-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J5qWJwvRmyYoPcgLZNqQ9UpC+vGEpYJUewtdMfaZR5UXmWnUgiJrA1K73W+abxZU vRyl4Dg3CxkYG/ncAKIhzw== 0000950152-01-502015.txt : 20010516 0000950152-01-502015.hdr.sgml : 20010516 ACCESSION NUMBER: 0000950152-01-502015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGENT COMMUNICATIONS INC CENTRAL INDEX KEY: 0000913015 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 311492857 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-46435 FILM NUMBER: 1637587 BUSINESS ADDRESS: STREET 1: 100 EAST RIVERCENTER BOULEVARD STREET 2: 9TH FLOOR CITY: COVINGTON STATE: KY ZIP: 41011 BUSINESS PHONE: 6062920030 MAIL ADDRESS: STREET 1: 100 EAST RIVERCENTER BLVD STREET 2: 9TH FLOOR CITY: COVINGTON STATE: KY ZIP: 41011 10-Q 1 l88332ae10-q.txt REGENT COMMUNICATIONS, INC. FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ COMMISSION FILE NUMBER 0-15392 REGENT COMMUNICATIONS, INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 31-1492857 - ------------------------------- ------------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 100 EAST RIVERCENTER BOULEVARD 9TH FLOOR COVINGTON, KENTUCKY 41011 ---------------------------------------- (Address of Principal Executive Offices) (Zip Code) (859) 292-0030 --------------------------------------------------- (Registrant's Telephone Number, including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value - 33,862,518 shares outstanding as of May 10, 2001 2 REGENT COMMUNICATIONS, INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2001 INDEX PART I FINANCIAL INFORMATION PAGE NUMBER ------ Item 1. Financial Statements Condensed Consolidated Statements of Operations for the three months ended March 31, 2001 (unaudited) and March 31, 2000 (unaudited)........... 3 Condensed Consolidated Balance Sheets As of March 31, 2001 (unaudited) and December 31, 2000.................................... 4 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2001 (unaudited) and March 31, 2000 (unaudited)........... 5 Notes to Condensed Consolidated Financial Statements (unaudited).......................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk.......................................... 13 PART II OTHER INFORMATION Item 1. Legal Proceedings...................................... 14 Item 2. Changes in Securities and Use of Proceeds.............. 14 Item 6. Exhibits and Reports on Form 8-K....................... 14 2 3 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS REGENT COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share amounts)
Three Months Ended March 31, ------------------ 2001 2000 ---- ---- Gross broadcast revenues $ 12,403 $ 8,097 Less agency commissions 1,069 620 -------- -------- Net broadcast revenues 11,334 7,477 Station operating expenses 8,441 5,673 Depreciation and amortization 3,352 1,505 Corporate general and administrative expenses 1,326 986 -------- -------- Operating loss (1,785) (687) Interest expense (986) (2,236) Other (expense) income, net (137) 248 -------- -------- Loss before income taxes and extraordinary items (2,908) (2,675) Income tax benefit 1,900 - -------- -------- Loss before extraordinary item (1,008) (2,675) Extraordinary loss on extinguishment of debt, net of taxes - (1,114) -------- -------- Net loss $ (1,008) $ (3,789) ======== ======== Loss applicable to common shares: Net loss $ (1,008) $ (3,789) Preferred stock dividend requirements - (629) Preferred stock accretion - (26,611) -------- -------- Loss applicable to common shares $ (1,008) $(31,029) ======== ======== Basic and diluted loss per common share: Loss before extraordinary items $ (0.03) $ (1.24) Extraordinary items - (.05) -------- -------- Net loss per common share $ (0.03) $ (1.29) ======== ======== Weighted average number of common shares used in basic and diluted calculations 33,810 24,100
The accompanying notes are an integral part of these financial statements. 3 4 REGENT COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
March 31, December 31, 2001 2000 ----------------- --------------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,110 $ 778 Accounts receivable, less allowance of $499 and $403 at March 31, 2001 and December 31, 2000, respectively 8,790 10,639 Other current assets 503 595 --------- --------- Total current assets 10,403 12,012 Property and equipment, net 20,830 20,716 Intangible assets, net 215,357 217,897 Other assets, net 2,048 2,108 --------- --------- Total assets $ 248,638 $ 252,733 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,383 $ 1,672 Accrued compensation 750 932 Other current liabilities 1,952 2,298 --------- --------- Total current liabilities 4,085 4,902 Long-term debt, less current portion 44,495 45,010 Deferred taxes and other long-term liabilities 2,475 4,401 --------- --------- Total liabilities 51,055 54,313 Commitments and Contingencies Stockholders' equity: Common stock, $.01 par value, 60,000,000 shares authorized; 35,226,270 and 35,158,349 shares issued at March 31, 2001 and December 31, 2000, respectively 352 352 Treasury shares, 1,363,752 shares, at cost, at March 31, 2001 and December 31, 2000 (7,063) (7,063) Additional paid-in capital 259,557 259,386 Retained deficit (55,263) (54,255) --------- --------- Total stockholders' equity 197,583 198,420 --------- --------- Total liabilities and stockholders' equity $ 248,638 $ 252,733 ========= =========
The accompanying notes are an integral part of these financial statements. 4 5 REGENT COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
Three months ended March 31, ------------------------------------ 2001 2000 ------------- ------------- Cash flows from operating activities: Net cash provided by (used in) operating activities $ 1,800 $ (39) Cash flows from investing activities: Acquisitions of radio stations, net of cash acquired and other acquisition costs (69) (67,667) Proceeds from insurance claim and sales of assets 19 98 Capital expenditures (920) (197) Escrow deposit for acquisition of radio stations - (5,000) -------- -------- Net cash used in investing activities (970) (72,766) Cash flows from financing activities: Proceeds from issuance of common and convertible preferred stocks 17 156,900 Payment on buyback of treasury shares - (1,513) Dividends paid on all series of preferred stock - (8,153) Redemption of Series B preferred stock - (5,000) Principal payments on long-term debt (1,515) (24,778) Long-term debt borrowings 1,000 - Payments for deferred financing costs - (1,843) Payment of issuance costs - (11,431) -------- -------- Net cash (used in) provided by financing activities (498) 104,182 -------- -------- Net increase in cash and cash equivalents 332 31,377 Cash and cash equivalents at beginning of period 778 3,410 -------- -------- Cash and cash equivalents at end of period $ 1,110 $ 34,787 ======== ======== Supplemental schedule of non-cash financing and investing activities: Common stock issued in conjunction with the acquisition of stations in Utica-Rome and Watertown, New York $ - $ 850
The accompanying notes are an integral part of these financial statements. 5 6 REGENT COMMUNICATIONS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION Regent Communications, Inc. (including its wholly-owned subsidiaries, the "Company" or "Regent") was formed to acquire, own and operate radio stations in medium-sized and small markets in the United States. The condensed consolidated financial statements of Regent have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, in the opinion of management, include all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for each period shown. All adjustments are of a normal and recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. Results for interim periods may not be indicative of results for the full year. The December 31, 2000 condensed balance sheet was derived from audited financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in Regent's Form 10-K for the year ended December 31, 2000. 2. COMPLETED AND PENDING ACQUISITIONS AND DISPOSITIONS On May 15, 2001 the Company entered into a definitive agreement with Two Petaz, Inc.; WFYR, Inc.; Winston Communications, Inc. of Illinois; and the Cromwell Group, Inc., to acquire (i) substantially all the assets of WGLO(FM), WPPY(FM), WRVP(FM) and WVEL(AM), serving the Peoria, Illinois market for a purchase price of approximately $14.0 million in cash and (ii) the capital stock of the corporations owning radio stations WFYR(FM) and WIXO(FM), also serving the Peoria market, in exchange for $6.0 million in shares of Regent common stock. Regent delivered an irrevocable letter of credit in the amount of $1.0 million to secure its obligations under the agreement. The Company expects the transactions to close in the third quarter of 2001. On May 9, 2001, the Company completed the acquisition by merger with StarCom, Inc. of 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. The purchase was funded by borrowings under Regent's bank credit facility. Prior to the closing of the purchase, the Company provided programming and other services to the stations under a time brokerage agreement which began in July 2000. 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 Federal Communications Commission has approved the assignment of the station licenses, and the Company anticipates closing this acquisition in the third quarter 2001. The closing of this transaction had been delayed by the FCC's analysis of market revenue share in Erie, Pennsylvania . 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- 6 7 AM licensed to Mojave and Tehachapi, and KOSS-FM licensed to Rosamond) to Concord Media Group, Inc. for approximately $13.5 million. The Federal Communications Commission has approved the assignment of the station licenses, and the Company anticipates closing the transaction in the second quarter 2001. Action on the FCC application for approval of this sale had been delayed due to the filing of an objection by the owner of a competing station in the market. The following unaudited pro forma data summarize the combined results of operations of Regent, together with the operations of the stations acquired prior to 2001.
