10-K for Regent Communications, Inc.


	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

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 15, 2001, the aggregate market value of registrant’s common equity held by non-affiliates of registrant was approximately $143,821,767 based upon the closing sale price of $6.3594 on the Nasdaq Stock Market’s National Market for that date. (For purposes hereof, directors, executive officers and 10% or greater stockholders have been deemed affiliates.)

The number of common shares of registrant outstanding as of March 15, 2001 was 33,839,693.

Portions of Registrant’s definitive Proxy Statement to be filed during April 2001 in connection with the 2001 Annual Meeting of Stockholders presently scheduled to be held on May 17, 2001 are incorporated by reference into Part III of this Form 10-K.

Regent Communications, Inc. is a holding company. We own and operate our radio stations and hold our radio broadcast licenses in separate subsidiaries. In this report, when we use the term “Regent” and the pronouns “we,” “our” and “us,” we mean Regent Communications, Inc. and all its subsidiaries, unless the context otherwise requires.

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 30 FM and 14 AM radio stations in 11 markets in California, Michigan, Minnesota, New York, Pennsylvania and Texas. We have entered into written agreements to acquire four additional stations in two of our existing markets (Erie, Pennsylvania and St. Cloud, Minnesota) and currently provide programming and certain other services to the St. Cloud stations pending completion of their purchase. We also have agreed to sell three stations in one of our existing markets (Palmdale, California). Our assembled clusters of radio stations rank first or second in terms of revenue share in all of our markets except Albany, where our cluster ranks third.

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 the following:


	•	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.

We completed the following acquisitions and dispositions of radio stations during 2000. The purchase prices set forth below were paid in cash, except where otherwise indicated, and include, where applicable, amounts paid under consulting and non-competition agreements but do not include transaction-related costs.


(1)	The purchase price paid consisted of 233,333 shares of our common stock.

(2)	The purchase price paid consisted of approximately $80.5 million in cash and substantially all of the assets of our three stations in Mansfield, Ohio and our five stations in Victorville, California.

(3)	The purchase price consisted of approximately $43.8 million in cash and 100,000 shares of our common stock at $8.50 per share.


(1)	We acquired substantially all of the assets of six radio stations in Albany, New York and four radio stations in Grand Rapids, Michigan in exchange for our Mansfield, Ohio and Victorville, California stations and the payment by us of approximately $80.5 million in cash.

We currently have transactions pending which, if completed, will result in the purchase by us of four radio stations, and the sale by us of three radio stations. Closing of each of these transactions is subject to certain conditions, including required governmental approvals.

On June 21, 2000, we entered into an agreement to acquire by merger with StarCom, Inc. two FM and one AM radio stations (KKRS-FM, KLZZ-FM and KXSS-AM) serving the St. Cloud, Minnesota market for approximately $5.0 million in cash. We made an escrow deposit in the amount of $350,000. The Federal Communications Commission has approved the assignment of the station licenses, and we anticipate closing this acquisition in March or April 2001. The closing of this transaction had been delayed by the FCC’s analysis of market revenue share in St. Cloud, Minnesota. On July 1, 2000, pending closing of the purchase, we began providing programming and other services to the stations under a time brokerage agreement.

On November 3, 2000, we entered into a definitive agreement to sell substantially all the assets of our three Southern California radio stations (KTPI-FM and KAVC-AM licensed to Mojave and Tehachapi, and KOSS-FM licensed to Rosamond) to Concord Media Group, Inc. for approximately $13.5 million. An application seeking FCC approval of the assignment of the station licenses was filed on November 7, 2000. Action on the FCC application for approval of this sale has been delayed due to the filing of an objection by the owner of a competing station in the market based on the alleged ownership concentration claimed to be allocable to the proposed buyer following the sale.

On December 28, 2000, we entered into a definitive agreement with NextMedia Group II, Inc. and its affiliate to acquire substantially all of the assets of WJET-FM, serving the Erie, Pennsylvania market, for approximately $5.0 million in cash. We delivered an irrevocable letter of credit in the amount of $250,000 to secure our obligations under the agreement. An application seeking approval from the FCC of the assignment of the station licenses was filed on January 12,

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 $7.0 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. 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.

We believe that our acquisition strategy, properly implemented, affords 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.

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.

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.

When our pending acquisition and sale transactions are completed, we will own 31 FM and 14 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.

As you review the information in the table below, 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. 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 from Investing in Radio 2000 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 January 2001 Miller, Kaplan Market Revenue Report, a publication of Miller, Kaplan, Arase & Co., Certified Public Accountants.

	•	We obtained all audience share information from the Fall 2000 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.

Virtually all of our revenue is generated from the sale of local, regional and national advertising for broadcast on our radio stations. In 2000, approximately 86% 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.

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 following:


	•	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.

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 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 or controlled by a single entity.

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 or direct broadcast satellite television systems, by satellite-delivered digital audio radio service and by in-band digital audio broadcasting. Satellite-delivered 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. In-band digital audio broadcasting may deliver multi-channel, multi-format programming in the same bands now used by AM and FM broadcasters. The delivery of information through the Internet also could create a new form of competition.

The FCC has adopted rules creating a new low power radio service that will open up opportunities for new “microbroadcasting” FM radio stations that would serve small, localized areas. 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. There can be no assurances, however, that this historical growth will continue.

At March 15, 2001, we employed approximately 576 persons. Twelve 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 generally to be good.

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. Among other things, the FCC:


	•	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 designed 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 a 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, C0 and C. The FCC recently adopted a rule that subjects Class C FM stations to involuntary downgrades to Class C0 if they do not meet certain antenna height specifications.

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.


*	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 (#).

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, as well as level of market concentration that would result from the proposed transaction;

	•	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 or control, the application must be placed on public notice for not less than 30 days during which time petitions to deny or other objections against the application may be filed by interested parties, including members of the public. Once the FCC grants an application, interested parties may seek reconsideration of that grant for 30 days, after which time the FCC may for another ten days reconsider the grant on its own motion. 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 has, for several years, followed a practice of reviewing proposed transactions based on the degree of concentration that would result from such transactions in the market for radio advertising revenue. The FCC has recently signaled that it may undertake a full-scale review of what, if any, consideration should be given in its review of license transfer applications to issues of market concentration. The outcome of such a review, and whether it will be conducted, remains uncertain.

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 has 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 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. The FCC recently removed its former rule that the interests of minority shareholders in a corporation were not attributable if a single entity or individual held 50.0% or more of that corporation’s voting stock. While removing the rule, the FCC grandfathered as non-attributable those minority stock interests that were held as of the date of the FCC’s order.

The FCC has adopted a 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 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. 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. These restrictions apply in similar fashion to other forms of businesses and organizations, including partnerships and limited liability companies. 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.

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. In January 2001, the U.S. Court of Appeals for the District of Columbia Circuit vacated these rules and remanded them to the FCC for further consideration. While the rules have been suspended, their future is uncertain as the FCC seeks reconsideration of certain aspects of the Court’s decision, and as it considers the rules on remand.

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.

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 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, including narrowing the definition of the local market for multiple ownership purposes;

	•	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.

The FCC currently is considering standards for evaluating, authorizing, and implementing terrestrial digital audio broadcasting technology, including In-Band On-Channel™ 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™ 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™ technology and what effect such regulations would have on our business or the operations of our radio stations.

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 ten 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 begun to accept applications for new, low power FM stations.

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 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 Department of Justice 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

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.

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; Whitesboro (Utica-Rome), New York; and Watertown, New York. We own transmitter and antenna sites in Mojave (Palmdale), California; Redding, California; Burton (Flint), Michigan; St. Cloud, Stearns County and Graham Township (St. Cloud), Minnesota; Whitestown, Deerfield and Kirkland (Utica-Rome), New York; Watertown and Rutland (Watertown), New York; El Paso, Texas; Albany, New York; and Grand Rapids, Michigan. 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.

The two AM stations in the Watertown, New York market are operating under special temporary authorities which will expire in July, 2001. The FCC has renewed these temporary authorities, which by statute can last no longer than six months, every six months since November, 1998. We expect 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 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.

Substantially all of our personal property and equipment serve as collateral for our obligations under our existing credit facility.

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.

There was no matter submitted to our security holders during the fourth quarter of the fiscal year ended December 31, 2000.

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 each of the calendar quarters indicated, the reported high and low closing sale prices of our common stock as reported in the Nasdaq National Market.

As of March 15, 2001, there were approximately 338 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.

In May 2000, a total of 34,095 shares of our common stock was issued to four former directors of Faircom Inc. at a price of $1.1064 per share upon the exercise of options that were outstanding under the Regent Communications, Inc. Faircom Conversion Stock Option Plan which provided substitute options for those granted under the Faircom Inc. Stock Option Plan prior to our merger with Faircom Inc. On October 25, 2000, we granted to eligible employees under our 1998 Management Stock Option Plan options to purchase a total of 10,500 shares of our common stock at $5.50 per share. The options granted are exercisable in five annual increments (up to one-fifth each year) beginning on the first anniversary of the date of grant. These options and shares issued on exercise of 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.

The selected financial data below should be read in conjunction with our consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report.


(1)	Acquisitions in 1998, 1999, and 2000 affect comparability among years (see Note 2 in Notes to Financial Statements).

(2)	On June 15, 1998, we acquired, pursuant to an agreement of merger, all of the outstanding common stock of Faircom Inc. for 3,700,000 shares of our Series C convertible preferred stock. The acquisition was treated for accounting purposes as the acquisition of Regent 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.

Our company was formed in November 1996 to acquire, own and operate clusters of radio stations in small and mid-sized markets. Since that time, we have consummated a number of mergers, acquisitions, borrowings and issuances of additional equity, including the successful completion of an initial public offering (IPO) of 18,400,000 shares of common stock in January 2000. Concurrently with the IPO, we entered into a new revolving credit facility, and terminated our old revolving credit facility. The IPO and new credit facility have strengthened our balance sheet and allowed us to triple our asset base in year 2000 through the acquisition of 23 radio stations in six markets and the disposal of 11 radio stations in three markets. As a result of these transactions, we now own and operate a total of 44 radio stations in 11 markets and have entered into three new markets that rank among the top 70 markets in the country (Albany, New York; Grand Rapids, Michigan; and El Paso, Texas). We also began providing programming and other services to three additional stations in St. Cloud, Minnesota that we have agreed to acquire.

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 a station’s ability to attract audiences in the demographic groups targeted by its advertisers, as measured principally by periodic Arbitron Radio Market Reports. In 2000, our radio stations derived approximately 86% 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.

The financial results of our business are seasonal. 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.

Excluding gains on the sale or exchange of radio stations, we have historically generated net losses primarily as a result of significant non-cash 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. We are amortizing the FCC licenses and goodwill attributable to our acquisitions in 2000 and beyond over a useful life not to exceed 20 years.

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.

The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, “Revenue Recognition in Financial Statements,” which is effective for the fourth quarter of 2000. In SAB 101, the SEC staff expressed its views regarding the appropriate recognition of revenue with regard to a variety of circumstances. We have evaluated SAB 101 and have determined that the impact of adoption is not material.

In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44 (FIN 44), “Accounting for Certain Transactions Including Stock Compensation — an Interpretation of APB Opinion No. 25.” FIN 44 provides guidance for certain issues that arose in applying APB Opinion No. 25, “Accounting for Stock Issued to Employees.” We have adopted FIN 44, as required in the third quarter of 2000, and deemed that the impact of adoption is not material.

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS 133, “Accounting for Derivative Instruments and Hedging Activities.” 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. As of December 31, 2000, we have not employed any financial instruments to manage our interest rate exposure. We may employ financial instruments to manage our exposure to fluctuations in interest rates. We do not hold or issue such financial instruments for trading purposes. In June 2000, the FASB issued SFAS 138, an amendment to SFAS 133. We have adopted SFAS 133 and related amendments, as required in the year 2001, and have determined the impact of adoption to be immaterial.

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 forward-looking statements. For these statements, we claim the protections for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Following is a discussion of the key factors that have affected our business over the last three years. This commentary should be read in conjunction with our consolidated financial statements and the related footnotes.

In 2000 compared to 1999, we experienced substantial increases in net broadcast revenues, station operating expenses, depreciation and amortization, corporate general and administrative expenses, and interest expense, due primarily to our year 2000 acquisitions of radio stations in El Paso, Texas; Utica/ Rome, Watertown and Albany, New York; Grand Rapids, Michigan; and Chico, California; as well as a time brokerage arrangement in St. Cloud, Minnesota. Accordingly, the results of our operations in 2000 are not comparable to those of the prior period, nor are they necessarily indicative of results in the future.

Net broadcast revenues, operating expenses and broadcast cash flow in 2000 increased 84.9%, 64.7% and 152.0%, respectively, over that of the 1999 period. While acquisitions have affected the comparability of our 2000 operating results to those of 1999, 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 under contract for disposition. These comparable results between 2000 and 1999 are listed in the table below by quarter.

Note: Each quarter represents the markets and stations that we owned or operated for five full quarters at that time.

Corporate general and administrative expenses increased from $2.8 million in 1999 to $4.5 million in 2000, reflecting the increased infrastructure required to support a public company whose stock is listed on a national exchange. Corporate personnel increased by approximately 50% from 1999 to 2000 and additionally, we moved into new corporate facilities in the third quarter of 2000 to accommodate the new infrastructure.

Due to purchase price allocations of $11.1 million of property and equipment in addition to $176.2 million of intangible assets from acquisitions in 2000, depreciation and amortization expense

increased by approximately 155% compared to 1999 from $3.4 million in 1999 to $8.6 million in 2000. Additionally, for properties acquired in 2000, we are amortizing intangibles over 20 years rather than 40 years for properties acquired in 1999 and prior years.

Interest expense decreased by approximately 19% in 2000 compared to 1999 as average debt levels in 2000 were approximately $16.5 million, compared to average debt levels of $39.2 million in 1999. Average debt levels were lower in 2000 as we had paid down all our debt with proceeds from the IPO in January and subsequently did not incur any borrowings until August when we borrowed $44.0 million under our new credit facility. The interest expense savings on the lower debt levels in 2000 were partially offset by increased commitment fees on the unborrowed capacity of our new credit facility.

On August 24, 2000, we completed an exchange agreement entered into with Clear Channel Broadcasting, Inc, Capstar Radio Operating Company and their affiliates in which we exchanged our eight stations serving the Mansfield, Ohio (2 FM/1 AM) and Victorville, California (3 FM/2 AM) markets plus approximately $80.5 million in cash for ten stations serving the Grand Rapids, Michigan (3 FM/1 AM) and Albany, New York (4 FM/2 AM) markets. As a result of this transaction, we recognized a gain on the exchange of approximately $17.8 million which is reflected in the Consolidated Statement of Operations for the year ended December 31, 2000.

We have cumulative federal and state tax loss carryforwards of approximately $44.4 million at December 31, 2000. These loss carryforwards will expire in years 2001 through 2020. The utilization of a portion of these net operating loss carryforwards for federal income tax purposes is limited pursuant to the annual utilization limitations provided under the provisions of Internal Revenue Code Section 382. In 1998 and 1999, we established a valuation allowance against our deferred tax assets following an assessment of the realizability of such amounts.

In 2000, we recognized a gain of approximately $17.8 million on the asset exchange from the Clear Channel transaction. For tax purposes this transaction was treated as a like-kind exchange resulting in a deferred tax liability pursuant to the provisions of Internal Revenue Code Section 1031, of approximately $6.3 million. In arriving at the determination as to the amount of the valuation allowance required for the current year, we considered the impact of deferred tax liabilities resulting from purchase transactions; statutory restrictions on the use of operating losses and a tax planning strategy available to us. Consequently, we determined that no valuation allowance is required for 2000 and released the full valuation allowance. As a result of these events, no income tax expense was recorded in 2000. On a quarterly basis, we will assess whether it remains more likely than not that the deferred tax asset will be realized.

On January 28, 2000, we paid off the outstanding debt from our old credit facility, accrued interest and related fees totaling approximately $25.1 million using proceeds from our IPO. This final paydown resulted in an extraordinary loss of approximately $1.1 million, net of income tax, from the write-off of deferred financing costs.

On June 15, 1998, we completed 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.

Because of our June 1998 acquisitions (see Note 2) 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.

For 1999 compared to 1998, net broadcast revenues increased 61.5% from $14.8 million to $23.9 million, station operating expenses increased 65.8% from $11.1 million to $18.3 million, and depreciation and amortization increased 48.0% from $2.3 million to $3.4 million. We experienced a 48.0% increase from $1.9 million to $2.8 million 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 $2.9 million to $5.2 million as a result of increased borrowings used to finance the various acquisitions and a $1.1 million 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. Additionally, in 1999 as a result of the old credit facility paydown in accordance with the original terms of the credit facility, we 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.

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 had been operating for five full quarters, exclusive of any markets held for sale. This group of comparable markets in 1999, is 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 were 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.

Our cash balance at December 31, 2000 was approximately $778,000 compared to $3.4 million at December 31, 1999. Net cash provided by operating activities was $3.1 million in 2000 compared to $2.4 million cash used in operating activities in 1999. The increase was due primarily to the operating activities of radio stations acquired in 2000. Cash flow used in investing activities increased to $148.7 million in 2000 compared to $15.5 million used in 1999, due to the increase in the acquisition of radio stations in 2000. Cash flows provided by financing activities increased to $142.9 million in 2000 compared to $20.8 million in 1999 due primarily to net proceeds received from our IPO in January 2000.

In 2000, our sources of cash totaled approximately $199 million and were derived from a combination of the net proceeds from the issuance of common stock; borrowings from our new credit facility; cash provided from operating activities; and proceeds from the sale of our stations in Flagstaff, Arizona.

On January 27, 2000, we terminated our old credit facility and entered into a new credit facility, which is a $125.0 million senior secured seven-year reducing revolving facility, that also provides for an additional $50.0 million on substantially the same terms, to fund future acquisitions, subject to terms and conditions of the credit agreement. This additional $50.0 million borrowing capability is available during the first 24 months of the facility and thereafter will convert to a term loan maturing December 31, 2006. This credit facility permits the borrowing of available credit for working capital requirements and general corporate purposes, including transaction fees and expenses, and to fund pending and permitted future acquisitions. The credit facility also permits us to request from time to time that the lenders issue letters of credit in an amount up to $25.0 million in accordance with the same lending provisions. The commitment, and our maximum borrowings, will reduce over five years beginning in 2002 as follows (In thousands):

The $25.0 million letter of credit sub-limit also reduces proportionately but not below $15.0 million. 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 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 our credit facility bear interest at a rate equal to, at our option, either (a) the higher of the rate announced or published publicly from time to time by the agent as its corporate base 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 which varies between 1.25% and 2.75% depending upon our financial leverage. Borrowings under the new credit facility bore interest at the rate of 8.05% as of December 31, 2000. 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 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 these subsidiaries. As of March 15, 2001, we had borrowings under this facility of $44.0 million.

On January 28, 2000, we closed our IPO of 16,000,000 shares of our common stock. On February 7, 2000, the underwriters exercised their over-allotment of an additional 2,400,000 shares. All shares were sold at $8.50 per share, resulting in gross proceeds of $156.4 million and net proceeds of approximately $143.8 million (see Note 3).

On September 29, 2000, we completed the sale of our Flagstaff, Arizona radio stations to Yavapai Broadcasting Corporation for approximately $2.0 million. These proceeds were used to reduce outstanding borrowings on the new credit facility.

In 2000, we utilized our sources of cash primarily to acquire radio stations totaling $148.9 million; pay off our credit facility debt and related costs in the amount of $30.7 million; and fund other financing activities totaling $20.2 million.

The net proceeds from the IPO in January 2000 were used as follows: approximately $27.1 million was used to repay all borrowings, accrued interest and related fees under our old credit facility along with the fees associated with entering into the new bank credit facility; $67.3 million was used to fund our acquisitions of radio stations in Utica-Rome and Watertown, New York and El Paso, Texas; $5.9 million was used to redeem our Series B convertible preferred stock and pay accrued dividends; $7.3 million was used to pay accrued dividends on all other series of convertible preferred stock, which were converted to common stock on a one-for-one basis; $1.5 million was used to repurchase 275,152 shares of common stock from an affiliate of one of the underwriters in order to comply with the rules of the National Association of Securities Dealers, Inc; and the remaining net proceeds of approximately $35.0 million were used to fund a portion of the cash required for the Clear Channel transaction.

On August 24, 2000, we completed the Clear Channel transaction, in which we exchanged our eight stations serving the Mansfield, Ohio (2 FM/1 AM) and Victorville, California (3 FM/2 AM) markets plus approximately $80.5 million in cash for ten stations serving the Grand Rapids, Michigan (3 FM/1 AM) and Albany, New York (4 FM/2 AM) markets. We borrowed $44.0 million on the new credit facility and used residual cash from the IPO and cash from operations to fund this transaction.

In June of 2000, we initiated a program to buy back shares of our common stock at certain market price levels. We acquired a total of 1,363,752 shares for an aggregate purchase price of approximately $7.1 million in 2000.

In 2000, we funded capital expenditures of $1.7 million to upgrade our equipment and facilities, primarily at stations recently acquired in order to remain competitive and to create cost savings over the long term. We expect capital expenditures to increase in 2001 due to the radio stations we acquired in 2000 and the correlating increase in the size of our infrastructure.

On June 21, 2000, we entered into a definitive agreement to acquire by merger with StarCom, Inc. two FM and one AM radio stations (KKRS-FM, KLZZ-FM and KXSS-AM) serving the St. Cloud, Minnesota market for approximately $5.0 million in cash. We made an escrow deposit in the amount of $350,000. The Federal Communications Commission has approved the assignment of the station licenses, and we anticipate closing this acquisition in March or April 2001. The closing of this transaction had been delayed by the FCC’s analysis of market revenue share in St. Cloud, Minnesota. On July 1, 2000, pending closing of the purchase, we began providing programming and other services to the stations under a time brokerage agreement.

On December 28, 2000 we entered into a definitive agreement with NextMedia Group II, Inc. and its affiliate to acquire substantially all of the assets of WJET-FM serving the Erie, Pennsylvania market for approximately $5.0 million in cash. We delivered an irrevocable letter of credit in the amount of $250,000 to secure our obligations under the agreement. An application seeking FCC approval of the assignment of the station licenses was filed on January 12, 2001. The closing of this transaction has been delayed by the FCC’s analysis of market revenue share in Erie, Pennsylvania.

We believe the cash generated from operations and available borrowings under our new credit facility will be sufficient to complete our pending acquisitions and to meet our requirements for corporate expenses and capital expenditures for the foreseeable future, based on our projected operations and indebtedness. After giving effect to all pending transactions, the outstanding borrowings under our credit facility would be approximately $41.0 million with available borrowings of approximately $84.0 million, subject to the terms and conditions of the credit facility.

We are exposed to the impact of interest rate changes as borrowings under our new credit facility bear interest at variable interest rates. It is our policy to enter into interest rate transactions only to the extent considered necessary to meet our objectives. As of December 31, 2000, we have not employed any financial instruments to manage our interest rate exposure. Based on our exposure to variable rate borrowings at December 31, 2000, a one percent change in the weighted average interest rate would change the Company’s annual interest expense by $445,000.

To satisfy the requirements imposed under the terms of our old credit facility, we had previously entered into a two-year collar agreement 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 in conjunction with the termination of the old credit facility. In the event that we deem it economically feasible, at some time in the future we would consider entering into an agreement to mitigate interest rate risk.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Regent Communications, Inc. and its subsidiaries (the “Company”) at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index 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 of America, 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 audits provide a reasonable basis for our opinion.

Regent Communications, Inc. (including its wholly-owned subsidiaries, the “Company” or “Regent”) 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”). The acquisition was 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 in Mansfield, Ohio (see Note 2).

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.

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.

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.

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 accompanying Consolidated Statements of Operations.

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.

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.

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.

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 Country. The Company also maintains cash in bank accounts at financial institutions where the balance, at times, exceeds federally insured limits.

Broadcast revenue for commercial broadcasting advertisements is recognized when the commercial is broadcast.

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 $3.2 million, $2.2 million and $731,000 and barter expense was approximately $3.1 million, $2.0 million and $800,000 for the years ended December 31, 2000, 1999, and 1998, respectively.

At December 31, 2000, the Company operated three stations under the terms of time brokerage agreements (hereafter referred to as “TBAs”). Revenues and expenses related to such stations are included in operations since the effective dates of the TBAs. Fees paid and received under such TBAs are included in Other income, net in the accompanying Consolidated Statements of Operations.

Due to their short-term maturity, the carrying amount of accounts receivable, accounts payable and accrued expenses approximated their fair value at December 31, 2000 and 1999.

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, 2000 and 1999.

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 basis of the stock from the June 15, 1998 merger (see Note 1) plus accrued dividends. The fair value of these shares was approximately $2.6 million at December 31, 1999.

Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized.

On June 21, 2000, the Company entered into an agreement to acquire by merger with StarCom, Inc. two FM and one AM radio stations serving the St. Cloud, Minnesota market for approximately $5.0 million in cash. The purchase will be funded by borrowings under Regent’s bank credit facility. Regent made an escrow deposit in the amount of $350,000. The Federal Communications Commission has approved the assignment of the station licenses, and the Company anticipates closing this acquisition in March or April 2001. The closing of this transaction had been delayed by the FCC’s analysis of market revenue share in St. Cloud, Minnesota. On July 1, 2000, pending closing of the purchase, the Company began providing programming and other services to the stations under a time brokerage agreement.

On November 3, 2000, the Company entered into a definitive agreement to sell substantially all the assets of its three Southern California radio stations (KTPI-FM and KAVC-AM licensed to Mojave and Tehachapi, and KOSS-FM licensed to Rosamond) to Concord Media Group, Inc. for approximately $13.5 million. Action on the FCC application for approval of this sale has been delayed due to the filing of an objection by the owner of a competing station in the market.

On December 28, 2000 the Company entered into a definitive agreement with NextMedia Group II, Inc. to acquire WJET-FM serving the Erie, Pennsylvania market, for approximately $5.0 million in cash. Regent delivered an irrevocable letter of credit in the amount of $250,000 to secure its obligations under the agreement. The closing of this transaction has been delayed by the FCC’s analysis of market revenue share in Erie, Pennsylvania.

On January 28, 2000, Regent purchased the FCC licenses and related assets used in the operations of radio stations WODZ(FM), WLZW(FM), WFRG(FM), WIBX(AM) and WRUN(AM) in Utica-Rome, New York and WCIZ(FM), WFRY(FM), WTNY(AM) and WNER(AM) in Watertown, New York for approximately $43.8 million in cash and 100,000 shares of Regent’s common stock. Approximately $40.9 million of the total purchase price was allocated to the FCC licenses and goodwill and is being amortized over a 20-year period. The remaining $3.8 million was allocated to property and equipment.

On January 31, 2000, Regent purchased the FCC licenses and related assets used in the operations of radio stations KLAQ(FM), KSII(FM) and KROD(AM) in El Paso, Texas for approximately $23.5 million in cash. Approximately $21.8 million of the purchase price was allocated to the FCC licenses and goodwill and is being amortized over a 20-year period. The remaining $1.7 million of the purchase price was allocated to property and equipment.

On August 24, 2000, Regent completed an exchange agreement entered into with Clear Channel Broadcasting, Inc, Capstar Radio Operating Company and their affiliates (the “Clear Channel transaction”). Under the agreement, Regent exchanged its eight stations serving the Mansfield, Ohio (2 FM/1 AM) and Victorville, California (3 FM/2 AM) markets plus approximately $80.5 million in cash for ten stations serving the Grand Rapids, Michigan (3 FM/1 AM) and Albany, New York (4 FM/2 AM) markets. Approximately $110.1 million of the purchase price was allocated to the FCC licenses and goodwill and is being amortized over a 20-year period. The remaining $5.2 million of the purchase price was allocated to property and equipment. As a result of this transaction, Regent recognized a gain on this exchange of approximately $17.8 million which is reflected in the accompanying Consolidated Statements of Operations for the year ended December 31, 2000.

On September 29, 2000, Regent acquired radio station KZAP(FM) in Chico, California, by acquiring the stock of KZAP, Inc. in exchange for 233,333 shares of Regent’s common stock with a market value of approximately $2.7 million at March 29, 2000, the date of Regent’s agreement to acquire the station. Approximately $2.4 million of the purchase price was allocated to the FCC licenses and is being amortized over a 20-year period. The remaining $218,000 of the purchase price was allocated to property and equipment. Regent provided programming and other services to KZAP(FM) under a time brokerage agreement from December 1, 1999 until the acquisition was completed on September 29, 2000.

On September 29, 2000, Regent completed the sale of radio stations KZGL(FM), KVNA(AM) and KVNA(FM) in Flagstaff, Arizona to Yavapai Broadcasting Corporation for approximately $2.0 million in cash. Regent recognized a note receivable for the purchase price at September 30, 2000 which was collected on October 5, 2000. Yavapai had previously been operating the Flagstaff stations under a time brokerage agreement since May 1, 2000.

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 $1.6 million in cash. The Company had previously issued a note for $1.5 million to a third party which was collateralized by the assets of the station (See Note 5). 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 gain (loss) on exchange/sale of radio station 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 $12.7 million in cash. The purchase was financed by approximately $5.1 million in proceeds from the issuance of Series F convertible preferred stock and borrowings under the Company’s old credit facility. Approximately $9.1 million of the purchase price was allocated to the FCC licenses and goodwill and is being amortized over a 40-year period, and the remaining $3.6 million 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 $6.0 million in cash.

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 for approximately $13.5 million in cash. The purchase was financed by approximately $6.3 million in proceeds from the issuance of Series H convertible preferred stock and borrowings under the Company’s senior reducing credit facility. Approximately $12.4 million of the purchase price was been allocated to the FCC licenses and goodwill and is being amortized over a 40-year period. The remaining $1.1 million 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 KFLG(AM), KFLG(FM), KAAA(AM) and KZZZ(FM) in Kingman, Arizona for approximately $5.4 million in cash.

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 for approximately $1.2 million in cash.

The assets of the Company’s radio stations in Flagstaff, Arizona which were sold to Yavapai Broadcasting Corporation in the third quarter of 2000 were classified as assets held for sale as of December 31, 1999 and 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 in the accompanying Consolidated Statement of Operations in 1999 as a gain (loss) on exchange/sale of radio stations.

On January 21, 1998, Faircom acquired substantially all of the assets and operations of radio station WSWR-FM in Shelby, Ohio for approximately $1.1 million in cash. The acquisition was

accounted for under the purchase method of accounting and was principally financed through the borrowing of $1.1 million 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 $24.0 million 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 in cash.

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., an affiliate of Topaz Broadcasting, Inc. (“Topaz”), for approximately $6.0 million 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. for approximately $3.7 million 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 approximately $2.6 million 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 $52.9 million (including approximately $21.1 million of debt assumed and refinanced with borrowings under the Company’s then existing credit facility and $3.7 million of transaction costs) were $34.4 million borrowed under the Company’s old credit facility, $18.2 million 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 $1.6 million 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.

The Company allocated the aggregate purchase price from all acquisitions in 2000 and 1999 as follows (in thousands):

The fair values of the significant 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 summarize the combined results of operations of Regent, together with the operations of the stations acquired in 1999 and 2000, but exclude the operations of smaller acquisitions that are not material to the results of Regent, as though the acquisition and disposition of these operations had occurred at the beginning of each of the periods presented.

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.

On January 28, 2000, Regent consummated an initial public offering (the “IPO”) of 16,000,000 shares of its common stock at an initial offering price of $8.50 per share. On February 7, 2000, the underwriters purchased an additional 2,400,000 shares of Regent’s common stock upon exercise of their over-allotment option. Regent received total proceeds from the completion of the offering, net of underwriter discounts, commissions and expenses related to the offering of $143.8 million. Of these proceeds, Regent used $67.3 million to fund the acquisitions of stations in Utica-Rome, and Watertown, New York and in El Paso, Texas; $27.1 million to pay in full the amounts borrowed, including accrued interest and related fees, under its prior bank credit facility (the “old Credit Facility”) and fees related to its new bank credit facility; $7.3 million to pay or reserve for payment accumulated, unpaid dividends on all series of convertible preferred stock converted into common stock; $5.9 million to redeem all outstanding shares of its Series B

convertible preferred stock, including accumulated unpaid dividends; and $1.5 million to repurchase shares of its common stock from an affiliate of one of the underwriters in order to comply with rules of the National Association of Securities Dealers, Inc. Regent used the balance of the proceeds for working capital needs and the Clear Channel transaction.

Also in conjunction with the IPO, Regent required the conversion into common stock on a one-for-one basis of 15,800,000 shares of convertible preferred stock in accordance with the terms of the preferred stock. These shares represented the balance of Regent’s outstanding shares of convertible preferred stock. Regent paid accumulated, unpaid dividends on those shares in the total amount of $7.3 million.

Additionally, “put” rights associated with common stock purchase warrants (see Note 5) issued in connection with the issuance of Regent’s Series B and Series F convertible preferred stock were terminated. Regent had previously classified approximately $3.7 million in long-term liabilities due to the associated “put” rights of the warrants at December 31, 1999. These warrant liabilities were reclassified to additional paid in capital as of January 28, 2000 along with approximately $1.5 million of non-cash interest expense that had been recorded to account for an increase in the fair value of the warrants from January 1, 2000 to January 28, 2000.

Regent adjusted the carrying values of its Series A, C, D, F, G, H, and K convertible preferred stock to fair value through January 28, 2000. This adjustment was recognized as a charge of $26.6 million to retained deficit (since there was no additional paid-in capital) resulting in an adjustment to loss from continuing operations attributable to common stockholders.

Repayment of long-term debt required over each of the years following December 31, 2000 consists of (in thousands):

On January 27, 2000, Regent Broadcasting, Inc., a wholly-owned subsidiary of Regent Communications, Inc., as the borrower, entered into a credit agreement (the “new credit facility” or “credit facility”) with a group of lenders which provides for a senior reducing revolving credit facility expiring December 31, 2006 with an initial aggregate revolving commitment of up to $125.0 million (including a commitment to issue letters of credit of up to $25.0 million in aggregate face amount, subject to the maximum revolving commitment available) and an additional revolving loan facility with a maximum aggregate amount of $50.0 million available, subject to the terms of the credit agreement, which converts, after two years, to a term loan maturing December 31, 2006. Regent incurred approximately $2.0 million in financing costs related to this new credit facility, which are being amortized over the life of the agreement. The credit facility is available for working capital and acquisitions, including related acquisition expenses. At December 31, 2000 there were borrowings of $44.5 million outstanding under this facility and there was approximately $80.5 million of available borrowings.

Under the new credit facility, the Company is 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 credit facility bear interest at a rate equal to, at the Company’s option, either (a) the higher of the rate announced or published publicly from time to time by the agent as its corporate base 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 which varies between 1.25% and 2.75% depending upon the Company’s financial leverage. Borrowings under the credit facility bore interest at the rate of 8.05% as of December 31, 2000. The Company is required to pay certain fees to the agent and the lenders for the underwriting commitment, administration and use of the credit facility. The Company’s indebtedness under this credit facility is collateralized by liens on substantially all of its assets and by a pledge of its operating and license subsidiaries’ stock and is guaranteed by these subsidiaries.

Prior to the new credit facility, the Company had an agreement with a group of lenders (“the old credit facility”) which provided for a senior reducing revolving credit facility with a commitment of up to $55.0 million expiring in March 2005. On January 28, 2000, Regent paid off the outstanding debt, accrued interest and related fees totaling approximately $25.1 million under the old credit facility. The pay-off was completed using proceeds from an initial public offering of Regent’s common stock, which was completed on January 28, 2000. This final paydown resulted in an extraordinary loss of approximately $1.1 million, net of income tax, from the write-off of deferred financing costs.

In conjunction with the IPO, the Company redeemed 1,000,000 shares of its Series B convertible preferred stock, which constituted all outstanding shares of that series. Also in conjunction with the IPO, Regent required the conversion into common stock on a one-for-one basis of approximately 15,800,000 shares of convertible preferred stock in accordance with the terms of the preferred stock. These shares represented the balance of Regent’s outstanding shares of convertible preferred stock. Additionally, “put” rights associated with common stock purchase

warrants issued in connection with the issuance of Regent’s Series B and Series F convertible preferred stock were terminated.

The Company’s authorized capital stock consists of 60,000,000 shares of common stock and 40,000,000 shares of preferred stock. Of the authorized preferred stock, 620,000 shares are designated 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 as Series E convertible preferred stock (“Series E”), 4,100,000 million shares as series F convertible preferred stock (“Series F”), 1,800,000 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 was $5.00 per share and the stated value of Series H and Series K was $5.50 per share. (See table below)

At December 31, 2000 and 1999 respectively, the Company’s authorized shares of all series of redeemable preferred stock were as follows (In thousands, except share amounts):

On January 28, 2000, Regent issued 100,000 shares valued at $8.50 per share of its common stock to principals of the sellers in conjunction with the acquisition of stations in the Utica-Rome and Watertown, New York markets.

