<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CITADEL BROADCASTING COMPANY
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
NEVADA 4832 86-0703641
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
CITADEL LICENSE, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
NEVADA 4832 86-0837753
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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1015 Eastman Drive
Bigfork, Montana 59911
(406) 837-5360
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Lawrence R. Wilson
President and Chief Executive Officer
Citadel Broadcasting Company
1015 Eastman Drive
Bigfork, Montana 59911
(406) 837-5360
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
Bryan D. Rosenberger, Esq.
Eckert Seamans Cherin & Mellott, LLC
42nd Floor, 600 Grant Street
Pittsburgh, PA 15219
(412) 566-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OR SHARE(1) OFFERING PRICE(1) FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10-1/4% Series B Senior Subordinated Notes due
2007 $101,000,000 100% $101,000,000 $30,606
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13-1/4% Series B Exchangeable Preferred Stock,
no par value 1,000,000(2) $100 $100,000,000 $30,304
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13-1/4% Exchangeable Debentures due 2009(3) -- -- -- --
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Guarantee of 10-1/4% Series B Senior
Subordinated Notes due 2007(4) -- -- -- --
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Guarantee of 13-1/4% Exchange Debentures due
2009(4) -- -- -- --
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) The Registration Statement also covers such indeterminable number of shares
of the Company's 13-1/4% Series B Exchangeable Preferred Stock (the "Series
B Exchangeable Preferred Stock") as may be issued and delivered to holders
of Series B Exchangeable Preferred Stock as an in-kind dividend payment on
the Series B Exchangeable Preferred Stock. No additional registration fee is
payable in respect thereof.
(3) The Registration Statement covers the Company's 13-1/4% Exchange Debentures
due 2009 (the "Exchange Debentures") to be issued and delivered to the
holders of Series B Exchangeable Preferred Stock when and if the Company
exchanges the Exchange Debentures for the Series B Exchangeable Preferred
Stock and such indeterminable number of Exchange Debentures as may be paid
in lieu of cash interest on the Exchange Debentures. Pursuant to Rule
457(i), no registration fee is required with respect to the Exchange
Debentures.
(4) Pursuant to Rule 457(n), no registration fee is required with respect to the
Guarantees.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 1997
PROSPECTUS
CITADEL LOGO CITADEL BROADCASTING COMPANY
OFFER TO EXCHANGE
10-1/4% SENIOR SUBORDINATED NOTES DUE 2007
FOR
10-1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
AND
13-1/4% SERIES A EXCHANGEABLE PREFERRED STOCK
FOR
13-1/4% SERIES B EXCHANGEABLE PREFERRED STOCK
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
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Citadel Broadcasting Company, a Nevada corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letters of Transmittal (the "Exchange Offer"),
to exchange (i) its 10-1/4% Series B Senior Subordinated Notes due 2007 (the
"Series B Notes") for an equal principal amount of its outstanding 10-1/4%
Senior Subordinated Notes due 2007 (the "Series A Notes"), of which an aggregate
of $101,000,000 in principal is outstanding as of the date hereof, and (ii) one
new share of its 13-1/4% Series B Exchangeable Preferred Stock (the "Series B
Exchangeable Preferred Stock") for each outstanding share of its 13-1/4% Series
A Exchangeable Preferred Stock (the "Series A Exchangeable Preferred Stock"), of
which 1,000,000 shares are outstanding as of the date hereof. The form and the
terms of each of the Series B Notes and the Series B Exchangeable Preferred
Stock will be the same as the form and terms of each of the Series A Notes and
the Series A Exchangeable Preferred Stock, respectively, except that (i) each of
the Series B Notes and the Series B Exchangeable Preferred Stock will bear a
"Series B" designation and will bear different CUSIP Numbers from the Series A
Notes and the Series A Exchangeable Preferred Stock, (ii) the Series B Notes and
the Series B Exchangeable Preferred Stock will have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and, therefore, will
not bear legends restricting their transfer, and (iii) holders of the Series B
Notes and the Series B Exchangeable Preferred Stock will not be entitled to
certain rights of holders of Series A Notes and Series A Exchangeable Preferred
Stock, respectively, under the Registration Rights Agreements (as defined),
which rights will terminate as to holders of the Series B Notes and Series B
Exchangeable Preferred Stock upon consummation of the Exchange Offer. Series B
Notes will evidence the same debt as the Series A Notes and will be entitled to
the benefits of the indenture (the "Notes Indenture") dated as of July 1, 1997
governing the Series A Notes and the Series B Notes. The Series A Notes and the
Series B Notes are sometimes referred to herein collectively as the "Notes." The
Series A Exchangeable Preferred Stock and the Series B Exchangeable Preferred
Stock are sometimes referred to herein collectively as the "Exchangeable
Preferred Stock." The Series A Notes and the Series A Exchangeable Preferred
Stock are sometimes referred to herein collectively as the "Series A
Securities." The Series B Notes and the Series B Exchangeable Preferred Stock
are sometimes referred to herein collectively as the "Series B Securities."
Interest on the Series B Notes will accrue from and including their
issuance date. Additionally, interest on the Series B Notes will accrue from the
last interest payment date on which interest was paid on the Series A Notes
surrendered in exchange therefor or, if no interest has been paid on the Series
A Notes, from the date of original issuance of such Series A Notes to but not
including the issuance date of the Series B
(continued on next page)
SEE "RISK FACTORS" WHICH BEGINS ON PAGE 20 OF THIS PROSPECTUS, FOR A DESCRIPTION
OF CERTAIN RISKS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR SERIES A
SECURITIES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE> 3
Notes. Interest on the Notes is payable semi-annually on January 1 and July 1 of
each year, commencing January 1, 1998. The Notes are unconditionally guaranteed
(the "Subsidiary Notes Guarantees") on a senior subordinated basis by Citadel
License, Inc., a wholly owned subsidiary of the Company ("Citadel License"), and
will be guaranteed by any future Restricted Subsidiaries (as defined). The Notes
are unsecured senior subordinated obligations of the Company and are
subordinated to all Senior Debt (as defined) of the Company, including
indebtedness under the Credit Facility (as defined). As of June 30, 1997, on a
pro forma basis, after giving effect to the Recent 1997 Acquisitions (as
defined), the Pending Transactions (as defined) and the sale of the Series A
Securities (the "Original Offerings"), the aggregate amount of Senior Debt of
the Company would have been approximately $113.6 million. The Company has not
issued, and does not have any firm arrangement to issue, any significant Debt
(as defined) that would be subordinate to the Notes, except as described below
in connection with the exchange, at the Company's option, of the Exchangeable
Preferred Stock for the Exchange Debentures (as defined).
Dividends on the Series B Exchangeable Preferred Stock will accumulate from
and including its issuance date. Additionally, dividends on the Series B
Exchangeable Preferred Stock will accumulate from the last dividend payment date
on which dividends were paid on the Series A Exchangeable Preferred Stock
surrendered in exchange therefor or, if no dividends have been paid on the
Series A Exchangeable Preferred Stock, from the date of original issuance of
such Series A Exchangeable Preferred Stock to but not including the issuance
date of the Series B Exchangeable Preferred Stock. Dividends on the Exchangeable
Preferred Stock are payable semi-annually on January 1 and July 1 of each year,
commencing January 1, 1998, at a rate per annum of 13-1/4% of the liquidation
preference per share. Dividends may be paid, at the Company's option, on any
dividend payment date occurring on or prior to July 1, 2002, either in cash or
in additional shares of Exchangeable Preferred Stock. Thereafter, all dividends
will be payable only in cash.
The Notes are redeemable, in whole or in part, at the option of the
Company, at any time on or after July 1, 2002, at the redemption prices set
forth herein, plus accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time prior to July 1, 2000, the Company may, at
its option, redeem a portion of the Notes with the net proceeds of one or more
Public Equity Offerings (as defined), at a redemption price equal to 110.25% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of redemption; provided, however, that after any such redemption there is
outstanding at least $75.0 million aggregate principal amount of the Notes. Upon
the occurrence of a Change of Control (as defined), the Company will be required
to make an offer to purchase all of the then outstanding Notes at a price equal
to 101% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the repurchase date. See "Description of the Notes."
The Exchangeable Preferred Stock is redeemable, in whole or in part, at the
option of the Company, at any time on or after July 1, 2002, at the redemption
prices set forth herein, plus accumulated and unpaid dividends, if any, to the
date of redemption. In addition, at any time prior to July 1, 2000, the Company
may, at its option, redeem up to an aggregate of 35% of the shares of
Exchangeable Preferred Stock with the net proceeds of one or more Public Equity
Offerings, at a redemption price equal to 113.25% of the liquidation preference
thereof, plus accumulated and unpaid dividends, if any, to the date of
redemption; provided, however, that after any such redemption there is
outstanding at least $75.0 million aggregate liquidation preference of the
Exchangeable Preferred Stock. The Company is required, subject to certain
conditions, to redeem all of the Exchangeable Preferred Stock outstanding on
July 1, 2009, at a redemption price equal to 100% of the liquidation preference
thereof, plus accumulated and unpaid dividends, if any, to the date of
redemption. Upon the occurrence of a Change of Control, the Company will be
required to make an offer to purchase all of the then outstanding shares of
Exchangeable Preferred Stock at a price equal to 101% of the liquidation
preference thereof, plus accumulated and unpaid dividends, if any, to the
repurchase date.
Subject to certain conditions, the Exchangeable Preferred Stock is
exchangeable in whole, but not in part, at the option of the Company, on any
dividend payment date, for the Company's 13-1/4% Subordinated Exchange
Debentures due 2009 (including any such securities paid in lieu of cash
interest, as described herein, the "Exchange Debentures"). Interest on the
Exchange Debentures will be payable at a rate of 13-1/4%
(continued on next page)
<PAGE> 4
per annum and will accrue from the date of issuance thereof. Interest on the
Exchange Debentures will be payable semi-annually in cash or, at the option of
the Company, on or prior to July 1, 2002, in additional Exchange Debentures, on
each January 1 and July 1, commencing on the first such date after the exchange
of the Exchangeable Preferred Stock for the Exchange Debentures. The Exchange
Debentures mature on July 1, 2009, and are redeemable, in whole or in part, at
the option of the Company, at any time on or after July 1, 2002, at the
redemption prices set forth herein, plus accrued and unpaid interest, if any, to
the date of redemption. In addition, at any time prior to July 1, 2000, the
Company may, at its option, redeem up to an aggregate of 35% of the aggregate
principal amount of the Exchange Debentures with the net proceeds of one or more
Public Equity Offerings, at a redemption price equal to 113.25% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
redemption; provided, however, that after any such redemption there is
outstanding at least $75.0 million aggregate principal amount of the Exchange
Debentures. Upon the occurrence of a Change of Control, the Company will be
required to make an offer to purchase all of the then outstanding Exchange
Debentures at a price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the repurchase date.
The Exchange Debentures will be unsecured subordinated obligations of the
Company and will be subordinated to all existing and future Senior Debt and
Senior Subordinated Debt (as defined), including the Notes, of the Company and
will rank pari passu with or senior to all future Debt of the Company that
expressly provides that it ranks pari passu with or junior to the Exchange
Debentures. As of June 30, 1997, on a pro forma basis, after giving effect to
the Recent 1997 Acquisitions, the Pending Transactions and the Original
Offerings, the aggregate amount of Senior Debt and Senior Subordinated Debt
(including the Notes) of the Company would have been approximately $214.6
million, and no Debt of the Company would have been pari passu with or
subordinated to the Exchange Debentures. See "Description of the Exchangeable
Preferred Stock and Exchange Debentures."
The Company will accept for exchange any and all validly tendered Series A
Securities not withdrawn prior to 5:00 p.m., New York City time, on
, 1997, unless extended by the Company in its sole discretion (the "Expiration
Date"). Tenders of Series A Securities may be withdrawn at any time prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Series A Notes or any minimum number of shares of
Series A Exchangeable Preferred Stock being tendered for exchange. In the event
the Company terminates the Exchange Offer and does not accept for exchange any
Series A Securities, the Company will promptly return all previously tendered
Series A Securities to the holders thereof. The Exchange Offer is subject to
certain customary conditions. See "The Exchange Offer--Conditions." The Company
has agreed to pay all expenses incident to the Exchange Offer. The Company will
not receive any proceeds from the Exchange Offer.
The Series A Securities were originally issued and sold on July 3, 1997 in
transactions which were not registered under the Securities Act in reliance upon
exemptions from the registration requirements of the Securities Act.
Accordingly, the Series A Securities may not be reoffered, resold or otherwise
pledged, hypothecated or transferred in the United States unless registered
under the Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Series B Securities are
being offered hereunder to satisfy the obligations of the Company under the
Registration Rights Agreements. See "The Exchange Offer--Purpose and Effect of
Exchange Offer."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
the Series B Notes and the Series B Exchangeable Preferred Stock issued pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by any holder thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without further registration under the Securities Act and without delivery
of a prospectus that satisfies the requirements of Section 10 of the Securities
Act, provided that such Series B Securities are acquired in the ordinary course
of such holder's business and that such holder does not intend to participate,
and has no arrangement or understanding with any person to participate, in the
distribution of such Series B Securities. Eligible holders wishing to accept the
Exchange Offer must represent
(continued on next page)
<PAGE> 5
to the Company that such conditions have been met. Each broker-dealer that
receives Series B Securities pursuant to the Exchange Offer in exchange for
Series A Securities acquired for its own account as a result of market-making or
other trading activities (a "Participating Broker-Dealer") may be a statutory
underwriter and must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Series
B Securities. The Letters of Transmittal state that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Series B
Securities received in exchange for Series A Securities where such Series A
Securities were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 120 days after the Expiration Date, it will make this
Prospectus available to any Participating Broker-Dealer for use in connection
with any such resale. See "Plan of Distribution."
Holders of Series A Notes and Series A Exchangeable Preferred Stock whose
Series A Notes and Series A Exchangeable Preferred Stock are not tendered and
accepted in the Exchange Offer will continue to hold such Series A Notes and
Series A Exchangeable Preferred Stock and will be entitled to all the rights and
preferences and will be subject to the limitations applicable thereto under the
Notes Indenture governing the Series A Notes and the Series B Notes and the
certificate of designation governing the Series A Exchangeable Preferred Stock
and Series B Exchangeable Preferred Stock (the "Certificate of Designation"),
respectively. Following consummation of the Exchange Offer, the holders of
Series A Notes and Series A Exchangeable Preferred Stock will continue to be
subject to the existing restrictions upon transfer thereof under the Securities
Act.
There has been no previous public market for the Series A Securities or the
Series B Securities. The Company does not intend to list the Series B Securities
on any securities exchange or to seek approval for quotation through any
automated quotation system. There can be no assurance that an active market for
the Series B Securities will develop. See "Risk Factors--Lack of Established
Trading Market." Moreover, to the extent that Series A Securities are tendered
and accepted in the Exchange Offer, the trading market for untendered and
tendered but unaccepted Series A Securities could be adversely affected.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF SERIES A NOTES OR SERIES A EXCHANGEABLE
PREFERRED STOCK IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE
ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY
LAWS OF SUCH JURISDICTION.
<PAGE> 6
CERTAIN OF THE MATTERS DISCUSSED UNDER "PROSPECTUS SUMMARY," "RISK
FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS," "BUSINESS" AND ELSEWHERE IN THIS PROSPECTUS CONTAIN
FORWARD-LOOKING STATEMENTS CONCERNING THE COMPANY'S OPERATIONS, ECONOMIC
PERFORMANCE AND FINANCIAL CONDITION, INCLUDING, AMONG OTHER THINGS, THE
COMPANY'S BUSINESS STRATEGY. THESE STATEMENTS ARE BASED ON THE COMPANY'S
EXPECTATIONS AND ARE SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES. ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED DUE TO A NUMBER OF FACTORS,
INCLUDING THOSE IDENTIFIED UNDER "RISK FACTORS" AND ELSEWHERE IN THIS
PROSPECTUS.
MARKET AND STATION DATA
Unless otherwise indicated herein, (i) all metropolitan statistical area
("MSA") rank information and information concerning the number of stations and
station groups in a market have been obtained from Investing in Radio 1997
Market Report (1st ed.) (the "1997 BIA Report") published by BIA Publications,
Inc. ("BIA"); (ii) all audience share and primary demographic share and rank
information have been obtained from the Spring 1997 Radio Market Report (the
"Arbitron Reports") published by The Arbitron Company ("Arbitron"); (iii)
station and station group market revenue share and rank information for the
Albuquerque, Colorado Springs, Eugene, Modesto, Reno, Salt Lake City and Spokane
markets are given for the first six months of 1997 and have been obtained from
the June 1997 Miller, Kaplan Market Revenue Report, a publication of Miller,
Kaplan, Arase & Co., Certified Public Accountants; (iv) station and station
group market revenue share and rank information for the Allentown/Bethlehem,
Billings, Boise, Harrisburg, Little Rock, Medford, Tri-Cities,
Wilkes-Barre/Scranton and York markets are given for 1996 and have been obtained
from BIA's -- Master Access Radio Database, version 2.0 (data as of June 26,
1997); (v) station and station group market revenue share and rank information
for the Providence market is given for the first six months of 1997 and has been
obtained from the June 1997 Radio Revenue Report, a publication of Hungerford,
Aldrin, Nichols & Carter, P.C., Certified Public Accountants ("Hungerford");
(vi) market revenue is given for the period indicated and, with respect to a
particular market, has been obtained from the same source from which station
group market revenue share and rank information have been obtained for such
market, except that market revenue data for 1996 and 1995 for the Albuquerque,
Colorado Springs, Eugene, Modesto, Reno, Salt Lake City and Spokane markets and
for the Providence market have been obtained from the December 1996 Miller,
Kaplan Market Revenue Report and Hungerford's December 1996 Radio Revenue
Report, respectively; and (vii) unless otherwise noted, information concerning
the number of viable stations in a market has been obtained from Duncan's Radio
Market Guide (1997 ed.) ("Duncan's") compiled by Duncan's American Radio, Inc.
Duncan's defines "viable stations" as stations which are active and viable
competitors for advertising dollars in the market. If the total number of viable
stations within a market was not a whole number, that number was rounded up to
the nearest whole number.
A radio station's designated market may be different from its community of
license. If a radio station's call letters have changed during the time the
Company has owned or operated the station, the station is described herein by
its call letters currently in use, unless otherwise indicated.
"Broadcast cash flow" consists of operating income (loss) before
depreciation, amortization and corporate expenses. "EBITDA" consists of
operating income (loss) before depreciation and amortization. Although broadcast
cash flow and EBITDA are not measures of performance calculated in accordance
with generally accepted accounting principles ("GAAP"), management believes that
they are useful in evaluating the Company because they are measures widely used
in the broadcast industry to evaluate a radio company's operating performance.
However, broadcast cash flow and EBITDA should not be considered in isolation or
as substitutes for net income, cash flows from operating activities and other
income or cash flow data prepared in accordance with GAAP as a measure of
liquidity or profitability.
i
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<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in connection with, the more detailed information and financial statements and
notes thereto appearing elsewhere in this Prospectus. Unless the context
otherwise requires, the term the "Company" refers to Citadel Broadcasting
Company and its subsidiary, and the term "Citadel Communications" refers to
Citadel Communications Corporation, the Company's parent. Unless the context
otherwise requires, the term "operate," as used in connection with the Company's
radio station activities, includes the provision of programming and the sale of
advertising pursuant to local marketing agreements ("LMA") or the sale of
advertising pursuant to joint sales agreements ("JSA"). Investors should
consider carefully the information set forth under "Risk Factors" in this
Prospectus. Certain terms used in this Prospectus are defined herein under the
caption "Glossary of Certain Defined Terms."
THE COMPANY
The Company is a radio broadcasting company that focuses on acquiring,
developing and operating radio stations in mid-sized markets. Upon completion of
the Pending Transactions (as defined), the Company will own or operate 68 FM and
31 AM radio stations in 18 markets and will have the right to construct one
additional FM station, and the Company's stations will comprise the leading
radio station group in terms of revenue share in 13 of those markets.
The Company's primary strategy is to secure and maintain a leadership
position in the markets it serves and to expand into additional mid-sized
markets where it believes a leadership position can be obtained. Upon entering a
market, the Company seeks to acquire additional stations which, when integrated
with its existing operations, allow it to reach a wider range of demographic
groups that appeal to advertisers, enhance operating performance and achieve
substantial cost savings. Since January 1, 1993, the Company has completed 17
station acquisitions in markets where it already owned stations, and it is
currently party to agreements to acquire nine additional stations in markets in
which it currently owns radio stations.
The Company chooses programming formats for its stations that are intended
to maximize each station's cash flow. The Company's stations broadcast a number
of formats including country, news/talk, adult contemporary, rock and oldies,
each of which is designed to appeal to a specific audience in each market. The
Company's portfolio of stations is diversified in terms of format, target
demographics and geographic location. Because of the size of its portfolio and
its individual radio station groups, the Company believes it is not unduly
reliant upon the performance of any single station. The Company also believes
that the diversity of its portfolio of radio stations helps insulate the Company
from downturns in specific markets and changes in format preferences.
The Company believes that mid-sized markets represent attractive
opportunities because, as compared to the 50 largest markets in the United
States, they are generally characterized by (i) lower radio station purchase
prices as a multiple of broadcast cash flow, (ii) fewer sophisticated and
well-capitalized competitors, including both radio and competing advertising
media such as newspapers and television and (iii) less direct format competition
due to the smaller number of stations in any given market. The Company believes
that the attractive operating characteristics of mid-sized markets coupled with
the opportunity to establish or expand in-market radio station groups create the
potential for substantial revenue growth and cost efficiencies. As a result,
management seeks to achieve broadcast cash flow margins that are comparable to
the higher margins that historically were generally achievable only in the 50
largest markets.
STATION PORTFOLIO
The Company currently owns 49 FM and 22 AM radio stations, sells
advertising on behalf of four FM and five AM radio stations pursuant to JSAs and
provides programming and sells advertising on behalf of three FM radio stations
and one AM radio station pursuant to LMAs. The Company has entered into
agreements to purchase (the "Pending Acquisitions") six FM and three AM radio
stations in its existing markets and 11 FM and four AM radio stations, one FM
license and related assets in new markets. In
1
<PAGE> 9
addition, the Company has entered into agreements to sell (such sales
collectively with the Pending Acquisitions, the "Pending Transactions") four FM
and three AM radio stations. Upon completion of the Pending Transactions, the
Company will own 62 FM and 26 AM radio stations in 18 mid-sized markets, operate
six FM and five AM additional radio stations in its markets pursuant to LMAs or
JSAs and have the right to construct one additional FM radio station.
The following chart sets forth certain information with respect to the
radio stations owned or operated by the Company after giving effect to the
Pending Transactions:
<TABLE>
<CAPTION>
COMBINED
NUMBER OF COMBINED MARKET
STATIONS MARKET REVENUE
----------- AUDIENCE --------------
MSA RANK FM AM SHARE(1) SHARE RANK
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EXISTING MARKETS(2):
Albuquerque, NM.................................. 71 5 3 38.0% 58.0 % 1
Allentown/Bethlehem, PA(3)(6).................... 65 2 0 16.9 24.1 2
Billings, MT..................................... 238 4 1 50.5 58.3 1
Colorado Springs, CO(4).......................... 95 5 2 43.0 63.5 1
Eugene, OR....................................... 146 2 1 18.7 32.4 1
Harrisburg, PA(5)................................ 73 1 0 7.4 12.2 4
Medford, OR...................................... 201 4 2 30.9 55.3 1
Modesto, CA...................................... 122 4 1 31.6 62.2 1
Providence, RI(6)................................ 31 4 2 26.4 36.4 1
Quincy, IL....................................... NA 3 1 NA NA NA
Reno, NV......................................... 131 3 1 36.5 47.4 1
Salt Lake City, UT(6)............................ 35 4 2 20.1 22.7 1
Spokane, WA(4)................................... 87 4 4 43.1 53.6 1
Tri-Cities, WA................................... 200 4 1 28.0 40.2 1
Wilkes-Barre/Scranton, PA(6)(7).................. 62 7 5 23.6 33.1 2
York, PA(5)...................................... 103 1 1 6.9 11.1 3
-- --
TOTAL..................................... 57 27
NEW MARKETS:
Boise, ID(8)..................................... 129 4 1 29.1% 36.4 % 1
-- --
Little Rock, AR(9)............................... 82 8 3 29.9 37.9 1
-- --
TOTAL..................................... 12 4
-- --
TOTAL STATIONS............................ 69 31
== ==
</TABLE>
- ---------------
NA -- Information not available.
(1) Combined market audience share has been derived from Arbitron surveys of
persons ages 25 to 54, listening Monday through Sunday, 6:00 a.m. to 12:00
midnight.
(2) A market is not included if the Company has entered into an agreement to
sell all of its radio stations in such market.
(3) Does not include one station to be sold.
(4) Includes four stations in Colorado Springs and four stations in Spokane for
which the Company sells advertising under a JSA.
(5) Harrisburg and York are adjacent markets with numerous overlapping radio
signals.
(6) Includes one station in Providence, two stations in Salt Lake City, five
stations in Wilkes-Barre/Scranton and one station in Allentown/Bethlehem
with respect to which the Company has entered into agreements to acquire.
(7) Includes two stations for which the Company provides programming and sells
advertising under an LMA and one station for which the Company sells
advertising under a JSA (all of which the Company has an option to acquire).
(8) The Company has entered into agreements to acquire all of these stations.
(9) The Company has entered into agreements to acquire all of these stations.
One station is not yet operational. Three of these stations serve the
surrounding communities outside of Little Rock.
2
<PAGE> 10
OPERATING STRATEGY
In order to maximize its radio stations' appeal to advertisers, and thus
the revenue and cash flow of its stations, the Company has implemented the
following strategies:
Ownership of Strong Station Groups. The Company seeks to secure and
maintain a leadership position in the markets it serves through the ownership of
multiple stations in a market. By strategically coordinating programming,
promotional and selling strategies among a group of local stations, the Company
attempts to capture a wide range of demographic groups which appeal to
advertisers. The Company believes that the diversification of its programming
formats and its collective inventory of available advertising time strengthen
relationships with advertisers and increase the Company's ability to maximize
the value of its inventory.
The Company believes that its ability to leverage the existing programming
and sales resources of its strong station groups enables it to enhance the
growth potential of both new and underperforming stations while reducing the
risks associated with undertaking means of improving station performance,
including launching new formats. The Company also believes that operating
leading station groups allows it to attract and retain talented local management
teams, on-air personalities and sales personnel, which it believes are essential
to operating success. Furthermore, the Company seeks to achieve substantial cost
savings through the consolidation of facilities, management, sales and
administrative personnel and operating resources (such as on-air talent,
programming and music research) and through the reduction of other redundant
expenses. The Company believes that having multiple stations in a market also
enhances its ability to sell the advantages of radio advertising versus other
advertising media.
Aggressive Sales and Marketing. The Company seeks to maximize its share of
local advertising revenue in each of its markets by implementing and maintaining
strong sales and marketing programs. The Company provides extensive training for
its sales personnel through in-house sales and time management programs, and it
retains various independent consultants who hold frequent seminars for and are
available for consultation with the Company's sales personnel. The Company also
emphasizes regular, informal exchanges of ideas among its management and sales
personnel across its various markets. Because advertising time is perishable,
the Company seeks to maximize its revenue through the utilization of
sophisticated inventory management techniques that allow it to provide its sales
personnel with frequent price adjustments based on regional and local market
conditions. To further strengthen its relationships with advertisers, the
Company also offers and markets its ability to create customer traffic through
on-site events staged at, and broadcast from, an advertiser's business.
Targeted Programming. To maintain or improve its position in each market,
the Company combines extensive market research with an assessment of its
competitors' vulnerabilities in order to identify significant and sustainable
target audiences. The Company then tailors the programming, marketing and
promotion of each station to maximize its appeal to its target audience. Within
each market, the Company attempts to build strong franchises through (i) the
creation of distinct, highly visible profiles for its on-air personalities,
particularly those broadcasting during morning "drive time" traditionally
between 6:00 a.m. and 10:00 a.m., (ii) the formulation of recognizable "brand
names" for select stations such as the "Bull" and "Cat Country" and (iii) active
involvement in community events and charities. The Company has achieved
particular success in programming country formats and currently operates the
leading country station in ten of its 13 existing markets where it programs
country music.
Decentralized Operations. The Company believes that radio is primarily a
local business and that much of its success is the result of the efforts of
regional and local management and staff. Accordingly, the Company decentralizes
its operations. Each of the Company's regional and local station groups is
managed by a team of experienced broadcasters who understand radio format
trends, demographics and competitive opportunities of the particular market.
Regional and local managers are responsible for preparing annual operating
budgets, and a portion of their compensation is linked to meeting or surpassing
operating targets. Corporate management approves each station group's annual
operating budgets and imposes strict financial reporting requirements to track
station performance. Corporate management is responsible for long range
planning, establishing Company policies and serving as a resource to local
management. The Company has implemented local sales reporting systems at each
station to provide local and corporate management with daily sales information.
3
<PAGE> 11
ACQUISITION STRATEGY
As the Company has achieved a leading position in most of the markets it
currently serves, the Company expects that, in addition to acquiring additional
radio stations in existing markets, it will emphasize the acquisition of radio
stations in new markets which present opportunities for the Company to apply its
operating strategies. The Company believes that such acquisitions will enable it
to achieve, among other things, greater size and geographic diversification. The
Company anticipates that it will continue to focus on mid-sized markets rather
than attempt to expand into larger markets. Although competition among potential
purchasers for suitable radio station acquisitions is intense throughout the
United States, the Company believes that less competition exists, particularly
from the larger radio operators, in mid-sized markets as compared to larger
markets, affording the Company relatively more attractive acquisition
opportunities in these markets. There can be no assurance, however, that the
Company will be able to identify suitable and available acquisition
opportunities or that it will be able to consummate any such acquisition
opportunities.
In evaluating acquisition opportunities in new markets, the Company
assesses its potential, over time, to build leading radio station groups in
those markets. The Company believes that the creation of strong station groups
in local markets is essential to operating success and generally will not
consider entering a new market unless it believes it can acquire multiple
stations in the market. The Company also analyzes a number of additional factors
which it believes are important to its success, including the number and quality
of commercial radio signals broadcasting in the market, the nature of the
competition in the market, the Company's ability to improve the operating
performance of the radio station or stations under consideration and the general
economic conditions of the market.
The Company believes that its acquisition strategy, if properly
implemented, could have a number of benefits, including (i) diversification of
revenue and broadcast cash flow across a greater number of stations and markets,
(ii) improved broadcast cash flow margins through the consolidation of
facilities and the elimination of redundant expenses, (iii) enhanced utilization
of its senior management team, (iv) improved leverage in various key vendor
negotiations, (v) greater appeal to top industry management talent and (vi)
increased overall scale which should facilitate the Company's capital raising
activities.
CORPORATE HISTORY AND RECENTLY COMPLETED TRANSACTIONS
The Company was incorporated in Nevada in 1991, and in 1992 it acquired all
of the radio stations then owned or operated by Citadel Associates Limited
Partnership and Citadel Associates Montana Limited Partnership (collectively,
"Predecessor") and certain other radio stations. Lawrence R. Wilson, Chief
Executive Officer of the Company, was a co-founder and one of the two general
partners of Predecessor. In 1993, Citadel Communications was incorporated and
the Company was reorganized as a wholly owned subsidiary of Citadel
Communications. The Company acquired ownership of additional radio stations in
each of 1993, 1994, 1996 and 1997.
On July 3, 1997, the Company purchased all of the issued and outstanding
capital stock of Tele-Media Broadcasting Company ("Tele-Media") which owned or
operated 16 FM and ten AM radio stations in Pennsylvania, Rhode Island and
Illinois (the "Tele-Media Acquisition"). The purchase price for the Tele-Media
Acquisition was approximately $114.4 million, which included the repayment of
certain indebtedness of Tele-Media and the redemption of certain corporate bonds
and warrants of Tele-Media (collectively, the "Tele-Media Bonds"). Upon
consummation of the Tele-Media Acquisition, Tele-Media was merged with and into
the Company.
Effective as of January 1, 1997, Citadel Communications acquired Deschutes
River Broadcasting, Inc. ("Deschutes") which owned 18 radio stations in Montana,
Oregon and Washington. The total consideration paid was approximately $26.0
million. Following the acquisition, Deschutes was operated as a sister company
to the Company until June 20, 1997 when Deschutes was merged with and into the
Company (the "Subsidiary Merger").
The Company also acquired (i) two FM radio stations and one AM radio
station in Albuquerque, New Mexico and one FM radio station in Modesto,
California in four separate transactions in June 1996; (ii) one FM radio station
in Colorado Springs, Colorado and one FM radio station in Albuquerque, New
Mexico in
4
<PAGE> 12
two separate transactions in October 1996; (iii) two FM radio stations and one
AM radio station in Salt Lake City, Utah in two separate transactions in
February 1997 and April 1997; (iv) one FM radio station in Reno, Nevada in July
1997; (v) one FM radio station in Tri-Cities, Washington in September 1997; and
(vi) one FM radio station in Providence, Rhode Island in September 1997. Prior
to their acquisition by the Company, seven of these stations had been operated
by the Company under an LMA or JSA. The aggregate purchase price paid for these
stations and related assets was approximately $58.4 million, consisting of
approximately $54.2 million in cash and the balance in shares of preferred stock
of Citadel Communications. The Tele-Media Acquisition and the other acquisitions
which have occurred since June 30, 1997 are collectively referred to herein as
the "Recent 1997 Acquisitions."
The Company sold the Series A Securities on July 3, 1997 in order to
finance acquisitions by the Company, repay certain indebtedness of the Company
and provide cash for working capital purposes.
Concurrently with the closing of the Original Offerings, the Company
entered into amendments to the Credit Facility which allow for borrowings of up
to $150.0 million (although the actual amount which may be borrowed under the
Credit Facility is limited under the Certificate of Designation, the Notes
Indenture and, if the Exchange Debentures are issued, the indenture governing
the Exchange Debentures (the "Exchange Indenture")). See "Description of
Indebtedness -- Existing Loan Agreement," "Description of the Notes" and
"Description of the Exchangeable Preferred Stock and Exchange Debentures."
THE PENDING TRANSACTIONS
The Company has entered into various agreements to purchase (collectively,
the "In-Market Acquisitions") (i) one FM radio station in Providence, Rhode
Island, (ii) one FM radio station in Allentown/ Bethlehem, Pennsylvania (which
acquisition would include the sale by the Company of one AM radio station in
Allentown/Bethlehem), (iii) three FM and two AM radio stations in
Wilkes-Barre/Scranton, Pennsylvania and (iv) one FM radio station and one AM
radio station in Salt Lake City, Utah (collectively, the "In-Market Acquisition
Stations"). The Company currently operates six of the In-Market Acquisition
Stations under LMAs. The purchase price for these stations is approximately
$37.2 million, consisting of approximately $36.7 million in cash and the assets
of one AM radio station.
The Company has also entered into various agreements with respect to
several transactions (collectively, the "Little Rock Acquisitions") which, if
consummated would result in the Company owning an aggregate of seven FM and
three AM radio stations and the right to construct one FM radio station in
Little Rock, Arkansas (collectively, the "Little Rock Stations"). The Company
would also acquire ownership of the Arkansas Radio Network, a state-wide news
network. The aggregate purchase price for the Little Rock Stations, the Arkansas
Radio Network and certain related assets is approximately $37.9 million,
consisting of approximately $27.9 million in cash and the balance in shares of a
newly created series of preferred stock of Citadel Communications. The Company
operates six of the Little Rock Stations under LMAs pending their acquisition.
In addition, the Company has entered into various agreements to purchase
(the "Boise Acquisition") four FM radio stations and one AM radio station in
Boise, Idaho (collectively, the "Boise Stations"). The purchase price for such
stations is approximately $28.5 million in cash.
The Company has entered into an agreement to sell its two FM radio stations
in Johnstown, Pennsylvania and its two FM and two AM radio stations in State
College, Pennsylvania for the aggregate sale price of approximately $8.5 million
in cash. In addition, the Company has entered into an agreement to sell one AM
radio station in Allentown/Bethlehem in connection with the pending acquisition
of one FM radio station in such market. See "The Pending Transactions."
5
<PAGE> 13
THE EXCHANGE OFFER
Registration Rights
Agreement.................. The Series A Securities were originally sold by the
Company on July 3, 1997 in transactions exempt from
the registration requirements of the Securities
Act. The Series A Exchangeable Preferred Stock and
$100,000,000 aggregate principal amount of the
Series A Notes were sold to Prudential Securities
Incorporated, NationsBanc Capital Markets, Inc. and
BancBoston Securities Inc. (collectively, the
"Initial Purchasers") pursuant to a Purchase
Agreement dated as of June 30, 1997 by and among
the Company, Citadel Communications and the Initial
Purchasers (the "Purchase Agreement"). The Initial
Purchasers subsequently sold such Series A Notes
and Series A Exchangeable Preferred Stock to
qualified institutional buyers in reliance on Rule
144A under the Securities Act. The Company issued
$1,000,000 aggregate principal amount of the Series
A Notes to the holders of the Tele-Media Bonds in
connection with the closing of the Tele-Media
Acquisition. The Company, Citadel License and the
Initial Purchasers entered into a Notes
Registration Rights Agreement dated July 3, 1997
(the "Notes Registration Rights Agreement") and a
Preferred Stock Registration Rights Agreement dated
July 3, 1997 (the "Preferred Stock Registration
Rights Agreement" and, together with the Notes
Registration Rights Agreement, the "Registration
Rights Agreements") which grants the holders of the
Series A Notes and the Series A Exchangeable
Preferred Stock, respectively, certain exchange and
registration rights. The Exchange Offer is intended
to satisfy such rights. The holders of the Series B
Securities are not entitled to any exchange or
registration rights with respect to the Series B
Securities. See "The Exchange Offer-- Purpose and
Effect of the Exchange Offer."
The Exchange Offer......... The Company is offering to exchange (i) an equal
principal amount of Series B Notes for each such
principal amount of Series A Notes that are
properly tendered and accepted and (ii) one share
of Series B Exchangeable Preferred Stock for each
share of Series A Exchangeable Preferred Stock that
is properly tendered and accepted. The Company will
issue Series B Securities on or promptly after the
Expiration Date. As of the date hereof, there is
$101,000,000 aggregate principal amount of Series A
Notes outstanding and there are 1,000,000 shares of
Series A Exchangeable Preferred Stock outstanding.
The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Series A
Notes or any minimum number of shares of Series A
Exchangeable Preferred Stock being tendered for
exchange.
Based on no-action letters issued by the staff of
the Commission to third parties, the Company
believes the Series B Notes and the Series B
Exchangeable Preferred Stock issued pursuant to the
Exchange Offer may be offered for resale, resold
and otherwise transferred by any holder thereof
(other than any such holder that is an "affiliate"
of the Company within the meaning of Rule 405 under
the Securities Act) without further registration
under the Securities Act and without delivery of a
prospectus that satisfies the requirements of
Section 10 of the Securities Act, provided that
such Series B Securities are acquired in the
ordinary course of such holder's business and that
such holder does not intend to participate, and has
no arrangement or understanding with any person to
participate, in the distribution of such Series B
Securities.
6
<PAGE> 14
Each Participating Broker-Dealer that receives
Series B Securities for its own account pursuant to
the Exchange Offer in exchange for Series A
Securities where such Series A Securities were
acquired by such Participating Broker-Dealer as a
result of market-making activities or other trading
activities may be a statutory underwriter and must
acknowledge that it will deliver a prospectus in
connection with any resale of such Series B
Securities. The Letters of Transmittal state that
by so acknowledging and by delivering a prospectus,
a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to
time, may be used by Participating Broker-Dealers
in connection with such resales of Series B
Securities. The Company has agreed that, for a
period of 120 days after the Expiration Date, it
will make this Prospectus available to any
Participating Broker-Dealer for use in connection
with any such resale. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose of
participating, in a distribution of the Series B
Securities could not rely on the position of the
staff of the Commission communicated in no-action
letters and, in the absence of an exception
therefrom, must comply with the registration and
prospectus delivery requirements of the Securities
Act in connection with any resale transaction.
Failure to comply with such requirements in such
instance may result in such holder incurring
liability under the Securities Act for which the
holder is not indemnified by the Company.
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1997, unless the
Exchange Offer is extended by the Company in its
reasonable discretion, in which case the term
"Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
Accrued Interest on the
Notes...................... Interest on the Series B Notes will accrue from and
including their issuance date. Additionally,
interest on the Series B Notes will accrue from the
last interest payment date on which interest was
paid on the Series A Notes surrendered in exchange
therefor or, if no interest has been paid on the
Series A Notes, from the date of original issuance
of such Series A Notes to but not including the
issuance date of the Series B Notes. Accordingly,
holders who exchange their Series A Notes will
receive the same interest payment on the next
interest payment date (expected to be January 1,
1998) that they would have received had they not
accepted the Exchange Offer.
Accumulated Dividends on
the Exchangeable Preferred
Stock.................... Dividends on the Series B Exchangeable Preferred
Stock will accumulate from and including its
issuance date. Additionally, dividends on the
Series B Exchangeable Preferred Stock will
accumulate from the last dividend payment date on
which dividends were paid on the Series A
Exchangeable Preferred Stock surrendered in
exchange therefor or, if no dividends have been
paid on the Series A Exchangeable Preferred Stock,
from the date of original issuance of such Series A
Exchangeable Preferred Stock to but not including
the issuance date of the Series B Exchangeable
Preferred Stock. Accordingly, holders who exchange
their Series A Exchangeable Preferred Stock will
receive the same dividend
7
<PAGE> 15
payment on the next dividend payment date (expected
to be January 1, 1998) that they would have
received had they not accepted the Exchange Offer,
except that if such dividend is not paid in cash,
it will be paid in shares of Series B Exchangeable
Preferred Stock instead of shares of Series A
Exchangeable Preferred Stock.
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer--Conditions."
The Company reserves the right to terminate or
amend the Exchange Offer at any time prior to the
Expiration Date upon the occurrence of any such
conditions.
Procedures for Tendering
Series A Securities...... Each holder of Series A Notes and/or Series A
Exchangeable Preferred Stock wishing to accept the
Exchange Offer must complete, sign and date the
respective Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Series A Securities
and any other required documentation to the
exchange agent (the "Exchange Agent") at the
address set forth herein. A separate Letter of
Transmittal is required for the tender of Series A
Notes and Series A Exchangeable Preferred Stock.
Series A Securities may be physically delivered,
but physical delivery is not required if a
confirmation of a book-entry transfer of such
Series A Securities to the Exchange Agent's account
at The Depository Trust Company is delivered in a
timely fashion. By executing a Letter of
Transmittal, each holder will represent to the
Company that, among other things, the Series B
Securities acquired pursuant to the Exchange Offer
are being obtained in the ordinary course of
business of the person receiving such Series B
Securities, whether or not such person is the
holder, that neither the holder nor any such other
person is engaged in, or intends to engage in, or
has an arrangement or understanding with any person
to participate in, the distribution of such Series
B Securities and that neither the holder nor any
such person is an "affiliate," as defined under
Rule 405 of the Securities Act, of the Company.
Each Participating Broker-Dealer that receives
Series B Securities for its own account in exchange
for Series A Securities where such Series A
Securities were acquired by such Participating
Broker-Dealer as a result of market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of such Series B
Securities. See "The Exchange Offer--Purpose and
Effect of the Exchange Offer" and "Plan of
Distribution."
Special Procedures for
Beneficial Owner........... Any beneficial owner whose Series A Securities are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender should contact such registered
holder promptly and instruct such registered holder
to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on such
owner's own behalf, such owner must, prior to
completing and executing a Letter of Transmittal
and delivering his Series A Securities, either make
appropriate arrangements to register ownership of
the Series A Securities in such owner's name or
obtain a properly completed bond power, in the case
of Series A Notes, or stock power, in the case of
Series A
8
<PAGE> 16
Exchangeable Preferred Stock, from the registered
holder. The Transfer of registered ownership may
take considerable time and may not be completed
prior to the Expiration Date. See "The Exchange
Offer--Procedures for Tendering."
Guaranteed Delivery
Procedures................. Holders of Series A Securities who wish to tender
their Series A Securities and whose Series A
Securities are not immediately available or who
cannot deliver their Series A Securities, the
Letters of Transmittal or any other documents
required by the Letters of Transmittal to the
Exchange Agent prior to the Expiration Date, must
tender their Series A Securities according to the
guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Acceptance of the Series A
Securities and Delivery
of the Series B
Securities............... Subject to the satisfaction of the conditions to
the Exchange Offer, the Company will accept for
exchange any and all Series A Securities which are
properly tendered in the Exchange Offer prior to
the Expiration Date. The Series B Securities issued
pursuant to the Exchange Offer will be delivered on
the earliest practicable date following the
Expiration Date. See "The Exchange Offer--Terms of
the Exchange Offer."
Withdrawal Rights.......... Tenders of Series A Securities may be withdrawn at
any time prior to 5:00 p.m., New York City time, on
the Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders."
Effect on Holders of the
Series A Securities........ Following the consummation of the Exchange Offer,
holders of the Series A Securities eligible to
participate in the Exchange Offer but who do not
tender their Series A Securities will not have
further exchange rights and such Series A
Securities will continue to be subject to certain
restrictions on transfer. To the extent that Series
A Securities are tendered and accepted in the
Exchange Offer, the trading market for untendered
Series A Securities could be adversely affected.
Consequences of Failure to
Exchange................. The Series A Securities that are not exchanged
pursuant to the Exchange Offer will remain
restricted securities. Accordingly, such Series A
Securities may be resold only (i) to the Company,
(ii) pursuant to Rule 144A or Rule 144 under the
Securities Act or pursuant to another exemption
under the Securities Act, (iii) outside the United
States to a foreign person pursuant to the
requirements of Rule 904 under the Securities Act
or (iv) pursuant to an effective registration
statement under the Securities Act. See "The
Exchange Offer--Consequences of Failure to
Exchange."
Shelf Registration
Statement.................. Under certain circumstances, including if any
holder of the Series A Securities (other than an
Initial Purchaser) is not eligible under applicable
securities laws to participate in the Exchange
Offer, and such holder has provided information
regarding such holder and the distribution of such
holder's Series A Securities to the Company for use
therein, the Company has agreed to register the
Series A Securities with a shelf registration
statement and use its best efforts to cause it to
be declared effective by the Commission. The
Company has agreed to maintain the effectiveness of
any such shelf registration statement for, under
certain
9
<PAGE> 17
circumstances, a maximum of two years, to cover
resales of the Series A Securities held by any such
holders. See "The Exchange Offer--Purpose and
Effect of the Exchange Offer."
Exchange Agent............. The Bank of New York is serving as the Exchange
Agent in connection with the Exchange Offer. See
"The Exchange Offer--Exchange Agent."
