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Exhibit 4(d)
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STOCK PURCHASE AGREEMENT
BY AND AMONG
REGENT COMMUNICATIONS, INC.,
WALLER-SUTTON MEDIA PARTNERS, L.P.,
AND
THE PURCHASERS NAMED HEREIN
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DATED AS OF JUNE 15, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS.......................................................................................................1
1.1 DEFINITIONS..............................................................................................1
1.2 ACCOUNTING TERMS; FINANCIAL STATEMENTS..................................................................11
1.3 KNOWLEDGE OF THE COMPANY................................................................................11
ARTICLE 2
PURCHASE AND SALE OF THE PREFERRED STOCK.........................................................................11
2.1 PURCHASE AND SALE OF THE SHARES.........................................................................11
2.2 CLOSINGS................................................................................................12
2.3 DEFAULT SHARES..........................................................................................13
2.4 FINANCIAL ACCOUNTING POSITIONS; TAX REPORTING...........................................................15
2.5 FEES AND EXPENSES.......................................................................................16
2.6 TAG-ALONG RIGHT.........................................................................................16
ARTICLE 3
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS
TO PURCHASE THE SHARES...........................................................................................17
3.1 REPRESENTATIONS AND WARRANTIES..........................................................................18
3.2 COMPLIANCE WITH THIS AGREEMENT..........................................................................18
3.3 COMPLIANCE WITH THE ACQUISITION DOCUMENTS; CLOSING THEREUNDER; NO DEFAULTS
........................................................................................................18
3.4 SECRETARY'S CERTIFICATE.................................................................................18
3.5 DOCUMENTS...............................................................................................18
3.6 PURCHASE OF SHARES PERMITTED BY APPLICABLE LAWS.........................................................19
3.7 OPINION OF COUNSEL......................................................................................19
3.8 APPROVAL OF COUNSEL TO THE PURCHASERS...................................................................19
3.9 CONSENTS AND APPROVALS..................................................................................19
3.10 REGISTRATION RIGHTS AGREEMENT...........................................................................19
3.11 STOCKHOLDERS' AGREEMENT.................................................................................19
3.12 CERTIFICATE OF INCORPORATION AND BY-LAWS................................................................20
3.13 NO MATERIAL JUDGMENT OR ORDER...........................................................................20
3.14 GOOD STANDING CERTIFICATE...............................................................................20
3.15 PRO FORMA BALANCE SHEET.................................................................................20
3.16 STOCK OPTION PLAN.......................................................................................20
3.17 D & O INSURANCE.........................................................................................20
3.18 FUTURE ACQUISITION AGREEMENTS...........................................................................20
3.19 SALE OF SERIES A, SERIES B AND SERIES D PREFERRED STOCK.................................................21
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3.20 KEY-MAN INSURANCE.......................................................................................21
3.21 FAIRCOM CONVERTIBLE NOTE PURCHASE AGREEMENT.............................................................21
3.22 EXECUTIVE EMPLOYMENT AGREEMENTS.........................................................................21
3.23 COMPLIANCE WITH STATE SECURITIES LAWS...................................................................21
3.24 CONVERSION OF FAIRCOM CONVERTIBLE NOTES.................................................................21
3.25 SBA COMPLIANCE..........................................................................................21
ARTICLE 4
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
TO ISSUE AND SELL THE SHARES.....................................................................................22
4.1 REPRESENTATIONS AND WARRANTIES..........................................................................22
4.2 COMPLIANCE WITH THIS AGREEMENT..........................................................................22
4.3 STOCKHOLDERS' AGREEMENT.................................................................................22
4.4 CONVERSION OF FAIRCOM CONVERTIBLE NOTES.................................................................22
4.5 COMPLIANCE WITH STATE SECURITIES LAWS...................................................................22
ARTICLE 5
REPRESENTATIONS AND WARRANTIES...................................................................................23
5.1 EXISTENCE AND POWER.....................................................................................23
5.2 AUTHORIZATION: NO CONTRAVENTION.........................................................................23
5.3 GOVERNMENTAL AUTHORIZATION: THIRD PARTY CONSENTS........................................................23
5.4 BINDING EFFECT..........................................................................................24
5.5 NO LEGAL BAR............................................................................................24
5.6 LITIGATION .............................................................................................24
5.7 COMPLIANCE WITH LAWS....................................................................................24
5.8 NO DEFAULT OR BREACH....................................................................................24
5.9 TITLE TO PROPERTIES.....................................................................................24
5.10 USE OF REAL PROPERTY....................................................................................24
5.11 TAXES...................................................................................................25
5.12 FINANCIAL CONDITION.....................................................................................25
5.13 ERISA ..................................................................................................26
5.14 DISCLOSURE..............................................................................................26
5.15 ABSENCE OF CERTAIN CHANGES OR EVENTS....................................................................27
5.16 ENVIRONMENTAL MATTERS...................................................................................27
5.17 INVESTMENT COMPANY/GOVERNMENT REGULATIONS...............................................................28
5.18 SUBSIDIARIES............................................................................................28
5.19 CAPITALIZATION..........................................................................................29
5.20 PRIVATE OFFERING........................................................................................29
5.21 BROKER'S, FINDER'S OR SIMILAR FEES......................................................................30
5.22 LABOR RELATIONS.........................................................................................30
5.23 EMPLOYEE BENEFIT PLANS..................................................................................30
5.24 PATENTS, TRADEMARKS. ETC................................................................................30
5.25 POTENTIAL CONFLICTS OF INTEREST.........................................................................31
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5.26 TRADE RELATIONS.........................................................................................31
5.27 OUTSTANDING BORROWINGS..................................................................................32
5.28 MATERIAL CONTRACTS......................................................................................32
5.29 INSURANCE...............................................................................................32
5.30 SOLVENCY................................................................................................33
5.31 COMPLIANCE WITH EACH ACQUISITION DOCUMENT; CLOSINGS THEREUNDER; NO DEFAULTS
........................................................................................................33
5.32 COMMISSION DOCUMENTS....................................................................................33
5.33 INCORPORATION OF REPRESENTATIONS AND WARRANTIES OF PARTIES TO THE ACQUISITION
DOCUMENTS...............................................................................................33
5.34 SMALL BUSINESS CONCERN..................................................................................33
5.35 COMPLIANCE WITH LOAN AGREEMENT..........................................................................34
5.36 YEAR 2000 COMPLIANCE....................................................................................34
5.37 RADIO STATIONS KCBQ (AM) AND WSSP (FM)..................................................................34
5.38 FAIRCOM DEBT............................................................................................35
ARTICLE 6
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS.....................................................................................35
6.1 AUTHORIZATION; NO CONTRAVENTION.........................................................................35
6.2 BINDING EFFECT..........................................................................................35
6.3 NO LEGAL BAR............................................................................................36
6.4 EXPERIENCE..............................................................................................36
6.5 PURCHASE FOR OWN ACCOUNT................................................................................36
6.6 EXEMPTION...............................................................................................37
6.7 ACCREDITED INVESTOR.....................................................................................37
6.8 NO PUBLIC MARKET........................................................................................37
6.9 ERISA...................................................................................................37
6.10 BROKER'S, FINDER'S OR SIMILAR FEES......................................................................37
ARTICLE 7
INDEMNIFICATION..................................................................................................38
7.1 INDEMNIFICATION.........................................................................................38
7.2 LIMITATIONS ON INDEMNIFICATION..........................................................................39
7.3 NOTIFICATION............................................................................................39
7.4 REGISTRATION RIGHTS AGREEMENT...........................................................................40
ARTICLE 8
AFFIRMATIVE COVENANTS............................................................................................40
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION..............................................................40
8.2 PRESERVATION OF CORPORATE EXISTENCE.....................................................................44
8.3 PAYMENT OF OBLIGATIONS..................................................................................44
8.4 COMPLIANCE WITH LAWS....................................................................................45
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8.5 INSPECTION; COMPLIANCE WITH SMALL BUSINESS INVESTMENT ACT...............................................45
8.6 MAINTENANCE OF INSURANCE................................................................................45
8.7 BOOKS AND RECORDS.......................................................................................46
8.8 USE OF PROCEEDS.........................................................................................46
8.9 BOARD NOMINEES..........................................................................................46
8.10 GRANTING OF OPTIONS.....................................................................................46
8.11 BUSINESS ACTIVITIES.....................................................................................47
8.12 BOARD CONSENT...........................................................................................47
8.13 RESERVATION OF SHARES...................................................................................47
ARTICLE 9
MISCELLANEOUS....................................................................................................48
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............................................................48
9.2 NOTICES.................................................................................................48
9.3 SUCCESSORS AND ASSIGNS..................................................................................49
9.4 AMENDMENT AND WAIVER....................................................................................49
9.5 SIGNATURES AND COUNTERPARTS.............................................................................50
9.6 HEADINGS................................................................................................50
9.7 GOVERNING LAW...........................................................................................50
9.8 JURISDICTION............................................................................................50
9.9 SEVERABILITY............................................................................................51
9.10 RULES OF CONSTRUCTION...................................................................................51
9.11 ENTIRE AGREEMENT........................................................................................51
9.12 CERTAIN EXPENSES........................................................................................51
9.13 PUBLICITY...............................................................................................51
9.14 FURTHER ASSURANCES......................................................................................52
9.15 OBLIGATIONS OF THE PARTIES..............................................................................52
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STOCK PURCHASE AGREEMENT
AGREEMENT (the "Agreement"), dated as of June 15, 1998, by and among
REGENT COMMUNICATIONS, INC. (the "Company"), a Delaware corporation,
WALLER-SUTTON MEDIA PARTNERS, L.P. ("Waller-Sutton"), a Delaware limited
partnership, and the other purchasers from time to time listed on Schedule I
hereto (each of Waller-Sutton and such other purchasers individually, a
"Purchaser" and collectively, the "Purchasers").
W I T N E S S E T H:
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WHEREAS, the Company wishes to sell to the Purchasers, and the
Purchasers wish to purchase from the Company, an aggregate of 4,100,000 shares
of its Series F Convertible Preferred Stock, $0.01 par value per share (the
"Series F Preferred Stock"), for an aggregate purchase price of $20,500,000,
upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 DEFINITIONS. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"ACQUISITIONS" shall mean the acquisition by the Company or any
wholly-owned Subsidiary of 31 radio stations in nine markets to be consummated
on the First Closing Date in accordance with and pursuant to the Acquisition
Documents.
"ACQUISITION DOCUMENTS" shall mean the following agreements,
collectively: (i) Agreement of Merger among Faircom Inc., Regent Merger Corp.
and the Company, dated as of December 5, 1997, as amended by First Amendment to
Agreement of Merger dated April 7, 1998, and by a Second Amendment to Agreement
of Merger dated April 24, 1998; (ii) Stock Purchase Agreement, dated June 16,
1997, among the Company and the Shareholders of The Park Lane Group, as amended
by First Amendment to Stock Purchase Agreement, dated February 2, 1998, and by a
Second Amendment to Stock Purchase Agreement, dated as of May 1, 1998, among the
Company and the Shareholders of The Park Lane Group; (iii) Agreement of Merger,
dated as of December 17, 1997, among the Company, Regent Broadcasting of
Victorville, Inc. and Topaz Broadcasting, Inc., as amended by an
Amendment to Agreement of Merger dated as of June __, 1998; (iv) Asset Purchase
Agreement, dated December 17, 1997, between Regent Broadcasting of Victorville,
Inc. and Ruby Broadcasting, Inc., as amended by an Amendment to Purchase
Agreement
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dated as of June __, 1998; (v) Asset Purchase Agreement, dated December 9, 1997,
between Regent Broadcasting of Kingman, Inc. and Continental Radio Broadcasting,
L.L.C.; and (vi) Agreement of Merger, dated October 10, 1997, among Alta
California Broadcasting, Inc., a California corporation ("Alta California"),
Regent Acquisition Corp. and the Company, as amended by an Amendment No. 1
thereto, dated as of June 10, 1998, among Regent Acquisition Corp., Alta
California and Alta California Broadcasting, Inc., a Delaware corporation and a
wholly-owned subsidiary of Alta California (the "Alta Merger Agreement"); in
each case, as the same may be amended or further amended from time to time as
permitted by the provisions of this Agreement.
"ADDITIONAL CLOSING(S)" shall have the meaning assigned to that
term in Section 2.2 hereof.
"ADDITIONAL CLOSING DATE(S)" shall have the meaning assigned to
that term in Section 2.2 hereof.
"ADDITIONAL DEFAULT SHARES" shall have the meaning assigned to that
term in Section 2.3(e) hereof.
"ADDITIONAL OPTION PERIOD" shall have the meaning assigned to that
term in Section 2.3(e) hereof.
"ADDITIONAL SHARES" shall have the meaning assigned to that term in
Section 2.1 hereof.
"AFFILIATE" shall mean any Person (a) directly or indirectly
controlling, controlled by, or under common control with, the Company, (b)
directly or indirectly owning or holding five percent (5%) or more of any equity
interest in the Company, or (c) five percent (5%) or more of whose voting stock
or other equity interest is directly or indirectly owned or held by the Company.
For purposes of this definition, "control" (including with correlative meanings,
the terms "controlling," "controlled by" and under "common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGREEMENT" shall mean this Agreement, including the exhibits and
schedules attached hereto, as the same may be amended, supplemented or modified
in accordance with the terms hereof.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning assigned to
that term in Section 5.12 hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
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"BY-LAWS" shall mean, unless the context in which it is used
otherwise requires, the by-laws of the Company, as in effect on the applicable
Closing Date.
"CERTIFICATE OF AMENDMENT" shall mean the amendment and restatement
of the certificate of incorporation of the Company, which, among other things,
sets forth the terms, limitations and relative rights and preferences of the
Series F Preferred Stock, substantially in the form attached hereto as Exhibit
A.
"CERTIFICATE OF INCORPORATION" shall mean the certificate of
incorporation of the Company (as amended), as in effect on the applicable
Closing Date.
"CLOSING" shall mean the First Closing, any Additional Closing or
the Default Shares Closing, as the case may be.
"CLOSING DATE" shall mean the First Closing Date, any Additional
Closing Date or the Default Shares Closing Date, as the case may be.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"COMMISSION" shall mean the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.
"COMMISSION DOCUMENTS" shall have the meaning set forth in Section
5.32 hereof.
"COMMON STOCK" shall mean shares of common stock, par value $0.01
per share, of the Company, or any other capital stock of the Company into which
such stock is reclassified or reconstituted.
"COMPANY" shall mean Regent Communications, Inc., a Delaware
corporation.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as
amended, and the rules and regulations of the FCC thereunder.
"CONDITION OF THE COMPANY" shall mean the assets, business,
properties, results of operations or financial condition of the Company or any
of its Subsidiaries.
"CONTINGENT OBLIGATION" as applied to any Person, shall mean any
direct or indirect liability, contingent or otherwise, of that Person: (i) with
respect to any Indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect
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thereto; (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings; or (iii) under any foreign exchange contract, currency swap agreement,
interest rate swap agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (other than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of nonperformance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATIONS" shall mean as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
"CRISLER AMENDMENT" shall mean that agreement, in form and
substance satisfactory to Waller-Sutton, that reduces the compensation payable
to The Crisler Company, L.P. ("Crisler") in respect of the Additional Shares in
the manner set forth therein.
"DEFAULT SHARES" shall have the meaning assigned to that term in
Section 2.3 hereof.
"DEFAULT SHARES CLOSING" shall have the meaning assigned to that
term in Section 2.3 hereof.
"DEFAULT SHARES CLOSING DATE" shall have the meaning assigned to
that term in Section 2.3 hereof.
"DEFINED BENEFIT PLAN" shall mean a defined benefit plan within the
meaning of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded
or unfunded, qualified or non-qualified (whether or not subject to ERISA or the
Code).
