<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO ______________
COMMISSION FILE NUMBER 0-15392
REGENT COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 31-1492857
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
50 EAST RIVERCENTER BOULEVARD
SUITE 180
COVINGTON, KENTUCKY 41011
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(606) 292-0030
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
----------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock - $.01 Par Value - 240,000 shares as of May 14, 1999.
<PAGE> 2
REGENT COMMUNICATIONS, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Operations for the three
months ended March 31, 1999 (unaudited) and March 31, 1998
(unaudited)
Condensed Consolidated Balance Sheets as of
March 31, 1999 (unaudited) and December 31, 1998
Condensed Consolidated Statements of Cash Flows for three months
ended March 31, 1999 (unaudited) and March 31, 1998
(unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 6. Exhibits and Reports on Form 8-K
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<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
---------------------------------------------------------
1999 1998
---- ----
<S> <C> <C>
Gross broadcast revenues $4,825,924 $1,613,205
Less agency commissions (305,934) (148,128)
------------ ----------
Net broadcast revenues 4,519,990 1,465,077
Station operating expenses 3,788,465 1,098,911
Depreciation and amortization 771,709 290,648
Corporate general and
administrative expense 615,021 113,528
------------ ----------
Operating loss (655,205) (38,010)
Interest expense 862,466 503,770
Other income, net 83,136 12,152
------------ ----------
Loss before income taxes ($1,434,535) ($529,628)
Income tax expense 0 12,000
------------ ----------
Net loss ($1,434,535) ($541,628)
------------ ----------
Loss applicable to common shares:
Net loss ($1,434,535) ($541,628)
Preferred stock dividend
requirements (1,000,060) 0
------------ ----------
Loss applicable to common shares ($2,434,595) ($541,628)
------------ ----------
Basic and diluted loss per common share ($10.14) ($2.26)
------------ ----------
Weighted average number of common 240,000 240,000
shares used in basic and diluted
calculations
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements.
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<PAGE> 4
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,484,966 $ 478,545
Accounts receivable, less allowance for doubtful accounts of $263,000
in 1999 and $268,000 in 1998 3,041,846 3,439,372
Other current assets 250,998 200,828
Assets held for sale 6,000,000 7,500,000
------------ ------------
Total current assets 11,777,810 11,618,745
Property and equipment, net 9,454,124 9,303,975
Intangibles, net 44,636,830 45,023,940
Other assets, net 1,863,764 1,671,210
------------ ------------
Total assets $ 67,732,528 $ 67,617,870
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 1,265,323 $ 1,005,327
Accrued expenses 1,501,537 2,772,612
Interest payable 769,730 769,367
Notes payable 6,000,000 7,500,000
Current portion of long-term debt 65,000 980,000
------------ ------------
Total current liabilities 9,601,590 13,027,306
------------ ------------
Long-term debt, less current portion 34,601,250 34,617,500
Warrants and other long-term liabilities 2,643,579 2,643,579
------------ ------------
Total liabilities 46,846,419 50,288,385
Commitments and contingencies
Redeemable preferred stock:
Series A convertible preferred stock, $5.00 stated value, 620,000 shares authorized;
620,000 shares issued and outstanding-liquidation value: $3,486,616 3,486,616 3,433,109
Series B senior convertible preferred stock, $5.00 stated value, 1,000,000 shares
authorized; 1,000,000 shares issued and outstanding-liquidation value: $5,483,013 5,483,013 5,372,054
Series D convertible preferred stock, $5.00 stated value, 1,000,000 shares authorized;
1,000,000 shares issued and outstanding-liquidation value: $5,317,742 5,317,742 5,231,441
Series F convertible preferred stock, $5.00 stated value, 4,100,000 shares authorized;
3,083,652 shares issued and outstanding-liquidation value: $16,356,451 16,356,451 12,839,454
Series G convertible preferred stock, $5.00 stated value, 4,000,000 shares authorized;
372,406 shares issued and outstanding-liquidation value: $1,902,842 1,902,842 -0-
------------ ------------
Total redeemable preferred stock 32,546,664 26,876,058
Shareholders' deficit:
Preferred stock:
Series C convertible preferred stock, $5.00 stated value, 4,000,000 shares authorized;
3,720,620 shares issued and outstanding-liquidation value: $19,632,386 1,584,820 1,584,820
Series E convertible preferred stock, $5.00 stated value, 5,000,000 shares authorized;
447,842 shares issued and outstanding-liquidation value: $2,363,102 2,239,210 2,239,210
Common stock, $.01 par value, 30,000,000 shares authorized;
240,000 shares issued and outstanding 2,400 2,400
Additional paid-in capital 3,268,937 3,948,384
Retained deficit (18,755,922) (17,321,387)
------------ ------------
Total shareholders' deficit (11,660,555) (9,546,573)
------------ ------------
Total liabilities and shareholders' deficit $ 67,732,528 $ 67,617,870
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 5
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31.
----------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ($1,434,535) ($541,628)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 771,709 290,548
Amortization of deferred rental income (8,502) (8,502)
Provision for doubtful accounts 41,366 -0-
Amortization of deferred financing costs 81,750 -0-
Barter, net (27,017) -0-
Increase(decrease) in cash flows from changes in operating assets
and liabilities:
Accounts receivable 362,489 271,796
Prepaid expenses and other assets (50,170) (31,805)
Accounts payable 266,585 15,106
Accrued expenses (1,262,573) 191,145
Taxes payable -0- 18,473
Interest payable 363 195,413
----------- -----------
Net cash (used in) provided by operating activities (1,258,535) 400,546
Cash flows from investing activities:
Acquisitions of radio stations, net of cash acquired (104,035) (1,385,946)
Capital expenditures (416,613) (46,898)
Escrow deposit for acquisition of radio station -0- 100,000
----------- -----------
Net cash used in investing activities (520,648) (1,332,844)
Cash flows from financing activities:
Proceeds from issuance of Series F and G Convertible
Preferred Stock 5,030,290 -0-
Proceeds from long-term debt -0- 1,100,000
Principal payments on and purchase of long-term debt (931,250) (95,002)
Payments for deferred financing costs (274,304) (83,831)
Payment of issuance costs (39,132) -0-
----------- -----------
Net cash provided by financing activities 3,785,604 921,167
----------- -----------
Net increase (decrease) in cash and cash equivalents 2,006,421 (11,131)
Cash and cash equivalents at beginning of period 478,545 535,312
----------- -----------
Cash and cash equivalents at end of period $ 2,484,966 $ 524,181
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Regent Communications, Inc. (including its wholly-owned
subsidiaries, the "Company") was formed to acquire, own and operate radio
stations in small and medium-sized markets in the United States. The Company
acquired on June 15, 1998, pursuant to an agreement of merger, all of the
outstanding common stock of Faircom Inc. ("Faircom") for 3,720,620 shares of the
Company's Series C Convertible Preferred Stock. The acquisition has been treated
for accounting purposes as the acquisition of the Company by Faircom under the
purchase method of accounting, with Faircom as the accounting acquirer.
Consequently, the historical financial statements prior to June 15, 1998 are
those of Faircom. Faircom operated radio stations through its wholly-owned
subsidiaries in Flint, Michigan and, in Mansfield, Ohio. As a result of the
Faircom merger, Faircom's historical shareholder deficit and earnings per share
information have been retroactively restated to reflect the number of common
shares outstanding subsequent to the merger, with the difference between the par
value of the Company's and Faircom's common stock recorded as an offset to
additional paid-in capital.
The condensed consolidated financial statements of the Company
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC) and, in the opinion of management, include all
adjustments necessary for a fair presentation of the results of operations,
financial position and cash flows for each period shown. All adjustments are of
a normal and recurring nature except for those outlined in Notes 2 and 3.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to SEC rules and regulations. Results
for interim periods may not be indicative of results for the full year. The
December 31, 1998 condensed consolidated balance sheet was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principles. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-K filed March 31, 1999.
2. CONSUMMATED AND PENDING ACQUISITIONS AND DIVESTITURES
On June 15, 1998, concurrent with the Faircom merger, the
following acquisitions (the "June 15 Acquisitions") were consummated:
The Company acquired all of the outstanding capital stock of The
Park Lane Group ("Park Lane") for approximately $24,038,000 in cash and
assumed liabilities. Park Lane owned 16 radio stations in California and
Arizona. At the time of the acquisition, the Company entered into a
one-year consulting and non-competition agreement with the President of
Park Lane, providing for the payment of a fee of $200,000.
The Company acquired the licenses issued by the Federal
Communications Commission ("FCC") and related assets used in the
operation of radio stations KIXW (AM) and KZWY (FM) in Apple Valley,
California from Ruby Broadcasting, Inc. ("Ruby") for $5,985,000 in cash.
The Company acquired the FCC licenses and related assets used in
the operation of radio stations KFLG (AM) and KFLG (FM) in Bullhead
City, Arizona from Continental Radio Broadcasting, L.L.C. for
approximately $3,747,000 in cash. The Company separately acquired the
accounts receivables of these stations for an additional purchase price
of approximately $130,000.
The Company acquired all of the outstanding capital stock of Alta
California Broadcasting, Inc. ("Alta") for $2,635,000 in cash and
assumed liabilities and 205,250 shares of the Company's Series E
Convertible Preferred Stock. Alta owned four radio stations in
California.
The Company acquired all of the outstanding capital stock of
Topaz Broadcasting, Inc. ("Topaz"), an affiliate of Ruby, for 242,592
shares of the Company's Series E Convertible Preferred Stock.
Immediately following the acquisition of Topaz, the Company acquired the
FCC licenses and operating assets of radio station KIXA (FM) in Lucerne
Valley, California for $215,000 in cash and assumed liabilities,
pursuant to an Asset Purchase Agreement between Topaz and RASA
Communications Corp.
The June 15 Acquisitions were accounted for under the purchase
method of accounting and the fair value of the acquired assets were determined
by independent valuations.
-6-
<PAGE> 7
The Company allocated the aggregate purchase price for the June
15 Acquisitions as follows:
<TABLE>
<S> <C>
Accounts receivable $ 143,000
Broadcasting equipment and furniture and fixtures 6,503,000
FCC licenses 30,328,000
Goodwill 1,853,000
Other 360,000
------------
$ 39,187,000
============
</TABLE>
Goodwill and FCC licenses related to the June 15 Acquisitions are being
amortized over a 40-year period.
The sources for the cash portion of the consideration paid by
the Company for the June 15 Acquisitions and the Faircom merger, aggregating
approximately $52,900,000 (including approximately $21,100,000 of assumed debt
refinanced with borrowings under the Company's senior reducing revolving credit
facility and $3,700,000 of transaction costs), were $34,400,000 borrowed under
the Company's senior reducing revolving credit facility, $18,150,000 in
additional equity from the sale of the Company's convertible preferred stock and
approximately $350,000 of the Company's funds.
On November 30, 1998, the Company purchased substantially all of
the assets of radio station KOSS (FM) (formerly KAVC (FM)) located in Lancaster,
California from Oasis Radio, Inc. for $1,600,000 in cash. The acquisition was
financed through the issuance of additional shares of Series F convertible
preferred stock. The acquisition was accounted for under the purchase method of
accounting. The excess cost over the fair market value of net assets acquired
and FCC licenses related to this acquisition are being amortized over a 40-year
period.
On March 1, 1999, the Company sold the FCC licenses and related
assets used in the operations of WSSP (FM) in Charleston, South Carolina for
approximately $1,600,000 in cash. The Company had previously issued a note for
$1,500,000 to a third party which was collateralized by the assets of the
station. Upon consummation of the sale, the note was repaid. The sale resulted
in a $100,000 gain to the Company.
On March 5, 1999, the Company entered into an agreement to sell
the FCC licenses and related assets used in the operations of radio stations
KAAA (AM) and KZZZ (FM) in Kingman, Arizona and KFLG (AM) and KFLG (FM) in
Bullhead City, Arizona for approximately $5,400,000 in cash to an unrelated
third party. The transaction is subject to FCC consent.
On March 30, 1999, the Company entered into an agreement to
sell the FCC licenses and related assets used in the operation of radio
stations KZGL (FM), KVNA (AM) and KVNA (FM) in Flagstaff, Arizona for
approximately $2,425,000 in cash to an unrelated third party. The transaction is
subject to FCC consent.
The results of operations of the acquired businesses are
included in the Company's financial statements since the respective dates of
acquisition.
The following unaudited pro forma data summarizes the combined
results of operations of the Company, Faircom, the June 15 Acquisitions and KOSS
(FM) as though the acquisitions had occurred at the beginning of the three month
period ended March 31, 1998. The Company's 1999 disposition of WSSP (FM) is
not material to the results of the Company for the three months ended March
31, 1998.
<TABLE>
<CAPTION>
1998
----
<S> <C>
Net broadcast revenues 4,110,333
Net loss (1,665,382)
Net loss per common share:
Basic and diluted (11.06)
</TABLE>
These unaudited pro forma amounts do not purport to be
indicative of the results that might have occurred if the foregoing transactions
had been consummated on the indicated dates.
-7-
<PAGE> 8
On May 6, 1999, the Company purchased FCC licenses and related
assets used in the operations of radio stations WJON (AM), WWJO (FM) and KMXK
(FM) (the "St. Cloud Stations") in the St. Cloud, Minnesota market from WJON
Broadcasting Company for approximately $12,700,000 in cash. The purchase was
financed by approximately $5,082,000 in proceeds from the issuance of Series F
Convertible Preferred Stock (See Note 3) and borrowings under the Company's
senior reducing credit facility.
On May 11, 1999 the Company entered into an agreement to sell
the FCC licenses and related assets of KCBQ (AM) in San Diego, California for
approximately $6,000,000 in cash to an unrelated third party. The transaction
is subject to FCC consent.