Three Months Ended March 31, ---------------------------- 2001 2000 ---- ---- (unaudited) (In thousands, except per share amounts) Net broadcast revenues $ 11,334 $ 10,854 Loss before extraordinary items $ (1,008) $ (743) Net loss $ (1,008) $ (1,857) Net loss per common share before extraordinary items: Basic and diluted $ (0.03) $ (0.02) Net loss per common share: Basic and diluted $ (0.03) $ (0.05)
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 at the beginning of the three-month periods. 3. LONG-TERM DEBT In January of 2000, the Company entered into a credit agreement 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 additional borrowing capacity of a maximum aggregate amount of $50.0 million available, which subfacility would convert in January 2002 to a term loan maturing December 31, 2006. The credit facility is available for working capital and acquisitions, including related acquisition expenses. At March 31, 2001, there were borrowings of $44.0 million outstanding under this facility and there were approximately $81.0 million of available borrowings, subject to the terms and conditions of the credit facility. Under the 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 7 8 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 6.54% as of March 31, 2001. 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. 4. CAPITAL STOCK The Company's authorized capital stock consists of 60,000,000 shares of common stock and 40,000,000 shares of preferred stock. No shares of preferred stock were issued at March 31, 2001. Of the authorized but unissued preferred stock, 620,000 shares are designated as Series A convertible preferred stock, 1,000,000 shares as Series B senior convertible preferred stock, 4,000,000 shares as Series C convertible preferred stock, 1,000,000 shares as Series D convertible preferred stock, 5,000,000 shares as Series E convertible preferred stock, 4,100,000 million shares as Series F convertible preferred stock, 1,800,000 shares as Series G convertible preferred stock, 2,200,000 shares as Series H convertible preferred stock and 4,100,000 shares of Series K convertible preferred stock. On March 20, 2001, Regent issued 37,230 shares of its common stock to River Cities Capital Fund Limited Partnership upon the exercise in full, on a cashless net issue basis, of outstanding warrants which provided for the purchase of a total of 100,000 shares of Regent common stock at $5.00 per share. These warrants had been issued in 1998 in connection with the issuance of Series B and F convertible preferred stock. Regent's remaining warrants, which expire in 2003, entitle the holders to purchase a total of 790,000 shares of Regent's common stock at $5.00 per share. During the third quarter of 2000, Regent's Board of Directors approved a program to buy back up to $10.0 million of its common stock. There were no purchases of common stock by Regent under this program in the first quarter of 2001. 5. EARNINGS PER SHARE Regent has adopted the provisions of SFAS 128, "Earnings Per Share." SFAS 128 calls for the dual presentation of basic and diluted earnings per share ("EPS"). Basic EPS is based upon the weighted average common shares outstanding during the period. Diluted EPS reflects the potential dilution that would occur if common stock equivalents were exercised. The effects of the assumed exercise of outstanding options to purchase 1,971,058 of common stock and warrants to purchase 790,000 shares of common stock would not be dilutive for all periods presented. Therefore, basic EPS and diluted EPS are the same for all periods presented. 6. INCOME TAXES The Company's effective tax rate differs from that computed at the federal statutory rate of 34% principally because of the effect of state income taxes of 2.5%, net of federal benefit, and an increase in deferred tax assets for true-up of net operating loss carry-forwards. 8 9 7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board (FASB) has issued an Exposure Draft, Proposed Statement of Financial Accounting Standards, Business Combinations and Intangible Assets-Accounting for Goodwill. The Exposure Draft contains the FASB's tentative decisions about requiring the use of a non-amortization approach to account for certain purchased intangible assets. Under the non-amortization approach, certain intangible assets would be tested for impairment, rather than being amortized to earnings. In June 1998, the 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. Regent may employ financial instruments to manage its exposure to fluctuations in interest rates. Regent does not hold or issue such financial instruments for trading purposes. In June 2000, the FASB issued SFAS 138, an amendment to SFAS 133. Regent has adopted SFAS 133 and related amendments, as required in the year 2001, and has determined the impact of adoption to be immaterial. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL 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. This Form 10-Q includes certain forward-looking statements with respect to our company that involve risks and uncertainties. These statements are influenced by our financial position, business strategy, budgets, projected costs, and plans and objectives of management for future operations. They may 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 of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 9 10 Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include changes in general economic, business and market conditions, as well as changes in such conditions that may affect the radio broadcast industry or the markets in which we operate, including, in particular, increased competition for attractive radio properties and advertising dollars, fluctuations in the cost of operating radio properties, and changes in the regulatory climate affecting radio broadcast companies. These forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q. If we do update or correct one or more forward-looking statements, you should not conclude that we will make additional updates or corrections with respect to those or any other forward-looking statements. RESULTS OF OPERATIONS A comparison of the three months ended March 31, 2001 versus March 31, 2000 follows: Our results from operations for the first three months of 2001 showed significant increases over the same period of 2000, primarily due to the acquisitions of stations in Grand Rapids, Michigan and Albany, New York in the third quarter of 2000 and, to a lesser extent, the acquisitions of stations in Watertown, New York, Utica, New York and El Paso Texas in the first quarter of 2000. Net broadcast revenues in the first quarter of 2001 increased by 52% from $7.5 million in the first quarter of 2000 to $11.3 million, station operating expenses increased 49% from $5.7 million to $8.4 million, and depreciation and amortization increased 123% from $1.5 million to $3.4 million. During the first quarter of 2001, in comparison to the same period of 2000, our broadcast cash flow increased by 60% from $1.8 million to $2.9 million. While the acquisitions mentioned above have affected the comparability of our 2001 results from operations to those of 2000, we believe meaningful quarter-to-quarter comparisons can be made for results of operations for those markets in which we have been operating for five full quarters, exclusive of any markets held for sale. This group of comparable markets is currently represented by five markets and 19 radio stations. In these comparable markets, for the three months ended March 31, 2001, as compared to the same period in 2000, our net broadcast revenues, excluding barter revenues, increased 9.1% and broadcast cash flow increased by 18.4%. The increases were due primarily to a combination of larger and better trained local sales departments at the radio stations, contributing to increased revenues and increased cost efficiencies. Corporate general and administrative expenses increased 30% from approximately $1.0 million to $1.3 million in the first quarter of 2001 compared to 2000 as a result of increasing the corporate infrastructure to support a larger company and from costs related to preparing our technical infrastructure for further growth. Interest expense decreased 56% from approximately $2.2 million to $1.0 million in 2001, primarily as a result of $1.5 million of interest expense recorded in the first quarter of 2000 related to an increase in warrant liability which was adjusted to fair value and reclassed to additional paid-in capital at the completion of our initial public offering in January 2000. The effective tax rate differs from that computed at the federal statutory rate of 34% principally because of the effect of state income taxes of 2.5%, net of federal benefit, and an increase in deferred tax assets for true-up of net operating loss carry-forwards. 10 11 In the first quarter of 2000, we recognized an extraordinary charge of approximately $1.1 million related to the write-off of deferred financing fees associated with the payoff of our former credit facility in January of 2000. Net loss per common share for the first quarter of 2001 was $0.03 compared to a net loss of $1.29 in 2000. The large variance was primarily the result of preferred stock dividends and preferred stock and warrant accretion from January 1, 2000 through completion of our initial public offering on January 28, 2000 and, to a lesser extent, a lower weighted average number of common shares in the first quarter of 2000. LIQUIDITY AND CAPITAL RESOURCES Our cash balance at March 31, 2001 was approximately $1.1 million compared to $34.8 million at March 31, 2000. The large cash balance in 2000 resulted from the net proceeds from our initial public offering that were not used for acquisitions until the third quarter of 2000. Net cash provided by operating activities was $1.8 million in 2001 compared to $39,000 of cash used in operating activities in 2000. The increase was due primarily to the operating activities of radio stations acquired in 2000. Cash flow used in investing activities decreased to $970,000 in 2001 compared to $72.8 million used in 2000, due primarily to the acquisition of radio stations in Utica, New York, Watertown, New York, and El Paso, Texas in the first quarter of 2000. Cash flows used in financing activities were $498,000 in 2001 compared to $104.2 million provided by financing activities in 2000, with the change due primarily to net proceeds received from our initial public offering in January 2000. Sources of funds In January 2000, we entered into a $125.0 million senior secured seven-year reducing revolving bank credit facility maturing December 31, 2006. This facility also provides for an additional $50.0 million of borrowing capacity on substantially the same terms to fund future acquisitions, which subfacility would convert in January 2002 to a term loan maturing December 31, 2006. The credit facility permits the borrowing of available credit for working capital requirements and general corporate purposes, including transaction fees and expenses, and to fund permitted acquisitions. The facility also permits us to request from time to time that the lenders issue letters of credit in an aggregate 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): December 31, Commitment Amount ------------ ----------------- 2001 $125,000 2002 106,250 2003 87,500 2004 62,500 2005 37,500 2006 0 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. 11 12 Under the terms of the facility, we are required to maintain a minimum interest rate coverage ratio, minimum fixed charge coverage ratio, maximum corporate overhead and maximum financial leverage ratio and to observe negative covenants customary for facilities of this type. Borrowings under the new credit facility bear interest at a rate equal to (a) the higher of the rate announced or published publicly from time to time by the agent as its corporate base 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 outstanding at March 31, 2001 bore interest at the rate of 6.54%. 