On March 20, 2000, Regent received $500,000 in cash and issued 100,000 shares of its common stock to CFE, Inc. upon the exercise of outstanding warrants issued in 1998 in connection with the issuance of Series B and F convertible preferred stock to its affiliate, General Electric Capital Corporation. The remaining warrants, previously issued in connection with the Series A, B, and F convertible preferred stock, entitling the holders to purchase a total of 890,000 shares of Regent’s common stock at $5.00 per share with a five year expiration, remain outstanding.

On September 29, 2000 Regent issued 233,333 shares of its common stock to a principal of the seller in conjunction with the acquisition of radio station KZAP(FM) in Chico, California. The total value of the acquisition is approximately $2.7 million.

Based on the approval by Regent’s Board of Directors of a program to buyback up to $10.0 million of its common stock, during the third quarter of 2000, Regent began buying back shares of its common stock at certain market price levels. Regent acquired a total of 1,363,752 shares of its common stock for an aggregate purchase price of approximately $7.1 million in 2000.

In connection with the IPO, the Company converted the remaining shares of Series C and E convertible preferred stock into common stock on a one-for-one basis. (see table below)

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 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.

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: (In thousands, except per share amounts)

The weighted-average fair value per share for options granted under the 1998 Stock Option Plan was $3.42, $2.88 and $2.88 for ISOs in 2000, 1999 and 1998, respectively, and $3.71, $2.69 and $2.00 for NQSOs in 2000, 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:

Presented below is a summary of the status of outstanding Company stock options issued to employees:

The following table summarizes the status of Company options outstanding and exercisable at December 31, 2000 under the 1998 Stock Option Plan and the Conversion Stock Option Plan:

Of the options outstanding at December 31, 2000, it is anticipated that no more than approximately 1,253,903 will be treated as NQSOs and at least 724,500 will be treated as ISOs.


⁽¹⁾	As of December 31, 2000, the stock options granted under the 1998 Stock Option Plan entitle the holders to purchase 1,801,166 shares of the Company’s common stock. Stock options granted under the Conversion Stock Option Plan entitle the holders to purchase 177,237 shares of the Company’s common stock.

SFAS 128 calls for the dual presentation of basic and diluted earnings per share (“EPS”). Basic EPS is based upon the weighted average common shares outstanding during the period. Diluted EPS reflects the potential dilution that would occur if common stock equivalents were exercised. The effects of the assumed exercise of outstanding options and warrants to purchase shares of common stock have been excluded from the calculations of diluted net loss per share as their effect is anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (In thousands except per share data):

The Company’s provision (benefit) for income taxes consists of the following for the year ended December 31 (in thousands):

The components of the Company’s deferred tax assets and liabilities are as follows as of December 31 (in thousands):

The Company has cumulative federal and state tax loss carryforwards of approximately $44.4 million at December 31, 2000. These loss carryforwards will expire in years 2001 through 2020. The utilization of a portion of these net operating loss carryforwards for federal income tax purposes is limited pursuant to the annual utilization limitations provided under the provisions of Internal Revenue Code Section 382. In 1998 and 1999, the Company established a valuation allowance against our deferred tax assets following an assessment of the realizability of such amounts.

In 2000, Regent recognized a gain of approximately $17.8 million on the asset exchange from the Clear Channel transaction. For tax purposes this transaction was treated as a like-kind exchange resulting in a deferred tax liability pursuant to the provisions of The Internal Revenue Code section 1031, of approximately $6.3 million. In arriving at the determination as to the amount of the valuation allowance required for the current year, the Company considered the impact of deferred tax liabilities resulting from purchase transactions; statutory restrictions on the use of operating losses and a tax planning strategy available to the Company. Consequently, the Company determined that no valuation allowance is required for 2000 and released the full valuation allowance. As a result of these events, no income tax expense was recorded in 2000. On a quarterly basis, management will assess whether it remains more likely than not that the deferred tax asset will be realized.

The Company realized an income tax benefit from the exercise of certain stock options in 2000 of $83,000. This benefit resulted in an increase in the deferred tax asset and an increase in paid in capital.

The difference between the Company’s effective tax rate on income (loss) before income taxes and the federal statutory tax rate arise from the following:

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.

In the third quarter of 2000, the Company added a matching feature to its contribution plan, in which the Company will match participant contributions in the form of employer stock. The matching formula is 50 cents for every dollar contributed up to the first 6% of compensation. Company matched contributions vest to the employees over a three-year period. Contributions of approximately $69,000 were charged to expense in 2000.

Property and equipment consists of the following as of December 31 (in thousands):

Depreciation expense was approximately $2.2 million and $1.4 million for the years ended December 31, 2000 and 1999.

Amortization expense was approximately $6.4 million and $2.0 million for the years ended December 31, 2000 and 1999.

Supplemental cash flow information for the year ended December 31 (in thousands):

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 $801,000, $594,000 and $502,000 in 2000, 1999 and 1998, respectively.

At December 31, 2000, the total minimum annual rental commitments under noncancelable leases are as follows (in thousands):

All adjustments necessary for a fair statement of income for each period have been included (in thousands, except per share amounts):


⁽¹⁾	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.

⁽²⁾	The diluted calculation is shown as the effect of the exercise of common stock equivalents was dilutive in the second and third quarters.


⁽¹⁾	Recorded in conjunction with acquisitions consummated on June 15, 1998.

⁽²⁾	Represents accounts written off to the reserve.

⁽³⁾	See Note 9 in the Notes to Financial Statements.

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 2001 in connection with the 2001 Annual Meeting of Stockholders presently scheduled to be held on May 17, 2001.

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 2001 in connection with the 2001 Annual Meeting of Stockholders presently scheduled to be held on May 17, 2001.

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 Beneficial Owners and Management,” to be filed in April 2001 in connection with the 2001 Annual Meeting of Stockholders presently scheduled to be held on May 17, 2001.

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 2001 in connection with the 2001 Annual Meeting of Stockholders presently scheduled to be held on May 17, 2001.

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.

The financial statement schedule filed as part of this Annual Report on Form 10-K is set forth under Item 8.

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.

On November 7, 2000, we filed a Form 8-K/A. The Form 8-K/A was an Amendment No. 1 to Current Report on Form 8-K dated August 24, 2000 and filed on August 29, 2000 which reported our acquisition from Clear Channel Broadcasting, Inc., Capstar Radio Operating Company and their related entities substantially all of the assets of four FM and two AM radio stations in Albany, New York and three FM and one AM radio stations in Grand Rapids, Michigan in exchange for substantially all of the assets of our five FM and three AM radio stations in the Mansfield, Ohio and Victorville, California markets and the payment by us of $80,465,000 in cash.. The Amendment No. 1 on Form 8-K/A was for the purpose of including the following financial statements and pro forma financial information which were impracticable to provide at the time the Form 8-K was initially filed:

Combined Balance Sheets at June 30, 2000 (Unaudited) and December 31, 1999 and 1998

Combined Statements of Operations for the six months ended June 30, 2000 (Unaudited) and 1999 (Unaudited) and for the years ended December 31, 1999 and 1998

Combined Statements of Cash Flows for the six months ended June 30, 2000 (Unaudited) and 1999 (Unaudited) and for the years ended December 31, 1999 and 1998

Combined Statements of Stations’ Equity for the years ended December 31, 1999 and 1998

Combined Balance Sheets at June 30, 2000 (Unaudited) and December 31, 1999 and 1998

Combined Statements of Operations for the six months ended June 30, 2000 (Unaudited) and 1999 (Unaudited) and for the period from July 13, 1999 to December 31, 1999, the period from January 1, 1999 to July 12, 1999, the period from May 28, 1998 to December 31, 1998 and the period from January 1, 1998 to May 27, 1998

Combined Statements of Cash Flows for the six months ended June 30, 2000 (Unaudited) and 1999 (Unaudited) and for the period from July 13, 1999 to December 31, 1999, the period from January 1, 1999 to July 12, 1999, the period from May 28, 1998 to December 31, 1998 and the period from January 1, 1998 to May 27, 1998

Combined Statements of Stations’ Equity for the period from July 13, 1999 to December 31, 1999, the period from January 1, 1999 to July 12, 1999, the period from May 28, 1998 to December 31, 1998 and the period from January 1, 1998 to May 27, 1998.


	RADIO STATIONS — WGRD-FM, WTRV-FM, WLHT-FM and WNWZ-AM (Grand Rapids, Michigan)

Combined Balance Sheets at June 30, 2000 (Unaudited) and December 31, 1999 and 1998

Combined Statements of Operations for the six months ended June 30, 2000 (Unaudited) and 1999 (Unaudited) and for the period from July 13, 1999 to December 31, 1999, the period from January 1, 1999 to July 12, 1999, and the period from February 1, 1998 to December 31, 1998

Combined Statements of Cash Flows for the six months ended June 30, 2000 (Unaudited) and 1999 (Unaudited) and for the period from July 13, 1999 to December 31, 1999, the period from January 1, 1999 to July 12, 1999, and the period from February 1, 1998 to December 31, 1998

Combined Statements of Stations’ Equity for the period from July 13, 1999 to December 31, 1999, the period from January 1, 1999 to July 12, 1999 and the period from February 1, 1998 to December 31, 1998

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.

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.

The following exhibits are filed, or incorporated by reference where indicated, as part of Part IV of this Annual Report on Form 10-K:


1.	Six substantially identical warrants for the purchase of shares of Registrant’s common stock were issued as follows:


2.	Two substantially identical stock purchase agreements were entered into for the purchase of Series H convertible preferred stock


as follows:


3.	Four substantially identical stock purchase agreements were entered into for the purchase of Series K convertible preferred stock as follows:

E-8 EX-2.G 2 l87353aex2-g.txt EXHIBIT 2(G) 1 Exhibit 2(g) ASSET PURCHASE AGREEMENT by and among NEXTMEDIA GROUP II, INC., NEXTMEDIA LICENSING, INC., REGENT BROADCASTING OF ERIE, INC. and REGENT LICENSEE OF ERIE, INC. 2 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered this 28th day of December, 2000 by and among NEXTMEDIA GROUP II, INC., a Delaware corporation (hereinafter referred to as "NMG"), NEXTMEDIA LICENSING, INC., a Delaware corporation (hereinafter referred to as "Licensee," and collectively with NMG referred to as "Seller"), REGENT BROADCASTING OF ERIE, INC., a Delaware corporation ("RBI"), and REGENT LICENSEE OF ERIE, INC., a Delaware corporation ("RLI") (RBI and RLI collectively referred to as "Buyers"). RECITALS WHEREAS, Seller owns and operates radio station WJET(FM) licensed to Erie, Pennsylvania (the "Station") pursuant to licenses issued by the Federal Communications Commission ("FCC"); and WHEREAS, Seller desires to sell, and Buyers desire to purchase, certain assets and assume certain obligations associated with the ownership and operation of the Station, 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 Buyers, Buyers shall purchase, and RBI shall assume from Seller, all of the right, title and interest of Seller in and to all of the following assets, properties, interests and rights of Seller, which are used or held for use in the operation of the Station (collectively, the "Station Assets"): 1.1.1 all licenses, permits and other authorizations issued to Seller by any governmental or regulatory authority including without limitation those issued to Licensee by the FCC (the licenses, permits and authorizations issued by the FCC are hereafter referred to as the "Station Licenses"), used or useful in connection with the operation of the Station, which are more fully described in Schedule 7.4, along with renewals or modifications of such items, and all applications pertaining thereto, between the date hereof and the Closing Date; 2 3 1.1.2 the Station's optimod and transmitter, and such other equipment as specifically described or listed in Schedule 1.1.2, together with any replacements thereof or improvements or additions thereto, made from the date hereof through the Closing Date, and less any retirements or dispositions thereof, made between the date hereof and the Closing Date in the ordinary course of Seller's business consistent with past practices; 1.1.3 all contracts, agreements, leases and legally binding contractual rights relating to the operation of the Station and which are listed in Schedule 7.9, together with (a) all advertising contracts entered into or acquired by Seller between the date hereof and the Closing Date in the ordinary course of business, consistent with past practices of Seller; and (b) any other contracts, agreements, leases and legal binding contractual rights entered into or acquired by Seller between the date hereof and the Closing Date (collectively the "Contracts"); 1.1.4 all of Seller's rights in and to all intellectual properties listed or described on Schedule 7.12 (the "Intellectual Property"). 1.1.5 all of Seller'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, sales correspondence, lists of advertisers, promotional materials, credit and sales reports and filings with the FCC and all written Contracts to be assigned hereunder, logs, software programs and books and records relating to employees, financial, accounting and operation matters, but excluding records relating solely to any Excluded Asset (as hereinafter defined); 1.1.6 all of Seller's rights under manufacturers' and vendors' warranties relating to items included in the Station Assets and all similar rights against third parties relating to items included in the Station Assets; and 1.1.7 except for Excluded Assets, such other assets, properties, interests and rights owned by Seller that are used or useful in connection with the operation of the Station. The Station Assets shall be transferred to RBI (except for the Station's Licenses which shall be transferred to RLI) 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 those Encumbrances, if any, set forth in Schedule 7.7 ("Permitted Encumbrances"). 1.2 Excluded Assets. Notwithstanding anything to the contrary contained herein, it is expressly understood and agreed that the Station Assets shall not include the following assets along with all rights, title and interest therein (the "Excluded Assets"): 1.2.1 all cash and cash equivalents of Seller on hand and/or in banks, including without limitation certificates of deposit, commercial paper, treasury bills, marketable securities, asset or money market accounts and all such similar accounts or investments; 3 4 1.2.2 all investment securities and accounts receivable or notes receivable for services performed by Seller in connection with the operation of the Station prior to the Closing Date; 1.2.3 all tangible and intangible personal property of Seller not specifically described or listed on Schedule 7.4, Schedule 7.12, or Schedule 1.1.2, or in Sections 1.1.5-.7 above including, but not limited to, the Station's call letters "WJET"; 1.2.4 all Contracts which are not specifically described or listed on Schedule 7.9, or which have terminated or expired prior to the Closing Date in the ordinary course of business consistent with the past practices of Seller; 1.2.5 Any right to use the name "NextMedia Group" or any variation thereof, Seller's corporate seals, minute books, charter documents, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of Seller and duplicate copies of such financial 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 Station Assets or the business or operations of the Station; 1.2.6 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; 1.2.7 all pension, profit sharing or cash or deferred (Internal Revenue Code Section 401 (k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and the assets thereof, if any, maintained by Seller; 1.2.8 all of Seller's rights in and to all causes of action; 1.2.9 all tax refunds relating to the period prior to the Closing Date; and 1.2.10 any right, property or asset described in Schedule 1.2.10. 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, RBI shall assume the obligations of NMG 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; and (b) all property taxes and other governmental charges on the Station Assets. All of the foregoing liabilities and obligations shall be referred to herein collectively as the "Assumed Liabilities." 4 5 2.2 Retained Liabilities. Notwithstanding anything contained in this Agreement to the contrary, Buyers expressly do 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 either Seller of any nature whatsoever whether accrued, absolute, contingent or otherwise and whether or not disclosed to Buyers, other than the Assumed Liabilities. Seller will retain and pay, satisfy, discharge and perform in accordance with the terms thereof, all liabilities and obligations of the Seller other than the Assumed Liabilities including, but not limited to, the obligation to assume, perform, satisfy or pay any liability, obligation, agreement, debt, charge, claim, judgment or expense incurred by or asserted against Seller related to taxes, environmental matters, pension or retirement plans or trusts, profit-sharing plans, employment contracts, employee benefits, severance of employees, product liability or warranty, negligence, contract breach or default, or other obligations, claims or judgments. All of such liabilities, obligations and commitments of Seller described in this Section 2.2 shall be referred to herein collectively as the "Retained Liabilities." ARTICLE 3 CONSIDERATION 3.1 Delivery of Consideration. In consideration for the sale of the Station Assets to Buyers, in addition to the assumption of certain obligations of NMG pursuant to Section 2.1 above, Buyers shall, at the Closing (as hereinafter defined), deliver to Seller Five Million Dollars ($5,000,000) 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"); provided, however, that at the Closing, Buyers shall be entitled to a credit of One Hundred Thousand Dollars ($100,000) against the Purchase Price for the studio equipment and furnishings of the Station. 3.2 Escrow Deposit. (a) Within five (5) business days after the execution and delivery of this Agreement, Buyers, NMG and Media Venture Partners, as Escrow Agent (the "Deposit Escrow Agent"), shall enter into a Deposit Escrow Agreement in the form of Exhibit A hereto (the "Deposit Escrow Agreement") pursuant to which Buyers 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, Buyers shall wire transfer Two Hundred Fifty Thousand Dollars ($250,000), or alternatively, deliver an irrevocable, stand-by letter of credit for such amount in form and substance acceptable to Seller, to an escrow account established pursuant to the Deposit Escrow Agreement (the "Escrow Deposit"). At the Closing, the Escrow Deposit if, in the form of cash, shall be applied to the Purchase Price to be paid to Seller and the interest accrued thereon shall be paid to Buyers, or if in the form of a letter of credit, shall be returned to Buyers. As more fully described in the Deposit Escrow Agreement: (a) in the event this Agreement is terminated because of Buyers' 5 6 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), Buyers and NMG shall execute written instructions to the Deposit Escrow Agent directing the Escrow Deposit to be paid to or delivered for draw thereon to NMG as liquidated damages as provided in Section 16.4 hereto for Buyers' material breach of this Agreement (the payment of such sum to NMG shall discharge any liability Buyers may have to NMG and/or Licensee), and the interest accrued on the Escrow Deposit shall be paid to Buyers; 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 Buyers. 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 Station Assets or the Assumed Liabilities and arising from the conduct of the business and operations of the Station shall be prorated between Buyers and Seller in accordance with generally accepted accounting principles as of 11:59 p.m. Eastern Standard time, on the Closing Date. Such prorations shall include, without limitation, all ad valorem, property taxes and other governmental charges on the Station Assets (but excluding taxes arising by reason of the transfer of the Station Assets as contemplated hereby which shall be paid as set forth in Section 13.2), business and license fees, frequency discounts, music and other license fees (including any retroactive adjustments thereof, which retroactive adjustments shall not be subject to the ninety-day limitation set forth in Section 3.3.2), utility expenses, 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 ninety (90) 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 Pricewaterhouse Coopers L.L.P. (the "Independent Auditor"), whose decision shall be final and binding on the parties, and the fees and expenses of which shall be paid one-half by Seller and one-half by Buyers in accordance with the following: each party shall pay an amount equal to the sum of all fees and expenses of the Independent Auditor on a proportional basis taking into account the amount of the net allocation and proration proposed by each of Buyer and Seller and the amount of the final allocation and proration determined by the Independent Auditor (for example, if Buyer proposed a payment of $10 to Seller, Seller proposed a payment of $100, and the Independent Auditor proposed a payment of $30, Buyer would pay 20/90ths of the Independent Auditor's fees and Seller would pay 70/90ths of those fees based on the $90 in dispute between the parties). Within five business days following a final determination hereunder, the party obligated to make payment will make the payments determined to be due and owing in accordance with this Section 3.3. 6 7 3.4 Allocation of Purchase Price. The parties shall in good faith attempt to agree prior to Closing upon an allocation of the Purchase Price among the Station Assets. If the allocation is not agreed upon within thirty (30) days after the Closing Date, Buyers and Seller will order an appraisal of the Station Assets from Broadcast Investments Analysts ("BIA") and BIA will determine the allocation. The appraisal, if required, shall be provided to each of Buyers and Seller within forty-five (45) days after it is ordered. The fees for BIA shall be borne equally by Buyers and Seller. Seller and Buyers agree to use the agreed upon allocation, if any, for all tax purposes, including without limitation, those matters subject to Section 1060 of the Internal Revenue Code of 1986, as amended. 3.5 Adjustment for Barter. As of the Closing Date, Buyers shall be entitled to a credit against the Purchase Price for the amount, if any, by which the aggregate net value of the Station's Barter Payable (as defined below) as of the Closing Date exceeds the aggregate net value of the Station's Barter Receivable (as defined below) as of the Closing Date by more than $17,500 with respect to Contracts for the sale of advertising in exchange, in whole or in part, for merchandise or services ("Trade Agreements"). "Barter Payable" means the aggregate value of time owed pursuant to each of the Trade Agreements. "Barter Receivable" means the aggregate value of goods and services to be received pursuant to each of the Trade Agreements. ARTICLE 4 CLOSING 4.1 Closing. Except as otherwise mutually agreed upon by Buyers and Seller, the consummation of the transactions contemplated herein (the "Closing") shall occur on the last day of the month after (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 all commercially reasonable 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 (c) such other date as may be mutually agreed by the parties hereto (the "Closing Date"); provided, however, that so long as the closing occurs on the last day of the month, Buyers may in their sole discretion waive the requirement that a Final Order be issued and elect (subject to clause (a) and (c) 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 transaction contemplated hereby (the "Initial Approval"), and provided further, that subject to clause (a) and (b) above the Closing shall occur on the same date of and simultaneous with the earliest date of the following: (i) the earliest date on which Seller shall have both closed on its acquisition of, and received program test authority for, a new FM broadcast station to operate on Channel 230A at Fairview, Pennsylvania (the "Fairview CP"), (ii) the date which is five (5) business days after the date on which (x) Seller shall have terminated its acquisition of the Fairview CP, (y) Seller's agreement to acquire the Fairview CP shall have been terminated by reason of a default thereof by Seller, or (z) the FCC shall have issued an order which is no longer subject to reconsideration or review by the FCC or a court of competent jurisdiction denying Seller's proposed acquisition of the Fairview CP, or (iii) December 20, 7 8 2001. 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 materially adverse to Buyers or any Affiliate (as hereinafter defined) of Buyers with respect to the assignment of the FCC Licenses to RLI or the continued operation by Buyers of the Station or the Station Assets. 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 Leibowitz & Associates, P.A., in Miami, Florida, or at such place and in such manner as the parties hereto may agree. ARTICLE 5 GOVERNMENTAL CONSENTS 5.1 FCC Consents. It is specifically understood and agreed by Buyers and Seller that the Closing and the assignment of the Station Licenses and the transfer of the Station Assets are expressly conditioned on and are subject to the prior consent and approval of the FCC without the imposition of any conditions materially adverse to Seller, Buyers or any Affiliate of Buyers (the "FCC Consent"). 5.2 FCC Application. Within ten (10) business days after the execution of this Agreement, Buyers and Seller shall file an application with the FCC for the FCC Consent (the "FCC Application"). Buyers and Seller shall prosecute the FCC Application with all reasonable diligence and otherwise use all reasonable efforts to obtain the FCC Consent as expeditiously as practicable (but neither Buyers nor Seller shall have any obligation to satisfy complainants or the FCC by taking any steps which would have a material adverse effect upon Buyers or Seller or upon any of their respective Affiliates). If the FCC Consent imposes any material condition on Buyers or Seller or any of their respective Affiliates, such party shall use all reasonable efforts to comply with such condition; provided, however, that neither Buyers nor Seller shall be required hereunder to comply with any condition that requires the sale of any other radio station owned by them or that otherwise would have a material adverse effect upon them or any of their 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 BUYERS Buyers, jointly and severally, hereby make 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. Buyers are corporations duly organized validly existing and in good standing under the laws of the State of Delaware, and are authorized to conduct business within those states where such qualification is necessary. 6.2 Authorization and Binding Obligations. Buyers have all necessary corporate power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and to own or lease the Station Assets and to carry on the business of the Station upon the consummation of the transactions contemplated by this Agreement. Buyers' execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on their 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 Buyers, enforceable against them 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 Buyers' knowledge, there are no facts, allegations, conditions or circumstances relating to Buyers which, under the Communications Act of 1934, as amended, or the existing rules and regulations of the FCC, would prevent or delay the FCC Consent or disqualify RLI as an assignee of the Station Licenses. There are no proceedings, complaints, notices of forfeiture, claims or investigations pending or, to the knowledge of Buyers, threatened against any, or in respect of any, of the broadcast stations licensed to RLI or its Affiliates that would materially impair the qualifications of RLI to become a licensee of the Station or delay the FCC Consent. 6.4 Absence of Conflicting Agreements or Required Consents. Except as set forth in Article 5 hereof with respect to governmental consents or on Schedule 6.4, the execution, delivery and performance of this Agreement by Buyers: (a) do not conflict with the provisions of the certificate of incorporation or by-laws of Buyers; (b) do not require the consent of any third party not affiliated with Buyers; (c) will not violate any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority applicable to either Buyer; 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 either Buyer is now subject. 6.5 Commissions or Finder's Fees. Neither Buyers nor any person or entity acting on behalf of Buyers 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. Buyers are 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 Buyers, threatened against or affecting Buyers that would affect Buyers' ability to carry out the transactions contemplated by this Agreement. 9 10 6.7 Financial Ability. Buyers have the financial ability and/or resources to consummate the transactions contemplated hereunder. 6.8 Full Disclosure. No representation or warranty made by Buyers contained in this Agreement nor any certificate, document or other instrument furnished or to be furnished by Buyers 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 Buyers' 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. ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER Each Seller makes the following representations and warranties to Buyers, 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 Buyers: 7.1 Organization and Standing. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is authorized to conduct business within those states where such qualification is necessary, and has the requisite power and authority to own, lease and operate the Station Assets owned or leased by it and to carry on the business of the Station 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 corporate power and authority, and has taken all necessary and proper corporate 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 Buyers, constitutes the legal, valid and binding obligation of Seller enforceable against it in accordance with its terms, except as limited by laws affecting the enforcement of creditors' rights or equitable principles generally. 7.3 Absence of Conflicting Agreements or Required Consents. Except as set forth in Article 5 with respect to governmental consents and in Schedule 7.9 with respect to consents required in connection with the assignment of certain Contracts, the execution, delivery and performance of this Agreement by Seller: (a) do not require the consent of any third party (including, without limitation, the consent of any governmental, regulatory, administrative or similar authority); (b) will not conflict with, result in a breach of, or constitute a violation of or default under, the provisions of Seller's certificate of incorporation or by-laws (or other charter or organizational documents), or any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority applicable to Seller or by which Seller or any of the Station 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 10 11 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 Station Assets is now subject; and (d) will not result in the creation of any lien, charge or encumbrance on any of the Station Assets. 7.4 Government Authorizations. 7.4.1 Schedule 7.4 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 material 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 Buyers true and complete copies of the Station Licenses and the other licenses, permits and authorizations listed in Schedule 7.4, including any and all amendments and other modifications thereto. 7.4.2 Licensee is the authorized legal holder of the Station Licenses and other licenses, permits and authorizations listed in Schedule 7.4. Except as set forth Schedule 7.4, none of the Station Licenses and other licenses, permits and authorizations listed in Schedule 7.4 is subject to any restrictions or conditions which would materially limit the full operation of the Station as now operated. The Station is not operating under any special temporary authority from the FCC. 7.4.3 Except as set forth in Schedule 7.4, and except for matters affecting the radio broadcast industry generally, there are no applications, complaints, petitions or proceedings pending or, to the best of Seller's knowledge, threatened as of the date hereof before the FCC or any other governmental or regulatory authority relating to the business or operations of the Station. Except as set forth in Schedule 7.4, the Station Licenses and the other licenses, permits and authorizations listed in Schedule 7.4 are in good standing, are in full force and effect and are unimpaired by any material act or omission of Seller or its shareholders, officers, directors or employees. The operations of the Station are in compliance in all material respects with the Station Licenses and the underlying construction permits and the other licenses, permits and authorizations listed in Schedule 7.4. No proceedings are pending or, to the best of Seller's knowledge, threatened, and to the best of Seller's knowledge there has not been any act or omission of Seller or any of its officers, directors, shareholders or employees, which 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 7.4, the denial of any pending applications, the issuance of any cease and desist order, the imposition of any administrative actions by the FCC or any other governmental or regulatory authority with respect to the Station Licenses or the other licenses, permits and authorizations listed in Schedule 7.4 or which may materially affect Buyers' ability to continue to operate the Station. 7.4.4 To the best of Seller's knowledge: (i) the Station is not causing unlawful 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 unlawful interference to transmissions of the Station or the public's reception of such transmissions. 11 12 7.4.5 Seller has no reason to believe that, upon Seller's compliance with the FCC's requirement that it divest the Station, the Station Licenses and the other licenses, permits, or authorizations listed in Schedule 7.4 will not be renewed in their ordinary course. 7.4.6 All reports, forms, and statements required to be filed by Seller 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. 7.4.7 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 Licensee as assignor of the Stations Licenses or cause the Stations Licenses and the other licenses, permits and authorizations listed in Schedule 7.4 not to be renewed in their ordinary course. 7.4.8 The operation of the Station and all of the Station Assets are in compliance in all respects with ANSI Radiation Standards C95.1-1992. 7.5 Compliance with FCC Regulations. The operation of the Station and all of the Station 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 that 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 Station Assets or the operation of the Station by Buyers. 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 Station Assets after conveyance thereof to Buyers or in any other form of transferee liability to Buyers. 7.7 Personal Property. Schedule 1.1.2 hereto contains a list of all items of tangible personal property and assets being transferred to Buyers and used or useful in the conduct of the business and operations of the Station. Schedule 1.1.2 also separately lists all tangible personal property leased by Seller pursuant to leases included within the Contracts. Except as disclosed in Schedule 7.7, Seller has, and following the Closing, RBI will have, good and marketable title to all of the items of tangible personal property which are included in the Station Assets (other than 12 13 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 except for the Assumed Liabilities. The properties listed in Schedule 1.1.2, along with those properties subject to lease and included among the Contracts, constitute all tangible personal property being transferred to Buyers. Except as set forth in Schedule 1.1.2, all items of tangible personal property included in the Station Assets are in good operating condition (ordinary wear and tear excepted), are free from all material defect and damage and are suitable for the purposes for which they are now being used. 7.8 Fairview CP. Seller holds an option to acquire the Fairview CP, which option is in full force and effect, is enforceable against the owner of the Fairview CP, and the only action required to exercise said option is written notice of exercise and execution of a definitive purchase agreement. A copy of the option and form of purchase agreement has been delivered to Buyers. 7.9 Contracts. Schedule 7.9 lists all Contracts being transferred to Buyers, as of the date of this Agreement. Those Contracts listed on Schedule 7.9, if any, requiring the consent of a third party to assignment are identified by an asterisk in the left margin of Schedule 7.9. Those Contracts, if any, that Seller and Buyers have agreed are material to the operation of the Station Assets and the valid assignment of which and receipt by Buyers of consents thereto is a condition to the consummation of the transactions contemplated hereby (the "Material Contracts") are identified by an "M" in the left margin of Schedule 7.9. 7.10 Status of Contracts, etc. Seller has delivered to Buyers true and complete copies of all Contracts, including any and all amendments and other modifications thereto. All of the Contracts are in full force and effect and are valid, binding and enforceable in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. Seller has complied in all material respects with all Contracts and is not in default beyond any applicable grace periods under any thereof and, to the best of Seller's knowledge, no other contracting party is in default under any thereof. 7.11 Reserved. 7.12 Intellectual Property. Except as noted thereon, Schedule 7.12 hereto is a true and complete list of all intellectual property used in connection with the operation of the Station. Except as set forth on Schedule 7.12, to the best of Seller's knowledge: (a) Seller's right, title and interest in the Intellectual Property as owner or licensee, as applicable, are free and clear of all liens, claims, encumbrances, rights or equities whatsoever of any third party and, to the extent any of the Intellectual Property is licensed to Seller, such interest is valid and uncontested by the licensor thereof or any third party; (b) Seller has not received any notice of any claimed conflict, violation or infringement of such Intellectual Property; and (c) none of such Intellectual Property rights is being infringed by any third party. 13 14 7.13 Financial Statements. Seller has furnished Buyers with true and complete copies of all financial statements, reports and information relating to the Station obtained by Seller from The Jet Broadcasting Co., Inc. at the time Seller acquired the Station, together with all other financial statements, reports and information of Seller relating to the Station requested by Buyers in Buyers' due diligence request for the period from August 16, 2000 (collectively, the "Financial Statements"). The Financial Statements have been prepared from the books, records and accounts of Seller relating to the Station and are generally consistent with the books, records and accounts of Seller with respect to such Station (which books, records and accounts are complete and accurate in all material respects), and present fairly the financial condition of Seller with respect to such Station and the results of operations for the period then ended. 7.14 Personnel Information. 7.14.1 Schedule 7.14 contains a true and complete list of all persons being transferred with the Station, 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 NMG. 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 Station upon the execution of this Agreement or after the Closing. 7.14.2 Seller, with respect to the Station, is not a party to any contract or agreement with any labor organization, nor has Seller agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any employees of Seller at the Station. Seller has no knowledge of any organization effort currently being made or threatened by or on behalf of any labor union with respect to employees of Seller at the Station. 7.14.3 Seller, with respect to the Station, has complied in all material respects with all laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, equal employment opportunity and payment and withholding of taxes. 7.15 Litigation. Except as described on Schedule 7.15, Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree relating to the conduct of the business or the operation of the 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 Seller with respect to, related to or in connection with the operation of the Station 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, 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 Station. 14 15 7.16 Compliance With Laws. Except as set forth in Schedule 7.16: (i) Seller is not in material violation of, nor has Seller received any notice asserting any non-compliance by it in connection with the operation of the Station or use or ownership of any of the Station 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 all material respects in compliance with all laws, regulations and governmental orders applicable to 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. 7.17 Reserved. 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 August 16, 2000: (a) Seller has conducted the business of the Station in the ordinary course consistent with Seller's past practices; (b) there has not been any material adverse change in the business, assets, properties, prospects or condition (financial or otherwise) of the Station, or any damage, destruction, or loss affecting any of the Station Assets; and (c) Seller has not created, assumed, or suffered any mortgage, pledge, lien or encumbrance on any of the Station Assets, which will not be released or terminated at or prior to closing. 7.20 Instruments of Conveyance: Good Title. The instruments to be executed by Seller and delivered to Buyers at the Closing, conveying the Station Assets to Buyers, will transfer good and marketable title to the Station 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 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 Station or the Station Assets exists which could, after the Closing result in any form of transferee liability against Buyers or subject the Station Assets to any lien, encumbrance, claim, charge, security interest or imposition whatsoever or otherwise affect the full, free and unencumbered use of the Station Assets by Buyers. 7.22 Full Disclosure. No representation or warranty made by Seller contained in this Agreement nor any certificate, document or other instrument furnished or to be furnished by Seller pursuant hereto contains or will contain any untrue statement of a material fact, or omits or shall omit to state any material fact required to make any statement contained herein or therein not misleading. To the best of Seller's knowledge, there is no impending or contemplated event or occurrence that would cause any of the foregoing representations not to be true and complete on the date of such event or occurrence as if made on that date. 15 16 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 Carl E. Hirsch, Seller's local engineer and the Station's local general manager. ARTICLE 8 COVENANTS OF BUYERS 8.1 Closing. Subject to Article 11 hereof, on the Closing Date, Buyers shall purchase the Station Assets from Seller as provided in Article I hereof and RBI shall assume the Assumed Liabilities of NMG as provided in Article 2 hereof. 8.2 Notification. Buyers, jointly or severally, shall provide Seller prompt written notice of any change in any of the information contained in the representations and warranties made in Article 6. Buyers shall also notify Seller of any litigation, arbitration or administrative proceeding pending or, to their knowledge, threatened against Buyers which challenges the transactions contemplated hereby. 8.3 No Inconsistent Action. Buyers, jointly and severally, 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 Buyers contained herein to be or become false or invalid or which could hinder or delay the consummation of the transactions contemplated by this Agreement. ARTICLE 9 COVENANTS OF SELLER 9.1 Pre-Closing Covenants. Seller covenants and agrees with respect to the 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 Buyers, Seller shall act in accordance with the following: 9.1.1 Seller shall use all commercially reasonable efforts to conduct the business and operations of the Station in the ordinary course of business consistent with past practice and with the intent of preserving the ongoing operations and assets of the Station, including but not limited to maintaining the independent identity of the Station, and retaining the current format and programming (including the content thereof) of the Station, and using all reasonable efforts to retain at the Station the services of all active employees, consultants and agents of the Station who are being transferred to the Buyers. 9.1.2 Seller shall use all commercially reasonable efforts to: (i) preserve the operation of the Station; and (ii) preserve the business of the Station's advertisers, customers, suppliers and others having business relations with the Station. 16 17 9.1.3 Seller shall operate the Station in all material 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 7.4 to expire, be surrendered, adversely modified, or otherwise terminated, or the FCC to institute any proceedings for the suspension, revocation or adverse modification of any of the Station 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 Buyers thereof and will use all reasonable efforts to take such steps as may be necessary to remove any such impediment to the FCC's consent to the transactions contemplated by this Agreement. 9.1.5 Except for changes or actions in the normal course of business, Seller shall not: (a) sell broadcast time on a prepaid basis (other than in the course of existing credit practices); (b) except as required by the applicable law or written agreements currently in effect, grant or agree to grant any general increases in the rates of salaries or compensation payable to employees of the Station (provided that no such increases to any employee shall in the aggregate exceed 5% of such employee's compensation as set forth on Schedule 7.14 hereto), (c) except as required by written agreements currently in effect, grant or agree to grant any specific bonus or increase in compensation to any executive management employee of the Station (provided that no such increases to any employee shall in the aggregate exceed 5% of such employee's compensation as set forth on Schedule 7.14 hereto); (d) provide for any new pension, retirement or other employment benefits for employees of the Station or any increases in any existing benefits, (e) modify, change or terminate any Contract; or (f) change the advertising rates in effect as of the date hereof. 9.1.6 Seller shall give or cause the Station to give Buyers and Buyers' counsel, accountants, engineers and other representatives, at Buyers' reasonable request and upon reasonable notice, full and reasonable access during normal business hours to all of Seller's personnel being transferred with the Station, properties, books, Contracts, reports and records (including, without limitation, financial information and tax returns relating to the Station, real estate, buildings and equipment relating to the Station and to the Station's employees, and to furnish Buyers 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 Station) that Buyers may reasonably request. The rights of Buyers under this Section 9.1.6 shall not be exercised in such a manner as to interfere unreasonably with the business of the Station. 9.1.7 Seller shall use all reasonable 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). 17 18 9.1.8 Seller shall: (a) refrain from making any sale, lease, transfer or other disposition of any of the Station Assets having a value in excess of $10,000 in the aggregate, other than in the normal course of business at fair market value in connection with replacements of equal or greater value without the prior approval of Buyers, which approval will not be unreasonably withheld; (b) if requested by Buyers, with respect to any Contract which can be terminated or not renewed by Seller in compliance with the terms thereof, notify the other parties to such Contract that Seller elects to terminate (or, if applicable, elect not to renew) such Contract; and (c) within thirty (30) days following the end of each calendar month, provide Buyers with a statement of income for the Station for such month and for the year-to-date period then ended (including a comparison to budget). 9.2 Notification. Seller will provide Buyers 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 Buyers of any litigation, arbitration or administrative proceeding pending or, to the best of its knowledge, threatened, which challenges the transactions contemplated hereby. Seller shall promptly notify Buyers if any of the normal broadcast transmissions of the Station are interrupted, interfered with or in any way impaired, and shall provide Buyers 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 substantially its prior signal coverage and to within FCC rules and regulations regarding power parameters within five (5) days of such event and to prior antenna height and to within FCC rules and regulations regarding power parameters within thirty (30) days of such event, or if more than five (5) such events occur within any thirty (30) day period, or if the Station shall be off the air for more than one hundred twenty (120) consecutive hours, then Buyers shall have the right to terminate this Agreement. 9.3 No Inconsistent Action. Seller shall not take any action which is materially inconsistent with its obligations under this Agreement nor take any action which would cause any representation or warranty of Seller contained herein to be or become false or invalid or which could hinder or delay the consummation of the transactions contemplated by this Agreement. Seller shall also take all necessary steps to cause the date of closing of its acquisition of the Fairview CP to be extended, if necessary, to coincide with the Closing Date under this Agreement in accordance with Section 4.1. 9.4 Closing. Subject to Article 12 hereof, on the Closing Date, Seller shall transfer, convey, assign and deliver to Buyers, the Station Assets and the Assumed Liabilities as provided in Articles 1 and 2 and Section 7.20 of this Agreement. 18 19 9.5 Other Items. Until the Closing Date or the earlier termination of this Agreement in accordance with the terms hereof, Seller shall not: (a) waive or release any right relating to the business or operations of the Station, 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 Station Licenses; (c) enter into any commitment for capital expenditures for which Buyers would become liable after the Closing Date; (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 except to call letters that have been suggested by Buyers and that are available to use without delay; (f) enter into any transaction or make or enter into any contract or commitment with respect to the Station or the Station Assets which by reason of its size or otherwise is not in the ordinary course of business consistent with past practices; or, without the prior written consent of Buyers, enter into any transaction or make or enter into any contract or commitment with respect to the Station or the Station Assets which involves more than $5,000 or is for longer than one (1) year; (g) fail to repair, maintain or replace the Station's transmitting, studio and other technical equipment necessary to maintain the Station's broadcast transmissions within the current parameters of the Station License; (h) 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; or (i) allow to occur or exist any event of default 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 Station. 9.6 Exclusivity. Seller agrees that, commencing on the date hereof through the Closing or earlier termination of this Agreement, Buyers shall have the exclusive right to consummate the transactions contemplated herein, and during such exclusive period, Seller agrees that neither Seller, nor any shareholders, 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 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 9.6. 9.7 FCC Filings. Seller shall file or cause to be filed on a current basis until the Closing Date all applications, fees, reports and documents required to be filed with the FCC with respect to the Station. Copies of each such application, fee filing, report and document filed between the date hereof and the Closing Date shall be furnished to Buyers as promptly as practicable after its filing. 9.8 Asset Purchase Agreement. Seller shall place a complete copy of this Agreement in the local public inspection file of the Station and shall append a complete copy of this Agreement to the application to the FCC for the FCC approval. 19 20 9.9 Fairview CP. Within five (5) business days after the execution and delivery of this Agreement, Seller shall exercise its option to acquire the Fairview CP, and promptly thereafter execute the definitive purchase agreement related thereto in the form provided to Buyers and proceed to consummate the transaction in accordance with, and abide by the terms of, the said purchase agreement. ARTICLE 10 JOINT COVENANTS Buyers 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, each of the Buyers and Seller shall each keep confidential all information obtained by it with respect to the other parties hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions contemplated by this Agreement, and if the transactions contemplated hereby are not consummated for any reason, each shall return to each other party hereto, without retaining a copy thereof, any schedules, documents or other written information obtained from such other party in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to keep confidential or return any information which: (a) is known or available through other lawful sources, not bound by a confidentiality agreement with the disclosing party; (b) is or becomes publicly known through no fault of the receiving party or its agents; (c) is required to be disclosed pursuant to an order or request of a judicial or governmental authority (provided the disclosing party is given reasonable prior notice of the order or request and the purpose of the disclosure); or (d) is developed by the receiving party independently of the disclosure by the disclosing party. Notwithstanding anything to the contrary herein, either party, with the prior written approval of the other party, may 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, unless such press release, statement or announcement is made in accordance with the disclosing party's legal obligations (including, but not limited to, filings permitted or required by the Securities Act of 1933 and the Securities and Exchange Act of 1934, the NASDAQ National Market and other similar regulatory bodies), in which case such prior approval shall not be required. 10.2 Cooperation. Subject to express limitations contained elsewhere herein, Buyers 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. 20 21 10.3 Control of Station. Buyers 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. 10.4 Consents to Assignment. To the extent that any Contract identified in the Schedules is not capable of being sold, assigned, transferred, delivered or subleased without the waiver or consent of any third person (including a government or governmental unit), or if such sale, assignment, transfer, delivery or sublease or attempted sale, assignment, transfer, delivery or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant hereto shall not constitute a sale, assignment, transfer, delivery or sublease or an attempted sale, assignment, offer, delivery or sublease thereof. Subject to the provisions of Section 11.5, in those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Closing relating to the assignment to RBI 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 RBI of all of Seller's rights, benefits, title and interest in and to the Contracts, and where necessary or appropriate, RBI 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 all commercially reasonable efforts to provide RBI with the financial and business benefits of such Contracts (including, without limitation, permitting RBI to enforce any rights of Seller arising under such Contracts), and RBI shall, to the extent RBI 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 RBI was to assume those obligations pursuant to the terms hereof. 10.5 Filings. In addition to the covenants of the parties set forth in Article 5 hereto, as promptly as practicable after the execution of this Agreement, Buyers and Seller shall use all reasonable 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. Buyers hereby waive compliance by Seller with the provisions of the "bulk sales" or similar laws of any state. Seller agrees to indemnify Buyers and hold them harmless from any and all loss, cost, damage and expense (including but not limited to, reasonable attorneys' fees) sustained by Buyers as a result of any failure of Seller to comply with any "bulk sales" or similar laws. 10.7 Employee Matters. Seller shall be responsible for the payment of all compensation and accrued employee benefits payable to all employees up to the Closing Date. Seller acknowledges and agrees that it, and not Buyers, is and shall be solely responsible for any 21 22 and all severance, insurance, supplemental pension, deferred compensation, retirement and any other benefits, and related costs, premiums and claims, due, to become due, committed or otherwise promised to any person who, as of the Closing Date, is a retiree, former employee, or current employee of Seller, relating to the period up to the Closing Date. Buyers, as purchaser of the Station Assets, shall assume no employee benefit plans, programs or practices, whether or not set forth in writing, maintained by Seller at any time. ARTICLE 11 CONDITIONS OF CLOSING BY BUYERS The obligations of Buyers hereunder are, at their option, subject to satisfaction or waiver, 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 if limited by materiality, in accordance with the terms thereof in all respects and if not so limited by materiality, in all material respects, as of the date hereof and on and as of the Closing Date as if made on and as of that date, except for changes (a) expressly permitted or contemplated by the terms of this Agreement; or (b) in the ordinary course of business which are not, either in individually or in the aggregate, material and adverse. 11.1.2 All of the terms, covenants and conditions to be complied with and performed by Seller on or prior to the Closing Date shall have been complied with or performed in all material respects. 11.1.3 Buyers shall have received a certificate, dated as of the Closing Date, from Seller, executed by an authorized 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; and (b) Seller has complied with or performed in all material respects all terms, covenants and conditions to be complied with or performed by it on or prior to the Closing Date. 11.2 Governmental Consents. The FCC Consent shall have been obtained and, subject to the provisions of Section 4.1 hereof, shall have become a Final Order. 11.3 Governmental Authorizations. Seller or an Affiliate of Seller shall be the holder of the Station Licenses and all other licenses, permits and other authorizations listed in Schedule 7.4, and there shall not have been any modification of any of such licenses, permits and other authorizations which has a material adverse effect on the Station or the operations thereof. No application shall be pending for the renewal of any of the Station 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 Station Licenses or any other licenses, permits or other authorizations listed in Schedule 7.4. 22 23 11.4 Adverse Proceedings. No suit, action, claim or governmental proceeding shall be pending or threatened against, and no order, decree or judgment of any court, agency or other governmental authority shall have been rendered (and remain in effect) against, any party hereto which: (a) would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms; (b) questions the validity or legality of any transaction contemplated hereby; (c) seeks to enjoin any transaction contemplated hereby; (d) seeks material damages on account of the consummation of any transaction contemplated hereby; or (e) is a petition of bankruptcy by or against Seller, an assignment by Seller for the benefit of its creditors, or other similar proceeding. 11.5 Third-Party Consents. All Material Contracts shall be in full force and effect on the Closing Date, and Seller shall have obtained and shall have delivered to RBI all appropriate third-party consents in form and substance acceptable to RBI in connection with the assignment of the Material Contracts to RBI and compliance with reasonable requirements of Buyers' senior lender. 11.6 Closing Documents. Seller shall have delivered or caused to be delivered to Buyers, on the Closing Date, all bills of sale, endorsements, assignments and other instruments of conveyance reasonably satisfactory in form and substance to Buyers, effecting the sale, transfer, assignment and conveyance of the Station Assets to Buyers, including, without limitation, each of the documents required to be delivered by it pursuant to Article 14. ARTICLE 12 CONDITIONS OF CLOSING BY SELLER The obligations of Seller hereunder are, at its option, subject to satisfaction or waiver, 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 Buyers made in this Agreement or in any Exhibit, Schedule or document delivered pursuant hereto, shall be true and complete in all material respects as of the date hereof and on and as of the Closing Date as if made on and as of that date, except for changes expressly permitted or contemplated by the terms of this Agreement. 12.1.2 All the terms, covenants and conditions to be complied with and performed by Buyers 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 authorized officer of Buyers, to the effect that: (a) the representations and 23 24 warranties of Buyers 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) Buyers have complied with or performed in all material respects all terms, covenants and conditions to be complied with or performed by them on or prior to the Closing Date. 12.2 Governmental Consents. The FCC Consent shall have been obtained and. subject to the provisions of Section 4.1 hereof, shall have become a Final Order. 12.3 Adverse Proceedings. No suit, action, claim or governmental proceeding shall be pending or threatened against, and no other decree or judgment of any court, agency or other governmental authority shall have been rendered (and remain in effect) against, any party hereto which: (a) would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms; (b) questions the validity or legality of any transaction contemplated hereby; (c) seeks to enjoin any transaction contemplated hereby; or (d) seeks material damages on account of the consummation of any transaction contemplated hereby. 12.4 Closing Documents. Buyers 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 them pursuant to Article 14. 12.5 Tower License. In the event the Closing occurs simultaneously with the closing on Seller's acquisition of the Fairview CP, as provided in Section 4.1, Buyer shall have entered into an Antenna License Agreement with Seller in the form of Exhibit B (the "Antenna License Agreement"). 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 Station Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be paid in equal shares by Buyers, on the one hand, and Seller on the other hand. 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 shall be paid in equal shares by Buyers, on the one hand, and Seller on the other hand. 24 25 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 Buyers the following: 14.1.1 Certified resolutions of the Board of Directors of Seller approving the execution and delivery of this Agreement and authorizing the consummation of the transactions contemplated hereby; 14.1.2 A certificate of Seller, dated the Closing Date, in the form described in Section 11.1.3; 14.1.3 Governmental certificates showing that Seller: (a) is duly organized and in good standing in the State of Delaware; and (b) has filed all returns, paid all taxes due thereon and is currently subject to no assessment and is in good standing as a foreign corporation in the Commonwealth of Pennsylvania, each certified as of a date not more than thirty (30) days before the Closing Date; 14.1.4 Such certificates, bills of sale, 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 reasonably satisfactory to Buyers and Buyers' counsel, as shall be effective to vest in Buyers good and marketable title in and to the Station Assets in accordance with the terms of this Agreement, free, clear and unencumbered except for Permitted Encumbrances, if any, as set forth on Schedule 7.7. 14.1.5 An Assignment and Assumption Agreement in the form of Exhibit C effectuating the assignment and assumption of the Assumed Liabilities (the "Assignment and Assumption Agreement"); 14.1.6 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 Station, including the public files of the Station, shall be left at the Station and thereby delivered to Buyers; 14.1.7 A written opinion of Seller's corporate and FCC counsel, on which Buyers' lenders shall be entitled to rely, in a form reasonably acceptable to Buyers, dated as of the Closing Date; 14.1.8 A Tower License Agreement in the form of Exhibit D (the "Tower License Agreement) executed by NMG; 14.1.9 The Antenna License Agreement executed by NMG, if applicable; and 14.1.10 Such additional information, materials, agreements, documents and 25 26 instruments as Buyers and their counsel may reasonably request in order to consummate the Closing. 14.2 Buyers' Documents. At the Closing, Buyers shall deliver or cause to be delivered to Seller the following: 14.2.1 Certified resolutions of the Board of Directors of Buyers approving the execution and delivery of this Agreement and authorizing the consummation of the transactions contemplated hereby; 14.2.2 A certificate of Buyers, dated the Closing Date, in the form described in Section 12.1.3; 14.2.3 The Assignment and Assumption Agreement executed by RBI; 14.2.4 A written opinion of Buyers' corporate counsel in a form reasonably acceptable to Seller, dated as of the Closing Date; 14.2.5 The Purchase Price in accordance with Section 3. 1 hereof; 14.2.6 The Tower License Agreement executed by RBI; 14.2.7 The Antenna License Agreement executed by RBI, if applicable; 14.2.8 Governmental certificates showing that (a) Buyers are duly organized and in good standing in the State of Delaware; and (b) RBI is in good standing as a foreign corporation in the Commonwealth of Pennsylvania, each certified as of a date not more than thirty (30) days before the Closing Date; and 14.2.9 Such additional information, materials, agreements, 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 Buyers 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 Buyers or Seller) for a period of twelve (12) months from the Closing Date. 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 Agreements and Warranties 26 27 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. 15.2 Indemnification. 15.2.1 Seller shall defend, indemnify and hold harmless Buyers from and against any and all losses, costs, damages, liabilities and expenses, including reasonable attorneys' fees and expenses ("Damages") incurred by Buyers 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 the Agreement; (c) the Retained Liabilities; (d) any failure of the parties to comply with any "bulk sales" laws applicable to the transactions contemplated hereby; and (e) the conduct of the business and operations of the Station or any portion thereof or the use or ownership of any of the Station Assets prior to the Closing Date. 15.2.2 RBI 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 Agreements and Warranties given or made by Buyers in this Agreement; (b) the Assumed Liabilities, and (c) the conduct of the business and operations of the Station or any portion thereof or the use or ownership of any of the Station Assets on or after the Closing Date. 15.3 Procedures: Third Party and Direct Indemnification Claims. The indemnified party agrees to give written notice within a reasonable time to the indemnifying party of any demand, suit, claim or assertion of liability by third parties or other circumstances that could give rise to an indemnification obligation hereunder against the indemnifying party (hereinafter collectively "Claims," and individually a "Claim"), it being understood that the failure to give such notice shall not affect the indemnified party's right to indemnification and the indemnifying party's obligation to indemnify as set forth in this Agreement, unless the indemnifying party's ability to contest, defend or settle with respect to such Claim is thereby demonstrably and materially prejudiced. The parties also agree that any claim for Damages arising directly between the parties relating to this Agreement may be brought at any time within the applicable survival period specified in Section 15.1. 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 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 27 28 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 contained 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 Notwithstanding the provisions in Section 15.2, neither Seller nor Buyers shall have the obligation to defend, indemnify and hold harmless under Section 15.2.1(a) and 15.2.2(a) for breach of Warranties until the aggregate Damages on account thereof exceed $50,000; provided, however, that the aggregate amount of all Damages asserted by either Seller or Buyer under Section 15.2 shall in no event exceed $250,000, except as otherwise set forth in Sections 16.2 and 16.3 hereof. 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 Buyers and Seller, this Agreement may be terminated on such terms and conditions as so agreed; or 16.1.2 By written notice of Buyers 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 Buyers or such longer period as provided in Section 17.1 hereof; or 28 29 16.1.3 By written notice of Seller to Buyers if either 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 any party if any material condition to the obligation to perform this Agreement of the party seeking to terminate has not been satisfied or materially complied with by the Closing Date or the date specified herein for such satisfaction or material compliance, and such inaccuracy, failure of performance or non-satisfaction of or material 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 16.1.5 By written notice of Buyers to Seller or by Seller to Buyers if the FCC denies the FCC Application; or 16.1.6 By written notice of Buyers to Seller, or by Seller to Buyers, 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 16.1.7 By written notice of Buyers to Seller, or by Seller to Buyers, if the Closing shall not have been consummated on or before December 20, 2001; or 16.1.8 By written notice of Buyers to Seller if it shall become apparent in both Seller's and Buyers' judgment reasonably exercised that any condition to Buyers' obligation to close as set forth in Article 11 hereof will not be satisfied on or before December 20, 2001; or 16.1.9 By written notice of Buyers to Seller under the conditions set forth in Section 9.2 hereof. Notwithstanding the foregoing, no party hereto may effect a termination hereof if such party is in material default or breach of this Agreement. 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 Buyers for their injury. Buyers shall therefore be entitled to obtain specific performance of the terms of this Agreement in addition to any other remedies, that may be available to them. If any action is brought by Buyers to enforce this Agreement, Seller shall waive the defense that there is an adequate remedy at law. The prevailing party in any lawsuit for damages, specific performance, or other remedy brought pursuant to this Agreement shall be entitled to reimbursement by the other party of the reasonable legal fees and expenses incurred by such prevailing party. 29 30 16.4 Seller's Liquidated Damages. As more fully described in the Deposit Escrow Agreement, in the event this Agreement is terminated because of Buyers' 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 NMG, and the proceeds thereof shall constitute liquidated damages as to both NMG and Licensee. It is understood and agreed that such liquidated damages amount represents Buyers' and Seller's reasonable estimate of actual damages and does not constitute a penalty. Recovery by NMG of liquidated damages shall be the sole and exclusive remedy of both NMG and Licensee against Buyers for failing to consummate this Agreement as a result of Buyers' material breach hereof, and shall be applicable regardless of the actual amount of damages sustained and all other remedies are deemed waived by both NMG and Licensee. ARTICLE 17 MISCELLANEOUS PROVISIONS 17.1 Risk of Loss. The risk of loss or damage to any of the Station Assets prior to the Closing Date shall be upon Seller. Subject to Buyers' right to terminate this Agreement pursuant to Section 9.2 hereof, Seller shall repair, replace and restore any such damaged or lost Station 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 Station Assets exists on the Closing Date, then notwithstanding any other provision hereto, Buyers at their 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 Station Asset to its prior condition or deduct from the Purchase Price that amount which Buyers 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 12b-2 of Regulation 12B under the Securities Exchange Act of 1934, as amended; (g) all references to "$" or dollar amounts will be to lawful currency of the United States of America; and (h) the term "Seller" means not only NMG and Licensee collectively but also each of NMG and Licensee separately. 17.3 Further Assurances. After the Closing, Seller shall from time to time, at the request of and without further cost or expense to Buyers, 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 30 31 in Buyers good and marketable title to the Station Assets being transferred hereunder in accordance with the terms hereof, and Buyers 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 Buyers hereunder. 17.4 Preservation of Records. Subject to Section 10.1 hereof, Buyers hereby agree that they will preserve and make available to Seller and its attorneys and accountants (including the right to inspect and copy at Seller's cost), during normal business hours and upon reasonable advance notice, for three (3) years after the Closing Date, such of the books, records, files, correspondence, memoranda and other documents referred pursuant to this Agreement as Seller may reasonably require for the preparation of tax reports and returns, the preparation of financial statements, or the preparation of a response to any claim by a third party against Seller. 17.5 Benefit and Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Seller may not voluntarily or involuntarily assign its interest under this Agreement without the prior written consent of Buyers; provided, however, that no such consent shall be required if Seller assigns its interest under this Agreement to NextMedia Licensing, Inc. pursuant to Section 9.5(b) above. 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 Buyers find it necessary or are required to provide to a third party a collateral assignment of the Buyers' interest in this Agreement and/or any related documents, Seller shall reasonably cooperate with the Buyers and any third party requesting such assignment including but not limited to signing a consent and acknowledgment of such assignment. 17.6 Amendments. No amendment, waiver of compliance with any provision or condition hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment, change, extension or discharge is sought. 17.7 Headings. The headings set forth in this Agreement are for convenience only and will not control or affect the meaning or construction of the provisions of this Agreement. 17.8 Governing Law. The construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, 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 31 32 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 Buyers, and in the case of Buyers, by notifying Seller: To Seller: NextMedia Group II, Inc. 6312 South Fiddler's Green Circle Suite 360-E Englewood, CO 80111 Fax: (310) 445-4606 Attn: Mr. Sean Stover Copy to: LEIBOWITZ AND ASSOCIATES, P.A. 1 SE 3rd Avenue Miami, FL 33131-1715 Fax: (305) 530-9417 Attn: Matthew L. Leibowitz, Esq. To Buyers: Regent Broadcasting of Erie, Inc. c/o Regent Communications, Inc. 100 East RiverCenter Blvd. 9th Floor Covington, KY 41011 Fax: (859) 292-0352 Attn: Mr. Terry S. Jacobs Copy to: STRAUSS & TROY The Federal Reserve Building 150 East Fourth Street Cincinnati, OH 45202 Fax: (513) 241-8259 Attn: Alan C. Rosser, Esq. 17.10 Counterparts. This Agreement may be executed in two or more counterparts and by facsimile, each of which will be deemed an original and all of which together will constitute one and the same instrument. 17.11 No Third Party Beneficiaries. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the parties hereto and their successors or permitted assigns any rights or remedies under or by reason of this Agreement. 17.12 Severability. The parties agree that if one or more provisions contained in this Agreement shall be deemed or held to be invalid, illegal or unenforceable in any respect under 32 33 any applicable law, this Agreement shall be construed with the invalid, illegal or unenforceable provision deleted, and the validity, legality and enforceability of the remaining provisions contained herein shall not be affected or impaired thereby. 17.13 Entire Agreement. This Agreement and the schedules and exhibits hereto embody the entire agreement and understanding of the parties hereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein. 17.14 Authority. Buyers and Seller expressly acknowledge that the agents executing this Agreement on their behalf possess the full agency and authority, both actual and apparent, to fully bind their respective principals to this Agreement. Neither party shall assert or interpose any defense in any proceeding, which defenses are hereby waived, that said agents did not possess the legal authority and agency to bind their respective principals to this Agreement. 17.15 Studio Facilities. For a period of ninety (90) days following the Closing (the "Transition Period"), Seller shall allow the Station to continue its operations at its current studio location under Buyers' control to provide Buyers with ample time to construct and equip new studios for the Station at Buyers' own facilities. Buyers may operate the Station in its current facilities in a manner substantially similar to the manner in which it is currently operated, using all commercially reasonable efforts to minimize any inconvenience to Seller. Buyers shall pay to NMG the Station's proportionate allocation of all utility costs associated with Buyers' use of Seller's studio and equipment during the Transition Period. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. REGENT BROADCASTING OF ERIE, INC. By: /s/ Terry S. Jacobs ---------------------------------------- Name: Terry S. Jacobs Title: Chairman and Chief Executive Officer REGENT LICENSEE OF ERIE, INC. By: /s/ Terry S. Jacobs ---------------------------------------- Name: Terry S. Jacobs Title: Chairman and Chief Executive Officer NEXTMEDIA GROUP II, INC. By: /s/ Carl E. Hirsch ---------------------------------------- Name: Carl E. Hirsch Title: Chairman 33 34 NEXTMEDIA LICENSING, INC. By: /s/ Carl E. Hirsch ---------------------------------------- Name: Carl E. Hirsch Title: Chairman 34 EX-2.H 3 l87353aex2-h.txt EXHIBIT 2(H) 1 EXHIBIT 2(h) AGREEMENT OF MERGER AMONG STARCOM, INC., DENNIS G. CARPENTER, AND REGENT BROADCASTING, INC. JUNE 15, 2000 2 AGREEMENT OF MERGER This Agreement of Merger made and entered into this 15th day of June, 2000, by and among REGENT BROADCASTING, INC., a Delaware corporation ("RBI"); STARCOM, INC., a Minnesota corporation (the "Company"); and DENNIS G. CARPENTER ("Carpenter"), who is the President and a principal shareholder of the Company. WHEREAS, the Company, pursuant to authorizations duly granted and issued by the Federal Communications Commission (hereinafter called the "FCC"), owns and operates radio stations KLZZ-FM and KXSS-AM, licensed to Waite Park, Minnesota, and KKSR-FM, licensed to Sartell, Minnesota (the "Stations"); and WHEREAS, the shareholders 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 Minnesota in the manner provided therefor pursuant to Section 251 and related sections of Title 8 of the Delaware Code and Section 302A.601 and related Sections of Chapter 302A of the Minnesota Statutes; and WHEREAS, as a result of such merger, control of the Company will be transferred to Regent Communications, Inc.; and WHEREAS, control of the Company may not be transferred without prior written consent of the Federal Communications Commission; and WHEREAS, RBI and the Company have negotiated the terms and conditions of such merger, including the consideration to be paid to Carpenter and the other shareholders of the Company. 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 302A.601 and related Sections of Chapter 302A of the Minnesota Statutes. 3 1.02 Action to Effect Merger. Prior to, from and after Effectiveness, the Company and RBI 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 Minnesota. 1.03. Certificate of Incorporation and By-Laws; Name. 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. The name of the Surviving Corporation shall be "Regent Broadcasting, Inc." and the Surviving Corporation shall cease using the name "StarCom, Inc." within sixty (60) days following the Closing Date. 