NOTES:
General.................... The Exchange Offer applies to $101,000,000
aggregate principal amount of the Series A Notes.
The form and terms of the Series B Notes will be
the same as the form and terms of the Series A
Notes except that (i) the Series B Notes will bear
a "Series B" designation and a different CUSIP
Number from the Series A Notes, (ii) the Series B
Notes will have been registered under the
Securities Act and, therefore, will not bear
legends restricting the transfer thereof and (iii)
holders of the Series B Notes will not be entitled
to certain rights of holders of Series A Notes
under the Notes Registration Rights Agreement which
rights will terminate as to holders of the Series B
Notes upon consummation of the Exchange Offer. The
Series B Notes will evidence the same debt as the
Series A Notes, will be entitled to the benefits of
the Notes Indenture and will be treated as a single
class thereunder with the Series A Notes. See
"Description of the Notes."
Securities Offered......... $101,000,000 in aggregate principal amount of
10-1/4% Series B Senior Subordinated Notes due
2007.
Maturity Date.............. July 1, 2007.
Interest Payment Dates..... January 1 and July 1 of each year commencing
January 1, 1998.
Optional Redemption........ The Notes are redeemable at the option of the
Company, in whole or in part, at any time on or
after July 1, 2002, at the redemption prices set
forth herein, plus accrued and unpaid interest, if
any, to the date of redemption. In addition, at any
time prior to July 1, 2000, the Company may, at its
option, redeem a portion of the Notes with the net
proceeds of one or more Public Equity Offerings, at
a redemption price equal to 110.25% of the
principal amount thereof, plus accrued and unpaid
interest, if any, to the date of redemption;
provided, however, that after any such redemption,
there is outstanding at least $75.0 million
aggregate principal amount of the Notes.
Ranking.................... The Notes and the Subsidiary Notes Guarantees are
subordinated to (i) all Senior Debt of the Company
(including indebtedness under the Credit Facility)
and (ii) the guarantees of such Senior Debt. As of
June 30, 1997, after giving pro forma effect to the
Recent 1997 Acquisitions, the Pending Transactions
and the Original Offerings, the Company would have
had Senior Debt outstanding of approximately $113.6
million. See "Use of Proceeds," "Risk
Factors -- Substantial Leverage" and
"-- Subordination of Notes; Ranking" and
"Capitalization."
Change of Control.......... Upon a Change of Control, the Company will be
required, subject to certain conditions, to make an
offer to purchase all outstanding Notes at a
purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest,
if any, to the repurchase date.
10
<PAGE> 18
Certain Covenants.......... The Notes Indenture contains certain covenants
which, among other things, will restrict the
ability of the Company and its subsidiaries with
respect to: (i) the incurrence of additional debt;
(ii) restricted payments; (iii) dividend and other
payment restrictions affecting certain
subsidiaries; (iv) asset dispositions; (v) Asset
Swaps (as defined); (vi) transactions with
Affiliates (as defined); (vii) issuances and sales
of stock of certain subsidiaries; (viii) liens; and
(ix) consolidations, mergers or sales of assets.
For more complete information regarding the Notes, see "Description of the
Notes."
11
<PAGE> 19
EXCHANGEABLE PREFERRED STOCK:
General.................... The Exchange Offer applies to the 1,000,000 shares
of Series A Exchangeable Preferred Stock plus any
additional shares of Series A Exchangeable
Preferred Stock issued as dividends prior to the
Expiration Date. The form and terms of the Series B
Exchangeable Preferred Stock are the same as the
form and terms of the Series A Exchangeable
Preferred Stock except that (i) the Series B
Exchangeable Preferred Stock will bear a "Series B"
designation and a different CUSIP Number from the
Series A Exchangeable Preferred Stock, (ii) the
shares of Series B Exchangeable Preferred Stock
will have been registered under the Securities Act
and, therefore, will not bear legends restricting
the transfer thereof and (iii) holders of Series B
Exchangeable Preferred Stock will not be entitled
to certain rights of holders of Series A
Exchangeable Preferred Stock under the Preferred
Stock Registration Rights Agreement which rights
will terminate as to holders of the Series B
Exchangeable Preferred Stock upon consummation of
the Exchange Offer. See "Description of
Exchangeable Preferred Stock and Exchange
Debentures."
Securities Offered......... 1,000,000 shares of 13-1/4% Series B Exchangeable
Preferred Stock, no par value.
Liquidation Preference..... $100 per share, plus accumulated and unpaid
dividends.
Dividends.................. 13-1/4% per annum. All dividends will be payable
semi-annually on January 1 and July 1 of each year,
commencing January 1, 1998. On or prior to July 1,
2002, dividends are payable in additional shares of
Exchangeable Preferred Stock having an aggregate
liquidation preference equal to the amount of such
dividends, or, at the option of the Company, in
cash. Thereafter, all dividends will be payable
only in cash. Dividends on the Exchangeable
Preferred Stock will accumulate and be cumulative
from the date of issuance thereof.
Voting Rights.............. Except as required by law, or with respect to the
authorization of any new class of Senior Stock (as
defined), the holders of the Exchangeable Preferred
Stock are not entitled to any voting rights except
in the event that, after July 1, 2002, two or more
semi-annual dividends payable on the Exchangeable
Preferred Stock are in arrears and unpaid, or upon
the occurrence of certain other events (including
failure to comply with certain covenants and
failure to pay the mandatory redemption price when
due), then the holders of a majority of the then
outstanding shares of Exchangeable Preferred Stock,
voting separately as a class with the holders of
shares of any Parity Stock (as defined) having
similar voting rights, will be entitled to elect
two additional directors of the Company, who shall
serve until such time as all dividends in arrears
or any other failure, breach or default giving rise
to such voting rights is remedied or waived.
Mandatory Redemption....... The Company will be required to redeem the
Exchangeable Preferred Stock on July 1, 2009
(subject to the legal availability of funds
therefor) at a redemption price equal to the
liquidation preference thereof, plus accumulated
and unpaid dividends, if any, to the date of
redemption.
Optional Redemption........ The Exchangeable Preferred Stock is redeemable at
the option of the Company, in whole or in part, at
any time on or after July 1, 2002, at the
12
<PAGE> 20
redemption prices set forth herein, plus
accumulated and unpaid dividends, if any, to the
date of redemption. In addition, at any time prior
to July 1, 2000, the Company may, at its option,
redeem shares of Exchangeable Preferred Stock
having an aggregate liquidation preference of up to
35% of the aggregate liquidation preference of all
shares of Exchangeable Preferred Stock issued in
the Exchangeable Preferred Stock Offering or issued
as a dividend on the Exchangeable Preferred Stock,
at a redemption price equal to 113.25% of the
liquidation preference thereof, plus accumulated
and unpaid dividends, if any, to the date of
redemption, with the net proceeds of one or more
Public Equity Offerings; provided, however, that
after any such redemption, there is outstanding at
least $75.0 million in aggregate liquidation
preference of the Exchangeable Preferred Stock.
Ranking.................... The Exchangeable Preferred Stock ranks: (i) senior
to all common stock of the Company and to all other
capital stock of the Company, the terms of which
expressly provide that it ranks junior to the
Exchangeable Preferred Stock; (ii) on a parity with
any capital stock of the Company the terms of which
expressly provide that it will rank on a parity
with the Exchangeable Preferred Stock; and (iii)
junior to all capital stock of the Company the
terms of which do not expressly provide that such
stock will rank junior to, or on a parity with, the
Exchangeable Preferred Stock. See "Risk
Factors -- Substantial Leverage," and
"-- Limitations on the Ability to Pay Dividends."
Exchange Provisions........ The Exchangeable Preferred Stock is exchangeable,
subject to certain conditions, at the option of the
Company, in whole but not in part, on any dividend
payment date, for the Exchange Debentures in an
aggregate principal amount equal to the liquidation
preference, plus accumulated and unpaid dividends,
if any, to the date of exchange.
Change of Control.......... Upon a Change of Control, the Company will be
required, subject to certain conditions, to make an
offer to purchase the shares of Exchangeable
Preferred Stock at a purchase price equal to 101%
of the liquidation preference, plus accumulated and
unpaid dividends, if any, to the repurchase date.
Certain Covenants.......... The Certificate of Designation contains certain
covenants which, among other things, will restrict
the ability of the Company and its subsidiaries
with respect to: (i) the incurrence of additional
debt; (ii) restricted payments; (iii) issuances and
sales of stock of certain subsidiaries; and (iv)
consolidations, mergers or sales of assets.
EXCHANGE DEBENTURES:
Issue...................... 13-1/4% Exchange Debentures due July 1, 2009,
issuable in exchange for the Exchangeable Preferred
Stock, in an aggregate principal amount equal to
the then effective liquidation preference of the
shares of Exchangeable Preferred Stock, plus
accumulated and unpaid dividends, if any, to the
date fixed for the exchange thereof (the "Exchange
Date"), plus any additional Exchange Debentures
issued in lieu of cash interest.
Maturity Date.............. July 1, 2009.
Interest Payment Dates..... Interest on the Exchange Debentures will be payable
semi-annually on January 1 and July 1 of each year,
commencing on the first such date
13
<PAGE> 21
after the Exchange Date. On or prior to July 1,
2002, interest is payable in additional Exchange
Debentures having an aggregate principal amount
equal to the amount of such interest, or, at the
option of the Company, in cash. Thereafter, all
interest will be payable in cash. Interest on the
Exchange Debentures will accrue from the date of
issuance thereof.
Optional Redemption........ The Exchange Debentures will be redeemable at the
option of the Company, in whole or in part, at any
time on or after July 1, 2002, at the redemption
prices set forth herein, plus accrued and unpaid
interest, if any, to the date of redemption. In
addition, at any time prior to July 1, 2000, the
Company may, at its option, redeem Exchange
Debentures having an aggregate principal amount of
up to 35% of the aggregate principal amount of
Exchange Debentures issued upon exchange of the
Exchangeable Preferred Stock or in payment of
interest on the Exchange Debentures, at a
redemption price equal to 113.25% of the aggregate
principal amount thereof, plus accrued and unpaid
interest, if any, to the date of redemption, with
the net proceeds of one or more Public Equity
Offerings; provided, however, that after any such
redemption, there is outstanding at least $75.0
million in aggregate principal amount of the
Exchange Debentures.
Ranking.................... The Exchange Debentures will be subordinated in
right of payment to the Senior Debt and Senior
Subordinated Debt (including the Notes) of the
Company. See "Risk Factors -- Substantial Leverage"
and "-- Subordination of Exchange Debentures."
Subsidiary Guarantees...... The Subsidiary Debentures Guarantees (as defined)
of the Exchange Debentures will, to the extent set
forth in the Exchange Indenture (as defined), be
subordinated in right of payment to the prior
payment in full of all Senior Debt and Senior
Subordinated Debt of the Subsidiary Debentures
Guarantors (as defined), upon terms substantially
comparable to the subordination of the Exchange
Debentures to all Senior Debt and Senior
Subordinated Debt.
Change of Control.......... Upon a Change of Control, the Company will be
required, subject to certain conditions, to make an
offer to purchase the Exchange Debentures at a
purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest,
if any, to the repurchase date.
Certain Covenants.......... The Exchange Indenture contains certain covenants
which, among other things, will restrict the
ability of the Company and its subsidiaries with
respect to: (i) the incurrence of additional debt;
(ii) restricted payments; (iii) dividend and other
payment restrictions affecting certain
subsidiaries; (iv) asset dispositions; (v) Asset
Swaps; (vi) transactions with Affiliates; (vii)
issuances and sales of stock of certain
subsidiaries; (viii) liens; and (ix)
consolidations, mergers or sales of assets.
For more complete information regarding the Exchangeable Preferred Stock and the
Exchange Debentures, see "Description of the Exchangeable Preferred Stock and
Exchange Debentures."
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Series B Securities pursuant to the Exchange Offer.
14
<PAGE> 22
RISK FACTORS
Investors should consider all of the information in this Prospectus before
tendering their Series A Securities in the Exchange Offer. In particular,
investors should carefully consider the factors set forth under "Risk Factors"
prior to tendering their Series A Securities in the Exchange Offer.
15
<PAGE> 23
SUMMARY HISTORICAL FINANCIAL DATA
The summary historical financial data of the Company and its Predecessor
presented below as of and for the years ended December 31, 1992, 1993, 1994,
1995 and 1996 are derived from the consolidated financial statements of the
Company and Predecessor, which consolidated financial statements have been
audited by KPMG Peat Marwick LLP, independent certified public accountants. The
summary historical financial data of the Company presented below as of June 30,
1997 and for the six months ended June 30, 1996 and 1997 are derived from
unaudited consolidated financial statements of the Company which, in the opinion
of management, contain all necessary adjustments of a normal recurring nature to
present the financial statements in conformity with GAAP. The consolidated
financial statements of the Company as of December 31, 1995 and 1996 and for
each of the years in the three-year period ended December 31, 1996 and the
independent auditors' report thereon, as well as the unaudited consolidated
financial statements of the Company as of June 30, 1997 and for the six months
ended June 30, 1996 and 1997, are included elsewhere in this Prospectus. The
financial results of the Company and its Predecessor are not comparable from
year to year because of the acquisition and disposition of various radio
stations by the Company and the reorganization in July 1992 when the Company
commenced operations. The summary historical financial data below should be read
in conjunction with, and is qualified by reference to, the Company's
Consolidated Financial Statements and related notes, "Selected Historical
Financial Data," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- ------------------
1992(1) 1993 1994 1995 1996 1996 1997
-------- -------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue........................ $ 13,688 $ 21,376 $32,998 $34,112 $45,413 $19,348 $27,181
Station operating expenses......... 10,421 17,081 24,331 26,832 33,232 14,797 19,321
Depreciation and amortization...... 4,395 5,245 7,435 4,891 5,158 1,974 3,907
Corporate general and
administrative................... 732 961 2,504 2,274 3,248 1,256 1,272
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)............ (1,860) (1,911) (1,272) 115 3,775 1,321 2,681
Interest expense (2)............... 1,393 2,637 4,866 5,242 6,156 2,779 3,594
Other income, net.................. 40 149 657 781 414 36 73
-------- -------- -------- -------- -------- -------- --------
Income (loss) before extraordinary
item............................. (3,213) (4,399) (5,481) (4,346) (1,967) (1,422) (840)
Extraordinary loss (3)............. -- -- -- -- (1,769) -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss).................. $ (3,213) $ (4,399) $(5,481) $(4,346) $(3,736) $(1,422) $ (840)
======== ======== ======== ======== ======== ======== ========
Net loss per common share.......... $ (80) $ (110) $ (137) $ (109) $ (93) $ (36) $ (21)
======== ======== ======== ======== ======== ======== ========
Shares used in per share
calculation...................... 40,000 40,000 40,000 40,000 40,000 40,000 40,000
======== ======== ======== ======== ======== ======== ========
Cash dividends declared per
share............................ $ -- $ -- $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ======== ======== ========
OTHER DATA:
Deficiency of earnings to fixed
charges (4)...................... $ 3,213 $ 4,399 $ 5,481 $ 4,346 $ 1,966 $ 1,422 $ 840
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------ JUNE 30,
1992 1993 1994 1995 1996 1997
------- ------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............... $ 1,244 $ 857 $ 1,538 $ 1,005 $ 1,588 $ 277
Working capital (deficiency)............ 2,235 1,701 3,382 2,928 (4,195) (9,034)
Intangible assets, net.................. 14,543 17,454 20,080 15,093 51,802 84,283
Total assets............................ 28,515 36,120 46,397 37,372 102,244 123,421
Long-term debt (including current
portion).............................. 22,026 30,468 47,805 43,046 91,072 103,641
Shareholder's equity (deficit).......... 4,870 3,492 (4,782) (9,249) 5,999 10,909
Book value per share.................... $ 122 $ 87 $ (120) $ (231) $ 150 $ 273
======== ======== ========= ========= ========= =========
</TABLE>
16
<PAGE> 24
(1) In July 1992, the Company acquired all of the radio stations then owned or
operated by Predecessor and certain other radio stations. In 1993, Citadel
Communications was incorporated and the Company was reorganized as a wholly
owned subsidiary of Citadel Communications. The Statement of Operations Data
for the year ended December 31, 1992 represents the combined operating
results from the audited Statement of Operations of Predecessor for the
period January 1, 1992 to July 23, 1992 and the Company from July 24, 1992
to December 31, 1992. Net revenue for Predecessor for the period January 1,
1992 to July 23, 1992 and the Company from July 24, 1992 to December 31,
1992 totaled $5.7 million and $8.0 million, respectively. Net income (loss)
for Predecessor for the period January 1, 1992 to July 23, 1992 and the
Company from July 24, 1992 to December 31, 1992 totaled $300,000 and $(3.5)
million, respectively.
(2) Includes debt issuance costs and debt discount amortization of $35,000,
$139,000, $287,000, $132,000 and $371,000 for the years ended December 31,
1992, 1993, 1994, 1995 and 1996, respectively, and $302,000 and $38,000 for
the six months ended June 30, 1996 and 1997, respectively,
(3) On October 9, 1996, the Company extinguished its long-term debt of $31.3
million, payable to a financial institution, and its note payable to a
related party of $7.0 million. The early retirement of the long-term debt
resulted in a $1.8 million extraordinary loss due to prepayment premiums and
the write-off of debt issuance costs.
(4) Fixed charges include interest expense on debt, amortization of financing
costs, amortization of debt discount, 33% of rent expense, and dividend
requirements with respect to the Exchangeable Preferred Stock.
17
<PAGE> 25
SUMMARY PRO FORMA FINANCIAL DATA
The following table presents summary unaudited pro forma financial data of
the Company as of and for the periods indicated. The summary pro forma operating
data reflect adjustments to the summary historical operating data of the Company
to give effect to (i) the June 1996 acquisitions of two FM radio stations and
one AM radio station in Albuquerque and one FM radio station in Modesto, the
October 1996 acquisitions of one FM radio station in Colorado Springs and one FM
radio station in Albuquerque, the February 1997 acquisition of one FM radio
station in Salt Lake City, the April 1997 acquisition of one FM radio station in
Salt Lake City, the Recent 1997 Acquisitions, the Subsidiary Merger, and the
Original Offerings (collectively the "Completed Transactions") and (ii) the
Pending Transactions, as if such transactions had occurred on January 1, 1996.
The summary pro forma balance sheet data as of June 30, 1997 give effect to the
Recent 1997 Acquisitions, the Original Offerings and the application of the net
proceeds therefrom and the Pending Transactions, as if such transactions had
occurred on that date.
The summary pro forma financial data are not necessarily indicative of
either future results of operations or the results that would have occurred if
those transactions had been consummated on the indicated dates. The following
financial information should be read in conjunction with the historical
consolidated financial statements and related notes of the Company, "Unaudited
Pro Forma Condensed Consolidated Financial Statements," "Selected Historical
Financial Data," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus.
18
<PAGE> 26
SUMMARY PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA
----------------------------------------
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------
1996 1996 1997
------------ -------- --------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
OPERATING DATA:
Net revenue................................................. $105,959 $ 49,616 $ 56,397
Station operating expenses.................................. 75,836 37,191 41,280
Depreciation and amortization............................... 25,236 12,499 15,899
Corporate general and administrative........................ 3,248 881 1,260
-------- -------- --------
Operating expenses.......................................... 104,320 50,571 58,439
-------- -------- --------
Operating income (loss)..................................... 1,639 (955) (2,042)
Interest expense............................................ 18,012 9,053 8,740
Other (income) expense, net................................. (443) (36) (125)
-------- -------- --------
Income (loss) before income taxes........................... (15,930) (9,972) (10,657)
Income taxes (benefit)...................................... -- -- --
Dividend requirement for Exchangeable Preferred Stock....... (13,825) (6,691) (7,607)
-------- -------- --------
Income (loss) from continuing operations applicable to
common shares.......................................... $(29,755) $(16,663) $(18,264)
======== ======== ========
Pro forma income (loss) per common share.................... $ (744) $ (417) $ (457)
======== ======== ========
Pro forma weighted average number of shares outstanding..... 40,000 40,000 40,000
======== ======== ========
OTHER DATA:
Broadcast cash flow......................................... $ 30,123 $ 12,425 $ 15,117
EBITDA...................................................... 26,875 11,544 13,857
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
JUNE 30, 1997
---------------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................... $ 2,923
Working capital................................................ 15,829
Intangible assets, net......................................... 287,585
Total assets................................................... 358,264
Long-term debt (including current portion)..................... 214,584
Exchangeable Preferred Stock................................... 96,350
Shareholder's equity........................................... 25,159
</TABLE>
19
<PAGE> 27
RISK FACTORS
Investors should carefully examine this entire Prospectus and should give
particular attention to the risk factors set forth below in evaluating whether
to tender their Series A Securities for Series B Securities in the Exchange
Offer.
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Those statements appear in a number of places in this Prospectus
and include statements regarding the intent, belief or current expectations of
the Company, its directors or its officers with respect to, among other things:
(i) the realization of the Company's business strategy; (ii) the sufficiency of
cash flow to fund the Company's debt service requirements and working capital
needs; (iii) anticipated trends in the radio broadcasting industry; (iv)
potential acquisitions by the Company and the successful integration of both
completed and future acquisitions; and (v) government regulation.
Forward-looking statements are typically identified by the words "believe,"
"expect," "anticipate," "intend," "estimate," and similar expressions. Readers
are cautioned that any such forward looking statements are not guarantees of
future performance and involve risks and uncertainties, and that actual results
may differ materially from those contained in the forward looking statements as
a result of various factors. The accompanying information contained in this
Prospectus, including without limitation, the information set forth under the
headings "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and "The Pending Transactions,"
identifies important factors that could cause such differences.
SUBSTANTIAL LEVERAGE. The Company is highly leveraged. At June 30, 1997,
after giving pro forma effect to the Recent 1997 Acquisitions, the Pending
Transactions and the Original Offerings, the Company would have had outstanding
total debt of approximately $216.3 million, Exchangeable Preferred Stock with an
aggregate liquidation preference of $100.0 million and shareholder's equity of
approximately $25.2 million. The Company's high degree of leverage will have
important consequences for the holders of the Notes and the Exchangeable
Preferred Stock, including the following: (i) the ability of the Company to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes, if
needed, may be impaired; (ii) a substantial portion of the cash flow of the
Company will be used to pay interest expense, which will reduce the funds which
would otherwise be available to fund operations and future business
opportunities; (iii) the Company may be more highly leveraged than its
competitors which may place it at a competitive disadvantage; (iv) the Company's
high degree of leverage will make it more vulnerable to a downturn in its
business or in the economy in general and (v) certain of the Company's
borrowings will be at variable rates of interest (including the borrowings under
the Credit Facility) which will expose the Company to the risks associated with
fluctuating interest rates. See "Capitalization," "Selected Historical Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Description of Indebtedness" and the Company's Consolidated
Financial Statements and the notes thereto.
The Company's ability to satisfy its debt obligations and to pay cash
dividends on, and to satisfy the redemption obligations in respect of, the
Exchangeable Preferred Stock, will depend upon its future financial and
operating performance, which, in turn, is subject to prevailing economic
conditions and financial, business and other factors, certain of which are
beyond its control. If the Company's cash flow and capital resources are
insufficient to fund its debt service obligations, the Company may be forced to
reduce or delay planned acquisitions and capital expenditures, sell assets,
obtain additional equity capital or restructure its debt. There can be no
assurance that the Company's operating results, cash flow and capital resources
will be sufficient for payment of its debt service and other obligations in the
future. In the absence of such operating results and resources, the Company
could face substantial liquidity problems and might be required to sell material
assets or operations to meet its debt service and other obligations, and there
can be no assurance as to the timing of such sales or the proceeds that the
Company could realize therefrom or that such sales can be effected on terms
satisfactory to the Company or at all. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Description of Indebtedness."
SUBORDINATION OF NOTES; RANKING. The Notes will be unsecured senior
subordinated obligations of the Company and will be subordinated to all existing
and future Senior Debt of the Company, including
20
<PAGE> 28
indebtedness under the Credit Facility. The Company actively intends to pursue
additional acquisitions of radio stations. The Company would likely seek to
finance all or a portion of such additional acquisitions through the use of
existing debt capacity or additional debt financing or from the proceeds of
selective asset sales. Additional indebtedness may be incurred by the Company
subject to the limitations contained in the Credit Facility and the Notes
Indenture, and any such additional indebtedness may constitute Senior Debt. See
"Description of the Notes -- Certain Covenants." As of June 30, 1997, on a pro
forma basis after giving effect to the Recent 1997 Acquisitions, the Pending
Transactions and the Original Offerings, the Company would have had
approximately $113.6 million in Senior Debt outstanding. Upon any payment or
distribution of assets of the Company upon liquidation, dissolution,
reorganization or any similar proceeding, the holders of Senior Debt will be
entitled to receive payment in full, in cash or cash equivalents, before the
holders of the Notes are entitled to receive any payment. In addition, the
Company may not pay principal of, premium, if any, or interest on or any other
amounts owing in respect of the Notes, make any deposit pursuant to defeasance
provisions or purchase, redeem or otherwise retire the Notes, if any Specified
Senior Debt (as defined in the Notes Indenture) is not paid when due or any
other default on Specified Senior Debt occurs and the maturity of such
indebtedness is accelerated in accordance with its terms unless, in either case,
such default has been cured or waived, any such acceleration has been rescinded
or such indebtedness has been repaid in full. Moreover, under certain
circumstances, if any non-payment default exists with respect to Specified
Senior Debt, the Company may not make any payments on the Notes for a specified
period of time, unless such default is cured or waived or such indebtedness has
been repaid in full.
LIMITATIONS ON THE ABILITY TO PAY DIVIDENDS. The Company is and will be
restricted under the Notes Indenture and the Credit Facility from paying
dividends or repurchasing, redeeming or otherwise acquiring any shares of
capital stock, including the Exchangeable Preferred Stock, and from
repurchasing, redeeming or otherwise acquiring for value the Exchange Debentures
unless certain financial tests are met and then only in accordance with a
formula based on cash flow and only in the absence of a default. See
"Description of the Notes," "Description of Indebtedness" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The Company may elect to pay dividends on the Exchangeable Preferred Stock
on any dividend payment date occurring on or before July 1, 2002 by issuing
either additional shares of Exchangeable Preferred Stock or cash. After July 1,
2002, dividends may be paid only in cash.
In the event that, after July 1, 2002, cash dividends on the Exchangeable
Preferred Stock are in arrears and unpaid for two or more semi-annual dividend
periods (whether or not consecutive), holders of Exchangeable Preferred Stock
will be entitled to certain voting rights. See "Description of the Exchangeable
Preferred Stock and Exchange Debentures -- Exchangeable Preferred
Stock -- Voting Rights."
SUBORDINATION OF EXCHANGE DEBENTURES. The payment of principal, premium,
if any, and interest on, and any other amounts owing in respect of, the Exchange
Debentures, if issued, will be subordinated in right of payment to the prior
payment in full of all existing and future Senior Debt and Senior Subordinated
Debt (including the Notes) of the Company. Upon any payment or distribution of
assets of the Company to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshalling of
assets or any bankruptcy, insolvency or similar proceedings of the Company, the
holders of all Senior Debt and Senior Subordinated Debt will first be entitled
to receive payment in full of all amounts due or to become due on or in respect
of such Senior Debt and Senior Subordinated Debt before the holders of Exchange
Debentures are entitled to receive any payment of principal of or interest on
the Exchange Debentures or on account of the purchase or redemption or other
acquisition of Exchange Debentures by the Company.
In addition, the Subsidiary Debentures Guarantees will, to the extent set
forth in the Exchange Indenture, be subordinated in right of payment to the
prior payment in full of all senior debt and senior subordinated debt of the
Subsidiary Debentures Guarantors, upon terms substantially comparable to the
subordination of the Exchange Debentures to the Notes and all Senior Debt.
By reason of such subordination, in the event of insolvency, creditors of
the Company or a Subsidiary Debentures Guarantor who are not holders of Senior
Debt or Senior Subordinated Debt or the Exchange
21
<PAGE> 29
Debentures may recover less, ratably, than the holders of Senior Debt and Senior
Subordinated Debt and may recover more, ratably, than the holders of the
Exchange Debentures.
At June 30, 1997, after giving effect to the Recent 1997 Acquisitions, the
Pending Transactions and the Original Offerings, the amount of Senior Debt and
Senior Subordinated Debt (including the Notes) outstanding would have been
approximately $214.6 million.
NO ASSURANCE OF CONSUMMATION OF THE PENDING ACQUISITIONS. The consummation
of each of the Pending Acquisitions is subject to certain conditions, including
approval of the Federal Communications Commission (the "FCC"). Although the
Company believes these closing conditions will be satisfied in each case, there
can be no assurance thereof. See "Business -- Federal Regulation of Radio
Broadcasting" and "The Pending Transactions."
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS. The Notes Indenture
contains certain restrictive covenants, including limitations which restrict the
ability of the Company to incur additional debt, incur liens, pay dividends or
make certain other restricted payments, consummate certain asset sales, enter
into certain transactions with affiliates, merge or consolidate with any other
person or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of their assets. In addition, the Credit Facility contains
certain other and more restrictive covenants than those contained in the Notes
Indenture, including certain limitations on future acquisitions and capital
expenditures without lender consent. This may adversely affect the Company's
ability to pursue its acquisition strategy. The Credit Facility also requires
the Company to maintain specific financial ratios and to satisfy certain
financial condition tests. The ability of the Company to meet those financial
ratios and financial conditions can be affected by events beyond its control,
and there can be no assurance that those tests will be met. A breach of any of
these covenants could result in a default under the Credit Facility and/or the
Notes Indenture. In the event of a default under the Credit Facility, the
lenders thereunder could elect to declare all amounts outstanding thereunder,
together with accrued interest, to be immediately due and payable. In the event
of a default under the Credit Facility, if the Company were unable to repay
those amounts, the lenders thereunder could proceed against the collateral
granted to them to secure that indebtedness. If the maturity of borrowings under
the Credit Facility were to be accelerated, there can be no assurance that the
assets of the Company would be sufficient to repay in full such indebtedness and
other indebtedness of the Company, including the Notes. Substantially all of the
assets of the Company are pledged as collateral under the Credit Facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Description of
Indebtedness -- Existing Loan Agreement" and "Description of the
Notes -- Certain Covenants."
HISTORY OF NET LOSSES. The Company had a net loss of $3.7 million and $0.8
million for the year ended December 31, 1996 and the six months ended June 30,
1997, respectively. After giving effect to the Subsidiary Merger, the Pending
Transactions, other acquisitions completed by the Company after January 1, 1996
and the Original Offerings as if they had occurred at January 1, 1996, on a pro
forma basis, the Company would have had a consolidated net loss of approximately
$29.8 million and $18.3 million for the year ended December 31, 1996 and the six
months ended June 30, 1997, respectively. Such net losses have resulted
primarily from significant charges for depreciation and amortization relating to
the acquisition of radio stations and interest charges on outstanding debt. The
Company expects to continue to experience net losses in the foreseeable future,
principally as a result of depreciation, amortization and interest expense
associated with completed and anticipated future acquisitions, including the
Pending Acquisitions. Such losses may be greater than those experienced
historically by the Company.
LIMITATIONS ON ACQUISITION STRATEGY; ANTITRUST CONSIDERATIONS. The Company
intends to pursue growth through the acquisition of radio station groups and
individual radio stations in mid-sized markets. See "Business -- Acquisition
Strategy." The Company cannot predict whether it will be successful in pursuing
such acquisition opportunities or what the consequences of any such acquisitions
would be. The Company is currently evaluating certain acquisitions; however,
other than as described in "The Pending Acquisitions," the Company currently has
no binding commitments to acquire any specific business or other material
assets.
Although the Company believes that its acquisition strategies are
reasonable, there can be no assurance that it will be able to implement its
plans without delay or that, when implemented, its efforts will result in the
increased broadcast cash flow or other benefits currently anticipated by the
Company's management. In
22
<PAGE> 30
addition, there can be no assurance that the Company will not encounter
unanticipated problems or liabilities in connection with such stations. The
Company's acquisition strategy involves numerous other risks, including
difficulties in the integration of operations and systems and the management of
a large and geographically diverse group of stations, the diversion of
management's attention from other business concerns and the potential loss of
key employees of acquired stations. There can be no assurance that the Company's
management will be able to manage effectively the resulting business or that
such acquisitions will benefit the Company. Depending upon the nature, size and
timing of future acquisitions, the Company may be required to raise additional
financing. There can be no assurance that the Credit Facility, the Notes
Indenture or any other loan agreements to which the Company may become a party
or subject to will permit such additional financing or that such additional
financing will be available to the Company or Citadel Communications on terms
acceptable to its management or at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
The Company competes and will continue to compete with many other buyers
for the acquisition of radio stations. Many of those competitors have
significantly greater financial and other resources than those of the Company.
In addition, if, as management believes may happen, the prices sought by sellers
of radio stations continue to rise, the Company may find fewer acceptable
acquisition opportunities.
In addition to the risks associated with the acquisition of radio stations,
the Company also is aware that the Federal Trade Commission ("FTC") and the
United States Department of Justice ("DOJ"), which evaluate transactions to
determine whether those transactions should be challenged under the federal
antitrust laws, have been increasingly active recently in their review of radio
station acquisitions, particularly where an operator proposes to acquire
additional stations in its existing markets. There can be no assurance that the
DOJ or the FTC will not require the restructuring of future acquisitions.
The Company has received two civil investigative demands ("CIDs") from the
Antitrust Division of the DOJ. One CID addresses the Company's acquisition of
KRST-FM in Albuquerque, New Mexico, and the second CID addresses the Company's
JSA relating to stations in Spokane, Washington and Colorado Springs, Colorado.
The Company has provided the requested information in response to each CID, and,
at present, has been given no indication from the DOJ regarding its intended
future actions. At this time, the Company is unable to quantify the effect, if
any, that such proceedings may have on the Company's business, results of
operations and financial condition. See "Business -- Legal Proceedings."
As part of its increased scrutiny of radio station acquisitions, the DOJ
has stated publicly that it believes that LMAs and other similar agreements
customarily entered into in connection with radio station transfers prior to the
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), could violate the HSR Act.
Since then, the DOJ has stated publicly that it will apply its new policy
prohibiting LMAs in connection with purchase agreements until the expiration or
termination of the HSR waiting period prospectively only.
The Company is also aware that on November 7, 1996, the FCC issued a
Further Notice of Proposed Rulemaking, which among other things, reviews the
regulations of the FCC governing the attribution of broadcast interests,
including the attribution of ownership as a result of time brokerage agreements
and LMAs. At this time, no determination can be made as to what effect, if any,
this proposed rulemaking will have on the Company. See "Business -- Federal
Regulation of Radio Broadcasting -- Proposed Changes."
DEPENDENCE ON KEY PERSONNEL. The Company's business is dependent upon the
performance of certain key individuals, particularly Lawrence R. Wilson, the
Chief Executive Officer. The loss of the services of Mr. Wilson would have a
material adverse effect on the Company, including causing an event of default
under the Credit Facility. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Description of Indebtedness -- Existing Loan Agreement." The
Company has entered into an employment agreement with Mr. Wilson, expiring in
June 2001. See "Management -- Employment Agreement." In addition, the Company
and Citadel Communications together have purchased key-man life insurance
covering Mr. Wilson in the amount of $5.0 million. Notwithstanding the
foregoing, should there be an event of default under the Credit Facility as a
result of the death, disability or termination of employment of Mr. Wilson
(which the lender thereunder could declare if, within 90 days after such death,
disability or employment termination, the Company has not replaced Mr. Wilson
with a person
23
<PAGE> 31
acceptable to the lender in its reasonable discretion), it is unlikely that the
proceeds of such policy would be sufficient to repay the outstanding
indebtedness under the Credit Facility. The Company employs three regional
presidents, 18 general managers, a number of sales managers, sales personnel and
program directors, and several high-profile on-air announcers, whose services
are also important to the Company. The Company sometimes enters into employment
agreements, including non-competition agreements, with its on-air announcers.
However, there can be no assurance that the Company will be able to retain any
such employees or that such non-competition agreements would be enforceable.
IMPORTANCE OF CERTAIN MARKETS. In 1996, the Company derived 33.7% of its
net revenue and 38.8% of its broadcast cash flow from the Albuquerque market,
and 16.7% of its net revenue and 24.1% of its broadcast cash flow from the
Modesto market. On a pro forma basis after giving effect to completed
acquisitions and the Pending Transactions, such radio stations in Albuquerque
and Providence would have generated approximately 16.4% and 12.9%, respectively,
of the Company's net revenue in 1996 and approximately 20.2% and 16.0%,
respectively, of the Company's broadcast cash flow in 1996. A significant
decline in net revenue from the Company's stations in these markets, as a result
of a ratings decline or otherwise, could have a material adverse effect on the
Company's financial position and results of operations.
COMPETITIVE CONDITIONS. The financial success of each of the Company's
radio stations is dependent, to a significant degree, upon its audience ratings
and share of the overall radio advertising revenue within its geographic market.
The radio broadcasting industry is a highly competitive business. Each of the
Company's radio stations competes for audience share and revenue directly with
other AM and FM radio stations, as well as with other media, within its market,
including television, newspapers, direct mail and outdoor advertising. The
audience ratings and advertising revenue of the Company's individual stations
are subject to change. Any adverse change in a particular market affecting
advertising expenditures or an adverse change in the relative market positions
of the stations located in a particular market could have a material adverse
effect on the revenue and broadcast cash flow of the Company's stations located
in that market and on the Company's operating results as a whole. There can be
no assurance that any one of the Company's radio stations will be able to
maintain or increase its current audience ratings and radio advertising revenue
market share. See "Business -- Advertising Sales" and "-- Competition."
The radio broadcasting industry is also subject to competition from new
media technologies that may be developed or introduced, such as the delivery of
audio programming by cable television systems, the introduction of terrestrial
digital audio broadcasting services and the introduction of satellite digital
audio radio services which may provide a medium for the delivery of multiple new
audio programming formats by terrestrial and satellite means, respectively, to
local and national audiences. The Company cannot predict the effect, if any,
that any such new technologies may have in the radio broadcasting industry. See
"Business -- Competition" and "-- Federal Regulation of Radio
Broadcasting -- Proposed Changes."
Companies that operate radio stations must be alert to the possibility of
another station changing its format to compete directly for listeners and
advertisers. Typically, other well-capitalized stations compete in the same
geographic markets as the Company. Another station's decision to convert to a
format similar to that of one of the Company's radio stations in the same
geographic area may result in lower ratings and advertising revenue, increased
promotion and other expenses and, consequently, lower broadcast cash flow.
ABILITY TO FINANCE REPURCHASE IN THE EVENT OF CHANGE OF CONTROL. In the
event of a Change of Control, the Company would be required to offer to purchase
all outstanding Notes and all outstanding Exchangeable Preferred Stock or
Exchange Debentures, as the case may be, at 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the repurchase date, or
101% of the liquidation preference, plus accumulated and unpaid dividends, if
any, to the repurchase date. The source of funds for any such purchase would be
the available cash of the Company or cash generated from other sources. However,
there can be no assurance that the Company would be able to obtain such funds
through a refinancing of the Notes or the Exchangeable Preferred Stock or, if
applicable, the Exchange Debentures, or otherwise, or that the purchase would be
permitted under the Credit Facility. See "Description of the Notes," and
"Description of the Exchangeable Preferred Stock and Exchange Debentures."
REPURCHASE OF CAPITAL STOCK OF CITADEL COMMUNICATIONS. Pursuant to the
terms of the Stockholders Agreement (as defined), on or after August 1, 2000,
certain shareholders of Citadel Communications have the
24
<PAGE> 32
right to require Citadel Communications to purchase all or a portion of certain
shares of capital stock of Citadel Communications owned by them for a price
determined in accordance with the Stockholders Agreement. The source of funds
for any such purchase would be dividends or other payments from the Company or
borrowings by Citadel Communications. However, there can be no assurance that
sufficient funds would be available at the time of any such tender to make any
required repurchases of capital stock tendered or, if applicable, that
restrictions in the Credit Facility and/or the Notes Indenture would permit
Citadel Communications to make such required repurchases. In the event that
Citadel Communications is unable to repurchase shares tendered by or on behalf
of ABRY Broadcast Partners II, L.P. ("ABRY II") or ABRY Citadel Investment
Partners, L.P. ("ABRY/CIP"), such entities are entitled, among other things, to
solicit offers and make presentations and proposals to prospective buyers of
Citadel Communications and enter into negotiations and/or agreements regarding
the potential sale of Citadel Communications. See "Management -- Compensation
Committee Interlocks and Insider Participation -- Stockholders Agreement" and
"Security Ownership of Certain Beneficial Owners."
GOVERNMENT REGULATION. The broadcasting industry is subject to extensive
federal regulation that, among other things, requires approval by the FCC for
the issuance, renewal, transfer of control and assignment of broadcasting
station operating licenses and limits the number of broadcasting properties that
the Company may acquire in any market. Additionally, the Communications Act of
1934, as amended (the "Communications Act"), and FCC rules will operate to
impose limitations on alien ownership and voting of the capital stock of the
Company. The Telecommunications Act of 1996 (the "Telecommunications Act")
creates significant new opportunities for broadcasting companies but also
creates uncertainties as to how the FCC and the courts will enforce and
interpret the Telecommunications Act.
The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. The
interests of the Company's officers, directors and shareholders are generally
attributable to the Company. Certain of the Company's officers and directors may
acquire attributable broadcast interests, which will limit the number of radio
stations that the Company may acquire or own in any market in which such
officers or directors hold or acquire attributable broadcast interests.
In addition, the number of radio stations the Company may acquire in any
market is limited by FCC rules and may vary depending upon whether the interests
in other radio stations or certain other media properties of certain individuals
affiliated with the Company are attributable to those individuals under FCC
rules. Moreover, under the FCC's cross-interest policy, the FCC in certain
instances may prohibit one party from acquiring an attributable interest in one
media outlet and a substantial non-attributable economic interest in another
media outlet in the same market, thereby prohibiting a particular acquisition by
the Company.
Citadel Communications' and the Company's Certificates of Incorporation
each contain provisions which permit restrictions on the ownership, voting and
transfer of such entity's capital stock in accordance with the Communications
Act and the rules and regulations of the FCC to prohibit the ownership or voting
of more than a certain percentage of such entity's outstanding capital stock by
or for the account of aliens or their representatives or by a foreign government
or representative thereof or by any corporation organized under the laws of a
foreign country, or by or for corporations of which any officer is an alien,
more than one-fourth of its directors are aliens, or which more than one-fourth
of its capital stock is owned of record or voted by aliens, or by any other
entity (i) that is subject to or deemed to be subject to management influence by
aliens or (ii) the equity of which is owned, controlled by, or held for the
benefit of, aliens in a manner that would cause Citadel Communications or the
Company to be in violation of the Communications Act or the FCC's regulations.
The Company's business will be dependent upon maintaining its broadcasting
licenses issued by the FCC, which are ordinarily issued for a maximum term of
eight years. Although it is rare for the FCC to deny a renewal application,
there can be no assurance that the future renewal applications of the Company
will be approved or that such renewals will not include conditions or
qualifications that could adversely affect the Company. Moreover, governmental
regulations and policies may change over time and there can be no assurance that
such changes would not have a material adverse impact upon the Company. See
"Business -- Federal Regulation of Radio Broadcasting."
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<PAGE> 33
CONTROL BY PRINCIPAL SHAREHOLDERS. The principal shareholders of Citadel
Communications are parties to various agreements pursuant to which the Boards of
Directors of Citadel Communications and the Company are constituted and by which
certain corporate actions are governed. Pursuant to such agreements, a
super-majority vote of the Citadel Communications' Board of Directors is
required for the taking by Citadel Communications or the Company of certain
actions. Additionally, the prior vote or written consent of the holders of a
majority of the Series D Preferred Stock (as defined) of Citadel Communications
is required for Citadel Communications or the Company to take certain actions.
ABRY II and ABRY/CIP own all of the outstanding Series D Preferred Stock and,
therefore, have the power to veto any corporate action which requires a majority
vote or written consent of the holders of the Series D Preferred Stock. See
"Management -- Board Composition and Governance Matters" and "Security Ownership
of Certain Beneficial Owners."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. Dividends on the Exchangeable
Preferred Stock that are paid to Non-U.S. Holders may be subject to a 30%
withholding tax. Unless a Non-U.S. Holder provides the Company with appropriate
documentation indicating its exemption from the withholding tax, in the event
any distribution is made with respect to the Exchangeable Preferred Stock in the
form of additional shares of Exchangeable Preferred Stock, such Non-U.S. Holder
will be required to pay the Company the amount of any such withholding tax and,
in the event such payment is not timely made, the Company will withhold a number
of shares of Exchangeable Preferred Stock sufficient to reimburse it for the
withholding tax obligation. For purposes of this Prospectus, a Non-U.S. Holder
is any holder that is not a "U.S. holder" as defined under "Certain Federal
Income Tax Considerations."
The Company does not presently have any earnings and profits (as determined
for U.S. Federal income tax purposes) and cannot predict whether or when it will
have such earnings and profits. Distributions on the Exchangeable Preferred
Stock will not be eligible for the dividends-received deduction available to
corporate holders until such time, if any, as the Company has sufficient
earnings and profits allocable to the Exchangeable Preferred Stock. See "Certain
Federal Income Tax Considerations."
LACK OF ESTABLISHED TRADING MARKET. There has not been any public market
for the Series A Securities. The Series B Securities will constitute a new issue
of securities with no established trading market. The Company does not intend to
list the Series B Securities on any securities exchange or to seek their
admission to trading in any automated quotation system. The Initial Purchasers
have advised the Company that they currently intend to make a market in the
Series B Securities, but they are not obligated to do so and may discontinue
such market-making at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and may be
limited during the Exchange Offer and at certain other times. Accordingly, no
assurance can be given that an active public or other market will develop for
the Series B Securities or as to the liquidity of the trading market for the
Series B Securities. If a trading market does not develop or is not maintained,
holders of the Series B Securities may experience difficulty in reselling the
Series B Securities or may be unable to sell them at all. If a market for the
Series B Securities develops, any such market may be discontinued at any time.
If a public trading market develops for the Series B Securities, future
trading prices of the Series B Securities will depend on many factors,
including, among other things, prevailing interest rates, the Company's
operating results and the market for similar securities. Depending on prevailing
interest rates, the market for similar securities and other factors, including
the financial condition of the Company, the Series B Notes may trade at a
discount from their principal amount and shares of Series B Exchangeable
Preferred Stock may trade at a discount from their initial offering price.
