-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MvXJuWzXZ1aujxBigAjkfCCsJ8hwMAulxcpEy+QH6zErPbOlUzDGZmlggeFK75ET kVx8FjgrmlFaxTnW+AgTyA== 0000950152-00-002527.txt : 20000331 0000950152-00-002527.hdr.sgml : 20000331 ACCESSION NUMBER: 0000950152-00-002527 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGENT COMMUNICATIONS INC CENTRAL INDEX KEY: 0000913015 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 311492857 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 333-46435 FILM NUMBER: 586778 BUSINESS ADDRESS: STREET 1: 50 EAST RIVERCENTER BOULEVARD STREET 2: SUITE 180 CITY: COVINGTON STATE: KY ZIP: 41011 BUSINESS PHONE: 6062920030 MAIL ADDRESS: STREET 1: 50 EAST RIVERCENTER BLVD STREET 2: SUITE 180 CITY: COVINGTON STATE: KY ZIP: 41011 10-K 1 REGENT COMMUNICATIONS, INC. FORM 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 [ ] 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) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value Series C Convertible Preferred Stock, $.01 par value (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of March 10, 2000, the aggregate market value of registrant's common equity held by non-affiliates of registrant was approximately $249,158,000 based upon the closing sale price of $10.875 on the Nasdaq Stock Market's National Market for that date. The number of common shares of registrant outstanding as of March 10, 2000 was 34,515,839. DOCUMENTS INCORPORATED BY REFERENCE Portions of Registrant's definitive Proxy Statement to be filed during April 1999 in connection with the 2000 Annual Meeting of Stockholders presently scheduled to be held on May 18, 2000 are incorporated by reference into Part III of this Form 10-K. 2 REGENT COMMUNICATIONS, INC. INDEX TO ANNUAL REPORT ON FORM 10-K Page ---- Part I Item 1 Business................................................... 3 Item 2 Properties................................................. 22 Item 3 Legal Proceedings.......................................... 23 Item 4 Submission of Matters to a Vote of Security Holders........ 23 Part II Item 5 Market for Registrant's Common Equity and Related Stockholder Matters...................................... 23 Item 6 Selected Financial Data.................................... 24 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 25 Item 7A Quantitative and Qualitative Disclosures about Market Risk........................................ 31 Item 8 Financial Statements and Supplementary Data ............... 31 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .................. 67 Part III Item 10 Directors and Executive Officers of the Registrant......... 67 Item 11 Executive Compensation..................................... 67 Item 12 Security Ownership of Certain Beneficial Owners and Management........................................... 67 Item 13 Certain Relationships and Related Transactions ............ 68 Part IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................................. 68 -2- 3 PART I ITEM 1. BUSINESS General Development of Business We are a radio broadcasting company focused on acquiring, developing and operating radio stations in mid-sized and small markets. We currently own and operate 29 FM and 15 AM radio stations in 12 markets in Arizona, California, Michigan, Minnesota, New York, Ohio, Pennsylvania and Texas. We have entered into written agreements to acquire a total of ten additional stations in two new markets (Albany, New York and Grand Rapids, Michigan) and one existing market (Chico, California) and to sell our stations in four of our existing markets (Mansfield, Ohio; Palmdale, California; Victorville, California; and Flagstaff, Arizona). Upon completion of these pending acquisitions and sales, we will own and operate 28 FM and 12 AM radio stations in ten markets. Our assembled clusters of radio stations rank first or second in terms of revenue share in all of our markets. Our primary strategy is to secure and maintain a leadership position in the markets we serve and to expand into additional mid-sized and small markets where we can achieve a leadership position. After we enter a market, we seek to acquire stations that, when integrated with our existing operations, will allow us to reach a wider range of demographic groups that appeal to advertisers, increase revenue and achieve substantial cost savings. Additionally, we believe that our advertising pricing on the basis of cost per thousand impressions, combined with the added reach of our radio station clusters, allows us to compete successfully for advertising revenue against non-traditional competitors such as print media, television and outdoor advertising. Relative to the largest radio markets in the United States, we believe that the mid-sized and small markets represent attractive operating environments because they are generally characterized by: - a greater use of radio advertising compared to the national average; - substantial growth in advertising revenues as national and regional retailers expand into mid-sized and small markets; - a weaker competitive environment characterized by small independent operators, many of whom lack the capital to produce locally-originated programming or to employ more sophisticated research, marketing, management and sales techniques; - less direct format competition due to a smaller number of stations in any given market; and - lower overall susceptibility to fluctuations in general economic conditions due to a lower percentage of national versus local advertising revenues. We believe that these operating characteristics, coupled with the opportunity to establish or expand radio station clusters within a specific market, create the potential for revenue growth and cost efficiencies. Our portfolio of radio stations is diversified in terms of geographic location, target demographics and format. We believe that this diversity helps insulate us from downturns in specific markets and changes in format preferences. -3- 4 Recently Completed Acquisitions and Dispositions We completed the following acquisitions and dispositions of radio stations during 1999 and the first quarter of 2000. The purchase prices set forth below were paid in cash, except where otherwise indicated, and include, where applicable, amounts paid under consulting and noncompetition agreements but do not include transaction-related costs. Acquisitions ------------
No. of Purchase Price Date Seller Market Stations Call Letters (in millions) Completed ------ ------ -------- ------------ ------------- --------- WJON Broadcasting Company St. Cloud, MN 3 KMXK(FM) $12.7 5/6/99 WJON(AM) WWJO(FM) Media One Erie, PA 3 WXKC(FM) $13.5 9/1/99 Group-Erie, Ltd. WRIE(AM) WXTA(FM) Forever of NY, Inc. and Utica-Rome, NY 5 WODZ(FM) $44.7(1) 1/28/00 related entities WLZW(FM) WFRG(FM) WIBX(AM) WRUN(AM) Watertown, NY 4 WCIZ(FM) WFRY(FM) WTNY(AM) WUZZ(AM) New Wave Broadcasting, El Paso, TX 3 KLAQ(FM) $23.5 1/31/00 L.P. KSII(FM) KROD(AM)
- -------------- (1) The purchase price paid consisted of approximately $43.8 million in cash and 100,000 shares of our common stock. -4- 5 Dispositions ------------
No. of Sale Price Date Purchaser Market Stations Call Letters (in millions) Completed --------- ------ -------- ------------ ------------- --------- Concord Media Group, Inc. Charleston, SC 1 WSSP(FM) $1.6 3/15/99 Concord Media Group of San Diego, CA 1 KCBQ(AM) $6.0 8/1/99 California, Inc. Mag Mile Media, L.L.C. Kingman, AZ 4 KFLG(AM) $5.4 10/15/99 KFLG(FM) KZZZ(FM) KAAA(AM) Commonwealth Lake Tahoe, CA 2 KRLT(FM) $1.2 11/1/99 Communications, LLC KOWL(AM)
------------- Pending Transactions We currently have transactions pending which, if completed, will result in the purchase by us of ten additional radio stations and the sale by us of 14 radio stations. Closing of each of these transactions is subject to certain conditions, including required governmental approvals. Albany and Grand Rapids Acquisition; Sale of Mansfield, Palmdale and Victorville Stations. On March 12, 2000, we entered into an Asset Exchange Agreement with Clear Channel Broadcasting, Inc., Capstar Radio Operating Company and their related entities to acquire substantially all of the assets of four FM and two AM radio stations in Albany, New York and three FM radio stations in Grand Rapids, Michigan in exchange for substantially all of the assets of our seven FM and four AM radio stations in the Mansfield, Ohio; Palmdale, California; and Victorville, California markets; and the payment by us of $67.0 million in cash. We have made a cash escrow deposit in the amount of $5.0 million and have agreed to pay liquidated damages in the amount of $28.0 million if we fail to perform our obligations under the asset exchange agreement in certain circumstances. The sale to us of the Albany and Grand Rapids stations is part of a sell-off of stations which regulatory agencies are requiring in order to allow for the completion of the pending merger of Clear Channel Communications, Inc. and AMFM, Inc. That merger requires the prior approvals of the shareholders of Clear Channel and AMFM, as well as approvals from various regulatory authorities, including the Federal Communications Commission, the Federal Trade Commission, the U.S. Department of Justice, and state antitrust enforcement agencies. These regulatory authorities are requiring divestiture of the Albany and Grand Rapids stations and many other stations to comply with multiple ownership and market concentration policies and other public interest considerations. These approvals and the consummation of the Clear Channel and AMFM merger are conditions precedent which must be met before the exchange of the Albany and Grand Rapids stations for our Mansfield, Palmdale and Victorville stations can take place. It is anticipated that these transactions could be completed during the third quarter of 2000; but there can be no assurance the shareholder and regulatory approvals will be obtained or, if obtained, when that will occur. -5- 6 Chico Acquisition. On March 29, 2000, we entered into an agreement of merger with KZAP, Inc. by which we will acquire control of radio station KZAP(FM) located in Chico, California in consideration for 233,333 shares of our common stock. We anticipate closing this acquisition during the second quarter of 2000 following receipt of FCC approval. We are currently providing programming and selling air time for KZAP(FM) under a time brokerage agreement pending consummation of the acquisition. Sale of Flagstaff Stations. On March 29, 2000, we entered into an asset purchase agreement with Yavapai Broadcasting Corporation to sell substantially all of the assets of our two FM and one AM radio stations in Flagstaff, Arizona for a cash purchase price of $2.0 million. We anticipate closing this acquisition during the second quarter of 2000 following receipt of FCC approval. Earlier in March 2000, we terminated a March 1999 agreement by which we had agreed to sell our Flagstaff assets to another party for a cash purchase price of approximately $2.4 million. Action on the FCC application for approval of that sale had been delayed since May 1999 due to the filing of an objection by the owner of a competing station in the Flagstaff market based on the alleged ownership concentration that the proposed buyer would have had following the sale. Acquisition Strategy Our acquisition strategy is to expand within our existing markets and into new mid-sized and small markets where we believe we can effectively use our operating strategies. In considering new markets, we focus on those markets that have a minimum of $8.0 million in gross radio advertising revenue where we believe we can build a station cluster that will generate at least $1.0 million in annual broadcast cash flow. Although significant competition exists among potential purchasers for suitable radio station acquisitions throughout the United States, we believe that there is currently less competition, particularly from the larger radio operators, in the mid-sized and small markets. This has afforded us relatively more attractive acquisition opportunities in these markets. After entering a market, we seek to acquire additional stations that will allow us to reach a wider range of demographic groups to appeal to advertisers and increase revenue. We also integrate these stations into our existing operations in an effort to achieve substantial cost savings. We have sold or will sell stations in different markets that did not or do not fit within our existing acquisition strategy. We believe that the creation of strong station clusters in our local markets is essential to our operating success. In evaluating an acquisition opportunity in a new market, we assess our potential to build a leading radio station cluster in that market over time. We will not consider entering a new market unless we can acquire multiple stations in that market. We also analyze a number of additional factors we believe are important to success, including the number and quality of commercial radio signals broadcasting in the market, the nature of the competition in the market, our ability to improve the operating performance of the radio station or stations under consideration and the general economic conditions of the market. -6- 7 We believe that our acquisition strategy, if properly implemented, could have a number of benefits, including: - greater revenue and broadcast cash flow diversity; - improved broadcast cash flow margins through the consolidation of facilities and the elimination of redundant expenses; - enhanced revenue by offering advertisers a broader range of advertising packages; - improved negotiating leverage with various key vendors; - enhanced appeal to top industry management talent; and - increased overall scale, which should facilitate our capital raising activities. We have developed a process for integrating newly acquired properties into our overall culture and operating philosophy, which involves the following key elements: - assess format quality and effectiveness so that we can refine station formats in order to increase audience and revenue share; - upgrade transmission, audio processing and studio facilities; - expand and strengthen sales staff through active recruiting and in-depth training; - convert acquired stations to our communications network and centralized networked accounting system; and - establish revenue and expense budgets consistent with the programming and sales strategy and corresponding cost adjustments. From time to time, in compliance with applicable law, we enter into a time brokerage agreement (under which separately owned and licensed stations agree to function cooperatively in terms of programming, advertising, sales and other matters), or a similar arrangement, with a target property prior to FCC final approval and the consummation of the acquisition, in order to gain a head start on the integration process. Operating Strategy Our operating strategy focuses on maximizing our radio stations' appeal to listeners and advertisers and, consequently, increasing our revenue and cash flow. To achieve these goals, we have implemented the following strategies: Ownership of Strong Radio Station Clusters. We seek to secure and maintain a leadership position in the markets we serve by owning multiple stations in those markets. By coordinating programming, promotional and sales strategies within each local station cluster, we attempt to capture a wider range of demographic listeners to appeal to advertisers. We believe that the diversification of our programming formats and inventory of available advertising time strengthen relationships with advertisers, increasing our ability to maximize the value of our inventory. We believe that operating multiple stations in a market enhances our ability to market the advantages of advertising on radio versus other media, such as newspapers and television. -7- 8 We believe that our ability to utilize the existing programming and sales resources of our radio station clusters enhances the growth potential of both new and underperforming stations while reducing the risks associated with the implementation of station performance improvements such as new format launches. We believe that operating leading station clusters allows us to attract and retain talented local personnel, who are essential to our operating success. Furthermore, we seek to achieve cost savings within a market through the consolidation of facilities, sales and administrative personnel, management and operating resources, such as on-air talent, programming and music research, and the reduction of other redundant expenses. Aggressive Sales and Marketing. We seek to maximize our share of local advertising revenue in each of our markets through aggressive sales and marketing initiatives. We provide extensive training through in-house sales and time management programs and independent consultants who hold frequent seminars and are available for consultation with our sales personnel. We emphasize regular, informal exchanges of ideas among our management and sales personnel across our various markets. We seek to maximize our revenue by utilizing sophisticated inventory management techniques to provide our sales personnel with frequent price adjustments based on regional and local market conditions. We further strengthen our relationship with some advertisers by offering the ability to create customer traffic through an on-site event staged at, and broadcast from, the advertiser's business location. We believe that, prior to their acquisition, many of our newly acquired stations had underperformed in sales, due primarily to undersized sales staffs. Accordingly, we have significantly expanded the sales forces of many of our acquired stations. Targeted Programming and Promotion. To maintain or improve our position in each market, we combine extensive market research with an assessment of our competitors' vulnerabilities in order to identify significant and sustainable target audiences. We then tailor the programming, marketing and promotion of each radio station to maximize its appeal to the targeted audience. We attempt to build strong markets by: - creating distinct, highly visible profiles for our on-air personalities, particularly those broadcasting during morning drive time, which traditionally airs between 6:00 a.m. and 10:00 a.m.; - formulating recognizable brand names for select stations; and - actively participating in community events and charities. Decentralized Operations. We believe that radio is primarily a local business and that much of our success will be the result of the efforts of regional and local management and staff. Accordingly, we decentralize much of our operations at these levels. Each of our station clusters is managed by a team of experienced broadcasters who understand the musical tastes, demographics and competitive opportunities of their particular market. Local managers are responsible for preparing annual operating budgets and a portion of their compensation is linked to meeting or surpassing their operating targets. Corporate management approves each station cluster's annual operating budget and imposes strict financial reporting requirements to track station performance. Corporate management is responsible for long range planning, establishing corporate policies and serving as a resource to local management. Station Portfolio When our pending acquisition and sale transactions are completed, we will own 28 FM and 12 AM radio stations in ten mid-sized and small markets. The following table sets forth information about the stations that we own and expect to own after giving effect to our pending transactions. -8- 9 As you review the information in the following table, you should note the following: - The abbreviation "MSA" in the table means the market's rank among the largest metropolitan statistical areas in the United States. - The symbol "*" indicates a station that is the subject of one of our pending acquisitions. The symbol # indicates a station that we have agreed to sell. The completion of each of the pending acquisition and sale transactions is subject to certain conditions, including governmental approvals and in some cases shareholder approvals. There can be no assurance that these conditions will be satisfied in any particular case. - In the Primary Demographic Target column, the letter "A" designates adults, the letter "W" designates women and the letter "M" designates men. The numbers following each letter designate the range of ages included within the demographic group. - Station Cluster Rank by Market Revenue Share in the table is the ranking, by radio cluster market revenue, of each of our radio clusters in its market among all other radio clusters in that market. - We obtained all metropolitan statistical area rank information, market revenue information and station cluster market rank information for all of our markets (except the Flagstaff, Arizona; Palmdale, California; Victorville, California; and Mansfield, Ohio markets) from Investing in Radio 1999 Market Report (4th ed.) published by BIA Publications, Inc. - We obtained all market revenue and station cluster market revenue rank information for the Palmdale market from the February 2000 Miller, Kaplan Market Revenue Report, a publication of Miller, Kaplan, Arase & Co., Certified Public Accountants. - Market data are not available for the Flagstaff, Victorville and Mansfield markets. - We obtained all audience share information from the Fall 1999 Radio Market Report published by The Arbitron Company. We derived station cluster audience share based on persons ages 12 and over, listening Monday through Sunday, 6:00 a.m. to 12:00 midnight.
Station Station Primary Station Cluster Cluster Radio Market/ Programming Demographic Rank by Market 12+ Audience Station Call Letters MSA Rank Format Target Revenue Share Share -------------------- -------- ------------------ ------------- --------------- ------------ Albany, NY...................59 2 19.9 WQBJ(FM)* Rock M 18-49 WQBK(FM)* Rock M 18-49 WABT(FM)* Oldies A 35+ WGNA(FM)* Country A 25-54 WGNA(AM)* Country A 25-54 WTMM(AM)* Sports M 35+
-9- 10
Station Station Primary Station Cluster Cluster Radio Market/ Programming Demographic Rank by Market 12+ Audience Station Call Letters MSA Rank Format Target Revenue Share Share -------------------- -------- ------------------ ------------- --------------- ------------ Chico, CA.................. 192 1 13.6 KFMF(FM) Rock M 18-49 KALF(FM) Country A 25-54 KQPT(FM) Alternative A 18-34 KZAP(FM)* Adult Contemporary A 25-54 El Paso, TX................ 70 2 20.9 KSII(FM) Hot Adult Contemporary W 25-54 KLAQ(FM) Rock M 18-49 KROD(AM) News/Talk A 35+ Erie, PA................... 155 1 26.4 WXKC(FM) Adult Contemporary W 25-54 WXTA(FM) Country A 25-54 WRIE(AM) Nostalgia A 35+ Flagstaff, AZ.............. N/A N/A N/A KZGL(FM)# Rock M 18-34 KVNA(FM)# Adult Contemporary A 25-54 KVNA(AM)# News/Talk A 35+ Flint, MI.................. 116 2 16.3 WCRZ(FM) Adult Contemporary W 25-54 WWBN(FM) Rock M 18-49 WFNT(AM) Nostalgia A 35+ Grand Rapids, MI........... 66 2 14.4 WLHT(FM)* Adult Contemporary W 25-54 WGRD(FM)* Rock M 18-49 WTRV(FM)* Soft Adult Contemporary W 35+ Mansfield, OH.............. N/A N/A N/A WYHT(FM)# Adult Contemporary W 25-54 WSWR(FM)# Oldies A 35-54 WMAN(AM)# News/Talk/Sports A 35+ Palmdale, CA............... N/A 1 N/A KTIP(FM)# Country A 25-54 KOSS(FM)# Adult Contemporary W 25-54 KAVC(AM)# Religion A 35+
-10- 11
Station Station Primary Station Cluster Cluster Radio Market/ Programming Demographic Rank by Market 12+ Audience Station Call Letters MSA Rank Format Target Revenue Share Share -------------------- -------- ------------------ ------------- --------------- ------------ Redding, CA.................. 218 1 40.6 KSHA(FM) Soft Adult Contemporary W 25-54 KNNN(FM) Current Hit Radio A 18-34 KRDG(FM) Oldies A 35-54 KRRX(FM) Rock M 18-49 KNRO(AM) Classic Country M 35+ KQMS(AM) News/Talk/Sports A 35+ St. Cloud, MN................ 216 1 29.2 KMXK(FM) Adult Contemporary W 25-54 WWJO(FM) Country A 25-54 KKSR(FM)* Lite Rock W 25-54 KLZZ(FM)* Classic Rock M 25-54 KXSS(AM)* Nostalgia A 35+ WJON(AM) News/Talk A 35+ Utica-Rome, NY............... 150 1 39.2 WODZ(FM) Oldies A 35-54 WLZW(FM) Adult Contemporary W 25-54 WFRG(FM) Country A 25-54 WRUN(AM) Sports A 35+ WIBX(AM) News/Talk M 35+ Victorville, CA.............. N/A N/A N/A KZXY(FM)# Adult Contemporary A 18-49 KATJ(FM)# Country A 25-54 KIXA(FM)# Rock M 18-49 KROY(AM)# News/Talk A 35+ KIXW(AM)# Nostalgia A 35+ Watertown, NY................ 252 1 43.2 WCIZ(FM) Classic Hits A 25-54 WFRY(FM) Country A 25-54 WTNY(AM) Talk A 35+ WUZZ(AM) R&B Oldies A 35+
Advertising Sales Virtually all of our revenue is generated from the sale of local, regional and national advertising for broadcast on our radio stations. In 1999, approximately 84.9% of our net broadcast revenue was generated from the sale of local and regional advertising. Additional broadcast revenue is generated from the sale of national advertising, network compensation payments and other miscellaneous transactions. The major categories of our advertisers include telephone companies, restaurants, fast food chains, automotive companies and grocery stores. -11- 12 Each station's local sales staff solicits advertising either directly from the local advertiser or indirectly through an advertising agency. We pay a higher commission rate to our sales staff for direct advertising sales. Through direct advertiser relationships, we can better understand the advertiser's business needs and more effectively design advertising campaigns to sell the advertiser's products. We employ personnel in each of our markets to produce commercials for the advertiser. In-house production combined with effectively designed advertising establishes a stronger relationship between the advertiser and the station cluster. National sales are made by a firm specializing in radio advertising sales on the national level in exchange for a commission based on gross revenue. Regional sales, which we define as sales in regions surrounding our markets to companies that advertise in our markets, are generally made by our local sales staff. Depending on the programming format of a particular station, we estimate the optimum number of advertising spots available. The number of advertisements that can be broadcast without jeopardizing listening levels is limited in part by the format of a particular station. Our stations strive to maximize revenue by managing advertising inventory. Our stations adjust pricing based on local market conditions and the ability to provide advertisers with an effective means of reaching a targeted demographic group. Each of our stations has a general target level of on-air inventory. This target level of inventory may be different at different times of the day but tends to remain stable over time. Much of our selling activity is based on demand for our radio stations' on-air inventory and, in general, we respond to this demand by varying prices rather than our target inventory level for a particular station. Therefore, most changes in revenue can be explained by demand-driven pricing changes. A station's listenership is reflected in ratings surveys that estimate the number of listeners tuned to the station and the time they spend listening. Each station's ratings are used by its advertisers and advertising representatives to consider advertising with the station and are used by us to chart audience levels, set advertising rates and adjust programming. The radio broadcast industry's principal ratings service is The Arbitron Company, which publishes periodic ratings surveys for significant domestic radio markets. These surveys are our primary source of audience ratings data. We believe that radio is one of the most efficient and cost-effective means for advertisers to reach specific demographic groups. Advertising rates charged by radio stations are based primarily on: - the supply of, and demand for, radio advertising time; - a station's share of audiences in the demographic groups targeted by advertisers, as measured by ratings surveys estimating the number of listeners tuned to the station at various times; and - the number of stations in the market competing for the same demographic groups. Rates are generally highest during morning and afternoon commuting hours. Competition The radio broadcasting industry is highly competitive. The success of each station depends largely upon audience ratings and its share of the overall advertising revenue within its market. Stations compete for listeners and advertising revenue directly with other radio stations within their respective markets. Radio stations compete for listeners primarily on the basis of program content that appeals to a particular demographic group. Building a strong listener base consisting of a specific demographic group in a market enables an operator to attract advertisers seeking to reach those listeners. Companies that operate radio stations must be alert to the possibility of another station changing format to compete -12- 13 directly for listeners and advertisers. A station's decision to convert to a format similar to that of another radio station in the same geographic area may result in lower ratings and advertising revenue, increased promotion and other expenses and, consequently, lower broadcast cash flow. Factors that are material to a radio station's competitive position include management experience, the station's local audience rank in its market, transmitter power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other radio stations in the market area. Recent changes in FCC policies and rules permit increased ownership and operation of multiple local radio stations. Management believes that radio stations that elect to take advantage of joint arrangements such as local marketing agreements or joint sales agreements may in certain circumstances have lower operating costs and may be able to offer advertisers more attractive rates and services. Although the radio broadcasting industry is highly competitive, some barriers to entry exist. The operation of a radio broadcast station requires a license from the FCC, and the number of radio stations that can operate in a given market is limited by the availability of FM and AM radio frequencies allotted by the FCC to communities in that market, as well as by the FCC's multiple ownership rules regulating the number of stations that may be owned and controlled by a single entity. The FCC's multiple ownership rules have changed significantly as a result of the Telecommunications Act of 1996. Stations compete for advertising revenue with other media, including newspapers, broadcast television, cable television, magazines, direct mail, coupons and outdoor advertising. In addition, the radio broadcasting industry is subject to competition from new media technologies that are being developed or introduced, such as the delivery of audio programming by cable television systems, by satellite and by digital audio broadcasting. Digital audio broadcasting may deliver by satellite to nationwide and regional audiences, multi-channel, multi-format, digital radio services with sound quality equivalent to compact discs. The delivery of information through the Internet also could create a new form of competition. The FCC has recently authorized spectrum for the use of a new technology, satellite digital audio radio services, to deliver audio programming. Digital audio radio services may provide a medium for the delivery by satellite or terrestrial means of multiple new audio programming formats to local and national audiences. It is not known at this time whether this digital technology also may be used in the future by existing radio broadcast stations either on existing or alternate broadcasting frequencies. The FCC has adopted rules creating a new low power radio service that will open up opportunities for new FM radio stations. The radio broadcasting industry historically has grown despite the introduction of new technologies for the delivery of entertainment and information. A growing population and greater availability of radios, particularly car and portable radios, have contributed to this growth. Employees At March 10, 2000, we employed 531 persons. Thirteen of our employees in Watertown, New York are covered by a collective bargaining agreement. None of our other employees is covered by collective bargaining agreements. We consider our relations with our employees to be good. Federal Regulation of Radio Broadcasting Introduction. Our ownership, operation, purchase and sale of radio stations is regulated by the FCC, which acts under authority derived from the Communications Act of 1934, as amended. The Telecommunications Act of 1996 made changes in several broadcast laws. Among other things, the FCC: -13- 14 - assigns frequency bands for broadcasting; - issues, renews, revokes and modifies station licenses; - determines whether to approve changes in ownership or control of station licenses; - regulates equipment used by stations; and - adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of stations. The following is a brief summary of certain provisions of the Communications Act and of specific FCC regulations and policies. Failure to observe these or other rules and policies can result in the imposition of various sanctions, including fines, the grant of abbreviated license renewal terms or, for particularly egregious violations, the denial of a license renewal application, the revocation of a license or the denial of FCC consent to acquire additional radio stations. License Grant and Renewal. Radio stations operate under renewable broadcasting licenses that are ordinarily granted by the FCC for maximum terms of eight years. Licenses are renewed through an application to the FCC. Petitions to deny license renewals can be filed by interested parties, including members of the public. These petitions may raise various issues before the FCC. The FCC is required to hold hearings on renewal applications if the FCC is unable to determine that renewal of a license would serve the public interest, convenience and necessity, or if a petition to deny raises a substantial and material question of fact as to whether the grant of the renewal application would be inconsistent with the public interest, convenience and necessity. If, as a result of an evidentiary hearing, the FCC determines that the licensee has failed to meet certain requirements and that no mitigating factors justify the imposition of a lesser sanction, then the FCC may deny a license renewal application. Historically, FCC licenses have generally been renewed. We are not currently aware of any facts that would prevent the timely renewal of our licenses to operate our radio stations, although we cannot assure you that all of our licenses will be renewed. The FCC classifies each AM and FM station. An AM station operates on either a clear channel, regional channel or local channel. A clear channel is one on which AM stations are assigned to serve wide areas. Clear channel AM stations are classified as either: Class A stations, which operate on an unlimited time basis and are designated to render primary and secondary service over an extended area; Class B stations, which operate on an unlimited time basis and are designed to render service only over a primary service area; or Class D stations, which operate either during daytime hours only, during limited times only or on an unlimited time basis with low nighttime power. A regional channel is one on which Class B and Class D AM stations may operate and serve primarily a principal center of population and the rural areas contiguous to it. A local channel is one on which AM stations operate on an unlimited time basis and serve primarily a community and the suburban and rural areas immediately contiguous thereto. Class C AM stations operate on a local channel and are designed to render service only over a primary service area that may be reduced as a consequence of interference. The minimum and maximum facilities requirements for an FM station are determined by its class. FM class designations depend upon the geographic zone in which the transmitter of the FM station is located. In general, commercial FM stations are classified as follows, in order of increasing power and antenna height: Class A, B1, C3, B, C2, C1 and C. The following table sets forth the market, call letters, FCC license classification, antenna height above average terrain (HAAT), power and frequency of each of the stations that are owned and operated by us or that are the subject of a pending acquisition, and the date on which each station's FCC license expires. -14- 15
Expiration Station Call FCC HAAT in Power in Date of Market Letters Class Meters Kilowatts Frequency FCC License ------ ------- ----- ------ --------- --------- ----------- Albany, NY............ WQBJ(FM)* B 150.0 50.0 103.5 MHz 6/1/06 WQBK(FM)* A 92.0 6.0 103.9 MHz 6/1/06 WABT(FM)* A 107.0 5.0 104.5 MHz 6/1/06 WGNA(FM)* B 300.0 12.50 107.7 MHz 6/1/06 WGNA(AM)* B N/A 5.0 1460 kHz 6/1/06 WTMM(AM)* B N/A 5.0 1300 kHz 6/1/06 Chico, CA............. KFMF(FM) B1 344 2.0 93.9 MHz 12/1/05 KPPL(FM) B 193 28.0 107.5 MHz 12/1/05 KALF(FM) B 386 7.0 95.7 MHz 12/1/05 KZAP(FM)* B1 393 1.5 96.7 MHz 12/1/05 El Paso, TX........... KSII(FM) C 433 98.0 93.1 MHz 8/1/05 KLAQ(FM) C 424 88.0 95.5 MHz 8/1/05 KROD(AM) B N/A 5.0 600 kHz 8/1/05 Erie, PA.............. WXKC(FM) B 150 50.0 99.9 MHz 8/1/06 WRIE(AM) B N/A 5.0 1260 kHz 8/1/06 WXTA(FM) B1 154 10.0 97.9 MHz 8/1/06 Flagstaff. AZ......... KZGL(FM)# C1 760.0 9.0 95.9 MHz 10/1/05 KVNA(FM)# C 460.0 100.0 horizontal+ 97.5 MHz 10/1/05 43.0 vertical+ KVNA(AM)# D N/A .04800 600 kHz 10/1/05 Flint, MI............. WCRZ(FM) B 331 50.0 107.9 MHz 10/1/04 WFNT(AM) B N/A 5.0 daytime 1470 kHz 10/1/04 1.0 night WWBN(FM) A 328 6.0 101.7 MHz 10/1/04 Grand Rapids, MI...... WLHT(FM)* B 168.0 40.0 95.7 MHz 10/1/04 WGRD(FM)* B 180.0 13.0 97.9 MHz 10/1/04 WTRV(FM)* A 92.0 3.50 100.5 MHz 10/1/04 Mansfield, OH......... WYHT(FM)# B 67 17.5 105.3 MHz 10/1/04 WMAN(AM)# C N/A 0.92 1400 kHz 10/1/04 WSWR(FM)# A 91 3.0 100.1 MHz 10/1/04 Palmdale, CA.......... KAVC(AM)# C N/A 1.0 1340 kHz 12/1/05 KOSS(FM)# A 94 2.9 105.5 MHz 12/1/05 KTPI(FM)# A 176 1.9 103.1 MHz 12/1/05 Redding, CA........... KRRX(FM) C 600 100.0 106.1 MHz 12/1/05 KNNN(FM) A 100 5.3 99.3 MHz 12/1/05 KNRO(AM) B N/A 1.0 600 kHz 12/1/05 KQMS(AM) C N/A 1.0 1400 kHz 12/1/05 KSHA(FM) C 475 100.0 104.3 MHz 12/1/05 KRDG(FM) C2 325 9.9 105.3 MHz 12/1/05
-15- 16
Expiration Station Call FCC HAAT in Power in Date of Market Letters Class Meters Kilowatts Frequency FCC License ------ ------- ----- ------ --------- --------- ----------- St. Cloud, MN......... KMXK(FM) C2 150 50.0 94.9 MHz 4/1/05 WJON(AM) C N/A 1.0 1240 kHz 4/1/05 WWJO(FM) C 305 97.0 98.1 MHz 4/1/05 Utica-Rome, NY........ WODZ(FM) B1 184 7.4 96.1 MHz 6/1/06 WLZW(FM) B 201 25.0 98.7 MHz 6/1/06 WFRG(FM) B 151 100.0 104.3 MHz 6/1/06 WIBX(AM) B N/A 5.0 950 kHz 6/1/06 WRUN(AM) B N/A 5.0 daytime 1150 kHz 6/1/06 1.0 night Victorville, CA....... KZXY(FM)# A 100 6.0 102.3 MHz 12/1/05 KIXW(AM)# D N/A 5.0 daytime 960 kHz 12/1/05 0.029 night KATJ(FM)# A 472 0.26 100.7 MHz 12/1/05 KIXA(FM)# A 325 0.56 106.5 MHz 12/1/05 KROY(AM)# D N/A 0.5 daytime 1590 kHz 12/1/05 0.131 night Watertown, NY......... WCIZ(FM) A 100 6.0 93.3 MHz 6/1/06 WFRY(FM) C1 145 97.0 97.5 MHz 6/1/06 WTNY(AM) B N/A 1.0 790 kHz 6/1/06 WUZZ(AM) B N/A 5.0 daytime 1410 kHz 6/1/06 1.0 night
______________ * Stations indicated with an asterisk (*) are subject to acquisition by us under an existing agreement. # We have agreed to sell those stations indicated with a pound sign (#). + Due to the polarity of this station's transmission antennae and the licensed parameters of its operation, the power level for this station is different for horizontally and vertically oriented reception antennae. Transfers or Assignment of Licenses. The Communications Act prohibits the assignment or transfer of a broadcast license without the prior approval of the FCC. In determining whether to grant approval, the FCC considers a number of factors pertaining to the licensee (and proposed licensee), including: - compliance with the various rules limiting common ownership of media properties in a given market; - the "character" of the licensee and those persons holding "attributable" interests in the licensee; and - compliance with the Communications Act's limitations on alien ownership as well as compliance with other FCC regulations and policies. To obtain FCC consent to assign or transfer control of a broadcast license, appropriate applications must be filed with the FCC. If the application involves a "substantial change" in ownership -16- 17 or control, the application must be placed on public notice for not less than 30 days during which time period petitions to deny or other objections against the application may be filed by interested parties, including members of the public. If the application does not involve a "substantial change" in ownership or control, it is a "pro forma" application. The "pro forma" application is nevertheless subject to having informal objections filed against it. When passing on an assignment or transfer application, the FCC is prohibited from considering whether the public interest might be served by an assignment or transfer of the broadcast license to any party other than the assignee or transferee specified in the application. Multiple Ownership Rules. The Communications Act, the Telecommunications Act of 1996 and FCC rules impose specific limits on the number of commercial radio stations an entity can own in a single market. These rules preclude us from acquiring certain stations we might otherwise seek to acquire. The rules also effectively prevent us from selling stations in a market to a buyer that has reached its ownership limit in the market. The local radio ownership rules are as follows: - in markets with 45 or more commercial radio stations, ownership is limited to eight commercial stations, no more than five of which can be either AM or FM; - in markets with 30 to 44 commercial radio stations, ownership is limited to seven commercial stations, no more than four of which can be either AM or FM; - in markets with 15 to 29 commercial radio stations, ownership is limited to six commercial stations, no more than four of which can be either AM or FM; and - in markets with 14 or fewer commercial radio stations, ownership is limited to five commercial stations or no more than 50.0% of the market's total, whichever is lower, and no more than three of which can be either AM or FM. The FCC is also reportedly considering proposing a policy that would review a proposed transaction if it would enable a single owner to attain a high degree of revenue concentration in a market. The FCC has also periodically invited comment on the impact of concentration in public notices concerning specific proposed transactions, and has delayed or refused its consent in some cases because of revenue concentrations. In addition to the limits on the number of radio stations that a single owner may own in a particular geographic market, the FCC also has cross-ownership rules which limit or prohibit radio station ownership by the owner of television stations or a newspaper in the same market. The FCC recently revised its radio/television cross-ownership rule to allow for greater common ownership of radio and television stations. The revised radio/television cross-ownership rule permits a single owner to own up to two television stations, consistent with the FCC's rules on common ownership of television stations, and one radio station in all markets. In addition, an owner can own additional radio stations, subject to local ownership limits for the market, as follows: - in markets where 20 media voices will remain, an owner may own an additional five radio stations, or, if the owner only has one television station, an additional six radio stations; and - in markets where ten media voices will remain, an owner may own an additional three radio stations. A "media voice" includes each independently-owned, full power television and radio station and each newspaper, plus one voice for all cable television systems operating in the market. The FCC's -17- 18 broadcast/newspaper cross-ownership rule prohibits the same owner from owning a broadcast station and a daily newspaper in the same geographic market. The FCC generally applies its ownership limits to "attributable" interests held by an individual, corporation, partnership or other association. In the case of corporations directly or indirectly controlling broadcast licenses, the interests of officers, directors and those who, directly or indirectly, have the right to vote 5.0% or more of the corporation's voting stock are generally attributable. In addition, certain passive investors are attributable if they hold 20.0% or more of the corporation's voting stock. If a single individual or entity controls more than 50.0% of a corporation's voting stock, however, the interests of other shareholders are generally not attributable unless the shareholders are also officers or directors of the corporation. The FCC recently adopted a new rule, known as the equity-debt-plus rule, that causes certain creditors or investors to be attributable owners of a station, regardless of whether there is a single majority shareholder. Under this new rule, a major programming supplier or a same-market owner will be an attributable owner of a station if the supplier or owner holds debt or equity, or both, in the station that is greater than 33.0% of the value of the station's total debt plus equity. A major programming supplier includes any programming supplier that provides more than 15.0% of the station's weekly programming hours. A same-market owner includes any attributable owner of a media company, including broadcast stations, cable television, and newspapers, located in the same market as the station, but only if the owner is attributable under an FCC attribution rule other than the equity-debt-plus rule. If attribution under the equity-debt-plus rule results in a violation of the FCC's multiple ownership rules, each affected party must come into compliance with those rules, by reducing or eliminating the party's interest in the affected media outlets or obtaining a waiver from the FCC, no later than August 5, 2000. The attribution rules limit the number of radio stations we may acquire or own in any market and may also limit the ability of certain potential buyers of stations owned by us from being able to purchase some or all of the stations which they might otherwise wish to purchase from us Alien Ownership Rules: The Communications Act prohibits the issuance or holding of broadcast licenses by aliens, including any corporation if more than 20.0% of its capital stock is owned or voted by aliens. In addition, the FCC may prohibit any corporation from holding a broadcast license if the corporation is directly or indirectly controlled by any other corporation of which more than 25.0% of the capital stock is owned of record or voted by aliens, if the FCC finds that the prohibition is in the public interest. Our charter provides that our capital stock is subject to redemption by us by action of the Board of Directors to the extent necessary to prevent the loss of any license held by us, including any FCC license. Time Brokerage. Over the past few years, a number of radio stations have entered into what have commonly been referred to as time brokerage agreements or local marketing agreements. While these agreements may take varying forms, under a typical time brokerage agreement, separately owned and licensed radio stations agree to enter into cooperative arrangements of varying sorts, subject to compliance with the requirements of antitrust laws and with the FCC's rules and policies. Under these arrangements, separately-owned stations could agree to function cooperatively in programming, advertising sales and similar matters, subject to the requirement that the licensee of each station maintain independent control over the programming and operations of its own station. One typical type of time brokerage agreement is a programming agreement between two separately-owned radio stations serving a common service area, whereby the licensee of one station provides substantial portions of the broadcast programming for airing on the other licensee's station, subject to ultimate editorial and other controls being exercised by the latter licensee, and sells advertising time during those program segments. -18- 19 The FCC's rules provide that a radio station that brokers more than 15.0% of its weekly broadcast time on another station serving the same market will be considered to have an attributable ownership interest in the brokered station for purposes of the FCC's multiple ownership rules. As a result, in a market where we own a radio station, we would not be permitted to enter into a time brokerage agreement with another local radio station in the same market that we could not own under the local ownership rules, unless our programming on the brokered station constituted 15.0% or less of the other local station's programming time on a weekly basis. FCC rules also prohibit a radio station from duplicating more than 25.0% of its programming on another station in the same broadcast service (i.e., AM-AM or FM-FM) through a time brokerage agreement where the brokered and brokering stations which it owns or programs serve substantially the same area. Programming and Operation. The Communications Act requires broadcasters to serve the public interest. Since 1981, the FCC gradually has relaxed or eliminated many of the more formalized procedures it developed to promote the broadcast of types of programming responsive to the needs of a station's community of license. However, licensees continue to be required to present programming that is responsive to community problems, needs and interests and to maintain records demonstrating such responsiveness. Complaints from listeners concerning a station's programming will be considered by the FCC when it evaluates the licensee's renewal application, although listener complaints may be filed and considered at any time and must be maintained in the station's public file. Stations also must pay regulatory and application fees and follow various FCC rules that regulate, among other things, political advertising, the broadcast of obscene or indecent programming, the advertisement of casinos and lotteries, sponsorship identification and technical operations, including limits on radio frequency radiation. On January 20, 2000, the FCC adopted new rules prohibiting employment discrimination by broadcast stations on the basis of race, religion, color, national origin, and gender; and requiring broadcasters to implement programs to promote equal employment opportunities at their stations. The rules generally require broadcast stations to disseminate information about job openings widely so that all qualified applicants, including minorities and women, have an adequate opportunity to compete for the job. Broadcasters may fulfill this requirement by sending the station's job vacancy information to organizations that request it, participating in community outreach programs or designing an alternative recruitment program. Broadcasters with five or more full-time employees must place in their public files annually a report detailing their recruitment efforts and must file a statement with the FCC certifying compliance with the rules every two years. Broadcasters with ten or more full-time employees must file their annual reports with the FCC midway through their license term. Broadcasters also must file employment information with the FCC annually for statistical purposes. The FCC recently issued a decision holding that a broadcast station may not deny a candidate for federal political office a request for broadcast advertising time solely on the grounds that the amount of time requested is not the standard length of time which the station offers to its commercial advertisers. This decision is currently being reconsidered by the FCC. The effect that this FCC decision will have on our programming and commercial advertising is uncertain. In 1985, the FCC adopted rules regarding human exposures to levels of radio frequency radiation. These rules require applicants for new broadcast stations, renewals of broadcast licenses or modifications of existing licenses to inform the FCC at the time of filing such applications whether a new or existing broadcast facility would expose people to radio frequency radiation in excess of FCC guidelines. In August 1996, the FCC adopted more restrictive radiation limits. These limits became effective on September 1, 1997 and govern applications filed after that date. We anticipate that such regulations will not have a material effect on our business. -19- 20 Periodically, we may be required to obtain special temporary authority from the FCC to operate the one or more of the stations in a manner different from the licensed parameters so that we can complete scheduled construction or maintenance or so that we may repair damaged or broken equipment without interrupting service. Proposed and Recent Changes: Congress and the FCC from time to time have under consideration, and may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of our radio stations, result in the loss of audience share and advertising revenue for our radio stations, and affect our ability to acquire additional radio stations or finance such acquisitions. Such matters include: - proposals to impose spectrum use or other fees on FCC licensees; - technical and frequency allocation matters; - proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages; - changes in the FCC's attribution and multiple ownership policies; - changes to broadcast technical requirements; - proposals to allow telephone or cable television companies to deliver audio and video programming to the home through existing phone, cable television or other communication lines; and - proposals to limit the tax deductibility of advertising expenses by advertisers. In January 1995, the FCC adopted rules to allocate spectrum for satellite digital audio radio service. Satellite digital audio radio service systems potentially could provide for regional or nationwide distribution of radio programming with fidelity comparable to compact discs. The FCC has issued two authorizations to launch and operate satellite digital audio radio service. The FCC currently is considering standards for evaluating, authorizing, and implementing terrestrial digital audio broadcasting technology, including In-Band On-Channel(TM) technology, for FM radio stations. Digital audio broadcasting's advantages over traditional analog broadcasting technology include improved sound quality and the ability to offer a greater variety of auxiliary services. In-Band On-Channel(TM) technology would permit an FM station to transmit radio programming in both analog and digital formats, or in digital only formats, using the bandwidth that the radio station is currently licensed to use. It is unclear what regulations the FCC will adopt regarding digital audio broadcasting or In-Band On-Channel(TM) technology and what effect such regulations would have on our business or the operations of our radio stations. The FCC has authorized an additional 100 kHz of bandwidth for the AM band and on March 17, 1997, adopted an allotment plan for the expanded band, which identified the 88 AM radio stations selected to move into the band. At the end of a five-year transition period, those licensees will be required to return to the FCC either the license for their existing AM band station or the license for the expanded AM band station. -20- 21 On January 20, 2000, the FCC voted to adopt rules creating a new low power FM radio service. The new low power stations will operate at a maximum power of between 10 and 100 watts in the existing FM commercial and non-commercial band. Low power stations may be used by governmental and non-profit organizations to provide noncommercial educational programming or public safety and transportation radio services. No existing broadcaster or other media entity, including Regent, will be permitted to have an ownership interest or enter into any program or operating agreement with any low power FM station. During the first two years of the new service, applicants must be based in the area that they propose to serve. Applicants will not be permitted to own more than one station nationwide during the initial two year period. After the initial two year period, entities will be allowed to own up to five stations nationwide, and after three years, the limit will be raised to ten stations nationwide. A single person or entity may not own two low power stations whose transmitters are less than seven miles from each other. The authorizations for the new stations will not be transferable. The FCC has stated that it intends to begin accepting applications for new stations in the next several months. At this time it is difficult to assess the competitive impact of these new stations. Although the new low power stations must comply with certain technical requirements aimed at protecting existing FM radio stations from interference, we cannot be certain of the level of interference that low power stations will cause after they begin operating. Moreover, if low power FM stations are licensed in the markets in which we operate, the low power stations may compete for listeners and advertisers. The low power stations may also limit our ability to obtain new licenses or to modify our existing facilities, or cause interference to areas of existing service that are not protected by the FCC's rules, any of which may have a material adverse affect on our business. Finally, the FCC has adopted procedures for the auction of broadcast spectrum in circumstances where two or more parties have filed for new or major change applications which are mutually exclusive. Such procedures may limit our efforts to modify or expand the broadcast signals of our stations. We cannot predict what other matters might be considered in the future by the FCC or Congress, nor can we judge in advance what impact, if any, the implementation of any of these proposals or changes might have on our business. Federal Antitrust Considerations. The Federal Trade Commission and the United States Department of Justice, which evaluate transactions to determine whether those transactions should be challenged under the federal antitrust laws, have been increasingly active recently in their review of radio station acquisitions, particularly where an operator proposes to acquire additional stations in its existing markets. For an acquisition meeting certain size thresholds, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules promulgated thereunder, require the parties to file Notification and Report Forms with the Federal Trade Commission and the Department of Justice and to observe specified waiting period requirements before consummating the acquisition. During the initial 30-day period after the filing, the agencies decide which of them will investigate the transaction. If the investigating agency determines that the transaction does not raise significant antitrust issues, then it will either terminate the waiting period or allow it to expire after the initial 30 days. On the other hand, if the agency determines that the transaction requires a more detailed investigation, then, at the conclusion of the initial 30-day period, it will issue a formal request for additional information. The issuance of a formal request extends the waiting period until the 20th calendar day after the date of substantial compliance by all parties to the acquisition. Thereafter, the waiting period may only be extended by court order or with the consent of the parties. In practice, complying with a formal request can take a significant amount of time. In addition, if the investigating agency raises substantive issues in connection with a proposed transaction, then the parties frequently engage in lengthy discussions or negotiations with the investigating agency concerning possible means of addressing those issues, including persuading the agency that the proposed acquisition -21- 22 would not violate the antitrust laws, restructuring the proposed acquisition, divestiture of other assets of one or more parties, or abandonment of the transaction. These discussions and negotiations can be time consuming, and the parties may agree to delay completion of the acquisition during their pendency. At any time before or after the completion of a proposed acquisition, the Federal Trade Commission or the Department of Justice could take such action under the antitrust laws as it considers necessary or desirable in the public interest, including seeking to enjoin the acquisition or seeking divestiture of the business or other assets acquired. Acquisitions that are not required to be reported under the Hart-Scott-Rodino Act may be investigated by the Federal Trade Commission or the Department of Justice under the antitrust laws before or after completion. In addition, private parties may under certain circumstances bring legal action to challenge an acquisition under the antitrust laws. In June 1998, we received a civil investigative demand from the Antitrust Division of the Department of Justice requesting certain information regarding our acquisition of radio stations in Redding, California to enable the DOJ to determine, among other things, whether our Redding acquisitions resulted in excessive concentration in the market. We have responded to the information request and the matter is still pending. Even if the Department of Justice were to proceed with and successfully challenge the Redding acquisitions and we were required to divest one or more radio stations in Redding, the result would not have a material adverse effect on our financial condition or results of operations. As part of its increased scrutiny of radio station acquisitions, the Department of Justice has stated publicly that it believes that commencement of operations under time brokerage agreements, local marketing agreements, joint sales agreements and other similar agreements customarily entered into in connection with radio station transfers prior to the expiration of the waiting period under the Hart-Scott-Rodino Act could violate the Hart-Scott-Rodino Act. In connection with acquisitions subject to the waiting period under the Hart-Scott-Rodino Act, so long as the Department of Justice policy on the issue remains unchanged, we would not expect to commence operation of any affected station to be acquired under time brokerage agreement, local marketing agreement or similar agreement until the waiting period has expired or been terminated. ITEM 2. PROPERTIES The types of properties required to support each of our radio stations include offices, studios, transmitter sites and antenna sites. A station's studios are generally housed with its offices in business districts. The transmitter sites and antenna sites are generally located so as to provide maximum market coverage. We currently own studio facilities in Redding, California; Burton (Flint), Michigan; St. Cloud, Minnesota; Mansfield, Ohio; Whitestown (Utica-Rome), New York; and Watertown, New York. We own transmitter and antenna sites in Mojave (Palmdale), California; Redding, California; Victorville, California; Burton (Flint), Michigan; St. Cloud, Stearns County and Graham Township (St. Cloud), Minnesota; Mansfield, Ohio; Whitestown, Deerfield and Kirkland (Utica-Rome), New York; Watertown and Rutland (Watertown), New York; and El Paso, Texas. We expect to acquire additional real estate and to dispose of certain real estate in connection with our pending transactions. We lease our remaining studio and office facilities, including corporate office space in Covington, Kentucky and Old Brookville, New York, and our remaining transmitter and antenna sites. We do not anticipate any difficulties in renewing any facility leases or in leasing alternative or additional space, if required. We own substantially all of our other equipment, consisting principally of transmitting antennae, towers, transmitters, studio equipment and general office equipment. We believe that our properties are generally in good condition and suitable for our operations. However, we continually look for opportunities to upgrade our properties and intend to upgrade studios, office space and transmission facilities in several markets. The two AM stations we acquired in the Watertown, New York market and one of the AM stations we acquired in the Utica-Rome, New York market have been operating under special temporary authorities granted by the FCC since January 1998. Two of these authorities will -22- 23 expire in May 2000 and one will expire in August 2000. We expect that we will be able to complete our evaluation of these facilities and complete any necessary repairs before these dates or that the FCC will grant further extensions of these special temporary authorities to allow us time to repair those transmission facilities to return the stations to licensed operations. However, due to the long period of time prior to our acquisition of these stations during which they have been operating under temporary authorizations, there can be no guarantee that the FCC will grant further extensions, in which event we might be required to interrupt service on these stations. An interruption in service at these stations would not have a material adverse effect on our financial condition or results of operations, as these stations represent less than 2% of our net revenue in the Watertown and Utica-Rome markets. Substantially all of our personal property and equipment serve as collateral for our obligations under our existing credit facility. ITEM 3. LEGAL PROCEEDINGS We currently and from time to time are involved in litigation incidental to the conduct of our business, but we are not a party to any lawsuit or proceeding that, in our opinion, is likely to have a material adverse effect on us. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There was no matter submitted to our security holders during the fourth quarter of the fiscal year ended December 31, 1999. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Shares of our common stock have been quoted on The Nasdaq Stock Market under the symbol RGCI since January 25, 2000 following effectiveness of the registration statement for the initial public offering of our common stock. The following table sets forth, for the period from January 25, 2000 through March 10, 2000, the high and low closing sale prices of our common stock as reported in the Nasdaq National Market. High Low -------- -------- January 25 through March 10, 2000 $14.0000 $10.3125 -23- 24 As of March 10, 2000, there were 311 holders of record of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of securities brokers, dealers and registered clearing agencies. We have never declared or paid cash dividends on our common stock and do not intend to do so in the foreseeable future. In addition, our credit agreement with our lenders prohibits the payment of cash dividends on our common stock. On December 14, 1999, we issued a total of 3,545,453 shares of our Series K convertible preferred stock at $5.50 per share for an aggregate purchase price of $19,499,992 to Blue Chip Capital Fund III Limited Partnership, WPG Corporate Development Associates V, L.L.C., WPG Corporate Development Associates V (Overseas), L.P., PNC Bank, N.A., Custodian, Mesirow Capital Partners VII and The Prudential Insurance Company of America. The terms of the Series K convertible preferred stock provided that the shares could be converted at any time at the option of the holder into shares of our common stock on a one-for-one basis. Subsequently, on January 28, 2000, 3,270,301 of these Series K shares were converted to shares of our common stock. The remaining 275,152 shares of Series K convertible preferred stock were sold back to us by an affiliate of one of the underwriters in our public offering consummated on January 28, 2000 in order to comply with rules of the National Association of Securities Dealers Inc. Under our 1998 Management Stock Option Plan we granted to certain key employees on April 29, 1999 options to purchase a total of 287,678 shares of our common stock at $5.00 per share and on October 28, 1999 options to purchase a total of 30,000 shares of our common stock at $5.50 per share. All of the options granted in October 1999 and 37,500 of the options granted in April 1999 are exercisable in five annual increments (up to one-fifth each year) beginning on the first anniversary of the date of grant. Of the remaining 250,178 options granted in April 1999, 25,018 options will vest on April 29, 2008, and the balance is exercisable in equal one-third increments at the end of each of the first three years following the grant. The Series K convertible preferred stock and the employee stock options were issued in private transactions to a limited number of select persons based upon exemptions from the registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) of that Act and the rules and regulations promulgated thereunder. ITEM 6. SELECTED FINANCIAL DATA.