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 this 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. At May 10, 2001 there were borrowings of $49.0 million outstanding under our facility, and there were approximately $76.0 million of available borrowings, subject to the terms and conditions of the credit facility. Uses of funds On May 9, 2001, we completed the acquisition by merger with StarCom, Inc. of 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, which was funded from the credit facility. Prior to the closing of the purchase, we provided programming and other services to the stations under a time brokerage agreement which began in July 2000. In the first quarter of 2001, we funded capital expenditures of $920,000, of which approximately $650,000 was related to the acquisition of a new broadcasting tower in our Flint, Michigan market. The remaining balance was utilized to upgrade our equipment and facilities, primarily at stations acquired in 2000, in order to remain competitive and to create cost savings over the long term. We expect capital expenditures in 2001 to increase by approximately $1.0 million compared to last year due to various capital projects related to the radio stations we acquired in 2000 and the correlating increase in the size of our infrastructure. Pending acquisitions and dispositions On May 15, 2001 we entered into a definitive agreement with Two Petaz, Inc.; WFYR, Inc.; Winston Communications, Inc. of Illinois; and the Cromwell Group, Inc., to acquire (i) substantially all the assets of WGLO(FM), WPPY(FM), WRVP(FM) and WVEL(AM), serving the Peoria, Illinois market for a purchase price of approximately $14.0 million in cash and (ii) the capital stock of the corporations owning radio stations WFYR(FM) and WIXO(FM), also serving the Peoria market, in exchange for $6.0 million in shares of our common stock. We delivered an irrevocable letter of credit in the amount of $1.0 million to secure our obligations under the agreement. We anticipate closing these transactions in the third quarter of 2001. 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. The Federal Communications Commission has approved the assignment of the station licenses, and we 12 13 anticipate closing this acquisition in the third quarter 2001. The closing of this transaction had been delayed by the FCC's analysis of market revenue share in Erie, Pennsylvania. 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. The Federal Communications Commission has approved the assignment of the station licenses, and we anticipate closing this transaction in the second quarter 2001. Action on the FCC application for approval of this sale had 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. We intend to apply the net proceeds of this sale to temporarily pay down our credit facility until we need to re-borrow it for future acquisitions or other corporate purposes. We believe the cash generated from operations and available borrowings under our 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 $54.5 million with available borrowings of approximately $70.5 million, subject to the terms and conditions of the credit facility. Recently issued accounting pronouncements The Financial Accounting Standards Board (FASB) has issued an Exposure Draft, Proposed Statement of Financial Accounting Standards, Business Combinations and Intangible Assets-Accounting for Goodwill. The Exposure Draft contains the FASB's tentative decisions about requiring the use of a non-amortization approach to account for certain purchased intangible assets. Under the non-amortization approach, certain intangible assets would be tested for impairment, rather than being amortized to earnings. In June 1998, the 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. 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to the impact of interest rate changes as borrowings under our 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 March 31, 2001, we have not employed any financial instruments to manage our interest rate exposure. Based on our exposure to variable rate borrowings at March 31, 2001, a one percent (1%) change in the weighted average interest rate would change our annual interest expense by $440,000. 13 14 PART II- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We currently and from time to time are involved in litigation incidental to the conduct of our business. In the opinion of our management, we are not a party to any lawsuit or legal proceeding which is likely to have a material adverse effect on our business or financial condition. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On March 20, 2001, we issued 37,230 shares of our common stock to River Cities Capital Fund Limited Partnership upon the exercise in full, on a cashless "net issue" basis, of outstanding warrants which provided for the purchase of a total of 100,000 shares of our common stock at $5.00 per share. These warrants had been issued in 1998 in connection with the issuance of Series B and F convertible preferred stock, which converted to our common stock in January 2000. In the first quarter of 2001, we issued 8,345 shares of common stock on the exercise of stock options under both our 1998 Management Stock Option Plan and Faircom Conversion Stock Option Plan at stated exercise prices ranging from $1.56 to $5.00 per share. We claimed exemptions from registration under Section 4(2) of the Securities Act of 1933 for the transactions described above, which we believe did not involve a public offering based on the number and nature of the persons involved and the generally private character of the transactions. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The exhibits identified as Part II Exhibits on the following Exhibit Index, which is incorporated herein by this reference, are filed or incorporated by reference as exhibits to Part II of this Form 10-Q. (b) Reports on Form 8-K No Forms 8-K were filed during the first quarter of 2001. 14 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. REGENT COMMUNICATIONS, INC. Date: May 15, 2001 By: /s/ Terry S. Jacobs -------------------------------------- Terry S. Jacobs, Chairman of the Board and CEO Date: May 15, 2001 By: /s/ Anthony A. Vasconcellos -------------------------------------- Anthony A. Vasconcellos, Chief Financial Officer and Senior Vice President (Chief Accounting Officer) S-1 16 EXHIBIT INDEX The following exhibits are filed, or incorporated by reference where indicated, as part of Part II of this report on Form 10-Q: EXHIBIT NUMBER EXHIBIT DESCRIPTION 3(a)* Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended by a Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series G Preferred Stock of Regent Communications, Inc., filed January 21, 1999 (previously filed as Exhibit 3(a) to Amendment No. 1 to the Registrant's Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference) 3(b)* Certificate of Decrease of Shares Designated as Series G Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on June 21, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(c) to the Registrant's Form 10-Q Fourth Quarter Ended June 30, 1999 and incorporated herein by this reference) 3(c)* Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series H Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on June 21, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(d) to the Registrant's Form 10-Q for the Quarter Ended June 30, 1999 and incorporated herein by this reference) 3(d)* Certificate of Decrease of Shares Designated as Series G Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on August 23, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as E-1 17 Exhibit 3(e) to the Registrant's Form 10-Q for the Quarter Ended on September 30, 1999 and incorporated herein by this reference) 3(e)* Certificate of Increase of Shares Designated as Series H Convertible Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on August 23, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(f) to the Registrant's Form 10-Q for the Quarter Ended on September 30, 1999 and incorporated herein by this reference) 3(f)* Certificate of Designation, Number, Powers Preferences and Relative, Participating, Optional, and Other Special Rights and the Qualifications, Limitations, Restrictions, and Other Distinguishing Characteristics of Series K Preferred Stock of Regent Communications, Inc., filed with the Delaware Secretary of State on December 13, 1999 amending the Amended and Restated Certificate of Incorporation of Regent Communications, Inc., as amended (previously filed as Exhibit 3(g) to Amendment No. 1 to the Registrants Form S-1 Registration Statement No. 333-91703 filed December 29, 1994 and incorporated herein by this reference) 3(g)* Amended and Restated By-Laws of Regent Communications, Inc. (previously filed as Exhibit 3(b) to the Registrant's Form S-4 Registration Statement No. 333-46435 effective May 7, 1998 and incorporated herein by this reference). 3(h)* Amendments to By-Laws of Regent Communications, Inc. adopted December 13, 1999 (previously filed as Exhibit 3(h) to Amendment No. 1 to the Registrant's Form S-1 Registration Statement No. 333-91703 filed December 29, 1999 and incorporated herein by this reference) 4(a)* Credit Agreement dated as of January 27, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc., Fleet National Bank, as administrative agent, Fleet National Bank, as issuing lender, General Electric Capital Corporation, as syndication agent, Dresdner Bank AG, New York and Grand Cayman Branches, as document agent, and the several lenders party thereto (excluding exhibits not deemed material or filed separately in executed form) (previously filed as Exhibit 4(a) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) 4(b)* Omnibus Amendment No. 1 and Amendment No. 1 to Credit Agreement dated as of February 4, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc., Fleet National Bank, as administrative agent, Fleet National Bank, as issuing lender, General Electric Capital Corporation, as syndication agent, Dresdner Bank AG, New York and Grand Cayman Branches, as document agent, and the several lenders party thereto (previously filed as Exhibit 4(e) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) E-2 18 4(c)* Amendment No. 2 and Consent, dated as of August 23, 2000, to the Credit Agreement dated as of January 27, 2000, as amended, among Regent Broadcasting, Inc., Regent Communications, Inc., Fleet National Bank, as administrative agent, Fleet National Bank, as issuing lender, General Electric Capital Corporation, as syndication agent, Dresdner Bank AG, New York and Grand Cayman Branches, as document agent, and the several lenders party thereto (previously filed as Exhibit 4(c) to the Registrant's Form 10-K for the year ended December 31, 2000 and incorporated herein by this reference) 4(d)* Amendment No. 3 dated as of December 1, 2000, to the Credit Agreement dated as of January 27, 2000, as amended, among Regent Broadcasting, Inc., Regent Communications, Inc., Fleet National Bank, as administrative agent, Fleet National Bank, as issuing lender, General Electric Capital Corporation, as syndication agent, Dresdner Bank AG, New York and Grand Cayman Branches, as document agent, and the several lenders party thereto (previously filed as Exhibit 4(d) to the Registrant's Form 10-K for the year ended December 31, 2000 and incorporated herein by this reference) 4(e)* Revolving Credit Note dated as of February 7, 2000 made by Regent Broadcasting, Inc. in favor of Fleet National Bank in the original principal amount of $25 million (previously filed as Exhibit 4(f) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) (See Note 1 below) 4(f)* Subsidiary Guaranty Agreement dated as of January 27, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc. and each of their subsidiaries and Fleet National Bank, as collateral agent (previously filed as Exhibit 4(c) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) 4(g)* Pledge Agreement dated as of January 27, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc. and each of their subsidiaries and Fleet National Bank, as collateral agent (previously filed as Exhibit 4(d) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) 4(h)* Security Agreement dated as of January 27, 2000 among Regent Broadcasting, Inc., Regent Communications, Inc. and each of their subsidiaries and Fleet National Bank, as collateral agent (previously filed as Exhibit 4(b) to the Registrant's Form 8-K filed February 10, 2000 and incorporated herein by this reference) E-3 19 10(a) Regent Communications, Inc. 1998 Management Stock Option Plan, as amended through March 30, 2001 10(b) Executive Employment Agreement dated as of March 1, 2001 between Regent Communications, Inc. and Terry S. Jacobs 10(c) Executive Employment Agreement dated as of March 1, 2001 between Regent Communications, Inc. and William L. Stakelin E-4 EX-10.A 2 l88332aex10-a.txt EXHIBIT 10(A) 1 Exhibit 10(a) THE REGENT COMMUNICATIONS, INC. 1998 MANAGEMENT STOCK OPTION PLAN (AS AMENDED THROUGH MARCH 30, 2001) 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 or successor of the Exchange Act or such provision as may be adopted in lieu of the referenced provision. 2 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. 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 -2- 3 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 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. -3- 4 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, arranged through a qualified broker approved by the Board of Directors, 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 -5- 6 and that number of shares, the fair market value of which is equal to the full Exercise Price (including any tax withholding to the Company) for all shares of Common Stock with respect to which the Option is exercised. Any shares of Common Stock delivered in payment of an Exercise Price shall be valued as of the Exercise Date in accordance with paragraph 6 hereof. 