"ENVIRONMENTAL LAWS" shall mean any Federal, state, territorial,
provincial or local law, common law doctrine, rule, order, decree, judgment,
injunction, license, permit or regulation relating to environmental matters,
including those pertaining to land use, air, soil, surface water, ground water
(including the protection, cleanup, removal, remediation or damage thereof),
public or employee health or safety or any other environmental matter, together
with any other laws (Federal, state, territorial, provincial or local) relating
to emissions, discharges, releases or threatened releases of any pollutant or
contaminant including, without limitation, medical, chemical, biological,
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biohazardous or radioactive waste and materials, into ambient air, land, surface
water, groundwater, personal property or structures, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, discharge or handling of any contaminant, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. 9601 ET SEQ.), the Hazardous Material Transportation
Act (49 U.S.C. 1801 ET SEQ.), the Resource Conservation and Recovery Act (42
U.S.C. 6901 ET SEQ.), the Federal Water Pollution Control Act (33 U.S.C. 1251 ET
SEQ.), the Clean Air Act (42 U.S.C. 1251 ET SEQ.), the Toxic Substances Control
Act (15 U.S.C. 2601 ET SEQ.), and the Occupational Safety and Health Act (29
U.S.C. 651 ET SEQ.), as such laws have been, or are, amended, modified or
supplemented heretofore or from time to time hereafter and any analogous future
Federal, or present or future state or local laws, statutes and regulations
promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any Person that is treated as a single
employer with the Company or any of its Subsidiaries under Section 414(b), (c),
(m) or (o) of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"EXECUTIVE EMPLOYMENT AGREEMENTS" shall mean the separate
Employment Agreements between Terry S. Jacobs and William Stakelin and the
Company each dated as of March 1 ,1998, copies of which are attached hereto as
Exhibit B.
"EXERCISABLE SHARES" shall have the meaning assigned to that term
in Section 8.14 hereof.
"FAIRCOM CONVERTIBLE NOTE PURCHASE AGREEMENT" shall mean the
agreement dated the date hereof between Waller-Sutton, Blue Chip Capital Fund II
Limited Partnership ("Blue Chip") and Miami Valley Venture Fund L.P. ("Miami")
pursuant to which Waller-Sutton is to purchase on the First Closing Date from
Blue Chip and Miami $1,500,000 aggregate principal amount of Faircom Convertible
Notes as set forth therein..
"FAIRCOM CONVERTIBLE NOTES" shall mean the Class A Convertible
Subordinated Promissory Notes and Class B Convertible Subordinated Promissory
Notes of Faircom, Inc.
"FCC" shall mean the Federal Communications Commission or any
similar agency then having jurisdiction to enforce the Communications Act.
"FINANCIAL STATEMENTS" shall mean the Audited Financial Statements
and the Unaudited Financial Statements.
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"FIRST CLOSING" shall have the meaning assigned to that term in
Section 2.2 hereof.
"FIRST CLOSING DATE" shall have the meaning assigned to that term
in Section 2.2 hereof.
"FUTURE ACQUISITION AGREEMENT" shall mean any agreement approved by
the Board of Directors and by Waller-Sutton pursuant to the provisions of the
Stockholders' Agreement relating to the acquisition by the Company or any
Subsidiary of one or more radio stations, whether by means of the purchase by
the Company or such Subsidiary of stock or assets of, or a merger or
consolidation by the Company or such Subsidiary with, any other Person or
otherwise.
"GAAP" shall mean generally accepted accounting principles in
effect from time to time within the United States.
"GOVERNMENTAL AUTHORITY" shall mean the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"HAZARDOUS MATERIALS" shall mean those substances which are
regulated by or form the basis of liability under any Environmental Laws.
"INDEBTEDNESS" shall mean as to any Person (a) all obligations of
such Person for borrowed money (including, without limitation, reimbursement and
all other obligations with respect to surety bonds, unfunded credit commitments,
letters of credit and bankers' acceptances, whether or not matured), (b) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and accrued
commercial or trade liabilities arising in the ordinary course of business, (d)
all interest rate and currency swaps, caps, collars and similar agreements or
hedging devices under which payments are obligated to be made by such Person,
whether periodically or upon the happening of a contingency, (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) any
Contingent Obligation of such Person.
"INITIAL SHARES" shall have the meaning assigned to that term in
Section 2.1 hereof.
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"INVESTOR WARRANT SHARES" shall mean the shares of common stock
issued upon exercise of the Investor Warrants.
"INVESTOR WARRANTS" shall mean detachable warrants in the form
attached hereto as Exhibit C to purchase 860,000 shares of Common Stock at $5.00
per share (subject to adjustment for dividends, subdivisions, combinations or
reclassifications and the like), which warrants shall be exercisable for 10
years from the First Closing.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences)
including, without limitation, those created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a capital lease obligation, or any financing lease having
substantially the same economic effect as any of the foregoing.
"MAJORITY PURCHASERS" shall mean at the time of determination
Waller-Sutton and such other Purchasers as shall, together with Waller-Sutton,
hold a majority of the then issued and outstanding shares of Series F Preferred
Stock.
"OUTSTANDING BORROWINGS" shall mean all Indebtedness of the Company
and its Subsidiaries for money borrowed that is outstanding at the relevant time
of determination.
"PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, Governmental Authority or other
entity of any kind, and shall include any successor (by merger or otherwise) of
such entity.
"PLANS" shall have the meaning assigned to that term in Section
5.23 hereof.
"PREFERRED STOCK" shall mean shares of preferred stock, par value
$.01 per share, of the Company including, but not limited to, shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock.
"PRO FORMA BALANCE SHEET" shall mean the pro forma consolidated
balance sheet of the Company and its Subsidiaries delivered pursuant to Article
3 hereof.
"PURCHASER CLOSING NOTICE" shall have the meaning assigned to that
term in Section 2.2(c) hereof.
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"PURCHASER PRO RATA SHARE" shall mean, as to any Purchaser, the
amount (expressed as a percentage) obtained by dividing (x) the Purchaser Share
Commitment of such Purchaser by (y) the sum of the Purchaser Share Commitments
of all Purchasers.
"PURCHASER SHARE COMMITMENT" shall mean, as to any Purchaser, the
aggregate number of shares of Series F Preferred Stock which such Purchaser is
obligated to purchase hereunder (including any Initial Shares), which number is
set forth alongside such Purchaser's name on the signature page hereto.
"QUALIFIED PUBLIC OFFERING" shall mean the sale by the Company
pursuant to a registration statement on Form S-1 or other Form under the
Securities Act, of shares of Common Stock at a price per share not less than
$12.00 (subject to appropriate adjustment in the event of any stock split,
recapitalization, reclassification or the like) and providing gross proceeds to
the Company of not less than $25 million in the aggregate (exclusive of any such
proceeds received upon exercise of any "over-allotment option" granted to the
underwriters of such offering).
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement substantially in the form attached hereto as Exhibit D.
"REMAINING SHARE COMMITMENT" shall mean, as to any Purchaser and as
of any date of determination thereof, the Purchaser Share Commitment of such
Purchaser, less the number of shares of Series F Preferred Stock (exclusive of
Default Shares and Additional Default Shares) theretofore purchased by such
Purchaser pursuant to this Agreement.
"REQUIRED CONSENTS" shall mean the authorizations, consents or
approvals listed on Schedule 5.2 hereto.
"REQUIREMENTS OF LAW" shall mean as to any Person, the certificate
or articles of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, regulation, right,
privilege, qualification, license or franchise or determination of an arbitrator
or a court or other Governmental Authority (including without limitation, the
Federal Communications Act of 1934, as amended, and the rules and regulations
promulgated thereunder, and all Federal and State securities laws, and the rules
and regulations promulgated thereunder), in each case applicable or binding upon
such Person or any of its property or to which such Person or any of its
property is subject or pertaining to any or all of the transactions contemplated
or referred to herein.
"SECURITIES" shall mean the Shares and the Investor Warrants.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
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"SERIES A PREFERRED STOCK" shall mean shares of Series A
Convertible Preferred Stock, par value $.01 per share, of the Company.
"SERIES A PURCHASE AGREEMENT" shall mean the Stock Purchase
Agreement, dated December 1, 1997, between the Company and William L. Stakelin.
"SERIES B PREFERRED STOCK" shall mean shares of Series B Senior
Convertible Preferred Stock, par value $.01 per share, of the Company.
"SERIES B PURCHASE AGREEMENT" shall mean the Stock Purchase
Agreement, dated December 8, 1997, between the Company and General Electric
Capital Corporation.
"SERIES C PREFERRED STOCK" shall mean shares of Series C
Convertible Preferred Stock, par value $.01 per share, of the Company.
"SERIES D PREFERRED STOCK" shall mean shares of Series D
Convertible Preferred Stock, par value $.01 per share, of the Company.
"SERIES D PURCHASE AGREEMENT" shall mean the Stock Purchase
Agreement, dated December 8, 1997, between the Company and BMO Financial, Inc.
"SERIES E PREFERRED STOCK" shall mean shares of Series E
Convertible Preferred Stock, par value $.01 per share, of the Company.
"SERIES F PREFERRED STOCK" shall have the meaning assigned to that
term in the first Whereas clause hereof.
"SHARES" shall have the meaning assigned to that term in Section
2.1 hereof.
"SOLVENT" shall mean, with respect to the Company and its
Subsidiaries considered as a whole, based on the Financial Statements, that (i)
the assets and the property of the Company and its Subsidiaries, considered as a
whole, exceed the aggregate liabilities (including contingent and unliquidated
liabilities) of the Company and its Subsidiaries, considered as a whole, (ii)
after giving effect to the transactions contemplated by this Agreement, the
Company and its Subsidiaries, considered as a whole, will not be left with
unreasonably small capital, and (iii) after giving effect to the transactions
contemplated by this Agreement, the Company and its Subsidiaries, considered as
a whole, are able to both service and pay their liabilities as they mature and
are, in fact, doing so. In computing the amount of contingent or unliquidated
liabilities at any time, such liabilities will be computed as the amount that,
in light of all the facts and circumstances existing at such time, represents
the amount that is likely to become an actual or matured liability.
"STOCKHOLDERS' AGREEMENT" shall mean the Amended and Restated
Stockholders' Agreement, substantially in the form attached hereto as Exhibit E.
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"STOCK OPTION PLAN" shall mean the 1998 Management Stock Option
Plan of the Company, a copy of which is attached hereto as Exhibit F.
"STOCK OPTIONS" shall have the meaning assigned to that term in
Section 5.19 hereof.
"SUBSIDIARY" shall mean, with respect to any Person, a corporation
or other entity (i) of which 50% or more of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly, by such
Person. Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company or (ii) with respect to which such Person, directly or indirectly,
has the power to elect a majority of the board of directors or similar governing
body, or otherwise direct the management and/or operations thereof.
"TRANSACTION DOCUMENTS" shall mean collectively, this Agreement,
the Registration Rights Agreement, the Stockholders' Agreement, the Faircom
Convertible Note Purchase Agreement, the Certificate of Incorporation, the
Certificate of Amendment, and the By-laws.
"TERMINATION DATE" shall mean the earliest to occur of (i) June 15,
2001, (ii) the occurrence of a Change of Control (as defined in the
Stockholders' Agreement) which is not consented to or approved by Waller-Sutton,
or (iii) the occurrence of any Triggering Event.
"TRIGGERING EVENT" shall mean any one or series of related
transactions that would result in (i) a sale to any Person other than the
Company or any Subsidiary thereof of all or substantially all of the Series F
Preferred Stock or the Common Stock, (ii) the consummation of a tender offer for
more than 20% of the outstanding shares of Common Stock (computed on a
fully-diluted and as converted basis) made by any Person other than the Company,
(iii) the consummation of a Qualified Public Offering by the Company of any
shares of capital stock thereof, (iv) a sale of all or substantially all of the
assets or business of the Company or (v) a merger of the Company with or into
another entity, or a recapitalization or reorganization of the Company, if in
any such case the shares of Series F Preferred Stock and/or Common Stock would
cease to be outstanding or if the holders of shares of Series F Preferred Stock
or Common Stock would receive in consideration for their shares of Series F
Preferred Stock or Common Stock, as the case may be, as a result of such
transaction, securities of any successor entity.
"UNAUDITED FINANCIAL STATEMENTS" shall have the meaning assigned to
that term in Section 5.12 hereof.
1.2 ACCOUNTING TERMS; FINANCIAL STATEMENTS. For purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to such terms in conformity with GAAP. Financial statements
and other information furnished to Purchasers pursuant to this Agreement shall
be prepared in accordance with GAAP as in effect at the time of such
preparation. No Accounting Changes (as defined below) shall affect any financial
covenants, standards or terms in this Agreement; PROVIDED that the Company shall
prepare footnotes to each
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compliance certificate and the financial statements required to be delivered
hereunder that show the differences between the financial statements delivered
(which reflect such Accounting Changes) and a separate calculation of financial
covenant compliance without reflecting such Accounting Changes). "ACCOUNTING
CHANGES" means: (a) changes in accounting principles required by GAAP and
implemented by the Company; (b) changes in accounting principles recommended by
the Company's certified public accountants and implemented by the Company; and
(c) changes in carrying value of the Company's or any of its Subsidiaries'
assets, liabilities or equity accounts resulting from adjustments that were
applicable to, but not included in, the Pro Forma Balance Sheet. All such
adjustments resulting from expenditures made subsequent to the First Closing
Date (including, without limitation, capitalization of costs and expenses or
payment of pre-closing date liabilities) shall be treated as expenses in the
period the expenditures are made.
1.3 KNOWLEDGE OF THE COMPANY. All references to the knowledge of the
Company or to facts known by the Company shall mean actual knowledge of, or
notice to, (i) the Chairman, Chief Executive Officer, President, Chief Financial
Officer, Vice President-Finance or any other executive officer of the Company or
any Subsidiary or any division of the Company or any Subsidiary and (ii) with
respect to representations and warranties made as of the date hereof and as of
the First Closing only, any director of the Company or any Subsidiary of the
Company.
ARTICLE 2
PURCHASE AND SALE OF THE PREFERRED STOCK
----------------------------------------
2.1 PURCHASE AND SALE OF THE SHARES.
(a) Subject to the terms and conditions herein set forth, the
Company agrees that it will issue and sell to the Purchasers, and each of the
Purchasers agrees that it will acquire from the Company, on the First Closing
Date, that number of shares of Series F Preferred Stock set forth opposite each
Purchaser's name on Schedule 1 hereto (the "Initial Shares") and the number of
Investor Warrants set forth opposite such Purchaser's name on Schedule 1. The
Initial Shares shall have the powers, rights and preferences set forth in the
Certificate of Amendment. The aggregate purchase price for the Initial Shares
and the Investor Warrants shall be $10,250,000, and the purchase price to be
paid by each Purchaser for the Initial Shares and Investor Warrants to be
purchased by it shall equal the product of (i) $5.00 and (ii) the number of
Initial Shares set forth opposite such Purchaser's name on Schedule 1.
(b) Subject to the terms and conditions herein set forth, the
Company agrees that it will issue and sell to the Purchasers, and each of the
Purchasers agrees that it will acquire from the Company, on one or more
Additional Closing Dates, that number of shares of Series F Preferred Stock that
bears the same proportion to the total number of shares of Series F Preferred
Stock being sold on such Additional Closing Date as the number of Initial Shares
purchased by such Purchaser bears to 2,050,000, at a purchase price of $5.00 per
share, it being understood that the aggregate
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number of shares of Series F Preferred Stock to be issued and sold on all
Additional Closing Dates shall not exceed 2,050,000 (the "Additional Shares").
The Additional Shares shall have the powers, rights and preferences set forth in
the Certificate of Amendment. No Purchaser shall be obligated to purchase, at
any Additional Closing, a number of Additional Shares which exceeds such
Purchaser's Remaining Share Commitment. The price of $5.00 per share set forth
herein with respect to the Additional Shares, as well as the maximum number of
Additional Shares to be sold hereunder, are subject to adjustment in the case of
any stock split, reverse stock split or the like with respect to the Series F
Preferred Stock.
(c) Subject to the terms and conditions herein set forth, the
Company agrees that it will issue and sell, in accordance with the provisions of
Section 2.3 hereof, on the Default Shares Closing Date, the Default Shares. The
Default Shares shall have the powers, rights and preferences set forth in the
Certificate of Amendment. The aggregate purchase price for the Default Shares
shall be equal to the purchase price per share for such Default Shares times the
number of Default Shares being purchased. The Initial Shares, the Additional
Shares and the Default Shares shall be collectively referred to herein as the
"Shares".
2.2 CLOSINGS.
(a) The issuance and purchase of the Initial Shares and the
Investor Warrants shall take place at the closing (the "First Closing") to be
held at the offices of Rubin Baum Levin Constant & Friedman, 30 Rockefeller
Plaza, New York, NY 10112, at 10:00 a.m., Eastern Daylight Savings Time, on or
before June 15, 1998, or at such other time and place as the Company and the
Purchasers may agree in writing (the "First Closing Date"). At the First
Closing, the Company shall deliver to the Purchasers the Initial Shares and the
Investor Warrants against delivery by the Purchasers to the Company of the
purchase price therefor, payable by wire transfer of immediately available funds
to an account or accounts of the Company designated in writing by the Company.