FRAUDULENT TRANSFER CONSIDERATIONS. Under applicable provisions of the
United States Bankruptcy Code or comparable provisions of state fraudulent
transfer and conveyance laws, if the Company, at the time it issued the Notes,
or, if applicable, the Exchange Debentures, or a guarantor under the Notes or
the Exchange Debentures (a "Guarantor"), at the time it issued a Guarantee (a
"Guarantee"), (a) incurred such indebtedness with the actual intent to hinder,
delay or defraud creditors or (b)(i) received less than reasonably equivalent
value or fair consideration therefor and (ii)(A) was insolvent at the time of
such
26
<PAGE> 34
incurrence, (B) was rendered insolvent by reason of such incurrence (and the
application of the proceeds thereof), (C) was engaged or was about to engage in
a business or transaction for which the assets remaining with the Company or
such Guarantor, as the case may be, constituted unreasonably small capital to
carry on its business or (D) intended to incur, or believed that it would incur,
debts beyond its ability to pay such debts as they mature, then, in each such
case, a court of competent jurisdiction could avoid, in whole or in part, the
Notes or, if issued, the Exchange Debentures, or such Guarantee or, in the
alternative, fashion other equitable relief such as subordinating the Notes or,
if issued, the Exchange Debentures, or such Guarantee to existing and future
indebtedness of the Company or such Guarantor. The measure of insolvency for
purposes of the foregoing would likely vary depending upon the law applied in
such case. Generally, however, the Company or such Guarantor would be considered
insolvent if the sum of its debts, including contingent liabilities, was greater
than all of its assets at a fair valuation, or if the present fair-salable value
of its assets was less than the amount that would be required to pay the
probable liabilities on its existing debts, including contingent liabilities, as
such debts become absolute and matured.
Based upon financial and other information currently available to it, the
Company believes that the Notes and the Subsidiary Notes Guarantee of Citadel
License were incurred for proper purposes and in good faith, and that, after
issuance of the Notes and the Subsidiary Notes Guarantee, the Company and
Citadel License are solvent and have sufficient capital for carrying on their
business and are able to pay their debts as they mature. However, there can be
no assurance that a court passing on such issues would agree with the
determination of the Company.
Any Guarantor which is a subsidiary of the Company may be released from its
Guarantee at any time upon any sale, exchange or transfer in compliance with the
provisions of the Notes Indenture by the Company of the capital stock of such
Guarantor or substantially all of the assets of such Guarantor to a
non-affiliate; provided that such Guarantor is released from its guarantees of
other Debt of the Company or any Restricted Subsidiary of the Company. See
"Description of the Notes -- Guarantees."
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES; CONSEQUENCES OF FAILURE TO EXCHANGE
Issuance of the Series B Securities in exchange for the Series A Securities
pursuant to the Exchange Offer will be made only after a timely receipt by the
Company of such Series A Securities, properly completed and duly executed
Letters of Transmittal and all other required documents. Therefore, holders of
the Series A Securities desiring to tender such Series A Securities in exchange
for Series B Securities should allow sufficient time to ensure timely delivery.
The Company is under no duty to give notification of defects or irregularities
with respect to the tenders of Series A Securities for exchange. Series A
Securities that are not tendered or are tendered but not accepted will,
following the consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof and, upon consummation of the
Exchange Offer, certain registration rights under the Registration Rights
Agreements will terminate. In addition, any holder of Series A Securities who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the Series B Securities may be deemed to have received restricted securities
and, if so, will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transactions. Each holder of the Series A Securities (other than certain
specified holders) who wishes to exchange the Series A Securities for Series B
Securities in the Exchange Offer will be required to represent in the Letters of
Transmittal that (i) it is not an affiliate of the Company, (ii) the Series B
Securities to be received by it are being acquired in the ordinary course of its
business and (iii) at the time of commencement of the Exchange Offer, it has no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of the Series B Securities. Each Participating
Broker-Dealer that receives Series B Securities for its own account in exchange
for Series A Securities, where such Series A Securities were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Series B Securities. See "Plan of
Distribution." To the extent that Series A Securities are tendered and accepted
in the Exchange Offer, the trading market for untendered and tendered but
unaccepted Series A Securities could be adversely affected. See "The Exchange
Offer."
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<PAGE> 35
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreements. The Company will not
receive any cash proceeds from the issuance of the Series B Securities in the
Exchange Offer. The net proceeds to the Company from the issuance of
$100,000,000 aggregate principal amount of the Series A Notes and the Series A
Exchangeable Preferred Stock were approximately $193.1 million. Of these net
proceeds $113.4 million was used to pay the cash portion of the purchase price
for the Tele-Media Acquisition, approximately $51.8 million was used to repay
certain indebtedness of the Company and the balance was used for acquisitions,
including expenses related thereto, and working capital purposes. The Company
did not receive any cash proceeds from the issuance of $1,000,000 aggregate
principal amount of the Series A Notes in connection with the Tele-Media
Acquisition.
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<PAGE> 36
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
as of June 30, 1997 (i) on an actual basis, (ii) on a pro forma basis to give
effect to the Recent 1997 Acquisitions and the Original Offerings and (iii) on a
pro forma basis as further adjusted to give effect to the Pending Transactions.
This table should be read in conjunction with the Company's Consolidated
Financial Statements and related notes, "Unaudited Pro Forma Condensed
Consolidated Financial Statements" and other information included elsewhere in
this Prospectus. Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------------------------
PRO FORMA
FOR THE PRO FORMA
RECENT 1997 AS FURTHER
ACQUISITIONS ADJUSTED
AND FOR THE
ORIGINAL PENDING
ACTUAL OFFERINGS TRANSACTIONS
-------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................ $ 277 $ 25,111 $ 2,923
======== ======== ========
Long-term debt, including current portion:
Credit Facility........................................ $ 89,584 $ 50,584 $113,584
Note payable to parent company(1)...................... 12,817 -- --
Other obligations...................................... 1,240 1,240 1,740
Notes(2)............................................... -- 101,000 101,000
-------- -------- ========
Total long-term debt..................................... 103,641 152,824 216,324
Exchangeable Preferred Stock............................. -- 96,350 96,350
Shareholder's Equity..................................... 10,909 15,159 25,159
-------- -------- ========
Total capitalization..................................... $114,550 $ 264,333 $337,833
======== ======== ========
</TABLE>
- ---------------
(1) Represents advances previously made by Citadel Communications to the Company
which were repaid out of the proceeds of the Original Offerings.
(2) Includes $1.0 million principal amount of Notes issued to the holders of the
Tele-Media Bonds.
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<PAGE> 37
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial
statements reflect the results of operations and balance sheet of the Company
after giving effect to the Completed Transactions and the Pending Transactions.
The pro forma condensed consolidated financial statements are based on the
historical consolidated financial statements of the Company and the financial
statements of those entities acquired or to be acquired, or from which assets
were or will be acquired, in connection with the Completed Transactions and the
Pending Acquisitions, and should be read in conjunction with the financial
statements and the notes thereto of (i) the Company, (ii) Tele-Media
Broadcasting Company, (iii) Deschutes River Broadcasting, Inc., (iv) Snider
Corporation, (v) Snider Broadcasting Corporation and subsidiary and CDB
Broadcasting Corporation, (vi) Maranatha Broadcasting Company, Inc.'s, Radio
Broadcasting Division and (vii) Pacific Northwest Broadcasting Corporation and
Affiliates which are included elsewhere in this Prospectus.
In the opinion of management, all adjustments necessary to fairly present
this pro forma information have been made. For pro forma purposes, the Company's
consolidated statements of operations for the year ended December 31, 1996 and
the six months ended June 30, 1996 and 1997 have been adjusted to give effect to
the Completed Transactions and the Pending Transactions as if each occurred on
January 1, 1996. For pro forma purposes, the Company's consolidated balance
sheet as of June 30, 1997 has been adjusted to give effect to the Recent 1997
Acquisitions, the Original Offerings and the Pending Transactions as if each had
occurred on June 30, 1997.
The unaudited pro forma information is presented for illustrative purposes
only and is not indicative of the operating results or financial position that
would have occurred if the Completed Transactions and the Pending Transactions
had been consummated on the dates indicated, nor is it indicative of future
operating results or financial position if the aforementioned transactions are
completed. The Company cannot predict whether the consummation of the Pending
Transactions will conform to the assumptions used in the preparation of the
unaudited pro forma condensed consolidated financial statements.
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<PAGE> 38
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL THE COMPLETED THE COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS TRANSACTIONS(2) THE COMPANY
----------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue................................. $45,413 $ 48,845 $ 94,258 $11,701 $ 105,959
Station operating expenses.................. 33,232 35,497 68,729 7,107 75,836
Depreciation and amortization............... 5,158 13,758 18,916 6,320 25,236
Corporate general and administrative........ 3,248 -- 3,248 -- 3,248
------- -------- -------- ------- --------
Operating expenses........................ 41,638 49,255 90,893 13,427 104,320
------- -------- -------- ------- --------
Operating income (loss)..................... 3,775 (410) 3,365 (1,726) 1,639
Interest expense............................ 6,156 6,540 12,696 5,316 18,012
Other (income) expense, net................. (414) (29) (443) -- (443)
------- -------- -------- ------- --------
Income (loss) before income taxes........... (1,967) (6,921) (8,888) (7,042) (15,930)
Income taxes (benefit)...................... -- -- -- --
Dividend requirement for Exchangeable
Preferred Stock........................... -- (13,825) (13,825) -- (13,825)
------- -------- -------- ------- --------
Income (loss) from continuing operations
applicable to common shares............... $(1,967) $ (20,746) $ (22,713) $(7,042) $ (29,755)
======= ======== ======== ======= ========
</TABLE>
31
<PAGE> 39
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the acquisition of Deschutes, (b) the
Tele-Media Acquisition, (c) the acquisitions of KTBL-FM, KHFM-FM, KNML-AM
and KRST-FM in Albuquerque, (d) the acquisition of KHOP-FM in Modesto, (e)
the acquisition of KKLI-FM in Colorado Springs, (f) the acquisitions of
KENZ-FM and KBER-FM in Salt Lake City, (g) the acquisition of KNHK-FM in
Reno, (h) the acquisition of KTHK-FM in Tri-Cities, (i) the acquisition of
WDGE-FM in Providence and (j) the consummation of the Original Offerings as
if each transaction had taken place as of January 1, 1996. Depreciation and
amortization for such acquisitions are based upon preliminary allocations of
the purchase price to property and equipment and intangible assets which
will be amortized over periods of 1-25 years. Actual depreciation and
amortization may differ depending on the final allocation of the purchase
price; however, management does not believe these differences will be
material. Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
OTHER THE THE
COMPLETED ORIGINAL COMPLETED
DESCHUTES(a) TELE-MEDIA(b) ACQUISITIONS(c) OFFERINGS TRANSACTIONS
------------ ------------- --------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue........................ $ 11,442 $31,385 $ 6,018 $ -- $ 48,845
Station operating expenses......... 9,412 22,720 3,365 -- 35,497
Depreciation and amortization...... 1,759 8,233 3,766 -- 13,758
Corporate general and
administrative................... 489 291 -- (780)(d) --
------------ ------------- ------- --------- -----------
Operating expenses............... 11,660 31,244 7,131 (780) 49,255
------------ ------------- ------- --------- -----------
Operating income (loss)............ (218) 141 (1,113) 780 (410)
Interest expense................... 1,556 9,669 3,105 (7,790)(e) 6,540
Other (income) expense, net........ (29) -- -- -- (29)
------------ ------------- ------- --------- -----------
Income (loss) before income
taxes............................ (1,745) (9,528) (4,218) 8,570 (6,921)
Income taxes (benefit)............. -- -- -- -- --
Dividend requirement for
Exchangeable Preferred Stock..... -- -- -- (13,825)(f) (13,825)
------------ ------------- ------- --------- -----------
Income (loss) from continuing
operations applicable to common
shares........................... $ (1,745) $(9,528) $(4,218) $(5,255) $(20,746)
============ ============= ======= ======== ===========
</TABLE>
(a) Represents the effect of the acquisition of Deschutes. Dollars in the
table below are shown in thousands.
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
ACQUISITIONS
PRO FORMA AND
ADJUSTMENTS FOR DISPOSITIONS
ACTUAL DESCHUTES COMPLETED BY
DESCHUTES(i) ACQUISITION DESCHUTES(vi) DESCHUTES
------------ --------------- --------------- ---------
<S> <C> <C> <C> <C>
Net revenue................................. $ 9,511 $ -- $ 1,931 $11,442
Station operating expenses.................. 8,002 (66)(ii) 1,476 9,412
Depreciation and amortization............... 1,173 586(iii) -- 1,759
Corporate general and administrative........ 705 (216)(iv) -- 489
---------- ------- ------- ---------
Operating expenses........................ 9,880 304 1,476 11,660
---------- ------- ------- ---------
Operating income (loss)..................... (369) (304) 455 (218)
Interest expense............................ 1,144 412(v) -- 1,556
Other (income) expense, net................. (127) -- 98 (29)
---------- ------- ------- ---------
Income (loss) before income taxes........... (1,386) (716) 357 (1,745)
Income taxes (benefit)...................... -- -- -- --
---------- ------- ------- ---------
Income (loss) from continuing operations.... $ (1,386) $ (716) $ 357 $(1,745)
========== ======= ======= =========
</TABLE>
(i) Represents the audited historical results of Deschutes for the
period from January 1, 1996 through December 31, 1996.
(ii) Reflects lower fees, as a percentage of national advertising
sales, paid by the Company to a national representative for
national advertising sales.
(iii) Represents increased depreciation and amortization resulting from
the purchase price allocation.
(iv) Reflects the elimination of management fees paid by Deschutes.
(v) Represents increased interest expense that would have been incurred
if the acquisition of Deschutes had occurred on January 1, 1996.
(vi) Gives effect to the historical operating results of stations
acquired in Medford, Eugene, Tri-Cities and Billings during 1996
and stations in Bozeman which were sold in November 1996. Prior to
the acquisition dates,
32
<PAGE> 40
Deschutes operated stations in Billings and Tri-Cities under a JSA
or LMA. Deschutes received fees for such services. Includes net
revenue and station operating expenses for stations operated under
JSAs to reflect ownership of the stations as of January 1, 1996.
Net revenue and station operating expenses for stations operated
under LMAs are included in the Deschutes' historical consolidated
financial statements. For those stations operated under JSAs or
LMAs and subsequently acquired, associated fees and redundant
expenses were eliminated and estimated occupancy costs were
included to adjust the results of operations to reflect ownership
of the stations as of January 1, 1996.
(b) Represents the net effect of the Tele-Media Acquisition, including
stations acquired by Tele-Media. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS FOR
ADJUSTMENTS FOR ACQUISITIONS
ACTUAL TELE-MEDIA COMPLETED BY
TELE-MEDIA(i) ACQUISITION TELE-MEDIA(vi) TELE-MEDIA
------------- --------------- --------------- ----------
<S> <C> <C> <C> <C>
Net revenue............................. $26,424 $ -- $ 4,961 $ 31,385
Station operating expenses.............. 18,293 (457)(ii) 4,884 22,720
Depreciation and amortization........... 3,494 4,739(iii) -- 8,233
Corporate general and administrative.... 804 (513)(iv) -- 291
------------- ------- ------ ----------
Operating expenses.................... 22,591 3,769 4,884 31,244
------------- ------- ------ ----------
Operating income (loss)................. 3,833 (3,769) 77 141
Interest expense........................ 10,750 (1,081)(v) -- 9,669
------------- ------- ------ ----------
Income (loss) before income taxes....... (6,917) (2,688) 77 (9,528)
Income taxes (benefit).................. -- -- -- --
------------- ------- ------ ----------
Income (loss) from continuing
operations............................ $(6,917) $(2,688) $ 77 $ (9,528)
============= =========== =========== ==========
</TABLE>
(i) Represents the audited historical results of Tele-Media for the
period January 1, 1996 through December 31, 1996.
(ii) Includes the elimination of $197,000 of expenses to reflect lower
fees, as a percentage of national advertising sales, paid by the
Company to a national representative for national advertising
sales and the elimination of $260,000 of expenses associated with
the litigation between the Company and Tele-Media. Had the
Tele-Media Acquisition occurred on January 1, 1996, these expenses
would not have been incurred.
(iii) Represents increased depreciation and amortization resulting from
the purchase price allocation.
(iv) Reflects the elimination of management fees paid to affiliates by
Tele-Media of $804,000, the recording of corporate overhead of
$400,000 which represents the Company's estimate of the
incremental expense necessary to oversee the Tele-Media stations
and the elimination of $109,000 of expenses associated with the
litigation between the Company and Tele-Media. Had the Original
Offerings and the Tele-Media Acquisition occurred on January 1,
1996, these expenses would not have been incurred.
(v) Reflects the elimination of Tele-Media interest expense of $10.8
million and the recording of interest expense of $9.7 million that
would have been incurred if the acquisition of Tele-Media had
occurred on January 1, 1996.
(vi) Represents the historical operating results of the
Wilkes-Barre/Scranton stations acquired by Tele-Media in February
and April 1997.
(c) Reflects adjustments for the acquisitions of KTBL-FM, KHFM-FM, KNML-AM
and KRST-FM in Albuquerque, KHOP-FM in Modesto, KKLI-FM in Colorado
Springs, KENZ-FM and KBER-FM in Salt Lake City, KNHK-FM in Reno, KTHK-FM
in Tri-Cities and WDGE-FM in Providence. Prior to the acquisition dates,
the Company operated KTBL-FM, KHOP-FM, KRST-FM, KTHK-FM, KNHK-FM,
KENZ-FM and KBER-FM under a JSA or LMA. The Company receives fees for
such services. Includes net revenue and station operating expenses for
stations operated under JSAs to reflect ownership of the stations as of
January 1, 1996. Net revenue and station operating expenses for stations
operated under LMAs are included in the Company's historical
consolidated financial statements. For those stations operated under
JSAs or LMAs and subsequently acquired, associated fees and redundant
expenses were eliminated and estimated occupancy costs were included to
adjust the results of operations to reflect ownership of the stations as
of January 1, 1996.
(d) Represents the elimination of $780,000 of professional expenses
associated with the Company's capital raising activities in 1996.
(e) Reflects the reduction of the Company's pro forma interest expense, the
recording of interest expense related to the Notes and recording of the
amortization of deferred financing costs of $3.3 million related to the
Notes.
(f) Reflects the recording of the dividends related to the Exchangeable
Preferred Stock as if the Original Offerings had taken place on January
1, 1996.
33
<PAGE> 41
(2) Represents the net effect of (a) the Little Rock Acquisitions, (b) the
acquisition of WLEV-FM in Allentown and the disposition of WEST-AM also in
Allentown, (c) the Boise Acquisition, (d) the acquisition of KBEE-FM and
KFNZ-AM in Salt Lake City, (e) the acquisition of WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, (f) the acquisition of WSGD-FM, WDLS-FM and WCDL-AM
in Wilkes-Barre/Scranton, (g) the acquisition of WDGF-FM in Providence and
(h) the disposition of the Johnstown and State College stations, as if each
transaction had taken place as of January 1, 1996. Depreciation and
amortization for such acquisitions are based upon preliminary allocations of
the purchase price to property and equipment and intangible assets which
will be amortized over periods of 1-25 years. Actual depreciation and
amortization may differ depending on the final allocation of the purchase
price; however, management does not believe these differences will be
material. Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
LITTLE ROCK ALLENTOWN BOISE OTHER PENDING
ACQUISITIONS(a) TRANSACTIONS(b) ACQUISITION(c) ACQUISITIONS(d) DISPOSITIONS(e) TRANSACTIONS
--------------- --------------- -------------- -------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue..... $ 8,364 $ 1,598 $ 4,152 $1,000 $(3,413) $ 11,701
Station
operating
expenses...... 5,638 918 3,035 579 (3,063) 7,107
Depreciation and
amortization... 2,715 1,538 2,002 663 (598) 6,320
------- ------- ------- ------ ------- ------------
Operating
expenses.... 8,353 2,456 5,037 1,242 (3,661) 13,427
------- ------- ------- ------ ------- ------------
Operating income
(loss)........ 11 (858) (885) (242) 248 (1,726)
Interest
expense....... 1,181 1,941 2,405 506 (717) 5,316
------- ------- ------- ------ ------- ------------
Income (loss)
before income
taxes......... (1,170) (2,799) (3,290) (748) 965 (7,042)
Income taxes
(benefit)..... -- -- -- -- -- --
------- ------- ------- ------ ------- ------------
Income (loss)
from
continuing
operations.... $(1,170) $(2,799) $ (3,290) $ (748) $ 965 $ (7,042)
============ ============= =========== ============ ============ ==========
</TABLE>
(a) Gives effect to the Little Rock Acquisitions as if such transactions had
taken place on January 1, 1996.
(b) Gives effect to the acquisition of WLEV-FM in Allentown and the
disposition of WEST-AM also in Allentown as if such transactions had
taken place on January 1, 1996.
(c) Gives effect to the Boise Acquisition as if such transaction had taken
place on January 1, 1996.
(d) Gives effect to (i) the acquisition of KBEE-FM and KFNZ-FM in Salt Lake
City, (ii) the acquisition of WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, (iii) the acquisition of WSGD-FM, WDLS-FM and
WCDL-AM in Wilkes-Barre/ Scranton and (iv) the acquisition of WDGF-FM in
Providence, as if each transaction had taken place on January 1, 1996.
(e) Gives effect to the disposition of the Johnstown and State College
stations as if such transaction had taken place on January 1, 1996.
34
<PAGE> 42
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL THE COMPLETED THE COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS TRANSACTIONS(2) THE COMPANY
----------- --------------- ---------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue................................ $19,348 $ 24,237 $ 43,585 $ 6,031 $ 49,616
Station operating expenses................. 14,797 18,678 33,475 3,716 37,191
Depreciation and amortization.............. 1,974 7,366 9,340 3,159 12,499
Corporate general and administrative....... 1,256 (375) 881 -- 881
----------- --------------- -------- ------- -----------
Operating expenses....................... 18,027 25,669 43,696 6,875 50,571
----------- --------------- -------- ------- -----------
Operating income (loss).................... 1,321 (1,432) (111) (844) (955)
Interest expense........................... 2,779 3,616 6,395 2,658 9,053
Other (income) expense, net................ (36) -- (36) -- (36)
----------- --------------- -------- ------- -----------
Income (loss) before income taxes.......... (1,422) (5,048) (6,470) (3,502) (9,972)
Income taxes (benefit)..................... -- -- -- -- --
Dividend requirement for Exchangeable
Preferred Stock.......................... -- (6,691) (6,691) -- (6,691)
----------- --------------- -------- ------- -----------
Income (loss) from continuing operations
applicable to common shares.............. $(1,422) $ (11,739) $(13,161) $(3,502) $ (16,663)
=========== ============ ============= ============ ===========
</TABLE>
35
<PAGE> 43
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the acquisition of Deschutes, (b) the
Tele-Media Acquisition, (c) the acquisitions of KTBL-FM, KHFM-FM, KNML-AM
and KRST-FM in Albuquerque, (d) the acquisition of KHOP-FM in Modesto, (e)
the acquisition of KKLI-FM in Colorado Springs, (f) the acquisitions of
KENZ-FM and KBER-FM in Salt Lake City, (g) the acquisition of KNHK-FM in
Reno, (h) the acquisition of KTHK-FM in Tri-Cities, (i) the acquisition of
WDGE-FM in Providence and (j) the consummation of the Original Offerings as
if each transaction had taken place as of January 1, 1996. Depreciation and
amortization for such acquisitions are based upon preliminary allocations of
the purchase price to property and equipment and intangible assets which
will be amortized over periods of 1-25 years. Actual depreciation and
amortization may differ depending on the final allocation of the purchase
price; however, management does not believe these differences will be
material. Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
OTHER THE THE
COMPLETED ORIGINAL COMPLETED
DESCHUTES(a) TELE-MEDIA(b) ACQUISITIONS(c) OFFERINGS TRANSACTIONS
------------- ------------- --------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue............................... $ 5,391 $14,632 $ 4,214 $ -- $ 24,237
Station operating expenses................ 4,747 11,301 2,630 -- 18,678
Depreciation and amortization............. 880 3,899 2,587 -- 7,366
Corporate general and administrative...... 205 200 -- (780)(d) (375)
------------- ------------- ------- --------- ------------
Operating expenses...................... 5,832 15,400 5,217 (780) 25,669
------------- ------------- ------- --------- ------------
Operating income (loss)................... (441) (768) (1,003) 780 (1,432)
Interest expense.......................... 778 4,835 1,930 (3,927)(e) 3,616
------------- ------------- ------- --------- ------------
Income (loss) before income taxes......... (1,219) (5,603) (2,933) 4,707 (5,048)
Income taxes (benefit).................... -- -- -- -- --
Dividend requirement for Exchangeable
Preferred Stock......................... -- -- -- (6,691)(f) (6,691)
------------- ------------- ------- --------- ------------
Income (loss) from continuing operations
applicable to common shares............. $(1,219) $(5,603) $(2,933) $ (1,984) $(11,739)
============= ============= =========== ======= ============
</TABLE>
(a) Represents the effect of the acquisition of Deschutes. Dollars in the
table below are shown in thousands.
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
PRO FORMA ACQUISITIONS AND
ADJUSTMENTS FOR DISPOSITIONS
ACTUAL DESCHUTES COMPLETED BY
DESCHUTES(i) ACQUISITION DESCHUTES(vi) DESCHUTES
------------ --------------- ---------------- ---------
<S> <C> <C> <C> <C>
Net revenue.......................................... $3,909 $ -- $1,482 $ 5,391
Station operating expenses........................... 3,496 (34)(ii) 1,285 4,747
Depreciation and amortization........................ 427 453(iii) -- 880
Corporate general and administrative................. 293 (88)(iv) -- 205
------ ------ ------ ---------
Operating expenses................................. 4,216 331 1,285 5,832
------ ------ ------ ---------
Operating income (loss).............................. (307) (331) 197 (441)
Interest expense..................................... 378 400(v) -- 778
------ ------ ------ ---------
Income (loss) before income taxes.................... (685) (731) 197 (1,219)
Income taxes (benefit)............................... -- -- -- --
------ ------ ------ ---------
Income (loss) from continuing operations............. $ (685) $(731) $ 197 $(1,219)
====== ====== ====== =========
</TABLE>
(i) Represents the unaudited historical results of Deschutes for the
period from January 1, 1996 through June 30, 1996.
(ii) Reflects lower fees, as a percentage of national advertising
sales, paid by the Company to a national representative for
national advertising sales.
(iii) Represents increased depreciation and amortization resulting from
the purchase price allocation.
(iv) Reflects the elimination of management fees paid by Deschutes.
(v) Represents increased interest expense that would have been incurred
if the acquisition of Deschutes had occurred on January 1, 1996.
(vi) Gives effect to the historical operating results of stations
acquired in Medford, Eugene, Tri-Cities and Billings during 1996
and stations in Bozeman which were sold in November 1996. Prior to
the acquisition dates, Deschutes operated stations in Billings and
Tri-Cities under a JSA or LMA. Deschutes received fees for such
services. Includes net revenue and station operating expenses for
stations operated under JSAs to reflect ownership of the stations
as of January 1, 1996. Net revenue and station operating expenses
for stations operated under LMAs are included in the Deschutes'
historical consolidated financial statements. For those stations
operated under JSAs or LMAs and subsequently acquired, associated
fees and redundant expenses were eliminated and estimated
occupancy costs were included to adjust the results of operations
to reflect ownership of the stations as of January 1, 1996.
36
<PAGE> 44
(b) Represents the net effect of the Tele-Media Acquisition, including
stations acquired by Tele-Media. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
ADJUSTMENTS
PRO FORMA FOR
ADJUSTMENTS FOR ACQUISITIONS
ACTUAL TELE-MEDIA COMPLETED BY
TELE-MEDIA(i) ACQUISITION TELE-MEDIA(vi) TELE-MEDIA
------------- --------------- --------------- ----------
<S> <C> <C> <C> <C>
Net revenue......................................... $11,950 $ -- $ 2,682 $ 14,632
Station operating expenses.......................... 8,613 (87)(ii) 2,775 11,301
Depreciation and amortization....................... 2,093 1,806(iii) -- 3,899
Corporate general and administrative................ 358 (158)(iv) -- 200
------------- ------- ------- ----------
Operating expenses................................ 11,064 1,561 2,775 15,400
------------- ------- ------- ----------
Operating income (loss)............................. 886 (1,561) (93) (768)
Interest expense.................................... 4,956 (121)(v) -- 4,835
------------- ------- ------- ----------
Income (loss) before income taxes................... (4,070) (1,440) (93) (5,603)
Income taxes (benefit).............................. -- -- -- --
------------- ------- ------- ----------
Income (loss) from continuing operations............ $(4,070) $(1,440) $ (93) $ (5,603)
============= =========== ======= ==========
</TABLE>
(i) Represents the unaudited historical results of Tele-Media for the
period January 1, 1996 through June 30, 1996.
(ii) Includes the elimination of $87,000 of expenses to reflect lower
fees, as a percentage of national advertising sales, paid by the
Company to a national representative for national advertising
sales.
(iii) Represents increased depreciation and amortization resulting from
the purchase price allocation.
(iv) Reflects the elimination of management fees paid to affiliates by
Tele-Media of $358,000 and the recording of corporate overhead of
$200,000 which represents the Company's estimate of the
incremental expense necessary to oversee the Tele-Media stations.
(v) Reflects the elimination of Tele-Media interest expense of $5.0
million and the recording of interest expense of $4.8 million that
would have been incurred if the acquisition of Tele-Media had
occurred on January 1, 1996.
(vi) Represents historical operating results of the
Wilkes-Barre/Scranton stations acquired by Tele-Media in February
and April 1997.
(c) Reflects adjustments for the acquisitions of KTBL-FM, KHFM-FM, KNML-AM
and KRST-FM in Albuquerque, KHOP-FM in Modesto, KKLI-FM in Colorado
Springs, KENZ-FM and KBER-FM in Salt Lake City, KNHK-FM in Reno, KTHK in
Tri-Cities and WDGE-FM in Providence. Prior to the acquisition dates,
the Company operated KTBL-FM, KHOP-FM, KRST-FM, KTHK-FM, KNHK-FM,
KENZ-FM and KBER-FM under a JSA or LMA. The Company receives fees for
such services. Includes net revenue and station operating expenses for
stations operated under JSAs to reflect ownership of the stations as of
January 1, 1996. Net revenue and station operating expenses for stations
operated under LMAs are included in the Company's historical
consolidated financial statements. For those stations operated under
JSAs or LMAs and subsequently acquired, associated fees and redundant
expenses were eliminated and estimated occupancy costs were included to
adjust the results of operations to reflect ownership of the stations as
of January 1, 1996.
(d) Represents the elimination of $780,000 of professional expenses
associated with the Company's capital raising activities in 1996. Had
the Original Offerings and the Tele-Media Acquisition occurred on
January 1, 1996, these expenses would not have been incurred.
(e) Reflects the reduction of the Company's pro forma interest expense, the
recording of interest expense related to the Notes and recording of the
amortization of deferred financing costs of $3.3 million related to the
Notes.
(f) Reflects the recording of the dividends related to the Exchangeable
Preferred Stock as if the Original Offerings had taken place on January
1, 1996.
(2) Represents the net effect of (a) the Little Rock Acquisitions, (b) the
acquisition of WLEV-FM in Allentown and the disposition of WEST-AM also in
Allentown, (c) the Boise Acquisition, (d) the acquisition of KBEE-FM and
KFNZ-AM in Salt Lake City, (e) the acquisition of WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, (f) the acquisition of WSGD-FM, WDLS-FM, and WCDL-AM
in Wilkes-Barre/Scranton, (g) the acquisition of WDGF-FM in Providence and
(h) the disposition of the Johnstown and State College stations, as if each
transaction had taken place as of January 1, 1996. Depreciation and
amortization for such acquisitions are based upon preliminary allocations of
the purchase price to property and equipment and intangible assets which
will be amortized over periods of
37
<PAGE> 45
1-25 years. Actual depreciation and amortization may differ depending on the
final allocation of the purchase price; however, management does not believe
these differences will be material. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
LITTLE ROCK ALLENTOWN BOISE OTHER PENDING
ACQUISITIONS(A) TRANSACTIONS(B) ACQUISITION(C) ACQUISITIONS(D) DISPOSITIONS(E) TRANSACTIONS
--------------- -------------- --------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.... $ 4,282 $ 686 $ 2,220 $ 141 $(1,298) $ 6,031
Station
operating
expenses..... 3,131 436 1,252 39 (1,142) 3,716
Depreciation
and
amortization... 1,357 769 1,001 331 (299) 3,159
------ ------- ------- ------ ------- ------------
Operating
expenses... 4,488 1,205 2,253 370 (1,441) 6,875
------ ------- ------- ------ ------- ------------
Operating
income
(loss)....... (206) (519) (33) (229) 143 (844)
Interest
expense...... 591 970 1,203 253 (359) 2,658
------ ------- ------- ------ ------- ------------
Income (loss)
before income
taxes........ (797) (1,489) (1,236) (482) 502 (3,502)
Income taxes
(benefit).... -- -- -- -- -- --
------ ------- ------- ------ ------- ------------
Income (loss)
from
continuing
operations... $ (797) $ (1,489) $(1,236) $(482) $ 502 $ (3,502)
============ ============ ============= ============ ============ ==========
</TABLE>
(a) Gives effect to the Little Rock Acquisitions as if such transactions had
taken place on January 1, 1996.
(b) Gives effect to the acquisition of WLEV-FM in Allentown and the
disposition of WEST-AM also in Allentown, as if such transactions had
taken place on January 1, 1996.
(c) Gives effect to the Boise Acquisition as if such transaction had taken
place on January 1, 1996.
(d) Gives effect to (i) the acquisition of KBEE-FM and KFNZ-AM in Salt Lake
City, (ii) the acquisition of WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, (iii) the acquisition of WSGD-FM, WDLS-FM and
WCDL-AM in Wilkes-Barre/ Scranton and (iv) the acquisition of WDGF-FM in
Providence, as if the acquisitions had taken place on January 1, 1996.
(e) Gives effect to the disposition of the Johnstown and State College
stations as if such transaction had taken place on January 1, 1996.
38
<PAGE> 46
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL COMPLETED COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS TRANSACTIONS(2) THE COMPANY
----------- ---------------- ---------------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue.............................. $27,181 $ 22,479 $ 49,660 $ 6,737 $ 56,397
Station operating expenses............... 19,321 17,705 37,026 4,254 41,280
Depreciation and amortization............ 3,907 8,833 12,740 3,159 15,899
Corporate general and administrative..... 1,271 (11) 1,260 -- 1,260
----------- -------- -------- ------- -----------
Operating expenses..................... 24,499 26,527 51,026 7,413 58,439
----------- -------- -------- ------- -----------
Operating income (loss).................. 2,682 (4,048) (1,366) (676) (2,042)
Interest expense......................... 3,594 2,488 6,082 2,658 8,740
Other (income) expense, net.............. (72) (53) (125) -- (125)
----------- -------- -------- ------- -----------
Income (loss) before income taxes........ (840) (6,483) (7,323) (3,334) (10,657)
Income taxes (benefit)................... -- -- -- -- --
Dividend requirement for Exchangeable
Preferred Stock........................ -- (7,607) (7,607) -- (7,607)
----------- -------- -------- ------- -----------
Income (loss) from continuing operations
applicable to common shares............ $ (840) $(14,090) $(14,930) $ (3,334) $ (18,264)
========== ============= ============= ============= ==========
</TABLE>
39
<PAGE> 47
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the Tele-Media Acquisition, including
stations acquired by Tele-Media, (b) the acquisitions of KENZ-FM and KBER-FM
in Salt Lake City, (c) the acquisition of KNHK-FM in Reno, (d) the
acquisition of KTHK-FM in Tri-Cities, (e) the acquisition of WDGE-FM in
Providence and (f) the consummation of the Original Offerings as if each
transaction had taken place as of January 1, 1996. Depreciation and
amortization for such acquisitions are based upon preliminary allocations of
the purchase price to property and equipment and intangible assets which
will be amortized over periods of 1-25 years. Actual depreciation and
amortization may differ depending on the final allocation of the purchase
price; however management does not believe these differences will be
material. Prior to the dates of their acquisition, the Company operated
KENZ-FM and KBER-FM, KNHK-FM and KTHK-FM under a JSA and LMAs. The Company
receives fees for such services. Includes net revenue and station operating
expenses for stations operated under JSAs to reflect ownership of the
stations as of January 1, 1996. Net revenue and station operating expenses
for stations operated under LMAs are included in the Company's historical
consolidated financial statements. For those stations operated under JSAs or
LMAs and subsequently acquired, associated fees and redundant expenses were
eliminated and estimated occupancy costs were included to adjust the results
of operations to reflect ownership of the stations as of January 1, 1996.
Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS FOR
ACTUAL ACTUAL TELE-MEDIA OTHER THE ORIGINAL THE COMPLETED
DESCHUTES(A) TELE-MEDIA(B) ACQUISITION ACQUISITIONS(G) OFFERINGS TRANSACTIONS
------------ ------------- --------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue............ $ 5,229 $16,241 $ -- $ 1,009 $ -- $ 22,479
Station operating
expenses............. 4,954 12,713 (543)(c) 581 -- 17,705
Depreciation and
amortization......... 1,053 2,208 4,739(d) 833 -- 8,833
Corporate general and
administrative....... 323 454 (788)(e) -- -- (11)
------------ ------------- ------- ------- ------------ -------------
Operating expenses... 6,330 15,375 3,408 1,414 -- 26,527
------------ ------------- ------- ------- ------------ -------------
Operating income
(loss)............... (1,101) 866 (3,408) (405) -- (4,048)
Interest expense....... 570 5,911 (1,076)(f) 831 (3,748)(h) 2,488
Other (income) expense,
net.................. (19) (34) -- -- -- (53)
------------ ------------- ------- ------- ------------ -------------
Income (loss) before
income taxes......... (1,652) (5,011) (2,332) (1,236) 3,748 (6,483)
Income taxes
(benefit)............ -- -- -- -- -- --
Dividend requirement
for Exchangeable
Preferred Stock...... -- -- -- -- (7,607)(i) (7,607)
------------ ------------- ------- ------- ------------ -------------
Income (loss) from
continuing operations
applicable to common
shares............... $ (1,652) $(5,011) $(2,332) $(1,236) $ (3,859) $ (14,090)
============ ============= ============== ============== =========== =============
</TABLE>
(a) Represents the unaudited historical results for Deschutes for the period
January 1, 1997 through June 30, 1997.
(b) Represents the unaudited historical results of Tele-Media for the period
January 1, 1997 through June 30, 1997, including the historical
operating results of the Wilkes-Barre/Scranton stations acquired by
Tele-Media in February and April 1997 which had been operated under
LMA/JSA agreements since August and December 1996.
(c) Includes the elimination of $85,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising sales and the
elimination of $211,000 of LMA/JSA fees related to the
Wilkes-Barre/Scranton stations and $247,000 of expenses associated with
the litigation between the Company and Tele-Media. Had the Tele-Media
Acquisition occurred on January 1, 1996, these expenses would not have
been incurred.
(d) Represents increased depreciation and amortization resulting from the
purchase price allocation.
(e) Reflects the elimination of management fees paid to affiliates by
Tele-Media of $454,000 and the recording of corporate overhead of
$200,000 which represents the Company's estimate of the incremental
expense necessary to oversee the Tele-Media stations and the elimination
of $534,000 of expenses associated with the litigation between the
Company and Tele-Media. Had the Original Offerings and the Tele-Media
Acquisition occurred on January 1, 1996, these expenses would not have
been incurred.
(f) Reflects the elimination of Tele-Media interest expense of $5.9 million
and the recording of interest expense of $4.8 million that would have
been incurred if the acquisition of Tele-Media had occurred on January
1, 1996.
(g) Gives effect to the acquisitions of KBER-FM and KENZ-FM in Salt Lake
City, KNHK-FM in Reno, KTHK-FM in Tri-Cities and WDGE-FM in Providence
as if such transactions had taken place on January 1, 1996.
(h) Reflects the reduction of the Company's pro forma interest expense, the
recording of interest expense related to the Notes and recording of the
amortization of deferred financing costs of $3.3 million related to the
Notes.
(i) Reflects the recording of the dividends related to the Exchangeable
Preferred Stock as if the Original Offerings had taken place on January
1, 1996.
40
<PAGE> 48
(2) Represents the net effect of (a) the Little Rock Acquisitions, (b) the
acquisition of WLEV-FM in Allentown and the disposition of WEST-AM, also in
Allentown, (c) the Boise Acquisition, (d) the acquisition of KBEE-FM and
KFNZ-AM in Salt Lake City, (e) the acquisition of WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, (f) the acquisition of WSGD-FM, WDLS-FM and WCDL-AM
in Wilkes-Barre/Scranton, (g) the acquisition of WDGF-FM in Providence and
(h) the dispositions of the Johnstown and State College stations, as if each
transaction had taken place as of January 1, 1996. Depreciation and
amortization for such acquisitions are based upon preliminary allocations of
the purchase price to property and equipment and intangible assets which
will be amortized over periods of 1-25 years. Actual depreciation and
amortization may differ depending on the final allocation of the purchase
price; however, management does not believe these differences will be
material. Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
LITTLE ROCK ALLENTOWN BOISE OTHER PENDING
ACQUISITIONS(a) TRANSACTIONS(b) ACQUISITION(c) ACQUISITIONS(d) DISPOSITIONS(e) TRANSACTIONS
--------------- --------------- -------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.... $ 4,228 $ 771 $ 2,812 $ 154 $ (1,228) $ 6,737
Station
operating
expenses..... 3,023 479 1,920 16 (1,184) 4,254
Depreciation
and
amortization... 1,357 769 1,001 331 (299) 3,159
------- --------------- -------------- ------- --------------- ------------
Operating
expenses... 4,380 1,248 2,921 347 (1,483) 7,413
------- --------------- -------------- ------- --------------- ------------
Operating
income
(loss)....... (152) (477) (109) (193) 255 (676)
Interest
expense...... 591 970 1,203 253 (359) 2,658
------- --------------- -------------- ------- --------------- ------------
Income (loss)
before income
taxes........ (743) (1,447) (1,312) (446) 614 (3,334)
Income taxes
(benefit).... -- -- -- -- -- --
------- --------------- -------------- ------- --------------- ------------
Income (loss)
from
continuing
operations... $ (743) $ (1,447) $ (1,312) $ (446) $ 614 $ (3,334)
============ =============== ============== ============ =============== ============
</TABLE>
(a) Gives effect to the Little Rock Acquisitions as if such transaction had
taken place on January 1, 1996.
(b) Gives effect to the acquisition of WLEV-FM in Allentown and the
disposition of WEST-AM also in Allentown as if such transactions had
taken place on January 1, 1996.
(c) Gives effect to the Boise Acquisition as if such transaction had taken
place on January 1, 1996.
(d) Gives effect to (i) the acquisition of KBEE-FM and KFNZ-FM in Salt Lake
City, (ii) the acquisition of WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, (iii) the acquisition of WSGD-FM, WDLS-FM and
WCDL-AM in Wilkes-Barre/Scranton and (iv) the acquisition of WDGF-FM in
Providence, as if each transaction had taken place on January 1, 1996.
(e) Gives effect to the disposition of the Johnstown and State College
stations as if such transaction had taken place on January 1, 1996.
41
<PAGE> 49
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR
THE RECENT 1997 THE RECENT 1997
ACQUISITIONS AND ACQUISITIONS AND ADJUSTMENTS FOR
ACTUAL ORIGINAL ORIGINAL THE PENDING PRO FORMA
THE COMPANY OFFERINGS(1) OFFERINGS TRANSACTIONS(2) THE COMPANY
----------- ---------------- ---------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents................ $ 277 $ 24,834 $ 25,111 $ (22,188) $ 2,923
Accounts receivable, net................. 16,030 2,000 18,030 -- 18,030
Other current assets..................... 1,144 -- 1,144 -- 1,144
----------- -------- -------- --------------- -----------
Total current assets..................... 17,451 26,834 44,285 (22,188) 22,097
Property and
equipment, net......................... 19,059 9,750 28,809 14,025 42,834
Intangible assets, net................... 84,283 115,579 199,862 87,723 287,585
Other assets, net........................ 2,628 3,120 5,748 -- 5,748
----------- -------- -------- --------------- -----------
$ 123,421 $155,283 $278,704 $ 79,560 $ 358,264
========== ============= ============= ============ ==========
Liabilities and Shareholder's Equity
Note payable to parent company........... $ 12,817 $(12,817) $ -- $ -- $ --
Current maturities of notes payable...... 7,500 (7,500) -- -- --
Other current liabilities................ 6,168 -- 6,168 100 6,268
----------- -------- -------- --------------- -----------
Total current liabilities................ 26,485 (20,317) 6,168 100 6,268
Notes payable, less current maturities... 82,084 69,500 151,584 63,000 214,584
Other long-term obligations, less current
maturities............................. 1,053 -- 1,053 400 1,453
Exchangeable preferred stock............. -- 96,350 96,350 -- 96,350
Deferred tax liability................... 2,890 5,500 8,390 6,060 14,450
Shareholder's equity..................... 10,909 4,250 15,159 10,000 25,159
----------- -------- -------- --------------- -----------
$ 123,421 $155,283 $278,704 $ 79,560 $ 358,264
========== ============= ============= ============ ==========
</TABLE>
42
<PAGE> 50
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(1) Represents the net effect of (a) the Tele-Media Acquisition, (b) the
acquisition of KNHK-FM in Reno, (c) the acquisition of KTHK-FM in
Tri-Cities, (d) the acquisition of WDGE-FM in Providence and (e) the
consummation of the Original Offerings, as if each transaction had taken
place on June 30, 1997. The preliminary allocation of purchase prices is
based on estimated fair values. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
THE RECENT
1997
ACQUISITIONS
AND
TELE-MEDIA OTHER ORIGINAL ORIGINAL
ACQUISITION ACQUISITIONS OFFERINGS OFFERINGS
----------- ------------ --------- -------------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents................................. $(114,429) $ (2,020) $ 141,283(d) $ 24,834
Accounts receivable, net.................................. 2,000 -- -- 2,000
----------- ------------ --------- -------------
Total current assets...................................... (112,429)(a) (2,020) (141,283) 26,834
Property and equipment, net............................... 9,000 750 -- 9,750
Intangible assets, net.................................... 109,929 5,650 -- 115,579
Other assets, net......................................... -- (130)(c) 3,250(e) 3,120
----------- ------------ --------- -------------
$ 6,500 $ 4,250 $ 144,533 $ 155,283
========== =========== ======== =============
Liabilities and Shareholder's Equity
Note payable to parent company............................ $ -- $ -- $ (12,817)(f) $ (12,817)
Current maturities of notes payable....................... -- -- (7,500)(g) (7,500)
----------- ------------ --------- -------------
Total current liabilities................................. -- -- (20,317) (20,317)
Notes payable, less current maturities.................... 1,000(b) -- 68,500(h) 69,500
Exchangeable Preferred Stock.............................. -- -- 96,350(i) 96,350
Deferred tax liability.................................... 5,500 -- -- 5,500
Shareholder's Equity...................................... -- 4,250 -- 4,250
----------- ------------ --------- -------------
$ 6,500 $ 4,250 $ 144,533 $ 155,283
========== =========== ======== =============
</TABLE>
(a) Represents purchase price of $114.4 million and $1.0 million of
acquisition costs, net of $2.0 million of purchased accounts receivable
and $1.0 million of obligations to the holders of the Tele-Media Bonds.