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 is subject to approval by the shareholders of the Company and by Regent Communications, Inc. as sole shareholder of RBI as provided by the applicable laws of the State of Delaware and State of Minnesota. Following such approvals and the fulfillment or waiver of all other conditions set forth herein, 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 251(c) of the General Corporation Law of the State of Delaware and Section 302A.601 and related Sections of Chapter 302A of the Minnesota Statutes, 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." -2- 4 1.07. Authorized Shares of Disappearing Corporation. The Company presently has authorized and outstanding capital stock as described on Schedule 1.07 (the "Company Stock"), which is owned by the common and preferred shareholders of the Company as set forth therein. 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, all of which are owned by Regent Communications, Inc. 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, all certificates evidencing all of the Company Stock shall be surrendered for cancellation. 1.10 Basic Merger Consideration. The consideration to be paid for the Company Stock shall be five million twenty-five thousand dollars ($5,025,000.00) (the "Basic Merger Consideration"), to be paid in cash by wire transfer of immediately available federal funds, subject to adjustment as provided in Section 1.11. Said consideration shall be payable as follows: (a) Approximately six hundred twenty thousand nine hundred seven and no/100 dollars ($620,907.00) in payment of the loan balance due to National City Bank; (b) Approximately one million three hundred forty-six thousand two hundred forty-two and no/100 dollars ($1,346,242.00) to Sioux Valley Broadcasting and KASM of Minnesota, Inc. in payment of their contract balance; (c) Approximately three hundred fifty thousand and no/100 dollars ($350,000.00) in payment of accounts and notes payable; (d) Two million one hundred thousand and no/100 dollars ($2,100,000.00) to the preferred shareholders of the Company in connection with the redemption of their shares; and (e) The remainder of the Closing Merger Consideration, being approximately six hundred seven thousand eight hundred fifty-one and no/100 dollars ($607,851.00), to the common shareholders of the Company for working capital and payment of income taxes payable with respect to distribution of assets to those shareholders. 1.11 Adjustment of Basic Merger Consideration. It is the intent of the parties, and the Basic Merger Consideration has been negotiated on the basis, that the Company and each Continuing Subsidiary shall have no Cash (as hereinafter defined) and no Liabilities (as hereinafter defined) as of the Closing Date. On or before the Closing Date, all Excluded Assets and all liabilities of the Company and each of the Continuing Subsidiaries will be transferred to an unrelated third party or parties. Nevertheless, at the Closing, a computation shall be compiled by -3- 5 the Company setting forth as of the Closing Date the amount, if any, of the Company's and each Continuing Subsidiary's Cash and all known Liabilities of Company and each Continuing Subsidiary as set forth below ("Closing Statement"). The Basic Merger Consideration shall be adjusted by (a) an increase by the aggregate amount of Cash and (b) a decrease by the aggregate amount of Liabilities shown on the Closing Statement. The amount of consideration 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 or either Continuing Subsidiary's balance sheet). As used herein, the term "Liabilities" shall mean at the Closing Date the amount of all the liabilities of the Company and each Continuing Subsidiary that would be recorded on a balance sheet 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, (v) net tax liabilities arising from a divisive reorganization or transfer of assets by the Company prior to the Closing Date after application of all loss carry forwards and similar tax attributes of the Company, and (vi) all other items which in accordance with generally accepted accounting principles consistently applied would be included as Liabilities of the Company or either Continuing Subsidiary. For purposes of the determination of Liabilities, all expenses relating to the Company or either Continuing Subsidiary and arising from the conduct of the Company's or a Continuing Subsidiary's business and operation of the Stations (including without limitation such items as taxes, license fees, utilities, and rents) shall be prorated between RBI and the Company in accordance with generally accepted accounting principles as of 11:59 p.m. Central time, on the date immediately preceding the Closing Date. Within ninety (90) days following execution of this Agreement, representatives of RBI's auditors may examine the books and records of the Company and of each of the Continuing Subsidiaries. If such examination is conducted, RBI's auditors shall prepare a report ("Closing Report") setting forth any Liabilities that have not been disclosed on the Financial Statements or on Schedule 4.19 hereof, and shall deliver same to RBI and to Carpenter, as the representative of the Company's shareholders, on or prior to the Closing Date. If such unknown Liabilities contained in the Closing Report exceed $150,000.00, in lieu of an adjustment therefor to the Basic Merger Consideration, the Company shall have the option to terminate this Agreement and the Escrow Deposit (as defined in paragraph 1.12 hereof) and any interest earned thereon shall be returned to RBI. The Company agrees to extend the Closing Date, if necessary, in order to provide to RBI 90 days to conduct such examination. In the event RBI does not disclose to the Company prior to the Closing any undisclosed Liabilities discovered by RBI's auditors during such examination, RBI shall be deemed to have waived its right to seek indemnification with respect to such discovered undisclosed Liabilities after the Closing, but not with respect to undisclosed Liabilities that are not discovered during the pre-Closing examination. -4- 6 If the Company does not terminate this Agreement pursuant to the foregoing paragraph and either RBI or Carpenter disagrees with the Closing Report, such party shall, prior to the earlier of the Closing and 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, Carpenter and RBI shall use their best efforts to resolve such objections and to agree upon the Closing Report through negotiation. If Carpenter 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, Carpenter 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 Carpenter, 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 Carpenter and RBI a written statement setting forth all adjustments made by the Arbitrator to the Closing Merger Consideration. Such Closing Report shall be employed to determine any further adjustments required to the Merger Consideration pursuant to this Section 1.11 ("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 the Company's former common shareholders and one-half by RBI. Notwithstanding the foregoing, the parties agree that the Closing Date shall not be delayed by the election by either RBI or Carpenter to object to the Closing Report pursuant to this Section 1.11 and further agree that the portion of the Closing Merger Consideration which is the subject of the objection shall be placed in escrow pending completion of the arbitration procedure. 1.12 Escrow Deposit. Concurrently with the execution of this Agreement, RBI shall forward to Security Title and Guaranty Agency, Inc. ("Escrow Agent") cash or an irrevocable, stand-by letter of credit in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00) (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 (other than such conditions as can readily be satisfied by the Closing), the Escrow Deposit shall be delivered to the Company (which may exercise its right to draw on the letter of credit) as its 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 1.12(a) above, the Escrow Deposit shall be delivered to RBI. -5- 7 1.13 Payment of Closing Merger Consideration. At the Closing, the Escrow Deposit shall be delivered to RBI. Except as otherwise described in Section 1.10, the Closing Merger Consideration shall be paid to the Company's shareholders by wire transfer of immediately available funds according to wire instructions of specific amounts owed each shareholder as Carpenter directs in writing. 1.14 Lease. At the Closing, RBI or an Affiliate of RBI shall enter into a tower site lease agreement with an entity to be formed for the common shareholders of the Company substantially in the same form attached hereto as Exhibit H. 1.15 Closing. Except as otherwise mutually agreed upon by the parties, 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 release of initial FCC approval on public notice that it has consented to the transactions contemplated hereby (the "Initial Approval"), or such other date as may be mutually agreed by the parties hereto (the "Closing Date"). In the event 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 at such place and in such manner as the parties hereto may agree. ARTICLE II Governmental Consents 2.01 FCC Consent. It is specifically understood and agreed by 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 (the "FCC Consent"). 2.02 FCC Application. Within five (5) business days after the execution of this Agreement, RBI and the Company shall file an application with the FCC for the FCC Consent (the "FCC Application"). RBI and the Company 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 party shall have any obligation to satisfy complainants or the FCC by taking any steps which would have a material adverse effect upon either party or upon any of their respective Affiliates). If the FCC Consent imposes any condition on either party or any of their respective Affiliates, such party shall use its best efforts to comply with such condition; provided, however, that neither party 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 -6- 8 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 RBI hereby makes 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 the Company: 3.01 Standing. RBI is duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own and lease its properties and carry on its business as now being conducted by it. 3.02 Authority. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of RBI and this Agreement is a valid and binding obligation of RBI. 3.03 Qualification. RBI has no knowledge of any facts which would, under present law (including the Communications Act of 1934, as amended), and present rules, regulations, practices and policies of the FCC, disqualify RBI and Regent Communications, Inc. as the transferee of the licenses, permits and authorizations listed on Schedule 4.08 hereto, or as an owner and/or operator of the Stations, and RBI will not take, or unreasonably fail to take, any action which RBI knows or has reason to know would cause such disqualification. Should RBI become aware of any such facts, it will promptly notify the Company in writing thereof and use its 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: (a) do not conflict with the provisions of the certificate of incorporation or by-laws of RBI; (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 RBI 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 RBI is now subject. ARTICLE IV Representations and Warranties of Carpenter and the Company Carpenter 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: -7- 9 4.01 Corporate Standing. The Company and its Subsidiaries are corporations duly organized, validly existing and in good standing under the laws of the State of Minnesota and have all requisite corporate power and authority to own or lease their properties and to carry on their business as now being conducted. The Company and its Subsidiaries are not qualified or required to be qualified in any other jurisdiction in order to own or lease their properties or to carry on their business as now being conducted. 4.02 Subsidiaries and Investments. The Company has only those Subsidiaries and Affiliates listed in Schedule 4.02. On the Closing Date, the Company shall have only two Subsidiaries (namely, RepCom, Inc. and Sartell FM, Inc. and each referred to herein as a "Continuing Subsidiary") and no other Subsidiaries or Affiliate. 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, other than as listed on Schedule 4.02. 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. Except as described on Schedule 4.02, the businesses carried on by the Company have not been conducted through any other direct or indirect subsidiary or entity related to the Company. 4.03 Charter and By-Laws. The Company has delivered to RBI true and complete copies of the Articles of Incorporation and By-Laws of the Company and each of its Continuing Subsidiaries 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 or any of its Continuing Subsidiaries since the delivery of copies thereof to RBI. No provision of the Articles of Incorporation or the By-Laws of the Company or any of its Subsidiaries or of any agreement, instrument or undertaking to which the Company is a party or by which the Company or any of its Subsidiaries is bound, has been or will be violated by the execution and delivery by the Company of this Agreement or the performance or satisfaction of any obligation or condition herein contained on its part to be performed or satisfied. Neither the Company nor any of its Subsidiaries is 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. The Company has delivered to RBI true and complete copies of the stock records and the minute book of the Company and each of its Continuing Subsidiaries for inspection and the stock records truly, accurately and fully account for all transactions in the capital stock of the Company, and the minute books contain the up-to-date, complete, and accurate minutes of the actions of the Company's and each Continuing Subsidiary'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 and each of its Continuing Subsidiaries ; (b) A payroll roster of the Company and each of its Continuing Subsidiaries for the most recent payroll period ended prior to the date of delivery thereof showing the names, titles, -8- 10 and annualized current rate of pay for each person entitled to receive compensation from the Company or any of its Continuing Subsidiaries; (c) Each bank account and safety deposit box of the Company and each of its Continuing Subsidiaries, 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 or any of its Continuing Subsidiaries. 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 or any of its Continuing Subsidiaries will submit his or her written resignation as such to RBI on the Closing Date, effective with the delivery thereof. 4.05 Capitalization; Company Stock. (a) The Company Stock constitutes all of the issued and outstanding capital stock of the Company, the ownership of which is set forth in Schedule 1.07. (b) The authorized and outstanding capital stock of each Continuing Subsidiary is set forth in Schedule 4.05. All of the issued and outstanding capital stock of the Continuing Subsidiaries is owned by the Company free and clear of all Encumbrances except as set forth on Schedules 1.07 and 4.05, all of which will be released by the Closing Date. All shares of Company Stock and the capital stock of the Continuing Subsidiaries 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 either Continuing Subsidiary or any agreement to which the Company or either Continuing Subsidiary is a party or by which it is bound. Except as set forth on Schedules 1.07 and 4.05 (all of which will be released by the Closing Date), the Company Stock is owned by the Company's shareholders, 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. The Company's shareholders have good and marketable title to the stock owned by them with full right to assign, transfer and deliver the same to RBI. According to the stock records of the Company, the Company's shareholders are the record and beneficial owner of all shares of Company Stock and the transfer thereof 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 the Company. (c) Except for those set forth in Schedules 1.07 and 4.05 (all of which to be eliminated by the Company prior to the Closing) there are no options, warrants, calls, rights, commitments or agreements of any character, written or oral, to which the Company or either Continuing Subsidiary is a party or by which it is bound obligating the Company or either Continuing Subsidiary 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 either Continuing Subsidiary 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. -9- 11 There is outstanding no vote, plan, or pending proposal for any redemption of stock of Company or either Continuing Subsidiary or merger or consolidation of Company or either Continuing Subsidiary with or into any other corporation. Except for legends disclosed on Schedules 1.07 and 4.05, no legend or other reference to any purported Encumbrances appears upon any certificate representing shares of Company Stock or the stock of either Continuing Subsidiary. The delivery of the certificates to RBI provided in Section 1.09 of this Agreement and the payment to the Company's shareholders provided in Section 1.13 of this Agreement will result in RBI's immediate acquisition of record and sole beneficial ownership of all the shares of Company Stock, free and clear of all Encumbrances. 4.06 Authorization and Binding Obligation. Subject to the consent of the Company's common and preferred shareholders, Carpenter 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 Carpenter 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 for the consent of the Company's common and preferred shareholders and consents required in connection with the assignment of certain material Contracts as set forth in Schedule 4.13, the execution, delivery and performance of this Agreement by Carpenter 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 (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 Carpenter is a party or by which the Company or Carpenter is bound; (c) will not either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under, any Contract, agreement, instrument, license or permit to which the Company is now subject; and (d) will not result in the creation of any lien, charge or encumbrance on any of the Company Stock or Stations Assets. 4.08 Government Authorizations. (a) Schedule 4.08 hereto contains a true and complete list of the 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 Stations in the manner and to the full extent they are presently conducted (including, without limitation, auxiliary licenses associated with the Stations). The Company 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 Continuing Subsidiaries are the authorized legal holders 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 -10- 12 in Schedule 4.08 is subject to any restrictions or conditions which would materially limit the full operation of the Stations as now operated. (c) Except for matters affecting the radio broadcast industry generally, there are no complaints, petitions to deny, informal objections, or adjudication proceedings pending or, to the best of the Company'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. 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 either Continuing Subsidiary, or any of their respective shareholders, officers, directors or employees. The operations of the Stations 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 the Company's knowledge, threatened, and there has not been any act or omission of the Company or either Continuing Subsidiary, or any of their respective 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 or any of its Affiliates' ability to continue to operate the Stations as they are currently operated. (d) The Stations are operating with the maximum facilities specified in their Station License. (e) To the best of the Company's knowledge: (i) the Stations are not causing objectionable interference to the transmissions of any other broadcast stations or communications facility nor have the stations received any complaints with respect thereto; and (ii) no other broadcast stations or communications facility is causing objectionable interference to respective transmissions of the Stations or the public's reception of such transmissions. (f) The Company 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 or any Continuing Subsidiary with the FCC with respect to the Stations 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 Stations 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 Stations 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 -11- 13 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 the Company's knowledge, there are no filed claims to the contrary. 4.10 Taxes. The Company and each of its Subsidiaries have 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 them. The Company has delivered to RBI true and complete copies of all federal, state and local tax returns of the Company and each of its Subsidiaries 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 and each of its Subsidiaries as filed for the year ended December 31, 1999. The Company has duly paid or accrued all taxes required to be paid by it and each of its Subsidiaries 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 and each of its Subsidiaries 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 and each of its Subsidiaries have not requested any extension of time except with respect to 1999 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 and each of its Subsidiaries 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 taxes of any nature payable by the Company or any of its Subsidiaries which in any event could adversely affect any of the Station Assets or the operation of the Stations. Except as set forth on Schedule 4.10, the Company has not been advised that any of its tax returns, federal, state, local or foreign, or any of its Subsidiaries have been or are being audited. Neither the Company nor any of its Subsidiaries has 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. With the exception of any Excluded Assets, Schedule 4.11 hereto contains a list of all material items of tangible personal property owned by the Company or any of its Continuing Subsidiaries and used in the conduct of the business and operations of the -12- 14 Stations. Schedule 4.11 also separately lists any material tangible personal property leased by the Company or any of its Continuing Subsidiaries pursuant to leases included within the Contracts. The Company or the Continuing Subsidiaries have 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 tangible personal property necessary to operate the Stations as the same are now being operated. Except as set forth in Schedule 4.11, all items of tangible personal property included in the 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 Stations) used by the Company or any of its Continuing Subsidiaries in connection with the operations of the Stations (the "Real Estate") and includes the name of the record title holder(s) thereof and a list of all indebtedness secured by a lien, mortgage or deed of trust thereon. The Company or the Continuing Subsidiaries have good and marketable title in fee simple to all the Real Estate specified as owned by them 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 and the Continuing Subsidiaries have adequate rights of ingress and egress for operation of the business of the Company and the Continuing Subsidiaries in the ordinary course. None of the buildings, structures, improvements, or fixtures constructed on the Real Estate, including without limitation towers, guy wires and guy anchors, and ground radials, nor the operation or maintenance thereto, violates any restrictive covenant or any provision of any federal, state or local law, ordinance, rule or regulation, or encroaches on any property owned by others. No condemnation proceeding is pending or threatened which would preclude or impair the continued use of any such property by the Company for the purposes for which it is currently used. (b) 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, telephone and electric for the conduct of the business and operations of the Stations as presently conducted. -13- 15 (c) The Company has completed those tower improvements described in Schedule 4.12 according to generally-accepted standards of good engineering practice. 4.13 Contracts. Schedule 4.13 lists all material Contracts to which the Company is a party, or which are binding on the Company or any Continuing Subsidiary, as of the date of this Agreement, including a listing of all required consents for the transfer thereof. All of such barter and trade agreements are preemptible for cash sales and none is subject to fixed positions (except for those contracts which provide for the delivery of programming to the Stations in return for barter advertising). 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 and each Continuing Subsidiary have complied in all respects with all material Contracts and are not in default beyond any applicable grace periods, and, to the best of the Company'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 $10,000.00, 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, neither the Company nor any Continuing Subsidiary is 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 or a Continuing Subsidiary as lessee having a value of less than $5,000.00 per annum in the aggregate; (c) agreement, contract or commitment for any capital expenditures; (d) agreement, indenture or other instrument which contains restrictions with respect to payment of dividends or any other distribution in respect of its capital stock; (e) agreement, contract or commitment limiting the freedom of the Company or a Continuing Subsidiary 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); -14- 16 (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 of the Stations, the Company or a Continuing Subsidiary; or (j) any other contract for borrowed money either as borrower or lender. 4.14 Environmental. The Company and each Continuing Subsidiary have 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 Stations and their 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 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. With the exception of any Excluded Assets, 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 any Continuing Subsidiary or under which the Company or any Continuing Subsidiary is a licensee and which is used in the conduct of the business and operations of the Company or the Stations. Except as set forth on Schedule 4.15, to the best of the Company's knowledge: (a) the Company's and each Continuing Subsidiary's right, title and interest in the Intellectual Property as owner or licensee, as applicable, are 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 or a Continuing Subsidiary, 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 either the Company or a Continuing Subsidiary, and all of the Company's and each Continuing Subsidiary'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 or any Continuing Subsidiary in connection with the Company's and each Continuing Subsidiary's business or operations. 4.16 Financial Statements. The Company has delivered to RBI copies of the Company's and each Continuing Subsidiary's financial statements for the fiscal year ended December 31, 1999 -15- 17 (the "Financial Statement Date"), and for the fiscal years ended on December 31 of each of the years 1997 and 1998, and notes thereto, as well as cash statements of operations (with general and administrative detail and with barter transactions excluded) for the Stations for the months of January, February and March of 1999 and 2000 (the "Financial Statements"), all of which are true, complete and correct, have been prepared from the books and records of the Company and the Continuing Subsidiaries 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, the Continuing Subsidiaries and the Stations as of the dates thereof and for the periods covered thereby. The Financial Statements include: (a) the balance sheets of the Company and each Continuing Subsidiary 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 periods 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 Financial Statements include all adjustments, which consist only of normal recurring accruals, necessary for such fair presentation. There are no facts known to the Company which would alter the information contained in the Financial Statements in any way whatever. 4.17 Absence of Certain Payments. Neither the Company, nor any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any Continuing Subsidiary, 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 or any Continuing Subsidiary, 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 and Continuing Subsidiary or the Stations. 4.18 Transactions with Certain Persons. Except as set forth on Schedule 4.18 (all of which to be paid in full and/or released at or prior to the Closing), the Company does not owe any amount to, or have any contract with or commitment to any of the Company's shareholders, directors, officers, employees or consultants, and none of such persons owes any amount to the Company. 4.19 Liabilities. Except to the extent claimed by preferred shareholders, or reflected, reserved against, or noted on the Financial Statements or set forth on Schedule 4.19, the Company and the Continuing Subsidiaries have, no debts, liabilities or obligations of any nature whatsoever, whether accrued, absolute, contingent, or otherwise, and whether due or to become due, for any -16- 18 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. All liabilities of the Company shall be paid, settled, released and discharged prior to the Closing or out of the proceeds from this transaction in accordance with the use of proceeds set forth in Section 1.10. There exists no basis for the assertion against the Company or either Continuing Subsidiary of any material liability of any nature or in any amount not fully reflected, reserved against, or noted in the 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. Neither the Company nor either Continuing Subsidiary is a party to any contract or agreement with any labor organization, nor has the Company or either Continuing Subsidiary 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 or either Continuing Subsidiary at the Stations. Neither the Company nor either Continuing Subsidiary has knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees at the Stations. Neither the Company nor either Continuing Subsidiary has consented to any final decree involving any claim of unfair labor practice or has 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 or either Continuing Subsidiary and any of its employees or any labor union or collective bargaining agent representing or purporting to represent employees of the Company or either Continuing Subsidiary. Since December 31, 1998, there has been no unusual increase in compensation payable by the Company or either Continuing Subsidiary to any of its officers, employees or agents or any bonus payment or similar arrangements made to or with them. The Company and the Continuing Subsidiaries have 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. Neither the Company nor either Continuing Subsidiary is 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 Station Assets, and there is no litigation, administrative action, arbitration, proceeding or investigation pending or, to the best knowledge of the Company, threatened against the Company or either Continuing Subsidiary 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 the Company, threatened before the FCC or any other governmental organization with respect to the business or operations of the Stations. -17- 19 4.22 Compliance With Laws. Except as set forth in Schedule 4.22, the Company and the Continuing Subsidiaries are not in material violation of, nor has the Company or either Continuing Subsidiary received any notice asserting any non-compliance by the Company or either Continuing Subsidiary with, any statute, rule or regulation, whether federal, state or local. The Company and the Continuing Subsidiaries are 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 and the Continuing Subsidiaries are in compliance in all material respects with all laws, regulations and governmental orders applicable to the conduct of the business and operations of the Stations, and their 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 Stations, 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 or either Continuing Subsidiary. (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 or either Continuing Subsidiary, and a brief description thereof. Except as set forth on Schedule 4.23, neither the Company nor either Continuing Subsidiary maintains or has 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 and the Continuing Subsidiaries have not engaged in, and the Company 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 -18- 20 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 the Company does not have any knowledge of any action or event, that could cause the Company to incur liability under Title IV of ERISA. (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 and the Continuing Subsidiaries have no obligation to provide health benefits to former employees of the Company or either Continuing Subsidiary, 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 the Company'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 February 29, 2000, except for matters caused by the Time Brokerage Agreement: (a) the Company and the Continuing Subsidiaries have conducted the business of the Stations only in the ordinary course consistent with past practices; (b) there has not been any material adverse change in the business, assets, properties, prospects or condition (financial or otherwise) of the Company, either Continuing Subsidiary, or the Stations, or any damage, destruction, or loss affecting any of the Station Assets; (c) the Company and the Continuing Subsidiaries have not created, assumed, or suffered any mortgage, pledge, lien or encumbrance on any of the Station Assets, and (d) the Company and the Continuing Subsidiaries have not sold, leased, or disposed or agreed to sell, lease, or dispose of any of their assets or properties (other than Excluded Assets) 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 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 and the Continuing Subsidiaries which are of an insurable character are insured by financially sound and responsible insurance companies against fire and other risks usually insured -19- 21 against by persons operating similar businesses. A true and complete list showing all policies of insurance maintained by the Company and the Continuing Subsidiaries, 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 or any Continuing Subsidiary'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 and the Continuing Subsidiaries will maintain the insurance set forth in Schedule 4.26 in full force and effect until Closing. 4.27 Full Disclosure. No representation or warranty made by Carpenter and the Company contained in this Agreement nor any certificate, document or other instrument furnished or to be furnished by Carpenter 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. Carpenter and the Company are not aware of any impending or contemplated event or occurrence that would cause any of the foregoing representations not to be true and complete on the date of such event or occurrence as if made on that date. Whenever in this Article IV a warranty or representation is qualified by a word or phrase referring to the Company's knowledge or awareness, it shall mean to the actual knowledge of the President and chief financial officer of the Company, the Stations' engineer, and each Station's general manager, after he has made reasonable investigation into the matter. ARTICLE V Covenants of RBI 5.01 Notification. RBI will provide the Company with 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 the Company of any litigation, arbitration or administrative proceeding pending or, to its knowledge, threatened against RBI which challenges the transactions contemplated hereby. 5.02 No Inconsistent Action. RBI 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 RBI contained herein to be or become false or invalid or which could hinder or delay the consummation of the transactions contemplated by this Agreement. 5.03 Consents. RBI shall promptly initiate steps and diligently take all reasonable actions to obtain all necessary approval of this transaction by Regent Communications, Inc. and those parties listed on Schedule 3.04. RBI shall give all consents and take all other actions, and RBI shall use its reasonable efforts to obtain any other third party consents necessary for the merger. -20- 22 ARTICLE VI Covenants of the Company The Company covenants and agrees with respect to the Company, the Continuing Subsidiaries, and the Stations that, between the date hereof and the Closing Date or the earlier termination of this Agreement in accordance with its terms, except as expressly permitted by this Agreement or with the prior written consent of RBI, the Company shall act, and shall cause the Continuing Subsidiaries to act, in accordance with the following: 6.01 Conduct of Business. Subject to time brokering of the Stations pursuant to the Time Brokerage Agreement, the Company and the Continuing Subsidiaries shall conduct the business and operations of the Stations only in the ordinary and prudent course of business consistent with past practice and with the intent of maintaining the condition of the Station Assets and preserving the ongoing operations and assets of the Stations, including using their reasonable best efforts to retain at the Stations the services of the key employees, consultants and agents of the Stations. 6.02 Compliance with Laws. The Company and the Continuing Subsidiaries shall operate the Stations 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 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 any Continuing Subsidiary which would cause the FCC to deny its consent to the transactions contemplated by this Agreement come to the Company's attention, the Company will promptly notify RBI 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. 6.03 Stations Operations. Subject to time brokering of the Stations pursuant to the Time Brokerage Agreement (which provisions shall control over any inconsistent provision in this Section 6.03) and except for changes or actions in the ordinary course of business consistent with past practices, the Company and the Continuing Subsidiaries 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 or any Continuing Subsidiary (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 Continuing Subsidiary 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 Stations to give RBI and RBI's counsel, accountants, engineers and other representatives, at RBI's reasonable request and upon -21- 23 reasonable notice, full and reasonable access during normal business hours to all of the Company's and its Continuing Subsidiary's personnel, properties, books, Contracts, reports and records (including, without limitation, financial information and environmental audits in existence with respect to the Stations Assets), Real Estate, and buildings and equipment, and to furnish RBI with information and copies of all documents and agreements relating to the Stations and the operation thereof (including but not limited to financial and operating data and other information concerning the financial condition, results of operations and business of the Company, either of the Continuing Subsidiaries, or the Stations) 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 Stations. 6.05 Consents. The Company shall promptly initiate steps and diligently take all reasonable actions to obtain all necessary approval of this transaction by the Company's common and preferred shareholders and those parties listed on Schedule 4.13. The Company shall give all consents and take all other actions, and the Company shall use its reasonable best efforts to obtain any other third party consents, necessary for the merger or the assignment of any Contract. 6.06 Notification. 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. The Company agrees to notify RBI of any litigation, arbitration or administrative proceeding pending or, to the best of the Company's knowledge, threatened, which challenges the transactions contemplated hereby. The Company shall promptly notify RBI if any of the normal broadcast transmissions of any of the Stations 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 Stations are not restored so that operation is resumed to full licensed power and antenna height within five (5) days of such event, or if more than five (5) such events occur within any thirty (30) day period, or if any of the Stations shall be off the air for more than ninety-six (96) consecutive hours, then RBI shall have the right to terminate this Agreement. 6.07 No Inconsistent Action. Carpenter 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 Carpenter 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, there shall be transferred, conveyed, assigned and delivered 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 Stations pursuant to the Time Brokerage Agreement, until the Closing Date or the earlier termination of this Agreement in accordance with the terms hereof, neither the Company nor either of the Continuing Subsidiaries shall: (a) waive or release any right relating to the business or operations of the Stations, except for adjustments or settlements made in the ordinary course of business consistent with past practices; (b) transfer or grant any rights under any of the Station Licenses; (c) enter into any commitment for capital -22- 24 expenditures; (d) introduce any material changes in the broadcast hours or in the format of the Stations or any other material change in the Stations' programming policies; (e) change the call letters of the Stations; (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, the stock of the Continuing Subsidiaries or Station Assets, except liens on the Station Assets for taxes not yet due and payable; (h) fail to repair, maintain or replace the Company's or the Continuing Subsidiaries' transmitting, studio and other technical equipment or fail to maintain reasonable and customary inventory of equipment, supplies and other tangible personal property used or useful in the operation of the Stations; (i) enter into, extend or renew any trade deals or sales of broadcast time on the Stations except as same are approved by RBI and except for time sales for cash at the Stations' prevailing rates; (j) assume, guarantee, endorse or otherwise become responsible for the indebtedness of any other person, firm or corporation except endorsement of negotiable instruments in the ordinary course of collection; (k) incur any indebtedness for borrowed money, or make any loans except in the ordinary course of business, or make any advances; (l) issue, sell, or contract to sell any of its securities or sell, contract to sell or grant any right or option to purchase or otherwise acquire, directly or indirectly, any securities, or redeem, purchase or otherwise acquire any outstanding shares of capital stock; (m) change, amend or modify the Articles of Incorporation or By-Laws of the Company or the Continuing Subsidiaries; (n) allow to occur or exist any event of default by the Company or any Subsidiary or Affiliate of 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, any Continuing Subsidiary or the Stations; (o) enter into any transaction or make or enter into any contract or commitment with respect to the Stations 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 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. Carpenter 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, Carpenter and the Company agree that neither the Company, the Continuing Subsidiaries, nor any director, officer, employee or other representative of the Company or any Continuing Subsidiary: (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, the stock of either Continuing Subsidiary, 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 -23- 25 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 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 thirty (30) days of notice of default served by the Company, Carpenter'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, Carpenter, and the Company 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 the 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, any party may in accordance with its legal obligations, including but not limited to filings permitted or required by the Securities Act of 1933 and the Securities and Exchange Act of 1934, the NASDAQ National Market and other similar regulatory bodies, make such press releases and other public statements and announcements as it deems necessary and appropriate in connection with this Agreement and the transactions contemplated hereby; provided, however, that prior to making any such unilateral press release or announcement, such party shall first communicate the same in writing to the other. 7.02 Cooperation. Subject to express limitations contained elsewhere herein, RBI and the Company agree to cooperate fully in taking any reasonable actions (including without limitation, reasonable actions to obtain the required consent of any governmental instrumentality or any third party) necessary or helpful to accomplish the transactions contemplated by this Agreement, including but not limited to the satisfaction of any condition to closing set forth herein. 7.3 Control of Stations. Subject to time brokering of the Stations pursuant to the Time Brokerage Agreement, RBI and the Continuing Subsidiaries shall not, directly or indirectly, -24- 26 control, supervise or direct the operations of the Stations prior to the Closing. Such operations, including complete control and supervision of all Station programs, employees and policies, shall be the sole responsibility of the Company and the Continuing Subsidiaries. ARTICLE VIII Conditions of Closing by RBI The obligations of RBI hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 8.01 Representations, Warranties and Covenants. (a) All representations and warranties of Carpenter 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) caused by the acts of Regent Broadcasting of St. Cloud, Inc. during the term of the Time Brokerage Agreement, or (b) 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 Carpenter 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 Carpenter 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 St. Cloud, Inc. under the Time Brokerage Agreement, the representations and warranties of Carpenter and the Company 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) Carpenter 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 Continuing Subsidiaries shall be the holders 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 Stations or the operations thereof. No proceeding shall be pending which seeks, or the effect of which reasonably could be, to revoke, cancel, fail to renew, suspend or adversely modify any of the Station Licenses or any other licenses, permits or other authorizations listed in Schedule 4.08. The Stations shall not be operating under any special temporary authority from the FCC. -25- 27 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 or any Continuing Subsidiary, an assignment by the Company or any Continuing Subsidiary for the benefit of its creditors, or other similar proceeding. 8.05 Consents. The Company's shareholders shall have approved this transaction in accordance with applicable law and the Company's Articles of Incorporation and By-Laws. All material Contracts shall be in full force and effect on the Closing Date 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) from those parties listed on Schedule 4.13 or in connection with any material Contracts, compliance with requirements of RBI's senior lender, or the surrender of the Company Stock to RBI. 8.06 Closing Documents. The Company 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 it pursuant to Article XI. 8.07 Time Brokerage Agreement Compliance. The Time Brokerage Agreement shall not have been terminated by Regent Broadcasting of St. Cloud, Inc. as permitted by the Time Brokerage Agreement as a result of the Continuing Subsidiaries' material noncompliance with its obligations under the Time Brokerage Agreement. 8.08 No Adverse Change. No material adverse change in the business, assets, properties, operations, prospects, or condition (financial or otherwise) of the Company, the Continuing Subsidiaries, the Stations, or the Stations 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 St. Cloud, Inc. under the Time Brokerage Agreement, shall have occurred since February 29, 2000, be threatened or be reasonably likely to occur. 8.09 Satisfactory Investigation of Station Assets. 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 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 conform to FCC rules and regulations and to the Company's warranties and representations contained herein. If RBI does not advise the Company in writing within forty-five (45) days after the date of this Agreement of any unsatisfactory findings or results, this condition -26- 28 shall be deemed waived. If RBI does advise the Company of any findings or results which do not conform to FCC rules and regulations and to the Company's warranties and representations contained herein, and such are capable of being cured by the Company to RBI's reasonable satisfaction, the Company shall cause the same to be cured at the Company's sole cost and expense prior to Initial Approval; provided, however, RBI may not advise the Company of the need to cure any findings unless the costs to cure in the aggregate are reasonably expected to exceed $15,000.00, and the Company, instead of curing such findings, may terminate this Agreement if the costs to cure in the aggregate are reasonably expected to exceed $100,000.00. 8.10 Environmental Studies. RBI shall have obtained within forty-five (45) days following the date of this Agreement Phase I environmental assessment reports on the Real Estate confirming the representations and warranties of 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. 8.11 Dissenters' Rights. Holders of not more than fifteen percent (15%) of the outstanding shares of Company Stock (excluding those owned by Carpenter) shall have made written demand for payment of the fair value of their shares in accordance with Section 302A.471 of the Minnesota Statutes. ARTICLE IX Conditions of Closing by the Company The obligations of the Company hereunder are, at its 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 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. (b) All the terms, covenants, agreements, and conditions to be complied with and performed by RBI on or prior to the Closing Date shall have been complied with or performed in all material respects. (c) The Company shall have received a certificate, dated as of the Closing Date, executed by the President of RBI to the effect that: (i) the representations and warranties of RBI 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 has complied with or performed in all material respects all terms, covenants, agreements and conditions to be complied with or performed by it on or prior to the Closing Date. -27- 29 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 the Company, on the Closing Date, the Closing Merger Consideration and each of the documents required to be delivered by it pursuant to Article XI. 9.05 Consents. RBI shall have obtained and delivered to the Company all appropriate third party consents in form and substance acceptable to the Company from those parties listed on Schedule 3.04. 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 the Company. 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 paid in equal shares by RBI and the Company. The fees and disbursements of counsel to the Company in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereby shall be paid by RBI up to and to the extent of $25,000.00. ARTICLE XI Documents To Be Delivered At Closing 11.01 Documents of the Company. At the Closing, 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 and each Continuing Subsidiary effective on the Closing Date; (b) A certificate of Carpenter and the Company, dated the Closing Date, in the form described in Section 8.01(c); (c) Governmental certificates showing that the Company and each Continuing Subsidiary: (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 Pledge Agreement executed by KYRS FM, Inc. substantially in the same form of Exhibit B and all assignments, guarantees, financing statements, and other documents to be supplied under the terms thereof; (f) A written opinion of Leonard, Street & Deinard, counsel for the Company, on which RBI's lenders and Affiliates shall be entitled to rely, in the form of Exhibit C, dated as of the Closing Date; (g) A written opinion of Wiley, Rein and Fielding, FCC counsel for the Company, on which RBI's lenders and Affiliates shall be entitled to rely, covering the matters set forth on Exhibit D; (h) 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 (i) The Consulting Agreement substantially in the same form of Exhibit E, executed by Carpenter; (j) The Tower Site Lease Agreement substantially in the same form of Exhibit H, executed by the Lessor; (k) The Guaranty substantially in the same form of Exhibit I ("Guaranty"), executed by KYRS FM, Inc., and -29- 31 (l) 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 the following: (a) Certified resolutions of the Board of Directors of RBI and Regent Communications, Inc. approving the execution and delivery of this Agreement and authorizing the consummation of the transactions contemplated hereby; (b) A certificate of RBI, dated the Closing Date, in the form described in Section 9.01(c); (c) The Pledge Agreement substantially in the same form of Exhibit B; (d) A written opinion of RBI's counsel substantially in the same form of Exhibit F, dated as of the Closing Date; (e) The Closing Merger Consideration in accordance with Section 1.13 hereof; (f) The Consulting Agreement substantially in the same form of Exhibit E, executed by RBI; (g) The Tower Site Lease Agreement substantially in the same form of Exhibit H, executed by Regent Broadcasting of St. Cloud, Inc.; and (h) Such additional information, materials, agreements, documents and instruments as Carpenter 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 Minnesota. -30- 32 (b) The Warranties in Sections 3.01, 3.02, 4.01, 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 the Company and any Continuing Subsidiary 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 for a period of twenty-four (24) months from the Closing Date. (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) 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) The Company's common shareholders severally 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 arising out of or related to: (i) any breach of the Warranties given or made by Carpenter or the Company in this Agreement; (ii) any breach of the Covenants or other agreements made by Carpenter, the shareholders of the Company, or the Company in the Agreement; (iii) liabilities of the Company and its Subsidiaries (including any contingent or other liability of the Company or its Subsidiaries that is not a Liability but that would be disclosed in the notes to the Company's financial statements in accordance with generally accepted accounting principles) incurred as a result of the operation of the Company, its Subsidiaries and the Stations for the period ended on the day preceding the Closing Date; (iv) income taxes of the Company and its Subsidiaries for the period ended on the day prior to the Closing Date; and (v) any claims by common or preferred shareholders pursuant to the exercise of their dissenters' rights under Section 302A.471 of the Minnesota Statutes (it being the agreement of the parties that in no event shall RBI be obligated to pay in excess of $5,025,000.00 plus the amounts to be paid by RBI pursuant to Article X). Notwithstanding the foregoing provisions of this Section 12.02(a), the Company's common shareholders shall have no obligation to defend, indemnify and hold harmless RBI for Damages -31- 33 arising out of any matter described in clause (a)(i) through (a)(v) of the immediately preceding paragraph unless the aggregate Damages on account thereof exceed $15,000.00, and the maximum liability of the Company's common shareholders for Damages arising out of any matter described in clause (a)(i) and (a)(iii) shall be equal to the remainder of five hundred thousand dollars ($500,000.00) less the amount of all payments actually made to Carpenter under the Consulting Agreement; provided, however, that no such limitation shall apply to any claim under clause (a)(iii) for indemnification for Damages based on claims by a third party. (b) RBI shall defend, indemnify and hold harmless the Company's shareholders from and against any and all Damages incurred by them arising out of or related to: (i) any breach of the Covenants, other agreements, and Warranties given or made by RBI in this Agreement; (ii) all federal, state and local tax liabilities of the Company and the Continuing Subsidiaries arising and relating to operation of the Stations on and after the Closing Date; and (iii) any loss or damage arising out of any Liability of the Company and the Continuing Subsidiaries incurred or the result of the operation of the Company and Stations on and after the Closing Date or which have been included in the Closing Report and as to which RBI has received an adjustment of the Basic Merger Consideration in its favor hereunder in accordance with Section 1.12. (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). The Company, on behalf of its shareholders, and RBI each irrevocably submits to the nonexclusive jurisdiction of any state or federal court sitting in Minneapolis, Minnesota 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 -32- 34 indemnified party shall fail to defend or oppose, the indemnified party (upon further written notice to the indemnifying party) shall have the right to undertake the defense, opposition, compromise or settlement of such Claim, by counsel or other representatives of its own choosing, on behalf of and for the account and risk of the indemnifying party (subject to the right of the indemnifying party to assume defense of or opposition to such Claim at any time prior to settlement, compromise or final determination thereto). (d) Anything this Section 12.02 to the contrary notwithstanding: (i) the indemnified party shall have the right, at its own cost and expense, to participate in the defense, opposition, compromise or settlement of the Claim; (ii) the indemnifying party shall not, without the indemnified party's written consent, settle or compromise any Claim or consent to entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such Claim, and (iii) in the event that the indemnifying party undertakes defense of or opposition to any Claim the indemnified party, by counsel or other representative of its own choosing and at its sole cost and expense, shall have the right to consult with the indemnifying party and its counsel or other representatives concerning such Claim and the indemnifying party and the indemnified party, and their respective counsel or other representatives, shall cooperate in good faith with respect to such Claim. (e) No undertaking of defense or opposition to a Claim shall be construed as an acknowledgment by such party that it is liable to the party claiming indemnification with respect to the Claim at issue or other similar Claims. (f) As collateral security for the performance by the Company's common shareholders of their obligations under Section 12.02(a) above, there shall be pledged to RBI under the terms of a Pledge Agreement substantially in the same form attached hereto as Exhibit B (the "Pledge Agreement"), that certain Promissory Note to KYRS FM, Inc. from Flagship Broadcasting, LLC in the amount of $499,000.00, together with an assignment to RBI of all rights of KYRS FM, Inc., which rights shall be prior and superior according to terms and conditions acceptable to RBI to the rights and interests of any other party therein, under that certain Loan Agreement, Mortgage, Security Agreement, and Pledge of LLC Membership Interest Agreement substantially in the same forms as supplied to RBI prior to the date of this Agreement, or otherwise as acceptable to RBI, in and to the assets of radio station KKLN-FM as collateral for the payment of such note, (the balance due under said note as of the date of this Agreement being $499,000.00). In the event of a failure by the Company's common shareholders to timely perform their obligations under Section 12.02(a), including without limitation those under Section 1.11, RBI shall be entitled to exercise all rights granted to it under the terms of the Pledge Agreement and Guaranty. -33- 35 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 the Company, this Agreement may be terminated on such terms and conditions as so agreed; or (b) By written notice of RBI to the Company if Carpenter 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/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 RBI; or (c) By written notice of the Company to RBI if RBI 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 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 the Company or by the Company to RBI, if the FCC denies the FCC Application; or (f) By written notice of RBI to the Company or by the Company 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 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 the Company or by the Company to RBI, if the Closing shall not have been consummated on or before December 31, 2000; or (h) By written notice of RBI to the Company if it shall become apparent in the judgment of RBI 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 December 31, 2000; or -34- 36 (i) By written notice of RBI to the Company under the conditions set forth in Sections 6.06 or 14.13 hereof; or (j) By written notice of RBI to the Company in the event Regent Broadcasting of St. Cloud, Inc. has terminated the Time Brokerage Agreement pursuant to Section 17 thereof; (k) By written notice of RBI to the Company, or by the Company 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; (l) By written notice of the Company to RBI, or by RBI to the Company, if the Company has not delivered to RBI within forty-five (45) days of the date hereof evidence reasonably satisfactory to RBI that the Company's shareholders and those other parties listed on Schedule 4.13 have consented to or approved this Agreement in accordance with applicable law and, if applicable, the Articles of Incorporation and By-Laws of the Company; or (m) By written notice of the Company to RBI under the conditions set forth in Sections 1.11 or 8.09 of this Agreement. 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 or any Continuing Subsidiary 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 Carpenter 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, Carpenter and the Company shall waive the defense that there is an adequate remedy at law. In the event of a default by Carpenter 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. -35- 37 13.04 COMPANY'S LIQUIDATED DAMAGES. AS MORE FULLY DESCRIBED IN THE DEPOSIT ESCROW AGREEMENT, IN 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 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 CARPENTER AND THE COMPANY AGAINST RBI 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 CARPENTER 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, Carpenter, as the representative of the Company's shareholders, 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 -36- 38 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 shall from time to time, at the request of and without further cost or expense to Carpenter, 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 the Company's shareholders. 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. Carpenter 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 shareholders, 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, Carpenter 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 Minnesota 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 Carpenter or the Company, by notifying RBI, and in the case of RBI, by notifying the Company: -37- 39 To Carpenter or the Company: Dennis G. Carpenter StarCom, Inc. 15395 91st Ave. N. Maple Grove, MN 55369 Fax: (612) 420-6551 Copy to: Steven D. DeRuyter, Esq. Leonard, Street & Deinard 150 South Fifth Street Suite 2300 Minneapolis, MN 55402 Fax: (612) 335-1657 To RBI: Terry S. Jacobs, Chairman Regent Communications, Inc. 50 East RiverCenter Blvd. Suite 180 Covington, KY 41011 Fax: (606) 292-0352 Copy to: Alan C. Rosser, Esq. Strauss & Troy The Federal Reserve Building 150 East Fourth Street Cincinnati, OH 45202 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 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. -38- 40 14.13 Risk of Loss. The risk of any loss, damage or destruction to any of the Stations Assets from fire or other casualty or cause shall be borne by the 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, the Company 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 Stations Assets lost or destroyed will be reimbursed under and insurance policy with respect thereto. In the event that the loss or damage exceeds One Hundred Thousand Dollars ($100,000.00) and the property is not substantially repaired, replaced or restored prior to the Closing Date, the Closing Date shall be extended for a period of up to ninety (90) days to permit the repair, replacement or restoration of the property by the 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 the Company: (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 the Company shall reimburse RBI for any deductible portion of the insurance coverage of Company. In the event of postponement of Closing hereunder, the Company and RBI 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. Concurrently with the execution of this Agreement, the Continuing Subsidiaries will enter into with Regent Broadcasting of St. Cloud, Inc. a Time Brokerage Agreement in the form attached hereto as Exhibit G pursuant to which the Continuing Subsidiaries are making available to Regent Broadcasting of St. Cloud, Inc. the broadcasting transmission facilities to the Stations and/or causing to be broadcast on the Stations programming provided by Regent Broadcasting of St. Cloud, 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 Consulting Agreement. Carpenter agrees on the Closing Date to enter into with Regent Broadcasting of St. Cloud, Inc., a Consulting Agreement in the form attached as Exhibit E. 14.16 Studios During Transition Period. For a period of six (6) months following the Commencement Date (as defined in the Time Brokerage Agreement) (the "Transition Period"), RBI shall be allowed to operate the Stations from the studios and production facilities utilized by them on the date of this Agreement in a manner substantially similar to the manner in which they are currently operated, free of rent except that RBI shall pay for its proportionate allocation of all utility expenses associated with the studio site during the Transition Period. -39- 41 14.17 Definitions. The following capitalized terms used in this Agreement shall have the following meanings: (a) "Contracts" means all contracts, agreements, leases and legally binding contractual rights of the Company or either of the Continuing Subsidiaries of any kind, written or oral, relating to the Company, either Continuing Subsidiary, or the operations of the Stations and which are listed on Schedule 4.13. (b) "Station Licenses" means all licenses, permits and other authorizations issued to the Company or either of the Continuing Subsidiaries by any governmental or regulatory authority including without limitation those issued by the FCC used or useful in connection with the operation of the Stations, including but not limited to those described in Schedule 4.08, along with renewals, 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 and the Continuing Subsidiaries of whatsoever kind and nature, real and personal, tangible and intangible, owned or leased (to the extent of the leasehold interest) by the Company or any of its Continuing Subsidiaries as the case may be, wherever situated, which are used or held for use in the operation of the Stations, including but not limited to all of the Company's right, title and interest in and to: (i) the 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 or Continuing Subsidiaries' rights therein, owned, leased (to the extent of the leasehold interest) or held by the Company or any of its Continuing Subsidiaries and used or useful in connection with the operations of the Stations and 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 and its Continuing Subsidiaries; 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 $5,000.00 in the aggregate unless the Company has obtained the prior written approval of RBI which shall not be unreasonably withheld; (iii) the Contracts (excluding items 5, 8, 9, 10 and 11 on Schedule 4.13) and all Time Sales Agreements (as defined in the Time Brokerage Agreement); (iv) all of the Company's and its Continuing Subsidiaries' rights in and to the call letters listed on Schedule 4.15, and any variation thereof, as well as all of the Company's and its Continuing Subsidiaries' 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, -40- 42 slogans, the Stations' logos and all other logos or licenses to use same and all other intangible property rights of the Company and its Continuing Subsidiaries, which are used or useful in connection with the operation of the Stations, 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 or any of its Continuing Subsidiaries, whether recorded on tape or other medium or intended for live performance, and all copyrights owned by or licensed to the Company or any of its Continuing Subsidiaries that are used or useful in connection with the operation of the Stations, including all such programs, materials, elements and copyrights acquired by the Company or any of its Continuing Subsidiaries between the date hereof and the Closing Date; (vi) all of the Company's or any of its Continuing Subsidiaries' rights in and to all the files, documents, records, and books of account relating to the operation of the Stations or to the Station Assets, including, without limitation, the Stations' local public files, programming information and studies, blueprints, technical information and engineering data, news and advertising studies or consulting reports, marketing and demographic data, sales correspondence, lists of advertisers, promotional materials, credit and sales reports and filings with the FCC, logs, software programs and books and records relating to employees, financial, accounting and operation matters; (vii) the Company's and its Continuing Subsidiaries' corporate minute books and records, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of the Company and its Continuing Subsidiaries; (viii) all claims and causes of action, including all contracts of insurance, and insurance proceeds or claims; and (ix) the real property described as Item No. 1 on Schedule 4.12; PROVIDED, HOWEVER, the Station Assets shall not include any Excluded Assets. (d) "Excluded Assets" means cash (unless adjustment therefor has been made pursuant to Section 1.11 hereof), accounts and notes receivable, the real property described as Item No. 2 on Schedule 4.12 consisting of the KXSS-AM tower site (the "KXSS-AM Tower Site") to be leased to the Company, any tangible and intangible assets not listed on Schedule 4.11 or 4.15 used exclusively in, or necessary for, the operation of radio stations KDDG and KASM and television station WCMN LP, as described or listed on Schedule 4.15, those contracts numbered 5, 8, 9, 10 and 11 on Schedule 4.13, those items listed on Schedule 4.23, the capital stock and all tangible and intangible assets of every subsidiary of the Company that is not a Continuing Subsidiary, and all the Company's right in and to the name "StarCom" and any variation thereof. (e) "Continuing Subsidiaries" means RepCom, Inc. and Sartell FM, Inc., wholly-owned subsidiaries of the Company. -41- 43 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. REGENT BROADCASTING, INC. STARCOM, INC. By: /s/ Terry S. Jacobs By: /s/ Dennis G. Carpenter ------------------------------------ ----------------------- Name: Terry S. Jacobs Name: Dennis G. Carpenter ------------------------------------ ----------------------- Title: Chairman and Chief Executive Officer Title: President CARPENTER: /s/ Dennis G. Carpenter ------------------------------ Dennis G. Carpenter In consideration of and as an inducement for Regent Broadcasting, Inc. entering into and performing its obligations under the foregoing Agreement of Merger, KYRS FM, Inc., a wholly-owned subsidiary of StarCom, Inc. that will benefit from the transaction contemplated by the foregoing Agreement of Merger, hereby agrees to execute and deliver to Regent Broadcasting, Inc. the Guaranty in the form attached hereto as Exhibit I. Dated: June 15, 2000 KYRS FM, INC. By: /s/ Dennis G. Carpenter ----------------------------- Name: Dennis G. Carpenter ----------------------------- Title: President ----------------------------- -42- 44 AMENDMENT TO AGREEMENT OF MERGER THIS AMENDMENT to that certain Agreement of Merger dated June 15, 2000 (the "Agreement"), by among REGENT BROADCASTING, INC., a Delaware corporation ("RBI"), STARCOM, INC., a Minnesota corporation (the "Company"), and DENNIS G. CARPENTER ("Carpenter"), who is the President and a principal shareholder of the Company, is entered into as of this 27th day of July, 2000. WHEREAS, under the terms of the Agreement as originally executed, it is contemplated that the Company shall be merged into RBI and that RBI shall be the surviving corporation in the merger; and WHEREAS, the parties desire to amend the Agreement to clarify provisions with respect to the elimination of liabilities of the Company at or prior to Effectiveness and to provide that the Company shall be the surviving corporation in the merger and that the merger be consummated by a merger of a newly-formed subsidiary of RBI into the Company; and WHEREAS, RBI Merger Corp., a Minnesota corporation ("Merger Corp."), is a wholly-owned subsidiary of RBI formed for the express purpose of consummating the merger transaction described in the Agreement; WHEREAS, RBI, the Company and Carpenter desire that Merger Corp. become a party to the Agreement, and Merger Corp. desires to become a party to the Agreement, on the terms and conditions set forth herein. NOW, THEREFORE, the parties agree as follows: 1. Parties. Merger Corp. shall observe and be bound by the terms and conditions of the Agreement, and, by executing below, Merger Corp. shall become a party to the Agreement, and thereby become entitled to the same rights and privileges, as fully as if Merger Corp. were originally named as a party thereto. 