(b) The issuance and purchase of the Additional Shares shall take
place at one or more closings (each, an "Additional Closing") to be held at the
offices of Rubin Baum Levin Constant & Friedman, 30 Rockefeller Plaza, New York,
NY 10112, at 10:00 a.m. on an Additional Closing Date or at such other time and
place as the Company and the Purchasers may agree in writing (each, an
"Additional Closing Date"); provided, however, that in no event shall any
Additional Closing Date be later than the Termination Date. Each of the
following shall be an Additional Closing Date: (i) any date specified in a
written notice given by the Company to the Purchasers at least 20 Business Days
in advance specifying that the Company requires the proceeds from the sale of
Additional Shares for a purpose permitted by Section 8.8 hereof (which notice
shall include a reasonably detailed breakdown of the proposed use of such
proceeds), and (ii) any date specified in a Purchaser Closing Notice given under
Section 2.2(c). At each Additional Closing, the Company shall deliver to the
Purchasers the Additional Shares to be purchased at such Additional Closing
against delivery by the Purchasers to the Company of the purchase price
therefor, payable by wire transfer of immediately available funds to an account
or accounts of the Company designated in writing by the Company.
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(c) Upon receipt by the Purchasers of notice, pursuant to Section
8.1(m) hereof, of a proposed Triggering Event (a "Triggering Event Notice"),
then each such Purchaser severally shall have the right, but not the obligation,
upon written notice to the Company (each such notice, a "Purchaser Closing
Notice") given not later than 30 days following Purchaser's receipt of the
Triggering Event Notice, to require the Company to sell to such Purchaser up to
such number of Additional Shares as shall equal the sum of (x) such Purchaser's
Remaining Share Commitment plus (y) the number of Additional Shares, if any, as
such Purchaser may have the right to acquire pursuant to Section 2.3(e) hereof.
Any Purchaser who shall have delivered a Purchaser Closing Notice pursuant to
this Section 2.2(c) shall be under a binding obligation to purchase and pay for
all the Additional Shares covered by such Purchaser Closing Notice on an
Additional Closing Date specified in such Purchaser Closing Notice, subject only
to, and no later than contemporaneously with or immediately preceding, the
consummation of the transaction resulting in such Triggering Event.
(d) Notwithstanding anything to the contrary contained in this
Agreement, if on or before April 15, 2001 there shall not have occurred one or
more Additional Closings resulting in the purchase of the maximum number of
shares of Series F Preferred Stock to be purchased by the Purchasers pursuant to
this Agreement, then each Purchaser severally shall have the right, but not the
obligation, upon delivery of a Purchaser Closing Notice to the Company and the
other Purchasers not later than May 15, 2001, to require the Company to sell to
such Purchaser up to such number of Additional Shares as shall equal the sum of
(x) such Purchaser's Remaining Share Commitment plus (y) the number of
Additional Shares, if any, as such Purchaser may have the right to acquire
pursuant to Section 2.3(e) hereof. Any Purchaser who shall have delivered a
Purchaser Closing Notice pursuant to this Section 2.2(d) shall be under a
binding obligation to purchase and pay for all the Additional Shares covered by
such Purchaser Closing Notice on an Additional Closing Date specified in such
Purchaser Closing Notice, which shall be no later than June 15, 2001. The
provisions of this Section 2.2(d) shall not apply if the Termination Date shall
have occurred on or prior to April 15, 2001.
(e) The issuance and purchase of the Default Shares shall take
place as set forth in Section 2.3(c) hereof.
2.3 DEFAULT SHARES.
(a) If any Purchaser (a "Defaulting Purchaser") fails or refuses to
purchase and pay for the number of Additional Shares agreed to be purchased by
such Purchaser at any Additional Closing, the Company shall immediately give
notice thereof to the Purchasers other than the Defaulting Purchaser (the
"Non-Defaulting Purchasers").
(b) Waller-Sutton shall have the option, which must be exercised by
written notification to the Company and the other Non-Defaulting Purchasers
within ten (10) Business Days of receipt of the notice set forth in Section
2.3(a) hereof (the "Option Period"), to purchase all or any portion of the
Additional Shares which the Defaulting Purchaser failed or refused to purchase
(the "Default Shares"). If Waller-Sutton fails to notify the Company and the
other Non-Defaulting
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Purchasers of its intent to exercise such option, or if such option is exercised
by Waller-Sutton for fewer than all of the Default Shares, then the Company
shall so notify all of the other Non-Defaulting Purchasers no later than two (2)
Business Days after the expiration of the Option Period, and the remaining
Non-Defaulting Purchasers shall have the option, which must be exercised by
written notification to the Company and all other Non-Defaulting Purchasers
within five (5) Business Days after the date of the aforesaid notice from the
Company, to purchase the remaining Default Shares in the same proportions as
their purchases of the Initial Shares, or in such proportions as such
Non-Defaulting Purchasers may otherwise agree, all upon the price, terms and
conditions set forth herein.
(c) If the Non-Defaulting Purchasers (or any of them) elect to
exercise their option to purchase some or all of the Default Shares, the
issuance and purchase of such Default Shares shall take place at a closing (the
"Default Shares Closing") to be held at the principal executive offices of the
Company at 10:00 a.m., local time, within twenty (20) Business Days following
the expiration of the Option Period (the "Default Shares Closing Date"). At each
Default Shares Closing, the Company shall deliver to the Non-Defaulting
Purchasers the Default Shares to be purchased at such Default Shares Closing
against delivery by the Non-Defaulting Purchasers to the Company of the purchase
price therefor, payable by wire transfer of immediately available funds to an
account or accounts of the Company designated in writing by the Company.
(d) In addition to and not in limitation of the right of the
Non-Defaulting Purchasers to purchase Default Shares pursuant to this Section
2.3, each Non-Defaulting Purchaser shall have the option, which must be
exercised by written notification to the Company, the Defaulting Purchaser and
the other Non-Defaulting Purchasers not later than 90 days after expiration of
the Option Period, to purchase from the Defaulting Purchaser a portion of the
Shares, Investor Warrants and Investor Warrant Shares then owned or held by the
Defaulting Purchaser (or, in the case of Investor Warrants and Investor Warrant
Shares, by any transferee of the Defaulting Purchaser), such portion to be equal
to a fraction, the numerator of which is the Purchaser Share Commitment of the
applicable Non-Defaulting Purchaser and the denominator of which is the
aggregate Purchaser Share Commitment of all Non-Defaulting Purchasers, or in
such other proportions as the Non-Defaulting Purchasers so electing may
otherwise agree, at a price equal to $2.50 times the number of shares being
purchased by the Non-Defaulting Purchaser. If the Non- Defaulting Purchasers (or
any of them) elect to exercise their option to purchase the Shares, Investor
Warrants and Investor Warrant Shares of a Defaulting Purchaser or transferee
pursuant to this Section 2.3(d), the sale and purchase of such Shares, Investor
Warrants and Investor Warrant Shares shall take place at a closing to be held at
the principal executive offices of the Company at 10:00 a.m., local time, on the
tenth (10th) Business Day following expiration of the 90-day period referred to
above in this Section 2.3(d). At each such closing, the Defaulting Purchaser
shall deliver or cause to be delivered to the Non- Defaulting Purchasers who
shall have exercised the purchase option provided for herein, the Shares,
Investor Warrants and Investor Warrant Shares to be purchased by such
Non-Defaulting Purchasers against delivery by such Non-Defaulting Purchasers of
the purchase price therefor, payable by wire transfer of immediately available
funds to an account or accounts designated in writing by the Defaulting
Purchaser.
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(e) Notwithstanding anything to the contrary contained in this
Agreement, following any default by a Defaulting Purchaser hereunder, such
Defaulting Purchaser shall not be relieved of its obligation to purchase
Additional Shares up to its full Purchaser Share Commitment; provided, however,
that such Defaulting Purchaser shall have no right following such a default to
require the Company to sell any Additional Shares to such Defaulting Purchaser.
In the event an Additional Closing pursuant to this Article 2 shall be scheduled
to take place following a default by a Defaulting Purchaser, the Company shall
so notify the Non-Defaulting Purchasers, which notice shall specify the number
of Shares that the Defaulting Purchaser is obligated to purchase at such
Additional Closing. Upon receipt of any such notice, Waller- Sutton shall have
the option (which must be exercised by written notification to the Company and
the other Non-Defaulting Purchasers within ten (10) Business Days of receipt of
the notice referred to in this Section 2.3(e) hereof (the "Additional Option
Period"), to purchase all or any portion of the Additional Shares to be
purchased by the Defaulting Purchaser (the "Additional Default Shares"). If
Waller-Sutton fails to notify the Company and the other Non-Defaulting
Purchasers of its intent to exercise such option, or if such option is exercised
by Waller-Sutton for fewer than all of the Additional Default Shares, then the
Company shall so notify all of the other Non-Defaulting Purchasers no later than
three (3) Business Days after the date of the aforesaid notice from the Company,
and the remaining Non-Defaulting Purchasers shall have the option, which must be
exercised by written notification to the Company and all other Non-Defaulting
Purchasers within five (5) Business Days after the date of the aforesaid notice
from the Company, to purchase the remaining Additional Default Shares in the
same proportions as their purchases of the Initial Shares, or in such
proportions as such Non-Defaulting Purchasers may otherwise agree, all upon the
price, terms and conditions set forth herein.
2.4 FINANCIAL ACCOUNTING POSITIONS; TAX REPORTING. Each of the parties
hereto agrees to take reporting and other positions with respect to the Shares
which are consistent with the purchase price of the Shares set forth herein for
all financial accounting purposes, unless otherwise required by applicable GAAP
or Commission rules (in which case the parties agree only to take positions
inconsistent with the purchase price of the Shares set forth herein provided
that the Purchasers have consented thereto, which consent shall not be
unreasonably withheld). Each of the parties to this Agreement agrees to take
reporting and other positions with respect to the Shares which are consistent
with the purchase price of the Shares set forth herein for all other purposes,
including without limitation, for all Federal, state and local tax purposes.
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2.5 FEES AND EXPENSES.
(a) The Company shall pay (i) a transaction structuring fee of
$475,000 to Waller- Sutton Management Group, Inc., of which $325,000 shall be
paid at the First Closing and $150,000 shall be paid prior to December 31, 1998,
and (ii) at each of the Closings, to the extent not previously paid, an amount
equal to the out-of-pocket expenses (including, without limitation, attorneys'
fees, charges and disbursements, consultants' fees and expenses and due
diligence expenses) of the Purchasers incurred at any time from and after
February 13, 1998 in connection with (A) the negotiation, execution, delivery
and filing of the Transaction Documents and any amendments or modifications
thereto and (B) the transactions contemplated by the Transaction Documents,
provided, however, that the Company shall only be responsible to pay the
attorneys' fees and expenses of one firm of counsel representing all of the
Purchasers, which firm shall be selected by Waller-Sutton.
(b) The Company shall pay Waller-Sutton Management Group, Inc. a
monitoring fee at the rate of $75,000 per annum, payable quarterly in advance,
as follows: (i) on the First Closing for the period from the First Closing Date
to and including June 30, 1998 and (ii) on July 1, 1998 and on the first day of
each calendar quarter thereafter.
2.6 TAG-ALONG RIGHT. In the event that any Purchaser beneficially
owning more than two percent (2%) of the issued and outstanding Common Stock of
the Company, computed on a fully diluted and as converted basis (each a "Selling
Stockholder"), desires to transfer, sell, convey, exchange or otherwise dispose
of ("Transfer") a number of shares of the Series F Preferred Stock, or shares of
Common Stock issued on conversion thereof (collectively, the "Subject Shares"),
which, together with any Transfers of Subject Shares made in transactions other
than Exempt Transactions (as defined below)within the immediately preceding 12
months, total at least ten percent (10%) of the number of Initial Shares
purchased by such Purchaser hereunder pursuant to a bona fide offer from a third
party (the "Buyer") in a transaction not constituting an Exempt Transaction,
then the Selling Stockholder shall notify all holders of the Series F Preferred
Stock who beneficially own at least two percent (2%) of the issued and
outstanding Common Stock of the Company, computed on a fully diluted and as
converted basis ("Tag- Along Stockholders"), in writing, of such offer and its
terms and conditions (the "Transfer Notice"). The Transfer Notice shall also set
forth whether the Buyer is only purchasing Series F Preferred Stock or if the
Buyer is willing to purchase both Series F Preferred Stock and Common Stock.
Upon receipt of such Transfer Notice, each Tag-Along Stockholder shall have the
right to elect to sell to the Buyer, on the same terms and conditions as the
Selling Stockholder, shares of Series F Preferred Stock or, in the event the
Buyer will purchase shares of Common Stock, both shares of Preferred Stock and
shares of Common Stock. In the event Buyer will purchase Common Stock, a
Tag-Along Stockholder shall be entitled to convert any other classes of the
Company's preferred stock into and exercise any warrants or options held by such
Tag-Along Stockholder for shares of Common Stock prior to any sale of Common
Stock to the Buyer. The number of shares of Preferred Stock and Common Stock
that each Tag-Along Stockholder shall be entitled to sell shall each be equal to
the product attained by multiplying (a) the number of shares of Series F
Preferred Stock or Common Stock (computed on an as converted basis) held by the
Tag- Along Stockholder times (b) the quotient derived by dividing (i) the number
of shares of Series F
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Preferred Stock or Common Stock which otherwise would have been sold by the
Selling Stockholder to the Buyer by (ii) the total number of shares of Series F
Preferred Stock or Common Stock (computed on an as converted basis) held by such
Selling Stockholder and the number of shares of Series F Preferred Stock or
Common Stock (computed on an as converted basis) held by the Tag-Along
Stockholders who have elected to participate in such Transfer, with the intent
that the Selling Stockholder and each Tag-Along Stockholder shall participate
pro rata in the sale of shares of Series F Preferred Stock and/or Common Stock
to the Buyer. If more than one Tag-Along Stockholder elects to sell shares of
Series F Preferred Stock or Common Stock pursuant to this Section 2.6, they may
do so pro rata, based on the number of shares of Series F Preferred Stock or
Common Stock (computed on an as converted basis) held by each of them or in such
other proportions as they may agree. The Tag-Along Stockholders' right to sell
pursuant to this Section 2.6 shall be exercised by delivery of written notice to
the Selling Stockholder within 10 Business Days following delivery of the
Transfer Notice. Any Tag-Along Stockholder who fails to notify the Selling
Stockholder within such 10 Business Days shall be deemed to have waived its
rights under this Section 2.6. As used herein, the term "Exempt Transaction"
shall mean any Transfer by a Purchaser (1) pursuant to Sections 9, 10 or 11 of
the Stockholders' Agreement, (2) pursuant to or in connection with a
registration statement filed under the Registration Rights Agreement, (3) made
under Rule 144 of the Securities Act, or (4) to (i) a direct or indirect partner
of such Purchaser if it is a partnership, (ii) a direct or indirect member of
such Purchaser if it is a limited liability company, or (iii) an Affiliate. The
Purchasers agree that the tag-along rights provided by this Section 2.6 shall be
not be applicable to any Transfer as to which the terms of Sections 9, 10 or 11
of the Stockholders' Agreement apply.
ARTICLE 3
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS
----------------------------------------------
TO PURCHASE THE SHARES
----------------------
The obligation of the Purchasers to purchase the Initial Shares, the
Investor Warrants, the Additional Shares or the Default Shares, as the case may
be, to pay the purchase prices therefor at the applicable Closing and to perform
any other obligations hereunder shall be subject to the satisfaction (unless
waived by the Purchasers or, in the case of any Closing occurring after the
First Closing, by the Majority Purchasers) of the following conditions on or
before the applicable Closing Date (it being understood and agreed that, with
respect to the First Closing, all of the conditions set forth in this Article 3
must be satisfied as of such Closing, and that with respect to each subsequent
Closing, only the conditions set forth in Sections 3.1, 3.2, 3.4, 3.5, 3.6, 3.7,
3.8, 3.9, 3.13, 3.14, 3.15, 3.17, 3.18 and 3.21 must be satisfied as of such
Additional Closing Date). In connection with the Additional Closings, the
Company shall be permitted to update the Schedules referred to in Sections 5.15
(except in respect of clause (ix) thereof), 5.18, 5.19, 5.24, 5.27, 5.28 and
5.29 in order to reflect any changes that may result from any acquisitions of
radio stations by the Company pursuant to Future Acquisition Agreements, or as
otherwise consented to by Waller-Sutton. No Purchaser shall be obligated to
purchase any of the Shares to be purchased by it at the First Closing hereunder
unless the purchase and sale of each of the other Shares required to be
purchased at the First Closing
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hereunder occurs simultaneously therewith. However, with respect to each
Additional Closing, the obligations of each Purchaser to purchase the Additional
Shares to be purchased by it shall be separate and independent.