SELECTED CONSOLIDATED FINANCIAL DATA YEAR ENDED DECEMBER 31, ---------------------------------------------------------------------------------- 1999 1998 (1) 1997 1996 1995 ------------ ------------ ------------ ----------- ----------- Operating results: Net broadcasting revenues $ 23,853,809 $ 14,771,523 $ 5,993,291 $ 4,873,954 $ 5,113,582 Income (loss) from operations (612,398) (433,321) 1,015,144 1,222,829 1,511,481 Income (loss) Before extraordinary items (6,299,521) (3,289,924) (362,537) 278,840 244,816 Extraordinary items (471,216) (1,170,080) (4,333,310) -- -- Net income (loss) (6,770,737) (4,460,004) (4,695,847) 278,840 244,816 Preferred stock dividend requirements (5,205,526) (2,165,471) -- -- -- Preferred stock accretion (17,221,154) (4,787,311) -- -- -- Basic and diluted net income (loss) Per common share: Income (loss) Before extraordinary items $ (119.69) $ (42.67) $ (1.51) $ 1.16 $ 1.02 Extraordinary items (1.96) (4.88) (18.06) -- -- ------------ ------------ ------------ ----------- ----------- Basic net income (loss) Per common share $ (121.65) $ (47.55) $ (19.57) $ 1.16 $ 1.02 Weighted average number of common shares used in basic and diluted calculation 240,000 240,000 240,000 240,000 240,000 Balance sheet data: Current assets $ 10,329,208 $ 11,618,745 $ 1,919,232 $ 1,305,585 $ 1,311,916 Total assets 83,727,155 67,617,870 13,010,554 4,326,453 4,546,508 Current liabilities 3,114,586 13,027,306 859,631 1,068,021 1,037,239 Long-term debt 25,331,307 34,617,500 21,911,661 7,276,884 7,828,883 Redeemable preferred stock 89,265,352 27,406,152 -- -- -- Total stockholders deficit (37,809,315) (10,076,667) (10,181,788) (5,485,941) (5,764,781)
- ------------- (1) - See Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of comparability between years. -24- 25 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction Our company was formed in November 1996 to acquire, own and operate clusters of radio stations in small and mid-sized markets. During 1997, we acquired our first radio station and entered into agreements to acquire 32 additional stations in ten additional markets. Also during 1997, we provided programming and other services to 24 of the radio stations we had agreed to acquire. Effective June 15, 1998, we consummated a number of mergers, acquisitions, borrowings and issuances of additional equity. One of these June 15, 1998 transactions was a merger with Faircom Inc. in which Faircom merged into one of our subsidiaries. Even though our subsidiary was the surviving entity in the merger, Faircom was deemed to be the "accounting acquirer," and the historical financial statements of Faircom became our historical financial statements. Accordingly, our results of operations and those of the other entities that merged with or were acquired by us as part of the transactions completed June 15, 1998 have been included in our consolidated financial statements only from June 15, 1998. This affects the comparability of the different periods. The principal source of our revenue is the sale of broadcasting time on our radio stations for advertising. As a result, our revenue is affected primarily by the advertising rates our radio stations charge. Correspondingly, the rates are based upon the station's ability to attract audiences in the demographic groups targeted by its advertisers, as measured principally by periodic Arbitron Radio Market Reports. The number of advertisements that can be broadcast without jeopardizing listening levels, and the resulting ratings, are limited in part by the format of a particular station. Each of our stations has a general pre-determined level of on-air inventory that it makes available for advertising. Available inventory may vary at different times of the day but tends to remain stable over time. Much of our selling activity is based on demand for our radio stations' on-air inventory and, in general, we respond to this demand by varying prices rather than by changing the available inventory. In the broadcasting industry, radio stations often utilize trade, or barter, agreements to exchange advertising time for goods or services, such as other media advertising, travel or lodging, in lieu of cash. In order to preserve most of our on-air inventory for cash advertising, we generally enter into trade agreements only if the goods or services bartered to us will be used in our business. We have minimized our use of trade agreements and have generally sold over 90.0% of our advertising time for cash. In addition, we generally do not preempt advertising spots paid for in cash with advertising spots paid for in trade. Historically, our broadcast revenues have varied through the year. As is typical in the radio broadcasting industry, our first calendar quarter will be expected to produce the lowest revenues for the year, and the fourth calendar quarter will be expected to produce the highest revenues for the year. Our operating results in any period may be affected by the incurrence of advertising and promotion expenses that do not necessarily produce commensurate revenues until the impact of the advertising and promotion is realized in future periods. The primary operating expenses incurred in the ownership and operation of radio stations include employee salaries and commissions, programming expenses and advertising and promotional expenses. We strive to control these expenses by working closely with local station management. We also incur and will continue to incur significant depreciation and amortization expense as a result of completed and future acquisitions of stations. In 1999, our radio stations derived approximately 84.9% of their net broadcast revenues from local and regional advertising in the markets in which they operated, and the remainder resulted principally from the sale of national advertising. Local and regional advertising is sold primarily by each station's sales staff. To generate national advertising sales, we engage national advertising representative firms. We believe that the volume of national advertising revenue tends to adjust to shifts in a station's audience share position more rapidly than does the volume of local and regional advertising revenue. Therefore, we focus on sales of local and regional advertising. During the year ended December 31, 1999, no single advertiser accounted for as much as 1.0% of our net broadcasting revenue. Our advertising revenue is typically collected within 120 days of the date on which the related advertisement is aired. Most accrued expenses, however, are paid within 45 to 60 days. As a result of this time lag, working capital requirements have increased as we have grown and will likely increase in the future. -25- 26 Historically, we have generated net losses primarily as a result of significant charges for depreciation and amortization relating to the acquisition of radio stations and interest charges on outstanding debt. We have historically amortized the FCC licenses and goodwill attributable to substantially all of our radio station acquisitions made prior to 2000 over a 15- to 40-year period. Based upon the large number of acquisitions we consummated within the last two years, we anticipate that depreciation and amortization charges will continue to be significant for several years. To the extent that we complete additional acquisitions, our interest expense and depreciation and amortization charges are likely to increase. Based upon new standards proposed by the Financial Accounting Standards Board related to business combinations and intangible assets, goodwill and other intangible assets will be amortized over their economic life, which is not to exceed twenty years. Accordingly, we expect to amortize the FCC licenses and goodwill attributable to our acquisitions in 2000 and beyond over a useful life not to exceed twenty years. If this occurs, we would expect to continue to incur net losses. Our financial results are dependent on a number of factors, including the general strength of the local and national economies, population growth, the ability to provide popular programming, local market and regional competition, relative efficiency of radio broadcasting compared to other advertising media, signal strength and government regulation and policies. From time to time the markets in which we operate experience weak economic conditions that may negatively affect our revenue. We believe, however, that this impact is somewhat mitigated by our diverse geographical presence. The performance of a radio station group, such as ours, is customarily measured by its ability to generate broadcast cash flow. The term "broadcast cash flow" means operating income (loss) before depreciation and amortization and corporate general and administrative expenses, excluding barter activity. Although broadcast cash flow is not a measure of performance calculated in accordance with generally accepted accounting principles, we believe that broadcast cash flow is accepted by the broadcasting industry as a generally recognized measure of performance and is used by analysts who report publicly on the performance of broadcasting companies. Nevertheless, this measure should not be considered in isolation or as a substitute for operating income, net income, net cash provided by operating activities or any other measure for determining our operating performance or liquidity that is calculated in accordance with generally accepted accounting principles. Results of Operations 1999 Compared to 1998 As a result of the transactions completed on June 15, 1998, we expanded from 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. Because of our June 1998 acquisitions and, to a lesser extent, our acquisitions of stations in St. Cloud, Minnesota and Erie, Pennsylvania in 1999, we experienced substantial increases in net broadcast revenues, station operating expenses, depreciation and amortization, corporate general and administrative expenses, and interest expense in 1999 compared to 1998. Accordingly, the results of our operations in 1999 are not comparable to those of the prior period, nor are they necessarily indicative of results in the future. For 1999 compared to 1998, net broadcast revenues increased 61.5% from $14,772,000 to $23,854,000, station operating expenses increased 65.8% from $11,051,000 to $18,325,000, and depreciation and amortization increased 48.0% from $2,281,000 to $3,368,000. We experienced a 48.0% increase from $1,872,000 to $2,773,000 in corporate general and administrative expenses in 1999 compared to 1998. This increase was comparatively less than the increase in net broadcasting revenues and station operating expenses because these expenses in 1998 included $530,000 in additional compensation expense resulting from our issuance of stock options in the Faircom merger to two officers of Faircom, as provided in the merger agreement. Interest expense increased 82.0% from $2,883,000 to $5,249,000 as a result of increased borrowings used to finance the various acquisitions and a $1,136,000 charge to interest expense due to an increase in our warrant liability, along with a $162,000 charge related to the write-off of deferred financing fees in connection with the modification of our former bank credit facility. -26- 27 While acquisitions have affected the comparability of our 1999 operating results to those of 1998, we believe meaningful quarter-to-quarter comparisons can be made for results of operations for those markets in which we have been operating for five full quarters, exclusive of any markets held for sale. This group of comparable markets is currently represented by six markets and 24 stations. In these comparable markets, for the six months ended December 31, 1999 as compared to the same period in 1998, our net broadcast revenues, excluding barter revenues, increased 3.2% and broadcast cash flow increased by 1.1%. These comparative results were adversely affected by circumstances in our Flint, Michigan market. The competitive environment in Flint changed in late 1997 with the addition of a new commercial FM radio station. The Flint school system previously owned this station and operated it as a non-commercial facility. The school board sold the station at auction to an experienced commercial broadcaster. In 1998, and shortly before we took control of Faircom's cluster of three stations in the Flint market, the new commercial station changed format and in 18 months became the top station in the marketplace in terms of adult listenership. Its success impacted advertising market rates and the distribution of advertising dollars to stations in the market, adversely affecting our market share of revenues, along with that of other competitors. It was estimated by an industry source that in 1999, its first full year of commercial operation, the new station would capture approximately 17% of the market revenue. In January 1999, we made significant changes in the management structure and personnel at our Flint stations, which had been delayed due to certain contractual arrangements. The acclimation of the new management team and related operational changes took most of 1999 to have effect. For these reasons, we do not believe the results of our Flint stations will be comparable to those of the prior year until the end of the first quarter of 2000. For the 21 stations in our other five comparable markets, net broadcast revenues, excluding barter revenues, increased 7.3% and broadcast cash flow increased 12.9% for the six months ended December 31, 1999 as compared to the same period in 1998. 1998 Compared to 1997 As a result of the significant change in the size of our operations brought about by the acquisitions made by us on June 15, 1998, our net broadcast revenues grew from $5,993,000 to $14,771,000. Our key focus in 1998 was developing the platform from which we could carry out our operating strategies as a much larger radio company. Development of the platform required significant expenditures. We viewed these costs as investment costs that would provide returns to us in future years. Operationally, we replaced general managers in eight of our markets and added or replaced general sales managers in six markets in order to implement aggressive sales programs. We invested significantly in the hiring and training of sales personnel and in increased promotional spending in all markets. Finally, we developed a corporate staff designed to support a much larger operation. In 1997, the Faircom corporate office was a very small operation. While that facility and expense have been maintained, our primary administrative offices are now located in Covington, Kentucky. The cost of additional executive personnel and administrative expense amounted to $940,000 from June 16, 1998 through December 31, 1998 as a result of the Faircom merger. Additionally, the issuance of stock options granted as of June 15, 1998 to two officers of Faircom under the terms of the merger agreement with Faircom resulted in the recognition, as of such date of grant, of approximately $530,000 in additional compensation expense which is included in corporate general and administrative expense for 1998. Consequently, our 1998 operating loss of $433,000 compared unfavorably with operating income of $1,015,000 in 1997. Interest expense was $2,883,000 in 1998 as compared with $1,331,000 in 1997 principally due to the debt incurred in connection with the transactions we completed on June 15, 1998 and, to a lesser extent, to debt incurred in connection with Faircom's acquisition of the stations in Mansfield and Shelby, Ohio. -27- 28 There were no federal, state or local income taxes in 1998 as a result of a net loss. In 1998, net loss declined to $4,460,000 from $4,696,000 in 1997 as a result of the increase in operating losses and the increase in interest expense being offset by lower net extraordinary losses from debt extinguishment. Seasonality. The financial results of the Company's business are seasonal. Revenues are generally higher in the second, third and fourth calendar quarters than in the first quarter. Liquidity and Capital Resources In 1999, we used net cash in operating activities of $2,378,000 compared with $385,000 for 1998. In 1999, proceeds of $41,754,000 from the issuance of convertible preferred stock and $16,500,000 from long-term borrowings, together with $13,999,000 of proceeds from the sale of radio stations, provided substantially all of the funds used in operating activities, and for acquisitions, capital expenditures, principal payments on long-term debt and other investing and financing activity cash requirements. We experienced a net increase in cash of $2,932,000 in 1999 compared with a net decrease of $57,000 in 1998. Our borrowings were made under our former bank credit facility, which provided for a senior reducing revolving credit facility with an original commitment of up to $55,000,000 expiring March 31, 2005 (the commitment was $32,425,000 at December 31, 1999). This facility permitted the borrowing of available credit for working capital and acquisitions, including related acquisition expenses. In addition, subject to available credit, we could request from time to time that our lenders issue letters of credit on the same terms as the credit facility. At December 31, 1999, we had borrowed $24,761,000 under this facility. The remaining unused portion of this facility of $7,664,000 was available to finance other acquisitions, subject to restrictions contained in the facility. During the fourth quarter, we used the $6,400,000 in net proceeds from the sales of our stations in Kingman, Arizona and Lake Tahoe, California to reduce borrowings under our former bank credit facility. Additionally, on December 14, 1999, we issued 3,545,453 shares of Series K convertible preferred stock at $5.50 per share. From the net proceeds, we reduced borrowings under our former bank credit facility by $15,775,000. In conjunction with these reductions of our borrowings, we took an interest charge of $162,000 along with an extraordinary charge of $471,000 to reflect the write-off of a portion of the deferred financing fees. The remaining $1,036,000 of deferred financing fees relating to the former bank credit facility will be written off in the first fiscal quarter of 2000. On January 28, 2000, we entered into a new $125,000,000 senior secured seven-year reducing revolving bank credit facility. This facility also provides for an additional $50,000,000 on substantially the same terms to fund future acquisitions, which would be available for 24 months and thereafter would convert to a term loan maturing December 31, 2006. This new bank credit facility permits the borrowing of available credit for working capital requirements and general corporate purposes, including transaction fees and expenses, to repay our existing bank credit facility and to fund pending and permitted future acquisitions. The new facility permits us to request from time to time that the lenders issue letters of credit in an amount up to $25,000,000 in accordance with the same lending provisions. The commitment, and our maximum borrowings, will reduce over five years beginning in 2002 as follows: -28- 29 December 31, Commitment Amount 2001............................... $125,000,000 2002............................... 106,250,000 2003............................... 87,500,000 2004............................... 62,500,000 2005............................... 37,500,000 2006............................... 0 The $25,000,000 letter of credit sub-limit also reduces proportionately but not below $15,000,000. Mandatory prepayments and commitment reductions will also be required from certain asset sales, subordinated debt proceeds, excess cash flow amounts and sales of equity securities. Under the new bank credit facility, we are required to maintain a minimum interest rate coverage ratio, minimum fixed charge coverage ratio, maximum corporate overhead and maximum financial leverage ratio and to observe negative covenants customary for facilities of this type. Borrowings under the new credit facility bear interest at a rate equal to (a) the higher of the rate announced or published publicly from time to time by the agent as its corporate base rate of interest or the Overnight Federal Funds Rate plus 0.5%, in either case plus the applicable margin determined under the credit facility, or (b) the reserve-adjusted Eurodollar Rate plus the applicable margin. We are required to pay certain fees to the agent and the lenders for the underwriting commitment, administration and use of the credit facility. Our indebtedness under the new bank credit facility is collateralized by liens on substantially all of our assets and by a pledge of our operating and license subsidiaries' stock and is guaranteed by those subsidiaries. On January 28, 2000, we closed on an offering of 16,000,000 shares of our common stock. On February 7, 2000 the underwriters exercised their overallotment of an additional 2,400,000 shares. All shares were sold at $8.50 per share, resulting in gross proceeds of $156,400,000. Net proceeds were approximately $143,836,000. Approximately $26,761,000 of the proceeds were used to repay all borrowings under our former bank credit facility along with the fees associated with entering into the new bank credit facility. Approximately $67,325,000 of the proceeds were used to fund our acquisitions in Utica-Rome and Watertown, New York which closed on January 28, 2000 and our acquisition in El Paso, Texas, which closed on January 31, 2000. Approximately $5,900,000 of the proceeds were used to redeem our Series B convertible preferred stock and pay accrued dividends. Approximately $7,300,000 were used to pay accrued dividends on all other series of convertible preferred stock and those shares were converted to common stock on an one-for-one basis. Finally, approximately $1,500,000 were used to repurchase 275,152 shares of common stock from an affiliate of one of the underwriters in order to comply with the NASD's rules. These expenditures have left us with proceeds remaining from the offering of approximately $35,000,000, with virtually no debt. Over the next six months, we anticipate the need to direct approximately $67,000,000 toward the completion of our pending acquisitions. These funds will be provided by the remaining net proceeds from our offering and by borrowings under our new credit facility. We also expect over the next 12 months to incur up to $2,800,000 of capital expenditures to upgrade our equipment and facilities, primarily at stations recently acquired and at those in the process of being acquired, in order to remain competitive and to create cost savings over the long term. This is expected to include upgrades necessary to return two of the stations we are acquiring, which are operating under special temporary authorities, to licensed operations. We expect to have sufficient cash from operations to fund these anticipated capital expenditures in 2000. -29- 30 After borrowings necessary to complete our pending acquisitions in Grand Rapids and Albany, we expect to have approximately $93,000,000 in remaining borrowing capability under our new credit agreement for working capital and future acquisitions, together with the additional $50,000,000 of available borrowing reserved for future acquisitions, subject in all cases to specified borrowing limitations. We believe that cash generated from operations, proceeds from the sale of our Flagstaff, Arizona stations and available borrowings under our new bank credit facility will be sufficient to meet our requirements for corporate expenses and capital expenditures for the foreseeable future, based on our projected operations and indebtedness. Year 2000 System Compliance Beginning in 1998, we developed and have worked through a Year 2000 compliance plan to address the material risks of noncompliance to our business operations and assets as a result of the calendar year rollover to the Year 2000. By the end of the fourth quarter of 1999, we had completed all assessments, upgrades, replacements and testing of our information technology and non-information technology systems, identified and polled significant suppliers and key business partners as to their Year 2000 readiness and developed contingency plans to address the greatest areas of risk of Year 2000 noncompliance. As of December 31, 1999, expenditures to address potential Year 2000 problems totaled $53,000. As of March 30, 2000, we have experienced no material disruptions in our business processes or operations related to the Year 2000 issue. To our knowledge, none of our material suppliers or key business partners has suffered material problems related to Year 2000 compliance that we believe would be likely to materially adversely affect our business. Despite the fact that we have not been adversely affected in any material respect by Year 2000 problems to date, we cannot be sure that we will not experience unexpected costs or be exposed to unexpected threats to our operations or assets from Year 2000 issues in the future. The impact of these uncertainties on our results of operations, liquidity and financial condition is not determinable. Market Risk We were exposed to the impact of interest rate changes because of borrowings under our former bank credit facility. It is our policy to enter into interest rate transactions only to the extent considered necessary to meet our objectives and to comply with the requirements of this facility. We have not entered into interest rate transactions for trading purposes. To satisfy the requirements imposed under the terms of our former credit facility, we entered into a two-year collar agreement with the Bank of Montreal effective August 17, 1998 for a notional amount of $34.4 million to mitigate the risk of interest rates increasing under this facility. On February 9, 2000 we terminated the collar agreement due to the fact that we no longer had any borrowings outstanding under a credit facility. In the event that we have material borrowing under our new credit agreement at some time in the future, we would consider entering into a new collar agreement. Cautionary Statement Concerning Forward-Looking Statements This Form 10-K includes certain forward-looking statements with respect to our company and its business that involve risks and uncertainties. These statements are influenced by our financial position, business strategy, budgets, projected costs and the plans and objectives of management for future operations. They use words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "project" and other similar expressions. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, we cannot assure you that our expectations will prove correct. Actual results and developments may differ materially from those conveyed in the -30- 31 forward-looking statements. For these statements, we claim 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 made in this Form 10-K 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 we operate, 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. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-K. If we do update or correct one or more forward-looking statements, you should not conclude that we will make additional updates or corrections with respect to those or any other forward-looking statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information required by this Item 7A is set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Market Risk" and is incorporated under this Item 7A by this reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Regent Communications, Inc. Index to Financial Statements - ------------------------------------------------------------------------------- Page Reports of Independent Accountants.................................... 32 Financial Statements: Consolidated Statements of Operations for the three years ended December 31, 1999, 1998 and 1997....... 34 Consolidated Balance Sheets at December 31, 1999 and 1998.... 35 Consolidated Statements of Cash Flows for the three years ended December 31, 1999, 1998 and 1997........... 37 Statement of Changes in Stockholders' Deficit................ 38 Notes to Consolidated Financial Statements................... 39 Financial Statement Schedules: II - Valuation and Qualifying Accounts....................... 66 31 32 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Regent Communications, Inc.: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of cash flows, and of changes in stockholders' deficit present fairly, in all material respects, the financial position of Regent Communications, Inc. (the "Company") at December 31, 1999 and 1998, and the results of its operations and its cash flows for the two years ended December 31, 1999 and 1998, in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. The consolidated financial statements of the Company, prior to the retroactive adjustments referred to below, for the period ended December 31, 1997 were audited by other independent accountants whose report dated January 21, 1998 expressed an unqualified opinion on those statements. We also audited the adjustments described in Note 1 to the consolidated financial statements that were applied to retroactively adjust the 1997 financial statements. In our opinion, such adjustments are appropriate and have been properly applied. /s/ PricewaterhouseCoopers LLP Cincinnati, Ohio March 28, 2000 32 33 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors and Stockholders Faircom Inc. We have audited the consolidated statements of operations, changes in stockholders' deficit, and cash flows of Faircom Inc. for the year ended December 31, 1997 (see Note 1). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Faircom Inc. for the year ended December 31, 1997 in conformity with generally accepted accounting principles. BDO Seidman, LLP Melville, New York January 21, 1998 33 34
REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - ----------------------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ------------------------------------------------------- 1999 1998 1997 ------------ ------------ ----------- Gross broadcast revenues $ 25,612,933 $ 16,046,968 $ 6,696,564 Less agency commissions (1,759,124) (1,275,445) (703,273) ------------ ------------ ----------- Net broadcast revenues 23,853,809 14,771,523 5,993,291 Station operating expenses 18,324,729 11,051,165 3,860,331 Depreciation and amortization 3,368,416 2,281,497 726,564 Corporate general and administrative expenses 2,773,062 1,872,182 391,252 ------------ ------------ ----------- Operating income (loss) (612,398) (433,321) 1,015,144 Interest expense (5,248,546) (2,883,251) (1,330,676) Write-down of carrying value of assets held for sale (602,226) -- -- Other income, net 163,649 26,648 24,537 ------------ ------------ ----------- Loss before income taxes and extraordinary items (6,299,521) (3,289,924) (290,995) Income tax expense -- -- (71,542) ------------ ------------ ----------- Loss before extraordinary items (6,299,521) (3,289,924) (362,537) Extraordinary net loss from debt extinguishments, net of taxes (471,216) (1,170,080) (4,333,310) ------------ ------------ ----------- Net loss $ (6,770,737) $ (4,460,004) $(4,695,847) ============ ============ =========== Loss applicable to common shares: Net loss $ (6,770,737) $ (4,460,004) $(4,695,847) Preferred stock dividend requirements (5,205,526) (2,165,471) -- Preferred stock accretion (17,221,154) (4,787,311) -- ------------ ------------ ----------- Loss applicable to common shares $(29,197,417) $(11,412,786) $(4,695,847) ============ ============ =========== Basic and diluted net loss per common share: Loss before extraordinary items $ (119.69) $ (42.67) $ (1.51) Extraordinary items (1.96) (4.88) (18.06) ------------ ------------ ----------- Net loss per common share $ (121.65) $ (47.55) $ (19.57) ============ ============ =========== Weighted average number of common shares used in basic and diluted calculation 240,000 240,000 240,000
The accompanying notes are an integral part of these financial statements. 34 35
REGENT COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS - ----------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, ---------------------------------- 1999 1998 ----------- ----------- ASSETS Current assets: Cash $ 3,410,410 $ 478,545 Accounts receivable, less allowance of $231,000 and $268,000 at December 31, 1999 and 1998, respectively 4,681,802 3,439,372 Other current assets 236,996 200,828 Assets held for sale 2,000,000 7,500,000 ----------- ----------- Total current assets 10,329,208 11,618,745 Property and equipment, net 12,373,274 9,303,975 Intangible assets, net 58,869,287 45,023,940 Other assets, net 2,155,386 1,671,210 ----------- ----------- Total assets $83,727,155 $67,617,870 =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 1,061,757 $ 1,005,327 Accrued expenses 1,879,135 2,772,612 Interest payable 111,194 769,367 Current portion of long-term debt 62,500 980,000 Notes payable -- 7,500,000 ----------- ----------- Total current liabilities 3,114,586 13,027,306 ----------- ----------- Long-term debt, less current portion 25,331,307 34,617,500 Other long-term liabilities 3,825,225 2,643,579 ----------- ----------- Total liabilities $32,271,118 $50,288,385 =========== ===========
The accompanying notes are an integral part of these financial statements. 35 36
REGENT COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) - ----------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, ------------------------------ 1999 1998 ------------ ------------ Redeemable preferred stock: Series A convertible preferred stock, $5.00 stated value, 620,000 shares authorized; 620,000 shares issued and outstanding-liquidation value: $3,650,109 and $3,433,109 at December 31, 1999 and 1998, respectively $ 4,580,109 $ 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: $5,822,054 and $5,372,054 at December 31, 1999 and 1998, respectively 7,322,054 5,372,054 Series C convertible preferred stock, $5.00 stated value, 400,640 shares issued and outstanding-liquidation value: $2,220,259 and $2,079,459 at December 31, 1999 and 1998, respectively 670,318 530,094 Series D convertible preferred stock, $5.00 stated value, 1,000,000 shares authorized; 1,000,000 shares issued and outstanding-liquidation value: $5,581,441 and $5,231,441 at December 31, 1999 and 1998, respectively 7,081,441 5,231,441 Series F convertible preferred stock, $5.00 stated value, 4,100,000 shares authorized; 4,100,000 and 2,450,000 shares issued and outstanding at December 31, 1999 and 1998, respectively-liquidation value: $23,052,566 and $12,839,454 at December 31, 1999 and 1998, respectively 29,202,566 12,839,454 Series G convertible preferred stock, $5.00 stated value, 1,800,000 shares authorized; 372,406 shares issued and outstanding-liquidation value: $2,049,837 2,608,446 -- Series H convertible preferred stock, $5.50 stated value, 2,200,000 shares authorized 2,181,817 shares issued and outstanding-liquidation value: $12,476,988 14,658,805 -- Series K convertible preferred stock, $5.50 stated value, 4,100,000 shares authorized 3,545,453 shares issued and outstanding-liquidation value: $19,596,160 23,141,613 -- ------------ ------------ Total redeemable preferred stock 89,265,352 27,406,152 Stockholders' deficit: Preferred stock: Series C convertible preferred stock, $5.00 stated value, 4,000,000 shares authorized; 3,382,693 and 3,319,980 shares issued and outstanding at December 31, 1999 and 1998, respectively-liquidation value: $18,718,925 and $17,231,832 at December 31, 1999 and 1998, respectively 1,445,126 1,131,561 Series E convertible preferred stock, $5.00 stated value, 5,000,000 shares authorized; 447,842 shares issued and outstanding-liquidation value: $2,481,842 and $2,324,453 at December 31, 1999 and 1998, respectively 2,239,210 2,239,210 Common stock, $.01 par value, 60,000,000 shares authorized; 240,000 shares issued and outstanding (Note 1) 2,400 2,400 Additional paid-in capital -- 3,871,549 Retained deficit (41,496,051) (17,321,387) ------------ ------------ Total stockholders' deficit (37,809,315) (10,076,667) ------------ ------------ Total liabilities and stockholders' deficit $ 83,727,155 $ 67,617,870 ============ ============
The accompanying notes are an integral part of these financial statements. 36 37
REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS - ----------------------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ------------------------------------------------ 1999 1998 1997 ------------ ------------ ------------ Cash flows from operating activities: Net loss $ (6,770,737) $ (4,460,004) $ (4,695,847) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 3,368,416 2,281,497 726,564 Amortization of deferred rental income (33,979) (34,008) (34,008) Provision for doubtful accounts 389,615 174,051 46,308 Noncash interest expense 1,575,758 234,897 -- Noncash charge for debt extinguishments 471,216 804,580 4,333,310 Noncash charge for compensation -- 530,264 -- Gain on sale of radio stations (124,696) -- -- Write-down of carrying value of assets held for sale 602,226 -- -- Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (1,481,379) (344,209) (234,538) Other assets (36,168) 335,644 (13,326) Accounts payable (339,255) (401,283) 10,427 Accrued expenses 659,505 (167,344) 24,751 Interest payable (658,173) 660,976 254,603 ------------ ------------ ------------ Net cash (used in) provided by operating activities (2,377,651) (384,939) 418,244 Cash flows from investing activities: Acquisitions of radio stations, net of cash acquired (27,532,988) (31,440,795) (7,831,180) Capital expenditures (1,977,466) (818,919) (131,701) Proceeds from sale of radio stations 13,998,693 -- -- ------------ ------------ ------------ Net cash used in investing activities (15,511,761) (32,259,714) (7,962,881) Cash flows from financing activities: Proceeds from issuance of redeemable convertible preferred stock 41,753,668 20,150,000 -- Proceeds from long-term debt 16,500,000 36,000,000 23,000,000 Principal payments on long-term debt (26,703,693) (20,749,410) (13,194,135) Payment of notes payable (7,500,000) -- -- Payment for deferred financing costs (426,649) (1,292,042) (834,137) Payment of issuance costs (2,802,049) (1,520,662) -- Payment of appraisal right liability -- -- (1,015,000) ------------ ------------ ------------ Net cash provided by financing activities 20,821,277 32,587,886 7,956,728 ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents 2,931,865 (56,767) 412,091 Cash and cash equivalents at beginning of period 478,545 535,312 123,221 ------------ ------------ ------------ Cash and cash equivalents at end of period $ 3,410,410 $ 478,545 $ 535,312 ============ ============ ============ Supplemental schedule of non-cash investing and financing activities: Conversion of Faircom Inc.'s convertible subordinated promissory notes to Faircom Inc. common stock $ -- $ 10,000,000 $ -- Liabilities assumed in acquisitions -- 11,680,322 -- Series E convertible preferred stock issued in conjunction with the acquisition of Alta California Broadcasting, Inc. and Topaz Broadcasting, Inc. -- 2,239,210 -- Series C convertible preferred stock issued in conjunction with the merger between Faircom Inc. and the Company -- 1,618,681 -- Series A and B convertible preferred stock warrants -- 310,000 --
The accompanying notes are an integral part of these financial statements. 37 38
REGENT COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - ----------------------------------------------------------------------------------------------------------------------------------- SERIES C SERIES E Convertible Convertible Additional Total Preferred Preferred Common Paid-In Retained Stockholders Stock Stock Stock Capital Deficit Deficit ----------- ----------- ------ ---------- ------------- ------------ Balance, December 31, 1996 $2,400 $2,677,195 $ (8,165,536) $ (5,485,941) Net loss (4,695,847) (4,695,847) ---------- ---------- ------ ---------- ------------ ------------ Balance, December 31, 1997 (see Note 1) 2,400 2,677,195 (12,861,383) (10,181,788) Conversion of Faircom Inc.'s Class A and Class B convertible subordinated promissory notes 10,000,000 10,000,000 Issuance of 3,720,620 shares of Series C convertible preferred stock and retirement of 26,390,199 shares of Faircom Inc. common stock and recordation of the effect of recapitalization due to the reverse merger with Faircom Inc. $1,584,820 (3,000,000) (1,415,180) Reclassification of Series C convertible preferred stock to outside of stockholders' deficit due to such shares being redeemable (453,259) (453,259) Issuance of Faircom Inc. employee stock options immediately converted into options to purchase 157,727 shares of Series C convertible preferred stock in conjunction with the merger 530,264 530,264 Issuance of Series A redeemable preferred stock warrants exercisable for 80,000 shares of common stock 160,000 160,000 Issuance of 205,250 shares of Series E convertible preferred stock in connection with the acquisition of Alta California Broadcasting, Inc. $1,026,250 1,026,250 Issuance of 242,592 shares of Series E convertible preferred stock in connection with the acquisition of Topaz Broadcasting, Inc. 1,212,960 1,212,960 Dividends and accretion on mandatorily redeemable convertible preferred stock (6,495,910) (6,495,910) Net loss (4,460,004) (4,460,004) ----------- ---------- ------ ---------- ------------ ------------ Balance, December 31, 1998 1,131,561 2,239,210 2,400 3,871,549 (17,321,387) (10,076,667) Exercise of stock options on 62,713 shares of Series C convertible preferred stock 313,565 (171,918) 141,647 Dividends and accretion on mandatorily redeemable convertible preferred stock (3,699,631) (13,858,474) (17,558,105) Beneficial conversion feature related to issuance of redeemable convertible preferred stocks (3,545,453) (3,545,453) Net loss (6,770,737) (6,770,737) ---------- ---------- ------ ---------- ------------ ------------ Balance, December 31, 1999 $1,445,126 $2,239,210 $2,400 $ -- $(41,496,051) $(37,809,315) ========== ========== ====== ========== ============ ============
The accompanying notes are an integral part of these financial statements. 38 39 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 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. On June 15, 1998, the Company acquired, 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, the date of merger, are those of Faircom. Faircom operated radio stations through its wholly-owned subsidiaries in Flint, Michigan and, effective June 30, 1997, in Mansfield, Ohio (see Note 2). As a result of the Faircom merger, Faircom's historical stockholders' deficit prior to the merger has 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. 2. ACQUISITIONS AND DISPOSITIONS 1999 Acquisitions and Dispositions ---------------------------------- 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 (See Note 10). Upon consummation of the sale, the note was repaid. The sale resulted in a $100,000 gain to the Company which has been included in other income in the accompanying consolidated Statement of Operations for the year ended December 31, 1999. On May 6, 1999, the Company consummated the acquisition of the FCC licenses and related assets of WJON (AM), WWJO (FM) and KMXK (FM) in St. Cloud, Minnesota (the "St. Cloud Stations") 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 and borrowings under the Company's senior reducing credit facility. Approximately $9,093,000 of the purchase price was allocated to the FCC licenses and goodwill and is being amortized over a 40-year period, and the remaining $3,607,000 was allocated to property and equipment. On August 1, 1999, the Company sold the FCC licenses and related assets used in the operations of KCBQ (AM) in San Diego, California for approximately $6,000,000 in cash (See Note 10). 39 40 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- On September 1, 1999, the Company purchased the FCC licenses and related assets used in the operations of radio stations WXKC (FM) and WRIE (AM) licensed to Erie, Pennsylvania and WXTA (FM) licensed to Edinboro, Pennsylvania (the "Erie Stations") for approximately $13,500,000 in cash. The purchase was financed by approximately $6,300,000 in proceeds from the issuance of Series H Convertible Preferred Stock and borrowings under the Company's senior reducing credit facility. Approximately $12,400,000 of the purchase price has been allocated to the FCC licenses and goodwill and is being amortized over a 40-year period. The remaining $1,100,000 was allocated to property and equipment and to a non-compete agreement. On October 15, 1999, the Company consummated the sale of the FCC licenses and related assets of KZGL (FM), KVNA (FM) and KVNA (AM) (the "Kingman Stations") for approximately $5,400,000. On November 5, 1999, the Company sold the FCC licenses and related assets used in the operations of radio stations KRLT (FM) and KOWL (AM) in Lake Tahoe, California (the "Lake Tahoe Stations") for approximately $1,250,000. On November 8, 1999 the Company signed a letter of intent to purchase all of the outstanding capital stock of KZAP, Inc., owner of radio station KZAP (FM) located in Chico, California for a purchase price of $1.4 million. The purchase price for the stock will be payable, in whole or in part, at the option of the seller, in cash or in shares of common stock at a stated value of $6.00 per share. On December 1, 1999, the Company began operating the Station under a time brokerage agreement ("TBA"). 1998 Acquisitions: ------------------ On January 21, 1998, Faircom acquired substantially all of the assets and operations of radio station WSWR-FM in Shelby, Ohio (the "Shelby Station") for $1,125,000 in cash. The acquisition was accounted for under the purchase method of accounting and was principally financed through the borrowing of $1,100,000 represented by a subordinated promissory note. Faircom allocated substantially all of the purchase price to the related FCC licenses. The excess cost over the fair market value of net assets acquired and the FCC licenses related to this acquisition are being amortized over a 15 year period. On June 15, 1998, concurrent with the Faircom merger, the following acquisitions (the "June 15 Acquisitions") were consummated. The acquisitions were accounted for under the purchase method of accounting. Goodwill and FCC licenses related to the June 15 Acquisitions are being amortized over a 40-year period. 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. 40 41 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The Company acquired the FCC licenses and related assets used in the operation of radio stations KIXW (AM) and KZWY (FM) in Apple Valley, California from Ruby Broadcasting, Inc. (the "Ruby Stations"), an affiliate of Topaz Broadcasting, Inc. ("Topaz"), for $5,985,000 in cash. The Company acquired all of the outstanding capital stock of Topaz 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 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. (the "Continental Stations") 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 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 debt assumed and 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 (see Note 4), $18,150,000 in additional equity from the sale of the Company's convertible preferred stock (see Note 5) 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 (see Note 5). 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. 41 42 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The Company allocated the aggregate purchase price from all acquisitions in 1999 and 1998 as follows:
1999 1998 ----------- ----------- Accounts receivable $ -- $ 143,000 Broadcasting equipment and furniture and equipment 4,675,000 6,503,000 FCC license 21,310,000 30,328,000 Goodwill 65,000 1,853,000 Other 150,000 360,000 ----------- ----------- $26,200,000 $39,187,000 ----------- -----------
The fair values of the assets acquired were determined by an independent valuation. 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 Mansfield Stations, the June 15 Acquisitions, KOSS (FM), the St. Cloud Stations, the Erie Stations and the dispositions of the Lake Tahoe Stations, Kingman Stations, KCBQ (AM) and WSSP (FM) as though the acquisitions and dispositions had occurred at the beginning of each year.