9. LIMITATION ON EXERCISABILITY. In the case of ISOs, the aggregate fair market value (determined as of the Grant Date) of the Common Stock issuable pursuant to ISOs granted under the Plan and under any other plan of the Company and any Related Corporation 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 -6- 7 Committee shall give notice of such adjustment to each Participant, and the adjustment shall be effective and binding on the Participant. 14. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of January 1, 1998, subject to the its approval and adoption by shareholders holding a majority of the Company's shares entitled to vote thereon. 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 -7- 8 shares subject to such Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issue or purchase of shares thereunder, such Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained. (E) The Committee shall, immediately after it approves the granting of an Option, notify the Participant of such action. 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 Company's minimum statutory withholding requirements. (B) DELAWARE LAW TO GOVERN. The Plan and all agreements entered into under the Plan shall be interpreted pursuant to the laws of the State of Delaware. (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, -8- 9 or as limiting the authority of the Board in respect of the payment of salaries, wages or special compensation. (D) OBLIGATIONS. Neither the Company nor Related Corporations nor the Board nor the Committee nor any member thereof shall, by any provisions of the Plan, be deemed to be a trustee of any property, and the liabilities of the Company or Related Corporations to any Participant pursuant to the Plan shall be those of a debtor pursuant to such contract obligation as are created by the Plan, and no such obligation of the Company or Related Corporations shall be deemed to be secured by any pledge or other encumbrance on any property of the Company or Related Corporations. (E) CHANGE IN CONDITIONS OF THE CODE. In the event of relevant changes in the Code, or other factors affecting the continued appropriateness of granting ISOs or NQSOs 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 -9- 10 Plan shall be or remain "incentive stock options" under Section 422 of the Code, all provisions under this Plan pertaining to ISOs shall be read together, without any provisions which pertain exclusively to NQSOs or otherwise do not apply to ISOs. (J) RULE 16B-3 SAVINGS CLAUSE. To the extent that they apply to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3. Any provision of the Plan or action by the Committee shall be interpreted, wherever possible, to comply with all applicable conditions of Rule 16b-3, and to the extent that it does not comply, it shall be deemed to be null and void, to the extent permitted by law and deemed advisable by the Committee. (K) OTHER PROVISIONS. The agreements authorized under this Plan may contain such other provisions as the Committee shall deem advisable. (L) NOTICE. Any notice which may be required or permitted to be given hereunder shall be in writing, and may be delivered to the Company personally or by registered mail, postage prepaid, addressed to: Treasurer, Regent Communications, Inc., 100 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. -10- EX-10.B 3 l88332aex10-b.txt EXHIBIT 10(B) 1 Exhibit 10(b) EXECUTIVE EMPLOYMENT AGREEMENT ------------------------------ THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement"), effective as of March 1, 2001 by and between REGENT COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and TERRY S. JACOBS ("Employee"). RECITALS WHEREAS, the Company is engaged in the business, either directly or through affiliates, of owning and operating radio broadcasting stations (the "Business"), with principal offices in Covington, Kentucky. For purposes of this Agreement, the term "Company" shall include the Company, its subsidiaries, affiliates, and assignees and any successors in interest of the Company and its subsidiaries and/or affiliates. WHEREAS, Employee has been actively engaged in the radio broadcasting business since 1979 and has extensive knowledge and a unique understanding of the operation of the Business. WHEREAS, the Company desires to employ Employee, and Employee desires to be employed by the Company, as Chairman and Chief Executive Officer of the Company. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. EMPLOYMENT. 1.1 ENGAGEMENT OF EMPLOYEE. The Company agrees to employ Employee and Employee agrees to accept employment as the Chairman and Chief Executive Officer of the Company, all in accordance with the terms and conditions of this Agreement. 1.2 DUTIES AND POWERS. (a) During the Employment Period, Employee will serve as the Company's Chairman and Chief Executive Officer, and will have such responsibilities, duties and authority as customarily held by executives in such a position in comparable companies, and will render services of an executive and administrative character, and act in such other executive capacity for the Company, as the Company's board of directors (the "Board") shall from time to time direct. Employee shall devote his reasonable best efforts, energies and abilities to the business and affairs of the Company. Employee shall perform the duties and carry out the responsibilities assigned to him, to the best of his ability, in a diligent, trustworthy and businesslike manner for the purpose of advancing the business of the Company and in a manner he reasonably believes to be in and not opposed to the best interests of the Company. (b) Employee acknowledges that his duties and responsibilities will require his concentrated business efforts and agrees that during the Employment Period he will not 2 engage directly or indirectly in any other business activity or have any business pursuits or interests which materially interfere or conflict with the performance of Employee's duties hereunder or which compete directly with the Company; provided, however, nothing in this Section 1.2 shall be deemed to prohibit Employee from investing in the stock of any competing corporation listed on a national securities exchange or traded in the over-the-counter market, but only if his associates (as such term is defined in Regulation 14A promulgated under the Securities Exchange Act of 1934, as in effect on the date hereof), collectively, do not own more than an aggregate of three percent of the stock of such corporation. Notwithstanding the foregoing or anything else in this Agreement to the contrary, the parties agree and acknowledge that Employee currently serves as a member of the board of directors of National Grange Insurance Company and affiliates, and may continue to do so throughout the Employment Period so long as such activities do not materially interfere with any of Employee's other obligations to the Company hereunder. In addition, Employee may serve on additional boards of directors during the Employment Period and volunteer his service to charitable, business and other public service agencies, clubs or organizations so long as such board or other service does not materially interfere or conflict with the performance of Employee's duties hereunder and so long as such activities are not rendered for a competitor of the Company. Any and all fees or remuneration paid to Employee in consideration of work and services performed outside the scope of Employee's employment hereunder shall inure to the benefit of Employee. (c) The parties hereto agree that none of Employee's duties hereunder shall require him to, and Employee agrees that he will not without the consent of the Board, which consent shall not be unreasonably withheld, change his personal residence from the Greater Cincinnati, Ohio SMSA Area. 1.3 EMPLOYMENT PERIOD. Employee's employment under this Agreement shall begin effective on March 1, 2001 and shall continue through and until February 29, 2004 (the "Initial Period") unless extended as provided in this Section 1.3. This Agreement shall automatically be extended for additional consecutive three-year periods ("Renewal Periods") unless either party desires to terminate this Agreement and notifies the other party in writing at least sixty (60) days prior to the end of the then current Initial Period or Renewal Period. The Initial Period and the Renewal Periods are hereinafter referred to collectively as the "Employment Period." Notwithstanding anything to the contrary contained herein, the Employment Period is subject to termination pursuant to Section 1.4 and Section 1.5 below. 1.4 TERMINATION BY THE COMPANY. The Company has the right to terminate Employee's employment under this Agreement, by notice to Employee in writing at any time, (i) for "Cause," (ii) without Cause for any or no reason, and (iii) due to the Disability of Employee. Any such termination shall be effective upon the date of service of such notice pursuant to Section 15. This Agreement shall terminate automatically upon Employee's death. "Cause" as used herein means the occurrence of any of the following events: (a) the determination by the Board in the exercise of its reasonable judgment that Employee has committed an act or acts constituting (i) a crime involving moral turpitude, dishonesty or theft, (ii) dishonesty or disloyalty with respect to the Company, or (iii) fraud; -2- 3 (b) the determination by the Board in the exercise of its reasonable judgment that Employee has committed an act that indicates alcohol or drug abuse by Employee that adversely affects his performance hereunder; (c) a material breach by Employee of any of the terms and conditions of Sections 3 or 4 of this Agreement; or (d) Employee's gross negligence, habitual neglect, or intentional misconduct in the performance of his duties hereunder. Employee shall be deemed to have a "Disability" for purposes of this Agreement if Employee shall be unable, by reason of illness or physical or mental incapacity or disability (from any cause or causes whatsoever), to perform Employee's essential job functions hereunder, whether with or without reasonable accommodation by the Company, in substantially the manner and to the extent required hereunder prior to the commencement of such Disability, for a total period of 90 days in any 180-day period. In the event Employee shall be under a Disability, the Company shall have the right to terminate Employee's employment hereunder during the continuance of such Disability upon at least thirty (30) days prior written notice to Employee. Such determination shall not be arbitrary or unreasonable, and the Board shall take into consideration the opinion of Employee's personal physician, if reasonably available, as well as applicable provisions of the Americans with Disabilities Act, but such determination by the Board, if not arbitrary or unreasonable, shall be final and binding on the parties hereto. 1.5 TERMINATION BY EMPLOYEE. Employee has the right to terminate his employment under this Agreement for any or no reason, upon ninety (90) days prior written notice to the Company. 1.6 BOARD OF DIRECTORS AND RESIGNATION. Throughout the Employment Period, the Company agrees to seek to cause Employee to be elected to the Board. Unless by virtue of his beneficial ownership of voting stock of the Company he has voting control over a number of shares sufficient to assure his election to the Board, upon the termination of Employee's employment with the Company for any reason, Employee shall be deemed to have automatically resigned from any position he may then hold on the Board. Such resignation shall be deemed effective immediately without the requirement that a written resignation be delivered. 1.7 INDEMNITY. The Company shall indemnify Employee and hold him harmless to the fullest extent permissible under applicable law for all acts or decisions made by him in good faith while performing services for the Company. The Company shall also use its best efforts to obtain coverage for him under any insurance policy obtained during the term of this Agreement covering the other officers and directors of the Company against lawsuits. 2. COMPENSATION AND BENEFITS. 