2. Representations, Warranties and Covenants. By executing below, Merger Corp. hereby joins jointly and severally with RBI in making the representations, warranties and covenants of RBI set forth in the Agreement, including, without limitation, those set forth in Articles III, V and VII, and RBI and Merger Corp. hereby jointly and severally warrant and represent that Merger Corp. is duly organized, validly existing and in good standing under the laws of the State of Minnesota and make each of the representations set forth in Sections 3.02, 3.03 and 3.04 of the Agreement with respect to Merger Corp. at and as of the date hereof. 45 3. Revisions to Agreement. The Agreement shall be revised as follows: (a) The introductory paragraph on page 1 shall be revised to include as a party to the Agreement: "RBI Merger Corp., a Minnesota corporation and a wholly-owned subsidiary of RBI expressly formed for the purpose of consummating the transaction described herein ("Merger Corp.")". (b) The second "WHEREAS" clause on page 1 shall be deleted in its entirety and replaced with the following: "WHEREAS, the Boards of Directors of the Company, RBI and Merger Corp. deem it advisable that Merger Corp. (sometimes referred to as the "Disappearing Corporation") be merged into the Company (sometimes referred to as the "Surviving Corporation") under the laws of the State of Minnesota in the manner provided therefor pursuant to Section 302A.601 and related Sections of Chapter 302A of the Minnesota Statutes; and" (c) The third "WHEREAS" clause on page 1 shall be deleted in its entirety and replaced with the following: "WHEREAS, at Closing 171,339 shares ("Redeemed Shares") of the common stock of the Company shall be redeemed in exchange for the distribution by the Company to the holders of the Redeemed Shares all of the issued and outstanding units in StarCom, LLC, a Minnesota limited liability corporation being created by the Company exclusively for the purposes of facilitating the merger, and as a result of such redemption and the merger, control of the Company will be transferred to Regent Communications, Inc.; and" (d) Section 1.01 shall be deleted in its entirety and replaced with the following: "1.01 Agreement. RBI, Merger Corp. and the Company hereby agree that, in accordance with and subject to the terms and conditions set forth herein, upon Effectiveness, Merger Corp. shall be merged with and into the Company, the separate corporate existence of Merger Corp. shall cease, the Company shall continue in existence and such merger shall in all respects have the effect provided for in Section 302A.601 and related Sections of Chapter 302A of the Minnesota Statutes." (e) Section 1.03 shall be deleted in its entirety and replaced with the following: "1.03 Articles of Incorporation and Bylaws; Name. From and after the Effectiveness and until thereafter amended as provided by law, the Articles of Incorporation and the Bylaws of Merger Corp. as in effect immediately prior to Effectiveness shall become the Articles of Incorporation and the Bylaws of the Surviving Corporation and the name of the Surviving Corporation shall be changed to "Regent Broadcasting of St. Cloud II, Inc.", which provisions shall be included in the Articles of Merger to be filed in accordance with Section 1.06 below. Within sixty (60) days 2 46 following the Closing Date, the Surviving Corporation shall cease using the name "StarCom" or any variation thereof." (f) Section 1.06 shall be deleted in its entirety and replaced with the following: "1.06 Stockholder Approval; Effectiveness of Merger. This Agreement of Merger is subject to approval by the shareholders of the Company and by RBI as the sole shareholder of Merger Corp. as provided by the applicable laws of the State of Minnesota. Following such approvals and the fulfillment or waiver of all other conditions set forth herein, if this Agreement is not terminated or abandoned in accordance with its terms, this Agreement of Merger shall be certified by the Company and Merger Corp. pursuant to Section 302A.601 and related Sections of Chapter 302A of the Minnesota Statutes, and the Surviving Corporation shall prepare, file and record with the Secretary of State of the of State of Minnesota Articles 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 Articles of Merger, herein sometimes called the "Effectiveness." (g) Section 1.07 shall be deleted in its entirety and replaced with the following: "1.07 Authorized Shares of Surviving Corporation. The Company presently has authorized and outstanding capital stock as described on Schedule 1.07 (the "Company Stock"), which is owned by the common and preferred shareholders of the Company as set forth therein. In the merger, the Company Stock will be transferred to RBI or tendered for cancellation or redemption in exchange for merger consideration, all as set forth in Sections 1.09, 1.10 and 1.11 below. Upon Effectiveness, the authorized capital stock of the Surviving Corporation will consist of 9,989,000 shares of common stock, $0.01 per share par value, 63,375 of which will be issued to RBI." (h) Section 1.08 shall be deleted in its entirety and replaced with the following: "1.08 Authorized Shares of Disappearing Corporation. Merger Corp. presently has authorized capital stock of 100,000 common shares, $0.01 per share par value, of which 1,000 shares are issued and outstanding, all of which are owned by RBI." (i) Section 1.09 shall be deleted in its entirety and replaced with the following: "1.09 Transfer or Redemption and Cancellation of Shares. At Effectiveness, following the common stock redemption at Closing described in the recitals hereto, (a) all remaining outstanding shares of the common stock of the Company (consisting of 63,375 shares) shall be transferred to RBI, (b) all outstanding shares of the preferred stock of the Company (consisting of 11,000 shares of the $15 Cumulative Dividend Convertible Class A Preferred Stock) shall be surrendered to the Company for cancellation; (c) all outstanding shares of Merger Corp. common stock shall be transferred to the Company and cancelled, and (d) each share held in Merger Corp.'s or the Company's treasury shall, by virtue of the merger and without any action on the part of the holder thereof, cease to 3 47 be outstanding, shall be cancelled and retired without payment of any consideration therefore and shall cease to exist. At the Closing, all certificates evidencing all of Merger Corp.'s common stock and all of the Company's preferred stock shall be surrendered for cancellation." (j) Section 1.10 shall be deleted in its entirety and replaced with the following: "1.10 Basic Merger Consideration. The consideration to be paid to holders of the Company Stock pursuant to the merger shall consist of (a) two million one hundred thousand and no/100 dollars ($2,100,000.00) to the preferred shareholders of the Company and (b) approximately six hundred seven thousand eight hundred fifty-one and no/100 ($607,851.00) to the common shareholders of the Company. Such amount in the aggregate is the net equity of the Company determined by subtracting from a gross agreed-upon value of five million twenty-five thousand dollars (5,025,000.00) (the "Basic Merger Consideration"), the following amounts which the parties hereto acknowledge will be contributed by RBI to the Company upon Effectiveness to pay the following liabilities: (i) Approximately six hundred twenty thousand nine hundred seven and no/100 dollars ($620,907.00) in payment of the loan balance due to National City Bank; (ii) Approximately one million three hundred forty-six thousand two hundred forty-two and no/100 dollars ($1,346,242.00) to Sioux Valley Broadcasting and KASM of Minnesota, Inc. in payment of their contract balance; and (iii) Approximately three hundred fifty thousand and no/100 dollars ($350,000.00) in payment of accounts and notes payable. In the event the actual payment amounts to pay in full those liabilities listed in subparts (i)-(iii) above differ in the aggregate from the approximate amounts stated, a corresponding opposite adjustment in the amount of such aggregate difference shall be made to the amount of the cash payment to the common shareholders of the Company that is to be made pursuant to Section 1.10(b) above." (k) Section 1.11 shall be deleted in its entirety and replaced with the following: "1.11 Adjustment of Basic Merger Consideration. It is the intent of the parties, and the Basic Merger Consideration has been negotiated on the basis, that the Company and each Continuing Subsidiary shall have no Cash (as hereinafter defined) and no Liabilities (as hereinafter defined) as of the Closing Date. On or before the Closing Date, immediately prior to Effectiveness, all Excluded Assets and all liabilities (other than those described in subparts (i)-(iii) of Section 1.10 above) of the Company and each of the Continuing Subsidiaries will be transferred to, and assumed by, StarCom, LLC, and thereby, effectively to the holders of the Common Stock pursuant to the redemption referenced in the recitals hereto. Nevertheless, at the Closing, a computation shall be 4 48 compiled by the Company setting forth as of the Closing Date the amount, if any, of the Company's and each Continuing Subsidiary's Cash and all known remaining Liabilities of Company and each Continuing Subsidiary as set forth below ("Closing Statement"). The Basic Merger Consideration shall be adjusted by (a) an increase by the aggregate amount of Cash and (b) a decrease by the aggregate amount of Liabilities shown on the Closing Statement. The amount of consideration 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 or either Continuing Subsidiary's balance sheet). As used herein, the term "Liabilities" shall mean at the Closing Date the amount of all the liabilities of the Company and each Continuing Subsidiary (excluding those described in subparts (i)-(iii) of Section 1.10 above) that would be recorded on a balance sheet 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, (v) net tax liabilities arising from the divisive reorganization or transfer of assets by the Company to StarCom, LLC or any other entity or person on or prior to the Closing Date after application of all loss carry forwards and similar tax attributes of the Company, and (vi) all other items which in accordance with generally accepted accounting principles consistently applied would be included as Liabilities of the Company or either Continuing Subsidiary. For purposes of the determination of Liabilities, all expenses relating to the Company or either Continuing Subsidiary and arising from the conduct of the Company's or a Continuing Subsidiary's business and operation of the Stations (including without limitation such items as taxes, license fees, utilities, and rents) shall be prorated between RBI and the Company in accordance with generally accepted accounting principles as of 11:59 p.m. Central time, on the date immediately preceding the Closing Date. Within ninety (90) days following execution of this Agreement, representatives of RBI's auditors may examine the books and records of the Company and of each of the Continuing Subsidiaries. If such examination is conducted, RBI's auditors shall prepare a report ("Closing Report") setting forth any Liabilities that have not been disclosed on the Financial Statements or on Schedule 4.19 hereof, and shall deliver same to RBI and to Carpenter, as the representative of the Company's shareholders, on or prior to the Closing Date. If such unknown Liabilities contained in the Closing Report exceed $150,000.00, in lieu of an adjustment therefor to the Basic Merger Consideration, the Company shall have the option to terminate this Agreement and the Escrow Deposit (as defined in paragraph 1.12 hereof) and any interest earned thereon shall be returned to RBI. The Company agrees to extend the Closing Date, if necessary, in order to provide to RBI 90 5 49 days to conduct such examination. In the event RBI does not disclose to the Company prior to the Closing any undisclosed Liabilities discovered by RBI's auditors during such examination, RBI shall be deemed to have waived its right to seek indemnification with respect to such discovered undisclosed Liabilities after the Closing, but not with respect to undisclosed Liabilities that are not discovered during the pre-Closing examination. If the Company does not terminate this Agreement pursuant to the foregoing paragraph and either RBI or Carpenter disagrees with the Closing Report, such party shall, prior to the earlier of the Closing and 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, Carpenter and RBI shall use their best efforts to resolve such objections and to agree upon the Closing Report through negotiation. If Carpenter 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, Carpenter 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 Carpenter, 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 Carpenter and RBI a written statement setting forth all adjustments made by the Arbitrator to the Closing Merger Consideration. Such Closing Report shall be employed to determine any further adjustments required to the Merger Consideration pursuant to this Section 1.11 ("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 the Company's former common shareholders and one-half by RBI. Notwithstanding the foregoing, the parties agree that the Closing Date shall not be delayed by the election by either RBI or Carpenter to object to the Closing Report pursuant to this Section 1.11 and further agree that the portion of the Closing Merger Consideration which is the subject of the objection shall be placed in escrow pending completion of the arbitration procedure." (l) Section 7.3 shall be revised to substitute "Merger Corp." for the words "the Continuing Subsidiaries" in the first sentence. (m) All references in the Agreement to the surrender of the Company Stock, or ownership interests therein, to RBI (or words to that effect) are amended to mean "RBI or the Company." 6 50 (n) All references in sections 11.02(a), 11.02(b), and 11.02(d) to RBI shall mean RBI and Merger Corp. 4. Effectiveness. This Amendment is effective as of the date hereof. Other than as amended in accordance with the terms hereof, the Agreement shall remain in full force and effect. 5. Counterparts. This Amendment may be executed concurrently in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (balance of page intentionally blank) 7 51 IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. REGENT BROADCASTING, INC. STARCOM, INC. By: /s/ Terry S. Jacobs By: /s/ Dennis Carpenter --------------------------- -------------------- Name: Terry S. Jacobs Name: Dennis Carpenter --------------------------- ---------------- Its: Chairman Its: Chairman --------------------------- -------- RBI MERGER CORP. CARPENTER: By: /s/ Terry S. Jacobs /s/ Dennis G. Carpenter --------------------------- ----------------------- Dennis G. Carpenter Name: Terry S. Jacobs --------------------------- Its: Chairman --------------------------- 8 52 SECOND AMENDMENT TO AGREEMENT OF MERGER This Second Amendment to that certain Agreement of Merger dated June 15, 2000, as amended by that certain Amendment to Agreement of Merger dated as of July 27, 2000 (the "Agreement"), by and among REGENT BROADCASTING, INC., a Delaware corporation ("RBI"), RBI MERGER CORP., a Minnesota corporation ("Merger Corp."), STARCOM, INC., a Minnesota corporation (the "Company"), and DENNIS G. CARPENTER ("Carpenter"), who is the President and a principal shareholder of the Company, is entered into as of this 19th day of February, 2001. WHEREAS, under the terms of the Agreement, each of RBI and the Company has the right to terminate the Agreement by written notice to the other if the Agreement has not been consummated on or before December 31, 2000; and WHEREAS, the parties wish to extend the date on which such termination rights arise from December 31, 2000 to June 30, 2001. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties hereto, the parties hereby agree as follows: 1. Amendment to Agreement. Sections 13.01(g) and 13.01(h) of the Agreement are hereby amended in their entirety to read as follows: "(g) By written notice of RBI to the Company or by the Company to RBI, if the Closing shall not have been consummated on or before June 30, 2001; or (h) By written notice of RBI to the Company if it shall become apparent in the judgment of RBI 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 June 30, 2001; or" 2. Other Provisions Remain in Effect. With the exception of the foregoing amendments, all other terms and conditions of the Agreement remain in full force and effect. In the event of any conflict in interpretation between the terms and conditions of the Agreement and this Second Amendment, the terms and conditions of this Second Amendment shall control and be absolute. 3. Counterparts. This Second Amendment may be executed concurrently in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 53 IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first above written. THE COMPANY: RBI: - ----------- --- STARCOM, INC. REGENT BROADCASTING, INC. By: /s/ Dennis G. Carpenter By: /s/ William L. Stakelin ----------------------------- ------------------------- Name: Dennis G. Carpenter Name: William L. Stakelin ----------------------------- ------------------------- Its: President Its: President ----------------------------- ------------------------- CARPENTER: MERGER CORP.: - --------- ------------ RBI MERGER CORP. /s/ Dennis G. Carpenter By: /s/ William L. Stakelin - -------------------------------------- ------------------------- Name: William L. Stakelin ------------------------- Its: President ------------------------- 2 EX-4.C 4 l87353aex4-c.txt EXHIBIT 4(C) 1 EXHIBIT 4(c) AMENDMENT NO. 2 AND CONSENT TO CREDIT AGREEMENT AMENDMENT NO. 2 AND CONSENT, dated as of August 23, 2000, to the Credit Agreement, dated as of January 27, 2000, as amended by Omnibus Amendment No. 1 and Amendment No. 1 to Credit Agreement dated as of February 4, 2000 (the "Credit Agreement"), among (a) REGENT BROADCASTING, INC., a Delaware corporation (the "BORROWER"), (b) REGENT COMMUNICATIONS, INC., a Delaware corporation (the "PARENT COMPANY" and, together with the Borrower, collectively, the "PRINCIPAL COMPANIES" and, singly, a "PRINCIPAL COMPANY"), (c) the several financial institutions from time to time party to the Credit Agreement as lenders thereunder ("LENDERS"), and (d) FLEET NATIONAL BANK, as Administrative Agent for the Lenders (the "ADMINISTRATIVE AGENT"), FLEET NATIONAL BANK, as Issuing Lender, GENERAL ELECTRIC CAPITAL CORPORATION, as Syndication Agent for the Lenders, and DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as Documentation Agent for the Lenders. RECITALS The Borrower and the Parent Company have requested the Administrative Agent and the Lenders grant to the Borrower all such consents and waivers as may be required under the Credit Agreement and the other Loan Documents to permit the execution, delivery and performance by certain of the Subsidiary Guarantors of (a) an Asset Exchange Agreement, dated as of March 12, 2000, executed and delivered by and among (i) Clear Channel Broadcasting, Inc., Clear Channel Broadcasting Licenses, Inc., Capstar Radio Operating Company and Capstar TX Limited Partnership (the "Clear Channel Entities"), (ii) Regent Broadcasting of Victorville, Inc., Regent Licensee of Victorville, Inc., Regent Broadcasting of Mansfield, Inc. and Regent Licensee of Mansfield, Inc. (the "Regent Entities"), and (iii) Regent Broadcasting of Palmdale, Inc. and Regent Licensee of Palmdale, Inc., (b) the First Amendment to Asset Exchange Agreement, dated as of May 31, 2000, executed and delivered by and among the Clear Channel Entities, the Regent Entities, Regent Broadcasting of Palmdale, Inc. and Regent Licensee of Palmdale, Inc., (c) the Second Amendment to Asset Exchange Agreement, dated as of June 2, 2000, executed and delivered by and among the Clear Channel Entities and the Regent Entities, and (d) the Funding Escrow Agreement, dated as of August 23, 2000, executed and delivered by and among the Clear Channel Entities, the Regent Entities and The Bank of New York, as escrow agent, (such Asset Exchange Agreement, together with the First Amendment to Asset Exchange Agreement, the Second Amendment to Asset Exchange Agreement and the Funding Escrow Agreement, being herein called the "Asset Exchange Agreement"). The Administrative Agent and the Lenders have agreed to grant the consents and waivers so requested by the Borrower and the Parent Company upon the terms and subject to the conditions contained in this Amendment No. 2 and Consent ("this Agreement"). 2 The Borrower, the Parent Company, the Lenders and the Administrative Agent have further agreed to amend certain of the provisions contained in the Loan Documents and the Credit Agreement, all as set forth in or required by this Agreement. Accordingly, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. DEFINITIONS IN CREDIT AGREEMENT. Unless otherwise defined herein, terms defined in the Credit Agreement (as amended hereby) are used herein as therein defined. ARTICLE II AMENDMENTS AND CONSENTS Effective on and as of July __, 2000 ("Effective Date"), and subject always in any event to the provisions of Article III hereof: SECTION 2.1. NEW DEFINED TERMS. Section 1.1 of the Credit Agreement is hereby further amended by adding thereto each of the following new defined terms: "Amendment No. 2" means Amendment No. 2 and Consent to Credit Agreement, dated as of August 23, 2000, among the Borrower, the Parent Company, the Lenders and the Administrative Agent, and upon the terms of which each of the parties hereto has agreed to amend this Agreement. "Amendment No. 2 Effective Date" means August 23, 2000, the so-called "Effective Date" of Amendment No. 2 and Consent to Credit Agreement. SECTION 2.2. EXECUTION, DELIVERY AND PERFORMANCE OF THE ASSET EXCHANGE AGREEMENT AND CONSUMMATION OF THE ASSET EXCHANGE TRANSACTION. In reliance on the agreements, representations, warranties and covenants of the Borrower and the Parent Company contained in this Agreement, and subject always to the satisfaction of the conditions contained in Article III, the Administrative Agent and the Lenders party hereto hereby grant to the Borrower and the Regent Entities all such consents and waivers as are required under the Credit Agreement and the other Loan Documents, for (a) the execution, delivery and performance by the Regent Entities of the Asset Exchange Agreement, and (b) the acquisition of the Clear Channel Station Assets (as defined in the Asset Exchange Agreement) and the related transactions described in the Asset Exchange Agreement, on the terms set forth therein (such purchase of Assets and related transactions are herein called, collectively, the "Asset Exchange Transaction"). 3 SECTION 2.3. AMENDMENT OF SECTION 9.7. Section 9.7 of the Credit Agreement is amended by (a) deleting the word "and" at the end of subsection (e) thereof; (b) replacing the period at the end of subsection (f) thereof with the new phrase "; and"; and (c) inserting the following new subsection (g) immediately after subsection (f) thereof: "(g) payments by the Borrower to the Parent Company in connection with the repurchase of Equity Interests of the Parent Company and the repurchase of such Equity Interests by the Parent Company; provided, however, that (i) the aggregate amount of all of such payments made shall not exceed $10,000,000 in the aggregate, (ii) both immediately before and immediately after giving effect to such purchase, the Consolidated Leverage Ratio determined as of the then most recent Covenant Determination Date shall not exceed 5.00:1.00, and (iii) at the time of any such payments, no Event of Default shall be continuing or shall result therefrom." ARTICLE III CONDITIONS PRECEDENT Each of the amendments to the Loan Documents and the Credit Agreement set forth in Article II of this Agreement shall be effective and in full force and effect on and as of and from and after the Effective Date, provided that each of the following conditions precedent shall first be satisfied: SECTION 3.1. AMENDMENT DOCUMENT. The Administrative Agent shall have received counterparts of this Agreement duly executed by each of the Borrower, the Parent Company, and also by each of the Lenders. SECTION 3.2. REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by the Borrower and the Parent Company pursuant to this Agreement shall be true and correct in all material respects on and as of the Effective Date with the same full force and effect as if made and repeated on and as of such date. ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS Each of the Borrower and the Parent Company represents and warrants to and covenants with the Administrative Agent and the Lenders as follows: SECTION 4.1. TOTAL CASH CONSIDERATION. The total gross cash consideration paid by the Regent Entities in connection with the acquisition of the Clear Channel Station Assets (as defined in the Asset Exchange Agreement) pursuant to the Asset Exchange Agreement shall be $80,465,000. No other cash consideration is being paid by any Credit Party, either directly or indirectly, in connection with the Asset Exchange Transaction. 4 SECTION 4.2. REPRESENTATIONS IN LOAN DOCUMENTS. Each of the representations and warranties made by or on behalf of each of the Principal Companies to the Administrative Agent and the Lenders in the Loan Documents was true and correct in all material respects when made and is true and correct in all material respects on and as of the date hereof, EXCEPT (a) as affected by the consummation of the transactions contemplated by the Loan Documents (including this Agreement), and (b) to the extent that any such representation or warranty relates by its express terms solely to a prior date. SECTION 4.3. CORPORATE AUTHORITY, ETC. The execution and delivery by each Principal Company of this Agreement, and the performance by each Principal Company of its agreements and obligations under this Agreement, have been duly and properly authorized by all necessary corporate or other action on the part of each of the Principal Companies, and do not and will not conflict with, result in any violation of, or constitute any default under, (a) any provision of any Governing Document of any Principal Company, (b) any Contractual Obligation of any Principal Company, or (c) any Applicable Law. SECTION 4.4. VALIDITY, ETC. This Agreement has been duly executed and delivered by each Principal Company and constitutes the legal, valid and binding obligation of each Principal Company, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, reorganization, insolvency, moratorium or other similar laws at the time in effect affecting the enforceability of the rights of creditors generally and to general equitable principles. Each of the Principal Companies hereby ratifies and confirms in all respects all of the Obligations as modified hereby. SECTION 4.5. NO DEFAULTS. After giving effect to this Agreement, no Defaults or Events of Default are continuing under the Credit Agreement or any of the other Loan Documents. 5 ARTICLE V PROVISIONS OF GENERAL APPLICATION SECTION 5.1. NO OTHER CHANGES. Except as otherwise expressly provided by this Agreement, all of the terms, conditions and provisions of the Credit Agreement and each of the other Loan Documents, and all rights and remedies of the Administrative Agent and the Lenders thereunder, shall remain unaltered. SECTION 5.2. OTHER PROVISIONS. This Agreement is a Loan Document for all purposes of the Credit Agreement and each of the other Loan Documents. This Agreement and the rights and obligations hereunder of each of the parties hereto shall in all respects be construed in accordance with and governed by the laws of the Commonwealth of Massachusetts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Agreement, it shall not be necessary to produce or account for more than one counterpart hereof signed by each of the parties hereto. [REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 6 IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT NO. 2 AND CONSENT TO CREDIT AGREEMENT to be executed and delivered by their respective authorized officers under seal as of the date first above written. THE PARENT COMPANY: REGENT COMMUNICATIONS, INC., as the Parent Company and a Guarantor By: /s/ Anthony A. Vasconcellos ------------------------------------ Name: Anthony A. Vasconcellos Title: Vice President and Chief Financial Officer THE BORROWER: REGENT BROADCASTING, INC., as Borrower By: /s/ Anthony A. Vasconcellos ------------------------------------ Name: Anthony A. Vasconcellos Title: Vice President and Chief Financial Officer THE ADMINISTRATIVE AGENT: FLEET NATIONAL BANK, individually and as Administrative Agent By: /s/ Robert F. Milordi ------------------------------------ Name: Robert F. Milordi Title: Managing Director THE SYNDICATION AGENT: GENERAL ELECTRIC CAPITAL CORPORATION, individually and as Syndication Agent By: /s/ Thomas P. Waters ------------------------------------ Name: Thomas P. Waters Title: Duly Authorized Signatory 7 THE DOCUMENTATION AGENT: DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, individually and as Documentation Agent By: /s/ William E. Lambert ------------------------------------ Name: William E. Lambert Title: Vice President By: /s/ Brian E. Haughney ------------------------------------ Name: Brian E. Haughney Title: Assistant Vice President THE LENDERS: FIRSTAR BANK, N.A. By: /s/ Michael J. Homeyer ------------------------------------ Name: Michael J. Homeyer Title: Vice President U.S. BANK NATIONAL ASSOCIATION By: /s/ Raymond S. Osburn ------------------------------------ Name: Raymond S. Osburn Title: Assistant Vice President SUMMIT BANK By: /s/ Donald J. Oberg, Jr. ------------------------------------ Name: Donald J. Oberg, Jr. Title: Vice President MICHIGAN NATIONAL BANK By: /s/ Teresa L. Irland ------------------------------------ Name: Teresa L. Irland Title: First Vice President 8 THE CIT GROUP/EQUIPMENT FINANCING, INC. By: /s/ Katie J. Saunders ------------------------------------ Name: Katie J. Saunders Title: EX-4.D 5 l87353aex4-d.txt EXHIBIT 4(D) 1 EXHIBIT 4(d) AMENDMENT NO. 3 TO CREDIT AGREEMENT AMENDMENT NO. 3, dated as of December 1, 2000, to the Credit Agreement, dated as of January 27, 2000, as amended by Omnibus Amendment No. 1 and Amendment No. 1 to Credit Agreement dated as of February 4, 2000 and Amendment No. 2 and Consent to Credit Agreement dated as of August 23, 2000 (the "Credit Agreement"), among (a) REGENT BROADCASTING, INC., a Delaware corporation (the "BORROWER"), (b) REGENT COMMUNICATIONS, INC., a Delaware corporation (the "PARENT COMPANY" and, together with the Borrower, collectively, the "PRINCIPAL COMPANIES" and, singly, a "PRINCIPAL COMPANY"), (c) the several financial institutions from time to time party to the Credit Agreement as lenders thereunder ("LENDERS"), and (d) FLEET NATIONAL BANK, as Administrative Agent for the Lenders (the "ADMINISTRATIVE AGENT"), FLEET NATIONAL BANK, as Issuing Lender, GENERAL ELECTRIC CAPITAL CORPORATION, as Syndication Agent for the Lenders, and DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as Documentation Agent for the Lenders. RECITALS The Borrower, the Parent Company, the Required Lenders and the Administrative Agent have agreed to amend certain of the provisions contained in the Loan Documents and the Credit Agreement, all as set forth in or required by this Amendment No. 3 ("this Agreement"). Accordingly, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. DEFINITIONS IN CREDIT AGREEMENT. Unless otherwise defined herein, terms defined in the Credit Agreement (as amended hereby) are used herein as therein defined. ARTICLE II AMENDMENTS AND WAIVERS Effective as of December 1, 2000 ("Effective Date"), and subject always in any event to the provisions of Article III hereof: SECTION 2.1. LENDER WAIVERS. The Lenders hereby waive the Borrower's performance of and compliance with the Maximum Consolidated Corporate Overhead covenant contained in Section 9.4(d) of the Credit Agreement insofar as and to the extent that such covenants are applicable to the period ended December 31, 2000. The 2 -2- execution, delivery and effectiveness of the Agreement shall not, except as otherwise stated herein, constitute a waiver of any provisions of, or any obligations of the Borrower under the Credit Agreement. SECTION 2.2. NEW DEFINED TERMS. Section 1.1 of the Credit Agreement is hereby further amended by adding thereto each of the following new defined terms: "Amendment No. 3" means Amendment No. 3 to Credit Agreement, dated as of December 1, 2000, among the Borrower, the Parent Company, the Required Lenders and the Administrative Agent, and upon the terms of which each of the parties hereto has agreed to amend this Agreement. "Amendment No. 3 Effective Date" means December 1, 2000, the so-called "Effective Date" of Amendment No. 3 to Credit Agreement. "New Markets" means Markets in which the Borrower and its Subsidiaries did not operate Radio Stations prior to the Amendment No. 3 Effective Date. "New Markets Entered" means New Markets entered into by the Borrower and its Subsidiaries through any Acquisitions; provided, however, that the Borrower or such Subsidiary acquires two (2) or more Radio Stations in such New Market. "Markets Exited" means Markets in which the Borrower and its Subsidiaries sell or otherwise dispose of all Radio Stations on or following the Amendment No. 3 Effective Date other than the Palmdale, California Market. SECTION 2.3. AMENDMENT OF SECTION 1.1. Section 1.1 of the Credit Agreement is hereby further amended by amending and restating the definition of "Consolidated Corporate Overhead" to read in its entirety as follows: "Consolidated Corporate Overhead" means, in relation to the Parent Company and its Subsidiaries for any period, the portion of the corporate overhead of the Parent Company and its Subsidiaries for such period not directly allocable to the operation of Radio Stations or other operating assets, LESS, without duplication, and only to the extent reflected as a charge against such portion of the corporate overhead for such period, any non-cash charges or expenses or non-cash losses (including non-cash losses on Sales of assets outside of the ordinary course of business), all as determined on a consolidated basis in accordance with GAAP; provided, however, that, for purposes of calculating the Consolidated Corporate Overhead of the Parent Company and its Subsidiaries for any period, there shall be excluded from such Consolidated Corporate Overhead for such period, the SUM (without duplication) of Consolidated Eligible Charges for such period of the kind described in paragraph (a), (b) or (c) of the definition of that term. 3 -3- SECTION 2.4. AMENDMENT OF SECTION 9.4(d). Section 9.4(d) of the Credit Agreement is amended by amending and restating subsection (d) to read in its entirety as follows: "(d) MAXIMUM CONSOLIDATED CORPORATE OVERHEAD. Permit the Consolidated Corporate Overhead for any Fiscal Year below to exceed the amount set forth opposite such Fiscal Year below: FISCAL YEAR MAXIMUM CONSOLIDATED CORPORATE OVERHEAD ----------- --------------------------------------- 2000 $3,750,000 2001 $4,800,000 2002 $5,400,000 2003 $5,700,000 2004 $6,000,000 2005 $6,200,000 2006 $6,500,000 provided, however, that the amount of the maximum Consolidated Corporate Overhead shown above for any Fiscal Year: (i) shall be increased by $200,000 for each New Market Entered during the period from the Amendment No. 3 Effective Date through the last day of such Fiscal Year ("REFERENCE PERIOD"); and (ii) shall be decreased by $200,000 for each two (2) Markets Exited for such Reference Period." ARTICLE III CONDITIONS PRECEDENT Each of the amendments and waivers to the Loan Documents and the Credit Agreement set forth in Article II of this Agreement shall be effective and in full force and effect as of and from and after the Effective Date, provided that each of the following conditions precedent shall first be satisfied: SECTION 3.1. AMENDMENT DOCUMENT. The Administrative Agent shall have received counterparts of this Agreement duly executed by each of the Borrower, the Parent Company, and also by the Required Lenders. SECTION 3.2. REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by the Borrower and the Parent Company pursuant to this Agreement shall be true and correct in all material respects on and as of the date the Borrower and the Parent Company execute and deliver this Agreement with the same full force and effect as if made and repeated on and as of such date. 4 -4- SECTION 3.3. FEES, COSTS AND EXPENSES. (a) The Borrower shall have paid to the Administrative Agent, upon the date the Required Lenders execute and deliver this Agreement, and for the account of the Lenders consenting to this Agreement as provided below, a non-refundable amendment fee in the total amount equal to three one-hundredths of one percent (0.03%) of the aggregate amount of the Commitments of the Consenting Lenders (as defined below) (the "AMENDMENT FEE"). When this Agreement shall become effective, each Lender that shall have given to the Administrative Agent, by 5:00 p.m., Boston, Massachusetts time, on February 8, 2001, confirmation in writing (whether by facsimile transmission or otherwise), satisfactory to the Administrative Agent, of such Lender's consent to, and execution and delivery of, this Agreement (each, a "CONSENTING LENDER"), shall become entitled to receive a share of the Amendment Fee, such share to be equal to three one-hundredths of one percent (0.03%) of such Lender's Commitment in effect on the date the Required Lenders execute and deliver this Agreement. Promptly after this Agreement shall have become effective, the Administrative Agent shall remit to each Consenting Lender its share as determined above of the Amendment Fee received by the Administrative Agent from the Borrower. (b) The Borrower shall have paid in full to special counsel for the Administrative Agent, all of the Attorney Costs of special counsel to the Administrative Agent incurred from time to time through February 8, 2001 and that are payable by the Borrower pursuant to Section 12.4 of the Credit Agreement and for which an invoice shall have been submitted by special counsel for the Administrative Agent to the Borrower on or prior to February 8, 2001. ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS Each of the Borrower and the Parent Company represents and warrants to and covenants with the Administrative Agent and the Lenders as follows: SECTION 4.1. REPRESENTATIONS IN LOAN DOCUMENTS. Each of the representations and warranties made by or on behalf of each of the Principal Companies to the Administrative Agent and the Lenders in the Loan Documents was true and correct in all material respects when made and is true and correct in all material respects on and as of the date hereof, EXCEPT (a) as affected by the consummation of the transactions contemplated by the Loan Documents (including this Agreement), and (b) to the extent that any such representation or warranty relates by its express terms solely to a prior date. SECTION 4.2. CORPORATE AUTHORITY, ETC. The execution and delivery by each Principal Company of this Agreement, and the performance by each Principal Company of its agreements and obligations under this Agreement, have been duly and properly authorized by all necessary corporate or other action on the part of each of the Principal Companies, and do not and will not conflict with, result in any violation of, or 5 -5- constitute any default under, (a) any provision of any Governing Document of any Principal Company, (b) any Contractual Obligation of any Principal Company, or (c) any Applicable Law. SECTION 4.3. VALIDITY, ETC. This Agreement has been duly executed and delivered by each Principal Company and constitutes the legal, valid and binding obligation of each Principal Company, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, reorganization, insolvency, moratorium or other similar laws at the time in effect affecting the enforceability of the rights of creditors generally and to general equitable principles. Each of the Principal Companies hereby ratifies and confirms in all respects all of the Obligations as modified hereby. SECTION 4.4. NO DEFAULTS. After giving effect to this Agreement, no Defaults or Events of Default are continuing under the Credit Agreement or any of the other Loan Documents. SECTION 4.5. PAYMENTS. The Borrower hereby promises to pay, not later than February 8, 2001: (a) to the Administrative Agent for the account of the Lenders, the amendment fee referred to in Section 3.3(a); and (b) to special counsel for the Administrative Agent, all of the Attorney Costs of such special counsel referred to in Section 3.3(b). ARTICLE V PROVISIONS OF GENERAL APPLICATION SECTION 5.1. NO OTHER CHANGES. Except as otherwise expressly provided by this Agreement, all of the terms, conditions and provisions of the Credit Agreement and each of the other Loan Documents, and all rights and remedies of the Administrative Agent and the Lenders thereunder, shall remain unaltered. SECTION 5.2. OTHER PROVISIONS. This Agreement is a Loan Document for all purposes of the Credit Agreement and each of the other Loan Documents. This Agreement and the rights and obligations hereunder of each of the parties hereto shall in all respects be construed in accordance with and governed by the laws of the Commonwealth of Massachusetts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Agreement, it shall not be necessary to produce or account for more than one counterpart hereof signed by each of the parties hereto. [REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 6 -6- IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT NO. 3 TO CREDIT AGREEMENT to be executed and delivered by their respective authorized officers under seal as of the date first above written. THE PARENT COMPANY: REGENT COMMUNICATIONS, INC., as the Parent Company and a Guarantor By: /s/ Matthew A. Yeoman ------------------------------------ Name: Matthew A. Yeoman Title: Vice President - Finance THE BORROWER: REGENT BROADCASTING, INC., as Borrower By: /s/ Matthew A. Yeoman ------------------------------------ Name: Matthew A. Yeoman Title: Vice President - Finance THE ADMINISTRATIVE AGENT: FLEET NATIONAL BANK, individually and as Administrative Agent By: /s/ Robert F. Milordi ------------------------------------ Name: Robert F. Milordi Title: Managing Director THE SYNDICATION AGENT: GENERAL ELECTRIC CAPITAL CORPORATION, individually and as Syndication Agent By: /s/ Kenneth M. Gacevich ------------------------------------ Name: Kenneth M. Gacevich Title: Duly Authorized Signatory 7 -7- THE DOCUMENTATION AGENT: DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, individually and as Documentation Agent By: /s/ William E. Lambert ------------------------------------ Name: William E. Lambert Title: Vice President By: /s/ Brian E. Haughney ------------------------------------ Name: Brian E. Haughney Title: Assistant Vice President THE LENDERS: FIRSTAR BANK, N.A. By: /s/ Christian Jon Bugyis ------------------------------------ Name: Christian Jon Bugyis Title: Vice President - Finance U.S. BANK NATIONAL ASSOCIATION By: /s/ Raymond S. Osburn ------------------------------------ Name: Raymond S. Osburn Title: Vice President SUMMIT BANK By: /s/ Donald J. Oberg, Jr. ------------------------------------ Name: Donald J. Oberg, Jr. Title: Vice President MICHIGAN NATIONAL BANK By: /s/ Jason W. Bierlein ------------------------------------ Name: Jason W. Bierlein Title: Commercial Relationship Manager 8 -8- THE CIT GROUP/EQUIPMENT FINANCING, INC. By: /s/ Michael L. Monahan ------------------------------------ Name: Michael L. Monahan Title:Vice President EX-10.D 6 l87353aex10-d.txt EXHIBIT 10(D) 1 EXHIBIT 10(d) TIME BROKERAGE AGREEMENT Time Brokerage Agreement ("Agreement") dated as of June 15, 2000, by and among REPCOM, INC., a Minnesota corporation, and SARTELL FM, INC., a Minnesota corporation (collectively "Licensees") and REGENT BROADCASTING OF ST. CLOUD, INC., a Delaware corporation ("Broker"). WHEREAS, Licensees are the licensees of radio stations KLZZ-FM and KXSS-AM, Waite Park, Minnesota, and KKSR-FM, Sartell, Minnesota (referred to herein as the "Stations"); and WHEREAS, Licensees and Licensees' sole stockholder and Broker's sole shareholder have entered into an Agreement of Merger, dated June 15, 2000 (the "Merger Agreement") contemplating the acquisition by Broker of the Stations as a result of the merger of Licensees' sole stockholder into Broker's sole stockholder, Regent Broadcasting, Inc.; and WHEREAS, Licensees, while maintaining control over the Stations' finances, personnel matters and programming desire to accept and broadcast programming supplied by Broker on the Stations subject to the terms and conditions set forth herein. NOW, THEREFORE, for and in consideration of the mutual covenants herein contained, the parties hereto have agreed and do agree as follows: 1. Air Time and Transmission Services. Licensees agree, beginning July 1, 2000 (the "Commencement Date"), to make the Stations' studio and broadcast facilities available to Broker, and to broadcast, or cause to be broadcast, on the Stations, according to the terms hereof, programming designated and provided by Broker (the "Programming"). 2. Payments. Broker hereby agrees to pay Licensees the amounts specified in Attachment A for the right, from and after the Commencement Date, to broadcast the Programming on the terms and conditions herein provided. Payments of the Monthly Fee (as defined in Attachment A), are due and payable in full on the first day of each calendar month for which such payment is intended to be applied and shall be prorated for any partial calendar month at the beginning or end of the term hereof. The failure of Licensees to demand or insist upon prompt payment in accordance herewith shall not constitute a waiver of its right to do so. Broker shall receive a payment credit for any Programming not broadcast by the Stations (a "Credit"), such Credit to be determined by multiplying the monthly payment by the ratio of the amount of time preempted or not accepted to the total number of hours of Programming each month. No credit shall be due on account of any Programming rejected for failure to comply with the standards for Programming set forth in this Agreement. 3. Term. The term of this Agreement shall begin on the Commencement Date and end on the earliest of (i) the Closing Date, as defined in the Merger Agreement, or (ii) the date which is 2 ten (10) days following any termination of the Merger Agreement, in accordance with the terms thereof (such date hereinafter referred to as the "Termination Date," and such period of time as the "Term"). 4. Programming. Broker shall furnish or cause to be furnished the Programming, which shall be an entertainment format of Broker's choice, provided that no format change shall be made without the delivery to Security Title and Guaranty Agency, Inc., as Escrow Agent, of a $100,000 letter of credit which the Escrow Agent shall hold under the terms of a Deposit Escrow Agreement of even date among StarCom, Inc., Regent Broadcasting, Inc., and Escrow Agent, and which StarCom, Inc. shall be entitled to draw upon to the extent of any costs which Licensees may incur as a result of undoing any such format change in the event this Agreement is terminated other than by reason of a default by Licensees, and may include, without limitation, news, promotions (including on-air giveaways), contests, syndicated programs, barter programs, paid-for programs, locally-produced programs, advertising commercial matter, including that in both program or spot announcement forms, and public service information; provided, however, that the Programming on the Stations shall include news, public service announcements and other programming on issues of importance to the local community as reasonably requested by Licensees. The Programming shall be consistent with the standards set forth in Attachment B. All actions or activities of Broker under this Agreement, and all Programming provided by Broker shall be in accordance with (i) the Communications Act of 1934, as amended; (ii) Federal Communications Commission (the "FCC") rules, requirements and policies, including, without limitation, the FCC's rules on plugola/payola, lotteries, Station identification, minimum operating schedule, sponsorship identification, political programming and political advertising rates; (iii) all applicable federal, state and local regulations and policies; and (iv) generally accepted quality standards consistent with Licensees' past practices. Broker agrees that, if in the sole, good faith judgment of the Licensees or the Stations' General Manager, Broker does not comply with the standards of this paragraph, Licensees may suspend or cancel any Programming not in compliance. Broker shall not be entitled to a Credit for Programming not broadcast over the Stations on account of any Programming rejected for failure to comply with the standards for Programming set forth in this Section 4. The right to use the Programming and to authorize its use in any manner and in any media whatsoever shall be, and remain, vested solely in Broker, subject in all events to the rights, if any, of others in such Programming. 5. Special Events. Licensees reserve the right in their discretion, and without liability, to preempt, delay or delete any of the broadcasts of the Programming and to substitute programming which in Licensees' judgment is of greater local, regional or national importance. In all such cases, Licensees shall use their best efforts to give Broker reasonable notice of their intention to preempt such Programming, and, in the event of such preemption, Broker shall receive a payment credit for the Programming so omitted consistent with the intent and pursuant to the terms of Section 2 hereof. 6. Advertising and Programming Revenues. Broker shall retain all advertising and other revenues, and all accounts receivable, with respect to Programming broadcast during the Term, and relating to the Programming it delivers to the Stations for broadcast during the Term, including without limitation, promotion-related revenues. Licensees and Broker each shall have the right, at their own expense, to seek copyright royalty payments for their own programming. Broker may sell 3 advertising on the Stations in combination with the sale of advertising on other broadcasting stations of its choosing, subject to compliance with applicable law. 7. Station Facilities. Subject to the qualifications set forth in this Agreement, throughout the term of this Agreement, Licensees shall make the facilities and equipment of the Stations in good operating condition and repair available to Broker for operation and broadcast with the maximum authorized facilities twenty-four (24) hours a day, seven (7) days a week, except for downtime occasioned by either (i) emergency maintenance or (ii) routine maintenance not to exceed two (2) hours each Sunday morning between the hours of 12 midnight and 5:00 a.m., and except for such programs and announcements prepared by and put on the air by Licensees in order to meet local needs and issues requirements, said programs and announcements not to exceed one (1) hour each Sunday morning at a mutually agreed upon time between the hours of 5:00 a.m. and 7:00 a.m. Broker shall not be entitled to a Credit for Programming not broadcast over the Stations for periods specified in this Section 7 hereof. To the extent practicable, any maintenance work affecting the operation of the Stations at full power shall be scheduled upon at least forty-eight (48) hours prior notice with the agreement of Broker, such agreement not to be unreasonably withheld. 8. Right of Access. Broker and Broker's employees or agents shall at all times be afforded reasonable access to the Stations in order to perform their duties in connection with the production and transmission of the Programming over the facilities of the Stations. Broker shall have the right to relocate to Broker's premises or to install at Licensees' and/or Broker's premises, and to maintain throughout the term of this Agreement, at Broker's expense, any microwave studio/transmitter relay equipment, telephone lines, transmitter remote control, monitoring devices or any other equipment necessary for the proper transmission of the Programming on the Stations, and Licensees and Broker shall take all steps reasonably necessary to prepare and file any applications with the FCC to effectuate such proper transmission. If this Agreement is terminated other than for reason of a default by Licensees and the parties do not close the Merger Agreement, Broker shall reimburse Licensees for the cost of putting all such changes back to the condition they were in on the date of this Agreement and for the amount, if any, by which the Stations' Barter Payable exceeds by more than $25,000 the aggregate net value of the Stations' Barter Receivable, as of the Termination Date. 9. Force Majeure. Any failure or impairment of facilities or any delay or interruption in broadcasting the Programming, or failure at any time to furnish facilities, in whole or in part, for broadcasting, due to acts of God, strikes, or threats thereof, force majeure, or due to causes beyond the control of Licensees, shall not constitute a breach of this Agreement, and Licensees shall not be liable to Broker for any damages or adjustments for such failure, impairment, delay or interruption, except to the extent of allowing in each such case an appropriate payment credit for Programming available to Licensees but not carried consistent with the intent and pursuant to the terms of Section 2 hereof. 10. Licensees Control of Stations. Notwithstanding anything to the contrary in this Agreement, Licensees shall have full authority, control and power over the operation of the Stations during the period of this Agreement. Licensees shall retain control, said control to be reasonably exercised, over the policies, programming and operations of the Stations, including, without limitation, the right to decide whether to accept or reject any Programming or advertisements, the 4 right to preempt any Programming in order to broadcast a program deemed by Licensees to be of greater national, regional, or local interest, and the right to take any other actions necessary for compliance with the laws of the United States; the laws of the relevant states; the rules, regulations, and policies of the FCC (including without limitation the prohibition on unauthorized transfers of control); and the rules, regulations and policies of other federal governmental authorities, including without limitation the Federal Trade Commission and the Department of Justice. Licensees shall be responsible for ensuring that FCC requirements are met with respect to ascertainment of the problems, needs and interests of the community, public service programming, main studio staffing, maintenance of public inspection files and the preparation of quarterly issues/programs lists. Broker shall, upon request by Licensees, provide Licensees with information with respect to such of Broker's programs which are responsive to the problems, needs and interests of the community, so as to assist Licensees in the preparation of required quarterly issues/programs lists, and shall provide upon request other information to enable Licensees to prepare other records, reports and logs required by the FCC or other local, state or federal governmental agencies. Whenever on the Stations' premises, all Broker personnel shall be subject to the supervision and the direction of Licensees' designated personnel. 11. Responsibility for Employees and Expenses. Licensees shall employ two full time employees at the main studio(s) of the Stations, one of whom shall be a manager, both of whom shall report to and be accountable to Licensees, and who shall be ultimately responsible for the day-to-day operation of the Stations. Licensees shall be directly responsible for paying the salaries, taxes, insurance and related costs for such employees (the "Licensees Employee Expenses"). Licensees shall be responsible for paying directly (i) transmitter site rent/mortgage for the Stations; (ii) costs for maintenance and repair of the transmission and other technical equipment; (iii) costs for capital improvements and replacements; and (iv) transmitter site utilities for the Stations ("Licensees Transmitter Expenses"). Licensees shall be responsible for paying directly all income taxes relating to Licensees' earnings from this arrangement. Broker shall employ and be responsible for the salaries, taxes, insurance and related costs for all personnel used in the production of the Programming (including, without limitation, salespeople, traffic personnel, administrative and programming staff). Excluding those expenses for which Licensees are making payments as set forth in this Section 11, during the Term, Broker shall be responsible for paying all other expenses reasonably and directly related to the continued operation of the Stations subject to the covenants of the parties to this Agreement (the "Other Expenses"), and further subject to the ultimate authority, control and power of Licensees. 11.1 Employee Matters. 11.1.1 Licensees shall be responsible for the payment of all compensation and accrued employee benefits payable to all of Licensees' employees through the Commencement Date. 11.1.2 Licensees acknowledge and agree that Licensees, and not Broker, are and shall be solely responsible for any and all insurance, supplemental pension, deferred compensation, retirement and any other benefits, and related costs, premiums and claims due, to become due, committed or otherwise promised to any person who, up to the Commencement Date is a retiree, former employee, or current employee of Licensees, relating to the period up to the 5 Commencement Date. Broker shall assume no employee benefit plans, programs or practices, whether or not set forth in writing, maintained by Licensees at any time. 12. Station Agreements. 12.1. Assignment and Assumption of Station Agreements. On the Commencement Date, Licensees shall assign to Broker and Broker shall assume, subject to the provisions of this Section 12, the obligations of Licensees arising or to be performed on and after the Commencement Date (except to the extent such obligations represent liabilities for activities, events or transactions occurring, or conditions existing, on or prior to the Commencement Date) under (a) all of the contracts which comprise Station Assets (as defined in the Merger Agreement), excluding (i) contracts and agreements relating to the Licensees Employee Expenses, (ii) contracts and agreements relating to the Licensees Transmitter Expenses, (iii) Licensees' financing agreements and (iv) corporate level contracts and agreements, except, if any, those listed on Attachment C (collectively, the contracts and agreements to be assigned by Licensees and assumed by Broker are referred to as the "Station Agreements") and (b) all sales commissions payable to Licensees' sales and other personnel under advertising contracts assigned to or administered by Broker. Licensees have delivered to Buyer true and complete copies of all Station Agreements, including any and all amendments and other modifications thereto. All of the Station Agreements 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. Licensees have complied in all respects with all Station Agreements and are not in default beyond any applicable grace periods, and, to the best of Licensees' knowledge, no other contracting party is in default under any of the terms thereof. Licensees represent and warrant that the Station Agreements are freely assignable, or, if consent of the other contracting party to the assignment is required, Licensees to use their reasonable best efforts to obtain such consent as promptly as practicable. As of the Commencement Date, Licensees shall have paid all amounts due on and shall have performed all obligations due under the Station Agreements as of that date. 12.2 Consents to Assignment. To the extent that any Station Agreement is not capable of being assigned, transferred, delivered or subleased without the waiver or consent of any third person (including a government or governmental unit), or if such assignment, transfer, delivery or sublease or attempted assignment, transfer, delivery or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant thereto shall not constitute an assignment, transfer, delivery or sublease or an attempted assignment, transfer, delivery or sublease thereof. In those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Commencement Date to the transfer and assignment to Broker of any Station Agreement, this Agreement and any assignment executed pursuant hereto, to the extent permitted by law, shall constitute an equitable assignment by Licensees to Broker of all of Licensees' rights, benefits, title and interest in and to the Station Agreements, and where necessary or appropriate, Broker shall be deemed to be Licensees' agent for the purpose of completion, fulfilling and discharging all of Licensees' rights and liabilities arising after the Commencement Date under such Station Agreements. Licensees shall use their reasonable best efforts to provide Broker with the financial and business benefits of such Station Agreements (including, without limitation, permitting Broker to enforce any rights of Licensees arising under such Station Agreements), and Broker shall, to the extent Broker is provided with the benefits of such Station Agreements, assume, 6 perform and in due course pay and discharge all debts, obligations and liabilities of Licensees under such Station Agreements to the extent that Broker was to assume those obligations pursuant to the terms hereof. 12.3 Retained Liabilities. Except as set forth in Sections 11 and 12 hereof, Broker expressly does not, and shall not, assume or agree to pay, satisfy, discharge or perform and will not be deemed by virtue of the execution and delivery of this Agreement or any agreement, instrument or document delivered pursuant to or in connection with this Agreement or otherwise by reason of or in connection with the consummation of the transactions contemplated hereby or thereby, to have assumed or to have agreed to pay, satisfy, discharge or perform, any liabilities, obligations or commitments of Licensees of any nature whatsoever whether accrued, absolute, contingent or otherwise and whether or not disclosed by Broker. Licensees will retain and pay, satisfy, discharge and perform in accordance with the terms thereof, all liabilities and obligations of the Licensees (other than those occurring on or after the Commencement Date under the Station Agreements), including but not limited to, the obligation to assume, perform, satisfy or pay any liability, obligation, agreement, debt, charge, claim, judgment or expense incurred by or asserted against Licensees related to taxes, environmental matters, pension or retirement plans or trusts, profit-sharing plans, employment contracts, employee benefits, severance of employees, product liability or warranty, negligence, contract breach or default, copyright, trademarks, service mark, trade name and other intellectual property, or other obligations, claims or judgments asserted against Broker as successor in interest to Licensees. All such liabilities, obligations and commitments of Licensees described in this Section 12.3 shall be referred to herein collectively as the "Retained Liabilities." 13. Accounts Receivable. It is agreed that all accounts receivable existing as of the date of this Agreement arising prior to the Commencement Date in connection with the operation of the Stations, including but not limited to accounts receivable for advertising revenues for programs and announcements performed prior to the Commencement Date and other broadcast revenues for services performed prior to the Commencement Date, shall remain the property of Licensees. Licensees and their agents shall take no action during the ninety (90) days following the Commencement Date to collect the balances of such accounts receivable other than the normal billing invoice reminder notices. Any amounts relating to such accounts receivable that are paid directly to Broker shall be remitted on a monthly basis by Broker to Licensees. On the Closing Date (as defined in the Merger Agreement), Broker may, at its option, purchase from Licensees all or any part of the accounts receivable outstanding as of the Closing Date at their face value. Any accounts receivable not purchased by Broker shall be conveyed by Licensees to an unrelated party or parties at the Closing. 14. Proration of Income and Expenses: Trade Agreements Adjustment. 14.1 Except as otherwise provided herein, all deposits, reserves and prepaid and deferred income and expenses relating to the Station Agreements shall be prorated between Broker and Licensees in accordance with general accepted accounting principles as of 11:59 p.m., local time, on the date immediately preceding the Commencement Date. 14.2 Licensees have delivered to Broker a list of all Trade Agreements as of the Commencement Date included in the Station Agreements and the aggregate value of time owed 7 ("Barter Payable") pursuant to each of the Trade Agreements and the aggregate value of goods and services to be received ("Barter Receivable") pursuant to each of the Trade Agreements, in each case as of the date specified. On the Commencement Date, Licensees shall deliver to Broker a report, dated as of the Commencement Date (the "Commencement Date Trade Report"), which report lists all Trade Agreements included in the Station Agreements and the contract end date for each Trade Agreement together with a true and correct itemized statement of the aggregate value of the Barter Payable and Barter Receivable pursuant to each of the Trade Agreements. To the extent that the aggregate net value as reflected on the Commencement Date Trade Report of the Stations' Barter Payable exceeds by more than $25,000 the aggregate net value as reflected on the Commencement Date Trade Report of the Barter Receivable, Broker shall be entitled to receive the excess as a credit against the next due Monthly Fee(s). 14.3 Except as otherwise provided herein, the prorations and adjustments contemplated by this Section 14, to the extent practicable, shall be made on the Commencement Date. As to those prorations and adjustments not capable of being ascertained on the Commencement Date, an adjustment and proration shall be made within ninety (90) calendar days after the Commencement Date. 14.4 In the event of any disputes between the parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 14.3 hereof and such disputes shall be determined by an independent certified public accountant mutually acceptable to the parties, and the fees and expenses of such accountant shall be paid one-half by Licensees and one-half by Broker. 15. Indemnification. 15.1 Indemnification. Broker shall indemnify and hold Licensees and their sole stockholder, directors, officers, agents, employees, successors, and assigns harmless from and against any and all claims, expenses, causes of action and liability resulting from or relating to (i) the broadcast of Programming during the Term, (ii) any and all promotions, contests and on-air "giveaways" by Broker relating to the Stations during the Term, (iii) a breach of Broker's representations, warranties, covenants or agreements contained herein, (iv) any liability resulting from Broker's default under the Station Agreements, and (v) all other matters arising out of or related to Broker's activities involving the Station or use of the Stations' facilities or relating to the obligations assumed by Broker in connection with this Agreement including but not limited to any damage caused to the Stations' equipment by Broker, its employees, or agents. Licensees agree to indemnify, defend, and hold harmless Broker and its sole stockholder, directors, officers, agents, employees, successors and assigns from and against any and all liability that arises out of (i) material broadcast by Licensees other than the Programming, (ii) liabilities (but not loss of advertising revenue) that arise as a result of Licensees' alteration of any and/or all Programming prior to broadcast by Licensees; and (iii) the Retained Liabilities. 15.2 Procedures: Third Party and Direct Indemnification Claims. The indemnified party agrees to give written notice within a reasonable time to the indemnifying party of any demand, suit, claim or assertion of liability by third parties or other circumstances that could give rise to an indemnification obligation hereunder against the indemnifying party (hereinafter collectively 8 "Claims," and individually a "Claim"), it being understood that the failure to give such notice shall not affect the indemnified party's right to indemnification and the indemnifying party's obligation to indemnify as set forth in this Agreement, unless the indemnifying party's ability to contest, defend or settle with respect to such Claim is thereby demonstrably and materially prejudiced. The obligations and liabilities of the parties hereto with respect to their respective indemnities pursuant to Section 15.1 resulting from any Claim shall be subject to the following additional terms and conditions: 15.2.1 The indemnifying party shall have the right to undertake, by counsel or other representatives of its own choosing, the defense or opposition to such Claim. 15.2.2 In the event that the indemnifying party shall elect not to undertake such defense or opposition, or within ten days after notice of any such Claim from the indemnified party shall fail to defend or oppose, the indemnified party (upon further written notice to the indemnifying party) shall have the right to undertake the defense, opposition, compromise or settlement of such Claim, by counsel or other representatives of its own choosing, on behalf of and for the account and risk of the indemnifying party (subject to the right of the indemnifying party to assume defense of or opposition to such Claim at any time prior to settlement, compromise or final determination thereof). 15.2.3 Anything in this Section 15.2 to the contrary notwithstanding: (a) the indemnified party shall have the right, at its own cost and expense, to participate in the defense, opposition, compromise or settlement of the Claim; (b) the indemnifying party shall not, without the indemnified party's written consent, settle or compromise any Claim or consent to entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such Claim; and (c) in the event that the indemnifying party undertakes defense of or opposition to any Claim, the indemnified party, by counsel or other representative of its own choosing and at its sole cost and expense, shall have the right to consult with the indemnifying party and its counsel or other representatives concerning such Claim and the indemnifying party and the indemnified party and their respective counsel or other representatives shall cooperate in good faith with respect to such Claim. 15.2.4 No undertaking of defense or opposition to a Claim shall be construed as an acknowledgment by such party that it is liable to the party claiming indemnification with respect to the Claim at issue or other similar Claims. 