-compete agreement has been amended to postpone the quarterly installments
for a period of four years. The quarterly payments will resume on July 1,
1997 and continue through July, 2001 (Note 5). The other covenant not to
compete had a term of seven years which expired June 16, 1994. As discussed
in Note 5, modifications have been made to extend installment payments. The
monthly payments for the period June 20, 1993 through May 20, 1997 were
reduced to $1,667 and the final payment, due June 16, 1994, was replaced by
48 monthly installments of $3,092.
F-39
<PAGE> 163
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 5--LONG-TERM LIABILITIES
Long term debt consists of a note payable to Star Bank, capital leases,
covenants and management fees (Note 9). The note payable to Star Bank is the
result of a refinancing of the Partnership's previous loan agreement with
Bank of America during the year ended November 30, 1996. Following is a
description of the Star Bank note payable, in accordance with the terms of
the agreement dated May 13, 1996:
The Star Bank note payable, initially amounting to $2,350,000, is an
eighty-four month term loan with payments commencing July 1, 1996 and ending
June 1, 2003. Monthly principal payments are due in the amount of $25,000
from July 1, 1996 through June 1, 1999, $29,167 from July 1, 1999 through
June 1, 2002 and $33,333 from July 1, 2002 through May 1, 2003. All remaining
principal, along with any accrued interest, is due June 1, 2003.
Interest is payable monthly on the outstanding loan balance at a rate of
9.05% per annum until May, 2000. At that time, the Partnership will be able
to select either the bank's "Prime Based Rate" or "Cost of Funds Based Rate"
on which the remaining interest payments will be based.
The Star Bank loan agreement contains various loan covenants including
assurance of the maintenance and continuance of the business, maintenance of
various financial ratios, reporting requirements and limitations on loans,
investments, partner distributions, capital expenditures, lease obligations
and management fees. The loan is collateralized by essentially all assets of
the Partnership and each limited partner's interest in the Partnership and is
guaranteed by the general partner of the Partnership (Note 8).
If prepaid, this loan is subject to a fee equal to the difference between
the net present value of the prepaid amount, including interest, and the
principal amount of the prepayment on the date of payment.
Following is a schedule of long-term debt:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Star Bank $2,225,000 $ 0
Bank of America--paid in full in May,
1996 with proceeds from Star Bank loan 0 2,418,314
Richland, Inc.--payments due under
covenant not to compete (Note 4);
effective interest rate 2.41%; per
modified agreement, monthly payments
of $1,667 beginning June 20, 1993
through May 20, 1997, and for the
period June 20, 1997 through May 20,
2001, monthly payments $3,092;
subordinated to the Star Bank debt 150,936 167,087
Capital Lease Obligation--Madison
Leasing--incurred in connection with
the acquisition of equipment;
effective interest rate at November
30, 1996 was 16.33%; payable in
monthly payments of $251, including
interest through February, 2001;
collateral, equipment 9,177 0
------------ -----------
Balance Carried Forward $2,385,113 $2,585,401
</TABLE>
F-40
<PAGE> 164
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 5--LONG-TERM LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Balance Brought Forward $2,385,113 $2,585,401
Greater Mansfield Broadcasting Company--payments under covenant not
to compete (Note 4); effective interest rate, 3.18%; per modified
agreement, payments deferred until July 1, 1997 at which time
quarterly payments of $6,250 will be due for a period of four
years; secured by property and equipment; subordinated to the Star
Bank debt 91,362 88,507
Capital Lease Obligation--payments due under a capital lease of
transmitter sites; discounted at the Partnership's incremental
borrowing rate at date of acquisition, yielding an effective
interest rate of 7.045%; payable in monthly payments of $2,500
through May, 1997, monthly payments of $2,782 from June 7, 1997
through May 7, 2001 when a final payment of $265,000 is due 319,948 327,130
Capital Lease Obligation--Fuerst & Co.--incurred in connection with
the acquisition of equipment; effective interest rate at November
30, 1996 and 1995 was 14.18%; payable in monthly payments of $141,
including interest through June of 1997; collateral, equipment 942 2,387
Loan Facility Fee Payable--Bank of America--$75,000 fee payable at
maturity on the Bank of America loan (September 30, 1997); if loan
were prepaid by December 31, 1995, the fee due was $25,000; if loan
were prepaid by December 31, 1996, the fee due was $50,000; this
loan was prepaid in May, 1996, at which time the Partnership paid a
negotiated fee of $25,000 0 25,000
Interstate Management Consultants, Inc. (Note 8)--payments due under
a promissory note; interest rate, 10%; interest is due annually on
February 1st beginning in 1989; subordinated to the Star Bank debt 50,000 50,000
Capital Lease Obligation--Reserve Management, Inc.--incurred in
connection with the acquisition of equipment; effective interest
rate at November 30, 1996 and 1995 was 14.9%; payable in monthly
payments of $189, including interest through March, 1998;
collateral, equipment 2,720 4,436
------------ ------------
Balance Carried Forward $2,850,085 $3,082,861
</TABLE>
F-41
<PAGE> 165
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 5--LONG-TERM LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Balance Brought Forward $2,850,085 $3,082,861
Interstate Management Consultants, Inc. (Note 8)--payments due
for unpaid management fees, reclassified to non-current since
debt is subordinated to the Star Bank debt; non-interest
bearing; unsecured 310,200 310,200
------------ ------------
Total Long-Term Liabilities 3,160,285 3,393,061
Less Current Portion 343,822 241,495
------------ ------------
Long-Term Liabilities, Net of Current Portion $2,816,463 $3,151,566
============ ============
</TABLE>
Following is a schedule of the maturities of long-term liabilities,
including capital lease obligations as of November 30, 1996:
<TABLE>
<CAPTION>
PRINCIPAL
YEARS ENDING PAYMENTS FUTURE MINIMUM MANAGEMENT
NOVEMBER 30, ON NOTES LEASE PAYMENTS FEES
- -------------------------------------- ------------ -------------- ------------
<S> <C> <C> <C>
1997 $ 327,000 $ 37,910 $ 0
1998 356,870 37,154 0
1999 379,268 36,401 0
2000 410,044 36,401 0
2001 389,959 280,018 0
Thereafter 654,157 0 310,200
------------ -------------- ------------
427,884
Less amounts representing interest and
maintenance fees 95,097
--------------
Total notes payable $2,517,298
============
Present value of net lease payments $332,787
==============
Accrued management fees $310,200
============
Total Long-Term Liabilities $3,160,285
============
</TABLE>
F-42
<PAGE> 166
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 6--COMMITMENTS AND CONTINGENCIES
As part of the original purchase on May 8, 1987, the Partnership also
acquired the leases of two houses. As of November 30, 1996, both of these
houses are being subleased under month-to-month leases. The net rental income
for 1996 and 1995 under these leases amounted to $4,967 and $3,196,
respectively. There are no future minimum rents due under these arrangements.
NOTE 7--TAXABLE INCOME
The individual partners are required to report their share of the
Partnership's taxable income on their respective tax returns. Following is a
reconciliation of the Partnership's net income for financial reporting
purposes to its taxable income for 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Net Income for Financial Reporting $351,279 $135,699
Permanent Differences:
Non-deductible amortization 30,838 30,838
Other 3,777 2,878
---------- ----------
34,615 33,716
Timing Differences:
Depreciation differences 84,910 81,575
Real estate taxes accrued but not paid 200 100
Accrued vacation pay 1,704 (1,471)
Allowance for doubtful accounts 0 2,000
Accrued compensation 0 (7,360)
Accrued interest 5,000 5,000
Accrued commissions 1,184 (471)
Capital lease differences (895) 0
---------- ----------
92,103 79,373
---------- ----------
Taxable Income $477,997 $248,788
========== ==========
</TABLE>
F-43
<PAGE> 167
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 8--RELATED PARTY TRANSACTIONS
Treasure Radio, Inc. is the sole general partner of the Partnership, and
has a 60.5% interest in the Partnership. Treasure Radio, Inc. is a
wholly-owned subsidiary of Interstate Management Consultants, Inc.
(Interstate).
Interstate provides management services to the Partnership. In return, the
Partnership has agreed to pay a management fee to Interstate equal to 15% of
the Partnership's net income before the management fee, depreciation,
amortization, interest expense and income taxes. The parties, in order to
comply with stipulations of the bank agreements, agreed to a reduced
management fee of $30,000 for 1996 and 1995 which was paid in each of those
years.
Interstate also paid organization and start-up costs amounting to $57,835
on behalf of the Partnership. During 1987, the Partnership repaid $42,165
leaving a balance due to Interstate of $15,670.
The sole shareholder of Interstate is an attorney who is associated with a
law firm that provides legal services to the Partnership. Amounts incurred
for services provided by attorneys of this law firm, other than the sole
shareholder (for whose services no charge was made), for 1996 and 1995
totaled $17,688 and $4,361, respectively. Of the $17,688 incurred in 1996,
$13,182 was capitalized and is being amortized in connection with the
refinancing of the Partnership's loan agreement (Note 5).
The sole shareholder of Interstate is also the owner of another company
with which the Partnership has a capital lease agreement. This lease
agreement has a term of five years, and expires in 1997 (Note 5).
During the year ended November 30, 1988, Interstate loaned the Partnership
an additional $50,000 (Note 5).
NOTE 9--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value under Statement of Financial Accounting Standards No.
107, Disclosures about Fair Value of Financial Instruments.
CASH, ACCOUNTS RECEIVABLE, INVESTMENTS AND PREPAID EXPENSES--The carrying
amount approximates fair value because of the short maturity of those
instruments.
ADVANCE PAYABLE, ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES--The carrying
amount approximates fair value because of the short maturity of those
instruments.
LOAN PAYABLE, BANK--the carrying amount approximates fair value because
the interest rate charged approximates current market rates.
NOTE PAYABLE INTERSTATE MANAGEMENT CONSULTANTS, INC.--The carrying amount
approximates fair value because the interest rate being charged approximates
the Partnership's incremental borrowing rate.
F-44
<PAGE> 168
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 9--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
COVENANTS NOT TO COMPETE--The carrying amounts of the Richland
Incorporated and Greater Mansfield Broadcasting Company covenants not to
compete do not approximate fair value because the interest rates implicit in
these agreements are 2.41% and 3.18%, respectively (Note 5). In order to
estimate the fair value of these covenants, the expected future cash flows
have been discounted at the Partnership's incremental borrowing rate.
The fair values of the covenants not to compete which do not approximate
carrying value are as follows:
<TABLE>
<CAPTION>
NOVEMBER 30,
1996
---------------------
CARRYING FAIR
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Payments due under covenants not to compete:
Richland, Inc. $150,936 $129,080
Greater Mansfield Broadcasting Company 91,362 81,722
---------- ----------
$242,298 $210,802
========== ==========
</TABLE>
It is not practicable to estimate the fair value of a liability
representing unpaid management fees in the amount of $310,200. This
liability, as discussed in Note 5, is non-interest bearing and unsecured. The
liability is also subordinate to the Star Bank loan agreement and would
probably be subordinate to any future senior debt. Because of this
subordination, it is impracticable to estimate a future repayment schedule
and therefore a term over which future cash flows can be discounted.
NOTE 10--SALE OF BUSINESS
On January 23, 1997, the Partnership entered into an Asset Purchase
Agreement to sell substantially all of the assets of the radio stations,
excluding cash and accounts receivable. The sales price is $7,350,000,
subject to customary contingencies and post closing adjustments. An escrow
deposit of $400,000 was made by the buyer upon execution of the Agreement.
Closing of the sale is contingent upon Federal Communications Commission
approval. The balance of the purchase price is due at closing, except for a
$200,000 eighteen month holdback.
Concurrent with the closing, non-compete agreements will be executed by
Treasure Radio, Inc. (general partner) and the sole shareholder of Interstate
Management, Inc. (the owner of Treasure Radio, Inc.).
F-45
<PAGE> 169
Treasure Radio Associates Limited Partnership
Condensed Balance Sheets
May 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 200,765 $ 387,986
Accounts receivable, net of allowance for doubtful accounts 287,735 316,410
Investments 490,529 --
Prepaid expenses and other current assets 3,348 7,468
----------- -----------
Total current assets 982,377 711,864
----------- -----------
Property and equipment 868,321 1,010,401
----------- -----------
Other assets:
Radio station, licenses, call letters and goodwill 307,918 338,755
Loan fees 45,050 35,499
----------- -----------
352,968 374,254
----------- -----------
$ 2,203,666 $ 2,096,519
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Accounts payable - trade $ 13,252 $ 43,570
Accrued payroll and related taxes 82,587 68,997
Current portion of long-term liabilities 300,000 300,000
Accrued interest 26,250 33,485
Other current liabilities 43,259 56,219
----------- -----------
Total current liabilities 465,348 502,271
Long-term liabilities, net of current portion 2,695,636 2,993,887
Partners' deficit (957,318) (1,399,639)
----------- -----------
$ 2,203,666 $ 2,096,519
=========== ===========
</TABLE>
F-46
<PAGE> 170
Treasure Radio Associates Limited Partnership
Condensed Statements of Operations
Six Months Ended May 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net broadcasting revenues $ 1,160,579 $ 1,059,546
----------- -----------
Operating expenses:
Programming and technical expenses 263,868 251,212
Selling, general and administrative expenses 450,148 398,075
Depreciation and amortization 102,449 111,061
Corporate expenses 15,000 15,000
----------- -----------
Total operating expenses 831,465 775,348
----------- -----------
Income from operations 329,114 284,198
Interest expense (98,096) (135,698)
Other income 14,477 5,953
----------- -----------
Income before taxes on income 245,495 154,453
Taxes on income -- --
----------- -----------
Net income $ 245,495 $ 154,453
=========== ===========
</TABLE>
F-47
<PAGE> 171
Treasure Radio Associates Limited Partnership
Condensed Statements of Cash Flows
Six Months Ended May 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 245,495 $ 154,453
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 102,449 111,061
Changes in assets and liabilities:
Increase in accounts receivable (22,382) (58,501)
Decrease (increase) in prepaid expenses 9,886 (525)
Increase in accounts payable 1,843 16,330
(Decrease) increase in accrued payroll and related taxes (3,086) 3,308
Decrease in accrued interest (14,280) (26,936)
Decrease in other current liabilities (41,389) (12,534)
--------- ---------
Net cash provided by operating activities 278,536 186,656
--------- ---------
Cash flows from investing activities:
Payments for purchases of investments (380,583) --
Proceeds from redemption of investments 235,362 --
Payments for purchases of property and equipment (1,728) (12,575)
--------- ---------
Net cash used in investing activities (146,949) (12,575)
--------- ---------
Cash flows from financing activities:
Principal payments on long-term liabilities (164,649) (99,174)
Payments for loan refinancing -- (19,095)
--------- ---------
Net cash used in financing activities (164,649) (118,269)
--------- ---------
(Decrease) increase in cash and cash equivalents (33,062) 55,812
Cash and cash equivalents, beginning 233,827 332,174
--------- ---------
Cash and cash equivalents, ending $ 200,765 $ 387,986
========= =========
</TABLE>
F-48
<PAGE> 172
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP
NOTE TO INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for completed financial
statements. In the opinion of management, the statements include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results for the interim periods. The results of
operations for any interim period are not necessarily indicative of the results
for a full year.
It is suggested that these interim financial statements be read in
conjunction with the financial statements and notes thereto included in the
Treasure Radio Associates Limited Partnership's audited financial statements
for the fiscal years ended November 30, 1996 and 1995.
F-49
<PAGE> 173
REPORT of INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Regent Communications, Inc.
We have audited the accompanying consolidated balance sheets of Regent
Communications, Inc. and Subsidiaries (the "Company") as of December 31, 1997
and 1996 and the related consolidated statements of operations, shareholders'
equity, and cash flows for the year ended December 31, 1997 and for the period
from November 5, 1996 (inception) through December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Regent
Communications, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for the year ended
December 31, 1997 and for the period from November 5,1996 (inception) through
December 31, 1996, in conformity with generally accepted accounting principles.
Coopers & Lybrand, L.L.P.
Cincinnati, Ohio
January 30, 1998
F-50
<PAGE> 174
REGENT COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
as of December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
Current assets:
Cash $ 1,013,547 $ 592
Accounts receivable, less allowance for doubtful
accounts of $86,000 in 1997 1,507,623 -
Other receivables 197,639 -
Other current assets 28,780 -
Deposits held in escrow for station acquisitions 1,975,000 -
Assets held for sale 7,500,000 -
------------ ----------
Total current assets 12,222,589 592
Property, plant and equipment, net 53,792 -
Other assets, net 1,089,462 -
------------ ----------
Total assets $ 13,365,843 $ 592
============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 526,004 $ 500
Accounts payable, shareholders - 11,906
Accrued expenses 655,078
Notes payable 7,500,000
------------ ----------
Total current liabilities 8,681,082 12,406
Redeemable preferred stock:
Series B Senior convertible preferred stock, 1,000,000 shares authorized, 1,000,000 issued
and outstanding, $5.00 stated value (liquidation value; $1,122,055), net of
subscription for 780,000 shares for $3,900,000 1,122,055 -
Series D convertible preferred stock, 1,000,000 shares authorized, 220,000 issued
and outstanding , $5.00 stated value (liquidation value; $1,104,852) 1,104,852 -
------------ ----------
Total redeemable preferred stock 2,226,907 -
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value: 20,000,000 shares authorized:
Series A convertible preferred stock, 620,000 shares authorized,
600,000 issued and outstanding, $5.00 stated value 3,000,000 -
(liquidation value: $3,119,268)
Series C convertible preferred stock, 4,000,000 shares authorized, none issued - -
or outstanding, $5.00 stated value
Series E convertible preferred stock, 5,000,000 shares authorized,
none issued or outstanding, $5.00 stated value - -
Common stock, $.01 par value; 30,000,000 shares
authorized; 240,000 shares issued and outstanding 2,400 2,400
Additional paid-in capital 571,285 (1,808)
Deficit (1,115,831) (12,406)
------------ ----------
Total shareholders' equity (deficit) 2,457,854 (11,814)
------------ ----------
Total liabilities and shareholders' equity $ 13,365,843 $ 592
============ ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-51
<PAGE> 175
REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
for the year ended December 31, 1997 and the period from November 5,1996
(inception) through December 31, 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Broadcast revenue $ 5,302,603 $ -
Less agency commissions (386,598) -
----------- -----------
Net revenue 4,916,005 -
Broadcast operating expenses 4,167,002 -
Time brokerage agreement fees, net 1,223,054 -
Depreciation and amortization expense 655 -
Corporate general and administrative expenses 517,486 12,406
----------- -----------
Operating loss (992,192) (12,406)
Interest expense, net 73,901 -
Other expense, net 37,332 -
----------- -----------
Net loss $(1,103,425) $ (12,406)
=========== ===========
Loss applicable to common shares:
Net loss (1,103,425) (12,406)
Preferred stock dividend requirements (146,175) -
----------- -----------
Loss applicable to common shares $(1,249,600) $ (12,406)
=========== ===========
Basic and diluted net loss per common share $ (5.21) $ (0.05)
=========== ===========
Shares used in basic and diluted per share calculation 240,000 240,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-52
<PAGE> 176
REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the year ended December 31, 1997 and the period November 5, 1996 (inception)
through December 31, 1996
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN
COMMON STOCK PREFERRED STOCK CAPITAL DEFICIT TOTAL
---------------------- -------------------------- ------------ ----------- ------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, November 5, 1996 - - - - - - -
(inception)
Issuance of common stock 240,000 $ 2,400 $ (1,808) $ 592
Net loss $ (12,406) (12,406)
---------- ---------- ------------ ------------ ------------ ----------- ------------
Balance December 31, 1996 240,000 2,400 (1,808) (12,406) (11,814)
Contribution from common shareholders 600,000 600,000
Issuance of Series A 600,000 $ 3,000,000
preferred stock 3,000,000
Preferred dividends on Series B and D
redeemable stock (26,907) (26,907)
Net loss (1,103,425) (1,103,425)
---------- ---------- ------------ ------------ ------------ ----------- ------------
Balances, December 31, 1997 240,000 $ 2,400 600,000 $ 3,000,000 $ 571,285 $(1,115,831) $ 2,457,854
========== ========== ============ ============ ============ =========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-53
<PAGE> 177
REGENT COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the year ended December 31, 1997 and the period November 5, 1996 (inception)
through December 31, 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,103,425) $ (12,406)
Adjustments to reconcile net loss to net
cash used in operating activities:
Provision for bad debts 86,000 -
Net barter expense 25,976 -
Depreciation expense 361 -
Amortization expense 294 -
Changes in operating assets and liabilities:
Accounts receivable (1,593,623) -
Other receivables and other current assets (252,395) -
Accounts payable 513,598 12,406
Accrued expenses 655,078 -
----------- -----------
Net cash used in operating activities (1,668,136) -
----------- -----------
Cash flows used in investing activities:
Cash paid for acquisitions costs (774,762) -
Cash paid for organizational costs (17,637)
Deposits held in escrow for station acquisitions (1,975,000) -
Capital expenditures (54,153) -
----------- -----------
Net cash used in investing activities (2,821,552) -
----------- -----------
Cash flows from financing activities:
Proceeds from the issuance of preferred stock 5,200,000 -
Proceeds from the issuance of common stock - 592
Contributions from common shareholders 600,000 -
Payments for financing costs (297,357) -
----------- -----------
Net cash provided by financing activities 5,502,643 592
----------- -----------
Net increase in cash and cash equivalents 1,012,955 592
----------- -----------
Cash, beginning of period 592 -
----------- -----------
Cash, end of period $ 1,013,547 $ 592
=========== ===========
Cash paid for interest $ 35,000 $ -
=========== ===========
Cash paid for fees under time brokerage agreements $ 1,287,808 $ -
=========== ===========
Noncash investing and financing activities:
Issuance of notes payable for acquisitions $ 7,500,000 $ -
=========== ===========
Issuance of preferred stock for note receivable $ 3,900,000 $ -
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-54
<PAGE> 178
REGENT COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
a. ORGANIZATION: JS Communications, Inc., a Delaware corporation, was
established in November 1996. In March 1997, JS Communications, Inc.
changed its name to Regent Communications, Inc. (the "Company"). The
Company was formed to acquire, own and operate radio stations in small
and medium-sized markets in the United States. At December 31, 1997,
the Company owned one radio station and provided programming and
other services to 21 radio stations located in 9 markets. See Note 2.
The Company began its broadcasting activities on March 1, 1997 by
providing programming and other services to radio station KBCQ (FM) in
San Diego under a time brokerage agreement and has continued to
operate it as an owned station from and after June 6, 1997. Throughout
the year, the Company also provided programming to 26 other stations
over different periods of time: WEZL (FM) and WXLY (FM) in Charleston,
South Carolina from June 1 to August 31; WXZZ (FM) in Lexington,
Kentucky from July 1 to August 22; WLRO (FM) and WLTO (FM) in
Lexington, Kentucky from September 1 to November 18; the 16 stations
of The Park Lane Group from August 18 to December 31; KRDG (FM), KNNN
(FM), KRRX (FM), and KNRO (FM) in Redding, California from October 10
to December 31; and WSSP (FM) in Charleston, South Carolina from
December 5 to December 31.
b. BASIS OF PRESENTATION: The accompanying consolidated financial
statements include the accounts of Regent Communications, Inc. and its
subsidiaries. All significant intercompany accounts and transactions
have been eliminated.
c. BROADCAST REVENUE: Broadcast revenue for commercial broadcasting
advertisements is recognized when the commercial is broadcast.
d. BARTER TRANSACTIONS: Barter transactions (advertising provided in
exchange for goods and services) are reported at the estimated fair
value of the product or services received. Revenue from barter
transactions is recognized when advertisements are broadcast and
merchandise or services received are charged to expense when received
or used. If merchandise or services are received prior to the
broadcast of the advertising, a liability (deferred barter revenue) is
recorded. If advertising is broadcast before the receipt of the goods
or services, a receivable is recorded. For the year ended December 31,
1997, barter revenue was approximately $492,000, and barter expense
was approximately $518,000.
e. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of accounts receivable. The credit risk is limited due to
the large number of customers comprising the Company's customer base
and their dispersion across several different geographic areas of the
country.
F-55
<PAGE> 179
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, CONTINUED:
f. PROPERTY, PLANT AND EQUIPMENT: Property and equipment are stated at
cost and depreciated on the straight-line basis over 5 - 10 years for
equipment and 6 years for furniture.
g. USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
h. PER SHARE DATA: The Company has adopted the provisions of Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS
128"). SFAS 128 requires the presentation of basic and diluted
earnings per share. Basic earnings per share is computed by dividing
income (loss) available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted earnings
per share is computed giving effect to all dilutive potential common
shares that were outstanding during the period. The Company's
convertible preferred stock was anti-dilutive and, therefore, was not
included in the diluted earnings per share computation.
i. TIME BROKERAGE AGREEMENTS: At December 31, 1997, the Company operated
21 radio stations under the terms of time brokerage agreements
(hereafter referred to as "TBA's"). Revenues and expenses related to
such stations are included in operations since the effective dates of
the agreements. Fees paid and received under such agreements are
included in time brokerage agreement fees in the accompanying
Consolidated Statements of Operations.
2. STATION TRANSACTIONS AND PENDING ACQUISITIONS:
On June 6, 1997, the Company acquired substantially all of the assets of
radio station KCBQ(AM) in San Diego, California for $6,000,000, subject
to a 5-year term note payable to the seller. See Note 9. Upon completion
of the purchase, the Company's TBA with the seller, effective since March
1, 1997, was terminated. Pursuant to the TBA and the Asset Purchase
Agreement, the seller has agreed to reimburse the Company for operating
losses incurred by KCBQ (AM) from March 1, 1997 through December 31,
1997. Such operating losses amounted to approximately $136,000.
Additionally, the seller has agreed to reimburse the Company for all
operating losses subsequent to December 31, 1997, while the station is
held for sale. See Note 6. The results of operations of the acquired
business is included in the Company's financial statements since the date
of acquisition.
F-56
<PAGE> 180
Notes to CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. STATION TRANSACTIONS AND PENDING ACQUISITIONS, CONTINUED:
On June 16, 1997, the Company entered into a stock purchase agreement to
acquire all of the outstanding capital stock of The Park Lane Group, a
California corporation which owns 16 radio stations. The purchase price
for the stock is $23,075,000 in cash, subject to adjustment as defined in
the agreement. In addition, the Company entered into a TBA with the Park
Lane Group, effective August 18, 1997, which will end upon consummation
of the acquisition described above or upon termination of the related
stock purchase agreement. The Company paid approximately $827,000 in TBA
fees related to the Park Lane Group during 1997. The Company received
Federal Communications Commission (FCC) approval in November 1997 and
expects to close the transaction prior to May 1998. At December 31, 1997,
the Company had placed a $1,175,000 deposit held in escrow pending the
closing of the Park Lane Group transaction.
On June 1, 1997, the Company entered into a TBA with WEZL(FM) and
WXLY(FM) located in Charleston, South Carolina. The TBA was terminated on
August 31, 1997. The Company paid TBA fees of approximately $413,009
related to these stations.
On August 22, 1997, the Company entered into an asset purchase agreement
to acquire substantially all of the assets of radio stations WLRO(FM) and
WLTO(FM) located in Richmond and Nicholasville, Kentucky, respectively,
for $4.5 million in cash. Simultaneously with the execution of the asset
purchase agreement, the Company entered into a TBA with respect to
WLRO(FM) and WLTO(FM), whereby the Company operated the stations from
September 1, 1997 through November 18, 1997 and the Company paid TBA fees
of approximately $45,000 related to these stations. Simultaneously with
the previously mentioned agreements, the Company entered into an
Assignment and Assumption Agreement with HMH Broadcasting ("HMH"),
whereby the Company assigned to HMH all of its rights, title and interest
in, to and under the original asset purchase agreement for WLRO(FM) and
WLTO(FM).
In August 1997, the Company entered into an agreement to acquire the
assets of two radio stations, WRFQ (FM) and WSUY (FM) (collectively,
"Charleston/FMs") in Charleston, South Carolina for $4.5 million. In
December 1997, after it was determined that the Company would be unable
to purchase additional stations in the market, the Company consummated
the acquisitions of the Charleston/FMs subject to a note payable, and
immediately sold the two radio stations to a third-party at no gain or
loss, in exchange for cancellation of the note payable.
F-57
<PAGE> 181
Notes to CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. STATION TRANSACTIONS AND PENDING ACQUISITIONS, CONTINUED:
On August 22, 1997, the Company acquired substantially all of the assets
of WXZZ (FM) located in Georgetown, Kentucky for $3,450,000, subject to a
note payable with a third party. A TBA effective July 1, 1997, with WXZZ
(FM) was terminated upon consummation of the purchase. On August 22,
1997, the Company entered into an agreement to sell WXZZ (FM) to HMH
Broadcasting ("HMH") for $3,450,000, in exchange for cancellation of the
previously mentioned $3,450,000 note payable. In conjunction with this
agreement, the Company also entered into a TBA with HMH effective August
22, 1997, with respect to WXZZ (FM) which was terminated on November 12,
1997, upon consummation of the sale of the station by the Company to HMH.
The Company received TBA fees of approximately $62,254 related to the HMH
TBA.
On October 10, 1997, the Company entered into an Agreement of Merger,
pursuant to which the Company will acquire all of the outstanding capital
stock of Alta California Broadcasting, Inc. ("Alta") (a wholly-owned
subsidiary of Redwood Broadcasting, Inc.), which owns and operates radio
stations KRDG (FM) and KNNN (FM) located in Redding, California. The
purchase price for the stock consists of $1 million in cash and 200,000
shares of the Company's Series E Preferred Stock at a stated value of $1
million, subject to adjustment as defined in the agreement. The closing
is conditioned on, among other things, receipt of FCC and other
regulatory approvals. Additionally, Alta holds an option to purchase, and
is required to purchase prior to closing, all of the assets held by Power
Surge, Inc. for use in the operation of radio stations KRRX (FM) and KNRO
(AM) located in Redding, California. In conjunction with this agreement
and effective October 10, 1997, the Company entered into a TBA with
Redwood Broadcasting, Inc. related to radio stations KRDG (FM), KNNN
(FM), KRRX (FM) and KNRO (AM); payments under the TBA approximated $2,500
during 1997. The TBA will end upon closing of the merger described above
or upon termination of the Agreement of Merger. At December 31, 1997, the
Company has placed a $175,000 deposit held in escrow pending the closing
of the Alta transaction.
On December 5, 1997, the Company entered into an Agreement of Merger with
Faircom, Inc. ("Faircom"), pursuant to which Faircom will be merged with
and into the Company. At the effective date of the merger, each then
outstanding share of Faircom common stock will be exchanged for
approximately 3,850,000 shares of the Company's Series C preferred stock,
subject to adjustment as defined in the agreement. Approximately
300,000 shares of such Series C stock will be subject to the right of the
holder to put such shares to the Company for redemption. Additionally,
the holders of Faircom common stock options at the time of the merger
will receive substitute stock options for the Company's Series C
preferred stock under the Regent Communications, Inc. Faircom Conversion
Stock Option Plan. The closing is conditioned on, among other things,
receipt of FCC and other regulatory approvals, Faircom shareholder
approval, closing of the Park Lane Group acquisition previously
discussed, effectiveness of a Registration Statement to be filed by the
Company, and the conversion of certain Faircom Subordinated Notes into
Faircom Common Stock.
F-58
<PAGE> 182
Notes to CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. STATION TRANSACTIONS AND PENDING ACQUISITIONS, CONTINUED:
On December 8, 1997, the Company entered into an asset purchase agreement
with Continental Radio Broadcasting L.L.C. to acquire substantially all
of the assets of radio stations KFLG(AM) and KFLG(FM) located in Bullhead
City, Arizona for $3.6 million in cash, subject to adjustment as defined
in the agreement. The closing is conditioned on, among other things,
receipt of FCC and other regulatory approvals. At December 31, 1997, the
Company has placed a $175,000 deposit held in escrow pending the closing
of the transaction.
On December 17, 1997, the Company entered into an asset purchase
agreement to acquire substantially all of the assets of radio stations
KIXW (AM) and KZXY (FM) located in Apple Valley, California for $6
million in cash, subject to adjustment as defined in the agreement. The
stations are owned by Ruby Broadcasting, Inc. ("Ruby"), a sister
corporation and affiliate of Topaz Broadcasting, Inc. ("Topaz"). The
closing is conditioned on, among other things, receipt of FCC and other
regulatory approvals. The closing is also conditioned on the prior
occurrence of a closing between the Company and Topaz (see below).
Effective January 1, 1998 the Company entered into a TBA with respect to
radio stations KIXW (AM) and KZXY (FM), which will end upon closing of
the acquisition described above or upon the termination of the asset
purchase agreement.
On December 17, 1997, the Company entered into an Agreement of Merger,
pursuant to which the Company will acquire all of the outstanding capital
stock of Topaz Broadcasting Inc. ("Topaz"), a sister corporation and
affiliate of Ruby. The purchase price for the stock consists of 400,000
shares of the Company's Series E preferred stock at a stated value of $2
million, subject to adjustment as defined in the agreement. The closing
is conditioned on, among other things, receipt of FCC and other
regulatory approvals. Additionally, Topaz is a party to an asset purchase
agreement, and is required to purchase the assets of radio station KIXA
(FM) located in Lucerne Valley, California, prior to closing of the
Agreement of Merger with the Company. In conjunction with this agreement
and effective January 1, 1998, the Company entered into a TBA with Topaz,
including radio station KIXA (FM), which will end upon closing of the
merger described above or upon termination of the Agreement of Merger. At
December 31, 1997, the Company has placed a $400,000 deposit held in
escrow pending the closing of the Ruby and Topaz transactions.
In December 1997, the Company acquired an option to purchase
substantially all of the assets of radio station WSSP (FM) located in
Goose Creek, South Carolina. The purchase price for the option was $1.5
million, subject to a 5 year term note payable to a third party. See Note
9. The term of the option is one year. Due to a lack of complimentary
stations in the market, the Company is currently seeking a buyer for the
option. At December 31, 1997, the cost of the option is included in
Assets Held for Sale in the accompanying Consolidated Balance Sheet. The
Company also entered into a TBA with respect to WSSP (FM) effective
December 5, 1997.
F-59
<PAGE> 183
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Equipment $ 12,520 $ -
Furniture & Fixtures 968 -
Equipment under installation 40,665 -
---------------- ----------------
54,153 -
Less accumulated depreciation (361) -
---------------- ----------------
$ 53,792 $ -
================ ================
</TABLE>
4. OTHER ASSETS:
Other assets consists of the following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred finance costs $ 297,357 $ -
Organizational costs 17,637 -
Deferred acquisition costs 774,762 -
---------------- ----------------
1,089,756
Less accumulated amortization (294) -
---------------- ----------------
$ 1,089,462 $ -
================ ================
</TABLE>
5. ACCRUED EXPENSES:
Accrued expenses at December 31, 1997 consists of the following:
<TABLE>
<S> <C>
Accrued payroll $ 34,496
Accrued license fees 78,779
Accrued property and other taxes 82,318
Accrued commissions 149,576
Accrued professional services 227,350
Accrued other 82,559
----------------
$ 655,078
================
</TABLE>
F-60
<PAGE> 184
Notes to CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
6. PENDING DISPOSITION:
On December 16, 1997, the Company signed a Letter of Intent with a third
party to sell substantially all of the assets of radio station KCBQ (AM)
located in San Diego, California for $6.5 million in cash. The Company is
currently involved in negotiating a definitive agreement and anticipates
the sale will close prior to July 31, 1998. At December 31, 1997, the
KCBQ (AM) assets are stated at cost and are included in Assets Held for
Sale in the accompanying Consolidated Balance Sheet. Net broadcast
revenue of approximately $66,000 and broadcast expenses of approximately
$202,000 related to KCBQ (AM) were included in the Consolidated Statement
of Operations for the year ended December 31, 1997.
7. CAPITAL STOCK:
The Company's Amended and Restated Certificate of Incorporation
authorizes 30,000,000 shares of common stock and 20,000,000 shares of
preferred stock and designates 620,000 shares as Series A Convertible
Preferred Stock ("Series A"), 1,000,000 shares as Series B Senior
Convertible Preferred Stock ("Series B"), 4,300,000 shares as Series C
Convertible Preferred Stock ("Series C"), 1,000,000 shares as Series D
Convertible Preferred Stock ("Series D"), and 5,000,000 shares as Series
E Convertible Preferred Stock ("Series E"). The stated value of all
series of preferred stock is $5 per share.
Series A, Series C, and Series E have the same voting rights as common
stock and may be converted at the option of the holder into one share of
common stock, subject to adjustment, as defined. The Company's Board of
Directors also has the right to require conversion of all shares of
Series A, C and E upon the occurrence of certain events, as defined.
Series B and Series D have no voting power except for specific events, as
defined. Series A, Series C, Series D and Series E have equal rights for
the payment of dividends and the distribution of assets and rights upon
liquidation, dissolution or winding up of the Company. Series B ranks
senior to all other series of preferred stock and may be converted at the
option of the holder into one-half share of common stock, subject to
adjustment, as defined. The Company's Board of Directors also has the
right to require conversion of all shares of Series B and D upon the
occurrence of certain events, as defined.
F-61
<PAGE> 185
Notes to CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
7. CAPITAL STOCK, CONTINUED:
Upon liquidation of the Company, no distribution shall be made (a) to
holders of stock ranking junior to the Series B unless the holders of the
Series B have received the stated value per share, plus an amount equal
to all unpaid dividends or (b) to the holders of stock ranking on a
parity with the Series B, except distributions made ratably on the Series
B and all other such parity stock. Dividends accrue on all series of
preferred stock at a cumulative annual rate of $.35 per share. The
Company may redeem Series A, B, and D at the stated value, plus an amount
equal to all unpaid dividends to the date of redemption, whether or not
declared. The Company is also required to redeem all shares of Series B
and D in the event the closing of the Faircom merger and Park Lane Group
acquisition is terminated or has not occurred on or before June 30, 1998,
at the stated value plus an amount equal to all unpaid dividends to the
date of redemption, whether or not declared. Undeclared dividends in
arrears on all outstanding series of preferred stock amounted to $146,175
at December 31, 1997.
In connection with the issuance of 1,000,000 shares of the Company's
Series B senior convertible preferred stock, the Company received cash
proceeds of $1,100,000 and a promissory note for $3,900,000. The note is
due upon consummation of the Faircom merger as described in Note 2. The
note bears interest at 7%; provided that to the extent dividends have
accrued on the Series B shares but have not been paid, such interest will
be offset against the amount of such accrued but unpaid dividends.
Under the terms of a Stock Purchase Agreement dated December 1, 1997, the
Chief Operating Officer of the Company has agreed to purchase 20,000
shares of Series A Convertible Preferred Stock for $100,000 on or before
the closing of the Company's Park Lane Group acquisition. See Note 2.
8. INCOME TAXES:
The Company recorded no income tax expense or benefit for the years ended
December 31, 1997 and 1996.
F-62
<PAGE> 186
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
8. INCOME TAXES, CONTINUED:
Components of the Company's deferred tax assets and liabilities at
December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax assets:
Federal and state net operating loss carryforward $ 465,219 $ -
Accounts receivable 27,844 -
Other miscellaneous accruals 33,220 -
---------------- ----------------
526,283 -
Valuation allowance (430,360) -
---------------- ----------------
95,923 -
Deferred tax liabilities:
Depreciation (95,923) -
---------------- ----------------
Net $ - $ -
================ ================
</TABLE>
The Company has cumulative federal and state tax loss carryforwards of
approximately $1,163,000 at December 31, 1997. The loss carryforwards
will expire in the year 2012.
9. NOTES PAYABLE:
Notes payable at December 31, 1997 consists of the following:
<TABLE>
<S> <C>
Promissory note $ 6,000,000
Promissory note 1,500,000
---------------
$ 7,500,000
===============
</TABLE>
In connection with the acquisition of radio station KCBQ (AM), the
Company issued to the seller a promissory note for $6,000,000, which is
collateralized by the assets of the station. See Note 2. The note matures
on the earlier of June 6, 2002 or upon the sale of the KCBQ (AM) assets
to a third party. The note does not bear interest prior to the maturity
date, as defined. Interest on the unpaid principal after maturity bears
interest at 10%. As discussed in Note 6, the Company is currently
negotiating the terms of a definitive agreement to sell KCBQ (AM) to an
unrelated third party. As a result, the unpaid principal balance of $6
million has been classified as a current liability at December 31, 1997
in the accompanying Consolidated Balance Sheet.
F-63
<PAGE> 187
Notes to CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. NOTES PAYABLE, CONTINUED:
In connection with the acquisition of an option to acquire radio station
WSSP (FM), the Company issued a 5 year term promissory note for $1.5
million to a third party. The terms of the promissory note obligate the
Company to pay the lesser of the principal amount of the note or the
proceeds from a sale of the option to acquire WSSP(FM). The note is
collateralized by the Company's option to acquire WSSP (FM) and matures
on the earlier of December 3, 2002 or upon the sale of the WSSP (FM)
assets to a third party. The note does not bear interest prior to the
maturity date, as defined. Interest on the unpaid principal after
maturity bears interest at 10%. Because the Company is currently
searching for a buyer of its option to acquire WSSP (FM), the unpaid
principal balance of $1.5 million has been classified as a current
liability at December 31, 1997 in the accompanying Consolidated Balance
Sheet. See Note 2.
10. BANK CREDIT FACILITY:
In November 1997, the Company entered into an agreement with a group of
lenders (the "Credit Agreement") which provides for a senior reducing
revolving credit facility with a commitment of up to $55,000,000 expiring
in March 2005 (the "Revolver"). The Credit Agreement is available for
working capital and acquisitions, including related acquisition expenses.
In addition, the Company may request from time to time that the lenders
issue Letters of Credit in accordance with the same provisions as the
Revolver. At December 31, 1997, no revolving loans were outstanding under
the Credit Agreement.
The Credit Agreement requires that the commitment under the Revolver be
reduced quarterly for each of the four quarters in the period ending
December 31, 1999 and by increasing quarterly amounts thereafter, and,
under certain circumstances, requires mandatory prepayments of any
outstanding loans and further commitment reductions. The indebtedness of
the Company under the Credit Agreement is collateralized by liens on
substantially all of the assets of the Company and its operating and
license subsidiaries and by a pledge of the operating and license
subsidiaries' stock, and is guaranteed by those subsidiaries. The Credit
Agreement contains restrictions pertaining to the maintenance of
financial ratios, capital expenditures, payment of dividends or
distributions of capital stock and incurrence of additional indebtedness.
F-64
<PAGE> 188
Notes to CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
10. BANK CREDIT FACILITY, CONTINUED:
Interest under the Credit Agreement is payable, at the option of the
Company, at alternative rates equal to the LIBOR rate (5.75% at December
31, 1997) plus 1.25% to 2.50% or the base rate announced by the Bank of
Montreal plus 0% to 1.25%. The spreads over the LIBOR rate and such base
rate vary from time to time, depending upon the Company's financial
leverage. The Company will pay quarterly commitment fees equal to 3/8% to
1/2% per annum, depending upon the Company's financial leverage, and the
aggregate unused portion of the aggregate commitment under the Credit
Agreement. The Company also is required to pay certain other fees to the
agent and the lenders for the administration of the facilities and the
use of the credit facility. At December 31, 1997, the Company had paid
nonrefundable fees totaling approximately $275,000 which are classified
as other assets in the accompanying Consolidated Balance Sheet. In
addition, the Company is committed to pay the remaining facility fee in
the amount of approximately $500,000 upon the completion of the merger
between the Company and Faircom. See Note 2.
11. LEASES:
The Company and its subsidiaries lease certain equipment and facilities
used in their operations. Future minimum rentals under all noncancelable
operating leases as of December 31, 1997 are payable as follows,
including lease commitments under fine brokerage agreements.
<TABLE>
<S> <C>
1998 $ 557,208
1999 185,594
2000 104,210
2001 96,135
2002 47,868
Thereafter 120,799
</TABLE>
Rental expense was approximately $214,692 and $0 for the years ended
December 31, 1997 and 1996, respectively, including lease rental payments
under time brokerage agreements.
12. EMPLOYEE BENEFIT PLAN
On December 15, 1997 the Company adopted a 401(k) plan effective January
1, 1997 which covers all eligible employees. The Company may make a
matching contribution in any year at the discretion of the Board of
Directors. The Company did not make any such contributions in 1997.
F-65
<PAGE> 189
Notes to CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
13. RECENT PRONOUNCEMENTS:
In June, 1997 the Financial Accounting Standards Board issued Statement
No. 130 (SFAS 130), Reporting Comprehensive Income. SFAS 130 establishes
standards of disclosure and financial statement display for reporting
total comprehensive income and its individual components. It is effective
for the Company in 1998.
14. SUBSEQUENT EVENTS:
In January 1998, the Board of Directors of the Company adopted the Regent
Communications, Inc. 1998 Management Stock Option Plan (the "1998" Plan).
The 1998 Plan provides for the issuance of up to 2,000,000 common shares
in connection with the issuance of nonqualified and incentive stock
options and eligibility is determined by the Company's Board of
Directors. The exercise price of the options is to be not less than the
fair market value at the grant date, except for any 10% owner (as
defined), for whom the option share price must be at least 110% of fair
market value at the grant date. The options expire no later than ten
years from the date of grant, or earlier in the event a participant
ceases to be an employee of the Company.
In February 1998 and effective upon consummation of the Faircom merger,
the Board of Directors authorized a grant of incentive stock options to
the Chief Executive Officer and Chief Operating Officer of the Company.
The options will provide the holders with the right to acquire up to
733,333 shares of the Company's common stock at an expected price per
share of $5.00. Of these options, that portion providing for the purchase
of shares having a total fair market value on the grant date of $1
million will be exercisable by each holder in equal 10% increments
beginning on the grant date and on each of the following nine anniversary
dates of the grants. The balance of the options will be exercisable in
equal one-third increments at the end of each of the first three years
following the grant. All options expire on February 28, 2008.
ADDITIONAL UNAUDITED ITEMS:
In March 1998, Waller-Sutton Media Partners, L.P. ("Waller-Sutton")
entered into a commitment letter with Regent which provides for the
investment by Waller-Sutton, subject to negotiation of definitive
agreements and the satisfaction of certain conditions, of at least
$11,500,000 in convertible preferred stock of Regent. This investment
would consist of the purchase from Regent of $10,000,000 of its Series F
Preferred Stock and the acquisition from Blue Chip Capital Fund II, L.P.
and Miami Valley Venture Fund, L.P. of $1,500,000 in principal amount of
Class A and Class B Faircom Subordinated Notes that would be converted to
Faircom Common Stock and exchanged for Series C Preferred Stock in the
Faircom Merger. Waller-Sutton would receive, as part of this investment,
warrants to purchase 820,000 shares of Regent Common Stock at an exercise
price of $5.00 per share. Waller-Sutton has reserved the right to assign
up to $3,500,000 of its investment commitment and an unspecified portion
of its warrant rights to partners or affiliates of Waller-Sutton and/or
other purchasers of Series F Preferred Stock and to so reduce its
investment commitment in respect of the first $3,500,000 of Series F
Preferred Stock purchased by others. One of the conditions precedent to
Waller-Sutton investment in Regent is the consummation of the Faircom
Merger. Upon making its investment, Waller-Sutton will have the right to
elect two members to Regent's Board of Directors.
The Waller-Sutton commitment letter provides that the terms of the Series
F Preferred Stock to be acquired by it will include the right of the
holders to require Regent to repurchase the Series F Preferred Stock at
any time after five years at a price equal to the greater of its fair
market value or the sum of its stated value of $5.00 per share and all
accrued but unpaid dividends thereon (as well as any warrants held by
such holders at a price equal to the fair market value of the Regent
Common Stock less the exercise price). Holders of the Series A, Series B
and Series D Preferred Stock would have similar "put" rights only if the
holders of the Series F Preferred Stock were to exercise their "put"
rights. The Series C and Series E Preferred Stock will not have these
tag-along "put" rights.
In order to induce River Cities Capital Fund Limited Partnership ("River
Cities"), as a holder of Regent's Series A Preferred Stock, to approve
the Faircom Merger, Regent agreed to issue to River Cities, upon
consummation of the Faircom Merger, five-year warrants to purchase 80,000
shares of Regent Common Stock at an exercise price of $5.00 per share. R.
Glen Mayfield, a member of Regent's Board of Directors, serves as the
general partner of River Cities Management Limited Partnership, which is
the general partner of River Cities.
In order to induce General Electric Capital Corporation ("GE Capital"),
as a holder of Regent's Series B Preferred Stock, to approve the addition
of mandatory conversion rights to the terms of the Series B Preferred
Stock in conjunction with issuance of the Series F Preferred Stock,
Regent has agreed to issue to GE Capital, upon issuance of the Series F
Preferred Stock, warrants to purchase 50,000 shares of Regent Common
Stock at an exercise price of $5.00 per share. It is contemplated the
terms of these warrants will be substantially the same as those which are
to be issued to River Cities upon consummation of the Faircom Merger.
F-66
<PAGE> 190
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
The Park Lane Group
Menlo Park, California
We have audited the accompanying consolidated balance sheets of The Park Lane
Group and Subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, shareholders' deficit and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Park Lane
Group and Subsidiaries as of December 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997 in conformity with generally accepted
accounting principles.
Coopers and Lybrand L.L.P.
Menlo Park, California
February 16, 1998
F-67
<PAGE> 191
THE PARK LANE GROUP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
-------
<TABLE>
<CAPTION>
ASSETS 1996 1997
--------------- ---------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 223,292 $ 431,466
Accounts receivable - trade, less allowance for doubtful accounts of
$45,414 in 1997 and $62,375 in 1996 1,292,543 53,009
Prepaid expenses and other current assets 100,201 83,474
--------------- ---------------
Total current assets 1,616,036 567,949
Property and equipment, net 3,156,578 2,502,766
Intangible assets, net 6,515,270 5,937,566
--------------- ---------------
Total assets $ 11,287,884 $ 9,008,281
=============== ===============
LIABILITIES, REDEEMABLE PREFERRED STOCK, CONVERTIBLE
PREFERRED STOCK, COMMON STOCK AND
SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 547,675 $ 94,513
Accrued expenses:
Compensation and related expenses 163,679 86,432
Interest 69,556 45,508
Other 11,521 119,725
Note payable to bank 650,800 70,526
Notes payable to shareholders 120,000 120,000
Current portion, long-term debt 253,809 760,964
--------------- ---------------
Total current liabilities 1,817,040 1,297,668
Long-term debt 6,353,299 5,607,199
--------------- ---------------
Total liabilities 8,170,339 6,904,867
--------------- ---------------
Commitments (Note 6).
Mandatorily redeemable Series B preferred stock, $0.01 par value:
Authorized: 43,000 shares;
Issued and outstanding: 42,805 shares in 1997 and 1996 4,187,127 5,231,150
(Liquidation value: $6,343,735 in 1997 and $5,384,004 in 1996)
Mandatorily redeemable convertible Series C preferred stock, $0.01 par value:
Authorized: 13,500 shares;
Issued and outstanding: 12,021 in 1997 and none in 1996 1,165,849
(Liquidation value: $1,435,656 in 1997 and $1,301,917 in 1996) 1,327,101
--------------- ---------------
Convertible Series A preferred stock, $0.01 par value: 5,352,976 6,558,251
Authorized: 6,117,945 shares;
Issued and outstanding: 5,595,875 shares in 1997 and 1996 5,595,875 5,595,875
(Liquidation value: $5,595,875 in 1997 and 1996)
Class B common stock, $0.01 par value:
Authorized: 3,238,828 shares;
Issued and outstanding: 3,238,821 shares in 1997 and 1996 1,163,612 1,163,612
Class C common stock, $0.01 par value:
Authorized: 1,350,000 shares;
Issued and outstanding: 1,202,100 in 1997 and in 1996 80,915 80,915
Class A common stock, $0.01 par value:
Authorized: 15,000,000 shares;
Issued and outstanding: 797,225 shares in 1997 and 758,944 shares in
1996 386,522 389,202
Note receivable from shareholders - (2,680)
Accumulated deficit (9,462,355) (11,681,761)
--------------- ---------------
Total convertible preferred stock, common stock and other
shareholders' deficit (2,235,431) (4,454,837)
--------------- ---------------
Total liabilities, redeemable preferred stock, convertible
preferred stock, common stock and shareholders' deficit $ 11,287,884 $ 9,008,281
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-68
<PAGE> 192
THE PARK LANE GROUP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1997, 1996 and 1995
-------
<TABLE>
<CAPTION>
1995 1996 1997
--------------- ---------------- ----------------
<S> <C> <C> <C>
Revenues $ 8,752,202 $ 8,927,500 $ 6,602,650
Less agency commissions (627,219) (588,833) (386,611)
--------------- ---------------- ----------------
Net revenues 8,124,983 8,338,667 6,216,039
--------------- ---------------- ----------------
Operating expenses:
Programming 1,572,305 1,609,415 980,325
Sales and promotion 2,213,329 2,118,918 1,415,164
Engineering 379,988 403,686 264,246
General and administrative 2,877,936 2,827,557 1,680,882
Depreciation and amortization 1,277,833 1,494,636 1,421,198
Corporate administrative expenses 879,652 670,177 746,878
--------------- ---------------- ----------------
Total operating expenses 9,201,043 9,124,389 6,508,693
Operating loss (1,076,060) (785,722) (292,654)
Interest expense (668,504) (695,899) (678,315)
Other expense, net (4,850) (4,850) (43,162)
--------------- ---------------- ----------------
Net loss before accretion (1,749,414) (1,486,471) (1,014,131)
--------------- ---------------- ----------------
Dividends and accretion for redemption on mandatorily
redeemable preferred stock (556,337) (1,154,436) (1,205,275)
--------------- ---------------- ----------------
Net loss available to common shareholders $ (2,305,751) $ (332,035) $ (2,219,406)
=============== ================ ================
Shares used in basic per share calculation 2,567,209 4,973,115 5,202,555
=============== ================ ================
Shares used in diluted per share calculation 2,567,209 4,973,115 5,202,555
=============== ================ ================
Basic net loss per share $ (0.90) $ (0.07) $ (0.43)
=============== ================ ================
Diluted net loss per share $ (0.90) $ (0.07) $ (0.43)
=============== ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-69
<PAGE> 193
THE PARK LANE GROUP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
for the years ended December 31, 1997, 1996, and 1995
-------
<TABLE>
<CAPTION>
Series A Class A Class B
Preferred Stock Common Stock Common Stock
------------------------ -------------------- ------------------------
Shares Amount Shares Amount Shares Amount
---------- ----------- ------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1995 758,944 $ 386,522 1,067,152 $ 477,803
Issuance of class B common stock 1,361,965 631,307
Preferred stock accretion
Preferred stock dividend
Net loss
---------- ----------- ------- --------- --------- -----------
Balances, December 31, 1995 758,944 386,522 2,429,117 1,109,110
Issuance of Class B common stock special delivery
in connection with issuance of Series C stock 809,704 54,502
less $2,177 issuance costs
Issuance of class C common stock
Reclassification of Series A preferred stock to
shareholders deficit due to removal of 5,595,875 $ 5,595,875
redemption requirement
Preferred stock accretion
Preferred stock dividend
Net loss
---------- ----------- ------- --------- --------- -----------
Balances, December 31, 1996 5,595,875 5,595,875 758,944 386,522 3,238,821 1,163,612
Issuance of Class A Common Stock upon exercise of
stock options in exchange for shareholder note 38,281 2,680
Preferred stock accretion
Preferred stock dividend
Net loss
---------- ----------- ------- --------- --------- -----------
Balances, December 31, 1997 5,595,875 $ 5,595,875 797,225 $ 389,202 3,238,821 $1,163,612
========== =========== ======= ========= ========= ===========
<CAPTION>
Class C Note
Common Stock Receivable
--------------------- from Accumulated
Shares Amount Shareholders Deficit Total
--------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1995 $(6,824,569) $(5,960,244)
Issuance of class B common stock 631,307
Preferred stock accretion (104,662) (104,662)
Preferred stock dividend (451,675) (451,675)
Net loss (1,749,414) (1,749,414)
------------ ------------
Balances, December 31, 1995 (9,130,320) (7,634,688)
Issuance of Class B common stock special delivery
in connection with issuance of Series C stock 54,502
less $2,177 issuance costs
Issuance of class C common stock 1,202,100 $ 80,915 80,915
Reclassification of Series A preferred stock to
shareholders deficit due to removal of 5,595,875
redemption requirement
Preferred stock accretion 1,881,082 1,881,082
Preferred stock dividend (726,646) (726,646)
Net loss (1,486,471) (1,486,471)
--------- -------- ------------ ------------
Balances, December 31, 1996 1,202,100 80,915 (9,462,355) (2,235,431)
Issuance of Class A Common Stock upon exercise of
stock options in exchange for shareholder note $ (2,680) -
Preferred stock accretion (216,650) (216,650)
Preferred stock dividend (988,625) (988,625)
Net loss (1,014,131) (1,014,131)
--------- -------- ---------- ------------ ------------
Balances, December 31, 1997 1,202,100 $ 80,915 $ (2,680) $(11,681,761) $(4,454,837)
========= ======== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-70
<PAGE> 194
THE PARK LANE GROUP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997, 1996, and 1995
-------
<TABLE>
<CAPTION>
1995 1996 1997
------------- ------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,749,414) $(1,486,471) $(1,014,131)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation 631,113 794,982 779,839
Amortization 646,720 700,955 641,359
Provision for (recovery of) doubtful accounts 158,441 148,959 (16,961)
Deferred interest on convertible note 91,944 101,138 111,027
Accounts receivable (114,738) (135,971) 1,256,495
Prepaid expenses and other assets 133,611 (33,399) 16,727
Accounts payable 46 16,266 (453,162)
Accrued expenses (38,272) 537 30,957
Accrued interest 25,167 (49,829) (24,048)
----------- ----------- -----------
Net cash provided by (used in) operating activities (215,382) 57,167 1,328,102
----------- ----------- -----------
Cash flows from investing activities:
Acquisition of radio stations (3,163,963) -
Purchases of property and equipment (189,079) (211,612) (126,027)
Acquisition of other assets (63,655)
----------- ----------- -----------
Net cash used in investing activities (3,353,042) (211,612) (189,682)
----------- ----------- -----------
Cash flows from financing activities:
(Payments on) borrowings under note payable to bank 179,800 (16,000) (580,274)
Proceeds from issuance of convertible notes 310,000
Proceeds from issuance of Series A stock
Proceeds from issuance of Series B stock 3,318,685 5,920
Proceeds from issuance of Series C stock 862,202
Borrowings under long-term debt and capital leases 3,840,721
Principal payments on long-term debt and capital leases (404,233) (825,926) (4,190,693)
----------- ----------- -----------
Net cash provided by (used in) financing activities 3,404,252 26,196 (930,246)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (164,172) (128,249) 208,174
Cash and cash equivalents, beginning of year 515,713 351,541 223,292
----------- ----------- -----------
Cash and cash equivalents, end of year $ 351,541 $ 223,292 $ 431,466
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING
ACTIVITY
Conversion of deferred interest to convertible note $ 91,944 $ 101,138
Conversion of convertible notes to Series A preferred stock $ 20,000
Conversion of convertible notes to Series B stock $ 310,000
Financing of acquisitions through notes payable $ 1,086,350
DISCLOSURE OF EQUITY ITEMS:
Property and equipment acquired under capital leases $ 307,750 $ 112,131
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Interest paid $ 552,629 $ 646,592 $ 590,451
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-71
<PAGE> 195
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------
1. Organization and Business:
--------------------------
The Park Lane Group and Subsidiaries (the Company or Park Lane) own and
operate commercial radio stations in California and Arizona. The Company
was formed in 1990 and through December 31, 1997, had acquired 16 stations
in seven markets. The Company's subsidiaries include the following wholly
owned entities: Park Lane Redding Radio, Inc., Park Lane Regency Radio,
Inc., Park Lane Chico, Inc., Park Lane High Desert, Inc., Park Lane
Northern Arizona, Inc.
The Company's primary customers are local retailers and service providers
who purchase advertising time to promote their goods and services. The
Company's stations also receive a portion of their advertising revenues
from regional and national advertisers such as fast food franchisers,
banks, automotive suppliers and grocery chains who have local outlets in
the Company's markets. No one advertiser at any of the Company's stations
represents a material portion of the station's total advertising revenue
or of accounts receivable in 1997, 1996 or 1995.
In August 1997, the Company entered into an arrangement with Regent
Communications, Inc. (Regent) for the acquisition of all of the
outstanding capital stock of the Company (the acquisition). The
transaction is subject to certain conditions before closing. There can be
no assurance that the transaction will close. Effective August 17, 1997,
the Company also entered into an operating agreement with Regent under
which most of the operations of the Company's radio stations are managed
by Regent and the Company receives a monthly fee based on their
performance, subject to a guaranteed minimum.
2. Summary of Significant Accounting Policies:
-------------------------------------------
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements of the Company include the
accounts of the corporate office and of the radio stations KPPL,
KTPI/KVOY, KSHA/KQMS, KAAA/KZZZ, KRLT/KOWL, KZGL, KFMF, KALF, KATJ/KROY
and KVNA A/F. All significant intercompany accounts and transactions
have been eliminated.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Continued
F-72
<PAGE> 196
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
2. Summary of Significant Accounting Policies, continued:
------------------------------------------
CASH EQUIVALENTS:
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT:
Property and equipment are recorded at cost less accumulated
depreciation. These assets are depreciated on a straight-line basis
over their estimated useful lives of three to 25 years. When assets are
retired or otherwise disposed of, the costs and related accumulated
depreciation are removed from the accounts and any gain or loss from
disposal is included in the results of operations. Assets under capital
leases are amortized over the lesser of their useful lives or the term
of the lease.
Maintenance and repairs are charged to expense as incurred. Major
renewals and betterments are charged to the asset accounts.
INTANGIBLE ASSETS:
Included in intangible assets are goodwill, FCC licenses, noncompete
agreements and tower leases. Goodwill, which represents the excess of
cost of purchased assets over their fair value at the date of
acquisition, is amortized over 15 to 30 years. FCC licenses are
amortized over 15 years. Noncompete agreements are amortized over the
terms of the related agreements which range from six months to 10
years. Tower leases are amortized over the period of the related lease
term, which range from seven to 25 years. Intangible assets are
evaluated for impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable.
LONG-TERM INDEBTEDNESS:
The fair value of the Company's long-term indebtedness is based upon
estimates using standard pricing models that take into account the
present value of future cash flows.
REVENUE:
Revenue from the sale of air time is recognized at the time the program
or advertisement is broadcast. Income receivable under the operating
agreement with Regent is recognized on an accrual basis.
Continued
F-73
<PAGE> 197
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
2. Summary of Significant Accounting Policies, continued:
-------------------------------------------
BARTER TRANSACTIONS:
The Company participates in barter transactions in which advertising
time is exchanged for goods or services. These exchanges are recorded
at the fair market value of the goods or services received for the
value of the advertising time provided, whichever is more clearly
determinable. Revenues from barter transactions are recognized as
income when advertisements are broadcast. Expenses are recognized when
goods or services are received. Barter transactions totaled
approximately $1,068,776, $1,088,884 and $741,978 in 1995, 1996, and
1997, respectively.
ADVERTISING COSTS:
Advertising costs are expensed to operations as incurred. Advertising
costs were $371,748, $751,770, and $519,271 for the years ended
December 31, 1995, 1996, and 1997, respectively.
INCOME TAXES:
The Company accounts for income taxes using the liability method to
calculate deferred income taxes. The realization of deferred tax assets
under this method is based on historical tax positions and expectations
about future taxable income. A valuation allowance has been provided
for deferred tax asset amounts in excess of the amount that can be
realized from existing taxable temporary differences.
CONCENTRATIONS OF CREDIT RISK:
The Company maintains its cash and short-term investments in deposits
with one major U.S. bank; these deposits, therefore, bear the credit
risk associated with these financial institutions.
The Company's radio station customer base consists principally of
businesses located in California and Arizona. Collateral, such as
letters of credit and bank guarantees, are not generally required from
customers. The Company maintains an allowance for potential credit
losses associated with its trade accounts receivable.
Continued
F-74
<PAGE> 198
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
2. Summary of Significant Accounting Policies, continued:
------------------------------------------
CONCENTRATIONS OF CREDIT RISK, continued:
Under the operating agreement with Regent, the Company's sole source of
income since August 17, 1997 is from Regent Communications who are
responsible for most of the operations of the Company's radio stations.
The Company could be adversely affected by a deterioration in the
financial position of Regent.
EMPLOYEE STOCK PLANS:
The Company accounts for its stock option plan in accordance with
provisions of the Accounting Principles Board's Opinion No. 25 (APB
25), "Accounting For Stock Issued to Employees." In 1995, the Financial
Accounting Standards Board released the Statement of Financial
Accounting Standards No. 123 (FAS), "Accounting for Stock-Based
Compensation." FAS 123 provides an alternative to APB 25. As allowed
under FAS 123, the Company continues to account for its employee stock
plan in accordance with the provisions of APB 25.
RECENT PRONOUNCEMENT:
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130 (SFAS), Reporting Comprehensive Income. SFAS 130 establishes
standards of disclosure and financial statement display for reporting
total comprehensive income and its individual components. It is
effective for the Company's fiscal year 1998.
Also in June 1997, the Financial Accounting Standards Board issued
Statement No. 131 (SFAS 131), Disclosures About Segments of an
Enterprise and Related Information. SFAS 131 changes current practice
under SFAS 14 by establishing a new framework on which to base segment
reporting (referred to as the management approach) and also requires
interim reporting of segment information. It is effective for the
Company's fiscal year 1998.
The Company is studying the implications of these new statements and
the impact of their implementation on the financial statements.
Continued
F-75
<PAGE> 199
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
3. Balance Sheet Detail:
---------------------
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1996 1997
---------------- ----------------
<S> <C> <C>
Land and buildings $ 960,507 $ 975,564
Transmitter equipment 1,332,770 1,359,972
Studio and technical equipment 1,812,033 1,912,017
Tower and antenna systems 415,901 415,901
Office furniture and equipment 720,057 738,106
Other 175,980 141,715
---------------- ----------------
5,417,248 5,543,275
Less accumulated depreciation and amortization (2,260,670) (3,040,509)
---------------- ----------------
$ 3,156,578 $ 2,502,766
================ ================
</TABLE>
The Company leases property and equipment under capital lease agreements
(See Note 6). Leased assets included above are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1996 1997
---------------- ----------------
<S> <C> <C>
Equipment under capital leases $ 647,516 $ 530,135
Less accumulated amortization (388,505) (278,483)
---------------- ----------------
$ 259,011 $ 251,652
================ ================
</TABLE>
Intangible assets consists of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1996 1997
---------------- ----------------
<S> <C> <C>
Goodwill and other $ 6,447,237 $ 6,510,892
Noncompete agreements 772,015 772,015
FCC licenses 1,846,950 1,846,950
---------------- ----------------
9,066,202 9,129,857
Less accumulated amortization (2,550,932) (3,192,291)
---------------- ----------------
$ 6,515,270 $ 5,937,566
================ ================
</TABLE>
Continued
F-76
<PAGE> 200
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
4. Note Payable to Bank:
---------------------
The Company has a revolving line of credit with a bank to borrow up to
$800,000 at an annual rate of prime plus 1.50% (payable monthly) based on
a percentage of certain radio stations' eligible receivables. At December
31, 1997, $70,526 was outstanding under the line of credit. The revolving
line of credit is subject to certain affirmative and negative covenants,
including minimum broadcast cash flow requirements on a periodic basis.
5. Long-Term Debt and Notes Payable:
---------------------------------
LONG-TERM DEBT:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------------
1996 1997
--------------- ---------------
<S> <C> <C>
Long-term notes payable $ 4,862,598 $ 4,685,307
9.875% promissory notes 1,124,163 1,235,190
Capital leases (note 6) 423,612 312,070
Other 196,735 135,596
--------------- ---------------
6,607,108 6,368,163
Less current portion (253,809) (760,964)
--------------- ---------------
$ 6,353,299 $ 5,607,199
=============== ===============
</TABLE>
Long-term notes payable at December 31, 1997, consist of a term loan
with Michigan National Bank, and three notes payable of original
principal amounts $310,000, $600,000 and $200,000, relating to the
acquisition of radio stations KTPI/KVOY, KALF and KROY/KATJ.
In March 1997, the Company entered into a refinancing arrangement with
Michigan National Bank which facilitated the consolidation of certain
of the Company's debt obligations. Under the arrangement, the Company
borrowed $3,800,000 under a term loan facility. At December 31, 1997,
$3,619,048 was outstanding under the term loan. The loan bears interest
at LIBOR rate plus 2.75% to 3.75% depending on the leverage of the
Company. The term loan is due in 84 monthly installments of $45,238,
final payment due September 30, 2004.
Continued
F-77
<PAGE> 201
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
5. Long-Term Debt and Notes Payable, continued:
--------------------------------
LONG-TERM DEBT, continued:
The $310,000 note bears interest at 8%, payable monthly. The principal
is payable in monthly installments from July 1997 to June 2002 at the
rate of 1/120 of the principal balance. The balance is due June 2002.
The note is collateralized by substantially all of the assets of
KTPI/KVOY. In connection with the refinancing discussed below, the note
was made subordinate to the new term loan and line of credit received.
At December 31, 1997, $294,819 was outstanding under the note.
The $600,000 note bears interest at 8%, payable quarterly, and is due
in quarterly installments from August 2000 to May 2005 at the rate of
1/40 of the principal balance. The balance is due May 2005. The note is
collateralized by the assets of KALF, but subordinated to all senior
indebtedness (present or future) of the Company.
The $200,000 note bears interest at 8.50% interest, payable monthly,
and is due in quarterly installments from February 1997 to May 2002 at
the rate of 1/28 of the principal balance. The balance is due May 2002.
The note is collateralized by the assets of KROY/KATJ, but subordinated
to all senior indebtedness (present or future) of the Company. At
December 31, 1997, $171,440 was outstanding under the note.
Repayments of long-term debt, excluding capital leases, (Note 6)
required over each of the years following December 31, 1997 consist of:
<TABLE>
<S> <C>
1998 $ 651,323
1999 1,892,439
2000 664,012
2001 690,976
2002 633,856
Thereafter 1,523,487
---------------
$ 6,056,093
===============
</TABLE>
The weighted average interest rate on short term borrowing as of
December 31, 1997 was 8.5%
Continued
F-78
<PAGE> 202
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
5. Long-Term Debt and Notes Payable, continued:
--------------------------------
SHAREHOLDER NOTES PAYABLE:
In March 1994, the Company issued a 7% subordinated promissory note for
$120,000, due to a shareholder, which is payable upon demand. Subject
to approval of Series B preferred shareholders and certain performance
criteria the noteholder has the option to demand payment of the notes
with accrued interest on some future date to be determined by mutual
agreement of the parties.
In connection with a Series A convertible redeemable preferred stock
issuance in 1993, the Company issued an $800,000, 9.875% subordinated
promissory note. Interest is payable at the maturity date of the note.
Total interest payable at December 31, 1997 was $435,190 included in
the balance due under the note. The note has been treated as though due
in fiscal 1999 since the Company's current projections do not allow for
earlier redemption and as repayment is subject to the mutual agreement
of BancBoston, the shareholders and the Company under the terms of the
Inter-Investor Agreement dated October 3, 1994.
6. Lease Commitments:
------------------
The Company leases various facilities and equipment under noncancelable
operating leases expiring through 2015. Certain operating leases are
renewable at the end of the lease term. Future minimum lease payments
under noncancelable operating leases and capital leases are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
---------------- ----------------
<S> <C> <C>
1998 $ 131,951 $ 333,837
1999 109,309 237,969
2000 75,124 139,299
2001 34,575 121,963
2002 5,201 108,564
Thereafter 295,652
---------------- ----------------
Total minimum lease payments 356,160 $ 1,237,284
================
Less amount representing future interest (44,090)
----------------
Present value of minimum capital lease payments 312,070
Current portion 109,641
----------------
$ 202,429
================
</TABLE>
Continued
F-79
<PAGE> 203
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
6. Lease Commitments, continued:
-----------------
Rent expense was approximately $394,340, $434,403, and $288,642 for the
years ended December 31, 1995, 1996 and 1997, respectively. In 1997 the
Company entered into an operating agreement with Regent (Note 1) under
which the Company receives reimbursement for certain ongoing rental
expenses.
7. Capital Stock:
--------------
SERIES C FINANCING:
On January 5, 1996, the Company entered into a Securities Purchase
Agreement with Nazem & Company III, L.P. (Nazem), BancBoston Ventures,
Inc. (BancBoston) and certain other investors that provided for up to
$1,363,500 in equity capital. The Company amended its Articles of
Incorporation effective December 22, 1995 to authorize the issuance of
Series C mandatorily redeemable convertible preferred stock and Class C
common stock which are the securities that were sold to the investors
listed above. A Series C unit is comprised of one share of Series C
mandatorily redeemable convertible preferred stock and one hundred
shares of Class C common at a rate of $101 per unit. The Series C
financing also resulted in the Series A class of preferred stock being
reclassified as no longer redeemable at the option of the holder.
Accordingly, amounts previously accreted to the carrying value of the
stock of $2,074,163 were reversed to reduce the Series A preferred
carrying value to the redemption value of the issue in the year ended
December 31, 1996.
Certain terms and conditions of the Series B Securities Purchase
Agreement with BancBoston were also amended. The rights and preferences
of the Series B shares discussed below have been updated to reflect the
amended terms. In addition, under the terms of the BancBoston agreement
809,704 shares of Class B common stock were issued in conjunction with
the first closing of the Series C financing on January 5, 1996 at a
price of $0.01 per share.
COMMON STOCK:
The Class B common stock has special voting rights which provide that
the Company shall not, without first obtaining the approval of a
majority of the then outstanding shares of Class B common stock, (i)
amend or supplement the Articles of Incorporation, (ii) merge,
consolidate, liquidate, or dissolve the Company, (iii) declare a
dividend on Series A convertible preferred, or (iv) purchase the shares
of capital stock of the Company, except in connection with the
Company's 1992 Stock Option Plan and the Series A convertible preferred
agreements.
Continued
F-80
<PAGE> 204
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
7. Capital Stock, continued:
-------------
COMMON STOCK, continued:
The holders of Class B common stock also have the right to elect that
the Company purchase their shares of common stock, on or after
September 30, 2000 or earlier upon the occurrence of certain events of
default, at a price defined as the greater of fair market value or the
Formula Value per Share (as defined in the Series B Securities Purchase
Agreement). The Company has the right to elect to purchase all the
outstanding shares of Class B common stock, at any one time after
September 30, 2002, at the same price as specified above. The holders
of Class B common stock have the option at any time to convert
outstanding shares into Class A common shares on a one-for-one basis.
At December 31, 1997, 3,238,821 shares of Class A common stock had been
reserved for conversion. The Class B common shareholders also have
certain demand registration rights.
Holders of Class C common - (1) have the right to elect that the
Company purchase their shares of common stock, on or after September
30, 2000, at a price defined as the greater of fair market value or the
Formula Value per Share (as defined in the Series C Securities Purchase
Agreement), and (2) have the right to convert outstanding shares of
Class C common to Class A common on a one-for-one basis. At December
31, 1997, 1,202,100 shares of Class A common stock had been reserved
for conversion.
In connection with the closing of the acquisition of the Company by
Regent only, common stock holders have agreed to waive certain of these
rights.
PREFERRED STOCK:
The Company's preferred stock terms and values at December 31, 1997 are
listed below:
<TABLE>
<CAPTION>
Class A
Common
Reserved
Authorized Outstanding for
Shares Shares Conversion
-------------- -------------- --------------
<S> <C> <C> <C>
Series A preferred 6,117,945 5,595,875 5,595,875
Series B preferred 43,000 42,805
Series C preferred 13,500 12,021
-------------- -------------- --------------
6,174,445 5,650,701 5,595,875
============== ============== ==============
</TABLE>
Continued
F-81
<PAGE> 205
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
7. Capital Stock, continued:
-------------
PREFERRED STOCK, continued:
The holders of the Series A convertible preferred stock have certain
demand registration rights commencing six months following the
effective date of an underwritten initial public offering. The Company
is prohibited from issuing any shares of any class of stock, other than
the investor securities to be issued in accordance with the Series C
Securities Purchase Agreement and shares in respect of the outstanding
warrants and the Company's 1992 Stock Option Plan, so long as any
shares of Series B redeemable preferred, or at least 55% of the Class B
common remain outstanding. Once this limitation on issuing capital
stock has been eliminated, the holders of the Series A convertible
preferred stock have rights of first refusal to purchase new
securities. As discussed above, the redemption rights of the Series A
preferred stock were removed in conjunction with the Series C
financing. Other rights are discussed below.
The Series B mandatorily redeemable preferred stockholders have special
voting rights which provide that the Company shall not, without first
obtaining the approval of the majority of the shareholders of the then
outstanding shares of Series B preferred, (i) create any new class of
stock having a preference over Series B preferred, (ii) amend or repeal
the Company's Articles of Incorporation, or (iii) purchase, redeem, or
retire any shares of the capital stock ranking junior to the Series B
redeemable preferred.
The holders of the Series B preferred shares are entitled to receive
dividends at a rate of $15 per share per annum. All dividends are
cumulative and accrue, whether or not declared. When and if no shares
of Series B or Series C preferred remain outstanding, the holders of
the outstanding Series A convertible preferred stock are entitled to
receive noncumulative dividends of $0.08 per share per annum, which are
in preference to any common stock dividends, whenever funds are legally
available and when and if declared by the Board of Directors.
Continued
F-82
<PAGE> 206
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
7. Capital Stock, continued:
-------------
PREFERRED STOCK, continued:
The holders of Series B preferred shares have a liquidation preference
of an amount equal to $100 per share plus any accrued but unpaid
dividends thereon, before any payment shall be made in respect of the
Series C mandatorily redeemable convertible preferred stock, the Series
A convertible preferred stock or the common stock. After payment to the
holders of Series B and Series C preferred stock, the holders of the
Series A preferred stock have liquidation preferences of an amount
equal to the original issue price of $1.00 per share plus any declared
and unpaid dividends thereon, before any payment shall be made in
respect to the common stock. Upon completion of the distribution
described above, all remaining assets of the Company shall be
distributed to all holders of common stock on a pro rata basis
dependent upon the number of shares of common stock held. In certain
situations specified in the Amended and Restated Articles of
Incorporation, a consolidation or merger of the Company or sale of all
or substantially all of its assets may be deemed to be a liquidation
for purposes of the liquidation preferences.
The Company shall redeem all of the Series B mandatorily redeemable
preferred stock outstanding on September 30, 2001, in the amount of
$100 per share plus any accrued but unpaid dividends thereon. Any time
after September 30, 1999, the Company may at its option redeem all, but
not less than all, of the Series B preferred shares outstanding at the
redemption price stated above.
Holders of Series C mandatorily redeemable convertible preferred stock
- (1) have the right to convert their number of shares held into shares
(or other units) of any subsequent securities as may be issued by the
Company in the first transaction occurring after January 5, 1996, 2)
have special voting rights identical to the rights described below for
the Series B redeemable preferred shares, 3) are entitled to receive
dividends at a rate of $10 per share per annum which are cumulative and
accrue, whether or not declared, 4) have a liquidation preference of an
amount equal to $100 per share plus any accrued but unpaid dividends
thereon, before any payment shall be made in respect of the Series A
convertible preferred stock or the common stock, and 5) have a
mandatory redemption feature which requires the Company to purchase all
of the shares of the Series C preferred stock outstanding on September
30, 2001, in the amount of $100 per share plus any accrued but unpaid
dividends thereon.
The Company is accreting the expected redemption value of Series B and
Series C preferred stock over the period ending when redemption is
estimated to occur.
In connection with the closing of the acquisition of the Company by
Regent only, preferred stock holders have agreed to waive certain of
these rights.
Continued
F-83
<PAGE> 207
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
7. Capital Stock, continued:
-------------
STOCK OPTIONS, continued:
Under the Company's 1992 Stock Option Plan (the Plan), a total of
1,800,000 shares of Class A common stock have been reserved for
issuance to employees, officers, directors and consultants. Incentive
stock options to purchase shares of the Company's common stock under
the Plan may be granted at not less than 100% of the fair value of the
stock as determined by the Board of Directors, on the date granted. The
options generally have a term of ten years and are generally
exercisable either immediately or over periods of up to four years, as
determined by the Board of Directors.
Activity in the Company's stock option plan consists of the following:
<TABLE>
<CAPTION>
Options
Available Options Exercise
for Grant Outstanding Price Amount
---------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Balances, December 31, 1994 257,882 1,530,000 $0.50-$0.55 $ 810,000
Options granted (140,000) 140,000 $0.50 70,000
Options canceled 150,000 (150,000) $0.50 (75,000)
---------- ------------- ------------
Balances, December 31, 1995 267,882 1,520,000 $0.50-$0.55 805,000
Options granted (822,882) 822,882 $0.07 145,250
Options canceled 717,882 (717,882) $0.07-$0.55 (836,500)
---------- ------------- ------------
Balances, December 31, 1996 162,882 1,625,000 $0.07 113,750
Options canceled 121,719 (121,719) $0.07 (8,520)
Options exercised - (38,281) $0.07 (2,680)
---------- ------------- ------------
Balances, December 31, 1997 284,601 1,465,000 $0.07 $ 102,550
========== ============= ============
</TABLE>
The options outstanding and currently exercisable by exercise price at
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Options Currently
Options Outstanding Exercisable
------------------------------------------------------------------- -------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Price Outstanding Life Price Exercisable Price
---------------------- ------------ ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
$0.07 1,465,000 6.03 $0.07 1,165,417 $0.07
</TABLE>
Continued
F-84
<PAGE> 208
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
7. Capital Stock, continued:
-------------
PRO FORMA COMPENSATION EXPENSE, continued:
During 1996 and following the dilution to holders of Series A common
stock caused by the Series C financing described above, the Company
repriced all of the outstanding stock options to a revised fair value
of $0.07. All unexercised options were effectively canceled and
regranted. No other terms of the options were altered.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 (SFAS No. 123), "Accounting for
Stock-Based Compensation." Accordingly, no compensation cost has been
recognized for the Plan. Had compensation cost for the Plans been
determined based on the fair value at the grant date for awards in
1997, 1996 and 1995 consistent with the provisions of SFAS No. 123, the
Company's net loss and net loss per share would have been
reduced to the proforma amounts as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1995 1996 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Net loss - as reported $ 1,749,414 $ 1,486,471 $ 1,014,131
=============== =============== ===============
Net loss - proforma $ 1,752,908 $ 1,504,018 $ 1,018,631
=============== =============== ===============
Basic and diluted net loss - as reported $ (0.90) $ (0.07) $ (0.43)
=============== =============== ===============
Basic and diluted net loss - proforma $ (0.90) $ (0.07) $ (0.43)
=============== =============== ===============
</TABLE>
The fair value of each option grant was estimated on the date of grant
using the minimum value method with the following weighted average
assumptions:
<TABLE>
<S> <C>
Risk-free interest rate 6.28%
Expected life (years) 4
Expected dividends none
Expected volatility zero
</TABLE>
The weighted average expected life was calculated based on the vesting
period and the exercise behavior. The risk-free interest rate was
calculated in accordance with the grant date and expected life
calculated for each subgroup.
Continued
F-85
<PAGE> 209
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
7. Capital Stock, continued:
-------------
WARRANTS:
The Company has issued warrants to purchase Series A preferred stock at
$1.00 per share as follows:
<TABLE>
<CAPTION>
Number Aggregate Exercise
of Shares Price Period
------------- ------------- -------------------------
<S> <C> <C>
63,000 $ 63,000 Through February 1998
42,000 42,000 Through March 1998
22,500 22,500 Through April 1998
240,000 240,000 Through May 1998
75,195 75,195 Through March 1999
45,000 45,000 Through August 1999
34,375 34,375 Through November 2002
------------- -------------
522,070 $ 522,070
============= =============
</TABLE>
The holders of these warrants have agreed not to exercise their purchase
rights in conjunction with the acquisition of the Company by Regent only.
Continued
F-86
<PAGE> 210
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
8. Net income (loss) per share:
----------------------------
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128, Earnings Per Share ("SFAS 128") effective
December 31, 1997. SFAS 128 requires the presentation of basic and diluted
net income (loss) per share. Basic net income (loss) per share is computed
by dividing income (loss) available to common stockholders by the weighted
average number of common shares outstanding for that period. Diluted
income (loss) per share is computed giving effect to all dilutive
potential common shares that were outstanding during the period. Dilutive
potential common shares consist of incremental common shares issuable upon
exercise of stock options and warrants, and conversion of preferred stock
for all periods. All prior period net income (loss) per share amounts have
been restated to comply with SFAS 128.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS USED IN BASIC AND DILUTED PER SHARE
CALCULATIONS:
Net loss before accretion $(1,749,414) $(1,486,471) $(1,014,131)
Dividends and accretion for redemption on mandatorily
redeemable preferred stock (556,337) 1,154,436 (1,205,275)
----------- ----------- -----------
Net loss available to common stockholders for basic and
diluted net loss per share $(2,305,751) $ (332,035) $(2,219,406)
=========== =========== ===========
RECONCILIATION OF SHARES USED IN BASIC AND DILUTED PER
SHARE CALCULATIONS:
Basic net loss per share
Weighted average shares of common stock outstanding 2,567,209 4,973,115 5,202,555
----------- ----------- -----------
Shares used in basic net loss per share calculation 2,567,209 4,973,115 5,202,555
=========== =========== ===========
Basic net loss per share ($0.90) ($0.07) ($0.43)
=========== =========== ===========
Diluted net loss per share
Weighted average shares of common stock outstanding 2,567,209 4,973,115 5,202,555
Dilutive effect of stock options and warrants - - -
Dilutive effect of convertible preferred stock - - -
----------- ----------- -----------
Shares used in diluted net loss per share calculation 2,567,209 4,973,115 5,202,555
=========== =========== ===========
Diluted net loss per share ($0.90) ($0.07) ($0.43)
=========== =========== ===========
</TABLE>
F-87
<PAGE> 211
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
9 Income Taxes:
-------------
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1997 and 1996 are presented below:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance
for doubtful accounts $ 25,000 $ 18,000
Net operating loss carryforwards 2,448,000 2,730,000
Accrued liabilities 19,000 35,000
Other 2,000 -
----------- -----------
Total deferred tax assets 2,494,000 2,783,000
Deferred tax liabilities - property, plant and
equipment, principally due to differences in (104,000) (96,000)
depreciation
Valuation allowance (2,390,000) (2,687,000)
----------- -----------
Net deferred taxes $ - $ -
=========== ===========
</TABLE>
The change in the valuation allowance was an increase in the allowance of
$543,000, $539,000 and $297,000 in 1995, 1996 and 1997, respectively.
The Company's effective tax rate in 1997 differs from the statutory
federal income tax rate as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- --------
<S> <C> <C> <C>
Income tax benefit at statutory rate (34.0)% (34.0) % (34.0)%
Net operating loss not benefited 34.0 34.0 34.0
------ ------- ------
Effective tax rate - % - % - %
====== ======= ======
</TABLE>
The Company has approximately $7,300,000 and $3,000,000 of federal and
state net operating loss carryforwards available to reduce future taxable
income, respectively. These carryforwards generally expire by 2010 for
federal purposes and 1999 for state purposes, if not utilized, and
represent the losses incurred subsequent to May 1992, the date the Company
began operations as a Subchapter C corporation.
The Tax Reform Act of 1986 substantially changed the rules relative to net
operating loss and tax credit carryforwards in the case of an "ownership
change" of a corporation. Any ownership change, as defined, may restrict
utilization of carryforwards.
F-88
<PAGE> 212
INDEPENDENT AUDITORS' REPORT
Alta California Broadcasting, Inc.
We have audited the accompanying consolidated balance sheet of Alta California
Broadcasting, Inc. (a wholly-owned subsidiary of Redwood Broadcasting, Inc.) and
subsidiary as of March 31, 1997 and the related consolidated statements of
operations, stockholder's deficiency and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Alta California Broadcasting, Inc.
and subsidiary as of March 31, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
STOCKMAN KAST RYAN & SCRUGGS, P.C.
Colorado Springs, Colorado
June 25, 1997 (October 10, 1997 as to the matter discussed
in the second and third paragraphs of Note 9)
F-89
<PAGE> 213
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 37,754 $ 11,261
Accounts receivable, net 121,560 212,805
Receivable from related parties (Note 5) 38,286 28,738
Receivable from sale of stations (Note 2) 633,000
Prepaid expenses 10,807 16,113
------------- --------------
Total current assets 841,407 268,917
PROPERTY AND EQUIPMENT, net (Notes 3 and 6) 213,472 208,523
INTANGIBLE ASSETS, net (Note 4) 996,584 935,933
NOTE RECEIVABLE (Note 2) 200,000
OTHER ASSETS 37,963 45,530
------------- --------------
TOTAL $ 2,289,426 $ 1,458,903
============= ==============
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Payable to Redwood Broadcasting, Inc. (Note 5) $ 1,292,025 $ 624,113
Accounts payable 143,500 119,979
Accrued liabilities 194,365 46,617
Payables to related parties (Note 5) 14,500 65,137
Bank borrowings (Note 6) 78,804
Current portion of notes payable (Note 6) 34,517 36,781
Current portion of notes payable to related parties (Note 5) 25,000 25,000
Capital lease obligations (Note 7) 11,994
------------- --------------
Total current liabilities 1,715,901 996,431
NOTES PAYABLE (Note 6) 605,208 577,332
NOTES PAYABLE TO RELATED PARTIES (Note 5) 130,949 26,839
------------- --------------
Total liabilities 2,452,058 1,600,602
------------- --------------
COMMITMENTS (Note 7)
STOCKHOLDER'S EQUITY (DEFICIENCY)
Common stock, no par value; 1,000,000
shares authorized; 30,000 shares issued
and outstanding 225,000 225,000
Accumulated deficit (387,632) (366,699)
------------- --------------
Total stockholder's equity (deficiency) (162,632) (141,699)
------------- --------------
TOTAL $ 2,289,426 $ 1,458,903
============= ==============
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-90
<PAGE> 214
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31,
MARCH 31, -----------------------------
1997 1996 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
REVENUE
Broadcast revenue $ 545,185 $ 278,902 $ 819,038
Less agency commissions 37,268 22,964 74,739
-------------- ------------- --------------
NET REVENUE 507,917 255,938 744,299
-------------- ------------- --------------
OPERATING EXPENSE
Selling, general and administrative 408,859 217,959 337,262
Broadcasting 339,499 257,457 414,271
Depreciation and amortization 151,544 66,562 99,647
-------------- ------------- --------------
Total 899,902 541,978 851,180
-------------- ------------- --------------
LOSS FROM OPERATIONS (391,985) (286,040) (106,881)
-------------- ------------- --------------
OTHER INCOME (EXPENSE)
Gain on sale of stations (Note 2) 678,206
Loss on sale of land (Note 2) (80,000) (80,000)
Interest expense (104,731) (71,029) (28,213)
Other income - net 59,664 44,873 156,027
-------------- ------------- --------------
Other income (expense), net 553,139 (106,156) 127,814
-------------- ------------- --------------
NET INCOME (LOSS) $ 161,154 $ (392,196) $ 20,933
============== ============= ==============
NET INCOME (LOSS) PER
COMMON SHARE $ 5.37 $ (13.07) $ 0.70
============== ============= ==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 30,000 30,000 30,000
============== ============= ==============
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-91
<PAGE> 215
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIENCY)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL
COMMON STOCK STOCKHOLDER'S
-------------------------- ACCUMULATED EQUITY
SHARES AMOUNT DEFICIT (DEFICIENCY)
<S> <C> <C> <C> <C>
BALANCES,
APRIL 1, 1996 30,000 $ 225,000 $ (548,786) $ (323,786)
Net income 161,154 161,154
---------- ------------ ------------- ---------------
BALANCES,
MARCH 31, 1997 30,000 225,000 (387,632) (162,632)
Net income (unaudited) 20,933 20,933
---------- ------------ ------------- ---------------
BALANCES,
DECEMBER 31, 1997
(unaudited) 30,000 $ 225,000 $ (366,699) $ (141,699)
========== ============ ============= ===============
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-92
<PAGE> 216
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31,
MARCH 31, ----------------------------
1997 1996 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 161,154 $ (392,196) $ 20,933
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 151,544 66,562 99,647
Gain on sale of stations (678,206)
Loss on sale of land 80,000 80,000
Changes in operating assets and liabilities:
Accounts receivable (46,998) (19,041) (91,245)
Other current assets (3,961) 40,012 (5,306)
Accounts payable and accrued expenses (40,658) (11,193) (171,269)
Other assets 14,854 (78,109) (7,567)
------------- ------------ -----------
Net cash used in operating activities (362,271) (313,965) (154,807)
------------- ------------ -----------
INVESTING ACTIVITIES
Proceeds from sale of stations, net of commissions
paid 588,333
Proceeds from sale of land 370,000 370,000
Purchases of station assets (448,920) (405,159) (34,047)
Increase in receivable from sale of stations (17,000)
Collection of receivable from sale of stations 850,000
------------- ------------ -----------
Net cash provided by (used in) investing activities 509,413 (35,159) 798,953
------------- ------------ -----------
FINANCING ACTIVITIES
Proceeds from borrowings under related party notes 273,675
Proceeds from borrowings under notes 170,000
Borrowings from (repayments to) Redwood Broadcasting, Inc. 651,257 775,516 (767,912)
Principal payments on notes to related parties (529,900) (239,801) (4,110)
Principal payments on notes (445,275) (286,975) (25,612)
Decrease (increase) in net payable to related
parties (215,481) 114,415 60,185
Payments on capital lease obligations (13,664) (10,014) (11,994)
Proceeds from bank borrowings 78,804
------------- ------------ -----------
Net cash provided by (used in) financing
activities (109,388) 353,141 (670,639)
------------- ------------ -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 37,754 4,017 (26,493)
CASH AND CASH EQUIVALENTS,
Beginning of period -- -- 37,754
------------- ------------ -----------
CASH AND CASH EQUIVALENTS,
End of period $ 37,754 $ 4,017 $ 11,261
============= ============ ===========
(continued)
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-93
<PAGE> 217
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31,
MARCH 31, ----------------------------
1997 1996 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
SUPPLEMENTAL NONCASH INVESTING
AND FINANCING ACTIVITIES
Promissory note received for sale of stations $ 200,000
Receivable for sale of stations 633,000
Assumption of note payable to related party by
Redwood Broadcasting, Inc. (Note 5) $ 100,000
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 103,577 $ 93,320 $ 48,282
(concluded)
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-94
<PAGE> 218
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED DECEMBER 31, 1996 AND 1997 IS
UNAUDITED)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- Alta California Broadcasting, Inc. (Alta) and its
subsidiary, Northern California Broadcasting, Inc. (Northern)
(collectively, the Company), operate in the radio broadcasting
industry. Alta is a wholly-owned subsidiary of Redwood Broadcasting,
Inc. (Redwood) which, in turn, is a majority-owned subsidiary of
Redwood MicroCap Fund, Inc. (MicroCap). Organized for the purpose of
acquiring and/or developing undervalued radio broadcasting properties
located in small to medium sized markets, the Company has embarked upon
an aggressive acquisition and development program and currently
operates radio stations in Northern California.
The accompanying financial statements for the year ended March 31, 1997
only include the operations of radio stations KRDG-FM and KNNN-FM. The
accompanying financial statements for the nine months ended December
31, 1997 include the operations of radio stations KRDG-FM, KNNN-FM,
KNRO-AM and KRRX-FM through October 10, 1997, at which time, Alta
entered into an agreement to sell such stations and a Local Management
Agreement (LMA) with the acquiror. The accompanying financial
statements for the nine months ended December 31, 1996 include the
operations of KRDG-FM and KNNN-FM (beginning in August 1996). See Notes
2 and 9.
INTERIM FINANCIAL STATEMENTS -- The accompanying financial statements
for the nine months ended December 31, 1996 and 1997 are unaudited. In
management's opinion, the financial statements reflect all adjustments
necessary for a fair presentation of the results of these periods, all
adjustments being of a normal and recurring nature.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of Alta and its wholly-owned subsidiary, Northern.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
ACCOUNTS RECEIVABLE -- The Company maintains an allowance for doubtful
accounts based upon the expected collectibility of all accounts
receivable. At March 31, 1997, the allowance was $3,200.
PROPERTY AND EQUIPMENT -- Property and equipment are recorded at fair
value as of the date of acquisition of the related station or cost if
purchased subsequently. Depreciation is provided on a straight line
basis over the estimated useful lives of the assets as follow:
buildings and improvements - 10 years; transmitter - 20 years; computer
equipment - 3 years; and technical equipment and furniture and fixtures
- 5 to 7 years. The recoverability of the carrying value of property
and equipment is evaluated periodically in relation to the estimated
value of the radio stations based on their operating performance and
cash flows.
INTANGIBLE ASSETS -- Intangible assets include the radio station
purchase price allocations to license costs and the noncompete
agreement. License costs are amortized over a period of 20 years and
F-95
<PAGE> 219
the noncompete agreement is amortized over the three-year period of the
agreement. The recoverability of the carrying value of intangible
assets is evaluated periodically in relation to the estimated value of
the radio stations based on their operating performance and cash flows.
REVENUE RECOGNITION -- The Company's primary source of revenue is the
sale of air time to advertisers. Revenue from the sale of air time is
recorded when the advertisements are broadcast.
BARTER TRANSACTIONS -- Revenue from barter transactions (advertising
provided in exchange for goods and services) is recognized based on the
fair value of the goods or services received when the advertisements
are broadcast. Goods and services received are recognized when used.
INCOME TAXES -- The Company accounts for income taxes using the asset
and liability method. Under the asset and liability method, deferred
income taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory tax rates to differences
between the financial statement carrying amounts and the tax bases of
existing assets and liabilities. The effect on deferred taxes of a
change in tax rate is recognized in the period that includes the
enactment date.
PER SHARE AMOUNTS -- Per share amounts are based upon the net income or
loss applicable to common shares and upon the weighted average of
common shares outstanding during the period.
USE OF ESTIMATES -- The preparation of the Company's financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
STATEMENT OF CASH FLOWS -- For purposes of the statement of cash flows,
highly liquid investments, maturing within three months of acquisition,
are considered to be cash equivalents.
CONCENTRATIONS OF RISK -- Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily
of cash and cash equivalents and receivables. Also, the Company's radio
stations broadcast in Northern California, which results in a risk to
the Company due to the concentration in one geographic area.
2. RADIO STATION ACQUISITIONS AND SALES
The following radio station acquisitions and sales have been completed
by Alta:
KHSL AM/FM -- In 1994, Alta acquired radio stations KHSL-AM/FM licensed
to Chico and Paradise, California, respectively. Subsequent to its
acquisition by Alta, KHSL-AM changed its call letters to KNSN-AM.
In March 1996, Alta entered into separate Asset Sale Agreements to sell
the assets of both KNSN-AM and KHSL-FM, excluding a parcel of land, for
$1,466,333. Simultaneously with signing the Asset Sale Agreements, Alta
entered into a LMA with the purchaser until the sale closed on March
31, 1997, at which time the LMA terminated.
F-96
<PAGE> 220
Alta received $633,333 cash and a $200,000 promissory note, bearing
interest at a rate of 7%. As of December 31, 1997, all amounts
receivable from the sale of KHSL-AM/FM had been collected. A gain on
the sale of $678,206 has been recorded in the accompanying statement of
operations for the year ended March 31, 1997.
Management believes that the fair values of its receivables relating to
the sale of the stations are not materially different from their
carrying values.
In April 1996, the parcel of land was sold to an unrelated party for
$370,000. A loss on the sale of $80,000 has been recorded in the
accompanying statement of operations for the year ended March 31, 1997.
KRDG-FM (F/K/A KHZL AND KCFM) -- In March 1995, Alta entered into a LMA
with an option to purchase radio station KCFM-FM licensed to
Shingletown, California, which began commercial broadcasting in August
1995. KCFM-FM primarily serves the Redding, California market. In
September 1995, KCFM-FM changed its call letters to KHZL-FM. In July
1996, Alta completed the acquisition of KHZL-FM, thereby terminating
the LMA. Alta paid $65,000 cash and issued a $155,000 promissory note
as consideration for KHZL-FM (see Note 6). The acquisition was recorded
using the purchase method and the $220,000 purchase price was recorded
as license costs as no other assets of KHZL-FM were acquired. Effective
September 27, 1996, Alta changed KHZL-FM's call letters to KRDG-FM.
KNNN-FM -- In May 1996, Alta entered into an Asset Purchase Agreement
to acquire KNNN-FM licensed to Central Valley, California. The Asset
Purchase Agreement was subsequently assigned to Northern. KNNN-FM
primarily serves the Redding, California market. In August 1996, Alta
began operating KNNN-FM under a LMA pending approval of the transfer of
ownership by the FCC. The purchase price for KNNN-FM was $825,000,
$325,000 of which was paid in cash at closing, and the balance of which
was in the form of a promissory note (see Note 6). Pursuant to the
Asset Purchase Agreement, the seller of KNNN-FM agreed to not compete
in the Redding, California market for a period of three years. The
acquisition was recorded using the purchase method and the purchase
price was allocated to property and equipment, noncompete agreement and
license costs, based on estimated fair values.
KLXR-FM -- In May 1996, Alta entered into an Asset Purchase Agreement
to acquire KLXR-AM, licensed to Redding, California, for a total
purchase price of $100,000. In February 1997, Alta entered into a LMA
with the seller until the purchase is completed, at which time, the LMA
will terminate. The purchase has not yet been completed. Prior to the
closing of the merger (see Note 9), it is anticipated that Alta will
assign its interests in the KLXR agreements to Redwood.
F-97
<PAGE> 221
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
<S> <C> <C>
Buildings and improvements $ 29,437 $ 35,859
Equipment 181,360 208,241
Furniture and fixtures 40,341 40,341
------------ -------------
Total property and equipment 251,138 284,441
Less accumulated depreciation 37,666 75,918
------------ -------------
Property and equipment-- net $ 213,472 $ 208,523
============ =============
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
<S> <C> <C>
License costs $ 950,489 $ 950,489
Noncompete agreement 100,000 100,000
------------- --------------
Total intangible assets 1,050,489 1,050,489
Less accumulated amortization 53,905 114,556
------------- --------------
Intangible assets-- net $ 996,584 $ 935,933
============= ==============
</TABLE>
F-98
<PAGE> 222
5. RELATED PARTY TRANSACTIONS
Notes payable to related parties consist of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
<S> <C> <C>
Unsecured note payable to an affiliated entity
controlled by an officer and stockholder of
Redwood (see below) $ 100,000
Unsecured note payable to an affiliated entity
controlled by an officer and stockholder of
Redwood with interest at 12% and principal
and interest due on demand 25,000 $ 25,000
Unsecured notes payable to stockholders of Redwood
with interest at 8% and principal and interest
due on March 31, 1999 30,949 26,839
------------ -------------
Total 155,949 51,839
Less current portion 25,000 25,000
------------ -------------
Total $ 130,949 $ 26,839
============ =============
</TABLE>
Management believes that the fair values of its notes payable to
related parties are not materially different from their carrying values
based on the terms and varying characteristics of the notes.
The $100,000 note payable to an affiliated entity was assumed by
Redwood during the nine months ended December 31, 1997, resulting in a
corresponding increase in the Company's payable to Redwood in the
accompanying balance sheet as of such date. The Company has noninterest
bearing payables to Redwood of $1,292,025 and $624,113 as of March 31,
1997 and December 31, 1997, respectively, which have no set repayment
terms. The Company recorded interest expense on the related party notes
of approximately $62,000 for the year ended March 31, 1997.
The Company has receivables from and payables to entities controlled by
an officer and stockholder of Redwood. The receivables and payables
total $38,286 and $14,500, respectively, as of March 31, 1997 and
$28,738 and $65,137, respectively, as of December 31, 1997. Such
balances do not bear interest and have no set repayment terms.
F-99
<PAGE> 223
6. NOTES PAYABLE AND BANK BORROWINGS
Notes payable consist of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
<S> <C> <C>
Note payable to seller of KNNN-FM with interest at 8.5%, collateralized
by the common stock of Northern, payable in monthly principal and
interest installments of $6,199 through October 2001 with the
remaining balance due at that date $ 484,725 $ 459,113
Note payable to seller of KRDG-FM with interest at 8.25% and payable
semi-annually, principal payable on July 21, 2004, collateralized
by property and equipment, guaranteed by MicroCap 155,000 155,000
------------ -------------
Total 639,725 614,113
Less current portion 34,517 36,781
------------ -------------
Total $ 605,208 $ 577,332
============ =============
</TABLE>
Under the terms of the promissory note agreements, including notes
payable to related parties (see Note 5), future minimum annual
principal payments during the next five fiscal years ending March 31
are as follows: 1998 - $59,517 (including $25,000 note payable on
demand); 1999 - $168,517; 2000 - $40,889; 2001 - $44,503; and 2002 -
$327,248.
As of March 31, 1997 and December 31, 1997, the Company has a $25,000
line of credit agreement with a bank which expires on April 1, 1998.
Bank borrowings under the line of credit agreement bear interest at a
rate of 7.9%, are collateralized by a certificate of deposit of
MicroCap, and are guaranteed by MicroCap. There were no borrowings
under the line of credit agreement as of March 31, 1997. As of December
31, 1997, $25,000 was outstanding under the agreement.
As of December 31, 1997, the Company has a $25,000 line of credit
agreement which expires July 1, 1998. Bank borrowings under the line of
credit agreement bear interest at the prime rate plus 2.5%, are
unsecured and are guaranteed by MicroCap. As of December 31, 1997,
$25,000 was outstanding under the agreement.
As of December 31, 1997, the Company has a note payable to a bank with
a principal balance of $28,804 which is payable in monthly installments
of $900 plus interest through September 2, 2000 when all outstanding
principal and interest is due. The note bears interest at the prime
rate plus 2.5%, is collateralized by equipment and is guaranteed by
Redwood and MicroCap.
Management believes that the fair values of its notes payable are not
materially different from their carrying values based on the terms and
varying characteristics of the notes.
F-100
<PAGE> 224
7. LEASE AGREEMENTS
The Company leases land and equipment under operating lease agreements
expiring in various years through 2001 and leases equipment under a
capital lease agreement expiring in 1998. Lease expense under the
operating lease agreements totalled $74,039 for the year ended March
31, 1997.
At March 31, 1997, future minimum lease payments under the lease
agreements are summarized as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASE LEASES
<S> <C> <C>
Fiscal year ending March 31:
1998 $ 13,858 $ 33,501
1999 16,812
2000 32,944
---------- ----------
Total minimum lease payments 13,858 $ 83,257
==========
Less amount representing interest 1,864
----------
Capital lease obligation $ 11,994
==========
</TABLE>
The equipment under capital lease is as follows at March 31, 1997:
<TABLE>
<S> <C>
Equipment $ 42,416
Less accumulated depreciation 3,361
----------
Net $ 39,055
==========
</TABLE>
F-101
<PAGE> 225
8. INCOME TAXES
The Company's operations are included in the consolidated federal and
state income tax returns of Redwood. Under Redwood's tax allocation
method, a tax provision is allocated to the Company based upon a
calculation of income taxes as if the Company filed separate income tax
returns.
As of March 31, 1997, Redwood has approximately $375,000 of
consolidated net operating loss carryovers of which approximately
$200,000 were attributable to the Company. The carryovers expire in
various years through 2012 and result in deferred income tax assets of
approximately $68,000. However, because of the uncertainty regarding
future realization of the deferred income tax assets, the Company has
established a valuation allowance of $68,000 as of March 31, 1997. The
valuation allowance decreased by $56,000 during the year ended March
31, 1997.
9. SUBSEQUENT EVENTS
Effective April 1, 1997, the Company acquired an option to purchase
radio stations KNRO-AM and KARZ-FM (KNRO/KARZ) licensed in Redding,
California from Power Surge, Inc. (Power Surge), a wholly-owned
subsidiary of Power Curve, Inc. (Power Curve). Power Surge and Power
Curve are both controlled by Redwood's President. Power Curve acquired
KNRO/KARZ on January 31, 1997 for $480,000 in cash and a $720,000
promissory note. Power Surge operated the stations from February 1,
1997 through March 31, 1997 and received the licenses from Power Curve
on March 31, 1997. Under the terms of the option agreement, the Company
can either (1) purchase KNRO/KARZ for $1,200,000 in cash or (2) issue
1,000,000 shares of its common stock in exchange for all of the issued
and outstanding shares of common stock of Power Surge. The option, as
extended, expires March 31, 1998. Also effective April 1, 1997, the
Company entered into a LMA with Power Surge for a period of one year.
Under the terms of the LMA, the Company is operating KNRO/KARZ and is
obligated to pay Power Surge a monthly fee of $5,000. Effective May 16,
1997, KARZ-FM changed its call letters to KRRX-FM.
On October 10, 1997, Alta entered into an agreement to merge with
Regent Acquisition Corp., a subsidiary of Regent Communications, Inc.
(Regent). Upon closing of the merger, all of the outstanding shares of
common stock of Alta will be redeemed and cancelled. As consideration
for the Alta common stock, Redwood will receive $1,000,000 cash and
200,000 shares of Series E preferred stock in Regent, subject to
certain adjustments at closing. Alta is required to acquire KNRO-AM and
KRRX-FM from Power Surge prior to the closing of the merger. The merger
agreement provides for the formation of a joint venture by Redwood and
Regent to construct an antenna tower which is intended to be leased by
Regent from the joint venture. In the event that these provisions have
not been satisfied prior to closing, the consideration at closing will
be reduced to $975,000 cash and 195,000 shares of stock. If such
provisions are satisfied subsequent to closing, the agreement provides
that Redwood will receive the additional consideration at that time.
- --------------------------------------------------------------------------------
F-102
<PAGE> 226
INDEPENDENT AUDITORS' REPORT
KARZ/KNRO (A Division of Merit Broadcasting Corporation)
We have audited the accompanying balance sheet of KARZ/KNRO (A Division of Merit
Broadcasting Corporation) as of December 31, 1996 and the related statements of
operations and of cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of KARZ/KNRO at December 31,1996 and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
STOCKMAN KAST RYAN & SCRUGGS, P.C.
Colorado Springs, Colorado
May 9, 1997
F-103
<PAGE> 227
KARZ/KNRO (A Division of Merit Broadcasting Corporation)
BALANCE SHEET
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 4,661
Accounts receivable - net of allowance for
doubtful accounts of $23,074 92,834
Prepaid expenses 10,000
---------
Total 107,495
OPERATING PROPERTY AND EQUIPMENT - Net (Note 3) 70,280
---------
TOTAL $ 177,775
=========
LIABILITIES AND NET LIABILITIES OF DIVISION
CURRENT LIABILITIES
Accounts payable $ 10,178
Accrued liabilities 699
Accrued interest payable to related parties (Note 2) 85,458
Line of credit borrowings (Note 4) 1,617
---------
Total 97,952
DEBT TO RELATED PARTIES (Note 2) 164,297
NET LIABILITIES OF DIVISION (84,474)
---------
TOTAL $ 177,775
=========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
F-104
<PAGE> 228
KARZ/KNRO (A Division of Merit Broadcasting Corporation)
STATEMENT OF OPERATIONS AND NET LIABILITIES OF DIVISION
FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
REVENUE
Broadcasting $588,339
Less agency commissions 38,042
--------
Net revenue 550,297
--------
COSTS AND EXPENSES
General and administrative 298,701
Programming and technical 152,611
Sales 104,014
--------
Total 555,326
--------
LOSS FROM OPERATIONS 5,029
INTEREST EXPENSE (Note 2) 17,526
--------
NET LOSS 22,555
TRANSFERS TO OTHER DIVISIONS 8,551
NET LIABILITIES OF DIVISION, Beginning of year 53,368
--------
NET LIABILITIES OF DIVISION, End of year $ 84,474
========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
F-105
<PAGE> 229
KARZ/KNRO (A Division of Merit Broadcasting Corporation)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $(22,555)
Adjustments to reconcile net loss to
net cash provided by activities:
Depreciation 8,887
Changes in operating assets and liabilities:
Accounts receivable 20,256
Accounts payable and accrued liabilities (7,854)
Accrued interest payable to related parties 16,930
--------
Net cash provided by operating activities 15,664
--------
FINANClNG ACTIVITIES
Repayment of line of credit borrowings (17,383)
Transfers to other divisions (8,551)
--------
Net cash used in financing activities (25,934)
--------
NET DECREASE IN CASH (10,270)
CASH, Beginning of year 14,931
--------
CASH, End of year $ 4,661
========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 1,058
========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
F-106
<PAGE> 230
KARZ/KNRO (A Division of Merit Broadcasting Corporation)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General - Merit Broadcasting Corporation (the Company) owned and operated
radio stations KARZ-FM and KNRO-AM (together, KARZ/KNRO) in Redding,
California through January 31, 1997, at which time KARZ/KNRO was acquired
by Power Curve, Inc.
The Company owns and operates two other radio stations and accounts for the
activities of the stations as separate divisions. The accompanying
financial statements include only the accounts of the KARZ/KNRO division of
the Company.
Accounts Receivable - Concentrations of credit risk with respect to
receivables are limited due to the large number of customers in diverse
industries and generally short payment terms. Due to these factors, no
additional credit risk beyond amounts provided for collection losses is
believed inherent in the accounts receivable of KARZ/KNRO.
Operating Property and Equipment - Property and equipment is recorded at
cost and is depreciated using accelerated methods over lives as follows:
buildings - 35 years; vehicles - 5 years; towers and improvements - 5 to 10
years; and other equipment - 5 to 7 years. The recoverability of the
carrying value of operating property and equipment is evaluated
periodically in relation to the estimated value of the radio stations based
on their operating performance and non-discounted cash flows.
Income Taxes -- As a division of the Company, KARZ/KNRO is not a taxable
entity. Accordingly, no provision or credit for income taxes has been made
in the accompanying financial statements.
Statement of Cash Flows - For purposes of the statement of cash flows,
highly liquid accounts maturing within three months of acquisition are
considered to be cash equivalents.
Use of Estimates - The preparation of KARZ/KNRO's financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates.
Geographic Area - KARZ/KNRO broadcasts in Northern California. This results
in a risk to the Company due to the concentration in one geographic area.
F-107
<PAGE> 231
2. RELATED PARTY TRANSACTIONS
The Company has debt to its shareholders totalling $164,297 as of December
31, 1996. The debt is unsecured, bears interest at 10% and has no maturity
date. Accrued interest on such debt was $85,458 as of December 31, 1996.
Such debt and the related accrued interest have been recorded in the
accompanying financial statements of KARZ/KNRO as it relates to the
acquisition of assets of KARZ/KNRO.
The Company has debt to a former shareholder totalling $644,825 as of
December 31, 1996. Accrued interest on such debt was $45,867 as of December
31, 1996. Since such debt was incurred for the purchase of treasury stock
of the Company, it has been recorded at the corporate level and has not
been recorded on the accompanying KARZ/KNRO financial statements. Had such
debt been recorded on the accompanying KARZ/KNRO financial statements as of
December 31, 1996, net liabilities would have increased by $690,692 and net
loss would have increased by $29,917.
3. OPERATING PROPERTY AND EQUIPMENT
Operating property and equipment consists of the following at December 31,
1996:
<TABLE>
<S> <C>
Land $ 23,000
Building 22,644
Towers and improvements 126,099
Equipment 191,856
Vehicles 26,914
--------
Total 390,513
Less accumulated depreciation 320,233
--------
Operating property and equipment -- net $ 70,280
========
</TABLE>
4. LINE OF CREDIT
The Company has a $50,000 line of credit agreement with a bank which is
unsecured, bears interest at the bank's index rate plus 1.5% and matured on
February 15, 1997. The Company borrowed $19,000 under the line of credit
agreement in 1995 for the purchase of equipment for KARZ/KNRO. Accordingly,
such borrowings have been recorded on the KARZ/KNRO financial statements.
As of December 31, 1996, the outstanding borrowings under the agreement
totalled $1,617.
5. BUILDING LEASE
KARZ/KNRO leases its offices under a month-to-month operating lease
agreement. Lease expense totalled $19,908 during 1996.
- --------------------------------------------------------------------------------
F-108
<PAGE> 232
INDEPENDENT AUDITORS' REPORT
Power Surge, Inc.
We have audited the accompanying balance sheet of Power Surge, Inc. (a
subsidiary of Power Curve, Inc.) as of December 31, 1997 and the related
statements of operations, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Power Surge, Inc. as of December 31, 1997,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
STOCKMAN KAST RYAN & SCRUGGS, P.C.
Colorado Springs, Colorado
March 13, 1998
F-109
<PAGE> 233
POWER SURGE, INC.
(A SUBSIDIARY OF POWER CURVE, INC.)
BALANCE SHEET
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 82
Income taxes receivable from Power Curve, Inc. (Note 5) 4,000
Receivable from related party (Note 7) 65,137
-----------
Total current assets 69,219
PROPERTY AND EQUIPMENT, net (Notes 2 and 3) 152,273
INTANGIBLE ASSETS, net (Notes 2 and 4) 953,477
-----------
TOTAL $ 1,174,969
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Payable to related party (Note 7) $ 2,133
Accounts payable 117
-----------
Total current liabilities 2,250
-----------
STOCKHOLDERS' EQUITY
Common stock, no par value; 1,500
shares authorized; 1,250 shares issued
and outstanding 1,202,500
Accumulated deficit (29,781)
-----------
Total stockholders' equity 1,172,719
-----------
TOTAL $ 1,174,969
===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
F-110
<PAGE> 234
POWER SURGE, INC.
(A SUBSIDIARY OF POWER CURVE, INC.)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REVENUE
<S> <C>
Broadcast revenue $ 74,704
Less agency commissions 5,893
---------
Net revenue 68,811
---------
OPERATING EXPENSE
Selling, general and administrative 66,410
Broadcasting 20,622
Depreciation and amortization 106,314
---------
Total 193,346
---------
LOSS FROM OPERATIONS (124,535)
OTHER INCOME (Notes 7 and 8) 90,754
---------
LOSS BEFORE INCOME TAX BENEFIT (33,781)
INCOME TAX BENEFIT (Note 5) 4,000
---------
NET LOSS $ (29,781)
=========
NET LOSS PER COMMON SHARE $ (23.82)
=========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,250
</TABLE> =========
See notes to financial statements.
- --------------------------------------------------------------------------------
F-111
<PAGE> 235
POWER SURGE, INC.
(A SUBSIDIARY OF POWER CURVE, INC.)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
-------------------------- ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT DEFICIT EQUITY
<S> <C> <C> <C> <C>
Issuance of common stock 1,250 $ 2,500 $ 2,500
Contribution of radio station
assets (Note 2) 1,200,000 1,200,000
Net loss for year ended
December 31, 1997 $ (29,781) (29,781)
-------- -------------- ------------- ---------------
BALANCES,
DECEMBER 31, 1997 1,250 $ 1,202,500 $ (29,781) $ 1,172,719
======== ============== ============= ===============
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
F-112
<PAGE> 236
POWER SURGE, INC.
(A SUBSIDIARY OF POWER CURVE, INC.)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (29,781)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 106,314
Changes in operating assets and liabilities:
Accounts receivable 9,436
Income taxes receivable (4,000)
Receivable from related party (65,137)
Payable to related party 2,133
Accounts payable and accrued expenses 117
-----------
Net cash provided by operating activities 19,082
INVESTING ACTIVITIES-- Purchase of property and equipment (21,500)
FINANCING ACTIVITIES-- Issuance of common stock 2,500
-----------
NET INCREASE IN CASH 82
CASH, Beginning of year --
-----------
CASH, End of year $ 82
===========
SUPPLEMENTAL NONCASH INVESTING
AND FINANCING ACTIVITY
Contribution of radio station assets (Note 2):
License cost $ 890,564
Property and equipment 150,000
Noncompete agreement 150,000
Accounts receivable 9,436
-----------
Total $ 1,200,000
===========
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-113
<PAGE> 237
POWER SURGE, INC.
(A SUBSIDIARY OF POWER CURVE, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- Power Surge, Inc. (the Company), a Delaware
corporation, operates in the radio broadcasting industry. The Company
is 80% owned by Power Curve, Inc. (Power Curve) and 20% owned by
Redwood Broadcasting, Inc. (Redwood Broadcasting) as of December 31,
1997. The Company was incorporated on October 16, 1996, however, the
Company did not have any operations prior to 1997.
PROPERTY AND EQUIPMENT -- Property and equipment are recorded at fair
value as of the date of acquisition of the related station or cost if
purchased subsequently. Depreciation is provided on a straight line
basis over the estimated useful lives of the assets as follow:
buildings and improvements - 10 years; transmitter - 20 years; computer
equipment - 3 years; technical equipment - 7 years; furniture and
fixtures - 5 years; and vehicles - 5 years. The recoverability of the
carrying value of property and equipment is evaluated periodically in
relation to the estimated value of the radio stations based on their
operating performance and cash flows.
INTANGIBLE ASSETS -- Intangible assets include the radio station
purchase price allocations to license costs and the noncompete
agreement. License costs are amortized over a period of 20 years and
the noncompete agreement is amortized over the three-year period of the
agreement. The recoverability of the carrying value of intangible
assets is evaluated periodically in relation to the estimated value of
the radio stations based on their operating performance and cash flows.
REVENUE RECOGNITION -- Revenue from the sale of air time is recorded
when the advertisements are broadcast.
BARTER TRANSACTIONS -- Revenue from barter transactions (advertising
provided in exchange for goods and services) is recognized based on the
fair value of the goods or services received when the advertisements
are broadcast. Goods and services received are recognized when used.
INCOME TAXES -- The Company accounts for income taxes using the asset
and liability method. Under the asset and liability method, deferred
income taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory tax rates to differences
between the financial statement carrying amounts and the tax bases of
existing assets and liabilities. The effect on deferred taxes of a
change in tax rate is recognized in the period that includes the
enactment date.
LOSS PER COMMON SHARE -- Loss per common share is based upon the net
loss applicable to common shares and the weighted average of common
shares outstanding during the period.
USE OF ESTIMATES -- The preparation of the Company's financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
F-114
<PAGE> 238
STATEMENT OF CASH FLOWS -- For purposes of the statement of cash flows,
highly liquid investments, maturing within three months of acquisition,
are considered to be cash equivalents.
2. RADIO STATION ACQUISITIONS
On January 31, 1997, Power Curve acquired radio stations KNRO-AM (KNRO)
and KARZ-FM (KARZ), licensed in Redding, California, from Merit
Broadcasting Corporation for $480,000 in cash and a $720,000 promissory
note. the Company operated the stations from February 1, 1997 through
March 31, 1997 under a Local Marketing Agreement (LMA) with Power
Curve. On March 31, 1997, the stations were contributed to the Company
by Power Curve. This contribution was recorded as contributed capital
of $1,200,000 and was allocated to accounts receivable, property and
equipment, noncompete agreement and license costs based on their
respective estimated fair values. Since Power Curve is the parent
company of the Company and it was the intention to have the Company own
and operate the stations upon acquisition, the accompanying financial
statements have been prepared as if the Company owned the stations
during the period from February 1, 1997 through March 31, 1997 (the
date of the contribution).
The following represents the unaudited pro forma results of operations
for the year ended December 31, 1997 as if the acquisition of KNRO and
KARZ had occurred on January 1, 1997: net revenue - $106,160; loss from
operations - $151,394; net loss - $56,640; and, net loss per common
share - $45.31.
Effective April 1, 1997, Alta California Broadcasting, Inc. (Alta), a
wholly-owned subsidiary of Redwood Broadcasting, acquired an option to
purchase KNRO and KARZ from the Company. Under the terms of the option
agreement, Alta can either (1) purchase the stations for $1,200,000 in
cash or (2) issue 1,000,000 shares of its common stock in exchange for
all of the issued and outstanding shares of common stock of the
Company. The option terminates on March 31, 1998. Concurrently, Alta
entered into a LMA with the Company for a period of one year. Under the
terms of the LMA, Alta is operating KNRO and KARZ and is obligated to
pay Power Surge a monthly fee of $5,000. Accordingly, the operating
activities of the radio stations from April 1, 1997 through December
31, 1997 are not reflected in the accompanying financial statements.
Effective May 16, 1997, KARZ changed its call letters to KRRX-FM.
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<S> <C>
Buildings and improvements $ 75,000
Equipment 40,000
Transmitter 30,000
Vehicle 21,500
Furniture and fixtures 5,000
-------------
Total property and equipment 171,500
Less accumulated depreciation 19,227
-------------
Property and equipment-- net $ 152,273
=============
</TABLE>
F-115
<PAGE> 239
4. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<S> <C>
License costs $ 890,564
Noncompete agreement 150,000
--------------
Total intangible assets 1,040,564
Less accumulated amortization 87,087
--------------
Intangible assets-- net $ 953,477
==============
</TABLE>
5. INCOME TAXES
The Company's operations are included in the consolidated federal and
state income tax returns of Power Curve. Under Power Curve's tax
allocation method, a tax provision is allocated to the Company based
upon a calculation of income taxes as if the Company filed separate
income tax returns.
The tax effects of temporary differences that give rise to deferred
income taxes at December 31, 1997 are as follows:
<TABLE>
<S> <C>
Deferred income tax asset -- difference between book
and tax basis of intangible assets $ 9,400
Valuation allowance (9,400)
-----------
Net deferred income taxes $ --
===========
</TABLE>
The valuation allowance increased by $9,400 during 1997.
The following summary reconciles income taxes computed at the federal
statutory rate with the income tax benefit:
<TABLE>
<S> <C>
Federal income tax benefit computed at statutory rate $ 11,486
Tax effect of:
State income taxes, net of federal benefit 1,914
Establishment of valuation allowance (9,400)
-----------
Income tax benefit $ 4,000
===========
</TABLE>
6. ALTA MERGER AGREEMENT
Effective October 10, 1997, Alta entered into an agreement to merge
with Regent Acquisition Corp., a subsidiary of Regent Communications,
Inc. Alta is required to exercise its option and complete its
acquisition of KNRO and KRRX from the Company prior to the closing of
the merger.
F-116
<PAGE> 240
7. RELATED PARTY TRANSACTIONS
The Company has a receivable from Alta and a payable to an entity under
common control of $65,137 and $2,133, respectively, as of December 31,
1997. The Company recorded income under its LMA with Alta (see Note 2)
totalling $45,000 which is included in other income in the accompanying
statement of operations.
8. OTHER INCOME
During 1997, the Company entered into a purchase agreement to acquire
stations KVVQ-AM and KVVQ-FM in Hesperia, California. As the result of
an upset bid for the stations by a third party, the Company waived its
rights under the purchase agreement and received compensation of
$50,000, which has been recorded as other income in the accompanying
statement of operations.
- --------------------------------------------------------------------------------
F-117
<PAGE> 241
REPORT of INDEPENDENT ACCOUNTANTS
To the Partners of Continental Radio Broadcasting, L.L.C.
We have audited the accompanying balance sheet of Continental Radio
Broadcasting, L.L.C. ("the Company") as of December 31, 1997 and the related
statement of operations, partner's deficit and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
1997, and the results of their operations and their cash flows for the year then
ended, in conformity with generally accepted accounting principles.
Coopers & Lybrand, L.L.P.
Cincinnati, Ohio
February 10, 1998
F-118
<PAGE> 242
CONTINENTAL RADIO BROADCASTING, L.L.C.
BALANCE SHEET
as of December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 373
Trade accounts receivable, less allowance for doubtful accounts of $26,000 172,465
Other receivables 7,544
Prepaid expenses 4,125
--------------
Total current assets 184,507
Property, plant and equipment, net 303,560
Intangible assets, net 948,647
Other assets, net 127,527
--------------
Total assets $ 1,564,241
==============
LIABILITIES AND PARTNER'S DEFICIT
Current liabilities:
Accounts payable $ 46,683
Book overdraft 8,950
Accrued expenses 69,066
Current portion of long-term debt 1,670,000
--------------
Total current liabilities 1,794,699
Long-term debt 90,000
--------------
Total liabilities 1,884,699
--------------
Commitments and contingencies
Partner's Deficit:
Capital contributions $ 10,000
Deficit (330,458)
--------------
Total partner's deficit (320,458)
--------------
Total liabilities and partner's deficit $ 1,564,241
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-119
<PAGE> 243
CONTINENTAL RADIO BROADCASTING, L.L.C.
STATEMENT OF OPERATIONS
for the year ended December 31, 1997
<TABLE>
<S> <C>
Broadcast revenue $ 1,095,761
Less agency commissions 73,905
-------------
Net revenue 1,021,856
Broadcast operating expenses 438,482
Corporate general and administrative expenses 346,055
Depreciation and amortization 241,744
-------------
Operating loss (4,425)
Interest expense 186,127
Loss on disposal of fixed assets 73,219
-------------
Net loss $ (263,771)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-120
<PAGE> 244
CONTINENTAL RADIO BROADCASTING, L.L.C.
STATEMENT OF PARTNER'S DEFICIT
for the year ended December 31, 1997
<TABLE>
<CAPTION>
CAPITAL
CONTRIBUTION DEFICIT TOTAL
--------------- ---------------- ----------------
<S> <C> <C> <C>
Balances, December 31, 1996 $ 10,000 $ (66,687) $ (56,687)
Net loss (263,771) (263,771)
--------------- ---------------- ----------------
Balances, December 31, 1997 $ 10,000 $ (330,458) $ (320,458)
=============== ================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-121
<PAGE> 245
CONTINENTAL RADIO BROADCASTING, L.L.C.
STATEMENT OF CASH FLOWS
for the year ended December 31, 1997
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (263,771)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 141,855
Amortization 99,889
Loss on disposal of fixed assets 73,219
Changes in operating assets and liabilities:
Accounts receivable (51,477)
Other receivables, prepaid expenses and other assets (9,302)
Accounts payable 23,400
Accrued expenses 55,663
-------------
Net cash provided by operating activities 69,476
Cash flows from investing activities:
Capital expenditures (37,480)
Proceeds from sale of equipment 24,500
-------------
Net cash used in investing activities (12,980)
Cash flows from financing activities:
Borrowings of long term debt 30,000
Payments of long term debt (170,000)
Book overdraft 8,950
-------------
Net cash used in financing activities (131,050)
-------------
Net decrease in cash (74,554)
-------------
Cash, beginning of period 74,927
-------------
Cash, end of period $ 373
=============
Cash paid for interest $ 142,589
=============
</TABLE>
The accompanying notes are integral part of the financial statements.
F-122
<PAGE> 246
CONTINENTAL RADIO BROADCASTING, L.L.C.
NOTES TO FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
a. ORGANIZATION: Continental Radio Broadcasting, L.L.C. (the Company), an
Arizona corporation, owns and operates radio stations KFLG (FM) and
KFLG (AM) located in Bullhead City, Arizona.
b. BROADCAST REVENUE: Broadcast revenue for commercial broadcasting
advertisements is recognized when the commercial is broadcast.
c. BARTER TRANSACTIONS: Revenue from barter transactions (advertising
provided in exchange for goods and services) is recognized as income
when advertisements are broadcast, and merchandise or services
received are charged to expense when received or used. If merchandise
or services are received prior to the broadcast of the advertising, a
liability (deferred barter revenue) is recorded. If advertising is
broadcast before the receipt of the goods or services, a receivable is
recorded. For the year ended December 31, 1997, barter revenue was
approximately $118,708 and barter expense was approximately $114,545.
d. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of accounts receivable. The credit risk is limited due to
the large number of customers comprising the Company's customer base.
e. PROPERTY AND EQUIPMENT: Property and equipment are recorded at cost.
Depreciation is provided using accelerated methods based upon the
estimated useful lives of the respective assets, ranging from five to
seven years. When assets are retired or otherwise disposed of, the
cost of the asset and the related accumulated depreciation are removed
from their respective accounts and any resulting gain or loss is
recognized.
f. INTANGIBLE ASSETS: Intangible assets are stated at cost and amortized
on the straight line basis over fifteen years. The carrying value of
intangible assets is reviewed by the Company when events or
circumstances indicate that the recoverability of an asset may be
impaired. If this review indicates that goodwill and licenses will not
be recoverable, as determined based on the undiscounted cash flows of
the entity over the remaining amortization period, the carrying value
of the goodwill and licenses will be reduced accordingly.
g. OTHER ASSETS: Other assets consist primarily of a non-compete
agreement, which is being amortized on the straight line method over 5
years. See Note 5.
F-123
<PAGE> 247
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS, CONTINUED:
h. USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
i. INCOME TAXES: Federal and state income taxes are not provided for in
the accompanying financial statements, as the partners are taxed at
federal and state levels individually on their share of earnings.
2. ASSET SALE AGREEMENT:
On December 9, 1997, the Company entered into an agreement to sell
substantially all of the assets of radio stations KFLG (FM) and KFLG (AM)
to Regent Communications, Inc. for approximately $3,600,000 in cash,
subject to adjustment. The closing is conditioned on, among other things,
receipt of FCC and other regulatory approvals.
3. PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1997 consisted of the following:
<TABLE>
<S> <C>
Equipment $ 398,430
Furniture and fixtures 63,597
------------
462,027
Less accumulated depreciation (158,467)
------------
$ 303,560
============
</TABLE>
F-124
<PAGE> 248
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. INTANGIBLE ASSETS:
Intangible Assets at December 31, 1997 consisted of the following:
<TABLE>
<S> <C>
Broadcast intangibles $ 662,000
Goodwill 360,500
------------
1,022,500
Less accumulated amortization (73,853)
------------
$ 948,647
============
</TABLE>
5. OTHER ASSETS:
Other assets at December 31, 1997 consisted of the following:
<TABLE>
<S> <C>
Non-compete agreement $ 150,000
Other 11,643
------------
161,643
Less accumulated amortization (34,116)
------------
$ 127,527
============
</TABLE>
6. LONG-TERM DEBT:
Long-term debt at December 31, 1997 consisted of the following:
<TABLE>
<S> <C>
Variable rate term loan (10.5% December 31, 1997),
collateralized by substantially all assets of
the Company $ 1,260,000
Subordinated notes payable (12.0% at December 31, 1997) 380,000
Non-compete obligation 120,000
-------------
1,760,000
Less current maturities (1,670,000)
-------------
Long-term debt $ 90,000
=============
</TABLE>
F-125
<PAGE> 249
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. LONG-TERM DEBT:, CONTINUED
Borrowings under the variable rate term loan bear interest at the bank's
prime rate plus the Floating Rate Spread, as defined in the agreement
(ranging from 1.5% to 5%) and the loan matures on December 31, 2003 and
has been personally guaranteed by a partner in the Company. The credit
agreement requires mandatory repayment of up to 50% of Excess Cash Flow,
as defined, within 120 days after the Company's year end. The Company may
prepay the note, in whole or in part, subject to a premium ranging from
1% to 3% prior to December 31, 2000. Subsequent prepayments may be made
without premium or penalty. The Credit Agreement contains certain
restrictive covenants which, among other things, requires the Company to
meet certain financial tests. During 1997, the Company was not in
compliance with certain covenants included in its Credit Agreement. As a
result, the outstanding principal balance has been classified as a
current liability at December 31, 1997 in the accompanying Balance Sheet.
The subordinated promissory notes bear interest at 12% and mature on
September 30, 2004. Interest is payable annually to the extent of Net
Cash Available, as defined. The Company may prepay the notes at any time
without premium or penalty. All principal and interest related to the
notes becomes due and payable in the event of the sale of the assets of
the Company. As discussed in Note 2, the Company entered into an Asset
Sale Agreement on December 9, 1997, which is expected to close prior to
May 1998. As a result, the outstanding principal and interest due under
the subordinated notes has been classified as a current liability at
December 31, 1997.
In connection with the acquisition of radio stations KFLG (FM) and (AM)
on December 1, 1996, the Company entered into a non-compete agreement
with the former owner of the stations, which requires the Company to pay
the former owner $30,000 per year for five years beginning on December 1,
1997.
7. LEASES:
The Company leases certain equipment and facilities used in their
operations. Future minimum rentals under all noncancelable operating
leases as of December 31, 1997 are payable as follows:
<TABLE>
<S> <C>
1998 $ 36,820
1999 31,774
2000 24,200
2001 24,200
2002 24,200
</TABLE>
Rental expense was approximately $34,000 for the year ended December 31, 1997.
8. RELATED PARTY TRANSACTIONS:
During 1996, the Company issued $350,000 of subordinated promissory
notes to a partner in the Company.
During 1997, the Company issued a $30,000 subordinated promissory
note to a partner in the Company.
F-126
<PAGE> 250
REPORT OF INDEPENDENT ACCOUNTANTS
To Ruby Broadcasting, Inc.
We have audited the accompanying Statement of Revenues and Direct Expenses of
Radio Station KZXY (FM)("KZXY") for the years ended December 31, 1997 and 1996.
This Statement of Revenues and Direct Expenses is the responsibility of KZXY's
management. Our responsibility is to express an opinion on the Statement of
Revenues and Direct Expenses based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenues and Direct Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the Statement
of Revenues and Direct Expenses. We believe that our audits provide a reasonable
basis for our opinion.
The accompanying statement was prepared to present the Revenue and Direct
Expenses of KZXY and is not intended to be a complete presentation of KZXY's
results of operations.
In our opinion, the accompanying Statement of Revenues and Direct Expenses
presents fairly, in all material respects, the revenues and direct expenses of
KZXY for the years ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles.
Coopers & Lybrand, L.L.P.
Cincinnati, Ohio
January 9, 1998
F-127
<PAGE> 251
RADIO STATION KZXY(FM)
STATEMENT OF REVENUES AND DIRECT EXPENSES
for the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Broadcast revenue $ 1,235,560 $ 1,278,968
Less agency commissions (43,974) (63,662)
----------- -----------
Net revenue 1,191,586 1,215,306
Broadcast operating expenses 500,486 475,917
Depreciation and amortization 26,467 26,467
General and administrative expenses 345,175 332,019
----------- -----------
Total direct expenses 872,128 834,403
----------- -----------
Excess of revenues over direct expenses $ 319,458 $ 380,903
=========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-128
<PAGE> 252
RADIO STATION KZXY(FM)
NOTES TO STATEMENT OF REVENUES AND DIRECT EXPENSES
1. ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
A. BASIS OF PRESENTATION AND ORGANIZATION: KZXY(FM), a radio station
located in Apple Valley, California, is owned and operated by Ruby
Broadcasting, Inc. ("Ruby"), a Delaware corporation. The Statement
of Revenues and Direct Expenses includes certain costs shared with
other stations under common ownership. These amounts primarily
cover administrative and production support, facility costs,
repairs and supplies. These costs have generally been allocated
among the affiliated stations based on estimated time spent, space
or volume of use. Management believes that these allocation
methods are reasonable. As a result of the allocations, however,
the financial statements presented may not be indicative of the
results achieved had the Company operated as a nonaffiliated
entity.
In December 1997, Ruby entered into an agreement to sell the FCC
license and related operating assets of this station and radio
station KIXW(AM) to Regent Communications, Inc. for $6,000,000 in
cash, subject to adjustment. The closing is conditioned on, among
other things, receipt of FCC and other regulatory approvals.
Additionally, on January 1, 1998, Ruby entered into a time
brokerage agreement with Regent Communications, Inc. related to
radio stations KZXY(FM) and KIXW(AM).
B. BROADCAST REVENUE: Broadcast revenue for commercial broadcasting
advertisements is recognized when the commercial is broadcast.
C. BARTER TRANSACTIONS: Barter transactions (advertising provided in
exchange for goods and services) are reported at the estimated
fair value of the product or services received. Revenue from
barter transactions is recognized when advertisements are
broadcast and merchandise or services received are charged to
expense when received or used. For the years ended December 31,
1997 and 1996, barter revenue was approximately $109,000 and
$116,000, respectively, and barter expense was approximately
$115,000 and $100,000, respectively.
D. DEPRECIATION: Depreciation is provided using accelerated methods
based upon the estimated useful lives of the respective assets as
follows:
Leasehold improvements 7 to 31 years
Furniture and fixtures 5 to 7 years
Broadcast equipment 5 to 15 years
Depreciation expense for the years ended December 31, 1997 and
1996 was approximately $16,500.
E. AMORTIZATION: Intangible assets are amortized on the straight line
method over 2 to 40 years. Amortization expense for the years
ended December 31, 1997 and 1996 was approximately $10,000.
F. USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts to revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
F-129
<PAGE> 253
Appendix A
AGREEMENT OF MERGER
AMONG
FAIRCOM INC.
AND
REGENT MERGER CORP.
AND
REGENT COMMUNICATIONS, INC.
Dated as of December 5, 1997
<PAGE> 254
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
DEFINITION OF TERMS
<S> <C>
1. Definition of Terms.............................................................................2
(a) [Reserved].............................................................................2
(b) Closing Date and Closing...............................................................2
(c) Commission.............................................................................2
(d) Commission's Order.....................................................................2
(e) Effectiveness..........................................................................2
(f) [Reserved].............................................................................2
(g) Faircom Broadcast Assets...............................................................2
(h) Faircom Budget.........................................................................3
(i) Faircom Financials.....................................................................3
(j) Faircom Licenses.......................................................................3
(k) Faircom Senior Debt....................................................................3
(l) Faircom Stations.......................................................................3
(m) Faircom Stock..........................................................................4
(n) Faircom Stockholders...................................................................4
(o) Faircom Subordinated Notes.............................................................4
(p) Faircom Subsidiaries...................................................................4
(q) Final Order............................................................................4
(r) [Reserved].............................................................................4
(s) Intellectual Property..................................................................4
(t) Internal Revenue Code..................................................................4
(u) Optionholders..........................................................................4
(u-1) Park Lane..............................................................................4
(v) Park Lane Financials...................................................................4
(w) Park Lane Stations.....................................................................5
(x) Preferred Stock........................................................................5
(y) Pro-Rata Percentage Interest...........................................................5
(z) Regent Assets..........................................................................5
(aa) Regent Financials......................................................................5
(bb) Regent Licenses........................................................................5
(cc) Regent Projections.....................................................................5
(dd) Regent Station.........................................................................5
(ee) Regent Subsidiaries....................................................................6
(ff) SEC....................................................................................6
(gg) [Reserved].............................................................................6
(hh) Shelby Station.........................................................................6
(ii) Shelby Station Pro Forma Broadcast Cash Flow...........................................6
(jj) Trustee................................................................................6
</TABLE>
<PAGE> 255
<TABLE>
<CAPTION>
PAGE
----
AGREEMENT TO MERGE
<S> <C>
2. Agreement.......................................................................................6
3. Action to Effect Merger.........................................................................6
4. Certificate of Incorporation and By-Laws........................................................6
5. Directors.......................................................................................7
6. Officers........................................................................................7
7. Stockholder Approval; Effectiveness of Merger...................................................7
8. Authorized Shares of Surviving Corporation......................................................8
9. Authorized Shares of Disappearing Corporation...................................................8
MODE OF EFFECTING MERGER
10. Conversion and Exchange of Shares...............................................................8
11. Funding of Consideration for Faircom Stock......................................................9
12. Issuance of Preferred Stock.....................................................................9
12A. SEC Registration................................................................................9
12B. Affiliates.....................................................................................11
12C. Trading Prohibitions...........................................................................11
12D. No Solicitation................................................................................11
12E. Registration Rights............................................................................12
CONSIDERATION
13. (a) Base Consideration....................................................................15
(b) Consideration After Adjustments.......................................................16
(c) Consideration Per Share Before Appraisal Rights.......................................18
(d) Distributions by Trustee..............................................................18
14. Surrender of Certificates and Delivery of Consideration After Adjustments......................19
COMMISSION MATTERS
15. Commission Consent to Transfers of Control.....................................................20
16. Applications for Consent - Cooperation of the Parties..........................................20
17. Costs and Expenses.............................................................................20
18. Operation of Stations Before Closing...........................................................20
19. Control and Access.............................................................................20
20. [Reserved].....................................................................................21
COVENANTS, REPRESENTATIONS AND WARRANTIES OF FAIRCOM
21. Covenants, Representations and Warranties of Faircom...........................................21
(a) Corporate Standing and Authority......................................................21
(b) Capitalization; Faircom Stock.........................................................22
</TABLE>
-ii-
<PAGE> 256
<TABLE>
PAGE
----
<S> <C>
(c) Corporate Power.......................................................................22
(d) [Reserved]............................................................................22
(e) [Reserved]............................................................................22
(f) Affiliates............................................................................23
(g) Rights to Acquire Securities..........................................................23
(h) Corporate Records.....................................................................23
(i) Title to Faircom Broadcast Assets.....................................................23
(j) Financial Statements; Budget..........................................................23
(k) Contracts.............................................................................24
(1) Government Authorizations.............................................................25
(m) Management, Key Employees and Accounts................................................26
(n) Tax Elections.........................................................................26
(o) Related Transactions..................................................................26
(p) Taxes.................................................................................26
(q) Employee Benefit Plans................................................................27
(r) Compliance with Commission Regulations................................................27
(s) Personal Property.....................................................................27
(t) Real Property.........................................................................28
(u) Environmental.........................................................................28
(v) Insurance.............................................................................29
(w) Accounts and Notes Receivable.........................................................29
(x) Laws, Regulations and Instruments.....................................................29
(y) Conduct of Faircom Stations...........................................................29
(z) Disposition of Assets.................................................................29
(aa) Transmitter Sites.....................................................................30
(bb) Litigation............................................................................30
(cc) No Conflict...........................................................................30
(dd) Required Consents.....................................................................30
(ee) Intellectual Property.................................................................30
(ff) Qualifications for Transfer of Control................................................31
(gg) Public Inspection File................................................................31
(hh) Absence of Certain Changes............................................................31
(ii) Personnel Information.................................................................32
(jj) [Reserved]............................................................................32
(kk) Outstanding Debt......................................................................32
(ll) Negative Covenants....................................................................32
(mm) Affirmative Covenants.................................................................33
(nn) Additional Agreements.................................................................34
(oo) Join in Execution of Documents........................................................34
(pp) Full Disclosure.......................................................................34
(qq) Submission of Material for Registration Statement.....................................35
(rr) Fairness and Tax Opinions.............................................................35
</TABLE>
-iii-
<PAGE> 257
<TABLE>
<CAPTION>
COVENANTS, REPRESENTATIONS AND WARRANTIES
OF REGENT AND SUBSIDIARY
PAGE
----
<S> <C>
22. Covenants, Representations and Warranties of Regent and Subsidiary.............................35
(a) Corporate Standing and Authority......................................................35
(b) Capitalization; Regent Stock..........................................................36
(c) Corporate Power.......................................................................37
(d) [Reserved]............................................................................37
(e) [Reserved]............................................................................37
(f) Affiliates............................................................................37
(g) Rights to Acquire Securities..........................................................37
(h) Corporate Records.....................................................................37
(i) Title to Regent Assets................................................................38
(j) Financial Statements; Projections.....................................................38
(k) Contracts.............................................................................38
(l) Government Authorizations.............................................................39
(m) Management, Key Employees and Accounts................................................40
(n) Tax Elections.........................................................................41
(o) Related Transactions..................................................................41
(p) Taxes.................................................................................41
(q) Employee Benefit Plans................................................................41
(r) Compliance with Commission Regulations................................................42
(s) Personal Property.....................................................................42
(t) Real Property.........................................................................42
(u) Environmental.........................................................................43
(v) Insurance.............................................................................44
(w) Accounts and Notes Receivable.........................................................44
(x) Laws, Regulations and Instruments.....................................................44
(y) Conduct of Regent Station and Park Lane Stations......................................44
(z) Disposition of Assets.................................................................45
(aa) Transmitter Sites.....................................................................45
(bb) Litigation............................................................................45
(cc) No Conflict...........................................................................45
(dd) Required Consents.....................................................................45
(ee) Intellectual Property.................................................................46
(ff) Qualifications for Transfer of Control................................................46
(gg) Public Inspection File................................................................46
(hh) Absence of Certain Changes............................................................46
(ii) Personnel Information.................................................................47
(jj) [Reserved]............................................................................47
(kk) Outstanding Debt......................................................................48
(ll) Negative Covenants....................................................................48
(mm) Affirmative Covenants.................................................................49
(nn) Additional Agreements.................................................................49
(oo) Join in Execution of Documents........................................................49
</TABLE>
-iv-
<PAGE> 258
<TABLE>
<CAPTION>
<S> <C>
PAGE
----
(pp) Full Disclosure.......................................................................49
(qq) Issuance of Preferred Stock...........................................................50
(rr) Transferability of Preferred Stock....................................................50
23. [Reserved].....................................................................................50
RISK OF LOSS
24. Risk of Loss...................................................................................50
(a) Faircom Broadcast Assets..............................................................50
(b) Regent Assets.........................................................................51
(c) Broadcast Transmission of Stations Prior to Closing...................................51
CONDITIONS PRECEDENT TO SUBSIDIARY'S AND REGENT'S
OBLIGATION TO CLOSE
25. Conditions Precedent to Subsidiary's and Regent's Obligations..................................52
(a) Representations, Warranties and Covenants.............................................52
(b) Delivery of Closing Documents.........................................................52
(c) Faircom Licenses......................................................................52
(d) Consents..............................................................................52
(e) Final Order...........................................................................53
(f) Adverse Proceedings...................................................................53
(g) Examination of Real Property..........................................................53
(h) Dissenters' Rights....................................................................53
(i) Faircom Information...................................................................53
(j) Stockholder Approval..................................................................53
(k) Registration Statement................................................................53
(l) Regent Financing; Acquisition of Park Lane............................................53
(m) Tax Opinion of Regent's Counsel.......................................................53
(n) Conversion of Faircom Subordinated Notes..............................................53
CONDITIONS PRECEDENT TO FAIRCOM'S OBLIGATION TO CLOSE
26. Conditions Precedent to Faircom's Obligations..................................................54
(a) Representations, Warranties and Covenants.............................................54
(b) Consideration.........................................................................54
(c) Delivery of Closing Documents.........................................................54
(d) Regent Licenses.......................................................................54
(e) Final Order...........................................................................54
(f) Consents..............................................................................54
(g) Adverse Proceedings...................................................................54
(h) Issuance of Preferred Stock...........................................................54
(i) Examination of Real Property..........................................................55
(j) Regent Financing; Acquisition of Park Lane............................................55
(k) Stockholder Approval..................................................................55
</TABLE>
-v-
<PAGE> 259
<TABLE>
<S> <C>
PAGE
----
(l) Registration Statement................................................................55
(m) Tax Opinion...........................................................................55
(n) Fairness Opinion......................................................................55
(o) Tax Opinion of Regent's Counsel.......................................................55
CLOSING DOCUMENTS
27. Closing Documents to be Delivered by Faircom...................................................55
28. Closing Documents to be Delivered by Regent and Subsidiary.....................................56
29. [Reserved].....................................................................................57
30. Termination....................................................................................57
31. Remedies on Termination of Agreement or Default Prior to Closing...............................58
32. Brokerage......................................................................................59
33. Survival of Representations and Warranties.....................................................59
MISCELLANEOUS PROVISIONS
34. Employment Agreement...........................................................................59
35. Headings.......................................................................................60
36. Execution......................................................................................60
37. Notices ......................................................................................60
38. Disclosure.....................................................................................61
39. Receipt of Preferred Stock.....................................................................61
40. Entire Agreement...............................................................................61
41. Governing Laws.................................................................................61
42. Successors and Assigns.........................................................................61
</TABLE>
-vi-
<PAGE> 260
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is made and entered as of
this 5th day of December, 1997, by and among FAIRCOM INC., a Delaware
corporation (hereinafter referred to as "Faircom"), REGENT MERGER CORP., a
Delaware corporation (hereinafter referred to as "Subsidiary"), REGENT
COMMUNICATIONS, INC., a Delaware corporation (hereinafter referred to as
"Regent"), BLUE CHIP CAPITAL FUND II LIMITED PARTNERSHIP (hereinafter referred
to as "Blue Chip"), and MIAMI VALLEY VENTURE FUND L.P. (hereinafter referred to
as "Miami Valley").
PREAMBLE
W I T N E S S E T H:
THAT, WHEREAS, Faircom, through its wholly-owned subsidiaries, Faircom
Flint Inc. and Faircom Mansfield Inc., is the owner, operator and licensee of
radio stations WCRZ-FM, WFNT-AM, and WWBN-FM in Flint, Michigan, and WYHT-FM and
WMAN-AM in Mansfield, Ohio, respectively; and
WHEREAS, Subsidiary is a wholly-owned subsidiary of Regent; and
WHEREAS, the Boards of Directors of Faircom and Subsidiary have
approved and adopted this Agreement pursuant to which Faircom (sometimes
referred to as "the Disappearing Corporation") will be merged into Subsidiary
(sometimes referred to as "the Surviving Corporation") under the laws of the
State of Delaware in the manner provided therefor pursuant to Section 251 and
related sections of Title 8 of the Delaware Code and the terms of this Agreement
(the "Merger"); and
WHEREAS, as a result of such merger, immediately after Effectiveness
the Faircom Stockholders will own approximately 57% or more of the outstanding
capital stock of Regent, and Regent will own all of the outstanding capital
stock of Faircom; and
WHEREAS, control of Regent and Faircom may not be transferred without
prior written consent of the Federal Communications Commission; and
WHEREAS, Regent, Subsidiary, and Faircom have negotiated the terms and
conditions of the Merger, including the consideration to be paid to the Faircom
Stockholders and the Optionholders.
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:
-A1-
<PAGE> 261
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) [Reserved]
(b) "Closing Date" means the date, time and place designated
by written notice from Subsidiary to Faircom, which date shall be as soon as
practicable but no later than ten (10) days after the date of the last to occur
of the following: (i) the Registration Statement (as hereinafter defined) is
declared effective; (ii) 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 Faircom and Subsidiary;
(iii) the approval of the Merger by the Faircom stockholders; and (iv) the
delivery to Regent of the Closing Worksheet prepared by Faircom in accordance
with the provisions of Paragraph 13(b) hereof. "Closing" means the exchange of
the Faircom Stock for the Preferred Stock, the delivery of the Preferred Stock
to the Faircom Stockholders, and the execution and delivery of the other
documents as provided herein.
(c) "Commission" means the Federal Communications Commission.
(d) "Commission's Order" means the action of the Commission
consenting to the transfers of control contemplated herein.
(e) "Effectiveness" means the date and time at which the
Merger shall become effective, which shall be upon the due and proper filing of
the Certificate of Merger.
(f) [Reserved.]
(g) "Faircom Broadcast Assets" means, with respect to the
Faircom Stations:
(i) The Licenses listed on Exhibit l(j) and the
Public Inspection File maintained in connection therewith.
(ii) All contracts for the sale of broadcast time
or advertising on the Faircom 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 Faircom 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 Faircom Stations and which are in effect on the
Closing Date, including without limitation those described in Exhibit 21(k-1).
(v) All the tangible property, assets, furniture,
fixtures, supplies, materials, goods, transmitters and equipment used or useful
in the operation of the Faircom Stations,
-A2-
<PAGE> 262
including, without limitation, those listed on Exhibit 21(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 other intangible rights (including
rights to the call letters of the Faircom Stations) used or useful in the
operation of the Faircom 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 Faircom and the Faircom Subsidiaries.
(viii) All accounts and notes receivable of Faircom or the
Faircom Subsidiaries as of the Closing Date.
(ix) The real property owned by Faircom or the Faircom
Subsidiaries, including without limitation that which is described in Exhibit
2l(t).
(x) All other things owned by Faircom or the Faircom
Subsidiaries (including, without limitation, cash on hand) used or useful in the
operation of the Faircom Stations and not disposed of in the ordinary and usual
course of business and any other assets acquired by Faircom or the Faircom
Subsidiaries prior to Closing.
(h) "Faircom Budget" means the 1997 Consolidated and
Consolidating projected operating statements of Faircom, a copy of which has
been delivered to Regent. Such operating statements shall contain pro forma
statements for the entire year for stations acquired or managed for partial
periods of 1997.
(i) "Faircom Financials" means the audited financial
statements of Faircom for the years ended December 31, 1994, 1995 and 1996, and
the unaudited financial statements of Faircom for the six months ended June 30,
1997, and for monthly periods thereafter to the most recent month preceding the
Closing as reasonably practicable, furnished by Faircom to Regent and consisting
of balance sheets, statements of income and retained earnings, and, except for
unaudited financials, statements of changes in financial position.
(j) "Faircom Licenses" means all licenses, permits and
authorizations issued by the Commission relative to the Faircom Stations, as
listed and described on Exhibit 1(j) attached hereto and incorporated by
reference herein.
(k) "Faircom Senior Debt" means the indebtedness of Faircom
listed on Exhibit 1(k) hereof.
(l) "Faircom Stations" means the following radio stations and
their cities of license: WCRZ-FM, WFNT-AM, Flint, Michigan; WWBN-FM, Tuscola,
Michigan; WYHT-FM and WMAN-AM, Mansfield, Ohio; and, if acquired on or before
the Closing Date, the Shelby Station, and the auxiliary licenses of all such
Faircom Stations.
-A3-
<PAGE> 263
(m) "Faircom Stock" means all shares of the capital stock of
Faircom outstanding on the Closing Date, including all shares issued on
conversion of the Faircom Subordinated Notes as contemplated hereby.
(n) "Faircom Stockholders" means all of the holders of the
issued and outstanding shares of capital stock of Faircom as of the Closing
Date, including all shares issued on conversion of the Faircom Subordinated
Notes as contemplated hereby.
(o) "Faircom Subordinated Notes" means those certain Class A
Convertible Subordinated Promissory Notes and Class B Convertible Subordinated
Promissory Notes in favor of Blue Chip Capital Fund II Limited Partnership and
Miami Valley Venture Fund L.P. in the aggregate principal amount of $10,000,000.
(p) "Faircom Subsidiaries" means Faircom Flint Inc. and
Faircom Mansfield Inc. and, if the Shelby Station is acquired on or before the
Closing Date, Faircom Shelby Inc.
(q) "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.
(r) [Reserved].
(s) "Intellectual Property" means all of the rights in and to
the call letters (and any variation thereof), trademarks, trade names, service
marks, franchises, copyrights (including registrations and applications for
registration of any of the foregoing), computer software, programs and
programming material of whatever form or nature, jingles, slogans, logos or
licenses to use same and other intangible property rights which are used or
useful in connection with the operation of the Faircom Stations, the Regent
Station and the Park Lane Stations, together with any associated goodwill and
any additions thereto between the date of this Agreement and the Closing Date.
(t) "Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended.
(u) "Optionholders" means those persons listed on Exhibit
21(b) and any amendments thereto as of the Closing Date, and identified thereon
as holding options to acquire capital stock of Faircom.
(u-1) "Park Lane" means The Park Lane Group, a California
corporation.
(v) "Park Lane Financials" means the consolidated and
consolidating financial statements for Park Lane for the fiscal year ended
December 31, 1996 and for the fiscal years ended December 31, 1992, 1993, 1994
and 1995, and notes thereto, as certified by Coopers & Lybrand, independent
public accountants. The Park Lane Financials include (i) the audited
consolidated balance sheets of Park Lane and its subsidiaries as of December 31,
1996; (ii) the related audited consolidated statements of earnings, source and
application of funds, shareholders' equity and changes in financial position or
cash flows (as the case may be) for the years ended as indicated on
-A4-
<PAGE> 264
each of the Park Lane financial statements; and (iii) an unaudited balance sheet
of Park Lane as of April 30, 1997 and the unaudited statement of earnings and
source and application of funds for the four-month period then ended, and
unaudited financial statements for monthly periods thereafter through August 31,
1997.
(w) "Park Lane Stations" means the following radio stations
and their cities of license, constituting The Park Lane Group, currently
operated by Regent under a time brokerage agreement with The Park Lane Group
(which commenced on August 18, 1997), which Regent has agreed to purchase
pursuant to a certain Stock Purchase Agreement dated June 16, 1997: KZGL-FM,
Cottonwood, Arizona; KVNA-AM and KVNA-FM, Flagstaff, Arizona; KAAA-AM and
KZZZ-FM, Kingman, Arizona; KFMF-FM, Chico, California; KPPL-AM, Colusa,
California; KATJ-FM, George, California; KVOY-AM, Mojave, California; KALF-FM,
Red Bluff, California; KQMS-AM and KSHA-FM, Redding, California; KOWL-AM and
KRLT-FM, South Lake Tahoe, California; KTPI-FM, Tehachapi, California; and
KROY-AM, Victorville, California, and the auxiliary licenses of all such Park
Lane Stations.
(x) "Preferred Stock" means the Series C Convertible Preferred
Stock of Regent being issued and delivered to, and acquired by, the Faircom
Stockholders under the terms of this Agreement, as set forth in the Amended and
Restated Certificate of Incorporation of Regent in substantially the form of
Exhibit 1(x) hereto, which will be filed with the Delaware Secretary of State
prior to the Closing Date.
(y) "Pro-Rata Percentage Interest" means a Faircom
Stockholder's percentage interest in Faircom as determined in accordance with
Paragraph 13(d)(1)(i) hereof.
(z) "Regent Assets" means any asset which would be included in
the definition of "Faircom Broadcast Assets" and which is used or useful in the
operation of the Regent Station or the Park Lane Stations, and any other assets
acquired by Regent or the Regent Subsidiaries prior to Closing.
(aa) "Regent Financials" means the audited financial
statements of Regent as of a date consistent with those that will be included in
the Registration Statement (as hereinafter defined), and unaudited financial
statements for monthly periods thereafter to the most recent month preceding the
Closing as reasonably practicable, to be furnished by Regent to Faircom and
consisting of balance sheets and statements of income and retained earnings,
and, except for unaudited financials, statements of changes in financial
position.
(bb) "Regent Licenses" means all licenses, permits and
authorizations issued by the Commission relative to the Regent Station and the
Park Lane Stations, as listed and described on Exhibit 1(bb) attached hereto and
incorporated by reference herein.
(cc) "Regent Projections" means pro forma projections for
Regent for the fiscal years 1997 and 1998.
(dd) "Regent Station" means radio station KCBQ-AM, San Diego,
California.
-A5-
<PAGE> 265
(ee) "Regent Subsidiaries" means those subsidiaries of Regent
listed on Exhibit 1(ee) hereto.
(ff) "SEC" means the Securities and Exchange Commission.
(gg) [Reserved]
(hh) "Shelby Station" means radio station WSWR-FM, licensed to
Shelby, Ohio and the auxiliary licenses of such station.
(ii) "Shelby Station Pro Forma Broadcast Cash Flow" means the
amount of Pro Forma Broadcast Cash Flow used by the lenders of Faircom providing
the senior debt to Faircom for the acquisition of the Shelby Station to compute
the amount of such senior debt. "Pro Forma Broadcast Cash Flow" means Pro Forma
Net Broadcast Revenues less Pro Forma Operating Expenses, before provision for
interest expense, depreciation and amortization and management fees, using
accrual accounting and prepared in accordance with generally accepted accounting
principles. "Pro Forma Net Broadcast Revenues" and "Pro Forma Operating
Expenses", respectively, means the revenues, net of agency commissions, and the
expenses, solely arising from the Shelby Station broadcasting operations,
excluding any revenues or expenses from trades and barter, as prepared on a pro
forma basis by such lenders. The computations hereunder shall be confirmed in
writing by such lenders.
(jj) "Trustee" means The Fifth Third Bank, an Ohio banking
corporation.
AGREEMENT TO MERGE
2. AGREEMENT. Faircom and Subsidiary, both corporations 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, Faircom shall be merged with and into Subsidiary,
the separate corporate existence of Faircom shall cease, Subsidiary shall
continue in existence and shall succeed to and assume all the rights and
obligations of Faircom, 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.
3. ACTION TO EFFECT MERGER. Prior to, from and after Effectiveness,
Faircom, Subsidiary and Regent shall take all such action as shall be necessary
or appropriate, in order to effectuate the Merger in accordance with and subject
to the terms of this Agreement and the laws of the State of Delaware.
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, attached hereto as Exhibits 4(a)
and 4(b), respectively, as in effect immediately prior to Effectiveness shall be
the Certificate of Incorporation and By-Laws of the Surviving Corporation.
-A6-
<PAGE> 266
5. DIRECTORS.
(a) The following shall be the directors of the Surviving
Corporation as of and after Effectiveness to replace the existing directors of
Faircom and to hold office as provided in the Certificate of Incorporation and
By-Laws of the Surviving Corporation:
Terry S. Jacobs
William L. Stakelin
(b) The following shall be the directors of Regent as of and
after Effectiveness to hold office as provided in the Amended and Restated
Certificate of Incorporation and By-Laws of Regent:
Joel M. Fairman
Terry S. Jacobs
R. Glen Mayfield
William L. Stakelin
John H. Wyant
6. OFFICERS. The following shall be the officers of Regent and of the
Surviving Corporation as of and after Effectiveness to replace the existing
officers of Faircom and to hold office as provided in the Certificate of
Incorporation and By-Laws of Regent and the Surviving Corporation:
Chairman of the Board,
Chief Executive Officer,
Treasurer..................................................Terry S. Jacobs
Vice Chairman..............................................Joel M. Fairman
President, Chief Operating
Officer, Secretary.....................................William L. Stakelin
Vice President-Finance,
Assistant Secretary.........................................Matthew Yeoman
Assistant Secretary..................................Christina Tenhundfeld
Assistant Secretary.........................................Alan C. Rosser
7. STOCKHOLDER APPROVAL; EFFECTIVENESS OF MERGER. This Agreement
shall be submitted to the Faircom stockholders as provided by the applicable
laws of the State of Delaware. If this Agreement is duly authorized and adopted
by the requisite votes or written consents of the Faircom stockholders and is
not terminated or abandoned in accordance with its terms, this Agreement
shall be certified by Faircom and Subsidiary pursuant to Section 251(c) of the
General Corporation Law of the State of Delaware, and the Surviving
Corporation shall prepare, file and record a Certificate of Merger in the form
provided under such Section 251(c) as soon as practicable after the approval of
the Faircom stockholders has been obtained and before or contemporaneously with
the Closing. The Merger shall become effective upon the due and proper filing
of the Certificate of Merger.
-A7-
<PAGE> 267
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. Faircom
presently has authorized and outstanding capital stock consisting of the
following:
Total Total
Authorized Outstanding
CAPITAL STOCK SHARES SHARES
------------- ------ ------
Common Stock 35,000,000 7,378,199*
*Does not include 19,012,000 shares of common stock reserved
for conversion of the Faircom Subordinated Notes or 1,943,700 shares reserved
for issuance upon exercise of outstanding options.
MODE OF EFFECTING MERGER
10. CONVERSION AND EXCHANGE OF SHARES.
(a) At Effectiveness, each share of Faircom Stock issued and
outstanding immediately prior to Effectiveness (other than shares owned or held
by dissenting Faircom Stockholders) shall, by virtue of the Merger and without
any action on the part of the holder thereof, automatically be converted into
shares of Preferred Stock as hereinafter provided, and each share of Faircom
Stock held in Faircom's treasury immediately prior to Effectiveness shall, by
virtue of the Merger, cease to be outstanding, and shall be canceled and retired
without payment of any consideration therefor. At Effectiveness, the holders of
each outstanding option to purchase shares of Faircom Common Stock (each a
"Faircom Option") will receive such substitute stock options under the Regent
Communications, Inc. Faircom Conversion Stock Option Plan ("Regent Options") as
will satisfy the requirements of Section 424(a) of the Internal Revenue Code and
the regulations under Treas. ss.1.425-1 and as will not constitute a
modification of the existing Faircom Options under Section 424(h) of the
Internal Revenue Code. Each Faircom Option will be deemed to constitute an
option to acquire the same number of shares of Preferred Stock as the holder of
such Faircom Option would have been entitled to receive pursuant to the Merger
had such holder exercised such Faircom Option in full immediately prior to the
consummation of the Merger (whether or not such Faircom Option was in fact
exercisable at the time). The terms of the Regent Options shall be the same as
the terms of the existing Faircom Options, and such terms shall run from the
date of grant of the Faircom Options. The Regent Options shall be immediately
exercisable at the same aggregate exercise price as the Faircom Options
surrendered in exchange therefor. The Regent Option agreements shall be
substantially in the form of Exhibit 10(a). At the Closing, each Faircom
Stockholder shall surrender for cancellation and exchange his certificate or
certificates evidencing Faircom Stock (or in the case of holders of Faircom
Options, option agreement); provided, however, any Faircom Stockholder who has
properly elected to demand appraisal of shares pursuant to the applicable laws
of Delaware need surrender his certificate or certificates only concurrently
with a
-A8-
<PAGE> 268
withdrawal of such demand or as required by law following a determination
of the fair value of his or her shares.
(b) The stock transfer books of Faircom shall be closed at
Effectiveness, and thereafter no transfer of any such shares of Faircom Stock
shall be recorded thereon. In the event a transfer of ownership of shares of
Faircom Stock is not recorded on the stock transfer books of Faircom, a
certificate or certificates representing the number of whole shares of Preferred
Stock into which such shares of Faircom Stock shall have been converted in
connection with the Merger may be issued to the transferee of such shares of
Faircom Stock if the certificate or certificates representing such shares of
Faircom Stock is or are surrendered to the Trustee accompanied by all documents
deemed necessary by the Trustee to evidence and effect such transfer of
ownership of shares of Faircom Stock and by the payment of any applicable stock
transfer tax with respect to such transfer, subject to compliance with any
restrictions or conditions contained herein with respect to the transfer of
shares of Faircom Stock.
11. FUNDING OF CONSIDERATION FOR FAIRCOM STOCK. On or before
the Closing Date, Regent shall have issued to Subsidiary the number of shares of
Preferred Stock equal to the Maximum Number of Shares to be Issued (as defined
in Paragraph 13(b)(2) below).
12. ISSUANCE OF PREFERRED STOCK. Subject to the provisions of
paragraph 13 hereof, at the Closing, Subsidiary shall cause to be delivered to
the Trustee certificates for the Maximum Number of Shares to be Issued, all of
which shares shall be fully paid and non-assessable and registered pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), and applicable
state securities laws.
The Trustee shall act as the disbursing agent and shall
distribute to the Faircom Stockholders the consideration for the surrender and
exchange of the Faircom Stock in accordance with paragraph 13(d) hereof.
12A. SEC REGISTRATION.
(a) Faircom shall furnish to Regent such information,
including information about Faircom and the Faircom Subsidiaries (including the
respective affiliates of any of them), as may be necessary to enable Regent to
prepare and file with the SEC a registration statement on Form S-4 under the
Securities Act, and the rules and regulations promulgated thereunder, in respect
of the Preferred Stock to be issued by reason of the Merger (such registration
statement, including the proxy statement/prospectus included therein, together
with any amendments or supplements thereto, being referred to in this Agreement
as the "Registration Statement"). Faircom covenants that the Faircom Information
(as defined below) included in the Registration Statement shall not, at the time
the Registration Statement is declared effective, at the time the proxy
statement/prospectus contained therein (the "Proxy Statement") is first mailed
to Faircom's stockholders, or at the time of the meeting of the Faircom
stockholders held to approve this Agreement, contain any untrue statement of a
material fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If at any
time prior to Effectiveness any event or circumstance should come to the
attention of Faircom with respect to the Faircom Information that is required to
be set forth in an amendment or supplement to the Registration Statement,
Faircom shall immediately notify Regent and shall assist Regent in appropriately
-A9-
<PAGE> 269
amending or supplementing the Registration Statement. An amendment or supplement
may be accomplished, to the extent permitted by law, rule or regulation, by
including such information in a filing under the Securities Exchange Act of
1934, as amended (the "Exchange Act") that is incorporated by reference into the
Registration Statement. The Registration Statement insofar as it relates to
information concerning Faircom, the Faircom Subsidiaries or any of their
respective businesses, assets, directors, officers, or stockholders or any other
affiliates or other matters pertaining to Faircom that is supplied by Faircom
for inclusion in the Registration Statement, including by incorporation by
reference to SEC filings made by Faircom (the "Faircom Information") shall
comply as to form and substance in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder; except that Faircom shall have no liability
or obligation for any information other than the Faircom Information.
(b) Faircom shall instruct its accountants, BDO Seidman, LLP,
to deliver, and shall use its reasonable best efforts to cause such accountants
to deliver, to Regent letters dated at the time the Registration Statement
becomes effective and as of the Closing Date, addressed to Regent, each
containing such matters as are customarily contained in auditors' letters
regarding information about Faircom included in the Registration Statement,
which auditors' letters shall be in form and substance reasonably satisfactory
to Regent. Regent shall use its reasonable best efforts to cause its
accountants, Coopers & Lybrand, LLP, to deliver to Faircom letters at such times
containing similar information about Regent in form and substance reasonably
satisfactory to Faircom.
(c) Regent shall file the Registration Statement and use its
reasonable best efforts to have it declared effective by the SEC as promptly as
practicable, and shall use its reasonable best efforts to take any action
required to be taken to comply in all material respects with any applicable
federal or state securities laws in connection with the issuance of Preferred
Stock in the Merger contemplated by this Agreement; except that such covenant of
Regent is made as to those portions of the Registration Statement containing or
required to contain Faircom Information, assuming and relying solely on timely
and full compliance with subparagraphs (a) and (b) above.
(d) Regent covenants that the information included in the
Registration Statement shall not, at the time the Registration Statement is
declared effective, at the time the Proxy Statement is first mailed to the
Faircom stockholders, or at the time of the meeting of the Faircom stockholders
held to approve the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; except that Regent makes no
covenant as to those portions of the Registration Statement containing or
required to contain Faircom Information. If at any time prior to Effectiveness
any event or circumstance should come to the attention of Regent that is
required to be set forth in an amendment or supplement to the Registration
Statement, Regent shall give reasonably prompt notice to Faircom and shall use
its reasonable efforts to amend or supplement appropriately the Registration
Statement.
(e) Regent covenants that the Registration Statement and all
other documents required to be filed by Regent with the SEC in connection with
the transactions contemplated herein shall comply as to form and substance in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder; except
-A10-
<PAGE> 270
that Regent shall have no liability or obligation for any failure to comply with
such requirements arising out of the Faircom Information.
(f) Regent covenants to obtain prior to the effective date of
the Registration Statement all necessary "blue sky" permits and approvals, if
any, required to consummate the Merger.
(g) Regent shall use all reasonable best efforts to take such
action as may be necessary to ensure that the requirements of Rule 144(c) under
the Securities Act are satisfied as to enable any "affiliates" of Faircom (as
that term is used in Rule 145 under the Securities Act) to offer or sell the
Preferred Stock received by them in the Merger pursuant to paragraph (d) of Rule
145 (subject to compliance with the provisions of paragraphs (e), (f) and (g) of
Rule 144).
12B. AFFILIATES. Faircom shall use its reasonable best efforts to cause
each person that is an "affiliate" of Faircom under the Securities Act on the
date of Faircom's stockholder meeting held to approve the Merger to deliver to
Regent at the Closing a written agreement substantially in the form attached
hereto as Exhibit 12B ("Rule 145 Letters").
12C. TRADING PROHIBITIONS. Each of Regent and Faircom hereby
acknowledges that as a result of disclosures by Regent and Faircom contemplated
under this Agreement, Faircom, the Faircom Subsidiaries and their affiliates
may, from time to time, have material, non-public information concerning such
parties and their respective subsidiaries or affiliated companies. Each of
Faircom and Regent confirms that it, each of the Faircom Subsidiaries and their
affiliates is aware, and each party has advised its representatives that (i) the
United States securities laws may prohibit a person who has material, non-public
information from purchasing or selling securities of any company to which such
information relates, and (ii) material non-public information shall not be
communicated to any other person except as permitted herein.
12D. NO SOLICITATION. From and after the date hereof, Faircom will not,
and shall use its reasonable best efforts not to permit, any of its officers,
directors, employees, attorneys, financial advisors, agents or other
representatives or those of any of its subsidiaries to, directly or indirectly,
solicit, initiate or knowingly encourage (including by way of furnishing
information) any Takeover Proposal (as hereinafter defined) from any person, or
engage in or continue discussions or negotiations relating thereto; provided,
however, that Faircom may engage in unsolicited discussions or negotiations
with, and furnish information concerning Faircom and its business, properties or
assets to, any third party which makes a Takeover Proposal if the Board of
Directors of Faircom concludes in good faith and in the exercise of its
reasonable judgment after consultation with its outside counsel (who may be its
regularly engaged outside counsel) that the failure to take such action would
present a reasonable probability of violating the obligations of such Board to
the Faircom Stockholders under applicable law (and such counsel has provided an
opinion to Faircom's Board of Directors to such effect). Faircom will promptly
(but in no case later than 24 hours) notify Regent of the receipt of any
Takeover Proposal, including the material terms and conditions thereof and the
identity of the person or group making such Takeover Proposal, and will promptly
(but in no case later than 24 hours) notify Regent of any determination by
Faircom's Board of Directors that a Superior Proposal (as hereinafter defined)
has been made. As used in this Agreement (i) "Takeover Proposal" shall mean any
proposal or offer, or any extension of interest by any third party relating to
Faircom's willingness or ability to receive or discuss a proposal or offer, in
each case made prior to
-A11-
<PAGE> 271
Faircom's stockholder vote at the meeting to consider the Merger, other than a
proposal or offer by Regent or any of its subsidiaries, for a merger,
consolidation or other business combination involving, or any purchase of, all
or substantially all of the assets or more than 50% of the voting securities of,
Faircom and (ii) "Superior Proposal" shall mean a bona fide Takeover Proposal
made by a third party on terms that a majority of the members of the Board of
Directors of Faircom determines, in their good faith reasonable judgment and
based on the advice of an independent financial advisor, is more favorable to
the Faircom Stockholders than the transactions contemplated hereby and for which
any required financing is committed or which, in the good faith reasonable
judgment of a majority of such members (after consultation with any independent
financial advisor), is reasonably capable of being financed by such third party.
12E. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION RIGHTS. (i) If, during any period
when either Blue Chip or Miami Valley holds shares of Preferred Stock, Regent
files a registration statement with the SEC to register for public offering its
common stock ("Regent Common Stock"), Regent shall give at least 45 days'
advance written notice to Blue Chip or Miami Valley, as the case may be, of its
intent to file such registration statement. If so requested by either Blue Chip
or Miami Valley within 30 days after the giving of such written notice, to the
extent then permissible under federal and applicable state securities laws, and
the rules and regulations of the SEC thereunder, Regent shall include in such
registration statement for resale for Blue Chip's or Miami Valley's account such
portion of the shares into which the Preferred Stock held by Blue Chip or Miami
Valley is then convertible (the "Conversion Stock"), as Blue Chip or Miami
Valley shall request, except where the inclusion of any or all of Blue Chip's or
Miami Valley's Conversion Stock is not permitted by Regent's underwriter(s)
based on bona fide market considerations as specified below. To the extent Blue
Chip's or Miami Valley's Conversion Stock is not included in such registration
statement, either as a result of Blue Chip's or Miami Valley's requesting
inclusion of less than all of such stock, of Blue Chip's or Miami Valley's not
requesting inclusion within the thirty (30) day period specified above, or of
the operation of the "underwriter out" specified below, such remaining shares of
Conversion Stock shall continue to be subject to this Paragraph 12E and eligible
for inclusion in any subsequent registration effected by Regent pursuant to this
Paragraph 12E.
(ii) Regent shall not be required to include any shares of
Conversion Stock in any registration statement to the extent the public offering
involves an underwriting, and the managing underwriter thereof advises Regent in
writing that, in its opinion, the number of shares of Conversion Stock requested
to be included, when added to the number of shares of Regent Common Stock
desired to be offered by Regent, exceeds the number that can be sold in such
offering, at a price reasonably related to fair market value. To the extent the
managing underwriter provides such advice, the Conversion Stock to be included
on behalf of Blue Chip and Miami Valley, and any other shares to be registered
pursuant to such Registration Statement on behalf of another selling
stockholder, shall be reduced pro rata, taking into account the number of shares
requested to be registered by Blue Chip or Miami Valley and any other selling
stockholders.
(iii) At the time of any registration pursuant to this
Paragraph 12E, Regent, Blue Chip and Miami Valley shall enter into any
underwriting or other formal agreements containing such terms and provisions
with respect to the marketing of such securities, indemnification and other
-A12-
<PAGE> 272
related matters as may be reasonably required by Regent's underwriter(s) in any
such registration. As a condition of the inclusion of the Conversion Stock in
any such registration, Blue Chip and Miami Valley agree to furnish to Regent
such information concerning Blue Chip and Miami Valley as may be requested by
Regent as necessary in connection with the registration or qualification of the
Conversion Stock under federal and state securities laws.
(b) DEMAND REGISTRATION RIGHTS. At any time, Blue Chip and
Miami Valley together may give notice to Regent requesting the registration
under the Securities Act of any or all of the Conversion Stock then held by them
or to be held by them upon conversion of the Preferred Stock. Upon receipt of
such notice, Regent shall use its best efforts to effect as promptly as possible
the registration under the Securities Act of the Conversion Stock that Regent
has been requested to register pursuant to this Paragraph 12E. Regent shall not
be obligated to file more than two registration statements under this Paragraph
12E or to keep such registration statement effective for more than 90 days.
Regent shall not be obligated to effect any registration pursuant to this
Paragraph 12E if such registration would require an audit of Regent as of a date
other than its fiscal year end. Regent may defer the filing of a registration
statement under this Paragraph 12E for a period of up to 90 days based on the
good faith judgment of the Board of Directors that such delay is needed (x) to
avoid premature disclosure of a matter if the Board has determined that the
disclosure would not be in the best interests of Regent or (y) to avoid conflict
with another public offering by Regent. Any registration statement prepared
pursuant to this Paragraph 12E shall be subject to such restrictions or
limitations as may be applicable by law to the sales price or sales method of
the proposed offering of the Conversion Stock.
(c) OTHER REGISTRATION RIGHTS. If Regent grants any
registration rights (whether "demand" or "piggyback") to any other person, this
Paragraph 12E shall be deemed amended, at the option of Blue Chip and Miami
Valley, to grant to Blue Chip and Miami Valley rights equivalent to the most
favorable rights granted to any other person.
(d) REGISTRATION PROCEDURES. If and whenever Regent is
required by the provisions of this Paragraph 12E to effect the registration of
any of Blue Chip and Miami Valley's shares of Conversion Stock or other
securities under the Securities Act, Regent shall, as expeditiously as possible:
(i) Prepare and file with the SEC a registration
statement with respect to such shares or other securities and use all reasonable
efforts to cause such registration statement to become effective as promptly as
possible;
(ii) Prepare and file with the SEC such amendments
and supplements to such registration statement as may be necessary to keep such
registration statement effective for three (3) months from the date of its
effectiveness;
(iii) Furnish to Blue Chip and Miami Valley such
number of copies of the prospectus forming a part of such registration statement
(including each preliminary prospectus) as Blue Chip or Miami Valley may
reasonably request;
(iv) Use its best efforts to register or qualify such
shares or other securities covered by such registration statement under the
securities or blue sky laws of such
-A13-
<PAGE> 273
jurisdictions as Blue Chip or Miami Valley shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable Blue
Chip or Miami Valley to consummate the disposition of such shares or such other
securities during the period provided in Paragraph 12E(d)(ii) above; and
(v) Notify Blue Chip and Miami Valley during the
period when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event which causes the prospectus
forming a part of such registration statement to include an untrue statement of
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which they
were made, and at the request of Blue Chip or Miami Valley, prepare and furnish
Blue Chip and Miami Valley with a reasonable number of copies of the supplement
to or any amendment of such prospectus necessary so as to render such
prospectus, as amended or supplemented, in compliance with the provisions of the
Securities Act.
(e) EXPENSES. All expenses incurred by Regent in complying
with this Paragraph 12E, including without limitation all registration and
filing fees, printing expenses, expenses of complying with securities or blue
sky laws, fees and disbursements of counsel for Regent and counsel for any
underwriters of the offering and any accountants, fees and expenses incident to
or required by any such registration and all reasonable fees and disbursements
of any counsel retained by Blue Chip or Miami Valley, shall be borne by Regent
to the maximum extent permitted by law. All underwriting fees and commissions
incurred by Blue Chip and Miami Valley shall be borne by Blue Chip and Miami
Valley.
(f) INDEMNIFICATION.
(i) BY REGENT. In the event of any registration
of Blue Chip's or Miami Valley's shares of Conversion Stock or other securities
under this Paragraph 12E, Regent shall defend, indemnify and hold harmless each
of Blue Chip and Miami Valley, its officers, directors, partners, affiliates,
each underwriter thereof and each person which controls such entity or such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities and any action in respect thereof, joint or
several, to which Blue Chip or Miami Valley or any such officer, director,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, other than that which is based upon information supplied by Blue
Chip or Miami Valley in writing, and Regent shall reimburse each of Blue Chip
and Miami Valley and such officers, directors, underwriters and controlling
persons for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that Regent shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or action
arises out of or is based upon information provided in writing to Regent by Blue
Chip or Miami Valley or any such officer, director, underwriter or controlling
person. This indemnity shall be in addition to any liability which Regent may
otherwise have.
-A14-
<PAGE> 274
(ii) BY BLUE CHIP AND MIAMI VALLEY. In the
event of any registration of such shares or other securities under this
Paragraph 12E, Blue Chip and Miami Valley shall indemnify Regent, its officers,
directors, partners, affiliates, each underwriter thereof and each person which
controls such entity or underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities and any action in respect
thereof, joint or several, to which Regent or any such officer, director,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which is based upon information supplied by Blue Chip or Miami
Valley in writing, and such entity shall reimburse Regent for any legal or other
expenses reasonably incurred by Regent in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that Blue Chip and Miami Valley shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon information provided to Regent by Regent or any of its
stockholders. This indemnity shall be in addition to any liability which Blue
Chip and Miami Valley may otherwise have.
(iii) CONTRIBUTION. If for any reason any
indemnification described in Paragraph 12E(f)(i) or (f)(ii) above may not be
provided by the party or parties required therein to provide such
indemnification (the "Indemnifying Parties"), in lieu of providing such
indemnification, the Indemnifying Parties shall contribute to the amount paid or
payable by the party or parties to be provided such indemnification (the
"Indemnified Parties") as a result of such losses, claims, damages, liabilities
or actions, in such proportion as is appropriate to reflect the relative fault
of the parties in connection with any statement or omission which resulted in
such losses, claims, damages, liabilities or actions, as well as any other
relevant equitable considerations. The relative fault of the Indemnifying
Parties and the Indemnified Parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by one
of the Indemnifying Parties or by one of the Indemnified Parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim. The parties agree that it would not be just and equitable if
contribution pursuant hereto were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to herein. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
CONSIDERATION
13. (a) BASE CONSIDERATION. The consideration to be paid to the Faircom
Stockholders in the Merger before adjustments as provided in paragraph 13(b)
below (the "Base Considera-
-A15-
<PAGE> 275
tion") shall be Preferred Stock in an aggregate liquidation preference amount of
Thirty-One Million One Hundred Sixty-Two Thousand Dollars ($31,162,000);
provided, however, that in the event the acquisition of the Shelby Station has
closed prior to the Closing Date, the Base Consideration will be increased by an
amount equal to 10.6 times the Shelby Station Pro Forma Broadcast Cash Flow less
the purchase price of the Shelby Station. In the event the acquisition of the
Shelby Station does not occur prior to the Closing for reasons beyond Faircom's
control, but the Net Working Capital of Faircom plus such available funds as
Faircom can readily borrow under its existing senior credit facility (as
certified in writing by its senior lender) is sufficient at Closing to fully
finance such acquisition, the Base Consideration will be increased as provided
in the immediately preceding sentence and the Net Working Capital of Faircom
shall be reduced by the purchase price of the Shelby Station and any financing
costs that would be incurred as if the closing of such acquisition had taken
place. If the acquisition of the Shelby Station does not occur prior to the
Closing and the Net Working Capital of Faircom plus such available funds as
Faircom can readily borrow under its existing senior credit facility (as
certified in writing by its senior lender) at Closing is not sufficient to fully
finance such acquisition, Regent shall assume the obligation of Faircom to
purchase the Shelby Station at the same purchase price previously agreed to
between Faircom and the seller thereof, and there shall be no increase in the
Base Consideration attributable to the acquisition of the Shelby Station. The
additional amount of Base Consideration, as so adjusted, shall be distributed to
the Faircom Stockholders as promptly as practicable after the closing of the
Shelby Station acquisition.
(b) CONSIDERATION AFTER ADJUSTMENTS.
(1) As soon as practicable but no later than
ten (10) days following the last to occur of the following, (A) the Registration
Statement is declared effective; (B) a Final Order has been obtained from the
Commission; and (C) the Faircom stockholders have approved the Merger, a
worksheet ("Closing Worksheet") shall be prepared by Faircom and delivered to
Regent setting forth as of the last day of the month immediately preceding the
Closing Date (the "Compilation Date") the amount of Faircom's Net Working
Capital (as hereinafter defined). The Base Consideration (as adjusted, if
necessary, in accordance with Paragraph 13(a) above) shall be (a) increased by
the amount of Faircom's Net Working Capital and (b) decreased by the outstanding
principal amount of and accrued interest on the Faircom Senior Debt, and by
one-half of the prepayment premium, if any, required to be paid upon payment of
the Faircom Senior Debt at Closing (which premium the parties will endeavor
through reasonable efforts and negotiations to eliminate). The Base
Consideration, as so adjusted, shall hereinafter be referred to as the
"Consideration After Adjustments".
As used herein, "Net Working Capital" shall mean current assets of
Faircom (defined as 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 asset properly classified as current)
minus current liabilities. As used herein, the term "current liabilities" shall
mean the amount of all the liabilities of Faircom at the Compilation Date that
should be classified as such on a balance sheet or disclosed in the notes to the
financial statements as of that date prepared 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 (other than the
Faircom Senior Debt and the Faircom Subordinated Notes), (iii) any unpaid
bonuses, severance or vacation pay accrued to employees for
-A16-
<PAGE> 276
the period ending on the day prior to the Compilation Date, and (iv) trade and
barter obligations not offset by corresponding amounts of trade and barter
receivables.
Regent and/or its representatives shall examine the Closing Worksheet,
including an examination of such of Faircom's books and records as are deemed by
Regent and/or its representatives to be necessary or appropriate, to verify
Faircom's Net Working Capital as of the Compilation Date. If Regent shall
disagree with the Closing Worksheet, it shall notify Faircom within ten (10)
days of its receipt of the Closing Worksheet of its objection to such
computation, specifying each item or computation to which objection is taken and
the reason for such objection. In such event, Regent and Faircom shall use their
best efforts to resolve such objections and to agree upon the Closing Worksheet
through negotiation as expeditiously as possible. If Regent and Faircom are
unable to reconcile their differences and to mutually agree upon the Closing
Worksheet, within five (5) business days after such notice shall have been given
as aforesaid, Regent and Faircom shall designate a mutually agreeable
independent national accounting firm, or if such firm cannot act, another
national accounting firm (which has not been retained by either Joel M. Fairman,
Faircom, Regent or Terry S. Jacobs within the past ten (10) years) mutually
acceptable to such parties to act as arbitrator ("Arbitrator"). The Arbitrator
shall determine all issues in disagreement and shall make such adjustments, if
any, to the Closing Worksheet as are necessitated by such determinations, and
shall within fifteen (15) business days after its designation as Arbitrator
deliver to Regent and Faircom a written statement setting forth all adjustments
made by the Arbitrator to the Closing Worksheet. Such Closing Worksheet shall be
employed to determine any further adjustments required to the Consideration
After Adjustments pursuant to this Paragraph 13(b) ("Final Consideration"), and
such Final Consideration shall be final, conclusive and binding upon all parties
to this Agreement. The fees and expenses of Regent's accountants, if any, and
the Arbitrator in connection with the making of the Closing Worksheet and the
determinations herein provided for to resolve any differences over the Closing
Worksheet shall be paid one-half by Faircom (as a reduction in Net Working
Capital at Closing) and one-half by Regent.
(2) The maximum number of shares of Preferred Stock
available for distribution to the Faircom Stockholders (the "Maximum Number of
Shares to be Issued") shall be computed by dividing the Consideration After
Adjustments by $5.00 (the "Initial Number") less the number derived by
multiplying the Initial Number by a fraction, the numerator of which is the
number of shares of Faircom Stock issuable pursuant to options outstanding and
not exercised on the Closing Date (the "Option Shares") and the denominator of
which is the number of shares of Faircom Stock outstanding on the Closing Date
(including any shares issued on conversion of the Faircom Subordinated Notes on
or before the Closing Date) plus the Option Shares.
(3) The Maximum Number of Shares to be Issued shall
be affected by the following:
Blue Chip and Miami Valley shall have the
right, at Closing, to require the repayment in cash by Regent of up to
$2,500,000 principal amount of Faircom's Class B Convertible Subordinated
Promissory Notes in the aggregate (the "Optional Faircom Subordinated Notes") or
to convert the principal amount of the Optional Faircom Subordinated Notes into
Faircom Common Stock as provided therein. If either Blue Chip or Miami Valley
elects to require a repayment of all or a portion of the Optional Faircom
Subordinated Notes at Closing, then the Maximum Number of Shares to be Issued
shall be reduced to the extent of one share of Preferred Stock per $5.00 so
repaid by Regent. Of the shares of Preferred Stock for which the Faircom
-A17-
<PAGE> 277
Subordinated Notes are converted into Faircom Common Stock as provided above
(other than the Optional Faircom Subordinated Notes), certain of the shares to
be issued in exchange for the shares of Faircom Common Stock issued upon the
conversion of the Class B Convertible Subordinated Promissory Notes will be
subject to the option of Blue Chip and Miami Valley to put such shares of
Preferred Stock to Regent for redemption in accordance with the terms of a
Redemption and Warrant Agreement between Blue Chip, Miami Valley and Regent in
substantially the form attached hereto as Exhibit 13(b)(3). All accrued interest
on the Faircom Subordinated Notes will be treated as a current liability of
Faircom at Closing (so as to reduce Net Working Capital) and paid in cash at
Closing.
(c) CONSIDERATION PER SHARE BEFORE APPRAISAL RIGHTS. In order
to determine the Consideration Per Share Before Appraisal Rights, the
Consideration After Adjustments will be divided by the total number of shares of
Faircom Stock treated as outstanding. The number of shares of Faircom treated as
outstanding will be the sum of the number of shares actually outstanding
(including any shares issued on conversion of the Faircom Subordinated Notes on
or before the Closing Date) plus the number of shares issuable upon the exercise
of all options to acquire shares of Faircom outstanding as of the Closing Date.
(d) DISTRIBUTIONS BY TRUSTEE. At Closing, the Trustee will
receive from Regent the Maximum Number of Shares to be Issued and cash in an
amount sufficient to make payment to the Faircom Stockholders in respect of
fractional shares, which securities and cash will be maintained, allocated and
distributed as follows:
(1) DISTRIBUTIONS TO FAIRCOM STOCKHOLDERS.
(i) Each Faircom Stockholder will be
allocated an amount equal to the product of the Consideration Per Share Before
Appraisal Rights times the number of shares of Faircom Stock (including shares
issuable pursuant to the conversion of all Faircom Subordinated Notes, including
all Optional Faircom Subordinated Notes, which are converted into Faircom Stock
on or before the Closing Date) held by such Faircom Stockholder on the Closing
Date. The amount determined as provided above to be allocable to each Faircom
Stockholder, as a percentage of the total amount allocable to all the Faircom
Stockholders, is referred to herein as that person's "Pro-Rata Percentage
Interest."
(ii) The Pro-Rata Percentage Interest
of each Faircom Stockholder who is not a dissenting Faircom Stockholder shall be
distributed as follows: each such Faircom Stockholder shall receive as soon as
practicable following Closing the number of shares of Preferred Stock (or, in
the event shares of Preferred Stock are not available to such Faircom
Stockholder pursuant to Paragraph 13(d)(1)(iii), the cash paid in lieu of such
shares of Preferred Stock) equal to the product of the Maximum Number of Shares
to be Issued multiplied by such Faircom Stockholder's Pro-Rata Percentage
Interest; and (B) cash as payment for any fractional shares of Preferred Stock
pursuant to Paragraph 13(d)(2).
(iii) AVAILABILITY OF PREFERRED STOCK.
In determining the extent to which shares of Preferred Stock are available for
distribution to any individual Faircom Stockholder, shares of Preferred Stock
shall not be available for distribution to any Faircom Stockholder who is the
resident of or who is otherwise located in a state in which the issuance of the
shares of Preferred
-A18-
<PAGE> 278
Stock is prohibited or conditioned upon terms unacceptable to Regent under the
securities laws or by the securities administrator of such state.
(2) NO FRACTIONAL SHARES. No certificates or
scrip representing fractional shares of Preferred Stock will be issued upon
surrender of certificates for conversion pursuant to this Agreement. In the
event any Faircom Stockholder is allocated an interest in a fractional share of
Preferred Stock pursuant to this Paragraph 13, said fractional amount will be
rounded down to the nearest whole share and the Faircom Stockholder will be paid
in cash, without interest, an amount equal to the product of the fraction
multiplied by $5.00.
14. SURRENDER OF CERTIFICATES AND DELIVERY OF CONSIDERATION
AFTER ADJUSTMENTS.
At Effectiveness, Subsidiary or Regent shall take all steps
necessary to enable and cause Subsidiary or Regent to provide the Trustee with
the shares of Preferred Stock and cash in respect of fractional shares necessary
to deliver the Consideration After Adjustments to each Faircom Stockholder as
contemplated by Paragraph 13 hereof prior to the time that such deliveries are
required to be made by the Trustee as provided in this Paragraph 14. The Trustee
shall hold the shares of Preferred Stock and cash until the receipt by it of
joint instructions signed by a representative of each of Regent and Faircom
certifying that the parties have agreed to the Consideration After Adjustments
or the Final Consideration has been determined by the Arbitrator in accordance
with Paragraph 13(b)(1) hereof, and authorizing the distribution of said shares
and cash to the Faircom Stockholders.
Promptly after Effectiveness, the Trustee shall mail to each
record holder (as of Effectiveness) of an outstanding certificate or
certificates that immediately prior to Effectiveness represented outstanding
shares of Faircom Stock (the "Certificates"), a letter of transmittal in form
reasonably satisfactory to Regent and Faircom which specifies that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Trustee and instructions
for use in effecting the surrender of the Certificates in exchange for the
Consideration After Adjustments payable in respect of the shares of Faircom
Stock formerly represented by such Certificate. Subject to the foregoing
paragraph, upon surrender to the Trustee of a Certificate, together with such
letter of transmittal properly completed and duly executed, together with any
other required documents, the holder of such Certificate shall be entitled to
receive in exchange therefor the Consideration After Adjustments payable in
respect of the shares of Faircom Stock formerly represented by such Certificate,
and such Certificate shall forthwith be canceled. If payment is to be made to a
person other than the person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction of Regent
that such tax has been paid or is not applicable. Until surrendered in
accordance with the provisions of this paragraph 14, each Certificate shall
represent for all purposes only the right to receive the Consideration After
Adjustments, without any interest on the value thereof.
-A19-
<PAGE> 279
COMMISSION MATTERS
15. COMMISSION CONSENT TO TRANSFERS 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 all transfers of
control as a result of the Merger.
16. APPLICATIONS FOR CONSENT - COOPERATION OF THE PARTIES. Regent and
Faircom shall file such applications for transfer of control as are required and
have not already been filed by not later than five (5) business days after the
date of this Agreement. They shall promptly and diligently file and
expeditiously prosecute all necessary or desired amendments to such
applications, 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 transfers of control as a result of the Merger; provided,
however, that neither Regent nor Faircom shall be required to petition for
review or to file an appeal of any decision by the Commission or the staff of
the Commission denying such application.
17. COSTS AND EXPENSES. Except as set forth in Paragraphs 31 and 32
hereof, Faircom, 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.
Except as provided in Paragraph 32 hereof, all fees and expenses payable by
Faircom but not paid prior to Closing shall be treated as a current liability of
Faircom at Closing (so as to reduce Net Working Capital) and will be paid by the
surviving entity at Closing.
18. OPERATION OF STATIONS BEFORE CLOSING. Between the date of this
Agreement and the Closing Date, each of Regent and Faircom (i) will continue to
operate its radio stations in good faith, in the ordinary and usual course of
business, under the terms of the Regent Licenses and the Faircom Licenses,
respectively, substantially in accordance with past practices, and as stated in
paragraphs 21(y) and 22(y) of this Agreement and (ii) will file with the
Commission all documents required to be filed in connection with the operation
of its radio stations. Between the date hereof and the Closing Date, Faircom and
Regent shall each provide the other with copies of all correspondence received
from or filed with the Commission relating to the Faircom Stations, the Regent
Station or the Park Lane Stations, as the case may be, the above applications or
any amendments of the same.
19. CONTROL AND ACCESS. Prior to Closing, neither Regent nor Faircom
nor their respective agents shall directly or indirectly (i) control, supervise
or direct, or (ii) attempt to control, supervise or direct, the operations of
the other's radio stations. Except as otherwise provided herein, such operations
shall be the sole responsibility of and in the complete discretion of the
respective owners of the radio stations. Each party shall, however, be permitted
reasonable observation, access and inspection of the records and property of the
other's radio stations during regular business hours and each of Faircom and
Regent shall furnish on a monthly basis (within twenty-five (25) days following
the end of each month) a profit and loss statement and such other financial
statements, including historical statements, relating to the radio stations as
the requesting party may reasonably request and as are regularly prepared by the
station owner in the ordinary course of the business of its stations.
-A20-
<PAGE> 280
20. [Reserved].
COVENANTS, REPRESENTATIONS
AND WARRANTIES OF FAIRCOM
---------------------------
21. COVENANTS, REPRESENTATIONS AND WARRANTIES OF FAIRCOM. Faircom, on
behalf of itself and on behalf of each of the Faircom Subsidiaries, makes the
following covenants, representations and warranties (where meaningful, all
warranties, representations, and covenants relating to Faircom hereunder shall
apply equally to each of the Faircom Subsidiaries, as if any reference to
Faircom is a reference to either or each Faircom Subsidiary as the context
permits):
(a) CORPORATE STANDING AND AUTHORITY.
(i) Faircom is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby. Faircom is in good
standing as a corporation qualified to do business under the laws of the State
of New York (being the only state in which Faircom's offices, equipment,
facilities and other tangible assets are situated).
(ii) Each of the Faircom Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has full corporate power to own or lease all of
its property and to carry on its business as it is now being conducted. Faircom
Flint Inc. is authorized to conduct business within the State of Michigan, and
Faircom Mansfield Inc is authorized to conduct business within the State of Ohio
(being the only jurisdictions in which the ownership or leasing of property by
each such subsidiary or the conduct of its business requires it to be so
qualified). All of the outstanding shares of capital stock of each of the
Faircom Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable, and except as set forth on Exhibit 21(a), are owned, of
record and beneficially, by Faircom, free and clear of all liens, encumbrances,
equities, options or claims whatsoever. Neither of the Faircom Subsidiaries has
outstanding any other equity securities or securities options, warrants or
rights of any kind, convertible into, exchangeable for, or otherwise entitling
any person to acquire, equity securities of such subsidiary.
(iii) This Agreement and the transactions
contemplated hereby have been adopted, ratified and approved by the Board of
Directors of Faircom and, assuming the Registration Statement has been declared
effective, will, by the Closing Date, have been duly and timely submitted to the
Faircom stockholders for authorization and approval (unless this Agreement is
terminated prior to Closing pursuant to the terms hereof), and copies of all
corporate proceedings of Faircom relating to such authorization and approval,
certified by its Secretary, have been or will be delivered to Subsidiary at the
Closing. Other than obtaining the approval of the Faircom stockholders, no
further corporate action on the part of Faircom is required. This Agreement,
upon approval by the Faircom stockholders in accordance with Delaware law, will
constitute a valid and binding obligation of Faircom, 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.
-A21-
<PAGE> 281
(b) CAPITALIZATION; FAIRCOM STOCK.
(i) The authorized capital stock of Faircom
(the "Capital Stock") consists of 35,000,000 shares of common stock ("Common
Stock"), of which 7,378,199 shares are issued and outstanding. Faircom has
reserved 19,012,000 shares of Common Stock for issuance upon conversion of the
Faircom Subordinated Notes and 1,943,700 shares for issuance upon exercise of
outstanding options, as more fully set forth below. All issued and outstanding
shares of Capital Stock constitute the Faircom Stock. All shares of Faircom
Stock are duly authorized, validly issued in compliance with all applicable
laws, fully paid and non-assessable and not subject to any preemptive,
subscription or other rights to purchase or acquire such securities created by
statute, the Certificate of Incorporation or By-Laws of Faircom or any agreement
to which Faircom is a party or by which it is bound. There are no restrictions
with respect to the exchange and conversion of the Faircom Stock in accordance
with the terms of this Agreement. No more than 25% of the Faircom 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.
(ii) Faircom has outstanding options to purchase
1,943,700 shares of Common Stock (the "Options"). Exhibit 21(b) sets forth for
each outstanding Option the name of the holder of such Option, the number of
shares of Faircom Stock subject to such Option and the exercise price of such
Option. All of such Options are currently exercisable except for options for
134,000 shares, which will be accelerated and fully exercisable as of the
Closing. Each Option has been duly authorized and validly issued in compliance
with all applicable laws. Except for the Options described in Exhibit 21(b) and
the Faircom Subordinated Notes, there are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral, to which Faircom is
a party or by which it is bound obligating Faircom to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of Faircom or obligating Faircom to
grant, extend, accelerate the vesting of, change the price of, otherwise amend
or enter into any such option, warrant, call, right, commitment or agreement.
Other than the transaction contemplated by this Agreement, there is outstanding
no vote, plan or pending proposal for any redemption of Faircom Stock or merger
or consolidation of Faircom with or into any other corporation.
(c) CORPORATE POWER. Each of the Faircom Subsidiaries:
(i) has all requisite corporate power
and authority to own, lease and operate the Faircom Broadcast Assets owned,
leased or operated by it and to carry on the business of the Faircom Stations as
now being conducted by it and as proposed to be conducted by it between the date
hereof and the Closing Date; and
(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.
(d) RESERVED.
(e) RESERVED.
-A22-
<PAGE> 282
(f) AFFILIATES. Except as set forth on Exhibit 21(f), neither
Faircom nor either of the Faircom Subsidiaries owns, directly or indirectly, any
capital stock or other equity or ownership or proprietary interest in any
corporation, business trust, joint stock company or other business organization,
association, partnership, venture or other entity.
(g) RIGHTS TO ACQUIRE SECURITIES. Except as identified on
Exhibit 21(g), there are no outstanding rights, options, subscriptions,
agreements, or commitments giving anyone any current or future right to require
Faircom to sell or issue any capital stock or other securities or any agreement
or arrangement restricting the right of Faircom to issue or sell any capital
stock or other securities.
(h) CORPORATE RECORDS. The minute books of each of Faircom and
the Faircom Subsidiaries reflect accurately in all material respects all action
taken by the respective stockholders and Boards of Directors of such entities
and the minute book of Faircom will accurately reflect all action required to be
taken by the Closing by the Faircom Stockholders and its Board of Directors to
enable Faircom to execute and perform this Agreement and all transactions
contemplated hereunder (provided the requisite Stockholder vote is obtained for
approval of the transactions contemplated hereunder). The minute books of
Faircom and the Faircom Subsidiaries contain true and complete copies of the
Certificate of Incorporation and By-Laws of such entities and all amendments
thereto. The ownership and transfer records maintained by Faircom or its
transfer agent with respect to Faircom and the Faircom Subsidiaries reflect
accurately in all material respects all information called for thereon and all
issuances and transfers of the capital stock of such entities. All issuances and
transfers reflected in said ownership and transfer records were duly and validly
made in compliance with the laws of the applicable jurisdiction(s).
(i) TITLE TO FAIRCOM BROADCAST ASSETS. Faircom or one of the
Faircom Subsidiaries has good and marketable title to all of the Faircom
Broadcast Assets, free and clear of all liens, mortgages, pledges, conditional
sales agreements, security interests, charges and encumbrances, except those
listed on Exhibit 21(i), all of which will be released and discharged on or
prior to the Closing Date, except as noted on Exhibit 21(i).
(j) FINANCIAL STATEMENTS; BUDGET. The Faircom Financials
heretofore furnished to Regent, as well as all financial information supplied,
or to be supplied, pursuant to paragraphs 12A, 19 and 21(qq), fairly present or
will fairly present the consolidated financial position and consolidated results
of operations of Faircom and the Faircom Subsidiaries as of the dates thereof
and for the periods represented. All said Faircom Financials and financial
information, where applicable, have been and will be prepared in accordance with
generally accepted accounting principles consistently applied. Faircom interim
statements have been or will be prepared in accordance with generally accepted
accounting principles for interim financial information subject to year-end
audit adjustments and the absence of footnotes.
The Faircom 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 Faircom to, and as of, the date of this
Agreement, continue to be reasonable as of the date of this Agreement.
-A23-
<PAGE> 283
(k) CONTRACTS.
(i) Exhibit 21(k-1) is a complete list or
description of all written and oral contracts relative to the Faircom Stations
in existence at the date of this Agreement which are enforceable against
Faircom, excluding:
(A) oral employment arrangements with
Faircom Station employees;
(B) written employment arrangements
with Faircom 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);
(E) contracts for the sale of broadcast
time or advertising in exchange for merchandise or services; and
(F) other miscellaneous contracts not
uncommon to broadcast properties which do not exceed $50,000 of expenditures or
revenues annually in the aggregate.
(ii) All contracts for the sale of broadcast
time or advertising on the Faircom 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 either Faircom, the Faircom Subsidiaries, or the Faircom
Stations is a party or by which it is bound are pre-emptible for cash sales and
none is subject to fixed positions (except for those contracts which provide for
the delivery of programming to the Faircom Stations in return for barter
advertising). True and complete copies of all contracts, leases and agreements
listed in Exhibit 21(k-1) have been made available to Regent. Faircom is current
in all of its obligations under all of the contracts, leases and agreements
listed on Exhibit 21(k-1), and each such contract, lease and agreement is in
full force and effect and will not be impaired by any acts or omissions within
the reasonable control of Faircom, its agents or employees except for those that
shall previously have expired by passage of time in accordance with their
respective terms.
(iii) Except as set forth on Exhibit 21(k-1) or
Exhibit 21(i), Faircom 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 Faircom;
(B) guarantee of any obligation (other
than the endorsement of negotiable instruments for collection in the ordinary
course of business); or
-A24-
<PAGE> 284
(C) agreement whereunder Faircom or
any successor is obligated to make any conditional or other payment based upon
the future performance of Faircom or the Faircom Stations.
(l) GOVERNMENT AUTHORIZATIONS.
(i) Exhibit 1(j) hereto contains a true and
complete list of all licenses, permits or other authorizations issued by the
Commission which are required for the lawful conduct of the business and
operations of the Faircom Stations in the manner and to the full extent they are
presently conducted (including, without limitation, auxiliary licenses
associated with each Faircom Station). Faircom has delivered to Regent true and
complete copies of the Faircom Licenses and all amendments and other
modifications thereto.
(ii) The entities specified on Exhibit 1(j) are
the authorized legal holders of the Faircom Licenses. Except as set forth
in Exhibit 1(j), none of the Faircom Licenses is subject to any restrictions or
conditions which would materially limit the full operation of the Faircom
Stations as now operated.
(iii) Except as set forth in Exhibit 1(j), and
except for matters affecting the radio broadcast industry generally, there are
no applications, complaints, petitions or proceedings pending or threatened as
of the date hereof before the Commission or any other governmental or
regulatory authority relating to the business or operations of the Faircom
Stations. Except as set forth in Exhibit 1(j), the Faircom Licenses are in good
standing, are in full force and effect and are unimpaired by any act or
omission of Faircom or its stockholders, officers, directors or employees. The
operations of the Faircom Stations are in accordance in all material respects
with the Faircom Licenses and the underlying construction permits. No
proceedings are pending or threatened, and there has not been any act or
omission of Faircom or any of its officers, directors, stockholders or
employees, which reasonably may result in the revocation, non-renewal,
suspension or material modification of any of the Faircom Licenses, the denial
of any pending applications, the issuance of any cease and desist order, the
imposition of any administrative actions by the Commission or any other
governmental or regulatory authority with respect to the Faircom Licenses or
which reasonably may affect Regent's ability to continue to operate the Faircom
Stations substantially as they are currently operated.
(iv) Each Faircom Station is operating with the
maximum facilities specified in the respective Faircom Station's License.
(v) None of the Faircom Stations is causing
objectionable interference to the transmissions of any other broadcast station
or communications facility nor has any of the Faircom Stations received any
complaints with respect thereto; and no other broadcast station or
communications facility is causing objectionable interference to the respective
transmissions of the Faircom Stations or the public's reception of such
transmissions.
(vi) Faircom has no reason to believe that the
Faircom Licenses will not be renewed in their ordinary course.
-A25-
<PAGE> 285
(vii) All reports, forms, and statements required to
be filed by Faircom or the Faircom Subsidiaries with the Commission with respect
to the Faircom Stations since the grant of the last renewal of the Faircom
Licenses have been filed and are substantially complete and accurate.
(viii) There are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the Commission, would disqualify Faircom as assignor of the Faircom Licenses or
cause the Faircom Licenses not to be renewed in their ordinary course.
(ix) The operation of the Faircom Stations and all
of the Faircom Broadcast Assets are in compliance in all material respects with
ANSI Radiation Standards C95.1 - 1992.
(m) MANAGEMENT, KEY EMPLOYEES AND ACCOUNTS. Exhibit 21(m-1)
sets forth the names of all employees whose compensation (including without
limitation, salaries, bonuses and commissions) from Faircom for the year ended
December 31, 1996 or for the current year on an annualized basis exceeds
$30,000. Exhibit 21(m-2) sets forth the name of each bank or savings institution
in which Faircom has an account or safe deposit box.
(n) TAX ELECTIONS. Faircom has not filed a consent to the
application of Section 341(f)(2) of the Internal Revenue Code with regard to any
property held, acquired or to be acquired at any time.
(o) RELATED TRANSACTIONS. All outstanding debts and other
obligations of Faircom to any Faircom Stockholders or officers or directors of
Faircom are listed on Exhibit 21(o), except for those incurred for normal travel
and entertainment in connection with the conduct of the business of Faircom and
the Faircom 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 any such Faircom Stockholders or any of Faircom's officers or
directors to Faircom are listed on Exhibit 21(o) and reflected on the Financial
Statements.
(p) TAXES. Except as set forth on Exhibit 21(p), Faircom 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 as of the date hereof. All returns identified on Exhibit 21(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. Faircom has
delivered to Regent true and complete copies of all federal, state and local
income tax returns of Faircom as filed for the years ended December 31, 1994,
1995, and 1996. All of the tax liabilities of Faircom for the current year to
date and all prior years, whether or not they have become due and payable, and
whether or not shown on such returns, and all interest and penalties, whether
disputed or not, 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 Faircom or in the Faircom Financials. Faircom 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
Faircom have been examined by the federal tax authorities or closed by
applicable statute and satisfied for all
-A26-
<PAGE> 286
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 reasonably 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 Faircom which in
any event reasonably could adversely affect any of the Faircom Broadcast Assets
or the operation of the Faircom Stations. Except as set forth on Exhibit 21(p),
Faircom has not been advised that any of its tax returns, federal, state, local
or foreign, have been or are being audited. Faircom does not have as of the date
hereof any unfunded 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 charges 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
Faircom by federal, state, local or foreign taxing authorities.
(q) EMPLOYEE BENEFIT PLANS. On the date hereof and on the
Closing Date, Faircom 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 21(q) and Exhibit 21(k-1).
(r) COMPLIANCE WITH COMMISSION REGULATIONS. Except as
specified in Exhibit 21(r), the operation of the Faircom Stations and all of the
Faircom Broadcast Assets are in compliance in all material respects with: (a)
all applicable engineering standards required to be met under applicable
Commission rules; and (b) all other applicable federal, state and local rules,
regulations, requirements and policies, including, but not limited to, equal
employment opportunity policies of the Commission, and all applicable painting
and lighting requirements of the Commission and the Federal Aviation
Administration to the extent required to be met under applicable Commission
rules and regulations, and there are no filed claims to the contrary.
(s) PERSONAL PROPERTY. Without material omission, Exhibit
21(s) hereto contains a list of all items of tangible personal property owned by
Faircom or either of the Faircom Subsidiaries and used in the conduct of the
business and operations of the Faircom Stations. Exhibit 21(s) also separately
lists any material tangible personal property leased by Faircom pursuant to
leases included within the Contracts. Except as disclosed in Exhibit 21(s),
Faircom or one of the Faircom Subsidiaries has good and marketable title to all
of the items of tangible personal property which are included in the Faircom
Broadcast Assets (other than those subject to lease) and none of such Faircom
Broadcast Assets is 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 or which are immaterial. The properties listed in
Exhibit 21(s), along with those properties subject to lease and included among
the Contracts, constitute all material tangible personal property necessary to
operate the Faircom Stations in all material respects as the same are now being
operated. Except as set forth in Exhibit 21(s), all items of tangible personal
property included in the Faircom Broadcast Assets are, in all material respects,
in good and technically sound operating condition and repair (ordinary wear and
tear excepted), are free from substantially all material defect and damage, are
-A27-
<PAGE> 287
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 21(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 Faircom Stations) used by Faircom or the Faircom Subsidiaries in
connection with the operations of the Faircom Stations (the "Faircom 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. The
Faircom Subsidiaries have good and marketable title in fee simple to all the
Faircom Real Estate specified as owned by them in Exhibit 21(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 21(t). With respect to each of the buildings,
structures and appurtenances situated on the Faircom Real Estate, the Faircom
Subsidiaries have adequate rights of ingress and egress for operation of their
respective businesses in the ordinary course. None of the buildings, structures,
improvements, or fixtures constructed on the Faircom 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. No condemnation proceeding is
pending or threatened which would preclude or impair the continued use of any
such property by the Faircom Subsidiaries for the purposes for which it is
currently used.
(ii) Except as described in Exhibit 21(t),
all buildings, structures, towers, antennae, improvements and fixtures situated
on the Faircom Real Estate are in all material respects 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 real property
site used by the Faircom Subsidiaries 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 Faircom
Stations as presently conducted.
(u) ENVIRONMENTAL. Except as set forth in Exhibit 21(u),
Faircom has complied in all material respects with all federal, state and local
environmental laws, rules and regulations as in effect on the date hereof
applicable to each of the Faircom Stations and its operations, including but not
limited to the Commission's guidelines regarding RF radiation. The technical
equipment included in the Faircom 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
-A28-
<PAGE> 288
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 Faircom Broadcast Assets are situated, including without limitation
the transmitter sites, or contained in the tangible personal property included
in the Faircom Broadcast Assets. The Faircom Broadcast Assets and Faircom's use
thereof are not in any material respect in violation of any Environmental Laws
or any occupational, safety and health or other applicable law now in effect.
(v) INSURANCE. Exhibit 21(q) and Exhibit 21(v) contain a list
and summary of the terms of all insurance coverage owned by Faircom. Until the
Closing Date, Faircom will maintain or cause to be maintained all insurance
coverage described in such Exhibits or obtain equivalent replacements therefor,
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 Faircom.
(w) ACCOUNTS AND NOTES RECEIVABLE. All accounts and notes
receivable of Faircom reflected on the balance sheet of the Faircom Financials
or referred to in the notes thereto, and all accounts and notes receivable of
Faircom 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 Faircom Financials or on Exhibit 21(o)), and are collectible at
their full amount except for bad debt allowance indicated therein.
(x) LAWS, REGULATIONS AND INSTRUMENTS. Neither Faircom nor the
Faircom Subsidiaries is in violation of any term of its respective Certificate
of Incorporation or By-Laws. On the date hereof, except as set forth on Exhibit
21(r), the Faircom Stations are in compliance in all material respects with all
applicable federal, state and local laws, ordinances and regulations. Faircom
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. Neither Faircom
nor the Faircom Subsidiaries is in default with respect to any judgment, order,
injunction or decree applicable to it of any court, administrative agency, or
other governmental authority.
(y) CONDUCT OF FAIRCOM STATIONS. Until the Closing Date, the
business of the Faircom Stations will be conducted in good faith in
substantially the same manner as heretofore. Faircom shall use its reasonable
best efforts (based upon the exercise of reasonably prudent business judgment)
to maintain and preserve the present character of the Faircom Stations, the
quality of their programs, their business organization and makeup and present
customers and present business reputation, to keep available to the Faircom
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, Faircom and the Faircom Subsidiaries will not, without the prior
written consent of Regent, transfer, convey or assign to any other person any of
the Faircom Broadcast Assets unless, (i) in the case of tangible assets included
in the Faircom Broadcast Assets, the same are replaced by assets of equal
quality and usefulness or (ii) such disposition is in the ordinary course of
Faircom's business and does not exceed $25,000 in the aggregate.
-A29-
<PAGE> 289
(aa) TRANSMITTER SITES. Except as otherwise disclosed on
Exhibit 1(j), none of the Faircom 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. Faircom 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 any Faircom 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 21(bb), there
is no litigation, action, suit, investigation or proceeding pending, or
threatened, against Faircom or against either of the Faircom Subsidiaries which
reasonably may give rise to any claim against any of the Faircom Broadcast
Assets material to the operation of the Faircom Stations or upon Faircom's
ability to perform in accordance with the terms of this Agreement, or which
might result in a monetary forfeiture in excess of $25,000, in any material
adverse effect upon the business operations or assets of Faircom or the Faircom
Subsidiaries, or in any impairment of the right or ability of Faircom or the
Faircom Subsidiaries to carry on in all material respects their business as now
conducted.
(cc) NO CONFLICT. Subject to obtaining the required consents
under material contracts, leases and agreements identified on Exhibits 2l(t),
21(k-1) and 21(i) and under paragraph 21(mm)(vii) and the approval of the
Faircom Stockholders and the Commission, 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, the
Certificate of Incorporation or By-Laws (or other charter or organizational
documents) of Faircom or either of the Faircom Subsidiaries or, subject to
obtaining the required approval of the Faircom Stockholders and the Commission,
any applicable law, judgment, order, injunction, decree, rule, regulation or
ruling of any governmental authority to which Faircom or either of the Faircom
Subsidiaries is a party or by which Faircom or either of the Faircom
Subsidiaries or any of the Faircom Broadcast Assets are bound.
(dd) REQUIRED CONSENTS. Except as specifically identified in
Exhibits 2l(t), 21(k-1) and 21(i), neither Faircom nor either of the Faircom
Subsidiaries 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; and
the consummation of the Merger 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 Faircom or
either of the Faircom Subsidiaries 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 Faircom or the Faircom Subsidiaries, or in the
creation of any lien, security interest, encumbrance or charge under any of the
foregoing on any assets or properties of Faircom or the Faircom Subsidiaries,
except where such breach or default would be immaterial.
(ee) INTELLECTUAL PROPERTY. Exhibit 21(ee) hereto is a true
and complete list of all material Intellectual Property applied for, registered
or issued to, and owned by the Faircom
-A30-
<PAGE> 290
Subsidiaries or under which the Faircom Subsidiaries are licensees and which is
used in the conduct of the respective business and operations of the Faircom
Subsidiaries. Except as set forth on Exhibit 21(ee): (i) the right, title and
interest of the Faircom Subsidiaries 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 the Faircom Subsidiaries, such interest is
valid and uncontested by the licensor thereof or any third party; (ii) all
computer software located at the Faircom Stations' facilities or used in the
Faircom Stations' business or operations is properly licensed to the Faircom
Subsidiaries, and all of the uses by the Faircom Subsidiaries of such computer
software are authorized under such licenses; (iii) all of the right, title and
interest of the Faircom Subsidiaries 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 all of
Faircom's or the Faircom Subsidiaries', as the case may be, 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 Faircom or the Faircom Subsidiaries in connection
with the business or operations of Faircom or the Faircom Subsidiaries.
(ff) QUALIFICATIONS FOR TRANSFER OF CONTROL. The Faircom
Subsidiaries are presently licensees in good standing with the Commission, and
Faircom and the Faircom Subsidiaries have no knowledge of any fact or
circumstance that could reasonably prevent approval of the transaction
contemplated by this Agreement or the renewal of the Faircom Licenses.
(gg) PUBLIC INSPECTION FILE. All the documents
required by the rules, regulations and policies of the Commission to be
maintained in each Faircom Station's local public records file are contained in
such file and available for public inspection.
(hh) ABSENCE OF CERTAIN CHANGES. Since December 31,
1996, except as disclosed in this Agreement, in the Faircom Financials or in
Faircom's filings under the Exchange Act, or as set forth on Exhibit 21(hh):
(i) Faircom has not created, assumed, or
suffered any mortgage, pledge, lien or encumbrance on any of the Faircom
Broadcast Assets;
(ii) Faircom has conducted the business of
the Faircom 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 Faircom or the Faircom Subsidiaries, or
any damage, destruction or loss (whether or not covered by insurance) materially
and adversely affecting any of the Faircom 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 Faircom 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;
-A31-
<PAGE> 291
(C) any lease, agreement, contract,
obligation, or commitment entered into in connection with the operation of the
Faircom Stations except in the ordinary course of business;
(D) any issuance of bonds, notes or
other corporate securities by Faircom;
(E) any declaration of payment or
payments or distribution of cash or other property to the Faircom Stockholders
with respect to Faircom's capital stock; or
(F) any purchase or redemption of any
shares of Faircom's capital stock.
(ii) PERSONNEL INFORMATION.
(i) Exhibit 21(ii) contains a true and
complete list of all persons employed full-time at the Faircom Stations,
including date of hire, a description of material compensation arrangements
(other than employee benefit plans set forth in Exhibit 21(q)) and a list of
other material terms of any and all agreements affecting such persons and their
employment by Faircom. Faircom has received no notice that, and Faircom is not
aware of, any individual employee who shall or is likely to terminate his or her
employment relationship with the Faircom Stations upon the execution of this
Agreement or after the Closing.
(ii) Faircom, with respect to the Faircom
Stations, is not a party to any contract or agreement with any labor
organization, nor has Faircom 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 Faircom at the Faircom Stations.
Faircom 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
Faircom at the Faircom Stations.
(iii) Except as disclosed in Exhibit 21(ii),
Faircom, with respect to the Faircom 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"), and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
(jj) [Reserved].
(kk) OUTSTANDING DEBT. Exhibit 21(kk) correctly lists all
outstanding debt of Faircom 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).
(ll) NEGATIVE COVENANTS. Except for changes or actions in the
ordinary course of business consistent with past practices, between the date
hereof and the Closing Date, Faircom will not, without the prior written consent
of Regent:
-A32-
<PAGE> 292
(i) Increase the compensation payable or to
become payable to any of the employees of Faircom 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 21(k-1);
(ii) Enter into any contract, lease or
commitment or engage in any transaction relating to any of the Faircom Stations;
(iii) Cancel, modify, or amend in any material
manner, or in any manner within its reasonable control impair any of the
contracts, leases or other agreements identified on Exhibit 21(k-1) relating to
any of the Faircom Stations which are included in the Faircom Broadcast Assets;
(iv) Create any mortgage, pledge, lien or
encumbrance affecting any of the Faircom Broadcast Assets which cannot be repaid
concurrently with the Closing by Faircom or Regent;
(v) Sell, assign, lease or otherwise transfer
or dispose of any of the Faircom Broadcast Assets;
(vi) Consolidate with, merge into, or acquire
(with the exception of the Shelby Station) any other person or entity, or
permit any person or entity to acquire, 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 options or the
conversion of the Faircom Subordinated Notes outstanding as of the date hereof;
(x) Amend its Certificate of Incorporation or
By-Laws; or
(xi) Borrow or incur any indebtedness unless
such indebtedness can be repaid concurrently with or prior to Closing.
(mm) AFFIRMATIVE COVENANTS. Between the date hereof and
the Closing Date, Faircom will:
(i) Give to Regent and its authorized
representatives, upon prior reasonable notice, 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 Faircom Stations as
Regent may
-A33-
<PAGE> 293
reasonably request, including monthly profit and loss statements and notice of
changes in full-time employees;
(ii) Notify Regent in writing upon obtaining knowledge of any
new litigation pending or threatened against Faircom or the Faircom Subsidiaries
or any damage to or destruction of any of the Faircom Broadcast Assets;
(iii) Continue promotional activity at the Faircom Stations
as the same level necessary in order to comply with the provisions of paragraph
21(y);
(iv) Furnish to Regent, at Faircom's expense, Faircom
Financials for the six months ended June 30, 1997 and for each month thereafter
through the Closing Date;
(v) Promptly notify Regent in writing of any material adverse
developments with respect to the business or operations of Faircom or the
Faircom Subsidiaries;
(vi) Call, give proper notice and hold a special meeting of
Faircom Stockholders for the purposes of submitting this Agreement and the
transactions provided for herein to the Faircom Stockholders for adoption and
approval, all in compliance with all applicable provisions of Delaware law,
which meeting shall be held as soon as practicable after effectiveness of the
Registration Statement; give the Faircom Stockholders due and proper notice of
such meeting; and include with such notice to each Stockholder a copy of the
proxy statement/prospectus constituting part of the Registration Statement, as
provided to it by Regent for such purpose;
(vii) Immediately following the execution of this Agreement,
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 2l(t), 21(k-1) and 21(i), and the consent of
the Faircom Stockholders in accordance with paragraph 21(mm)(vi). Within
forty-five (45) days after the execution of this Agreement and at periodic
intervals as may be reasonably requested by Regent thereafter, Faircom 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; and
(nn) ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, Faircom agrees to use its reasonable 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, Faircom shall take, or cause to be taken, such action.
(oo) JOIN IN EXECUTION OF DOCUMENTS. Faircom will 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.
(pp) FULL DISCLOSURE. No representation or warranty made by
Faircom contained in this Agreement nor any certificate, document or other
instrument furnished or to be furnished by
-A34-
<PAGE> 294
Faircom 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 misleading. Faircom 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 Faircom or
the Faircom Stations which has not been set forth in this Agreement, in the
Faircom Financials or in Faircom's filings under the Exchange Act, or otherwise
disclosed in writing by Faircom to Regent or its representatives. When the
Registration Statement is filed with the SEC and at all times subsequent
thereto, the portions of the Registration Statement and the proxy
statement/prospectus included therein, and any amendments or supplements thereto
which have been furnished by or on behalf of Faircom for inclusion therein
pursuant to paragraphs 12A and 21(qq), will comply in all material respects with
the requirements of the Securities Act, the Exchange Act, and the rules and
regulations promulgated thereunder; will not contain an untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will not fail to
describe or contain as an exhibit any contract or document required to be
described in the Registration Statement or the proxy statement/prospectus
included therein or to be filed as an exhibit to the Registration Statement.
(qq) SUBMISSION OF MATERIAL FOR REGISTRATION STATEMENT.
Faircom shall provide or cause to be provided to Regent the Faircom Information,
on or before five (5) days after the date hereof (or as soon thereafter as such
information is available), for inclusion in the Registration Statement.
(rr) FAIRNESS AND TAX OPINIONS. The Board of Directors of
Faircom has received from Hoffman Schutz Media Capital, Inc., its financial
advisor, an opinion that the consideration to be paid to the Faircom
Stockholders as contemplated by this Agreement is fair to them from a financial
point of view (the "Fairness Opinion"), and Faircom has received from Fulbright
& Jaworski L.L.P., its legal counsel, an opinion, in form and substance
reasonably satisfactory to it, to the effect that the Merger will qualify as a
tax-free reorganization under Section 368 of the Internal Revenue Code, on the
basis of the facts, representations and assumptions set forth in such opinion
(the "Tax Opinion").
COVENANTS, REPRESENTATIONS
AND WARRANTIES OF REGENT AND SUBSIDIARY
---------------------------------------
22. COVENANTS, REPRESENTATIONS AND WARRANTIES OF REGENT AND REGENT
SUBSIDIARIES. Regent, on behalf of itself and on behalf of each of the Regent
Subsidiaries, makes the following covenants, representations, and warranties
(where meaningful, all warranties, representations, and covenants relating to
Regent hereunder shall apply equally to each of the Regent Subsidiaries, as if
any reference to Regent is a reference to any or each Regent Subsidiary as the
context permits):
(a) CORPORATE STANDING AND AUTHORITY.
---------------------------------
(i) Regent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is in good standing as a corporation qualified
-A35-
<PAGE> 295
to do business under the laws of the Commonwealth of Kentucky (being the only
state in which Regent's offices, equipment, facilities and other tangible assets
are situated); and has all corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby.
(ii) Each of the Regent Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware; and is qualified as a foreign corporation in good
standing under the laws of those states listed on Exhibit 22(a) attached hereto.
All of the outstanding shares of capital stock of each of the Regent
Subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable, and except as set forth on Exhibit 22(a), are owned, of record
and beneficially, by Regent, free and clear of all liens, encumbrances,
equities, options or claims whatsoever. None of the Regent Subsidiaries has
outstanding any other equity securities or securities options, warrants or
rights of any kind, convertible into, exchangeable for, or otherwise entitling
any person to acquire, equity securities of such Subsidiary.
(iii) This Agreement and the transactions
contemplated hereby have been adopted, ratified and approved by the Boards of
Directors of Regent and Subsidiary and the 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, have been or will be
delivered to Faircom at the Closing. No further corporate action on the part of
Regent or Subsidiary is required. This Agreement constitutes a valid and binding
obligation of Regent and Subsidiary, enforceable in accordance with its terms,
subject to bankruptcy laws, other federal and state laws affecting creditors'
rights generally and availability of equitable remedies.
(b) CAPITALIZATION; REGENT STOCK. As of Effectiveness, the
authorized capital stock of Regent will be 30,000,000 shares of common stock
("Common Stock") (of which 240,000 shares were issued and outstanding as of the
date hereof), and 20,000,000 shares of preferred stock, of which 620,000 shares
will have been designated Series A Convertible Preferred Stock (600,000 shares
of which were issued and outstanding as of the date hereof); 1,000,000 shares
will have been designated Series B Senior Convertible Preferred Stock (none of
which were issued and outstanding as of the date hereof and 1,000,000 shares of
which may be issued and outstanding as of Effectiveness); 4,000,000 shares will
have been designated Series C Convertible Preferred Stock (none of which are
issued and outstanding as of the date hereof); 1,000,000 shares will have been
designated Series D Convertible Preferred Stock (none of which were issued and
outstanding as of the date hereof and 1,000,000 shares of which may be issued
and outstanding as of Effectiveness); and 5,000,000 shares will have been
designated as Series E Convertible Preferred Stock (none of which were issued
and outstanding as of the date hereof). As of the date hereof, the holders of
the preferred stock were entitled to convert the same into 600,000 shares of
Common Stock (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 shares of Common Stock or preferred stock, except (i) pursuant to the
conversion of the outstanding preferred stock, and (ii) pursuant to the exercise
of options which may be granted to management (up to but not to exceed an
aggregate of 15% of the outstanding shares of capital stock, assuming conversion
to Common Stock of all outstanding shares of Series A, B, C, D and E
-A36-
<PAGE> 296
Convertible Preferred Stock and any series of preferred stock hereafter created
on a fully diluted basis).
All of the outstanding capital stock of Regent and Regent Subsidiary
has been duly and validly authorized and issued and is fully paid and
non-assessable and none of such securities 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 or the securities or blue
sky or any other applicable laws or regulations of any jurisdiction.
(c) CORPORATE POWER. Each of the Regent Subsidiaries:
(i) has all requisite corporate power
and authority to own, lease and operate the Regent Assets owned, leased or
operated by it and to carry on the business of the Regent Station as now being
conducted by it and as proposed to be conducted by it between the date hereof
and the Closing Date; and
(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.
(d) RESERVED.
(e) RESERVED.
(f) AFFILIATES. Except as set forth on Exhibit 22(f), neither
Regent nor any of the Regent Subsidiaries owns, directly or indirectly, any
interest in any corporation, business trust, joint stock company or other
business organization, association, partnership, venture or other entity.
(g) RIGHTS TO ACQUIRE SECURITIES. Except as identified on
Exhibit 22(g), there are no outstanding rights, options, subscriptions,
agreements, or commitments giving anyone 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.
(h) CORPORATE RECORDS. The minute books of each of Regent and
the Regent Subsidiaries accurately reflect in all material respects all action
taken by the respective Boards of Directors of such entities and the minute
books of Regent and Subsidiary will accurately reflect all action required to be
taken by the Closing by the Board of Directors of Regent and Subsidiary and the
stockholder of Subsidiary to enable Regent and Subsidiary to execute and perform
this Agreement and all transactions contemplated hereunder. The minute books of
Regent and the Regent Subsidiaries contain true and complete copies of the
Certificates of Incorporation and By-Laws of such entities, and all amendments
thereto. The stock certificate books and share ledgers of Regent and the Regent
Subsidiaries reflect accurately all information called for thereon and all
issuances and transfers of the capital stock of such entities. All issuances and
transfers reflected in said stock certificate books and ledger were duly and
validly made in compliance with the laws of the applicable jurisdiction(s).
-A37-
<PAGE> 297
(i) TITLE TO REGENT ASSETS. The Regent Subsidiaries have, and
upon acquisition of the Park Lane Stations will have, good and marketable title
to all of the Regent Assets (other than those subject to lease), free and clear
of all liens, mortgages, pledges, conditional sales agreements, security
interests, charges and encumbrances, except liens for taxes not yet due and
payable and those listed on Exhibit 22(i).