3.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Article 5 hereof shall be true and correct in all
material respects at and as of the date hereof and the applicable Closing Date
as if made at and as of such date, and the Purchasers shall have received a
certificate, dated as of the applicable Closing Date, signed by the Chairman of
the Board, the President of the Company or the Company's Chief Financial
Officer, certifying compliance with this condition.
3.2 COMPLIANCE WITH THIS AGREEMENT. The Company shall have performed
and complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or
before the applicable Closing Date, and the Purchasers shall have received a
certificate, dated as of the applicable Closing Date, signed by the Chairman of
the Board, the President, the Vice President-Finance or the Chief Financial
Officer of the Company, certifying compliance with this condition.
3.3 COMPLIANCE WITH THE ACQUISITION DOCUMENTS; CLOSING THEREUNDER; NO
DEFAULTS. Each of the parties to the Acquisition Documents shall have performed
and complied with in all material respects all of the agreements and conditions
contemplated under the applicable Acquisition Document to which it is a party
and the agreements, instruments and other documents delivered thereunder or
contemplated thereby, and there shall be no material default by any such party
thereunder. The Acquisition Documents shall not have been amended in any respect
or any condition to closing thereunder waived by any party, in any case without
the prior written consent of Waller-Sutton, and the transactions contemplated by
each of the Acquisition Documents shall have been consummated in accordance with
its respective terms. The Purchasers shall have received such certificates or
other evidence as they may reasonably request to establish compliance with this
condition.
3.4 SECRETARY'S CERTIFICATE. The Purchasers shall have received a
certificate from the Company, dated the date of the applicable Closing Date, and
signed by the Secretary or an Assistant Secretary of the Company, certifying (a)
that the attached copies of the Certificate of Incorporation and By-laws are
true, complete and correct and remain unamended and in full force and effect,
(b) that the attached copies of the resolutions of the Board of Directors of the
Company approving the Transaction Documents to which it is a party and the
transactions contemplated hereby and thereby, are true, complete and correct and
remain unamended and in full force and effect, and (c) as to the incumbency and
specimen signature of each officer or member of the Company executing any
Transaction Document to which it is a party or any other document delivered in
connection herewith on behalf of the Company.
3.5 DOCUMENTS. The Purchasers shall have received true, complete and
correct copies of such agreements, schedules, exhibits, certificates, documents,
financial information, projections
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and filings as they may reasonably request in connection with or relating to the
transactions contemplated hereby and by the Acquisition Documents and any Future
Acquisition Agreement, all in form and substance satisfactory to the Purchasers.
3.6 PURCHASE OF SHARES PERMITTED BY APPLICABLE LAWS. The acquisition of
and payment for the Shares to be acquired by the Purchasers hereunder and the
consummation of the transactions contemplated hereby and by the other
Transaction Documents (a) shall not be prohibited by any Requirement of Law, (b)
shall not subject the Purchasers to any penalty or other onerous condition under
or pursuant to any Requirement of Law, and (c) shall be permitted under all
Requirements of Law to which the Purchasers or the transactions contemplated by
or referred to herein or in the other Transaction Documents are subject; and the
Purchasers shall have received such certificates or other evidence as they may
reasonably request to establish compliance with this condition.
3.7 OPINION OF COUNSEL. The Purchasers shall have received an opinion
of outside counsel to the Company (which shall include special FCC counsel to
the Company), dated the applicable Closing Date, relating to the transactions
contemplated by or referred to herein, in form and substance reasonably
acceptable to the Purchasers.
3.8 APPROVAL OF COUNSEL TO THE PURCHASERS. All actions and proceedings
hereunder and all agreements, schedules, exhibits, certificates, financial
information, filings and other documents required to be delivered by the Company
or any Subsidiary hereunder or in connection with the consummation of the
transactions contemplated hereby, and all other related matters, shall have been
in form and substance acceptable to Rubin Baum Levin Constant & Friedman,
counsel to the Purchasers, in its reasonable judgment (including, without
limitation, the opinions of counsel referred to in Section 3.7 hereof).
3.9 CONSENTS AND APPROVALS. All consents, exemptions, authorizations,
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons in respect of all Requirements of Law and with respect to
those Contractual Obligations of the Company or any Subsidiary necessary,
desirable, or required in connection with the execution, delivery or performance
(including, without limitation, the issuance of Common Stock upon conversion of
the Shares) by the Company or any Subsidiary, or enforcement against the Company
or any Subsidiary, of the Transaction Documents to which it is a party shall
have been obtained and shall be in full force and effect as of the applicable
Closing Date.
3.10 REGISTRATION RIGHTS AGREEMENT. The Company and all of the parties
thereto other than the Purchasers shall have duly executed and delivered the
Registration Rights Agreement.
3.11 STOCKHOLDERS' AGREEMENT. The Stockholders' Agreement shall have
been duly executed and delivered by all of the parties thereto other than the
Purchasers.
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3.12 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company shall have
amended its Certificate of Incorporation and By-laws, in form and substance
satisfactory to the Purchasers, and the Certificate of Amendment shall have been
duly filed with the Secretary of State of the State of Delaware.
3.13 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the
applicable Closing Date any judgment or order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Requirement of Law which, in the judgment of the Purchasers,
would prohibit the purchase of the Shares hereunder or subject the Purchasers to
any penalty or other onerous condition under or pursuant to any Requirement of
Law if the Shares were to be purchased hereunder.
3.14 GOOD STANDING CERTIFICATE. The Company shall have delivered to the
Purchasers as of the Closing Date, a good standing certificate or the equivalent
thereof for the Company and each of its Subsidiaries for each of their
respective jurisdictions of incorporation or organization, as the case may be,
and all other jurisdictions where they are required to be qualified to do
business.
3.15 PRO FORMA BALANCE SHEET. The Company shall have delivered to the
Purchasers as of the end of the month preceding each subsequent Additional
Closing Date a pro forma consolidated balance sheet of the Company and its
Subsidiaries, certified by the chief executive officer of the Company that such
pro forma balance sheet fairly presents the pro forma adjustments reflecting the
consummation of the transactions contemplated by this Agreement , the
Transaction Documents and the relevant Future Acquisition Agreements to be
consummated as of each such Closing Date, including, without limitation, all
material fees and expenses in connection therewith.
3.16 STOCK OPTION PLAN. As of the First Closing Date, the Company shall
have adopted, and the requisite number of stockholders shall have approved, the
Stock Option Plan. The Purchasers shall have received such certificates or other
evidence as they may reasonably request to establish compliance with this
condition.
3.17 D & O INSURANCE. The Company shall have in place as of the
applicable Closing Date an insurance policy providing directors' and officers'
liability insurance coverage for each of the members of the Board of Directors
of the Company in an aggregate amount of not less than $5 million. The
Purchasers shall have received such certificates or other evidence as they may
reasonably request to establish compliance with this condition.
3.18 FUTURE ACQUISITION AGREEMENTS. Subject to the provisions of
Section 2.2(c), as of each Additional Closing Date, the Company and/or its
Subsidiaries shall have entered into written agreements for the acquisition of
one or more radio stations or other assets or properties satisfactory to
Waller-Sutton, and the Company shall have delivered to the Purchasers, in a form
reasonably satisfactory to Waller- Sutton, evidence that the transactions
contemplated thereby shall have been (or on such Additional Closing Date are
being) consummated.
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3.19 SALE OF SERIES A, SERIES B AND SERIES D PREFERRED STOCK. The
closing of the sale of the Series A Preferred Stock, Series B Preferred Stock
and Series D Preferred Stock shall have been consummated in accordance with the
terms of the Series A Purchase Agreement, the Series B Purchase Agreement and
the Series D Purchase Agreement, respectively, without amendment or waiver of
any terms thereof without the prior written approval of Waller-Sutton.
3.20 KEY-MAN INSURANCE. As of the earlier of (i) two (2) months after
the First Closing Date or (ii) the Additional Closing Date next succeeding the
First Closing, the Company shall have in place a keyman term life insurance
policy that is renewable on an annual basis with a reputable and financially
sound insurer on each of the lives of Terry S. Jacobs and William L. Stakelin in
the face amount of not less than $1,000,000. The Purchasers shall have received
such certificates or other evidence as they may reasonably request to establish
compliance with this condition.
3.21 FAIRCOM CONVERTIBLE NOTE PURCHASE AGREEMENT. The closing of the
sale of the Faircom Convertible Notes shall have been consummated in accordance
with the terms of the Faircom Convertible Note Purchase Agreement, without
amendment or waiver of any of the terms thereof without the prior written
approval of Waller-Sutton, and the Company shall have issued to Waller-Sutton
400,640 shares of Series C Preferred Stock in respect of the shares of common
stock of Faircom issuable to Waller-Sutton upon conversion of the Faircom
Convertible Notes purchased by Waller-Sutton thereunder.
3.22 EXECUTIVE EMPLOYMENT AGREEMENTS. The Company and each of Terry S.
Jacobs and William L. Stakelin, respectively, shall have executed and delivered
the Executive Employment Agreement to which he is a party.
3.23 COMPLIANCE WITH STATE SECURITIES LAWS. The Company shall have
obtained (having used its reasonable best efforts to obtain) all permits and
qualifications required by any state for the offer and sale of the Shares or
shall have the availability of exemptions therefrom.
3.24 CONVERSION OF FAIRCOM CONVERTIBLE NOTES. All of the Faircom
Convertible Notes shall have been converted into common stock of Faircom Inc.
3.25 SBA COMPLIANCE. The Company shall have provided to River Cities
information necessary for the preparation of a Portfolio Financing Report on SBA
Form 1031, if River Cities is a Purchaser hereunder.
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ARTICLE 4
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
TO ISSUE AND SELL THE SHARES
----------------------------
The obligations of the Company to issue and sell the Initial Shares,
the Investor Warrants, the Additional Shares or the Default Shares, as the case
may be, and perform its other obligations hereunder relating thereto shall be
subject to the satisfaction as determined by, or waived by, the Company of the
following conditions on or before the applicable Closing Date:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchasers contained in Article 6 hereof shall be true and correct in all
material respects at and as of the date hereof and the applicable Closing Date,
as if made at and as of such date, and the Company shall have received a
certificate, dated as of the applicable Closing Date, signed by each Purchaser
certifying that such representations and warranties made by such Purchaser are
true and correct at and as of the date hereof and at and as of such Closing
Date, as if made at and as of such date.
4.2 COMPLIANCE WITH THIS AGREEMENT. Each of the Purchasers shall have
performed and complied with all of the respective agreements and conditions set
forth or contemplated herein that are required to be performed or complied with
by such Purchaser on or before the applicable Closing Date, and the Company
shall have received a certificate, dated as of the applicable Closing Date,
signed by each Purchaser certifying that such Purchaser has so performed and so
complied with such agreements and conditions.
4.3 STOCKHOLDERS' AGREEMENT. The Stockholders' Agreement shall have
been duly executed and delivered by the Purchasers.
4.4 CONVERSION OF FAIRCOM CONVERTIBLE NOTES. All of the Faircom
Convertible Notes purchased by Waller-Sutton pursuant to the Faircom Convertible
Note Purchase Agreement shall have been converted into common stock of Faircom
Inc.
4.5 COMPLIANCE WITH STATE SECURITIES LAWS. The Company shall have
obtained (having used its reasonable best efforts to obtain) all permits and
qualifications required by any state for the offer and sale of the Shares or
shall have the availability of exemptions therefrom.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company hereby represents and warrants to the Purchasers, which
representations and warranties shall be deemed to be repeated as of the First
Closing Date (after giving effect to the transactions contemplated by this
Agreement and the Acquisition Documents) and as of each Additional Closing Date
(after giving effect to the transactions contemplated by this Agreement and any
Future Acquisition Agreement), as follows:
5.1 EXISTENCE AND POWER. The Company and each of its Subsidiaries: (a)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, as the case may
be; (b) has all requisite power and authority to own and operate its property,
to lease the property it operates as lessee and to conduct the business in which
it is currently, or is currently proposed to be, engaged; (c) is duly qualified,
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to do so
would not have a material adverse effect on the Condition of the Company; and
(d) has the power and authority to execute, deliver and perform its obligations
under each Transaction Document to which it is or will be a party.
5.2 AUTHORIZATION: NO CONTRAVENTION. The execution, delivery and
performance by the Company of each Transaction Document to which it is a party
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Shares and Investor Warrants:
(a) have been duly authorized by all necessary corporate action; (b) do not
contravene the terms of the Certificate of Incorporation, Bylaws, or any
amendment thereto; and (c) upon receipt of the Required Consents, will not
violate, conflict with or result in any breach or contravention of or the
creation of any Lien under, any Contractual Obligation of the Company or any
Subsidiary (except as set forth on Schedule 5.2) or any Requirement of Law
applicable to the Company or any Subsidiary.
5.3 GOVERNMENTAL AUTHORIZATION: THIRD PARTY CONSENTS. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, the Company of the Transaction Documents
to which it is a party or the consummation of the transactions contemplated
hereby or thereby other than those which have been obtained and are in full
force and effect as of the date hereof and other than routine filings to be made
with the FCC or under state or Federal securities laws which are not required to
be made until following the First Closing Date (and which shall be made on or
prior to the due date therefor). Without limiting the generality of the
foregoing, all licenses, permits, approvals and consents required to be obtained
from the FCC for the operation of
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the radio stations owned or operated by the Company or any of its Subsidiaries
have been obtained and are in full force and effect.
5.4 BINDING EFFECT. Each of the Transaction Documents to which it is a
party has been duly executed and delivered by the Company, and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
relating to enforceability.
5.5 NO LEGAL BAR. Neither the execution, delivery and performance of
the Transaction Documents nor the issuance of or performance of the terms of the
Shares will violate any Requirement of Law or any Contractual Obligation of the
Company or any Subsidiary. Neither the Company nor any Subsidiary has previously
entered into any agreement which will remain in effect following the First
Closing, granting any rights to any Person which are inconsistent with the
rights to be granted by the Company in the Transaction Documents.
5.6 LITIGATION. Except as set forth on Schedule 5.6, there are no legal
actions, suits, proceedings, claims or disputes pending or, to the Company's
knowledge, threatened, at law, in equity, in arbitration or before any
Governmental Authority against or affecting the Company or any Subsidiary. No
injunction, writ, temporary restraining order, decree or any order of any nature
has been issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of the Transaction
Documents.
5.7 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.7, the
Company and its Subsidiaries are in compliance with all Requirements of Law
applicable to them. Without limiting the generality of the foregoing, there have
been duly and timely made all filings which are required to be made with respect
to the radio stations owned or operated by the Company or any of its
Subsidiaries under the Communications Act, and the Company and each of its
Subsidiaries are in all respects in compliance with such Act.
5.8 NO DEFAULT OR BREACH. Except as set forth on Schedule 5.8, neither
the Company nor any Subsidiary is in, and the incurrence of the obligations of
the Company contemplated by the Transaction Documents do not constitute, nor
with the giving of notice or lapse of time or both would constitute, a default
under or with respect to any Contractual Obligation of the Company or any
Subsidiary in any respect.
5.9 TITLE TO PROPERTIES. Except as set forth on Schedule 5.9, the
Company and/or each of its Subsidiaries has good record and marketable title in
fee simple to, or holds interests as lessee or licensee under leases or licenses
in full force and effect in, all real property reflected on the Financial
Statements or used in connection with its business.
5.10 USE OF REAL PROPERTY. Except as set forth on Schedule 5.10, the
owned and leased real properties reflected on the Financial Statements or used
in connection with the business of the
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Company and its Subsidiaries, are used and operated in compliance and conformity
with all applicable leases, contracts, commitments, licenses and permits, to the
extent that the failure so to conform would, individually or in the aggregate,
adversely affect the Condition of the Company; neither the Company nor any
Subsidiary has received notice of violation of any applicable zoning or building
regulation, ordinance or other law, order, regulation or requirement relating to
the operations of the Company or any Subsidiary; and there is no such violation.