(b) Represents the $1.0 million of obligations to holders of the Tele-Media
Bonds exchanged for $1.0 million of Notes.
(c) Represents an escrow deposit made prior to an acquisition.
(d) Reflects the net proceeds from the Original Offerings of $193.1 million,
after deducting fees and expenses of $6.9 million and the use of
proceeds from the Original Offerings to repay $39.0 million of
outstanding indebtedness under the Credit Facility and $12.8 million of
note payable to parent company.
(e) Represents deferred financing costs related to the Original Offerings.
(f) Reflects the payment of $12.8 million of note payable to parent company
from the net proceeds of the Original Offerings.
(g) Reflects the reclassification of the current portion of the Credit
Facility to long-term debt pursuant to the July 1997 amendments to the
Credit Facility done in conjunction with the Original Offerings.
(h) Represents the issuance of $100.0 million of Notes under the Original
Offerings and the repayment of $39.0 million of indebtedness under the
Credit Facility and the reclassification of the current portion of the
Credit Facility to long-term debt pursuant to the July 1997 amendments
to the Credit Facility.
(i) Represents the issuance of $100.0 million of Exchangeable Preferred
Stock under the Original Offerings, after deducting fees and expenses of
$3.7 million.
43
<PAGE> 51
(2) Represents the net effect of the Pending Transactions, and the preliminary
allocation of purchase prices, based on fair values. Dollars in the table
below are shown in thousands.
<TABLE>
<CAPTION>
LITTLE ROCK ALLENTOWN BOISE OTHER PENDING
ACQUISITIONS TRANSACTIONS(B) ACQUISITION ACQUISITIONS(C) DISPOSITIONS(D) TRANSACTIONS
------------ -------------- ----------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and cash
equivalents..... $(14,500) $ -- $ -- $ (7,688) $ -- $(22,188)
Property and
equipment,
net............. 8,216 150 5,000 1,812 (1,153) 14,025
Intangible assets,
net............. 32,984 22,850 27,360 11,876 (7,347) 87,723
------------ -------------- ----------- --------------- --------------- ------------
$ 26,700 $ 23,000 $ 32,360 $ 6,000 $ (8,500) $ 79,560
========= =========== ========= ============ ============ ==========
Liabilities and
Shareholder's
Equity
Other current
liabilities..... $ -- $ -- $ 100 $ -- $ -- $ 100
Notes payable,
less current
maturities...... 14,000 23,000 28,500 6,000 (8,500) 63,000
Other long-term
obligations,
less current
maturities...... -- -- 400 -- -- 400
Deferred tax
liability....... 2,700 -- 3,360 -- -- 6,060
Shareholder's
Equity.......... 10,000(a) -- -- -- 10,000
------------ -------------- ----------- --------------- --------------- ------------
$ 26,700 $ 23,000 $ 32,360 $ 6,000 $ (8,500) $ 79,560
========= =========== ========= ============ ============ ==========
</TABLE>
(a) Represents the non-cash portion of the purchase price to be paid in
360,636 shares of a newly created series of preferred stock of Citadel
Communications the benefit of which will be contributed to the Company.
(b) Represents the acquisition of WLEV-FM in Allentown and the disposition
of WEST-AM also in Allentown.
(c) Represents the net effect of (i) the acquisition of KBEE-FM and KFNZ-AM
in Salt Lake City, (ii) the acquisition of WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, (iii) the acquisition of WSGD-FM, WDLS-FM and
WCDL-AM in Wilkes-Barre/ Scranton and (iv) the acquisition of WDGF-FM in
Providence.
(d) Represents the disposition of the Johnstown and State College stations.
44
<PAGE> 52
SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data of the Company and Predecessor
presented below as of and for the years ended December 31, 1992, 1993, 1994,
1995 and 1996 are derived from the consolidated financial statements of the
Company and Predecessor, which consolidated financial statements have been
audited by KPMG Peat Marwick LLP, independent certified public accountants. The
selected historical financial data of the Company presented below as of June 30,
1997 and for the six months ended June 30, 1996 and 1997 are derived from
unaudited consolidated financial statements of the Company which, in the opinion
of management, contain all necessary adjustments of a normal recurring nature to
present the financial statements in conformity with GAAP. The consolidated
financial statements of the Company as of December 31, 1995 and 1996 and for
each of the years in the three-year period ended December 31, 1996 and the
independent auditors' report thereon, as well as the unaudited consolidated
financial statements of the Company as of June 30, 1997 and for the six months
ended June 30, 1996 and 1997, are included elsewhere in this Prospectus. The
financial results of the Company and Predecessor are not comparable from year to
year because of the acquisition and disposition of various radio stations by the
Company and the reorganization in July 1992 when the Company commenced
operations. The selected historical financial data below should be read in
conjunction with, and is qualified by reference to, the Company's Consolidated
Financial Statements and related notes, "Capitalization" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------- -----------------
1992(1) 1993 1994 1995 1996 1996 1997
-------- -------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue..................... $ 13,688 $ 21,376 $32,998 $34,112 $45,413 $19,348 $27,181
Station operating expenses...... 10,421 17,081 24,331 26,832 33,232 14,797 19,321
Depreciation and amortization... 4,395 5,245 7,435 4,891 5,158 1,974 3,907
Corporate general and
administrative................ 732 961 2,504 2,274 3,248 1,256 1,272
-------- -------- ------- ------- ------- ------- -------
Operating income (loss)......... (1,860) (1,911) (1,272) 115 3,775 1,321 2,681
Interest expense(2)............. 1,393 2,637 4,866 5,242 6,155 2,779 3,594
Other income, net............... 40 149 657 781 414 36 73
-------- -------- ------- ------- ------- ------- -------
Income (loss) before
extraordinary item............ (3,213) (4,399) (5,481) (4,346) (1,966) (1,422) (840)
Extraordinary loss(3)........... -- -- -- -- (1,769) -- --
-------- -------- ------- ------- ------- ------- -------
Net income (loss)............... $ (3,213) $ (4,399) $(5,481) $(4,346) $(3,735) $(1,422) $ (840)
======== ======== ======= ======= ======= ======= =======
Net loss per common share....... $ (80) $ (110) $ (137) $ (109) $ (93) $ (36) $ (21)
======== ======== ======= ======= ======= ======= =======
Shares used in per share
calculation................... 40,000 40,000 40,000 40,000 40,000 40,000 40,000
======== ======== ======= ======= ======= ======= =======
Cash dividends declared per
share......................... $ -- $ -- $ -- $ -- $ -- $ -- $ --
======== ======== ======= ======= ======= ======= =======
OTHER DATA:
Deficiency of earnings to fixed
charges(4).................... $ 3,213 $ 4,399 $ 5,481 $ 4,346 $ 1,966 $ 1,422 $ 840
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
------- ------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........ $ 1,244 $ 857 $ 1,538 $ 1,005 $ 1,588 $ 277
Working capital (deficiency)..... 2,235 1,701 3,382 2,927 (4,195) (9,034)
Intangible assets, net........... 14,543 17,454 20,080 15,093 51,802 84,283
Total assets..................... 28,515 36,120 46,397 37,372 102,244 123,421
Long-term debt (including current
portion)....................... 22,026 30,468 47,805 43,046 91,072 103,641
Shareholder's equity (deficit)... 4,870 3,492 (4,782) (9,249) 5,999 10,909
Book value per share............. $ 122 $ 87 $ (120) $ (231) $ 150 $ 273
======= ======= ======== ======== ======== ========
</TABLE>
45
<PAGE> 53
- ---------------
(1) In July 1992, the Company acquired all of the radio stations then owned or
operated by Predecessor and certain other radio stations. In 1993, Citadel
Communications was incorporated and the Company was reorganized as a wholly
owned subsidiary of Citadel Communications. The Statement of Operations Data
for the year ended December 31, 1992 represents the combined operating
results from the audited Statement of Operations of Predecessor for the
period January 1, 1992 to July 23, 1992 and the Company from July 24, 1992
to December 31, 1992. Net revenue for Predecessor for the period January 1,
1992 to July 23, 1992 and the Company from July 24, 1992 to December 31,
1992 totaled $5.7 million and $8.0 million, respectively. Net income (loss)
for Predecessor for the period January 1, 1992 to July 23, 1992 and the
Company from July 24, 1992 to December 31, 1992 totaled $300,000 and $(3.5)
million, respectively.
(2) Includes debt issuance costs and debt discount amortization of $35,000,
$139,000, $287,000, $132,000 and $371,000 for the years ended December 31,
1992, 1993, 1994, 1995 and 1996, respectively, and $302,000 and $38,000 for
the six months ended June 30, 1996 and 1997, respectively.
(3) On October 9, 1996, the Company extinguished its long-term debt of $31.3
million, payable to a financial institution, and its note payable to a
related party of $7.0 million. The early retirement of the long-term debt
resulted in a $1.8 million extraordinary loss due to prepayment premiums and
the write-off of debt issuance costs.
(4) Fixed charges include interest expense on debt, amortization of financing
costs, amortization of debt discount, 33% of rent expense, and dividend
requirements with respect to the Exchangeable Preferred Stock.
46
<PAGE> 54
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
Company's consolidated financial statements and notes thereto included elsewhere
in this Prospectus. This Prospectus contains forward-looking statements,
including statements regarding, among other items, (i) the realization of the
Company's business strategy, (ii) the sufficiency of cash flow to fund the
Company's debt service requirements and working capital needs, (iii) anticipated
trends in the radio broadcasting industry, (iv) potential acquisitions by the
Company and the successful integration of both completed and future acquisitions
and (v) government regulation. Forward-looking statements are typically
identified by the words "believe," "expect," "anticipate," "intend," "estimate"
and similar expressions. Readers are cautioned that any such forward looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those
contained in the forward looking statements as a result of various factors.
The principal source of the Company's revenue is the sale of broadcasting
time on its radio stations for advertising. As a result, the Company's revenue
is affected primarily by the advertising rates its radio stations charge.
Correspondingly, the rates are based upon the station's ability to attract
audiences in the demographic groups targeted by its advertisers, as measured
principally by periodic Arbitron Radio Market Reports. The number of
advertisements that can be broadcast without jeopardizing listening levels (and
the resulting ratings) is limited in part by, among other things, the format of
a particular station. Each of the Company's stations has a general
pre-determined level of on-air inventory that it makes available for
advertising, which may be different at different times of the day and tends to
remain stable over time. Much of the Company's selling activity is based on
demand for its radio stations' on-air inventory and, in general, the Company
responds to this demand by varying prices rather than by changing the available
inventory.
In the broadcasting industry, radio stations often utilize trade (or
barter) agreements to exchange advertising time for goods or services (such as
other media advertising, travel or lodging), in lieu of cash. In order to
preserve most of its on-air inventory for cash advertising, the Company
generally enters into trade agreements only if the goods or services bartered to
the Company will be used in the Company's business. The Company has minimized
its use of trade agreements and has generally sold over 90% of its advertising
time for cash. In addition, it is the Company's general policy not to preempt
advertising spots paid for in cash with advertising spots paid for in trade.
In 1996, the Company's radio stations derived approximately 87.0% of their
net broadcasting revenue from local and regional advertising in the markets in
which they operate, and the remainder resulted principally from the sale of
national advertising. Local and regional advertising is sold primarily by each
station's sales staff. To generate national advertising sales, the Company
engages a national advertising representative firm. The Company believes that
the volume of national advertising revenue tends to adjust to shifts in a
station's audience share position more rapidly than does the volume of local and
regional advertising revenue. During the year ended December 31, 1996 and the
six months ended June 30, 1997, no single advertiser accounted for more than
6.3% of the net revenue of any of the Company's station groups or more than 0.9%
of total net revenue of the Company.
The Company's financial results are dependent on a number of factors,
including the general strength of the local and national economies, population
growth, ability to provide popular programming, local market and regional
competition, relative efficiency of radio broadcasting compared to other
advertising media, signal strength and government regulation and policies.
The Company's quarterly revenue varies throughout the year, as is typical
in the radio broadcasting industry. The Company's first calendar quarter
typically produces the lowest revenue for the year, and the second and fourth
calendar quarters generally produce the highest revenue for the year. The
advertising revenue of the Company is typically collected within 120 days of the
date on which the related advertising is aired and its corresponding revenue is
recognized. Most accrued expenses, however, are paid within 45 to
47
<PAGE> 55
60 days. As a result of this time lag, working capital requirements have
increased as the Company has grown and will likely increase further in the
future.
The primary operating expenses incurred in the ownership and operation of
radio stations include employee salaries and commissions, programming expenses
and advertising and promotion expenses. The Company also incurs and will
continue to incur significant depreciation, amortization and interest expense as
a result of completed and future acquisitions of stations, including the Pending
Acquisitions, and due to existing and future financings, including the Notes and
the Exchangeable Preferred Stock and borrowings under the Credit Facility. The
Company's consolidated financial statements tend not to be directly comparable
from period to period due to the Company's acquisition activity.
"Broadcast cash flow" consists of operating income (loss) before
depreciation, amortization and corporate expenses. "EBITDA" consists of
operating income (loss) before depreciation and amortization. Although broadcast
cash flow and EBITDA are not measures of performance calculated in accordance
with GAAP, management believes that they are useful to an investor in evaluating
the Company because they are measures widely used in the broadcast industry to
evaluate a radio company's operating performance. However, broadcast cash flow
and EBITDA should not be considered in isolation or as substitutes for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP as a measure of liquidity or
profitability.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Net Revenue. Net revenue increased approximately $7.9 million or 40.9% to
$27.2 million in the period ended June 30, 1997 from $19.3 million in the period
ended June 30, 1996. The inclusion of revenue from the acquisitions of radio
stations and revenue generated from LMAs and JSAs entered into during 1996 and
1997 provided approximately $6.2 million of the increase. For stations owned and
operated over the comparable period in 1996 and 1997, net revenue improved
approximately $1.7 million or 10.4% to $18.1 million in 1997 from $16.4 million
in 1996 primarily due to increased ratings and improved selling efforts.
Station Operating Expenses. Station operating expenses increased
approximately $4.5 million or 30.4% to $19.3 million in the period ended June
30, 1997 from $14.8 million in the period ended June 30, 1996. The increase was
primarily attributable to the inclusion of station operating expenses of the
radio station acquisitions and the LMAs and JSAs entered into during 1996 and
1997.
Broadcast Cash Flow. As a result of the factors described above, broadcast
cash flow increased approximately $3.4 million or 75.6% to $7.9 million in the
period ended June 30, 1997 from $4.5 million in the period ended June 30, 1996.
As a percentage of net revenue, broadcast cash flow increased to 28.9% in the
period ended June 30, 1997 from 23.5% in the period ended June 30, 1996.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses were $1.3 million in the period ended June 30, 1997 and
1996.
EBITDA. As a result of the factors described above, EBITDA increased
approximately $3.3 million or 100.0% to $6.6 million in the period ended June
30, 1997 from $3.3 million in the period ended June 30, 1996.
Depreciation and Amortization. Depreciation and amortization expense
increased approximately $1.9 million or 95.0% to $3.9 million in the period
ended June 30, 1997 from $2.0 million in the period ended June 30, 1996,
primarily due to radio station acquisitions consummated during 1996 and 1997.
Interest Expense. Interest expense increased approximately $0.8 million or
28.6% to $3.6 million in the period ended June 30, 1997 from $2.8 million in the
period ended June 30, 1996, primarily due to interest expense associated with
additional borrowings to fund acquisitions consummated during 1996 and 1997.
Net Loss. As a result of the factors described above, net loss decreased
approximately $0.6 million or 42.9% to $0.8 million in the period ended June 30,
1997 from $1.4 million in the period ended June 30, 1996.
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<PAGE> 56
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net Revenue. Net revenue increased approximately $11.3 million or 33.1% to
$45.4 million in 1996 from $34.1 million in 1995. The inclusion of revenue from
the acquisitions of radio stations and revenue generated from LMAs and JSAs
entered into during 1996 provided approximately $7.8 million of the increase.
For stations owned and operated over the comparable period in 1995 and 1996, net
revenue improved approximately $3.5 million or 11.8% to $34.2 million in 1996
from $30.6 million in 1995 primarily due to increased ratings and improved
selling efforts.
Station Operating Expenses. Station operating expenses increased
approximately $6.4 million or 23.9% to $33.2 million in 1996 from $26.8 million
in 1995. The increase was primarily attributable to the inclusion of station
operating expenses of the radio station acquisitions and the LMAs and JSAs
entered into during 1996.
Broadcast Cash Flow. As a result of the factors described above, broadcast
cash flow increased approximately $4.9 million or 67.1% to $12.2 million in 1996
from $7.3 million in 1995. As a percentage of net revenue, broadcast cash flow
increased to 26.9% in 1996 from 21.4% in 1995.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased approximately $0.9 million or 39.1% to $3.2
million in 1996 from $2.3 million in 1995. Substantially all of the increase was
due to professional expenses incurred in 1996 related to the Company's capital
raising activities and a lawsuit.
EBITDA. As a result of the factors described above, EBITDA increased
approximately $3.9 million or 78.0% to $8.9 million in 1996 from $5.0 million in
1995.
Depreciation and Amortization. Depreciation and amortization expense
increased approximately $0.3 million or 6.1% to $5.2 million in 1996 from $4.9
million in 1995, primarily due to radio station acquisitions consummated during
1996.
Interest Expense. Interest expense increased approximately $1.0 million or
19.2% to $6.2 million in 1996 from $5.2 million in 1995, primarily due to
interest expense associated with additional borrowings to fund acquisitions
consummated during 1996.
Net Loss. As a result of the factors described above, net loss decreased
approximately $0.6 million or 12.2% to $3.7 million in 1996 from $4.3 million in
1995. Included in the net loss for 1996 is approximately $0.4 million of
interest earned on loans advanced by the Company to Deschutes prior to the
acquisition of Deschutes by Citadel Communications and a $1.8 million
extraordinary loss related to the repayment of long-term debt.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net Revenue. Net revenue increased approximately $1.1 million or 3.3% to
$34.1 million in 1995 from $33.0 million in 1994. The inclusion of revenue from
the acquisitions of radio stations entered into during 1994 provided
approximately $3.5 million of the increase. This increase was offset by a
reduction of $3.5 million of revenue from the Company's Billings and Bozeman
stations that were disposed of in February 1995. For stations owned and operated
over the comparable period in 1994 and 1995, net revenue improved approximately
$1.1 million or 5.2% to $22.2 million in 1995 from $21.1 million in 1994
primarily due to increased ratings and improved selling efforts.
Station Operating Expenses. Station operating expenses increased
approximately $2.5 million or 10.3% to $26.8 million in 1995 from $24.3 million
in 1994. Approximately $1.6 million of the increase was attributable to
operating expenses incurred by the Company's Salt Lake City stations in relation
to station format and call letter changes that occurred in May 1995, while the
remainder was primarily due to the inclusion of station operating expenses of
the radio station acquisitions and the LMAs and JSAs entered into during 1994.
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<PAGE> 57
Broadcast Cash Flow. As a result of the factors described above, broadcast
cash flow decreased approximately $1.4 million or 16.1% to $7.3 million in 1995
from $8.7 million in 1994. As a percentage of net revenue, broadcast cash flow
decreased to 21.4% in 1995 from 26.4% in 1994.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses decreased approximately $0.2 million or 8.0% to $2.3
million in 1995 from $2.5 million in 1994. The decrease is primarily a result of
professional fees related to the Company's capital raising activities that were
incurred in 1994.
EBITDA. As a result of the factors described above, EBITDA decreased
approximately $1.2 million or 19.4% to $5.0 million in 1995 from $6.2 million in
1994.
Depreciation and Amortization. Depreciation and amortization expense
decreased approximately $2.5 million or 33.8% to $4.9 million in 1995 from $7.4
million in 1994, primarily due to the inclusion in 1994 of the amortization of
certain intangible assets, related to acquisitions consummated during 1994, with
amortizable lives of less than one year.
Interest Expense. Interest expense increased approximately $0.3 million or
6.1% to $5.2 million in 1995 from $4.9 million in 1994, primarily due to
interest expense associated with additional borrowings to fund acquisitions
consummated during 1994.
Net Loss. As a result of the factors described above, net loss decreased
approximately $1.2 million or 21.8% to $4.3 million in 1995 from $5.5 million in
1994. Included in the net loss for 1995 was an approximate $0.8 million gain
related to the dispositions of the Company's Billings and Bozeman stations.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1997, net cash provided by operations
increased to $2.3 million, compared to approximately $0.3 million for the 1996
period due to increased depreciation and amortization charges included in
operations. Net cash used in operations increased to approximately $1.4 million
for the year ended December 31, 1996 from $0.4 million in 1995. This increase
resulted primarily from the reduction in the net loss in 1996 and an increase in
accounts receivable.
For the six months ended June 30, 1997, net cash used in investing
activities, primarily for station acquisitions, was $15.5 million, compared to
$18.7 million in the prior year period. Net cash used in investing activities
for the year ended December 31, 1996, primarily for station acquisitions, was
$61.2 million, compared to net cash provided by investing activities of $4.8
million in the prior year.
For the six months ended June 30, 1997, net cash provided by financing
activities was $11.9 million, primarily from proceeds from the issuance of notes
payable in such period, compared to $20.9 million in the prior year period. Net
cash provided by financing activities for the year ended December 31, 1996 was
approximately $63.1 million, due primarily to proceeds from the issuance of
notes payable, compared to net cash used in financing activities of $4.9 million
in the prior year.
The Company's acquisition strategy has required, and will continue in the
foreseeable future to require, a significant portion of the Company's capital
resources. The Company and its parent, Citadel Communications, have financed the
Company's past acquisitions through bank financing, private sales of equity and
debt securities and proceeds from asset sales. The Company frequently evaluates
potential acquisitions of stations and station groups, including station swap
opportunities. The Company expects that any required financing for acquisitions
will be provided through the incurrence of debt, the sale of equity securities,
internally generated funds or a combination of the foregoing. There can be no
assurance, however, that external financing will be available to the Company on
terms considered favorable by management or that cash flow from operations will
be sufficient to fund the Company's acquisition strategy.
The Company used the net proceeds from the Original Offerings to, among
other things, fund certain acquisitions, including related acquisition costs,
and to reduce outstanding indebtedness. See "Risk Factors -- Limitations on
Acquisition Strategy; Antitrust Considerations."
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<PAGE> 58
Management believes that the net proceeds from the Original Offerings
together with cash from operating activities and revolving loans under the
Credit Facility should be sufficient to permit the Company to meet its financial
obligations and to fund its operations for the next twelve months. In addition
to acquisitions and debt service, the Company's principal liquidity requirements
will be for working capital and general corporate purposes, including capital
expenditures, which are not expected to be material in amount. In addition to
debt service requirements under the Credit Facility, which are described under
"Description of Indebtedness -- Existing Loan Agreement," the Company is
required to pay interest on the Notes. The Exchangeable Preferred Stock does not
require cash dividends through July 1, 2002 since the Company may issue
additional shares of Exchangeable Preferred Stock in lieu of cash dividends.
Recently Issued Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share" ("SFAS No. 128"). This statement establishes
standards for computing and presenting earnings per share ("EPS"), and
supersedes APB Opinion No. 15. The Statement replaces primary EPS with basic EPS
and requires dual presentation of basic and diluted EPS. The Statement is
effective for both interim and annual periods ending after December 15, 1997.
Earlier application is not permitted. After adoption, all prior period EPS data
shall be restated to conform to SFAS No. 128. The pro forma effect of the
Company adopting SFAS No. 128 is that both basic and diluted EPS would have been
$(137) for the year ended December 31, 1994, $(109) for the year ended December
31, 1995 and $(93) for the year ended December 31, 1996 and $(36) for the six
months ended June 30, 1996 and $(21) for the six months ended June 30, 1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement establishes the definition of and requirements for
disclosure of comprehensive income and becomes effective for the Company for the
year ending December 31, 1998.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This statement establishes standards for
disclosure about operating segments in annual financial statements and selected
information in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. This statement supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise." The new standard becomes effective for the
Company for the year ending December 31, 1998, and requires that comparative
information from earlier years be restated to conform to the requirements of
this standard.
51
<PAGE> 59
BUSINESS
GENERAL
The Company is a radio broadcasting company that focuses on acquiring,
developing and operating radio stations in mid-sized markets. Upon completion of
the Pending Transactions, the Company will own or operate 68 FM and 31 AM radio
stations in 18 markets and will have the right to construct one additional FM
station, and the Company's stations will comprise the leading radio station
group in terms of revenue share in 13 of those markets.
The Company's primary strategy is to secure and maintain a leadership
position in the markets it serves and to expand into additional mid-sized
markets where it believes a leadership position can be obtained. Upon entering a
market, the Company seeks to acquire additional stations which, when integrated
with its existing operations, allow it to reach a wider range of demographic
groups that appeal to advertisers, enhance operating performance and achieve
substantial cost savings. Since January 1, 1993, the Company has completed 17
station acquisitions in markets where it already owned stations, and it is
currently party to agreements to acquire nine additional stations in markets in
which it currently owns radio stations.
The Company chooses programming formats for its stations that are intended
to maximize each station's cash flow. The Company's stations broadcast a number
of formats including country, news/talk, adult contemporary, rock and oldies,
each of which is designed to appeal to a specific audience in each local market.
The Company's portfolio of stations is diversified in terms of format, target
demographics and geographic location. Because of the size of its portfolio and
its individual radio station groups, the Company believes it is not unduly
reliant upon the performance of any single station. The Company also believes
that the diversity of its portfolio of radio stations helps insulate the Company
from downturns in specific markets and changes in format preferences.
The Company believes that mid-sized markets represent attractive
opportunities because, as compared to the 50 largest markets in the United
States, they are generally characterized by (i) lower radio station purchase
prices as a multiple of broadcast cash flow, (ii) fewer sophisticated and
well-capitalized competitors, including both radio and competing advertising
media such as newspapers and television, and (iii) less direct format
competition due to the smaller number of stations in any given market. The
Company believes that the attractive operating characteristics of mid-sized
markets coupled with the opportunity to establish or expand in-market radio
station groups create the potential for substantial revenue growth and cost
efficiencies. As a result, management seeks to achieve broadcast cash flow
margins that are comparable to the higher margins that historically were
generally achievable only in the 50 largest markets.
STATION PORTFOLIO
The Company currently owns 49 FM and 22 AM radio stations, sells
advertising on behalf of four FM and five AM radio stations pursuant to JSAs and
provides programming and sells advertising on behalf of three FM radio stations
and one AM radio station pursuant to LMAs. The Company has entered into
agreements to purchase the six FM and three AM In-Market Acquisition Stations,
the eight FM and three AM Little Rock Stations (which includes one FM license),
the Arkansas Radio Network and the four FM and one AM Boise Stations. In
addition, the Company has entered into agreements to sell four FM and three AM
radio stations. Upon completion of the Pending Transactions, the Company will
own 62 FM and 26 AM radio stations in 18 mid-sized markets, operate six FM and
five AM additional radio stations in its markets pursuant to LMAs or JSAs and
have the right to construct one additional FM radio station.
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<PAGE> 60
The following table sets forth certain information about stations currently
owned by or operated by the Company, the In-Market Acquisition Stations, the
Little Rock Stations and the Boise Stations.
<TABLE>
<CAPTION>
STATION
STATION AUDIENCE RADIO
RANK IN SHARE IN GROUP RADIO GROUP
RADIO GROUP/ STATION PRIMARY PRIMARY PRIMARY MARKET RANK IN
STATION CALL MSA PROGRAMMING DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC REVENUE MARKET
LETTERS(1) RANK FORMAT TARGET(2) TARGET(3) TARGET(3) SHARE(4) REVENUE(4)
- --------------------- ---- ------------------------ ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
EXISTING MARKETS:
ALBUQUERQUE, NM...... 71 58.0% 1
KKOB-AM............ News/Talk A 25-54 4t 5.8%
KKOB-FM............ Adult Contemporary W 25-54 3t 7.2
KMGA-FM............ Adult Contemporary W 25-54 2 7.6
KHTL-AM............ News/Talk A 35-64 28t 0.4
KTBL-FM............ Country A 25-54 9t 5.3
KHFM-FM............ Classical A 25-54 11t 3.7
KNML-AM............ Sports M 25-54 19t 1.0
KRST-FM............ Country A 25-54 1 10.9
COLORADO SPRINGS,
CO................. 95 63.5% 1
KKFM-FM............ Classic Rock M 25-54 1 16.1%
KKMG-FM............ Contemporary Hits W 18-34 1 17.0
KVUU-FM(5)......... Adult Contemporary W 18-49 4t 7.9
KSPZ-FM(5)......... Oldies A 25-54 6 6.0
KVOR-AM(5)......... News/Talk A 25-54 11t 3.1
KTWK-AM(5)......... Nostalgia A 25-54 20t 0.5
KKLI-FM............ Soft Adult Contemporary W 25-54 1 10.6
MODESTO, CA(6)....... 122 62.2% 1
KATM-FM............ Country A 25-54 1 18.6%
KHKK-FM/ KDJK-
FM(7)............ Rock Oldies A 25-54 5 5.2
KBUL-AM............ Sports M 25-54 13 1.4
KHOP-FM............ Album Oriented Rock A 18-34 2 9.7
RENO, NV............. 131 47.4% 1
KBUL-FM............ Country A 25-54 1 13.5%
KKOH-AM............ News/Talk A 25-54 5 7.8
KNEV-FM............ Adult Contemporary W 18-49 2 9.3
KNHK-FM............ Rock Oldies A 25-54 2 9.8
SALT LAKE CITY, UT... 35 22.7% 1
KFNZ-AM(8)(9)...... Sports M 25-54 9t 4.3%
KUBL-FM............ Country A 25-54 5 5.4
KBEE-FM(8)(9)...... Adult Contemporary W 18-49 3 8.4
KCNR-AM............ Children's C 4-11 -- --
KBER-FM............ Album Oriented Rock A 18-34 8t 5.0
KENZ-FM............ Rock Alternative A 18-34 4 7.7
SPOKANE, WA.......... 87 53.6% 1
KDRK-FM............ Country A 25-54 4t 8.2%
KAEP-FM............ Rock Alternative A 18-34 2 13.1
KJRB-AM............ Talk A 35-64 12t 2.4
KGA-AM............. News/Talk A 25-54 10 3.2
KKZX-FM(5)......... Classic Rock M 25-54 1 16.9
KEYF-AM/FM(5)(7) Oldies A 25-54 4t 8.2
KUDY-AM(5)......... Talk/Religion A 25-54 -- --
BILLINGS, MT......... 238 58.3% 1
KCTR-FM/
KDWG-AM(7)....... Country A 25-54 1 23.7%
KKBR-FM............ Oldies A 25-54 3 13.4
KBBB-FM............ Adult Contemporary W 25-54 5 6.4
KMHK-FM............ Rock Oldies A 25-54 5 7.2
EUGENE, OR........... 146 32.4% 1
KUGN-AM............ News/Talk A 35-64 8 3.8%
KUGN-FM............ Country A 25-54 2 9.1
KEHK-FM............ Rock Oldies A 25-54 6t 6.4
</TABLE>
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<PAGE> 61
<TABLE>
<CAPTION>
STATION
STATION AUDIENCE RADIO
RANK IN SHARE IN GROUP RADIO GROUP
RADIO GROUP/ STATION PRIMARY PRIMARY PRIMARY MARKET RANK IN
STATION CALL MSA PROGRAMMING DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC REVENUE MARKET
LETTERS(1) RANK FORMAT TARGET(2) TARGET(3) TARGET(3) SHARE(4) REVENUE(4)
- --------------------- ---- ------------------------ ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MEDFORD, OR.......... 201 55.3% 1
KAKT-FM............ Country A 25-54 8 4.8%
KBOY-FM............ Classic Rock M 25-54 2 11.3
KCMX-AM............ News/Talk A 35-64 8t 3.5
KCMX-FM............ Adult Contemporary W 25-54 2t 7.8
KTMT-AM............ Sports M 25-54 10t 1.9
KTMT-FM............ Contemporary Hits W 18-34 1t 16.0
TRI-CITIES, WA....... 200 40.2% 1
KEYW-FM............ Adult Contemporary A 25-54 6t 7.0%
KFLD-AM............ Sports M 25-54 7t 4.2
KORD-FM............ Country A 25-54 4t 7.8
KXRX-FM............ Album Oriented Rock M 18-34 1 24.2
KTHK-FM............ Rock Oldies A 25-54 13t 1.6
PROVIDENCE, RI....... 31 36.4% 1
WPRO-AM............ News/Talk A 25-54 8 2.9%
WPRO-FM............ Contemporary Hits A 18-49 1 10.8
WWLI-FM............ Adult Contemporary W 25-54 1 13.1
WLKW-AM............ Nostalgia A 35-64 8 4.2
WDGE-FM............ Rock Alternative A 18-34 7 4.3
WDGF-FM(8)(9)...... Adult Contemporary W 18-49 8 3.5
ALLENTOWN/ BETHLEHEM,
PA................. 65 24.1% 2
WCTO-FM............ Country A 25-54 3 12.2%
WLEV-FM(8)(9)...... Adult Contemporary W 25-54 4 6.9
HARRISBURG, PA....... 73 12.2% 4
WRKZ-FM............ Country A 25-54 3 7.4%
YORK, PA............. 103 11.1% 3
WQXA-FM............ Rock M 18-34 2 3.0%
WQXA-AM............ Nostalgia A 35-64 -- --
WILKES-BARRE/
SCRANTON, PA....... 62 34.1% 2
WMGS-FM............ Adult Contemporary W 25-54 2 14.0%
WARM-AM/
WKQV-AM(7)(10)... News/Talk A 25-54 20t 1.0
WZMT-FM/
WKQV-FM(7)(10)... Album Oriented Rock M 18-34 2 17.6
WAZL-AM............ News/Talk A 35-64 -- --
WBHT-FM/
WEMR-FM(7)(8)
(9)(10).......... Contemporary Hits W 18-34 3 10.8
WSGD-FM/
WDLS-FM(7)(8)(9).. Oldies A 25-54 11 2.4
WCDL-AM(8)(9)...... Country A 35-64 -- --
WEMR-AM(8)(9)...... Country A 35-64 -- --
QUINCY, IL........... NA NA NA
WQCY-FM............ Country A 25-54 NA NA
WMOS-FM............ Album Oriented Rock M 18-34 NA NA
WTAD-AM............ News/Talk A 25-54 NA NA
WBRJ-FM............ News/Talk A 25-54 NA NA
</TABLE>
54
<PAGE> 62
<TABLE>
<CAPTION>
STATION
STATION AUDIENCE RADIO
RANK IN SHARE IN GROUP RADIO GROUP
RADIO GROUP/ STATION PRIMARY PRIMARY PRIMARY MARKET RANK IN
STATION CALL MSA PROGRAMMING DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC REVENUE MARKET
LETTERS(1) RANK FORMAT TARGET(2) TARGET(3) TARGET(3) SHARE(4) REVENUE(4)
- --------------------- ---- ------------------------ ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NEW MARKETS:
LITTLE ROCK,
AR(9)(11).......... 82 37.9% 1
KARN-AM/ KARN-FM/
KKRN-FM/
KRNN-AM(7)....... News/Talk/Sports A 25-54 11 3.5%
KIPR-FM............ Urban A 18-49 3 9.6
KESR-FM............ Contemporary Hits A 18-34 7 4.7
KYTN-FM............ Christian Contemporary A 12+ 16 2.2
KAFN-FM............ NA NA NA NA
KEZQ-AM............ Nostalgia A 35-64 17t 1.3
KURB-FM............ Adult Contemporary A 25-54 3 9.5
KVLO-FM............ Soft Adult Contemporary W 25-54 6 6.3
BOISE, ID(9)......... 129 36.4% 1
KIZN-FM............ Country A 25-54 1 8.7%
KZMG-FM............ Contemporary Hits W 18-34 3 12.3%
KKGL-FM............ Classic Rock M 25-54 -- --
KQFC-FM............ Country A 25-54 3 7.7%
KBOI-AM............ News/Talk A 35-64 2t 10.1%
</TABLE>
- ---------------
t -- Tied with one or more other radio stations.
NA -- Information not available.
(1) Does not include information for stations under contract to be sold by the
Company or for a market if the Company has entered into an agreement to
sell all of its stations in such market.
(2) The letter "A" designates adults, the letter "W" designates women, the
letter "M" designates men and the letter "C" designates children. The
numbers following each letter designate the range of ages included within
the demographic group.
(3) The generally accepted method of measuring the relative size of a radio
station's audience is by reference to total persons, within specific
demographic groups, Monday - Sunday, 6:00 a.m. - 12:00 midnight Average
Quarter Hour ("AQH") shares, as published by Arbitron. Arbitron
periodically samples radio listeners in defined market areas, principally
through the use of diaries returned by selected listeners. A station's AQH
share is a percentage computed by dividing the average number of persons
listening to a particular station for at least five minutes during an
average quarter hour in a given time period by the average number of such
persons for all stations in the market area. Station Rank by Primary
Demographic Target is the ranking of a station among all stations in its
target demographic group based upon the station's AQH shares. Arbitron
compiles ratings data for various demographic groups. All information
concerning ratings and audience listening information used in this
Prospectus is given pursuant to the method described above and derived from
the Arbitron Reports.
(4) Radio Group Market Revenue Share was derived for each radio group by
summing the market share of revenue of each station included within the
group. Radio Group Rank in Market Revenue is the ranking, by radio group
market revenue, of each of the Company's radio groups in its market among
all other radio groups in such market.
(5) The Company sells advertising on behalf of the listed stations under a JSA.
(6) KBUL-AM, KHKK-FM/KDJK-FM, KHOP-FM and KATM-FM also broadcast in the
adjacent Stockton, California market where, in the Spring 1997 Arbitron
Report, they ranked 13, 5, 2 and 1 in their primary demographic targets,
respectively.
(7) Combined stations are simulcast.
(8) The listed stations other than WBHT-FM in Wilkes-Barre/Scranton are
In-Market Acquisition Stations. The Company currently operates six of the
In-Market Acquisition Stations under LMAs.
(9) The consummation of each of the Pending Acquisitions is subject to certain
conditions, including FCC approval. Although the Company believes these
closing conditions are customary for transactions of this type and will be
satisfied, there can be no assurance that such closing conditions will be
satisfied.
(10) WKQV-FM, WKQV-AM and WBHT-FM in Wilkes-Barre/Scranton are operated pursuant
to an LMA or a JSA, and the Company has the option to purchase these
stations.
(11) The Company currently operates six of the Little Rock Stations under LMAs.
KARN-FM, KKRN-FM and KRNN-AM simulcast with KARN-AM. KAFN-FM is not yet
operational. Three of the Little Rock Stations serve the surrounding
communities outside of Little Rock.
55
<PAGE> 63
CORPORATE HISTORY
The Company was incorporated in Nevada in 1991, and in 1992 it acquired all
of the radio stations then owned or operated by Predecessor and certain other
radio stations. Lawrence R. Wilson, Chief Executive Officer of the Company, was
a co-founder and one of the two general partners of Predecessor. In 1993,
Citadel Communications was incorporated and the Company was reorganized as a
wholly owned subsidiary of Citadel Communications. The Company acquired
ownership of additional radio stations in each of 1993, 1994, 1996 and 1997.
Effective as of January 1, 1997, Citadel Communications acquired Deschutes,
which was operated as a sister company to the Company until June 20, 1997 when
Deschutes was merged with and into the Company in the Subsidiary Merger. Upon
consummation of the Tele-Media Acquisition, Tele-Media was merged with and into
the Company. Citadel License holds the Company's radio broadcast licenses and
does not conduct any independent business operations.
The Company's principal executive offices are located at 1015 Eastman
Drive, Bigfork, Montana 59911, and its telephone number is (406) 837-5360.
OPERATING STRATEGY
In order to maximize its radio stations' appeal to advertisers, and thus
the revenue and cash flow of its stations, the Company has implemented the
following strategies:
Ownership of Strong Station Groups. The Company seeks to secure and
maintain a leadership position in the markets it serves through ownership of
multiple stations in a market. By strategically coordinating programming,
promotional and selling strategies among a group of local stations, the Company
attempts to capture a wide range of demographic groups which appeal to
advertisers. The Company believes that the diversification of its programming
formats and its collective inventory of available advertising time strengthen
relationships with advertisers and increase the Company's ability to maximize
the value of its inventory.
The Company believes that its ability to leverage the existing programming
and sales resources of its strong station groups enables it to enhance the
growth potential of both new and underperforming stations while reducing the
risks associated with undertaking means of improving station performance,
including launching new formats. The Company also believes that operating
leading station groups allows it to attract and retain talented local management
teams, on-air personalities and sales personnel, which it believes are essential
to operating success. Furthermore, the Company seeks to achieve substantial cost
savings through the consolidation of facilities, management, sales and
administrative personnel and operating resources (such as on-air talent,
programming and music research) and through the reduction of other redundant
expenses. The Company believes that having multiple stations in a market also
enhances its ability to sell the advantages of radio advertising versus other
advertising media.
Aggressive Sales and Marketing. The Company seeks to maximize its share of
local advertising revenue in each of its markets by implementing and maintaining
strong sales and marketing programs. The Company provides extensive training for
its sales personnel through in-house sales and time management programs, and it
retains various independent consultants who hold frequent seminars for and are
available for consultation with the Company's sales personnel. The Company also
emphasizes regular, informal exchanges of ideas among its management and sales
personnel across its various markets. Because advertising time is perishable,
the Company seeks to maximize its revenue through the utilization of
sophisticated inventory management techniques that allow it to provide its sales
personnel with frequent price adjustments based on regional and local market
conditions. To further strengthen its relationship with advertisers, the Company
also offers and markets its ability to create customer traffic through on-site
events staged at, and broadcast from, an advertiser's business.
Targeted Programming. To maintain or improve its position in each market,
the Company combines extensive market research with an assessment of its
competitors' vulnerabilities in order to identify significant and sustainable
target audiences. The Company then tailors the programming, marketing and
promotion of each station to maximize its appeal to its target audience. Within
each market, the Company attempts to build strong franchises through (i) the
creation of distinct, highly visible profiles for its on-air personalities,
particularly those broadcasting during morning "drive time" traditionally
between 6:00 a.m. and 10:00 a.m.,
56
<PAGE> 64
(ii) the formulation of recognizable "brand names" for select stations such as
the "Bull" and "Cat Country" and (iii) active involvement in community events
and charities. The Company has achieved particular success in programming
country formats and currently operates the leading country station in ten of its
13 existing markets where it programs country music.
Decentralized Operations. The Company believes that radio is primarily a
local business and that much of its success is the result of the efforts of
regional and local management and staff. Accordingly, the Company decentralizes
its operations. Each of the Company's regional and local station groups is
managed by a team of experienced broadcasters who understand the musical tastes,
demographics and competitive opportunities of the particular market. Regional
and local managers are responsible for preparing annual operating budgets, and a
portion of their compensation is linked to meeting or surpassing operating
targets. Corporate management approves each station group's annual operating
budget and imposes strict financial reporting requirements to track station
performance. Corporate management is responsible for long range planning,
establishing Company policies and serving as a resource to local management. The
Company has implemented local sales reporting systems at each station to provide
local and corporate management with daily sales information.
ACQUISITION STRATEGY
In February 1996, as a result of the passage of the Telecommunications Act,
radio broadcasting companies were permitted to increase their ownership of
stations within a single market from four to a maximum of between five and eight
stations, depending on market size. The Telecommunications Act also eliminated
the national ownership restriction that generally had limited companies to the
ownership of no more than 40 stations (20 AM and 20 FM) throughout the United
States. As the Company has achieved a leading position in most of the markets it
currently serves, the Company expects that, in addition to acquiring additional
radio stations in existing markets as permitted by the Telecommunications Act,
it will emphasize the acquisition of additional radio stations in new markets
which present opportunities for the Company to apply its operating strategies.
The Company believes that such acquisitions will enable it to achieve, among
other things, greater size and geographic diversification. The Company
anticipates that it will continue to focus on mid-sized markets rather than
attempt to expand into larger markets. Although competition among potential
purchasers for suitable radio station acquisitions is intense throughout the
United States, the Company believes that less competition exists, particularly
from the larger radio operators, in mid-sized markets as compared to larger
markets, affording the Company relatively more attractive acquisition
opportunities in these markets. There can be no assurance, however, that the
Company will be able to identify suitable and available acquisition
opportunities or that it will be able to consummate any such acquisition
opportunities.
In evaluating acquisition opportunities in new markets, the Company
assesses its potential, over time, to build leading radio station groups in
those markets. The Company believes that the creation of strong station groups
in local markets is essential to operating success and generally will not
consider entering a new market unless it believes it can acquire multiple
stations in the market. The Company also analyzes a number of additional factors
which it believes are important to its success, including the number and quality
of commercial radio signals broadcasting in the market, the nature of the
competition in the market, the Company's ability to improve the operating
performance of the radio station or stations under consideration and the general
economic conditions of the market.
The Company believes that its acquisition strategy, if properly
implemented, could have a number of benefits, including (i) diversification of
revenue and broadcast cash flow across a greater number of stations and markets,
(ii) improved broadcast cash flow margins through the consolidation of
facilities and the elimination of redundant expenses, (iii) enhanced utilization
of its senior management team, (iv) improved leverage in various key vendor
negotiations, (v) greater appeal to top industry management talent and (vi)
increased overall scale which should facilitate the Company's capital raising
activities.
The consummation of certain acquisitions requires special approval of the
Company's Board of Directors or certain of its shareholders. See
"Management -- Board Composition and Governance Matters."
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<PAGE> 65
RADIO INDUSTRY OVERVIEW
Radio stations generate the majority of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers. Radio serves primarily as a medium for local advertising. During
the past decade, local advertising revenue as a percentage of total radio
advertising revenue has ranged from approximately 74% to 78%. The growth in
total radio advertising revenue tends to be fairly stable and has generally
grown at a rate faster than the Gross Domestic Product (the "GDP"). Total radio
advertising revenue in 1996 of $12.4 billion represented an 8.2% increase over
1995, as reported by the Radio Advertising Bureau ("RAB").