3. CAPITAL STOCK
In January 1999, the Company issued 372,406 shares of Series G
Convertible Preferred Stock for $5.00 per share to certain executive officers of
the Company and Blue Chip Capital Fund II Limited Partnership, an existing
holder of Series C Convertible Preferred Stock. The proceeds were used to pay
down existing debt under the Credit Agreement and fund working capital needs of
the Company.
In February 1999, the Company issued 633,652 shares of Series F
Convertible Preferred Stock for $5.00 per share to existing Series F holders.
The proceeds were used to finance certain capital improvements, fund deferred
transaction costs related to the June 15 Acquisitions and the Faircom merger and
fund working capital needs of the Company.
In April 1999, the Company issued 1,016,348 shares of Series F
Convertible Preferred Stock at $5.00 per share to fund the purchase by the
Company of FCC licenses and other assets from WJON Broadcasting Company (See
Note 2).
In April 1999, the Company shareholders voted to increase the
number of authorized shares of common stock from 30,000,000 to 60,000,000 and
increase the number of authorized shares of preferred stock from 20,000,000 to
40,000,000.
4. EARNINGS PER SHARE
SFAS 128 calls for the dual presentation of basic and diluted
earnings per share ("EPS"). Basic EPS is based upon the weighted average common
shares outstanding during the period. Diluted EPS reflects the potential
dilution that would occur if common stock equivalents were exercised. The
effects of the assumed conversion of the Company's convertible preferred stock
and the assumed exercise of outstanding options and warrants would not be
dilutive for all periods presented. Therefore, basic EPS and diluted EPS are the
same for all periods presented.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Condensed Consolidated Financial Statements. Results for the interim periods may
not be indicative of the results for the full years.
On June 15, 1998, Regent consummated a number of mergers, acquisitions,
borrowings and issuances of additional equity (the "June 1998 Transactions").
See Notes 1 and 2 to the Company's Condensed Consolidated Financial Statements
included as part of this Form 10-Q. The historical financial statements of
Faircom Inc. ("Faircom"), which was deemed the "accounting acquirer" in the
merger between Faircom and Regent completed June 15, 1998, became the historical
financial statements of the Company, and accordingly, the results of operations
of Regent and of the other entities which merged with or were acquired by Regent
as part of the June 1998 Transactions have been included in the Company's
Condensed Consolidated Financial Statements only from June 15, 1998.
-8-
<PAGE> 9
On the closing date of the June 1998 Transactions, the Company expanded
from being a small broadcaster (represented, from an accounting standpoint, by
Faircom's six stations in two markets) to a group broadcaster operating 33
stations in ten different markets. This significant change in size of the
Company's operations led directly to substantial increases in revenue, operating
expenses, depreciation and amortization, corporate general and administrative
expenses, and interest expense in 1999 as compared to 1998. Because of the June
1998 Transactions, the results of the Company's operations in 1999 are not
comparable to those of 1998, nor are they necessarily indicative of results in
the future.
The key focus from the consummation of the June 1998 Transactions into
the first quarter of 1999 was developing the platform from which the Company
could carry out its operating strategies as a much larger radio company.
Development of the platform required significant expenditures. These costs are
viewed by the Company as investment costs which will provide returns to the
Company in future years. Operationally, the Company replaced general managers in
eight of its markets and added or replaced general sales managers in six markets
in order to implement aggressive sales programs. The Company invested
significantly in the hiring and training of sales personnel and in increased
promotional spending in all markets. While many of these changes took place
prior to the first quarter of 1999, the operational improvements take some
time to manifest even though the cost increases were immediate. In addition,
the Company developed a corporate staff which it believes is capable of
supporting a much larger operation and now maintains primary executive and
administrative offices located in Covington, Kentucky, as well as the New York
corporate office utilized by Faircom at the time of its merger with the Company.
The cost of executive personnel and administrative expense amounted to
approximately $615,000 in the three months ended March 31, 1999, versus
approximately $114,000 in the comparable period in 1998. Consequently,
operating loss of $655,000 in the three months ended March 31, 1999
compared unfavorably with operating loss of $38,000 in the comparable
period for 1998.
Interest expense was $862,000 in the three months ended March 31, 1999
as compared with $504,000 in the comparable period for 1998 principally due to
debt incurred in connection with the June 1998 Transactions.
In addition to developing the infrastructure to support a large radio
group, the Company has decided to concentrate on markets which have a minimum of
approximately $8,000,000 in market advertising revenue and where the Regent
stations have the potential to generate at least $1,000,000 in annual broadcast
cash flow. The Company has entered into agreements to sell its Flagstaff and
Kingman/Bullhead City, Arizona radio stations (the "Arizona Stations"), which
do not meet this strategic objective. Applications for FCC approval of these
sales are pending.
LIQUIDITY AND CAPITAL RESOURCES
In three months ended March 31, 1999, net cash used in operating
activities was $1,259,000 compared with net cash provided by operating
activities of $401,000 for 1998. Approximately $1,200,000 of the cash used in
operating activities during the 1999 period was used to pay deferred
professional fees which were mostly incurred in connection with the June 1998
Transactions. In the three months ended March 31, 1999, proceeds from the
issuance of preferred stock provided substantially all of the funds used in
operating activities, as well as funds used for capital expenditures, principal
payments on long-term debt and other investing and financing activity cash
requirements. As a result, there was a net increase in cash of $2,006,000 in the
three months ended March 31, 1999 compared with a net decrease of $11,000 in the
same period in 1998.
The Company's borrowings are made under an agreement with a group of
lenders (as amended through the latest amendment dated February 24, 1999, the
"Credit Agreement") which provides for a senior reducing revolving credit
facility with a commitment of up to $55,000,000 expiring March 31, 2005 (the
"Revolver"). The Credit Agreement permits the borrowing of available credit 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
March 31, 1999, the Company had borrowed $33,985,000 under the Credit Agreement
and had approximately $2,485,000 in cash balances. The remaining unused portion
of the Revolver of $21,015,000 was available to finance other acquisitions,
subject to restrictions contained in the Credit Agreement.
Beginning January 1, 1999, the Company is required to maintain an
interest rate coverage ratio (EBITDA, defined as earnings before interest,
taxes, depreciation and amortization, to annual interest rate cost); a fixed
charge coverage ratio (EBITDA to annual fixed charges); and a financial leverage
ratio (total debt to Adjusted EBITDA, as defined in the Credit Agreement). To
maintain compliance with these covenants, the Company must reduce its
outstanding borrowings during the second and third quarters of 1999.
-9-
<PAGE> 10
It intends to do this through proceeds from the sales of the Arizona
Stations as well as the sale of the Company's operations in another non-
strategic market. The sale of four of the seven Arizona Stations is expected to
close during the second quarter of 1999, pending receipt of FCC consent. Sale of
the other three could be delayed into the third quarter, depending on the timing
of FCC consent. The Company is currently seeking a buyer for its other
non-strategic market and expects to be able to consummate that sale during the
third quarter of 1999. If these sales were to be delayed, the Company will
request waivers from its lenders to allow more time for the sales to close or to
raise additional equity to reduce its debt.
Interest under the Credit Agreement is payable, at the option of the
Company, at alternative rates equal to the LIBOR rate (established March 3, 1999
at 5.06% and effective at that same rate at March 31, 1999) plus 1.50% to 3.50%,
or the base rate announced by the Bank of Montreal (7.75% at March 31, 1999)
plus .25% to 2.25%. 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, on the unused portion of the commitment under
the Credit Agreement. The Company also is required to pay certain other fees to
the agent and the lenders for the administration and use of the credit facility.
In the first quarter of 1999, the Company received approximately
$5,030,000 in gross proceeds from the issuance of shares of its Series F and G
Convertible Preferred Stock at $5.00 per share. In the second quarter of 1999,
the holders of the Series F Convertible Preferred Stock purchased an additional
1,016,348 shares of the Company's Series F Convertible Preferred Stock at $5.00
per share, to finance the acquisition of the St. Cloud Stations. In May 1999,
the Company borrowed $8,500,000 in funds under the Credit Agreement to finance
the balance of the purchase price of the St. Cloud Stations and related
transaction fees. In addition, in May of 1999 three existing shareholders have
expressed a willingness to purchase an additional $10,000,000 of a new series of
convertible preferred stock ("Series H Convertible Preferred Stock"), with terms
substantially the same as the Company's outstanding Series G Convertible
Preferred Stock, at $5.50 per share. It is anticipated that approximately
$2,500,000 of that amount will be funded in the second quarter of 1999 and will
be used to reduce bank debt and fund working capital requirements. The remaining
amount would be generally available to finance future acquisitions.
Based on current interest rates and accrued interest expense as of
March 31, 1999, the Company believes its interest payments for the remainder of
1999 will be approximately $2,400,000. Scheduled debt principal payments are
expected to be $49,000 for the remainder of 1999. Corporate general and
administrative expense and capital expenditures for the remainder of 1999 are
estimated to be approximately $1,500,000 and $1,200,000, respectively. Most of
the planned capital expenditures are required to be made in 1999 under the terms
of the Credit Agreement. During the first quarter of 1999, the Company paid
approximately $1,200,000 of deferred professional fees which were mostly
incurred in connection with the June 1998 Transactions. The Company has paid an
additional $171,000 in the second quarter of 1999 and intends to pay the
remaining balance of approximately $115,000 in 1999. For these payments to be
made over the balance of 1999, aggregating $5,435,000, the Company has used or
will utilize net cash provided by operations, current cash balances, proceeds
from the issuance of Series F and G Convertible Preferred Stock received in the
first quarter of 1999 and the $2,500,000 of proceeds from the Series H
Convertible Preferred Stock expected in the second quarter of 1999.
The Company believes net cash from operations; cash balances; the
proceeds from the sales of the Arizona Stations and the Company's other
non-strategic property; and $2,500,000 of the proceeds from the contemplated
issuance of the Series H Convertible Preferred Stock will be sufficient to
reduce borrowings under the Credit Agreement to allow the Company to maintain
compliance with all covenants and to meet the Company's interest expense and
any required principal payments, corporate expenses and capital expenditures
in the foreseeable future, based on its projected operations and indebtedness.
The Company is actively pursuing a number of acquisitions of radio
stations in a number of markets. Any such acquisitions would be financed from
borrowings against the unused portion of the Credit Agreement (less any
utilization of such portion for working capital needs), proceeds from the
issuance of Series H Convertible Preferred Stock, and through additional equity
or high yield debt offerings. There can be no assurance, however, that any of
such acquisitions will be consummated or that all or any portion of such
financing will be available.
MARKET RISK
The Company is exposed to the impact of interest rate changes because
of borrowings under its Credit Agreement. It is the Company's policy to enter
into interest rate transactions only to the extent considered necessary to meet
its objectives and to comply with the requirements of its Credit Agreement. The
Company has not entered into interest rate transactions for trading purposes.
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<PAGE> 11
To satisfy the requirements of its Credit Agreement, the Company
entered into a two-year collar agreement with the Bank of Montreal effective
August 17, 1998 for a notional amount of $34,400,000 to mitigate the risk of
increasing interest rates created by the borrowing under its Credit Agreement.
This agreement is based on the three-month LIBOR rate, has a Cap Rate, as
defined, of 6.50% and a Floor Rate, as defined, of 5.28%. These rates are
exclusive of additional spreads over the LIBOR rate depending upon the Company's
financial leverage. Based on the $33,985,000 principal amount outstanding under
the Company's credit facility at March 31, 1999, the annual interest expense
would fluctuate by a maximum of $415,000.
YEAR 2000 COMPUTER SYSTEM COMPLIANCE
The "Year 2000" ("Y2K") issue results from the fact that many computer
programs were written with date-sensitive codes that utilize only the last two
digits (rather than all four digits) to refer to a particular year. As the year
2000 approaches, these computer programs may be unable to process accurately
certain date-based information, as the program may interpret the year 2000 as
1900.
The Company utilizes various information technology (IT) systems in the
operation of its business, including accounting and financial reporting systems
and local and wide area networking infrastructure. In addition to IT systems,
the Company is also reliant on several non-information technology (non-IT)
systems, which could potentially pose Y2K issues, including traffic scheduling
and billing systems and digital audio systems providing automated broadcasting.
Finally, in addition to the risks posed by Y2K issues involving its own IT and
non-IT systems, the Company could also be affected by any Y2K problems
experienced by its key business partners, which include local and national
advertisers, suppliers of communications services, financial institutions and
suppliers of utilities. The Company's plans to address the Y2K issue involve
four phases: (a) assessment of the existence, nature and risk of Y2K problems
affecting the Company's systems; (b) remediation of the Company's systems,
whether through repair, replacement or upgrade, based on the findings of the
assessment phase; (c) testing of the enhanced or upgraded systems; and (d)
contingency planning.
In the fourth quarter of 1998, the Company engaged the services of an
independent Y2K consultant in order to analyze the scope of the Company's Y2K
compliance issues and to initiate formal communications with its advertisers,
suppliers, lenders and other key business partners to determine their exposure
to the Y2K issue.
During the first quarter of 1999, the assessment phase was completed
with respect to the IT-systems and non-IT systems. Based on the findings of the
assessment phase, a detailed plan was developed for the remaining phases
(remediation, testing and contingency planning).
A summary of the status of the Company's Y2K plans in the IT and non-IT
areas follows.