PRO FORMA (UNAUDITED) ------------------------------------- 1999 1998 ----------------- ------------------ Net broadcast revenues $24,633,000 $24,489,000 Net loss before extraordinary items (7,121,000) (5,534,000) Net loss (7,592,000) (6,704,080) Net loss per common share before extraordinary items: Basic and diluted $ (125.96) $ (54.87) Net loss per common share: Basic and diluted $ (127.92) $ (59.75)
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 nor is it indicative of future results of operations. The acquisition of the Shelby Station has not been included in the above pro forma information, due to it not having a material effect on the operating results of the Company. 42 43 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1997 Acquisitions: ------------------ On June 30, 1997, Faircom acquired the assets and operations of two commercial radio stations located in Mansfield, Ohio (the "Mansfield Stations"), pursuant to the terms of an asset purchase agreement dated May 20, 1997 for $7,350,000 in cash. In addition, Faircom paid $300,000 in cash to one of the sellers in consideration of a five year non-compete agreement. The acquisition was accounted for under the purchase method of accounting and was financed with borrowings under Faircom's senior secured term notes (see Note 4). Faircom allocated approximately $1,089,000 of the purchase price to property and equipment and approximately $6,261,000 to the related Federal Communication Commission ("FCC") licenses. The excess cost over the fair market value of the net assets acquired and the FCC licenses related to this acquisition are being amortized over three to 15-year periods. 3. SUMMARY OF ACCOUNTING POLICIES a. CONSOLIDATION: The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts and balances have been reclassified to conform to the current classifications with no effect on financial results. b. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. c. PROPERTY AND EQUIPMENT: Property and equipment are stated at cost and depreciated on the straight-line basis over the estimated useful life of the assets. Buildings are depreciated over forty years, broadcasting equipment over a six-to-thirteen year life and furniture and fixtures generally over a five-year life. Leasehold improvements are amortized over the shorter of their useful lives or the terms of the related leases. For property and equipment retired or sold, the gain or loss is classified in other income, net in the Statement of Operations. 43 44 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- d. INTANGIBLE ASSETS: Intangible assets consist principally of the value of FCC licenses and the excess of the purchase price over the fair value of net assets of acquired radio stations (goodwill). These assets are amortized on a straight-line basis over lives ranging from 15 to 40 years. The periods of amortization are evaluated annually to determine whether they warrant revision. e. LONG-LIVED ASSETS: Long-lived assets (including related goodwill and other intangible assets) are evaluated periodically if events or circumstances indicate a possible inability to recover their carrying amount. Such evaluation is based on various analyses, including cash flows and profitability projections. If future expected undiscounted cash flows are insufficient to recover the carrying amounts of the asset, then an impairment loss is recognized based upon the excess of the carrying value of the asset over the anticipated cash flows on a discounted basis. f. DEFERRED FINANCING COSTS AND OTHER ASSETS: Deferred financing costs are generally amortized on a straight-line basis over the term of the related debt. Non-compete agreements are amortized over the terms of the related agreements. g. CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The credit risk is limited due to the large number of customers comprising the Company's customer base and their dispersion across several different geographic areas of the Company. The Company also maintains cash in bank accounts at financial institutions where the balance, at times, exceeds federally insured limits. h. REVENUE RECOGNITION: BROADCAST REVENUE Broadcast revenue for commercial broadcasting advertisements is recognized when the commercial is broadcast. 44 45 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- BARTER TRANSACTIONS Barter transactions (advertising provided in exchange for goods and services) are reported at the estimated fair value of the products or services received. Revenue from barter transactions is recognized when advertisements are broadcast, and merchandise or services received are charged to expense when received or used. If merchandise or services are received prior to the broadcast of the advertising, a liability (deferred barter revenue) is recorded. If advertising is broadcast before the receipt of the goods or services, a receivable is recorded. Barter revenue was approximately $2,157,800 and $731,000, and barter expense was approximately $2,001,900 and $800,000 for the years ended December 31, 1999 and 1998, respectively. i. FAIR VALUE OF FINANCIAL INSTRUMENTS: SHORT-TERM INVESTMENTS Due to their short term maturity, the carrying amount of accounts receivable, accounts payable, accrued expenses and notes payable approximated their fair value at December 31, 1999 and 1998. LONG-TERM DEBT The fair value of the Company's long-term debt is estimated based on the current rates offered to the Company for debt of the same remaining maturities. Based on borrowing rates currently available, the fair value of long-term debt approximates its carrying value at December 31, 1999. REDEEMABLE PREFERRED STOCK The carrying amounts of the Company's Series A, B, D, F, G, H and K redeemable convertible preferred stock represent the fair market value of the shares at December 31, 1999 plus accrued dividends. The Series C redeemable convertible preferred stock carrying value is based on an allocated amount of the total Series C basis from the June 15, 1998 merger (see Note 1) plus accrued dividends. The fair value of these shares is approximately $2,604,000 at December 31, 1999. j. RECLASSIFICATION: Certain balances in the December 31, 1998 and 1997 statements have been reclassified to conform with the December 31, 1999 presentation. These changes had no impact on previously reported results of operations. 45 46 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 4. LONG-TERM DEBT Long-term debt consists of the following as of December 31:
1999 1998 ------------ ------------ Senior reducing revolving credit facility (a) $ 24,761,307 $ 34,900,000 Subordinated promissory note (b) 600,000 600,000 Non-compete agreements (c) 32,500 97,500 ------------ ------------ 25,393,807 35,597,500 Less: current portion of long-term debt (62,500) (980,000) ------------ ------------ $ 25,331,307 $ 34,617,500 ============ ============
Repayment of long-term debt required over each of the years following December 31, 1999 consists of: 2000 $ 62,500 2001 4,562,056 2002 5,312,398 2003 5,312,398 2004 6,062,741 Thereafter 4,081,714 ----------- $25,393,807 =========== a. SENIOR REDUCING REVOLVING CREDIT FACILITY: On June 15, 1998, the Company extinguished its existing loan facility using funds obtained from the Company's senior reducing revolving credit facility. As a result of the extinguishment of debt, the Company recognized an extraordinary loss of $1,170,080, net of income taxes, in 1998 consisting of a $366,000 prepayment penalty and the write-off of approximately $804,000 of related deferred financing costs. The effective tax rate applied to the extraordinary gain and loss was zero due to the Company's cumulative loss carryforward position. 46 47 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The Company has an agreement with a group of lenders (as amended, the "Credit Agreement") which provides for a senior reducing revolving credit facility with a commitment of up to $55,000,000 expiring in March 2005 (the "Revolver"). 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. During 1998, in conjunction with financing the June 15 Acquisitions, refinancing certain existing debt and providing for additional working capital, the Company borrowed $34,900,000 under the Credit Agreement. The Credit Agreement provides for the reduction of the commitment under the Revolver for each of the four quarters ended December 31, 1999 and by increasing quarterly amounts thereafter, and, under certain circumstances, requires mandatory prepayments of any outstanding loans and further commitment reductions. The indebtedness of the Company under the Credit Agreement is collateralized by liens on substantially all of the assets of the Company and its operating and license subsidiaries and by a pledge of the operating and license subsidiaries' stock, and is guaranteed by these subsidiaries. The Credit Agreement contains restrictions pertaining to the maintenance of financial ratios, capital expenditures, payment of dividends or distributions of capital stock and incurrence of additional indebtedness. Interest under the Credit Agreement is payable, at the option of the Company, at alternative rates equal to the LIBOR rate (6.50% at December 31, 1999) plus 1.25% to 3.50% or the base rate announced by the Bank of Montreal (8.50% at December 31, 1999) plus 0% 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 must 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 is also required to pay certain other fees to the agent and the lenders for the administration of the facilities and the use of the credit facility. As a condition of the Credit Agreement, the Company entered into a two-year collar agreement (the "Collar Agreement") with the Bank of Montreal on August 17, 1998 for a notional amount of $34,400,000. The Collar Agreement is based on the three month LIBOR rate, provides for a CAP Rate, as defined, of 6.5% and a Floor Rate, as defined, of 5.28% plus, in each case, the additional spread stipulated under the Credit Agreement. Effective January 1, 1999, the Company amended the Credit Agreement in order to cure violations of certain restrictive covenants that existed as of December 31, 1998. The amended Credit Agreement stipulated that the Company must reduce the outstanding amount under the Credit Agreement by $915,000 during the first quarter of 1999; consequently, such amount has been classified as current portion of long term debt at December 31, 1998. The Company also agreed to sell its properties located in Lake Tahoe, California, Flagstaff and Kingman, Arizona (see Note 2), and make certain capital expenditures according to an agreed-upon timetable. In addition, the amended Credit Agreement increased the spread applied to the LIBOR rate from 1.25% to 2.75% to 1.50% to 3.50% and the spread applied to the base rate announced by the Bank of Montreal from 0% to 1.50% to .25% to 2.25%. 47 48 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- On November 11, 1999, the Company and its senior lenders amended the Credit Agreement again in order to cure non-compliance by the Company as of September 30, 1999 with certain restrictive covenants. Under the amendment, the Company agreed that it would (a) borrow no additional funds during the balance of 1999, (b) obtain by no later than November 30, 1999, written commitments in form and substance satisfactory to the lenders for the issuance of at least $10,000,000 of additional net equity and (c) issue such equity no later than December 30, 1999. Of the net proceeds raised, subject to the provisions of the Credit agreement, the first $10,000,000 must be applied to reduce permanently the senior debt. To the extent the Company raised more than $10,000,000, a substantial portion of the additional proceeds had to be applied to reduce permanently the senior revolving credit facility. On December 14, 1999, the Company issued 3,545,453 shares of Series K Convertible Preferred Stock at $5.50 per share. From the net proceeds of approximately $19,100,000, $15,775,000 was used to permanently reduce the senior revolving credit facility. An additional $6,398,600 from the net proceeds of the sale of the Kingman Stations and the Lake Tahoe Stations was used to permanently reduce the outstanding borrowings under the credit facility. As a result of the debt facility paydown in accordance with the original terms of the credit facility, the Company recognized an extraordinary loss of $471,000, net of income tax, from the write-off of related deferred financing costs. The effective tax rate applied to the extraordinary loss was zero due to the Company's cumulative loss carryforward position. In addition, as a result of the modification to the credit facility in November 1999, which permanently reduced the overall availability, the Company wrote-off a portion of deferred financing costs and recognized a charge to interest expense of approximately $162,000. At December 31, 1999, the Company had related unamortized deferred financing fees totaling approximately $1,187,661 which are classified as other assets in the accompanying Consolidated Balance Sheet. On January 27, 2000, Regent Broadcasting, Inc., a wholly owned subsidiary of the Company, as the borrower, and the Company, as a guarantor, entered into a new credit agreement with a group of lenders which provides for a senior secured reducing revolving credit facility expiring December 31, 2006 with an initial aggregate revolving commitment of up to $125,000,000 (including a commitment to issue letters of credit of up to $25,000,000 in aggregate face amount, subject to the maximum revolving commitment amount available). This revolving credit facility is available for working capital and acquisitions, including related acquisition expenses. On January 28, 2000 the Company paid off the outstanding amount of debt and related fees totaling approximately $25,096,000 to the Bank of Montreal. The pay off was completed using proceeds from an initial public offering of Common stock which also occurred on January 28, 2000 (See Note 15). This final paydown resulted in an extraordinary loss of approximately $1,036,000, net of income tax from the write-off of the remaining deferred financing costs in January 2000. 48 49 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- b. SUBORDINATED PROMISSORY NOTE: In conjunction with the June 15 Acquisitions, the Company assumed a subordinated promissory note (the "McNulty Note") to McNulty Broadcasting, Inc. ("McNulty") for $600,000. The McNulty Note provides for quarterly principal payments of $15,000 beginning on August 1, 2000. The remaining principal is due May 1, 2005. Interest on the McNulty Note is payable quarterly at a rate of 8.0%. c. NON-COMPETE AGREEMENTS: In conjunction with the June 15 Acquisitions, the Company assumed five year non-compete agreements with McNulty and Island Broadcasting Associates, L.P. in the amounts of $125,000 and $200,000, respectively (the "Non-Compete Agreements"). The Non-compete Agreements require quarterly payments of $16,250 through May 2000. 5. CAPITAL STOCK AND REDEEMABLE PREFERRED STOCK The Company's authorized capital stock consists of 60,000,000 shares of common stock and 40,000,000 shares of preferred stock and designates 620,000 shares as Series A Convertible Preferred Stock ("Series A"), 1,000,000 shares as Series B Senior Convertible Preferred Stock ("Series B"), 4,000,000 shares as Series C Convertible Preferred Stock ("Series C"), 1,000,000 shares as Series D Convertible Preferred Stock ("Series D"), 5,000,000 shares are Series E Convertible Preferred Stock ("Series E"), 4,100,000 as Series F Convertible Preferred Stock ("Series F"), 4,000,000 shares as Series G Convertible Preferred Stock ("Series G"), 2,200,000 shares as Series H Convertible Preferred Stock ("Series H") and 4,100,000 shares of Series K Convertible Preferred Stock ("Series K"). The stated value of Series A through Series G preferred stock is $5.00 per share and the stated value of Series H and Series K is $5.50 per share. Series A, Series C, Series E, Series F, Series G, Series H and Series K generally have the same voting rights as common stock and each share may be converted at the option of the holder into one share of common stock, subject to adjustment. Series B has no voting power except for specific events and ranks senior to all other series of preferred stock. Each Series B share may be converted at the option of the holder into one-half share of common stock, subject to adjustment. Series D has limited voting power and each share may be converted at the option of the holder into one share of common stock, which would also have the same limited voting power in certain circumstances. The Company's Board of Directors also has the right to require conversion of all shares of Series A, B, C, D, E, F, G, H and K upon the occurrence of certain events. Series A, Series C, Series D, Series E, Series F, Series G, Series H and Series K have equal rights for the payment of dividends and the distribution of assets and rights upon liquidation, dissolution or winding up of the Company. 49 50 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Upon liquidation of the Company, no distribution shall be made (a) to holders of stock ranking junior to the Series B unless the holder of the Series B has received the stated value per share, plus an amount equal to all unpaid dividends or (b) to the holders of stock ranking on a parity with the Series B, except distributions made rateably on the Series B and all other such parity stock. Dividends accrue cumulatively on all series of preferred stock, except Series F, Series G, Series H and Series K at an annual rate of $0.35 per share. Dividends accrue cumulatively on Series F and Series G at an annual rate of $0.50 per share and Series H and Series K at an annual rate of $0.55 per share and, to the extent not paid in cash, are compounded quarterly at a rate of 10% per annum. The Company may redeem Series A, B and D at the stated value, plus an amount equal to all unpaid dividends to the date of redemption, whether or not declared. Undeclared dividends in arrears on all outstanding series of preferred stock amounted to approximately $7,532,000 and $2,327,000 at December 31, 1999 and 1998, respectively. Dividends on a per share basis are as follows:
PREFERRED SERIES ---------------------------- DECEMBER 31, A B C D E F G H K - - - - - - - - - 1999 $ 0.89 $ 0.82 $ 0.53 $ 0.58 $ 0.54 $ 0.62 $ 0.50 $ 0.22 $ 0.03 1998 $ 0.54 $ 0.37 $ 0.19 $ 0.23 $ 0.19 $ 0.24 - - -
In conjunction with the closing of the Faircom merger and the June 15 Acquisitions, BMO Financial, Inc., an existing shareholder of the Company, purchased 780,000 shares of Series D for $3,900,000, General Electric Capital Corporation ("GE Capital") paid $3,900,000 to complete its purchase of 1,000,000 shares of Series B and the Chief Operating Officer of the Company purchased 20,000 shares of Series A for $100,000. On June 15, 1998, pursuant to a stock purchase agreement with the Company (the "Series F Stock Purchase Agreement"), Waller-Sutton Media Partners, L.P. ("Waller-Sutton") purchased 1,000,000 shares of Series F for $5,000,000. Also on that date, WPG Corporate Development Associates V, L.L.C. and WPG Corporate Development Associates V (Overseas), L.P., purchased a total of 650,000 shares of Series F for $3,250,000; the Chairman of Waller-Sutton Management Group, which manages Waller-Sutton, purchased 50,000 shares of Series F for $250,000; GE Capital purchased 250,000 shares of Series F for $1,250,000; and River Cities Capital Fund Limited Partnership ("River Cities") purchased 100,000 shares of Series F for $500,000. In connection with these purchases, the purchasers acquired 10-year warrants to purchase an aggregate of 860,000 shares of the Company's common stock for $5.00 per share. Such warrants can be "put" back to the Company after five years. The 860,000 warrants issued in conjunction with the Series F have been assigned a fair value of $3,539,000 and $2,459,000 at December 31, 1999 and 1998, respectively and have been classified under other long-term liability due to the associated "put" rights. During 1999, $1,080,000 was charged to interest expense to account for the increase in the fair value of the warrants. The Series F Stock Purchase Agreement provides that the terms of the Series F include the right of the holders to require the Company to repurchase the Series F at any time after five years at a price equal to the greater of its fair market value, as defined, or the sum of its stated value of $5.00 per share and all accrued but unpaid dividends thereon, as 50 51 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- well as any warrants held by such holders at a price equal to the fair market value of the Company's common stock less the exercise price of such warrants. Holders of the Series A, Series B, certain Series C, Series D, Series G, Series H and Series K would have similar "put" rights only if the holders of the Series F were to exercise their "put" rights. Series A, Series B, a portion of Series C, Series D and Series F, Series G, Series H and Series K (but not the remaining Series C and Series E) have been excluded from the equity to reflect such anticipated "put" rights. Issuance costs of approximately $2,925,000 for these shares have been netted against the proceeds. The Company adjusted the carrying values of Series A, Series B, Series D, Series F, Series G, and Series H to fair value at December 31, 1999. This adjustment was recognized as a charge to retained deficit (since there was no additional paid in capital) resulting in an adjustment to loss from continuing operations attributable to common stockholders. In order to induce River Cities, as a holder of Series A, to approve the merger with Faircom, the Company issued to River Cities, upon consummation of the merger, five year warrants to purchase 80,000 shares of the Company's common stock at an exercise price of $5.00 per share. R. Glen Mayfield, a member of the Company's Board of Directors, serves as the general partner of River Cities Management Limited Partnership, which is the general partner of River Cities. The warrants issued to the holders of Series A have been assigned a value of $160,000 and have been classified as additional paid-in capital. In order to induce GE Capital, the holder of the Company's Series B, to approve the addition of mandatory conversion rights to the terms of the Series B in conjunction with the issuance of the Series F, the Company issued to GE Capital, upon issuance of the Series F, five year warrants to purchase 50,000 shares of the Company's common stock at an exercise price of $5.00 per share. The warrants issued to the holder of Series B has been assigned a fair value of $205,800 and $150,000 at December 31, 1999 and 1998, respectively and has been classified as a long-term liability due to associated "put" rights. These "put" rights are subject to the prior exercise of the warrants and exercise of the "put" rights associated with warrants issued to the Series F holders. During 1999, $55,800 was charged to interest expense to account for the increase in the warrants fair value. In November 1998, the Company issued 400,000 shares of Series F for $5.00 per share to existing Series F holders on a pro rata basis. The proceeds were used to complete the purchase of KOSS (FM) (see Note 2), finance capital expenditures and meet initial working capital requirements of KOSS (FM). In January 1999, the Company issued 372,406 shares of Series G 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. The proceeds were used to pay down existing debt under the Credit Agreement and fund working capital needs of the Company. 51 52 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- In February 1999, the Company issued 633,652 shares of Series F for $5.00 per share to existing Series F holders. The proceeds were used to finance certain capital improvements, and the Faircom merger and fund working capital needs of the Company. In addition, the holders of Series F committed an additional $5,082,000 through the purchase of an additional 1,016,000 shares of Series F at $5.00 to fund acquisitions by 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 its purchase of the St. Cloud Stations. In June 1999, the Company issued 636,363 shares of Series H Convertible Preferred Stock at $5.50 per share to certain existing preferred stockholders to fund a reduction in bank debt and working capital requirements. The Series H Convertible Preferred Stock was issued with similar terms as the Series G Convertible Preferred Stock. In addition, holders of the Series H Convertible Preferred Stock were granted the right to elect one individual to the Company's Board of Directors upon and subject to certain conditions. In August 1999, the Company issued an additional 1,545,454 of Series H Convertible Preferred Stock at $5.50 per share to certain existing preferred stockholders and two new investors to fund in part the purchase of the Erie Stations as well as working capital requirements. On December 14, 1999, the Company issued 3,545,453 shares of Series K Convertible Preferred Stock (new series of convertible preferred stock with terms substantially similar to the terms of the Series H Convertible Preferred Stock) at $5.50 per share. The net proceeds of $19,113,000 were used to reduce debt by $15,775,000, and the remaining proceeds were used to fund a portion of the purchase price of the Company's pending acquisitions consummated in February 2000. The redeemable Series K convertible preferred shares were deemed to have an embedded beneficial conversion feature valued in aggregate at $3,545,000. The beneficial conversion feature was recognized immediately as a charge to retained deficit (since there was no additional paid-in capital) resulting in an adjustment to loss from continuing operations attributable to common stockholders and an increase in the carrying value of the preferred stock. 6. STOCK-BASED COMPENSATION PLAN The Regent Communications, Inc. 1998 Management Stock Option Plan (the "1998 Stock Option Plan") provides for the issuance of up to an aggregate of 2,000,000 common shares in connection with the issuance of incentive stock options ("ISO's") and non-qualified stock options ("NQSO's"). The Compensation Committee of the Company's Board of Directors determines eligibility. The exercise price of the options is to be not less than the fair market value of the underlying common stock at the grant date, except in the case of ISO's granted to a 10% owner (as defined), for which the option share price must be at least 110% of the fair market value of the underlying common stock at the grant date. Under the terms of the 1998 Stock Option Plan, the options 52 53 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- expire no later than ten years from the date of grant in the case of ISO's (five years in the case of ISOs granted to a 10% owner), no later than ten years and one day in the case of NQSOs, or earlier in either case in the event a participant ceases to be an employee of the Company. Upon consummation of the Faircom merger, the Board of Directors of the Company adopted the Regent Communications, Inc. Faircom Conversion Stock Option Plan ("Conversion Stock Option Plan") which applies to those individuals previously participating in the Faircom Inc. Stock Option Plan ("Faircom Plan"). In exchange for relinquishing their options under the Faircom Plan, five former officers and members of Faircom's Board of Directors were given, in total, the right to acquire 274,045 shares of the Company's Series C Convertible Preferred stock at exercise prices ranging from $0.89 to $3.73 per share and expiring from May 11, 1999 to July 1, 2002 (the "Converted Options"). In addition, two officers of Faircom, pursuant to the terms of the merger agreement between the Company and Faircom, were granted stock options as of June 15, 1998 resulting in the recognition of approximately $530,000 in compensation expense. 53 54 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The Company applies the provisions of APB Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25"), in accounting for the 1998 Stock Option Plan. Under APB 25, no compensation expense is recognized for options granted to employees at exercise prices that are equal to or greater than the fair market value of the underlying common stock at the grant date. Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), requires the Company to provide, beginning with 1995 grants, pro forma information regarding net income and net income per common share as if compensation costs for the Company's stock option plans had been determined in accordance with the fair value based method prescribed in SFAS 123. Such pro forma information is as follows for the year ended December 31:
Net loss: 1999 1998 1997 ----------- ----------- ----------- As reported $(6,770,737) $(4,460,004) $(4,695,847) Pro forma compensation expense, net of tax benefit (543,817) (599,736) (169,841) ----------- ----------- ----------- Pro forma $(7,314,544) $(5,059,740) $(4,865,688) =========== =========== =========== Basic and diluted net loss per common share: As reported $ (121.65) $ (47.55) $ (19.57) Pro forma $ (123.92) $ (50.05) $ (20.27)
54 55 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The weighted-average fair value per share for options granted under the 1998 Stock Option Plan was $2.88 for ISOs in both 1999 and 1998, and $2.69 and $2.00 for NQSOs in 1999 and 1998, respectively. The weighted-average fair value for options granted under the Conversion Stock Option Plan was approximately $230,000, and such amount was recognized at the time of conversion since the Converted Options are fully vested. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
1999 1998 1997 -------------------- ----------------------------- ------- Converted ISOs NQSOs ISOs NQSOs Options NQSOs ------- ------- ------- ------- ------- ------- Dividends None None None None None None Volatility 35% 35% 35.0% 35.0% 35.0% 46.5% Risk-free interest rate 5.56% 5.58% 5.55% 5.43% 5.38% 6.28% Expected term 10 years 5 years 10 years 5 years 2 years 5 years
55 56 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Presented below is a summary of the status of outstanding Company stock options issued to employees:
WEIGHTED AVERAGE SHARES EXERCISE PRICE --------- ---------------- Company options converted on June 15, 1998 274,045 $2.73 Granted 1,321,488 $5.00 Exercised -- -- Forfeited/expired -- -- --------- ----- Company options held by employees at December 31, 1998 1,595,533 $4.61 Granted 317,678 $5.05 Exercised (62,713) $2.73 Forfeited/expired (10,000) $2.73 --------- ----- Company options held by employees at December 31, 1999 1,840,498 $4.76
The following table summarizes the status of Company options outstanding and exercisable at December 31, 1999, under the 1998 Stock Option Plan and the Conversion Stock Option Plan:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------------------- -------------------------------- WEIGHTED AVERAGE WEIGHTED WEIGHTED REMAINING AVERAGE AVERAGE EXERCISE CONTRACTUAL EXERCISE EXERCISE PRICE SHARES(1) LIFE (YEARS) PRICE SHARES PRICE ----------------- --------------- -------------- ------------ ------------- ------------- $5.50 30,000 4.8 $ 5.50 -- $ 5.50 $5.00 1,599,166 8.3 $ 5.00 371,162 $ 5.00 $0.88 - $3.73 211,332 2.5 211,332 $ 2.86 --------- -------- 1,840,498 582,494 ========= =======
Of the options outstanding at December 31, 1999, it is anticipated that no more than 1,252,980 will be treated as NQSOs and at least 587,518 will be treated as ISOs. (1) As of December 31, 1999, the stock options granted under the 1998 Stock Option Plan entitle the holders to purchase 1,629,166 shares of the Company's common stock. Stock options granted under the Conversion Stock Option Plan entitle the holders to purchase 211,332 shares of the Company's Series C Convertible Preferred Stock. 7. EARNINGS PER SHARE The Company has adopted the provisions of SFAS 128, "Earnings Per Share" ("SFAS 128"). 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. Basic EPS and diluted EPS are the same for all periods presented, since the effect of the Company's common stock equivalents would be anti-dilutive. All Series of the Company's convertible preferred stocks (convertible into 16,442,347 shares at December 31, 1999), the Company's options outstanding at December 31, 1999 to purchase 1,840,498 shares of common stock and 910,000 outstanding warrants to purchase the Company's common stock were not included in the computation of diluted EPS because they are anti-dilutive. Basic and diluted EPS for all periods presented have been calculated using the 240,000 common shares that were outstanding subsequent to the merger with Faircom (see Note 1). 56 57 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 8. INCOME TAXES The Company's provision for income taxes consists of the following for the year ended December 31:
1999 1998 1997 ------- ------- ------- Current federal $ -- $ -- $ -- Current state -- -- 71,542 ------- ------- ------- Total $ -- $ -- $71,542 ------- ------- -------
The components of the Company's deferred tax assets and liabilities are as follows as of December 31:
1999 1998 ----------- ----------- Deferred tax assets: Net operating loss carryforward $ 9,765,000 $ 4,528,000 Miscellaneous accruals and credits -- 79,000 Accounts receivable reserve 92,000 107,000 ----------- ----------- Total deferred tax assets 9,857,000 4,714,000 Deferred tax liabilities: Property and equipment (248,000) (296,000) Intangible assets (325,000) (170,000) ----------- ----------- Total deferred tax liabilities $ 573,000 $ (466,000) =========== =========== Valuation allowance (9,284,000) (4,248,000) ----------- ----------- Net deferred tax assets $ -- $ -- =========== ===========
57 58 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The Company has cumulative federal and state tax loss carryforwards of approximately $24,412,000 at December 31, 1999. These loss carryforwards will expire in years 2000 through 2019. The utilization of the aforementioned operating losses for federal income tax purposes is limited pursuant to the annual utilization limitations provided under the provisions of Internal Revenue Code Section 382. The difference between the Company's effective tax rate on income before taxes on income and the federal statutory tax rate arise from the following:
1999 1998 1997 =----- ------ ------ Federal tax expense at statutory rate 34.0 % 34.0 % 34.0 % Loss from debt extinguishment - non-deductible -- -- (34.6) Amortization of intangibles and other non-deductible expenses (9.0) (12.0) (1.0) Benefit of net operating losses -- -- -- Establishment of valuation allowance (31.0) (28.0) 1.1 State tax, net of federal tax benefit 6.0 6.0 (1.0) ====== ====== ====== Effective tax rate 0% 0% (1.5)% ====== ====== ======
9. SAVINGS PLANS The Company sponsors defined contribution plans covering substantially all employees. Both the employee and the Company can make voluntary contributions to the plan. The Company did not make contributions to the defined contribution plan during the years ended December 31, 1999 and 1998. 10. NOTES PAYABLE Notes payable consists of the following at December 31:
1999 1998 ---------- ----------- Promissory note $ -- $6,000,000 Promissory note -- 1,500,000 ---------- ---------- $ -- $7,500,000 ========== ==========
58 59 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- In connection with the acquisition of radio station KCBQ (AM), the Company issued to the seller a promissory note for $6,000,000, which was collateralized by the assets of the station. The terms of the promissory note obligated the Company to pay the lesser of $6,000,000 or the net proceeds from a commercially reasonable sale of the KCBQ (AM) assets (with any such net sale proceeds in excess of $6,000,000 to be split between the Company and the holder of the note in accordance with the terms of the asset purchase agreement) on the earlier of June 4, 2002 or upon the sale of the KCBQ (AM) assets to an unrelated third party. The note did not bear interest prior to the maturity date, as defined. Interest on the unpaid principal of the note after maturity was at the rate of 10.0% per annum. In August 1999, the Company sold KCBQ (AM) for $6,000,000 and paid the promissory note in full. Because the Company intended to sell this property during 1999, the unpaid principal balance of $6,000,000 was classified as a current liability at December 31, 1998 in the accompanying Consolidated Balance Sheet. In connection with the acquisition of an option to acquire radio station WSSP (FM), the Company issued a five-year term promissory note for $1,500,000 to a third party. The terms of the promissory note obligated the Company to pay the lesser of $1,500,000 or the net proceeds from a commercially reasonable sale of the option or the station's assets (with any such net sale proceeds in excess of $1,500,000 to be retained by the Company). The note was collateralized by a security interest in the proceeds of a $1,500,000 note payable to the Company by the owner of WSSP (FM) and matured on the earlier of December 3, 2002 or upon the sale of the WSSP (FM) assets to an unrelated third party. The note did not bear interest prior to the maturity date, as defined. Interest on the unpaid principal of the note after maturity was at the rate of 10.0% per annum. In March 1999, the Company sold WSSP (FM) for $1,600,000 and repaid the promissory note. Because the Company intended to sell this property during 1999, the unpaid principal balance of $1,500,000 was classified as a current liability at December 31, 1998 in the accompanying Consolidated Balance Sheet. 11. OTHER FINANCIAL INFORMATION Property and equipment consists of the following as of December 31:
1999 1998 ------------- ------------ Equipment $ 14,653,009 $ 11,626,277 Furniture and fixtures 736,762 1,659,136 Building and improvements 2,526,969 1,442,799 Land 1,716,309 761,342 ------------ ------------ 19,633,049 15,489,554 Less accumulated depreciation (7,259,775) (6,185,579) ------------ ------------ Net property and equipment $ 12,373,274 $ 9,303,975 ============ ============
Depreciation expense was $1,392,370 and $777,118 for the years ended December 31, 1999 and 1998. 59 60 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Intangible assets consists of the following as of December 31:
1999 1998 ------------ ------------ FCC broadcast licenses $ 55,679,824 $ 40,768,013 Goodwill 7,220,103 6,545,097 ------------ ------------ 62,899,927 47,313,110 Less accumulated amortization (4,030,640) (2,289,170) ------------ ------------ Net intangible assets $ 58,869,287 $ 45,023,940 ------------ ------------
Amortization expense was $1,976,046 and $1,504,379 for the years ended December 31, 1999 and 1998. Accrued liabilities consist of the following as of December 31:
1999 1998 ---------- ---------- Balance Sheet: Accrued compensation $ 602,504 $ 154,812 Accrued offering costs 590,444 -- Accrued professional fees 277,817 602,785 Accrued acquisition costs -- 1,531,985 Accrued other 408,370 483,030 ---------- ---------- $1,879,135 $2,772,612 ========== ==========
Supplemental cash flow information for the year ended December 31,:
1999 1998 1997 ---------- ----------- ---------- Cash paid for interest $4,272,429 $ 2,974,000 $1,076,073 Income taxes paid, net of refunds -- -- 71,542
12. COMMITMENTS AND CONTINGENCIES In the normal course of business, the Company is subject to various regulatory proceedings, lawsuits, claims and other matters. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion of the Company's management, the eventual resolution of such matters for amounts above those reflected in the consolidated financial statements would not likely have a materially adverse effect on the financial condition of the Company. The Company leases certain facilities and equipment used in its operations. Total rental expenses were approximately $594,000, $502,000 and $56,000 in 1999, 1998 and 1997, respectively. At December 31, 1999, the total minimum annual rental commitments under noncancelable leases are as follows: 2000 $ 1,357,684 2001 813,660 2002 452,888 2003 393,646 2004 247,888 Thereafter 1,573,507 ------------------- Total $ 4,839,273 ------------------- 13. RELATED PARTY TRANSACTIONS The Company obtains all of its property and casualty insurance and director and officer liability insurance coverages through a firm 90% owned by the Company's Chief Executive Officer and members of his immediate family. In 1999, the Company paid approximately $369,000 in insurance premiums. In January 2000, the members sold their interest in the insurance firm to an unrelated third party. 60 61 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 14. OTHER SUBSEQUENT EVENTS a. INITIAL PUBLIC OFFERING OF COMMON STOCK On January 28, 2000, the Company consummated an initial public offering of 16,000,000 shares of its common stock at a public offering price of $8.50 per share. On February 7, 2000, the underwriters' purchased an additional 2,400,000 shares of the Company's common stock upon exercise of their over-allotment option. The Company received total proceeds from completion of the offering, net of underwriting discounts, commissions and estimated expenses related to the offering, of $143,836,000. Of these proceeds, the Company used $67,325,000 to fund the acquisitions of stations in Utica-Rome, New York and Watertown, New York on January 28, 2000 and in El Paso, Texas on January 31, 2000; $26,761,000 to pay in full amounts borrowed under its prior bank credit facility on January 28, 2000 and fees related to the new bank credit facility; $7,296,000 to pay or reserve for payment of accumulated, unpaid dividends on all series of convertible stock converted into common stock on January 28, 2000; $5,857,000 to redeem all outstanding shares of its Series B convertible preferred stock on January 28, 2000, including accumulated unpaid dividends; and $1,513,000 to repurchase shares of the Company's common stock from an affiliate of one of the underwriters in order to comply with NASD rules. The Company intends to use the balance of the proceeds for working capital needs and future acquisitions. 61 62 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- b. CONVERSION AND REDEMPTION OF PREFERRED STOCK In connection with the initial public offering of common stock, the Company redeemed 1,000,000 shares of its Series B convertible preferred stock, which constituted all outstanding shares of that series, for a redemption price of $5,857,000, being the original price paid for those shares of $5.00 per share plus accumulated, unpaid dividends on those shares. In addition, the Company converted 15,775,699 shares of convertible preferred stock, constituting all outstanding shares of the Company's other series of convertible preferred stock, into common stock on a one-for-one basis. The Company has paid or set aside for payment of accumulated, unpaid dividends on those shares in the total amount of $7,296,000. c. CONSUMMATED AND PENDING TRANSACTIONS AND DIVESTITURES: On January 28, 2000, the Company purchased the FCC licenses and related assets used in the operations of radio stations WOFDZ (FM), WLZW (FM), WFRG (FM), WIBX (AM) and WRUN (AM) licensed in Utica/Rome, New York and WCIZ (FM), WFRY (FM), WTNY (AM), and WUZZ (AM) licensed in Watertown, New York (the "Forever Stations") for approximately $43,825,000 in cash and 100,000 shares of the Company's Common Stock. On January 31, 2000, the Company purchased the FCC licenses and related assets used in the operations of radio stations KLAQ (FM), KSII (FM) and KROD (AM) licensed to El Paso, Texas (the "El Paso Stations") for approximately $23,500,000 in cash. On March 13, 2000, the Company entered into a definitive agreement with Clear Channel Communications, Inc. to exchange the Company's eleven stations serving the Mansfield, Ohio (2 FM/1 AM), Victorville, California (3 FM/2 AM) and Palmdale, California (2 FM/1 AM) markets plus $67 million in cash for Clear Channel's nine stations serving the Grand Rapids, Michigan (3 FM) and Albany, New York (4 FM/2 AM) markets. The Company has made an escrow deposit in the amount of $5,000,000 and have agreed to pay liquidated damages in the amount of $28,000,000 if the Company fails to perform their obligations under the agreement. The Company anticipates closing this transaction during the second half of 2000 following customary regulatory approvals. On March 29, 2000, the Company entered into an agreement of merger with KZAP, Inc. by which the Company will acquire control of radio station KZAP (FM) located in Chico, California in consideration for 233,333 shares of the Company's Common Stock. The Company anticipates the closing will occur during the second quarter 2000 following receipt of FCC approval. The Company is currently providing programming and selling air time for KZAP (FM) under a time brokerage agreement pending consummation of the acquisition. 62 63 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- d. ASSETS HELD FOR SALE: On March 29, 2000, the Company entered into an Asset Purchase Agreement with Yavapai Broadcasting Corporation to sell substantially all the assets used in the operations of radio stations KZGL (FM), KVNA (AM) and KVNA (FM), in Flagstaff, Arizona (the "Flagstaff Stations") for a cash purchase price of $2,000,000. The Company anticipates closing the disposition during the second quarter of 2000 following the receipt of FCC approval. Earlier in March 2000, in accordance with its terms, the Company terminated a March 1999 agreement by which the Company agreed to sell the Flagstaff Stations to another party for a cash purchase price of approximately $2,425,000 and withdrew the pending FCC application. Action on that FCC application had been delayed since May 1999 due to the filing of an objection made by the owner of a competing station in the Flagstaff market based on the alleged ownership concentration that the proposed buyer would have had following the sale. The assets classified as assets held for sale as of December 31, 1999 were recorded at the lower of their carrying value or estimated fair market value less anticipated disposition costs. As such, the Company recorded a loss of approximately $600,000 classified as a write-down of carrying value of assets held for sale in the accompanying Statement of Operations. 63 64 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED): All adjustments necessary for a fair statement of income for each period have been included:
1ST 2ND(*) 3RD 4TH TOTAL ----------- ----------- ----------- ------------ ------------ 1999 Net broadcasting revenues $ 4,519,990 $ 6,315,303 $ 6,630,377 $ 6,388,139 $ 23,853,809 Operating income (loss) (655,205) 515,369 151,140 (623,702) (612,398) Loss before extraordinary items (1,434,535) (256,610) (790,222) (3,818,154) (6,299,521) Extraordinary item -- -- -- (471,216) (471,216) Net loss (1,434,535) (256,610) (790,222) (4,289,370) (6,770,737) Preferred stock dividend and accretion requirements (1,000,060) (1,521,808) (1,415,844) (18,488,968) (22,426,680) ----------- ----------- ----------- ------------ ------------ Loss applicable to common shares (2,434,595) (1,778,418) (2,206,066) (22,778,338) (29,197,417) Basic and diluted earnings per share: Before extraordinary item $ (10.14) $ (7.41) $ (9.19) $ (92.95) $ (119.69) Extraordinary item -- -- -- (1.96) (1.96) ----------- ----------- ----------- ------------ ------------ $ (10.14) $ (7.41) $ (9.19) $ (94.91) $ (121.65) 1998 Net broadcasting revenues $ 1,465,077 $ 2,598,126 $ 5,421,098 $ 5,287,222 $ 14,771,523 Operating income (loss) (38,010) (132,542) 112,963 (375,732) (433,321) Loss before extraordinary items (541,628) (706,758) (843,842) (1,197,696) (3,289,924) Extraordinary item -- (1,170,080) -- -- (1,170,080) Net loss (541,628) (1,876,838) (843,842) (1,197,696) (4,460,004) Preferred stock dividend and accretion requirements -- (4,814,846) (854,231) (1,283,705) (6,952,782) ----------- ----------- ----------- ------------ ------------ Loss applicable to common shares (541,628) (6,691,684) (1,698,073) (2,481,401) (11,412,786) Basic and diluted earnings per share: Before extraordinary item (2.25) (23.00) (7.08) (10.34) (42.67) Extraordinary item -- (4.88) -- -- (4.88) ----------- ----------- ----------- ------------ ------------ $ (2.25) $ (27.88) $ (7.08) $ (10.34) $ (47.55)
(*) Approximately $149,000 was reclassed from depreciation expense to write-down of carrying value of assets held for sale in the second quarter of 1999. 64 65 REGENT COMMUNICATIONS, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 17. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 prescribes the accounting treatment for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company may employ financial instruments to manage its exposure to fluctuations in interest rates (see Note 4(c)). The Company does not hold or issue such financial instruments for trading purposes. The Company will adopt SFAS 133, as amended, in the year 2001, and does not expect that the impact of adoption will have a material impact on the Company's results of operations and statement of financial position. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, Revenue Recognition in Financial Statements," and is effective the first quarter of 2000. In SAB 101, the SEC staff expresses its views regarding the appropriate recognition of revenue with regard to a variety of circumstances, some of which are of particular relevance to the Company. The Company is currently evaluating SAB 101 to determine its impact on the financial statements. 65 66
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS ADDITIONS ------------------------------ BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER THE END OF PERIOD EXPENSES ACCOUNTS(*) DEDUCTIONS (**) OF PERIOD --------- -------- ----------- --------------- --------- Allowance for doubtful accounts: Years ended December 31, 1999 $ 268,000 389,615 -- 426,615 $ 231,000 1998 $ 32,000 174,051 173,960 112,011 $ 268,000 1997 $ 20,000 46,308 -- 34,308 $ 32,000 Deferred tax asset valuation allowance: Years ended December 31, 1999 $4,248,000 5,036,000 $9,284,000 1998 $2,483,000 1,765,000 $4,248,000 1997 $2,532,000 (49,000) $2,483,000
* Recorded in conjunction with acquisitions consummated on June 15, 1998. ** Represents accounts written off to the reserve. 66 67 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information required by this Item 10 is hereby incorporated by reference from our definitive Proxy Statement, and specifically from the portions thereof captioned "Election of Directors" and "Executive Officers," to be filed in April 2000 in connection with the 2000 Annual Meeting of Stockholders presently scheduled to be held on May 18, 2000. ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item 11 is hereby incorporated by reference from our definitive Proxy Statement, and specifically from the portion thereof captioned "Executive Compensation," to be filed in April 2000 in connection with the 2000 Annual Meeting of Stockholders presently scheduled to be held on May 18, 2000. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information required by this Item 12 is hereby incorporated by reference from our definitive Proxy Statement, and specifically from the portion thereof captioned "Security Ownership of Certain 67 68 Beneficial Owners and Management," to be filed in April 2000 in connection with the 2000 Annual Meeting of Stockholders presently scheduled to be held on May 18, 2000. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information required by this Item 13 is hereby incorporated by reference from our definitive Proxy Statement, and specifically from the portion thereof captioned "Certain Relationships and Related Transactions," to be filed in April 2000 in connection with the 2000 Annual Meeting of Stockholders presently scheduled to be held on May 18, 2000. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) 1. FINANCIAL STATEMENTS. The consolidated financial statements of Regent Communications, Inc. and subsidiaries filed as part of this Annual Report on Form 10-K are set forth under Item 8. 2. FINANCIAL STATEMENT SCHEDULES. The financial statement schedule filed as part of this Annual Report on Form 10-K is set forth under Item 8. 3. EXHIBITS. A list of the exhibits filed or incorporated by reference as part of this Annual Report on Form 10-K is set forth in the Index to Exhibits which immediately precedes such exhibits and is incorporated herein by this reference. (b) REPORTS ON FORM 8-K. We filed no reports on Form 8-K during the fourth quarter of the fiscal year ended December 31, 1999. 68 69 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Regent Communications, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. REGENT COMMUNICATIONS, INC. Date: March 30, 2000 By: /s/ Terry S. Jacobs ------------------------------------ Terry S. Jacobs, Chairman of the Board, Chief Executive Officer and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Terry S. Jacobs Chairman of the Board, Chief March 30, 2000 - --------------------------- Executive Officer, Treasurer and Terry S. Jacobs Director (Principal Executive Officer) /s/ William L. Stakelin President, Chief Operating - --------------------------- Officer, William L. Stakelin Secretary and Director March 30, 2000 /s/ Anthony A. Vasconcellos Vice President and Chief Financial March 30, 2000 - --------------------------- Officer (Principal Financial and Anthony A. Vasconcellos Principal Accounting Officer) /s/ Joel M. Fairman Vice Chairman of the Board and March 30, 2000 - --------------------------- Director Joel M. Fairman /s/ Kenneth J. Hanau Director March 30, 2000 - --------------------------- Kenneth J. Hanau /s/ William H. Ingram Director March 30, 2000 - --------------------------- William H. Ingram /s/ R. Glen Mayfield Director March 30, 2000 - --------------------------- R. Glen Mayfield /s/ Richard H. Patterson Director March 30, 2000 - --------------------------- Richard H. Patterson Director March 30, 2000 - --------------------------- William P. Sutter, Jr. Director March 30, 2000 - --------------------------- John H. Wyant S-1 70 EXHIBIT INDEX The following exhibits are filed, or incorporated by reference where indicated, as part of Part IV of this Annual Report on Form 10-K: EXHIBIT NUMBER EXHIBIT DESCRIPTION 2(a)* Asset Purchase Agreement dated as of 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. (excluding exhibits not deemed material or filed separately in executed form) (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) 2(b)* Asset Purchase Agreement dated as of March 4, 1999 by and among Mag Mile Media, L.L.C., Regent Broadcasting of Kingman, Inc. and Regent Licensee of Kingman, Inc. (excluding exhibits not deemed material or filed separately in executed form) (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) 2(c)* Asset Purchase Agreement dated as of May 18, 1999 by and among Media One Group-Erie, Ltd., Cisco LLC, James T. Embrescia, Thomas J. Embrescia, Regent Broadcasting of Erie, Inc. and Regent Licensee of Erie, Inc. (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 2(a) to the Registrant's Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by this reference) 2(d)* Asset Purchase Agreement dated as of July 29, 1999 by and among Forever of NY, Inc., Forever of NY, LLC, Forever Broadcasting, LLC, and Regent Broadcasting of Utica/Rome, Inc., Regent Licensee of Utica/Rome, Inc., Regent Broadcasting of Watertown, Inc., Regent Licensee of Watertown, Inc. and Regent Communications, Inc. (excluding exhibits not deemed material or filed separately in executed form) (previously E-1 71 filed as Exhibit 2(b) to the Registrant's Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by this reference) 2(e)* Asset Purchase Agreement dated as of September 13, 1999 by and among New Wave Broadcasting, L.P., Regent Broadcasting of El Paso, Inc. and Regent Licensee of El Paso, Inc. (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 2(b) to the Registrant's Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by this reference) 2(f)* Agreement of Merger dated as of December 5, 1997 by and among Faircom, Inc., Regent Merger Corp., Regent Communications, Inc., Blue Chip Capital Fund II Limited Partnership and Miami Valley Venture Fund L.P. (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 2(a) to the Registrant's Form S-4 Registration Statement No. 333-46435 effective May 7, 1998 and incorporated herein by this reference) 2(g) Asset Exchange Agreement dated as of March 12, 2000 by and among Clear Channel Broadcasting, Inc., Clear Channel Broadcasting Licenses, Inc., Capstar Radio Operating Company, Capstar TX Limited Partnership, Regent Broadcasting of Victorville, Inc., Regent Licensee of Victorville, Inc., Regent Broadcasting of Palmdale, Inc., Regent Licensee of Palmdale, Inc., Regent Broadcasting of Mansfield, Inc. and Regent Licensee of Mansfield, Inc. 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: Clear Channel Schedules ----------------------- 1.1(a) FCC Licenses 1.1(b) Tangible Personal Property 1.1(c) Station contracts 1.1(d) Intangible Property 1.1(f) Real Property 1.2(h) Excluded Assets Regent Schedules ---------------- 1.3(a) FFC Licenses 1.3(b) Tangible Personal Property 1.3(c) Station Contracts 1.3(d) Intangible Property 1.3(f) Real Property 1.4(h) Excluded Assets E-2 72 2(h) Agreement of Merger dated March 29, 2000 by and among Regent Communications, Inc., Regent Broadcasting, Inc., KZAP, Inc. and Rob Cheal The following exhibits and schedules to the foregoing Agreement of Merger are omitted as not material; however, copies will be provided to the Securities and Exchange Commission upon request: Exhibits -------- A Deposit Escrow Agreement B Indemnification Escrow Agreement C Opinion of Counsel for Seller and the Company D Non-Competition Agreement E Opinion of Counsel for Regent Broadcasting, Inc. F Consulting Agreement Schedules --------- 3.04 Conflicting Agreements 4.02 Investment Securities 4.04 Officer, Director, Employee and Banking Information 4.05 Legends 4.07 Required Consents 4.08 Station Licenses 4.10 Taxes 4.11 Tangible Personal Property 4.12 Real Property Interests 4.13 Contracts 4.15 Intellectual Property 4.22 Non-Compliance with Laws 4.23 Employee Benefit Plans 4.26 Insurance 2(i) Asset Purchase Agreement dated March 29, 2000 by and between Yavapai Broadcasting Corporation, Regent Broadcasting of Flagstaff, Inc. and Regent Licensee of Flagstaff, Inc. 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: Exhibits -------- A Indemnity Escrow Agreement B Deposit Escrow Agreement C Allocation of Purchase Price D Time Brokerage Agreement E General Conveyance, Bill Of Sale, Assignment and Assumption Agreement F Opinion of Seller's Counsel G Form of FCC Opinion H Opinion of Buyer's Counsel Schedules --------- 1.2.9 Miscellaneous Excluded Assets 6.3 Buyer Qualifications 7.4 Licenses 7.7 Tangible Personal Property 7.8 Leased Real Estate 7.9 Contracts 7.11 Environmental Matters 7.12 Intellectual Property 7.13 Financials 7.14 Compliance with Labor Laws 7.17 Employee Benefit Plans 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 Amendment No. 1 to the Registrant's Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference) 3(b)* Certificate of Decrease of Shares Designated as Series G Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on June 21, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(c) to the Registrant's Form 10-Q Fourth Quarter Ended June 30, 1999 and incorporated herein by this reference) 3(c)* 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 H Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on June 21, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(d) to the Registrant's Form 10-Q for the Quarter Ended June 30, 1999 and incorporated herein by this reference) 3(d)* Certificate of Decrease of Shares Designated as Series G Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on August 23, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(e) to the Registrant's Form 10-Q for the Quarter Ended on September 30, 1999 and incorporated herein by this reference) 3(e)* Certificate of Increase of Shares Designated as Series H Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on August 23, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(f) to the Registrant's Form 10-Q for the Quarter Ended on September 30, 1999 and incorporated herein by this reference) 3(f)* 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 K Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on December 13, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(g) to Amendment No. 1 to the Registrants Form S-1 Registration Statement No. 333-91703 filed December 29, 1994 and incorporated herein by this reference) E-3 73 3(g)* 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). 3(h)* Amendments to By-Laws of Regent Communications, Inc. adopted December 13, 1999 (previously filed as Exhibit 3(h) to Amendment No. 1 to the Registrant's Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference) 4(a)* Credit Agreement dated as of January 27, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc., Fleet National Bank, as administrative agent, Fleet National Bank, as issuing lender, General Electric Capital Corporation, as syndication agent, Dresdner Bank AG, New York and Grand Cayman Branches, as document agent, and the several lenders party thereto (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 4(a) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) 4(b)* Omnibus Amendment No. 1 and Amendment No. 1 to Credit Agreement dated as of February 4, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc., Fleet National Bank, as administrative agent, Fleet National Bank, as issuing lender, General Electric Capital Corporation, as syndication agent, Dresdner Bank AG, New York and Grand Cayman Branches, as document agent, and the several lenders party thereto (previously filed as Exhibit 4(e) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) 4(c)* Revolving Credit Note dated as of February 7, 2000 made by Regent Broadcasting, Inc. in favor of Fleet National Bank in the original principal amount of $25 million (previously filed as Exhibit 4(f) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) (See Note 1 below) 4(d)* Subsidiary Guaranty Agreement dated as of January 27, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc. and each of their subsidiaries and Fleet National Bank, as collateral agent (previously filed as Exhibit 4(c) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) 4(e)* Pledge Agreement dated as of January 27, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc. and each of their subsidiaries and Fleet National Bank, as collateral agent (previously filed as Exhibit 4(d) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) 4(f)* Security Agreement dated as of January 27, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc. and each of their subsidiaries and Fleet National Bank, as collateral agent (previously filed as Exhibit 4(b) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) 10(a) Escrow Agreement dated as of March 12, 2000 by and among Regent Broadcasting of Victorville, Inc., Regent Licensee of Victorville, Inc., Regent Broadcasting of Palmdale, Inc., Regent Licensee of Palmdale, Inc., Regent Broadcasting of Mansfield, Inc., Regent Licensee of Mansfield, Inc., Clear Channel Broadcasting, Inc., Clear Channel Broadcasting Licenses, Inc., Capstar Radio Operating Company, Capstar TX Limited Partnership and Bank of America E-4 74 10(b) Letter agreement dated March 12, 2000 from Clear Channel Communications, Inc. addressed to Regent Broadcasting of Victorville, Inc., Regent Licensee of Victorville, Inc., Regent Broadcasting of Palmdale, Inc., Regent Licensee of Palmdale, Inc., Regent Broadcasting of Mansfield, Inc., Regent Licensee of Mansfield, Inc. 10(c) Liquidated Damages Agreement made as of March 12, 2000 by Regent Broadcasting of Victorville, Inc., Regent Licensee of Victorville, Inc., Regent Broadcasting of Palmdale, Inc., Regent Licensee of Palmdale, Inc., Regent Broadcasting of Mansfield, Inc., Regent Licensee of Mansfield, Inc. for the benefit of Clear Channel Broadcasting, Inc., Clear Channel Broadcasting Licenses, Inc., Capstar Radio Operating Company and Capstar TX Limited Partnership 10(d)* Regent Communications, Inc. Faircom Conversion Stock Option Plan (previously filed as Exhibit 10(f) to the Registrant's S-4 filed on February 17, 1998 and incorporated herein by this reference) 10(e)* Regent Communications, Inc. 1998 Management Stock Option Plan (previously filed as Exhibit 10(g) to the Registrant's S-4 filed on February 17, 1998 and incorporated herein by this reference) 10(f)* Employment Agreement between Regent Communications, Inc. and Terry S. Jacobs (previously filed as Exhibit 10(h) to the Registrant's S-4 filed on February 17, 1998 and incorporated herein by this reference) 10(g)* Employment Agreement between Regent Communications, Inc. and William L. Stakelin (previously filed as Exhibit 10(i) to the Registrant's S-4 filed on February 17, 1998 and incorporated herein by this reference) 10(h)* Employment Agreement between Regent Communications, Inc. and Joel M. Fairman (previously filed as Exhibit 10(j) to the Registrant's S-4 filed on February 17, 1998 and incorporated herein by this reference) 10(i)* Lease Agreement dated January 17, 1994 between CPX-- RiverCenter Development Corporation and Regent Communications, Inc. (previously filed as Exhibit 10(z) to the Registrant's S-4 filed on February 17, 1998 and incorporated herein by this reference) 10(j)* 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 E-5 75 filed as Exhibit 4(d) to the Registrant's Form 8-K filed June 30, 1998 and incorporated herein by this reference) 10(k)* 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) 10(l)* 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 2 below) (previously filed as Exhibit 4(f) to the Registrant's Form 8-K filed June 30, 1998 and incorporated herein by this reference) 10(m)* 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) 10(n)* 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) 10(o)* 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) E-6 76 10(p)* 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) 10(q)* 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 3 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) 10(r)* 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) 10(s)* 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 this reference) 10(t)* 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 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 this reference) 10(u)* 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) E-7 77 10(v)* 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 4u to Amendment No. 1 to the Registrant's Form S-1 10K for the year ended December 31, 1998 and incorporated herein by this reference) 10(w)* 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 4) (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 4(v) to the Registrant's Form S-1 10-K for the year ended December 31, 1998 and incorporated herein by this reference) 10(x)* 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) 10(y)* 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) 10(z)* 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) E-8 78 10(aa)* Stock Purchase Agreement dated June 21, 1999 between Regent Communications, Inc. and Waller-Sutton Media Partners, L.P. relating to the purchase of 90,909 shares of Regent Communications, Inc. Series H convertible preferred stock (See Note 5 below) (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 4(aa) to the Registrant's Form 10-Q for the quarter ended June 30,1999 and incorporated herein by this reference) 10(bb)* Stock Purchase Agreement dated June 21, 1999, among Regent Communications, Inc., WPG Corporate Development Associates V, L.L.C. and WPG Corporate Development Associates V (Overseas), L.P. relating to the purchase of 1,180,909 and 182,727 shares, respectively, of Regent Communications, Inc. Series H convertible preferred stock (excluding exhibits not deemed material or filed separately in executed form)(previously filed as Exhibit 4(bb) to the Registrant's Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by this reference) 10(cc)* Seventh Amendment to Credit Agreement, dated as of June 30, 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(cc) to the Registrant's Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by this reference) 10(dd)* Eighth Amendment, Limited Consent and Limited Waiver to Credit Agreement, dated as of November 11, 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(dd) to the Registrant's Form 10-Q for the quarter ended on September 30, 1999 and incorporated herein by this reference) 10(ee)* Stock Purchase Agreement dated as of August 31, 1999 among Regent Communications, Inc., The Roman Arch Fund L.P. and The Roman Arch Fund II L.P. relating to the purchase of 109,091 and 72,727 shares, respectively, of Regent Communications, Inc. Series H convertible preferred stock(excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 4(ee) to the Registrant's Form 10-Q for the quarter ended on September 30, 1999 and incorporated herein by this reference) 10(ff)* First Amendment to Registration Rights Agreement dated as of August 31, 1999 among Regent Communications, Inc., PNC Bank, N.A., as trustee, Waller-Sutton Media Partners, L.P., WPG Corporate E-9 79 Development Associates V, L.L.C., WPG Corporate Development Associates (Overseas) V, L.P., BMO Financial, Inc., General Electric Capital Corporation, River Cities 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 P. Gammon (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 4(gg) to the Registrant's Form 10-Q for the quarter ended on September 30, 1999 and incorporated herein by this reference) 10(gg)* Second Amendment to Registration Rights Agreement dated as of December 13, 1999, among Regent Communications, Inc., Terry S. Jacobs, William L. Stakelin, Blue Chip Capital Fund II Limited Partnership, Blue Chip Capital Fund III Limited Partnership, Miami Valley Venture Fund, L.P., PNC Bank, N.A., as trustee, PNC Bank, N.A., Custodian, Waller-Sutton Media Partners, L.P., River Cities Capital Fund Limited Partnership, Mesirow Capital Partners VII, WPG Corporate Development Associates V, L.L.C., WPG Corporate Development Associates V (Overseas) L.P., General Electric Capital Corporation, William H. Ingram, The Roman Arch Fund L.P., The Roman Arch Fund II L.P. and The Prudential Insurance Company of America (previously filed as Exhibit 4(hh) to Amendment No. 1 to the Registrant's Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference) 10(hh)* Third Amended and Restated Stockholders' Agreement dated as of December 13, 1999, among Regent Communications, Inc., Terry S. Jacobs, William L. Stakelin, Blue Chip Capital Fund II Limited Partnership, Blue Chip Capital Fund III Limited Partnership, Miami Valley Venture Fund, L.P., PNC Bank, N.A., as trustee, PNC Bank, N.A., Custodian, Waller-Sutton Media Partners, L.P., River Cities Capital Fund Limited Partnership, Mesirow Capital Partners VII, WPG Corporate Development Associates V, L.L.C., WPG Corporate Development Associates V (Overseas) L.P., General Electric Capital Corporation, William H. Ingram, Joel M. Fairman, The Roman Arch Fund L.P., The Roman Arch Fund II L.P. and the Prudential Insurance Company of America (previously filed as Exhibit 4(gg) to Amendment No. 1 to the Registrant's Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference) 10(ii)* Stock Purchase Agreement dated as of November 24, 1999, between Regent Communications, Inc. and Blue Chip Capital Fund III Limited Partnership (see Note 6 below) (previously filed as Exhibit (jj) to Amendment No. 1 to the Registrant's Form S-1 Registration Statement filed December 29, 1999 and incorporated herein by this reference) 21 Subsidiaries of Registrant 27 Financial Data Schedule - ----------------- * Incorporated by reference. NOTES: 1. Seven substantially identical notes were made by Regent Broadcasting, Inc. as follows: E-10 80