Except as set forth on Schedule 5.10, all buildings that are owned or covered by
leases reflected on the Financial Statements or used in connection with the
business of the Company or any Subsidiary, substantially conform with all
applicable ordinances, codes, regulations and requirements, and no law or
regulation presently in effect or condition precludes or materially restricts
continuation of the present use of such properties. Except as set forth on
Schedule 5.10, each of the leases for real properties reflected on the Financial
Statements or used in connection with the business of the Company or any
Subsidiary is in full force and effect and the Company and its Subsidiaries
enjoy peaceful and undisturbed possession thereunder. There is no default on the
part of the Company or any Subsidiary or event or condition which with notice or
lapse of time, or both, would constitute a default on the part of the Company or
any Subsidiary under any of such leases.
5.11 TAXES. Except as set forth on Schedule 5.11, the Company and its
Subsidiaries have filed or caused to be filed, or have properly filed extensions
for, all tax returns which are required to be filed and have paid or caused to
be paid all taxes required to be paid by them and all assessments received by
them to the extent that such taxes have become due, except taxes the validity or
amount of which is being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been set aside. The Company and
each of its Subsidiaries have paid or caused to be paid, or have established
reserves that the Company reasonably believes to be adequate in all material
respects for, all tax liabilities applicable to the Company and its Subsidiaries
for all fiscal years which have not been examined and reported on by the taxing
authorities (or closed by applicable statutes).
5.12 FINANCIAL CONDITION.
(a) The Company has delivered to the Purchasers true and complete
copies of (i) the consolidated audited balance sheet of the Company and its
Subsidiaries, and the related statements of income, stockholders' equity and
cash flow, for the fiscal year ended December 31, 1997 (the "Audited Financial
Statements") and (ii) the consolidated unaudited balance sheet of the Company
and its Subsidiaries, and the related statements of income, stockholders' equity
and cash flow, for the fiscal quarter ended March 31, 1998 (the "Unaudited
Financial Statements"). The Financial Statements fairly present, in all material
respects, the financial position of the Company and its Subsidiaries as of the
dates thereof, and the results of operations and cash flows of the Company and
its Subsidiaries as of the dates or for the periods set forth therein, all in
conformity with GAAP consistently applied during the period involved, except as
otherwise set forth in the notes thereto and subject, in the case of the
Unaudited Financial Statements, to the absence of footnotes and normal year-end
audit adjustments.
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(b) The Company has not received any letters from any of its
certified public accountants to the management of the Company other than the
auditor's opinion letter that will accompany the above-referenced Audited
Financial Statements.
(c) Each Pro Forma Balance Sheet to be delivered to the Purchasers
pursuant to this Agreement shall set forth the assets and liabilities of the
Company and its Subsidiaries on a pro forma consolidated basis after taking into
account the consummation of the transactions contemplated in this Agreement and
the Acquisition Agreements (and, in the case of any Additional Closing, any
Future Acquisition Agreement). Each such Pro Forma Balance Sheet shall have been
prepared by the Company in accordance with GAAP and shall fairly present in all
material respects the assets and liabilities of the Companies and its
Subsidiaries on a consolidated basis, reflecting the consummation of the
transactions contemplated by this Agreement and the Acquisition Agreements (and,
in case of any Additional Closing, any Future Acquisition Agreement) and based
on the assumptions set forth therein.
(d) The projections of the Company and its Subsidiaries on a
consolidated basis heretofore delivered to the Purchasers by Waller-Sutton
Management Group, Inc. at the request of the Company and referred to in a
Co-Investment Opportunity Memorandum dated March 13, 1998 are based on
assumptions which were reasonable when made and such assumptions and projections
are reasonable on the date hereof and neither the Company nor any of its
Subsidiaries, as of the date of this Agreement, has delivered to any Person or
has in its possession any later dated projections.
5.13 ERISA. The execution and delivery of this Agreement and the other
Transaction Documents, the purchase and sale of the Shares hereunder and the
consummation of the transactions contemplated hereby and thereby will not result
in any prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code.
5.14 DISCLOSURE.
(a) Agreement and Other Documents. This Agreement, together with
all exhibits and schedules hereto, and the agreements, certificates and other
documents furnished to the Purchasers by the Company and its Subsidiaries in
connection with the transactions contemplated by this Agreement, the Commission
Documents, the Acquisition Documents and any Future Acquisition Agreement do not
or will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Material Adverse Effects. Except for matters relating to the
broadcast industry generally, there is no fact known to the Company, which the
Company has not disclosed to the Purchasers in writing which materially
adversely affects or, insofar as the Company can reasonably foresee, could
materially adversely affect, the Condition of the Company or the ability of the
Company or any Subsidiary to perform its or their obligations under the
Transaction Documents, or any agreement or other document contemplated thereby
to which any of them is a party.
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5.15 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1, 1998,
except as set forth on Schedule 5.15 or as provided pursuant to the terms of the
Acquisition Documents, neither the Company nor any Subsidiary has (i) issued any
stock, bonds or other corporate securities except for the securities being
issued pursuant to the terms of the Transaction Documents, (ii) borrowed any
amount or incurred any liabilities (absolute or contingent), other than in the
ordinary course of business, in excess of $25,000, (iii) discharged or satisfied
any lien or incurred or paid any obligation or liability (absolute or
contingent), other than in the ordinary course of business, in excess of
$25,000, (iv) declared or made any payment or distribution to stockholders or
purchased or redeemed any shares of its capital stock or other securities, (v)
mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, (vi) sold, assigned or transferred any of its tangible assets other
than the sale of excess or obsolete inventory or equipment in the ordinary
course of business, or canceled any debts or claims, (vii) sold, assigned or
transferred any patents, trademarks, trade names, copyrights, trade secrets or
other intangible assets, (viii) suffered any losses of property, or waived any
rights of substantial value, (ix) suffered any material adverse change in the
Condition of the Company, (x) expended any material amount, granted any bonuses
or extraordinary salary increases, (xi) entered into any transaction involving
consideration in excess of $50,000 except as otherwise contemplated hereby or by
the Transaction Documents or (xii) entered into any agreement or transaction, or
amended or terminated any agreement, with an Affiliate. To the knowledge of the
Company after reasonable investigation, no material adverse change in the
Condition of the Company is threatened or reasonably likely to occur.
5.16 ENVIRONMENTAL MATTERS. Except as described on Schedule 5.16:
(a) The property, assets and operations of the Company and each
Subsidiary are and have been in compliance with all applicable Environmental
Laws; there are no Hazardous Materials stored or otherwise located in, on or
under any of the property or assets of the Company or any Subsidiary, including,
without limitation, the groundwater except in compliance with applicable
Environmental Laws; and there have been no releases or threatened releases of
Hazardous Materials in, on or under any property adjoining any of the property
or assets of the Company or any Subsidiary which have not been remediated to the
satisfaction of the appropriate Governmental Authorities.
(b) None of the property, assets or operations of the Company or
any Subsidiary is the subject of any Federal, state or local investigation
evaluating whether (i) any remedial action is needed to respond to a release or
threatened release of any Hazardous Materials into the environment or (ii) any
release or threatened release of any Hazardous Materials into the environment is
in contravention of any Environmental Law.
(c) Neither the Company nor any Subsidiary has received any notice
or claim, nor are there pending, threatened or reasonably anticipated, lawsuits
or proceedings against any of them, with respect to violations of an
Environmental Law or in connection with the presence of or exposure to any
Hazardous Materials in the environment or any release or threatened release of
any Hazardous Materials into the environment, and neither the Company nor any
Subsidiary is or was the owner or operator of any property which (i) pursuant to
any Environmental Law has been placed on any list
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of Hazardous Materials disposal sites, including, without limitation, the
"National Priorities List" or "CERCLIS List," (ii) has, or had, any subsurface
storage tanks located thereon, or (iii) has ever been used as or for a waste
disposal facility, a mine, a gasoline service station or, other than for
petroleum substances stored in the ordinary course of business, a petroleum
products storage facility.
(d) Neither the Company nor any Subsidiary has any present or
contingent liability in connection with the presence either on or off the
property or assets of the Company or Subsidiary of any Hazardous Materials in
the environment or any release or threatened release of any Hazardous Materials
into the environment.
5.17 INVESTMENT COMPANY/GOVERNMENT REGULATIONS. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. Neither the Company nor any Subsidiary is subject to regulation
under the Public Utility Holding Company Act of 1935, as amended, the Federal
Power Act, the Interstate Commerce Act, or any federal or state statute or
regulation limiting its ability to incur Indebtedness.
5.18 SUBSIDIARIES.
(a) Schedule 5.18 sets forth a complete and accurate list of all
of the Subsidiaries of the Company, together with their respective jurisdictions
of incorporation or organization. Except as set forth on Schedule 5.18, each
such Subsidiary is wholly owned by the Company. All of the outstanding shares of
capital stock of the Subsidiaries that are corporations are validly issued,
fully paid and nonassessable. Except as set forth on Schedule 5.18, as of the
Closing Date, all of the outstanding shares of capital stock of, or other
ownership interests in, each of the Subsidiaries are and will be owned by the
Company free and clear of any Liens, claims, charges or encumbrances. Except as
set forth on Schedule 5.18, no Subsidiary has outstanding options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating the Subsidiary to issue, transfer or sell any securities
of the Subsidiary.
(b) Except as set forth on Schedule 5.18, the Company does not own
of record or beneficially, directly or indirectly, (i) any shares of outstanding
capital stock or securities convertible into capital stock of any other
corporation, or (ii) any participating interest in any limited liability
company, partnership, joint venture or other non-corporate business enterprises.
5.19 CAPITALIZATION.
(a) As of the First Closing Date, the authorized capital stock of
the Company will consist of Thirty Million (30,000,000) shares of Common Stock
and Twenty Million (20,000,000) shares of Preferred Stock. As of the First
Closing Date and after giving effect to the transactions contemplated by this
Agreement and the Acquisition Documents, the number of shares of each class or
series of the capital stock of the Company outstanding or reserved for issuance
will be as set forth on Schedule 5.19 hereof. The outstanding warrants and all
outstanding shares of capital stock of the Company have been duly authorized by
all necessary corporate action. All outstanding shares of
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capital stock of the Company are, and the shares of Common Stock issuable upon
conversion of the Preferred Stock and upon exercise of the Investor Warrants,
when issued in accordance with the respective terms and conditions of each
series thereof, will be validly issued, fully paid and nonassessable. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class or series of authorized capital stock of
the Company are as set forth in the Certificate of Incorporation, and all such
designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws. Schedule 5.19 provides an accurate list, after giving effect to
the transactions contemplated by this Agreement, of (A) all holders of any of
the issued and outstanding Preferred Stock or Common Stock, together with the
number of shares held by each (except, in the case of holders of Series C
Preferred Stock, only holders of more than 5% thereof shall be listed), and (B)
all of the holders of warrants, options, rights and securities convertible into
Common Stock of the Company, together with the number of shares of Common Stock
or Preferred Stock to be issued upon the exercise or conversion of such
warrants, options, rights and convertible securities.
(b) On each applicable Closing Date, except for the Stock Options,
the outstanding shares of Preferred Stock, the outstanding options and warrants
set forth on Schedule 5.19 and other securities issued hereafter in accordance
with action by the Board of Directors of the Company taken in compliance with
the Stockholders' Agreement, there will be no outstanding securities convertible
into or exchangeable for capital stock of the Company or any Subsidiary or,
except as contemplated in the other Transaction Documents (including, without
limitation, the Stockholders' Agreement) or in any Future Acquisition Agreement,
options, warrants or other rights to purchase or subscribe to capital stock of
the Company or any Subsidiary, or contracts, commitments, agreements,
understandings or arrangements of any kind to which the Company or any
Subsidiary is a party relating to the issuance of any capital stock of the
Company or any Subsidiary, any such convertible or exchangeable securities or
any such options, warrants or rights.
5.20 PRIVATE OFFERING. No form of general solicitation or general
advertising was used by the Company or any Subsidiary, or their representatives
in connection with the offer or sale of the Shares. Assuming the accuracy of the
representations and warranties of the Purchasers contained in Article VI hereof,
no registration of the Shares or the Common Stock issuable upon the conversion
of the Shares pursuant to the provisions of the Securities Act or applicable
state securities or "blue sky" laws will be required by the offer, sale or
issuance of the Shares pursuant to this Agreement or the Common Stock issuable
upon conversion of the Shares. The Company agrees that neither the Company, nor
anyone acting on its behalf, will offer or sell the Shares or any other security
so as to require the registration of the Shares or the Common Stock issuable
upon conversion of the Shares pursuant to the provisions of the Securities Act
or any state securities or "blue sky" laws, unless such securities or the Common
Stock issuable upon conversion of the Shares are so registered.
5.21 BROKER'S, FINDER'S OR SIMILAR FEES. Except for the fees referred
to in Schedule 5.21 hereof, there are no brokerage commissions, finder's fees or
similar fees or commissions payable in connection with the transactions
contemplated hereby based on any agreement, arrangement or understanding with
the Company or any Subsidiary.
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5.22 LABOR RELATIONS. Neither the Company nor any Subsidiary has
committed or is engaged in any unfair labor practice. Except as set forth in
Schedule 5.22, there is (a) no unfair labor practice complaint pending or
threatened against the Company or any Subsidiary before the National Labor
Relations Board and no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is so pending or threatened, (b) no
strike, labor dispute, slowdown or stoppage pending or threatened against the
Company or any Subsidiary, and (c) no union representation question existing
with respect to the employees of the Company or any Subsidiary and no union
organizing activities are taking place. Neither the Company nor any Subsidiary
is a party to any collective bargaining agreement.
5.23 EMPLOYEE BENEFIT PLANS. Neither the Company nor any Subsidiary nor
any ERISA Affiliate has any actual or contingent, direct or indirect, liability
in respect of any employee benefit plan (as defined in Section 3(3) of ERISA) or
other employee benefit arrangement (collectively, the "Plans"), other than those
liabilities with respect to such Plans specifically described on Schedule
5.23(a). Schedule 5.23(a) sets forth all Plans relating to the Company. The
Company has delivered to the Purchasers accurate and complete copies of all of
the Plans. All of the Plans are in substantial compliance with all applicable
Requirements of Law. Except as set forth on Schedule 5.23(b), no "prohibited
transaction," as defined in Section 406 of ERISA and Section 4975 of the Code,
has occurred in respect of any of the Plans, and no civil or criminal action
brought pursuant to Part 5 of Title I of ERISA is pending or, to the best
knowledge of the Company, is threatened against any fiduciary of any such Plan.
No Plan: (i) is subject to Title IV of ERISA, or is otherwise a Defined Benefit
Plan, or is a multiple employer plan (within the meaning of Section 413(c) of
the Code); or (ii) provides for post-retirement welfare benefits or a "parachute
payment" (within the meaning of Section 280G(b) of the Code).
5.24 PATENTS, TRADEMARKS. ETC. The Company and its Subsidiaries own or
are licensed or otherwise have the right to use all patents, trademarks, service
marks, trade names, copyrights, licenses, franchises and other rights
(collectively, the "Rights") being used to conduct their businesses as now
operated (a complete list of licenses or other contracts relating to the
Company's and its Subsidiaries' Rights and of registrations of patents,
trademarks, service marks and copyrights including any applications therefor
constituting such Rights, is attached hereto as Schedule 5.24). No Right or
product, process, method, substance or other material presently sold by or
employed by the Company or any Subsidiary, or which the Company or any
Subsidiary contemplates selling or employing, infringes upon the Rights that are
owned by others. Except as set forth on Schedule 5.24, no litigation is pending
and no claim has been made against the Company or any Subsidiary or, to the
knowledge of the Company, is threatened, contesting the right of the Company or
any Subsidiary to sell or use any Right or product, process, method, substance
or other material presently sold by or employed by the Company or any
Subsidiary. Neither the Company nor any Subsidiary has asserted any claim of
infringement, misappropriation or misuse by any Person of any Rights owned by
the Company or any Subsidiary or to which it has exclusive use. Except as set
forth on Schedule 5.24, no employee, officer or consultant of the Company or any
Subsidiary has any proprietary, financial or other interest in any Rights owned
or used by the Company or any Subsidiary in their businesses. Except as set
forth on Schedule 5.24, neither the Company nor any Subsidiary has any
obligation to
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compensate any Person for the use of any Rights and neither the Company nor any
Subsidiary has granted any license or other right to use any of the Rights of
the Company or any Subsidiary, whether requiring the payment of royalties or
not. The Company and its Subsidiaries have taken all reasonable measures to
protect and preserve the security, confidentiality and value of their Rights,
including trade secrets and other confidential information. All trade secrets
and other confidential information of the Company and its Subsidiaries are not
part of the public domain or knowledge, nor have they been used, divulged or
appropriated for the benefit of any Person other than the Company or any
Subsidiary or otherwise to the detriment of the Company or any Subsidiary. No
employee or consultant of the Company or Subsidiary has used any trade secrets
or other confidential information of any other Person in the course of his work
for the Company or any Subsidiary. No patent, invention, device, principle or
any statute, law, rule, regulation, standard or code is pending or proposed
which would restrict the Company's or any Subsidiary's ability to use any of the
Rights.