IT Systems
During the assessment phase, the Company evaluated the level of Y2K
compliance of IT systems and hardware in its executive offices and all
markets. All financial and networking systems which have been
determined to be non-compliant will be upgraded in the second quarter
of 1999 and tested by the end of the third quarter of 1999. Costs
associated with the upgrades are expected to be immaterial. The Company
has assessed several of its personal computers ("PCs") to be
non-compliant. Several of the non-compliant PCs are either upgradable
at a minimal cost or are used for tasks where non-compliance will not
impact their functionality. There are PCs which will need to be
replaced in 1999 and the cost of replacement is included in the
Company's capital plan. All necessary upgrades will occur by the end of
the third quarter of 1999. Most of the replacements will take place by
the end of the third quarter; however, a portion will occur in the
fourth quarter.
Non-IT Systems
The Company acquired all but one of its radio stations on or after June
15, 1998 from several independent operators. As part of the Company's
ongoing plan to provide its stations with a standardized digital audio
broadcast system and, thus, to realize certain of the efficiencies of
operating as a larger broadcast group, the Company has been
systematically upgrading the broadcast systems and other technical
equipment at its stations. Although this upgrading plan has had a
business purpose independent of the Y2K compliance issue, the Company
has required, as a matter of course, written assurance from its
suppliers that the new broadcast systems are Y2K compliant. With
respect to those properties which the Company expects to own on January
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<PAGE> 12
1, 2000, the upgrading project is 70% complete, with the installation
of new Y2K compliant broadcast systems having been completed for the
Company's stations in all of its markets except the Chico, California,
Mansfield, Ohio and Redding, California markets. The costs of the
upgrade project have been included in capital expenditures. Upgrades in
the Chico, California and the Mansfield, Ohio markets commenced during
the first quarter of 1999 and are expected to be completed by the end
of the second quarter of 1999. The upgrade in Redding will occur in the
third quarter in conjunction with an expansion of the Company's
facility in the market. The Company plans to conduct and complete its
own testing of the broadcast systems at all of its stations by the end
of the third quarter of 1999. The cost associated with this testing is
expected to be immaterial.
The traffic scheduling and billing systems currently utilized at the
Company's stations are provided by two suppliers on a Y2K compliant
basis, with the exception of the Company's stations located in the
Victorville, California market. To confirm Y2K compliance of its
traffic and billing systems, the Company intends to conduct and
complete tests of these systems during the second quarter of 1999. By
the third quarter of 1999, the Company intends to have replaced its
traffic and billing systems at the Victorville stations with a system
provided by suppliers utilized by the Company's other stations.
During the first quarter of 1999, the Company compiled a detailed
inventory of key business partners and prioritized the list based on potential
impact to the Company in the event that the business partners experienced severe
operational or financial hardship as a result of Y2K non-compliance. Each
business partner was contacted and asked to fill out a detailed questionnaire
regarding its own Y2K assessment. Follow-up on responses will occur in the
second quarter of 1999 and action steps will be developed based on the
responses.
The Company has budgeted $100,000 in 1999 for capital expenditures and
$50,000 for expenses involved in Y2K remediation. The Company does not expect
total expenditures to exceed the total budgeted amount.
Although the Company has not received any information to date that
would lead it to believe its internal Y2K compliance issues will not be able to
be resolved on a timely basis or that the related costs will have a material
adverse effect on the Company's operations, cash flows or financial condition,
the assessment phase of the Company's plans relative to its business partner
interfaces will continue through the second quarter of 1999. The remediation
phase is also not complete with respect to the broadcast systems at the
Company's Chico, Redding and Mansfield stations, and no actual testing of the
Company's enhanced or upgraded systems has been conducted. Accordingly,
unexpected costs associated with the remediation of the Company's systems or
with interruption of operation of the Company's stations could occur and, if
significant, could have a material adverse effect on the Company's operations,
cash flows and financial condition. The most reasonably likely worst-case
scenarios include loss of power and communications links. The impact of these
uncertainties on the Company's results of operations, liquidity and financial
condition, is not determinable. Based on the assessment of external and non-IT
system risks and the testing to be undertaken by the Company, contingency plans
will be developed for all critical systems by the end of the third quarter of
1999. Testing of contingency plans will occur in the third and fourth quarters
of 1999.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Form 10-Q includes certain forward-looking statements with respect
to the Company that involve risks and uncertainties. Such statements are
influenced by the Company's financial position, business strategy, budgets,
projected costs, and plans and objectives of management for future operations,
and are expressed with words such as "anticipate," "believe," "plan,"
"estimate," "expect," "intend," "project" and other similar expressions.
Although the Company 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. For these statements, the Company claims the
protections of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.
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 the Company operates, including, in particular, increased competition
for attractive radio properties and advertising dollars, fluctuations in the
cost of operating radio properties, and changes in the regulatory climate
affecting radio broadcast companies.
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<PAGE> 13
Such forward-looking statements speak only as of the date on which they are
made, and the Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date of this Form 10-Q.
If the Company does update or correct one or more forward-looking statements,
readers should not conclude that the Company will make additional updates or
corrections with respect thereto or with respect to other forward-looking
statements.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The information required by this Item 3 is presented above under Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations, and is incorporated herein by this reference.
PART II - OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds
(c) During the first quarter of 1999, the Company issued additional
shares of its preferred stock as follows:
On January 5, 1999, the Company issued 372,406 shares of its Series G
Convertible Preferred Stock for a cash purchase price of $5.00 per share to
certain executive officers of the Company and Blue Chip Capital Fund II Limited
Partnership, an existing holder of the Company's Series C Convertible Preferred
Stock. The proceeds were used to pay down existing debt under the Credit
Agreement and to fund working capital needs of the Company.
On February 23, 1999, the Company issued 633,652 shares of its Series F
Convertible Preferred Stock for a cash purchase price of $5.00 per share to
existing Series F holders. The proceeds were used to finance certain capital
improvements, fund deferred transaction costs related to the June 1998
Transactions and to fund working capital needs of the Company.
These issuances of securities were privately-negotiated transactions
based upon exemptions from registration under the Securities Act of 1933, as
amended (the "1933 Act"), claimed pursuant to Section 4(2) of the 1933 Act and
the rules and regulations promulgated thereunder.
Both the Series G Convertible Preferred Stock and the Series F
Convertible Preferred Stock are convertible into shares of the Company's common
stock on a one-for-one basis at any time at the option of the holder and under
certain circumstances at the option of the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following is filed herewith as an exhibit to Part I of
this Form 10-Q:
Exhibit No. 27 Financial Data Schedule
The exhibits identified as Part II Exhibits in the following
Exhibit Index, which is incorporated herein by this reference, are filed or
incorporated by reference as exhibits to Part II of this Form 10-Q.
(b) Reports of Form 8-K
On March 30, 1999, the Company filed an Amendment No. 2 to its
Form 8-K initially filed June 30, 1998 and amended on September 30, 1998. The
Amendment No. 2 reported under Item 4 a change in the accounting firm for
Faircom's financial statements effective June 15, 1998, the date of the merger
between Faircom and the Company.
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<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REGENT COMMUNICATIONS, INC.
Date: May 17, 1999 By: /s/ TERRY S. JACOBS
---------------------------------------
Terry S. Jacobs, Chairman of the Board
and Chief Executive Officer
Date: May 17, 1999 By: /s/ ANTHONY A. VASCONCELLOS
---------------------------------------
Anthony A. Vasconcellos,
Chief Financial Officer and
Vice President
(Chief Accounting Officer)
S-1
<PAGE> 15
EXHIBIT INDEX
The following exhibits are filed, or incorporated by reference where
indicated, as part of Part II of this Quarterly Report on Form 10-Q:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2(a)* Asset Purchase Agreement dated January 5, 1999 by and among
WJON Broadcasting Company, Regent Broadcasting of St. Cloud,
Inc., Regent Licensee of St. Cloud, Inc. and Regent
Communications, Inc. (previously filed as Exhibit 2(a) to the
Registrant's Form 10-K for the year ended December 31, 1998
and incorporated herein by this reference)
The following exhibits and schedules to the foregoing Asset
Purchase Agreement are omitted as not material; however,
copies will be provided to the Securities and Exchange
Commission upon request:
Schedules:
1.2 Miscellaneous Excluded Assets
3.4 Allocation of Purchase Price
6.4 Third Party Consents
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
Exhibits:
A Form of Indemnification Escrow Agreement
B Form of Deposit Escrow Agreement
C Form of Assignment and Assumption Agreement
D Form of Non-Competition Agreement
E Form of Lease Agreement
F Form of FCC Counsel Opinion
G Form of Buyers' Counsel Opinion
H Form of Seller's Counsel Opinion
2(b)* Asset Purchase Agreement dated March 4, 1999 by and among Mag
Mile Media, L.L.C., Regent Broadcasting of Kingman, Inc. and
Regent Licensee of Kingman, Inc. (previously filed as Exhibit
2(b) to the Registrant's Form 10-K for the year ended
December 31, 1998 and incorporated herein by this reference)
The following exhibits and schedules to the foregoing Asset
Purchase Agreement are omitted as not material; however,
copies will be provided to the Securities and Exchange
Commission upon request:
Schedules:
A Licenses
B Contracts
C Tangible Property
C-1 Leased Personal Property
D Copyrights, Logos, Jingles, Service Marks,
Trademarks and Other Intangible Rights
E Real Property
F Allocation of Purchase Price
G Evidence of Sources of Funds
H Excluded Employees
Exhibits:
A Form of Deposit Escrow Agreement
B Form of Time Brokerage Agreement
C Form of Assignment and Assumption Agreement
D Form of Opinion - Sellers' Counsel
E Form of Opinion - Sellers' Commission Counsel
F Form of Opinion - Buyer's Counsel
2(c)* Asset Purchase Agreement dated March 30, 1999 by and among The
Guyann Corporation, Regent Broadcasting of Flagstaff, Inc. and
Regent Licensee of Flagstaff, Inc. (previously filed as
Exhibit 2(c) to the Registrant's Form 10-K for the year ended
December 31, 1998 and incorporated herein by this reference)
The following exhibits and schedules to the foregoing Asset
Purchase Agreement are omitted as not material; however,
copies will be provided to the Securities and Exchange
Commission upon request:
Schedules:
1.2.9 Miscellaneous Excluded Assets
6.3 Buyer Qualifications
7.4 Stations Licenses, Etc.
7.7 Tangible Personal Property
7.8 Leased Real Estate
7.9 Contracts (including identification of
Material Contracts)
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Employees
7.17 Employee Benefit Plans
Exhibits:
A Form of Indemnity Escrow Agreement
B Form of Deposit Escrow Agreement
C Form of Allocation of Purchase Price
D Form of Agreement Not to Compete
E Form of General Conveyance, Bill of Sale,
Assignment and Assumption Agreement
F Form of Seller's Counsel Opinion
G Form of Seller's FCC Counsel Opinion
H Form of Buyer's Counsel Opinion
2(d) Agreement of Purchase and Sale of Assets dated as of January
15, 1999 among Concord Media Group, Inc., Regent Broadcasting
of South Carolina, Inc. and Regent Licensee of South Carolina,
Inc.
The following schedules and exhibits to the foregoing
Agreement of Purchase and Sale of Assets are omitted as not
material; however, copies will be provided to the Securities
and Exchange Commission upon request:
Schedule 1.2 Excluded Property
Schedule 1.4 Permitted Liens
Schedule 4.2(b) Leases, Contracts
Schedule 5.3(b) Capital Stock of Seller
Schedule 5.4 Conflicts or Consents
Schedule 5.6 Exceptions to Title or Condition
Schedule 5.7 Litigation
Schedule 5.8(a) Compliance with Laws
Schedule 5.8(b) Commission Authorizations
Schedule 5.9 Property, Contracts and Leases
Schedule 5.10 Certain Changes and Events
Schedule 5.11 Environmental Matters
Schedule 5.12 Undisclosed Liabilities
Schedule A Form of Deposit Escrow Agreement
Exhibit 2.5 Form of Liabilities Undertaking
Exhibit 4.5(e)(i) Form of Opinion of Seller's Counsel
Exhibit 4.5(e)(ii) Form of Opinion of Seller's
Communications Counsel
3(a)* Amended and Restated Certificate of Incorporation of Regent
Communications, Inc., as amended by a 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 G Preferred Stock of
Regent Communications, Inc., filed January 21, 1999.
(previously filed as Exhibit 3(a) to the Registrant's Form
10-K for the year ended December 31, 1998 and incorporated
herein by this reference)
3(b)* Amended and Restated By-Laws of Regent Communications, Inc.
(previously filed as Exhibit 3(b) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(a)* Second Amended and Restated Stockholders' Agreement dated as
of June 15, 1998 among Regent Communications, Inc., Terry S.
Jacobs, William L. Stakelin, Waller-Sutton Media Partners,
L.P., William H. Ingram, WGP Corporate Development Associates
V, L.L.C., WGP Corporate Development Associates (Overseas) V,
L.P., River Cities Capital Fund Limited Partnership, BMO
Financial, Inc., General Electric Capital Corporation, Joel M.
Fairman, Miami Valley Venture Fund II Limited Partnership, and
Blue Chip Capital Fund II Limited Partnership (excluding
exhibits not deemed material or filed separately in executed
form) (previously filed as Exhibit 4(c) to the Registrant's
Form 8-K filed June 30, 1998 and incorporated herein by this
reference).
4(b)* Stock Purchase Agreement dated June 15, 1998 among Regent
Communications, Inc., Waller-Sutton Media Partners, L.P., WPG
Corporate Development Associates V, L.C.C., WPG Corporate
Development Associates (Overseas) V, L.P., General Electric
Capital Corporation, River Cites Capital Fund Limited
Partnership and William H. Ingram (excluding exhibits not
deemed material or filed separately in executed form)
(previously filed as Exhibit 4(d) to the Registrant's Form 8-K
filed June 30, 1998 and incorporated herein by this
reference).