Original Holder Principal Amount ------ ---------------- General Electric Capital Corporation $22,000,000 Dresdner Bank AG, New York and Cayman Islands Branches $22,000,000 Mercantile Bank National Association $16,000,000 U.S. Bank National Association $10,000,000 Summit Bank $10,000,000 Michigan National Bank $10,000,000 The CIT Group Equipment Financing, Inc. $10,000,000 2. Six substantially identical warrants for the purchase of shares of Registrant's common stock were issued as follows: Shares ------ Waller-Sutton Media Partners, L.P. 650,000 WPG Corporate Development Associates V, L.L.C. 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 3. Two substantially identical notes were issued to Bank of Montreal, Chicago Branch, in the principal amounts of $15,000,000 and $20,000,000. 4. 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 5. Two substantially identical stock purchase agreements were entered into for the purchase of Series H convertible preferred stock as follows: Blue Chip Capital Fund II Limited Partnership 363,636 shares PNC Bank, N.A., as trustee 181,818 shares 6. Four substantially identical stock purchase agreements were entered into for the purchase of Series K convertible preferred stock as follows: WPG Corporate Development Associates V, L.L.C. and WPG Corporate Development Associates V (Overseas), L.P. 181,818 shares PNC Bank, N.A., Custodian 181,818 shares Mesirow Capital Partners VII1 1,818,181 shares The Prudential Insurance Company of America 1,000,000 shares
E-11 EX-2.G 2 EXHIBIT 2(G) 1 Exhibit 2(g) ASSET EXCHANGE AGREEMENT THIS ASSET EXCHANGE AGREEMENT (this "Agreement") is made as of March 12, 2000 among the company or companies designated as Clear Channel on the signature page hereto (collectively, "Clear Channel") and the company or companies designated as Exchange Party on the signature page hereto (collectively, "Exchange Party"). Recitals A. Clear Channel owns and operates the following radio broadcast stations (collectively, the "Clear Channel Stations") pursuant to certain authorizations issued by the Federal Communications Commission (the "FCC"): WABT-FM, WGNA-AM, WGNA-FM, WQBJ-FM, WQBK-FM and WTMM-AM licensed to Albany, New York; and WGRD-FM, WLHT-FM and WTRV-FM licensed to Grand Rapids, Michigan. B. Exchange Party owns and operates the following radio broadcast stations (collectively, the "Exchange Party Stations") pursuant to certain authorizations issued by the FCC: WYHT-FM, WSWR-FM and WMAN-AM, licensed to Mansfield/Shelby, Ohio; and KTPI-FM and KAVC-AM licensed to Mojave and Tehachapi (i.e.: Palmdale), California; and KATJ-FM, KZXY-FM, KIXA-FM, KROY-AM and KIXW-AM licensed to Victorville, California; and KOSS-FM, licensed to Lancaster, California. C. Subject to the terms and conditions set forth herein, the parties desire to exchange the Clear Channel Station Assets (defined below) and the Exchange Party Station Assets (defined below). The parties intend the transaction contemplated by this Agreement to be a like-kind exchange in accordance with the provisions of Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"). D. Clear Channel Communications, Inc. and AMFM Inc. (Clear Channel's parent) and CCU Merger Sub, Inc. are parties to an Agreement and Plan of Merger dated October 2, 1999 (the "AMFM Agreement"). 2 Agreement NOW, THEREFORE, taking the foregoing into account, and in consideration of the mutual covenants and agreements set forth herein, the parties, intending to be legally bound, hereby agree as follows: ARTICLE 1: EXCHANGE OF ASSETS 1.1. Clear Channel Station Assets. On the terms and subject to the conditions hereof, on the Closing Date (defined below), Clear Channel shall assign, transfer, convey and deliver to Exchange Party, and Exchange Party shall acquire from Clear Channel, all of the right, title and interest of Clear Channel in and to all of the assets, properties, interests and rights of Clear Channel of whatsoever kind and nature, real and personal, tangible and intangible, which are used in the operation of the Clear Channel Stations and described in this Section 1.1, but excluding the Clear Channel Excluded Assets as hereafter defined (the "Clear Channel Station Assets"): (1)1 all licenses, permits and other authorizations which are issued to Clear Channel by the FCC with respect to the Clear Channel Stations (the "Clear Channel FCC Licenses") and described on Schedule 1.1(a), including any renewals or modifications thereof between the date hereof and Closing; (1)2 all equipment, electrical devices, towers, antennae, cables, tools, hardware, office furniture and fixtures, office materials and supplies, inventory, motor vehicles, spare parts and other tangible personal property of every kind and description which are used in the operation of the Clear Channel Stations including but not limited to those listed on Schedule 1.1(b), except any retirements or dispositions thereof made between the date hereof and Closing in the ordinary course of business and consistent with past practices of Clear Channel (the "Clear Channel Tangible Personal Property"); (1)3 all Clear Channel Time Sales Agreements and Clear Channel Trade Agreements (both defined in Section 2.3), Clear Channel Real Property Leases (defined in Section 6.7), and other contracts, agreements, and leases which are used in the operation of the Clear Channel Stations and listed on Schedule 1.1(c), together with all contracts, agreements, and leases made between the date hereof and Closing in the ordinary course of business that are used in the operation of the Clear Channel Stations (the "Clear Channel Station Contracts"); (1)4 all of Clear Channel's rights in and to the Clear Channel Stations' call letters and Clear Channel's rights in and to the trademarks, trade names, service marks, franchises, copyrights, computer software, programs and programming material, jingles, slogans, logos, and other intangible property which are used in the operation of the Clear Channel Stations and listed on Schedule 1.1(d) (the "Clear Channel Intangible Property"); 3 (1)5 Clear Channel's rights in and to all the files, documents, records, and books of account (or copies thereof) relating to the operation of the Clear Channel Stations, including the Clear Channel Stations' local public files, programming information and studies, blueprints, technical information and engineering data, advertising studies, marketing and demographic data, sales correspondence, lists of advertisers, credit and sales reports, and logs, but excluding records relating to the Clear Channel Excluded Assets (defined below); and (1)6 any real property which is used in the operation of the Clear Channel Stations (including any of Clear Channel's appurtenant easements and improvements located thereon) and described on Schedule 1.1(f) (the "Clear Channel Real Property"). The Clear Channel Station Assets shall be transferred to Exchange Party free and clear of all liens, claims and encumbrances ("Liens") except for (i) Exchange Party Assumed Obligations (defined below), (ii) liens for taxes not yet due and payable and for which Exchange Party receives a credit pursuant to Section 3.3, (iii) such liens (not related to Clear Channel indebtedness), easements, rights of way, building and use restrictions, exceptions, reservations and limitations common for properties of such nature that do not, and are unlikely to, in any material respect detract from the value of the property subject thereto or impair the use thereof in the ordinary course of the business of the Clear Channel Stations, and (iv) any items listed on Schedule 1.1(b) (collectively, "Clear Channel Permitted Liens"). 1.2. Clear Channel Excluded Assets. Notwithstanding anything to the contrary contained herein, the Clear Channel Station Assets shall not include the following assets along with all rights, title and interest therein (the "Clear Channel Excluded Assets"): (2)1 all cash and cash equivalents of Clear Channel, including without limitation certificates of deposit, commercial paper, treasury bills, marketable securities, asset or money market accounts and all such similar accounts or investments; (2)2 all accounts receivable or notes receivable arising in the operation of the Clear Channel Stations prior to Closing; (2)3 all tangible and intangible personal property of Clear Channel disposed of or consumed in the ordinary course of business of Clear Channel between the date of this Agreement and Closing; (2)4 all Clear Channel Station Contracts that terminate or expire prior to Closing in the ordinary course of business of Clear Channel; 3 4 (2)5 Clear Channel's name, corporate minute books, charter documents, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of Clear Channel, duplicate copies of the records of the Clear Channel Stations, and all records not relating exclusively to the operation of the Clear Channel Stations; (2)6 contracts of insurance, and all insurance proceeds or claims made thereunder; (2)7 all pension, profit sharing or cash or deferred (Section 401(k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and the assets thereof, if any, maintained by Clear Channel; (2)8 all assets of Clear Channel of the nature described in Section 1.1 above which are used exclusively in the operation of radio station WNWZ-AM ("Retained Michigan Station"); (2)9 all assets of Clear Channel of the nature described in Section 1.1 above which are used primarily in the operation of radio station WXCR-FM ("Retained Albany Station"). (2)10 all rights, properties and assets described on Schedule 1.2(h) which schedule shall include any Clear Channel FM tower and FM tower site not used exclusively by any of the Clear Channel Stations, and all rights, properties and assets not specifically described in Section 1.1. 1.3. Exchange Party Station Assets. On the terms and subject to the conditions hereof, on the Closing Date (defined below), Exchange Party shall assign, transfer, convey and deliver to Clear Channel, and Clear Channel shall acquire from Exchange Party, all of the right, title and interest of Exchange Party in and to all of the assets, properties, interests and rights of Exchange Party of whatsoever kind and nature, real and personal, tangible and intangible, which are used in the operation of the Exchange Party Stations and described in this Section 1.3, but excluding the Exchange Party Excluded Assets as hereafter defined (the "Exchange Party Station Assets") (the parties acknowledge that the schedules referred to in this Section and Section 1.4 ("Exchange Party Schedules") are not attached to this Agreement. Exchange Party agrees to deliver to Clear Channel all of the Exchange Party Schedules within ten (10) days of the execution of this Agreement in form comparable to the schedules provided by Clear Channel and attached to this Agreement and reasonably acceptable to Clear Channel): (3)1 all licenses, permits and other authorizations which are issued to Exchange Party by the FCC with respect to the Exchange Party Stations (the "Exchange Party FCC Licenses") including but not limited to those described on Schedule 1.3(a), including any renewals or modifications thereof between the date hereof and Closing; 4 5 (3)2 all equipment, electrical devices, towers, antennae, cables, tools, hardware, office furniture and fixtures, office materials and supplies, inventory, motor vehicles, spare parts and other tangible personal property of every kind and description which are used in the operation of the Exchange Party Stations including but not limited to those listed on Schedule 1.3(b), except any retirements or dispositions thereof made between the date hereof and Closing in the ordinary course of business and consistent with past practices of Exchange Party (the "Exchange Party Tangible Personal Property"); (3)3 all Exchange Party Time Sales Agreements and Exchange Party Trade Agreements (both defined in Section 2.1), Exchange Party Real Property Leases (defined in Section 7.7), and other contracts, agreements, and leases which are used in the operation of the Exchange Party Stations and listed on Schedule 1.3(c), together with all contracts, agreements, and leases made between the date hereof and Closing in the ordinary course of business that are used in the operation of the Exchange Party Stations (the "Exchange Party Station Contracts"); (3)4 all of Exchange Party's rights in and to the Exchange Party Stations' call letters and Exchange Party's rights in and to the trademarks, trade names, service marks, franchises, copyrights, computer software, programs and programming material, jingles, slogans, logos, and other intangible property which are used in the operation of the Exchange Party Stations including but not limited to those listed on Schedule 1.3(d) (the "Exchange Party Intangible Property"); (3)5 Exchange Party's rights in and to all the files, documents, records, and books of account (or copies thereof) relating to the operation of the Exchange Party Stations, including but not limited to the Exchange Party Stations' local public files, programming information and studies, blueprints, technical information and engineering data, advertising studies, marketing and demographic data, sales correspondence, lists of advertisers, credit and sales reports, and logs, but excluding records relating to the Exchange Party Excluded Assets (defined below); and (3)6 any real property which is used in the operation of the Exchange Party Stations (including any of Exchange Party's appurtenant easements and improvements located thereon) including but not limited to those described on Schedule 1.3(f) (the "Exchange Party Real Property"). The Exchange Party Station Assets shall be transferred to Clear Channel free and clear of all Liens except for (i) Clear Channel Assumed Obligations (defined below), (ii) liens for taxes not yet due and payable and for which Clear Channel receives a credit pursuant to Section 3.3, 5 6 (iii) such liens (not related to Exchange Party indebtedness), easements, rights of way, building and use restrictions, exceptions, reservations and limitations common for properties of such nature that do not, and are unlikely to, in any material respect detract from the value of the property subject thereto or impair the use thereof in the ordinary course of the business of the Exchange Party Stations, and (iv) any items listed on Schedule 1.3(b) (collectively, "Exchange Party Permitted Liens"). 1.4. Exchange Party Excluded Assets Notwithstanding anything to the contrary contained herein, the Exchange Party Station Assets shall not include the following assets along with all rights, title and interest therein (the "Exchange Party Excluded Assets"): (4)1 all cash and cash equivalents of Exchange Party, including without limitation certificates of deposit, commercial paper, treasury bills, marketable securities, asset or money market accounts and all such similar accounts or investments; (4)2 all accounts receivable or notes receivable arising in the operation of the Exchange Party Stations prior to Closing; (4)3 all tangible and intangible personal property of Exchange Party disposed of or consumed in the ordinary course of business of Exchange Party between the date of this Agreement and Closing; (4)4 all Exchange Party Station Contracts that terminate or expire prior to Closing in the ordinary course of business of Exchange Party; (4)5 Exchange Party's name, corporate minute books, charter documents, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of Exchange Party, duplicate copies of the records of the Exchange Party Stations, and all records not relating exclusively to the operation of the Exchange Party Stations; (4)6 contracts of insurance, and all insurance proceeds or claims made thereunder; (4)7 all pension, profit sharing or cash or deferred (Section 401(k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and the assets thereof, if any, maintained by Exchange Party; and (4)8 any rights, properties or assets described on Schedule 1.4(h), and all rights, properties and assets not specifically described in Section 1.3. 1.5. Shared Assets. The parties acknowledge and agree that a portion of the Clear Channel Assets with respect to the stations licensed to Albany, New York and Grand Rapids, 6 7 Michigan are shared with the Retained Albany Station and Retained Michigan, respectively ("Shared Assets"). Clear Channel and Exchange Party shall review the equipment list for all of these stations and agree in good faith to make an equitable division of the Shared Assets in each asset category between the parties. Provided however, that this division shall be made such that the value of the Shared Assets that each party receives shall be equal. ARTICLE 2: ASSUMPTION OF OBLIGATIONS 2.1. Clear Channel Assumed Obligations. On the Closing Date, Clear Channel shall assume the obligations of Exchange Party (the "Clear Channel Assumed Obligations") arising after Closing under the Exchange Party Station Contracts which have been referenced in writing to or delivered to Clear Channel or were entered into in the ordinary course of business and which (i) do not have a term of more than one (1) year, (ii) represent an obligation to the Exchange Party of not more than fifty thousand dollars ($50,000.00), and (iii) can be terminated by Exchange Party with no more than ninety (90) days notice, including without limitation all agreements for the sale of advertising time on the Exchange Party Stations for cash in the ordinary course of business ("Exchange Party Time Sales Agreements") and all agreements for the sale of advertising time on the Exchange Party Stations for non-cash consideration ("Exchange Party Trade Agreements"). 2.2. Exchange Party Retained Obligations. Clear Channel does not assume or agree to discharge or perform and will not be deemed by reason of the execution and delivery of this Agreement or any agreement, instrument or document delivered pursuant to or in connection with this Agreement or otherwise by reason of the consummation of the transactions contemplated hereby, to have assumed or to have agreed to discharge or perform, any liabilities, obligations or commitments of Exchange Party of any nature whatsoever whether accrued, absolute, contingent or otherwise and whether or not disclosed to Clear Channel, other than the Clear Channel Assumed Obligations (the "Exchange Party Retained Obligations"). 2.3. Exchange Party Assumed Obligations. On the Closing Date, Exchange Party shall assume the obligations of Clear Channel (the "Exchange Party Assumed Obligations") arising after Closing under the Clear Channel Station Contracts, including without limitation all agreements for the sale of advertising time on the Clear Channel Stations for cash in the ordinary course of business ("Clear Channel Time Sales Agreements") and all agreements for the sale of advertising time on the Clear Channel Stations for non-cash consideration ("Clear Channel Trade Agreements"). 7 8 2.4. Clear Channel Retained Obligations. Exchange Party does not assume or agree to discharge or perform and will not be deemed by reason of the execution and delivery of this Agreement or any agreement, instrument or document delivered pursuant to or in connection with this Agreement or otherwise by reason of the consummation of the transactions contemplated hereby, to have assumed or to have agreed to discharge or perform, any liabilities, obligations or commitments of Clear Channel of any nature whatsoever whether accrued, absolute, contingent or otherwise and whether or not disclosed to Exchange Party, other than the Exchange Party Assumed Obligations (the "Clear Channel Retained Obligations"). ARTICLE 3: CASH PAYMENT 3.1. Cash Payment. Exchange Party shall at Closing (defined below) deliver to Clear Channel by wire transfer of immediately available funds $67,000,000, subject to adjustment pursuant to Sections 3.3 (the "Cash Payment"). 3.2. Deposit. On the date of this Agreement, Exchange Party shall deposit $5,000,000 (the "Deposit") with NationsBank/Bank of America (the "Escrow Agent") pursuant to the Escrow Agreement (the "Escrow Agreement") of even date herewith among Clear Channel, Exchange Party and the Escrow Agent. At Closing, the Deposit shall be applied to the Cash Payment and any interest accrued on the Deposit thereon shall be disbursed to Exchange Party. If this Agreement is terminated by Clear Channel pursuant to Section 16.1(b) and Clear Channel is entitled to liquidated damages pursuant to Section 16.3, the Exchange Deposit and any interest accrued thereon shall be disbursed to Clear Channel as partial payment of liquidated damages pursuant to Section 16.3. If this Agreement is terminated for any other reason, the Deposit and any interest accrued thereon shall be disbursed to Exchange Party. 3.3. Prorations and Adjustments. Except as otherwise provided herein, all deposits, reserves and prepaid and deferred income and expenses arising from the conduct of the business and operations of the Clear Channel Stations and Exchange Party Stations shall be prorated in accordance with generally accepted accounting principles as of 11:59 p.m. on the date immediately preceding the Closing Date. Such prorations shall include, without limitation, all ad valorem, real estate and other property taxes (but excluding transfer taxes which shall be paid as set forth in Section 13.1), business and license fees, music and other license fees (including any retroactive adjustments thereof), utility expenses, amounts due or to become due under contracts, rents, lease payments and similar prepaid and deferred items. Real estate taxes shall be apportioned on the basis of taxes assessed for the preceding year, with a reapportionment, if any, as soon as the new tax rate and valuation can be ascertained. Except as otherwise provided herein, the prorations and adjustments contemplated by this Section 3.3, to the extent practicable, shall be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within ninety (90) calendar days of the Closing Date. In the event of any disputes between the parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided herein and such disputes shall be determined by an independent certified public accountant mutually 8 9 acceptable to the parties, and the fees and expenses of such accountant shall be paid one-half by Clear Channel and one-half by Exchange Party. 3.4. Allocation. (4)1 Subject to Section 3.1, the values of the assets comprising the Clear Channel Station Assets and the Exchange Party Station Assets shall be determined by an appraisal (the "Appraisal") prepared by Bond & Pecaro (whose fees shall be paid one-half by Clear Channel and one-half by Exchange Party). Prior to Closing, Clear Channel shall prepare and provide to Exchange Party schedules which, for each party to this Agreement, show the respective Clear Channel Station Assets and Exchange Party Station Assets to be conveyed and acquired and Cash Payment to be made and received at Closing under this Agreement. (4)2 Before or after Closing, Clear Channel shall prepare schedules (the "Exchange Group Schedules") which (i) divide the Exchange Party Station Assets and the Clear Channel Station Assets into both "exchange groups" (in accordance with the like-kind exchange rules covering exchanges of multiple properties under Treas. Reg. section 1.1031(j)-1) and residual groups and (ii) set forth the total value of the assets making up each such exchange group and residual group (based upon the Appraisal). For tax purposes, the parties shall report the exchange of assets under this Agreement consistently with the Exchange Group Schedules and the Appraisal, including without limitation filing when due IRS Form 8594 and (if applicable) IRS Form 8824 on the basis of the Exchange Group Schedules and the Appraisal. ARTICLE 4: CLOSING 4.1. Closing. The consummation of the exchange of assets under this Agreement (the "Closing") shall occur on a date (the "Closing Date") and at a time and place designated solely by Clear Channel after FCC Consent (defined below) (which date may be before, but shall be not later than, five business days after the Closing under the AMFM Agreement), subject to satisfaction or waiver of the conditions to Closing contained herein (other than those to be satisfied at Closing). Clear Channel shall provide Exchange Party with notice of the Closing Date at least three (3) business days prior to the Closing, however, Clear Channel reserves the right to extend the Closing Date without penalty, provided, however, the Closing Date shall not be extended beyond a date which is ninety (90) days after the satisfaction or waiver of all of the conditions to Closing contained herein, including without limitation that the closing under the AMFM Agreement shall have been consummated (other than those to be satisfied at Closing). If requested by Clear Channel, prior to Closing the parties shall hold a pre-closing conference at a time and place designated by Clear Channel, at which the parties shall provide (for review only) all documents to be delivered at Closing under this Agreement, each duly executed but undated, 9 10 and otherwise confirm their ability to timely consummate the Closing. If Closing occurs prior to the FCC Consent becoming a final order (i.e., no longer subject to appeal), and prior to such finality the FCC Consent is reversed or otherwise set aside pursuant to a final order of the FCC (or court of competent jurisdiction), then the parties shall comply with such order in a manner that otherwise complies with applicable law and returns the parties to the status quo ante in all material respects (it being understood that in such event Exchange Party may designate one or more third parties as the transferees of the Clear Channel Stations). ARTICLE 5: GOVERNMENTAL CONSENTS Closing is subject to and conditioned upon (i) prior FCC consent (the "FCC Consent") to the assignment of the Clear Channel FCC Licenses to Exchange Party and the Exchange Party FCC Licenses to Clear Channel, (ii) United States Department of Justice ("DOJ") prior approval (the "DOJ Consent") of the transactions contemplated hereby, including without limitation any such approval as may be necessary to enable Clear Channel to consummate the merger under the AMFM Agreement, and (iii) expiration or termination of any applicable waiting period ("HSR Clearance") under the HSR Act (defined below). 5.1. FCC. On a date designated by Clear Channel, Clear Channel and Exchange Party shall file applications with the FCC (the "FCC Application") requesting the FCC Consent. Clear Channel and Exchange Party shall diligently prosecute the FCC Application and otherwise use their best efforts to obtain the FCC Consent as soon as possible. If the FCC Consent imposes upon Exchange Party any condition (including without limitation in any divestiture condition), Exchange Party shall timely comply therewith. If the FCC Consent imposes upon Clear Channel any condition that Clear Channel can satisfy by the payment of $100,000.00 or less, Clear Channel shall comply therewith, but only if such condition can be satisfied by the payment by Clear Channel of $100,000 or less. 5.2. HSR. If not previously filed, then within five (5) business days after the execution of this Agreement, Clear Channel and Exchange Party shall make any required filings with the Federal Trade Commission and the DOJ pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") with respect to the transactions contemplated hereby (including a request for early termination of the waiting period thereunder), and shall thereafter promptly respond to all requests received from such agencies for additional information or documentation. 5.3. General. Clear Channel and Exchange Party shall notify each other of all documents filed with or received from any governmental agency with respect to this Agreement or the transactions contemplated hereby. Clear Channel and Exchange Party shall furnish each other with such information and assistance as the other may reasonably request in connection with their preparation of any governmental filing hereunder. If Exchange Party becomes aware of any fact relating to it which would prevent or delay the FCC Consent, the DOJ Consent or HSR Clearance, Exchange Party shall promptly notify Clear Channel thereof and take such steps 10 11 as necessary to remove such impediment, including but not limited to divesting any stations and terminating any agreements to acquire or program or market any stations. ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF CLEAR CHANNEL Clear Channel makes the following representations and warranties to Exchange Party: 6.1. Organization. Clear Channel is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and is qualified to do business in each jurisdiction in which the Clear Channel Station Assets and the Exchange Party Station Assets are located. Clear Channel has the requisite power and authority to execute and deliver this Agreement and all of the other agreements and instruments to be executed and delivered by Clear Channel pursuant hereto (collectively, the "Clear Channel Ancillary Agreements"), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. 6.2. Authorization. The execution, delivery and performance of this Agreement and the Clear Channel Ancillary Agreements by Clear Channel have been duly authorized and approved by all necessary action of Clear Channel and do not require any further authorization or consent of Clear Channel. This Agreement is, and each Clear Channel Ancillary Agreement when executed and delivered by Clear Channel and the other parties thereto will be, a legal, valid and binding agreement of Clear Channel enforceable in accordance with its respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 6.3. No Conflicts. Neither the execution and delivery by Clear Channel of this Agreement and the Clear Channel Ancillary Agreements or the consummation by Clear Channel of any of the transactions contemplated hereby or thereby nor compliance by Clear Channel with or fulfillment by Clear Channel of the terms, conditions and provisions hereof or thereof will: (i) conflict with any organizational documents of Clear Channel or any law, judgment, order, or decree to which Clear Channel is subject or, except as set forth on Schedule 1.1(c), any Clear Channel Station Contract; or (ii) require the approval, consent, authorization or act of, or the making by Clear Channel of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except the FCC Consent and DOJ Consent, and, if applicable, HSR Clearance. 11 12 6.4. FCC Licenses. Clear Channel (or one of the companies comprising Clear Channel) is the holder of the Clear Channel FCC Licenses described on Schedule 1.1(a) which lists all of the material Clear Channel FCC Licenses for the Clear Channel Stations. The Clear Channel FCC Licenses are in full force and effect and have not been revoked, suspended, canceled, rescinded or terminated and have not expired. Except as described on Schedule 1.1(a), to the actual knowledge of the station general managers of any of the Clear Channel Stations, (i) each Clear Channel Station is operating with maximum power and facilities specified in the respective Clear Channel License, (ii) none of the Clear Channel Stations is causing objectionable interference to the transmissions of any other broadcast station or communications facility and (iii) no other broadcast station or communications facility is causing objectionable interference to the transmissions of any Clear Channel Station. There is not pending any action by or before the FCC to revoke, suspend, cancel, rescind or materially adversely modify any of the Clear Channel FCC Licenses (other than proceedings to amend FCC rules of general applicability), and there is not now issued or outstanding, by or before the FCC, any order to show cause, notice of violation, notice of apparent liability, or notice of forfeiture against Clear Channel with respect to the Clear Channel Stations. The Clear Channel Stations are operating in compliance in all material respects with the Clear Channel FCC Licenses, the Communications Act of 1934, as amended (the "Communications Act"), and the rules, regulations and policies of the FCC. 6.5. Taxes. Clear Channel has, in respect of the Clear Channel Stations' business, filed all foreign, federal, state, county and local income, excise, property, sales, use, franchise and other tax returns and reports which are required to have been filed by it under applicable law and has paid all taxes which have become due pursuant to such returns or pursuant to any assessments which have become payable. 6.6. Personal Property. Schedule 1.1(b) contains a list of all material items of Clear Channel Tangible Personal Property included in the Clear Channel Station Assets. Clear Channel has title to the Clear Channel Tangible Personal Property free and clear of Liens other than Clear Channel Permitted Liens. The items of Clear Channel Tangible Personal Property listed on Schedule 1.1(b) are in all material respects in good working condition, ordinary wear and tear excepted. 6.7. Real Property. Schedule 1.1(f) contains a description of all material real property used by Clear Channel in the operation of the Clear Channel Stations. Clear Channel has fee simple title to the owned Clear Channel Real Property ("Clear Channel Owned Real Property") free and clear of Liens other than Clear Channel Permitted Liens. Schedule 1.1(f) includes a description of each material real property lease or similar agreement included in the Clear Channel Station Assets (the "Clear Channel Real Property Leases"). The Clear Channel Owned Real Property includes, and the Clear Channel Real Property Leases provide, access to the Clear Channel Stations' facilities. To Clear Channel's knowledge, the Clear Channel Real Property is not subject to any suit for condemnation or other taking by any public authority. Except as described on Schedule 1.1(f), to the actual knowledge of the station general managers of any of the Clear Channel Stations, none of the buildings, structures, improvements or fixtures constructed on any of 12 13 the Clear Channel Owned Real Property encroach upon adjoining real property ("Clear Channel Encroachment Representation"). 6.8. Contracts. Schedule 1.1(c) contains a description of all material Clear Channel Station Contracts. Each of the Clear Channel Station Contracts (including without limitation each of the Clear Channel Real Property Leases) is in effect and is binding upon Clear Channel and, to Clear Channel's knowledge, the other parties thereto (subject to bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally). Clear Channel has performed its obligations under each of the Clear Channel Station Contracts in all material respects, and is not in material default thereunder, and to Clear Channel's knowledge, no other party to any of the Clear Channel Station Contracts is in default thereunder in any material respect. 6.9. Environmental. Except as set forth in any environmental report delivered by Clear Channel to Exchange Party prior to the date of this Agreement and except as set forth on Schedule 1.1(f), to Clear Channel's knowledge, no hazardous or toxic substance or waste regulated under any applicable environmental, health or safety law has been generated, stored, transported or released on, in, from or to the Clear Channel Real Property included in the Clear Channel Station Assets. Except as set forth in any environmental report delivered by Clear Channel to Exchange Party prior to the date of this Agreement and except as set forth on Schedule 1.1(f), to Clear Channel's knowledge, Clear Channel has complied in all material respects with all environmental, health and safety laws applicable to the Clear Channel Stations. 6.10. Intangible Property. Schedule 1.1(d) contains a description of the material Clear Channel Intangible Property included in the Clear Channel Station Assets. Except as set forth on Schedule 1.1(d), Clear Channel has received no notice of any claim that its use of the Clear Channel Intangible Property infringes upon any third party rights. . Except as set forth on Schedule 1.1(d), Clear Channel owns or has the right to use the Clear Channel Intangible Property free and clear of Liens other than Clear Channel Permitted Liens. 6.11. Compliance with Law. Clear Channel has complied in all material respects with all laws, regulations, rules, writs, injunctions, ordinances, franchises, decrees or orders of any court or of any foreign, federal, state, municipal or other governmental authority which are applicable to the operation of the Clear Channel Stations. There is no action, suit or proceeding pending or threatened against Clear Channel in respect of the Clear Channel Stations that will subject Exchange Party to liability or which questions the legality or propriety of the transactions contemplated by this Agreement. To Clear Channel's knowledge, there are no governmental 13 14 claims or investigations pending or threatened against Clear Channel in respect of the Clear Channel Stations (except those affecting the industry generally). 6.12. No Finder. No broker, finder or other person is entitled to a commission, brokerage fee or other similar payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or action of Clear Channel or any party acting on Clear Channel's behalf. 6.13. Qualification. Clear Channel is legally, financially and otherwise qualified to be the licensee of, acquire, own and operate the Exchange Party Stations under the Communications Act and the rules, regulations and policies of the FCC. There are no facts that would, under existing law and the existing rules, regulations, policies and procedures of the FCC, disqualify Clear Channel as an assignee of the Exchange Party FCC Licenses or as the owner and operator of the Exchange Party Stations. No request by Clear Channel for waiver of any FCC rule or policy is necessary for the FCC Consent to be obtained. There is no action, suit or proceeding pending or threatened against Clear Channel which could materially adversely affect Clear Channel's ability to perform its obligations hereunder. 6.14. Financial Statements. Clear Channel has delivered to Exchange Party copies of the unaudited results of operations of the Clear Channel Stations for the twelve months ended December 31, 1999. Such financial statements (and the monthly income statements to be supplied pursuant to Section 9.1(c)) were or will be prepared in accordance with the books and records of the Clear Channel Stations and present (or will present) fairly the results of operations for the period indicated. ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF EXCHANGE PARTY Exchange Party makes the following representations and warranties to Clear Channel: 7.1. Organization. Exchange Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and is qualified to do business in each jurisdiction in which the Exchange Party Station Assets and the Clear Channel Station Assets are located. Exchange Party has the requisite power and authority to execute and deliver this Agreement and all of the other agreements and instruments to be executed and delivered by Exchange Party pursuant hereto (collectively, the "Exchange Party Ancillary Agreements"), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. 7.2. Authorization. The execution, delivery and performance of this Agreement and the Exchange Party Ancillary Agreements by Exchange Party have been duly authorized and approved by all necessary action of Exchange Party and do not require any further authorization or consent of Exchange Party. This Agreement is, and each Exchange Party Ancillary Agreement when executed and delivered by Exchange Party and the other parties thereto will be, 14 15 a legal, valid and binding agreement of Exchange Party enforceable in accordance with its respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 7.3. No Conflicts. Neither the execution and delivery by Exchange Party of this Agreement and the Exchange Party Ancillary Agreements or the consummation by Exchange Party of any of the transactions contemplated hereby or thereby nor compliance by Exchange Party with or fulfillment by Exchange Party of the terms, conditions and provisions hereof or thereof will: (i) conflict with any organizational documents of Exchange Party or any law, judgment, order, or decree to which Exchange Party is subject or, except as set forth on Schedule 1.3(c), any Exchange Party Station Contract; or (ii) require the approval, consent, authorization or act of, or the making by Exchange Party of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except the FCC Consent and DOJ Consent and, if applicable, HSR Clearance. 7.4. 7.5. FCC Licenses. Exchange Party is the holder of the Exchange Party FCC Licenses described on Schedule 1.3(a) which lists all of the material Exchange Party FCC Licenses for the Exchange Party Stations. The Exchange Party FCC Licenses are in full force and effect and have not been revoked, suspended, canceled, rescinded or terminated and have not expired. Except as described on Schedule 1.3(a), to the actual knowledge of the station general managers of any of the Exchange Party Stations, (i) each Exchange Party Station is operating with maximum power and facilities specified in the respective Exchange Party License, (ii) none of the Exchange Party Stations is causing objectionable interference to the transmissions of any other broadcast station or communications facility and (iii) no other broadcast station or communications facility is causing objectionable interference to the transmissions of any Exchange Party Station. There is not pending any action by or before the FCC to revoke, suspend, cancel, rescind or materially adversely modify any of the Exchange Party FCC Licenses (other than proceedings to amend FCC rules of general applicability), and there is not now issued or outstanding, by or before the FCC, any order to show cause, notice of violation, notice of apparent liability, or notice of forfeiture against Exchange Party with respect to the Exchange Party Stations. The Exchange Party Stations are operating in compliance in all material respects with the Exchange Party FCC Licenses, the Communications Act, and the rules, regulations and policies of the FCC. 7.6. Taxes. Exchange Party has, in respect of the Exchange Party Stations' business, filed all foreign, federal, state, county and local income, excise, property, sales, use, franchise 15 16 and other tax returns and reports which are required to have been filed by it under applicable law and has paid all taxes which have become due pursuant to such returns or pursuant to any assessments which have become payable. 7.7. Personal Property. Schedule 1.3(b) contains a list of all material items of Exchange Party Tangible Personal Property included in the Exchange Party Station Assets. Exchange Party has title to the Exchange Party Tangible Personal Property free and clear of Liens other than Exchange Party Permitted Liens. The items of Exchange Party Tangible Personal Property listed on Schedule 1.3(b) are in all material respects in good working condition, ordinary wear and tear excepted. 7.8. Real Property. Schedule 1.3(f) contains a description of all material real property used by Exchange Party in the operation of the Exchange Party Stations. Exchange Party has fee simple title to the owned Exchange Party Real Property ("Exchange Party Owned Real Property") free and clear of Liens other than Exchange Party Permitted Liens. Schedule 1.3(f) includes a description of each material real property lease or similar agreement included in the Exchange Party Station Assets (the "Exchange Party Real Property Leases"). The Exchange Party Owned Real Property includes, and the Exchange Party Real Property Leases provide, access to the Exchange Party Stations' facilities. To Exchange Party's knowledge, the Exchange Party Real Property is not subject to any suit for condemnation or other taking by any public authority. Except as described in Schedule 1.3(f), to the actual knowledge of the station general managers of any of the Exchange Party Stations, none of the buildings, structures, improvements or fixtures constructed on any of the Clear Channel Owned Real Property encroach upon adjoining real property ("Exchange Party Encroachment Representation"). 7.9. Contracts. Schedule 1.3(c) contains a description of all material Exchange Party Station Contracts. Each of the Exchange Party Station Contracts (including without limitation each of the Exchange Party Real Property Leases) is in effect and is binding upon Exchange Party and, to Exchange Party's knowledge, the other parties thereto (subject to bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally). Exchange Party has performed its obligations under each of the Exchange Party Station Contracts in all material respects, and is not in material default thereunder, and to Exchange Party's knowledge, no other party to any of the Exchange Party Station Contracts is in default thereunder in any material respect. 7.10. Environmental. Except as set forth in any environmental report delivered by Exchange Party to Clear Channel prior to the date of this Agreement and except as set forth on Schedule 1.3(f), to Exchange Party's knowledge, no hazardous or toxic substance or waste regulated under any applicable environmental, health or safety law has been generated, stored, transported or released on, in, from or to the Exchange Party Real Property included in the Exchange Party Station Assets. Except as set forth in any environmental report delivered by Exchange Party to Clear Channel prior to the date of this Agreement and except as set forth on Schedule 1.3(f), to Exchange Party's knowledge, Exchange Party has complied in all material 16 17 respects with all environmental, health and safety laws applicable to the Exchange Party Stations. 7.11. Intangible Property. Schedule 1.3(d) contains a description of the material Exchange Party Intangible Property included in the Exchange Party Station Assets. Except as set forth on Schedule 1.3(d), Exchange Party has received no notice of any claim that its use of the Exchange Party Intangible Property infringes upon any third party rights. . Except as set forth on Schedule 1.3(d), Exchange Party owns or has the right to use the Exchange Party Intangible Property free and clear of Liens other than Exchange Party Permitted Liens. 7.12. Compliance with Law. Exchange Party has complied in all material respects with all laws, regulations, rules, writs, injunctions, ordinances, franchises, decrees or orders of any court or of any foreign, federal, state, municipal or other governmental authority which are applicable to the operation of the Exchange Party Stations. There is no action, suit or proceeding pending or threatened against Exchange Party in respect of the Exchange Party Stations that will subject Clear Channel to liability or which questions the legality or propriety of the transactions contemplated by this Agreement. To Exchange Party's knowledge, there are no governmental claims or investigations pending or threatened against Exchange Party in respect of the Exchange Party Stations (except those affecting the industry generally). 7.13. No Finder. No broker, finder or other person is entitled to a commission, brokerage fee or other similar payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or action of Exchange Party or any party acting on Exchange Party's behalf. 7.14. Qualification. Exchange Party is legally, financially and otherwise qualified to be the licensee of, acquire, own and operate the Clear Channel Stations under the Communications Act and the rules, regulations and policies of the FCC. There are no facts that would, under existing law and the existing rules, regulations, policies and procedures of the FCC, disqualify Exchange Party as an assignee of the Clear Channel FCC Licenses or as the owner and operator of the Clear Channel Stations. No request by Exchange Party for waiver of any FCC rule or policy is necessary for the FCC Consent to be obtained. There is no action, suit or proceeding pending or threatened against Exchange Party which could materially adversely affect Exchange Party's ability to perform its obligations hereunder. Exchange Party has and will have available on the Closing Date sufficient funds to enable it to consummate the transactions contemplated hereby. 7.15. Financial Statements. Exchange Party has delivered to Clear Channel copies of the unaudited results of operations of the Exchange Party Stations for the twelve months ended December 31, 1999. Such financial statements (and the monthly income statements to be 17 18 supplied pursuant to Section 9.2(c)) prepared in accordance with the books and records of the Exchange Party Stations and present (or will present) fairly the results of operations for the period indicated. ARTICLE 8: ACCOUNTS RECEIVABLE 8.1. Clear Channel Accounts Receivable. All accounts receivable arising prior to the Closing Date in connection with the operation of the Clear Channel Stations, including but not limited to accounts receivable for advertising revenues for programs and announcements performed prior to the Closing Date and other broadcast revenues for services performed prior to the Closing Date, shall remain the property of Clear Channel (the "Clear Channel Accounts Receivable") and Exchange Party shall not acquire any right or interest therein. For a period of six months from Closing (the "Collection Period"), Exchange Party shall collect the Clear Channel Accounts Receivable in the normal and ordinary course of Exchange Party's business and shall apply all such amounts collected to the debtor's oldest account receivable first. Exchange Party's obligation shall not extend to the institution of litigation, employment of counsel or a collection agency or any other extraordinary means of collection. During the Collection Period, neither Clear Channel nor its agents shall make any direct solicitation of any such account debtor for collection purposes or institute litigation for the collection of amounts due. Any amounts relating to the Clear Channel Accounts Receivable that are paid directly to Clear Channel shall be retained by Clear Channel (and it shall inform Exchange Party thereof). Within ten calendar days after the end of each month, Exchange Party shall make a payment to Clear Channel equal to the amount of all collections of Clear Channel Accounts Receivable during the preceding month. At the end of the Collection Period, any remaining Clear Channel Accounts Receivable shall be returned to Clear Channel for collection. 8.2. Exchange Party Accounts Receivable. All accounts receivable arising prior to the Closing Date in connection with the operation of the Exchange Party Stations, including but not limited to accounts receivable for advertising revenues for programs and announcements performed prior to the Closing Date and other broadcast revenues for services performed prior to the Closing Date, shall remain the property of Exchange Party (the "Exchange Party Accounts Receivable") and Clear Channel shall not acquire any right or interest therein. During the Collection Period, Clear Channel shall collect the Exchange Party Accounts Receivable in the normal and ordinary course of Clear Channel's business and shall apply all such amounts collected to the debtor's oldest account receivable first. Clear Channel's obligation shall not extend to the institution of litigation, employment of counsel or a collection agency or any other extraordinary means of collection. During the Collection Period, neither Exchange Party nor its agents shall make any direct solicitation of any such account debtor for collection purposes or institute litigation for the collection of amounts due. Any amounts relating to the Exchange Party Accounts Receivable that are paid directly to Exchange Party shall be retained by Exchange Party (and it shall inform Clear Channel thereof). Within ten calendar days after the end of each month, Clear Channel shall make a payment to Exchange Party equal to the amount 18 19 of all collections of Exchange Party Accounts Receivable during the preceding month. At the end of the Collection Period, any remaining Exchange Party Accounts Receivable shall be returned to Exchange Party for collection. ARTICLE 9: COVENANTS 9.1. Clear Channel's Covenants. Clear Channel covenants and agrees with respect to the Clear Channel Stations that, between the date hereof and Closing, except as permitted by this Agreement or with the prior written consent of Exchange Party, which shall not be unreasonably withheld, Clear Channel shall: (1)1 operate the Clear Channel Stations in the ordinary course of business consistent with past practice, including retaining the current format and programming (including the content thereof) and spending for promotions, advertising and research at levels shown on budgets delivered to Exchange Party and in all material respects in accordance with FCC rules and regulations and with all other applicable laws, regulations, rules and orders; (1)2 not, other than in the ordinary course of business in accordance with past practice, (i) sell, lease or dispose of or agree to sell, lease or dispose of any of the Clear Channel Station Assets, (ii) create, assume or permit to exist any Liens upon the Clear Channel Station Assets, except for Clear Channel Permitted Liens, (iii) amend or terminate any Clear Channel Station Contract or enter into any new contracts (except for Clear Channel Time Sales Agreements) which (x) have a term of more than one (1) year, (y) represent an obligation to Clear Channel of more than fifty thousand dollars ($50,000.00), and (z) can't be terminated by Clear Channel with no more than ninety (90) days notice, or (iv) except as provided for by the Clear Channel budgets delivered to Exchange Party, grant any increases in the compensation of its employees; (1)3 furnish Exchange Party with such information relating to the Clear Channel Station Assets as Exchange Party may reasonably request (including weekly sales projections and monthly income statements), at Exchange Party's expense and provided such request does not interfere unreasonably with the business of the Clear Channel Stations, and provide Exchange Party access to the Clear Channel Stations, Station Assets and personnel upon reasonable request and notice to Clear Channel. 9.2. Exchange Party's Covenants. Exchange Party covenants and agrees with respect to the Exchange Party Stations that, between the date hereof and Closing, except as permitted by this Agreement or with the prior written consent of Clear Channel, which shall not be unreasonably withheld, Exchange Party shall: 19 20 (2)1 operate the Exchange Party Stations in the ordinary course of business consistent with past practice, including retaining the current format and programming (including the content thereof) and spending for promotions, advertising and research at levels shown on budgets delivered to Clear Channel and in all material respects in accordance with FCC rules and regulations and with all other applicable laws, regulations, rules and orders; (2)2 not, other than in the ordinary course of business in accordance with past practice, (i) sell, lease or dispose of or agree to sell, lease or dispose of any of the Exchange Party Station Assets, (ii) create, assume or permit to exist any Liens upon the Exchange Party Station Assets, except for Exchange Party Permitted Liens, (iii) amend or terminate any Exchange Party Station Contract or enter into any new contracts (except for Exchange Party Time Sales Agreements) which (x) have a term of more than one (1) year, (y) represent an obligation to Exchange Party of more than fifty thousand dollars ($50,000.00), and (z) can't be terminated by Exchange Party with no more than ninety (90) days notice, or (iv) except as provided for by the Exchange Party budgets delivered to Clear Channel, grant any increases in the compensation of its employees; (2)3 furnish Clear Channel with such information relating to the Exchange Party Station Assets as Clear Channel may reasonably request including weekly sales projections and monthly income statements, at Clear Channel's expense and provided such request does not interfere unreasonably with the business of the Exchange Party Stations, and provide Clear Channel access to the Exchange Party Stations, Station Assets and personnel upon reasonable request and notice to Exchange Party. ARTICLE 10: JOINT COVENANTS Clear Channel and Exchange Party hereby covenant and agree that between the date hereof and Closing: 10.1. Cooperation. Subject to express limitations contained elsewhere herein, each party (i) shall cooperate fully with one another in taking any reasonable actions (including without limitation, reasonable actions to obtain the required consent of any governmental instrumentality or any third party) necessary or helpful to accomplish the transactions contemplated by this Agreement, including but not limited to the prompt satisfaction of any condition to Closing set forth herein, and (ii) shall not take any action that conflicts with its obligations hereunder or that causes its representations and warranties to become untrue in any material respect. 10.2. Control of Stations. Neither party shall, directly or indirectly, control, supervise or direct the operations of the other party's stations prior to Closing. Such operations, including complete control and supervision of all programs, employees and policies, shall be the sole responsibility of the FCC licensee thereof. 20 21 10.3. Consents to Assignment. The parties shall use commercially reasonable efforts to obtain any third party consents necessary for the assignment of any Clear Channel Station Contract or Exchange Party Station Contract (which shall not require any payment to any such third party). To the extent that any such contract may not be assigned without the consent of any third party, and such consent is not obtained prior to Closing, this Agreement and any assignment executed pursuant hereto shall not constitute an assignment thereof, but to the extent permitted by law shall constitute an equitable assignment and assumption of rights and obligations thereunder, with the conveying party making available to the acquiring party the benefits thereof and the acquiring party performing the obligations thereunder on the conveying party's behalf; provided, however, the conveying party shall indemnify (pursuant to Article 15 of this Agreement) the acquiring party for Damages (as hereafter defined) as a result of the conveying party's failure to have obtained a consent to assignment with respect to any of the leases for the main transmitter sites and studio sites listed on Schedule 1.1(f) and included in Section 1.3(f) including but not limited to those listed on Schedule 1.3(f) respectively. 10.4. Employee Matters. Clear Channel has provided, and Exchange Party shall provide within three (3) days of the execution of this Agreement to the other party a list (with name, position and base salary) of all of their respective employees employed at the Clear Channel Stations and the Exchange Party Stations and who work primarily for those stations. Exchange Party may interview and elect to hire any or all of the Clear Channel employees on the list (i) employed at the Clear Channel Stations licensed to Grand Rapids, Michigan and (ii) employed at the Clear Channel Stations licensed to Albany, New York who work primarily for those Clear Channel Stations (including without limitation any member of the sales staff who primarily sells for or represents radio station WQBJ-FM or WQBK-FM). Clear Channel may interview and elect to hire any or all of the Exchange Party employees on the list. The acquiring party is obligated to hire only those employees that are under employment contracts (and assume the obligations and liabilities under such employment contracts) which are included in the Clear Channel Station Contracts or Exchange Party Station Contracts. With respect to employees hired by the acquiring party ("Transferred Employees"), to the extent permitted by law the conveying party shall provide access to its personnel records and such other information as may be reasonably requested prior to Closing. For a period of twelve (12) months after Closing, neither party will hire, solicit or induce for hire or make any offer or attempt to hire, any of the Transferred Employees hired by the other party. Provided, however, either party may six (6) months after Closing (but not before) hire or solicit for hire any of its former employees who are not Transferred Employees. With respect to such hired employees, the conveying party shall be responsible for the payment of all compensation and accrued employee benefits payable by it until Closing and thereafter the acquiring party shall be responsible for all such obligations payable by it. The acquiring party shall cause all employees it hires to be eligible to participate 21 22 in its "employee welfare benefit plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA, respectively) in which similarly situated employees are generally eligible to participate; provided, however, that all such employees and their spouses and dependents shall be eligible for coverage immediately after Closing (and shall not be excluded from coverage on account of any pre-existing condition) to the extent provided under such employee welfare benefit plans. For purposes of any length of service requirements, waiting periods, vesting periods or differential benefits based on length of service in any such employee welfare benefit plans for which such employees may be eligible after Closing, the acquiring party shall ensure that service with the conveying party shall be deemed to have been service with the acquiring party. No such service credit must be granted with respect to participation or eligibility in any employee pension benefit plan. In addition, the acquiring party shall ensure that each such employee receives credit under any welfare benefit plan of the acquiring party for any deductibles or co-payments paid by such employees and dependents for the current plan year under a plan maintained by the conveying party. Notwithstanding any other provision contained herein, the acquiring party shall grant credit to each such employee for all unused sick leave accrued as of Closing as an employee of the conveying party. Notwithstanding any other provision contained herein, the acquiring party shall assume and discharge the conveying party's liabilities for the payment of all unused vacation leave accrued by such employees as of Closing. From and after the Closing, Exchange Party shall cooperate with the reasonable requests of Clear Channel to continue to withhold from the pay checks of Transferred Employees who have outstanding loan balances in Clear Channel's 401(k) Savings Plan, and Exchange Party shall remit such withheld amounts to Clear Channel in a timely fashion such that the outstanding loans do not go into default. 10.5. 1031 Exchange. At or prior to Closing, Clear Channel may assign its rights under this Agreement (in whole or in part) to a qualified intermediary (as defined in Treasury regulation section 1.1031(k)-1(g)(4)) or similar entity or arrangement ("Qualified Intermediary"). Upon any such assignment, Clear Channel shall promptly give written notice thereof to Exchange Party and Exchange Party shall cooperate with the reasonable requests of Clear Channel and any Qualified Intermediary in connection therewith. Without limiting the generality of the foregoing, if Clear Channel gives notice of such agreement, Exchange Party shall (i) promptly provide Clear Channel with written acknowledgment of such notice and (ii) at Closing, convey all or part of the Exchange Party Station Assets and make all or part of the Cash Payment (each as designated in writing by the Qualified Intermediary) to or on behalf of the Qualified Intermediary (which payment and conveyance shall, to the extent thereof, satisfy the obligation of Exchange Party to make such conveyance and payment hereunder). Clear Channel's assignment to a Qualified Intermediary will not relieve Clear Channel of any of its duties or obligations herein. Except for the obligations of Exchange Party set forth in this Section, Exchange Party shall not have any liability or obligation to Clear Channel for the failure of such other exchange to qualify as a like kind exchange under Section 1031 of the Code unless such failure is the result of the material breach or default by Exchange Party under this Agreement. 22 23 10.6. Trust. Notwithstanding anything in this Agreement to the contrary, Clear Channel may at it option assign this Agreement (in whole or part) and assign and transfer the Clear Channel Station Assets (in whole or in part) to a trustee to hold and operate pursuant to a trust agreement, provided such trustee assumes Clear Channel's duties and obligations hereunder with respect to the Clear Channel Station Assets held in such trust. ARTICLE 11: CONDITIONS OF CLOSING BY CLEAR CHANNEL The obligations of Clear Channel hereunder are, at its option, subject to satisfaction, at or prior to Closing, of each of the following conditions: 11.1. Representations, Warranties and Covenants. The representations and warranties of Exchange Party made in this Agreement shall be true and correct in all material respects as of the Closing Date except for changes permitted or contemplated by the terms of this Agreement, and the covenants and agreements to be complied with and performed by Exchange Party at or prior to Closing shall have been complied with or performed in all material respects. Clear Channel shall have received a certificate dated as of the Closing Date from Exchange Party, executed by an authorized officer of Exchange Party to the effect that the conditions set forth in this Section have been satisfied. 11.2. Governmental Consents. The FCC Consent and DOJ Consent, and, if applicable, HSR Clearance, shall have been obtained, and no court or governmental order prohibiting Closing shall be in effect. 