2.1 BASE COMPENSATION. During the Employment Period, the Company will pay Employee an annual base salary of $320,000 per annum (the "Base Salary"), payable in -3- 4 accordance with the Company's regular payroll policy for senior executive salaried employees. At least once every twelve (12) months, the Board shall perform an annual review of Employee's Base Salary based on Employee's performance of his duties and the Company's other compensation policies and make such increase thereto as it deems appropriate, provided that at each such twelve-month interval the Base Salary shall be increased from its level during the prior twelve-month period at least by a percentage no less than the percentage increase in the Consumer Price Index - All Items during such prior twelve-month period. Upon termination of the Employment Period, the Base Salary for any partial year will be prorated based on the number of days elapsed in such year during which the Employment Period had continued. 2.2 DISCRETIONARY BONUS. Within seventy five (75) days following the end of each fiscal year, the Board, as part of its annual review of Employee's performance, shall consider in its sole discretion the merits of a bonus to Employee, and in the event a bonus is warranted, shall cause the Company to award to Employee a bonus (the "Discretionary Bonus") for such year in an amount to be determined by the Board in its reasonable judgment based upon the Employee's and the Company's performance and the achievement of reasonably attainable goals and objectives established by the Board in consultation with Employee for such year. For purposes of a guideline, an assessment by the Board that Employee's performance has been "good" should merit a Discretionary Bonus equal to at least sixty percent (60%) of Employee's Base Salary for that year, with higher percentages of Base Salary for "excellent" and "outstanding" performances, a lesser percentage of Base Salary for only "satisfactory" performance, and no Discretionary Bonus for "poor" performance. 2.3 STOCK OPTIONS. It is agreed that, in addition to and not in lieu of Discretionary Bonuses, the Company will, from time to time and on such terms and conditions as the Board shall deem appropriate, in its sole discretion, grant to Employee pursuant to the Company's 1998 Management Stock Option Plan qualified and/or non-qualified options to acquire common stock of the Company. 2.4 BENEFITS. In addition to the Base Salary, any Discretionary Bonus and any stock options payable or granted to Employee hereunder, Employee will be entitled to the following benefits during the Employment Period: (a) payments of premiums for hospitalization, disability, life and health insurance, to the extent offered by the Company, and in amounts consistent with Company policy, for all key management employees, as reasonably determined by the Board; (b) up to four (4) weeks paid vacation each year with salary, provided that unused vacation time shall not be carried over to subsequent years; (c) reimbursement for reasonable, ordinary and necessary out-of-pocket business expenses incurred by Employee in the performance of his duties, subject to the Company's policies in effect from time to time with respect to travel, entertainment and other expenses, including without limitation, requirements with respect to reporting and documentation of such expenses; -4- 5 (d) use of an automobile at the Company's expense which shall include expenses for parking in the area of the Company's offices and for comprehensive insurance coverage for the automobile; and (e) other benefit arrangements and perquisites, including a 401(k) or similar tax deferral plan, to the extent made generally available by the Company to its executives and key management employees. 2.5 TAXES, ETC. All compensation payable to Employee hereunder is stated in gross amount and shall be subject to all applicable withholding taxes, other normal payroll and any other amounts required by law to be withheld. 2.6 COMPENSATION AFTER TERMINATION. (a) If the Employment Period is terminated (i) by the Company without Cause; (ii) by reason of Employee's Disability; or (iii) through expiration of the Employment Period or death of Employee, then, (1) all shares of the Company's capital stock beneficially owned by the Employee may, at the Company's election, be repurchased by the Company for cash equal to the fair market value thereof at the effective date of termination (with the cash payment in full made promptly after a termination pursuant to this Section 2.6(a)(i) or 2.6(a)(iii) and with the cash payment made in three equal consecutive annual installments beginning on the date of termination pursuant to this Section 2.6(a)(ii)); (2) except as otherwise provided in the specific terms of the option agreement or grant, all unvested options to purchase stock of the Company held by Employee shall cease and terminate as of the date of termination, and all vested but unexercised options to purchase stock of the Company held by Employee may, at the Company's election, be repurchased by the Company (according to the same payment terms as apply to shares of the Company's capital stock) for an amount constituting the excess of fair market value of the shares subject to the options over the exercise price of the options, if any, and if there is no such excess, then such options may be repurchased by the Company for one hundred dollars ($100) in the aggregate; whereupon, the Company shall have no further obligations hereunder or otherwise with respect to Employee's employment from and after the termination or expiration date (except for the unpaid installments and payment of Employee's current Base Salary accrued through the date of termination or expiration) and the Company shall continue to have all other rights available hereunder (including without limitation, all rights under Sections 3 and 4 at law or in equity). For purposes of this Agreement, "fair market value" of shares of the Company's capital stock shall be determined as follows: i. If the Company's 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 stock on such exchange on the date of termination, or if there were no sales on such date, then on the next prior business day on which there were sales. ii. If the 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 date of termination, 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 stock as the -5- 6 Board of Directors may 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. If neither of the methods described in (i) or (ii) above is available, and the Company and the Employee cannot agree on the fair market value within thirty (30) days after termination, then each of the Company and the Employee shall promptly appoint an appraiser, who will in turn promptly select a third appraiser, and the three appraisers will, within thirty (30) days of their appointment, determine the fair market value of the stock in such manner as a majority of them deems appropriate. Any shares of stock and any options purchased by the Company shall be transferred to the Company free and clear of all liens, encumbrances or rights of third parties. (b) If the Employment Period is terminated by the Company because of Employee's Disability, the Company agrees to continue to pay Employee his current Base Salary during such period of Disability, said payments to continue for a maximum of one year. Thereafter, Employee shall be paid by the Company's insurer, if any, such disability benefits as may be paid to any employee of the Company under any disability plan then in effect, if any. (c) If the Employment Period is terminated by the Company without Cause, Employee shall be entitled to receive as severance pay (in addition to the payment of the Base Salary through the date of termination as well as a prorated Discretionary Bonus) an amount equal to the greater of (i) his current Base Salary for a period equal to twelve (12) months and (ii) Employee's current Base Salary for the remainder of the current Initial or Renewal Period, such amount to be payable in regular installments in accordance with the Company's general payroll practices for salaried employees. Employee shall have no obligation to mitigate these post-employment payments by seeking other employment. Except pursuant to Section 2.6(a), the Company shall have no other obligations hereunder or otherwise with respect to Employee's employment from and after the termination or expiration date, and the Company shall continue to have all other rights available hereunder (including, without limitation, all rights under Sections 3, 4, and 6 at law or in equity). (d) If the Employment Period is terminated pursuant to Section 2.6(a)(iii), 2.6(b), or 2.6(c) above, Employee shall be entitled to receive, at such time it would otherwise be payable, any Discretionary Bonus which would have been payable, based upon the Company's performance over the full fiscal year, prorated for that portion of the fiscal year during which the Employee was employed by the Company. 2.7 PROFIT SHARING, PENSION AND SALARY DEFERRAL BENEFITS. It is understood by the parties to this Agreement that, during the Employment Period, Employee shall be entitled to participate in or accrue benefits under any pension, salary deferral or profit sharing plan now existing or hereafter created for employees of the Company upon terms and conditions equivalent to those which the Company may provide for other senior executive employees. -6- 7 3. COVENANT NOT TO COMPETE. 3.1 NON-COMPETITION. Employee agrees that during the Employment Period and for the 18-month period immediately following the termination of his employment with the Company, he shall not, within a seventy-five (75) mile radius of any radio station transmission tower or studio then owned or operated, directly or indirectly, by the Company (the "Territory"), engage in any of the following activities: (a) Directly or indirectly enter into the employ or render any service to or act in concert with any person, partnership, corporation or other entity engaged in the ownership or operation of radio stations (the "Radio Business") with a radio station transmission tower or studio located within the Territory; or (b) Directly or indirectly engage in the Radio Business with a radio station transmission tower or studio located within the Territory on his own account; or (c) Become interested in any such Radio Business with a radio station transmission tower or studio located within the Territory directly or indirectly as an individual, partner, shareholder, director, officer, principal, agent, employee, consultant, creditor or in any other relationship or capacity; provided, that the purchase of a publicly traded security of a corporation engaged in the Radio Business shall not in itself be deemed violative of this Agreement so long as Employee does not own, directly or indirectly, more than 3% of the securities of such corporation. 3.2 NON-SOLICITATION. Employee agrees that during the Employment Period and for the 18-month period immediately following the termination of his employment with the Company, he shall not (other than in the regular course of the Company's business) within the Territory solicit, directly or indirectly, business of the type then being performed by the Company from any person, partnership, corporation or other entity which is a customer of the Company at the time Employee's employment with the Company terminates, or was such a customer within the one-year period immediately prior thereto, or to the knowledge of Employee at the date of termination of employment, is a person, partnership, corporation or other entity with which the Company plans to do a substantial amount of business within the one-year period after such termination of employment. 4. NON-INDUCEMENT AND NON-DISCLOSURE. 4.1 NON-INDUCEMENT. Employee agrees that during the Employment Period and for a one-year period immediately following the termination of his employment with the Company, he shall not directly or indirectly, individually or on behalf of persons not parties to this Agreement, aid or endeavor to solicit or induce any of the Company's employees to leave their employment with the Company in order to accept employment with Employee or another person, partnership, corporation or other entity. 4.2 NON-DISCLOSURE. At no time shall Employee divulge, furnish or make accessible to anyone (other than in the regular course of the Company's business) any knowledge or -7- 8 information with respect to confidential information or data of the Company, or with respect to any confidential information or data of any of the customers of the Company, or with respect to any other confidential aspect of the business or products or services of the Company or its customers. Upon termination of his employment with the Company, Employee shall return to the Company all records, documents and material containing confidential information of the Company prepared by Employee or coming into his possession by virtue of his employment with the Company, including all copies thereof. 5. EFFECT OF TERMINATION WITHOUT CAUSE. Notwithstanding the provisions of Sections 3 and 4 above, the restrictions imposed upon Employee in Sections 3.1, 3.2, and 4.1 of this Agreement during the period following the termination of his employment hereunder shall apply in the event Employee's employment hereunder is terminated by the Company without cause pursuant to Section 1.4(ii) only for a period of one year provided Employee has received and has elected to accept the severance pay under Section 2.6(c). 