(j) FINANCIAL STATEMENTS; PROJECTIONS. The Regent Financials
heretofore furnished to Faircom fairly present or will fairly present the
consolidated financial position and consolidated results of operations of Regent
and the Regent Subsidiaries as of the dates thereof and for the periods
represented. All said Regent Financials, where applicable, have been and will be
prepared in accordance with generally accepted accounting principles
consistently applied. Regent interim statements have been or will be prepared in
accordance with generally accepted accounting principles for interim financial
information subject to year-end audit adjustments and the absence of footnotes.
The Park Lane Financials are true, complete and correct, and have been
prepared in accordance with generally accepted accounting principles
consistently applied and maintained throughout the periods indicated, and
present fairly the financial position and results of operations of Park Lane as
of the dates thereof and for the periods covered thereby.
The Regent Projections were prepared based upon assumptions which were
reasonable and justifiable at the time of their preparation and, after taking
into account actual conditions known to Regent to, and as of, the date of this
Agreement, continue to be reasonable as of the date of this Agreement.
(k) CONTRACTS.
(i) Exhibit 22(k-1) is a complete list or
description of all written and oral contracts relative to the Regent Station and
the Park Lane Stations in existence at the date of this Agreement which are
enforceable against Regent or which will be enforceable against Regent upon the
acquisition by Regent of Park Lane, excluding:
(A) oral employment arrangements with
Regent Station or Park Lane Station employees;
(B) written employment arrangements
with Regent Station or Park Lane 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);
(E) contracts for the sale of broadcast
time or advertising in exchange for merchandise or services; and
-A38-
<PAGE> 298
(F) other miscellaneous contracts
not uncommon to broadcast properties which do not exceed $50,000 of expenditures
or revenues annually in the aggregate.
(ii) All contracts for the sale of broadcast
time or advertising on the Regent Station or the Park Lane 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 either Regent, the Regent Subsidiaries or
Park Lane is a party or by which it is bound are pre-emptible for cash sales and
none is subject to fixed positions (except for those contracts which provide for
the delivery of programming to the Regent Station or the Park Lane Stations in
return for barter advertising). True and complete copies of all contracts,
leases and agreements listed in Exhibit 22(k-1) have been made available to
Faircom. Regent is current in all of its obligations under all of the contracts,
leases and agreements listed on Exhibit 22(k-1) which are enforceable against
Regent, and each such contract, lease and agreement is in full force and effect
and will not be impaired by any acts or omissions within the reasonable control
of Regent, its agents or employees except for those that shall previously have
expired by passage of time in accordance with their respective terms.
(iii) Except as set forth on Exhibit 22(k-1) or
Exhibit 22(i), neither Regent nor Park Lane is 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 Regent, the
Regent Stations or the Park Lane Stations;
(B) guarantee of any obligation (other
than the endorsement of negotiable instruments for collection in the ordinary
course of business); or
(C) agreement whereunder Regent or
any successor is obligated to make any conditional or other payment based upon
the future performance of Regent or the Regent Station or the Park Lane
Stations.
(l) GOVERNMENT AUTHORIZATIONS.
--------------------------
(i) Exhibit 1(bb) hereto contains a true
and complete list of all licenses, permits or other authorizations issued by the
Commission which are required for the lawful conduct of the business and
operations of the Regent Station and the Park Lane Stations in the manner and to
the full extent they are presently conducted (including, without limitation,
auxiliary licenses associated with each Station). Regent has delivered to
Faircom true and complete copies of the Regent Licenses, including any and all
amendments and other modifications thereto.
(ii) The entities specified on Exhibit 1(bb) are
the authorized legal holders of the Regent Licenses. Except as set forth in
Exhibit 1(bb), none of the Regent Licenses is subject to any restrictions or
conditions which would materially limit the full operation of the Regent
Station or the Park Lane Stations as now operated.
(iii) Except as set forth in Exhibit 1(bb), and
except for matters affecting the radio broadcast industry generally, there are
no applications, complaints, petitions or proceedings
-A39-
<PAGE> 299
pending or threatened as of the date hereof before the Commission or any other
governmental or regulatory authority relating to the business or operations of
the Regent Station or any of the Park Lane Stations. Except as set forth in
Exhibit 1(bb), the Regent Licenses are in good standing, are in full force and
effect and are unimpaired by any act or omission of Regent or its stockholders,
officers, directors or employees. The operations of the Regent Station and the
Park Lane Stations are in accordance in all material respects with the Regent
Licenses and the underlying construction permits. No proceedings are pending or
threatened, and there has not been any act or omission of Regent or any of its
officers, directors, stockholders or employees, which reasonably may result in
the revocation, non-renewal, suspension or material modification of any of the
Regent Licenses, the denial of any pending applications, the issuance of any
cease and desist order, the imposition of any administrative actions by the
Commission or any other governmental or regulatory authority with respect to the
Regent Licenses or which reasonably may affect Regent's ability to continue to
operate the Regent Station and the Park Lane Stations substantially as they are
currently operated.
(iv) The Regent Station and each of the Park Lane
Stations is operating with the maximum facilities specified in the Regent
License.
(v) Neither the Regent Station nor any of the
Park Lane Stations is causing objectionable interference to the transmissions of
any other broadcast station or communications facility nor has any of the Park
Lane Stations or the Regent Station received any complaints with respect
thereto; and (ii) no other broadcast station or communications facility is
causing objectionable interference to the respective transmissions of the Regent
Station or the Park Lane Stations or the public's reception of such
transmissions.
(vi) Regent has no reason to believe that the
Regent Licenses will not be renewed in their ordinary course.
(vii) All reports, forms, and statements required
to be filed by Regent or the Regent Subsidiaries with the Commission
with respect to the Regent Station and the Park Lane Stations since the grant
of the last renewal of the Regent Licenses have been filed and are
substantially complete and accurate.
(viii) There are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the Commission, would cause the Regent Licenses not to be renewed in their
ordinary course.
(ix) The operation of the Regent Station and
the Park Lane Station and all of the Regent Assets are in compliance in all
material respects with ANSI Radiation Standards C95.1 - 1992.
(m) MANAGEMENT, KEY EMPLOYEES AND ACCOUNTS. Exhibit 22(m-1)
sets forth the names of all current employees whose compensation (including
without limitation, salaries, bonuses and commissions) from Regent and Park Lane
for the year ended December 31, 1996 or for the current year on an annualized
basis exceeds $30,000. Exhibit 22(m-2) sets forth the name of each bank or
savings institution in which Regent and Park Lane have an account or safe
deposit box.
-A40-
<PAGE> 300
(n) TAX ELECTIONS. Neither Regent nor Park Lane has filed a
consent to the application of Section 341(f)(2) of the Internal Revenue Code
with regard to any property held, acquired or to be acquired at any time.
(o) RELATED TRANSACTIONS. All outstanding debts and other
obligations of Regent to any stockholders or officers or directors of Regent and
all outstanding debts and other obligations of Park Lane to any stockholders or
officers or directors of Park Lane are listed on Exhibit 22(o), except for those
incurred for normal travel and entertainment in connection with the conduct of
the business of Regent, the Regent Station, Park Lane, the Park Lane 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 any such
stockholders, officers or directors to Regent and Park Lane are listed on
Exhibit 22(o) and reflected on the Regent Financials or the Park Lane
Financials, respectively.
(p) TAXES. Except as set forth on Exhibit 22(p), each of
Regent and Park Lane 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 as of the date hereof. All returns identified on
Exhibit 22(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. Regent has delivered to Faircom true and complete copies of all federal,
state and local income tax returns of Regent and Park Lane as filed. Each of
Regent and Park Lane 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 neither Regent nor Park Lane has any liability for taxes in excess of
the amounts so paid. All of the tax liabilities of Regent and Park Lane for the
current year to date and for the year 1996, 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 or in the Regent Financials or the Park Lane Financials.
Neither Regent nor Park Lane has 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 or Park Lane which in any event reasonably could adversely affect any of
the Regent Assets. Except as set forth on Exhibit 22(p), neither Regent nor Park
Lane has been advised that any of its tax returns, federal, state, local or
foreign, have been or are being audited. Neither Regent nor Park Lane has as of
the date hereof any unfunded 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 charges 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 Regent by federal, state, local or foreign taxing authorities.
(q) EMPLOYEE BENEFIT PLANS. On the date hereof and on the
Closing Date, neither Regent nor Park Lane will 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 22(q) and Exhibit 22(k-1).
-A41-
<PAGE> 301
(r) COMPLIANCE WITH COMMISSION REGULATIONS. Except as
specified in Exhibit 22(r), the operation of the Regent Station, the Park Lane
Stations, and the Regent Assets are in compliance in all material respects with:
(a) all applicable engineering standards required to be met under applicable
Commission rules; and (b) all other applicable federal, state and local rules,
regulations, requirements and policies, including, but not limited to, equal
employment opportunity policies of the Commission, and all applicable painting
and lighting requirements of the Commission and the Federal Aviation
Administration to the extent required to be met under applicable Commission
rules and regulations, and there are no filed claims to the contrary.
(s) PERSONAL PROPERTY. Without material omission, Exhibit
22(s) hereto contains a list of all items of tangible personal property owned by
Regent and/or the Regent Subsidiaries and all items of tangible personal
property that are to be acquired by Regent upon the acquisition by Regent of
Park Lane, and used in the conduct of the business and operations of the Regent
Station and the Park Lane Stations. Exhibit 22(s) also separately lists any
material tangible personal property leased by Regent and Park Lane pursuant to
leases included within the contracts listed on Exhibit 22(k-1). Except as
disclosed on Exhibit 22(s), Regent or the Regent Subsidiaries have, and upon the
acquisition of the Park Lane Stations will have, good and marketable title to
all of the items of tangible personal property which are included in the Regent
Assets (other than those subject to lease) and none of such assets is 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
or which are immaterial. The properties listed in Exhibit 22(s), along with
those properties subject to lease and included among the contracts listed on
Exhibit 22(k-1), constitute all material tangible personal property necessary to
operate the Regent Station and the Park Lane Stations as the same are now being
operated. Except as set forth in Exhibit 22(s) and except as provided below, all
items of tangible personal property included in the Regent Assets are, in all
material respects, 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. Regent has discovered that certain conditions exist which
it believes are inconsistent with certain representations made to Regent by the
stockholders of Park Lane with respect to the condition of certain of its
equipment, and Regent has exercised its right to require Park Lane to cause this
equipment to be brought into compliance with its representations.
(t) REAL PROPERTY.
(i) Exhibit 22(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 Regent Station and the Park Lane Stations) used by Regent or the
Regent Subsidiaries in connection with the operations of the Regent Station (the
"Regent Real Estate") and a description of all real property that is to be
acquired upon the closing of the acquisition by Regent of Park Lane (the "Park
Lane Real Estate").
(ii) The Regent Subsidiaries have good and
marketable title in fee simple to all the Regent Real Estate specified as
owned by them in Exhibit 22(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
-A42-
<PAGE> 302
kind, direct or indirect, whether accrued, absolute, contingent or
otherwise, except for those of the nature set forth in Exhibit 22(t). With
respect to each of the buildings, structures and appurtenances situated on the
Regent Real Estate, the Regent Subsidiaries have adequate rights of ingress and
egress for operation of their respective businesses in the ordinary course. None
of the buildings, structures, improvements, or fixtures constructed on the
Regent 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 condemnation or other legal proceeding or action of any kind relating
to such real property and/or title thereto is pending or threatened which would
preclude or impair the continued use of any such property by the Regent
Subsidiaries for the purposes for which it is currently used.
(iii) Except as described in Exhibit 22(t), all
buildings, structures, towers, antennae, improvements and fixtures situated on
the Regent Real Estate are in all material respects 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 real property
site used by the Regent Subsidiaries 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 Regent
Station as presently conducted.
(iv) With respect to the Park Lane Real Estate,
Park Lane has good and marketable title in fee simple to all of the Park
Lane Real Estate 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 22(t). With
respect to each of the buildings, structures and appurtenances situated on the
Park Lane Real Estate, Park Lane has adequate rights of ingress and egress for
the operation of the business of Park Lane in the ordinary course. None of the
buildings, structures, improvements, or fixtures constructed on the Park Lane
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.
No condemnation proceeding is pending or threatened which would preclude or
impair the continued use of any such property by Park Lane for the purposes for
which it is currently used. Except as described in Exhibit 22(t), all
buildings, structures, towers, antennae, improvements and fixtures situated on
the Park Lane 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 Park Lane Stations as presently conducted.
(u) ENVIRONMENTAL. Except as set forth in Exhibit 22(u), each
of Regent and Park Lane has complied in all material respects with all federal,
state and local environmental laws, rules and regulations as in effect on the
date hereof applicable to the Regent Station and its operations
-A43-
<PAGE> 303
and the Park Lane Stations and their operations, respectively, including but not
limited to the Commission's guidelines regarding RF radiation. The technical
equipment included in the assets used or held for use in the operation of the
Regent Station and the Park Lane Stations 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 Regent Station and the Park Lane Stations
and their assets are situated, including without limitation the transmitter
sites, or contained in the tangible personal property included in the assets in
respect of the Regent Station and the Park Lane Stations. The Regent Assets and
Regent's use thereof are not in any material respect in violation of any
Environmental Laws or any occupational, safety and health or other applicable
law now in effect.
(v) INSURANCE. Exhibit 22(q) and Exhibit 22(v) contain a list
and summary of the terms of all insurance coverage owned by Regent and Park
Lane. Until the Closing Date, Regent and Park Lane will maintain or cause to be
maintained all insurance coverage described in such Exhibits or obtain
equivalent replacements therefor, and copies of all insurance policies have been
delivered to Faircom or will be delivered to Faircom within three (3) days of
when received by Regent.
(w) ACCOUNTS AND NOTES RECEIVABLE. All accounts and notes
receivable of Regent reflected in the Regent Financials or referred to in the
notes thereto, and all accounts and notes receivable of Park Lane reflected in
the Park Lane Financials or referred to in the notes thereto, arose from valid
transactions in the ordinary course of business with unrelated third parties
(except as otherwise disclosed in the Regent Financials or in the Park Lane
Financials or on Exhibit 22(o)), and are collectible at their full amount except
for bad debt allowance indicated therein.
(x) LAWS, REGULATIONS AND INSTRUMENTS. Neither Regent, any of
the Regent Subsidiaries, nor Park Lane is in violation of any term of its
respective Certificate of Incorporation or By-Laws. On the date hereof, except
as set forth on Exhibit 22(r), the Regent Station and the Park Lane Stations are
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. Neither Regent, any of the Regent Subsidiaries,
nor Park Lane is in default with respect to any judgment, order, injunction or
decree applicable to it of any court, administrative agency, or other
governmental authority.
(y) CONDUCT OF REGENT STATION AND PARK LANE STATIONS. Until
the Closing Date, Regent shall use its reasonable best efforts (based upon the
exercise of reasonably prudent business
-A44-
<PAGE> 304
judgment) to maintain and preserve the present character of the Regent Station
and the Park Lane Stations, the quality of their programs, their business
organization and makeup and present customers and present business reputation,
to keep available to the Regent Station and the Park Lane 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, neither Regent, the Regent Subsidiaries nor Park Lane will,
without the prior written consent of Faircom, transfer, convey or assign to any
other person any of the Regent Assets unless, (i) in the case of tangible assets
included in the Regent Assets, the same are replaced by assets of equal quality
and usefulness or (ii) such disposition is in the ordinary course of Regent's
business and does not exceed $25,000 in the aggregate.
(aa) TRANSMITTER SITES. Except as otherwise disclosed on
Exhibit 1(bb), neither the Regent Station's transmitter site nor any of the Park
Lane 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. Regent 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 Regent Station's transmitter site
lease or any Park Lane Stations' transmitter site lease and in the manner and
for the purpose for which it is presently used.
(bb) LITIGATION. Except as disclosed in Exhibit 22(bb), there
is no litigation, action, suit, investigation or proceeding pending, or
threatened, against Regent, any of the Regent Subsidiaries, or Park Lane, which
reasonably may give rise to any claim upon any of Regent's Assets material to
the operation of the Regent Station or the Park Lane Stations 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 $25,000,
in any material adverse effect upon the business, operations or assets of Regent
or the Regent Subsidiaries, or in any impairment of the right or ability of
Regent or the Regent Subsidiaries to carry on in all material respects their
business as now conducted.
(cc) NO CONFLICT. Subject to obtaining the required consents
referred to in paragraph 22(dd) and the approval of the Commission, 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, the Certificate of Incorporation or By-Laws (or other charter
or organizational documents) of Regent, any of the Regent Subsidiaries, or Park
Lane, or any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Regent, any of the
Regent Subsidiaries, or Park Lane is a party or by which Regent, any of the
Regent Subsidiaries, Park Lane, or any of the Regent Assets is bound.
(dd) REQUIRED CONSENTS. Except as specifically identified in
Exhibit 22(dd), neither Regent, the Regent Subsidiaries, nor Park Lane 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
-A45-
<PAGE> 305
or make unduly burdensome the consummation of, the Merger; and the consummation
of the Merger 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, the Regent Subsidiaries, or Park Lane 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, the Regent Subsidiaries, or Park Lane,
or in the creation of any lien, security interest, encumbrance or charge under
any of the foregoing on any assets or properties of Regent, the Regent
Subsidiaries, or Park Lane, except where such breach or default would be
immaterial.
(ee) INTELLECTUAL PROPERTY. Exhibit 22(ee) hereto is a true
and complete list of all material Intellectual Property applied for, registered
or issued to, and owned by the Regent Subsidiaries and Park Lane or under which
the Regent Subsidiaries and Park Lane are licensees and which is used in the
conduct of the respective business and operations of the Regent Subsidiaries or
Park Lane. Except as set forth on Exhibit 22(ee): (i) the right, title and
interest of the Regent Subsidiaries and Park Lane 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 the Regent Subsidiaries
and Park Lane, such interest is valid and uncontested by the licensor thereof or
any third party; (ii) all computer software located at the Regent Station's or
the Park Lane Stations' facilities or used in the Regent Station's or the Park
Lane Stations' business or operations is properly licensed to the Regent
Subsidiaries or Park Lane, as the case may be, and all of the uses by the Regent
Subsidiaries or Park Lane of such computer software are authorized under such
licenses; and (iii) there are no infringements or unlawful use of such
Intellectual Property by Regent, the Regent Subsidiaries or Park Lane in
connection with the business or operations of Regent, the Regent Subsidiaries,
or Park Lane.
(ff) QUALIFICATIONS FOR TRANSFER OF CONTROL. One of the Regent
Subsidiaries and either Park Lane or one or more of its subsidiaries is
presently a licensee in good standing with the Commission, and 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 Regent
Licenses.
(gg) PUBLIC INSPECTION FILE. All the documents
required by the rules, regulations and policies of the Commission to be
maintained in the Regent Station's and the Park Lane Stations' local public
records file are contained in such file and available for public inspection.
(hh) ABSENCE OF CERTAIN CHANGES. Since December 31,
1996, except as disclosed in this Agreement, in the Regent Financials or the
Park Lane Financials, or as set forth on Exhibit 22(hh):
(i) Neither Regent nor Park Lane has created,
assumed, or suffered any mortgage, pledge, lien or encumbrance on any of the
Regent Assets;
(ii) there has not been:
(A) any material adverse change in the
business, assets, capitalization, operations, properties, prospects or condition
(financial or otherwise) of Regent, the
-A46-
<PAGE> 306
Regent Subsidiaries, or Park Lane, or any damage, destruction or loss (whether
or not covered by insurance) materially and adversely affecting the Regent
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 Regent Station and the Park Lane
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
Regent Station or the Park Lane Stations except in the ordinary course of
business;
(D) any issuance of bonds, notes or
other corporate securities by Regent;
(E) any declaration of payment or
payments or distribution of cash or other property to Regent's stockholders with
respect to Regent's capital stock; or
(F) any purchase or redemption of any
shares of Regent's capital stock.
(ii) PERSONNEL INFORMATION.
----------------------
(i) Exhibit 22(ii) contains a true and
complete list of all persons employed full-time at the Regent Station and the
Park Lane Stations, including date of hire, a description of material
compensation arrangements (other than employee benefit plans set forth in
Exhibit 22(q)) and a list of other material terms of any and all agreements
affecting such persons and their employment by Regent. Regent has received no
notice that, and Regent is not aware of, any individual employee who shall or is
likely to terminate his or her employment relationship with the Regent Station
or any of the Park Lane Stations upon the execution of this Agreement or after
the Closing.
(ii) Regent, with respect to the Regent Station and
the Park Lane Stations, is not a party to any contract or agreement with any
labor organization, nor has Regent 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 Regent at the Regent
Station or any of the Park Lane Stations. Regent 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 Regent at the Regent Station or any of
the Park Lane Stations.
(iii) Except as disclosed in Exhibit 22(ii), Regent,
with respect to the Regent Station and the Park Lane Stations, has complied in
all material respects with all laws relating to the employment of labor,
including, without limitation, ERISA, and those laws relating to wages, hours,
collective bargaining, unemployment insurance, workers' compensation, equal
employment opportunity and payment and withholding of taxes.
(jj) [Reserved].
-A47-
<PAGE> 307
(kk) OUTSTANDING DEBT. Exhibit 22(kk) correctly lists all
outstanding debt of Regent and Park Lane 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).
(ll) NEGATIVE COVENANTS. Except for changes or actions in the
ordinary course of business consistent with past practices, and except as set
forth on Exhibit 22(ll) or as contemplated by this Agreement, between the date
hereof and the Closing Date, Regent will not, without the prior written consent
of Faircom:
(i) Increase the compensation payable or to
become payable to any of the employees of Regent 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 22(k-1);
(ii) Enter into any contract, lease or
commitment or engage in any transaction relating to the Regent Station or any of
the Park Lane Stations;
(iii) Cancel, modify or amend in any material
manner, or in any manner within its reasonable control impair any of the
contracts, leases or other agreements identified on Exhibit 22(k-1) relating to
the Regent Station or any of the Park Lane Stations which are included in the
Regent Assets;
(iv) Create any mortgage, pledge, lien or
encumbrance affecting any of the Regent Assets;
(v) Sell, assign, lease or otherwise
transfer or dispose of any of the Regent Assets;
(vi) Consolidate with, merge into, or acquire any
other person or entity, or permit any person or entity to acquire, merge into or
consolidate with it; provided, however, that for purposes of this subparagraph
22(ll)(vi), the consent of either the President of Faircom or the General
Partner of Blue Chip shall constitute the consent of Faircom, and the consent of
Faircom shall not be required for those transactions listed on Exhibit 22(ll);
(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 pursuant to the conversion of the outstanding Preferred Stock,
and except for shares issued pursuant to the exercise of options which may be
granted to management (up to but not to exceed 15% of the outstanding shares of
capital stock of Regent, assuming conversion to Common Stock of all outstanding
shares of Series A, B, C, D and E and any series of preferred stock hereafter
created on a fully diluted basis);
-A48-
<PAGE> 308
(x) Amend its Certificate of Incorporation
or By-Laws (other than to file its Amended and Restated Certificate of
Incorporation as provided in Paragraph 1(y) hereto); or
(xi) Borrow or incur any indebtedness unless
such indebtedness can be repaid concurrently with or prior to the Closing.
(mm) AFFIRMATIVE COVENANTS. Between the date hereof and
the Closing Date, Regent will:
(i) Give to Faircom and its authorized
representatives, upon prior reasonable notice, full access during normal
business hours to all properties, books, records, contracts and documents and
furnish or cause to be furnished to Faircom or its authorized representatives
all information with respect to the affairs and business of the Regent Station
or the Park Lane Stations as Faircom may reasonably request, including monthly
profit and loss statements and notice of changes in full-time employees;
(ii) Notify Faircom in writing of any new
litigation pending or threatened against Regent, the Regent Subsidiaries or any
of the Park Lane Stations or any damage to or destruction of any of the Regent
Assets;
(iii) Furnish to Faircom, at Regent's expense, the
Regent Financials and the Park Lane Financials;
(iv) Promptly notify Faircom in writing of any
material adverse developments with respect to the business or operations of
Regent or the Regent Subsidiaries; and
(v) Use its reasonable best efforts to
consummate the acquisition of the Park Lane Stations prior to or concurrently
with the Closing hereunder on substantially the terms previously disclosed to
Faircom, and use its reasonable best efforts to obtain all necessary financing
in connection with the pending acquisition of Park Lane.
(nn) ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, Regent and Subsidiary agree to use their reasonable
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 transactions contemplated by this Agreement. In case at any time after the
Closing any further action by Regent or Subsidiary is reasonably necessary to
carry out the purposes of this Agreement, Regent and Subsidiary shall take, or
cause to be taken, such action.
(oo) JOIN IN EXECUTION OF DOCUMENTS. Regent and Subsidiary
will join with Faircom, 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.
(pp) 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 hereto contains or
will contain any untrue statement of a material fact, or omits or
-A49-
<PAGE> 309
shall omit to state any material fact required to make any statement contained
herein or therein 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, conditions, affairs or operations of Regent or the Regent
Station which has not been set forth in this Agreement, in the Regent
Financials, or otherwise disclosed or to be disclosed in writing (pursuant to a
registration statement or otherwise) by Regent to Faircom, its representatives
or the Faircom Stockholders. When the Registration Statement is filed with the
SEC and at all times subsequent thereto, the portions of the Registration
Statement and the proxy statement/prospectus included therein, and any
amendments or supplements thereto which have been furnished by or on behalf of
Regent for inclusion therein, will comply in all material respects with the
requirements of the Securities Act and the rules and regulations promulgated
thereunder, will not contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will not fail to describe or contain as
an exhibit any contract or document required to be described in the Registration
Statement or the proxy statement/prospectus included therein or to be filed as
an exhibit to the Registration Statement.
(qq) ISSUANCE OF PREFERRED STOCK. The Preferred Stock, when
and if issued in accordance with the provisions of this Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any liens or
encumbrances (other than those created by the Faircom Stockholders), and will
not be subject to any restrictions on transferability by Regent's Certificate of
Incorporation, as amended and restated, or by any agreement to which Regent is a
party; provided, however, that such shares may be subject to restrictions on
transfer under state securities laws and federal communications and/or
securities laws.
(rr) TRANSFERABILITY OF PREFERRED STOCK. The Preferred Stock,
when issued pursuant to the Registration Statement and delivered to the Faircom
Stockholders pursuant to the terms hereof, will be freely tradable under the
Securities Act by Faircom Stockholders who are not deemed "affiliates" (as
defined under the Securities Act) of Regent or Faircom.
23. RESERVED.
RISK OF LOSS
24. RISK OF LOSS.
(a) FAIRCOM BROADCAST ASSETS. The risk of loss, damage or
destruction from any cause to the tangible Faircom Broadcast Assets shall be
borne by Faircom at all times between the date of this Agreement and the Closing
Date. In the event of any such loss, damage or destruction, Faircom shall
repair, replace or restore any such Faircom Broadcast Asset prior to the Closing
Date. In the event of substantial damage to any of the Faircom Broadcast Assets
or in the event of the occurrence of any damage or event which prevents
broadcast transmission of any of the Faircom Stations in the normal and usual
manner and substantially in accordance with its license, Faircom 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
-A50-
<PAGE> 310
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 thirty (30) days after such loss, damage or destruction, as the
property has been completely repaired, replaced or restored; or
(ii) terminate this Agreement if Faircom has
not acted diligently to repair, replace or restore such Faircom Broadcast
Assets; or
(iii) elect to consummate the Closing and accept the
Faircom Broadcast Assets in their then condition.
In the event Regent and Subsidiary elect to postpone
the Closing Date, Faircom, Regent and Subsidiary will cooperate to extend the
time during which this Agreement must be closed as specified in the Commission's
Order.
(b) REGENT ASSETS. The risk of loss, damage or destruction
from any cause to the tangible Regent Assets shall be borne by Regent at all
times between the date of this Agreement and the Closing Date. In the event of
any such loss, damage or destruction, Regent shall repair, replace or restore
any such Regent Asset prior to the Closing Date. In the event of substantial
damage to any of the Regent Assets or in the event of the occurrence of any
damage or event which prevents broadcast transmission of the Regent Station or
any of the Park Lane Stations in the normal and usual manner and substantially
in accordance with its license, Regent shall promptly notify Faircom 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 Faircom shall have the option to:
(i) postpone the Closing Date until such time,
not later than thirty (30) days after such loss, damage or destruction, as the
property has been completely repaired, replaced or restored; or
(ii) terminate this Agreement if Regent has not acted
diligently to repair, replace or restore such Regent Assets; or
(iii) elect to consummate the Closing and accept the
Regent Assets in their then
condition.
In the event Faircom elects to postpone the
Closing Date, Faircom, Regent and Subsidiary will cooperate to extend the time
during which this Agreement must be closed as specified in the Commission's
Order.
(c) BROADCAST TRANSMISSION OF STATIONS PRIOR TO CLOSING.
Notwithstanding the provisions of paragraphs 24(a) and (b) above, if prior to
the Closing Date any event occurs which prevents the broadcast transmission of
any of the Faircom Stations or the Regent Station or any of
-A51-
<PAGE> 311
the Park Lane Stations in the manner which it has heretofore been operating,
for a period of thirty-six (36) hours or more or five (5) periods of more than
five (5) hours each in any thirty (30) day period, then Faircom (in cases
involving the Faircom Stations) or Regent (in cases involving the Regent
Station or the Park Lane Stations) shall give prompt written notice thereof to
the other party. In such event, the owner of the affected station shall use its
best efforts to restore the operations to substantially full licensed power and
antenna height as soon as possible. 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 seven (7) consecutive days or eight (8) non-consecutive days after the
date of the interruption, the party whose station is not subject to such
interruption in transmission shall have the right, by giving written notice to
the other party 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 the other party the notice of interruption.
CONDITIONS PRECEDENT TO SUBSIDIARY'S AND REGENT'S
OBLIGATION TO CLOSE
25. 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 24, shall be obligated (and Regent shall be
obligated to cause Subsidiary) to consummate the Merger in accordance with the
terms and conditions of this Agreement:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Faircom contained herein or in any list,
certificate or document delivered pursuant to the terms 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 (i) expressly
permitted or contemplated by this Agreement; or (ii) in the ordinary course of
business which are not individually, or in the aggregate, material and adverse.
Faircom shall have performed and complied with all obligations and covenants
required by this Agreement to be performed or complied with by Faircom on or
prior to the Closing Date. Faircom shall have delivered to Regent a certificate
dated the Closing Date and signed by an officer of Faircom attesting to the
above.
(b) DELIVERY OF CLOSING DOCUMENTS. Faircom shall have
delivered to Subsidiary the Closing Documents described in Paragraph 27 of this
Agreement.
(c) FAIRCOM LICENSES. Faircom shall be the holder of the
Faircom Licenses, and such Faircom Licenses shall be free and clear of
conditions, competing applications, petitions to deny, complaints, appeals or
any restrictions as might materially limit the operation or prospects of the
Faircom 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 exchange of the Faircom Stock and the Merger of Faircom into Subsidiary, as
herein provided (other than dissenting Faircom Stockholders), is then required
shall have duly consented thereto, and all other consents required under the
terms of the material contracts, leases and agreements identified on Exhibits
2l(t), 21(k-1) and 21(i) and under subparagraphs 21(mm)(vi) and (vii) shall have
been obtained.
-A52-
<PAGE> 312
(e) FINAL ORDER. The Commission's Order shall have become a
Final Order, unless the failure to obtain the Final Order is caused by the
action or inaction of Regent.
(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 Faircom which
makes unlawful the carrying out of this Agreement, causes this Agreement to be
rescinded, or imposes a lien on or requires Regent to divest itself of any of
the Faircom Broadcast Assets.
(g) EXAMINATION OF REAL PROPERTY. Regent shall have conducted
and/or obtained a satisfactory review and examination of the title to and
condition of all real property owned by Faircom (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) DISSENTERS' RIGHTS. Holders of less than ten percent (10%)
(excluding Blue Chip or Miami Valley) of the outstanding Faircom Stock shall
have taken all necessary steps to be entitled pursuant to the provisions of
Section 262 of the Delaware Code to make a written demand for payment of the
fair value of their shares.
(i) FAIRCOM INFORMATION. Faircom shall have provided to Regent
all of the Faircom Information for inclusion in the Registration Statement.
(j) STOCKHOLDER APPROVAL. The Faircom stockholders shall have
approved this Agreement and the Merger contemplated herein.
(k) REGISTRATION STATEMENT. The Registration Statement shall
have been declared effective, unless the failure to obtain such effectiveness is
caused by the actions or inactions of Regent.
(l) REGENT FINANCING; ACQUISITION OF PARK LANE. Regent shall
have raised and/or shall have commitments for at least $13,700,000 of cash
equity and additional bank financing sufficient to finance the acquisition of
the assets of the Park Lane Stations, free and clear of all liabilities other
than the contracts, leases and agreements to be assumed by Regent, and the
closing of such acquisition shall have occurred prior to or concurrently with
the Closing hereunder.
(m) TAX OPINION OF REGENT'S COUNSEL. Regent shall have
received from Strauss & Troy, its legal counsel, to the effect that the Merger
will qualify as a tax-free reorganization under Section 368 of the Internal
Revenue Code, on the basis of the facts, representations and assumptions set
forth in such opinion.
(n) CONVERSION OF FAIRCOM SUBORDINATED NOTES. The holders of
the Faircom Subordinated Notes shall have converted such Notes (other than the
Optional Faircom Subordinated Notes) into Faircom Common Stock on or before the
Closing Date.
-A53-
<PAGE> 313
CONDITIONS PRECEDENT TO FAIRCOM'S
---------------------------------
OBLIGATION TO CLOSE
-------------------
26. CONDITIONS PRECEDENT TO FAIRCOM'S OBLIGATIONS. If at the Closing
Date the following conditions are satisfied, Faircom, subject to the provisions
of Paragraph 24, shall be obligated to consummate the Merger 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 (i)
expressly permitted or contemplated by this Agreement; or (ii) in the ordinary
course of business which are not individually, or in the aggregate, material and
adverse. 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, including without
limitation taking all necessary and proper corporate action to enter into this
Agreement and to consummate the transactions referred to or set forth in this
Agreement. Regent and Subsidiary shall have delivered to Faircom a certificate
dated the Closing Date and signed by an officer of each entity attesting to the
above.
(b) CONSIDERATION. 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 Faircom the Closing Documents described hereafter in paragraph
28 of this Agreement.
(d) REGENT LICENSES. Regent shall be the holder of the Regent
Licenses, and such Regent Licenses shall be free and clear of conditions,
competing applications, petitions to deny, complaints, appeals or any
restrictions as might materially limit the operation or prospects of the Regent
Station and the Park Lane Stations as presently authorized.
(e) FINAL ORDER. The Commission's Order shall have become a
Final Order, unless the failure to obtain the Final Order is caused by the
actions or inactions of Faircom.
(f) 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 Preferred Stock, if applicable, and the Merger of Faircom
into Subsidiary, as herein provided, is then required shall have duly consented
or approved such merger.
(g) 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.
(h) ISSUANCE OF PREFERRED STOCK. The issuance of the Preferred
Stock pursuant to the terms of this Agreement shall be legally permitted by all
applicable laws and regulations and
-A54-
<PAGE> 314
shall be issued pursuant to an effective registration statement filed with the
SEC and pursuant to applicable state securities laws.
(i) EXAMINATION OF REAL PROPERTY. Faircom shall have conducted
and/or obtained a satisfactory review and examination of the title to and
condition of all real property owned by Regent (including such environmental
assessments of said properties as may be currently in existence or as Faircom
may elect to have conducted at its expense, to be completed within sixty (60)
days after the execution of this Agreement).
(j) REGENT FINANCING; ACQUISITION OF PARK LANE. Regent shall
have raised and/or shall have commitments for at least $13,700,000 of cash
equity and additional bank financing sufficient to finance the acquisition of
the assets of the Park Lane Stations, free and clear of all liabilities other
than the contracts, leases and agreements to be assumed by Regent, and the
closing of such acquisition shall have occurred prior to or concurrently with
the Closing hereunder.
(k) STOCKHOLDER APPROVAL. The Faircom Stockholders shall have
approved this Agreement and the Merger contemplated herein.
(l) REGISTRATION STATEMENT. The Registration Statement shall
have been declared effective.
(m) TAX OPINION. The Tax Opinion shall not have been withdrawn
with reasonable justification, unless such withdrawal is caused by the action or
inaction of Faircom.
(n) FAIRNESS OPINION. The Fairness Opinion shall not have been
withdrawn with reasonable justification, unless such withdrawal is caused by the
action or inaction of Faircom.
(o) TAX OPINION OF REGENT'S COUNSEL. Strauss & Troy, legal
counsel to Regent, shall have delivered to Faircom an opinion, in form and
substance reasonably satisfactory to Faircom, to the effect that the Merger will
qualify as a tax-free reorganization under Section 368 of the Internal Revenue
Code, on the basis of the facts, representations and assumptions set forth in
such opinion.
CLOSING DOCUMENTS
27. CLOSING DOCUMENTS TO BE DELIVERED BY FAIRCOM. On the Closing Date,
Faircom shall deliver to Regent and Subsidiary:
(a) A certificate signed by the President of Faircom
to the effect set forth in paragraph 25(a) hereof.
(b) Such other assignments, documents and instruments as
counsel for Regent and Subsidiary may reasonably require.
-A55-
<PAGE> 315
(c) An opinion of Fulbright & Jaworski L.L.P., as legal
counsel for Faircom, in form satisfactory to counsel for Regent and Subsidiary,
dated the Closing Date, to the effect as set forth in Exhibit 27(c) attached
hereto.
(d) Copies of resolutions of Faircom's Board of Directors and
the Faircom stockholders authorizing the execution, delivery and performance of
this Agreement and all instruments referred to herein to which Faircom or the
Faircom Stockholders are a party, certified by its corporate secretary or an
assistant secretary as being in full force and effect without modification or
amendment.
(e) All necessary consents to be obtained by Faircom as set
forth under paragraph 25(d).
(f) The Faircom Financials, certified as true and correct
pursuant to an officer's certificate of Faircom.
(g) Certified copies of the Certificate of Incorporation and
certificate of good standing for Faircom and each of the Faircom Subsidiaries
from the Secretary of State of its state of incorporation and each other state
in which it is qualified as a foreign corporation to do business and a
certificate or other evidence of good standing as to payment of any applicable
taxes from the appropriate taxing authority of each of such states, each dated a
recent date prior to the Closing Date.
(h) Copies of the Bylaws of Faircom and each of the Faircom
Subsidiaries, certified in each case as of the Closing Date by its corporate
secretary or an assistant secretary.
(i) Signature and incumbency certificates of Faircom's
officers executing this Agreement.
28. CLOSING DOCUMENTS TO BE DELIVERED BY REGENT AND SUBSIDIARY. On the
Closing Date, Regent and Subsidiary shall deliver to the Trustee:
(a) Certificates for the number of shares of Preferred
Stock to be issued in accordance with Paragraphs 12 and 13 hereof.
(b) An opinion of Strauss & Troy, counsel for Regent and
Subsidiary, in form satisfactory to counsel for Faircom and dated the Closing
Date to the effect as set forth in Exhibit 28(b) attached hereto.
(c) A certificate signed by the President of Regent and
Subsidiary to the effect set forth in paragraph 26(a) hereof.
(d) Copies of resolutions of the Boards of Directors of Regent
and Subsidiary and Regent as sole stockholder of Subsidiary authorizing the
execution, delivery and performance of this Agreement and all instruments
referred to herein to which Regent or Subsidiary is a party, certified by its
corporate secretary or an assistant secretary as being in full force and effect
without modification or amendment.
-A56-
<PAGE> 316
(f) A certified copy of a resolution of the Board of Directors
of Regent authorizing the issuance of the shares of Preferred Stock to be
transferred to the Faircom Stockholders by Subsidiary.
(g) All necessary consents to be obtained by Regent and
Subsidiary as set forth in Paragraph 25(d).
(h) The Regent Financials, certified as true and correct
pursuant to an officer's certificate of Regent.
(i) Certified copies of the Certificate of Incorporation and
certificate of good standing for Regent and each of the Regent Subsidiaries from
the Secretary of State of its state of incorporation and each other state in
which it is qualified as a foreign corporation to do business and a certificate
or other evidence of good standing as to payment of any applicable taxes from
the appropriate taxing authority of each of such states, each dated a recent
date prior to the Closing Date.
(j) Copies of the Bylaws of Regent and each of the Regent
Subsidiaries, certified in each case as of the Closing Date by its corporate
secretary or an assistant secretary.
(k) Signature and incumbency certificates of Regent's officers
executing this Agreement.
29. [Reserved].
30. TERMINATION. This Agreement constitutes the binding and irrevocable
agreement of the parties to consummate the transactions contemplated hereby, the
consideration for which is (i) the covenants set forth herein and (ii)
expenditures and obligations incurred and to be incurred by Regent and
Subsidiary, on the one hand, and by Faircom, on the other hand, in respect of
this Agreement, and this Agreement may be terminated or abandoned only as
follows:
(a) By the mutual consent of the Boards of Directors of
Faircom and Regent, notwithstanding prior approval by the stockholders of either
or both of such corporations;
(b) By the Boards of Directors of Regent and Faircom in
accordance with their respective rights under Paragraph 24;
(c) By the Board of Directors of Faircom after June 1, 1998,
if any of the conditions set forth in Paragraph 26, to which Faircom's
obligations are subject, have not been fulfilled or waived, unless such
fulfillment has been frustrated or made impossible by Faircom's act or failure
to act;
(d) By the Board of Directors of Regent after June 1, 1998, if
any of the conditions set forth in Paragraph 25, to which the obligations of
Regent are subject, have not been fulfilled or waived, unless such fulfillment
has been frustrated or made impossible by Regent's act or failure to act;
-A57-
<PAGE> 317
(e) By the Board of Directors of Faircom if in the exercise of
its good faith determination and in the exercise of its reasonable business
judgment, as set forth in Paragraph 12D, as to its fiduciary duties to the
Faircom Stockholders imposed by law, the Board of Directors decides that such
termination is required.
(f) By the Boards of Directors of either Regent or Faircom if
the Commission fails, on its own and through no breach on the part of Regent or
Faircom, to give its consent to the transfers of control contemplated hereunder
in sufficient time to permit a Closing Date no later than June 1, 1998, or if
the FCC application for such transfers should be set for evidentiary hearing
(other than a hearing at which only oral arguments are to be presented) by the
Commission for any reason; provided, however, that the terminating party may not
so terminate this Agreement if it is in material breach under any provision of
this Agreement, or if such Commission consent has been given in sufficient time
prior to the delivery of written notice of termination to permit a Closing Date
on or before June 1, 1998.
31. REMEDIES ON TERMINATION OF AGREEMENT OR DEFAULT PRIOR TO CLOSING.
-----------------------------------------------------------------
(a) In the event this Agreement is terminated solely because
of a material breach by Subsidiary or Regent prior to Closing of any term
contained in this Agreement or any warranty or representation contained herein,
Faircom may terminate this Agreement only if Faircom 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 June 1, 1998 if such breach occurs prior
to June 1, 1998) of the specific nature of the breach and Subsidiary or Regent
have failed to correct it within that period.
(b) In the event of a material breach by Faircom prior to
Closing of any term or material covenant contained in this Agreement or any
warranty or representation contained herein, Regent and Subsidiary may, at their
option, terminate the Agreement and Regent and Subsidiary may recover damages
from Faircom or, without terminating this Agreement, obtain specific performance
of this Agreement, which Faircom acknowledges 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 Faircom thirty (30)
days' written notice (or such lesser number of days as are remaining until June
1, 1998 if such breach occurs prior to June 1, 1998) of the specific nature of
the breach and Faircom has failed to correct it within that period.
(c) Notwithstanding the provisions of subparagraphs 30(a) and
(b) 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 or to obtain the consent of the Faircom
Stockholders described in paragraph 21(mm)(vi), 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 or, except as contemplated by subparagraph
30(e), Faircom Stockholder consent.
(d) Except as provided in subparagraphs (e) and (f) below, and
except as provided in the immediately succeeding sentence, in the event of a
termination of this Agreement pursuant to Paragraph 30, each party shall pay the
costs and expenses incurred by it in connection with this Agreement, and no
party (or any of its officers, directors, employees, agents, representa-
-A58-
<PAGE> 318
tives or stockholders) shall be liable to any other party for any costs,
expenses, damage or loss of anticipated profits hereunder. In the event of any
termination of this Agreement, the parties shall retain any and all rights
attendant to a breach of any covenant, representation or warranty hereunder.
(e) In the event this Agreement is terminated by Faircom in
accordance with subparagraph 30(e), or in the event this Agreement is not
terminated but the Faircom stockholders do not approve the Merger and, within
one year from the date of the Faircom Stockholders' meeting, Faircom consummates
a transaction pursuant to a Superior Proposal, Faircom shall promptly pay to
Regent a fee in the amount of $1,650,000.
(f) In the event this Agreement is terminated by Faircom in
accordance with subparagraph 31(a) above, Regent shall promptly pay to Faircom
$300,000 plus any out-of-pocket expenses incurred by Faircom in connection with
this transaction in excess of $300,000; provided that such expenses must be
properly documented by Faircom and shall be reasonable and charged at customary
hourly rates; and provided further, that in no event shall Regent be required to
pay to Faircom more than $823,000 in the aggregate.
(g) The parties acknowledge and agree that any and all amounts
paid by any party to the other pursuant to the provisions of this Paragraph 31
shall constitute liquidated damages.
32. BROKERAGE. The parties agree that other than The Crisler Company,
no broker or finder was connected with or brought about this transaction. Of the
fees due to The Crisler Company, Regent will pay $150,000, and will be entitled
to a reduction of the consideration to be paid for the Faircom Stock for the
balance of $50,000 to be paid by Faircom, as a reduction of Net Working Capital.
33. 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 nor any other consideration
hereunder shall constitute a waiver of any covenant, representation, or warranty
herein contained. Regent and Subsidiary, on the one hand, and Faircom, 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
34. EMPLOYMENT AGREEMENT. Prior to the mailing of the Registration
Statement and effective as of the Closing, Regent and the Chairman and Chief
Executive Officer of Faircom shall execute an employment agreement (the
"Employment Agreement"). The Employment Agreement shall be substantially in the
form attached as Exhibit 34 hereto, with such additional terms and conditions as
may be mutually agreed to by the various parties thereto.
-A59-
<PAGE> 319
35. 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.
36. EXECUTION. This Agreement may be executed in one or more
counterparts, all of which shall be construed to be one and the same Agreement,
and shall become effective when one counterpart has been signed by each party
and delivered to the others hereto.
37. 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 Faircom, by notifying Regent, and in the case
of Regent or Subsidiary, by notifying Faircom:
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 Faircom:
Joel M. Fairman, Chairman
Faircom Inc.
333 Glen Head Road
Old Brookville, New York 11545
Fax: (516) 676-2631
-A60-
<PAGE> 320
copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, N.Y. 10103
Attn: Anthony Pantaleoni, Esq.
Fax: (212) 752-5958
and a copy to:
Taft Stettinius & Hollister
1800 Star Bank Center
425 Walnut Street
Cincinnati, Ohio 45202-3957
Attn: Gerald S. Greenberg, Esq.
Fax: (513) 381-0205
38. DISCLOSURE. The parties hereto 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 such parties. The parties hereto
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, the parties hereto 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.
39. RECEIPT OF PREFERRED STOCK. Receipt of the shares of the Preferred
Stock by a Faircom Stockholder shall be deemed to be acceptance, ratification
and consent by said Faircom Stockholder in all respects to the terms and
provisions of this Agreement.
40. ENTIRE AGREEMENT. This Agreement, together with the Exhibits
hereto, embodies the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof.
41. GOVERNING LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Delaware without reference to its
conflicts of laws provisions.
42. SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights, interest or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation or law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
-A61-
<PAGE> 321
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
WITNESS: FAIRCOM INC.
/s/ By: /s/ Joel M. Fairman
- -------------------------- -----------------------------
Its: Chairman and Ceo
-----------------------------
WITNESS: REGENT MERGER CORP.
/s/ By: /s/ Terry S. Jacobs
- -------------------------- -----------------------------
Its: Chairman and Ceo
-----------------------------
WITNESS: REGENT COMMUNICATIONS, INC.
/s/ By: /s/ Terry S. Jacobs
- -------------------------- -----------------------------
Its: Chairman and Ceo
-----------------------------
The undersigned, Blue Chip Capital Fund II Limited Partnership and Miami Valley
Venture Fund L.P., hereby consent and agree to the terms and conditions of the
foregoing Merger Agreement (except that such parties shall not be subject to or
bound by the representations, warranties or covenants made therein by Faircom)
and do hereby covenant and agree that (i) they will convert at least $7.5
million of the outstanding principal amount of Faircom Subordinated Notes into
Faircom Common Stock not later than immediately prior to Effectiveness; and (ii)
they will enter into an agreement with Faircom to the effect that, upon such
conversion, they will have no voting rights with respect to the Faircom Stock
into which such Notes are converted until such time as approval of the
Commission is no longer required.
BLUE CHIP CAPITAL FUND II LIMITED
PARTNERSHIP
By: Blue Chip Venture Company, Ltd.
Its General Partner
By: /s/ John H. Wyant
---------------------------------
John H. Wyant
Its: Manager
MIAMI VALLEY VENTURE FUND L.P.
By: Blue Chip Venture Company of Dayton, Ltd.
Its Special Limited Partner
By: /s/ John H. Wyant
---------------------------------
John H. Wyant
Its: Manager
-A62-
<PAGE> 322
I, _________________________, Secretary of Faircom Inc., a corporation
organized and existing under the laws of the State of Delaware ("Faircom"),
hereby certify, as such Secretary, that the Agreement of Merger dated December
______, 1997 between Faircom, Regent Merger Corp. and Regent Communications,
Inc., to which this certificate is attached, was duly submitted to the Faircom
Stockholders at a special meeting of said Faircom Stockholders called and held
after at least 20 days' notice by mail as provided by Section 251 of Title 8 of
the General Corporation Law of the State of Delaware on the ________ day of
__________________, 199___, for the purpose, among other things, of
consideration and taking action upon the proposed Agreement of Merger; that
_____________ shares of common stock of Faircom were on said date issued and
outstanding; that the proposed Agreement of Merger was approved by the
affirmative vote of the holders of a majority of the total number of shares of
the outstanding common stock of Faircom entitled to vote thereon, and that
thereby the Agreement of Merger was at such meeting duly adopted as the act of
the Faircom Stockholders and the duly adopted agreement of such corporation.
WITNESS my hand on this ________ day of ________________, 199___.
---------------------------------
Secretary
I, ______________________, Secretary of Regent Merger 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 December _____, 1997, between Faircom 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 __________________, 199___.
---------------------------------
Secretary
-A63-
<PAGE> 323
The above Agreement of Merger, having been approved by the Board of
Directors of each of Faircom Inc. and Subsidiary, and having been adopted
separately by the stockholders of Faircom Inc. and the stockholder of
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 Faircom Inc. and Subsidiary, the ____________
of Faircom Inc. and the ______________ of Regent Merger Corp., do now hereby
execute the said Agreement of Merger by authority of the directors and
stockholders of Faircom Inc. and the directors and stockholder of Regent Merger
Corp., as the respective act, deed and agreement of each of such corporations,
on this _____ day of _____________, 199___.
WITNESS: FAIRCOM INC.
By:
- --------------------------------------- --------------------------------
Its:
-------------------------------
WITNESS: REGENT MERGER CORP.
By:
- --------------------------------------- --------------------------------
Its:
-------------------------------
-A64-
<PAGE> 324
Appendix B
CERTIFICATE OF DESIGNATION, NUMBER, POWERS PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE QUALIFICATIONS,
LIMITATIONS, RESTRICTIONS, AND OTHER DISTINGUISHING CHARACTERISTICS OF
SERIES C PREFERRED STOCK OF REGENT COMMUNICATIONS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation")
is
REGENT COMMUNICATIONS, INC.
2. The certificate of incorporation (as amended) of the corporation
authorizes the issuance of 20,000,000 shares of Preferred Stock (of a par value
of $.01 each) and expressly vests in the Board of Directors of the corporation
the authority provided therein to issue any or all of said shares in one or more
series and by resolution or resolutions, the designation, number, full or
limited voting powers, or the denial of voting powers, preferences and relative,
participating, optional, and other special rights and the qualifications,
limitations, restrictions, and other distinguishing characteristics of each
series to be issued.
3. The Board of Directors of the corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
designating an additional 300,000 shares of Preferred Stock as Series C
Preferred Stock so that the total number of shares of Series C Preferred Stock
shall be 4,300,000:
RESOLVED, that the Board of Directors hereby designates an
additional 300,000 shares of the corporation's Preferred Stock
as Series C Preferred Stock, so that the total number of
shares constituting the Series C Preferred Stock shall be
4,300,000 shares;
RESOLVED FURTHER, that the statements contained in the
foregoing resolution designating the number of the said Series
C Preferred Stock shall, upon the effective date of said
series, be deemed to be included in and be a part of the
certificate of incorporation of the corporation pursuant to
the provisions of Sections 104 and 151 of the General
Corporation Law of the State of Delaware;
RESOLVED FURTHER, that the officers of the corporation and
each of them individually hereby are authorized to execute and
deliver, for and on behalf of the corporation a Certificate of
Designation to be filed with the Delaware Secretary of State
and any other documents or filings required by applicable law
required to amend the corporation's Certificate and to
otherwise effectuate the intent of the foregoing resolutions."
The effective time and date of the series herein certified shall be the filing
of this certificate.
<PAGE> 325
IN WITNESS WHEREOF, the undersigned officer has executed this document the 30th
day of March, 1998.
/s/_________________________________
William L. Stakelin, President
STATE OF KENTUCKY
) SS:
AT LARGE )
BE IT REMEMBERED, that on this 30th day of March, 1998, before me, the
subscriber, a Notary Public in and for said county, personally came William L.
Stakelin, the President of Regent Communications, Inc., and acknowledged that he
signed the foregoing instrument on behalf of said corporation and that the
signing thereof is his voluntary act and deed and the voluntary act and deed of
said corporation.
IN TESTIMONY THEREOF, I have hereunto subscribed my name and affixed my
seal on this day and year aforesaid.
/s/_________________________________
Notary Public
<PAGE> 326
FIRST AMENDMENT
TO
AGREEMENT OF MERGER
This FIRST AMENDMENT TO AGREEMENT OF MERGER (this "First Amendment")
dated as of April _______, 1998, is entered into by and among FAIRCOM INC.
("Faircom"), REGENT MERGER CORP. ("Subsidiary"), REGENT COMMUNICATIONS, INC.
("Regent"), BLUE CHIP CAPITAL FUND II LIMITED PARTNERSHIP ("Blue Chip") and
MIAMI VALLEY VENTURE FUND L.P. ("Miami Valley").
WHEREAS, the parties hereto are parties to an Agreement of Merger dated
as of December 5, 1997 (the "Original Agreement"), which contemplates the merger
of Faircom into Subsidiary subject to the satisfaction of certain conditions
contained therein; and
WHEREAS, the Original Agreement restricts Regent prior to the closing
date of the Merger (the "Closing Date") from taking certain actions without the
consent of Faircom, including the issuance of additional equity securities; and
WHEREAS, Regent has entered into a commitment letter (the
"Waller-Sutton Commitment") with Waller-Sutton Media Partners, L.P.
("Waller-Sutton") whereby Waller-Sutton has committed to purchase, subject to
the negotiation and execution of definitive documentation and the satisfaction
of certain other conditions, a minimum of 2,000,000 shares of a Series F
Convertible Preferred Stock and to receive warrants to purchase up to 820,000
shares of Regent Common Stock, all as described in and subject to the terms of
the Waller-Sutton Commitment, a copy of which is attached hereto as Exhibit A;
and
WHEREAS, the issuance of such securities to Waller-Sutton may occur on
or prior to the Closing Date; and
WHEREAS, the parties deem it advisable and in their best interests that
Regent issue such securities to Waller-Sutton according to the terms contained
in the Waller-Sutton Commitment and that the Original Agreement be amended to
contemplate and permit the same.
NOW, THEREFORE, in consideration of the premises and the terms and
conditions set forth below, it is hereby agreed as follows.
A. CONSENTS AND ACKNOWLEDGMENTS REGARDING WALLER-SUTTON.
1. To the extent necessary, Faircom hereby consents to the
issuance of up to 3,700,000 shares of Series F Preferred Stock of Regent and
warrants to purchase 820,000 shares of Regent Common Stock to Waller-Sutton, all
in accordance with the terms of the Waller-Sutton Commitment, subject to the
approval of Regent's Amended and Restated Certificate of Incorporation by
Faircom's Board of Directors as provided in Paragraph 2(b) below (which approval
shall not be unreasonably withheld). If the Series F Preferred Stock is issued
to Waller-
<PAGE> 327
Sutton, Faircom hereby further consents to the issuance to General Electric
Capital Corporation of warrants to purchase 50,000 shares of Regent Common Stock
at $5.00 per share.
2. Faircom acknowledges that Regent and Waller-Sutton are
currently negotiating the exact terms of the Series F Preferred Stock and agrees
that if Waller-Sutton makes its equity investment in Regent on or prior to the
Closing Date, Exhibit 1(x) to the Original Agreement will be deemed amended such
that all references to Exhibit 1(x) shall be to the Amended and Restated
Certificate of Incorporation in such form as shall be approved by the Board of
Directors of Faircom.
B. SPECIFIC AMENDMENTS TO THE ORIGINAL AGREEMENT.
1. Paragraph 5(b) is hereby amended to provide that, if
Waller-Sutton makes its equity investment in Regent, the Board of Directors as
of and after Effectiveness shall also include Messrs. William H.
Ingram and Richard H. Patterson.
2. The first sentence of paragraph 22(b) is hereby amended to
provide that 4,300,000 shares have been designated Series C Convertible
Preferred Stock.
Following the first sentence of paragraph 22(b), there is
hereby added the following additional sentence:
"If Waller-Sutton Media Partners, L.P. acquires shares of
Series F Convertible Preferred Stock of Regent, as of
Effectiveness, 3,700,000 shares will have been designated
Series F Convertible Preferred Stock."
3. Exhibit 22(g) is hereby amended to add the following items:
"13. Stock Purchase Agreement dated as of December 1, 1997
between William L. Stakelin and Regent Communications,
Inc.
14. Agreement to Issue Warrant dated as of March 25, 1998
between Regent Communications, Inc. and River Cities
Capital Fund Limited Partnership."
4. Exhibit 22(ll) is hereby amended to add the following
transactions, which may be consummated concurrently with the Merger:
"5. Regent intends to acquire all of the outstanding
capital stock of Alta California Broadcasting, Inc. by
virtue of a merger of Alta with and into a
wholly-owned subsidiary of Regent.
<PAGE> 328
6. Regent intends to purchase the FCC licenses and
related assets used in the operation of radio stations
KFLG(AM) and KFLG(FM).
7. Regent intends to acquire all of the outstanding
capital stock of Topaz Broadcasting, Inc. by virtue of
a merger of Topaz with and into a wholly-owned
subsidiary of Regent. Regent also intends to purchase
the FCC licenses and related assets used in the
operation of radio stations KIXW(AM) and KZXY(FM)."
C. MISCELLANEOUS.
1. This First Amendment may be executed in one or more counterparts and
by facsimile, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
2. This First Amendment embodies the entire agreement and understanding
of the parties and supersedes any and all prior agreements and understandings
relating to the matters specifically covered herein. Except as amended hereby,
the terms and conditions of the Original Agreement remain in full force and
effect.
3. This First Amendment has been duly authorized, validly executed, and
delivered by the parties hereto and constitutes a valid and binding obligation
of such parties.
4. All capitalized terms used herein and not otherwise defined have the
meaning ascribed to them in the Original Agreement.
IN WITNESS WHEREOF, this First Amendment has been executed as of the
date first above written.
REGENT COMMUNICATIONS, INC.
By: _______________________________________
Matthew A. Yeoman
Vice President-Finance
REGENT MERGER CORP.
By: _______________________________________
Matthew A. Yeoman
Vice President-Finance
<PAGE> 329
FAIRCOM INC.
By: _________________________________________
Joel M. Fairman
Chairman and Chief Executive Officer
BLUE CHIP CAPITAL FUND II LIMITED PARTNERSHIP
By: Blue Chip Venture Company, Ltd.
Its General Partner
By: _________________________________________
John H. Wyant
Its: Manager
MIAMI VALLEY VENTURE FUND. L.P.
By: Blue Chip Venture Company of Dayton, Ltd.
Its Special Limited Partner
By: _________________________________________
John H. Wyant
Its: Manager
<PAGE> 330
EXHIBIT A
WALLER-SUTTON COMMITMENT LETTER
<PAGE> 331
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
REGENT COMMUNICATIONS, INC.
Regent Communications, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies that the
Corporation was originally incorporated under the name "JS Communications, Inc."
on November 4, 1996, and that its original Certificate of Incorporation was
filed with the Secretary of State of the State of Delaware on the same date. The
Corporation further certifies that the Corporation changed its named from JS
Communications, Inc. to Regent Communications, Inc. upon the filing with the
Secretary of State of Delaware of a Certificate of Amendment on May 16, 1997.
The Corporation further certifies that this Amended and Restated Certificate of
Incorporation amends and restates the provisions previously filed with the
Secretary of State of the State of Delaware.
FIRST: NAME. The name of the Corporation is Regent Communications, Inc.
SECOND: REGISTERED OFFICE AND REGISTERED AGENT. The registered office
of the Corporation in the State of Delaware is 1209 Orange Street, New Castle
County, Wilmington, Delaware 19801. The Registered Agent at the same address is
The Corporation Trust Company.
THIRD: PURPOSES. The purposes of the Corporation are to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: CAPITAL STOCK.
A. AUTHORIZED CAPITAL STOCK. The total number of shares of all classes
of stock which the Corporation shall have authority to issue is Fifty Million
(50,000,000) shares, consisting of a class of Thirty Million (30,000,000) shares
of Common Stock, par value of $.01 per share, and a class of Twenty Million
(20,000,000) shares of Preferred Stock, par value of $.01 per share.
B. COMMON STOCK. The Common Stock shall have full voting rights and
other characteristics of common stock recognized under the General Corporation
Law of the State of
-B1-
<PAGE> 332
Delaware subject to the rights and preferences of Preferred Stock; provided,
however, in the event the Corporation holds (directly or indirectly) a license
or franchise from a governmental agency to conduct its business and such license
or franchise is conditioned upon some or all of the holders of its capital stock
possessing prescribed qualifications, such Common Stock and the Preferred Stock
shall be subject to redemption by the Corporation, to the extent necessary to
prevent the loss of such license or franchise or to reinstate it, for cash,
property or rights, including other securities of the Corporation, at such time
or times as the Board of Directors determines upon notice and following the same
procedures as are applicable to redemption of Preferred Stock at a redemption
price equal to its fair market value.
C. PREFERRED STOCK. The Board of Directors is authorized, subject to
the limitations prescribed by law and the provisions of this Article FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
[1] The number of shares constituting that series and the
distinctive designation of that series;
[2] The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on
shares of that series;
[3] Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such
voting rights;
[4] Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
[5] Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
[6] Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
[7] The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares of that series;
[8] Any other relative rights, preferences and limitations of
that series.
-B2-
<PAGE> 333
D. DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK. A series of the
Preferred Stock of the Corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as "Series A Convertible
Preferred Stock" (the "Series A Preferred") and the number of shares
constituting such series shall be 620,000 shares. The stated value of the Series
A Preferred shall be $5 per share, the original per share issue price (the
"Stated Value") .
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series A Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series A Preferred at the rate of $.35 per share per annum. No interest
shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
In addition to voting rights required by law or by this Amended
Certificate of Incorporation, as amended or restated from time to time (the
"Certificate of Incorporation"), subject to restrictions contained in this
Certificate of Incorporation the holders of Series A Preferred shall be entitled
to vote on all matters submitted to a vote of the Corporation's stockholders.
Except as otherwise required by law or provided by this Certificate of
Incorporation, the holders of the Series A Preferred, the holders of the Series
C Preferred, the holders of the Series D Preferred (under certain conditions),
the holders of the Series E Preferred and the holders of the Corporation's
Common Stock shall vote together as one class with one vote per share (in the
case of Preferred Stock, subject to adjustments as provided in Section 7 below
and if convertible into Common Stock, one vote per share of Common Stock into
which such convertible Preferred Stock is then convertible) on all matters
submitted to a vote of the Corporation's stockholders.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series A Preferred as provided in
Section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series A Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred, except dividends paid
ratably on the Series A Preferred and all such parity stock on which dividends
are payable or in
-B3-
<PAGE> 334
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled, (C) redeem or purchase or otherwise acquire for
consideration any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior to the Series A Preferred or in satisfaction of
contractual obligations to do so entered into with the written consent of the
holders of a majority of outstanding shares of Series A Preferred, or (D)
purchase or otherwise acquire for consideration any shares of the Series A
Preferred, or any shares of stock ranking on a parity with the Series A
Preferred except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series of classes.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series A Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series A Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
unless, prior thereto, the holders of Series A Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred, except distributions made ratably on the Series A Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. CONVERSION.
7A. OPTIONAL CONVERSION. Each share of the Series A Preferred may be
converted at any time, at the option of the holder thereof, into shares of
Common Stock of the Corporation, on the terms and conditions set forth below in
this Section 7A:
[a] Subject to the provisions for adjustment hereinafter set
forth, each share of the Series A Preferred shall be convertible at the
option of the holder thereof, in the manner hereinafter set forth, into
one (1) fully paid and nonassessable share of Common Stock of the
Corporation.
-B4-
<PAGE> 335
[b] The number of shares of Common Stock into which each share
of the Series A Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series A
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series A Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in accordance with clause (I) above. An adjustment
made pursuant to this sub-paragraph b[i] shall become
effective (a) in the case of any such dividend, immediately
after the close of business on the record date for the
determination of holders of Common Stock entitled to receive
such dividend, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series A Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series A Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which
the holder would have owned after giving effect to such event
had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event.
An adjustment made pursuant to this subparagraph b(ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the issuance of
such share of Series A Preferred shall: (A) issue any options,
warrants, or other rights (excluding those to Blue Chip
Capital Fund II Limited Partnership and/or to Miami Valley
Venture Fund L.P. as a holder of Series C Preferred pursuant
to the terms of a Redemption and Warrant Agreement among the
Corporation and them, dated during December, 1997, excluding
-B5-
<PAGE> 336
those issued in exchange for options to purchase common stock
in Faircom Inc. pursuant to the terms of a merger, and
excluding stock options to management of the Corporation
exercisable for up to fifteen percent (15%) of the equity
securities of the Corporation, on a fully-diluted basis)
entitling the holder thereof to subscribe for, or purchase,
Common Stock at a price per share which, when added to the
amount of consideration received or receivable by the
Corporation for such options, warrants, or other rights, is
less than the then fair market value per share of the Common
Stock at the date of such issuance; (B) issue or sell
securities of the Corporation convertible into, or
exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series A Preferred is convertible shall be adjusted so
that, thereafter, until further adjusted, the holder of each
share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (w) the number of shares of Common
Stock into which such shares are convertible immediately prior
to the occurrence of such event by (x) a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding prior to such issuance PLUS the number of
additional shares of Common Stock issuable upon exercise of
such options, warrants, or rights, or exchangeable or
convertible securities, or the additional number of shares of
Common Stock issued at such time, and the denominator of which
shall be the number of shares of Common Stock outstanding
prior to such issuance PLUS the number of shares of Common
Stock that either (y) the sum of the aggregate exercise price
of the total number of shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or upon
conversion or exchange of such convertible securities, and the
aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
[iv] In the event that, at any time, or from time to
time, after the issuance such share of the Series A Preferred,
the Common Stock issuable upon conversion of the Series A
Preferred Stock is changed into the same or a different number
of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7A), then, and in any
such event, each holder of Series A Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series A Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
-B6-
<PAGE> 337
[v] If at any time, or from time to time after the
issuance such share of the Series A Preferred there is a
capital reorganization of the Common Stock other than a
recapitalization, subdivision, combination, reclassification,
or exchange of shares provided for elsewhere in this Section
7A) or a merger or consolidation of the Corporation with or
into another corporation, or the sale of all, or substantially
all, of the Corporations' properties and assets to any other
person, then, as a part of such reorganization, merger,
consolidation, or sale, provision shall be made so that the
holders of the Series A Preferred shall thereafter be entitled
to receive upon conversion of the Series A Preferred the
number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any
such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7A with respect
to the rights of the holders of Series A Preferred after the
reorganization, merger, consolidation, or sale to the end that
the provisions of this Section 7A shall be applicable after
that event and be as nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights, options,
warrants or conversion or exchange privileges which caused an
adjustment pursuant to this Section 7 to be made, if any
thereof shall not have been exercised, the number of shares of
Common Stock into which each share of the Series A Preferred
is convertible shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been
required, as the case may be) as if (a) the only shares of
Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange privileges and (b)
such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Corporation upon
such exercise plus the aggregate consideration, if any,
actually received by the Corporation for the issuance, sale or
grant of all such rights, options, warrants or conversion or
exchange privileges, whether or not exercised.
[c] If any adjustment in the number of shares of Common Stock
into which each share of the Series A Preferred may be converted
required pursuant to this Section 7A would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series A Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series A Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series A Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7A. All calculations under this paragraph [c] shall be made to the
nearest one-hundredth of a share.
[d] Subject to the limitation in Section 7A[f] below, the
holder of any shares of the Series A Preferred may convert such shares
into shares of Common Stock by surrendering for such purpose to the
Corporation, at its principal office or at such other office or agency
main-
-B7-
<PAGE> 338
tained by the Corporation for that purpose, a certificate or
certificates representing the shares of Series A Preferred to be
converted accompanied by a written notice stating that such holder
elects to convert all or a specified number of such shares in
accordance with the provisions of this Section 7A and specifying the
name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such
notice shall specify a name or names other than that of such holder,
such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or
names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series A Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series A Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series A Preferred to be
converted so that the rights of the holder thereof shall cease except
for the right to receive Common Stock of the corporation in accordance
herewith, and the converting holder shall be treated for all purposes
as having become the record holder of such Common Stock of the
Corporation at such time.
[e] Upon conversion of any shares of the Series A Preferred,
the holder thereof shall be entitled to receive any accumulated,
accrued or unpaid dividends in respect of the shares so converted,
including any dividends on such shares of the Series A Preferred
declared prior to such conversion if such holder held such shares on
the record date fixed for the determination of holders of the Series A
Preferred entitled to receive payment of such dividend.
[f] Shares of the Series A Preferred may not be converted
after the close of business on the third business day preceding the
Redemption Date pursuant to Section 8.
[g] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series A Preferred.
[h] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Company demand in writing that "fair market value" be determined
by an appraiser who shall be mutually acceptable to the Board of
Directors and such holders, whose determination shall be binding and
whose fees and expenses shall be paid equally by the Company and such
holders.
[i] The provisions in subpart 7A[b][ii] above shall not apply
to, and no adjustment shall be made as a result of, a reverse stock split of
Common Stock made by the Corporation on December 1, 1997.
-B8-
<PAGE> 339
7B. MANDATORY CONVERSION. Each share of the Series A Preferred shall be
converted, at the option of the Board of Directors, into shares of Common Stock
of the Corporation, on the terms and conditions set forth below in this Section
7B:
[a] Subject to the provisions for adjustment set forth in this
Section 7, each share of the Series A Preferred shall be convertible at
the option of the Board of Directors, under the conditions hereinafter
set forth, into one (1) fully paid and nonassessable share of Common
Stock of the Corporation.
[b] The Board of Directors of the Corporation may require
conversion of all shares of the Series A Preferred into shares of
Common Stock in preparation for or upon any of the following:
[i] A public offering of equity securities of the
Corporation of at least $10,000,000 in gross proceeds;
[ii] A private placement of equity securities of the
Corporation of at least $25,000,000 in gross proceeds;
[iii] A private placement of equity securities of the
Corporation of at least $10,000,000 in gross proceeds under
circumstances where the investor(s) reasonably believe the
conversion of the Series A Preferred is necessary to achieve
its (their) investment objectives;
[iv] A merger of the Corporation with another
corporation or other entity, whether or not the Corporation is
a survivor of such transaction whereby as a result the
stockholders of the Corporation hold less than 50% of the
outstanding capital stock of the surviving entity; or
[v] An acquisition of equity securities of the
Corporation in one transaction or in a series of related
transactions which results in a transfer of majority voting
control of the Corporation.
[c] The Series A Preferred shall convert to Common Stock of
the Corporation automatically upon notice in writing to the
stockholders or upon publication (as determined by the Board of
Directors). As promptly as practicable after such notice, and in any
event within five business days after the surrender of certificates for
the Series A Preferred (if required by the Board of Directors), the
Corporation shall deliver or cause to be delivered certificates
representing the number of validly issued, fully paid and nonassessable
shares of Common Stock of the Corporation to which the holder of the
Series A Preferred so converted shall be entitled. Such conversion
shall be deemed to have been made at the close of business on the date
of giving of such notice of mandatory conversion so that the rights of
the holder thereof shall cease with or without surrender of
certificates for the Series A Preferred, except for the right to
receive Common Stock of the Corporation in accordance herewith, and the
converting holder shall be treated for all purposes as having become
the record holder of such Common Stock of the Corporation at such time.
-B9-
<PAGE> 340
[d] Upon conversion of the Series A Preferred, the holder
thereof shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, including any
dividends on such shares of the Series A Preferred declared prior to
such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series A Preferred
entitled to receive payment of such dividend.
[e] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series A Preferred.
SECTION 8. REDEMPTION.
[a] The Corporation may, at the election of its Board of
Directors, at any time or from time to time, redeem the whole or part
of the Series A Preferred, at the Stated Value, plus an amount equal to
all unpaid dividends thereon, including accrued dividends, whether or
not declared, to the date of redemption. In case the Corporation shall
elect to redeem less than all the Series A Preferred, the Corporation
shall select pro rata the shares so to be redeemed, except that if the
Board of Directors determines in its reasonable business judgment that
to do so by lot would be in the best interests of the Corporation, then
the shares so to be redeemed shall be selected by lot in such manner as
shall be prescribed by the Board of Directors.
[b] Notice of every such redemption shall be mailed, first
class postage prepaid, not less than thirty (30) nor more than sixty
(60) days prior to the date fixed for redemption ("Redemption Date"),
to each holder of record of the shares to be redeemed, at his or her
address as the same appears on the record of stockholders; but neither
failure to mail any such notice to one or more such holders nor any
defect in any such notice shall affect the sufficiency of the
proceedings for redemptions as to other holders. Each such notice shall
state the Redemption Date; the number of shares of Series A Preferred
to be redeemed, and, if less than all the shares of Series A Preferred
held by such holder are to be redeemed, the manner of selecting by lot
the shares to be redeemed; the place or places where such shares are to
be surrendered for payment; that dividends on the shares to be redeemed
will cease on such Redemption Date; and the effect of such redemption
on the right of conversion.
[c] Notice having been mailed as aforesaid, from and after the
Redemption Date, all dividends on the shares so called for redemption
shall cease to accrue, said shares shall no longer be deemed to be
outstanding, all rights of the holders thereof as stockholders of the
Corporation (except the right to receive payment for the shares, the
right to receive declared dividends pursuant to Section 7A[e] above,
and the right to convert such shares into shares of Common Stock of the
Corporation until the close of business on the third business day
preceding the Redemption Date, as provided in Section 7) shall cease,
and, upon surrender in accordance with said notice of the certificates
for any such shares (properly endorsed or assigned for transfer, if the
Board of Directors shall so require), such shares shall be redeemed by
the Corporation in accordance with this Section 8. In connection with
the determination of the amount of dividends accruing with respect to
any conversion in the period between a notice of redemption and the
Redemption Date, on a date which is not a Quarterly Dividend Payment
Date, the amount of any such dividends shall be prorated based upon the
number of days which have elapsed since the immediately preceding
Quarterly Dividend Payment Date (excluding such Quarterly Dividend
Payment Date itself).
-B10-
<PAGE> 341
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series A Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series A Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series A Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series A Preferred a notice stating that the number of shares into
which the shares of Series A Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series A
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
9, nor shall such failure affect the validity, rights or preferences of any
shares of the Series A Preferred.
SECTION 10. RANKING.
The Series A Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except the
Series B Preferred, which shall rank senior to the Series A Preferred, and the
Series C Preferred, the Series D Preferred, and the Series E Preferred with
which it shall rank equal), as to the payment of dividends and the distribution
of assets and rights upon liquidation, dissolution or winding up of the
Corporation.
SECTION 11. DIRECTORSHIP.
The holders of the Series A Preferred, as a class, shall be entitled to
be represented on the Board of Directors by one Director (the "Series A
Director") who, upon nomination by such holders, as a class, will stand for
election by voting by the holders of the Series A Preferred, the Series B
Preferred (subject to limitation contained in Article FOURTH, Subpart E, Section
11), the Series C Preferred, the Series D Preferred (subject to limitations
contained in Article FOURTH, Subpart G, Sections 3 and 11), the Series E
Preferred and holders of Common Stock, except under circumstances where the
number of individuals nominated for election exceeds the number of Directors to
be elected. In the event the number of individuals nominated for election
exceeds the number of Directors to be elected, then the holders of the Series A
Preferred shall have the sole right to vote for, elect and remove the individual
nominated by them, as a class, to serve as the Series A Director, and in such
event no right to vote for, elect or remove any of the other Directors. The
Series A Director, upon being elected, will serve for the same term and have the
same voting powers as other Directors. In addition, the Series A Director shall
serve as a member of the Compensation, Audit, and Nominating Committees of the
Board of Directors (or any other committee of the Board performing such
functions), which Committees will be composed of at least one Director, in
addition to the Series A Director, who is not an employee of the Corporation.
E. DESIGNATION OF SERIES B SENIOR CONVERTIBLE PREFERRED STOCK. A series
of the Preferred Stock of the corporation is hereby created and authorized, and
the designations, amount and stated value of such series of Preferred Stock and
the voting powers, preferences and relative, participating,
-B11-
<PAGE> 342
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as Series B Senior
Convertible Preferred (the "Series B Preferred") and the number of shares
constituting such series shall be 1,000,000 shares. The stated value of the
Series B Preferred shall be $5 per share, the original per share issue price
(the "Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series B Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series B Preferred at the rate of $.35 per share per annum. No interest
shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
Except as provided herein or otherwise required by law, the voting
power of the Corporation shall be vested in the holders of shares of Common
Stock, Series A Preferred, Series C Preferred, Series E Preferred, and such
other series of voting preferred stock as are from time to time designated, and
the holders of shares of Series B Preferred and the Series D Preferred shall
have no voting power except that with respect to the events described below the
holders of the Series A Preferred, the holders of the Series B Preferred, the
holders of the Series C Preferred, the holders of the Series D Preferred, the
holders of the Series E Preferred, and the holders of the Corporation's Common
Stock shall vote together as one class with one vote per share (in the case of
Preferred Stock, subject to adjustments as provided in Section 7 below and if
convertible into Common Stock, one vote per share of Common Stock into which
such convertible Preferred Stock is then convertible), to the extent such of the
following events are otherwise subject to the vote of any holders of capital
stock of the Corporation:
[a] any amendment of this Amended and Restated Certificate of
Incorporation;
[b] a sale of all or substantially all of the assets of the
Corporation;
[c] the dissolution, liquidation or termination of the
Corporation;
[d] any acquisition of, or merger of the Corporation with,
another corporation or other entity, whether or not the Corporation is
a survivor of such transaction;
[e] any change in the fundamental nature of the business of
the Corporation;
[f] any transaction with affiliates, except upon fair and
reasonable terms comparable to an arms-length transaction; and
-B12-
<PAGE> 343
[g] any change in the Corporation's capital structure in a
manner that dilutes the ownership interest of the holders of Series B
Preferred.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series B Preferred as provided in
Section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series B Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred, except dividends paid
ratably on the Series B Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series B Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series B
Preferred, or (D) purchase or otherwise acquire for consideration any shares of
the Series B Preferred, or any shares of stock ranking on a parity with the
Series B Preferred except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series of classes.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series B Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred unless, prior thereto, the holders of Series B Preferred shall have
received the Stated Value per share, plus an amount equal to unpaid dividends
thereon, including accrued dividends, whether or not declared, to the date of
such payment or (B) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred, except distributions made ratably on the Series B Preferred and all
other such parity
-B13-
<PAGE> 344
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up.
SECTION 7. CONVERSION.
Each share of the Series B Preferred may be converted at any time, at
the option of the holder thereof, into shares of Common Stock of the
Corporation, on the terms and conditions set forth below in this Section 7:
[a] Subject to the provisions for adjustment hereinafter set
forth, each share of the Series B Preferred shall be convertible at the
option of the holder thereof, in the manner hereinafter set forth, into
one-half (1/2) fully paid and nonassessable share of Common Stock of
the Corporation.
[b] The number of shares of Common Stock into which each share
of the Series B Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series B
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series B Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in accordance with clause (I) above. An adjustment
made pursuant to this subparagraph b[i] shall become effective
(a) in the case of any such dividend, immediately after the
close of business on the record date for the determination of
holders of Common Stock entitled to receive such dividend, or
(b) in the case of any such subdivision, at the close of
business on the day immediately prior to the day upon which
such corporate action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series B Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series B Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the
-B14-
<PAGE> 345
numerator of which is the number of shares which the holder
would have owned after giving effect to such event had such
share been converted immediately prior to the occurrence of
such event and the denominator of which is the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event. An
adjustment made pursuant to this subparagraph b[ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation at any time or from
time to time after the issuance of such share of Series B
Preferred shall issue warrants, options or other rights to
subscribe for or purchase Common Stock (whether or not at the
time exercisable) to Blue Chip Capital Fund II Limited
Partnership and/or to Miami Valley Venture Fund L.P., as a
holder of Series C Preferred, then in such case the number of
shares of Common Stock into which each share of the Series B
Preferred is convertible shall be adjusted as provided below
on the basis that the maximum number of additional shares of
Common Stock necessary to effect the conversion or exchange of
all such warrants, options or other rights shall be deemed to
have been issued as of the date for the determination of the
adjusted number of shares of Common Stock as hereinafter
provided. For the purpose of this subparagraph 7[b][iii], the
date as of which the adjusted number of shares of Common Stock
shall be computed shall be the earlier of (A) the date on
which the Corporation shall enter into an unconditional
contract for the issuance of such warrants, options or other
rights, or (B) the date of actual issuance of such warrants,
options or other rights.
Upon the issuance or sale of warrants,
options, or other rights as provided in the foregoing
paragraph, the holder of each share of Series B Preferred
shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock equal to the quotient of (A)
an amount equal to the product of (x) the number of shares of
Common Stock which such holder would have been entitled to
receive upon conversion of the Series B Preferred immediately
prior to such issuance or sale multiplied by (y) the total
number of shares of Common Stock deemed outstanding
immediately after such issuance or sale divided by (B) the
total number of shares of Common Stock deemed outstanding
immediately prior to such issuance or sale. For purposes of
this subsection 7[b][iii], the number of shares of Common
Stock deemed outstanding shall include the number of shares
actually issued and outstanding and the number of shares
issuable upon the conversion of the Preferred Stock and the
exercise of all warrants and options.
[iv] In case the Corporation after the issuance of
such share of Series B Preferred shall: (A) issue any options,
warrants, or other rights entitling the holder thereof to
subscribe for, or purchase, Common Stock at a price per share
which, when added to the amount of consideration received or
receivable by the Corporation for such options, warrants, or
other rights, is less than the then fair market value per
share of the Common Stock at the date of such issuance (other
than an issuance of warrants or other rights of the
Corporation subject to subsection (b)(iii) above and also
other than stock options issued in exchange for options to
purchase common stock in Faircom Inc. pursuant to the terms of
a merger and stock options to management of the Corporation
exercisable for up to fifteen percent (15%) of the
-B15-
<PAGE> 346
equity securities of the Corporation, on a fully-diluted
basis); (B) issue or sell securities of the Corporation
convertible into, or exchangeable for, Common Stock at a price
per share which, when added to the amount of consideration
received or receivable, from the Corporation for such
exchangeable or convertible securities, is less than the then
fair market value of a share of Common Stock at the date of
such issuance; or (C) issue or sell additional shares of
Common Stock for consideration representing less than the then
fair market value of the Common Stock at the date of such
issuance; then the number of shares of Common Stock into which
each share of the Series B Preferred is convertible shall be
adjusted so that, thereafter, until further adjusted, the
holder of each share thereof shall be entitled to receive,
upon the conversion thereof, the number of shares of Common
Stock determined by multiplying (w) the number of shares of
Common Stock into which such shares are convertible
immediately prior to the occurrence of such event by (x) a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding prior to such issuance PLUS the
number of additional shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or exchangeable
or convertible securities, or the additional number of shares
of Common Stock issued at such time, and the denominator of
which shall be the number of shares of Common Stock
outstanding prior to such issuance PLUS the number of shares
of Common Stock that either (y) the sum of the aggregate
exercise price of the total number of shares of Common Stock
issuable upon exercise of such options, warrants, or rights,
or upon conversion or exchange of such convertible securities,
and the aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
[v] In the event that, at any time, or from time to
time, after the issuance of such share of the Series B
Preferred, the Common Stock issuable upon conversion of the
Series B Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series B Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series B Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[vi] If at any time, or from time to time after the
issuance of such share of the Series B Preferred there is a
capital reorganization of the Common Stock (other than a
recapitalization, subdivision, combination, reclassification,
or exchange of shares provided for elsewhere in this Section
7) or a merger or consolidation of the Corporation with or
into another corporation, or the sale of all, or substantially
all, of the Corporation's properties and assets to any other
person, then, as a part of such
-B16-
<PAGE> 347
reorganization, merger, consolidation, or sale, provision
shall be made so that the holders of the Series B Preferred
shall thereafter be entitled to receive upon conversion of the
Series B Preferred the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions
of this Section 7 with respect to the rights of the holders of
Series B Preferred after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Section 7 shall be applicable after that event and be as
nearly equivalent as may be practicable.
[vii] Upon the expiration of any rights, options,
warrants or conversion or exchange privileges which caused an
adjustment pursuant to this Section 7 to be made, if any
thereof shall not have been exercised, the number of shares of
Common Stock into which each share of the Series B Preferred
is convertible shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been
required, as the case may be) as if (a) the only shares of
Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange privileges and (b)
such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Corporation upon
such exercise plus the aggregate consideration, if any,
actually received by the Corporation for the issuance, sale or
grant of all such rights, options, warrants or conversion or
exchange privileges, whether or not exercised.
[c] If any adjustment in the number of shares of Common Stock
into which each share of the Series B Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series B Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series B Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series B Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [c] shall be made to the
nearest one-hundredth of a share.
[d] Subject to the limitation in Section 7[f] below, the
holder of any shares of the Series B Preferred may convert such shares
into shares of Common Stock by surrendering for such purpose to the
Corporation, at its principal office or at such other office or agency
maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of Series B Preferred to be
converted accompanied by a written notice stating that such holder
elects to convert all or a specified number of such shares in
accordance with the provisions of this Section 7 and specifying the
name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such
notice shall specify a name or names other than that of such holder,
such notice shall be accompanied by
-B17-
<PAGE> 348
payment of all transfer taxes payable upon the issuance of shares of
Common Stock in such name or names. As promptly as practicable, and in
any event within five business days after the surrender of such
certificates and the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes, the Corporation shall
deliver or cause to be delivered (I) certificates representing the
number of validly issued, fully paid and nonassessable shares of Common
Stock of the Corporation to which the holder of the Series B Preferred
so converted shall be entitled and (ii) if less than the full number of
shares of the Series B Preferred evidenced by the surrendered
certificate or certificates are being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares
converted. Such conversions shall be deemed to have been made at the
close of business on the date of giving of such notice and of such
surrender of the certificate or certificates representing the shares of
the Series B Preferred to be converted so that the rights of the holder
thereof shall cease except for the right to receive Common Stock of the
Corporation in accordance herewith, and the converting holder shall be
treated for all purposes as having become the record holder of such
Common Stock of the Corporation at such time.
[e] Upon conversion of any shares of the Series B Preferred,
the holder thereof shall be entitled to receive any accumulated,
accrued or unpaid dividends in respect of the shares so converted,
including any dividends on such shares of the Series B Preferred
declared prior to such conversion if such holder held such shares on
the record date fixed for the determination of holders of the Series B
Preferred entitled to receive payment of such dividend.
[f] Shares of the Series B Preferred may not be converted
after the close of business on the third business day preceding the
Redemption Date pursuant to Section 8.
[g] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series B Preferred.
[h] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Company demand in writing that "fair market value" be determined
by an appraiser, who shall be mutually acceptable to the Board of
Directors and such holders, whose determination shall be binding and
whose fees and expenses shall be paid equally by the Company and such
holders.
SECTION 8. REDEMPTION.
[a] The Corporation may, at the election of its Board of
Directors, at any time or from time to time, redeem the whole or part
of the Series B Preferred, at the Stated Value, plus an amount equal to
all unpaid dividends thereon, including accrued dividends, whether or
not declared, to the date of redemption. In case the Corporation shall
elect to redeem less than all the Series B Preferred, the Corporation
shall select pro rata the shares so to be redeemed, except that if the
Board of Directors determines in its reasonable business judgment that
to do so by lot would be in the best interests of the Corporation, then
the shares so to be redeemed shall be selected by lot in such manner as
shall be prescribed by the Board of Directors.
-B18-
<PAGE> 349
[b] Notice of every such redemption shall be mailed, first
class postage prepaid, not less than thirty (30) nor more than sixty
(60) days prior to the date fixed for redemption ("Redemption Date"),
to each holder of record of the shares to be redeemed, at his or her
address as the same appears on the record of stockholders; but neither
failure to mail any such notice to one or more such holders nor any
defect in any such notice shall affect the sufficiency of the
proceedings for redemptions as to other holders. Each such notice shall
state the Redemption Date; the number of shares of Series B Preferred
to be redeemed, and, if less than all the shares of Series B Preferred
held by such holder are to be redeemed, the manner of selecting by lot
the shares to be redeemed; the place or places where such shares are to
be surrendered for payment; that dividends on the shares to be redeemed
will cease on such Redemption Date; and the effect of such redemption
on the right of conversion.
[c] Notice having been mailed as aforesaid, from and after the
Redemption Date, all dividends on the shares so called for redemption
shall cease to accrue, said shares shall no longer be deemed to be
outstanding, all rights of the holders thereof as stockholders of the
Corporation (except the right to receive payment for the shares, and
the right to convert such shares into shares of Common Stock of the
Corporation until the close of business on the third business day
preceding the Redemption Date, as provided in Section 7) shall cease,
and, upon surrender in accordance with said notice of the certificates
for any such shares (properly endorsed or assigned for transfer, if the
Board of Directors shall so require), such shares shall be redeemed by
the Corporation in accordance with this Section 8. In connection with
the determination of the amount of dividends accruing with respect to
any conversion in the period between a notice of redemption and the
Redemption Date, on a date which is not a Quarterly Dividend Payment
Date, the amount of any such dividends shall be prorated based upon the
number of days which have elapsed since the immediately preceding
Quarterly Dividend Payment Date (excluding such Quarterly Dividend
Payment Date itself)
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series B Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series B Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series B Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series B Preferred a notice stating that the number of shares into
which the shares of Series B Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series B
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
9, nor shall such failure affect the validity, rights or preferences of any
shares of the Series B Preferred.
SECTION 10. RANKING.
The Series B Preferred shall rank senior to the Common Stock, the
Series A Preferred, the Series C Preferred, the Series D Preferred, the Series E
Preferred, and any other series of Preferred
-B19-
<PAGE> 350
Stock of the Corporation hereafter created, as to the payment of dividends and
the distribution of assets and rights upon liquidation, dissolution or winding
up of the Corporation.
SECTION 11. DIRECTORSHIP. The holders of the Series B Preferred, as a
class, shall be entitled to be represented on the Board of Directors by one
Director (the "Series B Director") who, upon nomination by such holders, as a
class, will stand for election by voting by the holders of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred (subject
to limitations contained in Article FOURTH, Subpart G, Sections 3 and 11),
Series E Preferred, and holders of Common Stock, except under circumstances (a)
where the right to nominate and vote for the Series B Director would (i) result
in attribution of the media interests of the Corporation to, or present any
other FCC regulatory issue for, the holders of the Series B Preferred under the
rules and written policies of the Federal Communications Commission ("FCC") for
so long as the holders of the Series B Preferred seek to have their ownership
interest in the Corporation deemed non-attributable under such rules and
policies or (ii) in the opinion of FCC counsel to the Corporation, the form of
such opinion and the identity of such counsel to be reasonably satisfactory to
the holders of the Series B Preferred, present any FCC regulatory issues for the
Corporation or (b) where the number of individuals nominated for election
exceeds the number of Directors to be elected. In the event the holders of the
Series B Preferred have nominated and can vote on an individual for election to
the Board of Directors and the number of individuals nominated for election
exceeds the number of Directors to be elected, then the holders of the Series B
Preferred shall have the sole right to vote for, elect and remove the individual
nominated by them, as a class, to serve as the Series B Director, and in such
event no right to vote for, elect or remove any of the other Directors. The
Series B Director, upon being elected, will serve for the same term and have the
same voting powers as other Directors. The right to elect the Series B Director
pursuant to the terms hereof shall be exercisable by the holders of a majority
of the Series B Preferred at their option upon at least 60 days notice to the
Corporation; provided, however, if the Corporation is subject to the reporting
requirements of the Securities Exchange Act of 1934, such notice must be
provided on or before the date established by the Corporation for the submission
of proposals pursuant to the proxy rules promulgated under the Securities
Exchange Act of 1934.
F. DESIGNATION OF SERIES C CONVERTIBLE PREFERRED STOCK. A series of the
Preferred Stock of the corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as Series C Convertible
Preferred (the "Series C Preferred") and the number of shares constituting such
series shall be 4,000,000 shares. The stated value of the Series C Preferred
shall be $5 per share, the original per share issue price (the "Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series C Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing
-B20-
<PAGE> 351
commencing with the date of issue of such shares, on shares of the Series C
Preferred at the rate of $.35 per share per annum. No interest shall be paid on
accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
In addition to voting rights required by law or by the Certificate of
Incorporation, subject to restrictions contained in this Certificate of
Incorporation the holders of Series C Preferred shall be entitled to vote on all
matters submitted to a vote of the Corporation's stockholders. Except as
otherwise required by law or provided by this Certificate of Incorporation, the
holders of the Series C Preferred, the holders of the Series A Preferred (under
certain conditions), the holders of the Series D Preferred, the holders of the
Series E Preferred, and the holders of the Corporation's Common Stock shall vote
together as one class with one vote per share (in the case of Preferred Stock,
subject to adjustments as provided in Section 7 below and if convertible into
Common Stock, one vote per share of Common Stock into which such convertible
Preferred Stock is then convertible) on all matters submitted to a vote of the
Corporation's stockholders.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series C Preferred as provided in
section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series C Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series C
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred, except dividends paid
ratably on the Series C Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series C
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series C Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series C
Preferred, or (D) purchase or otherwise acquire for consideration any shares of
the Series C Preferred, or any shares of stock ranking on a parity with the
Series C Preferred except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series of classes.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series C Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series
-B21-
<PAGE> 352
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, or otherwise in accordance with Delaware General Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series C Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series C Preferred
unless, prior thereto, the holders of Series C Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series C
Preferred, except distributions made ratably on the Series C Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. OPTIONAL CONVERSION.
Each share of the Series C Preferred may be converted at any time, at
the option of the holder thereof, into shares of Common Stock of the
Corporation, on the terms and conditions set forth below in this Section 7:
[a] Subject to the provisions for adjustment hereinafter set
forth, each share of the Series C Preferred shall be convertible at the
option of the holder thereof, in the manner hereinafter set forth, into
one (1) fully paid and nonassessable share of Common Stock of the
Corporation.
[b] The number of shares of Common Stock into which each share
of the Series C Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series C
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series C Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in accordance with clause (I) above. An adjustment
made
-B22-
<PAGE> 353
pursuant to this subparagraph b[i] shall become effective (a)
in the case of any such dividend, immediately after the close
of business on the record date for the determination of
holders of Common Stock entitled to receive such dividend, or
(b) in the case of any such subdivision, at the close of
business on the day immediately prior to the day upon which
such corporate action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series C Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series C Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which
the holder would have owned after giving effect to such event
had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event.
An adjustment made pursuant to this subparagraph b[ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the issuance of
such share of Series C Preferred shall: (A) issue any options,
warrants, or other rights (excluding those to Blue Chip
Capital Fund II Limited Partnership and/or to Miami Valley
Venture Fund L.P. as a holder of Series C Preferred pursuant
to the terms of a Redemption and Warrant Agreement among the
Corporation and them, dated during December, 1997 and
excluding stock options to management of the Corporation
exercisable for up to fifteen percent (15%) of the equity
securities of the Corporation, on a fully-diluted basis)
entitling the holder thereof to subscribe for, or purchase,
Common Stock at a price per share which, when added to the
amount of consideration received or receivable by the
Corporation for such options, warrants, or other rights, is
less than the then fair market value per share of the Common
Stock at the date of such issuance: (B) issue or sell
securities of the Corporation convertible into, or
exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series C Preferred is convertible shall be adjusted so
that, thereafter, until further adjusted, the holder of each
share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (w) the number of shares of Common
Stock into which such shares are convertible immediately prior
to the occurrence of such event by (x) a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding prior to such issuance PLUS the number of
additional
-B23-
<PAGE> 354
shares of Common Stock issuable upon exercise of such options,
warrants, or rights, or exchangeable or convertible
securities, or the additional number of shares of Common Stock
issued at such time, and the denominator of which shall be the
number of shares of Common Stock outstanding prior to such
issuance PLUS the number of shares of Common Stock that either
(y) the sum of the aggregate exercise price of the total
number of shares of Common Stock issuable upon exercise of
such options, warrants, or rights, or upon conversion or
exchange of such convertible securities, and the aggregate
amount of consideration, if any, received or receivable by the
Corporation for such options, warrants, or rights, or
convertible or exchangeable securities, or (z) the aggregate
consideration received in connection with the sale of shares
of its Common Stock for less than the then fair market value,
as the case may be, would purchase at the then fair market
value.
[iv] In the event that, at any time, or from time to
time, after the issuance of such share of the Series C
Preferred, the Common Stock issuable upon conversion of the
Series C Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series C Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series C Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time after the
issuance of such share of the Series C Preferred there is a
capital reorganization of the Common Stock other than a
recapitalization, subdivision, combination, reclassification,
or exchange of shares provided for elsewhere in this Section
7) or a merger or consolidation of the Corporation with or
into another corporation, or the sale of all, or substantially
all, of the Corporations' properties and assets to any other
person, then, as a part of such reorganization, merger,
consolidation, or sale, provision shall be made so that the
holders of the Series C Preferred shall thereafter be entitled
to receive upon conversion of the Series C Preferred the
number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any
such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect
to the rights of the holders of Series C Preferred after the
reorganization, merger, consolidation, or sale to the end that
the provisions of this Section 7 shall be applicable after
that event and be as nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights, options,
warrants or conversion or exchange privileges which caused an
adjustment pursuant to this Section 7 to be made, if any
thereof shall not have been exercised, the number of shares of
Common Stock into which each share of the Series B Preferred
is convertible shall, upon such
-B24-
<PAGE> 355
expiration, be readjusted and shall thereafter be such as it
would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) as
if (a) the only shares of Common Stock so issued were the
shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion
or exchange privileges and (b) such shares of Common Stock, if
any, were issued or sold for the consideration actually
received by the Corporation upon such exercise plus the
aggregate consideration, if any, actually received by the
Corporation for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange
privileges, whether or not exercised.
[c] If any adjustment in the number of shares of Common Stock
into which each share of the Series C Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series C Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series C Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series C Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [c] shall be made to the
nearest one-hundredth of a share.
[d] The holder of any shares of the Series C Preferred may
convert such shares into shares of Common Stock by surrendering for
such purpose to the Corporation, at its principal office or at such
other office or agency maintained by the Corporation for that purpose,
a certificate or certificates representing the shares of Series C
Preferred to be converted accompanied by a written notice stating that
such holder elects to convert all or a specified number of such shares
in accordance with the provisions of this Section 7 and specifying the
name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such
notice shall specify a name or names other than that of such holder,
such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or
names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series C Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series C Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series C Preferred to be
converted so that the rights of the holder thereof shall cease except
for the right to receive Common Stock of the Corporation in accordance
herewith, and the converting holder shall be treated for all purposes
as having become the record holder of such Common Stock of the
Corporation at such time.
-B25-
<PAGE> 356
[e] Upon conversion of any shares of the Series C Preferred,
the holder thereof shall be entitled to receive any accumulated,
accrued or unpaid dividends in respect of the shares so converted,
including any dividends on such shares of the Series C Preferred
declared prior to such conversion if such holder held such shares on
the record date fixed for the determination of holders of the Series C
Preferred entitled to receive payment of such dividend.
[f] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series C Preferred.
[g] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall deem
appropriate in their discretion, unless the holder(s) of more than twenty-five
percent (25%) of the outstanding shares of Preferred Stock of the Company demand
in writing that "fair market value" be determined by an appraiser who shall be
mutually acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be paid equally
by the Company and such holders.
SECTION 8. MANDATORY CONVERSION.
Each share of the Series C Preferred shall be converted, at the option
of the Board of Directors, into shares of Common Stock of the Corporation, on
the terms and conditions set forth below in this Section 8:
[a] Subject to the provisions for adjustment set forth in
Section 7, which shall also apply to conversions pursuant to this
Section 8, each share of the Series C Preferred shall be convertible at
the option of the Board of Directors, under the conditions hereinafter
set forth, into one (1) fully paid and nonassessable share of Common
Stock of the Corporation.
[b] The Board of Directors of the Corporation may require
conversion of all shares of the Series C Preferred into shares of
Common Stock upon any of the following if, and only if, all other
outstanding shares of Preferred Stock of the Corporation, other than
those which rank senior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C preferred, are concurrently
either redeemed or converted:
[i] A public offering of equity securities of the
Corporation of at least $10,000,000 in gross proceeds;
[ii] A private placement of equity securities of the
Corporation of at least $25,000,000 in gross proceeds;
[iii] A private placement of equity securities of the
Corporation of at least $10,000,000 in gross proceeds under
circumstances where the investor(s) reasonably believe the
conversion of the Series C Preferred is necessary to achieve
its (their) investment objectives;
[iv] A merger of the Corporation with another
corporation or other entity, whether or not the Corporation is
a survivor of such transaction whereby as a result the
-B26-
<PAGE> 357
stockholders of the Corporation hold less than 50% of the
outstanding capital stock of the surviving entity; or
[v] An acquisition of equity securities of the
Corporation in one transaction or in a series of related
transactions which results in a transfer of majority voting
control of the Corporation.
[c] The Series C Preferred shall convert to Common Stock of
the Corporation automatically upon notice in writing to the
stockholders or upon publication (as determined by the Board of
Directors). As promptly as practicable after such notice, and in any
event within five business days after the surrender of certificates for
the Series C Preferred (if required by the Board of Directors), the
Corporation shall deliver or cause to be delivered certificates
representing the number of validly issued, fully paid and nonassessable
shares of Common Stock of the Corporation to which the holder of the
Series C Preferred so converted shall be entitled. Such conversion
shall be deemed to have been made at the close of business on the date
of giving of such notice of mandatory conversion so that the rights of
the holder thereof shall cease with or without surrender of
certificates for the Series C Preferred, except for the right to
receive Common Stock of the Corporation in accordance herewith, and the
converting holder shall be treated for all purposes as having become
the record holder of such Common Stock of the Corporation at such time.
[d] Upon conversion of the Series C Preferred, the holder
thereof shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, including any
dividends on such shares of the Series C Preferred declared prior to
such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series C Preferred
entitled to receive payment of such dividend.
[e] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series C Preferred.
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series C Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series C Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series C Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series C Preferred a notice stating that the number of shares into
which the shares of Series C Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series C
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
9, nor shall such failure affect the validity, rights or preferences of any
shares of the Series C Preferred.
SECTION 10. RANKING.
-B27-
<PAGE> 358
The Series C Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except the
Series B Preferred, which shall rank senior to the Series C Preferred, and the
Series A Preferred, the Series D Preferred and the Series E Preferred, with
which it shall rank equal), as to the payment of dividends and the distribution
of assets and rights upon liquidation, dissolution or winding up of the
Corporation.
SECTION 11. DIRECTORSHIP.
The holders of the Series C Preferred, as a class, shall be entitled to
be represented on the Board of Directors by one Director (the "Series C
Director") who, upon nomination by such holders, as a class, will stand for
election by voting by the holders of the Series A Preferred, Series B Preferred
(subject to limitations contained in Article FOURTH, Subpart E, Section 11),
Series C Preferred, Series D Preferred (subject to limitations contained in
Article FOURTH, Subpart G, Section 3 and 11), Series E Preferred, and holders of
Common Stock, except under circumstances where the number of individuals
nominated for election exceeds the number of Directors to be elected, then the
holders of the Series C Preferred shall have the sole right to vote for, elect
and remove the individuals nominated by them, as a class, to serve as the Series
C Director, and in such event no right to vote for, elect or remove any of the
other Directors. The Series C Director, upon being elected, will serve for the
same term and have the same voting powers as other Directors. The right to elect
the Series C Director pursuant to the terms hereof shall be exercisable by the
holders of a majority of the Series C Preferred at their option upon at least 60
days notice to the Corporation; provided, however, if the Corporation is subject
to the reporting requirements of the Securities Exchange Act of 1934, such
notice must be provided on or before the date established by the Corporation for
the submission of proposals pursuant to the proxy rules promulgated under the
Securities Exchange Act of 1934. The Series C Director, if not an employee of
the Corporation, shall serve as a member of the Compensation, Audit, and
Nominating Committees of the Board of Directors (or any other Committee of the
Board performing such functions), which Committees will be composed of at least
one Director, in addition to the Series C Director, who is not an employee of
the Corporation.
G. DESIGNATION OF SERIES D CONVERTIBLE PREFERRED STOCK. A series of the
Preferred Stock of the corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as Series D Convertible
Preferred (the "Series D Preferred") and the number of shares constituting such
series shall be 1,000,000 shares. The stated value of the Series D Preferred
shall be $5 per share, the original per share issue price (the "Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series D Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and
-B28-
<PAGE> 359
October (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), accruing commencing with the date of issue of such shares, on
shares of the Series D Preferred at the rate of $.35 per share per annum. No
interest shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
Except as provided herein or otherwise required by law, the voting
power of the Corporation shall be vested in the holders of shares of Common
Stock, Series A Preferred, Series C Preferred, Series E Preferred, and such
other series of voting preferred stock as are from time to time designated, and
the holders of shares of Series B Preferred and the Series D Preferred shall
have no voting power except that with respect to the events described below the
holders of the Series A Preferred, the holders of the Series B Preferred, the
holders of the Series C Preferred, the holders of the Series D Preferred, the
holders of the Series E Preferred, and the holders of the Corporation's Common
Stock shall vote together as one class with one vote per share (in the case of
Preferred Stock, subject to adjustments as provided in Section 7 below and if
convertible into Common Stock, one vote per share of Common Stock into which
such convertible Preferred Stock is then convertible), to the extent such of the
following events are otherwise subject to the vote of any holders of capital
stock of the Corporation:
[a] any amendment of this Amended and Restated Certificate of
Incorporation, including the same as it may hereafter be amended or
restated, which (i) authorizes, or modifies the rights, preferences or
terms of, any security that is or would be senior in any respect to the
Series D Preferred, (ii) modifies any of the rights, preferences or
terms of the Series D Preferred, or (iii) would otherwise significantly
and adversely affect the Series D Preferred.
[b] a sale of all or substantially all of the assets of the
Corporation;
[c] the dissolution, liquidation or termination of the
Corporation;
[d] any merger of the Corporation with another corporation or
entity, whether or not the Corporation is the survivor;
[e] any material change in the fundamental nature of the
business of the Corporation;
[f] any transaction with affiliates, except upon fair and
reasonable terms comparable to an arms-length transaction; and
[g] any change in the Corporation's capital structure in a
manner that dilutes the economic interest of the holders of Series D
Preferred.
At such time as the holders of the Series D Preferred shall have
obtained the consent (which does not need to have become final) of the Federal
Communications Commission to the exercise by the holders of the Series D
Preferred of the voting rights set forth below or at such time as the consent of
the Federal Communications Commission is not necessary under applicable law,
rule or regulation (in the opinion of counsel acceptable to the Board of
Directors),
-B29-
<PAGE> 360
then on the election of a majority of the holders of the Series D Preferred, in
addition to voting rights required by law, the holders of Series D Preferred
shall be entitled to vote on all matters submitted to a vote of the
Corporation's stockholders in accordance with the next sentence. Except as
otherwise required by law or this Certificate of Incorporation, the holders of
the Series D Preferred and the holders of the Corporation's Common Stock shall
vote together as part of the same class and each of the outstanding shares of
the Series D Preferred shall have a number of votes per share on a matter equal
to the quotient of (a) the lesser of (1) the number of shares of Common Stock
into which the outstanding shares of Series D Preferred are then convertible,
and (2) the difference between (A) the product of (i) the fraction equal to
0.049 divided by 0.951, multiplied by (ii) the sum of the number of votes
entitled to be a cast by the Corporation's Common Stock and any Series of
Preferred (other than the Series D Preferred) which votes as a class with the
Corporation's Common Stock on such matter minus (B) the number of shares of the
Corporation's Common Stock issued pursuant to Section 7[a][i] of this Subarticle
G of Article 4 (fully adjusted to reflect the events described in Section
7[c][i] and [ii], divided by (b) the number of outstanding shares of Series D
Preferred. It is the intention of this provision that it should be construed
consistently with the limitations to which bank holding companies and foreign
banks treated as bank holding companies are subject with respect to the
ownership or control of voting securities under the Bank Holding Company Act of
1956, as amended.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series D Preferred as provided in
section 2 are in arrears,, thereafter and until dividends, including all accrued
dividends, on shares of the Series D Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series D
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series D Preferred, except dividends paid
ratably on the Series D Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series D
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series D Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series D
Preferred, or (D) purchase or otherwise acquire for consideration any shares of
the Series D Preferred, or any shares of stock ranking on a parity with the
Series D Preferred except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series of classes.
SECTION 5. REACQUIRED SHARES.
-B30-
<PAGE> 361
Any shares of the Series D Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series D Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series D Preferred
unless, prior thereto, the holders of Series D Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series D
Preferred, except distributions made ratably on the Series D Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. CONVERSION.
Subject to Section 7[a], each share of the Series D Preferred may be
converted, at the option of the holder thereof, into shares of Common Stock of
the Corporation on the terms and conditions set forth below in this Section 7:
[a] Shares of Series D Preferred may be converted by a holder
only:
[i] To acquire a number of shares of Common Stock
which, when added to all of the shares of Common Stock
previously acquired on conversion of Series D Preferred under
this provision (fully adjusted to reflect the events described
in Section 7[c], does not exceed 4.99% of the total shares of
Common Stock then outstanding; or
[ii] In a widely dispersed public distribution of the
resulting Common Stock; or
[iii] In connection with a private placement in which
no one party directly or indirectly acquires the right to
purchase in excess of 2% of the Common Stock; or
[iv] In an assignment to one or more financial
intermediaries (e.g., broker-dealer or investment banker) for
the purpose of conducting a widely dispersed distribution of
the resulting Common Stock on behalf of the holder; or
-B31-
<PAGE> 362
[v] On effectiveness of an amendment to or repeal of
the Bank Holding Company Act of 1956, as amended (including
any replacement law, "BHCA"), or the International Banking Act
of 1978, as amended ("IBA"), as a result of which a bank
holding company (as defined in the BHCA) and a foreign bank
with a U.S. branch or agency may acquire the resulting shares
of Common Stock without limitation; or
[vi] On receipt and finality of an order approving
the transaction from the Board of Governors of the Federal
Reserve System (including any successor agency responsible for
supervision and enforcement under the BHCA or IBA, "FRB")
under the BHCA or the IBA.
[b] Subject to the provisions for adjustment hereinafter set
forth, each share of the Series D Preferred shall be convertible at the
option of the holder thereof, in the manner hereinafter set forth, into
one (1) fully paid and nonassessable share of Common Stock of the
Corporation.
[c] The number of shares of Common Stock into which each share
of the Series D Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series D
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series D Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in accordance with clause (I) above. An adjustment
made pursuant to this subparagraph b[i] shall become effective
(a) in the case of any such dividend, immediately after the
close of business on the record date for the determination of
holders of Common Stock entitled to receive such dividend, or
(b) in the case of any such subdivision, at the close of
business on the day immediately prior to the day upon which
such corporate action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series D Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series D Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by
-B32-
<PAGE> 363
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the number of shares which the holder would have
owned after giving effect to such event had such share been
converted immediately prior to the occurrence of such event
and the denominator of which is the number of shares of Common
Stock into which such share was convertible immediately prior
to the occurrence of such event. An adjustment made pursuant
to this subparagraph b[ii] shall become effective at the close
of business on the date immediately prior to the day upon
which such corporate action becomes effective.
[iii] In case the Corporation after the issuance of
such share of Series D Preferred shall: (A) issue any options,
warrants, or other rights (excluding those to Blue Chip
Capital Fund II Limited Partnership and/or to Miami Valley
Venture Fund L.P. as a holder of Series C Preferred Stock
pursuant to the terms of a Redemption and Warrant Agreement
among the Corporation and them, dated during December, 1997,
excluding those issued in exchange for options to purchase
common stock in Faircom Inc. pursuant to the terms of a
merger, and excluding stock options to management of the
Corporation exercisable for up to fifteen percent (15%) of the
equity securities of the Corporation, on a fully-diluted
basis) entitling the holder thereof to subscribe for, or
purchase, Common Stock at a price per share which, when added
to the amount of consideration received or receivable by the
Corporation for such options, warrants, or other rights, is
less than the then fair market value per share of the Common
Stock at the date of such issuance; (B) issue or sell
securities of the Corporation convertible into, or
exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series D Preferred is convertible shall be adjusted so
that, thereafter, until further adjusted, the holder of each
share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (w) the number of shares of Common
Stock into which such shares are convertible immediately prior
to the occurrence of such event by (x) a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding prior to such issuance PLUS the number of
additional shares of Common Stock issuable upon exercise of
such options, warrants, or rights, or exchangeable or
convertible securities, or the additional number of shares of
Common Stock issued at such time, and the denominator of which
shall be the number of shares of Common Stock outstanding
prior to such issuance PLUS the number of shares of Common
Stock that either (y) the sum of the aggregate exercise price
of the total number of shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or upon
conversion or exchange of such convertible securities, and the
aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
-B33-
<PAGE> 364
[iv] In the event that, at any time, or from time to
time, after the issuance of such share of the Series D
Preferred, the Common Stock issuable upon conversion of the
Series D Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series D Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series D Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time after the
issuance of such share of the Series D Preferred, there is a
capital reorganization of the Common Stock other than a
recapitalization, subdivision, combination, reclassification,
or exchange of shares provided for elsewhere in this Section
7) or a merger or consolidation of the Corporation with or
into another corporation, or the sale of all, or substantially
all, of the Corporations' properties and assets to any other
person, then, as a part of such reorganization, merger,
consolidation, or sale, provision shall be made so that the
holders of the Series D Preferred shall thereafter be entitled
to receive upon conversion of the Series D Preferred the
number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any
such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect
to the rights of the holders of Series D Preferred after the
reorganization, merger, consolidation, or sale to the end that
the provisions of this Section 7 shall be applicable after
that event and be as nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights, options,
warrants or conversion or exchange privileges which caused an
adjustment pursuant to this Section 7 to be made, if any
thereof shall not have been exercised, the number of shares of
Common Stock into which each share of the Series D Preferred
is convertible shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been
required, as the case may be) as if (a) the only shares of
Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange privileges and (b)
such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all
such rights, options, warrants or conversion or exchange
privileges, whether or not exercised.
[d] If any adjustment in the number of shares of Common Stock
into which each share of the Series D Preferred may be converted
required pursuant to this Section 7 would
-B34-
<PAGE> 365
result in an increase or decrease of less than 1% in the number of
shares of Common Stock into which each share of the Series D Preferred
is then convertible, the amount of any such adjustment shall be carried
forward and adjustment with respect thereto shall be made at the time
of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall
aggregate at least 1% of the number of shares of Common Stock into
which each share of the Series D Preferred is then convertible;
provided that any such adjustments carried forward shall be made
immediately following receipt of notice from a holder of the intent to
convert all or a portion of the Series D Preferred such that upon
conversion the holder shall receive such number of shares of Common
Stock as such holder is entitled, taking into account all adjustments
required by this Section 7. All calculations under this paragraph [c]
shall be made to the nearest one-hundredth of a share.
[e] Subject to the limitation in Section 7[g] below, the
holder of any shares of the Series D Preferred may convert such shares
into shares of Common Stock by surrendering for such purpose to the
Corporation, at its principal office or at such other office or agency
maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of Series D Preferred to be
converted accompanied by a written notice stating that such holder
elects to convert all or a specified number of such shares in
accordance with the provisions of this Section 7 and specifying the
name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such
notice shall specify a name or names other than that of such holder,
such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or
names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series D Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series D Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series D Preferred to be
converted so that the rights of the holder thereof shall cease except
for the right to receive Common Stock of the Corporation in accordance
herewith, and the converting holder shall be treated for all purposes
as having become the record holder of such Common Stock of the
Corporation at such time.
[f] Upon conversion of any shares of the Series D Preferred,
the holder thereof shall be entitled to receive any accumulated,
accrued or unpaid dividends in respect of the shares so converted,
including any dividends on such shares of the Series D Preferred
declared prior to such conversion if such holder held such shares on
the record date fixed for the determination of holders of the Series D
Preferred entitled to receive payment of such dividend.
[g] Shares of the Series D Preferred may not be converted
after the close of business on the third business day preceding the
Redemption Date pursuant to Section 8.
-B35-
<PAGE> 366
[h] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series D Preferred.
[i] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Company demand in writing that "fair market value" be determined
by an appraiser, who shall be mutually acceptable to the Board of
Directors and such holders, whose determination shall be binding and
whose fees and expenses shall be paid equally by the Company and such
holders.
SECTION 8. REDEMPTION.
[a] The Corporation may, at the election of its Board of
Directors, at any time or from time to time, redeem the whole or part
of the Series D Preferred, at the Stated Value, plus an amount equal to
all unpaid dividends thereon, including accrued dividends, whether or
not declared, to the date of redemption. In case the Corporation shall
elect to redeem less than all the Series D Preferred, the Corporation
shall select pro rata the shares so to be redeemed, except that if the
Board of Directors determines in its reasonable business judgment that
to do so by lot would be in the best interests of the Corporation, then
the shares so to be redeemed shall be selected by lot in such manner as
shall be prescribed by the Board of Directors.
[b] Notice of every such redemption shall be mailed, first
class postage prepaid, not less than thirty (30) nor more than sixty
(60) days prior to the date fixed for redemption ("Redemption Date"),
to each holder of record of the shares to be redeemed, at his or her
address as the same appears on the record of stockholders; but neither
failure to mail any such notice to one or more such holders nor any
defect in any such notice shall affect the sufficiency of the
proceedings for redemptions as to other holders. Each such notice shall
state the Redemption Date; the number of shares of Series D Preferred
to be redeemed, and, if less than all the shares of Series D Preferred
held by such holder are to be redeemed, the manner of selecting by lot
the shares to be redeemed; the place or places where such shares are to
be surrendered for payment; that dividends on the shares to be redeemed
will cease on such Redemption Date; and the effect of such redemption
on the right of conversion.
[c] Notice having been mailed as aforesaid, from and after the
Redemption Date, all dividends on the shares so called for redemption
shall cease to accrue, said shares shall no longer be deemed to be
outstanding, all rights of the holders thereof as stockholders of the
Corporation (except the right to receive payment for the shares, the
right to receive declared dividends pursuant to Section 7(e) above, and
the right to convert such shares into shares of Common Stock of the
Corporation until the close of business on the third business day
preceding the Redemption Date, as provided in Section 7) shall cease,
and, upon surrender in accordance with said notice of the certificates
for any such shares (properly endorsed or assigned for transfer, if the
Board of Directors shall so require), such shares shall be redeemed by
the Corporation in accordance with this Section 8. In connection with
the determination of the amount of dividends accruing with respect to
any conversion in the period between a notice of redemption and the
Redemption Date, on a date which is not a Quarterly Dividend Payment
-B36-
<PAGE> 367
Date, the amount of any such dividends shall be prorated based upon the
number of days which have elapsed since the immediately preceding
Quarterly Dividend Payment Date (excluding such Quarterly Dividend
Payment Date itself).
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series D Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series D Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series D Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series D Preferred a notice stating that the number of shares into
which the shares of Series D Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series D
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
9, nor shall such failure affect the validity, rights or preferences of any
shares of the Series D Preferred.
SECTION 10. RANKING.
The Series D Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except the
Series B Preferred, which shall rank senior to the Series D Preferred, and the
Series A Preferred, the Series C Preferred and the Series E Preferred, with
which it shall rank equal), as to the payment of dividends and the distribution
of assets and rights upon liquidation, dissolution or winding up of the
Corporation.
SECTION 11. DIRECTORSHIP.
[a] After the occurrence of the events described in Section
11[b] below, the holders of the Series D Preferred, as a class, shall be
entitled to be represented on the Board of Directors by one Director (the
"Series D Director") who, upon nomination by such holders, as a class, will
stand for election by voting by the holders of the Series A Preferred, Series B
Preferred (subject to limitations contained in Article FOURTH, Subpart E,
Section 11), Series C Preferred, Series D Preferred (subject to limitations
contained in Article FOURTH, Subpart G, Section 3 and 11), Series E Preferred,
and holders of Common Stock, except under circumstances where the number of
individuals nominated for election exceeds the number of Directors to be
elected. In the event the number of individuals nominated for election exceeds
the number of Directors to be elected, then the holders of the Series D
Preferred shall have the sole right to vote for, elect and remove the individual
nominated by them, as a class, to serve as the Series D Director, and in such
event no right to vote for, elect or remove any of the other Directors. The
Series D Director, upon being elected, will serve for the same term and have the
same voting powers as other Directors. The right to elect the Series D Director
pursuant to the terms hereof shall be exercisable by the holders of a majority
of the Series D Preferred at their option upon at least 60 days notice to the
Corporation provided, however, if the Corporation is subject to the reporting
requirements of the Securities Exchange Act of 1934, such notice must be
provided on or before the date established by the Corporation for the submission
of proposals pursuant to the proxy rules promulgated under the Securities Act of
1934.
-B37-
<PAGE> 368
[b] The right set forth in Section 11[a] may be exercised only
after:
[i][A] Effectiveness of an amendment to or repeal of
the BHCA or IBA, as a result of which amendment or repeal a
bank holding company (as defined in the BHCA) and a foreign
bank with a U.S. branch or agency may appoint a director of
Corporation without limitation, or [B] on receipt and finality
of an order approving the power to elect a director from the
FRB under the BHCA or the IBA; and
[ii] On receipt and finality of an order of the
Federal Communications Commission consenting thereto, if such
consent is then required under applicable law, rule or
regulation.
H. DESIGNATION OF SERIES E CONVERTIBLE PREFERRED STOCK. A series of the
Preferred Stock of the Corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as "Series E Convertible
Preferred Stock" (the "Series A Preferred") and the number of shares
constituting such series shall be 5,000,000 shares. The stated value of the
Series E Preferred shall be $5 per share, the original per share issue price
(the "Stated Value") .
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series E Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series E Preferred at the rate of $.35 per share per annum. No interest
shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
In addition to voting rights required by law or by this Amended
Certificate of Incorporation, as amended or restated from time to time (the
"Certificate of Incorporation"), subject to restrictions contained in this
Certificate of Incorporation the holders of Series E Preferred shall be entitled
to vote on all matters submitted to a vote of the Corporation's stockholders.
Except as otherwise required by law or provided by this Certificate of
Incorporation, the holders of the Series A Preferred, the holders of the Series
C Preferred, the holders of the Series D Preferred (under certain conditions),
the holders of the Series E Preferred and the holders of the Corporation's
Common Stock shall vote together as one class with one vote per share (in the
case of Preferred Stock, subject to adjustments as provided in Section 7 below
and if convertible into Common Stock, one vote per share of Common Stock into
which such convertible Preferred Stock is then convertible) on all matters
submitted to a vote of the Corporation's stockholders.
-B38-
<PAGE> 369
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series E Preferred as provided in
Section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series E Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series E
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series E Preferred, except dividends paid
ratably on the Series E Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series E
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series E Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of aggregate outstanding shares of Series A
Preferred and Series E Preferred outstanding as of the date of the creation of
such contractual obligations, or (D) purchase or otherwise acquire for
consideration any shares of the Series E Preferred or any shares of stock
ranking on a parity with the Series E Preferred except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series of classes.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series E Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series E Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series E Preferred
unless, prior thereto, the holders of Series E Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series E
-B39-
<PAGE> 370
Preferred, except distributions made ratably on the Series E Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. OPTIONAL CONVERSION.
Each share of the Series E Preferred may be converted at any time, at
the option of the holder thereof, into shares of Common Stock of the
Corporation, on the terms and conditions set forth below in this Section 7:
[a] Subject to the provisions for adjustment hereinafter set
forth, each share of the Series E Preferred shall be convertible at the
option of the holder thereof, in the manner hereinafter set forth, into
one (1) fully paid and nonassessable share of Common Stock of the
Corporation.
[b] The number of shares of Common Stock into which each share
of the Series E Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series E
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series E Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in accordance with clause (I) above. An adjustment
made pursuant to this sub-paragraph b[i] shall become
effective (a) in the case of any such dividend, immediately
after the close of business on the record date for the
determination of holders of Common Stock entitled to receive
such dividend, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series E Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series E Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which
the holder would have owned after giving effect to such event
had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the
number of shares of Common Stock into which such share was
-B40-
<PAGE> 371
convertible immediately prior to the occurrence of such event.
An adjustment made pursuant to this subparagraph b(ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the issuance of
such share of Series E Preferred shall: (A) issue any options,
warrants, or other rights (excluding those to Blue Chip
Capital Fund II Limited Partnership and/or to Miami Valley
Venture Fund L.P. as a holder of Series C Preferred pursuant
to the terms of a Redemption and Warrant Agreement among the
Corporation and them, dated during December, 1997, excluding
those issued in exchange for options to purchase common stock
in Faircom Inc. pursuant to the terms of a merger, and
excluding stock options to management of the Corporation
exercisable for up to fifteen percent (15%) of the equity
securities of the Corporation, on a fully-diluted basis)
entitling the holder thereof to subscribe for, or purchase,
Common Stock at a price per share which, when added to the
amount of consideration received or receivable by the
Corporation for such options, warrants, or other rights, is
less than the then fair market value per share of the Common
Stock at the date of such issuance; (B) issue or sell
securities of the Corporation convertible into, or
exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series E Preferred is convertible shall be adjusted so
that, thereafter, until further adjusted, the holder of each
share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (w) the number of shares of Common
Stock into which such shares are convertible immediately prior
to the occurrence of such event by (x) a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding prior to such issuance PLUS the number of
additional shares of Common Stock issuable upon exercise of
such options, warrants, or rights, or exchangeable or
convertible securities, or the additional number of shares of
Common Stock issued at such time, and the denominator of which
shall be the number of shares of Common Stock outstanding
prior to such issuance PLUS the number of shares of Common
Stock that either (y) the sum of the aggregate exercise price
of the total number of shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or upon
conversion or exchange of such convertible securities, and the
aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
-B41-
<PAGE> 372
[iv] In the event that, at any time, or from time to
time, after the issuance of such share of the Series E
Preferred, the Common Stock issuable upon conversion of the
Series E Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series E Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series E Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time after the
issuance of such share of the Series E Preferred there is a
capital reorganization of the Common Stock other than a
recapitalization, subdivision, combination, reclassification,
or exchange of shares provided for elsewhere in this Section
7) or a merger or consolidation of the Corporation with or
into another corporation, or the sale of all, or substantially
all, of the Corporations' properties and assets to any other
person, then, as a part of such reorganization, merger,
consolidation, or sale, provision shall be made so that the
holders of the Series E Preferred shall thereafter be entitled
to receive upon conversion of the Series E Preferred the
number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any
such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect
to the rights of the holders of Series E Preferred after the
reorganization, merger, consolidation, or sale to the end that
the provisions of this Section 7 shall be applicable after
that event and be as nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights, options,
warrants or conversion or exchange privileges which caused an
adjustment pursuant to this Section 7 to be made, if any
thereof shall not have been exercised, the number of shares of
Common Stock into which each share of the Series E Preferred
is convertible shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been
required, as the case may be) as if (a) the only shares of
Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange privileges and (b)
such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all
such rights, options, warrants or conversion or exchange
privileges, whether or not exercised.
[c] If any adjustment in the number of shares of Common Stock
into which each share of the Series E Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock
-B42-
<PAGE> 373
into which each share of the Series E Preferred is then convertible,
the amount of any such adjustment shall be carried forward and
adjustment with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall
aggregate at least 1% of the number of shares of Common Stock into
which each share of the Series E Preferred is then convertible;
provided that any such adjustments carried forward shall be made
immediately following receipt of notice from a holder of the intent to
convert all or a portion of the Series B Preferred such that upon
conversion the holder shall receive such number of shares of Common
Stock as such holder is entitled, taking into account all adjustments
required by this Section 7. All calculations under this paragraph [c]
shall be made to the nearest one-hundredth of a share.
[d] The holder of any shares of the Series E Preferred may
convert such shares into shares of Common Stock by surrendering for
such purpose to the Corporation, at its principal office or at such
other office or agency maintained by the Corporation for that purpose,
a certificate or certificates representing the shares of Series E
Preferred to be converted accompanied by a written notice stating that
such holder elects to convert all or a specified number of such shares
in accordance with the provisions of this Section 7 and specifying the
name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such
notice shall specify a name or names other than that of such holder,
such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or
names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series E Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series E Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series E Preferred to be
converted so that the rights of the holder thereof shall cease except
for the right to receive Common Stock of the corporation in accordance
herewith, and the converting holder shall be treated for all purposes
as having become the record holder of such Common Stock of the
Corporation at such time.
[e] Upon conversion of any shares of the Series E Preferred,
the holder thereof shall be entitled to receive any accumulated,
accrued or unpaid dividends in respect of the shares so converted,
including any dividends on such shares of the Series E Preferred
declared prior to such conversion if such holder held such shares on
the record date fixed for the determination of holders of the Series E
Preferred entitled to receive payment of such dividend.
[f] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series E Preferred.
[g] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the
-B43-
<PAGE> 374
holder(s) of more than twenty-five percent (25%) of the outstanding
shares of Preferred Stock of the Company demand in writing that "fair
market value" be determined by an appraiser, who shall be mutually
acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be
paid equally by the Company and such holders.
SECTION 8. MANDATORY CONVERSION.
Each share of the Series E Preferred shall be converted, at the option
of the Board of Directors, into shares of Common Stock of the Corporation, on
the terms and conditions set forth below in this Section 8:
[a] Subject to the provisions for adjustment set forth in this
Section 7, which shall also apply to conversions pursuant to this
Section 8, each share of the Series E Preferred shall be convertible at
the option of the Board of Directors, under the conditions hereinafter
set forth, into one (1) fully paid and nonassessable share of Common
Stock of the Corporation.
[b] The Board of Directors of the Corporation may require
conversion of all shares of the Series E Preferred into shares of
Common Stock in preparation for or upon any of the following:
[i] A public offering of equity securities of the
Corporation of at least $10,000,000 in gross proceeds;
[ii] A private placement of equity securities of the
Corporation of at least $25,000,000 in gross proceeds;
[iii] A private placement of equity securities of the
Corporation of at least $10,000,000 in gross proceeds under
circumstances where the investor(s) reasonably believe the
conversion of the Series E Preferred is necessary to achieve
its (their) investment objectives;
[iv] A merger of the Corporation with another
corporation or other entity, whether or not the Corporation is
a survivor of such transaction whereby as a result the
stockholders of the Corporation hold less than 50% of the
outstanding capital stock of the surviving entity; or
[v] An acquisition of equity securities of the
Corporation in one transaction or in a series of related
transactions which results in a transfer of majority voting
control of the Corporation.
[c] The Series E Preferred shall convert to Common Stock of
the Corporation automatically upon notice in writing to the
stockholders or upon publication (as determined by the Board of
Directors). As promptly as practicable after such notice, and in any
event within five business days after the surrender of certificates for
the Series E Preferred (if required by the Board of Directors), the
Corporation shall deliver or cause to be delivered certificates
representing the number of validly issued, fully paid and nonassessable
shares of Common Stock of the Corporation to which the holder of the
Series E Preferred so converted shall be
-B44-
<PAGE> 375
entitled. Such conversion shall be deemed to have been made at the
close of business on the date of giving of such notice of mandatory
conversion so that the rights of the holder thereof shall cease with or
without surrender of certificates for the Series E Preferred, except
for the right to receive Common Stock of the Corporation in accordance
herewith, and the converting holder shall be treated for all purposes
as having become the record holder of such Common Stock of the
Corporation at such time.
[d] Upon conversion of the Series E Preferred, the holder
thereof shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, including any
dividends on such shares of the Series E Preferred declared prior to
such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series E Preferred
entitled to receive payment of such dividend.
[e] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series E Preferred.
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series E Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series E Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series E Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series E Preferred a notice stating that the number of shares into
which the shares of Series E Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series E
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
9, nor shall such failure affect the validity, rights or preferences of any
shares of the Series E Preferred.
SECTION 10. RANKING.
The Series E Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except the
Series B Preferred, which shall rank senior to the Series E Preferred, and the
Series A Preferred, Series C Preferred, and the Series D Preferred with which it
shall rank equal), as to the payment of dividends and the distribution of assets
and rights upon liquidation, dissolution or winding up of the Corporation.
FIFTH: INCORPORATOR. The name and mailing address of the incorporator
is Terry Jacobs, 50 East RiverCenter Boulevard, Covington, Kentucky 41011, whose
powers as incorporator have ceased by virtue of the election of the Board of
Directors.
SIXTH: ELIMINATION OF DIRECTOR LIABILITY. A director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
-B45-
<PAGE> 376
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after the filing of the Certificate of
Incorporation of which this Article is a part to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
SEVENTH: RIGHT TO INDEMNIFICATION.
A. INDEMNIFICATION. The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party, or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding"), by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another Corporation or of a partnership, joint venture, trust, enterprise or
non-profit entity, including service with respect to employee benefit plans,
against all liability and loss suffered and expenses reasonably incurred by such
person. The Corporation shall be required to indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
B. PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses of
directors and executive officers of the Corporation, and may pay the expenses of
all other officers, employees or agents of the Corporation, incurred in
defending any proceeding, in advance of its final disposition, PROVIDED,
however, that the payment of expenses incurred by a director, officer, employee
or agent in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the director, officer, employee or agent
to repay all amounts advanced if it should be ultimately determined that the
director, officer, employee or agent is not entitled to be indemnified under
this Article SEVENTH or otherwise.
C. CLAIMS. If a claim for indemnification or payment of expenses under
this Article is not paid in full within sixty days after a written claim
therefor has been received by the Corporation, the claimant may file suit to
recover the unpaid amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such claim. In any such
action the Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or payment of expenses under
applicable law.
-B46-
<PAGE> 377
D. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Article SEVENTH shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
E. OTHER INDEMNIFICATION. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust, enterprise or nonprofit entity, shall be reduced by any amount such
person may collect as indemnification from such other Corporation, partnership,
joint venture, trust, enterprise or non-profit enterprise.
F. AMENDMENT OR REPEAL. Any repeal or modification of the foregoing
provisions of this Article SEVENTH shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
EIGHTH: BYLAWS. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized to make, alter or repeal bylaws of the Corporation.
*******
II. That thereafter, pursuant to resolution of its Board of Directors,
consents of the stockholders of the corporation were executed, in accordance
with Section 228 of the General Corporation Law of the State of Delaware, by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Pursuant to Section
228 of the General Corporation Law of the State of Delaware, written notice has
been given to stockholders who have not consented in writing.
III. That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by Terry S. Jacobs, its Chairman, and William J. Stakelin, its Secretary,
this 4th day of December, 1997.
By: /S/ TERRY S. JACOBS
------------------------------
Terry S. Jacobs, Chairman
ATTEST:
/S/ WILLIAM S. STAKELIN
------------------------------
William J. Stakelin, Secretary
-B47-
<PAGE> 378
Appendix C
AMENDED AND RESTATED BY-LAWS
OF
REGENT COMMUNICATIONS, INC.
ARTICLE I
---------
STOCKHOLDERS
------------
SECTION 1. ANNUAL MEETING. The annual meeting of stockholders,
for the purpose of electing directors to succeed those whose terms
expire and for the transaction of such other business as may properly
come before the meeting, shall be held at such place, on such date, and
at such time as the Board of Directors shall each year fix, which date
shall be within thirteen (13) months of the last annual meeting of
stockholders or, if no such meeting has been held, the date of
incorporation.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes prescribed in the notice of
the meeting, may be called by the Chairman of the Board, the President,
or the Board of Directors, and shall be called by the President or the
Secretary upon the written request of stockholders holding of record
twenty percent (20%) or more of all shares of stock outstanding and
entitled to vote thereat, to be held at such place, on such date and at
such time as the caller of such meeting shall fix. No business other
than that specified in the notice shall be considered at any special
meeting except with the unanimous consent of all stockholders entitled
to receive notice of such meeting.
SECTION 3. NOTICES OF MEETINGS. Except as otherwise required
by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of
Incorporation or By-laws of the Corporation), a written notice of each
annual and special meeting of stockholders stating the date, time and
place thereof, and in the case of a special meeting, the purpose or
purposes thereof, shall be personally delivered, or deposited, postage
prepaid, in the U.S. mail for delivery, to each stockholder of record
entitled to notice of such meeting, not more than sixty (60) days nor
less than ten (10) days before the date on which such meeting is to be
held. If mailed, such notice shall be addressed to each stockholder at
his address as it appears upon the records of the Corporation. Notice
of adjournment of a meeting need not be given if the time and place to
which it is adjourned are fixed and announced at such meeting;
provided, however, that if the date of any adjourned meeting is more
than thirty (30) days after the date for which the meeting was
originally noticed, or if a new record date is fixed for the adjourned
meeting, written notice of the place, date, and time of the adjourned
meeting shall be given in accordance with this Section. At an adjourned
meeting, any business may be transacted which could have been
transacted at the original meeting.
-C1-
<PAGE> 379
Notice of the time, place, and purposes of any meeting of
stockholders, whether or not required by law, may be waived in writing,
either before or after the holding of such meeting, by any stockholder,
which writing shall be filed with or entered upon the records of the
meeting. The attendance of any stockholder at any such meeting without
protesting, prior to or at the commencement of the meeting, the lack of
proper notice shall be deemed to be a waiver by him of notice of such
meeting; provided, however, that such waiver shall not be deemed to
permit consideration at a special meeting of any business not specified
in the notice.
SECTION 4. QUORUM; ADJOURNMENT. At any meeting of
stockholders, the holders of a majority of the outstanding shares of
stock entitled to vote at the meeting, present in person or by proxy,
shall constitute a quorum for all purposes, except when a greater
proportion is required by law. Where a separate vote by a class or
classes of stock is to be taken, a majority of the outstanding shares
of stock of such class or classes, present in person or by proxy, shall
constitute a quorum entitled to take action with respect to that vote
on that matter.
At any meeting, whether a quorum is present or not, the
chairman of the meeting or the holders of a majority of the shares of
stock entitled to vote who are present, in person or by proxy, may
adjourn the meeting to another place, date or time without notice other
than by announcement at the meeting. At any such adjourned meeting at
which a quorum is presented, any business may be transacted which could
have been transacted at the original meeting.
SECTION 5. ORGANIZATION OF MEETINGS. Such person as the Board
of Directors may have designated or, in the absence of such a person,
the chief executive officer of the Corporation or, in his absence, such
person as may be chosen by the holders of a majority of the shares of
stock entitled to vote who are present, in person or by proxy, shall
call to order any meeting of the stockholders and act as chairman of
the meeting. The Secretary of the Corporation shall act as secretary of
the meeting. In the absence of the Secretary of the Corporation, the
secretary of the meeting shall be such person as the chairman of the
meeting appoints to act as such.
The chairman of any meeting of stockholders shall determine
the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as may
seem to him to be in order. The date and time of the opening and
closing of the polls for each matter upon which the stockholders will
vote at the meeting shall be announced at the meeting.
SECTION 6. PROXIES AND VOTING. Every stockholder entitled to
vote at a meeting of stockholders or to consent or dissent to corporate
action in writing without a meeting may authorize another person to act
for him as proxy pursuant to an instrument in writing or by a
transmission permitted by law filed in accordance
-C2-
<PAGE> 380
with the procedure established for the meeting. The instrument
appointing a proxy must be in writing and must be either signed by the
person making the appointment or, in the case of a authorization by
means of telegram, cablegram or other form of electronic transmission,
must set forth or be submitted with such information from which it may
be determined that such telegram, cablegram or other electronic
transmission was authorized by the stockholder. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or
transmission duly constituting the appointment of a proxy may be
substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission
could be used, provided that such copy, facsimile telecommunication or
other reproduction shall be a complete reproduction of the entire
original writing or transmission. A vote in accordance with the terms
of a duly authorized and filed proxy shall be valid notwithstanding the
previous death or incapacity of the principal or revocation of the
appointment unless notice in writing of such death, incapacity or
revocation shall have been given to the Corporation before such vote is
taken. The presence of a stockholder at a meeting shall not operate to
revoke a proxy unless and until notice of such revocation is given to
the Corporation in writing or in open meeting.
Except as otherwise required by law, all voting, including on
the election of directors, may be conducted by voice vote unless a
stock vote is demanded by a stockholder entitled to vote or his proxy.
Every stock vote shall be taken by written ballot, each of which shall
state the name of the stockholder or the proxy voting and such other
information as may be required under the procedure established for the
meeting. The Corporation may, and to the extent required by law, shall,
in advance of any meeting of stockholders, appoint one or more
inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors
to replace any inspector who fails to act. If no inspector or alternate
is able to act at a meeting of stockholders, the person presiding at
the meeting may, and to the extent required by law, shall, appoint one
or more inspectors to act at the meeting. Each inspector, before
entering upon the discharge of his duties, shall take an oath and sign
faithfully to execute the duties of inspector with strict impartiality
and according to the best of his ability. Every vote taken by ballots
shall be conducted by an inspector or inspectors appointed by the
chairman of the meeting.
In all matters other than the election of directors, the
affirmative vote of the majority of shares present, in person or by
proxy, at the meeting and entitled to vote on the matter shall
constitute the act of the stockholders. The election of directors shall
be determined by a plurality of the votes of the shares present, in
person or by proxy, at the meeting and entitled to vote in the election
of directors. Where a separate vote by class or classes is required,
the affirmative vote of the majority of shares of each such class
present in person or represented by proxy at the meeting shall be the
act of such class.
-C3-
<PAGE> 381
SECTION 7. STOCK LIST. A complete list of stockholders
entitled to vote at any meeting of stockholders, arranged in
alphabetical order for each class of stock and showing the address of
each such stockholder and the number of shares of stock registered in
his or her name, shall be open to the examination of any such
stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or
if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting
during the whole time thereof and shall be open to the examination of
any such stockholder who is present. The list shall presumptively
determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Any
action which is required or may be taken at any annual or special
meeting of the stockholders of the Corporation may be taken without a
meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed
by the holders of the outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon
were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, to its principal place
of business, or to an officer or agent of the Corporation having
custody of the book in which proceedings or meetings of stockholders
are recorded. Delivery made to the Corporation's registered office
shall be made by hand or by certified or registered mail, return
receipt requested.
Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless,
within sixty (60) days of the date of the earliest dated consent
delivered to the Corporation, a written consent or consents signed by a
sufficient number of holders to take action are delivered to the
Corporation in the manner prescribed in the first paragraph of this
Section.
-C4-
<PAGE> 382
ARTICLE II
----------
DIRECTORS
---------
SECTION 1. NUMBER OF DIRECTORS. The number of directors that
shall constitute the entire Board shall be such number as the Board of
Directors shall from time to time designate pursuant to the affirmative
vote of a majority of the directors then in office, except that in the
absence of any such designation, such number of directors shall be two
(2). Any decrease in the authorized number of directors shall not
become effective until the expiration of the term of the directors then
in office, unless, at the time of such decrease, there are vacancies on
the Board of Directors which are being eliminated by the decrease.
SECTION 2. ELECTION OF DIRECTORS AND TERM OF OFFICE. At all
elections of directors the candidates receiving the greatest number of
votes shall be elected. Each director shall hold office until the
annual meeting of stockholders next succeeding his election and until
his successor is elected and qualified, or until his earlier
resignation, removal from office, or death.
SECTION 3. QUALIFICATION OF DIRECTORS. Directors of the
Corporation need not be stockholders of the Corporation.
SECTION 4. VACANCIES IN THE BOARD OF DIRECTORS. In the event a
vacancy in the Board of Directors or any director's office is created
by reason of death, resignation, disqualification, removal or other
cause or by reason of an increase in the authorized number of
directors, the directors then in office, though less than a majority of
the whole authorized number of directors, by the vote of a majority of
their number, or a sole remaining director, may fill such vacancy for
the unexpired term.
SECTION 5. REGULAR MEETINGS OF DIRECTORS. An annual meeting of
the Board of Directors shall be held immediately following the
adjournment of each annual meeting of stockholders of the Corporation.
The Board of Directors may, by resolution, provide for other regular
meetings of the Board, to be held at such place or places, on such date
or dates, and at such time or times as may established by the Board of
Directors and published among all of the directors. Notice of the
annual and any such other regular meeting of the Board of Directors
shall not be required.
-C5-
<PAGE> 383
SECTION 6. SPECIAL MEETINGS OF DIRECTORS. Special meetings of
the Board of Directors may be called by one-third (1/3) of the
directors then in office (rounded up to the nearest whole number) or by
the Chairman of the Board or the President and shall be held at such
place, on such date, and at such time as the caller of such meeting
shall fix. Notice of the place, date, and time of each such special
meeting shall be given each director by whom it is not waived by
mailing written notice not less than five (5) days before the meeting
or by telegraphing or telexing or by facsimile transmission of the same
not less than twenty-four (24) hours before the meeting. Such notice
may be waived in writing, either before or after the holding of such
meeting, by any director, which writing shall be filed with or entered
upon the records of the meeting. The attendance of any director at any
such meeting without protesting, prior to or at the commencement of the
meeting, the lack of proper notice shall be deemed to be a waiver by
him of notice of such meeting. Unless otherwise indicated in the notice
thereof, any and all business may be transacted at a special meeting of
directors.
SECTION 7. QUORUM. At any meeting of the Board of Directors, a
majority of the whole authorized number of directors shall constitute a
quorum for all purposes, except that a majority of the directors then
in office shall constitute a quorum for filling a vacancy in the Board
of Directors. Whenever less than a quorum is present at any time and
place appointed for a meeting of the Board, a majority of those present
may, by announcement at the meeting, adjourn the meeting to another
place, date or time without further notice or waiver thereof.
SECTION 8. PARTICIPATION IN MEETINGS BY COMMUNICATIONS
EQUIPMENT. Members of the Board of Directors, or of any committee
thereof, may participate in a meeting of the Board or such committee by
means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each
other and such participation shall constitute presence in person at
such meeting.
SECTION 9. CONDUCT OF BUSINESS AT A MEETING OF THE BOARD. At
any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and
all matters shall be determined by the vote of a majority of the
directors present, except as otherwise required by law. The act of a
majority of directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors unless the act of a greater
number is required by law.
SECTION 10. CONSENT OF DIRECTORS IN LIEU OF MEETING. Action
may be taken by the Board of Directors without a meeting if all members
thereof consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors.
-C6-
<PAGE> 384
SECTION 11. POWER OF THE BOARD OF DIRECTORS. The Board of
Directors may, except as otherwise required by law, exercise all such
powers and do all such acts and things as may be exercised or dome by
the Corporation.
SECTION 12. COMPENSATION OF DIRECTORS. Directors, as such, may
receive, pursuant to resolution of the Board of Directors, fixed fees
and other forms of compensation for their services as directors,
including, without limitation, their services as members of committees
of the Board of Directors.
ARTICLE III
-----------
COMMITTEES OF THE BOARD OF DIRECTORS
------------------------------------
SECTION 1. COMMITTEES. The Board of Directors, by the vote of
a majority of the whole Board, may from time to time designate one or
more committees of the Board, with such lawfully delegable powers and
duties as it thereby confers, to serve at the pleasure, direction and
control of the Board. The resolution establishing each such committee
shall specify a designation by which it shall be known, fix its powers
and authority, and elect a director or directors to serve as its member
or members, designating, if the Board desires, other directors as
alternate committee members who may replace any absent or disqualified
member at any meeting of the committee. An act or authorization of an
act by any such committee within the authority lawfully delegated to it
by the resolution establishing it shall be as effective for all
purposes as the act or authorization of the Board of Directors.
SECTION 2. CONDUCT OF BUSINESS AT COMMITTEE MEETINGS. Each
committee may determine the procedural rules for meeting and conducting
its business and shall act in accordance therewith, except as otherwise
provided by law. Adequate provision shall be made for notice to members
of all meetings. One-third (1/3) of the members shall constitute a
quorum. All matters shall be determined by a majority vote of the
members present. Action may be taken by any committee without a meeting
if all members thereof consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of such
committee.
ARTICLE IV
----------
OFFICERS
--------
SECTION 1. OFFICERS. The officers of the Corporation shall be
a Chairman of the Board, President, Secretary, and Treasurer, and such
other officers and assistant officers as the Board of Directors may
from time to time determine. Any number of offices may be held by the
same person. The Chairman of the Board shall be elected from among the
members of the Board of Directors.
-C7-
<PAGE> 385
SECTION 2. ELECTION AND TERM OF OFFICE. Each officer of the
Corporation shall be elected by the Board of Directors, and shall hold
office until the annual meeting of the Board of Directors following his
election or until his earlier resignation, removal from office, or
death. The Board of Directors may remove any officer at any time, with
or without cause. The Board of Directors may fill any vacancy in any
office occurring from whatever cause.
SECTION 3. DUTIES OF OFFICERS. Each officer and assistant
officer shall have such duties, responsibilities, powers and authority
as are prescribed below and as are assigned to him by the Board of
Directors from time to time. The Board of Directors may from time to
time delegate the powers or duties of any officer to any other officers
or agents, notwithstanding any provision hereof.
(a) CHAIRMAN OF THE BOARD. The Chairman of the Board
shall be the chief executive officer of the Corporation. Subject to the
provisions of these By-laws and to the direction of the Board of
Directors, he shall have the responsibility for the general management
and control of the business and affairs of the Corporation and shall
perform all duties and have all powers which are commonly incident to
the office of chief executive and those which are delegated to him by
the Board of Directors. He shall preside at all meetings of the
stockholders and the Board of Directors. He shall have the power to
sign all stock certificates, contracts and other instruments of the
Corporation which are authorized.
(b) PRESIDENT. The President shall be the chief
operating officer of the Corporation. Subject to the provisions of
these By-laws and to the direction of the Board of Directors, he shall
have the responsibility for the general operations of the Corporation
and shall perform all duties and have all powers which are commonly
incident to the office of chief operating officer and those delegated
to him by the Board of Directors. He shall have the power to sign all
stock certificates, contracts and other instruments of the Corporation
which are authorized.
(c) VICE PRESIDENT. The Vice President, if one be
elected, shall perform such duties as may from time to time be assigned
to him by the Board of Directors. At the request of the Chairman of the
Board or the President, or in the absence or disability of the
President, the Vice President designated by the Chairman of the Board
or the President (or in the absence of such designation, the Vice
President designated by the Board of Directors), shall perform all the
duties of the President, and when so acting, shall have all the powers
of the President. The authority of the Vice President to sign in the
name of the corporation all certificates for shares and authorized
deeds, mortgages, bonds, contracts, notes and other instruments shall
be coordinated with like authority of the President.
(d) SECRETARY. The Secretary shall issue all
authorized notices for, and shall keep the minutes of, all proceedings
of the Board of Directors and of the stockholders and make a proper
record of the same, which shall be
-C8-
<PAGE> 386
attested by him. He shall keep such books as may be required by the
Board of Directors, shall, in the absence of a duly appointed transfer
agent, take charge of the stock book of the Corporation, and shall
issue and attest all certificates of stock. He shall have the authority
to sign all deeds, mortgages, bonds, contracts, notes and other
instruments requiring his signature at the express direction of the
Board of Directors or with the countersignature of the Chairman of the
Board, the President, or of any other officer expressly authorized to
do so. He shall further have such other powers as are commonly incident
to the office of Secretary and all the powers and duties which the
Board of Directors may, from time to time, assign to him.
(e) TREASURER. The Treasurer shall have the
responsibility for maintaining the financial records of the
Corporation. He shall make such disbursements of the funds of the
Corporation as are authorized and shall render from time to time an
account of all such transactions and of the financial condition of the
Corporation. He shall perform such other duties as are commonly
incident to the office of Treasurer and as may from time to time be
assigned by the Board of Directors to him.
(f) ASSISTANT AND SUBORDINATE OFFICERS. The Board of
Directors may appoint such assistant and subordinate officers as it may
deem desirable. Each such officer shall hold office during the pleasure
of the Board of Directors and perform such duties as the Board of
Directors may prescribe.
SECTION 4. ACTION WITH RESPECT TO SECURITIES OF OTHER
ENTITIES. Unless otherwise directed by the Board of Directors, the
Chairman of the Board, the President or any other officer of the
Corporation authorized by the Chairman of the Board or the President
shall have the power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of, or with respect
to any action taken by, the stockholders, partners, members or other
equity owners of any corporation, partnership, limited liability
company or other entity in which the Corporation may hold securities,
and otherwise to exercise any and all rights and powers which this
Corporation may possess by reason of its ownership of securities in
such other entity.
ARTICLE V
---------
STOCK
-----
SECTION 1. CERTIFICATES OF STOCK. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares in such form as the Board of Directors may from
time to time prescribe, signed by, or in the name of the Corporation,
by the Chairman of the Board or the President or a Vice President, and
by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, certifying the number of shares owned. Any and all
of the signatures on the certificate may be by facsimile.
-C9-
<PAGE> 387
SECTION 2. TRANSFERS OF STOCK. The shares of stock of the
Corporation shall be transferable only on the stock transfer books of
the Corporation kept at an office of the Corporation or by transfer
agents designated to transfer shares of the stock of the Corporation.
Except where a certificate is issued in accordance with Section 4 of
ARTICLE V of these By-laws, an outstanding certificate shall be
surrendered for cancellation before a new certificate representing the
same shares is issued.
Shares of stock of the Corporation are transferable upon
surrender for cancellation of a certificate or certificates
representing the shares to be transferred, with an assignment and power
of transfer endorsed thereon or attached thereto, duly executed, and
with such proof of the authenticity of the signature as the Corporation
or its transfer agent may reasonably require.
SECTION 3. LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the
Board of Directors may establish concerning such proof of loss, theft
or destruction and concerning the giving of a satisfactory bond or
bonds of indemnity.
SECTION 4. OTHER REGULATIONS. The issue, transfer, conversion
and registration of certificates of stock shall be governed by such
other regulations as the Board of Directors may establish.
ARTICLE VI
----------
RECORD DATE
-----------
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders of the
Corporation, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any rights in
respect if such change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted and which record date
shall be not more than sixty (60) days nor less than ten (10) days
prior to the date of any meeting of stockholders, nor more than sixty
(60) days prior to the time of any dividend or distribution payment
date or any date for the allotment of rights, or other matter provided
by law. If no record date has been so fixed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting
of stockholders, then such record date shall be the close of business
on the day next preceding the day on which notice of the meeting is
given or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. If no record date has
been so fixed for the purpose of determining stockholders entitled to
receive payment of any dividend or other
-C10-
<PAGE> 388
distribution or allotment of rights or to exercise any rights of
change, conversion or exchange of stock or for any other purpose, the
record date shall be at the close of business on the day on which the
Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
The Board of Directors may close the books of the Corporation
against transfer of shares during the whole or any part of the period
commencing with the record date and continuing until completion of the
meeting (including all adjournments thereof) or the transaction to
which the record date pertains.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting,
the Board of Directors may fix a record date, which shall not precede
the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall be not more than
ten (10) days after the date upon which the resolution fixing the
record date is adopted. If no record date has been fixed by the Board
of Directors and no prior action by the Board of Directors is required
by the Delaware General Corporation Law, the record date shall be the
first date on which a signed written consent setting forth the action
taken or proposed to be taken is delivered to the Corporation in the
manner prescribed by ARTICLE I, Section 8 hereof. If no record date has
been fixed by the Board of Directors and prior action by the Board of
Directors is required by the Delaware General Corporation Law with
respect to the proposed action by written consent of the stockholders,
the record date for determining stockholders entitled to consent to
corporation action in writing shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such
prior action.
ARTICLE VII
-----------
INDEMNIFICATION OF DIRECTORS AND OTHER PERSONS
----------------------------------------------
SECTION 1. INDEMNIFICATION. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law as
it presently exists or may hereafter be amended, any person who was or
is made or is threatened to be made a party, or is otherwise involved
in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact
that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation or of a partnership, joint
venture, trust, enterprise or non-profit entity, including
-C11-
<PAGE> 389
service with respect to employee benefit plans, against all liability
and loss suffered and expenses reasonably incurred by such person. The
Corporation shall be required to indemnify a person in connection with
a proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the Corporation.
SECTION 2. PREPAYMENT OF EXPENSES. The Corporation shall pay
the expenses of directors and executive officers of the Corporation,
and may pay the expenses of all other officers, employees or agents of
the Corporation, incurred in defending any proceeding, in advance of
its final disposition, PROVIDED, however, that the payment of expenses
incurred by a director, officer, employee or agent in advance of the
final disposition of the proceeding shall be made only upon receipt of
an undertaking by the director, officer, employee or agent to repay all
amounts advanced if it should be ultimately determined that the
director, officer, employee or agent is not entitled to be indemnified
under this Article VII or otherwise.
SECTION 3. CLAIMS. If a claim for indemnification or payment
of expenses under this Article VII is not paid in full within sixty
days after a written claim therefor has been received by the
Corporation, the claimant may file suit to recover the unpaid amount of
such claim and, if successful in whole or in part, shall be entitled to
be paid the expense of prosecuting such claim. In any such action the
Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification or payment of expenses under
applicable law.
SECTION 4. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on
any person by this Article VII shall not be exclusive of any other
rights which such person may have or hereafter acquire under any
statute, provision of the certificate of incorporation, bylaws,
agreement, vote of stockholders or disinterested directors or
otherwise.
SECTION 5. OTHER INDEMNIFICATION. The Corporation's
obligation, if any, to indemnify any person who was or is serving at
its request as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust, enterprise or nonprofit
entity, shall be reduced by any amount such person may collect as
indemnification from such other Corporation, partnership, joint
venture, trust, enterprise or non-profit enterprise.
SECTION 6. INSURANCE. The Corporation may purchase and
maintain insurance, at its expense, to protect itself and any person
who is or was a director, officer, trustee, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as
a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust or other enterprise (including, without
limitation, an employee benefit plan), against any expense, liability,
or loss, whether or not the Corporation would
-C12-
<PAGE> 390
have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.
SECTION 7. AMENDMENT OR REPEAL. Any repeal or modification of
the foregoing provisions of this Article VII shall not adversely affect
any right or protection hereunder of any person in respect of any act
or omission occurring prior to the time of such repeal or modification.
ARTICLE VIII
------------
AMENDMENT
---------
These By-laws may be amended or repealed by the Board of
Directors at any meeting or by the stockholders at any meeting or
written consent in lieu thereof in accordance with these By-laws.
ARTICLE IX
----------
MISCELLANEOUS
-------------
SECTION 1. NOTICES. Except as otherwise provided herein or as
required by law, any notices required to be delivered pursuant to these
By-laws shall be in writing and shall be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the
U.S. mails, postage pre-paid, or by sending such notice by pre-paid
telegram or mailgram addressed to the recipient at his last known
address on the books of the Corporation. The time when such notice is
received, if hand delivered, or the time when such notice is
dispatched, if delivered through the mails or by telegram or mailgram,
shall be the time of the giving of the notice.
A written waiver of any notice, signed by the person entitled
to such notice, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to the notice
required to be given to such person. With respect to the waiver of
notice of any meeting, neither the business nor the purpose of the
meeting need be specified the waiver.
SECTION 2. CORPORATE SEAL. The Board of Directors may provide
a suitable seal, containing the name of the Corporation, which seal
shall be in the charge of the Secretary. If and when so directed by the
Board of Directors or a committee thereof, duplicates of such seal may
be kept and used by the Treasurer or by an Assistant Secretary or
Assistant Treasurer.
SECTION 3. RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each
director, member of any committee designated by the Board of Directors,
and each officer of the Corporation shall, in the performance of his
duties, be fully protected in relying in good faith on the books of
account or other records of the Corporation and upon
-C13-
<PAGE> 391
such information, opinions, reports or statements presented to the
Corporation by any of its officers or employees or the committees of
the Board of Directors, or by any other person as to matters which such
director or committee member reasonably believes are within such other
person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation.
SECTION 4. FISCAL YEAR. The fiscal year of the Corporation
shall be as fixed by the Board of Directors.
SECTION 5. TIME PERIODS. In applying any provision of these
By-laws which requires that an act be done or not be done a specified
number of days prior to an event or during a period of a specified
number of days prior to an event, calendar days shall be used, the day
of the doing of the act shall be excluded, and the day of the event
shall be included."
-C14-
<PAGE> 392
Appendix D-1
HOFFMAN
SCHUTZ
MEDIA
CAPITAL, INC.
March 25, 1998
Board of Directors
Faircom Inc.
333 Glen Head Road
Old Brookville, NY 11545
Gentlemen:
Faircom Inc. ("Faircom") proposes to enter into an Agreement of Merger (the
"Merger") with Regent Communications, Inc. ("Regent") and Regent Merger Corp., a
wholly owned subsidiary of Regent. As of the closing of the Merger, Faircom
shareholders will receive total consideration of $19,350,315 (subject to certain
adjustments for Faircom's net working capital at closing), in the form of
Regent's Series C Convertible Preferred Stock. Such Convertible Preferred Stock
will be registered under the Securities Act of 1933, is convertible into common
shares of Regent at a rate of $5 of Convertible Preferred per Regent common
share and has voting rights equal to the common shares into which it is
convertible .
Immediately prior to the Merger, Regent will acquire the assets of twelve other
radio stations currently owned by The Park Lane Group. The consummation of this
acquisition will require Regent to raise significant amounts of capital from
banks and various institutional sources. A portion of these funds will come
from the sale of several different classes of Convertible Preferred Stock with
terms similar to the Series C Convertible Preferred Stock that the Faircom
shareholders are to receive in exchange for their existing Faircom common
shares.
Hoffman Schutz Media Capital, Inc. has been retained by the Board of Directors
of Faircom to review the proposed merger with Regent and to determine the
fairness, from a financial point of view, of the consideration to be received by
Faircom's common shareholders. In arriving at the opinion set forth herein, we
have, among other things:
1. Reviewed Faircom's Annual Reports on Forms 10K and related financial
information for the three fiscal years ended December 31, 1997, and
unaudited financial results for station WSWR in Shelby, Ohio which was
recently acquired by Faircom;
2. Conducted discussions with the management of Faircom concerning the
company's business and prospects for each of its stations;
3. Conducted discussions with the senior management of Regent concerning
certain strategic, financial and operational issues relating to the
combination of the Regent and Faircom stations;
-D-1.1-
<PAGE> 393
Board of Directors
Faircom Inc.
December 4, 1997
PAGE 2
4. Reviewed the terms and conditions of the proposed merger as set forth in
documents supplied to us by both Regent and Faircom, with particular
attention to the value of the contribution of each of the merger
participants relative to the consideration each is proposed to receive under
the terms of the merger agreement;
5. Visited and inspected the five radio stations owned by Faircom in Michigan
and Ohio, as well as the station in Shelby, Ohio, which was recently
purchased by Faircom. Reviewed their current business operations with
Faircom's local management to determine current business activity and future
prospects. This included a review of local competition, projections for
local radio advertising expenditures, and anticipated future financial
performance for the stations in 1998 and beyond;
6. Visited and inspected each of the radio stations in seven cities which
Regent is contracted to purchase from Park Lane Group, Inc., and which
Regent has been operating under "Time Brokerage Agreements" since August of
1997. These inspections included extensive meetings with Regent's local
station managers to assess current and future business prospects in a manner
identical to that done with the stations owned by Faircom;
7. Inspected the studios, offices and transmission facilities of the radio
stations which Regent is proposing to acquire in Bullhead City, Arizona and
Victorville, California;
8. Reviewed audited and unaudited financial operating information for the full
years 1995, 1996, and 1997 and operating budgets for 1998 for each of the
Faircom stations, each of the Park Lane stations currently being leased by
Regent and the two stations currently owned by Ruby/Topaz Broadcasting which
Regent has agreed to purchase;
9. Created financial operating models for each of the station groups in the
nine radio markets where Regent and Faircom stations now operate. Calculated
the current fair market value of the operating assets of each station
combination using the discounted cash flow valuation method;
10. Compared the computed fair market values of the assets contributed by
Faircom and Regent, with allowances for existing Faircom liabilities and
proposed Regent liabilities according to the terms of the proposed merger.
These were then compared with the equity equivalents which each of the
participants will receive in the merger; and
11. Reviewed such other financial studies and analyses and performed such other
investigations and took into account such other matters as we deemed
necessary, including our assessments of likely changes in regulatory,
general economic, and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness of all
information that was available to us, including that supplied to us by Regent,
Faircom and the individual stations involved in this merger. We have assumed no
responsibility for the independent verification of such information.
-D-2.2-
<PAGE> 394
Board of Directors
Faircom Inc.
December 4, 1997
PAGE 3
Where we have used projections, estimates or budgets not prepared by us, we have
assumed that they were reasonably prepared to reflect the best available
estimates of the future performance of the subject stations. We have also not
undertaken an independent verification of the outstanding indebtedness of
Faircom, Regent or any of the individual companies which currently own the
stations proposed to be acquired by Regent. We have assumed that (i) all
material assets and liabilities of Faircom and Regent are as set forth in their
respective financial statements; and (ii) the Merger will qualify as a
reorganization for tax purposes with respect to the common shareholders of
Faircom. Our opinion is based upon regulatory, economic and monetary conditions
existing as of this date. Further, we express no opinion as to the price or
trading ranges at which the Convertible Preferred shares (or the common shares
into which the preferred shares are convertible) will trade after the effective
date of the Merger.
Our opinion is directed to the Board of Directors of Faircom and does not
constitute a recommendation to any shareholder of Faircom as to how any such
shareholder should vote on the Merger. This opinion does not address the
relative merits of the Merger and other transactions or business strategies, if
any, that may have been discussed by the Board of Directors of Faircom as
alternatives to the Merger or the decision of the Board of Directors of Faircom
to proceed with the Merger. We were not requested to, and did not, solicit third
party indications of interest in acquiring all or any portion of the stock or
assets of Faircom.
This opinion has been prepared at the request and for the use of the Board of
Directors of Faircom and shall not be reproduced, summarized, described,
referred to or given to any other person or otherwise made public without our
prior written consent; provided, however, that this letter may be reproduced in
full in the Proxy Statement/Prospectus relating to the Merger.
In delivering our opinion to the Board of Directors of Faircom in connection
with the Merger, we will receive a flat fee for performing such services. This
fee is in no way dependent upon the results of our analyses or conclusions, nor
is it dependent upon the consummation of the Merger.
Neither we nor our principals have any financial association with Faircom,
Regent, Regent Merger Corp, or any of the entities which now own stations which
are expected to be involved in the Merger.
We submitted an earlier report on the fairness of this merger to the Board on
December 4, 1997. Since that time we have received additional financial
information on the stations involved in the merger and have been informed as to
changes in the financing for the transaction. Upon review of this additional
information, our opinion is essentially unchanged. ON THE BASIS OF, AND SUBJECT
TO THE FOREGOING, WE ARE OF THE OPINION THAT, BASED ON THE INFORMATION AVAILABLE
AS OF THIS DATE, THE CONSIDERATION TO BE RECEIVED BY THE COMMON STOCKHOLDERS OF
FAIRCOM IN CONNECTION WITH THE MERGER IS FAIR, FROM A FINANCIAL POINT OF VIEW,
TO SUCH HOLDERS.
Very truly yours,
Hoffman Schutz Media Capital, Inc.
/s/ Hoffman Schutz Media Capital, Inc.
--------------------------------------
-D-2.3-
<PAGE> 395
Appendix D-2
HOFFMAN
SCHUTZ
MEDIA
CAPITAL, INC.
December 4, 1997
Board of Directors
Faircom Inc.
333 Glen Head Road
Old Brookville, NY 11545
Gentlemen:
Faircom Inc. ("Faircom") proposes to enter into an Agreement of Merger (the
"Merger") with Regent Communications, Inc. ("Regent") and Regent Merger Corp., a
wholly owned subsidiary of Regent. As of the closing of the Merger, Faircom
shareholders will receive total consideration of $31,162,000 increased by the
value of a radio station in Shelby, Ohio (to be acquired by Faircom prior to the
Merger) and by the net working capital of Faircom and decreased by Faircom's
senior and subordinated debt then outstanding, in the form of Regent's Series C
Convertible Preferred Stock. Such Convertible Preferred Stock will be registered
under the Securities Act of 1933 and is convertible into common shares of Regent
at a rate of $5 of Convertible Preferred per Regent common share.
Immediately prior to the Merger, Regent will acquire the assets of twelve other
radio stations currently owned by five other companies. The consummation of
these acquisitions will require Regent to raise significant amounts of capital
from banks and various institutional sources. Regent will also issue significant
additional amounts of different classes of Convertible Preferred Stock with
terms similar to the Series C Convertible Preferred Stock that the Faircom
shareholders are to receive in exchange for their existing Faircom common
shares.
Hoffman Schutz Media Capital, Inc. has been retained by the Board of Directors
of Faircom to review the proposed merger with Regent and to determine the
fairness, from a financial point of view, of the consideration to be received by
Faircom's common shareholders. In arriving at the opinion set forth herein, we
have, among other things:
1. Reviewed Faircom's Annual Reports on Forms 10K and related financial
information for the three fiscal years ended December 31, 1996 and
Faircom's Form 10Q for the first three quarters of 1997;
2. Conducted discussions with the management of Faircom concerning the
company's business and prospects for each of its stations;
3. Conducted discussions with the senior management of Regent concerning
certain strategic, financial and operational issues relating to the
combination of the Regent and Faircom stations.
-D-2.1-
<PAGE> 396
Board of Directors
Faircom Inc.
March 25, 1998
PAGE 2
4. Reviewed the terms and conditions of the proposed merger as set forth
in the Plan of Acquisition and Capitalization dated December, 1997
prepared by The Crisler Company, with particular attention to the value
of the contribution of each of the merger participants relative to the
consideration each is proposed to receive under the terms of the merger
agreement;
5. Compared the financial terms of the Merger with the financial terms of
certain other business combinations which we deemed relevant;
6. Visited and inspected the five radio stations owned by Faircom in
Michigan and Ohio, as well as the new station in Shelby, Ohio, that
Faircom has contracted to purchase. Reviewed their current business
operations with Faircom's local management to determine current
business activity and future prospects. This included a review of local
competition, projections for local radio advertising expenditures, and
anticipated future financial performance for the stations in 1998 and
beyond;
7. Visited and inspected each of the radio stations in seven cities which
Regent is contracted to purchase from Park Lane Group, Inc., and which
Regent has been operating under "Time Brokerage Agreements" since
August of 1997. These inspections included extensive meetings with
Regent's local station managers to assess current and future business
prospects in a manner identical to that done with the stations owned by
Faircom;
8. Inspected the studios and offices of the radio stations which Regent is
proposing to acquire in Bullhead City, Arizona and Victorville,
California;
9. Reviewed audited and unaudited financial operating information for the
full years 1995 and 1996, interim operating statements for the first
nine months of 1997 and operating budgets for the last 3 months of 1997
for each of the Faircom stations and each of the Park Lane stations
currently being leased by Regent;
10. Created financial operating models for each of the station groups in
the nine radio markets where Regent and Faircom stations now operate.
Calculated the current fair market value of the operating assets of
each station combination using the discounted cash flow valuation
method;
11. Compared the computed fair market values of the assets contributed by
Faircom and Regent, with allowances for existing Faircom liabilities
and proposed Regent liabilities as outlined in the above mentioned
"Plan of Acquisition and Capitalization". These were then compared with
the consideration which each of the participants will receive according
to such plan; and
12. Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessments of likely changes in
regulatory, general economic, and monetary conditions.
-D-1.2-
<PAGE> 397
Board of Directors
Faircom Inc.
March 25, 1998
PAGE 3
In preparing our opinion, we have relied on the accuracy and completeness of all
information that was available to us, including that supplied to us by Regent,
Faircom and the individual stations involved in this merger. We have assumed no
responsibility for the independent verification of such information.
Where we have used projections, estimates or budgets not prepared by us, we have
assumed that they were reasonably prepared to reflect the best available
estimates of the future performance of the subject stations. We have also not
undertaken an independent verification of the outstanding indebtedness of
Faircom, Regent or any of the individual companies which currently own the
stations proposed to be acquired by Regent. We have assumed that (i) all
material assets and liabilities of Faircom and Regent are as set forth in their
respective financial statements; and (ii) the Merger will qualify as a
reorganization for tax purposes with respect to the common shareholders of
Faircom. Our opinion is based upon regulatory, economic and monetary conditions
existing as of this date. Further, we express no opinion as to the price or
trading ranges at which the Convertible Preferred shares (or the common shares
into which the preferred shares are convertible) will trade after the effective
date of the Merger.
Our opinion is directed to the Board of Directors of Faircom and does not
constitute a recommendation to any shareholder of Faircom as to how any such
shareholder should vote on the Merger. This opinion does not address the
relative merits of the Merger and other transactions or business strategies, if
any, that may have been discussed by the Board of Directors of Faircom as
alternatives to the Merger or the decision of the Board of Directors of Faircom
to proceed with the Merger. We were not requested to, and did not, solicit third
party indications of interest in acquiring all or any portion of the stock or
assets of Faircom .
This opinion has been prepared at the request and for the use of the Board of
Directors of Faircom and shall not be reproduced, summarized, described,
referred to or given to any other person or otherwise made public without our
prior written consent; provided, however, that this letter may be reproduced in
full in the Proxy Statement/Prospectus relating to the Merger.
In delivering our opinion to the Board of Directors of Faircom in connection
with the Merger, we will receive a flat fee for performing such services. This
fee is in no way dependent upon the results of our analyses or conclusions, nor
is it dependent upon the consummation of the Merger.
Neither we nor our principals have any financial association with Faircom,
Regent, Regent Merger Corp, or any of the entities which now own stations which
are expected to be involved in the Merger.
ON THE BASIS OF, AND SUBJECT TO THE FOREGOING, WE ARE OF THE OPINION THAT, AS OF
THIS DATE, THE CONSIDERATION TO BE RECEIVED BY THE COMMON STOCKHOLDERS OF
FAIRCOM IN CONNECTION WITH THE MERGER IS FAIR, FROM A FINANCIAL POINT OF VIEW,
TO SUCH HOLDERS.
Very truly yours,
Hoffman Schutz Media Capital, Inc.
/s/ Hoffman Schutz Media Capital, Inc.
-D-1.3-
<PAGE> 398
APPENDIX E
APPRAISAL RIGHTS
SECTION 262, DELAWARE
GENERAL CORPORATION LAW
Section 262. (a) Any stockholder of a corporation of this State who holds shares
of stock on the date of the making of a demand pursuant to subsection (d) of
this section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in favor
of the merger or consolidation nor consented thereto in writing pursuant to
Section 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or (ii) held of record by more
than 2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of
Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation pursuant to
Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities exchange
or designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
E1
<PAGE> 399
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under Section 253 of this title is not
owned by the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the record date
for such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall include
in such notice a copy of this section. Each stockholder electing to demand the
appraisal of his shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of his
shares. Such demand will be sufficient if it reasonably informs the corporation
of the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to take
such action must do so by a separate written demand as herein provided. Within
10 days after the effective date of such merger or consolidation, the surviving
or resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in favor of
or consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
Section 228 or Section 253 of this title, each constituent corporation, either
before the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of stock of
such constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section; provided
that, if the notice is given on or after the effective date of the merger or
consolidation, such notice shall be given by the surviving or resulting
corporation to all such holders of any class or series of stock of a constituent
corporation that are entitled to appraisal rights. Such notice may, and, if
given on or after the effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or consolidation.
Any stockholder entitled to appraisal rights may,
E2
<PAGE> 400
within 20 days after the date of mailing of such notice, demand in writing from
the surviving or resulting corporation the appraisal of such holder's shares.
Such demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either (i)
each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders of
any class or series of stock of such constituent corporation that are entitled
to appraisal rights of the effective date of the merger or consolidation or (ii)
the surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more the 20 days following the sending of the
first notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is required
to give either notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than 10
days prior to the date the notice is given, provided, that if the notice is
given on or after the effective date of the merger or consolidation, the record
date shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by one or more publications at
least one week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices
E3
<PAGE> 401
by mail and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written
E4
<PAGE> 402
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Count
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
120, L. '97, eff. 7-1-97.)
E5
<PAGE> 403
Appendix F
Preliminary Copy
PROXY
FAIRCOM INC.
Special Meeting of
Stockholders,
_________, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL OF THE AGREEMENT OF MERGER.
The undersigned hereby appoints Joel M. Fairman and Anthony Pantaleoni, and
each of them, as Proxy Holders for the undersigned, with full power of
substitution, to appear and vote all of the shares of Faircom Inc. which the
undersigned is entitled to vote at the Special Meeting of Stockholders to be
held at ______________, ____________, ________ on ____________, 1998 at ___
a.m., local time, and at any adjournment thereof, and hereby revokes any and all
Proxies heretofore given.
I hereby authorize the above-named holders and any of them to vote all the
shares of Faircom Inc. represented by this Proxy as follows:
1. Proposal to approve the Agreement of Merger dated as of December 5, 1997
among Faircom Inc., Regent Communications, Inc., Regent Merger Corp.,
Blue Chip Capital Fund II Limited Partnership and Miami Valley Venture
Fund L.P., as amended.
( ) FOR ( ) AGAINST ( ) ABSTAIN
2. To act in accordance with their best judgment on any other business
which may properly come before the meeting.
If this Proxy is properly marked, the shares represented by this Proxy will
be voted at the Special Meeting, and at any adjournment thereof, in accordance
with the choice marked. If no directions are given above, the shares represented
by this Proxy will be voted "FOR" the proposal set forth in paragraph 1 above.
Please date, sign and promptly return
in the accompanying envelope.
( ) I plan to attend the Special Meeting.
-----------------------------------------
(Signature of Stockholder)
-----------------------------------------
(Title)
-----------------------------------------
(Signature of Stockholder)
-----------------------------------------
(Title)
Dated: __________________, 1998
Please sign exactly as your name appears on this proxy. If the shares
represented by this proxy are held by joint tenants, both must sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If stockholder is a corporation, please sign in full
corporate name by President or other authorized officer. If stockholder is a
partnership, please sign in partnership name by authorized person.
-F1-
<PAGE> 404
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102(b)(7) of the General Corporation Law of the
State of Delaware (the "DGCL"), the Amended and Restated Certificate of
Incorporation of the Registrant (the "Certificate of Incorporation") provides
that a director of the Registrant shall not be personally liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
(iii) under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit. If the DGCL is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the Certificate of Incorporation of the Registrant
requires that the liability of a director of the Registrant must be eliminated
or limited to the fullest extent permitted by the DGCL, as so amended. Further,
any repeal or modification of this provision of the Certificate of Incorporation
of the Registrant by the stockholders of the Registrant shall not adversely
affect any right or protection of a director of the Registrant existing at the
time of such repeal or modification.
In accordance with Section 145 of the DGCL, the Certificate of
Incorporation and the Amended and Restated By-Laws ("By-Laws") of the Registrant
provide that the Registrant shall indemnify and hold harmless, to the fullest
extent permitted by applicable law as it presently exists or may hereafter be
amended, any person who was or is threatened to be made a party, or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he, or a person for
whom he is a legal representative, is or was a director, officer, employee or
agent of the Registrant or of a partnership, joint venture, trust, enterprise or
nonprofit entity, including service with respect to employee benefit plans,
against all liability and loss suffered and expenses reasonably incurred by such
person. The indemnification and advancement of expenses pursuant to the
Certificate of Incorporation and By-Laws are not exclusive of any other rights
which the person seeking indemnification may have under any statute, provision
of such Certificate of Incorporation, By-Laws, agreement, vote of stockholders
or disinterested directors or otherwise. Pursuant to the terms of the
Certificate of Incorporation and the By-Laws, the Registrant is required to
indemnify a person in connection with a proceeding initiated by such person only
if the proceeding was authorized by the Board of Directors of the Registrant.
The Certificate of Incorporation and the By-Laws further provide that the
Registrant shall pay the expenses of directors and executive officers of the
Registrant, and may pay the expenses of all other officers, employees or agents
of the Registrant, incurred in defending any proceeding, in advance of its final
disposition, upon receipt of an undertaking by the director, officer, employee
or agent to repay all amounts advanced if it should be ultimately determined
that such person is not entitled to be indemnified under the provisions of the
Certificate of Incorporation, the By-Laws or otherwise.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful on the merits or otherwise in the
defense of any action, suit or proceeding referred to in subsections (a) and (b)
of Section 145 or in the defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred in connection therewith; that indemnification
provided for by Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and that indemnification provided
for by Section 145 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of such person's heirs, executors and
administrators.
The Certificate of Incorporation and the By-Laws provide that the
Registrant's obligation, if any, to indemnify any person who was or is serving
at its request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity, shall be
reduced by any amount such person may collect as indemnification from such other
entity.
II-1
<PAGE> 405
If the indemnification provisions of the Certificate of Incorporation or
By-Laws are repealed or modified, such repeal or modification will not adversely
affect any right or protection thereunder of any person in respect of any act or
omission occurring prior to the time of such repeal or modification.
Pursuant to the Merger Agreement, in the event of any registration of the
Faircom Subordinated Noteholders' shares of the Registrant's Common Stock as
provided in the Merger Agreement, the Registrant is required to defend,
indemnify and hold harmless each of the Faircom Subordinated Noteholders, its
officers, directors, partners, affiliates, and each underwriter thereof and each
person who controls such entity or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities and any claim
in respect thereof, joint or several, to which any such party may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary or final prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, other than that which is based upon
information supplied by the Faircom Subordinated Noteholders, in writing, and
the Registrant shall reimburse each of the Faircom Subordinated Noteholders, and
such officers, directors, underwriters and controlling person for any legal or
other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or actions
(except to the extent the foregoing arises out of or is based upon information
provided in writing to the Registrant by the person or entity seeking
indemnification).
The Merger Agreement further provides that, in the event of any
registration of the Faircom Subordinated Noteholders' shares of the Registrant's
Common Stock as provided in the Merger Agreement, the Faircom Subordinated
Noteholders are required to defend, indemnify and hold harmless the Registrant,
its officers, directors, partners, affiliates, and each underwriter thereof and
each person who controls such entity or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities and any claim
in respect thereof, joint or several, to which the Registrant may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary or final prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, which is based upon information supplied by
the Faircom Subordinated Noteholders, in writing, and such entities are required
to reimburse the Registrant for any legal or other expenses reasonably incurred
by the Registrant in connection with investigating or defending any such loss,
claim, damage, liability or actions (except to the extent the foregoing arises
out of or is based upon information provided by Registrant or any of its
stockholders).
Pursuant to the Merger Agreement, if for any reason any indemnification
described above may not be provided by the party or parties required to provide
such indemnification, the indemnifying parties are required, in lieu of such
indemnification, to contribute to the amount paid or payable by the party or
parties seeking indemnification, in such proportion as is appropriate to reflect
the relative fault of the parties in connection with any statement or omission
which resulted in such losses, claims, damages, liabilities or actions, as well
as any other relevant equitable considerations.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<S> <C>
2(a) -- Agreement of Merger among Faircom Inc., Regent Merger
Corp., Regent Communications, Inc., Blue Chip Capital
Fund II Limited Partnership and Miami Valley Venture Fund
L.P. dated as of December 5, 1997, as amended (included
as Appendix A to the Proxy Statement/Prospectus filed as
part of this Registration Statement).
The following exhibits to the Agreement of Merger are
omitted as not material:
</TABLE>
II-2
<PAGE> 406
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
1(j) Faircom Licenses
1(k) Faircom Senior Debt
1(x) Form of Amended and Restated Certificate of Incorporation of
Regent Communications, Inc.
1(bb) Regent Licenses
1(ff) Regent Subsidiaries
4(a) Certificate of Incorporation of Subsidiary
4(b) By-Laws of Subsidiary
10(a) Form of Regent Option Agreement
12B Rule 145 Letter
13(b)(3) Form of Redemption and Warrant Agreement
21(a) Capital Stock of Faircom Subsidiaries
21(b) Faircom Options
21(f) Faircom Affiliates
21(g) Rights to Acquire Securities (Faircom)
21(i) Title to Faircom Broadcast Assets
21(k-1) Faircom Contracts
21(m-1) Faircom Key Employees
21(m-2) Faircom Accounts and Safe Deposit Boxes
21(o) Faircom Related Transactions
21(p) Faircom Taxes
21(q) Faircom Employee Benefit Plans
21(r) Faircom Compliance with Commission Regulations
21(s) Faircom Tangible Personal Property
21(t) Faircom Real Property
21(u) Faircom Environmental
21(v) Faircom Insurance
21(bb) Faircom Litigation
21(ee) Faircom Intellectual Property
21(hh) Certain Changes (Faircom)
21(ii) Faircom Personnel
21(kk) Faircom Outstanding Debt
22(a) Information Regarding Regent Subsidiaries
22(f) Regent Affiliates
22(g) Rights to Acquire Securities (Regent)
22(i) Title to Regent Assets
22(k-1) Regent Contracts
22(m-1) Regent Key Employees
22(m-2) Regent Accounts and Safe Deposit Boxes
22(o) Regent Related Transactions
22(p) Regent Taxes
22(q) Regent Employee Benefit Plans
</TABLE>
II-3
<PAGE> 407
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
22(r) Regent Compliance with Commission Regulations
22(s) Regent Tangible Personal Property
22(t) Regent Real Property
22(u) Regent Environmental
22(v) Regent Insurance
22(bb) Regent Litigation
22(dd) Regent Required Consents
22(ee) Regent Intellectual Property
22(hh) Certain Changes (Regent)
22(ii) Regent Personnel
22(kk) Regent Outstanding Debt
22(ll) Exceptions to Negative Covenants
27(c) Form of Opinion of Fulbright & Jaworski L.L.P.
28(b) Form of Opinion of Strauss & Troy
34 Form of Employment Agreement
2(b) -- Agreement of Merger dated as of December 17, 1997 among
Regent Communications, Inc., Regent Broadcasting of
Victorville, Inc. and Topaz Broadcasting, Inc.
2(c) -- Asset Purchase Agreement dated December 17, 1997 between
Regent Broadcasting of Victorville, Inc. and Ruby
Broadcasting, Inc.
2(d) -- Asset Purchase Agreement dated December 9, 1997 between
Regent Broadcasting of Kingman, Inc. and Continental
Radio Broadcasting, L.L.C.
2(e) -- Stock Purchase Agreement dated as of June 16, 1997 among
Regent Communications, Inc. and the shareholders of The
Park Lane Group, as amended
2(f) -- Agreement of Merger among Alta California Broadcasting,
Inc., Regent Acquisition Corp. and Regent Communications,
Inc. dated October 10, 1997
3(a) -- Amended and Restated Certificate of Incorporation of
Regent Communications, Inc. (included as Appendix B to
the Proxy Statement/Prospectus filed as part of this
Registration Statement)
3(b) -- Amended and Restated By-Laws of Regent Communications,
Inc. (included as Appendix C to the Proxy
Statement/Prospectus filed as part of this Registration
Statement)
4(a) -- Specimen stock certificate
4(b) -- Stock Purchase Agreement dated as of May 20, 1997 between
Terry S. Jacobs and Regent Communications, Inc.
4(c) -- Stock Purchase Agreement dated as of May 20, 1997 between
River Cities Capital Fund Limited Partnership and Regent
Communications, Inc.
4(d) -- Stock Purchase Agreement dated as of December 1, 1997 and
Terry S. Jacobs and Regent Communications, Inc.
4(e) -- Stock Purchase Agreement dated as of December 1, 1997
between William L. Stakelin and Regent Communications,
Inc.
4(f) -- Stock Purchase Agreement dated as of December 8, 1997
between Regent Communications, Inc. and General Electric
Capital Corporation
4(g) -- Stock Purchase Agreement dated as of December 8, 1997
between Regent Communications, Inc. and BMO Financial,
Inc.
</TABLE>
II-4
<PAGE> 408
<TABLE>
<S> <C>
4(h) -- First Amended and Restated Stockholders' Agreement dated as of December 8, 1997 among Regent
Communications, Inc., Terry S. Jacobs, William L. Stakelin, River Cities Capital Fund Limited
Partnership, BMO Financial, Inc. and General Electric Capital Corporation
4(i) -- Amended and Restated Redemption and Warrant Agreement dated as of March 31, 1998 among Regent
Communications, Inc., Blue Chip Capital Fund II Limited Partnership, Miami Valley Venture Fund
L.P. and Faircom Inc.
4(j) -- Credit Agreement dated as of November 14, 1997 among Regent Communications, Inc., the lenders
listed therein, as Lenders, General Electric Capital Corporation, as Documentation Agent and
Bank of Montreal, Chicago Branch, as Agent (excluding exhibits not deemed material or filed
separately in executed form)
4(k) -- Revolving Note issued by Regent Communications, Inc. to Bank of Montreal, Chicago Branch dated
November 14, 1997 in the principal amount of $20,000,000 (See Note 1 below)
4(l) -- Agreement to Issue Warrant dated as of March 25, 1998 between Regent Communications, Inc. and
River Cities Capital Fund Limited Partnership
4(m) -- Regent Communications, Inc. Faircom Conversion Stock Option Plan
5 -- Opinion of Strauss & Troy as to legality of the securities being registered
8(a) -- Form of Opinion of Fulbright & Jaworski L.L.P. regarding certain tax matters
8(b) -- Form of Opinion of Strauss & Troy regarding certain tax matters
10(a) -- Regent Communications, Inc. 1998 Management Stock Option Plan
10(b) -- Employment Agreement between Regent Communications, Inc. and Terry S. Jacobs
10(c) -- Employment Agreement between Regent Communications, Inc. and William L. Stakelin
10(d) -- $1,500,000 Promissory Note made by Regent Communications, Inc. in favor of Citicasters Co. dated
December 3, 1997
10(e) -- Security Agreement between Regent Communications, Inc. and Citicasters Co. dated December 3,
1997
10(f) -- $1,500,000 Limited Recourse Promissory Note made by Southwind Broadcasting, Inc. in favor of
Regent Communications, Inc. dated December 3, 1997
10(g) -- Assignment dated as of December 3, 1997 among Wicks Broadcast Group Limited Partnership, WBG
License Co., L.L.C. and Regent Communications, Inc.
10(h) -- Pledge and Security Agreement among Southwind Broadcasting, Inc., William G. Dudley III, Randall
T. Odeneal and Regent Communications, Inc. dated as of December 3, 1997
10(i) -- Time Brokerage Agreement dated as of October 10, 1997 among Redwood Broadcasting, Inc., Alta
California Broadcasting, Inc., Power Surge, Inc., Northern California Broadcasting, Inc. and
Regent Communications, Inc.
10(j) -- Time Brokerage Agreement dated as of June 16, 1997 between Regent Communications, Inc. and The
Park Lane Group, as amended (assigned by the Registrant to its subsidiaries by a certain
Assignment and Assumption of Time Brokerage Agreement dated as of August 18, 1997)
10(k) -- Time Brokerage Agreement dated as of December 17, 1997 between Topaz Broadcasting, Inc. and
Regent Communications, Inc.
10(l) -- Time Brokerage Agreement dated as of December 17, 1997 between Ruby Broadcasting, Inc. and
Regent Communications, Inc.
10(m) -- Time Brokerage Agreement dated effective as of December 3, 1997 between Southwind Broadcasting,
Inc. and Regent Communications, Inc.
10(n) -- Deposit Escrow Agreement dated as of December 17, 1997 among Regent Broadcasting of Victorville,
Inc., Ruby Broadcasting, Inc., Topaz Broadcasting, Inc., Regent Communications, Inc., Thomas P.
Gammon and Security Title & Guaranty, Inc., as escrow agent
</TABLE>
II-5
<PAGE> 409
<TABLE>
<S> <C>
10(o) -- Deposit Escrow Agreement dated as of December 9, 1997
among Regent Broadcasting of Kingman, Inc., Continental
Radio Broadcasting, L.L.C. and Star Media, as escrow
agent
10(p) -- Deposit Escrow Agreement dated as of October 10, 1997
among Regent Communications, Inc., Redwood Broadcasting,
Inc. and Security Title & Guaranty Agency, Inc., as
escrow agent
10(q) -- Deposit Escrow Agreement dated as of June 16, 1997 among
Regent Communications, Inc., Star Media and the
stockholders of The Park Lane Group
10(r) -- Lease Agreement dated January 17, 1994 between
CPX -- Rivercenter Development Corporation and Regent
Communications, Inc.
10(s) -- Amended and Restated Promissory Note issued by Regent
Licensee of San Diego, Inc. and Regent Broadcasting of
San Diego, Inc. to Citicasters Co. in the principal
amount of $6,000,000
10(t) -- Non-Recourse Guaranty Agreement dated as of June 6, 1997
between Regent Communications, Inc. and Citicasters Co.
10(u) -- Amended and Restated Security Agreement dated as of
September 10, 1997 among Regent Broadcasting of San
Diego, Inc., Regent Licensee of San Diego, Inc. and
Citicasters Co.
10(v) -- Stock Pledge Agreement dated as of June 6, 1997 between
Regent Communications, Inc. and Citicasters Co.
10(w) -- Subsidiary Guaranty dated as of November 14, 1997 by each
of the subsidiaries of Regent Communications, Inc. in
favor of Bank of Montreal, Chicago Branch
10(x) -- Pledge and Security Agreement dated as of November 14,
1997 among Regent Communications, Inc. and each of its
subsidiaries and Bank of Montreal, Chicago Branch
10(y) -- Collateral Account Agreement dated as of November 14,
1997 between Regent Communications, Inc. and Bank of
Montreal, Chicago Branch
10(z) -- Commitment Letter of Waller-Sutton Media Partners, L.P.
dated March 19, 1997
21 -- Subsidiaries of the Registrant
23(a) -- Consent of Coopers & Lybrand L.L.P.
23(b) -- Consent of Coopers & Lybrand L.L.P.
23(c) -- Consent of Coopers & Lybrand L.L.P.
23(d) -- Consent of Coopers & Lybrand L.L.P.
23(e) -- Consent of Strauss & Troy (contained in Exhibit 5 and
8(b))
23(f) -- Consent of Fulbright & Jaworski L.L.P. (contained in
Exhibit 8(a))
23(g) -- Consent of Hoffman Schutz Media Capital, Inc. (contained
in Appendices D-1 and D-2 to the Proxy
Statement/Prospectus filed as part of this Registration
Statement)
23(h) -- Consent of BDO Seidman, LLP
23(i) -- Consent of Stockman Kast Ryan & Scruggs, P.C.
23(j) -- Consent of Kopperman & Wolf Co.
23(k) -- Consent of Joel M. Fairman
23(l) -- Consent of John H. Wyant
23(m) -- Consent of William H. Ingram
23(n) -- Consent of Richard H. Patterson
</TABLE>
- ---------------
Note:
1. Two substantially identical notes were issued to Bank of Montreal, Chicago
Branch in the principal amounts of $15,000,000 and $20,000,000.
II-6
<PAGE> 410
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(b) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference in to the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(d) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-7
<PAGE> 411
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
caused this Amendment No. 1 to Form S-4 Registration Statement to be signed on
its behalf by the undersigned thereto duly authorized, in the City of Covington,
Commonwealth of Kentucky, on April , 1998.
REGENT COMMUNICATIONS, INC.
By: /s/ TERRY S. JACOBS
------------------------------------
Terry S. Jacobs, Chairman of the
Board,
Chief Executive Officer and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ TERRY S. JACOBS Chairman of the Board, Chief April , 1998
- ----------------------------------------------------- Executive Officer and
Terry S. Jacobs Treasurer (Principal
Executive and Financial
Officer)
/s/ MATTHEW A. YEOMAN Vice President -- Finance April , 1998
- ----------------------------------------------------- (Principal Accounting
Matthew A. Yeoman Officer)
/s/ TERRY S. JACOBS Director April , 1998
- -----------------------------------------------------
Terry S. Jacobs
/s/ WILLIAM L. STAKELIN Director April , 1998
- -----------------------------------------------------
William L. Stakelin
</TABLE>
II-8
<PAGE> 1
Exhibit 2(b)
AGREEMENT OF MERGER
AMONG
TOPAZ BROADCASTING, INC.
AND
REGENT BROADCASTING OF VICTORVILLE, INC.
AND
REGENT COMMUNICATIONS, INC.
December 17, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
DEFINITION OF TERMS
<S> <C>
1. Definition of Terms
(a) Topaz 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..............................................................3
(l) Series E Preferred Stock..............................................3
(m) Station...............................................................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..................................4
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 Topaz Stock.......................................5
12. Payment of Cash and Issuance of Preferred Stock................................5
PURCHASE PRICE
13. (a) Consideration Before Adjustment.......................................6
(b) Consideration After Adjustment........................................6
</TABLE>
-i-
<PAGE> 3
<TABLE>
FCC MATTERS
<S> <C>
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.......................................7
18. Control and Access.............................................................7
19. Time for Commission Consent - Termination......................................7
COVENANTS, REPRESENTATIONS AND WARRANTIES OF TOPAZ
20. Covenants, Representations and Warranties of Topaz.............................8
(a) Corporate Standing and Authority......................................8
(b) Ownership of Topaz Stock..............................................8
(c) Corporate Power.......................................................9
(d) Capital Stock.........................................................9
(e) Due Authorization, Etc................................................9
(f) Affiliates............................................................9
(g) Rights to Acquire Securities..........................................9
(h) Corporate Records.....................................................9
(i) Right to Acquire Title to Broadcast Assets...........................10
(j) Financial Statements.................................................10
(k) Contracts............................................................10
(1) Government Authorizations............................................11
(m) Management, Key Employees and Accounts...............................12
(n) Tax Elections........................................................13
(o) Related Transactions.................................................13
(p) Taxes................................................................13
(q) Employee Benefit Plans...............................................13
(r) Compliance With FCC Regulations......................................14
(s) Personal Property....................................................14
(t) Environmental........................................................14
(u) Insurance............................................................15
(v) Laws, Regulations and Instruments....................................15
(w) Conduct of Station...................................................15
(x) Disposition of Assets................................................15
(y) Transmitter Sites....................................................15
(z) Litigation...........................................................16
(aa) No Conflict..........................................................16
(bb) Required Consents....................................................16
(cc) Intellectual Property................................................16
(dd) Qualifications for Transfer of Control...............................17
(ee) Absence of Certain Changes...........................................17
(ff) Personnel Information................................................17
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
(gg) Outstanding Debt.....................................................18
(hh) Negative Covenants...................................................18
(ii) Affirmative Covenants................................................19
(jj) Additional Agreements................................................20
(kk) Join in Execution of Documents.......................................20
(ll) Full Disclosure......................................................20
COVENANTS, REPRESENTATIONS AND WARRANTIES
OF REGENT AND SUBSIDIARY
21. Covenants, Representations and Warranties of Regent and Subsidiary............20
(a) Corporate Standing and Authority.....................................20
(b) Corporate Power......................................................21
(c) Capitalization.......................................................21
(d) Join in Execution of Documents.......................................21
(e) Litigation...........................................................22
(f) No Conflict..........................................................22
(g) Licenses.............................................................22
(h) [Intentionally Left Blank]...........................................22
(i) Absence of Certain Changes...........................................22
(j) Laws, Regulations and Instruments....................................23
(k) Issuance of Series E Preferred Stock.................................23
(l) Financial Statements.................................................23
(m) No Adverse Changes...................................................23
(n) Qualifications for Transfer of Control...............................23
(o) Insurance............................................................24
(p) Taxes................................................................24
(q) Full Disclosure .....................................................24
(r) Covenants............................................................24
INDEMNIFICATION
22. Indemnification ..............................................................25
RISK OF LOSS
23. Risk of Loss..................................................................26
(a) Broadcast Assets.....................................................26
(b) Broadcast Transmission of the Stations Prior to Closing..............27
</TABLE>
-iii-
<PAGE> 5
CONDITIONS PRECEDENT TO SUBSIDIARY'S AND REGENT'S
OBLIGATION TO CLOSE
<TABLE>
<S> <C>
24. Conditions Precedent to Subsidiary's and Regent's Obligations.................27
(a) Representations, Warranties and Covenants............................27
(b) Delivery of Closing Documents........................................27
(c) Licenses.............................................................27
(d) Consents.............................................................28
(e) Final Order..........................................................28
(f) Adverse Proceedings..................................................28
(g) Environmental Examination............................................28
(h) Time Brokerage Agreement Compliance..................................28
(i) Material Adverse Change..............................................28
(j) Repair or Correction of Existing Condition...........................28
(k) Closing on Ruby APA..................................................28
CONDITIONS PRECEDENT TO TOPAZ'S OBLIGATION TO CLOSE
25. Conditions Precedent to Topaz's Obligations...................................29
(a) Representations, Warranties and Covenants............................29
(b) Purchase Price.......................................................29
(c) Delivery of Closing Documents........................................29
(d) Final Order..........................................................29
(e) Consents.............................................................29
(f) Adverse Proceedings..................................................29
(g) Issuance of Series E Preferred Stock.................................29
(h) Title and Environmental Examination..................................29
(i) Closing on Ruby APA..................................................30
CLOSING DOCUMENTS
26. Closing Documents to be Delivered by Topaz....................................30
27. Closing Documents to be Delivered by Regent and Subsidiary....................31
28. Escrow Deposit................................................................34
29. Remedies on Default-Prior to Closing..........................................34
30. Brokerage.....................................................................35
31. Survival of Representations and Warranties....................................35
MISCELLANEOUS PROVISIONS
32. Time Brokerage Agreement......................................................35
33. Headings......................................................................35
34. Execution.....................................................................36
35. Notices.......................................................................36
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C>
36. Disclosure....................................................................37
37. Receipt of Series E Preferred Stock...........................................37
38. Amendment or Termination......................................................37
39. Entire Agreement..............................................................37
40. Governing Law and Forum.......................................................37
41. Successors and Assigns........................................................41
</TABLE>
-v-
<PAGE> 7
AGREEMENT OF MERGER
THIS AGREEMENT is made and entered as of this 17th day of December
1997, by and among REGENT COMMUNICATIONS, INC., a Delaware corporation
(hereinafter referred to as "Regent"), REGENT BROADCASTING OF VICTORVILLE, INC.,
a Delaware corporation (hereinafter referred to as "Subsidiary"), and TOPAZ
BROADCASTING, INC., a Delaware corporation (hereinafter referred to as "Topaz").
PREAMBLE
W I T N E S E T H:
WHEREAS, Topaz is a party to an Asset Purchase Agreement (the "KIXA
APA"), to purchase all of the tangible and intangible assets used or held by
RASA Communications, Inc. for use in the operation of Radio Station KIXA-FM,
Lucerne Valley, California (the "Station"); and
WHEREAS, Subsidiary is a wholly-owned subsidiary of Regent; and
WHEREAS, the Board of Directors of Topaz and the Board of Directors of
Subsidiary deem it advisable that Topaz (sometimes referred to as "the
Disappearing Corporation") be merged into Subsidiary (sometimes referred to as
"the Surviving Corporation") under the laws of the States of Delaware in the
manner provided therefor pursuant to Section 251 and related sections of Title 8
of the Delaware Code and in a tax-free exchange in accordance with the
provisions of Section 1031 of the Code of the Internal Revenue Service; and
WHEREAS, as a result of such merger, all of the outstanding capital
stock of Topaz will be redeemed and cancelled by Regent; and
WHEREAS, the permit of the Station may not be assigned without prior
written consent of the Federal Communications Commission; and
WHEREAS, Regent, Subsidiary, and Topaz have negotiated the terms and
conditions of such merger, including the consideration to be paid to Thomas P.
Gammon, the sole stockholder of Topaz (hereinafter sometimes referred as
"Gammon" or "Stockholder"); and
WHEREAS, Subsidiary and Ruby Broadcasting, Inc., a Delaware
corporation, the sole stockholder of which is Gammon have entered into an Asset
Purchase Agreement (hereinafter the "Ruby APA") for the acquisition of radio
stations KIXW (AM) and KZXY-FM, Apple Valley, California; and
WHEREAS, Topaz and Regent have entered into a Time Brokerage Agreement
(the "Time Brokerage Agreement") of even date herewith concerning the operation
of the Station;
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:
<PAGE> 8
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) "Topaz Stock" means all shares of the capital stock of
Topaz outstanding on the Closing Date and all options, warrants and other rights
to acquire the capital stock of Topaz (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 Topaz" means the Best Knowledge of Thomas P. Gammon. "Best
Knowledge of Regent" means the Best Knowledge of Terry S. Jacobs and William L.
Stakelin.
(c) "Broadcast Assets" means the KIXA Assets as defined in the
KIXA APA, together with any tangible and intangible assets used or held for use
by Topaz in the operation of the Station, including:
(i) All contracts for the sale of broadcast time or
advertising on the Station for cash which are valid and enforceable as of the
Closing Date.
(ii) All contracts for the sale of broadcast time or
advertising on the Station 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 arising from the sale of broadcast time on the Station.
(iii) All other leases, contracts and agreements
relating to the operation of the Station and which are in effect on the Closing
Date, including without limitation those described in Schedule 20(k-1).
(iv) All the tangible property, assets, furniture,
fixtures, supplies, materials, goods, transmitters and equipment used or useful
in the operation of the Station, including, without limitation, those listed on
Schedule 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.
(v) Goodwill, privileges, permits, copyrights, logos,
jingles, service marks, trademarks and trade names (including rights in
applications in connection therewith), and other intangible rights used or owned
by, or under the control of, Topaz for use in the operation of the Station or in
connection therewith.
(vi) The correspondence, files, records, stock books,
minute books, books of account, logs, advertising lists, copy and other files,
books, writings and records of Topaz.
-2-
<PAGE> 9
(vii) All accounts and notes receivable of Topaz as
of the Closing Date arising from the sale of broadcast time on the Station.
(viii) Real property owned by Topaz as of the Closing
Date.
(ix) All other things owned by Topaz (excluding cash
on hand) used or useful in the operation of the Station and not disposed of in
the ordinary and usual course of business; provided, however, the Broadcast
Assets shall not include those items listed on Schedule 1(c)(ix).
(d) "Closing Date" means the date, time and place designated
by not less than ten (10) days' written notice from Subsidiary to Topaz, 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 Topaz and Subsidiary.
"Closing" means the redemption and cancellation of the Topaz Stock, the delivery
of the consideration therefor to Gammon, and the execution and delivery of the
other documents as provided herein, which shall occur prior to the assignment of
the KIXA FCC Licenses to Subsidiary.
(e) "Commission" means the Federal Communications Commission.
(f) "Commission's Order" means the action of the Commission
consenting to the assignment of the KIXA FCC Licenses, as defined in the KIXA
APA, to Subsidiary.
(g) "Constituent Corporations" means Topaz Broadcasting, Inc.
and Regent Broadcasting of Victorville, Inc.
(h) "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.
(i) "Financials" means the unaudited financial statements for
the Station for the month ended October 31, 1997, and for monthly periods
thereafter up to and including the Closing Date, furnished and to be furnished
to Regent and consisting of balance sheets, and statements of income and
retained earnings.
(j) "Licenses" means all licenses, permits and authorizations
issued by the Commission relative to the Station, as listed and described on
Schedule 2.1(a) to the KIXA APA.
(k) "Series E Preferred Stock" means the $5 Series E
Convertible Preferred Stock of Regent being issued and delivered to, and
acquired by, Gammon under the terms of this Agreement, and having the attributes
described on Schedule 1(l).
-3-
<PAGE> 10
(l) "Station" means radio station KIXA-FM and any auxiliary
stations of such Station.
AGREEMENT TO MERGE
------------------
2. AGREEMENT. Topaz, a corporation duly organized under the State of
Delaware, 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, Topaz shall be
merged with and into Subsidiary, the separate corporate existence of Topaz 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.
3. ACTION TO EFFECT MERGER. Prior to, from and after Effectiveness,
Topaz, 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.
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:
<TABLE>
<S> <C>
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
</TABLE>
7. STOCKHOLDER APPROVAL; EFFECTIVENESS OF MERGER. This Agreement of
Merger has been approved by the stockholder of Topaz and the stockholder of
Subsidiary as provided by the applicable laws of the State of Delaware. If this
Agreement is not terminated or abandoned in accordance with its terms, this
Agreement of Merger shall be executed and certified by Topaz 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
-4-
<PAGE> 11
Delaware a Certificate of Merger in the form provided under such Section 251(c)
as soon as practicable after the Closing. 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. Topaz presently has
authorized and outstanding capital stock consisting of the following:
<TABLE>
<CAPTION>
Total Total
Authorized Outstanding
Capital Stock Shares Shares
<S> <C> <C>
Common, $0.10 per 1,000 1,000
share par value
</TABLE>
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 Topaz stock
and all outstanding options and warrants to purchase Topaz stock shall be
redeemed and canceled, and each share held in Topaz'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, Gammon shall surrender for redemption and cancellation his certificate
or certificates evidencing all of the outstanding shares of Topaz Stock.
11. FUNDING OF CONSIDERATION FOR TOPAZ STOCK. On or before the Closing
Date, Regent shall have issued to Subsidiary at least 400,000 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 40,000 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
-5-
<PAGE> 12
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 Gammon a certificate or
certificates for 360,000 fully paid and nonassessable shares of Series E
Preferred Stock.
PURCHASE PRICE
--------------
13. (a) CONSIDERATION BEFORE ADJUSTMENTS. The consideration to be
paid for the Topaz Stock before adjustments as provided in paragraph 13(b) below
(the "Consideration Before Adjustments") will consist of the following:
(i) Four Hundred Thousand (400,000) shares of Series
E Preferred Stock.
(b) CONSIDERATION AFTER ADJUSTMENTS. At the Closing, a
computation shall be compiled by Topaz setting forth as of the Closing Date the
amount of Topaz's Cash (as hereinafter defined) and all known Liabilities of
Topaz as set forth below ("Closing Statement"). The Consideration Before
Adjustments shall be adjusted by (a) an increase by the amount of any Cash and
(b) a decrease by the amount of any 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 the total Consideration After
Adjustments payable to Gammon for the Topaz Stock, shall be payable in shares of
Series E Preferred Stock, based on a per share stated value of $5.00.
As used herein, "Cash" shall mean any 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 Topaz's balance sheet) that are assets of Topaz after the
Closing Date.
As used herein, the term "Liabilities" shall mean at the Closing Date
the amount of all the liabilities of Topaz 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) net trade and barter obligations that exceed $25,000 in the
aggregate, and (v) all other items which in accordance with generally accepted
accounting principles consistently applied should be included as Liabilities of
Topaz. Liabilities shall not include any liability under the KIXA APA or KIXA
TBA. For purposes of the determination of Liabilities, all expenses relating to
Topaz and arising from the conduct of Topaz's business and operation of the
Station (including without limitation such items as taxes, license fees,
utilities, and rents) shall be prorated between Regent and Topaz in accordance
with generally accepted
-6-
<PAGE> 13
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 any applicable Final Order prior to Closing granting consent to the
assignment of KIXA FCC Licenses to Subsidiary.
15. APPLICATIONS FOR CONSENT - Cooperation of the Parties. As set forth
in Section 7.2 of the KIXA APA, RASA shall join with Regent, in filing an
application for assignment of license. 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.
16. COSTS AND EXPENSES. Topaz, Subsidiary and Regent each shall bear
its own legal fees and other costs and expenses with respect to this
transaction. All sales, transfer and documentary taxes, if any, in respect of
the Topaz Stock shall be borne equally by Topaz and Regent. All other fees and
expenses payable by Topaz but not paid prior to Closing shall be treated as a
current liability of Topaz at Closing and will be paid by the surviving entity
at Closing.
17. OPERATION OF THE STATION BEFORE CLOSING. Subject to Regent's time
brokering of the Station pursuant to the Time Brokerage Agreement, between the
date of this Agreement and the Closing Date, Topaz will perform its obligations
under the Time Brokerage Agreement dated August 29, 1997 by and between RASA and
Topaz (the "KIXA TBA").
18. CONTROL AND ACCESS. Subject to Regent's time brokering of the
Station 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 Station.
Except as otherwise provided herein, such operations shall be the sole
responsibility of and in the complete discretion of RASA. Regent shall be
permitted reasonable observation, access and inspection of Topaz's records and
property of the Station 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 Station as it may reasonably request and as are regularly
prepared by Topaz in the ordinary course of the business.
19. TIME FOR COMMISSION CONSENT-TERMINATION. If the Closing has not
occurred on or before December 1, 1998, this Agreement may be terminated at the
option of either Topaz or Subsidiary upon the giving of ten (10) days written
notice to the other, provided that the terminating party is not in material
breach of this Agreement or the Ruby APA and, in the absence of material breach
by any of the parties, Regent, Subsidiary and Topaz shall thereupon be released
and discharged of all obligations hereunder, and the Escrow Deposit under
paragraph 28 shall be refunded to Regent.
-7-
<PAGE> 14
COVENANTS, REPRESENTATIONS
AND WARRANTIES OF TOPAZ
-----------------------
20. COVENANTS, REPRESENTATIONS AND WARRANTIES OF TOPAZ. Topaz makes the
following covenants, representations and warranties:
(a) CORPORATE STANDING AND AUTHORITY.
(i) Topaz 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 Delaware; authorized to conduct business within the State of
California (being the only state in which the Station's offices, equipment,
facilities and the 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 Topaz, and copies of all corporate proceedings of Topaz
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 Topaz, 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.
(b) OWNERSHIP OF TOPAZ STOCK. Based upon a certificate of
Gammon to be delivered on or before the Closing Date and upon the stock records
of Topaz:
(i) all of the Topaz Stock is owned by Gammon free
and clear of all liens, encumbrances, charges and assessments;
(ii) at the Closing, Gammon will own the Topaz Stock,
which will be all of the outstanding capital stock of Topaz and all of the
outstanding options, warrants or other rights to acquire capital stock of Topaz;
(iii) there will be no restrictions with respect to
the redemption and cancellation of the Topaz Stock in accordance with the terms
of this Agreement;
(iv) the Topaz 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 Topaz 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.
-8-
<PAGE> 15
(c) CORPORATE POWER. Topaz:
(i) has all requisite corporate power and authority
to own, lease and operate its assets and to carry on its business 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. Topaz has authorized and outstanding
capital stock consisting solely of the following:
<TABLE>
<CAPTION>
Total Total
Authorized Outstanding
Capital Stock Shares Shares
------------- ------ ------
<S> <C> <C>
Common, $0.10 per 1,000 1,000
share par value
</TABLE>
(e) DUE AUTHORIZATION, ETC. All of the outstanding capital
stock of Topaz has been duly and validly authorized and issued and is fully paid
and nonassessable and none of such securities 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 Schedule 20(f), Topaz
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
Schedule 20(g), there are no outstanding rights, warrants, options,
subscriptions, agreements, or commitments giving anyone any current or future
right to require Topaz to sell or issue any capital stock or other securities or
any agreement or arrangement restricting the right of Topaz to issue or sell any
capital stock or other securities.
(h) CORPORATE RECORDS. The minute books of Topaz 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 Topaz 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 Topaz, and all amendments thereto. The stock
certificate books and
-9-
<PAGE> 16
share ledger of Topaz 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) RIGHT TO ACQUIRE TITLE TO BROADCAST ASSETS. Topaz has the
full and complete right to acquire good and marketable title to all of the
Broadcast Assets pursuant to the KIXA-APA, free and clear of all liens,
mortgages, pledges, conditional sales agreements, security interests, charges
and encumbrances, except those identified in the KIXA APA.
(j) FINANCIAL STATEMENTS. 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 Topaz 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 the books and
records of Seller.
(k) CONTRACTS.
(i) Schedule 20(k-1) is a complete list or
description of all written and oral contracts relative to the Station in
existence at the date of this Agreement which are enforceable against Topaz or,
to the best knowledge of Topaz, RASA Communications, Inc., 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;
(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 Station in exchange for merchandise or services on or
after the date hereof which will not be fully performed by the Closing Date to
which Topaz or RASA Communications, Inc. is a party or by which it is bound are
listed on Schedule 20(k-2) and are pre-emptible for cash sales with the
exception of those identified on Schedule 20(k-2) as not pre-emptible for cash
sales. True and complete copies of all contracts, leases and agreements listed
in Schedule 20(k-1) have been made available to Regent. Except as provided in
the KIXA APA, Topaz or RASA Communications, Inc. is and on the Closing Date will
be current in all of its obligations under all of the contracts, leases and
agreements listed on Schedule 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
-10-
<PAGE> 17
effect and will not be impaired by any acts or omissions within the reasonable
control of Topaz, 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 Schedule 20(k-1), there shall not, on the
Closing Date, be any other contracts not of the types excluded from being listed
on Schedule 20(k-1) outstanding with respect to the operation of the Station.
(ii) on the Closing Date, to the extent any
assignment may be necessary, Topaz 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.
(iii) Except as set forth on Schedule 20(k-1), Topaz
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 Topaz;
(B) guarantee of any obligation; or
(C) agreement whereunder Topaz or any
successor is obligated to make any conditional or other payment based upon the
future performance of Topaz or the Station.
(l) GOVERNMENT AUTHORIZATIONS.
(i) To the best knowledge of Topaz, the KIXA APA
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 Station in
the manner and to the full extent they are presently conducted (including,
without limitation, auxiliary licenses associated with the Station), except for
such licenses, permits and authorizations the failure of which to obtain would
not have an adverse effect on Regent or the Station. Topaz has delivered to
Regent true and complete copies of the Station's Licenses and the other
licenses, permits and authorizations listed in Schedule 1(k), including any and
all amendments and other modifications thereto.
(ii) To the best knowledge of Topaz, as specified in
the KIXA APA, RASA Communications, Inc. is the authorized legal holder of the
Licenses and other licenses, permits and authorizations listed in the KIXA APA.
Except as set forth in the KIXA APA, none of the Licenses and other licenses,
permits and authorizations listed in the KIXA APA is subject to any restrictions
or conditions which would materially limit the full operation of the Station as
now operated.
(iii) To the Best Knowledge of Topaz, except as set
forth in the KIXA APA, and except for matters affecting the radio broadcast
industry generally, there are no applications, complaints, petitions or
proceedings pending or threatened as of the date hereof
-11-
<PAGE> 18
before the FCC or any other governmental or regulatory authority relating to the
business or operations of the Station. To the best knowledge of Topaz, except as
set forth in the KIXA APA, the Licenses and the other licenses, permits and
authorizations listed in the KIXA APA are in good standing, are in full force
and effect and are unimpaired by any act or omission of RASA Communications,
Inc. or its stockholders, officers, directors or employees. The operations of
the Station is in accordance with the Licenses and the underlying construction
permits and the other licenses, permits and authorizations listed in the KIXA
APA. Except as set forth in the KIXA APA, no proceedings are pending or
threatened, and there has not been any act or omission of Topaz or RASA
Communications, Inc. or any of their respective officers, directors,
stockholders 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 listed in the KIXA APA, 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 the KIXA APA or which may affect Regent's ability to
continue to operate the Station as it is currently operated.
(iv) To the best knowledge of Topaz, the Station is
operating with the maximum facilities specified in the License.
(v) To the Best Knowledge of Topaz: (i) the Station
is not causing objectionable interference to the transmissions of any other
broadcast station or communications facility nor has the Station received any
complaints with respect thereto; and (ii) no other broadcast station or
communications facility is causing objectionable interference to transmissions
of the Station or the public's reception of such transmissions.
(vi) Topaz has no reason to believe that the Licenses
and the other licenses, permits, or authorizations listed in the KIXA APA will
not be renewed in their ordinary course.
(vii) All reports, forms, and statements required to
be filed by Topaz with the FCC with respect to the Station have been filed and
are substantially complete and accurate.
(viii) To the Best Knowledge of Topaz, there are no
facts which, under the Communications Act of 1934, as amended, or the existing
rules and regulations of the FCC, would disqualify RASA Communications, Inc. as
assignor of the Licenses or cause the Licenses and the other licenses, permits
and authorizations listed in the KIXA APA not to be renewed in their ordinary
course.
(ix) To the best knowledge of Topaz, the operations
of the Station 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. Schedule 20(m-1)
sets forth the names of all employees whose compensation (including without
limitation, salaries, bonuses and commissions) from Topaz, or to the best
knowledge of Topaz, RASA Communications, Inc. for the year ended December 31,
1996 or for the current year on an annualized basis exceeds
-12-
<PAGE> 19
$20,000. Schedule 20(m-2) sets forth the name of each bank or savings
institution in which Topaz has an account or safe deposit box.
(n) TAX ELECTIONS. Topaz 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. Except as set forth on Schedule
20(o), at Closing there will be no outstanding debts and other obligations of
Topaz to its Stockholder or officers or directors, except for those incurred for
normal travel and entertainment in connection with the conduct of the business
of the Station, and were incurred in return for fair and adequate consideration
paid or delivered by it in cash, services, or other property. All debts of the
Stockholder or any of Topaz's officers or directors to Topaz are reflected on
the Financial Statements. Since December 31, 1996, Topaz 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 that will exist at Closing,
except as disclosed in Schedule 20(o).
(p) TAXES. Except as set forth on Schedule 20(p), Topaz 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 Schedule 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. Topaz has delivered to Regent true and
complete copies of all federal, state and local tax returns of Topaz as filed
for the years ended December 31, 1994, 1995, and 1996. Topaz 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 Topaz has no liability for taxes
in excess of the amounts so paid. All of the tax liabilities of Topaz for the
current year to date and all prior years, whether or not they have become due
and payable, 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 Topaz or in the Financials. Topaz has not requested any extension of time
within which to file any tax returns which have not since been filed. The
federal income tax returns of Topaz have been examined by the federal tax
authorities or closed by applicable statute and satisfied for all periods to and
including fiscal year 1992. Except as set forth on Schedule 20(p), Topaz has not
been advised that any of its tax returns, federal, state, local or foreign, have
been or are being audited. Topaz 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.
-13-
<PAGE> 20
(q) EMPLOYEE BENEFIT PLANS. On the date hereof and on the
Closing Date, Topaz 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
Schedule 20(q) and Schedule 20(k-1).
(r) COMPLIANCE WITH FCC REGULATIONS. To the best knowledge of
Topaz, except as specified in the KIXA APA, the operation of the Station 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, 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, the KIXA APA
and Schedule 20(s) hereto contain a list of all items of tangible personal
property owned by Topaz and, to the Best Knowledge of Topaz, RASA
Communications, Inc., respectively, and used in the conduct of the business and
operations of the Station. Schedule 20(s) also separately lists any tangible
personal property leased by Topaz pursuant to leases included within the
Contracts. Except as disclosed in the KIXA APA and Schedule 20(s), Topaz and, to
the Best Knowledge of Topaz, RASA Communications, Inc., respectively, have 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. To the Best
Knowledge of Topaz, the properties listed in the KIXA APA and Schedule 20(s),
along with those properties subject to lease and included among the Contracts,
constitute all tangible personal property necessary to operate the Station as
the same is now being operated. Except as set forth in the KIXA APA and Schedule
20(s), to the Best Knowledge of Topaz, 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) ENVIRONMENTAL. Except as set forth in Schedule 20(u),
Topaz or to the Best Knowledge of Topaz, RASA Communications, Inc.,
respectively, have complied with all federal, state and local environmental
laws, rules and regulations as in effect on the date hereof applicable to the
Station and its operations, including but not limited to the FCC's guidelines
regarding RF radiation. To the Best Knowledge of Topaz, the technical equipment
included in the Broadcast Assets does not contain any PCBs. To the Best
Knowledge of Topaz, 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. Sections 9601 et seq., Toxic Substances Control Act. 15 U.S.C. Sections
2601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Sections 6901 et seq. or any other applicable federal, state and local
environmental law, statute, ordinance, order, judgment rule or regulation
-14-
<PAGE> 21
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. To the Best Knowledge of Topaz, the Broadcast
Assets and Topaz's use thereof are not in violation of any Environmental Laws or
any occupational, safety and health or other applicable law now in effect.
(u) INSURANCE. Schedule 20(q) and Schedule 20(u) contain a
list and summary of the terms of all insurance coverage owned by Topaz. Subject
to the terms of the Time Brokerage Agreement, Topaz will maintain or cause to be
maintained all insurance coverage described in such Schedules 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 Topaz but not
later than 30 days from the date hereof.
(v) LAWS, REGULATIONS AND INSTRUMENTS. Topaz is not in
violation of any term of its Certificate of Incorporation or By-Laws. On the
date hereof and at Closing, the Station is and will be in compliance with all
applicable federal, state and local laws, ordinances and regulations. Topaz
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. Topaz is not in
default with respect to any judgment, order, injunction or decree of any court,
administrative agency, or other governmental authority to which Topaz is a named
party or of which it has received notice.
(w) CONDUCT OF STATION. Subject to Regent's time brokering of
the Station pursuant to the Time Brokerage Agreement, until the Closing Date,
Topaz will conduct its business in good faith in substantially the same manner
as heretofore. Topaz shall use its best efforts (based upon the exercise of
reasonably prudent business judgment) to maintain and preserve the present
character of its business, the quality of its programs, its business
organization and makeup and present customers and present business reputation,
to keep available to the Station the services of its present employees, and to
maintain and preserve the good will of its advertisers and listeners.
(x) DISPOSITION OF ASSETS. Between the date hereof and the
Closing Date, Topaz will not, and Topaz will not permit RASA Communications,
Inc. to, 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 Topaz's or RASA's business and does not exceed $25,000 in the
aggregate.
(y) TRANSMITTER SITES. To the Best Knowledge of Topaz, except
as otherwise disclosed on Schedule 20(l), the Station's transmitter site is not
the subject of any official complaint
-15-
<PAGE> 22
or notice of violation of any applicable zoning ordinance or building code and
no such violation is known to exist. Topaz 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 Station's transmitter site lease and
in the manner and for the purpose for which it is presently used.
(z) LITIGATION. To the Best Knowledge of Topaz, except as
disclosed in Schedule 20(z) or the KIXA APA, there is no litigation, action,
suit, investigation or proceeding pending or threatened, against Topaz or RASA
Communications, Inc., which may give rise to any claim against any of the
Broadcast Assets material to the operation of the Station or upon Topaz'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 Topaz, or in any
impairment of the right or ability of Topaz or RASA Communications, Inc., to
carry on its business as now conducted.
(aa) NO CONFLICT. Subject to obtaining the required consents
under material contracts, leases and agreements identified on Schedule 20(k-1)
and the KIXA APA, 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, Topaz'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 Topaz is a party or by which Topaz or any of the
Broadcast Assets are bound.
(bb) REQUIRED CONSENTS. Except as specifically identified in
Schedule 20(k-1) and the KIXA APA, Topaz 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 Topaz 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 Topaz, or in the creation of any lien, security interest,
encumbrance or charge under any of the foregoing on any assets or properties of
Topaz.
(cc) INTELLECTUAL PROPERTY. Schedule 20(cc) hereto is a true
and complete list of all material Intellectual Property applied for, registered
or issued to, and owned by Topaz or under which Topaz is a licensee and which is
used in the conduct of Topaz's business and operations. Except as set forth on
Schedule 20(cc): (i) Topaz'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
-16-
<PAGE> 23
is licensed to Topaz, such interest is valid and uncontested by the licensor
thereof or any third party; (ii) all computer software located at the Station's
facilities or used in the Station's business or operations is properly licensed
to Topaz, and all of Topaz's uses of such computer software are authorized
under such licenses; (iii) all of Topaz'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 Topaz in connection with Topaz's business or
operations.
(dd) QUALIFICATIONS FOR TRANSFER OF CONTROL. To the Best
Knowledge of Topaz, RASA Communications, Inc. is presently a permittee in good
standing with the Commission, and Topaz 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, except as
disclosed in the KIXA APA.
(ee) ABSENCE OF CERTAIN CHANGES. Since September 1, 1997,
except as specifically noted in the Financials heretofore delivered or the
Schedules hereto:
(i) Topaz has not created, assumed, or suffered any
mortgage, pledge, lien or encumbrance on any of the Broadcast Assets;
(ii) Topaz has conducted its business 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 Topaz, 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 Station 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
Station except in the normal and usual course of business;
(D) any issuance of bonds, notes or other
corporate securities by Topaz;
(E) any declaration of payment or payments
or distribution of cash or other property to the Stockholder with respect to
Topaz's capital stock; or
-17-
<PAGE> 24
(F) any purchase or redemption of any shares
of Topaz's capital stock.
(ff) PERSONNEL INFORMATION.
(i) Except as set forth thereon, Schedule 20(ff)
contains a true and complete list of all persons employed by Topaz at the
Station, including date of hire, a description of material compensation
arrangements (other than employee benefit plans set forth in Schedule 20(q)) and
a list of other material terms of any and all agreements affecting such persons
and their employment by Topaz or RASA Communications, Inc. Topaz has received no
notice that, and it is not aware of, any individual employee who shall or is
likely to terminate his or her employment relationship with the Station upon the
execution of this Agreement.
(ii) Topaz or RASA Communications, Inc.,
respectively, with respect to the Station, is not a party to any contract or
agreement with any labor organization, nor has Topaz 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 Topaz at the
Station. Topaz 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 Topaz or RASA Communications, Inc. respectively, at the Station.
(iii) Except as disclosed in Schedule 20(ff), Topaz,
with respect to the Station, 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"), and those laws
relating to wages, hours, collective bargaining, unemployment insurance,
workers' compensation, equal employment opportunity and payment and withholding
of taxes.
(gg) OUTSTANDING DEBT. Schedule 20(gg) correctly lists all
outstanding debt of Topaz that will exist at the Closing (other than short term
debt payable on demand or within one year from the creation thereof and incurred
in the ordinary course of business).
(hh) NEGATIVE COVENANTS. Subject to the KIXA APA, the KIXA TBA
and Regent's time brokering of the Station pursuant to the Time Brokerage
Agreement (which provisions shall control over any inconsistent provision in
this paragraph 20(hh), between the date hereof and the Closing Date, Topaz and
RASA Communications, Inc. will not, without the prior written consent of Regent:
(i) Increase the compensation payable or to become
payable to any of the employees of Topaz 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 Schedule
20(k-1);
-18-
<PAGE> 25
(ii) Enter into any contract, lease or commitment or
engage in any transaction relating to the Station, 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 Schedule 20(k-1) relating to the Station 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
(xi) Borrow or incur any indebtedness unless such
indebtedness is to be paid off concurrently at Closing.
(ii) AFFIRMATIVE COVENANTS. Between the date hereof and the
Closing Date, Topaz 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 Station 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 Topaz, or to the Best Knowledge of Topaz, RASA
Communications, Inc., or any damage to or destruction of any Broadcast Assets;
(iii) Furnish to Regent, at Topaz's expense,
Financials for each month up to the Commencement Date under the Time Brokerage
Agreement;
-19-
<PAGE> 26
(iv) Promptly notify Regent in writing of any
material adverse developments with respect to the business or operations of
Topaz, RASA Communications, Inc. (to the extent Topaz is notified of such by
RASA Communications, Inc.) or the Station; and
(v) Immediately following the execution of this
Agreement, Topaz 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 Schedule 20(k-1). Within
forty-five (45) days after the execution of this Agreement and every twenty (20)
days thereafter, Topaz 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.
(jj) ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, Topaz agrees to use its reasonable 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, Topaz shall take, or cause to be taken, such action.
(kk) JOIN IN EXECUTION OF DOCUMENTS. Topaz 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.
(ll) FULL DISCLOSURE. No written representation or warranty
made by Topaz contained in this Agreement nor any certificate, document or other
instrument furnished or to be furnished by Topaz pursuant hereto contains any
untrue statement of a material fact, or omits to state any material fact
required to make any statement contained herein or therein not misleading in
light of the circumstances under which such statement is made. Topaz is not
aware of any impending or contemplated material 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. To Topaz's knowledge,
as of the date of this Agreement there is no fact which materially adversely
affects the business, conditions, affairs or operations of Topaz or the Station
which has not been set forth in this Agreement or otherwise disclosed in writing
by Topaz to Regent or its representatives.
COVENANTS, REPRESENTATIONS
AND WARRANTIES OF REGENT AND SUBSIDIARY
---------------------------------------
-20-
<PAGE> 27
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 Topaz. 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 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 _________ 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
-21-
<PAGE> 28
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 ________ 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. Except as disclosed,
there are no stockholders agreements. 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 $5.00 per share, or (iii) for a consideration no
less than $5.00 per share.
(d) JOIN IN EXECUTION OF DOCUMENTS. Regent and Subsidiary will
join with Topaz 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 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
-22-
<PAGE> 29
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) [INTENTIONALLY LEFT BLANK].
(i) ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, other
than as set forth in Schedule 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;
(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 Gammon), 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
-23-
<PAGE> 30
be delivered to Topaz when they have been prepared. Regent will also deliver to
Topaz 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 Schedule 21(m),
since December 31, 1996, there has been no material adverse change in the
business, operations, prospects, properties or condition (financial or
otherwise) of Regent.
(n) QUALIFICATIONS FOR ASSIGNMENT OF LICENSE AND MERGER.
Regent has no knowledge of any fact or circumstance that could reasonably
prevent approval of the transaction contemplated by this Agreement, its
acquisition of the Station or the renewal of the licenses for any of the Regent
Stations.
(o) INSURANCE. Schedule 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 Schedule through
the Closing Date, and copies of all insurance policies have been delivered to
Topaz or will be delivered to Topaz 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 Station. 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
-24-
<PAGE> 31
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
therein 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 Topaz or its
representatives.
(r) COVENANTS. Regent covenants that it will continue to use
the Broadcast Assets in and as a business enterprise in order to satisfy the
requirements of Section 1031 of the Internal Revenue Code.
INDEMNIFICATION
---------------
22. INDEMNIFICATION.
(a) After the Closing, subject to subparagraphs 22(e) and (f),
Gammon 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 material misrepresentation or breach of warranty by Topaz, or nonfulfillment
of any agreement or obligation assumed or required to be assumed by Topaz or
Gammon 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 Topaz's or Gammon'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 Topaz (on behalf of itself
and Gammon) shall enter into an Indemnification Escrow Agreement with Security
Title & Guaranty, Inc., as Escrow Agent, in substantially the form attached
hereto as Schedule 22(b). The Indemnification Escrow Agreement shall be funded
by Forty Thousand (40,000) shares of the Series E Preferred Stock to be issued
to Gammon at Closing. Said shares will be held in escrow pursuant to the
Indemnification Escrow Agreement for a period of one (1) year.
-25-
<PAGE> 32
(c) If any claim or liability shall be asserted against Regent
or Subsidiary which would give rise to a claim by Regent or Subsidiary against
Gammon for indemnification under the provisions of this paragraph, Regent or
Subsidiary shall promptly notify Gammon of the same, and Gammon shall be
entitled at his own expense to compromise or defend any such claim.
(d) After the Closing, subject to subparagraphs 22(e) and (f),
Regent and Subsidiary shall jointly and severally indemnify and hold Topaz and
Gammon and their respective successors and assigns harmless from and against:
(i) Any and all damages or deficiency resulting from
any misrepresentation, 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 Topaz 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 Topaz or Gammon 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.
(e) If any claim or liability shall be asserted against Gammon
which would give rise to a claim by Gammon against Regent or Subsidiary for
indemnification under the provisions of this paragraph, Gammon 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.
(f) 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 or tax 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.
(g) 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, which is not the
responsibility of Regent under the express terms of the Time Brokerage
Agreement, shall be borne by Topaz at all times between the date of this
Agreement and the Closing Date. In the event of any such loss, damage or
destruction, Topaz shall use its best efforts to cause RASA Communications,
Inc. to repair, replace or restore any such Broadcast Asset in accordance
with the KIXA TBA prior to the Closing Date. In the event of
-26-
<PAGE> 33
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 the
Station in the normal and usual manner and substantially in accordance with its
license, Topaz 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 1, 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 Topaz 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, Topaz, 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.
Seller shall promptly notify Buyer if any of the normal broadcast transmissions
of the Station are interrupted, interfered with or in any way impaired, and
shall provide Buyer with prompt written notice of the problem and the measures
being taken to correct such problem. If such Station is not restored so that
operation is resumed to full licensed power and antenna height within five (5)
days of such event, or if more than five (5) such events occur within any thirty
(30) day period, or if the Station shall be off the air for more than one
hundred twenty (120) consecutive hours, then Buyer shall have the right to
terminate this Agreement, provided that notice of termination is given within
thirty (30) days of the occurrence of such event.