16. Events of Default: Cure Periods and Remedies. 16.1. Events of Default. The following shall, after the expiration of the applicable cure periods, constitute Events of Default under the Agreement: 16.1.1 Non-Payment. Broker's failure to timely pay the consideration provided for in Section 2 and Attachment A hereof which is not cured within five (5) business days following notice in accordance with Section 16.2 hereof; 9 16.1.2 Default in Covenants or Adverse Legal Action. The default by any party hereto in the material observance or performance of any material covenant, condition or agreement contained herein which is not cured within five (5) business days following notice in accordance with Section 16.2 hereof, or if (a) any party shall make a general assignment for the benefit of creditors, (b) any party shall file or have filed against it a petition for bankruptcy, for reorganization or an arrangement, or for the appointment of a receiver, trustee or similar creditors' representative for the property or assets of such party under any federal or state insolvency law, which, if filed against such party, has not been dismissed or discharged within sixty (60) days thereof, or (c) specifically and without limitation, if Licensees' successors and assigns, including, without limitation, any assignee of the FCC license for the Stations, except if such successor or assign is Broker or an affiliate of Broker, refuse to abide by or terminate this Agreement during the term of this Agreement. 16.1.3 Breach of Representation. If any material representation or warranty herein made by either party hereto, or in any certificate or document furnished by either party to the other pursuant to the provisions hereof, shall prove to have been false in any material respect as of the time made or furnished and is not cured within thirty (30) days following notice in accordance with Section 16.2 hereof. 16.1.4 Breach of Merger Agreement. The breach by any party or their affiliates in the observance or performance of any representation, warranty, covenant, condition or agreement in the Merger Agreement which is not cured within any time period provided for such cure under the Merger Agreement and which breach gives rise to a right to a party to terminate the Merger Agreement, provided that no party may use its or its affiliate's own breach under the Merger Agreement as grounds to terminate this Agreement. 16.2 Cure Periods. An Event of Default shall not be deemed to have occurred until after the nondefaulting party has provided the defaulting party with written notice specifying the event or events that if not cured would constitute an Event of Default and specifying the actions necessary to cure within the relevant cure period. The Event of Default shall not be deemed to have occurred if actions necessary to cure are completed during the relevant cure period. 16.3 Termination Upon Default. Upon the occurrence of an Event of Default, the non-defaulting party may terminate this Agreement provided that it is not also in material default hereunder, and may seek such remedies at law and/or equity as are available, including without limitation specific performance. If Broker has defaulted in the performance of its obligations, Licensees shall be under no further obligation to make available to Broker any further broadcast time or broadcast transmission facilities and, without limitation of remedies, all amounts accrued or payable to Licensees up to the date of termination which have not been paid, less any payment credits, shall immediately become due and payable. 16.4 Liabilities Upon Termination. Upon termination of this Agreement, Broker shall be responsible for all liabilities, debts and obligations of Broker accrued from the purchase of air time and transmission services including, without limitation, accounts payable, barter agreements and unaired advertisements, but not for Licensees' federal, state, and local tax liabilities associated with Broker's payments to Licensees as provided for herein. With respect to Broker's obligations to 10 broadcast material over the Stations after termination hereunder, Broker may propose compensation to Licensees for meeting these obligations, but Licensees shall be under no duty to accept such compensation or to perform such obligations. Upon termination, Broker shall return to Licensees any equipment or property of the Stations used by Broker, its employees or agents, in substantially the same condition and location as such equipment existed on the date of this Agreement, ordinary wear and tear excepted, and Broker shall assign to Licensees the still outstanding Station Agreements that were assigned to Broker pursuant to Section 12 hereof and any new contracts entered into by Broker relating to the Stations that Licensees expressly agree to assume. Notwithstanding anything in the foregoing to the contrary, termination shall not extinguish any rights of either party as may be provided by Section 15 hereof. 17. Broker Termination Option. Broker may elect to terminate this Agreement at any time during the term hereof in the event that Licensees preempt or substitute other programming for that supplied by the Broker during ten percent (10%) or more of the total hours of operation of the Stations during any calendar month. In the event Broker elects to terminate this Agreement pursuant to this provision, it shall give Licensees notice of such election at least ten (10) days prior to the termination date. Upon termination, no party shall have any further liability to any other except as may be provided by Sections 15 and 16.4 hereof. 18. Responsive Programming. Broker and Licensees mutually acknowledge their interest in ensuring that the Stations serve the needs and interests of the residents of the Stations' community of license and service areas and agree to cooperate in doing so. Licensees shall, on a regular basis, assess the issues of concern to residents of the Stations' community of license and service areas and address those issues in its public service programming. Licensees shall describe those issues and responsive programming and place issues/programs lists in the Stations' public inspection file as required by FCC rules. The Programming shall include material that is responsive to the issues identified by Licensees. Licensees may request, and Broker shall provide, information concerning such of Broker's Programming that is responsive to community issues so as to assist Licensees in the satisfaction of its public service programming obligations. Broker shall also provide to Licensees upon request such other information necessary to enable Licensees to prepare records and reports required by the FCC or other local, state or federal government entities. 19. Time Brokerage Challenge. If this Agreement is challenged in whole or in part at or by a governmental authority or is challenged in whole or in part in a judicial forum, counsel for the Licensees and counsel for the Broker shall jointly defend this Agreement and the parties' performance thereunder throughout all such proceedings. If this Agreement is declared invalid or illegal in whole or in substantial part by a ruling, order or decree of a governmental authority or court, and such ruling, order or decree has become effective, then the parties shall endeavor in good faith to reform the Agreement as necessary. If the parties are unable to reform this Agreement within thirty (30) days of the effective date of such ruling, order or decree, then this Agreement shall terminate, and all sums owing to Licensees shall be paid and no party shall have any further liability to any other except as may be provided by Section 15 hereof. 11 20. Additional Representations, Warranties and Covenants. 20.1. Mutual Representations, Warranties and Covenants. Both Licensees and Broker represent that they are legally qualified, empowered, and able to enter into this Agreement, and that the execution, delivery and performance hereof shall not constitute a breach or violation of any agreement, contract or other obligation to which either party is subject or by which it is bound. 20.2. Additional Licensees Representations, Warranties and Covenants. Licensees make the following further representations, warranties and covenants: 20.2.1 Authorizations. During the term of this Agreement, Licensees shall own and hold all licenses and other permits and authorizations necessary for the operation of the Stations as presently conducted (including licenses, permits and authorizations issued by the FCC), and such licenses, permits and authorizations shall be in full force and effect for the entire Term hereunder, unimpaired by any acts or omissions of Licensees, their principals, employees or agents. Licensees hereby make and incorporate by reference those representations, warranties and covenants of the Company which are set forth in the Merger Agreement that pertain to Licensees, their assets or their operation of the Stations. 20.2.2 Payment of Obligations. Licensees shall not incur any debt, obligation or liability without the prior written consent of Broker if such undertaking would adversely affect Licensees' performance hereunder or the business and operations of the Broker permitted hereby. Subject to the provisions of Sections 2 and 11 hereof, Licensees shall pay in a timely fashion all of their debts, assessments and obligations, including without limitation tax liabilities and payments in each case attributable to the operations of the Stations, as they come due during the Term of this Agreement. 20.2.3 Broadcast Obligations. Licensees have no agreement, contract, commitment or understanding to broadcast on the Stations on or after the Commencement Date, any programs or commercial matter other than the Stations Agreements. Licensees shall not incur any other programming obligations without the prior written consent of Broker except in connection with programming obligations incurred by Licensees for programming that replaces Programming that does not meet the standards set forth in this Agreement. 20.2.4 Licensees Control. Licensees hereby verify that for the term of this Agreement they shall maintain ultimate control over the Stations' facilities, including specifically control over the Stations' finances, personnel and programming, and nothing herein shall be interpreted as depriving Licensees of the power or right of such ultimate control. 20.2.5 Insurance. Licensees shall maintain in full force and effect (at Licensees' expense) throughout the term of this Agreement insurance with responsible and reputable insurance companies or associations covering such risks (including fire and other risks insured against by extended coverage, public liability insurance, insurance for claims against personal injury or death or property damage and such other insurance as may be applicable) and in such amounts and on such terms as is conventionally carried by broadcasters operating radio Stations with facilities in 12 the area comparable to those of the Stations. Broker shall be listed as an additional insured on such insurance policies. Any insurance proceeds received by Licensees in respect of damaged property shall be used to repair or replace such property so that the operations of the Stations conform with this Agreement. Licensees shall present to Broker prior to the execution of this Agreement certificates of insurance or binders for such insurance policies. If requested by Broker, Licensees shall maintain, at Broker's expense, business interruption insurance for Broker's benefit. If Licensees do not carry such insurance, Broker shall reimburse Licensees for the costs of obtaining such insurance. 20.2.6 Compliance with Law. Licensees covenant that, throughout the term of this Agreement, Licensees shall comply with all laws and regulations applicable in the conduct of Licensees' business and Licensees acknowledge that Broker has not urged, counseled, or advised the use of any unfair business practice. 20.3 Additional Broker Representations, Warranties and Covenants. 20.3.1 Compliance with 47 C.F.R. Section 73.3555(a). Broker hereby verifies that execution and performance of this Agreement complies with the Commission's restrictions on local radio ownership set out in Section 73.3555(a) of the FCC Rules. 20.3.2 Compliance with Applicable Law. Broker covenants that its performance of its obligations under this Agreement and its furnishing of Programming shall be in compliance with, and shall not violate, any applicable laws or any applicable rules, regulations, or orders of the FCC or any other governmental agency and Broker acknowledges that Licensees have not urged, counseled, or advised the use of any unfair business practice. 20.3.3 Handling of Complaints. Broker shall promptly advise Licensees of any public or FCC complaint or inquiry that Broker receives concerning the Programming on the Stations and shall cooperate with Licensees and take all actions as may be reasonably requested by Licensees in responding to any such complaint or inquiry. 20.3.4 Copyright and Licensing. Broker represents and warrants to Licensees that Broker has and shall have throughout the term of this Agreement the full authority to broadcast the Programming on the Stations and that Broker shall not broadcast on the Stations any material in violation of the Copyright Act. All music supplied by Broker shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or (iii) cleared at the source by Broker. 20.3.5 Information For FCC Reports. Upon request by Licensees, Broker shall provide in a timely manner any such information in its possession which shall enable Licensees to prepare, file or maintain the records and reports required by the FCC. 20.3.6 Payola/Plugola. Broker covenants that it shall not accept, and shall instruct its employees not to accept, any consideration, compensation, gift or gratuity of any kind whatsoever, regardless of its value or form, including, but not limited to, a commission, discount, bonus, materials, supplies or other merchandise, services or labor, whether or not pursuant to written contracts or agreements between Broker and merchants or advertisers, unless the payer is identified 13 in the program as having paid for or furnished such consideration, in accordance with FCC requirements. Broker agrees to annually, or more frequently at the request of Licensees, execute and provide Licensees with an affidavit regarding payola/plugola compliance. 21. Intellectual Property. Effective as of the Commencement Date, Licensees license to Broker the exclusive right to use all intellectual property owned by or licensed to Licensees and used solely in the operation of the Stations (including, but not limited to, logos, jingles, promotional materials, call signs, goodwill, trademarks, service marks, slogans, trade names, copyrights and any applications and registrations therefor) (the "IP License"). In the event of termination of this Agreement, the IP License shall terminate. 22. Subcarrier Rights. Licensees and Broker acknowledge and agree that any subsidiary communications services transmitted on a subcarrier within the FM baseband signal of the Stations ("Subcarrier"), and any uses of the Subcarrier authorized by the FCC ("Subcarrier Uses"), are subject to the terms and conditions of this Agreement. Licensees hereby agree (a) to apply, at Broker's expense, for any additional authorization from the FCC or any other governmental agency or entity that may be necessary in order to make use of any Subcarrier Uses, and (b) that Broker has the sole and exclusive right, subject to the terms and conditions hereof, to make use of any Subcarrier Uses and collect the revenues therefrom. Broker hereby agrees to reimburse Licensees for Licensees' reasonable expenses incurred in carrying out Licensees' obligations pursuant to this Section 22, including reasonable attorneys and engineering fees and expenses. 23. Publicity. Licensees and Broker shall not issue any press release or otherwise make any public statement with respect to the transactions contemplated herein except as may be required by law or regulation or as agreed to by Licensees and Broker. 24. No Waiver; Remedies Cumulative. No failure or delay on the part of Licensees or Broker in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of Licensees and Broker herein provided are cumulative and are not exclusive of any right or remedies which it may otherwise have. 25. Construction. This Agreement shall be construed in accordance with the laws of the State of Minnesota, without giving effect to the choice of law provisions thereunder, and the obligations of the parties hereto are subject to all federal, state or municipal laws or regulations now or hereafter in force and to the regulations of the FCC and all other governmental bodies or authorities presently or hereafter to be constituted. 26. Headings. The headings contained in this Agreement are included for convenience only and no such heading shall in any way alter the meaning of any provision. 27. Parties in Interest; Assignment. All covenants and agreements contained in this Agreement by or on behalf of any of the parties to this Agreement shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not. No party to this Agreement may assign its rights or delegate its obligations under this Agreement to any other person or entity 14 without the express prior written consent of the other parties, except that (i) Broker may assign its rights and delegate its obligations to one or more subsidiary or affiliated corporations of Broker, in which event Broker shall be released and discharged of all obligation hereunder and all reference herein to Broker shall mean such subsidiary or affiliate; (ii) in the event that Broker finds it necessary or is required to provide to a third party a collateral assignment of Broker's interest in this Agreement or any related documents, Licensees will cooperate with Broker and any third party requesting such assignment including but not limited to signing a consent and acknowledgment of such assignment; provided, however, that except as otherwise provided herein Broker shall remain fully liable as to all of its obligations and agreements whether or not delegated or assigned. 28. Notices. All notices, demands, requests, or other communications which may be or are required to be given or made by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered, mailed by first-class registered or certified mail, return receipt requested, postage prepaid, delivered by overnight air courier, or transmitted by telegram, telex, or facsimile transmission addressed in accordance with the listing set forth in Attachment D hereto or such other address as the addressee may indicate by written notice to the other parties. Each notice, demand, request, or communication which shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the affidavit of messenger or (with respect to a telex or facsimile) the answerback being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation. 29. Entire Agreement. This Agreement and the Merger Agreement and related documents embody the entire agreement between the parties and there are no other agreements, representations, warranties, or understandings, oral or written, between them with respect to the subject matter hereof. No alterations, modification or change of this Agreement shall be valid unless made in writing, and signed by like written instrument. No waiver of any provision hereof shall be valid unless in writing and signed by the party adversely affected by the waiver, and then such waiver shall be effective only in the specified instance and for the purpose for which given. 30. Severability. In the event that any of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable such event shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had not been contained herein. 31. Counterpart Signatures. This Agreement may be signed in one or more counterparts, each of which shall be deemed a duplicate original, binding on the parties hereto notwithstanding that the parties are not signatory to the original or the same counterpart. This Agreement shall be binding and effective as of the date on which the executed counterparts are exchanged by the parties. 15 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. REPCOM, INC. By: /s/ Dennis G. Carpenter --------------------------------------- Name: Dennis G. Carpenter --------------------------------------- Title: President --------------------------------------- SARTELL FM, INC. By: /s/ Dennis G. Carpenter --------------------------------------- Name: Dennis G. Carpenter --------------------------------------- Title: President --------------------------------------- REGENT BROADCASTING OF ST. CLOUD, INC. By: /s/ Terry S. Jacobs --------------------------------------- Name: Terry S. Jacobs --------------------------------------- Title: Chairman and Chief Executive Officer --------------------------------------- 16 FIRST AMENDMENT TO TIME BROKERAGE AGREEMENT This First Amendment to that certain Time Brokerage Agreement dated as of June 15, 2000 (the "Agreement"), by and among REGENT BROADCASTING OF ST. CLOUD, INC., a Delaware corporation ("Broker"), and REPCOM, INC. and SARTELL FM, INC., both Minnesota corporations (the "Licensees"), is entered into as of this 19th day of February, 2001. WHEREAS, the parties wish to modify the Agreement according to the provisions set forth in this Amendment. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties hereto, the parties hereby agree as follows: 1. Amendment to Agreement. Attachment A to the Agreement is hereby amended to read as follows: "A Monthly Fee of $29,234." 2. Other Provisions Remain in Effect. With the exception of the foregoing amendment, all other terms and conditions of the Agreement remain in full force and effect. In the event of any conflict in interpretation between the terms and conditions of the Agreement and this First Amendment, the terms and conditions of this First Amendment shall control and be absolute. 3. Counterparts. This First Amendment may be executed concurrently in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date first above written. REPCOM, INC. REGENT BROADCASTING OF ST. CLOUD, INC. By: /s/ Dennis G. Carpenter By: /s/ William L. Stakelin --------------------------- ----------------------------- Name: Dennis G. Carpenter Name: William L. Stakelin --------------------------- ----------------------------- Its: President Its: President --------------------------- ----------------------------- SARTELL FM, INC. By: /s/ Dennis G. Carpenter --------------------------- Name: Dennis G. Carpenter --------------------------- Its: President --------------------------- EX-10.E 7 l87353aex10-e.txt EXHIBIT-10(E) 1 EXHIBIT 10(e) DEPOSIT ESCROW AGREEMENT THIS DEPOSIT ESCROW AGREEMENT (this "Escrow Agreement") is made and entered into this 15th day of June, 2000, by and among STARCOM, INC., a Minnesota corporation ("StarCom"), REGENT BROADCASTING, INC., a Delaware corporation, ("Regent"); and SECURITY TITLE AND GUARANTY AGENCY, INC., as escrow agent ("Escrow Agent"). W I T N E S S E T H: THAT, WHEREAS, Regent and StarCom are parties to a certain Agreement of Merger, dated as of June 15, 2000 (the "Merger Agreement"), pursuant to which StarCom, Inc. will merge into Regent, as described in the Merger Agreement; and WHEREAS, Regent and StarCom desire Escrow Agent to serve as Escrow Agent for certain monies to be held to secure Regent's performance under the Merger Agreement, and Escrow Agent is willing to do so, all upon the terms and conditions set forth in this Agreement. NOW, THEREFORE, on the basis of the mutual promises and covenants set forth herein, it is agreed as follows: 1. Delivery of Escrow Fund 1.1 Simultaneously with the execution hereof, Regent will deliver to Escrow Agent by wire transfer the sum of Two Hundred Fifty Thousand Dollars ($250,000.00) or an irrevocable, stand-by letter of credit (in form and substance acceptable to StarCom) in the aggregate amount of Two Hundred Fifty Thousand Dollars ($250,000.00), which Escrow Agent will hold under the terms of this Agreement (the deposit in cash and/or letter of credit being referred to herein as the "Escrow Fund"). 1.2 The Escrow Fund shall be held on the terms and subject to the limitations set forth herein as a source of funds for the payment of liquidated damages in the event that a Closing under the Merger Agreement is not consummated solely by reason of a material breach by Regent, and shall be released by the Escrow Agent in accordance with the terms and conditions hereinafter set forth. 1.3 In the event the Escrow Fund is in the form of a letter of credit and such letter of credit being held by Escrow Agent has not been renewed and will expire within forty-five (45) days, upon written direction of StarCom, and regardless of any contrary instructions or notice that may be received by Escrow Agent from or on behalf of Regent, Escrow Agent shall forthwith draw on such letter of credit in full and thereafter hold the cash proceeds in escrow as the Escrow Fund in accordance with the terms and provisions of this Agreement. 2 2. Maintenance and Distribution of Escrow Fund 2.1 Escrow Agent shall hold or promptly place such portion of the Escrow Fund consisting of cash in such investment vehicle and financial institution as may be designated by Regent from time to time. In the event Escrow Agent receives no such designation, Escrow Agent shall invest the cash Escrow Fund in federally-insured savings accounts. Escrow Agent shall not be liable for the investment results, or lack thereof, achieved by the investment vehicle chosen by Regent, nor shall Escrow Agent have any liability for loss of the Escrow Fund in the event of the financial failure of the financial institution chosen by Regent. Any and all interest earned on the cash Escrow Fund shall belong to Regent and shall not be treated as part of the Escrow Fund distributable to StarCom under any circumstances. 2.2 At the time and place of the Closing under the Merger Agreement, and simultaneously with the performance by Regent and StarCom of their respective obligations under the Merger Agreement, Regent and StarCom shall instruct the Escrow Agent to deliver or pay the cash portion of the Escrow Fund to Regent, the interest accrued thereon shall be paid to Regent, and the letter of credit shall be returned to Regent. 2.3 On the fifteenth (15th) day after Escrow Agent's receipt of written notice from StarCom (with evidence of service of such notice on Regent) that (a) the Merger Agreement has been terminated pursuant to Section 13.01(c) of the Merger Agreement solely because of Regent's material breach of the Merger Agreement which was not cured within any applicable cure period, and (b) all other conditions to Closing are at such time satisfied or waived (other than such conditions as can reasonably be expected to be satisfied by the Closing) ("StarCom's Notice"), Escrow Agent shall deliver the Escrow Fund to StarCom; provided, however, that Escrow Agent shall make no such delivery if Regent, prior to the expiration of the aforesaid 15-day period, have provided notice to Escrow Agent and StarCom of their countervailing claim to the Escrow Fund or otherwise claims that StarCom is not entitled to the Escrow Fund for any reason ("Regent's Rebuttal Notice"). 2.4 On the fifteenth (15th) day after Escrow Agent's receipt of written notice from Regent (with evidence of service of such notice on StarCom) that the Merger Agreement has been terminated for any reason other than the circumstances described in Section 2.3 above ("Regent's Notice"), Escrow Agent shall deliver the Escrow Fund to Regent; provided, however, that Escrow Agent shall make no such delivery if StarCom, prior to the expiration of the aforesaid 15-day period, have provided notice to Escrow Agent and Regent of StarCom's countervailing claim to the Escrow Fund or otherwise claims that Regent are not entitled to the Escrow Fund for any reason ("StarCom's Rebuttal Notice"). 2.5 After timely receipt by Escrow Agent of StarCom's Rebuttal Notice or Regent's Rebuttal Notice, Escrow Agent shall not deliver the Escrow Fund until such time as Escrow Agent receives: (a) a written agreement signed by StarCom and Regent providing instructions as to the disposition of the Escrow Fund, or (b) a certified copy of an order or judgment from an arbitrator or court which has become final (meaning that the order or judgment is no longer subject to appeal to or review by a court of competent jurisdiction) with respect to the disposition of the Escrow Fund, at which time, Escrow Agent shall deliver the Escrow Fund in accordance with said agreement, order 3 or judgment. Any interest earned on the Escrow Fund in all events shall be delivered to Regent at the termination of this Agreement. Notwithstanding the foregoing, after receipt by Escrow Agent of StarCom's Rebuttal Notice or Buyer's Rebuttal Notice, Escrow Agent may, but need not: (a) deposit the Escrow Fund with any court which has properly assumed jurisdiction of any dispute hereunder, or (b) commence an action in interpleader in any court of competent jurisdiction in Minneapolis, Minnesota and deposit the Escrow Fund and any interest earned thereon with such court; and thereupon, Escrow Agent shall be discharged from all further duties under this Agreement. 2.6 Notwithstanding any other provision of this Escrow Agreement, Escrow Agent shall, upon receipt of written instructions signed jointly by StarCom and Regent, deliver the Escrow Fund to the party or parties named in, or otherwise act in accordance with such instructions. 3. General Provisions 3.1 This Escrow Agreement shall become effective as of the date hereof and shall continue in force until the final delivery of the Escrow Fund and any interest earned thereon by Escrow Agent pursuant to the terms of this Escrow Agreement. This Agreement shall then terminate and the Escrow Agent shall be discharged of all responsibility hereunder. 3.2 All notices, demands or other communications required or permitted by this Escrow Agreement shall be in writing and shall be: (a) delivered personally, (b) sent, charges prepaid, by nationally recognized overnight delivery service, or (c) by facsimile transmission, to all of the following persons at the specified addresses or facsimile transmission phone number (or at such other address or facsimile transmission phone number as any party may designate in writing to the other parties): To StarCom: Dennis G. Carpenter StarCom, Inc. 15395-91st St. Ave. N. Maple Grove, MN 55369 Fax: (612) 420-6551 Copy to: Steve D. DeRuyter, Esq. Leonard, Street & Deinard 150 South Fifth Street Suite 2300 Minneapolis, MN 55402 Fax: (612) 335-1657 If to Regent: Terry S. Jacobs Regent Broadcasting, Inc. c/o Regent Communications, Inc. 50 East RiverCenter Boulevard, Suite 180 Covington, Kentucky 41011 Fax: (606) 292-0352 4 Copy to: Alan C. Rosser, Esq. Strauss & Troy The Federal Reserve Building 150 East Fourth Street Cincinnati, Ohio 45202-4018 Fax: (513) 241-8259 If to Escrow Agent: Nina M. Marx Security Title and Guaranty Agency, Inc. The Federal Reserve Building 150 East Fourth Street Cincinnati, Ohio 45202 Fax: (513) 241-8259 A copy of any notice or communication given by any party to any other party hereto shall be given at the same time to every party to this Escrow Agreement. Each notice, demand or other communication which shall be delivered or sent in the manner described above shall be deemed effective for all purposes at such time it is actually delivered to the addressee (with the delivery receipt or the affidavit of messenger or facsimile confirmation sheet being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation. 3.3 In no event shall the Escrow Agent be liable for any act or failure to act under the provisions of this Escrow Agreement, except where its acts are the result of its own gross negligence or willful misconduct. The Escrow Agent shall have no duties except those which are expressly set forth herein, and it shall not be bound by any waiver, modification, amendment, termination or rescission of this Escrow Agreement, unless in writing received by it and signed by Regent and StarCom. No right, duty or obligations of the Escrow Agent hereunder shall be changed or modified without the Escrow Agent's prior written consent. 3.4 The Escrow Agent shall be protected in acting upon any written notice, request, waiver, consent, receipt or other paper or document furnished to it in connection herewith, not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained, which it reasonably believes to be genuine and what it purports to be. 3.5 In the event that the Escrow Agent shall find it necessary to consult with counsel of its own choosing in connection with this Escrow Agreement, the Escrow Agent shall not incur any liability for any action taken in accordance with such advice. Regent, on the one hand, and StarCom, on the other hand, jointly and severally, shall indemnify and hold harmless the Escrow Agent for any liability, loss, claim or damage incurred by the Escrow Agent in connection with this Escrow Agreement, including any claims by third parties, unless such liability, loss, claim or damage is a result of Escrow Agent's own gross negligence or willful misconduct. This indemnification shall survive termination of this Escrow Agreement. 5 3.6 The Escrow Agent may resign at any time by giving a minimum of thirty (30) days prior written notice of resignation to both Regent and StarCom, such resignation to be effective on the date specified in such notice. Any assets held by the Escrow Agent under the terms of this Escrow Agreement as of the effective date of the resignation shall be delivered to a successor Escrow Agent designated in writing by both Regent and StarCom. 3.7 Escrow Agent is not a party to, and is not bound by, any agreement relating to the Escrow Fund other than as expressly set forth herein. In the event that any of the terms and provisions of any other agreement (excluding any amendment to this Escrow Agreement) between any of the parties hereto, conflict or are inconsistent with any of the provisions of this Escrow Agreement, the terms and provisions of this Escrow Agreement shall govern and control in all respects. 3.8 The Escrow Agent shall be compensated for its services hereunder in accordance with its customary rates, to be paid one-half by StarCom and one-half by Regent. In the event that Regent or StarCom file a lawsuit or institute arbitration or other formal legal action against the other (including any counterclaim to a lawsuit filed by the other party) to enforce its right to the Escrow Fund under this Agreement, the prevailing party shall be reimbursed by the other party (either StarCom or Regent incurred therewith, including reasonable attorneys' fees. 3.9 This Escrow Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. 3.10 The construction and performance of this Escrow Agreement shall be governed by the laws of the State of Minnesota without giving effect to the choice of law provisions thereof. 3.11 This Escrow Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above set forth. STARCOM, INC. By: /s/ Dennis G. Carpenter ------------------------- Name: Dennis G. Carpenter ------------------------- Its: President ------------------------- 6 REGENT BROADCASTING, INC. By: /s/ Terry S. Jacobs ------------------------------------- Name: Terry S. Jacobs ------------------------------------- Its: Chairman and Chief Executive Officer ------------------------------------- ESCROW AGENT: SECURITY TITLE AND GUARANTY AGENCY, INC. By: /s/ Nina M. Marx ------------------------------------- Name: Nina M. Marx ------------------------------------- Its: Vice President ------------------------------------- EX-10.F 8 l87353aex10-f.txt EXHIBIT-10(F) 1 EXHIBIT 10(f) DEPOSIT ESCROW AGREEMENT THIS DEPOSIT ESCROW AGREEMENT (this "Escrow Agreement") is made and entered into this 28th day of December, 2000, by and among NEXTMEDIA GROUP II, INC. ("Seller"); REGENT BROADCASTING OF ERIE, INC. and Regent Licensee OF ERIE, Inc. (collectively, "Buyers"); and MEDIA VENTURE PARTNERS, as escrow agent ("Escrow Agent"). W I T N E S S E T H: THAT, WHEREAS, Buyers, Seller and NextMedia Licensing, Inc. have entered into a certain Asset Purchase Agreement, dated as of December 28, 2000 (the "Purchase Agreement"), pursuant to which Buyers will purchase certain assets and assume certain obligations described in the Purchase Agreement; and WHEREAS, Buyers and Seller desire Escrow Agent to serve as Escrow Agent for certain monies to be held to secure Buyers' performance under the Purchase Agreement, and Escrow Agent is willing to do so, all upon the terms and conditions set forth in this Agreement. NOW, THEREFORE, on the basis of the mutual promises and covenants set forth herein, it is agreed as follows: 1. Delivery of Escrow Fund 1.1 Simultaneously with the execution hereof, Buyers will deliver to Escrow Agent by wire transfer the sum of Two Hundred Fifty Thousand Dollars ($250,000.00) or an irrevocable, stand-by letter of credit (in substantially the form of Attachment 1 hereto) in the aggregate amount of Two Hundred Fifty Thousand Dollars ($250,000.00), which Escrow Agent will hold under the terms of this Agreement (the deposit in cash and/or letter of credit being referred to herein as the "Escrow Fund"). 1.2 The Escrow Fund shall be held on the terms and subject to the limitations set forth herein as a source of funds for the payment of liquidated damages in the event that a Closing under the Purchase Agreement is not consummated by reason of a material breach by Buyers, and shall be released by the Escrow Agent in accordance with the terms and conditions hereinafter set forth. 1.3 In the event the Escrow Fund is in the form of a letter of credit and such letter of credit being held by Escrow Agent has not been renewed and will expire within forty-five (45) days, upon written direction of Seller, and regardless of any contrary instructions or notice that may be received by Escrow Agent from or on behalf of Buyers, Escrow Agent shall forthwith draw on such letter of credit in full and thereafter hold the cash proceeds in escrow as the Escrow Fund in accordance with the terms and provisions of this Agreement. 2 2. Maintenance and Distribution of Escrow Fund 2.1 Escrow Agent shall hold or promptly place such portion of the Escrow Fund consisting of cash in such investment vehicle and financial institution as may be designated by Buyers from time to time. In the event Escrow Agent receives no such designation, Escrow Agent shall invest the cash Escrow Fund in federally-insured savings accounts. Escrow Agent shall not be liable for the investment results, or lack thereof, achieved by the investment vehicle chosen by Buyers, nor shall Escrow Agent have any liability for loss of the Escrow Fund in the event of the financial failure of the financial institution chosen by Buyers. Any and all interest earned on the cash Escrow Fund shall belong to Buyers and under no circumstances shall such interest be distributed to Seller. 2.2 At the time and place of the Closing under the Purchase Agreement, and simultaneously with the performance by Buyers and Seller of their respective obligations under the Purchase Agreement, Buyers and Seller shall instruct the Escrow Agent to deliver or pay the cash portion of the Escrow Fund to Seller to be applied to the Purchase Price to be paid to Seller, the interest accrued thereon shall be paid to Buyers, and the letter of credit shall be returned to Buyers. 2.3 On the seventh (7th) day after Escrow Agent's receipt of written notice from Seller (with evidence of service of such notice on Buyers) that (a) the Purchase Agreement has been terminated pursuant to Section 16.1.3 of the Purchase Agreement because of either Buyer's material breach of the Purchase Agreement which was not cured within any applicable cure period, (b) Seller is not in material default or breach of the Purchase Agreement, and (c) all other conditions to Closing are at such time satisfied or waived (other than such conditions as can reasonably be expected to be satisfied by the Closing) ("Seller's Notice"), Escrow Agent shall deliver the Escrow Fund to Seller; provided, however, that Escrow Agent shall make no such delivery if Buyers, prior to the expiration of the aforesaid 15-day period, have provided notice to Escrow Agent and Seller of their countervailing claim to the Escrow Fund or otherwise claims that Seller is not entitled to the Escrow Fund for any reason ("Buyers' Rebuttal Notice"). 2.4 On the seventh (7th) day after Escrow Agent's receipt of written notice from Buyers (with evidence of service of such notice on Seller) that the Purchase Agreement has been terminated for any reason other than the circumstances described in Section 2.3 above ("Buyers' Notice"), Escrow Agent shall deliver the Escrow Fund to Buyers; provided, however, that Escrow Agent shall make no such delivery if Seller, prior to the expiration of the aforesaid 15-day period, have provided notice to Escrow Agent and Buyers of Seller's countervailing claim to the Escrow Fund or otherwise claims that Buyers are not entitled to the Escrow Fund for any reason ("Seller's Rebuttal Notice"). 2.5 After timely receipt by Escrow Agent of Seller's Rebuttal Notice or Buyers' Rebuttal Notice, Escrow Agent shall not deliver the Escrow Fund until such time as Escrow Agent receives: (a) a written agreement signed by Seller and Buyers providing instructions as to the disposition of the Escrow Fund, or (b) a certified copy of an order or judgment from an arbitrator or court which has become final (meaning that the order or judgment is no longer subject to appeal to or review by a court of competent jurisdiction) with respect to the disposition of the Escrow Fund, at which time, Escrow Agent shall deliver the Escrow Fund in accordance with said agreement, order or judgment. Notwithstanding the foregoing, after receipt by Escrow Agent of Seller's Rebuttal Notice or Buyer's 3 Rebuttal Notice, Escrow Agent may, but need not: (a) deposit the Escrow Fund with any court which has properly assumed jurisdiction of any dispute hereunder, or (b) commence an action in interpleader in any court of competent jurisdiction in Georgia and deposit the Escrow Fund and any interest earned thereon with such court; and thereupon, Escrow Agent shall be discharged from all further duties under this Agreement. 2.6 Notwithstanding any other provision of this Escrow Agreement, Escrow Agent shall, upon receipt of written instructions signed jointly by Seller and Buyers, deliver the Escrow Fund to the party or parties named in, or otherwise act in accordance with such instructions. 3. General Provisions 3.1 This Escrow Agreement shall become effective as of the date hereof and shall continue in force until the final delivery of the Escrow Fund and any interest earned thereon by Escrow Agent pursuant to the terms of this Escrow Agreement. This Agreement shall then terminate and the Escrow Agent shall be discharged of all responsibility hereunder. 3.2 All notices, demands or other communications required or permitted by this Escrow Agreement shall be in writing and shall be: (a) delivered personally, (b) sent, charges prepaid, by nationally recognized overnight delivery service, or (c) by facsimile transmission, to all of the following persons at the specified addresses or facsimile transmission phone number (or at such other address or facsimile transmission phone number as any party may designate in writing to the other parties): To Seller: NextMedia Group II, Inc. 6312 South Fiddler's Green Circle Suite 360-E Englewood, CO 80111 Attention: Mr. Sean Stover Fax: (310) 445-4606 Copy to: Leibowitz and Associates, P.A. 1 SE 3rd Avenue Miami, FL 33131-1715 Attention: Matthew L. Leibowitz, Esq. Fax: (305) 530-9417 If to Buyers: Regent Broadcasting of Erie, Inc. c/o Regent Communications, Inc. 100 East RiverCenter Boulevard, 9th Floor Covington, Kentucky 41011 Attention: Mr. Terry S. Jacobs Fax: (606) 292-0352 4 Copy to: Strauss & Troy The Federal Reserve Building 150 East Fourth Street Cincinnati, Ohio 45202-4018 Attention: Alan C. Rosser, Esq. Fax: (513) 241-8259 If to Escrow Agent: Media Venture Partners 50 Francisco Street Suite 450 San Francisco, CA 94133 Attention: Mr. Elliott Evers Fax: (415) 391-4912 A copy of any notice or communication given by any party to any other party hereto shall be given at the same time to every party to this Escrow Agreement. Each notice, demand or other communication which shall be delivered or sent in the manner described above shall be deemed effective for all purposes at such time it is actually delivered to the addressee (with the delivery receipt or the affidavit of messenger or facsimile confirmation sheet being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation. 3.3 In no event shall the Escrow Agent be liable for any act or failure to act under the provisions of this Escrow Agreement, except where its acts are the result of its own gross negligence or willful misconduct. The Escrow Agent shall have no duties except those which are expressly set forth herein, and it shall not be bound by any waiver, modification, amendment, termination or rescission of this Escrow Agreement, unless in writing received by it and signed by Buyers and Seller. No right, duty or obligations of the Escrow Agent hereunder shall be changed or modified without the Escrow Agent's prior written consent. 3.4 The Escrow Agent shall be protected in acting upon any written notice, request, waiver, consent, receipt or other paper or document furnished to it in connection herewith, not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained, which it reasonably believes to be genuine and what it purports to be. 3.5 In the event that the Escrow Agent shall find it necessary to consult with counsel of its own choosing in connection with this Escrow Agreement, the Escrow Agent shall not incur any liability for any action taken in accordance with such advice. Buyers, on the one hand, and Seller, on the other hand, jointly and severally, shall indemnify and hold harmless the Escrow Agent for any liability, loss, claim or damage incurred by the Escrow Agent in connection with this Escrow Agreement, including any claims by third parties, unless such liability, loss, claim or damage is a result of Escrow Agent's own gross negligence or willful misconduct. This indemnification shall survive termination of this Escrow Agreement. 5 3.6 The Escrow Agent may resign at any time by giving a minimum of thirty (30) days prior written notice of resignation to both Buyers and Seller, such resignation to be effective on the date specified in such notice. Any assets held by the Escrow Agent under the terms of this Escrow Agreement as of the effective date of the resignation shall be delivered to a successor Escrow Agent designated in writing by both Buyers and Seller. 3.7 Escrow Agent is not a party to, and is not bound by, any agreement relating to the Escrow Fund other than as expressly set forth herein. In the event that any of the terms and provisions of any other agreement (excluding any amendment to this Escrow Agreement) between any of the parties hereto, conflict or are inconsistent with any of the provisions of this Escrow Agreement, the terms and provisions of this Escrow Agreement shall govern and control in all respects. 3.8 The Escrow Agent shall be compensated for its services hereunder according to its customary charges, to be paid one-half by Seller and one-half by Buyers. In the event that Buyers or Seller file a lawsuit or institute arbitration or other formal legal action against the other (including any counterclaim to a lawsuit filed by the other party) to enforce its right to the Escrow Fund under this Agreement, the prevailing party shall be reimbursed by the other party (either Seller or Buyers for costs and expenses incurred therewith, including reasonable attorneys' fees. 3.9 This Escrow Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. 3.10 The construction and performance of this Escrow Agreement shall be governed by the laws of the State of California without giving effect to the choice of law provisions thereof. 3.11 This Escrow Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above set forth. SELLER: NEXTMEDIA GROUP II, INC. By: /s/ Matthew L. Leibowitz -------------------------- Name: Matthew L. Leibowitz -------------------------- Its: Secretary -------------------------- 6 BUYERS: REGENT BROADCASTING OF ERIE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs -------------------------------------- Its: Chairman and Chief Executive Officer -------------------------------------- REGENT LICENSEE OF ERIE, INC. By: /s/ Terry S. Jacobs -------------------------------------- Name: Terry S. Jacobs -------------------------------------- Its: Chairman and Chief Executive Officer -------------------------------------- ESCROW AGENT: MEDIA VENTURE PARTNERS By: /s/ Elliott B. Evers -------------------------------------- Name: Elliott B. Evers -------------------------------------- Its: Managing Director -------------------------------------- EX-10.H 9 l87353aex10-h.txt EXHIBIT-10(H) 1 EXHIBIT 10(h) THE REGENT COMMUNICATIONS, INC. 1998 MANAGEMENT STOCK OPTION PLAN (AS AMENDED EFFECTIVE MAY 1, 2000) Regent Communications, Inc. (the "Company") has, by appropriate resolution of its Board of Directors, adopted the following 1998 Management Stock Option Plan to be effective upon the first day of January, 1998, subject to its approval by the Company's shareholders. 1. DEFINITIONS. The following terms, when capitalized, shall have the designated meanings set forth below, unless a different meaning is plainly required by the context. Where applicable, the masculine pronoun shall include the feminine, and the singular shall include the plural and vice versa. A. BOARD. "Board" shall mean the Board of Directors of the Company, as it may be comprised from time to time. B. CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder. Any specific provision of the Code referenced herein shall be deemed to refer to the corresponding provision of any amendment, revision or successor of the Code or such provision as may be adopted in lieu of the referenced provision. C. COMMITTEE. "Committee" shall mean the Compensation Committee of the Board, comprised of at least three members of the Board, each of whom is, as to the Plan, both a disinterested person as defined in Rule 16b-3(c)(2)(i) under the Exchange Act and an outside director as defined in Prop. Reg. Section 1.162-27 under the Code (or two members if there are not three persons then serving on the Board who are both disinterested persons and outside directors), and appointed by and to serve at the pleasure of the Board. D. COMMON STOCK. "Common Stock" shall mean shares of the Company's authorized voting common stock. E. COMPANY. "Company" shall mean Regent Communications, Inc. F. ELIGIBLE EMPLOYEE. "Eligible Employee" shall mean any Key Employee of the Company who was a full-time permanent salaried employee of the Company on the Grant Date of any Option granted to him. G. EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules promulgated thereunder. Any specific provision of the Exchange Act referenced herein shall be deemed to refer to the corresponding provision of any amendment, revision -1- 2 or successor of the Exchange Act or such provision as may be adopted in lieu of the referenced provision. H. EXERCISE DATE. "Exercise Date" shall mean the calendar date on which a Participant exercises an Option granted under the Plan. I. EXERCISE PERIOD. "Exercise Period" shall mean that period of time during which an Option granted under the Plan may be exercised, determined in accordance with paragraph 7 hereof. J. EXERCISE PRICE. "Exercise Price" shall mean that price for which a share of Common Stock may be purchased pursuant to an Option, determined in accordance with paragraph 6 hereof. K. GRANT DATE. "Grant Date" shall mean the calendar date on which the grant of an Option is made under the Plan, determined in accordance with paragraph 5 hereof. L. INCENTIVE STOCK OPTION. "Incentive Stock Option" ("ISO") shall mean an Option which qualifies as an incentive stock option under Section 422 of the Code. M. KEY EMPLOYEE. "Key Employee" shall mean any full-time permanent management employee of the Company designated as such by the Committee on or prior to the Grant Date of any Option granted to him. N. NONQUALIFIED STOCK OPTION. "Nonqualified Stock Option" ("NQSO") shall mean an Option which is not, by its terms, an ISO on its Grant Date. O. OPTION. "Option" shall mean an ISO or NQSO granted or to be granted under the Plan for the purchase of a fixed number of shares of Common Stock at a fixed Exercise Price. P. PARTICIPANT. "Participant" shall mean an Eligible Employee to whom an Option has been granted under the Plan, but which Option has not expired, exercised in full, forfeited or otherwise terminated or satisfied under the Plan. Q. PLAN. "Plan" shall mean Regent Communications, Inc. 1998 Management Stock Option Plan as set forth herein. R. RELATED CORPORATION. "Related Corporation" shall mean any corporation of which the Company is a parent corporation. The term "parent corporation" shall have the meanings ascribed to it under Section 424 of the Code. -2- 3 S. RULE 16B-3. "Rule 16b-3" means Rule 16b-3 of the General Rules and Regulations of the Exchange Act or any successor rules or regulations which may hereafter be adopted in lieu thereof. Any reference to a specific provision of Rule 16b-3 shall refer to the corresponding provision of Rule 16b-3 as amended or replaced. T. TEN PERCENT OWNER PARTICIPANT. "Ten Percent Owner Participant" shall mean any Participant who, on the Grant Date of an ISO granted to him under the Plan, owns, directly or indirectly, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or a Related Corporation. 2. PURPOSE. The purpose of the Plan is to advance the interests of the Company and its shareholders by enhancing the Company's ability to retain and attract highly qualified key management employees and to provide additional financial incentives to key employees to contribute to the long-term growth and success of the Company. 3. ELIGIBILITY. Participation in the Plan shall be determined by the Committee and shall be limited to Eligible Employees. No member of the Committee shall be eligible to receive Options under the Plan. 4. SHARES SUBJECT TO THE PLAN. Subject to adjustments provided in paragraph 13 hereof, the aggregate number of shares of Common Stock that may be delivered pursuant to the exercise of Options granted under the Plan shall not exceed Two Million (2,000,000) shares. Such shares may consist, either in whole or in part, of the Company's authorized but unissued Common Stock or shares of the Company's authorized and issued Common Stock reacquired by the Company and held in its Treasury, as may from time to time be determined by the Board. If an Option granted under the Plan is surrendered, expires unexercised or for any reason ceases to be exercisable in whole or in part, the shares of Common Stock that were issuable pursuant to such Option, but as to which the Option was not exercised, shall again be available for the purposes of the Plan. 5. OPTION GRANTS. The Committee may, in its sole discretion and subject to the terms of the Plan, grant Options to such Eligible Employees, for such number of shares of Common Stock, at such time or times, and containing such terms consistent with the Plan, as it deems appropriate. Unless otherwise specified by the Committee, the date on which the Committee approves the granting of an Option shall be deemed the Grant Date for such Option. 6. EXERCISE PRICE. The Exercise Price for each Option granted under the Plan shall be as determined by the Committee, but shall not be less than 100% of the fair market value of a share of the Common Stock on the Grant Date. The Exercise Price for an ISO granted to -3- 4 any Ten Percent Owner Participant shall not be less than 110% of the fair market value of a share of the Common Stock on the Grant Date. Unless otherwise required by applicable provisions of the Code, fair market value of the Common Stock on the Grant Date of an Option shall be determined as follows: (i) If the Common Stock is listed on a national securities exchange, the fair market value shall be the average of the highest and lowest selling price of a share of Common Stock on such exchange on the Grant Date, or if there were no sales on such date, then on the next prior business day on which there were sales. (ii) If the Common Stock is traded other than on a national securities exchange, the fair market value shall be the average between the closing bid and asked price on the Grant Date, as reported by the National Association of Securities Dealers Automated Quotation System or such other source of quotations for, or reports of trading of, the Common Stock as the Committee may reasonably select from time to time, or if there is no bid and asked price on said date, then on the next prior business day on which there was a bid and asked price. (iii) If neither of the methods described in (i) or (ii) above is available or accurately reflects fair market value, then the Committee shall make a good faith determination of the fair market value using any reasonable method of valuation. 7. TERM OF OPTION. The Exercise Period of each Option granted shall commence on the Grant Date of the Option or on such later date as may be determined by the Committee and, except as set forth below, shall expire on such date as is determined by the Committee ("Expiration Date"); provided, however, such Expiration Date shall be not later than ten (10) years from the Grant Date in the case of an ISO and ten (10) years and one (1) day in the case of a NQSO. In the case of a Ten Percent Owner Participant, no ISO shall have an Expiration Date more than five (5) years after its Grant Date. Any Option granted under the Plan shall terminate and may no longer be exercised if the Participant ceases to be an employee of the Company or a Related Corporation, except as follows: (i) If a Participant's employment with the Company or a Related Corporation shall have been terminated for any reason other than his death or disability within the meaning of Section 22(e)(3) of the Code, he may at any time within a period of three (3) months thereafter, exercise any Option held by him to the extent the Option was exercisable by him on the date of termination of employment; -4- 5 (ii) If a Participant's employment with the Company or a Related Corporation is terminated due to his disability within the meaning of Section 22(e)(3) of the Code, he may at any time within a one (1) year period thereafter, exercise any Option held by him to the extent the Option was exercisable by him on the date of termination of employment; (iii) If a Participant dies while employed by the Company or a Related Corporation, any Option held by him at his death, to the extent the Option was exercisable by the deceased Participant at his death, may be exercised within six (6) months after his death (or within such longer period as may be otherwise specified by the Committee and, in the case of an ISO, which is permitted by Sections 421 and 422 of the Code) by the person or persons to whom the Participant's rights shall pass by will duly admitted to probate, or in the absence of any provision by will duly admitted to probate, by the executor or administrator of his estate duly qualified and appointed under the laws of the decedent's domicile at the time of his death; (iv) Those Options granted to Joel Fairman on May 18, 2000 shall be exercisable according to the terms of the Grant for the periods provided therein; provided, however, that in no event may an Option be exercised to any extent by any person after its Expiration Date. 8. EXERCISE OF OPTION. During the period when any Option, or a portion of it, remains exercisable, such Option may be exercised at any time in whole or in part; provided, however, that the Committee may require a partial exercise of an Option to be for no less than a stated minimum number of shares of Common Stock. Options may be exercised from time to time by delivering to the Secretary of the Company written notice of exercise, stating the number of shares of Common Stock with respect to which an Option is being exercised, along with payment of the Exercise Price for such shares by (a) cash or check payable to the Company; (b) delivery of shares of Common Stock; or (c) a combination of the preceding two methods. Payment by delivery of shares of Common Stock may include (i) the delivery of Common Stock already owned by the Participant; or (ii) the exchange, in successive steps, of Common Stock to be received from the exercise of the Option, with the result that the Participant will receive from the exercise a net number of shares of Common Stock represented by the difference between the total number of shares with respect to which the Option is being exercised and that number of shares, the fair market value of which is equal to the full Exercise Price for all shares of Common Stock with respect to which the Option is exercised. Any shares of Common Stock delivered in payment of an Exercise Price shall be valued as of the Exercise Date in accordance with paragraph 6 hereof. -5- 6 9. LIMITATION ON EXERCISABILITY. In the case of ISOs, the aggregate fair market value (determined as of the Grant Date) of the Common Stock issuable pursuant to ISOs granted under the Plan and under any other plan of the Company and any Related Corporation which are exercisable for the first time by a Participant during any calendar year, shall not exceed $100,000. 10. GRANT OF SUBSTITUTE OPTIONS; MERGERS. In the event that a person who, as an employee of a company other than the Company or a Related Corporation, received one or more stock options entitling him to purchase stock in his employer-company, and by reason of a corporate merger, consolidation, acquisition of stock or property, separation, reorganization or liquidation, such person becomes a key employee of the Company or a Related Corporation, then, to the extent permitted by Sections 422 and 424 of the Code in the case of ISOs, the Committee, with the approval of the Board, may approve the granting of an Option under the Plan to such person in substitution for his option to acquire stock in such other company. Options granted under the Plan in substitution may include provisions inconsistent with those required by the Plan, so long as any ISO so granted meets the requirements of Sections 422 and 424 of the Code and would not as a result cause other ISOs granted under the Plan to be disqualified as ISOs. 11. NONTRANSFERABILITY OF OPTIONS. An Option granted under the Plan is not transferable, except by will or by the laws of descent and distribution, and, during the lifetime of the Participant to whom granted, is exercisable only by him or in the event of his disability, his personal representative. Notwithstanding the foregoing, an Option may be transferred pursuant to a Qualified Domestic Relations Order as defined in Section 414(p) of the Code; provided, however, that an ISO may not be so transferred unless otherwise permitted pursuant to the Code without affecting its status as an ISO. 12. NO EFFECT ON EMPLOYMENT. Nothing contained in the Plan or in any option agreement issued in connection herewith shall be construed to limit or restrict the right of the Company or any Related Corporation to terminate a Participant's employment at any time, with or without cause, or to increase or decrease the Participant's compensation from the rate in existence at the time the Option is granted. 13. ADJUSTMENT OF SHARES SUBJECT TO OPTION. In the event there is any change in the Common Stock of the Company subject to the Plan through the declaration of stock dividends, or through recapitalization resulting in stock split-ups, or combinations or exchanges of shares, or otherwise, the number of shares of Common Stock available for the granting of Options under the Plan and the shares of Common Stock subject to any Option granted under the Plan shall be appropriately adjusted by the Board. The Committee shall give notice of such adjustment to each Participant, and the adjustment shall be effective and binding on the Participant. -6- 7 14. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of January 1, 1998, subject to the its approval and adoption by shareholders holding a majority of the Company's shares entitled to vote thereon. 15. SUSPENSION OR TERMINATION OF THE PLAN. The Board of Directors may at any time suspend or terminate the Plan. Unless the Plan shall theretofore have been terminated by the Board of Directors, the Plan shall terminate at the close of business on the tenth anniversary of the effective date of the Plan. Options may be granted during such suspension or after such termination. The suspension or termination of the Plan shall not, without the consent of the holders of Options granted under the Plan, alter or impair any rights or obligations under any Option previously granted under the Plan. 16. AMENDMENT OF THE PLAN. The Board may at any time amend the Plan in such respect as the Board may deem advisable in order that ISOs granted under it shall be or remain "incentive stock options" under Section 422 of the Code, or in order to conform to any change in the law, or in any other respect the Board may deem to be in the best interest of the Company; provided, however, that no such amendment shall be made without approval of the holders of a majority of all shares of the Company's issued and outstanding shares entitled to vote thereon to the extent that shareholder approval would be required by Section 422 of the Code or Rule 16b-3 of the Exchange Act or by the rules of any stock exchange or market quotation system to which the Company is subject. Any amendment to the Plan shall not alter or impair any rights or obligations under any Option theretofore granted under the Plan without the consent of the holder thereof. 17. ADMINISTRATION. (A) The Committee shall have full power to construe and interpret the Plan and to establish and amend rules and regulations for its administration. (B) Each Option shall be evidenced by an option agreement which shall contain such terms and conditions as may be approved by the Committee and shall be signed by an officer of the Company and the Participant. (C) The Committee shall report to the Board the names of those Eligible Employees granted Options, the number of shares covered by each Option, and the applicable Exercise Prices. (D) Each Option shall be subject to the requirement that, if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares subject to such Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issue or purchase of shares thereunder, such Option may not be -7- 8 exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained. (E) The Committee shall, immediately after it approves the granting of an Option, notify the Participant of such action. 18. COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES. No Option shall be exercisable and no shares will be delivered under this Plan except in compliance with all applicable federal and state laws and regulations including, without limitation, compliance with applicable federal and state securities laws, withholding tax requirements and the rules of all domestic stock exchanges and reporting systems on which the Company's shares of Common Stock may be listed or reported, as the Committee, in its sole discretion, may deem necessary or advisable. Any share certificate issued to evidence shares of Common Stock for which an Option is exercised may bear legends and statements the Committee shall deem advisable to assure compliance with federal and state laws and regulations. 19. MISCELLANEOUS PROVISIONS. (A) WITHHOLDING TAXES. The Company or a Related Corporation shall have the right to require a payment from a Participant to cover applicable withholding taxes. If permitted by the Committee, a Participant may make a written election to have shares of Common Stock withheld from the shares otherwise to be received upon the exercise of an Option and applied by the Company or Related Corporation to the payment of applicable taxes relative to the exercise of the Option. The number of shares so withheld shall have an aggregate fair market value, as determined by the Committee, sufficient to satisfy the applicable withholding taxes. (B) OHIO LAW TO GOVERN. The Plan and all agreements entered into under the Plan shall be interpreted pursuant to the laws of the State of Ohio. (C) OTHER PLANS. Nothing herein contained shall be construed as limiting the establishment or continued operation of other incentive compensation plans by the Company or a Related Corporation, or in any way limiting or restricting the amounts of payments thereunder, or as in any way limiting the authority of the Board to authorize or make such payments as they may determine for any period, or as limiting the authority of the Board in respect of the payment of salaries, wages or special compensation. (D) OBLIGATIONS. Neither the Company nor Related Corporations nor the Board nor the Committee nor any member thereof shall, by any provisions of the Plan, be deemed to be a trustee of any property, and the liabilities of the Company or Related Corporations to any Participant pursuant to the Plan shall be those of a debtor pursuant to such contract obligation as are created by the Plan, and no such obligation of the Company or Related Corporations shall be deemed to be secured -8- 9 by any pledge or other encumbrance on any property of the Company or Related Corporations. (E) CHANGE IN CONDITIONS OF THE CODE. In the event of relevant changes in the Code, or other factors affecting the continued appropriateness of granting ISOs or NQSOs under the Plan, the Committee may, in its sole discretion, accelerate or change the form of awarding benefits under the Plan. (F) PURCHASE OF COMMON STOCK. The Company and Related Corporations may, but shall not be required to, purchase from time to time shares of Common Stock of the Company in such amounts as they may determine for purposes of the Plan. The Company and Related Corporations shall have no obligation to retain, and shall have the unlimited right to sell or otherwise deal with for their own account, any shares of Common Stock of the Company purchased pursuant to this paragraph. (G) PARTICIPANT'S AGREEMENT. If, at the time of the distribution of any shares of the Common Stock of the Company hereunder, in the opinion of counsel for the Company, it is necessary or desirable, in order to comply with any applicable laws or regulations relating to the sale of securities, that the Participant receiving such shares shall agree that he will take the shares for investment and not with any present intention to resell the same and that he will dispose of such shares only in compliance with such laws and regulations, the Participant will, upon the request of the Company, execute and deliver to the Company an agreement to such effect. (H) USE OF CERTAIN TERMS. The terms used herein which are defined in Sections 421, 422 and 424, inclusive, of the Code and regulations and revenue rulings applicable thereto, shall have the meanings attributed to them therein. (I) ISO SAVINGS CLAUSE. It is intended that ISOs granted under this Plan, and the terms of this Plan which apply to ISOs, shall meet all requirements of Section 422 of the Code, and the Plan shall be interpreted, whenever possible, to comply therewith. To the extent necessary that ISOs granted or to be granted under the Plan shall be or remain "incentive stock options" under Section 422 of the Code, all provisions under this Plan pertaining to ISOs shall be read together, without any provisions which pertain exclusively to NQSOs or otherwise do not apply to ISOs. (J) RULE 16B-3 SAVINGS CLAUSE. To the extent that they apply to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3. Any provision of the Plan or action by the Committee shall be interpreted, wherever possible, to comply with all applicable conditions of Rule 16b-3, and to the extent that it does not comply, it shall be deemed to be null and void, to the extent permitted by law and deemed advisable by the Committee. -9- 10 (K) OTHER PROVISIONS. The agreements authorized under this Plan may contain such other provisions as the Committee shall deem advisable. (L) NOTICE. Any notice which may be required or permitted to be given hereunder shall be in writing, and may be delivered to the Company personally or by registered mail, postage prepaid, addressed to: Treasurer, Regent Communications, Inc., 50 East RiverCenter Boulevard, Covington, Kentucky 41011 or at such other address as the Company, by notice to the Participant, may designate in writing from time to time, and to the Participant, at the Participant's address as shown on the records of the Company, or at such other address as the Participant, by notice to the Treasurer, Regent Communications, Inc., may designate in writing from time to time. REGENT COMMUNICATIONS, INC. By: /s/ William L. Stakelin -------------------------------- William L. Stakelin, President -10- EX-21 10 l87353aex21.txt 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.