11.3. AMFM Closing. The closing under the AMFM Agreement shall have been consummated. ARTICLE 12: CONDITIONS OF CLOSING BY EXCHANGE PARTY The obligations of Exchange Party hereunder are, at its option, subject to satisfaction, at or prior to Closing, of each of the following conditions: 12.1. Representations, Warranties and Covenants. The representations and warranties of Clear Channel made in this Agreement shall be true and correct in all material respects as of the Closing Date except for changes permitted or contemplated by the terms of this Agreement, and the covenants and agreements to be complied with and performed by Clear Channel at or prior to Closing shall have been complied with or performed in all material respects. Exchange Party shall have received a certificate dated as of the Closing Date from Clear Channel, executed 23 24 by an authorized officer of Clear Channel, to the effect that the conditions set forth in this Section have been satisfied. 12.2. Governmental Consents. The FCC Consent and DOJ Consent, and, if applicable, HSR Clearance, shall have been obtained, and no court or governmental order prohibiting Closing shall be in effect. ARTICLE 13: EXPENSES 13.1. Expenses. Each party shall be solely responsible for all costs and expenses incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement, except that (i) all recordation, transfer and documentary taxes, fees and charges, and any excise, sales or use taxes, applicable to the transfer of the Clear Channel Station Assets and Exchange Party Station Assets shall be paid by the transferring party, (ii) all FCC filing fees shall be paid equally by Clear Channel and Exchange Party, and (iii) all HSR Act filing fees and expenses shall be paid equally by Exchange Party and Clear Channel. ARTICLE 14: DOCUMENTS TO BE DELIVERED AT CLOSING 14.1. Clear Channel's Documents. At Closing, Clear Channel shall deliver or cause to be delivered to Exchange Party: 14.2. (i) certified copies of resolutions authorizing its execution, delivery and performance of this Agreement, including the consummation of the transactions contemplated hereby; (ii) the certificate described in Section 12.1; (iii) such bills of sale, assignments, special warranty deeds, documents of title and other instruments of conveyance, assignment and transfer as may be necessary to convey, transfer and assign the Clear Channel Station Assets to Exchange Party, free and clear of Liens, except for Clear Channel Permitted Liens; and (iv) such documents and instruments of assumption as may be necessary to assume the Exchange Party Assumed Obligations. 14.3. Exchange Party's Documents. At Closing, Exchange Party shall deliver or cause to be delivered to Clear Channel: (i) the certified copies of resolutions authorizing its execution, delivery and performance of this Agreement, including the consummation of the transactions contemplated hereby; (ii) the certificate described in Section 11.1; (iii) such bills of sale, assignments, special warranty deeds, documents of title and other instruments of conveyance, assignment and transfer as may be necessary to convey, transfer and assign the Exchange Party Station Assets to Clear Channel, free and clear of Liens, except for Exchange Party Permitted Liens; 24 25 (iv) such documents and instruments of assumption as may be necessary to assume the Clear Channel Assumed Obligations; and (v) the Cash Payment in accordance with Section 3.1 hereof. ARTICLE 15: SURVIVAL; INDEMNIFICATION. 15.1. Survival. The covenants, agreements, representations and warranties in this Agreement shall survive Closing for a period of six (6) months from the Closing Date whereupon they shall expire and be of no further force or effect, except those under (i) this Article 15 that relate to Damages (defined below) for which written notice is given by the indemnified party to the indemnifying party prior to the expiration, which shall survive until resolved and (ii) Sections 2.1 and 2.3 (Assumed Obligations), 2.2 and 2.4 (Retained Obligations), 3.3 (Adjustments), 3.4 (Allocation), 8.1 and 8.2 (Accounts Receivable) and 13.1 (Expenses) (collectively, the "Payment Provisions"), and indemnification obligations with respect to such provisions, which shall survive until performed. 15.2. Indemnification. (2)1 From and after the Closing, Clear Channel shall defend, indemnify and hold harmless Exchange Party from and against any and all losses, costs, damages, liabilities and expenses, including reasonable attorneys' fees and expenses ("Damages") incurred by Exchange Party arising out of or resulting from: (i) any breach or default by Clear Channel under this Agreement; (ii) the Clear Channel Retained Obligations or the business or operation of the Clear Channel Stations before Closing; or (iii) the Clear Channel Assumed Obligations or the business or operation of the Exchange Party Stations after Closing; provided, however, that for matters other than the Payment Provisions, Clear Channel shall have no liability to Exchange Party hereunder until, and only to the extent that, Exchange Party's aggregate Damages exceed $100,000, (except for Damages (x) for any Liens not in compliance with subsection (iii) of the last paragraph of 1.1 ("Clear Channel Lien Default") or (y) for breach of the Clear Channel Encroachment Representation ("Clear Channel Encroachment Default") for which Clear Channel shall have liability for all such Damages under $500,000 and in excess of $600,000) and the maximum liability of Clear Channel in all cases of indemnification hereunder shall be $7,000,000. (2)2 From and after the Closing, Exchange Party shall defend, indemnify and hold harmless Clear Channel from and against any and all Damages incurred by Clear Channel arising out of or resulting from: (i) any breach or default by Exchange Party under this Agreement; (ii) the Exchange Party Retained Obligations or the business or operation of the Exchange Party Stations before Closing or (iii) the Exchange Party Assumed Obligations or the 25 26 business or operation of the Clear Channel Stations after Closing; provided, however, that for matters other than the Payment Provisions and the Cash Payment, Exchange Party shall have no liability to Clear Channel hereunder until, and only to the extent that, Clear Channel's aggregate Damages exceed $100,000 (except for Damages (x) for any Liens not in compliance with subsection (iii) of the last paragraph of 1.3 ("Exchange Party Lien Default") or (y) for breach of the Exchange Party Encroachment Representation ("Exchange Party Encroachment Default") for which the Exchange Party shall have liability for all such Damages under $500,000 and in excess of $600,000) and (ii) the maximum liability of Exchange Party in all cases of indemnification hereunder shall be $7,000,000. Provided, however, the parties agree that before making a claim for Damages for Clear Channel Lien Default, Clear Channel Encroachment Default, Exchange Party Lien Default or Exchange Party Encroachment Default, respectively, they both shall use their reasonable best efforts to allow the breaching party to avoid or cure any such default and Damages through the use of lease, contract or any other reasonable arrangements. 15.3. Procedures. The indemnified party shall give prompt written notice to the indemnifying party of any demand, suit, claim or assertion of liability by third parties or other circumstances that could give rise to an indemnification obligation hereunder against the indemnifying party (a "Claim"), but a failure to give such notice or delaying such notice shall not affect the indemnified party's right to indemnification and the indemnifying party's obligation to indemnify as set forth in this Agreement, except to the extent the indemnifying party's ability to remedy, contest, defend or settle with respect to such Claim is thereby prejudiced. The obligations and liabilities of the parties with respect to any Claim shall be subject to the following additional terms and conditions: (3)1 The indemnifying party shall have the right to undertake, by counsel or other representatives of its own choosing, the defense or opposition to such Claim. (3)2 In the event that the indemnifying party shall elect not to undertake such defense or opposition, or, within twenty (20) days after written notice (which shall include sufficient description of background information explaining the basis for such Claim) of any such Claim from the indemnified party, the indemnifying party shall fail to undertake to defend or oppose, the indemnified party (upon further written notice to the indemnifying party) shall have the right to undertake the defense, opposition, compromise or settlement of such Claim, by counsel or other representatives of its own choosing, on behalf of and for the account and risk of the indemnifying party (subject to the right of the indemnifying party to assume defense of or opposition to such Claim at any time prior to settlement, compromise or final determination thereof). (3)3 Anything herein to the contrary notwithstanding: (i) the indemnified party shall have the right, at its own cost and expense, to participate in the defense, opposition, compromise or settlement of the Claim; (ii) the indemnifying party shall not, without the 26 27 indemnified party's written consent, settle or compromise any Claim or consent to entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such Claim; and (iii) in the event that the indemnifying party undertakes defense of or opposition to any Claim, the indemnified party, by counsel or other representative of its own choosing and at its sole cost and expense, shall have the right to consult with the indemnifying party and its counsel or other representatives concerning such Claim and the indemnifying party and the indemnified party and their respective counsel or other representatives shall cooperate in good faith with respect to such Claim. (3)4 All claims not disputed shall be paid by the indemnifying party within thirty (30) days after receiving notice of the Claim. "Disputed Claims" shall mean claims for Damages by an indemnified party which the indemnifying party objects to in writing within thirty (30) days after receiving notice of the Claim. In the event there is a Disputed Claim with respect to any Damages, the indemnifying party shall be required to pay the indemnified party the amount of such Damages for which the indemnifying party has, pursuant to a final determination, been found liable within ten (10) days after there is a final determination with respect to such Disputed Claim. A final determination of a Disputed Claim shall be (i) a judgment of any court determining the validity of a Disputed Claim, if no appeal is pending from such judgment and if the time to appeal therefrom has elapsed; (ii) an award of any arbitration determining the validity of such disputed claim, if there is not pending any motion to set aside such award and if the time within which to move to set aside such award has elapsed; (iii) a written termination of the dispute with respect to such claim signed by the parties thereto or their attorneys; (iv) a written acknowledgment of the indemnifying party that it no longer disputes the validity of such claim; or (v) such other evidence of final determination of a disputed claim as shall be acceptable to the parties. No undertaking of defense or opposition to a Claim shall be construed as an acknowledgment by such party that it is liable to the party claiming indemnification with respect to the Claim at issue or other similar Claims. ARTICLE 16: TERMINATION 16.1. Termination. This Agreement may be terminated at any time prior to Closing as follows: (1)1 by mutual written consent of Clear Channel and Exchange Party; (1)2 by written notice of Clear Channel to Exchange Party if Exchange Party (i) does not satisfy the conditions or perform the obligations to be satisfied or performed by it on the Closing Date, including without limitation, the consummation of the Closing in accordance with 27 28 the Agreement; or (ii) otherwise breaches in any material respect any of its representations or warranties or defaults in any material respect in the performance of any of its covenants or agreements herein contained and such breach or default is not cured within the Cure Period (defined below) (1)3 by written notice of Exchange Party to Clear Channel if Clear Channel (i) does not satisfy the conditions or perform the obligations to be satisfied or performed by it on the Closing Date, including without limitation, the consummation of the Closing in accordance with the Agreement; or (ii) otherwise breaches in any material respect any of its representations or warranties or defaults in any material respect in the performance of any of its covenants or agreements herein contained and such breach or default is not cured within the Cure Period (defined below) (1)4 by written notice of either party to the other if the FCC denies the FCC Application; (1)5 by written notice of Clear Channel to Exchange Party if the FCC Consent, DOJ Consent and HSR Clearance have not been obtained before the date four months after the date of this Agreement; (1)6 by written notice of Clear Channel to Exchange Party or Exchange Party to Clear Channel if the Closing shall not have been consummated by March 31, 2001. (1)7 by written notice of Clear Channel to Exchange Party if the AMFM Agreement is terminated or expires. The term "Cure Period" as used herein means a period commencing the date a party receives from the other written notice of breach or default hereunder and continuing until the earlier of (i) thirty (30) days thereafter or (ii) the Closing Date; provided, however, that if the breach or default cannot reasonably be cured within such period but can be cured before the Closing Date, and if diligent efforts to cure promptly commence, then the Cure Period shall continue as long as such diligent efforts to cure continue, but not beyond the Closing Date. Except as set forth below, the termination of this Agreement shall not relieve any party of any liability for breach or default under this Agreement prior to the date of termination. Notwithstanding anything contained herein to the contrary, Section 13.1 shall survive any termination of this Agreement. 16.2. Remedies. The parties recognize that if either party refuses to consummate the Closing pursuant to the provisions of this Agreement or either party otherwise breaches or defaults such that the Closing has not occurred ("Breaching Party"), monetary damages alone will not be adequate to compensate the non-breaching party ("Non-Breaching Party") for its injury. Such Non-Breaching Party shall therefore be entitled to obtain specific performance of the terms of this Agreement in lieu of, and not in addition to, any other remedies, including but 28 29 not limited to monetary damages, that may be available to it; provided however, that Clear Channel may elect to recover liquidated damages in lieu of obtaining specific performance. If any action is brought by the Non-Breaching Party to enforce this Agreement, the Breaching Party shall waive the defense that there is an adequate remedy at law. In the event of a default by the Breaching Party which results in the filing of a lawsuit for damages, specific performance, or other remedy, the Non-Breaching Party shall be entitled to reimbursement by the Breaching Party of reasonable legal fees and expenses incurred by the Non-Breaching Party, provided that the Non-Breaching Party is successful in such lawsuit. 16.3. Liquidated Damages. If Clear Channel terminates this Agreement pursuant to Section 16.1(b), then Exchange Party shall pay Clear Channel as liquidated damages an amount equal to $28,000,000; provided however, Clear Channel shall not be entitled to liquidated damages in the event Clear Channel terminates this Agreement because of a failure of a condition to be satisfied if such failure is not caused by a failure of the Exchange Party to perform the obligations to be satisfied or performed by it under this Agreement. Provided further, Clear Channel shall not be entitled to liquidated damages unless all of the Exchange Party's conditions precedent to its obligation to close as provided for in Article 12 have been satisfied and Exchange Party fails to consummate the Closing on the Closing Date and Clear Channel is not in material default or breach of any of its obligations under the Agreement and has otherwise satisfied the conditions and has performed the obligations to be satisfied or performed by it pursuant to the Agreement in all material respects. It is understood and agreed that such liquidated damages amount represents Clear Channel's and Exchange Party's reasonable estimate of actual damages and does not constitute a penalty. On the date of this Agreement, Exchange Party shall execute and deliver to Clear Channel the liquidated damages agreement attached hereto as Exhibit C. ARTICLE 17: MISCELLANEOUS PROVISIONS 17.1. Casualty Loss. In the event any loss or damage of the Clear Channel Station Assets or the Exchange Party Station Assets exists on the Closing Date, the parties shall consummate the Closing and assign as appropriate the proceeds of any insurance payable on account of such damage or loss. 17.2. Further Assurances. After the Closing, each party shall from time to time, at the request of and without further cost or expense to the other, execute and deliver such other instruments and take such other actions as may reasonably be requested in order to more effectively consummate the transactions contemplated hereby to exchange assets and assume obligations as contemplated by this Agreement. 29 30 17.3. Assignment. Except as set forth in Sections 10.5 (1031 Exchange) and 10.6 (Trust), neither party may assign this Agreement without the prior written consent of the other party hereto, provided that any party may assign its right to acquire one or more of the radio stations covered by this Agreement to one or more 100% owned affiliates of such party if such assignment does not delay the governmental consents contemplated by Article 5 (or otherwise delay Closing), the representations made by it under this Agreement are true with respect to the assignee(s), and the assigning party gives the other party prior written notice thereof. No such assignment shall relieve the assigning party of any obligation or liability under this Agreement. With respect to any permitted assignment, the parties shall take all such actions as are reasonably necessary to effectuate such assignment, including but not limited to cooperating in any appropriate filings with the FCC or other governmental authorities. All covenants, agreements, statements, representations, warranties and indemnities in this Agreement by and on behalf of any of the parties hereto shall bind and inure to the benefit of their respective successors and permitted assigns of the parties hereto. 17.4. Amendments. No amendment, waiver of compliance with any provision or condition hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment, change, extension or discharge is sought. 17.5. Headings. The headings set forth in this Agreement are for convenience only and will not control or affect the meaning or construction of the provisions of this Agreement. 17.6. Governing Law. The construction and performance of this Agreement shall be governed by the laws of the State of Texas without giving effect to the choice of law provisions thereof. 17.7. Notices. Any notice, demand or request required or permitted to be given under the provisions of this Agreement shall be in writing, including by facsimile, and shall be deemed to have been received on the date of personal delivery, on the third day after deposit in the U.S. mail if mailed by registered or certified mail, postage prepaid and return receipt requested, on the day after delivery to a nationally recognized overnight courier service if sent by an overnight delivery service for next morning delivery or when delivered by facsimile transmission, and shall be addressed as follows (or to such other address as any party may request by written notice): if to Clear Channel: c/o Clear Channel Broadcasting, Inc. 200 Concord Plaza, Suite 600 San Antonio, Texas 78216 Attention: President Facsimile: (210) 822-2299 30 31 with a copy (which shall not constitute notice) to: Graydon, Head & Ritchey 1900 Fifth Third Center 511 Walnut Street Cincinnati, OH 45202 Attention: John J. Kropp, Esq. Facsimile: (513) 651-3836 if to Exchange Party: c/o Regent Communications, Inc. 50 East River Center Blvd., Suite 180 Covington, KY 41011 Attention: Terry S. Jacobs Facsimile: (606) 292-0352 with a copy (which shall not constitute notice) to: Strauss & Troy The Federal Reserve Building 150 East Fourth Street Cincinnati, Ohio 45202 Attention: Alan C. Rosser, Esq. Facsimile: 513-241-8259 17.8. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. 17.9. No Third Party Beneficiaries. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the parties hereto and their successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 17.10. Severability. The parties agree that if one or more provisions contained in this Agreement shall be deemed or held to be invalid, illegal or unenforceable in any respect under any applicable law, this Agreement shall be construed with the invalid, illegal or unenforceable provision deleted, and the validity, legality and enforceability of the remaining provisions contained herein shall not be affected or impaired thereby. 17.11. Entire Agreement. This Agreement, and any other document executed by the parties pursuant or in connection with this Agreement of even date embody the entire agreement 31 32 and understanding of the parties hereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein. This Agreement does not supersede any confidentiality agreement relating to the Clear Channel Stations or Exchange Party Stations. [SIGNATURE PAGE FOLLOWS] 32 33 SIGNATURE PAGE TO ASSET EXCHANGE AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. CLEAR CHANNEL: CLEAR CHANNEL BROADCASTING, INC. By: /s/ Jerome L. Kersting -------------------------------------- Name: Jerome L. Kersting --------------------------------- Title: Senior Vice President -------------------------------- CLEAR CHANNEL BROADCASTING LICENSES, INC. By: /s/ Jerome L. Kersting -------------------------------------- Name: Jerome L. Kersting --------------------------------- Title: Senior Vice President -------------------------------- CAPSTAR RADIO OPERATING COMPANY By: /s/ William S. Banowsky, Jr. -------------------------------------- Name: William S. Banowsky, Jr. --------------------------------- Title: Executive Vice President -------------------------------- CAPSTAR TX LIMITED PARTNERSHIP By: /s/ William S. Banowsky, Jr. -------------------------------------- Name: William S. Banowsky, Jr. --------------------------------- Title: Executive Vice President -------------------------------- 33 34 EXCHANGE PARTY: REGENT BROADCASTING OF VICTORVILLE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT LICENSEE OF VICTORVILLE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT BROADCASTING OF PALMDALE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT LICENSEE OF PALMDALE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT BROADCASTING OF MANSFIELD, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT LICENSEE OF MANSFIELD, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- 34 35 Clear Channel Schedules - ----------------------- 1.1(a) - FCC Licenses 1.1(b) - Tangible Personal Property 1.1(c) - Station Contracts 1.1(d) - Intangible Property 1.1(f) - Real Property 1.2(h) - Excluded Assets Exchange Party Schedules - ------------------------ 1.3(a) - FCC Licenses 1.3(b) - Tangible Personal Property 1.3(c) - Station Contracts 1.3(d) - Intangible Property 1.3(f) - Real Property 1.4(h) - Excluded Assets 35 EX-2.H 3 EXHIBIT 2(H) 1 Exhibit 2(h) AGREEMENT OF MERGER AMONG KZAP, INC., ROBB CHEAL, REGENT BROADCASTING, INC., AND REGENT COMMUNICATIONS, INC. MARCH 29, 2000 2 AGREEMENT OF MERGER This Agreement of Merger made and entered into this 29th day of March, 2000, by and among REGENT COMMUNICATIONS, INC., a Delaware corporation ("Regent"); REGENT BROADCASTING, INC., a Delaware corporation and wholly-owned subsidiary of Regent ("RBI"); and KZAP, INC., a California corporation (the "Company"); and ROBB CHEAL ("Seller"), who is the sole shareholder of the Company. WHEREAS, Seller is the owner and holder of all of the issued and outstanding shares of capital stock of the Company; and WHEREAS, the Company, pursuant to authorizations duly granted and issued by the Federal Communications Commission (hereinafter called the "FCC"), owns and operates the radio station KZAP, Chico, California (the "Station"); and WHEREAS, Seller and the Board of Directors of the Company and the Board of Directors of RBI deem it advisable that the Company (sometimes referred to as "the Disappearing Corporation") be merged into RBI (sometimes referred to as "the Surviving Corporation") under the laws of the State of Delaware and the State of California in the manner provided therefor pursuant to Section 252 and related sections of Title 8 of the Delaware Code and Section 1100 et seq. of the California Corporations Code; and WHEREAS, as a result of such merger, control of the Company will be transferred to Regent; and WHEREAS, control of the Company may not be transferred without prior written consent of the Federal Communications Commission; and WHEREAS, Regent, RBI, and the Company have negotiated the terms and conditions of such merger, including the consideration to be paid to Seller. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, it is hereby agreed as follows: ARTICLE I Agreement to Merge 1.01 Agreement. RBI and the Company hereby agree that, in accordance with and subject to the terms and conditions set forth herein, upon Effectiveness, the Company shall be merged with and into RBI, the separate corporate existence of the Company shall cease, RBI shall continue in existence and such merger shall in all respects have the effect provided for in Section 259 of the General Corporation Law of the State of Delaware and Section 1100 et seq. of the California Corporations Code. 3 1.02 Action to Effect Merger. Prior to, from and after Effectiveness, the Company, RBI and Regent shall take all such action as shall be necessary or appropriate, in order to effectuate this merger in accordance with and subject to the terms of this Agreement of Merger and the laws of the State of Delaware and State of California. 1.03. Certificate of Incorporation and By-Laws. From and after Effectiveness and until thereafter amended as provided by law, the Certificate of Incorporation and the By-Laws of RBI as in effect immediately prior to Effectiveness shall be and continue to be the Certificate of Incorporation and By-Laws of the Surviving Corporation. 1.04. Directors. The following shall be the directors of the Surviving Corporation as of and after Effectiveness to hold office as provided in the Certificate of Incorporation and By-Laws of the Surviving Corporation: Terry S. Jacobs William L. Stakelin 1.05. Officers. The following shall be the officers of the Surviving Corporation as of and after Effectiveness to hold office as provided in the Certificate of Incorporation and By-Laws of the Surviving Corporation: Chairman of the Board, Chief Executive Officer, Treasurer ..............................................Terry S. Jacobs President, Chief Operating Officer, Secretary .................................William L. Stakelin Vice President-Finance, Assistant Secretary .....................................Matthew Yeoman Assistant Secretary ..............................Christina Tenhundfeld Assistant Secretary .....................................Alan C. Rosser 1.06 Stockholder Approval; Effectiveness of Merger. This Agreement of Merger has been approved by Seller and Regent as provided by the applicable laws of the State of Delaware and State of California. If this Agreement is not terminated or abandoned in accordance with its terms, this Agreement of Merger shall be certified by the Company and RBI pursuant to Section 252(c) of the General Corporation Law of the State of Delaware and Section 1103 of the California Corporations Code, and the Surviving Corporation shall prepare, file and record a Certificate of Merger in the form provided under such Sections as soon as practicable after the Closing. The merger shall become effective upon the due and proper filing of the Certificate of Merger, herein sometimes called the "Effectiveness." 1.07. Authorized Shares of Disappearing Corporation. The Company presently has authorized capital stock of no par value (the "Company Stock"), all of which are issued and outstanding to Seller. -2- 4 1.08 Authorized Shares of Surviving Corporation. RBI presently has authorized capital stock of 1,000 common shares, $1.00 per share par value, of which 100 shares are issued and outstanding. Upon Effectiveness, the authorized capital stock of the Surviving Corporation will consist of 1,000 shares of common stock, $1.00 per share par value. 1.09 Cancellation of Shares. At Effectiveness, all outstanding shares of Company Stock shall be transferred to RBI and cancelled, and each share held in the Company's treasury shall, by virtue of the merger and without any action on the part of the holder thereof, cease to be outstanding, shall be cancelled and retired without payment of any consideration therefor and shall cease to exist. At the Closing, Seller shall surrender for cancellation his certificate or certificates evidencing all of the Company Stock. 1.10 Funding of Consideration for Company Stock. On or before the Closing Date, Regent shall have issued and delivered to RBI 233,333 shares of Common Stock of Regent. 1.11 Basic Merger Consideration. The consideration to be paid for the Company Stock shall be 233,333 of fully-paid and nonassessable unregistered shares of the Common Stock of Regent (the "Basic Merger Consideration"), subject to adjustment as provided in Section 1.12. 1.12 Adjustment of Basic Merger Consideration. At the Closing, a computation shall be compiled by the Company setting forth as of the Closing Date the amount of the Company's Cash (as hereinafter defined) and all known Liabilities of Company as set forth below ("Closing Statement"). The Basic Merger Consideration shall be adjusted by (a) an increase by the amount of Cash and (b) a decrease by the amount of Liabilities shown on the Closing Statement, with a corresponding adjustment in the number of shares of Regent Common Stock to be issued, determined by using a value of $6.00 per share. The number of shares of the Common Stock of Regent determined after making the foregoing adjustments to the Basic Merger Consideration is herein referred to as the "Closing Merger Consideration." As used herein, the term "Cash" shall mean cash on hand and in banks, certificates of deposit, treasury bills and marketable securities and other cash equivalents, but excluding accounts and notes receivable and any other current asset listed on the Company's balance sheet. As used herein, the term "Liabilities" shall mean at the Closing Date the amount of all the liabilities of the Company that would be recorded on a balance sheet or disclosed in the notes to the financial statements at that date computed in accordance with generally accepted accounting principles applied on a basis consistent with those followed in the preparation of the financial statements described in Section 4.16 and shall include (i) accounts payable, (ii) all indebtedness, (iii) any unpaid bonuses, severance or vacation pay accrued to employees for the period ending on the day prior to the Closing Date, (iv) trade and barter obligations, and (v) all other items which in accordance with generally accepted accounting principles consistently applied would be included as Liabilities of the Company. For purposes of the determination of Liabilities, all expenses relating to the Company and arising from the conduct of the Company's business and operation of the Station (including without limitation such items as taxes, license fees, utilities, and rents) shall be prorated between RBI and Seller in accordance with generally accepted accounting principles as of 11:59 p.m. Pacific time, on the date immediately preceding the Closing Date. -3- 5 Within ninety (90) days after the Closing Date, representatives of RBI's auditors shall examine the computation of the Closing Merger Consideration in accordance with this Section 1.12, including an examination of such of the Company's books and records as are deemed necessary or appropriate, to verify the Company's Cash and Liabilities as of the Closing Date in accordance with auditing standards approved and adopted by the American Institute of Certified Public Accountants and otherwise in accordance with generally accepted accounting principles. Based upon such examination, they shall prepare a report setting forth their computation of the Merger Consideration pursuant to this Section 1.12 ("Closing Report"), and upon completion of such Closing Report, they shall deliver same to Seller and RBI. If either RBI or Seller shall disagree with the Closing Report, such parties shall, within fifteen (15) days after receipt of such Closing Report, give written notice to the other and RBI's auditors of its objection to the Closing Report, specifying each item or computation to which objection is taken and the reason for such objection. In such event, Seller and RBI shall use their best efforts to resolve such objections and to agree upon the Closing Report through negotiation. If Seller and RBI are unable to reconcile their differences and to mutually agree upon the Closing Report, within thirty (30) days after such written notice shall have been given as aforesaid, Seller and RBI shall designate a mutually agreeable independent national accounting firm, or if such firm cannot act, another national accounting firm (which has not been retained by either Seller, the Company or RBI within the past ten (10) years) mutually acceptable to such parties to act as arbitrator ("Arbitrator"). The Arbitrator shall determine all issues in disagreement and shall make such adjustments, if any, to the items and computations in the Closing Report as are necessitated by such determinations, and shall within thirty (30) days after their designation as Arbitrator deliver to Seller and RBI a written statement setting forth all adjustments made by the Arbitrator to the Closing Report. Such Closing Report shall be employed to determine any further adjustments to the number of shares, at $6.00 per share, required to the Merger Consideration pursuant to this Section 1.12 ("Final Merger Consideration"), and such Final Merger Consideration shall be final, conclusive and binding upon all parties to this Agreement. The fees and expenses of RBI's auditor and the Arbitrator in connection with the making of the Closing Report and the determinations herein provided for to resolve any differences over the Closing Report shall be paid one-half by Seller and one-half by RBI. Within five (5) business days after the determination of the Final Merger Consideration, any adjustment to the Closing Report required thereby and the number of shares of Regent Common Stock to be issued in this transaction shall be made by Seller to RBI or by RBI to Seller, as the case may be, in shares of Regent Common Stock. 1.13 Escrow Deposit. Within ten (10) days following the execution of this Agreement, RBI shall deliver to Mid Valley Title and Escrow ("Escrow Agent") cash or an irrevocable, stand-by letter of credit in the amount of Fifty Thousand Dollars ($50,000.00) (the "Escrow Deposit"). The Escrow Deposit shall be held and applied by the Escrow Agent in accordance with the terms of a Deposit Escrow Agreement in the form of Exhibit A attached hereto (the "Deposit Escrow Agreement"), executed by the parties thereto contemporaneously with the execution of this Agreement. As more fully described in the Deposit Escrow Agreement: (a) in the event this Agreement is terminated solely because of RBI's material breach of this Agreement and all other conditions to Closing are at such time satisfied or waived -4- 6 (other than such conditions as can readily be satisfied by the Closing), the Escrow Deposit shall be delivered to Seller (who may exercise his right to draw on the letter of credit) as his sole remedy and as liquidated damages as provided in Section 13.04 hereof for RBI's material breach of this Agreement; and (b) in the event this Agreement is terminated under any circumstances other than those set forth in Section 1.13(a) above, the Escrow Deposit shall be delivered to RBI. 1.14 Payment of Merger Consideration. At the Closing, the Escrow Deposit shall be delivered to RBI. The Closing Merger Consideration shall be paid as follows: (a) Eight Thousand Three Hundred Thirty-Three (8,333) shares of Common Stock of Regent delivered to the Escrow Agent, to be held, administered and released in accordance with the terms of an Indemnification Escrow Agreement to be executed by Seller, RBI, Regent, and the Escrow Agent at the Closing in the form of Exhibit B attached hereto (the "Indemnification Escrow Agreement"), which funds shall be held in escrow until the expiration of twelve (12) months after the Closing Date, and will be used to satisfy indemnification claims of RBI and Regent pursuant to Section 12.02 hereof; and (b) Two Hundred Twenty-Five Thousand (225,000) shares of Regent's Common Stock to Seller, subject to adjustment thereafter in accordance with Section 1.12. 1.15 Closing. Except as otherwise mutually agreed upon by the parties, the consummation of the transactions contemplated herein (the "Closing") shall occur within five (5) business days after the later to occur of (a) the satisfaction or waiver of each condition to closing contained herein, other than such conditions as are reasonably anticipated to be satisfied at Closing (provided that each party hereto shall use its reasonable best efforts to cause each condition to closing to be satisfied so that the Closing may occur at the earliest possible date), and (b) the issuance of the Final Order (as defined below), or such other date as may be mutually agreed by the parties hereto (the "Closing Date"); provided, however, that RBI, and Regent may in their discretion waive the requirement that a Final Order be issued and elect (subject to clause (a) above) to close at any time (upon not less than five (5) business days' notice to Seller) after the release of initial FCC approval on public notice that it has consented to the transactions contemplated hereby (the "Initial Approval"). For purposes of the Agreement, "Final Order" (and "Final") means an order or grant by the FCC which is no longer subject to timely reconsideration or review by the FCC or a court of competent jurisdiction and pursuant to which the FCC consents, as the case may be, to the transactions contemplated by this Agreement, such order or grant being without the imposition of any conditions adverse to RBI and Regent or any Affiliate (as hereinafter defined) of RBI and Regent with respect to the transfer of control of the FCC Licenses to Regent or the continued operation by RBI of the Station. In the event that the parties close before the Initial Approval has become a Final Order, the parties shall enter into a mutually acceptable Unwind Agreement. The Closing shall be held preferably by exchange of closing documents by overnight deliveries, or otherwise in the offices of Strauss & Troy in Cincinnati, Ohio, or at such place and in such manner as the parties hereto may agree. -5- 7 ARTICLE II Governmental Consents 2.01 FCC Consent. It is specifically understood and agreed by the parties that the Closing and the transfer of control of the Station Licenses and the transfer of the Company Stock are expressly conditioned on and are subject to the prior consent and approval of the FCC without the imposition of any conditions adverse to RBI and Regent or any Affiliate of RBI and Regent (the "FCC Consent"). 2.02 FCC Application. Within ten (10) business days after the execution of this Agreement, Regent and Seller shall file an application with the FCC for the FCC Consent (the "FCC Application"). Regent and Seller shall prosecute the FCC Application with all reasonable diligence and otherwise use their best efforts to obtain the FCC Consent as expeditiously as practicable (but neither Regent nor Seller shall have any obligation to satisfy complainants or the FCC by taking any steps which would have a material adverse effect upon Regent or Seller or upon any of their respective Affiliates). If the FCC Consent imposes any condition on Regent or Seller or any of their respective Affiliates, such party shall use its best efforts to comply with such condition; provided, however, that neither Regent nor Seller shall be required hereunder to comply with any condition that would have a material adverse effect upon it or any of its Affiliates. If reconsideration or judicial review is sought with respect to the FCC Consent, the party affected shall vigorously oppose such efforts for reconsideration or judicial review; provided, however, that nothing herein shall be construed to limit either party's right to terminate this Agreement pursuant to Article 13.01 hereof. ARTICLE III Representations and Warranties of RBI and Regent RBI and Regent hereby make the following representations and warranties, each of which is true and correct on the date hereof, shall survive the Closing and shall be unaffected by any investigation heretofore or hereafter made by Seller: 3.01 Standing. RBI and Regent are duly organized, validly existing and in good standing under the laws of the State of Delaware, and have all requisite corporate power and authority to own and lease their properties and carry on their business as now being conducted by them. 3.02 Authority. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of RBI and Regent and this Agreement is a valid and binding obligation of RBI and Regent. -6- 8 3.03 Qualification. RBI and Regent have no knowledge of any facts which would, under present law (including the Communications Act of 1934, as amended), and present rules, regulations, practices and policies of the FCC, disqualify RBI and Regent as the transferee of the licenses, permits and authorizations listed on Schedule 4.08 hereto, or as an owner and/or operator of the Station, and RBI and Regent will not take, or unreasonably fail to take, any action which RBI and Regent know or have reason to know would cause such disqualification. Should RBI and Regent become aware of any such facts, they will promptly notify Seller in writing thereof and use their best efforts to prevent any such disqualification. 3.04 Absence of Conflicting Agreements or Required Consents. Except as set forth in Article II hereof with respect to governmental consents or on Schedule 3.04 hereto, the execution, delivery and performance of this Agreement by RBI and Regent: (a) do not conflict with the provisions of the articles of incorporation or by-laws of RBI and Regent; (b) do not require the consent of any third party not affiliated with RBI and Regent; (c) will not violate any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which RBI and Regent are a party; and (d) will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any agreement, instrument, license or permit to which RBI and Regent are now subject. 3.05 Common Stock. The Common Stock, when delivered to Seller pursuant to the terms of this Agreement, will be validly issued, fully paid and non-assessable. ARTICLE IV Representations and Warranties of Seller and the Company Seller and the Company make the following representations and warranties, each of which is true and correct on the date hereof, shall survive the Closing and shall be unaffected by any investigation heretofore or hereafter made by RBI and Regent: 4.01 Corporate Standing. Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to own or lease its properties and to carry on its business as now being conducted. Company is not qualified or required to be qualified in any other jurisdiction in order to own or lease its properties or to carry on its business as now being conducted. 4.02 No Subsidiaries and Investments. The Company has no Subsidiaries or Affiliates. The Company does not own, directly or indirectly, any capital stock or other equity or ownership or proprietary interest in any other corporation, partnership, association, trust, joint venture or other entity. Since the Financial Statement Date, as defined below, except as set forth in Schedule 4.02 no investment securities of any kind have been acquired or disposed of by the Company. The businesses carried on by the Company have not been conducted through any other direct or indirect subsidiary or entity related to the Company or Seller. -7- 9 4.03 Charter and By-Laws. Seller has delivered to RBI true and complete copies of the Articles of Incorporation and By-Laws of Company as in effect on the date of delivery thereof. There has been no change in the Articles of Incorporation or By-Laws of the Company since the delivery of copies thereof to RBI. No provision of the Articles of Incorporation or the By-Laws of the Company or of any agreement, instrument or undertaking to which the Company is a party or by which the Company is bound, has been or will be violated by the execution and delivery by Seller and the Company of this Agreement or the performance or satisfaction of any obligation or condition herein contained on their part to be performed or satisfied. The Company is not now nor on the Closing Date will it be in default in the performance, observance or fulfillment of any of the terms or conditions of its Articles of Incorporation or By-Laws. Seller has delivered to RBI true and complete copies of the stock records and the minute book of the Company for inspection and the stock records truly, accurately and fully account for all transactions in the Company's capital stock, and the minute book contains the up-to-date, complete, and accurate minutes of the actions of the Company's Board of Directors and stockholders from its inception. 4.04 Directors and Officers; Compensation; Banks. Schedule 4.04 represents a true and complete list showing as of the date of delivery thereof the following: (a) The names of all of the directors and officers of the Company; (b) A payroll roster of the Company for the most recent payroll period ended prior to the date of delivery thereof showing the names, titles, and annualized current rate of pay for each person entitled to receive compensation from the Company; (c) Each bank account and safety deposit box of the Company, all authorized signatories to such account and all persons having access to such safety deposit box; and (d) The names of all persons, if any, holding a power of attorney from the Company. The information set forth in each such list is true and accurate on the date hereof. Each officer and director or any other person holding authorized signatory powers of the Company will submit his or her written resignation as such to RBI on the Closing Date, effective with the delivery thereof. -8- 10 4.05 Capitalization; Company Stock. (a) The authorized capital stock of the Company (the "Capital Stock") consists of 1,000 shares of authorized Common Stock, no par value, of which 1,000 shares are issued and outstanding. All issued and outstanding shares of Capital Stock constitute the Company Stock. All shares of Company Stock are duly authorized, validly issued in compliance with all applicable laws, fully paid and non-assessable and not subject to preemptive rights created by statute, the Articles of Incorporation or Bylaws of the Company or any agreement to which the Company is a party or by which it is bound. The Company Stock is owned by Seller, free and clear of all security interests, liens, pledges, encumbrances, agreements, charges, rights of rescission or claims of any kind (including without limitation any restrictions on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership ("Encumbrances")) by or on the part of any person, firm or corporation. Seller has good and marketable title to the stock owned by him with full right to enter into this Agreement and to sell, assign, transfer and deliver the same to RBI. Seller is the record and beneficial owner of all shares of Company Stock and the transfer thereof from the Seller to RBI will vest RBI with good and marketable title, free and clear of all Encumbrances to all of the issued and outstanding shares of capital stock of Company. (b) There are no options, warrants, calls, rights, commitments or agreements of any character, written or oral, to which the Company is a party or by which it is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the capital stock of the Company or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. There is outstanding no vote, plan, or pending proposal for any redemption of stock of Company or merger or consolidation of Company with or into any other corporation. Except for legends disclosed on Schedule 4.05, no legend or other reference to any purported Encumbrances appears upon any certificate representing shares of Company Stock. The delivery of the certificates to RBI provided in Section 1.09 of this Agreement and the payment to Seller provided in Section 1.14 of this Agreement will result in RBI's immediate acquisition of record and sole beneficial ownership of all the shares of Company Stock and rights to acquire or receive Capital Stock, free and clear of all Encumbrances. 4.06 Authorization and Binding Obligation. Seller and the Company have the power and authority, and have taken all necessary and proper action to enter into and perform this Agreement and to consummate the actions contemplated hereby. This Agreement constitutes the legal, valid and binding obligation of Seller and the Company. 4.07 Absence of Conflicting Agreements or Required Consents. Except as set forth in Article II with respect to governmental consents and in Schedule 4.07 with respect to compliance with Sections 1103 and 25151 of the California Corporations Code and consents required in connection with the assignment of certain material Contracts, the execution, delivery and performance of this Agreement by Seller and the Company: (a) do not require the consent of any third party (including, without limitation, the consent of any governmental, regulatory, administrative or similar authority); (b) will not conflict with, result in a breach of, or constitute a violation of or default under, the provisions of the Company's articles of incorporation or bylaws -9- 11 (or other charter or organizational documents), or any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which the Company or Seller is a party or by which the Company or Seller is bound; (c) will not either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any Contract, agreement, instrument, license or permit to which the Company is now subject; and (d) will not result in the creation of any lien, charge or encumbrance on any of the Company Stock or Station Assets. 4.08 Government Authorizations. (a) Schedule 4.08 hereto contains a true and complete list of the Station Licenses and other licenses, permits or other authorizations from governmental and regulatory authorities which are required for the lawful conduct of the business and operations of the Station in the manner and to the full extent they are presently conducted (including, without limitation, auxiliary licenses associated with the Station). Seller has delivered to RBI true and complete copies of the Station Licenses and the other licenses, permits and authorizations listed in Schedule 4.08, including any and all amendments and other modifications thereto. (b) As specified in Schedule 4.08, the Company is the authorized legal holder of the Station Licenses and other licenses, permits and authorizations listed in Schedule 4.08. None of the Station Licenses and other licenses, permits and authorizations listed in Schedule 4.08 is subject to any restrictions or conditions which would materially limit the full operation of the Station as now operated. (c) Except for matters affecting the radio broadcast industry generally, there are no complaints, petitions to deny, informal objections, or adjudication proceedings pending or, to the best of 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 Station Licenses and the other licenses, permits and authorizations listed in Schedule 4.08 are in good standing, are in full force and effect and are unimpaired by any act or omission of the Company or its shareholders, officers, directors or employees. The operations of the Station are in accordance with the Station Licenses and the underlying construction permits and the other licenses, permits and authorizations listed in Schedule 4.08. No proceedings are pending or, to the best of Seller's knowledge, threatened, and there has not been any act or omission of the Company or any of its officers, directors, shareholders or employees, which reasonably may result in the revocation, modification, non-renewal or suspension of any of the Station Licenses or the other licenses, permits and authorizations listed in Schedule 4.08, the denial of any pending applications, the issuance of any cease and desist order, the imposition of any administrative sanctions by the FCC or any other governmental or regulatory authority with respect to the Station Licenses or the other licenses, permits and authorizations listed in Schedule 4.08 or which may affect RBI's ability to continue to operate the Station as it is currently operated. (d) The Station is operating with the maximum facilities specified in its Station License. -10- 12 (e) To the best of Seller's knowledge: (i) the Station is not causing objectionable interference to the transmissions of any other broadcast station or communications facility nor has the Station received any complaints with respect thereto; and (ii) no other broadcast station or communications facility is causing objectionable interference to respective transmissions of the Station or the public's reception of such transmissions. (f) Seller has no reason to believe that the Station Licenses and the other licenses, permits, or authorizations listed in Schedule 4.08 will not be renewed in their ordinary course. (g) All reports, forms, and statements required to be filed by the Company with the FCC with respect to the Station since the grant of the last renewal of the Station Licenses have been filed and are substantially complete and accurate. (h) The operation of the Station and all of the Station Assets is in compliance in all respects with ANSI Radiation Standards C95.1 - 1992. 4.09 Compliance with FCC Regulations. The operation of the Station and all of the Station Assets is in compliance in all respects with: (a) all applicable engineering standards required to be met under applicable FCC rules; and (b) all other applicable federal, state and local rules, regulations, requirements and policies, including, but not limited to, equal employment opportunity policies of the FCC, and all applicable painting and lighting requirements of the FCC and the Federal Aviation Administration to the extent required to be met under applicable FCC rules and regulations, and to the best of Seller's knowledge, there are no filed claims to the contrary. 4.10 Taxes. The Company has filed all federal, state, local and foreign income, franchise, sales, use, property, excise, payroll and other tax returns required by law to be filed by it. Seller has delivered to RBI true and complete copies of all federal, state and local tax returns of the Company as filed for the years ended December 31, 1996, 1997, and 1998, and promptly upon filing will deliver to RBI true and complete copies of all federal, state and local tax returns of the Company as filed for the year ended December 31, 1999. The Company has duly paid or accrued all taxes required to be paid by it in respect of the periods covered by all such returns, whether or not shown on such returns, and all interest and penalties thereon, whether disputed or not, and the Company has no liability for taxes in excess of the amounts so paid. All of the tax liabilities of the Company for the current year to date and all prior years, whether or not they have become due and payable, have been paid in full or adequately reserved for, and to the extent tax liabilities have accrued but not become payable, they are reflected on the books of the Company or in the Financial Statements. The Company has not requested any extension of time within which to file any tax returns which have not since been filed, and no deficiencies for any tax, assessment or governmental charge have been claimed, proposed or assessed by any taxing authority and there is no basis for any such deficiency or claim. The federal income tax returns of the Company have been examined by the federal tax authorities or closed by applicable statute and satisfied for all periods to and including fiscal year 1993; all deficiencies asserted as a result of such examinations have been paid or finally settled; and no state of facts exists or has existed which might constitute grounds for the assessment of any further tax liability with respect to the periods which have been audited by the federal, state, local or foreign taxing authorities. There are no present disputes as to -11- 13 taxes of any nature payable by the Company which in any event could adversely affect any of the Station Assets or the operation of the Station. Except as set forth on Schedule 4.10, the Company has not been advised that any of its tax returns, federal, state, local or foreign, have been or are being audited. The Company does not have as of the date hereof any liability, fixed or contingent, for any unpaid federal, state or local taxes or other governmental or regulatory charges whatsoever (including without limitation withholding and payroll taxes). As used herein, the term "tax" includes, without limitation, all federal, state, local and foreign income, profits, sales, use, occupancy, excise, added value, employees' income withholding, social security, franchise, property, and all other governmental taxes, license fees and other changes of every kind and description and related governmental charges imposed by the laws and regulations of any governmental jurisdiction, whether such taxes are due or claimed to be due from them by federal, state, local or foreign taxing authorities. 4.11 Personal Property. Schedule 4.11 hereto contains a list of all material items of tangible personal property owned by the Company and used in the conduct of the business and operations of the Station. Schedule 4.11 also separately lists any material tangible personal property leased by the Company pursuant to leases included within the Contracts. The Company has good and marketable title to all of the items of tangible personal property which are included in the Station Assets (other than those subject to lease) and none of such Station Assets is, or at the Closing will be, subject to any security interest, mortgage, pledge, lease, license, lien, encumbrance, title defect or other charge, except for liens for taxes not yet due and payable, and liens or encumbrances described in Schedule 4.11. The properties listed in Schedule 4.11, along with those properties subject to leases which are included among the Contracts, constitute all material tangible personal property necessary to operate the Station as the same is now being operated. Except as set forth in Schedule 4.11, all items of tangible personal property included in the Station Assets are in good and technically sound operating condition and repair (ordinary wear and tear excepted), are free from all material defect and damage, are suitable for the purposes for which they are now being used, and have been maintained in a manner consistent with generally accepted standards of good engineering practice. 4.12 Real Property. (a) Schedule 4.12 hereto contains a complete and accurate list and description of all real property (including without limitation, real property relating to the towers, transmitters, studio sites and offices of the Station) used by the Company in connection with the operations of the Station (the "Real Estate") and includes the name of the record title holder(s) thereof and a list of all indebtedness secured by a lien, mortgage or deed of trust thereon. The Company has good and marketable title in fee simple to all the Real Estate specified as owned by it in Schedule 4.12, free and clear of all liens, charges, security interests, physical and financial encumbrances, leases, covenants, restrictions, rights of way, easements, encroachments, other matters affecting title, and adverse claims of any kind, direct or indirect, whether accrued, absolute, contingent or otherwise, except for those set forth in Schedule 4.11 or 4.12. With respect to each of the buildings, structures and appurtenances situated on the Real Estate, the Company has adequate rights of ingress and egress for operation of the business of the Company in the ordinary course. None of the buildings, structures, improvements, or fixtures constructed on the Real Estate, including without limitation towers, guy wires and guy anchors, and ground radials, nor the operation or maintenance thereto, -12- 14 violates any restrictive covenant or any provision of any federal, state or local law, ordinance, rule or regulation, or encroaches on any property owned by others. No condemnation proceeding is pending or threatened which would preclude or impair the continued use of any such property by the Company for the purposes for which it is currently used. (b) Except as described in Schedule 4.12, all buildings, structures, towers, antennae, improvements and fixtures situated on the Real Estate are in good and technically sound operating condition, ordinary wear and tear excepted, have no latent structural, mechanical or other defects of material significance, are reasonably suitable for the purposes for which they are being used, and each has adequate rights of ingress and egress, utility service for water and sewer, telephone, electric and/or gas, and sanitary service for the conduct of the business and operations of the Station as presently conducted. 4.13 Contracts. Schedule 4.13 lists all material Contracts to which the Company is a party, or which are binding on the Company, as of the date of this Agreement, including a listing of all barter and trade agreements (contracts for the sale of broadcast time or advertising on the Station in exchange for merchandise or services) involving a barter payable or barter receivable in excess of $1,000 as of the date of this Agreement, specifying for each the amount of the barter payable or barter receivable, whichever is applicable. All of such barter and trade agreements are preemptible for cash sales and none is subject to fixed positions (except for those contracts which provide for the delivery of programming to the Station in return for barter advertising). The Company has delivered to RBI true and complete copies of all written material Contracts and true and complete memoranda of all oral material Contracts, including any and all amendments and other modifications thereto. All of the material Contracts are in full force and effect and are valid, binding and enforceable in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. The Company has complied in all respects with all material Contracts and is not in default beyond any applicable grace periods, and, to the best of Seller's knowledge, no other contracting party is in default under any of the terms thereof. For purposes of this Agreement, a Contract shall be deemed material if its remaining term is more than one year in length, it involves cash expenditures in excess of $10,000, if it is a capitalized lease, or if its non-existence would adversely affect rights of occupancy or access to leased or owned real estate or building space. Except as designated by the reference to particular Contracts listed on Schedule 4.13 by a letter in parenthesis which corresponds to the applicable subpart below, the Company is not a party (in its own name or as successor in interest) to any written or oral: (a) contracts or commitments involving employment, profit sharing, pension, bonus, percentage compensation, incentive compensation, deferred compensation, employee benefits, stock options or warrants or employee stock purchase; (b) leases or licenses with respect to any property, real or personal, as lessor, lessee, licensor, or licensee, except leases of personal property with the Company as lessee having a value of less than $5,000 per annum in the aggregate; (c) agreement, contract or commitment for any capital expenditures; -13- 15 (d) agreement, indenture or other instrument which contains restrictions with respect to payment of dividends or any other distribution in respect of its capital stock; (e) agreement, contract or commitment limiting the freedom of the Company to engage in any line of business or to compete with any other person or entity; (f) contract or option for the purchase of any real or personal property other than in the ordinary course of business; (g) letter of credit or guarantee agreement in respect of any indebtedness or obligation of any other person or entity (other than the endorsement of negotiable instruments for collection in the ordinary course of business); (h) contract or commitment to acquire investment securities or to extend credit; (i) agreement, contract or commitment which might reasonably be expected to have a potential adverse impact on the business or operations or the Company; or (j) any other contract for borrowed money either as borrower or lender. 4.14 Environmental. The Company has complied in all material respects with all federal, state and local environmental laws, rules and regulations as in effect on the date hereof applicable to the Station and its operations, including but not limited to the FCC's guidelines regarding RF radiation. No hazardous or toxic waste, substance, material or pollutant (as those or similar terms are defined under the Comprehensive Environmental Response, Compensation and Liability, Act of 1980, as amended, 42 U.S.C. sections 9601 et seq., Toxic Substances Control Act. 15 U.S.C. sections 2601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. sections 6901 et seq. or any other applicable federal, state and local environmental law, statute, ordinance, order, judgment rule or regulation relating to the environment or the protection of human health ("Environmental Laws"). including but not limited to, any asbestos or asbestos related products, oils or petroleum-derived compounds, CFCs, PCBs, or underground storage tanks, have been released, emitted or discharged (in violation of applicable laws or regulations), or are currently located (in violation of applicable laws and regulations) in, on, under, or about the real property on which the Station Assets are situated, including without limitation the transmitter sites, or contained in the tangible personal property included in the Station Assets. The Station Assets and the Company's use thereof are not in violation in any material respect of any Environmental Laws or any occupational, safety and health or other applicable law now in effect. 4.15 Intellectual Property. Schedule 4.15 hereto is a true and complete list of all material Intellectual Property applied for, registered or issued to, and owned by the Company or under which the Company is a licensee and which is used in the conduct of the Company's business and operations. Except as set forth on Schedule 4.15, to the best of Seller's knowledge: (a) the Company's right, title and interest in the Intellectual Property as owner or licensee, as applicable, is free and clear of all liens, claims, encumbrances, rights, or equities whatsoever of any third party and, to the extent any of the Intellectual Property is licensed to the Company, such interest is valid and uncontested by the licensor thereof or any third party; (b) all computer software located at the -14- 16 Station's facilities or used in the Station's business or operations is properly licensed to the Company, and all of the Company's uses of such computer software are authorized under such licenses; and (c) there are no infringements or unlawful use of such Intellectual Property by the Company in connection with the Company's business or operations. 4.16 Financial Statements. The Company or Seller has delivered to RBI copies of the Company's financial statements for the fiscal year ended December 31, 1999 (the "Financial Statement Date"), and for the fiscal years ended on December 31 of each of the years 1997 and 1998, and notes thereto (the "Financial Statements"), all of which are true, complete and correct, have been prepared from the books and records of the Company in accordance with generally accepted accounting principles consistently applied and maintained throughout the periods indicated, and which present fairly the financial position and results of operations of the Company as of the dates thereof and for the periods covered thereby. The Financial Statements include: (a) the balance sheets of the Company as of the Financial Statement Date; and (b) the related statements of earnings, source and application of funds, shareholders' equity and changes in financial position or cash flows (as the case may be) for the years ended as indicated on each of the Financial Statements. In such Financial Statements, the statements of earnings do not contain any items of special or nonrecurring income or any other income not earned in the ordinary course of business except as expressly specified therein, and the Interim Financial Statements include all adjustments, which consist only of normal recurring accruals, necessary for such fair presentation. There are no facts known to Seller or the Company which would alter the information contained in the Financial Statements in any way whatever. 