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 Topaz
in accordance with the terms and conditions of this Agreement:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Topaz contained herein or in any Schedule
hereto or in any list, certificate or
-27-
<PAGE> 34
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. Topaz shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
duly performed or complied with by Topaz on or prior to the Closing Date. Topaz
shall have delivered to Subsidiary a certificate dated the Closing Date and
signed by an officer of Topaz attesting to the above.
(b) DELIVERY OF CLOSING DOCUMENTS. Topaz shall have delivered
to Subsidiary the Closing Documents described in paragraph 26 of this Agreement.
(c) LICENSES. RASA Communications, Inc. 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 Topaz Stock, and the merger of Topaz into Subsidiary, is
then required shall have duly consented thereto, and all other consents required
under the terms of the material contracts, leases and agreements identified on
Schedule 20(k-1) 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 Topaz 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 Topaz
Stock.
(g) ENVIRONMENTAL EXAMINATION. Regent shall have conducted
and/or obtained a reasonably satisfactory review and examination of and
condition of the properties owned by RASA Communications, Inc. (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 Topaz's material noncompliance
with its obligations under the Time Brokerage Agreement.
-28-
<PAGE> 35
(i) MATERIAL ADVERSE CHANGE. No material adverse change in
condition of the Broadcast Assets, which change is caused by or arises out of
any breach by either Topaz or Gammon of any of its representations, warranties,
covenants or agreements hereunder or under the Time Brokerage Agreement, shall
have occurred, or be threatened. No material adverse change shall be deemed to
occur due to changes in the financial condition, ratings or operation of the
Station during the period of the Time Brokerage Agreement.
(j) REPAIR OR CORRECTION OF EXISTING CONDITION. Topaz warrants
and represents that the studio and transmitter facilities and equipment are in
good repair and condition, ordinary wear and tear excepted, as of the date of
this Agreement. Regent shall have until January 1, 1998 to examine such
equipment and facilities. Any items or conditions found by Regent and disclosed
to Topaz, which would make Topaz's warranties and representations untrue or
inaccurate, shall, in addition to the requirements of the Time Brokerage
Agreement, be remedied or caused to be remedied by Topaz to the reasonable
satisfaction of Regent prior to Closing.
(k) CLOSING ON RUBY APA. Subsidiary shall have consummated a
closing under the Ruby APA with Ruby Broadcasting, Inc., either on or before the
Closing Date.
CONDITIONS PRECEDENT TO TOPAZ'S
-------------------------------
OBLIGATION TO CLOSE
-------------------
25. CONDITIONS PRECEDENT TO TOPAZ'S OBLIGATIONS. If at the Closing Date
the following conditions are satisfied, Topaz and Gammon shall be obligated to
surrender or cause to be surrendered the Topaz 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 Topaz 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 Topaz the Closing Documents described hereafter in paragraph
27 of this Agreement.
(d) FINAL ORDER. The Commission's Order shall have become a
Final Order.
-29-
<PAGE> 36
(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
Topaz 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.
(h) TITLE AND ENVIRONMENTAL EXAMINATION. Topaz 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 Topaz may
elect to have conducted at its expense) to be completed within sixty (60) days
after the execution of this Agreement.
(i) CLOSING ON RUBY APA. A closing shall have been consummated
under the Ruby APA between Subsidiary and Ruby Broadcasting, Inc., on or before
the Date of Closing.
CLOSING DOCUMENTS
-----------------
26. CLOSING DOCUMENTS TO BE DELIVERED BY TOPAZ. On the Closing Date,
Topaz shall deliver to Regent and Subsidiary:
(a) A certificate signed by the President of Topaz to the
effect set forth in paragraph 24(a) hereof [certificate of Topaz'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 Leventhal, Senter & Lerman, PLLC as legal
counsel for Topaz and Gammon, in form satisfactory to counsel for Regent and
Subsidiary, dated the Closing Date, to the effect that:
(i) Topaz is a corporation duly organized and in good
standing under the laws of the State of Delaware, with full corporate power to
execute, deliver, and perform this Agreement; Topaz is in good standing as a
foreign corporation in California; and Topaz has all requisite corporate power
and authority to own its properties and carry on its business as conducted on
the date of Closing;
-30-
<PAGE> 37
(ii) The execution of this Agreement by Topaz 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 Topaz in accordance with the terms hereof,
subject to bankruptcy laws, other federal and state laws affecting creditor's
rights generally and the availability of equitable remedies;
(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 Topaz or, to the knowledge of
counsel, under any material agreement or other material instrument to which
Topaz is a party or by which Topaz 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 Topaz or Gammon;
(iv) To the Best Knowledge of such counsel, there are
no actions, suits, investigations, or proceedings pending against or affecting
Topaz, 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 the Broadcast Assets or the Station; and to the Best
Knowledge of such counsel, Topaz is not subject to any currently existing order,
writ, injunction or decree relating to the operation of the Station;
(v) To counsel's knowledge, 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 Topaz is obligated
are not valid, enforceable and in full force and effect; and
(vii) Topaz has authorized and outstanding capital
stock as set forth in paragraph 20(d); all shares of Topaz'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 to counsel's knowledge there are no outstanding
rights, warrants, options, subscriptions, agreements or commitments giving
anyone any rights to require Topaz to sell, issue or reissue any capital stock
or other securities, other than as set forth in Schedule 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 Topaz and of public officials.
-31-
<PAGE> 38
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 Topaz Stock.
(e) Certified copies of resolutions of Topaz's Board of
Directors and its Stockholder authorizing the execution, delivery and
performance of this Agreement and all instruments referred to herein to which
Topaz or the Stockholder are a party.
(f) All necessary consents to be obtained by Topaz 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:
(a) The consideration to be paid for the Topaz 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 Topaz 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;
-32-
<PAGE> 39
(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;
(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
(ix) Regent has authorized and outstanding capital
stock as set forth in paragraph 21(c); all shares of Regent's outstanding
capital stock have been duly and validly authorized and issued and are fully
paid and non-assessable and have been issued in compliance with all applicable
federal and state securities laws; and to counsel's knowledge there are no
outstanding rights, warrants, options, subscriptions, agreements or commitments
giving anyone any rights to require Regent to sell, issue or re-issue any
capital stock or other securities, other than as set forth in Schedule 21(c).
In rendering such opinion, such counsel may rely upon opinions or
provide opinions of other counsel satisfactory to Topaz, copies of which
opinions upon which there is reliance shall be delivered to Topaz, 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
-33-
<PAGE> 40
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 Topaz's counsel.
(c) 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].
(d) 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.
(e) 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 Gammon by Subsidiary.
(f) All necessary consents to the issuance of the Series E
Preferred Stock, the redemption and cancellation of the Topaz Stock, and the
merger of Topaz 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 in the amount of Four Hundred Thousand
Dollars ($400,000) (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 Schedule A to the Ruby APA (the "Deposit Escrow
Agreement"), executed by the parties thereto contemporaneously with the
execution of this Agreement. The funds comprising this Escrow Deposit shall also
be considered to comprise the escrow deposit required under the Ruby APA. Any
funds disbursed from the Escrow Deposit as liquidated damages under this
Agreement shall be considered as satisfying an equal amount of liquidated
damages under the Ruby APA, in which event any further liquidated damages paid
pursuant to the Ruby APA shall be deemed to be equal to, and satisfied from, the
then remaining balance of the Escrow Deposit, if any.
29. REMEDIES ON DEFAULT-PRIOR TO CLOSING.
-34-
<PAGE> 41
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 Gammon as his and
Topaz's sole remedy and as liquidated damages. The rights conferred in this
subparagraph may not be exercised unless either Gammon or Topaz 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 December 1, 1998, of the
specific nature of the breach and Subsidiary or Regent has failed to correct it
within that period provided, however, that Buyer shall have no right to cure a
failure to pay the Purchase Price at the Closing or to consummate the Ruby APA.
(b) In the event of a material breach by Topaz 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 paragraph 7 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 liquidated
damages from Topaz and/or Gammon and/or Ruby (under the Ruby APA), up to
$400,000.00 in the aggregate, or, without terminating this Agreement, demand and
obtain specific performance of this Agreement, which Topaz and Gammon
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 Topaz thirty (30) days' written notice (or such
lesser number of days as are remaining until December 1, 1998) of the specific
nature of the breach and Topaz 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 Star Media, no broker
or finder was connected with or brought about this transaction and the parties
have not entered into any other brokerage agreements. Regent shall pay the fee
due to Star Media Group at Closing. Topaz and Gammon agree to indemnify and save
Regent and Subsidiary harmless with respect to any other claimant for a broker's
fee for this transaction based on any agreement with Topaz or Gammon, and Regent
and Subsidiary agree to indemnify and save Topaz and Gammon harmless, with
respect to any other claimant for a broker's fee for this transaction.
31. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements herein contained shall be deemed and
construed to be continuing
-35-
<PAGE> 42
representations, warranties, covenants, and agreements which shall survive the
consummation of this transaction for one (1) year; 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 Topaz, 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,
Topaz shall enter into with Regent or its affiliate a Time Brokerage Agreement,
in the form of Schedule 32 hereto (the "Time Brokerage Agreement"), pursuant to
which Topaz will make available to Regent and/or its affiliate the broadcasting
transmission facilities to the Station and/or cause to be broadcast on the
Station 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 Topaz, by notifying Regent, and in the case of
Regent or Subsidiary, by notifying Topaz:
If to Regent or Subsidiary:
-36-
<PAGE> 43
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 Gammon or Topaz:
Thomas P. Gammon, President
Topaz Broadcasting, Inc.
1476 Waterfront Road
Suite 100
Reston, Virginia 22094
Fax: (202) 737-9001
copy to:
LEVENTHAL, SENTER & LERMAN, PLLC
2000 K Street, N.W., Suite 600
Washington, D.C. 20006
ATTN: Meredith S. Senter, Jr., Esq.
Fax: 202/293-7783
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 Gammon shall be deemed to be acceptance,
ratification and consent by Gammon in all respects to the terms and provisions
of this Agreement.
-37-
<PAGE> 44
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 Topaz, 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 Topaz, 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 Topaz, 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 Topaz 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
Schedules hereto and the Time Brokerage Agreement, embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof. Any matter that is disclosed in a Schedule hereto in such a way as to
make its relevance to the information called for by another Schedule readily
apparent shall be deemed to have been included in such other Schedule,
notwithstanding the omission of an appropriate cross-reference.
40. GOVERNING LAW AND FORUM. The parties agree that any action brought
to enforce any provisions of this Agreement or to seek any remedy provided for
hereunder shall be brought in a California State court of competent jurisdiction
located in Los Angeles County, California. EACH OF THE PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM
MADE IN SUCH ACTION OR PROCEEDING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE DECIDED SOLELY BY A JUDGE IN THE COUNTY OF LOS ANGELES, CALIFORNIA.
Each of the parties hereto acknowledges that it has been represented by counsel
in the negotiation, execution and delivery of this Agreement and that its
lawyers have fully explained the meaning of the Agreement, including in
particular the jury-trial waiver. 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.
[THE BALANCE OF THIS PAGE LEFT INTENTIONALLY BLANK]
-38-
<PAGE> 45
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
WITNESS: TOPAZ BROADCASTING, INC.
By:
- ---------------------- ---------------------------------------
Its:
-------------------------------------
WITNESS: REGENT BROADCASTING OF
VICTORVILLE, INC.
By:
- ---------------------- ---------------------------------------
Its:
-------------------------------------
WITNESS: REGENT COMMUNICATIONS, INC.
By:
- ---------------------- ---------------------------------------
Its:
-------------------------------------
I, ______________________, Secretary of Topaz Broadcasting, Inc., a corporation
organized and existing under the laws of the State of California ("Topaz")
hereby certify, as such Secretary, that the Agreement of Merger dated December ,
1997, between Topaz, Regent Broadcasting of Victorville, Inc. and Regent
Communications, Inc., to which this certificate is attached, was duly consented
to in writing by Thomas P. Gammon, the holder of all the outstanding stock of
Topaz, 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 Topaz, and the duly adopted agreement of such
corporation.
WITNESS my hand on this _________ day of __________________, 1997.
- --------------------------------
Secretary
-39-
<PAGE> 46
I, William L. Stakelin, Secretary of REGENT BROADCASTING OF VICTORVILLE, INC., 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 December , 1997, between Topaz 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
-40-
<PAGE> 47
The above Agreement of Merger, having been approved by the Board of
Directors of each of Topaz Broadcasting, Inc. and Subsidiary and having been
adopted separately by the stockholder of Topaz 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 Topaz Broadcasting, Inc. and Subsidiary, the
President of Topaz 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: TOPAZ BROADCASTING, INC.
By:
- ----------------------- --------------------------------------------
Its:
-------------------------------------------
WITNESS: REGENT BROADCASTING OF
VICTORVILLE, INC.
By:
- ----------------------- --------------------------------------------
Its:
-------------------------------------------
WITNESS: REGENT COMMUNICATIONS, INC.
By:
- ----------------------- --------------------------------------------
Its:
-------------------------------------------
-41-
<PAGE> 1
Exhibit 2(c)
ASSET PURCHASE AGREEMENT
by and between
RUBY BROADCASTING, INC.
and
REGENT BROADCASTING OF VICTORVILLE, INC.
<PAGE> 2
TABLE OF CONTENTS
-----------------
PAGE
ARTICLE I - PURCHASE OF ASSETS ----
1.1 Transfer of Assets 1
1.2 Excluded Assets 3
ARTICLE 2 ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations 4
2.2 Retained Liabilities 5
ARTICLE 3 CONSIDERATION
3.1 Delivery of Consideration 5
3.2 Escrow Deposit 5
3.3 Proration of Income and Expenses 6
3.4 Allocation of Purchase Price 7
3.5 Adjustment for Barter 7
ARTICLE 4 CLOSING
4.1 Closing 7
4.2 Time Brokerage Agreement 8
ARTICLE 5 GOVERNMENTAL CONSENTS
5.1 FCC Consent 8
5.2 FCC Application 8
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER
6.1 Organization and Standing 9
6.2 Authorization and Binding Obligation 9
6.3 Qualification As Assignee 9
6.4 Absence of Conflicting Agreements or
Required Consents 9
6.5 Commissions or Finder's Fees 9
6.6 Litigation 9
-i-
<PAGE> 3
6.7 Bankruptcy 10
6.8 Committed Sources of Financing 10
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER
7.1 Organization and Standing 11
7.2 Authorization and Binding Obligation 11
7.3 Absence of Conflicting Agreements or Required
Consents 11
7.4 Government Authorizations 11
7.5 Compliance with FCC Regulations 12
7.6 Taxes 12
7.7 Personal Property 12
7.8 Real Property 13
7.9 Contracts 13
7.10 Status of Contracts, etc. 14
7.11 Environmental 14
7.12 Intellectual Property 14
7.13 Financial Statements 15
7.14 Personnel Information 15
7.15 Litigation 16
7.16 Compliance With Laws 16
7.17 Employee Benefit Plans 16
7.18 Commissions or Finder's Fees 16
7.19 Conduct of Business in Ordinary Course: Adverse
Change 16
7.20 Instruments of Conveyance; Good Title 16
7.21 Undisclosed Liabilities 17
7.22 Full Disclosure 17
7.23 Bankruptcy 17
ARTICLE 8 COVENANTS OF BUYER
8.1 Closing 17
8.2 Notification 17
8.3 No Inconsistent Action 18
ARTICLE 9 COVENANTS OF SELLER
9.1 Pre-Closing Covenants 18
9.2 Notification 19
9.3 No Inconsistent Action 20
9.4 Closing 20
9.5 Other Items 20
9.6 Exclusivity 20
-ii-
<PAGE> 4
ARTICLE 10 JOINT COVENANTS
10.1 Confidentiality 21
10.2 Cooperation 21
10.3 Control of Stations 21
10.4 Consents to Assignment 22
10.5 Filings 22
10.6 Bulk Sales Laws 22
10.7 Employee Matters 22
ARTICLE 11 CONDITIONS OF CLOSING BY BUYER
11.1 Representations, Warranties and Covenants 23
11.2 Governmental Consents 23
11.3 Governmental Authorizations 23
11.4 Adverse Proceedings 24
11.5 Third-Party Consents 24
11.6 Closing Documents 24
11.7 Time Brokerage Agreement Compliance 24
11.8 No Adverse Change 24
11.9 Closing on Topaz Merger Agreement 24
ARTICLE 12 CONDITIONS OF CLOSING BY SELLER
12.1 Representations, Warranties and Covenants 25
12.2 Governmental Consents 25
12.3 Adverse Proceedings 25
12.4 Closing Documents 25
12.5 Time Brokerage Agreement Compliance 25
12.6 Closing on Topaz Merger Agreement 26
ARTICLE 13 TRANSFER TAXES; FEES AND EXPENSES
13.1 Expenses 26
13.2 Specific Charges 26
-iii-
<PAGE> 5
ARTICLE 14 DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 Seller's Documents 26
14.2 Buyer's Documents 27
ARTICLE 15 SURVIVAL, INDEMNIFICATION, ETC.
15.1 Survival of Representations, Etc 28
15.2 Indemnification 28
15.3 Procedures: Third Party and Direct Indemnification
Claims 29
ARTICLE 16 TERMINATION RIGHTS
16.1 Termination 30
16.2 Liability 31
16.3 Monetary Damages, Specific Performance and Other
Remedies 31
16.4 Seller's Liquidated Damages 31
ARTICLE 17 MISCELLANEOUS PROVISIONS
17.1 Risk of Loss 33
17.2 Certain Interpretive Matters and Definitions 33
17.3 Further Assurances 33
17.4 Preservation of Records 34
17.5 Benefit and Assignment 34
17.6 Amendments 34
17.7 Headings 34
17.8 Governing Law 34
17.9 Notices 35
17.10 Counterparts 35
17.11 No Third Party Beneficiaries 36
17.12 Severability 36
17.13 Entire Agreement 36
17.14 Disclosure 36
-iv-
<PAGE> 6
LIST OF SCHEDULES
-----------------
Schedule 1.2.9 Miscellaneous Excluded Assets
7.4 Stations Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 Contracts (including identification of
Material Contracts)
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information
7.15 Litigation
7.16 Compliance With Laws
7.17 Employee Benefit Plans
A Indemnification Escrow Agreement
B Deposit Escrow Agreement
C Time Brokerage Agreement
D Assignment and Assumption Agreement
-v-
<PAGE> 7
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
this 17th day of December, 1997 by and between RUBY BROADCASTING, INC., a
Delaware corporation (hereinafter referred to as "Seller") and REGENT
BROADCASTING OF VICTORVILLE, INC., a Delaware corporation ("Buyer").
RECITALS
--------
WHEREAS, Seller owns and operates radio stations KIXW (AM) and KZXY-FM
licensed to Apple Valley, California (together the "Stations" and each
individually, a "Station") pursuant to licenses issued by the Federal
Communications Commission ("FCC"); and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
assets and assume certain obligations associated with the ownership and
operation of the Stations, all on the terms and subject to the conditions set
forth herein; and
WHEREAS, Buyer and Regent Communications, Inc. have entered into an
Agreement of Merger of even date herewith with Topaz Broadcasting, Inc., a
sister corporation and Affiliate of Seller (hereinafter the "Topaz Merger
Agreement").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS
------------------
1.1 TRANSFER OF ASSETS. On the terms and subject to the conditions
hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and assume from Seller, all of the right, title and interest of
Seller in and to all of the assets, properties, interests and rights of Seller
of whatsoever kind and nature, real and personal, tangible and intangible, owned
or leased (to the extent of Seller's leasehold interest) by Seller as the case
may be, wherever situated, which are used or held for use in the operation of
the Stations (the "Stations Assets"), including but not limited to all of
Seller's right, title and interest in and to the assets, properties, interests
and rights described in this Section 1. 1:
1.1.1 all licenses, permits and other authorizations issued to
Seller by any governmental or regulatory authority including without limitation
those issued by the FCC (the licenses, permits and authorizations issued by the
FCC are hereafter referred to as the "Stations Licenses") used or useful in
connection with the operation of the Stations, including but not limited to
those described in SCHEDULE 7.4, along with renewals or modifications of such
items between the date hereof and the Closing Date but excluding any license
listed on SCHEDULE 1.2.9;
<PAGE> 8
1.1.2 all equipment, electrical devices, antennae, cables,
tools, hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and all other tangible personal property
of every kind and description, and Seller's rights therein, owned, leased (to
the extent of Seller's leasehold interest) or held by Seller and used or useful
in connection with the operations of the Stations, including but not limited to
those items described or listed in SCHEDULE 7.7, together with any replacements
thereof and additions thereto, made between the date hereof and the Closing
Date, and less any retirements or dispositions thereof made between the date
hereof and the Closing Date in the ordinary course of business and consistent
with past practices of Seller; provided, however, Seller agrees that the value
of all such assets retired or disposed of and not replaced with an asset of like
kind and quality shall not exceed $5,000 in the aggregate unless Seller has
obtained the prior written approval of Buyer which shall not be unreasonably
withheld;
1.1.3 subject to the prior assignment and assumption thereof
pursuant to the Time Brokerage Agreement (as defined in Section 4.2 hereof) (i)
all Time Sales Agreements and Trade Agreements (as defined in the Time Brokerage
Agreement relating to the operation of the Stations), and (ii) all other
contracts, agreements, leases and legally binding contractual rights of any
kind, written or oral, relating to the operation of the Stations and which are
listed in SCHEDULE 7.8 and SCHEDULE 7.9, together with (a) all contracts,
agreements, leases and legal binding contractual rights entered into or acquired
by Seller between the date hereof and the Closing Date in the ordinary course of
business, consistent with past practices of Seller; (b) contracts, agreements,
leases and legal binding contractual rights entered into or acquired by Seller
between the date hereof and the Closing Date, which are not in the ordinary
course of business and with respect to which the Buyer specifically consents in
writing prior to Closing or agrees at Closing to assume; and (c) other
miscellaneous contracts not uncommon to broadcast properties which do not exceed
$100,000 of expenditures or revenues annually in the aggregate ("Miscellaneous
Agreements") (collectively (i) and (ii) above are referred to herein as the
"Contracts"); for the purpose of this Agreement, Contracts shall be deemed in
the ordinary course of business if they are: (x) marked with the number one (1)
on SCHEDULE 7.9 or (y) have a term not greater than twelve (12) months and
payment obligations on behalf of the Seller that do not exceed $25,000 in the
aggregate.
1.1.4 all of Seller's rights in and to the call letters KZXY-FM
and any variations thereof, as well as all of Seller's rights in and to all
trademarks, trade names, service marks, franchises, copyrights, including
registrations and applications for registration of any of them, computer
software, programs and programming material of whatever form or nature, jingles,
slogans, the Stations' logos and all other logos or licenses to use same and all
other intangible property rights of Seller, which are used or useful in
connection with the operation of the Stations, including but not limited to
those listed in SCHEDULE 7.12 (collectively, the "Intellectual Property")
together with any associated goodwill and any additions thereto between the date
hereof and the Closing Date;
1.1.5 all programming materials and elements of whatever form
or nature owned by Seller that are used or useful in connection with the
operation of the Stations, whether recorded on tape or other medium or intended
for live performance, and all copyrights owned by or licensed to Seller that are
used or useful in connection with the operation of the Stations,
-2-
<PAGE> 9
including all such programs, materials, elements and copyrights acquired by
Seller between the date hereof and the Closing Date;
1.1.6 all of Seller's rights in and to all the files, documents,
records, and books of account relating to the operation of the Stations or to
the Stations Assets, including, without limitation, the Stations' local public
files, programming information and studies, blueprints, technical information
and engineering data, news and advertising studies or consulting reports,
marketing and demographic data, sales correspondence, lists of advertisers,
promotional materials, credit and sales reports and filings with the FCC and all
written Contracts to be assigned hereunder, logs, software programs and books
and records relating to employees, financial, accounting and operation matters,
but excluding records relating solely to any Excluded Asset (as hereinafter
defined);
1.1.7 all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Stations Assets and all similar
rights against third parties relating to items included in the Stations Assets;
1.1.8 the real property and fixtures thereon described in
Section 7.8 but excluding any real property and fixtures thereon listed on
SCHEDULE 1.2.9;
1.1.9 subject to the prior assignment and assumption thereof
pursuant to the Time Brokerage Agreement, all of Seller's rights in all accounts
receivable from Time Sales Agreements and Trade Agreements relating to the sale
of time on the Stations; and
1.1.10 except for Excluded Assets, such other assets,
properties, interests and rights owned by Seller that are located at the
Stations' Facilities and used or useful in connection with the operation of the
Stations.
The Stations Assets shall be transferred to Buyer free and clear of all
debts, security interests, mortgages, trusts, claims, pledges or other liens,
liabilities, encumbrances or rights of third parties whatsoever
("Encumbrances"), except for Permitted Encumbrances, if any, as provided for in
Section 7.8.2, except as set forth in SCHEDULE 7.7.and SCHEDULE 7.8, and except
for Assumed Liabilities.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Stations Assets shall not
include the following assets along with all rights, title and interest therein
(the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller on hand and/or
in banks, including without limitation certificates of deposit, commercial
paper, treasury bills, marketable securities, asset or money market accounts and
all such similar accounts or investments;
1.2.2 all assets of the Seller that are used exclusively in
connection with the operation of radio stations KIXW-FM, Lenwood, California and
KIXF (FM), Baker, California, which radio stations are owned and operated by
Turquoise Broadcasting, Inc., an Affiliate of Seller, and which are operated
from the same location and with part of the same facilities as the Stations.
-3-
<PAGE> 10
1.2.3 all real property owned by Seller and all tangible and
intangible personal property of Seller not located at the Stations' facilities
and not used by Seller in connection with the operation of the Stations;
1.2.4 subject to the limitation set forth in Section 1.1.2 of
this Agreement, all tangible and intangible personal property of Seller disposed
of or consumed in the ordinary course of business consistent with the past
practices of Seller between the date of this Agreement and the Closing Date;
1.2.5 all Contracts that have terminated or expired prior to
the Closing Date in the ordinary course of business consistent with the past
practices of Seller;
1.2.6 Seller's corporate minute books and records, corporate
stock record books and such other books and records as pertain to the
organization, existence or share capitalization of Seller and duplicate copies
of such records as are necessary to enable Seller to file its tax returns and
reports, as well as any other records or materials relating to Seller generally
and not involving or relating to the Stations Assets or the operation or
operations of the Stations;
1.2.7 contracts of insurance, and any insurance proceeds or
claims made by, Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.8 all pension, profit sharing or cash or deferred (Section
401 (k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller;
1.2.9 any right, property or asset described in SCHEDULE
1.2.9; and
1.2.10 Seller's pending application with the FCC for a
Construction Permit for a new radio station in Lenwood (Barstow), California,
which application is not transferable under FCC rules and regulations.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
-------------------------
2.1 ASSUMPTION OF OBLIGATIONS. Subject to the provisions of this Section
2. 1, Section 2.2 and Section 3.3, on the Closing Date, and subject to any prior
assumption under the Time Brokerage Agreement, Buyer shall assume the
obligations of Seller arising or to be performed on and after the Closing Date
(except to the extent such obligations represent liabilities for activities,
events or transactions occurring, or conditions existing, on or prior to the
Closing Date) under: (a) the Contracts; (b) all property taxes and other similar
governmental charges on the Stations Assets; and (c) all Time Sales Agreements
and Trade Agreements (subject to Section 3.5). All of the foregoing liabilities
and obligations shall be referred to herein collectively as the "Assumed
Liabilities. "
-4-
<PAGE> 11
2.2 RETAINED LIABILITIES. Notwithstanding anything contained in this
Agreement to the contrary, Buyer expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue of
the execution and delivery of this Agreement or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Seller of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed to Buyer, other than the Assumed
Liabilities. Seller will retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations of the
Seller, other than the Assumed Liabilities, including but not limited to, the
obligation to assume, perform, satisfy or pay any liability, obligation,
agreement, debt, charge, claim, judgment or expense incurred by or asserted
against Seller related to taxes, environmental matters, pension or retirement
plans or trusts, profit-sharing plans, employment contracts, employee benefits,
severance of employees, product liability or warranty, negligence, contract
breach or default, or other obligations, claims or judgments asserted against
Buyer as successor in interest to Seller. All of such liabilities, obligations
and commitments of Seller described in this Section 2.2 shall be referred to
herein collectively as the "Retained Liabilities. "
ARTICLE 3
CONSIDERATION
-------------
3.1 DELIVERY OF CONSIDERATION. In consideration for the sale of the
Stations Assets to Buyer, in addition to the assumption of certain obligations
of Seller pursuant to Section 2.1 above, Buyer shall, at the Closing (as
hereinafter defined), deliver to Seller Six Million Dollars ($6,000,000) by wire
transfer of immediately available funds, subject to adjustment pursuant to the
provisions of Section 3.2 and 3.3 below (the "Purchase Price"). Notwithstanding
the foregoing, the parties agree that at the Closing, Buyer, Seller and Security
Title & Guaranty Agency, Inc. as Escrow Agent (the "Indemnification Escrow
Agent"), shall enter into an Indemnification Escrow Agreement in the form of
Schedule 22(b) to the Topaz Merger Agreement, pursuant to which Seller shall
make an escrow deposit as provided therein, which deposit will be used to
satisfy indemnification claims of Buyer pursuant to Section 15.2.1 hereof and
under the Topaz Merger Agreement and which deposit shall otherwise be
administered and released as specifically provided for in the Indemnification
Escrow Agreement.
3.2 ESCROW DEPOSIT. (a) Simultaneous with execution and delivery of this
Agreement, Buyer, Seller and Security Title & Guaranty Agency, Inc. as Escrow
Agent (the "Deposit Escrow Agent"), shall enter into a Deposit Escrow Agreement
in the form of SCHEDULE A hereto (the "Deposit Escrow Agreement") pursuant to
which Buyer shall deposit Four Hundred Thousand Dollars ($400,000.00) or deliver
an irrevocable, stand-by letter of credit for such amount as a deposit on the
full amount of the Purchase Price. Such amounts held in escrow shall be applied
as set forth herein and in the Deposit Escrow Agreement.
-5-
<PAGE> 12
(b) Pursuant to the terms of the Deposit Escrow Agreement,
Buyer shall wire transfer Four Hundred Thousand Dollars ($400,000), or
alternatively, deliver an irrevocable, stand-by letter of credit for such amount
in form and substance acceptable to Seller, to an escrow account established
pursuant to the Deposit Escrow Agreement (the "Escrow Deposit"). At the Closing,
the Escrow Deposit if, in the form of cash, shall be applied to the Purchase
Price to be paid to Seller and the interest accrued thereon shall be paid to
Buyer, or if in the form of a letter of credit, shall be returned to Buyer. As
more fully described in the Deposit Escrow Agreement: (a) in the event this
Agreement is terminated because of Buyer's material breach of this Agreement and
all other conditions to Closing that are within Seller's control are at such
time satisfied or waived (other than such conditions as can reasonably be
expected to be satisfied by the Closing), the Escrow Deposit shall be paid to or
delivered for draw thereon to Seller as liquidated damages as provided in
Section 16.4 hereof for Buyer's material breach of this Agreement (the payment
of such sum to Seller shall discharge any liability Buyer may have to Seller),
and the interest accrued on the Escrow Deposit shall be paid to Buyer; and (b)
in the event this Agreement is terminated under any circumstances other than
those set forth in the immediately preceding clause (a), the Escrow Deposit and
the interest accrued thereon shall be paid or returned to Buyer. The Escrow
Deposit is the same cash or letter of credit deposited in escrow pursuant to the
terms of the Topaz Merger Agreement and may be used to pay any liquidated
damages under this Agreement or the Topaz Merger Agreement in the event of
certain defaults or breaches hereunder or thereunder.
3.3 PRORATION OF INCOME AND EXPENSES.
3.3.1 Except as otherwise provided herein, and except as
previously prorated pursuant to the Time Brokerage Agreement (as hereinafter
defined), all deposits, reserves and prepaid and deferred income and expenses
relating to the Stations Assets or the Assumed Liabilities and arising from the
conduct of the business and operations of the Stations shall be prorated between
Buyer and Seller in accordance with generally accepted accounting principles as
of 11:59 p.m. Pacific time, on the date immediately preceding the Closing Date.
Such prorations shall include, without limitation, all ad valorem, real estate
property taxes and other governmental charges on the Stations Assets (but
excluding taxes arising by reason of the transfer of the Stations Assets as
contemplated hereby which shall be paid as set forth in Section 13.2), business
and license fees, music and other license fees (including any retroactive
adjustments thereof, which retroactive adjustments shall not be subject to the
sixty-day limitation set forth in Section 3.3.2), utility expenses, accrued
vacation pay, amounts due or to become due under Contracts, rents and similar
prepaid and deferred items.
3.3.2 Except as otherwise provided herein or in the Time
Brokerage Agreement, the prorations and adjustments contemplated by this Section
3.3, to the extent practicable, shall be made on the Closing Date. As to those
prorations and adjustments not capable of being ascertained on the Closing Date,
an adjustment and proration shall be made within sixty (60) calendar days after
the Closing Date.
3.3.3 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in Section 3.3.2 and such disputes shall be determined by an
independent certified public accountant mutually acceptable
-6-
<PAGE> 13
to the parties, and the fees and expenses of such accountant shall be paid
one-half by Seller and one-half by Buyer. If the aggregate amount in dispute
under this Agreement and the Time Brokerage Agreement is equal to or less than
Three Thousand Dollars ($3,000.00), such amount shall be divided equally between
Buyer and Seller.
3.4 ALLOCATION OF PURCHASE PRICE. The parties agree that One Hundred
Thousand Dollars ($100,000.00) of the Purchase Price shall be allocated to
tangible personal property included in the Stations Assets, with the balance of
the Purchase Price being allocated among such assets as the Stations Licenses,
goodwill and other intangible assets included hereunder. Seller and Buyer agree
to use the agreed upon allocation, if any, for all tax purposes, including
without limitation, those matters subject to Section 1060 of the Internal
Revenue Code of 1986, as amended.
3.5 ADJUSTMENT FOR BARTER. In the event the Commencement Date under the
Time Brokerage Agreement has not occurred prior to the Closing Date, then the
parties shall make the calculations set forth in the Time Brokerage Agreement as
of the Closing Date and Buyer shall be entitled to a credit against the Purchase
Price, for the amount, if any, by which the aggregate net value of the Stations'
Barter Payable (as defined below) in excess of $25,000 as of the Closing Date
exceeds the aggregate net value of the Stations' Barter Receivable (as defined
below) as of the Closing Date.
"Barter Payable" means the aggregate value of time owed pursuant to
each of the Trade Agreements calculated in accordance with generally accepted
accounting principles.. "Barter Receivable" means the aggregate value of goods
and services to be received pursuant to each of the Trade Agreements.
ARTICLE 4
CLOSING
-------
4.1 CLOSING. Except as otherwise mutually agreed upon by Buyer and
Seller, the consummation of the transactions contemplated herein (the "Closing")
shall occur within ten (10) days after the later to occur of (a) the
satisfaction or waiver of each condition to closing contained herein, other than
such conditions as are reasonably anticipated to be satisfied at Closing
(provided that each party hereto shall use its reasonable best efforts to cause
each condition to closing to be satisfied so that the Closing may occur at the
earliest possible date); and (b) the issuance of the Final Order (as defined
below), or such other date as may be mutually agreed by the parties hereto (the
"Closing Date"); provided, however, that Buyer may in its sole discretion waive
the requirement that a Final Order be issued and elect (subject to clause (a)
above) to close at any time (upon not less than ten (10) days notice to Seller)
after the release of initial FCC approval on public notice that it has consented
to the transaction contemplated hereby (the "Initial Approval"). For purposes of
this Agreement, "Final Order" (and "Final") means an order or grant by the FCC
which is no longer subject to reconsideration or review by the FCC or a court of
competent jurisdiction and pursuant to which the FCC consents, as the case may
be, to the assignments of the FCC Licenses contemplated by this Agreement or to
the renewal of the FCC Licenses, each such order or grant being without the
imposition of any
-7-
<PAGE> 14
conditions adverse to Buyer or any Affiliate (as hereinafter defined) of Buyer
with respect to the assignment of the FCC Licenses to Buyer or the continued
operation by Buyer of the Stations or the Stations Assets. The Closing shall be
held in the offices of Strauss & Troy, 2100 PNC Center, 201 East Fifth Street,
Cincinnati, Ohio, or at such place and in such manner as the parties hereto may
agree.
4.2 TIME BROKERAGE AGREEMENT. On even date herewith, Buyer and Seller
shall enter into a Time Brokerage Agreement, substantially in the form of
SCHEDULE B hereto (the "Time Brokerage Agreement"), pursuant to which Seller has
agreed to make available to Buyer the broadcasting transmission facilities of
the Stations and/or cause to be broadcast on the Stations Buyer's programming
from the Commencement Date (as defined in the Time Brokerage Agreement) during
the term thereof. An Event of Default by either 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 Section 16.1.2 or Section 16.1.3 hereof.
ARTICLE 5
GOVERNMENTAL CONSENTS
---------------------
5.1 FCC CONSENT. It is specifically understood and agreed by Buyer and
Seller that the Closing and the assignment of the Stations Licenses and the
transfer of the Stations Assets are expressly conditioned on and are subject to
the prior consent and approval of the FCC without the imposition of any
conditions adverse to Seller, Buyer or any Affiliate of Buyer (the "FCC
Consent").
5.2 FCC APPLICATION. Within five (5) business days after the execution
of this Agreement, Buyer and Seller shall file an application with the FCC for
the FCC Consent (the "FCC Application"). Buyer and Seller shall prosecute the
FCC Application with all reasonable diligence and otherwise use their best
efforts to obtain the FCC Consent as expeditiously as practicable (but neither
Buyer nor Seller shall have any obligation to satisfy complainants or the FCC by
taking any steps which would have a material adverse effect upon Buyer or Seller
or upon any of their respective Affiliates). If the FCC Consent imposes any
condition on Buyer or Seller or any of their respective Affiliates, such party
shall use its best efforts to comply with such condition; provided, however,
that neither Buyer nor Seller shall be required hereunder to comply with any
condition that would have a material adverse effect upon it or any of its
Affiliates. If reconsideration or judicial review is sought with respect to the
FCC Consent, the party affected shall vigorously oppose such efforts for
reconsideration or judicial review; provided, however, that nothing herein shall
be construed to limit either party's right to terminate this Agreement pursuant
to Article 16
-8-
<PAGE> 15
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall survive the
Closing and shall be unaffected by any investigation heretofore or hereafter
made by Seller:
6.1 ORGANIZATION AND STANDING. Buyer is a corporation duly organized
validly existing and in good standing under the laws of the State of Delaware,
and by the Closing Date will be authorized, as necessary, to conduct business
within the State of California.
6.2 AUTHORIZATION AND BINDING OBLIGATIONS. Buyer has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Stations Assets and to
carry on the business of the Stations upon the consummation of the transactions
contemplated by this Agreement. Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part and, assuming the due
authorization, execution and delivery of this Agreement by Seller, this
Agreement will constitute the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as limited by laws
affecting creditors' rights or equitable principles generally.
6.3 QUALIFICATION AS ASSIGNEE. To the best of Buyer's knowledge, there
are no facts which, under the Communications Act of 1934, as amended, or the
existing rules and regulations of the FCC, would disqualify Buyer as an assignee
of the Stations Licenses.
6.4 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in Article 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) do not
conflict with the provisions of the articles of incorporation or by-laws of
Buyer; (b) do not require the consent of any third party not affiliated with
Buyer (including, without limitation, the consent of any governmental,
regulatory, administrative or similar authority); (c) will not violate any
applicable law, judgment, order, injunction, decree, rule, regulation or ruling
of any governmental authority to which Buyer is a party or is subject; and (d)
will not, either alone or with the giving of notice or the passage of time, or
both, conflict with, constitute grounds for termination of or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
agreement, instrument, license or permit to which Buyer is now subject.
6.5 COMMISSIONS OR FINDER'S FEES. Buyer has agreed to pay a commission
or similar payment in connection with this Agreement and the matters related
hereto only to Star Media Group and to no other person or entity.
6.6 LITIGATION. Buyer is not subject to any judgment, award, order, writ,
injunction, arbitration decision or decree that would prohibit the consummation
of the transactions contemplated by this Agreement, and there are no suits,
legal proceedings or investigations of any nature pending, or to the best
knowledge of Buyer, threatened against or affecting Buyer that would affect
Buyer's ability to carry out the transactions contemplated by this Agreement.
-9-
<PAGE> 16
6.7 BANKRUPTCY. No insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, against Buyer or any of
its Affiliates are pending or threatened, and neither Buyer nor any of its
Affiliates has made any assignment for the benefit of creditors or taken any
action in contemplation of or which would constitute the basis for the
institution of such insolvency proceedings.
6.8 COMMITTED SOURCES OF FINANCING. Seller has sufficient net liquid
assets on hand or available from committed sources of financing to consummate
the transaction contemplated by this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller makes the following representations and warranties to Buyer, each
of which is true and correct on the date hereof, shall survive the Closing and
shall be unaffected by any investigation heretofore or hereafter made by Buyer:
7.1 ORGANIZATION AND STANDING. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is authorized to conduct business within the State of California, and has the
requisite power and authority to own, lease and operate the Stations Assets
owned or leased by it 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.
7.2 AUTHORIZATION AND BINDING OBLIGATION. Seller has the power and
authority, and has taken all necessary and proper action to enter into and
perform this Agreement and to consummate the actions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by Seller and,
assuming the due authorization, execution and delivery of this Agreement by
Buyer, constitutes the legal, valid and binding obligation of Seller enforceable
against it in accordance with its terms, except as limited by laws affecting the
enforcement of creditors' rights or equitable principles generally.
7.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in Article 5 with respect to governmental consents and in SCHEDULE 7.9
with respect to consents required in connection with the assignment of certain
Contracts, the execution, delivery and performance of this Agreement by Seller:
(a) do not require the consent of any third party not affiliated with Seller
(including, without limitation, the consent of any governmental, regulatory,
administrative or similar authority); (b) will not conflict with, result in a
breach of, or constitute a violation of or default under, the provisions of
Seller's articles of incorporation (or other charter or organizational
documents), or any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Seller is a party or
by which Seller or any of the Stations Assets are bound; (c) will not either
alone or with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Contract,
agreement, instrument, license or permit to which Seller or any of the Stations
Assets is now
-10-
<PAGE> 17
subject; and (d) will not result in the creation of any lien, charge or
encumbrance on any of the Stations Assets.
7.4 GOVERNMENT AUTHORIZATIONS.
--------------------------
7.4.1 SCHEDULE 7.4 hereto contains a true and complete list of
the Stations 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 a
material adverse effect on Buyer or the Stations. Seller has delivered to Buyer
true and complete copies of the Stations Licenses and the other licenses,
permits and authorizations listed in SCHEDULE 7.4, including any and all
amendments and other modifications thereto.
7.4.2 Seller is the authorized legal holder of the Stations
Licenses and other licenses, permits and authorizations listed in SCHEDULE 7.4.
Except as set forth Schedule 7.4 or on the face of the licenses, none of the
Stations Licenses and other licenses, permits and authorizations listed in
SCHEDULE 7.4 is subject to any restrictions or conditions which would materially
limit the full operation of the Stations as now operated.
7.4.3 Except as set forth in SCHEDULE 7.4, and except for
matters affecting the radio broadcast industry generally, there are no
applications, complaints, petitions or proceedings pending or, to the best of
Seller's knowledge, 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 SCHEDULE 7.4, the Stations Licenses and the
other licenses, permits and authorizations listed in SCHEDULE 7.4 are in good
standing, are in full force and effect and are unimpaired by any act or omission
of Seller or its members, managers, officers, or employees. The operations of
the Stations are in accordance with the Stations Licenses and the underlying
construction permits and the other licenses, permits and authorizations listed
in SCHEDULE 7.4. Except as set forth in SCHEDULE 7.4, no proceedings are pending
or, to the best of Seller's knowledge, threatened, and to the best of Seller's
knowledge there has not been any act or omission of Seller or any of its
officers, directors, or employees, which may result in the revocation,
modification, non-renewal or suspension of any of the Stations Licenses or the
other licenses, permits and authorizations listed in SCHEDULE 7.4, 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 Stations Licenses or the other
licenses, permits and authorizations listed in SCHEDULE 7.4 or which may affect
Buyer's ability to continue to operate the Stations as they are currently
operated.
7.4.4 To the best of Seller's knowledge, each Station is
operating with the maximum facilities specified in the respective Station
License.
7.4.5 To the best of Seller's knowledge: (i) neither of the
Stations is causing objectionable interference to the transmissions of any other
broadcast station or communications facility nor has either of the Stations
received any complaints with respect thereto; and (ii) no
-11-
<PAGE> 18
other broadcast station or communications facility is causing objectionable
interference to respective transmissions of either Station or the public's
reception of such transmissions.
7.4.6 Except as set forth in SCHEDULE 7.4, Seller has no
reason to believe that the Stations Licenses and the other licenses, permits, or
authorizations listed in SCHEDULE 7.4 will not be renewed in their ordinary
course.
7.4.7 All material reports, forms, and statements required to
be filed by Seller with the FCC with respect to the Stations since the grant of
the last renewal of the Stations Licenses have been filed and are substantially
complete and accurate.
7.4.8 To the best knowledge of Seller, and except as set forth
in SCHEDULE 7.4, there are no facts which, under the Communications Act of 1934,
as amended, or the existing rules and regulations of the FCC, would disqualify
Seller as assignor of the Stations Licenses or cause the Stations Licenses and
the other licenses, permits and authorizations listed in SCHEDULE 7.4 not to be
renewed in their ordinary course.
7.4.9 To the best of Seller's knowledge, the operation of the
Stations and all of the Stations Assets are in compliance in all respects with
ANSI Radiation Standards C95.1-1992.
7.5 COMPLIANCE WITH FCC REGULATIONS. Except as specified in SCHEDULE 7.4,
to the best of Seller's knowledge, the operation of the Stations and all of the
Stations Assets are in compliance in all 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, 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 to the best of Seller's knowledge,
there are no filed claims to the contrary.
7.6 TAXES. There are no present disputes as to taxes of any nature
payable by Seller which in any event could adversely affect any of the Stations
Assets or the operation of the Stations by Buyer.
7.7 PERSONAL PROPERTY. SCHEDULE 7.7 hereto contains a list of all
material items of tangible personal property owned by Seller and used in the
conduct of the business and operations of the Stations. SCHEDULE 7.7 also
separately lists any material tangible personal property leased by Seller
pursuant to leases included within the Contracts. Except as disclosed in
SCHEDULE 7.7, Seller has, and following the Closing, Buyer will have, good and
marketable title to all of the items of tangible personal property which are
included in the Stations Assets (other than those subject to lease) and none of
such Stations 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, and except for
the Assumed Liabilities. The personal property listed in SCHEDULE 7.7, along
with the personal property subject to lease and included among the Contracts,
constitute all material tangible personal property necessary to operate the
Stations as the same are now being operated. Except as set forth in SCHEDULE
7.7, all items of tangible personal property included in the Stations' Assets
are in good and technically sound operating condition and repair (ordinary wear
and tear excepted),
-12-
<PAGE> 19
are free from all material defect and damage, are suitable for the purposes for
which they are now being used, and have been properly maintained in a manner
consistent with generally accepted standards of good engineering practice.
7.8 REAL PROPERTY.
-------------
7.8.1 SCHEDULE 7.8 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 Seller in connection with the operations of the Stations,
identifying thereon the real property that is leased by Seller (the "Leased Real
Estate").
7.8.2 Except as set forth in Schedule 7.8, Seller enjoys quiet
possession of all Real Estate. To Seller's knowledge, there are no present
disputes or claims with respect to offsets or defenses by any party against the
other under any of the Contracts relating to the Leased Real Estate. Seller has
delivered to Buyer true and complete copies of all Contracts relating to the
Real Property. Except as set forth in SCHEDULE 7.9 hereto, the assignment of the
Contracts relating to the Leased Real Property to Buyer will not permit the
other party to accelerate the rent, cause the terms thereof to be renegotiated
or constitute a default thereunder, and will not require the consent of any such
party to the assignment thereof to Buyer.
7.8.3 Except as set forth in Schedule 7.8, Seller has full
legal and practical access to all of the Real Estate, and, to Seller's
knowledge, all easements, rights of way, and real property licenses relating to
Seller's use thereof have been properly recorded in the appropriate public
recording offices. The Real Estate includes all the real property, easements,
rights of way, and other real property interests necessary to conduct the
business and operations of the Stations as they are now conducted. Except as
described in SCHEDULE 7.8, to Seller's knowledge, none of the buildings,
structures, improvements or fixtures constructed on any Real Estate, in
connection with the operation of the Stations, including, but not limited to,
all towers, guy wires and guy anchors and ground radials, encroach upon
adjoining real property, and all such buildings, structures, improvements and
fixtures are constructed and are operated and used in conformance with all "set
back" lines, easements, covenants, restrictions and all applicable building,
fire, zoning, health and safety laws and codes. Except as set forth in Schedule
7.8, to the best of Seller's knowledge, no utility lines serving such Real
Estate pass over the lands of a third party except where appropriate easements
have been obtained. To the best of Seller's knowledge, except as described in
SCHEDULE 7.8, 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. There is no pending or, to the best
knowledge of Seller, threatened condemnation or other legal proceeding or action
of any kind relating to such real property and/or title thereto.
7.9 CONTRACTS. SCHEDULE 7.9 lists all Contracts to which Seller is a
party, or which are binding on Seller, as of the date of this Agreement other
than Time Sales Agreements, Trade
-13-
<PAGE> 20
Agreements and Miscellaneous Agreements. Those Contracts listed on SCHEDULE 7.9,
if any, requiring the consent of a third party to assignment are identified by
an asterisk in the left margin of SCHEDULE 7.9. Those Contracts, if any, that
Seller and Buyer have agreed are material to the operation of the Stations
Assets and the valid assignment of which and receipt by Buyer of consents
thereto (along with appropriate estoppel certificates for the leases related to
the Leased Real Estate) is a condition to the consummation of the transactions
contemplated hereby (the "Material Contracts") are identified by an "M" in the
left margin of SCHEDULE 7.9.
7.10 STATUS OF CONTRACTS, ETC. Seller has delivered to Buyer true and
complete copies of all written Contracts and true and complete memoranda of all
oral Contracts, including any and all amendments and other modifications
thereto. To Seller's knowledge, all of the Contracts are in full force and
effect and are valid, binding and enforceable in accordance with their
respective terms, except as limited by laws affecting creditors' rights or
equitable principles generally. Seller has complied in all respects with all
Contracts and is not in default beyond any applicable grace periods under any
thereof and, to the best of Seller's knowledge, no other contracting party is in
default under any thereof.
7.11 ENVIRONMENTAL. To the best of Seller's knowledge, except as set
forth in SCHEDULE 7.11, Seller 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. To Seller's knowledge, the
technical equipment included in the Stations Assets does not contain any PCBs.
To the best of Seller's knowledge, 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. Sections 9601 ET SEQ., Toxic Substances Control Act. 15 U. S.
C. Sections 2601 ET SEQ., the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Sections 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 (collectively Hazardous Materials"), 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, or
under or about the real property on which the Stations Assets are situated,
including without limitation the transmitter sites, or contained in the tangible
personal property included in the Stations Assets. To the best of Seller's
knowledge, the Stations Assets and Seller's use thereof are not in violation of
any Environmental Laws or any occupational, safety and health or other
applicable law now in effect. With respect to Buyer, Seller shall be as of the
Closing Date and thereafter solely responsible for all environmental
liabilities, of whatsoever kind and nature, arising out of or attributable to
the operation or ownership of the Stations Assets prior to the Commencement Date
of the Time Brokerage Agreement.
7.12 INTELLECTUAL PROPERTY. SCHEDULE 7.12 hereto is a true and complete
list of all material Intellectual Property applied for, registered or issued to,
and owned by Seller or under which Seller is a licensee and which is used in the
conduct of Seller's business and operations. Except as set forth on SCHEDULE
7.12, to the best of Seller's knowledge: (a) Seller's right, title and interest
in the Intellectual Property as owner or licensee, as applicable, is free and
clear of all liens, claims,
-14-
<PAGE> 21
encumbrances, rights, or equities whatsoever of any third party and, to the
extent any of the Intellectual Property is licensed to Seller, such interest is
valid and uncontested by the licensor thereof or any third party; (b) all
computer software located at the Stations' facilities or used in the Stations'
business or operations is properly licensed to Seller, and all of Seller's uses
of such computer software are authorized under such licenses; (c) all of
Seller's right, title and interest in and to the Intellectual Property and
computer software shall be assignable to Buyer at Closing, and upon such
assignment, Buyer shall receive complete and exclusive right, title, and
interest in and to all tangible and intangible property rights existing in the
Intellectual Property; and (d) there are no infringements or unlawful use of
such Intellectual Property by Seller in connection with Seller's business or
operations.
7.13 FINANCIAL STATEMENTS. Seller has delivered to Buyer complete copies
of the financial statements of Seller relating to the Stations for the year
ended 1996 together with monthly income statements for the Stations for each
month ended after January 1, 1997 (collectively, the "Financial Statements").
The Financial Statements are prepared in accordance with the books and records
of Seller. The Financial Statements present fairly the financial condition,
results of operations and cash flow of the Stations for the periods indicated,
except as set forth on SCHEDULE 7.13. None of the Financial Statements
understates the true costs and expenses of conducting the business and
operations of the Stations, fails to disclose any material liability, or
inflates (or will inflate) the revenues of the Stations for any reason, except
as set forth on SCHEDULE 7.13.
7.14 PERSONNEL INFORMATION.
7.14.1 SCHEDULE 7.14 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 SCHEDULE 7.17) and a list of other material terms of any and all agreements
affecting such persons and their employment by Seller. Seller has received no
notice that, and Seller 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 or after the Closing.
7.14.2 Seller, with respect to the Stations, is not a party to
any contract or agreement with any labor organization, nor has Seller 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
Seller at the Stations. Seller has no knowledge of any organization effort
currently being made or threatened by or on behalf of any labor union with
respect to employees of Seller at the Stations.
7.14.3 To the best of Seller's knowledge, except as disclosed
in SCHEDULE 7.14, Seller, 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"), and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal employment
opportunity and payment and withholding of taxes.
-15-
<PAGE> 22
7.15 LITIGATION. Except as set forth in SCHEDULE 7.15, Seller is not
subject to any judgment, award, order, writ, injunction, arbitration decision or
decree relating to the conduct of the business or the operation of the Stations
or any of the Stations Assets, and there is no litigation, administrative
action, arbitration, proceeding or investigation pending or, to the best
knowledge of Seller, threatened against Seller with respect to, related to or in
connection with the operation of the Stations in any federal, state or local
court, or before any administrative agency or arbitrator (including, without
limitation, any proceeding which seeks the forfeiture of, or opposes the renewal
of, any of the Stations Licenses), or before any other tribunal duly authorized
to resolve disputes. In particular, but without limiting the generality of the
foregoing and except as set forth on SCHEDULE 7.4, to the best knowledge of
Seller, there are no applications, complaints or proceedings pending or
threatened before the FCC or any other governmental organization with respect to
the business or operations of the Stations.
7.16 COMPLIANCE WITH LAWS. To the best of Seller's knowledge and except
as set forth in SCHEDULE 7.16 or SCHEDULE 7.4: (i) Seller is not in material
violation of, nor has Seller received any notice asserting any non-compliance by
it in connection with the operation of the Stations or use or ownership of any
of the Stations Assets with, any applicable statute, rule or regulation, whether
federal, state or local; (ii) Seller is not in default with respect to any
judgment, order, injunction or decree of any court administrative agency or
other governmental authority or any other tribunal duly authorized to resolve
disputes which relates to the transactions contemplated hereby; and (iii) Seller
is in full compliance with all laws, regulations and governmental orders
applicable to the conduct of the business and operations of the Stations, and
its present use of the Stations Assets does not violate any of such laws,
regulations or orders.
7.17 EMPLOYEE BENEFIT PLANS. SCHEDULE 7.17 contains a true and complete
list as of the date of this Agreement of all employee benefit plans applicable
to the employees of Seller employed at the Stations, and a brief description
thereof. Seller does not maintain any other employee benefit plan as the term is
defined in Section 3 of ERISA, applicable to the employees of Seller employed at
the Stations.
7.18 COMMISSIONS OR FINDER'S FEES. Neither Seller nor any person or
entity acting on behalf of Seller has agreed to pay a commission, finder's fee
or similar payment in connection with this Agreement or any matter related
hereto to any person or entity. It is acknowledged that Buyer is paying a
commission to Star Media Group.
7.19 CONDUCT OF BUSINESS IN ORDINARY COURSE: ADVERSE CHANGES. Except as
set forth in Schedule 7.19, since September 30, 1997: (a) Seller has conducted
the business of the Stations only in the ordinary course consistent with
Seller's past practices; (b) there has not been any material adverse change in
the business, assets, properties, prospects or condition (financial or
otherwise) of the Stations, or any damage, destruction, or loss affecting any of
the Stations Assets; and (c) Seller has not created, assumed, or suffered any
mortgage, pledge, lien or encumbrance on any of the Stations Assets.
7.20 INSTRUMENTS OF CONVEYANCE: GOOD TITLE. The instruments to be
executed by Seller and delivered to Buyer at the Closing, conveying the Stations
Assets to Buyer, will transfer good and marketable title to the Assets free and
clear of all liabilities (absolute or contingent), security
-16-
<PAGE> 23
interests, mortgages, pledges, liens, obligations and encumbrances, except for
Permitted Encumbrances and except as set forth in SCHEDULE 7.7 and SCHEDULE 7.8
hereto and those obligations referred to in the first sentence of Section 2.1
hereof.
7.21 UNDISCLOSED LIABILITIES. Excepting only for the Assumed
Liabilities, no liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, relating to Seller, the Stations or the
Stations Assets exists which could, after the Closing result in any form of
transferee liability against Buyer or subject the Stations Assets to any lien,
encumbrance, claim, charge, security interest or imposition whatsoever or
otherwise affect the full, free and unencumbered use of the Stations Assets by
Buyer.
7.22 FULL DISCLOSURE. No written representation or warranty made by
Seller contained in this Agreement nor any certificate, document or other
instrument furnished or to be furnished by Seller 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 misleading in light of the circumstances under which such statement
is made. To the best of Seller's knowledge, there is no impending or
contemplated material 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. To Seller's knowledge as of the date of this
Agreement, there is no fact which materially adversely affects the business,
conditions, affairs or operations of Seller or the Stations which has not been
set forth in this Agreement or otherwise disclosed in writing by Seller to Buyer
or its representatives.
Whenever in this Article 7 a warranty or representation is qualified by
a word or phrase referring to the best of Seller's knowledge (or similar terms),
it shall mean to the actual knowledge of Thomas P. Gammon
7.23 BANKRUPTCY. No insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, against Seller or any of
its Affiliates are pending or threatened, and neither Seller nor any of its
Affiliates has made any assignment for the benefit of creditors or taken any
action in contemplation of or which would constitute the basis for the
institution of such insolvency proceedings.
ARTICLE 8
COVENANTS OF BUYER
------------------
8.1 CLOSING. Subject to Article 11 hereof, on the Closing Date, Buyer
shall purchase the Stations Assets from Seller as provided in Article 1 hereof
and shall assume the Assumed Liabilities of Seller as provided in Article 2
hereof.
8.2 NOTIFICATION. Buyer will provide Seller prompt written notice of any
change in any of the information contained in the representations and warranties
made in Article 6. Buyer shall also notify Seller of any litigation, arbitration
or administrative proceeding pending or, to its knowledge, threatened against
Buyer which challenges the transactions contemplated hereby.
-17-
<PAGE> 24
8.3 NO INCONSISTENT ACTION. Buyer shall not take any action which is
materially inconsistent with its obligations under this Agreement or take any
action which would cause any representation or warranty of Buyer contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
ARTICLE 9
COVENANTS OF SELLER
-------------------
9.1 PRE-CLOSING COVENANTS. Seller covenants and agrees with respect to
the Stations that, between the date hereof and the Closing Date or the earlier
termination of this Agreement in accordance with its terms, except as expressly
permitted by this Agreement or with the prior written consent of Buyer, Seller
shall act in accordance with the following:
9.1.1 Subject to Buyer's time brokering of the Stations
pursuant to the Time Brokerage Agreement, Seller shall use its reasonable best
efforts to conduct the business and operations of the Stations in the ordinary
and prudent course of business consistent with past practice and with the intent
of preserving the ongoing operations and assets of the Stations, including but
not limited to maintaining the independent identity of the Stations, retaining
the current format and programming (including the content thereof) of the
Stations (with the exception that the format of Station KIXW (AM) may change in
the event that Turquoise Broadcasting, Inc. commences a time brokerage agreement
for Stations KIXW-FM and KIXF-FM), continuing at historical levels and
frequencies spending for promotions, advertising, and survey testing, and using
its reasonable best efforts to retain at the Stations the services of all active
employees (with the exception of employees who will remain Seller's employees
under the Time Brokerage Agreement), consultants and agents of the Stations.
9.1.2 Subject to Buyer's time brokering of the Stations
pursuant to the Time Brokerage Agreement, Seller shall use its reasonable best
efforts to: (i) preserve the operation of the Stations intact; (ii) preserve
relationships with the Stations' advertisers, customers, suppliers and others
having business relations with the Stations; and (iii) continue to conduct
financial operations of the Stations, including without limitation, their credit
and collection and pricing policies and practices, all in the ordinary course of
business consistent with past practices.
9.1.3 Subject to Buyer's time brokering of the Stations
pursuant to the Time Brokerage Agreement, Seller shall operate the Stations in
all respects in accordance with FCC rules and regulations and the Stations
Licenses and with all other laws, regulations, rules and orders, and shall not
cause or permit by any act, or failure to act, any of the Stations Licenses or
other licenses, permits or authorizations listed in SCHEDULE 7.4 to expire, be
surrendered, adversely modified, or otherwise terminated, or the FCC to
institute any proceedings for the suspension, revocation or adverse modification
of any of the Stations Licenses, or fail to prosecute with due diligence any
pending applications to the FCC.
9.1.4 Should any fact relating to Seller which would cause the
FCC to deny its consent to the transactions contemplated by this Agreement come
to Seller's attention, Seller will promptly notify Buyer thereof and will take
such steps as may be necessary to remove any such
-18-
<PAGE> 25
impediment to the FCC's consent to the transactions contemplated by this
Agreement, subject to Section 5.2 hereof.
9.1.5 Subject to Buyer's time brokering of the Stations
pursuant to the Time Brokerage Agreement (which provisions shall control over
any inconsistent provision in this Section 9.1.5) and except for changes or
actions in the ordinary course of business consistent with past practices,
Seller shall not: (a) sell broadcast time on a prepaid basis (other than in the
course of existing credit practices); (b) except as required by the applicable
law or written agreements currently in effect, grant or agree to grant any
general increases in the rates of salaries or compensation payable to employees
of the Stations (except increases not to exceed 6 % of such employee's
compensation as set forth on SCHEDULE 7.14 hereto), (c) except as required by
written agreements currently in effect, grant or agree to grant any specific
bonus or increase in compensation to any executive management employee of the
Stations (except an increase to any employee not to exceed 6 % of such
employee's compensation as set forth on SCHEDULE 7.14 hereto); (d) provide for
any new pension, retirement or other employment benefits for employees of the
Stations or any increases in any existing benefits, (e) modify, change or
terminate any material Contract; or (f) change the advertising rates in effect
as of the date hereof.
9.1.6 Seller shall give or cause the Stations to give Buyer
and Buyer's counsel, accountants, engineers and other representatives, at
Buyer's reasonable request and upon reasonable notice, full and reasonable
access during normal business hours to all of Seller's personnel, properties,
books, Contracts, reports and records (including, without limitation, financial
information and tax returns relating to the Stations, and environmental audits
in existence with respect to the Stations Assets), real estate, buildings and
equipment relating to the Stations and to the Stations' employees, and to
furnish Buyer with information and copies of all documents and agreements
relating to the Stations and the operation thereof (including but not limited to
financial and operating data and other information concerning the financial
condition, results of operations and business of the Stations) that Buyer may
reasonably request. The rights of Buyer under this Section 9.1.6 shall not be
exercised in such a manner as to interfere unreasonably with the business of the
Stations.
9.1.7 Seller shall use its reasonable best efforts to obtain
any third party consents necessary for the assignment of any Contract (which
shall not require any payment to any such third party except for such amounts
contemplated by the Contract to be assigned, and any amount then owing by Seller
to such third party).
9.2 NOTIFICATION. Seller will provide Buyer prompt written notice of any
material change in any of the information contained in the representations and
warranties made in Article 7 or any Schedule. Seller agrees to notify Buyer of
any litigation, arbitration or administrative proceeding pending or, to the best
of its knowledge, threatened, which challenges the transactions contemplated
hereby. Seller shall promptly notify Buyer if any of the normal broadcast
transmissions of either Station are interrupted, interfered with or in any way
impaired, and shall provide Buyer with prompt written notice of the problem and
the measures being taken to correct such problem. If such Station is not
restored so that operation is resumed to full licensed power and antenna height
within five (5) days of such event, or if more than five (5) such events occur
within any thirty (30) day period, or if either of the Stations shall be off the
air
-19-
<PAGE> 26
for more than one hundred twenty (120) consecutive hours, then Buyer shall have
the right to terminate this Agreement, provided that notice of termination is
given within thirty (30) days of the occurrence of such event.
9.3 NO INCONSISTENT ACTION. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement nor take any
action which would cause any representation or warranty of Seller contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
9.4 CLOSING. Subject to Article 12 hereof, on the Closing Date, Seller
shall transfer, convey, assign and deliver to Buyer the Stations Assets and the
Assumed Liabilities as provided in Articles 1 and 2 and Section 7.20 of this
Agreement.
9.5 OTHER ITEMS. Except as otherwise specifically contemplated by this
Agreement or the Time Brokerage Agreement, until the Closing Date or the earlier
termination of this Agreement in accordance with the terms hereof, Seller shall
not: (a) waive or release any right relating to the business or operations of
the Stations, except for adjustments or settlements made in the ordinary course
of business consistent with its past practices; (b) transfer or grant any rights
under any of the Stations Licenses; (c) enter into any commitment for capital
expenditures for which Buyer would become liable after the Closing Date; (d)
subject to Buyer's time brokering of the Station pursuant to the Time Brokerage
Agreement, introduce any material changes in the broadcast hours or in the
format of the Stations (except a change in the format of Station KIXW (AM) as
set forth in Section 9.1.1 hereof) or any other material change in the Station's
programming policies; (e) change the call letters of either Station except that
Seller will file an application to change the call letters of Station KIXW (AM)
at Buyer's request; and (f) enter into any transaction or make or enter into any
contract or commitment with respect to either of the Stations or the Stations
Assets which by reason of its size or otherwise is not in the ordinary course of
business consistent with past practices.
9.6 EXCLUSIVITY. Seller agrees that, commencing on the date hereof
through the Closing or earlier termination of this Agreement, Buyer shall have
the exclusive right to consummate the transactions contemplated herein, and
during such exclusive period, Seller agrees that neither Seller, nor any
director, officer, employee or other representative of Seller: (a) will
initiate, solicit or encourage, directly or indirectly, any inquiries, or the
making or implementation of any proposal or offer with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of,
all or any portion of the Stations Assets (any such inquiry, proposal or offer
being hereinafter referred to as an "Acquisition Proposal" and any such
transaction being hereinafter referred to as an "Acquisition"); (b) will engage
in any negotiations concerning, or provide any confidential information except
such information relating to combined operations with Turquoise Broadcasting,
Inc. as may be provided to the Buyer of Stations KIXW (FM) and KIXF (FM) or data
to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; or (c) will continue any existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal or Acquisition. Notwithstanding the foregoing, in the event
that Buyer defaults in any material
-20-
<PAGE> 27
respect in the observance or in the due and timely performance of any of its
covenant or agreements herein contained and such default shall not be cured
within ten (10) business days of notice of default served by Seller, Seller's
obligations under this Section 9.6 shall be null and void.
ARTICLE 10
JOINT COVENANTS
---------------
Buyer and Seller each covenant and agree that between the date hereof
and the Closing Date, they shall act in accordance with the following:
10.1 CONFIDENTIALITY. Subject to the requirements of applicable law,
Buyer and Seller shall each keep confidential all information obtained by it
with respect to the other parties hereto in connection with this Agreement and
the negotiations preceding this Agreement, and the fact of the existence of this
Agreement and will use such information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, each shall return to
each other party hereto, without retaining a copy thereof, any schedules,
documents or other written information obtained from such other party in
connection with this Agreement and the transactions contemplated hereby. 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. Notwithstanding the foregoing, no party shall be required to keep
confidential or return any information which: (a) is known or available through
other lawful sources, not bound by a confidentiality agreement with the
disclosing party; (b) is or becomes publicly known through no fault of the
receiving party or its agents; (c) is required to be disclosed pursuant to an
order or request of a judicial or governmental authority (provided the
disclosing party is given reasonable prior notice of the order or request and
the purpose of the disclosure); or (d) is developed by the receiving party
independently of the disclosure by the disclosing party. Notwithstanding
anything to the contrary herein, either party may in accordance with its legal
obligations, including but not limited to filings permitted or required by the
Securities Act of 1933 and the Securities and Exchange Act of 1934, make such
press releases and other public statements and announcements as it deems
necessary and appropriate in connection with this Agreement and the transactions
contemplated hereby; provided, however, that prior to making any such unilateral
press release or announcement, such party shall first communicate the same in
writing to the other.
10.2 COOPERATION. Subject to express limitations contained elsewhere
herein, Buyer and Seller agree to cooperate fully with one another in taking any
reasonable actions (including without limitation, reasonable actions to obtain
the required consent of any governmental instrumentality or any third party)
necessary or helpful to accomplish the transactions contemplated by this
Agreement, including but not limited to the satisfaction of any condition to
closing set forth herein.
10.3 CONTROL OF STATIONS. Subject to Buyer's time brokering of the
Stations pursuant to the Time Brokerage Agreement, Buyer shall not, directly or
indirectly, control, supervise or direct the operations of the Stations prior to
the Closing. Such operations, including complete
-21-
<PAGE> 28
control and supervision of all Station programs, employees and policies, shall
be the sole responsibility of Seller.
10.4 CONSENTS TO ASSIGNMENT. To the extent that any Contract identified
in the Schedules is not capable of being sold, assigned, transferred, delivered
or subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an attempted
sale, assignment, offer, delivery or sublease thereof. Subject to the provisions
of Section 11.5, in those cases where consents, assignments, releases and/or
waivers have not been obtained at or prior to the Closing relating to the
assignment to Buyer of the Contracts, this Agreement and any assignment executed
pursuant hereto, to the extent permitted by law, shall constitute an equitable
assignment by Seller to Buyer of all of Seller's rights, benefits, title and
interest in and to the Contracts, and where necessary or appropriate, Buyer
shall be deemed to be Seller's agent for the purpose of completing, fulfilling
and discharging all of Seller's rights and liabilities arising after the Closing
Date under such Contracts. Seller shall use its reasonable best efforts to
provide Buyer with the financial and business benefits of such Contracts
(including, without limitation, permitting Buyer to enforce any rights of Seller
arising under such Contracts), and Buyer shall, to the extent Buyer is provided
with the benefits of such Contracts, assume, perform and in due course pay and
discharge all debts, obligations and liabilities of Seller under such Contracts
to the extent that Buyer was to assume those obligations pursuant to the terms
hereof.
10.5 FILINGS. In addition to the covenants of the parties set forth in
Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller shall use their reasonable best efforts to obtain,
and to cooperate with each other in obtaining, all authorizations, consents,
orders and approvals of any governmental authority that may be or become
necessary in connection with the consummation of the transactions contemplated
by this Agreement, and to take all reasonable actions to avoid the entry of any
order or decree by any governmental authority prohibiting the consummation of
the transactions contemplated hereby, including without limitation, any reports
or notifications that may be required to be filed with the FCC, and each shall
furnish to one another all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by the
other.
10.6 BULK SALES LAWS. Buyer hereby waives compliance by Seller with the
provisions of the "bulk sales" or similar laws of any state. Seller agrees to
indemnify Buyer and hold it harmless from any and all loss, cost, damage and
expense (including but not limited to, reasonable attorney's fees) sustained by
Buyer as a result of any failure of Seller to comply with any "bulk sales" or
similar laws.
10.7 EMPLOYEE MATTERS. The parties agree that this Section 10.7 shall
be subject to the rights and obligations of the parties set forth in, and any
prior actions taken by the parties pursuant to, the Time Brokerage Agreement.
Seller shall be responsible for the payment of all compensation and accrued
employee benefits payable to all employees up to the Commencement Date. Seller
acknowledges and agrees that it, and not Buyer, is and shall be solely
responsible
-22-
<PAGE> 29
for any and all insurance, supplemental pension, deferred compensation,
retirement and any other benefits, and related costs, premiums and claims, due,
to become due, committed or otherwise promised to any person who, as of the
Commencement Date, is a retiree, former employee, or current employee of Seller,
relating to the period up to the Commencement Date. Buyer, as a purchaser of the
Stations Assets, shall assume no employee benefit plans, programs or practices,
whether or not set forth in writing, maintained by Seller at any time.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
------------------------------
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
11.1.1 All representations and warranties of Seller made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all respects as of the date hereof and on
and as of the Closing Date as if made on and as of that date, except for changes
(a) expressly permitted or contemplated by the terms of this Agreement; or (b)
caused by the acts of Buyer during the term of the Time Brokerage Agreement; or
(c) in the ordinary course of business which are not, either in individually or
in the aggregate, material and adverse.
11.1.2 All of the terms, covenants and conditions to be
complied with and performed by Seller on or prior to the Closing Date shall have
been complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of
the Closing Date, from Seller, executed by the President of Seller to the effect
that: (a) except for changes occurring as a result of Buyer's actions under the
Time Brokerage Agreement, the representations and warranties of Seller contained
in this Agreement are true and complete in all material respects on and as of
the Closing Date as if made on and as of that date; and (b) Seller has complied
with or performed in all material respects all terms, covenants and conditions
to be complied with or performed by it on or prior to the Closing Date.
11.2 GOVERNMENTAL CONSENTS. The FCC Consent shall have been obtained
and, subject to the provisions of Section 4. 1 hereof, shall have become a Final
Order.
11.3 GOVERNMENTAL AUTHORIZATIONS. Seller shall be the holder of the
Stations Licenses and all other licenses, permits and other authorizations
listed in SCHEDULE 7.4, and there shall not have been any modification of any of
such licenses, permits and other authorizations which has a material adverse
effect on any of the Stations or the operations thereof. No application shall be
pending for the renewal of any of the Stations Licenses. No proceeding shall be
pending which seeks, and the effect of which reasonably could be, to revoke,
cancel, fail to renew, suspend or
-23-
<PAGE> 30
adversely modify any of the Stations Licenses or any other licenses, permits or
other authorizations listed in SCHEDULE 7.4.
11.4 ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no order, decree or
judgment of any court, agency or other governmental authority shall have been
rendered (and remain in effect) against, any party hereto which: (a) would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms; (b) questions the
validity or legality of any transaction contemplated hereby; (c) seeks to enjoin
any transaction contemplated hereby; (d) seeks material damages on account of
the consummation of any transaction contemplated hereby; or (e) is a petition of
bankruptcy by or against Seller, an assignment by Seller for the benefit of its
creditors, or other similar proceeding.
11.5 THIRD-PARTY CONSENTS. All Material Contracts shall be in full
force and effect on the Closing Date, and Seller shall have obtained and shall
have delivered to Buyer all appropriate third-party consents in form and
substance acceptable to Buyer (including estoppel certificates for the leases
related to the Leased Real Estate) in connection with the assignment of the
Material Contracts to Buyer.
11.6 CLOSING DOCUMENTS. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all bills of sale, general warranty
deeds, endorsements, assignments and other instruments of conveyance reasonably
satisfactory in form and substance to Buyer, effecting the sale, transfer,
assignment and conveyance of the Stations Assets to Buyer, including, without
limitation, each of the documents required to be delivered by it pursuant to
Article 14.
11.7 TIME BROKERAGE AGREEMENT COMPLIANCE. From the date hereof through
the Closing Date, the Time Brokerage Agreement shall not have been terminated by
Buyer as permitted by the Time Brokerage Agreement as a result of Seller's
material noncompliance with its obligations under the Time Brokerage Agreement.
11.8 NO ADVERSE CHANGE. No material adverse change in condition of the
Stations Assets, which change is caused by or arises out of any breach by Seller
of any of its representations, warranties, covenants or agreements hereunder or
under the Time Brokerage Agreement, shall have occurred, or be threatened. No
material adverse change shall be deemed to occur due to changes in the financial
condition, ratings or operations of the Stations following the start of the Time
Brokerage Agreement.
11.9 CLOSING ON TOPAZ MERGER AGREEMENT. A Closing shall have been
consummated and the merger effected between Buyer and Topaz Broadcasting, Inc.
under the Topaz Merger Agreement, on or before the Closing Date.
-24-
<PAGE> 31
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
-------------------------------
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
12.1.1 All representations and warranties of Buyer made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
12.1.2 All the terms, covenants and conditions to be complied
with and performed by Buyer on or prior to the Closing Date shall have been
complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of
the Closing Date, executed by the President of Buyer, to the effect that: (a)
the representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date; and (b) Buyer has complied with or performed in all
material respects all terms, covenants and conditions to be complied with or
performed by it on or prior to the Closing Date.
12.2 GOVERNMENTAL CONSENTS. The FCC Consent shall have been obtained
and, subject to the provisions of Section 4.1 hereof, shall have become a Final
Order.
12.3 ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no other decree or
judgment of any court, agency or other governmental authority shall have been
rendered (and remain in effect) against, any party hereto which: (a) would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms; (b) questions the
validity or legality of any transaction contemplated hereby; (c) seeks to enjoin
any transaction contemplated hereby; or (d) seeks material damages on account of
the consummation of any transaction contemplated hereby.
12.4 CLOSING DOCUMENTS. Buyer shall have delivered or caused to be
delivered to Seller, on the Closing Date, the Purchase Price and each of the
documents required to be delivered by it pursuant to Article 14.
12.5 TIME BROKERAGE AGREEMENT COMPLIANCE. From the date hereof through
the Closing Date, the Time Brokerage Agreement shall not have been terminated by
Seller as permitted by the Time Brokerage Agreement as a result of Buyer's
material noncompliance with its obligations under the Time Brokerage Agreement.
-25-
<PAGE> 32
12.6 CLOSING ON TOPAZ MERGER AGREEMENT. A Closing shall have been
consummated and the merger effected between Buyer and Topaz Broadcasting, Inc.
under the Topaz Merger Agreement, on or before the Closing Date.
ARTICLE 13
SALES AND TRANSFER TAXES: FEES AND EXPENSES
-------------------------------------------
13.1 EXPENSES. Except as set forth in Section 13.2 hereof or otherwise
expressly set forth in this Agreement, each party hereto shall be solely
responsible for all costs and expenses incurred by it in connection with the
negotiation, preparation and performance of and compliance with the terms of
this Agreement including, but not limited to, the costs and expenses incurred
pursuant to Article 5 hereof and the fees and disbursements of counsel and other
advisors.
13.2 SPECIFIC CHARGES. All costs of transferring the Stations Assets in
accordance with this Agreement, including FCC filing fees, sales, recordation,
transfer and documentary taxes and fees, (but excluding any excise, sales or use
taxes which are Seller's obligation), shall be shall be paid equally by Seller
and Buyer. Each party shall pay any filing or grant fees imposed upon it by any
governmental authority the consent of which or the filing with which is required
for the consummation of the transactions contemplated hereby.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
14.1 SELLER'S DOCUMENTS. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
14.1.1 Certified resolutions of the Board of Directors of
Seller approving the execution and delivery of this Agreement and authorizing
the consummation of the transactions contemplated hereby;
14.1.2 A certificate of Seller, dated the Closing Date, in the
form described in Section 11.1.3;
14.1.3 Governmental certificates showing that Seller: (a) is
duly organized and in good standing in the State of Delaware; and (b) has filed
all returns, paid all taxes due thereon and is currently subject to no
assessment and is in good standing as a foreign corporation in the State of
California, each certified as of a date not more than thirty (30) days before
the Closing Date;
14.1.4 Such certificates, bills of sale, general warranty
deeds, assignments, documents of title and other instruments of conveyance,
assignment and transfer (including without limitation any necessary consents to
conveyance, assignment or transfer required to be delivered hereunder), and lien
releases, all in form satisfactory to Buyer and Buyer's counsel, as shall be
effective to vest in Buyer good and marketable title in and to the Stations
Assets, free,
-26-
<PAGE> 33
clear and unencumbered except for Permitted Encumbrances, if any, as set forth
on SCHEDULE 7.7 and SCHEDULE 7.8 and Assumed Liabilities.
14.1.5 An Assignment and Assumption Agreement in the form of
SCHEDULE C effectuating the assignment and assumption of the Assumed Liabilities
(the "Assignment and Assumption Agreement");
14.1.6 The Indemnification Escrow Agreement and the Deposit
Escrow Agreement (if not previously delivered);
14.1.7 At the time and place of Closing, originals and all
copies of all program, operations, transmission or maintenance logs and all
other records required to be maintained by the FCC with respect to the Stations,
including the public files of the Stations, shall be left at the Stations and
thereby delivered to Buyer;
14.1.8 A written opinion of Seller's corporate counsel in a
form reasonably acceptable to Buyer, dated as of the Closing Date;
14.1.9 A written opinion of Seller's FCC counsel in a form
reasonably acceptable to Buyer, dated as of the Closing Date; and
14.1.10 Such additional information, materials, agreements,
documents and instruments as Buyer and its counsel may reasonably request in
order to consummate the Closing.
14.2 BUYER'S DOCUMENTS. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
14.2.1 Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.2.2 A certificate of Buyer, dated the Closing Date, in the
form described in Section 12.1.3;
14.2.3 The Assignment and Assumption Agreement;
14.2.4 The Indemnification Escrow Agreement and the Deposit
Escrow Agreement (if not previously delivered);
14.2.5 A written opinion of Buyer's counsel in a form
reasonably acceptable to Seller, dated as of the Closing Date;
14.2.6 The Purchase Price in accordance with Section 3.1
hereof; and
-27-
<PAGE> 34
14.2.7 Such additional information, materials, agreement,
documents and instruments as Seller and its counsel may reasonably request in
order to consummate the Closing.
ARTICLE 15
SURVIVAL, INDEMNIFICATION, ETC.
-------------------------------
15.1 SURVIVAL OF REPRESENTATIONS, ETC. It is the express intention and
agreement of the parties to this Agreement that all covenants and agreements
(together, "Agreements") and all representations and warranties (together,
"Warranties") made by Buyer and Seller in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at any
time made by or on behalf of Buyer or Seller) as follows:
15.1.1 The Agreements shall survive the Closing for a period
from the Closing Date of one (1) year.
15.1.2 The Warranties in Sections 6.2, 6.5 and 7.2, shall
survive the Closing without limitation.
15.1.3 The Warranties in Section 7.6 or otherwise relating to
the federal, state, local or foreign tax obligations of Seller shall survive the
Closing for the period of the applicable statute of limitations plus any
extensions or waivers granted or imposed with respect thereto.
15.1.4 All other Warranties shall survive for a period of one
(1) year from the Closing Date.
15.1.5 The right of any party to recover Damages (as defined
in Section 15.2.1) pursuant to Section 15.2 shall not be affected by the
expiration of any Warranties as set forth herein, provided that notice of the
existence of any Damages (but not necessarily the fixed amount of any such
Damages) has been given by the indemnified party to the indemnifying party prior
to such expiration.
15.1.6 Notwithstanding any provision hereof to the contrary,
there shall be no contractual time limit in which Buyer or Seller may bring any
action for actual fraud (a "Fraud Action"), regardless of whether such actual
fraud also included a breach of any Agreement or Warranty; provided, however,
that any Fraud Action must be brought within the period of the applicable
statute of limitations plus any extensions or waivers granted or imposed with
respect thereto.
15.2 INDEMNIFICATION.
15.2.1 Seller shall defend, indemnify and hold harmless Buyer
from and against any and all losses, costs, damages, liabilities and expenses,
including reasonable attorneys' fees and expenses ("Damages") in excess of
$25,000 in the aggregate, incurred by Buyer arising out of or related to: (a)
any breach of the Warranties given or made by Seller in this Agreement; (b)
-28-
<PAGE> 35
any breach of the Agreements made by Seller in the Agreement; (c) the Retained
Liabilities; (d) any failure of the parties to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby; and (e) the conduct of the
business and operations of the Stations or any portion thereof or the use or
ownership of any of the Stations Assets prior to the Closing Date, except for
such actions as may be taken by Buyer pursuant to the Time Brokerage Agreement.
15.2.2 Buyer shall in addition to any indemnification
obligations it may have under the Time Brokerage Agreement defend, indemnify and
hold harmless Seller from and against any and all Damages incurred by Seller
arising out of or related to: (a) any breach of the Agreements and Warranties
given or made by Buyer in this Agreement; (b) the Assumed Liabilities, and (c)
the conduct of the business and operations of the Stations or any portion
thereof or the use or ownership of any of the Stations Assets on or after the
Closing Date.
15.3 PROCEDURES: THIRD PARTY AND DIRECT INDEMNIFICATION CLAIMS. The
indemnified party agrees to give written notice within a reasonable time to the
indemnifying party of any demand, suit, claim or assertion of liability by third
parties or other circumstances that could give rise to an indemnification
obligation hereunder against the indemnifying party (hereinafter collectively
"Claims," and individually a "Claim"), it being understood that the failure to
give such notice shall not affect the indemnified party's right to
indemnification and the indemnifying party's obligation to indemnify as set
forth in this Agreement, unless the indemnifying party's ability to contest,
defend or settle with respect to such Claim is thereby demonstrably and
materially prejudiced. The parties also agree that any claim for Damages arising
directly between the parties relating to this Agreement may be brought at any
time within the applicable survival period specified in Section 15. 1, and that
the only notice required with respect thereto shall be as specified in Section
15.1.5.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.2 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.3.1 The indemnifying party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
or opposition to such Claim.
15.3.2 In the event that the indemnifying party shall elect
not to undertake such defense or opposition, or within (10) days after notice of
any such Claim from the indemnified party, the indemnifying party shall fail to
defend or oppose, the indemnified party (upon further written notice to the
indemnifying party) shall have the right to undertake the defense, opposition,
compromise or settlement of such Claim, by counsel or other representatives of
its own choosing, on behalf of and for the account and risk of the indemnifying
party (subject to the right of the indemnifying party to assume defense of or
opposition to such Claim at any time prior to settlement, compromise or final
determination thereof).
15.3.3 Anything in this Section 15.3 to the contrary
notwithstanding: (a) the indemnified party shall have the right, at its own cost
and expense, to participate in the defense, opposition, compromise or settlement
of the Claim; (b) the indemnifying party shall not, without the indemnified
party's written consent, settle or compromise any Claim or consent to entry of
-29-
<PAGE> 36
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim, and (c) in the event that the indemnifying
party undertakes defense of or opposition to any Claim the indemnified party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying party and its
counsel or other representatives concerning such Claim and the indemnifying
party and the indemnified party, and their respective counsel or other
representatives, shall cooperate in good faith with respect to such Claim.
15.3.4 No undertaking of defense or opposition to a Claim
shall be construed as an acknowledgment by such party that it is liable to the
party claiming indemnification with respect to the Claim at issue or other
similar Claims.
ARTICLE 16
TERMINATION RIGHTS
------------------
16.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing as follows:
16.1.1 Upon the mutual written consent of Buyer and Seller,
this Agreement may be terminated on such terms and conditions as so agreed; or
16.1.2 By written notice of Buyer to Seller if Seller breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Buyer, provided, however, that if the breach or default is due
to no fault of the Seller and is incapable of cure within such thirty (30) day
period, the cure period shall be extended as long as the Seller is diligently
and in good faith attempting to effectuate a cure, but in no event shall the
cure period be extended beyond the earlier of (i) ninety (90) days or (ii)
December 1, 1998; or
16.1.3 By written notice of Seller to Buyer if Buyer breaches
in any material respect any of its representations or warranties or defaults in
any material respect in the observance or in the due and timely performance of
any of its covenants or agreements herein contained and such breach or default
shall not be cured within thirty (30) days of the date of notice of breach or
default served by Seller, provided, however, that if the breach or default is
due to no fault of the Buyer and is incapable of cure within such thirty (30)
day period, the cure period shall be extended as long as the Buyer is diligently
and in good faith attempting to effectuate a cure, but in no event shall the
cure period be extended beyond ninety days and provided further that Buyer shall
have no right to cure a failure to pay the Purchase Price at the Closing or to
consummate the Topaz Merger Agreement; or
-30-
<PAGE> 37
16.1.4 By written notice of Buyer to Seller or by Seller to
Buyer if the FCC denies the FCC Application under circumstances in which Seller
is NOT entitled to the Escrow Deposit;
16.1.5 By written notice of Buyer to Seller, or by Seller to
Buyer, if any court of competent jurisdiction shall have issued a final and
non-appealable order, decree or ruling (which then remains in effect) or taken
any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement; or
16.1.6 By written notice of Buyer to Seller, or by Seller to
Buyer, if the Closing shall not have been consummated on or before December 1,
1998.
16.1.7 By written notice of Buyer to Seller, or Seller to
Buyer, if it shall become apparent in both Seller's and Buyer's judgment
reasonably exercised that any condition to Buyer's or Seller's obligation to
close as set forth in Articles 11 and 12 hereof will not be satisfied on or
before December 1, 1998.
16.1.8 By written notice of Buyer to Seller under the
conditions set forth in Section 9.2 hereof.
Notwithstanding the foregoing, no party hereto may effect a termination
hereof if such party is in material default or breach of this Agreement or the
Topaz Merger Agreement.
16.2 LIABILITY. Except as set forth in Section 16.4 below, the
termination of this Agreement under Section 16.1 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
16.3 MONETARY DAMAGES, SPECIFIC PERFORMANCE AND OTHER REMEDIES. The
parties recognize that if Seller refuses to perform under the provisions of this
Agreement, monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement in addition to any other remedies, including but not
limited to monetary damages, that may be available to it. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law. In the event of a default by Seller, which
results in the filing of a lawsuit for damages, specific performance, or other
remedy, Buyer shall be entitled to reimbursement by Seller of reasonable legal
fees and expenses incurred by Buyer.
16.4 SELLER'S LIQUIDATED DAMAGES. As more fully described in the
Deposit Escrow Agreement, in the event this Agreement is terminated because of
Buyer's material breach of this Agreement, and all other conditions within the
Seller's control to Closing are at such time satisfied or waived (other than
such conditions as can reasonably be satisfied by Closing), then the Escrow
Deposit shall be delivered to Seller, and the proceeds thereof shall constitute
liquidated damages. It is understood and agreed that such liquidated damages
amount represents Buyer's and Seller's reasonable estimate of actual damages and
does not constitute a penalty. Recovery of liquidated damages shall be the sole
and exclusive remedy of Seller against Buyer for failing to consummate this
Agreement as a result of Buyer's material breach hereof, and shall
-31-
<PAGE> 38
be applicable regardless of the actual amount of damages sustained and all other
remedies are deemed waived by Seller. Seller acknowledges and agrees that the
Escrow Deposit may be used to pay liquidated damages under the Topaz Merger
Agreement and in such an event, the amount of liquidated damages that can be
paid hereunder shall be reduced by the amount so paid under the Topaz Merger
Agreement. In the event of a default by Buyer, which results in the filing of a
lawsuit for liquidated damages, Seller shall be entitled to reimbursement by
Buyer of reasonable legal fees and expenses incurred by Seller.
-32-
<PAGE> 39
ARTICLE 17
MISCELLANEOUS PROVISIONS
------------------------
17.1 RISK OF LOSS. The risk of loss or damage to any of the Stations
Assets prior to the Closing Date, which is not the responsibility of Buyer under
the express terms of the Time Brokerage Agreement, shall be upon Seller. Seller
shall repair, replace and restore any such damaged or lost Stations Asset to its
prior condition prior to the Closing Date. In the event of substantial damage to
any of the Stations Assets or in the event of the occurrence of any damage or
event which prevents broadcast transmission of the Stations in the normal and
usual manner and substantially in accordance with its license, Seller shall
promptly notify Buyer 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 Buyer shall have the option to:
(i) postpone the Closing Date until such time not later than
December 1, 1998 as the property has been completely repaired, replaced or
restored; or
(ii) terminate this Agreement and be refunded the Escrow
Deposit if Seller has not acted diligently to repair, replace or restore such
Stations 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 Buyer.
In the event Buyer elects to postpone the Closing Date, Seller and
Buyer will cooperate to extend the time during which this Agreement must be
closed as specified in the Commission's Order.
17.2 CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS. Unless the context
otherwise requires:
(a) all references to Sections, Articles, or Schedules are to
Sections, Articles, or Schedules of or to this Agreement; (b) each term defined
in this Agreement has the meaning assigned to it; (c) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with generally accepted accounting principles as in effect on the date hereof,
(d) "or" is disjunctive but not necessarily exclusive; (e) words in the singular
include the plural and vice versa; (f) the term "Affiliate" has the meaning
given it in Rule 12b-2 of Regulation 12B under the Securities Exchange Act of
1934, as amended; and (g) all references to "$" or dollar amounts will be to
lawful currency of the United States of America.
17.3 FURTHER ASSURANCES. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order more effectively to
consummate the transactions contemplated hereby to vest
-33-
<PAGE> 40
in Buyer good and marketable title to the Stations Assets being transferred
hereunder in accordance with the terms hereof, and Buyer shall from time to
time, at the request of and without further cost or expense to Seller, execute
and deliver such other instruments and take such other actions as may reasonably
be requested in order more effectively to relieve Seller of any obligations
being assumed by Buyer hereunder.
17.4 PRESERVATION OF RECORDS. Subject to Section 10.1 hereof, Buyer
hereby agrees that it will preserve and make available to Seller and its
attorneys and accountants (including the right to inspect and copy at Seller's
cost), during normal business hours and upon reasonable advance notice, for
three (3) years after the Closing Date, such of the books, records, files,
correspondence, memoranda and other documents referred pursuant to this
Agreement as Seller may reasonably require for the preparation of tax reports
and returns, the preparation of financial statements, or the preparation of a
response to any claim by a third party against Seller.
17.5 BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Seller may not voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of Buyer. Buyer
shall have the right to assign and/or delegate all or any portion of its rights
and obligations under this Agreement, including without limitation, assignments
as collateral, provided that no such assignment and/or delegation shall relieve
Buyer of its obligations hereunder in the event that its assignee fails to
perform the obligations delegated. All covenants, agreements, statements,
representations, warranties and indemnities in this Agreement by and on behalf
of any of the parties hereto shall bind and inure to the benefit of their
respective successors and permitted assigns of the parties hereto. In the event
Buyer finds it necessary or is required to provide to a third party a collateral
assignment of the Buyer's interest in this Agreement and/or any related
documents, Seller shall cooperate with the Buyer and any third party requesting
such assignment including but not limited to signing a consent and
acknowledgment of such assignment.
17.6 AMENDMENTS. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
17.7 HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.8 GOVERNING LAW AND FORUM. The construction and performance of this
Agreement shall be governed by the laws of the State of California, without
giving effect to the choice of law provisions thereof. The parties agree that
any action brought to enforce any provisions of this Agreement or to seek any
remedy provided for hereunder shall be brought in a California State court of
competent jurisdiction located in Los Angeles County, California. Each of the
parties hereby irrevocably and unconditionally waives trial by jury in any legal
action or proceeding relating in any way to this Agreement, including any
counterclaim made in such action or proceeding, and agrees that any such action
or proceeding shall be decided solely by a judge in the County of Los Angeles,
California. Each of the parties hereto hereby acknowledges
-34-
<PAGE> 41
that it has been represented by counsel in the negotiation, execution and
delivery of this Agreement and that its lawyers have fully explained the meaning
of the Agreement, including in particular the jury-trial waiver.
17.9 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 Seller, by notifying Buyer, and in the case of
Buyer, by notifying Seller:
To Seller: Thomas P. Gammon, President
Ruby Broadcasting, Inc.
1476 Waterfront Road, Suite 100
Reston, VA 22094
Fax: (202) 737-9001
Copy to: Meredith S. Senter, Jr., Esq.
Leventhal, Senter & Lerman
2000 K Street, N.W., Suite 600
Washington, D.C. 20006
Fax: (202) 293-7783
To Buyer: Terry S. Jacobs, Chairman
Regent Broadcasting of
Victorville, Inc.
50 East RiverCenter Blvd.
Suite 180
Covington, KY 41011
Fax: (606) 292-0352
Copy to: STRAUSS & TROY
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Attn: Alan C. Rosser, Esq.
Fax: (513) 241-8289
17.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by facsimile, each of which will be deemed an original and all
of which together will constitute one and the same instrument.
-35-
<PAGE> 42
17.11 NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or permitted assigns any
rights or remedies under or by reason of this Agreement.
17.12 SEVERABILITY. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.13 ENTIRE AGREEMENT. This Agreement and the schedules hereto embody
the entire agreement and understanding of the parties hereto and supersede any
and all prior agreements, arrangements and understandings relating to the
matters provided for herein. Any matter that is disclosed in a Schedule hereto
in such a way as to make its relevance to the information called for by another
Schedule readily apparent shall be deemed to have been included in such other
Schedule, notwithstanding the omission of an appropriate cross-reference.
17.14 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.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK.]
-36-
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
REGENT BROADCASTING OF
VICTORVILLE, INC.
By:_____________________________
Name:___________________________
Title:__________________________
RUBY BROADCASTING, INC.
By:_____________________________
Name:___________________________
Title:___________________________
-37-
<PAGE> 1
Exhibit 2 (d)
ASSET PURCHASE AGREEMENT
by and between
CONTINENTAL RADIO BROADCASTING, L.L.C.
and
REGENT BROADCASTING OF KINGMAN, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 PURCHASE OF ASSETS........................................1
1.1 Transfer of Assets............................................1
1.2 Excluded Assets...............................................3
ARTICLE 2 ASSUMPTION OF OBLIGATIONS.................................4
2.1 Assumption of Obligations.....................................4
2.2 Retained Liabilities..........................................4
ARTICLE 3 CONSIDERATION.............................................5
3.1 Delivery of Consideration.....................................5
3.2 Escrow Deposit................................................5
3.3 Proration of Income and Expenses..............................6
3.4 Allocation of Purchase Price..................................6
3.5 Adjustment for Barter.........................................6
3.6 Accounts Receivable...........................................7
ARTICLE 4 CLOSING...................................................7
4.1 Closing.......................................................7
ARTICLE 5 GOVERNMENTAL CONSENTS.....................................8
5.1 FCC Consent...................................................8
5.2 FCC Application...............................................8
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER...................8
6.1 Organization and Standing.....................................9
6.2 Authorization and Binding Obligation..........................9
6.3 Qualification As Assignee.....................................9
6.4 Absence of Conflicting Agreements or Required Consents........9
6.5 Commissions or Finder's Fees..................................9
6.6 Litigation....................................................9
6.7 Full Disclosure...............................................9
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER..................10
7.1 Organization and Standing.....................................10
7.2 Authorization and Binding Obligation..........................10
7.3 Absence of Conflicting Agreements or Required Consents........10
7.4 Government Authorizations.....................................11
7.5 Compliance with FCC Regulations...............................12
7.6 Taxes.........................................................12
7.7 Personal Property.............................................12
7.8 Real Property.................................................13
7.9 Contracts.....................................................14
7.10 Status of Contracts, etc......................................14
7.11 Environmental.................................................14
7.12 Intellectual Property.........................................14
7.13 Financial Statements..........................................15
7.14 Personnel Information.........................................15
7.15 Litigation....................................................16
7.16 Compliance With Laws..........................................16
7.17 Employee Benefit Plans........................................16
7.18 Commissions or Finder's Fees..................................16
7.19 Conduct of Business in Ordinary Course: Adverse Change........16
7.20 Instruments of Conveyance; Good Title.........................17
7.21 Undisclosed Liabilities.......................................17
7.22 Full Disclosure...............................................17
ARTICLE 8 COVENANTS OF BUYER........................................17
8.1 Closing.......................................................17
8.2 Notification..................................................17
8.3 No Inconsistent Action........................................17
8.4 Removal of Impediments........................................18
8.5 Offer to Existing Employees...................................18
ARTICLE 9 COVENANTS OF SELLER...........................................18
9.1 Pre-Closing Covenants...........................................18
9.2 Notification....................................................20
9.3 No Inconsistent Action..........................................20
9.4 Closing.........................................................20
9.5 Other Items.....................................................20
9.5 Exclusivity.....................................................20
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 10 JOINT COVENANTS...........................................21
10.1 Confidentiality...............................................21
10.2 Cooperation...................................................22
10.3 Control of Stations...........................................22
10.4 Consents to Assignment........................................22
10.5 Filings.......................................................22
10.6 Bulk Sales Laws...............................................23
10.7 Employee Matters..............................................23
ARTICLE 11 CONDITIONS OF CLOSING BY BUYER............................23
11.1 Representations, Warranties and Covenants.....................23
11.2 Governmental Consents.........................................23
11.3 Governmental Authorizations...................................24
11.4 Adverse Proceedings...........................................24
11.5 Third-Party Consents..........................................24
11.6 Closing Documents.............................................24
11.7 No Adverse Change.............................................24
ARTICLE 12 CONDITIONS OF CLOSING BY SELLER...........................24
12.1 Representations, Warranties and Covenants.....................25
12.2 Governmental Consents.........................................25
12.3 Adverse Proceedings...........................................25
12.4 Closing Documents.............................................25
ARTICLE 13 TRANSFER TAXES; FEES AND EXPENSES.........................25
13.1 Expenses......................................................25
13.2 Specific Charges..............................................25
ARTICLE 14 DOCUMENTS TO BE DELIVERED AT CLOSING......................26
14.1 Seller's Documents............................................26
14.2 Buyer's Documents.............................................27
ARTICLE 15 SURVIVAL, INDEMNIFICATION, ETC............................27
15.1 Survival of Representations, Etc..............................27
15.2 Indemnification...............................................28
15.3 Procedures: Third Party and Direct Indemnification Claims.....28
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 16 TERMINATION RIGHTS........................................30
16.1 Termination...................................................30
16.2 Liability.....................................................31
16.3 Monetary Damages, Specific Performance and Other Remedies.....31
16.4 Seller's Liquidated Damages...................................31
ARTICLE 17 MISCELLANEOUS PROVISIONS..................................31
17.1 Risk of Loss..................................................31
17.2 Certain Interpretive Matters and Definitions..................32
17.3 Further Assurances............................................32
17.4 Preservation of Records.......................................32
17.5 Benefit and Assignment........................................32
17.6 Amendments....................................................33
17.7 Headings......................................................33
17.8 Governing Law.................................................33
17.9 Notices.......................................................33
17.10 Counterparts..................................................34
17.11 No Third Party Beneficiaries..................................34
17.12 Severability..................................................34
17.13 Entire Agreement..............................................34
</TABLE>
<TABLE>
<CAPTION>
LIST OF SCHEDULES AND EXHIBITS
<S> <C> <C>
Schedule 1.2.9 Miscellaneous Excluded Assets
7.4 Stations Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 Contracts (including identification of Material Contracts)
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information
7.15 Litigation
7.16 Compliance With Laws
7.17 Employee Benefit Plans
Exhibit A Indemnification Escrow Agreement
B Deposit Escrow Agreement
C Agreement re Allocation of Purchase Price
D Assignment and Assumption Agreement
E Opinion of Seller's Corporate Counsel
F Opinion of Seller's FCC Counsel
G Opinion of Buyer's Counsel
</TABLE>
iv
<PAGE> 6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
this 9th day of December, 1997 by and between CONTINENTAL RADIO BROADCASTING,
L.L.C., an Arizona limited liability company (hereinafter referred to as
"Seller") and REGENT BROADCASTING OF KINGMAN, INC., a Delaware corporation
("Buyer").
RECITALS
WHEREAS, Seller owns and operates radio stations KFLG-AM and KFLG-FM
licensed to Bullhead City, Arizona (together the "Stations" and each
individually, a "Station") pursuant to licenses issued by the Federal
Communications Commission ("FCC"), and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
assets and assume certain obligations associated with the ownership and
operation of the Stations, all on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS
1.1 Transfer of Assets. On the terms and subject to the conditions
hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and assume from Seller, all of the right, title and interest of
Seller in and to all of the assets, properties, interests and rights of Seller
of whatsoever kind and nature, real and personal, tangible and intangible, owned
or leased (to the extent of Seller's leasehold interest) by Seller as the case
may be, wherever situated, which are used or held for use in the operation of
the Stations (the "Stations Assets"), including but not limited to all of
Seller's right, title and interest in and to the assets, properties, interests
and rights described in this Section 1. 1:
1.1.1 all licenses, permits and other authorizations issued to
Seller by any governmental or regulatory authority including without limitation
those issued by the FCC (the licenses, permits and authorizations issued by the
FCC are hereafter referred to as the "Stations Licenses") used or useful in
connection with the operation of the Stations, including but not limited to
those described in Schedule 7.4, along with renewals or modifications of such
items between the date hereof and the Closing Date;
<PAGE> 7
1.1.2 all equipment, electrical devices, antennae, cables,
tools, hardware, office furniture and fixtures, office materials and supplies,
inventory, motor vehicles, spare parts and all other tangible personal property
of every kind and description, and Seller's rights therein, owned, leased (to
the extent of Seller's leasehold interest) or held by Seller and used or useful
in connection with the operations of the Stations, including but not limited to
those items described or listed in Schedule 7.7, together with any replacements
thereof and additions thereto, made between the date hereof and the Closing
Date, and less any retirements or dispositions thereof made between the date
hereof and the Closing Date in the ordinary course of business and consistent
with past practices of Seller; provided, however, Seller agrees that the value
of all such assets retired or disposed of and not replaced with an asset of like
kind and quality shall not exceed $5,000 in the aggregate unless Seller has
obtained the prior written approval of Buyer which shall not be unreasonably
withheld;
1.1.3 all time sales agreements and Trade Agreements (time
sales agreements for consideration other than cash), and all other contracts,
agreements, leases and legally binding contractual rights of any kind, written
or oral, relating to the operation of the Stations and which are listed in
Schedule 7.8 and Schedule 7.9, together with (a) all contracts, agreements,
leases and legal binding contractual rights entered into or acquired by Seller
between the date hereof and the Closing Date in the ordinary course of business,
consistent with past practices of Seller; and (b) contracts, agreements, leases
and legal binding contractual rights entered into or acquired by Seller between
the date hereof and the Closing Date, which are not in the ordinary course of
business and with respect to which the Buyer specifically agrees at Closing to
assume (collectively (i) and (ii) above are referred to herein as the
"Contracts"); for the purpose of this Agreement, Contracts shall be deemed in
the ordinary course of business if they are: (x) marked with the number one (1)
on Schedule 7.9 or (y) have a term not greater than twelve (12) months and
payment obligations on behalf of the Seller that do not exceed $25,000 in the
aggregate.
1.1.4 all of Seller's rights in and to the call letters KFLG, as
well as all of Seller's rights in and to all trademarks, trade names, service
marks, franchises, copyrights, including registrations and applications for
registration of any of them, computer software, programs and programming
material of whatever form or nature, jingles, slogans, the Stations' logos and
all other logos or licenses to use same and all other intangible property rights
of Seller, which are used or useful in connection with the operation of the
Stations, including but not limited to those listed in Schedule 7.12
(collectively, the "Intellectual Property") together with any associated
goodwill and any additions thereto between the date hereof and the Closing Date;
1.1.5 all programming materials and elements of whatever form
or nature owned by Seller, whether recorded on tape or other medium or intended
for live performance, and all copyrights owned by or licensed to Seller that are
used or useful in connection with the operation of the Stations, including all
such programs, materials, elements and copyrights acquired by Seller between the
date hereof and the Closing Date;
1.1.6 all of Seller's rights in and to all the files, documents,
records, and books of account relating to the operation of the Stations or to
the Stations Assets, including, without limitation, the Stations' local public
files, programming information and studies, blueprints, technical information
and engineering data, news and advertising studies or consulting reports,
- 2 -
<PAGE> 8
marketing and demographic data, sales correspondence, lists of advertisers,
promotional materials, credit and sales reports and filings with the FCC and all
written Contracts to be assigned hereunder, logs, software programs and books
and records relating to employees, financial, accounting and operation matters,
but excluding records relating solely to any Excluded Asset (as hereinafter
defined);
1.1.7 all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Stations Assets and all similar
rights against third parties relating to items included in the Stations Assets;
1.1.8 the leasehold interests in the real property and fixtures
thereon described in Section 7.8; and
1.1.9 except for Excluded Assets, such other assets, properties,
interests and rights owned by Seller that are located at the Station's
facilities and used or useful in connection with the operation of the Stations.
The Stations Assets shall be transferred to Buyer free and clear of all
debts, security interests, mortgages, trusts, claims, pledges or other liens,
liabilities, encumbrances or rights of third parties whatsoever
("Encumbrances"), except as set forth in Schedule 7.7 and Schedule 7.8.
Notwithstanding the foregoing, Buyer may, at or prior to the Closing, decide, in
the exercise of its sole discretion, not to purchase any one or more of such
Stations Assets (and, in such event, not to assume any liability secured by,
arising from the acquisition of, or otherwise relating to any such Asset);
provided, that in no event shall such decision reduce the Purchase Price.
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, it is expressly understood and agreed that the Stations Assets shall not
include the following assets along with all rights, title and interest therein
(the "Excluded Assets"):
1.2.1 all cash and cash equivalents of Seller on hand and/or in
banks, including without limitation certificates of deposit, commercial paper,
treasury bills, marketable securities, asset or money market accounts and all
such similar accounts or investments;
1.2.2 all investment securities and accounts receivable or notes
receivable for services performed by Seller in connection with the operation of
the Stations prior to the Closing Date;
1.2.3 all real property owned by Seller and all tangible and
intangible personal property of Seller not located at the Stations' facilities
and not used by Seller in connection with the operation of the Stations;
1.2.4 subject to the limitation set forth in Section 1. 1.2 of
this Agreement, all tangible and intangible personal property of Seller disposed
of or consumed in the ordinary course of business consistent with the past
practices of Seller between the date of this Agreement and the Closing Date;
- 3 -
<PAGE> 9
1.2.5 all Contracts that have terminated or expired prior to the
Closing Date in the ordinary course of business consistent with the past
practices of Seller;
1.2.6 Seller's corporate minute books and records, corporate
stock record books and such other books and records as pertain to the
organization, existence or share capitalization of Seller and duplicate copies
of such records as are necessary to enable Seller to file its tax returns and
reports, as well as any other records or materials relating to Seller generally
and not involving or relating to the Stations Assets or the operation or
operations of the Stations;
1.2.7 contracts of insurance, and any insurance proceeds or
claims made by, Seller relating to property or equipment repaired, replaced or
restored by Seller prior to the Closing Date;
1.2.8 all pension, profit sharing or cash or deferred (Section
401 (k)) plans and trusts and the assets thereof and any other employee benefit
plan or arrangement and the assets thereof, if any, maintained by Seller; and
1.2.9 any right, property or asset described in Schedule 1.2.9.
ARTICLE 2
ASSUMPTION OF OBLIGATIONS
2.1 Assumption of Obligations. Subject to the provisions of this Section
2. 1, Section 2.2 and Section 3.3, on the Closing Date, Buyer shall assume the
obligations of Seller arising or to be performed on and after the Closing Date
(except to the extent such obligations represent liabilities for activities,
events or transactions occurring, or conditions existing, on or prior to the
Closing Date) under: (a) the Contracts; (b) all property taxes and other
governmental charges on the Stations Assets; and (c) all Time Sales Agreements.
All of the foregoing liabilities and obligations shall be referred to herein
collectively as the "Assumed Liabilities. "
2.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Buyer expressly does not, and shall not, assume or
agree to pay, satisfy, discharge or perform and will not be deemed by virtue of
the execution and delivery of this Agreement or any agreement, instrument or
document delivered pursuant to or in connection with this Agreement or otherwise
by reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Seller of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed to Buyer, other than the Assumed
Liabilities. Seller will retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations of the
Seller, other than the Assumed Liabilities, including but not limited to, the
obligation to assume, perform, satisfy or pay any liability, obligation,
agreement, debt, charge, claim, judgment or expense incurred by or asserted
against Seller related to taxes, environmental matters, pension or retirement
plans or trusts, profit-sharing plans, employment contracts, employee benefits,
severance of employees, product liability or warranty, negligence, contract
breach or default, or other obligations, claims or judgments asserted against
Buyer as successor in interest to Seller. All of such liabilities,
- 4 -
<PAGE> 10
obligations and commitments of Seller described in this Section 2.2 shall be
referred to herein collectively as the "Retained Liabilities."
ARTICLE 3
CONSIDERATION
3.1 Delivery of Consideration. In consideration for the sale of the
Stations Assets to Buyer, in addition to the assumption of certain obligations
of Seller pursuant to Section 2.1 above, Buyer shall, at the Closing (as
hereinafter defined), deliver to Seller Three Million Six Hundred Thousand
Dollars ($3,600,000) by wire transfer of immediately available funds, subject to
adjustment pursuant to the provisions of Sections 3.2 and 3.3 below (the
"Purchase Price"). Notwithstanding the foregoing, the parties agree that at the
Closing, Buyer, Seller and Star Media, as Escrow Agent (the "Indemnification
Escrow Agent"), shall enter into an Indemnification Escrow Agreement in the form
of Exhibit A hereto (the "Indemnification Escrow Agreement") pursuant to which
Seller shall deposit with the Indemnification Escrow Agent One Hundred
Seventy-Five Thousand Dollars ($175,000), which funds shall be held in escrow
for a period of at least twelve (12) months from the Closing Date and will be
used to satisfy indemnification claims of Buyer pursuant to Section 15.2.1
hereof, and which funds shall otherwise be administered and released as
specifically provided for in the Indemnification Escrow Agreement.
3.2 Escrow Deposit. (a) Within ten business days of the execution and
delivery of this Agreement, Buyer, Seller and Star Media, as Escrow Agent (the
"Deposit Escrow Agent"), shall enter into a Deposit Escrow Agreement in the form
of Exhibit B hereto (the "Deposit Escrow Agreement") pursuant to which Buyer
shall deposit the amount described below as a deposit on the amount of the
Purchase Price. Such amounts held in escrow shall be applied as set forth herein
and in the Deposit Escrow Agreement.
(b) Pursuant to the terms of the Deposit Escrow Agreement, Buyer
shall wire transfer One Hundred Seventy-Five Thousand Dollars ($175,000), or
alternatively, deliver an irrevocable, stand-by letter of credit for such amount
in form and substance acceptable to Seller, to an escrow account established
pursuant to the Deposit Escrow Agreement (the "Escrow Deposit"). At the Closing,
the Escrow Deposit, if in the form of cash, shall be applied to the Purchase
Price to be paid to Seller and the interest accrued thereon shall be paid to
Buyer, or if in the form of a letter of credit, shall be returned to Buyer. As
more fully described in the Deposit Escrow Agreement: (a) in the event this
Agreement is terminated because of Buyer's material breach of this Agreement and
all other conditions to Closing are at such time satisfied or waived (other than
such conditions as can reasonably be expected to be satisfied by the Closing),
the Escrow Deposit shall be paid to or delivered for draw thereon to Seller as
liquidated damages as provided in Section 16.4 hereto for Buyer's material
breach of this Agreement (the payment of such sum to Seller shall discharge any
liability Buyer may have to Seller), and the interest accrued on the Escrow
Deposit shall be paid to Buyer; and (b) in the event this Agreement is
terminated under any circumstances other than those set forth in the immediately
preceding
- 5 -
<PAGE> 11
clause (a), the Escrow Deposit and the interest accrued thereon shall be paid or
returned to Buyer.
3.3 Proration of Income and Expenses.
3.3.1 Except as otherwise provided herein, all deposits,
reserves and prepaid and deferred income and expenses relating to the Stations
Assets or the Assumed Liabilities and arising from the conduct of the business
and operations of the Stations shall be prorated between Buyer and Seller in
accordance with generally accepted accounting principles as of 11:59 p.m.
Pacific time, on the date immediately preceding the Closing Date. Such
prorations shall include, without limitation, all ad valorem, real estate,
property taxes and other governmental charges on the Stations Assets (but
excluding taxes arising by reason of the transfer of the Stations Assets as
contemplated hereby which shall be paid as set forth in Section 13.2), business
and license fees, frequency discounts, music and other license fees (including
any retroactive adjustments thereof, which retroactive adjustments shall not be
subject to the sixty-day limitation set forth in Section 3.3.2), utility
expenses, vacation pay, amounts due or to become due under Contracts, rents and
similar prepaid and deferred items.
3.3.2 Except as otherwise provided herein, the prorations and
adjustments contemplated by this Section 3.3, to the extent practicable, shall
be made on the Closing Date. As to those prorations and adjustments not capable
of being ascertained on the Closing Date, an adjustment and proration shall be
made within sixty (60) calendar days after the Closing Date.
3.3.3 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in Section 3.3.2 and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Seller and
one-half by Buyer.
3.4 Allocation of Purchase Price. The parties have agreed upon an
allocation of the Purchase Price among the Stations Assets, a copy of which is
attached to this Agreement as Exhibit C. Seller and Buyer agree to use the
agreed upon allocation, if any, for all tax purposes, including without
limitation, those matters subject to Section 1060 of the Internal Revenue Code
of 1986, as amended.
3.5 Adjustment for Barter. As of the Closing Date, Buyer shall be
entitled to a credit against the Purchase Price, for the amount, if any, by
which the aggregate net value of the Stations' Barter Payable (as defined below)
as of the Closing Date exceeds by more than $25,000 the aggregate net value of
the Stations' Barter Receivable (as defined below) as of the Closing Date.
"Barter Payable" means the aggregate value of time owed pursuant to
each of the Trade Agreements. "Barter Receivable" means the aggregate value of
goods and services to be received pursuant to each of the Trade Agreements.
- 6 -
<PAGE> 12
3.6 Accounts Receivable. Buyer acknowledges that all accounts
receivable arising prior to the Closing Date in connection with the operation of
the Stations, including but not limited to accounts receivable for advertising
revenues for programs and announcements performed on the Stations prior to the
Closing Date and other broadcast revenues for services performed prior to the
Closing Date, shall remain the property of Seller ("Seller Accounts Receivable")
and that Buyer shall not acquire any beneficial right or interest therein or
responsibility therefor under this Agreement. For a period of one hundred fifty
(150) days following the Closing Date ("Collection Period"), Buyer agrees to use
substantially the same efforts to collect the Seller Accounts Receivable as
Buyer uses to collect Buyer's own accounts receivable in the normal and ordinary
course of business, and Buyer will apply all such amounts collected in
connection with the Seller Accounts Receivable to the debtor's oldest account
receivable first, except that any such accounts collected by Buyer from persons
who are also indebted to Buyer may be applied to Buyer's account if so directed
by the debtor or under circumstances in which there is a bona fide dispute
between Seller and such account debtor with respect to such account. Buyer's
obligation and authority shall not extend to the institution of litigation,
employment of counsel or a collection agency or any other extraordinary means of
collection. Buyer agrees to reasonably cooperate with Seller, at Seller's
expense, as to any litigation or other collection efforts instituted by Seller
to collect any delinquent Seller Accounts Receivable. During the Collection
Period, neither Seller nor its agents shall make any direct solicitation of any
account debtor for collection purposes or institute litigation for the
collection of amounts due. Any amounts relating to the Seller Accounts
Receivable that are paid directly to Seller shall be retained by Seller, but
Seller shall provide Buyer with prompt notice of any such payment. Every thirty
(30) days during the Collection Period, Buyer shall make a payment to Seller
equal to the amount of all collections of Seller Accounts Receivable during such
thirty (30) day period. At the end of the 150-day Collection Period, any
remaining Seller Accounts Receivable shall be returned to Seller for collection.
ARTICLE 4
CLOSING
4.1 Closing. Except as otherwise mutually agreed upon by Buyer and
Seller, the consummation of the transactions contemplated herein (the "Closing")
shall occur within ten (10) business days after the later to occur of (a) the
satisfaction or waiver of each condition to closing contained herein, other than
such conditions as are reasonably anticipated to be satisfied at Closing
(provided that each party hereto shall use its reasonable best efforts to cause
each condition to closing to be satisfied so that the Closing may occur at the
earliest possible date); and (b) the issuance of the Final Order (as defined
below), or such other date as may be mutually agreed by the parties hereto (the
"Closing Date"); provided, however, that Buyer may in its sole discretion waive
the requirement that a Final Order be issued and elect (subject to clause (a)
above) to close at any time (upon not less than ten (10) business days' notice
to Seller) after the release of initial FCC approval on public notice that it
has consented to the transaction contemplated hereby (the "Initial Approval").
For purposes of this Agreement, "Final Order" (and "Final") means an order or
grant by the FCC which is no longer subject to reconsideration or review by the
FCC or a court of competent jurisdiction and pursuant to which the FCC
- 7 -
<PAGE> 13
consents, as the case may be, to the assignments of the FCC Licenses
contemplated by this Agreement or to the renewal of the FCC Licenses, each such
order or grant being without the imposition of any conditions adverse to Buyer
or any Affiliate (as hereinafter defined) of Buyer with respect to the
assignment of the FCC Licenses to Buyer or the continued operation by Buyer of
the Stations or the Stations Assets; provided, however, that the Closing shall
not occur prior to January 1, 1998. In the event that the parties close before
the Initial Approval has become a Final Order, the parties shall enter into an
Unwind Agreement mutually acceptable to the parties and their respective senior
lenders. The Closing shall be held in the offices of Osborn Maledon, P.A., 2929
North Central Avenue, Suite 2100, Phoenix, Arizona, or at such place and in such
manner as the parties hereto may agree.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1 FCC Consent. It is specifically understood and agreed by Buyer and
Seller that the Closing and the assignment of the Stations Licenses and the
transfer of the Stations Assets are expressly conditioned on and are subject to
the prior consent and approval of the FCC without the imposition of any
conditions adverse to Buyer or any Affiliate of Buyer (the "FCC Consent").
5.2 FCC Application. Within five (5) business days after the execution
of this Agreement, Buyer and Seller shall file an application with the FCC for
the FCC Consent (the "FCC Application"). Buyer and Seller shall prosecute the
FCC Application with all reasonable diligence and otherwise use their best
efforts to obtain the FCC Consent as expeditiously as practicable (but neither
Buyer nor Seller shall have any obligation to satisfy complainants or the FCC by
taking any steps which would have a material adverse effect upon Buyer or Seller
or upon any of their respective Affiliates). If the FCC Consent imposes any
condition on Buyer or Seller or any of their respective Affiliates, such party
shall use its best efforts to comply with such condition; provided, however,
that neither Buyer nor Seller shall be required hereunder to comply with any
condition that would have a material adverse effect upon it or any of its
Affiliates. If reconsideration or judicial review is sought with respect to the
FCC Consent, the party affected shall vigorously oppose such efforts for
reconsideration or judicial review; provided, however, that nothing herein shall
be construed to limit either party's right to terminate this Agreement pursuant
to Article 16 hereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof, shall survive the
Closing and shall be unaffected by any investigation heretofore or hereafter
made by Seller:
- 8 -
<PAGE> 14
6.1 Organization and Standing. Buyer is a corporation duly organized
validly existing and in good standing under the laws of the State of Delaware,
and by the Closing Date will be authorized to conduct business within the State
of Arizona.
6.2 Authorization and Binding Obligations. Buyer has all necessary
corporate power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and to own or lease the Stations Assets and to
carry on the business of the Stations upon the consummation of the transactions
contemplated by this Agreement. Buyer's execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on its part and, assuming the due
authorization, execution and delivery of this Agreement by Seller, this
Agreement will constitute the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as limited by laws
affecting creditors' rights or equitable principles generally.
6.3 Qualification As Assignee. To the best of Buyer's knowledge, there
are no facts which, under the Communications Act of 1934, as amended, or the
existing rules and regulations of the FCC, would disqualify Buyer as an assignee
of the Stations Licenses.
6.4 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 hereof with respect to governmental consents, the
execution, delivery and performance of this Agreement by Buyer: (a) do not
conflict with the provisions of the articles of incorporation or by-laws of
Buyer; (b) do not require the consent of any third party not affiliated with
Buyer; (c) will not violate any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority to which Buyer
or any of its affiliates is a party; and (d) will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination of or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any agreement, instrument, license
or permit to which Buyer is now subject.
6.5 Commissions or Finder's Fees. Except for Buyer's obligation to pay a
commission to Star Media for acting as Buyer's broker in connection with this
transaction, which Buyer shall satisfy in full at or prior to the Closing,
neither Buyer nor any person or entity acting on behalf of Buyer has agreed to
pay a commission, finder's fee or similar payment in connection with this
Agreement or any matter related hereto to any person or entity.
6.6 Litigation. Buyer is not subject to any judgment, award, order, writ,
injunction, arbitration decision or decree prohibiting the consummation of the
transactions contemplated by this Agreement, and there are no suits, legal
proceedings or investigations of any nature pending, or to the best knowledge of
Buyer, threatened against or affecting Buyer that would affect Buyer's ability
to carry out the transactions contemplated by this Agreement.
6.7 Full Disclosure. No representation or warranty made by Buyer
contained in this Agreement nor any certificate, document or other instrument
furnished or to be furnished by Buyer 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
misleading. To the best of Buyer's knowledge, there is no impending or
contemplated event
- 9 -
<PAGE> 15
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.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to Buyer, each
of which is true and correct on the date hereof, shall survive the Closing and
shall be unaffected by any investigation heretofore or hereafter made by Buyer:
7.1 Organization and Standing. Seller is a limited liability company
duly organized, validly existing under the laws of the State of Arizona, is
authorized to conduct business within the State of Arizona, and has the
requisite power and authority to own, lease and operate the Stations Assets
owned or leased by it 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.
7.2 Authorization and Binding Obligation. Seller has the power and
authority, and has taken all necessary and proper action to enter into and
perform this Agreement and to consummate the actions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by Seller and,
assuming the due authorization, execution and delivery of this Agreement by
Buyer, constitutes the legal, valid and binding obligation of Seller enforceable
against it in accordance with its terms, except as limited by laws affecting the
enforcement of creditors' rights or equitable principles generally.
7.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 5 with respect to governmental consents and in Schedule 7.9
with respect to consents required in connection with the assignment of certain
Contracts, the execution, delivery and performance of this Agreement by Seller:
(a) do not require the consent of any third party (including, without
limitation, the consent of any governmental, regulatory, administrative or
similar authority); (b) will not conflict with, result in a breach of, or
constitute a violation of or default under, the provisions of Seller's articles
of organization or operating agreement (or other charter or organizational
documents), or any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority to which Seller is a party or
by which Seller or any of the Stations Assets are bound; (c) will not either
alone or with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Contract,
agreement, instrument, license or permit to which Seller or any of the Stations
Assets is now subject; and (d) will not result in the creation of any lien,
charge or encumbrance on any of the Stations Assets.
- 10 -
<PAGE> 16
7.4 Government Authorizations.
7.4.1 Schedule 7.4 hereto contains a true and complete list of the
Stations 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 a
material adverse effect on Buyer or the Stations. Seller has delivered to Buyer
true and complete copies of the Stations Licenses and the other licenses,
permits and authorizations listed in Schedule 7.4, including any and all
amendments and other modifications thereto.
7.4.2 Seller is the authorized legal holder of the Stations Licenses
and other licenses, permits and authorizations listed in Schedule 7.4. Except as
set forth Schedule 7.4, none of the Stations Licenses and other licenses,
permits and authorizations listed in Schedule 7.4 is subject to any restrictions
or conditions which would materially limit the full operation of the Stations as
now operated.
7.4.3 Except as set forth in Schedule 7.4, and except for matters
affecting the radio broadcast industry generally, there are no complaints,
petitions or proceedings pending or, to the best of Seller's knowledge,
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 on Schedule 7.4, there are no applications pending by Seller
before the FCC. Except as set forth in Schedule 7.4, the Stations Licenses and
the other licenses, permits and authorizations listed in Schedule 7.4 are in
good standing, are in full force and effect and are unimpaired by any act or
omission of Seller or its members, managers, officers, or employees. The
operations of the Stations are in accordance with the Stations Licenses and the
other licenses, permits and authorizations listed in Schedule 7.4. No
proceedings are pending or, to the best of Seller's knowledge, threatened, and
to the best of Seller's knowledge there has not been any act or omission of
Seller or any of its members, managers, officers, or employees, which may result
in the revocation, modification, non-renewal or suspension of any of the
Stations Licenses or the other licenses, permits and authorizations listed in
Schedule 7.4, 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 Stations Licenses
or the other licenses, permits and authorizations listed in Schedule 7.4 or
which may affect Buyer's ability to continue to operate the Stations as they are
currently operated.
7.4.4 Except as set forth on Schedule 7.4, each Station is operating
with the maximum facilities specified in the respective Station License.
7.4.5 To the best of Seller's knowledge: (i) neither of the Stations
is causing objectionable interference to the transmissions of any other
broadcast station or communications facility nor has either 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.
- 11 -
<PAGE> 17
7.4.6 Seller has no reason to believe that the Stations Licenses and
the other licenses, permits, or authorizations listed in Schedule 7.4 will not
be renewed in their ordinary course.
7.4.7 All reports, forms, and statements required to be filed by
Seller with the FCC with respect to the Stations since the grant of the last
renewal of the Stations Licenses have been filed and are substantially complete
and accurate.
7.4.8 To the best knowledge of Seller, there are no facts which,
under the Communications Act of 1934, as amended, or the existing rules and
regulations of the FCC, would disqualify Seller as assignor of the Stations
Licenses or cause the Stations Licenses and the other licenses, permits and
authorizations listed in Schedule 7.4 not to be renewed in their ordinary
course.
7.4.9 As if the Closing Date, the operation of the Stations and all
of the Stations Assets will be in compliance in all respects with ANSI Radiation
Standards C95.1-1992.
7.5 Compliance with FCC Regulations. Except as specified in Schedule
7.4, the operation of the Stations and all of the Stations 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, 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 to the best of Seller's knowledge,
there are no filed claims to the contrary.
7.6 Taxes. Seller 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 and has paid in full all taxes, estimated
taxes, interest, assessments, and penalties due and payable by it. All returns
and forms which have been filed have been true and correct in all material
respects and no tax or other payment in an amount other than as shown on such
returns and forms is required to be paid by Seller and has not been paid by
Seller. There are no present disputes as to taxes of any nature payable by
Seller which in any event could adversely affect any of the Stations Assets or
the operation of the Stations by Buyer. Seller has not been advised that any of
its tax returns, federal, state, local or foreign, have been or are being
audited. Seller does not and will not in the future have 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) which could result in a lien on the Stations Assets after
conveyance thereof to Buyer or in any other form of transferee liability to
Buyer.
7.7 Personal Property. Schedule 7.7 hereto contains a list of all
material items of tangible personal property owned by Seller and used in the
conduct of the business and operations of the Stations. Schedule 7.7 also
separately lists any material tangible personal property leased by Seller
pursuant to leases included within the Contracts. Except as disclosed in
Schedule 7.7, Seller has, and following the Closing, Buyer will have, good and
marketable title
- 12 -
<PAGE> 18
to all of the items of tangible personal property which are included in the
Stations Assets (other than those subject to lease) and, except as set forth in
Schedule 7.7, all of which will be paid at or prior to Closing, none of such
Stations 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, and except for the
Assumed Liabilities. The properties listed in Schedule 7.7, along with those
properties subject to lease and included among the Contracts, constitute all
material tangible personal property necessary to operate the Stations as the
same are now being operated. Except as set forth in Schedule 7.7, all items of
tangible personal property included in the Stations' Assets are in good
operating condition and repair (ordinary wear and tear excepted), are fee from
all material defect and damage, are suitable for the purposes for which they are
now being used, and have been properly maintained in a manner consistent with
generally accepted standards of good engineering practice.
7.8 Real Property .
7.8.1 Seller owns no real property. Schedule 7.8 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) leased by Seller and used by Seller in
connection with the operations of the Stations (the "Leased Real Estate").
7.8.2 Seller enjoys quiet possession of all Leased Real Estate.
There are no present disputes or claims with respect to offsets or defenses by
any party against the other under any of the Contracts relating to the Leased
Real Estate. Seller has delivered to Buyer true and complete copies of all
Contracts relating to the Leased Real Estate. Except as set forth in Schedule
7.9 hereto, the assignment of the Contracts relating to the Leased Real Estate
to Buyer will not permit the other party to accelerate the rent, cause the terms
thereof to be renegotiated or constitute a default thereunder, and will not
require the consent of any such party to the assignment thereof to Buyer.
7.8.3 Except as described in Schedule 7.8, to the best of Seller's
knowledge none of the buildings, structures, improvements or fixtures
constructed on any Leased Real Estate, in connection with the operation of the
Stations, including, but not limited to, all towers, guy wires and guy anchors
and ground radials, encroach upon adjoining real property, and all such
buildings, structures, improvements and fixtures are constructed and are
operated and used in conformance with all "set back" lines, easements,
covenants, restrictions and all applicable building, fire, zoning, health and
safety laws and codes. To the best of Seller's knowledge, no utility lines
serving such Leased Real Estate pass over the lands of a third party except
where appropriate easements have been obtained. To the best of Seller's
knowledge, except as described in Schedule 7.8, all buildings, structures,
towers, antennae, improvements and fixtures situated on the Leased 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.
There is no pending or, to the best knowledge of Seller, threatened condemnation
or other legal proceeding or action of any kind relating to such real property
and/or title thereto.
- 13 -
<PAGE> 19
7.9 Contracts. Schedule 7.9 lists all Contracts to which Seller is a
party, or which are binding on Seller, as of the date of this Agreement. Those
Contracts listed on Schedule 7.9, if any, requiring the consent of a third party
to assignment are identified by an asterisk in the left margin of Schedule 7.9.
Those Contracts, if any, that Seller and Buyer have agreed are material to the
operation of the Stations Assets and the valid assignment of which and receipt
by Buyer of consents thereto (along with appropriate estoppel certificates for
the leases related to the Leased Real Estate) is a condition to the consummation
of the transactions contemplated hereby (the "Fundamental Contracts") are
identified by an "F" in the left margin of Schedule 7.9.
7.10 Status of Contracts, etc. Seller has delivered to Buyer true and
complete copies of all material written Contracts and true and complete
memoranda of all material oral Contracts, including any and all amendments and
other modifications thereto. All of such material Contracts are in full force
and effect and are valid, binding and enforceable in accordance with their
respective terms, except as limited by laws affecting creditors' rights or
equitable principles generally. Seller has complied in all respects with all
Contracts and is not in default beyond any applicable grace periods under any
thereof and, to the best of Seller's knowledge, no other contracting party is in
default under any thereof.
7.11 Environmental. To the best of Seller's knowledge, except as set
forth in Schedule 7.11, Seller 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. To the best of the Seller's
knowledge, the technical equipment included in the Stations Assets does not
contain any PCBs. To the best of Seller's knowledge, 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. Sections 9601 et seq., Toxic Substances Control
Act. 15 U. S. C. Sections 2601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Sections 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 (collectively Hazardous Materials"), have been
released, emitted or discharged by Seller or any predecessor of Seller in
violation of applicable laws or regulations, or are currently located in
quantities in violation of applicable laws and regulations in, on, or under or
about the real property on which the Stations Assets are situated, including
without limitation the transmitter sites, or contained in the tangible personal
property included in the Stations Assets which were placed there by Seller or
any predecessor of Seller. To the best of Seller's knowledge, the Stations
Assets and Seller's use thereof are not in violation of any Environmental Laws
or any occupational, safety and health or other applicable law now in effect.
With respect to Buyer, Seller shall be as of the Closing Date and thereafter
solely responsible for all environmental liabilities, of whatsoever kind and
nature, arising out of or attributable to the operation or ownership of the
Stations Assets prior to the Closing Date.
7.12 Intellectual Property. Schedule 7.12 hereto is a true and complete
list of all material Intellectual Property applied for, registered or issued to,
and owned by Seller or under which Seller
- 14 -
<PAGE> 20
is a licensee and which is used in the conduct of Seller's business and
operations, except for computer software licensed for use by the Stations.
Except as set forth on Schedule 7.12, to the best of Seller's knowledge: (a)
Seller'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 Seller, such interest is valid and
uncontested by the licensor thereof or any third party; (b) all computer
software located at the Stations' facilities or used in the Stations' business
or operations is properly licensed to Seller, and all of Seller's uses of such
computer software are authorized under such licenses; (c) all of Seller's right,
title and interest in and to the Intellectual Property and computer software
shall be assignable to Buyer at Closing, and upon such assignment, Buyer shall
receive complete and exclusive right, title, and interest in and to all tangible
and intangible property rights existing in the Intellectual Property; and (d)
there are no infringements or unlawful use of such Intellectual Property by
Seller in connection with Seller's business or operations.
7.13 Financial Statements. Set forth in Schedule 7.13 are complete
copies of the financial statements of Seller relating to the Stations for the
month ended December 31, 1996, together with monthly income statements for the
Stations for each month ended after January 1, 1997 (collectively, the
"Financial Statements"). The Financial Statements were prepared in accordance
with the books and records of Seller and in accordance with generally accepted
accounting principles consistently applied and maintained throughout the periods
indicated except as has been disclosed in Schedule 7.13. The Financial
Statements present fairly the financial condition, results of operations and
cash flow of the Stations for the periods indicated. None of the Financial
Statements understates the true costs and expenses of conducting the business
and operations of the Stations, fails to disclose any material liability, or
inflates (or will inflate) the revenues of the Stations for any reason.
7.14 Personnel Information.
7.14.1 Schedule 7.14 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 Schedule 7.17) and a list of other material terms of any and all agreements
affecting such persons and their employment by Seller. Seller has received no
notice that, and Seller 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 or after the Closing.
7.14.2 Seller, with respect to the Stations, is not a party to any
contract or agreement with any labor organization, nor has Seller 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
Seller at the Stations. Seller has no knowledge of any organization effort
currently being made or threatened by or on behalf of any labor union with
respect to employees of Seller at the Stations.
7.14.3 To the best of Seller's knowledge, except as disclosed in
Schedule 7.14, Seller, 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
- 15 -
<PAGE> 21
Security Act of 1974, as amended ("ERISA"), and those laws relating to wages,
hours, collective bargaining, unemployment insurance, workers' compensation,
equal employment opportunity and payment and withholding of taxes.
7.15 Litigation. Except as set forth in Schedule 7.15, Seller is not
subject to any judgment, award, order, writ, injunction, arbitration decision or
decree relating to the conduct of the business or the operation of the Stations
or any of the Stations Assets, and there is no litigation, administrative
action, arbitration, proceeding or investigation pending or, to the best
knowledge of Seller, threatened against Seller with respect to, related to or in
connection with the operation of the Stations in any federal, state or local
court, or before any administrative agency or arbitrator (including, without
limitation, any proceeding which seeks the forfeiture of, or opposes the renewal
of, any of the Stations Licenses), or before any other tribunal duly authorized
to resolve disputes. In particular, but without limiting the generality of the
foregoing, to the best knowledge of Seller, there are no applications,
complaints or proceedings pending or threatened before the FCC or any other
governmental organization with respect to the business or operations of the
Stations.
7.16 Compliance With Laws. To the best of Seller's knowledge and except
as set forth in Schedule 7.16: (i) Seller is not in material violation of, nor
has Seller received any notice asserting any non-compliance by it in connection
with the operation of the Stations or use or ownership of any of the Stations
Assets with, any applicable statute, rule or regulation, whether federal, state
or local; (ii) Seller is not in default with respect to any judgment, order,
injunction or decree of any court administrative agency or other governmental
authority or any other tribunal duly authorized to resolve disputes which
relates to the transactions contemplated hereby; and (iii) Seller is in material
compliance with all laws, regulations and governmental orders applicable to the
conduct of the business and operations of the Stations.
7.17 Employee Benefit Plans. Schedule 7.17 contains a true and complete
list as of the date of this Agreement of all employee benefit plans applicable
to the employees of Seller employed at the Stations, and a brief description
thereof. Seller does not maintain any other employee benefit plan as the term is
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended, applicable to the employees of Seller employed at the Stations.
7.18 Commissions or Finder's Fees. Neither Seller nor any person or
entity acting on behalf of Seller has agreed to pay a commission, finder's fee
or similar payment in connection with this Agreement or any matter related
hereto to any person or entity.
7.19 Conduct of Business in Ordinary Course: Adverse Changes. Since
September 1, 1997, (a) Seller has conducted the business of the Stations only in
the ordinary course consistent with Seller's past practices; (b) there has not
been any material adverse change in the business, assets, properties, prospects
or condition (financial or otherwise) of the Stations, or any damage,
destruction, or loss affecting any of the Stations Assets; and (c) Seller has
not created, assumed, or suffered any mortgage, pledge, lien or encumbrance on
any of the Stations Assets.
- 16 -
<PAGE> 22
7.20 Instruments of Conveyance: Good Title. The instruments to be
executed by Seller and delivered to Buyer at the Closing, conveying the Stations
Assets to Buyer, will transfer good and marketable title to the Assets free and
clear of all liabilities (absolute or contingent), security interests,
mortgages, pledges, liens, obligations and encumbrances, except for Permitted
Encumbrances and except as set forth in Schedule 7.7 and Schedule 7.8 hereto and
those obligations referred to in the first sentence of Section 2.1 hereof.
7.21 Undisclosed Liabilities. Excepting only for the Assumed
Liabilities, no liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, relating to Seller, the Stations or the
Stations Assets exists which could, after discharging any indebtedness therefor
at or prior to the Closing, result in any form of transferee liability against
Buyer or subject the Stations Assets to any lien, encumbrance, claim, charge,
security interest or imposition whatsoever or otherwise affect the full, free
and unencumbered use of the Stations Assets by Buyer.
7.22 Full Disclosure. No representation or warranty made by Seller
contained in this Agreement nor any certificate, document or other instrument
furnished or to be furnished by Seller 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
misleading. To the best of Seller's knowledge, there is no 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.
Whenever in this Article 7 a warranty or representation is qualified by
a word or phrase referring to the best of Seller's knowledge (or similar terms),
it shall mean to the actual knowledge of Dave Peschau, after having made due
inquiry of the employees, representatives and agents of Seller who would be
expected to have knowledge of the matter, and with respect to the condition of
any Stations Assets, records or other object, after having inspected it.
ARTICLE 8
COVENANTS OF BUYER
8.1 Closing. Subject to Article 11 hereof, on the Closing Date, Buyer
shall purchase the Stations Assets from Seller as provided in Article I hereof
and shall assume the Assumed Liabilities of Seller as provided in Article 2
hereof.
8.2 Notification. Buyer will provide Seller prompt written notice of any
change in any of the information contained in the representations and warranties
made in Article 6. Buyer shall also notify Seller of any litigation, arbitration
or administrative proceeding pending or, to its knowledge, threatened against
Buyer which challenges the transactions contemplated hereby.
8.3 No Inconsistent Action. Buyer shall not take any action which is
materially inconsistent with its obligations under this Agreement or take any
action which would cause any
- 17 -
<PAGE> 23
representation or warranty of Buyer contained herein to be or become false or
invalid or which could hinder or delay the consummation of the transactions
contemplated by this Agreement.
8.4 Removal of Impediments. Should any fact relating to Buyer which
would cause the FCC to deny its consent to the transactions contemplated by this
Agreement come to Buyer's attention, Buyer will promptly notify Seller thereof
and will use its reasonable efforts to take such steps as may be necessary to
remove any such impediment to the FCC's consent to the transactions contemplated
by this Agreement.
8.5 Offer to Existing Employees. On the Closing Date, Buyer shall offer
employment to each of the employees of Seller listed on Schedule 7.14 hereto on
terms and conditions determined by Buyer but at salary levels and with such
benefits that are, taken as a whole package, not materially less than those
currently provided to such employees by Seller, provided, however, that Buyer
may elect not to offer employment to any individual listed on Schedule 7.14 if
Buyer determines, in its sole discretion, that any action taken or failed to be
taken by such individual, or any condition or circumstance which exists or
existed, would be just cause for termination of such individual's employment had
the action or failure to act occurred or the condition or circumstance existed
during such individual's employment with Buyer. Buyer will have no
responsibility for any severance or similar obligations Seller may have to its
employees.
ARTICLE 9
COVENANTS OF SELLER
9.1 Pre-Closing Covenants. Seller covenants and agrees with respect to
the Stations that, between the date hereof and the Closing Date or the earlier
termination of this Agreement in accordance with its terms, except as expressly
permitted by this Agreement or with the prior written consent of Buyer, Seller
shall act in accordance with the following:
9.1.1 Seller shall use its reasonable best efforts to conduct the
business and operations of the Stations in the ordinary and prudent course of
business consistent with past practice and with the intent of preserving the
ongoing operations and assets of the Stations, including but not limited to
maintaining the independent identity of the Stations, retaining the current
format and programming (including the content thereof) of the Stations,
continuing at historical levels and frequencies spending for promotions,
advertising, and survey testing, and using its reasonable best efforts to retain
at the Stations the services of all active employees, consultants and agents of
the Stations.
9.1.2 Seller shall use its reasonable best efforts to: (i) preserve
the operation of the Stations intact; (ii) preserve the business of the
Stations' advertisers, customers, suppliers and others having business relations
with the Stations; and (iii) continue to conduct financial operations of the
Stations, including without limitation, their credit and collection and pricing
policies and practices, all in the ordinary course of business consistent with
past practices.
- 18 -
<PAGE> 24
9.1.3 Seller shall operate the Stations in all respects in
accordance with FCC rules and regulations and the Stations Licenses and with all
other laws, regulations, rules and orders, and shall not cause or permit by any
act, or failure to act, any of the Stations Licenses or other licenses, permits
or authorizations listed in Schedule 7.4 to expire, be surrendered, adversely
modified, or otherwise terminated, or the FCC to institute any proceedings for
the suspension, revocation or adverse modification of any of the Stations
Licenses, or fail to prosecute with due diligence any pending applications to
the FCC.
9.1.4 Should any fact relating to Seller which would cause the FCC
to deny its consent to the transactions contemplated by this Agreement come to
Seller's attention, Seller will promptly notify Buyer thereof and will use its
reasonable best efforts to take such steps as may be necessary to remove any
such impediment to the FCC's consent to the transactions contemplated by this
Agreement.
9.1.5 Except for changes or actions in the ordinary course of
business consistent with past practices, Seller shall not: (a) sell broadcast
time on a prepaid basis (other than in the course of existing credit practices);
(b) except as set forth on Schedule 7.14, or as required by applicable law or
written agreements currently in effect, grant or agree to grant any general
increases in the rates of salaries or compensation payable to employees of the
Stations (provided that no such increases to any employee shall in the aggregate
exceed 6 % of such employee's compensation as set forth on Schedule 7.14 hereto)
unless such increase is as a result of increased commissions payable to
employees on account of increased advertising sales; (c) except as required by
written agreements currently in effect, grant or agree to grant any specific
bonus or increase in compensation to any executive management employee of the
Stations (provided that no such increases to any employee shall in the aggregate
exceed 6 % of such employee's compensation as set forth on Schedule 7.14 hereto)
unless such increase is as a result of increased commissions payable to
employees on account of increased advertising sales; (d) provide for any new
pension, retirement or other employment benefits for employees of the Stations
or any increases in any existing benefits, (e) modify, change or terminate any
Contract other than in the ordinary course of business; or (f) change the
advertising rates in effect as of the date hereof other than in the ordinary
course of business.
9.1.6 Seller shall give or cause the Stations to give Buyer and
Buyer's counsel, accountants, engineers and other representatives, at Buyer's
reasonable request and upon reasonable notice, full and reasonable access during
normal business hours to all of Seller's personnel, properties, books,
Contracts, reports and records (including, without limitation, financial
information and tax returns relating to the Stations, and environmental audits
in existence with respect to the Stations Assets), real estate, buildings and
equipment relating to the Stations and to the Stations' employees, and to
furnish Buyer with information and copies of all documents and agreements
relating to the Stations and the operation thereof (including but not limited to
financial and operating data and other information concerning the financial
condition, results of operations and business of the Stations) that Buyer may
reasonably request. The rights of Buyer under this Section 9.1.6 shall not be
exercised in such a manner as to interfere unreasonably with the business of the
Stations.
- 19 -
<PAGE> 25
9.1.7 Seller shall use its reasonable best efforts to obtain any
third party consents necessary for the assignment of any Contract (which shall
not require any payment to any such third party except for such amounts
contemplated by the Contract to be assigned, and any amount then owing by Seller
to such third party).
9.2 Notification. Seller will provide Buyer prompt written notice of any
change in any of the information contained in the representations and warranties
made in Article 7 or any Schedule. Seller agrees to notify Buyer of any
litigation, arbitration or administrative proceeding pending or, to the best of
its knowledge, threatened, which challenges the transactions contemplated
hereby. Seller shall promptly notify Buyer if any of the normal broadcast
transmissions of either Station are interrupted, interfered with or in any way
impaired, and shall provide Buyer with prompt written notice of the problem and
the measures being taken to correct such problem. If such Station is not
restored so that operation is resumed to the power at which it was operated
prior to the interruption and full licensed antenna height within five (5) days
of such event, or if more than five (5) such events occur within any thirty (30)
day period, or if either of the Stations shall be off the air for more than
seventy-two (72) consecutive hours more than twice in any thirty (30) day
period, then Buyer shall have the right to terminate this Agreement.
9.3 No Inconsistent Action. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement nor take any
action which would cause any representation or warranty of Seller contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
9.4 Closing. Subject to Article 12 hereof, on the Closing Date, Seller
shall transfer, convey, assign and deliver to Buyer the Stations Assets and the
Assumed Liabilities as provided in Articles 1 and 2 and Section 7.20 of this
Agreement.
9.5 Other Items. Until the Closing Date or the earlier termination of
this Agreement in accordance with the terms hereof, except with Buyer's prior
written consent, Seller shall not: (a) waive or release any right relating to
the business or operations of the Stations, except for adjustments or
settlements made in the ordinary course of business consistent with its past
practices; (b) transfer or grant any rights under any of the Stations Licenses;
(c) enter into any commitment for capital expenditures for which Buyer would
become liable after the Closing Date; (d) introduce any material changes in the
broadcast hours or in the format of the Stations (except for the format change
previously instituted by Seller as set forth on Schedule 9.5) or any other
material change in the Station's programming policies; (e) change the call
letters of either Station; and (f) enter into any transaction or make or enter
into any contract or commitment with respect to either of the Stations or the
Stations Assets which by reason of its size or otherwise is not in the ordinary
course of business consistent with past practices, other than in connection with
the format change referred to on Schedule 9.5.
9.6 Exclusivity. Seller agrees that, commencing on the date hereof
through the Closing or earlier termination of this Agreement, Buyer shall have
the exclusive right to consummate the transactions contemplated herein, and
during such exclusive period, Seller
- 20 -
<PAGE> 26
agrees that neither Seller, nor any director, officer, employee or other
representative of Seller: (a) will initiate, solicit or encourage, directly or
indirectly, any inquiries, or the making or implementation of any proposal or
offer with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of, all or any portion of the Stations
Assets (any such inquiry, proposal or offer being hereinafter referred to as an
"Acquisition Proposal" and any such transaction being hereinafter referred to as
an "Acquisition"); (b) will engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal; or (c) will continue
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal or Acquisition and will take
the necessary steps to inform the individuals or entities referred to above of
the obligations undertaken by them in this Section 9.6. Notwithstanding the
foregoing, in the event that Buyer defaults in any material respect in the
observance or in the due and timely performance of any of its covenant or
agreements herein contained and such default shall not be cured within ten (10)
business days of notice of default served by Seller, Seller's obligations under
this Section 9.6 shall be null and void.
ARTICLE 10
JOINT COVENANTS
Buyer and Seller each covenant and agree that between the date hereof
and the Closing Date, they shall act in accordance with the following:
10.1 Confidentiality. Subject to the requirements of applicable law,
Buyer and Seller shall each keep confidential all information obtained by it
with respect to the other parties hereto in connection with this Agreement and
the negotiations preceding this Agreement, and will use such information solely
in connection with the transactions contemplated by this Agreement, and if the
transactions contemplated hereby are not consummated for any reason, each shall
return to each other party hereto, without retaining a copy thereof, any
schedules, documents or other written information obtained from such other party
in connection with this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, no party shall be required to keep confidential
or return any information which: (a) is known or available through other lawful
sources, not bound by a confidentiality agreement with the disclosing party; (b)
is or becomes publicly known through no fault of the receiving party or its
agents; (c) is required to be disclosed pursuant to an order or request of a
judicial or governmental authority (provided the disclosing party is given
reasonable prior notice of the order or request and the purpose of the
disclosure); or (d) is developed by the receiving party independently of the
disclosure by the disclosing party. Notwithstanding anything to the contrary
herein, either party may in accordance with its legal obligations, including but
not limited to filings permitted or required by the Securities Act of 1933 and
the Securities and Exchange Act of 1934, make such press releases and other
public statements and announcements as it deems necessary and appropriate in
connection with this Agreement and the transactions contemplated hereby;
provided, however, that prior to making any such unilateral press release or
announcement, such party shall first communicate the same in writing to the
other.
- 21 -
<PAGE> 27
10.2 Cooperation. Subject to express limitations contained elsewhere
herein, Buyer and Seller agree to cooperate fully with one another in taking any
reasonable actions (including without limitation, reasonable actions to obtain
the required consent of any governmental instrumentality or any third party)
necessary or helpful to accomplish the transactions contemplated by this
Agreement, including but not limited to the satisfaction of any condition to
closing set forth herein.
10.3 Control of Stations. Buyer shall not, directly or indirectly,
control, supervise or direct the operations of the Stations prior to the
Closing. Such operations, including complete control and supervision of all
Station programs, employees and policies, shall be the sole responsibility of
Seller.
10.4 Consents to Assignment. To the extent that any Contract identified
in the Schedules is not capable of being sold, assigned, transferred, delivered
or subleased without the waiver or consent of any third person (including a
government or governmental unit), or if such sale, assignment, transfer,
delivery or sublease or attempted sale, assignment, transfer, delivery or
sublease would constitute a breach thereof or a violation of any law or
regulation, this Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an attempted
sale, assignment, offer, delivery or sublease thereof. Subject to the provisions
of Section 11.5, in those cases where consents, assignments, releases and/or
waivers have not been obtained at or prior to the Closing relating to the
assignment to Buyer of the Contracts, this Agreement and any assignment executed
pursuant hereto, to the extent permitted by law, shall constitute an equitable
assignment by Seller to Buyer of all of Seller's rights, benefits, title and
interest in and to the Contracts, and where necessary or appropriate, Buyer
shall be deemed to be Seller's agent for the purpose of completing, fulfilling
and discharging all of Seller's rights and liabilities arising after the Closing
Date under such Contracts. Seller shall use its reasonable best efforts to
provide Buyer with the financial and business benefits of such Contracts
(including, without limitation, permitting Buyer to enforce any rights of Seller
arising under such Contracts), and Buyer shall, to the extent Buyer is provided
with the benefits of such Contracts, assume, perform and in due course pay and
discharge all debts, obligations and liabilities of Seller under such Contracts
to the extent that Buyer was to assume those obligations pursuant to the terms
hereof.
10.5 Filings. In addition to the covenants of the parties set forth in
Article 5 hereto, as promptly as practicable after the execution of this
Agreement, Buyer and Seller shall use their reasonable best efforts to obtain,
and to cooperate with each other in obtaining, all authorizations, consents,
orders and approvals of any governmental authority that may be or become
necessary in connection with the consummation of the transactions contemplated
by this Agreement, and to take all reasonable actions to avoid the entry of any
order or decree by any governmental authority prohibiting the consummation of
the transactions contemplated hereby, including without limitation, any reports
or notifications that may be required to be filed with the FCC, and each shall
furnish to one another all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by the
other.
- 22 -
<PAGE> 28
10.6 Bulk Sales Laws. Buyer hereby waives compliance by Seller with the
provisions of the "bulk sales" or similar laws of any state. Seller agrees to
indemnify Buyer and hold it harmless from any and all loss, cost, damage and
expense (including but not limited to, reasonable attorney's fees) sustained by
Buyer as a result of any failure of Seller to comply with any "bulk sales" or
similar laws.
10.7 Employee Matters. Seller shall be responsible for the payment of
all compensation and accrued employee benefits payable to all employees up to
the Closing Date. Seller acknowledges and agrees that it, and not Buyer, is and
shall be solely responsible for any and all insurance, supplemental pension,
deferred compensation, retirement and any other benefits, and related costs,
premiums and claims, due, to become due, committed or otherwise promised to any
person who, as of the Closing Date, is a retiree, former employee, or current
employee of Seller, relating to the period up to the Closing Date. Buyer, as a
purchaser of the Stations Assets, shall assume no employee benefit plans,
programs or practices, whether or not set forth in writing, maintained by Seller
at any time.
ARTICLE 11
CONDITIONS OF CLOSING BY BUYER
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants.
11.1.1 All representations and warranties of Seller made in this
Agreement or in any Exhibit, Schedule or document delivered pursuant hereto,
shall be true and complete in all respects as of the date hereof and on and as
of the Closing Date as if made on and as of that date, except for changes (a)
expressly permitted or contemplated by the terms of this Agreement; or (b) in
the ordinary course of business which are not, either individually or in the
aggregate, material and adverse.
11.1.2 All of the terms, covenants and conditions set forth in this
Agreement to be complied with and performed by Seller on or prior to the Closing
Date shall have been complied with or performed in all material respects.
11.1.3 Buyer shall have received a certificate, dated as of the
Closing Date, from Seller, executed by the Manager of Seller to the effect that:
(a) the representations and warranties of Seller contained in this Agreement are
true and complete in all material respects on and as of the Closing Date as if
made on and as of that date; and (b) Seller has complied with or performed in
all material respects all terms, covenants and conditions set forth in this
Agreement to be complied with or performed by it on or prior to the Closing
Date.
11.2 Governmental Consents. The FCC Initial Approval shall have been
obtained.
- 23 -
<PAGE> 29
11.3 Governmental Authorizations. Seller shall be the holder of the
Stations Licenses and all other licenses, permits and other authorizations
listed in Schedule 7.4, and there shall not have been any modification of any of
such licenses, permits and other authorizations which has a material adverse
effect on either of the Stations or the operations thereof. No application shall
be pending for the renewal of any of the Stations Licenses. No proceeding shall
be pending which seeks, or the effect of which reasonably could be, to revoke,
cancel, fail to renew, suspend or adversely modify any of the Stations Licenses
or any other licenses, permits or other authorizations listed in Schedule 7.4.
11.4 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no order, decree or
judgment of any court, agency or other governmental authority shall have been
rendered (and remain in effect) against, any party hereto which: (a) would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms; (b) questions the
validity or legality of any transaction contemplated hereby; (c) seeks to enjoin
any transaction contemplated hereby; (d) seeks material damages on account of
the consummation of any transaction contemplated hereby; or (e) is a petition of
bankruptcy by or against Seller, an assignment by Seller for the benefit of its
creditors, or other similar proceeding.
11.5 Third-Party Consents. All Material Contracts shall be in full force
and effect on the Closing Date, and Seller shall have obtained and shall have
delivered to Buyer all appropriate third-party consents in form and substance
acceptable to Buyer (including estoppel certificates for the leases related to
the Leased Real Estate) in connection with the assignment of the Material
Contracts to Buyer.
11.6 Closing Documents. Seller shall have delivered or caused to be
delivered to Buyer, on the Closing Date, all bills of sale, general warranty
deeds, endorsements, assignments and other instruments of conveyance reasonably
satisfactory in form and substance to Buyer, effecting the sale, transfer,
assignment and conveyance of the Stations Assets to Buyer, including, without
limitation, each of the documents required to be delivered by it pursuant to
Article 14.
11.7 No Adverse Change. No material adverse change in condition or
status of the Stations or the Stations Assets, which change is caused by or
arises out of any breach by Seller of any of its representations, warranties,
covenants or agreements hereunder shall have occurred, be threatened or be
reasonably likely to occur.
ARTICLE 12
CONDITIONS OF CLOSING BY SELLER
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
- 24 -
<PAGE> 30
12.1 Representations, Warranties and Covenants.
12.1.1 All representations and warranties of Buyer made in this Agreement or in
any Exhibit, Schedule or document delivered pursuant hereto, shall be true and
complete in all material respects as of the date hereof and on and as of the
Closing Date as if made on and as of that date, except for changes expressly
permitted or contemplated by the terms of this Agreement.
12.1.2 All the terms, covenants and conditions set forth in this
Agreement to be complied with and performed by Buyer on or prior to the Closing
Date shall have been complied with or performed in all material respects.
12.1.3 Seller shall have received a certificate, dated as of the
Closing Date, executed by the President of Buyer, to the effect that: (a) the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date; and (b) Buyer has complied with or performed in all
material respects all terms, covenants and conditions to be complied with or
performed by it on or prior to the Closing Date.
12.2 Governmental Consents. The FCC Initial Approval shall have been
obtained.
12.3 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no other decree or
judgment of any court, agency or other governmental authority shall have been
rendered (and remain in effect) against, any party hereto which: (a) would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms; (b) questions the
validity or legality of any transaction contemplated hereby; (c) seeks to enjoin
any transaction contemplated hereby; or (d) seeks material damages on account of
the consummation of any transaction contemplated hereby.
12.4 Closing Documents. Buyer shall have delivered or caused to be
delivered to Seller, on the Closing Date, the Purchase Price and each of the
documents required to be delivered by it pursuant to Article 14.
ARTICLE 13
TRANSFER TAXES: FEES AND EXPENSES
13.1 Expenses. Except as set forth in Section 13.2 hereof or otherwise
expressly set forth in this Agreement, each party hereto shall be solely
responsible for all costs and expenses incurred by it in connection with the
negotiation, preparation and performance of and compliance with the terms of
this Agreement including, but not limited to, the costs and expenses incurred
pursuant to Article 5 hereof and the fees and disbursements of counsel and other
advisors.
13.2 Specific Charges. All costs of transferring the Stations Assets in
accordance with this Agreement, including recordation, transfer and documentary
taxes and fees, and any excise,
- 25 -
<PAGE> 31
sales or use taxes, shall be shall be paid by Seller. Each party shall pay any
filing or grant fees imposed upon it by any governmental authority the consent
of which or the filing with which is required for the consummation of the
transactions contemplated hereby, with the exception of filing fees of the FCC
which shall be shared equally by Buyer and Seller.
ARTICLE 14
DOCUMENTS TO BE DELIVERED AT CLOSING
14.1 Seller's Documents. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
14.1.1 Certified resolutions of the members of Seller approving the
execution and delivery of this Agreement and authorizing the consummation of the
transactions contemplated hereby;
14.1.2 A certificate of Seller, dated the Closing Date, in the form
described in Section 11.1.3;
14.1.3 Governmental certificates showing that Seller: (a) is duly
organized and existing in the State of Arizona; and (b) has filed all returns,
paid all taxes due thereon and is currently subject to no assessment, each
certified as of a date not more than thirty (30) days before the Closing Date;
14.1.4 Such certificates, bills of sale, general warranty deeds,
assignments, documents of title and other instruments of conveyance, assignment
and transfer (including without limitation any necessary consents to conveyance,
assignment or transfer required to be delivered hereunder), and lien releases,
all in form satisfactory to Buyer and Buyer's counsel, as shall be effective to
vest in Buyer good and marketable title in and to the Stations Assets, free,
clear and unencumbered except for Permitted Encumbrances, if any, as set forth
on Schedule 7.7 and Schedule 7.8.
14.1.5 An Assignment and Assumption Agreement in the form of Exhibit
D effectuating the assignment and assumption of the Assumed Liabilities (the
"Assignment and Assumption Agreement");
14.1.6 The Indemnification Escrow Agreement;
14.1.7 At the time and place of Closing, originals and all copies of
all program, operations, transmission or maintenance logs and all other records
required to be maintained by the FCC with respect to the Stations, including the
public files of the Stations, shall be left at the Stations and thereby
delivered to Buyer;
14.1.8 A written opinion of Seller's corporate counsel in the form
attached as Exhibit E, dated as of the Closing Date;
- 26 -
<PAGE> 32
14.1.9 A written opinion of Seller's FCC counsel in the form
attached as Exhibit F, dated as of the Closing Date; and
14.1.10 Such additional information, materials, agreements,
documents and instruments as Buyer and its counsel may reasonably request in
order to consummate the Closing.
14.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
14.2.1 Certified resolutions of the Board of Directors of Buyer
approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
14.2.2 A certificate of Buyer, dated the Closing Date, in the form
described in Section 12.1.3;
14.2.3 The Assignment and Assumption Agreement;
14.2.4 The Indemnification Escrow Agreement;
14.2.5 A written opinion of Buyer's counsel in the form attached as
Exhibit G, dated as of the Closing Date;
14.2.6 The Purchase Price in accordance with Section 3. 1 hereof;
and
14.2.7 Such additional information, materials, agreement, documents
and instruments as Seller and its counsel may reasonably request in order to
consummate the Closing.
ARTICLE 15
SURVIVAL, INDEMNIFICATION, ETC.
15.1 Survival of Representations, Etc. It is the express intention and
agreement of the parties to this Agreement that all covenants and agreements
(together, "Agreements") and all representations and warranties (together,
"Warranties") made by Buyer and Seller in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at any
time made by or on behalf of Buyer or Seller) as follows:
15.1.1 The Agreements shall survive the Closing for a period from
the Closing Date equal to the statute of limitations for written contracts in
Arizona.
15.1.2 The Warranties in Sections 6.2, 6.5, 7.2, the third sentence
of 7.7, 7.18 and 7.20 shall survive the Closing without limitation.
- 27 -
<PAGE> 33
15.1.3 The Warranties in Section 7.6 or otherwise relating to the
federal, state, local or foreign tax obligations of Seller shall survive the
Closing for the period of the applicable statute of limitations plus any
extensions or waivers granted or imposed with respect thereto.
15.1.4 All other Warranties shall survive for a period of twelve
(12) months from the Closing Date.
15.1.5 The right of any party to recover Damages (as defined in
Section 15.2. 1) pursuant to Section 15.2 shall not be affected by the
expiration of any Warranties as set forth herein, provided that notice of the
existence of any Damages (but not necessarily the fixed amount of any such
Damages) has been given by the indemnified party to the indemnifying party prior
to such expiration.
15.1.6 Notwithstanding any provision hereof to the contrary, there
shall be no contractual time limit in which Buyer or Seller may bring any action
for actual fraud (a "Fraud Action"), regardless of whether such actual fraud
also included a breach of any Agreement or Warranty; provided, however, that any
Fraud Action must be brought within the period of the applicable statute of
limitations plus any extensions or waivers granted or imposed with respect
thereto.
15.2 Indemnification.
15.2.1 Seller shall defend, indemnify and hold harmless Buyer from
and against any and all losses, costs, damages, liabilities and expenses,
including reasonable attorneys' fees and expenses ("Damages") incurred by Buyer
arising out of or related to: (a) any breach of the Warranties given or made by
Seller in this Agreement; (b) any breach of the Agreements made by Seller in
this Agreement; (c) the Retained Liabilities; and (d) any failure of the parties
to comply with any "bulk sales" laws applicable to the transactions contemplated
hereby.
15.2.2 Buyer shall defend, indemnify and hold harmless Seller from
and against any and all Damages incurred by Seller arising out of or related to:
(a) any breach of the Warranties given or made by Buyer in this Agreement; (b)
any breach of the Agreements made by Buyer in this Agreement, and (c) the
Assumed Liabilities.
15.3 Procedures: Third Party and Direct Indemnification Claims. The
indemnified party agrees to give written notice, within thirty (30) days
following its discovery thereof, to the indemnifying party of any demand, suit,
claim or assertion of liability by third parties or other circumstances that
could give rise to an indemnification obligation hereunder against the
indemnifying party (hereinafter collectively "Claims," and individually a
"Claim"), it being understood that the failure to give such notice shall not
affect the indemnified party's right to indemnification and the indemnifying
party's obligation to indemnify as set forth in this Agreement, unless the
indemnifying party's ability to contest, defend or settle with respect to such
Claim is thereby demonstrably and materially prejudiced. The parties also agree
that any claim for Damages arising directly between the parties relating to this
Agreement may be
- 28 -
<PAGE> 34
brought at any time within the applicable survival period specified in Section
15. 1, and that the only notice required with respect thereto shall be as
specified in Section 15.1.5.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.2 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.3.1 The indemnifying party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense or opposition
to such Claim.
15.3.2 In the event that the indemnifying party shall elect not to
undertake such defense or opposition, or within (10) days after notice of any
such Claim from the indemnified party shall fail to defend or oppose, the
indemnified party (upon further written notice to the indemnifying party) shall
have the right to undertake the defense, opposition, compromise or settlement of
such Claim, by counsel or other representatives of its own choosing, on behalf
of and for the account and risk of the indemnifying party (subject to the right
of the indemnifying party to assume defense of or opposition to such Claim at
any time prior to settlement, compromise or final determination thereof).
15.3.3 Anything in this Section 15.3 to the contrary
notwithstanding: (a) the indemnified party shall have the right, at its own cost
and expense, to participate in the defense, opposition, compromise or settlement
of the Claim; (b) the indemnifying party shall not, without the indemnified
party's written consent, settle or compromise any Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim, and (c) in the event that the indemnifying
party undertakes defense of or opposition to any Claim the indemnified party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying party and its
counsel or other representatives concerning such Claim and the indemnifying
party and the indemnified party, and their respective counsel or other
representatives, shall cooperate in good faith with respect to such Claim.
15.3.4 No undertaking of defense or opposition to a Claim shall be
construed as an acknowledgment by such party that it is liable to the party
claiming indemnification with respect to the Claim at issue or other similar
Claims.
15.3.5 No indemnified party shall be entitled to assert a claim for
indemnification under Section 15.2.1(a) or Section 15.2.2(a) unless and then
only to the extent that the aggregate damages for all such claims exceed
$25,000, and the maximum liability of either party for indemnification under
such Subsections shall be $1,000,000, except with respect to claims relating to
title, taxes, License revocation, and environmental matters (which shall not be
so limited) or as otherwise set forth in Sections 16.2, 16.3 and 16.4 hereof.
15.3.6 If at any time Seller makes a distribution of assets to its
members in respect of their ownership or membership interests pursuant to the
terms of Seller's Operating Agreement, in liquidation or otherwise, and Seller
is thereafter financially unable to indemnify
- 29 -
<PAGE> 35
Buyer in accordance with Article 15 hereof, then the members of Seller, on
behalf of Seller, shall severally indemnify Buyer in accordance with Article 15
hereof, but only to the extent of the amount of the distribution of assets
previously made to them.
ARTICLE 16
TERMINATION RIGHTS
16.1 Termination. This Agreement may be terminated at any time prior to
Closing as follows:
16.1.1 Upon the mutual written consent of Buyer and Seller, this
Agreement may be terminated on such terms and conditions as so agreed; or
16.1.2 By written notice of Buyer to Seller if Seller breaches in
any material respect any of its representations or warranties or defaults in any
material respect in the observance or in the due and timely performance of any
of its covenants or agreements herein contained and such breach or default shall
not be cured within thirty (30) days of the date of notice of breach or default
served by Buyer; or
16.1.3 By written notice of Seller to Buyer if Buyer breaches in any
material respect any of its representations or warranties or defaults in any
material respect in the observance or in the due and timely performance of any
of its covenants or agreements herein contained and such breach or default shall
not be cured within thirty (30) days of the date of notice of breach or default
served by Seller; or
16.1.4 By written notice of Buyer to Seller or by Seller to Buyer if
the FCC denies the FCC Application under circumstances in which Seller is not
entitled to the Escrow Deposit;
16.1.5 By written notice of Buyer to Seller, or by Seller to Buyer,
if any court of competent jurisdiction shall have issued an order, decree or
ruling (which then remains in effect) or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, or by Buyer, if any court, legislative body or governmental or
regulatory authority has taken, or is reasonably expected to take, action that
would make the consummation of the transactions contemplated hereby inadvisable
or undesirable as determined by Buyer in its sole discretion reasonably
exercised; or
16.1.6 By written notice of Buyer to Seller, or by Seller to Buyer,
if the Closing shall not have been consummated on or before October 31, 1998.
16.1.7 By written notice of Buyer to Seller if it shall become
apparent in both Seller's and Buyer's judgment reasonably exercised that any
condition to Buyer's obligation to close as set forth in Article 11 hereof will
not be satisfied on or before October 31, 1998.
16.1.8 By written notice of Buyer to Seller under the conditions set
forth in Section 9.2 hereof.
- 30 -
<PAGE> 36
Notwithstanding the foregoing, no party hereto may effect a termination
hereof if such party is in material default or breach of this Agreement.
16.2 Liability. Except as set forth in Section 16.4 below, the
termination of this Agreement under Section 16.1 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
16.3 Monetary Damages, Specific Performance and Other Remedies. The
parties recognize that if Seller refuses to perform under the provisions of this
Agreement, monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement in addition to any other remedies, including but not
limited to monetary damages, that may be available to it. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law. In the event of a default by Seller, which
results in the filing of a lawsuit for damages, specific performance, or other
remedy, Buyer shall be entitled to reimbursement by Seller of reasonable legal
fees and expenses incurred by Buyer.
16.4 Seller's Liquidated Damages. As more fully described in the
Deposit Escrow Agreement, in the event this Agreement is terminated because of
Buyer's material breach of this Agreement, and all other conditions to Closing
are at such time satisfied or waived (other than such conditions as can
reasonably be satisfied by Closing), then the Escrow Deposit shall be delivered
to Seller, and the proceeds thereof shall constitute liquidated damages. It is
understood and agreed that such liquidated damages amount represents Buyer's and
Seller's reasonable estimate of actual damages and does not constitute a
penalty. Recovery of liquidated damages shall be the sole and exclusive remedy
of Seller against Buyer for failing to consummate this Agreement as a result of
Buyer's material breach hereof, and shall be applicable regardless of the actual
amount of damages sustained and all other remedies are deemed waived by Seller.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Risk of Loss. The risk of loss or damage to any of the Stations
Assets prior to the Closing Date, shall be upon Seller. Seller shall repair,
replace and restore any such damaged or lost Stations Asset to its prior
condition as soon as possible and in no event later than forty-five (45) days
following the loss or damage; provided, however, that in the event any such loss
or damage of the Stations Assets exists on the Closing Date, then
notwithstanding any other provision hereto, Buyer at its option may extend the
Closing Date for a period of up to sixty (60) days until such time as Seller
shall have repaired, replaced and restored any such damaged or lost Stations
Asset to its prior condition or deduct from the Purchase Price that amount which
Buyer and Seller reasonably determine to be sufficient to cover any such loss or
damage and close the transaction on the Closing Date.
- 31 -
<PAGE> 37
17.2 Certain Interpretive Matters and Definitions. Unless the context
otherwise requires:
(a) all references to Sections, Articles, Schedules or Exhibits are
to Sections, Articles, Schedules or Exhibits of or to this Agreement; (b) each
term defined in this Agreement has the meaning assigned to it; (c) each
accounting term not otherwise defined in this Agreement has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
on the date hereof, (d) "or" is disjunctive but not necessarily exclusive; (e)
words in the singular include the plural and vice versa; (f) the term
"Affiliate" has the meaning given it in Rule 12b-2 of Regulation 12B under the
Securities Exchange Act of 1934, as amended; and (g) all references to "$" or
dollar amounts will be to lawful currency of the United States of America.
17.3 Further Assurances. After the Closing, Seller shall from time to
time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order more effectively to
consummate the transactions contemplated hereby to vest in Buyer good and
marketable title to the Stations Assets being transferred hereunder in
accordance with the terms hereof, and Buyer shall from time to time, at the
request of and without further cost or expense to Seller, execute and deliver
such other instruments and take such other actions as may reasonably be
requested in order more effectively to relieve Seller of any obligations being
assumed by Buyer hereunder.
17.4 Preservation of Records. Subject to Section 10.1 hereof, Buyer
hereby agrees that it will preserve and make available to Seller and its
attorneys and accountants (including the right to inspect and copy at Seller's
cost), during normal business hours and upon reasonable advance notice, for
three (3) years after the Closing Date, such of the books, records, files,
correspondence, memoranda and other documents referred pursuant to this
Agreement as Seller may reasonably require for the preparation of tax reports
and returns, the preparation of financial statements, or the preparation of a
response to any claim by a third party against Seller.
17.5 Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Seller may not voluntarily or involuntarily assign its
interest under this Agreement without the prior written consent of Buyer. Buyer
shall have the right to assign and/or delegate all or any portion of its rights
and obligations under this Agreement to a party qualified to be a FCC licensee,
including without limitation, assignments as collateral, provided that no such
assignment and/or delegation shall relieve Buyer of its obligations hereunder in
the event that its assignee fails to perform the obligations delegated and
further provided that no such assignment and/or delegation extends or delays FCC
approval of the assignment of the FCC Licenses as contemplated hereunder. All
covenants, agreements, statements, representations, warranties and indemnities
in this Agreement by and on behalf of any of the parties hereto shall bind and
inure to the benefit of their respective successors and permitted assigns of the
parties hereto. In the event Buyer finds it necessary or is required to provide
to a third party a collateral assignment of the Buyer's interest in this
Agreement and/or any related documents, Seller shall cooperate with the Buyer
and any third party requesting such assignment including but not limited to
signing a consent and acknowledgment of such assignment.
- 32 -
<PAGE> 38
17.6 Amendments. No amendment, waiver of compliance with any provision
or condition hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
17.7 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.8 Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of Arizona, without giving effect to
the choice of law provisions thereof.
17.9 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 Seller, by notifying Buyer, and in the case of
Buyer, by notifying Seller:
To Seller: David F. Peschau, Member
Continental Radio Broadcasting, L.L.C.
W5733 Sherwood Drive
La Crosse, WI 54601
Fax: (608) 788-6191
Copy to: OSBORN MALEDON, P.A.
2929 North Central Avenue
Suite 2100
Phoenix, Arizona 85012
Attn: Michelle M. Matiski, Esq.
Fax: (602) 640-6060
To Buyer: Terry S. Jacobs, Chairman
Regent Broadcasting of
Kingman, Inc.
50 East RiverCenter Blvd.
Suite 180
Covington, KY 41011
Fax: (606) 292-0352
- 33 -
<PAGE> 39
Copy to: STRAUSS & TROY
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Attn: Alan C. Rosser, Esq.
Fax: (513) 241-8289
17.10 Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile, each of which will be deemed an original and all
of which together will constitute one and the same instrument.
17.11 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any person or entity
other than the par-ties hereto and their successors or permitted assigns any
rights or remedies under or by reason of this Agreement.
17.12 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
17.13 Entire Agreement. This Agreement and the schedules and exhibits
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
REGENT BROADCASTING OF
KINGMAN, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CONTINENTAL RADIO BROADCASTING,
L.L.C.
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
- 34 -
<PAGE> 40
AGREEMENT OF MEMBERS OF SELLER
The undersigned, constituting all of the Members of Seller, by their
signatures below, do acknowledge, confirm and evidence their agreement with the
provisions of Section 15.3.6 of this Agreement.
Date: , 1997
--------- ----------------------------------------
Print Name:
------------------------------
Date: , 1997
--------- ----------------------------------------
Print Name:
------------------------------
Date: , 1997
--------- ----------------------------------------
Print Name:
------------------------------
Date: , 1997
--------- ----------------------------------------
Print Name:
------------------------------
- 35 -
<PAGE> 1
Exhibit 2(e)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement made and entered into this 16th day of
June, 1997 by and among REGENT COMMUNICATIONS, INC., a Delaware corporation
("Buyer"), and those individuals listed on the signature page(s) hereto
(collectively, "Sellers"), who constitute all of the shareholders of The Park
Lane Group, a California corporation (the "Company").
WHEREAS, Sellers are the owners and holders of all of the issued and
outstanding shares of capital stock of the Company; and
WHEREAS, the Company, pursuant to authorizations duly granted and
issued by the Federal Communications Commission (hereinafter called the "FCC"),
owns and operates the radio stations set forth on Schedule 4.08, respectively
(the "Stations"); and
WHEREAS, Sellers and Buyer have reached an understanding with respect
to the sale by Sellers and the purchase by Buyer of all of the issued and
outstanding shares of capital stock of Company, subject to and upon the terms,
provisions and conditions contained herein; and
WHEREAS, consummation of this transaction is subject to the prior
approval of the FCC.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, Sellers and Buyer hereby agree as
follows:
ARTICLE I
Purchase and Sale
1.01 Sale of Stock of Company. Subject to and upon the terms,
provisions and conditions contained in this Agreement, Sellers shall sell,
assign and transfer to Buyer, free and clear of all security interests, liens,
encumbrances, equities and claims, all of Sellers' right, title and interest in
and to all shares of all classes of common stock and preferred stock of the
Company, which are described on Schedule 1.01 and which constitute all of the
Company's issued and outstanding shares ("Company Stock"). Buyer's obligation to
purchase the shares is contingent upon delivery to Buyer of certificates
representing all of the shares of Company Stock at the Closing (as hereinafter
defined). Sellers shall deliver to Buyer such certificates representing the
Company Stock duly endorsed in appropriate form for transfer, with signatures
guaranteed and any necessary stock transfer stamps affixed thereto.
1.02 Basic Purchase Price. The purchase price payable to Sellers
for the Company Stock shall be Twenty-Three Million Five Hundred Thousand
Dollars ($23,500,000.00) (the "Basic Purchase Price"), to be paid in immediately
available federal funds, subject to adjustment as provided in Section 1.03.
<PAGE> 2
1.03 Adjustment of Basic Purchase Price. At the Closing, a
computation shall be compiled by the Company setting forth as of the Closing
Date the amount of the Company's Cash (as hereinafter defined) and all known
Liabilities of Company as set forth below ("Closing Statement"). The Basic
Purchase Price 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
purchase price determined after making the foregoing adjustments to the Basic
Purchase Price is herein referred to as the "Closing Purchase Price."
As used herein, the term "Cash" shall mean cash on hand and in banks,
certificates of deposit, treasury bills and marketable securities and other cash
equivalents, accounts receivable (less reserves) and any other current asset
listed on the Company's balance sheet.
As used herein, the term "Liabilities" shall mean at the Closing Date
the amount of all the liabilities of the Company that would be recorded on a
balance sheet or disclosed in the notes to the financial statements at 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 Section 4.16 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 would be
included as Liabilities of the Company. For purposes of the determination of
Liabilities, all expenses relating to the Company and arising from the conduct
of the Company's business and operation of the Stations (including without
limitation such items as taxes, license fees, utilities, and rents) shall be
prorated between Buyer and Sellers in accordance with generally accepted
accounting principles as of 11:59 p.m. Pacific time, on the date immediately
preceding the Closing Date.
Within ninety (90) days after the Closing Date, representatives of
Coopers & Lybrand's office in Cincinnati, Ohio, shall examine the computation of
the Closing Purchase Price in accordance with this Section 1.03, including an
examination of such of the Company's books and records as are deemed necessary
or appropriate, to verify the Company's Cash and Liabilities as of the Closing
Date in accordance with auditing standards approved and adopted by the American
Institute of Certified Public Accountants and otherwise in accordance with
generally accepted accounting principles. Based upon such examination, they
shall prepare a report setting forth their computation of the Purchase Price
pursuant to this Section 1.03 ("Closing Report"), and upon completion of such
Closing Report, Coopers & Lybrand shall deliver same to Sellers' Representative
and Buyer. If either Buyer or Sellers' Representative shall disagree with the
Closing Report, such parties shall, within fifteen (15) days after receipt of
such Closing Report, give written notice to the other and Coopers & Lybrand of
its objection to the Closing Report, specifying each item or computation to
which objection is taken and the reason for such objection. In such event,
Sellers' Representative and Buyer shall use their best efforts to resolve such
objections and to agree upon the Closing Report through negotiation. If Sellers'
Representative and Buyer are unable to reconcile their differences and to
mutually agree upon the Closing Report, within thirty (30) days after such
written notice shall have been given as aforesaid, Sellers' Representative and
Buyer shall designate a mutually agreeable independent national accounting firm,
or if such firm cannot act, another national accounting firm (which has not been
retained by either Sellers' Representative, the
2
<PAGE> 3
Company or Buyer within the past ten (10) years) mutually acceptable to such
parties to act as arbitrator ("Arbitrator"). The Arbitrator shall determine all
issues in disagreement and shall make such adjustments, if any, to the items and
computations in the Closing Report as are necessitated by such determinations,
and shall within thirty (30) days after their designation as Arbitrator deliver
to Sellers' Representative and Buyer a written statement setting forth all
adjustments made by the Arbitrator to the Closing Report. Such Closing Report
shall be employed to determine any further adjustments required to the purchase
price pursuant to this Section 1.03 ("Final Purchase Price"), and such Final
Purchase Price shall be final, conclusive and binding upon all parties to this
Agreement. The fees and expenses of Coopers & Lybrand and the Arbitrator in
connection with the making of the Closing Report and the determinations herein
provided for to resolve any differences over the Closing Report shall be paid
one-half by Sellers and one-half by Buyer.
Within five (5) business days after the determination of the Final
Purchase Price, any adjustment to the Closing Report required thereby shall be
paid by Sellers to Buyer or by Buyer to Sellers, as the case may be, in
immediately available federal funds by wire transfer.
1.04 Escrow Deposit. Buyer has previously deposited with the
Company a non-refundable deposit of Twenty-Five Thousand Dollars
($25,000.00)(the "Cash Deposit"). Contemporaneously with the execution of this
Agreement, Buyer has also delivered to Star Media ("Escrow Agent") an
irrevocable, stand-by letter of credit in the amount of One Million One Hundred
Seventy-Five Thousand Dollars ($1,175,000.00) (the "Letter of Credit"). The
Letter of Credit shall be held and applied by the Escrow Agent in accordance
with the terms of a Deposit Escrow Agreement in the form of Exhibit A attached
hereto (the "Deposit Escrow Agreement"), executed by the parties thereto
contemporaneously with the execution of this Agreement. As more fully described
in the Deposit Escrow Agreement:
(a) in the event this Agreement is terminated solely
because of Buyer's material breach of this Agreement and all other conditions to
Closing are at such time satisfied or waived (other than such conditions as can
readily be satisfied by the Closing), the Letter of Credit shall be delivered to
Sellers (who may exercise their rights to draw on the Letter of Credit) as their
sole remedy and as liquidated damages as provided in Section 13.04 hereof for
Buyer's material breach of this Agreement; and
(b) in the event this Agreement is terminated under any
circumstances other than those set forth in Section 1.04(a) above, the Letter of
Credit shall be delivered to Buyer.
1.05 Payment of Purchase Price. At the Closing, the Cash Deposit
shall be applied to the Closing Purchase Price, and the Letter of Credit shall
be delivered to Buyer. The balance of the Closing Purchase Price shall be paid
by wire transfer of immediately available funds, as follows:
(a) Two Million Dollars ($2,000,000.00) to the Escrow
Agent, to be held, administered and released in accordance with the terms of an
Indemnification Escrow Agreement to be executed by Sellers, Buyer and the Escrow
Agent at the Closing in the form of Exhibit B attached hereto (the
"Indemnification Escrow Agreement"), which funds shall be held in escrow until
June 30, 1999 or until thirty (30) days after such time as Buyer's outside
public accounting
3
<PAGE> 4
firm has released its annual audit of the financial statements applicable to the
Company and the Stations on a consolidated basis for the period ending December
31, 1998, whichever is earlier (subject to partial release earlier under certain
conditions as specified in the Indemnification Escrow Agreement), and will be
used to satisfy indemnification claims of Buyer pursuant to Section 12.02
hereof; and
(b) the balance to Sellers in such amounts and to persons
as Sellers' Representative may direct in writing.
1.06 Closing. Except as otherwise mutually agreed upon by Buyer and
Sellers, the consummation of the transactions contemplated herein (the
"Closing") shall occur within five (5) business days after the later to occur of
(a) the satisfaction or waiver of each condition to closing contained herein,
other than such conditions as are reasonably anticipated to be satisfied at
Closing (provided that each party hereto shall use its reasonable best efforts
to cause each condition to closing to be satisfied so that the Closing may occur
at the earliest possible date), and (b) the issuance of the Final Order (as
defined below), or such other date as may be mutually agreed by the parties
hereto (the "Closing Date"); provided, however, that Buyer may in its sole
discretion waive the requirement that a Final Order be issued and elect (subject
to clause (a) above) to close at any time (upon not less than five (5) business
days' notice to Sellers) after the release of initial FCC approval on public
notice that it has consented to the transactions contemplated hereby (the
"Initial Approval"). For purposes of the Agreement, "Final Order" (and "Final")
means an order or grant by the FCC which is no longer subject to timely
reconsideration or review by the FCC or a court of competent jurisdiction and
pursuant to which the FCC consents, as the case may be, to the transactions
contemplated by this Agreement, such order or grant being without the imposition
of any conditions adverse to Buyer or any Affiliate (as hereinafter defined) of
Buyer with respect to the transfer of control of the FCC Licenses to Buyer or
the continued operation by Buyer of the Stations. In the event that the parties
close before the Initial Approval has become a Final Order, the parties shall
enter into a mutually acceptable Unwind Agreement. The Closing shall be held in
the offices of Strauss & Troy in Cincinnati, Ohio, or at such place and in such
manner as the parties hereto may agree.
ARTICLE II
Governmental Consents
2.01 FCC Consent. It is specifically understood and agreed by Buyer
and Sellers that the Closing and the transfer of control of the Stations
Licenses and the transfer of the Company Stock are expressly conditioned on and
are subject to the prior consent and approval of the FCC without the imposition
of any conditions adverse to Buyer or any Affiliate of Buyer (the "FCC
Consent").
2.02 FCC Application. Within five (5) business days after the
execution of this Agreement, Buyer and Sellers shall file an application with
the FCC for the FCC Consent (the "FCC Application"). Buyer and Sellers shall
prosecute the FCC Application with all reasonable
4
<PAGE> 5
diligence and otherwise use their best efforts to obtain the FCC Consent as
expeditiously as practicable (but neither Buyer nor Sellers shall have any
obligation to satisfy complainants or the FCC by taking any steps which would
have a material adverse effect upon Buyer or Sellers or upon any of their
respective Affiliates). If the FCC Consent imposes any condition on Buyer or
Sellers or any of their respective Affiliates, such party shall use its best
efforts to comply with such condition; provided, however, that neither Buyer nor
Sellers shall be required hereunder to comply with any condition that would have
a material adverse effect upon it or any of its Affiliates. If reconsideration
or judicial review is sought with respect to the FCC Consent, the party affected
shall vigorously oppose such efforts for reconsideration or judicial review;
provided, however, that nothing herein shall be construed to limit either
party's right to terminate this Agreement pursuant to Article 13.01 hereof.
ARTICLE III
Representations and Warranties of Buyer
Buyer hereby makes the following representations and warranties to
Sellers, each of which is true and correct on the date hereof, shall survive the
Closing and shall be unaffected by any investigation heretofore or hereafter
made by Sellers:
3.01 Standing. Buyer is duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own and lease its properties and carry on its
business as now being conducted by it.
3.02 Authority. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of Buyer and this
Agreement is a valid and binding obligation of Buyer.
3.03 Purchase of Company Stock for Investment. Buyer is acquiring
the Company Stock for its own account for investment and with no view to any
distribution or resale of all or any part thereof.
3.04 Qualification. Buyer has no knowledge of any facts which
would, under present law (including the Communications Act of 1934, as amended),
and present rules, regulations, practices and policies of the FCC, disqualify
Buyer as the transferee of the licenses, permits and authorizations listed on
Schedule 4.08 hereto, or as an owner and/or operator of the Stations, and Buyer
will not take, or unreasonably fail to take, any action which Buyer knows or has
reason to know would cause such disqualification. Should Buyer become aware of
any such facts, it will promptly notify Sellers in writing thereof and use its
best efforts to prevent any such disqualification.
3.05 Absence of Conflicting Agreements or Required Consents. Except
as set forth in Article II hereof with respect to governmental consents, the
execution, delivery and performance of
5
<PAGE> 6
this Agreement by Buyer: (a) do not conflict with the provisions of the articles
of incorporation or by-laws of Buyer; (b) do not require the consent of any
third party not affiliated with Buyer; (c) will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Buyer is a party; and (d) will not, either alone
or with the giving of notice or the passage of time, or both, conflict with,
constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any agreement,
instrument, license or permit to which Buyer is now subject.
3.06 Adequate Funds. Buyer is in receipt of written financing
proposals adequate in amount to finance the purchase of the Company Stock.
ARTICLE IV
Representations and Warranties of Sellers
Sellers, jointly and severally, make the following representations and
warranties to Buyer, each of which is true and correct on the date hereof, shall
survive the Closing and shall be unaffected by any investigation heretofore or
hereafter made by Buyer:
4.01 Corporate Standing. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite corporate power and authority to own or lease its
properties and to carry on its business as now being conducted. Company is not
qualified or required to be qualified in any other jurisdiction in order to own
or lease its properties or to carry on its business as now being conducted.
4.02 Subsidiaries and Investments. Set forth in Schedule 4.02 is a
list of each of the Company's Subsidiaries (the "Subsidiaries" and individually
a "Subsidiary"). Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation (as set forth in Schedule 4.02), and has full corporate power to
own or lease all of its property and to carry on its business as it is now being
conducted. Also set forth in Schedule 4.02 is a list of jurisdictions in which
each Subsidiary is qualified as a foreign corporation. Such jurisdictions are
the only jurisdictions in which the ownership or leasing of property by each
Subsidiary or the conduct of its business requires it to be so qualified. All of
the outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and except as
set forth on Schedule 4.02, are owned, of record and beneficially, by the
Company, free and clear of all liens, encumbrances, equities, options or claims
whatsoever. No Subsidiary has outstanding any other equity securities or
securities options, warrants or rights of any kind, convertible into,
exchangeable for, or otherwise entitling any person to acquire, equity
securities of such Subsidiary. Neither the Company nor any Subsidiary owns,
directly or indirectly, any capital stock or other equity or ownership or
proprietary interest in any other corporation, partnership, association, trust,
joint venture or other entity. Since the Financial Statement Date, as defined
below, no such investment securities of any kind have been acquired or disposed
of by the Company or any Subsidiary. Where meaningful, all warranties,
representations and covenants
6
<PAGE> 7
relating to the Company hereunder shall apply equally to each of the
Subsidiaries discussed in this section, as if any reference to the Company is a
reference to any or each Subsidiary as the context permits. The businesses
carried on by the Company have not been conducted through any other direct or
indirect subsidiary or entity related to any Seller other than a Subsidiary.
4.03 Charter and By-Laws. Sellers have delivered to Buyer true and
complete copies of the Articles of Incorporation and By-Laws of Company as in
effect on the date of delivery thereof. There has been no change in the Articles
of Incorporation or By-Laws of the Company since the delivery of copies thereof
to Buyer. No provision of the Articles of Incorporation or the By-Laws of the
Company or of any agreement, instrument or undertaking to which the Company is a
party or by which the Company is bound, has been or will be violated by the
execution and delivery by Sellers of this Agreement or the performance or
satisfaction of any obligation or condition herein contained on their part to be
performed or satisfied. The Company is not now nor on the Closing Date will it
be in default in any material respect in the performance, observance or
fulfillment of any of the terms or conditions of its Articles of Incorporation
or By-Laws. Sellers have delivered to Buyer true and complete copies of the
stock records and the minute book of the Company for inspection and the stock
records truly, accurately and fully account for all transactions in the
Company's capital stock, and the minute book contains the up-to-date, complete,
and accurate minutes of the actions of the Company's Board of Directors and
stockholders from its inception.
4.04 Directors and Officers; Compensation; Banks. Schedule 4.04
represents a true and complete list showing as of the date of delivery thereof
the following:
(a) The names of all of the directors and officers of the
Company;
(b) A payroll roster of the Company for the most recent
payroll period ended prior to the date of delivery thereof showing the names,
titles, and annualized current rate of pay for each person entitled to receive
compensation from the Company;
(c) Each bank account and safety deposit box of the
Company, all authorized signatories to such account and all persons having
access to such safety deposit box; and
(d) The names of all persons, if any, holding a power of
attorney from the Company. The information set forth in each such list is true
and accurate on the date hereof. Each officer and director or any other person
holding authorized signatory powers of the Company will submit his or her
written resignation as such to Buyer on the Closing Date, effective with the
delivery thereof.
7
<PAGE> 8
4.05 Capitalization; Company Stock.
(a) The authorized capital stock of the Company (the "Capital
Stock") consists of (i) 15,000,000 shares of authorized Class A Common Stock, of
which 758,944 shares are issued and outstanding, (ii) 3,238,828 shares of
authorized Class B Common Stock, of which 3,238,821 shares are issued and
outstanding, (iii) 1,350,000 shares of authorized Class C Common Stock, of which
1,202,100 shares are issued and outstanding, (iv) 6,117,945 shares of authorized
Series A Preferred Stock, of which 5,595,875 shares are issued and outstanding,
(v) 43,000 shares of authorized Series B Preferred Stock, of which 42,805 shares
are issued and outstanding, and (vi) 13,500 shares of authorized Series C
Preferred Stock, of which 12,021 shares are issued and outstanding. The Capital
Stock has a par value of $.01 per share. All issued and outstanding shares of
Capital Stock constitute the Company Stock. All shares of Company Stock are duly
authorized, validly issued in compliance with all applicable laws, fully paid
and non-assessable and not subject to preemptive rights created by statute, the
Articles of Incorporation or Bylaws of the Company or any agreement to which the
Company is a party or by which it is bound. Except as set forth on Schedule
4.05, the Company Stock is owned by Sellers, free and clear of all security
interests, liens, pledges, encumbrances, agreements, charges, rights of
rescission or claims of any kind (including without limitation any restrictions
on the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership ("Encumbrances")) by or on the part of any person, firm
or corporation. Sellers have good and marketable title to the stock owned by
them with full right to enter into this Agreement and to sell, assign, transfer
and deliver the same to Buyer. Schedule 4.05 sets forth the addresses of the
record and beneficial owners of the Company Stock, and the number of shares
owned by each Seller. Sellers are the record and beneficial owners of all shares
of Company Stock and the transfer thereof from the Sellers to Buyer will vest
Buyer with good and marketable title, free and clear of all Encumbrances to all
of the issued and outstanding shares of capital stock of Company.
(b) The Company has reserved 1,800,000 shares of Common Stock for
issuance to employees and consultants pursuant to the 1992 Stock Option Plan
(the "Plan"), of which 1,555,000 shares are subject to outstanding, unexercised
options (the "Options") and 232,882 shares remain available for future grant.
The Company has outstanding warrants to purchase 522,070 shares of Series A
Preferred Stock (the "Warrants"), and the Company has reserved 522,070 shares of
Series A Preferred Stock and 522,070 shares of Series A Common for exercise of
the warrants and conversion thereto. Schedule 4.05 sets forth for each
outstanding Company Option or Warrant the name of the holder of such Option or
Warrant, the domicile address of such holder, the number of shares of Common
Stock subject to such Option, the number of Series A Preferred Stock subject to
the Warrant, the exercise price of such Option or Warrant and the vesting
schedule of such Option or Warrant, including the extent vested to date and
whether the exercisability of such Option or Warrant will be accelerated and
become exercisable by reason of the transactions contemplated by this Agreement.
Each Option and Warrant has been duly authorized and validly issued in
compliance with all applicable laws. Except for the Company Options and Warrants
described in Schedule 4.05, there are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral, to which the
Company is a party or by which it is bound obligating the Company to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
8
<PAGE> 9
repurchased or redeemed, any shares of the capital stock of the Company or
obligating the Company to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. The holders of Company Options and Warrants have been
or will be given, or shall have properly waived, any required notice prior to
the Closing Date, and all such rights will be validly terminated at or prior to
the Closing. Otherwise, there is outstanding no vote, plan, or pending proposal
for any redemption of stock of Company or merger or consolidation of Company
with or into any other corporation. Except for legends disclosed on Schedule
4.05, no legend or other reference to any purported Encumbrances appears upon
any certificate representing shares of Company Stock. The delivery of the
certificates to Buyer provided in Section 1.01 of this Agreement and the payment
to Sellers provided in Section 1.05 of this Agreement will result in Buyer's
immediate acquisition of record and sole beneficial ownership of all the shares
of Company Stock and rights to acquire or receive Capital Stock, free and clear
of all Encumbrances.
4.06 Authorization and Binding Obligation. Sellers have the power
and authority, and have taken all necessary and proper action to enter into and
perform this Agreement and to consummate the actions contemplated hereby.
Sellers have agreed among themselves as to the method of allocation of the
Closing and Final Purchase Price and authorize Buyer to rely upon the directive
of Sellers' Representative pursuant to Section 1.05(b), subject to any
adjustment payments pursuant to Section 1.03. This Agreement has been duly
authorized, executed and delivered by Sellers and constitutes the legal, valid
and binding obligation of Sellers.
4.07 Absence of Conflicting Agreements or Required Consents. Except
as set forth in Article II with respect to governmental consents and in Schedule
4.07 with respect to consents required in connection with the assignment of
certain material Contracts, the execution, delivery and performance of this
Agreement by Sellers: (a) do not require the consent of any third party
(including, without limitation, the consent of any governmental, regulatory,
administrative or similar authority); (b) will not conflict with, result in a
breach of, or constitute a violation of or default under, the provisions of the
Company's articles of incorporation or bylaws (or other charter or
organizational documents), or any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority to which the
Company or any Seller is a party or by which the Company or any Seller is bound;
(c) will not either alone or with the giving of notice or the passage of time,
or both, conflict with, constitute grounds for termination of or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any Contract, agreement, instrument, license or permit to which the Company is
now subject; and (d) will not result in the creation of any lien, charge or
encumbrance on any of the Company Stock or Stations Assets.
4.08 Government Authorizations.
(a) Schedule 4.08 hereto contains a true and complete
list of the Stations 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). Sellers have
delivered to Buyer true and complete
9
<PAGE> 10
copies of the Stations Licenses and the other licenses, permits and
authorizations listed in Schedule 4.08, including any and all amendments and
other modifications thereto.
(b) As specified in Schedule 4.08, the Company is the
authorized legal holder of the Stations Licenses and other licenses, permits and
authorizations listed in Schedule 4.08. None of the Stations Licenses and other
licenses, permits and authorizations listed in Schedule 4.08 is subject to any
restrictions or conditions which would materially limit the full operation of
the Stations as now operated.
(c) Except for matters affecting the radio broadcast
industry generally, there are no complaints, petitions to deny, informal
objections, or adjudication proceedings pending or, to the best of Sellers'
knowledge, 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. The Stations Licenses and the other licenses, permits and
authorizations listed in Schedule 4.08 are in good standing, are in full force
and effect and are unimpaired by any act or omission of the Company or its
shareholders, officers, directors or employees. The operations of the Stations
are in accordance with the Stations Licenses and the underlying construction
permits and the other licenses, permits and authorizations listed in Schedule
4.08. No proceedings are pending or, to the best of Sellers' knowledge,
threatened, and to the best of Sellers' knowledge there has not been any act or
omission of the Company or any of its officers, directors, shareholders or
employees, which reasonably may result in the revocation, modification,
non-renewal or suspension of any of the Stations Licenses or the other licenses,
permits and authorizations listed in Schedule 4.08, the denial of any pending
applications, the issuance of any cease and desist order, the imposition of any
administrative sanctions by the FCC or any other governmental or regulatory
authority with respect to the Stations Licenses or the other licenses, permits
and authorizations listed in Schedule 4.08 or which may affect Buyer's ability
to continue to operate the Stations as they are currently operated.
(d) Each Station is operating with the maximum facilities
specified in the respective Station License.
(e) To the best of Sellers' knowledge: (i) none of the
Stations is causing objectionable interference to the transmissions of any other
broadcast station or communications facility nor has 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 any Station or the public's reception of such
transmissions.
(f) Sellers have no reason to believe that the Stations
Licenses and the other licenses, permits, or authorizations listed in Schedule
4.08 will not be renewed in their ordinary course.
(g) All reports, forms, and statements required to be
filed by the Company with the FCC with respect to the Stations since the grant
of the last renewals of the Stations Licenses have been filed and are
substantially complete and accurate.
10
<PAGE> 11
(h) The operation of the Stations and all of the Stations
Assets are in compliance in all respects with ANSI Radiation Standards C95.1 -
1992.
4.09 Compliance with FCC Regulations. The operation of the Stations
and all of the Stations Assets are in compliance in all 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, 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 to the best
of Sellers' knowledge, there are no filed claims to the contrary.
4.10 Taxes. Except as set forth on Schedule 4.10, the Company 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 Schedule 4.10 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. Sellers have delivered to Buyer true and
complete copies of all federal, state and local tax returns of the Company as
filed for the years ended December 31, 1992, 1993, 1994, and 1995, and prior to
the Closing Date will deliver to Buyer true and complete copies of all federal,
state and local tax returns of the Company as filed for the year ended December
31, 1996. The Company 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 the Company has no liability for taxes in excess of the amounts so
paid. All of the tax liabilities of the Company 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 the Company
or in the Financial Statements. The Company 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 the Company 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 the Company which
in any event could adversely affect any of the Stations Assets or the operation
of the Stations. Except as set forth on Schedule 4.10, the Company has not been
advised that any of its tax returns, federal, state, local or foreign, have been
or are being audited. The Company 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
11
<PAGE> 12
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.
4.11 Personal Property. Schedule 4.11 hereto contains a list of all
material items of tangible personal property owned by the Company and used in
the conduct of the business and operations of the Stations. Schedule 4.11 also
separately lists any material tangible personal property leased by the Company
pursuant to leases included within the Contracts. The Company has good and
marketable title to all of the items of tangible personal property which are
included in the Stations Assets (other than those subject to lease) and none of
such Stations 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 those set forth in the notes to the Financial Statements,
for liens for taxes not yet due and payable, and liens or encumbrances described
in Schedule 4.11. The properties listed in Schedule 4.11, along with those
properties subject to leases which are included among the Contracts, constitute
all material tangible personal property necessary to operate the Stations as the
same are now being operated. Except as set forth in Schedule 4.11, all items of
tangible personal property included in the Stations 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.
4.12 Real Property.
(a) Schedule 4.12 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 the Company 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. The Company has good and marketable title in fee simple to all the Real
Estate specified as owned by it in Schedule 4.12, 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 Schedule 4.11 or 4.12. With respect to each of the buildings,
structures and appurtenances situated on the Real Estate, the Company 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. No condemnation proceeding is pending or threatened which would
preclude or impair the continued use of any such property by the Company for the
purposes for which it is currently used.
(b) To the best of Sellers' knowledge, except as
described in Schedule 4.12, 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
12
<PAGE> 13
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.
4.13 Contracts. Schedule 4.13 lists all material Contracts to which
the Company is a party, or which are binding on the Company, as of the date of
this Agreement. On or before August 1, 1997, Sellers shall supplement Schedule
4.13 with a listing of all barter and trade agreements (contracts for the sale
of broadcast time or advertising on the Stations in exchange for merchandise or
services) involving a barter payable or barter receivable in excess of $1,000 as
of the date of this Agreement, specifying for each the amount of the barter
payable or barter receivable, whichever is applicable. All of such barter and
trade agreements are preemptible for cash sales and none is subject to fixed
positions (except for those contracts which provide for the delivery of
programming to the Stations in return for barter advertising). Sellers have
delivered to Buyer true and complete copies of all written material Contracts
and true and complete memoranda of all oral material Contracts, including any
and all amendments and other modifications thereto. All of the material
Contracts are in full force and effect and are valid, binding and enforceable in
accordance with their respective terms, except as limited by laws affecting
creditors' rights or equitable principles generally. The Company has complied in
all respects with all material Contracts and is not in default beyond any
applicable grace periods, and, to the best of Sellers' knowledge, no other
contracting party is in default under any of the terms thereof. For purposes of
this Agreement, a Contract shall be deemed material if its remaining term is
more than one year in length, it involves cash expenditures in excess of
$25,000, if it is a capitalized lease, or if its non-existence would adversely
affect rights of occupancy or access to leased or owned real estate or building
space. Except as designated by the reference to particular Contracts listed on
Schedule 4.13 by a letter in parenthesis which corresponds to the applicable
subpart below, the Company is not a party (in its own name or as successor in
interest) to any written or oral:
(a) contracts or commitments involving employment, profit
sharing, pension, bonus, percentage compensation, incentive compensation,
deferred compensation, employee benefits, stock options or warrants or employee
stock purchase;
(b) leases or licenses with respect to any property, real
or personal, as lessor, lessee, licensor, or licensee, except leases of personal
property with the Company as lessee having a value of less than $5,000 per annum
in the aggregate;
(c) agreement, contract or commitment for any capital
expenditures;
(d) agreement, indenture or other instrument which
contains restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock;
(e) agreement, contract or commitment limiting the
freedom of the Company to engage in any line of business or to cooperate with
any other person or entity;
13
<PAGE> 14
(f) contract or option for the purchase of any real or
personal property other than in the ordinary course of business;
(g) letter of credit or guarantee agreement in respect of
any indebtedness or obligation of any other person or entity (other than the
endorsement of negotiable instruments for collection in the ordinary course of
business);
(h) contract or commitment to acquire investment
securities or to extend credit;
(i) agreement, contract or commitment which might
reasonably be expected to have a potential adverse impact on the business or
operations or the Company; or
(j) any other contract for borrowed money either as
borrower or lender.
4.14 Environmental. Except as set forth in Schedule 4.14, the
Company has complied in all material respects 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. 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. Sections 9601 et seq., Toxic Substances
Control Act. 15 U.S.C. Sections 2601 et seq., the Resource Conservation
and Recovery Act of 1976, 42 U.S.C. Sections 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 violation of applicable laws and regulations) in, on, under, or
about the real property on which the Stations Assets are situated, including
without limitation the transmitter sites, or contained in the tangible personal
property included in the Stations Assets. The Stations Assets and the Company's
use thereof are not in violation in any material respect of any Environmental
Laws or any occupational, safety and health or other applicable law now in
effect.
4.15 Intellectual Property. Schedule 4.15 hereto is a true and
complete list of all material Intellectual Property applied for, registered or
issued to, and owned by the Company or under which the Company is a licensee and
which is used in the conduct of the Company's business and operations. Except as
set forth on Schedule 4.15, to the best of Sellers' knowledge: (a) the Company'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 the Company, such interest is valid and
uncontested by the licensor thereof or any third party; (b) all computer
software located at the Stations' facilities or used in the Stations' business
or operations is properly licensed to the Company, and all of the Company's uses
of such computer software are authorized under such licenses; and (c) there are
no infringements or unlawful use of such Intellectual Property by the Company in
connection with the Company's business or operations.
14
<PAGE> 15
4.16 Financial Statements. Sellers have delivered to Buyer copies
of the Company's financial statements for the fiscal year ended December 31,
1996 (the "Financial Statement Date"), and for the fiscal years ended on
December 31 of each of the years 1992, 1993, 1994 and 1995, and notes thereto,
as certified by Coopers & Lybrand, independent public accountants (the
"Financial Statements"), all of which are true, complete and correct, have been
prepared from the books and records of the Company in accordance with generally
accepted accounting principles consistently applied and maintained throughout
the periods indicated, and which present fairly the financial position and
results of operations of the Company as of the dates thereof and for the periods
covered thereby. The Financial Statements include:
(a) the audited consolidated balance sheets of the
Company and its Subsidiaries as of the Financial Statement Date;
(b) the related audited consolidated statements of
earnings, source and application of funds, shareholders' equity and changes in
financial position or cash flows (as the case may be) for the years ended as
indicated on each of the Financial Statements; and
(c) an unaudited balance sheet of the Company as of April
30, 1997 (the "Interim Financial Statement Date") and the Company's unaudited
statement of earnings and source and application of funds for the four-month
period then ended (the "Interim Financial Statements").
In such Financial Statements, the statements of earnings do not contain
any items of special or nonrecurring income or any other income not earned in
the ordinary course of business except as expressly specified therein, and the
Interim Financial Statements include all adjustments, which consist only of
normal recurring accruals, necessary for such fair presentation. There are no
facts known to any of the Sellers or the Company which would alter the
information contained in the Financial Statements in any way whatever.
4.17 Absence of Certain Payments. Neither the Company nor any
Seller, director, officer, agent, employee or other person associated with or
acting on behalf of the Company, has, directly or indirectly, within the past
five years, used any funds of the Company for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, or made
any direct or indirect unlawful payments to government officials or employees
from corporate funds, or made or received any payment, whether direct or
indirect, to or from any supplier or customer of the Company, for purposes other
than the satisfaction of lawful obligations, or established or maintained any
unlawful or unrecorded funds, where any of the foregoing would have a material
adverse affect on the financial condition, results of operations, business or
prospects of the Company.
4.18 Receivables. All receivables of the Company (including
accounts receivable, loans receivable and advances) which are reflected in the
Financial Statements, and all such receivables which will have arisen since the
date thereof, shall have arisen only from bona fide transactions in the ordinary
course of the Company's business and shall be (or have been) fully collected
when due, or in the case of each account receivable within 120 days after it
arose, without resort to litigation and without offset or counterclaim,
collectible in the aggregate face amounts thereof except to the
15
<PAGE> 16
extent of the normal allowance for doubtful accounts with respect to accounts
receivable computed as a percentage of sales consistent with the Company's prior
practices as reflected in the Financial Statements.
4.19 Liabilities. Except to the extent reflected, reserved against,
or noted on the Financial Statements and the Interim Financial Statements, the
Company had, as of the Financial Statement Date, no debts, liabilities or
obligations of any nature whatsoever, whether accrued, absolute, contingent, or
otherwise, and whether due or to become due, for any period or arising out of
any transaction entered into or any set of facts existing prior thereto, whether
or not then known due or payable. There exists no basis for the assertion
against the Company of any material liability of any nature or in any amount not
fully reflected, reserved against, or noted in Financial Statements as of the
Financial Statement Date. All deposits, accounts and notes payable, and other
liabilities of the Company are current and not in default.
4.20 Labor Matters. The Company is not a party to any contract or
agreement with any labor organization, nor has the Company 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 the
Company at the Stations. The Company 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 Seller at the Stations. The Company has not
consented to any final decree involving any claim of unfair labor practice and
has not been held in any final judicial proceeding to have committed any unfair
labor practice and there are no material controversies pending or threatened
between the Company and any of its employees or any labor union or collective
bargaining agent representing or purporting to represent employees of the
Company. Since December 31, 1996, there has been no unusual increase in
compensation payable by the Company to any of its officers, employees or agents
or any bonus payment or similar arrangements made to or with them. The Company
has complied in all material respects with all federal and state laws relating
to the employment of labor, including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws
relating to wages, hours, collective bargaining, unemployment insurance,
workers' compensation, discrimination in employment practices or benefits,
family and medical leave, employment of handicapped or disabled individuals,
sexual harassment, equal employment opportunity, employment of protected
minorities (including women and persons over 40 years of age), and payment and
withholding of taxes.
4.21 Litigation. Except as set forth in Schedule 4.21, the Company
is not subject to any judgment, award, order, writ, injunction, arbitration
decision or decree relating to the conduct of the business or the operation of
the Stations or any of the Stations Assets, and there is no litigation,
administrative action, arbitration, proceeding or investigation pending or, to
the best knowledge of Sellers, threatened against the Company in any federal,
state or local court, or before any administrative agency or arbitrator
(including, without limitation, any proceeding which seeks the forfeiture of, or
opposes the renewal of, any of the Stations Licenses), or before any other
tribunal duly authorized to resolve disputes. In particular, but without
limiting the generality of the foregoing, there are no complaints, petitions to
deny, informal objections, or adjudication
16
<PAGE> 17
proceedings pending or, to the best knowledge of Sellers, threatened before the
FCC or any other governmental organization with respect to the business or
operations of the Stations.
4.22 Compliance With Laws. Except as set forth in Schedule 4.22,
the Company is not in material violation of, nor have Sellers or the Company
received any notice asserting any non-compliance by the Company with, any
statute, rule or regulation, whether federal, state or local. The Company is not
in default with respect to any judgment, order, injunction or decree of any
court administrative agency or other governmental authority or any other
tribunal duly authorized to resolve disputes which relates to the transactions
contemplated hereby. The Company is in compliance in all material respects with
all laws, regulations and governmental orders applicable to the conduct of the
business and operations of the Stations, and its present use of the Stations
Assets does not violate any of such laws, regulations or orders.
4.23 Employee Benefit Plans.
(a) Schedule 4.23 contains a true and complete list as of
the date of this Agreement of all employee benefit plans applicable to the
employees of Seller employed at the Stations, and a brief description thereof.
Except as set forth on Schedule 4.23, the Company does not maintain or have any
present or future obligation or liability with respect to, any bonus, deferred
compensation, pension, profit-sharing, retirement, severance pay, insurance,
stock purchase, stock option, welfare benefit, or other fringe benefit plan,
arrangement or practice, or any other employee benefit plan, as defined in
Section 3 of the ERISA, whether qualified or unqualified, formal or informal
(collectively, the "Plans"). Sellers have delivered to Buyer true and complete
copies of: (i) all documents which comprise each of the Plans, including any
related trust agreements or insurance contracts (or any other funding
instruments), (ii) the most current summary plan description (and any summary of
material modifications) for each Plan for which one is required, (iii) the most
recent Internal Revenue Service ("IRS") determination letter relating to each
Plan intended to be qualified under Section 401(a) of the Internal Revenue Code
of 1986 (the "Code) (and none of such Plans has been amended or modified since
the date of the latest determination letter relating thereto), (iv) the most
recent annual reports (Form 5500 Series) and accompanying schedules filed for
each of the Plans for which one is required, and (v) the most recent actuarial
report for each of the Plans for which required (which report fairly presents
the assets and liabilities of the Plans as of the date thereof). Except as set
forth in Schedule 4.23, there have been no material changes in the terms of the
Plans, or in the assets or liabilities associated with such Plans, as reflected
in the foregoing documents. Each of the Plans has been administered in
accordance with its terms, and to the extent applicable, complies with and has
been administered in accordance with ERISA and the Code.
(b) The Company has not engaged in, and Sellers do not
have knowledge of any person that has engaged in, any transaction in violation
of Section 406(a) or (b) of ERISA for which no exemption exists under Section
408 of ERISA, or any "prohibited transaction" as defined in Section 4975(c)(1)
of the Code for which no exemption exists under Section 4975(c)(2) or (d) of the
Code, with respect to any Plan.
17
<PAGE> 18
(c) Neither the Company nor any corporation or other
trade or business under common control with the Company (as determined under
Section 414(b), (c), or (m) of the Code) has taken any action, and Sellers do
not have any knowledge of any action or event that could cause the Company to
incur liability under Title IV of ERISA.
(d) The Company has never been and is not now a party to,
nor is Company bound by and required to contribute to, a multiemployer plan
within the meaning of Section 4001(a)(3) of ERISA.
(e) The Company has no obligation to provide health
benefits to former employees of the Company, except as specifically required by
law.
(f) The Company has complied with all requirements of
Part 6 of Title I, Subtitle B of ERISA regarding continuation coverage for group
health plans.
(g) To Sellers' knowledge, there is no pending or
threatened claim which alleges any violations of ERISA or any other law, nor any
basis for such a claim by any person, against the Company arising out of
Company's maintenance of any Plan.
4.24 Conduct of Business in Ordinary Course: Adverse Change;
Budget. Except as disclosed in the Financial Statements with respect to the
Company's refinancing arrangement with Michigan National Bank, since December
31, 1996: (a) the Company has conducted the business of the Stations only in the
ordinary course consistent with past practices; (b) there has not been any
material adverse change in the business, assets, properties, prospects or
condition (financial or otherwise) of the Company or the Stations, or any
damage, destruction, or loss affecting any of the Stations Assets; (c) the
Company has not created, assumed, or suffered any mortgage, pledge, lien or
encumbrance on any of the Stations Assets, and (d) the Company has not disposed
or agreed to dispose of any of its assets or properties other than in the
ordinary course of business. The Consolidated 1997 Park Lane Budget (Attachment
C-1 to the Time Brokerage Agreement) 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 Sellers to, and as of, the date of this
Agreement and adjustment for the effect of the deferral of certain budgeted
capital expenditures which have not been completed as of the date of this
Agreement and which previously have been disclosed to Buyer, continue to be
reasonable as of the date of this Agreement.
4.25 Instruments of Conveyance; Good Title. The instruments to be
executed by Sellers and delivered to Buyer at the Closing, conveying the Company
Stock to Buyer, will transfer good and marketable title to the Company Stock
free and clear of all liabilities (absolute or contingent), security interests,
mortgages, pledges, liens, obligations and encumbrances of any nature.
4.26 Insurance. All of the real and tangible personal property and
other assets of the Company which are of an insurable character are insured by
financially sound and responsible insurance companies against fire and other
risks usually insured against by persons operating similar businesses. A true
and complete list showing all policies of insurance maintained by the Company,
including types of coverage, policy expiration dates, and policy limits, is set
forth in
18
<PAGE> 19
Schedule 4.26 hereto. There has been no change in the information set forth in
such Schedule since the delivery thereof to Buyer. If any of the Company's
property is damaged or destroyed prior to Closing, the proceeds of the insurance
therefor will be sufficient to replace, restore or repair the same to its former
condition and utility, except for applicable deductible amounts. The Company
will maintain the insurance set forth in Schedule 4.26 in full force and effect
until Closing.
4.27 Transactions with Certain Persons. The Company does not owe
any amount to, or have any contract with or commitment to, any Seller, any of
the Company's directors, officers, employees or consultants (other than
compensation which may be paid to those key employees identified by an asterisk
on Schedule 4.04 which will be paid in full prior to Closing or treated as a
Liability at Closing, compensation for current services not yet due and payable
and reimbursement of expenses arising in the ordinary course of business), and
none of such persons owes any amount to the Company. No part of the property or
assets of any Seller, or any affiliate of any Seller within the meaning of the
federal securities laws, is used by the Company.
4.28 Full Disclosure. No representation or warranty made by Sellers
contained in this Agreement nor any certificate, document or other instrument
furnished or to be furnished by Sellers 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
misleading. Sellers are 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.
* * * * * * *
Whenever in this Article IV a warranty or representation is qualified
by a word or phrase referring to Sellers' knowledge or awareness, it shall mean
to the actual knowledge of James H. Levy, the Company's corporate engineer,
and/or the Company's chief financial officer, after they have made due inquiry
of the employees, representatives and agents of the Company who would be
expected to have knowledge of the matter, and with respect to the condition of
any Stations Assets, records or other object, after they have inspected it.
ARTICLE V
Covenants of Buyer
5.01 Notification. Buyer will provide Sellers prompt written notice
of any change in any of the information contained in the representations and
warranties made in Article III. Buyer shall also notify Sellers of any
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against Buyer which challenges the transactions
contemplated hereby.
19
<PAGE> 20
5.02 No Inconsistent Action. Buyer shall not take any action which
is materially inconsistent with its obligations under this Agreement or take any
action which would cause any representation or warranty of Buyer contained
herein to be or become false or invalid or which could hinder or delay the
consummation of the transactions contemplated by this Agreement.
ARTICLE VI
Covenants of Sellers
Sellers covenant and agree with respect to the Company and the Stations
that, between the date hereof and the Closing Date or the earlier termination of
this Agreement in accordance with its terms, except as expressly permitted by
this Agreement or with the prior written consent of Buyer, Sellers shall, and
cause the Company to, act in accordance with the following:
6.01 Conduct of Business. Subject to Buyer's time brokering of the
Stations pursuant to the Time Brokerage Agreement, the Company shall conduct the
business and operations of the Stations only in the ordinary and prudent course
of business consistent with past practice and with the intent of maintaining the
condition of the Stations Assets and preserving the ongoing operations and
assets of the Stations, including but not limited to maintaining the independent
identity of the Stations, retaining the current format and programming
(including the content thereof) of the Stations, continuing at historical levels
and frequencies spending for promotions, advertising, and survey testing, and
using its reasonable best efforts to retain at the Stations the services of the
key employees, consultants and agents of the Stations.
6.02 Compliance with Laws. The Company shall operate the Stations
in all respects in accordance with FCC rules and regulations and the Stations
Licenses and with all other laws, regulations, rules and orders, and shall not
cause or permit by any act, or failure to act, any of the Stations Licenses or
other licenses, permits or authorizations listed in Schedule 4.08 to expire, be
surrendered, adversely modified, or otherwise terminated, or cause the FCC to
institute any proceedings for the suspension, revocation or adverse modification
of any of the Stations Licenses, or fail to prosecute with due diligence any
pending applications to the FCC. Should any fact relating to the Company or
Sellers which would cause the FCC to deny its consent to the transactions
contemplated by this Agreement come to Sellers' attention, Sellers will promptly
notify Buyer thereof and will use their reasonable best efforts to take such
steps as may be necessary to remove any such impediment to the FCC's consent to
the transactions contemplated by this Agreement.
6.03 Station Operations. Subject to Buyer's time brokering of the
Stations pursuant to the Time Brokerage Agreement (which provisions shall
control over any inconsistent provision in this Section 6.03) and except for
changes or actions in the ordinary course of business consistent with past
practices, the Company shall not: (a) sell broadcast time on a prepaid basis
(other than in the course of existing credit practices); (b) except as required
by the applicable law or written agreements currently in effect, grant or agree
to grant any general increases in the rates of salaries
20
<PAGE> 21
or compensation payable to employees of the Company (provided that no such
increases to any employee shall in the aggregate exceed 6% of such employee's
compensation as set forth on Schedule 4.04 hereto), (c) except as required by
written agreements currently in effect, grant or agree to grant any specific
bonus or increase in compensation to any executive management employee of the
Company (provided that no such increases to any employee shall in the aggregate
exceed 6% of such employee's compensation as set forth on Schedule 4.04 hereto);
(d) provide for any new pension, retirement or other employment benefits for
employees of the Company or any increases in any existing benefits, (e) modify,
change or terminate any Contract; or (f) change the advertising rates in effect
as of the date hereof.
6.04 Access. The Company shall give or cause the Stations to give
Buyer and Buyer's counsel, accountants, engineers and other representatives, at
Buyer's reasonable request and upon reasonable notice, full and reasonable
access during normal business hours to all of the Company's personnel,
properties, books, Contracts, reports and records (including, without
limitation, financial information and environmental audits in existence with
respect to the Stations Assets), Real Estate, and buildings and equipment, and
to furnish Buyer with information and copies of all documents and agreements
relating to the Stations and the operation thereof (including but not limited to
financial and operating data and other information concerning the financial
condition, results of operations and business of the Company or the Stations)
that Buyer may reasonably request. The rights of Buyer under this Section 6.04
shall not be exercised in such a manner as to interfere unreasonably with the
business of the Stations.
6.05 Consents. Each Seller shall give all consents and take all
other actions, and Sellers shall use their reasonable best efforts to obtain any
third party consents, necessary for the transfer of the Company Stock, the
compliance by the Company with Section 6.11, or the assignment of any Contract.
6.06 Notification. Sellers will provide Buyer prompt written notice
of any change in any of the information contained in the representations and
warranties made in Article IV or any Schedule. Sellers agree to notify Buyer of
any litigation, arbitration or administrative proceeding pending or, to the best
of their knowledge, threatened, which challenges the transactions contemplated
hereby. Sellers shall promptly notify Buyer if any of the normal broadcast
transmissions of any Station are interrupted, interfered with or in any way
impaired, and shall provide Buyer with prompt written notice of the problem and
the measures being taken to correct such problem. If such Station is not
restored so that operation is resumed to full licensed power and antenna height
within five (5) days of such event, or if more than five (5) such events occur
within any thirty (30) day period, or if any of the Stations shall be off the
air for more than ninety-six (96) consecutive hours, then Buyer shall have the
right to terminate this Agreement.
6.07 No Inconsistent Action. Sellers shall not take any action
which is materially inconsistent with their obligations under this Agreement nor
take any action which would cause any representation or warranty of Sellers
contained herein to be or become false or invalid or which could hinder or delay
the consummation of the transactions contemplated by this Agreement
21
<PAGE> 22
6.08 Closing. Subject to Article IX hereof, on the Closing Date,
Sellers shall transfer, convey, assign and deliver to Buyer the Company Stock as
provided in Article I of this Agreement.
6.09 Negative Covenants. Except as otherwise specifically
contemplated by this Agreement and subject to Buyer's time brokering of the
Stations pursuant to the Time Brokerage Agreement, until the Closing Date or the
earlier termination of this Agreement in accordance with the terms hereof,
neither Sellers nor the Company shall: (a) waive or release any right relating
to the business or operations of the Stations, except for adjustments or
settlements made in the ordinary course of business consistent with past
practices; (b) transfer or grant any rights under any of the Stations Licenses;
(c) enter into any commitment for capital expenditures; (d) subject to Buyer's
time brokering of the Station pursuant to the Time Brokerage Agreement,
introduce any material changes in the broadcast hours or in the format of the
Stations or any other material change in the Stations' programming policies; (e)
change the call letters of any Station; (f) dispose of, sell or encumber, or
agree to dispose of, sell or encumber, any of the Stations Assets, except in the
ordinary course of business, or any shares of Company Stock except as
contemplated hereby; (g) suffer or permit the creation of any lien, mortgage,
pledge, encumbrance or charge of any kind on the Company Stock or Stations
Assets except as specifically referred to on Schedules 4.11 or 4.12 hereto,
except liens for taxes not yet due and payable; (h) fail to repair, maintain or
replace the Company's transmitting, studio and other technical equipment or fail
to maintain reasonable and customary inventory of equipment, supplies and other
tangible personal property used or useful in the operation of the Stations; (i)
enter into, extend or renew any trade deals or sales of broadcast time on the
Stations except as same are approved by Buyer and except for time sales for cash
at the Stations prevailing rates; (j) assume, guarantee, endorse or otherwise
become responsible for the indebtedness of any other person, firm or corporation
except endorsement of negotiable instruments in the ordinary course of
collection; (k) incur any indebtedness for borrowed money, or make any loans
except in the ordinary course of business, or make any advances; (l) issue,
sell, or contract to sell any of its securities or sell, contract to sell or
grant any right or option to purchase or otherwise acquire, directly or
indirectly, any securities, or redeem, purchase or otherwise acquire any
outstanding shares of capital stock; (m) change, amend or modify the Articles of
Incorporation or By-Laws of the company; (n) allow to occur or exist any event
of default by the Company under any contract, agreement, arrangement, license,
permit, commitment or understanding, which event of default would have a
material adverse affect upon the business, operations or financial position of
the Company; or (o) enter into any transaction or make or enter into any
contract or commitment with respect to either of the Stations or the Stations
Assets which involves an expenditure after the Closing Date of in excess of
$25,000.00 or otherwise by reason of its size or otherwise is not in the
ordinary course of business consistent with past practices.
6.10 Exclusivity. Sellers agree that, commencing on the date hereof
through the Closing or earlier termination of this Agreement, Buyer shall have
the exclusive right to consummate the transactions contemplated herein, and
during such exclusive period, Sellers agree that neither Sellers, nor any
director, officer, employee or other representative of Sellers: (a) will
initiate, solicit or encourage, directly or indirectly, any inquiries, or the
making or implementation of any proposal or offer with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of,
all or any portion of the Company Stock or Stations Assets (any such inquiry,
proposal or offer being hereinafter referred to as an "Acquisition Proposal" and
any such transaction being
22
<PAGE> 23
hereinafter referred to as an "Acquisition"); (b) will engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; or (c) will continue any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal or Acquisition and will take the necessary steps to inform
the individuals or entities referred to above of the obligations undertaken by
them in this Section 6.10. Notwithstanding the foregoing, in the event that
Buyer defaults in any material respect in the observance or in the due and
timely performance of any of its covenant or agreements herein contained and
such default shall not be cured within fifteen (15) business days of notice of
default served by Sellers, Sellers' obligations under this Section 6.10 shall be
null and void.
6.11 Elimination of Derivative Securities. The Company shall
redeem, cancel, terminate, retire, or otherwise eliminate all Company Options
and Warrants as of the Closing Date and effective prior to Closing.
6.12 Schedule 4.11 Supplement. On or before August 15, 1997, the
Company shall deliver to Buyer a supplement to Schedule 4.11 providing (i) a
list of all motor vehicles leased and (ii) individual asset detail for the items
listed on Schedule 4.11 regarding date of acquisition, date placed in service,
book basis, tax basis, accumulated tax depreciation, accumulated book
depreciation, life for book and tax, and depreciation method for book and tax
for each asset (or group of assets as Buyer may agree).
ARTICLE VII
Joint Covenants
Buyer and Sellers covenant and agree that between the date hereof and
the Closing Date, they shall act in accordance with the following:
7.01 Confidentiality. Subject to the requirements of applicable
law, Buyer and Sellers shall each keep confidential all information obtained by
them in connection with this Agreement and the negotiations preceding this
Agreement, and will use such information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, each shall return to
each other party hereto, without retaining a copy thereof, any schedules,
documents or other written information obtained from such other party in
connection with this Agreement and the transactions contemplated hereby.
Notwithstanding the foregoing, no party shall be required to keep confidential
or return any information which: (a) is known or available through other lawful
sources, not bound by a confidentiality agreement with the disclosing party; (b)
is or becomes publicly known through no fault of the receiving party or its
agents; (c) is required to be disclosed pursuant to an order or request of a
judicial or governmental authority (provided the disclosing party is given
reasonable
23
<PAGE> 24
prior notice of the order or request and the purpose of the disclosure); or (d)
is developed by the receiving party independently of the disclosure by the
disclosing party. Notwithstanding anything to the contrary herein, either party
may in accordance with its legal obligations, including but not limited to
filings permitted or required by the Securities Act of 1933 and the Securities
and Exchange Act of 1934, the NASDAQ National Market and other similar
regulatory bodies, make such press releases and other public statements and
announcements as it deems necessary and appropriate in connection with this
Agreement and the transactions contemplated hereby; provided, however, that
prior to making any such unilateral press release or announcement, such party
shall first communicate the same in writing to the other.
7.02 Cooperation. Subject to express limitations contained
elsewhere herein, Buyer and Sellers agree to cooperate fully in taking any
reasonable actions (including without limitation, reasonable actions to obtain
the required consent of any governmental instrumentality or any third party)
necessary or helpful to accomplish the transactions contemplated by this
Agreement, including but not limited to the satisfaction of any condition to
closing set forth herein.
7.3 Control of Stations. Subject to Buyer's time brokering of the
Stations pursuant to the Time Brokerage Agreement, Buyer shall not, directly or
indirectly, control, supervise or direct the operations of the Stations prior to
the Closing. Such operations, including complete control and supervision of all
Station programs, employees and policies, shall be the sole responsibility of
Sellers and the Company.
ARTICLE VIII
Conditions of Closing by Buyer
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
8.01 Representations, Warranties and Covenants.
(a) All representations and warranties of Sellers made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all respects as of the date hereof and on
and as of the Closing Date as if made on and as of that date, except for changes
(a) expressly permitted or contemplated by the terms of this Agreement, (b)
caused by the acts of Buyer during the term of the Time Brokerage Agreement, or
(c) in the ordinary course of business which are not, either in individually or
in the aggregate, material and adverse.
(b) All of the terms, covenants, agreements, and
conditions to be complied with and performed by Seller or the Company on or
prior to the Closing Date shall have been complied with or performed in all
material respects.
24
<PAGE> 25
(c) Buyer shall have received a certificate, dated as of
the Closing Date, from the Company, executed by the President of the Company to
the effect that: (a) except for changes occurring as a result of Buyer's actions
under the Time Brokerage Agreement, the representations and warranties of Seller
contained in this Agreement as they pertain to the Company are true and complete
in all material respects on and as of the Closing Date as if made on and as of
that date; and (b) Sellers and the Company have complied with or performed in
all material respects all terms, covenants, agreements, and conditions to be
complied with or performed by them on or prior to the Closing Date.
8.02 Governmental Consents. The FCC Consent shall have been
obtained and, subject to the provisions of Section 1.06 hereof, shall have
become a Final Order.
8.03 Governmental Authorizations. The Company shall be the holder
of the Stations Licenses and all other licenses, permits and other
authorizations listed in Schedule 4.08, and there shall not have been any
modification of any of such licenses, permits and other authorizations which has
a material adverse effect on any of the Stations or the operations thereof. No
proceeding shall be pending which seeks, or the effect of which reasonably could
be, to revoke, cancel, fail to renew, suspend or adversely modify any of the
Stations Licenses or any other licenses, permits or other authorizations listed
in Schedule 4.08.
8.04 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no order, decree or
judgment of any court, agency or other governmental authority shall have been
rendered (and remain in effect) against, any party hereto which: (a) would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms; (b) questions the
validity or legality of any transaction contemplated hereby; (c) seeks to enjoin
any transaction contemplated hereby; (d) seeks material damages on account of
the consummation of any transaction contemplated hereby; or (e) is a petition of
bankruptcy by or against the Company, an assignment by the Company for the
benefit of its creditors, or other similar proceeding.