2 Regent Licensee of San Diego, Inc. Delaware -- Regent Licensee of South Carolina, Inc. Delaware -- Regent Licensee of St. Cloud, Inc. Delaware -- Regent Licensee of Utica/Rome, Inc. Delaware -- Regent Licensee of Watertown, Inc. Delaware -- GRAPHIC 11 l87353api5-178.gif begin 775 pi5-178.gif M1TE&.#EA#``,`/?^``````$!`0("`@,#`P0$!`4%!08&!@<'!P@("`D)"0H* M"@L+"PP,#`T-#0X.#@\/#Q`0$!$1$1(2$A,3$Q04%!45%186%A<7%Q@8&!D9 M&1H:&AL;&QP<'!T='1X>'A\?'R`@("$A(2(B(B,C(R0D)"4E)28F)B7IZ>GM[>WQ\?'U]?7Y^?G]_?X"`@(&!@8*" M@H.#@X2$A(6%A8:&AH>'AXB(B(F)B8J*BHN+BXR,C(V-C8Z.CH^/CY"0D)&1 MD9*2DI.3DY24E)65E9:6EI>7EYB8F)F9F9J:FIN;FYRGI^?GZ"@ MH*&AH:*BHJ.CHZ2DI*6EI::FIJ>GIZBHJ*FIJ:JJJJNKJZRLK*VMK:ZNKJ^O MK["PL+&QL;*RLK.SL[2TM+6UM;:VMK>WM[BXN+FYN;JZNKN[N[R\O+V]O;Z^ MOK^_O\#`P,'!P<+"PL/#P\3$Q,7%Q<;&QL?'Q\C(R,G)RWM_?W^#@X.'AX>+BXN/CX^3DY.7EY>;FYN?GY^CHZ.GIZ>KJZNOK MZ^SL[.WM[>[N[N_O[_#P\/'Q\?+R\O/S\_3T]/7U]?;V]O?W]_CX^/GY^?KZ M^OO[^_S\_/W]_?[^_O___R'Y!`$``/X`+``````,``P`!PA>`/]%8T:PH,%_ M&0`H7,@0(3UF_R)&C*8N`T)P"O1(1"4@F$6+UB@0^H=*P2V$*/]94\!$P$F4 J%B/^`1!%XL>('#-EC'BSY,F0(S]& GRAPHIC 12 l87353api5-110.gif begin 775 pi5-110.gif M1TE&.#EA#``,`/?^``````$!`0("`@,#`P0$!`4%!08&!@<'!P@("`D)"0H* M"@L+"PP,#`T-#0X.#@\/#Q`0$!$1$1(2$A,3$Q04%!45%186%A<7%Q@8&!D9 M&1H:&AL;&QP<'!T='1X>'A\?'R`@("$A(2(B(B,C(R0D)"4E)28F)B7IZ>GM[>WQ\?'U]?7Y^?G]_?X"`@(&!@8*" M@H.#@X2$A(6%A8:&AH>'AXB(B(F)B8J*BHN+BXR,C(V-C8Z.CH^/CY"0D)&1 MD9*2DI.3DY24E)65E9:6EI>7EYB8F)F9F9J:FIN;FYRGI^?GZ"@ MH*&AH:*BHJ.CHZ2DI*6EI::FIJ>GIZBHJ*FIJ:JJJJNKJZRLK*VMK:ZNKJ^O MK["PL+&QL;*RLK.SL[2TM+6UM;:VMK>WM[BXN+FYN;JZNKN[N[R\O+V]O;Z^ MOK^_O\#`P,'!P<+"PL/#P\3$Q,7%Q<;&QL?'Q\C(R,G)RWM_?W^#@X.'AX>+BXN/CX^3DY.7EY>;FYN?GY^CHZ.GIZ>KJZNOK MZ^SL[.WM[>[N[N_O[_#P\/'Q\?+R\O/S\_3T]/7U]?;V]O?W]_CX^/GY^?KZ M^OO[^_S\_/W]_?[^_O___R'Y!`$``/X`+``````,``P`!P@Z`/\)'$APX)L? M"!,J_/<#F;B'$!\:8"BNX,`#%"T*Q/BCHD:.'BV"U/AOY,>,)SN2Y&C@@,N7 &+@$$!``[ ` end -----END PRIVACY-ENHANCED MESSAGE-----


PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Exhibit 2(G)
Exhibit 2(H)
Exhibit 4(C)
Exhibit 4(D)
Exhibit 10(D)
Exhibit-10(E)
Exhibit-10(F)
Exhibit-10(H)
Exhibit 21


Delaware		31-1492857
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


	High		Low

2000




First quarter (commencing January 25, 2000)	$	14.0000	$	9.3750




Second quarter	$	12.1875	$	5.0625




Third quarter	$	8.8750	$	5.2500




Fourth quarter	$	6.8750	$	3.5000



	Year Ended December 31,

	2000			1999			1998			1997			1996


	(In thousands, except per share data)




Operating Results⁽¹⁾⁽²⁾:




Net broadcasting revenues	$	44,107		$	23,854		$	14,772		$	5,993		$	4,874




Income (loss) from operations		831			(612	)		(433	)		1,015			1,223




Income (loss) before income taxes and extraordinary items		14,966			(6,300	)		(3,290	)		(363	)		279




Extraordinary items		(1,114	)		(471	)		(1,170	)		(4,333	)		—




Net income (loss)		13,852			(6,771	)		(4,460	)		(4,696	)		279




Preferred stock dividend requirements		(629	)		(5,205	)		(2,166	)		—			—




Preferred stock accretion		(26,611	)		(17,221	)		(4,787	)		—			—




Basic and Diluted Net Loss Per Common Share:




Income (loss) before extraordinary items	$	(0.39	)	$	(119.69	)	$	(42.67	)	$	(1.51	)	$	1.16




Extraordinary items		(0.03	)		(1.96	)		(4.88	)		(18.06	)		—

Basic and diluted net income (loss) per common share	$	(0.42	)	$	(121.65	)	$	(47.55	)	$	(19.57	)	$	1.16




Weighted average number of common shares used in basic and diluted calculations		31,715			240			240			240			240




Balance Sheet Data:




Current assets	$	12,012		$	10,329		$	11,619		$	1,919		$	1,306




Total assets		252,733			83,727			67,618			13,010			4,326




Current liabilities		4,902			3,115			13,027			860			1,068




Long-term debt, less current portion		45,010			25,331			34,618			21,912			7,277




Redeemable preferred stock		—			89,265			27,406			—			—




Total stockholders’ equity (deficit)	$	198,420		$	(37,810	)	$	(10,077	)	$	(10,182	)	$	(5,486	)


		Net Revenue			Broadcast Cash Flow


		(Dollars in thousands)




First Quarter 2000		$	3,602		$	706




First Quarter 1999		$	3,336		$	635




	% change		8.0	%		11.2	%




Second Quarter 2000		$	2,408		$	670




Second Quarter 1999		$	2,200		$	595




	% change		9.5	%		12.6	%




Third Quarter 2000		$	3,293		$	982




Third Quarter 1999		$	2,947		$	780




	% change		11.7	%		25.9	%




Fourth Quarter 2000		$	4,082		$	1,097




Fourth Quarter 1999		$	3,476		$	835




	% change		17.4	%		31.4	%


			Page

Part I




	Item 1.	Business		3




	Item 2.	Properties		21




	Item 3.	Legal Proceedings		21




	Item 4.	Submission of Matters to a Vote of Security Holders		22
Part II




	Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters		22




	Item 6.	Selected Financial Data		23




	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24




	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		31




	Item 8.	Financial Statements and Supplementary Data		32




	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		57
Part III




	Item 10.	Directors and Executive Officers of the Registrant		57




	Item 11.	Executive Compensation		57




	Item 12.	Security Ownership of Certain Beneficial Owners and Management		57




	Item 13.	Certain Relationships and Related Transactions		57
Part IV




	Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		57


Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations


December 31,	Commitment Amount

2001	$	125,000




2002		106,250




2003		87,500




2004		62,500




2005		37,500




2006		–0–


		Page

Report of Independent Accountants			33




Financial Statements:




	Consolidated Statements of Operations for the three years ended December 31, 2000, 1999 and 1998		34




	Consolidated Balance Sheets at December 31, 2000 and 1999		35




	Consolidated Statements of Cash Flows for the three years ended December 31, 2000, 1999 and 1998		36




	Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2000, 1999 and 1998		37




	Notes to Consolidated Financial Statements		38




Financial Statement Schedules:




	Schedule II — Valuation and Qualifying Accounts		56


	Series C and E														Total
	Convertible								Additional						Stockholders’
	Preferred			Common		Treasury			Paid-In			Retained			Equity
	Stock			Stock		Stock			Capital			Deficit			(Deficit)


	(In thousands, except share amounts)




Balance, January 1, 1998 (see Note 1)	$			$	2	$			$	2,677		$	(12,861	)	$	(10,182	)




Conversion of Faircom Inc.’s Class A and Class B convertible subordinated promissory notes		—			—		—			10,000			—			10,000




Issuance of 3,721,000 shares of Series C convertible preferred stock and retirement of 26,390,000 shares of Faircom Inc. common stock and recordation of the effect of recapitalization due to the reverse merger with Faircom Inc.		1,584			—		—			(3,000	)		—			(1,416	)




Reclassification of Series C convertible preferred stock to outside of stockholders’ deficit due to such shares being redeemable		(453	)		—		—						—			(453	)




Issuance of Faircom Inc. employee stock options immediately converted into options to purchase 158,000 shares of Series C convertible preferred stock in conjunction with the merger		—			—		—			530			—			530




Issuance of Series A redeemable preferred stock warrants exercisable for 80,000 shares of common stock		—			—		—			160			—			160




Issuance of 205,000 shares of Series E convertible preferred stock in connection with the acquisition of Alta California Broadcasting, Inc.		1,026			—		—			—			—			1,026




Issuance of 243,000 shares of Series E convertible preferred stock in connection with the acquisition of Topaz Broadcasting, Inc.		1,213			—		—			—			—			1,213




Dividends and accretion on mandatorily redeemable convertible preferred stock		—			—		—			(6,495	)		—			(6,495	)




Net loss		—			—		—			—			(4,460	)		(4,460	)

Balance, December 31, 1998		3,370			2		—			3,872			(17,321	)		(10,077	)




Exercise of stock options on 63,000 shares of Series C convertible preferred stock		314			—		—			(172	)		—			142




Dividends and accretion on mandatorily redeemable convertible preferred stock		—			—		—			(3,700	)		(13,859	)		(17,559	)




Beneficial conversion feature related to issuance of redeemable convertible preferred stocks		—			—		—			—			(3,545	)		(3,545	)




Net loss		—			—		—			—			(6,771	)		(6,771	)

Balance, December 31, 1999		3,684			2		—			—			(41,496	)		(37,810	)




Issuance of 18,400,000 shares of common stock, net of issuance costs of $12,460		—			184		—			143,756			—			143,940




Issuance of 333,000 shares of common stock in conjunction with acquisitions		—			3		—			3,534			—			3,537




Adjustment of converted redeemable preferred stock to market		—			—		—			—			(26,611	)		(26,611	)




Purchase of 1,364,000 shares of treasury stock		—			—		(7,063	)		—			—			(7,063	)




Conversion of Series C and E preferred stock to 3,831,000 shares of common stock		(3,684	)		38		—			3,646			—			—




Conversion of Series A,D,F,G,H,K redeemable preferred stock		—			124		—			110,745			—			110,869




Reclassification of liability associated with Series F convertible preferred stock put rights		—			—		—			5,239			—			5,239




Exercise of stock options and stock warrants		—			1		—			619			—			620




Preferred stock dividends paid		—			—		—			(8,153	)		—			(8,153	)




Net income		—			—		—			—			13,852			13,852

Balance, December 31, 2000	$	—		$	352	$	(7,063	)	$	259,386		$	(54,255	)	$	198,420


		2000		1999

Broadcasting equipment and furniture and equipment		$	11,105	$	4,675




	FCC license		173,474		21,460




	Goodwill		2,686		65

		$	187,265	$	26,200



		Pro Forma (Unaudited)

		2000			1999


		(In thousands)




Net broadcast revenues		$	53,707		$	51,311




Net loss before extraordinary items			(3,652	)		(4,461	)




Net loss			(4,766	)		(4,932	)




Net loss per common share before extraordinary items:




	Basic and diluted	$	(0.12	)	$	(0.14	)




Net loss per common share:




	Basic and diluted	$	(0.14	)	$	(0.15	)


	2000			1999

Senior reducing revolving credit facility (a)	$	44,500		$	24,762




Subordinated promissory note (b)		570			600




Non-compete agreements (c)		—			32

		45,070			25,394




Less: current portion of long-term debt		(60	)		(63	)

	$	45,010		$	25,331


					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




	Granted		179,500		$	7.23




	Exercised		(34,095	)	$	1.11




	Forfeited/expired		(7,500	)	$	6.56

Company options held by employees at December 31, 2000			1,978,403		$	5.04



	Options Outstanding						Options Exercisable

			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
			Contractual		Exercise				Exercise
Exercise Price	Shares⁽¹⁾		Life (Years)		Price		Shares		Price

$6.63-$7.81		165,500		4.5	$	7.35		33,100	$	7.35
$5.00-$6.00		1,635,666		7.1	$	5.26		410,980	$	5.20
$0.88-$3.73		177,237		0.3	$	3.20		177,237	$	3.20

		1,978,403						621,317


			2000			1999

Deferred tax assets:




	Net operating loss carryforward		$	11,083		$	9,800




	Miscellaneous accruals and credits			300			–0–




	Accounts receivable reserve			200			100

		Total deferred tax assets		11,583			9,900




Deferred tax liabilities:




	Property and equipment			(300	)		(300	)




	Intangible assets			(15,600	)		(300	)

		Total deferred tax liabilities	$	(15,900	)	$	(600	)

		Valuation allowance		–0–			(9,300	)

		Net deferred tax liabilities	$	(4,317	)	$	—0-


		2000			1999

Equipment		$	21,835		$	14,653




Furniture and fixtures			1,700			737




Building and improvements			3,562			2,527




Land			2,273			1,716

			29,370			19,633




Less accumulated depreciation			(8,654	)		(7,260	)

	Net property and equipment	$	20,716		$	12,373


		2000			1999

FCC broadcast licenses		$	213,346		$	55,680




Goodwill			12,612			7,220

			225,958			62,900




Less accumulated amortization			(8,061	)		(4,031	)

	Net intangible assets	$	217,897		$	58,869


		2000		1999

Balance Sheet:




	Accrued interest	$	457	$	111




	Current portion of long-term debt		60		63




	Accrued offering costs		—		590




	Accrued professional fees		405		278




	Accrued other		1,376		408

		$	2,298	$	1,450






2001		$	2,808




2002			1,376




2003			1,150




2004			846




2005			680




Thereafter			2,787

	Total	$	9,647


			1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
			ended			ended			ended			ended			Total
			Mar. 31			June 30⁽¹⁾			Sept. 30			Dec. 31			Year

2000




	Net broadcasting revenues		$	7,477		$	10,661		$	11,691		$	14,278		$	44,107




	Operating income (loss)			(687	)		728			526			264			831




	Extraordinary loss, net of taxes			(1,114	)		—			—			—			(1,114	)




	NET INCOME (LOSS)			(3,789	)		966			17,979			(1,304	)		13,852




NET INCOME (LOSS) APPLICABLE TO COMMON SHARES:




	Net income (loss)			(3,789	)		966			17,979			(1,304	)		13,852




	Preferred stock dividend and accretion requirements			(27,240	)		—			—			—			(27,240	)

	Income (loss) applicable to common shares			(31,029	)		966			17,979			(1,304	)		(13,388	)




	BASIC NET INCOME (LOSS) PER COMMON SHARE:




	Before extraordinary loss		$	(1.24	)	$	0.03		$	0.52		$	(0.04	)	$	(0.39	)




	Extraordinary loss		$	(0.05	)	$	0.00		$	0.00		$	0.00		$	(0.03	)

	Net income (loss) per common share		$	(1.29	)	$	0.03		$	0.52		$	(0.04	)	$	(0.42	)




	DILUTED NET INCOME (LOSS) PER COMMON SHARE⁽²⁾:




	Before extraordinary loss		$	(1.24	)	$	0.03		$	0.51		$	(0.04	)	$	(0.39	)




	Extraordinary loss		$	(0.05	)	$	0.00		$	0.00		$	0.00		$	(0.03	)

	Net income (loss) per common share		$	(1.29	)	$	0.03		$	0.51		$	(0.04	)	$	(0.42	)




1999




	Net broadcasting revenues		$	4,520		$	6,315		$	6,631		$	6,388		$	23,854




	Operating income (loss)			(655	)		515			151			(623	)		(612	)




	Loss before extraordinary items			(1,435	)		(257	)		(790	)		(3,818	)		(6,300	)




	Extraordinary item			—			—			—			(471	)		(471	)




	Net loss			(1,435	)		(257	)		(790	)		(4,289	)		(6,771	)




	Preferred stock dividend and accretion requirements			(1,000	)		(1,521	)		(1,416	)		(18,489	)		(22,426	)

	Loss applicable to common shares			(2,435	)		(1,778	)		(2,206	)		(22,778	)		(29,197	)




	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	)



					Additions

		Balance			Charged		Charged					Balance
		at			to		to					at
		Beginning			Costs and		Other					the End
		of Period			Expenses		Accounts		Deductions⁽²⁾			of Period


		(In thousands)




Allowance for doubtful accounts:
Years ended December 31,




	2000	$	231			725		—		553		$	403




	1999	$	268			390		—		427		$	231




	1998	$	32			174		174		112		$	268




Deferred tax asset valuation allowance:
Years ended December 31,




	2000	$	9,300			—		—	($	9,300	)⁽³⁾	$	—




	1999	$	4,248			—		5,052		—		$	9,300




	1998	$	2,483	⁽¹⁾		—		1,765		—		$	4,248


Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


	RADIO STATIONS — WQBJ-FM, WQBK-FM and WTMM-AM (Albany, New York)


	RADIO STATIONS — WGNA-FM, WGNA-AM and WABT-FM (Albany, New York)


	REGENT COMMUNICATIONS, INC.

Date: March 29, 2001	By:	/s/ Terry S. Jacobs

		Terry S. Jacobs, Chairman of the Board, Chief Executive Officer and Treasurer


Signature	Title	Date

/s/ TERRY S. JACOBS Terry S. Jacobs	Chairman of the Board, Chief Executive Officer, Treasurer and Director (Principal Executive Officer)	March 29, 2001

/s/ WILLIAM L. STAKELIN William L. Stakelin	President, Chief Operating Officer, Secretary and Director	March 29, 2001

/s/ ANTHONY A. VASCONCELLOS Anthony A. Vasconcellos	Senior Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer)	March 29, 2001

/s/ JOEL M. FAIRMAN Joel M. Fairman	Vice-Chairman of the Board and Director	March 29, 2001

/s/ KENNETH J. HANAU Kenneth J. Hanau	Director	March 29, 2001

/s/ WILLIAM H. INGRAM William H. Ingram	Director	March 29, 2001

/s/ R. GLEN MAYFIELD R. Glen Mayfield	Director	March 29, 2001

/s/ RICHARD H. PATTERSON Richard H. Patterson	Director	March 29, 2001

/s/ WILLIAM P. SUTTER, JR. William P. Sutter, Jr.	Director	March 29, 2001

/s/ JOHN H. WYANT John H. Wyant	Director	March 29, 2001


Exhibit
Number			Exhibit Description

	2	(a)*	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. (previously filed as Exhibit 2(g) to the Registrant’s Form 10-K for the year ended December 31, 1999 and incorporated herein by this reference)

	2	(b)*	First Amendment to Asset Exchange Agreement made on May 31, 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. (previously filed as Exhibit 2(b) to the Registrant’s Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference)

	2	(c)*	Second Amendment to Asset Exchange Agreement made on June 2, 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. (previously filed as Exhibit 2(c) to the Registrant’s Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference)

	2	(d)*	Agreement of Merger dated March 29, 2000 by and among Regent Communications, Inc., Regent Broadcasting, Inc., KZAP, Inc. and Rob Cheal (previously filed as Exhibit 2(h) to the Registrant’s Form 10-K for the year ended December 31, 1999 and incorporated herein by this reference)

	2	(e)*	Asset Purchase Agreement dated March 29, 2000 by and between Yavapai Broadcasting Corporation, Regent Broadcasting of Flagstaff, Inc. and Regent Licensee of Flagstaff, Inc. (previously filed as Exhibit 2(i) to the Registrant’s Form 10-K for the year ended December 31, 1999 and incorporated herein by this reference)

	2	(f)*	Asset Purchase Agreement made as of October 31, 2000 among Concord Media Group of California, Inc., Regent Broadcasting of Palmdale, Inc. and Regent Licensee of Palmdale, Inc. (previously filed as Exhibit 2(d) to the Registrant’s Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference)

	2	(g)	Asset Purchase Agreement made December 28, 2000 among NextMedia Group II, Inc., NextMedia Licensing, Inc., Regent Broadcasting of Erie, Inc. and Regent Licensee of Erie, Inc. (excluding exhibits not deemed material or filed separately in executed form)


	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






Blue Chip Capital Fund II Limited Partnership			363,636 shares




PNC Bank, N.A., as trustee			181,818 shares






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			818,181 shares




The Prudential Insurance Company of America			1,000,000 shares