4(c)* Registration Rights Agreement dated June 15, 1998 among Regent
Communications, Inc., PNC Bank, N.A., Trustee, Waller-Sutton
Media Partners, L.P., WPG Corporate Development Associates V,
L.C.C., WPG Corporate Development Associates (Overseas) V,
L.P., BMO Financial, Inc., General Electric Capital
Corporation, River Cites Capital Fund Limited Partnership,
Terry S. Jacobs, William L. Stakelin, William H. Ingram, Blue
Chip Capital Fund II Limited Partnership, Miami Valley Venture
Fund L.P. and Thomas Gammon (excluding exhibits not deemed
material or filed separately in executed form) (previously
filed as Exhibit 4(e) to the Registrant's Form 8-K filed June
30, 1998 and incorporated herein by this reference).
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<PAGE> 16
4(d)* Warrant for the Purchase of 650,000 Shares of Common Stock
issued by Regent Communications, Inc. to Waller-Sutton Media
Partners, L.P. dated June 15, 1998 (See Note 1 below)
(previously filed as Exhibit 4(f) to the Registrant's Form 8-K
filed June 30, 1998 and incorporated herein by this
reference).
4(e)* Warrant for the Purchase of 50,000 Shares of Common Stock
issued by Regent Communications, Inc. to General Electric
Capital Corporation dated June 15, 1998 (previously filed as
Exhibit 4(g) to the Registrant's Form 8-K filed June 30, 1998
and incorporated herein by this reference).
4(f)* Agreement to Issue Warrant dated as of June 15, 1998 between
Regent Communications, Inc. and General Electric Capital
Corporation (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit 4(h)
to the Registrant's Form 8-K filed June 30, 1998 and
incorporated herein by this reference).
4(g)* Warrant for the Purchase of 80,000 Shares of Common Stock
issued by Regent Communications, Inc. to River Cities Capital
Fund Limited Partnership dated June 15, 1998 (previously filed
as Exhibit 4(k) to the Form 10-Q for the Quarter Ended June
30, 1998, as amended, and incorporated herein by this
reference).
4(h)* Stock Purchase Agreement dated as of May 20, 1997 between
Terry S. Jacobs and Regent Communications, Inc. (previously
filed as Exhibit 4(b) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(i)* Stock Purchase Agreement dated as of May 20, 1997 between
River Cities Capital Fund Limited Partnership and Regent
Communications, Inc. (previously filed as Exhibit 4(c) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
4(j)* Stock Purchase Agreement dated as of November 26, 1997 and
Terry S. Jacobs and Regent Communications, Inc. (previously
filed as Exhibit 4(d) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(k)* Stock Purchase Agreement dated as of December 1, 1997 between
William L. Stakelin and Regent Communications, Inc.
(previously filed as Exhibit 4(e) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(l)* Stock Purchase Agreement dated as of December 8, 1997 between
Regent Communications, Inc. and General Electric Capital
Corporation (previously filed
E-2
<PAGE> 17
as Exhibit 4(f) to the Registrant's Form S-4 Registration
Statement No. 333-46435 effective May 7, 1998 and incorporated
herein by this reference).
4(m)* Stock Purchase Agreement dated as of December 8, 1997 between
Regent Communications, Inc. and BMO Financial, Inc.
(previously filed as Exhibit 4(g) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(n)* 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) (previously filed as Exhibit 4(j) to the Registrant's
Form S-4 Registration Statement No. 333-46435 effective May 7,
1998 and incorporated herein by this reference).
4(o)* 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 2 below) (previously
filed as Exhibit 4(k) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(p)* Agreement to Issue Warrant dated as of March 25, 1998 between
Regent Communications, Inc. and River Cities Capital Fund
Limited Partnership (previously filed as Exhibit 4(1) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
4(q)* First Amendment to Credit Agreement dated as of February 16,
1998 among Regent Communications, Inc., the financial
institutions listed therein, as lenders, General Electric
Capital Corporation, as Documentation Agent, and Bank of
Montreal, Chicago Branch as Agent (previously filed as Exhibit
4(w) to the Registrant's Form 8-K/A (date of report June 15,
1998) filed September 3, 1998 and incorporated herein by
reference).
4(r)* Second Amendment and Limited Waiver to Credit Agreement dated
as of June 10, 1998 among Regent Communications, Inc., the
financial institutions listed therein, as lenders, General
Electric Capital corporation, as Documentation Agent, and Bank
of Montreal, Chicago Branch, as Agent (previously filed as
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<PAGE> 18
Exhibit 4(x) to the Registrant's Form 8-K/A (date of report
June 15, 1998) filed September 3, 1998 and incorporated herein
by reference).
4(s)* Third Amendment to Credit Agreement dated as of August 14,
1998 among Regent Communications, Inc., the financial
institutions listed therein, as lenders, General Electric
Capital Corporation, as Documentation Agent, and Bank of
Montreal, Chicago Branch, as Agent (previously filed as
Exhibit 4(y) to the Registrant's Form 10-Q for the Quarter
Ended September 30, 1998, as amended, and incorporated herein
by this reference).
4(t)* Amendment to Second Amended and Restated Stockholders'
Agreement, dated as of January 11, 1999, among Regent
Communications, Inc., Terry S. Jacobs, William L. Stakelin,
Waller-Sutton Media Partners, L.P., William H. Ingram, WGP
Corporate Development Associates V, L.L.C., WGP Corporate
Development Associates (Overseas) V, L.P., River Cities
Capital Fund Limited Partnership, BMO Financial, Inc., General
Electric Capital Corporation, Joel M. Fairman, Miami Valley
Venture Fund II Limited Partnership, and Blue Chip Capital
Fund II Limited Partnership (excluding exhibits not deemed
material or filed separately in executed form) (previously
filed as Exhibit 4(t) to the Registrant's Form 10-K for the
year ended December 31, 1998 and incorporated herein by
this reference)
4(u)* Stock Purchase Agreement dated January 11, 1999 between Regent
Communications, Inc. and Blue Chip Capital II Limited
Partnership relating to the purchase of 315,887 shares of
Regent Communications, Inc. Series G Convertible Preferred
Stock (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit
4(u) to the Registrant's Form 10-K for the year ended
December 31, 1998 and incorporated herein by this reference)
4(v)* Stock Purchase Agreement dated January 11, 1999 between
Regent Communications, Inc. and Terry S. Jacobs relating to
the purchase of 50,000 shares of Regent Communications, Inc.
Series G Convertible Preferred Stock (See Note 3) (excluding
exhibits not deemed material or filed separately in executed
form) (previously filed as Exhibit 4(v) to the Registrant's
Form 10-K for the year ended December 31, 1998 and
incorporated herein by this reference)
4(w)* Fourth Amendment, Limited Consent and Limited Waiver to Credit
Agreement, First Amendment to Subsidiary Guaranty and First
Amendment to Pledge and Security Agreement, dated as of
October 16, 1998 among Regent Communications, Inc., the
financial institutions listed therein, as lenders, General
Electric Capital Corporation, as Documentation Agent, and Bank
of Montreal, Chicago Branch, as Agent. (previously filed as
Exhibit 4(w) to the Registrant's Form 10-K for the year
ended December 31, 1998 and incorporated herein by this
reference)
4(x)* Fifth Amendment to Credit Agreement, dated as of November 23,
1998, among Regent Communications, Inc., the financial
institutions listed therein, as lenders, General Electric
Capital Corporation, as Documentation Agent, and Bank of
Montreal, Chicago Branch, as Agent. (previously filed as
Exhibit 4(x) to the Registrant's Form 10-K for the year
ended December 31, 1998 and incorporated herein by this
reference)
4(y)* Sixth Amendment and Limited Consent to Credit Agreement, dated
as of February 24, 1999, among Regent Communications, Inc.,
the financial institutions listed therein, as lenders, General
Electric Capital Corporation, as Documentation Agent, and Bank
of Montreal, Chicago Branch, as Agent. (previously filed as
Exhibit 4(y) to the Registrant's Form 10-K for the year
ended December 31, 1998 and incorporated herein by this
reference)
The following exhibit is filed as part of Part I of this Quarterly Report on
Form 10-Q:
27 Financial Data Schedule
- --------------------------------------------------------------------------------
* Incorporated by reference.
1. Six substantially identical Warrants for the purchase of shares of
Registrant's common stock were issued as follows:
<TABLE>
<S> <C>
Waller-Sutton Media Partners, L.P. 650,000
WPG Corporate Development Associates V, L.P. 112,580
WPG Corporate Development Associates (Overseas) V, L.P. 17,420
General Electric Capital Corporation 50,000
River Cities Capital Fund Limited Partnership 20,000
William H. Ingram 10,000
</TABLE>
2. Two substantially identical notes were issued to Bank of Montreal, Chicago
Branch, in the principal amounts of $15,000,000 and $20,000,000.
3. Two substantially identical Stock Purchase Agreements were entered into for
the purchase of Series G Convertible Preferred Stock as follows:
Joel M. Fairman 3,319 shares
William L. Stakelin 3,200 shares
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<PAGE> 1
Exhibit 2(d)
AGREEMENT OF PURCHASE AND SALE OF ASSETS
----------------------------------------
This Agreement dated as of January 15, 1999, by and among REGENT
BROADCASTING OF SOUTH CAROLINA, INC., a Delaware corporation ("Regent
Broadcasting"), REGENT LICENSEE OF SOUTH CAROLINA, INC., a Delaware corporation
("Regent Licensee") (together with Regent Broadcasting, the "Seller"), and
CONCORD MEDIA GROUP, INC., a Florida corporation ("Buyer").
W I T N E S S E T H:
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In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:
ARTICLE 1
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PURCHASE AND SALE OF ASSETS
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1.1 PURCHASED ASSETS. Subject to and upon the terms and conditions of
this Agreement, Seller shall sell, transfer, convey, assign, grant and deliver
to Buyer and Buyer shall purchase and acquire, at the Closing (as hereinafter
defined) all right, title and interest in and to all business, properties,
assets, machinery, equipment, furniture, fixtures, licenses, permits and
franchises, goodwill and rights of Seller, whether or not carried or reflected
on the books or records of Seller, pertaining or relating to the radio station
and the broadcast frequency 94.3 MHz, currently using the call letters WSSP(FM),
serving the Goose Creek, South Carolina market (the "Station") (but excluding
the "Excluded Assets," as hereinafter defined). All of the foregoing are herein
collectively referred to as the "Purchased Assets" and include without
limitation all of the following:
(a) AUTHORIZATIONS. All right, title and interest in and to
all licenses, permits, variances, franchises, certifications, approvals,
construction permits and authorizations issued or granted by the Federal
Communications Commission (the "Commission" or the "FCC") for the operation of
or used in connection with the operation of the Station (hereinafter the
"Commission Authorizations"), including, without limitation, all of those listed
in SCHEDULE 5.8(b) of the Disclosure Schedule (as such term is hereinafter
defined), together with any renewals, extensions or modifications thereof and
additions thereto. All licenses, permits, variances, franchises, certifications,
approvals, construction permits and authorizations issued by any administrative
body or licensing authority or governmental or regulatory agency, other than
Commission Authorizations, used in the operation of the Station and/or the
ownership and/or use of the Purchased Assets (hereinafter the "Other
Authorizations" and, collectively with the Commission Authorizations, the
"Authorizations"), including without limitation those listed in SCHEDULE 5.8(b)
to the Disclosure Schedule, together with any renewals, extensions or
modifications thereof and additions thereto.
(b) TANGIBLE PERSONAL PROPERTY. All right, title and interest
in and to all fixed and tangible equipment, machinery, vehicles, furniture,
fixtures, transmitters, antennae, office material and supplies, spare parts,
music libraries and other personal property used, or held for use, by Seller by
or for the Station and/or Seller in connection with the business or operation of
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the Station, together with all replacements thereof, additions and alterations
thereto, and substitutions therefor, made between the date hereof and the
Closing Date (hereinafter collectively the "Tangible Personal Property").
(c) AGREEMENTS. All right, title and interest in and to the
contracts, agreements, and leases related to the Station and or any of the
Purchased Assets to which Seller or the Station is a party and to be assumed by
Buyer pursuant to this Agreement (hereinafter collectively "Contracts").
(d) INTANGIBLES. All right, title and interest in and to the
call letters for the Station, together with all copyrights, trademarks, trade
names, logos, slogans, service marks, applications for any of the foregoing,
telephone numbers and listings, computer software, trade secrets, confidential
or proprietary information and other intangible property used, or held for use,
by or for the Station (hereinafter collectively the "Intangibles").
(e) INSURANCE PROCEEDS. All insurance proceeds derived from
loss, damage or destruction of or to any properties or assets of the type
described in paragraph (b) above, to the extent not utilized prior to the
Closing to repair or replace the lost, damaged or destroyed items (collectively
"Insurance Proceeds").
(f) BUSINESS RECORDS. All financial records, engineering and
advertising reports, programming studies, consulting reports, marketing data,
and personnel records, logs required by the Commission to be maintained for the
Station, mailing and listener lists, lists of vendors or other suppliers and any
other information in tangible form, used, or held for use, by Seller for the
Station (hereinafter collectively "Business Records").
(g) PREPAID ITEMS. All right, title and interest in and to all
prepaid items relating to any of the Purchased Assets or the operation or
business of the Station (other than unearned insurance premiums and security
deposits).