8.05 Third-Party Consents. All material Contracts shall be in full
force and effect on the Closing Date, and Seller shall have obtained and shall
have delivered to Buyer all appropriate third-party consents in form and
substance acceptable to Buyer (including estoppel certificates reasonably
requested by Buyer) in connection with any material Contracts, compliance with
requirements of Buyer's senior lender, or the transfer of the Company Stock to
Buyer.
8.06 Closing Documents. Sellers shall have delivered or caused to
be delivered to Buyer, on the Closing Date, all stock powers, endorsements,
assignments and other instruments of conveyance reasonably satisfactory in form
and substance to Buyer, effecting the sale, transfer, assignment and conveyance
of, and release of all claims to dividends or other distributions, whether
declared or undeclared, on the Company Stock to Buyer, including, without
limitation, each of the documents required to be delivered by them pursuant to
Article XI.
25
<PAGE> 26
8.07 Time Brokerage Agreement Compliance. The Time Brokerage
Agreement shall not have been terminated by Buyer as permitted by the Time
Brokerage Agreement as a result of the Company's material noncompliance with its
obligations under the Time Brokerage Agreement.
8.08 No Adverse Change. No material adverse change in condition or,
status of the Company or the Stations Assets, which change is not caused by or
does not arise out of, any breach by Buyer of any of its representations,
warranties, covenants or agreements hereunder or under the Time Brokerage
Agreement, shall have occurred since April 30, 1997, be threatened or be
reasonably likely to occur. Any adverse change in the condition of the Company
due to material changes in competitive conditions, material changes in market
economics, changes in operating or financial performance, changes in ratings, or
changes in market values for radio stations generally shall not constitute a
"material adverse change" as used in this Section 8.08.
8.09 Satisfactory Investigation of Station Facilities. Buyer shall
have conducted such examination and investigation of the Real Estate, studios,
transmitter facilities, and other Stations Assets and personnel on matters
covered by or generally within the scope of Sellers' warranties and
representations as Buyer deems advisable or appropriate pursuant to Section 6.04
and shall have determined that the findings and results of such examination and
investigation are satisfactory in its sole discretion. If Buyer does not advise
Sellers' Representative in writing within twenty-one (21) days after the date of
this Agreement of any unsatisfactory findings or results, this condition shall
be deemed waived. If Buyer does advise Sellers' Representative of any
unsatisfactory findings or results, and such are capable of being cured by
Sellers to Buyer's reasonable satisfaction, Sellers shall have the right to cure
the same to Buyer's reasonable satisfaction prior to a Final Order.
8.10 Company Options and Warrants. Sellers shall have delivered or
caused to be delivered to Buyer, within twenty-one (21) days after the date of
this Agreement, binding written agreements, in form and substance acceptable to
Buyer, from all persons and entities who are not parties to this Agreement but
who, because of outstanding Company Options and Warrants or otherwise, have the
right to acquire Capital Stock to the effect that such persons and entities will
be bound to the terms of this Agreement as if having been an original signatory
hereto as a Seller and on the Closing Date will sell, transfer and convey to
Buyer in accordance with the terms of this Agreement all Company Stock owned by
them on the Closing Date, including all rights to acquire Capital Stock.
8.11 Environmental Studies. Buyer shall have obtained updated Phase
I environmental assessment reports on the Real Property confirming the
representations and warranties of Sellers on environmental matters and the
absence of any material adverse change from the content of the reports which
have been provided to Buyer by the Company; provided, however, if Buyer elects
not to obtain such environmental reports, Buyer shall be deemed to have waived
the condition of Closing contained in this Section 8.11.
26
<PAGE> 27
ARTICLE IX
Conditions of Closing by Sellers
The obligations of Sellers hereunder are, at their option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
9.01 Representations, Warranties and Covenants.
(a) All representations and warranties of Buyer made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
(b) All the terms, covenants, agreements, and conditions
to be complied with and performed by Buyer on or prior to the Closing Date shall
have been complied with or performed in all material respects.
(c) Seller shall have received a certificate, dated as of
the Closing Date, executed by the President of Buyer, to the effect that: (i)
the representations and warranties of Buyer contained in this Agreement are true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date; and (ii) Buyer has complied with or performed in all
material respects all terms, covenants, agreements and conditions to be complied
with or performed by it on or prior to the Closing Date.
9.02 Governmental Consents. The FCC Consent shall have been
obtained and, subject to the provisions of Section 1.06 hereof, shall have
become a Final Order.
9.03 Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending or threatened against, and no other decree or
judgment of any court, agency or other governmental authority shall have been
rendered (and remain in effect) against, any party hereto which: (a) would
render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms; (b) questions the
validity or legality of any transaction contemplated hereby; (c) seeks to enjoin
any transaction contemplated hereby; or (d) seeks material damages on account of
the consummation of any transaction contemplated hereby.
9.04 Closing Documents. Buyer shall have delivered or caused to be
delivered to Seller, on the Closing Date, the Purchase Price and each of the
documents required to be delivered by it pursuant to Article XI.
27
<PAGE> 28
ARTICLE X
Transfer Taxes: Fees and Expenses
10.01 Expenses. Except as set forth in Section 10.02 hereof or
otherwise expressly set forth in this Agreement, each party hereto shall be
solely responsible for all costs and expenses incurred by it in connection with
the negotiation, preparation and performance of and compliance with the terms of
this Agreement including, but not limited to, the costs and expenses incurred
pursuant to Article II hereof and the fees and disbursements of counsel and
other advisors.
10.02 Specific Charges. All costs of transferring the Company Stock
in accordance with this Agreement, including any income, transfer and
documentary taxes and fees, shall be paid by Seller. Any filing or grant fees
imposed by any governmental authority, the consent of which or the filing with
which is required for the consummation of the transactions contemplated hereby,
shall be shared equally by Buyer on the one hand and Sellers on the other.
ARTICLE XI
Documents To Be Delivered At Closing
11.01 Seller's Documents. At the Closing, Sellers shall deliver or
cause to be delivered to Buyer the following:
(a) Resignation of all directors and officers of the
Company effective on the Closing Date;
(b) A certificate of the Company, dated the Closing Date,
in the form described in Section 8.01(c);
(c) Governmental certificates showing that the Company:
(i) is duly incorporated and in good standing in the state of its incorporation;
and (ii) has filed all returns, paid all taxes due thereon and is currently
subject to no assessment and is in good standing as a foreign corporation in
each state where such qualification is necessary, each certified as of a date
not more than thirty (30) days before the Closing Date;
(d) Such certificates, stock powers (executed in blank
with signatures guaranteed), assignments, documents of title and other
instruments of conveyance, assignment and transfer (including without limitation
any necessary consents to conveyance, assignment or transfer), and lien
releases, if any, all in form satisfactory to Buyer and Buyer's counsel, as
shall be effective to vest in Buyer title in and to the Company Stock, free,
clear and unencumbered in accordance with the terms of this Agreement.
28
<PAGE> 29
(e) The Indemnification Escrow Agreement;
(f) The Consulting and Non-Competition Agreement signed
by James H. Levy referred to in Section 14.14;
(g) A written opinion of Wilson Sonsini Goodrich &
Rosati, counsel for the Sellers in the form of Exhibit C, dated as of the
Closing Date;
(h) A written opinion of the Company's FCC counsel in
form and substance reasonably satisfactory to Buyer covering the matters set
forth on Exhibit D, dated as of the Closing Date;
(i) Updating title insurance endorsements on all title
insurance policies on the Real Property held by the Company in form and
substance reasonably satisfactory to Buyer; and
(j) Such additional information, materials, agreements,
documents and instruments as Buyer, its counsel, or its senior lender may
reasonably request in order to consummate the Closing.
11.02 Buyer's Documents. At the Closing, Buyer shall deliver or
cause to be delivered
(a) Certified resolutions of the Board of Directors of
Buyer approving the execution and delivery of this Agreement and authorizing the
consummation of the transactions contemplated hereby;
(b) A certificate of Buyer, dated the Closing Date, in
the form described in Section 9.01(c);
(c) The Indemnification Escrow Agreement;
(d) A written opinion of Buyer's counsel in the form of
Exhibit E, dated as of the Closing Date;
(e) The Purchase Price in accordance with Section 1.05
hereof; and
(f) The Consulting and Non-Competition Agreement signed
by Buyer referred to in Section 14.14.
(g) Such additional information, materials, agreements,
documents and instruments as Seller and its counsel may reasonably request in
order to consummate the Closing.
29
<PAGE> 30
ARTICLE XII
Survival; Indemnification: Etc.
12.01 Survival of Representations, Etc. It is the express intention
and agreement of the parties to this Agreement that all covenants in Articles V,
VI, and VII ("Covenants") and all representations and warranties (together,
"Warranties") made by Buyer and Sellers in this Agreement shall survive the
Closing (regardless of any knowledge, investigation, audit or inspection at any
time made by or on behalf of Buyer or Sellers) as follows:
(a) The Covenants in Sections 6.08, 6.11, 7.01 and 7.02
and any other agreements not specifically addressed in this Section 12.01 shall
survive the Closing for a period from the Closing Date equal to the statute of
limitations for written contracts in California.
(b) The Warranties in Sections 3.02, 4.01, 4.02, 4.05,
4.06 shall survive the Closing without limitation.
(c) The Warranties in Section 4.10 or otherwise relating
to the federal, state, local or foreign tax obligations of Seller and in Section
4.14 shall survive the Closing for the period of the applicable statute of
limitations plus any extensions or waivers granted or imposed with respect
thereto.
(d) All other Covenants and Warranties shall survive
until June 30, 1999 or until thirty (30) days after such time as Buyer's outside
public accounting firm has released its annual audit of the financial statements
applicable to the Stations for the period ending December 31, 1998, whichever is
earlier.
(e) The right of any party to recover Damages (as defined
in Section 12.02(a))pursuant to Section 12.02 shall not be affected by the
expiration of any Covenants or Warranties as set forth herein, provided that
notice of the existence of any damages (but not necessarily the fixed amount of
any such damages) has been given by the indemnified party to the indemnifying
party prior to such expiration. The survival of a Covenant shall not extend the
period to which the Covenant applies, but merely establishes the time by which
notice of a claim of breach may be given.
(f) All claims for monetary damages in connection with
this Agreement and the transactions contemplated hereby shall be brought
pursuant to, and subject to the limitations of, this Article XII, and no such
claim may be brought except pursuant to, and subject to the limitations of, this
Article XII.
(g) Notwithstanding any provision hereof to the contrary,
there shall be no contractual time limit in which Buyer or Sellers may bring any
action for actual fraud (a "Fraud Action'), regardless of whether such actual
fraud also included a breach of any Covenant or
30
<PAGE> 31
Warranty; provided, however, that any Fraud Action must be brought within the
period of the applicable statute of limitations plus any extensions or waivers
granted or imposed with respect thereto.
12.02 Indemnification.
(a) Sellers shall defend, indemnify and hold harmless
Buyer from and against any and all losses, costs, damages, liabilities and
expenses, including reasonable attorneys' fees and expenses ('Damages') incurred
by Buyer arising out of or related to: (i) any breach of the Warranties given or
made by Sellers in this Agreement; (ii) any breach of the Covenants or other
agreements made by Sellers in the Agreement; (iii) Liabilities of the Company
incurred as a result of the operation of the Company and Stations for the period
ended on the day preceding the Closing Date which are known at the time of the
preparation of the Closing Report but not reflected in the Closing Report
(subject, however, to the limitation that the amount of indemnification owed
under this clause (iii) in respect of such Liability shall be limited to the
amount of any reserve which was or should have been, under generally-accepted
accounting principles, established for such Liability in the Closing Report but
which was not reflected in the Closing Report, and any amount in excess of any
such reserve (whether or not so established) shall be indemnified against under
clause (i) of this first paragraph of Section 12.02(a), subject to any
limitations thereon); and (iv) income taxes of the Company for the period ended
on the day prior to the Closing Date.
Notwithstanding the foregoing provisions of this Section 12.02(a),
Sellers shall have no obligation to defend, indemnify and hold harmless Buyer
for Damages arising out of any matter described in clause (a)(i) of the
immediately preceding paragraph unless the aggregate Damages on account thereof
exceed $37,500, the maximum liability of Sellers hereunder for Damages arising
out of any matter described in said clause (a)(i) shall be $2,000,000, and the
maximum liability of Sellers hereunder for Damages arising out of any matter
described in clauses (a)(i), (a)(ii), (a)(iii), and (a)(iv) shall be equal to
the Final Purchase Price.
(b) Buyer shall defend, indemnify and hold harmless
Sellers from and against any and all Damages incurred by Sellers arising out of
or related to: (i) any breach of the Covenants, other agreements, and Warranties
given or made by Buyer in this Agreement; (ii) all federal, state and local tax
liabilities of the Company arising on and after the Closing Date; and (iii) any
loss or damage arising out of any Liability of Company incurred or the result of
the operation of the Company and Stations on and after the Closing Date or which
have been included in the Closing Report and as to which Buyer has received an
adjustment of the Purchase Price in its favor hereunder in accordance with
Section 1.03.
(c) Procedures: Third Party and Direct Indemnification
Claims. The indemnified party agrees to give written notice within a reasonable
time to the indemnifying party of any demand, suit, claim or assertion of
liability by third parties or other circumstances that could give rise to an
indemnification obligation hereunder against the indemnifying party, providing a
description of the nature and amount of the claim (hereinafter collectively
'Claims," and individually a "Claim'), it being understood that the failure to
give such notice shall not affect the indemnified party's right to
indemnification and the indemnifying party's obligation to indemnify as
31
<PAGE> 32
set forth in this Agreement, unless the indemnifying party's ability to contest,
defend or settle with respect to such Claim is thereby demonstrably and
materially prejudiced. The parties agree that any claim for Damages arising
directly between the parties relating to this Agreement may be brought at any
time within the applicable survival period specified in Section 12.01, and that
the only notice required with respect thereto shall be as specified in Section
12.01(c). Sellers and Buyer each irrevocably submits to the nonexclusive
jurisdiction of any state or federal court sitting in San Francisco, California
over any suit, action or proceeding arising out of or relating to this Agreement
and irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such court. Each party to this Agreement hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. Each
Seller hereby irrevocably designates and appoints Sellers' Representative as its
agent for service of process and agrees that service of process on Sellers'
Representative in any such action shall be effective service upon each Seller,
the need for direct service of process on each Seller being hereby waived.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to this Section 12.02 resulting from any
Claim shall be subject to the following additional terms and conditions:
(i) The indemnifying party shall have the right
to undertake, by counsel or other representatives of its own choosing, the
defense or opposition to such Claim.
(ii) In the event that the indemnifying party
shall elect not to undertake such defense or opposition, or within ten (10) days
after notice of any such Claim from the indemnified party shall fail to defend
or oppose, the indemnified party (upon further written notice to the
indemnifying party) shall have the right to undertake the defense, opposition,
compromise or settlement of such Claim, by counsel or other representatives of
its own choosing, on behalf of and for the account and risk of the indemnifying
party (subject to the right of the indemnifying party to assume defense of or
opposition to such Claim at any time prior to settlement, compromise or final
determination thereto).
(d) Anything this Section 12.02 to the contrary
notwithstanding: (i) the indemnified party shall have the right, at its own cost
and expense, to participate in the defense, opposition, compromise or settlement
of the Claim; (ii) the indemnifying party shall not, without the indemnified
party's written consent, settle or compromise any Claim or consent to entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the indemnified party of a release from all
liability in respect of such Claim, and (iii) in the event that the indemnifying
party undertakes defense of or opposition to any Claim the indemnified party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying party and its
counsel or other representatives concerning such Claim and the indemnifying
party and the indemnified party, and their respective counsel or other
representatives, shall cooperate in good faith with respect to such Claim.
32
<PAGE> 33
(e) No undertaking of defense or opposition to a Claim
shall be construed as an acknowledgment by such party that it is liable to the
party claiming indemnification with respect to the Claim at issue or other
similar Claims.
(f) Notwithstanding any other provision hereof to the
contrary, the satisfaction of Claims complying with the terms and conditions in
this Section 12.02 shall be apportioned among the Sellers as follows:
(i) Any and all Claims shall first be satisfied
from the $2,000,000 deposited with the Escrow Agent ("Escrow Fund") under the
terms of the Indemnification Escrow Agreement; provided, however, Claims
satisfied from the Escrow Fund shall be allocated among each of the Sellers
holding Common Stock of the Company (each, a "Common Stock Seller") according to
each Common Stock Seller's "Common Stock Pro Rata Share." As used herein, a
Seller's "Common Stock Pro Rata Share" shall mean the percentage set forth in
the column designated "Column 1" on Schedule 12.02(f) to this Agreement.
(ii) If the aggregate amount of Claims (the
"Excess Claim Amount") exceeds the Escrow Fund, the Excess Claim Amount shall be
satisfied in the following order:
(A) First from the portion of the Final
Purchase Price in excess of the Escrow Fund allocated to the Common Stock
Sellers according to each Common Stock Sellers' Common Stock Pro Rata
Percentage.
(B) Second from the portion of the
Final Purchase Price allocated to the Sellers holding Series A Preferred Stock
of the Company (each, a "Series A Seller") according to each Series A Seller's
"Series A Pro Rata Share." As used herein, a Series A Seller's "Series A Pro
Rata Share" shall mean the percentage set forth in the column designated "Column
2" on Schedule 12.02(f) to this Agreement.
(C) Third from the portion of the Final
Purchase Price allocated to the Sellers holding Series C Preferred Stock of the
Company (each, a "Series C Seller") according to each Series C Seller's "Series
C Pro Rata Share." As used herein, a Series C Seller's "Series C Pro Rata Share"
shall mean the percentage set forth in the column designated "Column 3" on
Schedule 12.02(f) to this Agreement.
(D) Last from the portion of the Final
Purchase Price allocated to the Sellers holding Series B Preferred Stock of the
Company (each, a "Series B Seller") according to each Series B Seller's "Series
B Pro Rata Share." As used herein, a Series B Seller's "Series B Pro Rata
Shares" shall mean the percentage set forth in the column designated "Column 4"
on Schedule 12.02(f) to this Agreement.
(iii) Notwithstanding the foregoing, if the
indemnification obligation of any Seller shall not be able to be collected from
such Seller (an "Uncollectible Seller") by Buyer, after good-faith, diligent and
reasonable best efforts to do so (not to include having to proceed against any
Seller in any other proceeding or jurisdiction in or for foreclosure,
attachment, garnishment,
33
<PAGE> 34
bankruptcy or other similar type procedures), then the amount which is so
uncollectible shall be treated as an additional Claim payable under this Section
12.02(f), apportioned among the Sellers other than such Uncollectible Seller in
accordance with Section 12.02(f)(ii).
(iv) No Seller shall be required to satisfy any
amount of any Claim in excess of the aggregate of such Seller's pro rata share
of the Final Purchase Price.
(v) Notwithstanding the foregoing provisions of
this Article XII (including without limitation Section 12.02(f)(iv) thereof), if
a Seller shall have taken any action or failed to act as a result of which there
shall have occurred the violation of a representation, warranty, covenant or
other agreement applicable to such Seller in his, her or its individual
capacity, then as among Sellers such Seller shall indemnify and hold harmless
the other Sellers from any Claim with respect thereto unless such Claim is based
upon a breach attributed to the paragraph regarding "knowledge" which follows
Section 4.28.
ARTICLE XIII
Termination Rights
13.01 Termination. This Agreement may be terminated at any time
prior to Closing as follows:
(a) Upon the mutual written consent of Buyer and Sellers'
Representative, this Agreement may be terminated on such terms and conditions as
so agreed; or
(b) By written notice of Buyer to Sellers if Sellers'
breach in any material respect any of their representations or warranties or
default in any material respect in the observance or in the due and timely
performance of any of their covenants or agreements herein contained and such
breach or default shall not be cured within thirty (30) days of the date of
notice of breach or default served by Buyer; or
(c) By written notice of Sellers' Representative to Buyer
if Buyer breaches in any material respect any of its representations or
warranties or defaults in any material respect in the observance or in the due
and timely performance of any of its covenants or agreements herein contained
and such breach or default shall not be cured within thirty (30) days of the
date of notice of breach or default served by Sellers' Representative; or
34
<PAGE> 35
(d) By written notice of either party if any condition to
the obligation to perform this Agreement of the party seeking to terminate has
not been satisfied or complied with by the Closing Date or the date specified
herein for such satisfaction or compliance, and such inaccuracy, failure of
performance or non-satisfaction of or compliance with a condition, if capable of
being cured, has not been cured within thirty (30) days after written demand
therefor, or has not been waived by the party seeking to terminate this
Agreement; or
(e) By written notice of Buyer to Sellers if the FCC
denies the FCC Application; and by written notice of Sellers' Representative to
Buyer if the FCC denies the FCC Application under circumstances in which Sellers
are not entitled to delivery of the Letter of Credit; or
(f) By written notice of Buyer to Sellers, or by Sellers'
Representative to Buyer, if any court of competent jurisdiction shall have
issued an order, decree or ruling (which then remains in effect) or taken any
other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, or by Buyer, if any court, legislative body or
governmental or regulatory authority has taken, or is reasonably expected to
take, action that would prohibit the consummation of the transactions
contemplated hereby in accordance with the terms of the this Agreement, as
determined by Buyer in its sole discretion reasonably exercised; or
(g) By written notice of Buyer to Sellers, or by Sellers'
Representative to Buyer, if the Closing shall not have been consummated on or
before March 31, 1998; or
(h) By written notice of Buyer to Sellers if it shall
become apparent in the judgment of Buyer and Sellers' Representative reasonably
exercised that any condition to Buyer's obligation to close as set forth in
Article VIII hereof will not be satisfied on or before March 31, 1998; or
(i) By written notice of Buyer to Sellers under the
conditions set forth in Sections 6.06 or 14.13 hereof; or
(j) By written notice of Buyer to Sellers in the event
Buyer has terminated the Time Brokerage Agreement pursuant to Section 17
thereof; or
(k) By written notice of Buyer to Sellers, or by Sellers'
Representative to Buyer, in the event of (i) a termination of the Time Brokerage
Agreement by the notifying party pursuant to Sections 16.3 or (ii) a termination
of the Time Brokerage Agreement pursuant to Section 19 thereof if such
termination of the Time Brokerage Agreement has a material adverse effect on
such party's ability to complete the transactions contemplated hereunder.
Notwithstanding the foregoing, no party hereto may effect a termination
hereof if such party is in material default or breach of this Agreement. If this
Agreement is terminated, Buyer shall not, except as contemplated by the Time
Brokerage Agreement, solicit or attempt to employ any person
35
<PAGE> 36
who is an officer or employee of the Company or its affiliates or Subsidiaries
as of the date of this Agreement for a period of six (6) months after the
effective date of such termination.
13.02 Liability. Except as set forth in Section 13.04 below, the
termination of this Agreement under Section 13.01 shall not relieve any party of
any liability for breach of this Agreement prior to the date of termination.
13.03 Monetary Damages, Specific Performance and Other Remedies. The
parties recognize that if Sellers refuse to perform under the provisions of this
Agreement, monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement in addition to any other remedies, including but not
limited to monetary damages (which would include at least the Cash Deposit),
that may be available to it. If any action is brought by Buyer to enforce this
Agreement, Sellers shall waive the defense that there is an adequate remedy at
law. In the event of a default by Sellers, which results in the filing of a
lawsuit for damages, specific performance, or other remedy, the prevailing party
in such action shall be entitled to reimbursement by the other of reasonable
legal fees and expenses incurred by the prevailing party.
13.04 Sellers' Liquidated Damages. As more fully described in the
Deposit Escrow Agreement, in the event this Agreement is terminated because of
Buyer's material breach of this Agreement, and all other conditions to Closing
are at such time satisfied or waived (other than such conditions as can readily
be satisfied by Closing), then the Letter of Credit shall be delivered to
Sellers, and the proceeds from a draw on the Letter of Credit shall constitute
liquidated damages. It is understood and agreed that such liquidated damages
amount represents Buyer's and Sellers' reasonable estimate of actual damages and
does not constitute a penalty. Recovery of liquidated damages shall be the sole
and exclusive remedy of Sellers against Buyer for failing to consummate this
Agreement as a result of Buyer's material breach hereof, and shall be applicable
regardless of the actual amount of damages sustained and all other remedies are
deemed waived by Sellers.
ARTICLE XIV
Miscellaneous Provisions
14.01 Brokerage. Sellers and Buyer represent and warrant to the
other that no broker or finder other than Star Media, whose commission shall be
paid by Sellers, was employed, appointed or authorized by either of them in
connection with the transactions contemplated by this Agreement. Buyer and
Sellers hereby indemnify and hold each other harmless from and against any and
all other liabilities with respect thereto.
14.02 Certain Interpretive Matters and Definitions. Unless the
context otherwise requires: (a) all references to Sections, Articles, Schedules
or Exhibits are to Sections, Articles, Schedules or Exhibits of or to this
Agreement; (b) each term defined in this Agreement has the meaning assigned to
it; (c) each accounting term not otherwise defined in this Agreement has the
meaning assigned to
36
<PAGE> 37
it in accordance with generally accepted accounting principles as in effect on
the date hereof, (d) "or" is disjunctive but not necessarily exclusive; (e)
words in the singular include the plural and vice versa; and (f) all references
to "$" or dollar amounts will be to lawful currency of the United States of
America.
14.03 Further Assurances. After the Closing, Sellers shall from time
to time, at the request of and without further cost or expense to Buyer, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as may reasonably be requested in order more effectively to
consummate the transactions contemplated hereby to vest in Buyer good title to
the Company Stock being transferred hereunder in accordance with the terms
hereof, and Buyer shall from time to time, at the request of and without further
cost or expense to Sellers, execute and deliver such other instruments and take
such other actions as may reasonably be requested in order to more effectively
consummate the transaction contemplated hereby for the benefit of Sellers.
14.04 Benefit and Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective,
heirs, executors, administrators, successors and permitted assigns. Sellers may
not voluntarily or involuntarily assign their interest under this Agreement
without the prior written consent of Buyer. Buyer shall have the right to assign
and/or delegate all or any portion of its rights and obligations under this
Agreement, including without limitation assignments as collateral, provided that
no such assignment and/or delegation shall relieve Buyer of its obligations
hereunder in the event that its assignee fails to perform the obligations
delegated. All covenants, agreements, statements, representations, warranties
and indemnities in this Agreement by and on behalf of any of the parties hereto
shall bind and inure to the benefit of their respective successors and permitted
assigns of the parties hereto. In the event Buyer finds it necessary or is
required to provide to a third party a collateral assignment of the Buyer's
interest in this Agreement and/or any related documents, Seller shall cooperate
with the Buyer and any third party requesting such assignment including but not
limited to signing or delivering a consent and acknowledgment of such
assignment.
14.05 Amendments. No amendment, waiver of compliance with any
provision or condition hereof or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
14.06 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
14.07 Governing Law. The construction and performance of this
Agreement shall be governed by the laws of the State of California without
giving effect to the choice of law provisions thereof.
14.08 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
37
<PAGE> 38
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 Sellers, by notifying Buyer, and in the case
of Buyer, by notifying Sellers:
To Sellers: James H. Levy, Sellers' Representative
The Park Lane Group
750 Menlo Avenue, Suite 340
Menlo Park, CA 94025
Fax: (415) 324-3817
Copy to: WILSON SONSINI GOODRICH & ROSATI
650 Page Mill Road
Palo Alto, CA 94304
Attn: Arthur F. Schneiderman, Esq.
Fax: (415) 493-6811
To Buyer: Terry S. Jacobs, Chairman
Regent Communications, Inc.
50 East RiverCenter Blvd. Suite 180
Covington, KY 41011
Fax: (606) 292-0352
Copy to: STRAUSS & TROY
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Attn: Alan C. Rosser, Esq.
Fax: (513) 241-8289
14.09 Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile, each of which will be deemed an original and all
of which together will constitute one and the same instrument.
14.10 No Third Party Beneficiaries. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give to any person
or entity other than the parties hereto and their successors or permitted
assigns any rights or remedies under or by reason of this Agreement.
38
<PAGE> 39
14.11 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any, applicable law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
14.12 Entire Agreement. This Agreement and the schedules and
exhibits hereto embody the entire agreement and understanding of the parties
hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein.
14.13 Risk of Loss. The risk of any loss, damage or destruction to
any of the Stations Assets from fire or other casualty or cause shall be borne
by the Sellers and the Company at all times prior to the Closing hereunder. Upon
the occurrence of any loss or damage to any material property or assets of the
Company as a result of fire, casualty or other causes prior to Closing, Sellers
shall notify Buyer of same in writing immediately stating with particularity the
extent of such loss or damage incurred, the cause thereof if known and the
extent to which restoration, replacement and repair of the Stations Assets lost
or destroyed will be reimbursed under and insurance policy with respect thereto.
In the event that the loss or damage exceeds One Hundred Thousand Dollars
($100,000.00) and the property is not substantially repaired, replaced or
restored prior to the Closing Date, the Closing Date shall be extended for a
period of up to ninety (90) days to permit the repair, replacement or
restoration of the property by Sellers and Company, and in the further event
that it is not so repaired, replaced or restored within such sixty (60) day
period, Buyer, at its option, may, upon written notice to Sellers:
(a) terminate this Agreement; or
(b) postpone the Closing Date for an additional period of
up to sixty (60) days until such time that the property has been substantially
repaired, replaced or restored; or
(c) elect to consummate the Closing and accept the
property in its "then" condition, and Sellers shall reimburse Buyer for any
deductible portion of the insurance coverage of Company. In the event of
postponement of Closing hereunder, Sellers, Company and Buyer shall join in any
necessary requests of the FCC to extend the time of the effective period of the
FCC's consent. Buyer may also at its option elect to consummate the Closing
pursuant to Subsection (c) hereof prior to the initial sixty (60) day extension
of the Closing Date.
14.14 Consulting and Non-Competition Agreement. Buyer and James H.
Levy agree on the Closing Date to enter into a Consulting and Non-Competition
Agreement in the form attached hereto as Exhibit F.
14.15 Time Brokerage Agreement. Simultaneously with the execution
hereof, Sellers shall cause the Company to enter into with Buyer a Time
Brokerage Agreement, in the form of Exhibit G hereto (the "Time Brokerage
Agreement"), pursuant to which the Company will make available to Buyer the
broadcasting transmission facilities to the Stations and/or cause to be
broadcast on the Stations Buyer's programming from the Commencement Date (as
defined in the Time Brokerage Agreement) during the term thereof. An Event of
Default by either party under the Time Brokerage Agreement shall constitute a
material default under this Agreement (by Sellers hereunder if the Event of
Default under the Time Brokerage Agreement is by the Company) and
39
<PAGE> 40
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.
14.16 Definitions. The following capitalized terms used in this
Agreement shall have the following meanings:
(a) "Contracts" means all contracts, agreements, leases
and legally binding contractual rights of the Company of any kind, written or
oral, relating to the Company or the operations of the Stations and which are
listed on Schedule 4.13.
(b) "Stations Licenses" means all licenses, permits and
other authorizations issued to the Company by any governmental or regulatory
authority including without limitation those issued by the FCC used or useful in
connection with the operation of the Stations, including but not limited to
those described in Schedule 4.08, along with renewals or modifications of such
items between the date hereof and the Closing Date;
(c) "Stations Assets" means all of the assets,
properties, interests and rights of the Company of whatsoever kind and nature,
real and personal, tangible and intangible, owned or leased (to the extent of
the Company's leasehold interest) by the Company as the case may be, wherever
situated, which are used or held for use in the operation of the Stations,
including but not limited to all of the Company's right, title and interest in
and to:
(i) the Stations Licenses;
(ii) all equipment, electrical devices, antennae,
cables, tools, hardware, office furniture and fixtures, office materials and
supplies, inventory, motor vehicles, spare parts and all other tangible personal
property of every kind and description, and the Company's rights therein, owned,
leased (to the extent of the Company's leasehold interest) or held by the
Company and used or useful in connection with the operations of the Stations,
including but not limited to those items described or listed in Schedule 4.11,
together with any replacements thereof and additions thereto, made between the
date hereof and the Closing Date, and less any retirements or dispositions
thereof made between the date hereof and the Closing Date in the ordinary course
of business and consistent with past practices of the Company; provided,
however, the Company agrees that the value of all such assets retired or
disposed of and not replaced with an asset of like kind and quality shall not
exceed $10,000 in the aggregate unless Sellers have obtained the prior written
approval of Buyer which shall not be unreasonably withheld;
(iii) the Contracts and all Time Sales Agreements
(as defined in the Time Brokerage Agreement);
(iv) all of the Company's rights in and to the
call letters listed on Schedule 4.15, and any variation thereof, as well as all
of the Company's rights in and to all trademarks, trade names, service marks,
franchises, copyrights, including registrations and applications for
registration of any of them, computer software, programs and programming
material of whatever form or nature, jingles, slogans, the Stations' logos and
all other logos or licenses to use same and all other intangible property rights
of the Company, which are used or useful in connection with the operation of the
Stations, including but not limited to those listed in
40
<PAGE> 41
Schedule 4.15 (collectively, the "Intellectual Property") together with any
associated goodwill and any additions thereto between the date hereof and the
Closing Date;
(v) all programming materials and elements of
whatever form or nature owned by the Company, whether recorded on tape or other
medium or intended for live performance, and all copyrights owned by or licensed
to the Company that are used or useful in connection with the operation of the
Stations, including all such programs, materials, elements and copyrights
acquired by the Company between the date hereof and the Closing Date;
(vi) all of the Company's rights in and to all
the files, documents, records, and books of account relating to the operation of
the Stations or to the Stations Assets, including, without limitation, the
Stations' local public files, programming information and studies, blueprints,
technical information and engineering data, news and advertising studies or
consulting reports, marketing and demographic data, sales correspondence, lists
of advertisers, promotional materials, credit and sales reports and filings with
the FCC, logs, software programs and books and records relating to employees,
financial, accounting and operation matters.
(vii) the Company's corporate minute books and
records, corporate stock record books and such other books and records as
pertain to the organization, existence or share capitalization of the Company;
and
(viii) all claims and causes of action, including
all contracts of insurance, and insurance process or claims made by, the Company
relating to property or equipment repaired, replaced or restored by the Company
prior to the Closing Date.
14.17. Appointment of Sellers' Representative. Sellers hereby appoint
James H. Levy to act as the representative of each of them in taking any action
permitted or required to be taken by Sellers in connection with the performance
of this Agreement. Buyer may conclusively rely on any actions taken by James H.
Levy as constituting the actions of all Sellers in connection with the
performance of this Agreement, and Buyer shall not be liable for, and no claim
or cause of action shall be asserted against Buyer for, the errors, acts, or
omissions of James H. Levy with respect to Sellers or this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
REGENT COMMUNICATIONS, INC.
By:______________________________
Name:____________________________
Title:___________________________
41
<PAGE> 42
SELLERS:
<TABLE>
<S> <C>
___________________________________________ ___________________________________________
Richard Blue Paul M. Cook, co-Trustee of the Paul and
Address: Marcia Cook Living Trust dated 4/21/92
Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
James H. Levy, as Co-Trustee of James Marcia L. Cook, co-Trustee of the Paul and
Levy and Marcia Levy Community Property Marcia Cook Living Trust dated 4/21/92
Trust U/D/T Dated May 2, 1986 Address:
Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
Marcia Klein Levy, as Co-Trustee of the Susan B. Ford
James Levy and Marcia Levy Community Address:
Property Trust U/D/T Dated May 2, 1986
Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
Arthur Schneiderman Richard W. Worthing
Address: Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
BancBoston Ventures, Inc.
By:________________________________________ ___________________________________________
Printed Name:______________________________ Thomas W. Ford
Title:_____________________________________ Address:
Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
</TABLE>
42
<PAGE> 43
<TABLE>
<S> <C>
Quest Ventures II, L.P. Trantek Traders Ltd.
By:________________________________________ By:________________________________________
Printed Name:______________________________ Printed Name:______________________________
Title:_____________________________________ Title:_____________________________________
Address: Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
Quest Ventures International, L.P. Nazem & Company III, L.P.
By:________________________________________ By:________________________________________
Printed Name:______________________________ Printed Name:______________________________
Title:_____________________________________ Title:_____________________________________
Address: Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
David Nierenberg Douglas M. Laurice, Trustee, WSGR
Address: Retirement Plan FBO Arthur F. Schneiderman
Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
James H. Levy, Trustee FBO the James H. Jeff Drazan
Levy Separate Property Trust dated 9/27/84 Address:
Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
Paul M. Cook Susie Gharib
Address: Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
</TABLE>
43
<PAGE> 44
<TABLE>
<S> <C>
___________________________________________ ___________________________________________
Marcia L. Cook Fred Nazem, Trustee of Nazem Inc.
Address: Defined Benefit Plan
Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
Andrew Pickholtz Jeffrey Krauss
Address: Address:
___________________________________________ ___________________________________________
___________________________________________ ___________________________________________
Seabourne World Express Group PLC
By:________________________________________
Printed Name:______________________________
Title:_____________________________________
Address:
___________________________________________
___________________________________________
</TABLE>
44
<PAGE> 45
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
BY AND AMONG
REGENT COMMUNICATIONS, INC.
AND
THE SHAREHOLDERS OF THE PARK LANE GROUP
This First Amendment to Stock Purchase Agreement ("this First
Amendment") is dated February 2, 1998, by and among Regent Communications, Inc.
("Buyer") and all of the shareholders ("Sellers") of The Park Lane Group (the
"Company"), executed on behalf of Sellers by James H. Levy pursuant to authority
granted to him as Sellers' Representative under the terms of said Stock Purchase
Agreement.
WHEREAS, Buyer and Sellers are parties to a Stock Purchase Agreement
dated June 16, 1997 (the "Original Agreement," or as amended by this First
Amendment, the "Agreement") whereby Sellers have agreed to sell, and Buyer has
agreed to purchase, all of the issued and outstanding shares of capital stock of
the Company;
WHEREAS, Buyer and Sellers have agreed to extend the date of Closing of
the transactions contemplated under the Original Agreement upon the terms and
conditions set forth below; and
WHEREAS, the FCC Consent and the Final Order have been issued as
required by the Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
A. SPECIFIC AMENDMENTS TO THE ORIGINAL AGREEMENT.
1. Section 1.02 is hereby amended to provide that the
Basic Purchase Price shall be Twenty-Three Million and Seventy-Five Thousand
Dollars ($23,075,000.00), which shall remain subject to adjustment as provided
in Section 1.03, as amended herein.
2. The second sentence of Section 1.03 is hereby amended
in its entirety to provide as follows:
"The Basic Purchase Price shall be adjusted
by (a) an increase by the amount of Cash, (b) an
increase by the amount of the Interest Factor, and
(c) a decrease by the amount of Liabilities shown on
the Closing Statement."
Following the third paragraph of Section 1.03, there is hereby added the
following additional paragraph:
"As used herein, the term "Interest Factor"
shall mean at the Closing Date the product of the
Closing Purchase Price determined as if the Closing
Statement had been calculated as of December 31, 1997
multiplied by an
-1-
<PAGE> 46
interest rate of 10.44% per annum for the period from
January 1, 1998 to the Closing Date."
3. Subpart (a) of Section 1.04 is hereby amended in its
entirety to provide as follows:
"(a) in the event this Agreement is
terminated solely because of Buyer's material breach
of this Agreement and all conditions to closing are
at such time satisfied or waived (other than such
conditions as can readily be satisfied by the
Closing), the Letter of Credit shall be delivered to
Sellers (who may exercise their rights to draw on the
Letter of Credit) as provided in Section 13.04 hereof
for Buyer's material breach of this Agreement; and"
4. Subpart (a) of Section 1.05 is hereby amended in its
entirety to provide as follows:
"(a) One Million Dollars ($1,000,000.00) to
the Escrow Agent, to be held, administered and
released in accordance with the terms of an
Indemnification Escrow Agreement to be executed by
Sellers, Buyer and the Escrow Agent at the Closing in
the form of Exhibit B-1 attached hereto (the
"Indemnification Escrow Agreement"), which funds
shall be held in escrow until September 30, 1998 or
as otherwise provided in the Indemnification
Agreement, and will be used to satisfy
indemnification claims of Buyer pursuant to Section
12.02 hereof; and"
5. The Original Agreement is hereby amended to add
Section 5.03 which provides in its entirety as follows:
"5.03 Faircom Transaction. Buyer shall use
its best efforts to prepare, file and have declared
effective by the Securities and Exchange Commission
the Registration Statement on Form S-4 (the "S-4")
regarding the merger between Buyer and Faircom Inc.
(the "Faircom Transaction"). Buyer furthermore shall
use its best efforts to close the Faircom Transaction
as soon as practicable after effectiveness of the
S-4."
6. Subpart (a) of Section 8.01 is hereby amended in its
entirety to provide as follows:
"(a) all representations and warranties of
Sellers made in this Agreement or in any Exhibit,
Schedule or document delivered pursuant hereto, shall
be true and complete in all respects as of the date
hereof and on and as
-2-
<PAGE> 47
of the Closing Date as if made on and as of that
date, except for changes (a) expressly permitted or
contemplated by the terms of this Agreement, (b)
caused by the acts of Buyer during the term of the
Time Brokerage Agreement, (c) to the physical
condition of the tangible personal property or the
real property owned by the Company which occur after
December 31, 1997 other than as a result of an error,
act or omission of Sellers, the Company, or any of
the Company's officers, directors, employees, agents
or contractors, or (d) in the ordinary course of
business which are not, either in individually or in
the aggregate, material and adverse."
7. Subpart (c) of Section 8.01 is hereby amended in its
entirety to provide as follows:
"(c) Buyer shall have received a
certificate, dated as of the Closing Date, from the
Company, executed by the President of the Company to
the effect that: (a) except for changes described in
Section 8.01(a) above and for those representations
or warranties which have been waived in the First
Amendment by Buyer, the representations and
warranties of Seller contained in this Agreement as
they pertain to the Company are true and complete in
all material respects on and as of the Closing Date
as if made on and as of that date; and (b) Sellers
and the Company have complied with or performed in
all material respects all terms, covenants,
agreement, and conditions to be complied with or
performed by them on or prior to the Closing Date
other than those terms, covenants, agreements and
conditions which have been waived in the First
Amendment by Buyer."
8. Subpart (d) of Section 12.01 is hereby amended in its
entirety to provide as follows:
"(d) All other Covenants and Warranties
shall survive until September 30, 1998."
9. Subpart (b) of Section 12.02 is hereby amended in its
entirety to provide as follows:
"(b) Buyer shall defend, indemnify and hold
harmless Sellers from and against any and all Damages
incurred by Sellers arising out of or related to: (i)
any breach of the Covenants, other agreements, and
Warranties given or made by Buyer in this Agreement
(subject to the limitations on Damages contained in
Section 13.04); (ii) all
-3-
<PAGE> 48
federal, state and local tax liabilities of the
Company arising on and after the Closing Date; and
(iii) any loss or damage arising out of any Liability
of Company incurred or the result of the operation of
the Company and Stations on and after the Closing
Date or which have been included in the Closing
Report and as to which Buyer has received an
adjustment of the Purchase Price in its favor
hereunder in accordance with Section 1.03."
10. Subpart (f)(i) of Section 12.02 is hereby amended by
the substitution of $1,000,000 for $2,000,000.
11. Subpart (c) of Section 13.01 is hereby amended in its
entirety to provide as follows:
"(c) By written notice of Sellers'
Representative to Buyer if Buyer breaches in any
material respect any of its representations or
warranties or defaults in any material respect in the
observance or in the due and timely performance of
any of its covenants or agreements herein contained
and such breach or default shall not be cured within
thirty (30) days of the date of notice of breach or
default served by Sellers' Representative; provided,
however, that if Buyer fails to renew the Letter of
Credit as required in Section E of the First
Amendment to the Original Agreement, Buyer shall have
eight (8) business days from the date of the notice
of breach or default served by Sellers'
Representative in which to cure such breach; or"
12. Subparts (g) and (h) of Section 13.01 are hereby
amended by the substitution of June 30, 1998 for March 31, 1998.
13. Section 13.04 is hereby amended in its entirety to
provide as follows:
"13.04 Sellers' Liquidated Damages. As more
fully described in the Deposit Escrow Agreement, in
the event this Agreement is terminated because of
Buyer's material breach of this Agreement, and all
other conditions to Closing are at such time
satisfied or waived (other than such conditions as
can readily be satisfied by Closing), then (a)
Sellers shall be entitled to liquidated damages from
Buyer in the amount of $2,000,000.00, (b) the Letter
of Credit shall be delivered to Sellers, and (c) the
proceeds from a draw on the Letter of Credit shall be
applied toward satisfaction of such liquidated
damages. It is understood and agreed that such
liquidated damages amount represents Buyer's and
Sellers' reasonable estimate of actual damages and
does not constitute a penalty. Recovery of liquidated
-4-
<PAGE> 49
damages shall be the sole and exclusive remedy of
Sellers against Buyer for failing to consummate this
Agreement as a result of Buyer's material breach
hereof, and shall be applicable regardless of the
actual amount of damages sustained and all other
remedies are deemed waived by Sellers."
14. Section 14.13 is hereby amended in its entirety to
provide as follows:
"14.13 Risk of Loss. Provided the
representations and warranties of Sellers in Section
4.26 continue to remain correct in all material
respects, the risk of any loss, damage or destruction
to any of the Stations' Assets from fire or other
casualty or cause (other than an error, act, or
omission of Sellers, the Company, or any of the
Company's officers, directors, employees, agents or
contractors) shall be borne by Buyer after January 1,
1998. To Buyer's knowledge, as of the date of the
First Amendment to the Original Agreement, there has
been no loss, damage or destruction to any of the
Stations' Assets from fire or other casualty or cause
occurring on or before December 31, 1997. Upon the
occurrence of any loss or damage to any material
property or assets of the Company after December 31,
1997 and prior to Closing as a result of fire,
casualty or other causes, Seller shall notify Buyer
of the same in writing immediately stating with
particularity the extent of such loss or damage
incurred, the cause thereof if known and the extent
to which restoration, replacement and repair of the
Stations' Assets lost or destroyed will be reimbursed
by any insurance policy with respect thereto. Unless
the cause of the loss or damages is the result of an
error, act or omission of Sellers, the Company, or
any of the Company's officers, directors, employees,
agents or contractors, or the representations and
warranties of Sellers in Section 4.26 are not correct
in all material respects at the time of such loss or
damage, any costs in excess of those reimbursed by
any insurance policy shall be the sole responsibility
of Buyer, and the occurrence of any such loss or
damage to the Stations' Assets shall not provide the
basis for any postponement of the Closing or the
termination of the Agreement.
15. The Original Agreement is amended such that all
references to Exhibit B shall be to Exhibit B-1 attached hereto.
B. EXTENDED CLOSING DATE.
-5-
<PAGE> 50
Notwithstanding the provisions of Section 1.06 of the Original
Agreement, it is mutually agreed that the Closing shall occur on or before the
earlier to occur of (i) March 31, 1998 or (ii) the date of the closing of the
merger between Buyer and Faircom Inc. upon not less than five (5) business days'
notice from Buyer to Sellers. The parties agree to cooperate, at Buyer's cost,
in obtaining any extensions of the effective period of the FCC's Final Order as
may be necessary or appropriate. The failure of either Buyer or Sellers to
consummate the Closing by March 31, 1998 or by the closing of the Faircom
Transaction, whichever is earlier, shall immediately entitle the other party
(provided it is not then in material default or breach of the Agreement) to
serve notice of breach or default as provided in Sections 13.01(b), (c) or (d)
of the Agreement.
C. WAIVERS AND ACKNOWLEDGEMENTS.
1. Buyer hereby waives any breach by Sellers of the
warranties and representations contained in the second sentence of Section 4.24
regarding the assumptions upon which preparation of the Consolidated 1997 Park
Lane Budget was based.
2. Buyer hereby waives all claims under Section 8.08
which it has or may have that there has occurred after December 31, 1997 a
material adverse change unless any such material adverse change is caused by the
error, act, or omission of Sellers, the Company, or any of the Company's
officers, directors, employees, agents, or contractors.
3. In consideration of agreements contained herein and
in reliance upon and contingent upon the accuracy of the information supplied to
Buyer by Sellers' Representative in writing prior to the date hereof regarding
remediation efforts which have been taken, Buyer hereby waives all claims and
conditions of Closing under Section 8.09 relating to the failure of Sellers to
cure unsatisfactory conditions discovered by Buyer.
4. With reference to Section 8.11, Buyer hereby
acknowledges that it has obtained updated Phase I environmental assessment
reports on the Real Property confirming as to the Real Property covered by the
reports provided to Buyer by the Company the representations and warranties of
Sellers on environmental matters and the absence of any material adverse change
from the content of the reports which have been provided to Buyer by the
Company.
5. Buyer hereby acknowledges that Sellers have submitted
sufficient information to supplement Schedules 4.11 and 4.13, pursuant to
Section 4.13 and 6.12. Buyer hereby further acknowledges that, except as
identified on Exhibit H attached hereto, no third-party consent is required by
any of the Contracts listed in Schedule 4.13 in connection with the transactions
contemplated by the Agreement.
6. Buyer hereby acknowledges that, as of December 31,
1997, it did not have actual knowledge of any breach of Warranties or Covenants
by Sellers then existing which would then constitute grounds for termination of
this Agreement or a Claim under Section 12.02(a) or (b), other than those
provisions, if any, the noncompliance with which Buyer has specifically waived
in this First Amendment. Actual knowledge of Buyer shall mean the actual
knowledge of Buyer's officers after they have made due inquiry of the employees,
representatives and agents of Buyer who would be expected to have knowledge of
the matter, and with respect to the
-6-
<PAGE> 51
condition of any Station Assets, records or other object, after either Buyer's
officers and/or employees, representatives, or agents of Buyer have inspected
it.
7. Except as specifically waived or modified above, all
conditions of Closing precedent to Buyer's obligations remain in full force and
effect.
D. FEES.
Buyers agree to reimburse Sellers up to a maximum amount of
$20,000.00 for the legal fees and expenses incurred by Sellers or the Company to
Wilson Sonsini Goodrich & Rosati for services rendered in connection with, and
limited strictly to, the negotiation and documentation of this Agreement, based
on customary hourly rates and such detailed itemization as Buyer may reasonably
request.
E. RENEWAL OF LETTER OF CREDIT.
Buyer agrees that the Letter of Credit shall either be renewed
or converted to cash by Buyer at least sixty (60) days prior to any stated
expiration date thereof, as the same may be amended from time to time. Failure
of Buyer to do so shall be a material default of the Agreement, for which
Sellers shall have the remedies provided under Article XIII of the Agreement;
provided, however, that notwithstanding Section 13.01(c) of the Original
Agreement, Buyer shall have eight (8) business days to cure any default by
reason of failure to timely renew the Letter of Credit.
F. MISCELLANEOUS.
1. This First Amendment may be executed in one or more
counterparts and by facsimile, each of which will be deemed an original and all
of which together will constitute one and the same instrument.
2. This First Amendment and a contemporaneous amendment
to the Time Brokerage Agreement embody the entire agreement and understanding of
the parties and supersede any and all prior agreements and understandings
relating to the matters specifically covered herein. Except as amended or waived
hereby, the terms and conditions of the Original Agreement remain in full force
and effect.
3. This First Amendment has been duly authorized,
validly executed, and delivered by Buyer and Sellers' Representative on behalf
of Sellers and constitutes a valid and binding obligation of Buyer and Sellers.
4. All capitalized terms used herein and not otherwise
defined have the meaning ascribed to them in the Original Agreement.
-7-
<PAGE> 52
IN WITNESS WHEREOF, this First Amendment has been executed as of the
date first above written.
REGENT COMMUNICATIONS, INC. SELLERS' REPRESENTATIVE
By:
------------------------------------ ------------------------------------
Terry S. Jacobs James H. Levy
Chairman and Chief Executive Officer
8
<PAGE> 1
Exhibit 2(f)
AGREEMENT OF MERGER
AMONG
ALTA CALIFORNIA BROADCASTING, INC.
AND
REGENT ACQUISITION CORP.
AND
REGENT COMMUNICATIONS, INC.
October 10, 1997
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
DEFINITION OF TERMS
<S> <C> <C>
1. Definition of Terms.............................................................................2
(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............................................................................4
(j) Financials.............................................................................4
(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.......................................................................................5
6. Officers........................................................................................5
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..........................................................................6
11. Funding of Consideration for Alta Stock.........................................................6
12. Payment of Cash and Issuance of Preferred Stock.................................................6
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
PURCHASE PRICE
<S> <C> <C>
13. (a) Consideration Before Adjustment........................................................7
(b) Consideration After Adjustment.........................................................7
FCC MATTERS
14. Commission Consent to Transfer of Control.......................................................8
15. Applications for Consent - Cooperation of the Parties...........................................8
16. Costs and Expenses..............................................................................8
17. Operation of the Stations Before Closing........................................................8
18. Control and Access..............................................................................9
19. Time for Commission Consent - Termination.......................................................9
COVENANTS, REPRESENTATIONS AND WARRANTIES OF ALTA
20. Covenants, Representations and Warranties of Alta...............................................9
(a) Corporate Standing and Authority.......................................................9
(b) Ownership of Alta Stock................................................................9
(c) Corporate Power.......................................................................10
(d) Capital Stock.........................................................................10
(e) Due Authorization, Etc................................................................10
(f) Affiliates............................................................................11
(g) Rights to Acquire Securities..........................................................11
(h) Corporate Records.....................................................................11
(i) Title to Broadcast Assets.............................................................11
(j) Financial Statements; Budget..........................................................11
(k) Contracts.............................................................................12
(1) Government Authorizations.............................................................13
(m) Management, Key Employees and Accounts................................................14
(n) Tax Elections.........................................................................15
(o) Related Transactions..................................................................15
(p) Taxes.................................................................................15
(q) Employee Benefit Plans................................................................16
(r) Compliance With FCC Regulations.......................................................16
(s) Personal Property.....................................................................16
(t) Real Property.........................................................................16
(u) Environmental.........................................................................17
(v) Insurance.............................................................................18
(w) Accounts and Notes Receivable.........................................................18
(x) Laws, Regulations and Instruments.....................................................18
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(y) Conduct of Stations...................................................................18
(z) Disposition of Assets.................................................................18
(aa) Transmitter Sites.....................................................................18
(bb) Litigation............................................................................19
(cc) No Conflict...........................................................................19
(dd) Required Consents.....................................................................19
(ee) Intellectual Property.................................................................19
(ff) Qualifications for Transfer of Control................................................20
(gg) Public Inspection File................................................................20
(hh) Absence of Certain Changes............................................................20
(ii) Personnel Information.................................................................21
(jj) Outstanding Debt......................................................................21
(kk) Negative Covenants....................................................................21
(ll) Affirmative Covenants.................................................................23
(mm) Additional Agreements.................................................................23
(nn) Join in Execution of Documents........................................................23
(oo) Full Disclosure.......................................................................24
COVENANTS, REPRESENTATIONS AND WARRANTIES
OF REGENT AND SUBSIDIARY
21. Covenants, Representations and Warranties of Regent and Subsidiary.............................24
(a) Corporate Standing and Authority......................................................24
(b) Corporate Power.......................................................................24
(c) Capitalization........................................................................25
(d) Join in Execution of Documents........................................................25
(e) Litigation............................................................................25
(f) No Conflict...........................................................................26
(g) Licenses..............................................................................26
(h) Required Consents.....................................................................26
(i) Absence of Certain Changes............................................................27
(j) Laws, Regulations and Instruments.....................................................27
(k) Issuance of Series E Preferred Stock..................................................27
(l) Financial Statements..................................................................28
(m) No Adverse Changes....................................................................28
(n) Qualifications for Transfer of Control................................................28
(o) Insurance.............................................................................28
(p) Taxes.................................................................................28
(q) Full Disclosure ......................................................................29
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
INDEMNIFICATION
<S> <C> <C>
22. Indemnification ...............................................................................29
RISK OF LOSS
23. Risk of Loss...................................................................................30
(a) Broadcast Assets......................................................................30
(b) Broadcast Transmission of the Stations Prior to Closing...............................31
CONDITIONS PRECEDENT TO SUBSIDIARY'S AND REGENT'S
OBLIGATION TO CLOSE
24. Conditions Precedent to Subsidiary's and Regent's Obligations..................................32
(a) Representations, Warranties and Covenants.............................................32
(b) Delivery of Closing Documents.........................................................32
(c) Licenses..............................................................................32
(d) Consents..............................................................................32
(e) Final Order...........................................................................32
(f) Adverse Proceedings...................................................................32
(g) Title, Engineering and Environmental Examination......................................33
(h) Time Brokerage Agreement Compliance...................................................33
(i) Material Adverse Change...............................................................33
(j) Acquisition of Assets.................................................................33
(k) Relocation of KRDG(FM) Antenna Tower..................................................33
(l) Repair or Correction of Existing Condition............................................34
CONDITIONS PRECEDENT TO ALTA'S OBLIGATION TO CLOSE
25. Conditions Precedent to Alta's Obligations.....................................................34
(a) Representations, Warranties and Covenants.............................................34
(b) Purchase Price........................................................................34
(c) Delivery of Closing Documents.........................................................34
(d) Final Order...........................................................................34
(e) Consents..............................................................................34
(f) Adverse Proceedings...................................................................35
(g) Issuance of Preferred Stock...........................................................35
(h) Title, Engineering and Environmental Examination......................................35
(i) Refinancing of Alta Senior Debt.......................................................35
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
CLOSING DOCUMENTS
<S> <C> <C>
26. Closing Documents to be Delivered by Alta......................................................35
27. Closing Documents to be Delivered by Regent and Subsidiary.....................................37
28. Escrow Deposit.................................................................................39
29. Remedies on Default-Prior to Closing...........................................................39
30. Brokerage......................................................................................40
31. Survival of Representations and Warranties.....................................................40
MISCELLANEOUS PROVISIONS
32. Time Brokerage Agreement.......................................................................41
33. Headings.......................................................................................41
34. Execution......................................................................................41
35. Notices........................................................................................41
36. Disclosure.....................................................................................42
37. Receipt of Series E Preferred Stock............................................................42
38. Amendment or Termination.......................................................................42
39. Entire Agreement...............................................................................43
40. Governing Law..................................................................................43
41. Successors and Assigns.........................................................................43
42. Exhibits.......................................................................................43
</TABLE>
-v-
<PAGE> 7
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
-1-
<PAGE> 8
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").
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).
-2-
<PAGE> 9
(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 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.
-3-
<PAGE> 10
(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
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
-4-
<PAGE> 11
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
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:
<TABLE>
<CAPTION>
Total Total
Authorized Outstanding
Capital Stock Shares Shares
------------- ------ ------
<S> <C> <C>
Common 1,000,000 30,000
</TABLE>
-5-
<PAGE> 12
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.
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.
-6-
<PAGE> 13
PURCHASE PRICE
--------------
13. (a) CONSIDERATION BEFORE ADJUSTMENTS. Subject to the provisions of
paragraph 24(k), 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 as follows:
(i) if the amount of Liabilities exceeds the amount
of Cash, as shown on the Closing Statement, by less than $116,476, then the
Consideration Before Adjustments shall be adjusted upward by the amount by which
such excess is less than $116,476; and
(ii) if the amount of Liabilities exceeds the amount
of Cash, as shown on the Closing Statement, by more than $116,476, then the
Consideration Before Adjustments shall be adjusted downward by the amount by
which such excess is greater than $116,476.
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, with any fractional share rounded up to
the next whole share and a corresponding reduction to the cash payment to take
into account such rounding adjustment.
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
-7-
<PAGE> 14
accordance with generally accepted accounting principles consistently applied
should be included as Liabilities of Alta, but excluding those liabilities of
Alta identified as Alta Senior Debt on Exhibit 20(i) existing as of the Closing
Date (provided, however, if the Alta Senior Debt exceeds $1,500,000 as of the
Closing Date, the amount of the excess over $1,500,000 shall not be excluded and
shall be included as a Liability for purposes of calculating the Consideration
After Adjustments. 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 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.
-8-
<PAGE> 15
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.
(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:
-9-
<PAGE> 16
(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:
<TABLE>
<CAPTION>
Total Total
Authorized Outstanding
Capital Stock Shares Shares
------------- ------ ------
<S> <C> <C>
Common 1,000,000 30,000
</TABLE>
(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
-10-
<PAGE> 17
securities 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 there of
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.
-11-
<PAGE> 18
(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
-12-
<PAGE> 19
Station the contract with whom is set forth on such Exhibit, or (D) shall be
subject to end-rate discounts.
(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
-13-
<PAGE> 20
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 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.
-14-
<PAGE> 21
(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, 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
-15-
<PAGE> 22
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, 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,
-16-
<PAGE> 23
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.
(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. Sections 9601 ET SEQ., Toxic Substances Control Act. 15
U.S.C. Sections 2601 ET SEQ., the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Sections 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.
-17-
<PAGE> 24
(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 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
-18-
<PAGE> 25
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.
(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
-19-
<PAGE> 26
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;
(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;
-20-
<PAGE> 27
(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"), 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
-21-
<PAGE> 28
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
(xi) Borrow or incur any indebtedness unless such
indebtedness is to be paid off concurrently at Closing.
-22-
<PAGE> 29
(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;
(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; and
(vi) Make all payments on its outstanding debt
(including Alta Senior Debt) on a current basis and in accordance with its
contractual obligations.
(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.
-23-
<PAGE> 30
(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
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
-24-
<PAGE> 31
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 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.
-25-
<PAGE> 32
(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 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
-26-
<PAGE> 33
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;
(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.
-27-
<PAGE> 34
(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.
(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
-28-
<PAGE> 35
(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.
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 misrepresentation 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
-29-
<PAGE> 36
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 misrepresentation, 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.
(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,
-30-
<PAGE> 37
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 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.
-31-
<PAGE> 38
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 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,
-32-
<PAGE> 39
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) RELOCATION OF KRDG(FM) ANTENNA TOWER. Redwood and Regent
or Subsidiary shall have entered into a joint venture agreement on terms and
conditions acceptable to both parties pursuant to which the joint venture will
construct and own a tower in a location and of a design and height acceptable to
Regent and then lease the tower to Regent or Subsidiary at a fair market rent to
be paid to the joint venture and on such other terms and conditions acceptable
to the parties. In the event this condition shall not have been satisfied on or
before the Closing Date, then at Closing (i) the Consideration Before
Adjustments set forth in paragraph 13(a) will consist of $975,000 in cash, plus
195,000 shares of Series E Preferred Stock, (ii) the number of shares to be
delivered to Redwood pursuant to paragraph 12(b) shall be reduced to 175,000,
(iii) the amount of cash to be delivered to Redwood pursuant to paragraph 12(c)
shall be reduced to $975,000, and (iv) with such modifications, this condition
shall be deemed satisfied; provided, however, if after the Closing Redwood and
Regent or Subsidiary shall enter into such a joint venture agreement, then upon
the execution of such joint venture agreement, there shall be distributed to
Redwood by Subsidiary an additional $25,000 in cash and 5,000 shares of Series E
Preferred Stock to place the parties in the same position as if the joint
venture agreement had been executed on or before the Closing Date.
-33-
<PAGE> 40
(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;
provided, however, if items 2 and 3 shall not have been remedied, despite
diligent efforts to do so, by the Closing Date, then as to such items Redwood
shall have entered into an agreement with Regent, containing terms and
conditions acceptable to Regent (including provision for an escrow of shares of
Series E Preferred Stock as security for performance), obligating Redwood to
cause such items to be remedied to the satisfaction of Regent after the Closing
Date diligently and as soon as reasonably possible, all at the cost of Redwood.
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.
-34-
<PAGE> 41
(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.
(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
-35-
<PAGE> 42
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 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
-36-
<PAGE> 43
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:
(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;
-37-
<PAGE> 44
(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;
(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,
-38-
<PAGE> 45
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
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.
-39-
<PAGE> 46
(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.
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
-40-
<PAGE> 47
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:
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
-41-
<PAGE> 48
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
Washington, D.C. 20006
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.
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
-42-
<PAGE> 49
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
-43-
<PAGE> 50
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:
--------------------------------
-44-
<PAGE> 51
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
-45-
<PAGE> 52
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:
--------------------------------
-46-
<PAGE> 1
Exhibit 4(a)
REGENT
------
COMMUNICATIONS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SERIES C CONVERTIBLE SERIES C CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK
THIS CERTIFICATE IS TRANSFERABLE IN SEE REVERSE SIDE FOR
CINCINNATI, OHIO CERTAIN DEFINITIONS
CUSIP
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE SERIES C CONVERTIBLE PREFERRED
STOCK, $0.01 PAR VALUE PER SHARE, OF
REGENT COMMUNICATIONS, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar. This Certificate and the shares represented hereby are issued and
shall be held subject to all provisions of the Amended and Restated Certificate
of Incorporation and the Amended and Restated By-Laws of the Corporation and
all amendments thereto and restatements thereof now existing or hereafter duly
made, copies of which shall be maintained on file with the Transfer Agent. The
Corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
Such request may be made to the Corporation or the Transfer Agent.
Witness the facsimile signatures of its duly authorized officers.
Dated:
/s/ WILLIAM L. STAKELIN /s/ TERRY S. JACOBS
- ----------------------------- -------------------
William L. Stakelin Terry S. Jacobs
President, Chief Operating Chairman of the Board,
Officer and Secretary Chief Executive Officer and Treasurer
COUNTERSIGNED AND REGISTERED:
FIFTH THIRD BANK
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM = as tenants in common UNIF GIFT MIN ACT = ___________Custodian (until age _____)
TEN ENT = as tenants by the entireties (Cust)
JT TEN = as joint tenants with right of ___________under Uniform Gifts
survivorship and not as tenants (Minor)
in common to Minors Act _______________________
(State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received, _______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
| |
- --------------------------------------
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated _________________________
X_____________________________________
X_____________________________________
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
NOTICE: THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By____________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 4(b)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of the 20th day
of May, 1997 between TERRY S. JACOBS (the "Buyer"), and REGENT COMMUNICATIONS,
INC., a Delaware corporation (the "Company").
1. Sale and Purchase of the Series A Preferred Stock. On and subject to the
terms and conditions set forth herein, the Company hereby sells, issues and
delivers to Buyer, and Buyer hereby purchases from the Company, 240,000 shares
of the 7% Series A Convertible Preferred Stock of the Company (the "Series A
Preferred Stock").
2. Purchase Price. The purchase price for the Series A Preferred Stock is
One Million Two Hundred Thousand Dollars ($1,200,000.00) ($5.00 per share) (the
"Purchase Price"), which sum has been paid by Buyer to the Company upon the
execution of this Agreement.
3. Deliveries by the Company. Upon the execution of this Agreement, the
Company has made the following deliveries to Buyer, and Buyer hereby
acknowledges receipt thereof:
(a) a stock certificate representing the Series A Preferred Stock duly
issued in the name of Buyer and bearing the legends set forth in Section 6(j)
hereof; and
(b) the Stockholders' Agreement, in the form of Exhibit A attached
hereto (the "Stockholders' Agreement"), duly executed on behalf of the
Company; and
(c) a certificate issued by the Secretary of State of Delaware as to
the status of the Company as a corporation organized and existing in good
standing in that state; and
(d) copies of the Certificate of Incorporation and By-Laws of the
Company, certified as true and complete by an officer of the Company.
4. Deliveries by Buyer. Upon the execution of this Agreement, Buyer has
made the following deliveries to the Company, and the Company hereby
acknowledges receipt thereof:
(a) the Purchase Price; and
(b) the Stockholders' Agreement, duly executed on behalf of Buyer.
5. Representations and Warranties of the Company. The Company represents
and warrants to Buyer, as of the date hereof, as follows:
(a) Organization and Qualification. The Company is validly existing as a
Delaware corporation in good standing and is authorized to transact business as
a foreign
-1-
<PAGE> 2
corporation in good standing in those jurisdictions in which the nature of its
activities or the property owned by it make such qualification necessary.
(b) Capital Stock. The parties having made the deliveries set forth in
Section 3 and Section 4 hereof, the Series A Preferred Stock issued and
delivered to Buyer hereunder is duly authorized, validly issued, fully paid and
nonassessable, and constitutes 21.2% of the issued and outstanding shares of
capital stock of the Company. Based on the capitalization of the Company as of
the date hereof, if the Series A Preferred Stock purchased by Buyer pursuant to
this Agreement and all other outstanding shares of the Series A Preferred Stock
were converted to common stock of the Company in accordance with the terms of
the Series A Preferred Stock, all as of the date hereof, the Series A Preferred
Stock issued and delivered to Buyer pursuant to this Agreement, as so converted,
would constitute 21.2% of the issued and outstanding common stock of the Company
as of the date hereof. Except under the terms of the Series A Preferred Stock,
as set forth in the Amended and Restated Certificate of Incorporation of the
Company, and except as described elsewhere in this Agreement, there are not
outstanding any warrants, options or conversion or other rights (including
preemptive rights) pursuant to which the Company is or could become obligated to
issue any stock or any securities convertible into or exchangeable for stock of
the Company, or any contracts or commitments providing for the issuance of or
granting of rights to acquire, any stock of the Company or securities
convertible into or exchangeable for stock of the Company.
(c) Authority of the Company. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity).
(d) No Conflicts. The execution, delivery and performance of this
Agreement and the Stockholders' Agreement by the Company does not and will not
violate any provision of law or any rule or regulation of any federal, state or
local governmental authority to which the Company is subject, nor result in a
breach or violation by the Company of any of the terms or provisions of, or
constitute an event of default under the Company's Certificate of Incorporation
or By-Laws, as currently in effect, or any indenture, mortgage, trust
(constructive or otherwise), loan agreement, lease or other agreement or
instrument to which the Company is a party or by which the Company or its assets
are bound. The Company is not a party to, or subject to, or bound by, any
judgment, award, injunction, order or decree of any court or governmental
authority, or any arbitration award which may restrict or interfere with the
performance by the Company of this Agreement or the Stockholders' Agreement.
(e) Required Consents. No consent, approval, joinder, waiver,
authorization, or declaration, filing or registration with any governmental or
regulatory authority, or any consent of any third party, is required to be
obtained by the Company in connection with the execution, delivery and
performance of this Agreement or the Stockholders' Agreement or the consummation
of the transactions contemplated thereby.
-2-
<PAGE> 3
(f) Litigation. There are no claims, demands, disputes, actions, suits,
proceedings or investigations pending or, to the best of the Company's
knowledge, threatened against or directly affecting the Company or its
properties, at law or in equity or before or by any federal, state, municipal or
other governmental department, commission, board, agency or instrumentality,
domestic or foreign; nor is the Company, its business or assets, subject to any
presently effective adverse order, writ, injunction or decree of any court,
domestic or foreign, or any federal agency or instrumentality, and, the Company
is not in default with respect to or in violation of any law, order, regulation,
rule or ordinance of any federal, state, municipal or local department,
commission, board, agency or instrumentality.
(g) Compliance With Laws. The Company is in compliance with all
applicable laws, orders, regulations, rules and ordinances non-compliance with
which could have a material adverse effect on the Company or its business or
properties.
(h) No Broker or Finder. The Company has not retained, or otherwise
entered into any agreement or understanding with, any broker or finder in
connection with the transactions contemplated by this Agreement, and Buyer will
not incur any liability for any fee, commission or other compensation on account
of any such retention, agreement or understanding by the Company.
(i) Balance Sheet. The Company's balance sheet as of May 15, 1997, a
copy of which is attached hereto as Exhibit B (the "Balance Sheet"), is true and
correct in all material respects as of such date and fairly reflects the
financial condition of the Company as of said date. Since the date of the
Balance Sheet, the Company has not engaged in any transaction otherwise than in
the ordinary course of business.
(j) Absence of Undisclosed Liabilities. As of the date of this
Agreement, the Company does not have any liabilities, obligations, or debts,
whether accrued, absolute, contingent or otherwise, existing or arising out of
any transaction entered into, or state of facts existing, on or prior to the
date hereof, other than such liabilities as are reflected on the Balance Sheet.
6. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Company, as of the date hereof, as follows:
(a) Non-Registration. Buyer understands that the offering and sale of
the Series A Preferred Stock is intended to be exempt from registration under
the Securities Act of 1933, as amended (the "1933 Act"), by virtue of Section
4(2) of the Act and the provisions of Regulation D promulgated thereunder, that
the Series A Preferred Stock has not been registered under the 1933 Act or under
the securities laws of any state, and that the Company will be under no
obligation to effect any such registration.
(b) Investment Intent. Buyer is purchasing the Series A Preferred Stock
for his own account, for investment and not with a view to resale, distribution,
or other disposition, and Buyer has no present plans to enter into any contract,
undertaking, agreement or arrangement for
-3-
<PAGE> 4
any such resale, distribution or other disposition. Buyer will not sell or
otherwise transfer the Series A Preferred Stock without registration under the
1933 Act and applicable state securities laws, or pursuant to an exemption from
the registration requirements thereof which, in the opinion of counsel
acceptable to the Company, is available for the transaction.
(c) Status of Buyer. Buyer is an "accredited investor," as that term is
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.
(d) Opportunity to Review Books and Records. Buyer has had a reasonable
opportunity to inspect all documents, books and records pertaining to the
Company and the Series A Preferred Stock and confirms that the Series A
Preferred Stock is being purchased without Buyer's receipt of any offering
literature. Buyer is not relying on the Company or any agent of the Company with
respect to the economic or other considerations of an investment in the Company;
provided, however, that the representations of Buyer contained in this
subsection (d) and in subsection (e) below of this Section 6 shall not operate
to limit or modify the representations and warranties made by the Company in
Section 5 of this Agreement or the right of Buyer to rely thereon.
(e) Opportunity for Questions. Buyer has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the Company, its business and proposed operations, the
terms of the Series A Preferred Stock and all other aspects of investment in the
Company, and all such questions have been answered to the full satisfaction of
Buyer.
(f) Manner of Purchase. Buyer is not subscribing for the Series A
Preferred Stock as a result of or pursuant to any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person other than a representative of
the Company.
(g) Absence of Certain Convictions, Orders. Neither Buyer nor any
affiliate (as defined in the 1933 Act) of Buyer: (i) has filed a registration
statement which is the subject of a currently effective stop order entered
pursuant to any state's law within five years prior to the date hereof; (ii) has
been convicted within five years prior to the date hereof of any felony or
misdemeanor in connection with the purchase or sale of any security or any
felony involving fraud or deceit including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny or conspiracy to
defraud; (iii) is currently subject to any state's administrative order or
judgment entered by that state's securities administrator within five years
prior to the date hereof and is not subject to any state's administrative order
or judgment in which fraud or deceit was found and the order or judgment was
entered within five years of the date hereof; (iv) is currently subject to any
state's administrative order or judgment which prohibits the use of any
exemption from registration in connection with the purchase or sale of
securities; (v) is subject to any order, judgment or decree of any court of
competent jurisdiction temporarily or preliminarily restraining or enjoining, or
is subject to any order, judgment or decree of any court of competent
jurisdiction, entered within five years prior to the date hereof, permanently
restraining or enjoining
-4-
<PAGE> 5
the any such person from engaging in or continuing any conduct or practice in
connection with the purchase or sale of any security or involving the making of
any false filing with any state.
(h) No Conflict. The execution, delivery and performance of this
Agreement by Buyer (i) will not constitute a default under or conflict with any
agreement or instrument to which Buyer is a party or by which Buyer of his
assets are bound, (ii) will not conflict with or violate any order, judgment,
decree, statute, ordinance or regulation applicable to Buyer and (iii) do not
require the consent of any person or entity.
(i) No Broker or Finder. Buyer has not retained, or otherwise entered
into any agreement or understanding with, any broker or finder in connection
with its purchase of the Series A Preferred Stock hereunder, and the Company
will not incur any liability for any fee, commission or other compensation on
account of any such retention, agreement or understanding by Buyer.
(j) Legends. Buyer understands that the certificate representing the
Series A Preferred Stock shall bear legends in substantially the following
forms, and Buyer shall not transfer any of the shares of Series A Preferred
Stock, or any shares of common stock that may be issued on conversion thereof,
or any interest therein, except in accordance with the terms of such legends:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state (the "Securities Laws") . These securities may not be offered,
sold, transferred, pledged or hypothecated in the absence of
registration under applicable Securities Laws, or the availability of an
exemption therefrom. This certificate will not be transferred on the
books of the Corporation or any transfer agent acting on behalf of the
Corporation except upon the receipt of an opinion of counsel,
satisfactory to the Corporation, that the proposed transfer is exempt
from the registration requirements of all applicable Securities Laws, or
the receipt of evidence, satisfactory to the Corporation, that the
proposed transfer is the subject of an effective registration statement
under all applicable Securities Laws."
"The issuer is subject to restrictions contained in the Federal
Communications Act, as amended. The securities evidenced by this
certificate may not be sold, transferred, assigned or hypothecated if,
as a result thereof, the issuer would be in violation of that act."
"The securities represented by this certificate are subject to the terms
of (i) that certain Stock Purchase Agreement dated as of May 20, 1997
between Terry S. Jacobs and Regent Communications, Inc., and (ii) that
certain Stockholders' Agreement dated as of May 20, 1997 among Terry S.
Jacobs and its stockholders, as the same may be amended from time to
time."
(k) Authority of Buyer. This Agreement and the Stockholders' Agreement
constitute the legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their terms, except as enforcement may be
limited by bankruptcy, insolvency,
-5-
<PAGE> 6
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity).
(l) No Conflicts. The execution, delivery and performance of this
Agreement and the Stockholders' Agreement by Buyer will not violate any
provision of law or any rule or regulation of any federal, state or local
governmental authority to which Buyer is subject, nor result in a breach or
violation by Buyer of any of the terms or provisions of, or constitute an event
of default under, the any indenture, mortgage, trust (constructive or
otherwise), loan agreement, lease or other agreement or instrument to which
Buyer is a party or by which Buyer or his assets are bound. Buyer is not a party
to, or subject to, or bound by, any judgment, award, injunction, order or decree
of any court or governmental authority, or any arbitration award which may
restrict or interfere with the performance by Buyer of this Agreement, the
Stockholders' Agreement or such other documents as may be delivered by Buyer in
connection herewith.
(m) Legal Proceedings. There is no action, suit, proceeding or
investigation pending (or, to the knowledge of Buyer, threatened) against Buyer
in, before or by any court, administrative agency or arbitrator affecting the
ability of Buyer to carry out the provisions of this Agreement or the
Stockholders' Agreement and the transactions contemplated thereby.
(n) Dilution. Buyer acknowledges and understands that shares of common
stock of the Company have been issued at prices per share substantially less
than that on which the Purchase Price is based and that Buyer will suffer
immediate substantial dilution from the Purchase Price paid by Buyer for the
Series A Preferred Stock. Furthermore, the Company anticipates financing its
contemplated acquisitions of radio and other communications properties, in part,
with additional equity, the issuance of which would dilute the percentage
interest of Buyer in the Company.
8. Use of Proceeds. The Company hereby covenants and agrees with Buyer that
the Purchase Price received from Buyer at the Closing shall be used solely for
working capital, fixed asset purchases, acquisitions, and related expenses, and
for no other use or purpose. The Company hereby agrees that in the event the
Purchase Price is applied for purposes other than those specified in this
Section 8, the Company shall redeem the Series A Preferred Stock from Buyer and
refund to Buyer the full amount of the Purchase Price plus an amount equal to
any accrued and unpaid dividends through the date of such redemption.
9. Registration Rights. If, during any period when Buyer holds shares of
the Series A Preferred Stock or common stock of the Company issued on conversion
thereof (the "Conversion Shares"), the Company files a registration statement to
register for public offering its common stock, the Company shall give at least
90 days' advance written notice to Buyer of its intent to file such registration
statement. If so requested by Buyer within 30 days of the giving of such written
notice, to the extent then permissible under federal and applicable state
securities laws, and the rules and regulations of the Securities and Exchange
Commission thereunder, the Company shall include in such registration statement
for Buyer's account all but not less than all of the shares of the Conversion
Shares then held by Buyer, except where the inclusion of any or all of Buyer's
-6-
<PAGE> 7
Conversion Shares is not permitted by the Company's underwriter(s) based on bona
fide market considerations.
The expense of such registration (except for the expense of underwriters'
or other sales compensation which will be borne by Buyer on a pro rata basis in
proportion to the number of shares transferred for Buyer's account as a portion
of the total number of shares sold pursuant to the registration statement) will
be borne by the Company. At the time of any registration pursuant to this
Section 9, the Company and Buyer shall enter into any underwriting or other
formal agreements containing such terms and provisions with respect to the
marketing of such securities, indemnification and other related matters as may
be reasonably required by the Company's underwriter(s) in any such registration.
As a condition of the inclusion of the Conversion Shares in any such
registration, Buyer agrees to furnish to the Company such information concerning
Buyer as may be requested by the Company as necessary in connection with the
registration or qualification of the Conversion Shares under federal and state
securities laws. Prior to the effective date of any such registration statement
relating to the Conversion Shares, the Company and Buyer shall each enter into
an agreement providing for reciprocal indemnification against losses, claims,
damages, liabilities and expenses resulting from any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or related
registration statement, notification or the like or from any omission or alleged
untrue statement of material fact required to be stated therein or necessary to
make the statements therein not misleading, based upon the information provided
by it or on its behalf for use therein.
10. Modification of Terms of Convertible Preferred Stock. Notwithstanding
Section 12 hereof, the Company and Buyer agree that in the event the Company
issues additional shares of any series of its Preferred Stock now or hereafter
authorized by its Certificate of Incorporation, as it may be amended from time
to time ("Additional Shares"), and if the terms of such Additional Shares
entitle the holders thereof to the following, on and subject to such further
terms and conditions as may be agreed to between the Company and such holders
(collectively, the "New Terms"):
(a) to require the Company to redeem the Additional Shares;
(b) to demand that the Company effect a 1933 Act registration
statement covering the Additional Shares or the common stock of the
Company into which the Additional Shares may be converted;
(c) to receive an adjustment to the number of Additional Shares
or the number of shares of common stock of the Company into which the
Additional Shares may be converted, or to the conversion price
thereof, by virtue of the future issuance or deemed issuance of
additional common stock of the Company or other securities of the
Company convertible into or otherwise entitling the holder to acquire
common stock of the Company; and/or
-7-
<PAGE> 8
(d) to assert the occurrence of one or more specified events as
events of default by the Company and to exercise one or more specified
rights and remedies by virtue of the occurrence thereof;
then in such event, the New Terms shall automatically also apply to the Series A
Preferred Stock acquired by Buyer hereunder, whether or not the New Terms are
perceived by Buyer (or any subsequent holder of such Series A Preferred Stock)
or by the Company as being a benefit to Buyer (or any such subsequent holder),
as if such New Terms had been set forth in the Company's Certificate of
Incorporation and/or this Agreement on the date hereof. To the extent that the
New Terms are inconsistent in any respect with the then existing terms of the
Series A Preferred Stock or any provision of this Agreement, the New Terms shall
control. If such inconsistency involves provisions set forth in the Company's
Certificate of Incorporation or By-Laws as then in effect, the Company's
Certificate of Incorporation of By-Laws shall be amended to resolve such
inconsistency. Buyer (and for any subsequent holder of the Series A Preferred
Stock acquired by Buyer hereunder) shall consent to any such amendment that
requires the consent of the holders of such Series A Preferred Stock.
12. No Additional Restrictions. Except as otherwise required by law or
provided for in this Agreement, including the provisions of Section 10 hereof,
the Company hereby agrees that it will not, without the written consent of
Buyer, become a party to any agreement which, by its terms, materially
restricts, nor will it modify, amend or restate the terms of any existing
agreement which would materially restrict, the rights of the Series A Preferred
Stock.
13. Repurchase by the Company.
(a) If the Company fails to consummate, in its own name or through one
or more wholly-owned subsidiaries, within the 12-month period commencing on the
date hereof, the acquisition of radio station properties having an aggregate
purchase price of at least $10,000,000, the Company will, within 60 days from
the date of its receipt of the written request of Buyer given within 30 days
following the end of such 12-month period, repurchase the Series A Preferred
Stock then held by Buyer at the per share Purchase Price, plus an amount equal
to all unpaid dividends thereon, including accrued dividends, whether or not
declared, to the date of repurchase, which shall be paid by the Company to Buyer
in cash at the closing thereof.
(b) If the Company fails to raise additional equity of $5,000,000 or
more, in its own name or through one or more wholly-owned subsidiaries, within
the 24-month period commencing on the date hereof, the Company will, within 60
days from the date of its receipt of the written request of Buyer therefor given
within 30 days following the end of such 24-month period, repurchase the Series
A Preferred Stock then held by Buyer at the per share Purchase Price, plus an
amount equal to all unpaid dividends thereon, including accrued dividends,
whether or not declared, to the date of repurchase, which shall be paid by the
Company to Buyer in cash at the closing thereof.
14. Audited Financials. The Company shall furnish to the holder(s) of the
Series A Preferred Stock issued pursuant to this Agreement, within 120 days
after the close of each fiscal
-8-
<PAGE> 9
year of the Company, audited financial statements of the Company for such fiscal
year, prepared and presented in accordance with generally accepted accounting
principles, together with the report of independent certified public
accountants, unqualified as to scope.
15. Employment Agreements. The Company hereby agrees to enter into
Executive Employment Agreements with each of Buyer and William L. Stakelin in
substantially the form attached hereto as Exhibit C. Buyer hereby agrees to
enter into an Executive Employment Agreement with the Company in substantially
the form of Exhibit C.
16. Miscellaneous
(a) Notices. Any notice, request or other document to be given hereunder
to any party shall be effective upon receipt (or refusal of receipt) and shall
be in writing and delivered personally or sent by telecopy or certified or
registered mail, postage prepaid:
(i) if to the Company, addressed to:
Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Attn: William L. Stakelin, President
Facsimile: (606) 292-0352
(ii) if to Buyer, addressed to:
Mr. Terry S. Jacobs
c/o Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Facsimile: (606) 292-0352
or to such other address or telecopy number as any party shall have specified by
notice given to the other parties in the manner specified above.
(b) Entire Agreement; Amendment. This Agreement, including the Exhibits
hereto, and the other agreements expressly contemplated by this Agreement,
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior oral and written agreements, memoranda,
term sheets, understandings and undertakings among the parties hereto relating
to the subject matter hereof. This Agreement may be modified or amended only by
a written instrument executed by or on behalf of the parties hereto.
(c) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Ohio without regard to the application
of its conflicts of laws principles.
-9-
<PAGE> 10
(d) Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
(e) Construction. The section and subsection headings used herein are
for convenience of reference only, are not a part of this Agreement and are not
to affect the construction of, or be taken into consideration in interpreting,
any provision of this Agreement. As used in this Agreement, the masculine,
feminine and neuter gender each includes the other, unless the context otherwise
dictates. Any and all schedules and exhibits referred to in this Agreement and
attached hereto are and shall be incorporated in this Agreement as if fully set
forth herein.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Specific Performance. The parties hereto acknowledge that damages
may be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder may be specifically
enforceable, and no party will take any action to impede the other from seeking
to enforce such right of specific performance after any such breach.
(h) Successors and Assigns: Assignability. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns. This Agreement (i) shall not confer upon any person other than the
parties hereto and their respective successors and permitted assigns any rights
or remedies hereunder; and (ii) shall not be assignable by either party without
the prior written consent of the other.
(i) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable 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
transactions contemplated by this Agreement.
(j) Survival. The representations and warranties of the parties
contained herein shall survive execution and delivery of this Agreement and
issuance and delivery of the Series A Preferred Stock hereunder.
-10-
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the day and year first above written.
COMPANY:
REGENT COMMUNICATIONS, INC.
By:
--------------------------------------
Its:
-------------------------------------
BUYER:
-----------------------------------------
Terry S. Jacobs
-11-
<PAGE> 1
EXHIBIT 4(c)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of the 20th day
of May, 1997 between RIVER CITIES CAPITAL FUND LIMITED PARTNERSHIP, a Delaware
limited partnership (the "Buyer"), and REGENT COMMUNICATIONS, INC., a Delaware
corporation (the "Company").
1. Sale and Purchase of the Series A Preferred Stock. On and subject to the
terms and conditions set forth herein, the Company hereby sells, issues and
delivers to Buyer, and Buyer hereby purchases from the Company, 300,000 shares
of the 7% Series A Convertible Preferred Stock of the Company (the "Series A
Preferred Stock").
2. Purchase Price. The purchase price for the Series A Preferred Stock is
One Million Five Hundred Thousand Dollars ($1,500,000.00) ($5.00 per share) (the
"Purchase Price"), which sum has been paid by Buyer to the Company upon the
execution of this Agreement.
3. Deliveries by the Company. Upon the execution of this Agreement, the
Company has made the following deliveries to Buyer, and Buyer hereby
acknowledges receipt thereof:
(a) a stock certificate representing the Series A Preferred Stock duly
issued in the name of Buyer and bearing the legends set forth in Section 6(j)
hereof; and
(b) the Stockholders' Agreement, in the form of Exhibit A attached
hereto (the "Stockholders' Agreement"), duly executed on behalf of the Company;
and
(c) a Size Status Declaration on Small Business Administration ("SBA")
Form 480, duly completed and executed on behalf of the Company; and
(d) an Assurance of Compliance on SBA Form 652, completed and executed
on behalf of the Company; and
(e) all information reasonably required by Buyer for the preparation of
a Portfolio Financing Report on SBA Form 1031; and
(f) a certificate issued by the Secretary of State of Delaware as to the
status of the Company as a corporation organized and existing in good standing
in that state; and
(g) copies of the Certificate of Incorporation and By-Laws of the
Company, certified as true and complete by an officer of the Company.
-1-
<PAGE> 2
4. Deliveries by Buyer. Upon the execution of this Agreement, Buyer has
made the following deliveries to the Company, and the Company hereby
acknowledges receipt thereof:
(a) the Purchase Price; and
(b) the Stockholders' Agreement, duly executed on behalf of Buyer.
5. Representations and Warranties of the Company. The Company represents
and warrants to Buyer, as of the date hereof, as follows:
(a) Organization and Qualification. The Company is validly existing as a
Delaware corporation in good standing and is authorized to transact business as
a foreign corporation in good standing in those jurisdictions in which the
nature of its activities or the property owned by it make such qualification
necessary.
(b) Capital Stock. The parties having made the deliveries set forth in
Section 3 and Section 4 hereof, the Series A Preferred Stock issued and
delivered to Buyer hereunder is duly authorized, validly issued, fully paid and
nonassessable, and constitutes 26.5% of the issued and outstanding shares of
capital stock of the Company. Based on the capitalization of the Company as of
the date hereof, if the Series A Preferred Stock purchased by Buyer pursuant to
this Agreement and all other outstanding shares of the Series A Preferred Stock
were converted to common stock of the Company in accordance with the terms of
the Series A Preferred Stock, all as of the date hereof, the Series A Preferred
Stock issued and delivered to Buyer pursuant to this Agreement, as so converted,
would constitute 26.5% of the issued and outstanding common stock of the Company
as of the date hereof. Except under the terms of the Series A Preferred Stock,
as set forth in the Amended and Restated Certificate of Incorporation of the
Company, and except as described elsewhere in this Agreement, there are not
outstanding any warrants, options or conversion or other rights (including
preemptive rights) pursuant to which the Company is or could become obligated to
issue any stock or any securities convertible into or exchangeable for stock of
the Company, or any contracts or commitments providing for the issuance of or
granting of rights to acquire, any stock of the Company or securities
convertible into or exchangeable for stock of the Company.
(c) Authority of the Company. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity).
(d) No Conflicts. The execution, delivery and performance of this
Agreement and the Stockholders' Agreement by the Company does not and will not
violate any provision of law or any rule or regulation of any federal, state or
local governmental authority to which the Company is subject, nor result in a
breach or violation by the Company of any of the terms or
-2-
<PAGE> 3
provisions of, or constitute an event of default under the Company's Certificate
of Incorporation or By-Laws, as currently in effect, or any indenture, mortgage,
trust (constructive or otherwise), loan agreement, lease or other agreement or
instrument to which the Company is a party or by which the Company or its assets
are bound. The Company is not a party to, or subject to, or bound by, any
judgment, award, injunction, order or decree of any court or governmental
authority, or any arbitration award which may restrict or interfere with the
performance by the Company of this Agreement or the Stockholders' Agreement.
(e) Required Consents. No consent, approval, joinder, waiver,
authorization, or declaration, filing or registration with any governmental or
regulatory authority, or any consent of any third party, is required to be
obtained by the Company in connection with the execution, delivery and
performance of this Agreement or the Stockholders' Agreement or the consummation
of the transactions contemplated thereby.
(f) Litigation. There are no claims, demands, disputes, actions, suits,
proceedings or investigations pending or, to the best of the Company's
knowledge, threatened against or directly affecting the Company or its
properties, at law or in equity or before or by any federal, state, municipal or
other governmental department, commission, board, agency or instrumentality,
domestic or foreign; nor is the Company, its business or assets, subject to any
presently effective adverse order, writ, injunction or decree of any court,
domestic or foreign, or any federal agency or instrumentality, and, the Company
is not in default with respect to or in violation of any law, order, regulation,
rule or ordinance of any federal, state, municipal or local department,
commission, board, agency or instrumentality.
(g) Compliance With Laws. The Company is in compliance with all
applicable laws, orders, regulations, rules and ordinances non-compliance with
which could have a material adverse effect on the Company or its business or
properties.
(h) Small Business Concern. The Company acknowledges that Buyer is a
federal licensee under the Small Business Investment Act of 1958, as amended
(the "SBIA"). The Company, together with any of its "affiliates" (as that term
is defined in Title 13, Code of Federal Regulations, Section 121.103), is a
"small business concern" within the meaning of the SBIA and the regulations
thereunder, including Title 13, Code of Federal Regulations, Section 121.101 et
seq. The information regarding the Company and any such affiliates set forth in
the SBA Forms delivered herewith is accurate and complete. The Company does not
presently engage in any activities, nor shall the Company use directly or
indirectly the Purchase Price received by it hereunder for any purpose for which
a Small Business Investment Company is prohibited from providing funds by the
SBIA and the regulations thereunder, including Title 13, Code of Federal
Regulations, Section 107.720 et seq.
(i) Purchase of Shares by Management. Pursuant to a Stock Purchase
Agreement with the Company, an executed copy of which is attached hereto as
Exhibit C, Terry S. Jacobs has purchased for his own account from the Company
240,000 shares of the Series A Preferred Stock for a cash purchase price of
$5.00 per share, which purchase price has been paid in
-3-
<PAGE> 4
full to the Company. In addition, Terry S. Jacobs and William L. Stakelin have
purchased a total of 592,000 shares of the common stock of the Company in
consideration for, inter alia, aggregate cash payments to the Company of at
least $600,000. Said 240,000 shares of the Series A Preferred Stock issued to
Mr. Jacobs and the said 592,000 shares of common stock issued to Messrs. Jacobs
and Stakelin constitute all of the issued and outstanding shares of the Company.
(j) No Broker or Finder. The Company has not retained, or otherwise
entered into any agreement or understanding with, any broker or finder in
connection with the transactions contemplated by this Agreement, and Buyer will
not incur any liability for any fee, commission or other compensation on account
of any such retention, agreement or understanding by the Company.
(k) Balance Sheet. The Company's balance sheet as of May 15, 1997, a
copy of which is attached hereto as Exhibit D (the "Balance Sheet"), is true and
correct in all material respects as of such date and fairly reflects the
financial condition of the Company as of said date. Since the date of the
Balance Sheet, the Company has not engaged in any transaction otherwise than in
the ordinary course of business.
(l) Absence of Undisclosed Liabilities. As of the date of this
Agreement, the Company does not have any liabilities, obligations, or debts,
whether accrued, absolute, contingent or otherwise, existing or arising out of
any transaction entered into, or state of facts existing, on or prior to the
date hereof, other than such liabilities as are reflected on the Balance Sheet.
6. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Company, as of the date hereof, as follows:
(a) Non-Registration. Buyer understands that the offering and sale of
the Series A Preferred Stock is intended to be exempt from registration under
the Securities Act of 1933, as amended (the "1933 Act"), by virtue of Section
4(2) of the Act and the provisions of Regulation D promulgated thereunder, that
the Series A Preferred Stock has not been registered under the 1933 Act or under
the securities laws of any state, and that the Company will be under no
obligation to effect any such registration.
(b) Investment Intent. Buyer is purchasing the Series A Preferred Stock
for its own account, for investment and not with a view to resale, distribution,
or other disposition, and Buyer has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution or other
disposition. Buyer will not sell or otherwise transfer the Series A Preferred
Stock without registration under the 1933 Act and applicable state securities
laws, or pursuant to an exemption from the registration requirements thereof
which, in the opinion of counsel acceptable to the Company, is available for the
transaction.
(c) Status of Buyer. Buyer is: (i) an "accredited investor," as that
term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act,
inasmuch as Buyer meets the requirements of subparagraph (a)(3) of Rule 501; and
(ii) engaged, as a substantial part of its
-4-
<PAGE> 5
business or operations, in purchasing or holding securities of non-affiliated
entities and was not formed for the primary purpose of evading federal or state
securities laws.
(d) Opportunity to Review Books and Records. Buyer has had a reasonable
opportunity to inspect all documents, books and records pertaining to the
Company and the Series A Preferred Stock and confirms that the Series A
Preferred Stock is being purchased without Buyer's receipt of any offering
literature. Buyer is not relying on the Company or any agent of the Company with
respect to the economic or other considerations of an investment in the Company;
provided, however, that the representations of Buyer contained in this
subsection (d) and in subsection (e) below of this Section 6 shall not operate
to limit or modify the representations and warranties made by the Company in
Section 5 of this Agreement or the right of Buyer to rely thereon.
(e) Opportunity for Questions. Buyer has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the Company, its business and proposed operations, the
terms of the Series A Preferred Stock and all other aspects of investment in the
Company, and all such questions have been answered to the full satisfaction of
Buyer.
(f) Manner of Purchase. Buyer is not subscribing for the Series A
Preferred Stock as a result of or pursuant to any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person other than a representative of
the Company.
(g) Absence of Certain Convictions, Orders. Neither Buyer nor any
affiliate (as defined in the 1933 Act) of Buyer: (i) has filed a registration
statement which is the subject of a currently effective stop order entered
pursuant to any state's law within five years prior to the date hereof; (ii) has
been convicted within five years prior to the date hereof of any felony or
misdemeanor in connection with the purchase or sale of any security or any
felony involving fraud or deceit including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny or conspiracy to
defraud; (iii) is currently subject to any state's administrative order or
judgment entered by that state's securities administrator within five years
prior to the date hereof and is not subject to any state's administrative order
or judgment in which fraud or deceit was found and the order or judgment was
entered within five years of the date hereof; (iv) is currently subject to any
state's administrative order or judgment which prohibits the use of any
exemption from registration in connection with the purchase or sale of
securities; (v) is subject to any order, judgment or decree of any court of
competent jurisdiction temporarily or preliminarily restraining or enjoining, or
is subject to any order, judgment or decree of any court of competent
jurisdiction, entered within five years prior to the date hereof, permanently
restraining or enjoining the any such person from engaging in or continuing any
conduct or practice in connection with the purchase or sale of any security or
involving the making of any false filing with any state.
-5-
<PAGE> 6
(h) No Conflict. The execution, delivery and performance of this
Agreement by Buyer (i) will not constitute a default under or conflict with any
agreement or instrument to which Buyer is a party or by which it or its assets
are bound, (ii) will not conflict with or violate any order, judgment, decree,
statute, ordinance or regulation applicable to Buyer (including, without
limitation, any applicable laws relating to permissible legal investments) and
(iii) do not require the consent of any person or entity.
(i) No Broker or Finder. Buyer has not retained, or otherwise entered
into any agreement or understanding with, any broker or finder in connection
with its purchase of the Series A Preferred Stock hereunder, and the Company
will not incur any liability for any fee, commission or other compensation on
account of any such retention, agreement or understanding by Buyer.
(j) Legends. Buyer understands that the certificate representing the
Series A Preferred Stock shall bear legends in substantially the following
forms, and Buyer shall not transfer any of the shares of Series A Preferred
Stock, or any shares of common stock that may be issued on conversion thereof,
or any interest therein, except in accordance with the terms of such legends:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state (the "Securities Laws") . These securities may not be offered,
sold, transferred, pledged or hypothecated in the absence of
registration under applicable Securities Laws, or the availability of an
exemption therefrom. This certificate will not be transferred on the
books of the Corporation or any transfer agent acting on behalf of the
Corporation except upon the receipt of an opinion of counsel,
satisfactory to the Corporation, that the proposed transfer is exempt
from the registration requirements of all applicable Securities Laws, or
the receipt of evidence, satisfactory to the Corporation, that the
proposed transfer is the subject of an effective registration statement
under all applicable Securities Laws."
"The issuer is subject to restrictions contained in the Federal
Communications Act, as amended. The securities evidenced by this
certificate may not be sold, transferred, assigned or hypothecated if,
as a result thereof, the issuer would be in violation of that act."
"The securities represented by this certificate are subject to the terms
of (i) that certain Stock Purchase Agreement dated as of May 20, 1997
between River Cities Capital Fund Limited Partnership and Regent
Communications, Inc., and (ii) that certain Stockholders' Agreement
dated as of May 20, 1997 among Regent Communications, Inc. and its
stockholders, as the same may be amended from time to time."
(k) Authority of Buyer. This Agreement and the Stockholders' Agreement
constitute the legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their terms, except as enforcement may be
limited by bankruptcy, insolvency,
-6-
<PAGE> 7
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity).
(l) No Conflicts. The execution, delivery and performance of this
Agreement and the Stockholders' Agreement by Buyer will not violate any
provision of law or any rule or regulation of any federal, state or local
governmental authority to which Buyer is subject, nor result in a breach or
violation by Buyer of any of the terms or provisions of, or constitute an event
of default under, the any indenture, mortgage, trust (constructive or
otherwise), loan agreement, lease or other agreement or instrument to which
Buyer is a party or by which Buyer or its assets are bound. Buyer is not a party
to, or subject to, or bound by, any judgment, award, injunction, order or decree
of any court or governmental authority, or any arbitration award which may
restrict or interfere with the performance by Buyer of this Agreement, the
Stockholders' Agreement or such other documents as may be delivered by Buyer in
connection herewith.
(m) Legal Proceedings. There is no action, suit, proceeding or
investigation pending (or, to the knowledge of Buyer, threatened) against Buyer
in, before or by any court, administrative agency or arbitrator affecting the
ability of Buyer to carry out the provisions of this Agreement or the
Stockholders' Agreement and the transactions contemplated thereby.
(n) Dilution. Buyer acknowledges and understands that Terry S. Jacobs
and William L. Stakelin have purchased certain shares of common stock of the
Company at prices per share substantially less than that on which the Purchase
Price is based and that Buyer will suffer immediate substantial dilution from
the Purchase Price paid by Buyer for the Series A Preferred Stock. Furthermore,
0the Company anticipates financing its contemplated acquisitions of radio and
other communications properties, in part, with additional equity, the issuance
of which would dilute the percentage interest of Buyer in the Company.
7. Compliance with Small Business Investment Act. The Company agrees to
provide Buyer with sufficient information to permit Buyer to comply with its
obligations under the SBIA and the regulations thereunder. Upon reasonable
request, the Company shall also provide Buyer with (i) access to the Company's
properties, places of business, records (including financial records) and
offices during business hours and (ii) the opportunity to discuss the affairs,
finances and accounts of the Company with its officers. Buyer and
representatives of the SBA shall be given access to the Company's records to
confirm that the proceeds received by the Company in connection with the Closing
are used for the purposes delineated in Section 8 hereof. The President of the
Company shall certify to Buyer, within three (3) months of the Closing Date, and
at such other time or times thereafter as may be reasonably requested by Buyer,
that the Company has used the proceeds in accordance with the purposes
delineated in Section 8 hereof.
8. Use of Proceeds. The Company hereby covenants and agrees with Buyer that
the Purchase Price received from Buyer at the Closing shall be used solely for
working capital, fixed asset purchases, acquisitions, and related expenses, and
for no other use or purpose. The Company hereby agrees that in the event the
Purchase Price is applied for purposes other than those specified
-7-
<PAGE> 8
in this Section 8, the Company shall redeem the Series A Preferred Stock from
Buyer and refund to Buyer the full amount of the Purchase Price plus an amount
equal to any accrued and unpaid dividends through the date of such redemption.
9. Registration Rights. If, during any period when Buyer holds shares of
the Series A Preferred Stock or common stock of the Company issued on conversion
thereof (the "Conversion Shares"), the Company files a registration statement to
register for public offering its common stock, the Company shall give at least
90 days' advance written notice to Buyer of its intent to file such registration
statement. If so requested by Buyer within 30 days of the giving of such written
notice, to the extent then permissible under federal and applicable state
securities laws, and the rules and regulations of the Securities and Exchange
Commission thereunder, the Company shall include in such registration statement
for Buyer's account all but not less than all of the shares of the Conversion
Shares then held by Buyer, except where the inclusion of any or all of Buyer's
Conversion Shares is not permitted by the Company's underwriter(s) based on bona
fide market considerations.
The expense of such registration (except for the expense of underwriters'
or other sales compensation which will be borne by Buyer on a pro rata basis in
proportion to the number of shares transferred for Buyer's account as a portion
of the total number of shares sold pursuant to the registration statement) will
be borne by the Company. At the time of any registration pursuant to this
Section 9, the Company and Buyer shall enter into any underwriting or other
formal agreements containing such terms and provisions with respect to the
marketing of such securities, indemnification and other related matters as may
be reasonably required by the Company's underwriter(s) in any such registration.
As a condition of the inclusion of the Conversion Shares in any such
registration, Buyer agrees to furnish to the Company such information concerning
Buyer as may be requested by the Company as necessary in connection with the
registration or qualification of the Conversion Shares under federal and state
securities laws. Prior to the effective date of any such registration statement
relating to the Conversion Shares, the Company and Buyer shall each enter into
an agreement providing for reciprocal indemnification against losses, claims,
damages, liabilities and expenses resulting from any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or related
registration statement, notification or the like or from any omission or alleged
untrue statement of material fact required to be stated therein or necessary to
make the statements therein not misleading, based upon the information provided
by it or on its behalf for use therein.
10. Modification of Terms of Convertible Preferred Stock. Notwithstanding
Section 12 hereof, the Company and Buyer agree that in the event the Company
issues additional shares of any series of its Preferred Stock now or hereafter
authorized by its Certificate of Incorporation, as it may be amended from time
to time ("Additional Shares"), and if the terms of such Additional Shares
entitle the holders thereof to the following, on and subject to such further
terms and conditions as may be agreed to between the Company and such holders
(collectively, the "New Terms"):
(a) to require the Company to redeem the Additional Shares;
-8-
<PAGE> 9
(b) to demand that the Company effect a 1933 Act registration
statement covering the Additional Shares or the common stock of the Company
into which the Additional Shares may be converted;
(c) to receive an adjustment to the number of Additional Shares or the
number of shares of common stock of the Company into which the Additional
Shares may be converted, or to the conversion price thereof, by virtue of
the future issuance or deemed issuance of additional common stock of the
Company or other securities of the Company convertible into or otherwise
entitling the holder to acquire common stock of the Company; and/or
(d) to assert the occurrence of one or more specified events as events
of default by the Company and to exercise specified rights and remedies by
virtue of the occurrence thereof;
then in such event, the New Terms shall automatically also apply to the Series A
Preferred Stock acquired by Buyer hereunder, whether or not the New Terms are
perceived by Buyer (or any subsequent holder of such Series A Preferred Stock)
or by the Company as being a benefit to Buyer (or any such subsequent holder),
as if such New Terms had been set forth in the Company's Certificate of
Incorporation and/or this Agreement on the date hereof. To the extent that the
New Terms are inconsistent in any respect with the then existing terms of the
Series A Preferred Stock or any provision of this Agreement, the New Terms shall
control. If such inconsistency involves provisions set forth in the Company's
Certificate of Incorporation or By-Laws as then in effect, the Company's
Certificate of Incorporation of By-Laws shall be amended to resolve such
inconsistency. Buyer (and for any subsequent holder of the Series A Preferred
Stock acquired by Buyer hereunder) shall consent to any such amendment that
requires the consent of the holders of such Series A Preferred Stock.
11. Reimbursement of Expenses. The Company hereby agrees to reimburse Buyer
for its out-of-pocket expenses, including legal fees, incurred in connection
with its due diligence review of the investment in the Company made by it
hereunder, subject to a total maximum amount of $30,000.
12. No Additional Restrictions. Except as otherwise required by law or
provided for in this Agreement, including the provisions of Section 10 hereof,
the Company hereby agrees that it will not, without the written consent of
Buyer, become a party to any agreement which, by its terms, materially
restricts, nor will it modify, amend or restate the terms of any existing
agreement which would materially restrict, the rights of the Series A Preferred
Stock.
13. Repurchase by the Company.
(a) If the Company fails to consummate, in its own name or through one
or more wholly-owned subsidiaries, within the 12-month period commencing on the
date hereof, the
-9-
<PAGE> 10
acquisition of radio station properties having an aggregate purchase price of at
least $10,000,000, the Company will, within 60 days from the date of its receipt
of the written request of Buyer given within 30 days following the end of such
12-month period, repurchase the Series A Preferred Stock then held by Buyer at
the per share Purchase Price, plus an amount equal to all unpaid dividends
thereon, including accrued dividends, whether or not declared, to the date of
repurchase, which shall be paid by the Company to Buyer in cash at the closing
thereof.
(b) If the Company fails to raise additional equity of $5,000,000 or
more, in its own name or through one or more wholly-owned subsidiaries, within
the 24-month period commencing on the date hereof, the Company will, within 60
days from the date of its receipt of the written request of Buyer therefor given
within 30 days following the end of such 24-month period, repurchase the Series
A Preferred Stock then held by Buyer at the per share Purchase Price, plus an
amount equal to all unpaid dividends thereon, including accrued dividends,
whether or not declared, to the date of repurchase, which shall be paid by the
Company to Buyer in cash at the closing thereof.
14. Audited Financials. The Company shall furnish to the holder(s) of the
Series A Preferred Stock issued pursuant to this Agreement, within 120 days
after the close of each fiscal year of the Company, audited financial statements
of the Company for such fiscal year, prepared and presented in accordance with
generally accepted accounting principles, together with the report of
independent certified public accountants, unqualified as to scope.
15. Employment Agreements. The Company hereby agrees to enter into
Executive Employment Agreements with each of Terry S. Jacobs and William L.
Stakelin in substantially the form attached hereto as Exhibit B.
16. Miscellaneous
(a) Notices. Any notice, request or other document to be given hereunder
to any party shall be effective upon receipt (or refusal of receipt) and shall
be in writing and delivered personally or sent by telecopy or certified or
registered mail, postage prepaid:
(i) if to the Company, addressed to:
Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011 Attn: Terry S.
Jacobs, Chairman of the Board Facsimile
(606) 292-0352
-10-
<PAGE> 11
(ii) if to Buyer, addressed to:
River Cities Capital Fund Limited Partnership
221 East Fourth Street, Suite 2250
Cincinnati, Ohio 45202
Attn: R. Glen Mayfield
Facsimile (513) 579-8939
or to such other address or telecopy number as any party shall have specified by
notice given to the other parties in the manner specified above.
(b) Entire Agreement; Amendment. This Agreement, including the Exhibits
hereto, and the other agreements expressly contemplated by this Agreement,
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior oral and written agreements, memoranda,
term sheets, understandings and undertakings among the parties hereto relating
to the subject matter hereof. This Agreement may be modified or amended only by
a written instrument executed by or on behalf of the parties hereto.
(c) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Ohio without regard to the application
of its conflicts of laws principles.
(d) Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
(e) Construction. The section and subsection headings used herein are
for convenience of reference only, are not a part of this Agreement and are not
to affect the construction of, or be taken into consideration in interpreting,
any provision of this Agreement. As used in this Agreement, the masculine,
feminine and neuter gender each includes the other, unless the context otherwise
dictates. Any and all schedules and exhibits referred to in this Agreement and
attached hereto are and shall be incorporated in this Agreement as if fully set
forth herein.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Specific Performance. The parties hereto acknowledge that damages
may be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder may be specifically
enforceable, and no party will take any action to impede the other from seeking
to enforce such right of specific performance after any such breach.
-11-
<PAGE> 12
(h) Successors and Assigns: Assignability. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns. This Agreement (i) shall not confer upon any person other than the
parties hereto and their respective successors and permitted assigns any rights
or remedies hereunder; and (ii) shall not be assignable by either party without
the prior written consent of the other.
(i) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable 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
transactions contemplated by this Agreement.
(j) Survival. The representations and warranties of the parties
contained herein shall survive execution and delivery of this Agreement and
issuance and delivery of the Series A Preferred Stock hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the day and year first above written.
COMPANY:
REGENT COMMUNICATIONS, INC.
By:
------------------------------------------
Its:
-----------------------------------------
BUYER:
RIVER CITIES CAPITAL FUND LIMITED PARTNERSHIP
By: River Cities Management Limited Partnership,
General Partner
By: Mayson, Inc., General Partner
By:
---------------------------------
Its:
--------------------------------
-12-
<PAGE> 1
EXHIBIT 4(d)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of the 1st day of
December, 1997 between TERRY S. JACOBS (the "Buyer"), and REGENT COMMUNICATIONS,
INC., a Delaware corporation (the "Company").
1. Sale and Purchase of the Series A Preferred Stock. On and subject to the
terms and conditions set forth herein, the Company hereby sells, issues and
delivers to Buyer, and Buyer hereby purchases from the Company, 60,000 shares of
the 7% Series A Convertible Preferred Stock of the Company (the "Series A
Preferred Stock").
2. Purchase Price. The purchase price for the Series A Preferred Stock is
Three Hundred Thousand Dollars ($300,000.00) ($5.00 per share) (the "Purchase
Price"), which sum has been paid by Buyer to the Company prior to the execution
of this Agreement, receipt of which is hereby acknowledged.
3. Deliveries by the Company. Upon the execution of this Agreement, the
Company has delivered to Buyer, and Buyer hereby acknowledges receipt thereof, a
stock certificate representing the Series A Preferred Stock duly issued in the
name of Buyer and bearing the legends set forth in Section 6(j) hereof.
4. Representations and Warranties of the Company. The Company represents
and warrants to Buyer, as of the date hereof, as follows:
(a) Organization and Qualification. The Company is validly existing as a
Delaware corporation in good standing and is authorized to transact business as
a foreign corporation in good standing in those jurisdictions in which the
nature of its activities or the property owned by it make such qualification
necessary.
(b) Authority of the Company. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity).
(c) No Conflicts. The execution, delivery and performance of this
Agreement by the Company does not and will not violate any provision of law or
any rule or regulation of any federal, state or local governmental authority to
which the Company is subject, nor result in a breach or violation by the Company
of any of the terms or provisions of, or constitute an event of
-1-
<PAGE> 2
default under the Company's Certificate of Incorporation or By-Laws, as
currently in effect, or any indenture, mortgage, trust (constructive or
otherwise), loan agreement, lease or other agreement or instrument to which the
Company is a party or by which the Company or its assets are bound. The Company
is not a party to, or subject to, or bound by, any judgment, award, injunction,
order or decree of any court or governmental authority, or any arbitration award
which may restrict or interfere with the performance by the Company of this
Agreement.
(d) Required Consents. No consent, approval, joinder, waiver,
authorization, or declaration, filing or registration with any governmental or
regulatory authority, or any consent of any third party, is required to be
obtained by the Company in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, other than the consent and waiver attached hereto.
5. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Company, as of the date hereof, as follows:
(a) Non-Registration. Buyer understands that the offering and sale of
the Series A Preferred Stock is intended to be exempt from registration under
the Securities Act of 1933, as amended (the "1933 Act"), by virtue of Section
4(2) of the Act and the provisions of Regulation D promulgated thereunder, that
the Series A Preferred Stock has not been registered under the 1933 Act or under
the securities laws of any state, and that the Company will be under no
obligation to effect any such registration.
(b) Investment Intent. Buyer is purchasing the Series A Preferred Stock
for his own account, for investment and not with a view to resale, distribution,
or other disposition, and Buyer has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution or other
disposition. Buyer will not sell or otherwise transfer the Series A Preferred
Stock without registration under the 1933 Act and applicable state securities
laws, or pursuant to an exemption from the registration requirements thereof
which, in the opinion of counsel acceptable to the Company, is available for the
transaction.
(c) Status of Buyer. Buyer is an "accredited investor," as that term is
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.
(d) Opportunity to Review Books and Records. Buyer has had a reasonable
opportunity to inspect all documents, books and records pertaining to the
Company and the Series A Preferred Stock and confirms that the Series A
Preferred Stock is being purchased without Buyer's receipt of any offering
literature. Buyer is not relying on the Company or any agent of the Company with
respect to the economic or other considerations of an investment in the Company;
provided, however, that the representations of Buyer contained in this
subsection (d) and in subsection (e) below of this Section 5 shall not operate
to limit or modify the representations and warranties made by the Company in
Section 4 of this Agreement or the right of Buyer to rely thereon.
-2-
<PAGE> 3
(e) Opportunity for Questions. Buyer has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the Company, its business and proposed operations, the
terms of the Series A Preferred Stock and all other aspects of investment in the
Company, and all such questions have been answered to the full satisfaction of
Buyer.
(f) Manner of Purchase. Buyer is not subscribing for the Series A
Preferred Stock as a result of or pursuant to any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person other than a representative of
the Company.
(g) Absence of Certain Convictions, Orders. Neither Buyer nor any
affiliate (as defined in the 1933 Act) of Buyer: (i) has filed a registration
statement which is the subject of a currently effective stop order entered
pursuant to any state's law within five years prior to the date hereof; (ii) has
been convicted within five years prior to the date hereof of any felony or
misdemeanor in connection with the purchase or sale of any security or any
felony involving fraud or deceit including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny or conspiracy to
defraud; (iii) is currently subject to any state's administrative order or
judgment entered by that state's securities administrator within five years
prior to the date hereof and is not subject to any state's administrative order
or judgment in which fraud or deceit was found and the order or judgment was
entered within five years of the date hereof; (iv) is currently subject to any
state's administrative order or judgment which prohibits the use of any
exemption from registration in connection with the purchase or sale of
securities; (v) is subject to any order, judgment or decree of any court of
competent jurisdiction temporarily or preliminarily restraining or enjoining, or
is subject to any order, judgment or decree of any court of competent
jurisdiction, entered within five years prior to the date hereof, permanently
restraining or enjoining the any such person from engaging in or continuing any
conduct or practice in connection with the purchase or sale of any security or
involving the making of any false filing with any state.
(h) No Conflict. The execution, delivery and performance of this
Agreement by Buyer (i) will not constitute a default under or conflict with any
agreement or instrument to which Buyer is a party or by which Buyer of his
assets are bound, (ii) will not conflict with or violate any order, judgment,
decree, statute, ordinance or regulation applicable to Buyer and (iii) do not
require the consent of any person or entity.
(i) No Broker or Finder. Buyer has not retained, or otherwise entered
into any agreement or understanding with, any broker or finder in connection
with its purchase of the Series A Preferred Stock hereunder, and the Company
will not incur any liability for any fee, commission or other compensation on
account of any such retention, agreement or understanding by Buyer.
-3-
<PAGE> 4
(j) Legends. Buyer understands that the certificate representing the
Series A Preferred Stock shall bear legends in substantially the following
forms, and Buyer shall not transfer any of the shares of Series A Preferred
Stock, or any shares of common stock that may be issued on conversion thereof,
or any interest therein, except in accordance with the terms of such legends:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state (the "Securities Laws"). These securities may not be offered, sold,
transferred, pledged or hypothecated in the absence of registration under
applicable Securities Laws, or the availability of an exemption therefrom.
This certificate will not be transferred on the books of the Corporation or
any transfer agent acting on behalf of the Corporation except upon the
receipt of an opinion of counsel, satisfactory to the Corporation, that the
proposed transfer is exempt from the registration requirements of all
applicable Securities Laws, or the receipt of evidence, satisfactory to the
Corporation, that the proposed transfer is the subject of an effective
registration statement under all applicable Securities Laws."
"The issuer is subject to restrictions contained in the Federal
Communications Act, as amended. The securities evidenced by this
certificate may not be sold, transferred, assigned or hypothecated if, as a
result thereof, the issuer would be in violation of that act."
"The securities represented by this certificate are subject to the terms of
that certain Stockholders' Agreement dated as of May 20, 1997 among the
Corporation and its stockholders, as the same may be amended from time to
time."
6. Registration Rights. If, during any period when Buyer holds shares of
the Series A Preferred Stock or common stock of the Company issued on conversion
thereof (the "Conversion Shares"), the Company files a registration statement to
register for public offering its common stock, the Company shall give at least
90 days' advance written notice to Buyer of its intent to file such registration
statement. If so requested by Buyer within 30 days of the giving of such written
notice, to the extent then permissible under federal and applicable state
securities laws, and the rules and regulations of the Securities and Exchange
Commission thereunder, the Company shall include in such registration statement
for Buyer's account all but not less than all of the shares of the Conversion
Shares then held by Buyer, except where the inclusion of any or all of Buyer's
Conversion Shares is not permitted by the Company's underwriter(s) based on bona
fide market considerations.
The expense of such registration (except for the expense of underwriters'
or other sales compensation which will be borne by Buyer on a pro rata basis in
proportion to the number of shares transferred for Buyer's account as a portion
of the total number of shares sold pursuant to the registration statement) will
be borne by the Company. At the time of any registration pursuant to this
Section 6, the Company and Buyer shall enter into any underwriting or other
formal
-4-
<PAGE> 5
agreements containing such terms and provisions with respect to the marketing of
such securities, indemnification and other related matters as may be reasonably
required by the Company's underwriter(s) in any such registration. As a
condition of the inclusion of the Conversion Shares in any such registration,
Buyer agrees to furnish to the Company such information concerning Buyer as may
be requested by the Company as necessary in connection with the registration or
qualification of the Conversion Shares under federal and state securities laws.
Prior to the effective date of any such registration statement relating to the
Conversion Shares, the Company and Buyer shall each enter into an agreement
providing for reciprocal indemnification against losses, claims, damages,
liabilities and expenses resulting from any untrue statement or alleged untrue
statement of a material fact contained in a prospectus or related registration
statement, notification or the like or from any omission or alleged untrue
statement of material fact required to be stated therein or necessary to make
the statements therein not misleading, based upon the information provided by it
or on its behalf for use therein.
7. Modification of Terms of Convertible Preferred Stock. Unless waived or
otherwise agreed to by Buyer in writing, the Company and Buyer agree that in the
event the Company issues additional shares of any series of its Preferred Stock
now or hereafter authorized by its Certificate of Incorporation, as it may be
amended from time to time ("Additional Shares"), and if the terms of such
Additional Shares entitle the holders thereof to the following, on and subject
to such further terms and conditions as may be agreed to between the Company and
such holders (collectively, the "New Terms"):
(a) to require the Company to redeem the Additional Shares;
(b) to demand that the Company effect a 1933 Act registration
statement covering the Additional Shares or the common stock of the Company
into which the Additional Shares may be converted;
(c) to receive an adjustment to the number of Additional Shares or the
number of shares of common stock of the Company into which the Additional
Shares may be converted, or to the conversion price thereof, by virtue of
the future issuance or deemed issuance of additional common stock of the
Company or other securities of the Company convertible into or otherwise
entitling the holder to acquire common stock of the Company; and/or
(d) to assert the occurrence of one or more specified events as events
of default by the Company and to exercise one or more specified rights and
remedies by virtue of the occurrence thereof;
then in such event, the New Terms shall automatically also apply to the Series A
Preferred Stock acquired by Buyer hereunder, whether or not the New Terms are
perceived by Buyer (or any subsequent holder of such Series A Preferred Stock)
or by the Company as being a benefit to Buyer (or any such subsequent holder),
as if such New Terms had been set forth in the Company's
-5-
<PAGE> 6
Certificate of Incorporation and/or this Agreement on the date hereof. To the
extent that the New Terms are inconsistent in any respect with the then existing
terms of the Series A Preferred Stock or any provision of this Agreement, the
New Terms shall control. If such inconsistency involves provisions set forth in
the Company's Certificate of Incorporation or By-Laws as then in effect, the
Company's Certificate of Incorporation of By-Laws shall be amended to resolve
such inconsistency. Buyer (and for any subsequent holder of the Series A
Preferred Stock acquired by Buyer hereunder) shall consent to any such amendment
that requires the consent of the holders of such Series A Preferred Stock.
8. Audited Financials. The Company shall furnish to the holder(s) of the
Series A Preferred Stock issued pursuant to this Agreement, within 120 days
after the close of each fiscal year of the Company, audited financial statements
of the Company for such fiscal year, prepared and presented in accordance with
generally accepted accounting principles, together with the report of
independent certified public accountants, unqualified as to scope.
9. Miscellaneous
(a) Notices. Any notice, request or other document to be given hereunder
to any party shall be effective upon receipt (or refusal of receipt) and shall
be in writing and delivered personally or sent by telecopy or certified or
registered mail, postage prepaid:
(i) if to the Company, addressed to:
Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Attn: William L. Stakelin, President
Facsimile (606) 292-0352
(ii) if to Buyer, addressed to:
Mr. Terry S. Jacobs
c/o Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Facsimile (606) 292-0352
or to such other address or telecopy number as any party shall have specified by
notice given to the other parties in the manner specified above.
-6-
<PAGE> 7
(b) Entire Agreement; Amendment. This Agreement, and the other
agreements expressly contemplated by this Agreement, contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior oral and written agreements, memoranda, term sheets,
understandings and undertakings among the parties hereto relating to the subject
matter hereof. This Agreement may be modified or amended only by a written
instrument executed by or on behalf of the parties hereto.
(c) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Ohio without regard to the application
of its conflicts of laws principles.
(d) Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
(e) Construction. The section and subsection headings used herein are
for convenience of reference only, are not a part of this Agreement and are not
to affect the construction of, or be taken into consideration in interpreting,
any provision of this Agreement. As used in this Agreement, the masculine,
feminine and neuter gender each includes the other, unless the context otherwise
dictates. Any and all schedules and exhibits referred to in this Agreement and
attached hereto are and shall be incorporated in this Agreement as if fully set
forth herein.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Specific Performance. The parties hereto acknowledge that damages
may be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder may be specifically
enforceable, and no party will take any action to impede the other from seeking
to enforce such right of specific performance after any such breach.
(h) Successors and Assigns: Assignability. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns. This Agreement (i) shall not confer upon any person other than the
parties hereto and their respective successors and permitted assigns any rights
or remedies hereunder; and (ii) shall not be assignable by either party without
the prior written consent of the other.
(i) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and
-7-
<PAGE> 8
to do, or cause to be done, all things necessary proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
(j) Survival. The representations and warranties of the parties contained
herein shall survive execution and delivery of this Agreement and issuance and
delivery of the Series A Preferred Stock hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the day and year first above written.
COMPANY:
REGENT COMMUNICATIONS, INC.
By:
---------------------------------
Its:
---------------------------------
BUYER:
------------------------------------
Terry S. Jacobs
-8-
<PAGE> 9
WAIVER AND CONSENT
The undersigned, being parties to a Stockholders' Agreement dated as of
May 20, 1997 to which the shares of Series A Preferred Stock being issued to
Terry S. Jacobs pursuant to the foregoing Stock Purchase Agreement are subject,
hereby consent to the issuance of such shares and waive as to such shares all
rights which the undersigned possess pursuant to Section 6 of said Stockholders'
Agreement, including all rights of notice, offer and purchase.
Dated as of December 1, 1997.
River Cities Capital Fund Limited Partnership
-------------------------------
Terry S. Jacobs
By: River Cities Management Limited
Partnership, its General Partner
-------------------------------
William L. Stakelin
By: Mayson, Inc., its General Partner
By:
--------------------------------
R. Glen Mayfield, Vice President
<PAGE> 1
EXHIBIT 4(e)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of the 1st day of
December, 1997 between WILLIAM L. STAKELIN (the "Buyer"), and REGENT
COMMUNICATIONS, INC., a Delaware corporation (the "Company").
1. Sale and Purchase of the Series A Preferred Stock. On and subject to the
terms and conditions set forth herein, the Company hereby agrees to sell, issue
and deliver to Buyer, and Buyer hereby agrees to purchase from the Company,
20,000 shares of the 7% Series A Convertible Preferred Stock of the Company (the
"Series A Preferred Stock").
2. Purchase Price. The purchase price for the Series A Preferred Stock is
One Hundred Thousand Dollars ($100,000.00) ($5.00 per share) (the "Purchase
Price"), which sum shall be paid by Buyer to the Company in full at the Closing.
3. Deliveries by the Company. At the Closing of this Agreement, the Company
shall deliver to Buyer, upon the Company's receipt of the Purchase Price, a
stock certificate representing the Series A Preferred Stock duly issued in the
name of Buyer and bearing the legends set forth in Section 6(j) hereof. The
Closing shall take place on a date mutually agreed upon by the parties on or
before the date of the closing of the Company's acquisition of the stock of The
Park Lane Group.
4. Representations and Warranties of the Company. The Company represents
and warrants to Buyer, as of the date hereof, as follows:
(a) Organization and Qualification. The Company is validly existing as a
Delaware corporation in good standing and is authorized to transact business as
a foreign corporation in good standing in those jurisdictions in which the
nature of its activities or the property owned by it make such qualification
necessary.
(b) Authority of the Company. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity).
(c) No Conflicts. The execution, delivery and performance of this
Agreement by the Company does not and will not violate any provision of law or
any rule or regulation of any federal, state or local governmental authority to
which the Company is subject, nor result in a breach or violation by the Company
of any of the terms or provisions of, or constitute an event of
-1-
<PAGE> 2
default under the Company's Certificate of Incorporation or By-Laws, as
currently in effect, or any indenture, mortgage, trust (constructive or
otherwise), loan agreement, lease or other agreement or instrument to which the
Company is a party or by which the Company or its assets are bound. The Company
is not a party to, or subject to, or bound by, any judgment, award, injunction,
order or decree of any court or governmental authority, or any arbitration award
which may restrict or interfere with the performance by the Company of this
Agreement.
(d) Required Consents. No consent, approval, joinder, waiver,
authorization, or declaration, filing or registration with any governmental or
regulatory authority, or any consent of any third party, is required to be
obtained by the Company in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, other than the consent and waiver attached hereto.
5. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Company, as of the date hereof, as follows:
(a) Non-Registration. Buyer understands that the offering and sale of
the Series A Preferred Stock is intended to be exempt from registration under
the Securities Act of 1933, as amended (the "1933 Act"), by virtue of Section
4(2) of the Act and the provisions of Regulation D promulgated thereunder, that
the Series A Preferred Stock has not been registered under the 1933 Act or under
the securities laws of any state, and that the Company will be under no
obligation to effect any such registration.
(b) Investment Intent. Buyer is purchasing the Series A Preferred Stock
for his own account, for investment and not with a view to resale, distribution,
or other disposition, and Buyer has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution or other
disposition. Buyer will not sell or otherwise transfer the Series A Preferred
Stock without registration under the 1933 Act and applicable state securities
laws, or pursuant to an exemption from the registration requirements thereof
which, in the opinion of counsel acceptable to the Company, is available for the
transaction.
(c) Status of Buyer. Buyer is an "accredited investor," as that term is
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.
(d) Opportunity to Review Books and Records. Buyer has had a reasonable
opportunity to inspect all documents, books and records pertaining to the
Company and the Series A Preferred Stock and confirms that the Series A
Preferred Stock is being purchased without Buyer's receipt of any offering
literature. Buyer is not relying on the Company or any agent of the Company with
respect to the economic or other considerations of an investment in the Company;
provided, however, that the representations of Buyer contained in this
subsection (d) and in subsection (e) below of this Section 5 shall not operate
to limit or modify the representations and warranties made by the Company in
Section 4 of this Agreement or the right of Buyer to rely thereon.
-2-
<PAGE> 3
(e) Opportunity for Questions. Buyer has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the Company, its business and proposed operations, the
terms of the Series A Preferred Stock and all other aspects of investment in the
Company, and all such questions have been answered to the full satisfaction of
Buyer.
(f) Manner of Purchase. Buyer is not subscribing for the Series A
Preferred Stock as a result of or pursuant to any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person other than a representative of
the Company.
(g) Absence of Certain Convictions, Orders. Neither Buyer nor any
affiliate (as defined in the 1933 Act) of Buyer: (i) has filed a registration
statement which is the subject of a currently effective stop order entered
pursuant to any state's law within five years prior to the date hereof; (ii) has
been convicted within five years prior to the date hereof of any felony or
misdemeanor in connection with the purchase or sale of any security or any
felony involving fraud or deceit including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny or conspiracy to
defraud; (iii) is currently subject to any state's administrative order or
judgment entered by that state's securities administrator within five years
prior to the date hereof and is not subject to any state's administrative order
or judgment in which fraud or deceit was found and the order or judgment was
entered within five years of the date hereof; (iv) is currently subject to any
state's administrative order or judgment which prohibits the use of any
exemption from registration in connection with the purchase or sale of
securities; (v) is subject to any order, judgment or decree of any court of
competent jurisdiction temporarily or preliminarily restraining or enjoining, or
is subject to any order, judgment or decree of any court of competent
jurisdiction, entered within five years prior to the date hereof, permanently
restraining or enjoining the any such person from engaging in or continuing any
conduct or practice in connection with the purchase or sale of any security or
involving the making of any false filing with any state.
(h) No Conflict. The execution, delivery and performance of this
Agreement by Buyer (i) will not constitute a default under or conflict with any
agreement or instrument to which Buyer is a party or by which Buyer of his
assets are bound, (ii) will not conflict with or violate any order, judgment,
decree, statute, ordinance or regulation applicable to Buyer and (iii) do not
require the consent of any person or entity.
(i) No Broker or Finder. Buyer has not retained, or otherwise entered
into any agreement or understanding with, any broker or finder in connection
with its purchase of the Series A Preferred Stock hereunder, and the Company
will not incur any liability for any fee, commission or other compensation on
account of any such retention, agreement or understanding by Buyer.
(j) Legends. Buyer understands that the certificate representing the
Series A Preferred Stock shall bear legends in substantially the following
forms, and Buyer shall not transfer
-3-
<PAGE> 4
any of the shares of Series A Preferred Stock, or any shares of common stock
that may be issued on conversion thereof, or any interest therein, except in
accordance with the terms of such legends:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state (the "Securities Laws") . These securities may not be offered, sold,
transferred, pledged or hypothecated in the absence of registration under
applicable Securities Laws, or the availability of an exemption therefrom.
This certificate will not be transferred on the books of the Corporation or
any transfer agent acting on behalf of the Corporation except upon the
receipt of an opinion of counsel, satisfactory to the Corporation, that the
proposed transfer is exempt from the registration requirements of all
applicable Securities Laws, or the receipt of evidence, satisfactory to the
Corporation, that the proposed transfer is the subject of an effective
registration statement under all applicable Securities Laws."
"The issuer is subject to restrictions contained in the Federal
Communications Act, as amended. The securities evidenced by this
certificate may not be sold, transferred, assigned or hypothecated if, as a
result thereof, the issuer would be in violation of that act."
"The securities represented by this certificate are subject to the terms of
that certain Stockholders' Agreement dated as of May 20, 1997 among the
Corporation and its stockholders, as the same may be amended from time to
time."
6. Registration Rights. If, during any period when Buyer holds shares of
the Series A Preferred Stock or common stock of the Company issued on conversion
thereof (the "Conversion Shares"), the Company files a registration statement to
register for public offering its common stock, the Company shall give at least
90 days' advance written notice to Buyer of its intent to file such registration
statement. If so requested by Buyer within 30 days of the giving of such written
notice, to the extent then permissible under federal and applicable state
securities laws, and the rules and regulations of the Securities and Exchange
Commission thereunder, the Company shall include in such registration statement
for Buyer's account all but not less than all of the shares of the Conversion
Shares then held by Buyer, except where the inclusion of any or all of Buyer's
Conversion Shares is not permitted by the Company's underwriter(s) based on bona
fide market considerations.
The expense of such registration (except for the expense of underwriters'
or other sales compensation which will be borne by Buyer on a pro rata basis in
proportion to the number of shares transferred for Buyer's account as a portion
of the total number of shares sold pursuant to the registration statement) will
be borne by the Company. At the time of any registration pursuant to this
Section 6, the Company and Buyer shall enter into any underwriting or other
formal agreements containing such terms and provisions with respect to the
marketing of such securities, indemnification and other related matters as may
be reasonably required by the Company's underwriter(s) in any such registration.
As a condition of the inclusion of the Conversion Shares in
-4-
<PAGE> 5
any such registration, Buyer agrees to furnish to the Company such information
concerning Buyer as may be requested by the Company as necessary in connection
with the registration or qualification of the Conversion Shares under federal
and state securities laws. Prior to the effective date of any such registration
statement relating to the Conversion Shares, the Company and Buyer shall each
enter into an agreement providing for reciprocal indemnification against losses,
claims, damages, liabilities and expenses resulting from any untrue statement or
alleged untrue statement of a material fact contained in a prospectus or related
registration statement, notification or the like or from any omission or alleged
untrue statement of material fact required to be stated therein or necessary to
make the statements therein not misleading, based upon the information provided
by it or on its behalf for use therein.
7. Modification of Terms of Convertible Preferred Stock. Unless waived or
otherwise agreed to by Buyer in writing, the Company and Buyer agree that in the
event the Company issues additional shares of any series of its Preferred Stock
now or hereafter authorized by its Certificate of Incorporation, as it may be
amended from time to time ("Additional Shares"), and if the terms of such
Additional Shares entitle the holders thereof to the following, on and subject
to such further terms and conditions as may be agreed to between the Company and
such holders (collectively, the "New Terms"):
(a) to require the Company to redeem the Additional Shares;
(b) to demand that the Company effect a 1933 Act registration
statement covering the Additional Shares or the common stock of the
Company into which the Additional Shares may be converted;
(c) to receive an adjustment to the number of Additional Shares
or the number of shares of common stock of the Company into which the
Additional Shares may be converted, or to the conversion price
thereof, by virtue of the future issuance or deemed issuance of
additional common stock of the Company or other securities of the
Company convertible into or otherwise entitling the holder to acquire
common stock of the Company; and/or
(d) to assert the occurrence of one or more specified events as
events of default by the Company and to exercise one or more specified
rights and remedies by virtue of the occurrence thereof;
then in such event, the New Terms shall automatically also apply to the Series A
Preferred Stock acquired by Buyer hereunder, whether or not the New Terms are
perceived by Buyer (or any subsequent holder of such Series A Preferred Stock)
or by the Company as being a benefit to Buyer (or any such subsequent holder),
as if such New Terms had been set forth in the Company's Certificate of
Incorporation and/or this Agreement on the date hereof. To the extent that the
New Terms are inconsistent in any respect with the then existing terms of the
Series A Preferred Stock or any provision of this Agreement, the New Terms shall
control. If such inconsistency involves provisions set forth in the Company's
Certificate of Incorporation or By-Laws as then in effect, the
-5-
<PAGE> 6
Company's Certificate of Incorporation of By-Laws shall be
amended to resolve such inconsistency. Buyer (and for any subsequent holder of
the Series A Preferred Stock acquired by Buyer hereunder) shall consent to any
such amendment that requires the consent of the holders of such Series A
Preferred Stock.
8. Audited Financials. The Company shall furnish to the holder(s) of the
Series A Preferred Stock issued pursuant to this Agreement, within 120 days
after the close of each fiscal year of the Company, audited financial statements
of the Company for such fiscal year, prepared and presented in accordance with
generally accepted accounting principles, together with the report of
independent certified public accountants, unqualified as to scope.
9. Miscellaneous
(a) Notices. Any notice, request or other document to be given hereunder
to any party shall be effective upon receipt (or refusal of receipt) and shall
be in writing and delivered personally or sent by telecopy or certified or
registered mail, postage prepaid:
(i) if to the Company, addressed to:
Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Attn: Terry S. Jacobs, Chairman
Facsimile (606) 292-0352
(ii) if to Buyer, addressed to:
Mr. William L. Stakelin
c/o Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Facsimile (606) 292-0352
or to such other address or telecopy number as any party shall have specified by
notice given to the other parties in the manner specified above.
(b) Entire Agreement; Amendment. This Agreement, and the other
agreements expressly contemplated by this Agreement, contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior oral and written agreements, memoranda, term sheets,
understandings and undertakings among the parties hereto relating to the subject
matter hereof. This Agreement may be modified or amended only by a written
instrument executed by or on behalf of the parties hereto.
-6-
<PAGE> 7
(c) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Ohio without regard to the application
of its conflicts of laws principles.
(d) Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
(e) Construction. The section and subsection headings used herein are
for convenience of reference only, are not a part of this Agreement and are not
to affect the construction of, or be taken into consideration in interpreting,
any provision of this Agreement. As used in this Agreement, the masculine,
feminine and neuter gender each includes the other, unless the context otherwise
dictates. Any and all schedules and exhibits referred to in this Agreement and
attached hereto are and shall be incorporated in this Agreement as if fully set
forth herein.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Specific Performance. The parties hereto acknowledge that damages
may be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder may be specifically
enforceable, and no party will take any action to impede the other from seeking
to enforce such right of specific performance after any such breach.
(h) Successors and Assigns: Assignability. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns. This Agreement (i) shall not confer upon any person other than the
parties hereto and their respective successors and permitted assigns any rights
or remedies hereunder; and (ii) shall not be assignable by either party without
the prior written consent of the other.
(i) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable 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
transactions contemplated by this Agreement.
(j) Survival. The representations and warranties of the parties
contained herein shall survive execution and delivery of this Agreement and
issuance and delivery of the Series A Preferred Stock hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the day and year first above written.
COMPANY:
REGENT COMMUNICATIONS, INC.
By:
-----------------------------------
Its:
-----------------------------------
BUYER:
--------------------------------------
William L. Stakelin
-7-
<PAGE> 8
WAIVER AND CONSENT
The undersigned, being parties to a Stockholders' Agreement dated as of
May 20, 1997 to which the shares of Series A Preferred Stock being issued to
William L. Stakelin pursuant to the foregoing Stock Purchase Agreement are
subject, hereby consent to the issuance of such shares and waive as to such
shares all rights which the undersigned possess pursuant to Section 6 of said
Stockholders' Agreement, including all rights of notice, offer and purchase.
Dated as of December 1, 1997.
River Cities Capital Fund Limited Partnership
------------------------------
Terry S. Jacobs
By: River Cities Management Limited
Partnership, its General Partner
------------------------------
William L. Stakelin
By: Mayson, Inc., its General Partner
By:
--------------------------------
R. Glen Mayfield, Vice President
-8-
<PAGE> 1
EXHIBIT 4(f)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of the 8th day of
December, 1997 between REGENT COMMUNICATIONS, INC., a Delaware corporation (the
"Company") and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (the
"Buyer").
1. Authorization. The Company will authorize the sale and issuance under
this Agreement of 1,000,000 shares (the "Shares") of its Series B Senior
Convertible Preferred Stock (the "Series B Preferred Stock"), having the rights,
privileges and preferences as set forth in the Amended and Restated Certificate
of Incorporation (the "Certificate") in the form attached to this Agreement as
Exhibit A. The shares of Common Stock into which the Shares will be convertible
are referred to herein as the "Conversion Stock."
2. Sale and Purchase of the Series B Preferred Stock. On and subject to the
terms and conditions set forth herein, the Company will sell, issue and deliver
to Buyer, and Buyer will purchase from the Company, 1,000,000 shares of the
Series B Preferred Stock.
3. Closing Date. The closing of the purchase and sale of the Series B
Preferred Stock hereunder shall be at the offices of Strauss & Troy, 2100 PNC
Center, 201 East Fifth Street, Cincinnati, Ohio 45202 on December 8, 1997 (the
"Closing") or at such other time and place upon which the Company and Buyer
shall agree (the date of the Closing is hereinafter referred to as the "Closing
Date").
4. Purchase Price. The purchase price for the Series B Preferred Stock is
Five Million Dollars ($5,000,000.00) ($5.00 per share) (the "Purchase Price"),
which sum Buyer will pay to the Company as follows:
(a) $10,000.00, representing the aggregate par value of the Shares, by
wire transfer in accordance with the Company's instructions on the Closing Date;
and
(b) the balance of $4,990,000 in accordance with a demand note, executed
and delivered on the Closing Date, in the form attached as Exhibit B (the
"Note").
5. Deliveries by the Company. At the Closing, the Company will deliver to
Buyer the following:
(a) a stock certificate or certificates representing the Series B
Preferred Stock duly issued in the name of Buyer and bearing the legends set
forth in Section 8(j) hereof; and
(b) the Stockholders' Agreement, in the form of Exhibit C attached
hereto (the "Stockholders' Agreement"), duly executed on behalf of the Company;
-1-
<PAGE> 2
(c) certificates issued by the Secretaries of State of Delaware and
Kentucky as to the status of the Company as a corporation organized and/or
existing in good standing in that state: and
(d) an opinion of Strauss & Troy, as counsel to the Company,
substantially in the form attached as Exhibit I.
6. Deliveries by Buyer. At the Closing, Buyer will deliver to the Company
the following:
(a) the Note;
(b) the $10,000 cash portion of the Purchase Price; and
(c) the Stockholders' Agreement, duly executed on behalf of Buyer.
7. Representations and Warranties of the Company. Except as set forth on
Exhibit D attached hereto, the Company represents and warrants to Buyer as
follows:
(a) Organization and Qualification. The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has requisite
power and authority to own and operate its properties and assets, and to carry
on its business as presently conducted and as proposed to be conducted. The
Company is authorized to transact business as a foreign corporation in good
standing in those jurisdictions in which the nature of its activities or the
property owned by it make such qualification necessary. The Company has
furnished Buyer or its counsel with copies of its Amended and Restated
Certificate of Incorporation and By-Laws, as currently in effect. Said copies
are true, correct and complete and contain all amendments through the date
hereof. As of the Closing Date, the Amended and Restated Certificate of
Incorporation of the Company shall be in the form of the Certificate.
(b) Subsidiaries. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity.
(c) Capitalization. The authorized capital stock of the Company
consists, or upon the filing of the Certificate will consist, of 30,000,000
shares of Common Stock, of which 240,000 shares are issued and outstanding, and
20,000,000 shares of Preferred Stock, of which 620,000 shares have been
designated Series A Preferred (600,000 shares of which are issued and
outstanding (at $5.00 per share) and 620,000 will be issued and outstanding
prior to full payment of the Note), 1,000,000 shares have been designated Series
B Preferred (none of which will be issued and outstanding as of the Closing
Date), 4,000,000 shares have been designated Series C Preferred (none of which
will be issued and outstanding as of
-2-
<PAGE> 3
the Closing Date), 1,000,000 shares have been designated Series D Preferred
(none of which will be issued and outstanding as of the Closing Date), and
5,000,000 shares have been designated Series E Preferred (none of which will be
issued and outstanding as of the Closing Date). The outstanding shares have been
duly authorized and validly issued, and are fully paid and nonassessable. The
Company has reserved 1,000,000 shares of Series B Preferred Stock for issuance
hereunder and 1,200,000 shares of Common Stock for issuance upon conversion of
the Series B Preferred Stock. All outstanding securities of the Company were
issued in compliance with applicable federal and state securities laws. The
Series B Preferred Stock shall have the rights, preferences, privileges and
restrictions set forth in the Certificate. Except under the terms of the
Preferred Stock, as set forth in the Certificate, and except as described in
this Agreement or on Exhibit D, there are no outstanding options, warrants,
conversion privileges, preemptive rights, or other rights or agreements to
purchase or otherwise acquire or issue any equity securities of the Company.
(d) Authorization. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of (i) the Shares and (ii) the Conversion Stock and the
performance of all of the Company's obligations hereunder has been taken or will
be taken prior to the Closing. This Agreement and the Stockholders' Agreement,
when executed and delivered by the Company, shall constitute valid and binding
obligations of the Company, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting enforcement of creditors' rights generally and except
as enforcement is subject to general principles of equity regardless of whether
enforcement is considered in a proceeding at law or in equity. The Shares, when
issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable and will have the rights, preferences and
privileges described in the Certificate. The Conversion Stock has been duly and
validly reserved and, when issued in compliance with the provisions of this
Agreement and the Certificate, will be validly issued, fully paid and
nonassessable. The Shares and the Conversion Stock will be free of any liens or
encumbrances, other than any liens or encumbrances created by or imposed upon
the holders thereof through no action of the Company; provided, however, that
the Shares and the Conversion Stock will be subject to restrictions on transfer
under state and/or federal securities laws as set forth herein and under certain
other restrictions as set forth in the Stockholders' Agreement.
(e) Financial Statements. The Company has delivered to the Buyer its
unaudited Balance Sheet dated September 30, 1997, together with its unaudited
income statements dated September 30, 1997 (collectively, the "Financial
Statements"). The Financial Statements are complete and correct in all material
respects, have been prepared in accordance with generally-accepted accounting
principles (with the exception of normal year-end adjustment and the absence of
footnotes), and accurately set forth and describe the financial condition of the
Company as of the dates thereof. Between the dates of the Financial Statements
and the Closing Date, there has not been any change in the assets, liabilities,
financial condition or operations of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business which
have not been, either in any case or in the aggregate, materially adverse.
-3-
<PAGE> 4
(f) Material Liabilities. As of the Closing, the Company has no material
liabilities or obligations, absolute or contingent (individually or in the
aggregate), except (i) the liabilities and obligations set forth in the Balance
Sheet provided in accordance with Section 7(e), (ii) liabilities and obligations
which have been incurred subsequent to the date of the Balance Sheet in the
ordinary course of business which have not been in the aggregate, materially
adverse, (iii) liabilities and obligations under a lease for its principal
offices and leases for equipment, and (iv) liabilities and obligations under
sales, procurement and other contracts and arrangements entered into in the
normal course of business.
(g) Compliance with Laws. The Company is not in violation of (i) any
applicable order, judgment, injunction, award or decree, or (ii) any federal,
state, local or foreign law, statute, rule, ordinance or regulation or any other
requirement of any governmental or regulatory body, court or arbitrator
applicable to the business of the Company except for violations which reasonably
could not have a material adverse effect on the business or properties of the
Company. The Company has obtained all licenses, permits, orders and approvals of
any federal, state, local or foreign governmental regulatory body (collectively,
"Permits") that are material to or necessary for the conduct of the business of
the Company. All of such Permits are in full force and effect, no violations are
or have been recorded in respect of any Permit and no proceeding is pending or,
to the best of the Company's knowledge, threatened to revoke or limit any such
Permit.
(h) Title to Properties and Assets; Liens, etc. The Company has good and
marketable title to its properties and assets, and has good title to all its
leasehold interests, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge (including inchoate liens for taxes and employee
liabilities), other than (i) the lien of current taxes not yet due and payable,
and (ii) possible minor liens and encumbrances which do not in any case
materially detract from the value of the property subject thereto or materially
impair the operations of the Company, and which have not arisen otherwise than
in the ordinary course of business.
(i) Compliance with Other Instruments, None Burdensome, etc. The Company
is not in violation of any term of its Amended and Restated Certificate of
Incorporation or By-Laws, or, of any term or provision of any material mortgage,
indebtedness, indenture, contract, agreement, instrument, judgment or decree.
The execution, delivery and performance of and compliance with this Agreement,
and the issuance of the Series B Preferred Stock, the Conversion Stock, and the
Company's Series A Preferred Stock, Series C Preferred Stock, and Series D
Preferred Stock as contemplated by existing agreements have not resulted and
will not result in any violation of, or conflict with, or constitute a default
under, the Company's existing Amended and Restated Certificate of Incorporation
or By-Laws or any of its agreements or result in the creation of, any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company.
(j) Litigation. There are no actions, suits, proceedings or
investigations pending against the Company or its properties before any court or
governmental agency (nor, to the best of the Company's knowledge, is there any
reasonable basis therefor or threat thereof).
-4-
<PAGE> 5
(k) Registration Rights. Except as set forth in this Agreement, Stock
Purchase Agreements with Terry S. Jacobs and River Cities Capital Fund Limited
Partnership, a Stock Purchase Agreement with BMO Financial, and an Agreement of
Merger with Faircom Inc., the Company is not under any contractual obligation to
register any of its presently outstanding securities or any of its securities
which may hereafter be issued.
(l) Governmental Consent, etc. No consent, approval or authorization of
(or designation, declaration of filing with) any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Series B
Preferred Stock and the Conversion Stock, or the consummation of any other
transaction contemplated hereby, except (i) filing of the Certificate in the
office of the Secretary of State of the State of Delaware, and (ii)
qualification (or taking such action as may be necessary to secure an exemption
from qualification, if available) of the offer and sale of the Series B
Preferred Stock and the Conversion Stock under applicable state securities laws,
which filings and qualifications, if required, will be accomplished in a timely
manner.
(m) Offering. Subject to the accuracy of the Buyer's representations in
Section 8 hereof, the offer, sale and issuance of the Series B Preferred Stock
to be issued in conformity with the terms of this Agreement, and the issuance of
the Conversion Stock upon conversion of the Series B Preferred Stock, constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act").
(n) Brokers or Finders; Other Offers. The Company has not incurred, and
will not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
(o) Material Contracts and Obligations. Attached hereto as Exhibit E is
a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which the Company is a party or by which the Company or its
assets are bound that are material to the conduct and operations of its business
and properties, which provide for payments to or by the Company in excess of
Fifty Thousand Dollars ($50,000) (excluding contracts for advertising or the
broadcast of air time entered into in the ordinary course of business), or which
are between the Company and its officers, directors, consultants and employees.
Copies of such agreements and contracts and documentation evidencing such
liabilities and other obligations have been made available for inspection by
Buyer and its counsel. All of such agreements and contracts are valid, binding
and in full force and effect in all material respects, assuming due execution by
the other parties to such agreements and contracts. The Company is not in
default under any such agreements or contracts and, to the best of the Company's
knowledge, no other party to such agreements or contracts is in default
thereunder.
(p) Taxes. The Company has filed all tax returns that are required to
have been filed on or before the Closing with appropriate federal, state, county
and local governmental agencies or instrumentalities, except where the failure
to do so would not have a material adverse
-5-
<PAGE> 6
effect upon the business of the Company taken as a whole. The Company has paid
or established reserves for all income, franchise and other taxes, assessments,
governmental charges, penalties, interest and fines due and payable by it on or
before the Closing. There is no pending dispute with any taxing authority
relating to any of such returns, and the Company has no knowledge of any
proposed liability for any tax to be imposed upon the properties or assets of
the Company for which there is not an adequate reserve reflected in the
Financial Statements.
(q) Representations and Warranties. The representations and warranties
set forth in Section 5 of the Credit Agreement by and between the Company,
Buyer, as Documentation Agent, Bank of Montreal, Chicago Branch, as Agent, and
the lenders listed therein providing for a $55,000,000 senior secured revolving
credit facility, dated November 14, 1997 (the "Credit Agreement"), as qualified
by any schedules thereto (which representations, warranties and schedules are
incorporated herein by this reference), are true and correct in all material
respects as of the date of this Agreement.
(r) Formation and Operations of the Company. The Company was formed as a
Delaware corporation on November 4, 1996. Except as disclosed on Exhibit D
hereto, the Company has not been engaged in any material business or operations
or incurred any material liabilities, other than in connection with its
formation, the negotiation and execution of this Agreement, the Credit
Agreement, the agreements relating to the offer and sale of the Series A, Series
C, Series D and Series E Preferred Stock, and the negotiation and execution of
documentation with respect to the Proposed Acquisitions (as defined in Section
12 below).
(s) Disclosure. No representations or warranty by the Company in this
Agreement, nor any statement, document, or certificate, furnished or to be
furnished, to the Buyer in connection herewith, or pursuant hereto, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary to make any statement herein or therein not
misleading. The Company has made available for inspection by the Buyer and its
representatives complete and correct copies of the corporate minute books of the
Company. Such minute books contain the minutes of all meetings of the
stockholders, the Board of Directors, and any committees thereof, of the Company
that have been held prior to the date hereof, and all written consents to
actions executed in lieu thereof.
8. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Company with respect to the purchase of the Shares as follows:
(a) Non-Registration. Buyer understands that the offering and sale of
the Series B Preferred Stock is intended to be exempt from registration under
the Securities Act of 1933, as amended (the "1933 Act"), by virtue of Section
4(2) of the Act and the provisions of Regulation D promulgated thereunder, that
the Series B Preferred Stock has not been registered under the 1933 Act or under
the securities laws of any state, and that the Company will be under no
obligation to effect any such registration except to the extent set forth in
Section 13 hereof.
-6-
<PAGE> 7
(b) Investment Intent. Buyer is purchasing the Series B Preferred Stock
and the Conversion Stock for its own account, for investment and not with a view
to resale, distribution, or other disposition, and Buyer has no present plans to
enter into any contract, undertaking, agreement or arrangement for any such
resale, distribution or other disposition. It understands that the Shares and
the Conversion Stock have not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
such Buyer's representations as expressed herein. Buyer will not sell or
otherwise transfer the Series B Preferred Stock without registration under the
1933 Act and applicable state securities laws, or pursuant to an exemption from
the registration requirements thereof which, in the opinion of counsel
reasonably acceptable to the Company, is available for the transaction.
(c) Rule 144. Buyer acknowledges that the Shares and the Conversion
Stock must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. It is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permit limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than one year after
a party has purchased and paid for the security to be sold, the sale being
effected through a "broker's transaction" or in transactions directly with a
"market maker" and the number of shares being sold during any three-month period
not exceeding specified limitations.
(d) No Public Market. Buyer understands that no public market now exists
for any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's securities.
(e) Status of Buyer. Buyer: (i) is an "accredited investor," as that
term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act,
inasmuch as Buyer meets the requirements of subparagraph (a)(3) of Rule 501;
(ii) was not formed for the primary purpose of evading federal or state
securities laws, and (iii) is a "Qualified Institutional Buyer" as defined in 17
CFR.144A(a).
(f) Opportunity to Review Books and Records. Buyer has had a reasonable
opportunity to inspect all documents, books and records pertaining to the
Company and the Series B Preferred Stock and confirms that the Series B
Preferred Stock is being purchased without Buyer's receipt of any offering
literature.
(g) Opportunity for Questions. Buyer has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the Company, its business and proposed operations, the
terms of the Series B Preferred Stock and all other aspects of investment in the
Company, and all such questions have been answered to the full satisfaction of
Buyer.
-7-
<PAGE> 8
(h) Manner of Purchase. Buyer is not subscribing for the Series B
Preferred Stock as a result of or pursuant to any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person other than a representative of
the Company.
(i) Brokers or Finders; Other Offers. Buyer has not incurred, and will
not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
(j) Legends. Buyer understands that the certificate(s) representing the
Series B Preferred Stock shall bear legends in substantially the following
forms, and Buyer shall not transfer any of the shares of Series B Preferred
Stock, or any shares of common stock that may be issued on conversion thereof,
or any interest therein, except in accordance with the terms of such legends:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state (the "Securities Laws"). These securities may not be offered, sold,
transferred, pledged or hypothecated in the absence of registration under
applicable Securities Laws, or the availability of an exemption therefrom.
This certificate will not be transferred on the books of the Corporation or
any transfer agent acting on behalf of the Corporation except upon the
receipt of an opinion of counsel, satisfactory to the Corporation, that the
proposed transfer is exempt from the registration requirements of all
applicable Securities Laws, or the receipt of evidence, satisfactory to the
Corporation, that the proposed transfer is the subject of an effective
registration statement under all applicable Securities Laws."
"The issuer is subject to restrictions contained in the Federal
Communications Act, as amended. The securities evidenced by this
certificate may not be sold, transferred, assigned or hypothecated if, as a
result thereof, the issuer would be in violation of that act."
"The securities represented by this certificate are subject to the terms of
that certain Stockholders' Agreement dated as of May 20, 1997 among Regent
Communications, Inc. and its stockholders, as the same may be amended from
time to time."
(k) Authority of Buyer. This Agreement and the Stockholders' Agreement
when executed and delivered by the Buyer will constitute the legal, valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement is subject to general principles of
equity regardless of whether enforcement is considered in a proceeding at law or
in equity.
-8-
<PAGE> 9
(l) No Conflicts. The execution, delivery and performance of this
Agreement and the Stockholders' Agreement by Buyer will not violate in any
material respect any provision of law or any rule or regulation of any federal,
state or local governmental authority to which Buyer is subject, nor result in a
breach or violation by Buyer of any of the terms or provisions of, or constitute
an event of default under, any material indenture, mortgage, trust (constructive
or otherwise), loan agreement, lease or other agreement or instrument to which
Buyer is a party or by which Buyer or its assets are bound. Buyer is not a party
to, or subject to, or bound by, any judgment, award, injunction, order or decree
of any court or governmental authority, or any arbitration award which may
restrict or interfere with the performance by Buyer of this Agreement, the
Stockholders' Agreement or such other documents as may be delivered by Buyer in
connection herewith.
(m) Legal Proceedings. There is no action, suit, proceeding or
investigation pending (or, to the knowledge of Buyer, threatened) against Buyer
in, before or by any court, administrative agency or arbitrator affecting the
ability of Buyer to carry out the provisions of this Agreement or the
Stockholders' Agreement and the transactions contemplated thereby.
9. Buyer's Conditions to Closing. The Buyer's obligation to purchase the
Shares at the Closing is subject to the fulfillment of the following conditions:
(a) Representations and Warranties Correct. The representations and
warranties made by the Company in Section 7 hereof shall be true and correct, if
limited by materiality, in accordance with the terms thereof in all respects,
and if not so limited by materiality, in all material respects, as of the
Closing Date.
(b) Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
(c) Compliance Certificate. The Company shall have delivered to Buyer a
certificate of the Company in the form of Exhibit F hereto, executed by the
President of the Company, dated as of the Closing Date, and certifying as to the
fulfillment of the conditions specified in Sections 9(a) and (b) of this
Agreement.
(d) Compliance with State Securities Laws. The Company shall have
obtained all permits and qualifications required by any state for the offer and
sale of the Shares and the Conversion Stock, or shall have the availability of
exemptions therefrom.
(e) Certificate of Amendment. The Certificate shall have been filed with
the Secretary of State of the State of Delaware.
(f) Legal Matters. All material matters of a legal nature which pertain
to this Agreement and the transactions contemplated hereby shall have been
reasonably approved by counsel to Buyer.
-9-
<PAGE> 10
(g) Proposed Acquisitions. The Company shall have obtained executed
definitive documentation with respect to the Proposed Acquisitions (as defined
in Section 12 below).
(h) Additional Financing. A Credit Agreement providing for a $55,000,000
senior secured revolving credit facility through Bank of Montreal (the "Credit
Agreement") shall have been signed and the Series C and 1,000,000 shares of
Series D Preferred Stock shall have been issued by the Company or definitive
agreements for the issuance of the Series C and Series D Preferred Stock (with
closing conditions reasonably satisfactory to Buyer) shall have been executed by
the Company and the purchasers thereof, each on terms reasonably satisfactory to
Buyer.
(i) Third Party Consents. Buyer shall have received satisfactory
evidence of the receipt by the Company of all permits, authorizations, consents,
approvals, and/or waivers from third parties and governmental, regulatory or
administrative authorities, including without limitation, the Federal
Communications Commission, necessary to permit the consummation of the
transaction contemplated by this Agreement and issuance of the Series B
Preferred Stock.
(j) Series A Preferred Stock. The current holders of the Series A
Preferred Stock shall have waived any rights such holders may have to subscribe
for shares of Series B Preferred Stock pursuant to Section 6 of the Regent
Communications, Inc. Stockholders' Agreement, dated May 20, 1997, by and among
the Company, Terry S. Jacobs, William J. Stakelin, and River Cities Capital Fund
Limited Partnership.
(k) Jacobs Guaranty. Terry S. Jacobs shall have executed and delivered
to Buyer a Guaranty in the form attached hereto as Exhibit G.
10. Company's Conditions to Closing. The Company's obligation to sell and
issue the Shares at the Closing Date is, at the option of the Company, subject
to the fulfillment as of the Closing Date of the following conditions:
(a) Representations and Warranties Correct. The representations and
warranties made by Buyer in Section 8 hereof shall be true and correct when
made, and shall be true and correct on the Closing Date.
(b) Compliance with State Securities Laws. The Company shall have
obtained (having used its reasonable best efforts to obtain) all permits and
qualifications required by any state for the offer and sale of the Shares and
the Conversion Stock, or shall have the availability of exemptions therefrom.
(c) Certificate of Amendment. The Certificate shall have been filed with
the Delaware Secretary of State.
-10-
<PAGE> 11
(d) Stockholders' Agreement. The Buyer shall have executed the
Stockholders' Agreement and be bound as a party thereto.
(e) Legal Matters. All material matters of a legal nature which pertain
to this Agreement, and the transactions contemplated hereby, shall have been
reasonably approved by counsel to the Company.
11. Affirmative Covenants of the Company. The Company hereby covenants and
agrees as follows:
(a) Financial Information. The Company will mail the following reports
to Buyer so long as Buyer is a holder of any of the Shares or the Conversion
Stock:
(i) As soon as practicable after the end of each fiscal year, and in
any event within one hundred twenty (120) days thereafter, consolidated balance
sheets of the Company and its subsidiaries, if any, as of the end of such fiscal
year, and consolidated statements of operations and cash flows of the Company
and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and audited by independent public accountants of national standing
selected by the Company, who shall provide to Buyer their opinion on such
financial statements based on their audit.
(ii) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company and in any
event within forty-five (45) days thereafter, a consolidated balance sheet of
the Company and its subsidiaries, if any, as of the end of each such quarterly
period, and consolidated statements of income and consolidated statements of
changes in financial condition of the Company and its subsidiaries, if any, for
such period and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles (other than for accompanying notes),
all in reasonable detail and signed by the principal financial or accounting
officer of the Company.
(iii) As soon as practicable after the end of each month, and in any
event within thirty (30) days thereafter, copies of the monthly sales reports
and cash flow for such month of each radio station owned and operated by the
Company and its subsidiaries as furnished to the Company by each such station.
(b) Assignment of Rights to Financial Information. The rights to receive
the reports described in Section 11(a) may not be assigned or otherwise conveyed
by Buyer or by any subsequent transferee of any such rights without the prior
written consent of the Company; provided, however, that Buyer may assign the
right to receive such reports to any transferee, other than a competitor, vendor
or customer of the Company, and after giving notice to the Company, if such
transferee acquires at least 20,000 shares of Series B Preferred Stock or
Conversion Stock (appropriately adjusted for any stock split, stock dividend,
recapitalization or similar event).
-11-
<PAGE> 12
(c) Inspection. The Company shall permit Buyer, its counsel or its other
representatives (i) to examine the Company's books of account and other records
and to make copies or extracts therefrom and to discuss the Company's affairs,
finances and accounts with its officers, management employees and independent
accountants, all at such reasonable times and as often as Buyer may reasonably
request; provided, however, that the Company shall not be obligated pursuant to
this Section 11(c) to provide trade secrets or confidential information or to
provide information to any person who the Company reasonably believes is a
competitor of the Company.
(d) Termination of Covenants. The covenants set forth in this Section 11
shall terminate at such time as the Company is required to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
(e) Percentage Interest. Based on the capitalization of the Company as
of the Closing Date and taking into account the issuance, and treating as
outstanding, of 620,000 shares of the Company's Series A Preferred Stock,
3,792,400 shares of the Company's Series C Preferred Stock, and 1,000,000 shares
of the Company's Series D Preferred Stock as contemplated by existing
agreements, if the Series B Preferred Stock purchased by Buyer pursuant to this
Agreement were converted to Common Stock of the Company in accordance with the
terms of the Series B Preferred Stock, as of the Closing Date, the Series B
Preferred Stock issued and delivered to Buyer pursuant to this Agreement, as so
converted, would constitute not less than 8.12% of the issued and outstanding
equity securities of the Company, calculated on a fully diluted basis (assuming
the conversion or exercise of all outstanding convertible securities, options
and warrants, but excluding options to purchase Common Stock of the Company up
to an amount equal to 15% of the outstanding capital stock of the Company, on a
fully diluted basis (assuming the conversion of all Convertible Preferred Stock
to Common Stock), to be issued to management of the Company under the terms of a
management stock option plan described on Exhibit J ("Management Stock
Options").
(f) Failure to Consummate Faircom Acquisition. In accordance with the
terms of the Note, Buyer shall fund $1,090,000 of the Purchase Price upon
execution by the Company of a definitive agreement with Faircom Inc. providing
for the merger of Faircom Inc. into Regent Merger Corp., a wholly-owned
subsidiary of the Company (the "Faircom Acquisition") and shall fund the
remainder of the Purchase Price upon and concurrent with consummation of the
Faircom Acquisition. Notwithstanding any other provision of this Agreement or
the Certificate, if the Faircom Acquisition is terminated for any reason or the
Closing Date under the Credit Agreement has not occurred on or before March 31,
1998 (for reasons other than a default by Buyer), the Company shall immediately
redeem all Shares of Series B Preferred Stock at a redemption price equal to the
portion of the Purchase Price paid prior to such termination (including the
$10,000 paid upon execution of this Agreement) plus an amount equal to that same
portion of all unpaid dividends thereon, including accrued dividends, whether or
not declared, to the date of redemption, the Note shall be canceled, and all of
the Shares previously issued to Buyer shall be returned to the Company for
cancellation; whereupon, this Agreement shall terminate and be of no further
force or effect, and Buyer shall have no further obligation to, or claims or
rights against, the Company
-12-
<PAGE> 13
pursuant to this Agreement (other than claims for payment of expenses pursuant
to Section 14 hereof, which Section shall survive such termination), the
Certificate, or the terms of the Shares.
12. Use of Proceeds. The Company hereby covenants and agrees with Buyer
that the Purchase Price received from Buyer at the Closing shall be used to fund
the acquisitions of certain radio stations and related assets in California,
Arizona, Michigan and Ohio (the "Proposed Acquisitions") and for other general
corporate purposes.
13. Registration Rights. If, during any period when Buyer holds shares of
the Series B Preferred Stock or Conversion Stock, the Company files a
registration statement with the Securities and Exchange Commission to register
for public offering its common stock, the Company shall give at least 45 days'
advance written notice to Buyer of its intent to file such registration
statement. If so requested by Buyer within 30 days of the giving of such written
notice, to the extent then permissible under federal and applicable state
securities laws, and the rules and regulations of the Securities and Exchange
Commission thereunder, the Company shall include in such registration statement
for resale for Buyer's account such portion of the shares of the Conversion
Stock then held by Buyer or into which the Series B Preferred Stock held by
Buyer is then convertible, as Buyer shall request, except where the inclusion of
any or all of Buyer's Conversion Stock is not permitted by the Company's
underwriter(s) based on bona fide market considerations as specified below. To
the extent Buyer's Conversion Stock is not included in such registration, either
as a result of Buyer's requesting inclusion of less than all of such stock, of
Buyer's not requesting inclusion within the thirty (30) day period specified
above, or of the operation of the "underwriter out" specified below, such
remaining share of Conversion Stock shall continue to be subject to this Section
13 and eligible for inclusion in any subsequent registration effected by the
Company pursuant to this Section 13.
The Company shall not be required to include any shares of Conversion Stock
in any Registration Statement to the extent the public offering involves an
underwriting, and the managing underwriter thereof advises the Company in
writing that, in their opinion, the number of shares of Conversion Stock
requested to be included, when added to the number of shares of Common Stock
desired to be offered by the Company exceeds the number that can be sold in such
offering, at a price reasonably related to fair market value. To the extent the
managing underwriter provides such advice, the Conversion Stock to be included
on behalf of Buyer, and any other shares to be registered pursuant to such
Registration Statement on behalf of another selling stockholder, shall be
reduced pro rata, taking into account the number of shares requested to be
registered by the Buyer and any other selling stockholders.
The expense of such registration (except for the expense of underwriters'
or other sales compensation which will be borne by Buyer on a pro rata basis in
proportion to the number of shares transferred for Buyer's account as a portion
of the total number of shares sold pursuant to the registration statement) will
be borne by the Company. At the time of any registration pursuant to this
Section 13, the Company and Buyer shall enter into any underwriting or other
formal agreements containing such terms and provisions with respect to the
marketing of such securities, indemnification and other related matters as may
be reasonably required by the Company's
-13-
<PAGE> 14
underwriter(s) in any such registration. As a condition of the inclusion of the
Conversion Stock in any such registration, Buyer agrees to furnish to the
Company such information concerning Buyer as may be requested by the Company as
necessary in connection with the registration or qualification of the Conversion
Stock under federal and state securities laws. Prior to the effective date of
any such registration statement relating to the Conversion Stock, the Company
and Buyer shall each enter into an agreement providing for reciprocal
indemnification against losses, claims, damages, liabilities and expenses
resulting from any untrue statement or alleged untrue statement of a material
fact contained in a prospectus or related registration statement, notification
or the like or from any omission or alleged untrue statement of material fact
required to be stated therein or necessary to make the statements therein not
misleading, based upon the information provided by it or on its behalf for use
therein.
14. Reimbursement of Expenses. The Company hereby agrees to reimburse Buyer
for its out-of-pocket expenses, including all reasonable legal and other costs
and fees, incurred in connection with its due diligence review of the investment
in the Company made by it hereunder and the negotiation, execution and
performance of this Agreement. To the extent any change of, amendment to or
waiver of any requirement under this Agreement is effected at the request of the
Company, the Company hereby agrees to reimburse Buyer for its out-of-pocket
expenses, including all reasonable legal and other costs and fees, incurred in
connection with such change, amendment or waiver. Further, the Company shall
reimburse Buyer for its out-of-pocket expenses, including all reasonable legal
and other costs and fees, incurred in connection with the enforcement by Buyer
of the Company's obligations hereunder.
15. Miscellaneous.
(a) Notices. Any notice, request or other document to be given hereunder
to any party shall be effective upon receipt (or refusal of receipt) and shall
be in writing and delivered personally or sent by telecopy or certified or
registered mail, postage prepaid:
(i) if to the Company, addressed to:
Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Attn: Terry S. Jacobs, Chairman of the Board
Facsimile: (606) 292-0352
with a copy to:
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attn: Alan C. Rosser, Esq.
Facsimile: (513) 241-8289
-14-
<PAGE> 15
(ii) if to Buyer, addressed to:
General Electric Capital Corporation
3379 Peachtree Road, N.E., Suite 600
Atlanta, GA 30326
Attn: Regent Account Manager
Facsimile: (404) 842-1533
with copies to:
General Electric Capital Corporation
201 High Ridge Road
Stamford, CT 06927
Attn: Region Counsel
Facsimile: (203) 316-7889
and
Paul, Hastings, Janofsky & Walker LLP
600 Peachtree Street N.E., Suite 2400
Atlanta, GA 30308
Attn: Elizabeth Hardy Noe, Esq.
Facsimile: (404) 815-2424
or to such other address or telecopy number as any party shall have specified by
notice given to the other parties in the manner specified above.
(b) Entire Agreement; Amendment. This Agreement, including the Exhibits
hereto, and the other agreements expressly contemplated by this Agreement,
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior oral and written agreements, memoranda,
term sheets, understandings and undertakings among the parties hereto relating
to the subject matter hereof. This Agreement may be modified or amended only by
a written instrument executed by or on behalf of the parties hereto.
(c) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York without regard to
the application of its conflicts of laws principles. The state and federal
courts located in New York County, New York shall have exclusive jurisdiction
over claims or disputes between the Company and the Buyer pertaining to the
purchase by the Buyer of the Series B Preferred Stock hereunder. The parties
expressly submit and consent in advance to such jurisdiction in any action or
suit commenced in any such court and hereby waive any objection which such party
may have based on lack of personal jurisdiction, improper venue or inconvenient
forum. The parties hereby waive all right to
-15-
<PAGE> 16
trial by jury in any action, suit or proceeding brought to enforce or defend any
rights or remedies under this Agreement or the transactions contemplated hereby.
(d) Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
(e) Construction. The section and subsection headings used herein are
for convenience of reference only, are not a part of this Agreement and are not
to affect the construction of, or be taken into consideration in interpreting,
any provision of this Agreement. As used in this Agreement, the masculine,
feminine and neuter gender each includes the other, unless the context otherwise
dictates. Any and all schedules and exhibits referred to in this Agreement and
attached hereto are and shall be incorporated in this Agreement as if fully set
forth herein.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Specific Performance. The parties hereto acknowledge that damages
may be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder may be specifically
enforceable, and no party will take any action to impede the other from seeking
to enforce such right of specific performance after any such breach.
(h) Successors and Assigns: Assignability. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns; provided, however, that the right of the Buyer to purchase the Series B
Preferred Stock shall not be assignable without the consent of the Company. This
Agreement (i) shall not confer upon any person other than the parties hereto and
their respective successors and permitted assigns any rights or remedies
hereunder; and (ii) shall not be assignable by either party without the prior
written consent of the other.
(i) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable 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
transactions contemplated by this Agreement.
(j) Survival. The representations and warranties of the parties
contained herein shall survive execution and delivery of this Agreement and
issuance and delivery of the Series B Preferred Stock hereunder.
-16-
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the day and year first above written.
COMPANY:
REGENT COMMUNICATIONS, INC.
By:
-------------------------------------
Its:
------------------------------------
BUYER:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------------------
Its:
------------------------------------
-17-
<PAGE> 1
EXHIBIT 4(g)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated as of the 8th day of
December, 1997 between REGENT COMMUNICATIONS, INC., a Delaware corporation (the
"Company") and BMO FINANCIAL, INC., Delaware corporation (the "Buyer").
1. Authorization. The Company will authorize the sale and issuance under
this Agreement of 1,000,000 shares (the "Shares") of its Series D Convertible
Preferred Stock (the "Series D Preferred Stock"), having the rights, privileges
and preferences as set forth in the Amended and Restated Certificate of
Incorporation (the "Certificate") in the form attached to this Agreement as
Exhibit A. The shares of Common Stock into which the Shares will be convertible
are referred to herein as the "Conversion Stock."
2. Sale and Purchase of the Series D Preferred Stock. On and subject to the
terms and conditions set forth herein, the Company will sell, issue and deliver
to Buyer, and Buyer will purchase from the Company, 1,000,000 shares of the
Series D Preferred Stock. Buyer's purchase of the Shares will be made in two
stages: the first consisting of the sale of 220,000 Shares for $1,100,000 to
occur on the First Closing Date and the second consisting of the sale of 780,000
Shares for $3,900,000 to occur on the Second Closing Date.
3. Closing Dates. The closings of the purchase and sale of the Series D
Preferred Stock hereunder (the "Closings") shall be at the offices of Strauss &
Troy, 2100 PNC Center, 201 East Fifth Street, Cincinnati, Ohio 45202 or at such
other place upon which the Company and Buyer shall agree, as to the first staged
purchase on December 8, 1997 (the "First Closing Date") and as to the second
staged purchase on the date the obligations to purchase the Shares at the Second
Closing Date set forth in Section 9 hereof have been fulfilled or waived (the
"Second Closing Date") (the dates of the Closings are hereinafter referred to as
the "Closing Dates").
4. Purchase Price. The purchase price for the Series D Preferred Stock is
Five Million Dollars ($5,000,000.00) ($5.00 per share) (the "Purchase Price"),
which sum Buyer will pay to the Company as follows:
(a) on the First Closing Date, $1,100,000, representing the value of
220,000 Shares, by wire transfer in accordance with the Company's instructions;
and
(b) on Second Closing Date, the balance of $3,900,000 representing the
value of 780,000 Shares, by wire transfer in accordance with the Company's
instructions.
5. Deliveries by the Company. At the Closings, the Company will deliver to
Buyer the following:
-1-
<PAGE> 2
(a) at the First Closing, a stock certificate or certificates
representing 220,000 shares of Series D Preferred Stock, and at the Second
Closing a stock certificate or certificates representing 780,000 shares of
Series D Preferred Stock, duly issued in the name of Buyer and bearing the
legends set forth in Section 8(j) hereof; and
(b) at the First Closing, the Stockholders' Agreement, in the form of
Exhibit B attached hereto (the "Stockholders' Agreement"), duly executed on
behalf of the Company;
(c) certificates issued by the Secretaries of State of Delaware and
Kentucky as to the status of the Company as a corporation organized and/or
existing in good standing in that state; and
(d) an opinion of Strauss & Troy as counsel to the Company,
substantially in the form attached as Exhibit C.
6. Deliveries by Buyer. At the Closings, Buyer will deliver to the Company
the following:
(a) at the First Closing, $1,100,000;
(b) at the Second Closing, $3,900,000; and
(c) at the First Closing, the Stockholders' Agreement, duly executed on
behalf of Buyer.
7. Representations and Warranties of the Company. Except as set forth on
Exhibit D attached hereto, the Company represents and warrants to Buyer as
follows:
(a) Organization and Qualification. The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has requisite
power and authority to own and operate its properties and assets, and to carry
on its business as presently conducted and as proposed to be conducted. The
Company is authorized to transact business as a foreign corporation in good
standing in those jurisdictions in which the nature of its activities or the
property owned by it make such qualification necessary. The Company has
furnished Buyer or its counsel with copies of its Amended and Restated
Certificate of Incorporation and By-Laws, as currently in effect. Said copies
are true, correct and complete and contain all amendments through the date
hereof. As of the First Closing Date, the Amended and Restated Certificate of
Incorporation of the Company shall be in the form of the Certificate.
(b) Subsidiaries. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity.
-2-
<PAGE> 3
(c) Capitalization. The authorized capital stock of the Company
consists, or upon the filing of the Certificate will consist, of 30,000,000
shares of Common Stock, of which 240,000 shares are issued and outstanding, and
20,000,000 shares of Preferred Stock, of which 620,000 shares have been
designated Series A Preferred (600,000 shares of which will be issued and
outstanding (at $5.00 per share) as of the First Closing Date and 620,000 will
be issued and outstanding as of the Second Closing Date), 1,000,000 shares have
been designated Series B Preferred (none of which will be issued and outstanding
as of the First Closing Date), 4,000,000 shares have been designated Series C
Preferred (none of which will be issued and outstanding as of the First Closing
Date), and 1,000,000 shares have been designated Series D Preferred (none of
which will be issued and outstanding as of the Closing Date),and 5,000,000
shares have been designated Series E Preferred (none of which will be issued and
outstanding as of the First Closing Date). The outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable. The Company
has reserved 1,000,000 shares of Series D Preferred Stock for issuance hereunder
and 1,200,000 shares of Common Stock for issuance upon conversion of the Series
D Preferred Stock. All outstanding securities of the Company were issued in
compliance with applicable federal and state securities laws. The Series D
Preferred Stock shall have the rights, preferences, privileges and restrictions
set forth in the Certificate. Except under the terms of the Preferred Stock, as
set forth in the Certificate, and except as described in this Agreement or on
Exhibit D, there are no outstanding options, warrants, conversion privileges,
preemptive rights, or other rights or agreements to purchase or otherwise
acquire or issue any equity securities of the Company.
(d) Authorization. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of (i) the Shares and (ii) the Conversion Stock and the
performance of all of the Company's obligations hereunder has been taken or will
be taken prior to the Closings. This Agreement and the Stockholders' Agreement,
when executed and delivered by the Company, shall constitute valid and binding
obligations of the Company, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting enforcement of creditors' rights generally and except
as enforcement is subject to general principles of equity regardless of whether
enforcement is considered in a proceeding at law or in equity. The Shares, when
issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable and will have the rights, preferences and
privileges described in the Certificate. The Conversion Stock has been duly and
validly reserved and, when issued in compliance with the provisions of this
Agreement and the Certificate, will be validly issued, fully paid and
nonassessable. The Shares and the Conversion Stock will be free of any liens or
encumbrances, other than any liens or encumbrances created by or imposed upon
the holders thereof through no action of the Company; provided, however, that
the Shares and the Conversion Stock will be subject to restrictions on transfer
under state and/or federal securities laws as set forth herein and under certain
other restrictions as set forth in the Stockholders' Agreement.
(e) Financial Statements. The Company has delivered to the Buyer its
unaudited Balance Sheet dated September 30, 1997, together with its unaudited
income statements dated
-3-
<PAGE> 4
September 30, 1997 (collectively, the "Financial Statements"). The Financial
Statements are complete and correct in all material respects, have been prepared
in accordance with generally-accepted accounting principles (with the exception
of normal year-end adjustment and the absence of footnotes), and accurately set
forth and describe the financial condition of the Company as of the dates
thereof. Between the dates of the Financial Statements and the Closing Dates,
there has not been any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements,
except changes in the ordinary course of business which have not been, either in
any case or in the aggregate, materially adverse.
(f) Material Liabilities. As of the Closings, the Company has no
material liabilities or obligations, absolute or contingent (individually or in
the aggregate), except (i) the liabilities and obligations set forth in the
Balance Sheet provided in accordance with Section 7(e), (ii) liabilities and
obligations which have been incurred subsequent to the date of the Balance Sheet
in the ordinary course of business which have not been in the aggregate,
materially adverse, (iii) liabilities and obligations under a lease for its
principal offices and leases for equipment, and (iv) liabilities and obligations
under sales, procurement and other contracts and arrangements entered into in
the normal course of business.
(g) Compliance with Laws. The Company is not in violation of (i) any
applicable order, judgment, injunction, award or decree, or (ii) any federal,
state, local or foreign law, statute, rule, ordinance or regulation or any other
requirement of any governmental or regulatory body, court or arbitrator
applicable to the business of the Company except for violations which reasonably
could not have a material adverse effect on the business or properties of the
Company. The Company has obtained all licenses, permits, orders and approvals of
any federal, state, local or foreign governmental regulatory body (collectively,
"Permits") that are material to or necessary for the conduct of the business of
the Company. All of such Permits are in full force and effect, no violations are
or have been recorded in respect of any Permit and no proceeding is pending or,
to the best of the Company's knowledge, threatened to revoke or limit any such
Permit.
(h) Title to Properties and Assets; Liens, etc. The Company has good and
marketable title to its properties and assets, and has good title to all its
leasehold interests, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or (charge including inchoate liens for taxes and employee
liabilities), other than (i) the lien of current taxes not yet due and payable,
and (ii) possible minor liens and encumbrances which do not in any case
materially detract from the value of the property subject thereto or materially
impair the operations of the Company, and which have not arisen otherwise than
in the ordinary course of business.
(i) Compliance with Other Instruments, None Burdensome, etc. The Company
is not in violation of any term of its Amended and Restated Certificate of
Incorporation or By-Laws, or of any term or provision of any material mortgage,
indebtedness, indenture, contract, agreement, instrument, judgment or decree.
The execution, delivery and performance of and compliance with this Agreement,
and the issuance of the Series D Preferred Stock, the Conversion Stock, and the
Company's Series A Preferred Stock, Series C Preferred Stock, and Series D
Preferred Stock as contemplated by existing agreements have not resulted and
will not result in any
-4-
<PAGE> 5
violation of, or conflict with, or constitute a material default under, the
Company's existing Amended and Restated Certificate of Incorporation or By-Laws
or any of its agreements or result in the creation of, any mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of the Company.
(j) Litigation. There are no actions, suits, proceedings or
investigations pending against the Company or its properties before any court or
governmental agency (nor, to the best of the Company's knowledge, is there any
reasonable basis therefor or threat thereof).
(k) Registration Rights. Except as set forth in this Agreement, Stock
Purchase Agreements with Terry S. Jacobs and River Cities Capital Fund Limited
Partnership, a Stock Purchase Agreement with General Electric Capital
Corporation, and an Agreement of Merger with Faircom Inc., (the "Faircom Merger
Agreement"), the Company is not under any contractual obligation to register any
of its presently outstanding securities or any of its securities which may
hereafter be issued.
(l) Governmental Consent, etc. No consent, approval or authorization of
(or designation, declaration of filing with) any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Series D
Preferred Stock and the Conversion Stock, or the consummation of any other
transaction contemplated hereby, except (i) filing of the Certificate in the
office of the Secretary of State of the State of Delaware, and (ii)
qualification (or taking such action as may be necessary to secure an exemption
from qualification, if available) of the offer and sale of the Series D
Preferred Stock and the Conversion Stock under applicable state securities laws,
which filings and qualifications, if required, will be accomplished in a timely
manner.
(m) Offering. Subject to the accuracy of the Buyer's representations in
Section 8 hereof, the offer, sale and issuance of the Series D Preferred Stock
to be issued in conformity with the terms of this Agreement, and the issuance of
the Conversion Stock upon conversion of the Series D Preferred Stock, constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act").
(n) Brokers or Finders; Other Offers. The Company has not incurred, and
will not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
(o) Material Contracts and Obligations. Attached hereto as Exhibit E is
a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which the Company is a party or by which is the Company or its
assets are bound that are material to the conduct and operations of its business
and properties, which provide for payments to or by the Company in excess of
Fifty Thousand Dollars ($50,000) (excluding contracts for advertising or the
broadcast of air time entered into in the ordinary course of business), or which
are between the Company and its officers, directors, consultants and employees.
Copies of such agreements and contracts and
-5-
<PAGE> 6
documentation evidencing such liabilities and other obligations have been made
available for inspection by Buyer and its counsel. All of such agreements and
contracts are valid, binding and in full force and effect in all material
respects, assuming due execution by the other parties to such agreements and
contracts. The Company is not in default under any such agreements or contracts
and, to the best of the Company's knowledge, no other party to such agreements
or contracts is in default thereunder.
(p) Taxes. The Company has filed all tax returns that are required to
have been filed on or before the Closings with appropriate federal, state,
county and local governmental agencies or instrumentalities, except where the
failure to do so would not have a material adverse effect upon the business of
the Company taken as a whole. The Company has paid or established reserves for
all income, franchise and other taxes, assessments, governmental charges,
penalties, interest and fines due and payable by it on or before the Closings.
There is no pending dispute with any taxing authority relating to any of such
returns, and the Company has no knowledge of any proposed liability for any tax
to be imposed upon the properties or assets of the Company for which there is
not an adequate reserve reflected in the Financial Statements.
(q) Representations and Warranties. The representations and warranties
set forth in Section 5 of the Credit Agreement by and between the Company,
General Electric Capital Corporation, as Documentation Agent, Bank of Montreal,
Chicago Branch, as Agent, and the lenders listed therein providing for a
$55,000,000 senior secured revolving credit facility, dated November 14, 1997
(the "Credit Agreement"), as qualified by any schedules thereto (which
representations, warranties and schedules are incorporated herein by this
reference), are true and correct in all material respects as of the date of this
Agreement.
(r) Formation and Operations of the Company. The Company was formed as a
Delaware corporation on November 4, 1996. Except as disclosed on Exhibit D,
hereto, the Company has not been engaged in any material business or operations
or incurred any material liabilities, other than in connection with its
formation, the negotiation and execution of this Agreement, the Credit
Agreement, the agreements relating to the offer and sale of the Series A, Series
C, Series D and Series E Preferred Stock, and the negotiation and execution of
documentation with respect to the Proposed Acquisitions (as defined in Section
12 below).
(s) Disclosure. No representations or warranty by the Company in this
Agreement, nor any statement, document, or certificate, furnished or to be
furnished, to the Buyer in connection herewith, or pursuant hereto, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary to make any statement herein or therein not
misleading. The Company has made available for inspection by the Buyer and its
representatives complete and correct copies of the corporate minute books of the
Company. Such minute books contain the minutes of all meetings of the
stockholders, the Board of Directors, and any committees thereof, of the Company
that have been held prior to the date hereof, and all written consents to
actions executed in lieu thereof.
-6-
<PAGE> 7
8. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Company with respect to the purchase of the Shares as follows:
(a) Non-Registration. Buyer understands that the offering and sale of
the Series D Preferred Stock is intended to be exempt from registration under
the Securities Act of 1933, as amended (the "1933 Act"), by virtue of Section
4(2) of the Act and the provisions of Regulation D promulgated thereunder, that
the Series D Preferred Stock has not been registered under the 1933 Act or under
the securities laws of any state, and that the Company will be under no
obligation to effect any such registration except to the extent set forth in
Section 13 hereof.
(b) Investment Intent. Buyer is purchasing the Series D Preferred Stock
and the Conversion Stock for its own account, for investment and not with a view
to resale, distribution, or other disposition, and Buyer has no present plans to
enter into any contract, undertaking, agreement or arrangement for any such
resale, distribution or other disposition. It understands that the Shares and
the Conversion Stock have not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
such Buyer's representations as expressed herein. Buyer will not sell or
otherwise transfer the Series D Preferred Stock without registration under the
1933 Act and applicable state securities laws, or pursuant to an exemption from
the registration requirements thereof which, in the opinion of counsel
reasonably acceptable to the Company, is available for the transaction.
(c) Rule 144. Buyer acknowledges that the Shares and the Conversion
Stock must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. It is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permit limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than one year after
a party has purchased and paid for the security to be sold, the sale being
effected through a "broker's transaction" or in transactions directly with a
"market maker" and the number of shares being sold during any three-month period
not exceeding specified limitations.
(d) No Public Market. Buyer understands that no public market now exists
for any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's securities.
(e) Status of Buyer. Buyer: (i) is an "accredited investor," as that
term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act,
inasmuch as Buyer meets the requirements of subparagraph (a)(3) of Rule 501;
(ii) was not formed for the primary purpose of evading federal or state
securities laws, and (iii) is a "Qualified Institutional Buyer" as defined in 17
C.F.R.230.144A(a).
-7-
<PAGE> 8
(f) Opportunity to Review Books and Records. Buyer has had a reasonable
opportunity to inspect all documents, books and records pertaining to the
Company and the Series D Preferred Stock and confirms that the Series D
Preferred Stock is being purchased without Buyer's receipt of any offering
literature.
(g) Opportunity for Questions. Buyer has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the Company, its business and proposed operations, the
terms of the Series D Preferred Stock and all other aspects of investment in the
Company, and all such questions have been answered to the full satisfaction of
Buyer.
(h) Manner of Purchase. Buyer is not subscribing for the Series D
Preferred Stock as a result of or pursuant to any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person other than a representative of
the Company.
(i) Brokers or Finders; Other Offers. Buyer has not incurred, and will
not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
(j) Legends. Buyer understands that the certificate(s) representing the
Series D Preferred Stock shall bear legends in substantially the following
forms, and Buyer shall not transfer any of the shares of Series D Preferred
Stock, or any shares of common stock that may be issued on conversion thereof,
or any interest therein, except in accordance with the terms of such legends:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state (the "Securities Laws"). These securities may not be offered, sold,
transferred, pledged or hypothecated in the absence of registration under
applicable Securities Laws, or the availability of an exemption therefrom.
This certificate will not be transferred on the books of the Corporation or
any transfer agent acting on behalf of the Corporation except upon the
receipt of an opinion of counsel, satisfactory to the Corporation, that the
proposed transfer is exempt from the registration requirements of all
applicable Securities Laws, or the receipt of evidence, satisfactory to the
Corporation, that the proposed transfer is the subject of an effective
registration statement under all applicable Securities Laws."
"The issuer is subject to restrictions contained in the Federal
Communications Act, as amended. The securities evidenced by this
certificate may not be sold, transferred, assigned or hypothecated if, as a
result thereof, the issuer would be in violation of that act."
-8-
<PAGE> 9
"The securities represented by this certificate are subject to the terms of
that certain Stockholders' Agreement dated as of May 20, 1997 among Regent
Communications, Inc. and its stockholders, as the same may be amended from
time to time."
(k) Authority of Buyer. This Agreement and the Stockholders' Agreement
when executed and delivered by the Buyer will constitute the legal, valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement is subject to general principles of
equity regardless of whether enforcement is considered in a proceeding at law or
in equity.
(l) No Conflicts. The execution, delivery and performance of this
Agreement and the Stockholders' Agreement by Buyer will not violate in any
material respect any provision of law or any rule or regulation of any federal,
state or local governmental authority to which Buyer is subject, nor result in a
breach or violation by Buyer of any of the terms or provisions of, or constitute
an event of default under, any material indenture, mortgage, trust (constructive
or otherwise), loan agreement, lease or other agreement or instrument to which
Buyer is a party or by which Buyer or its assets are bound. Buyer is not a party
to, or subject to, or bound by, any judgment, award, injunction, order or decree
of any court or governmental authority, or any arbitration award which may
restrict or interfere with the performance by Buyer of this Agreement, the
Stockholders' Agreement or such other documents as may be delivered by Buyer in
connection herewith.
(m) Legal Proceedings. There is no action, suit, proceeding or
investigation pending (or, to the knowledge of Buyer, threatened) against Buyer
in, before or by any court, administrative agency or arbitrator affecting the
ability of Buyer to carry out the provisions of this Agreement or the
Stockholders' Agreement and the transactions contemplated thereby.
9. Buyer's Conditions to Closings. The Buyer's obligation to purchase the
Shares at the Closings is subject to the fulfillment of the following
conditions:
(a) Representations and Warranties Correct. The representations and
warranties made by the Company in Section 7 hereof shall be true and correct, if
limited by materiality, in accordance with the terms thereof in all respects,
and if not so limited by materiality, in all material respects, as of each
Closing Date.
(b) Covenants. As to each Closing Date, all covenants, agreements and
conditions contained in this Agreement to be performed by the Company on or
prior to that Closing Date shall have been performed or complied with in all
material respects.
(c) Compliance Certificate. The Company shall have delivered to Buyer a
certificate of the Company in the form of Exhibit F hereto, executed by the
President of the Company, dated as of the First or Second Closing Date
(whichever is applicable), and certifying as to the fulfillment of the
conditions specified in Sections 9(a) and (b) of this Agreement.
-9-
<PAGE> 10
(d) Compliance with State Securities Laws. The Company shall have
obtained all permits and qualifications required by any state for the offer and
sale of the Shares and the Conversion Stock, or shall have the availability of
exemptions therefrom.
(e) Certificate of Amendment. The Certificate shall have been filed with
the Secretary of State of the State of Delaware.
(f) Legal Matters. All material matters of a legal nature which pertain
to this Agreement and the transactions contemplated hereby shall have been
reasonably approved by counsel to Buyer.
(g) Proposed Acquisitions. The Company shall have obtained executed
definitive documentation with respect to the Proposed Acquisitions (as defined
in Section 12 below).
(h) Additional Financing. A Credit Agreement providing for a $55,000,000
senior secured revolving credit facility through Bank of Montreal shall have
been signed and (i) as to the Second Closing Date, the Series C and 1,000,000
shares of Series B Preferred Stock shall have been issued by the Company or,
(ii) as to the First Closing Date, definitive agreements for the issuance of the
Series C and Series B Preferred Stock (with closing conditions reasonably
satisfactory to Buyer) shall have been executed by the Company and the
purchasers thereof, each on terms reasonably satisfactory to Buyer.
(i) Third Party Consents. Buyer shall have received satisfactory
evidence of the receipt by the Company of all permits, authorizations, consents,
approvals, and/or waivers from third parties and governmental, regulatory or
administrative authorities, including without limitation, the Federal
Communications Commission, necessary to permit the consummation of the
transaction contemplated by this Agreement and issuance of the Series B
Preferred Stock.
(j) Series A Preferred Stock. On or before the Second Closing Date, the
Company shall have sold an aggregate of 620,000 shares of Series A Preferred
Stock of the Company with an aggregate value of $3,100,000, of which by the
First Closing Date 600,000 shall have been issued for $3,000,000 and the balance
subject to sale by the Second Closing Date pursuant to an executed definitive
agreement. The current holders of the Series A Preferred Stock shall have waived
any rights such holders may have to subscribe for shares of Series D Preferred
Stock pursuant to Section 6 of the Regent Communications, Inc. Stockholders'
Agreement, dated May 20, 1997, by and among the Company, Terry S. Jacobs,
William J. Stakelin, and River Cities Capital Fund Limited Partnership.
(k) Limitation of Ownership. After giving effect to the issuance of the
Shares on the First Closing Date and on the Second Closing Date (whichever is
applicable), the number of Shares held by Buyer shall be less than twenty-five
percent (25%) of the total number of fully-paid shares of Common Stock and
Preferred Stock of the Company in the aggregate then outstanding.
-10-
<PAGE> 11
(l) Jacobs Guaranty. Terry S. Jacobs shall have executed and delivered
to Buyer a Guaranty in the form attached as Exhibit G.
10. Company's Conditions to Closings. The Company's obligation to sell
and issue the Shares at the Closing Dates is, at the option of the Company,
subject to the fulfillment as of the Closing Dates of the following conditions:
(a) Representations and Warranties Correct. The representations and
warranties made by Buyer in Section 8 hereof shall be true and correct when
made, and shall be true and correct on each Closing Date.
(b) Compliance with State Securities Laws. The Company shall have
obtained (having used its reasonable best efforts to obtain) all permits and
qualifications required by any state for the offer and sale of the Shares and
the Conversion Stock, or shall have the availability of exemptions therefrom.
(c) Certificate of Amendment. The Certificate shall have been filed with
the Delaware Secretary of State.
(d) Stockholders' Agreement. The Buyer shall have executed the
Stockholders' Agreement and shall be bound as a party thereto.
(e) Legal Matters. All material matters of a legal nature which pertain
to this Agreement, and the transactions contemplated hereby, shall have been
reasonably approved by counsel to the Company.
11. Affirmative Covenants of the Company. The Company hereby covenants
and agrees as follows:
(a) Financial Information. The Company will mail the following reports
to Buyer so long as Buyer is a holder of any of the Shares or the Conversion
Stock:
(i) As soon as practicable after the end of each fiscal year, and in
any event within one hundred twenty (120) days thereafter, consolidated balance
sheets of the Company and its subsidiaries, if any, as of the end of such fiscal
year, and consolidated statements of operations and cash flows of the Company
and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and audited by independent public accountants of national standing
selected by the Company, who shall provide to Buyer their opinion on such
financial statements based on their audit.
(ii) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company and in any
event within forty-five
-11-
<PAGE> 12
(45) days thereafter, a consolidated balance sheet of the Company and its
subsidiaries, if any, as of the end of each such quarterly period, and
consolidated statements of income and consolidated statements of changes in
financial condition of the Company and its subsidiaries, if any, for such period
and for the current fiscal year to date, prepared in accordance with generally
accepted accounting principles (other than for accompanying notes), all in
reasonable detail and signed by the principal financial or accounting officer of
the Company.
(iii) As soon as practicable after the end of each month, and in any
event within thirty (30) days thereafter, copies of the monthly sales reports
and cash flow for such month of each radio station owned and operated by the
Company and its subsidiaries as furnished to the Company by each such station.
(b) Assignment of Rights to Financial Information. The rights to receive
the reports described in Section 11(a) may not be assigned or otherwise conveyed
by Buyer or by any subsequent transferee of any such rights without the prior
written consent of the Company; provided, however, that Buyer may assign the
right to receive such reports to any transferee, other than a competitor, vendor
or customer of the Company, and after giving notice to the Company, if such
transferee acquires at least 20,000 shares of Series D Preferred Stock or
Conversion Stock (appropriately adjusted for any stock split, stock dividend,
recapitalization or similar event).
(c) Inspection. The Company shall permit Buyer, its counsel or its other
representatives (i) to examine the Company's books of account and other records
and to make copies or extracts therefrom and to discuss the Company's affairs,
finances and accounts with its officers, management employees and independent
accountants, all at such reasonable times and as often as Buyer may reasonably
request; provided, however, that the Company shall not be obligated pursuant to
this Section 11(c) to provide trade secrets or confidential information or to
provide information to any person who the Company reasonably believes is a
competitor of the Company.
(d) Termination of Covenants. The covenants set forth in this Section 11
shall terminate at such time as the Company is required to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
(e) Percentage Interest. Based on the capitalization of the Company as
of the Second Closing Date and taking into account the issuance, and treating as
outstanding, of 620,000 additional shares of the Company's Series A Preferred
Stock, 3,792,400 shares of the Company's Series C Preferred Stock, and 1,000,000
shares of the Company's Series B Preferred Stock as contemplated by existing
agreements, if the Series D Preferred Stock purchased by Buyer pursuant to this
Agreement were converted to Common Stock of the Company in accordance with the
terms of the Series D Preferred Stock, as of the Second Closing Date, the Series
D Preferred Stock issued and delivered to Buyer pursuant to this Agreement, as
so converted, would constitute approximately 16.25% of the issued and
outstanding equity securities of the Company, calculated on a fully diluted
basis (assuming the conversion or exercise of all outstanding convertible
securities, options and warrants, but excluding options to purchase Common Stock
of the Company up to an amount equal to 15% of the outstanding capital stock of
the Company, on a
-12-
<PAGE> 13
fully diluted basis (assuming the conversion of all Convertible Preferred Stock
to Common Stock), to be issued to management of the Company under the terms of a
management stock option plan described on Exhibit H ("Management Stock
Options").
(f) Redemption. In the event the Faircom Merger Agreement is terminated
for any reason or either the Closing Date under the Credit Agreement or the
Second Closing Date under this Agreement has not occurred on or before March 31,
1998 (for reasons other than a default by Buyer), the Company shall immediately
redeem all Shares of Series D Preferred Stock held by Buyer at the Stated Value
thereof, plus an amount equal to all unpaid dividends thereon, including accrued
dividends, whether or not declared, to the date of redemption, and all of the
Shares shall be returned to the Company for cancellation; whereupon, this
Agreement shall terminate and be of no further force or effect, and Buyer shall
have no further obligations to, or claims or rights against, the Company
pursuant to this Agreement, the Certificate, or the terms of the Shares.
12. Use of Proceeds. The Company hereby covenants and agrees with Buyer
that the Purchase Price received from Buyer at the Closing shall be used to fund
the acquisitions of certain radio stations and related assets in California,
Arizona, Michigan and Ohio (the "Proposed Acquisitions") and for other general
corporate purposes.
13. Registration Rights. If, during any period when Buyer holds shares
of the Series D Preferred Stock or Conversion Stock, the Company files a
registration statement with the Securities and Exchange Commission to register
for public offering its common stock, the Company shall give at least 45 days'
advance written notice to Buyer of its intent to file such registration
statement. If so requested by Buyer within 30 days of the giving of such written
notice, to the extent then permissible under federal and applicable state
securities laws, and the rules and regulations of the Securities and Exchange
Commission thereunder, the Company shall include in such registration statement
for resale for Buyer's account such portion of the shares of the Conversion
Stock then held by Buyer or into which the Series B Preferred Stock held by
Buyer is then convertible, as Buyer shall request, except where the inclusion of
any or all of Buyer's Conversion Stock is not permitted by the Company's
underwriter(s) based on bona fide market considerations as specified below. To
the extent Buyer's Conversion Stock is not included in such registration, either
as a result of Buyer's requesting inclusion of less than all of such stock, of
Buyer's not requesting inclusion within the thirty (30) day period specified
above, or of the operation of the "underwriter out" specified below, such
remaining share of Conversion Stock shall continue to be subject to this Section
13 and eligible for inclusion in any subsequent registration effected by the
Company pursuant to this Section 13.
The Company shall not be required to include any shares of Conversion
Stock in any Registration Statement to the extent the public offering involves
an underwriting, and the managing underwriter thereof advises the Company in
writing that, in their opinion, the number of shares of Conversion Stock
requested to be included, when added to the number of shares of Common Stock
desired to be offered by the Company exceeds the number that can be sold in such
offering, at a price reasonably related to fair market value. To the extent the
managing underwriter
-13-
<PAGE> 14
provides such advice, the Conversion Stock to be included on behalf of Buyer,
and any other shares to be registered pursuant to such Registration Statement on
behalf of another selling stockholder, shall be reduced pro rata, taking into
account the number of shares requested to be registered by the Buyer and any
other selling stockholders.
The expense of such registration (except for the expense of underwriters'
or other sales compensation which will be borne by Buyer on a pro rata basis in
proportion to the number of shares transferred for Buyer's account as a portion
of the total number of shares sold pursuant to the registration statement) will
be borne by the Company. At the time of any registration pursuant to this
Section 13, the Company and Buyer shall enter into any underwriting or other
formal agreements containing such terms and provisions with respect to the
marketing of such securities, indemnification and other related matters as may
be reasonably required by the Company's underwriter(s) in any such registration.
As a condition of the inclusion of the Conversion Stock in any such
registration, Buyer agrees to furnish to the Company such information concerning
Buyer as may be requested by the Company as necessary in connection with the
registration or qualification of the Conversion Stock under federal and state
securities laws. Prior to the effective date of any such registration statement
relating to the Conversion Stock, the Company and Buyer shall each enter into an
agreement providing for reciprocal indemnification against losses, claims,
damages, liabilities and expenses resulting from any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or related
registration statement, notification or the like or from any omission or alleged
untrue statement of material fact required to be stated therein or necessary to
make the statements therein not misleading, based upon the information provided
by it or on its behalf for use therein.
14. Reimbursement of Expenses. The Company hereby agrees to reimburse Buyer
for its out-of-pocket expenses, including all reasonable legal and other costs
and fees, incurred in connection with its due diligence review of the investment
in the Company made by it hereunder and the negotiation, execution and
performance of this Agreement. To the extent any change of, amendment to or
waiver of any requirement under this Agreement is effected at the request of the
Company, the Company hereby agrees to reimburse Buyer for its out-of-pocket
expenses, including all reasonable legal and other costs and fees, incurred in
connection with such change, amendment or waiver. Further, the Company shall
reimburse Buyer for its out-of-pocket expenses, including all reasonable legal
and other costs and fees, incurred in connection with the enforcement by Buyer
of the Company's obligations hereunder.
15. Miscellaneous.
(a) Notices. Any notice, request or other document to be given hereunder
to any party shall be effective upon receipt (or refusal of receipt) and shall
be in writing and delivered personally or sent by telecopy or certified or
registered mail, postage prepaid:
-14-
<PAGE> 15
(i) if to the Company, addressed to:
Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Attn: Terry S. Jacobs, Chairman of the Board
Facsimile: (606) 292-0352
with a copy to:
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attn: Alan C. Rosser, Esq.
Facsimile: (513) 241-8289
(ii) if to Buyer, addressed to:
BMO Financial, Inc.
430 Park Avenue
New York, New York 10022
Attn: Mike Andres
Facsimile: 212/605-1648
with a copy to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attn: Jeffrey L. Norton, Esq.
Facsimile: 212/326-2061
or to such other address or telecopy number as any party shall have specified by
notice given to the other parties in the manner specified above.
(b) Entire Agreement; Amendment. This Agreement, including the Exhibits
hereto, and the other agreements expressly contemplated by this Agreement,
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior oral and written agreements, memoranda,
term sheets, understandings and undertakings among the parties hereto relating
to the subject matter hereof. This Agreement may be modified or amended only by
a written instrument executed by or on behalf of the parties hereto.
-15-
<PAGE> 16
(c) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York without regard to
the application of its conflicts of laws principles. The state and federal
courts located in New York County, New York shall have exclusive jurisdiction
over claims or disputes between the Company and the Buyer pertaining to the
purchase by the Buyer of the Series D Preferred Stock hereunder. The parties
expressly submit and consent in advance to such jurisdiction in any action or
suit commenced in any such court and hereby waive any objection which such party
may have based on lack of personal jurisdiction, improper venue or inconvenient
forum. The parties hereby waive all right to trial by jury in any action, suit
or proceeding brought to enforce or defend any rights or remedies under this
Agreement or the transactions contemplated hereby.
(d) Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
(e) Construction. The section and subsection headings used herein are
for convenience of reference only, are not a part of this Agreement and are not
to affect the construction of, or be taken into consideration in interpreting,
any provision of this Agreement. As used in this Agreement, the masculine,
feminine and neuter gender each includes the other, unless the context otherwise
dictates. Any and all schedules and exhibits referred to in this Agreement and
attached hereto are and shall be incorporated in this Agreement as if fully set
forth herein.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Specific Performance. The parties hereto acknowledge that damages
may be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder may be specifically
enforceable, and no party will take any action to impede the other from seeking
to enforce such right of specific performance after any such breach.
(h) Successors and Assigns: Assignability. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns; provided, however, that the right of the Buyer to purchase the Series D
Preferred Stock shall not be assignable without the consent of the Company. This
Agreement (i) shall not confer upon any person other than the parties hereto and
their respective successors and permitted assigns any rights or remedies
hereunder; and (ii) shall not be assignable by either party without the prior
written consent of the other.
(i) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable 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
transactions contemplated by this Agreement.
-16-
<PAGE> 17
(j) Survival. The representations and warranties of the parties contained
herein shall survive execution and delivery of this Agreement and
issuance and delivery of the Series D Preferred Stock hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the day and year first above written.
COMPANY:
REGENT COMMUNICATIONS, INC.
By:
------------------------------------
Its:
------------------------------------
BUYER:
BMO FINANCIAL, INC.
By:
------------------------------------
Its:
------------------------------------
-17-
<PAGE> 1
EXHIBIT 4(h)
REGENT COMMUNICATIONS, INC.
FIRST AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
THIS FIRST AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this "Agreement"),
is made and entered into as of December 8, 1997 by and among REGENT
COMMUNICATIONS, INC., a Delaware corporation (the "Company"), TERRY S. JACOBS
("Jacobs"), WILLIAM J. STAKELIN ("Stakelin"), RIVER CITIES CAPITAL FUND LIMITED
PARTNERSHIP, a Delaware limited partnership ("River Cities"), BMO FINANCIAL,
INC., a Delaware corporation ("BMO"), and GENERAL ELECTRIC CAPITAL CORPORATION
("GE CAPITAL").
W I T N E S S E T H:
THAT, WHEREAS, Jacobs, Stakelin and River Cities, the holders of all of the
Company's issued and outstanding capital stock, are parties to a Stockholders'
Agreement among them, dated as of May 20, 1997; and
WHEREAS, GE Capital and BMO have agreed to purchase 1,000,000 shares of the
Company's Series B Preferred Stock and Series D Preferred Stock (as defined
below), respectively, pursuant to Stock Purchase Agreements dated December 8,
1997 (the "Stock Purchase Agreement"); and
WHEREAS, Jacobs has agreed to purchase 60,000 additional shares of the
Company's Series A Preferred Stock and Stakelin has agreed to purchase 20,000
shares of the Company's Series A Preferred Stock; and
WHEREAS, the Company and the Stockholders deem it desirable to enter into
this Agreement in order to establish certain agreements among themselves
granting certain rights and imposing certain restrictions on themselves, the
Company and the shares of capital stock in the Company held by the Stockholders
(collectively, the "Shares").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. As used in this Agreement:
"Affiliate" as applied to any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. The term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power
-1-
<PAGE> 2
to vote 10% or more of the Voting Stock (or in the case of a Person which is not
a corporation, 10% or more of the ownership interest, beneficial or otherwise)
of such Person or otherwise to direct or cause the direction of the management
and policies of that Person, whether through the ownership of Voting Stock or
other ownership interest, by contract or otherwise.
"Common Shares" means shares of the Company's Common Stock that have not
been sold pursuant to a registration statement effective with the Securities and
Exchange Commission including any that have been issued upon conversion of the
Series A, B, C or D Preferred Stock. For the purposes of this Agreement, a
Stockholder will be deemed to own, in addition to any Common Shares such
Stockholder actually owns, any Common Shares which would then be directly or
indirectly issuable upon the conversion or exercise of any other securities
owned by such Stockholder and such other securities shall be deemed to represent
such Common Shares.
"Common Stock" means the common stock of the Company, $.01 par value.
"Indebtedness" of any Person shall mean the principal of, premium, if any,
and unpaid interest on: (a) indebtedness for money borrowed from others; (b)
indebtedness guaranteed, directly or indirectly, in any manner by such Person,
or in effect guaranteed, directly or indirectly, in any manner by such Person
through an agreement, contingent or otherwise, to supply funds to, or in any
other manner invest in, the debtor, or to purchase indebtedness, or to purchase
and pay for property if not delivered or pay for services if not performed,
primarily for the purpose of enabling the debtor to make payment of the
indebtedness or to assure the owners of the indebtedness against loss; (c) all
indebtedness secured by any mortgage, lien, pledge, charge or other encumbrance
upon property owned by such Person, even though such Person has not in any
manner become liable for the payment of such indebtedness; (d) all indebtedness
of such Person created or arising under any conditional sale, lease (intended
primarily as a financing device) or other title retention or security agreement
with respect to property acquired by such Person even though the rights and
remedies of the seller, lessor or lender under such agreement or lease in the
event of default may be limited to repossession or sale of such property; and
(e) renewals, extensions and refundings of any such indebtedness.
"Person" means a natural person, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency or political
subdivision thereof.
"Qualified Public Offering" means an underwritten initial public offering
of Common Stock of the Company of not less than $10,000,000 in gross proceeds.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Series A Preferred Stock" means the Company's 7% Series A Convertible
Preferred Stock, $.01 par value, together with all shares of the Company's
common stock issued upon conversion of such shares.
-2-
<PAGE> 3
"Series B Preferred Stock" means the Company's 7% Series B Convertible
Preferred Stock, $.01 par value, together with all shares of the Company's
common stock issued upon conversion of such shares.
"Series C Preferred Stock" means the Company's 7% Series C Convertible
Preferred Stock, $.01 par value, together with all shares of the Company's
common stock issued upon conversion of such shares.
"Series D Preferred Stock" means the Company's 7% Series D Convertible
Preferred Stock, $.01 par value, together with all shares of the Company's
common stock issued upon conversion of such shares.
"Stockholder" means any holder (or deemed holder) of Common Shares or
Series A Preferred Stock, Series B Preferred Stock, or Series D Preferred Stock
who is a party to this Agreement or is a successor and assign or subsequent
holder contemplated by Section 12 below.
"Voting Stock" of any Person means securities of any class or classes of
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors of such Person.
2. Disposition of Shares. No Stockholder shall transfer, sell, convey,
exchange, pledge or otherwise dispose of ("Transfer") any share of the capital
stock of the Company except in compliance with Section 3 of this Agreement.
Notwithstanding the foregoing, Section 3 of this Agreement shall not apply to
any of the following transfers (each an "Exempt Transfer"): (i) Transfers by a
Stockholder to its Affiliate, (ii) Transfers to any partner of a Stockholder
that is a venture capital partnership (such as River Cities) in the event of a
dissolution or liquidation of the partnership or in conjunction with a Qualified
Public Offering, (iii) Transfers by any Stockholder who is an individual
pursuant to applicable laws of descent and distribution to members of such
Stockholder's immediate family, or to a trust whose beneficiaries are a
Stockholder during his or her lifetime, his or her spouse or one or more of his
or her descendants and whose sole trustee during his or her lifetime is such
Stockholder, (iv) Transfers pursuant to a pledge to a bank or other lending
institution to secure indebtedness of a Stockholder, (v) transfers pursuant to a
Qualified Public Offering, (vi) Transfers pursuant to the exercise of
registration rights granted by the Company applicable to such shares, and (vii)
Transfers pursuant to Rule 144 under the Securities Act (except Rule 144(k)),
provided that, in the case of Exempt Transfers of the types referenced in
clauses (i) through (iv) above, the restrictions contained in this Section 2
will continue to be applicable to Shares and the transferee of such Shares must
have agreed in writing to be bound by the terms and conditions of this Agreement
applicable to the Stockholder.
3. Right of First Offer. Prior to making any Transfer other than an Exempt
Transfer, a Stockholder (the "Offering Stockholder") will deliver a written
notice ("Notice") to the Company and the remaining Stockholders, disclosing in
reasonable detail the terms and conditions of the proposed Transfer. Upon
receipt of such Notice, each of the remaining Stockholders shall have twenty
(20) days (the "Offer Period") within which to submit a proposal to the Offering
Stockholder, which proposal shall provide for the purchase of all and not less
than all of the
-3-
<PAGE> 4
Offered Shares. The Offering Stockholder shall then have ten (10) days from the
end of the Offer Period to either accept or reject the proposal in its sole
discretion. In the event the Offering Stockholder rejects each proposal, the
Offering Stockholder may, within ninety (90) days after the expiration of the
Offer Period, Transfer the Shares on terms that are, in the Offering
Stockholder's good faith reasonable judgment, more favorable to the Offering
Stockholder than the terms contained in each proposal submitted during the Offer
Period. At the expiration of such ninety (90) day period, the Offering
Stockholder shall not Transfer the Shares without again complying with these
provisions. In the event none of the remaining Stockholders submits a proposal
during the Offer Period, the Offering Stockholder shall be free to Transfer the
Shares of capital stock of the Company for a period of ninety (90) days after
the Offer Period. After such ninety (90) day period, the Offering Stockholder
shall not Transfer the Shares without again complying with these provisions.
4. Tag-Along Right. In the event that Stockholders owning more than
sixty-seven percent (67%) of the outstanding capital stock of the Company
subject to this Agreement (each a "Selling Stockholder"), desire to Transfer any
Shares pursuant to a bona fide offer from a third party (the "Buyer"), then such
Selling Stockholders shall notify the Stockholders who are not Selling
Stockholders ("Tag-Along Stockholders"), in writing, of such offer and its terms
and conditions (the "Transfer Notice"). Upon receipt of such Transfer Notice,
each Tag-Along Stockholder shall have the right to sell to the Buyer, on the
same terms and conditions as the Selling Stockholders, that number of Shares of
the Company's capital stock subject to this Agreement equal to the product
attained by multiplying (a) the number of Shares held by the Tag-Along
Stockholder times (b) the quotient derived by dividing (i) the number of Shares
which otherwise would have been sold by the Selling Stockholders to the Buyer by
(ii) the total number of Shares held by such Selling Stockholders and the number
of Shares held by the Tag-Along Stockholders who have elected to participate in
such Transfer (assuming, in the case of sales of Common Stock of the Company,
full conversion of all shares of Preferred Stock of the Company held by the
Selling Stockholders and each Tag-Along Stockholder exercising its rights under
this Section 4). If more than one Tag-Along Stockholder elects to sell Shares
pursuant to this Section 4, they may do so pro rata based on the number of
Shares held by each of them or in such other proportions as they may agree. The
Tag-Along Stockholders' right to sell pursuant to this Section 4 can be
exercised by delivery of a written notice to the Selling Stockholders within ten
(10) business days following the delivery of the Transfer Notice. Any Tag-Along
Stockholder who fails to notify the Selling Stockholders within such ten (10)
business day period shall be deemed to have waived its rights under this
Section 4.
5. Drag-Along Right. In the event any Stockholders owning more than
sixty-seven percent (67%) of the capital stock of the Company subject to this
Agreement (each a "Transferring Stockholder") wish to Transfer in a bona fide
arms' length sale all of the capital stock held by the Transferring Stockholders
to any person or persons who are not Affiliates of the Transferring Stockholders
(the "Proposed Transferee"), the Transferring Stockholders shall have the right,
subject to applicable law, to require all the remaining Stockholders to sell to
the Proposed Transferee all of the capital stock of the Company subject to this
Agreement then owned by such remaining Stockholders (including any warrants or
options to acquire capital stock of the Company). The per share consideration to
be paid by the Proposed Transferee to the Transferring
-4-
<PAGE> 5
Stockholders and the remaining Stockholders shall be the same (less, in the case
of options or warrants, the exercise price for such options or warrants, and in
the case of any convertible preferred stock shall be based on the conversion of
the convertible preferred stock into Common Stock immediately prior to the
closing of such Transfer). In any sale of Series A Preferred Stock, Series B
Preferred Stock, or Series D Preferred Stock pursuant to the provisions of this
Section 5, such Preferred Stock will be converted into Common Stock.
6. Subscription Right. If at any time the Company proposes to issue equity
securities of any kind (the term "equity securities" shall include for these
purposes any warrants, options or other rights to acquire equity securities and
debt securities convertible into equity securities) of the Company (other than
the issuance of securities (i) upon conversion of any Preferred Stock
outstanding on the date of this Agreement pursuant to the Company's Certificate
of Incorporation, (ii) to the public in a firm commitment underwriting pursuant
to a registration statement filed under the Securities Act of 1933, as amended,
(iii) pursuant to the acquisition of another corporation by the Company by
merger, purchase of substantially all of the assets or other form of
reorganization or (iv) pursuant to an employee stock option plan, stock bonus
plan, stock purchase plan or other management equity program), then, as to each
Stockholder who then holds in excess of 5% of the then outstanding shares of
Common Stock (on an as converted basis), the Company shall: (i) give written
notice setting forth in reasonable detail (1) the designation and all of the
terms and provisions of the securities proposed to be issued (the "Proposed
Securities"), (2) the price and other terms of the proposed sale of such
securities, (3) the amount of such securities proposed to be issued and (4) such
other information as the Stockholder may reasonably request in order to evaluate
the proposed issuance; and (ii) offer to issue to each such Stockholder a
portion of the Proposed Securities equal to a percentage determined by dividing
(x) the number of shares of Common Stock held by such Stockholder and issuable
to such Stockholder, assuming conversion in full of any convertible securities
then held by such Stockholder, by (y) the total number of Shares of Common Stock
then outstanding, including for purposes of this calculation all Shares of
Common Stock issuable upon conversion in full of any then outstanding
convertible securities.
Each such Stockholder must exercise its purchase rights hereunder within
ten (10) days after receipt of such notice from the Company. If all of the
Proposed Securities offered to such Stockholder are not fully subscribed by such
Stockholder, the remaining Proposed Securities will not be reoffered to the
Stockholders purchasing their full allotment. To the extent that the Company
offers two or more securities in units, Stockholders must purchase such units as
a whole and will not be given the opportunity to purchase only one of the
securities making up such unit.
Upon the expiration of the offering periods described above, the Company
will be free to sell such Proposed Securities that the Stockholders have not
elected to purchase during the ninety (90) days following such expiration on
terms and conditions not more favorable to the purchasers thereof than those
offered to such holders. Any Proposed Securities offered or sold by the Company
after such ninety (90) day period must be reoffered to the Stockholders pursuant
to these terms.
-5-
<PAGE> 6
7. Representations and Warranties.
(a) Each Stockholder represents and warrants the following with respect
to himself, herself or itself, as the case may be:
(i) Authorization. All corporate action on the part of each
Stockholder which is not an individual necessary for the authorization,
execution, delivery and performance by such Stockholder of this Agreement has
been taken. This Agreement is a legal, valid and binding obligation of each
Stockholder, enforceable against such Stockholder in accordance with its terms.
(ii) No Violation. The execution and delivery of this Agreement will
not (with or without notice or passage of time or both) (a) conflict with or
result in a breach of any provision of the certificate of incorporation or
bylaws of a Stockholder which is not an individual, (b) result in a default,
give rise to any right of termination, cancellation or acceleration, or require
any consent or approval, under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, loan, factoring arrangement, license,
agreement, lease or other instrument or obligation to which a Stockholder is a
party or by which it or any of its assets may be bound or (c) violate any law,
judgment, order, writ, injunction, decree, statute, rule or regulation of any
court, administrative agency, bureau, board, commission, office, authority,
department or other governmental entity applicable to such Stockholder or any of
its, his or her assets.
8. Term. This Agreement will terminate upon the earlier of: (a) the closing
of a Qualified Public Offering, or (b) the written agreement of the holders of
more than seventy-five percent (75%) of the outstanding shares of the Company's
capital stock subject to this Agreement to terminate this Agreement.
9. Consent to Amendments; Waivers. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended or waived at any time
only by the written agreement of the Company and Stockholders holding not less
than seventy-five percent (75%) of the Shares issued and outstanding at the
time. Any waiver, permit, consent or approval of any kind or character on the
part of any such holder of any provisions or conditions of this Agreement must
be made in writing and shall be effective only to the extent specifically set
forth in such writing.
10. Successors and Assigns. Except as otherwise expressly provided herein,
all covenants and agreements contained in this Agreement by or on behalf of any
of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto, whether so expressed or not.
11. Legend on Certificates. All Series A Preferred Stock, Series B
Preferred Stock and Series D Preferred Stock of the Company and all Common
Shares of the Company now or hereafter owned by the parties to this Agreement
shall be subject to the provisions of this Agreement and the certificates
representing said shares shall bear substantially the following legend:
-6-
<PAGE> 7
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any State (the "Securities Laws"). These securities may not be offered,
sold, transferred, pledged or hypothecated in the absence of
registration under applicable Securities Laws, or the availability of an
exemption therefrom. This certificate will not be transferred on the
books of the Corporation or any transfer agent acting on behalf of the
Corporation except upon the receipt of an opinion of counsel,
satisfactory to the Corporation, that the proposed transfer is exempt
from the registration requirements of all applicable Securities Laws, or
the receipt of evidence, satisfactory to the Corporation, that the
proposed transfer is the subject of an effective registration statement
under all applicable Securities Laws."
"The issuer is subject to restrictions contained in the Federal
Communications Act, as amended. The securities evidenced by this
certificate may not be sold, transferred, assigned or hypothecated if,
as a result thereof, the issuer would be in violation of that act."
"The securities represented by this certificate are subject to the terms
of that certain Stockholders' Agreement dated as of May 20, 1997 among
Regent Communications, Inc. and its stockholders, as the same may be
amended from time to time."
12. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
13. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a part of
and shall not be utilized in interpreting this Agreement.
14. Notices. Any notices required or permitted to be sent hereunder shall
be delivered personally or mailed, certified mail, return receipt requested,
facsimile transmission, or delivered by overnight courier service to the
addresses shown on the signature pages hereof, or such other address as any
party hereto designates by written notice to the Company, and shall be deemed to
have been given upon delivery, if delivered personally, three days after
mailing, if mailed, upon the transmission thereof if sent by facsimile (with
telephonic confirmation), or one business day after delivery to the courier, if
delivered by overnight courier service.
-7-
<PAGE> 8
15. Governing Law. All questions concerning the construction, validity, and
interpretation of this Agreement, and the performance of the obligations imposed
by this Agreement, shall be governed by the laws of the State of Delaware.
16. Final Agreement. This Agreement constitutes the complete agreement of
the parties concerning the matters referred to herein.
17. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
18. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be used against any party.
19. Remedies. The parties hereto shall have all rights and remedies set
forth in this Agreement and all rights and remedies available under any
applicable law. The parties hereto agree and acknowledge that money may not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party may, in its sole discretion, apply to any court of law or equity of
competent jurisdiction for specific performance or injunctive relief (without
posting bond or other security) in order to enforce, or prevent any violations
of, the provisions of this Agreement.
The parties hereto have executed this Agreement on the date first set forth
above.
THE COMPANY:
REGENT COMMUNICATIONS, INC.
By:
-------------------------------
Title:
----------------------------
Address:
--------------------------
----------------------------------
Terry S. Jacobs
Address:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
-8-
<PAGE> 9
-------------------------------------------
William J. Stakelin
Address:
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
RIVER CITIES CAPITAL FUND LIMITED
PARTNERSHIP
By: River Cities Management Limited
Partnership, General Partner
y: Mayson, Inc., General Partner
By:
----------------------------------
R. Glen Mayfield, Vice President
Address:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
BMO FINANCIAL, INC.
By:
----------------------------------------
Address:
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------------------
Address:
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
9
<PAGE> 1
Exhibit 4(i)
AMENDED AND RESTATED
REDEMPTION AND WARRANT AGREEMENT
--------------------------------
Agreement dated as of March 31, 1998 among Regent Communications, Inc.,
a Delaware corporation ("Regent"), Blue Chip Capital Fund II Limited
Partnership, an Ohio limited partnership ("Blue Chip"), Miami Valley Venture
Fund L.P., an Ohio limited partnership ("Miami"), and Faircom Inc., a Delaware
corporation ("Faircom"). This Agreement amends and restates the Redemption and
Warrant Agreement dated as of December 5, 1997.
Pursuant to a Securities Purchase Agreement dated as of June 30, 1997,
Blue Chip and Miami purchased an aggregate of $10 million principal amount of
Class A and Class B Convertible Subordinated Promissory Notes due July 1, 2002
(the "Notes") of Faircom. On February 13, 1998 Blue Chip and Miami sold $1
million principal amount of the Notes to PNC Bank, National Association,
Trustee. Pursuant to an Agreement of Merger dated as December 5, 1997 (the
"Merger Agreement") among Faircom, Regent Merger Corp. and Regent, it is
contemplated that immediately prior to the consummation of the merger
contemplated by the Merger Agreement (the "Merger"), Blue Chip and Miami will
sell $1.5 million principal amount of the Notes to Waller-Sutton Media Partners,
L.P. ("Waller-Sutton") and convert their remaining $7.5 million principal amount
of the Notes into shares of common stock of Faircom, which pursuant to the
Merger will be exchanged for shares of $5 Series C Convertible Preferred Stock
of Regent ("Preferred Stock"). In order to induce Blue Chip and Miami to approve
the execution of the Merger Agreement and the consummation of the Merger and to
convert their Notes as described above, the parties hereby agree as follows:
1. The parties shall take all actions necessary so that at least $7.5
million principal amount of the Notes (and if Blue Chip and Miami so elect, up
to $9 million principal amount of the Notes) are converted into Common Stock of
Faircom immediately prior to the consummation of the Merger.
2. It shall be a condition precedent to such conversion and the Merger
that Regent shall have received all necessary corporate approvals (including
those of its shareholders) for the transactions contemplated by this Agreement
and that Regent shall have delivered a certificate to that effect.
3. Regent shall promptly notify each of Blue Chip and Miami at such
time after the consummation of the Merger (the "Merger Closing") that Regent has
received aggregate net proceeds of not less than $1,500,000 from the sale of
equity securities after the Merger Closing.
4. During the sixty (60)-day period after receipt of the notice from
Regent described in Section 3 hereof, each of Blue Chip and Miami may elect, by
notice to Regent, which notice shall be irrevocable, to sell to Regent all or a
portion of the shares of Preferred Stock described on Exhibit A hereto (or any
other
<PAGE> 2
securities of Regent issued to Blue Chip or Miami upon conversion of or in
exchange for such shares of Preferred Stock) at a price of $5.00 per share of
Preferred Stock, plus any accrued but unpaid dividends thereon.
5. At a closing held at the principal offices of Regent within thirty
(30) days after receipt of the notice described in Section 4 above, Blue Chip or
Miami, as the case may be, shall sell and Regent shall purchase the shares of
Preferred Stock or other securities subject to such notice. The seller shall
deliver to Regent certificates for the shares or securities to be purchased,
duly endorsed for transfer, and Regent shall deliver to the seller the purchase
price therefor by certified or bank check or wire transfer. Regent may assign
its rights, but not its obligations, under this Section 5.
6. On the last day of each month from the Merger Closing Date to the
date on which Regent gives the notice described in Section 3 above, Regent shall
deliver to Blue Chip and Miami warrants in the form of Exhibit B hereto (the
"Warrants") to purchase such number of shares of Preferred Stock as is set forth
on Exhibit A hereto (such number to be prorated for any partial month).
7. Regent hereby represents and warrants to Blue Chip and Miami as
follows: All corporate action on the part of Regent, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement by Regent, the authorization, sale, issuance and
delivery of (i) the Warrants and (ii) the Warrant Shares (as defined in the
Warrants) and the performance of all of Regent's obligations hereunder and
thereunder has been taken. This Agreement constitutes the valid and binding
obligation of Regent, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting enforcement of creditors' rights generally and except
as enforcement is subject to general principles of equity regardless of whether
enforcement is considered in a proceeding at law or in equity. The Warrants,
when issued in compliance with the provisions of this Agreement, will be validly
issued, will have the rights, preferences and privileges described therein and
will constitute valid and binding obligations of Regent, enforceable in
accordance with their terms, subject to the matters described above. The Warrant
Shares have been duly and validly reserved and, when issued in compliance with
the provisions of the Warrants, will be validly issued, fully paid and
nonassessable. The Warrants and the Warrant Shares will be free of any liens or
encumbrances, other than any liens or encumbrances created by or imposed upon
the holders thereof through no action of Regent; provided, however, that the
Warrants and the Warrant Shares will be subject to restrictions on transfer
under state and/or federal securities laws as set forth therein.
-2-
<PAGE> 3
8. If prior to the consummation of the Merger, Blue Chip and
Miami sell an additional $1.5 million principal amount of the Notes to
Waller-Sutton, the obligations of Regent under Sections 3 through 6 of this
Agreement shall terminate without further action by any party.
9. Miscellaneous.
--------------
(a) NOTICES. Any notice, request or other document to be given
hereunder to any party shall be effective upon receipt (or refusal of receipt)
and shall be in writing and delivered personally or sent by telecopy or
certified or registered mail, postage prepaid:
(i) if to Regent, addressed to:
Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, Kentucky 41011
Attn: Terry S. Jacobs, Chairman of the Board
Facsimile (606) 292-0352
with a copy to:
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attn: Alan C. Rosser, Esq.
Facsimile (513) 241-8289
(ii) if to Blue Chip, addressed to:
Blue Chip Capital Fund II Limited Partnership
c/o Blue Chip Venture Company, Ltd.
2000 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attn: John H. Wyant
Facsimile (513) 723-2306
with a copy to:
Taft, Stettinius & Hollister
425 Walnut Street, Suite 1800
Cincinnati, Ohio 45202
Attn: Gerald S. Greenberg, Esq.
Facsimile (513) 381-0205
(iii) if to Miami, addressed to:
-3-
<PAGE> 4
Miami Valley Venture Fund L.P.
c/o Blue Chip Venture Company of Dayton, Ltd.
2000 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attn: John H. Wyant
Facsimile (513) 723-2306
with a copy to:
Taft, Stettinius & Hollister
425 Walnut Street, Suite 1800
Cincinnati, Ohio 45202
Attn: Gerald S. Greenberg, Esq.