6. REMEDIES. Employee acknowledges and agrees that the covenants set forth in Sections 3 and 4 of this Agreement (collectively, the "Restrictive Covenants") are reasonable and necessary for the protection of the Company's business interests and compliance therewith will not deprive Employee of the ability to earn a suitable living, that irreparable injury will result to the Company if Employee breaches any of the terms of the Restrictive Covenants, and that in the event of Employee's actual or threatened breach of any such Restrictive Covenants, the Company will have no adequate remedy at law. Employee accordingly agrees that in the event of any actual or threatened breach by him of any of the Restrictive Covenants, the Company shall be entitled to immediate temporary injunctive and other equitable relief, without the necessity of showing actual monetary damages, subject to hearing as soon thereafter as possible. In such event, the periods of time referred to in Sections 3 and 4 shall be deemed extended for a period equal to the respective period during which Employee is in breach thereof, in order to provide for injunctive relief and specific performance for a period equal to the full term thereof. Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages which it is able to prove. The covenants contained in Section 4 and 5 shall be construed as separate covenants, and if any court shall finally determine that the restraints provided for in any such covenants are too broad as to the geographic area, activity or time covered, said area, activity or time covered may be reduced to whatever extent the court deems reasonable and such covenants shall be enforced as to such reduced area, activity or time. Employee shall indemnify and hold Company harmless from any liability, loss, damage, judgment, cost or expense (including reasonable attorneys' fees and expenses) arising out of any claim or suit resulting from Employee's breach of these covenants or his failure to perform a duty hereunder. 7. NO OTHER NON-COMPETE AGREEMENTS. Notwithstanding anything to the contrary contained herein, Employee hereby represents, warrants and covenants to Company that Employee (i) is not a party to nor bound by any non-competition, non-solicitation, confidentiality or other agreement of any kind which would conflict with or prevent his employment hereunder or the full performance of all of his duties hereunder, and (ii) has not, and will not, wrongfully use any confidential information or know-how taken from another employer. Employee hereby agrees to indemnify and hold the Company harmless from any claim, loss, damage and expense hereafter -8- 9 incurred by the Company as a result of any breach of the foregoing representations, warranties or covenants made by Employee in this Section. 8. LIFE INSURANCE. The Company may at its discretion and at any time apply for and procure as owner and for its own benefit and at its own expense, insurance on the life of Employee in such amounts and in such form or forms as the Company may choose. Employee shall cooperate with the Company in procuring such insurance and shall, at the request of the Company, submit to such medical examinations, supply such information and execute such documents as may be required by the insurance company or companies to whom the Company has applied for such insurance. Employee shall have no interest whatsoever in any such policy or policies, except that, upon the termination of Employee's employment hereunder, Employee shall have the privilege of purchasing any such insurance from the Company for an amount equal to the actual premiums thereon previously paid by the Company. 9. INCOME TAX TREATMENT. Employee and the Company acknowledge that it is the intention of the Company to deduct all amounts paid under Section 2 hereof as ordinary and necessary business expenses for income tax purposes. Employee agrees and represents that he will treat all amounts paid hereunder as ordinary income for income tax purposes, and should he report such amounts as other than ordinary income for income tax purposes, he will indemnify and hold the Company harmless from and against any and all taxes, penalties, interest, costs and expenses, including reasonable attorneys' and accounting fees and costs, which are incurred by the Company directly or indirectly as a result thereof. 10. ASSIGNMENT. No party hereto may assign or delegate any of its rights or obligations hereunder without the prior written consent of the other party hereto, provided, however, the Company shall have the right to assign all or any part of its rights and obligations under this Agreement to (i) any affiliate of the Company to which the Business is assigned at any time or (ii) the purchaser of all or substantially all of the assets of the Company. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not. 11. SEVERABILITY. Whenever possible, each provision of this agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 12. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same Agreement. 13. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings in this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. The use of the word "including" in this Agreement shall be by way of example rather than by limitation. -9- 10 14. NOTICES. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally to the recipient, (ii) sent to the recipient by reputable express courier service (charges prepaid) or mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, or (iii) transmitted by telecopy to the recipient with a confirmation copy to follow the next day to be delivered by overnight carrier. Such notices, demands and other communications shall be sent to the addresses indicated below: (a) If to Employee: (b) If to the Company: Terry S. Jacobs Regent Communications, Inc. 100 East RiverCenter Blvd. 100 East RiverCenter Boulevard 9th Floor 9th Floor Covington, KY 41011 Covington, Kentucky 41011 Facsimile No. 859/292-0352 Facsimile No.: 859/292-0352 or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Date of service of such notice shall be (w) the date such notice is personally delivered, (x) three days after the date of mailing if sent by certified or registered mail, (y) one day after the date of delivery to the overnight courier if sent by overnight courier or (z) the next business day after the date of transmittal by telecopy. 15. PREAMBLE; PRELIMINARY RECITALS. The Preliminary Recitals set forth in the Preamble hereto are hereby incorporated and made part of this Agreement. 16. WAIVER. No modification, termination or attempted waiver of this Agreement shall be valid unless in writing and signed by the party against whom the same is sought to be entered. Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions as to any future violations thereof, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted the parties herein are cumulative and the waiver by a party of any single remedy shall not constitute a waiver of such party's right to assert all other legal remedies available to him or it under the circumstances. 17. ADDITIONAL OBLIGATIONS. Both during and after the Employment Period, Employee shall, upon reasonable notice, furnish the Company with such information as may be in Employee's possession, and cooperate with the Company, as may reasonably be requested by the Company (and, after the Employment Period, with due consideration for Employee's obligations with respect to any new employment or business activity) in connection with any litigation in which the Company or any affiliate is or may become a party. The Company shall reimburse Employee for all reasonable expenses incurred by Employee in fulfilling Employee's obligations under this Section 17. 18. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this -10- 11 Agreement shall be governed by, the laws of the Commonwealth of Kentucky without giving effect to provisions thereof regarding conflict of laws. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. COMPANY: REGENT COMMUNICATIONS, INC. By: William L. Stakelin ---------------------------- Title: President ---------------------------- EMPLOYEE: /s/ Terry S. Jacobs ----------------------------------- Terry S. Jacobs -11- EX-10.C 4 l88332aex10-c.txt EXHIBIT 10(C) 1 Exhibit 10(c) EXECUTIVE EMPLOYMENT AGREEMENT ------------------------------ THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement"), effective as of March 1, 2001 by and between REGENT COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and WILLIAM L. STAKELIN ("Employee"). RECITALS WHEREAS, the Company is engaged in the business, either directly or through affiliates, of owning and operating radio broadcasting stations (the "Business"), with principal offices in Covington, Kentucky. For purposes of this Agreement, the term "Company" shall include the Company, its subsidiaries, affiliates, and assignees and any successors in interest of the Company and its subsidiaries and/or affiliates. WHEREAS, Employee has been actively engaged in the radio broadcasting business since 1958 and has extensive knowledge and a unique understanding of the operation of the Business. WHEREAS, the Company desires to employ Employee, and Employee desires to be employed by the Company, as President of the Company. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. EMPLOYMENT. 1.1 ENGAGEMENT OF EMPLOYEE. The Company agrees to employ Employee and Employee agrees to accept employment as the President of the Company, all in accordance with the terms and conditions of this Agreement. 1.2 DUTIES AND POWERS. (a) During the Employment Period, Employee will serve as the Company's President, and will have such responsibilities, duties and authority as customarily held by executives in such a position in comparable companies, and will render services of an executive and administrative character, and act in such other executive capacity for the Company, as the Company's board of directors (the "Board") shall from time to time direct. Employee shall devote his reasonable best efforts, energies and abilities to the business and affairs of the Company. Employee shall perform the duties and carry out the responsibilities assigned to him, to the best of his ability, in a diligent, trustworthy and businesslike manner for the purpose of advancing the business of the Company and in a manner he reasonably believes to be in and not opposed to the best interests of the Company. (b) Employee acknowledges that his duties and responsibilities will require his concentrated business efforts and agrees that during the Employment Period he will not 2 engage directly or indirectly in any other business activity or have any business pursuits or interests which materially interfere or conflict with the performance of Employee's duties hereunder or which compete directly with the Company; provided, however, nothing in this Section 1.2 shall be deemed to prohibit Employee from investing in the stock of any competing corporation listed on a national securities exchange or traded in the over-the-counter market, but only if his associates (as such term is defined in Regulation 14A promulgated under the Securities Exchange Act of 1934, as in effect on the date hereof), collectively, do not own more than an aggregate of three percent of the stock of such corporation. In addition, Employee may serve on boards of directors during the Employment Period and volunteer his service to charitable, business and other public service agencies, clubs or organizations so long as such board or other service does not materially interfere or conflict with the performance of Employee's duties hereunder and so long as such activities are not rendered for a competitor of the Company. Any and all fees or remuneration paid to Employee in consideration of work and services performed outside the scope of Employee's employment hereunder shall inure to the benefit of Employee. (c) The parties hereto agree that none of Employee's duties hereunder shall require him to, and Employee agrees that he will not without the consent of the Board, which consent shall not be unreasonably withheld, change his personal residence from the Greater Cincinnati, Ohio SMSA Area. 1.3 EMPLOYMENT PERIOD. Employee's employment under this Agreement shall begin effective March 1, 2001 and shall continue through and until February 29, 2004 (the "Initial Period") unless extended as provided in this Section 1.3. This Agreement shall automatically be extended for additional consecutive three-year periods ("Renewal Periods") unless either party desires to terminate this Agreement and notifies the other party in writing at least sixty (60) days prior to the end of the then current Initial Period or Renewal Period. The Initial Period and the Renewal Periods are hereinafter referred to collectively as the "Employment Period." Notwithstanding anything to the contrary contained herein, the Employment Period is subject to termination pursuant to Section 1.4 and Section 1.5 below. 