1.2 EXCLUDED ASSETS. The Purchased Assets shall not include the
following (the "Excluded Assets"):
(a) All Sale Assets (as hereinafter defined);
(b) All supplies and similar items of tangible personal
property consumed in the ordinary course of business between the date of this
Agreement and the Closing Date and in conformity with the terms and provisions
of this Agreement;
(c) Certain personal effects identified in SCHEDULE 1.2(d) of
the Disclosure Schedule;
(d) Seller's corporate seal, minute books, charter documents,
corporate stock record books and such other books and records as pertain solely
to the corporate organization, existence or share capitalization of Seller and
duplicate copies of such records as are necessary to enable Seller to file its
tax returns.
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1.3 SALE ASSETS AND RETAINED RECEIVABLES. For purposes hereof, the
"Sale Assets" shall mean (i) any consideration paid to Seller in respect of the
"Purchase Price" under this Agreement, (ii) accounts receivable and other
receivables of Seller accrued prior to the date of the "Closing" under this
Agreement (the "Closing Date") (said accounts receivable and other receivables
being herein called the "Retained Receivables"), as opposed to any accounts
receivable and other receivables accruing from and after the Closing Date, and
(iii) any cash on hand of Seller as of the Closing Date or thereafter collected
in respect of the Retained Receivables.
1.4 TITLE TO PURCHASED ASSETS. Title to all of the Purchased Assets
shall be transferred to Buyer free and clear of any liens, pledges, charges,
mortgages, security interests, restrictions, easements, liabilities, claims,
encumbrances or rights of others of every kind and description Collectively,
"Liens"), except for those Liens listed on Schedule 1.4 of the Disclosure
Schedule, said Liens so listed being herein called the "Permitted Liens". The
business, obligations and activities of the Station and the use of the Purchased
Assets in connection therewith are herein collectively referred to as the
"Business".
1.5 ASSIGNMENTS OF CONTRACTS. Buyer and Seller acknowledge that certain
of the Contracts, to be included in the Purchased Assets, and the rights and
benefits thereunder necessary or appropriate or relating to the conduct of the
business and activities of any one or more of Seller and/or the Station may not,
by their terms, be assignable. Anything in this Agreement or in the Liabilities
Undertaking to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any such Contract, and Buyer shall not be deemed to have
assumed the same or to be required to perform any obligations thereunder, if an
attempted assignment thereof, without the consent of a third party thereto,
would constitute a breach thereof or in any way affect the rights under any such
Contract of Buyer or Seller thereunder. In such event, Seller will cooperate
with Buyer to provide for Buyer all benefits to which Seller is entitled under
such Contracts, and any transfer or assignment to Buyer by Seller of any such
Contract or any right or benefit arising thereunder or resulting therefrom which
shall require the consent or approval of any third party shall be made subject
to such consent or approval being obtained. Seller shall, without further
consideration therefor, pay, assign and remit to Buyer promptly all monies, and,
to the extent permitted, all other rights or consideration received or obtained,
or which may be received or obtained in respect of performance of such
Contracts.
1.6 SATISFACTION OF LIABILITIES. At the Closing, Seller shall cause all
security interests, encumbrances and other Liens on or relating to any of the
Purchased Assets (other than Permitted Liens), to be released, extinguished and
discharged in full, and shall deliver to Buyer instruments releasing,
extinguishing and discharging all such security interests, encumbrances,
mortgages and other Liens, all in form and substance reasonably satisfactory to
Buyer (collectively the "Lien Release Instruments").
1.7 RETAINED RECEIVABLES. (a) At Closing, Seller shall appoint Buyer
its sole and exclusive agent for collecting Retained Receivables. In such
regard, at Closing, Seller shall deliver to Buyer a detailed statement showing
the name, amount and age of each Retained Receivable. From the Closing Date
until three months thereafter (the "Collection Period"),
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Buyer shall use commercially reasonable efforts to collect or cause to be
collected, as agent for Seller and on Seller's behalf, but in accordance with
Buyer's normal collection procedures as in effect from time to time (and without
being required to incur any out-of pocket cost or expense or resort to
litigation), Retained Receivables, and Seller agrees that during such period of
time it shall refrain from taking any action (whether in connection with
collection or otherwise) in respect of the Retained Receivables; provided that
the provisions of this sentence shall not apply to Retained Receivables which
are more than 60 days past due as of the Closing Date or which become more than
90 days past due during the Collection Period (the "Past Due Receivables").
During the Collection Period, as soon as practicable, but in no event later than
the 5th day of each calendar month following the end of the first full month
after the Closing Date or the next business day thereafter if the 5th is not a
business day, Buyer will furnish Seller with an accounting and payment of the
Retained Receivables collected during the preceding calendar month. Within 30
days after the end of the Collection Period, Buyer will furnish Seller with a
final and up-to-date accounting, and any applicable payment, of the applicable
Retained Receivables, and thereafter Seller shall be solely responsible for the
collection of any remaining Retained Receivables; PROVIDED, HOWEVER, that any
funds received by Buyer subsequent to the Collection Period on account of any
Retained Receivables payable to Seller shall be remitted to Seller by Buyer
immediately after its receipt of such funds. Buyer shall not be obligated to use
any extraordinary efforts, retain counsel or a collection agency or expend any
sums to collect any Retained Receivable. To the extent that any amounts are
received by Buyer from an obligor on both a Retained Receivable and any other
receivable of Buyer, such amounts, unless specifically allocated by the obliger,
shall be allocated to payment of the oldest of such receivables first. From and
after the date that is three months after the Closing Date, Buyer shall have no
further obligation hereunder with respect to any Retained Receivables that may
then be uncollected.
(b) Seller shall be responsible for all agency, sales and
other commissions which are attributable to the Retained Receivables.
(c) Buyer shall have the right and authority to (i) collect
Retained Receivables as provided in this Agreement, and (ii) endorse, without
recourse, with the name of Seller, any checks received on account of any
Retained Receivables.
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ARTICLE 2
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PURCHASE PRICE: ASSUMPTION OF OBLIGATIONS
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2.1 PURCHASE PRICE. (a) Subject to and upon the terms and conditions of
this Agreement, Buyer shall pay to Seller, in full payment and consideration for
the Purchased Assets a purchase price (the "Purchase Price"), cash at Closing,
in the aggregate principal amount of $1,600,000, subject to adjustment as
hereinafter provided.
(b) At or prior to the Closing, Seller shall cause the then
outstanding Citicasters Debt to be paid and discharged in full (which may be
made out of funds provided by Buyer in connection with the Closing), subject to
Buyer' s right to satisfy the same, with the effect set forth in Section 2.1(a)
above, if Seller fails to so pay and discharge all of the same.
2.2 ESCROW DEPOSITS.
(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 Fifty Thousand Dollars ($50,000) 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.
(b) Pursuant to the terms of the Deposit Escrow Agreement,
Buyer shall wire transfer Fifty Thousand Dollars ($50,000) 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. 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 8.2 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
Seller; 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.
2.3 ALLOCATION. The parties agree to allocate the Purchase Price in
accordance with an appraisal prepared, at Buyer's expense, by such appraiser
(who may be Buyer's accountants) as Buyer shall reasonably select. Such
allocation shall be submitted to the Seller for its review and if reasonable
shall be deemed accepted by and binding upon the Seller. The parties also agree
to use such allocation in completing and filing Internal Revenue Code Form 8594
for federal income tax purposes.
2.4 CERTAIN PRORATIONS AND ADJUSTMENTS.
(a) All utilities charges, real estate taxes, monthly rental
payments under leases to be assumed by Buyer pursuant to this Agreement, amounts
payable in respect of all contracts and agreements assumed by Buyer pursuant to
this Agreement, association dues, business and license fees (other than the
Station's annual FCC license fees) and similar prepaid items (to the extent
included in the Purchased Assets) and similar accrued expenses, shall be
prorated between Seller and Buyer as of 11:59 PM on the day immediately
preceding the Closing Date, and the net amount resulting from the foregoing in
favor of Buyer or Seller, as the case may be, shall then be paid to such party
by the other at the Closing. If all the apportionments set forth above are not
accomplished at the Closing, then, as soon as practicable thereafter,
representatives of Seller and Buyer shall examine all appropriate books and
records in order to make the determination of said apportionments. Payments in
respect thereof shall be made
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within ten (10) days after each such determination, provided that if payments
with respect to real or personal property taxes are based in whole or in part on
the previous year's taxes, there shall be a later adjustment to reflect the
current year's taxes when the bills are finally rendered.
(b) In the event of any dispute between the parties as to
prorations or payments called for under this Section 2.4, the amounts not in
dispute shall nonetheless be paid and adjusted for at the Closing and such
disputes shall be promptly presented for resolution to an independent certified
public accountant mutually acceptable to the parties. The accountant's
resolution of the dispute shall be final and binding on the parties and a
judgment may be entered thereon. The fees and expenses of such accountant shall
be paid one-half (1/2) by Seller and one-half (1/2) by Buyer.
2.5 ASSUMED LIABILITIES. Buyer shall, at the Closing, execute and
deliver to Seller a Liabilities Undertaking (the "Liabilities Undertaking"),
substantially in the form of Exhibit 2.5 hereto. Except as expressly set forth
in the Liabilities Undertaking, Buyer shall not assume any debts, commitments,
obligations or liabilities of any nature whatsoever.
ARTICLE 3
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APPLICATION TO AND CONSENT BY COMMISSION
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3.1 COMMISSION CONSENT. Consummation of the purchase and sale provided
for herein and the performance of the obligations of the Seller and Buyer to
close under this Agreement are subject to the condition that the Commission
shall have issued its approval, without any condition adverse to Buyer, of the
assignment (the "Assignment") of the Commission Authorizations (and covering the
Station) to Buyer as contemplated by the terms of this Agreement (the "Initial
Orders), and, if Buyer so requires, such Initial Order shall have become a Final
Order (as hereinafter defined) . In the event any such Commission approval
fails, or is expected not to cover any particular Commission Authorization,
Buyer may, at its option, elect to waive such failure by written notice to
Seller, and in such event such approval shall nevertheless be deemed an Initial
Order for purposes of this Agreement.
3.2 APPLICATION FOR COMMISSION CONSENT.
(a) Seller and Buyer agree to proceed expeditiously and with
due diligence and to use their reasonable efforts and to cooperate with each
other in seeking and applying (the "Assignment Application") for the Initial
Order and the Final Order.
(b) Within five (5) business days after the date of this
Agreement, each party shall prepare and file with the Commission the Assignment
Application, and all information, data, exhibits, resolutions, statements, and
other materials necessary and proper in connection with such Assignment
Application. Each of Seller and Buyer further agrees expeditiously to prepare
any amendments to the Assignment Application whenever such amendments are
required by the Commission or its rules. For purposes of this Agreement, each
party shall be deemed to be using its reasonable efforts with respect to
obtaining the Initial Order and the Final Order, and
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to be otherwise complying with the foregoing provisions of this Section 3.2, so
long as it expeditiously and truthfully provides information necessary in
completing the application process, expeditiously provides its comments on any
filing materials, and uses its reasonable efforts to oppose attempts by third
parties to resist, modify or overturn the grant of the Final Order; it being
further understood that neither Seller nor Buyer shall be required to expend any
funds or efforts contemplated under this Article 3 unless the other of them is
concurrently and likewise complying with its obligations under this Article 3.
(c) Except as otherwise provided herein, each party will be
solely responsible for the expenses incurred by it in the preparation, filing
and prosecution of its respective portions of the Assignment Application. All
filing fees and grant fees imposed in respect of the Assumption Application
shall be paid one-half (1/2) by Seller and one-half (1/2) by Buyer.
(d) Buyer and Seller, each at its own respective expense,
shall use their respective reasonable efforts to oppose any efforts, before or
after the grant or proposed grant of the Initial Order, for reconsideration or
judicial review of the grant by the Commission of the Initial Order.
3.3 NOTICE OF APPLICATION. Seller shall, at its expense, give due
notice of the filing of the Assignment Application by broadcasting on the
Station, and by such other means as may be required by the rules and regulations
of the Commission.
3.4 ABSENCE OF COMMISSION CONSENT. This Agreement, prior to the
Closing, may be terminated by Seller, on the one hand, or Buyer on the other
hand, upon written notice to the other, if the Initial Order does not become a
Final Order by the Outside Date; PROVIDED, HOWEVER, that neither Seller nor
Buyer, as the case may be, may terminate this Agreement if such party is in
default or breach under this Agreement, or if a delay in any decision or
determination by the Commission respecting the Assignment Application has been
caused or materially contributed to: (i) by any failure of the Seller or Buyer,
as the case may be, to furnish, file or make available to the Commission
information within its control; (ii) by the willful furnishing by Seller or
Buyer, as the case may be, of materially incorrect, inaccurate or incomplete
information to the Commission; or (iii) by any other action taken by the Seller
or Buyer, as the case may be, for the purpose of delaying the Commission's
decision or determination respecting the Assignment Application.
3.5 DEFINITION OF FINAL ORDER. For purposes of this Agreement, the term
"Final Order" shall mean a final order of the Commission consistent with and
affirming the Initial Order which is not, or the passage of time with respect to
such Initial Order such that the order of the Commission embodied therein is
not, reversed, stayed, enjoined or set aside, and with respect to which no
timely request for stay, reconsideration, review, rehearing or notice of appeal
or determination to reconsider or review is pending, and as to which the time
for filing any such request, petition or notice of appeal or for review by the
Commission, and for any reconsideration, stay or setting aside by the Commission
on its own motion or initiative, has expired.
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ARTICLE 4
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CLOSING; DELIVERIES; CONDITIONS PRECEDENT
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4.l CLOSING.