Facsimile (513) 381-0205
(iv) if to Faircom, addressed to:
Joel M. Fairman, Chairman
Faircom Inc.
333 Glen Head Road
Old Brookville, New York 11545
Facsimile (516) 676-2632
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attn: Anthony Pantaleoni, Esq.
Facsimile (212) 752-5958
or to such other address or telecopy number as any party shall have specified by
notice given to the other parties in the manner specified above.
(b) ENTIRE AGREEMENT; AMENDMENT. This Agreement, including the
Exhibits hereto, and the other agreements expressly contemplated by this
Agreement, contain the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior oral and written agreements,
memoranda, term sheets, understandings and undertakings among the parties hereto
relating to the subject matter hereof. This Agreement may be modified or amended
only by a written instrument executed by or on behalf of the parties hereto.
(c) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware without
regard to the application of its conflicts of laws principles. The parties
hereby waive all right to trial by jury in any action, suit or proceeding
brought to enforce or defend any rights or remedies under this Agreement or the
transactions contemplated hereby.
-4-
<PAGE> 5
(d) SEVERABILITY. If any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
(e) CONSTRUCTION. The section and subsection headings used
herein are for convenience of reference only, are not a party of this Agreement
and are not to affect the construction of, or be taken into consideration in
interpreting, any provision of this Agreement. As used in this Agreement, the
masculine, feminine and neuter gender each includes the other, unless the
context otherwise dictates. Any and all schedules and exhibits referred to in
this Agreement and attached hereto are and shall be incorporated in this
Agreement as if fully set forth herein.
(f) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
(g) SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages may be an inadequate remedy for any breach of the provisions of this
Agreement and agree that the obligations of the parties hereunder may be
specifically enforced, and no party will take any action to impede the other
from seeking to enforce such right of specific performance after any such
breach.
(h) SUCCESSORS AND ASSIGNS; ASSIGNABILITY. Except as otherwise
provided herein, this Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective successor and
permitted assigns. This Agreement shall not confer upon any person other than
the parties hereto and their respective successors and permitted assigns any
rights or remedies hereunder.
(i) FURTHER ASSURANCES. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable 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
transactions contemplated by this Agreement.
(j) SURVIVAL. The representations and warranties of the
parties contained herein shall survive execution and delivery of this Agreement
and issuance and delivery of the Warrants or Warrant Shares.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the day and year first above written.
REGENT COMMUNICATIONS, INC.
By: __________________________
Its: _________________________
BLUE CHIP CAPITAL FUND II
LIMITED PARTNERSHIP
By: Blue Chip Venture Company, Ltd.
Its General Partner
By: __________________________
John H. Wyant
Its: Manager
MIAMI VALLEY VENTURE FUND L.P.
By: Blue Chip Venture Company of
Dayton, Ltd.
Its Special Limited Partner
By: __________________________
John H. Wyant
Its: Manager
FAIRCOM, INC.
By: __________________________
Its: _________________________
-6-
<PAGE> 1
Exhibit 4(j)
CREDIT AGREEMENT
DATED AS OF NOVEMBER 14, 1997
AMONG
REGENT COMMUNICATIONS, INC.,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
GENERAL ELECTRIC CAPITAL CORPORATION,
AS DOCUMENTATION AGENT,
AND
BANK OF MONTREAL, CHICAGO BRANCH,
AS AGENT
<PAGE> 2
REGENT COMMUNICATIONS, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
SECTION 1.
DEFINITIONS
<S> <C> <C>
1.1 Certain Defined Terms................................................................ 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement...................................................................... 31
1.3 Other Definitional Provisions........................................................ 31
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; Notes.................................................. 31
2.2 Interest on the Loans................................................................ 34
2.3 Fees................................................................................. 38
2.4 Repayments, Prepayments and Reductions in Revolving Loan
Commitments; General Provisions Regarding Payments................................... 39
2.5 Use of Proceeds...................................................................... 45
2.6 Special Provisions Governing LIBOR Rate Loans........................................ 45
2.7 Increased Costs; Taxes; Capital Adequacy............................................. 47
2.8 Obligation of Lenders and Issuing Lender to Mitigate................................. 51
2.9 Affected Lenders..................................................................... 52
2.10 Guaranties of and Security for the Obligations....................................... 53
SECTION 3.
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.............................................................................. 54
3.2 Letter of Credit Fees................................................................ 56
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of
Credit............................................................................... 57
3.4 Obligations Absolute................................................................. 59
3.5 Indemnification; Nature of Issuing Lender's Duties................................... 60
3.6 Increased Costs and Taxes Relating to Letters of Credit.............................. 61
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
4.1 Conditions to Initial Letters of Credit.............................................. 62
4.2 Conditions to Initial Revolving Loans................................................ 64
4.3 Conditions to Permitted Acquisitions................................................. 68
4.4 Conditions to All Loans.............................................................. 72
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
4.5 Conditions to Letters of Credit...................................................... 74
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries......................................................................... 74
5.2 Authorization of Borrowing, etc...................................................... 77
5.3 Financial Condition.................................................................. 78
5.4 No Material Adverse Change; No Restricted Junior Payments............................ 78
5.5 Title to Properties; Liens........................................................... 78
5.6 Litigation; Adverse Facts............................................................ 79
5.7 Payment of Taxes..................................................................... 79
5.8 Performance of Agreements; Materially Adverse Agreements............................. 79
5.9 Governmental Regulation.............................................................. 80
5.10 Securities Activities................................................................ 80
5.11 Employee Benefit Plans............................................................... 80
5.12 Certain Fees......................................................................... 80
5.13 Environmental Protection............................................................. 81
5.14 Employee Matters..................................................................... 82
5.15 Solvency............................................................................. 82
5.17 Intellectual Property................................................................ 82
5.18 Disclosure........................................................................... 83
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS
6.1 Financial Statements and Other Reports............................................... 83
6.2 Corporate Existence, etc............................................................. 88
6.3 Payment of Taxes and Claims; Tax Consolidation....................................... 88
6.4 Maintenance of Properties; Insurance................................................. 89
6.5 Inspection; Lender Meeting........................................................... 89
6.6 Compliance with Laws, etc............................................................ 90
6.7 Environmental Disclosure and Inspection.............................................. 90
6.8 Company's Remedial Action Regarding Hazardous Materials.............................. 91
6.9 Interest Rate Protection............................................................. 92
6.10 Compliance with Related Documents.................................................... 92
6.11 Transfer of FCC Licenses to License Subs............................................. 92
6.12 Sale of the San Diego Station, the Lexington Station and the Charleston
Stations............................................................................. 92
SECTION 7.
COMPANY'S NEGATIVE COVENANTS
7.1 Indebtedness......................................................................... 93
7.2 Liens and Related Matters............................................................ 94
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
7.3 Investments; Joint Ventures.......................................................... 95
7.4 Contingent Obligations............................................................... 96
7.5 Restricted Junior Payments........................................................... 96
7.6 Financial Covenants.................................................................. 97
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions..................... 98
7.8 Consolidated Capital Expenditures.................................................... 99
7.9 Sales and Lease-Backs................................................................ 99
7.10 Sale or Discount of Receivables...................................................... 99
7.11 Transactions with Shareholders and Affiliates........................................ 99
7.12 Disposal of Subsidiary Stock.........................................................100
7.13 Conduct of Business..................................................................100
7.14 Amendments or Waivers of Related Documents and Charter Documents.....................100
7.15 Fiscal Year..........................................................................101
7.16 Overhead.............................................................................101
SECTION 8.
EVENTS OF DEFAULT
8.1 Failure to Make Payments When Due....................................................102
8.2 Default in Other Agreements..........................................................102
8.3 Breach of Certain Covenants..........................................................102
8.4 Breach of Warranty...................................................................102
8.5 Other Defaults Under Loan Documents..................................................103
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.................................103
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc...................................103
8.8 Judgments and Attachments............................................................104
8.9 Dissolution..........................................................................104
8.10 Employee Benefit Plans...............................................................104
8.11 Change in Control....................................................................104
8.12 Failure of Security or Guaranty......................................................104
8.13 FCC Licenses.........................................................................104
8.14 Acquisition FCC Consent..............................................................105
8.15 Material Adverse Effect..............................................................105
8.16 Faircom and Park Lane Acquisitions...................................................105
8.17 Letters of Credit....................................................................105
SECTION 9.
AGENT; DOCUMENTATION AGENT
9.1 Appointment..........................................................................106
9.2 Powers; General Immunity.............................................................106
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.....................................................................108
9.4 Right to Indemnity...................................................................108
9.5 Successor Agent......................................................................109
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
9.6 Security Documents, Etc..............................................................109
9.7 Appointment of Separate Agent........................................................110
SECTION 10.
MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit........................110
10.2 Expenses.............................................................................113
10.3 Indemnity............................................................................113
10.4 Set-Off; Security Interest in Deposit Accounts.......................................114
10.5 Ratable Sharing......................................................................115
10.6 Amendments and Waivers...............................................................115
10.7 Independence of Covenants............................................................116
10.8 Notices..............................................................................116
10.9 Survival of Representations, Warranties and Agreements...............................117
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative................................117
10.11 Marshalling; Payments Set Aside......................................................117
10.12 Severability.........................................................................117
10.13 Obligations Several; Independent Nature of Lenders' Rights...........................118
10.14 Headings.............................................................................118
10.15 Applicable Law.......................................................................118
10.16 Successors and Assigns...............................................................118
10.17 Consent to Jurisdiction and Service of Process.......................................118
10.18 Waiver of Jury Trial.................................................................119
10.19 Confidentiality......................................................................119
10.20 Counterparts; Effectiveness..........................................................120
Signature pages S-1
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF REVOLVING NOTE
V [RESERVED]
VI FORM OF COMPLIANCE CERTIFICATE
VII-A FORMS OF OPINION OF STRAUSS & TROY
VII-B FORM OF OPINION OF LATHAM & WATKINS (Effective Date)
VII-C FORM OF OPINION OF LOCAL COUNSEL
VII-D FORM OF OPINION OF LATHAM & WATKINS (Permitted Acquisitions)
VIII FORM OF OPINION OF O'MELVENY & MYERS LLP
IX FORM OF SUBSIDIARY GUARANTY
X FORM OF PLEDGE AND SECURITY AGREEMENT
XI FORM OF FINANCIAL CONDITION CERTIFICATE
XII FORM OF OPERATING AGREEMENT
XIII FORM OF MORTGAGE
XIV FORM OF CONSENT LETTER
XV FORM OF JACOBS GUARANTY
XVI FORM OF COLLATERAL ACCOUNT AGREEMENT
</TABLE>
v
<PAGE> 7
SCHEDULES
1.1A STATIONS
1.1B EXISTING DEBT
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1D SUBSIDIARIES OF COMPANY
5.1E FCC LICENSES AND STATION MATTERS
5.1E(v) LEASE MANAGEMENT AGREEMENTS
5.1F REAL PROPERTY INTERESTS
5.1G COLLATERAL MATTERS
5.4 RESTRICTED JUNIOR PAYMENTS
5.7 TAX OBLIGATIONS
5.12 BROKER'S FEE
5.13 ENVIRONMENTAL MATTERS
5.16 INSURANCE
7.1 CERTAIN PERMITTED SECURED PURCHASE MONEY INDEBTEDNESS
7.3 PERMITTED INVESTMENTS
7.4 CONTINGENT OBLIGATIONS
vi
<PAGE> 8
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of November 14, 1997 and entered
into by and among REGENT COMMUNICATIONS, INC., a Delaware corporation
("COMPANY"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a "LENDER" and collectively as
"LENDERS"), GENERAL ELECTRIC CAPITAL CORPORATION, as documentation agent (in
such capacity, "DOCUMENTATION AGENT") and BANK OF MONTREAL, CHICAGO BRANCH
("BANK OF MONTREAL"), as agent for Lenders (in such capacity, "AGENT").
R E C I T A L S
- - - - - - - -
WHEREAS, Company owns all of the issued and outstanding
capital stock of (i) Regent Broadcasting of San Diego, Inc., a Delaware
corporation ("REGENT OF SAN DIEGO"), which owns and operates the radio station
set forth opposite its name on SCHEDULE 1.1A annexed hereto and (ii) Regent
Broadcasting of Lexington, Inc., a Delaware corporation ("REGENT OF
LEXINGTON"), which owns and operates the radio station set forth opposite its
name on SCHEDULE 1.1A;
WHEREAS, Regent of San Diego owns all of the issued and
outstanding capital stock of Regent Licensee of San Diego, Inc., a Delaware
corporation ("SAN DIEGO LICENSE SUB"), which owns the FCC Licenses for the
radio station set forth opposite its name on Schedule 1.1 A;
WHEREAS, Regent of Lexington owns all of the issued and
outstanding capital stock of Regent Licensee of Lexington, Inc., a Delaware
corporation ("LEXINGTON LICENSE SUB"), which owns the FCC Licenses for the
radio station set forth opposite its name on Schedule 1.1A;
WHEREAS, after the Closing Date, in accordance with this
Agreement, Company has agreed to acquire from the Sellers the radio stations
set forth under Part II on SCHEDULE 1.1A, each of which shall be owned and
operated by the Operating Sub (as defined below) set forth opposite its name on
SCHEDULE 1.1A;
WHEREAS, after the Closing Date, in accordance with this
Agreement, the FCC Licenses for the Acquired Stations (as defined below) shall
be owned by the License Sub (as
1
<PAGE> 9
defined below) set forth opposite its name under Part II on SCHEDULE 1.1A
pursuant to an operating agreement between such License Sub and the Operating
Sub set forth opposite its name on SCHEDULE 1.1A;
WHEREAS, Company desires that Lenders extend certain credit
facilities to Company and its Subsidiaries for (i) the acquisition of certain
radio stations, from time to time, to the extent permitted hereunder, (ii) the
payment of fees and expenses hereunder and fees and expenses related to the
foregoing transactions, and (iii) working capital purposes;
WHEREAS, the Subsidiaries of Company desire to guarantee the
Obligations pursuant to the Subsidiary Guaranty;
WHEREAS, Company and its Subsidiaries desire to secure their
respective Obligations by granting to Agent, on behalf and for the ratable
benefit of Lenders, First Priority Liens (subject to Permitted Liens) in all of
their respective assets (to the full extent permitted by law) pursuant to the
Pledge and Security Agreement and the other Security Documents;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders, and
Agent agree as follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
---------------------
The following terms used in this Agreement shall have the following
meanings:
"ACQUIRED STATIONS" means the radio stations to be acquired
on any Permitted Acquisition Closing Date.
"ACQUISITION" means a Permitted Acquisition.
"ACQUISITION DOCUMENTS" means collectively, the Permitted
Acquisition Documents.
"ACQUISITION PROCEEDS" means the proceeds of any additional
Company Common Stock, Company Preferred Stock or any other equity
securities issued in accordance with this Agreement that are used to
pay all or any portion of the consideration for the consummation of a
Permitted Acquisition
"ACQUISITION FCC CONSENT" means the initial written action or
actions by the FCC approving the assignment of the FCC Licenses for
each Station to be acquired as part of an Acquisition to the
respective Operating Subs and License Subs in the manner contemplated
by the applicable Acquisition Documents including, in the event such
FCC
2
<PAGE> 10
Licenses are not acquired directly by such License Subs, the
assignment of such FCC Licenses for each such Station by the
applicable Operating Subs to the respective License Sub, all in form
and substance satisfactory to Agent and Requisite Lenders.
"ADJUSTED CONSOLIDATED OPERATING CASH FLOW" means
Consolidated Operating Cash Flow; PROVIDED that for any relevant
period through June 30, 1998, to the extent that the operating cash
flow on a trailing 12 month basis relating to the Flagstaff and
Kingman Stations (on a combined basis in accordance with GAAP) after
the Park Lane Acquisition Date included in the calculation of
Consolidated Operating Cash Flow is negative, such negative combined
operating cash flow for any such period shall be deemed to be zero for
purposes of calculating Adjusted Consolidated Operating Cash Flow
hereunder; PROVIDED, FURTHER, that (i) no more than $300,000 in the
aggregate of negative combined operating cash flow for all such
Stations may be excluded in any such period and (ii) the Company shall
not exclude losses at any such Stations (and there shall be no
adjustments to Consolidated Operating Cash Flow with respect to any
such losses for purposes of calculating Adjusted Consolidated
Operating Cash Flow hereunder) to the extent any such losses are
incurred after the Park Lane Acquisition Date.
"ADJUSTED LIBOR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a LIBOR Rate
Loan, the rate per annum obtained by DIVIDING (i) the arithmetic mean
(rounded upward to the nearest 1/16 of one percent) of the offered
rates for Dollar deposits with maturities comparable to the Interest
Period for which such Adjusted LIBOR Rate will apply, appearing on
Telerate Page 3750 at approximately 11:00 A.M. (London time) on such
Interest Rate Determination Date, as determined by the Agent BY (ii) a
percentage equal to 100% MINUS the stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest
Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in
Regulation D (or any successor category of liabilities under
Regulation D).
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any
successor Agent appointed pursuant to subsection 9.5.
3
<PAGE> 11
"AGREEMENT" means this Credit Agreement dated as of November
14, 1997.
"AGGREGATE AMOUNTS DUE" has the meaning assigned to that term
in subsection 10.5.
"APPLICABLE MARGIN" means the percentage determined by
reference to subsection 2.2A.
"ASSET SALE" means the sale by any Credit Party to any Person
other than another Credit Party of (i) any of the stock of any of
Company's Subsidiaries, (ii) substantially all of the assets of any
division or line of business of Company or any of its Subsidiaries, or
(iii) any other assets (whether tangible or intangible) of Company or
any of its Subsidiaries outside of the ordinary course of business.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any
successor statute.
"BARTER OBLIGATIONS" means all non-Cash obligations of any
nature of any Credit Party with respect to Barter Transactions.
"BARTER TRANSACTIONS" means, with respect to Company or any
of its Subsidiaries, the arm's length exchange of advertising time or
other goods or services of the Stations for programming or other goods
or services, in each case in the ordinary course of business
consistent with past practice and industry standards.
"BASE RATE" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection
2.2A.
"BUSINESS DAY" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of New
York or is a day on which banking institutions located in such state
are authorized or required by law or other governmental action to
close, and (ii) with respect to all notices, determinations, fundings
and payments in connection with the Adjusted LIBOR Rate or any LIBOR
Rate Loans, any day that is a Business Day described in clause (i)
above and that is also a day for trading by and between banks in
Dollar deposits in the London interbank market.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as
lessee that, in conformity with GAAP, is accounted for as a capital
lease on the balance sheet of that Person, other than any LMA.
4
<PAGE> 12
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination,
(i) marketable securities (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States
Government or (b) issued by any agency of the United States the
obligations of which are backed by the full faith and credit of the
United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or
any public instrumentality thereof, in each case maturing within one
year after such date and having, at the time of the acquisition
thereof, the highest rating obtainable from either Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc. ("S&P") or Moody's
Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing
no more than one year from the date of creation thereof and having, at
the time of the acquisition thereof, a rating of at least A-1 from S&P
or at least P-1 from Moody's; (iv) certificates of deposit or bankers'
acceptances maturing within one year after such date and issued or
accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the
District of Columbia that (a) is at least "adequately capitalized" (as
defined in the regulations of its primary Federal banking regulator)
and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund
that (a) has at least 95% of its assets invested continuously in the
types of investments referred to in clauses (i) through (iv) above,
(b) has net assets of not less than $500,000,000, and (c) has the
highest rating obtainable from either S&P or Moody's.
"CASH PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment
pursuant to, or monetization of, a note receivable or otherwise, but
only as and when so received) received from such Asset Sale.
"CHANGE OF CONTROL" means:
(i) any Credit Party ceasing for any reason to
beneficially own and control all of the issued and
outstanding shares of capital stock of its Subsidiaries,
excluding Regent of Charleston and Charleston License Sub;
(ii) the sale, lease, or transfer of all or
substantially all of Company's assets to any person or group
(as such term is used in Section 13(d)(3) of the Exchange
Act) other than a wholly-owned Subsidiary;
(iii) the adoption of a plan relating to the
liquidation or dissolution of Company;
(iv) the consummation of any transaction (including
any merger or consolidation but excluding the Faircom
Acquisition and the purchase of equity by GECC and BMO
Financial, Inc.) as a result of which any person or group (as
5
<PAGE> 13
such term is used in Section 13(d)(3) of the Exchange Act)
that is not a "beneficial owner" of (as such term is used in
Section 13(d)(3) of the Exchange Act) any stock of Company as
of the date of this Agreement, directly or indirectly becomes
a "beneficial owner" of more than 50% of the voting stock of
Company;
(v) the chief executive officer of Company is a
person other than Terry S. Jacobs or such other person as has
been approved by Requisite Lenders (such approval not to be
unreasonably withheld); or
(vi) a majority of the members of Company's Boards
of Directors (excluding any directors who may be elected by
the holders of the Series B Senior Convertible Preferred
Stock and the Series D Convertible Preferred Stock of the
Company) are not individuals who on the date hereof are
members of such Board of Directors, who will become directors
as a result of the Faircom Acquisition, or who were nominated
for election or elected with the approval of a majority of
the directors who were directors on the date hereof or whose
nomination or election was previously so approved.
"CHARLESTON ACQUISITION" means the acquisition of the
Charleston Stations pursuant to the Charleston Acquisition Documents
and upon terms and conditions set forth herein and the sale by the
Company of all of the stock of Regent of Charleston to Citicasters Co.
for $4,500,000 pursuant to the provisions of a Stock Purchase
Agreement, dated August 22, 1997, and the acquisition for $1,500,000
by the Company of an option to purchase radio station WSSP (FM),
Charleston, South Carolina, which funds are to be loaned to the
Company by Citicasters Co. on substantially similar terms and
conditions as are contained in the Jacor Note.
"CHARLESTON ACQUISITION DATE" means the date upon which the
Charleston Acquisition is consummated.
"CHARLESTON ACQUISITION DOCUMENTS" means all of the purchase
agreements and related documents pursuant to which the Charleston
Acquisition is implemented or evidenced.
"CHARLESTON LICENSE SUB" means Regent Licensee of Charleston,
Inc., a Delaware corporation and wholly-owned subsidiary of Regent of
Charleston.
"CHARLESTON NOTES" means (i) the promissory note of Company
in the original principal amount of $1,500,000 which may be issued to
Citicasters in connection with the Charleston Acquisition and (ii) the
promissory note of Regent of Charleston and Charleston License Sub in
the original principal amount of $4,500,000 which may be issued to
Citicasters in connection with the Charleston Acquisition.
6
<PAGE> 14
"CHARLESTON NOTE DOCUMENTS" means, collectively, the
Charleston Notes, and all deeds of trust, mortgages, security
agreements, pledge agreements, guaranties, assignments, licenses,
landlord consents and releases and all other instruments or documents
(including, without limitation, UCC-1 financing statements, fixture
filings or similar documents required in order to perfect the Liens
created by any of the above) delivered by Company or Regent of
Charleston pursuant to any of the Charleston Note Documents in order
to grant to Citicasters Liens in real, personal or mixed property of
Regent of Charleston, Charleston License Sub, or the Company.
"CHARLESTON STATIONS" means those Stations set forth under
Part II on SCHEDULE 1.1A that are to be acquired by Regent of
Charleston pursuant to the Charleston Acquisition.
"CHICO LICENSE SUB" means that wholly-owned Subsidiary of the
Company or of a Subsidiary of the Company formed or to be formed,
which will own the FCC Licenses for the Chico Stations following the
Park Lane Acquisition Date.
"CHICO STATIONS" means those Stations identified as the Chico
Stations under Part II, Schedule 1.1A.
"CITICASTERS" means Citicasters Co., an Ohio corporation.
"CLOSING DATE" means the Funding Date on or before March 31,
1998, on which the Loans are made for the initial Permitted
Acquisition and the conditions set forth in subsection 4.2 are
satisfied.
"COLLATERAL" means, collectively, all real, personal, and
mixed property securing the Obligations pursuant to the Security
Documents in accordance with the terms thereof.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account
Agreement to be executed and delivered by Company, substantially in
the form of EXHIBIT XVI annexed hereto.
"COMMITMENT LETTER" means the letter agreement dated May 23,
1997 between Company and Bank of Montreal and the related term sheet.
"COMMITMENT TERMINATION DATE" means the earlier of (i) the
Stated Maturity Date or (ii) the date on which the Commitments are
terminated and the Loans and other Obligations are declared
immediately due and payable in accordance with Section 8.
"COMMITMENTS" means the commitments of Lenders to make Loans
as set forth in subsection 2.1A.
7
<PAGE> 15
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended, and the rules, regulations and policies of the FCC
promulgated thereunder, as from time to time in effect.
"COMPANY" has the meaning assigned to that term in the
introduction to this Agreement.
"COMPANY COMMON STOCK" means all classes of common stock of
Company, par value $.01 per share, issued by Company pursuant to the
Amended and Restated Certificate of Incorporation of Company.
"COMPANY PREFERRED STOCK" means, collectively, the Series A
Convertible Preferred Stock of Company, the Series B Senior
Convertible Preferred Stock of Company, the Series C Convertible
Preferred Stock of Company and the Series D Convertible Preferred
Stock of Company, par value $.01 per share, issued by Company pursuant
to the Amended and Restated Certificate of Incorporation of Company.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of EXHIBIT VI annexed hereto delivered to Agent and Lenders
by Company pursuant to subsection 6.1(iv).
"CONSENT LETTER" means a landlord consent letter
substantially in the form of EXHIBIT XIV annexed hereto (or otherwise
consistent with landlord consent letters previously delivered pursuant
hereto with respect to similar properties), executed and delivered to
Agent by the owner of each real property leased to a Credit Party with
respect to the Mortgage on such property, and "CONSENT LETTERS" means
all letters collectively.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period,
the sum of the aggregate of all expenditures (whether paid in Cash or
other consideration or accrued as a liability including that portion
of Capital Leases which is capitalized on the consolidated balance
sheet of Company and its Subsidiaries, but excluding assets acquired
solely pursuant to Barter Transactions) by Company and its
Subsidiaries during that period that, in conformity with GAAP, are
included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company
and its Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means, as at any date of
determination, the total assets of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current assets
in conformity with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries
on a consolidated basis which may properly be classified as current
liabilities in conformity with GAAP.
8
<PAGE> 16
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, (y)
the sum for that period of (i) Consolidated Operating Cash Flow PLUS
(ii) the Consolidated Working Capital Adjustment LESS (z) the sum
(without duplication) for that period of (i) Consolidated Fixed
Charges, (ii) repayments of Consolidated Total Debt to the extent
actually made in that period (other than voluntary prepayments of the
Revolving Loans or other Indebtedness not corresponding to a reduction
in Commitments or other commitments to lend, as the case may be),
(iii) prepayments of the Loans resulting from the application of Net
Cash Proceeds and (iv) gains from sales of assets included in
determining Consolidated Operating Cash Flow.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum
of the amounts for such period of (i) Consolidated Interest Expense,
(ii) income taxes paid in Cash, (iii) all scheduled principal payments
on Consolidated Total Debt, (iv) Consolidated Capital Expenditures and
(v) Consolidated Rental Payments in respect of Capital Leases, all of
the foregoing as determined on a consolidated basis for Company and
its Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total
interest expense (including that portion attributable to Capital
Leases in accordance with GAAP and capitalized interest) of Company
and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of Company and its Subsidiaries, whether paid
in Cash or accrued, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of
credit and bankers' acceptance financing and net costs under Interest
Rate Agreements, but excluding, however, any amounts referred to in
subsection 2.3 payable to Agent and Lenders on or before the Closing
Date, all of the foregoing determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated
basis for such period taken as a single accounting period determined
in conformity with GAAP; PROVIDED that there shall be excluded (i) the
income (or loss) of any Person (other than a Subsidiary of Company) in
which any other Person (other than Company or any of its Subsidiaries)
has a joint interest, except to the extent of the amount of dividends
or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of
its Subsidiaries or that Person's assets are acquired by Company or
any of its Subsidiaries, (iii) the income of any Subsidiary of Company
to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or
losses attributable to Asset Sales or returned surplus assets of any
Pension Plan, and (v) (to the extent not included in clauses (i)
through (iv) above) any net extraordinary gains or net non-Cash
extraordinary losses.
9
<PAGE> 17
"CONSOLIDATED OPERATING CASH FLOW" means, for any period, (x)
the sum, without duplication, of the amounts for such period of (i)
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
income taxes paid in Cash, (iv) total depreciation expense, (v) total
amortization expense, (vi) other non-Cash items reducing Consolidated
Net Income including, without limitation, accrued but unpaid income
taxes, but excluding accrued and unpaid Overhead, and (vii)
extraordinary losses LESS (y) other non-Cash items increasing
Consolidated Net Income, LESS (z) extraordinary gains, all of the
foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the
aggregate amount of all rents paid or payable by Company and its
Subsidiaries in Cash on a consolidated basis during that period under
all Capital Leases and Operating Leases to which Company or any of its
Subsidiaries is a party as lessee.
"CONSOLIDATED TOTAL DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all
Indebtedness of Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP; PROVIDED however that
solely for the purpose of any calculation of the Consolidated Total
Debt Ratio hereunder, the Sellers Notes, as long as no default in
respect of any such note shall have occurred and be continuing, shall
each be excluded from Consolidated Total Debt until the earlier of (i)
the date which is the first anniversary of the Closing Date, (ii) the
occurrence of any Event of Default or Potential Event of Default under
subsection 8.2 in respect of any such note or (iii) the date on which
a material portion of the assets purchased with the proceeds of such
note are sold, unless such note is repaid in full and cancelled at the
time of such sale.
"CONSOLIDATED TOTAL DEBT RATIO" has the meaning assigned to
that term in subsection 2.2A.
"CONSOLIDATED WORKING CAPITAL" means, as at any date of
determination, the excess of Consolidated Current Assets over
Consolidated Current Liabilities.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any
period on a consolidated basis, the amount (which may be a negative
number) by which the Consolidated Working Capital of Company and its
Subsidiaries as of the beginning of the period exceeds (or is less
than) the Consolidated Working Capital of Company and its Subsidiaries
as of the end of such period.
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person
(i) with respect to any Indebtedness, lease, dividend or other
obligation of another if the primary purpose or intent thereof by the
Person incurring the Contingent Obligation is to provide assurance to
the obligee of such obligation of another that such obligation of
another will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such
10
<PAGE> 18
obligation will be protected (in whole or in part) against loss in
respect thereof, (ii) with respect to any letter of credit issued for
the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings, or (iii) under Interest Rate
Agreements. Contingent Obligations shall include, without limitation,
(a) the direct or indirect guaranty, endorsement (otherwise than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the
obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such
Person for the obligation of another through any agreement (contingent
or otherwise) (X) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (Y)
to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary
purpose or intent thereof is as described in the preceding sentence.
The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if less,
the amount to which such Contingent Obligation is specifically
limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement
or other instrument to which that Person is a party or by which it or
any of its properties is bound or to which it or any of its properties
is subject.
"CREDIT PARTY" means Company, and each of Company's
Subsidiaries and "CREDIT PARTIES" means such Persons collectively.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union
or like organization, other than an account evidenced by a negotiable
certificate of deposit.
"DOCUMENTATION AGENT" has the meaning assigned to that term
in the introduction to this Agreement.
"DOLLARS" and the sign "$" mean the lawful money of the
United States of America.
"EFFECTIVE DATE" means the date on which this Agreement
becomes effective in accordance with subsection 10.20.
"ELIGIBLE ASSIGNEE" means an "accredited investor" (as
defined in Regulation D under the Securities Act) including without
limitation (A) (i) a commercial bank organized under the laws of the
United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United
States or any state
11
<PAGE> 19
thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; PROVIDED that (x) such
bank is acting through a branch or agency located in the United States
or (y) such bank is organized under the laws of a country that is a
member of the Organization for Economic Cooperation and Development or
a political subdivision of such country; and (iv) any other accredited
investor which extends credit or buys loans as one of its businesses
including, but not limited to, insurance companies, mutual funds and
lease financing companies, in each case (under clauses (i) through
(iv) above) that is reasonably acceptable to Agent and the Company;
and (B) any Lender and any Affiliate of any Lender that is reasonably
acceptable to Agent and Company (unless such assignment to such
Affiliate is required or advisable to comply with any applicable law
or governmental regulation binding upon such Lender); PROVIDED that no
Affiliate of Company shall be an Eligible Assignee; PROVIDED FURTHER
that in the case of the forgoing clauses (A) and (B) the consent of
Company to any Eligible Assignee shall not be required at any time
that an Event of Default has occurred and is continuing.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is, or was at any time,
maintained or contributed to by Company or any of its ERISA
Affiliates.
"ENVIRONMENTAL CLAIM" means any allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person
for any damage, including, without limitation, personal injury
(including sickness, disease or death), tangible or intangible
property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, nuisance, pollution, contamination
or other adverse effects on the environment, or for fines, penalties
or restrictions, in each case relating to, resulting from or in
connection with Hazardous Materials and relating to Company, any of
its Subsidiaries, any of their respective Affiliates or any Facility.
"ENVIRONMENTAL LAWS" means all statutes, ordinances, orders,
rules, regulations, plans, policies or decrees and the like relating
to (i) environmental matters, including, without limitation, those
relating to fines, injunctions, penalties, damages, contribution, cost
recovery compensation, losses or injuries resulting from the Release
or threatened Release of Hazardous Materials, (ii) the generation,
use, storage, transportation or disposal of Hazardous Materials, or
(iii) occupational safety and health, industrial hygiene, land use or
the protection of human, plant or animal health or welfare, in any
manner applicable to any Credit Party, its Subsidiaries or any of
their respective properties, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. ss. 9601 ET SEQ.), the Hazardous Materials Transportation
Act (49 U.S.C. ss. 1801 ET SEQ.), the Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901 ET SEQ.), the Federal Water Pollution
Control Act ( 33 U.S.C. ss. 1251 ET SEQ.), the Clean Air Act (42
U.S.C. ss. 7401 ET SEQ.), the Toxic Substances Control Act (15 U.S.C.
ss. 2601 ET SEQ.), the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.C. ss.136 ET SEQ.), the Occupational Safety and Health Act
(29
12
<PAGE> 20
U.S.C. ss. 651 ET SEQ.) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. ss. 11001 ET SEQ.), each as amended or
supplemented, and any analogous future or present local, state and
federal statutes and regulations promulgated pursuant thereto, each as
in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means (i) any
corporation which is, or was at any time, a member of a controlled
group of corporations within the meaning of Section 414(b) of the
Internal Revenue Code of which that Person is, or was at any time, a
member; (ii) any trade or business (whether or not incorporated) which
is, or was at any time, a member of a group of trades or businesses
under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is, or was at any time, a
member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which
that Person, any corporation described in clause (i) above or any
trade or business described in clause (ii) above is, or was at any
time, a member.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder
with respect to any Pension Plan (excluding those for which the
provision for 30-day notice to the PBGC has been waived by
regulation); (ii) the failure to meet the minimum funding standard of
Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code
with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2) of
ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal
by any Credit Party or any of its ERISA Affiliates from any Pension
Plan with two or more contributing sponsors or the termination of any
such Pension Plan resulting in liability pursuant to Sections 4063 or
4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or
condition which might constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on any Credit Party or
any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA;
(vii) the withdrawal by any Credit Party or any of its ERISA
Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there
is any potential liability therefor, or the receipt by any Credit
Party or any of its ERISA Affiliates of notice from any Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence
of an act or omission which could give rise to the imposition on any
Credit Party or any of its ERISA
13
<PAGE> 21
Affiliates of fines, penalties, taxes or related charges under Chapter
43 of the Internal Revenue Code or under Section 409 or 502(c), (i) or
(l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or
the assets thereof, or against any Credit Party or any of its ERISA
Affiliates in connection with any such Employee Benefit Plan; (x)
receipt from the Internal Revenue Service of notice of the failure of
any Pension Plan (or any other Employee Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to
qualify under Section 401(a) of the Internal Revenue Code, or the
failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue
Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.
"EVENT OF DEFAULT" means each of the events set forth in
Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXISTING DEBT" means the debt described on SCHEDULE 1.1B
annexed hereto.
"FACILITIES" means any and all real property (including,
without limitation, all buildings, fixtures or other improvements
located thereon) now, hereafter or heretofore owned, leased, operated
or used by any Credit Party or any of its predecessors or Affiliates.
"FAIRCOM" means Faircom Inc.
"FAIRCOM ACQUISITION" means the acquisition of the Flint
Stations and the Mansfield Stations by means of a merger pursuant to
the Faircom Acquisition Documents and upon terms and conditions set
forth herein.
"FAIRCOM ACQUISITION DATE" means the date upon which each of
the conditions necessary to consummate the Faircom Acquisition is
satisfied and the Faircom Acquisition is consummated.
"FAIRCOM ACQUISITION DOCUMENTS" means the merger agreement
and all related documents pursuant to which the Faircom Acquisition is
implemented or evidenced.
"FAIRCOM STATIONS" means the Flint Stations and the Mansfield
Stations.
"FCC" means the Federal Communications Commission and any
successor governmental agency performing functions similar to those
performed by the Federal Communications Commission on the date hereof.
14
<PAGE> 22
"FCC LICENSE" means any of the material licenses, permits or
other authorizations issued by the FCC relating to the Stations.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the
rates on overnight Federal funds transactions quoted by Bank of
Montreal.
"FINAL ORDER" means, as of any date of determination with
respect to any written action or consent by the FCC, such written
action or consent which shall have been obtained and (i) which shall
not have been reversed, stayed, enjoined, annulled or suspended and
(ii) for which the time for filing a request for administrative or
judicial relief or for instituting administrative review thereof SUA
SPONTE, shall have expired without any such filing having been made or
notice of such review having been issued, or, in the event of such
filing or review SUA SPONTE, such filing or review SUA SPONTE shall
have been disposed of favorably to confirmation of such written action
or the grant of such consent and the time for seeking further relief
with respect thereto shall have expired without any request for such
further relief having been filed.
"FIRST PRIORITY" means, with respect to any Lien purported to
be created in any Collateral pursuant to any Security Document, that
(i) such Lien has priority over any other Lien on such Collateral
(other than Liens permitted pursuant to subsection 7.2(A) (iii) and
(v)) and (ii) such Lien is the only Lien other than Permitted Liens to
which such Collateral is subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its
Subsidiaries maintained in accordance with subsection 7.15.
"FLAGSTAFF LICENSE SUB" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed,
which will own the FCC Licenses for the Flagstaff Stations following
the Park Lane Acquisition Date.
"FLAGSTAFF STATIONS" means those Stations identified as the
Flagstaff Stations under Part II, Schedule 1.1A.
"FLINT LICENSE SUB" means that wholly-owned Subsidiary of the
Company or of a Subsidiary of the Company formed or to be formed,
which will own the FCC Licenses for the Flint Stations following the
Faircom Acquisition Date.
"FLINT STATIONS" means those Stations identified as the Flint
Stations under Part II, Schedule 1.1A.
"FUNDING AND PAYMENT OFFICE" means the office of Agent
located at 115 South LaSalle Street, Chicago, Illinois 60603.
15
<PAGE> 23
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, in
each case as the same are applicable to the circumstances as of the
date of determination.
"GECC" means General Electric Capital Corporation.
"GOVERNMENTAL ACTS" has the meaning assigned to that term in
subsection 3.5A hereof.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or
from any federal, state or local governmental authority, agency or
court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous waste", "restricted hazardous waste", "infectious
waste", "toxic substances" or any other formulations intended to
define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or
"EP toxicity" or words of similar import under any applicable
Environmental Laws or publications promulgated pursuant thereto; (ii)
any oil, petroleum, petroleum fraction or petroleum derived substance;
(iii) any drilling fluids, produced waters and other wastes associated
with the exploration, development or production of crude oil, natural
gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in any form;
(vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per million; (ix)
pesticides; and (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any
governmental authority or which may or could pose a hazard to the
health and safety of the owners, occupants or any Persons in the
vicinity of the Facilities.
"HMH" means HMH Broadcasting, Inc.
"HMH NOTE" means the promissory note of Regent of Lexington
and Lexington License Sub in the original principal amount of
$3,500,000 issued to HMH in connection with the Acquisition of the
Lexington Station.
"HMH NOTE DOCUMENTS" means, collectively, the HMH Note, and
all deeds of trust, mortgages, security agreements, pledge agreements,
guaranties, assignments, license, landlord consents and releases and
all other instruments (including, without
16
<PAGE> 24
limitation, UCC-1 financing statements, fixture filings or similar
documents required in order to perfect the Liens created by any of the
above) delivered by Regent of Lexington, Lexington Licensee Sub or
Company pursuant to any of the HMH Note Documents in order to grant to
HMH Liens in real, personal or mixed property or stock of Regent of
Lexington or Lexington License Sub.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability
on a balance sheet in conformity with GAAP, (iii) notes payable and
drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any obligation owed
for all or any part of the deferred purchase price of property or
services (excluding any such obligations incurred under ERISA), which
purchase price is (a) due more than six months from the date of
incurrence of the obligation in respect thereof or (b) evidenced by a
note or similar written instrument, (v) all indebtedness secured by
any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person
and (vi) obligations under non-compete agreements and all other
obligations that would be properly classified as a liability on a
balance sheet conforming with GAAP (other than current trade payables
and current accrued expenses); PROVIDED that obligations under
Interest Rate Agreements constitute Contingent Obligations and not
Indebtedness; PROVIDED FURTHER that Indebtedness shall not include (1)
Barter Obligations or (2) obligations in respect of Operating Leases
that would not be properly classified as a liability on a balance
sheet in conformity with GAAP.
"INDEMNITEE" has the meaning assigned to that term in
subsection 10.3.
"INITIAL MORTGAGED PROPERTY" and "INITIAL MORTGAGED
PROPERTIES" have the respective meanings assigned thereto in
subsection 4.2B.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or
necessary for the conduct of the business of any Credit Party or its
Subsidiaries as currently conducted that are material to the condition
(financial or otherwise), business or operations of such Credit Party
and its Subsidiaries, taken as a whole.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate Loan, each March 31, June 30, September 30 and December 31 of
each year, commencing on the first such date to occur after the
Closing Date, and (ii) with respect to any LIBOR Rate Loan, the last
day of each Interest Period applicable to such Loan; PROVIDED that in
the case of each Interest Period of longer than three months "Interest
Payment Date" shall also include the date that is three months, or an
integral multiple thereof, after the commencement of such Interest
Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
17
<PAGE> 25
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement designed to protect Company
or any of its Subsidiaries against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of
such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.
"INVESTMENT" means (i) any direct or indirect purchase or
other acquisition by any Credit Party of, or of a beneficial interest
in, any Securities of any other Person (other than a Person that,
prior to such purchase or acquisition, was a wholly-owned Subsidiary
of such Credit Party), or (ii) any direct or indirect loan, advance
(other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by any Credit Party to any
other Person other than a wholly-owned Subsidiary of such Credit
Party, including all indebtedness and accounts receivable from that
other Person that are not current assets or did not arise from sales
to that other Person in the ordinary course of business. The amount of
any Investment shall be the original cost of such Investment plus the
cost of all additions thereto, without any adjustments for increases
or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"ISSUING LENDER" means Bank of Montreal.
"JACOBS GUARANTY" means the Jacobs Guaranty to be executed by
Terry S. Jacobs, substantially in the form of EXHIBIT XV annexed
hereto.
"JACOR" means Citicasters Co., a subsidiary of Jacor
Communications, Inc.
"JACOR NOTE" means the amended and restated promissory note
of Regent of San Diego and San Diego License Sub in the original
principal amount of $6,000,000 issued to Jacor in connection with the
Acquisition of the San Diego Station.
"JACOR NOTE DOCUMENTS" means, collectively, the Jacor Note,
and all deeds of trust, mortgages, security agreements, pledge
agreements, guaranties, assignments, licenses, landlord consents and
releases and all other instruments or documents (including, without
limitation, UCC-1 financing statements, fixture filings or similar
documents required in order to perfect the Liens created by any of the
above) delivered by Company, Regent of San Diego, or San Diego License
Sub pursuant to any of the Jacor Note Documents in order to grant to
Jacor Liens in real, personal or mixed property or stock of Regent of
San Diego or San Diego License Sub.
18
<PAGE> 26
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal
form; PROVIDED that in no event shall any corporate Subsidiary of any
Person be considered to be a Joint Venture to which such Person is a
party.
"KINGMAN LICENSE SUB" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed,
which will own the FCC Licenses for the Kingman Stations following the
Park Lane Acquisition Date.
"KINGMAN STATIONS" means those Stations identified as the
Kingman Stations under Part II, Schedule 1.1A.
"LAKE TAHOE LICENSE SUB" means that wholly-owned Subsidiary
of the Company or of a Subsidiary of the Company formed or to be
formed, which will own the FCC Licenses for the Lake Tahoe Stations
following the Park Lane Acquisition Date.
"LAKE TAHOE STATIONS" means those Stations identified as the
Lake Tahoe Stations under Part II, Schedule 1.1A.
"LENDER" and "LENDERS" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement,
together with their successors and permitted assigns pursuant to
subsection 10.1; PROVIDED that the term "Lenders", when used in the
context of a particular Commitment, shall mean Lenders having that
Commitment.
"LENDERS' POLICY" has the meaning assigned that term in
subsection 4.2B and "LENDERS' POLICIES" means all such policies
collectively.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means the standby
letters of credit issued or to be issued by Issuing Lender for the
account of Company pursuant to subsection 3.1 for the purpose of
supporting (i) Indebtedness of Company or any of its Subsidiaries in
respect of industrial revenue or development bonds or financings, (ii)
workers' compensation liabilities of Company or any of its
Subsidiaries, (iii) the obligations of third party insurers of Company
or any of its Subsidiaries arising by virtue of the laws of any
jurisdiction requiring third party insurers, (iv) obligations with
respect to Capital Leases or Operating Leases of Company or any of its
Subsidiaries, (v) performance, payment, deposit or surety obligations
of Company or any of its Subsidiaries, in any case if required by law
or governmental rule or regulation or in accordance with custom and
practice in the industry, and (vi) obligations with respect to
Permitted Acquisitions of Company or any of its Subsidiaries; PROVIDED
that standby Letters of Credit may not be issued for the purpose of
supporting (a) trade payables or (b) any Indebtedness constituting
"antecedent debt" (as that term is used in Section 547 of the
Bankruptcy Code).
"LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or
at any time thereafter may become available
19
<PAGE> 27
for drawing under all Letters of Credit then outstanding PLUS (ii) the
aggregate amount of all drawings under Letters of Credit honored by
Issuing Lender and not theretofore reimbursed by Company (including
any such reimbursement out of the proceeds of Revolving Loans pursuant
to subsection 3.3B).
"LEXINGTON LICENSE SUB" means Regent Licensee of Lexington,
Inc., a Delaware corporation and wholly-owned subsidiary of Regent of
Lexington.
"LEXINGTON STATION" means the Station set forth on SCHEDULE
1.1A that is owned and operated by Regent of Lexington.
"LIBOR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted LIBOR Rate as provided in
subsection 2.2A.
"LICENSE SUBS" means each of San Diego License Sub, Flagstaff
License Sub, Kingman License Sub, Lake Tahoe License Sub, Chico
License Sub, Palmdale License Sub, Redding License Sub, Victorville
License Sub, Flint License Sub, Mansfield License Sub, Lexington
License Sub, Charleston License Sub, and any other special purpose
Subsidiary of an Operating Sub or Company which is created or acquired
to hold the FCC Licenses acquired in connection with any Permitted
Acquisition and "LICENSE SUBS" means all such License Subs.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"LMA" means any joint sales agreement, advertising sales
agreement, time brokerage agreement, local marketing agreement or
management services agreement or similar arrangement with respect to
the management or marketing of any radio station (including, without
limitation, the Stations) or any other broadcast properties to which
Company or any of its Subsidiaries is a party.
"LOAN OR LOANS" means one or more of the Revolving Loans.
"LOAN DOCUMENTS" means this (i) Agreement, (ii) the Notes,
(iii) the Letters of Credit (and any applications for, or
reimbursement agreements or other documents or certificates executed
by Company in favor of Issuing Lender relating to, the Letters of
Credit), (iv) the Subsidiary Guaranty, (v) the Security Documents,
(vi) any Interest Rate Agreements entered into by Company with any
Lender, and (vii) the Jacobs Guaranty.
"MANSFIELD LICENSE SUB" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed,
which will own the FCC Licenses for the Mansfield Stations following
the Faircom Acquisition Date.
20
<PAGE> 28
"MANSFIELD STATIONS" means those Stations identified as the
Mansfield Stations under Part II, Schedule 1.1A.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
upon the business, operations, properties, assets, condition
(financial or otherwise) or prospects of the Company and its
Subsidiaries (taken as a whole) or (ii) the impairment of any material
portion of the Collateral or the ability of any Credit Party to
perform in any material respect, or of Agent or Lenders to enforce,
the Obligations.
"MIAMI VALLEY" means Miami Valley Venture Fund L.P.
"MORTGAGES" means each of the Mortgages to be executed and
delivered by a Credit Party on the Closing Date substantially in the
form of EXHIBIT XIII (as modified to conform to local requirements),
as such mortgages may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof and
thereof.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined
in Section 3(37) of ERISA, to which Company or any of its ERISA
Affiliates is contributing, or ever has contributed, or to which
Company or any of its ERISA Affiliates has, or ever has had, an
obligation to contribute.
"NET CASH PROCEEDS" means, with respect to any Asset Sale,
Cash Proceeds of such Asset Sale net of bona fide direct costs of sale
including (i) income and other taxes reasonably estimated to be
actually payable as a result of such Asset Sale within two years of
the date of such Asset Sale, (ii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any
Indebtedness permitted hereunder (other than the Loans) that is
secured by a Lien on the stock or assets in question and that is
required to be repaid under the terms thereof as a result of such
Asset Sale and (iii) brokerage, legal and accounting fees; PROVIDED
that such fees shall be deducted from Cash Proceeds only to the extent
that they are reasonable in amount in accordance with industry
standards and are not payable to any Affiliates of the Company.
"NOTE OR NOTES" means one or more of the Revolving Notes.
"NOTICE OF BORROWING" means a notice substantially in the
form of EXHIBIT I annexed hereto delivered by Company to Agent
pursuant to subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice
substantially in the form of EXHIBIT II annexed hereto delivered by
Company to Agent pursuant to subsection 2.2D
21
<PAGE> 29
with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the
Loans specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice
substantially in the form of EXHIBIT III annexed hereto delivered by
Company to Agent pursuant to subsection 3.1B(i) with respect to the
proposed issuance of a Letter of Credit.
"OBLIGATIONS" means all obligations of every nature of the
Credit Parties from time to time owed to Agent, Lenders or any of them
under the Loan Documents, whether for principal, interest,
reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnification or otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation,
a certificate executed on behalf of such corporation by any of its
chairman of the board (if an officer), its president, its chief
operating officer or one of its vice presidents or its chief financial
officer or its treasurer (in each case, in such officer's official
capacity and not individually); PROVIDED that every Officers'
Certificate with respect to the compliance with a condition precedent
to the making of any Loans hereunder shall include: (i) a statement
that the officer or officers, in his capacity as such, making or
giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating
thereto, (ii) a statement that, in the opinion of the signers, they
have made or have caused to be made such examination or investigation
as is necessary to enable them to express an informed opinion as to
whether or not such condition has been complied with, and (iii) a
statement as to whether, in the opinion of the signers, such condition
has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the
lessee at any time) of any property (whether real, personal or mixed)
that is not a Capital Lease other than (i) any such lease under which
that Person is the lessor and (ii) any LMA.
"OPERATING SUB" means each of Regent of San Diego, Regent of
Flagstaff, Regent of Kingman, Regent of Lake Tahoe, Regent of Chico,
Regent of Redding, Regent of Palmdale, Regent of Victorville, Regent
of Flint, Regent of Mansfield, Regent of Lexington, Regent of
Charleston, and each other Subsidiary of Company (other than a License
Sub) created or acquired in connection with a Permitted Acquisition
for the purposes of operating any Station and "OPERATING SUBS" means
all such Operating Subs.
"OVERHEAD" means, collectively, all amounts paid, payable or
distributed or distributable to any Person (other than Company) by any
Credit Party in connection with corporate "home office" costs and
expenses including, without limitation, management fees, salaries,
bonuses, reimbursement of expenses or other compensation for services
in connection with headquarters, collective or overhead operations for
the Credit Parties, provided, however, that Overhead shall not include
amounts incurred by Company and
22
<PAGE> 30
allocated to any or all of the Stations and included in the line item
"Station Allocated Overhead" on such Station's statements of income
for any applicable period in accordance with GAAP and past practice up
to an aggregate amount not to exceed $1,200,000 for all Stations
combined for the Fiscal Year ending December 31, 1997 and increasing
by 5% per annum for all Stations combined for each Fiscal Year
thereafter.
"PALMDALE LICENSE SUB" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed,
which will own the FCC Licenses for the Palmdale Stations following
the Park Lane Acquisition Date.
"PALMDALE STATIONS" means those Stations identified as the
Palmdale Stations under Part II, Schedule 1.1A
"PARK LANE ACQUISITION" means the acquisition of the Park
Lane Stations pursuant to the Park Lane Acquisition Documents and upon
terms and conditions set forth herein.
"PARK LANE ACQUISITION DATE" means the date upon which each
of the conditions to funding the Loans to consummate the Park Lane
Acquisition is satisfied.
"PARK LANE ACQUISITION DOCUMENTS" means all of the purchase
agreements and related documents pursuant to which the Park Lane
Acquisition is implemented or evidenced.
"PARK LANE STATIONS" means the Flagstaff Stations, the
Kingman Stations, the Lake Tahoe Stations, the Redding Stations, the
Chico Stations, the Palmdale Stations and the Victorville Stations.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal
Revenue Code or Section 302 of ERISA.
"PERMITTED ACQUISITION" has the meaning set forth in
subsection 7.7(ii).
"PERMITTED ACQUISITION CLOSING DATE" means, with respect to
any Permitted Acquisition, including the Faircom Acquisition, the
Charleston Acquisition and the Park Lane Acquisition, the date upon
which each of the conditions to consummation of such acquisition
(including, without limitation, funding any Revolving Loans to
consummate such Permitted Acquisition) set forth in subsections
7.7(ii), 4.2 and 4.3 is satisfied.
"PERMITTED ACQUISITION DOCUMENTS" means, the material
agreements pursuant to which any other Permitted Acquisition is
consummated.
23
<PAGE> 31
"PERMITTED ENCUMBRANCES" means the following types of Liens
(other than any such Lien imposed pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the time,
required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics and materialmen and other
Liens imposed by law incurred in the ordinary course of
business for sums not yet delinquent or being contested in
good faith, if such reserve or other appropriate provision,
if any, as shall be required by GAAP shall have been made
therefor;
(iii) Liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien not
constituting an Event of Default under subsection 8.8;
(v) leases or subleases granted to others not
interfering in any material respect with the ordinary conduct
of the business of any Credit Party or any of its
Subsidiaries;
(vi) easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and other
similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business of
any Credit Party or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or
sublessor under any lease, (b) restriction or encumbrance
that the interest or title of such lessor or sublessor may be
subject to, or (c) subordination of the interest of the
lessee or sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC financing
statements relating solely to leases permitted by this
Agreement;
(ix) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
and
24
<PAGE> 32
(x) Liens of a collecting bank under Section 4-208
of the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"PERMITTED LIENS" means Liens permitted pursuant to
subsection 7.2A.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies,
Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations,
whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"PLEDGE AND SECURITY AGREEMENT" means the Pledge and Security
Agreement to be executed and delivered by each Credit Party,
substantially in the form of EXHIBIT X annexed hereto.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of
Default.
"PRIME RATE" means the rate that Bank of Montreal announces
from time to time as its prime lending rate, as in effect from time to
time in the United States. The Prime Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to
any customer in the United States or any other country. Bank of
Montreal or any other Lender may make commercial loans or other loans
at rates of interest at, above or below the Prime Rate.
"PRO RATA SHARE" means (i) with respect to all payments,
computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans of any Lender, the percentage
obtained by DIVIDING (x) the Revolving Loan Exposure of that Lender BY
(y) the aggregate Revolving Loan Exposure of all Lenders, and (ii) for
all other purposes with respect to each Lender, the percentage
obtained by dividing (x) the Revolving Loan Exposure of that Lender BY
(y) the aggregate Revolving Loan Exposure of all Lenders, in any such
case as the applicable percentage may be adjusted by assignments
permitted pursuant to subsection 10.1.. The initial Pro Rata Share of
each Lender for purposes of each of clauses (i), and (ii) of the
preceding sentence is set forth opposite the name of that Lender in
SCHEDULE 2.1 annexed hereto.
"REAL PROPERTY" means each of the fee and lease properties of
the Credit Parties described in SCHEDULE 5.1F annexed hereto.
"REDDING LICENSE SUB" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed,
which will own the FCC Licenses for the Redding Stations following the
Park Lane Acquisition Date.
"REDDING STATIONS" means those Stations identified as the
Redding Stations under Part II, Schedule 1.1A.
25
<PAGE> 33
"REFINANCING PROCEEDS" has the meaning set forth in
subsection 7.5.
"REGENT OF CHARLESTON" means Regent Broadcasting of
Charleston, Inc., a Delaware corporation and wholly-owned subsidiary
of Company.
"REGENT OF CHICO" means that wholly-owned Subsidiary of the
Company or of a Subsidiary of the Company formed or to be formed or
acquired, which will own the assets (other than the FCC Licenses) and
operate the Chico Stations pursuant to an operating agreement with
Chico License Sub following the Park Lane Acquisition Date.
"REGENT OF FLAGSTAFF" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed
or acquired, which will own the assets (other than the FCC Licenses)
and operate the Flagstaff Stations pursuant to an operating agreement
with Flagstaff License Sub following the Park Lane Acquisition Date.
"REGENT OF FLINT" means that wholly-owned Subsidiary of the
Company or of a Subsidiary of the Company formed or to be formed or
acquired, which will own the assets (other than the FCC Licenses) and
operate the Flint Stations pursuant to an operating agreement with
Flint License Sub following the Faircom Acquisition Date.
"REGENT OF KINGMAN" means that wholly-owned Subsidiary of the
Company or of a Subsidiary of the Company formed or to be formed or
acquired, which will own the assets (other than the FCC Licenses) and
operate the Kingman Stations pursuant to an operating agreement with
Kingman License Sub following the Park Lane Acquisition Date.
"REGENT OF LEXINGTON" has the meaning set forth in the
recitals to this Agreement.
"REGENT OF LAKE TAHOE" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed
or acquired, which will own the assets (other than the FCC Licenses)
and operate the Lake Tahoe Stations pursuant to an operating agreement
with Lake Tahoe License Sub following the Park Lane Acquisition Date.
"REGENT OF MANSFIELD" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed
or acquired, which will own the assets (other than the FCC Licenses)
and operate the Mansfield Stations pursuant to an operating agreement
with Mansfield License Sub following the Faircom Acquisition Date.
"REGENT OF PALMDALE" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed
or acquired, which will own the assets (other than the FCC Licenses)
and operate the Palmdale Stations pursuant to an
26
<PAGE> 34
operating agreement with Palmdale License Sub following the Park Lane
Acquisition Date.
"REGENT OF REDDING" means that wholly-owned Subsidiary of the
Company or of a Subsidiary of the Company formed or to be formed or
acquired, which will own the assets (other than the FCC Licenses) and
operate the Redding Stations pursuant to an operating agreement with
Redding License Sub following the Park Lane Acquisition Date.
"REGENT OF SAN DIEGO" has the meaning set forth in the
recitals to this Agreement.
"REGENT OF VICTORVILLE" means that wholly-owned Subsidiary of
the Company or of a Subsidiary of the Company formed or to be formed
or acquired, which will own the assets (other than the FCC Licenses)
and operate the Victorville Stations pursuant to an operating
agreement with Victorville License Sub following the Park Lane
Acquisition Date.
"REGULATION D" means Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELATED DOCUMENTS" means the (i) Acquisition Documents, (ii)
the Subordinated Debt Documents and (iii) the LMAs.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into
the indoor or outdoor environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed
receptacles containing any Hazardous Materials), or into or out of any
Facility, including the movement of any Hazardous Material through the
air, soil, surface water, groundwater or property.
"REQUISITE LENDERS" means Lenders having or holding 66-2/3%
or more of the sum of the aggregate Revolving Loan Exposure of all
Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of stock of Company, except a dividend payable solely in shares
of that class of stock to the holders of that class, and (ii) any
redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any
class of stock of Company, (iii) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of stock of Company and (iv) any
27
<PAGE> 35
payment or prepayment of principal of, premium, if any, or interest
on, redemption, retirement, defeasance (including substance or legal
defeasance), sinking fund or similar payment with respect to any
Subordinated Indebtedness; PROVIDED that Restricted Junior Payments
shall not include any Overhead payments permitted hereunder.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender
to make Revolving Loans to Company pursuant to subsection 2.1A, and
"REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders in
the aggregate.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender
as of any date of determination (i) prior to the termination of the
Revolving Loan Commitments, that Lender's Revolving Loan Commitment
and (ii) after the termination of the Revolving Loan Commitments, the
aggregate outstanding principal amount of the Revolving Loans of that
Lender.
"REVOLVING LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A.
"REVOLVING NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1D on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Revolving
Loan Commitments and Revolving Loans of any Lenders, in each case
substantially in the form of EXHIBIT IV annexed hereto, as they may be
amended, supplemented or otherwise modified from time to time.
"SAN DIEGO LICENSE SUB" means Regent Licensee of San Diego,
Inc., a California corporation and wholly-owned subsidiary of Regent
of San Diego.
"SAN DIEGO STATION" means the Station set forth on SCHEDULE
1.1A that is owned and operated by Regent of San Diego.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation
in any profit-sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"SECURITY DOCUMENTS" means the Pledge and Security Agreement,
the Collateral Account Agreement, the Mortgages, Memoranda of Lease,
the Lenders' Policies, Consent Letters and all deeds of trust,
mortgages, security agreements, pledge
28
<PAGE> 36
agreements, assignments, licenses, landlord consents and releases and
all other instruments or documents (including, without limitation,
UCC-1 financing statements, fixture filings or similar documents
required in order to perfect the Liens created by the Security
Documents) delivered by a Credit Party pursuant to this Agreement and
the other Loan Documents in order to grant to Agent on behalf and for
the ratable benefit of Lenders Liens in real, personal or mixed
property of that Credit Party.
"SELLERS" means, collectively, the shareholders of the Park
Lane Group, Faircom, Wicks Broadcast Group Limited Partnership,
Highbourne Communications, Inc., Village Communications, Inc. and any
of the sellers of radio stations under a Permitted Acquisition
Document.
"SELLERS NOTES" means, collectively, the Jacor Note, the
Charleston Notes and the HMH Note.
"SELLERS NOTE DOCUMENTS" means, collectively, the Jacor Note
Documents, the Charleston Note Documents and the HMH Note Documents
"SOLVENT" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (z)
not less than the amount that will be required to pay the probable
liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its business
or any contemplated or undertaken transaction; and (iii) such Person
does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such
debts as they become due; and (B) such Person is "solvent" within the
meaning given that term and similar terms under applicable laws
relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall
be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"STATED MATURITY DATE" means March 31, 2005.
"STATION" means each radio station owned and operated by
Company or any of its Subsidiaries, including, without limitation, the
San Diego Station, the Lexington Station and each radio station
hereafter acquired by Company or any of its Subsidiaries pursuant to a
Permitted Acquisition, including the Faircom Acquisition, the
Charleston Acquisition and the Park Lane Acquisition, and "STATIONS"
means all such Stations.
"SUBORDINATED DEBT DOCUMENTS" means, collectively, all
agreements and instruments evidencing, implementing or supporting
Subordinated Indebtedness.
29
<PAGE> 37
"SUBORDINATED INDEBTEDNESS" means, collectively, all
obligations of Company and its Subsidiaries including, without
limitation, any obligation to pay principal, interest, premiums,
penalty, fees, expenses, indemnities or any other charge under or in
respect of any other obligations of Company or its Subsidiaries
subordinated in right of payment to the Obligations pursuant to
documentation containing maturities, amortization, schedules,
covenants, remedies, subordination provisions and other material terms
in form and substance satisfactory to Agent and Requisite Lenders.
"SUBSEQUENT MORTGAGED PROPERTY" AND "SUBSEQUENT MORTGAGED
PROPERTIES" have the respective meanings assigned thereof in
Subsection 4.4A.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, association, joint venture or other business
entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Person
or Persons (whether directors, managers, trustees or other Persons
performing similar functions) having the power to direct or cause the
direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty to be
executed and delivered by each Subsidiary of Company including,
without limitation, each License Sub and Operating Sub, substantially
in the form of EXHIBIT IX annexed hereto.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding levied, collected,
withheld or assessed; PROVIDED that "TAX ON THE OVERALL NET INCOME" of
a Person shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that
Person is deemed to be doing business on all or part of the net
income, profits or gains of that Person (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise).
"TRANSFER FCC CONSENT" means the initial written action or
actions by the FCC approving any assignment of FCC Licenses for the
Stations from Company or an Operating Sub to the respective License
Sub, as required hereunder.
"VICTORVILLE LICENSE SUB" means that wholly-owned Subsidiary
of the Company or of a Subsidiary of the Company formed or to be
formed, which will own the FCC Licenses for the Victorville Stations
following the Park Lane Acquisition Date.
"VICTORVILLE STATIONS" means those Stations identified as the
Victorville Stations under Part II, Schedule 1.1A.
30
<PAGE> 38
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. Any reference herein or in any other Loan Document to any agreement,
document or instrument, including, without limitation, this Agreement, the
Notes, the other Loan Documents and the Related Documents and any schedules or
exhibits thereto, unless expressly noted otherwise, shall be a reference to
each such agreement, document or instrument as the same may be amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted hereunder or under the applicable Loan Document.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees to lend to Company from time to time
during the period from the Closing Date to but excluding the Commitment
Termination Date an aggregate amount not exceeding its Pro Rata Share of the
aggregate amount of the Revolving Loan Commitments to be used for the purposes
identified in subsection 2.5A. The original amount of each Lender's Revolving
Loan Commitment is set forth opposite its name on SCHEDULE 2.1 annexed hereto
and the aggregate original amount of the Revolving Loan Commitments is
$55,000,000; PROVIDED that anything in this Agreement to the contrary
notwithstanding (i) the aggregate Revolving Loan Commitments shall not exceed
$10,000,000 at any time on and after the Closing Date and prior to the
satisfaction of the conditions set forth in subsection 4.3 with respect to
either the Park Lane Acquisition or the Faircom Acquisition and (ii)
immediately upon satisfaction of such conditions for either the Park Lane
Acquisition or the Faircom Acquisition, as the case may be, the aggregate
Revolving Loan Commitments shall automatically increase to $55,000,000;
PROVIDED, FURTHER that the Revolving Loan Commitments of Lenders shall be
adjusted to give
31
<PAGE> 39
effect to any assignments of the Revolving Loan Commitments pursuant to
subsection 10.1B; and PROVIDED, STILL FURTHER that the amount of the Revolving
Loan Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsections 2.4A(ii), 2.4B(ii) and
2.4B(iii). Each Lender's Revolving Loan Commitment shall expire on the
Commitment Termination Date and all Revolving Loans and all other amounts owed
hereunder with respect to the Revolving Loans and the Revolving Loan
Commitments shall be paid in full no later than that date; PROVIDED that each
Lender's Revolving Loan Commitment shall expire immediately and without further
action on March 31, 1998 if the initial Revolving Loans are not made on or
before that date. Amounts borrowed under this subsection 2.1A may be repaid and
reborrowed to but excluding the Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding
the Revolving Loans and the Revolving Loan Commitments shall be subject to the
limitation that (i) in no event shall the aggregate Revolving Loan Exposure of
all Lenders at any time exceed the Revolving Loan Commitments then in effect
and (ii) during the period from the Effective Date to the Closing Date, no
Revolving Loans shall be made hereunder other than Revolving Loans used to
reimburse Issuing Lender for the amount of a drawing under a Letter of Credit
as provided in subsection 3.3B.
B. BORROWING MECHANICS. Revolving Loans made on any Funding Date
(other than Revolving Loans made pursuant to subsection 3.3B for the purpose of
reimbursing Issuing Lender for the amount of a drawing under a Letter of Credit
issued by it) shall be in an aggregate minimum amount of $100,000 and integral
multiples of $100,000 in excess of that amount; PROVIDED that Revolving Loans
made on any Funding Date as LIBOR Rate Loans with a particular Interest Period
shall be in an aggregate minimum amount of $500,000 and integral multiples of
$500,000 in excess of that amount. Whenever Company desires that Lenders make
Revolving Loans it shall deliver to Agent a Notice of Borrowing no later than
10:00 A.M. (New York time) at least three Business Days in advance of the
proposed Funding Date (in the case of a LIBOR Rate Loan) or at least one
Business Day in advance of the proposed Funding Date (in the case of a Base
Rate Loan). The Notice of Borrowing shall specify (i) the proposed Funding Date
(which shall be a Business Day), (ii) the amount and type of Loans requested,
(iii) whether such Loans shall be Base Rate Loans or LIBOR Rate Loans, and (iv)
in the case of any Loans requested to be made as LIBOR Rate Loans, the initial
Interest Period requested therefor. Revolving Loans may be continued as or
converted into Base Rate Loans and LIBOR Rate Loans in the manner provided in
subsection 2.2D. In lieu of delivering the above-described Notice of Borrowing,
Company may give Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; PROVIDED that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to Agent on
or before the applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to Company in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of Company or for otherwise acting in good faith
under this subsection 2.1B, and upon funding of Loans by Lenders in accordance
with this Agreement pursuant to any such telephonic notice Company shall have
effected Loans hereunder.
32
<PAGE> 40
Company shall notify Agent prior to the funding of any Loans in the
event that any of the matters to which Company is required to certify in the
applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a LIBOR Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in
accordance therewith.
C. DISBURSEMENT OF FUNDS. All Loans under this Agreement shall be made
by Lenders simultaneously and proportionately to their respective Pro Rata
Shares, it being understood that no Lender shall be responsible for any default
by any other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular type of
Loan requested be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Loan requested hereunder.
Promptly after receipt by Agent of a Notice of Borrowing pursuant to subsection
2.1B (or telephonic notice in lieu thereof), Agent shall notify each Lender of
the proposed borrowing. Each Lender shall make the amount of its Loan available
to Agent, in same day funds in Dollars, at the Funding and Payment Office, not
later than 12:00 P.M. (New York time) on the applicable Funding Date. Except as
provided in subsection 3.3B with respect to Revolving Loans used to reimburse
Issuing Lender for the amount of a drawing under a Letter of Credit issued by
it, upon satisfaction or waiver of the conditions precedent specified in
subsections 4.2 (in the case of Loans made on the Closing Date) and 4.4 (in the
case of all Loans), Agent shall make the proceeds of such Loans available to
Company on the applicable Funding Date by causing an amount of same day funds
in Dollars equal to the proceeds of all such Loans received by Agent from
Lenders to be credited to the account of Company at the Funding and Payment
Office.
Unless Agent shall have been notified by any Lender prior to the
Funding Date for any Loans that such Lender does not intend to make available
to Agent the amount of such Lender's Loan requested on such Funding Date, Agent
may assume that such Lender has made such amount available to Agent on such
Funding Date and Agent may, in its sole discretion, but shall not be obligated
to, make available to Company a corresponding amount on such Funding Date. If
such corresponding amount is not in fact made available to Agent by such
Lender, Agent shall be entitled to recover such corresponding amount on demand
from such Lender together with interest thereon, for each day from such Funding
Date until the date such amount is paid to Agent, at the customary rate set by
Agent for the correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon Agent's demand therefor, Agent shall promptly notify
Company and Company shall immediately pay such corresponding amount to Agent
together with interest thereon, for each day from such Funding Date until the
date such amount is paid to Agent, at the rate payable under this Agreement for
Base Rate Loans. Nothing in this subsection 2.1C
33
<PAGE> 41
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Company may have against
any Lender as a result of any default by such Lender hereunder.
D. NOTES. Company shall execute and deliver to each Lender (or to
Agent for that Lender) on the Closing Date a Revolving Note substantially in
the form of EXHIBIT IV annexed hereto to evidence that Lender's Revolving Loan,
in the principal amount of that Lender's Revolving Loans, in the principal
amount of that Lender's Revolving Loan Commitment and with other appropriate
insertions.
Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until an assignment agreement effecting the
assignment or transfer thereof shall have been accepted by Agent as provided in
subsection 10.1B(ii). Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent
holder, assignee or transferee of that Note or of any Note or Notes issued in
exchange therefor.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Revolving Loan shall bear interest on the unpaid principal amount
thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the Adjusted
LIBOR Rate, as the case may be. The applicable basis for determining the rate
of interest with respect to any Loan shall be selected by Company initially at
the time a Notice of Borrowing is given with respect to such Loan pursuant to
subsection 2.1B. The basis for determining the interest rate with respect to
any Loan may be changed from time to time pursuant to subsection 2.2D. If on
any day a Loan is outstanding with respect to which notice has not been
delivered to Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Loans shall
bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate
PLUS the Applicable Margin per annum; or
(ii) if a LIBOR Rate Loan, then at the sum of the Adjusted
LIBOR Rate PLUS the Applicable Margin per annum.
The "APPLICABLE MARGIN" for each Base Rate Loan and LIBOR Rate Loan
shall be the percentage set forth below for that type of Loan based upon the
ratio of (y) Consolidated Total Debt to (z) Adjusted Consolidated Operating
Cash Flow (the "CONSOLIDATED TOTAL DEBT RATIO") as calculated in accordance
with subsection 7.6C for the applicable period:
34
<PAGE> 42
<TABLE>
<CAPTION>
================================================================================
APPLICABLE MARGIN
-------------------------------
CONSOLIDATED BASE LIBOR
TOTAL DEBT RATIO RATE LOAN RATE LOAN
================================================================================
<S> <C> <C>
Greater than or equal to 5.50:1.0 1.25% 2.50%
- --------------------------------------------------------------------------------
Greater than or equal to 5.00:1.0 but less
than 5.50:1.00: 1.00% 2.25%
- --------------------------------------------------------------------------------
Greater than or equal to 4.50:1.00 but
less than 5.00:1.00 0.75% 2.00%
- --------------------------------------------------------------------------------
Greater than or equal to 4.00:1.00 but
less than 4.50:1.00 0.50% 1.75%
- --------------------------------------------------------------------------------
Greater than or equal to 3.50:1.00 but
less than 4.00:1.00 0.25% 1.50%
- --------------------------------------------------------------------------------
Less than 3.50:1.00: 0.00% 1.25%
================================================================================
</TABLE>
The Applicable Margin shall be adjusted, to the extent required, on
the date of delivery of each Compliance Certificate delivered pursuant to
subsection 6.1(iv), such adjustment to remain in effect until the next date of
delivery of a Compliance Certificate (and related financial information
required at such time pursuant to subsection 6.1) pursuant to subsection
6.1(iv); PROVIDED that without limiting any Event of Default or Potential Event
of Default that may result therefrom, in the event Company does not deliver any
Compliance Certificate required pursuant to subsection 6.1 by the date
specified therefor then (i) the Applicable Margin shall not be decreased until
and following the actual date of delivery thereof, and (ii) if the Applicable
Margin is required to be increased as a result of the information in such
Compliance Certificate, then such increase shall be retroactive to the date
such Compliance Certificate was originally required to be delivered hereunder;
PROVIDED FURTHER that in the event Company does not deliver any Compliance
Certificate within three Business Days after notice of such non-delivery has
been given by Agent hereunder, the Applicable Margin shall automatically be
adjusted to the highest rate set forth above during the period commencing on
the date such Compliance Certificate was required to be delivered and expiring
on the actual date of delivery thereof.
B. INTEREST PERIODS. In connection with each LIBOR Rate Loan, Company
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three, six or, subject to
availability for all Lenders, nine month period; PROVIDED that:
(i) the initial Interest Period for any LIBOR Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a
Loan initially made as a LIBOR Rate Loan, or on the date specified in
the applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a LIBOR Rate Loan;
35
<PAGE> 43
(ii) in the case of immediately successive Interest Periods
applicable to a LIBOR Rate Loan continued as such pursuant to a Notice
of Conversion/Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; PROVIDED that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding
Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the date on which a permanent
reduction of the Revolving Loan Commitments is scheduled to occur
unless the sum of (a) the aggregate principal amount of Revolving
Loans that are Base Rate Loans PLUS (b) the aggregate principal amount
of Revolving Loans that are LIBOR Rate Loans with Interest Periods
expiring on or before such date PLUS (c) the excess of the Revolving
Loan Commitments then in effect over the aggregate principal amount of
Revolving Loans then outstanding equals or exceeds the permanent
reduction of the Revolving Loan Commitments that is scheduled to occur
on such date;
(vii) there shall be no more than four (4) Interest Periods
outstanding at any time; and
(viii) in the event Company fails to specify an Interest
Period for any LIBOR Rate Loan in the applicable Notice of Borrowing
or Notice of Conversion/Continuation, Company shall be deemed to have
selected an Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); PROVIDED that in the event any Revolving Loans that are Base Rate
Loans are prepaid pursuant to subsection 2.4B(i), interest accrued on such
Revolving Loans through the date of such prepayment shall be payable on the
next succeeding Interest Payment Date applicable to Base Rate Loans (or, if
earlier, at final maturity).
36
<PAGE> 44
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part
of its outstanding Revolving Loans equal to $500,000 and integral multiples of
$500,000 in excess of that amount from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a LIBOR Rate Loan, to continue all or any
portion of such Loan equal to $500,000 and integral multiples of $500,000 in
excess of that amount as a LIBOR Rate Loan; PROVIDED, HOWEVER, that a LIBOR
Rate Loan may only be converted into a Base Rate Loan on the expiration date of
an Interest Period applicable thereto; and PROVIDED, FURTHER that no Loan may
be made as or converted into a Base Rate Loan during the period from December
24 of any year to and including January 7 of the immediately succeeding year
for the purpose of investing in securities bearing interest at a rate
determined by reference to any other basis for the purpose of arbitrage or
speculation.
Company shall deliver a Notice of Conversion/Continuation to Agent no
later than 10:00 A.M. (New York time) at least one Business Day in advance of
the proposed conversion date (in the case of a conversion to a Base Rate Loan)
and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a LIBOR Rate Loan). A Notice of Conversion/Continuation shall specify (i)
the proposed conversion/continuation date (which shall be a Business Day), (ii)
the amount and type of the Loan to be converted/continued, (iii) the nature of
the proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a LIBOR Rate Loan, the requested Interest Period, and (v) in
the case of a conversion to, or a continuation of, a LIBOR Rate Loan, that no
Potential Event of Default or Event of Default has occurred and is continuing.
In lieu of delivering the above-described Notice of Conversion/Continuation,
Company may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; PROVIDED that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent on or before the proposed
conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to Company in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person
authorized to act on behalf of Company or for otherwise acting in good faith
under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Company
shall have effected a conversion or continuation, as the case may be,
hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
LIBOR Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on
and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
37
<PAGE> 45
E. DEFAULT RATE. Upon the occurrence and during the continuation of
any Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans); PROVIDED that, in the case of LIBOR Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such LIBOR Rate Loans shall thereupon become Base
Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased
rates of interest provided for in this subsection 2.2E is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Agent or any
Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed
(i) in the case of Base Rate Loans, on the basis of a 365-day or 366-day year,
as the case may be, and (ii) in the case of LIBOR Rate Loans, on the basis of a
360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a LIBOR Rate
Loan, the date of conversion of such LIBOR Rate Loan to such Base Rate Loan, as
the case may be, shall be included, and the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan or, with respect
to a Base Rate Loan being converted to a LIBOR Rate Loan, the date of
conversion of such Base Rate Loan to such LIBOR Rate Loan, as the case may be,
shall be excluded; PROVIDED that if a Loan is repaid on the same day on which
it is made, one day's interest shall be paid on that Loan.
2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Agent, for distribution
to each Lender in proportion to that Lender's Pro Rata Share, commitment fees
for the period from and including the Closing Date to and excluding the
Commitment Termination Date, equal to the average of the daily excess of the
Revolving Loan Commitments over the aggregate Revolving Loan Exposure of all
Lenders MULTIPLIED BY the percentage set forth below (the "COMMITMENT FEE
PERCENTAGE") based upon the Consolidated Total Debt Ratio, such commitment fees
to be calculated on the basis of a 360-day year and the actual number of days
elapsed and to be payable quarterly in arrears on March 31, June 30, September
30 and December 31 of each year, commencing on the first such date to occur
after the Closing Date, and also payable (and terminating) on the Commitment
Termination Date:
38
<PAGE> 46
<TABLE>
<CAPTION>
==================================================================
CONSOLIDATED
TOTAL DEBT RATIO COMMITMENT FEE
PERCENTAGE
==================================================================
<S> <C>
Greater than or equal to 4.00:1.00 0.500%
- ------------------------------------------------------------------
Less than 4.00:1.00 0.375%
==================================================================
</TABLE>
The Commitment Fee Percentage shall be adjusted, to the extent
required, on the date of delivery of each Compliance Certificate delivered
pursuant to subsection 6.1(iv), such adjustment to remain in effect until the
next date of delivery of a Compliance Certificate (and related financial
information required at such time pursuant to subsection 6.1) pursuant to
subsection 6.1(iv); PROVIDED that without limiting any Event of Default or
Potential Event of Default that may result therefrom, in the event Borrowers do
not deliver any Compliance Certificate required pursuant to subsection 6.1 by
the date specified therefor then (i) the Commitment Fee Percentage shall not be
decreased until and following the actual date of delivery thereof, and (ii) if
the Commitment Fee Percentage is required to be increased as a result of the
information in such Compliance Certificate, then such increase shall be
retroactive to the date such Compliance Certificate was originally required to
be delivered hereunder; PROVIDED FURTHER that in the event Borrowers do not
deliver any Compliance Certificate within three Business Days after notice of
such non-delivery has been given by Agent hereunder, the Commitment Fee
Percentage shall automatically be adjusted to the highest rate set forth above
during the period commencing on the date such Compliance Certificate was
required to be delivered and expiring on the actual date of delivery thereof.
B. OTHER FEES. Company agrees to pay to Agent such other fees in the
amounts and at the times separately agreed upon between Company and Agent.
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS;
GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED REDUCTIONS OF REVOLVING LOAN COMMITMENTS. The Revolving
Loan Commitments shall be permanently reduced on the dates and in the amounts
set forth below:
39
<PAGE> 47
==============================================================
QUARTER SCHEDULED REDUCTION
ENDING OF REVOLVING
LOAN COMMITMENTS
- --------------------------------------------------------------
December 31, 1998 $ 687,500
- --------------------------------------------------------------
March 31, 1998 $ 687,500
- --------------------------------------------------------------
June 30, 1999 $ 687,500
- --------------------------------------------------------------
September 30, 1999 $ 687,500
- --------------------------------------------------------------
December 31, 1999 $ 1,718,750
- --------------------------------------------------------------
March 31, 2000 $ 1,718,750
- --------------------------------------------------------------
June 30, 2000 $ 1,718,750
- --------------------------------------------------------------
September 30, 2000 $ 1,718,750
- --------------------------------------------------------------
December 31, 2000 $ 2,062,500
- --------------------------------------------------------------
March 31, 2001 $ 2,062,500
- --------------------------------------------------------------
June 30, 2001 $ 2,062,500
- --------------------------------------------------------------
September 30, 2001 $ 2,062,500
- --------------------------------------------------------------
December 31, 2001 $ 2,406,250
- --------------------------------------------------------------
March 31, 2002 $ 2,406,250
- --------------------------------------------------------------
June 30, 2002 $ 2,406,250
- --------------------------------------------------------------
September 30, 2002 $ 2,406,250
- --------------------------------------------------------------
December 31, 2002 $ 2,406,250
- --------------------------------------------------------------
March 31, 2003 $ 2,406,250
- --------------------------------------------------------------
June 30, 2003 $ 2,406,250
- --------------------------------------------------------------
September 30, 2003 $ 2,406,250
- --------------------------------------------------------------
December 31, 2003 $2,750,000
- --------------------------------------------------------------
March 31, 2004 $2,750,000
- --------------------------------------------------------------
June 30, 2004 $2,750,000
- --------------------------------------------------------------
September 30, 2004 $2,750,000
- --------------------------------------------------------------
December 31, 2004 $3,437,500
- --------------------------------------------------------------
March 31, 2005 $3,437,500
==============================================================
40
<PAGE> 48
; PROVIDED that the scheduled reductions of the Revolving Loan
Commitments set forth above shall be reduced in connection with any
voluntary or mandatory reductions of the Revolving Loan Commitments in
accordance with subsection 2.4B(iv).
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN LOANS AND
COMMITMENTS.
(i) VOLUNTARY PREPAYMENTS. Company may, upon not less than
one Business Day's prior written or telephonic notice, in the case of
Base Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of LIBOR Rate Loans, in each case given to Agent
by 10:00 A.M. (New York time) on the date required and, if given by
telephone, promptly confirmed in writing to Agent (which original
written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time
to time prepay without premium or penalty (other than breakage and
other costs with respect to LIBOR Rate Loans, to the extent
applicable, as set forth in subsection 2.6) any Loans on any Business
Day in whole or in part in an aggregate minimum amount of $500,000 and
integral multiples of $500,000 in excess of that amount; PROVIDED,
HOWEVER, that a LIBOR Rate Loan may only be prepaid on the expiration
of the Interest Period applicable thereto. Notice of prepayment having
been given as aforesaid, the principal amount of the Loans specified
in such notice shall become due and payable on the prepayment date
specified therein. Any such voluntary prepayment shall be applied as
specified in subsection 2.4B(iv).
(ii) VOLUNTARY REDUCTIONS OF REVOLVING LOAN COMMITMENTS.
Company may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Agent (which original
written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time
to time terminate in whole or permanently reduce in part, without
premium or penalty, the Revolving Loan Commitments in an amount up to
the amount by which the Revolving Loan Commitments exceed the Total
Utilization of Revolving Loan Commitments at the time of such proposed
termination or reduction; PROVIDED that any such partial reduction of
the Revolving Loan Commitments shall be in an aggregate minimum amount
of $500,000 and integral multiples of $500,000 in excess of that
amount. Company's notice to Agent shall designate the date (which
shall be a Business Day) of such termination or reduction and the
amount of any partial reduction, and such termination or reduction of
the Revolving Loan Commitments shall be effective on the date
specified in Company's notice and shall reduce the Revolving Loan
Commitment of each Lender proportionately to its Pro Rata Share. Any
such voluntary reduction of the Revolving Loan Commitments shall be
applied as specified in subsection 2.4B(iv).
(iii) MANDATORY PREPAYMENTS AND MANDATORY REDUCTIONS OF LOANS
AND COMMITMENTS.
(a) PREPAYMENTS AND REDUCTIONS FROM ASSET SALES. On
the same Business Day a Credit Party or any of its
Subsidiaries receives Cash Proceeds of
41
<PAGE> 49
any Asset Sale, Company shall prepay the Revolving Loans and
the Revolving Loan Commitments shall be permanently reduced
in an amount equal to the Net Cash Proceeds of such Asset
Sale. Concurrently with any prepayment of the Loans and the
reduction of the Revolving Loan Commitments pursuant to this
subsection 2.4B(iii)(a), Company shall deliver to Agent an
Officers' Certificate demonstrating the derivation of the Net
Cash Proceeds of the correlative Asset Sale from the gross
sales price thereof. In the event that Company shall, at any
time after receipt of Cash Proceeds of any Asset Sale
requiring a prepayment and a reduction of the Revolving Loan
Commitments pursuant to this subsection 2.4B(iii)(a),
determine that the prepayments and the reductions of the
Revolving Loan Commitments previously made in respect of such
Asset Sale were in an aggregate amount less than that
required by the terms of this subsection 2.4B(iii)(a),
Company shall promptly make an additional prepayment of the
Revolving Loans (and the Revolving Loan Commitments shall be
permanently reduced), in the manner described above in an
amount equal to the amount of any such deficit, and Company
shall concurrently therewith deliver to Agent an Officers'
Certificate demonstrating the derivation of the additional
Net Cash Proceeds resulting in such deficit. Any mandatory
prepayments or reductions of the Revolving Loan Commitments
pursuant to this subsection 2.4B(iii)(a) shall be applied as
specified in subsection 2.4B(iv).
(b) PREPAYMENTS AND REDUCTIONS DUE TO REVERSION OF
SURPLUS ASSETS OF PENSION PLANS. On the date of return to any
Credit Party or any of its Subsidiaries of any surplus assets
of any pension plan of such Credit Party or any of its
Subsidiaries, Company shall prepay the Revolving Loans in an
amount (the "NET REVERSION AMOUNT") equal to 100% of such
returned surplus assets, net of transaction costs and
expenses incurred in obtaining such return, including
incremental taxes payable as a result thereof. Any such
mandatory prepayments shall be applied as specified in
subsection 2.4B(iv).
(c) PREPAYMENTS AND REDUCTIONS DUE TO ISSUANCE OF
EQUITY SECURITIES. In the event that the Consolidated Total
Debt Ratio at such time (prior to making any payments
required hereunder) is greater than 4.50:1.00 on the date of
receipt by any Credit Party of cash proceeds (net of
underwriting discounts and commissions and other reasonable
costs associated therewith), from one or more issuances of
any equity Securities of such Credit Party (other than
Refinancing Proceeds and Acquisition Proceeds) Company shall
prepay the Revolving Loans and the Revolving Loan Commitments
shall be permanently reduced by the amount of such net equity
proceeds up to the amount necessary to make the Consolidated
Total Debt Ratio equal to or less than 4.50:1.00 (calculated
on a pro forma basis after giving effect to such prepayment
as of the end of the most recently concluded Fiscal Quarter).
Any such mandatory prepayments or reductions of the Revolving
Loan Commitments shall be applied as specified in subsection
2.4B(iv).
42
<PAGE> 50
(d) PREPAYMENTS DUE TO REDUCTIONS OR RESTRICTIONS OF
REVOLVING LOAN COMMITMENTS. Company shall from time to time
prepay the Revolving Loans to the extent necessary so that
the Total Utilization of Revolving Loan Commitments shall not
at any time exceed the Revolving Loan Commitments then in
effect. Any such mandatory prepayments shall be applied as
specified in subsection 2.4B(iv).
(e) PREPAYMENTS AND REDUCTIONS DUE TO INSURANCE
PROCEEDS. No later than the 120th Business Day following the
date of receipt by any Credit Party of any cash payments
under any of the insurance policies maintained pursuant to
subsection 6.4 ("INSURANCE PROCEEDS") which have not been
reinvested (as soon as practicable and, in any event, within
120 days from the date of receipt thereof) in productive
assets of a kind then used or usable in the business of such
Credit Party or used to maintain the business of such Credit
Party as a going concern as a consequence of any business
interruption, Company shall reduce the Revolving Loan
Commitments in an amount equal to the aggregate amount of
such Insurance Proceeds in the manner specified in subsection
2.4B(iv)(b) and 2.4B(iv)(d); PROVIDED that, notwithstanding
any of the foregoing to the contrary, upon and during the
continuance of an Event of Default, and upon notice from
Agent or Requisite Lenders, all Insurance Proceeds,
regardless of reinvestment or other use, received by Company
shall be applied to reduce the Revolving Loan Commitments in
the manner specified in subsection 2.4B(iv)(b).
(iv) APPLICATION OF PREPAYMENTS AND UNSCHEDULED REDUCTIONS OF
REVOLVING LOAN COMMITMENTS.
(a) APPLICATION OF VOLUNTARY PREPAYMENTS BY TYPE OF
LOANS AND ORDER OF MATURITY. Any voluntary prepayments
pursuant to subsection 2.4B(i) shall be applied as specified
by Company in the applicable notice of prepayment.
(b) APPLICATION OF MANDATORY PREPAYMENTS BY TYPE OF
LOANS. Any amount (the "APPLIED AMOUNT") required to be
applied as a mandatory prepayment of the Loans and a
reduction of the Revolving Loan Commitments pursuant to
subsections 2.4B(iii)(a) and 2.4B(iii)(c)-(e) shall be
applied (based on the amount of the Revolving Loan
Commitments in effect at such time) to prepay the Revolving
Loans and to further permanently reduce the Revolving Loan
Commitments by the amount of such prepayment. The Applied
Amount required to be applied as a mandatory prepayment of
the Loans pursuant to subsection 2.4B(iii)(b) shall be
applied to prepay the Revolving Loans but shall not reduce
the Revolving Loan Commitments.
(c) APPLICATION OF PREPAYMENTS TO BASE RATE LOANS
AND LIBOR RATE LOANS. Prepayments of Revolving Loans shall be
applied first to Base Rate Loans to the full extent thereof
before application to LIBOR Rate Loans, in a
43
<PAGE> 51
manner which minimizes the amount of any payments required to
be made by Company pursuant to subsection 2.6D.
(d) APPLICATION OF UNSCHEDULED REDUCTIONS OF
REVOLVING LOAN COMMITMENTS. Any voluntary reduction of the
Revolving Loan Commitments pursuant to subsection 2.4B(ii)
shall be applied to reduce the scheduled reductions of the
Revolving Loan Commitments set forth in subsection 2.4A(ii)
in forward chronological order. Any mandatory reduction of
the Revolving Loan Commitments pursuant to subsection
2.4B(iii) shall be applied pro rata to each scheduled
reduction of the Revolving Loan Commitments set forth in
subsection 2.4A that is remaining at the time of such
mandatory reduction.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) MANNER AND TIME OF PAYMENT. All payments by Company of
principal, interest, fees and other Obligations hereunder and under
the Notes shall be made in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and
delivered to Agent not later than 12:00 Noon (New York time) on the
date due at the Funding and Payment Office for the account of Lenders;
funds received by Agent after that time on such due date shall be
deemed to have been paid by Company on the next succeeding Business
Day. Company hereby authorizes Agent to charge its accounts with Agent
in order to cause timely payment to be made to Agent of all principal,
interest, fees and expenses due hereunder (subject to sufficient funds
being available in its accounts for that purpose).
(ii) APPLICATION OF PAYMENTS TO PRINCIPAL AND INTEREST. All
payments in respect of the principal amount of any Loan shall include
payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments shall be applied to the payment of
interest before application to principal.
(iii) APPORTIONMENT OF PAYMENTS. Aggregate principal and
interest payments shall be apportioned among all outstanding Loans to
which such payments relate, in each case proportionately to Lenders'
respective Pro Rata Shares. Agent shall promptly distribute to each
Lender, at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such
Lender may request, its Pro Rata Share of all such payments received
by Agent and the commitment fees of such Lender when received by Agent
pursuant to subsection 2.3. Notwithstanding the foregoing provisions
of this subsection 2.4C(iii), if, pursuant to the provisions of
subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as
to any Affected Lender or if any Affected Lender makes Base Rate Loans
in lieu of its Pro Rata Share of any LIBOR Rate Loans, Agent shall
give effect thereto in apportioning payments received thereafter.
(iv) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment
44
<PAGE> 52
shall be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case
may be.
(v) NOTATION OF PAYMENT. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which interest thereon has
been paid; PROVIDED that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall not limit
or otherwise affect the obligations of Company hereunder or under such
Note with respect to any Loan or any payments of principal or interest
on such Note.
2.5 USE OF PROCEEDS.
A. REVOLVING LOANS. The proceeds of any Revolving Loans shall be
applied by Company (i) to consummate Permitted Acquisitions (including
repayment of outstanding debt of Faircom), (ii) to pay fees and expenses
related thereto, (iii) to fund capital expenditures, and (iv) for working
capital purposes, including the payment of a portion of the fees and expenses
on the Closing Date.
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board
of Governors of the Federal Reserve System or any other regulation of such
Board or to violate the Exchange Act, in each case as in effect on the date or
dates of such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to LIBOR Rate Loans as to
the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York time) on each Interest Rate Determination Date,
Agent shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) the interest rate that shall
apply to the LIBOR Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to Company and each
Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Agent shall have determined (which determination shall be final and conclusive
and binding upon all parties hereto), on any Interest Rate Determination Date
with respect to any LIBOR Rate Loans, that by reason of circumstances affecting
the London interbank market adequate and fair means do
45
<PAGE> 53
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted LIBOR Rate, Agent shall on
such date give notice (by telefacsimile or by telephone confirmed in writing)
to Company and each Lender of such determination, whereupon (i) no Loans may be
made as, or converted to, LIBOR Rate Loans until such time as Agent notifies
Company and Lenders that the circumstances giving rise to such notice no longer
exist and (ii) any Notice of Borrowing or Notice of Conversion/Continuation
given by Company with respect to the Loans in respect of which such
determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF LIBOR RATE LOANS. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Agent) that the making, maintaining or
continuation of its LIBOR Rate Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental
rule, regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially
and adversely affect the London interbank market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Agent of such determination (which notice
Agent shall promptly transmit to each other Lender). Thereafter (a) the
obligation of the Affected Lender to make Loans as, or to convert Loans to,
LIBOR Rate Loans shall be suspended until such notice shall be withdrawn by the
Affected Lender, (b) to the extent such determination by the Affected Lender
relates to a LIBOR Rate Loan then being requested by Company pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, the Affected Lender
shall make such Loan as (or convert such Loan to, as the case may be) a Base
Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding
LIBOR Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier to
occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a LIBOR Rate Loan then being requested by
Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Agent of such rescission on the date on
which the Affected Lender gives notice of its determination as described above
(which notice of rescission Agent shall promptly transmit to each other
Lender). Except as provided in the immediately preceding sentence, nothing in
this subsection 2.6C shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans to, LIBOR
Rate Loans in accordance with the terms of this Agreement.
46
<PAGE> 54
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or
carry its LIBOR Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any LIBOR Rate Loan does not occur on a date specified
therefor in a Notice of Borrowing or a telephonic request for borrowing, or a
conversion to or continuation of any LIBOR Rate Loan does not occur on a date
specified therefor in a Notice of Conversion/Continuation or a telephonic
request for conversion or continuation, (ii) if any prepayment or other
principal payment or any conversion of any of its LIBOR Rate Loans occurs on a
date prior to the last day of an Interest Period applicable to that Loan, (iii)
if any prepayment of any of its LIBOR Rate Loans is not made on any date
specified in a notice of prepayment given by Company, or (iv) as a consequence
of any other default by Company in the repayment of its LIBOR Rate Loans when
required by the terms of this Agreement.
E. BOOKING OF LIBOR RATE LOANS. Any Lender may make, carry or transfer
LIBOR Rate Loans at, to, or for the account of any of its branch offices or the
office of an Affiliate of that Lender, but in any such event without
discharging Lender from its obligations to make Loans subject to and in
accordance with the provisions of the Loan Documents.
F. ASSUMPTIONS CONCERNING FUNDING OF LIBOR RATE LOANS. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant LIBOR Rate Loans through the purchase of a LIBOR deposit bearing
interest at the rate obtained pursuant to clause (i) of the definition of
Adjusted LIBOR Rate in an amount equal to the amount of such LIBOR Rate Loan
and having a maturity comparable to the relevant Interest Period and through
the transfer of such LIBOR deposit from an offshore office of that Lender to a
domestic office of that Lender in the United States of America; PROVIDED,
HOWEVER, that each Lender may fund each of its LIBOR Rate Loans in any manner
it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this subsection 2.6 and under
subsection 2.7A.
G. LIBOR RATE LOANS AFTER DEFAULT. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Company may not elect to have a Loan be made or maintained as, or converted to,
a LIBOR Rate Loan after the expiration of any Interest Period then in effect
for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice
of Borrowing or Notice of Conversion/Continuation given by Company with respect
to a requested borrowing or conversion/continuation that has not yet occurred
shall be deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent
47
<PAGE> 55
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental
authority, in each case that becomes effective after the date hereof, or
compliance by such Lender with any guideline, request or directive issued or
made after the date hereof by any central bank or other governmental or
quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office)
to any additional Tax (other than any Tax on the overall net income of
such Lender) with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by,
any office of such Lender (other than any such reserve or other
requirements with respect to LIBOR Rate Loans that are reflected in
the definition of Adjusted LIBOR Rate); or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender
of agreeing to make, making or maintaining Loans hereunder or to reduce any
amount received or receivable by such Lender (or its applicable lending office)
with respect thereto; then, in any such case, Company shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Agent) a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. WITHHOLDING OF TAXES.
(i) PAYMENTS TO BE FREE AND CLEAR. All sums payable by
Company under this Agreement and the other Loan Documents shall be
paid free and clear of and (except to the extent required by law)
without any deduction or withholding on account of any Tax (other than
a Tax on the overall net income of any Lender) imposed, levied,
collected,
48
<PAGE> 56
withheld or assessed by or within the United States of America or any
political subdivision in or of the United States of America or any
other jurisdiction from or to which a payment is made by or on behalf
of Company or by any federation or organization of which the United
States of America or any such jurisdiction is a member at the time of
payment.
(ii) GROSSING-UP OF PAYMENTS. If Company or any other Person
is required by law to make any deduction or withholding on account of
any such Tax from any sum paid or payable by Company to Agent or any
Lender under any of the Loan Documents:
(a) Company shall notify Agent of any such
requirement or any change in any such requirement promptly
after the Company becomes aware of it;
(b) Company shall pay any such Tax before the date
on which penalties attach thereto, such payment to be made
(if the liability to pay is imposed on Company) for its own
account or (if that liability is imposed on Agent or such
Lender, as the case may be) on behalf of and in the name of
Agent or such Lender;
(c) the sum payable by Company in respect of which
the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
Agent or such Lender, as the case may be, receives on the due
date a net sum equal to what it would have received had no
such deduction, withholding or payment been required or made;
and
(d) within 30 days after paying any sum from which
it is required by law to make any deduction or withholding,
and within 30 days after the due date of payment of any Tax
which it is required by clause (b) above to pay, Company
shall deliver to Agent evidence satisfactory to the other
affected parties of such deduction, withholding or payment
and of the remittance thereof to the relevant taxing or other
authority;
PROVIDED that no such additional amount shall be required to be paid
to any Lender under clause (c) above except to the extent that any
change after the date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date of the assignment agreement
pursuant to which such Lender became a Lender (in the case of each
other Lender) in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in an increase in the
rate of such deduction, withholding or payment from that in effect at
the date of this Agreement or at the date of such assignment
agreement, as the case may be, in respect of payments to such Lender.
49
<PAGE> 57
(iii) EVIDENCE OF EXEMPTION FROM U.S. WITHHOLDING TAX.
(a) Each Lender that is organized under the laws of
any jurisdiction other than the United States or any state or
other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "NON-US LENDER") shall deliver to
Agent for transmission to Company, on or prior to the Closing
Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the assignment agreement
pursuant to which it becomes a Lender (in the case of each
other Lender), and at such other times as may be necessary in
the determination of Company or Agent (each in the reasonable
exercise of its discretion), (1) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any successor
forms), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required under the Internal Revenue Code or the regulations
issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of
principal, interest, fees or other amounts payable under any
of the Loan Documents or (2) if such Lender is not a "bank"
or other Person described in Section 881(c)(3) of the
Internal Revenue Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (1)
above, a Certificate re Non-Bank Status together with two
original copies of Internal Revenue Service Form W-8 (or any
successor form), properly completed and duly executed by such
Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender
is not subject to deduction or withholding of United States
federal income tax with respect to any payments to such
Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to time after the
initial delivery by such Lender of such forms, certificates
or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, such
Lender shall (1) deliver to Agent for transmission to Company
two new original copies of Internal Revenue Service Form 1001
or 4224, or a Certificate re Non- Bank Status and two
original copies of Internal Revenue Service Form W-8, as the
case may be, properly completed and duly executed by such
Lender, together with any other certificate or statement of
exemption required in order to confirm or establish that such
Lender is not subject to deduction or withholding of United
States federal income tax with respect to payments to such
Lender under the Loan Documents or (2) immediately notify
Agent and Company of its inability to deliver any such forms,
certificates or other evidence.
50
<PAGE> 58
(c) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to
satisfy the requirements of subsection 2.7B(iii)(a); PROVIDED
that if such Lender shall have satisfied such requirements on
the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the assignment
agreement pursuant to which it became a Lender (in the case
of each other Lender), nothing in this subsection
2.7B(iii)(c) shall relieve Company of its obligation to pay
any additional amounts pursuant to clause (c) of subsection
2.7B(ii) in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation or
order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at
a subsequent date establishing the fact that such Lender is
not subject to withholding as described in subsection
2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its applicable lending office) with any guideline,
request or directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans or Commitments or
Letters of Credit or participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit to a level below that which such
Lender or such controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business
Days after receipt by Company from such Lender of the statement referred to in
the next sentence, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to Company (with
a copy to Agent) a written statement, setting forth in reasonable detail the
basis of the calculation of such additional amounts, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDER TO MITIGATE.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Lender,
as the case may be, becomes aware of the occurrence of an event or the
existence of a condition that would cause such Lender to become an Affected
Lender or that would entitle such Lender or Issuing Lender to receive payments
under subsection 2.7 or subsection 3.6, it will, to the extent not inconsistent
with the internal policies of such
51
<PAGE> 59
Lender or Issuing Lender and any applicable legal or regulatory restrictions,
use reasonable efforts (i) to make, issue, fund or maintain the Commitments of
such Lender or Issuing Lender or the affected Loans or Letters of Credit of
such Lender or Issuing Lender through another lending or letter of credit
office of such Lender or Issuing Lender, or (ii) take such other measures as
such Lender or Issuing Lender may deem reasonable, if as a result thereof the
circumstances which would cause such Lender to be an Affected Lender would
cease to exist or the additional amounts which would otherwise be required to
be paid to such Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in
its sole discretion, the making, issuing, funding or maintaining of such
Commitments or Loans or Letters of Credit through such other lending or letter
of credit office or in accordance with such other measures, as the case may be,
would not otherwise materially adversely affect such Commitments or Loans or
Letters of Credit or the interests of such Lender or Issuing Lender; PROVIDED
that such Lender or Issuing Lender will not be obligated to utilize such other
lending or letter of credit office pursuant to this subsection 2.8 unless
Company agrees to pay all incremental expenses incurred by such Lender or
Issuing Lender as a result of utilizing such other lending or letter of credit
office as described in clause (i) above. A certificate as to the amount of any
such expenses payable by Company pursuant to this subsection 2.8 (setting forth
in reasonable detail the basis for requesting such amount) submitted by such
Lender or Issuing Lender to Company (with a copy to Agent) shall be conclusive
absent manifest error.
2.9 AFFECTED LENDERS.
If Company is obligated to pay to any Lender any additional amount
under subsections 2.6 (other than subsection 2.6D), 2.7 or 3.6 hereof, and such
Lender is unable or unwilling to mitigate such amounts in accordance with
subsection 2.8, Company may, if no Event of Default or Potential Event of
Default then exists, replace such Lender with an assignee acceptable to Agent,
and such Lender hereby agrees to be so replaced subject to the following:
(i) The obligations of Company hereunder to the Lender to be
replaced (including such increased or additional costs incurred by
such Lender through the date such Lender is replaced hereunder) shall
be paid in full to such Lender concurrently with such replacement;
(ii) The replacement Lender shall be a bank or other
financial institution that is not subject to such increased costs
which caused Company's election to replace any Lender hereunder, and
each such replacement Lender shall execute and deliver to Agent such
documentation satisfactory to Agent pursuant to which such replacement
Lender is to become a party hereto, with a commitment equal to that of
the Lender being replaced and shall make Loans in the aggregate
principal amount equal to the aggregate outstanding principal amount
of the Loans of the Lender being replaced;
(iii) Upon such execution of such documents referred to in
clause (ii) and repayment of the amount referred to in clause (i), the
replacement Lender shall be a "Lender" with a commitment as specified
hereinabove and the Lender being replaced
52
<PAGE> 60
shall cease to be a "Lender" hereunder, except with respect to such
provisions under this Agreement, which expressly survive the
termination of this Agreement as to such replaced Lender;
(iv) Agent shall reasonably cooperate in effectuating the
replacement of any Lender under this subsection 2.9, but at no time
shall Agent be obligated to initiate any such replacement;
(v) Any Lender replaced under this subsection 2.9 shall be
replaced at Company's sole cost and expense and at no cost or expense
to Agent or any of the Lenders; and
(vi) If Company proposes to replace any Lender pursuant to
this subsection 2.9 because the Lender seeks reimbursement under
subsection 2.6, 2.7 or 3.6, then it must also replace any other Lender
who seeks similar or greater levels of reimbursement (as a percentage
of such Lender's commitment) under such subsections; PROVIDED HOWEVER
that if the amount of the commitment any replacement Lender is willing
to commit to does not exceed the aggregate of the commitments of each
such Lender seeking such reimbursement, the commitment of each such
Lender seeking reimbursement shall be reduced pro rata to the extent
of the commitment of such replacement Lender.
2.10 GUARANTIES OF AND SECURITY FOR THE OBLIGATIONS.
A. COMPANY AND ITS SUBSIDIARIES. (i) Each Operating Sub and each
License Sub shall guaranty the Obligations of Company pursuant to the
Subsidiary Guaranty and (ii) to secure the full performance of the Obligations,
each Credit Party shall grant, subject to the limitation set forth in
subsection 2.10B(ii), to Agent on behalf and for the ratable benefit of
Lenders, a duly perfected First Priority Lien (subject to Permitted Liens) on
all real, personal and mixed property of such Credit Party, including, without
limitation, to the extent permitted by law, the FCC Licenses, now owned or
hereafter acquired, which Agent or Requisite Lenders may request. Each Credit
Party shall execute and deliver any and all Security Documents including,
without limitation, the Pledge and Security Agreement, Mortgages, financing
statements, termination statements, collateral search reports, title reports,
title insurance, landlord waivers and consents, trademark documentation,
opinions of counsel and such other perfection documents, instruments,
information and materials with respect to the property of such Credit Party as
Agent may reasonably request. All of the foregoing shall be in form and
substance reasonably satisfactory to Agent.
B. FURTHER ASSURANCES; ADDITIONAL SECURITY.
(i) Company shall, and shall cause each other Credit Party
to, from time to time, execute and deliver to Agent on behalf of
Lenders, such additional Security Documents, statements, documents,
agreements and reports as it may from time to time reasonably request
to evidence, perfect or otherwise implement or assure the security for
repayment of the Obligations; PROVIDED that no Credit Party shall be
required to provide
53
<PAGE> 61
any different type of Collateral from that contemplated for such by
the Security Documents to which it is a party as of the Closing Date.
With respect to the Lenders' Policies, upon Agent's request, Company
shall arrange for co-insurance and/or reinsurance, with companies and
in amounts satisfactory to Agent. All reinsurance policies shall
include direct access agreements acceptable to Agent. Any future
advances made by Lenders hereunder shall be conditioned upon Agent
obtaining such additional endorsements to the Lenders' Policies
insuring the additional amount of the Loan and the validity and
priority of such advances as Agent deems necessary or advisable.
(ii) Notwithstanding anything herein to the contrary, to the
extent this Agreement or any other Loan Document purports to require
any Credit Party to grant to Agent, on behalf and for the ratable
benefit of Lenders, a security interest in the FCC Licenses of such
Credit Party, Agent, on behalf and for the ratable benefit of Lenders,
shall only have a security interest in such licenses at such times and
to the extent that a security interest in such licenses is permitted
under applicable law. Notwithstanding anything to the contrary set
forth herein, Agent, on behalf of Lenders, agrees that to the extent
prior FCC approval is required pursuant to the Communications Act for
(a) the operation and effectiveness of any grant, right or remedy
hereunder or under any Loan Document or (b) taking any action that may
be taken by Agent hereunder or under any Loan Document, such grant,
right, remedy or actions will be subject to such prior FCC approval
having been obtained by or in favor of Agent, on behalf and for the
ratable benefit of Lenders. Company agrees that, upon an Event of
Default and at Agent's request, Company shall immediately file, or
cause to be filed, such applications for approval and shall take all
other and further actions required by the Agent, on behalf and for the
ratable benefit of Lenders, to obtain such FCC approvals or consents
as are necessary to transfer ownership and control to Agent or trustee
or other fiduciary acting in lieu of Agent in order to ensure
compliance with Section 310(b) of the Communications Act, on behalf
and for the ratable benefit of Lenders, or their successors or
assigns, of the FCC Licenses held by it.
SECTION 3.
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. In addition to Company requesting that Lenders
make Revolving Loans pursuant to subsection 2.1A, Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Effective Date to but excluding the date thirty days prior
to the Stated Maturity Date, that Issuing Lender issue Letters of Credit for
the account of Company for the purposes specified in the definition of Letters
of Credit. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company herein set forth,
Issuing Lender shall issue such Letters of Credit in accordance with the
provisions of this subsection 3.1; PROVIDED that Company shall not request that
Issuing Lender issue (and Issuing Lender shall not issue):
54
<PAGE> 62
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed, (a) during the
period from the Effective Date to the Closing Date, $4,000,000;
PROVIDED that such Letters of Credit are cash collateralized when
issued pursuant to the Collateral Account Agreement, and (b) upon the
Closing Date, $10,000,000; PROVIDED that on the Closing Date, as long
as no Event of Default or Potential Event of Default has occurred and
is continuing, the cash collateral referred to in clause (a) of this
subsection 3.1A(ii), pursuant to the Collateral Account Agreement,
will be terminated and the proceeds of such collateral will be
returned to Company or to such Person as Company may direct;
(iii) any Letter of Credit having an expiration date later
than the earlier of (a) 30 days prior to the Stated Maturity Date and
(b) the date which is one year from the date of issuance of such
standby Letter of Credit; PROVIDED that the immediately preceding
clause (b) shall not prevent Issuing Lender from agreeing that a
Letter of Credit will automatically be extended for one or more
successive periods not to exceed one year each unless Issuing Lender
elects not to extend for any such additional period; and PROVIDED,
FURTHER that Issuing Lender shall give notice that it will not extend
such Letter of Credit if it has knowledge that an Event of Default has
occurred and is continuing (and has not been waived in accordance with
subsection 10.6) at the time Issuing Lender must elect whether or not
to allow such extension;
(iv) any Letter of Credit after the Commitment Termination
Date; or
(v) any Letter of Credit denominated in a currency other than
Dollars.
B. MECHANICS OF ISSUANCE.
(i) NOTICE OF ISSUANCE. Whenever Company desires the issuance
of a Letter of Credit, it shall deliver to Agent a Notice of Issuance
of Letter of Credit substantially in the form of EXHIBIT III annexed
hereto no later than 10:00 A.M. (New York time) at least three
Business Days, or in each case such shorter period as may be agreed to
by Issuing Lender in any particular instance, in advance of the
proposed date of issuance. The Notice of Issuance of Letter of Credit
shall specify (a) the proposed date of issuance (which shall be a
Business Day), (b) the face amount of the Letter of Credit, (c) the
expiration date of the Letter of Credit, (d) the name and address of
the beneficiary, and (e) the verbatim text of the proposed Letter of
Credit or the proposed terms and conditions thereof, including a
precise description of any documents and the verbatim text of any
certificates to be presented by the beneficiary which, if presented by
the beneficiary prior to the expiration date of the Letter of Credit,
would require Issuing Lender to make payment under the Letter of
Credit; PROVIDED that Issuing Lender, in its reasonable discretion,
may require changes in the text of the proposed Letter of Credit
55
<PAGE> 63
or any such documents or certificates; and PROVIDED, FURTHER that no
Letter of Credit shall require payment against a conforming draft to
be made thereunder on the same business day (under the laws of the
jurisdiction in which the office of Issuing Lender to which such draft
is required to be presented is located) that such draft is presented
if such presentation is made after 10:00 A.M. (New York time) on such
business day.
Company shall notify Issuing Lender prior to the issuance of
any Letter of Credit in the event that any of the matters to which
Company is required to certify in the applicable Notice of Issuance of
Letter of Credit is no longer true and correct as of the proposed date
of issuance of such Letter of Credit, and upon the issuance of any
Letter of Credit Company shall be deemed to have re-certified, as of
the date of such issuance, as to the matters to which Company is
required to certify in the applicable Notice of Issuance of Letter of
Credit.
(ii) ISSUANCE OF LETTER OF CREDIT. Upon satisfaction or
waiver (in accordance with subsection 10.6) of the conditions set
forth in subsection 4.5, Issuing Lender shall issue the requested
Letter of Credit in accordance with Issuing Lender's standard
operating procedures.
(iii) NOTIFICATION TO LENDERS. Upon the issuance of any
Letter of Credit, Issuing Lender shall promptly notify Agent and each
other Lender of such issuance, which notice shall be accompanied by a
copy of such Letter of Credit. Promptly after receipt of such notice,
Agent shall notify each Lender of the amount of such Lender's
respective participation in such Letter of Credit, determined in
accordance with subsection 3.1C.
(iv) REPORTS TO LENDERS. Within 15 days after the end of each
calendar quarter ending after the Closing Date, so long as any Letter
of Credit shall have been outstanding during such calendar quarter,
Issuing Lender shall deliver to each other Lender a report setting
forth the average for such calendar quarter of the daily maximum
amount available to be drawn under the Letters of Credit issued by
Issuing Lender that were outstanding during such calendar quarter.
C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from Issuing Lender
a participation in such Letter of Credit and drawings thereunder in an amount
equal to such Lender's Pro Rata Share of the maximum amount which is or at any
time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
Company agrees to pay the following amounts to Issuing Lender with
respect to Letters of Credit issued by it:
56
<PAGE> 64
(i) (a) a fronting fee equal to 0.25% per annum of the daily
maximum amount available to be drawn under such Letter of Credit and
(b) a letter of credit fee equal to the product of (X) an annual rate
equal to the Applicable Margin for LIBOR Rate Loans in effect at the
time of issuance of such Letter of Credit and (Y) daily maximum amount
available to be drawn under such Letter of Credit, in each case
payable in arrears on and to (but excluding) each March 31, June 30,
September 30 and December 31 of each year and computed on the basis of
a 360-day year for the actual number of days elapsed;
(ii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clause (i) above),
documentary and processing charges in accordance with Issuing Lender's
standard schedule for such charges in effect at the time of such
issuance, amendment, transfer or payment, as the case may be.
Promptly upon receipt by Issuing Lender of any amount described in clause
(i)(b) of this subsection 3.2, Issuing Lender shall distribute to each other
Lender its Pro Rata Share of such amount.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, Issuing Lender shall be responsible only to determine that
the documents and certificates required to be delivered under such Letter of
Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
In the event Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, Issuing Lender shall immediately notify Company and Agent,
and Company shall reimburse Issuing Lender on or before the Business Day
immediately following the date on which such drawing is honored (the
"REIMBURSEMENT DATE") in an amount in Dollars and in same day funds equal to
the amount of such drawing; PROVIDED that, anything contained in this Agreement
to the contrary notwithstanding, (i) unless Company shall have notified Agent
and Issuing Lender prior to 10:00 A.M. (New York time) on the date of such
drawing that Company intends to reimburse Issuing Lender for the amount of such
drawing with funds other than the proceeds of Revolving Loans, Company shall be
deemed to have given a timely Notice of Borrowing to Agent requesting Lenders
to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in
an amount in Dollars equal to the amount of such drawing and (ii) subject to
satisfaction or waiver of the conditions specified in subsection 4.5B, Lenders
shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans
in the amount of such drawing, the proceeds of which shall be applied directly
by Agent to reimburse Issuing Lender for the amount of such drawing; and
PROVIDED, FURTHER that if for any reason proceeds of Revolving Loans are not
received by Issuing Lender on the Reimbursement Date in an amount equal to the
amount of such drawing, Company shall reimburse Issuing Lender, on demand, in
an amount in same day funds equal to the excess of the amount of such drawing
over the
57
<PAGE> 65
aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make Revolving Loans on the terms and conditions set forth in
this Agreement, and Company shall retain any and all rights it may have against
any Lender resulting from the failure of such Lender to make such Revolving
Loans under this subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED DRAWINGS UNDER LETTERS OF
CREDIT.
(i) PAYMENT BY LENDERS. In the event that Company shall fail
for any reason to reimburse Issuing Lender as provided in subsection
3.3B in an amount equal to the amount of any drawing honored by
Issuing Lender under a Letter of Credit issued by it, Issuing Lender
shall promptly notify each other Lender of the unreimbursed amount of
such drawing and of such other Lender's respective participation
therein based on such Lender's Pro Rata Share. Each Lender shall make
available to Issuing Lender an amount equal to its respective
participation, in Dollars and in same day funds, at the office of
Issuing Lender specified in such notice, not later than 12:00 P.M.
(New York time) on the first business day (under the laws of the
jurisdiction in which such office of Issuing Lender is located) after
the date notified by Issuing Lender. In the event that any Lender
fails to make available to Issuing Lender on such business day the
amount of such Lender's participation in such Letter of Credit as
provided in this subsection 3.3C, Issuing Lender shall be entitled to
recover such amount on demand from such Lender together with interest
thereon at the rate customarily used by Issuing Lender for the
correction of errors among banks for three Business Days and
thereafter at the Base Rate. Nothing in this subsection 3.3C shall be
deemed to prejudice the right of any Lender to recover from Issuing
Lender any amounts made available by such Lender to Issuing Lender
pursuant to this subsection 3.3C in the event that it is determined by
the final judgment of a court of competent jurisdiction that the
payment with respect to a Letter of Credit by Issuing Lender in
respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of Issuing Lender.
(ii) DISTRIBUTION TO LENDERS OF REIMBURSEMENTS RECEIVED FROM
COMPANY. In the event Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of
any drawing honored by Issuing Lender under a Letter of Credit issued
by it, Issuing Lender shall distribute to each other Lender which has
paid all amounts payable by it under subsection 3.3C(i) with respect
to such drawing such other Lender's Pro Rata Share of all payments
subsequently received by Issuing Lender from Company in reimbursement
of such drawing when such payments are received. Any such distribution
shall be made to a Lender at its primary address set forth below its
name on the appropriate signature page hereof or at such other address
as such Lender may request.
D. INTEREST ON AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
(i) PAYMENT OF INTEREST BY COMPANY. Company agrees to pay to
Issuing Lender, with respect to drawings made under any Letters of
Credit issued by it, interest
58
<PAGE> 66
on the amount paid by Issuing Lender in respect of each such drawing
from the date of such drawing to but excluding the date such amount is
reimbursed by Company (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate
equal to (a) for the period from the date of such drawing to but
excluding the Reimbursement Date, the rate then in effect under this
Agreement with respect to Revolving Loans that are Base Rate Loans and
(b) thereafter, a rate which is 2% per annum in excess of the rate of
interest otherwise payable under this Agreement with respect to
Revolving Loans that are Base Rate Loans. Interest payable pursuant to
this subsection 3.3D(i) shall be computed on the basis of a 365-day or
366-day year, as the case may be, for the actual number of days
elapsed in the period during which it accrues and shall be payable on
demand or, if no demand is made, on the date on which the related
drawing under a Letter of Credit is reimbursed in full.
(ii) DISTRIBUTION OF INTEREST PAYMENTS BY ISSUING LENDER.
Promptly upon receipt by Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing under a
Letter of Credit issued by it, (a) Issuing Lender shall distribute to
each other Lender, out of the interest received by Issuing Lender in
respect of the period from the date of such drawing to but excluding
the date on which Issuing Lender is reimbursed for the amount of such
drawing (including any such reimbursement out of the proceeds of
Revolving Loans pursuant to subsection 3.3B), the amount that such
other Lender would have been entitled to receive in respect of the
letter of credit fee that would have been payable in respect of such
Letter of Credit for such period pursuant to subsection 3.2 if no
drawing had been made under such Letter of Credit, and (b) in the
event Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of such drawing,
Issuing Lender shall distribute to each other Lender which has paid
all amounts payable by it under subsection 3.3C(i) with respect to
such drawing such other Lender's Pro Rata Share of any interest
received by Issuing Lender in respect of that portion of such drawing
so reimbursed by other Lenders for the period from the date on which
Issuing Lender was so reimbursed by other Lenders to but excluding the
date on which such portion of such drawing is reimbursed by Company.
Any such distribution shall be made to a Lender at its primary address
set forth below its name on the appropriate signature page hereof or
at such other address as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of Company to reimburse Issuing Lender for drawings
made under the Letters of Credit issued by it and to repay any Revolving Loans
made by Lenders pursuant to subsection 3.3B and the obligations of Lenders
under subsection 3.3C(i) shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit;
59
<PAGE> 67
(ii) the existence of any claim, set-off, defense or other
right which Company or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), Issuing Lender or other
Lender or any other Person or, in the case of a Lender, against
Company, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between Company or one of its Subsidiaries and
the beneficiary for which any Letter of Credit was procured);
(iii) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by Issuing Lender under any Letter of Credit
against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of
Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document
by any party thereto;
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event
of Default shall have occurred and be continuing;
PROVIDED, in each case, that payment by Issuing Lender under the applicable
Letter of Credit shall not have constituted gross negligence or willful
misconduct of Issuing Lender under the circumstances in question (as determined
by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel) which Issuing Lender may incur or
be subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit by Issuing Lender, other than as a result of (a) the gross
negligence or willful misconduct of Issuing Lender as determined by a final
judgment of a court of competent jurisdiction or (b) subject to the following
clause (ii), the wrongful dishonor by Issuing Lender of a proper demand for
payment made under any Letter of Credit issued by it or (ii) the failure of
Issuing Lender to honor a drawing under any such Letter of Credit as a result
of any act or omission, whether
60
<PAGE> 68
rightful or wrongful, of any present or future de jure or de facto government
or governmental authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDER'S DUTIES. As between Company and Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of
the Letters of Credit issued by Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, Issuing Lender shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any such
Letter of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the beneficiary of any
such Letter of Credit to comply fully with any conditions required in order to
draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond
the control of Issuing Lender, including without limitation any Governmental
Acts, and none of the above shall affect or impair, or prevent the vesting of,
any of Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by Issuing Lender under or in connection with the Letters of
Credit issued by it or any documents and certificates delivered thereunder, if
taken or omitted in good faith, shall not put Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against Issuing Lender
for any liability arising solely out of the gross negligence or willful
misconduct of Issuing Lender, as determined by a final judgment of a court of
competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
In the event that Issuing Lender or Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by Issuing Lender or Lender with any guideline, request
or directive issued or made after the date hereof
61
<PAGE> 69
by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects Issuing Lender or Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than
any Tax on the overall net income of Issuing Lender or Lender) with
respect to the issuing or maintaining of any Letters of Credit or the
purchasing or maintaining of any participations therein or any other
obligations under this Section 3, whether directly or by such being
imposed on or suffered by Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement in respect of any Letters of Credit
issued by Issuing Lender or participations therein purchased by any
Lender; or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting Issuing Lender or Lender (or its
applicable lending or letter of credit office) regarding this Section
3 or any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate Issuing Lender
or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to Issuing Lender or Lender under this subsection
3.6, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters
of Credit hereunder are subject to the satisfaction of the following
conditions.
4.1 CONDITIONS TO INITIAL LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder to be made during the
period from the Effective Date to the Closing Date is, subject to the following
conditions precedent:
62
<PAGE> 70
A. On or before the date of issuance of such Letter of Credit, Agent
shall have received, in accordance with the provisions of subsection 3.1B(i),
an originally executed Notice of Issuance of Letter of Credit, in each case
signed by the chief financial officer of Company on behalf of Company in a
writing delivered to Agent, together with all other information specified in
subsection 3.1B(i) and such other documents or information as Issuing Lender
may reasonably require in connection with the issuance of such Letter of
Credit.
B. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.1A shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Revolving Loan
and the date of issuance of such Letter of Credit were a Funding Date.
C. CREDIT PARTY DOCUMENTS. On or before the Effective Date, each
Credit Party shall deliver or cause to be delivered to Lenders (or to Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following, each, unless otherwise noted, dated the
Effective Date:
(i) Certified copies of its Certificate or Articles of
Incorporation, together with a good standing certificate from the
Secretary of State of its state of incorporation and each other state
in which it is qualified as a foreign corporation to do business and,
to the extent generally available, a certificate or other evidence of
good standing as to payment of any applicable franchise or similar
taxes from the appropriate taxing authority of each of such states,
each dated a recent date prior to the Effective Date;
(ii) Copies of its Bylaws, certified as of the Effective Date
by its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of each Loan
Document to which it is to be a party, certified as of the Effective
Date by its corporate secretary or an assistant secretary as being in
full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of its officers
executing the Loan Documents to which it is to be a party;
(v) Executed originals of (A) in the case of Company this
Agreement, the Notes (duly executed in accordance with subsection
2.1D, drawn to the order of each Lender and with appropriate
insertions) and the other Loan Documents to which it is to be a party
and (B) in the case of each other Credit Party, the Loan Documents to
which it is to be a party; and
(vi) Such other documents as Agent may reasonably request.
D. SECURITY INTERESTS. Each Credit Party shall have taken or caused to
be taken (and Agent shall have received satisfactory evidence thereof) such
actions in such a manner so that
63
<PAGE> 71
Agent has a valid and perfected First Priority security interest (subject to
Permitted Liens) as of the Effective Date in the entire Collateral owned as of
such date. Such actions shall include, without limitation, (i) delivery to
Agent of certificates other than those certificates delivered in connection
with the Sellers Note Documents (which certificates shall be registered in the
name of Agent or properly endorsed in blank for transfer or accompanied by
irrevocable undated powers duly endorsed in blank, all in form and substance
satisfactory to Agent) representing the shares of capital stock pledged
pursuant to the Security Documents and delivery to Agent of all other
instruments, (ii) filing of Uniform Commercial Code financing statements, as to
the Collateral for all jurisdictions as may be necessary or desirable to
perfect Agent's security interests in the Collateral and (iii) delivery of all
other evidence reasonably satisfactory to Agent that all other filings,
recordings and other actions Agent deems necessary or advisable to establish,
preserve and perfect the First Priority Liens, or in the case of the assets of
Regent of San Diego, Regent of Lexington and Regent of Charleston the second
priority Liens granted to Agent on behalf and for the ratable benefit of
Lenders shall have been made.
E. JACOBS GUARANTY. On or before the Effective Date, Agent shall have
received a duly executed original of the Jacobs Guaranty.
F. OPINIONS OF CREDIT PARTIES' COUNSEL. Lenders and their respective
counsel shall have received originally executed copies of one or more favorable
written opinions, dated as of the Effective Date, of (i) Strauss & Troy,
counsel for the Credit Parties, in form and substance reasonably satisfactory
to Agent and their counsel and setting forth substantially the matters in the
opinions designated in EXHIBIT VII-A annexed hereto and, as to such other
matters as Agent may reasonably request and (ii) Latham & Watkins, counsel for
the Credit Parties as to the communications matters set forth in EXHIBIT VII-B
annexed hereto and as to such other matters as Agent may reasonably request,
all in form and substance satisfactory to Agent and their counsel.
G. OPINIONS OF AGENT'S COUNSEL. Lenders shall have received an
originally executed copy of one or more favorable written opinions of O'Melveny
& Myers LLP, dated as of the Effective Date, substantially in the form of
EXHIBIT VIII annexed hereto.
4.2 CONDITIONS TO INITIAL REVOLVING LOANS.
The obligations of Lenders to make any Revolving Loans to be made on
the Closing Date are, in addition to the conditions precedent specified in
subsection 4.4, subject to prior or concurrent satisfaction of the following
conditions:
A. DELIVERY OF MORTGAGES; MORTGAGE POLICIES. Agent shall have received
from each Credit Party (other than Regent of San Diego, Regent of Lexington and
Regent of Charleston), as appropriate (A) fully executed Mortgages, which
Mortgages shall cover the real properties owned by any of such Credit Parties
as of Closing Date (each a "INITIAL MORTGAGED PROPERTY" and collectively the
"INITIAL MORTGAGED PROPERTIES") sufficient to create a valid and enforceable
64
<PAGE> 72
lien, (B) if any lease included in the Initial Mortgaged Properties is not
currently of record in the name of the applicable Credit Party (by recordation
of the lease itself or a memorandum thereof), a memorandum for each such lease
and a schedule of the lessor and lessee thereunder in form and substance
satisfactory to Agent (each a "MEMORANDUM OF LEASE"), (C) a Consent Letter with
respect to each Initial Mortgage on a real estate lease in form and substance
satisfactory to Agent, (D) zoning letters with respect to each of the Initial
Mortgaged Properties and (E) an ALTA lender's title insurance policy or other
form of policy satisfactory to Agent ("LENDER'S POLICY") issued by a company or
companies satisfactory to Agent, in an amount satisfactory to Agent, with all
premiums paid thereon, and which shall insure that (i) the Obligations are
secured by a valid first Lien on the Initial Mortgaged Properties subject only
to the title exceptions approved by Agent, and (ii) the applicable Credit Party
is current in the payment of all applicable state and local taxes, charges and
assessments affecting each of the Initial Mortgaged Properties; PROVIDED that
Regent of San Diego, Regent of Lexington and Regent of Charleston shall
deliver, or cause to be delivered, each of the documents set forth in this
subsection 4.2B and satisfy each of the conditions set forth in this subsection
4.2B if the San Diego Station, the Lexington Station and the Charleston
Stations are not sold to a party other than another Credit Party within 1 year
of the Closing Date. The Lender's Policy shall contain, to the extent
available, (1) a comprehensive lender's endorsement, (2) a survey accuracy
endorsement, (3) a usury endorsement, (4) appropriate encroachment
endorsements, (5) a tie-in endorsement, and (6) such other endorsements as
Agent deems necessary or advisable. No title indemnities shall be established
in connection with the issuance of the Lender's Policy.
B. EVIDENCE OF INSURANCE. Agent shall have received an Officers'
Certificate of Company setting forth a schedule of insurance with respect to
each of the insurance policies required pursuant to subsection 6.4 hereof, and
Agent shall be satisfied with the nature and scope of these insurance policies
and each such insurance policy shall name Agent as loss payee and/or additional
insured, on behalf and for the ratable benefit of Lenders.
C. FINANCIAL STATEMENTS. On or before the Closing Date, Agent shall
have received the unaudited consolidated financial statements of Company and
its Subsidiaries (other than Regent of Charleston and Charleston License Sub,
Regent of San Diego and San Diego License Sub and Regent of Lexington and
Lexington License Sub), together with consolidating schedules for the Fiscal
Year ended December 31, 1996 and the unaudited consolidated and consolidating
financial statements of Company and its Subsidiaries (except those excluded
above), for the nine months ended September 30, 1997, in each case certified as
true and correct pursuant to an officer's certificate of Company or Sellers, as
the case may be.
D. FINANCIAL TESTS. Company shall have delivered to Agent an Officers'
Certificate in form and substance satisfactory to Agent detailing the
compliance by Company and its Subsidiaries with the financial covenants set
forth in subsection 7.6 herein, on a pro forma basis, giving effect to all
Closing Date transactions.
E. EQUITY ISSUANCE. On or before the Closing Date, (i) Agent shall
have received evidence satisfactory to it that Company shall have received an
amount of Cash proceeds from the issuance of Company Preferred Stock sufficient
enough to reduce the Consolidated Total
65
<PAGE> 73
Debt Ratio to be less than or equal to 6.00:1.00, on a pro forma basis, giving
effect to all Closing Date transactions, (ii) Agent shall have received
executed or conformed copies of the Amended and Restated Certificate of
Incorporation of Company and all subscription agreements, stock purchase
agreements, shareholder agreements and any other documents or instruments
pursuant to which the Company Preferred Stock is issued (the "EQUITY
DOCUMENTS") and any amendments thereto on or prior to the Closing Date, the
terms and conditions of which shall be in all respects satisfactory to Agent,
(iii) such Equity Documents shall be in full force and effect and no term or
condition thereof shall have been amended, modified or waived after the
execution thereof, (iv) no Credit Party shall have failed in any respect to
perform any obligation or covenant required by such Equity Documents to be
performed or complied with by it on or before the Closing Date, and (v) Agent
shall have received an Officers' Certificate in form and substance satisfactory
to Agent from each Credit Party to the effect set forth in clauses (i), (ii),
(iii) and (iv) above.
F. DELIVERY OF SOURCES, USES AND FUNDING CERTIFICATE. Company shall
have delivered an Officers' Certificate detailing the sources and uses of all
funds (including the net equity proceeds and the Loans) for the transactions
occurring on the Closing Date, with proper wire instructions for Agent for the
application of the Loan proceeds on the Closing Date, all in form and substance
satisfactory to Agent.
G. RELATED DOCUMENTS. On or before the Closing Date, (i) Agent shall
have received executed or conformed copies of the Related Documents and any
amendments thereto on or prior to the Closing Date, the terms and conditions of
which shall be in all respects satisfactory to Agent, (ii) such Related
Documents shall be in full force and effect and no term or condition thereof
shall have been amended, modified or waived after the execution thereof, (iii)
no Credit Party shall have failed in any respect to perform any obligation or
covenant required by such Related Documents to be performed or complied with by
it on or before the Closing Date, and (iv) Agent shall have received an
Officers' Certificate in form and substance satisfactory to Agent from each
Credit Party to the effect set forth in clauses (i), (ii) and (iii) above.
H. SELLERS NOTE DOCUMENTS. On or before the Closing Date, (i) Agent
shall have received executed or conformed copies of the Sellers Note Documents
(if then existing), and any amendments thereto on or prior to the Closing Date,
the terms and conditions of which shall be in all respects satisfactory to
Agent, (ii) the Sellers Note Documents (if then existing) shall be in full
force and effect and no term or condition thereof shall have been amended,
modified or waived after the execution thereof, (iii) no Credit Party shall
have failed in any respect to perform any obligation or covenant required by
the Sellers Note Documents (if then existing), to be performed or complied with
by it on or before the Closing Date, and (iv) Agent shall have received an
Officers' Certificate in form and substance satisfactory to Agent from each
Credit Party to the effect set forth in clauses (i), (ii) and (iii) above.
I. ENVIRONMENTAL AUDIT. On or before the Closing Date, Company shall
have delivered copies of a Phase I environmental assessment for each tower or
antenna Facility and any other owned Facility related to the Stations (other
than the San Diego Station, the Lexington
66
<PAGE> 74
Station and the Charleston Stations) together with such other information, in
form and substance satisfactory to Agent, concerning environmental matters that
Agent may require; PROVIDED that Company shall deliver copies of the Phase I
environmental assessments for the San Diego Station, the Lexington Station and
the Charleston Stations, together with such other information, in form and
substance satisfactory to Agent, concerning environmental matters that Agent
may require, if such Stations are not sold to a party other than another Credit
Party within 1 year of the Closing Date.
J. STATION ASSETS AND LIABILITIES. As of the Closing Date, the assets
of the Stations then owned by the Credit Parties shall be free and clear of all
Liens (other than Permitted Liens).
K. DELIVERY OF FINANCIAL CONDITION CERTIFICATE. On or before the
Closing Date, Company shall have delivered a Financial Condition Certificate,
substantially in the form of EXHIBIT XI annexed hereto with appropriate
attachments demonstrating that, both immediately prior to and immediately after
giving effect to the consummation of the transactions on the Closing Date
(including incurrence of the Obligations) each Credit Party is Solvent.
L. OFFICERS CERTIFICATE. As of the Closing Date, (i) since December
31, 1996, no event or change shall have occurred that has caused or evidences,
either in any case or in the aggregate (y) a Material Adverse Effect or (z) a
material adverse effect upon the business, operations, properties, assets,
condition (financial or otherwise) or prospects of any Station, (ii) no event
which would constitute an Event of Default or Potential Event of Default (after
giving effect to the consummation of the Closing Date transactions) shall have
occurred and be continuing, (iii) the representations and warranties in Section
5 hereof shall be true, correct and complete in all material respects on and as
of the Closing Date to the same extent as though made on and as of that date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations or warranties shall have
been true, correct and complete in all material respects as of such date, (iv)
no litigation, inquiry or other action and no injunction or restraining order
shall be pending or threatened with respect to the making of the Loans
hereunder or the transactions contemplated hereby and (v) each Credit Party
shall have delivered to Agent an Officers' Certificate to such effect, in form
and substance satisfactory to Agent.
M. DELIVERY OF COMPLIANCE CERTIFICATES. Company shall have delivered
to Agent a Compliance Certificate, substantially in the form of EXHIBIT VI
annexed hereto, dated as of the Closing Date and calculated to give effect to
the initial funding of Loans under this Agreement, demonstrating compliance
with the covenants set forth in this Agreement as of the Closing Date.
N. FEES AND EXPENSES. Company shall have paid to the Agent for
distribution (as appropriate) to Lenders the fees payable on the Closing Date
referred to in subsection 2.3.
O. PERFORMANCE OF AGREEMENTS. Each Credit Party shall have performed
in all material respects all agreements which this Agreement provides shall be
performed on or before the Closing Date except as otherwise disclosed to and
agreed to in writing by Agent, and Agent
67
<PAGE> 75
shall have received an Officers' Certificate from each Credit Party to such
effect in form and substance satisfactory to Agent.
P. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby
and all documents incidental thereto not previously found acceptable by Agent
and their counsel shall be satisfactory in form and substance to Agent and such
counsel, and Agent and their counsel shall have received all such counterpart
originals or certified copies of such documents as Agent may reasonably
request.
4.3 CONDITIONS TO PERMITTED ACQUISITIONS.
The obligations of Lenders to make the Revolving Loans to be made in
connection with any Permitted Acquisition are, in addition to the conditions
precedent specified in subsection 4.4, subject to prior or concurrent
satisfaction of the following conditions:
A. CREDIT PARTY DOCUMENTS. On or before the Permitted Acquisition
Closing Date, each new Credit Party formed to accomplish such Permitted
Acquisition shall deliver or cause to be delivered to Lenders (or to Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following, each, unless otherwise noted, dated the
Permitted Acquisition Closing Date:
(i) Certified copies of its Certificate or Articles of
Incorporation, together with a good standing certificate from the
Secretary of State of its state of incorporation and each other state
in which it is qualified as a foreign corporation to do business and,
to the extent generally available, a certificate or other evidence of
good standing as to payment of any applicable franchise or similar
taxes from the appropriate taxing authority of each of such states,
each dated a recent date prior to the Permitted Acquisition Closing
Date;
(ii) Copies of its Bylaws, certified as of the Permitted
Acquisition Closing Date by its corporate secretary or an assistant
secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of each Loan
Document to which it is to be a party, certified as of the Permitted
Acquisition Closing Date by its corporate secretary or an assistant
secretary as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of its officers
executing the Loan Documents to which it is to be a party;
(v) Executed originals of the Loan Documents to which it is
to be a party; and
(vi) Such other documents as Agent may reasonably request.
68
<PAGE> 76
B. DELIVERY OF MORTGAGES; MORTGAGE POLICIES. Agent shall have received
from each Credit Party, appropriate (A) fully executed Mortgages, which
Mortgages shall cover the real properties acquired by any of the Credit Parties
on the applicable Permitted Acquisition Closing Date (each a "SUBSEQUENT
MORTGAGED PROPERTY" and collectively the "SUBSEQUENT MORTGAGED PROPERTIES")
sufficient to create a valid and enforceable lien, (B) if any lease included in
the Subsequent Mortgaged Properties is not currently of record in the name of
the applicable Credit Party (by recordation of the lease itself or a memorandum
thereof), a Memorandum of Lease for each such lease in form and substance
satisfactory to Agent, (C) a Consent Letter with respect to each Mortgage on a
real estate lease in form and substance satisfactory to Agent, (D) zoning
letters with respect to each of the Subsequent Mortgaged Properties and (E) a
Lender's Policy satisfactory to Agent issued by a company or companies
satisfactory to Agent, in an amount satisfactory to Agent, with all premiums
paid thereon, and which shall insure that (i) the Obligations are secured by a
valid first Lien on the Subsequent Mortgaged Properties subject only to the
title exceptions approved by Agent, and (ii) the applicable Credit Party is
current in the payment of all applicable state and local taxes, charges and
assessments affecting each of the Subsequent Mortgaged Properties. The Lender's
Policy shall contain, to the extent available, (1) a comprehensive lender's
endorsement, (2) a survey accuracy endorsement, (3) a usury endorsement, (4)
appropriate encroachment endorsements, (5) a tie-in endorsement, and (6) such
other endorsements as Agent deems necessary or advisable. No title indemnities
shall be established in connection with the issuance of the Lender's Policy.
C. SECURITY INTERESTS. Each Credit Party shall have taken or caused to
be taken (and Agent shall have received satisfactory evidence thereof) such
actions in such a manner so that Agent has a valid and perfected first priority
security interest (subject to Permitted Liens) as of the applicable Permitted
Acquisition Closing Date in the entire Collateral owned as of such date. Such
actions shall include, without limitation, (i) delivery to Agent of
certificates (which certificates shall be registered in the name of Agent or
properly endorsed in blank for transfer or accompanied by irrevocable undated
powers duly endorsed in blank, all in form and substance satisfactory to Agent)
representing the shares of capital stock pledged pursuant to the Security
Documents and delivery to Agent of all other instruments, (ii) filing of
Uniform Commercial Code financing statements, as to the Collateral for all
jurisdictions as may be necessary or desirable to perfect Agent's security
interests in the Collateral and (iii) delivery of all other evidence reasonably
satisfactory to Agent that all other filings, recordings and other actions
Agent deems necessary or advisable to establish, preserve and perfect the first
priority Liens granted to Agent on behalf and for the ratable benefit of
Lenders shall have been made.
D. FINANCIAL STATEMENTS. Except to the extent previously delivered
under subsection 4.2, on the Permitted Acquisition Closing Date, Agent shall
have received the audited consolidated financial statements (to the extent
available) in respect of the Acquired Stations for its most recent fiscal year
then ended and the unaudited consolidated and consolidating (to the extent
available) financial statements of such Acquired Stations for each of the
calendar months between the first day of the then current fiscal year and the
last day of the most recent month then ended, in each case certified as true
and correct in all material respects pursuant to an officer's certificate of
such Sellers, and Agent shall be satisfied that the information set forth in
69
<PAGE> 77
such financial statements is in substantial accordance with the estimates
previously furnished by Company to the Agent.
E. PERMITTED ACQUISITION DOCUMENTS. Except to the extent previously
delivered under subsection 4.2, on the Permitted Acquisition Closing Date, (i)
Agent shall have received executed or conformed copies of the Permitted
Acquisition Documents and any amendments thereto on or prior to the Permitted
Acquisition Closing Date, the terms and conditions of which shall be in all
respects satisfactory to Agent, (ii) the Permitted Acquisition Documents shall
be in full force and effect and no term or condition thereof shall have been
amended, modified or waived after the execution thereof, (iii) no Credit Party
shall have failed in any respect to perform any obligation or covenant required
by the Permitted Acquisition Documents to be performed or complied with by it
on or before the Permitted Acquisition Closing Date, and (iv) Agent shall have
received an Officers' Certificate in form and substance satisfactory to Agent
from each Credit Party to the effect set forth in clauses (i), (ii) and (iii)
above.
F. ACQUISITION PROCEEDS. To the extent any additional Company Common
Stock or Company Preferred Stock is issued in connection with a Permitted
Acquisition, (i) Agent shall have received executed or conformed copies of the
purchase agreements and any amendments thereto on or prior to the Permitted
Acquisition Closing Date, the terms and conditions of which shall be in all
respects satisfactory to Agent, (ii) such purchase agreements shall be in full
force and effect and no term or condition thereof shall have been amended,
modified or waived after the execution thereof, (iii) no Credit Party shall
have failed in any respect to perform any obligation or covenant required by
such purchase agreements to be performed or complied with by it on or before
the Permitted Acquisition Closing Date, and (iv) Agent shall have received an
Officers' Certificate in form and substance satisfactory to Agent from each
Credit Party to the effect set forth in clauses (i), (ii) and (iii) above.
G. FCC LICENSES. Each of the FCC Licenses with respect to the Acquired
Stations shall have been transferred (pursuant to an appropriate Final Order of
the FCC) to Company or to the applicable License Sub, shall be in full force
and effect and shall, when transferred to the applicable License Sub, be
subject to an Operating Agreement between the applicable Operating Sub and
License Sub, which Operating Agreement is substantially in the form of EXHIBIT
XII annexed hereto.
H. ACQUISITION FCC CONSENT. The Acquisition FCC Consent with respect
to the Acquired Stations shall have been obtained and shall have become a Final
Order.
I. PERMITTED ACQUISITION. Except to the extent previously delivered
under subsection 4.2 on or before the Permitted Acquisition Closing Date,
Company (or its appropriate Operating Sub) shall deliver to Agent an Officers'
Certificate stating that (i) the Permitted Acquisition has been duly approved,
(ii) all action necessary by it to consummate the Permitted Acquisition has
been taken (other than the payment of the purchase price and the conveyance of
the appropriate assets) and (iii) each such party delivering such Officers'
Certificate will proceed to consummate the Permitted Acquisition immediately
upon the making of the Loans on the Permitted Acquisition Closing Date. The
Permitted Acquisition shall become effective
70
<PAGE> 78
in accordance with Permitted Acquisition Documents without any material
variation therefrom, except as disclosed to Lenders and consented to in writing
by Agent.
J. ENVIRONMENTAL AUDIT. Except to the extent previously delivered
under subsection 4.2, on or before the Permitted Acquisition Closing Date,
Company shall have delivered copies of Phase I environmental assessment for
each tower or antenna Facility and any other owned Facility subject to the
Permitted Acquisitions, together with such other information, in form and
substance satisfactory to Agent, concerning environmental matters that Agent
may require.
K. STATION ASSETS AND LIABILITIES. As of the Permitted Acquisition
Closing Date, the assets of the Acquired Stations shall be free and clear of
all Liens (other than Permitted Liens) and all assets and liabilities assumed
by any Credit Party pursuant to the Permitted Acquisition Documents and the
transactions contemplated thereby shall be acceptable to Agent.
L. DELIVERY OF FINANCIAL CONDITION CERTIFICATE. On or before the
making of the Loans on the Permitted Acquisition Closing Date, Company shall
have delivered a Financial Condition Certificate, substantially in the form of
EXHIBIT XI annexed hereto with appropriate attachments demonstrating that, both
immediately prior to and immediately after giving effect to the consummation of
the Permitted Acquisition and the other transactions on the Permitted
Acquisition Closing Date (including incurrence of the Obligations) each Credit
Party is Solvent.
M. SCHEDULES. Company shall have updated each of the Schedules to this
Agreement and the other Loan Documents to the extent necessary to reflect
changes resulting from the consummation of the Permitted Acquisition, in each
case, in form and substance satisfactory to Agent, and Company shall have
delivered to Agent an Officers' Certificate to which such updated Schedules
shall be attached certifying that such Schedules are true, correct and accurate
as of the Permitted Acquisition Closing Date.
N. OFFICERS CERTIFICATE. As of the Permitted Acquisition Closing Date,
(i) since the date of the most recent audited financial statement delivered
pursuant to subsection 6.1(iii), no event or change shall have occurred that
has caused or evidences, either in any case or in the aggregate (y) a Material
Adverse Effect or (z) a material adverse effect upon the business, operations,
properties, assets, condition (financial or otherwise) or prospects of any
Station subject to the Permitted Acquisition, (ii) no event which would
constitute an Event of Default or Potential Event of Default (after giving
effect to the consummation of the Permitted Acquisition Closing Date
transactions) shall have occurred and be continuing, (iii) the representations
and warranties in Section 5 hereof shall be true, correct and complete in all
material respects on and as of the Permitted Acquisition Closing Date to the
same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations or warranties shall have been true, correct and
complete in all material respects as of such date, (iv) no litigation, inquiry
or other action and no injunction or restraining order shall be pending or
threatened with respect to the making of the Loans hereunder or the
transactions contemplated hereby and (v) each Credit Party shall have delivered
to Agent an Officers' Certificate to such effect, in form and substance
satisfactory to Agent.
71
<PAGE> 79
O. DELIVERY OF COMPLIANCE CERTIFICATES. Company shall have delivered
to Agent a Compliance Certificate, substantially in the form of EXHIBIT VI
annexed hereto, dated as of the Permitted Acquisition Closing Date and
calculated to give effect to the funding of Revolving Loans under this
Agreement on the Permitted Acquisition Closing Date, demonstrating compliance
with the covenants set forth in this Agreement as of the Permitted Acquisition
Closing Date.
P. DELIVERY OF PERMITTED ACQUISITION AGREEMENT OPINIONS OF COUNSEL. On
or before the Permitted Acquisition Closing Date, Lenders and their counsel
shall have received originally executed copies of the favorable written
opinions of each of the counsel referred to in the Permitted Acquisition
Documents, in form and substance satisfactory to Agent and its counsel, dated
as of the Permitted Acquisition Closing Date, as to the matters specified in
such documents, and Company shall use its best efforts to have each such
opinion of counsel (other than the opinion of Seller's counsel with respect to
the Faircom Acquisition) state that Lenders are entitled to rely thereon.
Q. OPINIONS OF CREDIT PARTIES' COUNSEL. Lenders and their respective
counsel shall have received originally executed copies of one or more favorable
written opinions, dated as of the Permitted Acquisition Closing Date, of (i)
counsel for the Credit Parties reasonably satisfactory to Agent and its
counsel, in form and substance reasonably satisfactory to Agent and its counsel
and setting forth substantially the matters in the opinions designated in
EXHIBIT VII-A annexed hereto and, as to such other matters as Agent may
reasonably request, (ii) Latham & Watkins, counsel for the Credit Parties as to
the communications matters set forth in EXHIBIT VII-D annexed hereto (other
than those communications matters previously opined to in the opinion of Latham
& Watkins delivered pursuant to subsection 4.1F(ii)) and as to such other
matters as Agent may reasonably request, and (iii) special counsel for the
Credit Parties affected by the Permitted Acquisition qualified in each
jurisdiction (other than the jurisdictions covered in the opinion delivered
pursuant to clause (i) above in which any such Credit Party is incorporated or
where Security Documents for such Credit Parties are being filed or recorded,
setting forth substantially the matters in the opinions designated in EXHIBIT
VII-C annexed hereto with respect to such Credit Parties and Security Documents
and as to such other matters as Agent may reasonably request, all in form and
substance satisfactory to Agent and its counsel.
R. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by the
Permitted Acquisition and all documents incidental thereto not previously found
acceptable by Agent and its counsel shall be satisfactory in form and substance
to Agent and such counsel, and Agent and its counsel shall have received all
such counterpart originals or certified copies of such documents as Agent may
reasonably request.
4.4 CONDITIONS TO ALL LOANS.
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
72
<PAGE> 80
A. Agent shall have received before that Funding Date, in accordance
with the provisions of subsection 2.1B, an originally executed Notice of
Borrowing, in each case signed by the chief financial officer or treasurer of
Company on behalf of Company in a writing delivered to Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and
in the other Loan Documents shall be true, correct and complete in all
material respects on and as of that Funding Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been
true, correct and complete in all material respects on and as of such
earlier date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) Company shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before that
Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date
shall not violate any law including, without limitation, Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors
of the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting any Credit Party or
any of its Subsidiaries or any property of such Credit Party or any of
its Subsidiaries that has not been disclosed by Company in writing
pursuant to subsection 5.6 or 6.1(x) prior to the making of the last
preceding Loans (or, in the case of the initial Loans, prior to the
execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in
either event, in the opinion of Agent or of Requisite Lenders, would
be expected to have a Material Adverse Effect; and no injunction or
other restraining order shall have been issued and no hearing to cause
an injunction or other restraining order to be issued shall be pending
or noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated
by this Agreement or the making of Loans hereunder.
73
<PAGE> 81
4.5 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder is subject to the
following conditions precedent:
A. On or before the date of issuance of such Letter of Credit, Agent
shall have received, in accordance with the provisions of subsection 3.1B(i),
an originally executed Notice of Issuance of Letter of Credit, in each case
signed by the chief financial officer of Company on behalf of Company in a
writing delivered to Agent, together with all other information specified in
subsection 3.1B(i) and such other documents or information as Issuing Lender
may reasonably require in connection with the issuance of such Letter of
Credit.
B. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.1A shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Revolving Loan
and the date of issuance of such Letter of Credit were a Funding Date.
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
the Loans, to induce Issuing Lender to issue Letters of Credit and to induce
other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date
and on the date of issuance of each Letter of Credit, that the following
statements are true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Credit Party is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation. Each Credit Party has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into the Loan Documents and
to carry out the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Credit Party is qualified to
do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, except
in jurisdictions where the failure to be so qualified or in good standing has
not had and will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. The Credit Parties are engaged only in the
businesses permitted to be engaged in pursuant to subsection 7.13 and are
conducting their business in accordance with the provisions of subsection 7.13.
The Credit Parties hold all licenses (including, without limitation, FCC
Licenses), permits, franchises, certificates of authority, or any waivers of
the foregoing that are necessary to permit them to conduct their respective
74
<PAGE> 82
businesses as now conducted and to hold and operate their respective
properties. All such licenses, permits, franchises, certificates of authority,
and waivers are valid and in full force and effect.
D. SUBSIDIARIES. All of the Subsidiaries of Company as of the date of
this Agreement are identified in SCHEDULE 5.1D annexed hereto, as said SCHEDULE
5.1D may be supplemented from time to time pursuant to the provisions of
subsection 6.1(xvii). The capital stock of each Subsidiary of Company
identified in SCHEDULE 5.1D annexed hereto (as so supplemented) is duly
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each Subsidiary of Company identified
in SCHEDULE 5.1D annexed hereto (as so supplemented) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation set forth therein, has all requisite corporate
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, and is qualified to
do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in
each case except where failure to be so qualified or in good standing or a lack
of such corporate power and authority has not had and will not have a Material
Adverse Effect. SCHEDULE 5.1D annexed hereto (as so supplemented) correctly
sets forth, as of the Closing Date (and as of the date said SCHEDULE 5.1D is so
supplemented), the ownership interest of Company and each of its Subsidiaries
in each of the Subsidiaries of Company identified therein.
E. FCC AND STATION MATTERS. Upon and following consummation of each
Acquisition, each of the following representations and warranties will be true,
correct and complete:
(i) SCHEDULE 5.1E annexed hereto correctly describes each of
the radio broadcast stations owned by any Credit Party.
(ii) SCHEDULE 5.1E correctly sets forth all of the FCC
Licenses (other than auxiliary service licenses) held by each Credit
Party and its Subsidiaries and correctly sets forth the termination
date, if any, of each such FCC License. Each FCC License was duly and
validly issued by the FCC pursuant to procedures which comply with all
requirements of applicable law and no Credit Party has any knowledge
of the occurrence of any event or the existence of any circumstance
which, in the reasonable judgment of such Credit Party, is likely to
lead to the revocation of any FCC License. The Credit Parties have the
right to use all FCC Licenses required in the ordinary course of
business for the Stations. Each such FCC License is in full force and
effect and the Credit Parties are in substantial compliance therewith
with no known conflict with the valid rights of others which could
have a Material Adverse Effect. No event has occurred which permits,
or after notice or lapse of time or both would permit, the revocation,
termination, modification or restriction of any such FCC License or
other right which could have a Material Adverse Effect. Each such FCC
License is held by the License Sub of the Operating Sub directly
operating the Station with respect to which such FCC License was
issued. No Credit Party has any reason to believe (other than in
connection
75
<PAGE> 83
with there being no legal assurance thereof) that the FCC Licenses
listed on Schedule 5.1E will not be renewed in the ordinary course.
(iii) Each Credit Party has duly filed in a timely manner all
filings which are required to be filed by such Credit Party under the
Communications Act and is in all material respects in compliance with
the Communications Act, including, without limitation, the rules and
regulations of the FCC relating to the broadcast of radio signals.
(iv) None of the Facilities (including without limitation,
the transmitter and tower sites owned or used by any Credit Party)
violate in any material respect the provisions of any applicable
building codes, fire regulations, building restrictions or other
governmental ordinances, orders or regulations and each such Facility
is zoned so as to permit the commercial uses intended by the owner or
occupier thereof and there are no outstanding variances or special use
permits materially affecting any of the Facilities or the uses
thereof.
(v) SCHEDULE 5.1E(V) annexed hereto correctly sets forth each
of the LMAs for Company or any of its Subsidiaries and sets forth the
termination date, if any, of each such agreement and the amounts
payable or receivable thereunder. Each such LMA is in full force and
effect, in compliance with the Communications Act, and Company and its
Subsidiaries are in substantial compliance with such LMA to the extent
each is a party thereto. Other than as contemplated in connection with
the exercise by Company or of any of its Subsidiaries of any option to
acquire any radio station which is the subject of such LMA, no event
has occurred which permits, or after notice or lapse of time would
permit, the early termination of any such LMA, and neither Company nor
any of its Subsidiaries has knowledge of any fact or circumstance
which is likely to result in the non-renewal of any LMA.
F. REAL PROPERTY. No Credit Party owns any interest in real property
other than the real property identified in SCHEDULE 5.1F annexed hereto.
G. COLLATERAL MATTERS. Other than as may be supplemented by written
notices delivered to Agent pursuant to the Pledge and Security Agreement:
(i) the chief executive office and principal place of
business of each Credit Party is as set forth in Part One of SCHEDULE
5.1G annexed hereto;
(ii) the office where each Credit Party keeps its records
concerning Accounts (as defined in the Pledge and Security Agreement)
and all originals of all chattel paper which evidence any Accounts are
located at the addresses specified for such Credit Party in Part Two
of SCHEDULE 5.1G annexed hereto;
(iii) the location where each Credit Party keeps any
Inventory (as defined in the Pledge and Security Agreement) is at the
address specified for such Credit Party in Part Three of SCHEDULE 5.1G
annexed hereto;
76
<PAGE> 84
(iv) other than as set forth in Part Four of SCHEDULE 5.1G
annexed hereto, no Credit Party does any business under any fictitious
business names or tradenames or has done business under any fictitious
business names or tradenames during the five years preceding the
Closing Date.
H. PERSONAL PROPERTY LIENS. Upon the filing of Uniform Commercial Code
financing statements naming each Credit Party as "debtor", naming Agent as
"secured party" and describing the Collateral (as defined in the Pledge and
Security Agreement) in the filing offices set forth in Part Five of SCHEDULE
5.1G annexed hereto, the security interests in such Collateral granted to Agent
for the benefit of Lenders will, to the extent a security interest in such
Collateral may be perfected by filing Uniform Commercial Code financing
statements, constitute valid and perfected security interests therein prior to
all other Liens (other than Permitted Liens) to the extent contemplated by the
Security Documents. The Pledged Collateral (as defined in the Pledge and
Security Agreement) has been duly and validly pledged to Agent on behalf of
Lenders pursuant to the Pledge and Security Agreement and the Pledge and
Security Agreement creates in favor of Agent on behalf of Lenders a valid,
perfected First Priority security interest in the Pledged Collateral as
security for the Secured Obligations (as such term is defined in the Pledge and
Security Agreement), subject to no equal or prior security interest, to the
extent contemplated by the Security Documents.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION. The execution, delivery and performance of the Loan
Documents and the Related Documents have been duly authorized by all necessary
corporate action on the part of each Credit Party a party thereto.
B. NO CONFLICT. The execution, delivery and performance by each Credit
Party of the Loan Documents and the Related Documents to which such Credit
Party is a party, and the consummation of the transactions contemplated thereby
do not and will not (i) violate any provision of any law or any governmental
rule or regulation applicable to any Credit Party, the Certificate or Articles
of Incorporation or Bylaws of any Credit Party or any order, judgment or decree
of any court or other agency of government binding on any Credit Party, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of any Credit Party,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of any Credit Party (other than any Liens created
under any of the Loan Documents in favor of Agent on behalf and for the ratable
benefit of Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of any
Credit Party, except for such approvals or consents which will be obtained on
or before the Closing Date and disclosed in writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
each Credit Party of the Loan Documents and the Related Documents to which it
is party and the consummation of the transactions contemplated thereby do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any
77
<PAGE> 85
federal, state or other governmental authority or regulatory body including,
without limitation, the FCC, EXCEPT for filings required in connection with the
perfection of the security interests or the exercise of the rights granted
pursuant to the Security Documents and filings required with the FCC in
connection with the Acquisitions contemplated by the Permitted Acquisition
Documents.
D. BINDING OBLIGATION. Each of the Loan Documents and the Related
Documents has been duly executed and delivered by each Credit Party a party
thereto and is the legally valid and binding obligation of each such Credit
Party, enforceable against each such Credit Party in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, the
financial statements described in subsection 4.2E. All such statements were
prepared in conformity with GAAP and fairly present the financial position (on
a consolidated and, where applicable, consolidating basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments and
the absence of footnotes. Company and its Subsidiaries do not (and will not
following the funding of the initial Loans) have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Company or any of its Subsidiaries.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since December 31, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Except as set forth on SCHEDULE 5.4, neither Company nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid or made, or set
apart any sum or property for, any Restricted Junior Payment or agreed to do so
except as permitted by subsection 7.5.
5.5 TITLE TO PROPERTIES; LIENS.
The Credit Parties have (i) good, sufficient and legal title to (in
the case of fee interests in real property), (ii) valid leasehold interests in
(in the case of leasehold interests in real or personal property), or (iii)
good title to (in the case of all other personal property), all of their
respective properties and assets reflected in the financial statements referred
to in subsection 5.3 or in the most recent financial statements delivered
pursuant to subsection 6.1, in each case except for assets disposed of since
the date of such financial statements in the ordinary course
78
<PAGE> 86
of business or as otherwise permitted under subsection 7.7. Except for
Permitted Liens, all such properties and assets are free and clear of Liens.
5.6 LITIGATION; ADVERSE FACTS.
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of any Credit Party) at
law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, including, without limitation, the FCC, pending or, to the
knowledge of any Credit Party, threatened against or affecting any Credit Party
or any property of any Credit Party that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. No Credit
Party is (i) in violation of any applicable laws that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
or (ii) subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3 or as set forth in
SCHEDULE 5.7 annexed hereto, all tax returns and reports of each Credit Party
required to be filed by any of them have been timely filed, and all taxes,
assessments, fees and other governmental charges upon each Credit Party and
upon its properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. No Credit Party knows of any
proposed tax assessment against any Credit Party or any of its Subsidiaries
which is not being actively contested by such Credit Party or Subsidiary in
good faith and by appropriate proceedings; PROVIDED that such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. No Credit Party is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
of its Contractual Obligations, and no condition exists that, with the giving
of notice or the lapse of time or both, would constitute such a default, except
where the consequences, direct or indirect, of such default or defaults, if
any, would not have a Material Adverse Effect.
B. No Credit Party is a party to or is otherwise subject to any
agreements or instruments or any charter or other internal restrictions which,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
79
<PAGE> 87
5.9 GOVERNMENTAL REGULATION.
No Credit Party is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act
or the Investment Company Act of 1940 or under any other federal or state
statute or regulation which may limit its ability to incur Indebtedness or
which may otherwise render all or any portion of the Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
A. No Credit Party is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of a Credit Party alone or of a Credit
Party together with its Subsidiaries on a consolidated basis) subject to the
provisions of subsection 7.2 or 7.7 or subject to any restriction contained in
any agreement or instrument, between Company and any Lender or any Affiliate of
any Lender, relating to Indebtedness and within the scope of subsection 7.2,
will be Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. Each Credit Party and each of its ERISA Affiliates are in
compliance in all material respects with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed all
their obligations under each Employee Benefit Plan.
B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees of any Credit Party or any of its ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $100,000.
5.12 CERTAIN FEES.
Except as set forth in SCHEDULE 5.12, no broker's or finder's fee or
commission will be payable with respect to this Agreement or any of the
transactions contemplated hereby, and Company hereby indemnifies Lenders
against, and agrees that it will hold Lenders harmless from, any claim, demand
or liability for any such broker's or finder's fees alleged to have been
80
<PAGE> 88
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
Except as set forth in SCHEDULE 5.13 annexed hereto:
(i) the operations of each Credit Party (including, without
limitation, all operations and conditions at or in the Facilities)
comply in all material respects with all Environmental Laws;
(ii) each Credit Party has obtained all Governmental
Authorizations under Environmental Laws necessary to its operations,
and all such Governmental Authorizations are in good standing, and
each Credit Party is in compliance with all material terms and
conditions of such Governmental Authorizations;
(iii) no Credit Party has received (a) any notice or claim to
the effect that it is or may be liable to any Person as a result of or
in connection with any Hazardous Materials or (b) any letter or
request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. ss.
9604) or comparable state laws, and, to the best of each Credit
Party's knowledge, none of the operations of any Credit Party is the
subject of any federal or state investigation relating to or in
connection with any Hazardous Materials at any Facility or at any
other location;
(iv) none of the operations of any Credit Party is subject to
any judicial or administrative proceeding alleging the violation of or
liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) no Credit Party nor any of its Facilities or operations
are subject to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any
Environmental Laws or (b) any Environmental Claims;
(vi) no Credit Party has any contingent liability in
connection with any Release of any Hazardous Materials by such Credit
Party or any of its Subsidiaries;
(vii) no Credit Party nor, to the best knowledge of each
Credit Party, any predecessor of such Credit Party or its Subsidiaries
has filed any notice under any Environmental Law indicating past or
present treatment or Release of Hazardous Materials at any Facility,
and none of any Credit Party's or any of its Subsidiaries' operations
involves the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270
or any state equivalent;
81
<PAGE> 89
(viii) no Hazardous Materials exist on, under or about any
Facility in a manner that has a reasonably possibility of giving rise
to an Environmental Claim having a Material Adverse Effect, and no
Credit Party has filed any notice or report of a Release of any
Hazardous Materials that has a reasonable possibility of giving rise
to an Environmental Claim having a Material Adverse Effect;
(ix) no Credit Party nor, to the best knowledge of each
Credit Party, any of its predecessors has disposed of any Hazardous
Materials in a manner that has a reasonable possibility of giving rise
to an Environmental Claim having a Material Adverse Effect;
(x) no underground storage tanks or surface impoundments are
on or at any Facility; and
(xi) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been
attached to any Facility.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving any Credit Party that could reasonably be expected to have a Material
Adverse Effect.
5.15 SOLVENCY.
Each Credit Party is and, upon the incurrence of any Obligations by
such Credit Party on any date on which this representation is made, will be,
Solvent.
5.16 INSURANCE
Each Credit Party maintains, with, to its knowledge, financially sound
and reputable insurers, insurance with respect to its properties and business
and the properties and business of its Subsidiaries, against loss or damage of
the kinds customarily insured against by corporations of established reputation
engaged in the same or similar business of such types and in such amounts as
are customarily carried under similar circumstances by such other corporations.
Attached as SCHEDULE 5.16 hereto is a complete and accurate description of all
policies of insurance that will be in effect as of the Closing Date for the
Credit Parties.
5.17 INTELLECTUAL PROPERTY
A. The Credit Parties own, or are licensed to use, the Intellectual
Property and have taken all actions as is customary in the ordinary course of
business to protect such Intellectual Property.
B. No material claim has been asserted by any Person with respect to
the use of any such Intellectual Property, or challenging or questioning the
validity or effectiveness of any such
82
<PAGE> 90
Intellectual Property. To each Credit Party's knowledge, the use of such
Intellectual Property by such Credit Party does not infringe on the rights of
any Person, subject to such claims and infringements as do not, in the
aggregate, give rise to any liabilities on the part of any Credit Party that
are material to such Credit Party. The consummation of the transactions
contemplated by this Agreement will not impair the ownership of (or the license
to use, as the case may be) any of such Intellectual Property by any Credit
Party.
5.18 DISCLOSURE.
No representation or warranty of any Credit Party contained in any
Loan Document or Related Document or in any other document, certificate or
written statement furnished to Lenders by or on behalf of such Credit Party or
its Subsidiaries for use in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state a material fact (known to such Credit Party, in the case of any document
not furnished by it) necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances in which the same were
made. Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by each
Credit Party to be reasonable at the time made, it being recognized by Lenders
that such projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any such
projections may differ from the projected results. There are no facts known (or
which should upon the reasonable exercise of diligence be known) to any Credit
Party (other than matters of a general economic nature) that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect and that have not been disclosed herein or in such other documents,
certificates and statements furnished to Lenders for use in connection with the
transactions contemplated hereby.
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each other Credit Party to perform, all
covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Agent and Lenders:
(i) MONTHLY FINANCIALS: as soon as available and in any event
within 30 days after the end of each month ending after the Closing
Date, copies of the monthly sales
83
<PAGE> 91
reports and cash flow for such month of each Station as furnished to
Company by each Station.
(ii) QUARTERLY FINANCIALS: as soon as available and in any
event within 45 days after the end of each Fiscal Quarter, (a) the
consolidated balance sheet of Company and its Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its
Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
Fiscal Year and the corresponding figures from the Financial Plan for
the current Fiscal Year, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, and (b)
a narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior
management for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter;
(iii) YEAR-END FINANCIALS: as soon as available and in any
event within 120 days after the end of each Fiscal Year, (a) the
consolidated balance sheet of Company and its Subsidiaries as at the
end of such Fiscal Year and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its
Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal
Year and the corresponding figures from the Financial Plan for the
Fiscal Year covered by such financial statements, all in reasonable
detail and certified by the chief financial officer of Company that
they fairly present, in all material respects, the financial condition
of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, (b) a narrative report describing the operations of Company
and its Subsidiaries in the form prepared for presentation to senior
management for such Fiscal Year, and (c) in the case of such
consolidated financial statements, a report thereon of Coopers &
Lybrand or other independent certified public accountants of
recognized national standing selected by Company and satisfactory to
Agent, which report shall be unqualified, shall express no doubts
about the ability of Company and its Subsidiaries to continue as a
going concern, and shall state that such consolidated financial
statements fairly present, in all material respects, the consolidated
financial position of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made
in accordance with generally accepted auditing standards;
84
<PAGE> 92
(iv) OFFICERS' AND COMPLIANCE CERTIFICATES: together with
each delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (ii) and (iii) above, (a) an Officers'
Certificate of Company stating that the signers have reviewed the
terms of this Agreement and have made, or caused to be made under
their supervision, a review in reasonable detail of the transactions
and condition of Company and its Subsidiaries during the accounting
period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting
period, and that the signers do not have knowledge of the existence as
at the date of such Officers' Certificate, of any condition or event
that constitutes an Event of Default or Potential Event of Default,
or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action Company has
taken, is taking and proposes to take with respect thereto; and (b)
beginning with the earlier of (x) the Closing Date and (y) the fiscal
period ending March 31, 1998, a Compliance Certificate demonstrating
in reasonable detail compliance during and at the end of the
applicable accounting periods with the restrictions contained in
Section 7;
(v) RECONCILIATION STATEMENTS: if, as a result of any change
in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the consolidated financial statements of Company and
its Subsidiaries delivered pursuant to subdivisions (i), (ii), (iii)
or (xiii) of this subsection 6.1 will differ in any material respect
from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in
accounting principles and policies been made, then (a) together with
the first delivery of financial statements pursuant to subdivision
(i), (ii), (iii) or (xiii) of this subsection 6.1 following such
change, consolidated financial statements of Company and its
Subsidiaries for (y) the current Fiscal Year to the effective date of
such change and (z) the two full Fiscal Years immediately preceding
the Fiscal Year in which such change is made, in each case prepared on
a pro forma basis as if such change had been in effect during such
periods, and (b) together with each delivery of financial statements
pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection
6.1 following such change, a written statement of the chief accounting
officer or chief financial officer of Company setting forth the
differences which would have resulted if such financial statements had
been prepared without giving effect to such change;
(vi) ACCOUNTANTS' CERTIFICATION: together with each delivery
of consolidated financial statements of Company and its Subsidiaries
pursuant to subdivision (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a review of the
terms of this Agreement and the other Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with their
audit examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and,
if such a condition or event has come to their attention, specifying
the nature and period of existence thereof; PROVIDED that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit examination,
and (c)
85
<PAGE> 93
stating that based on their audit examination nothing has come to
their attention that causes them to believe either or both that the
information contained in the certificates delivered therewith pursuant
to subdivision (iv) above is not correct or that the matters set forth
in the Compliance Certificates delivered therewith pursuant to clause
(b) of subdivision (iv) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
(vii) ACCOUNTANTS' REPORTS: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of
all reports submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit
of the financial statements of Company and its Subsidiaries made by
such accountants, including, without limitation, any comment letter
submitted by such accountants to management in connection with their
annual audit;
(viii) SEC FILINGS AND PRESS RELEASES: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Company to its security holders or by any Subsidiary of Company to its
security holders other than Company or another Subsidiary of Company,
(b) all regular and periodic reports and all registration statements
(other than on Form S-8 or a similar form) and prospectuses, if any,
filed by Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, (c) copies of all
material information required to be filed by Company or any of its
Subsidiaries with the FCC and (d) all press releases and other
statements made available generally by Company or any of its
Subsidiaries to the public concerning material developments in the
business of Company or any of its Subsidiaries;
(ix) EVENTS OF DEFAULT, ETC.: promptly upon any officer of
any Credit Party obtaining knowledge (a) of any condition or event
that constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Agent) or taken any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person has given
any notice to any Credit Party or any of its Subsidiaries or taken any
other action with respect to a claimed default or event or condition
of the type referred to in subsection 8.2, (c) of any condition or
event that would be required to be disclosed in a current report filed
by Company with the Securities and Exchange Commission on Form 8-K
(Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof)
if Company were required to file such reports under the Exchange Act,
or (d) of the occurrence of any event or change that has caused or
evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officers' Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such
claimed Event of Default, Potential Event of Default, default, event
or condition, and what action such Credit Party has taken, is taking
and proposes to take with respect thereto;
86
<PAGE> 94
(x) LITIGATION OR OTHER PROCEEDINGS: (a) promptly upon any
officer of any Credit Party obtaining knowledge of (X) the institution
of, or non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting any Credit Party or any property of
any Credit Party (collectively, "PROCEEDINGS") not previously
disclosed in writing by the Credit Parties to Lenders or (Y) any
material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief
as a result of, the transactions contemplated hereby;
written notice thereof together with such other non-privileged
information as may be reasonably available to the Credit Parties to
enable Lenders and their counsel to evaluate such matters; and (b)
within forty-five days after the end of each Fiscal Quarter of
Company, a schedule of all Proceedings involving an alleged liability
of, or claims against or affecting, any Credit Party equal to or
greater than $100,000, and promptly after request by Agent such other
non-privileged information as may be reasonably requested by Agent to
enable Agent and its counsel to evaluate any of such Proceedings;
(xi) ERISA EVENTS: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action the Credit Parties
or any of their ERISA Affiliates have taken, are taking or propose to
take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto;
(xii) ERISA NOTICES: with reasonable promptness, copies of
(a) each SCHEDULE B (Actuarial Information) to the annual report (Form
5500 Series) filed by any Credit Party or any of its ERISA Affiliates
with the Internal Revenue Service with respect to each Pension Plan;
(b) all notices received by any Credit Party or any of its ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA
Event; and (c) such other documents or governmental reports or filings
relating to any Employee Benefit Plan as Agent shall reasonably
request;
(xiii) FINANCIAL PLANS: as soon as practicable and in any
event no later than 30 days following the beginning of each Fiscal
Year, a consolidated and consolidating plan and financial forecast for
such Fiscal Year including without limitation (a) a forecasted
consolidated balance sheet and forecasted consolidated and
consolidating statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Year and an explanation of the
assumptions on which such forecasts are based, (b) the amount of
87
<PAGE> 95
forecasted unallocated Overhead for each such Fiscal Year, and (c)
such other information and projections as any Lender may reasonably
request;
(xiv) INSURANCE: as soon as practicable and in any event
within 120 days after the end of each Fiscal Year, a report in form
and substance satisfactory to Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately
succeeding Fiscal Year;
(xv) ENVIRONMENTAL AUDITS AND REPORTS: as soon as practicable
following receipt thereof, copies of all environmental audits and
reports, whether prepared by personnel of Company or any of its
Subsidiaries or by independent consultants, with respect to
significant environmental matters at any Facility or which relate to
an Environmental Claim which could result in a Material Adverse
Effect;
(xvi) BOARD OF DIRECTORS: with reasonable promptness, written
notice of any change in the Board of Directors of Company or any of
its Subsidiaries;
(xvii) NEW SUBSIDIARY: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in SCHEDULE
5.1D annexed hereto with respect to all Subsidiaries of Company (it
being understood that such written notice shall be deemed to
supplement SCHEDULE 5.1D annexed hereto for all purposes of this
Agreement;
(xviii) BROADCASTING RATINGS: upon the request of Agent, all
copies of subscribed Arbitron rating books (winter, fall, spring,
summer) with respect to the Stations, in a form agreed upon by the
Credit Parties and Agent;
(xix) OTHER INFORMATION: with reasonable promptness, such
other information and data with respect to any Credit Party or any of
its Affiliates as from time to time may be reasonably requested by any
Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, each Credit Party will, and
will cause each of its Subsidiaries to, at all times (a) preserve and keep in
full force and effect its corporate existence and all rights and franchises
material to its business and (b) comply with all material provisions of all
franchises and licenses, all FCC Licenses, material agreements and leases to
which it is a party, and shall suffer no loss or forfeiture thereof or
thereunder.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Each Credit Party will, and will cause each of its Subsidiaries to,
pay all taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets
88
<PAGE> 96
or in respect of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; PROVIDED that no such charge or claim need be paid if being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made
therefor.
B. No Credit Party will file or consent to the filing of any
consolidated income tax return with any Person (other than the other Credit
Parties).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Each Credit Party will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear excepted, all material properties used or useful in the
business of such Credit Party and its Subsidiaries (including, without
limitation, Intellectual Property ) and from time to time will make or cause to
be made all appropriate repairs, renewals and replacements thereof. Each Credit
Party will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and businesses of its Subsidiaries against loss or damage of the
kinds customarily carried or maintained under similar circumstances by
corporations of established reputation engaged in similar businesses. Each such
policy of insurance shall name Agent as the loss payee and/or additional
insured thereunder, for the ratable benefit of Lenders, and shall provide for
at least 30 days prior written notice to Agent of any material modification or
cancellation of such policy.
6.5 INSPECTION; LENDER MEETING.
Subject to subsection 10.19, each Credit Party shall, and shall cause
each of its Subsidiaries to, permit any authorized representatives designated
by any Lender to visit and inspect any of the properties of such Credit Party
or any of its Subsidiaries, including its and their financial and accounting
records, and to make copies and take extracts therefrom, and to discuss their
affairs, finances and accounts with its and their officers and independent
public accountants (provided that such Credit Party may, if it so chooses, be
present at or participate in any such discussion), all upon reasonable notice
and at such reasonable times during normal business hours and as often as may
be reasonably requested. Without in any way limiting the foregoing, each Credit
Party will, upon the request of Agent or Requisite Lenders, participate in a
meeting of Agent and Lenders once during each Fiscal Year to be held at such
Credit Party's corporate offices (or such other location as may be agreed to by
such Credit Party and Agent) at such time as may be agreed to by such Credit
Party and Agent.
89
<PAGE> 97
6.6 COMPLIANCE WITH LAWS, ETC.
Each Credit Party shall, and shall cause each of its Subsidiaries to,
comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, noncompliance with which could reasonably
be expected to cause a Material Adverse Effect.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
A. Each Credit Party shall, and shall cause each of its Subsidiaries
to, exercise all reasonable due diligence in order to comply and cause (i) all
tenants under any leases or occupancy agreements affecting any portion of the
Facilities and (ii) all other Persons on or occupying such property, to comply
with all Environmental Laws.
B. Each Credit Party agrees that Agent may, from time to time and in
its sole and absolute discretion, retain an independent professional consultant
to review any report relating to Hazardous Materials prepared by or for such
Credit Party and to conduct its own investigation of any Facility currently
owned, leased, operated or used by such Credit Party or any of its
Subsidiaries, and each Credit Party agrees to use its best efforts to obtain
permission for Agent's professional consultant to conduct its own investigation
of any Facility previously owned, leased, operated or used by such Credit Party
or any of its Subsidiaries. Each Credit Party agrees to pay all reasonable
fees, costs, expenses incurred by Agent's professional consultant hereunder (i)
after the occurrence and during the continuation of an Event of Default or
Potential Event of Default, (ii) in connection with Agent and Lender's exercise
of its remedies hereunder or under any of the other Loan Documents, or (iii) in
the event that Agent in its reasonable discretion determines that there exists
a material risk of an Environmental Claim which could result in a Material
Adverse Effect. Each Credit Party hereby grants to Agent and its agents,
employees, consultants and contractors the right to enter into or on to the
Facilities currently owned, leased, operated or used by such Credit Party or
any of its Subsidiaries to perform such tests on such property as are
reasonably necessary to conduct such a review and/or investigation. Any such
investigation of any Facility shall be conducted, unless otherwise agreed to by
such Credit Party and Agent, upon reasonable advanced notice and during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at any such Facility or to
cause any damage or loss to any property at such Facility. Each Credit Party
and Agent hereby acknowledge and agree that any report of any investigation
conducted at the request of Agent pursuant to this subsection 6.7B will be
obtained and shall be used by Agent and Lenders for the purposes of Lenders'
internal credit decisions, to monitor and police the Loans and to protect
Lenders' security interests, if any, created by the Loan Documents. Agent
agrees to deliver a copy of any such report to such Credit Party with the
understanding that such Credit Party acknowledges and agrees that (i) it will
indemnify and hold harmless Agent and each Lender from any costs, losses or
liabilities relating to such Credit Party's use of or reliance on such report,
(ii) neither Agent nor any Lender makes any representation or warranty with
respect to such report, and (iii) by delivering such report to such Credit
Party, neither Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
90
<PAGE> 98
C. Each Credit Party shall promptly advise Lenders in writing and in
reasonable detail of (i) any Release of any Hazardous Materials required to be
reported to any federal, state or local governmental or regulatory agency under
any applicable Environmental Laws, (ii) any and all written communications with
respect to any Environmental Claims that have a reasonable possibility of
giving rise to a Material Adverse Effect or with respect to any Release of
Hazardous Materials required to be reported to any federal, state or local
governmental or regulatory agency, (iii) any remedial action taken by such
Credit Party or any other Person in response to (x) any Hazardous Materials on,
under or about any Facility, the existence of which has a reasonable
possibility of resulting in an Environmental Claim having a Material Adverse
Effect, or (y) any Environmental Claim that could have a Material Adverse
Effect, (iv) such Credit Party's discovery of any occurrence or condition on
any real property adjoining or in the vicinity of any Facility that could cause
such Facility or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws, and (v) any request for information from any governmental agency that
suggests such agency is investigating whether such Credit Party or any of its
Subsidiaries may be potentially responsible for a Release of Hazardous
Materials.
D. Each Credit Party shall promptly notify Lenders of (i) any proposed
acquisition of stock, assets, or property by such Credit Party or any of its
Subsidiaries that could reasonably be expected to expose such Credit Party or
any of its Subsidiaries to, or result in, Environmental Claims that could have
a Material Adverse Effect or that could reasonably be expected to have a
material adverse effect on any Governmental Authorization then held by such
Credit Party or any of its Subsidiaries and (ii) any proposed action to be
taken by such Credit Party or any of its Subsidiaries to commence
manufacturing, industrial or other operations that could reasonably be expected
to subject such Credit Party or any of its Subsidiaries to additional laws,
rules or regulations, including, without limitation, laws, rules and
regulations requiring additional environmental permits or licenses.
E. Each Credit Party shall, at its own expense, provide copies of such
documents or information in such Credit Party's possession or obtainable at a
reasonable cost as Agent may reasonably request in relation to any matters
disclosed pursuant to this subsection 6.7.
6.8 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
Each Credit Party shall promptly take, and shall cause each of its
Subsidiaries promptly to take, any and all necessary remedial action in
connection with the presence, storage, use, disposal, transportation or Release
of any Hazardous Materials on, under or about any Facility in order to comply
with all applicable Environmental Laws and Governmental Authorizations, except
when, and only to the extent that, such Credit Party's liability for such
presence, storage, use, disposal, transportation or discharge of any Hazardous
Materials is being contested in good faith by such Credit Party. In the event
any Credit Party or any of its Subsidiaries undertakes any remedial action with
respect to any Hazardous Materials on, under or about any Facility, such Credit
Party or such Subsidiary shall conduct and complete such remedial action in
substantial compliance with all applicable Environmental Laws, and in
accordance with the policies, orders and directives of all federal, state and
local governmental authorities.
91
<PAGE> 99
6.9 INTEREST RATE PROTECTION.
So long as the Consolidated Total Debt Ratio is greater than
4.00:1.00, at all times after the date which is 60 days after the Closing Date,
Company shall maintain in effect one or more Interest Rate Agreements with
respect to the Loans, in an aggregate notional principal amount at any time of
not less than an amount equal to 50% of the then outstanding principal balance
of the Loans, which Interest Rate Agreements shall have the effect of
establishing a maximum interest rate satisfactory to Agent with respect to such
notional principal amount, each such Interest Rate Agreement to be in form and
substance reasonably satisfactory to Agent and with a term of not less than two
years.
6.10 COMPLIANCE WITH RELATED DOCUMENTS.
Each Credit Party shall comply at all times with each of the covenants
under the Related Documents to which such Credit Party is a party. Material
waivers from compliance by such Credit Party or any other Person with the
obligations specified in such Related Documents shall not be effective as
waivers hereunder unless consented to in writing by Requisite Lenders.
6.11 TRANSFER OF FCC LICENSES TO LICENSE SUBS.
On or before the thirtieth (30th) day following the Closing Date or
the date of consummation of any Permitted Acquisition, as applicable, Company
shall have transferred or shall have caused to be transferred all of the FCC
Licenses held or acquired on or prior to such date by Company or any Operating
Sub of Company to the respective License Sub pursuant to an appropriate
Transfer FCC Consent which shall be a Final Order, and such FCC Licenses shall
be subject to an Operating Agreement substantially in the form of EXHIBIT XII
annexed hereto, and Company, each Operating Sub and each License Sub shall have
delivered to Agent all documents and instruments evidencing such assignment and
transfer and an opinion of counsel, satisfactory in form and substance to
Agent, with respect to such transfer and FCC Licenses substantially in the form
of the corresponding opinion of counsel delivered on the Closing Date.
6.12 SALE OF THE SAN DIEGO STATION, THE LEXINGTON STATION AND THE
CHARLESTON STATIONS.
In the event that any of the San Diego Station, the Lexington Station
or the Charleston Stations are still owned or operated by a Credit Party on the
date which is the one year anniversary of the Closing Date, Company and its
subsidiaries shall deliver, or cause to be delivered, (i) each of the documents
set forth in subsection 4.2B and satisfy each of the conditions set forth in
subsection 4.2B with respect to the real property assets related thereto and
(ii) copies of the Phase I environmental assessments for each tower or antenna
Facility and any other owned Facility related to such Station or Stations,
together with such other information, in form and substance satisfactory to
Agent, concerning environmental matters that Agent may require, in each case as
if such one year anniversary date were the Closing Date.
92
<PAGE> 100
SECTION 7.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each other Credit Party to perform, all
covenants in this Section 7.
7.1 INDEBTEDNESS.
The Credit Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) The Credit Parties may become and remain liable with
respect to the Obligations;
(ii) Company and the Operating Subsidiaries may become and
remain liable with respect to Contingent Obligations permitted by
subsection 7.4 and, upon any matured obligations actually arising
pursuant thereto, the Indebtedness corresponding to the Contingent
Obligations so extinguished;
(iii) Company and the Operating Subsidiaries may become and
remain liable with respect to Indebtedness in respect of Capital
Leases;
(iv) Company and the Operating Subsidiaries may become and
remain liable with respect to secured purchase money Indebtedness and
other unsecured Indebtedness (in addition to other Indebtedness
specifically permitted under this subsection 7.1) in an aggregate
amount not to exceed $1,000,000 at any time (provided that with
respect to any purchase money Indebtedness, such Indebtedness shall be
secured only by the assets purchased with the proceeds thereof and,
except as otherwise set forth in SCHEDULE 7.1 annexed hereto, at least
80% of the purchase price of such assets was provided by the proceeds
of such purchase money Indebtedness);
(v) The Subsidiaries of Company may become and remain liable
with respect to Indebtedness to Company and Company may become and
remain liable with respect to Indebtedness to a Subsidiary of Company;
PROVIDED that all such intercompany Indebtedness shall be subordinated
in right of payment to the cash payment in full of the Obligations and
any payment by any Subsidiary of Company under the Subsidiary Guaranty
shall result in a PRO TANTO reduction of the amount of any
intercompany Indebtedness owed by such Subsidiary to Company;
93
<PAGE> 101
(vi) Company, Regent of San Diego and San Diego License Sub
may become and remain liable with respect to the Jacor Note to the
extent they are parties thereto as of the Closing Date;
(vii) Company, Regent of Charleston and Charleston License
Sub may become and remain liable with respect to the Charleston Notes
to the extent they are parties thereto as of the Closing Date; and
(viii) Company, Regent of Lexington and Lexington License Sub
may become and remain liable with respect to the HMH Note to the
extent they are parties thereto as of the Closing Date.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. The Credit Parties shall not, and shall not
permit any of their respective Subsidiaries to, directly or indirectly, create,
incur, assume or permit to exist any Lien on or with respect to any property or
asset of any kind (including any document or instrument in respect of goods or
accounts receivable) of any Credit Party or any of its Subsidiaries, whether
now owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any State or under any
similar recording or notice statute, except for the following:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Security Documents;
(iii) purchase money Liens securing purchase money
Indebtedness permitted pursuant to subsection 7.1(iv); PROVIDED that
(a) the purchase of the asset subject to such Lien is permitted under
the terms of subsection 7.7 and (b) such Liens encumber only the asset
so purchased;
(iv) Liens securing Capital Leases permitted under
subsections 7.8;
(v) Liens upon only the assets and capital stock of Regent of
San Diego and San Diego License Sub acquired pursuant to the Jacor
Note Documents;
(vi) Liens upon only the assets and/or capital stock of
Company, Regent of Charleston and Charleston License Sub acquired
pursuant to the Charleston Note Documents; and
(vii) Liens upon only the assets and capital stock of Regent
of Lexington and Lexington License Sub acquired pursuant to the HMH
Note Documents.
94
<PAGE> 102
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If any Credit Party or any of
its Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Permitted Liens, it
shall make or cause to be made effective provision whereby the Obligations will
be secured by such Lien equally and ratably with any and all other Indebtedness
secured thereby as long as any such Indebtedness shall be so secured; PROVIDED
that, notwithstanding the foregoing, this covenant shall not be construed as a
consent by Requisite Lenders to the creation or assumption of any Lien other
than a Permitted Lien.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale, neither any
Credit Party nor any of its Subsidiaries shall enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties
or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO CREDIT PARTIES OR
OTHER SUBSIDIARIES. Except as provided herein, the Credit Parties will not, and
will not permit any of their respective Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such Subsidiary's capital
stock owned by such Credit Party or any other Subsidiary of such Credit Party,
(ii) repay or prepay any Indebtedness owed by such Subsidiary to such Credit
Party or any other Subsidiary of such Credit Party, (iii) make loans or
advances to such Credit Party or any other Subsidiary of such Credit Party, or
(iv) transfer any of its property or assets to such Credit Party or any other
Subsidiary of such Credit Party.
7.3 INVESTMENTS; JOINT VENTURES.
The Credit Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, make or own any Investment
in any Person, including any Joint Venture, except:
(i) The Credit Parties and their respective Subsidiaries may
make and own Investments in Cash Equivalents;
(ii) The Credit Parties and their respective Subsidiaries may
continue to own the Investments owned by them as of the Closing Date
in any of their respective Subsidiaries;
(iii) The Credit Parties and their respective Subsidiaries
may make inter-company loans to the extent permitted under subsection
7.1(v);
(iv) The Credit Parties and their respective Subsidiaries may
make Consolidated Capital Expenditures permitted by subsection 7.8;
95
<PAGE> 103
(v) The Credit Parties and their respective Subsidiaries may
make Acquisitions; and
(vi) The Credit Parties and their respective Subsidiaries may
make and own the Investments set forth in SCHEDULE 7.3.
7.4 CONTINGENT OBLIGATIONS.
The Credit Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, create or become or remain
liable with respect to any Contingent Obligation, except:
(i) The Credit Parties and their respective Subsidiaries may
become and remain liable with respect to Contingent Obligations
incurred pursuant to the Loan Documents or the Related Documents;
(ii) Company may become and remain liable with respect to
Contingent Obligations under Interest Rate Agreements required under
subsection 6.9;
(iii) Contingent Obligations with respect to transactions
permitted pursuant to subsection 7.7 (including, without limitation,
the escrow deposits made in connection with the Acquisition);
(iv) Other Contingent Obligations of the Credit Parties
existing as of the Closing Date as set forth in SCHEDULE 7.4; and
(v) Other Contingent Obligations of the Credit Parties in an
aggregate amount not to exceed $100,000 outstanding at any time.
7.5 RESTRICTED JUNIOR PAYMENTS.
The Credit Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, declare, order, pay, make
or set apart any sum for any Restricted Junior Payment; PROVIDED that (i) as
long as no Event of Default or Potential Event of Default has occurred and is
continuing or would result therefrom and (ii) the Consolidated Total Debt Ratio
is less than 4.50:1.00 (on both an historical and pro forma basis using
assumptions reasonably acceptable to Agent) at the time of such payment,
Company may pay annual Cash dividends on Company Preferred Stock in an annual
aggregate amount not to exceed 50% of the Consolidated Excess Cash Flow for the
twelve month period ending December 31 of the previous year; PROVIDED FURTHER
that as long as no Event of Default or Potential Event of Default has occurred
and is continuing or would result therefrom, Company may redeem up to
$2,500,000 plus accrued unpaid dividends of the Company's outstanding Series C
Convertible Preferred Stock, with the proceeds ("REFINANCING PROCEEDS") of the
issuance of additional Company Common Stock or additional Company Preferred
Stock.
96
<PAGE> 104
7.6 FINANCIAL COVENANTS.
A. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the ratio
of (i) Consolidated Operating Cash Flow to (ii) Consolidated Interest Expense
for any four consecutive Fiscal Quarter period ending as of the last day of any
Fiscal Quarter of Company (X) during the period from and including the Closing
Date to and including September 30, 1998 to be less than 1.75:1.00, and (Y)
thereafter to be less than 2.00:1.00; PROVIDED that for purposes of calculating
compliance with this covenant, during the period from the Closing Date to the
end of the first anniversary following the Closing Date, the amount of
Consolidated Interest Expense included in such calculation shall be annualized
on the basis of the number of post-Closing Date calendar days completed at such
time.
B. MINIMUM FIXED CHARGE COVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated Operating Cash Flow to (ii) Consolidated Fixed
Charges for any four consecutive Fiscal Quarter period ending as of the last
day of any Fiscal Quarter of Company to be less than 1.10:1.00; PROVIDED that
for purposes of calculating compliance with this covenant, during the period
from the Closing Date to the end of the first anniversary following the Closing
Date, the amount of Consolidated Fixed Charges included in such calculation
shall be annualized on the basis of the number of post-Closing Date calendar
days completed at such time.
C. MAXIMUM CONSOLIDATED TOTAL DEBT RATIO. Company shall not permit the
ratio of (i) Consolidated Total Debt to (ii) Adjusted Consolidated Operating
Cash Flow for any four- Fiscal Quarter period ending as of the last day of any
Fiscal Quarter of Company occurring during any of the fiscal years set forth
below to exceed the correlative ratio indicated:
<TABLE>
<CAPTION>
====================================================================
MAXIMUM
FISCAL YEAR LEVERAGE RATIO
- --------------------------------------------------------------------
<S> <C> <C>
Closing Date - March 31, 1998 6.00:1.00
- --------------------------------------------------------------------
April 1, 1998 - June 30, 1998 5.50:1.00
- --------------------------------------------------------------------
July 1, 1998 - September 30, 1998 5.25:1.00
- --------------------------------------------------------------------
October 1, 1998 - March 31, 1999 5.00:1.00
- --------------------------------------------------------------------
January 1, 1999 - September 30, 1999 4.75:1.00
- --------------------------------------------------------------------
October 1, 1999 - March 31, 2000 4.50:1.00
- --------------------------------------------------------------------
April 1, 2000 - September 30, 2000 4.00:1.00
- --------------------------------------------------------------------
October 1, 2000 and thereafter 3.50:1.00
====================================================================
</TABLE>
97
<PAGE> 105
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
The Credit Parties shall not, and shall not permit any of their
respective Subsidiaries to, alter the corporate, capital or legal structure of
the Credit Parties or any of their respective Subsidiaries, or enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
sub-lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or fixed assets,
whether now owned or hereafter acquired (other than sales including the sale,
transfer, replacement or other disposition of equipment and inventory, in each
case, in the ordinary course of business), or acquire by purchase or otherwise
all or substantially all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person or any division or line
of business of any Person or enter into any LMA except:
(i) Capital Expenditures permitted pursuant to subsection
7.8;
(ii) So long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, or would result
therefrom, Company and its Subsidiaries may consummate the Charleston
Acquisition, the Faircom Acquisition and the Park Lane Acquisition and
other acquisitions of radio broadcasting stations (each, a "PERMITTED
ACQUISITION") may enter into or continue LMA's for radio broadcasting
stations; PROVIDED that, in the case of a Permitted Acquisition, each
of the conditions set forth in subsection 4.3 have been satisfied;
PROVIDED FURTHER that, in the case of an LMA each of the following
conditions shall be satisfied:
(a) there shall be no obligation on the part of
Company or any of its Subsidiaries to acquire any Station or
assets other than in accordance with this Agreement and,
without limiting the foregoing, the terms and conditions of
such LMA shall be in form and substance satisfactory to
Requisite Lenders;
(b) such LMA shall only be entered into in by
Company or its Subsidiaries as a lessee with respect to radio
broadcasting stations Company or its Subsidiaries would
otherwise be permitted to acquire in accordance with this
subsection 7.7(ii);
(c) Company and its Subsidiaries' rights, title and
interest in and to such LMA shall be subject to a First
Priority Lien in favor of Agent on behalf of Lenders; and
(d) Company shall have delivered to Agent a
Compliance Certificate, substantially in the form of EXHIBIT
VI annexed hereto, dated as of the date Company or its
Subsidiaries enter into such LMA and calculated to give
effect to the funding of Revolving Loans under this Agreement
after giving effect to such LMA, demonstrating compliance
with the covenants set forth in this Agreement after giving
effect to such LMA.
98
<PAGE> 106
(iii) Subject to the prepayment requirements of subsection
2.4B(iii) and as long as no Event of Default or Potential Event of
Default shall have occurred and be continuing or would result
therefrom, Company and its Subsidiaries may sell the San Diego
Station, the Lexington Station and/or the Charleston Stations for a
cash purchase price equal to at least the fair market value of such
Stations; and
(iv) Subject to subsection 7.11 and the prepayment
requirements of subsection 2.4B(iii), Company may issue additional
common stock and Company Preferred Stock so long as such additional
common stock and Company Preferred Stock have the same, or
substantially the same, attributes and provisions as such capital
stock as of the Closing Date; PROVIDED that Company may issue
additional common stock and Company Preferred Stock with different
attributes and provisions upon the prior written consent of Requisite
Lenders.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
The Credit Parties shall not, and shall not permit their respective
Subsidiaries to, make or incur Consolidated Capital Expenditures, in any Fiscal
Year, in an aggregate amount in excess of $1,500,000.
7.9 SALES AND LEASE-BACKS.
The Credit Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, become or remain liable as
lessee or as a guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, (i) which Credit Parties or
any of their respective Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than the Credit Parties or any of their
respective Subsidiaries) or (ii) which Credit Parties or any of the respective
Subsidiaries intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by the Credit Parties
or any of their respective Subsidiaries to any Person (other than the Credit
Parties or any of their respective Subsidiaries) in connection with such lease.
7.10 SALE OR DISCOUNT OF RECEIVABLES.
The Credit Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable.
7.11 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
The Credit Parties shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with any holder of
5% or more of any class of equity Securities of any Credit Party or with any
Affiliates
99
<PAGE> 107
of any Credit Party or of any such holder, on terms that are less favorable to
such Credit Party or such Subsidiary, as the case may be, than those that might
be obtained at the time from Persons who are not such a holder or Affiliate;
PROVIDED that the foregoing restrictions shall not apply to (i) any
transactions between the Company and any of its wholly-owned Subsidiaries or
between any such Subsidiary and any of its wholly-owned Subsidiaries or (ii)
reasonable and customary fees paid to members of the Boards of Directors of the
Credit Parties and their respective Subsidiaries.
7.12 DISPOSAL OF SUBSIDIARY STOCK.
The Credit Parties shall not, except as specifically permitted under
subsection 7.7 or subsection 7.2:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of their respective Subsidiaries, except to qualify
directors if required by applicable law; or
(ii) permit any of their respective Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber or dispose of
any shares of capital stock or other equity Securities of the Credit
Parties' respective Subsidiaries (including such Subsidiary), except
with respect to the Sellers Notes or to Agent pursuant to the terms of
the Security Documents, the Credit Parties, another Subsidiary of any
Credit Party, or to qualify directors if required by applicable law.
7.13 CONDUCT OF BUSINESS
From and after the Closing Date, no Credit Party will engage in any
business other than (i) the business engaged in by such Credit Party on the
Closing Date, and similar or related businesses, (ii) subject to subsection
7.7, each Credit Party may, from time to time, enter into and perform its
obligations under LMA's, and (iii) such other lines of business as may be
consented to by Agent and Requisite Lenders; PROVIDED that, notwithstanding
anything to the contrary in this Agreement, including, without limitation, any
references to "Subsidiaries", no Credit Party shall operate, or hold any
interest in, any radio broadcast station other than the ownership and operation
of the Stations by the Operating Subs and ownership of the FCC Licenses for the
Stations by the applicable License Sub (including Stations acquired pursuant to
Permitted Acquisitions) and the operation by Operating Subs of radio broadcast
stations in accordance with the preceding clause (ii); PROVIDED FURTHER that
each License Sub shall not engage in any business or incur any liabilities
other than the ownership of its FCC Licenses and the execution, delivery and
performance of the Loan Documents and Related Documents to which it is a party
and activities incidental to the foregoing.
7.14 AMENDMENTS OR WAIVERS OF RELATED DOCUMENTS AND CHARTER DOCUMENTS
A. NO AMENDMENT OR WAIVER OF RELATED DOCUMENTS. Without obtaining the
written consent of Requisite Lenders, no Credit Party will agree to any
amendment to, or waive
100
<PAGE> 108
any of its rights under, (i) any of the Sellers Note Documents or (ii) any of
the other Related Documents (other than non-material amendments or waivers of
such other Related Documents which individually, or together with all other
amendments, waivers or changes made, would not be adverse to any Credit Party,
Agent or any Lender).
B. CHARTER DOCUMENTS. No Credit Party will agree to any material
amendment to, or waive any of its material rights under, its certificates or
articles of incorporation, bylaws or other documents relating to its capital
stock (other than non-material amendments or waivers which individually, or
together with all other amendments, waivers or changes made, would not be
adverse to any Credit Party, Agent or any Lender) without, in each case,
obtaining the written consent of Requisite Lenders to such amendment or waiver.
7.15 FISCAL YEAR
No Credit Party shall change its fiscal year-end from December 31
without the consent of Requisite Lenders.
7.16 OVERHEAD.
Company may make payments of Overhead in an aggregate amount for each
such fiscal year not to exceed the correlative amount indicated below:
<TABLE>
<CAPTION>
================================================================
AGGREGATE
FISCAL YEAR OVERHEAD
- ----------------------------------------------------------------
<S> <C>
1997 $1,200,000
- ----------------------------------------------------------------
1998 $1,260,000
- ----------------------------------------------------------------
1999 $1,323,000
- ----------------------------------------------------------------
2000 $1,389,150
- ----------------------------------------------------------------
2001 $1,458,608
- ----------------------------------------------------------------
2002 $1,531,538
- ----------------------------------------------------------------
2003 $1,608,115
- ----------------------------------------------------------------
2004 $1,688,521
================================================================
</TABLE>
101
<PAGE> 109
SECTION 8.
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of or interest
on any Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; failure by Company
to pay when due any amount payable to Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or failure by Company to pay or any fee or
any other amount due under this Agreement within two Business Days after the
date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of any Credit Party to pay when due (including any
applicable grace period) (a) any principal of or interest on the Sellers Notes
or any other Indebtedness (other than Indebtedness referred to in subsection
8.1) in an individual principal amount of $100,000 or more or any items of
Indebtedness with an aggregate principal amount of $100,000 or more or (b) any
Contingent Obligation in an individual principal amount of $100,000 or more or
any Contingent Obligations with an aggregate principal amount of $100,000 or
more, in each case beyond the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its Subsidiaries with respect to
any other material term of (a) the Sellers Notes or any evidence of any other
Indebtedness in an individual principal amount of $100,000 or more or any items
of Indebtedness with an aggregate principal amount of $100,000 or more or any
Contingent Obligation in an individual principal amount of $100,000 or more or
any Contingent Obligations with an aggregate principal amount of $100,000 or
more or (b) any of the Sellers Note Documents or any loan agreement, mortgage,
indenture or other agreement relating to such other Indebtedness or Contingent
Obligation(s), if the effect of such breach or default is to cause, or to
permit the holder or holders of that Indebtedness or Contingent Obligation(s)
(or a trustee on behalf of such holder or holders) to cause, the Sellers Notes
or such other Indebtedness or Contingent Obligation(s) to become or be declared
due and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5, 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
any Credit Party or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time
102
<PAGE> 110
given by such Credit Party or any of its respective Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be
false in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Credit Party shall default in the performance of or compliance
with any term contained in this Agreement or any of the other Loan Documents,
other than any such term referred to in any other subsection of this Section 8,
and such default shall not have been remedied or waived within 30 days after
the earlier of (i) an officer of Company shall have obtained knowledge of such
default or (ii) receipt by Company of notice from Agent or any Lender of such
default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of any Credit Party in an involuntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable federal or state
law; or (ii) an involuntary case shall be commenced against any Credit Party
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over such Credit Party, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee or other custodian of such Credit
Party for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of such Credit Party, and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Any Credit Party shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under
any such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; or any Credit Party shall make any assignment for the benefit of
creditors; or (ii) any Credit Party shall be unable, or shall fail generally,
or shall admit in writing its inability, to pay its debts as such debts become
due; or the Board of Directors of any Credit Party (or any committee thereof)
shall adopt any resolution or otherwise authorize any action to approve any of
the actions referred to in clause (i) above or this clause (ii); or
103
<PAGE> 111
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $100,000 or (ii) in
the aggregate at any time an amount in excess of $100,000 (in either case not
adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days
(or in any event later than five days prior to the date of any proposed sale
thereunder); or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against any Credit
Party decreeing the dissolution or split up of such Credit Party or such
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Company or any of its ERISA Affiliates in excess of $100,000 during the term
of this Agreement; or there shall exist an amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in
the aggregate for all Pension Plans (excluding for purposes of such computation
any Pension Plans with respect to which assets exceed benefit liabilities),
which exceeds $100,000; or
8.11 CHANGE IN CONTROL.
There shall occur any Change of Control; or
8.12 FAILURE OF SECURITY OR GUARANTY
The Subsidiary Guaranty or any Security Document shall, at any time,
cease to be in full force and effect (other than by reason of a release of
Collateral in accordance with the terms thereof or the satisfaction in full of
all Obligations) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any party thereto, or the Agent
shall not have or cease to have a valid and perfected First Priority security
interest in the Collateral (subject to Permitted Liens) to the extent
contemplated by the Security Documents; or
8.13 FCC LICENSES
Any FCC License (other than auxiliary service licenses) relating to a
Station shall be canceled, terminated, modified in any material adverse
respect, renewed on terms that materially and adversely affect the economic or
commercial value thereof, or finally denied renewal for any reason; or
104
<PAGE> 112
8.14 ACQUISITION FCC CONSENT
Any Credit Party shall fail to comply with any Acquisition FCC Consent
or Transfer FCC Consent, or any Acquisition FCC Consent or Transfer FCC Consent
shall be rescinded, shall no longer be in full force and effect, or the
effectiveness thereof shall have been stayed by judicial proceedings; or
8.15 MATERIAL ADVERSE EFFECT
Any event or changes shall occur that has caused or evidences either
in any case or in the aggregate, a Material Adverse Effect;
8.16 FAIRCOM AND PARK LANE ACQUISITIONS
The Faircom Acquisition and the Park Lane Acquisition shall not have
been consummated on or before March 31, 1998, or any of the Faircom Acquisition
Documents or the Park Lane Acquisition Documents shall have been terminated at
any time for any reason (other than the consummation of such acquisition); or
8.17 LETTERS OF CREDIT
Any Letter of Credit issued during the period from the Effective Date
to the Closing Date is not cash collateralized for any reason other than the
cancellation or termination of such Letter of Credit;
THEN (i) upon the occurrence of any Event of Default described in subsection
8.6 or 8.7, each of (a) the unpaid principal amount of and accrued interest on
the Loans and (b) an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit) (such amount to be held by
Collateral Agent pursuant to the Collateral Account Agreement), and (c) all
other Obligations shall automatically become immediately due and payable,
without presentment, demand, protest or other requirements of any kind, all of
which are hereby expressly waived by Company, and the obligation of each Lender
to make any Loan, the obligation of Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) upon the occurrence and during the continuation of any
other Event of Default, Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Agent to issue
any Letter of Credit and the right of any Lender to issue any Letter of Credit
hereunder shall thereupon terminate; PROVIDED that the foregoing shall not
affect in any way the obligations of Lenders under subsection 3.3C(i).
105
<PAGE> 113
In addition, upon the occurrence of any Event of Default, Company
shall promptly enter into, and comply with the provisions of, a collateral
account agreement with such terms and conditions satisfactory to Agent in its
sole discretion. Any amounts described in clause (b) above, when received by
Agent, shall be held by Agent pursuant to the terms of such collateral account
agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
such paragraph Company shall pay all arrears of interest and all payments on
account of principal which shall have become due otherwise than as a result of
such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than non-payment of
the principal of and accrued interest on the Loans, in each case which is due
and payable solely by virtue of acceleration) shall be remedied or waived
pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended to
benefit Company and do not grant Company the right to require Lenders to
rescind or annul any acceleration hereunder, even if the conditions set forth
herein are met.
SECTION 9.
AGENT; DOCUMENTATION AGENT
9.1 APPOINTMENT.
Bank of Montreal is hereby appointed Agent hereunder and General
Electric Capital Corporation is hereby appointed Documentation Agent hereunder
and under the other Loan Documents and each Lender hereby authorizes Agent to
act as its agent in accordance with the terms of this Agreement and the other
Loan Documents. Agent agrees to act upon the express conditions contained in
this Agreement and the other Loan Documents, as applicable. The provisions of
this Section 9 are solely for the benefit of Agent, Documentation Agent and
Lenders and neither any Credit Party nor any of its Subsidiaries shall have any
rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, Agent and
Documentation Agent shall act solely as an agent of Lenders, Agent and
Documentation Agent do not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for any Credit
Party or any of its Subsidiaries.
9.2 POWERS; GENERAL IMMUNITY.
A. DUTIES SPECIFIED. Each Lender irrevocably authorizes Agent to take
such action on such Lender's behalf and to exercise such powers hereunder and
under the other Loan Documents as are specifically delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Agent shall have only those duties and
106
<PAGE> 114
responsibilities that are expressly specified in this Agreement and the other
Loan Documents and it may perform such duties by or through its agents or
employees. Agent shall not have, by reason of this Agreement or any of the
other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein. Anything in this Agreement or
the other Loan Documents to the contrary notwithstanding, Documentation Agent
shall not have any duties or responsibilities hereunder or under any Loan
Documents other than its duties and responsibilities as a Lender hereunder and
thereunder.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent and Documentation
Agent shall not be responsible to any Lender for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any other Loan Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statements or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by Agent or Documentation
Agent to Lenders or by or on behalf of any Credit Party to Agent or
Documentation Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of any Credit Party or any other Person liable for the payment of any
Obligations, nor shall Agent or Documentation Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or
as to the use of the proceeds of the Loans or the use of the Letters of Credit
or as to the existence or possible existence of any Event of Default or
Potential Event of Default. Anything contained in this Agreement to the
contrary notwithstanding, Agent and Documentation Agent shall not have any
liability arising from confirmations of the amount of outstanding Loans or the
Letter of Credit Usage or the components amounts thereof.
C. EXCULPATORY PROVISIONS. None of Agent, Documentation Agent or any
of their respective officers, directors, employees or agents shall be liable to
Lenders for any action taken or omitted by Agent or Documentation Agent under
or in connection with any of the Loan Documents except to the extent caused by
their own gross negligence or willful misconduct. If Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any of the
other Loan Documents, Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received instructions from
Requisite Lenders. Without prejudice to the generality of the foregoing, (i)
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for the Credit Parties and their
respective Subsidiaries), accountants, experts and other professional advisors
selected by it; and (ii) no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or (where so instructed) refraining
from acting under this Agreement or any of the other Loan Documents in
accordance with the instructions of
107
<PAGE> 115
Requisite Lenders. Agent shall be entitled to refrain from exercising any
power, discretion or authority vested in it under this Agreement or any of the
other Loan Documents unless and until it has obtained the instructions of
Requisite Lenders.
D. AGENT AND DOCUMENTATION AGENT ENTITLED TO ACT AS LENDER. The agency
hereby created shall in no way impair or affect any of the rights and powers
of, or impose any duties or obligations upon, Agent or Documentation Agent in
their individual capacity as a Lender hereunder. With respect to its
participation in the Loans and the Letters of Credit, Agent and Documentation
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include Agent and
Documentation Agent in their individual capacity. Agent, Documentation Agent
and their respective Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial advisory or other
business with any Credit Party or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from any Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Credit
Parties and their respective Subsidiaries in connection with the making of the
Loans and the issuance of Letters of Credit hereunder and that it has made and
shall continue to make its own appraisal of the creditworthiness of the Credit
Parties and their respective Subsidiaries. Agent and Documentation Agent shall
not have any duty or responsibility, either initially or on a continuing basis,
to make any such investigation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans or at any
time or times thereafter, and Agent and Documentation Agent shall not have any
responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Agent, to the extent that Agent shall not have been reimbursed by
Company or another Credit Party, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in performing its duties hereunder or
under the other Loan Documents or otherwise in its capacity as Agent in any way
relating to or arising out of this Agreement or the other Loan Documents;
PROVIDED that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or
108
<PAGE> 116
disbursements resulting from Agent's gross negligence or willful misconduct. If
any indemnity furnished to Agent for any purpose shall, in the opinion of
Agent, be insufficient or become impaired, Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
9.5 SUCCESSOR AGENT.
Agent may resign at any time by giving 30 days' prior written notice
thereof to Lenders and Company, and Agent may be removed at any time with or
without cause by an instrument or concurrent instruments in writing delivered
to Company and Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Agent. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent and the
retiring or removed Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Agent's resignation or
removal hereunder as Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
9.6 SECURITY DOCUMENTS, ETC.
A. SECURITY DOCUMENTS. Each Lender hereby further authorizes Agent to
enter into the Security Documents as secured party, and to accept the
Subsidiary Guaranty, in each case on behalf of and for the benefit of Lenders
and agrees to be bound by the terms of the Security Documents and the
Subsidiary Guaranty; PROVIDED that Agent shall not enter into or consent to any
amendment, modification, termination or waiver of any provision contained in
the Security Documents or the Subsidiary Guaranty without the prior consent of
Requisite Lenders; PROVIDED FURTHER, that anything in this Agreement or the
other Loan Documents to the contrary notwithstanding:
(i) Agent is authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from the Lenders, from
time to time to take any action with respect to any Collateral or the
Security Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral
granted pursuant to the Security Documents.
(ii) The Lenders irrevocably authorize Agent, at its option
and in its discretion, to release any Lien granted to or held by Agent
upon any Collateral (a) upon termination of the Commitments and
payment in full of the Loans and all other Obligations payable under
this Agreement and under any other Loan Document; (b) constituting
property sold or to be sold or disposed of as part of or in connection
with any disposition permitted hereunder or under the Security
Documents; (c) constituting property in which any Credit Party owned
no interest at the time the Lien was granted or at any time
thereafter; (d) constituting property leased to any Credit Party under
a
109
<PAGE> 117
lease which has expired or been terminated in a transaction permitted
under this Agreement or is about to expire and which has not been, and
is not intended by such Credit Party to be, renewed or extended; (e)
consisting of an instrument evidencing Indebtedness if the
Indebtedness evidenced thereby has been paid in full; or (f) if
otherwise approved, authorized or ratified in writing by Requisite
Lenders, subject to subsection 10.6. Upon request by Agent at any
time, Lenders will confirm in writing Agent's authority to release
particular types or items of Collateral pursuant to this subsection
9.6.
B. LENDER ACTION. Anything contained in any of the Loan Documents to
the contrary notwithstanding, each Lender agrees that no Lender shall have any
right individually to realize upon any of the Collateral under the Security
Documents (including without limitation through the exercise of a right of
set-off against call deposits of such Lender in which any funds on deposit in
the Security Documents may from time to time be invested) or enforce any remedy
or make any demand pursuant to the Subsidiary Guaranty, it being understood and
agreed that all rights and remedies under the Security Documents and the
Subsidiary Guaranty may be exercised solely by Agent for the benefit of Lenders
in accordance with the terms thereof.
9.7 APPOINTMENT OF SEPARATE AGENT.
At any time or times deemed necessary or advisable by Agent or
Requisite Lenders, including for purposes of complying with Section 310(b) of
the Communications Act and for purposes of enforcing any right or remedy
hereunder, Agent or Requisite Lenders may appoint one or more Persons to act as
a separate agent or co-agent to the full extent permitted by law and in
accordance with such instructions and directions as Agent or Requisite Lenders,
as the case may be, may specify. All provisions of this Agreement which are for
the benefit of the Agent shall extend to and apply to each separate agent or
co-agent appointed pursuant to the foregoing provisions. The powers of any
separate agent or co-agent shall not exceed those of the Agent hereunder.
SECTION 10.
MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Each Lender shall have the right at any time to (i) sell,
assign or transfer to any Eligible Assignee, or (ii) sell participations to any
Person in, all or any part of its Commitments or any Loan or Loans made by it
or its Letters of Credit or participations therein or any other interest herein
or in any other Obligations owed to it; PROVIDED that no such sale, assignment,
transfer or participation shall, without the consent of Company, require
Company to file a registration statement with the Securities and Exchange
Commission or apply to qualify such sale, assignment, transfer or participation
under the securities laws of any state; and PROVIDED, FURTHER that no such
sale, assignment, transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or
110
<PAGE> 118
participation of a corresponding interest in the Revolving Loan Commitment and
the Revolving Loans of the Lender effecting such sale, assignment, transfer or
participation. Except as otherwise provided in this subsection 10.1, no Lender
shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or
any granting of participations in, all or any part of its Commitments or the
Loans, the Letters of Credit or participations therein, or other Obligations
owed to such Lender.
B. ASSIGNMENTS.
(i) AMOUNTS AND TERMS OF ASSIGNMENTS. Each Commitment, Loan,
Letter of Credit or participation therein, or other Obligation may (a)
be assigned in any amount to another Lender, or to an Affiliate of the
assigning Lender or another Lender, with the giving of notice to
Company and Agent and with the consent of Company and Agent (which
consent of Company and Agent shall not be unreasonably withheld and
which consent, in any case, shall not be required at any time that an
Event of Default has occurred and is continuing or if such assignment
is necessary or advisable to comply with any applicable law or
governmental regulation binding upon such Lender) or (b) be assigned
in an aggregate amount of not less than $1,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitments,
Loans, Letters of Credit and participation therein, and other
Obligations of the assigning Lender) to any other Eligible Assignee
with the giving of notice to Company and Agent and with the consent of
Company and Agent (which consent of Company and Agent shall not be
unreasonably withheld and which consent, in the case of Company, shall
not be required at any time that an Event of Default has occurred and
is continuing); PROVIDED that any such assignment in accordance with
either clause (a) or (b) above shall effect a pro rata assignment of
both the Revolving Loan Commitment and the Revolving Loan of the
assigning Lender (including any corresponding interest in any Letter
of Credit). To the extent of any such assignment in accordance with
either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its Commitments, Loans, Letters of
Credit or participations therein, or other Obligations or the portion
thereof so assigned. The parties to each such assignment shall execute
and deliver to Agent, for its acceptance, an assignment agreement,
together with a processing fee of $2,500 (for which no Credit Party
shall have any responsibility or liability) and such forms,
certificates or other evidence, if any, with respect to United States
federal income tax withholding matters as the assignee under such
assignment agreement may be required to deliver to Agent pursuant to
subsection 2.7B(iii)(a). Upon such execution, delivery, and
acceptance, from and after the effective date specified in such
assignment agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such assignment agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such assignment
agreement, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an assignment agreement
covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a
party hereto; PROVIDED
111
<PAGE> 119
that, anything contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is Issuing Lender with respect to any
outstanding Letters of Credit such Lender shall continue to have all
rights and obligations of Issuing Lender with respect to such Letters
of Credit until the cancellation or expiration of such Letters of
Credit and the reimbursement of any amounts drawn thereunder). The
Commitments hereunder shall be modified to reflect the Commitment of
such assignee and any remaining Commitment of such assigning Lender
and, if any such assignment occurs after the issuance of the Notes
hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its
applicable Notes, if any, to Agent for cancellation, and thereupon new
Notes shall be issued to the assignee and to the assigning Lender,
substantially in the form of EXHIBIT IV annexed hereto, with
appropriate insertions, to reflect the new Commitments, as the case
may be, of the assignee and the assigning Lender.
(ii) ACCEPTANCE BY AGENT. Upon its receipt of an assignment
agreement executed by an assigning Lender and an assignee representing
that it is an Eligible Assignee, together with the processing fee
referred to in subsection 10.1B(i) and any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to
Agent pursuant to subsection 2.7B(iii)(a), Agent shall, if such
assignment agreement has been completed and is acceptable in form and
substance to Agent, and if Agent and Company have consented to the
assignment evidenced thereby (in each case to the extent such consent
is required pursuant to subsection 10.1B(i)), (a) accept such
assignment agreement by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required consent of Agent
to such assignment) and (b) give prompt notice thereof to Company.
Agent shall maintain a copy of each assignment agreement delivered to
and accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the regularly scheduled maturity of any
portion of the principal amount of or interest on any Loan allocated to such
participation or (ii) a reduction of the principal amount of or the rate of
interest payable on any Loan allocated to such participation, and all amounts
payable by Company hereunder (including without limitation amounts payable to
such Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as
if such Lender had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5,
(a) any participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 10.1, any Lender may assign and pledge all or any portion of its
Loans, the other Obligations owed to such Lender, and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating circular issued by
such
112
<PAGE> 120
Federal Reserve Bank; PROVIDED that (i) no Lender shall, as between Company and
such Lender, be relieved of any of its obligations hereunder as a result of any
such assignment and pledge and (ii) in no event shall such Federal Reserve Bank
be considered to be a "Lender" or be entitled to require the assigning Lender
to take or omit to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning the
Credit Parties and their respective Subsidiaries in the possession of that
Lender from time to time to assignees and participants (including prospective
assignees and participants), subject to subsection 10.19.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents; (ii) all the
reasonable costs of furnishing all opinions by counsel for the Credit Parties
(including without limitation any opinions requested by Lenders as to any legal
matters arising hereunder) and all costs of the Credit Parties' performance of
and compliance with all agreements and conditions on their respective parts to
be performed or complied with under this Agreement and the other Loan Documents
including, without limitation, with respect to confirming compliance with
environmental and insurance requirements; (iii) the reasonable fees, expenses
and disbursements of counsel to Agent (including allocated costs of internal
counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loans and any consents,
amendments, waivers or other modifications hereto or thereto and any other
documents or matters requested by any Credit Party; (iv) all other actual and
reasonable costs and expenses incurred by Agent in connection with the
syndication of the Commitments and the negotiation, preparation and execution
of the Loan Documents and the transactions contemplated hereby and thereby
(except that no Credit Party shall be required to pay financing fees or any
other fees or expenses of any syndication member unless agreed upon separately
by Company); and (v) after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Agent and Lenders in
enforcing any Obligations of or in collecting any payments due from any Credit
Party hereunder or under the other Loan Documents by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Agent and Lenders,
and the officers, directors, employees, agents and affiliates of Agent and
Lenders (collectively called the "INDEMNITEES") from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees and disbursements
of counsel for such Indemnitees in connection with any
113
<PAGE> 121
investigative, administrative or judicial proceeding commenced or threatened by
any Person (including, without limitation, any Credit Party or Affiliate
thereof), whether or not any such Indemnitee shall be designated as a party or
a potential party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including without limitation securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby (including without limitation Lenders' agreement
to make the Loans hereunder or the use or intended use of the proceeds of any
of the Loans or the issuance of Letters of Credit hereunder or the use or
intended use of any of the Letters of Credit) or the statements contained in
the commitment letter delivered by any Lender to Company with respect thereto
(collectively called the "INDEMNIFIED LIABILITIES"); PROVIDED that Company
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as
determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Company shall contribute as necessary up to the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or
from time to time, without notice to Company or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or
unmatured, but not including trust accounts) and any other Indebtedness at any
time held or owing by that Lender to or for the credit or the account of
Company against and on account of the obligations and liabilities of Company to
that Lender under this Agreement, the Letters of Credit and participations
therein and the other Loan Documents, including, but not limited to, all claims
of any nature or description arising out of or connected with this Agreement,
the Letters of Credit and participations therein or any other Loan Document,
irrespective of whether or not (i) that Lender shall have made any demand
hereunder or (ii) the principal of or the interest on the Loans or any amounts
in respect of the Letters of Credit or any other amounts due hereunder shall
have become due and payable pursuant to Section 8 and although said obligations
and liabilities, or any of them, may be contingent or unmatured. Company hereby
further grants to Agent and each Lender a security interest in all deposits and
accounts maintained with Agent or such Lender as security for the Obligations.
114
<PAGE> 122
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the
exercise of any right of set-off or banker's lien, by counterclaim or cross
action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to that Lender hereunder
or under the other Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE" to
such Lender) which is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the
other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to them;
PROVIDED that if all or part of such proportionately greater payment received
by such purchasing Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of Company or otherwise, those purchases shall be
rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; PROVIDED that any such amendment, modification, termination,
waiver or consent which: (i) postpones the scheduled final maturity date of any
of the Loans; changes in any manner the method for calculating "Pro Rata Share"
or "Requisite Lenders"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; releases any Lien granted in favor of Agent with respect to any
material portion of the Collateral; or changes in any manner the provisions
contained in subsection 8.1 or this subsection 10.6 shall be effective, in each
case, only if evidenced by a writing signed by or on behalf of all Lenders, and
(ii) increases the amount of any of the Commitments or reduces the principal
amount of any of the Loans; reduces the amount of, or postpones the date of,
any scheduled or mandatory installment of principal of, or commitment reduction
with respect to, any of the Loans; postpones the date on which any interest or
any fees are payable with respect to any Loans; decreases the interest rate
borne by any of the Loans (other than any waiver of any increase in the
interest rate applicable to any of the Loans pursuant to subsection 2.2E) or
the amount of any fees payable hereunder with respect to any Loans; increases
the maximum duration of
115
<PAGE> 123
Interest Periods permitted hereunder with respect to any Loans; reduces the
amount or postpones the due date of any amount payable in respect of, or
extends the required expiration date of, any Letter of Credit; or changes in
any manner the obligations of Lenders relating to the purchase of
participations in Letters of Credit, shall be effective, in each case, only if
evidenced by a writing signed by or on behalf of all Lenders holding the Loans
or Letters of Credit (or having a Commitment with respect thereto) which are
the subject of such amendment, modification, termination, waiver or consent. In
addition, (i) any amendment, modification, termination or waiver of any of the
provisions contained in Section 4 shall be effective only if evidenced by a
writing signed by or on behalf of Agent and Requisite Lenders, (ii) no
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the Lender which is the
holder of that Note, and (iii) no amendment, modification, termination or
waiver of any provision of Section 9 or of any other provision of this
Agreement which, by its terms, expressly requires the approval or concurrence
of Agent shall be effective without the written concurrence of Agent. Agent
may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that
Lender. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No notice to or demand on
Company in any case shall entitle Company to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 10.6
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by Company, on Company.
10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be
within the limitations of, another covenant shall not avoid the occurrence of
an Event of Default or Potential Event of Default if such action is taken or
condition exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered
in person or by courier service, upon receipt of telefacsimile or telex if
received by 5 p.m. (local time) on a Business Day (or if not received by such
time on a Business Day, the telefacsimile or telex shall be deemed received on
the next Business Day), or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed; PROVIDED that
notices to Agent shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or (i) as to Company and Agent, such
other address as shall be designated by such Person in a written notice
delivered to the other parties hereto and (ii) as to each other party, such
other address as shall be designated by such party in a written notice
delivered to Agent.
116
<PAGE> 124
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the
Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4, 10.5 and 10.19 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of
any amounts drawn hereunder, and the termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise
thereof or of any other power, right or privilege. All rights and remedies
existing under this Agreement and the other Loan Documents are cumulative to,
and not exclusive of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Agent nor any Lender shall be under any obligation to marshal
any assets in favor of Company or any other party or against or in payment of
any or all of the Obligations. To the extent that a Credit Party makes a
payment or payments to Agent or Lenders (or to Agent for the benefit of
Lenders), or Agent or Lenders enforce any security interests or exercise their
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
117
<PAGE> 125
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no
action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not
be necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER
LOAN DOCUMENT OR SUCH OBLIGATION. Company hereby agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return
118
<PAGE> 126
receipt requested, to Company at its address provided in subsection 10.8, such
service being hereby acknowledged by Company to be sufficient for personal
jurisdiction in any action against Company in any such court and to be
otherwise effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of any Lender to bring proceedings against Company in the
courts of any other jurisdiction.
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER
RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that
each has already relied on this waiver in entering into this Agreement, and
that each will continue to rely on this waiver in their related future
dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information identified by
Company as confidential obtained pursuant to the requirements of this Agreement
in accordance with such Lender's customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices, it being understood and agreed by Company that in any event a Lender
may make disclosures reasonably required by any bona fide assignee, transferee
or participant in connection with the contemplated assignment or transfer by
such Lender of any Loans or any participation therein or as required or
requested by any governmental agency or representative thereof or pursuant to
legal process; PROVIDED that, unless specifically prohibited by applicable law
or court order, each Lender shall notify Company of any request by any
governmental agency or representative thereof (other than any such request in
connection with any examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information; and
119
<PAGE> 127
PROVIDED, FURTHER that in no event shall any Lender be obligated or required to
return any materials furnished by the Credit Parties or any of their respective
Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon (i) the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Agent of written or telephonic notification of such execution and authorization
of delivery thereof and (ii) satisfaction of each of the conditions set forth
in subsection 4.1.
[Remainder of page intentionally left blank]
120
<PAGE> 128
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
REGENT COMMUNICATIONS, INC.
By: /s/Terry S. Jacobs
--------------------------
Name: Terry S. Jacobs
Title: Chairman & CEO
Notice Address:
Suite 180
50 East River Center Boulevard
Covington, Kentucky 41011
Attention: Terry S. Jacobs
Telecopy: (606) 292-0352
S-1
<PAGE> 129
LENDERS:
BANK OF MONTREAL, CHICAGO BRANCH,
individually and as Agent
By:
/s/M.Andres
------------------------------
Name: M. Andres
Title: M.D.
Notice Address:
16th Floor
430 Park Avenue
New York, New York 10022
Attention: Michael Andres
Telecopy: (212) 605-1648
2
<PAGE> 130
GENERAL ELECTRIC CAPITAL
CORPORATION, individually and as
Documentation Agent
By:/s/Thomas P. Waters
-----------------------------
Name: Thomas P. Waters
Title: Senior Vice President
Notice Address:
Suite 600
3379 Peachtree Road, N.E.
Atlanta, Georgia 30326
Attention: Thomas Waters
Telecopy: (404) 842-1533
S-3
<PAGE> 131
BANK ONE, INDIANAPOLIS, NA
By: /s/Dale C. Arfman
--------------------------
Name: Dale C. Arfman
Title: Vice President
Notice Address:
Bank One Center/Tower
111 Monument Circle
Suite 1911
P.O. Box 7700
Indianapolis, Indiana 46277
Attention: Dale Arfman
Telecopy: (317) 321-8830
S-4
<PAGE> 1
Exhibit 4(k)
REVOLVING NOTE
REGENT COMMUNICATIONS, INC.
$20,000,000 NEW YORK, NEW YORK
NOVEMBER 14, 1997
FOR VALUE RECEIVED, REGENT COMMUNICATIONS, INC., a Delaware corporation
("COMPANY"), promises to pay to the order of BANK OF MONTREAL, CHICAGO BRANCH
("PAYEE"), on or before the Maturity Date, the lesser of (x) TWENTY MILLION
DOLLARS ($20,000,000) or (y) the unpaid principal amount of all advances made by
Payee to Company as Revolving Loans under the Credit Agreement referred to
below.
Company also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates, at the times and from the
dates which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of November 14, 1997 (such agreement, as it
may be amended, restated, replaced, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"; capitalized terms used herein without
definition shall have the meanings assigned to those terms in the Credit
Agreement) among Company, the Lenders listed therein, General Electric Capital
Corporation, as Documentation Agent, and Bank of Montreal, Chicago Branch, as
Agent.
This Note is one of Company's "Revolving Notes" in the aggregate
principal amount of $55,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Revolving Loans
evidenced hereby were made and are to be repaid.