4.17 Absence of Certain Payments. Neither the Company, Seller, nor any director, officer, agent, employee or other person associated with or acting on behalf of the Company, has, directly or indirectly, within the past five years, used any funds of the Company for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, or made any direct or indirect unlawful payments to government officials or employees from corporate funds, or made or received any payment, whether direct or indirect, to or from any supplier or customer of the Company, for purposes other than the satisfaction of lawful obligations, or established or maintained any unlawful or unrecorded funds, where any of the foregoing would have a material adverse affect on the financial condition, results of operations, business or prospects of the Company. 4.18 Receivables. All receivables of the Company (including accounts receivable, loans receivable and advances) which are reflected in the Financial Statements, and all such receivables which will have arisen since the date thereof, shall have arisen only from bona fide transactions in the ordinary course of the Company's business. 4.19 Liabilities. Except to the extent reflected, reserved against, or noted on the Financial Statements, the Company had, as of the Financial Statement Date, no debts, liabilities or obligations of any nature whatsoever, whether accrued, absolute, contingent, or otherwise, and -15- 17 whether due or to become due, for any period or arising out of any transaction entered into or any set of facts existing prior thereto, whether or not then known due or payable. There exists no basis for the assertion against the Company of any material liability of any nature or in any amount not fully reflected, reserved against, or noted in Financial Statements as of the Financial Statement Date. All deposits, accounts and notes payable, and other liabilities of the Company are current and not in default. 4.20 Labor Matters. The Company is not a party to any contract or agreement with any labor organization, nor has the Company agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any employees of the Company at the Station. The Company has no knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees at the Station. The Company has not consented to any final decree involving any claim of unfair labor practice and has not been held in any final judicial proceeding to have committed any unfair labor practice and there are no material controversies pending or threatened between the Company and any of its employees or any labor union or collective bargaining agent representing or purporting to represent employees of the Company. Since December 31, 1998, there has been no unusual increase in compensation payable by the Company to any of its officers, employees or agents or any bonus payment or similar arrangements made to or with them. The Company has complied in all material respects with all federal and state laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, discrimination in employment practices or benefits, family and medical leave, employment of handicapped or disabled individuals, sexual harassment, equal employment opportunity, employment of protected minorities (including women and persons over 40 years of age), and payment and withholding of taxes. 4.21 Litigation. The Company is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree relating to the conduct of the business or the operation of the Station or any of the Station Assets, and there is no litigation, administrative action, arbitration, proceeding or investigation pending or, to the best knowledge of Seller, threatened against the Company in any federal, state or local court, or before any administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Station Licenses), or before any other tribunal duly authorized to resolve disputes. In particular, but without limiting the generality of the foregoing, there are no complaints, petitions to deny, informal objections, or adjudication proceedings pending or, to the best knowledge of Seller, threatened before the FCC or any other governmental organization with respect to the business or operations of the Station. 4.22 Compliance With Laws. Except as set forth in Schedule 4.22, the Company is not in material violation of, nor has Seller or the Company received any notice asserting any non-compliance by the Company with, any statute, rule or regulation, whether federal, state or local. The Company is not in default with respect to any judgment, order, injunction or decree of any court administrative agency or other governmental authority or any other tribunal duly authorized to resolve disputes which relates to the transactions contemplated hereby. The Company is in compliance in all material respects with all laws, regulations and governmental orders applicable to -16- 18 the conduct of the business and operations of the Station, and its present use of the Station Assets does not violate any of such laws, regulations or orders. 4.23 Personnel; Employee Benefit Plans. (a) Schedule 4.04 contains a true and complete list of all persons employed at the Station, including date of hire, a description of material compensation arrangements and a list of other material terms of any and all agreements affecting such persons and their employment by the Company. (b) Schedule 4.23 contains a true and complete list as of the date of this Agreement of all employee benefit plans applicable to the employees of the Company, and a brief description thereof. Except as set forth on Schedule 4.23, the Company does not maintain or have any present or future obligation or liability with respect to, any bonus, deferred compensation, pension, profit-sharing, retirement, severance pay, insurance, stock purchase, stock option, welfare benefit, or other fringe benefit plan, arrangement or practice, or any other employee benefit plan, as defined in Section 3 of the ERISA, whether qualified or unqualified, formal or informal (collectively, the "Plans"). The Company has delivered to RBI true and complete copies of: (i) all documents which comprise each of the Plans, including any related trust agreements or insurance contracts (or any other funding instruments), (ii) the most current summary plan description (and any summary of material modifications) for each Plan for which one is required, (iii) the most recent Internal Revenue Service ("IRS") determination letter relating to each Plan intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986 (the "Code) (and none of such Plans has been amended or modified since the date of the latest determination letter relating thereto), (iv) the most recent annual reports (Form 5500 Series) and accompanying schedules filed for each of the Plans for which one is required, and (v) the most recent actuarial report for each of the Plans for which required (which report fairly presents the assets and liabilities of the Plans as of the date thereof). Except as set forth in Schedule 4.23, there have been no material changes in the terms of the Plans, or in the assets or liabilities associated with such Plans, as reflected in the foregoing documents. Each of the Plans has been administered in accordance with its terms, and to the extent applicable, complies with and has been administered in accordance with ERISA and the Code. (c) The Company has not engaged in, and Seller does not have knowledge of any person that has engaged in, any transaction in violation of Section 406(a) or (b) of ERISA for which no exemption exists under Section 408 of ERISA, or any "prohibited transaction" as defined in Section 4975(c)(1) of the Code for which no exemption exists under Section 4975(c)(2) or (d) of the Code, with respect to any Plan. (d) Neither the Company nor any corporation or other trade or business under common control with the Company (as determined under Section 414(b), (c), or (m) of the Code) has taken any action, and Seller does not have any knowledge of any action or event that could cause the Company to incur liability under Title IV of ERISA. -17- 19 (e) The Company has never been and is not now a party to, nor is Company bound by and required to contribute to, a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA. (f) The Company has no obligation to provide health benefits to former employees of the Company, except as specifically required by law. (g) The Company has complied with all requirements of Part 6 of Title I, Subtitle B of ERISA regarding continuation coverage for group health plans. (h) To Seller's knowledge, there is no pending or threatened claim which alleges any violations of ERISA or any other law, nor any basis for such a claim by any person, against the Company arising out of Company's maintenance of any Plan. 4.24 Conduct of Business in Ordinary Course; Adverse Change. Since December 31, 1998, except for matters caused by the Time Brokerage Agreement: (a) the Company has conducted the business of the Station only in the ordinary course consistent with past practices; (b) there has not been any material adverse change in the business, assets, properties, prospects or condition (financial or otherwise) of the Company or the Station, or any damage, destruction, or loss affecting any of the Station Assets; (c) the Company has not created, assumed, or suffered any mortgage, pledge, lien or encumbrance on any of the Station Assets, and (d) the Company has not sold, leased, or disposed or agreed to sell, lease, or dispose of any of its assets or properties other than in the ordinary course of business, and (e) the Company has not issued any bonds, notes or other securities or declared any dividends or made any distribution to its shareholders with respect to the Company Stock. 4.25 Instruments of Conveyance; Good Title. The instruments to be executed by Seller and delivered to RBI at the Closing, surrendering the Company Stock to RBI for cancellation, will transfer good and marketable title to the Company Stock free and clear of all liabilities (absolute or contingent), security interests, mortgages, pledges, liens, obligations and encumbrances of any nature. 4.26 Insurance. All of the real and tangible personal property and other assets of the Company which are of an insurable character are insured by financially sound and responsible insurance companies against fire and other risks usually insured against by persons operating similar businesses. A true and complete list showing all policies of insurance maintained by the Company, including types of coverage, policy expiration dates, and policy limits, is set forth in Schedule 4.26 hereto. There has been no change in the information set forth in such Schedule since the delivery thereof to RBI. If any of the Company's property is damaged or destroyed prior to Closing, the proceeds of the insurance therefor will be sufficient to replace, restore or repair the same to its former condition and utility, except for applicable deductible amounts. The Company will maintain the insurance set forth in Schedule 4.26 in full force and effect until Closing. 4.27 Transactions with Certain Persons. The Company does not owe any amount to, or have any contract with or commitment to, Seller, any of the Company's directors, officers, employees or consultants, and none of such persons owes any amount to the Company. No part of -18- 20 the property or assets of Seller, or any affiliate of Seller within the meaning of the federal securities laws, is used by the Company. 4.28 Non-Registration. (a) Seller understands that the issuance of the Common Stock of Regent in this transaction is intended to be exempt from registration under the Securities Act of 1933, as amended (the "1933 Act"), by virtue of Section 4(2) and/or 4(6) of the 1933 Act and the provisions of Regulation D promulgated thereunder, that the Common Stock of Regent has not been registered under the 1933 Act or under the securities laws of any state, and that Regent will be under no obligation to effect any such registration. (b) Seller is acquiring the Common Stock of Regent for his own account, for investment and not with a view to resale, distribution, or other disposition, and Seller has no present plans to enter into any contract, undertaking, agreement or arrangement for any such resale, distribution or other disposition. Seller understands that the shares of Regent Common Stock to be issued in this transaction have not been, and will not be, registered under the 1933 Act by reason of a specific exemption from the registration provisions of the 1933 Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Seller's representations as expressed herein. Seller will not sell or otherwise transfer the shares of Regent Common Stock to be issued in this transaction without registration under the 1933 Act and applicable state securities laws, or pursuant to an exemption from the registration requirements thereof which, in the opinion of counsel reasonably acceptable to Regent, is available for the transaction. (c) Seller acknowledges that the shares of Regent Common Stock to be issued in this transaction must be held indefinitely unless subsequently registered under the 1933 Act or unless an exemption from such registration is available. Seller is aware of the provisions of Rule 144 promulgated under the 1933 Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about Regent, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being effected through a "broker's transaction" or in transactions directly with a "market maker" and the number of shares being sold during any three-month period not exceeding specified limitations. (d) Seller is an "accredited investor," as that term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act, inasmuch as Seller meets the requirements of subparagraph (a)(5) of Rule 501. (e) Seller has had a reasonable opportunity to inspect all documents, books and records pertaining to Regent and the shares of Regent Common Stock and confirms that the Common Stock of Regent is being acquired without Seller's receipt of any offering literature, although Seller confirms he has received a copy of Regent's Prospectus, dated January 24, 2000, and a list of exhibits filed with the SEC in connection therewith, all of which will be supplied to Seller on request. -19- 21 (f) Seller has had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of Regent concerning Regent, its business and proposed operations, the terms of the Common Stock of Regent and all other aspects of investment in Regent, and all such questions have been answered to the full satisfaction of Seller. (g) Seller is not acquiring the Common Stock of Regent as a result of or pursuant to any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio, or presented at any seminar or meeting, or any solicitation of a subscription by a person other than a representative of Regent. (h) Seller has not incurred, and will not incur, directly or indirectly, as a result of any action taken by Regent or RBI, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement. (i) Seller understands that the certificate(s) representing the Common Stock of Regent issued to him shall bear legends in substantially the following forms, and Seller shall not transfer any of such shares of Common Stock of Regent, or any interest therein, except in accordance with the terms of such legends: "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state (the "Securities Laws"). These securities may not be offered, sold, transferred, pledged or hypothecated in the absence of registration under applicable Securities Laws, or the availability of an exemption therefrom. This certificate will not be transferred on the books of the Corporation or any transfer agent acting on behalf of the Corporation except upon the receipt of an opinion of counsel, satisfactory to the Corporation, that the proposed transfer is exempt from the registration requirements of all applicable Securities Laws, or the receipt of evidence, satisfactory to the Corporation, that the proposed transfer is the subject of an effective registration statement under all applicable Securities Laws." "The issuer is subject to restrictions contained in the Federal Communications Act, as amended. The securities evidenced by this certificate may not be sold, transferred, assigned or hypothecated if, as a result thereof, the issuer would be in violation of that act." 4.29 Full Disclosure. No representation or warranty made by Seller and the Company contained in this Agreement nor any certificate, document or other instrument furnished or to be furnished by Seller or the Company pursuant hereto contains or will contain any untrue statement of a material fact, or omits or shall omit to state any material fact required to make any statement contained herein or therein not misleading. Seller is not aware of any impending or contemplated event or occurrence that would cause any of the foregoing representations not to be true and complete on the date of such event or occurrence as if made on that date. -20- 22 * * * * * * * Whenever in this Article IV a warranty or representation is qualified by a word or phrase referring to Seller's knowledge or awareness, it shall mean to the actual knowledge of Seller after he has made due inquiry of the employees, representatives and agents of the Company who would be expected to have knowledge of the matter, and with respect to the condition of any Station Assets, records or other object, after he has inspected it. ARTICLE V Covenants of RBI and Regent 5.01 Notification. RBI will provide Seller prompt written notice of any change in any of the information contained in the representations and warranties made in Article III. RBI shall also notify Seller of any litigation, arbitration or administrative proceeding pending or, to its knowledge, threatened against RBI or Regent which challenges the transactions contemplated hereby. 5.02 No Inconsistent Action. RBI and Regent shall not take any action which is materially inconsistent with their obligations under this Agreement or take any action which would cause any representation or warranty of RBI and Regent contained herein to be or become false or invalid or which could hinder or delay the consummation of the transactions contemplated by this Agreement. ARTICLE VI Covenants of Seller and Company Seller and the Company covenant and agree with respect to the Company and the Station that, between the date hereof and the Closing Date or the earlier termination of this Agreement in accordance with its terms, except as expressly permitted by this Agreement or with the prior written consent of RBI, Seller and the Company shall act in accordance with the following: 6.01 Conduct of Business. Subject to time brokering of the Station pursuant to the Time Brokerage Agreement, the Company shall conduct the business and operations of the Station only in the ordinary and prudent course of business consistent with past practice and with the intent of maintaining the condition of the Station Assets and preserving the ongoing operations and assets of the Station, including using its reasonable best efforts to retain at the Station the services of the key employees, consultants and agents of the Station. 6.02 Compliance with Laws. The Company shall operate the Station in all respects in accordance with FCC rules and regulations and the Station Licenses and with all other laws, regulations, rules and orders, and shall not cause or permit by any act, or failure to act, any of the Station Licenses or other licenses, permits or authorizations listed in Schedule 4.08 to expire, be -21- 23 surrendered, adversely modified, or otherwise terminated, or cause the FCC to institute any proceedings for the suspension, revocation or adverse modification of any of the Station Licenses, or fail to prosecute with due diligence any pending applications to the FCC. Should any fact relating to the Company or Seller which would cause the FCC to deny its consent to the transactions contemplated by this Agreement come to Seller's attention, Seller will promptly notify RBC thereof and will use his reasonable best efforts to take such steps as may be necessary to remove any such impediment to the FCC's consent to the transactions contemplated by this Agreement. 6.03 Station Operations. Subject to time brokering of the Station pursuant to the Time Brokerage Agreement (which provisions shall control over any inconsistent provision in this Section 6.03) and except for changes or actions in the ordinary course of business consistent with past practices, the Company shall not: (a) sell broadcast time on a prepaid basis (other than in the course of existing credit practices); (b) except as required by the applicable law or written agreements currently in effect, grant or agree to grant any general increases in the rates of salaries or compensation payable to employees of the Company (provided that no such increases to any employee shall in the aggregate exceed 6% of such employee's compensation as set forth on Schedule 4.04 hereto); (c) provide for any new pension, retirement or other employment benefits for employees of the Company or any increases in any existing benefits; (d) modify, change or terminate any Contract; or (e) change the advertising rates in effect as of the date hereof. 6.04 Access. The Company shall give or cause the Station to give RBI and RBI's counsel, accountants, engineers and other representatives, at RBI's reasonable request and upon reasonable notice, full and reasonable access during normal business hours to all of the Company's personnel, properties, books, Contracts, reports and records (including, without limitation, financial information and environmental audits in existence with respect to the Station Assets), Real Estate, and buildings and equipment, and to furnish RBI with information and copies of all documents and agreements relating to the Station and the operation thereof (including but not limited to financial and operating data and other information concerning the financial condition, results of operations and business of the Company or the Station) that RBI may reasonably request. The rights of RBI under this Section 6.04 shall not be exercised in such a manner as to interfere unreasonably with the business of the Station. 6.05 Consents. Seller and the Company shall give all consents and take all other actions, and Seller and the Company shall use their reasonable best efforts to obtain any third party consents, necessary for the merger or the assignment of any Contract. 6.06 Notification. Seller and the Company will provide RBI prompt written notice of any change in any of the information contained in the representations and warranties made in Article IV or any Schedule. Seller and the Company agree to notify RBI of any litigation, arbitration or administrative proceeding pending or, to the best of their knowledge, threatened, which challenges the transactions contemplated hereby. Seller and the Company shall promptly notify RBI if any of the normal broadcast transmissions of the Station are interrupted, interfered with or in any way impaired, and shall provide RBI with prompt written notice of the problem and the measures being taken to correct such problem. If the Station is not restored so that operation is resumed to full licensed power and antenna height within five (5) days of such event, or if more -22- 24 than five (5) such events occur within any thirty (30) day period, or if the Station shall be off the air for more than ninety-six (96) consecutive hours, then RBI shall have the right to terminate this Agreement. 6.07 No Inconsistent Action. Seller and the Company shall not take any action which is materially inconsistent with their obligations under this Agreement nor take any action which would cause any representation or warranty of Seller and the Company contained herein to be or become false or invalid or which could hinder or delay the consummation of the transactions contemplated by this Agreement. 6.08 Closing. Subject to Article IX hereof, on the Closing Date, Seller shall transfer, convey, assign and deliver to RBI the Company Stock as provided in Article I of this Agreement. 6.09 Negative Covenants. Except as otherwise specifically contemplated by this Agreement and subject to time brokering of the Station pursuant to the Time Brokerage Agreement, until the Closing Date or the earlier termination of this Agreement in accordance with the terms hereof, neither Seller nor the Company shall: (a) waive or release any right relating to the business or operations of the Station, except for adjustments or settlements made in the ordinary course of business consistent with past practices; (b) transfer or grant any rights under any of the Station Licenses; (c) enter into any commitment for capital expenditures; (d) introduce any material changes in the broadcast hours or in the format of the Station or any other material change in the Station's programming policies; (e) change the call letters of the Station; (f) dispose of, lease, sell or encumber, or agree to dispose of, lease, sell or encumber, any of the Station Assets, except in the ordinary course of business, or any shares of Company Stock except as contemplated hereby; (g) suffer or permit the creation of any lien, mortgage, pledge, encumbrance or charge of any kind on the Company Stock or Station Assets except as specifically referred to on Schedules 4.11 or 4.12 hereto, except liens for taxes not yet due and payable; (h) fail to repair, maintain or replace the Company's transmitting, studio and other technical equipment or fail to maintain reasonable and customary inventory of equipment, supplies and other tangible personal property used or useful in the operation of the Station; (i) enter into, extend or renew any trade deals or sales of broadcast time on the Station except as same are approved by RBI and except for time sales for cash at the Station's prevailing rates; (j) assume, guarantee, endorse or otherwise become responsible for the indebtedness of any other person, firm or corporation except endorsement of negotiable instruments in the ordinary course of collection; (k) incur any indebtedness for borrowed money, or make any loans except in the ordinary course of business, or make any advances; (l) issue, sell, or contract to sell any of its securities or sell, contract to sell or grant any right or option to purchase or otherwise acquire, directly or indirectly, any securities, or redeem, purchase or otherwise acquire any outstanding shares of capital stock; (m) change, amend or modify the Articles of Incorporation or By-Laws of the Company; (n) allow to occur or exist any event of default by the Company under any contract, agreement, arrangement, license, permit, commitment or understanding, which event of default would have a material adverse affect upon the business, operations or financial position of the Company; (o) enter into any transaction or make or enter into any contract or commitment with respect to the Station or the Station Assets which involves an expenditure after the Closing Date of in excess of $10,000.00 or otherwise by reason of its size or otherwise is not in the ordinary course of business consistent with past practices; (p) cancel, modify, amend or in any manner impair any of the material Contracts; (q) consolidate with or merge into any other person or entity -23- 25 or permit any person or entity to merge or consolidate with it; or (r) declare, make or incur any liability to make any dividends or other distributions on the Company Stock. 6.10 Exclusivity. Seller and the Company agree that, commencing on the date hereof through the Closing or earlier termination of this Agreement, RBI shall have the exclusive right to consummate the merger contemplated herein, and during such exclusive period, Seller and the Company agree that neither Seller, nor any director, officer, employee or other representative of the Company: (a) will initiate, solicit or encourage, directly or indirectly, any inquiries, or the making or implementation of any proposal or offer with respect to a merger, acquisition, consolidation or similar transaction involving, or any purchase of, all or any portion of the Company Stock or Station Assets (any such inquiry, proposal or offer being hereinafter referred to as an "Acquisition Proposal" and any such transaction being hereinafter referred to as an "Acquisition"); (b) will engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any person relating to an Acquisition Proposal, or otherwise facilitate any effort or attempt to make or implement an Acquisition Proposal; or (c) will continue any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any Acquisition Proposal or Acquisition and will take the necessary steps to inform the individuals or entities referred to above of the obligations undertaken by them in this Section 6.10. Notwithstanding the foregoing, in the event that RBI and Regent default in any material respect in the observance or in the due and timely performance of any of its covenant or agreements herein contained and such default shall not be cured within thirty (30) days of notice of default served by Seller, Seller's and the Company's obligations under this Section 6.10 shall be null and void. ARTICLE VII Joint Covenants The parties hereto covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 7.01 Confidentiality. Subject to the requirements of applicable law, RBI, Regent, and Seller shall each keep confidential all information obtained by them in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions contemplated by this Agreement, and if the transactions contemplated hereby are not consummated for any reason, each shall return to each other party hereto, without retaining a copy thereof, any schedules, documents or other written information obtained from such other party in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to keep confidential or return any information which: (a) is known or available through other lawful sources, not bound by a confidentiality agreement with the disclosing party; (b) is or becomes publicly known through no fault of the receiving party or its agents; (c) is required to be disclosed pursuant to an order or request of a judicial or governmental authority (provided the disclosing party is given reasonable prior notice of the order or request and the purpose of the disclosure); or (d) is developed by the receiving party independently of the disclosure by the disclosing party. Notwithstanding anything to the contrary herein, either party may in accordance with its legal -24- 26 obligations, including but not limited to filings permitted or required by the Securities Act of 1933 and the Securities and Exchange Act of 1934, the NASDAQ National Market and other similar regulatory bodies, make such press releases and other public statements and announcements as it deems necessary and appropriate in connection with this Agreement and the transactions contemplated hereby; provided, however, that prior to making any such unilateral press release or announcement, such party shall first communicate the same in writing to the other. 7.02 Cooperation. Subject to express limitations contained elsewhere herein, RBI, Regent, and Seller agree to cooperate fully in taking any reasonable actions (including without limitation, reasonable actions to obtain the required consent of any governmental instrumentality or any third party) necessary or helpful to accomplish the transactions contemplated by this Agreement, including but not limited to the satisfaction of any condition to closing set forth herein. 7.03 Control of Station. Subject to time brokering of the Station pursuant to the Time Brokerage Agreement, RBI and Regent shall not, directly or indirectly, control, supervise or direct the operations of the Station prior to the Closing. Such operations, including complete control and supervision of all Station programs, employees and policies, shall be the sole responsibility of Seller and the Company. ARTICLE VIII Conditions of Closing by RBI and Regent The obligations of RBI and Regent hereunder are, at their option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 8.01 Representations, Warranties and Covenants. (a) All representations and warranties of Seller and the Company made in this Agreement or in any Exhibit, Schedule or document delivered pursuant hereto, shall be true and complete in all respects as of the date hereof and on and as of the Closing Date as if made on and as of that date, except for changes (a) expressly permitted or contemplated by the terms of this Agreement, (b) caused by the acts of RBI during the term of the Time Brokerage Agreement, or (c) in the ordinary course of business which are not, either in individually or in the aggregate, material and adverse. (b) All of the terms, covenants, agreements, and conditions to be complied with and performed by Seller or the Company on or prior to the Closing Date shall have been complied with or performed in all material respects. (c) RBI shall have received a certificate, dated as of the Closing Date, from Seller and the Company, executed by the President of the Company to the effect that: (a) except for changes occurring as a result of actions by Regent Broadcasting of Chico, Inc. under the Time Brokerage Agreement, the representations and warranties of Seller and the Company contained in this Agreement are true and complete in all material respects on and as of the Closing Date as if -25- 27 made on and as of that date; and (b) Seller and the Company have complied with or performed in all material respects all terms, covenants, agreements, and conditions to be complied with or performed by them on or prior to the Closing Date. 8.02 Governmental Consents. The FCC Consent shall have been obtained and, subject to the provisions of Section 1.15 hereof, shall have become a Final Order. 8.03 Governmental Authorizations. The Company shall be the holder of the Station Licenses and all other licenses, permits and other authorizations listed in Schedule 4.08, and there shall not have been any modification of any of such licenses, permits and other authorizations which has a material adverse effect on the Station or the operations thereof. No proceeding shall be pending which seeks, or the effect of which reasonably could be, to revoke, cancel, fail to renew, suspend or adversely modify any of the Station Licenses or any other licenses, permits or other authorizations listed in Schedule 4.08. The Station shall not be operating under any special temporary authority from the FCC. 8.04 Adverse Proceedings. No suit, action, claim or governmental proceeding shall be pending or threatened against, and no order, decree or judgment of any court, agency or other governmental authority shall have been rendered (and remain in effect) against, any party hereto which: (a) would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms; (b) questions the validity or legality of any transaction contemplated hereby; (c) seeks to enjoin any transaction contemplated hereby; (d) seeks material damages on account of the consummation of any transaction contemplated hereby; or (e) is a petition of bankruptcy by or against the Company, an assignment by the Company for the benefit of its creditors, or other similar proceeding. 8.05 Third-Party Consents. All material Contracts shall be in full force and effect on the Closing Date, and Seller and the Company shall have obtained and shall have delivered to RBI all appropriate third-party consents in form and substance acceptable to RBI (including estoppel certificates reasonably requested by RBI) in connection with any material Contracts, compliance with requirements of Regent's senior lender, the surrender of the Company Stock to RBI, or the delivery of the Common Stock of Regent to Seller. 8.06 Closing Documents. Seller shall have delivered or caused to be delivered to RBI, on the Closing Date, all stock powers, endorsements, assignments and other instruments of conveyance reasonably satisfactory in form and substance to RBI, effecting the sale, transfer, assignment and conveyance of, and release of all claims to dividends or other distributions, whether declared or undeclared, on the Company Stock to RBI, including, without limitation, each of the documents required to be delivered by them pursuant to Article XI. 8.07 Time Brokerage Agreement Compliance. The Time Brokerage Agreement shall not have been terminated by Regent Broadcasting of Chico, Inc. as permitted by the Time Brokerage Agreement as a result of the Company's material noncompliance with its obligations under the Time Brokerage Agreement. -26- 28 8.08 No Adverse Change. No material adverse change in condition or, status of the Company or the Station Assets, which change is not caused by or does not arise out of, any breach by RBI of any of its representations, warranties, covenants or agreements hereunder or by Regent Broadcasting of Chico, Inc. under the Time Brokerage Agreement, shall have occurred since December 31, 1998, be threatened or be reasonably likely to occur. 8.09 Satisfactory Investigation of Station Facilities. RBI shall have conducted such examination and investigation of the Real Estate and title thereto, studios, transmitter facilities, and other Station Assets and personnel on matters covered by or generally within the scope of Seller's and the Company's warranties and representations as RBI deems advisable or appropriate pursuant to Section 6.04 and shall have determined that the findings and results of such examination and investigation are satisfactory in its sole discretion. If RBI does not advise Seller and the Company in writing within twenty-one (21) days after the date of this Agreement of any unsatisfactory findings or results, this condition shall be deemed waived. If RBI does advise Seller and the Company of any unsatisfactory findings or results, and such are capable of being cured by Seller or the Company to RBI's reasonable satisfaction, Seller and the Company shall have the right to cause the same to be cured to RBI's reasonable satisfaction prior to Initial Approval. 8.10 Environmental Studies. RBI shall have obtained within sixty (60) days following the date of this Agreement Phase I environmental assessment reports on the Real Estate confirming the representations and warranties of Seller and the Company on environmental matters; provided, however, if RBI elects not to obtain such environmental reports, RBI shall be deemed to have waived the condition of Closing contained in this Section 8.10. ARTICLE IX Conditions of Closing by Seller The obligations of Seller and the Company hereunder are, at their option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 9.01 Representations, Warranties and Covenants. (a) All representations and warranties of RBI and Regent made in this Agreement or in any Exhibit, Schedule or document delivered pursuant hereto, shall be true and complete in all material respects as of the date hereof and on and as of the Closing Date as if made on and as of that date, except for changes expressly permitted or contemplated by the terms of this Agreement. (b) All the terms, covenants, agreements, and conditions to be complied with and performed by RBI and Regent on or prior to the Closing Date shall have been complied with or performed in all material respects. (c) Seller shall have received a certificate, dated as of the Closing Date, executed by the President of RBI and Regent to the effect that: (i) the representations and -27- 29 warranties of RBI and Regent contained in this Agreement are true and complete in all material respects on and as of the Closing Date as if made on and as of that date; and (ii) RBI and Regent have complied with or performed in all material respects all terms, covenants, agreements and conditions to be complied with or performed by it on or prior to the Closing Date. 9.02 Governmental Consents. The FCC Consent shall have been obtained and, subject to the provisions of Section 1.15 hereof, shall have become a Final Order. 9.03 Adverse Proceedings. No suit, action, claim or governmental proceeding shall be pending or threatened against, and no other decree or judgment of any court, agency or other governmental authority shall have been rendered (and remain in effect) against, any party hereto which: (a) would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms; (b) questions the validity or legality of any transaction contemplated hereby; (c) seeks to enjoin any transaction contemplated hereby; or (d) seeks material damages on account of the consummation of any transaction contemplated hereby. 9.04 Closing Documents. RBI shall have delivered or caused to be delivered to Seller, on the Closing Date, the Merger Consideration and each of the documents required to be delivered by it pursuant to Article XI. ARTICLE X Transfer Taxes: Fees and Expenses 10.01 Expenses. Except as set forth in Section 10.02 hereof or otherwise expressly set forth in this Agreement, each party hereto shall be solely responsible for all costs and expenses incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement including, but not limited to, the costs and expenses incurred pursuant to Article II hereof and the fees and disbursements of counsel and other advisors. 10.02 Specific Charges. All costs of transferring the Company Stock in accordance with this Agreement, including any income, transfer and documentary taxes and fees, shall be paid by Seller. Any filing or grant fees imposed by any governmental authority, the consent of which or the filing with which is required for the consummation of the transactions contemplated hereby, shall be by RBI and Regent. ARTICLE XI Documents To Be Delivered At Closing 11.01 Documents of Seller and the Company. At the Closing, Seller and the Company shall deliver or cause to be delivered to RBI the following: -28- 30 (a) Resignation of all directors and officers of the Company effective on the Closing Date; (b) A certificate of Seller and the Company, dated the Closing Date, in the form described in Section 8.01(c); (c) Governmental certificates showing that the Company: (i) is duly incorporated and in good standing in the state of its incorporation; and (ii) has filed all returns, paid all taxes due thereon and is currently subject to no assessment and is in good standing as a foreign corporation in each state where such qualification is necessary, each certified as of a date not more than thirty (30) days before the Closing Date; (d) Such certificates, stock powers (executed in blank with signatures guaranteed), assignments, documents of title and other instruments of conveyance, assignment and transfer (including without limitation any necessary consents to conveyance, assignment or transfer), and lien releases, if any, all in form satisfactory to RBI and RBI's counsel, as shall be effective to vest in RBI title in and to the Company Stock, free, clear and unencumbered in accordance with the terms of this Agreement. (e) The Indemnification Escrow Agreement; (f) A written opinion of Robert Harp, Esq., Marshall, Burghardt, Mieske & Harp, counsel for the Seller and the Company, on which Regent's lenders and affiliates shall be entitled to rely, in the form of Exhibit C, dated as of the Closing Date; (g) Updating title insurance endorsements on all title insurance policies on the Real Estate held by the Company in form and substance reasonably satisfactory to RBI; and (h) the Non-Competition Agreement in the form of Exhibit D, executed by Seller; (i) the Consulting Agreement in the form of Exhibit F, executed by Seller; and (j) Such additional information, materials, agreements, documents and instruments as RBI, its counsel, or its senior lender may reasonably request in order to consummate the Closing. 11.02 RBI's Documents. At the Closing, RBI shall deliver or cause to be delivered (a) Certified resolutions of the Board of Directors of RBI and Regent approving the execution and delivery of this Agreement and authorizing the consummation of the transactions contemplated hereby; (b) A certificate of RBI and Regent, dated the Closing Date, in the form described in Section 9.01(c); -29- 31 (c) The Indemnification Escrow Agreement; (d) A written opinion of RBI's counsel in the form of Exhibit E, dated as of the Closing Date; (e) The Merger Consideration in accordance with Section 1.14 hereof; (f) All necessary consents to the issuance by Regent of the Common Stock of Regent; (g) The Non-Competition Agreement in the form of Exhibit D, executed by RBI; (h) The Consulting Agreement in the form of Exhibit F, executed by RBI; and (i) Such additional information, materials, agreements, documents and instruments as Seller and its counsel may reasonably request in order to consummate the Closing. ARTICLE XII Survival; Indemnification: Etc. 12.01 Survival of Representations, Etc. It is the express intention and agreement of the parties to this Agreement that all covenants in Articles V, VI, and VII ("Covenants") and all representations and warranties (together, "Warranties") made in this Agreement shall survive the Closing (regardless of any knowledge, investigation, audit or inspection at any time made by or on behalf of any of the parties) as follows: (a) The Covenants in Sections 6.08, 7.01 and 7.02 and any other agreements not specifically addressed in this Section 12.01 shall survive the Closing for a period from the Closing Date equal to the statute of limitations for written contracts in California. (b) The Warranties in Sections 3.02, 4.01, 4.02, 4.05, 4.06 shall survive the Closing without limitation. (c) The Warranties in Section 4.10 or otherwise relating to the federal, state, local or foreign tax obligations of Seller or the Company and in Section 4.14 shall survive the Closing for the period of the applicable statute of limitations plus any extensions or waivers granted or imposed with respect thereto. (d) All other Covenants and Warranties shall survive until June 30, 2001 or until thirty (30) days after such time as Regent's outside public accounting firm has released its annual audit of the financial statements applicable to the Station for the period ending December 31, 2000, whichever is earlier. -30- 32 (e) The right of any party to recover Damages (as defined in Section 12.02(a))pursuant to Section 12.02 shall not be affected by the expiration of any Covenants or Warranties as set forth herein, provided that notice of the existence of any damages (but not necessarily the fixed amount of any such damages) has been given by the indemnified party to the indemnifying party prior to such expiration. The survival of a Covenant shall not extend the period to which the Covenant applies, but merely establishes the time by which notice of a claim of breach may be given. (f) All claims for monetary damages in connection with this Agreement and the transactions contemplated hereby shall be brought pursuant to, and subject to the limitations of, this Article XII, and no such claim may be brought except pursuant to, and subject to the limitations of, this Article XII. (g) Notwithstanding any provision hereof to the contrary, there shall be no contractual time limit in which any party may bring any action for actual fraud (a "Fraud Action'), regardless of whether such actual fraud also included a breach of any Covenant or Warranty; provided, however, that any Fraud Action must be brought within the period of the applicable statute of limitations plus any extensions or waivers granted or imposed with respect thereto. 12.02 Indemnification. (a) Seller shall defend, indemnify and hold harmless RBI and its Affiliates from and against any and all losses, costs, damages, liabilities and expenses, including reasonable attorneys' fees and expenses ('Damages') incurred by RBI and its Affiliates and Regent arising out of or related to: (i) any breach of the Warranties given or made by Seller or the Company in this Agreement; (ii) any breach of the Covenants or other agreements made by Seller or the Company in the Agreement; (iii) Liabilities of the Company incurred as a result of the operation of the Company and the Station for the period ended on the day preceding the Closing Date; and (iv) income taxes of the Company for the period ended on the day prior to the Closing Date except to the extent such taxes are offset by existing net loss carryovers. Notwithstanding the foregoing provisions of this Section 12.02(a), Seller shall have no obligation to defend, indemnify and hold harmless RBI and Regent for Damages arising out of any matter described in clause (a)(i) of the immediately preceding paragraph unless the aggregate Damages on account thereof exceed $15,000, and the maximum liability of Seller hereunder for Damages shall be equal to the Final Merger Consideration. (b) RBI and Regent shall defend, indemnify and hold harmless Seller from and against any and all Damages incurred by Seller arising out of or related to: (i) any breach of the Covenants, other agreements, and Warranties given or made by RBI and Regent in this Agreement; (ii) all federal, state and local tax liabilities of the Company arising and relating to operation of the Station on and after the Closing Date; and (iii) any loss or damage arising out of any Liability of Company incurred or the result of the operation of the Company and Station on and after the Closing Date or which have been included in the Closing Report and as to which RBI and Regent have received an adjustment of the Merger Consideration in their favor hereunder in accordance with Section 1.12. -31- 33 (c) Procedures: Third Party and Direct Indemnification Claims. The indemnified party agrees to give written notice within a reasonable time to the indemnifying party of any demand, suit, claim or assertion of liability by third parties or other circumstances that could give rise to an indemnification obligation hereunder against the indemnifying party, providing a description of the nature and amount of the claim (hereinafter collectively 'Claims," and individually a "Claim'), it being understood that the failure to give such notice shall not affect the indemnified party's right to indemnification and the indemnifying party's obligation to indemnify as set forth in this Agreement, unless the indemnifying party's ability to contest, defend or settle with respect to such Claim is thereby demonstrably and materially prejudiced. The parties agree that any claim for Damages arising directly between the parties relating to this Agreement may be brought at any time within the applicable survival period specified in Section 12.01, and that the only notice required with respect thereto shall be as specified in Section 12.01(c). Seller and RBI each irrevocably submits to the nonexclusive jurisdiction of any state or federal court sitting in San Francisco, California over any suit, action or proceeding arising out of or relating to this Agreement and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such court. Each party to this Agreement hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The obligations and liabilities of the parties hereto with respect to their respective indemnities pursuant to this Section 12.02 resulting from any Claim shall be subject to the following additional terms and conditions: (i) The indemnifying party shall have the right to undertake, by counsel or other representatives of its own choosing, the defense or opposition to such Claim. (ii) In the event that the indemnifying party shall elect not to undertake such defense or opposition, or within ten (10) days after notice of any such Claim from the indemnified party shall fail to defend or oppose, the indemnified party (upon further written notice to the indemnifying party) shall have the right to undertake the defense, opposition, compromise or settlement of such Claim, by counsel or other representatives of its own choosing, on behalf of and for the account and risk of the indemnifying party (subject to the right of the indemnifying party to assume defense of or opposition to such Claim at any time prior to settlement, compromise or final determination thereto). (d) Anything this Section 12.02 to the contrary notwithstanding: (i) the indemnified party shall have the right, at its own cost and expense, to participate in the defense, opposition, compromise or settlement of the Claim; (ii) the indemnifying party shall not, without the indemnified party's written consent, settle or compromise any Claim or consent to entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such Claim, and (iii) in the event that the indemnifying party undertakes defense of or opposition to any Claim the indemnified party, by counsel or other representative of its own choosing and at its sole cost and expense, shall have the right to consult with the indemnifying party and its counsel or other representatives concerning such Claim and the indemnifying party and the indemnified party, and -32- 34 their respective counsel or other representatives, shall cooperate in good faith with respect to such Claim. (e) No undertaking of defense or opposition to a Claim shall be construed as an acknowledgment by such party that it is liable to the party claiming indemnification with respect to the Claim at issue or other similar Claims. ARTICLE XIII Termination Rights 13.01 Termination. This Agreement may be terminated at any time prior to Closing as follows: (a) Upon the mutual written consent of RBI and Seller, this Agreement may be terminated on such terms and conditions as so agreed; or (b) By written notice of RBI to Seller if Seller or the Company breaches in any material respect any of his/its representations or warranties or defaults in any material respect in the observance or in the due and timely performance of any of his covenants or agreements herein contained and such breach or default shall not be cured within thirty (30) days of the date of notice of breach or default served by RBI; or (c) By written notice of Seller or the Company to RBI if RBI and Regent breach in any material respect any of their representations or warranties or default in any material respect in the observance or in the due and timely performance of any of their covenants or agreements herein contained and such breach or default shall not be cured within thirty (30) days of the date of notice of breach or default served by Seller or the Company; or (d) By written notice of any party if any condition to the obligation to perform this Agreement of the party seeking to terminate has not been satisfied or complied with by the Closing Date or the date specified herein for such satisfaction or compliance, and such inaccuracy, failure of performance or non-satisfaction of or compliance with a condition, if capable of being cured, has not been cured within thirty (30) days after written demand therefor, or has not been waived by the party seeking to terminate this Agreement; or (e) By written notice of RBI to Seller if the FCC denies the FCC Application; and by written notice of Seller to RBI if the FCC denies the FCC Application under circumstances in which Seller is not entitled to delivery of the Escrow Deposit; or (f) By written notice of RBI to Seller, or by Seller to RBI, if any court of competent jurisdiction shall have issued an order, decree or ruling (which then remains in effect) or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, or by RBI, if any court, legislative body or governmental or regulatory authority has taken, or is reasonably expected to take, action that would prohibit the consummation of the -33- 35 transactions contemplated hereby in accordance with the terms of the this Agreement, as determined by RBI in its sole discretion reasonably exercised; or (g) By written notice of RBI to Seller, or by Seller to RBI, if the Closing shall not have been consummated on or before October 31, 2000; or (h) By written notice of RBI to Seller if it shall become apparent in the judgment of RBI and Seller reasonably exercised that any condition to RBI's obligation to close as set forth in Article VIII hereof will not be satisfied on or before October 31, 2000; or (i) By written notice of RBI to Seller under the conditions set forth in Sections 6.06 or 14.13 hereof; or (j) By written notice of RBI to Seller in the event Regent Broadcasting of Chico, Inc. has terminated the Time Brokerage Agreement pursuant to Section 17 thereof; or (k) By written notice of RBI to Seller, or by Seller to RBI, in the event of (i) a termination of the Time Brokerage Agreement by the notifying party pursuant to Section 16.3 thereof or (ii) a termination of the Time Brokerage Agreement pursuant to Section 19 thereof if such termination of the Time Brokerage Agreement has a material adverse effect on such party's ability to complete the transactions contemplated hereunder. Notwithstanding the foregoing, no party hereto may effect a termination hereof if such party is in material default or breach of this Agreement. If this Agreement is terminated, RBI and its Affiliates shall not, except as contemplated by the Time Brokerage Agreement, solicit or attempt to employ any person who is an officer or employee of the Company as of the date of this Agreement for a period of six (6) months after the effective date of such termination. 13.02 Liability. Except as set forth in Section 13.04 below, the termination of this Agreement under Section 13.01 shall not relieve any party of any liability for breach of this Agreement prior to the date of termination. 13.03 Monetary Damages, Specific Performance and Other Remedies. The parties recognize that if the Company or Seller refuses to perform under the provisions of this Agreement, monetary damages alone will not be adequate to compensate RBI for its injury. RBI shall therefore be entitled to obtain specific performance of the terms of this Agreement in addition to any other remedies, including but not limited to monetary damages (which would include an amount equal to at least the amount of the Escrow Deposit), that may be available to it. If any action is brought by RBI to enforce this Agreement, Seller and the Company shall waive the defense that there is an adequate remedy at law. In the event of a default by Seller or the Company, which results in the filing of a lawsuit for damages, specific performance, or other remedy, the prevailing party in such action shall be entitled to reimbursement by the other of reasonable legal fees and expenses incurred by the prevailing party. 13.04 SELLER'S AND COMPANY'S LIQUIDATED DAMAGES. AS MORE FULLY DESCRIBED IN THE DEPOSIT ESCROW AGREEMENT, IN -34- 36 THE EVENT THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 13.01(C) BECAUSE OF A MATERIAL BREACH OF THIS AGREEMENT BY RBI AND ALL OTHER CONDITIONS TO CLOSING ARE AT SUCH TIME SATISFIED OR WAIVED (OTHER THAN SUCH CONDITIONS AS CAN READILY BE SATISFIED BY CLOSING), THEN THE ESCROW DEPOSIT SHALL BE DELIVERED TO SELLER AND THE COMPANY, AND THE CASH OR PROCEEDS FROM A DRAW ON THE LETTER OF CREDIT SHALL CONSTITUTE LIQUIDATED DAMAGES. IT IS UNDERSTOOD AND AGREED THAT SUCH LIQUIDATED DAMAGES AMOUNT REPRESENTS THE 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 RBI AND REGENT AND ANY OF THEIR AFFILIATES FOR FAILING TO CONSUMMATE THIS AGREEMENT AS A RESULT OF A MATERIAL BREACH HEREOF, AND SHALL BE APPLICABLE REGARDLESS OF THE ACTUAL AMOUNT OF DAMAGES SUSTAINED AND ALL OTHER REMEDIES ARE DEEMED WAIVED BY SELLER AND THE COMPANY. ARTICLE XIV Miscellaneous Provisions 14.01 Brokerage. The parties represent and warrant that no broker or finder was employed, appointed or authorized by any of them in connection with the transactions contemplated by this Agreement. Each hereby agree to indemnify and hold the others harmless from and against any and all other liabilities with respect thereto. 14.02 Certain Interpretive Matters and Definitions. Unless the context otherwise requires: (a) all references to Sections, Articles, Schedules or Exhibits are to Sections, Articles, Schedules or Exhibits of or to this Agreement; (b) each term defined in this Agreement has the meaning assigned to it; (c) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with generally accepted accounting principles as in effect on the date hereof, (d) "or" is disjunctive but not necessarily exclusive; (e) words in the singular include the plural and vice versa; (f) the term "Affiliate" has the meaning given it in Rule 12b-2 of Regulations 12B under the Securities Exchange Act of 1934, as amended; and (g) all references to "$" or dollar amounts will be to lawful currency of the United States of America. 14.03 Further Assurances. After the Closing, Seller shall from time to time, at the request of and without further cost or expense to RBI, execute and deliver such other instruments of conveyance and transfer and take such other actions as may reasonably be requested in order more effectively to consummate the transactions contemplated hereby to vest in RBI good title to the Company Stock being transferred hereunder in accordance with the terms hereof, and RBI and Regent shall from time to time, at the request of and without further cost or expense to Seller, -35- 37 execute and deliver such other instruments and take such other actions as may reasonably be requested in order to more effectively consummate the transaction contemplated hereby for the benefit of Seller. 14.04 Benefit and Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective, heirs, executors, administrators, successors and permitted assigns. Seller may not voluntarily or involuntarily assign his interest under this Agreement without the prior written consent of RBI. RBI shall have the right to assign and/or delegate all or any portion of its rights and obligations under this Agreement, including without limitation assignments as collateral, provided that no such assignment and/or delegation shall relieve RBI of its obligations hereunder in the event that its assignee fails to perform the obligations delegated. All covenants, agreements, statements, representations, warranties and indemnities in this Agreement by and on behalf of any of the parties hereto shall bind and inure to the benefit of their respective successors and permitted assigns of the parties hereto. In the event RBI finds it necessary or is required to provide to a third party a collateral assignment of the RBI's interest in this Agreement and/or any related documents, Seller and the Company shall cooperate with the RBI and any third party requesting such assignment including but not limited to signing or delivering a consent and acknowledgment of such assignment. 14.05 Amendments. No amendment, waiver of compliance with any provision or condition hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment, change, extension or discharge is sought. 14.06 Headings. The headings set forth in this Agreement are for convenience only and will not control or affect the meaning or construction of the provisions of this Agreement. 14.07 Governing Law. The construction and performance of this Agreement shall be governed by the laws of the State of California without giving effect to the choice of law provisions thereof. 14.08 Notices. Any notice, demand or request required or permitted to be given under the provisions of this Agreement shall be in writing, including by facsimile, and shall be deemed to have been duly delivered and received on the date of personal delivery, on the third day after deposit in the U.S. mail if mailed by registered or certified mail, postage prepaid and return receipt requested, on the day after delivery to a nationally recognized overnight courier service if sent by an overnight delivery service for next morning delivery or when dispatched by facsimile transmission (with the facsimile transmission confirmation being deemed conclusive evidence of such dispatch) and shall be addressed to the following addresses, or to such other address as any party may request, in the case of Seller or the Company, by notifying RBI, and in the case of RBI and Regent, by notifying Seller: -36- 38 To Seller or the Company: Robb Cheal KZAP Radio 407 West Ninth Street Chico, California 95928 Fax: (530) 895-3740 Copy to: Robert Harp, Esq. Marshall, Burghardt, Mieske & Harp Suite 2 1350 E. Lassen Avenue Chico, California 95973 Fax: (530) 895-0844 To RBI and Regent: Terry S. Jacobs, Chairman Regent Communications, Inc. 50 East RiverCenter Blvd. Suite 180 Covington, KY 41011 Fax: (606) 292-0352 Copy to: STRAUSS & TROY The Federal Reserve Building 150 East Fourth Street Cincinnati, OH 45202 Attn: Alan C. Rosser, Esq. Fax: (513) 241-8259 14.09 Counterparts. This Agreement may be executed in one or more counterparts and by facsimile, each of which will be deemed an original and all of which together will constitute one and the same instrument. 14.10 No Third Party Beneficiaries. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the parties hereto and their successors or permitted assigns any rights or remedies under or by reason of this Agreement. 14.11 Severability. The parties agree that if one or more provisions contained in this Agreement shall be deemed or held to be invalid, illegal or unenforceable in any respect under any, applicable law, this Agreement shall be construed with the invalid, illegal or unenforceable -37- 39 provision deleted, and the validity, legality and enforceability of the remaining provisions contained herein shall not be affected or impaired thereby. 4.12 Entire Agreement. This Agreement and the schedules and exhibits hereto embody the entire agreement and understanding of the parties hereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein. 14.13 Risk of Loss. The risk of any loss, damage or destruction to any of the Station Assets from fire or other casualty or cause shall be borne by the Seller and the Company at all times prior to the Closing hereunder. Upon the occurrence of any loss or damage to any material property or assets of the Company as a result of fire, casualty or other causes prior to Closing, Seller shall notify RBI of same in writing immediately stating with particularity the extent of such loss or damage incurred, the cause thereof if known and the extent to which restoration, replacement and repair of the Station Assets lost or destroyed will be reimbursed under and insurance policy with respect thereto. In the event that the loss or damage exceeds One Hundred Thousand Dollars ($100,000.00) and the property is not substantially repaired, replaced or restored prior to the Closing Date, the Closing Date shall be extended for a period of up to ninety (90) days to permit the repair, replacement or restoration of the property by Seller and Company, and in the further event that it is not so repaired, replaced or restored within such sixty (60) day period, RBI, at its option, may, upon written notice to Seller: (a) terminate this Agreement; or (b) postpone the Closing Date for an additional period of up to sixty (60) days until such time that the property has been substantially repaired, replaced or restored; or (c) elect to consummate the Closing and accept the property in its "then" condition, and Seller shall reimburse RBI for any deductible portion of the insurance coverage of Company. In the event of postponement of Closing hereunder, Seller, Company and Regent shall join in any necessary requests of the FCC to extend the time of the effective period of the FCC's consent. RBI may also at its option elect to consummate the Closing pursuant to this Subsection (c) prior to the initial sixty (60) day extension of the Closing Date. 14.14 Time Brokerage Agreement. Prior to the execution hereof, the Company has entered into with Regent Broadcasting of Chico, Inc. a Time Brokerage Agreement pursuant to which the Company is making available to Regent Broadcasting of Chico, Inc. the broadcasting transmission facilities to the Station and/or causing to be broadcast on the Station programming provided by Regent Broadcasting of Chico, Inc. from the Commencement Date (as defined in the Time Brokerage Agreement) during the term thereof. An Event of Default by either party under the Time Brokerage Agreement shall constitute a material default under this Agreement and insofar as the cure period specified in the Time Brokerage Agreement has expired with respect to the default, no further cure period shall be afforded under the provisions of this Agreement. 