1.4 TERMINATION BY THE COMPANY. The Company has the right to terminate Employee's employment under this Agreement, by notice to Employee in writing at any time, (i) for "Cause," (ii) without Cause for any or no reason, and (iii) due to the Disability of Employee. Any such termination shall be effective upon the date of service of such notice pursuant to Section 15. This Agreement shall terminate automatically upon Employee's death. "Cause" as used herein means the occurrence of any of the following events: (a) the determination by the Board in the exercise of its reasonable judgment that Employee has committed an act or acts constituting (i) a crime involving moral turpitude, dishonesty or theft, (ii) dishonesty or disloyalty with respect to the Company, or (iii) fraud; (b) the determination by the Board in the exercise of its reasonable judgment that Employee has committed an act that indicates alcohol or drug abuse by Employee that adversely affects his performance hereunder; -2- 3 (c) a material breach by Employee of any of the terms and conditions of Sections 3 or 4 of this Agreement; or (d) Employee's gross negligence, habitual neglect, or intentional misconduct in the performance of his duties hereunder. Employee shall be deemed to have a "Disability" for purposes of this Agreement if Employee shall be unable, by reason of illness or physical or mental incapacity or disability (from any cause or causes whatsoever), to perform Employee's essential job functions hereunder, whether with or without reasonable accommodation by the Company, in substantially the manner and to the extent required hereunder prior to the commencement of such Disability, for a total period of 90 days in any 180-day period. In the event Employee shall be under a Disability, the Company shall have the right to terminate Employee's employment hereunder during the continuance of such Disability upon at least thirty (30) days prior written notice to Employee. Such determination shall not be arbitrary or unreasonable, and the Board shall take into consideration the opinion of Employee's personal physician, if reasonably available, as well as applicable provisions of the Americans with Disabilities Act, but such determination by the Board, if not arbitrary or unreasonable, shall be final and binding on the parties hereto. 1.5 TERMINATION BY EMPLOYEE. Employee has the right to terminate his employment under this Agreement for any or no reason, upon ninety (90) days prior written notice to the Company. 1.6 BOARD OF DIRECTORS AND RESIGNATION. Throughout the Employment Period, the Company agrees to seek to cause Employee to be elected to the Board. Unless by virtue of his beneficial ownership of voting stock of the Company he has voting control over a number of shares sufficient to assure his election to the Board, upon the termination of Employee's employment with the Company for any reason, Employee shall be deemed to have automatically resigned from any position he may then hold on the Board. Such resignation shall be deemed effective immediately without the requirement that a written resignation be delivered. 1.7 INDEMNITY. The Company shall indemnify Employee and hold him harmless to the fullest extent permissible under applicable law for all acts or decisions made by him in good faith while performing services for the Company. The Company shall also use its best efforts to obtain coverage for him under any insurance policy obtained during the term of this Agreement covering the other officers and directors of the Company against lawsuits. 2. COMPENSATION AND BENEFITS. 2.1 BASE COMPENSATION. During the Employment Period, the Company will pay Employee an annual base salary of $290,000 per annum (the "Base Salary"), payable in accordance with the Company's regular payroll policy for senior executive salaried employees. At least once every twelve (12) months, the Board shall perform an annual review of Employee's Base Salary based on Employee's performance of his duties and the Company's other compensation policies and make such increase thereto as it deems appropriate, provided that at each such twelve-month interval the Base Salary shall be increased from its level during the prior twelve-month -3- 4 period at least by a percentage no less than the percentage increase in the Consumer Price Index - All Items during such prior twelve-month period. Upon termination of the Employment Period, the Base Salary for any partial year will be prorated based on the number of days elapsed in such year during which the Employment Period had continued. 2.2 DISCRETIONARY BONUS. Within seventy five (75) days following the end of each fiscal year, the Board, as part of its annual review of Employee's performance, shall consider in its sole discretion the merits of a bonus to Employee, and in the event a bonus is warranted, shall cause the Company to award to Employee a bonus (the "Discretionary Bonus") for such year in an amount to be determined by the Board in its reasonable judgment based upon the Employee's and the Company's performance and the achievement of reasonably attainable goals and objectives established by the Board in consultation with Employee for such year. For purposes of a guideline, an assessment by the Board that Employee's performance has been "good" should merit a Discretionary Bonus equal to at least sixty percent (60%) of Employee's Base Salary for that year, with higher percentages of Base Salary for "excellent" and "outstanding" performances, a lesser percentage of Base Salary for only "satisfactory" performance, and no Discretionary Bonus for "poor" performance. 2.3 STOCK OPTIONS. It is agreed that, in addition to and not in lieu of Discretionary Bonuses, the Company will, from time to time and on such terms and conditions as the Board shall deem appropriate, in its sole discretion, grant to Employee pursuant to the Company's 1998 Management Stock Option Plan qualified and/or non-qualified options to acquire common stock of the Company. 2.4 BENEFITS. In addition to the Base Salary, any Discretionary Bonus and any stock options payable or granted to Employee hereunder, Employee will be entitled to the following benefits during the Employment Period: (a) payments of premiums for hospitalization, disability, life and health insurance, to the extent offered by the Company, and in amounts consistent with Company policy, for all key management employees, as reasonably determined by the Board; (b) up to four (4) weeks paid vacation each year with salary, provided that unused vacation time shall not be carried over to subsequent years; (c) reimbursement for reasonable, ordinary and necessary out-of-pocket business expenses incurred by Employee in the performance of his duties, subject to the Company's policies in effect from time to time with respect to travel, entertainment and other expenses, including without limitation, requirements with respect to reporting and documentation of such expenses; (d) use of an automobile at the Company's expense which shall include expenses for parking in the area of the Company's offices and for comprehensive insurance coverage for the automobile; and -4- 5 (e) other benefit arrangements and perquisites, including a 401(k) or similar tax deferral plan, to the extent made generally available by the Company to its executives and key management employees. 2.5 TAXES, ETC. All compensation payable to Employee hereunder is stated in gross amount and shall be subject to all applicable withholding taxes, other normal payroll and any other amounts required by law to be withheld. 2.6 COMPENSATION AFTER TERMINATION. (a) If the Employment Period is terminated (i) by the Company without Cause; (ii) by reason of Employee's Disability; or (iii) through expiration of the Employment Period or death of Employee, then, (1) all shares of the Company's capital stock beneficially owned by the Employee may, at the Company's election, be repurchased by the Company for cash equal to the fair market value thereof at the effective date of termination (with the cash payment in full made promptly after a termination pursuant to this Section 2.6(a)(I) or 2.6(a)(iii) and with the cash payment made in three equal consecutive annual installments beginning on the date of termination pursuant to this Section 2.6(a)(ii)); (2) except as otherwise provided in the specific terms of the option agreement or grant, all unvested options to purchase stock of the Company held by Employee shall cease and terminate as of the date of termination, and all vested but unexercised options to purchase stock of the Company held by Employee may, at the Company's election, be repurchased by the Company (according to the same payment terms as apply to shares of the Company's capital stock) for an amount constituting the excess of fair market value of the shares subject to the options over the exercise price of the options, if any, and if there is no such excess, then such options may be repurchased by the Company for one hundred dollars ($100) in the aggregate; whereupon, the Company shall have no further obligations hereunder or otherwise with respect to Employee's employment from and after the termination or expiration date (except for the unpaid installments and payment of Employee's current Base Salary accrued through the date of termination or expiration) and the Company shall continue to have all other rights available hereunder (including without limitation, all rights under Sections 3 and 4 at law or in equity). For purposes of this Agreement, "fair market value" of shares of the Company's capital stock shall be determined as follows: i. If the Company's 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 stock on such exchange on the date of termination, or if there were no sales on such date, then on the next prior business day on which there were sales. ii. If the 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 date of termination, 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 stock as the Board of Directors may 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. -5- 6 If neither of the methods described in (i) or (ii) above is available, and the Company and the Employee cannot agree on the fair market value within thirty (30) days after termination, then each of the Company and the Employee shall promptly appoint an appraiser, who will in turn promptly select a third appraiser, and the three appraisers will, within thirty (30) days of their appointment, determine the fair market value of the stock in such manner as a majority of them deems appropriate. Any shares of stock and any options purchased by the Company shall be transferred to the Company free and clear of all liens, encumbrances or rights of third parties. (b) If the Employment Period is terminated by the Company because of Employee's Disability, the Company agrees to continue to pay Employee his current Base Salary during such period of Disability, said payments to continue for a maximum of one year. Thereafter, Employee shall be paid by the Company's insurer, if any, such disability benefits as may be paid to any employee of the Company under any disability plan then in effect, if any. (c) If the Employment Period is terminated by the Company without Cause, Employee shall be entitled to receive as severance pay (in addition to the payment of the Base Salary through the date of termination as well as a prorated Discretionary Bonus) an amount equal to the greater of (i) his current Base Salary for a period equal to twelve (12) months and (ii) Employee's current Base Salary for the remainder of the current Initial or Renewal Period, such amount to be payable in regular installments in accordance with the Company's general payroll practices for salaried employees. Employee shall have no obligation to mitigate these post-employment payments by seeking other employment. Except pursuant to Section 2.6(a), the Company shall have no other obligations hereunder or otherwise with respect to Employee's employment from and after the termination or expiration date, and the Company shall continue to have all other rights available hereunder (including, without limitation, all rights under Sections 3, 4, and 6 at law or in equity). (d) If the Employment Period is terminated pursuant to Section 2.6(a)(iii), 2.6(b), or 2.6(c) above, Employee shall be entitled to receive, at such time it would otherwise be payable, any Discretionary Bonus which would have been payable, based upon the Company's performance over the full fiscal year, prorated for that portion of the fiscal year during which the Employee was employed by the Company. 