5.25 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on Schedule
5.25, no officer or director of the Company or any Subsidiary: (a) owns,
directly or indirectly, any interest in (excepting less than 5% stock holdings
for investment purposes in securities of publicly held and traded companies), or
is an officer, director, employee or consultant of, any Person that is engaged
in a broadcasting business in the Applicable Region or is engaged in business as
a lessor, lessee, supplier, distributor, sales agent or customer of, or lender
to or borrower from, the Company or any Subsidiary; (b) owns, directly or
indirectly, in whole or in part, any tangible or intangible property that the
Company or any Subsidiary uses in the conduct of business; or (c) has any cause
of action or other claim whatsoever against, or owes or has advanced any amount
to, the Company or any Subsidiary, except for claims in the ordinary course of
business such as for accrued vacation pay, accrued benefits under employee
benefit plans, and similar matters and agreements existing on the date hereof.
As used herein, the term "Applicable Region" shall mean (i) as to either of
Messrs. Jacobs or Stakelin, anywhere in the United States, and (ii) as to any
other officer or director, any market in which the Company or any Subsidiary is
engaged in business.
5.26 TRADE RELATIONS. Except as set forth on Schedule 5.26, there
exists no actual or, to the knowledge of the Company, threatened termination,
cancellation or limitation of, or any adverse modification or change in, the
business relationship of the Company or any Subsidiary or its business with any
customer or any group of customers whose purchases are individually or in the
aggregate material to the business of the Company or any Subsidiary, or with any
material supplier, and there exists no present condition or state of facts or
circumstances that would materially adversely affect the Condition of the
Company or prevent the Company or any Subsidiary from conducting its business
after the consummation of the transactions contemplated by this Agreement, in
substantially the same manner in which such business has heretofore been
conducted.
5.27 OUTSTANDING BORROWINGS. Schedule 5.27 lists (i) the amount of all
Outstanding Borrowings of the Company and its Subsidiaries as of the closing of
the transactions contemplated hereby, (ii) the Liens that relate to such
Outstanding Borrowings and that encumber the assets of the Company or any
Subsidiary, (iii) the name of each lender thereof, and (iv) the amount of any
unfunded commitments available to the Company in connection with any Outstanding
Borrowings.
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5.28 MATERIAL CONTRACTS. Neither the Company nor any Subsidiary is a
party to any Contractual Obligation, or is subject to any charge, corporate
restriction, judgment, injunction, decree, or Requirement of Law, which
materially adversely affects or could reasonably be determined to materially
adversely affect the Condition of the Company. Schedule 5.28 lists all
contracts, agreements and commitments of the Company and each Subsidiary as of
the First Closing Date, whether written or oral, other than (a) the Transaction
Documents and the Acquisition Documents, (b) contracts entered into in the
ordinary course of business, and (c) any other contracts, agreements and
commitments of the Company or any Subsidiary that do not extend beyond one year
and involve the receipt or payment of not more than $15,000. With respect to
each contract, agreement and commitment of the Company and its Subsidiaries
required to be set forth on Schedule 5.28, the Company has delivered to the
Purchasers a full and complete copy of all agreements and understandings between
the parties thereto with respect to the subject matter thereof and all
transactions related thereto, and there are no agreements or understandings,
oral or written, or side agreements not contained therein that relate to or
modify the substance thereof. Each contract or agreement to which the Company or
any subsidiary is a party (i) has been duly authorized by all necessary
corporate and other action on the part of the Company and each Subsidiary which
is a party thereto, (ii) was validly executed and delivered by the Company and
each such Subsidiary, and (iii) is the legal, valid and binding obligation of
the Company and each such Subsidiary and their successors, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting creditors' rights generally and by general principles of equity
relating to enforceability. Each of such documents is in full force and effect,
none of their provisions has been waived by any party thereto and there are no
defaults thereunder or notice of defaults delivered pursuant thereto.
5.29 INSURANCE. Schedule 5.29 accurately summarizes all of the
insurance policies or programs of the Company and its Subsidiaries in effect as
of the date hereof, and indicates the insurer's name, policy number, expiration
date, amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
All such policies are in full force and effect, are underwritten by financially
sound and reputable insurers, are sufficient for all applicable Requirements of
Law and otherwise are in compliance with the criteria set forth in Section 8.6
hereof. All such policies will remain in full force and effect and will not in
any way be affected by, or terminate or lapse by reason of any of the
transactions contemplated hereby.
5.30 SOLVENCY. The Company and its Subsidiaries are Solvent.
5.31 COMPLIANCE WITH EACH ACQUISITION DOCUMENT; CLOSINGS THEREUNDER; NO
DEFAULTS. Except as set forth on Schedule 5.31, each of the parties to each
Acquisition Agreement has performed and complied with all of the agreements and
conditions contemplated under such Acquisition Agreement and the agreements,
instruments and other documents delivered thereunder or contemplated thereby,
including, without limitation, the Transaction Documents that are required to be
performed or complied with by each such party, and, except as set forth on
Schedule 5.31, there is no default by any such party thereunder. Except as set
forth in Schedule 5.31, the Acquisition
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Documents have not been amended in any respect or any condition to closing
thereunder waived by any party, in any case without the prior written consent of
Waller-Sutton, and the transactions contemplated by each of the Acquisition
Documents have been consummated in accordance with its respective terms. The
disclosures set forth in Schedule 5.31 shall not constitute a waiver by the
Purchasers of any rights or remedies they may have with respect to any breach or
default by any party to any Acquisition Agreement of the terms of such
Acquisition Agreement.
5.32 COMMISSION DOCUMENTS. Each of the Company and its Subsidiaries has
filed all registration statements, proxy statements, reports and other documents
required to be filed by it under the Securities Act or the Exchange Act, and all
amendments thereto (collectively, the "Commission Documents"); and the Company
and each such Subsidiary have furnished the Purchasers copies of all such
Commission Documents, each as filed with the Commission, relating to the
Acquisitions and all such other Commission Documents as the Purchasers shall
have reasonably requested in connection with the transactions contemplated
hereby and by the Acquisition Documents. Each Commission Document when filed
with the Commission was true and accurate in all material respects and in
compliance in all material respects with the requirements of its respective
report form.
5.33 INCORPORATION OF REPRESENTATIONS AND WARRANTIES OF PARTIES TO THE
ACQUISITION DOCUMENTS. Each of the representations and warranties of the parties
to the Acquisition Documents other than the Company are hereby incorporated
herein by this reference as though fully set forth and the Company represents
and warrants to the Purchasers that each such representation and warranty is
true, correct and complete in all material respects.
5.34 SMALL BUSINESS CONCERN. The Company acknowledges that River Cities
is a Federal licensee under the Small Business Investment Act of 1958, as
amended (the "SB Act"). The Company, together with its "affiliates" (as that
term is defined in Title 13, Code of Federal Regulations, ss. 121.103), is a
"small business concern" within the meaning of the SB Act and the regulations
thereunder, including Title 13, Code of Federal Regulations, ss. 121.101 ET.
SEG. The information regarding the Company and its affiliates set forth in the
SB Act Form 1031 delivered at the First Closing shall be accurate and complete.
The Company does not presently engage in, and it shall not hereafter engage in,
any activities, nor shall the Company use directly or indirectly the proceeds
hereunder for any purpose for which a Small Business Investment Company is
prohibited from providing funds by the SB Act and the regulations thereunder
(including Title 13, Code of Federal Regulations, ss. 107.720 ET. SEG.).
5.35 COMPLIANCE WITH LOAN AGREEMENT. The Company is not in default and
no event has occurred which, with notice or lapse of time or both, would
constitute a default, in the due performance or observance of any term, covenant
or condition contained in that Credit Agreement between the Company, certain
Lenders and The Bank of Montreal, dated as of November 14, 1997, as amended by a
First Amendment to Credit Agreement dated as of February 16, 1998 and a Second
Amendment to Credit Agreement dated as of June 15, 1998 (the "Credit
Agreement"). As of the First Closing Date, the Company will have $34,400,000
borrowing availability under the Credit Agreement which, together with the
proceeds of the sale of the Series A Preferred Stock, the Series
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B Preferred Stock, the Series D Preferred Stock and the Series F Preferred Stock
required under Section 3.19 above, will be sufficient to consummate all of the
acquisitions contemplated by the Acquisition Documents and to pay all costs and
expenses associated therewith. In addition, the Company expects to have
sufficient cash on hand or borrowing availability under the Credit Agreement to
satisfy its working capital needs for the foreseeable future.
5.36 YEAR 2000 COMPLIANCE. All hardware and software products used by
the Company or its Subsidiaries in the administration and the business
operations thereof will be able to accurately process date data (including, but
not limited to calculating, comparing and sequencing) from, into and between the
twentieth century (through the year 1999), the year 2000 and the twenty-first
century, including leap year calculations when used in accordance with the
product documentation accompanying such hardware and software products.
5.37 RADIO STATIONS KCBQ (AM) AND WSSP (FM). The Company is party to
one or more agreements or arrangements pursuant to which the Company has been
reimbursed by an unaffiliated third party for all operating losses incurred by
radio station KCBQ (AM) from March 1, 1997 through December 31, 1997 (and
thereafter for such time as the station is held for sale), which unreimbursed
losses as of May 31, 1998 are approximately $90,000 (which the Company
represents will be reimbursed or paid in the ordinary course within 60 days of
the date hereof). The Company is in negotiations for the sale of substantially
all of the assets of radio station KCBQ (AM), which could lead to a consummation
of a sale during the third quarter of 1998. In consideration for the issuance by
the Company of a five-year promissory note for $1.5 million (the "WSSP Note"),
the Company acquired an option to purchase radio station WSSP (FM). Under the
terms of the WSSP Note, the Company is obligated to pay in full satisfaction
thereof the lesser of (i) the stated principal amount of such note or (ii) the
proceeds received by the Company from a sale of WSSP (FM) or of the option to
acquire WSSP (FM). The WSSP Note is collateralized by the Company's interest in
a note receivable from Southwind Broadcasting, Inc. for $1.5 million or by a
first lien on the assets used in the operation of such radio station. Except as
stated above, the Company has not incurred any liability or obligation in
respect of the ownership or operation of radio stations KCBQ (AM) or WSSP (FM).
5.38 FAIRCOM DEBT. The Company shall, upon consummation of the
transactions contemplated herein, pay all indebtedness of Faircom Inc. that is
not "Subordinated Indebtedness" as defined in that certain Subordination
Agreement, dated as of June 30, 1997, as amended by the Amendment and
Reaffirmation of Intercreditor and Subordination Agreement, dated as of January
22, 1998, by and among Faircom Flint Inc., Faircom Mansfield Inc., Faircom Inc.,
Blue Chip Capital Fund II Limited Partnership, Miami Valley Venture Fund L.P.
and AT&T Commercial Financial Corporation.
5.39 CONSOLIDATED FINANCIAL INFORMATION. The Company shall deliver to
the Purchasers no later than June 30, 1998, the pro forma consolidated balance
sheet and financial statements of the Company and its Subsidiaries for each of
the three month period ended March 31, 1998 and the twelve month period ended
March 31, 1998, certified by the chief executive officer of the Company
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that such pro forma balance sheet and financial statements have been prepared in
accordance with generally accepted accounting principals and fairly present the
pro forma adjustments reflecting the consummation of the transactions
contemplated by this Agreement, the Transaction Documents and the Acquisition
Agreements, including, without limitation, all material fees and expenses in
connection therewith. The Total Consolidated Broadcast Cash Flow for the twelve
month period ended March 31, 1998 set forth in such pro forma consolidated
financial statements (prior to adjustments) shall be not more than $50,000 less
than the comparable amount contained in the "pro forma 12 month trailing
financial statements" of the Company delivered by the Company to the lenders
under the Credit Agreement in connection with the loans being made on the First
Closing Date thereunder.
ARTICLE 6
REPRESENTATIONS AND
-------------------
WARRANTIES OF THE PURCHASERS
----------------------------
Each Purchaser, severally but not jointly, hereby represents and
warrants as to itself or himself as follows:
6.1 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by such Purchaser of each Transaction Document to which such
Purchaser is a party: (a) are within such Purchaser's power and authority and
have been duly authorized by all necessary action; (b) do not contravene the
terms of such Purchaser's organizational documents or any amendment thereof; and
(c) will not violate, conflict with or result in any breach or contravention of
any Contractual Obligation or any Requirement of Law applicable to such
Purchaser.
6.2 BINDING EFFECT. This Agreement has been duly executed and delivered
by such Purchaser and each Transaction Document to which such Purchaser is a
party constitutes such Purchaser's legal, valid and binding obligation,
enforceable against such Purchaser in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
6.3 NO LEGAL BAR. The execution, delivery and performance of each
Transaction Document to which such Purchaser is a party by such Purchaser will
not violate any Requirement of Law applicable to such Purchaser.
6.4 EXPERIENCE. Such Purchaser has carefully reviewed the information
with respect to such Purchaser contained in the registration statement on Form
S-4 filed by the Company in respect of securities of the Company to be issued in
connection with its planned merger with Faircom Inc., as well as the
representations concerning the Company and its Subsidiaries contained in this
Agreement; the officers of the Company have made available to such Purchaser any
and all written information which such Purchaser has requested and have answered
to such Purchaser's satisfaction all inquiries made by such Purchaser; and such
Purchaser has sufficient knowledge and experience
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in investing in companies similar to the Company so as to be able to evaluate
the risks and merits of the investment in the Shares and Investor Warrants and
is able financially to bear the risks thereof.
6.5 PURCHASE FOR OWN ACCOUNT. The Shares and the Investor Warrants to
be acquired by such Purchaser pursuant to this Agreement, or upon conversion
thereof to Common Stock, are being or will be acquired for such Purchaser's own
account for investment and with no intention of distributing or reselling such
securities or any part thereof in any transaction that would be in violation of
the securities laws of the United States of America, or any state, without
prejudice, however, to such Purchaser's right at all times, subject to the
provisions of the Stockholders' Agreement, to sell or otherwise dispose of all
or any part of the Shares or Investor Warrants under an effective registration
statement under the Securities Act, or any applicable state securities laws or
under an exemption from such registration available under the Securities Act, or
any applicable state securities laws and subject, nevertheless, to the
disposition of such Purchaser's property being at all times within such
Purchaser's control. If such Purchaser should in the future decide to dispose of
any of the Shares or Investor Warrants or the Common Stock issuable upon
conversion or exercise thereof, such Purchaser understands and agrees that such
Purchaser may do so only in compliance with the Securities Act and applicable
state securities laws, as then in effect, as well as with the Shareholders'
Agreement. Such Purchaser agrees to the imprinting of one or more legends on
certificates representing all of the Shares and Investor Warrants to the
following effect: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS." "THE ISSUER IS SUBJECT TO RESTRICTIONS CONTAINED IN
THE COMMUNICATIONS ACT OF 1934, AS AMENDED. THE SECURITIES EVIDENCED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED IF, AS A
RESULT THEREOF, THE ISSUER WOULD BE IN VIOLATION OF THAT ACT." "THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THAT CERTAIN AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF June 15, 1998 AMONG REGENT
COMMUNICATIONS, INC. AND CERTAIN OF ITS STOCKHOLDERS, AS THE SAME MAY BE AMENDED
FROM TIME TO TIME."
6.6 EXEMPTION. Such Purchaser understands that the Shares and Investor
Warrants have not been registered under the Securities Act or under the
securities laws of any state on the grounds that the sale provided for in this
Agreement and the issuance of the Shares are intended to be exempt from
registration thereunder, and that the Company's reliance on such exemption is
predicated in part on such Purchaser's representations set forth herein.
6.7 ACCREDITED INVESTOR. Such Purchaser is an accredited investor
within the definition set forth in Rule 501(a) promulgated under the Securities
Act. Such Purchaser is not subscribing to the Shares and Investor Warrants as a
result of or pursuant to any advertisement, article, notice or
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other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person other than a representative of
the Company. Such Purchaser acknowledges that the Shares and Investor Warrants,
including shares of Common Stock issued upon conversion or exercise thereof,
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. It is aware of
the provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than one year after
a party has purchased and paid for the security to be sold, the sale being
effected through a "broker's transaction" or in transactions directly with a
"market maker" and the number of shares being sold during any three-month period
not exceeding specified limitations.