14.15 Definitions. The following capitalized terms used in this Agreement shall have the following meanings: -38- 40 (a) "Contracts" means all contracts, agreements, leases and legally binding contractual rights of the Company of any kind, written or oral, relating to the Company or the operations of the Station and which are listed on Schedule 4.13. (b) "Station Licenses" means all licenses, permits and other authorizations issued to the Company by any governmental or regulatory authority including without limitation those issued by the FCC used or useful in connection with the operation of the Station, including but not limited to those described in Schedule 4.08, along with renewals, modifications, or applications relating to such items between the date hereof and the Closing Date; (c) "Station Assets" means all of the assets, properties, interests and rights of the Company of whatsoever kind and nature, real and personal, tangible and intangible, owned or leased (to the extent of the Company's leasehold interest) by the Company as the case may be, wherever situated, which are used or held for use in the operation of the Station, including but not limited to all of the Company's right, title and interest in and to: (i) the Station Licenses; (ii) all equipment, electrical devices, antennae, cables, tools, hardware, office furniture and fixtures, office materials and supplies, inventory, motor vehicles, spare parts and all other tangible personal property of every kind and description, and the Company's rights therein, owned, leased (to the extent of the Company's leasehold interest) or held by the Company and used or useful in connection with the operations of the Station, including but not limited to those items described or listed in Schedule 4.11, together with any replacements thereof and additions thereto, made between the date hereof and the Closing Date, and less any retirements or dispositions thereof made between the date hereof and the Closing Date in the ordinary course of business and consistent with past practices of the Company; provided, however, the Company agrees that the value of all such assets retired or disposed of and not replaced with an asset of like kind and quality shall not exceed $5,000 in the aggregate unless Seller has obtained the prior written approval of RBI which shall not be unreasonably withheld; (iii) the Contracts and all Time Sales Agreements (as defined in the Time Brokerage Agreement); (iv) all of the Company's rights in and to the call letters listed on Schedule 4.15, and any variation thereof, as well as all of the Company's rights in and to all trademarks, trade names, service marks, franchises, copyrights, including registrations and applications for registration of any of them, computer software programs and programming material of whatever form or nature, jingles, slogans, the Station's logos and all other logos or licenses to use same and all other intangible property rights of the Company, which are used or useful in connection with the operation of the Station, including but not limited to those listed in Schedule 4.15 (collectively, the "Intellectual Property") together with any associated goodwill and any additions thereto between the date hereof and the Closing Date; (v) all programming materials and elements of whatever form or nature owned by the Company, whether recorded on tape or other medium or intended for live -39- 41 performance, and all copyrights owned by or licensed to the Company that are used or useful in connection with the operation of the Station, including all such programs, materials, elements and copyrights acquired by the Company between the date hereof and the Closing Date; (vi) all of the Company's rights in and to all the files, documents, records, and books of account relating to the operation of the Station or to the Station Assets, including, without limitation, the Station's local public files, programming information and studies, blueprints, technical information and engineering data, news and advertising studies or consulting reports, marketing and demographic data, sales correspondence, lists of advertisers, promotional materials, credit and sales reports and filings with the FCC, logs, software programs and books and records relating to employees, financial, accounting and operation matters. (vii) the Company's corporate minute books and records, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of the Company; (viii) all claims and causes of action, including all contracts of insurance, and insurance process or claims made by, the Company relating to property or equipment repaired, replaced or restored by the Company prior to the Closing Date; and (ix) all accounts receivable and notes receivable of the Company. (d) "Common Stock" means the Common Stock of Regent. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. REGENT BROADCASTING, INC. KZAP, INC. By: /s/ Terry S. Jacobs By: /s/ Robb Cheal ----------------------------- ------------------------------- Name: Terry S. Jacobs Name: Robb Cheal --------------------------- ----------------------------- Title: Chairman Title: President -------------------------- ---------------------------- REGENT COMMUNICATIONS, INC. SELLER: By: /s/ Terry S. Jacobs /s/ Robb Cheal ----------------------------- ------------------------------------ Robb Cheal Name: Terry S. Jacobs --------------------------- Title: Chairman -------------------------- -40- EX-2.I 4 EXHIBIT 2(I) 1 Exhibit 2(i) ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered this 29th day of March, 2000 by and between YAVAPAI BROADCASTING CORPORATION, an Arizona corporation (hereinafter referred to as "Buyer") and REGENT LICENSEE OF FLAGSTAFF, INC., a Delaware corporation ("RLF") and REGENT BROADCASTING OF FLAGSTAFF, INC. ("RBF," and with RLF collectively referred to as "Seller"). RECITALS WHEREAS, Seller owns and operates radio stations KZGL-FM licensed to Cottonwood, Arizona, and KVNA-AM and FM licensed to Flagstaff, Arizona (together the "Stations" and each individually, a "Station") pursuant to licenses issued by the Federal Communications Commission ("FCC"), and WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain assets and assume certain obligations associated with the ownership and operation of the Stations, all on the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I PURCHASE OF ASSETS 1.1 Transfer of Assets. On the terms and subject to the conditions hereof and subject to Section 1.2, on the Closing Date (as hereinafter defined), Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase and assume from Seller, all of the right, title and interest of Seller in and to all of the assets, properties, interests and rights of Seller of whatsoever kind and nature, real and personal, tangible and intangible, owned or leased (to the extent of Seller's leasehold interest) by Seller as the case may be, wherever situated, which are used or held for use in the operation of the Stations (the "Stations Assets"), including but not limited to all of Seller's right, title and interest in and to the assets, properties, interests and rights described in this Section 1.1: 1.1.1 all licenses, permits and other authorizations issued to Seller by any governmental or regulatory authority including without limitation those issued by the FCC (the licenses, permits and authorizations issued by the FCC are hereafter referred to as the "Stations Licenses") used or useful in connection with the operation of the Stations, including but not limited to those described in Schedule 7.4, along with renewals or modifications of such items between the date hereof and the Closing Date; 2 1.1.2 all equipment, electrical devices, antennae, cables, tools, hardware, office furniture and fixtures, office materials and supplies, inventory, motor vehicles, spare parts and all other tangible personal property of every kind and description, and Seller's rights therein, owned, leased (to the extent of Seller's leasehold interest) or held by Seller and used or useful in connection with the operations of the Stations, including but not limited to those items described or listed in Schedule 7.7, together with any replacements thereof and additions thereto, made between the date hereof and the Closing Date, and less any retirements or dispositions thereof made between the date hereof and the Closing Date in the ordinary course of business and consistent with past practices of Seller; provided, however, Seller agrees that the value of all such assets retired or disposed of and not replaced with an asset of like kind and quality shall not exceed $5,000 in the aggregate unless Seller has obtained the prior written approval of Buyer which shall not be unreasonably withheld. 1.1.3 all time sales agreements and Trade Agreements (time sales agreements for consideration other than cash), and (i) all other contracts, agreements, leases and legally binding contractual rights of any kind, written or oral, relating to the operation of the Stations and which are listed in Schedule 7.8 and Schedule 7.9, together with (ii) all contracts, agreements, leases and legal binding contractual rights entered into or acquired by Seller between the date hereof and the Closing Date which the Buyer specifically agrees at Closing to assume (collectively (i) and (ii) above are referred to herein as the "Contracts"). 1.1.4 all of Seller's rights in and to the call letters KZGL-FM and KVNA-AM and FM, as well as all of Seller's rights in and to all trademarks, trade names, service marks, franchises, copyrights, including registrations and applications for registration of any of them, computer software programs and programming material of whatever form or nature (to the extent transferable without adversely affecting Seller's rights thereto), jingles, slogans, the Stations' logos and all other logos or licenses to use same and all other intangible property rights of Seller, which are used or useful in connection with the operation of the Stations, including but not limited to those listed in Schedule 7.12 (collectively, the "Intellectual Property") together with any associated goodwill and any additions thereto between the date hereof and the Closing Date; 1.1.5 all programming materials and elements of whatever form or nature owned by Seller, whether recorded on tape or other medium or intended for live performance, and all copyrights owned by or licensed to Seller that are used or useful in connection with the operation of the Stations, including all such programs, materials, elements and copyrights acquired by Seller between the date hereof and the Closing Date; 1.1.6 all of Seller's rights in and to all the files, documents, records, and books of account relating to the operation of the Stations or to the Stations Assets, including, without limitation, the Stations' local public files, programming information and studies, blueprints, technical information and engineering data, news and advertising studies or consulting reports, marketing and demographic data, sales correspondence and account files, lists of advertisers, promotional materials, credit and sales reports and filings with the FCC and all written contracts, whether current or expired, including without limitation, the Contracts to be assigned hereunder, 2 3 logs, books and records relating to employees, financial, accounting and operation matters, but excluding records relating solely to any Excluded Asset (as hereinafter defined); 1.1.7 all of Seller's rights under manufacturers' and vendors' warranties relating to items included in the Stations Assets and all similar rights against third parties relating to items included in the Stations Assets; 1.1.8 the leasehold interests in the real property and fixtures thereon described in Section 7.8; and 1.1.9 except for Excluded Assets, such other assets, properties, interests and rights owned by Seller that are located at the Station's facilities and used or useful in connection with the operation of the Stations. The Stations Assets shall be transferred to Buyer free and clear of all debts, security interests, mortgages, trusts, claims, pledges or other liens, liabilities, encumbrances or rights of third parties whatsoever ("Encumbrances"), except for Permitted Encumbrances (as defined in Section 7.7) and except as set forth in Schedule 7.7 and Schedule 7.8. 1.2 Excluded Assets. Notwithstanding anything to the contrary contained herein, it is expressly understood and agreed that the Stations Assets shall not include the following assets along with all rights, title and interest therein (the "Excluded Assets"): 1.2.1 all cash and cash equivalents of Seller on hand and/or in banks, including without limitation investment securities, certificates of deposit, commercial paper, treasury bills, marketable securities, asset or money market accounts and all such similar accounts or investments; 1.2.2 all investment securities and accounts receivable or notes receivable existing on the Closing Date arising from services performed by Seller in connection with the operation of the Stations prior to the Closing Date (which shall not include accounts receivable generated by Buyer under the Time Brokerage Agreement identified below); 1.2.3 all property owned by Seller or any affiliate of Seller not located at the Stations' facilities and not used by Seller in connection with the operation of the Stations; 1.2.4 subject to the limitation set forth in Section 1.1.2 of this Agreement, all tangible and intangible personal property of Seller disposed of or consumed in the ordinary course of business consistent with the past practices of Seller between the date of this Agreement and the Closing Date; 1.2.5 all Contracts that have terminated or expired prior to the Closing Date in the ordinary course of business consistent with the past practices of Seller; 1.2.6 Seller's corporate minute books and records, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization 3 4 of Seller and duplicate copies of such records as are necessary to enable Seller to file its tax returns and reports, as well as any other records or materials relating to Seller generally and not involving or relating to the Stations Assets or the operation or operations of the Stations; 1.2.7 contracts of insurance, and any insurance proceeds or claims made by, Seller relating to property or equipment repaired, replaced or restored by Seller prior to the Closing Date; 1.2.8 all pension, profit sharing or cash or deferred (Section 401 (k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and the assets thereof, if any, maintained by Seller; and 1.2.9 any right, property or asset described in Schedule 1.2.9. ARTICLE 2 ASSUMPTION OF OBLIGATIONS 2.1 Assumption of Obligations. Subject to the provisions of this Section 2. 1, Section 2.2 and Section 3.3, on the Closing Date, Buyer shall assume the obligations of Seller arising or to be performed on and after the Closing Date (except to the extent such obligations represent liabilities for activities, events or transactions occurring, or conditions existing, on or prior to the Closing Date) under: (a) the Contracts; (b) all property taxes and other governmental charges on the Stations Assets; and (c) all time sales agreements and Trade Agreements. All of the foregoing liabilities and obligations shall be referred to herein collectively as the "Assumed Liabilities." 2.2 Retained Liabilities Notwithstanding anything contained in this Agreement to the contrary, Buyer expressly does not, and shall not, assume or agree to pay, satisfy, discharge or perform and will not be deemed by virtue of the execution and delivery of this Agreement or any agreement, instrument or document delivered pursuant to or in connection with this Agreement or otherwise by reason of or in connection with the consummation of the transactions contemplated hereby or thereby, to have assumed or to have agreed to pay, satisfy, discharge or perform, any liabilities, obligations or commitments of Seller of any nature whatsoever whether accrued, absolute, contingent or otherwise and whether or not disclosed to Buyer, other than the Assumed Liabilities. Seller will retain and pay, satisfy, discharge and perform in accordance with the terms thereof, all liabilities and obligations of the Seller, other than the Assumed Liabilities, including but not limited to, the obligation to assume, perform, satisfy or pay any liability, obligation, agreement, debt, charge, claim, judgment or expense incurred by or asserted against Seller related to taxes, environmental matters, stock option, pension or retirement plans or trusts, profit-sharing plans, employment contracts, employee benefits, severance of employees, product liability or warranty, negligence, contract breach or default, or other obligations, claims or judgments asserted against Buyer as successor in interest to Seller. All of such liabilities, obligations and commitments of Seller described in this Section 2.2 shall be referred to herein collectively as the "Retained Liabilities." 4 5 ARTICLE 3 CONSIDERATION; ACCOUNTS RECEIVABLE 3.1 Delivery of Consideration. In consideration for the sale of the Stations Assets to Buyer, in addition to the assumption of certain obligations of Seller pursuant to Section 2.1 above, Buyer shall, at the Closing (as hereinafter defined), deliver to Seller Two Million Dollars ($2,000,000) by wire transfer of immediately available funds, subject to adjustment pursuant to the provisions of Sections 3.2 and 3.3 below (the "Purchase Price"). Notwithstanding the foregoing, the parties agree that at the Closing, Buyer, Seller and National City Bank, in Cambridge, Ohio, as Escrow Agent (the "Indemnification Escrow Agent"), shall enter into an Indemnification Escrow Agreement in the form of Exhibit A hereto (the "Indemnification Escrow Agreement") pursuant to which Seller shall deposit with the Indemnification Escrow Agent One Hundred Thousand Dollars ($100,000), which funds shall be held in escrow for a period of at least twelve (12) months from the Closing Date and will be used to satisfy indemnification claims of Buyer pursuant to Section 15.2.1 hereof, and which funds shall otherwise be administered and released as specifically provided for in the Indemnification Escrow Agreement. 3.2 Escrow Deposit. (a) Within two (2) business days after the execution and delivery of this Agreement, Buyer, Seller and National City Bank, in Cambridge, Ohio, as Escrow Agent, or an alternative escrow agent (the "Deposit Escrow Agent"), shall enter into a Deposit Escrow Agreement in the form of Exhibit B hereto (the "Deposit Escrow Agreement") pursuant to which Buyer shall deposit the amount described below as a deposit on the amount of the Purchase Price. Such amounts held in escrow shall be applied as set forth herein and in the Deposit Escrow Agreement. (b) Pursuant to the terms of the Deposit Escrow Agreement, Buyer shall wire transfer One Hundred Thousand Dollars ($100,000) to an escrow account established pursuant to the Deposit Escrow Agreement (the "Escrow Deposit"). At the Closing, the Escrow Deposit 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 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 Seller as liquidated damages as provided in Section 16.4 hereto for Buyer's material breach of this Agreement (the payment of such sum to Seller shall discharge any liability Buyer may have to Seller), and the interest accrued on the Escrow Deposit shall be paid to Buyer; and (b) in the event this Agreement is terminated under any circumstances other than those set forth in the immediately preceding clause (a), the Escrow Deposit and the interest accrued thereon shall be paid or returned to Buyer. 3.3 Proration of Income and Expenses. 3.3.1. Except as otherwise provided herein, all deposits, reserves and prepaid and deferred income and expenses relating to the Stations Assets or the Assumed Liabilities and 5 6 arising from the conduct of the business and operations of the Stations shall be prorated between Buyer and Seller in accordance with generally accepted accounting principles as of 11:59 p.m. local Arizona time, on the date immediately preceding the Closing Date. Such prorations shall include, without limitation, all ad valorem, real estate, property taxes and other governmental charges on the Stations Assets (but excluding taxes arising by reason of the transfer of the Stations Assets as contemplated hereby which shall be paid as set forth in Section 13.2), business and license fees, music and other license fees (including any retroactive adjustments thereof, which retroactive adjustments shall not be subject to the sixty-day limitation set forth in Section 3.3.2), utility expenses, vacation pay, amounts due or to become due under Contracts, rents and similar prepaid and deferred items. 3.3.2 Except as otherwise provided herein, the prorations and adjustments contemplated by this Section 3.3, to the extent practicable, shall be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within sixty (60) calendar days after the Closing Date. 3.3.3 In the event of any disputes between the parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 3.3.2 and such disputes shall be determined by an independent certified public accountant mutually acceptable to the parties, and the fees and expenses of such accountant shall be paid one-half by Seller and one-half by Buyer. 3.4 Allocation of Purchase Price. The parties have agreed upon an allocation of the Purchase Price among the Stations Assets, a copy of which is attached to this Agreement as Exhibit C. Seller and Buyer agree to use the agreed upon allocation, if any, for all tax purposes, including without limitation, those matters subject to Section 1060 of the Internal Revenue Code of 1986, as amended. 3.5 Time Brokerage Agreement. Upon the lapse of the right of Buyer to terminate this Agreement under Section 17.10 hereof, Buyer and RBF will enter into a Time Brokerage Agreement, in the form of Exhibit D hereto (the "Time Brokerage Agreement"), pursuant to which RBF will make available to Buyer the broadcasting transmission facilities of the Stations and/or cause to be broadcast on the Stations Buyer's programming from the Commencement Date (as defined in the Time Brokerage Agreement) and during the term thereof. An Event of Default by either party under the Time Brokerage Agreement shall constitute a material default under this Agreement and insofar as the cure period specified in the Time Brokerage Agreement has expired with respect to the default, no further cure period shall be afforded under the provisions hereof. 3.6 Accounts Receivable. Buyer acknowledges that Seller's accounts receivable arising prior to the Closing Date in connection with the operation of the Stations, including but not limited to accounts receivable for advertising revenues for programs and announcements performed prior to the Closing Date other than for Buyer under the Time Brokerage Agreement, shall remain the property of RBF ("Seller Accounts Receivable") and that Buyer shall not acquire any beneficial right or interest therein or responsibility therefor under this Agreement. For the period of thirty (30) days following the Closing Date or ninety (90) days following the 6 7 Commencement Date under the Time Brokerage Agreement, whichever is shorter (the "Collection Period"), Buyer shall for no remuneration use substantially the same efforts to collect the Seller Accounts Receivable as Buyer uses to collect Buyer's own accounts receivable in the normal and ordinary course of business, and Buyer will apply all such amounts collected in connection with the Seller Accounts Receivable collected in connection with the Seller Accounts Receivable to the debtor's oldest account receivable first, except that any such accounts collected by Buyer from persons who are also indebted to Buyer for programs and announcements broadcast on any of the Stations may be applied to Buyer's account if so directed by the debtor or under circumstances in which there is a bona fide dispute between RBF and such account debtor with respect to such account. Buyer's obligation and authority shall not extend to the institution of litigation, employment of counsel or a collection agency or any other extraordinary means of collection. Buyer agrees to reasonably cooperate with RBF, at RBF's expense, as to any litigation or other collection efforts instituted by RBF to collect any delinquent Seller Accounts Receivable. During the Collection Period, neither Seller nor its agents shall make any direct solicitation of any account debtor for collection purposes or institute litigation for the collection of amounts due except with respect to any accounts that may be reassigned to RBF. Any amounts relating to the Seller Accounts Receivable that are paid directly to Seller shall be retained by Seller, but Seller shall provide Buyer with prompt notice of any such payment. Except as otherwise provided herein, amounts collected by Buyer on account of Seller Accounts Receivable shall be remitted in full to RBF at the end of the Collection Period, accompanied by an accounting showing the amount it received on each account, provided that Buyer may deduct from such amounts, and be responsible for payment of, commissions due on the collected Seller Accounts Receivable. At the conclusion of the Collection Period and after remittance of all amounts collected, Buyer will thereafter have no further responsibility with respect to the collection of the Seller Accounts Receivable, and Buyer may apply all collections received by Buyer from any party who continues business with Buyer to obligations owing to Buyer, except for any payment received by Buyer which such party specifies is for amounts owed to RBF, in which event such specified amounts shall be paid over to RBF. Buyer shall not have the right to compromise, settle or adjust the amounts of any of the Seller Accounts Receivable without RBF's prior written consent. RBF shall promptly pay all sales commissions relating to all of its accounts receivable whenever RBF receives payment thereon, except to the extent previously paid by Buyer as provided herein. ARTICLE 4 CLOSING 4.1 Closing. Except as otherwise mutually agreed upon by Buyer and Seller, the consummation of the transactions contemplated herein (the "Closing") shall occur within ten (10) business days after the later to occur of (a) the satisfaction or waiver of each condition to closing contained herein, other than such conditions as are reasonably anticipated to be satisfied at Closing (provided that each party hereto shall use its reasonable best efforts to cause each condition to closing to be satisfied so that the Closing may occur at the earliest possible date); and (b) the issuance of the Final Order (as defined below), or such other date as may be mutually agreed by the parties hereto (the "Closing Date"); provided, however, that unless Seller's senior lenders object Buyer may in its sole discretion waive the requirement that a Final Order be issued and elect (subject to clause (a) above) to close at any time (upon not less than ten (10) business 7 8 days' notice to Seller) after the release of initial FCC approval on public notice that it has consented to the transaction contemplated hereby (the "Initial Approval"). For purposes of this Agreement, "Final Order" (and "Final") means an order or grant by the FCC which is no longer subject to reconsideration or review by the FCC or a court of competent jurisdiction and pursuant to which the FCC consents, as the case may be, to the assignments of the FCC Licenses contemplated by this Agreement or to the renewal of the FCC Licenses, each such order or grant being without the imposition of any conditions adverse to Buyer or any Affiliate (as hereinafter defined) of Buyer with respect to the assignment of the FCC Licenses to Buyer or the continued operation by Buyer of the Stations or the Stations Assets. In the event that the parties close before the Initial Approval has become a Final Order, the parties shall enter into an Unwind Agreement mutually acceptable to the parties and their respective senior lenders. The Closing shall be held in the offices of Seller's counsel in Cincinnati, Ohio, or at such place and in such manner as the parties hereto may agree. ARTICLE 5 GOVERNMENTAL CONSENTS 5.1 FCC Consent. It is specifically understood and agreed by Buyer and Seller that the Closing and the assignment of the Stations Licenses and the transfer of the Stations Assets are expressly conditioned on and are subject to the prior consent and approval of the FCC without the imposition of any conditions adverse to Buyer or any Affiliate of Buyer (the "FCC Consent"). 5.2 FCC Application. Within five (5) business days after the effective date of this Agreement, Buyer and RLF shall file an application with the FCC for the FCC Consent (the "FCC Application"). Buyer and RLF shall prosecute the FCC Application with all reasonable diligence and otherwise use their best efforts to obtain the FCC Consent as expeditiously as practicable (but neither Buyer nor RLF shall have any obligation to satisfy complainants or the FCC by taking any steps which would have a material adverse effect upon Buyer or RLF or upon any of their respective Affiliates). If the FCC Consent imposes any condition on Buyer or RLF or any of their respective Affiliates, such party shall use its best efforts to comply with such condition; provided, however, that neither Buyer nor RLF shall be required hereunder to comply with any condition that would have a material adverse effect upon it or any of its Affiliates. If reconsideration or judicial review is sought with respect to the FCC Consent, the party affected shall vigorously oppose such efforts for reconsideration or judicial review; provided, however, that nothing herein shall be construed to limit either party's right to terminate this Agreement pursuant to Article 16 hereof. ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby makes the following representations and warranties to Seller, each of which is true and correct on the date hereof, shall survive the Closing and shall be unaffected by any investigation heretofore or hereafter made by Seller: 8 9 6.1 Organization and Standing. Buyer is a corporation duly organized and validly existing under the laws of the State of Arizona. 6.2 Authorization and Binding Obligations. Buyer has all necessary legal power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and to own or lease the Stations Assets and to carry on the business of the Stations upon the consummation of the transactions contemplated by this Agreement. Buyer's execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all necessary action on its part and, assuming the due authorization, execution and delivery of this Agreement by Seller, this Agreement will constitute the legal, valid and binding obligation of Buyer, enforceable against it in accordance with its terms, except as limited by laws affecting creditors' rights or equitable principles generally. 6.3 Qualification As Assignee. To the best of Buyer's knowledge, there are no facts which, under the Communications Act of 1934, as amended, or the existing rules and regulations of the FCC, would disqualify Buyer as an assignee of the Stations Licenses. Buyer has, and will continue to have to the Closing, funds committed and readily available to it sufficient to pay all amounts due at the Closing, as evidenced by the documentation set forth in Schedule 6.3. 6.4 Absence of Conflicting Agreements or Required Consents. Except as set forth in Article 5 hereof with respect to governmental consents, the execution, delivery and performance of this Agreement by Buyer: (a) do not conflict with the provisions of the articles of organization or operating agreement of Buyer; (b) do not require the consent of any third party; (c) will not violate any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which Buyer or any of its affiliates is a party; and (d) will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any agreement, instrument, license or permit to which Buyer is now subject. 6.5 Commissions or Finder's Fees. Neither Buyer nor any person or entity acting on behalf of Buyer has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity. 6.6 Litigation. Except as set forth on Schedule 6.6, Buyer is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree prohibiting the consummation of the transactions contemplated by this Agreement, and there are no suits, legal proceedings or investigations of any nature pending, or to the best knowledge of Buyer, threatened against or affecting Buyer that would affect Buyer's ability to carry out the transactions contemplated by this Agreement. 6.7 Full Disclosure. No representation or warranty made by Buyer contained in this Agreement nor any certificate, document or other instrument furnished or to be furnished by Buyer pursuant hereto contains or will contain any untrue statement of a material fact, or omits or shall omit to state any material fact required to make any statement contained herein or therein not misleading. To the best of Buyer's knowledge, there is no impending or contemplated event 9 10 or occurrence that would cause any of the foregoing representations not to be true and complete on the date of such event or occurrence as if made on that date. ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER Seller makes the following representations and warranties to Buyer, each of which is true and correct on the date hereof, shall survive the Closing and shall be unaffected by any investigation heretofore or hereafter made by Buyer: 7.1 Organization and Standing. Each of RBF and RLF is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, RBF is authorized to conduct business within the State of Arizona, and each of RBF and RLF has the requisite power and authority to own, lease and operate the Stations Assets owned or leased by it and to carry on the business of the Stations as now being conducted by it and as proposed to be conducted by it between the date hereof and the Closing Date. 7.2 Authorization and Binding Obligation. Seller has the power and authority, and has taken all necessary and proper action to enter into and perform this Agreement and to consummate the actions contemplated hereby. This Agreement has been duly authorized, executed and delivered by Seller and, assuming the due authorization, execution and delivery of this Agreement by Buyer, constitutes the legal, valid and binding obligation of Seller enforceable against it in accordance with its terms, except as limited by laws affecting the enforcement of creditors' rights or equitable principles generally. 7.3 Absence of Conflicting Agreements or Required Consents. Except as set forth in Article 5 with respect to governmental consents and in Schedule 7.9 with respect to required consents, the execution, delivery and performance of this Agreement by Seller: (a) do not require the consent of any third party (including, without limitation, the consent of any governmental, regulatory, administrative or similar authority); (b) will not conflict with, result in a breach of, or constitute a violation of or default under, the provisions of Seller's certificate of organization or bylaws, or any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which Seller is a party or by which Seller or any of the Stations Assets are bound; (c) will not either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any Contract, agreement, instrument, license or permit to which Seller or any of the Stations Assets is now subject; and (d) will not result in the creation of any lien, charge or encumbrance on any of the Stations Assets. 7.4 Government Authorizations. 7.4.1 Schedule 7.4 hereto contains a true and complete list of the Stations Licenses which are required for the lawful conduct of the business and operations of the Stations in the manner and to the full extent they are presently conducted (including, without limitation, auxiliary licenses associated with each Station and all tower registrations), except for such licenses, permits and authorizations the failure of which to obtain would not have a material 2 11 adverse effect on Buyer or the Stations. Seller has delivered to Buyer true and complete copies of the Stations Licenses listed in Schedule 7.4, including any and all amendments and other modifications thereto. 7.4.2 RLF is the authorized legal holder of the Stations Licenses. Except as set forth Schedule 7.4, none of the Stations Licenses is subject to any restrictions or conditions which would materially limit the full operation of the Stations as now operated. 7.4.3 Except as set forth in Schedule 7.4, and except for matters affecting the radio broadcast industry generally, there are no complaints, petitions or proceedings pending or, to the best of Seller's knowledge, threatened as of the date hereof before the FCC or any other governmental or regulatory authority relating to the business or operations of the Stations. Except as set forth on Schedule 7.4, there are no applications pending by RLF before the FCC. Except as set forth in Schedule 7.4, the Stations Licenses are in good standing, are in full force and effect and are unimpaired by any act or omission of Seller or its directors, officers, or employees, and the operations of the Stations are in accordance with the Stations Licenses. Except as set forth on Schedule 7.4, no proceedings are pending or, to the best of Seller's knowledge, threatened, and to the best of Seller's knowledge there has not been any act or omission of Seller or any of its directors, officers, or employees, which may result in the revocation, modification, non-renewal or suspension of any of the Stations Licenses, the denial of any pending applications, the issuance of any cease and desist order, the imposition of any administrative actions by the FCC or any other governmental or regulatory authority with respect to the Stations Licenses or which may affect Buyer's ability to continue to operate the Stations as they are currently operated. 7.4.4 Except as set forth on Schedule 7.4, each Station is operating with the maximum facilities specified in the respective Station License. 7.4.5 To the best of Seller's knowledge: (i) none of the Stations is causing objectionable interference to the transmissions of any other broadcast station or communications facility nor has any of the Stations received any complaints with respect thereto; and (ii) no other broadcast station or communications facility is causing objectionable interference to respective transmissions of either Station. 7.4.6 Seller has no reason to believe that the Stations Licenses will not be renewed in their ordinary course. 7.4.7 All reports, forms, and statements required to be filed by RLF with the FCC with respect to the Stations since the grant of the last renewal of the Stations Licenses have been filed and are substantially complete and accurate. 7.4.8 To the best knowledge of Seller, there are no facts which, under the Communications Act of 1934, as amended, or the existing rules and regulations of the FCC, would disqualify RLF as assignor of the Stations Licenses or cause the Stations Licenses not to be renewed in their ordinary course. 11 12 7.4.9 As if the Closing Date, the operation of the Stations and all of the Stations Assets will be in compliance in all respects with ANSI Radiation Standards C95.1-1992. 7.5 Compliance with FCC Regulations. Except as specified in Schedule 7.4, the operation of the Stations and all of the Stations Assets are in compliance in all material respects with: (a) all applicable engineering standards required to be met under applicable FCC rules; and (b) all other applicable federal, state and local rules, regulations, requirements and policies, including, but not limited to, equal employment opportunity policies of the FCC, and all applicable painting and lighting requirements of the FCC and the Federal Aviation Administration to the extent required to be met under applicable FCC rules and regulations, and to the best of Seller's knowledge, there are no filed claims to the contrary. 7.6 Taxes. Seller has filed all federal, state, local and foreign income, franchise, sales, use, property, excise, payroll and other tax returns required by law to be filed by it and has paid in full all taxes, estimated taxes, interest, assessments, and penalties due and payable by it. All returns and forms which have been filed have been true and correct in all material respects and no tax or other payment in an amount other than as shown on such returns and forms is required to be paid by Seller and has not been paid by Seller. There are no present disputes as to taxes of any nature payable by Seller which in any event could adversely affect any of the Stations Assets or the operation of the Stations by Buyer. Seller has not been advised that any of its tax returns, federal, state, local or foreign, have been or are being audited. Seller does not and will not in the future have any liability, fixed or contingent, for any unpaid federal, state or local taxes or other governmental or regulatory charges whatsoever (including without limitation withholding and payroll taxes) which could result in a lien on the Stations Assets after conveyance thereof to Buyer or in any other form of transferee liability to Buyer. 7.7 Personal Property. Schedule 7.7 hereto contains a list of all material items of tangible personal property owned by RBF and used in the conduct of the business and operations of the Stations. Schedule 7.7, also separately lists any material tangible personal property leased by RBF pursuant to leases included within the Contracts. Except as disclosed in Schedule 7.7 RBF has, and following the Closing, Buyer will have, good and marketable title to all of the items of tangible personal property which are included in the Stations Assets (other than those subject to lease) and, except as set forth in Schedule 7.7, all of which will be paid at or prior to Closing, none of such Stations Assets is, or at the Closing will be, subject to any security interest, mortgage, pledge, lease, license, lien, encumbrance, title defect or other charge, except for liens for taxes not yet due and payable, and except for the Assumed Liabilities ("Permitted Encumbrances"). The properties listed in Schedule 7.7, along with those properties subject to lease and included among the Contracts, constitute all material tangible personal property necessary to operate the Stations as the same are now being operated. Except as set forth in Schedule 7.7, all items of tangible personal property included in the Stations' Assets are in good operating condition and repair (ordinary wear and tear excepted), are free from all material defect and damage, are suitable for the purposes for which they are now being used, and have been properly maintained by Seller in a manner consistent with generally accepted standards of good engineering practice. 12 13 7.8 Real Property. 7.8.1 Seller owns no real property. Schedule 7.8 hereto contains a complete and accurate list and description of all real property (including without limitation, real property relating to the towers, transmitters, studio sites and offices of the Stations) leased by RBF and used by RBF in connection with the operations of the Stations (the "Leased Real Estate"). 7.8.2 RBF enjoys quiet possession of all Leased Real Estate. There are no present disputes or claims with respect to offsets or defenses by any party against the other under any of the Contracts relating to the Leased Real Estate. Seller has delivered to Buyer true and complete copies of all Contracts relating to the Leased Real Estate. Except as set forth in Schedule 7.9 hereto, the assignment of the Contracts relating to the Leased Real Estate to Buyer will not permit the other party to accelerate the rent, cause the terms thereof to be renegotiated or constitute a default thereunder, and will not require the consent of any such party to the assignment thereof to Buyer. 7.8.3 Except as described in Schedule 7.8, to the best of Seller's knowledge none of the buildings, structures, improvements or fixtures constructed on any Leased Real Estate, in connection with the operation of the Stations, including, but not limited to, all towers, guy wires and guy anchors and ground radials, encroach upon adjoining real property, and all such buildings, structures, improvements and fixtures are constructed and are operated and used in conformance with all "set back" lines, easements, covenants, restrictions and all applicable building, fire, zoning, health and safety laws and codes. To the best of Seller's knowledge, no utility lines serving such Leased Real Estate pass over the lands of a third party except where appropriate easements have been obtained. To the best of Seller's knowledge, except as described in Schedule 7.8, all buildings, structures, towers, antennae, improvements and fixtures situated on the Leased Real Estate are in good and technically sound operating condition, ordinary wear and tear excepted, have no latent structural mechanical or other defects of material significance, are reasonably suitable for the purposes for which they are being used and each has adequate rights of ingress and egress, utility service for water and sewer, telephone, electric and/or gas, and sanitary service for the conduct of the business and operations of the Stations as presently conducted. There is no pending or, to the best knowledge of Seller, threatened condemnation or other legal proceeding or action of any kind relating to such real property and/or title thereto. 7.9 Contracts. Schedule 7.9 lists all Contracts to which Seller is a party, or which are binding on Seller, as of the date of this Agreement, except for contracts which are not to be assumed by or assigned to Buyer. Those Contracts listed on Schedule 7.9, if any, requiring the consent of a third party to assignment are identified by an asterisk in the left margin of Schedule 7.9. Those Contracts, if any, that Seller and Buyer have agreed are material to the operation of the Stations Assets and the valid assignment of which and receipt by Buyer of consents thereto (along with appropriate estoppel certificates for the leases related to the Leased Real Estate) is a condition to the consummation of the transactions contemplated hereby (the "Fundamental Contracts") are identified by an "F" in the left margin of Schedule 7.9. 13 14 7.10 Status of Contracts, etc. Seller has delivered to Buyer true and complete copies of all material written Contracts and true and complete memoranda of all material oral Contracts, including any and all amendments and other modifications thereto. All of such material Contracts are in full force and effect and are valid, binding and enforceable in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. Seller has complied in all respects with all material Contracts and is not in default beyond any applicable grace periods under any thereof and, to the best of Seller's knowledge, no other contracting party is in default under any thereof. 7.11 Environmental. To the best of Seller's knowledge, except as set forth in Schedule 7.11, Seller has complied with all federal, state and local environmental laws, rules and regulations as in effect on the date hereof applicable to each of the Stations and its operations, including but not limited to the FCC's guidelines regarding RF radiation. No hazardous or toxic waste, substance, material or pollutant (as those or similar terms are defined under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. sections 9601 et seq., Toxic Substances Control Act. 15 U. S. C. sections 2601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. sections 6901 et seq. or any other applicable federal, state and local environmental law, statute, ordinance, order, judgment rule or regulation relating to the environment or the protection of human health ("Environmental Laws")), including but not limited to, any asbestos or asbestos-related products, oils, or petroleum-derived compounds, CFCs, PCBs, or underground storage tanks (collectively Hazardous Materials"), have been released, emitted or discharged by Seller or, to the best of Seller's knowledge, any predecessor of Seller, in violation of applicable laws or regulations, or, to the best of Seller's knowledge, are currently located in quantities in violation of applicable laws and regulations in, on, or under or about the real property on which the Stations Assets are situated, including without limitation the transmitter sites, or contained in the tangible personal property included in the Stations Assets which were placed there by Seller or any predecessor of Seller. To the best of Seller's knowledge, the Stations Assets and RBF's use thereof are not in violation of any Environmental Laws or any occupational, safety and health or other applicable law now in effect. With respect to Buyer, Seller shall be as of the Closing Date and thereafter solely responsible for all environmental liabilities, of whatsoever kind and nature, arising out of or attributable to the operation or ownership of the Stations Assets prior to the Closing Date. 7.12 Intellectual Property. Schedule 7.12 hereto is a true and complete list of all material Intellectual Property applied for, registered or issued to, and owned by RBF or under which RBF is a licensee and which is used in the conduct of Seller's business and operations, except for computer software licensed for use by the Stations. Except as set forth on Schedule 7.12, to the best of Seller's knowledge: (a) RBF's right, title and interest in the Intellectual Property as owner or licensee, as applicable, is free and clear of all liens, claims, encumbrances, rights, or equities whatsoever of any third party and, to the extent any of the Intellectual Property is licensed to RBF, such interest is valid and uncontested by the licensor thereof or any third party; (b) all computer software located at the Stations' facilities or used in the Stations' business or operations is properly licensed to RBF, and all of RBF's uses of such computer software are authorized under such licenses; (c) all of RBF's right, title and interest in and to the Intellectual Property and computer software (to the extent transferable without adversely affecting Seller's rights thereto) shall be assignable to Buyer at Closing, and upon such assignment, Buyer shall 14 15 receive sufficient right, title, and interest in and to all tangible and intangible property rights existing in the Intellectual Property; and (d) there are no infringements or unlawful use of such Intellectual Property by RBF in connection with RBF's business or operations. 7.13 Financial Statements. Schedule 7.13 lists the income statements of RBF relating to the Stations which have been supplied to Buyer (collectively, the "Financial Statements"). The Financial Statements were prepared in accordance with the books and records of RBF and in accordance with generally accepted accounting principles consistently applied and maintained throughout the periods indicated except for the absence of footnotes and customary year-end adjustments and as has been disclosed in Schedule 7.13. The Financial Statements present fairly the results of operations of the Stations for the periods indicated. None of the Financial Statements understates the true costs and expenses of conducting the business and operations of the Stations, fails to disclose any material liability, or inflates (or will inflate) the revenues of the Stations for any reason. 7.14 Personnel Information. 7.14.1 Seller has provided to Buyer a complete list of all persons employed at the Stations, including date of hire, a description of material compensation arrangements (other than employee benefit plans set forth in Schedule 7.17) and a list of other material terms of any and all agreements affecting such persons and their employment by RBF. Seller has received no notice that, and Seller is not aware of, any individual employee who shall or is likely to terminate his or her employment relationship with the Stations upon the execution of this Agreement or after the Closing. 7.14.2 Seller, with respect to the Stations, is not a party to any contract or agreement with any labor organization, nor has Seller agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any employees of RBF at the Stations. Seller has no knowledge of any organization effort currently being made or threatened by or on behalf of any labor union with respect to employees of RBF at the Stations. 7.14.3 To the best of Seller's knowledge, except as disclosed in Schedule 7.14, Seller, with respect to the Stations, has complied in all material respects with all laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, equal employment opportunity and payment and withholding of taxes. 7.15 Litigation. Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree relating to the conduct of the business or the operation of the Stations or any of the Stations Assets, and there is no litigation, administrative action, arbitration, proceeding or investigation pending or, to the best knowledge of Seller, threatened against Seller with respect to, related to or in connection with the operation of the Stations in any federal, state or local court, or before any administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Stations 15 16 Licenses), or before any other tribunal duly authorized to resolve disputes. In particular, but without limiting the generality of the foregoing, to the best knowledge of Seller, there are no applications, complaints or proceedings pending or threatened before the FCC or any other governmental organization with respect to the business or operations of the Stations. 7.16 Compliance With Laws. To the best of Seller's knowledge, (i) Seller is not in material violation of, nor has Seller received any notice asserting any non-compliance by it in connection with the operation of the Stations or use or ownership of any of the Stations Assets with, any applicable statute, rule or regulation, whether federal, state or local; (ii) Seller is not in default with respect to any judgment, order, injunction or decree of any court administrative agency or other governmental authority or any other tribunal duly authorized to resolve disputes which relates to the transactions contemplated hereby; and (iii) Seller is in material compliance with all laws, regulations and governmental orders applicable to the conduct of the business and operations of the Stations. 7.17 Employee Benefit Plans. Schedule 7.17 contains a true and complete list as of the date of this Agreement of all employee benefit plans applicable to the employees of RBF employed at the Stations, and a brief description thereof. Seller does not maintain any other employee benefit plan as the term is defined in Section 3 of the Employee Retirement Income Security Act of 1974, as amended, applicable to the employees of RBF employed at the Stations. 7.18 Commissions or Finder's Fees. Neither Seller nor any person or entity acting on behalf of Seller has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity. 7.19 Conduct of Business in Ordinary Course: Adverse Changes. Since the date Seller acquired the Stations, (a) Seller has conducted the business of the Stations only in the ordinary course consistent with Seller's past practices; (b) there has not been any material adverse change in the physical condition of the tangible assets of the Stations, nor any damage, destruction, or loss affecting any of the Stations Assets; and (c) Seller has not created, assumed, or suffered any mortgage, pledge, lien or encumbrance on any of the Stations Assets which will not be satisfied at Closing. 7.20 Instruments of Conveyance: Good Title. The instruments to be executed by Seller and delivered to Buyer at the Closing, conveying the Stations Assets to Buyer, will transfer good and marketable title to the Assets free and clear of all liabilities (absolute or contingent), security interests, mortgages, pledges, liens, obligations and encumbrances, except for Permitted Encumbrances and except as set forth in Schedule 7.7 and Schedule 7.8 hereto and those obligations referred to in the first sentence of Section 2.1 hereof. 7.21 Undisclosed Liabilities. Excepting only for the Assumed Liabilities, no liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, relating to Seller, the Stations or the Stations Assets exists which could, after discharging any indebtedness therefor at or prior to the Closing, result in any form of transferee liability against Buyer or subject the Stations Assets to any lien, encumbrance, claim, charge, security interest or 16 17 imposition whatsoever or otherwise affect the full, free and unencumbered use of the Stations Assets by Buyer. 7.22 Termination of Prior Contract. On March 20, 2000, Seller sent written notice to The Guyann Corporation of Seller's decision to terminate the Asset Purchase Agreement between it and Seller, dated March 30, 1999, pursuant to Section 16.1.6 thereof for reason that the Closing thereunder was not consummated on or before September 15, 1999. 7.23 Full Disclosure. No representation or warranty made by Seller contained in this Agreement nor any certificate, document or other instrument furnished or to be furnished by Seller pursuant hereto contains or will contain any untrue statement of a material fact, or omits or shall omit to state any material fact required to make any statement contained herein or therein not misleading. To the best of Seller's knowledge, there is no impending or contemplated event or occurrence that would cause any of the foregoing representations not to be true and complete on the date of such event or occurrence as if made on that date. Whenever in this Article 7 a warranty or representation is qualified by a word or phrase referring to the best of Seller's knowledge (or similar terms), it shall mean to the actual knowledge of Terry S. Jacobs, William L. Stakelin, David Remund (Seller's engineer), and Jay Mlazgar (Seller's General Manager), after having made due inquiry of the employees, representatives and agents of Seller who would be expected to have knowledge of the matter, and with respect to the condition of any Stations Assets, records or other object, after having inspected it. ARTICLE 8 COVENANTS OF BUYER 8.1 Closing. Subject to Article 11 hereof, on the Closing Date, Buyer shall purchase the Stations Assets from Seller as provided in Article I hereof and shall assume the Assumed Liabilities of Seller as provided in Article 2 hereof. 8.2 Notification. Buyer will provide Seller prompt written notice of any change in any of the information contained in the representations and warranties made in Article 6. Buyer shall also notify Seller of any litigation, arbitration or administrative proceeding pending or, to its knowledge, threatened against Buyer which challenges the transactions contemplated hereby. 8.3 No Inconsistent Action. Buyer shall not take any action which is materially inconsistent with its obligations under this Agreement or take any action which would cause any representation or warranty of Buyer contained herein to be or become false or invalid or which could hinder or delay receipt of FCC Consent or the consummation of the transactions contemplated by this Agreement. 8.4 Removal of Impediments. Should any fact relating to Buyer which would cause the FCC to deny its consent to the transactions contemplated by this Agreement come to Buyer's attention, Buyer will promptly notify Seller thereof and will use its reasonable efforts to take such steps as may be necessary to remove any such impediment to the FCC's consent to the 17 18 transactions contemplated by this Agreement; provided, however, nothing in this Section 8.4 shall require Buyer to dispose of or commit to dispose of any existing ownership interest of Buyer in any other radio broadcast station. ARTICLE 9 COVENANTS OF SELLER 9.1 Pre-Closing Covenants. Seller covenants and agrees with respect to the Stations that, between the date hereof and the Closing Date or the earlier termination of this Agreement in accordance with its terms, except as expressly permitted by this Agreement or required by or provided otherwise by the Time Brokerage Agreement, or with the prior written consent of Buyer, Seller shall act in accordance with the following: 9.1.1 Seller shall conduct the business and operations of the Stations in the ordinary and prudent course of business consistent with past practice and with the intent of preserving the ongoing operations and assets of the Stations, including but not limited to maintaining the independent identity of the Stations. 9.1.2 Seller shall use its reasonable best efforts to: (i) preserve the operation of the Stations intact; (ii) preserve the business of the Stations' advertisers, customers, suppliers and others having business relations with the Stations; and (iii) continue to conduct financial operations of the Stations, including without limitation, their credit and collection and pricing policies and practices, all in the ordinary course of business consistent with past practices, and, without limiting the generality of the foregoing, Seller shall not discount its accounts receivable, accelerate its efforts to collect accounts receivable or take any other action or use any other collection method not regularly taken or used by it in the ordinary course of business prior to the date of this Agreement. 9.1.3 Seller shall operate the Stations in all respects in accordance with FCC rules and regulations and the Stations Licenses and with all other laws, regulations, rules and orders, and shall not cause or permit by any act, or failure to act, any of the Stations Licenses to expire, be surrendered, adversely modified, or otherwise terminated, or the FCC to institute any proceedings for the suspension, revocation or adverse modification of any of the Stations Licenses, or fail to prosecute with due diligence any pending applications to the FCC. 9.1.4 Should any fact relating to Seller which would cause the FCC to deny its consent to the transactions contemplated by this Agreement come to Seller's attention, Seller will promptly notify Buyer thereof and will use its reasonable best efforts to take such steps as may be necessary to remove any such impediment to the FCC's consent to the transactions contemplated by this Agreement. 9.1.5 Except for changes or actions in the ordinary course of business consistent with past practices, Seller shall not: (a) sell broadcast time on a prepaid basis (other than in the course of existing credit practices); (b) except as set forth on Schedule 7.14, or as required by applicable law or written agreements currently in effect, grant or agree to grant any general increases in the rates of salaries or compensation payable to employees of the Stations (provided 18 19 that no such increase to any employee shall exceed the amount budgeted therefor in RBF's 2000 budgets) unless such increase is as a result of increased commissions payable to employees on account of increased advertising sales; (c) except as required by written agreements currently in effect, grant or agree to grant any specific bonus or increase in compensation to any executive management employee of the Stations (provided that no such increase to any employee shall exceed the amount budgeted therefor in RBF's 2000 budgets) unless such bonus or increase is as a result of increased commissions payable to employees on account of increased advertising sales or is used as an incentive for employees to remain with the Stations up to the Closing; (d) provide for any new pension, retirement or other employment benefits for employees of the Stations or any increases in any existing benefits, (e) modify, change or terminate any Contract other than in the ordinary course of business; or (f) change the advertising rates in effect as of the date hereof other than in the ordinary course of business. 9.1.6 Seller shall give or cause the Stations to give Buyer and Buyer's counsel, accountants, engineers and other representatives, at Buyer's reasonable request and upon reasonable notice, full and reasonable access during normal business hours to all of Seller's personnel, properties, books, Contracts, reports and records (including, without limitation, financial information and tax returns relating to the Stations, and environmental audits in existence with respect to the Stations Assets), real estate, buildings and equipment relating to the Stations and to the Stations' employees, and to furnish Buyer with information and copies of all documents and agreements relating to the Stations and the operation thereof (including but not limited to financial and operating data and other information concerning the financial condition, results of operations and business of the Stations, and any engineering materials in Seller's possession regarding the operations of the Stations and the ability, if any, of the Stations' signals to be upgraded) that Buyer may reasonably request. The rights of Buyer under this Section 9.1.6 shall not be exercised in such a manner as to interfere unreasonably with the business of the Stations. 9.1.7 Without limiting Buyer's rights with respect to Fundamental Contracts, Seller shall use its reasonable best efforts to obtain any third party consents necessary for the assignment of any Contract (which shall not require any payment to any such third party except for such amounts contemplated by the Contract to be assigned, and any amount then owing by Seller to such third party). 9.2 Notification. Seller will provide Buyer prompt written notice of any change in any of the information contained in the representations and warranties made in Article 7 or any Schedule. Seller agrees to notify Buyer of any litigation, arbitration or administrative proceeding pending or, to the best of its knowledge, threatened, which challenges the transactions contemplated hereby. Subject to the terms of the Time Brokerage Agreement, Seller shall promptly notify Buyer if any of the normal broadcast transmissions of any Station are interrupted, interfered with or in any way impaired, and shall provide Buyer with prompt written notice of the problem and the measures being taken to correct such problem. 9.3 No Inconsistent Action. Seller shall not take any action which is materially inconsistent with its obligations under this Agreement nor take any action which would cause any representation or warranty of Seller contained herein to be or become false or invalid 19 20 or which could hinder or delay receipt of FCC Consent or the consummation of the transactions contemplated by this Agreement. 9.4 Closing. Subject to Article 12 hereof, on the Closing Date, Seller shall transfer, convey, assign and deliver to Buyer the Stations Assets and the Assumed Liabilities as provided in Articles 1 and 2 and Section 7.20 of this Agreement. 9.5 Other Items. Until the Closing Date or the earlier termination of this Agreement in accordance with the terms hereof, except with Buyer's prior written consent or pursuant to the terms of the Time Brokerage Agreement, Seller shall not: (a) waive or release any right relating to the business or operations of the Stations, except for adjustments or settlements made in the ordinary course of business consistent with its past practices; (b) transfer or grant any rights under any of the Stations Licenses; (c) enter into any commitment for capital expenditures for which Buyer would become liable after the Closing Date; (d) introduce any material changes in the broadcast hours or in the format of the Stations or any other material change in the Station's programming policies; (e) change the call letters of any of the Stations; and (f) enter into any transaction or make or enter into any contract or commitment with respect to any of the Stations or the Stations Assets which by reason of its size or otherwise is not in the ordinary course of business consistent with past practices. 9.6 Exclusivity. Seller agrees that, commencing on the effective date hereof, subject to limitations of applicable law and the effective termination of an Asset Purchase Agreement between Seller and The Guyann Corporation, dated March 30, 1999, through the Closing or earlier termination of this Agreement, Buyer shall have the exclusive right to consummate the transactions contemplated herein, and during such exclusive period, Seller agrees that neither Seller, nor any director, officer, employee or other representative of Seller: (a) will initiate, solicit or encourage, directly or indirectly, any inquiries, or the making or implementation of any proposal or offer with respect to a merger, acquisition, consolidation or similar transaction involving, or any purchase of, all or any portion of the Stations Assets (any such inquiry, proposal or offer being hereinafter referred to as an "Acquisition Proposal" and any such transaction being hereinafter referred to as an "Acquisition"); (b) will engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any person relating to an Acquisition Proposal, or otherwise facilitate any effort or attempt to make or implement an Acquisition Proposal; or (c) will continue any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any Acquisition Proposal or Acquisition and will take the necessary steps to inform the individuals or entities referred to above of the obligations undertaken by them in this Section 9.6. Notwithstanding the foregoing, in the event that Buyer defaults in any material respect in the observance or in the due and timely performance of any of its covenant or agreements herein contained and such default shall not be cured within ten (10) business days of notice of default served by Seller, Seller's obligations under this Section 9.6 shall be null and void. 20 21 ARTICLE 10 JOINT COVENANTS Buyer and Seller each covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 10.1 Confidentiality. Subject to the requirements of applicable law, Buyer and Seller shall each keep confidential all information obtained by it with respect to the other parties hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions contemplated by this Agreement, and if the transactions contemplated hereby are not consummated for any reason, each shall return to each other party hereto, without retaining a copy thereof, any schedules, documents or other written information obtained from such other party in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to keep confidential or return any information which: (a) is known or available through other lawful sources, not bound by a confidentiality agreement with the disclosing party; (b) is or becomes publicly known through no fault of the receiving party or its agents; (c) is required to be disclosed pursuant to an order, request or the rules of a judicial or governmental authority (provided the disclosing party is given reasonable prior notice of the order or request and the purpose of the disclosure); or (d) is developed by the receiving party independently of the disclosure by the disclosing party. Notwithstanding anything to the contrary herein, either party may in accordance with its legal obligations, including but not limited to filings permitted or required by the Securities Act of 1933 and the Securities and Exchange Act of 1934, make such press releases and other public statements and announcements as it deems necessary and appropriate in connection with this Agreement and the transactions contemplated hereby; provided, however, that prior to making any such unilateral press release or announcement, such party shall first communicate the same in writing to the other. 