Company shall make principal payments on this Note on such dates as
required pursuant to the terms of the Credit Agreement and in an amount
determined in accordance with the provisions thereof; PROVIDED that the last
such installment shall be in an amount sufficient to repay the entire principal
balance of this Note, together with all unpaid interest thereon.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of Agent located at 115 South LaSalle Street, Chicago, Illinois, or at
such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Until notified in writing of
the transfer of this Note in accordance with the terms of the Credit Agreement,
Company and Agent shall be entitled to deem Payee (or such person who has been
identified by the transferor in writing to Company and Agent as the owner and
holder of this Note) as the owner and holder of this Note. Each of Payee and any
subsequent holder of this Note agrees, by its acceptance hereof, that before
disposing of this Note or any part hereof it will make a notation hereon of all
principal payments previously made hereunder and of the date to which interest
hereon has been paid; PROVIDED, HOWEVER, that the failure to make a notation of
any payment made on this Note shall not limit or
<PAGE> 2
otherwise affect the obligation of Company hereunder with respect to payments of
unpaid principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note; PROVIDED, HOWEVER, that in the event that
the day on which payment relating to a LIBOR Rate Loan is due is not a Business
Day but is a day of the month after which no further Business Day occurs in such
month, then the due date thereof shall be the next preceding Business Day.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of Company,
which are absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
This Note is secured by certain Security Documents including, without
limitation, the Pledge and Security Agreement and Mortgages.
[Remainder of page intentionally left blank]
2
<PAGE> 3
IN WITNESS WHEREOF, Company has caused this Note to be duly executed
and delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
REGENT COMMUNICATIONS, INC.
By:
------------------------------
Name:
Title:
S-1
<PAGE> 4
TRANSACTIONS
ON
REVOLVING NOTE
<TABLE>
<CAPTION>
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- ----------- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
Exhibit 4(l)
AGREEMENT TO ISSUE WARRANT
Agreement dated as of March 25, 1998 by and between Regent
Communications, Inc., a Delaware corporation ("Regent") and River Cities Capital
Fund Limited Partnership, a Delaware limited partnership ("River Cities").
WITNESSETH:
WHEREAS, an Agreement of Merger dated as of December 5, 1997 (the
"Merger Agreement") has been executed among Faircom, Inc., Regent Merger Corp.
and Regent;
WHEREAS, River Cities owns 300,000 shares of the 7% Series A
Convertible Preferred Stock of Regent; and
WHEREAS, in order to induce River Cities to approve the consummation of
the merger contemplated by the Merger Agreement (the "Merger"), Regent agreed to
issue, and River Cities agreed to accept, upon consummation of the Merger,
warrants to purchase 80,000 shares of Regent Common Stock;
NOW, THEREFORE, the parties, desiring to enter into this Agreement
to establish the specific terms and conditions of the warrants, agree as
follows:
1. Issuance of Warrant.
Upon Effectiveness of the Merger under the terms of the Merger
Agreement, Regent shall deliver to River Cities a warrant in the form of Exhibit
A hereto to purchase 80,000 shares of Common Stock of Regent (the "Warrant").
2. Representations and Warranties of Regent.
Regent hereby represents and warrants to River Cities as follows:
All corporate action on the part of Regent, its directors and stockholders
necessary for the authorization, execution, delivery and performance of this
Agreement by Regent, the authorization, sale, issuance and delivery of (i) the
Warrant and (ii) the Warrant Shares (as defined in the Warrant), and the
performance of all of Regent's obligations hereunder and thereunder has been
taken. This
<PAGE> 2
Agreement constitutes the valid and binding obligation of Regent, enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement is subject to general
principles of equity regardless of whether enforcement is considered in a
proceeding at law or in equity. The Warrant, when issued in compliance with the
provisions of this Agreement, will be validly issued, will have the rights,
preferences and privileges described therein and will constitute valid and
binding obligations of Regent, enforceable in accordance with its terms, subject
to the matters described above. The Warrant Shares have been duly and validly
reserved and, when issued in compliance with the provisions of the Warrant, will
be validly issued, fully paid and nonassessable. The Warrant and the Warrant
Shares will be free of any liens or encumbrances, other than any liens or
encumbrances created by or imposed upon the holders thereof through no action of
Regent; provided, however, that the Warrant and the Warrant Shares will be
subject to restrictions on transfer under state and/or federal securities laws
as set forth therein.
3. Representations and Warranties of River Cities.
River Cities hereby represents and warrants to Regent, as of the date
hereof, as follows:
(a) Investment Intent. River Cities is acquiring the Warrant for its
own account, for investment and not with a view to resale, distribution, or
other disposition, and River Cities has no present plans to enter into any
contract, undertaking, agreement or arrangement for any such resale,
distribution or other disposition. River Cities will not sell or otherwise
transfer the Warrant without registration under the 1933 Act and applicable
state securities laws, or pursuant to an exemption from the registration
requirements thereof which, in the opinion of counsel acceptable to Regent, is
available for the transaction.
- 2 -
<PAGE> 3
(b) Opportunity to Review Books and Records. River Cities has had a
reasonable opportunity to inspect all documents, books and records pertaining to
Regent and the Warrant and confirms that the Warrant is being acquired without
River Cities's receipt of any offering literature. River Cities is not relying
on Regent or any agent of Regent with respect to the economic or other
considerations of an investment in Regent.
(c) Opportunity for Questions. River Cities has had a reasonable
opportunity to ask questions of and receive answers from a person or persons
acting on behalf of Regent concerning Regent, its business and proposed
operations, the terms of the Warrant and all other aspects of investment in
Regent, and all such questions have been answered to the full satisfaction of
River Cities.
(d) No Conflict. The execution, delivery and performance of this
Agreement by River Cities (i) will not constitute a default under or conflict
with any agreement or instrument to which River Cities is a party or by which it
or its assets are bound, (ii) will not conflict with or violate any order,
judgment, decree, statute, ordinance or regulation applicable to River Cities
(including, without limitation, any applicable laws relating to permissible
legal investments) and (iii) do not require the consent of any person or entity.
(e) Authority of River Cities. This Agreement constitutes the legal,
valid and binding obligations of River Cities, enforceable against River Cities
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement is subject
to general principles of equity regardless of whether enforcement is considered
in a proceeding at law or in equity.
- 3 -
<PAGE> 4
4. Miscellaneous.
(a) Notices. Any notice, request or other document to be given
hereunder to any party shall be effective upon receipt (or refusal of receipt)
and shall be in writing and delivered personally or sent by telecopy or
certified or registered mail, postage prepaid:
(i) if to Regent, addressed to:
Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, Kentucky 41011
Attn: Terry S. Jacobs, Chairman of the Board
Facsimile (606) 292-0352
(ii) if to River Cities, addressed to:
River Cities Capital Fund Limited Partnership
221 East Fourth Street, Suite 2250
Cincinnati, Ohio 45202
Attn: R. Glen Mayfield
Facsimile (513) 579-8939
or to such other address or telecopy number as any party shall have specified by
notice given to the other parties in the manner specified above.
(b) Entire Agreement; Amendment. This Agreement, including the
Exhibit hereto, and the other agreements, if any, expressly contemplated by this
Agreement, contain the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior oral and written agreements,
memoranda, term sheets, understandings and undertakings among the parties hereto
relating to the subject matter hereof. This Agreement may be modified or amended
only by a written instrument executed by or on behalf of the parties hereto.
(c) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware without regard to
the application of
- 4 -
<PAGE> 5
its conflicts of laws principles. The parties hereby waive all right to trial by
jury in any action, suit or proceeding brought to enforce or defend any rights
or remedies under this Agreement or the transactions contemplated hereby.
(d) Severability. If any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
(e) Construction. The section and subsection headings used herein are
for convenience of reference only, are not a party of this Agreement and are not
to affect the construction of, or be taken into consideration in interpreting,
any provision of this Agreement. As used in this Agreement, the masculine,
feminine and neuter gender each includes the other, unless the context otherwise
dictates. Any and all schedules and exhibits referred to in this Agreement and
attached hereto are and shall be incorporated in this Agreement as if fully set
forth herein.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instruments.
(g) Specific Performance. The parties hereto acknowledge that damages
may be an inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder may be specifically
enforced, and no party will take any action to impede the other from seeking to
enforce such right of specific performance after any such breach.
(h) Successors and Assigns; Assignability. Except as otherwise
provided herein, this Agreement shall be binding upon and inure to the benefit
of and be enforceable by the
- 5 -
<PAGE> 6
parties hereto and their respective successor and permitted assigns. This
Agreement shall not confer upon any person other than the parties hereto and
their respective successors and permitted assigns any rights or remedies
hereunder.
(i) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable 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
transactions contemplated by this Agreement.
(j) Survival. The representations and warranties of the parties
contained herein shall survive execution and delivery of this Agreement and
issuance and delivery of the Warrant or Warrant Shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as of the day and year first above written.
REGENT COMMUNICATIONS, INC.
By:
---------------------------------
Its:
---------------------------------
RIVER CITIES CAPITAL FUND LIMITED
PARTNERSHIP
By: River Cities Management Limited
Partnership, its General Partner
By: Mayson, Inc.
By:
---------------------------------
R. Glen Mayfield, Vice President
- 6 -
<PAGE> 1
Exhibit 4(m)
REGENT COMMUNICATIONS, INC.
FAIRCOM CONVERSION STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. This Regent Communications, Inc.
Faircom Conversion Stock Option Plan (hereinafter referred to as the
"Plan") is intended to encourage ownership of stock of Regent
Communications, Inc. (hereinafter referred to as the "Corporation")
by persons who formerly were directors and employees of Faircom Inc.
("Faircom") and who, on the date of merger between Faircom and the
Corporation (the "Merger Date"), were holders of outstanding and
unexercised options under the Faircom Inc. Stock Option Plan (the
"Faircom Plan"). This Plan provides for the substitution of options
to purchase shares of the Corporation for options to purchase shares
of Faircom in a transaction to which Section 424 of the Internal
Revenue Code of 1986, as amended (hereinafter referred to as the
"Code") applies. In so doing, this Plan is intended to recognize the
previous contributions of the employees and directors of Faircom to
the success of Faircom's business and to provide additional
incentive for such individuals who become employees or directors of
the Corporation or its subsidiaries to promote the success of the
Corporation's business. As used in the Plan the term "subsidiary"
shall have the same meaning as the term "subsidiary corporation"
defined in Section 424(f) of the Code. Stock options may be granted
under the Plan which qualify as "Incentive Stock Options" under
Section 422 of the Code. Such options are sometimes referred to as an "ISO" or
collectively as "ISOs."
2. SCOPE OF THE PLAN. The aggregate number of the
Corporation's Series C Convertible Preferred Stock, par value $.01
per share (hereinafter referred to as "Series C Preferred Stock"),
available and reserved for issue under the Plan shall be equal to
the same number of shares of Series C Preferred Stock as the holders
of all outstanding options under the Faircom Plan would be entitled
1
<PAGE> 2
to receive in the merger if their options had been exercised in full
prior to the merger, subject, however, to the provisions of Section
12 hereof. Series C Preferred Stock shall not be issued in respect
of an option granted under the Plan unless the exercise of such
option and the issuance and delivery of shares of Series C Preferred
Stock pursuant thereto shall comply with all relevant provisions of
law, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and
regulations thereunder, and the requirements of any stock exchange
upon which the Series C Preferred Stock may then be listed, and
shall be further subject to the approval of the Corporation's
counsel with respect to such compliance.
3. ELIGIBILITY AND GRANT. Options shall be granted to all
persons who have previously been granted options under the Faircom
Plan that remain outstanding and unexercised on the Merger Date.
Such persons shall be referred to as herein as "Eligible
Participants." The terms "employee" and "employment" when used in
this Plan shall be considered to also include directors and
consultants when referring to non-ISOs and salaried directors when
referring to ISOs. Upon issue of such substituted options, all
options held under the Faircom Plan shall immediately terminate. The
number of shares granted under such substituted option shall be
determined so as to replace 100% of the option held by the Eligible
Participant under the Plan in a transaction which complies with
Section 424(a)(1) of the Code and the regulations thereunder.
4. ADMINISTRATION OF THE PLAN. The Plan shall be
administered by the Board of Directors or by a committee appointed
by the Board of Directors of the Corporation (the "Committee").
Committee members shall serve for such term as the Board of
Directors may in each case determine, and shall be subject to
removal at any time by the Board of Directors. As used herein,
except as the Committee's powers are specifically limited in
Sections 4 and 12 thereof, reference to the Board of Directors shall
mean such Board or the Committee, whichever is then acting with
respect to the Plan.
2
<PAGE> 3
Subject to the provisions of the Plan, the Board of Directors shall have the
authority in its discretion (i) to determine, upon review of relevant
information, the fair market value of the Series C Preferred Stock; (ii) to
determine the exercise price per share of stock options granted; (iii) to
determine the Eligible Participants to whom, and time or times at which, awards
are to be granted and the number of shares to be represented by each stock
option; (iv) to construe and interpret the Plan; (v) to prescribe, amend and
rescind rules and regulations relating to the Plan; (vi) to determine the terms
and provisions of each award (which need not be identical) and (vii) to make
all other determinations necessary to or advisable for the administration of
the Plan.
5. OPTION PRICE. The purchase price to be paid for each share of
Series C Preferred Stock transferred pursuant to the exercise of any option
granted under the Plan shall be equal to $5.00 multiplied by the percentage
determined by dividing the option price for one share of Faircom Common Stock
held by the Eligible Participant by the Fair Market Value of one share of
Faircom Common Stock on the Merger Date. For purposes of this Plan, the
Fair Market Value of each share of Common Stock of Faircom on the Merger Date
shall be equal to the Consideration Per Share Before Appraisal Rights as
determined in accordance with the terms of the Agreement of Merger dated as of
December 5, 1997 among Faircom, Regent Merger Corp., Regent Communications,
Inc., Blue Chip Capital Fund II Limited Partnership and Miami Valley Venture
Fund L.P. Inc. (the "Merger Agreement"). Such price shall not thereafter be
subject to reduction except as provided in Section 12 hereof. The Option Price
shall be determined so as not to constitute a modification, within the meaning
of Section 424 of the Code. In order to qualify as an ISO, the purchase price
determined under the Faircom Plan to be paid for Common Stock issued pursuant
to the Faircom Plan must not be less than the fair market value of such Common
Stock on the date the option was granted and an ISO granted to an individual
under the Faircom Plan who, at the time of grant, owned stock
3
<PAGE> 4
possessing more than ten percent of the total combined voting power
of all classes of stock of Faircom or its subsidiaries, as described
in Section 424(f) of the Code, must be not less than 110% of the
fair market value of the Faircom Common Stock. For purposes of the
Plan, the fair market value of stock on any date shall be as
reasonably determined by the Board of Directors. The proceeds of
Series C Preferred Stock subject to option are to be added to the
general funds of the Corporation and used for such corporate
purposes as the Board of Directors may determine.
6. TERM OF OPTIONS. The term for each option granted under the
Plan shall be that same term determined by the Board of Directors of
Faircom and specified in the Eligible Participant's Faircom Option,
subject to earlier termination as provided herein, provided,
however, that the term of each ISO granted under the Plan shall be
not more than ten years from the date of the granting thereof under
the Faircom Plan and the term of each option granted to an
individual who, at the time of grant under the Faircom Plan, owned
stock possessing more than ten percent of the total combined voting
power of all classes of stock of Faircom or its subsidiaries, as
described in Section 424(f) of the Code, shall be not more than five
years as provided by Section 422(c)(5) of the Code.
7. NON-TRANSFERABILITY OF OPTIONS. An option granted under the
Plan shall by its terms not be transferable otherwise than by will
or by the laws of descent and distribution and an option may be
exercised, during the lifetime of the holder of the option, only by
such holder. More particularly, but without limiting the generality
of the foregoing, an option may not be assigned, transferred (except
as provided in the next preceding sentence), pledged, or
hypothecated in any way (whether by operation of law or otherwise),
and will not be subject to execution, attachment or similar process.
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of any option contrary to the provisions of the Plan,
and any levy of any attachment or similar process
4
<PAGE> 5
upon an option will be null and void and without effect, and the
Board of Directors may, in its discretion, upon the happening of any
such event, terminate an option forthwith.
8. ANNUAL LIMITATION ON ISOS GRANTED. The amount of the
aggregate fair market value of stock, determined at the time of the
grant of the option under the Faircom Plan, for which any employee
may be granted ISOs under this Plan in any calendar year shall not
exceed $100,000.
9. EXERCISE OF OPTIONS. Options under the Plan may not be
exercised unless the optionee has remained in the employment of
Faircom, the Corporation or a subsidiary for a period of at least
one year from the date of the grant under the Faircom Plan,
provided, however, that the Board of Directors of Faircom may have
provided a shorter period of employment to any Eligible Participant
in its discretion. Moreover, subject to Section 11 hereof, an option
shall not be exercisable unless the holder thereof shall, at the
time of exercise, be an employee of the Corporation or a subsidiary.
The purchase price of any shares as to which an option shall be
exercised shall be paid in full at the time of exercise; provided,
however, that the purchase price for non-ISO shares may also be paid
by delivery of previously owned shares of Series C Preferred Stock,
properly endorsed for transfer to the Corporation. The holder of an
option shall not have any of the rights of a shareholder with
respect to the shares covered by his option until such shares shall
have been issued to him (as evidenced by the appropriate entry on
the books of a duly authorized transfer agent of the Corporation)
upon the purchase of such shares upon exercise of the option.
10. CONSIDERATION. The nature of the consideration flowing to
the Corporation in respect of each option granted under the Plan as
well as the conditions, if any, which it may deem appropriate to
assure that such consideration shall be received by, or accrue to,
the Corporation shall be those determined by the Board of Directors
of Faircom and specified in such option. The
5
<PAGE> 6
consideration specified in any option may be different from the
consideration specified in any other option, whether granted at the
same or a different time.
11. EXERCISE UPON CESSATION OF EMPLOYMENT. The right of a holder of
an option to exercise such option shall terminate immediately upon termination
of employment except, as to a non-ISO only, if the Board of Directors of
Faircom has, in its discretion, otherwise determined.
However, if the holder of an option ceases to be an employee by reason
of retirement or permanent disability, then, except as provided in the option
agreement or unless the Board of Directors shall otherwise determine, such
option may be exercised to the extent the holder would have been entitled to
exercise the option on the day next preceding the date of such cessation of
employment, at any time within three months after such cessation, at the end of
which period the option shall terminate. Such period shall in no event extend
the date of exercise of the option beyond the term thereof as provided in
Section 6.
If the holder of an option dies while an employee of the Corporation or
a subsidiary, such option may be exercised, to the extent the holder would have
been entitled under Section 9 hereof to exercise the option on the date of his
death, by the estate of such deceased holder, or by the person or persons who
acquire the right to exercise such option by bequest or inheritance or by
reason of the death of such holder, at any time within one year after his
death, or within such shorter period of time as shall be prescribed in the
option agreement or by the Board of Directors, at the end of which period such
option shall terminate. Such period shall in no event extend the date of
exercise of the option beyond the term thereof as provided in Section 6.
Option agreements may contain such provisions as the Board of Directors
shall approve with reference to the effect of approved leaves of absence;
provided, however, that such provisions shall
6
<PAGE> 7
in no event extend the date of exercise of the option beyond the
term thereof as provided in Section 6.
12. ADJUSTMENTS. Options granted under the Plan shall contain
such uniform provisions as the Board of Directors shall, in its sole
judgment, determine for adjustment of the number and class of the
shares covered thereby, or of the option prices (but not below the
par value of the Series C Preferred Stock), or both, to reflect a
stock dividend, stock split-up, share combination, exchange of
shares, recapitalization, merger, consolidation, acquisition or
disposition of property or shares, reorganization, liquidation, or
other similar changes or transactions, of or by the Corporation. In
any such event the aggregate number and class of shares available
for issuance under the Plan shall be appropriately adjusted and all
of the provisions of the Plan with respect to the number and class
of shares so available shall likewise be adjusted; provided,
however, that any such adjustment shall be made so as not to
constitute a modification, extension or renewal of the option within
the meaning of Section 424(h) of the Code.
13. EFFECTIVENESS OF THE PLAN. The Plan shall become effective
as of the Merger Date.
14. TIME OF GRANTING OPTIONS. The date of grant of an option
under the Plan shall, for all purposes, be the grant date of the
Faircom Option held by the Eligible Participant.
15. TERMINATION AND AMENDMENT OF THE PLAN. The Plan shall
terminate, with respect to ISOS, ten years from the Merger Date.
Prior thereto, the Board of Directors may terminate the Plan at any
time; provided, however, that any such termination shall not affect
any options then outstanding under the Plan. No options under the
Plan may be granted after termination of the Plan.
The Board of Directors from time to time may make such
modifications or amendments of the Plan and, with the consent of the
holder of an option, of the terms and conditions of his option, as
it shall deem advisable, but may not, without further approval of
the shareholders of the Corpora-
7
<PAGE> 8
tion, except as provided in Section 12 hereof, (a) increase the
maximum number of shares of Series C Preferred Stock which shall be
available and reserved for issue under the Plan, (b) increase the
aggregate fair market value of shares of Series C Preferred Stock
which may be issued upon exercise of ISOs under the Plan to any one
employee, (c) decrease the option price per share issuable upon the
exercise of an option granted hereunder, or (d) extend the term of
the Plan with respect to ISOs beyond the period provided in this
paragraph.
Neither the termination nor any modifications or amendment of
the Plan shall, without the consent of the holder of an option
theretofore granted under the Plan, adversely affect the rights of
such holder with respect to such option.
16. TERMINATION OF RIGHT OF ACTION. Every right of action
arising out of or in connection with the Plan by or on behalf of the
Corporation or a subsidiary or by any shareholder of the Corporation
or a subsidiary against any past, present or future member of the
Board of Directors or against any employee, or by an employee (past,
present or future) against the Corporation shall, irrespective of
the place where an action may be brought and irrespective of the
place of residence of any such shareholder, director or employee,
cease and be barred by the expiration of three years from the date
of the act or omission in respect to which such right of action is
alleged to have arisen.
17. GOVERNING LAW. To the extent permissible under the Employee
Retirement Security Income Act of 1974, as amended, the laws of the
State of Ohio shall govern any dispute or interpretation of this
Plan.
<PAGE> 1
Exhibit 5
April 3, 1998
Regent Communications, Inc.
50 East RiverCenter Blvd.
Suite 180
Covington, Kentucky 41011
Re: Registration Statement on Form S-4, File No. 333-46435,
as amended by an Amendment No. 1 filed April 3, 1998
(the "Registration Statement")
Gentlemen:
We have examined the above captioned Registration Statement on Form S-4
filed by you with the Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended, of shares of your
Series C Convertible Preferred Stock (the "Shares") to be exchanged for existing
shares of the Common Stock of Faircom Inc. as described in the Registration
Statement and pursuant to the Agreement of Merger dated as of December 5, 1997,
as amended, among Regent Communications, Inc., Faircom Inc., Blue Chip Capital
Fund II Limited Partnership and Miami Valley Venture Fund L.P. (the "Agreement")
filed as an exhibit to the Registration Statement. We have examined the
proceedings proposed to be taken in connection with the issuance of the Shares
and as described in the Agreement.
Based upon such investigation as we have deemed necessary, we are of
the opinion that, upon completion of the proceedings being taken or contemplated
to be taken prior to the issuance of the Shares, including the due filing of a
Certificate of Designation with the Delaware Secretary of State to increase the
number of authorized Shares to a number equal to or in excess of the number of
Shares to be issued pursuant to the Merger, determined as of the last day of the
month preceding the closing date of the Merger, if such increase is required,
the Shares, when issued in the manner referred to in the Registration Statement,
will be validly issued and will be fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to our firm in the Registration
Statement under the caption "Legal Matters."
Very truly yours,
/s/ Strauss & Troy
STRAUSS & TROY
<PAGE> 1
Exhibit 8(a)
[FULBRIGHT & JAWORSKI L.L.P. LETTERHEAD]
December 5, 1997
Faircom Inc.
333 Glen Head Road
Old Brookville, NY 11545
Ladies and Gentlemen:
We have acted as legal counsel to Faircom Inc. ("Faircom") in
connection with the Agreement of Merger ("Merger Agreement"), dated as of
December 5, 1997, by and among Faircom, Regent Communications, Inc. ("Regent")
and Regent Merger Corp. ("Sub"). Pursuant to the Merger Agreement, Faircom will
merge with and into Sub (the "Merger"), and Sub will be the survivor. Pursuant
to Section 21(rr) of the Merger Agreement, you have requested our opinion with
respect to certain federal income tax consequences of the Merger. All
capitalized terms not otherwise defined herein have the meaning given to such
terms in the Merger Agreement.
In rendering this opinion, we have examined and are relying
upon (without any independent investigation or review thereof) the truth,
completeness and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in the following documents:
1. The Merger Agreement;
2. Representations made to us by Faircom in a letter
reproduced as Attachment A hereto;
3. Representations made to us by Regent and Sub in a letter
reproduced as Attachment B hereto;
4. Representations made to us by certain shareholders of
Faircom in a letter reproduced as Attachment C hereto; and
5. Such other documents, records and matters of law as in our
judgment were necessary or appropriate.
<PAGE> 2
December 5, 1997
Page 2
In connection with rendering this opinion, we have assumed
(without any independent investigation or review thereof) that original
documents (including signatures) are authentic, that documents submitted to us
as copies conform to the original documents, and that there has been (or will be
by the Effectiveness of the Merger) due execution and delivery of all documents
where due execution and delivery are prerequisites to the effectiveness thereof.
Based on our examination of the foregoing items and subject to
the assumptions, exceptions, limitations and qualifications set forth herein, we
are of the opinion that, for federal income tax purposes, the Merger will
qualify as a reorganization pursuant to Section 368(a) of the Code.
In addition to the assumptions set forth above, this opinion
is subject to the exceptions, limitations and qualifications set forth below.
1. This opinion represents and is based upon our best judgment
regarding the application of federal income tax laws arising under the
Code, existing judicial decisions, administrative regulations and
published rulings and procedures. Our opinion is not binding upon the
Internal Revenue Service or the courts, and we cannot provide assurance
that the Internal Revenue Service will not assert a contrary position.
Furthermore, we cannot provide assurance that future legislative,
judicial or administrative changes would not, on either a prospective
or retroactive basis, adversely affect the accuracy of the conclusions
stated herein. Moreover, we undertake no responsibility to advise you
of any new developments in the application or interpretation of the
federal income tax laws as they might relate to this opinion.
2. This opinion addresses only whether the Merger will qualify
as a reorganization under Section 368(a) of the Code. The opinion does
not address any other federal, state, local or foreign tax consequences
that may result from the Merger or any other transaction.
3. No opinion is expressed as to any transaction other than
the Merger as described in the Merger Agreement. Moreover, we have
assumed that all the transactions described in the Merger Agreement
have been or will be consummated in accordance with the terms of such
Merger Agreement and without waiver or breach of any material provision
thereof and that all of the representations, warranties, statements and
assumptions upon which we have relied remain true and accurate at all
relevant times. Any change after the date hereof in the facts and
circumstances surrounding the Merger, or any inaccuracy in the
representations, warranties, statements and assumptions upon which we
have relied may affect the continuing validity of the opinion set forth
herein. We assume no responsibility to inform you of any such change or
inaccuracy that may occur or come to our attention.
<PAGE> 3
December 5, 1997
Page 3
4. This opinion has been delivered to you for the purpose of
satisfying the condition set forth in Section 21(rr) of the Merger
Agreement and is intended solely for your benefit. This opinion may not
be relied upon for any other purpose or by any other person or entity,
and may not be made available to any other person or entity, without
our prior written consent.
Very truly yours,
<PAGE> 1
Exhibit 8(b)
___________, 1998
Faircom, Inc.
333 Glen Head Road
Old Brookville, NY 11545
Regent Communications, Inc.
50 East River Center Blvd., Suite 180
Covington, KY 41011
Re: Merger Pursuant to the Agreement of Merger ("Merger Agreement")
dated as of December 5, 1997, between Regent Communications,
Inc. ("Regent"), Faircom, Inc. ("Faircom") and Regent Merger
Comp. ("Sub") and others
Ladies and Gentlemen:
We have acted as counsel for Regent in connection with the preparation
and execution of the Merger Agreement. Pursuant to the Merger Agreement, Faircom
will merge with and into Sub, a wholly-owned subsidiary of Regent (the
"Merger"). Unless otherwise defined, capitalized terms referred to herein have
the meanings set forth in the Merger Agreement. All section references, unless
otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").
You have requested our opinion regarding certain federal income tax
consequences of the Merger. In delivering this opinion, we have reviewed and
relied upon the facts, statements, descriptions and representations set forth in
the Merger Agreement and such other documents pertaining to the Merger as we
have deemed necessary or appropriate. We have also relied upon the
representations made to us by Regent and Faircom in letters attached hereto as
Exhibits A and B (the "Representation Letters").
In connection with rendering this opinion, we have assumed or have
obtained representations (without any independent investigation) that, as of the
date hereof and as of the Effectiveness of the Merger:
1. Original documents (including signatures) are authentic, documents submitted
to us as copies conform to the original documents, and there has been (or will
be by the Effectiveness of the Merger) due execution and delivery of all
documents where due execution and delivery are prerequisites to effectiveness
thereof;
<PAGE> 2
Faircom, Inc.
Regent Communications, Inc.
_________________, 1998
Page 2
2. Any statement made in any of the documents referred to herein "to the
knowledge" of any person or party is correct without such qualification;
3. All statements, descriptions and representations contained in any of
the documents referred to herein or otherwise made to us are true and correct in
all respects and no actions have been (or will be) taken which are inconsistent
with such representations as of the date hereof and as of the Effectiveness of
the Merger;
4. The shareholders of Faircom do not, and will not on or before the
Effectiveness of the Merger, have a plan or intention to dispose of an amount of
Regent Common Stock to be received in the Merger (or to dispose of Faircom
Common Stock in anticipation of the merger) such that the shareholders of
Faircom will not receive and retain a meaningful continuing equity ownership in
Regent that is sufficient to satisfy the continuity of interest requirement set
forth in Treas. Reg. ss.1.368-1(b) and as interpreted in certain Internal
Revenue Service rulings and federal judicial decisions.
Based on the foregoing and subject to the assumptions, exceptions,
limitations and qualifications set forth herein, we are of the opinion that, if
the Merger is consummated in accordance with the Merger Agreement (without any
waiver, breach or amendment of the provisions thereof), for federal income tax
purposes, the Merger will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code.
This opinion represents and is based upon our best judgment regarding
the application of federal income tax laws arising under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or the
courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, no assurance can be given
that the future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, will not adversely affect the accuracy of the
conclusions stated herein. However, we undertake no responsibility to advise you
of any developments in the application or interpretation of the federal income
tax laws as they might relate to this opinion.
This opinion addresses only the matters set forth above, and does not
address any other federal, state, local or foreign tax consequences that may
result from the Merger or any other transaction (including any transaction
undertaken in connection with the Merger).
<PAGE> 3
Faircom, Inc.
Regent Communications, Inc.
_________________, 1998
Page 3
This letter is being delivered to you and is intended solely for your
benefit. This letter may not be relied upon for any other purpose or by any
other person or entity, and may not be made available to any person or entity,
without our prior written consent.
Very truly yours,
STRAUSS & TROY
<PAGE> 4
Exhibit A
Regent Communications, Inc.
50 East River Center Blvd., Suite 180
Covington, KY 41011
________________, 1998
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Re Merger of Faircom, Inc. into Regent Merger Corp.,
a wholly-owned subsidiary of Regent Communications, Inc.
Gentlemen:
You have requested that we represent certain matters to you in
connection with the opinion that you are rendering with respect to certain
federal income tax consequences of the merger (the "Merger") of Faircom Inc.
("Faircom") with and into Regent Merger Corp. ("Sub"), a direct, wholly-owned
subsidiary of Regent Communications, Inc. ("Regent"). We recognize that you will
rely on this certificate in rendering your opinion pursuant to section 21(rr) of
the Agreement of Merger, dated as of December 5, 1997 by and among Faircom, Sub
and Regent (the "Merger Agreement") and in connection with your description of
certain federal income tax consequences of the Merger in the Registration
Statement. Unless otherwise specified, the capitalized terms used herein are
defined in the Merger Agreement.
In accordance with your request, we hereby represent to you
that the following facts are now true and will continue to be true as of the
Effectiveness of the Merger;
1. The fair market value of the stock of Regent ("Regent
Shares") plus cash in lieu of fractional shares to be received by each
shareholder of Faircom will be approximately equal to the fair market value of
Faircom stock surrendered in the exchange.
2. Following the Merger, Sub will hold at least 90% of the
fair market value of the net assets of Faircom and at least 70% of the fair
market value of the gross assets of Faircom held immediately prior to the
Merger. For purposes of this representation, amounts paid by Faircom to Faircom
shareholders who receive cash or other property in the Merger, amounts, if any,
paid by Faircom to dissenters, amounts used by Faircom to pay its reorganization
expenses, and all redemptions and distributions (except for regular, normal
dividends) made by Faircom will be included as assets of Faircom immediately
prior to the Merger.
3. Except as set forth in Paragraph 15 below, Regent has no
plan or intention to redeem or otherwise reacquire any of its stock issued
pursuant to the Merger (other than in connection with the repurchase of
fractional shares).
<PAGE> 5
Strauss & Troy
_________, 1998
Page 2
4. Except for transfers described in Section 368(a)(2)(C) of
the Code, Regent has no plan or intention to liquidate Sub, to merge Sub with or
into another corporation including Regent or any of its affiliates, to sell,
distribute or otherwise dispose of the capital stock of Sub, or to cause Sub to
sell or otherwise dispose of any of its assets or of any of the assets acquired
from Faircom, except for dispositions made in the ordinary course of business.
5. Regent will acquire from shareholders of Faircom their
stock in Faircom solely in exchange for Regent Shares. Further, no liabilities
of Faircom's shareholders will be assumed by Regent, nor will any Faircom stock
be subject to any liabilities.
6. Regent and Sub will pay their respective expenses, if any,
incurred in connection with the Merger, and will not pay any of the expenses of
Faircom or its shareholders other than a portion of the commission due The
Crisler Company.
7. Neither Regent nor Sub is an investment company as defined
in section 368 (a)(2)(F)(iii) and (iv) of the Code.
8. There is no intercorporate indebtedness existing between
Regent and Faircom or between Sub and Faircom that was issued, acquired or will
be settled at a discount.
9. Following the Merger, Regent will cause Sub to continue the
historic business Faircom was conducting immediately before the Merger or cause
Sub to use a significant portion of the historic business assets of Faircom in a
business, within the meaning of Treasury Regulation Section 1.368-l(d).
10. Prior to the Merger, Regent will be in "Control" of Sub.
As used in this letter, "Control" means the direct ownership of stock possessing
at least eighty percent (80%) of the total combined voting power of all classes
of stock entitled to vote and at least eighty percent (80%) of the total number
of shares of each other class of stock of the corporation. For purposes of
determining Control, a person or entity shall not be considered to own voting
stock if rights to vote such stock (or to restrict or otherwise control the
voting of such stock) are held by a third party (including a voting trust) other
than an agent of such person or entity.
11. Regent has no plan or intention to cause Sub to issue
additional shares of Sub stock after the Merger that would result in Regent
losing Control of Sub.
12. No stock of Sub will be issued in the Merger.
<PAGE> 6
Strauss & Troy
_________, 1998
Page 3
13. The payment of cash in lieu of fractional Regent Shares is
solely for the purpose of avoiding the expense and inconvenience to Regent of
issuing fractional shares and does not represent separately bargained
consideration. The total cash consideration that will be paid in the transaction
to Faircom shareholders instead of issuing fractional Regent Shares will not
exceed ten percent (10%) of the total consideration that will be issued in the
transaction to Faircom shareholders in exchange for their stock in Faircom.
14. None of the shares of Regent Shares received by any
shareholder of Faircom who is (or was) a service provider to Faircom will be
separate consideration for, or allocable to, past or future services (including
covenants not to compete).
15. Other than the 300,000 Regent Shares subject to redemption
pursuant to the Redemption and Warrant Agreement, as amended, between Blue Chip,
Miami Valley and Regent ("Redemption Agreement") and Section 13 of the Merger
Agreement (the "Option Shares"), none of the Regent Shares to be issued in
connection with the Merger contain terms which either: (i) permit the holder to
require Regent or a Related Person (as defined in Section 351(g)(3)(B) of the
Code) to purchase such stock; (ii) require Regent or a Related Person to redeem
or purchase such stock; (iii) permit Regent or a Related Person to redeem or
purchase such stock; or (iv) determine the dividend rate on such stock in whole
or in part (directly or indirectly) based on interest rates (other than the 7%
rate specified), commodity prices or similar indices.
16. The fair market value of all Regent Shares issued in
connection with the Merger, other than the Option Shares, is not less than 50%
of the fair market value of the aggregate consideration issued or paid by Regent
in connection with the Merger, including, without limitation, amounts paid by
Regent to dissenters and in lieu of fractional share interests in Regent Shares,
the right of Blue Chip and Miami Valley to receive warrants pursuant to the
Redemption Agreement, amounts paid in repayment of Optional Faircom Subordinated
Notes, the Option Shares and all other Regent shares issued in connection with
the Merger.
17. The Merger Agreement and the Redemption Agreement
represent the full and complete agreement among Regent, Sub and Faircom
regarding the Merger, and there are no other written or oral agreements
regarding the Merger.
18. The Merger is being undertaken to enhance the business of
Regent and for other good business purposes of Regent.
19. The terms of the Merger Agreement and all other agreements
entered into in connection therewith were the product of arm's-length
negotiations.
<PAGE> 7
Strauss & Troy
_________, 1998
Page 4
Regent and Sub will promptly notify Strauss & Troy if, after signing
this letter, Regent and Sub have reason to believe that any of the
representations made in this letter are untrue, incomplete or incorrect in any
respect.
In rendering your opinion, you have our permission to attach a copy of
this letter to your written opinion.
Very truly yours,
REGENT COMMUNICATIONS, INC.
a Delaware corporation
By:_________________________________
Title:_______________________________
REGENT MERGER CORP.
a Delaware corporation
By:_________________________________
Title:_______________________________
<PAGE> 8
Exhibit B
Faircom Inc.
333 Glen Head Road
Old Brookville, NY 11545
___________________, 1998
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Re: Merger of Faircom Inc. into Regent Merger Corp.,
wholly-owned subsidiary of Regent Communications, Inc.
Gentlemen:
You have requested that we represent certain matters to you in
connection with the opinion that you are rendering with respect to) certain
federal income tax consequence of the merger (the "Merger") of Faircom Inc.
("Faircom") with and into Regent Merger Corp. ("Sub"), a direct, wholly-owned
subsidiary of Regent Communications, Inc. ("Regent"). We recognize that you will
rely on this certificate in rendering your opinion pursuant to the Agreement of
Merger, dated as of December 5, 1997 by and among Faircom, Sub, Regent and
others (the "Merger Agreement") and in connection with your description of
certain federal income tax consequences of the Merger in the Registration
Statement. Unless otherwise specified, the capitalized terms used herein are
defined in the Merger Agreement.
In accordance with your request, we hereby represent to you
that the following facts are now true and will continue to be true as of the
Effectiveness of the Merger:
1. The fair market value of the stock of Regent ("Regent
Shares") plus cash in lieu of fractional shares to be received by each
shareholder of Faircom will be approximately equal to the fair market value of
Faircom stock surrendered in the exchange.
2. There is no plan or intention by the shareholders of
Faircom who own five percent or more of Faircom stock as of the date of the
Merger, and to the knowledge of the management of Faircom, there is no plan or
intention of the remaining shareholders of Faircom to sell, exchange, or
otherwise dispose of a number of Regent Shares to be received in the Merger that
would reduce Faircom shareholders' ownership of Regent Shares to a number of
Regent Shares having a value as of the date of the Merger of less then 50% of
the value of all of the formerly outstanding Faircom stock as of the same date.
For purposes of this paragraph, shares of Faircom stock exchanged for cash or
other property, surrendered by dissenters or exchanged for fractional shares of
Regent shares will be treated as outstanding Faircom stock exchanged on the date
of the Merger. Moreover, shares of Faircom stock and Regent Shares held
<PAGE> 9
Strauss & Troy
_________, 1998
Page 2
by Faircom shareholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the Merger will be considered in making this representation.
3. Faircom and its shareholders will pay their respective
expenses, if any, incurred in connection with the Merger, other than the payment
by Regent of a portion of the fee due to the Crisler Company pursuant to Section
32 of the Merger Agreement.
4. Faircom is not an investment company as defined in section
368(a)(2)(F) (iii) and (iv) of the Internal Revenue Code of 1986, as amended
(the "Code").
5. On the date of the Merger the fair market value of the
assets of Faircom transferred to Sub will exceed the sum of the liabilities of
Faircom assumed by Sub, plus the amount of liabilities, if any, to which the
assets are subject.
6. Faircom is not under the jurisdiction of a court in a
Title 11, or similar case within the meaning of Section 368 (a) (A) of the Code.
7. Following the Merger, Sub will hold at least 90% of the
fair market value of the net assets of Faircom and at least 70% of the fair
market value of the gross assets of Faircom held immediately prior to the
Merger. For purposes of this representation, amounts paid by Faircom to Faircom
shareholders who receive cash or other property in the Merger, amounts, if any,
paid by Faircom to dissenters, amounts used by Faircom to pay its reorganization
expenses, and all redemptions and distributions (except for regular, normal
dividends) made by Faircom will be included assets of Faircom immediately prior
to the Merger.
8. There is no intercorporate indebtedness existing between
Regent and Faircom or between Sub and Faircom that was issued, acquired or will
be settled at a discount.
9. The liabilities no Faircom to be assumed by Sub and the
liabilities to which the transferred assets of Faircom are subject were incurred
by Faircom in the ordinary course of business,
10. The payment of cash its lieu of fractional Regent Shares
is solely for the purpose of avoiding the expense and inconvenience to Regent of
issuing fractional shares and does not represent separately bargained-for
consideration. The total cash consideration that will be paid in the transaction
to Faircom shareholders instead of issuing fractional Regent Shares will not
exceed ten percent of the total consideration that will be issued in the
transaction to Faircom shareholders in exchange for their stock in Faircom.
-2-
<PAGE> 10
Strauss & Troy
_________, 1998
Page 3
11. None of the compensation received by any stockholder of
Faircom who is (or was) a service provider to Faircom will be separate
consideration for, or allocable to, any of his or her Faircom stock, and the
compensation paid to any such person will be for services actually rendered and
will be commensurate with amounts paid to third parties bargaining at
arm's-length for similar services. None of the Regent Shares received by any
shareholder of Faircom who is (or was) a service provider to Faircom will be
separate consideration for, or allocable to, past or future services (including
any employment agreement or any covenants not to compete).
12. Other than the 300,000 Regent Shares subject to the
Redemption and Warrant Agreement, as amended, between Blue Chip, Miami Valley
and Regent ("Redemption Agreement") and Section 13 of the Merger Agreement (the
"Option Shares"), none of the Regent Shares to be issued in connection with the
Merger contain terms which either: (i) permit the holder to require Regent or a
Related Person (as defined in Section 351(g)(3)(B) of the Code) to purchase such
stock; (ii) require Regent or a Related Person to redeem or purchase such stock;
(iii) permit Regent or a Related Person to redeem or purchase such stock; or
(iv) determine the dividend rate on such stock in whole or in part (directly or
indirectly) with reference to interest rates, commodity prices or similar
indices.
13. The fair market value of all Regent Shares issued in
connection with the Merger, other than the Option Shares, is not less than 50%
of the fair market value of the aggregate consideration issued or paid by Regent
in connection with the Merger, including, without limitation, amounts paid by
Regent, to dissenters and in lieu of fractional share interests in Regent
Shares, the right of Blue Chip and Miami Valley to receive warrants pursuant to
the Redemption Agreement, amounts paid in repayment of Optional Faircom
Subordinated Notes, the Option Shares and all other Regent shares issued in
connection with the Merger.
14. The Merger Agreement and the Redemption Agreement
represent the full and complete agreement among Regent, Sub and Faircom
regarding the Merger, and there are no other written or oral agreements
regarding the Merger.
15. The Merger is being undertaken to enhance the business of
Faircom and for other good business purposes of Faircom.
16. The terms of the Merger Agreement and all other
agreements entered into in connection therewith were the product of arm's-length
negotiations.
Faircom will promptly notify Strauss & Troy if, after signing
this letter, Faircom has reason to believe that any representations made in this
letter are untrue, incomplete or incorrect in any respect.
-3-
<PAGE> 11
Strauss & Troy
_________, 1998
Page 4
In rendering your opinion, you have our permission to attach a
copy of this letter to your written opinion.
Very truly yours,
FAIRCOM, INC.
a Delaware CORPORATION
By:_________________________________
Title:_______________________________
-4-
<PAGE> 1
Exhibit 10(a)
THE REGENT COMMUNICATIONS, INC.
1998 MANAGEMENT STOCK OPTION PLAN
Regent Communications, Inc. (the "Company") has, by appropriate
resolution of its Board of Directors, adopted the following 1998 Management
Stock Option Plan to be effective upon the first day of January, 1998, subject
to its approval by the Company's shareholders.
1. DEFINITIONS. The following terms, when capitalized, shall have the
designated meanings set forth below, unless a different meaning is
plainly required by the context. Where applicable, the masculine
pronoun shall include the feminine, and the singular shall include the
plural and vice versa.
A. BOARD. "Board" shall mean the Board of Directors of the
Company, as it may be comprised from time to time.
B. CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations
promulgated thereunder. Any specific provision of the Code
referenced herein shall be deemed to refer to the
corresponding provision of any amendment, revision or
successor of the Code or such provision as may be adopted in
lieu of the referenced provision.
C. COMMITTEE. "Committee" shall mean the Compensation Committee
of the Board, comprised of at least three members of the
Board, each of whom is, as to the Plan, both a disinterested
person as defined in Rule 16b-3(c)(2)(i) under the Exchange
Act and an outside director as defined in Prop. Reg. Section
1.162-27 under the Code (or two members if there are not three
persons then serving on the Board who are both disinterested
persons and outside directors), and appointed by and to serve
at the pleasure of the Board.
D. COMMON STOCK. "Common Stock" shall mean shares of the
Company's authorized voting common stock.
E. COMPANY. "Company" shall mean Regent Communications, Inc.
F. ELIGIBLE EMPLOYEE. "Eligible Employee" shall mean any Key
Employee of the Company who was a full-time permanent salaried
employee of the Company on the Grant Date of any Option
granted to him.
G. EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time, and the rules
promulgated thereunder. Any specific provision of the Exchange
Act referenced herein shall be deemed to refer to the
corresponding provision of any amendment, revision
-1-
<PAGE> 2
or successor of the Exchange Act or such provision as may be
adopted in lieu of the referenced provision.
H. EXERCISE DATE. "Exercise Date" shall mean the calendar date on
which a Participant exercises an Option granted under the
Plan.
I. EXERCISE PERIOD. "Exercise Period" shall mean that period of
time during which an Option granted under the Plan may be
exercised, determined in accordance with paragraph 7 hereof.
J. EXERCISE PRICE. "Exercise Price" shall mean that price for
which a share of Common Stock may be purchased pursuant to an
Option, determined in accordance with paragraph 6 hereof.
K. GRANT DATE. "Grant Date" shall mean the calendar date on which
the grant of an Option is made under the Plan, determined in
accordance with paragraph 5 hereof.
L. INCENTIVE STOCK OPTION. "Incentive Stock Option" ("ISO") shall
mean an Option which qualifies as an incentive stock option
under Section 422 of the Code.
M. KEY EMPLOYEE. "Key Employee" shall mean any full-time
permanent management employee of the Company designated as
such by the Committee on or prior to the Grant Date of any
Option granted to him.
N. NONQUALIFIED STOCK OPTION. "Nonqualified Stock Option"
("NQSO") shall mean an Option which is not, by its terms, an
ISO on its Grant Date.
O. OPTION. "Option" shall mean an ISO or NQSO granted or to be
granted under the Plan for the purchase of a fixed number of
shares of Common Stock at a fixed Exercise Price.
P. PARTICIPANT. "Participant" shall mean an Eligible Employee to
whom an Option has been granted under the Plan, but which
Option has not expired, exercised in full, forfeited or
otherwise terminated or satisfied under the Plan.
Q. PLAN. "Plan" shall mean Regent Communications, Inc. 1998
Management Stock Option Plan as set forth herein.
R. RELATED CORPORATION. "Related Corporation" shall mean any
corporation of which the Company is a parent corporation. The
term "parent corporation" shall have the meanings ascribed to
it under Section 424 of the Code.
-2-
<PAGE> 3
S. RULE 16B-3. "Rule 16b-3" means Rule 16b-3 of the General Rules
and Regulations of the Exchange Act or any successor rules or
regulations which may hereafter be adopted in lieu thereof.
Any reference to a specific provision of Rule 16b-3 shall
refer to the corresponding provision of Rule 16b-3 as amended
or replaced.
T. TEN PERCENT OWNER PARTICIPANT. "Ten Percent Owner Participant"
shall mean any Participant who, on the Grant Date of an ISO
granted to him under the Plan, owns, directly or indirectly,
stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or a Related
Corporation.
2. PURPOSE. The purpose of the Plan is to advance the interests of the
Company and its shareholders by enhancing the Company's ability to
retain and attract highly qualified key management employees and to
provide additional financial incentives to key employees to contribute
to the long-term growth and success of the Company.
3. ELIGIBILITY. Participation in the Plan shall be determined by the
Committee and shall be limited to Eligible Employees. No member of the
Committee shall be eligible to receive Options under the Plan.
4. SHARES SUBJECT TO THE PLAN. Subject to adjustments provided in
paragraph 13 hereof, the aggregate number of shares of Common Stock
that may be delivered pursuant to the exercise of Options granted under
the Plan shall not exceed Two Million (2,000,000) shares. Such shares
may consist, either in whole or in part, of the Company's authorized
but unissued Common Stock or shares of the Company's authorized and
issued Common Stock reacquired by the Company and held in its Treasury,
as may from time to time be determined by the Board. If an Option
granted under the Plan is surrendered, expires unexercised or for any
reason ceases to be exercisable in whole or in part, the shares of
Common Stock that were issuable pursuant to such Option, but as to
which the Option was not exercised, shall again be available for the
purposes of the Plan.
5. OPTION GRANTS. The Committee may, in its sole discretion and subject to
the terms of the Plan, grant Options to such Eligible Employees, for
such number of shares of Common Stock, at such time or times, and
containing such terms consistent with the Plan, as it deems
appropriate.
Unless otherwise specified by the Committee, the date on which the
Committee approves the granting of an Option shall be deemed the Grant
Date for such Option.
6. EXERCISE PRICE. The Exercise Price for each Option granted under the
Plan shall be as determined by the Committee, but shall not be less
than 100% of the fair market value of a share of the Common Stock on
the Grant Date. The Exercise Price for an ISO granted to
-3-
<PAGE> 4
any Ten Percent Owner Participant shall not be less than 110% of the
fair market value of a share of the Common Stock on the Grant Date.
Unless otherwise required by applicable provisions of the Code, fair
market value of the Common Stock on the Grant Date of an Option shall
be determined as follows:
(i) If the Common Stock is listed on a national securities
exchange, the fair market value shall be the average of
the highest and lowest selling price of a share of
Common Stock on such exchange on the Grant Date, or if
there were no sales on such date, then on the next
prior business day on which there were sales.
(ii) If the Common Stock is traded other than on a national
securities exchange, the fair market value shall be the
average between the closing bid and asked price on the
Grant Date, as reported by the National Association of
Securities Dealers Automated Quotation System or such
other source of quotations for, or reports of trading
of, the Common Stock as the Committee may reasonably
select from time to time, or if there is no bid and
asked price on said date, then on the next prior
business day on which there was a bid and asked price.
(iii) If neither of the methods described in (i) or (ii)
above is available or accurately reflects fair market
value, then the Committee shall make a good faith
determination of the fair market value using any
reasonable method of valuation.
7. TERM OF OPTION. The Exercise Period of each Option granted shall
commence on the Grant Date of the Option or on such later date as may
be determined by the Committee and, except as set forth below, shall
expire on such date as is determined by the Committee ("Expiration
Date"); provided, however, such Expiration Date shall be not later than
ten (10) years from the Grant Date in the case of an ISO and ten (10)
years and one (1) day in the case of a NQSO. In the case of a Ten
Percent Owner Participant, no ISO shall have an Expiration Date more
than five (5) years after its Grant Date.
Any Option granted under the Plan shall terminate and may no longer be
exercised if the Participant ceases to be an employee of the Company or
a Related Corporation, except as follows:
(i) If a Participant's employment with the Company or a
Related Corporation shall have been terminated for any
reason other than his death or disability within the
meaning of Section 22(e)(3) of the Code, he may at any
time within a period of three (3) months thereafter,
exercise any Option held by him to the extent the
Option was exercisable by him on the date of
termination of employment;
-4-
<PAGE> 5
(ii) If a Participant's employment with the Company or a
Related Corporation is terminated due to his disability
within the meaning of Section 22(e)(3) of the Code, he
may at any time within a one (1) year period
thereafter, exercise any Option held by him to the
extent the Option was exercisable by him on the date of
termination of employment;
(iii) If a Participant dies while employed by the Company or
a Related Corporation, any Option held by him at his
death, to the extent the Option was exercisable by the
deceased Participant at his death, may be exercised
within six (6) months after his death (or within such
longer period as may be otherwise specified by the
Committee and, in the case of an ISO, which is
permitted by Sections 421 and 422 of the Code) by the
person or persons to whom the Participant's rights
shall pass by will duly admitted to probate, or in the
absence of any provision by will duly admitted to
probate, by the executor or administrator of his estate
duly qualified and appointed under the laws of the
decedent's domicile at the time of his death;
PROVIDED, HOWEVER, that in no event may an Option be exercised to any
extent by any person after its Expiration Date.
8. EXERCISE OF OPTION. During the period when any Option, or a portion of
it, remains exercisable, such Option may be exercised at any time in
whole or in part; provided, however, that the Committee may require a
partial exercise of an Option to be for no less than a stated minimum
number of shares of Common Stock.
Options may be exercised from time to time by delivering to the
Secretary of the Company written notice of exercise, stating the number
of shares of Common Stock with respect to which an Option is being
exercised, along with payment of the Exercise Price for such shares by
(a) cash or check payable to the Company; (b) delivery of shares of
Common Stock; or (c) a combination of the preceding two methods.
Payment by delivery of shares of Common Stock may include (i) the
delivery of Common Stock already owned by the Participant; or (ii) the
exchange, in successive steps, of Common Stock to be received from the
exercise of the Option, with the result that the Participant will
receive from the exercise a net number of shares of Common Stock
represented by the difference between the total number of shares with
respect to which the Option is being exercised and that number of
shares, the fair market value of which is equal to the full Exercise
Price for all shares of Common Stock with respect to which the Option
is exercised. Any shares of Common Stock delivered in payment of an
Exercise Price shall be valued as of the Exercise Date in accordance
with paragraph 6 hereof.
9. LIMITATION ON EXERCISABILITY. In the case of ISOs, the aggregate fair
market value (determined as of the Grant Date) of the Common Stock
issuable pursuant to ISOs granted under the Plan and under any other
plan of the Company and any Related Corporation
-5-
<PAGE> 6
which are exercisable for the first time by a Participant during any
calendar year, shall not exceed $100,000.
10. GRANT OF SUBSTITUTE OPTIONS; MERGERS. In the event that a person who,
as an employee of a company other than the Company or a Related
Corporation, received one or more stock options entitling him to
purchase stock in his employer-company, and by reason of a corporate
merger, consolidation, acquisition of stock or property, separation,
reorganization or liquidation, such person becomes a key employee of
the Company or a Related Corporation, then, to the extent permitted by
Sections 422 and 424 of the Code in the case of ISOs, the Committee,
with the approval of the Board, may approve the granting of an Option
under the Plan to such person in substitution for his option to acquire
stock in such other company. Options granted under the Plan in
substitution may include provisions inconsistent with those required by
the Plan, so long as any ISO so granted meets the requirements of
Sections 422 and 424 of the Code and would not as a result cause other
ISOs granted under the Plan to be disqualified as ISOs.
11. NONTRANSFERABILITY OF OPTIONS. An Option granted under the Plan is not
transferable, except by will or by the laws of descent and
distribution, and, during the lifetime of the Participant to whom
granted, is exercisable only by him or in the event of his disability,
his personal representative. Notwithstanding the foregoing, an Option
may be transferred pursuant to a Qualified Domestic Relations Order as
defined in Section 414(p) of the Code; provided, however, that an ISO
may not be so transferred unless otherwise permitted pursuant to the
Code without affecting its status as an ISO.
12. NO EFFECT ON EMPLOYMENT. Nothing contained in the Plan or in any option
agreement issued in connection herewith shall be construed to limit or
restrict the right of the Company or any Related Corporation to
terminate a Participant's employment at any time, with or without
cause, or to increase or decrease the Participant's compensation from
the rate in existence at the time the Option is granted.
13. ADJUSTMENT OF SHARES SUBJECT TO OPTION. In the event there is any
change in the Common Stock of the Company subject to the Plan through
the declaration of stock dividends, or through recapitalization
resulting in stock split-ups, or combinations or exchanges of shares,
or otherwise, the number of shares of Common Stock available for the
granting of Options under the Plan and the shares of Common Stock
subject to any Option granted under the Plan shall be appropriately
adjusted by the Board. The Committee shall give notice of such
adjustment to each Participant, and the adjustment shall be effective
and binding on the Participant.
14. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of January
1, 1998, subject to the its approval and adoption by shareholders
holding a majority of the Company's shares entitled to vote thereon.
-6-
<PAGE> 7
15. SUSPENSION OR TERMINATION OF THE PLAN. The Board of Directors may at
any time suspend or terminate the Plan. Unless the Plan shall
theretofore have been terminated by the Board of Directors, the Plan
shall terminate at the close of business on the tenth anniversary of
the effective date of the Plan. Options may be granted during such
suspension or after such termination. The suspension or termination of
the Plan shall not, without the consent of the holders of Options
granted under the Plan, alter or impair any rights or obligations under
any Option previously granted under the Plan.
16. AMENDMENT OF THE PLAN. The Board may at any time amend the Plan in such
respect as the Board may deem advisable in order that ISOs granted
under it shall be or remain "incentive stock options" under Section 422
of the Code, or in order to conform to any change in the law, or in any
other respect the Board may deem to be in the best interest of the
Company; provided, however, that no such amendment shall be made
without approval of the holders of a majority of all shares of the
Company's issued and outstanding shares entitled to vote thereon to the
extent that shareholder approval would be required by Section 422 of
the Code or Rule 16b-3 of the Exchange Act or by the rules of any stock
exchange or market quotation system to which the Company is subject.
Any amendment to the Plan shall not alter or impair any rights or
obligations under any Option theretofore granted under the Plan without
the consent of the holder thereof.
17. ADMINISTRATION.
(A) The Committee shall have full power to construe and interpret
the Plan and to establish and amend rules and regulations for
its administration.
(B) Each Option shall be evidenced by an option agreement which
shall contain such terms and conditions as may be approved by
the Committee and shall be signed by an officer of the Company
and the Participant.
(C) The Committee shall report to the Board the names of those
Eligible Employees granted Options, the number of shares
covered by each Option, and the applicable Exercise Prices.
(D) Each Option shall be subject to the requirement that, if at
any time the Committee shall determine, in its discretion,
that the listing, registration or qualification of the shares
subject to such Option upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such
Option or the issue or purchase of shares thereunder, such
Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval
shall have been effected or obtained.
(E) The Committee shall, immediately after it approves the
granting of an Option, notify the Participant of such action.
-7-
<PAGE> 8
18. COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES. No Option shall
be exercisable and no shares will be delivered under this Plan except
in compliance with all applicable federal and state laws and
regulations including, without limitation, compliance with applicable
federal and state securities laws, withholding tax requirements and the
rules of all domestic stock exchanges and reporting systems on which
the Company's shares of Common Stock may be listed or reported, as the
Committee, in its sole discretion, may deem necessary or advisable. Any
share certificate issued to evidence shares of Common Stock for which
an Option is exercised may bear legends and statements the Committee
shall deem advisable to assure compliance with federal and state laws
and regulations.
19. MISCELLANEOUS PROVISIONS.
(A) WITHHOLDING TAXES. The Company or a Related Corporation shall
have the right to require a payment from a Participant to
cover applicable withholding taxes. If permitted by the
Committee, a Participant may make a written election to have
shares of Common Stock withheld from the shares otherwise to
be received upon the exercise of an Option and applied by the
Company or Related Corporation to the payment of applicable
taxes relative to the exercise of the Option. The number of
shares so withheld shall have an aggregate fair market value,
as determined by the Committee, sufficient to satisfy the
applicable withholding taxes.
(B) OHIO LAW TO GOVERN. The Plan and all agreements entered into
under the Plan shall be interpreted pursuant to the laws of
the State of Ohio.
(C) OTHER PLANS. Nothing herein contained shall be construed as
limiting the establishment or continued operation of other
incentive compensation plans by the Company or a Related
Corporation, or in any way limiting or restricting the amounts
of payments thereunder, or as in any way limiting the
authority of the Board to authorize or make such payments as
they may determine for any period, or as limiting the
authority of the Board in respect of the payment of salaries,
wages or special compensation.
(D) OBLIGATIONS. Neither the Company nor Related Corporations nor
the Board nor the Committee nor any member thereof shall, by
any provisions of the Plan, be deemed to be a trustee of any
property, and the liabilities of the Company or Related
Corporations to any Participant pursuant to the Plan shall be
those of a debtor pursuant to such contract obligation as are
created by the Plan, and no such obligation of the Company or
Related Corporations shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company or
Related Corporations.
(E) CHANGE IN CONDITIONS OF THE CODE. In the event of relevant
changes in the Code, or other factors affecting the continued
appropriateness of granting ISOs or NQSOs
-8-
<PAGE> 9
under the Plan, the Committee may, in its sole discretion,
accelerate or change the form of awarding benefits under the
Plan.
(F) PURCHASE OF COMMON STOCK. The Company and Related Corporations
may, but shall not be required to, purchase from time to time
shares of Common Stock of the Company in such amounts as they
may determine for purposes of the Plan. The Company and
Related Corporations shall have no obligation to retain, and
shall have the unlimited right to sell or otherwise deal with
for their own account, any shares of Common Stock of the
Company purchased pursuant to this paragraph.
(G) PARTICIPANT'S AGREEMENT. If, at the time of the distribution
of any shares of the Common Stock of the Company hereunder, in
the opinion of counsel for the Company, it is necessary or
desirable, in order to comply with any applicable laws or
regulations relating to the sale of securities, that the
Participant receiving such shares shall agree that he will
take the shares for investment and not with any present
intention to resell the same and that he will dispose of such
shares only in compliance with such laws and regulations, the
Participant will, upon the request of the Company, execute and
deliver to the Company an agreement to such effect.
(H) USE OF CERTAIN TERMS. The terms used herein which are defined
in Sections 421, 422 and 424, inclusive, of the Code and
regulations and revenue rulings applicable thereto, shall have
the meanings attributed to them therein.
(I) ISO SAVINGS CLAUSE. It is intended that ISOs granted under
this Plan, and the terms of this Plan which apply to ISOs,
shall meet all requirements of Section 422 of the Code, and
the Plan shall be interpreted, whenever possible, to comply
therewith. To the extent necessary that ISOs granted or to be
granted under the Plan shall be or remain "incentive stock
options" under Section 422 of the Code, all provisions under
this Plan pertaining to ISOs shall be read together, without
any provisions which pertain exclusively to NQSOs or otherwise
do not apply to ISOs.
(J) RULE 16b-3 SAVINGS CLAUSE. To the extent that they apply to
persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3. Any provision of the Plan
or action by the Committee shall be interpreted, wherever
possible, to comply with all applicable conditions of Rule
16b-3, and to the extent that it does not comply, it shall be
deemed to be null and void, to the extent permitted by law and
deemed advisable by the Committee.
(K) OTHER PROVISIONS. The agreements authorized under this Plan
may contain such other provisions as the Committee shall deem
advisable.
(L) NOTICE. Any notice which may be required or permitted to be
given hereunder shall be in writing, and may be delivered to
the Company personally or by registered mail,
-9-
<PAGE> 10
postage prepaid, addressed to: Treasurer, Regent
Communications, Inc., 50 East RiverCenter Boulevard,
Covington, Kentucky 41011 or at such other address as the
Company, by notice to the Participant, may designate in
writing from time to time, and to the Participant, at the
Participant's address as shown on the records of the Company,
or at such other address as the Participant, by notice to the
Treasurer, Regent Communications, Inc., may designate in
writing from time to time.
REGENT COMMUNICATIONS, INC.
By:
---------------------------------
Terry S. Jacobs, President
-10-
<PAGE> 1
Exhibit 10(b)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement"), effective as of
March 1, 1998 by and between REGENT COMMUNICATIONS, INC., a Delaware corporation
(the "Company"), and TERRY S. JACOBS ("Employee").
RECITALS
WHEREAS, the Company is engaged in the business, either directly or through
affiliates, of owning and operating radio broadcasting stations (the
"Business"), with principal offices in Covington, Kentucky. For purposes of this
Agreement, the term "Company" shall include the Company, its subsidiaries,
affiliates, and assignees and any successors in interest of the Company and its
subsidiaries and/or affiliates.
WHEREAS, Employee has been actively engaged in the radio broadcasting
business since 1979 and has extensive knowledge and a unique understanding of
the operation of the Business.
WHEREAS, the Company desires to employ Employee, and Employee desires to be
employed by the Company, as Chairman and Chief Executive Officer of the Company.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. EMPLOYMENT.
1.1 ENGAGEMENT OF EMPLOYEE. The Company agrees to employ Employee and
Employee agrees to accept employment as the Chairman and Chief Executive Officer
of the Company, all in accordance with the terms and conditions of this
Agreement.
1.2 DUTIES AND POWERS.
(a) During the Employment Period, Employee will serve as the Company's
Chairman and Chief Executive Officer, and will have such responsibilities,
duties and authority as customarily held by executives in such a position in
comparable companies, and will render services of an executive and
administrative character, and act in such other executive capacity for the
Company, as the Company's board of directors (the "Board") shall from time to
time direct. Employee shall devote his reasonable best efforts, energies and
abilities to the business and affairs of the Company. Employee shall perform the
duties and carry out the responsibilities assigned to him, to the best of his
ability, in a diligent, trustworthy and businesslike manner for the purpose of
advancing the business of the Company and in a manner he reasonably believes to
be in and not opposed to the best interests of the Company.
(b) Employee acknowledges that his duties and responsibilities will
require his concentrated business efforts and agrees that during the Employment
Period he will not
<PAGE> 2
engage directly or indirectly in any other business activity or have any
business pursuits or interests which materially interfere or conflict with the
performance of Employee's duties hereunder or which compete directly with the
Company; provided, however, nothing in this Section 1.2 shall be deemed to
prohibit Employee from investing in the stock of any competing corporation
listed on a national securities exchange or traded in the over-the-counter
market, but only if his associates (as such term is defined in Regulation 14(A)
promulgated under the Securities Exchange Act of 1934, as in effect on the date
hereof), collectively, do not own more than an aggregate of three percent of the
stock of such corporation. Notwithstanding the foregoing or anything else in
this Agreement to the contrary, the parties agree and acknowledge that Employee
currently serves as a member of the board of directors of National Grange
Insurance Company and affiliates, and may continue to do so throughout the
Employment Period so long as such activities do not materially interfere with
any of Employee's other obligations to the Company hereunder. In addition,
Employee may serve on additional boards of directors during the Employment
Period and volunteer his service to charitable, business and other public
service agencies, clubs or organizations so long as such board or other service
does not materially interfere or conflict with the performance of Employee's
duties hereunder and so long as such activities are not rendered for a
competitor of the Company. Any and all fees or remuneration paid to Employee in
consideration of work and services performed outside the scope of Employee'
employment hereunder shall inure to the benefit of Employee.
(c) The parties hereto agree that none of Employee's duties hereunder
shall require him to, and Employee agrees that he will not without the consent
of the Board, which consent shall not be unreasonably withheld, change his
personal residence from the Greater Cincinnati, Ohio SMSA Area.
1.3 EMPLOYMENT PERIOD. Employee's employment under this Agreement shall
begin effective on March 1, 1998 and shall continue through and until April 30,
2001 (the "Initial Period") unless extended as provided in this Section 1.3.
This Agreement shall automatically be extended for additional consecutive
three-year periods ("Renewal Periods") unless either party desires to terminate
this Agreement and notifies the other party in writing at least sixty (60) days
prior to the end of the then current Initial Period or Renewal Period. The
Initial Period and the Renewal Periods are hereinafter referred to collectively
as the "Employment Period." Notwithstanding anything to the contrary contained
herein, the Employment Period is subject to termination pursuant to Section 1.4
and Section 1.5 below.
1.4 TERMINATION BY THE COMPANY. The Company has the right to terminate
Employee's employment under this Agreement, by notice to Employee in writing at
any time, (i) for "Cause", (ii) without Cause for any or no reason, and (iii)
due to the Disability of Employee. Any such termination shall be effective upon
the date of service of such notice pursuant to Section 15. This Agreement shall
terminate automatically upon Employee's death.
"Cause" as used herein means the occurrence of any of the following events:
(a) the determination by the Board in the exercise of its reasonable
judgment that Employee has committed an act or acts constituting (i) a crime
involving moral turpitude, dishonesty or theft, (ii) dishonesty or disloyalty
with respect to the Company, or (iii) fraud;
-2-
<PAGE> 3
(b) the determination by the Board in the exercise of its reasonable
judgment that Employee has committed an act that indicates alcohol or drug abuse
by Employee that adversely affects his performance hereunder;
(c) a material breach by Employee of any of the terms and conditions of
Sections 3 or 4 of this Agreement; or
(d) Employee's gross negligence, habitual neglect, or intentional
misconduct in the performance of his duties hereunder.
Employee shall be deemed to have a "Disability" for purposes of this
Agreement if Employee shall be unable, by reason of illness or physical or
mental incapacity or disability (from any cause or causes whatsoever), to
perform Employee's essential job functions hereunder, whether with or without
reasonable accommodation by the Company, in substantially the manner and to the
extent required hereunder prior to the commencement of such Disability, for a
total period of 90 days in any 180-day period. In the event Employee shall be
under a Disability, the Company shall have the right to terminate Employee's
employment hereunder during the continuance of such Disability upon at least
thirty (30) days prior written notice to Employee. Such determination shall not
be arbitrary or unreasonable, and the Board shall take into consideration the
opinion of Employee's personal physician, if reasonably available, as well as
applicable provisions of the Americans with Disabilities Act, but such
determination by the Board, if not arbitrary or unreasonable, shall be final and
binding on the parties hereto.
1.5 TERMINATION BY EMPLOYEE. Employee has the right to terminate his
employment under this Agreement for any or no reason, upon ninety (90) days
prior written notice to the Company.
1.6 BOARD OF DIRECTORS AND RESIGNATION. Throughout the Employment
Period, the Company agrees to seek to cause Employee to be elected to the Board.
Unless by virtue of his beneficial ownership of voting stock of the Company he
has voting control over a number of shares sufficient to assure his election to
the Board, upon the termination of Employee's employment with the Company for
any reason, Employee shall be deemed to have automatically resigned from any
position he may then hold on the Board. Such resignation shall be deemed
effective immediately without the requirement that a written resignation be
delivered.
1.7 INDEMNITY. The Company shall indemnify Employee and hold him
harmless to the fullest extent permissible under applicable law for all acts or
decisions made by him in good faith while performing services for the Company.
The Company shall also use its best efforts to obtain coverage for him under any
insurance policy obtained during the term of this Agreement covering the other
officers and directors of the Company against lawsuits.
-3-
<PAGE> 4
2. COMPENSATION AND BENEFITS.
2.1 BASE COMPENSATION. During the Employment Period, the Company will
pay Employee an annual base salary of $250,000 per annum (the "Base Salary"),
payable in accordance with the Company's regular payroll policy for senior
executive salaried employees; provided, however, payment of Employee's Base
Salary shall be deferred until the earlier of July 1, 1998 and the date of
consummation of the merger with Faircom Inc., at which time all accrued and
unpaid Base Salary shall be paid in full. At least once every twelve (12)
months, the Board shall perform an annual review of Employee's Base Salary based
on Employee's performance of his duties and the Company's other compensation
policies and make such increase thereto as it deems appropriate, provided that
at each such twelve-month interval the Base Salary shall be increased from its
level during the prior twelve-month period at least by a percentage no less than
the percentage increase in the Consumer Price Index - All Items during such
prior twelve-month period. Upon termination of the Employment Period, the Base
Salary for any partial year will be prorated based on the number of days elapsed
in such year during which the Employment Period had continued.
2.2 DISCRETIONARY BONUS. Within seventy five (75) days following the end
of each fiscal year, the Board, as part of its annual review of Employee's
performance, shall consider in its sole discretion the merits of a bonus to
Employee, and in the event a bonus is warranted, shall cause the Company to
award to Employee a bonus (the "Discretionary Bonus") for such year in an amount
to be determined by the Board in its reasonable judgment based upon the
Employee's and the Company's performance and the achievement of reasonably
attainable goals and objectives established by the Board in consultation with
Employee for such year. For purposes of a guideline, an assessment by the Board
that Employee's performance has been "good" should merit a Discretionary Bonus
equal to at least fifty percent (50%) of Employee's Base Salary for that year,
with higher percentages of Base Salary for "excellent" and "outstanding"
performances, a lesser percentage of Base Salary for only "satisfactory"
performance, and no Discretionary Bonus for "poor" performance.
2.3 STOCK OPTIONS. It is agreed that, in addition to and not in lieu of
Discretionary Bonuses, the Company will, from time to time and on such terms and
conditions as the Board shall deem appropriate, in its sole discretion, grant to
Employee pursuant to the Company's 1998 Management Stock Option Plan qualified
and/or non-qualified options to acquire that number of shares of common stock of
the Company which constitutes 5.5% of the outstanding equity securities of the
Company from time to time, on a fully-diluted, as converted, basis; provided,
however, that such number shall not exceed 733,333 without further approval of
the Board of Directors. These grants will be made at intervals as additional
equity securities are issued by the Company and will include an initial grant
during the first year of the Initial Period to be made upon consummation of the
pending merger transaction with Faircom Inc. of options to purchase the number
of shares of the Company's common stock to which he is then entitled pursuant to
the terms of this Section 2.3. These options will be granted in two sets - one
set consisting of incentive stock options (ISO's") to purchase the maximum
number of shares allowable to maintain their qualified status and the other set
consisting of non-qualified stock options (the "Non-Qualified Options"). All
such options will (a) be exercisable at an exercise price of not less than the
then fair market value of the Company's common stock but, in any event, at
]
-4-
<PAGE> 5
least $5.00 per share with respect to the authorized options to purchase 733,333
shares, (b) vest over a period of ten (10) years (10% each year) for the ISO's
and three (3) years (33% each year) for the Non-Qualified Options, provided all
non-vested options will vest immediately upon a change of majority control of
the Company or a sale of substantially all of the assets of the Company, and (c)
have an exercise period of ten (10) years from the date of grant (or such
shorter period as may be required to preserve the ISO's).
2.4 BENEFITS. In addition to the Base Salary, any Discretionary Bonus
and any stock options payable or granted to Employee hereunder, Employee will be
entitled to the following benefits during the Employment Period:
(a) payments of premiums for hospitalization, disability, life and
health insurance, to the extent offered by the Company, and in amounts
consistent with Company policy, for all key management employees, as reasonably
determined by the Board;
(b) up to four (4) weeks paid vacation each year with salary, provided
that unused vacation time shall not be carried over to subsequent years;
(c) reimbursement for reasonable, ordinary and necessary out-of-pocket
business expenses incurred by Employee in the performance of his duties, subject
to the Company's policies in effect from time to time with respect to travel,
entertainment and other expenses, including without limitation, requirements
with respect to reporting and documentation of such expenses;
(d) use of an automobile at the Company's expense which shall include
expenses for parking in the area of the Company's offices and for comprehensive
insurance coverage for the automobile; and
(e) other benefit arrangements and perquisites, including a 401(k) or
similar tax deferral plan, to the extent made generally available by the Company
to its executives and key management employees.
2.5 TAXES, ETC. All compensation payable to Employee hereunder is stated
in gross amount and shall be subject to all applicable withholding taxes, other
normal payroll and any other amounts required by law to be withheld.
2.6 COMPENSATION AFTER TERMINATION.
(a) If the Employment Period is terminated (i) by the Company without
Cause; (ii) by reason of Employee's Disability; or (iii) through expiration of
the Employment Period or death of Employee, then, (1) all shares of the
Company's capital stock beneficially owned by the Employee shall be repurchased
by the Company for cash equal to the fair market value thereof at the effective
date of termination (with the cash payment in full made promptly after a
termination pursuant to this Section 2.6(a)(i) or 2.6(a)(iii) and with the cash
payment made in three equal consecutive annual installments beginning on the
date of termination pursuant to this Section 2.6(a)(ii)); (2) except as
otherwise provided in the specific terms of the option agreement or grant,
-5-
<PAGE> 6
all unvested options to purchase stock of the Company held by Employee shall
cease and terminate as of the date of termination, and all vested but
unexercised options to purchase stock of the Company held by Employee shall be
repurchased by the Company (according to the same payment terms as apply to
shares of the Company's capital stock) for an amount constituting the excess of
fair market value of the shares subject to the options over the exercise price
of the options, if any, and if there is no such excess, then such options shall
be repurchased by the Company for one hundred dollars ($100) in the aggregate;
whereupon, the Company shall have no further obligations hereunder or otherwise
with respect to Employee's employment from and after the termination or
expiration date (except for the unpaid installments and payment of Employee's
current Base Salary accrued through the date of termination or expiration) and
the Company shall continue to have all other rights available hereunder
(including without limitation, all rights under Sections 3 and 4 at law or in
equity). For the purposes of this Agreement, "fair market value" shall have its
customary meaning and shall promptly be determined by agreement between the
Company and the Employee. If the Company and the Employee cannot agree on the
fair market value within thirty (30) days after termination, then each of the
Company and the Employee shall promptly appoint an appraiser, who will in turn
promptly select a third appraiser, and the three appraisers will, within thirty
(30) days of their appointment, determine the fair market value of the stock in
such manner as a majority of them deem appropriate. The shares of stock and any
options shall be transferred to the Company free and clear of all liens,
encumbrances or rights of third parties within three (3) business days after the
decision of the appraiser has been communicated to the parties. Notwithstanding
the foregoing, if the Employment Period is terminated prior to September 1,
1998, then the Company shall not be obligated to repurchase from Employee the
capital stock and options owned or held by him until October 1, 1998 (or as
promptly thereafter as practicable) and the fair market value of such securities
shall be determined as of September 1, 1998.
(b) If the Employment Period is terminated by the Company because of
Employee's Disability, the Company agrees to continue to pay Employee his
current Base Salary during such period of Disability, said payments to continue
for a maximum of one year. Thereafter, Employee shall be paid by the Company's
insurer, if any, such disability benefits as may be paid to any employee of the
Company under any disability plan then in effect, if any.
(c) If the Employment Period is terminated by the Company without Cause,
Employee shall be entitled to receive as severance pay (in addition to the
payment of the Base Salary through the date of termination as well as a prorated
Discretionary Bonus) an amount equal to the greater of (i) his current Base
Salary for a period equal to twelve (12) months and (ii) Employee's current Base
Salary for the remainder of the current Initial or Renewal Period, such amount
to be payable in regular installments in accordance with the Company's general
payroll practices for salaried employees. Employee shall have no obligation to
mitigate these post-employment payments by seeking other employment. Except
pursuant to Section 2.6(a), the Company shall have no other obligations
hereunder or otherwise with respect to Employee's employment from and after the
termination or expiration date, and the Company shall continue to have all other
rights available hereunder (including, without limitation, all rights under
Sections 3, 4, and 6 at law or in equity).
(d) If the Employment Period is terminated pursuant to Section
2.6(a)(iii), 2.6(b), or 2.6(c) above, Employee shall be entitled to receive, at
such time it would
-6-
<PAGE> 7
otherwise be payable, any Discretionary Bonus which would have been payable,
based upon the Company's performance over the full fiscal year, prorated for
that portion of the fiscal year during which the Employee was employed by the
Company.
2.7 PROFIT SHARING, PENSION AND SALARY DEFERRAL BENEFITS. It is
understood by the parties to this Agreement that, during the Employment Period,
Employee shall be entitled to participate in or accrue benefits under any
pension, salary deferral or profit sharing plan now existing or hereafter
created for employees of the Company upon terms and conditions equivalent to
those which the Company may provide for other senior executive employees.
3. COVENANT NOT TO COMPETE.
3.1 NON-COMPETITION. Employee agrees that during the Employment Period
and for the 18-month period immediately following the termination of his
employment with the Company, he shall not, within a seventy-five (75) mile
radius of any radio station transmission tower or studio then owned or operated,
directly or indirectly, by the Company (the "Territory"), engage in any of the
following activities:
(a) Directly or indirectly enter into the employ or render any service
to or act in concert with any person, partnership, corporation or other entity
engaged in the ownership or operation of radio stations (the "Radio Business")
with a radio station transmission tower or studio located within the Territory;
or
(b) Directly or indirectly engage in the Radio Business with a radio
station transmission tower or studio located within the Territory on his own
account; or
(c) Become interested in any such Radio Business with a radio station
transmission tower or studio located within the Territory directly or indirectly
as an individual, partner, shareholder, director, officer, principal, agent,
employee, consultant, creditor or in any other relationship or capacity;
provided, that the purchase of a publicly traded security of a corporation
engaged in the Radio Business shall not in itself be deemed violative of this
Agreement so long as Employee does not own, directly or indirectly, more than 3%
of the securities of such corporation.
3.2 NON-SOLICITATION. Employee agrees that during the Employment Period
and for the 18-month period immediately following the termination of his
employment with the Company, he shall not (other than in the regular course of
the Company's business) within the Territory solicit, directly or indirectly,
business of the type then being performed by the Company from any person,
partnership, corporation or other entity which is a customer of the Company at
the time Employee's employment with the Company terminates, or was such a
customer within the one-year period immediately prior thereto, or to the
knowledge of Employee at the date of termination of employment, is a person,
partnership, corporation or other entity with which the Company plans to do a
substantial amount of business within the one-year period after such termination
of employment.
-7-
<PAGE> 8
4. NON-INDUCEMENT AND NON-DISCLOSURE.
4.1 NON-INDUCEMENT. Employee agrees that during the Employment Period
and for a one-year period immediately following the termination of his
employment with the Company, he shall not directly or indirectly, individually
or on behalf of persons not parties to this Agreement, aid or endeavor to
solicit or induce any of the Company's employees to leave their employment with
the Company in order to accept employment with Employee or another person,
partnership, corporation or other entity.
4.2 NON-DISCLOSURE. At no time shall Employee divulge, furnish or make
accessible to anyone (other than in the regular course of the Company's
business) any knowledge or information with respect to confidential information
or data of the Company, or with respect to any confidential information or data
of any of the customers of the Company, or with respect to any other
confidential aspect of the business or products or services of the Company or
its customers. Upon termination of his employment with the Company, Employee
shall return to the Company all records, documents and material containing
confidential information of the Company prepared by Employee or coming into his
possession by virtue of his employment with the Company, including all copies
thereof.
5. EFFECT OF TERMINATION WITHOUT CAUSE. Notwithstanding the provisions
of Sections 3 and 4 above, the restrictions imposed upon Employee in Sections
3.1, 3.2, and 4.1 of this Agreement during the period following the termination
of his employment hereunder shall apply in the event Employee's employment
hereunder is terminated by the Company without cause pursuant to Section 1.4(ii)
only for a period of one year provided Employee has received and has elected to
accept the severance pay under Section 2.6(c).
6. REMEDIES. Employee acknowledges and agrees that the covenants set
forth in Sections 3 and 4 of this Agreement (collectively, the "Restrictive
Covenants") are reasonable and necessary for the protection of the Company's
business interests and compliance therewith will not deprive Employee of the
ability to earn a suitable living, that irreparable injury will result to the
Company if Employee breaches any of the terms of the Restrictive Covenants, and
that in the event of Employee's actual or threatened breach of any such
Restrictive Covenants, the Company will have no adequate remedy at law. Employee
accordingly agrees that in the event of any actual or threatened breach by him
of any of the Restrictive Covenants, the Company shall be entitled to immediate
temporary injunctive and other equitable relief, without the necessity of
showing actual monetary damages, subject to hearing as soon thereafter as
possible. In such event, the periods of time referred to in Sections 3 and 4
shall be deemed extended for a period equal to the respective period during
which Employee is in breach thereof, in order to provide for injunctive relief
and specific performance for a period equal to the full term thereof. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of any damages which it is able to prove. The covenants contained
in Section 4 and 5 shall be construed as separate covenants, and if any court
shall finally determine that the restraints provided for in any such covenants
are too broad as to the geographic area, activity or time covered, said area,
activity or time covered may be reduced to whatever extent the court deems
reasonable and such covenants shall be enforced as to such reduced area,
activity or time. Employee shall indemnify and hold Company harmless from any
-8-
<PAGE> 9
liability, loss, damage, judgment, cost or expense (including reasonable
attorneys' fees and expenses) arising out of any claim or suit resulting from
Employee's breach of these covenants or his failure to perform a duty hereunder.
7. NO OTHER NON-COMPETE AGREEMENTS. Notwithstanding anything to the
contrary contained herein, Employee hereby represents, warrants and covenants to
Company that Employee (i) is not a party to nor bound by any non-competition,
non-solicitation, confidentiality or other agreement of any kind which would
conflict with or prevent his employment hereunder or the full performance of all
of his duties hereunder, and (ii) has not, and will not, wrongfully use any
confidential information or know-how taken from another employer. Employee
hereby agrees to indemnify and hold the Company harmless from any claim, loss,
damage and expense hereafter incurred by the Company as a result of any breach
of the foregoing representations, warranties or covenants made by Employee in
this Section.
8. LIFE INSURANCE. The Company may at its discretion and at any time apply
for and procure as owner and for its own benefit and at its own expense,
insurance on the life of Employee in such amounts and in such form or forms as
the Company may choose. Employee shall cooperate with the Company in procuring
such insurance and shall, at the request of the Company, submit to such medical
examinations, supply such information and execute such documents as may be
required by the insurance company or companies to whom the Company has applied
for such insurance. Employee shall have no interest whatsoever in any such
policy or policies, except that, upon the termination of Employee's employment
hereunder, Employee shall have the privilege of purchasing any such insurance
from the Company for an amount equal to the actual premiums thereon previously
paid by the Company.
9. INCOME TAX TREATMENT. Employee and the Company acknowledge that it is
the intention of the Company to deduct all amounts paid under Section 2 hereof
as ordinary and necessary business expenses for income tax purposes. Employee
agrees and represents that he will treat all amounts paid hereunder as ordinary
income for income tax purposes, and should he report such amounts as other than
ordinary income for income tax purposes, he will indemnify and hold the Company
harmless from and against any and all taxes, penalties, interest, costs and
expenses, including reasonable attorneys' and accounting fees and costs, which
are incurred by the Company directly or indirectly as a result thereof.
10. ASSIGNMENT. No party hereto may assign or delegate any of its rights or
obligations hereunder without the prior written consent of the other party
hereto, provided, however, the Company shall have the right to assign all or any
part of its rights and obligations under this Agreement to (i) any affiliate of
the Company to which the Business is assigned at any time or (ii) the purchaser
of all or substantially all of the assets of the Company. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto whether so expressed or not.
11. SEVERABILITY. Whenever possible, each provision of this agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be
-9-
<PAGE> 10
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
12. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same Agreement.
13. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings in this
Agreement are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement. The use
of the word "including" in this Agreement shall be by way of example rather than
by limitation.
14. NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been duly given if (i) delivered personally
to the recipient, (ii) sent to the recipient by reputable express courier
service (charges prepaid) or mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid, or (iii) transmitted by
telecopy to the recipient with a confirmation copy to follow the next day to be
delivered by overnight carrier. Such notices, demands and other communications
shall be sent to the addresses indicated below:
(a) If to Employee:
Terry S. Jacobs
50 East RiverCenter Blvd.
Suite 180
Covington, KY 41011
Facsimile No. 606/292-0352
(b) If to the Company:
Regent Communications, Inc.
50 East RiverCenter Boulevard
Suite 180
Covington, Kentucky 41011
Facsimile No.: 606/292-0352
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. Date
of service of such notice shall be (w) the date such notice is personally
delivered, (x) three days after the date of mailing if sent by certified or
registered mail, (y) one day after the date of delivery to the overnight courier
if sent by overnight courier or (z) the next business day after the date of
transmittal by telecopy.
15. PREAMBLE; PRELIMINARY RECITALS. The Preliminary Recitals set forth in
the Preamble hereto are hereby incorporated and made part of this Agreement.
-10-
<PAGE> 11
16. WAIVER. No modification, termination or attempted waiver of this
Agreement shall be valid unless in writing and signed by the party against whom
the same is sought to be entered. Either party's failure to enforce any
provision or provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions as to any future violations thereof,
nor prevent that party thereafter from enforcing each and every other provision
of this Agreement. The rights granted the parties herein are cumulative and the
waiver by a party of any single remedy shall not constitute a waiver of such
party's right to assert all other legal remedies available to him or it under
the circumstances.
17. ADDITIONAL OBLIGATIONS. Both during and after the Employment Period,
Employee shall, upon reasonable notice, furnish the Company with such
information as may be in Employee's possession, and cooperate with the Company,
as may reasonably be requested by the Company (and, after the Employment Period,
with due consideration for Employee's obligations with respect to any new
employment or business activity) in connection with any litigation in which the
Company or any affiliate is or may become a party. The Company shall reimburse
Employee for all reasonable expenses incurred by Employee in fulfilling
Employee's obligations under this Section 17.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the Commonwealth of Kentucky without giving effect to provisions thereof
regarding conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
REGENT COMMUNICATIONS, INC.
By:
--------------------------------
Title:
-----------------------------
EMPLOYEE:
-----------------------------------
Terry S. Jacobs
-11-
<PAGE> 1
Exhibit 10(c)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement"), effective as of
March 1, 1998 by and between REGENT COMMUNICATIONS, INC., a Delaware corporation
(the "Company"), and WILLIAM L. STAKELIN ("Employee").
RECITALS
WHEREAS, the Company is engaged in the business, either directly or through
affiliates, of owning and operating radio broadcasting stations (the
"Business"), with principal offices in Covington, Kentucky. For purposes of this
Agreement, the term "Company" shall include the Company, its subsidiaries,
affiliates, and assignees and any successors in interest of the Company and its
subsidiaries and/or affiliates.
WHEREAS, Employee has been actively engaged in the radio broadcasting
business since 1958 and has extensive knowledge and a unique understanding of
the operation of the Business.
WHEREAS, the Company desires to employ Employee, and Employee desires to be
employed by the Company, as President of the Company.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. EMPLOYMENT.
1.1 ENGAGEMENT OF EMPLOYEE. The Company agrees to employ Employee and
Employee agrees to accept employment as the President of the Company, all in
accordance with the terms and conditions of this Agreement.
1.2 DUTIES AND POWERS.
(a) During the Employment Period, Employee will serve as the Company's
President, and will have such responsibilities, duties and authority as
customarily held by executives in such a position in comparable companies, and
will render services of an executive and administrative character, and act in
such other executive capacity for the Company, as the Company's board of
directors (the "Board") shall from time to time direct. Employee shall devote
his reasonable best efforts, energies and abilities to the business and affairs
of the Company. Employee shall perform the duties and carry out the
responsibilities assigned to him, to the best of his ability, in a diligent,
trustworthy and businesslike manner for the purpose of advancing the business of
the Company and in a manner he reasonably believes to be in and not opposed to
the best interests of the Company.
<PAGE> 2
(b) Employee acknowledges that his duties and responsibilities will
require his concentrated business efforts and agrees that during the Employment
Period he will not engage directly or indirectly in any other business activity
or have any business pursuits or interests which materially interfere or
conflict with the performance of Employee's duties hereunder or which compete
directly with the Company; provided, however, nothing in this Section 1.2 shall
be deemed to prohibit Employee from investing in the stock of any competing
corporation listed on a national securities exchange or traded in the
over-the-counter market, but only if his associates (as such term is defined in
Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof), collectively, do not own more than an aggregate of
three percent of the stock of such corporation. In addition, Employee may serve
on boards of directors during the Employment Period and volunteer his service to
charitable, business and other public service agencies, clubs or organizations
so long as such board or other service does not materially interfere or conflict
with the performance of Employee's duties hereunder and so long as such
activities are not rendered for a competitor of the Company. Any and all fees or
remuneration paid to Employee in consideration of work and services performed
outside the scope of Employee' employment hereunder shall inure to the benefit
of Employee.
(c) The parties hereto agree that none of Employee's duties hereunder
shall require him to, and Employee agrees that he will not without the consent
of the Board, which consent shall not be unreasonably withheld, change his
personal residence from the Greater Cincinnati, Ohio SMSA Area.
1.3 EMPLOYMENT PERIOD. Employee's employment under this Agreement shall
begin effective March 1, 1998 and shall continue through and until April 30,
2001 (the "Initial Period") unless extended as provided in this Section 1.3.
This Agreement shall automatically be extended for additional consecutive
three-year periods ("Renewal Periods") unless either party desires to terminate
this Agreement and notifies the other party in writing at least sixty (60) days
prior to the end of the then current Initial Period or Renewal Period. The
Initial Period and the Renewal Periods are hereinafter referred to collectively
as the "Employment Period." Notwithstanding anything to the contrary contained
herein, the Employment Period is subject to termination pursuant to Section 1.4
and Section 1.5 below.
1.4 TERMINATION BY THE COMPANY. The Company has the right to terminate
Employee's employment under this Agreement, by notice to Employee in writing at
any time, (i) for "Cause", (ii) without Cause for any or no reason, and (iii)
due to the Disability of Employee. Any such termination shall be effective upon
the date of service of such notice pursuant to Section 15. This Agreement shall
terminate automatically upon Employee's death.
"Cause" as used herein means the occurrence of any of the following events:
(a) the determination by the Board in the exercise of its reasonable
judgment that Employee has committed an act or acts constituting (i) a crime
involving moral turpitude, dishonesty or theft, (ii) dishonesty or disloyalty
with respect to the Company, or (iii) fraud;
-2-
<PAGE> 3
(b) the determination by the Board in the exercise of its reasonable
judgment that Employee has committed an act that indicates alcohol or drug abuse
by Employee that adversely affects his performance hereunder;
(c) a material breach by Employee of any of the terms and conditions of
Sections 3 or 4 of this Agreement; or
(d) Employee's gross negligence, habitual neglect, or intentional
misconduct in the performance of his duties hereunder.
Employee shall be deemed to have a "Disability" for purposes of this
Agreement if Employee shall be unable, by reason of illness or physical or
mental incapacity or disability (from any cause or causes whatsoever), to
perform Employee's essential job functions hereunder, whether with or without
reasonable accommodation by the Company, in substantially the manner and to the
extent required hereunder prior to the commencement of such Disability, for a
total period of 90 days in any 180-day period. In the event Employee shall be
under a Disability, the Company shall have the right to terminate Employee's
employment hereunder during the continuance of such Disability upon at least
thirty (30) days prior written notice to Employee. Such determination shall not
be arbitrary or unreasonable, and the Board shall take into consideration the
opinion of Employee's personal physician, if reasonably available, as well as
applicable provisions of the Americans with Disabilities Act, but such
determination by the Board, if not arbitrary or unreasonable, shall be final and
binding on the parties hereto.
1.5 TERMINATION BY EMPLOYEE. Employee has the right to terminate his
employment under this Agreement for any or no reason, upon ninety (90) days
prior written notice to the Company.
1.6 BOARD OF DIRECTORS AND RESIGNATION. Throughout the Employment
Period, the Company agrees to seek to cause Employee to be elected to the Board.
Unless by virtue of his beneficial ownership of voting stock of the Company he
has voting control over a number of shares sufficient to assure his election to
the Board, upon the termination of Employee's employment with the Company for
any reason, Employee shall be deemed to have automatically resigned from any
position he may then hold on the Board. Such resignation shall be deemed
effective immediately without the requirement that a written resignation be
delivered.
1.7 INDEMNITY. The Company shall indemnify Employee and hold him
harmless to the fullest extent permissible under applicable law for all acts or
decisions made by him in good faith while performing services for the Company.
The Company shall also use its best efforts to obtain coverage for him under any
insurance policy obtained during the term of this Agreement covering the other
officers and directors of the Company against lawsuits.
-3-
<PAGE> 4
2. COMPENSATION AND BENEFITS.
2.1 BASE COMPENSATION. During the Employment Period, the Company will
pay Employee an annual base salary of $225,000 per annum (the "Base Salary"),
payable in accordance with the Company's regular payroll policy for senior
executive salaried employees; provided, however, payment of Employee's Base
Salary shall be deferred until the earlier of July 1, 1998 and the date of
consummation of the merger with Faircom Inc., at which time all accrued and
unpaid Base Salary shall be paid in full. At least once every twelve (12)
months, the Board shall perform an annual review of Employee's Base Salary based
on Employee's performance of his duties and the Company's other compensation
policies and make such increase thereto as it deems appropriate, provided that
at each such twelve-month interval the Base Salary shall be increased from its
level during the prior twelve-month period at least by a percentage no less than
the percentage increase in the Consumer Price Index - All Items during such
prior twelve-month period. Upon termination of the Employment Period, the Base
Salary for any partial year will be prorated based on the number of days elapsed
in such year during which the Employment Period had continued.
2.2 DISCRETIONARY BONUS. Within seventy five (75) days following the end
of each fiscal year, the Board, as part of its annual review of Employee's
performance, shall consider in its sole discretion the merits of a bonus to
Employee, and in the event a bonus is warranted, shall cause the Company to
award to Employee a bonus (the "Discretionary Bonus") for such year in an amount
to be determined by the Board in its reasonable judgment based upon the
Employee's and the Company's performance and the achievement of reasonably
attainable goals and objectives established by the Board in consultation with
Employee for such year. For purposes of a guideline, an assessment by the Board
that Employee's performance has been "good" should merit a Discretionary Bonus
equal to at least fifty percent (50%) of Employee's Base Salary for that year,
with higher percentages of Base Salary for "excellent" and "outstanding"
performances, a lesser percentage of Base Salary for only "satisfactory"
performance, and no Discretionary Bonus for "poor" performance.
2.3 STOCK OPTIONS. It is agreed that, in addition to and not in lieu of
Discretionary Bonuses, the Company will, from time to time and on such terms and
conditions as the Board shall deem appropriate, in its sole discretion, grant to
Employee pursuant to the Company's 1998 Management Stock Option Plan qualified
and/or non-qualified options to acquire that number of shares of common stock of
the Company which constitutes 5.5% of the outstanding equity securities of the
Company from time to time, on a fully-diluted, as converted, basis; provided,
however, that such number shall not exceed 733,333 without further approval of
the Board of Directors. These grants will be made at intervals as additional
equity securities are issued by the Company and will include an initial grant
during the first year of the Initial Period to be made upon consummation of the
pending merger transaction with Faircom Inc. of options to purchase the number
of shares of the Company's common stock to which he is then entitled pursuant to
the terms of this Section 2.3. These options will be granted in two sets - one
set consisting of incentive stock options ("ISO's") to purchase the maximum
number of shares allowable to maintain their qualified status and the other set
consisting of non-qualified stock options (the "Non-Qualified Options"). All
such options will (a) be exercisable at an exercise price of not less than the
then fair market value of the Company's common stock but, in any
-4-
<PAGE> 5
event, at least $5.00 per share with respect to the authorized options to
purchase 733,333 shares, (b) vest over a period of ten (10) years (10% each
year) for the ISO's and three (3) years (33% each year) for the Non-Qualified
Options, provided all non-vested options will vest immediately upon a change of
majority control of the Company or a sale of substantially all of the assets of
the Company, and (c) have an exercise period of ten (10) years from the date of
grant (or such shorter period as may be required to preserve the ISO's).
2.4 BENEFITS. In addition to the Base Salary, any Discretionary Bonus
and any stock options payable or granted to Employee hereunder, Employee will be
entitled to the following benefits during the Employment Period:
(a) payments of premiums for hospitalization, disability, life and
health insurance, to the extent offered by the Company, and in amounts
consistent with Company policy, for all key management employees, as reasonably
determined by the Board;
(b) up to four (4) weeks paid vacation each year with salary, provided
that unused vacation time shall not be carried over to subsequent years;
(c) reimbursement for reasonable, ordinary and necessary out-of-pocket
business expenses incurred by Employee in the performance of his duties, subject
to the Company's policies in effect from time to time with respect to travel,
entertainment and other expenses, including without limitation, requirements
with respect to reporting and documentation of such expenses;
(d) use of an automobile at the Company's expense which shall include
expenses for parking in the area of the Company's offices and for comprehensive
insurance coverage for the automobile; and
(e) other benefit arrangements and perquisites, including a 401(k) or
similar tax deferral plan, to the extent made generally available by the Company
to its executives and key management employees.
2.5 TAXES, ETC. All compensation payable to Employee hereunder is stated
in gross amount and shall be subject to all applicable withholding taxes, other
normal payroll and any other amounts required by law to be withheld.
2.6 COMPENSATION AFTER TERMINATION.
(a) If the Employment Period is terminated (i) by the Company without
Cause; (ii) by reason of Employee's Disability; or (iii) through expiration of
the Employment Period or death of Employee, then, (1) all shares of the
Company's capital stock beneficially owned by the Employee shall be repurchased
by the Company for cash equal to the fair market value thereof at the effective
date of termination (with the cash payment in full made promptly after a
termination pursuant to this Section 2.6(a)(I) or 2.6(a)(iii) and with the cash
payment made in three equal consecutive annual installments beginning on the
date of termination pursuant to this Section 2.6(a)(ii)); (2) except as
otherwise provided in the specific terms of the
-5-
<PAGE> 6
option agreement or grant, all unvested options to purchase stock of the Company
held by Employee shall cease and terminate as of the date of termination, and
all vested but unexercised options to purchase stock of the Company held by
Employee shall be repurchased by the Company (according to the same payment
terms as apply to shares of the Company's capital stock) for an amount
constituting the excess of fair market value of the shares subject to the
options over the exercise price of the options, if any, and if there is no such
excess, then such options shall be repurchased by the Company for one hundred
dollars ($100) in the aggregate; whereupon, the Company shall have no further
obligations hereunder or otherwise with respect to Employee's employment from
and after the termination or expiration date (except for the unpaid installments
and payment of Employee's current Base Salary accrued through the date of
termination or expiration) and the Company shall continue to have all other
rights available hereunder (including without limitation, all rights under
Sections 3 and 4 at law or in equity). For the purposes of this Agreement, "fair
market value" shall have its customary meaning and shall promptly be determined
by agreement between the Company and the Employee. If the Company and the
Employee cannot agree on the fair market value within thirty (30) days after
termination, then each of the Company and the Employee shall promptly appoint an
appraiser, who will in turn promptly select a third appraiser, and the three
appraisers will, within thirty (30) days of their appointment, determine the
fair market value of the stock in such manner as a majority of them deem
appropriate. The shares of stock and any options shall be transferred to the
Company free and clear of all liens, encumbrances or rights of third parties
within three (3) business days after the decision of the appraiser has been
communicated to the parties. Notwithstanding the foregoing, if the Employment
Period is terminated prior to September 1, 1998, then the Company shall not be
obligated to repurchase from Employee the capital stock and options owned or
held by him until October 1, 1998 (or as promptly thereafter as practicable) and
the fair market value of such securities shall be determined as of September 1,
1998.
(b) If the Employment Period is terminated by the Company because of
Employee's Disability, the Company agrees to continue to pay Employee his
current Base Salary during such period of Disability, said payments to continue
for a maximum of one year. Thereafter, Employee shall be paid by the Company's
insurer, if any, such disability benefits as may be paid to any employee of the
Company under any disability plan then in effect, if any.
(c) If the Employment Period is terminated by the Company without Cause,
Employee shall be entitled to receive as severance pay (in addition to the
payment of the Base Salary through the date of termination as well as a prorated
Discretionary Bonus) an amount equal to the greater of (i) his current Base
Salary for a period equal to twelve (12) months and (ii) Employee's current Base
Salary for the remainder of the current Initial or Renewal Period, such amount
to be payable in regular installments in accordance with the Company's general
payroll practices for salaried employees. Employee shall have no obligation to
mitigate these post-employment payments by seeking other employment. Except
pursuant to Section 2.6(a), the Company shall have no other obligations
hereunder or otherwise with respect to Employee's employment from and after the
termination or expiration date, and the Company shall continue to have all other
rights available hereunder (including, without limitation, all rights under
Sections 3, 4, and 6 at law or in equity).
-6-
<PAGE> 7
(d) If the Employment Period is terminated pursuant to Section
2.6(a)(iii), 2.6(b), or 2.6(c) above, Employee shall be entitled to receive, at
such time it would otherwise be payable, any Discretionary Bonus which would
have been payable, based upon the Company's performance over the full fiscal
year, prorated for that portion of the fiscal year during which the Employee was
employed by the Company.
2.7 PROFIT SHARING, PENSION AND SALARY DEFERRAL BENEFITS. It is
understood by the parties to this Agreement that, during the Employment Period,
Employee shall be entitled to participate in or accrue benefits under any
pension, salary deferral or profit sharing plan now existing or hereafter
created for employees of the Company upon terms and conditions equivalent to
those which the Company may provide for other senior executive employees.
3. COVENANT NOT TO COMPETE.
3.1 NON-COMPETITION. Employee agrees that during the Employment Period
and for the 18-month period immediately following the termination of his
employment with the Company, he shall not, within a seventy-five (75) mile
radius of any radio station transmission tower or studio then owned or operated,
directly or indirectly, by the Company (the "Territory"), engage in any of the
following activities:
(a) Directly or indirectly enter into the employ or render any service
to or act in concert with any person, partnership, corporation or other entity
engaged in the ownership or operation of radio stations (the "Radio Business")
with a radio station transmission tower or studio located within the Territory;
or
(b) Directly or indirectly engage in the Radio Business with a radio
station transmission tower or studio located within the Territory on his own
account; or
(c) Become interested in any such Radio Business with a radio station
transmission tower or studio located within the Territory directly or indirectly
as an individual, partner, shareholder, director, officer, principal, agent,
employee, consultant, creditor or in any other relationship or capacity;
provided, that the purchase of a publicly traded security of a corporation
engaged in the Radio Business shall not in itself be deemed violative of this
Agreement so long as Employee does not own, directly or indirectly, more than 3%
of the securities of such corporation.
3.2 NON-SOLICITATION. Employee agrees that during the Employment Period
and for the 18-month period immediately following the termination of his
employment with the Company, he shall not (other than in the regular course of
the Company's business) within the Territory solicit, directly or indirectly,
business of the type then being performed by the Company from any person,
partnership, corporation or other entity which is a customer of the Company at
the time Employee's employment with the Company terminates, or was such a
customer within the one-year period immediately prior thereto, or to the
knowledge of Employee at the date of termination of employment, is a person,
partnership, corporation or other entity with which the Company plans to do a
substantial amount of business within the one-year period after such termination
of employment.
-7-
<PAGE> 8
4. NON-INDUCEMENT AND NON-DISCLOSURE.
4.1 NON-INDUCEMENT. Employee agrees that during the Employment Period
and for a one-year period immediately following the termination of his
employment with the Company, he shall not directly or indirectly, individually
or on behalf of persons not parties to this Agreement, aid or endeavor to
solicit or induce any of the Company's employees to leave their employment with
the Company in order to accept employment with Employee or another person,
partnership, corporation or other entity.
4.2 NON-DISCLOSURE. At no time shall Employee divulge, furnish or make
accessible to anyone (other than in the regular course of the Company's
business) any knowledge or information with respect to confidential information
or data of the Company, or with respect to any confidential information or data
of any of the customers of the Company, or with respect to any other
confidential aspect of the business or products or services of the Company or
its customers. Upon termination of his employment with the Company, Employee
shall return to the Company all records, documents and material containing
confidential information of the Company prepared by Employee or coming into his
possession by virtue of his employment with the Company, including all copies
thereof.
5. EFFECT OF TERMINATION WITHOUT CAUSE. Notwithstanding the provisions
of Sections 3 and 4 above, the restrictions imposed upon Employee in Sections
3.1, 3.2, and 4.1 of this Agreement during the period following the termination
of his employment hereunder shall apply in the event Employee's employment
hereunder is terminated by the Company without cause pursuant to Section 1.4(ii)
only for a period of one year provided Employee has received and has elected to
accept the severance pay under Section 2.6(c).
6. REMEDIES. Employee acknowledges and agrees that the covenants set
forth in Sections 3 and 4 of this Agreement (collectively, the "Restrictive
Covenants") are reasonable and necessary for the protection of the Company's
business interests and compliance therewith will not deprive Employee of the
ability to earn a suitable living, that irreparable injury will result to the
Company if Employee breaches any of the terms of the Restrictive Covenants, and
that in the event of Employee's actual or threatened breach of any such
Restrictive Covenants, the Company will have no adequate remedy at law. Employee
accordingly agrees that in the event of any actual or threatened breach by him
of any of the Restrictive Covenants, the Company shall be entitled to immediate
temporary injunctive and other equitable relief, without the necessity of
showing actual monetary damages, subject to hearing as soon thereafter as
possible. In such event, the periods of time referred to in Sections 3 and 4
shall be deemed extended for a period equal to the respective period during
which Employee is in breach thereof, in order to provide for injunctive relief
and specific performance for a period equal to the full term thereof. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of any damages which it is able to prove. The covenants contained
in Section 4 and 5 shall be construed as separate covenants, and if any court
shall finally determine that the restraints provided for in any such covenants
are too broad as to the geographic area, activity or time covered, said area,
activity or time covered may be reduced to whatever extent the court deems
reasonable and such
-8-
<PAGE> 9
covenants shall be enforced as to such reduced area, activity or time. Employee
shall indemnify and hold Company harmless from any liability, loss, damage,
judgment, cost or expense (including reasonable attorneys' fees and expenses)
arising out of any claim or suit resulting from Employee's breach of these
covenants or his failure to perform a duty hereunder.
7. NO OTHER NON-COMPETE AGREEMENTS. Notwithstanding anything to the
contrary contained herein, Employee hereby represents, warrants and covenants to
Company that Employee (i) is not a party to nor bound by any non-competition,
non-solicitation, confidentiality or other agreement of any kind which would
conflict with or prevent his employment hereunder or the full performance of all
of his duties hereunder, and (ii) has not, and will not, wrongfully use any
confidential information or know-how taken from another employer. Employee
hereby agrees to indemnify and hold the Company harmless from any claim, loss,
damage and expense hereafter incurred by the Company as a result of any breach
of the foregoing representations, warranties or covenants made by Employee in
this Section.
8. LIFE INSURANCE. The Company may at its discretion and at any time apply
for and procure as owner and for its own benefit and at its own expense,
insurance on the life of Employee in such amounts and in such form or forms as
the Company may choose. Employee shall cooperate with the Company in procuring
such insurance and shall, at the request of the Company, submit to such medical
examinations, supply such information and execute such documents as may be
required by the insurance company or companies to whom the Company has applied
for such insurance. Employee shall have no interest whatsoever in any such
policy or policies, except that, upon the termination of Employee's employment
hereunder, Employee shall have the privilege of purchasing any such insurance
from the Company for an amount equal to the actual premiums thereon previously
paid by the Company.
9. INCOME TAX TREATMENT. Employee and the Company acknowledge that it is
the intention of the Company to deduct all amounts paid under Section 2 hereof
as ordinary and necessary business expenses for income tax purposes. Employee
agrees and represents that he will treat all amounts paid hereunder as ordinary
income for income tax purposes, and should he report such amounts as other than
ordinary income for income tax purposes, he will indemnify and hold the Company
harmless from and against any and all taxes, penalties, interest, costs and
expenses, including reasonable attorneys' and accounting fees and costs, which
are incurred by the Company directly or indirectly as a result thereof.
10. ASSIGNMENT. No party hereto may assign or delegate any of its rights or
obligations hereunder without the prior written consent of the other party
hereto, provided, however, the Company shall have the right to assign all or any
part of its rights and obligations under this Agreement to (i) any affiliate of
the Company to which the Business is assigned at any time or (ii) the purchaser
of all or substantially all of the assets of the Company. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto whether so expressed or not.
11. SEVERABILITY. Whenever possible, each provision of this agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision
-9-
<PAGE> 10
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
12. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same Agreement.
13. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings in this
Agreement are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement. The use
of the word "including" in this Agreement shall be by way of example rather than
by limitation.
14. NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been duly given if (i) delivered personally
to the recipient, (ii) sent to the recipient by reputable express courier
service (charges prepaid) or mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid, or (iii) transmitted by
telecopy to the recipient with a confirmation copy to follow the next day to be
delivered by overnight carrier. Such notices, demands and other communications
shall be sent to the addresses indicated below:
(a) If to Employee:
William L. Stakelin
50 East RiverCenter Blvd.
Suite 180
Covington, KY 41011
Facsimile No. 606/292-0352
(b) If to the Company:
Regent Communications, Inc.
50 East RiverCenter Boulevard
Suite 180
Covington, Kentucky 41011
Facsimile No.: 606/292-0352
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. Date
of service of such notice shall be (w) the date such notice is personally
delivered, (x) three days after the date of mailing if sent by certified or
registered mail, (y) one day after the date of delivery to the overnight courier
if sent by overnight courier or (z) the next business day after the date of
transmittal by telecopy.
15. PREAMBLE; PRELIMINARY RECITALS. The Preliminary Recitals set forth in
the Preamble hereto are hereby incorporated and made part of this Agreement.
-10-
<PAGE> 11
16. WAIVER. No modification, termination or attempted waiver of this
Agreement shall be valid unless in writing and signed by the party against whom
the same is sought to be entered. Either party's failure to enforce any
provision or provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions as to any future violations thereof,
nor prevent that party thereafter from enforcing each and every other provision
of this Agreement. The rights granted the parties herein are cumulative and the
waiver by a party of any single remedy shall not constitute a waiver of such
party's right to assert all other legal remedies available to him or it under
the circumstances.
17. ADDITIONAL OBLIGATIONS. Both during and after the Employment Period,
Employee shall, upon reasonable notice, furnish the Company with such
information as may be in Employee's possession, and cooperate with the Company,
as may reasonably be requested by the Company (and, after the Employment Period,
with due consideration for Employee's obligations with respect to any new
employment or business activity) in connection with any litigation in which the
Company or any affiliate is or may become a party. The Company shall reimburse
Employee for all reasonable expenses incurred by Employee in fulfilling
Employee's obligations under this Section 17.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the Commonwealth of Kentucky without giving effect to provisions thereof
regarding conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
REGENT COMMUNICATIONS, INC.
By:
-------------------------------
Title:
----------------------------
EMPLOYEE:
----------------------------------
William L. Stakelin
-11-
<PAGE> 1
Exhibit 10(d)
PROMISSORY NOTE
December 3, 1997
FOR VALUE RECEIVED, REGENT COMMUNICATIONS, INC., a Delaware
corporation ("Borrower"), promises to pay to the order of CITICASTERS CO., an
Ohio corporation (the "Lender"), at the Lender's offices at Twelfth Floor, 50 E.
RiverCenter Boulevard, Covington, Kentucky 41011, or such other address as the
holder hereof shall have designated to the Borrower, the principal sum of the
lesser of One Million Five Hundred Thousand and xx/100 ($1,500,000) Dollars, or
the proceeds, net of Borrower's reasonable expenses, received by Borrower from a
sale of the WSSP Assets (as that term is defined in the Agreement Concerning
Purchase of WRFQ(FM) and WSUY(FM), Option to Purchase WSSP(FM) and Loan
Agreements, dated August 18, 1997, between Borrower and Lender (the
"Agreement")) deemed to be commercially reasonable either by Lender or by the
Panel (as that term is defined in the Agreement), pursuant to Sections 6 and 7
of the Agreement, payable on the Maturity Date, defined as the earlier of: (a)
December 3, 2002 or (b) the date of the sale and transfer of the WSSP Assets by
Borrower to a Third Party Purchaser (as that term is defined in the Agreement)
as provided for in Sections 5 of the Agreement. Interest on the unpaid principal
balance of this Promissory Note after the Maturity Date shall accrue at a rate
per annum of 10%. This Promissory Note shall not bear interest prior to the
Maturity Date.
Interest shall be calculated based on a 360 day year and charged for the
actual number of days elapsed. In no event shall the interest rate hereunder
exceed the highest rate permitted by law. All payments shall be made in
immediately available funds. Payments shall be made at the Lender's place of
business, 50 EAST RIVERCENTER BOULEVARD, 12TH FLOOR, COVINGTON, KENTUCKY 41011,
or at such other place as the holder of this Promissory Note may designate in
writing to the Borrower from time to time. This Note may be prepaid in whole or
in part without penalty. All payments of principal and interest on this
Promissory Note shall be payable in lawful currency of the United States of
America, in immediately available funds.
Each of the following shall be an Event of Default: (a) the failure of the
Borrower to pay any sum owing hereunder when due, time being of the essence; (b)
Borrower defaults in its required performance under the Security Agreement of
even date herewith between Lender and Borrower (the "Security Agreement"); (c)
the entry of a decree or order for relief by a court in respect of Borrower in
an involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, custodian, trustee or
similar official for Borrower or for any substantial part of its property, or
ordering the wind-up or liquidation of its affairs; or the filing of a petition
initiating an involuntary case under any such bankruptcy, insolvency or similar
law; (d) the commencement by Borrower of a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
making by it of any general assignment for the benefit of creditors, or the
failure of Borrower generally to pay its debts as such debts become due, or the
insolvency of Borrower; or (e) an event of default under any other security
agreement,
<PAGE> 2
mortgage, guaranty or other instrument which by its terms secures or guarantees
this Promissory Note.
If an Event of Default described in (c) or (d) above shall occur, the
entire unpaid principal and all accrued interest on this Promissory Note shall
become automatically due and payable without the need for any act by the Lender.
If an Event of Default described in (a), (b) or (e) above shall occur, the
Lender may at its option declare the entire unpaid principal and all accrued
interest on this Promissory Note to be immediately due and payable, without
demand or notice of any kind.
Borrower further agrees, subject only to any limitation imposed by
applicable law, to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder of this Promissory Note in endeavoring to
collect any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
No delay on the part of the Lender or any other holder of this Promissory
Note in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or remedy
preclude other or further exercise thereof, or the exercise of any other right,
power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Promissory Note shall in any event be
effective unless the same shall be in writing and signed and delivered by the
Lender or any other holder hereof.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest, notice of dishonor and notice of
the existence, creation or nonpayment of all or any of the loans or advances
evidenced hereby.
[SIGNATURE ON NEXT PAGE]
- 2 -
<PAGE> 3
This Promissory Note shall be construed in accordance with the internal
laws (and not the law of conflicts) of the State of Kentucky.
"Borrower"
REGENT COMMUNICATIONS, INC.
By_______________________________
Title____________________________
- 3 -
<PAGE> 1
Exhibit 10(e)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is entered into as of the 3rd day of December,
1997, by and between REGENT COMMUNICATIONS, INC., a Delaware corporation (the
"Borrower") and CITICASTERS CO., an Ohio corporation (the "Lender")
1. Definitions:
1.1 Specific Definitions. The following definitions shall apply:
"Accounts" means all accounts, contract rights, instruments,
documents, chattel paper, and all obligations in any form arising out of the
WSSP Loan Documents (as hereinafter defined); all guaranties, letters of credit
and other security for any of the above; and all books and records (including
computer programs, tapes and data processing software) evidencing an interest in
or relating to the above.
"General Intangibles" means all general intangibles, chosen in action,
causes of action, obligations or indebtedness owed to Borrower from any source
whatsoever under the WSSP Loan Documents, and all other intangible personal
property of every kind and nature (other than Accounts) including without
limitation patents, trademarks, trade names, service marks, copyrights and
applications for any of the above, and goodwill, trade secrets, licenses,
franchises, rights under agreements, tax refund claims, and all books and
records including all computer programs, disks, tapes, printouts, customer
lists, credit files and other business and financial records, and the equipment
containing any such information, pertaining to the WSSP Loan Documents.
"Lien" means any security interest, mortgage, pledge, assignment, lien
or other encumbrance of any kind, including interests of vendors or lessors
under conditional sale contracts or capital leases.
"Loan" shall mean the loan evidenced by the Note (as hereinafter
defined).
"Note" shall mean the Promissory Note executed by the Borrower in
favor of the Lender of even date herewith in the amount of $1,500,000 or such
lesser amount as provided for in such Promissory Note.
"Obligation(s)" means all loans, advances, indebtedness and other
obligations of the Borrower owed to Lender under the Note, and all expenses and
attorney's fees incurred by Lender with respect to the enforcement of this
Agreement in the event of a default hereunder.
"WSSP" shall mean the radio station known as WSSP-FM, licensed to
Goose Creek, South Carolina.
<PAGE> 2
"WSSP Sellers" means Southwind Broadcasting, Inc., a South Carolina
corporation, and William G. Dudley, III.
"WSSP Option Agreement" shall mean the Option Agreement, dated June 3,
1997 by and among Wicks Broadcast Group Limited Partnership, a Delaware limited
partnership ("WBG"), and WBG License Co., LLC, a Delaware limited liability
company ("WBG Licensee").
"WSSP Option" shall mean the option to purchase WSSP pursuant to the
WSSP Option Agreement.
"WSSP Note" means the Promissory Note made by the WSSP Sellers payable
to Borrower, dated of even date herewith.
"WSSP Loan Documents" means the Loan Commitment Agreement, dated June
3, 1997 by and among the WSSP Sellers and Borrower (as assignee of WBG) pursuant
to which Borrower is obligated to lend $1,500,000 to the WSSP Sellers which
shall be repaid to Borrower at the closing of the purchase of the WSSP Option,
the WSSP Note, and any other documents in connection with such loan.
2. Security
2.1 Security Interest of Lender. To induce Lender to make the Loan, and as
security for all the Obligations, Borrower hereby assigns to Lender as
collateral and grants to Lender a continuing first priority pledge and security
interest in the following property of Borrower (the "Collateral"), whether now
owned or existing or hereafter acquired or arising and regardless of where it is
located:
(a) all Accounts, including without limitation those Accounts
acquired by Borrower from Borrower's predecessor in interest;
(b) the WSSP Loan Documents and the WSSP Note included therein and
any and all other documents evidencing the right of payment from
the WSSP Sellers, all of which are hereby assigned and pledged
with the originals contemporaneously delivered from Borrower to
Lender in connection with the signing of this Agreement;
(c) all General Intangibles; provided however, Borrower shall assign
and grant a continuing first priority pledge and security
interest in any licenses and authorizations issued by the Federal
Communications Commission (the "FCC"), only to the extent
permitted by law and/or the proceeds of such licenses and
authorizations;
- 2 -
<PAGE> 3
(d) all proceeds and products of Collateral and all additions and
accessions to, replacements of, insurance or condemnation
proceeds of, and documents covering Collateral, all tort or other
claims against third parties arising out of damage or destruction
of Collateral, all property received wholly or partly in trade or
exchange for Collateral, all leases of Collateral and all rents,
revenues, issues, profits and proceeds arising from the sale,
lease, license, encumbrance, collection, or any other temporary
or permanent disposition, of the Collateral or any interest
therein; and
(e) all instruments, documents, securities, money or other property,
owned by Borrower or in which Borrower has an interest generated
in connection with the WSSP Loan Documents by Borrower or
acquired by Borrower from Borrower's predecessor in interest
under the WSSP Loan Documents.
2.2 Representations in Schedule I. Borrower represents and warrants that
the representations and warranties set forth in Schedule I, the Specific
Representations Schedule, are true and correct. Except as otherwise permitted
hereunder, Borrower will not change its name, transfer its executive offices or
maintain records with respect to Accounts at any location other than its present
executive offices specified in that Schedule.
2.3 Provisions Concerning WSSP Loan Documents.
(a) Other than the security interest granted to Borrower's senior
lenders, which has been subordinated to the security interest
granted to Lender hereunder, Borrower represents and warrants
that the WSSP Loan Documents are owned by Borrower free and clear
of all Liens in favor of any third party, will be a bona fide
existing obligation and is not subject to any known deduction,
offset, counterclaim, return privilege or other condition.
(b) Any officer, employee or agent of Lender shall have the right, at
any time or times hereafter, in the name of Lender or its nominee
(including Borrower), to verify the validity, amount or any other
matter relating to any WSSP Loan Documents. Lender or its
designee may at any time notify the WSSP Sellers that WSSP Loan
Documents have been assigned to Lender or of Lender's security
interest therein, and after default by Borrower hereunder collect
the same directly and charge all collection costs and expenses to
Borrower's account.
(c) Borrower appoints Lender or Lender's designee as its
attorney-in-fact to endorse Borrower's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or
security that may come into Lender's possession relating to the
WSSP Loan Documents; to sign Borrower's name
- 3 -
<PAGE> 4
on any invoice or bill of lading relating to any WSSP Loan
Documents, on notices of assignment and other public records, and
on proofs of claim, releases of lien and any other documents
needed to collect WSSP Loan Documents, and to do all things
necessary to carry out or enforce this Agreement. Borrower
ratifies and approves all acts of Lender as attorney-in-fact.
Lender as attorney-in-fact will not be liable for any acts or
omissions, or for any error of judgment or mistake of fact or law
except for bad faith. This power, being coupled with an interest,
is irrevocable until all Obligations have been fully satisfied.
Any person dealing with Lender shall be entitled to conclusively
rely on any written or oral statement of Lender or its designee
that this power of attorney is in effect.
(d) Borrower shall use its best commercially reasonable efforts to
collect the WSSP Loan from the WSSP Sellers including, without
limitation, promptly notifying WSSP Sellers of any defaults or
Event of Default under the WSSP Loan Documents, promptly
commencing litigation against WSSP Sellers in the event payment
is not forthcoming within twenty days after such notice, and
diligently and continuously pursuing such litigation to judgment
and then collecting and levying upon assets of WSSP Sellers in an
attempt to satisfy said judgment.
(e) Borrower shall either (a) exercise the WSSP Option and close on a
purchase of the WSSP assets prior to the expiration of the term
of the WSSP Option and, if Borrower so chooses as part of such
transaction, to sell the assets of WSSP to a qualified third
party either simultaneously therewith or at a later date, or, (b)
assign the WSSP Option to a third party purchaser which shall
exercise the WSSP Option and close on the purchase of the WSSP
Assets prior to the expiration of the WSSP Option.
Notwithstanding the above, in the event Borrower exercises the
WSSP Option and closes the purchase of the WSSP Assets, Borrower
shall grant to Lender first priority mortgages and security
interests in, and liens upon, all of the WSSP Assets, including
but not limited to all FCC licenses and authorizations as
security for repayment of the Note.
2.4 Provisions Concerning Accounts. Borrower represents and warrants that
except as otherwise disclosed herein, each Account is reflected in its books and
records is, or will at the time it arises be, owned by the Borrower free and
clear of all Liens in favor of any third party, will be a bona fide existing
obligation created by the final sale and delivery of goods or the completed
performance of services by the Borrower in the ordinary course of its business,
will be for a liquidated amount maturing as stated in the supporting data
covering such transaction, and will not be subject to any known deduction,
offset, counterclaim, return privilege or other condition, except as reflected
on the Borrower's books and records.
- 4 -
<PAGE> 5
2.5 Provisions Concerning General Intangibles. Borrower represents and
warrants that, except as otherwise disclosed herein, Borrower owns all of the
General Intangibles in which Borrower grants Lender a Lien, free and clear of
any Liens in favor of any person other than Lender. Borrower will preserve all
patents, trademarks, copyrights and the like which are necessary or useful for
the conduct of its business.
2.6 Liens. Borrower represents and warrants that, except as otherwise
disclosed herein, Borrower has good and marketable title to the Collateral, and
the Liens granted to Lender in this Agreement are fully perfected first priority
Liens in the Collateral with priority over the rights of every person other than
Borrower in the Collateral. Borrower is the owner of all personal property in
its possession or shown on its books and records, and, except as otherwise
disclosed herein, all assets of Borrower are owned free, clear and unencumbered,
except for the Lien of Lender and except for Liens imposed by law which secure
amounts not yet due and payable.
2.7 Further Assurances.
(a) Borrower will execute and deliver to Lender at Lender's request
all financing statements, continuation statements and other
documents that Lender may reasonably request, in form
satisfactory to Lender, to perfect and maintain perfected
Lender's security interest in the Collateral and to fully
consummate all transactions contemplated under this Agreement.
Borrower hereby irrevocably makes, constitutes and appoints
Lender (and any of Lender's officers, employees or agents
designated by Lender) as Borrower's true and lawful attorney with
power to sign the name of Borrower on any such documents.
Borrower ratifies and approves all acts of Lender and its
designees as attorney-in-fact. Lender or its designees as
attorney-in-fact will not be liable for any acts or omissions, or
for any error of judgment or mistake of fact or law, except for
bad faith.
(b) If any Collateral, including proceeds, consists of a letter of
credit, promissory note, advice of credit, instrument, money,
negotiable documents, chattel paper or similar property
(collectively, "Negotiable Collateral") Borrower will,
immediately upon receipt thereof, endorse and assign such
Negotiable Collateral over to Lender and deliver actual physical
possession of the Negotiable Collateral to Lender.
(c) Lender may inspect and verify Borrower's books and records at any
time or times hereafter, during usual business hours, in order to
verify the amount or condition of the Collateral, or any other
matter relating to the Collateral or Borrower's financial
condition. Borrower will promptly deliver to Lender copies of all
books and records requested by Lender.
- 5 -
<PAGE> 6
2.8 Reinstatement of Lien. If any payments made by Borrower or any other
person on Obligations must be disgorged by Lender after termination of this
Agreement for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of Borrower or such other person), this
Agreement and Lender's Liens granted hereunder will be reinstated as to all
disgorged payments as though such payment had not been made, and Borrower will
sign and deliver to Lender all documents and things necessary to reperfect all
terminated Liens.
2.9 Other Amounts Deemed Part of Loan. If Borrower fails to pay any tax,
assessment, government charge or levy or to maintain insurance within the time
permitted by this Agreement or the Note, or to discharge any Lien prohibited
hereby, or to comply with any other obligation, Lender may, but shall not be
required to, pay, satisfy, discharge or bond the same for the account of
Borrower, and to the extent permitted by law and all monies so paid out shall be
secured by the Collateral.
2.10 Borrower Remains Liable. Borrower remains liable under any contracts
and agreements included in the Collateral to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, and Lender will not have any obligation or liability under such
contracts and agreements by reason of this Agreement or otherwise.
3. Events of Default and Remedies
3.1 Events of Default. Any of the following events shall be an Event of
Default:
(a) any representation or warranty made herein by Borrower is
incorrect when made or reaffirmed; or
(b) Borrower fails to observe or perform any covenant, condition or
agreement herein, and such default continues for 30 days after
written notice thereof to Borrower by Lender; or
(c) an Event of Default occurs under the Note or under the WSSP Loan
Documents.
(d) the WSSP Option terminates or expires without Borrower or
qualified third party purchaser exercising the WSSP Option and
closing on the purchase of the WSSP Assets.
3.2 Remedies. If any Event of Default shall occur and not be waived, in
addition to the remedies provided in the Note:
(a) Lender may resort to the rights and remedies of a secured party
under the Uniform Commercial Code including the right to enter
any premises of
- 6 -
<PAGE> 7
Borrower, with or without legal process and take possession of
the Collateral and remove it and any records pertaining thereto
and/or remain on such premises and use it for the purpose of
collecting, preparing and disposing of the Collateral;
(b) Lender may dispose of the Collateral as is or at its election;
Lender's failure to take steps to preserve rights against any
parties or property shall not be deemed to be failure to exercise
reasonable care with respect to the Collateral;
(c) Lender may in its sole discretion pay, purchase, contest or
compromise any encumbrance, charge or lien which in the opinion
of Lender appears to be prior or superior to its Lien, and pay
all expenses incurred in connection therewith;
(d) Lender may sell the Collateral at public or private sale, and
Borrower shall be credited with the net proceeds of such sale
only when they are actually received by Lender; any requirement
of reasonable notice of any disposition of the Collateral shall
be satisfied if such notice is sent to Borrower, as provided in
the Notices Section of this Agreement, 10 days prior to such
disposition;
(e) Borrower shall upon request of Lender assemble the Collateral and
any records pertaining thereto and make them available at a place
designated by Lender; and
(f) Lender may use, in connection with any assembly or disposition of
the Collateral, any trademark, trade name, trade style,
copyright, patent right, trade secret or technical process used
or utilized by Borrower.
(g) Notwithstanding anything to the contrary contained in this
Agreement, Lender will not take any action pursuant to this
Agreement or the Note which would constitute (or result in) any
assignment of any licenses issued by the FCC or any transfer of
control of Borrower if such assignment of licenses or transfer of
control would require, under then existing law (including the
written rules and regulations promulgated by the FCC), the prior
approval of the FCC, without first obtaining such approval of the
FCC.
(h) Borrower agrees to take (or cause to be taken), any action which
the Lender may reasonably request in order to obtain and enjoy
the full rights and benefits granted to Lender by this Agreement,
including specifically, at Borrower's own cost and expense, the
use of Borrower's best efforts (i) to
- 7 -
<PAGE> 8
assist in obtaining approval of the FCC for any action or
transaction contemplated by this Agreement which is then required
by law, and (ii) without limitation, upon request following the
occurrence of an Event of Default, to prepare, sign, and file
with the FCC (or cause to be prepared, signed, and filed with the
FCC) any portion of any application or applications for consent
to the assignment of the FCC licenses (the "Licenses") associated
with the operation of WSSP or transfer of control required to be
signed by Borrower and necessary or appropriate under the FCC's
rules and regulations of approval of any sale or transfer of any
of the ownership interests or assets of Borrower or any transfer
of control over any of the Licenses.
3.3 Cumulative Remedies. No remedy set forth herein is exclusive of any
other available remedy or remedies, but each is cumulative and in addition to
every other remedy given under this Agreement or any other agreement or now or
hereafter existing at law or in equity or by statute. Lender may pursue its
rights and remedies concurrently or in any sequence, and no exercise of one
right or remedy shall be deemed to be an election. If Borrower fails to comply
with this Agreement, no remedy of law will provide adequate relief to Lender,
and Lender shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damages.
3.4 Fees and Expenses. Upon a sale, lease or other disposition of the
Collateral, the proceeds shall be applied first to the expenses of retaking,
holding, storing, processing and preparing for sale, selling and the like, and,
to the extent permitted by law, to reasonable attorneys' fees and legal
expenses, and then to the satisfaction of the obligations secured by this
Agreement. Borrower shall be liable for any deficiency.
3.5 FCC Compliance. In the event that Lender elects to exercise its
remedies upon an Event of Default as contemplated by Section 3.2 hereof or under
any other provision of this Agreement, Lender shall comply in all material
respects with the Communications Act of 1934, as amended, and all applicable
rules and regulations of the FCC, including, without limitation, obtaining any
required consent or approval of the FCC prior to the exercise of such remedies.
Borrower shall cooperate and otherwise use its best efforts to cause any such
required consent or approval to be granted.
4. Miscellaneous Provisions
4.1 Miscellaneous. No delay or omission to exercise any right shall impair
any such right or be a waiver thereof, and a waiver on one occasion shall be
limited to that particular occasion. This Agreement may be amended only in
writing signed by the party against whom enforcement of the amendment is sought.
This Agreement may be executed in counterparts. If any part of this Agreement is
held invalid, the remainder of this Agreement shall not be affected thereby.
4.2 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective legal representatives, successors and assigns of the
parties hereto; however, Borrower may
- 8 -
<PAGE> 9
not assign any of its rights or delegate any of its obligations hereunder.
Lender (and any subsequent assignee) may transfer and assign this Agreement or
may assign partial interests or participations in the Loan to other persons.
4.3 Subsidiaries. If Borrower has any Subsidiaries at any time during the
term of this Agreement, the term "Borrower" in each representation, warranty and
covenant herein shall mean "the Borrower and each Subsidiary individually and in
the aggregate," and Borrower shall cause each Subsidiary to be in compliance
therewith.
4.4 Notices. Any notice required, permitted or contemplated hereunder
shall be in writing and addressed to the party to be notified at the address set
forth below or at such other address as each party may designate for itself from
time to time by notice hereunder, and shall be deemed validly given (i) three
(3) days following deposit in the U.S. mails, with proper postage prepaid, or
(ii) the next business day after such notice was delivered to a regularly
scheduled overnight delivery carrier with delivery fees either prepaid or an
arrangement, satisfactory with such carrier, made for the payment thereof, or
(iii) upon receipt of notice given by telecopy, mailgram, telegram, telex or
personal delivery:
To Borrower: Regent Communications, Inc.
Attn: Terry Jacobs
50 East RiverCenter Boulevard, Suite 180
Covington, Kentucky 41011
Fax: (606) 292-0352
With a copy to: Strauss & Troy
Attn: Alan C. Rosser, Esq.
2100 PNC Center
201 East Fourth Street
Cincinnati, Ohio 45202
Fax: (513) 241-8289
Lender: Citicasters Co.
Attn: Randy Michaels, President
12th Floor
50 East RiverCenter Boulevard
Covington, Kentucky 41011
Fax: (606) 655-9354
- 9 -
<PAGE> 10
With a copy to: Graydon, Head & Ritchey
Attn: John J. Kropp, Esq.
1900 Fifth Third Center
511 Walnut Street
Cincinnati, OH 45202
Fax: (513) 651-3836
4.5 Governing Law; Jurisdiction. This Agreement will be governed by the
domestic laws of the Commonwealth of Kentucky. Borrower agrees that the state
and federal courts in Kenton County, Kentucky or any other court in which Lender
initiates proceedings have exclusive jurisdiction over all matters arising out
of this Agreement, and that service of process in any such proceeding shall be
effective if mailed to Borrower at its address described in the Notices section
of the Note. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY
MATTERS ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
4.6 Subordinated Lien. Lender acknowledges that Borrower's senior lenders
have an existing security interest in the Collateral, which has been
subordinated to the interests granted to Lender hereunder, to the satisfaction
of Lender.
[SIGNATURES ON FOLLOWING PAGE]
- 10 -
<PAGE> 11
IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Agreement by their duly authorized officers as of the date first above written.
REGENT COMMUNICATIONS, INC.
By:________________________________
Name:______________________________
Title: ____________________________
CITICASTERS CO.
By:________________________________
Name:______________________________
Title: ____________________________
- 11 -
<PAGE> 12
SCHEDULE I TO SECURITY AGREEMENT
Specific Representations
1. The exact legal name of the Borrower is:
----------------------------------
------------------------------------------------------------------------.
2. The Borrower's federal Employer I.D. number is:
-------------------- .
3. If the Borrower has changed its name since it was incorporated, its past
legal names were:
--------------------------------------------------------------.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. The Borrower uses in its business and owns the following trade names:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. The Borrower was incorporated on , under the laws of the
---------------
State of Delaware and is in good standing under those laws.
6. The Borrower has its chief executive office and principal place of business
at
- --------------------------------------------------------------------------------
This office
- ----------------------------------------------------------------.
is in County. Borrower maintains all of its records with respect to
-----------
its Accounts at that address.
7. The Borrower also has places of business at:
-------------------------------
- --------------------------------------------------------------------------------
8. No inventory, equipment or fixtures owned by the Borrower are located at
any other place, nor were they located at any other place within the past
four months, except at
---------------------------------------------------
- --------------------------------------------------------------------------------
9. If the Borrower is incorporated in Kentucky or qualified to do business
there, its registered agent and registered office there as listed on the
Kentucky Secretary of State's corporate records are:
---------------------
- ------------------------------------------------------------------------------.
- 12 -
<PAGE> 1
EXHIBIT 10(f)
LIMITED RECOURSE PROMISSORY NOTE
Cincinnati, Ohio
$1,500,000.00 Effective as of December 3, 1997
FOR VALUE RECEIVED the undersigned SOUTHWIND BROADCASTING, INC., a South
Carolina corporation ("Borrower") whose address is 409 Coleman Boulevard, Mr.
Pleasant, S.C. 29464 hereby promises to pay to the order of REGENT
COMMUNICATIONS, INC., a Delaware corporation ("Lender"), whose address is 50
East RiverCenter Boulevard, Suite 180, Covington, Kentucky 41011, or its
assignee (the holder of this Note, whether Lender or any assignee, being
hereinafter referred to as "Holder"), on demand, the principal sum of One
Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00), together with
interest computed from the date hereof at the rate or rates and in the manner
hereinafter provided on the principal balance hereof from time to time
outstanding. Borrower's Federal tax identification number is 57-1041494.
1. Interest Rate.
The interest rate hereunder shall be the prime rate announced
from time to time by Lender's principal lending bank, as determined from time to
time by Lender, plus three percent percent (3%) per annum. All interest payable
on this Note shall be calculated on the basis of a 360-day year for the actual
number of days that principal is outstanding.
2. Payments.
(a) Payments hereunder shall be due as follows:
(i) payments of interest only shall be due and
payable quarterly on the first day of each calendar quarter, commencing on the
first day of January, 1998 and continuing through the Maturity Date (hereinafter
defined).
(b) Notwithstanding anything to the contrary herein
contained and unless earlier demanded by Lender, the entire unpaid principal of
this Note and all accrued interest thereon and all other sums and/or charges as
determined pursuant to this Note shall be due and payable in full on the
"Maturity Date" which shall be the earlier of (i) November 18, 1998; or (ii) the
date that Lender, or any assignee, purchases and acquires certain assets of
Borrower pursuant to exercise of the option described in the Option Agreement
between Borrower and Wicks Broadcast Group Limited Partnership ("Wicks") dated
as of June 3, 1997, which Option Agreement was assigned by Wicks to Lender. In
the event of such exercise and acquisition and purchase of assets pursuant to
the Option Agreement, Borrower may elect, in lieu of receiving the purchase
price for such assets, not to repay the unpaid principal amount of or then
unpaid interest on this Note, in which case said purchase price shall not be
paid and this Note, shall be cancelled and satisfied, or, in the alternative,
Borrower may repay the unpaid principal hereunder and shall receive other
promissory notes in the amount of said purchase price for said assets, as
contemplated by the Option Agreement.
(c) Principal, interest and all other sums payable in
accordance with this Note shall be payable in lawful, immediately available
money of the United States of America at the
<PAGE> 2
office of Lender, hereinabove set forth, or at such other place of which any
Holder may from time to time give written notice to Borrower.
(d) Borrower further agrees to pay to the order of Holder
immediately upon demand any advancements and/or expenditures made by Holder in
accordance with the Pledge and Security Agreement between Borrower and Lender
including, without limitation, those for the payment of taxes, special
assessments, insurance premiums, and costs of maintenance and preservation of
property mortgaged or pledged in connection with the loan evidenced by this
Note. At the option of Holder, without notice or demand (which notice and demand
are expressly waived by Borrower), all or any part of the advancements and/or
expenditures described in this paragraph may be added to the unpaid principal
balance hereof and become a part of and on a parity with the principal
indebtedness secured by the Pledge and Security Agreement, and all other
instruments executed in connection herewith, and the same shall accrue interest
until paid, at the "Default Rate" (as hereinafter defined).
(e) Unless applicable law requires otherwise, each
payment shall be applied by Holder to (i) the payment of such additional
advancements and expenditures as Holder may make in accordance with the terms of
the Pledge and Security Agreement including, without limitation, advancements
for taxes, insurance and the like; (ii) the payment of accrued but unpaid
interest and late charges; (iii) the payment of principal outstanding under this
Note; and (iv) the payment of any other amounts which may become due to the
Holder pursuant to this Note, or the Pledge and Security Agreement, all in such
order and such manner as Holder may determine, in its discretion, from time to
time.
3. Prepayment. No prepayment of the principal of this Note, in
whole or in part, shall be allowed without the prior written consent of Holder.
4. Security. This Note is secured inter alia by a Pledge and
Security Agreement of even date herewith on certain personal property owned by
Borrower and located in Berkeley County and Charleston County, South Carolina
(the "Pledge and Security Agreement"). The terms and conditions of the Pledge
and Security Agreement are made a part hereof and incorporated herein by this
reference and Borrower covenants and agrees to perform or cause to be performed
all of the terms and conditions, covenants and agreements of the Pledge and
Security Agreement as fully as if such terms, conditions, covenants and
agreements were set forth at length herein.
5. Default; Remedies.
(a) Time is of the essence under this Note. If Borrower
should fail to make any payment of principal and/or interest within fifteen (15)
days after the same is due or if any other "Event of Default" (said term being
defined in this Note as it is defined in the Pledge and Security Agreement)
should occur, then, in addition to any other action permitted to be taken by
Holder hereunder or under the Pledge and Security Agreement: (i) Holder may, at
its option, declare the entire unpaid principal balance of this Note and all
accrued but unpaid interest hereon and any other sums then payable in accordance
with this Note to be immediately due and payable, whereupon all such sums shall
be immediately due and payable and shall thereafter bear interest at
2
<PAGE> 3
the highest rate permitted by applicable law beginning with the date of the
event, default, act and/or failure to act first giving rise to the occurrence of
the Event of Default; and (ii) the Holder shall have all rights and remedies
available under the laws of the State of South Carolina (including, without
limitation, all rights and remedies with respect to all property mortgaged or
pledged as security for this Note) and all of the rights or remedies available
under the Pledge and Security Agreement. The provisions hereof and of the Pledge
and Security Agreement shall apply and be controlling as to all property which
may at any time be security for this Note. The failure to exercise any option to
declare the maturity of the principal debt or to exercise any other rights or
remedies under any provision(s) of the Pledge and Security Agreement, shall not
be taken or deemed to be a waiver of the right to exercise such option or to
declare such maturity after such past or any subsequent violation of any such
provision(s). All remedies provided for herein and in the Pledge and Security
Agreement upon any default by the Borrower shall be cumulative and not
exclusive.
(b) Borrower hereby agrees that: (i) Borrower will pay to
Holder upon demand any and all reasonable costs, expenses and fees, including
without limitation reasonable attorneys fees, incurred before or after suit is
commenced in enforcing payment hereof, and agrees that, in the event suit is
brought to enforce payment hereof, such costs, expenses and fees shall be
determined by a court sitting without a jury; and (ii) the acceptance by Holder
of any late payment or other performance which does not strictly comply with the
terms of this Note or of any document securing payment of this Note or otherwise
executed in connection with this Note shall not be deemed to be a waiver of any
rights of Holder arising as a result of such failure to comply.
6. Waivers. Borrower, waives diligence, presentment for payment,
protest, notice of dishonor and of non-payment and protest, and does hereby
consent to any number of forbearances, renewals or extensions of time of payment
hereof, releases or substitutions of all or any part of the security for the
payment hereof or release of any party liable for this obligation. Any such
extension or release may be made without notice to Borrower and without
discharging its liability.
7. Compliance with Laws; Severability.Borrower and Holder intend
that this Note shall be in compliance with all applicable laws and shall be
enforceable in accordance with its terms. If, however, any provision of this
Note (other than a provision regarding the amount of interest which shall be
governed by Section 8) shall be held or deemed to be or shall, in fact, be
inoperative or unenforceable as applied in any particular case for any reason,
such circumstances shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other case or circumstance, or of
rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatever.
8. Interest Limitation. All agreements herein are expressly
limited so that in no event whatsoever, whether by reason of advancement of the
proceeds hereof, acceleration of maturity of the unpaid principal balance
hereof, or otherwise, shall the amount paid or agreed to be paid to the Holder
for the use, forbearance or detention of the money to be advanced hereunder
exceed the highest lawful rate permissible under applicable law. If, due to any
circumstances whatsoever, fulfillment of any provision hereof, or of the Pledge
and Security Agreement, at the
3
<PAGE> 4
time performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law which a court of competent jurisdiction may
deem applicable hereto, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if under any circumstances the Holder
hereof shall ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excessive interest shall be applied to
the reduction of the unpaid principal balance due hereunder and not to the
payment of interest. At the option of Holder, if a court of competent
jurisdiction determines that any amounts otherwise to be paid hereunder exceed
the highest permissible lawful rate or if Borrower or any guarantor asserts the
amounts otherwise to be paid hereunder exceed the highest permissible lawful
rate, then Holder shall have the right to accelerate the maturity of the entire
unpaid principal balance and accrued interest due under this Note, immediately
upon notice to Borrower.
9. Miscellaneous.
(a) Funds representing the proceeds of the indebtedness
evidenced hereby and disbursed for any purpose permitted hereunder by the Holder
by mail, wire transfer or other delivery to Borrower, to escrows or otherwise
for the benefit of Borrower, for any purpose, shall be deemed outstanding
hereunder and to have been received by Borrower as of the date of such mailing,
wire transfer or other delivery, and interest shall accrue and be payable upon
such funds from and after the date of such wire transfer, mailing or delivery
and until repaid, notwithstanding the fact that such funds may not at any time
have been remitted from such escrows to Borrower or for its benefit. Funds paid
hereunder by or on behalf of Borrower shall be deemed received by the Holder on
the next business day if not received prior to 2:00 p.m. local time at the
location where payments hereunder are to be made.
(b) Any and all references in this Note to any other
document or documents shall be references to such other document or documents as
the same may from time to time be modified, amended, renewed, consolidated or
extended.
(c) This Note and the rights and obligations of the
parties hereunder shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of South Carolina.
(d) Borrower and Lender hereby submit to personal
jurisdiction in the State of State of South Carolina and consent to be sued in
courts of the State of South Carolina.
(e) Borrower recognizes and agrees that any Holder may
sell or assign participations or other similar interest in this Note and that no
such sale or assignment shall affect the terms or conditions hereof.
10. Limited Recourse and Exculpation.
(a) Subject to the terms of the next succeeding paragraph
and notwithstanding anything to the contrary otherwise contained in this Note
and the Pledge and Security Agreement, but without in any way releasing,
impairing or otherwise affecting this Note or the Pledge and
4
<PAGE> 5
Security Agreement, or the validity hereof or thereof, or the lien of the Pledge
and Security Agreement, it is agreed that Holder's sole and only source of
satisfaction of the indebtedness and of Borrower's other obligations hereunder
and under the Pledge and Security Agreement, is limited to (a) the Collateral
and proceeds thereof, and (b) rents, income, issues, proceeds and profits
arising out of the Collateral; provided, however, that nothing herein contained
shall be deemed to be a release or impairment of said indebtedness or the
security thereof intended by the Pledge and Security Agreement, or be deemed to
preclude Holder from foreclosing the Pledge and Security Agreement or from
enforcing any of Holder's rights and remedies at law or in equity thereunder, or
in any way or manner affecting Holder's rights and privileges under the Pledge
and Security Agreement. Notwithstanding anything to the contrary contained in
this Note, the liability and obligation of the Borrower to perform and observe
and make good the obligations contained herein and to pay the principal balance
of, and accrued interest on, this Note in accordance with the provisions of this
Note shall not be enforced by any action or proceeding wherein damages or any
money judgment or any deficiency judgment or any judgment establishing any
personal obligation or liability shall be sought, collected or otherwise
obtained against, and shall be without recourse in or against any past, present
or future partner, officer, employee, director or shareholder of Borrower (or
any assignee thereof), and Holder for itself and its successors and assigns
irrevocably waives any and all right to sue for, seek or demand any such
damages, money, judgment, deficiency judgment or personal judgment against any
past, present or future partner, officer or shareholder of Borrower (or any
assignee thereof) under or by reason of or in connection with this Note and
agrees to look solely to the Collateral for payments of amounts due or payable
hereunder or in connection herewith. Nothing in the foregoing provision shall be
construed to prevent the Holder of this Note from bringing an action against
Borrower and/or its officers, directors and shareholders for specific
performance with respect to delivery of the Collateral upon the occurrence of an
Event of Default or for damages based upon fraud or conversion with respect to
the Collateral.
(b) Notwithstanding the foregoing limitation of liability
provision [paragraph 10(a)], it is expressly understood and agreed that Borrower
shall be liable only for the payment to Holder of:
(i) the application of rents or other income, issues,
profits, and revenues derived from the Collateral and after the occurrence of
Event of Default to anything other than (a) normal and necessary operating
expenses of the Collateral and or (b) the indebtedness evidenced by the Note.
(ii) any loss, cost or damages arising out of or in
connection with fraud or material misrepresentation to Holder by Borrower;
(iii) any loss, cost or damages arising out of or in
connection with Borrower's use or misapplication of (a) any proceeds paid under
any insurance policies by reason of damage, loss or destruction to any portion
of the Collateral, or (b) proceeds or awards resulting from the condemnation or
other taking in lieu of condemnation of any portion of the Collateral and, for
purposes other than those as set forth in the Pledge and Security Agreement;
(iv) any loss, cost or damages arising out of or in
connection with any waste of
5
<PAGE> 6
the Collateral or any portion thereof and all reasonable costs incurred by
Lender in order to protect the Collateral;
(v) any taxes, assessments and insurance premiums for
which Borrower is liable under the Note or the Pledge and Security Agreement,
and which are paid by Holder;
(vi) any loss, costs or damages arising out of or in
connection with any construction lien, mechanic's lien, materialmen's lien or
similar lien against the Collateral arising out of acts or omissions by
Borrower;
(vii) all costs and fees including without limitation
reasonable attorney fees incurred by Holder in the enforcement of subparagraphs
(i) through (vi) hereinabove.
(c) Notwithstanding anything to the contrary contained
herein or in any other agreement or instrument between Borrower and the Lender,
upon this Note becoming due and payable whether upon maturity, by acceleration
or other, Borrower may satisfy all obligations and liabilities under this note
and under any other such agreement or instrument by conveying to Lender such of
the Collateral as can be conveyed by Borrower without violating any law, rule or
regulation, including the Federal Communication Commission laws and the rules
and regulations thereunder, such Collateral to include contingent or conditional
assignments of all FCC licenses and authorizations.
-THIS SPACE INTENTIONALLY LEFT BLANK.
6
<PAGE> 7
IN WITNESS WHEREOF, Borrower has executed and delivered this Note
effective as of the day and year first above written.
SOUTHWIND BROADCASTING, INC.
By: /s/_________________________________________
Title: /s/ _____________________________________
STATE OF DISTRICT OF COLUMBIA )
) SS:
COUNTY OF _______________ )
BE IT REMEMBERED, that on the 3rd day of December, 1997, the foregoing
instrument was acknowledged before me, a Notary Public in and for said County
and State, by William G. Dudley, III, the President of Southwind Broadcasting,
Inc.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
notarial seal on the day and year last aforesaid.
/s/__________________________________
Notary Public
7
<PAGE> 1
EXHIBIT 10(g)
ASSIGNMENT
This Assignment is made as of December 3, 1997, by and among
Wicks Broadcast Group Limited Partnership, a Delaware limited partnership
("Wicks"), and WBG License Co., L.L.C., a Delaware limited liability company
(together with Wicks, "Assignors"), and Regent Communications, Inc., a Delaware
corporation ("Assignee").
WHEREAS, Assignors and Assignee and certain others are parties
to a certain Agreement, dated as of August 13, 1997 (the "August Agreement"),
pursuant to which, inter alia, Assignors propose to assign their rights and
obligations under that certain Option Agreement, dated as of June 3, 1997, among
Southwind Broadcasting, Inc., a South Carolina corporation ("Southwind"),
William G. Dudley, III ("Dudley"), a principal shareholder of Southwind, and
Assignors (the "Option Agreement"), and under than certain Loan commitment
Agreement, dated as of June 3, 1997, among Wicks and Southwind and Dudley (the
"Loan Commitment Agreement");
NOW THEREFORE, in consideration of the mutual premises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Assignors hereby assign and transfer over to Assignee, and
Assignee hereby accepts such assignment and transfer to it, of, and assumes,
Assignors' rights and obligations under the Option Agreement and the Loan
Commitment Agreement.
2. This Assignment may be executed in duplicate counterparts,
but all such counterparts shall constitute one and the same instrument.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption as of the date first above written.
WICKS BROADCAST GROUP LIMITED
PARTNERSHIP
By: WBG Management, Inc.,
general partner
By: ______________________________
Name:
Title:
WBG LICENSE CO., L.L.C.
By: WBG Management, Inc.,
managing member
By: ______________________________
Name:
Title:
REGENT COMMUNICATIONS, INC.
By: ______________________________
Name:
Title:
2
<PAGE> 3
The undersigned, Jacor Broadcasting of South Carolina , Inc.,
a Delaware corporation (formerly named Regent Broadcasting of Charleston, Inc.),
and Regent Licensee of Charleston, Inc., hereby consent to the above assignment
to and assumption by Regent Communications, Inc., and hereby relinquish and
surrender any and all rights in or to the Option Agreement and the Loan
Commitment Agreement and/or the assignment thereof contemplated by the August
Agreement.
JACOR BROADCASTING OF SOUTH CAROLINA,
INC.
By: ______________________________
Name:
Title:
REGENT LICENSEE OF CHARLESTON, INC.
By: ______________________________
Name:
Title:
3
<PAGE> 4
The undersigned hereby acknowledge the above assignment and
assumption.
SOUTHWIND BROADCASTING, INC.
By: _______________________________
William G. Dudley, III
President
________________________________
WILLIAM G. DUDLEY, III
4
<PAGE> 1
EXHIBIT 10(h)
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is made and entered into effective
as of the 3rd day of December, 1997, by and among SOUTHWIND BROADCASTING, INC.,
a South Carolina corporation (the "Debtor"), William G. Dudley, III and Randall
T. Odeneal (the "Shareholders"), and REGENT COMMUNICATIONS, INC., a Delaware
corporation (the "Secured Party"), as follows:
For value received, the Debtor and Shareholders respectively, as and
where applicable, hereby assign, pledge, transfer and grant a security interest
to the Secured Party in their respective property described in Exhibit A
attached hereto and incorporated herein by reference (the "Collateral") to
secure (1) the payment of the sum of One Million Five Hundred Thousand and
00/100 Dollars ($1,500,000.00), together with interest thereon and any other
sums due as provided in a certain Promissory Note of Debtor of even date
herewith payable to the order of Secured Party, and any renewal, modification,
extension or refinancing (hereinafter referred to as the "Note"); and (2) all
expenditures by the Secured Party in the collection and enforcement of the
indebtedness of Debtor.
The Debtor warrants, covenants, and agrees as follows:
1. Title. (a) Except for the security interest granted by this
Agreement, the Debtor or Shareholders, respectively, has or on acquisition will
have, title to the Collateral free from any lien, security interest,
encumbrance, or claim to ownership and possession of the Collateral. The Debtor
will, at the Debtor's cost and expense, defend any action that may affect the
Secured Party's security interest in, or the Debtor's title to, the Collateral.
The Debtor has the right to pledge and grant a security interest in the
Collateral without the consent of any other party.
(b) Anything to the contrary contained in this Security
Agreement notwithstanding, it is understood and agreed as follows:
(i) The distribution and payment of the
entire proceeds of the loan evidenced by the Note (the "Loan Proceeds") and/or
of any of the Sale Assets (as hereinafter defined) to the shareholders of the
Debtor or any or them or any other person is expressly permitted and shall not
constitute a breach or default under this Security Agreement or give rise to any
liability of any such shareholder.
(ii) The Collateral shall not include any of
the Loan Proceeds or any of the Sale Assets.
(iii) For purposes hereof, the "Sale Assets"
shall mean (i) any and all consideration paid to or at the direction of the
Debtor in respect of the "Purchase Price" under that certain Agreement of
Purchase and Sale of Assets, dated as of June 3, 1997, among the Debtor, William
G. Dudley, III, Wicks Broadcast Group Limited Partnership and WBG License Co.,
L.L.C., as the same may be amended from time to time (the "Southwind Sale
Agreement"), including without limitation the "Notes" issued to the Debtor
pursuant thereto (the "Sale Asset Notes"), and the letters of credit from time
to time securing the same (the "L/C's"), (ii) any and
<PAGE> 2
all principal and interest paid in respect of any of the Sale Asset Notes, and
any and all amounts paid or collected on or in respect of any of the L/C's,
(iii) the accounts receivable and other receivables of the Debtor accrued prior
to the date of the "Closing" under the Southwind Sale Agreement (the "Southwind
Closing Date") (said accounts receivable and other receivables being herein
called the "Pre-Southwind Closing Receivables"), as opposed to any trade
accounts receivable accruing from and after the Southwind Closing Date, (iv) any
and all cash on hand of the Company as of the Southwind Closing Date or
collected in respect of the Pre-Southwind Closing Receivables, and (v) any and
all proceeds of any of the foregoing.
(iv) The Secured Party and its assignees
shall not have any recourse against any of the Sale Assets with respect to, and
hereby waive any rights with respect to the Sale Assets accruing in respect of,
the Note or the indebtedness evidenced thereby.
2. Financing Statement. The Debtor and Shareholders will join in
executing all necessary financing statements in forms satisfactory to the
Secured Party and will further execute all other appropriate instruments deemed
necessary by the Secured Party and reasonably approved by counsel for Debtor and
Shareholders.
3. Sale, Lease, or Disposition of Collateral. Debtor will not, without
the prior written consent of the Secured Party, sell, contract to sell, lease,
encumber, or dispose of the Collateral or any interest in it until this Security
Agreement and all debts secured by it have been fully satisfied.
4. Insurance. The Debtor will insure (or cause to be insured) the
Collateral with companies acceptable to the Secured Party against the casualties
and in the amounts that the Secured Party shall reasonably require with a loss
payable clause in favor of the Debtor and Secured Party as their interests may
appear, and the Secured Party is authorized to collect sums that may become due
under any of the insurance policies and apply them to the obligations secured by
this Agreement.
5. Protection of Collateral. The Debtor will keep (or cause to be kept)
the Collateral in good order and repair (ordinary wear and tear excepted) and
will not waste or destroy the Collateral or any part of it. The Debtor will not
use (or permit the use of) the Collateral in violation of any statute or
ordinance, and the Secured Party will have the right to examine and inspect the
Collateral at any reasonable time.
6. Taxes. The Debtor will pay (or cause to be paid) promptly when due
all taxes and assessments on the Collateral or for its use and operation.
7. Location and Identification. The Debtor will keep the Collateral
separate and identifiable and at the address listed on Exhibit A hereto and will
not remove the Collateral from that address without the Secured Party's prior
written consent.
2
<PAGE> 3
8. Security Interest in Proceeds and Accessions. The Debtor grants to
the Secured Party a security interest in and to all proceeds, increases,
substitutions, replacements, additions, and accessions to the Collateral. This
provision shall not be construed to mean that the Debtor is authorized to sell,
lease, or dispose of the Collateral without the consent of the Secured Party.
9. Reimbursement of Expenses. At the option of the Secured Party, the
Secured Party may discharge taxes, liens, interest, or perform or cause to be
performed for and on behalf of the Debtor any actions and conditions,
obligations, or covenants that the Debtor has failed or refused to perform, and
may pay for the repair, maintenance, and preservation of the Collateral, and all
sums so expended, including but not limited to, attorneys' fees, court costs,
agent's fees, or commissions, or any other costs or expenses, shall bear
interest from the date of payment at the rate provided under the Note and shall
be payable and shall be secured by this Security Agreement.
10. Payment. The Debtor will pay the indebtedness secured by this
Security Agreement in accordance with the terms and provisions of the
indebtedness and will repay immediately all sums expended by the Secured Party
in accordance with the terms and provisions of this Security Agreement.
11. Time of Performance and Waiver. In performing any act under this
Security Agreement, time shall be of the essence. The Secured Party's acceptance
of partial or delinquent payments, or the failure of the Secured Party to
exercise any right or remedy, shall not be a waiver of any obligation of the
Debtor or right of the Secured Party or constitute a waiver of any other similar
default that occurs later.
12. Default. The Debtor shall be in default under this Security
Agreement on the occurrence of any of the following events or conditions:
(a) Default in the payment or performance of any obligation,
covenant, or liability secured by this Security Agreement, subject to any
applicable notice and cure provisions contained in the Note;
(b) Any warranty, representation, or statement made or
furnished to the Secured Party by or on behalf of the Debtor proves to have been
false in any material respect when made or furnished;
(c) Uninsured loss, theft, substantial damage, destruction,
sale, or encumbrance to or of any of the Collateral, or the making of any levy,
seizure, or attachment of or on the Collateral;
(d) Any failure by the Debtor to perform any of the provisions
of this Security Agreement; or
3
<PAGE> 4
13. Remedies. On the occurrence of any event of default, and at any
later time, the Secured Party may declare all obligations secured due and
payable immediately and may proceed to enforce payment and exercise any and all
of the rights and remedies provided by the Uniform Commercial Code as well as
any and all other rights and remedies possessed by the Secured Party either at
law or in equity.
The Secured Party may require the Debtor to assemble the Collateral and
make it available to the Secured Party at any place to be designated by the
Secured Party that is reasonably convenient to both parties. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Secured Party will give the
Debtor reasonable notice of the time and place of any public sale or of the time
after which any private sale or any intended disposition of the Collateral is to
be made. The requirements of reasonable notice shall be met if such notice is
mailed, postage prepaid, to the address of the Debtor shown at the beginning of
this Security Agreement at least five days before the time of the sale or
disposition. Expenses of retaking, holding, preparing for sale, selling, or the
like shall include the Secured Party's reasonable attorneys' fees and legal
expenses. No action and/or inaction of the Secured Party shall be construed as
an election of remedies, the Secured Party, under all circumstances, being
deemed to have reserved all of its rights and remedies at law or in equity.
14. Savings Clause. Notwithstanding anything to the contrary contained
in this Pledge and Security Agreement, the Secured Party will not take any
action which would constitute or result in any assignment of license or change
of control of Debtor, if such assignment of license or change of control would
require (under then-existing law) prior approval of the Federal Communications
Commission ("FCC") without first obtaining such prior approval. Debtor and
Shareholders agree to take any and all actions that the Secured Party may
reasonably request in order to obtain any FCC approvals which are necessary or
appropriate to enable the Secured Party to exercise and fully enjoy all rights
and benefits granted to it by this Pledge and Security Agreement, including
specifically, without limitation, the use of the Debtor's and Shareholders'
reasonable best efforts, at the Debtor's cost and expense, to assist the Secured
Party in obtaining any prior approvals from the FCC as are necessary for
performance of any action or transaction contemplated by this Pledge and
Security Agreement. Specifically, and without limitation, Debtor and
Shareholders will, upon the Secured Party's request, prepare, sign and file with
the FCC all relevant portions of any application for assignment of license or
transfer of control as may be necessary or appropriate under FCC rules and
regulations in order to obtain approval of any sale of, transfer of, or
assumption of voting rights in, the common stock, which is a part of the
Collateral.
15. Miscellaneous Provisions.
(a) South Carolina Law to Apply. This Security Agreement shall
be construed under and in accordance with the Uniform Commercial Code and other
applicable laws of the State of South Carolina.
4
<PAGE> 5
(b) Parties Bound. This Security Agreement shall be binding on
and inure to the benefit of the parties and their respective successors and
assigns.
(c) Legal Construction. In case any one or more of the
provisions contained in this Security Agreement shall for any reason be held
invalid, illegal, or unenforceable in any respect, the validity, illegality, or
unenforceability shall not affect any other provision of this Security Agreement
and this Security Agreement shall be construed as if the invalid, illegal, or
unenforceable provision had never been contained in it.
(d) Prior Agreements Superseded. This Security Agreement,
together with the Note and any guaranty, constitutes the only agreement of the
parties and supersedes any prior understandings or written or oral agreements
between the parties respecting the subject matter of this Security Agreement.
(e) Definitions. All terms used in this Security Agreement
that are defined in the Uniform Commercial Code of South Carolina shall have the
same meaning in this Security Agreement as in the Code.
(f) Limitation of Liability. Notwithstanding anything to the
contrary contained in this Security Agreement or any Promissory Note secured
hereby, the liability and obligation of the Debtor and the Shareholders to
perform and observe and make good the obligations contained herein and/or
contained or provided for in the Note shall not be enforced by any action or
proceeding wherein damages or any money judgment or any deficiency judgment or
any judgment establishing any personal obligations or liability shall be sought,
collected or otherwise obtained against, and shall be without recourse in or
against any Shareholder (or any assignee thereof) or against any past, present
or future officer, employee, director or shareholder of Debtor (or any assignee
thereof), and Secured Party for itself and its successors and assigns
irrevocably waives any and all right to sue for, seek or demand any such
damages, money, judgment, deficiency judgment or personal judgment against any
Shareholder (or any assignee thereof) or against any past, present or future
officer, director, employee or shareholder of Debtor (or any assignee thereof),
under or by reason of or in connection with this Security Agreement and the Note
and Secured Party agrees to look solely and only to the Collateral for payments
of amounts due or payable hereunder or in connection herewith. Nothing in the
foregoing provision shall be construed to prevent Secured Party from bringing an
action against the Debtor and/or its officers, directors and shareholders for
specific performance with respect to delivery of the Collateral upon the
occurrence of an Event of Default, or for damages based upon fraud or conversion
with respect to the Collateral.
(g) Termination of Pledge and Security Agreement. This
Security Agreement and all liens, security interests, encumbrance and pledges
created hereby, together with all other obligations hereunder and under the
Note, shall, automatically and without any act or deed on the part of any
person, including any party hereto, terminate and expire and be satisfied and
discharged upon the payment in full of the Note secured hereby. On the date of
termination, the Secured Party shall forthwith and immediately deliver to the
Debtor and to the Shareholders any
5
<PAGE> 6
and all instruments and documents requested by them to satisfy and discharge all
such liens, security interests, encumbrances, pledges and obligations. To that
end, Secured Party hereby irrevocably appoints and designates the Debtor its
attorney-in-fact to execute any and all such instruments and documents if the
Secured Party fails to deliver the same within five (5) days of a request by
Debtor.
(h) Notwithstanding anything to the contrary contained herein
or in any other agreement or instrument between Debtor and Secured Party, upon
the Note becoming due and payable whether upon maturity, by acceleration or
other, Debtor may satisfy all obligations and liabilities under the Note and
under any other such agreement or instrument by conveying to Secured Party such
of the Collateral as can be conveyed by Debtor without violating any law, rule
or regulation, including the Federal Communication Commission laws and the rules
and regulations thereunder, such Collateral to include contingent or conditional
assignments of all FCC licenses and authorizations.
(i) Shareholders. The Shareholders have entered into this
Security Agreement for the sole and only purpose of pledging with Secured Party
the stock of Debtor owned by them, and, except as otherwise provided in Section
15(f), neither Shareholder shall have any liability of any kind whatever
hereunder or under the Note nor shall either of them be required or obligated to
take any action or perform any obligation hereunder.
(j) Jurisdiction; Notice. The parties hereto agree that any
appropriate State Court located in Charleston County, South Carolina, shall have
exclusive jurisdiction over any case or controversy arising under or in any way
connected with this Security Agreement and shall be the proper forum in which to
adjudicate such case or controversy. The parties to this Security Agreement
hereby consent to such jurisdiction and venue and hereby agree that service may
be had and shall be considered to have been duly given if delivered personally
or five (5) business days after being deposited in the mail if via registered or
certified mail, return receipt requested, postage prepaid, to the person named
below at the following addresses:
Regent Communications, Inc.
50 RiverCenter Boulevard
Suite 180
Covington, Kentucky 41011
Southwind Broadcasting, Inc. and/or
William G. Dudley, III
P.O. Box 705
Mt. Pleasant, South Carolina 29464
Randall T. Odeneal
1921 Gallows Road
Suite 850
Vienna, VA 22182
6
<PAGE> 7
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
DEBTOR:
SOUTHWIND BROADCASTING, INC.
By: _______________________________________
Its: _______________________________________
SHAREHOLDERS:
____________________________________________
William G. Dudley, III
____________________________________________
Randall T. Odeneal
SECURED PARTY:
REGENT COMMUNICATIONS, INC.
By: _______________________________________
Its: _______________________________________
This instrument prepared by:
John G. Parnell
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 621-2120
7
<PAGE> 8
EXHIBIT A
Collateral
The following shall constitute the Collateral, except as otherwise
provided in Section 1(b) of the Security Agreement:
1. All inventory, goods, supplies and other tangible personal property.
2. All cash, accounts, accounts receivable, rights to payment, contract
rights, chattel paper, documents, instruments and notes.
3. All trademarks, service marks, tradenames, business names, trade
styles, logos, patents, and licenses.
4. All equipment, fixtures, furnishings, tools and motor vehicles.
5. All choses in action, causes of action and other general intangibles.
Anything to the contrary notwithstanding, it is understood and agreed
as follows:
(i) The Collateral shall not include any of the Loan Proceeds
from the $1,500,000 loan from Secured Party to Debtor or any of the Sale Assets.
(ii) For purposes hereof, the "Sale Assets" shall mean (i) any
and all consideration paid to or at the direction of the Debtor in respect of
the "Purchase Price" under that certain Agreement of Purchase and Sale of
Assets, dated as of June 3, 1997, among the Debtor, William G. Dudley, III,
Wicks Broadcast Group Limited Partnership and WBG License Co., L.L.C., as the
same may be amended from time to time (the "Southwind Sale Agreement"),
including, without limitation, the "Notes" issued to the Debtor pursuant thereto
(the "Sale Asset Notes"), and the letters of credit from time to time securing
the same (the "L/C's", (ii) any and all principal and interest paid in respect
of any of the Sale Asset Notes, and any and all amounts paid or collected on or
in respect of any of the L/C's, (iii) the accounts receivable and other
receivables of the Debtor accrued prior to the date of the "Closing" under the
Southwind Sale Agreement (the "Southwind Closing Date") (said accounts
receivable and other receivables being herein called the "Pre-Southwind Closing
Receivables"), as opposed to any trade accounts receivable accruing from and
after the Southwind Closing Date, (iv) any and all cash on hand of the Company
as of the Southwind Closing Date or collected in respect of the Pre-Southwind
Closing Receivables, and (v) any and all proceeds of any of the foregoing.
<PAGE> 1
Exhibit 10(i)
TIME BROKERAGE AGREEMENT
Time Brokerage Agreement ("Agreement") dated as of October 10, 1997, by
and among REDWOOD BROADCASTING, INC., a Colorado corporation ("Redwood"), ALTA
CALIFORNIA BROADCASTING, INC., a California corporation which is a wholly-owned
subsidiary of Redwood ("Alta"), POWER SURGE, INC., a Delaware corporation
("Power"), NORTHERN CALIFORNIA BROADCASTING, INC., a Colorado corporation
("NCB") (Redwood, Alta, Power and NCB referred to herein collectively as
"Licensee"), and REGENT COMMUNICATIONS, INC., a Delaware corporation, or its
permitted assignee ("Broker").
WHEREAS, Alta, Power and NCB are the licensees of the radio stations
set forth on ATTACHMENT A hereto (referred to herein collectively as the
"Stations"); and
WHEREAS, Alta and Broker have entered into an Agreement of Merger,
dated October 10, 1997 (the "Merger Agreement") for the acquisition by Broker of
all of the outstanding stock of Alta pursuant to which there will result a
transfer of control of the Stations to Broker; and
WHEREAS, Licensee, while maintaining control over the Stations'
finances, personnel matters and programming desires to accept and broadcast
programming supplied by Broker or its subsidiaries on the Stations subject to
the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
1. AIR TIME AND TRANSMISSION SERVICES. Licensee agrees, beginning on
October 15, 1997 (the "Commencement Date") to make the Stations' studio and
broadcast facilities available to Broker, and to broadcast, or cause to be
broadcast, on the Stations, according to the terms hereof, programming
designated and provided by Broker (the "Programming").
2. PAYMENTS. Broker hereby agrees to pay Licensee the amounts specified
in ATTACHMENT B for the right, from and after the Commencement Date, to
broadcast the Programming on the terms and conditions herein provided. Payments
of the estimated Monthly Fee (as defined in ATTACHMENT B), subject to adjustment
according to ATTACHMENT B, are due and payable in full on the first day of each
calendar month for which such payment is intended to be applied and shall be
prorated for any partial calendar month at the beginning or end of the term
hereof. The failure of Licensee to demand or insist upon prompt payment in
accordance herewith shall not constitute a waiver of its right to do so. Broker
shall receive a payment credit for any Programming not broadcast by any Station
(a "Credit"), such Credit to be determined by multiplying the monthly payment by
the ratio of the amount of time preempted or not accepted to the total number of
hours of Programming each month. No credit shall be due on account of any
Programming rejected for failure to comply with the standards for Programming
set forth in this Agreement.
-1-
<PAGE> 2
3. TERM. The term of this Agreement shall begin on the Commencement
Date and end on the earliest of (i) the Closing Date, as defined in the Merger
Agreement, or (ii) the date which is ten (10) days following any termination of
the Merger Agreement in accordance with the terms thereof (such date hereinafter
referred to as the "Termination Date," and such period of time as the "Term").
4. PROGRAMMING. Broker shall furnish or cause to be furnished the
Programming, which shall be an entertainment format and may include, without
limitation, news, promotions (including on-air giveaways), contests, syndicated
programs, barter programs, paid-for programs, locally-produced programs,
advertising commercial matter, including that in both program or spot
announcement forms, and public service information; provided, however, that the
Programming on each Station shall include news, public service announcements and
other programming on issues of importance to the local community as reasonably
requested by Licensee. The Programming shall be consistent with the standards
set forth in ATTACHMENT D. All actions or activities of Broker under this
Agreement, and all Programming provided by Broker shall be in accordance with
(i) the Communications Act of 1934, as amended; (ii) Federal Communications
Commission (the "FCC") rules, requirements and policies, including, without
limitation, the FCC's rules on plugola/payola, lotteries, station
identification, minimum operating schedule, sponsorship identification,
political programming and political advertising rates; (iii) all applicable
federal, state and local regulations and policies; and (iv) generally accepted
quality standards consistent with Licensee's past practices. Broker agrees that,
if in the sole, good faith judgment of the Licensee or any of the Stations'
General Managers, Broker does not comply with the standards of this paragraph,
Licensee may suspend or cancel any Programming not in compliance. Broker shall
not be entitled to a Credit for Programming not broadcast over the Station on
account of any Programming rejected for failure to comply with the standards for
Programming set forth in this Section 4. The right to use the Programming and to
authorize its use in any manner and in any media whatsoever shall be, and
remain, vested solely in Broker, subject in all events to the rights, if any, of
others in such Programming.
5. SPECIAL EVENTS. Licensee reserves the right in its discretion, and
without liability, to preempt, delay or delete any of the broadcasts of the
Programming and to substitute programming which in Licensee's judgment is of
greater local, regional or national importance. In all such cases, Licensee
shall use its best efforts to give Broker reasonable notice of its intention to
preempt such Programming, and, in the event of such preemption, Broker shall
receive a payment credit for the Programming so omitted consistent with the
intent and pursuant to the terms of Section 2 hereof.
6. ADVERTISING AND PROGRAMMING REVENUES. Broker shall retain all
advertising and other revenues, and all accounts receivable, with respect to
Programming broadcast during the Term, and relating to the Programming it
delivers to the Stations for broadcast during the Term, including without
limitation, promotion-related revenues. Licensee and Broker each shall have the
right, at their own expense, to seek copyright royalty payments for their own
programming. Broker
-2-
<PAGE> 3
may sell advertising on the Stations in combination with the sale of advertising
on other broadcasting stations of its choosing, subject to compliance with
applicable law.
7. STATION FACILITIES. Subject to the qualifications set forth in this
Agreement, throughout the term of this Agreement, Licensee shall make the
facilities and equipment of the Stations in good operating condition and repair
available to Broker for operation and broadcast with the maximum authorized
facilities twenty-four (24) hours a day, seven (7) days a week, except for
downtime occasioned by either (i) emergency maintenance or (ii) routine
maintenance not to exceed two (2) hours each Sunday morning between the hours of
12 midnight and 5:00 a.m., and except for such programs and announcements
prepared by and put on the air by Licensee in order to meet local needs and
issues requirements, said programs and announcements not to exceed one (1) hour
each Sunday morning at a mutually agreed upon time between the hours of 5:00
a.m. and 7:00 a.m. Broker shall not be entitled to a Credit for Programming not
broadcast over the Stations for periods specified in this Section 7 hereof. To
the extent practicable, any maintenance work affecting the operation of the
Stations at full power shall be scheduled upon at least forty-eight (48) hours
prior notice with the agreement of Broker, such agreement not to be unreasonably
withheld.
8. RIGHT OF ACCESS. Broker and Broker's employees or agents shall at
all times be afforded reasonable access to the Stations in order to perform
their duties in connection with the production and transmission of the
Programming over the facilities of the Stations. Broker shall have the right to
install at Licensee's and/or Broker's premises, and to maintain throughout the
term of this Agreement, at Broker's expense, any microwave studio/transmitter
relay equipment, telephone lines, transmitter remote control, monitoring devices
or any other equipment necessary for the proper transmission of the Programming
on the Stations, and Licensee and Broker shall take all steps reasonably
necessary to prepare and file any applications with the FCC to effectuate such
proper transmission.
9. FORCE MAJEURE. Any failure or impairment of facilities or any delay
or interruption in broadcasting the Programming, or failure at any time to
furnish facilities, in whole or in part, for broadcasting, due to acts of God,
strikes, or threats thereof, force majeure, or due to causes beyond the control
of Licensee, shall not constitute a breach of this Agreement, and Licensee shall
not be liable to Broker for any damages or adjustments for such failure,
impairment, delay or interruption, except to the extent of allowing in each such
case an appropriate payment credit for Programming available to Licensee but not
carried consistent with the intent and pursuant to the terms of Section 2
hereof.
10. LICENSEE CONTROL OF STATIONS. Notwithstanding anything to the
contrary in this Agreement, Licensee shall have full authority, control and
power over the operation of the Stations during the period of this Agreement.
Licensee shall retain control, said control to be reasonably exercised, over the
policies, programming and operations of the Stations, including, without
limitation, the right to decide whether to accept or reject any Programming or
advertisements, the right to preempt any Programming in order to broadcast a
program deemed by Licensee to be of greater national, regional, or local
interest, and the right to take any other actions necessary for
-3-
<PAGE> 4
compliance with the laws of the United States; the laws of the relevant states;
the rules, regulations, and policies of the FCC (including without limitation
the prohibition on unauthorized transfers of control); and the rules,
regulations and policies of other federal governmental authorities, including
without limitation the Federal Trade Commission and the Department of Justice.
Licensee shall be responsible for ensuring that FCC requirements are met with
respect to ascertainment of the problems, needs and interests of the community,
public service programming, main studio staffing, maintenance of public
inspection files and the preparation of quarterly issues/programs lists. Broker
shall, upon request by Licensee, provide Licensee with information with respect
to such of Broker's programs which are responsive to the problems, needs and
interests of the community, so as to assist Licensee in the preparation of
required quarterly issues/programs lists, and shall provide upon request other
information to enable Licensee to prepare other records, reports and logs
required by the FCC or other local, state or federal governmental agencies.
Whenever on the Stations' premises, all Broker personnel shall be subject to the
supervision and the direction of Licensee's designated personnel.
11. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES. Licensee shall employ
two full time employees at each main studio of the Stations (or such lesser or
greater number of employees as may be required by FCC rules). One of the
employees shall be a manager. Licensee's employees shall report to and be
accountable to Licensee and shall be ultimately responsible for the day-to-day
operation of the Stations. Licensee shall be directly responsible for paying the
salaries, taxes, insurance and related costs for such employees (the "Licensee
Employee Expenses"). Licensee shall be responsible for paying directly (i)
transmitter site rent/mortgage for the Stations; (ii) costs for maintenance and
repair of the transmission and other technical equipment; (iii) costs for
capital improvements and replacements; and (iv) transmitter site utilities for
the Stations ("Licensee Transmitter Expenses"). Licensee shall be responsible
for paying directly all income taxes relating to Licensee's earnings from this
arrangement. Broker shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming (including, without limitation, salespeople, traffic personnel,
administrative and programming staff) for Broker's use of the studio and for
routine maintenance and repair thereto (as opposed to maintenance and repair of
the transmission and other technical equipment and capital improvements and
replacements which shall be Licensee's responsibility). Excluding those expenses
for which Licensee is making payments as set forth in this Section 11, during
the Term, Broker shall be responsible for paying all other expenses reasonably
and directly related to the continued operation of the Stations subject to the
covenants of the parties to this Agreement (the "Other Expenses"), and further
subject to the ultimate authority, control and power of Licensee.
-4-
<PAGE> 5
11.1 EMPLOYEE MATTERS.
11.1.1 Licensee shall be responsible for the payment
of all compensation and accrued employee benefits payable to all Licensee
employees through the Commencement Date.
11.1.2 Licensee acknowledges and agrees that
Licensee, and not Broker, is and shall be solely responsible for any and all
insurance, supplemental pension, deferred compensation, retirement and any other
benefits, and related costs, premiums and claims due, to become due, committed
or otherwise promised to any person who, up to the Commencement Date is a
retiree, former employee, or current employee of Licensee, relating to the
period up to the Commencement Date. Broker shall assume no employee benefit
plans, programs or practices, whether or not set forth in writing, maintained by
Licensee at any time.
12. STATION AGREEMENTS.
12.1. ASSIGNMENT AND ASSUMPTION OF STATION AGREEMENTS. On the
Commencement Date, Licensee shall assign to Broker and Broker shall assume,
subject to the provisions of this Section 12, the obligations of Licensee
arising or to be performed on and after the Commencement Date (except to the
extent such obligations represent liabilities for activities, events or
transactions occurring, or conditions existing, on or prior to the Commencement
Date) under (a) all of the contracts which comprise Broadcast Assets (as defined
in the Merger Agreement), excluding (i) contracts and agreements relating to the
Licensee Employee Expenses, (ii) contracts and agreements relating to the
Licensee Transmitter Expenses, (iii) Licensee's financing agreements and (iv)
corporate level contracts and agreements, except, if any, those listed on
ATTACHMENT C (collectively, the contracts and agreements to be assigned by
Licensee and assumed by Broker are referred to as the "Station Agreements").
Licensee hereby makes and incorporates by reference the representations and
warranties of Sellers in Section 20(k) of the Merger Agreement. Licensee
represents and warrants that the Station Agreements are freely assignable, or,
if consent of the other contracting party to the assignment is required,
Licensee to use its reasonable best efforts to obtain such consent as promptly
as practicable. As of the Commencement Date, Licensee shall have paid all
amounts due on and shall have performed all obligations due under the Station
Agreements as of that date.
12.2 CONSENTS TO ASSIGNMENT. To the extent that any Station
Agreement is not capable of being assigned, transferred, delivered or subleased
without the waiver or consent of any third person (including a government or
governmental unit), or if such assignment, transfer, delivery or sublease or
attempted assignment, transfer, delivery or sublease would constitute a breach
thereof or a violation of any law or regulation, this Agreement and any
assignment executed pursuant thereto shall not constitute an assignment,
transfer, delivery or sublease or an attempted assignment, transfer, delivery or
sublease thereof. In those cases where consents, assignments, releases and/or
waivers have not been obtained at or prior to the Commencement Date to the
transfer and assignment to Broker of any Station Agreement, this Agreement and
any assignment executed pursuant hereto, to the extent permitted by law, shall
constitute an equitable assignment by Licensee to Broker of all of Licensee'
rights, benefits, title and interest in and to the Station
-5-
<PAGE> 6
Agreements, and where necessary or appropriate, Broker shall be deemed to be
Licensee's agent for the purpose of completion, fulfilling and discharging all
of Licensee's rights and liabilities arising after the Commencement Date under
such Station Agreements. Licensee shall use its reasonable best efforts to
provide Broker with the financial and business benefits of such Station
Agreements (including, without limitation, permitting Broker to enforce any
rights of licensee arising under such Station Agreements), and Broker shall, to
the extent Broker is provided with the benefits of such Station Agreements,
assume, perform and in due course pay and discharge all debts, obligations and
liabilities of Licensee under such Station Agreements to the extent that Broker
was to assume those obligations pursuant to the terms hereof.
12.3 RETAINED LIABILITIES. Except as set forth in Sections 11
and 12 hereof, Broker expressly does not, and shall not, assume or agree to pay,
satisfy, discharge or perform and will not be deemed by virtue of the execution
and delivery of this Agreement or any agreement, instrument or document
delivered pursuant to or in connection with this Agreement or otherwise by
reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Licensee of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed by Broker, other than the Station
Agreements. Licensee will retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations of the
Licensee, other than the Station Agreements, including but not limited to, the
obligation to assume, perform, satisfy or pay any liability, obligation,
agreement, debt, charge, claim, judgment or expense incurred by or asserted
against Licensee related to taxes, environmental matters, pension or retirement
plans or trusts, profit-sharing plans, employment contracts, employee benefits,
severance of employees, product liability or warranty, negligence, contract
breach or default, copyright, trademarks, service mark, trade name and other
intellectual property, or other obligations, claims or judgments asserted
against Broker as successor in interest to Licensee. All such liabilities,
obligations and commitments of Licensee described in this Section 12.3 shall be
referred to herein collectively as the "Retained Liabilities."
13. ACCOUNTS RECEIVABLE. Broker acknowledges that all accounts
receivable arising prior to the Commencement Date in connection with the
operation of the Stations, including but not limited to accounts receivable for
advertising revenues for programs and announcements performed prior to the
Commencement Date and other broadcast revenues for services performed prior to
the Commencement Date, shall remain the property of Licensee (the "Licensee
Accounts Receivable") and that Broker shall not acquire any beneficial right or
interest therein or responsibility therefor. For a period of one hundred twenty
(120) days from the Commencement Date ("Collection Period"), Broker agrees to
use reasonable efforts to assist Licensee in collection of the Licensee Accounts
Receivable in the normal and ordinary course of business and will apply all such
amounts collected to the debtor's oldest account receivable first, except that
any such accounts collected by Broker from persons who are also indebted to
Broker may be applied to Broker's account if so directed by the debtor or under
circumstances in which there is a bona fide dispute between Licensee and such
account debtor with respect to such account provided that such disputed accounts
are reassigned to Licensee. Broker's obligation and authority shall not extend
to the
-6-
<PAGE> 7
institution of litigation, employment of counsel or a collection agency or any
other extraordinary means of collection. Broker agrees to reasonably cooperate
with Licensee, at Licensee' expense, as to any litigation or other collection
efforts instituted by Licensee to collect any delinquent Licensee Accounts
Receivable. During the Collection Period, neither Licensee nor its agents shall
make any direct solicitation of any account debtor for collection purposes or
institute litigation for the collection of amounts due except with respect to
any accounts that may be reassigned to Licensee. Any amounts relating to the
Licensee Accounts Receivable that are paid directly to the Licensee shall be
retained by the Licensee, but Licensee shall provide Broker with prompt notice
of any such payment. Every forty (40) days during the Collection Period,
Licensee shall make a payment to Licensee equal to the amount of all Collections
of Licensee Accounts Receivable during such forty (40) day period, provided that
Broker shall deduct from such amounts and shall be responsible for paying
commissions due on the collected Licensee Accounts Receivable in accordance with
ATTACHMENT G hereto. At the end of the Collection Period, any remaining Licensee
Accounts Receivable shall be returned to Licensee for collection.
14. PRORATION OF INCOME AND EXPENSES: TRADE AGREEMENTS ADJUSTMENT.
14.1 Except as otherwise provided herein, all deposits,
reserves and prepaid and deferred income and expenses relating to the Station
Agreements shall be prorated between Broker and Licensee in accordance with
general accepted accounting principles as of 11:59 p.m., Pacific time, on the
Commencement Date.
14.2 SCHEDULE 14.2 will include a list of all Trade Agreements
as of the Commencement Date included in the Station Agreements and the aggregate
value of time owed ("Barter Payable") pursuant to each of the Trade Agreements
and the aggregate value of goods and services to be received ("Barter
Receivable") pursuant to each of the Trade Agreements, in each case as of the
date specified on Schedule 14.2 hereof. On the Commencement Date, Licensee shall
deliver to Broker a report, dated as of the Commencement Date (the "Commencement
Date Trade Report"), which report lists all Trade Agreements included in the
Station Agreements and the contract end date for each Trade Agreement together
with a true and correct itemized statement of the aggregate value of the Barter
Payable and Barter Receivable pursuant to each of the Trade Agreements. To the
extent that the aggregate net value as reflected on the Commencement Date Trade
Report of the Stations' Barter Payable exceeds the aggregate net value as
reflected on the Commencement Date Trade Report of the Barter Receivable, Broker
shall be entitled to receive the difference as a credit against the next due
Monthly Fee(s).
14.3 Except as otherwise provided herein, the prorations and
adjustments contemplated by this Section 14, to the extent practicable, shall be
made on the Commencement Date. As to those prorations and adjustments not
capable of being ascertained on the Commencement Date, an adjustment and
proration shall be made within ninety (90) calendar days after the Commencement
Date.
-7-
<PAGE> 8
14.4 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in Section 14.3 hereof and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Licensee and
one-half by Broker.
15. INDEMNIFICATION.
15.1 INDEMNIFICATION. Broker shall indemnify and hold Licensee
and its stockholders, directors, partners, officers, agents, employees,
successors, and assigns harmless from and against any and all claims, expenses,
causes of action and liability resulting from or relating to (i) the broadcast
of Programming during the Term, (ii) any and all promotions, contests and on-air
"giveaways" by Broker relating to the Stations during the Term, (iii) a breach
of Broker's representations, warranties, covenants or agreements contained
herein, (iv) any liability resulting from Broker's default under the Station
Agreements, and (v) all other matters arising out of or related to Broker's
activities involving the Stations or use of the Licensee Station facilities or
relating to the obligations assumed by Broker in connection with this Agreement
including but not limited to any damage caused to Station equipment by Broker,
its employees, or agents. Licensee agrees to indemnify, defend, and hold
harmless Broker and its stockholders, directors, officers, agents, employees,
successors and assigns from and against any and all liability that arises out of
(i) material broadcast by Licensee other than the Programming, (ii) liabilities
(but not loss of advertising revenue) that arise as a result of Licensee's
alteration of any and/or all Programming prior to broadcast by Licensee; and
(iii) the Retained Liabilities.
15.2 PROCEDURES: THIRD PARTY AND DIRECT INDEMNIFICATION
CLAIMS. The indemnified party agrees to give written notice within a reasonable
time to the indemnifying party of any demand, suit, claim or assertion of
liability by third parties or other circumstances that could give rise to an
indemnification obligation hereunder against the indemnifying party (hereinafter
collectively "Claims," and individually a "Claim"), it being understood that the
failure to give such notice shall not affect the indemnified party's right to
indemnification and the indemnifying party's obligation to indemnify as set
forth in this Agreement, unless the indemnifying party's ability to contest,
defend or settle with respect to such Claim is thereby demonstrably and
materially prejudiced.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.1 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.2.1 The indemnifying party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
or opposition to such Claim.
15.2.2 In the event that the indemnifying party shall
elect not to undertake such defense or opposition, or within ten days after
notice of any such Claim from the indemnified
-8-
<PAGE> 9
party shall fail to defend or oppose, the indemnified party (upon further
written notice to the indemnifying party) shall have the right to undertake the
defense, opposition, compromise or settlement of such Claim, by counsel or other
representatives of its own choosing, on behalf of and for the account and risk
of the indemnifying party (subject to the right of the indemnifying party to
assume defense of or opposition to such Claim at any time prior to settlement,
compromise or final determination thereof).
15.2.3 Anything in this Section 15.2 to the
contrary notwithstanding: (a) the indemnified party shall have the right, at its
own cost and expense, to participate in the defense, opposition, compromise or
settlement of the Claim; (b) the indemnifying party shall not, without the
indemnified party's written consent, settle or compromise any Claim or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such Claim; and (c) in the event that
the indemnifying party undertakes defense of or opposition to any Claim, the
indemnified party, by counsel or other representative of its own choosing and at
its sole cost and expense, shall have the right to consult with the indemnifying
party and its counsel or other representatives concerning such Claim and the
indemnifying party and the indemnified party and their respective counsel or
other representatives shall cooperate in good faith with respect to such Claim.
15.2.4 No undertaking of defense or opposition to a
Claim shall be construed as an acknowledgment by such party that it is liable to
the party claiming indemnification with respect to the Claim at issue or other
similar Claims.
16. EVENTS OF DEFAULT: CURE PERIODS AND REMEDIES.
16.1. EVENTS OF DEFAULT. The following shall, after the
expiration of the applicable cure periods, constitute Events of Default under
the Agreement:
16.1.1 NON-PAYMENT. Broker's failure to timely pay
the consideration provided for in Section 2 and ATTACHMENT B hereof which is
not cured within five (5) business days following notice in accordance with
Section 16.2 hereof;
16.1.2 DEFAULT IN COVENANTS OR ADVERSE LEGAL ACTION.
The default by any party hereto in the material observance or performance of
any material covenant, condition or agreement contained herein which is not
cured within five (5) business days following notice in accordance with Section
16.2 hereof, or if (a) any party shall make a general assignment for the
benefit of creditors, (b) any party shall file or have filed against it a
petition for bankruptcy, for reorganization or an arrangement, or for the
appointment of a receiver, trustee or similar creditors' representative for the
property or assets of such party under any federal or state insolvency law,
which, if filed against such party, has not been dismissed or discharged within
sixty (60) days thereof, or (c) specifically and without limitation, if
Licensee's successors and assigns, including, without limitation, any assignee
of the FCC license for the Stations, except if such successor or
-9-
<PAGE> 10
assign is Broker or an affiliate of Broker, refuses to abide by or terminates
this Agreement during the term of this Agreement.
16.1.3 BREACH OF REPRESENTATION. If any material
representation or warranty herein made by either party hereto, or in any
certificate or document furnished by either party to the other pursuant to
the provisions hereof, shall prove to have been false in any material respect
as of the time made or furnished and is not cured within thirty (30) days
following notice in accordance with Section 16.2 hereof.
16.1.4 BREACH OF MERGER AGREEMENT. The breach by any
party or their affiliates in the observance or performance of any
representation, warranty, covenant, condition or agreement in the Merger
Agreement which is not cured within any time period provided for such cure
under the Merger Agreement and which breach gives rise to a right to a party
to terminate the Merger Agreement pursuant to Section 29 of the Merger
Agreement, provided that no party may use its or its affiliate's own breach
under the Merger Agreement as grounds to terminate this Agreement.
16.2 CURE PERIODS. An Event of Default shall not be deemed to
have occurred until after the nondefaulting party has provided the defaulting
party with written notice specifying the event or events that if not cured would
constitute an Event of Default and specifying the actions necessary to cure
within the relevant cure period. The Event of Default shall not be deemed to
have occurred if actions necessary to cure are completed during the relevant
cure period. The curing of any matter shall not relieve a party of its
obligation to indemnify another pursuant to Section 15 hereof.
16.3 TERMINATION UPON DEFAULT. Upon the occurrence of an Event
of Default, the non-defaulting party may terminate this Agreement provided that
it is not also in material default hereunder, and may seek such remedies at law
and/or equity as are available, including without limitation specific
performance. If Broker has defaulted in the performance of its obligations,
Licensee shall be under no further obligation to make available to Broker any
further broadcast time or broadcast transmission facilities and, without
limitation of remedies, all amounts accrued or payable to Licensee up to the
date of termination which have not been paid, less any payment credits, shall
immediately become due and payable.
16.4 LIABILITIES UPON TERMINATION. Upon termination of this
Agreement, Broker shall be responsible for all liabilities, debts and
obligations of Broker accrued from the purchase of air time and transmission
services including, without limitation, accounts payable, barter agreements and
unaired advertisements, but not for Licensee's federal, state, and local tax
liabilities associated with Broker's payments to Licensee as provided for
herein. With respect to Broker's obligations to broadcast material over the
Stations after termination hereunder, Broker may propose compensation to
Licensee for meeting these obligations, but Licensee shall be under no duty to
accept such compensation or to perform such obligations. Upon termination,
Broker shall return to Licensee any equipment or property of the Stations used
by Broker, its employees or agents, in
-10-
<PAGE> 11
substantially the same condition and location as such equipment existed on the
date of this Agreement, ordinary wear and tear excepted, and Broker shall assign
to Licensee the still outstanding Station Agreements that were assigned to
Broker pursuant to Section 12 hereof and any new contracts entered into by
Broker relating to the Stations that Licensee expressly agrees to assume.
Notwithstanding anything in the foregoing to the contrary, termination shall not
extinguish any rights of either party as may be provided by Section 15 hereof.
17. BROKER TERMINATION OPTION. Broker may elect to terminate this
Agreement at any time during the term hereof in the event that Licensee preempts
or substitutes other programming for that supplied by the Broker during ten
percent (10%) or more of the total hours of operation of the Stations during any
calendar month. In the event Broker elects to terminate this Agreement pursuant
to this provision, it shall give Licensee notice of such election at least ten
(10) days prior to the termination date. Upon termination, neither party shall
have any further liability to the other except as may be provided by Sections 15
and 16.4 hereof.
18. RESPONSIVE PROGRAMMING. Broker and Licensee mutually acknowledge
their interest in ensuring that the Stations serve the needs and interests of
the residents of the Stations' community of license and service areas and agree
to cooperate in doing so. Licensee shall, on a regular basis, assess the issues
of concern to residents of the Stations' community of license and service areas
and address those issues in its public service programming. Licensee shall
describe those issues and responsive programming and place issues/programs lists
in the Stations' public inspection file as required by FCC rules. The
Programming shall include material that is responsive to the issues identified
by Licensee. Licensee may request, and Broker shall provide, information
concerning such of Broker's Programming that is responsive to community issues
so as to assist Licensee in the satisfaction of its public service programming
obligations. Broker shall also provide to Licensee upon request such other
information necessary to enable Licensee to prepare records and reports required
by the FCC or other local, state or federal government entities.
19. TIME BROKERAGE CHALLENGE. If this Agreement is challenged in whole
or in part at or by a governmental authority or is challenged in whole or in
part in a judicial forum, counsel for the Licensee and counsel for the Broker
shall jointly defend this Agreement and the parties' performance thereunder
throughout all such proceedings. If this Agreement is declared invalid or
illegal in whole or in substantial part by a ruling, order or decree of a
governmental authority or court, and such ruling, order or decree has become
effective, then the parties shall endeavor in good faith to reform the Agreement
as necessary. If the parties are unable to reform this Agreement within thirty
(30) days of the effective date of such ruling, order or decree, then this
Agreement shall terminate, and all sums owing to Licensee shall be paid and
neither party shall have any further liability to the other except as may be
provided by Section 15 hereof.
-11-
<PAGE> 12
20. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
20.1. MUTUAL REPRESENTATIONS, WARRANTIES AND COVENANTS. Both
Licensee and Broker represent that they are legally qualified, empowered, and
able to enter into this Agreement, and that the execution, delivery and
performance hereof shall not constitute a breach or violation of any agreement,
contract or other obligation to which either party is subject or by which it is
bound.
20.2. ADDITIONAL LICENSEE REPRESENTATIONS, WARRANTIES AND
COVENANTS. Licensee makes the following further representations, warranties and
covenants:
20.2.1 AUTHORIZATIONS. During the term of
this Agreement, Licensee shall own and hold all licenses and other permits and
authorizations necessary for the operation of the Stations as presently
conducted (including licenses, permits and authorizations issued by the FCC),
and such licenses, permits and authorizations shall be in full force and effect
for the entire Term hereunder, unimpaired by any acts or omissions of Licensee,
its principals, employees or agents. Licensee hereby makes and incorporates by
reference the representations, warranties and covenants of Sellers set forth in
the Merger Agreement that pertain to Licensee, its assets or its operation of
the Stations.
20.2.2 PAYMENT OF OBLIGATIONS. Licensee
shall not incur any debt, obligation or liability without the prior written
consent of Broker if such undertaking would adversely affect Licensee's
performance hereunder or the business and operations of the Broker permitted
hereby. Subject to the provisions of Sections 2 and 11 hereof, Licensee shall
pay in a timely fashion all of its debts, assessments and obligations, including
without limitation tax liabilities and payments in each case attributable to the
operations of the Stations, as they come due during the Term of this Agreement.
20.2.3 BROADCAST OBLIGATIONS. Licensee has
no agreement, contract, commitment or understanding to broadcast on the Stations
on or after the Commencement Date, any programs or commercial matter other than
the Station Agreements. Licensee shall not incur any other programming
obligations without the prior written consent of Broker except in connection
with programming obligations incurred by Licensee for programming that replaces
Programming that does not meet the standards set forth in this Agreement.
20.2.4 LICENSEE CONTROL. Licensee hereby
verifies that for the term of this Agreement it shall maintain ultimate control
over the Stations' facilities, including specifically control over the Stations'
finances, personnel and programming, and nothing herein shall be interpreted as
depriving Licensee of the power or right of such ultimate control.
20.2.5 INSURANCE. Licensee shall maintain in
full force and effect (at Broker's expense) throughout the term of this
Agreement insurance with responsible and reputable insurance companies or
associations covering such risks (including fire and other risks insured
-12-
<PAGE> 13
against by extended coverage, public liability insurance, insurance for claims
against personal injury or death or property damage and such other insurance as
may be applicable) and in such amounts and on such terms as is conventionally
carried by broadcasters operating radio stations with facilities in the area
comparable to those of the Stations. Broker shall be listed as an additional
insured on such insurance policies. Any insurance proceeds received by Licensee
in respect of damaged property shall be used to repair or replace such property
so that the operations of the Stations conform with this Agreement. Licensee
shall present to Broker prior to the execution of this Agreement certificates of
insurance or binders for such insurance policies. If requested by Broker,
Licensee shall maintain, at Broker's expense, business interruption insurance
for Broker's benefit.
20.2.6 COMPLIANCE WITH LAW. Licensee
covenants that, throughout the term of this Agreement, Licensee shall comply
with all laws and regulations applicable in the conduct of Licensee's business
and Licensee acknowledges that Broker has not urged, counseled, or advised the
use of any unfair business practice.
20.3 ADDITIONAL BROKER REPRESENTATIONS, WARRANTIES AND
COVENANTS.
20.3.1 COMPLIANCE WITH 47 C.F.R. SEC
73.3555(A). Broker hereby verifies that execution and performance of this
Agreement complies with the Commission's restrictions on local radio ownership
set out in Section 73.3555(a) of the FCC Rules.
20.3.2 COMPLIANCE WITH APPLICABLE LAW.
Broker covenants that its performance of its obligations under this Agreement
and its furnishing of Programming shall be in compliance with, and shall not
violate, any applicable laws or any applicable rules, regulations, or orders of
the FCC or any other governmental agency and Broker acknowledges that Licensee
has not urged, counseled, or advised the use of any unfair business practice.
20.3.3 HANDLING OF COMPLAINTS. Broker shall
promptly advise Licensee of any public or FCC complaint or inquiry that Broker
receives concerning the Programming on the Stations and shall cooperate with
Licensee and take all actions as may be reasonably requested by Licensee in
responding to any such complaint or inquiry.
20.3.4 COPYRIGHT AND LICENSING. Broker
represents and warrants to Licensee that Broker has and shall have throughout
the term of this Agreement the full authority to broadcast the Programming on
the Stations and that Broker shall not broadcast on the Stations any material in
violation of the Copyright Act. All music supplied by Broker shall be: (i)
licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or (iii) cleared at
the source by Broker.
20.3.5 INFORMATION FOR FCC REPORTS. Upon
request by Licensee, Broker shall provide in a timely manner any such
information in its possession which shall enable Licensee to prepare, file or
maintain the records and reports required by the FCC.
-13-
<PAGE> 14
20.3.6 PAYOLA/PLUGOLA. Broker covenants that
it shall not accept, and shall instruct its employees not to accept, any
consideration, compensation, gift or gratuity of any kind whatsoever, regardless
of its value or form, including, but not limited to, a commission, discount,
bonus, materials, supplies or other merchandise, services or labor, whether or
not pursuant to written contracts or agreements between Broker and merchants or
advertisers, unless the payer is identified in the program as having paid for or
furnished such consideration, in accordance with FCC requirements. Broker agrees
to annually, or more frequently at the request of Licensee, execute and provide
Licensee with an affidavit regarding payola/plugola compliance.
21. INTELLECTUAL PROPERTY. Effective as of the Commencement Date,
Licensee licenses to Broker the exclusive right to use all intellectual property
owned by or licensed to Licensee and used solely in the operation of the
Stations (including, but not limited to, logos, jingles, promotional materials,
call signs, goodwill, trademarks, service marks, slogans, trade names,
copyrights and any applications and registrations therefor) (the "IP License").
In the event of termination of this Agreement, the IP License shall terminate.
22. SUBCARRIER RIGHTS. Licensee and Broker acknowledge and agree that
any subsidiary communications services transmitted on a subcarrier within the FM
baseband signal of any of the Stations ("Subcarrier"), and any uses of the
Subcarrier authorized by the FCC ("Subcarrier Uses"), are subject to the terms
and conditions of this Agreement. Licensee hereby agrees (a) to apply, at
Broker's expense, for any additional authorization from the FCC or any other
governmental agency or entity that may be necessary in order to make use of any
Subcarrier Uses, and (b) that Broker has the sole and exclusive right, subject
to the terms and conditions hereof, to make use of any Subcarrier Uses and
collect the revenues therefrom. Broker hereby agrees to reimburse Licensee for
Licensee's reasonable expenses incurred in carrying out Licensee's obligations
pursuant to this Section 22, including reasonable attorneys and engineering fees
and expenses.
23. PUBLICITY. Licensee and Broker shall not issue any press release or
otherwise make any public statement with respect to the transactions
contemplated herein except as may be required by law or regulation or as agreed
to by Licensee and Broker.
24. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
Licensee or Broker in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of Licensee and Broker herein
provided are cumulative and are not exclusive of any right or remedies which it
may otherwise have.
25. CONSTRUCTION. This Agreement shall be construed in accordance with
the laws of the State of California, without giving effect to the choice of law
provisions thereunder, and the obligations of the parties hereto are subject to
all federal, state or municipal laws or regulations now or hereafter in force
and to the regulations of the FCC and all other governmental bodies or
authorities presently or hereafter to be constituted.
-14-
<PAGE> 15
26. HEADINGS. The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.
27. PARTIES IN INTEREST; ASSIGNMENT. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties to this
Agreement shall bind and inure to the benefit of their respective successors and
assigns, whether so expressed or not. No party to this Agreement may assign its
rights or delegate its obligations under this Agreement to any other person or
entity without the express prior written consent of the other parties, except
that (i) Broker may assign its rights and delegate its obligations to one or
more subsidiary or affiliated corporation of Broker, in which event Broker shall
be released and discharged of all obligation hereunder and all reference herein
to Broker shall mean such subsidiary or affiliate; (ii) in the event that Broker
finds it necessary or is required to provide to a third party a collateral
assignment of Broker's interest in this Agreement or any related documents,
Licensee will cooperate with Broker and any third party requesting such
assignment including but not limited to signing a consent and acknowledgment of
such assignment; provided, however, that except as otherwise provided herein
Broker shall remain fully liable as to all of its obligations and agreements
whether or not delegated or assigned.
28. NOTICES. All notices, demands, requests, or other communications
which may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by overnight air courier, or transmitted by telegram,
telex, or facsimile transmission addressed in accordance with the listing set
forth in ATTACHMENT E hereto or such other address as the addressee may indicate
by written notice to the other parties. Each notice, demand, request, or
communication which shall be given or made in the manner described above shall
be deemed sufficiently given or made for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, the
affidavit of messenger or (with respect to a telex or facsimile) the answerback
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
29. ENTIRE AGREEMENT. This Agreement and the Merger Agreement and
related documents embody the entire agreement between the parties and there are
no other agreements, representations, warranties, or understandings, oral or
written, between them with respect to the subject matter hereof. No alterations,
modification or change of this Agreement shall be valid unless made in writing,
and signed by like written instrument. No waiver of any provision hereof shall
be valid unless in writing and signed by the party adversely affected by the
waiver, and then such waiver shall be effective only in the specified instance
and for the purpose for which given.
30. SEVERABILITY. In the event that any of the provisions contained in
this Agreement is held to be invalid, illegal or unenforceable such event shall
not affect any other provision hereof, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provisions had not been contained
herein.
-15-
<PAGE> 16
31. COUNTERPART SIGNATURES. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be binding and effective
as of the date on which the executed counterparts are exchanged by the parties.
[SIGNATURES ON NEXT PAGE]
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
POWER SURGE, INC. REDWOOD BROADCASTING, INC.
By:______________________________ By:______________________________
Name:____________________________ Name:____________________________
Title:___________________________ Title:____________________________
NORTHERN CALIFORNIA ALTA CALIFORNIA BROADCASTING, INC.
BROADCASTING, INC.
By:______________________________ By:______________________________
Name:____________________________ Name:____________________________
Title:___________________________ Title:____________________________
REGENT COMMUNICATIONS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE> 18
TIME BROKERAGE AGREEMENT
ATTACHMENT A
Radio Stations Subject to this Agreement
KRDG-FM
KNNN-FM
KRRX-FM
KNRO-AM
<PAGE> 19
TIME BROKERAGE AGREEMENT
ATTACHMENT B
During the Term of this Agreement, Broker shall pay to Licensee for
each calendar month, pro-rated in the event of a partial month, the following:
(A) Reimbursement to Licensee for Licensee Employee Expenses and
Licensee Transmitter Expenses, commencing from the Commencement Date; plus
(B) Reimbursement to Licensee for interest costs paid by Licensee on
that portion of Alta's debt which is identified on Exhibit 20(j) to the Merger
Agreement as Alta Senior Debt, computed in accordance with Licensee's historical
financial statements, commencing from the Commencement Date; plus
(C) An amount equal to the greater of $1,000.00 or 10% of the Monthly
Average Cumulative Amount of Broker's Actual Broadcast Cash Flow for the
Stations, payable within twenty-five (25) days after the end of each calendar
month, supported by such operating statements and certifications as Licensee may
reasonably request. For purposes of this Agreement, "Broadcast Cash Flow" shall
mean, for any month, net revenue, excluding trade and barter revenue, from the
sale of advertising time by Broker on the Stations and all other income
generated by Broker from the Stations less Broker's operating expenses,
including the above reimbursement but excluding trade and barter expenses,
relating to the Stations and further excluding depreciation and amortization,
interest and corporate overhead (all computed in accordance with Broker's
historical financial statements). "Monthly Average Cumulation Amount of Broker's
Actual Broadcast Cash Flow" shall mean, as of the end of any month, the amount
equal to the aggregate amount of Broadcast Cash Flow received by Licensee under
this Agreement from the Commencement Date through and including such month,
divided by the number months elapsed, with partial months adjusted on a pro-rata
basis to reflect projected monthly results.
Broker shall pay to Licensee jointly (to be allocated among them as
they shall determine) the estimate of each month's (or portion thereof) monthly
payment on the first day of each month during the Term. Commencing after the
second month of the Term, each successive monthly payment shall be adjusted to
reflect the actual monthly payment due for the month two months prior. Within
fifteen (15) days following the end of each month during the Term and as a
condition precedent to further monthly payments by Broker, Licensee shall submit
to Broker an invoice for the Licensee Employee Expenses, Licensee Transmitter
Expenses, and interest costs on Alta Senior Debt paid by Licensee during such
prior month, in such detail and supported by such documentation as Broker shall
reasonably request. At the termination of this Agreement, a final adjustment
shall be made to the estimates paid to reflect the actual fee payable over the
Term of this Agreement.
<PAGE> 20
TIME BROKERAGE AGREEMENT
ATTACHMENT C
CORPORATE CONTRACTS
-------------------
None.
<PAGE> 21
TIME BROKERAGE AGREEMENT
ATTACHMENT D
PROGRAMMING POLICIES
--------------------
Broker will comply with and the Programming shall be consistent
with the following policies:
I. Respectful of Faiths. The subject of religion and references to
particular faiths and tenets shall be treated with respect at all
times. None of the Stations will be used as a medium for attack on any
faith, discrimination or sect upon any individual or organization.
II. Controversial Issues. Any discussion of controversial issues of public
importance shall be reasonably balanced with the presentation of
contrasting viewpoints in the course of overall programming; no attacks
on the honesty, integrity, or like personal qualities of any person or
group of persons shall be made during the course of political
campaigns; and Station programs (other than public forum or talk
features) are not to be used as a forum for editorializing about
individual candidates. If such events occur, Licensee may require that
responsive programming be aired. In the event that a statute,
regulation or policy is adopted that requires the airing of responsive
programming, programmer agrees to comply with such statute, regulation
or policy and will prepare such responsive programming.
III. Donation Solicitation. Requests for donations in the form of a specific
amount shall not be made if there is any suggestion that such donation
will result in miracles, physical cures or life-long prosperity.
However, statements generally requesting donations to support a
broadcast or church are permitted.
IV. Treatment of Parapsychology. The advertising or promotion of fortune
telling, occultism, astrology, phrenology, palm reading, or numerology,
mind-reading, character readings, or subjects of the like nature will
not be broadcast.
V. No Ministerial Solicitations. No invitations by a minister or other
individual appearing on the program to have listeners come and visit
him or her for consultation or the like shall be made if such
invitation implies that the listeners will receive consideration,
monetary gain, or physical cures for illness.
VI. No Vending of Miracles. Any exhortation to listeners to bring money to
a church affair or service containing any suggestion that miracles,
physical cures, or prosperity will result is prohibited.
VII. Sale of Religious Artifacts. The offering for sale of religious
artifacts or other items for which listeners would send money is
prohibited unless such items are normally available in ordinary
commerce or are clearly being sold for proper fund-raising purposes.
<PAGE> 22
VIII. No Miracle Solicitation. Any invitation to listeners to meet at places
other than a church and/or to attend other than regular services of a
church is prohibited if the invitation, meeting, or service contains
any claim that miracles, physical cures or prosperity will result.
IX. No Plugola or Payola. The mention of any business activity or "plug"
for any commercial, professional, or other related endeavor, except
where contained in an actual commercial message of a sponsor, or
otherwise lawful, is prohibited. No commercial messages (plugs) or
undue references shall be made in programming presented over the
Stations to any business venture, profit making activity or other
interest (other than noncommercial announcements for bona fide
charities, church activities or other public service activities) in
which Broker is directly or indirectly interested without the same
having been approved in advance by the Stations' respective Managers
and such broadcast being announced as sponsored material.
X. No Lotteries. Announcements giving any information about lotteries or
games prohibited by federal or state law or regulations are prohibited.
XI. No Gambling. References to "dream books, " the "straight line," or
other direct or indirect descriptions or solicitations relative to the
"numbers game," or the "policy game," or any other form of gambling are
prohibited.
XII. No Numbers Games. References to chapter and verse paragraphs, paragraph
numbers, or song numbers, which involve three digits should be avoided
and, when used, must reasonably relate to a non-gambling activity.
XIII. Political Programming. At least 90 days before the start of any
election campaign, Broker will review with the Stations' Managers the
rates that will be charged for the time to be sold to candidates for
public office of their supporters to make certain that such rates
conform with applicable law and Station policy.
XIV. Required Announcements. Programmer shall broadcast an announcement in
form satisfactory to Licensee at the beginning of each hour to identify
the Station and any other announcement that may be required by law,
regulation or Station policy.
XV. Credit Terms Advertising. Unless all applicable state and federal
guidelines relative to disclosure to credit terms are complied with, no
advertising of credit terms will be made over the Stations beyond
mention of the fact that, if desired, credit terms are available.
XVI. No Illegal Announcements. No announcement or promotion prohibited by
federal or state law or regulation of any lottery or game shall be made
over the Stations.
XVII. Licensee Discretion Paramount. In accordance with Licensee's
responsibility under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, Licensee
<PAGE> 23
reserves the right to reject or terminate any advertising or
programming being presented over the Stations which is in conflict with
Station policy or which in Licensee's sole but reasonable judgment
would not serve the public interest.
XVIII. Programming Prohibitions. Programmer shall not knowingly broadcast any
of the following programs or announcements:
A. False Claims. False or unwarranted claims for any product or service.
B. Unfair Imitation. Infringements of another advertiser's rights through
plagiarism or unfair imitation of either program idea or copy, or any
other unfair competition.
C. Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
D. Indecency, Obscenity, Profanity. Any programs or announcements that are
slanderous, obscene, indecent, profane, vulgar, repulsive or offensive,
either in theme or treatment.
E. Unauthenticated Testimonials. Any testimonials which cannot be
authenticated.
F. Descriptions of Bodily Functions. Any presentation which describes in a
repellent manner bodily functions.
G. Conflicting Advertising. Any advertising matter or announcement which
may, in the opinion of Licensee, be injurious or prejudicial to the
interests of the public or the Stations, or to honest advertising and
reputable business in general.
H. Contests. Any contests or promotions which are in any way misleading or
constitute a public nuisance or are likely to lead to injury to persons
or property.
I. Telephone Conversations. Any programming in violation of any statute,
regulation or policy, including without limitation to, Section 73.1206
of the FCC's rules, or any successor regulation, dealing with the
taping and/or broadcast of telephone conversations.
In any case where obvious questions of policy or
interpretation arise, programmer will submit the same to the general
manager of the station for decision before any broadcast of such
material.
<PAGE> 24
TIME BROKERAGE AGREEMENT
ATTACHMENT E
If notice is to the Licensee:
Redwood Broadcasting, Inc.
7518 Elbow Bend Road
P.O. Box 3463
Carefree, AZ 85377
Attention: John C. Power
Telecopy No: (602) 488-2384
With a copy to (which shall not constitute notice):
Pepper & Corazzini, L.L.P.
1776 K Street Northwest
Suite 200
Washington, D.C. 20006
Attention: Peter Gutmann, Esq.
Telecopy-No: (202) 296-5572
If the notice is to Broker:
Regent Communications, Inc.
50 East RiverCenter Blvd.
Suite 180
Covington, KY 41011
Attention: Terry S. Jacobs
Telecopy No. (606) 292-0453
With a copy to (which shall not constitute notice):
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Attention: Alan C. Rosser, Esq.
Telecopy No: (513) 241-8289
<PAGE> 25
TIME BROKERAGE AGREEMENT
ATTACHMENT G
Commissions
Commissions are payable on the 15th day of each month at the rate of
15% of agency collections and 20% on direct business collections received during
the preceding calendar month.
<PAGE> 1
Exhibit 10(i)
TIME BROKERAGE AGREEMENT
Time Brokerage Agreement ("Agreement") dated as of October 10, 1997, by
and among REDWOOD BROADCASTING, INC., a Colorado corporation ("Redwood"), ALTA
CALIFORNIA BROADCASTING, INC., a California corporation which is a wholly-owned
subsidiary of Redwood ("Alta"), POWER SURGE, INC., a Delaware corporation
("Power"), NORTHERN CALIFORNIA BROADCASTING, INC., a Colorado corporation
("NCB") (Redwood, Alta, Power and NCB referred to herein collectively as
"Licensee"), and REGENT COMMUNICATIONS, INC., a Delaware corporation, or its
permitted assignee ("Broker").
WHEREAS, Alta, Power and NCB are the licensees of the radio stations
set forth on ATTACHMENT A hereto (referred to herein collectively as the
"Stations"); and
WHEREAS, Alta and Broker have entered into an Agreement of Merger,
dated October 10, 1997 (the "Merger Agreement") for the acquisition by Broker of
all of the outstanding stock of Alta pursuant to which there will result a
transfer of control of the Stations to Broker; and
WHEREAS, Licensee, while maintaining control over the Stations'
finances, personnel matters and programming desires to accept and broadcast
programming supplied by Broker or its subsidiaries on the Stations subject to
the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
1. AIR TIME AND TRANSMISSION SERVICES. Licensee agrees, beginning on
October 15, 1997 (the "Commencement Date") to make the Stations' studio and
broadcast facilities available to Broker, and to broadcast, or cause to be
broadcast, on the Stations, according to the terms hereof, programming
designated and provided by Broker (the "Programming").
2. PAYMENTS. Broker hereby agrees to pay Licensee the amounts specified
in ATTACHMENT B for the right, from and after the Commencement Date, to
broadcast the Programming on the terms and conditions herein provided. Payments
of the estimated Monthly Fee (as defined in ATTACHMENT B), subject to adjustment
according to ATTACHMENT B, are due and payable in full on the first day of each
calendar month for which such payment is intended to be applied and shall be
prorated for any partial calendar month at the beginning or end of the term
hereof. The failure of Licensee to demand or insist upon prompt payment in
accordance herewith shall not constitute a waiver of its right to do so. Broker
shall receive a payment credit for any Programming not broadcast by any Station
(a "Credit"), such Credit to be determined by multiplying the monthly payment by
the ratio of the amount of time preempted or not accepted to the total number of
hours of Programming each month. No credit shall be due on account of any
Programming rejected for failure to comply with the standards for Programming
set forth in this Agreement.
-1-
<PAGE> 2
3. TERM. The term of this Agreement shall begin on the Commencement
Date and end on the earliest of (i) the Closing Date, as defined in the Merger
Agreement, or (ii) the date which is ten (10) days following any termination of
the Merger Agreement in accordance with the terms thereof (such date hereinafter
referred to as the "Termination Date," and such period of time as the "Term").
4. PROGRAMMING. Broker shall furnish or cause to be furnished the
Programming, which shall be an entertainment format and may include, without
limitation, news, promotions (including on-air giveaways), contests, syndicated
programs, barter programs, paid-for programs, locally-produced programs,
advertising commercial matter, including that in both program or spot
announcement forms, and public service information; provided, however, that the
Programming on each Station shall include news, public service announcements and
other programming on issues of importance to the local community as reasonably
requested by Licensee. The Programming shall be consistent with the standards
set forth in ATTACHMENT D. All actions or activities of Broker under this
Agreement, and all Programming provided by Broker shall be in accordance with
(i) the Communications Act of 1934, as amended; (ii) Federal Communications
Commission (the "FCC") rules, requirements and policies, including, without
limitation, the FCC's rules on plugola/payola, lotteries, station
identification, minimum operating schedule, sponsorship identification,
political programming and political advertising rates; (iii) all applicable
federal, state and local regulations and policies; and (iv) generally accepted
quality standards consistent with Licensee's past practices. Broker agrees that,
if in the sole, good faith judgment of the Licensee or any of the Stations'
General Managers, Broker does not comply with the standards of this paragraph,
Licensee may suspend or cancel any Programming not in compliance. Broker shall
not be entitled to a Credit for Programming not broadcast over the Station on
account of any Programming rejected for failure to comply with the standards for
Programming set forth in this Section 4. The right to use the Programming and to
authorize its use in any manner and in any media whatsoever shall be, and
remain, vested solely in Broker, subject in all events to the rights, if any, of
others in such Programming.
5. SPECIAL EVENTS. Licensee reserves the right in its discretion, and
without liability, to preempt, delay or delete any of the broadcasts of the
Programming and to substitute programming which in Licensee's judgment is of
greater local, regional or national importance. In all such cases, Licensee
shall use its best efforts to give Broker reasonable notice of its intention to
preempt such Programming, and, in the event of such preemption, Broker shall
receive a payment credit for the Programming so omitted consistent with the
intent and pursuant to the terms of Section 2 hereof.
6. ADVERTISING AND PROGRAMMING REVENUES. Broker shall retain all
advertising and other revenues, and all accounts receivable, with respect to
Programming broadcast during the Term, and relating to the Programming it
delivers to the Stations for broadcast during the Term, including without
limitation, promotion-related revenues. Licensee and Broker each shall have the
right, at their own expense, to seek copyright royalty payments for their own
programming. Broker
-2-
<PAGE> 3
may sell advertising on the Stations in combination with the sale of advertising
on other broadcasting stations of its choosing, subject to compliance with
applicable law.
7. STATION FACILITIES. Subject to the qualifications set forth in this
Agreement, throughout the term of this Agreement, Licensee shall make the
facilities and equipment of the Stations in good operating condition and repair
available to Broker for operation and broadcast with the maximum authorized
facilities twenty-four (24) hours a day, seven (7) days a week, except for
downtime occasioned by either (i) emergency maintenance or (ii) routine
maintenance not to exceed two (2) hours each Sunday morning between the hours of
12 midnight and 5:00 a.m., and except for such programs and announcements
prepared by and put on the air by Licensee in order to meet local needs and
issues requirements, said programs and announcements not to exceed one (1) hour
each Sunday morning at a mutually agreed upon time between the hours of 5:00
a.m. and 7:00 a.m. Broker shall not be entitled to a Credit for Programming not
broadcast over the Stations for periods specified in this Section 7 hereof. To
the extent practicable, any maintenance work affecting the operation of the
Stations at full power shall be scheduled upon at least forty-eight (48) hours
prior notice with the agreement of Broker, such agreement not to be unreasonably
withheld.
8. RIGHT OF ACCESS. Broker and Broker's employees or agents shall at
all times be afforded reasonable access to the Stations in order to perform
their duties in connection with the production and transmission of the
Programming over the facilities of the Stations. Broker shall have the right to
install at Licensee's and/or Broker's premises, and to maintain throughout the
term of this Agreement, at Broker's expense, any microwave studio/transmitter
relay equipment, telephone lines, transmitter remote control, monitoring devices
or any other equipment necessary for the proper transmission of the Programming
on the Stations, and Licensee and Broker shall take all steps reasonably
necessary to prepare and file any applications with the FCC to effectuate such
proper transmission.
9. FORCE MAJEURE. Any failure or impairment of facilities or any delay
or interruption in broadcasting the Programming, or failure at any time to
furnish facilities, in whole or in part, for broadcasting, due to acts of God,
strikes, or threats thereof, force majeure, or due to causes beyond the control
of Licensee, shall not constitute a breach of this Agreement, and Licensee shall
not be liable to Broker for any damages or adjustments for such failure,
impairment, delay or interruption, except to the extent of allowing in each such
case an appropriate payment credit for Programming available to Licensee but not
carried consistent with the intent and pursuant to the terms of Section 2
hereof.
10. LICENSEE CONTROL OF STATIONS. Notwithstanding anything to the
contrary in this Agreement, Licensee shall have full authority, control and
power over the operation of the Stations during the period of this Agreement.
Licensee shall retain control, said control to be reasonably exercised, over the
policies, programming and operations of the Stations, including, without
limitation, the right to decide whether to accept or reject any Programming or
advertisements, the right to preempt any Programming in order to broadcast a
program deemed by Licensee to be of greater national, regional, or local
interest, and the right to take any other actions necessary for
-3-
<PAGE> 4
compliance with the laws of the United States; the laws of the relevant states;
the rules, regulations, and policies of the FCC (including without limitation
the prohibition on unauthorized transfers of control); and the rules,
regulations and policies of other federal governmental authorities, including
without limitation the Federal Trade Commission and the Department of Justice.
Licensee shall be responsible for ensuring that FCC requirements are met with
respect to ascertainment of the problems, needs and interests of the community,
public service programming, main studio staffing, maintenance of public
inspection files and the preparation of quarterly issues/programs lists. Broker
shall, upon request by Licensee, provide Licensee with information with respect
to such of Broker's programs which are responsive to the problems, needs and
interests of the community, so as to assist Licensee in the preparation of
required quarterly issues/programs lists, and shall provide upon request other
information to enable Licensee to prepare other records, reports and logs
required by the FCC or other local, state or federal governmental agencies.
Whenever on the Stations' premises, all Broker personnel shall be subject to the
supervision and the direction of Licensee's designated personnel.
11. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES. Licensee shall employ
two full time employees at each main studio of the Stations (or such lesser or
greater number of employees as may be required by FCC rules). One of the
employees shall be a manager. Licensee's employees shall report to and be
accountable to Licensee and shall be ultimately responsible for the day-to-day
operation of the Stations. Licensee shall be directly responsible for paying the
salaries, taxes, insurance and related costs for such employees (the "Licensee
Employee Expenses"). Licensee shall be responsible for paying directly (i)
transmitter site rent/mortgage for the Stations; (ii) costs for maintenance and
repair of the transmission and other technical equipment; (iii) costs for
capital improvements and replacements; and (iv) transmitter site utilities for
the Stations ("Licensee Transmitter Expenses"). Licensee shall be responsible
for paying directly all income taxes relating to Licensee's earnings from this
arrangement. Broker shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming (including, without limitation, salespeople, traffic personnel,
administrative and programming staff) for Broker's use of the studio and for
routine maintenance and repair thereto (as opposed to maintenance and repair of
the transmission and other technical equipment and capital improvements and
replacements which shall be Licensee's responsibility). Excluding those expenses
for which Licensee is making payments as set forth in this Section 11, during
the Term, Broker shall be responsible for paying all other expenses reasonably
and directly related to the continued operation of the Stations subject to the
covenants of the parties to this Agreement (the "Other Expenses"), and further
subject to the ultimate authority, control and power of Licensee.
-4-
<PAGE> 5
11.1 EMPLOYEE MATTERS.
11.1.1 Licensee shall be responsible for the payment
of all compensation and accrued employee benefits payable to all Licensee
employees through the Commencement Date.
11.1.2 Licensee acknowledges and agrees that
Licensee, and not Broker, is and shall be solely responsible for any and all
insurance, supplemental pension, deferred compensation, retirement and any other
benefits, and related costs, premiums and claims due, to become due, committed
or otherwise promised to any person who, up to the Commencement Date is a
retiree, former employee, or current employee of Licensee, relating to the
period up to the Commencement Date. Broker shall assume no employee benefit
plans, programs or practices, whether or not set forth in writing, maintained by
Licensee at any time.
12. STATION AGREEMENTS.
12.1. ASSIGNMENT AND ASSUMPTION OF STATION AGREEMENTS. On the
Commencement Date, Licensee shall assign to Broker and Broker shall assume,
subject to the provisions of this Section 12, the obligations of Licensee
arising or to be performed on and after the Commencement Date (except to the
extent such obligations represent liabilities for activities, events or
transactions occurring, or conditions existing, on or prior to the Commencement
Date) under (a) all of the contracts which comprise Broadcast Assets (as defined
in the Merger Agreement), excluding (i) contracts and agreements relating to the
Licensee Employee Expenses, (ii) contracts and agreements relating to the
Licensee Transmitter Expenses, (iii) Licensee's financing agreements and (iv)
corporate level contracts and agreements, except, if any, those listed on
ATTACHMENT C (collectively, the contracts and agreements to be assigned by
Licensee and assumed by Broker are referred to as the "Station Agreements").
Licensee hereby makes and incorporates by reference the representations and
warranties of Sellers in Section 20(k) of the Merger Agreement. Licensee
represents and warrants that the Station Agreements are freely assignable, or,
if consent of the other contracting party to the assignment is required,
Licensee to use its reasonable best efforts to obtain such consent as promptly
as practicable. As of the Commencement Date, Licensee shall have paid all
amounts due on and shall have performed all obligations due under the Station
Agreements as of that date.
12.2 CONSENTS TO ASSIGNMENT. To the extent that any Station
Agreement is not capable of being assigned, transferred, delivered or subleased
without the waiver or consent of any third person (including a government or
governmental unit), or if such assignment, transfer, delivery or sublease or
attempted assignment, transfer, delivery or sublease would constitute a breach
thereof or a violation of any law or regulation, this Agreement and any
assignment executed pursuant thereto shall not constitute an assignment,
transfer, delivery or sublease or an attempted assignment, transfer, delivery or
sublease thereof. In those cases where consents, assignments, releases and/or
waivers have not been obtained at or prior to the Commencement Date to the
transfer and assignment to Broker of any Station Agreement, this Agreement and
any assignment executed pursuant hereto, to the extent permitted by law, shall
constitute an equitable assignment by Licensee to Broker of all of Licensee'
rights, benefits, title and interest in and to the Station
-5-
<PAGE> 6
Agreements, and where necessary or appropriate, Broker shall be deemed to be
Licensee's agent for the purpose of completion, fulfilling and discharging all
of Licensee's rights and liabilities arising after the Commencement Date under
such Station Agreements. Licensee shall use its reasonable best efforts to
provide Broker with the financial and business benefits of such Station
Agreements (including, without limitation, permitting Broker to enforce any
rights of licensee arising under such Station Agreements), and Broker shall, to
the extent Broker is provided with the benefits of such Station Agreements,
assume, perform and in due course pay and discharge all debts, obligations and
liabilities of Licensee under such Station Agreements to the extent that Broker
was to assume those obligations pursuant to the terms hereof.
12.3 RETAINED LIABILITIES. Except as set forth in Sections 11
and 12 hereof, Broker expressly does not, and shall not, assume or agree to pay,
satisfy, discharge or perform and will not be deemed by virtue of the execution
and delivery of this Agreement or any agreement, instrument or document
delivered pursuant to or in connection with this Agreement or otherwise by
reason of or in connection with the consummation of the transactions
contemplated hereby or thereby, to have assumed or to have agreed to pay,
satisfy, discharge or perform, any liabilities, obligations or commitments of
Licensee of any nature whatsoever whether accrued, absolute, contingent or
otherwise and whether or not disclosed by Broker, other than the Station
Agreements. Licensee will retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations of the
Licensee, other than the Station Agreements, including but not limited to, the
obligation to assume, perform, satisfy or pay any liability, obligation,
agreement, debt, charge, claim, judgment or expense incurred by or asserted
against Licensee related to taxes, environmental matters, pension or retirement
plans or trusts, profit-sharing plans, employment contracts, employee benefits,
severance of employees, product liability or warranty, negligence, contract
breach or default, copyright, trademarks, service mark, trade name and other
intellectual property, or other obligations, claims or judgments asserted
against Broker as successor in interest to Licensee. All such liabilities,
obligations and commitments of Licensee described in this Section 12.3 shall be
referred to herein collectively as the "Retained Liabilities."