(a) The Closing under this Agreement (the "Closing") shall
take place at the offices of Buyer's counsel, as designated by Buyer, at 10:00
a.m., local time, on the eighth (8th) business day after the Initial Order
becomes a Final Order, or such earlier date or such later date after the grant
of the Initial Order or the Final Order as Buyer may specify by written notice
to Seller, but in all events not later than the date (the "Outside Date") which
is six full months after the date hereof, or such other date, place or time as
the parties hereto shall mutually agree upon (the date of the Closing being
called the Closing Date").
(b) All proceedings to be taken and all documents to be
executed and delivered by the parties at the Closing shall be deemed to have
been taken and executed simultaneously and no proceedings shall be deemed taken
nor any documents deemed executed or delivered until all have been taken,
executed and delivered.
4.2 SELLER'S DELIVERIES. At the Closing, the Seller shall deliver
to Buyer:
(a) an appropriate bill of sale, executed by Seller;
(b) an appropriate assignment of lease (each a "Lease
Assignment"), with respect to each of the Real Property Leases listed in
SCHEDULE 4.2(B) of the Disclosure Schedule (each an "Assigned Lease"), executed
by the lessee thereunder;
(c) instruments of assignment and transfer of all the
Commission Authorizations, executed by Seller;
(d) at the location(s) thereof at the Closing, the Contracts
and Business Records;
(e) copies of corporate and stockholder resolutions of Seller
authorizing the execution and delivery of this Agreement and each exhibit hereto
and the consummation of the transactions contemplated hereby and thereby,
certified by the President of Seller;
(f) a certificate of existence with respect to each Seller,
issued as of a recent date by the Secretary of State of the State of Delaware;
(g) such other good and sufficient instruments of conveyance,
assignment and transfer, and as shall be necessary to vest in Buyer, good title
to the Purchased Assets as contemplated by this Agreement; and
(h) all other documents required by the terms of this
Agreement to be delivered to Buyer at the Closing.
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4.3 BUYER'S DELIVERIES. At the Closing, Buyer will deliver:
(a) evidence of any satisfaction of the Citicasters Debt in
accordance with Article 2 hereof, and the balance of the Purchase Price in cash
or other immediately available funds;
(b) each Lease Assignment, duly executed by the assignee
thereunder;
(c) the Liabilities Undertaking executed by Buyer;
(d) evidence that Buyer has qualified to do business as a
foreign corporation in the State of South Carolina;
(e) a certificate of existence with respect to Buyer, issued
as of a recent date by the Secretary of State of Florida;
(f) copies of resolutions of Buyer authorizing the execution
and delivery of this Agreement and each exhibit hereto and the consummation of
the transactions contemplated hereby and thereby, certified by an officers of
Buyer; and
(g) all other documents required by the terms of this
Agreement to be delivered to Seller at the Closing.
4.4 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at Buyer's request, and without further consideration, Seller will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation, and take such actions, as Buyer may reasonably deem
necessary in order more effectively to transfer, convey and assign to Buyer, and
to confirm Buyer's title to, all of the Purchased Assets, to put Buyer in actual
possession and operating control thereof, and to assist Buyer in exercising all
rights with respect thereto.
4.5 BUYER'S CONDITIONS PRECEDENT. The obligations of Buyer under this
Agreement to proceed with the transactions contemplated hereby are, at the
option of Buyer, subject to the fulfillment of the following conditions at or
prior to the Closing:
(a) no action, suit or proceeding shall have been instituted
against Buyer or Seller by, in or before any court, tribunal or governmental
body or agency (other than any involving matters coming within the jurisdiction
of the FCC), and be unresolved, in each case to restrain or prevent, or to
obtain substantial damages by reason of, any of the transactions contemplated
hereby;
(b) the representations and warranties of Seller contained in
this Agreement, any Schedules and Exhibits hereto and/or any certificates or
documents delivered in connection with this Agreement shall be true and correct
in all material respects when made, and shall also be true and correct in all
material respects at the time of Closing with the same force and effect as
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though such representations and warranties were made at that time, except for
changes expressly permitted by this Agreement;
(c) each covenant, agreement and obligation required by the
terms of this Agreement to be complied with and performed by Seller at or prior
to the Closing shall have been duly and properly complied with and performed;
(d) the Final Order shall have been granted by the Commission
and Buyer shall be entitled to be the holder of each of the Commission
Authorizations;
(e) Buyer shall have received an opinion of Seller's counsel,
Strauss & Troy, LPA, and an opinion of Seller's special communications counsel,
each dated the Closing Date, addressed to Buyer and favorably opining as to the
matters included in EXHIBITS 4.5(e)(i) AND 4.5(e)(ii) hereto; and
(f) there shall be delivered to and for the benefit of Buyer a
certificate of the Seller executed on the Closing Date that the conditions set
forth in subsections (b) through (d) of this Section 4.5 have been fulfilled.
4.6 SELLER'S CONDITIONS PRECEDENT. The obligations of Seller under this
Agreement to proceed with the transactions contemplated hereby are, at the
option of Seller, subject to the fulfillment of each of the following conditions
at or prior to the Closing:
(a) the representations and warranties of Buyer contained in
this Agreement or any exhibits hereto or any certificates or documents delivered
by it to Seller in connection with this Agreement shall be true and correct in
all material respects when made, and shall also be true and correct in all
material respects at the time of the Closing with the same force and effect as
though such representations and warranties were made at that time, except for
changes expressly permitted by this Agreement;
(b) each covenant, agreement and obligation required by the
terms of this Agreement to be complied with and performed by Buyer at or prior
to the Closing shall have been duly and properly complied with and performed;
(c) there shall be delivered to Seller a certificate of Buyer
executed on the Closing Date that the conditions set forth in subsections (a)
and (b) of this Section 4.6 have been fulfilled.
4.7 RECEIVABLES AND PAYMENT RIGHTS. Buyer shall have the right and
authority to collect for its own account all receivables and other items and
rights to payments which shall be transferred or assigned to Buyer as provided
in this Agreement and to endorse with the name of Seller any checks received on
account of any such receivables or other items. Seller shall immediately
transfer and deliver to Buyer any cash or other property which it may receive in
respect of such receivables and/or other items.
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ARTICLE 5
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REPRESENTATIONS AND WARRANTIES OF THE SELLER
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The Seller hereby makes each of the following representations and
warranties:
5.1 ORGANIZATION. STANDING AND QUALIFICATION:
Each Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is duly licensed
as a foreign corporation in the State of South Carolina, and has all requisite
corporate power and authority and is entitled to own, lease and operate its
properties and to carry on its business as and in the places such properties are
now owned, leased or operated and where such business is presently conducted.
The copies of the Certificate of Incorporation and By-Laws of each Seller
delivered to Buyer are complete and correct.
5.2 NO SUBSIDIARIES. Regent Broadcasting has no subsidiary other than
Regent Licensee, nor has any interest, direct or indirect, nor has any
commitment to purchase any interest, direct or indirect, in any other
corporation or in any partnership, joint venture or other business enterprise or
entity. The business carried on by Seller, and the operations of the Station,
have not been conducted through any direct or indirect subsidiary, other than
Regent Licensee, or any direct or indirect affiliate of Seller or of any
shareholder of Seller.
5.3 AUTHORITY OF SELLER; SHAREHOLDERS. (a) Seller has all requisite
corporate power and corporate authority to execute, deliver and perform this
Agreement and each other agreement, document and instrument to be executed,
delivered or performed by it in connection with this Agreement (the "Seller
Documents") and to carry out the transactions contemplated hereby and thereby.
This Agreement constitutes, and, when executed and delivered at the Closing,
each of the other Seller Documents will constitute, the legal, valid and binding
obligation of such of Seller. All corporate and shareholder proceedings and
action required to be taken by Seller relating to the execution, delivery and
performance of this Agreement and the Seller Documents and the consummation of
the transactions contemplated hereby and thereby have been duly taken.
(b) The presently issued and outstanding shares of capital
stock of Seller and the names and addresses of the sole and exclusive lawful
record and beneficial owners thereof are as set forth on SCHEDULE 5.3(B) of the
Disclosure Schedule delivered by Seller to Buyer concurrently with the execution
and delivery hereof and making express reference to this Agreement (the
"Disclosure Schedule").
5.4 NO VIOLATION. Except for the filing of the Assignment Application
and the granting of the Initial Order and Final Order, and except as indicated
on SCHEDULE 5.4 of the Disclosure Schedule:
(a) The execution, delivery and performance of this Agreement
and the Seller Documents and the consummation of the transactions contemplated
hereby and thereby, will not
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(i) conflict with or violate any provision of the Certificates of Incorporation
or By-Laws of Seller, (ii) with or without the giving of notice or the passage
of time, or both, result in a breach of, or violate, or be in conflict with, or
constitute a default under, or permit the termination of, or cause or permit
acceleration under, any agreement or instrument of any debt or obligation to
which Seller is a party or to or by which it or any of the Purchased Assets is
subject or bound, or result in the loss or adverse modification of any of the
Authorizations or the Intangibles, (iii) require the consent of any party to any
agreement or commitment to which Seller is a party, or to or by which it or any
of the Purchased Assets is subject or bound, (iv) result in the creation or
imposition of any Lien upon any of the Purchased Assets, or (v) violate any law,
rule or regulation or any order, judgment, decree or award of any court,
governmental authority or arbitrator to or by which Seller or any of the
Purchased Assets is subject or bound.
(b) No consent, approval or authorization of, or declaration,
filing or registration with any governmental or regulatory authority or any
other third party is required to be obtained or made by Seller in connection
with the execution, delivery and performance of this Agreement or the Seller
Documents or the consummation of the transactions contemplated hereby and
thereby.
5.5 FINANCIAL STATEMENTS. (a) The revenue statements for the Station
furnished to Buyer fairly present the revenue of the Station for the periods
covered thereby.
(b) Each Seller is not and is not expected to be insolvent and
is not expected to be unable to pay its debts as they fall due, nor has
liabilities (accrued or contingent, known or unknown) which in the aggregate
exceed the fair value of its assets.
5.6 TITLE TO AND CONDITION OF PURCHASED ASSETS. Except for the assets
and properties leased to Seller pursuant to the leases identified in SCHEDULE
5.9 of the Disclosure Schedule, Seller has good title to all of the assets which
it owns or purports to own. Except as set forth on SCHEDULE 5.6 of the
Disclosure Schedule, none of the Purchased Assets is subject to any Lien. Except
as set forth in SCHEDULE 5.6, of the Disclosure Schedule, the Purchased Assets
are in all material respects in good operating condition and repair and
reasonably suitable for the purposes used. Seller enjoys peaceful possession of
all real property leased by it for the Station.
5.7 LITIGATION. Except as set forth in SCHEDULE 5.7 of the Disclosure
Schedule, there is no action, suit, proceeding, arbitration or-investigation
pending, or to the knowledge of the Seller threatened, against or affecting
Seller in connection with the Station or the Business or relating to the Station
or the Business or the transactions contemplated by this Agreement, and there is
not outstanding any order, writ, injunction, award or decree of any court or
arbitrator or any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality to which the Station or the Seller
is subject or otherwise applicable to any of the business, assets, properties,
officers, directors or employees of Seller, nor is Seller in default with
respect to any such order, writ, injunction, award or decree.
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<PAGE> 13
5.8 COMPLIANCE; PROPERTIES AUTHORIZATIONS. (a) Except as set forth in
SCHEDULE 5.8(a) of the Disclosure Schedule, to the best knowledge of the Seller,
the Station complies, in all material respects, with all laws, rules,
regulations, ordinances, orders, judgments and decrees applicable to the
Station, the Station's operations or the Business, including, without
limitation, any laws, rules, regulations, ordinances, codes, orders, judgments
or decrees as to zoning, building requirements or standards, hiring, employment,
or environmental, health and/or safety matters. Except as set forth in Schedule
5.8(a) of the Disclosure Schedule, to the best knowledge of the Seller, neither
the conduct of the Business, nor the operation of the Station, in any material
respect conflicts with the rights of any other person or entity or violates, or
with or without the giving of notice or the passage of time, or both, will
violate, conflict with or result in a default, right to accelerate or loss of
rights under, any terms or provisions of its certificate of incorporation or
by-laws, or any material lease, license, agreement, commitment, law, ordinance,
rule or regulation, or any order, judgment or decree to which Seller or the
Station is a party or by which it may be bound or affected.
(b) To the knowledge of the Seller, Seller has all approvals,
certificates, authorizations, consents, licenses, franchises, orders and
permits, including, without limitation all Commission Authorizations, necessary
to the operation of the Business and/or the Station, all of which Commission
Authorizations are identified on SCHEDULE 5.8(b) of the Disclosure Schedule. All
such Commission Authorizations are validly existing authorizations for the
operation of the facilities described therein under the Communications Act of
1934, as amended. There is no action pending nor, to the best knowledge of
Seller, threatened before the Commission or other body to revoke, refuse to
renew, suspend or modify any of the Commission Authorizations or any Other
Authorization, or any action which may result in the denial of any pending
applications, the issuance of any cease and desist orders, or the imposition of
any administrative sanctions whatsoever with respect to the Station or its
operation, except for the Assignment Application before the Commission to
transfer the Commission Authorizations as contemplated by this Agreement. All
applications for the Commission Authorizations were true and correct in all
material respects when made and continue to be true and correct in all material
respects as they pertain to the Station.