Radio is considered an efficient means of reaching specifically identified
demographic groups. Stations are typically classified by their on-air format,
such as country, adult contemporary, oldies or news/talk. A station's format and
style of presentation enable it to target certain demographic and psychographic
groups. By capturing a specific listening audience share of a market's radio
audience, with particular concentration in a targeted demographic group, a
station is able to market its broadcasting time to advertisers seeking to reach
a specific audience. Advertisers and stations utilize data published by audience
measuring services, such as Arbitron, to estimate how many people within
particular geographical markets and demographic groups listen to specific
stations.
Stations determine the number of advertisements broadcast hourly that will
maximize available revenue dollars without jeopardizing listening levels.
Although the number of advertisements broadcast during a given time period may
vary, the total number of advertisements broadcast on a particular station
generally does not vary significantly from year to year.
A station's local sales staff generates the majority of its local and
regional advertising sales through direct solicitations of local advertising
agencies and businesses. To generate national advertising sales, a station will
engage a firm that specializes in soliciting radio advertising sales on a
national level. National sales representatives obtain advertising principally
from advertising agencies located outside the station's market and receive
commissions based on the revenue from the advertising obtained.
According to the RAB's Radio Marketing Guide and Fact Book for Advertisers,
1997, radio reaches approximately 95% of all Americans over the age of 12 each
week. More than one-half of all radio listening is done outside the home, in
contrast to other advertising mediums, and three out of four adults are reached
by car radio each week. The average listener spends approximately three hours
and 20 minutes per day listening to radio. The highest portion of radio
listenership occurs during the morning, particularly between the time a listener
wakes up and the time the listener reaches work. This morning "drive time"
period reaches more than 80% of people over 12 years of age and, as a result,
radio advertising sold during this period achieves premium advertising rates.
Radio listeners have gradually shifted over the years from AM (amplitude
modulation) to FM (frequency modulation) stations. FM reception, as compared to
AM, is generally clearer and provides greater tonal range and higher fidelity.
FM's listener share is now in excess of 75%, despite the fact that the number of
AM and FM commercial stations in the United States is approximately equal.
STATION PORTFOLIO
The following is a description of each of the radio stations currently
owned or operated by the Company, the In-Market Acquisition Stations, the Little
Rock Stations and the Boise Stations and the markets they serve. The stations
owned by the Company include those acquired in January 1997 when Deschutes was
acquired by Citadel Communications and those acquired in July 1997 when
Tele-Media was acquired by the Company. Information is not given for stations
under contract to be sold by the Company or for a market if the Company has
entered into an agreement to sell all of its stations in such market. Market
revenue information is given for the first six months of 1997 where available.
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<PAGE> 66
CURRENTLY OWNED OR OPERATED STATIONS AND THE IN-MARKET ACQUISITION STATIONS
Albuquerque, New Mexico. The Company owns five FM and three AM radio
stations in Albuquerque.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- ------------------------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
KKOB-AM........................ News/Talk 1994 A 25-54 4(tie)
KKOB-FM........................ A/C 1994 W 25-54 3(tie)
KMGA-FM........................ A/C 1994 W 25-54 2
KHTL-AM........................ News/Talk 1994 A 35-64 28(tie)
KHFM-FM........................ Classical 1996 A 25-54 11(tie)
KNML-AM........................ Sports 1996 M 25-54 19(tie)
KRST-FM........................ Country 1996/1996 A 25-54 1
KTBL-FM........................ Country 1996/1995 (JSA) A 25-54 9(tie)
</TABLE>
Albuquerque has an MSA rank of 71, and had market revenue of approximately
$28.7 million in 1996 and approximately $15.9 million in the first six months of
1997, an approximate 9.4% and 10.5% increase over 1995 and the first six months
of 1996, respectively. There are 36 stations in the Albuquerque market, 29 of
which are owned by multiple station owners. There are 17 viable FM and four
viable AM stations in this market. The eight stations owned by the Company rank
first in the market in terms of their combined gross revenue, with approximately
58.0% of the market revenue in the first six months of 1997.
The Company entered the Albuquerque market in May 1994 with the purchase of
KKOB-FM, KKOB-AM, KHTL-AM and KMGA-FM. At the time of purchase, the KKOB-AM
format included news/talk with a mix of adult contemporary ("A/C") music. After
the acquisition, the Company eliminated music from the station making it
exclusively news/talk. Larry Ahrens, the morning talk show host, has been on the
air with KKOB-AM for 17 years and has been the number one host in the market for
over 10 years. KKOB-AM features the University of New Mexico men's football and
basketball games, as well as Dallas Cowboys football games. In April 1997,
KKOB-AM celebrated its 75th anniversary on the air. KKOB-FM celebrated 30 years
on the air in the summer of 1997. KKOB-FM is the heritage A/C station in the
market and has a veteran morning team, "John and the Bean," which has been on
the air with the station for more than six years. Use of the term "heritage"
refers to a station or on-air show that is firmly established in its format and
market and has been so for many years.
In 1996, the Company expanded its ownership in the Albuquerque market with
the purchase of KHFM-FM, KNML-AM, KRST-FM and KTBL-FM. KNML-AM had an all
Associated Press news format at the time of acquisition which was changed to an
all sports format in October 1996. The station carries the Albuquerque Dukes
baseball games. KRST-FM is the heritage country station in the market, and has
achieved double digit market revenue shares since 1989. The Company received a
CID from the DOJ in connection with the acquisition of KRST-FM. See "-- Legal
Proceedings."
Colorado Springs, Colorado. The Company owns three FM radio stations and
sells advertising on behalf of two FM and two AM radio stations under a JSA in
Colorado Springs.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- ------------------------------- ------------ --------------- ----------- ---------------
<S> <C> <C> <C> <C>
KKFM-FM........................ Classic Rock 1986 M 25-54 1
KKMG-FM........................ CHR 1994/1990 W 18-34 1
KKLI-FM........................ Soft A/C 1996 W 25-54 1
KVUU-FM........................ A/C 1996 (JSA) W 18-49 4(tie)
KSPZ-FM........................ Oldies 1996 (JSA) A 25-54 6
KVOR-AM........................ News/Talk 1996 (JSA) A 25-54 11(tie)
KTWK-AM........................ Nostalgia 1996 (JSA) A 25-54 20(tie)
</TABLE>
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<PAGE> 67
Colorado Springs has an MSA rank of 95, and had market revenue of
approximately $14.8 million in 1996 and approximately $7.9 million in the first
six months of 1997, an approximate 8.7% and 17.4% increase over 1995 and the
first six months of 1996, respectively. There are 19 stations in the Colorado
Springs market, 13 of which are owned by multiple station owners. There are 11
viable FM and two viable AM stations in this market. The three stations owned by
the Company plus the four stations marketed under a JSA, rank first in the
market in terms of their combined gross revenue, with approximately 63.5% of the
market revenue in the first six months of 1997.
Predecessor entered the Colorado Springs market in January 1986 with the
purchase of KKFM-FM. At the time of purchase, KKFM-FM had a nominal share of
market advertising revenue and audience and, prior to the Company's purchase,
operated with negative broadcast cash flow. After purchasing KKFM-FM, the
Company changed the format to the current classic rock format and revamped the
sales and management staff. KKFM-FM is currently the number one station in its
primary demographic target of men ages 25-54, as well as adults ages 25-54.
KKFM-FM is the only classic rock station in the market and has the heritage
morning show, "The Mark Brothers," who have been on the air with the station for
over six years.
In December 1990, the Company began programming and selling the available
advertising time for KKMG-FM, "Magic," pursuant to an LMA. In May 1994, the
Company established an FM duopoly in the market when it purchased KKMG-FM, which
is currently the leading station in its primary demographic target of women ages
18-34. KKMG-FM, which is the only station in the market with a contemporary hit
radio ("CHR") format, together with KKFM-FM, permit the Company to appeal to a
wide spectrum of advertisers in the market.
In January 1996, the Company began to sell all of the advertising time for
two additional FM and two additional AM radio stations in Colorado Springs under
a JSA. KSPZ-FM broadcasts oldies, KVUU-FM broadcasts A/C, KVOR-AM carries a
news/talk format and KTWK-AM broadcasts a nostalgia format. The Company received
a civil investigative demand from the DOJ in connection with the JSA relating to
these stations. See "-- Legal Proceedings." The Company's 1996 acquisition of
KKLI-FM, which has an A/C format, helped to fill out an already well-covered
market, particularly among women listeners.
Modesto, California. The Company owns four FM radio stations and one AM
radio station in Modesto.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- --------------------------------- ------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
KATM-FM.......................... Country 1992 A 25-54 1
KBUL-AM.......................... Sports 1992 M 25-54 16 (tie)
KDJK-FM.......................... Rock Oldies 1993 A 25-54 Simulcast with
KHKK-FM
KHKK-FM.......................... Rock Oldies 1993/1993 A 25-54 5
KHOP-FM.......................... AOR 1996 A 18-34 2
</TABLE>
Modesto has an MSA rank of 122, and had market revenue of approximately
$13.7 million in 1996 and approximately $6.8 million in the first six months of
1997, an approximate 13.1% and 2.3% increase over 1995 and the first six months
of 1996, respectively. There are 16 stations in the Modesto market, ten of which
are owned by multiple station owners. There are nine viable FM and two viable AM
stations in this market. The five stations owned by the Company rank first in
the market in terms of their combined gross revenue, with approximately 62.2% of
the market revenue in the first six months of 1997.
The Company owns three stations serving the Modesto market (KATM-FM,
KHKK-FM and KHOP-FM) with sufficiently strong signals to attract additional
advertising revenue from advertisers that desire coverage of other markets in
California's central valley region. To further increase the operating
performance of such stations, the Company changed several formats and call
letters during 1996 in an effort to place the most popular formats on its
strongest signals.
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<PAGE> 68
The Company entered the Modesto market in July 1992 with the purchase of
KATM-FM, "Cat Country," and KBUL-AM. Promptly after purchasing KATM-FM, the
Company switched its easy listening format to the current contemporary country
format, and it has ranked number one in the market among persons 12 and older
since the switch. The Company recently switched the format of KBUL-AM to its
current sports format. In April 1993, the Company began programming and selling
the advertising time for KHKK-FM pursuant to an LMA. The Company established an
FM duopoly in the market when it purchased KHKK-FM in October 1993. The purchase
included KDJK-FM, licensed to Mariposa, an area adjacent to Modesto, which
simulcasts with KHKK-FM. KHKK-FM/KDJK-FM began broadcasting an album-oriented
rock ("AOR") format in October 1992. In April 1996, the Company moved KHKK-FM's
AOR format to KHOP-FM, a 1996 acquisition.
Reno, Nevada. The Company owns three FM radio stations and one AM radio
station in Reno.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- ---------------------------------- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
KBUL-FM........................... Country 1992 A 25-54 1
KKOH-AM........................... News/Talk 1992 A 25-54 5
KNEV-FM........................... A/C 1993/1993 W 18-49 2
KNHK-FM........................... Rock Oldies 1997/1997 A 25-54 2
</TABLE>
Reno has an MSA rank of 131, and had market revenue of approximately $14.0
million in 1996 and approximately $7.3 million in the first six months of 1997,
an approximate 8.8% and 13.1% increase over 1995 and the first six months of
1996, respectively. There are 26 stations in the Reno market, 20 of which are
owned by multiple station owners. There are 13 viable FM and two viable AM
stations in this market. The four stations owned by the Company rank first in
the market in terms of their combined gross revenue, with approximately 47.4% of
the market revenue in the first six months of 1997.
The Company entered the Reno market in April 1992 with the purchase of
KBUL-FM. KBUL-FM is the heritage country station in the market and is currently
the only station with a country format. J.J. Christy, the morning show
personality, celebrated ten years with the station in September 1997. In July
1992, the Company purchased KKOH-AM, and began programming and selling the
available advertising time for KNEV-FM, "Magic," under an LMA for a brief period
before purchasing it in May 1993. In March 1994, with the acquisition of the
news/talk format and certain other assets of a competing station in Reno, the
Company began broadcasting the acquired format on KKOH-AM. KKOH-AM will
celebrate its 69th year in 1997 and has a heritage morning show host, Ross
Mitchell. The station carries sports broadcasting for the University of Nevada,
Reno, and San Francisco 49ers football. In fall 1992, the Company changed the
format of KNEV-FM to its current A/C format.
In July 1997, the Company acquired KNHK-FM which had been off the air until
the fourth quarter of 1996, at which time it began broadcasting a mixed music
format. In January 1997, the Company began broadcasting a rock oldies format on
the station pursuant to an LMA.
Salt Lake City, Utah. The Company owns three FM radio stations and one AM
radio station in Salt Lake City. The Company also operates one FM and one AM
In-Market Acquisition Station under an LMA in Salt Lake City.
61
<PAGE> 69
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- ----------------------- ----------------- ------------------- ----------- ---------------
<S> <C> <C> <C> <C>
KCNR-AM................ Children's 1988 C 4-11 --
KUBL-FM................ Country 1988 A 25-54 5
KBEE-FM................ A/C Pending/1992 W 18-49 3
KFNZ-AM................ Sports Pending/1992 M 25-54 9 (tie)
KBER-FM................ AOR 1997/1996 A 18-34 8 (tie)
KENZ-FM................ Rock Alternative 1997/1996 (JSA) A 18-34 4
</TABLE>
Salt Lake City has an MSA rank of 35, and had market revenue of
approximately $52.5 million in 1996 and approximately $27.6 million in the first
six months of 1997, an approximate 18.4% and 16.1% increase over 1995 and the
first six months of 1996, respectively. There are 43 stations in the Salt Lake
City market, 26 of which are owned by multiple station owners. There are 16
viable FM and five viable AM stations in this market. The six stations owned by
the Company rank first in the market in terms of their combined gross revenue,
with approximately 22.7% of the market revenue in the first six months of 1997.
Predecessor entered the Salt Lake City market in March 1988 with the
purchase of KCNR-AM and KUBL-FM. Until August of 1990, KCNR-AM simulcast the
programming of KUBL-FM. At that time, an all news format was programmed. KCNR-AM
eventually moved to an all talk format and, in November 1996, it became an
affiliate of Disney Radio and began broadcasting programming for children. Its
primary target demographic is children ages 4-11 with a secondary target
audience of women ages 25-34. At the time of purchase, KUBL-FM had nominal
shares of market advertising revenue and audience and, prior to the Company's
purchase, operated with negative broadcast cash flow. After purchasing the
station, the Company changed its format. In rebuilding the station, the Company
brought in new management, bolstered the sales staff and hired a popular morning
team. In February 1994, another station in the market changed its format to
compete directly with KUBL-FM for listeners and advertisers, causing a decrease
in KUBL-FM's Arbitron station audience share. The Company responded by changing
the station's format to country in May 1995. The Spring 1997 Arbitron Report
rated KUBL-FM the number one country station in the market.
In April 1992, the Company began programming and selling the available
advertising time pursuant to an LMA for KFNZ-AM and KBEE-FM. The Company
exercised its option under the LMA to purchase KBEE-FM and KFNZ-AM for a total
purchase price of approximately $2.9 million. See "The Pending
Transactions -- The In-Market Acquisitions." KFNZ-AM has a sports format and
carries all of the professional sports teams in the market including Utah Jazz
basketball, Utah Grizzlies hockey and Salt Lake City Buzz baseball. KBEE-FM has
a strong presence in the market with its morning personality, Mick MacKay, who
has been with the station for eight years and is part of the "Wake Up Club"
morning show.
The Company believes the 1997 acquisitions of KBER-FM, the heritage rock
station in the market, and of KENZ-FM will give the Company an increased
presence, and, therefore, a greater ability to compete in the Salt Lake City
market.
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<PAGE> 70
Spokane, Washington. The Company owns two FM and two AM radio stations and
sells advertising on behalf of two FM and two AM radio stations under a JSA in
Spokane.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- ------------------------------- ----------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
KDRK-FM........................ Country 1992 A 25-54 4 (tie)
KGA-AM......................... News/Talk 1992 A 25-54 10
KAEP-FM........................ Rock Alternative 1993 A 18-34 2
KJRB-AM........................ Talk 1993/1993 A 35-64 12 (tie)
KKZX-FM........................ Classic Rock 1996 (JSA) M 25-54 1
KEYF-FM........................ Oldies 1996 (JSA) A 25-54 4 (tie)
KEYF-AM........................ Oldies 1996 (JSA) A 25-54 Simulcast with
KEYF-FM
KUDY-AM........................ Talk/Religion 1996 (JSA) A 25-54 --
</TABLE>
Spokane has an MSA rank of 87, and had market revenue of approximately
$13.7 million in 1996 and approximately $6.9 million in the first six months of
1997, an approximate 3.2% and 7.7% increase over 1995 and the first six months
of 1996, respectively. There are 25 stations in the Spokane market, 20 of which
are owned by multiple station owners. There are 12 viable FM and five viable AM
stations in this market. The four stations owned by the Company plus the four
stations marketed under a JSA rank first in the market in terms of their
combined gross revenue, with approximately 53.6% of the market revenue in the
first six months of 1997.
The Company entered the market in July 1992 with the purchase of KDRK-FM,
"Cat Country," and KGA-AM. KDRK-FM is the heritage country station in the
market, broadcasting a country format since 1979. KGA-AM is the flagship station
for the Spokane Chiefs hockey team. In May 1993, the Company purchased KAEP-FM
and in July 1993 began programming and selling the available advertising time
for KJRB-AM under an LMA for a brief period before purchasing it in October
1993. KAEP-FM is the only station with an adult alternative format in the
market. KJRB-AM is the flagship station for the Spokane Indians, a
semi-professional baseball team.
Pursuant to a JSA, in January 1996, the Company began selling all of the
advertising time for two additional FM and two additional AM radio stations in
Spokane. KEYF-FM/AM simulcasts an oldies format, KUDY-AM is a talk/religion
station and KKZX-FM carries a classic rock format. The Company received a CID
from the DOJ in connection with the JSA relating to these stations. See
"-- Legal Proceedings."
Billings, Montana. As a result of the acquisition of Deschutes and the
Subsidiary Merger, the Company owns four FM radio stations and one AM radio
station in Billings.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED TARGET TARGET
- ------------------------------------- ------------ --------- ----------- ---------------
<S> <C> <C> <C> <C>
KCTR-FM.............................. Country 1997 A 25-54 1
KDWG-AM.............................. Country 1997 A 25-54 Simulcast with
KCTR-FM
KKBR-FM.............................. Oldies 1997 A 25-54 3
KBBB-FM.............................. A/C 1997 W 25-54 5
KMHK-FM.............................. Rock Oldies 1997 A 25-54 5
</TABLE>
Billings has an MSA rank of 238, and had market revenue of approximately
$5.8 million in 1996, an approximate 7.4% increase over 1995. There are 14
stations in the Billings market, ten of which are owned by multiple station
owners. There are seven viable FM and three viable AM stations in this market.
The five
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<PAGE> 71
stations owned by the Company rank first in the market in terms of their
combined gross revenue, with approximately 58.3% of the market revenue in 1996.
Deschutes entered the Billings market in 1995 when it acquired KCTR-FM,
KDWG-AM and KKBR-FM from the Company. The Company had owned the stations since
1988, 1988 and 1993, respectively. KCTR-FM and KDWG-AM, which simulcast a
country format, "Cat Country," are currently the leaders in the Billings market.
KKBR-FM is the number three station in the Billings market in its primary
demographic target of adults ages 25-54.
In September 1996, Deschutes acquired KMHK-FM. At the time of the
acquisition, KMHK-FM broadcast an AOR format. However, after the acquisition,
the format was changed to rock oldies. This change in format established KMHK-FM
as the only rock oldies station in the Billings market.
In November 1996, Deschutes acquired KBBB-FM. At the time of the
acquisition, KBBB-FM broadcast a country music format. Deschutes converted the
station to an A/C format. The station is the only A/C station in Billings and
complements the Company's country franchise.
Eugene, Oregon. As a result of the acquisition of Deschutes and the
Subsidiary Merger, the Company owns two FM radio stations and one AM radio
station in Eugene.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED TARGET TARGET
- ----------------------------------- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
KEHK-FM............................ Rock Oldies 1997 A 25-54 6 (tie)
KUGN-AM............................ News/Talk 1997 A 35-64 8
KUGN-FM............................ Country 1997 A 25-54 2
</TABLE>
Eugene has an MSA rank of 146, and had market revenue of approximately
$10.1 million in 1996 and approximately $4.2 million in the first six months of
1997, an approximate 3.5% increase over 1995 and an approximate 9.6% decrease
from the first six months of 1996. There are 19 stations in the Eugene market,
14 of which are owned by multiple station owners. There are eight viable FM and
three viable AM stations in this market. The three stations owned by the Company
rank first in the market in terms of their combined gross revenue, with
approximately 32.4% of the market revenue in the first six months of 1997.
Deschutes acquired KUGN-AM/FM and KEHK-FM in September 1996. KUGN-AM/FM
have been the heritage radio stations in Eugene for the last 20 years. KUGN-AM
has been the leading news/talk station over much of this time, but ratings
gradually declined over the last six years when the station lost an important
sports contract with the University of Oregon. The station regained the contract
in the fall of 1995 and hired a high profile personality from a competitor (the
"voice of University of Oregon sports") to give it increased visibility in the
Eugene market.
KUGN-FM is the heritage country radio station in Eugene and was the only
country station in the market until 1993, when a competitor switched formats to
program country music. Less than six months after the acquisition of the
station, Deschutes modified its programming and KUGN-FM has been consistently
ranked in the top three among persons ages 12 and over and 25-54. KEHK-FM was a
"new-age" alternative music station targeted at adults ages 35-49. However, due
to unsatisfactory results in the spring 1996 ratings period, Deschutes changed
the station's format to a rock oldies format. The new format contributed to an
increase in the station's audience share to 6.4% based on the Spring 1997
Arbitron Report.
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<PAGE> 72
Medford, Oregon. As a result of the acquisition of Deschutes and the
Subsidiary Merger, the Company owns four FM and two AM radio stations in
Medford.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED TARGET TARGET
- ---------------------------- ------------------ ------------- ----------- ----------------
<S> <C> <C> <C> <C>
KAKT-FM..................... Country 1997 A 25-54 8 (tie)
KBOY-FM..................... Classic Rock 1997 M 25-54 2
KCMX-AM..................... News/Talk 1997 A 35-64 8 (tie)
KCMX-FM..................... A/C 1997 W 25-54 2 (tie)
KTMT-AM..................... Sports 1997 M 25-54 10 (tie)
KTMT-FM..................... CHR 1997 W 18-34 1 (tie)
</TABLE>
Medford has an MSA rank of 201, and had market revenue of approximately
$5.7 million in 1996, an approximate 5.6% increase over 1995. There are 17
stations in the Medford market, 11 of which are owned by multiple station
owners. According to the 1997 BIA Report, there are six viable FM stations in
this market. The six stations owned by the Company rank first in the market in
terms of their combined gross revenue, with approximately 55.3% of the market
revenue in 1996.
Deschutes entered the Medford market in 1995 when it acquired KBOY-FM and
KAKT-FM. KBOY-FM is the heritage classic rock station in the market and is the
number two station among men ages 25-54. KAKT-FM had broadcast a
satellite-delivered hot A/C format; however, in January 1996, Deschutes changed
the station's format to country, "Cat Country," to compete directly with the
market leader.
Deschutes acquired four additional stations in the Medford market in July
1996. KTMT-FM is the only CHR format station in the market, KCMX-FM broadcasts
an A/C format, KCMX-AM broadcasts a news/talk format and KTMT-AM broadcasts a
sports/talk format that includes University of Oregon football and basketball,
Oakland A's baseball and San Francisco 49ers football games. Two of these four
stations are ranked in the top seven in the Medford market among persons ages
25-54. The programming of all of these stations has been adjusted to improve
their audience appeal. In addition, the Company believes opportunities exist to
modify the programming of certain stations to reduce their competitive overlap
with other Company stations and thereby increase the Company's aggregate
audience share.
Tri-Cities, Washington. As a result of the acquisition of Deschutes, the
Subsidiary Merger and the September 1997 acquisition of KTHK-FM, the Company
owns four FM radio stations and one AM radio station in Tri-Cities.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- ----------------------------- ------------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
KFLD-AM...................... Sports 1997 M 25-54 7 (tie)
KORD-FM...................... Country 1997 A 25-54 4 (tie)
KXRX-FM...................... AOR 1997 M 18-34 1
KEYW-FM...................... A/C 1997 A 25-54 6 (tie)
KTHK-FM...................... Rock Oldies 1997/1997 A 25-54 13 (tie)
</TABLE>
Tri-Cities (includes the communities of Richland, Kennewick and Pasco,
Washington) has an MSA rank of 200, and had market revenue of approximately $5.4
million in 1996, an approximate 1.9% increase over 1995. There are 16 stations
in the Tri-Cities market, 12 of which are owned by multiple station owners.
According to the 1997 BIA Report, there are six viable FM stations in this
market. The five stations owned by the Company rank first in the market in terms
of their combined gross revenue, with approximately 40.2% of the market revenue
in 1996.
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<PAGE> 73
Deschutes entered the Tri-Cities market in 1994 when it acquired KORD-FM,
KFLD-AM and KXRX-FM in two separate transactions. KORD is the heritage country
station in the market. KFLD broadcasts a sports format, which includes Seattle
Mariners and Seattle SuperSonics games.
When Deschutes acquired KXRX, it had been a country music station. Shortly
after the acquisition, Deschutes changed the station's format from country to
AOR, so it would not compete with KORD. Branded "97 Rock," the station became
the number two ranked in the market among persons ages 18-34 in less than six
months.
Deschutes further increased its presence in the market with the October
1996 acquisition of KEYW-FM, a hot A/C station. Previously, this station was not
a significant performer in the market. According to the Spring 1997 Arbitron
Report, the station was ranked number two among persons ages 12 and over and
ages 18-34.
Providence, Rhode Island. As a result of the Tele-Media Acquisition and
the September 1997 acquisition of WDGE-FM, the Company owns three FM and two AM
radio stations in Providence. The Company also operates one FM In-Market
Acquisition Station under an LMA in Providence.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- ----------------------------- ---------------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
WLKW-AM...................... Nostalgia 1997 A 35-64 8
WWLI-FM...................... A/C 1997 W 25-54 1
WPRO-AM...................... News/Talk 1997 A 25-54 8
WPRO-FM...................... CHR 1997 A 18-49 1
WDGE-FM...................... Rock Alternative 1997 A 18-34 7
WDGF-FM...................... A/C Pending/1997 W 18-49 8
</TABLE>
Providence has an MSA rank of 31, and had market revenue of approximately
$37.9 million in 1996 and approximately $18.8 million in the first six months of
1997, an approximate 8.6% and 6.0% increase over 1995 and the first six months
of 1996, respectively. There are 30 stations in the Providence market, 19 of
which are owned by multiple station owners. There are 10 viable FM and three
viable AM stations in this market. The four stations owned by the Company
combined with the two In-Market Acquisition Stations in this market rank first
in the market in terms of their combined gross revenue, with approximately 36.4%
of the market revenue in the first six months of 1997.
WPRO-AM and WPRO-FM are heritage stations in the Providence market. WPRO-AM
carries Rush Limbaugh, as well as many of the local sports franchises including
the Boston Red Sox, the Boston Bruins and Providence College sports. WPRO-FM is
a heritage CHR station with a long running morning show and several airstaff
members that have been at the station for more than 15 years. WPRO-AM has
averaged just less than a 5% share over the past three years of persons ages 12
and over, and WPRO-FM has averaged a 7% share of persons ages 12 and over in the
past several years.
WDGE-FM began broadcasting in 1995 with an alternative rock format. In
April 1997, the station added the syndicated Mancow morning show. WDGF-FM
broadcast a jazz format until May 1996 when it began simulcasting the
programming of WDGE-FM. In February 1997, the station changed to a rhythmic A/C
format called "The Beat." Both stations are class A FM radio stations covering
most of the Providence metro area.
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<PAGE> 74
Allentown/Bethlehem, Pennsylvania. As a result of the Tele-Media
Acquisition, the Company owns one FM radio station and one AM radio station in
Allentown. The Company has entered into agreements to acquire one FM In-Market
Acquisition Station in Allentown and to sell WEST-AM, which is not included in
the chart below.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED TARGET TARGET
- ----------------------- ------------------ ------------------ ------------- -----------------
<S> <C> <C> <C> <C>
WCTO-FM................ Country 1997 A 25-54 3
WLEV-FM................ Lite A/C Pending/1997 W 25-54 4
</TABLE>
Allentown/Bethlehem has an MSA rank of 65, and had market revenue of
approximately $22.0 million in 1996, an approximate 2.8% increase over 1995.
There are 18 stations in the Allentown market, 11 of which are owned by multiple
station owners. There are five viable FM and three viable AM stations in this
market. WLEV-FM and WCTO-FM rank second in the market in terms of their combined
gross revenue, with approximately 24.1% of market revenue in 1996.
Because of the small number of viable stations in this market, most are
format-exclusive and, therefore, have no direct competitors in the market.
WCTO-FM broadcast an A/C format until July 1997 when the Company began
programming the market's only country format on the station. WLEV has been an
Allentown mainstay for approximately 30 years. The station had historically
broadcast an easy listening format targeting adults ages 45 and over with a
mostly instrumental music mix. In 1991, the format was changed slightly to
include more vocals in the mix.
Harrisburg, Pennsylvania and York, Pennsylvania. As a result of the
Tele-Media Acquisition, the Company owns one FM radio station in Harrisburg and
one FM radio station and one AM radio station in York. Harrisburg and York are
adjacent markets with numerous overlapping radio signals. The Company intends to
operate these stations as a single station group.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED TARGET TARGET
- --------------------------- ------------------ -------------- ------------- -----------------
<S> <C> <C> <C> <C>
WRKZ-FM (Harrisburg)....... Country 1997 A 25-54 3
WQXA-FM (York)............. Rock 1997 M 18-34 2
WQXA-AM (York)............. Nostalgia 1997 A 35-64 --
</TABLE>
Harrisburg has an MSA rank of 73, and had market revenue of approximately
$23.8 million in 1996, an approximate 3% increase over 1995. There are 23
stations in the Harrisburg market, 12 of which are owned by multiple station
owners. There are eight viable FM and three viable AM stations in this market.
WRKZ-FM ranks fourth in the market in terms of gross revenue, with approximately
12.2% of the market revenue in 1996.
York has an MSA rank of 103, and had market revenue of approximately $15.8
million in 1996, an approximate 6% increase over 1995. There are 12 stations in
the York market, 10 of which are owned by multiple station owners. There are
seven viable FM stations and one viable AM station in this market. The two
stations owned by the Company rank third in the market in terms of their
combined gross revenue, with approximately 11.1% of the market revenue in 1996.
Both WRKZ-FM and WQXA-FM have strong signals in the Harrisburg and York
markets and in the adjacent Lancaster market. WQXA-FM has four years remaining
on a five year contract with Howard Stern for the morning show. The Company
believes that WRKZ-FM and WQXA-FM have a competitive advantage in the Harrisburg
and York markets because they comprise two of the only three signals that have
good coverage of each of Harrisburg, York and Lancaster.
Wilkes-Barre/Scranton, Pennsylvania. As a result of the Tele-Media
Acquisition, the Company owns two FM and two AM radio stations and operates two
FM radio stations and one AM radio station under an LMA and a JSA in
Wilkes-Barre/Scranton, respectively. The Company also operates one FM In-Market
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<PAGE> 75
acquisition station and one AM In-Market Acquisition Station pursuant to an LMA
and has entered into an agreement to acquire two FM In-Market Acquisition
stations and one AM In-Market Acquisition station in Wilkes-Barre/Scranton.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- --------------------------- ------------------ -------------- ------------- -----------------
<S> <C> <C> <C> <C>
WMGS-FM.................... A/C 1997 W 25-54 2
WARM-AM.................... News/Talk 1997 A 25-54 20 (tie)
WZMT-FM.................... AOR 1997 M 18-34 2
WAZL-AM.................... News/Talk 1997 A 35-64 --
WBHT-FM.................... CHR 1997(LMA) W 18-34 3
WKQV-FM.................... AOR 1997(LMA) M 18-34 Simulcast with
WZMT-FM
WKQV-AM.................... News/Talk 1997(JSA) A 25-54 Simulcast with
WARM-AM
WSGD-FM.................... Oldies Pending A 25-54 11
WDLS-FM.................... Oldies Pending A 25-54 Simulcast with
WSGD-FM
WCDL-AM.................... Country Pending A 35-64 --
WEMR-FM.................... CHR Pending/1997 W 18-34 Simulcast with
WBHT-FM
WEMR-AM.................... Country Pending/1997 A 35-64 --
</TABLE>
Wilkes-Barre/Scranton has an MSA rank of 62, and had market revenue of
approximately $23.3 million in 1996, an approximate 5.9% increase over 1995.
There are 40 stations in the Wilkes-Barre/Scranton market, 28 of which are owned
by multiple station owners. There are 10 viable FM and four viable AM stations
in this market. The seven stations owned or operated by the Company combined
with the five In-Market Acquisition Stations in this market rank second in the
market in terms of their combined gross revenue, with approximately 34.1% of
market revenue in 1996.
The Company believes that WMGS-FM, which carries a traditional A/C format,
has one of the three strongest signals in the market. Tele-Media changed the
format on WZMT-FM from classic rock to AOR when it started operating the station
under an LMA in August 1996, and also added Howard Stern to the morning drive
show. WZMT-FM's format is simulcast on WKQV-FM, which extends WZMT-FM's coverage
of the Wilkes-Barre/Scranton area. WBHT-FM broadcasts a CHR format which the
Company recently began simulcasting on WEMR-FM to extend WBHT-FM's coverage to
the northern portion of the market. WARM-AM carries broadcasts for several
significant sports franchises, including the Philadelphia Phillies and the
Philadelphia Eagles. WDLS-FM and WSGD-FM simulcast an oldies format called
"Oldies 94."
Quincy, Illinois. As a result of the Tele-Media Acquisition, the Company
owns three FM radio stations and one AM radio station in Quincy.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED TARGET TARGET
- --------------------------- ------------------ -------------- ------------- -----------------
<S> <C> <C> <C> <C>
WQCY-FM.................... Country 1997 A 25-54 NA
WTAD-AM.................... News/Talk 1997 A 25-54 NA
WMOS-FM.................... AOR 1997 M 18-34 NA
WBRJ-FM.................... News/Talk 1997 A 25-54 NA
</TABLE>
MSA rank, market revenue, station ownership and viable station data are not
available for the Quincy market.
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<PAGE> 76
WTAD-AM has a strong AM signal. The station has a full-time farm
programming director serving this agriculturally-oriented community. WMOS-FM was
off the air at the time Tele-Media purchased the station. In March 1995, the
station was put back on the air with new call letters and an AOR format.
THE LITTLE ROCK STATIONS
Upon consummation of the Little Rock Acquisitions, the Company will own
seven FM and three AM radio stations in Little Rock and will have the right to
construct and operate one additional FM radio station in Little Rock.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED/LMA TARGET TARGET
- ------------------------ ----------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
KARN-AM................. News/Talk/Sports Pending/1997 A 25-54 11
KARN-FM................. News/Talk/Sports Pending/1997 A 25-54 Simulcast with
KARN-AM
KKRN-FM................. News/Talk/Sports Pending/1997 A 25-54 Simulcast with
KARN-AM
KRNN-AM................. News/Talk/Sports Pending/1997 A 25-54 Simulcast with
KARN-AM
KIPR-FM................. Urban Pending/1997 A 18-49 3
KESR-FM................. CHR Pending/1997 A 18-34 7
KYTN-FM................. Christian Pending A 12+ 16
Contemporary
KEZQ-AM................. Nostalgia Pending A 35-64 17(tie)
KURB-FM................. A/C Pending A 25-54 3
KVLO-FM................. Soft A/C Pending W 25-54 6
KAFN-FM................. Not Applicable Pending Not Applicable Not Applicable
</TABLE>
Little Rock has an MSA rank of 82, and had market revenue of approximately
$19.7 million in 1996, an approximate 2.1% increase over 1995. There are 32
stations in the Little Rock market, 20 of which are owned by multiple station
owners. There are 12 viable FM and two viable AM stations in this market. The
ten operating Little Rock Stations rank first in the market in terms of their
combined gross revenue, with approximately 37.9% of market revenue in 1996.
KARN-AM broadcasts a news/talk/sports format and has affiliations with the
CBS Radio Network and the Arkansas Radio Network. The station has one of the
largest radio news staffs in Arkansas. Each of KARN-FM, KKRN-FM and KRNN-AM
serve the surrounding communities outside of Little Rock and currently simulcast
the programming of KARN-AM. KIPR-FM, "Power 92," broadcasts the market's only
urban format, and KESR-FM targets the demographic group of adults ages 18 to 34
with its "Star 102" CHR format. KURB-FM broadcasts an A/C format. KVLO-FM
complements KURB-FM with a lite A/C format. Management believes that KVLO-FM is
an underdeveloped station and that there is potential to increase station
performance. KEZQ-AM currently broadcasts a nostalgia format.
KAFN-FM has not yet commenced broadcasting. The current owners hold a
permit to construct such station. The sellers of KYTN-FM intend to retain the
KYTN call letters and its current christian contemporary format. The Company has
not determined the format that it will program for the station.
Upon consummation of the acquisition of KARN-AM/FM, KKRN-FM and KRNN-FM,
the Company will also own the Arkansas Radio Network, which was established in
1968 and is a state-wide news network with affiliates in nearly every county in
Arkansas. The Arkansas Radio Network feeds hourly newscasts in addition to
agricultural programs, market reports, weather and special events.
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<PAGE> 77
THE BOISE STATIONS
Following the Boise Acquisition, the Company will own four FM radio
stations and one AM radio station in Boise.
<TABLE>
<CAPTION>
STATION RANK IN
STATION PRIMARY PRIMARY
PROGRAMMING YEAR DEMOGRAPHIC DEMOGRAPHIC
STATION CALL LETTERS FORMAT ACQUIRED TARGET TARGET
- ------------------------ ----------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
KIZN-FM................. Country Pending A 25 - 54 1
KZMG-FM................. CHR Pending W 18 - 34 3
KKGL-FM................. Classic Rock Pending M 25 - 54 --
KQFC-FM................. Country Pending A 25 - 54 3
KBOI-AM................. News/Talk Pending A 35 - 64 2 (tie)
</TABLE>
Boise has an MSA rank of 129, and had market revenue of approximately $14.3
million in 1996, an approximate 10.0% increase over 1995. There are 24 stations
in the Boise market, 18 of which are owned by multiple station owners. There are
ten viable FM and four viable AM stations in this market. The five Boise
Stations rank first in the market in terms of their combined gross revenue, with
approximately 36.4% of market revenue in 1996.
KBOI-AM has a 50,000 watt signal for its News/Talk format and has been
coined "The Station To Depend On." The station is also the Boise State
University sports station. KQFC-FM also has a strong signal and has consistently
been the number one rated country station in the market. KKGL-FM, known as "The
Eagle," broadcasts a classic rock format.
ADVERTISING SALES
Virtually all of the Company's revenue is generated from the sale of local,
regional and national advertising for broadcast on its radio stations. In 1996,
approximately 87.0% of the Company's net broadcasting revenue was generated from
the sale of local and regional advertising. Additional broadcasting revenue is
generated from the sale of national advertising, network compensation payments
and other miscellaneous transactions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- General." The major
categories of the Company's advertisers include telephone companies,
restaurants, fast food, automotive and grocery. Each station's local sales staff
solicits advertising either directly from the local advertiser or indirectly
through an advertising agency. The Company pays a higher commission rate to the
sales staff for generating direct sales because the Company believes that
through direct advertiser relationships it can better understand the
advertiser's business needs and more effectively design an advertising campaign
to help the advertiser sell its product. The Company employs personnel in each
of its markets to produce commercials for the advertisers. National sales are
made by a firm specializing in radio advertising sales on the national level in
exchange for a commission from the Company that is based on the Company's gross
revenue from the advertising obtained. Regional sales, which the Company defines
as sales in regions surrounding the Company's markets to companies that
advertise in the Company's markets, are generally made by the Company's local
sales staff.
Depending on the programming format of a particular station, the Company
estimates the optimum number of advertisements available for sale. The number of
advertisements that can be broadcast without jeopardizing listening levels (and
the resulting ratings) is limited in part by the format of a particular station.
The Company's stations strive to maximize revenue by managing their on-air
inventory of advertising time and adjusting prices based on local market
conditions and on the Company's ability, through its marketing efforts, to
provide advertisers with an effective means of reaching a targeted demographic
group. Each of the Company's stations has a general target level of on-air
inventory that it makes available for advertising. This target level of
inventory for sale may be different at different times of the day but tends to
remain stable over time. Much of the Company's selling activity is based on
demand for its radio stations' on-air inventory and, in general, the Company
responds to this demand by varying prices rather than by varying its target
inventory level for a particular station. Therefore, most changes in revenue are
explained by demand-driven pricing changes rather than by changes in the
available inventory.
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<PAGE> 78
The Company believes that radio is one of the most efficient and
cost-effective means for advertisers to reach specific demographic groups.
Advertising rates charged by radio stations are based primarily on (i) a
station's share of audiences in the demographic groups targeted by advertisers
(as measured by ratings surveys estimating the number of listeners tuned to the
station at various times), (ii) the number of stations in the market competing
for the same demographic groups, (iii) the supply of and demand for radio
advertising time and (iv) certain qualitative factors. Rates are generally
highest during morning and afternoon commuting hours.
A station's listenership is reflected in ratings surveys that estimate the
number of listeners tuned to the station and the time they spend listening. Each
station's ratings are used by its advertisers and advertising representatives to
consider advertising with the station and are used by the Company to chart
audience growth, set advertising rates and adjust programming. The radio
broadcast industry's principal ratings service is Arbitron, which publishes
periodic ratings surveys for significant domestic radio markets. These surveys
are the Company's primary source of ratings data.
COMPETITION
The radio broadcasting industry is highly competitive. The success of each
of the Company's stations depends largely upon its audience ratings and its
share of the overall advertising revenue within its market. The Company's
audience ratings and advertising revenue are subject to change, and any adverse
change in a particular market affecting advertising expenditures or an adverse
change in the relative market positions of the stations located in a particular
market could have a material adverse effect on the revenue of the Company's
radio stations located in that market. There can be no assurance that any one of
the Company's radio stations will be able to maintain or increase its current
audience ratings or advertising revenue market share.
The Company's stations compete for listeners and advertising revenue
directly with other radio stations within their respective markets. Radio
stations compete for listeners primarily on the basis of program content that
appeals to a particular demographic group. By building a strong listener base
consisting of a specific demographic group in each of its markets, the Company
is able to attract advertisers seeking to reach those listeners. Companies that
operate radio stations must be alert to the possibility of another station
changing its format to compete directly for listeners and advertisers. Another
station's decision to convert to a format similar to that of one of the
Company's radio stations in the same geographic area may result in lower ratings
and advertising revenue, increased promotion and other expenses and,
consequently, lower broadcast cash flow for the Company.
Factors that are material to a radio station's competitive position include
management experience, the station's local audience rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. The Company attempts to improve its competitive position in each
market by extensively researching its stations' programming, by implementing
advertising campaigns aimed at the demographic groups for which its stations
program and by managing its sales efforts to attract a larger share of
advertising dollars. However, the Company competes with some organizations that
have greater financial resources than the Company.
Recent changes in the FCC's policies and rules permit increased ownership
and operation of multiple local radio stations. Management believes that radio
stations that elect to take advantage of joint arrangements such as LMAs or JSAs
may in certain circumstances have lower operating costs and may be able to offer
advertisers more attractive rates and services. Although the Company currently
operates multiple stations in each of its markets and intends to pursue the
creation of additional multiple station groups, the Company's competitors in
certain markets include operators of multiple stations or operators who already
have entered into LMAs or JSAs. The Company also competes with other radio
station groups to purchase additional stations. Some of these groups are owned
or operated by companies that have substantially greater financial and other
resources than the Company.
Although the radio broadcasting industry is highly competitive, some
barriers to entry exist (which can be mitigated to some extent by changing
existing radio station formats and upgrading power, among other
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actions). The operation of a radio broadcast station requires a license from the
FCC, and the number of radio stations that can operate in a given market is
limited by the availability of FM and AM radio frequencies allotted by the FCC
to communities in that market, as well as by the FCC's multiple ownership rules
regulating the number of stations that may be owned and controlled by a single
entity. The FCC's multiple ownership rules have changed significantly as a
result of the Telecommunications Act. For a discussion of FCC regulation and the
provisions of the Telecommunications Act, see " -- Federal Regulation of Radio
Broadcasting."
The Company's stations also compete for advertising revenue with other
media, including newspapers, broadcast television, cable television, magazines,
direct mail, coupons and outdoor advertising. In addition, the radio
broadcasting industry is subject to competition from new media technologies that
are being developed or introduced, such as the delivery of audio programming by
cable television systems, by satellite and by digital audio broadcasting
("DAB"). DAB may deliver by satellite to nationwide and regional audiences,
multi-channel, multi-format, digital radio services with sound quality
equivalent to compact discs. The delivery of information through the presently
unregulated Internet also could create a new form of competition. The radio
broadcasting industry historically has grown despite the introduction of new
technologies for the delivery of entertainment and information, such as
television broadcasting, cable television, audio tapes and compact disks. A
growing population and greater availability of radios, particularly car and
portable radios, have contributed to this growth. There can be no assurance,
however, that the development or introduction in the future of any new media
technology will not have an adverse effect on the radio broadcasting industry.
The FCC has recently authorized spectrum for the use of a new technology,
satellite digital audio radio services ("DARS"), to deliver audio programming.
DARS may provide a medium for the delivery by satellite or terrestrial means of
multiple new audio programming formats to local and national audiences. It is
not known at this time whether this digital technology also may be used in the
future by existing radio broadcast stations either on existing or alternate
broadcasting frequencies.
The Company cannot predict what other matters might be considered in the
future by the FCC, nor can it assess in advance what impact, if any, the
implementation of any of these proposals or changes might have on its business.
See "-- Federal Regulation of Radio Broadcasting."
FEDERAL REGULATION OF RADIO BROADCASTING
Introduction. The ownership, operation and sale of broadcast stations,
including those licensed to the Company, are subject to the jurisdiction of the
FCC, which acts under authority derived from the Communications Act. The
Communications Act was amended in 1996 by the Telecommunications Act to make
changes in several broadcast laws. Among other things, the FCC assigns frequency
bands for broadcasting; determines whether to approve changes in ownership or
control of station licenses; regulates equipment used by stations; adopts and
implements regulations and policies that directly or indirectly affect the
ownership, operation and employment practices of stations; and has the power to
impose penalties for violations of its rules under the Communications Act.