6.8 NO PUBLIC MARKET. Such Purchaser understands that no public market
now exists for the Shares or Investor Warrants and that there is no assurance
that a public market will ever exist for the Shares or Investor Warrants.
6.9 ERISA. No part of the funds used by such Purchaser to purchase the
Shares or Investor Warrants hereunder constitutes assets of any "employee
benefit plan" (as defined in Section 3(3) of ERISA) or "plan" (as defined in
Section 4975 of the Code) listed on Schedule 5.23(b).
6.10 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with such Purchaser or any action taken by such Purchaser.
6.11 GOVERNMENTAL AUTHORIZATION: THIRD PARTY CONSENT. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, and no lapse of a waiting period under a Requirement of Law,
is necessary or required in connection with the execution, delivery or
performance by such Purchaser or enforcement against such Purchaser of this
Agreement or the transactions contemplated hereby.
ARTICLE 7
INDEMNIFICATION
---------------
7.1 INDEMNIFICATION. In addition to all other sums due hereunder or
provided for in this Agreement, the Company agrees to indemnify and hold
harmless each Purchaser and its Affiliates and each of their respective
officers, directors, agents, employees, subsidiaries, partners, attorneys,
accountants and controlling persons (each, an "Indemnified Party") to the
fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including, without limitation,
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reasonable fees, disbursements and other charges of counsel incurred by an
Indemnified Party in any action or proceeding between the Company and such
Indemnified Party (or Indemnified Parties) or between an Indemnified Party (or
Indemnified Parties) and any third party or otherwise) or other liabilities,
losses, or diminution in value of the Shares (collectively, "Liabilities")
resulting from or arising out of (i) any breach of any representation or
warranty, covenant or agreement of the Company in this Agreement, the
Certificate of Incorporation, the Certificate of Amendment, the Registration
Rights Agreement, the Stockholders' Agreement or the other Transaction
Documents, including, without limitation, the failure to make payment when due
of amounts owing pursuant to this Agreement, the Shares or the other Transaction
Documents, on the due date thereof (whether at the scheduled maturity, by
acceleration or otherwise);provided, however, that with respect to a breach of
the covenants of the Company contained in Sections 8.1(other than subsections
(j) and (l) thereof), 8.2, 8.3, 8.4, 8.5 and 8.7 from and after the date hereof,
the indemnification provided herein shall be limited to (1) the indemnification
of the Purchasers for all out-of-pocket costs and expenses incurred by them in
the course of causing the Company to duly perform its obligations under such
Sections, including but not limited to the reimbursement of legal fees and
expenses, and (2) damages incurred with respect to any purchase of Additional
Shares which occurs at a time any such breach existed, (ii) any breach by the
Company, any of its Subsidiaries or any other party to any of the Acquisition
Documents of any covenant or agreement of such contained therein, or (iii) any
legal, administrative or other actions (including actions brought against any of
the Purchasers by any party to any of the Acquisition Documents, or by any of
the other Purchasers, the Company, any Subsidiary, any equity holders of the
Company or any Subsidiary or any other Person, or derivative actions brought
against any of the Purchasers by any Person claiming through or in the Company's
or any Subsidiary's name), proceedings or investigations (whether formal or
informal), or written threats thereof, based upon, relating to or arising out of
the Transaction Documents or the Acquisition Documents, or the transactions
contemplated thereby, or any such actual or threatened action, proceeding or
investigation by any Person against an Indemnified Party arising out of or
relating to or by reason of such Indemnified Party's status as a holder of
securities of the Company, or any Indemnified Party's role therein or in the
transactions contemplated thereby; provided, however, that the Company shall not
be liable under this Section 7.1 to an Indemnified Party: (a) for any amount
paid by the Indemnified Party in settlement of claims by the Indemnified Party
without the Company's written consent (which consent shall not be unreasonably
withheld), (b) to the extent that it is finally judicially determined that such
Liabilities resulted from the willful misconduct or gross negligence of such
Indemnified Party or (c) to the extent that it is finally judicially determined
that such Liabilities resulted from the breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such Indemnified Party
contained in this Agreement or any other Transaction Document; provided,
further, that if and to the extent that such indemnification is unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of such Liabilities which shall be permissible under applicable
laws. In connection with the obligation of the Company to indemnify for expenses
as set forth above, the Company further agrees, upon presentation of appropriate
invoices containing reasonable detail, to reimburse each Indemnified Party for
all such expenses (including, without limitation, fees, disbursements and other
charges of counsel incurred by an Indemnified Party in any action or proceeding
between the Company and such Indemnified Party (or Indemnified Parties) or
between an Indemnified Party (or
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44
Indemnified Parties) and any third party or otherwise) as they are incurred by
such Indemnified Party; provided, however, that if an Indemnified Party is
reimbursed hereunder for any expenses, such reimbursement of expenses shall be
refunded to the extent it is finally judicially determined that the Liabilities
in question resulted from (i) the willful misconduct or gross negligence of such
Indemnified Party or (ii) the breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such Indemnified Party
contained in this Agreement or any other Transaction Document.
7.2 LIMITATIONS ON INDEMNIFICATION.
(a) The Company shall have no indemnification obligation to an
Indemnified Party pursuant to this Article 7 with respect to a breach of any
representation or warranty unless such Indemnified Party delivers to the Company
written notice of such breach within the applicable survival period for such
representation or warranty as set forth in Section 9.1 hereof.
(b) No Indemnified Party shall be entitled to indemnification under
this Article 7 unless the aggregate amount of Liabilities to which the
Indemnified Parties are entitled to recover exceeds $100,000. In the event that
such Liabilities exceed an aggregate of $100,000, the Indemnified Parties shall
be entitled to indemnification under this Article 7 for all such Liabilities.
The limitation set forth in this paragraph (b) shall not apply with respect to
any (i) any breach of any representation or warranty set forth in Section 5.21
hereof, (ii) matter constituting fraud or intentional or willful misconduct, or
(iii) covenant or agreement of the Company to be performed or complied with from
and after the First Closing Date.
7.3 NOTIFICATION. Each Indemnified Party under this Article 7 will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this Article 7,
notify the Company in writing of the commencement thereof. The omission of any
Indemnified Party so to notify the Company of any such action shall not relieve
the Company from any liability which it may have to such Indemnified Party under
this Article 7 unless, and only to the extent that, such omission results in the
Company's forfeiture of material substantive rights or defenses. In case any
such action, claim or other proceeding shall be brought against any Indemnified
Party and it shall notify the Company of the commencement thereof, the Company
shall be entitled to assume and control the defense thereof at its own expense,
with counsel satisfactory to such Indemnified Party in its reasonable judgment;
provided, however, that any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense. Notwithstanding the foregoing,
in any action, claim or proceeding in which the Company, on the one hand, and an
Indemnified Party, on the other hand, is, or is reasonably likely to become, a
party, such Indemnified Party shall have the right to employ separate counsel at
the Company's expense and to control its own defense of such action, claim or
proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between the Company, on the one hand, and
such Indemnified Party, on the other hand, that would make such separate
representation advisable. The Company agrees that it will not, without the prior
written consent of the Purchasers, settle,
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compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of the Purchasers and each other Indemnified Party from
all liability arising or that may arise out of such claim, action or proceeding.
The Company shall not be liable for any settlement of any claim, action or
proceeding effected against an Indemnified Party without its written consent,
which consent shall not be unreasonably withheld. The rights accorded to
Indemnified Parties hereunder shall survive the termination of this Agreement
and shall be in addition to any rights that any Indemnified Party may have at
common law, by separate agreement or otherwise.
7.4 REGISTRATION RIGHTS AGREEMENT. Notwithstanding anything to the
contrary in this Article 7, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
ARTICLE 8
AFFIRMATIVE COVENANTS
---------------------
For so long as the Purchasers shall continue to beneficially own any
shares of Series F Preferred Stock and/or Investor Warrants, and until the
payment by the Company of all amounts due to the Purchasers under this Agreement
and the other Transaction Documents, including, without limitation, all fees,
expenses and amounts due at such time in respect of indemnity obligations under
Article 7, the Company hereby covenants and agrees with the Purchasers as
follows:
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP (it being
understood that monthly and quarterly financial statements are not required to
have footnote disclosures). The Company shall deliver to the Purchasers each of
the financial statements and other reports described below:
(a) MONTHLY AND QUARTERLY FINANCIAL STATEMENTS. As soon as
available and in any event within thirty (30) days after the end of each month
(or forty-five (45) days after the end of any month that is also the end of a
quarter), the Company shall deliver to the Purchasers the consolidated and
consolidating balance sheets of the Company and its Subsidiaries, as at the end
of such month and the related consolidated and consolidating statements of
income, stockholders' and members equity and cash flow for such month and for
the period from the beginning of the then current fiscal year of the Company to
the end of such month (and, with respect to financial statements delivered for
months that are also the last month of any fiscal quarter, accompanied by the
related consolidated and consolidating statements of income, stockholders' and
member's equity and cash flow for such
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fiscal quarter), which, in the case of quarterly financial statements, shall
include a comparison to the corresponding period of the prior fiscal year and a
comparison to the corresponding figures contained in the budgets delivered
pursuant to Section 8.1(f) hereof, in each case with a reasonably detailed
explanation of any material variances.
(b) YEAR-END FINANCIAL STATEMENTS. As soon as available and in any
event within ninety (90) days after the end of the fiscal year of the Company,
the Company shall deliver to the Purchasers (A) the consolidated and
consolidating balance sheets of the Company and its Subsidiaries as at the end
of such year and the related consolidated and consolidating statements of
income, stockholders' and members' equity and cash flow for such fiscal year,
(B) a schedule of the outstanding Indebtedness for borrowed money of the Company
and its Subsidiaries describing in reasonable detail each such debt issue or
loan outstanding and the principal amount and amount of accrued and unpaid
interest with respect to each such debt issue or loan, and (C) a report with
respect to the financial statements from Coopers & Lybrand or another nationally
recognized accounting firm of certified public accountants selected by the
Company and reasonably acceptable to the holders of a majority of the shares of
Series F Preferred Stock, which report shall be prepared in accordance with
Statement of Auditing Standards No. 58 (the "Statement") entitled "Reports on
Audited Financial Statements" and such report shall be "Unqualified" (as such
term is defined in such Statement). Together with each delivery of financial
statements of the Company and its Subsidiaries pursuant to this subsection
8.1(b), the Company shall deliver to the Purchasers a copy of a letter from the
Company to such accounting firm, which letter shall have been delivered to such
accounting firm prior to its delivery of such financial statements, stating that
an intent of the Company in engaging the accounting firm's professional services
to prepare the audit report relating to such financial statements was to benefit
and influence the Purchasers and their successors or assigns. Such letter shall
state that the Purchasers intend to rely on the audit report and the accounting
firm's professional services provided to the Company and its Subsidiaries.
(c) COMPANY'S COMPLIANCE CERTIFICATE. Together with each delivery
of quarterly and annual financial statements of the Company and its Subsidiaries
pursuant to subsections 8.1(a) and 8.1(b) above, the Company shall deliver to
the Purchasers a fully and properly completed compliance certificate (in the
form of Exhibit G hereto or in such other form and substance satisfactory to the
Purchasers) signed by the Company's chief executive officer or chief financial
officer.
(d) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, the
Company shall deliver to the Purchasers copies of all significant reports
submitted by the Company's certified public accountants in connection with each
annual, interim or special audit or review of any type of the financial
statements or related internal control systems of the Company and its
Subsidiaries made by such accountants, including any comment letter submitted by
such accountants to management in connection with their services.
(e) MANAGEMENT REPORTS. Together with each delivery of financial
statements of the Company and its Subsidiaries pursuant to subsections 8.1(a)
and 8.1(b) (but with respect to
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subsection 8.1(a), with respect only to financial statements of the Company and
its Subsidiaries delivered for months that are the last month of any fiscal
quarter), the Company shall deliver to the Purchasers a management report (i)
describing the operations and financial condition of the Company and its
Subsidiaries for the quarter or fiscal year then ended and the portion of the
current fiscal year then elapsed (or for the fiscal year then ended in the case
of year-end financials), which description shall include, without limitation,
station ratings by station and corresponding advertising market share (in each
case, if and when available), (ii) setting forth in comparative form on a
quarter-to-quarter basis the corresponding figures from the most recent
projections for the current fiscal year delivered pursuant to subsection 8.1(f)
or otherwise approved by the Board of Directors, and discussing the reasons for
any significant variations, and (iii) setting forth in reasonable detail the
compliance or non-compliance by the Company or any Subsidiary with any financial
or other covenants to which the Company or any such Subsidiary is subject
pursuant to any loan agreement or other agreement relating to Indebtedness of
the Company or such Subsidiary and discussing the reasons for any
non-compliance. The information above shall be presented in reasonable detail
and shall be certified by the chief financial officer of the Company to the
effect that such information fairly presents the results of operations and
financial condition of the Company and its Subsidiaries as at the dates and for
the periods indicated.
(f) BUDGETS. No earlier than sixty (60) days prior nor later than
thirty (30) days after the end of each fiscal year beginning with the current
fiscal year, the Company shall prepare and deliver to the Purchasers budgets of
the Company and its Subsidiaries for the next succeeding fiscal year, on a month
to month basis, which budgets shall be in form and substance reasonably
satisfactory to Waller-Sutton.
(g) SEC FILINGS AND PRESS RELEASES. Promptly upon their becoming
available, the Company shall deliver to the Purchasers copies of (i) all
financial statements, reports, notices and proxy statements sent or made
available by the Company or any of its Subsidiaries to their security holders,
(ii) all regular and periodic reports and all registration statements and
prospectuses, if any, filed by the Company or any of its Subsidiaries with any
securities exchange or with the Commission or any other governmental or private
regulatory authority, and (iii) all press releases and other statements made
available by the Company or any of its Subsidiaries to the public concerning
material developments in the business of the Company or any of its Subsidiaries.
(h) EVENTS OF DEFAULT ETC. Promptly upon any officer of the Company
obtaining knowledge of any of the following events or conditions, the Company
shall deliver to the Purchasers copies of all notices given or received by the
Company or any of its Subsidiaries with respect to any such event or condition
and a certificate of the Company's chief executive officer specifying the nature
and period of existence of such event or condition and what action the Company
has taken, is taking and proposes to take with respect thereto: (i) any
condition or event that constitutes a breach of any provision of this Agreement;
(ii) any notice that any Person has given to the Company or any Subsidiary or
any other action taken with respect to a claimed default in any agreement
evidencing Indebtedness in excess of $50,000, either individually or in the
aggregate, or any other material agreement to which the Company or any
Subsidiary is a party; or (iii) any event or condition that
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could reasonably be expected to result in any material adverse effect on the
Condition of the Company.
(i) LITIGATION. Promptly upon any officer of the Company obtaining
knowledge of (i) the institution of any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Company or any Subsidiary
or any property of the Company or any Subsidiary not previously disclosed by the
Company to the Purchasers or (ii) any material development in any action, suit,
proceeding, governmental investigation or arbitration at any time pending
against or affecting the Company or any Subsidiary or any property of the
Company or any Subsidiary, which, in each and either case, is reasonably likely
to have a material adverse effect on the Condition of the Company, the Company
will promptly give notice thereof to the Purchasers and provide to the
Purchasers such other information as may be reasonably available to the Company
to enable the Purchasers and their respective counsel to evaluate such matter.
(j) SUBSIDIARIES; ACQUISITIONS OF ASSETS. Not less than thirty (30)
days prior to (i) acquiring the stock of a Person, such that such Person will
become a Subsidiary, or (ii) acquiring all or substantially all of the assets of
a business unit of any Person (other than a Subsidiary), the Company shall
notify the Purchasers of the Company's or any Subsidiary's intention to acquire
such stock or assets, and following such notice, such stock or assets will not
be acquired unless, if required by Section 6 of the Stockholders' Agreement, the
Company or a Subsidiary shall have executed and delivered an acquisition or
other agreement with the seller(s) thereof in form and substance satisfactory to
Waller-Sutton, setting forth the terms and conditions of any such acquisition.
(k) NO DEFAULTS. The Company shall deliver to the Purchasers
concurrently with the delivery of the financial statements referred to in
subsection 8.1(b), a certificate of the Company's Chief Financial Officer in the
form of stating that to his or her knowledge no breach of this Agreement or any
Transaction Document shall have occurred during the period covered thereby,
except as specified in such certificate.