13. ACCOUNTS RECEIVABLE. Broker acknowledges that all accounts
receivable arising prior to the Commencement Date in connection with the
operation of the Stations, including but not limited to accounts receivable for
advertising revenues for programs and announcements performed prior to the
Commencement Date and other broadcast revenues for services performed prior to
the Commencement Date, shall remain the property of Licensee (the "Licensee
Accounts Receivable") and that Broker shall not acquire any beneficial right or
interest therein or responsibility therefor. For a period of one hundred twenty
(120) days from the Commencement Date ("Collection Period"), Broker agrees to
use reasonable efforts to assist Licensee in collection of the Licensee Accounts
Receivable in the normal and ordinary course of business and will apply all such
amounts collected to the debtor's oldest account receivable first, except that
any such accounts collected by Broker from persons who are also indebted to
Broker may be applied to Broker's account if so directed by the debtor or under
circumstances in which there is a bona fide dispute between Licensee and such
account debtor with respect to such account provided that such disputed accounts
are reassigned to Licensee. Broker's obligation and authority shall not extend
to the
-6-
<PAGE> 7
institution of litigation, employment of counsel or a collection agency or any
other extraordinary means of collection. Broker agrees to reasonably cooperate
with Licensee, at Licensee' expense, as to any litigation or other collection
efforts instituted by Licensee to collect any delinquent Licensee Accounts
Receivable. During the Collection Period, neither Licensee nor its agents shall
make any direct solicitation of any account debtor for collection purposes or
institute litigation for the collection of amounts due except with respect to
any accounts that may be reassigned to Licensee. Any amounts relating to the
Licensee Accounts Receivable that are paid directly to the Licensee shall be
retained by the Licensee, but Licensee shall provide Broker with prompt notice
of any such payment. Every forty (40) days during the Collection Period,
Licensee shall make a payment to Licensee equal to the amount of all Collections
of Licensee Accounts Receivable during such forty (40) day period, provided that
Broker shall deduct from such amounts and shall be responsible for paying
commissions due on the collected Licensee Accounts Receivable in accordance with
ATTACHMENT G hereto. At the end of the Collection Period, any remaining Licensee
Accounts Receivable shall be returned to Licensee for collection.
14. PRORATION OF INCOME AND EXPENSES: TRADE AGREEMENTS ADJUSTMENT.
14.1 Except as otherwise provided herein, all deposits,
reserves and prepaid and deferred income and expenses relating to the Station
Agreements shall be prorated between Broker and Licensee in accordance with
general accepted accounting principles as of 11:59 p.m., Pacific time, on the
Commencement Date.
14.2 SCHEDULE 14.2 will include a list of all Trade Agreements
as of the Commencement Date included in the Station Agreements and the aggregate
value of time owed ("Barter Payable") pursuant to each of the Trade Agreements
and the aggregate value of goods and services to be received ("Barter
Receivable") pursuant to each of the Trade Agreements, in each case as of the
date specified on Schedule 14.2 hereof. On the Commencement Date, Licensee shall
deliver to Broker a report, dated as of the Commencement Date (the "Commencement
Date Trade Report"), which report lists all Trade Agreements included in the
Station Agreements and the contract end date for each Trade Agreement together
with a true and correct itemized statement of the aggregate value of the Barter
Payable and Barter Receivable pursuant to each of the Trade Agreements. To the
extent that the aggregate net value as reflected on the Commencement Date Trade
Report of the Stations' Barter Payable exceeds the aggregate net value as
reflected on the Commencement Date Trade Report of the Barter Receivable, Broker
shall be entitled to receive the difference as a credit against the next due
Monthly Fee(s).
14.3 Except as otherwise provided herein, the prorations and
adjustments contemplated by this Section 14, to the extent practicable, shall be
made on the Commencement Date. As to those prorations and adjustments not
capable of being ascertained on the Commencement Date, an adjustment and
proration shall be made within ninety (90) calendar days after the Commencement
Date.
-7-
<PAGE> 8
14.4 In the event of any disputes between the parties as to
such adjustments, the amounts not in dispute shall nonetheless be paid at the
time provided in Section 14.3 hereof and such disputes shall be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Licensee and
one-half by Broker.
15. INDEMNIFICATION.
15.1 INDEMNIFICATION. Broker shall indemnify and hold Licensee
and its stockholders, directors, partners, officers, agents, employees,
successors, and assigns harmless from and against any and all claims, expenses,
causes of action and liability resulting from or relating to (i) the broadcast
of Programming during the Term, (ii) any and all promotions, contests and on-air
"giveaways" by Broker relating to the Stations during the Term, (iii) a breach
of Broker's representations, warranties, covenants or agreements contained
herein, (iv) any liability resulting from Broker's default under the Station
Agreements, and (v) all other matters arising out of or related to Broker's
activities involving the Stations or use of the Licensee Station facilities or
relating to the obligations assumed by Broker in connection with this Agreement
including but not limited to any damage caused to Station equipment by Broker,
its employees, or agents. Licensee agrees to indemnify, defend, and hold
harmless Broker and its stockholders, directors, officers, agents, employees,
successors and assigns from and against any and all liability that arises out of
(i) material broadcast by Licensee other than the Programming, (ii) liabilities
(but not loss of advertising revenue) that arise as a result of Licensee's
alteration of any and/or all Programming prior to broadcast by Licensee; and
(iii) the Retained Liabilities.
15.2 PROCEDURES: THIRD PARTY AND DIRECT INDEMNIFICATION
CLAIMS. The indemnified party agrees to give written notice within a reasonable
time to the indemnifying party of any demand, suit, claim or assertion of
liability by third parties or other circumstances that could give rise to an
indemnification obligation hereunder against the indemnifying party (hereinafter
collectively "Claims," and individually a "Claim"), it being understood that the
failure to give such notice shall not affect the indemnified party's right to
indemnification and the indemnifying party's obligation to indemnify as set
forth in this Agreement, unless the indemnifying party's ability to contest,
defend or settle with respect to such Claim is thereby demonstrably and
materially prejudiced.
The obligations and liabilities of the parties hereto with respect to
their respective indemnities pursuant to Section 15.1 resulting from any Claim
shall be subject to the following additional terms and conditions:
15.2.1 The indemnifying party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
or opposition to such Claim.
15.2.2 In the event that the indemnifying party shall
elect not to undertake such defense or opposition, or within ten days after
notice of any such Claim from the indemnified
-8-
<PAGE> 9
party shall fail to defend or oppose, the indemnified party (upon further
written notice to the indemnifying party) shall have the right to undertake the
defense, opposition, compromise or settlement of such Claim, by counsel or other
representatives of its own choosing, on behalf of and for the account and risk
of the indemnifying party (subject to the right of the indemnifying party to
assume defense of or opposition to such Claim at any time prior to settlement,
compromise or final determination thereof).
15.2.3 Anything in this Section 15.2 to the
contrary notwithstanding: (a) the indemnified party shall have the right, at its
own cost and expense, to participate in the defense, opposition, compromise or
settlement of the Claim; (b) the indemnifying party shall not, without the
indemnified party's written consent, settle or compromise any Claim or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such Claim; and (c) in the event that
the indemnifying party undertakes defense of or opposition to any Claim, the
indemnified party, by counsel or other representative of its own choosing and at
its sole cost and expense, shall have the right to consult with the indemnifying
party and its counsel or other representatives concerning such Claim and the
indemnifying party and the indemnified party and their respective counsel or
other representatives shall cooperate in good faith with respect to such Claim.
15.2.4 No undertaking of defense or opposition to a
Claim shall be construed as an acknowledgment by such party that it is liable to
the party claiming indemnification with respect to the Claim at issue or other
similar Claims.
16. EVENTS OF DEFAULT: CURE PERIODS AND REMEDIES.
16.1. EVENTS OF DEFAULT. The following shall, after the
expiration of the applicable cure periods, constitute Events of Default under
the Agreement:
16.1.1 NON-PAYMENT. Broker's failure to timely pay
the consideration provided for in Section 2 and ATTACHMENT B hereof which is
not cured within five (5) business days following notice in accordance with
Section 16.2 hereof;
16.1.2 DEFAULT IN COVENANTS OR ADVERSE LEGAL ACTION.
The default by any party hereto in the material observance or performance of
any material covenant, condition or agreement contained herein which is not
cured within five (5) business days following notice in accordance with Section
16.2 hereof, or if (a) any party shall make a general assignment for the
benefit of creditors, (b) any party shall file or have filed against it a
petition for bankruptcy, for reorganization or an arrangement, or for the
appointment of a receiver, trustee or similar creditors' representative for the
property or assets of such party under any federal or state insolvency law,
which, if filed against such party, has not been dismissed or discharged within
sixty (60) days thereof, or (c) specifically and without limitation, if
Licensee's successors and assigns, including, without limitation, any assignee
of the FCC license for the Stations, except if such successor or
-9-
<PAGE> 10
assign is Broker or an affiliate of Broker, refuses to abide by or terminates
this Agreement during the term of this Agreement.
16.1.3 BREACH OF REPRESENTATION. If any material
representation or warranty herein made by either party hereto, or in any
certificate or document furnished by either party to the other pursuant to
the provisions hereof, shall prove to have been false in any material respect
as of the time made or furnished and is not cured within thirty (30) days
following notice in accordance with Section 16.2 hereof.
16.1.4 BREACH OF MERGER AGREEMENT. The breach by any
party or their affiliates in the observance or performance of any
representation, warranty, covenant, condition or agreement in the Merger
Agreement which is not cured within any time period provided for such cure
under the Merger Agreement and which breach gives rise to a right to a party
to terminate the Merger Agreement pursuant to Section 29 of the Merger
Agreement, provided that no party may use its or its affiliate's own breach
under the Merger Agreement as grounds to terminate this Agreement.
16.2 CURE PERIODS. An Event of Default shall not be deemed to
have occurred until after the nondefaulting party has provided the defaulting
party with written notice specifying the event or events that if not cured would
constitute an Event of Default and specifying the actions necessary to cure
within the relevant cure period. The Event of Default shall not be deemed to
have occurred if actions necessary to cure are completed during the relevant
cure period. The curing of any matter shall not relieve a party of its
obligation to indemnify another pursuant to Section 15 hereof.
16.3 TERMINATION UPON DEFAULT. Upon the occurrence of an Event
of Default, the non-defaulting party may terminate this Agreement provided that
it is not also in material default hereunder, and may seek such remedies at law
and/or equity as are available, including without limitation specific
performance. If Broker has defaulted in the performance of its obligations,
Licensee shall be under no further obligation to make available to Broker any
further broadcast time or broadcast transmission facilities and, without
limitation of remedies, all amounts accrued or payable to Licensee up to the
date of termination which have not been paid, less any payment credits, shall
immediately become due and payable.
16.4 LIABILITIES UPON TERMINATION. Upon termination of this
Agreement, Broker shall be responsible for all liabilities, debts and
obligations of Broker accrued from the purchase of air time and transmission
services including, without limitation, accounts payable, barter agreements and
unaired advertisements, but not for Licensee's federal, state, and local tax
liabilities associated with Broker's payments to Licensee as provided for
herein. With respect to Broker's obligations to broadcast material over the
Stations after termination hereunder, Broker may propose compensation to
Licensee for meeting these obligations, but Licensee shall be under no duty to
accept such compensation or to perform such obligations. Upon termination,
Broker shall return to Licensee any equipment or property of the Stations used
by Broker, its employees or agents, in
-10-
<PAGE> 11
substantially the same condition and location as such equipment existed on the
date of this Agreement, ordinary wear and tear excepted, and Broker shall assign
to Licensee the still outstanding Station Agreements that were assigned to
Broker pursuant to Section 12 hereof and any new contracts entered into by
Broker relating to the Stations that Licensee expressly agrees to assume.
Notwithstanding anything in the foregoing to the contrary, termination shall not
extinguish any rights of either party as may be provided by Section 15 hereof.
17. BROKER TERMINATION OPTION. Broker may elect to terminate this
Agreement at any time during the term hereof in the event that Licensee preempts
or substitutes other programming for that supplied by the Broker during ten
percent (10%) or more of the total hours of operation of the Stations during any
calendar month. In the event Broker elects to terminate this Agreement pursuant
to this provision, it shall give Licensee notice of such election at least ten
(10) days prior to the termination date. Upon termination, neither party shall
have any further liability to the other except as may be provided by Sections 15
and 16.4 hereof.
18. RESPONSIVE PROGRAMMING. Broker and Licensee mutually acknowledge
their interest in ensuring that the Stations serve the needs and interests of
the residents of the Stations' community of license and service areas and agree
to cooperate in doing so. Licensee shall, on a regular basis, assess the issues
of concern to residents of the Stations' community of license and service areas
and address those issues in its public service programming. Licensee shall
describe those issues and responsive programming and place issues/programs lists
in the Stations' public inspection file as required by FCC rules. The
Programming shall include material that is responsive to the issues identified
by Licensee. Licensee may request, and Broker shall provide, information
concerning such of Broker's Programming that is responsive to community issues
so as to assist Licensee in the satisfaction of its public service programming
obligations. Broker shall also provide to Licensee upon request such other
information necessary to enable Licensee to prepare records and reports required
by the FCC or other local, state or federal government entities.
19. TIME BROKERAGE CHALLENGE. If this Agreement is challenged in whole
or in part at or by a governmental authority or is challenged in whole or in
part in a judicial forum, counsel for the Licensee and counsel for the Broker
shall jointly defend this Agreement and the parties' performance thereunder
throughout all such proceedings. If this Agreement is declared invalid or
illegal in whole or in substantial part by a ruling, order or decree of a
governmental authority or court, and such ruling, order or decree has become
effective, then the parties shall endeavor in good faith to reform the Agreement
as necessary. If the parties are unable to reform this Agreement within thirty
(30) days of the effective date of such ruling, order or decree, then this
Agreement shall terminate, and all sums owing to Licensee shall be paid and
neither party shall have any further liability to the other except as may be
provided by Section 15 hereof.
-11-
<PAGE> 12
20. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
20.1. MUTUAL REPRESENTATIONS, WARRANTIES AND COVENANTS. Both
Licensee and Broker represent that they are legally qualified, empowered, and
able to enter into this Agreement, and that the execution, delivery and
performance hereof shall not constitute a breach or violation of any agreement,
contract or other obligation to which either party is subject or by which it is
bound.
20.2. ADDITIONAL LICENSEE REPRESENTATIONS, WARRANTIES AND
COVENANTS. Licensee makes the following further representations, warranties and
covenants:
20.2.1 AUTHORIZATIONS. During the term of
this Agreement, Licensee shall own and hold all licenses and other permits and
authorizations necessary for the operation of the Stations as presently
conducted (including licenses, permits and authorizations issued by the FCC),
and such licenses, permits and authorizations shall be in full force and effect
for the entire Term hereunder, unimpaired by any acts or omissions of Licensee,
its principals, employees or agents. Licensee hereby makes and incorporates by
reference the representations, warranties and covenants of Sellers set forth in
the Merger Agreement that pertain to Licensee, its assets or its operation of
the Stations.
20.2.2 PAYMENT OF OBLIGATIONS. Licensee
shall not incur any debt, obligation or liability without the prior written
consent of Broker if such undertaking would adversely affect Licensee's
performance hereunder or the business and operations of the Broker permitted
hereby. Subject to the provisions of Sections 2 and 11 hereof, Licensee shall
pay in a timely fashion all of its debts, assessments and obligations, including
without limitation tax liabilities and payments in each case attributable to the
operations of the Stations, as they come due during the Term of this Agreement.
20.2.3 BROADCAST OBLIGATIONS. Licensee has
no agreement, contract, commitment or understanding to broadcast on the Stations
on or after the Commencement Date, any programs or commercial matter other than
the Station Agreements. Licensee shall not incur any other programming
obligations without the prior written consent of Broker except in connection
with programming obligations incurred by Licensee for programming that replaces
Programming that does not meet the standards set forth in this Agreement.
20.2.4 LICENSEE CONTROL. Licensee hereby
verifies that for the term of this Agreement it shall maintain ultimate control
over the Stations' facilities, including specifically control over the Stations'
finances, personnel and programming, and nothing herein shall be interpreted as
depriving Licensee of the power or right of such ultimate control.
20.2.5 INSURANCE. Licensee shall maintain in
full force and effect (at Broker's expense) throughout the term of this
Agreement insurance with responsible and reputable insurance companies or
associations covering such risks (including fire and other risks insured
-12-
<PAGE> 13
against by extended coverage, public liability insurance, insurance for claims
against personal injury or death or property damage and such other insurance as
may be applicable) and in such amounts and on such terms as is conventionally
carried by broadcasters operating radio stations with facilities in the area
comparable to those of the Stations. Broker shall be listed as an additional
insured on such insurance policies. Any insurance proceeds received by Licensee
in respect of damaged property shall be used to repair or replace such property
so that the operations of the Stations conform with this Agreement. Licensee
shall present to Broker prior to the execution of this Agreement certificates of
insurance or binders for such insurance policies. If requested by Broker,
Licensee shall maintain, at Broker's expense, business interruption insurance
for Broker's benefit.
20.2.6 COMPLIANCE WITH LAW. Licensee
covenants that, throughout the term of this Agreement, Licensee shall comply
with all laws and regulations applicable in the conduct of Licensee's business
and Licensee acknowledges that Broker has not urged, counseled, or advised the
use of any unfair business practice.
20.3 ADDITIONAL BROKER REPRESENTATIONS, WARRANTIES AND
COVENANTS.
20.3.1 COMPLIANCE WITH 47 C.F.R. SEC
73.3555(A). Broker hereby verifies that execution and performance of this
Agreement complies with the Commission's restrictions on local radio ownership
set out in Section 73.3555(a) of the FCC Rules.
20.3.2 COMPLIANCE WITH APPLICABLE LAW.
Broker covenants that its performance of its obligations under this Agreement
and its furnishing of Programming shall be in compliance with, and shall not
violate, any applicable laws or any applicable rules, regulations, or orders of
the FCC or any other governmental agency and Broker acknowledges that Licensee
has not urged, counseled, or advised the use of any unfair business practice.
20.3.3 HANDLING OF COMPLAINTS. Broker shall
promptly advise Licensee of any public or FCC complaint or inquiry that Broker
receives concerning the Programming on the Stations and shall cooperate with
Licensee and take all actions as may be reasonably requested by Licensee in
responding to any such complaint or inquiry.
20.3.4 COPYRIGHT AND LICENSING. Broker
represents and warrants to Licensee that Broker has and shall have throughout
the term of this Agreement the full authority to broadcast the Programming on
the Stations and that Broker shall not broadcast on the Stations any material in
violation of the Copyright Act. All music supplied by Broker shall be: (i)
licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or (iii) cleared at
the source by Broker.
20.3.5 INFORMATION FOR FCC REPORTS. Upon
request by Licensee, Broker shall provide in a timely manner any such
information in its possession which shall enable Licensee to prepare, file or
maintain the records and reports required by the FCC.
-13-
<PAGE> 14
20.3.6 PAYOLA/PLUGOLA. Broker covenants that
it shall not accept, and shall instruct its employees not to accept, any
consideration, compensation, gift or gratuity of any kind whatsoever, regardless
of its value or form, including, but not limited to, a commission, discount,
bonus, materials, supplies or other merchandise, services or labor, whether or
not pursuant to written contracts or agreements between Broker and merchants or
advertisers, unless the payer is identified in the program as having paid for or
furnished such consideration, in accordance with FCC requirements. Broker agrees
to annually, or more frequently at the request of Licensee, execute and provide
Licensee with an affidavit regarding payola/plugola compliance.
21. INTELLECTUAL PROPERTY. Effective as of the Commencement Date,
Licensee licenses to Broker the exclusive right to use all intellectual property
owned by or licensed to Licensee and used solely in the operation of the
Stations (including, but not limited to, logos, jingles, promotional materials,
call signs, goodwill, trademarks, service marks, slogans, trade names,
copyrights and any applications and registrations therefor) (the "IP License").
In the event of termination of this Agreement, the IP License shall terminate.
22. SUBCARRIER RIGHTS. Licensee and Broker acknowledge and agree that
any subsidiary communications services transmitted on a subcarrier within the FM
baseband signal of any of the Stations ("Subcarrier"), and any uses of the
Subcarrier authorized by the FCC ("Subcarrier Uses"), are subject to the terms
and conditions of this Agreement. Licensee hereby agrees (a) to apply, at
Broker's expense, for any additional authorization from the FCC or any other
governmental agency or entity that may be necessary in order to make use of any
Subcarrier Uses, and (b) that Broker has the sole and exclusive right, subject
to the terms and conditions hereof, to make use of any Subcarrier Uses and
collect the revenues therefrom. Broker hereby agrees to reimburse Licensee for
Licensee's reasonable expenses incurred in carrying out Licensee's obligations
pursuant to this Section 22, including reasonable attorneys and engineering fees
and expenses.
23. PUBLICITY. Licensee and Broker shall not issue any press release or
otherwise make any public statement with respect to the transactions
contemplated herein except as may be required by law or regulation or as agreed
to by Licensee and Broker.
24. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
Licensee or Broker in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of Licensee and Broker herein
provided are cumulative and are not exclusive of any right or remedies which it
may otherwise have.
25. CONSTRUCTION. This Agreement shall be construed in accordance with
the laws of the State of California, without giving effect to the choice of law
provisions thereunder, and the obligations of the parties hereto are subject to
all federal, state or municipal laws or regulations now or hereafter in force
and to the regulations of the FCC and all other governmental bodies or
authorities presently or hereafter to be constituted.
-14-
<PAGE> 15
26. HEADINGS. The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.
27. PARTIES IN INTEREST; ASSIGNMENT. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties to this
Agreement shall bind and inure to the benefit of their respective successors and
assigns, whether so expressed or not. No party to this Agreement may assign its
rights or delegate its obligations under this Agreement to any other person or
entity without the express prior written consent of the other parties, except
that (i) Broker may assign its rights and delegate its obligations to one or
more subsidiary or affiliated corporation of Broker, in which event Broker shall
be released and discharged of all obligation hereunder and all reference herein
to Broker shall mean such subsidiary or affiliate; (ii) in the event that Broker
finds it necessary or is required to provide to a third party a collateral
assignment of Broker's interest in this Agreement or any related documents,
Licensee will cooperate with Broker and any third party requesting such
assignment including but not limited to signing a consent and acknowledgment of
such assignment; provided, however, that except as otherwise provided herein
Broker shall remain fully liable as to all of its obligations and agreements
whether or not delegated or assigned.
28. NOTICES. All notices, demands, requests, or other communications
which may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by overnight air courier, or transmitted by telegram,
telex, or facsimile transmission addressed in accordance with the listing set
forth in ATTACHMENT E hereto or such other address as the addressee may indicate
by written notice to the other parties. Each notice, demand, request, or
communication which shall be given or made in the manner described above shall
be deemed sufficiently given or made for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, the
affidavit of messenger or (with respect to a telex or facsimile) the answerback
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
29. ENTIRE AGREEMENT. This Agreement and the Merger Agreement and
related documents embody the entire agreement between the parties and there are
no other agreements, representations, warranties, or understandings, oral or
written, between them with respect to the subject matter hereof. No alterations,
modification or change of this Agreement shall be valid unless made in writing,
and signed by like written instrument. No waiver of any provision hereof shall
be valid unless in writing and signed by the party adversely affected by the
waiver, and then such waiver shall be effective only in the specified instance
and for the purpose for which given.
30. SEVERABILITY. In the event that any of the provisions contained in
this Agreement is held to be invalid, illegal or unenforceable such event shall
not affect any other provision hereof, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provisions had not been contained
herein.
-15-
<PAGE> 16
31. COUNTERPART SIGNATURES. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be binding and effective
as of the date on which the executed counterparts are exchanged by the parties.
[SIGNATURES ON NEXT PAGE]
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
POWER SURGE, INC. REDWOOD BROADCASTING, INC.
By:______________________________ By:______________________________
Name:____________________________ Name:____________________________
Title:___________________________ Title:____________________________
NORTHERN CALIFORNIA ALTA CALIFORNIA BROADCASTING, INC.
BROADCASTING, INC.
By:______________________________ By:______________________________
Name:____________________________ Name:____________________________
Title:___________________________ Title:____________________________
REGENT COMMUNICATIONS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE> 18
TIME BROKERAGE AGREEMENT
ATTACHMENT A
Radio Stations Subject to this Agreement
KRDG-FM
KNNN-FM
KRRX-FM
KNRO-AM
<PAGE> 19
TIME BROKERAGE AGREEMENT
ATTACHMENT B
During the Term of this Agreement, Broker shall pay to Licensee for
each calendar month, pro-rated in the event of a partial month, the following:
(A) Reimbursement to Licensee for Licensee Employee Expenses and
Licensee Transmitter Expenses, commencing from the Commencement Date; plus
(B) Reimbursement to Licensee for interest costs paid by Licensee on
that portion of Alta's debt which is identified on Exhibit 20(j) to the Merger
Agreement as Alta Senior Debt, computed in accordance with Licensee's historical
financial statements, commencing from the Commencement Date; plus
(C) An amount equal to the greater of $1,000.00 or 10% of the Monthly
Average Cumulative Amount of Broker's Actual Broadcast Cash Flow for the
Stations, payable within twenty-five (25) days after the end of each calendar
month, supported by such operating statements and certifications as Licensee may
reasonably request. For purposes of this Agreement, "Broadcast Cash Flow" shall
mean, for any month, net revenue, excluding trade and barter revenue, from the
sale of advertising time by Broker on the Stations and all other income
generated by Broker from the Stations less Broker's operating expenses,
including the above reimbursement but excluding trade and barter expenses,
relating to the Stations and further excluding depreciation and amortization,
interest and corporate overhead (all computed in accordance with Broker's
historical financial statements). "Monthly Average Cumulation Amount of Broker's
Actual Broadcast Cash Flow" shall mean, as of the end of any month, the amount
equal to the aggregate amount of Broadcast Cash Flow received by Licensee under
this Agreement from the Commencement Date through and including such month,
divided by the number months elapsed, with partial months adjusted on a pro-rata
basis to reflect projected monthly results.
Broker shall pay to Licensee jointly (to be allocated among them as
they shall determine) the estimate of each month's (or portion thereof) monthly
payment on the first day of each month during the Term. Commencing after the
second month of the Term, each successive monthly payment shall be adjusted to
reflect the actual monthly payment due for the month two months prior. Within
fifteen (15) days following the end of each month during the Term and as a
condition precedent to further monthly payments by Broker, Licensee shall submit
to Broker an invoice for the Licensee Employee Expenses, Licensee Transmitter
Expenses, and interest costs on Alta Senior Debt paid by Licensee during such
prior month, in such detail and supported by such documentation as Broker shall
reasonably request. At the termination of this Agreement, a final adjustment
shall be made to the estimates paid to reflect the actual fee payable over the
Term of this Agreement.
<PAGE> 20
TIME BROKERAGE AGREEMENT
ATTACHMENT C
CORPORATE CONTRACTS
-------------------
None.
<PAGE> 21
TIME BROKERAGE AGREEMENT
ATTACHMENT D
PROGRAMMING POLICIES
--------------------
Broker will comply with and the Programming shall be consistent
with the following policies:
I. Respectful of Faiths. The subject of religion and references to
particular faiths and tenets shall be treated with respect at all
times. None of the Stations will be used as a medium for attack on any
faith, discrimination or sect upon any individual or organization.
II. Controversial Issues. Any discussion of controversial issues of public
importance shall be reasonably balanced with the presentation of
contrasting viewpoints in the course of overall programming; no attacks
on the honesty, integrity, or like personal qualities of any person or
group of persons shall be made during the course of political
campaigns; and Station programs (other than public forum or talk
features) are not to be used as a forum for editorializing about
individual candidates. If such events occur, Licensee may require that
responsive programming be aired. In the event that a statute,
regulation or policy is adopted that requires the airing of responsive
programming, programmer agrees to comply with such statute, regulation
or policy and will prepare such responsive programming.
III. Donation Solicitation. Requests for donations in the form of a specific
amount shall not be made if there is any suggestion that such donation
will result in miracles, physical cures or life-long prosperity.
However, statements generally requesting donations to support a
broadcast or church are permitted.
IV. Treatment of Parapsychology. The advertising or promotion of fortune
telling, occultism, astrology, phrenology, palm reading, or numerology,
mind-reading, character readings, or subjects of the like nature will
not be broadcast.
V. No Ministerial Solicitations. No invitations by a minister or other
individual appearing on the program to have listeners come and visit
him or her for consultation or the like shall be made if such
invitation implies that the listeners will receive consideration,
monetary gain, or physical cures for illness.
VI. No Vending of Miracles. Any exhortation to listeners to bring money to
a church affair or service containing any suggestion that miracles,
physical cures, or prosperity will result is prohibited.
VII. Sale of Religious Artifacts. The offering for sale of religious
artifacts or other items for which listeners would send money is
prohibited unless such items are normally available in ordinary
commerce or are clearly being sold for proper fund-raising purposes.
<PAGE> 22
VIII. No Miracle Solicitation. Any invitation to listeners to meet at places
other than a church and/or to attend other than regular services of a
church is prohibited if the invitation, meeting, or service contains
any claim that miracles, physical cures or prosperity will result.
IX. No Plugola or Payola. The mention of any business activity or "plug"
for any commercial, professional, or other related endeavor, except
where contained in an actual commercial message of a sponsor, or
otherwise lawful, is prohibited. No commercial messages (plugs) or
undue references shall be made in programming presented over the
Stations to any business venture, profit making activity or other
interest (other than noncommercial announcements for bona fide
charities, church activities or other public service activities) in
which Broker is directly or indirectly interested without the same
having been approved in advance by the Stations' respective Managers
and such broadcast being announced as sponsored material.
X. No Lotteries. Announcements giving any information about lotteries or
games prohibited by federal or state law or regulations are prohibited.
XI. No Gambling. References to "dream books, " the "straight line," or
other direct or indirect descriptions or solicitations relative to the
"numbers game," or the "policy game," or any other form of gambling are
prohibited.
XII. No Numbers Games. References to chapter and verse paragraphs, paragraph
numbers, or song numbers, which involve three digits should be avoided
and, when used, must reasonably relate to a non-gambling activity.
XIII. Political Programming. At least 90 days before the start of any
election campaign, Broker will review with the Stations' Managers the
rates that will be charged for the time to be sold to candidates for
public office of their supporters to make certain that such rates
conform with applicable law and Station policy.
XIV. Required Announcements. Programmer shall broadcast an announcement in
form satisfactory to Licensee at the beginning of each hour to identify
the Station and any other announcement that may be required by law,
regulation or Station policy.
XV. Credit Terms Advertising. Unless all applicable state and federal
guidelines relative to disclosure to credit terms are complied with, no
advertising of credit terms will be made over the Stations beyond
mention of the fact that, if desired, credit terms are available.
XVI. No Illegal Announcements. No announcement or promotion prohibited by
federal or state law or regulation of any lottery or game shall be made
over the Stations.
XVII. Licensee Discretion Paramount. In accordance with Licensee's
responsibility under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, Licensee
<PAGE> 23
reserves the right to reject or terminate any advertising or
programming being presented over the Stations which is in conflict with
Station policy or which in Licensee's sole but reasonable judgment
would not serve the public interest.
XVIII. Programming Prohibitions. Programmer shall not knowingly broadcast any
of the following programs or announcements:
A. False Claims. False or unwarranted claims for any product or service.
B. Unfair Imitation. Infringements of another advertiser's rights through
plagiarism or unfair imitation of either program idea or copy, or any
other unfair competition.
C. Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
D. Indecency, Obscenity, Profanity. Any programs or announcements that are
slanderous, obscene, indecent, profane, vulgar, repulsive or offensive,
either in theme or treatment.
E. Unauthenticated Testimonials. Any testimonials which cannot be
authenticated.
F. Descriptions of Bodily Functions. Any presentation which describes in a
repellent manner bodily functions.
G. Conflicting Advertising. Any advertising matter or announcement which
may, in the opinion of Licensee, be injurious or prejudicial to the
interests of the public or the Stations, or to honest advertising and
reputable business in general.
H. Contests. Any contests or promotions which are in any way misleading or
constitute a public nuisance or are likely to lead to injury to persons
or property.
I. Telephone Conversations. Any programming in violation of any statute,
regulation or policy, including without limitation to, Section 73.1206
of the FCC's rules, or any successor regulation, dealing with the
taping and/or broadcast of telephone conversations.
In any case where obvious questions of policy or
interpretation arise, programmer will submit the same to the general
manager of the station for decision before any broadcast of such
material.
<PAGE> 24
TIME BROKERAGE AGREEMENT
ATTACHMENT E
If notice is to the Licensee:
Redwood Broadcasting, Inc.
7518 Elbow Bend Road
P.O. Box 3463
Carefree, AZ 85377
Attention: John C. Power
Telecopy No: (602) 488-2384
With a copy to (which shall not constitute notice):
Pepper & Corazzini, L.L.P.
1776 K Street Northwest
Suite 200
Washington, D.C. 20006
Attention: Peter Gutmann, Esq.
Telecopy-No: (202) 296-5572
If the notice is to Broker:
Regent Communications, Inc.
50 East RiverCenter Blvd.
Suite 180
Covington, KY 41011
Attention: Terry S. Jacobs
Telecopy No. (606) 292-0453
With a copy to (which shall not constitute notice):
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Attention: Alan C. Rosser, Esq.
Telecopy No: (513) 241-8289
<PAGE> 25
TIME BROKERAGE AGREEMENT
ATTACHMENT G
Commissions
Commissions are payable on the 15th day of each month at the rate of
15% of agency collections and 20% on direct business collections received during
the preceding calendar month.
<PAGE> 1
Exhibit 10(k)
EXECUTION COPY
--------------
KIXA(FM) TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement (the "Agreement"), made as of the 17th
day of December, 1997, is between Topaz Broadcasting, Inc., a Delaware
corporation ("Topaz"), programmer of radio station KIXA-FM, Lucerne Valley,
California (the "Station"), and Regent Communications, Inc., a Delaware
corporation ("Programmer").
Topaz has entered into an Asset Purchase Agreement dated as of August
29, 1997 under which Topaz has agreed to purchase the Station from RASA
Communications Corp. ("RASA")(the "RASA Purchase Agreement") and is programming
the Station pursuant to a Time Brokerage Agreement dated as of August 29, 1997
between Topaz and RASA, a copy of which is attached hereto as Exhibit A (the
"RASA TBA").
Topaz and Programmer have entered into a Merger Agreement dated as of
December 17, 1997 (the "Merger Agreement"), pursuant to which Topaz will merge
into Programmer on the terms and subject to the conditions set forth in the
Merger Agreement.
Topaz wishes to retain Programmer to provide programming for the
Station pursuant to the terms and conditions set forth in this Agreement and in
conformity with the Station's policies and practices and the rules and
regulations of the Federal Communications Commission ("FCC") concerning such
arrangements. Programmer desires to avail itself of Station's broadcast time for
the presentation of a programming service, including the sale of advertising
time.
For and in consideration of the mutual covenants herein contained, the
parties agree as follows:
1. SALE OF TIME
1.1. BROADCAST OF PROGRAMMING.
(a) During the Term (as defined below) of this Agreement,
Topaz shall make available broadcast time on the Station for the broadcast of
Programmer's programs (the "Programming") for up to One Hundred Sixty-Eight
(168) hours a week except for: (i) downtime occasioned by routine maintenance,
which, except for emergencies, shall be scheduled between 12:00 midnight and
6:00 a.m. and shall otherwise be consistent with prior practice; (ii) up to
three (3) hours per week between the hours of 6:00 and 9:00 a.m.
<PAGE> 2
2
Sundays during which time RASA may broadcast, at its own expense and pursuant to
the terms of the RASA TBA, programming designed to address the problems, needs,
and issues of the Station's listeners; (iii) times when Programmer's programs
are not accepted or are preempted by RASA in accordance with the provisions of
Section 2.1 of the RASA TBA; and (iv) times when broadcasts are prevented for
reasons beyond the control of RASA or Topaz.
1.2. ACCESS TO STUDIO FACILITIES; DELIVERY OF PROGRAMMING. To enable
Programmer to fulfill its obligations hereunder, Topaz shall make the office and
equipment at the main studio (the "Main Studio") available, for no additional
consideration, to Programmer for its use for the production of Programming under
this Agreement. Programmer accepts complete and full responsibility for the care
and maintenance of such equipment during the Term. If Programmer originates the
Programming from any place other than the Main Studio, Programmer shall be
responsible for delivering the Programming to the Main Studio for broadcast by
Topaz on the Station.
1.3. ADVERTISING AND PROGRAMMING REVENUES. During the Term, Programmer
shall have the exclusive authority to sell for its own account commercial time
on the Station and to retain all revenues from the sale of such advertising. In
accordance with the RASA TBA, the fees due hereunder shall be reduced pro rata
for any Programming preempted by RASA pursuant to Sections 2.1.1 or 2.1.2 of the
RASA TBA for the commercial advantage of RASA, in an arbitrary manner, or
otherwise not based on RASA's good faith determination that the broadcast of
such Programming is not in the public interest.
1.4. PAYMENTS. Programmer shall pay to Topaz the fees set forth on
Schedule 1.4 hereto for the rights granted under this Agreement.
1.5. TERM. The term of this Agreement (the "Term") shall be the period
commencing January 1, 1998 (the "Commencement Date") and terminating on the
earliest of: (a) the Closing under the Merger Agreement; (b) the termination of
the RASA Purchase Agreement in accordance with its terms; (c) the termination of
the RASA TBA in accordance with its terms; or (d) the termination of this
Agreement pursuant to Section 7 hereof.
<PAGE> 3
3
2. PROGRAMMING AND OPERATING STANDARDS
2.1. RIGHTS AND OBLIGATIONS OF RASA. As and to the extent provided by
law, RASA shall be responsible for the control of the day-to-day operations of
the Station in conformance with its FCC licenses, permits and authorizations.
Without limiting the generality of the foregoing, RASA shall have the rights and
obligations set forth in Sections 2.1.1 - 2.1.6 of the RASA TBA with respect to
programming and technical operations of the Station.
2.2. RIGHTS AND OBLIGATIONS OF PROGRAMMER. Programmer shall not take
any action, or omit to take any action, inconsistent with RASA's obligations
under law to retain ultimate responsibility for the programming and technical
operations of the Station. Without limiting the generality of the foregoing,
Programmer shall have the rights and obligations set forth in Sections 2.2.1 -
2.2.5 of the RASA TBA with respect to programming and technical operations of
the Station.
3. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES
3.1. LICENSEE'S RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.
(a) As set forth in the RASA TBA, RASA shall employ a
full-time managerial-level employee for the Station, who shall report and be
solely accountable to RASA and shall be responsible for overseeing the
operations of the Station generally, and a full-time staff-level employee, who
shall report to and assist the manager in the performance of his and her duties.
RASA will be responsible for the salaries, taxes, insurance and related costs
for its personnel. Whenever on the Station's premises, all of Programmer's
personnel shall be subject to the supervision and the direction of the Station's
General Manager and/or the Station's Chief Operator.
(b) As set forth in the RASA TBA, RASA shall also be
responsible for timely paying (i) all FCC regulatory fees and related attorneys'
fees; (ii) all lease payments, real estate and personal property taxes,
insurance premiums and utility costs (telephone, electricity, etc.) relating to
the Station's transmitter site, transmitter and antenna; (iii) all rent and
costs under the Existing Studio Lease or the New Studio Lease, as defined in the
RASA TBA, including the costs of appropriate levels of property insurance; and
(iv) all maintenance and repair costs on the transmitting equipment, real estate
and personal property taxes, utility costs (telephone, electricity, etc.)
relating to the
<PAGE> 4
4
existing transmitting site, transmitters and antennas; and maintenance and
repair costs on the transmitting equipment.
3.2. PROGRAMMER'S RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.
(a) Programmer shall be responsible for the artistic personnel
and material for the production of the Programming to be provided under this
Agreement. Programmer shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming.
(b) Programmer shall also be responsible for timely paying all
costs associated with production and listener responses, including telephone
costs, fees to ASCAP, BMI and SESAC, any other copyright fees, and all other
costs or expenses attributable to the Programming that is delivered by
Programmer for broadcast on the Station.
3.3. CONTINUED EMPLOYMENT OF STATION EMPLOYEES.
------------------------------------------
3.3.1 TRANSFERRED EMPLOYEES. Except for the employees set
forth in Section 3.1 or on SCHEDULE 3.3.1, on or prior to the
Commencement Date, Programmer shall offer employment to all employees
of the Station (employees accepting such employment on or after the
Commencement Date being herein referred to as the "Transferred
Employees"). The terms and conditions of Programmer's employment of the
Transferred Employees shall be at-will employment in at least the same
positions, for at least the same direct cash compensation, with medical
insurance effective as of the Commencement Date and including coverage
for any preexisting health conditions that would have been covered
under Topaz's health plan in which the employee was a participant
immediately prior to the Commencement Date and such other benefits as
Programmer provides generally for its other employees; PROVIDED,
HOWEVER, that Programmer shall comply with the terms of any Assumed
Contract, as hereafter defined, relating to any Transferred Employee.
3.3.2. EMPLOYEES ON LEAVE. If as of the Commencement Date any
employee of the Station is on a disability or other authorized
temporary leave from employment by Topaz, Programmer shall offer
employment to such person at such time the person is capable and ready
to return to active status, provided that such
<PAGE> 5
5
person actually returns to active status within six (6) months after
the Commencement Date. Any such employee who is capable and ready to
return from such a temporary leave from employment by Topaz, who
promptly accepts Programmer's offer of employment and who reports to
work promptly after such acceptance and prior to the expiration of such
six-month period, shall become a Transferred Employee as of the first
day he or she reports to work with Programmer.
3.3.3. VACATION POLICY. For purposes of determining the amount
of any entitlement of any Transferred Employee under Programmer's
vacation policy, Programmer will take into account and credit such
Transferred Employee's length of service with Topaz or RASA as well as
with Programmer, and Programmer will also assume responsibility for the
accrued but unused vacation of all Transferred Employees. As part of
the proration process described in Section 4, Topaz shall make a
payment to Programmer equal to the value of the unused vacation
entitlements of the Transferred Employees as of the Commencement Date.
Programmer shall not assume any obligations under Topaz's sick leave or
severance policies, except for obligations set forth in the Assumed
Contracts.
3.3.4. PRORATION OF SALARIES AND COMPENSATION. Except as
otherwise expressly set forth herein, Topaz shall be solely responsible
for all salaries and other compensation which will or may become
payable to any Transferred Employee in respect of any period of
employment by Topaz prior to the Commencement Date, and Programmer
shall be solely responsible for any salaries and other compensation
which will or may become payable to any Transferred Employee in respect
of any period on and after the Commencement Date.
3.3.5. RESTRICTIONS ON TRANSFER OF TRANSFERRED EMPLOYEES.
During the Term of this Agreement, Programmer shall not hire or
transfer any Transferred Employee to another radio broadcast station
owned or operated by Programmer or an Affiliate (as defined in Section
7.5 hereof) of Programmer.
3.3.6. NO THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement shall create any third party beneficiary rights of any
employee or former employee (including any beneficiary or dependent
thereof) of Topaz in respect of continued employment (or resumed
employment) with Topaz or with Programmer or in respect of any other
matter.
<PAGE> 6
6
4. ASSIGNMENT AND ASSUMPTION OF CERTAIN
AGREEMENTS, RIGHTS AND OBLIGATIONS; PRORATIONS
4.1 ACCOUNTS RECEIVABLE.
(a) As of the Commencement Date, Topaz shall assign to Programmer all
of Topaz's rights in all accounts receivable from Time Sales Agreements and
Trade Agreements relating to the sale of time on the Station prior to the
Commencement Date (the "Accounts Receivable"). As soon after the Commencement
Date as practicable, Topaz shall deliver to Programmer a complete and detailed
statement (the "Receivable Statement") of the Accounts Receivable. The
Receivable Statement shall show all commissions owing with respect to the
Accounts Receivable, if any. Prior to the Commencement Date, Topaz shall not
engage in the acceleration of customer orders, any grant of any discount to
customers other than in the ordinary course of business consistent with past
practices or any other changes intended to increase the cash collection of
accounts receivable prior to the Commencement Date.
(b) In the event that this Agreement is terminated for any reason other
than the occurrence of the Closing under the Merger Agreement, as of the date of
such termination (the "Termination Date"), Programmer shall assign to Licensee
cash or accounts receivable from Time Sales Agreements and Trade Agreements
relating to the sale of time on the Stations prior to the Termination Date (the
"Programmer's Accounts Receivable") equal in value to the Accounts Receivable.
As soon after the Termination Date as practicable, Programmer shall deliver to
Licensee a complete and detailed statement (the "Programmer's Receivable
Statement") of the Programmer's Accounts Receivable. The Programmer's Receivable
Statement shall show all commissions owing with respect to the Programmer's
Accounts Receivable, if any. Prior to the Termination Date, Programmer shall not
engage in the acceleration of customer orders, any grant of any discount to
customers other than in the ordinary course of business consistent with past
practices or any other changes intended to increase the cash collection of
accounts receivable prior to the Termination Date. The final determination of
any amount owed under this Section 4.1 shall be handled as a proration item in
accordance with Section 4.6 hereof. Notwithstanding anything herein to the
contrary, liabilities and obligations under Trade Agreements shall be prorated
in favor of Licensee as set forth in Section 4.7 hereof.
<PAGE> 7
7
4.2. LICENSE TO USE CALL SIGN AND TRADEMARKS. Topaz hereby grants
Programmer a license to use the call signs and trademarks and names related to
the Station (the "Marks") during the Programming during the Term. Programmer
agrees that the nature and quality of all services rendered by it in connection
with the Marks shall conform to reasonable quality standards set by and under
the control of Topaz. If Topaz becomes aware of any fact which in its opinion
indicates that Programmer is using the Marks in connection with Programming
which does not conform with Topaz's reasonable quality standards, Topaz may
notify Programmer in writing of such facts and request that Programmer conform
its use of the Marks to Topaz's reasonable quality standards. If Programmer does
not conform its use of the Marks, Topaz may terminate the license granted hereby
upon written notice to Programmer. Programmer agrees to cooperate with Topaz to
control the nature and quality of use of the Marks, to supply Topaz with audio
tapes and uses of the Marks upon Topaz's reasonable request, and to use the
Marks only in connection with quality programming services. Programmer further
agrees to notify Topaz in writing of any legal action commenced against it which
relates to the Marks or to the quality of the Programming, within ten (10) days
of notice to Programmer of such action.
4.3. ASSUMPTION OF OBLIGATIONS.
(a) As of the Commencement Date, Topaz shall assign to Programmer, and
Programmer shall assume and undertake to pay, satisfy or discharge the
liabilities, obligations and commitments of Topaz arising or accruing after the
date hereof under the contracts, leases, and other agreements specifically
identified on Schedule 4.3 hereto (the "Assumed Contracts").
(b) Topaz shall use reasonable efforts to obtain the consent of any
third party necessary for the assignment to Programmer of any of the Assumed
Contracts; provided, that Topaz shall not be obligated to pay any money to
obtain such consent. In the event a consent or waiver required with respect to
the assignment of any of the Assumed Contracts is not obtained, Topaz shall use
reasonable efforts to provide Programmer with the benefits of any such Assumed
Contract (including, without limitation, permitting Programmer to enforce any
rights of Topaz under such Assumed Contract), and Programmer shall, to the
extent Programmer is provided with the benefits of such Assumed Contract,
perform all obligations of Topaz thereunder.
4.4. STATION VEHICLES. As of the Commencement Date, Topaz shall
transfer,
<PAGE> 8
8
assign, convey and deliver to Programmer, all motor vehicles owned by Topaz (the
"Owned Vehicles").
4.5. LIMITATION. Except as set forth in this Section 4, Programmer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the transactions contemplated hereby, any
liabilities, obligations or commitments of Topaz of any nature whatsoever.
4.6 PRORATION OF INCOME AND EXPENSES. All income and expenses arising
from the conduct of the business and operation of the Station shall be prorated
between Programmer and Topaz as of 12:01 a.m. on the Commencement Date in
accordance with GAAP. Such prorations shall be based upon the principle that
Topaz shall incur or be entitled to all income earned and shall be responsible
for all liabilities and obligations incurred or accruing in connection with the
operation of the Station until the Commencement Date, and Programmer shall be
entitled to all income earned and (subject to Section 4.3 above) be responsible
for such liabilities and obligations incurred by Programmer thereafter. Such
prorations shall include, without limitation, all ad valorem, real estate and
other property taxes, business and license fees, music and other license fees,
wages and salaries of employees (including accruals up to the Commencement Date
for bonuses, commissions, sick leave, vacation and severance pay and related
payroll taxes), utility expenses, liabilities and obligations under all Assumed
Contracts (other than Trade Agreements), rents and similar prepaid and deferred
items and all other expenses attributable to the ownership and operation of the
Station except for income and expenses under Contracts not assigned and assumed
hereunder. Trade Agreements shall be prorated to the extent provided in Section
4.7 of this Agreement.
4.7. TRADE AGREEMENTS. Liabilities and obligations under Trade
Agreements shall be prorated in favor of Programmer for the amount, if any, by
which the aggregate net value of the Station's Barter Payable (as defined below)
for air time under such agreements as of 12:01 a.m. on the Commencement Date in
excess of Twenty-Five Thousand Dollars ($25,000) as of the Commencement Date
exceeds the aggregate net value of the Station's Barter Receivable (as defined
below) as of the Commencement Date. Programmer shall not be obligated to make
any proration in favor of Topaz with respect to Trade Agreements,
notwithstanding that the fair market value of property to be received by
Programmer exceeds the liability for unperformed time. "Barter Payable" means
the aggregate value of time owed pursuant to each of the Trade Agreements
calculated in accordance with generally accepted accounting principles. "Barter
<PAGE> 9
9
Receivable" means the aggregate value of goods and services to be received
pursuant to each of the Trade Agreements.
4.8. PAYMENT OF PRORATION ITEMS. Not less than five (5) days after the
Commencement Date, Topaz shall deliver to Programmer a schedule setting forth
its good faith calculation of the prorations pursuant to Sections 4.6 and 4.7
(which schedule shall set forth in reasonable detail the basis for those
determinations) (the "Proration Schedule"), and, to the extent feasible, such
prorations and adjustments shall be made as of the Commencement Date. The
Proration Schedule shall be conclusive and binding upon Programmer unless
Programmer provides Topaz with written notice of objection (the "Notice of
Disagreement") within thirty (30) days after Programmer's receipt of the
Proration Schedule, which notice shall state the prorations of expenses proposed
by Programmer (the "Programmer's Proration Amount"). Topaz shall have fifteen
(15) days from receipt of a Notice of Disagreement to accept or reject
Programmer's Proration Amount. If Topaz rejects Programmer's Proration Amount,
and the amount in dispute exceeds five thousand dollars ($5,000), the dispute
shall be submitted within ten (10) days to a mutually agreed upon accounting
firm (the "Referee") for resolution of the dispute, such resolution to be made
within thirty (30) days after submission to the Referee and to be final,
conclusive and binding on Topaz and Programmer. Programmer and Topaz agree to
share equally the cost and expenses of the Referee, but each party shall bear
its own legal and other expenses, if any. If the amount in dispute is equal to
or less than Five Thousand Dollars ($5,000), such amount shall be divided
equally between Programmer and Topaz. Payment by Programmer or Topaz, as the
case may be, of the proration amounts determined pursuant to this Section 4.8
shall be due fifteen (15) days after the last to occur of (i) Programmer's
acceptance of the Proration Schedule or failure to give Topaz a timely Notice of
Disagreement; (ii) Topaz's acceptance of Programmer's Proration Amount; (iii)
Topaz's rejection of Programmer's Proration Amount in the event the amount in
dispute equals or is less than Five Thousand Dollars ($5,000); and (iv) notice
to Topaz and Programmer of the resolution of the disputed amount by the Referee
in the event that the amount in dispute exceeds Five Thousand Dollars ($5,000).
Any payment required by Topaz to Programmer or by Programmer to Topaz, as the
case may be, under this Section 4.8 shall be paid by wire transfer of
immediately available federal funds to the account of the payee with a financial
institution in the United States as designated by Topaz in the Proration
Schedule or by Programmer in the Notice of Disagreement (or by separate notice
in the event that Topaz does not send a Notice of Disagreement). If either
Programmer or Topaz fails to pay when due any amount under this Section 4.8,
interest on such amount will accrue from the date payment was due to
<PAGE> 10
10
the date such payment is made at a per annum rate equal to the Prime Rate plus
three percent (3%), and such interest shall be payable upon demand.
5. INDEMNIFICATION
5.1. INDEMNIFICATION. From and after the Commencement Date, each of
Programmer and Topaz shall indemnify, defend, and hold harmless the other its
affiliates and their respective officers, directors, employees and
representatives, and the successors and assigns of any of them, from and
against, and reimburse them for, all claims, damages, costs and expenses,
including, without limitation, interest, penalties, court costs and reasonable
attorneys' fees and expenses, resulting from (a) any programming provided by
such party for broadcast on the Station; and (b) any breach by such party of any
representation, warranty, covenant or other agreement contained in this
Agreement.
5.2. SURVIVAL. The covenants, indemnities and other agreements
contained in this Agreement or in any certificate, document or instrument
delivered pursuant to this Agreement shall not survive the Term of this
Agreement, except for the covenants of Programmer set forth in Section 7.5 which
shall survive for the period set forth therein. No party shall be entitled to
indemnification hereunder for any claim arising from the breach by the other
party of its representations and warranties unless written notice describing in
reasonable detail the nature and basis of such claim is given during the
survival period. In the event such notice is given, the right to indemnification
with respect thereto shall survive until such claim is finally resolved and any
obligations thereto are fully satisfied. Any investigation by or on behalf of
any party hereto shall not constitute a waiver as to enforcement of any
representation, warranty, covenant or agreement contained herein.
6. EVENTS OF DEFAULT AND CURE PERIODS
6.1. EVENTS OF DEFAULT. The following shall, after the expiration of
the applicable cure periods as set forth in Section 6.2, each constitute an
"Event of Default" under this Agreement:
6.1.1. NON-PAYMENT. Programmer's failure to pay when due the
fees payable under Section 1.4 of this Agreement;
6.1.2. DEFAULT IN COVENANTS. Either party defaults in the
performance of
<PAGE> 11
11
any material covenant, condition or undertaking contained in this
Agreement or the Merger Agreement;
6.1.3. BREACH OF REPRESENTATION. Any material representation
or warranty made by either party to this Agreement or the Merger
Agreement, or in any certificate or document furnished by either party
to the other pursuant to the provisions of this Agreement or the Merger
Agreement, proves to have been false or misleading in any material
respect as of the time made or furnished.
6.1.4. BANKRUPTCY. Either party (a) makes a general assignment
for the benefit of creditors, or (b) files or has filed against it a
petition for bankruptcy, for reorganization or an arrangement, or for
the appointment of a receiver, trustee or similar creditors'
representative for the property or assets of such party under any
federal or state insolvency law, which, if filed against such party,
has not been dismissed or discharged within sixty (60) days thereafter.
6.2. CURE PERIODS. An Event of Default shall not be deemed to have
occurred until fifteen (15) days after the non-defaulting party has provided the
defaulting party with written notice specifying the event or events that, if not
cured, would constitute an Event of Default and specifying the actions necessary
to cure the default(s) within such period. This period may be extended for a
reasonable period of time if the defaulting party is acting in good faith to
cure and such delay is not materially adverse to the other party.
7. TERMINATION
7.1. TERMINATION UPON DEFAULT. Upon the occurrence of an Event of
Default, the non-defaulting party may terminate this Agreement, provided that it
is not also in material default of this Agreement or the Merger Agreement. If
Programmer has defaulted in the performance of its obligations, all amounts
accrued or payable to Topaz up to the date of termination which have not been
paid shall immediately become due and payable, and Topaz shall be under no
further obligation to make available to Programmer any broadcast time or
broadcast transmission facilities on the Station.
7.2. TERMINATION FOR CHANGE IN FCC RULES OR POLICIES. Either party may
terminate this Agreement upon written notice to the other if (a) there has been
a material change in FCC rules or policies, (b) this Agreement would materially
violate FCC rules
<PAGE> 12
12
or policies as changed; (c) such change is in effect; and (d) such change is not
the subject of an appeal or further administrative review; provided, however,
that in the event of such change the parties shall negotiate in good faith and
attempt to agree to an amendment to this Agreement that will provide the parties
with a valid and enforceable agreement that conforms to the new FCC rules or
policies.
7.3. TERMINATION UPON TERMINATION OF RELATED AGREEMENTS. In the event
that any of (a) the Purchase Agreement between Ruby Broadcasting, Inc. and
Programmer dated as of December ___, 1997; (b) the Merger Agreement; or (c) the
KIXW/KZXY Time Brokerage Agreement between Topaz and Programmer dated as of
December ___, 1997 are terminated in accordance with their respective terms,
this Agreement shall terminate.
7.4. CERTAIN MATTERS UPON TERMINATION.
7.4.1. If this Agreement is terminated for any reason other
than the occurrence of the Closing under the Merger Agreement,
(a) Programmer shall assign, transfer and convey to
Topaz all of Programmer's rights in, to and under (x) the
Owned Vehicles, and (y) the Assumed Contracts that remain in
effect on the date of such termination and all agreements with
advertisers existing on the date of such termination
(collectively the "Reassumed Contracts"). Programmer shall use
reasonable efforts to promptly obtain and deliver to Topaz, at
Programmer's expense, any necessary consents to the assignment
of the Reassumed Contracts to Topaz.
(b) Topaz shall assume from Programmer all
liabilities, obligations and commitments of Programmer arising
or accruing on or after the date of termination relating to
the Owned Vehicles and pursuant to the Reassumed Contracts,
and Programmer shall be responsible only for those obligations
relating to the Owned Vehicles and under the Reassumed
Contracts arising on or after the Commencement Date and prior
to the termination of this Agreement.
(c) Programmer shall return to Topaz any equipment or
property of the Station used by Programmer, its employees or
agents, in substantially
<PAGE> 13
- 13 -
the same condition as such equipment existed on the date
hereof, ordinary wear and tear excepted.
(d) Accounts Receivables shall be handled as set
forth in Section 4.1(b) hereof.
(e) Prorations shall be handled in the manner set
forth in Sections 4.6, 4.7 and 4.8 hereof; PROVIDED HOWEVER,
that income and expenses shall be prorated between Programmer
and Licensee as of 12:01 a.m. on the Termination Date, and all
prorations shall be based upon the principle that Programmer
shall incur or be entitled to all income earned and shall be
responsible for all liabilities and obligations incurred or
accruing in connection with the operation of the Stations
until the Termination Date, and Licensee shall be entitled to
all income earned and be responsible for such liabilities and
obligations incurred by Licensee thereafter.
7.4.2. No expiration or termination of this Agreement shall
terminate the obligation of each party to indemnify the other for
claims of third parties under Section 5 of this Agreement or limit or
impair any party's rights to receive payments due and owing hereunder
on or before the date of such termination.
7.5 COVENANTS OF PROGRAMMER UPON TERMINATION. If this
Agreement is terminated for any reason other than the occurrence of the
Closing under the Merger Agreement, Programmer covenants and agrees as
follows:
(a) For a period of one (1) year from the date of
termination, neither Programmer nor any Affiliate shall,
without the prior written consent of Topaz, directly or
indirectly engage in (whether as owner, partner, consultant,
advisor, employee, independent contractor or otherwise),
assist any person or entity in engaging in, or hold any legal
or beneficial interest in any person or entity that is engaged
in, the management or operation of any Competitive Business
(as defined below). "Competitive Business" shall mean any
radio broadcast station with a transmitter location within a
fifty (50) mile radius of the transmitter location of Station
KIXA(FM) (the "Covenant Area"), other than stations in which
the Noncompete Parties hold a legal or beneficial interest
prior to the date
<PAGE> 14
- 14 -
of this Agreement. "Affiliate" shall mean any firm or entity
in which either Terry Jacobs or Bill Stakelin (the "Noncompete
Party(ies)" may be interested as a partner, trustee, employee,
consultant or shareholder. Notwithstanding the foregoing,
ownership by a Noncompete Party of less than five percent (5%)
of the issued and outstanding stock of any corporation whose
securities are listed on a national securities exchange or by
NASDAQ shall not be deemed to violate this Section 7.5(a).
(b) For a period of one (1) year from the date
hereof, neither the Noncompete Parties nor any Affiliate
shall, directly or indirectly, employ or solicit the
employment of any employee of the Station.
7.6. ATTORNEYS FEES AND COSTS. In the event any action or proceeding is
commenced by either party to enforce the provisions of this Agreement or to seek
remedies for a breach or wrongful termination of this Agreement, the prevailing
party in such an action or proceeding shall be entitled to the award of its
reasonable attorneys fees and costs incurred in and relating to such an action
or proceeding.
8. REPRESENTATIONS AND WARRANTIES
8.1. REPRESENTATIONS AND WARRANTIES OF TOPAZ. Topaz hereby represents
and warrants that:
8.1.1. ORGANIZATION AND STANDING. Topaz is a corporation duly
formed, validly existing and in good standing under the laws of the
State of Delaware, and has all necessary corporate power and authority
to own, lease and operate the Station Assets and to carry on the
business of the Station.
8.1.2. AUTHORIZATION AND BINDING OBLIGATION. Topaz has all
necessary power and authority to enter into and perform this Agreement
and the transactions contemplated hereby, and Topaz's execution,
delivery and performance of this Agreement have been duly and validly
authorized by all necessary action on its part. This Agreement has been
duly executed and delivered by Topaz and constitutes its valid and
binding obligation enforceable against Topaz in accordance with its
terms.
<PAGE> 15
- 15 -
8.1.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except as set forth in Schedule 20(k-1) to the Merger Agreement, the
execution, delivery and performance of this Agreement by Topaz: (a) do
not and will not violate any provisions of Topaz's organizational
documents; (b) do not and will not require the consent or approval of
or any filing with any third party or governmental authority; (c) do
not and will not violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any governmental
authority; and (d) do not and will not, either alone or with the giving
of notice or the passage of time, or both, conflict with, constitute
grounds for termination or acceleration of or result in a breach of the
terms, conditions or provisions of, or constitute a default under any
agreement, lease, instrument, license or permit to which Topaz is now
subject.
8.2. REPRESENTATIONS AND WARRANTIES OF PROGRAMMER. Programmer hereby
represents and warrants that:
8.2.1. ORGANIZATION AND STANDING. Programmer is a corporation
duly formed, validly existing and in good standing under the laws of
the State of Delaware and has all necessary corporate power and
authority to perform its obligations hereunder on and after the date
hereof.
8.2.2. AUTHORIZATION AND BINDING OBLIGATION. Programmer has
all necessary power and authority to enter into and perform this
Agreement and the transactions contemplated hereby, and Programmer's
execution, delivery and performance of this Agreement have been duly
and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by Programmer and
constitutes its valid and binding obligation enforceable against
Programmer in accordance with its terms.
8.2.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
The execution, delivery and performance of this Agreement by
Programmer: (a) do not and will not violate any provision of
Programmer's organizational documents; (b) do not and will not require
the consent of any third party or governmental authority; (c) do not
and will not violate any law, judgment, order, injunction, decree,
rule, regulation or ruling of any governmental authority; and (d) do
not and will not, either alone or with the giving of notice or the
passage of time, or both,
<PAGE> 16
- 16 -
conflict with, constitute grounds for termination or acceleration of or
result in a breach of the terms, conditions or provisions of, or
constitute a default under any agreement, lease, instrument, license or
permit to which Programmer is now subject.
9. CERTIFICATIONS
9.1. PROGRAMMER'S CERTIFICATION. Programmer hereby certifies that this
Agreement complies with the provisions of Sections 73.3555 (a)(1) and (e)(1) of
the FCC's rules and regulations.
9.2. TOPAZ'S CERTIFICATION. Topaz hereby certifies that it will comply
with the certifications set forth in Sections 10.1 and 10.2 of the RASA TBA.
10. MISCELLANEOUS
10.1. NO PARTNERSHIP OR JOINT VENTURE. This Agreement is not intended
to be and shall not be construed as a partnership or joint venture agreement
between the parties. Except as otherwise specifically provided in this
Agreement, no party to this Agreement shall be authorized to act as agent of or
otherwise represent any other party to this Agreement.
10.2. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement
and any exhibits and schedules hereto, embody the entire agreement and
understanding of the parties hereto and supersede any and all prior agreements,
arrangements and understandings relating to the matters provided for herein. Any
matter that is disclosed in a Schedule to this Agreement in such a way as to
make its relevance to the information called for by another Schedule readily
apparent shall be deemed to have been included in such other Schedule,
notwithstanding the omission of an appropriate cross-reference. No amendment,
waiver of compliance with any provision or condition hereof, or consent pursuant
to this Agreement shall be effective unless evidenced by an instrument in
writing signed by the party against whom enforcement of any waiver, amendment,
change, extension or discharge is sought. No failure or delay on the part of
Topaz or Programmer in exercising any right or power under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any
<PAGE> 17
- 17 -
other or further exercise thereof or the exercise of any other right or power.
The rights and remedies of the parties to this Agreement are cumulative and are
not exclusive of any right or remedies which either may otherwise have.
10.3. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Neither Programmer nor Topaz may assign its rights under this
Agreement without the prior written consent of the other party hereto.
10.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
10.5. GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of the State of California without regard to its
principles of conflict of law.
10.6. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement, shall be in writing,
and addressed as follows:
If to Topaz:
Topaz Broadcasting, Inc.
1476 Waterfront Road
Suite 100
Reston, VA 22094
Attention: Mr. Thomas P. Gammon
Telephone: 202/737-9000
Facsimile: 202/737-9001
<PAGE> 18
- 18 -
With a copy to:
Leventhal, Senter & Lerman, P.L.L.C.
2000 K Street, NW
Suite 600
Washington, DC 20006
Attention: Meredith S. Senter, Jr., Esq.
Telephone: 202/429-8970
Facsimile: 202/293-7783
If to Programmer:
Regent Communications, Inc.
50 East River Center Boulevard
Suite 180
Covington, Kentucky 41011
Attention: Mr. Terry S. Jacobs
Telephone: 606/292-0030
Facsimile: 606/292-0357
With a copy to:
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202-4186
Attention: Alan C. Rosser, Esq.
Telephone: 513/621-2120
Facsimile: 513/241-8259
Any such notice, request, demand or communication shall be deemed to have been
duly delivered and received (a) upon hand delivery thereof during business
hours, (b) upon the earlier of receipt or three (3) days after posting by
registered mail or certified mail, return receipt requested, (c) on the next
business day following delivery to a reliable or recognized air freight delivery
service, and (d) on the date of transmission, if sent by facsimile during normal
business hours (but only if a hard copy is also sent by overnight
<PAGE> 19
- 19 -
courier), but in each case only if sent in the same manner to all persons
entitled to receive notice or a copy. Any party may, with written notice to the
other, change the place for which all further notices to such party shall be
sent. All costs and expenses for the delivery of notices hereunder shall be
borne and paid for by the delivering party.
10.7. SEVERABILITY. In the event that any of the provisions of this
Agreement shall be held unenforceable, then the remaining provisions shall be
construed as if such unenforceable provisions were not contained herein. Any
provision of this Agreement which is unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such unenforceability
without invalidating the remaining provisions hereof, and any such
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
10.8. CAPITALIZED TERMS. Unless otherwise defined herein, capitalized
terms used herein and in any Schedules hereto shall have the meanings ascribed
to them in the Merger Agreement.
10.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Time Brokerage
Agreement as of the date first above written.
TOPAZ BROADCASTING, INC.
By: /s/ Tom Gammon
---------------------------------
Name: Tom Gammon
--------------------------------
Title: President
-------------------------------
REGENT COMMUNICATIONS, INC.
By: /s/ Wm L. Statlelin
---------------------------------
Name: Wm L. Statlelin
--------------------------------
Title: President
-------------------------------
<PAGE> 21
EXHIBIT A TO
KIXA(FM)
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT BETWEEN RASA AND TOPAZ
-----------------------------------------------
See attached.
<PAGE> 22
EXECUTION COPY
TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement (the "Agreement"), made as of the 29th
day of August, 1997, is by and among RASA Communications Corp., a California
corporation ("RASA"), and Topaz Broadcasting, Inc., a Delaware corporation
("Topaz").
RASA is the permittee of and operates FM radio station KIXA, 106.5 mHz,
Lucerne Valley, California (the "Station"), pursuant to an authorization of the
Federal Communications Commission (the "FCC"). RASA and Topaz have entered into
an Asset Purchase Agreement, dated as of August 29, 1997 (the "Purchase
Agreement"), by which Topaz will acquire the KIXA Assets (as defined in the
Purchase Agreement) on the terms and subject to the conditions set forth in the
Purchase Agreement. In the interim period prior to the Closing under the
Purchase Agreement, Topaz desires to avail itself of Station's broad cast time
for the presentation of a programming service, including the sale of advertising
time, in accordance with and subject to the rules, regulations and policies of
the FCC.
Accordingly, the parties agree as follows:
1. SALE OF TIME
1.1. AMOUNT OF TIME SOLD. During the Term (as defined below), RASA
shall make available broadcast time on the Station for the broadcast of Topaz's
programs (the "Programming") for up to One Hundred Sixty-Eight (168) hours a
week except for: (i) downtime occasioned by routine maintenance, which, except
for emergencies, shall be scheduled between 12:00 midnight and 6:00 a.m. and
shall otherwise be consistent with prior practice; (ii) up to three (3) hours
per week between the hours of 6:00 and 9:00 a.m. Sundays during which time RASA
may broadcast, at its own expense, programming designed to address the problems,
needs, and issues of the Station's listeners; (iii) times when Topaz's programs
are not accepted or are preempted by RASA in accordance with the provisions of
SECTION 2.1 of this Agreement; and (iv) times when broadcasts are prevented for
reasons beyond the control of RASA.
1.2. ACCESS TO STUDIO FACILITIES; DELIVERY OF PROGRAMMING.
(a) Topaz may originate the Programming from RASA's existing
office and studio facilities until termination of RASA's existing lease for such
facilities (the "Existing Studio Lease").
(b) At Topaz's option, RASA shall either give the landlord
notice of termination under the Existing Studio Lease effective September 30,
1997 or enter into a
<PAGE> 23
new month-to-month lease for such space on financial terms acceptable to Topaz
(the "New Studio Lease"). If Topaz requests RASA to terminate the Existing
Studio Lease, RASA and Topaz shall, on or prior to the termination date,
relocate all equipment and furniture located at the existing office space and
used in the operation of KIXA to the office and studio facilities of radio
station KZXY, Apple Valley, California (hereinafter the "Main Studio"). Topaz
shall thereafter originate the Programming from the Main Studio and shall cause
space at the Main Studio to be made available to RASA at no cost for the
performance by RASA of its obligations under this Agreement.
(c) Topaz shall be responsible for the care and maintenance of
all equipment belonging to RASA located at the Main Studio during the Term.
1.3. ADVERTISING AND PROGRAMMING REVENUES. During the Term, Topaz shall
have the exclusive authority to sell for its own account commercial time on the
Station and to retain all revenues from the sale of such advertising. The fees
due hereunder shall be reduced pro rata for any Programming preempted by RASA
pursuant to SECTIONS 2.1.1 or 2.1.2 for the commercial advantage of RASA, in an
arbitrary manner, or otherwise not based on RASA's good faith determination that
the broadcast of such Programming is not in the public interest.
1.4. PAYMENTS. Topaz shall pay to RASA the fees set forth on
SCHEDULE 1.4 hereto for the rights granted under this Agreement.
1.5. TERM. The term of this Agreement (the "Term") shall be the period
commencing on September 1, 1997 (the "Effective Date") and terminating on the
earliest of: (a) the Closing under the Purchase Agreement; (b) the termination
of the Purchase Agreement in accordance with its terms; and (c) the termination
of this Agreement pursuant to SECTION 8 hereof.
2. PROGRAMMING AND OPERATING STANDARDS
2.1. RIGHTS AND OBLIGATIONS OF RASA. As and to the extent provided by
law, RASA shall remain responsible for the control of the day-to-day operations
of the Station in conformance with its FCC licenses, permits and authorizations.
Without limiting the generality of the foregoing, RASA shall have the following
rights and obligations with respect to programming and technical operations of
the Station:
2.1.1. RASA'S ABSOLUTE RIGHT TO REJECT PROGRAMMING. RASA shall
retain the absolute right to accept or reject any Programming
(including advertisements) that RASA in its sole discretion deems
contrary to the public interest. RASA expressly agrees that its right
of preemption shall not be exercised in an arbitrary manner or for the
commercial advantage of RASA.
2
<PAGE> 24
2.1.2. RASA'S RIGHT TO PREEMPT PROGRAMMING FOR SPECIAL EVENTS.
RASA shall have the right, in its sole discretion, to preempt the
Programming in order to broadcast a program deemed by RASA to be of
greater national, regional, or local interest, and to use part or all
of the hours of operation of the Station for the broadcast of events of
special importance. In all such cases, RASA will use its best efforts
to give Topaz reasonable advance notice of its intention to preempt any
regularly scheduled programming. RASA expressly agrees that its right
of preemption shall not be exercised in an arbitrary manner or for the
commercial advantage of RASA.
2.1.3. FCC PUBLIC INTEREST REQUIREMENTS.
(a) The parties agree that RASA may broadcast its own
public service programming between the hours of 6:00 a.m. and 9:00 a.m.
every Sunday. In addition, RASA may broadcast other public service
programming at such other times as the parties may agree.
(b) The parties acknowledge that RASA is ultimately
responsible for complying with the FCC's rules and regulations with
respect to (i) the carriage of political advertisements and programming
(including, without limitation, the rights of candidates to reasonable
access, equal opportunities and lowest unit charge); (ii) the
maintenance of political and public inspection files and the Station's
logs; (iii) the ascertainment of issues of community concern; (iv) the
broadcast and nature of public service programming; and (v) the
preparation of all quarterly issues/programs lists.
(c) RASA reserves the right to refuse to broadcast
any program containing matter that RASA in good faith believes to be,
or that RASA in good faith believes may be determined by the FCC or any
court or other regulatory body with authority over RASA or the Station
to be, violative of any right of any third party, a "personal attack"
(as that term is defined by the FCC) or indecent or obscene. RASA shall
further have the right to take any other actions necessary for
compliance with the laws of the United States, the State in which the
Station are located, the rules, regulations and policies of the FCC
(including the prohibition on unauthorized transfers of control), and
the rules, regulations and policies of other federal government
authorities, including the Federal Trade Commission and the Department
of Justice. If, in the judgment of RASA or the Station's General
Manager, any portion of the Programming does not meet any of the above
standards or the requirements of SECTION 2.2 of this Agreement, RASA
may suspend, cancel or refuse to broadcast any such portion of the
programming without reduction or offset in the payments due RASA under
this Agreement.
3
<PAGE> 25
2.1.4. MAIN STUDIO LOCATION. RASA shall maintain and staff a
main studio as required under the FCC's rules and regulations. For
this purpose, Topaz has agreed pursuant to SECTION 1.2 to make space
in the Main Studio available for RASA's exclusive use.
2.1.5. MAINTENANCE AND REPAIR OF TRANSMISSION FACILITIES. RASA
shall maintain the Station's transmission equipment and facilities,
including the antennas, transmitters and transmission lines, and shall
provide for the delivery of electrical power to the Station's
transmitting facilities at all times in order to ensure operation of
the Station. RASA shall undertake such repairs as are necessary to
maintain full-time operation of the Station with its maximum authorized
facilities following the occurrence of any such loss or damage.
2.1.6. COMPLIANCE WITH FCC TECHNICAL RULES. RASA shall retain,
on a full time, part time or contract basis, a qualified engineer who
shall be responsible for maintaining the transmission facilities of the
Station. RASA shall also employ or retain a Chief Operator, as that
term is defined by the rules and regulations of the FCC, who shall be
responsible for ensuring compliance by the Station with the technical
operating and reporting requirements established by the FCC.
2.2. RIGHTS AND OBLIGATIONS OF TOPAZ. Topaz shall not take any action,
or omit to take any action, inconsistent with RASA's obligations under law to
retain ultimate responsibility for the programming and technical operations of
the Station. Without limiting the generality of the foregoing, Topaz agrees as
follows:
2.2.1. COMPLIANCE WITH LAWS AND STATION POLICIES. All
Programming shall conform in all material respects to all applicable
rules, regulations and policies of the FCC, and all other laws or
regulations applicable to the broadcast of programming by the Station.
All Programming shall be prepared and presented in conformity with the
regulations prescribed in SCHEDULE 2.2.1 hereto.
2.2.2. COOPERATION WITH RASA. Topaz, on behalf of RASA, shall
furnish within the Programming all station identification announcements
required by the FCC's rules; shall, upon request by RASA, provide
information with respect to any of the Programming which is responsive
to the public needs and interests of the area served by the Station so
as to assist RASA in the preparation of any required programming
reports; and shall, upon request by RASA, provide any other information
necessary for RASA to prepare records, reports and logs required by the
FCC or other local, state or federal governmental agencies. Topaz shall
maintain and deliver to RASA all records and information required by
the FCC to be placed in the public inspection files of the Station
pertaining to the broadcast of political programming and
advertisements, in accordance with the provisions of Sections 73.1940
and 73.3526 of the FCC's rules, and agrees that broadcasts of sponsored
4
<PAGE> 26
programming addressing political issues or controversial subjects of
public importance will comply with the provisions of Section 73.1212 of
the FCC's rules.
2.2.3. PAYOLA AND PLUGOLA. Topaz shall provide to RASA in
advance any information known to Topaz regarding any money or other
consideration which has been paid or accepted, or has been promised to
be paid or to be accepted, for the inclusion of any matter as a part of
any programming or commercial material to be supplied to RASA by Topaz
for broadcast on the Station, unless the party making or accepting such
payment is identified in the program as having paid for or furnished
such consideration in accordance with FCC requirements. Commercial
matter with obvious sponsorship identification will not require
disclosure beyond the sponsorship identification contained in the
commercial copy. Topaz shall at all times endeavor to proceed in good
faith to comply with the requirements of Sections 317 and 507 of the
Communications Act of 1934, as amended, and the related rules and
regulations of the FCC.
2.2.4. HANDLING OF MAIL. Topaz shall provide RASA with the
original or a copy of any correspondence from a member of the public
relating to the Programming to enable RASA to comply with FCC rules and
policies, including those regarding the maintenance of the public
inspection file. RASA shall not be required to receive or handle mail,
cables, telegraph or telephone calls in connection with the Programming
unless RASA has agreed to do so in writing. RASA shall promptly forward
to Topaz all correspondence, payments, communications or other
information and/or documents which it receives and which relate to the
Programming, including without limitation, invoices, billing inquiries,
checks, money orders, wire transfers, or other payments for services or
advertising.
2.2.5. COMPLIANCE WITH COPYRIGHT ACT. Topaz shall not
broadcast any material on the Station in violation of the Copyright Act
or the rights of any person. All music supplied by Topaz shall be (a)
licensed by a music licensing agent such as ASCAP, BMI, or SESAC; (b)
in the public domain; or (c) cleared at the source by Topaz. Topaz
shall retain the exclusive right to use and to authorize the use in any
manner of any programming licensed to it. RASA shall not be obligated
to pay any music licensing fees or other similar expenses required in
connection with the material broadcast by Topaz on the Station. RASA,
to the extent the material is not covered by licenses Topaz has
acquired, shall be obligated to pay any music licensing fees and other
similar expenses required in connection with material broadcast by RASA
in accordance with SECTION 2.1.
3. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES
3.1. RASA'S RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.
5
<PAGE> 27
(a) RASA shall employ a full-time managerial-level employee
for the Station, who shall report and be solely accountable to RASA and shall be
responsible for overseeing the operations of the Station generally, and a
full-time staff-level employee, who shall report to and assist the manager in
the performance of his or her duties. RASA will be responsible for the salaries,
taxes, insurance and related costs for its personnel. Whenever on the Station's
premises, all of Topaz's personnel shall be subject to the supervision and the
direction of the Station's General Manager and/or the Station's Chief Operator.
(b) RASA shall also be responsible for timely paying (i) all
FCC regulatory fees and related reasonable attorneys' fees; (ii) all lease
payments, real estate and personal property taxes, insurance premiums and
utility costs (telephone, electricity, etc.) relating to the Station's
transmitter site, transmitter and antenna; (iii) all rent and costs under the
Existing Studio Lease or the New Studio Lease, including the costs of
appropriate levels of property insurance; and (iv) all maintenance and repair
costs on the transmitting equipment.
3.2. TOPAZ'S RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.
(a) Topaz shall be responsible for the artistic personnel and
material for the production of the Programming to be provided under this
Agreement. Topaz shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming.
(b) Topaz shall also be responsible for timely paying all
costs associated with production and listener responses, including telephone
costs, fees to ASCAP, BMI and SESAC, any other copyright fees, and all other
costs or expenses attributable to the Programming that is delivered by Topaz for
broadcast on the Station.
4. ASSIGNMENT AND ASSUMPTION OF CERTAIN ASSETS,
AGREEMENTS, RIGHTS AND OBLIGATIONS
4.1. ACCOUNTS RECEIVABLE.
(a) As of the Effective Date, RASA shall assign to Topaz all
of RASA's rights and interest in all accounts receivable for cash for services
performed or provided by the Station prior to the Effective Date (the "Accounts
Receivable"). As soon after the Effective Date as practicable, RASA shall
deliver to Topaz a complete and detailed statement (the "Receivable Statement")
of the Accounts Receivable. The Receivable Statement shall show all commissions
owing with respect to the Accounts Receivable, if any. Prior to the Effective
Date, RASA shall not engage in any acceleration of customer orders, any grant of
any discount to customers other than in the ordinary course of business
consistent with past practices or any other changes intended to increase the
cash collection of accounts receivable prior to the Effective Date.
6
<PAGE> 28
(b) On the first and fifteenth day of each calendar month
during the Term, Topaz shall deposit all collections on the Accounts Receivable,
net of commissions owing (which shall be paid by Topaz on RASA's behalf out of
the collections), into the Trust Account (as defined in the Purchase Agreement).
At the joint instruction of Topaz and RASA, the Escrow Agent (as defined in the
Purchase Agreement) shall disburse such funds either (i) to discharge in whole
or in part Existing RASA Indebtedness (as defined in the Purchase Agreement) or
(ii) to compromise with creditors threatening judgment or lien enforcement on
the Existing RASA Indebtedness. Upon termination of this Agreement, the Escrow
Agent shall disburse any funds remaining in the Trust Account to Topaz.
4.2. LICENSE TO USE CALL SIGN AND TRADEMARKS. RASA hereby grants Topaz
a license to use RASA's call signs and trademarks and names (the "Marks") in
connection with the broadcast and promotion of the Programming during the Term.
Topaz agrees that the nature and quality of all services rendered by it in
connection with the Marks shall conform to reasonable quality standards set by
and under the control of RASA. If RASA becomes aware of any fact which in its
opinion indicates that Topaz is using the Marks in connection with Programming
which does not conform with RASA's reasonable quality standards, RASA may notify
Topaz in writing of such facts and request that Topaz conform its use of the
Marks to RASA's reasonable quality standards. If Topaz does not conform its use
of the Marks, RASA may terminate the license granted hereby upon written notice
to Topaz. Topaz agrees to cooperate with RASA to control the nature and quality
of use of the Marks, to supply RASA with audio tapes and uses of the Marks upon
RASA's reasonable request, and to use the Marks only in connection with quality
programming services. Topaz further agrees to notify RASA in writing of any
legal action commenced against it which relates to the Marks or to the quality
of the Programming, within ten (10) days of notice to Topaz of such action.
4.3. ASSUMPTION OF OBLIGATIONS.
(a) As of the Effective Date, RASA shall assign to Topaz, and
Topaz shall assume and undertake to pay, satisfy or discharge the liabilities,
obligations and commitments of RASA arising or accruing after the date hereof
under the contracts, leases, and other agreements specifically identified on
SCHEDULE 4.3 hereto (the "Assumed Contracts").
(b) RASA shall use reasonable efforts to obtain the consent of
any third party necessary for the assignment to Topaz of any of the Assumed
Contracts; provided, that RASA shall not be obligated to pay any money to obtain
such consent. In the event a consent or waiver required with respect to the
assignment of any of the Assumed Contracts is not obtained, RASA shall use
reasonable efforts to provide Topaz with the benefits of any such Assumed
Contract (including, without limitation, permitting Topaz to enforce any rights
of RASA under such Assumed Contract), and Topaz shall, to the extent Topaz is
7
<PAGE> 29
provided with the benefits of such Assumed Contract, perform all obligations of
RASA thereunder.
4.4 STATION VEHICLES. As of the Effective Date, Licensee shall
transfer, assign, convey and deliver to Programmer, all motor vehicles owned by
Licensee (the "Owned Vehicles").
4.5. LIMITATION. Except as set forth in this SECTION 4, Topaz expressly
does not, and shall not, assume or be deemed to assume, under this Agreement or
otherwise by reason of the transactions contemplated hereby, any liabilities,
obligations or commitments of RASA of any nature whatsoever (the "Retained
Liabilities").
5. [Intentionally deleted.]
6. INDEMNIFICATION
6.1. INDEMNIFICATION. From and after the Effective Date, each of Topaz
and RASA shall indemnify, defend, and hold harmless the other its affiliates and
their respective officers, directors, employees and representatives, and the
successors and assigns of any of them, from and against, and reimburse them for,
all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from (a) any programming provided by such party for broadcast on the
Station; and (b) any breach by such party of any representation, warranty,
covenant or other agreement contained in this Agreement.
6.2. SURVIVAL. The covenants, indemnities and other agreements
contained in this Agreement or in any certificate, document or instrument
delivered pursuant to this Agreement are and will be deemed and construed to be
continuing covenants, indemnities and agreements and shall survive the
termination of this Agreement for a period of eighteen (18) months (the
"Survival Period"). No party shall be entitled to indemnification hereunder for
any claim arising from the breach by the other party of its representations and
warranties unless written notice describing in reasonable detail the nature and
basis of such claim is given during the Survival Period. In the event such
notice is given, the right to indemnification with respect thereto shall survive
until such claim is finally resolved and any obligations thereto are fully
satisfied. Any investigation by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation, warranty, covenant
or agreement contained herein.
7. EVENTS OF DEFAULT AND CURE PERIODS
7.1. EVENTS OF DEFAULT. The following shall, after the expiration of
the applicable cure periods as set forth in SECTION 7.2, each constitute an
"Event of Default" under this Agreement:
8
<PAGE> 30
7.1.1. NON-PAYMENT. Topaz's failure to pay when due the
fees payable under SECTION 1.4 of this Agreement;
7.1.2. DEFAULT IN COVENANTS. Either party defaults in the
performance of any material covenant, condition or undertaking
contained in this Agreement or the Purchase Agreement;
7.1.3. BREACH OF REPRESENTATION. Any material representation
or warranty made by either party to this Agreement, or in any
certificate or document furnished by either party to the other pursuant
to the provisions of this Agreement, proves to have been false or
misleading in any material respect as of the time made or furnished.
7.1.4. BANKRUPTCY. Either party (a) makes a general assignment
for the benefit of creditors, or (b) files or has filed against it a
petition for bankruptcy, for reorganization or an arrangement, or for
the appointment of a receiver, trustee or similar creditors'
representative for the property or assets of such party under any
federal or state insolvency law, which, if filed against such party,
has not been dismissed or discharged within sixty (60) days thereafter.
7.2. CURE PERIODS. An Event of Default shall not be deemed to have
occurred until fifteen (15) days after the non-defaulting party has provided the
defaulting party with written notice specifying the event or events that, if not
cured, would constitute an Event of Default and specifying the actions necessary
to cure the default(s) within such period. This period may be extended for a
reasonable period of time if the defaulting party is acting in good faith to
cure and such delay is not materially adverse to the other party.
8. TERMINATION
8.1. TERMINATION UPON DEFAULT. Upon the occurrence of an Event of
Default, the non-defaulting party may terminate this Agreement, provided that it
is not also in material default of this Agreement or the Purchase Agreement. If
Topaz has defaulted in the performance of its obligations, all amounts accrued
or payable to RASA up to the date of termination which have not been paid shall
immediately become due and payable, and RASA shall be under no further
obligation to make available to Topaz any broadcast time or broadcast
transmission facilities on the Station.
8.2. TERMINATION FOR CHANGE IN FCC RULES OR POLICIES. Either party may
terminate this Agreement upon written notice to the other if (a) there has been
a material change in FCC rules or policies, (b) this Agreement would materially
violate FCC rules or policies as changed; (c) such change is in effect; and (d)
such change is not the subject of an appeal or further administrative review;
provided, however, that in the event of such change the parties shall negotiate
in good faith and attempt to agree to an amendment to this
9
<PAGE> 31
Agreement that will provide the parties with a valid and enforceable agreement
that conforms to the new FCC rules or policies.
8.3. CERTAIN MATTERS UPON TERMINATION.
(a) If this Agreement is terminated for any reason other than the
occurrence of the Closing under the Purchase Agreement,
(i) Topaz shall assign, transfer and convey to RASA all of
Topaz's rights in, to and under (x) the Owned Vehicles, and (y) the
Assumed Contracts that remain in effect on the date of such termination
and all agreements with advertisers existing on the date of such
termination (collectively the "Reassumed Contracts"). Topaz shall use
reasonable efforts to promptly obtain and deliver to RASA, at Topaz's
expense, any necessary consents to the assignment of the Reassumed
Contracts to RASA.
(ii) RASA shall assume from Topaz all liabilities, obligations
and commitments of Topaz arising or accruing on or after the date of
termination relating to the Owned Vehicles and pursuant to the
Reassumed Contracts, and Topaz shall be responsible only for those
obligations relating to the Owned Vehicles and under the Reassumed
Contracts arising on or after the Effective Date and prior to the
termination of this Agreement.
(iii) Topaz shall return to RASA any equipment or property of
the Station used by Topaz, its employees or agents, in substantially
the same condition as such equipment existed on the date hereof,
ordinary wear and tear excepted.
(b) No expiration or termination of this Agreement shall terminate the
obligation of each party to indemnify the other for claims of third parties
under SECTION 6 of this Agreement or limit or impair any party's rights to
receive payments due and owing hereunder on or before the date of such
termination.
9. REPRESENTATIONS AND WARRANTIES
9.1. REPRESENTATIONS AND WARRANTIES OF RASA. RASA hereby represents and
warrants that:
9.1.1. ORGANIZATION AND STANDING. RASA is a corporation duly
formed, validly existing and in good standing under the laws of the
State of California and has all necessary corporate power and authority
to own, lease and operate the Station Assets and to carry on the
business of the Station.
9.1.2. AUTHORIZATION AND BINDING OBLIGATION. RASA has all
necessary power and authority to enter into and perform this Agreement
and the transactions
10
<PAGE> 32
contemplated hereby, and RASA's execution, delivery and performance of
this Agreement have been duly and validly authorized by all necessary
action on its part. This Agreement has been duly executed and
delivered by RASA and constitutes its valid and binding obligation
enforceable against RASA in accordance with its terms.
9.1.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED
CONSENTS. The execution, delivery and performance of this Agreement
by RASA: (a) do not and will not violate any provisions of RASA's
organizational documents; (b) do not and will not require the consent
or approval of or any filing with any third party or governmental
authority; (c) do not and will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling
of any governmental authority; and (d) do not and will not, either
alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination or acceleration of
or result in a breach of the terms, conditions or provisions of, or
constitute a default under any agreement, lease, instrument, license
or permit to which RASA is now subject.
9.2. REPRESENTATIONS AND WARRANTIES OF TOPAZ. Topaz hereby
represents and warrants that:
9.2.1. ORGANIZATION AND STANDING. Topaz is a corporation duly
formed, validly existing and in good standing under the laws of the
State of Delaware and has all necessary corporate power and authority
to perform its obligations hereunder on and after the date hereof.
9.2.2. AUTHORIZATION AND BINDING OBLIGATION. Topaz has all
necessary power and authority to enter into and perform this Agreement
and the transactions contemplated hereby, and Topaz's execution,
delivery and performance of this Agreement have been duly and validly
authorized by all necessary action on its part. This Agreement has been
duly executed and delivered by Topaz and constitutes its valid and
binding obligation enforceable against Topaz in accordance with its
terms.
9.2.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
The execution, delivery and performance of this Agreement by Topaz: (a)
do not and will not violate any provision of Topaz's organizational
documents; (b) do not and will not require the consent of any third
party or governmental authority; (c) do not and will not violate any
law, judgment, order, injunction, decree, rule, regulation or ruling of
any governmental authority; and (d) do not and will not, either alone
or with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination or acceleration of or result
in a breach of the terms, conditions or provisions of, or constitute a
default under any agreement, lease, instrument, license or permit to
which Topaz is now subject.
11
<PAGE> 33
10. CERTIFICATIONS
10.1. TOPAZ'S CERTIFICATION. Topaz hereby certifies that this Agreement
complies with the provisions of Sections 73.3555 (a) of the FCC's rules and
regulations.
10.2. RASA'S CERTIFICATION. RASA hereby certifies that it shall
maintain the ultimate control over the Station's facilities, including but not
limited to control over the finances with respect to the operation of the
Station, over the personnel operating the Station, and over the programming to
be broadcast by the Station.
11. MISCELLANEOUS
11.1. NO PARTNERSHIP OR JOINT VENTURE. This Agreement is not intended
to be and shall not be construed as a partnership or joint venture agreement
between the parties. Except as otherwise specifically provided in this
Agreement, no party to this Agreement shall be authorized to act as agent of or
otherwise represent any other party to this Agreement.
11.2. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement
and the Purchase Agreement, and the exhibits and schedules hereto and thereto,
embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein. Any matter that is disclosed in a Schedule
to this Agreement or the Purchase Agreement in such a way as to make its
relevance to the information called for by another Schedule readily apparent
shall be deemed to have been included in such other Schedule, notwithstanding
the omission of an appropriate cross-reference. No amendment, waiver of
compliance with any provision or condition hereof, or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in writing signed
by the party against whom enforcement of any waiver, amendment, change,
extension or discharge is sought. No failure or delay on the part of RASA or
Topaz in exercising any right or power under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the parties to this Agreement
are cumulative and are not exclusive of any right or remedies which either may
otherwise have.
11.3. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Except as provided in this SECTION 11.3, neither Topaz nor RASA may
assign its rights under this Agreement without the prior written consent of the
other party hereto. Topaz's rights hereunder shall be freely assignable without
RASA's consent to any assignee of Topaz's rights under the Purchase Agreement.
12
<PAGE> 34
11.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
11.5. COMPUTATION OF TIME. If after making computations of time
provided for in this Agreement, a time for action or notice falls on Saturday,
Sunday or a Federal holiday, then such time shall be extended to the next
business day.
11.6. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and
performance of this Agreement shall be governed by the law of the State of
California without regard to its principles of conflicts of law. EACH OF THE
PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY
COUNTERCLAIM MADE IN SUCH ACTION OR PROCEEDING, AND AGREES THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE DECIDED SOLELY BY A JUDGE IN THE COUNTY OF LOS ANGELES,
CALIFORNIA. Each of the parties hereto hereby acknowledges it has been
represented by counsel in the negotiation, execution and delivery of this
Agreement and that its lawyers have fully explained the meaning of the
Agreement, including in particular the jury-trial waiver. Any question of
doubtful interpretation shall not be resolved by any rule providing for
interpretation against the party who causes the uncertainty to exist or against
the drafter of this Agreement. This Agreement has been negotiated at
arm's-length between persons knowledgeable in the matters dealt with herein.
Accordingly, any rule of law, including, but not limited to, California Civil
Code Section 1654, or any other statutes, legal decisions, or common law
principles of similar effect, that would require interpretation of any
ambiguities in this Agreement against the party that has drafted it, is of no
application and is hereby expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intentions of the
parties hereto. Each term of this Settlement Agreement is contractual and not
merely a recital.
11.7. ATTORNEYS' FEES. In the event of any dispute between the parties
to this Agreement, RASA or Topaz, as the case may be, shall reimburse the
prevailing party for its reasonable attorneys' fees and other costs incurred in
enforcing its rights or exercising its remedies under this Agreement. Such right
of reimbursement shall be in addition to any other right or remedy that the
prevailing party may have under this Agreement. In addition, the prevailing
party shall be entitled to recover from the non-prevailing party
post-judgment/award/order attorneys' fees incurred by the prevailing party in
enforcing a judgment, order or award against the non-prevailing party.
Notwithstanding anything in this Agreement to the contrary, the provisions of
the preceding sentence are intended to be severable from the balance of the
Agreement, shall survive any judgment rendered in connection with the aforesaid
legal action, and shall not be merged into any such judgment, order or award.
13
<PAGE> 35
11.8. NOTICES. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing, addressed
to the following addresses, or to such other address as any party may request:
If to RASA or Garza:
12408 Hesperia Road
Suite 1
Victorville, CA 92392
Attention: Mr. Marcelino Q. Garza
Telephone: 619-951-0606
Facsimile: 619-951-0707
With a copy (which shall not constitute notice) to:
2787 Kennedy Blvd.
Suite 114
Jersey City, NJ 07306
Attention: William D. Goddard, Esq.
Telephone: 201-792-0709
Facsimile: 201-792-0709
If to Topaz or Gammon:
1476 Waterfront Road, Suite 100
Reston, VA 22094
Attention: Mr. Thomas P. Gammon
Telephone: 202-737-9000
Facsimile: 202-737-9001
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman
2000 K Street, N.W., Suite 600
Washington, D.C. 20006
Attention: Meredith S. Senter, Jr., Esq.
Telephone: 202-429-8970
Facsimile: 202-293-7783
Troy & Gould
1801 Century Park East
Suite 1510
Los Angeles, CA 90067
Attention: Alan Dettelbach, Esq.
14
<PAGE> 36
Telephone: 310-553-4441
Facsimile: 310-201-4746
Any such notice, demand or request shall be deemed to have been duly delivered
and received (a) on the date of personal delivery, or (b) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (c) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (d) on the date
of a signed receipt, if sent by an overnight delivery service, but only if sent
in the same manner to all persons entitled to receive notice or a copy.
11.9. SEVERABILITY. In the event that any of the provisions of this
Agreement shall be held unenforceable, then the remaining provisions shall be
construed as if such unenforceable provisions were not contained herein. Any
provision of this Agreement which is unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such unenforceability
without invalidating the remaining provisions hereof, and any such
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
11.10. CAPITALIZED TERMS. Unless otherwise defined herein, capitalized
terms used herein and in any Schedules hereto shall have the meanings ascribed
to them in the Purchase Agreement.
11.11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument. In addition, true and correct
copies may be used in lieu of the original Agreement for any purpose whatsoever.
Finally, faxed copies of the Agreement and faxed signature pages shall be
binding and effective as to all parties and may be used in lieu of the original
Agreement, and, in particular, in lieu of original signatures, for any purpose
whatsoever.
[Signatures immediately following this page.]
15
<PAGE> 37
IN WITNESS WHEREOF, the parties have executed this Time Brokerage
Agreement as of the date first above written.
RASA COMMUNICATIONS CORP.
By: ________________________________
Marcelino Q. Garza
President
TOPAZ BROADCASTING, INC.
By: ________________________________
Thomas P. Gammon
President
<PAGE> 38
SCHEDULE 1.4 TO
STATION KIXA(FM)
TIME BROKERAGE AGREEMENT
FEES
A. REIMBURSEMENT OF EXPENSES
1. Except as set forth below, Topaz shall reimburse RASA for all
expenses reasonably incurred and actually paid by RASA pursuant to Sections
2.1.5, 2.1.6 and 3.1 of this Agreement: (a) Topaz shall not be required to
reimburse RASA for more than $5,000 a month for the salaries, exclusive of
payroll taxes, of RASA's required employees under Section 3.1; (b) Reimbursable
expenses shall not include any payments previously made by RASA for the AT&T
transmitter site lease, and RASA represents, warrants and covenants that it has
paid the $5,570 due to AT&T as of July 24, 1997.
2. RASA's reimbursable expenses shall be payable by Topaz as follows:
(a) Topaz shall pay RASA $9,500 on the first of each month (the "Monthly
Advance") beginning September 1, 1997; (b) By the 15th day of each month,
beginning October 15, 1997, RASA shall provide Topaz with paid invoices or other
similar documentation of payment by RASA of reimbursable expenses during the
preceding calendar month (the "Actual Expenses"); (c) Commencing November 1,
1997, and on the first day of each month thereafter, the Monthly Advance shall
be increased or decreased by the amount by which the Actual Expenses reported by
RASA in the preceding month exceeded or were less than the Monthly Advance
(e.g., assuming that the Monthly Advance equals $3,000, if the Actual Expenses
submitted by October 15, 1997 for the month of September 1997 equal $3,250, then
on November 1, 1997 Topaz will owe RASA the Monthly Advance ($3,000) plus $250).
Following the Closing under the Purchase Agreement Topaz and RASA shall
reconcile accounts pursuant to the proration provisions of Section 3.4 and 3.5
of the Purchase Agreement, or in the event of a termination of this Agreement
for any reason other than the occurrence of the Closing, the accounts shall be
reconciled and Topaz or RASA, as the case may be, shall pay the other any excess
reimbursable expenses unpaid or overpaid within 30 days after the termination of
this Agreement.
B. ADDITIONAL FEE.
In addition to the reimbursement of expenses as provided above, Topaz
shall, for each month during the Term, advance RASA $5,000 against payment of
the Purchase Price under the Purchase Agreement (the "Additional Fee"). The
Additional Fee shall be prorated for any partial month. The Additional Fee shall
be payable on the first of each month, beginning the Effective Date, with a
proration for any partial month. Topaz shall pay one/fifth of the Additional Fee
($1,000 per month) directly to the Trust Account for use in paying RASA's
existing indebtedness to Desert Community Bank.
<PAGE> 39
C. REPAYMENT OF ADDITIONAL FEE, MONIES APPLIED TO EXISTING
RASA INDEBTEDNESS AND THE $6,500 LOAN.
In the event of the termination of the Purchase Agreement for any
reason other than the Closing, RASA shall pay Topaz, no later than 30 days
following the date of termination, the sum of (i) all collections on the
Accounts Receivable applied to the Existing RASA Indebtedness, pursuant to
Section 4.1(b), including collections applied to the payment of commissions,
(ii) amounts advanced to RASA pursuant to Schedule 1.4(B) of this Agreement, and
(iii) any other amounts advanced by Topaz to RASA between the date hereof and
the Closing for the purpose of paying Existing RASA Indebtedness. If the
Agreement is terminated by reason of RASA's default, then the sum repayable
shall include interest at the rate of 8 percent per annum. Such interest shall
accrue from the date that the collection was applied or amount advanced until
all amounts owing hereunder have been paid in full. The $6,500 Loan (as defined
in the Purchase Agreement) shall be repaid as provided in the Purchase
Agreement.
2
<PAGE> 40
SCHEDULE 2.2.1 TO
STATION KIXA(FM)
TIME BROKERAGE AGREEMENT
PROGRAMMING REGULATIONS
Topaz agrees to cooperate with RASA in the broadcasting of programs of
the highest possible standard of excellence and for this purpose to observe the
following regulations in the preparation, writing and broadcasting of its
programs:
I. RELIGIOUS PROGRAMMING. The subject of religion and references to particular
faiths, tenets, and customs shall be treated with respect at all times. Programs
shall not be used as a medium for attack on any faith, denomination, or sect or
upon any individual organization.
II. CONTROVERSIAL ISSUES. Any discussion of controversial issues of public
importance shall be reasonably balanced with the presentation of contrasting
viewpoints in the course of overall programming; no attacks on the honesty,
integrity, or like personal qualities of any person or group of persons shall be
made during the discussion of controversial issues of public importance; and
during the course of political campaigns, programs are not to be used as a forum
for editorializing about individual candidates. If such events occur, RASA may
require that responsive programming be aired.
III. NO PLUGOLA OR PAYOLA. The mention of any business activity or "plug" for
any commercial, professional, or other related endeavor, except where contained
in an actual commercial message of a sponsor, is prohibited.
IV. ELECTION PROCEDURES. At least ninety (90) days before the start of any
regular election campaign and 45 days before any primary (provided that if any
primary is scheduled to occur within 45 days of the date of this Agreement, such
notice shall be given within 5 days of the date of this Agreement, Topaz will
clear with RASA's General Manager the rate Topaz will charge for the time to be
sold to candidates for public office and/or his or her supporters to make
certain that the rate charged conforms to all applicable laws and Station
policy.
V. REQUIRED ANNOUNCEMENTS. Topaz shall broadcast (a) an announcement in the form
satisfactory to RASA at the beginning of each hour to identify the Station, (b)
announcements as required by law to indicate that program time has been
purchased by Broker, and (c) any other announcement that may be required by law,
regulation, or Station policy.
VI. CREDIT TERMS ADVERTISING. Pursuant to rules and regulations of the Federal
Trade Commission, any advertising of credit terms shall be made over the Station
in accordance with all applicable federal and state laws.
<PAGE> 41
VII. NO ILLEGAL ANNOUNCEMENTS. No announcement or promotion prohibited by
federal or state law or regulation of any lottery or game shall be made over the
Station. Any game, contest, or promotion relating to or to be presented over the
Station must be fully stated and explained in advance, and such explanation be
presented to RASA, which reserves the right, in its sole discretion to reject
any game, contest or promotion.
VIII. RASA DISCRETION PARAMOUNT. In accordance with the RASA's responsibility
under the Communications Act of 1934, as amended, and the rules and regulations
of the Federal Communications Commission, RASA reserves the right to reject or
terminate any advertising proposed to be presented or being presented over the
Station which is in conflict with Station policy or which in the judgment of
RASA or its General Manager/Chief Engineer would not serve the public interest.
IX. PROGRAMMING IN WHICH TOPAZ HAS A FINANCIAL INTEREST. Topaz shall advise
General Manager of the Station with respect to any programming [including
commercial(s)] concerning goods or services in which Topaz has a material
financial interest. Any announcements for such goods and services shall clearly
identify Broker's financial interest.
X. PROGRAMMING PROHIBITIONS. Topaz shall not knowingly and intentionally
broadcast any of the following programs or announcements:
A. FALSE CLAIMS. False or unwarranted claims for any product or
service.
B. UNFAIR IMITATION. Infringements of another advertiser's rights
through plagiarism or unfair imitation or either program idea or copy, or any
other unfair competition.
C. COMMERCIAL DISPARAGEMENT. Any disparagement of competitors or
competitive goods.
D. SLANDER, OBSCENE OR PROHIBITED INDECENT PROGRAMMING. Any programs
or announcements that are slanderous, obscene or legally indecent.
E. CONFLICT ADVERTISING. Any advertising matter or announcement which
may, in the reasonable opinion of RASA, be injurious or prejudicial to the
interests of the public, the Station, or honest advertising and reputable
business in general.
F. FRAUDULENT OR MISLEADING ADVERTISEMENT. Any advertising matter,
announcement, or claim which Topaz knows to be fraudulent, misleading, or
untrue.
RASA may waive any of the foregoing regulations in specific instances if, in its
reasonable opinion, good broadcasting in the public interest will be served
thereby.
2
<PAGE> 42
SCHEDULE 4.1 TO
STATION KIXA(FM)
TIME BROKERAGE AGREEMENT
ASSUMED CONTRACTS
TIME SALES AGREEMENT
- --------------------
o All broadcast orders or other agreements for the sale of time on
the Station for cash.
TRADE AGREEMENTS
- ----------------
See attached list dated September 3, 1997.
CONTRACTS
- ---------
Advanta
Datacount
TM Century
VV Marketing Group
Westwood One
<PAGE> 43
KIXA-FM RUN DATE 9/03/97 TIME: 14:44 PAGE 2
SALESPRO COLLECTION REPORT (Curr Bal Does Not Include Current Activity)
Sales Rep Number/Advertiser Name, Only Type 4, Only Rep 7
SALESREP TRADE
<TABLE>
<CAPTION>
SR BALANCE - CUSTOMERS CURRENT STATUS - ** CURRENT ACTIVITY**
CUSTOMER LAST STMT PYMT 0-30 31-60 60-90 120 NET SALES/TAX CURR BAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SPEEDWAY SFI 7 905.00 905.00 905.00
SUPERIOR SHUTTLE 7 495.00- 495.00- 495.00-
TANGLES HAIR SALON 7 30.00- 30.00- 30.00-
ACE COMPUTERS 7 10.00 10.00 10.00
THE GAMBLER'S 7 169.90 169.90- 169.90-
THUNDERBIRD GLASS 7 317.77- 317.77- 317.77-
TOM HUME 7 190.00- 190.00- 190.00-
TRACE EXCHANGE 7 2462.54 1500.00 962.54 2462.54
VICTORVILLE CHAMBER 7 150.00 120.00 30.00 150.00
WALMART 7 500.00 900.00 900.00
TRADE 3382.05 0.00 19032.65 3931.17 1920.90 14650.08 3382.05
=======
</TABLE>
<PAGE> 1
Exhibit 10(l)
EXECUTION COPY
--------------
KIXW(AM) AND KZXY-FM TIME BROKERAGE AGREEMENT
This Time Brokerage Agreement (the "Agreement"), made as of the 17th
day of December, 1997, is between Ruby Broadcasting, Inc., a Delaware
corporation ("Licensee"), licensee of radio stations KIXW(AM) and KZXY-FM, Apple
Valley, California (the "Stations"), pursuant to authorizations issued by the
Federal Communications Commission (the "FCC"), and Regent Communications, Inc.,
a Delaware corporation ("Programmer").
Licensee is engaged in the business of radio broadcasting and has
available broadcasting time on the Stations.
Licensee and Regent Broadcasting of Victorville, Inc. have entered into
an Asset Purchase Agreement dated as of December 17, 1997 (the "KIXW/KZXY
Purchase Agreement"), by which Programmer will acquire all of the tangible and
intangible assets owned by Licensee and used or useful in the operation of the
Stations on the terms and subject to the conditions set forth in the KIXW/KZXY
Purchase Agreement.
Programmer desires to avail itself of Stations' broadcast time for the
presentation of a programming service, including the sale of advertising time,
in accordance with the rules, regulations and policies of the FCC.
For and in consideration of the mutual covenants herein contained, the
parties agree as follows:
1. SALE OF TIME
1.1. BROADCAST OF PROGRAMMING.
(a) During the Term (as defined below) of this Agreement,
Licensee shall make available broadcast time on each of the Stations for the
broadcast of Programmer's programs (the "Programming") for up to One Hundred
Sixty-Eight (168) hours a week except for: (i) downtime occasioned by routine
maintenance consistent with prior practice; (ii) up to three (3) hours per week
during which time Licensee may broadcast, at its own expense, programming
designed to address the problems, needs, and issues of the Stations' listeners;
and (iii) times when Programmer's programs are not accepted or are preempted by
Licensee. Additionally, Programmer shall make 30 one-minute time
<PAGE> 2
2
segments per week, on a run-of-schedule basis, available to Licensee in the
Programming for broadcast of announcements in the public interest relevant to
local issues of concern.
(b) Any failure or impairment of facilities or any delay or
interruption in broadcasting the Programming, or failure at any time to furnish
the facilities, in whole or in part, for broadcasting, due to acts of God,
strikes or threats thereof, force majeure or any other causes beyond the control
of Licensee, shall not constitute a breach of this Agreement.
1.2. ACCESS TO STUDIO FACILITIES; DELIVERY OF PROGRAMMING. To enable
Programmer to fulfill its obligations hereunder, Licensee shall make its office
and equipment at its main studio (the "Main Studio") available, for no
additional consideration, to Programmer for its use for the production of
Programming under this Agreement. Programmer accepts complete and full
responsibility for the care and maintenance of such equipment during the Term.
If Programmer originates the Programming from any place other than the Main
Studio, Programmer shall be responsible for delivering the Programming to the
Main Studio for broadcast by Licensee on the Stations.
1.3. ADVERTISING AND PROGRAMMING REVENUES. During the Term, Programmer
shall have the exclusive authority to sell for its own account commercial time
on the Stations and to retain all revenues from the sale of such advertising.
1.4. PAYMENTS. Programmer shall pay to Licensee the fees set forth on
SCHEDULE 1.4 hereto for the rights granted under this Agreement. Programmer
shall receive a credit against any payments otherwise due pursuant to this
Agreement for the Programming delivered to the Station but not broadcast by the
Station in the event that Licensee preempts more than one hour per day of the
Programming in bad faith or for Licensee's commercial advantage. Such credit
shall be determined by multiplying the total payment due for the month in which
the Programming was delivered and not broadcast by the ratio of the amount of
time for Programming not broadcast to the total time of all Programming
delivered to the Station for broadcast during that month.
1.5. TERM. The term of this Agreement (the "Term") shall be the period
commencing on January 1, 1998 (the "Commencement Date") and terminating on the
earliest of: (a) the Closing under the KIXW/KZXY Purchase Agreement; (b) the
sale of
<PAGE> 3
3
the Stations to a third party; and (c) the termination of this Agreement
pursuant to Section 7 hereof.
2. PROGRAMMING AND OPERATING STANDARDS
2.1. RIGHTS AND OBLIGATIONS OF LICENSEE. Licensee shall be responsible
for the control of the day-to-day operations of the Stations in conformance with
its FCC licenses, permits and authorizations. Without limiting the generality of
the foregoing:
2.1.1. LICENSEE'S ABSOLUTE RIGHT TO REJECT PROGRAMMING.
Licensee shall retain the absolute right to accept or reject any
Programming (including advertisements) that Licensee in its sole
discretion deems contrary to the public interest.
2.1.2. LICENSEE'S RIGHT TO PREEMPT PROGRAMMING FOR SPECIAL
EVENTS. Licensee shall have the right, in its sole discretion, to
preempt the Programming in order to broadcast a program deemed by
Licensee to be of greater national, regional, or local interest, and to
use part or all of the hours of operation of the Stations for the
broadcast of events of special importance. In all such cases, Licensee
will use its best efforts to give Programmer reasonable advance notice
of its intention to preempt any regularly scheduled programming.
Licensee expressly agrees that its right of preemption shall not be
exercised in an arbitrary manner or for the commercial advantage of
Licensee.
2.1.3. FCC PUBLIC INTEREST REQUIREMENTS.
(a) The parties agree that Licensee may broadcast its
own public service programming between the hours of 6:00 a.m. and 9:00
a.m. every Sunday and such other public service programming at such
other times as the parties may agree.
(b) The parties acknowledge that Licensee is
ultimately responsible for complying with the FCC's rules and
regulations with respect to (i) the carriage of political
advertisements and programming (including, without limitation, the
rights of candidates and, as appropriate, others to equal
opportunities, lowest unit charge and reasonable access); (ii) the
broadcast and nature of public service programming; (iii) the
maintenance of political and public inspection files and the
<PAGE> 4
4
Stations' logs; (iv) the ascertainment of issues of community concern;
and (v) the preparation of all quarterly issues/programs lists.
(c) Licensee reserves the right to refuse to
broadcast any program containing matter that Licensee in good faith
believes to be, or that Licensee in good faith believes may be
determined by the FCC or any court or other regulatory body with
authority over Licensee or the Stations to be, violative of any right
of any third party, a "personal attack" (as that term is defined by the
FCC) or indecent or obscene. Licensee shall further have the right to
take any other actions necessary for compliance with the laws of the
United States, the State of California, the rules, regulations and
policies of the FCC (including the prohibition on unauthorized
transfers of control), and the rules, regulations and policies of other
federal government authorities, including the Federal Trade Commission
and the Department of Justice. If, in the judgment of Licensee or the
Stations' General Manager, any portion of the Programming does not meet
any of the above standards or the requirements of Section 2.2 of this
Agreement, Licensee may suspend, cancel or refuse to broadcast any such
portion of the programming without reduction or offset in the payments
due Licensee under this Agreement.
2.1.4. MAINTENANCE AND REPAIR OF TRANSMISSION FACILITIES.
Licensee shall maintain the Stations' transmission equipment and
facilities, including the antennas, transmitters and transmission
lines, and shall provide for the delivery of electrical power to the
Stations' transmitting facilities at all times in order to ensure
operation of the Stations. Licensee shall undertake such repairs as are
necessary to maintain full-time operation of the Stations with their
maximum authorized facilities as expeditiously as possible following
the occurrence of any such loss or damage.
2.1.5. MAIN STUDIO LOCATION. Licensee shall maintain a main
studio as required under the FCC's rules and regulations.
2.1.6. COMPLIANCE WITH FCC TECHNICAL RULES. Licensee shall
retain, on a full time or part time basis, a qualified engineer who
shall be responsible for maintaining the transmission facilities of the
Stations. Licensee shall employ or retain a Chief Operator, as that
term is defined by the rules and regulations of the FCC, who shall be
responsible for ensuring compliance by the Stations with the technical
operating and reporting requirements established by the FCC.
<PAGE> 5
5
2.2. RIGHTS AND OBLIGATIONS OF PROGRAMMER.
2.2.1. COMPLIANCE WITH LAWS AND STATION POLICIES. All
Programming shall conform in all material respects to all applicable
rules, regulations and policies of the FCC, and all other laws or
regulations applicable to the broadcast of programming by the Stations.
All Programming shall be prepared and presented in conformity with the
regulations prescribed in SCHEDULE 2.2.1 hereto.
2.2.2. COOPERATION WITH LICENSEE. Programmer, on behalf of
Licensee, shall furnish within the Programming all station
identification announcements required by the FCC's rules, and shall,
upon request by Licensee, provide information with respect to any of
the Programming which is responsive to the public needs and interests
of the area served by the Stations so as to assist Licensee in the
preparation of any required programming reports, and will provide upon
request other information to enable Licensee to prepare other records,
reports and logs required by the FCC or other local, state or federal
governmental agencies. Programmer shall maintain and deliver to
Licensee all records and information required by the FCC to be placed
in the public inspection files of the Stations pertaining to the
broadcast of political programming and advertisements, in accordance
with the provisions of Sections 73.1940 and 73.3526 of the FCC's rules,
and agrees to broadcast sponsored programming addressing political
issues or controversial subjects of public importance, in accordance
with the provisions of Section 73.1212 of the FCC's rules.
2.2.3. PAYOLA AND PLUGOLA. Programmer shall provide to
Licensee in advance any information known to Programmer regarding any
money or other consideration which has been paid or accepted, or has
been promised to be paid or to be accepted, for the inclusion of any
matter as a part of any programming or commercial material to be
supplied to Licensee by Programmer for broadcast on the Stations,
unless the party making or accepting such payment is identified in the
program as having paid for or furnished such consideration in
accordance with FCC requirements. Commercial matter with obvious
sponsorship identification will not require disclosure beyond the
sponsorship identification contained in the commercial copy. Programmer
shall at all times endeavor to proceed in good faith to comply with the
requirements of Sections 317 and 507 of the Communications Act of 1934,
as amended, and the related rules and regulations of the FCC.
<PAGE> 6
6
2.2.4. HANDLING OF MAIL. Programmer shall provide Licensee
with the original or a copy of any correspondence from a member of the
public relating to the Programming to enable Licensee to comply with
FCC rules and policies, including those regarding the maintenance of
the public inspection file. Licensee shall not be required to receive
or handle mail, cables, telegraph or telephone calls in connection with
the Programming unless Licensee has agreed to do so in writing.
Licensee shall promptly forward to Programmer all correspondence,
payments, communications or other information and/or documents which it
receives and which relate to the Programming, including without
limitation, invoices, billing inquiries, checks, money orders, wire
transfers, or other payments for services or advertising.
2.2.5. COMPLIANCE WITH COPYRIGHT ACT. Programmer shall not
broadcast any material on the Stations in violation of the Copyright
Act or the rights of any person. All music supplied by Programmer shall
be (a) licensed by a music licensing agent such as ASCAP, BMI, or
SESAC; (b) in the public domain; or (c) cleared at the source by
Programmer. Programmer shall retain the exclusive right to use and to
authorize the use in any manner of any programming licensed to it.
Licensee shall not be obligated to pay any music licensing fees or
other similar expenses required in connection with the material
broadcast by Programmer on the Stations. Licensee shall be obligated to
pay any music licensing fees and other similar expenses required in
connection with material broadcast by Licensee in accordance with
Section 1.1.
2.2.6. KZXY-FM FORMAT. Programmer shall not change the format
of Station KZXY-FM during the Term of this Agreement.
3. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES
3.1. LICENSEE'S RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.
(a) Licensee will employ a full-time management-level employee
for the Stations, who shall report and be solely accountable to Licensee and
shall be responsible for the operations of the Stations and a staff-level
employee who shall report to and assist the manager in the performance of his
and her duties. Licensee will be responsible for the salaries, taxes, insurance
and related costs for its Station personnel. Whenever at the Main Studio or
otherwise on the Stations' premises, all of Programmer's personnel shall
<PAGE> 7
7
be subject to the supervision and the direction of the Stations' General Manager
and/or the Stations' Chief Operator.
(b) Licensee shall be responsible for timely paying: lease
payments for the Main Studio and transmitter sites and all taxes and other costs
incident thereto; all FCC regulatory fees; real estate and personal property
taxes, utility costs (telephone, electricity, etc.) relating to the existing
transmitting sites, transmitters and antennas; and maintenance and repair costs
on the transmitting equipment.
3.2. PROGRAMMER'S RESPONSIBILITY FOR EMPLOYEES AND EXPENSES.
(a) Programmer shall be responsible for the artistic personnel
and material for the production of the Programming to be provided under this
Agreement. Programmer shall employ and be responsible for the salaries, taxes,
insurance and related costs for all personnel used in the production of the
Programming.
(b) Programmer shall pay for all costs associated with
production and listener responses, including telephone costs, fees to ASCAP, BMI
and SESAC, any other copyright fees, and all other costs or expenses
attributable to the Programming that is delivered by Programmer for broadcast on
the Stations. Programmer shall also reimburse Licensee for all maintenance and
repair costs for the studio and studio equipment used in production of the
Programming. Licensee shall pay all costs of repair of the transmitting
equipment as required in Section 2.1.4.
3.3. CONTINUED EMPLOYMENT OF STATION EMPLOYEES.
3.3.1 TRANSFERRED EMPLOYEES. Except for the employees set
forth in Section 3.1 or on SCHEDULE 3.3.1, on or prior to the
Commencement Date, Programmer shall offer employment to all employees
of the Station (employees accepting such employment on or after the
Commencement Date being herein referred to as the "Transferred
Employees"). The terms and conditions of Programmer's employment of the
Transferred Employees shall be at-will employment in at least the same
positions, for at least the same direct cash compensation, with medical
insurance effective as of the Commencement Date and including coverage
for any preexisting health conditions that would have been covered
under Licensee's health plan in which the employee was a participant
immediately prior to the Commencement Date and such other benefits as
<PAGE> 8
8
Programmer provides generally for its other employees; PROVIDED,
HOWEVER, that Programmer shall comply with the terms of any Assumed
Contract, as hereafter defined, relating to any Transferred Employee.
Upon consummation of the KIXW/KZXY Purchase Agreement, Programmer shall
offer employment to the employees set forth on Schedule 3.3.1.
3.3.2. EMPLOYEES ON LEAVE. If as of the Commencement Date any
employee of the Station is on a disability or other authorized
temporary leave from employment by Licensee, Programmer shall offer
employment to such person at such time the person is capable and ready
to return to active status, provided that such person actually returns
to active status within six (6) months after the Commencement Date. Any
such employee who is capable and ready to return from such a temporary
leave from employment by Licensee, who promptly accepts Programmer's
offer of employment and who reports to work promptly after such
acceptance and prior to the expiration of such six-month period, shall
become a Transferred Employee as of the first day he or she reports to
work with Programmer.
3.3.3. VACATION POLICY. For purposes of determining the amount
of any entitlement of any Transferred Employee under Programmer's
vacation policy, Programmer will take into account and credit such
Transferred Employee's length of service with Licensee as well as with
Programmer, and Programmer will also assume responsibility for the
accrued but unused vacation of all Transferred Employees. As part of
the proration process described in Section 4, Licensee shall make a
payment to Programmer equal to the value of the unused vacation
entitlements of the Transferred Employees as of the Commencement Date.
Programmer shall not assume any obligations under Licensee's sick leave
or severance policies, except for obligations set forth in the Assumed
Contracts.
3.3.4. PRORATION OF SALARIES AND COMPENSATION. Except as
otherwise expressly set forth herein, Licensee shall be solely
responsible for all salaries and other compensation which will or may
become payable to any Transferred Employee in respect of any period of
employment by Licensee prior to the Commencement Date, and Programmer
shall be solely responsible for any salaries and other compensation
which will or may become payable to any Transferred Employee in respect
of any period on and after the Commencement Date.
<PAGE> 9
9
3.3.5. RESTRICTIONS ON TRANSFER OF TRANSFERRED EMPLOYEES.
During the Term of this Agreement, Programmer shall not hire or
transfer any Transferred Employee to another radio broadcast station
owned or operated by Programmer or an Affiliate (as defined in Section
7.5 hereof) of Programmer.
3.3.6. NO THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement shall create any third party beneficiary rights of any
employee or former employee (including any beneficiary or dependent
thereof) of Licensee in respect of continued employment (or resumed
employment) with Licensee or with Programmer or in respect of any other
matter.
4. ASSIGNMENT AND ASSUMPTION OF CERTAIN
AGREEMENTS, RIGHTS AND OBLIGATIONS; PRORATIONS
4.1 ACCOUNTS RECEIVABLE.
(a) As of the Commencement Date, Licensee shall assign to Programmer
all of Licensee's rights in all accounts receivable from Time Sales Agreements
and Trade Agreements relating to the sale of time on the Stations prior to the
Commencement Date (the "Accounts Receivable"). As soon after the Commencement
Date as practicable, Licensee shall deliver to Programmer a complete and
detailed statement (the "Receivable Statement") of the Accounts Receivable. The
Receivable Statement shall show all commissions owing with respect to the
Accounts Receivable, if any. Prior to the Commencement Date, Licensee shall not
engage in the acceleration of customer orders, any grant of any discount to
customers other than in the ordinary course of business consistent with past
practices or any other changes intended to increase the cash collection of
accounts receivable prior to the Commencement Date.
(b) In the event that this Agreement is terminated for any reason other
than the occurrence of the Closing under the KIXW/KZXY Purchase Agreement, as of
the date of such termination (the "Termination Date"), Programmer shall assign
to Licensee cash or accounts receivable from Time Sales Agreements and Trade
Agreements relating to the sale of time on the Stations prior to the Termination
Date (the "Programmer's Accounts Receivable") equal in value to the Accounts
Receivable. As soon after the Termination Date as practicable, Programmer shall
deliver to Licensee a complete and detailed statement (the "Programmer's
Receivable Statement") of the Programmer's Accounts Receivable. The Programmer's
Receivable Statement shall show all commissions owing
<PAGE> 10
10
with respect to the Programmer's Accounts Receivable, if any. Prior to the
Termination Date, Programmer shall not engage in the acceleration of customer
orders, any grant of any discount to customers other than in the ordinary course
of business consistent with past practices or any other changes intended to
increase the cash collection of accounts receivable prior to the Termination
Date. The final determination of any amount owed under this Section 4.1 shall be
handled as a proration item in accordance with Section 4.5 hereof.
Notwithstanding anything herein to the contrary, liabilities and obligations
under Trade Agreements shall be prorated in favor of Licensee as set forth in
Section 4.6 hereof.
4.2. LICENSE TO USE CALL SIGN AND TRADEMARKS. Licensee hereby grants
Programmer a license to use Licensee's call signs and trademarks and names (the
"Marks") during the Programming during the Term. Programmer agrees that the
nature and quality of all services rendered by it in connection with the Marks
shall conform to reasonable quality standards set by and under the control of
Licensee. If Licensee becomes aware of any fact which in its opinion indicates
that Programmer is using the Marks in connection with Programming which does not
conform with Licensee's reasonable quality standards, Licensee may notify
Programmer in writing of such facts and request that Programmer conform its use
of the Marks to Licensee's reasonable quality standards. If Programmer does not
conform its use of the Marks, Licensee may terminate the license granted hereby
upon written notice to Programmer. Programmer agrees to cooperate with Licensee
to control the nature and quality of use of the Marks, to supply Licensee with
audio tapes and uses of the Marks upon Licensee's reasonable request, and to use
the Marks only in connection with quality programming services. Programmer
further agrees to notify Licensee in writing of any legal action commenced
against it which relates to the Marks or to the quality of the Programming,
within ten (10) days of notice to Programmer of such action.
4.3. ASSUMPTION OF OBLIGATIONS.
(a) As of the Commencement Date, Licensee shall assign to Programmer,
and Programmer shall assume and undertake to pay, satisfy or discharge the
liabilities, obligations and commitments of Licensee arising or accruing after
the date hereof under the contracts, leases, and other agreements specifically
identified on SCHEDULE 4.3 hereto (the "Assumed Contracts").
(b) Licensee shall use reasonable efforts to obtain the consent of any
third party necessary for the assignment to Programmer of any of the Assumed
Contracts; provided,
<PAGE> 11
11
that Licensee shall not be obligated to pay any money to obtain such consent. In
the event a consent or waiver required with respect to the assignment of any of
the Assumed Contracts is not obtained, Licensee shall use reasonable efforts to
provide Programmer with the benefits of any such Assumed Contract (including,
without limitation, permitting Programmer to enforce any rights of Licensee
under such Assumed Contract), and Programmer shall, to the extent Programmer is
provided with the benefits of such Assumed Contract, perform all obligations of
Licensee thereunder.
4.4. LIMITATION. Except as set forth in this Section 4, Programmer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the transactions contemplated hereby, any
liabilities, obligations or commitments of Licensee of any nature whatsoever.
4.5 PRORATION OF INCOME AND EXPENSES. All income and expenses arising
from the conduct of the business and operation of the Stations shall be prorated
between Programmer and Licensee as of 12:01 a.m. on the Commencement Date in
accordance with GAAP. Such prorations shall be based upon the principle that
Licensee shall incur or be entitled to all income earned and shall be
responsible for all liabilities and obligations incurred or accruing in
connection with the operation of the Stations until the Commencement Date, and
Programmer shall be entitled to all income earned and (subject to Section 4.3
above) be responsible for such liabilities and obligations incurred by
Programmer thereafter. Such prorations shall include, without limitation, all ad
valorem, real estate and other property taxes, business and license fees, music
and other license fees, wages and salaries of employees (including accruals up
to the Commencement Date for bonuses, commissions, sick leave, vacation and
severance pay and related payroll taxes), utility expenses, liabilities and
obligations under all Assumed Contracts (other than Trade Agreements), rents and
similar prepaid and deferred items and all other expenses attributable to the
ownership and operation of the Stations except for income and expenses under
Contracts not assigned and assumed hereunder. Trade Agreements shall be prorated
to the extent provided in Section 4.6 of this Agreement.
4.6. TRADE AGREEMENTS. Liabilities and obligations under Trade
Agreements shall be prorated in favor of Programmer for the amount, if any, by
which the aggregate net value of the Stations' Barter Payable (as defined in the
KIXW/KZXY Purchase Agreement) for air time under such agreements as of 12:01
a.m. on the Commencement Date in excess of Twenty-Five Thousand Dollars
($25,000) as of the Commencement Date exceeds the aggregate net value of the
Stations' Barter Receivable (as defined in the
<PAGE> 12
12
KIXW/KZXY Purchase Agreement) as of the Commencement Date. Programmer shall not
be obligated to make any proration in favor of Licensee with respect to Trade
Agreements, notwithstanding that the fair market value of property to be
received by Programmer exceeds the liability for unperformed time.
4.7. PAYMENT OF PRORATION ITEMS. Not less than five (5) days after the
Commencement Date, Licensee shall deliver to Programmer a schedule setting forth
its good faith calculation of the prorations pursuant to Sections 4.5 and 4.6
(which schedule shall set forth in reasonable detail the basis for those
determinations) (the "Proration Schedule"), and, to the extent feasible, such
prorations and adjustments shall be made as of the Commencement Date. The
Proration Schedule shall be conclusive and binding upon Programmer unless
Programmer provides Licensee with written notice of objection (the "Notice of
Disagreement") within thirty (30) days after Programmer's receipt of the
Proration Schedule, which notice shall state the prorations of expenses proposed
by Programmer (the "Programmer's Proration Amount"). Licensee shall have fifteen
(15) days from receipt of a Notice of Disagreement to accept or reject
Programmer's Proration Amount. If Licensee rejects Programmer's Proration
Amount, and the amount in dispute exceeds five thousand dollars ($5,000), the
dispute shall be submitted within ten (10) days to a mutually agreed upon
accounting firm (the "Referee") for resolution of the dispute, such resolution
to be made within thirty (30) days after submission to the Referee and to be
final, conclusive and binding on Licensee and Programmer. Programmer and
Licensee agree to share equally the cost and expenses of the Referee, but each
party shall bear its own legal and other expenses, if any. If the amount in
dispute is equal to or less than Five Thousand Dollars ($5,000), such amount
shall be divided equally between Programmer and Licensee. Payment by Programmer
or Licensee, as the case may be, of the proration amounts determined pursuant to
this Section 4.7 shall be due fifteen (15) days after the last to occur of (i)
Programmer's acceptance of the Proration Schedule or failure to give Licensee a
timely Notice of Disagreement; (ii) Licensee's acceptance of Programmer's
Proration Amount; (iii) Licensee's rejection of Programmer's Proration Amount in
the event the amount in dispute equals or is less than Five Thousand Dollars
($5,000); and (iv) notice to Licensee and Programmer of the resolution of the
disputed amount by the Referee in the event that the amount in dispute exceeds
Five Thousand Dollars ($5,000). Any payment required by Licensee to Programmer
or by Programmer to Licensee, as the case may be, under this Section 4.7 shall
be paid by wire transfer of immediately available federal funds to the account
of the payee with a financial institution in the United States as designated by
Licensee in the Proration Schedule or by Programmer in the Notice of
Disagreement (or by separate notice in the event that
<PAGE> 13
13
Licensee does not send a Notice of Disagreement). If either Programmer or
Licensee fails to pay when due any amount under this Section 4.7, interest on
such amount will accrue from the date payment was due to the date such payment
is made at a per annum rate equal to the Prime Rate plus three percent (3%), and
such interest shall be payable upon demand.
5. INDEMNIFICATION
5.1. INDEMNIFICATION. From and after the Commencement Date, each of
Programmer and Licensee shall indemnify, defend, and hold harmless the other,
its affiliates and their respective officers, directors, employees and
representatives, and the successors and assigns of any of them, from and
against, and reimburse them for, all claims, damages, costs and expenses,
including, without limitation, interest, penalties, court costs and reasonable
attorneys' fees and expenses, resulting from (a) any programming provided by
such party for broadcast on the Stations; and (b) any breach by such party of
any representation, warranty, covenant or other agreement contained in this
Agreement.
5.2. PROCEDURE FOR INDEMNIFICATION AND LIMITATIONS. The procedure for
indemnification shall be as set forth in Section 15.3 of the KIXW/KZXY Purchase
Agreement, and claims for indemnification shall be subject to the limitations
set forth at Section 15.3 of the KIXW/KZXY Purchase Agreement.
5.3. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants, indemnities and agreements contained in
this Agreement or in any certificate, document or instrument delivered pursuant
to this Agreement shall not survive the termination of this Agreement, except
for the covenants of Programmer set forth in Section 7.5 which shall survive for
the period set forth therein. No claim may be brought under this Agreement
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the termination of this Agreement. In the
event such notice is given, the right to indemnification with respect thereto
shall survive the termination of this Agreement until such claim is finally
resolved and any obligations thereto are fully satisfied. Any investigation by
or on behalf of any party hereto shall not constitute a waiver as to enforcement
of any representation, warranty, covenant or agreement contained herein.
<PAGE> 14
14
6. EVENTS OF DEFAULT AND CURE PERIODS
6.1. EVENTS OF DEFAULT. The following shall, after the expiration of
the applicable cure periods as set forth in Section 6.2, each constitute an
"Event of Default" under this Agreement:
6.1.1. NON-PAYMENT. Programmer's failure to pay when due the
fees payable under Section 1.4 of this Agreement;
6.1.2. DEFAULT IN COVENANTS OR ADVERSE LEGAL ACTION. Either
party defaults in the performance of any material covenant, condition
or undertaking contained in this Agreement or the KIXW/KZXY Purchase
Agreement;
6.1.3. BREACH OF REPRESENTATION. Any material representation
or warranty made by either party to this Agreement or the KIXW/KZXY
Purchase Agreement, or in any certificate or document furnished by
either party to the other pursuant to the provisions of this Agreement
or the KIXW/KZXY Purchase Agreement, proves to have been false or
misleading in any material respect as of the time made or furnished.
6.1.4. BANKRUPTCY. Either party (a) makes a general assignment
for the benefit of creditors, or (b) files or has filed against it a
petition for bankruptcy, for reorganization or an arrangement, or for
the appointment of a receiver, trustee or similar creditors'
representative for the property or assets of such party under any
federal or state insolvency law, which, if filed against such party,
has not been dismissed or discharged within sixty (60) days thereafter.
6.2. CURE PERIODS. Except for a default in payment as required under
Section 1.4 on the date provided for in SCHEDULE 1.4, an Event of Default shall
not be deemed to have occurred until fifteen (15) days after the non-defaulting
party has provided the defaulting party with written notice specifying the event
or events that, if not cured, would constitute an Event of Default and
specifying the actions necessary to cure the de fault(s) within such period.
This period may be extended for a reasonable period of time if the defaulting
party is acting in good faith to cure and such delay is not materially adverse
to the other party. For a default in payment as required under Section 1.4 on
the date provided for in SCHEDULE 1.4, an Event of Default shall not be deemed
to have occurred until five (5) days after Licensee has provided Programmer with
written notice
<PAGE> 15
15
specifying the event or events that, if not cured, would constitute an Event of
Default and specifying the actions necessary to cure the default(s) within such
period.
7. TERMINATION
7.1. TERMINATION UPON DEFAULT. Upon the occurrence of an Event of
Default, the non-defaulting party may terminate this Agreement, provided that it
is not also in material default of this Agreement or the KIXW/KZXY Purchase
Agreement. If Programmer has defaulted in the performance of its obligations,
all amounts accrued or payable to Licensee up to the date of termination which
have not been paid shall immediately become due and payable, and Licensee shall
be under no further obligation to make available to Programmer any broadcast
time or broadcast transmission facilities on the Stations.
7.2. TERMINATION FOR CHANGE IN FCC RULES OR POLICIES. Either party may
terminate this Agreement upon written notice to the other if there has been a
material change in FCC rules or policies that would cause this Agreement to be
in violation thereof and such change is in effect and not the subject of an
appeal or further administrative review; provided, however, that in such event
the parties shall negotiate in good faith and attempt to agree to an amendment
to this Agreement that will provide the parties with a valid and enforceable
agreement that conforms to the new FCC rules or policies.
7.3. TERMINATION UPON TERMINATION OF RELATED AGREEMENTS. In the event
that any of (a) the KIXW/KZXY Purchase Agreement; (b) the Merger Agreement
between Topaz Broadcasting, Inc. and Programmer dated as of December ___, 1997;
or (c) the KIXA(FM) Time Brokerage Agreement between Topaz and Programmer dated
as of December ___, 1997 are terminated in accordance with their respective
terms, this Agreement shall terminate.
7.4. CERTAIN MATTERS UPON TERMINATION.
7.4.1. If this Agreement is terminated for any reason other
than the occurrence of the Closing under the KIXW/KZXY Purchase
Agreement,
(a) Programmer shall assign, transfer and convey to
Licensee all of Programmer's rights in, to and under all
agreements with advertisers
<PAGE> 16
16
existing on the date of such termination (collectively the
"Reassumed Contracts"). Programmer shall use reasonable
efforts to promptly obtain and deliver to Licensee, at
Programmer's expense, any necessary consents to the assignment
of the Reassumed Contracts to Licensee.
(b) Licensee shall assume from Programmer all
liabilities, obligations and commitments of Programmer arising
or accruing on or after the date of termination pursuant to
the Reassumed Contracts, and Programmer shall be responsible
only for those obligations under the Reassumed Contracts
arising on or after the Commencement Date and prior to the
termination of this Agreement.
(c) Programmer shall return to Licensee any equipment
or property of the Stations used by Programmer, its employees
or agents, in substantially the same condition as such
equipment existed on the date hereof, ordinary wear and tear
excepted.
(d) Accounts Receivables shall be handled as set
forth in Section 4.1(b) hereof.
(e) Prorations shall be handled in the manner set
forth in Sections 4.5, 4.6 and 4.7 hereof; PROVIDED HOWEVER,
that income and expenses shall be prorated between Programmer
and Licensee as of 12:01 a.m. on the Termination Date, and all
prorations shall be based upon the principle that Programmer
shall incur or be entitled to all income earned and shall be
responsible for all liabilities and obligations incurred or
accruing in connection with the operation of the Stations
until the Termination Date, and Licensee shall be entitled to
all income earned and be responsible for such liabilities and
obligations incurred by Licensee thereafter.
7.4.2. No expiration or termination of this Agreement shall
terminate the obligation of each party to indemnify the other for
claims of third parties under Section 5 of this Agreement or limit or
impair any party's rights to receive payments due and owing hereunder
on or before the date of such termination.
<PAGE> 17
17
7.5 COVENANTS OF PROGRAMMER UPON TERMINATION. If this Agreement is
terminated for any reason other than the occurrence of the Closing under the
KIXW/KZXY Purchase Agreement, Programmer covenants and agrees as follows:
(a) For a period of one (1) year from the date of
termination, neither Programmer nor any Affiliate shall,
without the prior written consent of Licensee, directly or
indirectly engage in (whether as owner, partner, consultant,
advisor, employee, independent contractor or otherwise),
assist any person or entity in engaging in, or hold any legal
or beneficial interest in any person or entity that is engaged
in, the management or operation of any Competitive Business
(as defined below). "Competitive Business" shall mean any
radio broadcast station with a transmitter location within a
fifty (50) mile radius of the transmitter location of either
Station KIXW(AM) or KZXY-FM (the "Covenant Area"), other than
stations in which the Noncompete Parties hold a legal or
beneficial interest prior to the date of this Agreement.
"Affiliate" shall mean any firm or entity in which either
Terry Jacobs or Bill Stakelin (the "Noncompete Party(ies)" may
be interested as a partner, trustee, employee, consultant or
shareholder. Notwithstanding the foregoing, ownership by a
Noncompete Party of less than five percent (5%) of the issued
and outstanding stock of any corporation whose securities are
listed on a national securities exchange or by NASDAQ shall
not be deemed to violate this Section 7.5(a).
(b) For a period of one (1) year from the date
hereof, neither the Noncompete Parties nor any Affiliate
shall, directly or indirectly, employ or solicit the
employment of any employee of the Stations.
7.6. ATTORNEYS FEES AND COSTS. In the event any action or proceeding is
commenced by either party to enforce the provisions of this Agreement or to seek
remedies for a breach or wrongful termination of this Agreement, the prevailing
party in such an action or proceeding shall be entitled to the award of its
reasonable attorneys fees and costs incurred in and relating to such an action
or proceeding.
<PAGE> 18
18
8. REPRESENTATIONS AND WARRANTIES
8.1. REPRESENTATIONS AND WARRANTIES OF LICENSEE. Licensee hereby
represents and warrants that:
8.1.1. ORGANIZATION AND STANDING. Licensee is a corporation
duly formed, validly existing and in good standing under the laws of
the State of Delaware, and has all necessary corporate power and
authority to own, lease and operate the Station Assets and to carry on
the business of the Stations.
8.1.2. AUTHORIZATION AND BINDING OBLIGATION. Licensee has all
necessary power and authority to enter into and perform this Agreement
and the transactions contemplated hereby, and Licensee's execution,
delivery and performance of this Agreement have been duly and validly
authorized by all necessary action on its part. This Agreement has been
duly executed and delivered by Licensee and constitutes its valid and
binding obligation enforceable against Licensee in accordance with its
terms.
8.1.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except as set forth in Schedule 7.9 to the KIXW/KZXY Purchase
Agreement, the execution, delivery and performance of this Agreement by
Licensee: (a) do not and will not violate any provisions of Licensee's
organizational documents; (b) do not and will not require the consent
or approval of or any filing with any third party or governmental
authority; (c) do not and will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority; and (d) do not and will not, either alone or
with the giving of notice or the passage of time, or both, conflict
with, constitute grounds for termination or acceleration of or result
in a breach of the terms, conditions or provisions of, or constitute a
default under any agreement, lease, instrument, license or permit to
which Licensee is now subject.
8.2. REPRESENTATIONS AND WARRANTIES OF PROGRAMMER. Programmer hereby
represents and warrants that:
8.2.1. ORGANIZATION AND STANDING. Programmer is a corporation
duly formed, validly existing and in good standing under the laws of
the State of
<PAGE> 19
19
Delaware and has all necessary corporate power and authority to perform
its obligations hereunder on and after the date hereof.
8.2.2. AUTHORIZATION AND BINDING OBLIGATION. Programmer has
all necessary power and authority to enter into and perform this
Agreement and the transactions contemplated hereby, and Programmer's
execution, delivery and performance of this Agreement have been duly
and validly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by Programmer and
constitutes its valid and binding obligation enforceable against
Programmer in accordance with its terms.
8.2.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
The execution, delivery and performance of this Agreement by
Programmer: (a) do not and will not violate any provision of
Programmer's organizational documents; (b) do not and will not require
the consent of any third party or governmental authority; (c) do not
and will not violate any law, judgment, order, injunction, decree,
rule, regulation or ruling of any governmental authority; and (d) do
not and will not, either alone or with the giving of notice or the
passage of time, or both, conflict with, constitute grounds for
termination or acceleration of or result in a breach of the terms,
conditions or provisions of, or constitute a default under any
agreement, lease, instrument, license or permit to which Programmer is
now subject.
9. CERTIFICATIONS
9.1. PROGRAMMER'S CERTIFICATION. Programmer hereby certifies that this
Agreement complies with the provisions of Sections 73.3555 (a)(1) and (e)(1) of
the FCC's rules and regulations.
9.2. LICENSEE'S CERTIFICATION. Licensee hereby certifies that it shall
maintain the ultimate control over the Stations' facilities, including but not
limited to control over the finances with respect to the operation of the
Stations, over the personnel operating the Stations, and over the programming to
be broadcast by the Stations.
<PAGE> 20
20
10. MISCELLANEOUS
10.1. NO PARTNERSHIP OR JOINT VENTURE. This Agreement is not intended
to be and shall not be construed as a partnership or joint venture agreement
between the parties. Except as otherwise specifically provided in this
Agreement, no party to this Agreement shall be authorized to act as agent of or
otherwise represent any other party to this Agreement.
10.2. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement
and any exhibits and schedules hereto, embody the entire agreement and
understanding of the parties hereto and supersede any and all prior agreements,
arrangements and understandings relating to the matters provided for herein. Any
matter that is disclosed in a Schedule to this Agreement in such a way as to
make its relevance to the information called for by another Schedule readily
apparent shall be deemed to have been included in such other Schedule,
notwithstanding the omission of an appropriate cross-reference. No amendment,
waiver of compliance with any provision or condition hereof, or consent pursuant
to this Agreement shall be effective unless evidenced by an instrument in
writing signed by the party against whom enforcement of any waiver, amendment,
change, extension or discharge is sought. No failure or delay on the part of
Licensee or Programmer in exercising any right or power under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the parties
to this Agreement are cumulative and are not exclusive of any right or remedies
which either may otherwise have.
10.3. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Neither Programmer nor Licensee may assign its rights under this
Agreement without the prior written consent of the other party hereto.
10.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
<PAGE> 21
21
10.5. GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of the State of California without regard to its
principles of conflict of law.
10.6. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement, shall be in writing,
and addressed as follows:
If to Licensee:
Ruby Broadcasting, Inc.
1476 Waterfront Road
Suite 100
Reston, VA 22094
Attention: Mr. Thomas P. Gammon
Telephone: 202/737-9000
Facsimile: 202/737-9001
With a copy to:
Leventhal, Senter & Lerman, P.L.L.C.
2000 K Street, NW
Suite 600
Washington, DC 20006
Attention: Meredith S. Senter, Jr., Esq.
Telephone: 202/429-8970
Facsimile: 202/293-7783
<PAGE> 22
22
If to Programmer:
Regent Communications, Inc.
50 East River Center Boulevard
Suite 180
Covington, Kentucky 41011
Attention: Mr. Terry S. Jacobs
Telephone: 606/292-0030
Facsimile: 606/292-0357
With a copy to:
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202-4186
Attention: Alan C. Rosser, Esq.
Telephone: 513/621-2120
Facsimile: 513/241-8259
Any such notice, request, demand or communication shall be deemed to have been
duly delivered and received (a) upon hand delivery thereof during business
hours, (b) upon the earlier of receipt or three (3) days after posting by
registered mail or certified mail, return receipt requested, (c) on the next
business day following delivery to a reliable or recognized air freight delivery
service, and (d) on the date of transmission, if sent by facsimile during normal
business hours (but only if a hard copy is also sent by overnight courier), but
in each case only if sent in the same manner to all persons entitled to receive
notice or a copy. Any party may, with written notice to the other, change the
place for which all further notices to such party shall be sent. All costs and
expenses for the delivery of notices hereunder shall be borne and paid for by
the delivering party.
10.7. SEVERABILITY. In the event that any of the provisions of this
Agreement shall be held unenforceable, then the remaining provisions shall be
construed as if such unenforceable provisions were not contained herein. Any
provision of this Agreement which is unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such unenforceability
without invalidating the remaining provisions hereof,
<PAGE> 23
23
and any such unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
10.8. CAPITALIZED TERMS. Unless otherwise defined herein, capitalized
terms used herein and in any Schedules hereto shall have the meanings ascribed
to them in the KIXW/KZXY Purchase Agreement.
10.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Time Brokerage
Agreement as of the date first above written.
LICENSEE:
RUBY BROADCASTING, INC.
By: /s/ Tony Gammon
--------------------------------
Name: Tony Gammon
------------------------------
Title: President
-----------------------------
PROGRAMMER:
REGENT COMMUNICATIONS, INC.
By: /s/ Wm L. Statelin
--------------------------------
Name: Wm L. Statelin
------------------------------
Title: President
-----------------------------
<PAGE> 25
SCHEDULE 1.4 TO
KIXW(AM) AND KZXY-FM
TIME BROKERAGE AGREEMENT
FEES
Programmer shall reimburse Licensee for all costs incurred by Licensee
pursuant to this Agreement, including all lease payments for the Main Studio and
transmitter sites and all taxes and other costs incident thereto, all FCC
regulatory fees, real estate and personal property taxes, utility costs relating
to the existing transmitter sites, insurance, required employee expense and
other payments made by Licensee for the transmitter sites and the Main Studio
during the Term.
In addition, Programmer shall pay to Licensee a fee equal to the
greater of the Minimum Amount and the Net Cash Flow for the Stations during the
Term of this Agreement (the "Additional Fee").
The Minimum Amount shall mean $22,500 times the number of months of the
Term, prorated for any partial month.
For purposes of this Agreement, "Net Cash Flow for the Stations" shall
mean Programmer's operating revenues from the Stations minus Programmer's
operating expenses for the Stations (including reimbursements to Programmer
pursuant to Schedule 1.4), determined in accordance with generally accepted
accounting principles consistently applied, but (1) excluding any deduction for
(a) depreciation, (b) amortization, (c) interest expense or other expense
relating to financing transactions, (d) income tax expense, and (e) expenses
(including legal and accounting fees) attributable to the transactions
contemplated by the KIXW/KZXY Purchase Agreement; (2) excluding extraordinary
gains or losses; and (3) excluding revenues and expenses under the Trade
Agreements.
The Additional Fee shall be payable as follows: Programmer shall pay
Licensee $22,500 per month due on the first of each month. At the Closing under
the KZXY/KIXW Purchase Agreement, Licensee and Programmer shall agree in good
faith upon an estimate for Net Cash Flow for the Stations for the Term, such
estimate to be made as promptly as practical and in any event prior to five
business days prior to the Closing. In the event Programmer and Licensee are
unable for any reason to agree prior
<PAGE> 26
2
to five business days prior to the Closing upon such estimate, then such figure
shall upon request of either Programmer or Licensee be determined by an
independent certified public accountant mutually acceptable to the parties, and
the fees and expenses of such accountant shall be paid one-half by Programmer
and one-half by Licensee. In the event such estimated Net Cash Flow for the
Stations exceeds the Minimum Amount, then Programmer shall pay such excess to
Licensee at the Closing. As promptly as practicable following the Closing,
Programmer shall prepare and deliver to Licensee reasonably detailed
calculations of Net Cash Flow for the Stations, which shall be prepared from,
and will be in accordance with, the books and records of Programmer, and in
accordance with generally accepted accounting principles consistently applied.
Programmer shall deliver such final calculations to Licensee within 60 days
after the Closing, and such calculations shall be conclusive and binding upon
all parties unless within 20 days after delivery to Licensee, Licensee notifies
Programmer in writing that Licensee disputes any of the amounts set forth
therein, in which event the final calculation of Net Cash Flow for the Stations
shall be determined by an independent certified public accountant mutually
acceptable to the parties, and the fees and expenses of such accountant shall be
paid one-half by Programmer and one-half by Licensee. Any amount due as a result
of the final calculation of Net Cash Flow for the Stations shall be paid by
Programmer or reimbursed by Licensee, as the case may be, within 10 business
days of the final determination of such amount. In the event this Agreement is
terminated for any reason other than the Closing under the KZXY/KIXW Purchase
Agreement, calculations of Net Cash Flow for the Stations shall be made as of
the Termination Date.
<PAGE> 27
SCHEDULE 2.2.1 TO
KIXW(AM) AND KZXY-FM
TIME BROKERAGE AGREEMENT
PROGRAMMING REGULATIONS
Programmer agrees to cooperate with Licensee in the broadcasting of
programs of the highest possible standard of excellence and for this purpose to
observe the following regulations in the preparation, writing and broadcasting
of its programs:
I. RELIGIOUS PROGRAMMING. The subject of religion and references to particular
faiths, tenets, and customs shall be treated with respect at all times. Programs
shall not be used as a medium for attack on any faith, denomination, or sect or
upon any individual organization.
II. CONTROVERSIAL ISSUES. Any discussion of controversial issues of public
importance shall be reasonably balanced with the presentation of contrasting
viewpoints in the course of overall programming; no attacks on the honesty,
integrity, or like personal qualities of any person or group of persons shall be
made during the discussion of controversial issues of public importance; and
during the course of political campaigns, programs are not to be used as a forum
for editorializing about individual candidates. If such events occur, Licensee
may require that responsive programming be aired.
III. NO PLUGOLA OR PAYOLA. The mention of any business activity or "plug" for
any commercial, professional, or other related endeavor, except where contained
in an actual commercial message of a sponsor, is prohibited.
IV. NO LOTTERIES. Announcements giving any information about lotteries or games
prohibited by federal or state law or regulation are prohibited.
V. ELECTION PROCEDURES. At least ninety (90) days before the start of any
regular election campaign and 45 days before any primary (provided that if any
primary is scheduled to occur within 45 days of the date of this Agreement, such
notice shall be given within 5 days of the date of this Agreement, Programmer
will clear with Licensee's General Manager the rate Programmer will charge for
the time to be sold to candidates
<PAGE> 28
2
for public office and/or his or her supporters to make certain that the rate
charged conforms to all applicable laws and Stations policy.
VI. REQUIRED ANNOUNCEMENTS. Programmer shall broadcast (a) an announcement in
the form satisfactory to Licensee at the beginning of each hour to identify the
Station, (b) announcements as required by law to indicate that program time has
been purchased by Broker, and (c) any other announcement that may be required by
law, regulation, or Station policy.
VII. CREDIT TERMS ADVERTISING. Pursuant to rules and regulations of the Federal
Trade Commission, any advertising of credit terms shall be made over the
Stations in accordance with all applicable federal and state laws.
VIII. NO ILLEGAL ANNOUNCEMENTS. No announcement or promotion prohibited by
federal or state law or regulation or any lottery or game shall be made over the
Stations. Any game, contest, or promotion relating to or to be presented over
the Stations must be fully stated and explained in advance, and such explanation
be presented to Licensee, which reserves the right, in its sole discretion to
reject any game, contest or promotion.
IX. LICENSEE DISCRETION PARAMOUNT. In accordance with the Licensee's
responsibility under the Communications Act of 1934, as amended, and the rules
and regulations of the Federal Communications Commission, Licensee reserves the
right to reject or terminate any advertising proposed to be presented or being
presented over the Stations which is in conflict with Station policy or which in
the judgment of Licensee or its General Manager/Chief Engineer would not serve
the public interest.
X. PROGRAMMING IN WHICH PROGRAMMER HAS A FINANCIAL INTEREST. Programmer shall
advise General Manager of the Stations with respect to any programming
[including commercial(s)] concerning goods or services in which Programmer has a
material financial interest. Any announcements for such goods and services shall
clearly identify Broker's financial interest.
XI. PROGRAMMING PROHIBITIONS. Programmer shall not knowingly and intentionally
broadcast any of the following programs or announcements:
A. FALSE CLAIMS. False or unwarranted claims for any product or
service.
<PAGE> 29
3
B. UNFAIR IMITATION. Infringements of another advertiser's rights
through plagiarism or unfair imitation or either program idea or copy, or any
other unfair competition.
C. COMMERCIAL DISPARAGEMENT. Any disparagement of competitors or
competitive goods.
D. PROFANITY. Any programs or announcements that are slanderous,
obscene, profane, vulgar, repulsive or offensive, either in theme or treatment.
E. CONFLICT ADVERTISING. Any advertising matter or announcement which
may, in the reasonable opinion of Licensee, be injurious or prejudicial to the
interests of the public, the Stations, or honest advertising and reputable
business in general.
F. FRAUDULENT OR MISLEADING ADVERTISEMENT. Any advertising matter,
announcement, or claim which Programmer knows to be fraudulent, misleading, or
untrue.
Licensee may waive any of the foregoing regulations in specific instances if, in
its reasonable opinion, good broadcasting in the public interest will be served
thereby.
<PAGE> 30
SCHEDULE 3.3.1 TO
KIXW(AM) AND KZXY-FM
TIME BROKERAGE AGREEMENT
EXCLUDED EMPLOYEES
------------------
June Blue (Business Manager)
Lola Berishaj (Traffic Manager)
<PAGE> 31
SCHEDULE 4.3 TO
KIXW(AM) AND KZXY-FM
TIME BROKERAGE AGREEMENT
ASSUMED CONTRACTS
a. AP Membership Agreement for Radio dated January 28, 1994
between the Associated Press and Ruby Broadcasting, Inc.
(contract lists Stations KIXW(AM) (formerly KZXY(AM)), KZXY-FM
and KIXA-FM)
b. Yearly Subscription to Billboard - Coleen Quinn, MD (invoice
dated July 18, 1996)
c. Agreement with ABC/Satellite Music Network, dated September
16, 1994 for "Country Coast to Coast" programming (KIXW(AM)).
d. Blanket License Agreement between ASCAP and Ruby Broadcasting,
Inc. (renewal dated September 4, 1996) (correspondence lists
Stations KZXY- FM).
e. 1997 BMI Radio Station Interim License Agreement dated March
25, 1997 by and between Broadcast Music, Inc. and Ruby
Broadcasting, Inc. (KIXW(AM)).
f. 1997 BMI Radio Station Interim License Agreement dated March
25, 1997 by and between Broadcast Music, Inc. and Ruby
Broadcasting, Inc. (KZXY-FM).
g. SESAC Performance License between Ruby Broadcasting Company,
Inc. and SESAC (KZXY-FM).
h. Outdoor Media Group Renewal Contract dated November 15, 1996
(KZXY-FM).
<PAGE> 32
2
i. The Arbitron Company License Agreement dated January 29, 1997
(Stations KZXY(AM), KZXY-FM and KIXW(AM).
j. Membership Application and Agreement between Radio Advertising
Bureau and Highway Country Radio (contract used for KZXY-FM).
k. Datacount (computer support -- contract month to month)
l. Dude Walker (voice overs -- contract month to month)
m. John Gibbons (software support -- contract month to month)
n. Microwave frequency service (readings -- contract month to
month)
o. Addendum to Long Distance Service Agreement dated July 22,
1996 by and between Ruby Broadcasting and Express Tel.
p. Standard License Agreement dated July 16, 1991 between Radio
Computing Services, Inc. and Ruby Broadcasting, Inc.
q. Wireless Flash
r. RPM - Top Hits CD Service (month-to-month)
<PAGE> 1
Exhibit 10(m)
TIME BROKERAGE AGREEMENT
Time Brokerage Agreement ("Agreement") dated effective as of December
3, 1997, by and between SOUTHWIND BROADCASTING, INC. ("Licensee"), the licensee
of radio station WSSP (FM), Goose Creek, South Carolina (the "Station"), and
REGENT COMMUNICATIONS, INC. ("Broker").
WHEREAS, Licensee has available broadcasting time and is engaged in the
business of radio broadcasting on the Station; and
WHEREAS, Licensee wishes to procure programming from Broker; and
WHEREAS, Broker desires to avail itself of Station's broadcast time for
up to twenty-four (24) hours per day for the presentation of broadcasting
service, including the sale of advertising time.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
A. Facilities. Licensee agrees, beginning at 12:01 a.m. on December 3,
1997 (the "Effective Date"), to make air time and transmission services
available to Broker and to broadcast on the Station, or cause to be broadcast,
Broker's programs (the "Programming") described in Attachment I hereto, which
will originate from Broker's studios, for such periods as Broker may desire up
to twenty-four (24) hours a day, seven (7) days a week during the term of this
Agreement. The compensation to be paid to Licensee shall be as set forth in
Attachment II hereto.
2. Payments. Broker hereby agrees, beginning on and after the Effective
Date, to pay Licensee monthly for the broadcast of the Programming hereunder in
accordance with Attachment II. Payments for each calendar month shall be due and
payable in full on the first day of each such calendar month. The failure of
Licensee to demand or insist upon prompt payment in accordance herewith shall
not constitute a waiver of its right to do so. Broker shall receive a payment
credit with respect to any Programming complying with paragraph 4 hereof which
is preempted by Licensee. Such credit shall be determined by multiplying the
monthly payment by the ratio of the number of hours (or fractions thereof) of
such Programming preempted or not accepted during such calendar month to the
total number of brokered hours (or fractions thereof) for such calendar month.
3. Term. The term of this Agreement shall be for a period of eleven
(11) months, fifteen (15) days, beginning on the Effective Date, subject to
earlier termination as provided elsewhere in this Agreement.
-1-
<PAGE> 2
4. Programming Standards. Broker shall furnish or cause to be furnished
the air personnel and material for the Programming and all Programming shall be
in accordance with the rules and requirements of the Federal Communications
Commission (the "Commission"), including, without limitation, the Commission's
rules on plugola/payola, lotteries, contests, station identification, political
programming and political advertising rates; and the Programming shall include
all announcements and disclosures (including but not limited to station
identification announcements, EBS announcements, and sponsorship disclosures)
necessary for the Station to comply with the Commission's rules and
requirements. All Programming (including but not limited to all advertising
spots and promotional material or announcements) (i) shall comply with all
applicable federal, state and local regulations and policies; (ii) shall be
produced in accordance with quality standards generally applicable in the market
for similarly situated stations; and (iii) shall comply with Licensee's Program
Policy Statement, a copy of which is attached hereto as Attachment IV.
5. Station Facilities.
5.1 Operation of Station. The Station is authorized to operate with
an effective radiated power of ___________ watts from an antenna height of _____
meters above average terrain but currently has an STA to operate with lower
power. Licensee will at its expense obtain any necessary extension or extensions
of the STA. Throughout the term of this Agreement, Licensee shall make the
Station available to Broker for broadcast of Programming (except for Licensee's
studio facilities), subject to Licensee's rights under paragraph 7 hereof to
reject programming material not in compliance with paragraph 4 hereof or to
preempt Programming pursuant to paragraph 10 or 11 hereof. Licensee shall use
its reasonable best efforts to schedule downtime for maintenance on Sunday
morning between the hours of 12:00 a.m. and 7:00 a.m. and to provide Broker with
at least forty-eight hours prior notice of downtime for maintenance scheduled
for hours other than between the hours of 12:00 a.m. and 7:00 a.m. Sunday
mornings.
5.2 Interruption of Normal Operations. If the Station suffers loss
or damage of any nature to its transmission facilities which results in the
interruption of service or the inability of the Station to operate with
substantially its present power, Licensee shall immediately notify Broker, and
Licensee shall undertake such repairs as necessary to restore the full time
operation of the Station with substantially its present power within seven (7)
days from the occurrence of such loss or damage. If such repairs are not made in
the allotted period, Broker, if Broker's actions or omissions shall not have
been a principal cause of such interruption of service, may give notice to
Licensee of Broker's intention to terminate this Agreement, in which event this
Agreement shall terminate on the tenth (10th) day following such notice, any
other provision of this Agreement notwithstanding.
-2-
<PAGE> 3
6. Handling of Mail: Collection of Accounts Receivable.
6.1 Mail. Broker shall promptly furnish to Licensee any mail,
cables, telegrams or other communications (or, as appropriate, copies thereof)
which are intended for Licensee or relate to Licensee's responsibilities under
this Agreement or as a broadcast licensee of the Commission (including but not
limited to copies of all correspondence received from members of the public with
respect to the programming or operations of the Station), and shall furnish to
Licensee, unopened, any mail, cables, telegrams or other communications
addressed to Licensee and received by Broker. Licensee shall be solely
responsible for maintaining the Station's public file.
7. Programming and Operations Standards. Broker agrees to abide by the
standards set forth in paragraph 4 hereto in its programming and operations.
Broker further agrees that if, in the reasonable judgment of Licensee, Broker
does not comply with said standards, Licensee may suspend or cancel any program
or program material (including announcements, promotions and promotional themes)
not in compliance. Broker shall consult with Licensee in advance of providing
programming, and Licensee shall make its personnel available to consult with
Broker, in the event Broker shall be in doubt as to whether particular
programming proposed by Broker is consistent with paragraph 4. Licensee shall
attempt to consult with Broker in advance of preemption where circumstances
permit.
8. Responsibility for Employees and Expenses.
8.1 Licensee's Responsibilities. Except as otherwise provided in
Attachment II, Licensee shall employ, control and be responsible for the
salaries, taxes and benefits and all other costs of its own personnel necessary
to fulfill its obligations under the Commission's policies and to transmit the
Programming provided by Broker, and shall be responsible for those expenses set
forth on Attachment V hereto. Licensee shall indemnify defend and hold harmless
Broker, its stockholders, directors, officers, agents, employees, successors and
assigns from and against any and all claims, suits, liabilities, costs and
expenses (including but not limited to all attorneys fees and expenses) arising
under the preceding sentence.
8.2 Broker's Responsibilities. Broker shall bear all costs of
producing the Programming. Without in any way limiting the foregoing, Broker
shall employ, control and be responsible for the salaries, taxes, insurance,
commissions and other sales costs, and related costs for all personnel
(including salespeople, traffic personnel, board operators and programming
staff) used in the production of the Programming. Broker shall indemnify defend
and hold harmless Licensee, its stockholders, directors, officers, agents,
employees, successors and assigns from and against any and all claims, suits,
liabilities, costs and expenses (including but not limited to all attorneys fees
and expenses) arising under the preceding sentence. Broker shall pay for all
-3-
<PAGE> 4
telephone calls associated with program production and listener responses, for
all fees to ASCAP, BMI and SESAC, for any other copyright fees attributable to
its programming broadcast on the Station.
9. Advertising and Programming Revenues; Contracts and Agreements.
Broker shall retain all revenues from the sale of advertising time on the
Programming it delivers to the Station for broadcast and may, if permitted by
applicable law, sell such advertising in combination with the sale of
advertising on any other broadcasting stations of its choosing. Licensee shall
retain the revenue from the sale of any advertising on the Station on programs
not produced or delivered to it by Broker. Attachment VI hereto lists those
programming and other contracts and agreements of the Station that, except as
indicated on Attachment VI, are to be assumed by and performed by Broker on
behalf of the Licensee.
10. Operation of Station. Notwithstanding anything to the contrary in
this Agreement, Licensee shall have full authority and power over the operation
of the Station during the period of this Agreement. Licensee shall provide and
compensate its employees who perform services at the Station. They shall report
solely to and be accountable solely to Licensee and shall direct the day-to-day
operation of the Station. Licensee shall retain control, said control to be
reasonably exercised, over the policies, programming and operations of the
Station, including, without limitation, the right to decide whether to accept or
reject any Programming or advertisements, the right to preempt any Programming
in order to broadcast a program deemed by Licensee to be of greater national,
regional, or local interest, and the right to take any other actions necessary
for compliance with the laws of the United States; the State of South Carolina;
the rules, regulations, and policies of the Commission (including the
prohibition on unauthorized transfers of control); and the rules, regulations
and policies of other federal governmental authorities, including the Federal
Trade Commission and the Department of Justice. Licensee shall at all times be
solely responsible for meeting all of the Commission's requirements with respect
to public service programming, for maintaining the political and public
inspection files and the Station log, and for the preparation of programs/issues
lists. Licensee shall at all times be solely responsible for compliance with the
Commission's main studio rules and policies. Broker shall, upon request by
Licensee, provide Licensee with information with respect to such of Broker's
programs which are responsive to public needs and interest so as to assist
Licensee in the preparation of required programming reports, and will provide
upon request other information to enable Licensee to prepare other records,
reports and logs required by the Commission or other local, state or federal
governmental agencies. Broker shall originate the Programming at its studio and
shall provide a remote control facility to permit Licensee's personnel to
interrupt the Programming and/or substitute programming originated by Licensee
from a control point at Licensee's studio. The cost of telephone lines for such
facility will be borne by Licensee.
-4-
<PAGE> 5
11. Special Events. Licensee reserves the right in its discretion, to
preempt any of the broadcasts of Broker's Programming and to use such preempted
time for broadcast of special events deemed by Licensee to be of importance to
its community of license. In all such cases, Licensee shall use its diligent
efforts to give Broker reasonable notice of its intention to preempt Broker's
Programming and, in the event of such preemption, Broker shall receive a payment
credit for the broadcasts so omitted during brokered hours as provided in
paragraph 2 hereof.
12. Force Majeure. Any failure of facilities or any delay or
interruption in broadcasting programs, or failure at any time to furnish
facilities, in whole or in part, for broadcasting, due to acts of God, strikes,
or threats thereof, force majeure, or due to causes beyond the control of
Licensee, shall not constitute a breach of this Agreement, and Licensee will not
be liable to Broker, except to the extent of allowing in each such case an
appropriate payment credit for Programming available to Licensee but not carried
during brokered hours based upon a pro rata adjustment to amounts due as
specified in Attachment II calculated upon the length of time during which the
failure exists or continues.
13. Right to Use the Programming. The right to use the Programming and
to authorize its use in any manner and in any media whatsoever shall be, and
remain, vested in Broker.
14. Payola; EEO. Broker agrees that it shall not accept any
compensation or any kind of gift or gratuity of any kind whatsoever, regardless
of its value or form, including, but not limited to, a commission, discount,
bonus, materials, supplies or other merchandise, services or labor, whether or
not pursuant to written contracts or agreements between Broker and merchants or
advertisers, unless the payer is identified in the program as having paid for or
furnished such consideration in accordance with Commission requirements. Broker
agrees annually, or more frequently upon the request of Licensee, to execute and
provide Licensee (and to cause its employees and agents associated with
production of its Programming to execute and provide Licensee) with an affidavit
to that effect. Broker shall comply with all equal employment opportunity
regulations and policies (including but not limited to those of the Commission)
to the extent such regulations and policies apply, or may in the future be
deemed to apply, to the employment practices of Broker's personnel assigned to
duties in connection with the operation of the Station; and Broker shall timely
provide Licensee with all information that may be necessary or appropriate to
comply with any reporting obligations of the Commission pursuant to such
regulations or policies.
15. Broker Compliance with Law. Broker agrees that, throughout the term
of this Agreement, Broker will comply with all laws and regulations applicable
in the conduct of Broker's business and Broker acknowledges that Licensee has
not urged, counseled, or advised the use of any unfair business practice.
-5-
<PAGE> 6
16. Licensee Compliance with Law. Licensee agrees that, throughout the
term of this Agreement, Licensee will comply with all laws and regulations
applicable in the conduct of Licensee's business and Licensee acknowledges that
Broker has not urged, counseled, or advised the use of any unfair business
practice.
17. Indemnification. Broker's and Licensee's obligations to hold the
other harmless against the liabilities specified below shall survive any
termination of this Agreement until the expiration of all applicable statutes of
limitation.
17.1 Indemnification by Broker. Broker will indemnify and hold
Licensee and its stockholders, directors, officers, agents, employees,
successors, and assigns, harmless against all liability arising from (i)
Broker's provision of Programming pursuant to this Agreement; (ii) libel,
slander, illegal competition or trade practice, infringement of trade marks,
trade names, or program titles, violation of rights of privacy, bodily injury,
property damage, other broadcasting liabilities, injuries and occurrences, and
infringement of copyrights and proprietary rights resulting from the broadcast
of Programming furnished by Broker; (iii) costs, expenses or damages associated
with termination liabilities assigned to Broker pursuant to paragraphs 19 or
20.3, (iv) to the extent permissible under Commission rules and regulations, any
action or omission by Broker in violation of any applicable law or regulation
(including without limitation the Commission's rules and orders) or in violation
of this Agreement, including but not limited to reasonable attorneys fees and
expenses, or (v) any other liabilities or obligations of Broker under this
Agreement, including without limitation, those to be paid by Broker pursuant to
paragraph 8.2 hereof. Broker shall procure and maintain insurance as follows, in
amounts and coverages and with insurance carriers reasonably acceptable to the
Licensee: (i) Workman's Compensation Insurance; (ii) General Liability which
includes coverages for all promotional events; and (iii) auto liability,
including coverage for non-owned and hired vehicles. Prior to the Effective
Date, Broker shall furnish Licensee with copies of certificates of insurance
evidencing such coverage and (except for the Workman's Compensation Insurance)
shall furnish Licensee with evidence that Licensee has been added as an
additional insured under such policies.
17.2 Indemnification by Licensee. Licensee agrees to indemnify and
to hold Broker and its stockholders, directors, officers, agents, employees,
successors, and assigns harmless against all liability arising out of (i)
material broadcast by Licensee other than the Programming and/or (ii)
liabilities for libel, slander, illegal competition or trade practice,
infringement of trade marks, trade names, or program titles, violation of rights
of privacy, and infringement of copyrights and proprietary rights, but only to
the extent that such liabilities arise as a result of Licensee's alteration of
programming material (other than by preemption of Programming pursuant to
paragraphs 10 or 11 hereof or rejection of Programming pursuant to paragraph 7
hereof) prior to broadcast by Licensee; or (iii) costs, expenses or damages
associated with termination liabilities assigned to Licensee pursuant to
paragraph 20.3.
-6-
<PAGE> 7
18. Events of Default; Cure Periods and Remedies.
18.1 Events of Default. The following shall, after the expiration of
the applicable cure periods, constitute Events of Default under this Agreement:
18.1.1 Non-Payment. Broker's failure to timely pay the
consideration provided for in paragraph 2 hereof;
18.1.2 Default in Covenants or Adverse Legal Action. The
default by either party hereto in the material observance or performance of any
material covenant, condition or agreement contained herein, or if either party
shall (a) make a general assignment for the benefit of creditors, (b) files or
has filed against it a petition for bankruptcy, for reorganization or an
arrangement, or for the appointment of a receiver, trustee or similar creditors'
representative for the property or assets of such party under any federal or
state insolvency law, which, if filed against such party, has not been dismissed
or discharged within 60 days thereof;
18.1.3 Breach of Representation. If any material representation
or warranty herein made by either party hereto, or in any certificate or
document furnished by either party to the other pursuant to the provisions
hereof, shall prove to have been false or misleading in any material respect as
of the time made or furnished.
18.2 Cure Periods. An Event of Default other than a payment default
shall not be deemed to have occurred until twenty (20) business days after the
non-defaulting party has provided the defaulting party with written notice
specifying the event or events that if not cured would constitute an Event of
Default and specifying the actions necessary to cure within such period. This
period may be extended for a reasonable period of time by the party providing
such notice if the defaulting party is acting in good faith to cure and such
delay is not materially adverse to the party providing notice of such default.
The cure period provided above shall not apply to a payment default. A payment
default may be cured only if the Broker, within five (5) days after receipt of
notice from the Licensee of an untimely payment, shall have delivered to
Licensee, by wire transfer or certified check, the full amount of the payment
due, plus an additional amount equal to five percent (5%) of such payment as
liquidated damages for such payment delay.
18.3 Termination Upon Default. In the event of the occurrence of an
Event of Default, the non-defaulting party may terminate this Agreement provided
that it is not also in material default hereunder.
18.3.1 Default by Broker. If Broker has defaulted in the
performance of its obligations, (1) Licensee shall be under no further
obligation to make available to Broker any further broadcast time or broadcast
transmission facilities; (2) all amounts accrued or payable to Licensee up to
the date of termination which have not been paid, less any payments made on
behalf
-7-
<PAGE> 8
of Licensee by Broker and any payment credits, shall immediately become
due and payable; and (3) Licensee shall be entitled to receive from Broker such
other damages as Licensee shall incur as a result thereof.
18.3.2 Default by Licensee. If Licensee has defaulted in the
performance of its obligations hereunder, Broker may terminate this Agreement.
19. Broker Termination Options. Broker may elect to terminate this
Agreement at any time during the term hereof in the event that Licensee, without
the consent of the Broker (which consent shall not be unreasonably withheld in
the event of a national or local emergency), preempts or substitutes other
programming for Broker's Programming complying with paragraph 4 hereof during
fifteen percent (15%) or more of the total brokered hours during any calendar
month. In the event Broker elects to terminate this Agreement pursuant to this
provision, it shall give Licensee notice of such election at least sixty (60)
days prior to the termination date. Upon termination, all sums owing to Licensee
shall be paid and neither party shall have any further liability to the other
except as may be provided by paragraphs 17 or 20.3 hereof.
20. Termination Upon or After Purchase of Station or Termination of
Option Agreement; Liabilities Upon Termination.
20.1 Upon Purchase. This Agreement shall terminate upon the closing
on the purchase of the assets of the Station by Broker pursuant to the
OptionAgreement dated as of June 3, 1997 between Licensee and Wicks Broadcast
Group Limited Partnership, a Delaware limited partnership, Broker's predecessor
in interest (the "Option Agreement"). Upon termination under this paragraph 20,
Broker shall pay to Licensee any fees or costs due but unpaid, and Licensee
shall remit to Broker any fees or costs unearned, as of the date of termination.
20.2 Upon Termination of Option Agreement. Upon the termination of
the Option Agreement, either party, upon forty-five (45) days' prior written
notice to the other party, may terminate this Agreement.
20.3 Liabilities Upon Termination. Broker shall be responsible for
all liabilities, debts and obligations of Broker accrued from the purchase of
air time and transmission services including, without limitation, accounts
payable, barter agreements and unaired advertisements, but not for Licensee's
federal, state, and local tax liabilities associated with Broker's payments to
Licensee as provided for herein. With respect to Broker's obligations for
consideration in the form of air time, Broker may propose compensation to
Licensee for meeting these obligations, but Licensee shall be under no duty to
accept such compensation or to perform such obligations. Upon termination,
Broker shall return to Licensee any equipment or property of the Station used by
-8-
<PAGE> 9
Broker, its employees or agents, in substantially the same condition (including
condition of installation) as such equipment existed on the date of this
Agreement, ordinary wear and tear excepted.
21. Termination as a Consequence of Governmental Action. In the event
that a federal, state or local governmental authority orders the termination of
this Agreement and/or orders the curtailment in any manner material to the
relationship between the parties hereto of the provision of Programming by
Broker hereunder, and/or determines that other similar time brokerage
agreements, in whole or in part, are contrary to public or agency policy, at its
option, Broker may seek administrative or judicial appeal of or relief from such
order(s) (in which event Licensee shall cooperate with Broker provided that (i)
Broker shall be responsible for legal fees incurred in such proceedings and (ii)
Licensee shall not be required to undertake or omit any action that might
reasonably be deemed to constitute a violation of the rules or policies of the
Commission but shall cooperate fully in all other respects) or Broker shall
notify Licensee that it will terminate this Agreement pursuant to this
paragraph. If a hearing is designated with respect to the authorization held by
Licensee for the operation of the Station, Licensee shall participate fully in
such hearing and be responsible to ensure the continued validity of such
authorization. Licensee shall be responsible for its expenses incurred as a
consequence of the Commission proceeding (unless the actions or omissions of the
Broker in violation of this Agreement or the rules of the Commission were a
principal basis for such hearing designation, in which event Broker shall be
responsible for all such costs and expenses incurred by Licensee by reason of
such acts or omissions, including but not limited to reasonable attorneys' fees
and expenses); provided, however, that Broker shall cooperate and comply with
any reasonable request of Licensee to assemble and provide to the Commission
information relating to Broker's performance under this Agreement. In the event
of termination upon such governmental action(s), Broker shall pay to Licensee
any fees due but unpaid as of the date of termination as may be permitted by
such action(s), and Licensee shall reasonably cooperate with Broker to the
extent permitted to enable Broker to fulfill advertising or other programming
contracts then outstanding, in which event Licensee shall receive as
compensation for the carriage of such programming that which otherwise would
have been paid to Broker thereunder. Thereafter, neither party shall have any
liability to the other, provided that such termination shall not have resulted
from actions or omissions of the Broker or Licensee in violation of this
Agreement or the rules of the Commission.
22. Representations and Warranties.
22.1 Mutual Representations and Warranties. Both Licensee and
Broker represent that they are legally qualified, empowered, and able to enter
into this Agreement, and that the execution, delivery and performance hereof
shall not constitute a breach or violation of any agreement, contract or other
obligation to which either party is subject or by which it is bound.
-9-
<PAGE> 10
22.2 Licensee's Representations, Warranties and Covenants. Licensee
incorporates herein the further representations, warranties and covenants as
made by Licensee in the Option Agreement.
22.3 Broker's Representations, Warranties and Covenants. Broker
incorporates herein the further representations, warranties and covenants as
made by Broker in the Option Agreement.
23. Certifications. Licensee, by the signature of its authorized
representative to this Agreement, certifies that it maintains and will continue
to maintain ultimate control over the Station's facilities, including
specifically ultimate control over Station finances, personnel and programming
as provided herein. Broker, by the signature of its authorized representative to
this Agreement, certifies that the arrangement complies with the provisions of
P. P. (a) (1) and (e) (1) of ss. 73.3555 of the Commission's Rules, 47 C.F.R.
ss. 73.3555, in that the combined audience share of the Station and the stations
that are licensed to Broker in the Goose Creek, South Carolina market does not
exceed 25% of the total audience share of all commercial radio stations in such
market, computed in accordance with the rules of the Commission, and in that
Broker, its officers, directors and stockholders will not through this
arrangement acquire cognizable interests in more than __ FM broadcast stations
nationwide.
24. Notices. Any notice required hereunder shall be in writing and any
payment, notice or other communications shall be deemed given when delivered
personally, or mailed by certified mail or Federal Express, postage prepaid,
with return receipt requested, and addressed in accordance with the listing set
forth in Attachment III hereto.
25. Public Announcements. The parties will coordinate and consult with
one another before making any press release or other public announcement, other
than of information already publicly available, concerning the transaction
contemplated under this Agreement. Broker acknowledges that announcements and
direct or indirect communications concerning its proposed Programming or
commercial policies which are different from those of Licensee prior to the
Effective Date may have a deleterious effect on the business, operation, and
reputation of the Station and the Licensee. Accordingly, Broker agrees that
neither it nor its employees, the representatives or agents shall make any
formal or informal announcements to or communications with any employees of the
Station or to any person with whom the Station does business without written
approval of Licensee. Broker further agrees that neither it nor its employees
will release or publicize any such planned changes within the community of
license or service area or operations of the Station without the written
approval of Seller, which shall not be unreasonably withheld, and which shall be
granted if necessary or appropriate to comply with the rules, regulations or
policies of the FCC.
-10-
<PAGE> 11
26. Modification and Waiver. No modification or waiver of any provision
of this Agreement shall in any event be effected unless the same shall be in
writing and signed by the party adversely affected by the waiver or
modification, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
27. No Waiver: Remedies Cumulative. No failure or delay on the part of
Licensee or Broker in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of Licensee and Broker herein
provided are cumulative and are not exclusive of any right or remedies which it
may otherwise have.
28. Construction. This Agreement shall be construed in accordance with
the laws of the State of South Carolina, and the obligations of the parties
hereto are subject to all federal, state or municipal laws or regulations now or
hereafter in force and to the regulations of the Commission and all other
governmental bodies or authorities presently or hereafter to be constituted.
29. Headings. The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.
30. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including without limitation, any assignee of the Commission license for the
Station.
31. Counterpart Signatures. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be binding and effective
as of the date on which the executed counterparts are exchanged by the parties.
Prior to the execution of the original counterpart signature pages, this
Agreement may be executed in standard or telecopied counterpart originals,
which, when taken together, shall constitute one and the same instrument. A
telecopied ("faxed") signature received by one party shall be binding upon the
signing party just as if it were an original signature. Thereafter, the parties
shall take all necessary actions to execute and circulate fully executed
original counterpart signature pages.
-11-
<PAGE> 12
32. Entire Agreement. This Agreement embodies the entire agreement
between the parties and there are no other agreements, representations,
warranties, or understandings, oral or written, between them with respect to the
subject matter hereof. No alterations, modification or change of this Agreement
shall be valid unless by like written instruments.
33. Severability. The event that any of the provisions contained in
this Agreement is held to be invalid, illegal or unenforceable shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had not been contained herein,
subject to Broker's right to terminate pursuant to paragraph 21 hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SOUTHWIND BROADCASTING, INC.
By: _______________________________
Title: ____________________________
REGENT COMMUNICATIONS, INC.
By: _______________________________
Title: ____________________________
-12-
<PAGE> 13
TIME BROKERAGE AGREEMENT
ATTACHMENT I
Broker's Programming will be an entertainment format, which may include
news as well as promotions (including on-air giveaways) and contests.
Programming may include commercial matter, including that in both program or
spot announcement forms, as well as public service information. Broker shall
make available programming complying with paragraph 4 hereof for a minimum of
166 hours per week.
<PAGE> 14
TIME BROKERAGE AGREEMENT
ATTACHMENT II
Compensation to be paid by Broker to Licensee as follows:
(A) Broker shall be responsible for the employment expenses of William
G. Dudley, III, and one other Station employee of his choosing, such expenses to
include salaries, taxes, benefits and all other normal personnel costs.
(B) Reimbursement for all utilities, rents and maintenance attributable
to the operation of the Station's transmitter during the term of this Agreement.
<PAGE> 15
TIME BROKERAGE AGREEMENT
ATTACHMENT III
All notices are to be given to the addresses specified in the Option
Agreement.
<PAGE> 16
TIME BROKERAGE AGREEMENT
ATTACHMENT IV
BROADCAST STATION
PROGRAMMING POLICY STATEMENT
1. Controversial Issues. Any discussion of controversial issues of
public importance shall be reasonably balanced with the presentation of
contrasting viewpoints in the course of overall programming; no attacks on the
honesty, integrity, or like personal qualities of any person or group of persons
shall be made during the discussion of controversial issues of public
importance; and during the course of political campaigns, programs are not to be
used as a forum for editorializing about individual candidates. Notice of all
programming involving controversial issues, as described herein, shall be
provided immediately to Licensee; Station management may require that responsive
programming be aired.
2. No Plugola. The mention of any business activity or "plug" for any
commercial, professional, or other related endeavor, except where contained in
an actual commercial message of a sponsor, is prohibited.
3. Lotteries and Contests.
(a) Illegal Lotteries. Announcements giving any information about
lotteries or games prohibited by federal or state law or regulation are
prohibited.
(b) "Dream Books". References to "dream books," the "straight line,"
or other direct or indirect descriptions or solicitations relative to the
"numbers game," or the "policy game," or any other form of gambling are
prohibited.
(c) Contests. Any game, contest, or promotion relating to or to be
presented over the Station shall first be presented to Station management, which
reserves the right in its sole discretion to reject any game, contest or
promotion.
4. Required Announcements. Programmer shall broadcast (i) an
announcement in a form satisfactory to Station management at the beginning of
each hour to identify KNKN (FM), (ii) an announcement at the beginning and end
of each program to indicate that program time has been purchased by the
Programmer, and (iii) any other announcements that may be required by law,
regulation, or Station policy.
5. Programming Prohibitions. Programmer shall not knowingly and
willfully broadcast any of the following programs or announcements:
<PAGE> 17
(a) False Claims. False or unwarranted claims for any product or
service.
(b) Unfair Imitation. Infringements of another advertiser's right
though plagiarism or unfair imitation of either program idea or copy, or any
other unfair competition.
(c) Indecency. Any programs or announcements that are indecent,
obscene, profane, vulgar or repulsive, either in theme or in treatment.
(d) Descriptions of Bodily Functions. Any continuity which describes
in a repellent or pandering fashion any bodily or sexual functions or
symptomatic results of internal bodily disturbances, and no reference to matters
which are not considered acceptable topics in social groups.
(e) Injurious Advertising. Any advertising matter or announcement
that may, in the opinion of the Station, be injurious or prejudicial to the
interests of the public, or honest advertising and reputable business in
general.
(f) Howard Stern and Similar Programming. Programming involving
Howard Stern or programming that involves air personalities previously cited by
the Commission for repeated violations of its indecency policies.
<PAGE> 18
APPENDIX TO ATTACHMENT IV
FORM OF PAYOLA AFFIDAVIT
City of )
County of ) SS:
State of )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
_________________________, being first duly sworn, deposes and says as
follows:
1. He is _______________ for _________________________.
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Station _____ for which service,
money or other valuable consideration has been directly or indirectly paid, or
promised to, or charged, or accepted, by him for any person, which matter at the
time so broadcast has not been announced or otherwise indicated as paid for or
furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station _____
for which service, money, or other valuable consideration has been directly or
indirectly paid, or promised to, or charged, or accepted by Station _____ or by
any independent contractor engaged by Station _____ in furnishing programs, from
any person, which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
5. He will not pay, promise to pay, request, or receive any service,
money, or any other valuable consideration, direct or indirect, from a third
party, in exchange for the influencing of, or the attempt to influence, the
preparation or presentation of broadcast matter on Station ______.
6. Nothing contained herein is intended to, or shall prohibit receipt
or acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by someone
expressly authorized to give such approval.
7. He, his spouse and his immediate family do ______ do not _____ have
any present direct or indirect ownership interest in (other than an investment
in a corporation whose stock is publicly held), serve as an offer or director
of, whether with or without compensation, or serve as an employee of, any
person, firm or corporation engaged in:
<PAGE> 19
(a) The publishing of music;
(b) The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films, tapes, recordings
or electrical transcriptions of any program material intended for radio
broadcast use;
(c) The exploitation, promotion, or management of persons rendering
artistic, production and/or other services in the entertainment field;
(d) The ownership or operation of one or more radio or television
stations;
(e) The wholesale or retail sale of records intended for public
purchase;
(f) Advertising on Station _____, or any other station owned by its
licensee (excluding nominal stockholdings in publicly owned companies).
8. The facts and circumstances relating to such interest are none
______ or as follows _____:
___________________________________
Affiant
Subscribed and sworn to before me this ____ day of ___________, 199__.
____________________________________
Notary Public
My Commission Expires: _____________
<PAGE> 20
TIME BROKERAGE AGREEMENT
ATTACHMENT V
Licensee Responsibilities for Expenses
1. Salaries, taxes, insurance and related costs for employees of
Licensee who shall be responsible for the Licensee's exercise of its oversight
of Station operations and for the broadcast transmissions of the Station.
2. Maintenance of the transmitter site.
3. Income taxes relating to Licensee's earnings from this Agreement.
4. Real and personal property taxes.
5. General property insurance.
6. All public utilities (including, without limitation, telephone and
electricity for tower lighting) other than those utilities attributable to
operation of the Station's transmitter, for which Licensee shall be reimbursed
by Broker pursuant to Attachment II.
<PAGE> 21
TIME BROKERAGE AGREEMENT
ATTACHMENT VI
CONTRACTS AND AGREEMENTS
The following contracts and agreements of the Station are to be assumed
and performed by the Broker on behalf of the Licensee. The benefits and burdens
of all such contracts and agreements so designated shall remain with the
Licensee and Broker shall have no rights or obligations with respect to such
contracts and agreements:
[TO BE ADDED, IF ANY]
<PAGE> 1
Exhibit 10(n)
DEPOSIT ESCROW AGREEMENT
------------------------
THIS DEPOSIT ESCROW AGREEMENT ("this Agreement") entered into as of the
17th day of December, 1997, by and among REGENT BROADCASTING OF VICTORVILLE,
INC., a Delaware corporation ("Buyer"), RUBY BROADCASTING, INC., a Delaware
corporation ("Seller"), TOPAZ BROADCASTING, INC., a Delaware corporation
("Topaz"), REGENT COMMUNICATIONS, INC., a Delaware corporation ("Regent"),
THOMAS P. GAMMON ("Gammon") and SECURITY TITLE & GUARANTY, INC., as escrow agent
(the "Escrow Agent").
RECITALS:
A. Seller and Buyer have entered into an Asset Purchase Agreement dated
as of December 17, 1997 (the "Purchase Agreement"), pursuant to which Buyer has
agreed to purchase from Seller certain assets as described in the Purchase
Agreement. Buyer, Regent and Topaz have also entered into an Agreement of Merger
(the "Merger Agreement") dated as of December 17, 1997.
B. In accordance with Section 3.2 of the Purchase Agreement and Section
28 of the Merger Agreement, Buyer is prepared to deposit with the Escrow Agent
on and subject to the terms and conditions of this Agreement the sum of Four
Hundred Thousand Dollars ($400,000) or an irrevocable stand-by letter of credit
in the face amount of $400,000 as a source of funds for the payment to Seller of
liquidated damages as provided in Section 16.4 of the Purchase Agreement and
Section 29(a) of the Merger Agreement in the event that a Closing under the
Purchase Agreement is not consummated solely by reason of a material breach by
Buyer.
C. The Escrow Agent named above is willing to act as the escrow agent
hereunder on and subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. DEFINED TERMS. Capitalized terms used but not otherwise defined
herein shall have the same meanings herein as ascribed to them in the Purchase
Agreement, which is hereby incorporated herein by reference. "Business Days"
means any day which is not a Saturday, Sunday or federal holiday. Periods of
days referred to in this Agreement will be counted in calendar days unless
Business Days are expressly prescribed.
2. ESTABLISHMENT AND MAINTENANCE OF ESCROW FUND. Escrow Agent hereby
acknowledges receipt of either (a) the sum of Four Hundred Thousand Dollars
($400,000) or (b) an irrevocable, stand-by letter of credit in the amount of
Four Hundred Thousand Dollars ($400,000) (said cash deposit or letter of credit
and any cash proceeds thereof and any income earned on such cash proceeds while
on deposit hereunder being referred to as the "Escrow Fund"). Escrow Agent
agrees to hold, invest and disburse the Escrow Fund for the benefit of Buyer and
Seller, their
-1-
<PAGE> 2
respective successors and assigns, as provided herein. The Escrow
Fund shall be released by the Escrow Agent only in accordance with the terms and
conditions hereinafter set forth.
3. RELEASE OF ESCROW FUND.
(a) At the time and place of the Closing under the Purchase
Agreement and Merger Agreement, and simultaneously with the performance by Buyer
and Seller of their respective obligations under the Purchase Agreement and
Merger Agreement, Buyer and Seller shall instruct the Escrow Agent to deliver or
pay the Escrow Fund to Buyer.
(b) On the twentieth (20th) day after Escrow Agent's receipt
of written notice from Seller (with evidence of service of such notice on Buyer)
that (i) the Purchase Agreement has been terminated pursuant to Section 16.1.3
of the Purchase Agreement or pursuant to Section 29(a) of the Merger Agreement
solely because of Buyer's material breach of the Purchase Agreement or Merger
Agreement which was not cured within any applicable cure period, and (ii) all
other conditions to Closing that are within Seller's or Topaz's control, as the
case may be, are at such time satisfied or waived (other than such conditions as
can reasonably be expected to be satisfied by the Closing) ("Seller's Notice"),
Escrow Agent shall deliver the Escrow Fund to Seller; provided, however, that
Escrow Agent shall make no such delivery if Buyer, prior to the expiration of
the aforesaid 20-day period, has provided notice to Escrow Agent and Seller of
its countervailing claim to the Escrow Fund or otherwise claims that Seller is
not entitled to the Escrow Fund for any reason ("Buyer Rebuttal Notice").
(c) On the twentieth (20th) day after Escrow Agent's receipt
of written notice from Buyer (with evidence of service of such notice on Seller)
that the Purchase Agreement has been terminated for any reason other than the
circumstances described in Section 3(a) or (b) above ("Buyer's Notice"), Escrow
Agent shall deliver the Escrow Fund to Buyer; provided, however, that Escrow
Agent shall make no such delivery if Seller, prior to the expiration of the
aforesaid 20-day period, has provided notice to Escrow Agent and Buyer of
Seller's countervailing claim to the Escrow Fund or otherwise claims that Buyer
is not entitled to the Escrow Fund for any reason ("Seller's Rebuttal Notice").
(d) After timely receipt by Escrow Agent of Seller's Rebuttal
Notice or Buyer's Rebuttal Notice, Escrow Agent shall not deliver the Escrow
Fund until such time as Escrow Agent receives: (a) a written agreement signed by
Seller and Buyer providing instructions as to the disposition of the Escrow
Fund, or (b) a certified copy of an order or judgment from an arbitrator or
court which has become final (meaning that the order or judgment is no longer
subject to appeal to or review by a court of competent jurisdiction) with
respect to the disposition of the Escrow Fund, at which time, Escrow Agent shall
deliver the Escrow Fund in accordance with said agreement, order or judgment.
Any interest earned on the Escrow Fund in all events shall be delivered to
Seller at the termination of this Agreement.
-2-
<PAGE> 3
(e) Notwithstanding any other provision of this Escrow
Agreement, Escrow Agent shall, upon receipt of written instructions signed
jointly by Seller and Buyer, deliver the Escrow Fund to the party or parties
named in, or otherwise act in accordance with such instructions.
(f) In the event there has not been delivered to the Escrow
Agent, if applicable, a renewed and extended letter of credit within thirty (30)
days prior to of the expiration date of any letter of credit then on deposit,
the Escrow Agent shall, and is hereby irrevocably authorized and directed
without notice to or further action from Buyer or Seller and without regard to
any contrary instructions from either Buyer or Seller, to draw on said letter of
credit in full and to accept and hold the proceeds therefrom in escrow pursuant
to the terms of this Agreement, in which event the cash proceeds, and all
interest earned thereon, shall be deemed to be the Escrow Fund.
4. DISPUTE. In the event of any dispute among any of the parties to
this Agreement, including with respect to Buyer's or Seller's disputed claim to
the Escrow Fund or the interpretation or administration of this Agreement, the
Escrow Agent shall make no delivery or other disposition of the Escrow Fund
until it has received (i) written instructions executed by both Buyer and
Seller, or (ii) a certified copy of an order or judgment from an arbitrator or
court which has become final (meaning that the order or judgment is no longer
subject to appeal to or review by a court of competent jurisdiction) with
respect to the disposition of the Escrow Fund, whereupon Escrow Agent shall
deliver the Escrow Fund in accordance with such joint written instructions,
order or judgment.
5. TERMINATION OF THE ESCROW FUND. The Escrow Agreement shall
terminate:
(a) On the date on which the entire Escrow Fund shall have
been paid to or for the account of Buyer or Seller pursuant to the provisions of
this Agreement; or
(b) On the date on which the entire Escrow Fund shall have
been tendered to a court pursuant to Section 15 of this Agreement.
Upon disbursement by the Escrow Agent of all of the Escrow Fund as
provided in this Agreement, the duties of the Escrow Agent under this Agreement
shall be completed and the Escrow Agent shall have no further obligation, duty,
or liability under, or arising out of, this Agreement to any other party hereto.
6. JOINT INSTRUCTIONS. Notwithstanding anything herein to the contrary,
the Escrow Agent may act upon any written instructions given by Buyer and Seller
jointly.
7. INVESTMENTS OF ESCROW FUND. Prior to the final distribution of the
Escrow Fund upon termination of this Agreement as provided in Section 5 hereof,
the Escrow Agent shall invest and reinvest any cash portion of the Escrow Fund
in savings accounts, money market accounts or secured certificates of deposit in
United States banks, or securities issued or guaranteed by the United States
Government, as may from time to time be directed by Seller. In the absence of
direction from Seller as to investments, the Escrow Agent shall invest and
reinvest the cash Escrow
-3-
<PAGE> 4
Fund in federally insured savings accounts. The Escrow Agent shall not be liable
for any damages, losses or expenses resulting from any investment, or the sale
or redemption of any investment, made in accordance with this Section 7.
8. PROVISIONS RELATING TO ESCROW AGENT. The Escrow Agent shall serve
hereunder without compensation. The Escrow Agent agrees to hold the Escrow Fund
under the terms and conditions of this Agreement and to perform only the acts
and duties expressly imposed upon it hereby. The Escrow Agent's duties under
this Agreement will not in any way be modified, amended, amplified or increased
by reference to any document, instrument or agreement referred to herein or
whose terms or definitions are incorporated or referenced herein. The Escrow
Agent will be under no obligation to institute or defend any action, suit or
legal proceeding in connection herewith or to take any other action likely to
involve it in expense unless it has been first indemnified to its satisfaction.
The Escrow Agent will have no duty to take notice and will not be charged with
knowledge or notice of the existence of any agreement, understanding or other
arrangement or of any facts not set forth or referred to in this Agreement or in
any properly written, signed and delivered notices or demands to it as herein
provided. In the event of the receipt by the Escrow Agent of any notice or
demand not provided for in, or in compliance with, this Agreement or of any
inconsistent or conflicting notices or demands, the Escrow Agent will be
protected in taking no action whatsoever with reference to such notice of
demand. The Escrow Agent shall not be liable to anyone for any damages, losses,
or expenses which may be incurred as a result of any act or omission of the
Escrow Agent except to the extent, but only to the extent, of any direct, as
opposed to consequential, damages suffered which are caused by the Escrow
Agent's willful misconduct or gross negligence. Accordingly, the Escrow Agent
shall not incur any such liability with respect to (i) any action taken or
omitted in good faith upon the advice of counsel or counsel for any other party
hereto, given with respect to any question relating to the duties and
responsibilities of the Escrow Agent under this Agreement or (ii) any action
taken or omitted in reliance upon any instrument, including execution, or the
identity or authority of any person executing such instrument, its validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein which the Escrow Agent shall, in good faith, believe to be
genuine, to have been signed by a proper person or persons and to conform to the
provisions of this Agreement. If the Escrow Agent shall determine in its sole
discretion to require receipts for delivery of any Escrow Fund or any portion
thereof, the Escrow Agent shall be under no duty to deliver the Escrow Fund or
any portion thereof unless the person to whom delivery is to be made executes
and delivers to the Escrow Agent a receipt in form acceptable to the Escrow
Agent. The Escrow Agent shall not be required to obtain any such receipt.
9. NOTICES. All notices, demands and other communication which may or
are required to be given hereunder or with respect hereto shall be in writing
and shall be addressed and given in accordance with the provisions of Section
17.9 of the Purchase Agreement, as if such Section 17.9 were fully written
herein. All notices, demands and other communications given hereunder shall be
addressed to the Escrow Agent as follows:
-4-
<PAGE> 5
Security Title & Guaranty, Inc.
2100 PNC Center, 201 E. Fifth Street
Cincinnati, Ohio 45202-4186
Attn: William V. Strauss, Esq.
Fax: (513) 241-8259
10. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
No party shall assign its rights or obligations under this Agreement, by
operation of law or otherwise, without the written consent of the other parties.
11. INDEMNITY OF ESCROW AGENT. Seller and Buyer hereby jointly and
severally agree to indemnify the Escrow Agent and hold the Escrow Agent and its
officers, directors, employees, affiliates, and agents (collectively the
"Indemnified Parties" and, individually, as "Indemnified Party") harmless
against any and all actions, causes of action, suits, demands, investigations,
obligations, judgments, losses, costs, liabilities, damages, and expenses
(irrespective of whether such Indemnified Party is a party to the action for
which indemnification hereunder is sought) including, but not limited to,
reasonable attorneys' fees at customary hourly rates which are incurred by,
accrued, asserted, made or brought against, charged to, or recoverable from the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to, or as a direct or indirect result of this Agreement or any and all
claims, actions, settlement or liability for acts or failure to act in
connection with this Agreement, excepting, however, any such loss or expense to
the extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered which are caused by the Escrow Agent's gross negligence or its
willful misconduct.
12. COUNTERPARTS. This Agreement and any notices delivered pursuant
hereto may be executed simultaneously in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary in making proof of
this Agreement or any such notices to produce or account for more than one such
counterpart.
13. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of California without regard to the
conflict of law provisions thereof. EACH OF THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM MADE IN SUCH ACTION OR
PROCEEDING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE DECIDED
SOLELY BY A JUDGE IN THE COUNTY OF LOS ANGELES, CALIFORNIA. Each of the parties
hereto hereby acknowledges that it has been represented by counsel in the
negotiation, execution and delivery of this agreement and that its lawyers have
fully explained the meaning of the agreement, including in particular the
jury-trial waiver.
14. RESIGNATION. The Escrow Agent may resign as Escrow Agent at any
time and for any reason upon fifteen (15) days' prior written notice to Buyer
and Seller. In the event the Escrow
-5-
<PAGE> 6
Agent resigns as provided above, the Escrow Agent shall deliver the Escrow Fund
to the person or entity designated in writing by Buyer and Seller as a
replacement escrow agent hereunder (or if Buyer and Seller have not provided
Escrow Agent with written notice of a designated replacement escrow agent within
said 15-day period, to a bank or trust company chosen by Escrow Agent), provided
that such person or entity executes an addendum to this Agreement agreeing to
act as Escrow Agent hereunder and to be bound by the terms of the Agreement.
Upon such delivery of the Escrow Funds to such replacement escrow agent, the
Escrow Agent will be discharged from any and all further duties, obligations,
and liabilities under this Agreement, except to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered which are
caused by Escrow Agent's prior willful misconduct or gross negligence. Promptly
upon receipt of said notice of resignation, Buyer and Seller shall promptly
agree on a bank, trust company, or other entity or person to serve as a
replacement new escrow agent hereunder and notify Escrow Agent thereof in
writing.
15. INTERPLEADER. In the event of any disagreement among the parties to
this Agreement, or among them or any other person resulting in adverse claims
and demands being made in connection with or from any property involved herein
or affected hereby, the Escrow Agent may, but need not, tender into the registry
or custody of any court of competent jurisdiction all money or property in its
hands under the terms of this Agreement, together with such legal proceedings as
it deems appropriate and thereupon to be discharged from all further duties,
obligations, and liabilities under this Agreement, except to the extent, but
only to the extent, of any direct, as opposed to consequential, damages suffered
which are caused by Escrow Agent's prior willful misconduct or gross negligence.
IN WITNESS WHEREOF, each of the parties hereto has executed this Escrow
Agreement by its duly authorized officer, as of the day and year first above
written.
SELLER:
-------
RUBY BROADCASTING, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
BUYER:
------
REGENT BROADCASTING OF VICTORVILLE, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
-6-
<PAGE> 7
ESCROW AGENT:
-------------
SECURITY TITLE & GUARANTY, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
REGENT COMMUNICATIONS, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
TOPAZ BROADCASTING, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
THOMAS P. GAMMON
---------------------------------------------
-7-
<PAGE> 1
Exhibit 10(o)
DEPOSIT ESCROW AGREEMENT
------------------------
THIS DEPOSIT ESCROW AGREEMENT ("this Agreement") entered into as of the
9th day of December, 1997, by and among REGENT BROADCASTING OF KINGMAN, INC., a
Delaware corporation ("Buyer"), CONTINENTAL RADIO BROADCASTING, L.L.C., an
Arizona limited liability company ("Seller"), and STAR MEDIA, as escrow agent
(the "Escrow Agent").
RECITALS:
A. Seller and Buyer have entered into an Asset Purchase Agreement dated
as of December 9, 1997, as may have been amended through the date hereof (the
"Purchase Agreement"), pursuant to which Buyer has agreed to purchase from
Seller certain assets as described in the Purchase Agreement.
B. In accordance with Section 3.2 of the Purchase Agreement, Buyer is
prepared to deposit with the Escrow Agent on and subject to the terms and
conditions of this Agreement an irrevocable stand-by letter of credit in the
face amount of $175,000 as a source of funds for the payment to Seller of
liquidated damages as provided in Section 16.4 of the Purchase Agreement in the
event that a Closing under the Purchase Agreement is not consummated solely by
reason of a material breach by Buyer.
C. The Escrow Agent named above is willing to act as the escrow agent
hereunder on and subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. DEFINED TERMS. Capitalized terms used but not otherwise defined
herein shall have the same meanings herein as ascribed to them in the Purchase
Agreement, which is hereby incorporated herein by reference. "Business Days"
means any day which is not a Saturday, Sunday or a legal or national banking
holiday. Periods of days referred to in this Agreement will be counted in
calendar days unless Business Days are expressly prescribed.
2. ESTABLISHMENT AND MAINTENANCE OF ESCROW FUND. Escrow Agent hereby
acknowledges receipt of an irrevocable, stand-by letter of credit in the amount
of One Hundred Seventy-Five Thousand Dollars ($175,000) (said letter of credit
and any cash proceeds thereof and any income earned on such cash proceeds while
on deposit hereunder being referred to as the "Escrow Fund"). Escrow Agent
agrees to hold, invest and disburse the Escrow Fund for the benefit of Buyer and
Seller, their respective successors and assigns, as provided herein. The Escrow
Fund shall be released by the Escrow Agent only in accordance with the terms and
conditions hereinafter set forth.
-1-
<PAGE> 2
3. RELEASE OF ESCROW FUND.
(a) At the time and place of the Closing under the Purchase
Agreement, and simultaneously with the performance by Buyer and Seller of their
respective obligations under the Purchase Agreement, Buyer and Seller shall
instruct the Escrow Agent to deliver or pay the Escrow Fund to Buyer.
(b) On the twentieth (20th) day after Escrow Agent's receipt
of written notice from Seller (with evidence of service of such notice on Buyer)
that (a) the Purchase Agreement has been terminated pursuant to Section 16.1.3
of the Purchase Agreement solely because of Buyer's material breach of the
Purchase Agreement which was not cured within any applicable cure period, and
(b) all other conditions to Closing are at such time satisfied or waived (other
than such conditions as can reasonably be expected to be satisfied by the
Closing) ("Seller's Notice"), Escrow Agent shall deliver the Escrow Fund to
Seller; provided, however, that Escrow Agent shall make no such delivery if
Buyer, prior to the expiration of the aforesaid 20-day period, has provided
notice to Escrow Agent and Seller of its countervailing claim to the Escrow Fund
or otherwise claims that Seller is not entitled to the Escrow Fund for any
reason ("Buyer's Rebuttal Notice").
(c) On the twentieth (20th) day after Escrow Agent's receipt
of written notice from Buyer (with evidence of service of such notice on Seller)
that the Purchase Agreement has been terminated for any reason other than the
circumstances described in Section 3(a) or (b) above ("Buyer's Notice"), Escrow
Agent shall deliver the Escrow Fund to Buyer; provided, however, that Escrow
Agent shall make no such delivery if Seller, prior to the expiration of the
aforesaid 20-day period, has provided notice to Escrow Agent and Buyer of
Seller's countervailing claim to the Escrow Fund or otherwise claims that Buyer
is not entitled to the Escrow Fund for any reason ("Seller's Rebuttal Notice").
(d) After timely receipt by Escrow Agent of Seller's Rebuttal
Notice or Buyer's Rebuttal Notice, Escrow Agent shall not deliver the Escrow
Fund until such time as Escrow Agent receives: (a) a written agreement signed by
Seller and Buyer providing instructions as to the disposition of the Escrow
Fund, or (b) a certified copy of an order or judgment from an arbitrator or
court which has become final (meaning that the order or judgment is no longer
subject to appeal to or review by a court of competent jurisdiction) with
respect to the disposition of the Escrow Fund, at which time, Escrow Agent shall
deliver the Escrow Fund in accordance with said agreement, order or judgment.
Any interest earned on the Escrow Fund in all events shall be delivered to Buyer
at the termination of this Agreement.
(e) Notwithstanding any other provision of this Escrow
Agreement, Escrow Agent shall, upon receipt of written instructions signed
jointly by Seller and Buyer, deliver the Escrow Fund to the party or parties
named in, or otherwise act in accordance with such instructions.
(f) In the event there has not been delivered to the Escrow
Agent a renewed and extended letter of credit within thirty (30) days of the
expiration date of the letter of credit then on
-2-
<PAGE> 3
deposit, the Escrow Agent is hereby irrevocably authorized and directed without
notice to or further action from Buyer or Seller and without regard to any
contrary instructions from either Buyer or Seller to draw on said letter of
credit in full and to accept and hold the proceeds therefrom in escrow pursuant
to the terms of this Agreement, in which event the cash proceeds, and all
interest earned thereon, shall be deemed to be the Escrow Fund.
4. DISPUTE. In the event of any dispute among any of the parties to
this Agreement, including with respect to Buyer's or Seller's disputed claim to
the Escrow Fund or the interpretation or administration of this Agreement, the
Escrow Agent shall make no delivery or other disposition of the Escrow Fund
until it has received (i) written instructions executed by both Buyer and
Seller, or (ii) a certified copy of an order or judgment from an arbitrator or
court which has become final (meaning that the order or judgment is no longer
subject to appeal to or review by a court of competent jurisdiction) with
respect to the disposition of the Escrow Fund, whereupon Escrow Agent shall
deliver the Escrow Fund in accordance with such joint written instructions,
order or judgment.
5. TERMINATION OF THE ESCROW FUND. The Escrow Agreement shall
terminate:
(a) On the date on which the entire Escrow Fund shall have
been paid to or for the account of Buyer or Seller pursuant to the provisions of
this Agreement; or
(b) On the date on which the entire Escrow Fund shall have
been tendered to a court pursuant to Section 15 of this Agreement.
Upon disbursement by the Escrow Agent of all of the Escrow Fund as
provided in this Agreement, the duties of the Escrow Agent under this Agreement
shall be completed and the Escrow Agent shall have no further obligation, duty,
or liability under, or arising out of, this Agreement to any other party hereto.
6. JOINT INSTRUCTIONS. Notwithstanding anything herein to the contrary,
the Escrow Agent may act upon any written instructions given by Buyer and Seller
jointly.
7. INVESTMENTS OF ESCROW FUND. Prior to the final distribution of the
Escrow Fund upon termination of this Agreement as provided in Section 5 hereof,
the Escrow Agent shall invest and reinvest any cash portion of the Escrow Fund
in savings accounts, money market accounts or secured certificates of deposit in
United States banks, or securities issued or guaranteed by the United States
Government, as may from time to time be directed by Seller. In the absence of
direction from Seller as to investments, the Escrow Agent shall invest and
reinvest the cash Escrow Fund in federally insured savings accounts. The Escrow
Agent shall not be liable for any damages, losses or expenses resulting from any
investment, or the sale or redemption of any investment, made in accordance with
this Section 7.
8. PROVISIONS RELATING TO ESCROW AGENT. The Escrow Agent shall serve
hereunder without compensation. The Escrow Agent agrees to hold the Escrow Fund
under the terms and
-3-
<PAGE> 4
conditions of this Agreement and to perform only the acts and duties expressly
imposed upon it hereby. The Escrow Agent's duties under this Agreement will not
in any way be modified, amended, amplified or increased by reference to any
document, instrument or agreement referred to herein or whose terms or
definitions are incorporated or referenced herein. The Escrow Agent will be
under no obligation to institute or defend any action, suit or legal proceeding
in connection herewith or to take any other action likely to involve it in
expense unless it has been first indemnified to its satisfaction. The Escrow
Agent will have no duty to take notice and will not be charged with knowledge or
notice of the existence of any agreement, understanding or other arrangement or
of any facts not set forth in this Agreement or in any properly written, signed
and delivered notices or demands to it as herein provided. In the event of the
receipt by the Escrow Agent of any notice or demand not provided for in, or in
compliance with, this Agreement or of any inconsistent or conflicting notices or
demands, the Escrow Agent will be protected in taking no action whatsoever with
reference to such notice of demand. The Escrow Agent shall not be liable to
anyone for any damages, losses, or expenses which may be incurred as a result of
any act or omission of the Escrow Agent except to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered which are
caused by the Escrow Agent's willful misconduct or gross negligence.
Accordingly, the Escrow Agent shall not incur any such liability with respect to
(i) any action taken or omitted in good faith upon the advice of counsel or
counsel for any other party hereto, given with respect to any question relating
to the duties and responsibilities of the Escrow Agent under this Agreement or
(ii) any action taken or omitted in reliance upon any instrument, including
execution, or the identity or authority of any person executing such instrument,
its validity and effectiveness, but also as to the truth and accuracy of any
information contained therein which the Escrow Agent shall, in good faith,
believe to be genuine, to have been signed by a proper person or persons and to
conform to the provisions of this Agreement. If the Escrow Agent shall determine
in its sole discretion to require receipts for delivery of any Escrow Fund or
any portion thereof, the Escrow Agent shall be under no duty to deliver the
Escrow Fund or any portion thereof unless the person to whom delivery is to be
made executes and delivers to the Escrow Agent a receipt in form acceptable to
the Escrow Agent. The Escrow Agent shall not be required to obtain any such
receipt.
9. NOTICES. All notices, demands and other communication which may or
are required to be given hereunder or with respect hereto shall be in writing
and shall be addressed and given in accordance with the provisions of Section
17.9 of the Purchase Agreement, as if such Section 17.9 were fully written
herein; provided that any notice by Seller pursuant to Section 3 of this
Agreement may be given only by registered or certified mail, return receipt
requested. All notices, demands and other communications given hereunder shall
be addressed to the Escrow Agent as follows:
Star Media
5080 Spectrum Drive, Suite 609 East
Dallas, Texas 75248
Attn: Peter Handy
Fax: (972) 458-1330
-4-
<PAGE> 5
10. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
11. INDEMNITY OF ESCROW AGENT. Seller and Buyer hereby jointly and
severally agree to indemnify the Escrow Agent and hold the Escrow Agent and its
officers, directors, employees, affiliates, and agents (collectively the
"Indemnified Parties" and, individually, as "Indemnified Party") harmless
against any and all actions, causes of action, suits, demands, investigations,
obligations, judgments, losses, costs, liabilities, damages, and expenses
(irrespective of whether such Indemnified Party is a party to the action for
which indemnification hereunder is sought) including, but not limited to,
reasonable attorneys' fees at customary hourly rates which are incurred by,
accrued, asserted, made or brought against, charged to, or recoverable from the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to, or as a direct or indirect result of this Agreement or any and all
claims, actions, settlement or liability for acts or failure to act in
connection with this Agreement, excepting, however, any such loss or expense to
the extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered which are caused by the Escrow Agent's gross negligence or its
willful misconduct.
12. COUNTERPARTS. This Agreement and any notices delivered pursuant
hereto may be executed simultaneously in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary in making proof of
this Agreement or any such notices to produce or account for more than one such
counterpart.
13. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Arizona without regard to the conflict
of law provisions thereof.
14. RESIGNATION. The Escrow Agent may resign as Escrow Agent at any
time and for any reason upon 15-days' prior written notice to Buyer and Seller.
In the event the Escrow Agent resigns as provided above, the Escrow Agent shall
deliver the Escrow Fund to the person or entity designated in writing by Buyer
and Seller as a replacement escrow agent hereunder (or if Buyer and Seller have
not provided Escrow Agent with written notice of a designated replacement escrow
agent within said 15-day period, to a bank or trust company chosen by Escrow
Agent), provided that such person or entity executes an addendum to this
Agreement agreeing to act as Escrow Agent hereunder and to be bound by the terms
of the Agreement. Upon such delivery of the Escrow Funds to such replacement
escrow agent, the Escrow Agent will be discharged from any and all further
duties, obligations, and liabilities under this Agreement, except to the extent,
but only to the extent, of any direct, as opposed to consequential, damages
suffered which are caused by Escrow Agent's prior willful misconduct or gross
negligence. Promptly upon receipt of said notice of resignation, Buyer and
Seller shall promptly agree on a bank, trust company, or other entity or person
to serve as a replacement new escrow agent hereunder and notify Escrow Agent
thereof in writing.
15. INTERPLEADER. In the event of any disagreement among the parties to
this Agreement, or among them or any other person resulting in adverse claims
and demands being made in connection with or from any property involved herein
or affected hereby, the Escrow Agent may,
-5-
<PAGE> 6
but need not, tender into the registry or custody of any court of competent
jurisdiction all money or property in its hands under the terms of this
Agreement, together with such legal proceedings as it deems appropriate and
thereupon to be discharged from all further duties, obligations, and liabilities
under this Agreement, except to the extent, but only to the extent, of any
direct, as opposed to consequential, damages suffered which are caused by Escrow
Agent's prior willful misconduct or gross negligence.
IN WITNESS WHEREOF, each of the parties hereto has executed this Escrow
Agreement by its duly authorized officer, as of the day and year first above
written.
SELLER:
-------
RUBY BROADCASTING, INC.
By: _________________________________
Name: _________________________________
Title: _________________________________
BUYER:
------
REGENT BROADCASTING OF VICTORVILLE, INC.
By: _________________________________
Name: _________________________________
Title: _________________________________
ESCROW AGENT:
-------------
SECURITY TITLE & GUARANTY, INC.
By: _________________________________
Name: _________________________________
Title: _________________________________
<PAGE> 1
Exhibit 10(p)
DEPOSIT ESCROW AGREEMENT
------------------------
THIS AGREEMENT is made and entered into as of the 10th day of October,
1997, by and among REGENT COMMUNICATIONS, INC., a Delaware corporation
("Buyer"); REDWOOD BROADCASTING, INC. ("Seller"); and SECURITY TITLE & GUARANTY
AGENCY, INC., as escrow agent ("Escrow Agent").
WITNESSETH:
WHEREAS, Seller and Buyer have entered into a certain Agreement of
Merger, dated October 10, 1997 (the "Merger Agreement"), under which Alta
California Broadcasting, Inc. a wholly-owned subsidiary of Seller ("Alta"), will
be merged with and into Regent Acquisition Corp., a wholly-owned subsidiary of
Buyer, as a result of which Buyer will own all of the outstanding capital stock
of Alta; and
WHEREAS, Seller and Buyer desire Escrow Agent to serve as Escrow Agent
for certain monies to be held to secure Buyer's performance under the Merger
Agreement, and Escrow Agent is willing to do so, all upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, on the basis of the mutual promises and covenants set
forth herein, it is agreed as follows:
1. DELIVERY OF ESCROW FUND
-----------------------
1.1 Upon the approval by Buyer of all Exhibits and related documents
required to be delivered by Alta under the Merger Agreement, Buyer shall deliver
to Escrow Agent an irrevocable, stand-by letter of credit in the amount of One
Hundred Seventy-Five Thousand Dollars ($175,000) (the "Escrow Fund").
1.2 The Escrow Fund shall be held on the terms and subject to the
limitations set forth herein as a source of funds for the payment of liquidated
damages in the event that a Closing under the Merger Agreement is not
consummated solely by reason of a material breach by Buyer, and shall be
released by the Escrow Agent in accordance with the terms and conditions
hereinafter set forth.
2. MAINTENANCE AND DISTRIBUTION OF ESCROW FUND
-------------------------------------------
2.1 Escrow Agent shall hold or promptly place the Escrow Fund, if
converted to cash, in such investment vehicle and financial institution as may
be designated by Buyer from time to time. In the event Escrow Agent receives no
such designation, Escrow Agent shall invest the cash Escrow Fund in
federally-insured savings accounts. Escrow Agent shall not be liable for the
investment results, or lack thereof, achieved by the investment vehicle chosen
by Buyer, nor
-1-
<PAGE> 2
shall Escrow Agent have any liability for loss of the Escrow Fund in the event
of the financial failure of the financial institution chosen by Buyer.
2.2 At the time and place of the Closing under the Merger Agreement,
and simultaneously with the performance by Buyer and Seller of their respective
obligations under the Merger Agreement, Buyer and Seller shall instruct the
Escrow Agent to deliver or pay the Escrow Fund to Buyer.
2.3 On the fifteenth (15th) day after Escrow Agent's receipt of written
notice from Seller (with evidence of service of such notice on Buyer) that (a)
the Merger Agreement has been terminated pursuant to Section 29(a) of the Merger
Agreement solely because of Buyer's material breach of the Merger Agreement
which was not cured within any applicable cure period, and (b) all other
conditions to Closing are at such time satisfied or waived (other than such
conditions as can reasonably be expected to be satisfied by the Closing)
("Seller's Notice"), Escrow Agent shall deliver the Escrow Fund to Seller;
provided, however, that Escrow Agent shall make no such delivery if Buyer, prior
to the expiration of the aforesaid 15-day period, has provided notice to Escrow
Agent and Seller of its countervailing claim to the Escrow Fund or otherwise
claims that Seller is not entitled to the Escrow Fund for any reason ("Buyer's
Rebuttal Notice").
2.4 On the fifteenth (15th) day after Escrow Agent's receipt of written
notice from Buyer (with evidence of service of such notice on Seller) that the
Merger Agreement has been terminated for any reason other than the circumstances
described in Section 2.3 above ("Buyer's Notice"), Escrow Agent shall deliver
the Escrow Fund to Buyer; provided, however, that Escrow Agent shall make no
such delivery if Seller, prior to the expiration of the aforesaid 15-day period,
has provided notice to Escrow Agent and Buyer of Seller's countervailing claim
to the Escrow Fund or otherwise claims that Buyer is not entitled to the Escrow
Fund for any reason ("Seller's Rebuttal Notice").
2.5 After timely receipt by Escrow Agent of Seller's Rebuttal Notice or
Buyer's Rebuttal Notice, Escrow Agent shall not deliver the Escrow Fund until
such time as Escrow Agent receives: (a) a written agreement signed by Seller and
Buyer providing instructions as to the disposition of the Escrow Fund, or (b) a
certified copy of an order or judgment from an arbitrator or court which has
become final (meaning that the order or judgment is no longer subject to appeal
to or review by a court of competent jurisdiction) with respect to the
disposition of the Escrow Fund, at which time, Escrow Agent shall deliver the
Escrow Fund in accordance with said agreement, order or judgment. Any interest
earned on the Escrow Fund in all events shall be delivered to Buyer at the
termination of this Agreement. Notwithstanding the foregoing, after receipt by
Escrow Agent of Seller's Rebuttal Notice or Buyer's Rebuttal Notice, Escrow
Agent may, but need not: (a) deposit the Escrow Fund with any court which has
properly assumed jurisdiction of any dispute hereunder, or (b) commence an
action in interpleader in any court of competent jurisdiction in Ohio and
deposit the Escrow Fund and any interest earned thereon with such court; and
thereupon, Escrow Agent shall be discharged from all further duties under this
Agreement.
-2-
<PAGE> 3
2.6 Notwithstanding any other provision of this Escrow Agreement,
Escrow Agent shall, upon receipt of written instructions signed jointly by
Seller and Buyer, deliver the Escrow Fund to the party or parties named in, or
otherwise act in accordance with such instructions.
2.7 In the event there has not been delivered to the Escrow Agent a
renewed and extended letter of credit within thirty (30) days of the expiration
date of the letter of credit then on deposit, the Escrow Agent is hereby
irrevocably authorized and directed without notice to or further action from
Buyer or Seller and without regard to any contrary instructions from either
Buyer or Seller to draw on said letter of credit in full and to accept and hold
the proceeds therefrom in escrow pursuant to the terms of this Agreement, in
which event the cash proceeds, and all interest earned thereon, shall be deemed
to be the Escrow Fund.
3. GENERAL PROVISIONS
------------------
3.1 This Escrow Agreement shall become effective as of the date hereof
and shall continue in force until the final delivery of the Escrow Fund and any
interest earned thereon by Escrow Agent pursuant to the terms of this Escrow
Agreement. This Agreement shall then terminate and the Escrow Agent shall be
discharged of all responsibility hereunder.
3.2 All notices, demands or other communications required or permitted
by this Escrow Agreement shall be in writing and shall be: (a) delivered
personally, (b) sent, charges prepaid, by nationally recognized overnight
delivery service, or (c) by facsimile transmission, to all of the following
persons at the specified addresses or facsimile transmission phone number (or at
such other address or facsimile transmission phone number as any party may
designate in writing to the other parties):
To Seller: Redwood Broadcasting, Inc.
7518 Elbow Bend Road
P. O. Box 3463
Carefree, Arizona 85377
Attention: John C. Power
Fax: (602) 488-2384
Copy to: Pepper & Corazzini, L.L.P.
1776 K Street, Northwest
Suite 200
Washington, D. C. 20006
Attention: Peter Gutmann
Fax: (202) 296-5572
If to Buyer: Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, Kentucky 41011
Attention: Terry S. Jacobs
Fax: (606) 292-0352
-3-
<PAGE> 4
Copy to: Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attention: Alan C. Rosser
Fax: (513) 241-8289
If to Escrow Agent: Security Title & Guaranty Agency, Inc.
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
Attention: William V. Strauss
Fax: (513) 241-8259
A copy of any notice or communication given by any party to any other party
hereto shall be given at the same time to every party to this Escrow Agreement.
Each notice, demand or other communication which shall be delivered or sent in
the manner described above shall be deemed effective for all purposes at such
time it is actually delivered to the addressee (with the delivery receipt or the
affidavit of messenger or facsimile confirmation sheet being deemed conclusive
but not exclusive evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
3.3 In no event shall the Escrow Agent be liable for any act or failure
to act under the provisions of this Escrow Agreement, except where its acts are
the result of its own gross negligence or willful misconduct. The Escrow Agent
shall have no duties except those which are expressly set forth herein, and it
shall not be bound by any waiver, modification, amendment, termination or
rescission of this Escrow Agreement, unless in writing received by it and signed
by Buyer and Seller. No right, duty or obligations of the Escrow Agent hereunder
shall be changed or modified without the Escrow Agent's prior written consent.
3.4 The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, receipt or other paper or document furnished
to it in connection herewith, not only as to its due execution and the validity
and effectiveness of its provisions, but also as to the truth and acceptability
of any information therein contained, which it reasonably believes to be genuine
and what it purports to be.
3.5 In the event that the Escrow Agent shall find it necessary to
consult with counsel of its own choosing in connection with this Escrow
Agreement, the Escrow Agent shall not incur any liability for any action taken
in accordance with such advice. Buyer, on the one hand, and Seller, on the other
hand, jointly and severally, shall indemnify and hold harmless the Escrow Agent
for any liability, loss, claim or damage incurred by the Escrow Agent in
connection with this Escrow Agreement, including any claims by third parties,
unless such liability, loss, claim or
-4-
<PAGE> 5
damage is a result of Escrow Agent's own gross negligence or willful misconduct.
This indemnification shall survive termination of this Escrow Agreement.
3.6 The Escrow Agent may resign at any time by giving a minimum of
thirty (30) days prior written notice of resignation to both Buyer and Seller,
such resignation to be effective on the date specified in such notice. Any
assets held by the Escrow Agent under the terms of this Escrow Agreement as of
the effective date of the resignation shall be delivered to a successor Escrow
Agent designated in writing by both Buyer and Seller.
3.7 Escrow Agent is not a party to, and is not bound by, any agreement
relating to the Escrow Fund other than as expressly set forth herein. In the
event that any of the terms and provisions of any other agreement (excluding any
amendment to this Escrow Agreement) between any of the parties hereto, conflict
or are inconsistent with any of the provisions of this Escrow Agreement, the
terms and provisions of this Escrow Agreement shall govern and control in all
respects.
3.8 The Escrow Agent shall serve hereunder without compensation. In the
event that Buyer or Seller file a lawsuit or institute arbitration or other
formal legal action against the other (including any counterclaim to a lawsuit
filed by the other party) to enforce its right to the Escrow Fund under this
Agreement, the prevailing party shall be reimbursed by the other party (either
Seller or Buyer, as the case may be) and the non-prevailing party shall
reimburse Escrow Agent for all expenses incurred therewith, including reasonable
attorneys' fees.
3.9 This Escrow Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
3.10 The construction and performance of this Escrow Agreement shall be
governed by the laws of the State of California without giving effect to the
choice of law provisions thereof.
3.11 This Escrow Agreement may be executed in one or more counterparts,
each of which will be deemed an original and all of which together will
constitute one and the same instrument.
[SIGNATURES ON NEXT PAGE]
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above set forth.
BUYER: ESCROW AGENT:
REGENT COMMUNICATIONS, INC. SECURITY TITLE & GUARANTY
AGENCY, INC.
By: ______________________________ By: ________________________________
Name: ____________________________ Name: ______________________________
Its:______________________________ Its:________________________________
SELLER:
REDWOOD BROADCASTING, INC.
By: ______________________________
Name: ____________________________
Its: _____________________________
<PAGE> 1
Exhibit 10(q)
DEPOSIT ESCROW AGREEMENT
------------------------
THIS AGREEMENT is made and entered into this 16th day of June, 1997, by
and among REGENT COMMUNICATIONS, INC., a Delaware corporation ("Buyer"); those
individuals or parties listed on the signature page(s) hereto as Sellers
(collectively, "Sellers"); and STAR MEDIA, as escrow agent ("Escrow Agent").
WITNESSETH:
WHEREAS, Sellers and Buyer have entered into a certain Stock Purchase
Agreement, dated June 16, 1997 (the "Purchase Agreement"), under which Sellers
will sell, assign and otherwise convey to Buyer all of the outstanding capital
stock of The Park Lane Group, a California corporation; and
WHEREAS, Sellers and Buyer desire Escrow Agent to serve as Escrow Agent
for certain monies to be held to secure Buyer's performance under the Purchase
Agreement, and Escrow Agent is willing to do so, all upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, on the basis of the mutual promises and covenants set
forth herein, it is agreed as follows:
1. DELIVERY OF ESCROW FUND
-----------------------
1.1 Simultaneously with the execution hereof, Buyer shall deliver to
Escrow Agent an irrevocable, stand-by letter of credit in the amount of One
Million One Hundred Seventy-Five Thousand Dollars ($1,175,000) (the "Escrow
Fund"). By execution of this Agreement, Escrow Agent hereby acknowledges receipt
of the Escrow Fund.
1.2 The Escrow Fund shall be held on the terms and subject to the
limitations set forth herein as a source of funds for the payment of liquidated
damages in the event that a Closing under the Purchase Agreement is not
consummated solely by reason of a material breach by Buyer, and shall be
released by the Escrow Agent in accordance with the terms and conditions
hereinafter set forth.
2. MAINTENANCE AND DISTRIBUTION OF ESCROW FUND
-------------------------------------------
2.1 Escrow Agent shall hold or promptly place the Escrow Fund, if
converted to cash, in such investment vehicle and financial institution as may
be designated by Buyer from time to time. In the event Escrow Agent receives no
such designation, Escrow Agent shall invest the cash Escrow Fund in
federally-insured savings accounts. Escrow Agent shall not be liable for the
investment results, or lack thereof, achieved by the investment vehicle chosen
by Buyer, nor
-1-
<PAGE> 2
shall Escrow Agent have any liability for loss of the Escrow Fund in the event
of the financial failure of the financial institution chosen by Buyer.
2.2 At the time and place of the Closing under the Purchase Agreement,
and simultaneously with the performance by Buyer and Sellers of their respective
obligations under the Purchase Agreement, Buyer and Sellers shall instruct the
Escrow Agent to deliver or pay the Escrow Fund to Buyer.
2.3 On the fifteenth (15th) day after Escrow Agent's receipt of written
notice from Sellers' Representative (with evidence of service of such notice on
Buyer) that (a) the Purchase Agreement has been terminated pursuant to Section
13.01(c) of the Purchase Agreement solely because of Buyer's material breach of
the Purchase Agreement which was not cured with any applicable cure period, and
(b) all other conditions to Closing are at such time satisfied or waived (other
than such conditions as can reasonably be expected to be satisfied by the
Closing) ("Sellers Notice"), Escrow Agent shall deliver the Escrow Fund to
Sellers, c/o James H. Levy (Sellers' Representative), c/o Wilson Sonsini
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, CA 94304; provided, however,
that Escrow Agent shall make no such delivery if Buyer, prior to the expiration
of the aforesaid 15-day period, has provided notice to Escrow Agent and Sellers
of its countervailing claim to the Escrow Fund or otherwise claims that Sellers
are not entitled to the Escrow Fund for any reason ("Buyer's Rebuttal Notice").