The following is a brief summary of certain provisions of the
Communications Act and of specific FCC regulations and policies. Failure to
observe these or other rules and policies can result in the imposition of
various sanctions, including monetary forfeitures, the grant of "short" (less
than the maximum) license renewal terms or, for particularly egregious
violations, the denial of a license renewal application, the revocation of a
license or the denial of FCC consent to acquire additional broadcast properties.
Reference should be made to the Communications Act, FCC rules and the public
notices and rulings of the FCC for further information concerning the nature and
extent of federal regulation of broadcast stations.
License Grant and Renewal. Until recently, radio broadcast licenses were
granted for maximum terms of seven years, but acting under the authority of the
Telecommunications Act, the FCC recently revised its rules to extend the maximum
term for future renewals to eight years. Licenses may be renewed through an
application to the FCC. Prior to the Telecommunications Act, during certain
periods when a renewal application was pending, competing applicants could file
for the radio frequency being used by the renewal applicant. The
Telecommunications Act prohibits the FCC from considering such competing
applications if
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the FCC finds that the station has served the public interest, convenience and
necessity, that there have been no serious violations by the licensee of the
Communications Act or the rules and regulations of the FCC, and that there have
been no other violations by the licensee of the Communications Act or the rules
and regulations of the FCC that, when taken together, would constitute a pattern
of abuse.
Petitions to deny license renewals can be filed by interested parties,
including members of the public. Such petitions may raise various issues before
the FCC. The FCC is required to hold hearings on renewal applications if the FCC
is unable to determine that renewal of a license would serve the public
interest, convenience and necessity, or if a petition to deny raises a
"substantial and material question of fact" as to whether the grant of the
renewal application would be prima facie inconsistent with the public interest,
convenience and necessity. Also, during certain periods when a renewal
application is pending, the transferability of the applicant's license is
restricted. The Company is not currently aware of any facts that would prevent
the timely renewal of its licenses to operate its radio stations, although there
can be no assurance that the Company's licenses will be renewed.
The FCC classifies each AM and FM station. An AM station operates on either
a clear channel, regional channel or local channel. A clear channel is one on
which AM stations are assigned to serve wide areas. Clear channel AM stations
are classified as either: Class A stations, which operate on an unlimited time
basis and are designated to render primary and secondary service over an
extended area; Class B stations, which operate on an unlimited time basis and
are designed to render service only over a primary service area; and Class D
stations, which operate either during daytime hours only, during limited times
only or on an unlimited time basis with low nighttime power. A regional channel
is one on which Class B and Class D AM stations may operate and serve primarily
a principal center of population and the rural areas contiguous to it. A local
channel is one on which AM stations operate on an unlimited time basis and serve
primarily a community and the suburban and rural areas immediately contiguous
thereto. Class C AM stations operate on a local channel and are designed to
render service only over a primary service area that may be reduced as a
consequence of interference.
The minimum and maximum facilities requirements for an FM station are
determined by its class. FM class designations depend upon the geographic zone
in which the transmitter of the FM station is located. In general, commercial FM
stations are classified as follows, in order of increasing power and antenna
height: Class A, B1, C3, B, C2, C1 and C.
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The following table sets forth the market, call letters, FCC license
classification, antenna height above average terrain (HAAT), power and frequency
of each of the stations owned or operated by the Company, assuming the
consummation of the Pending Transactions, and the date on which each station's
FCC license expires.
<TABLE>
<CAPTION>
HAAT EXPIRATION
FCC IN POWER IN DATE OF
MARKET(1) STATION CLASS METERS KILOWATTS(2) FREQUENCY FCC LICENSE(3)
- ---------------------- ------- ----- ------ ------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Albuquerque, NM....... KKOB-AM B NA 50.0 770 kHz 10-01-97
KKOB-FM C 1265 20.2 93.3 MHz 10-01-97
KHTL-AM B NA 1.0/0.5 920 kHz 10-01-97
KMGA-FM C 1259 22.5 99.5 MHz 10-01-97
KTBL-FM C 1276 20.4 103.3 MHz 10-01-97
KHFM-FM C 1260 20.0 96.3 MHz 10-01-97
KRST-FM C 1268 22.0 92.3 MHz 10-01-97
KNML-AM B NA 1.0/0.5 1050 kHz 10-01-97
Colorado Springs,
CO.................. KKFM-FM C 698 71.0 98.1 MHz 04-01-05
KKMG-FM C 695 57.0 98.9 MHz 04-01-05
KKLI-FM C2 678 1.6 106.3 MHz 04-01-05
KVUU-FM(4) C 610 68.0 99.9 MHz 04-01-05
KSPZ-FM(4) C 649 72.0 92.9 MHz 04-01-05
KVOR-AM(4) B NA 5.0/1.0 1300 kHz 04-01-05
KTWK-AM(4) B NA 3.3/1.5 740 kHz 04-01-05
Modesto, CA........... KBUL-AM B NA 1.0 970 kHz 12-01-97
KATM-FM B 152 50.0 103.3 MHz 12-01-97
KHKK-FM B 152 50.0 104.1 MHz 12-01-97
KDJK-FM A 624 0.071 103.9 MHz 12-01-97
KHOP-FM B 193 29.5 95.1 MHz 12-01-97
Reno, NV.............. KKOH-AM B NA 50.0 780 kHz 10-01-97
KNEV-FM C 695 60.0 95.5 MHz 10-01-97
KBUL-FM C 699 72.0 98.1 MHz 10-01-97
KNHK-FM C 809 44.7 92.9 MHz 10-01-97
Salt Lake City, UT.... KCNR-AM B NA 10.0/0.195 860 kHz 10-01-97
KUBL-FM C 1140 26.0 93.3 MHz 10-01-97
KENZ-FM C 869 45.0 107.5 MHz 10-01-97
KBER-FM C 1140 25.0 101.1 MHz 10-01-97
KFNZ-AM(4) B NA 5.0 1320 kHz 10-01-97
KBEE-FM(4) C 894 40.0 98.7 MHz 10-01-97
Spokane, WA........... KGA-AM A NA 50.0 1510 kHz 02-01-98
KDRK-FM C 725 56.0 93.7 MHz 02-01-98
KJRB-AM B NA 5.0 790 kHz 02-01-98
KAEP-FM C 582 100.0 105.7 MHz 02-01-98
KKZX-FM(4) C 492 100.0 98.9 MHz 02-01-98
KEYF-AM(4) B NA 5.0 1050 kHz 02-01-98
KEYF-FM(4) C 490 100.0 101.1 MHz 02-01-98
KUDY-AM(4) B NA 5.0 1280 kHz 02-01-98
Billings, MT.......... KDWG-AM B NA 5.0 970 kHz 04-01-05
KCTR-FM C1 152 100.0 102.9 MHz 04-01-05
KKBR-FM C2 122 28.0 97.1 MHz 04-01-05
KBBB-FM C1 146 100.0 103.7 MHz 04-01-05
KMHK-FM C 300 100.0 95.5 MHz 04-01-05
Eugene, OR............ KUGN-AM B NA 5.0/1.0 590 kHz 02-01-98
KUGN-FM C 308 100.0 97.9 MHz 02-01-98
KEHK-FM C1 301 95.0 102.3 MHz 02-01-98
Medford, OR........... KTMT-AM B NA 1.0 880 kHz 02-01-98
KTMT-FM C 994 31.0 93.7 MHz 02-01-98
KBOY-FM C1 299 60.0 95.7 MHz 02-01-98
KCMX-AM B NA 1.0 580 kHz 02-01-98
KCMX-FM C1 435 31.6 101.9 MHz 02-01-98
KAKT-FM C1 166 51.7 105.1 MHz 02-01-98
</TABLE>
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<TABLE>
<CAPTION>
HAAT EXPIRATION
FCC IN POWER IN DATE OF
MARKET(1) STATION CLASS METERS KILOWATTS(2) FREQUENCY FCC LICENSE(3)
- ---------------------- ------- ----- ------ ------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Pasco (Tri-Cities),
WA.................. KFLD-AM B NA 10.0/0.25 870 kHz 02-01-98
KEYW-FM A 59 3.0 98.3 MHz 02-01-98
KORD-FM C 335 100.0 102.7 MHz 02-01-98
KXRX-FM C 408 50.0 97.1 MHz 02-01-98
KTHK-FM C2 339 8.0 97.9 MHz 02-01-98
Providence, RI........ WPRO-AM B NA 5.0 630 kHz 04-01-98
WPRO-FM B 168 39.0 92.3 MHz 04-01-98
WLKW-AM B NA 5.0 790 kHz 04-01-98
WWLI-FM B 152 50.0 105.1 MHz 04-01-98
WDGE-FM A 163 2.3 99.7 MHz 04-01-98
WDGF-FM(4) A 90 4.2 100.3 MHz 04-01-98
Allentown/ Bethlehem,
PA.................. WCTO-FM B 152 50.0 96.1 MHz 08-01-98
WLEV-FM(4) B 327 10.9 100.7 MHz 08-01-98
Harrisburg/York, PA... WRKZ-FM B 283 14.1 106.7 MHz 08-01-98
WQXA-AM B NA 1.0 1250 kHz 08-01-98
WQXA-FM B 215 25.1 105.7 MHz 08-01-98
Wilkes-Barre/
Scranton, PA........ WAZL-AM C NA 1.0 1490 kHz 08-01-98
WZMT-FM B 222 19.5 97.9 MHz 08-01-98
WARM-AM B NA 5.0 590 kHz 08-01-98
WMGS-FM B 422 5.3 92.9 MHz 08-01-98
WBHT-FM(4) A 336 0.50 97.1 MHz 08-01-98
WKQV-AM(4) B NA 10.0/0.5 1550 kHz 08-01-98
WKQV-FM(4) A 308 0.30 95.7 kHz 08-01-98
WSGD-FM(4) A 235 0.52 94.3 MHz 08-01-98
WDLS-FM(4) A 207 1.45 93.7 MHz 08-01-98
WCDL-AM B NA 5.0/.037 1440 kHz 08-01-98
WEMR-AM B NA 5.0/1.0 1460 kHz 08-01-98
WEMR-FM A 354 0.24 107.7 MHz 08-01-98
Quincy, IL............ WTAD-AM B NA 5.0/1.0 930 kHz 12-01-04
WQCY-FM B 229 27.0 99.5 MHz 12-01-04
WMOS-FM A 88 3.0 103.9 MHz 12-01-04
WBRJ-FM B1 100 25.0 106.7 MHz 12-01-04
Little Rock, AR....... KARN-FM(4) A 100 3.0 102.5 MHz 06-01-04
KARN-AM(4) B NA 5.0 920 kHz 06-01-04
KKRN-FM(4) A 100 6.0 101.7 MHz 06-01-04
KRNN-AM(4) B NA 5.0/2.5 1380 kHz 06-01-04
KIPR-FM(4) C1 286 100.0 92.3 MHz 06-01-04
KESR-FM(4) A 118 4.10 102.1 MHz 06-01-04
KYTN-FM C2 95 50.0 107.7 MHz 06-01-04
KAFN-FM(5) A 100 6.0 102.5 MHz 06-01-04
KEZQ-AM B NA 2.0/1.2 1250 kHz 06-01-04
KURB-FM C 392 100.0 98.5 MHz 06-01-04
KVLO-FM C2 150 50.0 102.9 MHz 06-01-04
Boise, ID............. KIZN-FM C 762 44.0 92.3 MHz 10-01-97
KZMG-FM C 802 50.0 93.1 MHz 10-01-97
KKGL-FM C 768 44.0 96.9 MHz 10-01-97
KQFC-FM C 762 47.0 97.9 MHz 10-01-97
KBOI-AM B NA 50.0 960 kHz 10-01-97
</TABLE>
- ---------------
(1) Actual city of license may be different from the metropolitan market served.
(2) Pursuant to FCC rules and regulations, many AM radio stations are licensed
to operate at a reduced power during nighttime broadcasting hours, which
results in reducing the radio station's coverage during those hours of
operation. Both power ratings are shown, where applicable.
(3) License renewal applications have been filed for the listed stations serving
the Albuquerque, Modesto, Reno, Salt Lake City and Boise markets, and the
expiration of the licenses is stayed during the pendency of such
proceedings.
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(4) The Company provides certain sales and marketing services to stations
KVUU-FM, KSPZ-FM, KVOR-AM and KTWK-AM in Colorado Springs, Colorado,
stations KKZX-FM, KEYF-AM, KEYF-FM and KUDY-AM in Spokane, Washington and
station WKQV-AM in Wilkes-Barre/Scranton, Pennsylvania, pursuant to JSAs.
The Company provides certain sales, programming and marketing services to
stations WBHT-FM and WKQV-FM in Wilkes Barre/Scranton, Pennsylvania, and,
pending their acquisition by the Company, stations KBEE-FM and KFNZ-AM in
Salt Lake City, Utah, stations KARN-FM, KARN-AM, KKRN-FM, KRNN-AM, KIPR-FM
and KESR-FM in Little Rock, Arkansas, station WLEV-FM in
Allentown/Bethlehem, Pennsylvania, station WDGF-FM in Providence, Rhode
Island, and stations WEMR-FM and WEMR-AM in Wilkes-Barre/Scranton,
Pennsylvania, pursuant to an LMA.
(5) KAFN-FM is under construction and has not yet commenced operations.
Ownership Matters. The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a broadcast license without the
prior approval of the FCC. In determining whether to assign, transfer, grant or
renew a broadcast license, the FCC considers a number of factors pertaining to
the licensee, including compliance with various rules limiting common ownership
of media properties, the "character" of the licensee and those persons holding
"attributable" interests therein, and compliance with the Communications Act's
limitation on alien ownership, as well as compliance with other FCC policies,
including equal employment opportunity requirements.
Once a station purchase agreement has been signed, an application for FCC
consent to assignment of license or transfer of control (depending upon whether
the underlying transaction is an asset purchase or stock acquisition) is filed
with the FCC. Approximately 10 to 15 days after this filing, the FCC publishes a
notice assigning a file number to the application and advising that the
application has been "accepted for filing." This notice begins a 30-day
statutory waiting period, which provides the opportunity for third parties to
file formal petitions to deny the transaction; informal objections may be filed
any time prior to grant of an application. The FCC staff will normally review
the application in this period and seek further information and amendments to
the application if it has questions.
Once the 30-day public notice period ends, the staff will complete its
processing, assuming that no petitions or informal objections were received and
that the application is otherwise consistent with FCC rules. The staff often
grants the application by delegated authority approximately 10 days after the
public notice period ends. At this point, the parties are legally authorized to
close the purchase, although the FCC action is not legally a "final order." If
there is a backlog of applications, the 10-day period can extend to 30 days or
more.
Public notice of the FCC staff grant is usually issued about a week after
the grant is made, stating that the grant was effective when the staff made the
grant. On the date of this notice, another 30-day period begins, within which
time interested parties can file petitions seeking either staff reconsideration
or full FCC review of the staff action. During this time the grant can still be
modified, set aside or stayed, and is not a "final order." In the absence of a
stay, however, the seller and buyer are not prevented from closing despite the
absence of a final order. Also, within 40 days after the public notice of the
grant, the full FCC can review and reconsider the staff's grant on its own
motion. Thus, during the additional 10 days beyond the 30-day period available
to third parties, the grant is still not "final." In the event that review by
the full FCC is requested and the FCC subsequently affirms the staff's grant of
the application, interested parties may thereafter seek judicial review in the
United States Court of Appeals for the District of Columbia Circuit within
thirty days of public notice of the full FCC's action. In the event the Court
affirms the FCC's action, further judicial review may be sought by seeking
rehearing en banc from the Court of Appeals or by certiorari from the United
States Supreme Court.
In the absence of the submission of a timely request for reconsideration,
administrative review or judicial review, the FCC staff's grant of an
application becomes final by operation of law. Upon the occurrence of that
event, counsel is able to deliver an opinion that the FCC's grant is no longer
subject to administrative or judicial review, although such action can
nevertheless be set aside in rare circumstances, such as fraud on the agency by
a party to the application.
The pendency of a license renewal application will alter the aforementioned
timetables because the FCC will not issue an unconditional assignment grant if
the station's license renewal is pending.
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Under the Communications Act, a broadcast license may not be granted to or
held by a corporation that has more than one-fifth of its capital stock owned or
voted by aliens or their representatives, by foreign governments or their
representatives, or by non-U.S. corporations. Under the Communications Act, a
broadcast license also may not be granted to or held by any corporation that is
controlled, directly or indirectly, by any other corporation more than
one-fourth of whose capital stock is owned or voted by aliens or their
representatives, by foreign governments or their representatives, or by non-U.S.
corporations. These restrictions apply in modified form to other forms of
business organizations, including partnerships. Each of Citadel Communications,
which serves as a holding company for its direct and indirect radio station
subsidiaries, and the Company therefore may be restricted from having more than
one-fourth of its stock owned or voted by aliens, foreign governments or
non-U.S. corporations. The Certificate of Incorporation of Citadel
Communications and the Certificate of Incorporation of the Company contain
provisions which permit Citadel Communications and the Company to prohibit alien
ownership and control consistent with the prohibitions contained in the
Communications Act.
The Communications Act and FCC rules also generally restrict the common
ownership, operation or control of radio broadcast stations serving the same
local market, of a radio broadcast station and a television broadcast station
serving the same local market, and of a radio broadcast station and a daily
newspaper serving the same local market. Under these "cross-ownership" rules,
absent waivers, neither Citadel Communications nor the Company would be
permitted to acquire any daily newspaper or television broadcast station (other
than low power television) in a local market where it then owned any radio
broadcast station. The FCC's rules provide for the liberal grant of a waiver of
the rule prohibiting common ownership of radio and television stations in the
same geographic market in the top 25 television markets if certain conditions
are satisfied. The Telecommunications Act extends this waiver policy to stations
in the top 50 television markets, although the FCC has not yet implemented this
change.
In response to the Telecommunications Act, the FCC amended its multiple
ownership rules to eliminate the national limits on ownership of AM and FM
stations. The FCC's broadcast multiple ownership rules restrict the number of
radio stations one person or entity may own, operate or control on a local
level. These limits are:
(i) in a market with 45 or more commercial radio stations, an entity
may own up to eight commercial radio stations, not more than five of which
are in the same service (FM or AM);
(ii) in a market with between 30 and 44 (inclusive) commercial radio
stations, an entity may own up to seven commercial radio stations, not more
than four of which are in the same service;
(iii) in a market with between 15 and 29 (inclusive) commercial radio
stations, an entity may own up to six commercial radio stations, not more
than four of which are in the same service;
(iv) in a market with 14 or fewer commercial radio stations, an entity
may own up to five commercial radio stations, not more than three of which
are in the same service, except that an entity may not own more than 50% of
the stations in such market.
None of these multiple ownership rules requires any change in the Company's
current ownership of radio broadcast stations or precludes consummation of the
Pending Acquisitions. However, these rules will limit the number of additional
stations which the Company may acquire in the future in certain of its markets.
Because of these multiple and cross-ownership rules, a purchaser of voting
stock of either Citadel Communications or the Company which acquires an
"attributable" interest in Citadel Communications or the Company may violate the
FCC's rule if it also has an attributable interest in other television or radio
stations, or in daily newspapers, depending on the number and location of those
radio or television stations or daily newspapers. Such a purchaser also may be
restricted in the companies in which it may invest, to the extent that these
investments give rise to an attributable interest. If an attributable
shareholder of Citadel Communications or the Company violates any of these
ownership rules, Citadel Communications or the Company may be unable to obtain
from the FCC one or more authorizations needed to conduct its radio station
business and may be unable to obtain FCC consents for certain future
acquisitions.
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<PAGE> 85
The FCC generally applies its television/radio/newspaper cross-ownership
rules and its broadcast multiple ownership rules by considering the
"attributable," or cognizable interests held by a person or entity. A person or
entity can have an interest in a radio station, television station or daily
newspaper by being an officer, director, partner or shareholder of a company
that owns that station or newspaper. Whether that interest is cognizable under
the FCC's ownership rules is determined by the FCC's attribution rules. If an
interest is attributable, the FCC treats the person or entity who holds that
interest as the "owner" of the radio station, television station or daily
newspaper in question, and therefore subject to the FCC's ownership rules.
With respect to a corporation, officers and directors and persons or
entities that directly or indirectly can vote 5% or more of the corporation's
stock (10% or more of such stock in the case of insurance companies, investment
companies, bank trust departments and certain other "passive investors" that
hold such stock for investment purposes only) generally are attributed with
ownership of whatever radio stations, television stations and daily newspapers
the corporation owns.
With respect to a partnership, the interest of a general partner is
attributable, as is the interest of any limited partner who is "materially
involved" in the media-related activities of the partnership. Debt instruments,
nonvoting stock, options and warrants for voting stock that have not yet been
exercised, limited partnership interests where the limited partner is not
"materially involved" in the media-related activities of the partnership, and
minority (under 5%) voting stock, generally do not subject their holders to
attribution. However, the FCC is currently reviewing its rules on attribution of
broadcast interests, and it may adopt stricter criteria. See "-- Proposed
Changes" below.
In addition, the FCC has a "cross-interest" policy that under certain
circumstances could prohibit a person or entity with an attributable interest in
a broadcast station or daily newspaper from having a "meaningful"
nonattributable interest in another broadcast station or daily newspaper in the
same local market. Among other things, "meaningful" interests could include
significant equity interests (including non-voting stock, voting stock and
limited partnership interests) and significant employment positions. This policy
may limit the permissible investments a purchaser of Citadel Communications' or
the Company's voting stock may make or hold.
Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest." Since 1981, the FCC gradually has relaxed or
eliminated many of the more formalized procedures it developed to promote the
broadcast of certain types of programming responsive to the needs of a station's
community of license. However, licensees continue to be required to present
programming that is responsive to community problems, needs and interests and to
maintain certain records demonstrating such responsiveness. Complaints from
listeners concerning a station's programming will be considered by the FCC when
it evaluates the licensee's renewal application, but such complaints may be
filed and considered at any time.
Stations also must pay regulatory and application fees and follow various
FCC rules that regulate, among other things, political advertising, the
broadcast of obscene or indecent programming, sponsorship identification and
technical operations (including limits on radio frequency radiation). In
addition, licensees must develop and implement programs designed to promote
equal employment opportunities and must submit reports to the FCC on these
matters annually and in connection with a renewal application. The broadcast of
contests and lotteries is regulated by FCC rules.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the maximum) renewal terms or, for particularly egregious
violations, the denial of a license renewal application or the revocation of a
license.
In 1985, the FCC adopted rules regarding human exposures to levels of radio
frequency ("RF") radiation. These rules require applicants for new broadcast
stations, renewals of broadcast licenses or modifications of existing licenses
to inform the FCC at the time of filing such applications whether a new or
existing broadcast facility would expose people to RF radiation in excess of
certain guidelines. In August 1996, the FCC adopted more restrictive radiation
limits. These limits will become effective on September 1, 1997 and will govern
applications filed after that date. The Company anticipates that such
regulations will not have a material effect on its business.
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Local Marketing Agreements. Over the past five years, a number of radio
stations, including certain of the Company's stations, have entered into what
commonly are referred to as "local marketing agreements" (LMAs) or "time
brokerage agreements." These agreements take various forms. Separately-owned and
licensed stations may agree to function cooperatively in terms of programming,
advertising sales and other matters, subject to compliance with the antitrust
laws and the FCC's rules and policies, including the requirement that the
licensee of each station maintains independent control over the programming and
other operations of its own station. For example, pursuant to the Company's LMA
with radio station WBHT-FM, the Company agreed to purchase a substantial amount
of the air time for a negotiated fee. The Company retains all revenue generated.
The owner of these stations is entitled to preempt the programming provided by
the Company. The FCC has held that such agreements do not violate the
Communications Act as long as the licensee of the station that is being
substantially programmed by another entity maintains complete responsibility
for, and control over, operations of its broadcast stations and otherwise
ensures compliance with applicable FCC rules and policies.
A station that brokers substantial time on another station in its market or
engages in an LMA with a station in the same market will be considered to have
an attributable ownership interest in the brokered station for purposes of the
FCC's ownership rules, discussed above. As a result, a broadcast station may not
enter into an LMA that allows it to program more than 15% of the broadcast time,
on a weekly basis, of another local station that it could not own under the
FCC's local multiple ownership rules. FCC rules also prohibit the broadcast
licensee from simulcasting more than 25% of its programming on another station
in the same broadcast service (i.e., AM-AM or FM-FM) where the two stations
serve substantially the same geographic area, whether the licensee owns the
stations or owns one and programs the other through an LMA arrangement.
Another example of a cooperative agreement between differently owned radio
stations in the same market is a joint sales agreement (JSA), whereby one
station sells advertising time in combination, both on itself and on a station
under separate ownership. In the past, the FCC has determined that issues of
joint advertising sales should be left to antitrust enforcement. The Company has
entered into several JSAs whereby it sells time on behalf of other local
stations. Currently, JSAs are not deemed by the FCC to be attributable. However,
the FCC has outstanding a notice of proposed rulemaking, which, if adopted,
would require the Company to terminate any JSA it might have with a radio
station with which the Company could not have an LMA. Currently, the only
Company group that would be so affected would be its group in Colorado Springs.
See "-- General" and "-- Station Portfolio."
Proposed Changes. In December, 1994, the FCC initiated a proceeding to
solicit comment on whether it should revise its radio and television ownership
"attribution" rules by among other proposals (i) raising the basic benchmark for
attributing ownership in a corporate licensee from 5% to 10% of the licensee's
voting stock, (ii) increasing from 10% to 20% of the licensee's voting stock the
attribution benchmark for "passive investors" in corporate licensees, (iii)
restricting the availability of the attribution exemption when a single party
controls more than 50% of the voting stock; and (iv) considering LMAs, JSAs,
debt and non-voting stock interests to be attributable under certain
circumstances. No decision has been made by the FCC in these matters. At this
time, no determination can be made as to what effect, if any, this proposed
rulemaking will have on the Company.
The Congress and the FCC from time to time have under consideration, and
may in the future consider and adopt, new laws, regulations and policies
regarding a wide variety of matters that could, directly or indirectly, affect
the operation, ownership and profitability of the Company's radio stations,
result in the loss of audience share and advertising revenues for the Company's
radio stations, and affect the ability of the Company to acquire additional
radio stations or finance such acquisitions. Such matters include: proposals to
impose spectrum use or other fees on FCC licensees; the FCC's equal employment
opportunity rules and matters relating to political broadcasting; technical and
frequency allocation matters; proposals to restrict or prohibit the advertising
of beer, wine and other alcoholic beverages on radio; changes in the FCC's
cross-interest, multiple ownership and cross-ownership policies; changes to
broadcast technical requirements; proposals to allow telephone or cable
television companies to deliver audio and video programming to the home through
existing phone lines; proposals to limit the tax deductibility of advertising
expenses by
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advertisers; and proposals to auction the right to use the radio broadcast
spectrum to the highest bidder, instead of granting FCC licenses and subsequent
license renewals without such bidding.
The FCC, on April 2, 1997, awarded two licenses for the provision of
satellite digital audio radio services ("DARS"). Under rules adopted for this
service, licensees must begin construction of their space stations within one
year, begin operating within four years, and be operating their entire system
within six years. The Company cannot predict whether the service will be
subscription or advertiser supported. Digital technology also may be used in the
future by terrestrial radio broadcast stations either on existing or alternate
broadcasting frequencies, and the FCC has stated that it will consider making
changes to its rules to permit AM and FM radio stations to offer digital sound
following industry analysis of technical standards. In addition, the FCC has
authorized an additional 100 kHz of bandwidth for the AM band and on March 17,
1997, adopted an allotment plan for the expanded band which identified the 88 AM
radio stations selected to move into the band. At the end of a five-year
transition period, those licensees will be required to return to the FCC either
the license for their existing AM band station or the license for the expanded
AM band station.
The Company cannot predict whether any proposed changes will be adopted or
what other matters might be considered in the future, nor can it judge in
advance what impact, if any, the implementation of any of these proposals or
changes might have on its business.
The foregoing is a brief summary of certain provisions of the
Communications Act and of specific FCC rules and policies. This description does
not purport to be comprehensive and reference should be made to the
Communications Act, the FCC's rules and the public notices and rulings of the
FCC for further information concerning the nature and extent of federal
regulation of radio broadcast stations.
Federal Antitrust Considerations. The Company is aware that the FTC and
the DOJ, which evaluate transactions to determine whether those transactions
should be challenged under the federal antitrust laws, have been increasingly
active recently in their review of radio station acquisitions, particularly
where an operator proposes to acquire additional stations in its existing
markets.
For an acquisition meeting certain size thresholds, the HSR Act and the
rules promulgated thereunder require the parties to file Notification and Report
Forms with the FTC and the DOJ and to observe specified waiting period
requirements before consummating the acquisition. During the initial 30 day
period after the filing, the agencies decide which of them will investigate the
transaction. If the investigating agency determines that the transaction does
not raise significant antitrust issues, then it will either terminate the
waiting period or allow it to expire after the initial 30 days. On the other
hand, if the agency determines that the transaction requires a more detailed
investigation, then at the conclusion of the initial 30 day period, it will
issue a formal request for additional information ("Second Request"). The
issuance of a Second Request extends the waiting period until the twentieth
calendar day after the date of substantial compliance by all parties to the
acquisition. Thereafter, such waiting period may only be extended by court order
or with the consent of the parties. In practice, complying with a Second Request
can take a significant amount of time. In addition, if the investigating agency
raises substantive issues in connection with a proposed transaction, then the
parties frequently engage in lengthy discussions or negotiations with the
investigating agency concerning possible means of addressing those issues,
including but not limited to persuading the agency that the proposed acquisition
would not violate the antitrust laws, restructuring the proposed acquisition,
divestiture of other assets of one or more parties, or abandonment of the
transaction. Such discussions and negotiations can be timeconsuming, and the
parties may agree to delay consummation of the acquisition during their
pendency.
At any time before or after the consummation of a proposed acquisition, the
FTC or the DOJ could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
acquisition or seeking divestiture of the business acquired or other assets of
the Company. Acquisitions that are not required to be reported under the HSR Act
may be investigated by the FTC or the DOJ under the antitrust laws before or
after consummation. In addition, private parties may under certain circumstances
bring legal action to challenge an acquisition under the antitrust laws.
The Company does not believe that any of the Pending Transactions will be
adversely affected in any material respect by review under the HSR Act. The
Company has received notification of early termination of
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the applicable waiting period under the HSR Act in regard to the pending
acquisition of WLEV-FM in Allentown, Pennsylvania and is awaiting termination of
the applicable waiting period in regard to the Boise Acquisition. No other
Pending Acquisition is subject to the HSR Act.
As part of its increased scrutiny of radio station acquisitions, the DOJ
has stated publicly that it believes that LMAs, JSAs and other similar
agreements customarily entered into in connection with radio station transfers
prior to the expiration of the waiting period under the HSR Act could violate
the HSR Act.
The Company has received two civil investigative demands from the Antitrust
Division of the DOJ. One CID addresses the Company's acquisition of KRST-FM in
Albuquerque, New Mexico, and the second CID addresses the Company's JSA relating
to stations in Spokane, Washington and Colorado Springs, Colorado. The Company
has provided the requested information in response to each CID, and, at present,
has been given no indication from the DOJ regarding its intended future actions.
See "-- Legal Proceedings."
SEASONALITY
Seasonal revenue fluctuations are common in the radio broadcasting industry
and are primarily the result of fluctuations in advertising expenditures by
retailers. The Company's revenue is typically lowest in the first quarter and
highest in the second and fourth quarters.
TRADEMARKS
The Company owns a number of trademarks and service marks, including the
federally registered marks "Cat Country," "KHOP," "Supertalk" and the Cat
Country logo. The Company also owns a number of marks registered in various
states. The Company considers such trademarks and service marks to be important
to its business. See "-- Operating Strategy -- Targeted Programming."
EMPLOYEES
At August 1, 1997, the Company employed approximately 1,300 persons. None
of such employees are covered by collective bargaining agreements, and the
Company considers its relations with its employees to be good.
The Company employs several on-air personalities with large loyal audiences
in their respective markets. The Company generally enters into employment
agreements with these personalities to protect their interests in those
relationships that it believes to be valuable. The loss of one of these
personalities could result in a short-term loss of audience share, but the
Company does not believe that any such loss would have a material adverse effect
on the Company's financial condition or results of operations.
PROPERTIES AND FACILITIES
The types of properties required to support each of the Company's radio
stations include offices, studios, transmitter sites and antenna sites. A
station's studios are generally housed with its offices in business districts.
The transmitter sites and antenna sites are generally located so as to provide
maximum market coverage.
The Company currently owns studio facilities in Spokane, Washington;
Billings, Montana; Tri-Cities, Washington; East Providence, Rhode Island; and
Patton Township (State College), Lower Yoder Township (Johnstown) and Williams
Township (Allentown), Pennsylvania, and it owns transmitter and antenna sites in
Reno, Nevada; Salt Lake City, Utah; Spokane and Tri-Cities, Washington; Tracy
(Modesto), California; Billings, Montana; Santa Fe and Albuquerque, New Mexico;
Medford, Oregon; East Providence and Johnston, Rhode Island; Township One
(Quincy), Illinois; and Patton Township (State College), Croyle Township
(Johnstown), Mt. Joy Township (Harrisburg/York), Williams Township and Salisbury
Township (Allentown) and Hanover Township (Wilkes-Barre/Scranton), Pennsylvania,
and expects to acquire additional facilities and dispose of certain existing
facilities in connection with the Pending Transactions. The Company leases its
remaining studio and office facilities, including office space in Tempe, Arizona
which is not related to the operations of a particular station, and it leases
its remaining transmitter and antenna sites. The Company does not anticipate any
difficulties in renewing any facility leases or in leasing alternative or
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additional space, if required. The Company owns substantially all of its other
equipment, consisting principally of transmitting antennae, transmitters, studio
equipment and general office equipment.
Substantially all of the Company's properties and equipment serve as
collateral for the Company's obligations under the Credit Facility.
No one property is material to the Company's operations. The Company
believes that its properties are generally in good condition and suitable for
its operations; however, the Company continually looks for opportunities to
upgrade its properties and intends to upgrade studios, office space and
transmission facilities in certain markets.
LEGAL PROCEEDINGS
The Company currently and from time to time is involved in litigation
incidental to the conduct of its business, but the Company is not a party to any
lawsuit or proceeding which, in the opinion of the Company, is likely to have a
material adverse effect on the Company.
The Company has received two CIDs from the DOJ pursuant to which the DOJ
has requested information from the Company to determine whether the Company has
violated certain antitrust laws. The first CID was issued on September 27, 1996
and concerns the Company's acquisition of all of the assets of KRST-FM in
Albuquerque, New Mexico on October 9, 1996 (the "KRST Acquisition"). The CID
requested written answers to interrogatories and the production of certain
documents concerning the radio station market in Albuquerque, in general, and
the KRST Acquisition, in particular, to enable the DOJ to determine, among other
things, whether the KRST Acquisition would result in excessive concentration in
the market. The Company has responded to the CID. The DOJ requested supplemental
information on January 27, 1997, to which the Company also responded. There have
been no communications since that time and, at present, the Company has been
given no indication from the DOJ regarding its intended future actions. If the
DOJ were to proceed with and successfully challenge the KRST Acquisition, the
Company may be required to divest one or more radio stations in Albuquerque
and/or it may be subject to the payment of fines.
The second CID was issued on October 9, 1996 and concerned the Company's
JSA relating to a total of eight radio stations in Spokane, Washington and
Colorado Springs, Colorado and which became effective in January 1996. Pursuant
to such CID, the DOJ has requested information to determine whether the JSAs
constituted a de facto merger, resulting in a combination or contract in
restraint of trade. The Company responded to the CID, and the DOJ is proceeding
with discovery in this matter. If the DOJ were to proceed with and successfully
challenge the JSA, the Company may be required to terminate the JSA and/or it
may be subject to the payment of fines.
At this time, the Company cannot predict the impact on the Company, if any,
of these proceedings or any future DOJ demands.
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THE PENDING TRANSACTIONS
There are several transactions currently pending which, if consummated,
would result in the Company (i) acquiring ownership of 24 additional radio
stations and the right to construct and operate one radio station and (ii)
selling seven radio stations.
THE IN-MARKET ACQUISITIONS
The Company has entered into agreements to purchase (i) one FM radio
station in Providence, Rhode Island, (ii) one FM radio station in
Allentown/Bethlehem, Pennsylvania (which acquisition would include the sale by
the Company of one AM radio station in Allentown/Bethlehem), (iii) three FM and
two AM radio stations in Wilkes-Barre/Scranton, Pennsylvania and (iv) one FM
radio station and one AM radio station in Salt Lake City, Utah, six of which the
Company currently operates under LMAs.
WDGF-FM, Providence, Rhode Island. On June 6, 1997, the Company entered
into an Asset Purchase Agreement with Bear Broadcasting Company ("Bear")
pursuant to which the Company has agreed to acquire from Bear substantially all
of the assets used in the operation of radio station WDGF-FM in Providence. The
aggregate purchase price is approximately $4.0 million in cash. Pending the
acquisition, on September 15, 1997, the Company began operating WDGF-FM under an
LMA.
The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the acquisition is subject to
various conditions, including (i) the receipt of FCC consent to the assignment
of the WDGF-FM license to the Company and (ii) the receipt of consents to the
assignment to the Company of certain contracts relating to WDGF-FM. An
application seeking FCC approval was filed with the FCC on June 16, 1997. The
Company received a grant of the application on August 6, 1997, and it
anticipates that the acquisition of WDGF-FM will close in November 1997. Upon
consummation of the acquisition, the Company will own four FM and two AM radio
stations in Providence.
WLEV-FM, Allentown/Bethlehem, Pennsylvania. On July 15, 1997, the Company
entered into an Asset Purchase Agreement with Maranatha Broadcasting Company,
Inc. ("Maranatha") pursuant to which the Company has agreed to acquire from
Maranatha certain of the assets used in the operation of radio station WLEV-FM
in Allentown/Bethlehem. Concurrently, the Company and Maranatha entered into a
second Asset Purchase Agreement pursuant to which Maranatha has agreed to
acquire from the Company certain of the assets used in the operation of radio
station WEST-AM in Allentown/Bethlehem. The purchase price for WLEV-FM is
approximately $23.0 million in cash plus the assets of WEST-AM. The Company has
delivered a letter of credit in the amount of $1.75 million to secure its
obligations under the asset purchase agreement relating to WLEV-FM.
The Company and Maranatha also entered into an LMA pursuant to which the
Company markets commercial advertising time and provides programming for WLEV-FM
pending the closing of its acquisition by the Company. A monthly fee of $25,000
will be paid by the Company to Maranatha under the LMA. The Company has received
notification of early termination of the applicable waiting period under the HSR
Act.
The asset purchase agreements contain customary representations and
warranties of the parties, and consummation of the transactions is subject to
certain conditions including (i) the receipt of FCC consent to the assignment of
the WLEV-FM license to the Company and the assignment of the WEST-AM license to
Maranatha and (ii) the receipt of consents to the assignment to the Company and
Maranatha of certain contracts relating to WLEV-FM and WEST-AM, respectively.
Applications seeking FCC approval were filed with the FCC on July 21, 1997 and
August 21, 1997. The Company received a grant of the application relating to
WLEV-FM on September 8, 1997. The Company anticipates that the acquisition of
WLEV-FM and the sale of WEST-AM will close in October 1997 and November 1997,
respectively. Upon consummation of these transactions, the Company will own two
FM radio stations in Allentown/Bethlehem.
WEMR-AM and WEMR-FM, Wilkes-Barre/Scranton, Pennsylvania. On September 11,
1997, the Company entered into an Asset Purchase Agreement with Endless Mountain
Broadcasting, Inc. ("Endless Mountain") pursuant to which the Company has agreed
to acquire from Endless Mountain substantially all of the assets of radio
stations WEMR-AM and WEMR-FM in Wilkes-Barre/Scranton for the aggregate
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purchase price of approximately $815,000 in cash. Pending the acquisition, on
September 25, 1997, the Company began operating WEMR-AM and WEMR-FM pursuant to
an LMA.
The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the acquisition of WEMR-AM and
WEMR-FM is subject to certain conditions including (i) the receipt of FCC
consent to the assignment of the station licenses to the Company and (ii) the
receipt of consents to the assignment to the Company of certain contracts
relating to the stations. An application seeking FCC approval was filed with the
FCC on September 17, 1997. The Company anticipates that the acquisition of
WEMR-AM and WEMR-FM will close in late 1997 or early 1998.
WSGD-FM, WDLS-FM and WCDL-AM, Wilkes-Barre/Scranton, Pennsylvania. On
September 26, 1997, the Company entered into an Asset Purchase Agreement with
S&P Broadcasting Limited Partnership I, S&P Broadcasting Limited Partnership III
and Swanson Holdings, Ltd. (collectively, "S&P Broadcasting") pursuant to which
the Company has agreed to acquire from S&P Broadcasting substantially all of the
assets of radio stations WSGD-FM, WDLS-FM and WCDL-AM in Wilkes-Barre/Scranton
for the aggregate purchase price of approximately $6.0 million in cash.
The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the acquisition of WSGD-FM,
WDLS-FM and WCDL-AM is subject to certain conditions including (i) the receipt
of FCC consent to the assignment of the station licenses to the Company and (ii)
the receipt of consents to the assignment to the Company of certain contracts
relating to the stations. The Company anticipates that an application seeking
FCC approval will be filed with the FCC in October 1997, and that the
acquisition of WSGD-FM, WDLS-FM and WCDL-AM will close in late 1997 or early
1998.
KBEE-FM and KFNZ-AM, Salt Lake City, Utah. On March 31, 1992, Predecessor
entered into an LMA with Price Broadcasting Company ("Price") pursuant to which
the Company markets all commercial advertising of and provides programming for
KBEE-FM and KFNZ-AM, licensed to Ogden, Utah and operating in Ogden and Salt
Lake City, Utah. At such time, Predecessor also acquired certain assets used in
the operation of the stations. In April 1996, the Company exercised its option
under the LMA with Price to purchase such stations. The Company and Price
subsequently entered into an Asset Purchase Agreement on April 21, 1997 relating
to the acquisition by the Company of KBEE-FM and KFNZ-AM for the aggregate
purchase price of approximately $2.9 million in cash.
The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the acquisition of KBEE-FM and
KFNZ-AM is subject to certain conditions including (i) the receipt of FCC
consent to the assignment of the station licenses to the Company and (ii) the
receipt of consents to the assignment to the Company of certain contracts
relating to the station. An application seeking FCC approval was filed on May 9,
1997. The Company received a grant of the application on July 18, 1997, and it
anticipates that the acquisition of KBEE-FM and KFNZ-AM will close in October
1997. Upon consummation of the acquisition of KBEE-FM and KFNZ-AM, the Company
will own four FM and two AM radio stations in Salt Lake City.
THE LITTLE ROCK ACQUISITIONS
KARN-FM, KKRN-FM, KARN-AM, KRNN-AM, KAFN-FM, KIPR-FM, KESR-FM and KYTN-FM,
Little Rock, Arkansas. On June 2, 1997, the Company entered into various
agreements relating to four transactions with various individuals and entities
pursuant to which the Company has agreed to acquire (i) five FM and two AM radio
stations in Little Rock, Arkansas, (ii) the right to construct an additional FM
radio station in Little Rock, (iii) the Arkansas Radio Network, a state-wide
news network, and (iv) certain real estate associated with station operations.
The first transaction is structured as a merger of Snider Corporation with
and into the Company. Snider Corporation owns KARN-FM, KKRN-FM, KARN-AM, KRNN-AM
and the Arkansas Radio Network and owns the right to construct and operate
KAFN-FM. The aggregate purchase price for this acquisition is approximately $9.0
million, consisting of $4.5 million in cash and the balance in shares of a newly
created series of preferred stock of Citadel Communications. The cash portion of
the purchase price may be reduced
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by the amount of certain liabilities of Snider Corporation existing on the
closing date. The second related transaction involves the purchase by the
Company from the shareholders of Snider Corporation of real estate used in
connection with the stations owned by Snider Corporation for the aggregate
purchase price of approximately $3.0 million in cash.
The third transaction is structured as a merger of Snider Broadcasting
Corporation ("Snider Broadcasting") with and into the Company. Snider
Broadcasting owns KIPR-FM. The purchase price is approximately $5.5 million
payable in shares of a newly created series of preferred stock of Citadel
Communications. In addition, the purchase price will be increased by the amount
necessary to repay indebtedness for borrowed money of Snider Broadcasting, and
such additional amount will be paid in cash. Such cash portion may be reduced by
the amount of certain liabilities of Snider Broadcasting existing on the closing
date of the acquisition.
The fourth transaction involves the purchase by the Company of
substantially all of the assets of CDB Broadcasting Corporation and its license
subsidiary (collectively, "CDB") which owns KESR-FM. The purchase price for CDB
is approximately $7.5 million, payable in cash, and will be reduced by the
amount of the cash portion of the purchase price for Snider Broadcasting, as
well as by the amount of certain liabilities to be assumed by the Company. CDB
has entered into an agreement to purchase the stock of Natural States
Communications Company ("Natural States") which owns KYTN-FM, and such agreement
has been assigned to the Company. The purchase price for the stock of Natural
States and certain shareholder non-compete agreements is approximately $1.5
million in cash.
The Company has delivered letters of credit in an aggregate amount of $1.25
million to secure its obligations under the various acquisition agreements.
Pending the acquisition, on June 2, 1997, the Company began operating six
of the foregoing stations pursuant to LMAs under which an aggregate monthly fee
of approximately $186,000 will be paid by the Company to Snider Corporation,
Snider Broadcasting and CDB.
The various acquisition documents contain customary representations and
warranties of the parties. Consummation of the various transactions is subject
to certain conditions including (i) the receipt of FCC consent to the transfer
of control of Snider Corporation, Snider Broadcasting and Natural States to the
Company, (ii) the receipt of FCC consent to the assignment of the KESR-FM
license to the Company and (iii) certain other customary conditions for the
types of transactions involved. An application seeking FCC approval (other than
the acquisition of Natural States) was filed with the FCC on June 12, 1997, and
an application seeking FCC approval of the acquisition of Natural States was
filed with the FCC on July 22, 1997. The Company received a grant of the
application (other than the acquisition of Natural States) on August 26, 1997,
and it anticipates that the acquisition (other than Natural States) will close
in October 1997. The Company received a grant of the application relating to
Natural States on September 9, 1997, and it anticipates that such transaction
will close in November 1997. Consummation of the acquisition of the foregoing
stations is contingent upon the closing of each of the several transactions
discussed above other than the consummation of the acquisition of Natural
States.
KURB-FM, KVLO-FM and KEZQ-AM, Little Rock, Arkansas. On August 1, 1997,
the Company entered into an Asset Purchase Agreement with GHB of Little Rock,
Inc. ("GHB") pursuant to which the Company has agreed to acquire from GHB
substantially all of the assets of radio stations KURB-FM, KVLO-FM and KEZQ-AM
in Little Rock for the aggregate purchase price of approximately $11.4 million.