2.7 PROFIT SHARING, PENSION AND SALARY DEFERRAL BENEFITS. It is understood by the parties to this Agreement that, during the Employment Period, Employee shall be entitled to participate in or accrue benefits under any pension, salary deferral or profit sharing plan now existing or hereafter created for employees of the Company upon terms and conditions equivalent to those which the Company may provide for other senior executive employees. 3. COVENANT NOT TO COMPETE. 3.1 NON-COMPETITION. Employee agrees that during the Employment Period and for the 18-month period immediately following the termination of his employment with the Company, he shall not, within a seventy-five (75) mile radius of any radio station transmission -6- 7 tower or studio then owned or operated, directly or indirectly, by the Company (the "Territory"), engage in any of the following activities: (a) Directly or indirectly enter into the employ or render any service to or act in concert with any person, partnership, corporation or other entity engaged in the ownership or operation of radio stations (the "Radio Business") with a radio station transmission tower or studio located within the Territory; or (b) Directly or indirectly engage in the Radio Business with a radio station transmission tower or studio located within the Territory on his own account; or (c) Become interested in any such Radio Business with a radio station transmission tower or studio located within the Territory directly or indirectly as an individual, partner, shareholder, director, officer, principal, agent, employee, consultant, creditor or in any other relationship or capacity; provided, that the purchase of a publicly traded security of a corporation engaged in the Radio Business shall not in itself be deemed violative of this Agreement so long as Employee does not own, directly or indirectly, more than 3% of the securities of such corporation. 3.2 NON-SOLICITATION. Employee agrees that during the Employment Period and for the 18-month period immediately following the termination of his employment with the Company, he shall not (other than in the regular course of the Company's business) within the Territory solicit, directly or indirectly, business of the type then being performed by the Company from any person, partnership, corporation or other entity which is a customer of the Company at the time Employee's employment with the Company terminates, or was such a customer within the one-year period immediately prior thereto, or to the knowledge of Employee at the date of termination of employment, is a person, partnership, corporation or other entity with which the Company plans to do a substantial amount of business within the one-year period after such termination of employment. 4. NON-INDUCEMENT AND NON-DISCLOSURE. 4.1 NON-INDUCEMENT. Employee agrees that during the Employment Period and for a one-year period immediately following the termination of his employment with the Company, he shall not directly or indirectly, individually or on behalf of persons not parties to this Agreement, aid or endeavor to solicit or induce any of the Company's employees to leave their employment with the Company in order to accept employment with Employee or another person, partnership, corporation or other entity. 4.2 NON-DISCLOSURE. At no time shall Employee divulge, furnish or make accessible to anyone (other than in the regular course of the Company's business) any knowledge or information with respect to confidential information or data of the Company, or with respect to any confidential information or data of any of the customers of the Company, or with respect to any other confidential aspect of the business or products or services of the Company or its customers. Upon termination of his employment with the Company, Employee shall return to the Company all -7- 8 records, documents and material containing confidential information of the Company prepared by Employee or coming into his possession by virtue of his employment with the Company, including all copies thereof. 5. EFFECT OF TERMINATION WITHOUT CAUSE. Notwithstanding the provisions of Sections 3 and 4 above, the restrictions imposed upon Employee in Sections 3.1, 3.2, and 4.1 of this Agreement during the period following the termination of his employment hereunder shall apply in the event Employee's employment hereunder is terminated by the Company without cause pursuant to Section 1.4(ii) only for a period of one year provided Employee has received and has elected to accept the severance pay under Section 2.6(c). 6. REMEDIES. Employee acknowledges and agrees that the covenants set forth in Sections 3 and 4 of this Agreement (collectively, the "Restrictive Covenants") are reasonable and necessary for the protection of the Company's business interests and compliance therewith will not deprive Employee of the ability to earn a suitable living, that irreparable injury will result to the Company if Employee breaches any of the terms of the Restrictive Covenants, and that in the event of Employee's actual or threatened breach of any such Restrictive Covenants, the Company will have no adequate remedy at law. Employee accordingly agrees that in the event of any actual or threatened breach by him of any of the Restrictive Covenants, the Company shall be entitled to immediate temporary injunctive and other equitable relief, without the necessity of showing actual monetary damages, subject to hearing as soon thereafter as possible. In such event, the periods of time referred to in Sections 3 and 4 shall be deemed extended for a period equal to the respective period during which Employee is in breach thereof, in order to provide for injunctive relief and specific performance for a period equal to the full term thereof. Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages which it is able to prove. The covenants contained in Section 4 and 5 shall be construed as separate covenants, and if any court shall finally determine that the restraints provided for in any such covenants are too broad as to the geographic area, activity or time covered, said area, activity or time covered may be reduced to whatever extent the court deems reasonable and such covenants shall be enforced as to such reduced area, activity or time. Employee shall indemnify and hold Company harmless from any liability, loss, damage, judgment, cost or expense (including reasonable attorneys' fees and expenses) arising out of any claim or suit resulting from Employee's breach of these covenants or his failure to perform a duty hereunder. 7. NO OTHER NON-COMPETE AGREEMENTS. Notwithstanding anything to the contrary contained herein, Employee hereby represents, warrants and covenants to Company that Employee (i) is not a party to nor bound by any non-competition, non-solicitation, confidentiality or other agreement of any kind which would conflict with or prevent his employment hereunder or the full performance of all of his duties hereunder, and (ii) has not, and will not, wrongfully use any confidential information or know-how taken from another employer. Employee hereby agrees to indemnify and hold the Company harmless from any claim, loss, damage and expense hereafter incurred by the Company as a result of any breach of the foregoing representations, warranties or covenants made by Employee in this Section. -8- 9 8. LIFE INSURANCE. The Company may at its discretion and at any time apply for and procure as owner and for its own benefit and at its own expense, insurance on the life of Employee in such amounts and in such form or forms as the Company may choose. Employee shall cooperate with the Company in procuring such insurance and shall, at the request of the Company, submit to such medical examinations, supply such information and execute such documents as may be required by the insurance company or companies to whom the Company has applied for such insurance. Employee shall have no interest whatsoever in any such policy or policies, except that, upon the termination of Employee's employment hereunder, Employee shall have the privilege of purchasing any such insurance from the Company for an amount equal to the actual premiums thereon previously paid by the Company. 9. INCOME TAX TREATMENT. Employee and the Company acknowledge that it is the intention of the Company to deduct all amounts paid under Section 2 hereof as ordinary and necessary business expenses for income tax purposes. Employee agrees and represents that he will treat all amounts paid hereunder as ordinary income for income tax purposes, and should he report such amounts as other than ordinary income for income tax purposes, he will indemnify and hold the Company harmless from and against any and all taxes, penalties, interest, costs and expenses, including reasonable attorneys' and accounting fees and costs, which are incurred by the Company directly or indirectly as a result thereof. 10. ASSIGNMENT. No party hereto may assign or delegate any of its rights or obligations hereunder without the prior written consent of the other party hereto, provided, however, the Company shall have the right to assign all or any part of its rights and obligations under this Agreement to (i) any affiliate of the Company to which the Business is assigned at any time or (ii) the purchaser of all or substantially all of the assets of the Company. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not. 11. SEVERABILITY. Whenever possible, each provision of this agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 12. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same Agreement. 13. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings in this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. The use of the word "including" in this Agreement shall be by way of example rather than by limitation. 14. NOTICES. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to -9- 10 have been duly given if (i) delivered personally to the recipient, (ii) sent to the recipient by reputable express courier service (charges prepaid) or mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, or (iii) transmitted by telecopy to the recipient with a confirmation copy to follow the next day to be delivered by overnight carrier. Such notices, demands and other communications shall be sent to the addresses indicated below: (a) If to Employee: (b) If to the Company: William L. Stakelin Regent Communications, Inc. 100 East RiverCenter Blvd. 100 East RiverCenter Blvd. 9th Floor 9th Floor Covington, KY 41011 Covington, KY 41011 Facsimile No. 859/292-0352 Facsimile No. 859/292-0352 or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Date of service of such notice shall be (w) the date such notice is personally delivered, (x) three days after the date of mailing if sent by certified or registered mail, (y) one day after the date of delivery to the overnight courier if sent by overnight courier or (z) the next business day after the date of transmittal by telecopy. 15. PREAMBLE; PRELIMINARY RECITALS. The Preliminary Recitals set forth in the Preamble hereto are hereby incorporated and made part of this Agreement. 16. WAIVER. No modification, termination or attempted waiver of this Agreement shall be valid unless in writing and signed by the party against whom the same is sought to be entered. Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions as to any future violations thereof, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted the parties herein are cumulative and the waiver by a party of any single remedy shall not constitute a waiver of such party's right to assert all other legal remedies available to him or it under the circumstances. 17. ADDITIONAL OBLIGATIONS. Both during and after the Employment Period, Employee shall, upon reasonable notice, furnish the Company with such information as may be in Employee's possession, and cooperate with the Company, as may reasonably be requested by the Company (and, after the Employment Period, with due consideration for Employee's obligations with respect to any new employment or business activity) in connection with any litigation in which the Company or any affiliate is or may become a party. The Company shall reimburse Employee for all reasonable expenses incurred by Employee in fulfilling Employee's obligations under this Section 17. 18. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the laws of the Commonwealth of Kentucky without giving effect to provisions thereof regarding conflict of laws. -10- 11 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. COMPANY: REGENT COMMUNICATIONS, INC. By: /s/ Terry S. Jacobs ------------------------------------- Title: Chairman of the Board ------------------------------------- EMPLOYEE: /s/ William L. Stakelin --------------------------------------------- William L. Stakelin -11- -----END PRIVACY-ENHANCED MESSAGE-----