5.9 SCHEDULES. SCHEDULE 5.9 of the Disclosure Schedule contains a true
and accurate list of the following, in each case if or to the extent relating to
or involving or arising out of the Station or the operations of the Station or
the Business:
(a) all real properties leased by Seller for the Station (the
"Real Properties"), together with each lease, sublease or license with respect
thereto (the "Real Property Leases");
(b) all material items of machinery, equipment, vehicles and
other tangible personal property owned, leased or used by Seller for the
Station, except for items having a value of less than $1,000 which do not, in
the aggregate, have a total value of more than $5,000, setting forth with
respect to all such listed property all leases relating thereto (the "Personal
Property Leases");
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<PAGE> 14
(c) all trademarks, trademark registrations, and applications
therefor, service marks, service mark registrations, and applications therefor,
service names, trade names, patents and patent applications, copyrights and
copyright registrations, and applications therefor, wholly or partially owned,
held or used by Seller for the Station or the Business; and all contracts,
agreements, commitments or licenses relating to the foregoing to which Seller is
a party or by which Seller is bound;
(d) all contracts, agreements, commitments, barter agreements,
air time sale orders, purchase orders, leases, licenses or other understandings
or arrangements to which Seller or the Station is a party relating to the
Station or the Business (as opposed to Seller generally) or by which the Station
or any of the Purchased Assets is bound or affected, but excluding (A) purchase
orders and air time sale orders for the Station made in the ordinary course of
business (on customary terms and conditions and consistent with past practice)
and (B) contracts entered into in the ordinary course of business which are
terminable by Seller on less than 30 days' notice without any penalty or
consideration or involving payments or receipts during the entire life of such
contracts of less than $5,000 in the case of any single contract but not more
than $25,000 in the aggregate;
(e) all collective bargaining agreements, all employment and
consulting agreements, and all executive compensation, bonus, deferred
compensation, severance, vacation, sick pay, personal pay, education, pension,
retirement, welfare, stock option or stock purchase, and group or individual
life, health, hospitalization, dental and accident insurance, and other employee
benefit plans, agreements, arrangements, commitments and/or practices, to which
Seller is a party or bound or which cover or relate to any of the employees of
the Station;
(f) the names and current annual salary rates of all persons
employed by Seller solely for the Station, and showing separately for each such
person the amounts paid or payable as salary and bonus payments and commission
compensation for the period that Seller has owned the Station.
True and complete copies of all contracts, agreements, plans,
arrangements, commitments and documents required to be listed pursuant to this
Section 5.9 (to the extent in writing or if not an writing, an accurate summary
thereof), together with any and all amendments thereto, have been delivered to
Buyer.
Except as set forth in SCHEDULE 5.9 of the Disclosure Schedule, all of
the contracts, agreements and commitments required to be listed pursuant to this
Section 5.9 (other than those which have been fully performed) are in full force
and effect, do not require the consent or approval of any party to the
assignment thereof. To the best of Seller's knowledge, there is not under any
contract, agreement or commitment required to be listed pursuant to this Section
5.9, any existing material default or event which, after notice or lapse of
time, or both, would constitute a material default or result in a right to
accelerate or loss of material rights.
5.10 ABSENCE OF CHANGES OR EVENTS. Except as set forth in SCHEDULE 5.10
of the Disclosure Schedule, since November 13, 1998 (the "Balance Sheet Date")
Seller has conducted the Business and the operations of the Station thereof only
in the ordinary course in a manner
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<PAGE> 15
consistent with past practices. Without limiting the foregoing, since such date,
Seller has not, with respect to the Station or the Business, except as set forth
on said SCHEDULE 5.10:
(i) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in the ordinary course of
business and consistent with its prior practice;
(ii) mortgaged, pledged or subjected to lien, security
interest or any other encumbrance any of its property or assets or, except for
Sale Assets, made any dividend, payment, distribution or transfer of any of its
property or assets to any shareholder of Seller or any affiliate of or person
related to any such shareholder;
(iii) failed to pay in a timely manner or permitted to accrue
or remain outstanding any trade accounts payable or accrued expenses of a type
or kind which Buyer would be required or expected to assume or incur from and
after the Closing;
(iv) accepted any cash prepayment for the sale of air time on
the Station or attempted to collect any account receivable or right to future
payment arising out of the Business or the operations of the Station prior to
the due date therefor or cancelled, settled, compromised or modified any account
receivable or right to future payment or used any extraordinary means of
collection with respect thereto), or canceled or compromised any debt or claim,
or waived or released any right of substantial value;
(v) in connection with or in a manner affecting the Station or
the operations thereof or the Business, made any material change in the rate of
compensation, commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay conditionally or otherwise,
any bonus, extra compensation, pension or severance or vacation pay, to any
shareholder, director, officer, employee, salesman, distributor or agent; and
(vi) entered into any agreement or made any commitment to take
any of the types of actions described in any of subsections (i) through (v)
above.
5.11 ENVIRONMENTAL MATTERS.
Except as set forth in Schedule 5.11 of the Disclosure
Schedule, Seller has not received (i) any notification or advice from or given
or been required to have given any report or notice to any governmental agency
or authority or any other person, firm or entity whatsoever involving the use,
management, handling, transport, treatment, generation, storage, spill, escape,
seepage, leakage, spillage, emission, release, discharge, remediation or
clean-up of any Hazardous Substance on or about any of the Real Properties (a
"Hazardous Discharge"), or (ii) any complaint, order, citation or notice with
regard to a Hazardous Substance or any other environmental, health or safety
matter affecting any of the Real Properties or the business or operations of the
Station (an "Environmental Complaint"), under the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or under any
other federal, state or local law, ordinance, rule or regulation. The term
"Hazardous Substance" as used in this Agreement shall include, without
limitation, gasoline, oil and other petroleum
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<PAGE> 16
products, explosives, radioactive materials and related and similar materials,
and any other substance or material defined as a hazardous, toxic or polluting
substance or material by any federal, state or local law, ordinance, rule or
regulation, including asbestos and asbestos-containing materials.
5.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 5.12 of the Disclosure Schedule, Seller has no material debts,
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
relating to or arising out of any act, transaction, circumstance or state of
facts which has heretofore occurred or existed, whether or not known, due or
payable, relating to, or arising out of the operations of, the Station or the
Business other than liabilities and obligations referred to in clause (i) of
Section 5.10 hereof and other than contract obligations under contracts
agreements and commitments disclosed pursuant to Section 5.9 hereof (or not
required to be disclosed pursuant to said Section 5.9), which in each case
conform to the representations and warranties with respect thereto in this
Agreement.
5.13 GOVERNMENT AUTHORIZATIONS.
5.13.1 SCHEDULE 5.8(b) hereto contains a true and complete
list of the FCC license and other material 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). Seller has delivered to Buyer true and complete
copies of the Station licenses and the other licenses, permits and
authorizations listed in SCHEDULE 5.8(b), including any and all
amendments and other modifications thereto.
5.13.2 Seller is the authorized legal holder of the FCC
licenses and the other material licenses, permits and authorizations
listed in SCHEDULE 5.8(b), which are in full force and effect, in good
standing and are unimpaired by any act of Seller or its shareholders,
directors, officers, employees, agents or Affiliates, and none of which
is subject to any restrictions or conditions which would limit in any
respect the operation of the Station as now operated, except for those
shown on the faces of the FCC licenses and except for those applicable
to the radio broadcasting industry generally.
5.13.3 Except as set forth in SCHEDULE 5.8(b), 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 Station. The operations of the Station
are in accordance with the FCC licenses and the underlying construction
permits and the other licenses, permits and authorizations listed in
SCHEDULE 5.8(b). No proceedings are pending or, to the best of Seller's
knowledge, threatened, and there has not been any act or omission of
Seller or any of its, directors, officers or employees, which may
result in the revocation, modification, non-renewal or suspension of
the FCC licenses or the other licenses, permits and authorizations
listed in SCHEDULE 5.8(b), 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 FCC licenses or the other
licenses, permits and
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<PAGE> 17
authorizations listed in SCHEDULE 5.8(b) or which may affect Buyer's
ability to continue to operate the Station as it is currently operated.
5.13.4 Except as set forth on SCHEDULE 5.8(b), the Station is
licensed by the FCC to operate and is operating with maximum facilities
as designated in its FCC licenses. To the best of Seller's knowledge,
the Station is not short-spaced, on a grand-fathered basis or
otherwise, to any existing station, outstanding construction permit or
pending application therefor, domestic or international, or to any
existing or proposed broadcast radio allotment, domestic or
international.
5.13.5 To the best of Seller's knowledge, the Station is not
causing interference cognizable to the FCC to the transmissions of any
other broadcast station, nor has the Station received any complaints
with respect thereto. To the best of Seller's knowledge, no other
broadcast station or communications facility is causing such
interference to transmissions of the Station or the public's reception
of such transmissions.
5.13.6 The FCC licenses have expiration dates as listed in
SCHEDULE 5.8(b). Seller has no reason to believe that the FCC licenses
and the other licenses, permits, or authorizations listed in SCHEDULE
5.8(b) would not be renewed in their ordinary course.
5.13.7 Except as set forth on SCHEDULE 5.8(b), all material
reports, forms, and statements required to be filed by Seller with the
FCC with respect to the Station since the earlier of the (i)
acquisition of the Station by Seller or (ii) grant of the last renewal
of the FCC licenses have been filed and are substantially complete and
accurate.
5.13.8 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 FCC licenses or cause the FCC licenses and the other
licenses, permits and authorizations listed in SCHEDULE 5.8(b) not to
be renewed in their ordinary course.
5.13.9 To the best of Seller's knowledge, the operation of the
Station and all of the Purchased Assets are in compliance in all
respects with ANSI Radiation Standards C95.1-1992.
5.14. REGULATORY COMPLIANCE. The operation of the Station and all of
the pertinent Purchased Assets are in compliance in all material respects with
all applicable federal, state and local rules, regulations, requirements and
policies, including, but not limited to, 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. The FCC annual
FCC regulatory fees due for the Station and the licenses associated therewith
have been paid.
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ARTICLE 6
---------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller that:
6.1 ORGANIZATION AND STANDING. Buyer is a corporation validly existing
and in good standing under the laws of the State of Florida. At the time of or
promptly after the Closing, Buyer will be qualified to do business as a foreign
corporation in the State of South Carolina.
6.2 AUTHORITY OF BUYER. (a) Buyer has all requisite [limited
partnership] [corporate] power and [limited partnership] [corporate] authority
to enter into this Agreement and each other agreement, document and instrument
to be executed or delivered by Buyer in connection with this Agreement (the
"Buyer Documents") and to carry out the transactions contemplated hereby and
thereby. This Agreement constitutes, and, when executed and delivered at the
Closing, each other Buyer Document will constitute, the legal, valid and binding
obligation of Buyer. All [limited partnership] [corporate] proceedings and
[limited partnership] [corporate] action required to be taken by Buyer relating
to the execution, delivery and performance of this Agreement and the Buyer
Documents and the consummation of the transactions contemplated hereby and
thereby shall have been duly taken by the Closing.
ARTICLE 7
---------
CERTAIN COVENANTS OF THE SELLER
-------------------------------
7.1 CONDUCT OF BUSINESS. During the period from the date of this
Agreement to and including the Closing Date, Seller shall cause the Station and
the Business and operations thereof to be conducted in the ordinary and usual
course of business and consistent with past practices. Without limiting the
foregoing, prior to the Closing, Seller will not, without the prior written
consent of Buyer, permit Seller or Station to:
(a) by any act or omission surrender, modify adversely,
forfeit, or fail to renew under regular terms, any of the Commission
Authorizations or any of the Other Authorizations with respect to the Station,
or give the FCC grounds to institute any proceeding for the revocation,
suspension or modification of any Commission Authorization or any Other
Authorization, or fail to prosecute with due diligence any pending application
with respect to any Commission Authorization or any other Authorization;
(b) dissolve, liquidate, merge or consolidate or sell,
transfer, lease or otherwise dispose of any assets or properties other than Sale
Assets and supplies consumed in the ordinary and customary course of business,
or obligate itself to do so;
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(c) amend, modify, change, alter, terminate, rescind or waive
any rights or benefits under any contract, agreement or commitment required to
be listed, or enter into any contract, agreement or commitment which, if in
existence as of the date of this Agreement, would have been required to be
listed, under Schedule 5.9 of the Disclosure Schedule;
(d) fail to maintain the Purchased Assets in substantially
their current condition (except as set forth in Schedule 5.6(b) of the
Disclosure Schedule), reasonable and ordinary wear and tear excepted; or cancel
or fail to renew any of the current insurance policies or any of the coverage
thereunder maintained for the protection of the Station or any Purchased Assets;
and
(e) perform, take any action or incur or permit to exist any
of the acts, transactions, events or occurrences of the type described in
clauses (i), (ii), (iii), (iv), (v) or (vi) of Section 5.10 hereof which would
have been inconsistent with the representations and warranties set forth in
Section 5.10 hereof had the same occurred after Seller acquired the Station and
prior to the date hereof.
7.2 OPERATIONS. During the period from the date of this Agreement to
the Closing Date, Seller shall have sole responsibility for the Station and its
operation, and during such period, Seller shall use its best efforts to:
(a) Operate the Station in accordance with the rules and
regulations of the Commission and the Commission Authorizations, not permit the
Station to change its format, and file all ownership reports, employment reports
and other documents required to be filed during such period and maintain and
promptly deliver to Buyer true and complete copies of Station's required
filings.
(b) Deliver to Buyer within five (5) days after filing thereof
with the Commission copies of any and all reports, applications, and/or
responses relating to the Station which are filed with the Commission on or
prior to the Closing Date, including a copy of any Commission inquiries to which
the filing is responsive.
7.3 CHANGES IN INFORMATION. During the period from the date of this
Agreement to the Closing Date, Seller shall give Buyer prompt written notice of
any material change in any of the information contained in the representations
and warranties made in or pursuant to this Agreement or of any event or
circumstance which, if it had occurred on or prior to the date hereof, would
cause any of such representations or warranties not to be true and correct.