The Company has delivered a letter of credit in the amount of $800,000 to secure
its obligations under the asset purchase agreement.
The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the acquisition of KURB-FM,
KVLO-FM and KEZQ-AM is subject to certain conditions including (i) the receipt
of FCC consent to the assignment of the station licenses to the Company and (ii)
the receipt of consents to the assignment to the Company of certain contracts
relating to the stations. An application seeking FCC approval was filed with the
FCC on August 6, 1997. The Company received a grant
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of the application on September 19, 1997, and it anticipates that the
acquisition of KURB-FM, KVLO-FM and KEZQ-AM will close in late 1997.
THE BOISE ACQUISITION
KKGL-FM, KQFC-FM, KBOI-AM, KIZN-FM and KZMG-FM, Boise, Idaho. On September
29, 1997, the Company entered into various agreements relating to three
transactions with various individuals and entities pursuant to which the Company
has agreed to acquire four FM radio stations and one AM radio station and
certain real estate associated with station operations.
The first transaction involves the purchase of all of the issued and
outstanding capital stock of Pacific Northwest Broadcasting Corporation
("Pacific Broadcasting") which owns radio stations KKGL-FM, KQFC-FM and KBOI-AM.
The aggregate purchase price for this transaction is approximately $13.2 million
in cash. At the time this transaction is consummated, Pacific Broadcasting will
be merged with and into the Company. The Company has deposited $500,000 into
escrow to secure its obligations under the acquisition agreement. The second
related transaction involves the purchase by the Company from the principals of
Pacific Broadcasting of real estate used in connection with the stations for the
purchase price of approximately $1.2 million in cash.
The third transaction involves the purchase by the Company of substantially
all of the assets of radio stations KIZN-FM and KZMG-FM from Wilson Group, LLC
("Wilson Group") for the aggregate purchase price of approximately $14.1 million
in cash. The Company has delivered a letter of credit in the amount of $500,000
to secure its obligations under the acquisition agreement. Wilson Group is not
affiliated with Lawrence R. Wilson, a director and executive officer of the
Company.
The Company has also entered into an LMA with each of Pacific Broadcasting
and Wilson Group pursuant to which the Company will market commercial
advertising time and provide programming for the Boise Stations pending their
acquisition by the Company. The Company will commence operations under these
LMAs after all applicable waiting periods under the HSR Act have expired or been
terminated. The Company will also enter into a five-year consulting agreement
with the principal of Pacific Broadcasting and Wilson Group.
The various acquisition agreements contain customary representations and
warranties of the parties. Consummation of the various transactions is subject
to certain conditions including (i) the receipt of FCC consent to the transfer
of control of Pacific Broadcasting to the Company, (ii) the receipt of FCC
consent to the assignment of the KIZN-FM and KZMG-FM licenses to the Company,
(iii) the expiration or termination of the applicable waiting periods under the
HSR Act and (iv) certain other customary conditions for the type of transactions
involved. The Company anticipates that an application seeking FCC approval will
be filed with the FCC in October 1997, that the acquisition of Pacific
Broadcasting will close in January 1998, and that the acquisition of KIZN-FM and
KZMG-FM will close in April 1998. Consummation of the acquisition of KIZN-FM and
KZMG-FM is contingent upon the consummation of the acquisition of Pacific
Broadcasting. Upon consummation of the various acquisitions, the Company will
own four FM radio stations and one AM radio station in Boise.
THE JOHNSTOWN/STATE COLLEGE DISPOSITION
On September 29, 1997, the Company entered into an Asset Purchase Agreement
with Talleyrand Broadcasting, Inc. ("Talleyrand") pursuant to which Talleyrand
has agreed to purchase substantially all of the assets of radio stations WQKK-FM
and WGLU-FM in Johnstown, Pennsylvania and radio stations WRSC-AM, WQWK-FM,
WBLF-AM and WIKN-FM in State College, Pennsylvania for the aggregate purchase
price of approximately $8.5 million in cash. In addition to the stations it owns
in Johnstown and State College, the Company will also sell to Talleyrand its
right of first refusal to purchase two additional radio stations in Johnstown.
The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the sale of WQKK-FM, WGLU-FM,
WRSC-AM, WQWK-FM, WBLF-AM and
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WIKN-FM is subject to certain conditions including (i) the receipt of FCC
consent to the assignment of the station licenses to Talleyrand and (ii) the
receipt of consents to the assignment to Talleyrand of certain contracts
relating to the stations. The Company anticipates that an application seeking
FCC approval will be filed with the FCC in October 1997 and that the sale of
WQKK-FM, WGLU-FM, WRSC-AM, WQWK-FM, WBLF-AM and WIKN-FM will close in late 1997
or early 1998. The Company does not own any other radio stations in either
Johnstown or State College.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the names, ages and positions of the
directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------ --- --------------------------------------------
<S> <C> <C>
Lawrence R. Wilson............ 52 Chief Executive Officer, President and
Chairman of the Board of Directors
Donna L. Heffner.............. 38 Vice President, Chief Financial Officer,
Treasurer and Secretary
Stuart R. Stanek.............. 41 Vice President; President of East Region
Edward T. Hardy............... 48 Vice President; President of West Region
D. Robert Proffitt............ 45 Vice President; President of Central Region
Michael J. Ahearn............. 40 Director
J. Walter Corcoran............ 59 Director
Christopher P. Hall........... 43 Director
Mark A. Leavitt............... 38 Director
Harlan A. Levy................ 41 Director
Scott E. Smith................ 42 Director
John E. von Schlegell......... 43 Director
Ted L. Snider, Sr.(1)......... 68 Director
</TABLE>
- ---------------
(1) It is anticipated that Ted L. Snider will become a director of the Company
following the Company's acquisition of Snider Corporation. See "The Pending
Transactions -- The Little Rock Acquisitions."
Lawrence R. Wilson co-founded and was a general partner of Predecessor from
1984 to July 1992 and has been the Chief Executive Officer, President and
Chairman of the Board of the Company since it was incorporated in August 1991
and of Citadel Communications since it was incorporated in May 1993. From 1974
to 1979, Mr. Wilson was Executive Vice President and General Counsel of Combined
Communications Corporation, a national media company, where he handled all
acquisitions and mergers and oversaw the broadcast, newspaper and outdoor
billboard divisions as a part of a five person management committee. From 1979
to 1986, he was engaged in the private practice of law.
Donna L. Heffner joined Predecessor in 1988 as its Controller. Ms. Heffner
has served as Treasurer and Secretary of the Company since it was incorporated
in August 1991 and of Citadel Communications since it was incorporated in May
1993. She has served as Chief Financial Officer of the Company and Citadel
Communications since July 1992 and May 1993, respectively. In January 1997, Ms.
Heffner became Vice President of Citadel Communications and the Company. From
1982 to 1985 and in 1987, she was employed by Price Waterhouse, and in 1986, she
was employed by Lowrimore, Warwick & Company as an accountant.
Stuart R. Stanek joined Predecessor in 1986 as a General Manager of KKFM-FM
in Colorado Springs. In 1988, he became General Manager of KCNR-AM/KUBL-FM in
Salt Lake City, in 1991, he was appointed Vice President of the Company, in 1992
he was elected to the Board of Directors of the Company and in 1993, he was
appointed Vice President and elected to the Board of Citadel Communications. He
served as a Director of Citadel Communications and the Company until August
1996. Mr. Stanek became President of East Region for the Company in June 1997.
Edward T. Hardy founded and was elected President and Chief Executive
Officer of Deschutes in 1994. Mr. Hardy joined Citadel Communications in January
1997 as President of Deschutes following Citadel Communications' acquisition of
Deschutes. Mr. Hardy became President of West Region for the Company and Vice
President of Citadel Communications and the Company in June 1997. From 1984 to
1993, Mr. Hardy was Vice President -- General Manager of KUPL AM/FM in Portland.
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<PAGE> 96
D. Robert Proffitt joined Predecessor in 1988 as Vice President -- General
Manager of KKFM-FM in Colorado Springs. In 1991, he was appointed Vice President
of the Company, and in 1993, he was appointed Vice President of Citadel
Communications. Mr. Proffitt took over as General Manager of the Company's
Albuquerque operations in 1994. Mr. Proffitt became President of Central Region
for the Company in June 1997.
Michael J. Ahearn has served as a member of the Board of Directors of the
Company and Citadel Communications since August 1996. He was a shareholder of
Gallagher & Kennedy, P.A., a Phoenix based law firm, from 1986 until June 1996,
where he practiced in the area of corporate law. In July 1996, he joined Quantum
Partners, L.L.C. as a principal. Quantum Partners, L.L.C. is a Phoenix based
venture capital company that invests in privately held, growth-oriented
businesses.
J. Walter Corcoran has served as a member of the Board of Directors of the
Company and Citadel Communications since March 1997. Since June 1996 he has been
the Service Advisor for Oxford Analytica, Inc., a provider of economic and
political analysis of world events. From 1993 to 1996, he was the President of
Bristol Media, a broker and provider of financing to media companies in the
broadcast and cable television fields, and from 1971 to 1993, he was the
President of Philips Credit Corporation, a full service finance company based in
New York with over $1.1 billion invested in the fields of television and radio
broadcasting, cable television and medical equipment.
Christopher P. Hall has served as a member of the Board of Directors of the
Company and Citadel Communications since March 1997. Since 1993, Mr. Hall has
been a Partner at Piliero Goldstein Jenkins & Hall, LLP, a law firm in New York.
From 1986 to 1993, he was an attorney with the New York office of Jones, Day,
Reavis & Pogue.
Mark A. Leavitt has served as a member of the Board of Directors of the
Company since 1992 and of Citadel Communications since 1993. He has been a
Managing Director and Group Head of the Telecommunications and Media Group
within the Investment Banking Department of Prudential Securities Incorporated
since August 1996. Mr. Leavitt was employed by Oppenheimer & Co., Inc.
("Oppenheimer") from 1987 to 1996, most recently as Managing Director of the
Investment Banking Group responsible for the firm's activities in media and
communications. Mr. Leavitt serves on the Board of Directors of T/SF
Communications Corp., a publishing company.
Harlan A. Levy has served as a member of the Board of Directors of the
Company and Citadel Communications since March 1997. He has had a private law
practice in New York since 1995. From 1987 to 1995, he was an Assistant District
Attorney for New York County.
Scott E. Smith has served as a member of the Board of Directors of the
Company since 1992 and of Citadel Communications since 1993. He is an Executive
Vice President of Baker, Fentress & Company ("Baker Fentress"). Since 1989, Mr.
Smith has managed the private placement portfolio of Baker Fentress.
John E. von Schlegell has served as a member of the Board of Directors of
the Company and Citadel Communications since January 1997. He co-founded and,
since 1991, has managed, Endeavour Capital Fund Limited Partnership ("Endeavour
Capital"), a firm that invests equity capital in privately held businesses
throughout the northwest. Since January 1994, Mr. von Schlegell has been the
President and a shareholder of DVS Management, Inc. ("DVS"), the general partner
of Endeavour Capital. From January 1991 until January 1994, Mr. von Schlegell
was a general partner of DVS Associates, the then general partner of Endeavour
Capital.
Ted L. Snider, Sr. is anticipated to become a director of the Company
following the Company's acquisition of Snider Corporation. Mr. Snider has been
Chairman of Snider Corporation since its incorporation in 1971. Snider
Corporation owns two FM and two AM radio stations, the right to construct an
additional FM radio station and the Arkansas Radio Network.
Members of the Board of Directors are not currently compensated for their
services as Board members. Each nonemployee director is reimbursed for travel
and related expenses for attendance at Board and Committee meetings.
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BOARD COMPOSITION AND GOVERNANCE MATTERS
Pursuant to the Third Amended and Restated Voting Agreement dated as of
March 17, 1997, as amended (the "Voting Agreement"), by and among Citadel
Communications, Christopher P. Hall, as Trustee under the Voting Trust Agreement
dated March 17, 1997 (the "Voting Trust Agreement"), Baker Fentress, FINOVA
Capital Corporation ("FINOVA Capital"), Oppenheimer, Endeavour Capital, Edward
T. Hardy, Lawrence R. Wilson and certain other parties, certain parties to the
Voting Agreement have the right to designate the directors of Citadel
Communications and the Company as follows: Baker Fentress has the right to
designate one director, and has initially designated Scott E. Smith; Lawrence R.
Wilson has the right to designate three directors, and has initially designated
himself, Michael J. Ahearn and Mark A. Leavitt; Endeavour Capital has the right
to designate one director, and has initially designated John von Schlegell; the
Voting Trustee has the right to designate three directors, subject to certain
restrictions, and has initially designated himself, J. Walter Corcoran and
Harlan A. Levy. The Voting Agreement also provides that any committees of the
Board of Directors of either Citadel Communications or the Company will be
created only upon the approval of at least three-quarters of the members of the
Board of Directors of Citadel Communications (the "Citadel Board"). Pursuant to
the Voting Trust Agreement, the Trustee votes the shares of ABRY II, and
ABRY/CIP in accordance with the relevant provisions of the Voting Agreement. See
"Security Ownership of Certain Beneficial Owners." In connection with the Little
Rock Acquisitions, the shareholders who receive shares of preferred stock of
Citadel Communications (collectively, the "Little Rock Shareholders") will
become parties to the Voting Agreement and the Voting Agreement will be amended
to give the Little Rock Shareholders the right to designate one additional
director of Citadel Communications and the Company. It is anticipated that Ted
L. Snider, Sr. will be such designee. See "The Pending Transactions" and
" -- Executive Officers and Directors."
The rights and obligations of a shareholder or group of shareholders under
the Voting Agreement terminate in relevant part either upon consummation of a
sale of Citadel Communications' common stock, par value $0.001 per share (the
"Common Stock"), in an underwritten public offering which results in net cash
proceeds to Citadel Communications of at least $25 million, or automatically
upon the fifteenth anniversary date of the Voting Agreement, unless extended.
The Voting Trust Agreement continues in effect until terminated upon written
agreement of Citadel Communications and the holders of voting trust certificates
which represent a majority of the shares held in the voting trust.
Pursuant to the Voting Agreement, the prior vote or written consent of not
less than three-quarters of the members of the Citadel Board is required for
certain actions by Citadel Communications or the Company, subject to various
exceptions including the Tele-Media Acquisition, as follows: transfers or other
dispositions of assets; acquisitions, mergers, investments and certain LMA or
similar transactions; the issuance or repurchase of equity securities; the
creation or incurrence of indebtedness or amendment of applicable debt
documents; transactions with affiliates; public offerings of equity securities;
amendments to certificates of incorporation or bylaws; and certain actions in
connection with bankruptcy.
Pursuant to a Securities Purchase and Exchange Agreement, dated June 28,
1996, as amended by the First Amendment thereto dated December 31, 1996, and by
the Second Amendment thereto dated March 17, 1997 (the "Securities Purchase and
Exchange Agreement") among Citadel Communications, the Company, ABRY II,
ABRY/CIP, Baker Fentress, Oppenheimer, Endeavour Capital, Edward T. Hardy, Bank
of America Illinois and certain other parties, the prior vote or written consent
of the holders of a majority of the Series D Preferred Stock is required for the
taking by Citadel Communications or the Company of the actions described in the
preceding paragraph (other than in respect of transactions with affiliates or
certain actions in connection with bankruptcy), also subject to various
exceptions. See "Security Ownership of Certain Beneficial Owners."
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EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
paid to the Company's Chief Executive Officer and each of the other two persons
who were executive officers of the Company during 1996 (the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
----------------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ----------------------------- ---- -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence R. Wilson........... 1996 $325,000 $81,250(1) $3,404(2) 150,000 $411,423(3)
Chief Executive Officer and
President
Stuart R. Stanek............. 1996 $165,000 $35,000(1) $2,627(2) 24,000 $ 2,553(4)
Vice President and
President of East Region
Donna L. Heffner............. 1996 $120,000 $20,000(1) $1,364(2) 22,000 $ 2,505(5)
Vice President and Chief
Financial Officer
</TABLE>
- ---------------
(1) Bonuses were earned in 1996, but paid in 1997. Does not reflect bonuses
earned in 1995, but paid in 1996.
(2) Represents amount for personal use of Company-provided vehicle and for goods
and services received through the Company's trade agreements.
(3) Represents the Company's contribution of $2,708 to the Company's 401(k)
Plan, which contribution vests over five years, the Company's payment of $78
of premiums for term life insurance, and the forgiveness of $408,637 of
indebtedness. See "Certain Transactions."
(4) Represents the Company's contribution of $2,475 to the Company's 401(k)
Plan, which contribution vests over five years, and the Company's payment of
$78 of premiums for term life insurance.
(5) Represents the Company's contribution of $2,427 to the Company's 401(k)
Plan, which contribution vests over five years, and the Company's payment of
$78 of premiums for term life insurance.
Stock Options. The following table summarizes individual grants of options
to purchase shares of Class A Common Stock, par value $0.001 per share, of
Citadel Communications (the "Class A Common Stock") to the Named Executives
during the year ended December 31, 1996:
OPTIONS GRANTED IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS EXERCISE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(1)
OPTIONS EMPLOYEES PRICE EXPIRATION ------------------------
NAME GRANTED IN 1996 ($/SH) DATE 5%($) 10%($)
- -------------------------------- --------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Lawrence R. Wilson(2)........... 25,628 8.3% $17.17 6/28/01 $ 70,548 $ 204,257
124,372 40.1 17.17 6/28/06 1,026,945 2,900,146
Stuart R. Stanek(3)............. 2,000 0.6 12.00 1/05/06 26,854 38,250
22,000 7.1 17.17 6/28/06 181,655 513,003
Donna L. Heffner(3)............. 22,000 7.1 17.17 6/28/06 181,655 513,003
</TABLE>
- ---------------
(1) The potential realizable value is based on the term of the option at the
time of grant. An assumed stock price appreciation of 5% and 10% is used
pursuant to rules promulgated by the Commission. The potential realizable
value is calculated by assuming (i) that the stock price on the date of
grant was equal
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<PAGE> 99
to $12.00 for the option to purchase 2,000 shares granted to Mr. Stanek on
January 5, 1996 and $15.61 for the remaining options which were granted on
June 28, 1996, which represent Citadel Communications' estimate of fair
market value on such dates, and (ii) that such price appreciates at the
indicated rate, compounded annually, for the entire term of the option and
that the option is exercised and sold on the last day of its term at this
appreciated stock price. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise of the option or the sale of the underlying shares. The
potential realizable value is not intended to forecast the future
appreciation of the Class A Common Stock.
(2) Pursuant to his employment agreement with the Company, Mr. Wilson was
granted options under Citadel Communications' 1996 Equity Incentive Plan to
purchase 25,628 and 124,372 shares of Citadel Communications' Class A Common
Stock at an exercise price of $17.17 (110% of the fair market value on the
date of grant) per share. The option to purchase 25,628 shares vests 25% on
each of the first through fourth anniversaries of the date of the grant, and
the option to purchase 124,372 shares vests 20% on each of the first through
fifth anniversaries of the date of grant. Vesting accelerates in the event
of a change in control of Citadel Communications (as provided for in the
relevant option agreements), but only to the extent that such acceleration
does not result in Citadel Communications incurring compensation expense
under section 280G of the Internal Revenue Code of 1986, as amended.
(3) Options vest 20% on each of the first through fifth anniversaries of the
date of grant. Vesting accelerates in the event of a change in control of
Citadel Communications (as provided for in the relevant option agreements).
The following table shows the number and value of unexercised stock options
to purchase shares of Class A Common Stock held by the Named Executives as of
December 31, 1996. No options were exercised by the Named Executives in 1996.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS(1)
------------------------- -------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- -------------------------
<S> <C> <C>
Lawrence R. Wilson........... 62,942/150,000 $ 729,086/$0
Stuart R. Stanek............. 18,671/ 52,007 $207,724/$284,486
Donna L. Heffner............. 18,807/ 50,211 $209,451/$279,857
</TABLE>
- ---------------
(1) Assumes that the fair market value of each share of Class A Common Stock
into which the options are exercisable is $15.61 which represents Citadel
Communications' estimate of fair market value on December 31, 1996.
In October 1993, Mr. Wilson was granted performance options to acquire up
to an aggregate of 85,936 shares of Class A Common Stock at an exercise price
per share of $2.91, which represented Citadel Communications' estimate of the
fair market value of the shares on the date of grant. The options can be earned
(17,187 shares per year) over a five-year period following the date of grant and
expire on the earlier of ten years from the date granted or termination of
employment. Vesting is dependent upon Citadel Communications achieving certain
annual operating results. At December 31, 1996, the option was exercisable with
respect to 34,374 shares, and, on January 1, 1997, the option vested with
respect to an additional 17,187 shares. In December 1994, Mr. Wilson was granted
an immediately exercisable option to acquire an aggregate of 28,568 shares of
Class A Common Stock at an exercise price of $5.37 per share.
EMPLOYMENT AGREEMENT
In June 1996, the Company entered into an employment agreement with
Lawrence R. Wilson which has an initial term ending in June 2001. Mr. Wilson's
current annual base salary under the agreement is $341,250 which is to be
increased by 5% in January of each year during the term of the agreement. The
agreement also
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<PAGE> 100
provides for an annual bonus calculated as a percentage of Mr. Wilson's base
salary in effect at the end of the year and based on certain annual performance
criteria of the Company.
Mr. Wilson's employment with the Company will terminate upon Mr. Wilson's
becoming permanently disabled or upon (i) a liquidation or dissolution of
Citadel Communications, (ii) a sale, transfer or other disposition of all of the
assets of the Company on a consolidated basis or (iii) any transaction or series
of transactions whereby any person or entity other than ABRY II or its
affiliates or affiliates of the Company, becomes the direct or indirect
beneficial owner of securities of Citadel Communications or the Company
representing 50% or more of the combined voting power of Citadel Communications'
or the Company's then outstanding securities. In such event, Mr. Wilson or his
beneficiary will be entitled to receive Mr. Wilson's then base salary through
the end of the month in which the termination occurs. In addition, upon the
affirmative vote or written consent of not less than 66-2/3% of the members of
the Citadel Board, Mr. Wilson's employment may be terminated with or without
cause. If any such termination is without cause, Mr. Wilson will be entitled to
receive his then current base salary through the end of the then term of the
employment agreement.
1996 EQUITY INCENTIVE PLAN
Citadel Communications has adopted the 1996 Equity Incentive Plan (the
"Plan") pursuant to which all employees of the Company are eligible to receive
awards in the form of non-qualified options and incentive options to purchase
Class A Common Stock, stock appreciation rights, restricted securities and other
stock-based awards as determined by the Citadel Board. The Plan is administered
by the Citadel Board, which determines the price and type of awards granted and
the key managerial employees eligible to receive awards and the terms thereof,
including vesting, all in a manner consistent with the Plan. The Citadel Board
may delegate responsibility for administration of the Plan to a committee of the
Citadel Board. The total number of shares of Class A Common Stock reserved and
available for awards under the Plan (or which may be used to provide a basis of
measurement for an award) is 526,824 shares. Shares subject to any option which
terminates or expires unexercised will be available for subsequent grants. The
exercise price of incentive stock options granted under the Plan is to be at
least 100% of the fair market value of the Class A Common Stock on the date of
grant (110% of the fair market value of the Class A Common Stock in the case of
an incentive stock option to an individual who at the time of the grant owns
more than 10% of the combined voting power of Citadel Communications' capital
stock). The Citadel Board may provide that an optionee may pay for shares upon
exercise of an option in cash or by check or by such other medium or by any
combination of media as authorized by the Citadel Board. The grant of an option
may be accompanied by a reload option, which gives an optionee who pays the
exercise price of an option with shares of Class A Common Stock an additional
option to acquire the same number of shares that was used to pay for the
original option at an exercise price of not less than the fair market value of
Class A Common Stock as of the reload option grant date. An unexercised option
normally expires upon termination of employment, provided that the Citadel Board
may permit the holder of the option to exercise it during the 90 days following
termination. Under certain circumstances, including termination of employment
upon retirement, disability or death, the option may be exercised during an
extended period. In the event of termination of employment under certain
circumstances following certain change in control events, an option generally
may be exercised in full during the 90 days following termination. The Plan also
provides for the grant of performance units and shares of restricted stock.
401(K) PLAN
Effective in 1993, the Company adopted a 401(k) Savings Plan ("Retirement
Plan") for the purpose of providing, at the option of the employee, retirement
benefits to full-time employees of the Company and its subsidiaries who have
been employed for a period of one year or longer. Contributions to the
Retirement Plan are made by the employee and, on a voluntary basis, by the
Company. The Company currently matches 100% of that part of the employee's
deferred compensation which does not exceed 2% of such employee's salary.
A contribution to the Retirement Plan of $144,256 was made during the year
ended December 31, 1996.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Mark A. Leavitt and Scott E. Smith and former directors
William P. Sutter, Jr. and Royce Yudkoff were members of the Compensation
Committee of the Citadel Board, which determines compensation matters for the
Company. Such persons are or were also directors of the Company. Mr. Yudkoff is
President of ABRY Holdings, Inc., the general partner of ABRY Capital, L.P., the
general partner of ABRY II and ABRY/CIP.
Investment Banking Relationships. Mark A. Leavitt, a director of the
Company, is a Managing Director of Prudential Securities Incorporated, which has
provided since 1996, and may in the future provide, investment banking services
to the Company. Such services have been provided on terms customary in the
industry. Prudential Securities Incorporated was an Initial Purchaser in the
Original Offerings. In each of 1994, 1995 and 1996, Oppenheimer provided
investment banking services to the Company and Citadel Communications. During
such years, Mr. Leavitt was a Managing Director of Oppenheimer. Such services
were provided on terms customary in the industry. Oppenheimer is also a party to
the Voting Agreement, the Securities Purchase and Exchange Agreement, the
Stockholders Agreement and the Registration Rights Agreement (as defined).
Repayment of Certain Indebtedness. In October 1996, the Company repaid its
indebtedness to Baker Fentress, which consisted of $7.0 million in principal
amount and $20,534 in accrued and unpaid interest. The Company also paid Baker
Fentress a $420,000 prepayment penalty. Baker Fentress beneficially owns all of
the outstanding shares of Series A Preferred Stock (as defined) of Citadel
Communications which is convertible into shares of Class A Common Stock. See
"Security Ownership of Certain Beneficial Owners." Scott E. Smith, a director of
the Company, is an Executive Vice President of Baker Fentress.
Registration Rights Agreement. Citadel Communications is a party to a
Registration Rights Agreement, dated June 28, 1996, as amended (the
"Registration Rights Agreement"), with Lawrence R. Wilson, ABRY II, ABRY/CIP,
Baker Fentress, Bank of America Illinois (and certain of its employees and its
affiliates), Oppenheimer, Edward T. Hardy, Endeavour Capital and others, which
requires Citadel Communications, upon a one-time demand by such shareholders on
or after the earlier of (i) the consummation of an initial public offering of
Citadel Communications' Common Stock which is registered pursuant to the
Securities Act or (ii) August 1, 2000, to register their shares of Common Stock
of Citadel Communications under the Securities Act for offer and sale to the
public (including by way of an underwritten public offering), and which entitles
such parties to join in any registration of equity securities of Citadel
Communications. In connection with the Little Rock Acquisitions, the Little Rock
Shareholders will become parties to the Registration Rights Agreement.
Securities Purchase and Exchange Agreement. Pursuant to a Securities
Purchase and Exchange Agreement dated June 28, 1996, as amended (the "Securities
Purchase and Exchange Agreement"), among Citadel Communications, the Company,
ABRY II, ABRY/CIP, Baker Fentress, Oppenheimer, Endeavor Capital, Edward T.
Hardy, Bank of America Illinois and certain other parties, Citadel
Communications redeemed outstanding preferred stock held by Bank of America
Illinois and certain other parties, repaid the $2.0 million principal balance
and the $17,500 in accrued interest on Citadel Communications' Junior
Subordinated Convertible Note Due 1996 dated May 24, 1996 issued to ABRY II,
financed four radio station acquisitions, and paid certain working capital
requirements. The transactions were financed by Citadel Communications' issuance
of approximately 1,473,857 shares of its Series C Preferred Stock (as defined),
and approximately 1,346,422 shares of its Series D Preferred Stock to ABRY II,
and of approximately 182,162 shares of Series C Preferred Stock, and
approximately 166,411 shares of Series D Preferred Stock to ABRY/CIP, all for
approximately $15.61 per share for a total consideration of approximately $49.5
million, and through borrowings under a $20.0 million revolving line of credit
with ABRY II and ABRY/CIP. See "Security Ownership of Certain Beneficial
Owners." Simultaneously, four then existing series of capital stock of Citadel
Communications held by ABRY II, ABRY/CIP, Baker Fentress, Oppenheimer, Bank of
America Illinois and certain other parties were reclassified. The consummation
of these transactions was conditioned upon, among other things, the entry of
various parties into, and the effectiveness as of the time of closing of,
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<PAGE> 102
the Registration Rights Agreement, the Stockholders Agreement, the Voting
Agreement, and the Management and Consulting Services Agreement (as defined).
The Securities Purchase and Exchange Agreement established a commitment
(the "Facility A Commitment") by ABRY II and ABRY/CIP in favor of Citadel
Communications for a revolving line of credit in the aggregate principal amount
of $20.0 million and against which ABRY II and ABRY/CIP made pro rata advances
(the "Facility A Advances"). At June 30, 1997, there were four Facility A
Advances outstanding, the aggregate principal balance of which was approximately
$12.8 million. Contemporaneously with the consummation of the Original
Offerings, a portion of the proceeds was used to repay advances made to the
Company by Citadel Communications with the proceeds of the Facility A Advances.
Citadel Communications repaid the Facility A Advances concurrently with the
closing of the Original Offerings. Thereafter, the Facility A Commitment
terminated and ABRY II and ABRY/CIP have no further obligation to make Facility
A Advances.
The Securities Purchase and Exchange Agreement provides that Citadel
Communications and, to the extent applicable, its subsidiaries, including the
Company, must enter into an agreement with each of its employees who owns
Citadel Communications equity securities providing (i) that any employee
transfer of these equity securities (except for any made by Mr. Wilson) is
subject to a Citadel Communications right of first refusal to purchase these
equity securities at a price determined by a formula and (ii) that any payment
or other consideration received by such employee in connection with any
transaction resulting in a change of control of Citadel Communications or the
Company including (a) certain employment agreements or consulting agreements,
(b) noncompetition agreements, (c) licenses or (d) forbearances of any kind,
unless such payment does not exceed the price per share of Common Stock paid to
non-employee holders of Common Stock, shall be deemed additional payment to
Citadel Communications in the case of sale of the assets of Citadel
Communications, or shall be payable to all holders of equity securities of
Citadel Communications in the case of a merger or sale of part or all of the
equity securities of Citadel Communications. For additional information
concerning the Securities Purchase and Exchange Agreement, see "--Board
Composition and Governance Matters."
Voting Trust Agreement. The Voting Trust Agreement provides that the
Trustee, currently Christopher P. Hall, and each person who is at any time a
Back-Up Trustee (as defined in the Voting Trust Agreement), currently J. Walter
Corcoran and Harlan A. Levy, shall be entitled to receive compensation for
services as Trustee and availability as Back-Up Trustee, either under the Voting
Trust Agreement or under an agreement to provide services thereunder, in the
amount of $25,000 per year. The Trustee is also expressly authorized to incur
and be promptly reimbursed by ABRY II and ABRY/CIP for all reasonable charges
and other expenses which he deems necessary and proper in the performance of his
duties. Citadel Communications has agreed to pay ABRY II (for the account of
ABRY II and ABRY/CIP) the amount of up to $75,000 per year to defray the fees
and expenses associated with the Voting Trust, including any fees payable to the
Voting Trustee and the Back-Up Trustees. For additional information concerning
the Voting Trust Agreement, see "Management -- Board Composition and Governance
Matters" and "Security Ownership of Certain Beneficial Owners."
Management and Consulting Services Agreement. In June 1996, the Company
entered into a Management Services and Consulting Agreement with ABRY Partners,
Inc. (the "Management and Consulting Services Agreement") which was terminated
in March 1997. Pursuant to the agreement, ABRY Partners, Inc. provided
consultation to the Company's Board of Directors and management on business and
financial matters. The Company paid $37,500 and $62,500 to ABRY Partners, Inc.
under this agreement in 1996 and 1997, respectively, and reimbursed ABRY
Partners, Inc. for reasonable out-of-pocket costs and expenses. ABRY Partners,
Inc. is an affiliate of ABRY II and ABRY/CIP.
Stockholders Agreement. Citadel Communications is a party to a Second
Amended and Restated Stockholders Agreement, dated June 28, 1996, as amended
(the "Stockholders Agreement"), with ABRY II, ABRY/CIP, Baker Fentress,
Oppenheimer, Bank of America Illinois, FINOVA Capital, Endeavour Capital,
Lawrence R. Wilson, Claire Wilson, Edward T. Hardy and certain other
shareholders of Citadel Communications (collectively, the "Shareholder
Parties"). Pursuant to the Stockholders Agreement, the
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<PAGE> 103
Shareholder Parties have the right of first refusal to purchase any equity
securities issued by Citadel Communications or any of its subsidiaries,
including the Company, other than Class A Common Stock or options to purchase
Class A Common Stock issued to employees or directors pursuant to certain
compensation plans, equity securities issued upon conversion of another class of
equity securities or Common Stock issued in a registered public offering.
Subject to certain exceptions, the Shareholder Parties, other than Lawrence and
Claire Wilson, also have (i) the right of first refusal with respect to the
shares of capital stock of Citadel Communications proposed to be transferred by
the Wilsons, or (ii) the right to participate in any such transfer. Certain of
the Shareholder Parties, including ABRY II, ABRY/CIP, Bank of America Illinois,
Endeavour Capital and Mr. Hardy, have the right, under certain circumstances, to
require Citadel Communications to purchase all or a portion of their shares of
capital stock of Citadel Communications for a price determined in accordance
with the Stockholders Agreement. In the event that Citadel Communications is
unable to repurchase shares tendered by or on behalf of ABRY II or ABRY/CIP,
such entities are entitled, among other things, to solicit offers and make
presentations and proposals to prospective buyers of Citadel Communications and
enter into negotiations and/or agreements regarding the potential sale of
Citadel Communications. Citadel Communications also has the right, at its
option, at any time commencing on August 1, 2000, to repurchase outstanding
shares of Preferred Stock (as defined) and the warrants held by Bank of America
Illinois to purchase shares of Class B Common Stock (as defined), and, under
certain circumstances, shares of Class A Common Stock, held by certain
Shareholder Parties, for a price determined in accordance with the Stockholders
Agreement. The foregoing provisions of the Stockholders Agreement terminate upon
the consummation of a sale of Citadel Communications' Common Stock in an
underwritten public offering which results in receipt by Citadel Communications
of net cash proceeds of at least $25.0 million.
Donna L. Heffner, Stuart R. Stanek and D. Robert Proffitt, executive
officers of the Company, and Michael J. Ahearn, a director of the Company, have
joined as parties with respect to certain provisions of the Stockholders
Agreement. In connection with the Little Rock Acquisitions, the Little Rock
Shareholders will become Shareholder Parties under the Stockholders Agreement.
Stock Repurchase. In June 1996, Citadel Communications repurchased shares
of capital stock of Citadel Communications then held by Mesirow Capital Partners
VI ("Mesirow VI") for an aggregate amount of approximately $10.7 million.
Mesirow VI had acquired such shares in 1993. William P. Sutter, Jr., a former
director of the Company, was an officer of the general partner of Mesirow VI.
Mesirow VI had been a party to the Registration Rights Agreement, the Voting
Agreement and the Stockholders Agreement.
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CERTAIN TRANSACTIONS
CERTAIN LOAN TRANSACTIONS
Lawrence R. Wilson, an executive officer and director of the Company, was
indebted to the Company in the amount of $394,297 (including accrued interest of
$46,440) as of December 31, 1995 (the "Principal Shareholder Loan").
Approximately $70,000 of the principal amount of the Principal Shareholder Loan
was advanced by Predecessor to Mr. Wilson in June 1992 for personal purposes,
approximately $27,860 of the Principal Shareholder Loan was advanced by
Predecessor to Mr. Wilson in April 1993 to finance Mr. Wilson's purchase of
capital stock of the Company from a former shareholder and approximately
$250,000 was advanced by the Company to Mr. Wilson in 1994 for personal
purposes. The Principal Shareholder Loan, which bore interest at the rate of
8.5% per annum, was forgiven in June 1996, at which time an aggregate of
$408,637 principal and accrued interest was outstanding. Mr. Wilson's
indebtedness under the Principal Shareholder Loan was secured by certain shares
of capital stock of Citadel Communications owned by Mr. Wilson.
In 1995, Mr. Wilson made a short-term unsecured loan of $365,000 to the
Company at an annual interest rate of 10%. The Company repaid such loan in full
in 1996.
SALE AND LEASEBACK OF AIRPLANE
In December 1995, the Company sold to Wilson Aviation, L.L.C., a company
owned by Mr. Wilson and his spouse, an airplane formerly owned by the Company,
for a cash purchase price of approximately $1.3 million. Contemporaneously with
the sale of the airplane, the Company entered into an agreement to lease the
airplane from Wilson Aviation, L.L.C. from December 29, 1995 to December 31,
2001. Under the terms of the lease, the Company is required to pay monthly rent
in the amount of $17,250 and, in addition, to bear all of the costs of the
maintenance, repair and operation of the airplane during the term of the lease.
The sale and leaseback were not independently established in an arm's length
transaction; however, the transaction was reviewed and approved by the Company's
senior lender and the Company believes, based upon such review, that the terms
of the transaction are reasonable.
REAL ESTATE PURCHASE IN CONNECTION WITH ACQUISITION
In order to facilitate the Company's acquisition of KKLI-FM from Tippie
Communications, Inc. ("Tippie") in 1996, Mr. Wilson purchased from a shareholder
of Tippie certain associated real estate located in Colorado Springs, Colorado,
which the Company did not desire to acquire. The purchase price for the real
estate was $350,000. The purchase price and terms of the transaction were
negotiated between Mr. Wilson and the seller of the real estate, and neither the
Company nor Mr. Wilson obtained an independent appraisal of such real estate.
The Company believes that its acquisition of KKLI-FM, in the context of the
acquisition of the real estate by Mr. Wilson, was fair to the Company.
DESCHUTES TRANSACTIONS
In connection with the acquisition of Deschutes, Edward T. Hardy, an
officer, director and shareholder of Deschutes prior to its acquisition by
Citadel Communications and currently an executive officer of the Company, and
Endeavour Capital, a shareholder of Deschutes prior to its acquisition by
Citadel Communications and currently a shareholder of Citadel Communications,
each received merger consideration consisting of shares of capital stock of
Citadel Communications valued at approximately $206,500 and approximately $7.2
million, respectively. John E. von Schlegell, a director of the Company, is
President and a shareholder of the general partner of Endeavour Capital. Mr.
Hardy also received immediately exercisable options to purchase 22,918 shares of
Class A Common Stock at an exercise price of $4.91 per share and 8,045 shares of
Class A Common Stock at an exercise price of $17.17 per share in exchange for
options to acquire shares of Deschutes capital stock. Following the Deschutes
merger, he was granted options to purchase an aggregate of 37,000 shares of
Class A Common Stock at an exercise price of $17.17 per share, which options
vest 20% per year beginning with the first anniversary of the date of the grant.
In contemplation of the
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<PAGE> 105
proposed acquisition of Deschutes, during 1996, the Company made advances to
Deschutes to enable Deschutes to acquire various radio stations and pay-off
existing debt. At December 31, 1996, an aggregate of approximately $18.3 million
was due under these advances, which was credited against the cash portion of the
purchase price for Deschutes.
In connection with the acquisition of Deschutes, Citadel Communications
entered into an Agreement Not to Compete with DVS, the general partner of
Endeavour Capital, pursuant to which Citadel Communications is obligated to pay
DVS an aggregate of $200,000 in 1997 and 1998.
In February 1995, the Company sold the assets of six radio stations located
in Montana to Deschutes for the aggregate purchase price of $5.4 million. At the
time of the transaction, Mr. Hardy was a director, executive officer and
shareholder of Deschutes and Endeavour Capital was a shareholder of Deschutes.
LITTLE ROCK ACQUISITIONS
Ted L. Snider, Sr., who is expected to become a director of the Company,
and his spouse are the shareholders of Snider Corporation and, in connection
with the Company's acquisition of Snider Corporation and certain other assets
from Mr. Snider and his spouse, Mr. Snider and his spouse will receive
approximately $7.5 million in cash and approximately $4.5 million in shares of a
newly created series of preferred stock of Citadel Communications. Mr. Snider's
son and nephew are principal shareholders of Snider Broadcasting and of CDB and,
in connection with the Company's acquisition of Snider Broadcasting and certain
assets from CDB, they will receive approximately $5.5 million in shares of a
newly created series of preferred stock of Citadel Communications. In addition,
the Company may repay certain indebtedness of Snider Broadcasting and CDB will
receive up to $7.5 million.
Effective June 2, 1997, the Company began operating the radio stations
owned by Snider Corporation, Snider Broadcasting and CDB under LMAs under which
an aggregate monthly fee of approximately $186,000 is paid by the Company to
such entities. See "The Pending Transactions."
CONSULTING ARRANGEMENT
During the fiscal year ended December 31, 1996, Michael J. Ahearn, a
director of the Company, provided financial consulting services to the Company
for which he was paid $83,520. On June 28, 1996, Mr. Ahearn was also granted an
option to purchase 4,000 shares of Class A Common Stock at an exercise price of
$17.17 per share. Such option will vest with respect to 800 shares on each of
the first through fifth anniversaries of the date of the grant.
LEGAL SERVICES
During each of the fiscal years ended December 31, 1994, 1995 and 1996, the
Company retained the law firm of Gallagher & Kennedy, P.A. to represent the
Company on various matters. Michael J. Ahearn was a shareholder of such firm in
such years.
PREPAYMENT AND REDEMPTION
On June 28, 1996, pursuant to the Securities Purchase and Exchange
Agreement, the Company prepaid certain Senior Subordinated Notes in the
principal amount of $4.0 million, and funded Citadel Communications' redemption
of a portion of the stock purchase warrants, issued under a Senior Subordinated
Note and Warrant Purchase Agreement dated as of October 1, 1993. These Senior
Subordinated Notes and warrants were held, in part, by Bank of America Illinois.
Bank of America Illinois now holds, and as of June 28, 1996 held, warrants to
purchase 138,101 shares of Class B Common Stock (nonvoting). Class B Common
Stock is convertible into Class A Common Stock (voting) upon the occurrence of
certain events, and such a conversion would result in Bank of America Illinois
owning in excess of 5% of the outstanding shares of Class A Common Stock on an
undiluted basis. See "Security Ownership of Certain Beneficial Owners."
See also "Management -- Compensation Committee Interlocks and Insider
Participation."
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Citadel Communications owns all of the currently issued and outstanding
common stock of the Company and has pledged such common stock to secure its
guaranty of indebtedness under the Credit Facility. See "Description of
Indebtedness -- Existing Loan Agreement" and "Description of Other Capital
Stock."
Citadel Communications is authorized to issue up to 53,831,234 shares of
capital stock, par value $0.001 per share, consisting of 15,910,471 shares of
Class A Common Stock, 156,933 shares of Class B Common Stock, 12,000,000 shares
of Class C Common Stock (the "Class C Common Stock" and collectively with the
Class A and Class B Common Stock, the "Common Stock") and 25,763,830 shares of
preferred stock (the "Preferred Stock"), of which seven classes have been
designated. There are currently issued and outstanding shares of
Common Stock and the following shares of Preferred Stock: 746,412 shares of
Series A Convertible Redeemable Preferred, having a liquidation value of
approximately $2.49 per share (the "Series A Preferred Stock"); 17,201 shares of
Series B Convertible Redeemable Preferred Stock, having a liquidation value of
approximately $2.91 per share (the "Series B Preferred Stock"); 2,130,587 shares
of Series C Convertible Redeemable Preferred Stock, having a liquidation value
of approximately $15.61 per share (the "Series C Preferred Stock"); 1,038,267
shares of Series D Convertible Redeemable Preferred Stock, having a liquidation
value of approximately $15.61 per share (the "Series D Preferred Stock");
482,729 shares of Series E Convertible Redeemable Preferred Stock, having a
liquidation value of approximately $15.61 per share (the "Series E Preferred
Stock"); and 153,264 shares of Series F Convertible Redeemable Preferred Stock
having a liquidation value of approximately $27.73 per share (the "Series F
Preferred Stock"). The Company has reserved 360,636 shares of Series G
Convertible Redeemable Preferred Stock having a liquidation value of $27.73 per
share (the "Series G Preferred Stock") for issuance in connection with the
Little Rock Acquisitions. See "The Pending Transactions." The Class A Common
Stock, the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock and
the Series G Preferred Stock are presently the only voting securities of Citadel
Communications. The Securities Purchase and Exchange Agreement requires the
majority vote or consent of the holders of the Series D Preferred Stock under
certain circumstances. See "Management -- Board Composition and Governance
Matters."
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<PAGE> 107
The following table sets forth certain information as to the actual
ownership of Citadel Communications' Series A, B, C, D, E, F and G Preferred
Stock, as to the actual ownership of its Class C Common Stock and as to the
actual and beneficial ownership of its Class A Common Stock, as of September 30,
1997, after giving effect to the issuance of the Series G Preferred Stock, by
(i) each person or group who is known to Citadel Communications to own
beneficially more than 5% of the outstanding shares of the Class A Common Stock,
(ii) each director of the Company, (iii) each Named Executive and (iv) all
directors and executive officers of the Company as a group. Except as indicated
below, the persons named have sole voting and investment power with respect to
all shares shown as being beneficially owned by them. The numbers of shares
shown are rounded to the nearest whole share, and percentages are rounded to the
nearest tenth of a percent.
<TABLE>
<CAPTION>
COMMON STOCK CLASS A COMMON STOCK
PREFERRED STOCK ACTUAL OWNERSHIP BENEFICIAL OWNERSHIP
ACTUAL OWNERSHIP ----------------------------- --------------------------------------
------------------------------------ CLASS PERCENT OF
SERIES OF NO. OF PERCENT OF OF NO. OF PERCENT OF NO. OF PERCENT OF CLASS FULLY
NAME PREFERRED SHARES CLASS COMMON SHARES CLASS SHARES(A) CLASS(A) DILUTED(B)
- ------------------- --------- --------- ---------- ------ ------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence R.
Wilson(c)(d)(e)... -- -- -- A 756,225 77.4% 867,635 79.7% 13.5%
1015 Eastman Drive
Bigfork, MT 59911
Edward T.
Hardy(d)......... E 12,029 2.5% A 364 * 43,356 4.3% *
Stuart R.