10.2 Cooperation. Subject to express limitations contained elsewhere herein, including without limitation Sections 8.4 and 9.1.7 hereof, Buyer and Seller agree to cooperate fully with one another in taking any reasonable actions (including without limitation, reasonable actions to obtain the required consent of any governmental instrumentality or any third party) necessary or helpful to accomplish the transactions contemplated by this Agreement, including but not limited to the satisfaction of any condition to closing set forth herein; provided, that neither Buyer nor Seller shall be required to waive any material right or consent to any materially adverse provision or condition to obtain any such consent. 10.3 Control of Stations. Buyer shall not, directly or indirectly, control, supervise or direct the operations of the Stations prior to the Closing. Except as provided in the Time Brokerage Agreement, such operations, including complete control and supervision of all Station programs, employees and policies, shall be the sole responsibility of Seller. 10.4 Consents to Assignment. To the extent that any Contract identified in the Schedules is not capable of being sold, assigned, transferred, delivered or subleased without the waiver or consent of any third person (including a government or governmental unit), or if such sale, assignment, transfer, delivery or sublease or attempted sale, assignment, transfer, delivery 21 22 or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant hereto shall not constitute a sale, assignment, transfer, delivery or sublease or an attempted sale, assignment, offer, delivery or sublease thereof. Subject to the provisions of Section 11.5, in those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Closing relating to the assignment to Buyer of the Contracts, this Agreement and any assignment executed pursuant hereto, to the extent permitted by law, shall constitute an equitable assignment by Seller to Buyer of all of Seller's rights, benefits, title and interest in and to the Contracts, and where necessary or appropriate, Buyer shall be deemed to be Seller's agent for the purpose of completing, fulfilling and discharging all of Seller's rights and liabilities arising after the Closing Date under such Contracts. Seller shall use its reasonable best efforts to provide Buyer with the financial and business benefits of such Contracts (including, without limitation, permitting Buyer to enforce any rights of Seller arising under such Contracts), and Buyer shall, to the extent Buyer is provided with the benefits of such Contracts, assume, perform and in due course pay and discharge all debts, obligations and liabilities of Seller under such Contracts to the extent that Buyer was to assume those obligations pursuant to the terms hereof; provided, that the foregoing shall not affect or modify the parties' obligations with respect to the Assumed Liabilities and Retained Liabilities as provided in Article 2 hereof. 10.5 Filings. In addition to the covenants of the parties set forth in Article 5 hereto, as promptly as practicable after the execution of this Agreement, Buyer and Seller shall use their reasonable best efforts to obtain, and to cooperate with each other in obtaining, all authorizations, consents, orders and approvals of any governmental authority that may be or become necessary in connection with the consummation of the transactions contemplated by this Agreement, and to take all reasonable actions to avoid the entry of any order or decree by any governmental authority prohibiting the consummation of the transactions contemplated hereby, including without limitation, any reports or notifications that may be required to be filed with the FCC, and each shall furnish to one another all such information in its possession as may be necessary for the completion of the reports or notifications to be filed by the other. 10.6 Bulk Sales Laws. Buyer hereby waives compliance by Seller with the provisions of the "bulk sales" or similar laws of any state. Seller agrees to indemnify Buyer and hold it harmless from any and all loss, cost, damage and expense (including but not limited to, reasonable attorney's fees) sustained by Buyer as a result of any failure of Seller to comply with any "bulk sales" or similar laws. 10.7 Employee Matters. RBF shall be responsible for the payment of all compensation and accrued employee benefits payable to all employees up to the Commencement Date of the Time Brokerage Agreement. RBF acknowledges and agrees that it, and not Buyer, is and shall be solely responsible for any and all insurance, supplemental pension, deferred compensation, retirement and any other benefits, and related costs, premiums and claims, due, to become due, committed or otherwise promised to any person who, as of the Commencement Date of the Time Brokerage Agreement, is a retiree, former employee, or current employee of RBF, relating to the period up to the Commencement Date of the Time Brokerage Agreement. Buyer, as a purchaser of the Stations Assets, shall assume no employee benefit plans, programs or practices, whether or not set forth in writing, maintained by Seller at any time. Between the date of this Agreement 22 23 and the Commencement Date of the Time Brokerage Agreement, Seller shall use reasonable efforts to retain those employees of the Station who Buyer has notified in writing that it intends to hire. RBF, or any of its Affiliates, may employ any person who rejects Buyer's offer of employment. ARTICLE 11 CONDITIONS OF CLOSING BY BUYER The obligations of Buyer hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 11.1 Representations, Warranties and Covenants. 11.1.1 All representations and warranties of Seller made in this Agreement or in any Exhibit, Schedule or document delivered pursuant hereto, shall be true and complete in all material respects as of the date hereof and on and as of the Closing Date as if made on and as of that date, except for changes (a) expressly permitted or contemplated by the terms of this Agreement or the Time Brokerage Agreement; (b) resulting from the errors, acts or omissions of Buyer under the Time Brokerage Agreement, or (c) in the ordinary course of business which are not, either individually or in the aggregate, material and adverse. 11.1.2 All of the terms, covenants and conditions set forth in this Agreement to be complied with and performed by Seller on or prior to the Closing Date shall have been complied with or performed in all material respects. 11.1.3 Buyer shall have received a certificate, dated as of the Closing Date, from Seller, executed by an officer of Seller to the effect that: (a) the representations and warranties of Seller contained in this Agreement are true and complete in all material respects on and as of the Closing Date as if made on and as of that date, except for changes (i) expressly permitted or contemplated by the terms of this Agreement or the Time Brokerage Agreement; (ii) resulting from the errors, acts or omissions of Buyer under the Time Brokerage Agreement, or (iii) in the ordinary course of business which are not, either individually or in the aggregate, material and adverse; and (b) Seller has complied with or performed in all material respects all terms, covenants and conditions set forth in this Agreement to be complied with or performed by it on or prior to the Closing Date. 11.2 Governmental Consents. The FCC Final Approval shall have been obtained. 11.3 Governmental Authorizations. RLF shall be the holder of the Stations Licenses and there shall not have been any modification of any of such Licenses which has a material adverse effect on any of the Stations or the operations thereof. No application shall be pending for the renewal of any of the Stations Licenses. No proceeding shall be pending which seeks, or the effect of which reasonably could be, to revoke, cancel, fail to renew, suspend or adversely modify any of the Stations Licenses. 23 24 11.4 Adverse Proceedings. No suit, action, claim or governmental proceeding shall be pending or threatened in writing against, and no order, decree or judgment of any court, agency or other governmental authority shall have been rendered (and remain in effect) against, any party hereto which: (a) would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms; (b) questions the validity or legality of any transaction contemplated hereby; (c) seeks to enjoin any transaction contemplated hereby; (d) seeks material damages on account of the consummation of any transaction contemplated hereby; or (e) is a petition of bankruptcy by or against Seller, an assignment by Seller for the benefit of its creditors, or other similar proceeding. 11.5 Third-Party Consents. All Fundamental Contracts shall be in full force and effect on the Closing Date, and Seller shall have obtained and shall have delivered to Buyer all appropriate third-party consents in form and substance acceptable to Buyer (including estoppel certificates for the leases related to the Leased Real Estate) in connection with the assignment of the Fundamental Contracts to Buyer. 11.6 Closing Documents. Seller shall have delivered or caused to be delivered to Buyer, on the Closing Date, all bills of sale, general warranty deeds, endorsements, assignments and other instruments of conveyance reasonably satisfactory in form and substance to Buyer, effecting the sale, transfer, assignment and conveyance of the Stations Assets to Buyer, including, without limitation, each of the documents required to be delivered by it pursuant to Article 14. 11.7 No Adverse Change in Physical Condition of Tangible Assets. No material adverse change in physical condition of any of the tangible assets included in the Station Assets, which change is caused by or arises out of any breach by Seller of any of its representations, warranties, covenants or agreements hereunder shall have occurred or be reasonably likely to occur. 11.8 Phase One Environmental Audit. Buyer shall have received the Phase I environmental site assessments received by Seller related to the Stations during calendar year 1998 (copies of which are included in Schedule 7.11), which assessments shall be recertified to Buyer in all material respects by the environmental consultants who prepared the assessments, the cost for such recertification to be paid by Buyer. ARTICLE 12 CONDITIONS OF CLOSING BY SELLER The obligations of Seller hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 12.1 Representations, Warranties and Covenants. 12.1.1 All representations and warranties of Buyer made in this Agreement or in any Exhibit, Schedule or document delivered pursuant hereto, shall be true and complete in all material respects as of the date hereof and on and as of the Closing Date as if made on and as of 24 25 that date, except for changes expressly permitted or contemplated by the terms of this Agreement. 12.1.2 All the terms, covenants and conditions set forth in this Agreement to be complied with and performed by Buyer on or prior to the Closing Date shall have been complied with or performed in all material respects. 12.1.3 Seller shall have received a certificate, dated as of the Closing Date, executed by an officer of Buyer, to the effect that: (a) the representations and warranties of Buyer contained in this Agreement are true and complete in all material respects on and as of the Closing Date as if made on and as of that date; and (b) Buyer has complied with or performed in all material respects all terms, covenants and conditions to be complied with or performed by it on or prior to the Closing Date. 12.2 Governmental Consents. The FCC Initial Approval shall have been obtained. 12.3 Adverse Proceedings. No suit, action, claim or governmental proceeding shall be pending or threatened in writing against, and no other decree or judgment of any court, agency or other governmental authority shall have been rendered (and remain in effect) against, any party hereto which: (a) would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms; (b) questions the validity or legality of any transaction contemplated hereby; (c) seeks to enjoin any transaction contemplated hereby; or (d) seeks material damages on account of the consummation of any transaction contemplated hereby. 12.4 Closing Documents. Buyer shall have delivered or caused to be delivered to Seller, on the Closing Date, the Purchase Price and each of the documents required to be delivered by it pursuant to Article 14. ARTICLE 13 TRANSFER TAXES: FEES AND EXPENSES 13.1 Expenses. Except as set forth in Section 13.2 hereof or otherwise expressly set forth in this Agreement, each party hereto shall be solely responsible for all costs and expenses incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement including, but not limited to, the costs and expenses incurred pursuant to Article 5 hereof and the fees and disbursements of counsel and other advisors. 13.2 Specific Charges. All costs of transferring the Stations Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be shall be paid by Seller. Each party shall pay any filing or grant fees imposed upon it by any governmental authority the consent of which or the filing with which is required for the consummation of the transactions contemplated hereby, with the exception of filing fees of the FCC which shall be shared equally by Buyer and Seller. 25 26 ARTICLE 14 DOCUMENTS TO BE DELIVERED AT CLOSING 14.1 Seller's Documents. At the Closing, Seller shall deliver or cause to be delivered to Buyer the following: 14.1.1 Certified resolutions of the directors and sole shareholder of Seller approving the execution and delivery of this Agreement and authorizing the consummation of the transactions contemplated hereby; 14.1.2 A certificate of Seller, dated the Closing Date, in the form described in Section 11.1.3; 14.1.3 Governmental certificates showing that (a) each of RBF and RLF is duly organized, validly existing and in good standing in the State of Delaware, (b) RBF is qualified to transact business and in good standing in the State of Arizona; and (c) each of RBF and RLF has filed all returns, paid all taxes due thereon and is currently subject to no assessment, each certified as of a date not more than thirty (30) days before the Closing Date; 14.1.4 Such certificates, bills of sale, general warranty deeds, assignments, documents of title and other instruments of conveyance, assignment and transfer (including without limitation any necessary consents to conveyance, assignment or transfer required to be delivered hereunder), and lien releases, all in form satisfactory to Buyer and Buyer's counsel, as shall be effective to vest in Buyer good and marketable title in and to the Stations Assets, free, clear and unencumbered except for Permitted Encumbrances, if any, as set forth on Schedule 7.7 and Schedule 7.8. 14.1.5 An Assignment and Assumption Agreement in the form of Exhibit E effectuating the assignment and assumption of the Assumed Liabilities (the "Assignment and Assumption Agreement"); 14.1.6 The Indemnification Escrow Agreement; 14.1.7 At the time and place of Closing, originals and all copies of all program, operations, transmission or maintenance logs and all other records required to be maintained by the FCC with respect to the Stations, including the public files of the Stations, shall be left at the Stations and thereby delivered to Buyer; 14.1.8 A written opinion of Seller's corporate counsel in the form attached as Exhibit F, dated as of the Closing Date; 14.1.9 A written opinion of Seller's FCC counsel confirming the matters set forth in Exhibit G, dated as of the Closing Date; and 26 27 14.1.10 Such additional information, materials, agreements, documents and instruments as Buyer and its counsel may reasonably request in order to consummate the Closing. 14.2 Buyer's Documents. At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: 14.2.1 Certified resolutions of the directors of Buyer approving the execution and delivery of this Agreement and authorizing the consummation of the transactions contemplated hereby; 14.2.2 A certificate of Buyer, dated the Closing Date, in the form described in Section 12.1.3; 14.2.3 The Assignment and Assumption Agreement; 14.2.4 The Indemnification Escrow Agreement; 14.2.5 A written opinion of Buyer's counsel in the form attached as Exhibit H, dated as of the Closing Date; 14.2.6 The Purchase Price in accordance with Section 3. 1 hereof; and 14.2.7 Such additional information, materials, agreement, documents and instruments as Seller and its counsel may reasonably request in order to consummate the Closing. ARTICLE 15 SURVIVAL, INDEMNIFICATION. ETC. 15.1 Survival of Representations, Etc. It is the express intention and agreement of the parties to this Agreement that all covenants and agreements (together, "Agreements") and all representations and warranties (together, "Warranties") made by Buyer and Seller in this Agreement shall survive the Closing (regardless of any knowledge, investigation, audit or inspection at any time made by or on behalf of Buyer or Seller) as follows: 15.1.1 The Agreements shall survive the Closing for a period from the Closing Date equal to the statute of limitations for written contracts in Arizona. 15.1.2 The Warranties in Sections 6.2, 6.5, 7.2, the third sentence of 7.7, 7.18 and 7.20 shall survive the Closing without limitation. 15.1.3 The Warranties in Section 7.6 or otherwise relating to the federal, state, local or foreign tax obligations of Seller shall survive the Closing for the period of the applicable statute of limitations plus any extensions or waivers granted or imposed with respect thereto. 27 28 15.1.4 All other Warranties shall survive for a period of twelve (12) months from the Closing Date. 15.1.5 The right of any party to recover Damages (as defined in Section 15.2. 1) pursuant to Section 15.2 shall not be affected by the expiration of any Warranties as set forth herein, provided that notice of the existence of any Damages (but not necessarily the fixed amount of any such Damages) has been given by the indemnified party to the indemnifying party prior to such expiration. 15.1.6 Notwithstanding any provision hereof to the contrary, there shall be no contractual time limit in which Buyer or Seller may bring any action for actual fraud (a "Fraud Action"), regardless of whether such actual fraud also included a breach of any Agreement or Warranty; provided, however, that any Fraud Action must be brought within the period of the applicable statute of limitations plus any extensions or waivers granted or imposed with respect thereto. 15.2 Indemnification. 15.2.1 Seller shall defend, indemnify and hold harmless Buyer from and against any and all losses, costs, damages, liabilities and expenses, including reasonable attorneys' fees and expenses ("Damages") incurred by Buyer arising out of or related to: (a) any breach of the Warranties given or made by Seller in this Agreement; (b) any breach of the Agreements made by Seller in this Agreement; (c) the Retained Liabilities; and (d) any failure of the parties to comply with any "bulk sales" laws applicable to the transactions contemplated hereby. 15.2.2 Buyer shall defend, indemnify and hold harmless Seller from and against any and all Damages incurred by Seller arising out of or related to: (a) any breach of the Warranties given or made by Buyer in this Agreement; (b) any breach of the Agreements made by Buyer in this Agreement, (c) the Assumed Liabilities, (d) the activities of Buyer under the Time Brokerage Agreement, and (e) the operation of the Stations on and after the Closing Date. 15.3 Procedures: Third Party and Direct Indemnification Claims. The indemnified party agrees to give written notice, within thirty (30) days following its discovery thereof, to the indemnifying party of any demand, suit, claim or assertion of liability by third parties or other circumstances that could give rise to an indemnification obligation hereunder against the indemnifying party (hereinafter collectively "Claims," and individually a "Claim"), it being understood that the failure to give such notice shall not affect the indemnified party's right to indemnification and the indemnifying party's obligation to indemnify as set forth in this Agreement, unless the indemnifying party's ability to contest, defend or settle with respect to such Claim is thereby demonstrably and materially prejudiced. The parties also agree that any claim for Damages arising directly between the parties relating to this Agreement may be brought at any time within the applicable survival period specified in Section 15. 1, and that the only notice required with respect thereto shall be as specified in Section 15.1.5. 28 29 The obligations and liabilities of the parties hereto with respect to their respective indemnities pursuant to Section 15.2 resulting from any Claim shall be subject to the following additional terms and conditions: 15.3.1 The indemnifying party shall have the right to undertake, by counsel or other representatives of its own choosing, the defense or opposition to such Claim. 15.3.2 In the event that the indemnifying party shall elect not to undertake such defense or opposition, or within (10) days after notice of any such Claim from the indemnified party shall fail to defend or oppose, the indemnified party (upon further written notice to the indemnifying party) shall have the right to undertake the defense, opposition, compromise or settlement of such Claim, by counsel or other representatives of its own choosing, on behalf of and for the account and risk of the indemnifying party (subject to the right of the indemnifying party to assume defense of or opposition to such Claim at any time prior to settlement, compromise or final determination thereof). 15.3.3 Anything in this Section 15.3 to the contrary notwithstanding: (a) the indemnified party shall have the right, at its own cost and expense, to participate in the defense, opposition, compromise or settlement of the Claim; (b) the indemnifying party shall not, without the indemnified party's written consent, settle or compromise any Claim or consent to entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such Claim, and (c) in the event that the indemnifying party undertakes defense of or opposition to any Claim the indemnified party, by counsel or other representative of its own choosing and at its sole cost and expense, shall have the right to consult with the indemnifying party and its counsel or other representatives concerning such Claim and the indemnifying party and the indemnified party, and their respective counsel or other representatives, shall cooperate in good faith with respect to such Claim. 15.3.4 No undertaking of defense or opposition to a Claim shall be construed as an acknowledgment by such party that it is liable to the party claiming indemnification with respect to the Claim at issue or other similar Claims. 15.3.5 No indemnified party shall be entitled to assert a claim for indemnification under Section 15.2.1(a) or Section 15.2.2(a) unless and then only to the extent that the aggregate damages for all such claims exceed $25,000, and the maximum liability of either party for indemnification under such Subsections shall be $1,000,000, except with respect to claims relating to title, taxes, License revocation, and environmental matters (which shall not be so limited) or as otherwise set forth in Sections 16.2, 16.3 and 16.4 hereof. 29 30 ARTICLE 16 TERMINATION RIGHTS 16.1 Termination. This Agreement may be terminated at any time prior to Closing as follows: 16.1.1 Upon the mutual written consent of Buyer and Seller, this Agreement may be terminated on such terms and conditions as so agreed; or 16.1.2 By written notice of Buyer to Seller if Seller breaches in any material respect any of its representations or warranties or defaults in any material respect in the observance or in the due and timely performance of any of its covenants or agreements herein contained and such breach or default shall not be cured within thirty (30) days of the date of notice of breach or default served by Buyer; or 16.1.3 By written notice of Seller to Buyer if Buyer breaches in any material respect any of its representations or warranties or defaults in any material respect in the observance or in the due and timely performance of any of its covenants or agreements herein contained and such breach or default shall not be cured within thirty (30) days of the date of notice of breach or default served by Seller; or 16.1.4 By written notice of Buyer to Seller or by Seller to Buyer if the FCC denies the FCC Application under circumstances in which Seller is not entitled to the Escrow Deposit; 16.1.5 By written notice of Buyer to Seller, or by Seller to Buyer, if any court of competent jurisdiction shall have issued an order, decree or ruling (which then remains in effect) or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, or by Buyer, if any court, legislative body or governmental or regulatory authority has taken, or is reasonably expected to take, action that would make the consummation of the transactions contemplated hereby inadvisable or undesirable as determined by Buyer in its sole discretion reasonably exercised; 16.1.6 By written notice of Buyer to Seller, or by Seller to Buyer, if the Initial Approval has not been granted on or before March 30, 2001. 16.1.7 By written notice of Buyer to Seller if it shall become apparent in both Seller's and Buyer's judgment reasonably exercised that any condition to Buyer's obligation to close as set forth in Article 11 hereof will not be satisfied on or before March 30, 2001. 16.1.8 By written notice of Buyer to Seller under the conditions set forth in Section 9.2 hereof. 16.1.9 By written notice of Buyer to Seller, or by Seller to Buyer, if the party giving such notice has terminated the Time Brokerage Agreement. 30 31 16.1.10 By written notice of Buyer to Seller within fourteen (14) business days after the effective date of this Agreement as provided in Section 17.10 hereof. Notwithstanding the foregoing, no party hereto may effect a termination hereof if such party is in material default or breach of this Agreement. 16.2 Liability. Except as set forth in Section 16.4 below, the termination of this Agreement under Section 16.1 shall not relieve any party of any liability for breach of this Agreement prior to the date of termination. 16.3 Monetary Damages, Specific Performance and Other Remedies. The parties recognize that if Seller refuses to perform under the provisions of this Agreement, monetary damages alone will not be adequate to compensate Buyer for its injury. Buyer shall therefore be entitled to obtain specific performance of the terms of this Agreement in addition to any other remedies, including but not limited to monetary damages, that may be available to it, if any action is brought by Buyer to enforce this Agreement, Seller shall waive the defense that there is an adequate remedy at law. In the event of a default by Seller, which results in the filing of a lawsuit for damages, specific performance, or other remedy, Buyer shall be entitled to reimbursement by Seller of reasonable legal fees and expenses incurred by Buyer. 16.4 Seller's Liquidated Damages. As more fully described in the Deposit Escrow Agreement, in the event this Agreement is terminated because of Buyer's material breach of this Agreement, and all other conditions to Closing are at such time satisfied or waived (other than such conditions as can reasonably be satisfied by Closing), then the Escrow Deposit shall be delivered to Seller, and the proceeds thereof shall constitute liquidated damages. It is understood and agreed that such liquidated damages amount represents Buyer's and Seller's reasonable estimate of actual damages and does not constitute a penalty. Recovery of liquidated damages shall be the sole and exclusive remedy of Seller against Buyer for failing to consummate this Agreement as a result of Buyer's material breach hereof, and shall be applicable regardless of the actual amount of damages sustained and all other remedies are deemed waived by Seller. The provision for liquidated damages contained herein, however, shall not limit the damages which Seller may be entitled to recover from Buyer for Buyer's breach of the Time Brokerage Agreement. ARTICLE 17 MISCELLANEOUS PROVISIONS 17.1 Risk of Loss. The risk of loss or damage to any of the Stations Assets prior to the Closing Date, shall be upon Seller. Seller shall repair, replace and restore any such damaged or lost Stations Asset to its prior condition as soon as possible and in no event later than forty-five (45) days following the loss or damage; provided, however, that in the event any such loss or damage of the Stations Assets exists on the Closing Date, then notwithstanding any other provision hereto, Buyer at its option may extend the Closing Date for a period of up to sixty (60) days until such time as Seller shall have repaired, replaced and restored any such damaged or lost 31 32 Stations Asset to its prior condition or deduct from the Purchase Price that amount which Buyer and Seller reasonably determine to be sufficient to cover any such loss or damage and close the transaction on the Closing Date. 17.2 Certain Interpretive Matters and Definitions. Unless the context otherwise requires: (a) all references to Sections, Articles, Schedules or Exhibits are to Sections, Articles, Schedules or Exhibits of or to this Agreement; (b) each term defined in this Agreement has the meaning assigned to it; (c) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with generally accepted accounting principles as in effect on the date hereof, (d) "or" is disjunctive but not necessarily exclusive; (e) words in the singular include the plural and vice versa; (f) the term "Affiliate" has the meaning given it in Rule l2b-2 of Regulation 12B under the Securities Exchange Act of 1934, as amended; and (g) all references to '$' or dollar amounts will be to lawful currency of the United States of America. 17.3 Further Assurances. After the Closing, Seller shall from time to time, at the request of and without further cost or expense to Buyer, execute and deliver such other instruments of conveyance and transfer and take such other actions as may reasonably be requested in order more effectively to consummate the transactions contemplated hereby to vest in Buyer good and marketable title to the Stations Assets being transferred hereunder in accordance with the terms hereof, and Buyer shall from time to time, at the request of and without further cost or expense to Seller, execute and deliver such other instruments and take such other actions as may reasonably be requested in order more effectively to relieve Seller of any obligations being assumed by Buyer hereunder. 17.4 Preservation of Records. Subject to Section 10. 1 hereof, Buyer hereby agrees that it will preserve and make available to Seller and its attorneys and accountants (including the right to inspect and copy at Seller's cost), during normal business hours and upon reasonable advance notice, for three (3) years after the Closing Date, such of the books, records, files, correspondence, memoranda and other documents referred pursuant to this Agreement as Seller may reasonably require for the preparation of tax reports and returns, the preparation of financial statements, or the preparation of a response to any claim by a third party against Seller. 17.5 Benefit and Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither Buyer nor Seller may voluntarily or involuntarily assign its interest under this Agreement without the prior written consent of the other; provided, however, that no such permitted assignment shall relieve Buyer of its obligations hereunder in the event that its assignee fails to perform the obligations delegated. All covenants, agreements, statements, representations, warranties and indemnities in this Agreement by and on behalf of any of the parties hereto shall bind and inure to the benefit of their respective successors and permitted assigns of the parties hereto. In the event Buyer finds it necessary or is required to provide to a third party a collateral assignment of the Buyer's interest in this Agreement and/or any related documents, Seller shall cooperate with the Buyer and any third party requesting such assignment including but not limited to signing a consent and acknowledgment of such assignment. 32 33 17.6 Amendments. No amendment, waiver of compliance with any provision or condition hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment, change, extension or discharge is sought. 17.7 Headings. The headings set forth in this Agreement are for convenience only and will not control or affect the meaning or construction of the provisions of this Agreement. 17.8 Governing Law. The construction and performance of this Agreement shall be governed by the laws of the State of Arizona, without giving effect to the choice of law provisions thereof. 17.9 Notices. Any notice, demand or request required or permitted to be given under the provisions of this Agreement shall be in writing, including by facsimile, and shall be deemed to have been duly delivered and received on the date of personal delivery, on the third day after deposit in the U.S. mail if mailed by registered or certified mail, postage prepaid and return receipt requested, on the day after delivery to a nationally recognized overnight courier service if sent by an overnight delivery service for next morning delivery or when dispatched by facsimile transmission (with the facsimile transmission confirmation being deemed conclusive evidence of such dispatch) and shall be addressed to the following addresses, or to such other address as any party may request, in the case of Seller, by notifying Buyer, and in the case of Buyer, by notifying Seller: To Buyer: W. Grant Hafley Yavapai Broadcasting Corporation 2405 East Highway 89A Cottonwood, AZ 86326 Fax: (520) 634-2295 or (740) 432-5565 Copy to: IRWIN, CAMPBELL & TANNENWALD, P.C. 1730 Rhode Island Avenue, N.W., Suite 200 Washington, D.C. 20036 Attn: Alan C. Campbell, Esq. Fax: (202) 728-0354 33 34 To Seller: Terry S. Jacobs, Chairman Regent Broadcasting of Flagstaff, Inc. 50 East RiverCenter Blvd. Suite 180 Covington, KY 41011 Fax: (606) 292-0352 Copy to: STRAUSS & TROY The Federal Reserve Building 150 East Fourth Street Cincinnati, OH 45202 Attn: Alan C. Rosser, Esq. Fax: (513) 241-8259 17.10 Effectiveness. Buyer acknowledges that Seller has been a party to an Asset Purchase Agreement, dated March 30, 1999, with The Guyann Corporation ("Guyann") under which Seller agreed to sell the Stations to Guyann, granted to Guyann the exclusive right to purchase the Stations while such agreement was in effect, and agreed not to initiate, solicit, encourage or negotiate any proposals or offers for a sale of the Stations to any other party during such period of exclusivity. Buyer confirms (a) that its offer to purchase the Stations was presented to Seller at Buyer's own initiative, without solicitation or encouragement from Seller, (b) that prior to March 21, 2000 the parties had not engaged in any negotiations concerning Buyer's offer, that no confidential information or data had been provided by Seller to Buyer, and that Seller had taken no action to facilitate any effort or attempt by Buyer to make or implement its proposal or offer to acquire the Stations, and (c) that Seller has executed this Agreement in recognition of the fiduciary duties of its Board of Directors. Because of the absence of information supplied by Seller to Buyer, immediately upon the execution of this Agreement Buyer shall have the right to conduct such investigation of the Stations as Buyer may desire pursuant to the provisions of Section 9.1.6 hereof and to terminate this Agreement at its option on the basis of its investigation within fourteen (14) business days after the date of this Agreement without any liability or further obligation by either party to the other party, except to return any confidential material. In the event Buyer fails to give notice of termination to Seller within said 14-day period, such right of termination shall lapse and be of no further force and effect. In the event this Agreement, or Seller's activities in connection with it, are determined by a court, arbitrator or by an opinion of independent legal counsel selected by Seller to be in violation of the Guyann Agreement, then this Agreement shall be null and void, and neither party shall have any rights or obligations hereunder. 17.11 Counterparts. This Agreement may be executed in one or more counterparts and by facsimile, each of which will be deemed an original and all of which together will constitute one and the same instrument. 34 35 17.12 No Third Party Beneficiaries. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the parties hereto and their successors or permitted assigns any rights or remedies under or by reason of this Agreement. 17.13 Severability. The parties agree that if one or more provisions contained in this Agreement shall be deemed or held to be invalid, illegal or unenforceable in any respect under any applicable law, this Agreement shall be construed with the invalid, illegal or unenforceable provision deleted, and the validity, legality and enforceability of the remaining provisions contained herein shall not be affected or impaired thereby. 17.14 Entire Agreement. This Agreement and the schedules and exhibits hereto embody the entire agreement and understanding of the parties hereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein. 35 36 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. REGENT LICENSEE OF FLAGSTAFF, INC. By: /s/ Terry S. Jacobs ---------------------------------- Name: Terry S. Jacobs ---------------------------------- Title: Chairman ---------------------------------- REGENT BROADCASTING OF FLAGSTAFF, INC. By: /s/ Terry S. Jacobs ---------------------------------- Name: Terry S. Jacobs ---------------------------------- Title: Chairman ---------------------------------- YAVAPAI BROADCASTING CORPORATION By: /s/ W. Grant Hafley ---------------------------------- Name: W. Grant Hafley ---------------------------------- Title: President ---------------------------------- 36 EX-10.A 5 EXHIBIT 10(A) 1 Exhibit 10(a) ESCROW AGREEMENT REGENT BROADCASTING OF VICTORVILLE, INC., REGENT LICENSEE OF VICTORVILLE, INC., REGENT BROADCASTING OF PALMDALE, INC., REGENT LICENSEE OF PALMDALE, INC., REGENT BROADCASTING OF MANSFIELD, INC., REGENT LICENSEE OF MANSFIELD, INC./CLEAR CHANNEL BROADCASTING, INC., CLEAR CHANNEL BROADCASTING LICENSES, INC., CAPSTAR RADIO OPERATING COMPANY, CAPSTAR TX LIMITED PARTNERSHIP $5,000,000.00 THIS ESCROW AGREEMENT (the "Agreement") is made as of March 12, 2000 among the company or companies designated as Clear Channel on the signature page hereto (collectively, "Clear Channel"), the company or companies designated as Exchange Party on the signature page hereto (collectively, "Exchange Party"), and Bank of America, a national banking association ("Escrow Agent"). W I T N E S S E T H: - - - - - - - - - - - WHEREAS, Clear Channel and Exchange Party are parties to an Asset Exchange Agreement (the "Exchange Agreement") of even date herewith pursuant to which Exchange Party is to deposit funds with the Escrow Agent in connection with the exchange of certain radio broadcast stations. NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Clear Channel, Exchange Party and Escrow Agent hereby agree as follows: Section 1. Escrow Account and Deposit. The Escrow Agent has established, or simultaneously with the execution hereof will establish, an account (the "Escrow Account") into which Exchange Party has deposited, or simultaneously with the execution hereof will deposit, FIVE MILLION DOLLARS ($5,000,000.00). Upon receipt thereof, the Escrow Agent shall provide Exchange Party and Clear Channel confirmation thereof, and shall hold and disburse such deposit as set forth in this Agreement. Such deposit shall be invested in the Bank of America Business Investment Account or a money market fund investing solely in securities issued by the United States, as directed by Exchange Party and Clear Channel. Such deposit, as increased or decreased based upon such investment results, is referred to herein as the "Deposit." For tax purposes, interest and other income earned on the Deposit shall be reported as income of Exchange Party, the Escrow Agent shall file a Form 1099 consistent with such treatment, and Exchange Party shall provide Escrow Agent with executed Forms W-8 and W-9, as requested by Escrow Agent. 2 Section 2. Release of Deposit by Escrow Agent. The Escrow Agent shall promptly release all or a portion of the Deposit to Exchange Party or Clear Channel, as the case may be, upon the first to occur of the following circumstances: (a) if the Escrow Agent receives written instructions from Clear Channel stating that Clear Channel is entitled to the Deposit pursuant to the Exchange Agreement and that Clear Channel has delivered to Exchange Party a copy of such notice, and directing the Escrow Agent to disburse the Deposit, then the Escrow Agent shall disburse the Deposit in accordance with such instructions; provided, however, that prior to the release of any portion of the Deposit in accordance with such written instructions from Clear Channel, Escrow Agent shall send to Exchange Party a copy of Clear Channel's written instructions and Escrow Agent shall not release the Deposit to Clear Channel if Escrow Agent receives, within fifteen (15) days after it has delivered a copy of Clear Channel's instructions to Exchange Party, written notice from Exchange Party objecting to release of the Deposit to Clear Channel ("Exchange Party's Rebuttal Notice"). After timely receipt by Escrow Agent of Exchange Party's Rebuttal Notice, Escrow Agent shall not deliver the Deposit until such time as Escrow Agent receives: (i) a written agreement signed by Clear Channel and Exchange Party providing instructions as to the disposition of the Deposit, or (ii) a certified copy of an order or judgment from an arbitrator or court which has become final (meaning that the order or judgment is no longer subject to appeal or review by a court of competent jurisdiction) with respect to the disposition of the Deposit, at which time Escrow Agent shall deliver the Deposit (along with interest accrued thereon) in accordance with said agreement, order or judgment. Notwithstanding the foregoing, after receipt by Escrow Agent of Exchange Party's Rebuttal Notice, Escrow Agent may: (i) deposit the Deposit (along with interest accrued thereon) with any court which has properly assumed jurisdiction of any dispute hereunder, or (ii) commence an action in interpleader in any court of competent jurisdiction in the District of Columbia and deposit the Deposit (along with interest accrued thereon) with such court; or (b) if the Escrow Agent receives joint written instructions from Clear Channel and Exchange Party directing the Escrow Agent to disburse the Deposit, then the Escrow Agent shall disburse the Deposit in accordance with such instructions. Section 3. Reliance by Escrow Agent. The Escrow Agent shall be entitled to rely upon and act in accordance with any of: (a) written notice of Clear Channel pursuant to Section 2(a) hereof in the absence of an Exchange Party's Rebuttal, (b) written notice of Exchange Party pursuant to Section 2(a) hereof, (c) the joint written instructions of Clear Channel and Exchange Party, and (d) a final order of an arbitrator or a court of competent jurisdiction authorizing the Escrow Agent to release the Deposit, or any portion thereof, to Exchange Party or Clear Channel. Section 4. Conflicting Demands. If conflicting demands are made upon the Escrow Agent, the Escrow Agent shall not be required to resolve such controversy or take any action, but shall await resolution of the controversy by joint instructions from Clear Channel and Exchange Party or by appropriate judicial or arbitration proceedings.. - 2 - 3 Section 5. Indemnification; Fees of Escrow Agent. Exchange Party and Clear Channel shall jointly and severally pay, and hold the Escrow Agent harmless against, all costs, charges, damages and attorneys' fees which the Escrow Agent in good faith may incur or suffer in connection with or arising out of this Agreement. The Escrow Agent shall be entitled to a fee for services it renders hereunder in the amount set forth on Schedule A attached hereto, which shall be paid one-half by the Clear Channel and one-half by Exchange Party. Section 6. Rights and Duties of Escrow Agent. (a) No assignment of the interest of any of the parties hereto shall be binding upon the Escrow Agent unless and until written evidence of such assignment in a form satisfactory to the Escrow Agent shall be filed with and accepted by the Escrow Agent. (b) The Escrow Agent may rely or act upon orders or directions signed by the proper parties, or bearing a signature or signatures reasonably believed by the Escrow Agent to be genuine. (c) The Escrow Agent shall have no duties other than those expressly imposed on it herein and shall not be liable for any act or omission except for its own gross negligence or willful misconduct. (d) In the event that the Deposit or any proceeds thereof shall be attached, garnished, or levied upon by an order of any court, or the delivery thereof shall be stayed or enjoined by an order of court, or any order, judgment or decree shall be made or entered by any court affecting the property deposited under this Agreement, or any part thereof, the Escrow Agent is hereby expressly authorized in its sole discretion to obey and comply with all writs, orders or decrees so entered or issued, which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction, and in case the Escrow Agent obeys or complies with any such writ, order or decree it shall not be liable to any of the parties hereto or to any other person, firm or corporation, by reason of such compliance notwithstanding that such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated. (e) The Escrow Agent may resign by giving sixty (60) days written notice of resignation, specifying the effective date thereof. Within thirty (30) days after receiving the aforesaid notice, the Clear Channel and Exchange Party agree to appoint a successor escrow agent to which the Escrow Agent shall transfer the Deposit or any proceeds thereof then held in escrow under this Agreement. If a successor escrow agent has not been appointed and/or has not accepted such appointment by the end of the 30-day period, the Escrow Agent may at its sole option: (i) apply to a court of competent jurisdiction for the appointment of a successor escrow agent, and the costs, expenses and reasonable attorneys' fees which are incurred in connection with such a proceeding shall be paid one-half by the Clear Channel and one-half by Exchange Party, or (ii) continue to hold the Deposit until it receives an order from a court of competent jurisdiction or joint written instructions of Clear Channel and Exchange Party directing the Escrow Agent to release the Deposit. - 3 - 4 Section 7. Disputes. Except as provided in Section 4, in the event of any disagreement between any of the parties resulting in conflicting or adverse claims or demands being made to the Deposit, the Escrow Agent shall be entitled, at its sole option, to refuse to comply with or recognize any such claims or demands as long as the disagreement shall continue, and in doing so, Escrow Agent shall not become liable in any way to any person for failure or refusal to comply with such conflicting or adverse claims or demands, and its duties hereunder with regard to such disputed Deposit shall be suspended until the rights of the claimants have been fully adjudicated or the differences adjusted between the parties and the Escrow Agent shall have been notified thereof in writing signed by all parties interested. In the event the differences between the parties with regard to the disputed Deposit have not been adjusted, and the Escrow Agent has been so notified, within ten (10) days following receipt of notice by Escrow Agent of conflicting or adverse claims or demands, Escrow Agent may, but shall not be obligated to, interplead the disputed Deposit in court, and thereupon Escrow Agent shall be fully and completely discharged of its duties as Escrow Agent with regard to the Deposit. The parties shall be jointly and severally liable to Escrow Agent for all fees and expenses, including legal fees, incurred by Escrow Agent in exercising its rights. Section 8. Notices. Any notice or other communication required or permitted hereunder shall be deemed to have been sufficiently given when delivered personally, by facsimile, recognized air courier, or registered or certified mail, return receipt requested, addressed as follows: if to Clear Channel: c/o Clear Channel Broadcasting, Inc. 200 Concord Plaza, Suite 600 San Antonio, Texas 78216 Attention: President Facsimile: (210) 822-2299 with a copy (which shall not constitute notice) to: Wiley, Rein & Fielding 1776 K Street, N.W. Washington, D.C. 20006 Attention: Richard J. Bodorff, Esq. Facsimile: (202) 719-7049 if to Exchange Party: c/o Regent Communications, Inc. 50 East River Center Blvd., Suite 180 Covington, KY 41011 Attention: Terry S. Jacobs Facsimile: (606) 292-0352 with a copy (which shall not constitute notice) to: Strauss & Troy The Federal Reserve Building - 4 - 5 150 East Fourth Street Cincinnati, Ohio 45202 Attention: Alan C. Rosser, Esq. Facsimile: 513-241-8259 if to Escrow Agent: Bank of America Private Banking 8300 Greensboro Drive Third Floor McLean, Virginia 22102 Attention: Susan B. Poliquin, Vice President Facsimile No.: (703) 761-9203 or to such other address as may be specified by any party in a written notice to the other parties. Section 9. Governing Law. This Agreement shall be construed under the laws of the District of Columbia. Section 10. Waiver. This Agreement may be amended or modified, and any term may be waived, only if such amendment, modification or waiver is in writing and signed by all parties. Section 11. No Third Party Beneficiaries. This Agreement is a personal one, the duty of the Escrow Agent being only to the parties hereto, their successors or assigns, and to no other person whatsoever. Section 12. Counterparts. This Agreement may be executed in separate counterparts. [SIGNATURE PAGE FOLLOWS] - 5 - 6 SIGNATURE PAGE TO ESCROW AGREEMENT IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective duly authorized officers all as of the day and year first above written. CLEAR CHANNEL: CLEAR CHANNEL BROADCASTING, INC. By: /s/ Jerome L. Kersting ----------------------------------------- Jerome L. Kersting, Senior Vice President CLEAR CHANNEL BROADCASTING LICENSES, INC. By: /s/ Jerome L. Kersting ----------------------------------------- Jerome L. Kersting, Senior Vice President CAPSTAR RADIO OPERATING COMPANY By: /s/ William S. Banowsky, Jr. -------------------------------------- Name: William S. Banowsky, Jr. --------------------------------- Title: Executive Vice President -------------------------------- CAPSTAR TX LIMITED PARTNERSHIP By: /s/ William S. Banowsky, Jr. -------------------------------------- Name: William S. Banowsky, Jr. --------------------------------- Title: Executive Vice President -------------------------------- 7 EXCHANGE PARTY: REGENT BROADCASTING OF VICTORVILLE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT LICENSEE OF VICTORVILLE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT BROADCASTING OF PALMDALE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT LICENSEE OF PALMDALE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT BROADCASTING OF MANSFIELD, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- REGENT LICENSEE OF MANSFIELD, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs --------------------------------- Title: Chairman -------------------------------- 8 ESCROW AGENT: BANK OF AMERICA By: /s/ Susan B. Poliquin ----------------------------------------- Name: Susan B. Poliquin Title: Vice President EX-10.B 6 EXHIBIT 10(B) 1 Exhibit 10(b) March 12, 2000 Regent Broadcasting of Victorville, Inc. Regent Licensee of Victorville, Inc. Regent Broadcasting of Palmdale, Inc. Regent Licensee of Palmdale, Inc. Regent Broadcasting of Mansfield, Inc. Regent Licensee of Mansfield, Inc. c/o Regent Communications, Inc. 50 East RiverCenter Blvd., Suite 180 Covington, KY 41011 Attention: Mr. Terry S. Jacobs RE: ASSET EXCHANGE AGREEMENT OF EVEN DATE HEREWITH (THE "EXCHANGE AGREEMENT") BY AND AMONG CLEAR CHANNEL BROADCASTING, INC. (TOGETHER WITH CLEAR CHANNEL COMMUNICATIONS, INC., "CLEAR CHANNEL"), CLEAR CHANNEL BROADCASTING LICENSES, INC., CAPSTAR RADIO OPERATING COMPANY AND CAPSTAR TX LIMITED PARTNERSHIP, AND REGENT BROADCASTING OF VICTORVILLE, INC., REGENT LICENSEE OF VICTORVILLE, INC., REGENT BROADCASTING OF PALMDALE, INC., REGENT LICENSEE OF PALMDALE, INC., REGENT BROADCASTING OF MANSFIELD, INC. AND REGENT LICENSEE OF MANSFIELD, INC. (COLLECTIVELY "EXCHANGE PARTY") Ladies and Gentlemen: This letter will clarify certain aspects relating to the subject Exchange Agreement (capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Exchange Agreement): 1. CLOSING. Clear Channel agrees that if Clear Channel fails to consummate the Closing on the Closing Date, provided that all of Clear Channel's conditions precedent to its obligation to close as provided for in Article 11 of the Exchange Agreement have been satisfied and provided further that the Exchange Party is not in material default or breach of any of its obligations under the Exchange Agreement and has otherwise satisfied the conditions and has performed the obligations to be satisfied or performed by it pursuant to the Exchange Agreement in all material respects, then, at Exchange Party's option and in lieu of the remedies provided for in the Exchange Agreement pursuant to Section 16.2, the Exchange Party shall be paid by Clear Channel the sum of $6,000,000 payable in cash upon such failure by Clear Channel to consummate the Closing within seven (7) days following a demand for payment by the Exchange Party. 2 2. COVENANT NOT TO COMPETE (a) In consideration of and as an inducement for the acquisition by Regent of WABT-FM, WQBJ-FM, WQBK-FM, WTMM-FM, WGNA-AM and WGNA-FM (the "Clear Channel Albany Stations"), in accordance with and as provided in the Exchange Agreement, and in order that Regent may realize the full economic value of the intellectual property used in connection with the entertainment programing (excluding news and public affairs) currently being broadcast by the Clear Channel Albany Stations (the "Entertainment Programming") to be transferred to Regent pursuant to the terms of the Exchange Agreement, Clear Channel agrees, on behalf of itself and its affiliates and successors, that commencing on the Closing Date and continuing for a period of three (3) years, it and each of its affiliates and successors (each, a "Restricted Party"), will cause any radio station owned, controlled, time brokered, or operated by any Restricted Party which has a primary service contour (the 1.0 mV/m contour) that intersects with the primary service contour of any of the Clear Channel Albany Stations not to broadcast in a format of entertainment programming (excluding news and public affairs programming) that consists primarily of music which presently, in the future, or in the past, appears, or has appeared, on the "Country" (or any future analogous variations or off-shoots thereof) music charts published or compiled by Radio & Records newspaper or Billboard Newspaper, or if no longer published or compiled by those publications, then by any similar broadcast industry publication. (b) In the event any aspect of the restrictions agreed to by Clear Channel in Paragraph 2.(a) is declared illegal or unenforceable by the FCC or any court of competent jurisdiction, such aspect which is determined to be illegal or unenforceable shall be amended by the FCC or such court (if either will do so) to the extent possible to make such aspect legal and enforceable. In the event no amendment is or can be made by the FCC or such court to make such aspect legal and enforceable but guidance has been given as to the nature of any modification to that aspect that would make the covenant legal and enforceable, then at Regent's request, Clear Channel agrees to enter into an amendment of this covenant consistent with such guidance to make the covenant legal and enforceable, provided that such amendment does not expand the scope of Clear Channel's obligations under this letter agreement, including but not limited to, the obligations under Paragraph 2.(a). If the restriction as amended by the FCC or the court or as would be amended by the parties consistent with guidance given by the FCC or the court, in Regent's and Clear Channel's reasonable judgment, materially and adversely alter the benefits to Regent for which it has bargained, then Regent shall have the right to terminate this covenant. In the event this covenant is so terminated by Regent and thereafter, within three (3) years from the Closing Date, any Restricted Party causes any station which has a primary service contour (the 1.0 mV/m contour) that intersects with the primary service contour of any of the Clear Channel Albany Stations and which is owned, controlled, time brokered or operated by it to broadcast in the "Country" format of entertainment programming described above, then Regent shall concurrently receive, irrespective of any ruling of illegality or unenforceability of the covenant not to compete, a pro-rata payment from Clear Channel of $6,000,000 as its sole remedy, equal to the percentage of the three (3) year period since the Closing Date which is unexpired, as of the date the broadcast of such programming is commenced. Clear Channel acknowledges and agrees 3 that in the absence of such payment under these circumstances Regent will have been damaged and Clear Channel will have been unjustly enriched because the consideration to be paid by Regent for the Clear Channel Albany Stations pursuant to the Exchange Agreement was arrived at upon the understanding and agreement that Clear Channel, for a period of three years from the Closing Date, would not be utilizing in Albany, New York the "Country" Entertainment Programming being sold to Regent at any of Clear Channel's other Albany, New York stations which has a primary service contour (the 1.0 mV/m contour) that intersects with the primary service contour of any of the Clear Channel Albany Stations. 3. LIABILITIES ON TERMINATION OR BREACH. Clear Channel acknowledges that the intellectual property and the rights inuring to the benefit of Regent from the ownership thereof are of a special, unique and extraordinary character and that damages are inadequate to compensate any breach of this Agreement. Accordingly, in the event of a material breach by Clear Channel of its representations, warranties, covenants and agreements under this letter with respect to Paragraphs 2 above, Regent, provided that is not otherwise in default hereunder, shall be entitled to, in lieu of the cash payment set forth in Paragraph 2.(b) above, an injunction restraining any such breach or threatened breach or to enforcement of this Agreement by a decree of specific performance requiring Clear Channel to fulfill its obligations under this letter agreement, in each case without the necessity of showing economic loss or other actual damage and without bond or other security being required. Sincerely, CLEAR CHANNEL COMMUNICATIONS, INC. By: /s/ Jerome L. Kersting ------------------------------- Jerome L. Kersting EX-10.C 7 EXHIBIT 10(C) 1 Exhibit 10(c) LIQUIDATED DAMAGES AGREEMENT THIS AGREEMENT (this "Agreement") is made as of March 12, 2000 by the Exchange Party set forth below ("Exchange Party") to and for the benefit of Clear Channel Broadcasting, Inc., Clear Channel Broadcasting Licenses, Inc., Capstar Radio Operating Company, and Capstar TX Limited Partnership (together, "Clear Channel"). Recitals A. This is the liquidated damages agreement contemplated by Section 16.3 of the Asset Exchange Agreement (the "Exchange Agreement") of even date herewith between Exchange Party and Clear Channel. Capitalized terms used herein and not defined have the respective meanings set forth in the Exchange Agreement. B. Section 16.3 of the Exchange Agreement provides that if Clear Channel terminates the Exchange Agreement pursuant to Section 16.1(b) thereof under certain circumstances entitling Clear Channel to the payment to it of liquidated damages by Exchange Party ("LD Event"), then Exchange Party shall pay Clear Channel as liquidated damages an amount equal to TWENTY EIGHT MILLION DOLLARS ($28,000,000) (the "LD Amount"). C. Section 3.2 of the Exchange Agreement provides for a Deposit to be made by Exchange Party on the date hereof. By agreement, the Deposit is less than the LD Amount (the amount of such difference is referred to herein as the "Deficiency"), and Exchange Party is executing and delivering this Agreement with respect to the Deficiency as a material condition without which Clear Channel would not enter into the Exchange Agreement (from which Exchange Party derives substantial benefit). Agreement NOW, THEREFORE, taking the foregoing into account, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confirmed, Exchange Party, intending to be legally bound, hereby consents and agrees as follows for the benefit of Clear Channel: 1. Pre-Judgment Attachment. (a) In the event that the Exchange Party has failed after demand by Clear Channel upon the occurrence of an LD event to pay all or part of the LD Amount, Clear Channel shall have the right, subject to, to the extent permitted by, and in accordance with applicable law in any legal proceeding in a court of competent jurisdiction in which Clear Channel asserts the occurrence of an LD Event and the non-payment of all or any part of the LD Amount (whether 2 by complaint, counterclaim or otherwise), to secure such payment, to file for and request an immediate judicial order of attachment before judgment against Exchange Party in the amount of the Deficiency, together with any writs of execution and other orders necessary to enforce such order (the "Pre-Judgment Attachment"). (b) To the fullest extent permitted by applicable law, Exchange Party hereby agrees that any court may rely upon its equitable or common law powers (in addition to any authority granted by statute or rule) to issue the Pre-Judgment Attachment. Without limiting the foregoing, Clear Channel shall not be required to post any bond or provide any security as a condition of obtaining or maintaining the Pre-Judgment Attachment, and Exchange Party waives all such requirements to the fullest extent permitted by applicable law. 2. Miscellaneous. The agreement of Exchange Party set forth in this Agreement is binding and enforceable against Exchange Party subject to any claim, counterclaim or defense which may be asserted by Exchange Party. Nothing contained in this Agreement shall limit Clear Channel's rights with respect to the Deposit or any other right or remedy of Seller. The provisions of Sections 17.4 (Amendments), 17.6 (Governing Law), 17.7 (Notices) and 17.10 (Severability) are incorporated herein by this reference as if fully set forth herein. [SIGNATURE PAGE FOLLOWS] 3 SIGNATURE PAGE TO LIQUIDATED DAMAGES AGREEMENT IN WITNESS WHEREOF, Exchange Party has duly executed this Agreement as of the date first above written. EXCHANGE PARTY: REGENT BROADCASTING OF VICTORVILLE, INC. By: /s/ Terry S. Jacobs ------------------------------------- Name: Terry S. Jacobs -------------------------------- Title: Chairman ------------------------------- REGENT LICENSEE OF VICTORVILLE, INC. By: /s/ Terry S. Jacobs ------------------------------------- Name: Terry S. Jacobs -------------------------------- Title: Chairman ------------------------------- REGENT BROADCASTING OF PALMDALE, INC. By: /s/ Terry S. Jacobs ------------------------------------- Name: Terry S. Jacobs -------------------------------- Title: Chairman ------------------------------- REGENT LICENSEE OF PALMDALE, INC. By: /s/ Terry S. Jacobs ------------------------------------- Name: Terry S. Jacobs -------------------------------- Title: Chairman ------------------------------- REGENT BROADCASTING OF MANSFIELD, INC. By: /s/ Terry S. Jacobs ------------------------------------- Name: Terry S. Jacobs -------------------------------- Title: Chairman ------------------------------- REGENT LICENSEE OF MANSFIELD, INC. By: /s/ Terry S. Jacobs ------------------------------------- Name: Terry S. Jacobs -------------------------------- Title: Chairman ------------------------------- EX-21 8 EXHIBIT 21 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT The following is a list of the names of each subsidiary of Regent Communications, Inc. and each subsidiary of a subsidiary of Regent Communications, Inc., the jurisdiction of incorporation of each such subsidiary, and any other name or names under which such subsidiary does business.
Jurisdiction of Other Name of Subsidiary Incorporation Business Names - ------------------ ------------- -------------- Regent Broadcasting of Chico, Inc. Delaware KFMF(FM), KPPL(FM), KALF(FM) Regent Broadcasting of Erie, Inc. Delaware WXKC(FM), WRIE(AM), WXTA(FM) Regent Broadcasting of Flagstaff, Inc. Delaware KVNA(AM), KVNA(FM), KZGL(FM) Regent Broadcasting of Flint, Inc. Delaware WCRZ(FM), WFNT(AM), WWBN(FM) Regent Broadcasting of Mansfield, Inc. Delaware WYHT(FM), WMAN(AM), WSWR(FM) Regent Broadcasting of Palmdale, Inc. Delaware KAVC(AM), KOSS(FM), KTPI(FM) Regent Broadcasting of Redding, Inc. Delaware KQMS(AM), KSHA(FM), KNNN(FM), KRDG(FM), KRRX(FM), KNRO(AM) Regent Broadcasting of St. Cloud, Inc. Delaware KMXK(FM), WJON(AM), WWJO(FM) Regent Broadcasting of Victorville, Inc. Delaware KROY(AM), KATJ(FM), KIXW(AM), KZXY(FM), KIXA(FM) Regent Broadcasting West Coast, Inc. California -- Regent Broadcasting Midwest, Inc. Delaware -- Regent Broadcasting of El Paso, Inc. Delaware KSII(FM), KLAQ(FM), KROD(AM) Regent Broadcasting of Utica/Rome, Inc. Delaware WODZ(FM), WLZW(FM), WFRG(FM), WIBX(AM), WRUN(AM) Regent Broadcasting of Watertown, Inc. Delaware WCIZ(FM), WFRY(FM), WTNY(AM), WUZZ(AM) Regent Broadcasting of Kingman, Inc. Delaware -- Regent Broadcasting of Lake Tahoe, Inc. Delaware -- Regent Broadcasting of San Diego, Inc. Delaware -- Regent Broadcasting of Lexington, Inc. Delaware -- Regent Broadcasting of South Carolina, Inc. Delaware -- Regent Licensee of Chico, Inc. Delaware -- Regent Licensee of Erie, Inc. Delaware -- Regent Licensee of Flagstaff, Inc. Delaware -- Regent Licensee of Flint, Inc. Delaware -- Regent Licensee of Mansfield, Inc. Delaware -- Regent Licensee of Palmdale, Inc. Delaware -- Regent Licensee of Redding, Inc. Delaware -- Regent Licensee of St. Cloud, Inc. Delaware -- Regent Licensee of Victorville, Inc. Delaware -- Regent Licensee of El Paso, Inc. Delaware -- Regent Licensee of Utica/Rome, Inc. Delaware -- Regent Licensee of Watertown, Inc. Delaware -- Regent Licensee of Kingman, Inc. Delaware -- Regent Licensee of Lake Tahoe, Inc. Delaware -- Regent Licensee of San Diego, Inc. Delaware -- Regent Licensee of Lexington, Inc. Delaware -- Regent Licensee of South Carolina, Inc. Delaware --
EX-27 9 EXHIBIT 27
5 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 3,410,410 0 4,912,802 231,000 0 10,329,208 19,633,049 7,259,775 83,727,155 3,114,586 25,331,307 89,265,352 3,684,336 2,400 (41,496,051) 83,727,155 25,612,933 23,853,809 0 24,466,207 (163,649) 0 5,248,546 (6,299,521) 0 (6,299,521) 0 (471,216) 0 (6,770,737) (121.65) (121.65)
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