7.4 RESTRICTIONS ON BUYER. Nothing contained in this Agreement shall
give Buyer any right to control the programming or operations of the Station
prior to the Closing Date and Seller shall have complete control of the
programming and operation of the Station between the date hereof and the Closing
Date and shall operate the Station in conformity with the public interest,
convenience and necessity and with all other requirements of law and this
Agreement.
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<PAGE> 20
7.5 ACCESS TO INFORMATION. During the period from the date of this
Agreement to the Closing Date, Buyer and Buyer's accountants, counsel and other
representatives, shall upon prior written or telephone notice, and by prior
appointment (with the reasonable cooperation of Seller), be given reasonable and
continuing access during normal business hours to all of the facilities,
properties, books and records of the Station, and they shall be furnished with
such documents and information with respect to the affairs of Seller and the
Station as may from time to time reasonably be requested, and in furtherance
thereof, Buyer may retain an engineering firm of its own choosing to conduct
engineering due diligence into the adequacy, operation and condition of the
Tangible Personal Property and their compliance with the standards of applicable
law.
7.6 PRESERVATION OF BUSINESS. During the period from the date of this
Agreement to the Closing Date, Seller shall use its reasonable efforts to
preserve intact the goodwill and staff of the Station, and the relationships of
the Station with advertisers, customers, suppliers, employees, contracting
parties, governmental authorities and others having business relations with it.
7.7 SALES AND OTHER TAXES. Seller shall pay all sales taxes, transfer
taxes and intangibles taxes and similar government charges applicable to the
transactions contemplated by this Agreement, including without limitation all
taxes and similar charges, if any, payable upon the transfer of title by Seller
to any Purchased Assets. Buyer shall pay all filing fees and recording and
registration fees applicable to the recording and/or registration of the
transfer to Buyer of title to any Purchased Assets. Buyer and Seller will
cooperate to prepare and file with the proper public officials, as and to the
extent necessary, all appropriate sales tax exemption certificates or similar
instruments as may be necessary to avoid the imposition of sales, transfer and
similar taxes on the transfer of Purchased Assets pursuant hereto. The
provisions of this Section 7.7 shall not apply to filing and grant fees
associated with the Assignment Application. The payment of such fees shall be
governed by Section 3.2 hereof.
7.8 BULK TRANSFER LAWS. The parties do not believe that any bulk
transfer or fraudulent conveyance statute applies to the transactions
contemplated by this Agreement. Buyer therefore waives compliance by Seller with
the requirements of any such statutes, and Seller agrees to indemnify and hold
harmless Buyer against any claim made against Buyer by any creditor of or
claimant against Seller as a result of a failure to comply with any such
statute.
ARTICLE 8
---------
SPECIFIC PERFORMANCE AND LIQUIDATED DAMAGES
-------------------------------------------
8.1 SPECIFIC PERFORMANCE. The Seller agrees that the Purchased Assets
include unique property that cannot be readily obtained on the open market and
that Buyer will be irreparably injured if this Agreement is not specifically
enforced. Therefore, Buyer shall have the right specifically to enforce the
performance of the Seller under this Agreement without the necessity of posting
any bond or other security, and the Seller hereby waive the defense in any such
suit that Buyer have an adequate remedy at law and agree not to interpose any
opposition, legal or otherwise, as to the propriety of specific performance as a
remedy. The remedy of specifically
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<PAGE> 21
enforcing any or all of the provisions of this Agreement in accordance with this
Section 8.1 shall not be exclusive of any other rights which Buyer may have to
terminate this Agreement under any other provisions hereof, or of any other
rights or remedies which it may otherwise have under this Agreement or
otherwise, all of which rights and remedies shall be cumulative.
8.2 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 within
the Seller's control 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. 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.
ARTICLE 9
---------
INDEMNIFICATION
---------------
9.1 OBLIGATION TO INDEMNIFY.
(a) If the Closing shall occur, Buyer shall assume and agrees
to save, indemnify and hold harmless Seller from and against, and shall on
demand reimburse Seller for:
(i) any failure by Buyer to comply with the
Liabilities Undertaking;
(ii) any and all actual loss, liability, damage or
deficiency suffered or incurred by Seller by reason of any material
misrepresentation or material breach of warranty by Buyer or nonfulfillment of
any covenant or agreement to be performed or complied with by Buyer under this
Agreement or in any agreement, certificate, document or instrument (other than
any Assigned Lease) executed by Buyer and delivered to Seller pursuant to or in
connection with this Agreement; and
(iii) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses, including
reasonable attorneys' fees, incident to any of the foregoing, or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing any of the obligations under this Section 9.1(a).
(b) The Seller hereby assumes and agrees to save, indemnify
and hold harmless Buyer from, against and in respect of, and shall on demand
reimburse Buyer for:
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<PAGE> 22
(i) any and all actual loss, liability, damage or
deficiency suffered or incurred by Buyer by reason of any material
misrepresentation, material breach of warranty or nonfulfillment of any covenant
or agreement to be performed or complied with by Seller under this Agreement or
any agreement, certificate, document or instrument (other than any Assigned
Lease) executed by Seller and delivered to Buyer pursuant to or in connection
with this Agreement;
(ii) any and all actual loss, liability or damage
suffered or incurred by Buyer in respect of or in connection with any and all
debts, liabilities and obligations of, and any and all violation of laws, rules,
regulations, codes or orders by, Seller, direct or indirect, fixed, contingent,
legal, statutory, contractual or otherwise, which exist at or as of the Closing
Date or which arise after the Closing Date but which are based upon or arise
from any act, transaction, circumstance, sale or providing of time, goods or
services, state of facts or other condition which occurred or existed, or the
content of any program, advertisement or transmission broadcasted or aired, on
or before the Closing Date, whether or not then known, due or payable, except to
the extent specifically assumed by Buyer pursuant to the Liabilities
Undertaking;
(iii) any and all actual loss, liability, damage,
cost or expense suffered or incurred by Buyer based on or arising from (A) the
presence of any Hazardous Substance on any of the Real Properties or any
Hazardous Discharge thereon or on or prior to the Closing Date, and/or any
Environmental Complaint, and/or the failure to obtain any license or permit
required in connection with any Hazardous Substance or Hazardous Discharge or
the retention, disposal, treatment or use thereof, and/or arising out of any
noncompliance with any environmental, health or safety law, ordinance, rule or
regulation (each, an "Environmental Requirement"), in each case, based on or
arising from any act, transaction, state of facts or other condition involving
the Business or any of the Real Properties, which occurred or existed on or
before the Closing Date, whether or not then known, (B) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to any Hazardous Discharge, the presence, use, disposal or treatment
of a Hazardous Substance, or noncompliance with any Environmental Requirement,
on or prior to the Closing Date, involving the Business or any of the Real
Properties, and/or (C) any Environmental Complaint and/or any demand of any
government agency or authority prior to, on or after the Closing Date which is
based upon or in any way related to any Hazardous Discharge, the presence, use,
disposal or treatment of a Hazardous Substance, and/or noncompliance with any
Environmental Requirement on or prior to the Closing Date, involving the
Business or any of the Real Properties, and including, without limitation and in
each such case under this clause (iii), the reasonable costs and expenses of all
remedial action and clean-up, attorney and consultant fees, investigation,
sampling and laboratory fees, court costs and litigation expense and costs
arising out of emergency or temporary assistance or action undertaken by or as
required by any regulatory body in connection with any of the foregoing;
(iv) any and all income, franchise and similar taxes
and similar governmental charges or assessments which are due or payable by
Seller, or arising out of the operation of Seller's business or the Station on
or prior to the Closing Date, and all interest and penalties thereon;
-22-
<PAGE> 23
(v) any and all actual loss, liability, damage, cost
or expense suffered or incurred by Buyer by reason of noncompliance with the
provisions of any bulk transfer law of any jurisdiction in connection with any
of the transactions contemplated by this Agreement, except to the extent of
liabilities specifically assumed by Buyer pursuant to the Liabilities
Undertaking; and
(vi) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable attorneys' fees, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing any of the obligations under this Section
9.1(b).
9.2 SURVIVAL AND OTHER MATTERS. Each representation, warranty,
indemnity, covenant and agreement of each of the parties hereto shall survive
the Closing; provided, however, that no party shall be entitled to assert claims
against any other for misrepresentations or breach of warranty under or pursuant
to this Agreement unless the party asserting such claim shall notify the other
in writing of such claim within two (2) years after the Closing Date; and
provided, further, however that the foregoing limitations on the survival of
representations and warranties shall not apply to any of the representations and
warranties in or pursuant to Section 5.3, 5.6 or 5.1, hereof. Notwithstanding
the foregoing, in no event shall the Seller on the one hand or Buyer on the
other hand, have any liabilities under or pursuant to this Agreement for any
misrepresentations or breaches of warranties hereunder except to the extent such
liabilities shall exceed in the aggregate $25,000.
ARTICLE 10
----------
MISCELLANEOUS
-------------
10.1 BINDING AGREEMENT; ASSIGNMENT. All the terms and provisions of
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Agreement and all rights of Buyer
shall be fully assignable by Buyer. No assignment shall relieve the assigning
party of its obligations hereunder.
10.2 LAW TO GOVERN. This Agreement and the Liabilities Undertaking
shall be construed and enforced in accordance with the internal laws of the
State of South Carolina, without regard to principles of conflict of laws.
10.3 NOTICES. All notices shall be in writing and shall be deemed to
have been duly given if delivered personally or when deposited in the mail if
mailed via registered or certified mail, return receipt requested, postage
prepaid, to the other party hereto at the following addresses:
-23-
<PAGE> 24
If to the Seller, to:
Mr. Terry S. Jacobs
Regent Broadcasting of South Carolina, Inc.
50 RiverCenter Boulevard
Suite 180
Covington, KY 41011
with a copy to:
Strauss & Troy, LPA
Attn: Alan C. Rosser, Esq.
2100 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
If to Buyer, to:
Mr. Mark Jorgenson
Concord Media Group, Inc.
11521 Innfields Drive
Odessa, FL 33556
with a copy to:
Lee W Shubert, Esq.
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive, Suite 900
Arlington, VA 22203-1633
or to such other addresses as any such party may designate in writing in
accordance with this Section 10.3.
10.4 FEES AND EXPENSES. Except as expressly set forth in this
Agreement, each of the parties shall pay its own fees and expenses with respect
to the transactions contemplated hereby.
10.5 ENTIRE AGREEMENT. This Agreement, when read with the Escrow
Deposit Agreement, sets forth the entire understanding of the parties hereto in
respect of the subject matter hereof and may not be modified, amended or
terminated except by a written agreement specifically referring to this
Agreement signed by all of the parties hereto. This Agreement supersedes all
prior agreements and understandings among the parties with respect to such
subject matter.
-24-
<PAGE> 25
10.6 WAIVERS. Any failure by any party to this Agreement to comply with
any of its obligations hereunder may be waived by Seller in the case of a
default by Buyer and by Buyer in case of a default by Seller. No waiver shall be
effective unless in writing and signed by the party granting such waiver, and no
such waiver shall be deemed a waiver of any subsequent breach or default of the
same or similar nature.
10.7 NO THIRD-PARTY BENEFICIARIES. Nothing herein, express or implied,
is intended or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the parties hereto and their permitted
assigns, any rights, remedies or other benefits under or by reason of this
Agreement or any documents executed in connection with this Agreement.
10.8 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person or entity or any circumstance, is invalid or
unenforceable in any jurisdiction, (i) a suitable and equitable provision shall
be substituted therefor in order to carry out, so far as may be valid and
enforceable, the extent and purpose of such invalid or unenforceable provision,
and (ii) the remainder of this Agreement and the application of such provision
to other persons, entities or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.9 PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued prior to
Closing without advance approval of the form and substance thereof by Buyer.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement.
10.11 HEADINGS. The Section and paragraph headings contained herein are
for the purposes of convenience only and are not intended to define or limit the
contents of said Sections and paragraphs.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
SELLER:
REGENT BROADCASTING OF SOUTH
CAROLINA, INC.
By: /s/ Terry S. Jacobs
----------------------------------
Name: Terry S. Jacobs
Title: Chairman and CEO
-25-
<PAGE> 26
REGENT LICENSEE OF SOUTH
CAROLINA, INC.
By: /s/ Terry S. Jacobs
----------------------------------
Name: Terry S. Jacobs
Title: Chairman and CEO
BUYER:
CONCORD MEDIA GROUP, INC.
By: /s/ Mark W. Jorgenson
----------------------------------
Name: Mark W. Jorgenson
Title: President
-26-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGENT
COMMUNICATION INC.'S FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000913015
<NAME> REGENT COMMUNICATIONS
<CURRENCY>US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 2,484,966
<SECURITIES> 0
<RECEIVABLES> 3,304,846
<ALLOWANCES> 263,000
<INVENTORY> 0
<CURRENT-ASSETS> 11,777,810
<PP&E> 15,920,266
<DEPRECIATION> 6,466,142
<TOTAL-ASSETS> 67,732,528
<CURRENT-LIABILITIES> 9,601,590
<BONDS> 34,601,250
32,546,664
3,824,030
<COMMON> 2,400
<OTHER-SE> (15,486,986)
<TOTAL-LIABILITY-AND-EQUITY> 67,732,528
<SALES> 4,825,924
<TOTAL-REVENUES> 4,519,990
<CGS> 0
<TOTAL-COSTS> 5,175,195
<OTHER-EXPENSES> (83,136)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 862,466
<INCOME-PRETAX> (1,434,535)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,434,535)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,434,535)
<EPS-PRIMARY> (10.14)
<EPS-DILUTED> (10.14)
</TABLE>