(l) NOTICE OF TRIGGERING EVENTS. The Company shall notify the
Purchasers as promptly as practicable of any proposed transaction that is
reasonably likely to cause or result in a Triggering Event, which notice (i)
shall be given in any event not later than 30 days prior to the consummation of
any such transaction or, if earlier, 10 days after the Company shall have
entered into any letter of intent, memorandum of understanding, agreement in
principle (whether or not legally binding) or definitive agreement relating
thereto or received an unsolicited offer or bid relating thereto and (ii) shall
provide a reasonably detailed description of the nature of the proposed
transaction, including without limitation the name or names of the parties
thereto other than the Company, the consideration to be received by the Company
or its securityholders in respect of or as a result of such transaction, the
proposed schedule for closing of such transaction and such other information
(financial or otherwise) relating thereto as the Purchasers shall request. The
Company shall not permit or facilitate the consummation or occurrence of any
transaction which is reasonably likely to cause or result in a Triggering Event
unless the notice required by this Section 8.1(l) has been so given and the
Company complies with its obligations under Section 2.2(c). If the Company
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identifies any information given to a Purchaser pursuant hereto as confidential
at the time such information is provided, Purchaser shall treat such information
as confidential and shall limit the internal distribution of such information
and shall refrain from disclosing such information to any third party, until
such time as such information otherwise becomes publicly available or is
disclosed without breach of this subsection.
(m) OTHER INFORMATION. With reasonable promptness, the Company
shall deliver to the Purchasers such other information and data with respect to
the Company or any of its Subsidiaries as from time to time may be reasonably
required by the Purchasers.
8.2 PRESERVATION OF CORPORATE EXISTENCE. The Company shall, and shall
cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence;
(b) conduct their businesses in accordance with sound business
practices, keep their material items of property in good working order and
condition (normal wear and tear excepted), and from time to time make all needed
repairs to, renewals of or replacements of such properties (except to the extent
that any of such properties are obsolete or are being replaced) so that the
efficiency of their business operations shall be satisfactorily maintained and
preserved; and (c) file or cause to be filed in a timely manner all material
reports, applications, estimates and licenses that shall be required by a
Governmental Authority.
8.3 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause each of
its Subsidiaries to, pay and discharge as the same shall become due and payable,
all their respective obligations and liabilities, including without limitation:
(a) all tax liabilities, assessments and governmental charges or
levies upon the Company or any Subsidiary or their properties or assets, unless
the same are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the Company or
such Subsidiary;
(b) all lawful claims which the Company or such Subsidiary is
obligated to pay, which are due and which, if unpaid, might by law become a Lien
upon any material property, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary; and
(c) all payments of principal, interest and other amounts when due
on Indebtedness.
8.4 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause its
Subsidiaries to comply, in all material respects with all Requirements of Law
and with the directions of any
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Governmental Authority having jurisdiction over them or their business or
property (including all applicable Environmental Laws).
8.5 INSPECTION; COMPLIANCE WITH SMALL BUSINESS INVESTMENT ACT. (a) The
Company will permit, and will cause each of its Subsidiaries to permit,
representatives of the Purchasers to visit and inspect any of their properties,
to examine their corporate, financial and operating records and make copies
thereof or abstracts therefrom, and to discuss their affairs, finances and
accounts with their respective directors, officers and independent public
accountants, all at such reasonable times during normal business hours and as
often as may be reasonably requested, upon reasonable advance notice.
(b) In addition to and not in limitation of the foregoing, the Company
agrees to provide River Cities with sufficient information to permit River
Cities to comply with its obligations under the SB Act and the regulations
thereunder. River Cities and representatives of the SB Act shall be given access
to the Company's records to confirm that the proceeds of the sale of the Shares
are used for the purposes delineated in Section 8.8 hereof. The President of the
Company shall certify to River Cities, within three (3) months of the date of
the First Closing and from time to time thereafter, that the Company has used
the proceeds in accordance with the purposes delineated in Section 8.8 hereof.
If the Company identifies any information given to a River Cities pursuant to
this Section 8.5 as confidential at the time such information is provided, River
Cities shall treat such information as confidential and shall limit the internal
distribution of such information and shall refrain from disclosing such
information to any third party.
8.6 MAINTENANCE OF INSURANCE. The Company and its Subsidiaries will
maintain or cause to be maintained with financially sound and reputable insurers
that have a rating of "A" or better as established by Best's Rating Guide (or an
equivalent rating with such other publication of a similar nature as shall be in
current use), public liability and property damage insurance with respect to
their respective businesses and properties against loss or damage of the kinds
customarily carried or maintained by companies of established reputation engaged
in similar businesses and will deliver evidence thereof to Purchasers. Without
limiting the foregoing, the Company and its Subsidiaries will maintain at all
times business interruption insurance in an amount satisfactory to the Board of
Directors of the Company, and directors' and officers' liability insurance
coverage for each of the members of the Board of Directors of the Company in
amounts satisfactory to the Board of Directors of the Company but in no event
less than $5 million; provided, however, that the Company shall not be obligated
to purchase or maintain such insurance in the event that reasonable terms and
pricing are not commercially available.
8.7 BOOKS AND RECORDS. The Company shall, and shall cause each of its
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
businesses of the Company and each of its Subsidiaries in accordance with GAAP
consistently applied to the Company and its Subsidiaries taken as a whole.
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8.8 USE OF PROCEEDS. The Company shall use the proceeds of the sale of
the Initial Shares at the First Closing hereunder only to fund the Acquisitions,
including payment of capital expenditures related thereto, the fees and expenses
in connection with the transactions contemplated hereunder and under the
Transaction Documents and the Acquisition Documents. The proceeds of the sale of
the Additional Shares will be used by the Company to fund acquisitions of radio
stations pursuant to Future Acquisition Agreements and, in connection therewith,
to the extent approved by the Board of Directors and Waller- Sutton, to pay
capital expenditures, working capital requirements, closing costs and
transaction expenses related thereto, in each case as approved by Waller-Sutton.
In the event of any diversion by the Company of the proceeds of the sale of the
Shares from the uses specified in this Section 8.8 that causes or results in a
breach or violation by River Cities of the SB Act, which shall remain uncured or
unwaived for more than 30 days after notice thereof by River Cities to the
Company, the Company shall use diligent efforts to assist River Cities upon its
request to facilitate the sale by River Cities of its interest in the Company to
a third party.
8.9 BOARD NOMINEES. The Company shall maintain a Board of Directors
consisting of the number of directors specified in Section 2 of the
Stockholders' Agreement and use its best efforts to have the nominees designated
pursuant to Section 2 of the Stockholders' Agreement elected to the Board of
Directors of the Company in accordance with the terms thereof. Without limiting
the generality of the foregoing, each Purchaser other than Waller-Sutton by its
execution and delivery of this Agreement agrees that for so long as
Waller-Sutton shall continue to beneficially own an aggregate number of shares
of Common Stock (either directly or indirectly through its ownership of Series F
Preferred Stock, Series C Preferred Stock and/or Investor Warrants) equal to at
least 10% of the number of shares of Common Stock beneficially owned by it as of
the First Closing Date (either directly or indirectly), such Purchaser shall
nominate and vote its shares of Series F Preferred Stock for the election as
directors designated by the holders of the Series F Preferred Stock of such
Persons as are nominated by Waller-Sutton.
8.10 GRANTING OF OPTIONS. The Company may grant up to an aggregate of
2,000,000 Stock Options, of which up to 1,224,000 Stock Options may be granted
as of the First Closing Date; provided, however, the aggregate amount of shares
of Common Stock issuable upon the exercise of all such Stock Options shall at no
time exceed 15% of the sum of (i) all then outstanding shares of Common Stock of
the Company and (ii) the number of shares of Common Stock then issuable upon the
conversion of then outstanding shares of convertible preferred stock or issuable
upon the exercise of then outstanding warrants or then outstanding stock options
(including, but not limited to, the Stock Options); and provided, further,
however, that the number of shares of Common Stock issuable to Terry S. Jacobs
and William Stakelin upon the exercise of any such Stock Options shall not
exceed the lesser of (x) 733,000 individually (or 1,466,000 in the aggregate) or
(y) 5.5% individually (or 11% in the aggregate) of the sum of (A) all then
outstanding shares of Common Stock of the Company and (B) the number of shares
of Common Stock then issuable upon the conversion of then outstanding shares of
convertible preferred stock or issuable upon the exercise (and conversion) of
then outstanding warrants or then outstanding stock options computed on a fully
diluted basis. If the Stock Options are granted, the Company shall grant the
Stock Options at an exercise price equal to at least the per share fair market
value of the Common Stock (as determined by the Company's Board
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of Directors) at the time of such grant, but in no event less than $5.00 per
share. From and after the First Closing Date, any increase in the number of
Stock Options available for grant under the Stock Option Plan or in the maximum
number of shares of Common Stock issuable upon the exercise of all such Stock
Options (other than pursuant to the operation of customary antidilution
provisions contained in the Stock Option Plan) shall require the approval of the
Company's Board of Directors and Waller- Sutton.
8.11 BUSINESS ACTIVITIES. The Company shall engage in no business or
business activity other than the businesses and business activities in which it
is currently engaged and the performance of its obligations under the
Transaction Documents.
8.12 BOARD CONSENT. The Company shall not, and shall not enter into any
agreement or commitment to, engage in any transaction that is required pursuant
to the terms of the Stockholders' Agreement to be approved by the Company's
Board of Directors and/or Waller-Sutton, including but not limited to any
merger, acquisition, change of control, issuance of equity or debt securities
(including the issuance of Stock Options in excess of the amounts specified in
Section 8.10 hereof), sale of assets or the like, without each required approval
having been obtained.
8.13 RESERVATION OF SHARES. The Company shall at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issuance or delivery upon (a) exercise of the options and warrants set forth on
Schedule 5.19, the Stock Options and the Investor Warrants, and (b) conversion
of the Shares, the maximum number of shares of capital stock that may be
issuable or deliverable upon such exercise or conversion, as the case may be
(the "Exercisable Shares"). The Exercisable Shares shall, when issued or
delivered and paid for in accordance with such options, warrants, the Stock
Options, the Investor Warrants or the Certificate of Amendment with respect to
the Shares, as the case may be, be duly and validly issued and fully paid and
non-assessable. The Company shall issue such capital stock in accordance with
the provisions of such options, warrants, the Stock Options, the Investor
Warrants or the Certificate of Amendment with respect to the Shares, as the case
may be, and shall otherwise comply, in each case, with the terms thereof.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement, any investigation by or on behalf of either
Purchaser, acceptance of the Shares and payment therefor, or termination of this
Agreement until the date that is 12 months after the final Additional Closing
Date, except for the representations and warranties set forth in the Acquisition
Documents which are incorporated herein pursuant to Section 5.33, which shall
terminate one year from the closing of the acquisition effected pursuant to each
such Acquisition Document and except for representations and warranties set
forth in Sections 5.9, 5.11, 5.13, 5.16, 5.19 and 5.20 and all matters
constituting fraud, or
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intentional or willful misconduct, which shall survive until the expiration of
the applicable statute of limitation periods (including extensions or waivers
thereof). If notification of a breach of any representation or warranty is given
on or before the applicable survival period, any claim with respect to such
breach shall survive until finally resolved by agreement of the parties or
nonappealable court order.
9.2 NOTICES. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to Waller-Sutton:
Waller-Sutton Media Partners, L.P.
c/o Waller-Sutton Management Group, Inc.
1 Rockefeller Plaza, Suite 3300
New York, New York 10020
Telecopier No.: (212)218-4355
Attention: Cathy M. Brienza
with a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza, 29th Floor
New York, New York 10112
Telecopier No.: (212) 698-7825
Attention: Ronald Greenberg, Esq.
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(b) If to the Company:
Regent Communications, Inc.
50 E. RiverCenter Blvd., Suite 180
Covington, KY 41011
Telecopier: 606-292-0351
Attention: Terry S. Jacobs
with a copy to:
Strauss & Troy
2100 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202-4186
Telecopier: 513-241-8259
Attention: Alan C. Rosser, Esq.
(c) If to any Purchaser other than Waller-Sutton, to such
Purchaser at its address as it appears on the books
and records of the Company or such other address as
to which such Purchaser shall have notified the
Company in accordance with the provisions of this
Section 9.2.
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; when delivered by courier, if
delivered by commercial overnight courier service; five Business Days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
9.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the parties
hereto. Subject to applicable securities laws and FCC limitations, each
Purchaser may assign any of its rights under any of the Transaction Documents to
any Person, and, also subject to the terms of the Stockholders' Agreement, any
holder of any of the Shares or any of the Common Stock issuable upon conversion
of the Series F Preferred Stock may assign any such securities to any Person.
The Company may not assign any of its rights under this Agreement without the
prior written consent of Waller-Sutton. Except as provided in Article 7, no
Person other than the parties hereto and their successors and permitted assigns
is intended to be a beneficiary of any of the Transaction Documents.
9.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any of the parties hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and
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are not exclusive of any remedies that may be available to the parties hereto at
law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by all of the parties hereto, and (ii) only in the specific instance
and for the specific purpose for which made or given; provided, however, that
any amendment, supplement or modification of or to any provision of Article 8
hereof, and any consent to any departure by any party from the terms of any
provision of Article 8 hereof, shall be effective if it is made or given in
writing and signed by the Purchasers holding a majority of the issued and
outstanding shares of Series F Preferred Stock (provided that such majority
shall include Waller-Sutton), and provided further, however, that amendments and
waivers to the provisions of Article 3 effected or given at any time following
the Initial Closing shall be binding on all Purchasers if agreed to in writing
by the Company and Waller-Sutton. Except where notice is specifically required
by this Agreement, no notice to or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or other
circumstances.
9.5 SIGNATURES AND COUNTERPARTS. Telefacsimile transmissions of any
executed original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
9.6 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
9.8 JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
AGREES THAT THE ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE SHARES OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO
THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND
EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT THE
SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY
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HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS
SET FORTH IN SECTION 9.2, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH
MAILING.
9.9 SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
9.10 RULES OF CONSTRUCTION. Unless the context otherwise requires, "or"
is not exclusive, and references to sections or subsections refer to sections or
subsections of this Agreement.
9.11 ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
9.12 CERTAIN EXPENSES. The Company agrees to pay all reasonable
expenses of Waller-Sutton (including reasonable fees, charges and disbursements
of its counsel) incurred in connection with (i) any amendment, supplement,
modification or waiver of or to any provision of this Agreement (including,
without limitation, a response to a request by the Company for such Purchasers'
consent to any action otherwise prohibited hereunder), the Certificate of
Amendment, or consent to any departure by the Company from, the terms of any
provision of this Agreement or the Certificate of Amendment; and (ii) any
matters on behalf of the Purchasers arising hereunder or under the Transaction
Documents, including without limitation the reasonable out-of-pocket expenses of
the Purchasers incurred to monitor or confirm the Company's performance of or
compliance with all agreements and covenants on its part to be performed or
complied with by the Company hereunder or thereunder.
9.13 PUBLICITY. Except as may be required by applicable law, none of
the parties hereto shall issue a publicity release or announcement or otherwise
make any public disclosure concerning this Agreement or the transactions
contemplated hereby, without prior approval by the other party hereto. If any
announcement is required by law to be made by any party hereto, prior to making
such announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon.
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9.14 FURTHER ASSURANCES. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
9.15 OBLIGATIONS OF THE PARTIES. Each Purchaser's obligations and the
obligations of the Company hereunder are subject to the execution and delivery
by the other Purchasers of this Agreement. The obligations of each Purchaser
hereunder and under the other Transaction Documents to which such Purchaser is a
party shall be several and not joint, and no Purchaser shall be liable or
otherwise responsible for the acts or omissions of any other Purchaser.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
REGENT COMMUNICATIONS, INC.
By:__________________________________________________
Name:
Title:
WALLER-SUTTON MEDIA PARTNERS, L.P.
By: WALLER-SUTTON MEDIA, L.L.C., its General Partner
By:__________________________________________________
Member
WPG CORPORATE DEVELOPMENT ASSOCIATES V, L.P.
By:__________________________________________________
Name:
Title:
WPG CORPORATE DEVELOPMENT ASSOCIATES V
(OVERSEAS), L.P.
By:__________________________________________________
Name:
Title:
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GENERAL ELECTRIC CAPITAL CORPORATION
By:__________________________________________________
Name:
Title:
RIVER CITIES CAPITAL AND LIMITED PARTNERSHIP
By:__________________________________________________
Name:
Title:
--------------------------------------------------
WILLIAM H. INGRAM
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