2.4 On the fifteenth (15th) day after Escrow Agent's receipt of written
notice from Buyer (with evidence of service of such notice on Sellers) that the
Purchase Agreement has been terminated for any reason other than the
circumstances described in Section 2.3 above ("Buyer's Notice"), Escrow Agent
shall deliver the Escrow Fund to Buyer; provided, however, that Escrow Agent
shall make no such delivery if Sellers' Representative, prior to the expiration
of the aforesaid 15-day period, has provided notice to Escrow Agent and Buyer of
Sellers' countervailing claim to the Escrow Fund or otherwise claims that Buyer
is not entitled to the Escrow Fund for any reason ("Sellers' Rebuttal Notice").
2.5 After timely receipt by Escrow Agent of Sellers' Rebuttal Notice or
Buyer's Rebuttal Notice, Escrow Agent shall not deliver the Escrow Fund until
such time as Escrow Agent receives: (a) a written agreement signed by Sellers'
Representative and Buyer providing instructions as to the disposition of the
Escrow Fund, or (b) a certified copy of an order or judgment from an arbitrator
or court which has become final (meaning that the order or judgment is no longer
subject to appeal to or review by a court of competent jurisdiction) with
respect to the disposition of the Escrow Fund, at which time, Escrow Agent shall
deliver the Escrow Fund in accordance with said agreement, order or judgment.
Any interest earned on the Escrow Fund in all events shall be delivered to Buyer
at the termination of this Agreement. Notwithstanding the foregoing, after
receipt by Escrow Agent of Sellers' Rebuttal Notice or Buyer's Rebuttal Notice,
Escrow Agent may, but need not: (a) deposit the Escrow Fund with any court which
has properly assumed jurisdiction of any dispute hereunder, or (b) commence an
action in interpleader in any court of competent jurisdiction in Ohio and
deposit the Escrow
-2-
<PAGE> 3
Fund and any interest earned thereon with such court; and thereupon, Escrow
Agent shall be discharged from all further duties under this Agreement.
2.6 Notwithstanding any other provision of this Escrow Agreement,
Escrow Agent shall, upon receipt of written instructions signed jointly by
Sellers' Representative and Buyer, deliver the Escrow Fund to the party or
parties named in, or otherwise act in accordance with such instructions.
3. GENERAL PROVISIONS
------------------
3.1 This Escrow Agreement shall become effective as of the date hereof
and shall continue in force until the final delivery of the Escrow Fund and any
interest earned thereon by Escrow Agent pursuant to the terms of this Escrow
Agreement. This Agreement shall then terminate and the Escrow Agent shall be
discharged of all responsibility hereunder.
3.2 All notices, demands or other communications required or permitted
by this Escrow Agreement shall be in writing and shall be: (a) delivered
personally, (b) sent, charges prepaid, by nationally recognized overnight
delivery service, or (c) by facsimile transmission, to all of the following
persons at the specified addresses or facsimile transmission phone number (or at
such other address or facsimile transmission phone number as any party may
designate in writing to the other parties):
To Sellers: James H. Levy, Sellers' Representative
c/o The Park Lane Group
750 Menlo Ave., Suite 340
Menlo Park, CA 94025
Fax: (415) 324-3817
Copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Arthur F. Schneiderman
Fax: (415) 493-6811
If to Buyer: Regent Communications, Inc.
50 East RiverCenter Boulevard, Suite 180
Covington, KY 41011
Attention: Terry S. Jacobs
Fax: (606) 292-0352
and to: Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Attention: Alan C. Rosser
Fax: (513) 241-8289
-3-
<PAGE> 4
If to Escrow Agent: Star Media
5080 Spectrum Drive, Suite 609 East
Dallas, Texas 75248
Attn: Peter Handy
Fax: (972) 458-1330
A copy of any notice or communication given by any party to any other party
hereto shall be given at the same time to every party to this Escrow Agreement.
Each notice, demand or other communication which shall be delivered or sent in
the manner described above shall be deemed effective for all purposes at such
time it is actually delivered to the addressee (with the delivery receipt or the
affidavit of messenger or facsimile confirmation sheet being deemed conclusive
but not exclusive evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
3.3 In no event shall the Escrow Agent be liable for any act or failure
to act under the provisions of this Escrow Agreement, except where its acts are
the result of its own gross negligence or willful misconduct. The Escrow Agent
shall have no duties except those which are expressly set forth herein, and it
shall not be bound by any waiver, modification, amendment, termination or
rescission of this Escrow Agreement, unless in writing received by it and signed
by Buyer and Sellers' Representative. No right, duty or obligations of the
Escrow Agent hereunder shall be changed or modified without the Escrow Agent's
prior written consent.
3.4 The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, receipt or other paper or document furnished
to it in connection herewith, not only as to its due execution and the validity
and effectiveness of its provisions, but also as to the truth and acceptability
of any information therein contained, which it reasonably believes to be genuine
and what it purports to be.
3.5 In the event that the Escrow Agent shall find it necessary to
consult with counsel of its own choosing in connection with this Escrow
Agreement, the Escrow Agent shall not incur any liability for any action taken
in accordance with such advice. Buyer, on the one hand, and Sellers, on the
other hand, jointly and severally, shall indemnify and hold harmless the Escrow
Agent for any liability, loss, claim or damage incurred by the Escrow Agent in
connection with this Escrow Agreement, including any claims by third parties,
unless such liability, loss, claim or damage is a result of Escrow Agent's own
gross negligence or willful misconduct. This indemnification shall survive
termination of this Escrow Agreement.
3.6 The Escrow Agent may resign at any time by giving a minimum of
thirty (30) days prior written notice of resignation to both Buyer and Sellers,
such resignation to be effective on the date specified in such notice. Any
assets held by the Escrow Agent under the terms of this Escrow Agreement as of
the effective date of the resignation shall be delivered to a successor Escrow
Agent designated in writing by both Buyer and Sellers' Representative.
3.7 Escrow Agent is not a party to, and is not bound by, any agreement
relating to the Escrow Fund other than as expressly set forth herein. In the
event that any of the terms and provisions of any other agreement (excluding any
amendment to this Escrow Agreement)
-4-
<PAGE> 5
between any of the parties hereto, conflict or are inconsistent with any of the
provisions of this Escrow Agreement, the terms and provisions of this Escrow
Agreement shall govern and control in all respects.
3.8 The Escrow Agent shall serve hereunder without compensation. In the
event that Buyer or Sellers file a lawsuit or institute arbitration or other
formal legal action against the other (including any counterclaim to a lawsuit
filed by the other party) to enforce its right to the Escrow Fund under this
Agreement, the prevailing party shall be reimbursed by the other party (either
Sellers or Buyer, as the case may be) and the non-prevailing party shall
reimburse Escrow Agent for all expenses incurred therewith, including reasonable
attorneys' fees.
3.9 This Escrow Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
3.10 The construction and performance of this Escrow Agreement shall be
governed by the laws of the State of California without giving effect to the
choice of law provisions thereof.
3.11 This Escrow Agreement may be executed in one or more counterparts,
each of which will be deemed an original and all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above set forth.
REGENT COMMUNICATIONS, INC. STAR MEDIA
By:____________________________ By:____________________________
Name:__________________________ Name:__________________________
Its:___________________________ Its:___________________________
-5-
<PAGE> 6
SELLERS:
___________________________________ ______________________________________
Richard Blue Paul M. Cook, Co-Trustee of the Paul and
Address: Marcia Cook Living Trust dated 4/21/92
___________________________________ Address:
___________________________________ ______________________________________
______________________________________
___________________________________
James H. Levy, as Co-Trustee of James ___________________________________
Levy and Marcia Levy Community Marcia L. Cook, co-Trustee of the Paul
Property Trust U/D/T Dated and Marcia Cook Living Trust
May 2, 1986 dated 4/21/92
Address: Address:
___________________________________ ______________________________________
___________________________________ ______________________________________
___________________________________ ______________________________________
Marcia Klein Levy, as Co-Trustee of Susan B. Ford
the James Levy and Marcia Levy Address:
Community ______________________________________
Property Trust U/D/T Dated May 2, 1986 ______________________________________
Address:
___________________________________ ______________________________________
___________________________________
Richard W. Worthing
___________________________________ Address:
Arthur Schneiderman
Address: ______________________________________
___________________________________ ______________________________________
___________________________________
BancBoston Ventures, Inc. ______________________________________
By:_________________________________ Thomas W. Ford
Printed Name:_______________________ Address:
Title:______________________________ _______________________________________
Address: _______________________________________
____________________________________
____________________________________
-6-
<PAGE> 7
Trantek Traders Ltd.
By:___________________________________
Quest Ventures II, L.P. Printed Name:_________________________
By:___________________________________ Title:________________________________
Printed Name:__________________________ Address:
Title:__________________________________ ______________________________________
Address: ______________________________________
____________________________________
____________________________________
Nazem & Company III, L.P.
By:___________________________________
Quest Ventures International, L.P. Printed Name:_________________________
By:___________________________________ Title:________________________________
Printed Name:_________________________ Address:
Title:________________________________ ______________________________________
Address: ______________________________________
______________________________________
______________________________________ Douglas M. Laurice, Trustee, WSGR
Retirement Plan FBO Arthur F.
______________________________________ Schneiderman
David Nierenberg Address:
Address: ______________________________________
______________________________________ ______________________________________
______________________________________
______________________________________ ______________________________________
James H. Levy, Trustee FBO the James H. Jeff Drazan
Levy Separate Property Trust dated Address:
9/27/84 ______________________________________
Address: ______________________________________
______________________________________
______________________________________
______________________________________
______________________________________ Susie Gharib
Paul M. Cook Address:
Address: ______________________________________
______________________________________ ______________________________________
______________________________________
______________________________________ ______________________________________
Marcia L. Cook Fred Nazem, Trustee of Nazem Inc.
Address: Defined Benefit Plan
-7-
<PAGE> 8
______________________________________ Address:
______________________________________ _______________________________________
_______________________________________
______________________________________ _______________________________________
Andrew Pickholtz Jeffrey Krauss
Address: Address:
______________________________________ _______________________________________
______________________________________ _______________________________________
Seabourne World Express Group PLC
By:___________________________________
Printed Name:_________________________
Title:________________________________
Address:
______________________________________
______________________________________
-8-
<PAGE> 9
FIRST AMENDMENT TO DEPOSIT ESCROW AGREEMENT
This First Amendment to Deposit Escrow Agreement (the "Amendment"),
dated February 2, 1998, is entered into by and among Regent Communications, Inc.
("Buyer"); all of the shareholders ("Sellers") of The Park Lane Group, executed
on behalf of Sellers by James H. Levy pursuant to authority granted to him as
Sellers' Representative; and Star Media, as escrow agent.
WHEREAS, Buyer, Sellers, and Star Media are parties to a Deposit Escrow
Agreement, dated June 16, 1997 (the "Deposit Agreement") whereby Buyer has
deposited with Star Media a Letter of Credit in the amount of $1,175,000
pursuant to the terms of a Stock Purchase Agreement of even date therewith
between Sellers and Buyer (the "Purchase Agreement"); and
WHEREAS, the said Letter of Credit has an expiration date of June 30,
1998; and
WHEREAS, Buyer has agreed to extend the expiration date under certain
circumstances set forth in a First Amendment to the Purchase Agreement of even
date herewith; and
WHEREAS, the parties desire to amend the Deposit Agreement to provide
certain remedies to Sellers in the event the said Letter of Credit is not
renewed or converted to cash as required under the terms of the Purchase
Agreement, as amended;
NOW, THEREFORE, it is hereby agreed that the Deposit Agreement is
hereby amended as follows:
1. Section 2.3 of the Deposit Agreement is hereby amended in its
entirety to provide as follows:
"2.3 The Escrow Agent shall deliver the Escrow Fund
to Sellers according to the following procedures:
(a) On the fifth (5th) business day after
Escrow Agent's receipt of written notice from Sellers'
Representative (with evidence of service of such notice on
Buyer) that (i) the Purchase Agreement has been terminated
pursuant to Section 13.01(c) by reason of a failure of Buyer
to deliver the closing documents referred to in Section 9.04
or renew or convert the Letter of Credit to cash, which
failure was not cured within any applicable cure period, and
(ii) all other conditions to Closing are at such time
satisfied or waived (other than such conditions as can
reasonable be expected to be satisfied by the Closing)
("Sellers Notice"), Escrow Agent shall deliver the Escrow Fund
to Sellers, c/o James H. Levy ("Sellers' Representative"), c/o
Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo
Alto, California 94304; provided, however, that Escrow Agent
shall make no such
<PAGE> 10
delivery if Buyer, prior to the expiration of the aforesaid
five (5) business day period, has provided notice to Escrow
Agent and Sellers that Sellers are not entitled to the
Escrow Fund (a "Buyer's Rebuttal Notice").
(b) On the fifteenth (15th) day after Escrow
Agent's receipt of written notice from Sellers' Representative
(with evidence of service of such notice on Buyer) that (i)
the Purchase Agreement has been terminated pursuant to Section
13.01(c) solely because of Buyer's material breach (other than
as described in Section 2.3(a) above) of the Purchase
Agreement which was not cured within any applicable cure
period, and (ii) all other conditions to Closing are at such
time satisfied or waived (other than such conditions as can
reasonable be expected to be satisfied by the Closing)
("Sellers Notice"), Escrow Agent shall deliver the Escrow Fund
to Sellers, c/o James H. Levy ("Sellers Representative"), c/o
Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo
Alto, California 94304; provided, however, that Escrow Agent
shall make no such delivery if Buyer, prior to the expiration
of the aforesaid 15-day period, has provided notice to Escrow
Agent and Sellers of its countervailing claim to the Escrow
Fund or otherwise claims that Sellers are not entitled to the
Escrow Fund for any reason ("Buyer's Rebuttal Notice")."
This Amendment may be executed in one or more counterparts and by
facsimile, each of which will be deemed an original and all of which together
will constitute one and the same instrument. This Amendment and a
contemporaneous amendment to the Purchase Agreement and Time Brokerage Agreement
embody the entire agreement and understanding of the parties and supercede any
and all prior agreements and understandings relating to the matters specifically
covered herein. Except as amended hereby, the terms and conditions of the
Deposit Agreement remain in full force and effect.
This Amendment has been duly authorized, validly executed, and
delivered and constitutes the valid and binding agreement of the parties hereto.
All capitalized terms used herein and not otherwise defined have the meaning
ascribed to them in the agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
REGENT COMMUNICATIONS, INC. SELLERS' REPRESENTATIVE
By: ________________________________ __________________________________
Terry S. Jacobs James H. Levy
Chairman and Chief Executive Officer
-2-
<PAGE> 11
STAR MEDIA
By:__________________________________________________
Name:________________________________________________
Its:_________________________________________________
-3-
<PAGE> 1
Exhibit 10(r)
LEASE AGREEMENT
Between
CPX-RIVERCENTER DEVELOPMENT CORPORATION
LANDLORD
and
REGENT COMMUNICATIONS. INC.
TENANT
<PAGE> 2
LEASE AGREEMENT
---------------
TOWERS OF RlVERCENTER
COVINGTON, KENTUCKY
THIS LEASE AGREEMENT, hereinafter known as the "Lease" entered into
effect this 17th day of January, 1994, between CPX-RIVERCENTER DEVELOPMENT
CORPORATION, a Kentucky corporation, whose principal place of business is P O.
Box 75020, Cincinnati, Ohio 45275, hereinafter known as "Landlord," and REGENT
COMMUNICATIONS, INC., a _______________, whose principal place of business is 50
RiverCenter Boulevard, Suite 180, Covington, Kentucky 41011, hereinafter known
as "Tenant."
WITNESSETH:
-----------
In consideration of the rent hereafter reserved and the covenants
herein contained, each party to this Lease hereby agrees:
(1) PREMISES:
---------
Landlord does hereby lease and demise to the Tenant and Tenant
does hereby take and rent from the following premises:
Agreed to be Three Thousand Sixty (3,060) rentable square feet
of the first floor(s), Suite 180 of the Towers of RiverCenter located
at 50 East RiverCenter Boulevard, Covington, Kentucky 41011. That
portion which is leased to Tenant is designated in red on the floor
plan attached as Exhibit "A" and is hereinafter known as the "Leased
Premises". The entire building, of which the Leased Premises from a
part, is hereinafter known as the "Building". The Building and other
buildings which comprise RiverCenter, if any, are situated upon a tract
of land hereinafter known as the "Developed Parcel," which is more
particularly described in Exhibit "B". The Building is also part of the
property demised to Landlord pursuant to an Air Rights Lease, which is
more fully described in Paragraph (45).
(2) TERM:
-----
The term of this Lease shall be for five (5) years and zero
(0) months beginning on the first day of April, 1994 and ending on the last day
of March, 1999, subject however to the terms of Paragraph (3) and further
subject to any of the conditions or covenants of this Lease or pursuant to law.
(3) CONDITIONS OF AND IMPROVEMENTS TO LEASED PREMISES:
--------------------------------------------------
Immediately upon execution of this Lease, Landlord shall
commence any alterations or improvements to the Leased Premises indicated on
Exhibit "C". Landlord shall
-2-
<PAGE> 3
proceed diligently with said work and use its best efforts to complete same by
April 1, 1994, if this Lease is fully executed by January 21, 1994; but, if the
alterations or improvements are not substantially completed or alterations or
improvements are not substantially completed or if the Leased Premises are not
available for occupancy by said date, Tenant shall have no claim against
Landlord due to such delay, excepting only that the term of this Lease shall not
commence until the Leased Premises are deemed to be available to Tenant, and the
term shall expire five (5) years and zero (0) months thereafter. The Leased
Premises shall be deemed to be available to Tenant at the earlier of the time
when:
(a) the alterations or improvements to be made by Landlord are
substantially completed (notwithstanding the necessity of punch list or minor
repairs and adjustments still to be made by the Landlord or notwithstanding the
Tenant has not completed installation and/or connection of its fixtures and/or
equipment); or
(b) the Tenant actually occupies the Leased Premises.
Immediately after the actual-commencement date of this Lease has been
determined, if at variance with Paragraph (2), Landlord and Tenant shall execute
a written instrument fixing the commencement and termination dates of this
Lease.
Tenants taking possession shall be conclusive evidence that Leased
Premises were then in good order and satisfactory condition, except for the
completion of punch list items, if any.
Notwithstanding anything else to the contrary in this Paragraph (3), if
Landlord is not able to complete alterations or improvements to the Leased
Premises due to delays caused by Tenant, its employees, agents or contractors,
then the term of this Lease shall not be delayed, but shall commence according
to Paragraph (2).
OPTION TO RENEW:
- ----------------
Provided that Tenant is not in default during the initial term of this
Lease, Tenant shall be given two (2) five (5) year options to renew, market
rates to be negotiated. Tenant shall be required to give six (6) months written
notice of its intent to exercise such options.
LOBBY LEVEL FUMES:
- ------------------
Landlord agrees to use reasonable efforts to minimize any fumes from
the Deli or fumes from any future restaurant on the first floor of the building.
ACCESS TO LEASE PREMISES:
- -------------------------
Landlord agrees not to locate any vendors (i.e. hotdog or magazine stands)
directly in front of the Tenant's Leased Premises.
-3-
<PAGE> 4
(4) OCCUPANCY PRIOR TO TERM:
------------------------
If permitted by law, Landlord may allow Tenant to occupy the
Leased Premises prior to the commencement of the term stated in Paragraph (2).
If Tenant occupies the Leased Premises on a day other than the first day of the
month, the Monthly Base Rent provided for in Paragraph (6) and the Additional
Rant provided for in Paragraph (a) shall be adjusted and prorated so that Tenant
shall only pay rent for the actual number of days in the month. Tenant shall
also comply with all other terms and provisions of this Lease in the same manner
as if the term had, in fact, commenced.
(5) SECURITY DEPOSIT:
-----------------
Tenant shall deposit with Landlord upon execution hereof the
sum of Four Thousand Four Hundred Sixty Three and no/100 ($4,463.00) as security
for Tenant's faithful performance of Tenant's obligations hereunder. If Tenant
falls to pay rent or other charges due hereunder, or otherwise defaults with
respect to any provision of this Lease, Landlord may use, apply or retain all or
any portion of said deposit for the payment of any rent or other charge in
default or for the payment of any other sum to which Landlord may become
obligated by reason or Tenant's default, or to compensate Landlord for any loss
or damage which Landlord may suffer thereby. Said Security Deposit shall not
earn interest thereon for the benefit of Tenant. No trust relationship is
created herein between Landlord and Tenant with respect to said Security
Deposit.
(6) BASE RENT:
----------
(a) As Annual Base Rent for the use and occupancy of the
Leased Premises during the initial term, Tenant shall pay to Landlord rent
pursuant to the schedule attached as Exhibit "D."
The Annual Base Rent is to be payable in equal monthly
installments (the "Monthly Base Rent") in advance on the first day or each and
every month during the initial or extended term of this Lease.
(b) Tenant agrees to pay as supplemental base rent for the use
or said Leased Premises an amount equal to ten percent (10%) of any Monthly Base
Rent payment which is not received by Landlord within five (5) days of the date
said Monthly Base Rant is due. Said supplemental base rent shall be in addition
to any other amounts due under this Lease.
(c) Rent shell be mailed by Tenant to Landlord at Landlord's
principal place of business or at such other place as Landlord any designate in
writing. Rent shall be payable promptly without deduction or setoff or prior
demand thereof by Landlord. All payments shall be in U.S. dollars, in cash or by
check, all checks subject to collection.
-4-
<PAGE> 5
(7) ESCALATION OF BASE RENT:
------------------------
Not applicable.
(8) ADDITIONAL RENT:
----------------
(a) For each calendar year or partial calendar year during the
term hereof (or renewal periods, if any), Tenant shall pay to Landlord, as
Additional Rent, its pro rata share of the Operating Expenses of the Building
and the Developed Parcel, as hereinafter defined. For purposes of this Lease,
Tenant's pro rata share of the Operating Expenses is deemed to be one and ten
one hundredths percent (1.10%). 1994 Operating Expenses shall not exceed
$4.25/s.f. There shall be a 4 1/2% per year CAP on all increases in controllable
operating expenses (excluding taxes, utilities, and insurance).
(b) At the commencement of this Lease, or prior to or at the
commencement of any calendar year during the term hereof, Landlord may deliver
to Tenant a written estimate of any Additional Rent (such estimate being
hereinafter referred to as "Estimated Operating Expenses") which may be due
hereunder during the calendar year in which this Lease commences or for any such
succeeding calendar year as the case may be. For each month, Tenant shall pay
1/12 of the amount of the Estimated Operating Expenses for that particular
calendar year in addition to the Monthly Base Rent.
(c) Statements showing the actual Operating Expenses of the
Building and the Developed Parcel and Tenant's proportionate share thereof
(hereinafter referred to as "Statement of Actual Adjustment") shall be delivered
by Landlord to Tenant within a reasonable period of time after the end of any
calendar year in which Estimate Operating Expenses was paid by Tenant or due
Landlord under the provisions hereof. Within thirty (30) days after the delivery
by Landlord to Tenant of such Statement of Actual Adjustment, Tenant shall pay
to Landlord the amount by which the actual adjustment exceeds the amount paid by
Tenant as Estimated Operating Expenses during said previous calendar year, or
Landlord shall credit Tenant the amount by which the Estimated Operating
Expenses exceeded the Statement of Actual Adjustment
(d) The computations set forth in this Paragraph shall be made
on a calendar year basis except if this Lease commences on a day other than the
first day of a calendar year or terminates on a day other than the last day of a
calendar year, in such event the computations shall be made n the basis of the
proportion that the number of days that this Lease was in effect for such
calendar years bears to 365.
(e) For the purposes of this Lease, Operating Expenses shall
mean any and all costs paid or incurred in connection with the operation,
servicing, maintenance and repair of the Building and the Developed Parcel
determined on a cash basis, which shall include, but not be limited to the
following:
-5-
<PAGE> 6
(i) All real estate taxes, assessments,
governmental levies, county taxes or any other governmental charge, ordinary or
extraordinary, unforeseen as well as foreseen, of any kind or nature whatsoever
which are or may be assessed or imposed upon the Building and the Developed
Parcel under the laws of the United States, the State of Kentucky, or any
political subdivision thereof or by the City of Covington, as a substitute in
whole or in part for taxes payable or hereinafter imposed on the Building and
the Developed Parcel or resulting from or due to any change in method of
taxation, but excluding any income, franchise, excise, corporation, estate,
inheritance, succession, capital stock or transfer tax levied on Landlord to the
extent that it is not a substitute in whole or in part for real estate taxes.
(ii) Compensation provided in the form of wages,
salaries and such other compensation and benefits (including insurance, welfare,
retirement, vacation, holiday, sick pay and other fringe benefits) as well as
any adjustments thereto for the following classes of employees, employees of
agents, or agents of Landlord performing services rendered in connection with
the management, operation and maintenance or the Building and the Developed
Parcel;
a. Building Managers;
b. Building department heads and assistants;
c. clerical and accounting staff;
d. elevator operators, including starters
and assistant starters;
e. window cleaners, porters, janitors,
cleaners, dusters, sidewalk shovelers and miscellaneous handymen;
f. watchmen, gardeners, caretakers and
persons engaged in patrolling and protecting the Building;
g. engineers, fireman, mechanics,
electricians, plumbers and persons engaged in the operating and maintenance of
the heating, air conditioning, ventilating, plumbing, electrical and elevator
systems of the Building; and
h. carpenters, plasterers, painters and
other persons engaged in connection with the management, operating and
maintenance of the Building.
(iii) The uniforms of employees of RiverCenter
specified in subdivision (ii) above and the cleaning, pressing and replacement
thereof.
(iv) Payroll taxes, including federal and state
unemployment taxes and social security taxes and any other such taxes that may
be created, payable in connection with the employment of any of the employees
specified in subdivision (ii) above.
-6-
<PAGE> 7
(v) Premiums and other charges incurred by
Landlord with respect to the following insurance (listed below) on employees
specified in subdivision (ii) above, and on the Building and the Developed
Parcel as required by Paragraph (20), and, if Landlord elects to self insure
some or all of the risks as would normally be covered by insurance, an amount
deemed by Landlord in its reasonable discretion to be equal to the amount which
would have been incurred if insurance had been purchased.
a fire; extended coverage, including
windstorm, hail, explosion, riot, rioting attending a strike, civil commotion,
aircraft, vehicle and smoke; all risk; flood; and earthquake;
b. public liability;
c elevator;
d. boiler damage, water damage, legal
liability, and pilferage on equipment and materials for the Building and the
Developed Parcels;
e. workmen's compensation for the employees
specified in subdivision (ii) above;
f. health, accident, disability and group
life on employees enumerated in subdivision (ii) above as therein qualified; and
g. other insurance which Landlord reasonably
deems necessary for a first class office building would carry or which the
holder of any mortgage affecting the Building or the Building and the Developed
Parcel might require to be carried under the terms of such mortgage.
(vi) Costs, premiums, or penalties incurred for
electricity, steam, gas, water or other utilities or fuels required in
connection with the operation and maintenance of the Building and the Developed
Parcel.
(vii) Water and sewer charges.
(viii) Repairs or maintenance of the Building, and
the Developed Parcel and the cost of the supplies, tools, materials and
equipment used in connection therewith.
(ix) Replacement of tools and equipment.
(x) Charges of any independent contractor
incurred in connection with operating, maintaining or repairing the Building
and the appurtenances, including inspection and servicing of elevator,
electrical, plumbing and mechanical equipment; and the furnishing of cleaning
and janitorial services and the cost of materials, tools, supplies and equipment
used in connection therewith.
-7-
<PAGE> 8
(xi) Sales, use and excise taxes on goods and
services purchased or provided by Landlord to properly manage, operate and
maintain the Building and the Developed Parcel.
(xii) Taxes levied against and paid by Landlord on
rents collected, excepting taxes levied and paid under the provisions of (i)
above, and in no way including any state, federal or local income taxes of
Landlord.
(xiii) License, permit and inspection fees.
(xiv) Auditor's fees for public accounting.
(xv) Legal fees of outside or special counsel
retained by Landlord in connection with proceedings for the reduction of real
estate taxes, labor relations, or other matters to the extent that the same
shall be of general benefit to all tenants in the Building.
(xvi) Cost of telephone, telegraph, postage,
stationery supplies and other materials required for routine operation of the
Building Manager's office.
(xvii) Association dues and subscriptions.
(xviii) Management fees.
(xix) Restroom keys, security passes, directory
strips, control cards.
(xx) Amortization of capital improvements made to the
Building which will improve Building operating efficiencies or which may be
required by governmental authorities, with interest at the rate of ten percent
(18%) per annum on the unamortized amount.
(xxi) Such other expenses and costs of any nature
whatsoever, whether or not herein mentioned, which would be construed as an
operating expense by Landlord in its reasonable discretion and in accordance
with sound real estate accounting practices.
(xxii) Any amounts (including but not limited to
ground rent) which Landlord, as lessee under the Air Rights Lease, is required
to pay to its lessor.
(f) Notwithstanding anything contained in subparagraph (e), no
expense incurred for the following shall be included in Operating Expenses.
(i) Any repairs to the Building including the Leased
Premises where the occurrence causing the damage or loss necessitating repair is
reimbursed by insurance carried by Landlord.
(ii) Leasing or procuring new tenants including
leasing commissions paid to agents of Landlord or other brokers.
-8-
<PAGE> 9
(iii) Renovating space for new tenants or in
renovating space vacated by any tenant.
(iv) Income, capital stock, estate or inheritance
taxes payable by Landlord, provided the same shall not have been levied as a
substitute for or supplement to real property taxes.
(v) Cost of utilities charged to tenants and any
portion of Landlord's payroll, material and contract costs of other services
charged to tenants.
(vi) Costs incurred by Landlord for Tenant's
alterations.
(vii) Cost of painting and decorating the premises of
other tenants.
(viii) Depreciation of the Building.
(ix) Cost of capital improvements (except as set
forth in (xxi) above).
(x) Interest on debt or amortization payments on any
mortgage or mortgages (except as set forth in (xxiii) above).
(xi) Any cost or expense of any nature whatsoever
which Landlord shall incur in connection with the operation of the Building
which is specifically reimbursed to the Landlord from any source, charged
directly to the tenant on whose behalf it is incurred (whether or not the same
shall finally be paid), or for which Landlord is otherwise compensated or
recoups such expense by way of setoff, reduction of recovery allowed, or
otherwise.
(g) If at any tine during the term of the Lease the occupancy
of the Building is less than ninety-five (95) of its capacity, than for the
purpose of this Paragraph, the Operating Expenses per rentable square foot of
rentable floor space shall nevertheless be computed as if the Building were
ninety-five (95) percent occupied.
(h) The obligation of Landlord and Tenant under this
Paragraph shall survive the expiration or other termination of this Lease.
(i) All costs and expenses which Tenant assumes or agrees to
pay to Landlord pursuant to this Lease shall be deemed an additional rent, and,
in the event of nonpayment, Landlord shall have all the rights and remedies
herein provided for in case of nonpayment of rent.
(j) In no event will the Annual Base Rent be reduced below
the amount in Paragraph (6) and (7) as a result of any adjustments pursuant to
this Paragraph.
-9-
<PAGE> 10
(9) SERVICES AND UTILITIES:
-----------------------
(a) The Landlord hereby covenants an. agrees to maintain in
good condition and repair the foundation, roof, elevators, exterior masonry
walls of the Building and all common areas in the Building and on the Developed
Parcel, as well as sewer, water and other pipes and conduits located beyond the
boundaries of the Leased Premises; and to make all repairs becoming necessary by
reason of any structural defects in the Building; provided, however, that
Landlord shall not be required to make any repairs necessitated by reason of any
act or omission of Tenant, its officers, agents, employees, visitors, or anyone
claiming under Tenant, or caused by any alteration, addition, or improvement
made by Tenant or anyone claiming under Tenant, and that if Landlord does make
any such repairs Tenant shall promptly, upon demand, reimburse to Landlord the
cost thereof.
(b) The Landlord shall maintain, operate and repair heating,
ventilation, air conditioning, plumbing and sprinkler systems (hereinafter known
as the "Systems") and shall provide:
(i) Heating, ventilating and air conditioning in
the Leased Premises at the temperature required in Landlord's judgment for a
comfortable occupancy of the Leased Premises during normal business hours (that
is, daytime hours of 8:00 a.m. through 6:00 p.m. weekdays and 8:00 a.m. to 1:00
p.m. on Saturdays, excluding Sunday and Holidays). Because of System
requirements, if Tenant shall require air conditioning or heating service at any
other time, Landlord shall furnish such "after hours" air conditioning or
heating service upon reasonable advance notice from Tenant and Tenant shall pay
Landlord's actual cost. A minimum charge for two (2) hours of "after hours"
service will be made for any such service. After hours HVAC rate is $25.00/hour.
Use of the leased Premises (or any part
thereof) in a manner exceeding the designed conditions therefor for air
conditioning services, or rearrangement of partitioning which interferes with
normal operation of the Systems, or use of computer or data processing machines
may require changes in the System service for the Leased Premises.
Such changes so occasioned for the leased
Premises shall be made by Tenant at its expense but subject to Landlord's
approval.
(ii) Cold water for drinks, lavatory and toilet
purposes and hot water for lavatory purposes.
(c) The Landlord shall provide electricity consumed in the
Leased Premises for normal lighting, air conditioning and operation of the
Tenant's normal office equipment only. However, Landlord shall not be liable in
any way to Tenant for any failure or default in supply or character of electric
current furnished to the Leased Premises. Landlord shall supply the Leased
Premises with required lamps, bulbs, ballast, starters, and replacements thereof
in the ordinary course of business, with Tenant's cooperation, through proper
communication of need for said replacement items. Tenant's use of electric
current in the Leased Premises shall not at any time exceed the capability of
the electrical conductors and equipment in or otherwise servicing the
-10-
<PAGE> 11
Leased premises. Tenant shall not make or perform or permit any alterations to
wiring, installations, lighting fixtures or other electrical facilities in any
manner without prior written consent of Landlord. In each instance, should
Landlord grant any such consent for additional risers or other equipment
required thereof, such equipment shall be installed by Landlord or Landlord's
approved agent and the cost thereof shall be paid by Tenant upon Landlord's
demand. As a condition to grant any such consent, Landlord may require that
Tenant agree to an increase in the Annual Base Rent payable hereunder by an
amount which will reflect the value to Tenant of the additional electrical
current to be made available to the Tenant. Such calculation, if required, may
be determined by a reputable independent electrical engineer to be selected by
Landlord with the cost of said engineer to be paid equally by both parties.
(d) Tenant will not install or operate in the Leased Premises
any heavy duty electrical equipment or machinery, without first obtaining prior
written consent of Landlord. Landlord may require, as a condition to its consent
for the installation of such equipment or machinery, payment by Tenant of
additional rent for excess consumption of electricity that may be occasioned by
the operation of said equipment or machinery. Landlord may make periodic
inspections of the Leased Premises at reasonable times to determine that
Tenant's electrically operated equipment and machinery complies with the
provisions of this section and to review for excessive heat generation.
Any individual piece of electrically operated
machinery or equipment that draws in excess of two (2) kilowatts shall be deemed
as requiring excess electrical current. The total average consumption of
electricity in excess of five (5) watts per square foot for the Leased Premises
shall also be deemed excessive.
Landlord may require that one or more separate meters by installed to
record the consumption or use of electricity, or shall have the right to cause a
reputable independent electrical engineer to survey and determine the quantity
of electricity consumed by such excessive use. The cost of any such survey or
meters and of installation, maintenance and repair thereof shall be paid for by
Tenant. Tenant agrees to pay Landlord (or the utility company, if direct service
is provided by the utility company), promptly upon demand therefor, for all such
electric consumption and demand as shown by said meters, or a flat monthly
charge determined by the survey, as applicable, at the rates charged for such
service by the local public utility company. If Tenant's cost of electricity
based on meter readings is to be paid to Landlord, Tenant shall pay a service
charge related thereto.
(e) Landlord shall not be liable for its failure to maintain
comfortable atmospheric conditions in all or any portion of the Leased Premises
due to heat generated by any equipment or machinery installed by Tenant (with or
without Landlord's consent) that exceeds generally accepted engineering design
practices for normal office purposes. If Tenant desires additional cooling to
offset excessive heat generated by such equipment or machinery, Tenant shall pay
for auxiliary cooling equipment and its operating costs including without
limitation electricity, gas, oil and water, and/or pay for excess electrical
consumption by the existing cooling system, as appropriate.
-11-
<PAGE> 12
(f) The Landlord shall also provide the cleaning services
detailed on Exhibit "E."
(10) USE OF LEASED PREMISES:
-----------------------
(a) Tenant shall use and occupy the Leased Premises for
general business offices and no other purpose.
(b) Tenant, at its expense, shall comply with all Federal,
State, County and City laws, ordinances, rules and regulations affecting the use
or occupancy of the Leased Premises by Tenant or the business at any time
transacted by Tenant;
(c) As of the commencement date of this Lease, the Leased
Premises shall be in compliance with all applicable laws, ordinances, rules and
regulations of governmental authorities.
(d) Tenant shall comply with all the Rules and Regulations
which have been adopted by Landlord, attached as Exhibit "F," (and such
reasonable changes or additions thereto) for the protection and welfare of the
Building, the Developed Parcel and other tenants. Landlord shall enforce such
rules and regulations in a uniform and non-discriminatory manner as to all
tenants in the building.
(e) Tenant shall also comply with all the terms and conditions
contained in the Air Rights Lease.
(11) PARKING:
--------
Parking will be provided to Tenant in accordance with Exhibit
"G" attached hereto.
(12) CONTINUANCE OF OCCUPANCY:
-------------------------
Not applicable.
(13) REPAIRS:
--------
(a) Tenant shall at its expense keep in good order, condition,
and repair the interior of the Leased Premises, excluding such items as Building
HVAC equipment, structural systems and lighting. However, Tenant shall pay for
any and all damage caused by negligence of Tenant, its officers, agents,
employees and guests.
(b) If Tenant fails to maintain and repair the Leased Premises
as required by Subparagraph (13)(a), Landlord may, on ten (10) days prior notice
(except that no notice shall be required in case of emergency), enter the Leased
Premises and perform such maintenance or repair on behalf of Tenant. In such
case, Tenant shall reimburse Landlord for all costs incurred in performing such
maintenance or repair immediately upon demand.
-12-
<PAGE> 13
(14) ALTERATIONS:
------------
No alterations, modifications, additions or installations to
the Leased Premises shall be made unless the Landlord shall first have given
written approval of the plans and specifications thereof, and shall have been
protected, to the Landlord's satisfaction, against any cost or damage incidental
thereto. Prior to any approved construction, Tenant shall first have secured all
necessary building and other permits. Tenant agrees to make such alternations,
modifications, additions or installations to the Leased Premises as may be
required by building, OSHA, or other applicable regulations or local codes in
the jurisdiction in which the Leased premises are located. No alterations,
modifications, additions or installations shall be made which in any way
conflict with the requirements of Landlord's insurance company. All such
alterations, modifications, additions, or installations, when made, shall
become, unless the Landlord elects otherwise as provided in Paragraph (16)
hereof, the property of the Landlord and shall remain upon and be surrendered
with said Leased premises as a part thereof at the end of the term of this
Lease.
(15) FIXTURES AND UNAUTHORIZED USE OF PREMISES:
------------------------------------------
Tenant shall not without Landlord's prior written consent
attach any fixtures in or to the Leased premises or change, alter, or made
additions to the Leased Premises nor permit any annoying sound device, install
any additional locks, overload any floor, or deface the Leased Premises. Any
attached fixtures or any alterations, additions, or improvements made or
attached by Tenant shall on the expiration or termination of this Lease, if
requested by Landlord, be promptly removed at Tenant's expense, and the Leased
premises restored by Tenant at its expense to its original condition, ordinary
wear and tear excepted. Any such fixture, alteration, addition and/or
improvement not requested to be moved shall remain on the Leased Premises and
shall become and remain the property of Landlord. All Tenant's fixtures,
installations, and personal property not removed form the Leased Premises upon
expiration or termination and not required by Landlord to have been removed as
provided in this Paragraph shall be conclusively presumed to have been abandoned
by Tenant, and title thereto shall pass to Landlord under this Lease as by a
bill of sale.
(16) WARRANTY OF QUIET ENJOYMENT:
----------------------------
Tenant, upon paying the rents and keeping and performing the
covenants of this Lease to be performed by Tenant, shall peacefully and quietly
hold, occupy, and enjoy said Leased Premises during said term or any renewal
thereof.
(17) INTERRUPTION OF SERVICE:
------------------------
Landlord does not warrant that any services to be provided by
Landlord will be free from interruption due to causes beyond Landlord's
reasonable control. Temporary interruption of services or unavoidable delay in
the making of repairs shall not be deemed an eviction or disturbance of Tenant's
use and possession nor render Landlord liable to Tenant for
-13-
<PAGE> 14
damage by abatement of rent or otherwise nor relieve Tenant from performance of
its obligations under this Lease.
(18) RIGHTS RESERVED BY LANDLORD:
----------------------------
Landlord shall have the following rights exercisable without
notice and without liability to Tenant:
(a) To change the name or street address of the Building.
Landlord to incur expenses required to replace Tenant's stationery and business
cards.
(b) To have pass keys to the Leased Premises;
(c) To require all persons entering or leaving the Building
during such hours as Landlord may from time to time reasonably determine to
identify themselves to a watchman by registration or otherwise, and to establish
their right to enter or leave, and to exclude or expel any peddler, solicitor or
beggar at any time from the Developed Parcel or the Building;
(d) To approve the weight, size and location of safes,
computers, and other heavy articles or equipment in and about the Leased
Premises and to require all such items and other office furniture and equipment
to be moved to and out of the Building only at such times and in such manner as
Landlord shall direct and in all events at Tenant's sole risk and
responsibility;
(e) Landlord may, at its expense, relocate the Tenant's Leased
premises within the Building to a space built out similar to Tenant's existing
offices in order to facilitate leasing of the Building and/or construction
and/or alterations of the Building;
(f) Landlord or its agents shall have the right to enter the
Leased Premises at reasonable times for the purpose of inspecting the same,
showing the same to prospective purchasers, lenders, or tenants, making such
alterations, repairs, improvements or additions to the Leased Premises as
Landlord may deem necessary or desirable.
(g) Within six (6) months prior to the date of the expiration
of this Lease, Landlord or its agents shall have the right to enter the Leased
premises with reasonable notification at all reasonable times for the purpose of
exhibiting the Leased Premises to prospective tenants.
(h) At any time after the completion of the Building, Landlord
shall have the right to change the arrangement or location of such of the
following as are not contained within the Leased Premises or any part thereof:
entrances, signs, passageways, doors and doorways, corridors, stairs, toilets
and other like public service portions of the Building; providing, however, that
in no event shall Landlord make any change which shall diminish the area of the
Leased premises, make any change which shall interfere with the access to the
Leased premises from and through the Building, or change the character of the
Building from that of a first-class office building.
-14-
<PAGE> 15
(19) FIRE OR OTHER CASUALTY:
-----------------------
Should the Leased Premises be damaged or destroyed by any
cause and such damage or destruction be of such a nature that it may be repaired
or restored within a period of one hundred twenty (120) days after the
occurrence, then this Lease shall not terminate, but it shall be the obligation
of Landlord to repair or restore the leased Premises as nearly as possible to
its condition prior to such damage or destruction, and the Landlord shall
proceed promptly to make such repairs or restoration; provided, however, that
such repairs or restoration; provided, however, that such repairs or restoration
can be made by Landlord for an amount not in excess of the amount recovered by
Landlord on the fire, extended coverage and all risk insurance. There shall be a
full abatement of rent during the period that the Leased Premises may be wholly
unavailable for sue by Tenant for the operation of its business. There shall be
a partial abatement of rent during the period that the Leased Premises is
partially unavailable. Should the damage or destruction be of a character that
will not permit repair or restoration of the Leased Premises within the one
hundred twenty (120) days after the occurrence thereof, or if the cost of such
repair or restoration exceeds Landlord's insurance recovery, either Landlord or
Tenant shall have the privilege of canceling the unexpired term of this Lease
upon giving written notice to the other within forty five (45) days after such
destruction. Landlord will use reasonable efforts to relocate Tenant to another
space within the office building.
(20) INSURANCE:
----------
(a) Landlord shall keep the Building insured against loss by
fire or other casualty with both extended coverage and all risk coverage in an
amount determined by the Landlord not less than 90% of building replacement
cost. In the event that the Landlord's cost of premiums on such insurance
increases due to the hazardous nature of the use and occupancy by Tenant of the
Leased premises, then the entire increase in such insurance cost shall be paid
by Tenant in a lump sum upon receipt of invoice from Landlord.
(b) Landlord shall maintain public liability insurance for the
common areas and the exterior of the Building, as well as the sidewalks and the
parking lot on the Developed Parcel.
(c) Tenant shall, at all times during the term hereof, at its
own expense, carry and keep in full force and effect in companies satisfactory
to Landlord,, public liability insurance in form satisfactory to Landlord, with
limits of (a) at least ONE MILLION DOLLARS ($1,000,000.00) for bodily injury,
including death, and property damage, and (b) at least ONE MILLION DOLLARS
($1,000,000.00) aggregate. Landlord may increase the above limits to such
greater amounts of insurance coverage as Landlord may from time to time
reasonably require. Tenant shall also carry Worker's Compensation insurance for
all of Tenant's employees working in the Leased Premises, in an amount
sufficient to comply with applicable laws or regulations.
(d) All property in the Leased Premises, in the Building or on
the Developed Parcel, belonging to Tenant, its agents, employees, or invitees or
to any other person, shall be
-15-
<PAGE> 16
there at the risk of Tenant or such other person only, and Landlord shall not be
liable for damage thereto or theft, misappropriation or loss thereof. In
furtherance of this provision, Tenant shall, during the entire term of this
Lease keep in full force and effect insurance upon all property situated in the
Leased Premises owned by Tenant or for which Tenant is legally liable and also
upon fixtures and improvements installed in the Leased Premises by or on behalf
of Tenant. Such policies shall be for an amount of not less than one hundred
percent (100%) of the full replacement cost with protection against (at a
minimum) fire or other casualty, with both extended coverage and all risk
coverage.
(e) All public liability insurance policies maintained by
Tenant shall name the Landlord and the Tenant as parties insured, and shall
contain a provision that the same may not be canceled or changed without giving
to the Landlord at least thirty (30) days written notice prior to expiration or
cancellation of any such policy. Tenant shall furnish to Landlord a certified
copy of each insurance policy. Furthermore, renewals of such insurance policies
shall be presented to Landlord at least thirty (30) days before the expiration
of such insurance coverages.
(f) Landlord and Tenant, for themselves and their respective
insurers, agree to and do hereby release each other of and from any and all
claims, demands, actions and causes of action that each may have or claim to
have against the other for lose or damage to the property of the other, both
real and personal, caused by or resulting from casualties insured against, or,
if there in no insurance, caused by or resulting from casualties customarily
insurable under ordinary fire insurance policies with both extended and all risk
coverage, notwithstanding that any such loss or damage may be due to or result
from the negligence of either of the parties hereto or their respective
employees or agents.
(g) Landlord, its agents and employees shall not be liable for
losses or damages as a result of any injury to any person or damage to property
(except for damage to the Building itself) sustained by Tenant, by Tenant's
agents or employees, by any occupant of the Leased Premises, the Building or the
Developed Parcel, or by any other person, occurring or resulting directly or
indirectly from any existing or future condition, defect, matter, or thing in
the Leased Premises, in the Building or on the Developed Parcel or from
equipment or appurtenance therein or from accident or from any occurrence, act,
or from negligence or omission of any tenant, occupant or any other person; but
nothing in this Subparagraph (g) shall be deemed to relieve Landlord from
liability for damages for bodily injuries to any person caused by or resulting
from the negligence of Landlord, its agents or employees.
(21) INDEMNIFICATION:
----------------
Landlord and Tenant shall indemnify and hold each other (and
any mortgagee of Landlord) harmless from and against all claims, actions,
lawsuits, damages, liabilities, expenses and costs (including reasonable
attorneys' fees) for any loss of life, bodily injury or property damage caused
by or resulting from: 1) the use or occupancy of the Leased Premises, the
Building, or the Developed Parcel by the Tenant, its officers, agents,
employees, invitees, guests, assignees or subtenants; 2) any occurrence within
the Leased premises; 3) a breach of this Lease by the Tenant; or 4) any
negligent act or omission or misconduct caused wholly or in part by the
-16-
<PAGE> 17
Tenant, its officers, agents, employees, invitees, guests, assignees or
subtenants. Nothing in this Paragraph shall require Tenant to indemnify Landlord
for damage to the Building, to the extent released in Paragraph (20)(f) of this
Lease.
(22) BROKER'S COMMISSION:
--------------------
Tenant represents that it has dealt directly with (and only
with), Thesing Real Estate Services, Inc., (as broker) in connection with this
Lease and that no other broker negotiated or participated in the negotiations of
this Lease or submitted or showed the Leased Premises to it or is entitled to
any commission in connection therewith. Landlord shall be liable for the payment
of any commission due to the broker named in this Paragraph; however, if there
is a violation of the representation herein made by Tenant, and any other broker
claims a commission from Landlord, Tenant shall indemnify and hold the Landlord
harmless from such claim.
(23) SUBORDINATION AND ATTORNMENT:
-----------------------------
(a) The Tenant accepts this Lease subject and subordinate to
the Air Rights Lease, and ground lease, mortgage, deed of trust, or any other
hypothecation or security now or hereafter placed upon the Developed Parcel and
to any and all advances made on the security thereof and to all removals,
modifications, consolidations, replacements and extensions thereof. If any
mortgagee, shall elect to have this Lease prior to the lien of its mortgage, and
shall give written notice thereof to Tenant, this Lease shall be deemed prior to
such mortgage, whether this Lease is dated prior or subsequent to the date of
said mortgage, or the date of recording thereof.
(b) Although the provisions of Paragraph (23) (a) shall be
self operative, Tenant agrees, upon request of Landlord or Landlord's lender, to
execute any documents required to effectuate any attornment, a subordination or
to make this Lease prior to the lien of any mortgage. Tenant's failure to
execute such documents within 10 days after written demand shall constitute a
material default by Tenant hereunder, or, at Landlord's option, Landlord shall
execute such documents on behalf of Tenant as Tenant's attorney-in-fact.
Tenant does hereby make, constitute and irrevocably appoint
Landlord as Tenant's attorney-in-fact, and in Tenant's name, place and stead, to
execute such documents in accordance with this Paragraph (23).
(c) If by reason of a default under the mortgage upon the
Developed Parcel, the interest of Landlord in the Developed Parcel is
terminated, the Tenant will attorn to the holder of such mortgage (or to any
person or entity to which the Developed Parcel is conveyed by such holder) and
will recognize such holder, person or entity as Tenant's landlord under this
Lease. Tenant agrees to execute and deliver, at any time and from time to time,
upon the request of Landlord or of the Landlord's lender any instrument which
may be necessary or appropriate to evidence such attornment and Tenant hereby
appoints Landlord the attorney-in-fact, irrevocable, of Tenant to execute and
deliver for and on behalf of Tenant any such instrument. Tenant further waives
the provision of any statute or rule of law now or hereafter in effect which may
give or
-17-
<PAGE> 18
purport to give Tenant any right of election to terminate this Lease or
to surrender possession of the Leased Premises in the event any proceeding is
brought by Landlord's lender to terminate the interest of the Landlord in the
Developed Parcel and agrees that this Lease shall not be affected in any way
whatsoever by any such proceeding.
(24) ASSIGNMENT AND SUBLETTING:
--------------------------
Tenant shall not assign, mortgage or encumber this Lease nor
sublet or permit the Leased Premises or any part thereof to be used by others,
without the prior written consent of Landlord in each instance. The consent by
Landlord to an assignment or subletting shall not be construed to relieve Tenant
from obtaining the consent of the Landlord to any further assignment or
subletting. The consent by Landlord will not be given unless: a) the subtenant
or assignee assumes the Tenant's obligations under this Lease; and b) Tenant
remains liable for all its obligations under this lease, including extensions or
renewals provided for herein. Nor will consent be given if Tenant is in default
under this Lease. Tenant shall notify Landlord of the name of each proposed
assignee or subtenant and shall provide information to Landlord pursuant to the
financial standing of the proposed assignee or subtenant and shall offer at
Tenant's option to surrender such space to Landlord.
Landlord reserves the right to require as additional rent, 50%
of any subtenant or assignee rent which is in excess of the base rent and
additional rent then being paid by Tenant pursuant to this Lease, and any other
profit or gain realized by Tenant from such assignment or subletting. All sums
payable hereunder by Tenant shall be paid as additional rent upon receipt by
Tenant or upon request by Landlord.
(25) EMINENT DOMAIN:
---------------
Tenant agrees that if the Leased Premises, or any part
thereof, shall be taken or condemned for public or quasipublic use or purpose by
any competent authority, Tenant shall have no claim against Landlord and shall
not have any claim or right to any portion of the amount that may be awarded as
damages or paid as a result of any such condemnation, whether such amount be
awarded for diminution in value to the leasehold or to the fee. It is agreed
that the full amount of such award, if any, made by the taking authorities shall
be paid to and retained by Landlord, free of any claim by Tenant to any portion
thereof, and all rights of Tenant to damages therefor, if any, are hereby
assigned by Tenant to Landlord.
In the event that all or substantially all of the leased
Premises shall be taken or condemned by any governmental authority, then the
term of this Lease shall cease and terminate from the date on which the Tenant
is required, by such taking authority, to surrender possession of said Leased
Premises and the Tenant shall not have nor make any claim against Landlord for
the value of any unexpired term of this Lease. In the event that a portion of
the Leased Premises shall be taken or condemned by any governmental authority,
then this Lease shall continue in full force and effect, and rent shall abate in
an amount which bears the same ratio to the Annual Base Rent as the value of the
floor space taken bears to the value of the total floor space of the leased
Premises. All rentals and other sums payable by Tenant hereunder shall be
adjusted to the date
-18-
<PAGE> 19
on which Tenant is required, by the taking authority, to surrender possession of
the Leased Premises or portion of the Leased Premises so taken.
(26) ESTOPPEL CERTIFICATE:
---------------------
(a) Tenant shall at any time upon not less than ten (10) days'
prior written notice from Landlord execute, acknowledge and deliver to Landlord
a statement in writing: (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease as so modified, is in full force and effect) and the
date to which rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are no uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed. Such statement shall
be in a form as Landlord, purchaser or mortgagee shall require. Any such
statement may be conclusively relied upon by any prospective purchaser or
mortgagee of the leased Premises, or the lessor under the Air Rights Lease.
(b) Tenant's failure to deliver such statement within such
time shall be a material default under this Lease or, at Landlord's option,
Tenant's failure to furnish such statement shall be conclusive upon Tenant: (i)
that this Lease is in full force and effect, without modification except as may
be represented by Landlord, (ii) that there are no uncured defaults in
Landlord's performance, and (iii) that not more than one month's rent has been
paid in advance or such failure may be considered by Landlord as a default by
Tenant under this Lease.
(c) If requested by any purchaser, mortgagee, or the lessor
under the Air Rights Lease, Landlord shall executed such statement on behalf of
Tenant as Tenant's attorney-in-fact. Tenant does hereby make, constitute and
appoint Landlord as Tenant's attorney-in-fact and in Tenant's name, place and
stead to execute such statement in accordance with this paragraph (26).
(27) DEFAULT; REMEDIES UPON DEFAULT:
-------------------------------
(a) Each of the following shall be a Default hereunder: (i)
the failure of Tenant to pay when due any installment of Monthly Base Rent,
Additional Rent or any other charge hereunder within five (5) days after the due
date therefor; (ii) the failure of Tenant to timely or fully perform or observe
any other provision of this Lease and the continuation of such failure for ten
(10) days after Landlord gives Tenant written notice thereof; (iii) the breach
by Tenant of any representation or warranty in this lease; (iv) the filing by or
against Tenant or any guarantor hereof of any petition in bankruptcy; (v) the
filing of any voluntary or involuntary proceeding instituted to declare Tenant
or any guarantor hereof insolvent or unable to pay its debts as they mature;
(vi) the making by Tenant or any guarantor hereof of an assignment for the
benefit of its creditors; or (vii) the appointment of a trustee or receiver for
Tenant or any guarantor hereof or for the major part of Tenant's or guarantor's
property.
(b) Upon and after a Default, Landlord shall have the
following remedies in addition to all other remedies allowed at law or in equity
or elsewhere in this lease, all of which shall be cumulative and not in the
alternative and any or all of which may be exercised
-19-
<PAGE> 20
successively or concurrently and at such time or times as Landlord elects,
except as provided to the contrary below:
(i) Landlord shall have the right to terminate
this Lease or to terminate Tenant's right to possession of the Leased premises
without terminating this Lease, but in either event Tenant shall surrender
possession of and vacate the Leased Premises immediately upon Landlord's notice
to Tenant of either such termination and Landlord shall have the further right
to enter the Leased Premises with or without process of law, retake possession
of the Leased Premises and expel or remove Tenant (or anyone occupying the
leased Premises) and its effects therefrom without being liable or subject to
prosecution or any claim for damages therefor. In such event, Landlord shall
retain possession of the Leased premises and shall use reasonable efforts to
relet the Leased Premises or any part thereof as agent for Tenant for such rent
and other consideration, for such time and upon such terms and conditions as
Landlord determines appropriate. Landlord shall have no duty to accept any
tenant offered by Tenant or to observe any instructions given by Tenant
concerning such reletting. If the consideration collected by Landlord during the
remainder of the term by reason of such reletting exceeds the Annual Base Rent,
Additional Rent and other charges hereunder for the remainder of the term,
Landlord shall pay such excess to Tenant within sixty (60) days after the
expiration of the term.
(ii) Landlord shall have the right to terminate
Tenant's right to possession of the Leased Premises without terminating this
Lease and to recover from Tenant within ten (10) days after Landlord's demand a
sum equal to the entire amount of the Annual Base Rent, Additional Rent and
other charges hereunder for the remainder of the Term. If, due to escalation
mechanisms in this Lease or other factors, the balance of the Annual Base Rent,
Additional Rent and other charges due for the remainder of the Lease term cannot
be precisely determined as of the date of such termination, Tenant shall pay the
amount Landlord reasonably estimates would result from such escalation
mechanisms and other factors. Upon the expiration of the term or at such earlier
time as may be practicable, Landlord shall determine the actual Annual Base
Rent, Additional Rent and other charges hereunder and Landlord or Tenant shall
pay to the other the resulting excess or deficiency, as the case may be.
(iii) Landlord shall have the right but not the duty
to perform any of Tenant's obligations hereunder which Tenant has not timely and
fully performed and to charge to Tenant the cost of such performance, together
with a service charge of ten percent (10%) of such cost, to compensate Landlord
for administrative and other services associated with such performance.
(iv) Landlord shall have the right to suspend or
discontinue the provision of services to the Leased premises and the performance
of any other obligation of Landlord hereunder.
(v) If Landlord is not permitted to terminate this
Lease as provided above because of the provisions of Title 11 of the United
States Code relating to bankruptcy, then Landlord shall have the right to
require Tenant as a debtor in possession or any trustee for Tenant, within no
more than fifteen (15) days upon request by Landlord to the Bankruptcy Court, to
assume or reject this lease and Tenant on behalf of itself, and any trustee,
agrees not to seek or
-20-
<PAGE> 21
request any extension or adjournment of any application by Landlord to assume or
reject this Lease. In such event, Tenant or any trustee for Tenant may only
assume this Lease if (A) it cures or provides adequate assurance that the Tenant
will promptly cure any default hereunder, (B) compensates or provides adequate
assurance that Tenant will promptly compensate Landlord for any actual pecuniary
loss of Landlord resulting from Tenant's defaults hereunder, and (C) provides
adequate assurance of performance during the full term of all of the Tenant's
obligations under this Lease. In no event after the assumption of this Lease
shall any then-existing default remain uncured for a period in excess of the
earlier of ten (10) days or the time period set forth herein.
(vi) Landlord shall have the right to recover from
Tenant, if Landlord relets or attempts to relet the Leased Premises, all costs
and expenses incurred in connection with such reletting, including without
limitation broker's commissions, advertising costs, reasonable legal fees for
lease preparation and negotiations and the cost of alterations or improvements
to the leased Premises.
(c) Any property which may be removed from the leased premises
by the landlord pursuant to the authority of the Lease or of law to which the
Tenant is or may be entitled may be handled, removed, or stored in a commercial
warehouse or otherwise by the Landlord at the risk, cost, and expense of the
Tenant. Landlord shall in no event be responsible for the value, preservation,
or safekeeping thereof. The Tenant shall pay to the Landlord, upon demand, all
expenses incurred in such removal and all storage charges against such property.
Any such property of Tenant not removed form the leased premises or retaken from
storage by Tenant within thirty (30) days after the end of the term of this
Lease, however terminated, shall be conclusively deemed to have been abandoned
by Tenant.
(d) If Tenant violates any of the terms and provisions of this
lease or defaults in any of its obligations hereunder other than the payment of
rent or other sums payable hereunder, such violation may be restrained or such
obligation enforced by injunction.
(28) HOLDING OVER:
-------------
Tenant shall pay Landlord for each month, or part thereof,
that Tenant retains possession of the Leased premises or any part thereof after
termination or expiration of the term of this Lease one hundred-fifty percent
(150%) the amount of the monthly rent then required by the terms hereof and also
pay all damages sustained by Landlord by reason of such retention.
(29) REDELIVERY OF PREMISES:
-----------------------
Tenant shall, on the expiration of this Lease, deliver up the Leased Premises in
as good order and condition as it now is or may be put by Landlord, reasonable
use and ordinary wear and tear thereof and damages by fire or other unavoidable
casualty, condemnation or appropriation excepted. Tenant shall promptly
surrender all keys to the Leased Premises to Landlord.
-21-
<PAGE> 22
(30) CUMULATIVE REMEDIES:
--------------------
No remedy or election hereunder shall be deemed exclusive but
shall, wherever possible, be cumulative with all other remedies at law or in
equity.
(31) INTEREST ON PAST DUE OBLIGATIONS:
---------------------------------
Any amount owed by Tenant to Landlord which is not paid when
due shall bear interest at the rate of fifteen percent (15%) per annum from the
due date of such amount. However, interest shall not be payable on late charges
to be paid by Tenant under this lease. The payment of interest on such amounts
shall not excuse or cure any default by Tenant under this Lease. If the interest
rate specified in this Lease is higher than the rate permitted by law, the
interest rate is hereby decreased to the maximum legal interest rate permitted
by law.
(32) ATTORNEYS' FEES:
----------------
In the event any sums payable to Landlord hereunder are
collected at law or through any attorney at law, Tenant shall pay all attorneys'
fees and expenses which Landlord incurs in enforcing any obligation of the
Lease.
(33) NOTICES:
--------
All notices required or permitted to be given to Tenant under
this Lease shall be given to it at 50 East RiverCenter Boulevard, Suite 180,
Covington, Kentucky 41011.
Any such notice to Landlord under this lease shall be given to
it at P.O. Box 75020, Cincinnati, OH 45275, Attn: Property Management. All
noticers shall be in writing and sent by certified mail, postage prepaid.
Notice so mailed shall be effective upon the third day after
its deposit into the mails. Notice given in any other manner shall be effective
under this Paragraph (33) only if and when received by the addressee.
(34) LANDLORD'S LIABILITY:
---------------------
(a) The term "Landlord" as used herein shall mean only the
owner or owners at the time in question of the fee title. In the event of any
transfer of such title, Landlord herein named (and in case of any subsequent
transfers, then the grantor) shall be relieved from and after the date of such
transfer of all liability as respects Landlord's obligations thereafter to be
performed, provided that any funds in the hands of Landlord or the then grantor
at the time of such transfer, in which Tenant has an interest, shall be
delivered to the grantee. The obligations contained in this Lease to be
performed by Landlord shall, subject as aforesaid, be binding on Landlord's
successors and assigns, only during their respective periods of ownership.
Tenant shall attorn to any such purchaser, grantee, assignee or transferee.
-22-
<PAGE> 23
(b) Tenant shall look solely to the estate and property of
Landlord in the Developed Parcel for the collection of any judgment (or other
judicial process) requiring the payment of money by Landlord in the event of any
default or breach by Landlord with respect to any of the terms and provisions of
this Lease to be kept, observed, and performed by Landlord, subject, however, to
the prior rights of any mortgagee of all or any part of the property; no other
assets of Landlord shall be subject to levy, execution or other judicial process
for the satisfaction of Tenant's claim. Nothing in this Lease shall be construed
in any event whatsoever to impose any personal liability upon the trustees,
officers or the shareholders of the Landlord, or of the general or limited
partners comprising the Landlord, as Landlord herein or otherwise.
(35) INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS:
----------------------------------------------
This Lease including any exhibits, schedules or attachments,
hereto, contains all agreements of the parties with respect to any matter
mentioned herein. No prior agreement or understanding pertaining to any such
matter shall be effective. This Lease may be modified in writing only, signed by
the parties in interest at the time of the modification. Except as otherwise
stated in this lease, Tenant hereby acknowledges that neither any cooperating
broker on this transaction nor the Landlord or any employees or agents of any of
said persons has made any oral or written warranties or representations to
Tenant relative to the condition or use by Tenant of said Leased Premises, the
Building or the Developed Parcel.
(36) WAIVERS:
--------
(a) No waiver by Landlord of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Tenant of the same or any other provision. Landlord's consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act by Tenant.
(b) The acceptance of rent hereunder by Landlord shall not be
a waiver of any preceding breach by Tenant of any provision hereof, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
(37) SEVERABILITY:
-------------
If any provision of this Lease (or portion thereof) shall at
any time be deemed to be invalid, illegal or unenforceable by any court of
competent jurisdiction, this Lease shall not be invalidated thereby. Any such
provision shall be construed to be valid, legal and enforceable to the fullest
extent permitted by law and this lease shall be read and construed as if such
invalid, illegal or unenforceable provision had not been contained herein.
(38) RECORDING:
----------
This Lease shall not be placed of record; however, either
Landlord or Tenant shall, upon request of the other, execute, acknowledge and
deliver to the other a "short form" memorandum of this Lease for recording
purposes.
-23-
<PAGE> 24
(39) BINDING EFFECT:
---------------
Subject to any provisions hereof restricting assignment or
subletting by Tenant, this Lease shall be binding upon and inure to the benefit
of the parties, their heirs, personal representatives, successors and assigns.
(40) AUTHORITY:
----------
If Tenant is a corporation, trust, general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this lease on behalf of said entity and shall, at the execution of this lease,
deliver to Landlord evidence of such authority satisfactory to Landlord.
(41) CONFLICT:
---------
Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provision.
(42) GOVERNING LAW; FORUM:
---------------------
This Lease is made under and is to be governed by the laws of
the State of Kentucky. Any action arising out of this Lease shall be brought
only in a court of competent jurisdiction in Kenton County, Kentucky.
(43) JOINT AND SEVERAL OBLIGATIONS:
------------------------------
Not applicable.
(44) GUARANTORS:
-----------
Not applicable.
(45) AIR RIGHTS LEASE:
-----------------
The leasehold estate created by this Lease constitutes a
sublease of a portion of the premises demised to Landlord, as lessee, by the
City of Covington, as lessor, by an instrument dated and recorded in the lease
records of the Kenton County Clerk at Covington, Kentucky as follows: instrument
dated August 1, 1988, filed in Lease Record Volume 452, Page 452 on the records
of Kenton County. Such instrument shall be referred to under this Lease as the
"Air Rights Lease." This Lease and all of Tenant's rights hereunder are and
shall be subject and subordinate to the Air Rights Lease and the rights of all
parties under such Air Rights Lease.
-24-
<PAGE> 25
(46) ADDITIONAL EXHIBITS:
--------------------
The following exhibits are attached hereto and incorporated
into this Lease, in addition to previously identified Exhibits A, B, C, D, E, F,
and G (identify additional exhibits by letter and title; if none, please so
state): None.
(SIGNATURES, ACKNOWLEDGEMENTS, and EXHIBITS not shown on this form.)
-25-
<PAGE> 1
Exhibit 10(s)
AMENDED AND RESTATED PROMISSORY NOTE
June 6, 1997
Amended and Restated September 10, 1997
1. FOR VALUE RECEIVED, Regent Licensee of San Diego, Inc., a
Delaware corporation, and Regent Broadcasting of San Diego, Inc., a Delaware
corporation (collectively, the "Maker"), promise to pay to the order of
Citicasters Co., an Ohio corporation (the "Payee"), the principal sum of the
lesser of $6,000,000.00 or the proceeds, net of Maker's reasonable expenses,
received by Maker from a sale of the KCBQ-AM Assets (as that term is defined in
the "Asset Purchase Agreement KCBQ" dated April 16, 1997, as amended, between
Maker and Payee (the "Asset Agreement")) deemed to be commercially reasonable
either by Payee or by the Panel (as that term is defined in the Asset
Agreement), pursuant to Section 32 of the Asset Agreement, payable on the
Maturity Date, defined as the earlier of: (a) June 4, 2002 or (b) the date of
the sale and transfer of the KCBQ Assets by Maker to an unrelated third party
as provided for in Section 32 of the Asset Agreement. Interest on the unpaid
principal balance of this Note after the Maturity Date shall accrue at a rate
per annum of 10.0%. This Note shall not bear interest prior to the Maturity
Date.
2. Interest shall be calculated based on a 360 day year and
charged for the actual number of days elapsed. In no event shall the interest
rate hereunder exceed the highest rate permitted by law. All payments shall be
made in immediately available funds. Payments shall be made at the Payee's
place of business, 50 EAST RIVERCENTER BOULEVARD, 12TH FLOOR, COVINGTON,
KENTUCKY 41011, or at such other place as the holder of this Note may designate
in writing to the Maker from time to time.
3. This Note may be prepaid in whole or in part without penalty.
4. Each of the following shall be an Event of Default: (a) the
failure of the Maker to pay any sum owing hereunder when due, time being of the
essence; (b) the occurrence of an event of default under the terms of any
security agreement or mortgage securing this Note or under the terms of any
guaranty of this Note; (c) the entry of a decree or order for relief by a court
in respect of the Maker in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, custodian, trustee, or similar official for the Maker or for any
substantial part of its property, or ordering the wind-up or liquidation of its
affairs; or the filing and pendency for 60 days without dismissal of a petition
initiating an involuntary case under any such bankruptcy, insolvency or similar
law; or (d) the commencement by the Maker of a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or the making by it of any general assignment for the benefit of
creditors, or the failure of the Maker generally to pay its debts as such debts
become due, or the insolvency of the Maker.
5. If an Event of Default described in (c) or (d) above shall
occur, the entire unpaid principal and all accrued interest on this Note shall
become automatically due and payable without the need for any act by the Payee.
If an Event of Default described in (a) or (b) above shall occur, the Payee may
at his option declare the entire unpaid principal and all accrued interest on
this Note to be immediately due and payable, without demand or notice of any
kind.
<PAGE> 2
6. No delay or omission by any holder in exercising any right or
remedy shall be a waiver of such right or remedy or any other rights or
remedies, or of any Event of Default. A waiver of a right or remedy or of an
Event of Default on one occasion shall not be construed as a bar or waiver on
any other occasion. No waiver shall be effective unless made in a signed
writing. If any provision of this Note is held invalid, that provision will be
ineffective to the extent of such invalidity, without invalidating the
remainder of that provision or the other provisions of this Note.
7. The Maker and all endorsers, sureties, guarantors and all
others who may become liable for all or any part of this obligation hereby
waive presentment, demand for payment, notice of default or dishonor, notice of
protest, and protest, and all other notices or demands in connection with the
delivery, acceptance, performance, default, endorsement or guaranty of this
Note. All such persons hereby consent to any number of renewals or extension of
the time of payment hereof and to any changes in the interest rate and to any
releases of collateral which the holder at any time may grant or agree to,
without notice to such persons. This Note shall be governed by the laws of the
Commonwealth of Kentucky.
8. This Note is secured by, and Maker hereby grants to Payee a
pledge, lien and security interest in, the following collateral (the
"Collateral"): The KCBQ-AM Assets, as that term is defined in the Asset
Agreement. This Note is guaranteed by Regent Communications, Inc. pursuant to a
"Non- Recourse Guaranty Agreement" dated June 6, 1997, which Guaranty Agreement
is secured by a Stock Pledge Agreement of even date therewith.
9. In the event that the rules or policies of the Federal
Communications Commission ("FCC") change such that this Note would be deemed to
give Payee a prohibited attributable interest in Station KCBQ(AM), then Payee
shall have the right to accelerate the maturity date of the Note and to
exercise as its sole remedy its rights pursuant to the Stock Pledge and Amended
and Restated Security Agreement in order to ensure Payee's compliance with the
FCC's rules and policies, provided that the proceeds received by Payee from the
exercise of such rights shall be deemed in full satisfaction of Maker's
obligations to Payee pursuant to this Amended and Restated Note.
10. This Amended and Restated Note amends and restates the Note
dated June 6, 1997, by and between the Payee, Regent Broadcasting of San Diego,
Inc. and Regent Communications, Inc. as further amended and restated from time
to time and is executed and delivered in substitution but not in payment of
such Note.
11. The construction and performance of this Amended and Restated Note
shall be governed by the laws of the Commonwealth of Kentucky, without giving
effect to the choice of law provisions thereof. Any action brought pursuant to
this Note must be brought and prosecuted as to all parties in, and each of the
parties hereby consents to service of process, personal jurisdiction and venue
in, the state and federal courts of general jurisdiction located in Kenton
County, Kentucky.
REGENT LICENSEE OF SAN DIEGO, INC.
By:_______________________________
Title:____________________________
2
<PAGE> 3
REGENT BROADCASTING OF
SAN DIEGO, INC.
By: _______________________________
Title: ____________________________
COMMONWEALTH OF KENTUCKY )
) ss:
COUNTY OF KENTON )
BEFORE ME, a Notary Public, in and for said State, personally appeared
__________________, the ________________ of Regent Licensee of San Diego, Inc.,
who acknowledged that he/she did sign the foregoing instrument and that the same
is his or her free act and deed, on behalf of the corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________ this ____ day of __________, 1997.
--------------------------------------
Notary Public
COMMONWEALTH OF KENTUCKY )
) ss:
COUNTY OF KENTON )
BEFORE ME, a Notary Public, in and for said State, personally appeared
__________________, the ________________ of Regent Broadcasting of San Diego,
Inc., who acknowledged that he/she did sign the foregoing instrument and that
the same is his or her free act and deed, on behalf of the corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________ this ____ day of __________, 1997.
---------------------------------------
Notary Public
3
<PAGE> 1
Exhibit 10(t)
NON-RECOURSE GUARANTY AGREEMENT
THIS NON-RECOURSE GUARANTY AGREEMENT (the "Guaranty") made as of June
6, 1997, by and between REGENT COMMUNICATIONS, INC., a Delaware corporation
(formerly known as JS COMMUNICATIONS, INC.) (the "Guarantor"), and CITICASTERS
CO., an Ohio corporation (the "Beneficiary").
W I T N E S S E T H:
WHEREAS, Beneficiary has agreed, subject to certain terms and
conditions, to extend credit and financial accommodations to Regent
Broadcasting of San Diego, Inc., a Delaware corporation (the "Borrower"),
pursuant to the terms and conditions of a Promissory Note for no more than
$6,000,000 plus interest (the "Note"); and
WHEREAS, Guarantor will be benefited directly by the credit and
financial accommodations extended to Borrower by Beneficiary, and is willing to
execute this Guaranty in order to induce Beneficiary to extend such credit and
accommodations.
NOW, THEREFORE, Guarantor hereby unconditionally absolutely and
irrevocably guarantees to Beneficiary the full and prompt payment when due
(whether at maturity by acceleration or otherwise) of all loans, advances,
indebtedness or other obligations of the Company owed to Citicasters under the
promissory note of the Company to Citicasters of even date herewith (the
"Note"), and all expenses and attorneys' fees incurred by Citicasters under
this agreement or any other document or instrument related thereto. All of the
above are collectively called the "Obligations." Provided, however,
notwithstanding anything to the contrary herein or in the Terms and Conditions
attached hereto, the Guarantor's liability under this Guaranty shall be limited
as follows: Beneficiary agrees that in no event shall any monetary deficiency
judgment for any such amounts be sought or secured against Guarantor, it being
the intention of the parties that the only recourse of Beneficiary for the
satisfaction of the Obligations shall be against the Securities (as defined in
the Stock Pledge Agreement of even date between Guarantor and Beneficiary).
Notwithstanding the foregoing, Guarantor shall be fully liable to Beneficiary
for: (i) all damages suffered by Beneficiary on account of fraud or
misrepresentation committed by Borrower or Guarantor and (ii) for personal
property taxes, assessments, and all other liens and charges on the collateral
for the Obligations which may become due and payable and are not paid.
THIS NON-RECOURSE GUARANTY AGREEMENT IS SUBJECT TO THE TERMS
AND CONDITIONS ATTACHED HERETO, WHICH ARE INCORPORATED HEREIN AND
ARE AN INTEGRAL PART OF THIS AGREEMENT.
<PAGE> 2
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement
to be executed as of the day and year first above written.
GUARANTOR: REGENT COMMUNICATIONS,
INC.
By:
-------------------------------
Its:
------------------------------
COMMONWEALTH OF KENTUCKY )
) ss:
COUNTY OF KENTON )
BEFORE ME, a Notary Public, in and for said State, personally appeared
__________________ , the of Regent Communications, Inc., who acknowledged that
he/she did sign the foregoing instrument and that the same is his or her free
act and deed, on behalf of the corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
__________ this _______ day of _______________, 1997.
-----------------------------------
Notary Public
Accepted as of ____________, 1997.
BENEFICIARY:
CITICASTERS CO.
By: _________________________________
Its: _________________________________
2
<PAGE> 3
TERMS AND CONDITIONS
of
NON-RECOURSE GUARANTY AGREEMENT
of the Obligations of
JS Communications, Inc.
THESE TERMS AND CONDITIONS GOVERN EACH NON-RECOURSE GUARANTY AGREEMENT
INTO WHICH THEY ARE INCORPORATED, AND ARE AN INTEGRAL PART OF SUCH NON-RECOURSE
GUARANTY AGREEMENT.
1. To the extent of the Obligations outstanding at any time, any
payment by any other guarantor shall not reduce Guarantor's maximum obligations
hereunder. In the absence of any termination of this Guaranty in writing by
Beneficiary, Guarantor agrees that nothing shall discharge or satisfy
Guarantor's obligations created hereunder except for the full payment and
performance of the Obligations. A successor of Borrower, including Borrower in
its capacity as debtor in a bankruptcy reorganization case, shall not be
considered to be a different person than Borrower; and this Guaranty shall
apply to all Obligations incurred by such successor.
2. Guarantor agrees that Guarantor is directly and primarily liable to
Beneficiary and that the Obligations hereunder are independent of the
Obligations of Borrower, or of any other guarantor. The liability of Guarantor
hereunder shall survive discharge or compromise of any Obligation of Borrower
in bankruptcy or otherwise. As a condition to payment or performances by
Guarantor under this Guaranty, Beneficiary shall not be required to prosecute
or seek to enforce any remedies against Borrower or any other party liable to
Beneficiary on account of the Obligations, or, subject to page 1 of this
Guaranty, to seek to enforce or resort to any remedies with respect to any
collateral granted to Beneficiary by Borrower or any other party on account of
the Obligations.
3. Beneficiary may, without notice or demand and without affecting its
rights hereunder, from time to time renew, extend, accelerate or otherwise
change the amount of, the time for payment of, or other terms relating to, any
or all of the Obligations, or otherwise modify, amend or change the terms of
the Note or any other document or instrument relating to the Obligations, take
and hold collateral for the payment of the Obligations guaranteed hereby, and
exchange, enforce, waive, and release any such collateral, and to apply such
collateral and direct the order or manner of sale thereof as Beneficiary in its
discretion may determine. Guarantor waives any defense arising out of
Beneficiary's impairment of any collateral, including the failure to record or
perfect the Beneficiary's interest in the collateral.
4. Guarantor hereby waives all defenses, counterclaims and off-sets of
any kind or nature, arising directly or indirectly from the present lack of
validity, binding effect and/or enforceability of the Note.
5. Guarantor hereby waives any defense arising by reason of any claim
or defense based upon an election of remedies by Beneficiary, which in any
manner impairs, affects, reduces, releases, destroys and/or extinguishes
Guarantor's rights of contribution or reimbursement, and/or any other
<PAGE> 4
rights of the Guarantor to proceed against any other guarantor, or against any
other person or any collateral. Guarantor waives all presentments, demands for
performance or payment, notices of nonperformance, protests, notices of
protest, notices of dishonor, notices of default or nonpayment, notice of
acceptance of this Guaranty, and notices of the existence, creation, or
incurring of new or additional Obligations, and all other notices or
formalities to which Guarantor may be entitled. Guarantor hereby irrevocably
waives all legal and equitable rights to recover from Borrower any sums paid by
the Guarantor under the terms of this Guaranty, including without limitation
all rights of subrogation and all other rights that would result in Guarantor
being deemed a creditor of Borrower under the federal Bankruptcy Code or any
other law.
6. The execution, delivery and performance by the Guarantor of this
Guaranty have been duly authorized by all necessary corporation action, and
will not violate any provision of law or regulation applicable to the
Guarantor, or the certificate of incorporation, regulations or bylaws of
Guarantor, or any writ or decree of any court or governmental instrumentality,
or any instrument or agreement to which the Guarantor is a party or by which
the Guarantor may be bound; this Guaranty is a legal, valid and binding
obligation of said Guarantor, enforceable in accordance with its terms; and
there is no action or proceeding before any court or governmental body agency
now pending which materially adversely affect the condition (financial or
otherwise) of the Guarantor.
7. Each of the following shall constitute an "Event of Default" under
this Guaranty:
(a) The occurrence of an Event of Default under the terms of
the Note, or the failure by the Guarantor to observe and perform any covenant,
condition, or agreement under this Guaranty, or the failure of any
representation or warranty of the Guarantor contained in this Guaranty to be
true when given.
(b) The commencement by the Guarantor of a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; or the entry of a decree or order for relief in respect of
the Guarantor in a case under any such law or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Guarantor or for any substantial part of Guarantor's property,
or ordering the wind-up or liquidation of Guarantor's affairs; or the filing
and pendency for 60 days without dismissal of a petition initiating an
involuntary case under any such bankruptcy, insolvency or similar law; or the
making by Guarantor of any general assignment for the benefit of creditors; or
the failure of the Guarantor generally to pay Guarantor's debts as such debts
become due; or the taking of action by the Guarantor in furtherance of any of
the foregoing.
(c) The revocation or attempted revocation of this Guaranty
by Guarantor before the termination of this Guaranty as provided in Section 1
hereof or the assignment or attempted assignment of this Guaranty by Guarantor.
8. (a) Whenever any Event of Default as defined herein shall
have happened, the Beneficiary, in its sole discretion, may take the remedial
action specified on page 1 of this Guaranty with respect to the Securities and
the Stock Pledge Agreement.
2
<PAGE> 5
(b) If the Beneficiary should employ attorneys or incur other
expenses for the enforcement of this Guaranty, the Guarantor, on demand
therefor, shall reimburse the reasonable fees of such attorneys and such other
expenses to the extent permitted by law.
(c) No delay or omission to exercise any right or remedy
shall be construed to be a waiver thereof, but any such right or remedy may be
exercised from time to time and as often as may be deemed expedient. A waiver
on one occasion shall be limited to that particular occasion.
9. Guarantor is presently informed of the financial condition of the
Borrower and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Guarantor hereby
covenants that Guarantor will continue to keep informed of such matters, and
hereby waives Guarantor's right, if any, to require Beneficiary to disclose any
present or future information concerning such matters including, but not
limited to, the release of or revocation by any other guarantor.
10. All indebtedness and liability now or hereafter owing by Borrower
to Guarantor is hereby postponed and subordinated to the Obligations of
Borrower to Beneficiary; and such indebtedness and liability to Guarantor, if
Beneficiary so requests, shall be collected, enforced and received by Guarantor
as trustee for Beneficiary and be paid over to Beneficiary on account of the
Obligations.
11. This Guaranty shall continue in full force and effect until the
Obligations as listed on page 1 of this Guaranty are fully paid, performed and
discharged, all payments by Borrower to Beneficiary are no longer subject to
any right on the part of any person whomsoever, including but not limited to
any trustee in bankruptcy, to recover any of such payments, and this Guaranty
has been terminated by Beneficiary. If any such payments are so set aside or
settled without litigation, all of which is within Beneficiary's discretion,
Guarantor shall be liable for the full amount Beneficiary is required to repay
plus costs, interest, reasonable attorneys' fees and any and all expenses which
Beneficiary paid or incurred in connection therewith.
12. Any notices under or pursuant to this Guaranty shall be deemed
duly sent when delivered in hand or when mailed by registered or certified
mail, return receipt requested or by recognized overnight delivery courier
service, addressed as follows:
To Guarantor: JS Communications, Inc.
Attn: Terry Jacobs
50 East RiverCenter Boulevard, Suite 180
Covington, Kentucky 41011
Fax: (606) 292-0352
3
<PAGE> 6
With a copy to: Strauss & Troy
Attn: Alan C. Rosser, Esq.
2100 PNC Center
201 East Fourth Street
Cincinnati, OH 45202
Fax: (513) 241-8289
To Beneficiary: Citicasters Co.
Attn: Randy Michaels, President
50 East RiverCenter Boulevard, Suite 180
Covington, Kentucky 41011
Fax: (606) 655-9354
With a copy to: Graydon, Head & Ritchey
Attn: John J. Kropp, Esq.
1900 Fifth Third Center
511 Walnut Street
Cincinnati, OH 45202
Fax: (513) 651-3836
Either party may change such address by sending notice of the change
to the other party.
13. This Guaranty may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. This Guaranty is the complete agreement of the parties hereto
and supersedes all previous understandings and agreements relating to the
subject matter hereof; neither this Guaranty nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against whom enforcement of the
termination, amendment, supplement, waiver or modification is sought. As the
context requires, the singular shall include the plural and one gender shall
include one or both other genders. This Guaranty may be assigned to any third
party by Beneficiary without Guarantor's consent and shall inure to the benefit
of the Beneficiary's successors and assigns and shall be binding upon the
heirs, executors, administrators and successors of the Guarantor. This Guaranty
is nonassignable by the Guarantor. If any provision of this Guaranty or the
application thereof to any person or circumstance is held invalid, the
remainder of this Guaranty and the application thereof to other persons or
circumstances shall not be affected thereby. This Guaranty shall be governed by
and construed in accordance with the law of the Commonwealth of Kentucky. Any
action brought pursuant to this Guaranty must be brought and prosecuted as to
all parties in, and each of the parties hereby consents to service of process,
personal jurisdiction, and venue in, the state and Federal courts of general
jurisdiction located in Kenton County, Kentucky. GUARANTOR AND BENEFICIARY
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING IN CONNECTION
WITH THIS GUARANTY OR THE TRANSACTIONS RELATED THERETO.
4
<PAGE> 7
14. The maximum aggregate liability of Guarantor hereunder (exclusive
of interest) shall be Six Million Dollars ($6,000,000). This Guaranty shall
terminate on the earlier of: (a) payment of the Obligations; (b) delivery of
the Securities to the Beneficiary; or (c) April 15, 2017, provided that such
termination shall not affect the liability of the Guarantor with respect to
Obligations created or incurred prior to such termination date, or extensions
or renewals of, interest accruing on, or fees, costs or expenses incurred with
respect to, such Obligations on or after such date of termination.
5
<PAGE> 1
Exhibit 10(u)
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT ("Agreement") is entered
into as of September 10, 1997, by and between REGENT BROADCASTING OF SAN DIEGO,
INC., a Delaware corporation, and REGENT LICENSEE OF SAN DIEGO, INC., a
Delaware corporation, (collectively, the "COMPANY"), and Citicasters Co., an
Ohio corporation ("Citicasters"), amends and restates in its entirety that
certain SECURITY AGREEMENT, dated June 6, 1997, by and between the Company,
Regent Broadcasting of San Diego, Inc. and Regent Communications, Inc.
1. DEFINITIONS:
1.1. SPECIFIC DEFINITIONS. The following definitions shall apply:
"Accounts" means all accounts, contract rights, instruments,
documents, chattel paper, and all obligations in any form arising out of the
sale or lease of goods or the rendition of services by Company; all guaranties,
letters of credit and other security for any of the above; all merchandise
returned to or reclaimed by Company; and all books and records (including
computer programs, tapes and data processing software) evidencing an interest
in or relating to the above.
"Equipment" means all machinery, machine tools, equipment,
fixtures, office equipment, furniture, furnishings, motors, motor vehicles,
tools, dies, parts, jigs, goods (including, without limitation, each of the
items of equipment set forth on any schedule which is either now or in the
future attached to Citicasters' copy of this Agreement), and all attachments,
accessories, accessions, replacements, substitutions, additions and
improvements thereto, and all supplies used or useful in connection therewith.
"General Intangibles" means all general intangibles, choses
in action, causes of action, obligations or indebtedness owed to Company from
any source whatsoever, and all other intangible personal property of every kind
and nature (other than Accounts) including without limitation patents,
trademarks, trade names, service marks, copyrights and applications for any of
the above, and goodwill, trade secrets, licenses, franchises, rights under
agreements, tax refund claims, and all books and records including all computer
programs, disks, tapes, printouts, customer lists, credit files and other
business and financial records, and the equipment containing any such
information.
"Inventory" means any and all goods, supplies, wares,
merchandise and other tangible personal property, including raw materials, work
in process, supplies and components, and finished goods, whether held for sale
or lease, or furnished or to be furnished under any contract for service, and
also including products of and accessions to inventory, packing and shipping
materials, and all documents of title, whether negotiable or non-negotiable,
representing any of the foregoing.
"Lien" means any security interest, mortgage, pledge,
assignment, lien or other encumbrance of any kind, including interests of
vendors or lessors under conditional sale contracts or capital leases.
"Obligation(s)" means all loans, advances, indebtedness and
other obligations of the Company owed to Citicasters under the amended and
restated promissory note of the Company to Citicasters of even date herewith
(the "Amended and Restated Note"), and all expenses and
<PAGE> 2
attorney's fees incurred by Citicasters under this Agreement or any other
document or instrument related thereto.
1.2. OTHER DEFINITIONS. Capitalized terms not defined herein have the
meanings set forth in the Amended and Restated Note. All other undefined terms
shall have the meanings given to them in the Kentucky Uniform Commercial Code.
2. SECURITY
2.1. Security Interest of Citicasters. To induce Citicasters to issue
credit for the benefit of the Company and as security for all Obligations, the
Company hereby assigns to Citicasters Collateral and grants to Citicasters a
continuing first priority pledge and security interest in the following
property of the Company (the "Collateral"), whether now owned or existing or
hereafter acquired or arising and regardless of where it is located:
(a) all Accounts;
(b) all Inventory;
(c) all Equipment;
(d) all General Intangibles;
(e) all proceeds and products of Collateral and all additions
and accessions to, replacements of, insurance or condemnation proceeds of, and
documents covering Collateral, all tort or other claims against third parties
arising out of damage or destruction of Collateral, all property received
wholly or partly in trade or exchange for Collateral, all leases of Collateral
and all rents, revenues, issues, profits and proceeds arising from the sale,
lease, license, encumbrance, collection, or any other temporary or permanent
disposition, of the Collateral or any interest therein; and
(f) all instruments, documents, securities, money or other
property, owned by the Company or in which the Company has an interest, which
now or hereafter are at any time in the possession or control of Citicasters or
in transit by mail or carrier to or in the possession of any third party acting
on behalf of Citicasters, without regard to whether Citicasters received the
same in pledge, for safekeeping, as agent for collection or transmission or
otherwise or whether Citicasters had conditionally released the same.
2.2. REPRESENTATIONS IN SCHEDULE I. The Company represents and
warrants that the representations and warranties set forth in Schedule I, the
Specific Representations Schedule, are true and correct. Except as otherwise
permitted hereunder, the Company will not change its name, transfer its
executive offices or maintain records with respect to Accounts at any location
other than its present executive offices specified in that Schedule.
2.3. PROVISIONS CONCERNING ACCOUNTS. The Company represents and
warrants that each Account reflected in its books and records is, or will at
the time it arises be, owned by the Company free and clear of all Liens in
favor of any third party, will be a bona fide existing obligation created
2
<PAGE> 3
by the final sale and delivery of goods or the completed performance of
services by the Company in the ordinary course of its business, will be for a
liquidated amount maturing as stated in the supporting data covering such
transaction, and will not be subject to any known deduction, offset,
counterclaim, return privilege or other condition, except as reflected on the
Company's books and records.
2.4. PROVISIONS CONCERNING GENERAL INTANGIBLES. The Company represents
and warrants that the Company owns all of the General Intangibles in which the
Company grants Citicasters a Lien, free and clear of any Liens in favor of any
person other than Citicasters. The Company will preserve all patents,
trademarks, copyrights and the like which are necessary or useful for the
conduct of its business.
2.5. PROVISIONS CONCERNING INVENTORY. (a) The Specific Representations
Schedule is a true and correct list showing all places where the Company
maintains Inventory or has maintained Inventory at any time during the past
four months, including, without limitation, facilities leased and operated by
the Company and locations neither owned nor leased by the Company. No Inventory
will be removed from the current locations set forth in such Schedule or stored
at locations other than the current locations set forth in such Schedule,
except (i) for the purpose of sale in the ordinary course of the Company's
business or (ii) upon 30 days' written notice to Citicasters, to such other
locations as to which all action required to perfect and protect Citicasters's
lien in such Inventory has been taken. Inventory may be moved from one current
location set forth in such Schedule to another.
(b) The Company shall keep all Inventory in good order and
condition and shall maintain full, accurate and complete books and records with
respect to Inventory at all times.
(c) Except during the continuance of an Event of Default, the
Company may sell Inventory in the ordinary course of its business (which does
not include a transfer in full or partial satisfaction of indebtedness).
2.6. PROVISIONS CONCERNING EQUIPMENT. (a) The Company warrants
and represents that the Specific Representations Schedule shows all places
where any of the Company's Equipment is located or has been located at any time
during the past four months. The Company shall not permit any Equipment to be
located at any place other than (i) current locations set forth in the Specific
Representations Exhibit, and (ii) upon 30 days' prior written notice to
Citicasters, at such other locations as to which all action required to perfect
and protect Citicasters's Lien in such Equipment has been taken.
(b) The Company will keep and maintain the Equipment in its
present condition and repair, make all necessary replacements so that its value
and operating efficiency is maintained and preserved. The Company will promptly
immediately notify Citicasters of any material loss or damage to the
Collateral.
2.7. LIENS. The Company represents and warrants that the Company
has good and marketable title to the Collateral, and the Liens granted to
Citicasters in this Agreement are first priority Liens in the Collateral with
priority over the rights of every person other than the Company in the
Collateral. The Company is the owner of all personal property in its possession
or shown on
3
<PAGE> 4
its books and records, and all assets of the Company are owned free, clear and
unencumbered, except for the Lien of Citicasters and except for Liens imposed
by law which secure amounts not yet due and payable.
2.8. FURTHER ASSURANCES. (a) The Company will execute and
deliver to Citicasters at Citicasters's request all financing statements,
continuation statements and other documents that Citicasters may reasonably
request, in form satisfactory to Citicasters, to perfect and maintain perfected
Citicasters's security interest in the Collateral and to fully consummate all
transactions contemplated under this Agreement.
(b) If any Collateral, including proceeds, consists of a
letter of credit, advice of credit, instrument, money, negotiable documents,
chattel paper or similar property (collectively, "Negotiable Collateral") the
Company will, immediately upon receipt thereof, endorse and assign such
Negotiable Collateral over to Citicasters and deliver actual physical
possession of the Negotiable Collateral to Citicasters.
(c) Citicasters may inspect and verify the Company's books
and records at any time or times hereafter, during usual business hours, in
order to verify the amount or condition of the Collateral, or any other matter
relating to the Collateral or the Company's financial condition. After default,
the Company will promptly deliver to Citicasters copies of all books and
records reasonably requested by Citicasters.
2.9. REINSTATEMENT OF LIEN. If any payments made by the Company
or any other person on Obligations must be disgorged by Citicasters after
termination of this Agreement for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of the Company or such
other person), this Agreement and Citicasters's Liens granted hereunder will be
reinstated as to all disgorged payments as though such payment had not been
made, and the Company will sign and deliver to Citicasters all documents and
things necessary to reperfect all terminated Liens.
2.10. OTHER AMOUNTS DEEMED LOANS. If the Company fails to pay
any tax, assessment, government charge or levy or to maintain insurance within
the time permitted by this Agreement, or to discharge any Lien prohibited
hereby, or to comply with any other obligation, Citicasters may, but shall not
be required to, pay, satisfy, discharge or bond the same for the account of the
Company, and to the extent permitted by law and all monies so paid out shall be
secured by the Collateral.
2.11. COMPANY REMAINS LIABLE. The Company remains liable under
any contracts and agreements included in the Collateral to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, and Citicasters will not have any obligation or liability
under such contracts and agreements by reason of this Agreement or otherwise.
3. EVENTS OF DEFAULT AND REMEDIES
3.1. EVENTS OF DEFAULT. Any of the following events shall be an
Event of Default:
4
<PAGE> 5
(a) any representation or warranty made herein by the Company is
materially incorrect when made or reaffirmed; or
(b) The Company fails to keep its assets insured as reasonably
required by Citicasters, or material uninsured damage to or loss, theft or
destruction of the Collateral occurs; or
(c) The Company fails to observe or perform any covenant,
condition or agreement herein, and such default continues for 30 days after
written notice thereof to the Company by Citicasters; or
(d) an Event of Default occurs under any of the Obligations,
under any document evidencing any part of the Obligations, or in the event of a
sale of the Collateral not deemed to be commercially reasonable by Citicasters
or the Panel (as that term is defined in the "Asset Purchase Agreement KCBQ"
dated April 16, 1997, as amended, between Citicasters and JS Communications,
Inc.).
3.2. REMEDIES. If any Event of Default shall occur and not be waived,
in addition to the remedies provided in the documents evidencing the
Obligations.
(a) Citicasters may resort to the rights and remedies of a
secured party under the Uniform Commercial Code including the right to enter
any premises of the Company, with or without legal process and take possession
of the Collateral and remove it and any records pertaining thereto and/or
remain on such premises and use it for the purpose of collecting, preparing and
disposing of the Collateral;
(b) Citicasters may dispose of the Collateral as is or at its
election may refurbish, repair, improve, process, finish, operate, demonstrate
and prepare for sale the Collateral, and may store, ship, reclaim, recover,
protect, advertise for sale or lease, and insure the Collateral; Citicasters
may use and operate Equipment of the Company in order to process or finish
Inventory included in the Collateral; if any Collateral consists of documents,
Citicasters may proceed either as to the documents or as to the goods
represented thereby; Citicasters's failure to take steps to preserve rights
against any parties or property shall not be deemed to be failure to exercise
reasonable care with respect to the Collateral;
(c) Citicasters may in its sole discretion pay, purchase,
contest or compromise any encumbrance, charge or lien which in the opinion of
Citicasters appears to be prior or superior to its Lien, and pay all expenses
incurred in connection therewith;
(d) Citicasters may sell the Collateral at public or private
sale, and the Company shall be credited with the net proceeds of such sale only
when they are actually received by Citicasters; any requirement of reasonable
notice of any disposition of the Collateral shall be satisfied if such notice
is sent to the Company, as provided in the Notices Section of this Agreement,
10 days prior to such disposition;
(e) The Company shall upon request of Citicasters assemble the
Collateral and any records pertaining thereto and make them available at a
place designated by Citicasters; and
5
<PAGE> 6
(f) Citicasters may use, in connection with any assembly or
disposition of the Collateral, any trademark, trade name, tradestyle,
copyright, patent right, trade secret or technical process used or utilized by
the Company.
3.3. CUMULATIVE REMEDIES. No remedy set forth herein is
exclusive of any other available remedy or remedies, but each is cumulative and
in addition to every other remedy given under this Agreement or any other
agreement or now or hereafter existing at law or in equity or by statute.
Citicasters may pursue its rights and remedies concurrently or in any sequence,
and no exercise of one right or remedy shall be deemed to be an election. If
the Company fails to comply with this Agreement, no remedy of law will provide
adequate relief to Citicasters, and Citicasters shall be entitled to temporary
and permanent injunctive relief without the necessity of proving actual
damages.
3.4. FEES AND EXPENSES. Upon a sale, lease or other disposition
of the Collateral, the proceeds shall be applied first to the reasonable
expenses of retaking, holding, storing, processing and preparing for sale,
selling and the like, and, to the extent permitted by law, to reasonable
attorneys' fees and legal expenses, and then to the satisfaction of the
Obligations secured by this Agreement. The Company shall not be liable for any
deficiency.
4. MISCELLANEOUS PROVISIONS
4.1. Notwithstanding anything to the contrary contained in this
Agreement, Citicasters will not take any action pursuant to this Agreement or
any of the other Obligations which would constitute (or result in) any
assignment of any licenses issued by the FCC or any transfer of control of the
Company if such assignment of licenses or transfer of control would require,
under then-existing law (including the written rules and regulations
promulgated by the FCC), the prior approval of the FCC, without first obtaining
such approval of the FCC.
4.2. The Company agrees to take (or cause to be taken) any
action which Citicasters may reasonably request in order to obtain and enjoy
the full rights and benefits granted to Citicasters by this Agreement,
including specifically, at the Company's own cost and expense, the Company's
best efforts (i) to assist in obtaining approval of the FCC for any action or
transaction contemplated by this Agreement which is then required by law, and
(ii) without limitation, upon request following the occurrence of a default
under this Agreement or the Obligations, to prepare, sign, and file with the
FCC (or cause to be prepared, signed, and filed with the FCC) any portion of
any application or applications for consent to the assignment of any FCC
licenses or transfer of control required to be signed by the Company and
necessary or appropriate under the FCC's rules and regulations for approval of
any sale or transfer of any of the ownership interests or assets of the Company
or any transfer of control over any FCC licenses.
4.3. MISCELLANEOUS. No delay or omission to exercise any right
shall impair any such right or be a waiver thereof, and a waiver on one
occasion shall be limited to that particular occasion. This Agreement may be
amended only in writing signed by the party against whom enforcement of the
amendment is sought. This Agreement may be executed in counterparts. If any
part of this Agreement is held invalid, the remainder of this Agreement shall
not be affected thereby.
6
<PAGE> 7
4.4. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the respective legal representatives, successors and
assigns of the parties hereto; however, the Company may not assign any of its
rights or delegate any of its obligations hereunder. Citicasters (and any
subsequent assignee) may transfer and assign this Agreement or may assign
partial interests or participations in the Obligations to other persons.
4.5. SUBSIDIARIES. If the Company has any Subsidiaries at any
time during the term of this Agreement, the term "Company" in each
representation, warranty and covenant herein shall mean "the Company and each
Subsidiary individually and in the aggregate," and the Company shall cause each
Subsidiary to be in compliance therewith.
4.6. NOTICES. Any notice required, permitted or contemplated
hereunder shall be in writing and addressed to the party to be notified at the
address set forth below or at such other address as each party may designate
for itself from time to time by notice hereunder, and shall be deemed validly
given (i) three (3) days following deposit in the U.S. mails, with proper
postage prepaid, or (ii) the next business day after such notice was delivered
to a regularly-scheduled overnight delivery carrier with delivery fees either
prepaid or an arrangement, satisfactory with such carrier, made for the payment
thereof, or (iii) upon receipt of notice given by telecopy, mailgram, telegram,
telex or personal delivery:
The Company: Regent Broadcasting of San Diego, Inc. and
Regent Licensee of San Diego, Inc.
Attn: Terry Jacobs
50 East RiverCenter Boulevard, Suite 180
Covington, Kentucky 41011
Fax: (606) 292-0352
With a copy to: Strauss & Troy
Attn: Alan C. Rosser, Esq.
2100 PNC Center
201 East Fourth Street
Cincinnati, Ohio 45202
Fax: (513) 241-8289]
Citicasters: Citicasters Co.
Attn: Randy Michaels, President
12th Floor
50 East RiverCenter Boulevard
Covington, Kentucky 41011
Fax: (606) 655-9354
7
<PAGE> 8
With a copy to: Graydon, Head & Ritchey
Attn: John J. Kropp, Esq.
1900 Fifth Third Center
511 Walnut Street
Cincinnati, OH 45202
Fax: (513) 651-3836
4.7. GOVERNING LAW, JURISDICTION. This Agreement will be
governed by the domestic laws of the Commonwealth of Kentucky. The Company
agrees that the state and federal courts in Kenton County, Kentucky have
exclusive jurisdiction over all matters arising out of this Agreement, and that
service of process in any such proceeding shall be effective if mailed to the
Company at its address described in the Notices section of the documents
evidencing the Obligations. CITICASTERS AND THE COMPANY HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Company and Citicasters have executed this
Agreement by their duly authorized officers as of the date first above written.
REGENT BROADCASTING OF
SAN DIEGO, INC.
By: ________________________________
Its: ________________________________
REGENT LICENSEE OF SAN DIEGO, INC.
By: ________________________________
Its: ________________________________
CITICASTERS CO.
By: ________________________________
Its: ________________________________
8
<PAGE> 9
SCHEDULE I
to
Security Agreement
SPECIFIC REPRESENTATIONS
1. The exact legal name of Regent Licensee of San Diego, Inc.
("Regent") is:___________________________________________
_________________________________________________________.
2. Regent's federal Employer I.D. number is:_________________.
3. If Regent has changed its name since it was incorporated, its
past legal names were:____________________________________
__________________________________________________________.
4. Regent uses in its business and owns the following trade
names:____________________________________________________.
5. Regent has its chief executive office and principal place of
business at________________________________________________
___________________________________________________________
____________. This office is in________________ County.
Regent maintains all of its records with respect to its
Accounts at that address.
6. Regent also has places of business at:_____________________
___________________________________________________________.
7. No inventory, equipment or fixtures owned by Regent are
located at any other place, nor were they located at any other
place within the past four months, except at_______________.
8. In the past five years Regent has never maintained its chief
executive office or principal place of business or records
with respect to accounts, nor owned personal property, at any
locations except those set forth above and except_____________.
1
<PAGE> 10
1. The exact legal name of Regent Broadcasting of San Diego, Inc.
("Broadcasting") is:_____________________________________________
2. Broadcasting's federal Employer I.D. number is:___________________
.
3. If Broadcasting has changed its name since it was incorporated, its
past legal names were:_____________________________________________
___________________________________________________________________
4. Broadcasting uses in its business and owns the following trade names:
___________________________________________________________________
5. Broadcasting has its chief executive office and principal
place of business at_______________________________________________
______________________. This office is in_________________________
County. Broadcasting maintains all of its records with
respect to its Accounts at that address.
6. Broadcasting also has places of business at:_______________________
___________________________________________________________________
7. No inventory, equipment or fixtures owned by Broadcasting are located
at any other place, nor were they located at any other place,
within the past four months, except at_____________________________.
8. In the past five years Broadcasting has never maintained its
chief executive office or principal place of business or records with
respect to accounts, nor owned personal property, at any locations
except those set forth above and except____________________________ .
2
<PAGE> 1
Exhibit 10(v)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Agreement"), dated as of
June 6, 1997, between REGENT COMMUNICATIONS, INC. (formerly known
as JS COMMUNICATIONS, INC.) (the "Pledgor") and CITICASTERS CO., an Ohio
corporation ("Pledgee").
W I T N E S S E T H
WHEREAS, Pledgor owns all the shares of Regent Broadcasting of San
Diego, Inc., a Delaware corporation (the "Company"); and
WHEREAS, the Company has delivered to Pledgee a Promissory Note of
even date in the principal amount of no more than $6,000,000 (the "Note"); and
WHEREAS, contemporaneously with the execution of this Agreement,
Pledgor is delivering to Pledgee a Continuing Guaranty Agreement ("Guaranty")
whereby Pledgor guarantees the Company's obligations to Pledgee under the
Agreements (as that term is defined in the Guaranty); and
WHEREAS, Pledgee is unwilling to accept the Guaranty unless this
Agreement is executed and delivered by Pledgor.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS. Initially capitalized terms used herein which are
defined in the Note shall have the meanings assigned to them therein, unless
the context otherwise requires or unless otherwise defined herein. As used
herein, "Obligations" refers to the obligations of Pledgor to Pledgee arising
under the Guaranty.
2. PLEDGE. The Pledgor pledges, mortgages, assigns, transfers,
delivers, deposits, sets over and confirms as a first priority pledge to the
Pledgee and its successors and assigns all of Pledgor's stock of the Company
(the "Securities") as collateral security for payment and performance by the
Pledgor of the Obligations. Certificates representing the Securities,
accompanied by proper instruments of assignment duly executed in blank by the
Pledgor, are concurrently delivered to the Pledgee.
3. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
to the Pledgee that:
(a) As of the date hereof, the Pledgor is the sole
holder of record and the sole beneficial owner of
the Securities, free and clear of any security
interest, pledge, or other lien or encumbrance
(collectively, "Lien") thereon or affecting the
title thereto;
1
<PAGE> 2
(b) The Securities have been duly issued, are fully paid
and non-assessable, and the Pledgor has the right
and requisite authority to pledge, mortgage, assign,
transfer, deliver, deposit, set over and confirm the
Securities to the Pledgee as provided herein; and
(c) Pledgor has obtained all permits, consents,
approvals, authorizations or other orders of any
person, corporation, partnership, trust,
governmental entity, or other entity required for
the execution and delivery of this Agreement or the
delivery of the Securities to the Pledgee as
provided herein.
4. PLEDGOR RIGHTS. Unless and until an Event of Default shall have
occurred and be continuing:
(a) The Pledgor shall have the right, from time to time,
to vote and give consents with respect to the
Securities for all purposes not inconsistent with
the provisions of this Agreement; and
(b) The Pledgor shall be entitled, from time to time, to
collect and receive for his own use all cash
dividends paid on the Securities.
5. COVENANTS. The Pledgor covenants and agrees that until payment in
full of all the Obligations:
(a) Without the prior written consent of the Pledgee,
Pledgor will not sell, assign, transfer, mortgage,
pledge or otherwise encumber any of Pledgor's rights
in or to the Securities or grant a Lien in any
therein.
(b) The Pledgor, at Pledgor's expense, will obtain,
execute, acknowledge and deliver all such
instruments and take all such action necessary (or
as the Pledgee from time to time may request) in
order to ensure the Pledgee shall have and retain
the benefits of the first priority Lien in and the
security intended to be created by this Agreement.
6. EVENTS OF DEFAULT. The following shall each constitute an "Event of
Default" under this Agreement:
(a) The occurrence of an Event of Default under either
(i) the Note, or (ii) the Guaranty;
(b) Failure by the Pledgor to observe and perform any
covenant, condition, or agreement on the Pledgor's
part to be observed or performed under this
Agreement; or
2
<PAGE> 3
(c) Failure of any representation or warranty of the
Pledgor contained in this Agreement to be true in
any material respect when given.
7. FCC COMPLIANCE. In the event that the Pledgee elects to exercise
its remedies upon an Event of Default as contemplated by Section 6 hereof or
under any other provision of this Agreement, the Pledgee shall comply in all
material respects with the Communications Act of 1934, as amended, and all
applicable rules and regulations of the Federal Communications Commission
("FCC"), including, without limitation, obtaining any required consent or
approval of the FCC prior to the exercise of such remedies. Pledgor shall
cooperate and otherwise use its best efforts to cause any such required consent
or approval to be granted.
8. REMEDIES. Upon the occurrence and during the continuation of an
Event of Default, then in addition to the rights and remedies of Pledgee
pursuant to the terms and provisions of the asset purchase agreement entered
into between JS Communications, Inc. and Pledgee dated April 16, 1997 (the
"Purchase Agreement"), the Pledgee (personally or through an agent) is hereby
authorized and empowered at its election, to transfer and register in its name
or in the name of its nominee the whole or any part of the Securities, to
exercise the voting rights with respect thereto, to collect and receive all
cash dividends and other distributions made thereon, to sell in one or more
sales after seven (7) days' notice (which notice the Pledgor agrees is
commercially reasonable), the whole or any part of the Securities and to
otherwise act with respect to the Securities as though the Pledgee was the
outright owner thereof, the Pledgor hereby irrevocably constituting and
appointing the Pledgee as the proxy and attorney-in-fact of the Pledgor, with
full power of substitution to do so. Any sale may be either for cash or upon
credit or for future delivery at such price as the Pledgee may deem fair, and
the Pledgee may be the purchaser of the whole or any part of the Securities so
sold and hold the same thereafter in its own right free from any claim of the
Pledgor or any right of redemption. Each sale shall be made to the highest
bidder, but the Pledgee reserves the right to reject any and all bids at such
sale which, in its sole discretion, it shall deem inadequate. Demands of
performance, except as otherwise herein specifically provided for, notices of
sale, advertisements and the presence of property at sale are hereby waived and
any sale hereunder may be conducted by an auctioneer or any officer or agent of
the Pledgee.
9. WAIVER. No delay on the Pledgee's part in exercising any power of
sale, lien, option or other right hereunder, and no notice or demand which may
be given to or made upon the Pledgor by the Pledgee with respect to any power
of sale, lien, option or other right hereunder, shall constitute a waiver
thereof, or limit or impair the Pledgee's right to take any action or to
exercise any power of sale, lien, option, or any other right hereunder, without
notice or demand, or prejudice the Pledgee's rights as against the Pledgor in
any respect.
10. TERMINATION. Upon payment and performance in full of all of the
Obligations, the Pledgee shall deliver to the Pledgor the Securities at the
time subject to this Agreement and all instruments of assignment executed in
connection therewith, free and clear of the lien hereof and except as otherwise
provided herein, all of the Pledgor's obligations hereunder shall, upon such
payment in full, terminate.
3
<PAGE> 4
11. MISCELLANEOUS.
-------------
(a) Any notices under or pursuant to this Agreement
shall be deemed duly sent when delivered in
accordance with the terms of the Purchase
Agreement. Either party may change such address by
sending notice of the change to the other party.
This Agreement may be executed in any number of
counterparts, which shall, collectively and
separately, constitute one agreement. All acts and
transactions hereunder and the rights and
obligations of the parties hereto shall be
governed, construed and interpreted in accordance
with the domestic laws of the Commonwealth of
Kentucky. Any action brought pursuant to this
Agreement must be brought and prosecuted as to all
parties in, and each of the parties hereby consents
to service of process, personal jurisdiction, and
venue in the state and Federal courts of general
jurisdiction located in Kenton County, Kentucky.
(b) This Agreement shall be binding upon the Pledgor
and the Pledgor's heirs and assigns, and shall
inure to the benefit of, and be enforceable by, the
Pledgee and its successors, transferees and
assigns; provided, however, that the Pledgor may
assign this Agreement only after obtaining the
written consent of the Pledgee. The Pledgee may
freely assign its rights under this Agreement None
of the terms or provisions of this Agreement may be
waived, altered, modified or amended except in
writing duly signed for and on behalf of the
Pledgee and the Pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Stock Pledge
Agreement to be duly executed as of the date first above written.
CITICASTERS CO.
By: _________________________________
Title: _________________________________
REGENT COMMUNICATIONS, INC.
By: _________________________________
Title: _________________________________
4
<PAGE> 5
COMMONWEALTH OF KENTUCKY )
) ss:
COUNTY OF KENTON )
The foregoing instrument was acknowledged before me this ___ day of
_______, 1997, by _______________ for Citicasters Co.
------------------------------------
Notary Public
COMMONWEALTH OF KENTUCKY )
) ss:
COUNTY OF KENTON )
The foregoing instrument was acknowledged before me this ___day of
__________, 1997, by _________________________ for Regent Communications, Inc.
-----------------------------------
Notary Public
5
<PAGE> 1
Exhibit 10(w)
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY is entered into as of November 14, 1997 by THE
UNDERSIGNED (each a "GUARANTOR" and collectively, "GUARANTORS") in favor of and
for the benefit of BANK OF MONTREAL, CHICAGO BRANCH, as agent for and
representative of (in such capacity herein called "GUARANTIED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement referred to
below and any Interest Rate Exchangers (as hereinafter defined), and, subject to
subsection 3.14, for the benefit of the other Beneficiaries (as hereinafter
defined).
RECITALS
A. Regent Communications, Inc. ("COMPANY"), the Lenders listed therein,
and Bank of Montreal, Chicago Branch, as Agent ("AGENT"; Lenders and Agent being
herein called, collectively, the "GUARANTIED PARTIES") have entered into that
certain Credit Agreement dated as of November 14, 1997 (said Agreement, as it
may hereafter be amended, restated, replaced, supplemented or otherwise modified
from time to time, being the "CREDIT AGREEMENT"; the terms defined therein and
not otherwise defined herein being used herein as defined in the Credit
Agreement);
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreements (collectively, the "LENDER
INTEREST RATE AGREEMENTS") with or one or more Lenders (in such capacity,
collectively, "INTEREST RATE EXCHANGERS") in accordance with the terms of the
Credit Agreement, and it is desired that the obligations of Company under the
Lender Interest Rate Agreements, including the obligation of Company to make
payments thereunder in the event of early termination thereof (all such
obligations being the "INTEREST RATE OBLIGATIONS"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be guarantied hereunder.
C. A portion of the proceeds of the Loans may be advanced to Guarantors
and thus the Guarantied Obligations (as hereinafter defined) are being incurred
for and will inure to the benefit of Guarantors (which benefits are hereby
acknowledged).
D. It is a condition precedent to the making of the initial Loans under
the Credit Agreement that Company's obligations thereunder be guarantied by
Guarantors.
E. Guarantors are willing irrevocably and unconditionally to guaranty
such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lenders and Guarantied Party to enter into the Credit
Agreement and to make Loans and other
1
<PAGE> 2
extensions of credit thereunder and to induce Interest Rate Exchangers to enter
into the Lender Interest Rate Agreements, Guarantors hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
----------------------
As used in this Guaranty, the following terms shall have the following
meanings unless the context otherwise requires:
"BENEFICIARIES" means Guarantied Party, Lenders and any Interest Rate
Exchangers.
"GUARANTIED OBLIGATIONS" has the meaning assigned to that term in
subsection 2.1.
"GUARANTY" means this Subsidiary Guaranty dated as of November 14,
1997, as it may be amended, supplemented or otherwise modified from
time to time.
"PAYMENT IN FULL", "PAID IN FULL" or any similar term means payment in
full of the Guarantied Obligations, including all principal, interest,
costs, fees and expenses (including reasonable legal fees and expenses)
of Beneficiaries as required under the Loan Documents and the Lender
Interest Rate Agreements.
1.2 INTERPRETATION.
---------------
(a) References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Guaranty unless otherwise specifically
provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions of this
Guaranty shall prevail.
SECTION 2.
THE GUARANTY
2.1 GUARANTY OF THE GUARANTIED OBLIGATIONS.
---------------------------------------
Subject to the provisions of subsection 2.2(a), Guarantors jointly and
severally hereby irrevocably and unconditionally guaranty the due and punctual
payment in full of all Guarantied Obligations when the same shall become due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss. 362(a)). The term "GUARANTIED OBLIGATIONS" is used herein in its most
comprehensive sense and includes:
2
<PAGE> 3
(a) any and all Obligations of Company and any and all Interest Rate
Obligations, in each case now or hereafter made, incurred or created,
whether absolute or contingent, liquidated or unliquidated, whether due
or not due, and however arising under or in connection with the Credit
Agreement and the other Loan Documents and the Lender Interest Rate
Agreements, including those arising under successive borrowing
transactions under the Credit Agreement which shall either continue the
Obligations of Company or from time to time renew them after they have
been satisfied and including interest which, but for the filing of a
petition in bankruptcy with respect to Company, would have accrued on
any Guarantied Obligations, whether or not a claim is allowed against
Company for such interest in the related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 LIMITATION ON AMOUNT GUARANTIED; CONTRIBUTION BY GUARANTORS.
------------------------------------------------------------
(a) Anything contained in this Guaranty to the contrary
notwithstanding, if any Fraudulent Transfer Law (as hereinafter defined) is
determined by a court of competent jurisdiction to be applicable to the
obligations of any Guarantor under this Guaranty, such obligations of such
Guarantor hereunder shall be limited to a maximum aggregate amount equal to the
largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11
of the United States Code or any applicable provisions of comparable state law
(collectively, the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect
to all other liabilities of such Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Guarantor (x) in respect of intercompany indebtedness to
Company or other affiliates of Company to the extent that such indebtedness
would be discharged in an amount equal to the amount paid by such Guarantor
hereunder and (y) under any guaranty of Subordinated Indebtedness which guaranty
contains a limitation as to maximum amount similar to that set forth in this
subsection 2.2(a), pursuant to which the liability of such Guarantor hereunder
is included in the liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, reimbursement, indemnification or contribution of such Guarantor
pursuant to applicable law or pursuant to the terms of any agreement (including
any such right of contribution under subsection 2.2(b)).
(b) Guarantors under this Guaranty together desire to allocate among
themselves, in a fair and equitable manner, their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this
Guaranty (a "FUNDING GUARANTOR") that exceeds its Fair Share (as defined below)
as of such date, that Funding Guarantor shall be entitled to a contribution from
each of the other Guarantors in the amount of such other Guarantor's Fair Share
Shortfall (as defined below) as of such date, with the result that all such
contributions will cause each Guarantor's Aggregate Payments (as defined below)
to equal its Fair Share as of such date. "FAIR SHARE" means, with respect to a
Guarantor as of any date of determination, an amount equal to (i) the ratio of
(x) the Adjusted Maximum
3
<PAGE> 4
Amount (as defined below) with respect to such Guarantor to (y) the aggregate of
the Adjusted Maximum Amounts with respect to all Guarantors MULTIPLIED BY (ii)
the aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations guarantied. "FAIR
SHARE SHORTFALL" means, with respect to a Guarantor as of any date of
determination, the excess, if any, of the Fair Share of such Guarantor over the
Aggregate Payments of such Guarantor. "ADJUSTED MAXIMUM AMOUNT" means, with
respect to a Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Guarantor under this Guaranty, determined as
of such date in accordance with subsection 2.2(a); PROVIDED that, solely for
purposes of calculating the "Adjusted Maximum Amount" with respect to any
Guarantor for purposes of this subsection 2.2(b), any assets or liabilities of
such Guarantor arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall
not be considered as assets or liabilities of such Guarantor. "AGGREGATE
PAYMENTS" means, with respect to a Guarantor as of any date of determination, an
amount equal to (i) the aggregate amount of all payments and distributions made
on or before such date by such Guarantor in respect of this Guaranty (including
in respect of this subsection 2.2(b) MINUS (ii) the aggregate amount of all
payments received on or before such date by such Guarantor from the other
Guarantors as contributions under this subsection 2.2(b). The amounts payable as
contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. The
allocation among Guarantors of their obligations as set forth in this subsection
2.2(b) shall not be construed in any way to limit the liability of any Guarantor
hereunder.
2.3 PAYMENT BY GUARANTORS; APPLICATION OF PAYMENTS.
-----------------------------------------------
Subject to the provisions of subsection 2.2(a), Guarantors hereby
jointly and severally agree, in furtherance of the foregoing and not in
limitation of any other right which any Beneficiary may have at law or in equity
against any Guarantor by virtue hereof, that upon the failure of Company to pay
any of the Guarantied Obligations when and as the same shall become due, whether
at stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.
362(a)), Guarantors will upon demand pay, or cause to be paid, in cash, to
Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to
the sum of the unpaid principal amount of all Guarantied Obligations then due as
aforesaid, accrued and unpaid interest on such Guarantied Obligations (including
interest which, but for the filing of a petition in bankruptcy with respect to
Company, would have accrued on such Guarantied Obligations, whether or not a
claim is allowed against Company for such interest in the related bankruptcy
proceeding) and all other Guarantied Obligations then owed to Beneficiaries as
aforesaid. All such payments shall be applied promptly from time to time by
Guarantied Party as provided in subsection 2.4C of the Credit Agreement.
4
<PAGE> 5
2.3 LIABILITY OF GUARANTORS ABSOLUTE.
---------------------------------
Each Guarantor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or
surety other than payment in full of the Guarantied Obligations. In furtherance
of the foregoing and without limiting the generality thereof, each Guarantor
agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Guarantied Party may enforce this Guaranty upon the
occurrence of an Event of Default under the Credit Agreement or the
occurrence of an Early Termination Date (as defined in a Master
Agreement or an Interest Rate Swap Agreement or Interest Rate and
Currency Exchange Agreement in the form prepared by the International
Swap and Derivatives Association Inc. or a similar event under any
similar swap agreement) under any Lender Interest Rate Agreement
(either such occurrence being an "EVENT OF DEFAULT" for purposes of
this Guaranty) notwithstanding the existence of any dispute between
Company and any Beneficiary with respect to the existence of such Event
of Default.
(c) The obligations of each Guarantor hereunder are
independent of the obligations of Company under the Loan Documents or
the Lender Interest Rate Agreements and the obligations of any other
guarantor (including any other Guarantor) of the obligations of Company
under the Loan Documents or the Lender Interest Rate Agreements, and a
separate action or actions may be brought and prosecuted against such
Guarantor whether or not any action is brought against Company or any
of such other guarantors and whether or not Company is joined in any
such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge
any Guarantor's liability for any portion of the Guarantied Obligations
which has not been paid. Without limiting the generality of the
foregoing, if Guarantied Party is awarded a judgment in any suit
brought to enforce any Guarantor's covenant to pay a portion of the
Guarantied Obligations, such judgment shall not be deemed to release
such Guarantor from its covenant to pay the portion of the Guarantied
Obligations that is not the subject of such suit, and such judgment
shall not, except to the extent satisfied by such Guarantor, limit,
affect, modify or abridge any other Guarantor's liability hereunder in
respect of the Guarantied Obligations.
(e) Any Beneficiary, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any reduction,
limitation, impairment, discharge or termination of any Guarantor's
liability hereunder, from time to time may (i) renew, extend,
accelerate, increase the rate of interest on, or otherwise change the
time, place, manner or terms of payment of the Guarantied Obligations,
(ii) settle, compromise, release or discharge, or accept or refuse any
offer of performance with respect to, or substitutions for, the
Guarantied Obligations or any
5
<PAGE> 6
agreement relating thereto and/or subordinate the payment of the same
to the payment of any other obligations; (iii) request and accept other
guaranties of the Guarantied Obligations and take and hold security for
the payment of this Guaranty or the Guarantied Obligations; (iv)
release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration, any
security for payment of the Guarantied Obligations, any other
guaranties of the Guarantied Obligations, or any other obligation of
any Person (including any other Guarantor) with respect to the
Guarantied Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of such Beneficiary in respect of
this Guaranty or the Guarantied Obligations and direct the order or
manner of sale thereof, or exercise any other right or remedy that such
Beneficiary may have against any such security, in each case as such
Beneficiary in its discretion may determine consistent with the Credit
Agreement or the applicable Lender Interest Rate Agreement and any
applicable security agreement, including foreclosure on any such
security pursuant to one or more judicial or nonjudicial sales, whether
or not every aspect of any such sale is commercially reasonable, and
even though such action operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of any Guarantor
against Company or any security for the Guarantied Obligations; and
(vi) exercise any other rights available to it under the Loan Documents
or the Lender Interest Rate Agreements.
(f) This Guaranty and the obligations of Guarantors hereunder
shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guarantied Obligations),
including the occurrence of any of the following, whether or not any
Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce or agreement or election not
to assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any
claim or demand or any right, power or remedy (whether arising under
the Loan Documents or the Lender Interest Rate Agreements, at law, in
equity or otherwise) with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or
security for the payment of the Guarantied Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including provisions
relating to events of default) of the Credit Agreement, any of the
other Loan Documents, any of the Lender Interest Rate Agreements or any
agreement or instrument executed pursuant thereto, or of any other
guaranty or security for the Guarantied Obligations, in each case
whether or not in accordance with the terms of the Credit Agreement or
such Loan Document, such Lender Interest Rate Agreement or any
agreement relating to such other guaranty or security; (iii) the
Guarantied Obligations, or any agreement relating thereto, at any time
being found to be illegal, invalid or unenforceable in any respect;
(iv) the application of payments received from any source (other than
payments received pursuant to the other Loan Documents or any of the
Lender Interest Rate Agreements or from the proceeds of any security
for the Guarantied Obligations, except to the extent such security also
serves as collateral for indebtedness other than the Guarantied
Obligations) to the payment of indebtedness other than the Guarantied
Obligations, even though any Beneficiary might have elected to apply
such payment to any part or all of the Guarantied Obligations; (v) any
Beneficiary's consent to
6
<PAGE> 7
the change, reorganization or termination of the corporate structure or
existence of Company or any of its Subsidiaries and to any
corresponding restructuring of the Guarantied Obligations; (vi) any
failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations; (vii) any
defenses, set-offs or counterclaims which Company may allege or assert
against any Beneficiary in respect of the Guarantied Obligations,
including failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or delay to do
any other act or thing, which may or might in any manner or to any
extent vary the risk of any Guarantor as an obligor in respect of the
Guarantied Obligations.
2.4 WAIVERS BY GUARANTORS.
----------------------
Each Guarantor hereby waives, for the benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition of
payment or performance by such Guarantor, to (i) proceed against
Company, any other guarantor (including any other Guarantor) of the
Guarantied Obligations or any other Person, (ii) proceed against or
exhaust any security held from Company, any such other guarantor or any
other Person, (iii) proceed against or have resort to any balance of
any deposit account or credit on the books of any Beneficiary in favor
of Company or any other Person, or (iv) pursue any other remedy in the
power of any Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including any
defense based on or arising out of the lack of validity or the
unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the
liability of Company from any cause other than payment in full of the
Guarantied Obligations;
(c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
(d) any defense based upon any Beneficiary's errors or
omissions in the administration of the Guarantied Obligations, except
behavior which amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of such Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations
affecting such Guarantor's liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims,
and (iv) promptness, diligence and any requirement that any Beneficiary
protect, secure, perfect or insure any security interest or lien or any
property subject thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty,
7
<PAGE> 8
notices of default under the Credit Agreement, the Lender Interest Rate
Agreements or any agreement or instrument related thereto, notices of
any renewal, extension or modification of the Guarantied Obligations or
any agreement related thereto, notices of any extension of credit to
Company and notices of any of the matters referred to in subsection 2.4
and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.
2.5 CERTAIN CALIFORNIA LAW WAIVERS.
-------------------------------
As used in this subsection 2.5, any reference to "the principal"
includes Company, and any reference to "the creditor" includes each Beneficiary.
In accordance with Section 2856 of the California Civil Code:
(a) each Guarantor agrees (i) to waive any and all rights of
subrogation and reimbursement against Company or against any collateral
or security granted by Company for any of the Guarantied Obligations
and (ii) to withhold the exercise of any and all rights of contribution
against any other guarantor of any of the Guarantied Obligations and
against any collateral or security granted by any such other guarantor
for any of the Guarantied Obligations until the Guarantied Obligations
shall have been paid in full and the Commitments shall have terminated
and all Letters of Credit shall have expired or been cancelled, all as
more fully set forth in subsection 2.5;
(b) each Guarantor waives any and all other rights and
defenses available to such Guarantor by reason of Sections 2787 to
2855, inclusive, 2899 and 3433 of the California Civil Code, including
any and all rights or defenses such Guarantor may have by reason of
protection afforded to the principal with respect to any of the
Guarantied Obligations, or to any other guarantor (including any other
Guarantor) of any of the Guarantied Obligations with respect to any of
such guarantor's obligations under its guaranty, in either case
pursuant to the antideficiency or other laws of the State of California
limiting or discharging the principal's indebtedness or such
guarantor's obligations, including Section 580a, 580b, 580d, or 726 of
the California Code of Civil Procedure; and
(c) each Guarantor waives all rights and defenses arising out
of an election of remedies by the creditor, even though that election
of remedies, such as a nonjudicial foreclosure with respect to security
for any Guarantied Obligation, has destroyed such Guarantor's rights of
subrogation and reimbursement against the principal by the operation of
Section 580d of the Code of Civil Procedure or otherwise; and even
though that election of remedies by the creditor, such as nonjudicial
foreclosure with respect to security for an obligation of any other
guarantor (including any other Guarantor) of any of the Guarantied
Obligations, has destroyed such Guarantor's rights of contribution
against such other guarantor.
8
<PAGE> 9
No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this subsection 2.5.
In accordance with subsection 3.5 below, this Guaranty shall be governed by, and
shall be construed and enforced in accordance with, the internal laws of the
State of New York, without regard to conflicts of laws principles. This
subsection 2.5 is included solely out of an abundance of caution, and shall not
be construed to mean that any of the above-referenced provisions of California
law are in any way applicable to this Guaranty or to any of the Guarantied
Obligations.
2.6 GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.
-----------------------------------------------------
Each Guarantor hereby waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against Company or
any of its assets in connection with this Guaranty or the performance by such
Guarantor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute (including under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including (a) any right of subrogation, reimbursement or indemnification
that such Guarantor now has or may hereafter have against Company, (b) any right
to enforce, or to participate in, any claim, right or remedy that any
Beneficiary now has or may hereafter have against Company, and (c) any benefit
of, and any right to participate in, any collateral or security now or hereafter
held by any Beneficiary. In addition, until the Guarantied Obligations shall
have been indefeasibly paid in full and the Commitments shall have terminated
and all Letters of Credit shall have expired or been cancelled, each Guarantor
shall withhold exercise of any right of contribution such Guarantor may have
against any other guarantor (including any other Guarantor) of the Guarantied
Obligations (including any such right of contribution under California Civil
Code Section 2848 or under subsection 2.2(b). Each Guarantor further agrees
that, to the extent the waiver or agreement to withhold the exercise of its
rights of subrogation, reimbursement, indemnification and contribution as set
forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement or
indemnification such Guarantor may have against Company or against any
collateral or security, and any rights of contribution such Guarantor may have
against any such other guarantor, shall be junior and subordinate to any rights
any Beneficiary may have against Company, to all right, title and interest any
Beneficiary may have in any such collateral or security, and to any right any
Beneficiary may have against such other guarantor. If any amount shall be paid
to any Guarantor on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time when all Guarantied
Obligations shall not have been paid in full, such amount shall be held in trust
for Guarantied Party on behalf of Beneficiaries and shall forthwith be paid over
to Guarantied Party for the benefit of Beneficiaries to be credited and applied
against the Guarantied Obligations, whether matured or unmatured, in accordance
with the terms hereof.
9
<PAGE> 10
2.7 SUBORDINATION OF OTHER OBLIGATIONS.
-----------------------------------
Any indebtedness of Company or any Guarantor now or hereafter held by
any Guarantor (the "OBLIGEE GUARANTOR") is hereby subordinated in right of
payment to the Guarantied Obligations, and any such indebtedness collected or
received by the Obligee Guarantor after an Event of Default has occurred and is
continuing shall be held in trust for Guarantied Party on behalf of
Beneficiaries and shall forthwith be paid over to Guarantied Party for the
benefit of Beneficiaries to be credited and applied against the Guarantied
Obligations but without affecting, impairing or limiting in any manner the
liability of the Obligee Guarantor under any other provision of this Guaranty.
2.8 EXPENSES.
---------
Guarantors jointly and severally agree to pay, or cause to be paid, on
demand, and to save Beneficiaries harmless against liability for, any and all
costs and expenses (including fees and disbursements of counsel) incurred or
expended by any Beneficiary in connection with the enforcement of or
preservation of any rights under this Guaranty.
2.9 CONTINUING GUARANTY.
--------------------
This Guaranty is a continuing guaranty and shall remain in effect until
all of the Guarantied Obligations shall have been paid in full and the
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled. Each Guarantor hereby irrevocably waives any right (including
any such right arising under California Civil Code Section 2815) to revoke this
Guaranty as to future transactions giving rise to any Guarantied Obligations.
2.10 AUTHORITY OF GUARANTORS OR COMPANY.
-----------------------------------
It is not necessary for any Beneficiary to inquire into the capacity or
powers of any Guarantor or Company or the officers, directors or any agents
acting or purporting to act on behalf of any of them.
10
<PAGE> 11
2.11 FINANCIAL CONDITION OF COMPANY.
-------------------------------
Any Loans may be granted to Company or continued from time to time, and
any Lender Interest Rate Agreements may be entered into from time to time, in
each case without notice to or authorization from any Guarantor regardless of
the financial or other condition of Company at the time of any such grant or
continuation or at the time such Lender Interest Rate Agreement is entered into,
as the case may be. No Beneficiary shall have any obligation to disclose or
discuss with any Guarantor its assessment, or any Guarantor's assessment, of the
financial condition of Company. Each Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Loan
Documents and the Lender Interest Rate Agreements, and each Guarantor assumes
the responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations. Each Guarantor hereby waives and relinquishes any duty
on the part of any Beneficiary to disclose any matter, fact or thing relating to
the business, operations or conditions of Company now known or hereafter known
by any Beneficiary.
2.12 RIGHTS CUMULATIVE.
------------------
The rights, powers and remedies given to Beneficiaries by this Guaranty
are cumulative and shall be in addition to and independent of all rights, powers
and remedies given to Beneficiaries by virtue of any statute or rule of law or
in any of the other Loan Documents, any of the Lender Interest Rate Agreements
or any agreement between any Guarantor and any Beneficiary or Beneficiaries or
between Company and any Beneficiary or Beneficiaries. Any forbearance or failure
to exercise, and any delay by any Beneficiary in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
2.13 BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF GUARANTY.
--------------------------------------------------------------
(a) So long as any Guarantied Obligations remain outstanding, no
Guarantor shall, without the prior written consent of Guarantied Party acting
pursuant to the instructions of Requisite Obligees (as defined in subsection
3.14), commence or join with any other Person in commencing any bankruptcy,
reorganization or insolvency proceedings of or against Company. The obligations
of Guarantors under this Guaranty shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership, reorganization,
liquidation or arrangement of Company or by any defense which Company may have
by reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guarantied Obligations ceases to accrue by operation of law by reason of
the commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
11
<PAGE> 12
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors and Beneficiaries that the Guarantied Obligations which
are guarantied by Guarantors pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guarantied Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Guarantied Party, or allow the claim of
Guarantied Party in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations
are paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guarantied Obligations for all purposes under this Guaranty.
2.14 NOTICE OF EVENTS.
-----------------
As soon as any Guarantor obtains knowledge thereof, such Guarantor
shall give Guarantied Party written notice of any condition or event which has
resulted in (a) a material adverse change in the financial condition of any
Guarantor or Company or (b) a breach of or noncompliance with any term,
condition or covenant contained herein or in the Credit Agreement, any other
Loan Document, any Lender Interest Rate Agreement or any other document
delivered pursuant hereto or thereto.
2.15 SET OFF.
--------
In addition to any other rights any Beneficiary may have under law or
in equity, if any amount shall at any time be due and owing by any Guarantor to
any Beneficiary under this Guaranty, such Beneficiary is authorized at any time
or from time to time, without notice (any such notice being hereby expressly
waived), to set off and to appropriate and to apply any and all deposits
(general or special, including indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness of such
Beneficiary owing to such Guarantor and any other property of such Guarantor
held by any Beneficiary to or for the credit or the account of such Guarantor
against and on account of the Guarantied Obligations and liabilities of such
Guarantor to any Beneficiary under this Guaranty.
12
<PAGE> 13
2.16 DISCHARGE OF GUARANTY UPON SALE OF GUARANTOR.
---------------------------------------------
If all of the stock of any Guarantor or any of its successors in
interest under this Guaranty shall be sold or otherwise disposed of (including
by merger or consolidation) in an Asset Sale not prohibited by subsection 7.7 of
the Credit Agreement or otherwise consented to by Requisite Lenders, the
Guaranty of such Guarantor or such successor in interest, as the case may be,
hereunder shall automatically be discharged and released without any further
action by any Beneficiary or any other Person effective as of the time of such
Asset Sale; PROVIDED that, as a condition precedent to such discharge and
release, Guarantied Party shall have received evidence satisfactory to it that
arrangements satisfactory to it have been made for delivery to Guarantied Party
of the applicable Net Asset Sale Proceeds.
SECTION 3.
MISCELLANEOUS
3.1 SURVIVAL OF WARRANTIES.
-----------------------
All agreements, representations and warranties made herein shall
survive the execution and delivery of this Guaranty and the other Loan Documents
and the Lender Interest Rate Agreements and any increase in the Commitments
under the Credit Agreement.
3.2 NOTICES.
--------
Any communications between Guarantied Party and any Guarantor and any
notices or requests provided herein to be given may be given by mailing the
same, postage prepaid, or by telex, facsimile transmission or cable to each such
party at its address set forth in the Credit Agreement, on the signature pages
hereof or to such other addresses as each such party may in writing hereafter
indicate. Any notice, request or demand to or upon Guarantied Party or any
Guarantor shall not be effective until received.
3.3 SEVERABILITY.
-------------
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
13
<PAGE> 14
3.4 AMENDMENTS AND WAIVERS.
-----------------------
No amendment, modification, termination or waiver of any provision of
this Guaranty, and no consent to any departure by any Guarantor therefrom, shall
in any event be effective without the written concurrence of Guarantied Party
and, in the case of any such amendment or modification, each Guarantor against
whom enforcement of such amendment or modification is sought. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
3.5 HEADINGS.
---------
Section and subsection headings in this Guaranty are included herein
for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
3.6 APPLICABLE LAW; RULES OF CONSTRUCTION.
--------------------------------------
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS AND
BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The rules of construction
set forth in subsection 1.3 of the Credit Agreement shall be applicable to this
Guaranty mutatis mutandis.
3.7 SUCCESSORS AND ASSIGNS.
-----------------------
This Guaranty is a continuing guaranty and shall be binding upon each
Guarantor and its respective successors and assigns. This Guaranty shall inure
to the benefit of Beneficiaries and their respective successors and assigns. No
Guarantor shall assign this Guaranty or any of the rights or obligations of such
Guarantor hereunder without the prior written consent of all Lenders. Any
Beneficiary may, without notice or consent, assign its interest in this Guaranty
in whole or in part. The terms and provisions of this Guaranty shall inure to
the benefit of any transferee or assignee of any Loan, and in the event of such
transfer or assignment the rights and privileges herein conferred upon such
Beneficiary shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof.
3.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
-----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF
OR RELATING TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND
CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GUARANTOR,
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
14
<PAGE> 15
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEX-
CLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SUBSECTION 3.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST SUCH GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
15
<PAGE> 16
3.9 WAIVER OF TRIAL BY JURY.
------------------------
EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH
BENEFICIARY EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The
scope of this waiver is intended to be all encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. Each Guarantor and, by its acceptance
of the benefits hereof, each Beneficiary, each (i) acknowledges that this waiver
is a material inducement for such Guarantor and Beneficiaries to enter into a
business relationship, that such Guarantor and Beneficiaries have already relied
on this waiver in entering into this Guaranty or accepting the benefits thereof,
as the case may be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED BY GUARANTIED PARTY AND EACH
GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the event of litigation, this
Guaranty may be filed as a written consent to a trial by the court.
3.10 NO OTHER WRITING.
-----------------
This writing is intended by Guarantors and Beneficiaries as the final
expression of this Guaranty and is also intended as a complete and exclusive
statement of the terms of their agreement with respect to the matters covered
hereby. No course of dealing, course of performance or trade usage, and no parol
evidence of any nature, shall be used to supplement or modify any terms of this
Guaranty. There are no conditions to the full effectiveness of this Guaranty.
3.11 FURTHER ASSURANCES.
-------------------
At any time or from time to time, upon the request of Guarantied Party,
Guarantors shall execute and deliver such further documents and do such other
acts and things as Guarantied Party may reasonably request in order to effect
fully the purposes of this Guaranty.
16
<PAGE> 17
3.12 ADDITIONAL GUARANTORS.
----------------------
The initial Guarantors hereunder shall be such of the Subsidiaries of
Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto, as additional Guarantors (each an "ADDITIONAL GUARANTOR"), by
executing a counterpart of this Guaranty. Upon delivery of any such counterpart
to Agent, notice of which is hereby waived by Guarantors, each such Additional
Guarantor shall be a Guarantor and shall be as fully a party hereto as if such
Additional Guarantor were an original signatory hereof. Each Guarantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Guarantor hereunder, nor by
any election of Agent not to cause any Subsidiary of Company to become an
Additional Guarantor hereunder. This Guaranty shall be fully effective as to any
Guarantor that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Guarantor hereunder.
3.13 COUNTERPARTS; EFFECTIVENESS.
----------------------------
This Guaranty may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original for all purposes; but
all such counterparts together shall constitute but one and the same instrument.
This Guaranty shall become effective as to each Guarantor upon the execution of
a counterpart hereof by such Guarantor (whether or not a counterpart hereof
shall have been executed by any other Guarantor) and receipt by Guarantied Party
of written or telephonic notification of such execution and authorization of
delivery thereof.
3.14 GUARANTIED PARTY AS AGENT.
--------------------------
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Lenders and, by their acceptance of the benefits hereof, Interest
Rate Exchangers. Guarantied Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Guaranty and the Credit Agreement; PROVIDED that Guarantied
Party shall exercise, or refrain from exercising, any remedies hereunder in
accordance with the instructions of (i) Requisite Lenders or (ii) after payment
in full of all Obligations under the Credit Agreement and the other Loan
Documents, the holders of a majority of the aggregate notional amount (or, with
respect to any Lender Interest Rate Agreement that has been terminated in
accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "REQUISITE OBLIGEES"). In furtherance of the foregoing provisions of
this subsection 3.14, each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to enforce this
Guaranty, it being understood and agreed by such Interest Rate Exchanger that
all rights and remedies hereunder may be exercised solely by Guarantied Party
for the benefit of Beneficiaries in accordance with the terms of this subsection
3.14.
17
<PAGE> 18
(b) Guarantied Party shall at all times be the same Person that is
Agent under the Credit Agreement. Written notice of resignation by Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Guarantied Party under this Guaranty; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal
as Guarantied Party under this Guaranty; and appointment of a successor Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Guarantied Party under this Guaranty. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Guarantied Party under this Guaranty, and the retiring or
removed Guarantied Party under this Guaranty shall promptly (i) transfer to such
successor Guarantied Party all sums held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance
of the duties of the successor Guarantied Party under this Guaranty, and (ii)
take such other actions as may be necessary or appropriate in connection with
the assignment to such successor Guarantied Party of the rights created
hereunder, whereupon such retiring or removed Guarantied Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
[Remainder of page intentionally left blank]
18
<PAGE> 19
IN WITNESS WHEREOF, each undersigned Guarantor has caused this
Subsidiary Guaranty to be duly executed as of the day and year first written
above.
REGENT BROADCASTING OF SAN DIEGO, INC.,
REGENT BROADCASTING OF LEXINGTON, INC.,
REGENT BROADCASTING OF CHARLESTON, INC.,
REGENT BROADCASTING OF DAYTON, INC., REGENT
BROADCASTING OF CHICO, INC., REGENT
BROADCASTING OF FLAGSTAFF, INC., REGENT
BROADCASTING OF KINGMAN, INC., REGENT
BROADCASTING OF LAKE TAHOE, INC., REGENT
BROADCASTING OF PALMDALE, INC., REGENT
BROADCASTING OF REDDING, INC., REGENT
BROADCASTING OF VICTORVILLE, INC.,
each a Delaware corporation
By:
--------------------------------------
Name:
Title:
-------------------------------
of each of the forgoing
REGENT LICENSEE OF SAN DIEGO, INC.,
REGENT LICENSEE OF LEXINGTON, INC.,
REGENT LICENSEE OF CHARLESTON, INC.,
REGENT LICENSEE OF DAYTON, INC.,
each a Delaware corporation
By:
--------------------------------------
Name:
Title:
-------------------------------
of each of the forgoing
S-1
<PAGE> 20
REGENT ACQUISITION CORP.,
REGENT MERGER CORP.,
each a Delaware corporation
By:
--------------------------------------
Name:
Title:
-------------------------------
of each of the forgoing
S-2
<PAGE> 21
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused
this Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of ______________, [199_] [200_].
----------------------------------------
(Name of Additional Guarantor)
By:
-----------------------------------
Name:
Title:
Notice Address:
Attention:
A-1
<PAGE> 1
Exhibit 10(x)
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") is dated as of
November 14, 1997 and entered into by and among REGENT COMMUNICATIONS, INC., a
Delaware corporation ("COMPANY"), each of the DIRECT AND INDIRECT WHOLLY- OWNED
SUBSIDIARIES OF COMPANY listed on the signature pages hereof, (collectively, the
"GUARANTORS" and together with Company, each individually a "GRANTOR" and
collectively, "GRANTORS"), and BANK OF MONTREAL, Chicago Branch, as agent for
and representative of (in such capacity, "SECURED PARTY") the financial
institutions ("LENDERS") party to the Credit Agreement referred to below and any
Interest Rate Exchanges (as hereinafter defined).
PRELIMINARY STATEMENTS
WHEREAS, Secured Party, General Electric Capital Corporation, as
Documentation Agent ("DOCUMENTATION AGENT"), and Lenders have entered into that
certain Credit Agreement dated as of November 14, 1997 (said Credit Agreement,
as it may hereafter be amended, restated, supplemented or otherwise modified
from time to time, being the "CREDIT AGREEMENT"; the terms defined therein and
not otherwise defined herein being used herein as therein defined) with Company,
pursuant to which Lenders have made certain commitments, subject to the terms
and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company;
WHEREAS, Company may from time to time enter into one or more Interest
Rate Agreements (collectively, the "LENDER INTEREST RATE AGREEMENTS") with one
or more Lenders (in such capacity, collectively, "INTEREST RATE EXCHANGERS") in
accordance with the terms of the Credit Agreement, and it is desired that the
obligations of Company under the Lender Interest Rate Agreements, including the
obligation of Company to make payments thereunder in the event of early
termination thereof, together with all obligations of Company under the Credit
Agreement and the other Loan Documents, be secured hereunder;
WHEREAS, the proceeds of the Loans will be used by Company and
Guarantors for the purposes set forth in the Credit Agreement, including,
without limitation, the acquisition of assets, the repayment of valid and
existing debt and for working capital purposes in the ordinary course of
business;
WHEREAS, each of the Guarantors has executed and delivered that certain
Subsidiary Guaranty dated as of November 14, 1997 (said Guaranty, as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the "SUBSIDIARY GUARANTY") in favor of Secured Party for the benefit
of Lenders, pursuant to which the Guarantors have jointly and severally
guarantied the prompt payment and performance when due of all obligations of
Company under the Credit Agreement;
1
<PAGE> 2
WHEREAS, Company desires to secure all Obligations under the Credit
Agreement and the other Loan Documents to which Company is a party, and each
Guarantor desires to secure its Obligations under the Subsidiary Guaranty and
the other Loan Documents to which such Guarantor is a party;
WHEREAS, it is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that Grantors shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement; and
WHEREAS, each Grantor will receive value and obtain benefits in
exchange for delivering this Agreement securing the Obligations of Company
arising from time to time under the Credit Agreement and the Obligations of each
Guarantor arising from time to time under the Subsidiary Guaranty, the receipt
of which value and benefits are hereby acknowledged, and each Grantor,
accordingly, desires to enter into this Agreement in order to satisfy the
condition precedent described in the foregoing paragraph.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under into the Credit
Agreement and to induce Interest Rate Exchangers to enter into the Lender
Interest Rate Agreements, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Grantors hereby agree
with Secured Party as follows:
SECTION 1. GRANT OF SECURITY. As collateral security for the prompt payment or
performance in full when due of the Secured Obligations (as hereinafter
defined), each Grantor, to the full extent permitted by law, hereby pledges and
assigns to Secured Party, and grants to Secured Party a security interest in,
for the ratable benefit of Lenders, all of such Grantor's right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which such Grantor now has or hereafter acquires an interest and wherever
the same may be located (the "COLLATERAL"):
(a) all inventory in all of its forms, including, but not limited to,
(i) all goods held by such Grantor for sale or lease or to be furnished under
contracts of service or so leased or furnished, (ii) all raw materials, work in
process, finished goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing or production of
such inventory or otherwise used or consumed in such Grantor's business, (iii)
all such goods in which such Grantor has an interest in mass or a joint or other
interest or right of any kind, and (iv) all such goods which are returned to or
repossessed by such Grantor and all accessions thereto and products thereof (all
such inventory, accessions and products being the "INVENTORY") and all
negotiable documents of title (including, without limitation, warehouse
receipts, dock receipts and bills of lading) issued by any Person covering any
Inventory (any such negotiable document of title being a "NEGOTIABLE DOCUMENT OF
TITLE");
(b) all accounts, accounts receivables, other receivables and rights to
payment for Inventory sold or leased or services rendered of every nature and
all contract rights, chattel paper, documents, instruments, notes, general
intangibles related to the foregoing, whether or not earned by performance,
including, without limitation, all rights to receive the proceeds of any Asset
Sale
2
<PAGE> 3
(including, without limitation, the sale or other disposition of any FCC License
or property related thereto)(collectively, the "ACCOUNTS") and all rights in, to
and under all security agreements, leases and other contracts securing or
otherwise relating to any of the Accounts (the "RELATED CONTRACTS");
(c) all trademarks, service marks, trade names, corporate names, trade
secrets, business names, trade styles, logos, patents, licenses (including,
without limitation, all FCC Licenses at the time and to the extent permitted by
law), copyrights, registrations, franchise rights, other source or business
identifiers, all applications therefor and reissues, extensions or renewals
thereof, all goodwill associated with any of the foregoing and any and all of
Grantor's licenses ("INTELLECTUAL PROPERTY LICENSES") to use any of the
foregoing (collectively, the "INTELLECTUAL PROPERTY COLLATERAL");
(d) all items of equipment and fixtures, including all equipment,
machinery, furnishings, fixtures, tools, supplies, automotive equipment, motor
vehicles and other equipment of any kind and nature, together with all
replacements, substitutions, attachments, parts (including spare parts),
modifications, additions, improvements, upgrades and accessions of, to or upon
such items of equipment or fixtures (together referred to herein as the
"EQUIPMENT");
(e) all choses in action, causes of action, judgments and all other
intangible personal property of such Grantor of every kind and nature (other
than Accounts) including, without limitation, corporate or other business
records, documents, contracts, instruments or agreements (including, without
limitation, program contracts, franchises, lease management agreements, local
marketing agreements, time brokerage agreements, network affiliation agreements
and similar arrangements), inventions, designs, patents, patent applications,
trademarks, trade names, trade secrets, goodwill, copyrights, registrations,
licenses (including, without limitation, all FCC Licenses to the extent
permitted by law), leases with respect to personal property, franchises, tax
refund claims, any guarantee claims, security interests or other security held
by or granted to such Grantor to secure payment by a debtor in respect of any
Account (together referred to herein as the "GENERAL INTANGIBLES"); and
(f) (i) all moneys, residues and property of any kind in the possession
of or under the control of Secured Party, any Lender or any bank or any
financial institution or a bailee of Secured Party, any Lender or any bank or
any financial institution, including without limitation, any deposit account at
any bank or any financial institution or any bailee of any thereof, (ii) all
accessions to, substitutions for and replacements, products and proceeds of
Accounts, Equipment, Inventory and General Intangibles, including, without
limitation, proceeds of insurance policies insuring (whether or not Secured
Party is the loss payee thereof), and condemnation or requisition payments with
respect to, any or all of the foregoing, and (iii) all books and records
(including, without limitation, ledger cards, correspondence, customer lists,
credit files, tapes, disks, computer programs, printouts and other computer
materials and records) of such Grantor pertaining to any Accounts, Equipment,
Inventory and General Intangibles or any item in this clause (g) (together
referred to herein as the "MISCELLANEOUS COLLATERAL");
(g) the stock described on SCHEDULE I hereto (collectively, the
"PLEDGED STOCK") and the certificates representing the Pledged Stock, and any
interest of Grantors in the entries on the
3
<PAGE> 4
books of any financial intermediary pertaining to the Pledged Stock, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Stock;
(h) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Stock from time to time acquired by such Grantor in
any manner (which shares shall be deemed to be part of the Pledged Stock), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of such Grantor
in the entries on the books of any financial intermediary pertaining to such
additional shares, and all dividends, cash, warrants, rights, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights;
(i) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of such Grantor (which shares shall be deemed to be part of
the Pledged Stock), the certificates or other instruments representing such
shares, securities, warrants, options or other rights and any interest of such
Grantor in the entries on the books of any financial intermediary pertaining to
such shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares,
securities, warrants, options or other rights;
(j) the indebtedness described on SCHEDULE I hereto and all other
indebtedness from time to time owed to such Grantor by any other Grantor or
Grantors or any Person that, after the date of this Agreement, becomes, as a
result of any occurrence, a direct or indirect Subsidiary of, such Grantor and
all interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness (collectively, the "PLEDGED DEBT" and, together
with the Pledged Stock, the "PLEDGED COLLATERAL"); and
(k) all proceeds, products, rents and profits of or from any and all of
the foregoing Collateral and, to the extent not otherwise included, all payments
under insurance (whether or not Secured Party is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral. For purposes of this
Agreement, the term "PROCEEDS" includes whatever is receivable or received when
Collateral or proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the Collateral
is collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. ss.362(a)), of all Obligations and liabilities of every nature
of each Grantor now or hereafter existing under or arising out of or in
connection with the Credit
4
<PAGE> 5
Agreement and the other Loan Documents and the Lender Interest Rate Agreements
to the extent such Grantor is a party thereto and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to any
Grantor, would accrue on such obligations), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
each Grantor now or hereafter existing under this Agreement (all such
obligations of Grantors, together with the Underlying Debt, being the "SECURED
OBLIGATIONS").
SECTION 3. EACH GRANTOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement (other than this Agreement to the extent included in the Collateral),
nor shall Secured Party be obligated to perform any of the obligations or duties
of any Grantor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and warrants
as follows:
(a) CREDIT AGREEMENT REPRESENTATIONS. Each of the representations and
warranties set forth in Section 5 of the Credit Agreement are true, correct and
complete to the extent specifically applicable to such Grantor and the
Collateral of such Grantor therein and each such representation and warranty is
hereby incorporated herein by this reference;
(b) MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant
to this Agreement does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System;
(c) OWNERSHIP OF COLLATERAL. Except for the security interests created
by this Agreement and the other Loan Documents and Permitted Liens, such Grantor
owns the Collateral held by it free and clear of any Lien. All of the Pledged
Stock has been duly authorized and validly issued and is fully paid and
nonassessable. Except as may have been filed in respect of Permitted Liens and
financing statement filings or other recordings permitted by the terms of the
Credit Agreement,
5
<PAGE> 6
no effective financing statement or other instrument similar in effect covering
all or any part of the Collateral is on file in any filing or recording office
other than financing statements for which executed termination statements have
been delivered to the Secured Party;
(d) LOCATION OF INVENTORY AND EQUIPMENT. All of the Inventory and
Equipment is, as of the date hereof, located at the places specified in SCHEDULE
II annexed hereto;
(e) OFFICE LOCATIONS; FICTITIOUS NAMES. As of the Closing Date, the
principal place of business, the chief executive office and the office where
each Grantor keeps its records regarding the Accounts and all originals of all
chattel paper that evidence Accounts is, and has been for the four month period
preceding the date hereof, located as set forth in SCHEDULE II annexed hereto.
Such Grantor has not in the past done, and does not now do, business under any
other name (including any trade-name or fictitious business name) except as set
forth in SCHEDULE II annexed hereto to the Credit Agreement;
(f) DELIVERY OF CERTAIN COLLATERAL. All chattel paper and all notes and
other instruments (excluding checks and other items delivered for deposit in the
ordinary course of business) comprising any and all items of Collateral have
been delivered to Secured Party duly indorsed and accompanied by duly executed
instruments of transfer or assignment in blank;
(g) PERFECTION. The security interests in the Collateral granted to the
Secured Party for the ratable benefit of the Lenders hereunder constitute valid
security interests in the Collateral. Upon the filing of UCC financing
statements naming each Grantor as "debtor", naming the Secured Party as "secured
party" and describing the Collateral in the filing offices set forth on SCHEDULE
I hereto, the security interests in the Collateral granted to the Secured Party
for the ratable benefit of the Lenders will, to the extent a security interest
in the Collateral may be perfected by filing UCC financing statements,
constitute valid and perfected security interests therein prior to all other
Liens other than Permitted Liens. Upon the delivery of the certificates
representing the Pledged Stock and the instruments evidencing the Pledged Debt
to the Secured Party, the security interests in the Pledged Collateral granted
to the Secured Party for the benefit of the Lenders will constitute valid and
perfected security interests therein prior to all other Liens;
(h) INSURANCE. Insurance covering the Collateral against loss or damage
of the kinds required by the terms of the Credit Agreement is in full force and
effect;
(i) ACCOUNTS RECEIVABLE. To the best of such Grantor's knowledge and in
accordance with credit policies typically applied in such Grantor's industry for
the evaluation of Accounts, all persons appearing to be obligated on Accounts
have authority and capacity to contract and are bound as they appear to be. All
Accounts of such Grantor comply in all material respects with all applicable
laws concerning form, content and manner of preparation and execution,
including, where applicable, but not limited to, any consumer credit laws;
(j) BILLS OF LADING. No bill of lading, warehouse receipt or other
document or instrument of title is outstanding with respect to the Collateral or
any portion of the Collateral;
(k) FILINGS. No authorization, approval or other action by, and no
notice to or filing
6
<PAGE> 7
with, any governmental authority or regulatory body (other than for the filing
of this Agreement to the extent required by the FCC), or any other Person is
required (i) for the grant by such Grantor of the security interest in the
Collateral granted hereby or for the execution, delivery or performance of this
Agreement by any Grantor or (ii) for the perfection of such security interest or
the exercise by Secured Party of the rights and remedies provided for in this
Agreement, except for the filing and recording of the UCC-1 financing statements
set forth on SCHEDULE III annexed hereto and proper continuances thereof, and
such other UCC-1 financing statements (and proper continuations thereof) as may
be required after the date hereof pursuant to Section 5 or subsection 6(b); and
(l) OTHER INFORMATION. All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of such Grantor with respect to the
Collateral is accurate and complete in all material respects.
SECTION 5. FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense of such
Grantor, such Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, such Grantor will:
(i) upon the request of Secured Party, mark conspicuously each item of chattel
paper included in the Accounts, and each of its records pertaining to the
Collateral, with a legend, in form and substance satisfactory to Secured Party,
indicating that such Collateral is subject to the security interest granted
hereby, (ii) at the request of Secured Party, deliver and pledge to Secured
Party hereunder all promissory notes and other instruments all original
counterparts of chattel paper constituting Collateral, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Secured Party, (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (iv) at any reasonable time and upon the terms
set forth in the Credit Agreement, upon request by Secured Party, exhibit the
Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, and (v) at Secured Party's reasonable
request, appear in and defend any action or proceeding that may affect Secured
Party's security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law; PROVIDED HOWEVER, that nothing in this Agreement shall relieve any
Grantor of its continuing obligations to file all necessary financing and
continuation statements in order to perfect and protect the security interests
granted or purported to be granted hereby. Such Grantor agrees that in the event
it does not provide Secured Party with an appropriate executed financing
statement at any time required to do so in accordance with the terms hereof, a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by such Grantor shall be sufficient as a financing statement
and may be
7
<PAGE> 8
filed as a financing statement in any and all jurisdictions.
(c) Such Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(d) Each Grantor will promptly notify Secured Party of any material
event causing loss or depreciation in the value of the Collateral of such
Grantor which is either outside the ordinary course of business of such Grantor
or any event which, in respect of any single such event, causes loss or
depreciation in excess of $100,000 and in respect of any of such events will
also notify Secured Party of the amount of such loss or depreciation.
(e) All certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on behalf of Secured
Party pursuant hereto and shall be in suitable form for transfer by delivery or,
as applicable, shall be accompanied by Grantors' endorsement, where necessary,
or duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Secured Party. The Secured Party shall have the right,
at any time in its discretion and without notice to Grantors, to transfer to or
to register in the name of Secured Party or any of its nominees any or all of
the Pledged Collateral, subject only to the revocable rights specified in
Section 10(a). In addition, Secured Party shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
(f) Subject to subsection 8(b), each Grantor hereby specifically and
irrevocably authorizes and directs every obligor under its respective contracts
and agreements included in the Collateral to make all distributions of payments
due or arising thereunder to Secured Party.
SECTION 6. CERTAIN COVENANTS OF THE GRANTORS. Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral if
the same would result in an Event of Default;
(b) give Secured Party 30 days' prior written notice of any change in
(i) such Grantor's name, identity or corporate structure, (ii) such Grantor's
principal place of business, chief executive office or residence, (iii) the
office where such Grantor keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts and (iv) locations of
Inventory or Equipment (or new locations therefor), in each case, at such other
places in jurisdictions where all action that may be necessary or desirable, or
that Secured Party may request, shall have been taken with respect to the
Collateral affected by any such change in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Collateral;
(c) except as otherwise permitted by the Credit Agreement, pay promptly
when due all property and other taxes, assessments and governmental charges or
levies imposed upon, and all
8
<PAGE> 9
claims (including claims for labor, materials and supplies) against, the
Collateral.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INSURANCE. Each Grantor shall, at
its own expense, maintain insurance with respect to the Collateral in accordance
with the terms of the Credit Agreement.
SECTION 8. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED CONTRACTS.
(a) Each Grantor shall, to the extent it owns any Accounts, maintain
(i) complete records of each Account, including records of all payments
received, credits granted and merchandise returned, and (ii) all documentation
relating thereto, in accordance with its customary practices and procedures for
retention of such information consistent with past practice and shall permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and such Grantor
agrees for purposes of enabling Secured Party to exercise its rights and
remedies hereunder to render to Secured Party, at such Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto. Promptly upon the request of Secured Party, such Grantor shall
deliver to Secured Party complete and correct copies of the Related Contracts.
(b) Except as otherwise provided in this subsection (b), each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor under the Accounts and Related Contracts. In connection with
such collections, such Grantor may take (and, upon the occurrence and during the
continuance of an Event of Default, at Secured Party's direction, shall take)
such action as such Grantor or Secured Party may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; PROVIDED,
HOWEVER, that Secured Party shall have the right at any time, upon the
occurrence and during the continuation of an Event of Default or a Potential
Event of Default, to notify the account debtors or obligors under any Accounts
of the assignment of such Accounts to Secured Party and to direct such account
debtors or obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to Secured Party, to notify each Person maintaining
a lockbox or similar arrangement to which account debtors or obligors under any
Accounts have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to Secured Party and,
upon such notification and at the expense of such Grantor, to enforce collection
of any such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by such Grantor of the notice from Secured Party referred to
in the PROVISO to the preceding sentence, (i) all amounts and proceeds
(including checks and other instruments) received by such Grantor in respect of
the Accounts and the Related Contracts shall be received in trust for the
benefit of Secured Party hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over or delivered to Secured Party in the
same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 16, and (ii) such Grantor shall
not adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
9
<PAGE> 10
(c) No Guarantor will directly or indirectly sell its Accounts.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT.
(a) Except for Equipment which is being repaired or restored in the
ordinary course of business and Equipment in transit between the locations set
forth on SCHEDULE II annexed hereto , each Grantor shall keep the Equipment
owned by it at the locations specified therefor in SCHEDULE II annexed hereto,
or at such locations in a jurisdiction where all actions required by Section 5
shall have been taken with respect to the Equipment.
(b) Each Grantor shall maintain or cause to be maintained to the extent
required by sound business practices all Equipment used by such Grantor in its
business in good repair, working order and condition, ordinary wear and tear
excepted, and shall make all necessary replacements thereof so that the value
and operating efficiency thereof shall at all times be maintained and preserved.
(c) Each Grantor, immediately on demand therefor by Secured Party,
shall deliver to Secured Party any and all evidence of ownership of any of the
Equipment (including, without limitation, certificates of title and applications
for title).
SECTION 10. CONSENSUAL RIGHTS; PAYMENTS ON PLEDGED COLLATERAL; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Each Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Collateral
of such Grantor or any part thereof for any purpose not inconsistent
with the terms of this Agreement, the Credit Agreement or any other
Loan Document;
(ii) Each Grantor shall be entitled to receive and retain any
and all principal and interest paid and dividends or other
distributions in respect of the Pledged Collateral; PROVIDED, HOWEVER,
that any and all principal, interest or other distributions paid or
payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Collateral (together with dividends and
other distributions paid or payable in cash in respect of any Pledged
Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus and cash paid, payable or otherwise
distributed in respect of principal or in redemption of or in exchange
for any Pledged Collateral) shall be, and shall forthwith be delivered
to Secured Party to hold as Collateral and shall, if received by any
Grantor, be received in trust for the benefit of Secured Party, be
segregated from the other property or funds of such Grantor and be
forthwith delivered to Secured Party as Collateral in the same form as
so received (with all necessary endorsements); and
10
<PAGE> 11
(iii) Secured Party shall execute and deliver (or cause to be
executed and delivered) to any Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the consensual rights which it is
entitled to exercise pursuant to paragraph (i) above and to receive the
principal or interest payments which it is authorized to receive and
retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default, at the election of Secured Party:
(i) All rights of any Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to subsection 10(a)(i) (subject however to prior FCC consent
to the extent required) and to receive the dividends, principal and
interest payments and any and all payments or distributions which it
would otherwise be authorized to receive and retain pursuant to
subsection 10(a)(ii) shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have the sole right
to exercise such voting and other consensual rights (subject however to
prior FCC consent to the extent required) and to receive and hold as
Collateral such dividends, principal and interest payments; and
(ii) All dividends, principal and interest payments and other
distributions which are received by any Grantor contrary to the
provisions of paragraph (i) of this subsection 10(b) shall be received
in trust for the benefit of Secured Party, shall be segregated from
other funds of such Grantor and shall forthwith be paid over to Secured
Party as Collateral in the same form as so received (with any necessary
endorsements).
(iii) In order to permit Secured Party to exercise the voting
and other consensual rights which it may be entitled to exercise
pursuant to Section 10(b) (subject however to prior FCC consent to the
extent required) and to receive all dividends, principal and interest
payments and other distributions which it may be entitled to receive
under Section 10(a) or 10(b), Grantors shall promptly execute and
deliver (or cause to be executed and delivered) to Secured Party all
such proxies, dividend payment orders and other instruments as Secured
Party may from time to time reasonably request (subject however to
prior FCC consent to the extent required).
SECTION 11. TRANSFERS AND OTHER LIENS. Other than as permitted by the Credit
Agreement, no Grantor shall (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral or (ii) except for Permitted
Liens, create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person or
entity.
SECTION 12. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby
irrevocably appoints Secured Party as such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such
Grantor, Secured Party or otherwise, from time to time,
11
<PAGE> 12
following the occurrence and during the continuance of an Event of Default, in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained
by such Grantor or paid to Secured Party pursuant to Section 7;
(b) to ask for, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a)
and (b) above;
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or
placed upon or threatened against the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by Secured Party in its sole discretion, any such payments
made by Secured Party to become obligations of such Grantor to Secured
Party, due and payable immediately without demand;
(f) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with
Accounts and other documents relating to the Collateral;
(g) to file, or cause to be filed, to the extent permitted by
law, such applications for approval and to take all other and further
actions required to obtain any approvals or consents from the FCC
required for the exercise of any right or remedy hereunder; and
(h) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though Secured Party were the absolute owner thereof
for all purposes, and to do, at Secured Party's option and such
Grantor's expense, at any time or from time to time, all acts and
things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
SECTION 13. SECURED PARTY MAY PERFORM. If any Grantor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Grantors under subsection 10.2 of the
Credit Agreement.
12
<PAGE> 13
SECTION 14. STANDARD OF CARE.
(a) The powers conferred on Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any
Collateral including, without limitation, (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Collateral, whether or not Secured Party has or is deemed to
have knowledge or such matters, (b) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Collateral) to preserve rights against any parties with
respect to any Collateral, (c) taking any necessary steps to collect or realize
upon the Secured Obligations or any guarantee therefor, or any part thereof, or
any of the Collateral, or (d) initiating any action to protect the Collateral
against the possibility of a decline in market value. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property.
(b) Secured Party shall not be liable to any Grantor (i) for any loss
or damage sustained by it, or (ii) for any loss, damage, depreciation or other
diminution in the value of any of the Collateral that may occur as a result of,
in connection with or that is in any way related to (x) any exercise by Secured
Party of any right or remedy under this Agreement or (y) any other act of or
failure to act by Secured Party, except to the extent that the same shall be
determined by a judgment of a court of competent jurisdiction that is final and
not subject to review on appeal, to be the result of acts or omissions on the
part of Secured Party constituting gross negligence or willful misconduct.
(c) NO CLAIM MAY BE MADE BY ANY GRANTOR AGAINST SECURED PARTY OR ITS
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR SECURED PARTIES FOR ANY
PUNITIVE, EXEMPLARY, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN RESPECT OF
ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR IS BASED ON CONTRACT,
TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY
RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND
EACH GRANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM
FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
13
<PAGE> 14
SECTION 15. REMEDIES.
14
<PAGE> 15
(a) If any Event of Default shall have occurred and be continuing,
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein, in the Credit Agreement, any
other agreement between any Grantor and Secured Party or otherwise available to
it, all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "CODE") (whether
or not the Code applies to the affected Collateral), and also may (i) require
any Grantor to, and each Grantor hereby agrees that it will at its expense and
upon request of Secured Party forthwith, assemble all or part of the Collateral
as directed by Secured Party and make it available to Secured Party at a place
to be designated by Secured Party that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take possession
thereof with or without judicial process; PROVIDED that notwithstanding the
foregoing, any voting interests of a Station included in Pledged Collateral and
any FCC Licenses and related assets necessary for the operation of a Station
included in the Collateral shall be offered for sale in accordance with
subsection 15(c) below, (iii) prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Secured Party deems
appropriate, (iv) take possession of any Grantor's premises or place custodians
in exclusive control thereof, remain on such premises and use the same and any
of such Grantor's equipment for the purpose of completing any work in process,
taking any actions described in the preceding clause (iii) and collecting any
Secured Obligation, and (v) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and upon such
other terms as Secured Party may deem commercially reasonable. Secured Party or
any Lender or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such sale and Secured Party, as agent for and representative
of Lenders (but not any Lender or Lenders or Interest Rate Exchanger or Interest
Rate Exchangers in its or their respective individual capacities unless
Requisite Obligees (as defined in Section 34 shall otherwise agree in writing),
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by Secured Party at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Grantor, and each
Grantor hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Grantor agrees that, to the extent notice of sale shall be required by law,
at least ten days' notice to such Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each Grantor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, such Grantor shall be
liable for the deficiency and the reasonable fees of any attorneys employed by
Secured Party to collect such deficiency in accordance with Section 17.
15
<PAGE> 16
(b) Notwithstanding anything herein to the contrary, but without
limiting in any manner the security interests granted to Secured Party on behalf
of Lenders hereunder in proceeds resulting from the sale or other disposition of
any FCC Licenses or property related thereto, to the extent this Agreement or
any other Loan Document purports to require any Grantor to grant to Secured
Party, on behalf of Lenders, a security interest in the FCC Licenses of any
Grantor, Secured Party, on behalf of Lenders, shall have a security interest in
such FCC Licenses only at such times and to the extent that a security interest
in such licenses is permitted under applicable law. Notwithstanding anything to
the contrary set forth herein, Secured Party, on behalf of Lenders, agrees that
to the extent prior FCC approval is required pursuant to the Communications Act
for (i) the operation and effectiveness of any grant, right or remedy hereunder
or under the other Loan Documents or (ii) taking any action that may be taken by
Secured Party hereunder or under the other Loan Documents, such grant, right,
remedy or actions will be subject to such prior FCC approval having been
obtained by or in favor of Secured Party, on behalf of Lenders (and each Grantor
shall use its best efforts to obtain any such approval as promptly as possible).
Each Grantor agrees that, upon an Event of Default and at Secured Party's
request, each Grantor will, and will cause its Subsidiaries to, immediately
file, or cause to be filed, such applications for approval and shall take all
other and further actions required by the Secured Party, on behalf of Lenders,
to obtain such FCC approvals or consents as are necessary to transfer ownership
and control to Secured Party or trustee or other fiduciary acting in lieu of
Secured Party in order to ensure compliance with Section 310(b) of the
Communication Act, on behalf of Lenders, or their successors or assigns, of the
FCC Licenses held by it or its Subsidiaries.
(c) Grantors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
"SECURITIES ACT"), and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
(including, without limitation, any voting interests of a Station included in
the Pledged Collateral) conducted without prior registration or qualification of
such Pledged Collateral under the Securities Act and/or such state securities
laws, to limit purchasers to those who will agree, among other things, to
acquire the Pledged Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Grantors acknowledge that any
such private sales may be at prices and on terms less favorable than those
obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under
the Securities Act) and, notwithstanding such circumstances, Grantors agree that
any such private sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation to engage in
public sales and no obligation to delay the sale of any Pledged Collateral for
the period of time necessary to permit the issuer thereof to register it for a
form of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it. Each Grantor agrees to do, or cause to be done, all such other
acts and things as may be necessary to make any sale or sales (whether private
or public) of all or any part of the Pledged Collateral valid and binding and in
compliance with applicable law including, without limitation, filing, or causing
to be filed, such applications for approval as may be required by the FCC or any
other governmental authority.
(d) Grantor and Collateral Secured Party agree that, in the event of
changes in the
16
<PAGE> 17
Communications Act, FCC Regulations or any other applicable law occurring after
the date hereof that affect in any manner the Lenders' rights of access to, or
use or sale of, the FCC Licenses, or the procedures necessary to enable the
Lenders to obtain such rights of access, use or sale (including, without
limitation, changes allowing greater access), the Lenders and Grantor, upon
request of the Lenders or the Collateral Secured Party, shall amend this
Agreement and the other Loan Documents in such manner as the Lenders or the
Collateral Secured Party shall reasonably request, in order to provide the
Lenders with such rights to the greatest extent possible consistent with then
applicable laws and FCC Regulations.
(e) Notwithstanding anything in this Agreement to the contrary, Secured
Party shall exercise, or shall refrain from exercising, any remedy provided for
in this Section 15 or otherwise herein in accordance with the instructions of
Requisite Lenders.
(f) Upon the occurrence and during the continuance of an Event of
Default, Secured Party may exercise dominion and control over, and refuse to
permit further withdrawals (whether of money, securities, instruments or other
property) from deposit accounts maintained with Secured Party or any Lender
constituting part of the Collateral.
(f) At any time or times deemed necessary or advisable by Secured Party
or Requisite Lenders, including for purposes of complying with Section 310(b) of
the Communications Act and for purposes of enforcing any right or remedy
hereunder, Secured Party or Requisite Lenders may appoint one or more Persons to
act as a separate agent or co-agent to the full extent permitted by law and in
accordance with such instructions and directions as Secured Party or Requisite
Lenders, as the case may be, may specify. All provisions of this Agreement which
are for the benefit of the Secured Party shall extend to and apply to each
separate agent or co-agent appointed pursuant to the foregoing provisions. The
powers of any separate agent or co-agent shall not exceed those of the Secured
Party hereunder.
SECTION 16. APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Agreement or the Credit Agreement, all proceeds received by Secured Party
in respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Secured Party, be held by
Secured Party as Collateral for, and/or then, or at any other time thereafter,
applied in full or in part by Secured Party against, the Secured Obligations in
the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, and all other expenses, liabilities
and advances made or incurred by Secured Party in connection therewith,
and all fees, expenses, indemnities and other amounts for which Secured
Party is entitled to indemnification hereunder and all advances made by
Secured Party hereunder for the account of any Grantor, and to the
payment of all costs and expenses paid or incurred by Secured Party in
connection with the exercise of any right or remedy hereunder, all in
accordance with Section 17;
SECOND: To the payment of all other Secured Obligations in
accordance with the terms of the Credit Agreement and the other Loan
Documents; and
17
<PAGE> 18
THIRD: To the payment to or upon the order of any Grantor, or
to whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 17. INDEMNITY AND EXPENSES.
(a) Each Grantor jointly and severally agrees to indemnify Secured
Party from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's (or its officer's, employee's or agent's) gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.
(b) Each Grantor jointly and severally agrees to pay to Secured Party
upon demand the amount of any and all reasonable costs and expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents,
that Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or (iv)
the failure by any Grantor to perform or observe any of the provisions hereof.
SECTION 18. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the payment in full of the Secured Obligations and the
cancellation or termination of the Commitments, (b) be binding upon each
Grantor, its successors and assigns, and (c) inure, together with the rights and
remedies of Secured Party hereunder, to the benefit of Secured Party and its
successors, transferees and assigns. Upon the indefeasible payment in full of
all Secured Obligations and the cancellation or termination of the Commitments,
the security interest granted hereby shall terminate and all rights to the
Collateral shall revert to Grantors.
SECTION 19. SECURITY INTEREST ABSOLUTE. All rights of Secured Party and security
interests granted hereunder, and all obligations of each Grantor hereunder,
shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement or any other Loan Document, or any other agreement or
instrument relating to any of the foregoing;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the
Credit Agreement or any other Loan Document;
(iii) any exchange, release or non-perfection of any other
collateral, or any
18
<PAGE> 19
release or amendment or waiver of or consent to any departure from any
guaranty, for all or any of the Secured Obligations; or
(iv) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, such Grantor or a third party
grantor.
SECTION 20. AMENDMENTS; ETC. No amendment or waiver of any provision of this
Agreement, or consent to any departure by any Grantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of an amendment, each Grantor, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 21. NOTICES. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served,
telecopied, telexed or sent by United States mail or courier service and shall
be deemed to have been given when delivered in person or by courier service,
upon confirmation of receipt of telecopy or telex, or three Business Days after
depositing it in the United States mail, registered or certified, with postage
prepaid and properly addressed; PROVIDED that notices to Secured Party shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such party in a written
notice delivered to the other parties hereto.
SECTION 22. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of Secured Party in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 23. PLEDGE, GRANT AND OBLIGATIONS SEVERAL. The pledge and grant of the
Collateral of, and the obligations hereunder of, each Grantor are independent
and several, and may be enforced against such Grantor separately, whether or not
enforcement of any right or remedy hereunder has been sought against any other
Grantor.
SECTION 24. MARSHALLING; PAYMENTS SET ASIDE. Secured Party shall not be under
any obligation to marshal any assets in favor of any Grantor or any other party
or against or in payment of any or all of the Secured Obligations. To the extent
that any Grantor makes a payment or payments to Secured Party or Secured Party
enforces its security interests or exercises its rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or
19
<PAGE> 20
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
SECTION 25. WAIVER OF HEARING. Each Grantor expressly waives, to the maximum
extent permitted by law, any constitutional or other right to a judicial hearing
prior to the time Secured Party takes possession or disposes of the Collateral
as provided in Section 15 hereof.
SECTION 26. SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 27. HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 28. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT FEDERAL LAW OR THE UNIFORM COMMERCIAL CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreement, terms used in Article 9 of the Uniform Commercial Code in the State
of New York are used herein as therein defined.
SECTION 29. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH
20
<PAGE> 21
OBLIGATION. EACH GRANTOR HEREBY AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDINGS IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS PROVIDED IN THE
APPLICABLE SIGNATURE PAGE HERETO, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH
GRANTOR TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING
PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 30. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS,
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION AND THE CREDITOR/DEBTOR RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including without limitation, contract claims, tort claims, breach
of duty claims, and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on the waiver in entering into this
Agreement, and that each will continue to rely on the waiver in their related
future dealings. Each party hereto further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, REPLACEMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
SECTION 31. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
SECTION 32. ADDITIONAL GRANTORS. The initial Grantors hereunder shall be such of
the Subsidiaries of Company as are signatories hereto on the date hereof. From
time to time subsequent to the date hereof, additional Subsidiaries of Company
may become parties hereto, as additional Grantors, by executing a counterpart of
this Agreement substantially in the form of Exhibit A annexed hereto. Upon
delivery of any such counterpart to Secured Party, notice of which
21
<PAGE> 22
is hereby waived by Grantors, each such additional Grantor shall be as fully a
party hereto as if such Grantor were an original signatory hereof. Each Grantor
expressly agrees that its joint and several obligations arising hereunder shall
not be affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of Requisite Lenders not to cause any Subsidiary
of Company to become an additional Grantor hereunder. This Agreement shall be
fully effective as to any Grantor that is or becomes a party hereto regardless
of whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.
SECTION 33. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of each Grantor and of
Secured Party (including any agent or co-agent thereof); PROVIDED that in no
event may any Grantor assign its interests or obligations hereunder without the
prior written consent of Secured Party.
SECTION 34. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement; PROVIDED that Secured Party shall exercise,
or refrain from exercising, any remedies provided for in Section 15 in
accordance with the instructions of (i) Requisite Lenders or (ii) after payment
in full of all Obligations under the Credit Agreement and the other Loan
Documents, the holders of a majority of the aggregate notional amount (or, with
respect to any Lender Interest Rate Agreement that has been terminated in
accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "REQUISITE OBLIGEES"). In furtherance of the foregoing provisions of
this Section 34(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Collateral hereunder, it being understood and agreed by such Interest
Rate Exchanger that all rights and remedies hereunder may be exercised solely by
Secured Party for the benefit of Lenders and Interest Rate Exchangers in
accordance with the terms of this Section 34(a).
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other
22
<PAGE> 23
items of Collateral held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Secured Party under this Agreement, and (ii) execute and
deliver to such successor Secured Party such amendments to financing statements,
and take such other actions, as may be necessary or appropriate in connection
with the assignment to such successor Secured Party of the security interests
created hereunder, whereupon such retiring or removed Secured Party shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Agent's resignation or removal hereunder as Secured Party,
the provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was Secured
Party hereunder.
[Remainder of page intentionally left blank]
23
<PAGE> 24
IN WITNESS WHEREOF, each Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY: REGENT COMMUNICATIONS, INC.
a Delaware corporation
By:
-----------------------------------------
Name:
Title:
REGENT BROADCASTING OF SAN DIEGO, INC.,
REGENT BROADCASTING OF LEXINGTON, INC.,
REGENT BROADCASTING OF CHARLESTON, INC.,
REGENT BROADCASTING OF DAYTON, INC., REGENT
BROADCASTING OF CHICO, INC., REGENT
BROADCASTING OF FLAGSTAFF, INC., REGENT
BROADCASTING OF KINGMAN, INC., REGENT
BROADCASTING OF LAKE TAHOE, INC., REGENT
BROADCASTING OF PALMDALE, INC., REGENT
BROADCASTING OF REDDING, INC., REGENT
BROADCASTING OF VICTORVILLE, INC.,
each a Delaware corporation
By:
-----------------------------------------
Name:
Title:
----------------------------------
of each of the forgoing
REGENT LICENSEE OF SAN DIEGO, INC.,
REGENT LICENSEE OF LEXINGTON, INC.,
REGENT LICENSEE OF CHARLESTON, INC.,
REGENT LICENSEE OF DAYTON, INC.,
each a Delaware corporation
By:
-----------------------------------------
Name:
Title:
----------------------------------
of each of the forgoing
S-1
<PAGE> 25
SECURED PARTY: BANK OF MONTREAL, CHICAGO BRANCH,
as Secured Party
By:
-----------------------------------------
Name:
Title:
S-2
<PAGE> 26
REGENT ACQUISITION CORP.,
REGENT MERGER CORP.,
each a Delaware corporation
By:
-----------------------------------
Name:
Title:
-----------------------------
of each of the foregoing
S-3
<PAGE> 27
<TABLE>
<CAPTION>
SCHEDULE I
PLEDGE AND SECURITY AGREEMENT
Description of Pledged Stock
----------------------------
At November __, 1997
Class Stock Cert. Par Number
Stock Issuer Holder of Stock Number Value of Shares
- ------------ ------ -------- ------ ----- ---------
<S> <C> <C> <C> <C> <C>
Regent Broadcasting
of San Diego, Inc.(1) Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Lexington, Inc.(2) Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Charleston, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Dayton, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Chico, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Flagstaff, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Kingman, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Lake Tahoe, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Palmdale, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Redding, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Broadcasting
of Victorville, Inc. Regent Communications, Inc. Common 1 $1.00 100
Regent Licensee of Regent Broadcasting of
San Diego, Inc.(1) San Diego, Inc. Common 1 $1.00 100
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
Class Stock Cert. Par Number
Stock Issuer Holder of Stock Number Value of Shares
- ------------ ------ -------- ------ ----- ---------
<S> <C> <C> <C> <C> <C>
Regent Licensee of Regent Broadcasting of
Lexington, Inc.(2) Lexington, Inc. Common 1 $1.00 100
Regent Licensee of Regent Broadcasting of
Charleston, Inc. Charleston, Inc. Common 1 $1.00 100
Regent Licensee of Regent Broadcasting of
Dayton, Inc. Dayton, Inc. Common 1 $1.00 100
Regent Merger Corp. Regent Communications, Inc. Common 1 $1.00 100
Regent Acquisition
Corp. Regent Communications, Inc. Common 1 $1.00 100
- ---------------
</TABLE>
(1) The stock of this corporation was previously pledged to Citicasters Co. and
is being held subject to such pledge. (2) The stock of this corporation was
previously pledged to HMH Broadcasting, Inc. and is being held subject to such
pledge.
Description of Pledged Debt
---------------------------
At June 30, 1997
None.
2
<PAGE> 29
<TABLE>
<CAPTION>
SCHEDULE II
PLEDGE AND SECURITY AGREEMENT
Location of Inventory and Equipment:
- ------------------------------------
<S> <C>
Regent Communications, Inc. 50 East RiverCenter Boulevard
Suite 180
Covington, Kentucky 41011
Regent Broadcasting of San Diego, Inc. 9416 Mission Gorge Road
Santee, California
Regent Broadcasting of Lexington, Inc. 50 East RiverCenter Boulevard
Suite 180
Covington, Kentucky 41011
Office Locations:
- -----------------
Regent Broadcasting of San Diego, Inc. 9416 Mission Gorge Road
and Regent Licensee of San Diego, Inc.: Santee, California
Regent Broadcasting of Lexington, Inc. 50 East RiverCenter Boulevard
and Regent Licensee of Lexington, Inc.: Suite 180
Covington, Kentucky 41011
Regent Broadcasting of Charleston, Inc. 50 RiverCenter Boulevard
and Regent Licensee of Charleston, Inc.: Suite 180
Covington, Kentucky 41011
Regent Broadcasting of Dayton, Inc. 50 East RiverCenter Boulevard
and Regent Licensee of Dayton, Inc.: Suite 180
Covington, Kentucky 41011
Regent Broadcasting of Chico, Inc.: 1459 Humboldt Road, Suite D
Chico, California 95928
Regent Broadcasting of Flagstaff, Inc.: 2690 E. Huntington Drive
Flagstaff, Arizona 86004
Regent Broadcasting of Kingman, Inc.: 2534 Hualapai Mountain Road
Kingman, Arizona 86401
Regent Broadcasting of Lake Tahoe, Inc.: 2435 E. Venice Drive, Suite 120
South Lake Tahoe, California 96150
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
<S> <C>
Regent Broadcasting of Palmdale, Inc.: 190 Sierra Court, B-2
Palmdale, California 93550
Regent Broadcasting of Redding, Inc.: 3360 Alta Mesa Drive
Redding, California 96002
Regent Broadcasting of Victorville, Inc.: 15650 Seneca Road, Bldg. A
Victorville, California 92392
Fictitious Business Names:
- --------------------------
Name of Corporation Tradename or Fictitious Business Name
Regent Communications, Inc. JS Communications, Inc.
Regent Broadcasting of San Diego, Inc. KCBQ (AM)
Regent Broadcasting of Lexington, Inc. WXXZ (FM), Z-103
Regent Broadcasting of Charleston, Inc. JS Broadcasting of Charleston, Inc.
Regent Broadcasting of Chico, Inc. KFMF (FM), KPPL (FM), KALF (FM)
Regent Broadcasting of Flagstaff, Inc. KVNA (AM), KVNA (FM), KZGL (FM)
Regent Broadcasting of Kingman, Inc. KAAA (AM), KZZZ (FM)
Regent Broadcasting of Lake Tahoe, Inc. KOWL (AM), KRLT (FM)
Regent Broadcasting of Palmdale, Inc. KVOY (AM), KTPI (FM)
Regent Broadcasting of Redding, Inc. KQMS (AM), KSHA (FM)
Regent Broadcasting of Victorville, Inc. KROY (AM), KATJ (FM)
Regent Licensee of San Diego, Inc. KCBQ (AM)
Regent Licensee of Lexington, Inc. WXXZ (FM), Z-103
Regent Licensee of Charleston, Inc. JS Licensee of Charleston, Inc.
</TABLE>
2
<PAGE> 31
<TABLE>
<CAPTION>
SCHEDULE III
PLEDGE AND SECURITY AGREEMENT
UCC Financing Statements
------------------------
Name of Corporation Filing Location
- ------------------- ---------------
<S> <C>
As to Regent Communications, Inc. Kentucky Secretary of State
and all Grantors: Kenton County, Kentucky
-and-
As to Regent Broadcasting of San Diego, Inc. California Secretary of State
and Regent Licensee of San Diego, Inc.: San Diego County, California
As to Regent Broadcasting of Lexington, Inc. Scott County, Kentucky
and Regent Licensee of Lexington, Inc.: Fayette County, Kentucky
As to Regent Broadcasting of Charleston, Inc. S. Carolina Secretary of State
and Regent Licensee of Charleston, Inc.:
As to Regent Broadcasting of Chico, Inc.: California Secretary of State
As to Regent Broadcasting of Flagstaff, Inc.: Arizona Secretary of State
As to Regent Broadcasting of Kingman, Inc.: Arizona Secretary of State
As to Regent Broadcasting of Lake Tahoe, Inc.: California Secretary of State
Nevada Secretary of State
As to Regent Broadcasting of Palmdale, Inc.: California Secretary of State
As to Regent Broadcasting of Redding, Inc.: California Secretary of State
As to Regent Broadcasting of Victorville, Inc.: California Secretary of State
As to Regent Broadcasting of Dayton, Inc. Ohio Secretary of State
and Regent Licensee of Dayton, Inc.: Montgomery County, Ohio
</TABLE>
<PAGE> 32
EXHIBIT A
[FORM OF COUNTERPART AND ACKNOWLEDGMENT
TO SECURITY AGREEMENT]
This COUNTERPART AND ACKNOWLEDGMENT TO SECURITY AGREEMENT (this
"COUNTERPART") is dated as of _________________, [199_] [200_] and is made with
reference to that certain Pledge and Security Agreement dated as of November 14,
1997 (as previously amended, restated, supplemented or modified and as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, THE "PLEDGE AND SECURITY Agreement"; capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Pledge and
Security Agreement) among Regent Communications, Inc., ("COMPANY") and the
Subsidiaries of Company that have become parties thereto (the "EXISTING
SUBSIDIARIES" and collectively, the Company and the Existing Subsidiaries are
the "EXISTING GRANTORS"), as grantors in favor of Bank of Montreal, Chicago
Branch, as Secured Party for the financial institutions party to the Credit A
Agreement (the "LENDERS").
By execution of this Counterpart, [NEW SUBSIDIARY], a _____________
("NEW SUBSIDIARY") agrees to become a party to the Pledge and Security Agreement
as a Grantor for all purposes thereunder and under the other Loan Documents and
to be jointly and severally liable for all obligations to the full extent set
forth therein. Without limiting the foregoing, as security for its respective
Secured Obligations, New Subsidiary hereby pledges to Secured Party for the
benefit of Lenders, and here by grants to Secured Party for the benefit of
Lenders, a First Priority security interest in all of such New Subsidiary's
right, title and interest in and to the Collateral and the Pledged Collateral
whether now owned or hereafter existing or in which New Subsidiary now has or
hereafter acquires an interest and wherever the same shall be located and all
proceeds thereof.
Annexed hereto are supplements to the Schedules for the Pledge and
Security Agreement (which Schedules shall hereafter include such supplements),
setting forth in each instance the information necessary to make such Schedules
true, correct and complete and not misleading as a result of the addition of New
Subsidiary as a Grantor thereunder.
New Subsidiary hereby represents and ware to Secured Party that the
representations and warranties applicable to New Subsidiary under the Pledge and
Security Agreement, as supplemented by the Schedule supplements annexed hereto,
are true, correct and complete in all material respects to the same extent as
though made on and as of the date hereof, and as of the Counterpart Effective
Date (as defined below), except to the extent such representations and
warranties specifically relate to an earlier date, in which case they are true,
correct and complete in all material respects as of such earlier date.
Exh. A-1
<PAGE> 33
THIS COUNTERPART SHALL BE GOVERN BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
This Counterpart may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document and, pursuant to the terms of the Pledge and Security Agreement, all
such counterparts shall be attached to, and be a part of, the Pledge and
Security Agreement.
This Counterpart shall become effective (such date being the
"COUNTERPART EFFECTIVE DATE") upon the execution of a counterpart hereof by each
of the parties hereto and receipt by Secured Party of written or telephone
notification if such execution and authorization of delivery thereof
IN WITNESS WHEREOF, New Subsidiary has caused this Counterpart to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first written above.
[NEW SUBSIDIARY]
By:
------------------------------------
Name:
Title:
Exh. A-2
<PAGE> 34
ACKNOWLEDGMENT. Each of the undersigns Grantors hereby consents to this
Counterpart and agrees that each Loan Document to which it is a party shall
continue in full force and effect and shall be valid and enforceable, is hereby
ratified and confirmed and shall not be impaired or limited by the execution and
delivery of this Counterpart.
EXISTING GRANTORS:
REGENT COMMUNICATIONS, INC.
a Delaware corporation
By:
----------------------------------------
Name:
Title:
REGENT BROADCASTING OF SAN DIEGO, INC.,
REGENT BROADCASTING OF LEXINGTON, INC.,
REGENT BROADCASTING OF CHARLESTON, INC.,
REGENT BROADCASTING OF DAYTON, INC.,
REGENT BROADCASTING OF CHICO, INC.,
REGENT BROADCASTING OF FLAGSTAFF, INC.,
REGENT BROADCASTING OF KINGMAN, INC.,
REGENT BROADCASTING OF PALMDALE, INC.,
REGENT BROADCASTING OF REDDING, INC.,
REGENT BROADCASTING OF VICTORVILLE, INC.,
each Delaware corporation
By:
----------------------------------------
Name:
Title:
-----------------------------
of each of the foregoing
Exh. A-3
<PAGE> 35
REGENT LICENSEE OF SAN DIEGO, INC.
REGENT LICENSEE OF LEXINGTON, INC.
REGENT LICENSEE OF CHARLESTON, INC.,
REGENT LICENSEE OF DAYTON, INC.,
each a Delaware corporation
By:
----------------------------------------
Name:
Title:
-----------------------------
of each of the foregoing
SECURED PARTY: BANK OF MONTREAL, CHICAGO BRANCH,
as Secured Party
By:
By:
----------------------------------------
Name:
Title:
Exh. A-4
<PAGE> 1
Exhibit 10(y)
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "AGREEMENT") is dated as of
November 14, 1997 and entered into by and between REGENT COMMUNICATIONS, INC., a
Delaware corporation ("PLEDGOR"), and BANK OF MONTREAL, CHICAGO BRANCH, as agent
for and representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement referred to
below.
PRELIMINARY STATEMENTS
A. Secured Party, General Electric Capital Corporation, as
Documentation Agent ("DOCUMENTATION AGENT"), and Lenders have entered into a
Credit Agreement dated as of November 14, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Pledgor pursuant to
which Lenders have made certain commitments, subject to the terms and conditions
set forth in the Credit Agreement, to extend certain credit facilities to
Pledgor.
B. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and issue Letters of Credit under the Credit Agreement and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Secured Party as follows:
SECTION 1. CERTAIN DEFINITIONS.
The following terms used in this Agreement shall have the following
meanings:
"COLLATERAL" means (i) the Collateral Account, (ii) all
amounts on deposit from time to time in the Collateral Account, (iii)
all interest, cash, instruments, securities and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Collateral, and (iv) to the
extent not covered by clauses (i) through (iii) above, all proceeds of
any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" means the restricted deposit account
established and
1
<PAGE> 2
maintained by Secured Party pursuant to Section 2(a).
"SECURED OBLIGATIONS" means all obligations and liabilities of
every nature of Pledgor now or hereafter existing under or arising out
of or in connection with the Credit Agreement and the other Loan
Documents and all extensions or renewals thereof, whether for
principal, interest (including interest that, but for the filing of a
petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or
not from time to time decreased or extinguished and later increased,
created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such
payment is avoided or recovered directly or indirectly from Secured
Party or any Lender as a preference, fraudulent transfer or otherwise,
and all obligations of every nature of Pledgor now or hereafter
existing under this Agreement.
SECTION 2. ESTABLISHMENT AND OPERATION OF COLLATERAL ACCOUNT.
(a) Secured Party is hereby authorized to establish and maintain at its
office at 115 South LaSalle Street, Chicago, Illinois 60603, as a blocked
account in the name of Secured Party and under the sole dominion and control of
Secured Party, a restricted deposit account designated as "Bank Of Montreal as
Agent for Regent Communications, Inc. Collateral Account".
(b) The Collateral Account shall be operated in accordance with the
terms of this Agreement.
(c) All amounts at any time held in the Collateral Account shall be
beneficially owned by Pledgor but shall be held in the name of Secured Party
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgor shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 3. DEPOSITS OF CASH COLLATERAL.
(a) All deposits of funds in the Collateral Account shall be made by
wire transfer (or, if applicable, by intra-bank transfer from another account of
Pledgor) of immediately available funds, in each case addressed as follows:
2
<PAGE> 3
Account Name: Harris Trust & Savings Bank for Credit to Bank of
Montreal
Account No.: 1248566
ABA No.: 071000288
Reference: Regent
Attention: GDS
Pledgor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount (the "AGGREGATE AVAILABLE AMOUNT") equal to the maximum
amount that may at any time be drawn under all Letters of Credit then
outstanding under the Credit Agreement, Pledgor shall deliver funds in such an
amount for deposit in the Collateral Account in accordance with Section 3(a). If
for any reason the aggregate amount delivered by Pledgor for deposit in the
Collateral Account as aforesaid is less than the Aggregate Available Amount, the
aggregate amount so delivered by Pledgor shall be apportioned among all
outstanding Letters of Credit for purposes of this Section 3(b) in accordance
with the ratio of the maximum amount available for drawing under each such
Letter of Credit (as to such Letter of Credit, the "MAXIMUM AVAILABLE AMOUNT")
to the Aggregate Available Amount. Upon any drawing under any outstanding Letter
of Credit in respect of which Pledgor has deposited in the Collateral Account
any amounts described above, Secured Party shall apply such amounts to reimburse
the Issuing Lender for the amount of such drawing. In the event of cancellation
or expiration of any Letter of Credit in respect of which Pledgor has deposited
in the Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, Secured
Party shall apply the amount then on deposit in the Collateral Account in
respect of such Letter of Credit (LESS, in the case of such a reduction, the
Maximum Available Amount under such Letter of Credit immediately after such
reduction) FIRST, to the payment of any amounts payable to Secured Party
pursuant to Section 13, SECOND, to the extent of any excess, to the cash
collateralization pursuant to the terms of this Agreement of any outstanding
Letters of Credit in respect of which Pledgor has failed to pay all or a portion
of the amounts described above (such cash collateralization to be apportioned
among all such Letters of Credit in the manner described above), THIRD, to the
extent of any further excess, to the payment of any other outstanding Secured
Obligations in such order as Secured Party shall elect, and FOURTH, to the
extent of any further excess, to the payment to whomsoever shall be lawfully
entitled to receive such funds.
3
<PAGE> 4
SECTION 4. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS.
Pledgor hereby pledges and assigns to Secured Party, and hereby grants
to Secured Party a security interest in, all of Pledgor's right, title and
interest in and to the Collateral as collateral security for the prompt payment
or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
ss.362(a)), of all Secured Obligations.
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE COLLATERAL ACCOUNT; INTEREST ON
AMOUNTS IN THE COLLATERAL ACCOUNT.
(a) Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement.
(b) To the extent permitted under Regulation Q of the Board of
Governors of the Federal Reserve System, any cash held in the Collateral Account
shall bear interest at the standard rate paid by Secured Party to its customers
for deposits of like amounts and terms.
(c) Subject to Secured Party's rights under Section 12, any interest
earned on deposits of cash in the Collateral Account in accordance with Section
5(b) shall be deposited directly in, and held in the Collateral Account.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants as
follows:
(a) OWNERSHIP OF COLLATERAL. Pledgor is (or at the time of transfer
thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free and
clear of any Lien except for the security interest created by this Agreement.
(b) GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except as may have been taken by or
at the direction of Pledgor).
(c) PERFECTION. The pledge and assignment of the Collateral pursuant to
this Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations.
4
<PAGE> 5
(d) OTHER INFORMATION. All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of Pledgor with respect to the
Collateral is accurate and complete in all respects.
SECTION 7. FURTHER ASSURANCES.
Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Pledgor will: (a) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (b) at Secured Party's request,
appear in and defend any action or proceeding that may affect Pledgor's
beneficial title to or Secured Party's security interest in all or any part of
the Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS.
Pledgor agrees that it will not (a) sell, assign (by operation of law
or otherwise) or otherwise dispose of any of the Collateral or (b) create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
for the security interest under this Agreement.
SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Pledgor hereby irrevocably appoints Secured Party as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including to file one or more financing or continuation statements,
or amendments thereto, relative to all or any part of the Collateral without the
signature of Pledgor.
SECTION 10. SECURED PARTY MAY PERFORM.
If Pledgor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Pledgor under Section 13.
5
<PAGE> 6
SECTION 11. STANDARD OF CARE.
The powers conferred on Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, Secured Party shall have no duty as to any Collateral, it being
understood that Secured Party shall have no responsibility for (a) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Collateral) to preserve rights
against any parties with respect to any Collateral or (b) taking any necessary
steps to collect or realize upon the Secured Obligations or any guarantee
therefor, or any part thereof, or any of the Collateral. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property of like
kind.
SECTION 12. REMEDIES.
Subject to the provisions of Section 3(b), Secured Party may exercise
in respect of the Collateral, in addition to all other rights and remedies
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Collateral).
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Pledgor to
perform or observe any of the provisions hereof.
6
<PAGE> 7
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the Closing Date,
(b) be binding upon Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the Closing Date, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
Pledgor; PROVIDED that no Event of Default or Potential Event of Default has
occurred and is continuing. Upon any such termination Secured Party shall, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination and Pledgor shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Secured Party, of such of the Collateral as shall not have
been otherwise applied pursuant to the terms hereof.
SECTION 15. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under
this Agreement shall promptly (i) transfer to such successor Secured Party all
sums held by Secured Party hereunder (which shall be deposited in a new
Collateral Account established and maintained by such successor Secured Party),
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Secured Party
under this Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of
7
<PAGE> 8
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC.
No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Pledgor. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
SECTION 17. NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the address of each party
hereto shall be as provided in subsection 10.8 of the Credit Agreement.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 19. SEVERABILITY.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
8
<PAGE> 9
SECTION 20. HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 21. GOVERNING LAW; TERMS.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 17, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any action against Pledgor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Secured Party to bring proceedings against Pledgor in the courts of any
other jurisdiction.
9
<PAGE> 10
SECTION 23. WAIVER OF JURY TRIAL.
PLEDGOR AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. Pledgor
and Secured Party each acknowledge that this waiver is a material inducement for
Pledgor and Secured Party to enter into a business relationship, that Pledgor
and Secured Party have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver in their related
future dealings. Pledgor and Secured Party further warrant and represent that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 23 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court.
SECTION 24. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
10
<PAGE> 11
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
REGENT COMMUNICATIONS, INC.
By:
------------------------------
Name:
Title:
S-1
<PAGE> 12
BANK OF MONTREAL, CHICAGO BRANCH,
as Secured Party
By:
------------------------------
Name:
Title:
S-2
<PAGE> 1
Exhibit 10(z)
WALLER-SUTTON MEDIA PARTNERS, L.P.
18 BANK STREET, Suite 202
SUMMIT, NEW JERSEY 07901
March 19, 1998
Commitment Letter
Purchase of Series C Convertible Preferred Stock
and Series F Convertible Stock of
Regent Communications, Inc.
Regent Communications, Inc.
Suite 180
50 East River Center Boulevard
Covington, Kentucky 41011
Attn: Terry S. Jacobs
By Fax: (606) 292-0352
Dear Terry:
You have requested that Waller-Sutton Media Partners, L.P.
("Waller-Sutton") commit to purchase an aggregate of $10 million of the Series F
Convertible Preferred Stock of Regent Communications, Inc. (the "Company") and,
from certain institutional holders, an aggregate of $1.5 million of convertible
notes issued by Faircom Inc. (the "Investment"), and to act as financial advisor
to the Company in connection with the sale of an additional $8.5 million of the
Company's Series F Convertible Preferred Stock (the "Additional Sale").
Waller-Sutton is pleased to advise you of its commitment to provide the
entire amount of the Investment and to act as financial advisor to the Company
in connection with the Additional Sale, upon the terms and subject to the
conditions set forth or referred to in this commitment letter (the "Commitment
Letter") and in the Term Sheet attached hereto as Exhibit A (the "Term Sheet"),
which Term Sheet is incorporated herein by reference and made a part hereof.
It is agreed that, except as expressly provided below, Waller-Sutton
will act as the sole and exclusive financial advisor for the Additional Sale.
You agree that, except for The Crisler Company, L.P. ("Crisler") acting pursuant
to an engagement letter dated November 27, 1997, no other financial advisors and
no placement agents will be engaged and no compensation (other than that
expressly
<PAGE> 2
contemplated by the Term Sheet or provided below) will be paid in connection
with the Additional Sale unless you and we shall so agree.
For a period of 60 days from your execution of this Commitment Letter,
you agree that you will not enter into discussions with (or provide any
information to) any other party regarding a debt or equity investment in the
Company, other than those potential investors introduced by Waller-Sutton and
discussions with Bank of Montreal regarding the senior debt commitment
previously disclosed and other than the potential issuance of equity or debt
securities to sellers of radio stations to the Company, and that you will
terminate all other discussions which have been commenced regarding such an
investment, provided, however, that after 30 days from your acceptance hereof,
you may offer to other parties the opportunity to participate in the Additional
Sale, to the extent such participation has not theretofore been allocated to
investors introduced to you by Waller-Sutton.
You agree that we may assign up to an aggregate of $3.5 million of our
Investment commitment with respect to the Series F Convertible Preferred Stock
to partners of Waller-Sutton and/or financial institutions selected by us.
You agree to assist us in effecting such assignments, and in
interesting prospective investors with respect to the Additional Sale. Such
assistance shall include (a) direct contact between appropriate senior
management and advisors of the Company, (b) assistance in the preparation of a
Confidential Information Memorandum and other marketing materials to be
distributed to interested parties, and (c) the hosting (including appropriate
senior management of the Company), with us, of one or more meetings of
prospective equity participants.
As consideration for our commitment hereunder and our acting as
financial advisor you will pay to us such fees and expenses as are indicated in
the Term Sheet or are provided for herein.
Waller-Sutton's commitment hereunder is subject to (a) there not
occurring or becoming known to us any adverse change in the business, assets,
property, condition (financial or otherwise) or prospects of the Company from
that reflected in the business plan of the Company previously delivered to us,
(b) our not becoming aware after the date hereof of any change in agreements,
laws, rules and regulations since the date of this Commitment Letter that, in
our opinion, would have any material adverse effect on the business, assets,
property, condition (financial or otherwise) or prospects of the Company, (c)
the negotiation, execution and delivery on or before April 15, 1998 of
definitive documentation with respect to the Investment satisfactory to
Waller-Sutton and its counsel, (d) the completion, to the satisfaction of
Waller-Sutton and its counsel, of due diligence review of the Company, Faircom
and the other entities and/or assets to be acquired by the Company at the
closing of the Investment, and (e) the other conditions set forth or referred to
in the Term Sheet. The terms and conditions of the Investment are not limited to
those set forth herein and in the Term Sheet. Those matters that are not covered
by the provisions hereof and of the Term Sheet are subject to the approval and
agreement of Waller-Sutton and the Company.
- 2 -
<PAGE> 3
You agree, (a) to indemnify and hold harmless Waller-Sutton and its
affiliates and its officers, directors, employees, advisors, and agents (each,
an "indemnified person") from and against any and all losses, claims, damages
and liabilities to which any such indemnified person may become subject insofar
as such directly arise out of or relate to or result from any material
misstatement or alleged material misstatement contained in any document or
information provided to us by you including such documents and information which
we may provide to potential investors in furtherance of the Investment or the
Additional Sale or which arise out of or relate to or result from the omission
to state in any such documents or information a material fact required to be
stated therein to make the statements contained therein not misleading (except
that with respect to documents or information provided or to be provided to
potential investors, the Company's indemnification obligation shall only extend
to documents or information provided by the Company or documents or information
that the Company has been given an opportunity to review and which the Company
does not promptly request (in writing) to be corrected or supplemented, or, if
the Company does so request, which are corrected or supplemented substantially
in accordance with the Company's request), and to reimburse each indemnified
person upon demand for any legal or other expenses incurred in connection with
investigating or defending any of the foregoing, and (b) to reimburse
Waller-Sutton and its affiliates on demand for all reasonable out-of-pocket
expenses (including due diligence expenses, consultant's fees and expenses,
travel expenses, and fees, charges and disbursements of counsel), arising after
February 13, 1998 and through the earlier of the closing of the Investment or
the date of termination of this Commitment Letter, incurred in connection with
the Investment and any related documentation (including this Commitment Letter,
the Term Sheet and the definitive documentation).
This Commitment Letter shall not be assignable by you without the prior
written consent of Waller-Sutton (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. This Commitment
Letter may not be amended or waived except by an instrument in writing signed by
you and Waller-Sutton. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Commitment Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. This Commitment Letter is
the only agreement that has been entered into among us with respect to the
Investment and sets forth the entire understanding of the parties with respect
thereto. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter nor any of its terms or substance shall be
disclosed by you, directly or indirectly, to any other person except (a) to the
Company's officers, agents and advisors who are directly involved in the
consideration of this matter, or (b) as may be compelled in a judicial or
administrative proceeding or as otherwise, in your good faith judgment, required
by law (in which case you agree to inform us promptly thereof).
- 3 -
<PAGE> 4
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein shall remain in full force and effect regardless of
whether definitive documentation shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or Waller-Sutton's
commitment hereunder.
You hereby irrevocably: (i) submit to the nonexclusive jurisdiction of
any state or federal court sitting in the State of New York in any action or
proceeding arising out of or relating to this Commitment Letter, (ii) agree that
all claims with respect to any such action or proceeding may be heard and
determined in such courts, (iii) waive, to the fullest possible extent, the
defense of an inconvenient forum, (iv) agree to either maintain an office in New
York City where service of process can be affected or appoint an agent in New
York City reasonably acceptable to Waller-Sutton to accept service of process in
any such action or proceeding by such date as is acceptable by Waller- Sutton,
(v) agree to service of process in any such action or proceeding by mailing of
copies thereof (by registered or certified mail if practicable) postage prepaid,
or by telecopier, to the then active agent or you at your address set forth
above and (vi) agree that if the procedures under clause (v) are not available,
nothing herein shall affect the right of Waller-Sutton to affect service of
process in any other manner permitted by law, and that it shall have the right
to bring any legal proceedings (including a proceeding for enforcement of a
judgment entered by any of the aforementioned courts) against you in any court
or jurisdiction in accordance with applicable law.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet by returning to us
executed counterparts hereof not later than 5:00 p.m., New York City time, March
20, 1998. This Commitment Letter shall not be enforceable if all parties to this
Commitment Letter have not executed and delivered this Commitment Letter in
accordance with the immediately preceding sentence.
You have represented to us that Crisler has consented to our engagement
as financial advisor to the Company as hereinabove contemplated and to the other
terms of this Commitment Letter to the extent necessary under your agreement
with them.
- 4 -
<PAGE> 5
Waller-Sutton is pleased to have been given the opportunity to assist
you in connection with this important financing and looks forward to working
with you.
Very truly yours,
WALLER-SUTTON MEDIA PARTNERS, L.P.
By: Waller-Sutton Media, L.L.C., general partner
By:
----------------------------------------
Title:
Accepted and agreed to as of
the date first written above by:
REGENT COMMUNICATIONS, INC.
By:
----------------------------
Title:
- 5 -
<PAGE> 6
Exhibit A
Regent Communications, Inc.
Term Sheet
Issuer: Regent Communications, Inc. ("Regent" or the "Company").
Purchaser: Waller-Sutton Media Partners, L.P. or an affiliated entity
("Waller-Sutton") and its co-investment partners and
assignees.
Use of Proceeds: The net proceeds of the purchase price hereunder and the
purchase price of the Additional Series F Shares (as defined
below) will be used by Regent to fund the acquisition of 31
radio stations in nine markets in accordance with the
business plan provided to Waller-Sutton, including but not
limited to the proposed mergers with Alta California
Broadcasting and Topaz Broadcasting, the proposed
acquisition of The Park Lane Group, the proposed asset
purchases of Continental Radio Broadcasting and Ruby
Broadcasting and the proposed merger with Faircom Inc. (the
"Faircom Merger") (collectively, the "Acquisitions"), as
well as to fund acquisitions of radio stations not yet
identified. In connection therewith, to the extent approved
by the Board of Directors, the funds may be used to pay the
purchase price of such acquisitions and for capital
expenditures, working capital requirements, closing costs
and transaction expenses.
Closing: The parties shall exchange documentation hereunder at a
closing to occur on the first date as is reasonably
practicable and concurrently with the consummation of the
Acquisitions and satisfaction of certain other conditions,
which date shall in no event be later than May 31, 1998 (the
"Initial Closing").
Securities to be
Purchased: For a total purchase price of $10.0 million, Waller-Sutton
shall receive: (i) 2.0 million shares of the Company's
Series F Convertible Preferred Stock ("Series F Preferred"),
which shall be convertible into 2.0 million shares of the
common stock of the Company representing at least 17.01% of
the fully diluted shares as of the Initial Closing (such
percentage to be affected by closing adjustments pursuant to
pending merger agreements in respect of the Acquisitions),
inclusive of all then outstanding options and warrants), and
(ii) warrants to purchase 820,000 shares of Regent common
stock at $5.00 per share (which will be detachable), which
warrants shall be exercisable for no less than 10 years and
will, as of the Closing, represent approximately 6.97% of
the fully diluted common stock of Regent (such percentage to
be affected by closing adjustments pursuant to pending
merger agreements in respect of the Acquisitions).
Immediately prior to the closing of the Faircom Merger,
Waller-Sutton shall also purchase $ 1.5 million of notes
issued by Faircom, Inc., which are convertible into shares
of Faircom Inc. common stock. The shares of
- 1 -
<PAGE> 7
Regent Communications, Inc.
Term Sheet
Faircom, Inc. common stock issued to Waller-Sutton on
conversion of such notes shall, upon closing of the Faircom
Merger, become 414,796 shares of the Company's Series C
Preferred Stock ("Series C Preferred") representing at least
3.53% of the fully diluted shares of Regent as of the
Initial Closing (such share numbers and percentage to be
affected by closing adjustments pursuant to pending merger
agreements in respect of the Acquisitions).
Additional Securities
to be Sold: The Company shall use its best efforts to issue and
sell an additional $8.5 million of Series F Preferred (the
"Additional Series F Shares") for a period not to exceed 60
days from the Closing, on the same terms as hereinabove
provided. Waller-Sutton shall act as financial advisor to
Regent in connection with such sale. Regent has represented
to Waller-Sutton that the sale of such Additional Series F
Shares is not necessary in order for it to complete the
Acquisitions (including paying all costs and expenses
related thereto), and that any proceeds received from such
sale shall be used in connection with future acquisitions.
If so requested by Waller-Sutton, Waller-Sutton's purchase
commitment in respect of the Series F Preferred will be
reduced by up to an aggregate of $3.5 million, on a
dollar-for-dollar basis, in respect of the first $3.5
million of Additional Series F Shares sold, in which event
the total amount of Additional Series F Shares to be sold
will be increased accordingly.
Staging of
Investment: Only $10.0 million of Series F Convertible Preferred Stock
(including the Series F Preferred to be purchased by
Waller-Sutton and the Additional Series F Shares) will be
issued and sold at the Initial Closing. The balance will be
committed to be purchased pursuant to binding agreements
entered into as of the Initial Closing, but will be issued
at one or more subsequent closings held no later than two
(2) years after the Initial Closing to fund future
acquisitions or capital expenditures approved by the
Company's Board of Directors. All purchasers of Additional
Series F Shares and Waller-Sutton will participate in the
purchase of shares of Series F Convertible Preferred Stock
at the Initial Closing and each subsequent closing on a pro
rata basis, based on their respective commitments to
purchase shares of Series F Convertible Preferred Stock. All
shares of Series F Convertible Preferred Stock will be
issued at $5.00 per share (subject to customary
anti-dilution adjustments). All Warrants related to all
shares of Series F Preferred committed to be purchased will
be issued at the Initial Closing, even if certain of the
shares of Series F Preferred are not to be issued until
subsequent closings.
Capitalization: Capitalization of the Company at Closing is expected to be
approximately as follows (excluding the Additional Series F
Shares):
- 2 -
<PAGE> 8
<TABLE>
<CAPTION>
Regent Communications, Inc.
Term Sheet
Fully Diluted Ownership
-----------------------
<S> <C>
Series A Convertible Preferred 5.27%
Series B Convertible Preferred 4.25%
Series C Convertible Preferred (incl. 283,729 option shares) 31.64%
Series C "Waller-Sutton" Convertible Preferred 3.53%
Series D Convertible Preferred 8.50%
Series E Convertible Preferred
Alta CA Broadcasting 1.70%
Thomas Gammon 3.40%
Series F "Waller-Sutton" Convertible Preferred 17.01%
Common Stock (management, incl. options) 17.04%
Common Stock (Waller-Sutton warrants) 6.97%
Common Stock (River Cities warrants) .68%
TOTAL 100.00%
======
</TABLE>
There shall be no amendments to the existing terms of either
the Series B Preferred Stock or the Series D Preferred Stock
of Regent, as reflected in the Certificate of Incorporation
or Certificate of Designation of Regent or the Stock
Purchase Agreements relating to any such series, without the
prior written approval of Waller-Sutton.
Dividends: The Series F Preferred will be entitled to receive a 10%
annual preferred dividend. To the extent cash is not
available for distribution, unpaid dividends (whether or not
declared) shall accrue and be compounded quarterly until
paid. All accrued but unpaid dividends shall be payable in
full upon conversion, liquidation or redemption.
All other series of preferred stock, including the Series C
Preferred, will be entitled to receive a 7% annual preferred
dividend. To the extent cash is not available for
distribution, unpaid dividends shall accumulate (without
compounding). All accumulated but unpaid dividends shall be
payable in full upon conversion, liquidation or redemption.
Seniority: The Series F Preferred and the Series C Preferred will rank
senior to all classes of the Company's common stock with
respect to distributions, liquidation and the like, junior
to the Series B Preferred Stock, and pari passu with all
other preferred stock series.
Put: Holders of Series F Preferred may put their respective
Series F Preferred to the Company at the greater of
liquidation preference (including accrued dividends) or fair
market value (computed on an "as converted" basis)
commencing five (5) years from the Initial Closing. If
Waller-Sutton
- 3 -
<PAGE> 9
Regent Communications, Inc.
Term Sheet
exercises its "put rights," then holders of any other series
of preferred stock outstanding on the Initial Closing in
respect of which the Company has granted "tag-along" put
rights shall have the right to put their respective
preferred stock on the same terms and conditions.
Conversion: Each holder of Series F Preferred will be able to convert
each share of its Series F Preferred into one fully paid
share of common stock of the Company, subject to adjustment.
Waller-Sutton will be able to convert each share of its
Series C Preferred into one fully paid share of common stock
of the Company (subject to adjustment), which in total will
account for approximately 3.53% of the fully diluted shares
of Regent. All Series C Preferred shall be convertible on
these same terms.
Management
Options: Messrs. Jacobs and Stakelin each will be granted options for
up to 5.5% of the fully diluted ownership of the Company.
These will be granted out of an incentive stock option plan
for up to 15% of fully diluted ownership of the Company (but
in no event will such option plan provide for the issuance
of options to purchase more than 2,000,000 shares of common
stock), which has been established for Regent management.
The exercise price of all Options granted shall be no less
than the fair market value of the common stock at the time
of grant (and no options granted as of or on the Initial
Closing Date shall have an exercise price of less than $5
per share). Grants under such program will be subject to
Board approval.
Voting Rights: Except for the special provisions relating to the election
and/or removal of directors which are to be set forth in the
Stockholders Agreement referred to below (which provisions
may also be set forth in the Company's Certificate of
Incorporation), the Series F Preferred and the Series C
Preferred shall vote with the common stock of Regent on an
as converted basis. In addition, a separate class vote for
the Series F Preferred shall be required with respect to any
changes in the conversion rate, dividend rate or put or
redemption rights of any series of the Company's preferred
stock.
Board
Representation: Regent's current Board of Directors will be reconstituted to
provide for a seven member Board of Directors as follows:
Management Designees 2 Board seats
Waller-Sutton Designees 2 Board seats
Blue Chip Capital Designee 1 Board seat
River Cities Capital Designee 1 Board seat
Joel Fairman 1 Board seat
- 4 -
<PAGE> 10
Regent Communications, Inc.
Term Sheet
In addition, each of GE Capital Corporation and BMO
Financial shall have the right to have one observer present
at each meeting of the Board of Directors.
All matters presented to the Board of Directors will require
a simple majority vote for approval.
Stockholders
Agreement: Waller-Sutton and the existing stockholders of Regent
(including BMO Financial, GE Capital Corporation, Terry
Jacobs, William Stakelin and River Cities Capital Fund), as
well as all persons beneficially owning more than 5% of any
class of stock of Faircom Inc. (including Blue Chip Capital
Fund II, Miami Valley Venture Fund, and Joel Fairman), shall
enter into a definitive stockholders agreement relating to
Regent.
Such agreement shall be in form and substance satisfactory
to Waller-Sutton and shall contain provisions reflecting
the stockholders' obligations to vote for the Board of
Directors as indicated above, and shall contain standard
drag along/tag along rights with respect to all existing
series and classes of capital stock (other than the Series E
Preferred), as well as the requirement that certain major
corporate actions, including but not limited to mergers,
acquisitions, change of control, issuance of equity or debt
securities, sale of assets and the like, shall be subject to
the express approval of Waller-Sutton if Waller-Sutton and
the other members of the Waller-Sutton Group collectively
beneficially own more than 10% of the outstanding common
stock of the Company. As used herein, the term
"Waller-Sutton Group" shall mean Waller-Sutton, direct or
indirect partners of Waller-Sutton, affiliates of any
thereof, and any other investors introduced to the Company
by Waller-Sutton or any of its partners or affiliates.
In addition, any series of the Company's preferred stock
which contains a separate right of approval with respect to
such matters for any party other than Waller-Sutton shall be
amended to eliminate such right.
Fees: Regent shall reimburse Waller-Sutton for all reasonable
legal, accounting and out-of-pocket expenses associated with
the proposed transaction, regardless of whether the
transaction contemplated herein is consummated.
Regent will also pay for all reasonable out-of-pocket
expenses associated with Waller-Sutton's responsibilities as
members of the Board of Directors and any Board fees as
applicable. Regent will also reimburse GE Capital
Corporation and BMO Financial for all reasonable
out-of-pocket expenses associated with their designees
acting as observers at board meetings.
- 5 -
<PAGE> 11
Regent Communications, Inc.
Term Sheet
Waller-Sutton will receive a $225,000 fee payable at the
Initial Closing. An additional fee of $200,000 shall be paid
by Regent to Waller-Sutton at the next closing of the sale
of Series F Convertible Preferred Stock, provided that at
least $15,000,000 of Series F Convertible Preferred Stock
has been purchased or committed to be purchased (including
any shares purchased or committed to be purchased by
Waller-Sutton, other members of the Waller-Sutton Group or
others).
Waller-Sutton, or its designee, will receive a $75,000 per
year monitoring fee payable quarterly.
Definitive
Agreements: Waller-Sutton shall cause its counsel to prepare the
definitive agreements with respect to the transaction,
including, without limitation, the following:
1. A stock purchase agreement which will set forth
the terms herein, as well as other standard
investment terms, conditions, negative and
affirmative covenants, anti-dilution and
registration rights, representations and
warranties and indemnities with respect to
undisclosed liabilities, breach of
representations and warranties and losses
relating to the operation and sale of "radio
stations KCBQ (AM) and WSSP(FM);"
2. A certificate of designation setting forth the
terms of the Company's Series F Preferred Stock;
and
3. A form of warrant.
Conditions to Closing: The following conditions shall be satisfied prior to
Closing:
1. Execution of definitive documents in form and
substance satisfactory to Waller-Sutton and its
counsel;
2. Closing of the Acquisitions pursuant to their
current terms (as disclosed to Waller-Sutton),
without amendment or waiver of any terms without
prior approval by Waller-Sutton, except for any
extension of the outside date for closing
thereunder;
3. Closing of the sale of the Company's Series B
and Series D Preferred Stocks in accordance with
their respective terms, without amendment or
waiver of any current terms (as disclosed to
Waller-Sutton) without prior approval by
Waller-Sutton;
4. Execution and filing of a certificate of
designation for the Series F Preferred;
- 6 -
<PAGE> 12
Regent Communications, Inc.
Term Sheet
5. Waller-Sutton will be covered under a Directors'
and Officers' Liability policy of at least $5
million which is acceptable to Waller-Sutton and
its counsel;
6. Receipt of final grants from the FCC for all
operating licenses for the 31 identified
stations prior to the Initial Closing. In
addition, Regent must provide an opinion from
its FCC counsel covering all customary matters
regarding the broadcast operations of each of
the stations, the contents of such opinion to be
satisfactory to Waller-Sutton and its counsel;
and
7. Satisfactory completion of Waller-Sutton's due
diligence with respect to the Company and the
Acquisitions, including review and approval of
the Registration Statement on Form S-4 relating
to the Faircom Merger.
8. Amendment to the engagement agreement between
The Crisler Company, L.P. ("Crisler") and the
Company reducing the compensation payable to
Crisler to 4% with respect to up to $8.5 million
of Additional Series F Shares sold to (i)
partners of Waller-Sutton or their affiliates,
(ii) any of Weiss, Peck & Greer, J.H. Whitney,
Hoak Capital, Brentwood Associates or their
respective affiliates or (iii) any other persons
agreed to by the Company, Crisler and
Waller-Sutton.
- 7 -
<PAGE> 1
EXHIBIT 21
----------
SUBSIDIARIES OF THE REGISTRANT
------------------------------
The following is a list of the names of each subsidiary of Regent
Communications, Inc. and each subsidiary of a subsidiary of Regent
Communications, Inc., the jurisdiction of incorporation of each such subsidiary,
and any other name or names under which such subsidiary does business.
<TABLE>
<CAPTION>
Jurisdiction of Other
Name of Subsidiary Incorporation Business Names
- ------------------ ------------- --------------
<S> <C> <C>
Regent Broadcasting of San Diego, Inc. Delaware KCBQ(AM)
Regent Broadcasting of Lexington, Inc. Delaware ___
Regent Broadcasting of Charleston, Inc. Delaware WSSP(FM)
Regent Broadcasting of Dayton, Inc. Delaware ___
Regent Broadcasting of Chico, Inc. Delaware KFMF(FM), KPPL(FM), KALF(FM)
Regent Broadcasting of Flagstaff, Inc. Delaware KVNA(AM), KVNA(FM), KZGL(FM)
Regent Broadcasting of Kingman, Inc. Delaware KAAA(AM), KZZZ(FM)
Regent Broadcasting of Lake Tahoe, Inc. Delaware KOWL(AM), KRLT(FM)
Regent Broadcasting of Palmdale, Inc. Delaware KVOY(AM), KTPI(FM)
Regent Broadcasting of Redding, Inc. Delaware KQMS(AM), KSHA(FM), KNNN(FM),
KRDG(FM), KRRX(FM), KNRO(AM)
Regent Broadcasting of Victorville, Inc. Delaware KROY(AM), KATJ(FM), KIXW(AM),
KZXY(FM), KIXA(FM)
Regent Licensee of San Diego, Inc. Delaware KCBQ(AM)
Regent Licensee of Lexington, Inc. Delaware ___
Regent Licensee of Charleston, Inc. Delaware ___
Regent Licensee of Dayton, Inc. Delaware ___
Regent Merger Corp. Delaware ___
Regent Acquisition Corp. Delaware ___
</TABLE>
<PAGE> 1
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4
(Registration No. 333-46435) of our report dated January 30, 1998, on our audits
of the consolidated financial statements of Regent Communications, Inc. We also
consent to the reference to our Firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Cincinnati, Ohio
April 7, 1998
<PAGE> 1
Exhibit 23(b)
Consent of Independent Accountants
We consent to the inclusion in this registration statement on Form S-4
(Registration No. 333-46435) of our report dated February 16, 1998 on our audits
of the financial statements of The Park Lane Group. We also consent to the
reference to our Firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Menlo Park, California
April 7, 1998
<PAGE> 1
Exhibit 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement of Form S-4
(Registration No. 333-46435) of our report dated February 10, 1998, on our
audits of the financial statements of Continental Radio Broadcasting, L.L.C. We
also consent to the reference to our Firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Cincinnati, Ohio
April 7, 1998
<PAGE> 1
Exhibit 23(d)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4
(Registration No. 333-46435) of our report dated January 9, 1998, on our audits
of the Statement of Revenues and Direct Expenses of Radio Station KZXY(FM). We
also consent to the reference to our Firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Cincinnati, Ohio
April 7, 1998
<PAGE> 1
Exhibit 23(h)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Faircom Inc.
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated January 21, 1998, relating to the
consolidated financial statements of Faircom Inc., which is contained in that
Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Mitchel Field, New York
April 6, 1998
<PAGE> 1
Exhibit 23(i)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 1 to Registration Statement No.
333-46435 of Regent Communications, Inc. of our reports, (i) dated June 25, 1997
and October 10, 1997 relating to the consolidated financial statements of Alta
California Broadcasting, Inc. and subsidiary as of March 31, 1997 and for the
year then ended, (ii) dated May 9, 1997 relating to the financial statements of
KARZ/KNRO (A Division of Merit Broadcasting Corporation) as of December 31, 1996
and for the year then ended, and (iii) dated March 13, 1998 relating to the
financial statements of Power Surge, Inc. as of December 31, 1997 and for the
year then ended, appearing in the Prospectus, which is part of this Registration
Statement and to the reference to us under the heading "Experts" in such
Prospectus.
/s/Stockman Kast Ryan & Scruggs, P.C.
STOCKMAN KAST RYAN & SCRUGGS, P.C.
Colorado Springs, Colorado
April 6, 1998
<PAGE> 1
Exhibit 23(j)
K&W CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
2000 KEITH BUILDING, CLEVELAND, OHIO 44115
(216) 696-1730 - FAX (216) 696-8234
KOPPERMAN & WOLF
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4
(File No. 333-46435) of our report dated January 9, 1997, on our audits of the
financial statements of Treasure Radio Associates Limited Partnership. We also
consent to the reference to our firm under the caption "Experts".
/s/ KOPPERMAN & WOLF CO.
Cleveland, Ohio
April 7, 1998
<PAGE> 1
Exhibit 23(k)
CONSENT OF PERSON TO
BECOME A DIRECTOR
I consent to serve as a director of Regent Communications, Inc. upon
and subject to the consummation of the Merger described in the Proxy
Statement/Prospectus which is part of this Registration Statement on Form S-4
(File No. 333-46435). I further consent to the reference to my willingness to so
serve contained in such Proxy Statement/Prospectus.
------------------------------------
John H. Wyant
<PAGE> 1
Exhibit 23(l)
CONSENT OF PERSON TO
BECOME A DIRECTOR
I consent to serve as a director of Regent Communications, Inc. upon
and subject to the closing of an equity investment of Waller-Sutton Media
Partners, L.P. in Regent Communications, Inc. pursuant to a certain commitment
letter dated March 19, 1998 described in the Proxy Statement/Prospectus which is
part of this Registration Statement on Form S-4 (File No. 333-46435). I further
consent to the reference to my willingness to so serve contained in such Proxy
Statement/Prospectus.
------------------------------------
William H. Ingram
<PAGE> 1
Exhibit 23(m)
CONSENT OF PERSON TO
BECOME A DIRECTOR
I consent to serve as a director of Regent Communications, Inc. upon
and subject to the closing of an equity investment of Waller-Sutton Media
Partners, L.P. in Regent Communications, Inc. pursuant to a certain commitment
letter dated March 19, 1998 described in the Proxy Statement/Prospectus which is
part of this Registration Statement on Form S-4 (File No. 333-46435). I further
consent to the reference to my willingness to so serve contained in such Proxy
Statement/Prospectus.
------------------------------------
Richard H. Patterson
<PAGE> 1
Exhibit 23(n)
CONSENT OF PERSON TO
BECOME A DIRECTOR
I consent to serve as a director of Regent Communications, Inc. upon
and subject to the consummation of the Merger described in the Proxy
Statement/Prospectus which is part of this Registration Statement on Form S-4
(File No. 333-46435). I further consent to the reference to my willingness to so
serve contained in such Proxy Statement/Prospectus.
------------------------------------
Joel M. Fairman