Stanek(e)(f)..... -- -- -- A 21,358 2.2% 48,189 4.8% *
D. Robert
Proffitt(e)(g)... -- -- -- A 23,441 2.4% 43,337 4.4% *
Donna L.
Heffner(e)(h).... -- -- -- A 12,184 1.3% 38,819 3.9% *
Michael J.
Ahearn(e)(i)..... -- -- -- A -- -- 4,800 * *
J. Walter
Corcoran......... -- -- -- -- -- -- -- -- --
Christopher P.
Hall(j).......... C 2,130,587 100% -- -- -- 2,718,270 73.6% 42.4%
D 1,038,306 100%
Mark A.
Leavitt(k)....... B 1,505 8.7% -- -- -- 1,505 * *
Harlan A. Levy..... -- -- -- -- -- -- -- -- --
Scott E.
Smith(l)......... A 746,412 100% -- -- -- 746,412 43.3% 11.6%
John E. von
Schlegell(m)..... E 482,729 100% -- -- -- 482,729 33.1% 7.5%
Ted L. Snider,
Sr.(d)(e)(n)..... G 121,715 33.8% -- -- -- 121,715 11.1% 1.9%
FINOVA Capital
Corporation(d)(e)... -- -- -- C 74,488 100% 74,488 7.1% 1.2%
Dial Tower
Dial Corporate
Center
Phoenix, AZ 85077
Baker, Fentress &
Company(d)(e).... A 746,412 100% -- -- -- 746,412 43.3% 11.6%
200 West Madison
Suite 3510
Chicago, IL 60602
Oppenheimer & Co.,
Inc.(d)(e)(o)...... B 17,201 100% -- -- -- 17,201 1.7% *
Oppenheimer Tower
World Financial
Center
New York, NY 10281
ABRY Broadcast
Partners II,
L.P.(d)(e)......... C 1,896,222 89% -- -- -- 2,419,260(p) 71.2% 37.7%
18 Newbury Street D 924,057 89%
Boston, MA 02116
ABRY/Citadel
Investment
Partners,
L.P.(d)(e)......... C 234,365 11% -- -- -- 299,010 (p) 23.4% 4.7%
18 Newbury Street D 114,209 11%
Boston, MA 02116
The Endeavour
Capital Fund
Limited
Partnership(d)(e)(q)... E 482,729 100% -- -- -- 482,729 33.1% 7.5%
4380 SW Macadam
Suite 460
Portland, OR 97201
Philip J.
Urso(d)(e)(r).... F 153,264 100% -- -- -- 153,264 13.6% 2.4%
Ted L. Snider,
Jr.(d)(e)(s)..... G 109,093 30.3% -- -- -- 109,093 10.0% 1.7%
Calvin G.
Arnold(d)(e)(s)... G 89,257 24.7% -- -- -- 89,257 8.4% 1.4%
Bank of America,
Illinois(e)...... -- -- -- -- -- -- 156,933 (t) 13.8% 2.5%
All directors
and.............. A 746,212 100% A 813,572 83.3% 5,116,767 97.2% 79.8%
executive officers
as a B 1,505 8.7%
group, including C 2,130,587 100%
persons named above D 1,038,306 100%
(13 persons)(u) E 482,729 100%
G 121,715 33.8%
</TABLE>
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- ---------------
* Less than 1%
(a) The number of shares and percentages are calculated in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on a shareholder by shareholder basis, assuming that each
shareholder converted all securities owned by such shareholder that are
convertible into Class A Common Stock, and that no other shareholder so
converts. Accordingly, the number of shares and percentage figures assume
the conversion of all Class B Common Stock and of all Series A, B and E
Preferred Stock owned by such shareholder. This conversion is at the option
of the holder within 60 days; provided, however, that the right of a holder
to convert Class B Common Stock is subject to the occurrence of a
Conversion Event (as defined). The number of shares and percentage figures
also assume conversion of all Class C Common Stock and of all Series C and
Series D Preferred Stock owned by such shareholder, to the full extent of
such shareholder's right of conversion consistent with the limitations set
forth in the Securities Purchase and Exchange Agreement. This conversion is
at the option of the holder within 60 days, except for limitations on the
exercise of conversion rights by certain shareholders owing to the terms of
the Securities Purchase and Exchange Agreement. The effect of those
limitations on the conversion rights of certain shareholders is discussed
in footnotes (b) and (o). The number of shares and percentage figures also
include shares covered by options that are currently exercisable or that
are exercisable within 60 days of September 30, 1997. The numbers and
percentages of shares owned assume that such outstanding options have been
exercised by such respective shareholders as follows (rounded to the
nearest whole share): Michael J. Ahearn -- 800 shares; Edward T.
Hardy -- 30,963 shares; Donna L. Heffner -- 26,635 shares; D. Robert
Proffitt -- 19,897 shares; Stuart R. Stanek -- 26,831 shares; Lawrence R.
Wilson -- 111,410 shares; and all directors and executive officers as a
group -- 216,536 shares.
(b) Fully diluted percentage figures assume the conversion of all outstanding
shares of Class B Common Stock and of Series A, B and E Preferred Stock by
all holders. This conversion is at the option of the holder within 60 days.
Fully diluted percentage figures also assume conversion of all outstanding
shares of Class C Common Stock and of Series C and D Preferred Stock by all
holders to the extent such conversion is consistent with the Securities
Purchase and Exchange Agreement. See footnote (p). Fully diluted percentage
figures also assume the exercise of all options that are currently
exercisable or are exercisable within 60 days of September 30, 1997.
(c) Mr. Wilson's shares are jointly owned by Mr. Wilson and his spouse.
(d) Represents shares subject to the Voting Agreement. See "Management -- Board
Composition and Governance Matters." An aggregate of 759,589 actual shares
of Class A Common Stock, and 4,364,042 shares of Class A Common Stock as
calculated in accordance with Rule 13d-3 under the Exchange Act, as more
fully described in footnote (a) above, are subject to the Voting Agreement.
(e) Represents shares subject to the Stockholders Agreement. See
"Management -- Compensation Committee Interlocks and Insider
Participation -- Stockholders Agreement." Of the aggregate of 5,185,172
shares which are subject to the Stockholders Agreement, 20,236 shares are
only subject to certain provisions thereof.
(f) Mr. Stanek's shares are jointly owned by Mr. Stanek and his spouse.
(g) Mr. Proffitt's shares are jointly owned by Mr. Proffitt and his spouse.
(h) Ms. Heffner's shares are jointly owned by Ms. Heffner and her spouse.
(i) Includes 2,200 shares and 1,800 shares of Class A Common Stock held of
record by Security Investment Management & Trust as custodian for Michael
J. Ahearn and Mr. Ahearn's spouse, respectively. Mr. Ahearn disclaims
beneficial ownership with respect to shares held by his spouse.
(j) Represents shares of Series C and Series D Preferred Stock held by Mr.
Hall as Initial Trustee under the Voting Trust Agreement. The Back-Up
Trustees under the Voting Trust are J. Walter Corcoran and Harlan A. Levy.
(k) Represents shares held of record by Oppenheimer for the benefit of Mr.
Leavitt.
(l) Represents shares held by Baker Fentress, as described in the table and in
footnotes (d) and (e). Mr. Smith is an Executive Vice President of Baker
Fentress, and since 1989, has managed its private placement portfolio.
(m) Represents shares held by Endeavour Capital, as described in the table and
in footnotes (d), (e) and (q). Mr. von Schlegell is the Managing Partner of
Endeavour Capital.
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<PAGE> 109
(n) It is anticipated that Mr. Snider will become a director of the Company
following the Company's acquisition of Snider Corporation. The 121,715
shares of Series G Preferred Stock are to be issued in connection with the
Little Rock Acquisitions. See "The Pending Transactions." Does not include
40,571 shares of Series G Preferred Stock to be issued to Mr. Snider's
spouse.
(o) Includes 1,505 shares held for the benefit of Mark A. Leavitt, as described
in the table and footnote (k).
(p) Represents shares issuable upon conversion of shares of Series C and Series
D Preferred Stock, assuming a current conversion ratio of 1-to-1. Such
conversion is limited by the terms of the Securities Purchase and Exchange
Agreement. The Securities Purchase and Exchange Agreement provides, subject
to certain exceptions, that ABRY II and ABRY/CIP may hold in the aggregate
no more than 49% of the voting securities of Citadel Communications on an
undiluted basis. These shareholders currently hold an aggregate of 43% of
the voting securities of Citadel Communications on an actual undiluted
basis, and 89% and 11%, respectively, of the Series C and the Series D
Preferred Stock. The Series C and Series D Preferred Stock of these
shareholders is held pursuant to the Voting Trust Agreement. By its terms,
the Voting Trust Agreement shall continue in effect until terminated upon
the written agreement of Citadel Communications and the holders of voting
trust certificates which represent a majority of the shares held in the
voting trust as determined in accordance with the Voting Trust Agreement.
During the term of the Voting Trust Agreement, the Trustee has the right to
vote the shares of stock subject to that Agreement (the "Voting Trust
Shares"), and to take part in any shareholders' meetings, including the
right to vote the Voting Trust Shares for the election of directors of
Citadel Communications; provided, however, that the Trustee shall vote the
Voting Trust Shares in the manner required by the Voting Agreement with
respect to the matters covered by that Voting Agreement. The Trustee may
assign his rights and delegate his obligations to a successor Trustee, who
shall be a Back-Up Trustee or other person appointed in the manner provided
under the terms of the Voting Trust Agreement.
(q) Includes 64,117 shares of Series E Preferred Stock held by various persons
who, with Citadel Communications and Endeavour Capital, are parties to a
Security Holder Agreement dated December 31, 1996. Pursuant to this
Agreement, (i) Endeavour Capital is the sole and exclusive agent of these
persons to act in any and all matters relating to the voting of such shares
in any manner not inconsistent with the provisions of the Stockholders
Agreement and the Voting Agreement, and (ii) Endeavour Capital has the sole
and exclusive power and authority to exercise all rights and remedies on
behalf of these persons under the Stockholders Agreement, the Voting
Agreement, and the Registration Rights Agreement.
(r) Includes 32,907 shares of Series F Preferred Stock held by various persons
who, with Citadel Communications and Mr. Urso, are parties to a Security
Holders Agreement dated September 29, 1997. Pursuant to this Agreement, (i)
Mr. Urso is the sole and exclusive agent of these persons to act in any and
all matters relating to the voting of such shares in any manner not
inconsistent with the provisions of the Stockholders Agreement and the
Voting Agreement, and (ii) Mr. Urso has the sole and exclusive power and
authority to exercise all rights and remedies on behalf of these persons
under the Stockholders Agreement, the Voting Agreement and the Registration
Rights Agreement.
(s) The shares of Series G Preferred Stock are to be issued in connection with
the Little Rock Acquisitions. See "The Pending Transactions."
(t) Represents 138,101 shares of Class B Common Stock issuable upon the
exercise of certain warrants issued pursuant to the Senior Subordinated
Note and Warrant Purchase Agreement dated as of October 1, 1993 among
Citadel Communications, the Company, Bank of America Illinois and certain
other parties. Also includes 18,832 shares of Class B Common Stock held by
various individuals who, with Citadel Communications, the Company and Bank
of America Illinois, are parties to a Second Amended and Restated Security
Holder Agreement dated June 28, 1996. Pursuant to this Agreement, (i) Bank
of America Illinois is the sole and exclusive agent of such individuals to
act in any and all matters relating to the voting of such shares in any
manner not inconsistent with the provisions of the Stockholders Agreement
and the Voting Agreement and (ii) Bank of America Illinois has the sole and
exclusive power and authority to exercise all rights and remedies on behalf
of these individuals under the Stockholders Agreement, the Voting
Agreement, and the Registration Rights Agreement.
(u) Includes Ted L. Snider, Sr. and the shares discussed in footnotes (d), (e)
and (i) through (q).
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DESCRIPTION OF INDEBTEDNESS
EXISTING LOAN AGREEMENT
On October 9, 1996, the Company, Deschutes f/k/a Deschutes Acquisition
Corporation (now merged into the Citadel Broadcasting pursuant to the Subsidiary
Merger), Citadel License and Deschutes License, Inc. (now merged into Citadel
License) (collectively, the "Borrowers") entered into a loan agreement (as
thereafter amended, the "Credit Facility") with FINOVA Capital Corporation, as
administrative agent (the "Agent"), and other lending institutions party thereto
(the "Lenders").
On July 3, 1997, the Borrowers, the Agent and the Lenders entered into
amendments to the Credit Facility which permitted the issuance of the Notes and
the Exchangeable Preferred Stock subject to certain limitations and restrictions
regarding, among other things, redemption of or payment prior to maturity of
principal on the Notes or the Exchange Debentures, if issued, the redemption of
or exchange of the Exchangeable Preferred Stock and the payment of cash
dividends on the Exchangeable Preferred Stock. The amendments to the Credit
Facility provide for a $150.0 million revolving loan (the "Revolving Loan")
which includes a $5.0 million letter of credit facility (the "L/C Facility"). A
portion of the proceeds of the Original Offerings was used to repay a portion of
Borrowers' indebtedness under the Credit Facility.
Revolving Loan
As of September 1, 1997, the outstanding principal amount of the revolving
loan under the Credit Facility was approximately $50.6 million, and there was no
interest accrued thereon. The Revolving Loan will be due on September 30, 2003
(the "Maturity Date") and it may be drawn upon, subject to certain conditions,
for certain acquisitions, working capital and other permitted uses. On the last
business day of each quarter commencing with the last quarter of 1997, the
Revolving Loan commitment is to be reduced by an amount increasing from $2.5
million at December 31, 1997 to approximately $8.1 million at June 30, 2003. The
Credit Facility also provides for certain additional mandatory reductions in the
Revolving Loan commitment. The Borrowers will be required to pay any amount by
which the outstanding principal balance exceeds the Revolving Loan commitment,
as adjusted. The remaining principal balance of the Revolving Loan shall be due
and payable on the Maturity Date. At the Borrowers' election (a) any portion of
the Revolving Loan which has been prepaid or repaid may be reborrowed and (b)
the maximum amount of the Revolving Loan commitment may be permanently reduced.
L/C Facility
The L/C Facility provides for, subject to certain limitations, the issuance
of letters of credit to be used by Borrowers as security for the obligations of
Borrowers under agreements entered into in connection with certain radio station
acquisitions and for such other purposes as may be approved by the Agent
("Permitted Letters of Credit"). The Borrowers will be required to pay a
quarterly fee equal to 1.25% of the amount of each Permitted Letter of Credit
from time to time outstanding. As of September 1, 1997, approximately $4.0
million of letters of credit had been issued but not drawn in connection with
certain of the Pending Acquisitions.
Prepayments
Voluntary prepayments of the amended Credit Facility are permitted without
premium or penalty. Mandatory prepayment of the Credit Facility will be
required, commencing in 1997, if the Total Leverage Ratio (as defined in the
Credit Facility) as of the end of each year is 4.5 or greater. The amount of the
mandatory prepayment shall be the lesser of (a)(i) 66-2/3% of the Excess Cash
Flow (as defined in the Credit Facility) if the Total Leverage Ratio as of the
end of such year exceeds 5.5 and (ii) 50% of the Excess Cash Flow if the Total
Leverage Ratio as of the end of each such year is 4.5 to 5.5, inclusive, or (b)
an amount by which Cash Equivalents (as defined in the Credit Facility), as of
the last day of March in which the Borrowers are required to deliver financial
statements, exceeds $5.0 million. Notwithstanding the foregoing, upon retirement
of the Credit Facility, the Company will be required to pay a fee in the maximum
amount of
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$820,806 as of September 1, 1997, which amount will decline quarterly based on
the amount of outstanding borrowings under the amended Credit Facility.
Interest Rates
The Credit Facility bears interest at a rate equal to the applicable Base
Rate (as defined in the Credit Facility) in effect from time to time plus the
Applicable Margin (as defined in the Credit Facility) or, at the written
election of the Borrowers, at a rate equal to the applicable LIBOR Rate (as
defined in the amended Credit Facility) in effect from time to time as
determined by the Agent for the respective Interest Period (as defined in the
Credit Facility), plus the Applicable Margin. The Borrowers' right to elect a
LIBOR Rate will be subject to certain limitations. The Applicable Margins for
the Credit Facility are expected to range between .50% and 1.75% for the Base
Rate and 1.50% and 2.75% for the LIBOR Rate, depending on the Total Leverage
Ratio from time to time. Except as otherwise provided with respect to voluntary
and mandatory prepayments, interest on the Credit Facility is payable quarterly
in arrears on the last business day of each quarter. At September 1, 1997, the
interest rate under the Credit Facility was 8.38%.
Other Fees
The Borrowers are required to pay to the Agent an unused commitment fee on
the last business day of each quarter, which equals the product of the Maximum
Revolving Loan Commitment (as defined in the Credit Facility) for the preceding
quarter minus the average outstanding principal balance of the Revolving Loan
during such preceding quarter, multiplied by .125%. This multiplier will be
reduced to .09375% if the Total Leverage Ratio calculated as of the last day of
the quarter preceding such quarter was less than 4.5. Borrowers are required to
pay an annual agency fee of $50,000 in October of each year.
Security and Guarantee
Subject to certain permitted liens, the Credit Facility is secured by (a) a
first priority pledge on all of the Borrowers' capital stock other than the
Exchangeable Preferred Stock, (b) a first priority security interest in all the
existing and after acquired property of the Borrowers, including, without
limitation, accounts, machinery, equipment, inventory, general intangibles,
investment property and insurance on the life of Lawrence R. Wilson and (c) all
proceeds of the foregoing. The Credit Facility is also guaranteed by Citadel
Communications pursuant to a guaranty (the "Guaranty").
Change of Control
The Credit Facility provides that a change in control or ownership will be
an Event of Default. A change in control or ownership shall occur if (a) Citadel
Communications shall cease to own all of the capital stock of the Company, (b)
the Company shall cease to own or control all of the capital stock of its
subsidiaries, (c) any person (including entities) or affiliates of such person,
except Mr. Wilson or ABRY II or their respective affiliates, own capital stock
possessing more than 35% of the voting power of all voting stock of Citadel
Communications or (d) Mr. Wilson shall die, become permanently disabled or
cease, for a period in excess of 60 days, to devote his full business time to
the operation of the Borrowers' broadcasting business, unless Mr. Wilson is
replaced by a person reasonably acceptable to certain Lenders within 90 days
after the occurrence of any such event.
Covenants
The Credit Facility contains customary restrictive covenants, which, among
other things, and with certain exceptions, limit the ability of the Borrowers to
incur additional indebtedness and liens in connection therewith, enter into
certain transactions with affiliates, pay dividends, consolidate, merge or
affect certain asset sales, issue additional stock, make certain capital or
overhead expenditures, make certain investments, loans or prepayments and change
the nature of their business. The Borrowers are also required to satisfy certain
financial covenants, which will require the Borrowers to maintain specified
financial ratios and to
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comply with certain financial tests, such as ratios for maximum leverage,
minimum interest coverage and minimum fixed charges.
Events of Default
The Credit Facility contains customary Events of Default, including without
limitation: (a) failure of Borrowers to pay all or any portion of the principal
balance of the amended Credit Facility when due or to pay any other of the
Borrowers' Obligations (as defined in the amended Credit Facility) within five
days after becoming due and payable; (b) failure of Borrowers to observe or
perform certain affirmative covenants or agreements, specifically those
pertaining to legal existence, good standing, insurance, environmental matters,
the interest hedge contract and all negative covenants; (c) failure of Borrowers
or Citadel Communications to observe or perform any other covenant or agreement
contained in the amended Credit Facility or related documents which is not
remedied within 30 days of written notice; (d) breach of warranty or
representation and/or false or misleading statements by Borrowers or the Company
made in connection with the amended Credit Facility or related documents; (e)
certain defaults, including payment defaults, by Borrowers, under other
agreements relating to indebtedness; (f) failure of Borrowers or the Company to
generally pay debts as they become due or to be adjudicated insolvent; (g)
Borrowers' or Citadel Communications' filing, or consent to the filing against
it, of a petition for relief or reorganization or arrangement or any other
petition in bankruptcy or insolvency under the law of any jurisdiction or making
of an assignment for the benefit of creditors, or the appointment of a
custodian, receiver or trustee for the Borrowers or Citadel Communications under
certain circumstances; (h) failure of the Borrowers or the Company to discharge
certain judgments and awards against any of them; (i) revocation, termination,
suspension or adverse modification of any license which is material to the
continuation of the Borrowers' broadcasting business; (j) seizure or failure to
maintain any item of collateral provided as security under the amended Credit
Facility; (k) complete interruption of on-air broadcast operations in two or
more markets at any time for more than 72 hours during any consecutive ten-day
period; (l) existence of certain conditions which result in actual or potential
liability to Borrower or any ERISA affiliate for its pension plan which creates
a material adverse effect in the opinion of certain Lenders; (m) a change of
ownership or control; (n) failure of the Guaranty to remain in full force and
effect; and (o) Citadel Communications' denial or disaffirmance of obligations
under the Guaranty or its failure to make payment when due.
Upon the occurrence of an Event of Default, with several limitations, the
Borrowers' obligations under the Credit Facility which are at that time
outstanding may become automatically accelerated.
OTHER INDEBTEDNESS
In connection with its acquisition of WBRJ-FM in Quincy, Illinois in May
1997, Tele-Media delivered to the seller a five year promissory note in the
principal amount of $160,000 which bears interest at the rate of 8.0% per year.
Payments of principal and interest on the unpaid principal balance are payable
in 60 equal monthly installments. Following the Tele-Media Acquisition, the note
became an obligation of the Company. The Company is permitted to prepay the
note, but will be responsible for the payment of any unearned interest on the
note. In connection with the acquisition of WDGE-FM and related assets in
Providence, Rhode Island in September 1997, the Company assumed approximately
$250,000 of a selling entity's existing debt.
In connection with the Tele-Media Acquisition, the Company incurred a $1.0
million contingent payment obligation which accrues interest at 5% per year. The
Company will be obligated to make such payment to the former holders of the
Tele-Media Bonds only if a particular $2.0 million payment relating to the
Company's Providence, Rhode Island operations is received from a third party.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Series A Securities were originally sold by the Company on July 3, 1997
in transactions exempt from the registration requirements of the Securities Act.
The Series A Exchangeable Preferred Stock and $100,000,000 aggregate principal
amount of the Series A Notes were sold to the Initial Purchasers pursuant to the
Purchase Agreement. The Initial Purchasers subsequently resold such Series A
Securities to qualified institutional buyers in reliance on Rule 144A under the
Securities Act. The Company issued $1,000,000 aggregate principal amount of the
Series A Notes to the holders of the Tele-Media Bonds in connection with the
closing of the Tele-Media Acquisition. The Company, Citadel License and the
Initial Purchasers entered into the Registration Rights Agreements pursuant to
which the Company and Citadel License agreed, for the benefit of the holders,
that it would, at its own cost, (i) use their best efforts to file, within 90
days after July 3, 1997, the original issue date of the Series A Securities (the
"Issue Date"), a registration statement (the "Exchange Offer Registration
Statement") with the Commission with respect to the Exchange Offer for the
Series B Securities and (ii) use their best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act within
180 days after the Issue Date. Upon the Exchange Offer Registration Statement
being declared effective, the Company will offer the Series B Securities in
exchange for surrender of the Series A Securities. The Company will keep the
Exchange Offer open for not less than 30 days (or longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to the
holders of the Series A Securities. For each of the Series A Notes surrendered
pursuant to the Exchange Offer, the holder who surrendered such Series A Note
will receive a Series B Note having a principal amount equal to that of the
surrendered Series A Note. For each share of Series A Exchangeable Preferred
Stock surrendered pursuant to the Exchange Offer, the holder who surrendered
such share will receive a share of Series B Exchangeable Preferred Stock. Based
on no-action letters issued by the staff of the Commission to third parties, the
Company believes the Series B Securities will be freely transferable by holders
thereof and any person who receives the Series B Securities after the Exchange
Offer without further registration under the Securities Act only if (i) the
Series B Securities were acquired in the ordinary course of business of such
holder or such other person, (ii) neither such holder nor such other person is
engaging in or intends to engage in a distribution of the Series B Securities
and (iii) neither such holder nor such other person has an arrangement or
understanding with any person to participate in the distribution of the Series B
Securities. However, any purchaser of Series A Securities who is an "affiliate"
of the Company or who intends to participate in the Exchange Offer for the
purpose of distribution the Series B Securities (i) will not be able to rely on
the position of the staff of the Commission, (ii) will not be able to tender its
Series A Securities in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Series A Securities, unless such
sale or transfer is made pursuant to an exemption from such requirements.
Each holder of the Series A Securities that wishes to exchange the Series A
Securities for Series B Securities in the Exchange Offer will be required to
represent in the Letters of Transmittal that (i) the Series B Securities are to
be acquired by the holder or the person receiving such Series B Securities,
whether or not such person is the holder, in the ordinary course of business,
(ii) the holder or any such other person (other than a broker-dealer referred to
in the next sentence) is not engaging, and does not intend to engage, in the
distribution of the Series B Securities, (iii) the holder or any such other
person has no arrangement or understanding with any person to participate in the
distribution of the Series B Securities, (iv) neither the holder nor any such
other person is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act and (v) the holder or any such other person
acknowledges that if such holder or other person participates in the Exchange
Offer for the purpose of distributing the Series B Securities it must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale of the Series B Securities and cannot rely on
those no-action letters. As indicated above, in connection with any resales of
Series B Securities, any Participating Broker-Dealer who acquired the Series A
Securities for its own account as a result of market-making or other trading
activities must deliver a prospectus meeting the requirements of the Securities
Act. The Commission has taken the position that Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to the Series B
Securities (other than a resale of
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an unsold allotment from the original sale of the Series A Securities) with this
Prospectus. Under the Registration Rights Agreements, the Company is required to
allow Participating Broker-Dealers to use this Prospectus in connection with the
resale of such Series B Securities. See "Plan of Distribution."
In the event that (i) applicable law or interpretations of the staff of the
Commission do not permit the Company to effect such an Exchange Offer, (ii) the
Exchange Offer is not consummated within 210 days after the Issue Date or (iii)
any holder of Series A Securities (other than an Initial Purchaser) is not
eligible to participate in the Exchange Offer, the Company and Citadel License
will, at their cost, (a) file, as promptly as practicable and, in any event,
within 90 days after such obligation arises, a shelf registration statement
covering resales of the Series A Securities (the "Shelf Registration
Statement"), (b) use their best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act on or prior to 45
days after the filing occurs and (c) use their best efforts to keep effective
the Shelf Registration Statement until the earlier of two years after its
effective date, such time as all of the applicable Series A Securities have been
sold thereunder and such time as all of the applicable Series A Securities
become eligible for resale pursuant to Rule 144 under the Securities Act without
volume restrictions. The Company will, in the event of the filing of the Shelf
Registration Statement, provide to each holder of the Series A Securities copies
of the prospectus which is a part of the Shelf Registration Statement, notify
each such holder when the Shelf Registration Statement has become effective and
take certain other actions as are required to permit unrestricted resales of the
applicable Series A Securities. A holder that sells its Series A Securities
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling security-holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreements which are
applicable to such a holder (including certain indemnification obligations). In
addition, each holder of Series A Securities will be required to deliver certain
information to be used in connection with the Shelf Registration Statement in
order to have its Series A Securities included in the Shelf Registration
Statement.
In the event that (i) the Exchange Offer Registration Statement is not
filed with the Commission on or prior to the 90th calendar day following the
Issue Date, (ii) the Exchange Offer is not consummated or a Shelf Registration
Statement is not declared effective on or prior to the 210th calendar day
following the Issue Date or (iii) either (A) the Exchange Offer Registration
Statement ceases to be effective at any time prior to the time that the Exchange
Offer is consummated or (B) if applicable, the shelf Registration Statement has
been declared effective and such Shelf Registration Statement ceases to be
effective at any time prior to the second anniversary of its effective date, the
interest rate borne by the Series A Notes and the dividend rate borne by the
Series A Exchangeable Preferred Stock will be increased by one-quarter of one
percent (0.25%) per annum following such 90-day period in the case of clause (i)
above, following such 210-day period in the case of clause (ii) above, or
immediately in the case of clause (iii) above, which rate will be increased by
an additional one-quarter of one percent (0.25%) per annum for each 30-day
period that any such additional interest continues to accrue or dividends
continue to accumulate in the case of clause (i) above or for each 90-day period
that any such additional interest continues to accrue or dividends continue to
accumulate in the case of clauses (ii) and (iii) above; provided, however, that
in no event will the interest rate borne by the Series A Notes or the dividend
rate borne by the Series A Exchangeable Preferred Stock be increased by more
than one and one-half percent (1.5%). Upon (x) the filing of the Exchange Offer
Registration Statement after the 90-day period described in clause (i) above,
(y) consummation of the Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after the 210-day period described
in clause (ii) above, or (z) the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement following an event
described in clause (iii) above, the interest rate borne by the Series A Notes
and the dividend rate borne by the Series A Exchangeable Preferred Stock from
the date of such filing, consummation or effectiveness, as the case may be, will
be reduced to the original interest rate or dividend rate if the Company is
otherwise in compliance with the above; provided, however, that, if after any
such reduction in interest rate or dividend rate, a different event specified in
clause (i), (ii) or (iii) above occurs, the interest rate or dividend rate may
again be increased and thereafter reduced pursuant to the foregoing provisions.
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If applicable, in the event that the Shelf Registration Statement ceases to
be usable for a period in excess of 30 days, whether or not consecutive, in any
given year, then the interest rate borne by the Series A Notes and the dividend
rate borne by the Series A Exchangeable Preferred Stock will be increased by
one-quarter of one percent (0.25%) per annum on the 31st day in the applicable
year such Shelf Registration Statement ceases to be usable. Such interest rate
and dividend rate will increase by an additional one-quarter of one percent
(0.25%) per annum for each additional 90 days that such Shelf Registration
Statement is not usable, subject to the same aggregate maximum increase in the
interest or dividend rate of one and one-half percent (1.5%) per annum referred
to above. Upon the Company declaring that the Shelf Registration Statement is
usable after the interest rate or dividend rate has been so increased, the
interest rate borne by the Series A Notes and the dividend rate borne by the
Series A Exchangeable Preferred Stock will be reduced to the original interest
rate or dividend rate if the Company is otherwise in compliance with the above;
provided, however, that, if after any such reduction in interest rate or
dividend rate, the Shelf Registration Statement again ceases to be usable beyond
the period permitted above, the interest rate or dividend rate may again be
increased and thereafter reduced pursuant to the foregoing provisions.
Any amounts of additional interest or dividends due, as the case may be, as
described above will be payable in cash on the same interest payments dates and
dividend payment dates, respectively, as the Notes and the Exchangeable
Preferred Stock, respectively; provided, however, that on any dividend payment
date occurring on or prior to July 1, 2002, dividends on the Exchangeable
Preferred Stock may be paid, at the Company's option, in additional shares of
Exchangeable Preferred Stock.
The summary herein of certain provisions of the Registration Rights
Agreements does not purport to be complete and is subject to, and is qualified
in its entirety by, all the provisions of the Registration Rights Agreements,
copies of which are filed as exhibits to the Exchange Offer Registration
Statement of which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of Series A
Securities who were eligible to participate in the Exchange Offer but who did
not tender their Series A Securities will not have any further registration
rights, and such Series A Securities will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for such
Series A Securities could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letters of Transmittal, the Company will accept any and all Series A
Securities validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue an equal principal amount
of Series B Notes in exchange for such principal amount of outstanding Series A
Notes accepted in the Exchange Offer and one share of Series B Exchangeable
Preferred Stock in exchange for each share of Series A Exchangeable Preferred
Stock accepted in the Exchange Offer. Holders may tender some or all of their
Series A Securities pursuant to the Exchange Offer. Series A Notes may be
tendered only in integral multiples of $1,000; provided, however, that a holder
holding any Series A Note in a denomination of other than an integral multiple
of $1,000 may tender the principal amount of such Series A Note that is not an
integral multiple of $1,000 in addition to tendering, in integral multiples of
$1,000, the remaining principal amount, if any, of such Series A Note.
The form and terms of the Series B Notes are the same as the form and terms
of the Series A Notes and the form and terms of the Series B Exchangeable
Preferred Stock are the same as the form and terms of the Series A Exchangeable
Preferred Stock except that (i) the Series B Notes and the Series B Exchangeable
Preferred Stock will bear a "Series B" designation and different CUSIP Numbers
from the Series A Securities, (ii) the Series B Notes and the Series B
Exchangeable Preferred Stock will have been registered under the Securities Act
and hence will not bear legends restricting the transfer thereof and (iii) the
holders of the Series B Notes and the Series B Exchangeable Preferred Stock will
not be entitled to certain rights of holders of Series A Notes and Series A
Exchangeable Preferred Stock under the Registration Rights Agreements, which
rights will terminate as to holders of the Series B Securities when the Exchange
Offer is consummated. The Series B Notes will evidence the same debt as the
Series A Notes and will be entitled to the benefits of the Notes Indenture.
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As of the date of this Prospectus, $101,000,000 aggregate principal amount
of Series A Notes are outstanding and 1,000,000 shares of Series A Exchangeable
Preferred Stock are outstanding. The Company has fixed the close of business on
, 1997 as the date for purposes of determining the persons to whom
this Prospectus and the Letters of Transmittal will be mailed initially.
In connection with the Exchange Offer, holders of Series A Notes do not
have any appraisal or dissenters' rights under the Notes Indenture or the
General Corporation Law of Nevada and holders of Series A Exchangeable Preferred
Stock do not have any appraisal or dissenters' rights under the Certificate of
Designation or the General Corporation Law of Nevada. The Company intends to
conduct the Exchange Offer in accordance with the applicable requirements of the
Exchange Act and the rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Series A
Securities when, as and if the Company has given oral or written notice thereof
to the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the Series B Securities from the Company.
If any tendered Series A Securities are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Series A Securities will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Series A Securities in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letters of Transmittal, transfer taxes with respect to the exchange of
Series A Securities pursuant to the Exchange Offer. The Company will pay all
charges and expenses, other than transfer taxes in certain circumstances, in
connection with the Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by written notice and will mail to the registered holders
an announcement thereof, each prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Series A Securities, to extend the Exchange Offer or to terminate
the Exchange Offer if any of the conditions set forth below under "--
Conditions" shall not have been satisfied, by giving written notice of such
delay, extension or termination to the Exchange Agent or (ii) to amend the terms
of the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by written
notice thereof to the registered holders.
INTEREST ON THE SERIES B SECURITIES
Interest on the Series B Notes will accrue from and including their
issuance date. Additionally, interest on the Series B Notes will accrue from the
last interest payment date on which interest was paid on the Series A Notes
surrendered in exchange therefor or, if no interest has been paid on the Series
A Notes, from the date of original issuance of the Series A Notes to but not
including the issuance date of the Series B Notes. Holders whose Series A Notes
are accepted for exchange will be deemed to have waived the right to receive
interest accrued on such Series A Notes. Accordingly, holders who exchange their
Series A Notes will receive the same interest payment on the next interest
payment date (expected to be January 1, 1998) that they would have received had
they not accepted the Exchange Offer. Interest on the Series B Notes is payable
semi-annually on each January 1 and July 1 commencing on January 1, 1998.
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Dividends on the Series B Exchangeable Preferred Stock will accumulate from
and including its issuance date. Additionally, dividends on the Series B
Exchangeable Preferred Stock will accumulate from the last dividend payment date
on which dividends were paid on the Series A Exchangeable Preferred Stock
surrendered in exchange therefor or, if no dividends have been paid on the
Series A Exchangeable Preferred Stock, from the date of original issuance of the
Series A Exchangeable Preferred Stock to but not including the issuance date of
the Series B Exchangeable Preferred Stock. Holders whose Series A Exchangeable
Preferred Stock is accepted for exchange will be deemed to have waived the right
to receive dividends accumulated on such Series A Exchangeable Preferred Stock.
Accordingly, holders who exchange their Series A Exchangeable Preferred Stock
will receive the same dividend payment on the next dividend payment date
(expected to be January 1, 1998) that they would have received had they not
accepted the Exchange Offer, except that if such dividend is not paid in cash,
it will be paid in shares of Series B Exchangeable Preferred Stock instead of
shares of Series A Exchangeable Preferred Stock. Dividends on the Series B
Exchangeable Preferred Stock are payable semiannually on each January 1 and July
1 commencing January 1, 1998.
PROCEDURES FOR TENDERING
Only a holder of Series A Securities may tender such Series A Securities in
the Exchange Offer. To tender in the Exchange Offer, a holder must complete,
sign and date the appropriate Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter of Transmittal
and mail or otherwise deliver such Letter of Transmittal, or such facsimile,
together with the Series A Securities and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. A
separate Letter of Transmittal is required for the tender of Series A Notes and
for the tender of Series A Exchangeable Preferred Stock. To be tendered
effectively, the Series A Securities, Letters of Transmittal and other required
documents must be completed and received by the Exchange Agent at the address
set forth below under "-- Exchange Agent" prior to 5:00 p.m., New York City
time, on the Expiration Date. Delivery of the Series A Securities may be made by
book-entry transfer in accordance with the procedures described below.
Confirmation of such book-entry transfer must be received by the Exchange Agent
prior to the Expiration Date.
By executing a Letter of Transmittal, each holder will make to the Company
the representations set forth above in the second paragraph under the heading
"-- Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute the agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letters of
Transmittal.
THE METHOD OF DELIVERY OF SERIES A SECURITIES AND THE LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR SERIES A SECURITIES
SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Series A Securities are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on such beneficial owner's behalf. See
"Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner" included with the Letters of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined) unless
the Series A Securities tendered pursuant thereto are tendered
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(i) by a registered holder who has not completed the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. In the event that signatures on a Letter of Transmittal
or a notice of withdrawal, as the case may be, are required to be guaranteed,
such guarantee must be by a member firm of the Medallion System (an "Eligible
Institution").
If a Letter of Transmittal is signed by a person other than the registered
holder of any Series A Securities listed therein, such Series A Securities must
be endorsed or accompanied by a properly completed bond power, in the case of
the Series A Notes, or stock power, in the case of the Series A Exchangeable
Preferred Stock, signed by such registered holder as such registered holder's
name appears on such Series A Securities with the signature thereon guaranteed
by an Eligible Institution.
If a Letter of Transmittal or any Series A Securities or bond or stock
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Series A Securities at the book-entry transfer facility, The Depository
Trust Company (the "Book-Entry Transfer Facility"), for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Series A Securities by causing
such Book-Entry Transfer Facility to transfer such Series A Securities into the
Exchange Agent's account with respect to the Series A Securities in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. Although
delivery of the Series A Securities may be effected through book-entry transfer
into the Exchange Agent's account at the Book-Entry Transfer Facility, an
appropriate Letter of Transmittal properly completed and duly executed with any
required signature guarantee and all other required documents must in each case
be transmitted to and received or confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Series A Securities and withdrawal of
tendered Series A Securities will be determined by the Company in its sole
discretion, which determination will be final and binding. The Company reserves
the absolute right to reject any and all Series A Securities not properly
tendered or any Series A Securities the Company's acceptance of which would, in
the opinion of counsel for the Company, be unlawful. The Company also reserves
the right in its sole discretion to waive any defects, irregularities or
conditions of tender as to particular Series A Securities. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letters of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Series A Securities must be cured within such time as the Company shall
determine. Although the Company intends to notify holders of defects or
irregularities with respect to tenders of Series A Securities, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Series A Securities will not be
deemed to have been made until such defects or irregularities have been cured or
waived. Any Series A Securities received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letters of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Series A Securities and (i) whose Series A
Securities are not immediately available, (ii) who cannot deliver their Series A
Securities, the Letters of Transmittal or any other required documents to the
Exchange Agent or (iii) who cannot complete the procedures for book-entry
transfer, prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
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<PAGE> 119
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name and address of the holder,
the certificate number(s) of such Series A Securities and the
principal amount of Series A Notes and/or number of shares of
Series A Exchangeable Preferred Stock tendered, stating that the
tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date,
the Letters of Transmittal (or facsimiles thereof) together with
the certificate(s) representing the Series A Securities (or a
confirmation of book-entry transfer of such Series A Securities
into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letters of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letters of Transmittal (or
facsimiles thereof), as well as the certificate(s) representing
all tendered Series A Securities in proper form for transfer (or a
confirmation of book-entry transfer of such Series A Securities
into the Exchange Agent's account at the Book-Entry Transfer
Facility), and all other documents required by the Letters of
Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Series A Securities according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Series A Securities may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Series A Securities in the Exchange Offer, a letter
or facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Series A Securities to be withdrawn (the
"Depositor"), (ii) identify the Series A Securities to be withdrawn (including
the certificate number(s) and principal amount of Series A Notes and/ or number
of shares of Series A Exchangeable Preferred Stock, or, in the case of Series A
Securities transferred by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited), (iii) be signed by
the holder in the same manner as the original signature on the Letters of
Transmittal by which such Series A Securities were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Series A Notes or the
Transfer Agent with respect to the Series A Exchangeable Preferred Stock
register the transfer of such Series A Securities into the name of the person
withdrawing the tender and (iv) specify the name in which any such Series A
Securities are to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Series A Securities so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer, and
no Series B Securities will be issued with respect thereto unless the Series A
Securities so withdrawn are validly retendered. Any Series A Securities which
have been tendered but which are not accepted for exchange will be returned to
the holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Series A Securities may be retendered by following one of the
procedures described above under "--Procedures for Tendering" at any time prior
to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Series B Securities for, any
Series A Securities, and may terminate or amend the Exchange Offer as provided
herein before the acceptance of such Series A Securities, if the Exchange Offer,
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<PAGE> 120
or the making of any exchange by a holder of Series A Securities, violates
applicable law or any applicable interpretation of the staff of the Commission.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letters of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
For Information by Telephone:
(212) 815-2742
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
(7 East) Corporate Trust Services Window
New York, New York 10286 Ground Level
Attention: Reorganization Section New York, New York 10286
Attention: Reorganization Section, 7 East
</TABLE>
By Facsimile Transmission:
(212) 815-6339
(Facsimile Confirmation)
(212) 815-2742
Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.
Delivery to an address or transmission of instructions via facsimile other than
as set forth above will not constitute a valid delivery.
The Bank of New York also acts as Trustee under the Notes Indenture and as
Transfer Agent for the Exchangeable Preferred Stock.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses includes fees and expenses of the Exchange
Agent, Trustee and Transfer Agent, accounting and legal fees and printing costs,
among others.
ACCOUNTING TREATMENT
The Series B Notes and the Series B Exchangeable Preferred Stock will be
recorded at the same carrying value as the Series A Notes and the Series A
Exchangeable Preferred Stock as reflected in the Company's accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by the Company. The expenses of the Exchange Offer will be
amortized over the term of the Notes and Exchangeable Preferred Stock.
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<PAGE> 121
CONSEQUENCES OF FAILURE TO EXCHANGE
The Series A Securities that are not exchanged for Series B Securities
pursuant to the Exchange Offer will remain restricted securities. Accordingly,
such Series A Securities may be resold only (i) to the Company (upon redemption
thereof or otherwise), (ii) so long as the Series A Securities are eligible for
resale pursuant to Rule 144A under the Securities Act, to a person inside the
United States whom the seller reasonably believes is a qualified institutional
buyer within the meaning of Rule 144A in a transaction meeting the requirements
of Rule 144A, (iii) in accordance with Rule 144 under the Securities Act, or
pursuant to another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel reasonably acceptable to
the Company), (iv) outside the United States to a foreign person in a
transaction meeting the requirements of Rule 904 under the Securities Act or (v)
pursuant to an effective registration statement under the Securities Act, in
each case in accordance with any applicable securities laws of any state of the
United States.
RESALE OF THE SERIES B SECURITIES
With respect to resales of Series B Securities, based on no-action letters
issued by the staff of the Commission to third parties, the Company believes
that a holder or other person who receives Series B Securities, whether or not
such person is the holder (other than a person who is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), who receives
Series B Securities in exchange for Series A Securities in the ordinary course
of business and who is not participating, does not intend to participate, and
has no arrangement or understanding with any person to participate, in the
distribution of the Series B Securities, will be allowed to resell the Series B
Notes to the public without further registration under the Securities Act and
without delivering to the purchasers of the Series B Securities a prospectus
that satisfies the requirements of Section 10 of the Securities Act. However, if
any holder acquires Series B Securities in the Exchange Offer for the purpose of
distributing or participating in a distribution of Series B Securities, such
holder cannot rely on the position of the staff of the Commission enunciated in
such no-action letters, and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction, unless an exemption from registration is otherwise available.
Further, each Participating Broker-Dealer that receives Series B Securities for
its own account in exchange for Series A Securities where such Series A
Securities were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities, may be a statutory
underwriter and must acknowledge that it will deliver a prospectus in connection
with any resale of such Series B Securities. The Letters of Transmittal state
that by so acknowledging and by delivering a prospectus, a Participating Broker-
Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
As contemplated by these no-action letters and the Registration Rights
Agreements, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the Series B Securities are to
be acquired by the holder or the person receiving such Series B Notes, whether
or not such person is the holder, in the ordinary course of business, (ii) the
holder or any such other person (other than a broker-dealer referred to in the
next sentence) is not engaging, and does not intend to engage, in the
distribution of the Series B Securities, (iii) the holder or any such other
person has no arrangement or understanding with any person to participate in the
distribution of the Series B Securities, (iv) neither the holder nor any such
other person is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act and (v) the holder or any such other person
acknowledges that if such holder or other person participates in the Exchange
Offer for the purpose of distributing the Series B Securities it must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale of the Series B Securities and cannot rely on
those no-action letters. As indicated above, each Participating Broker-Dealer
that receives Series B Securities for its own account in exchange for Series A
Securities must acknowledge that it will deliver a prospectus in connection with
any resale of such Series B Securities. For a description of the procedures for
such resales by Participating Broker-Dealers, see "Plan of Distribution."
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DESCRIPTION OF THE NOTES
The Series A Notes were, and the Series B Notes will be, issued under an
indenture dated as of July 1, 1997, (the "Notes Indenture") between the Company,
the initial Subsidiary Notes Guarantor referred to below and The Bank of New
York, trustee (the "Trustee"), a copy of which is available from the Company.
Upon the effectiveness of the Exchange Offer Registration Statement, the Notes
Indenture will be subject to and governed by the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). As used in this "Description of the Notes"
section, the term "Company" refers to Citadel Broadcasting Company, but not any
current or future subsidiary (unless the context otherwise requires). The
following summary of the material provisions of the Notes Indenture does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the provisions of the Notes Indenture, including the definitions
of certain terms contained therein and those terms made part of the Notes
Indenture by reference to the Trust Indenture Act. For definitions of certain
capitalized terms used in the following summary, see "-- Certain Definitions"
below.
GENERAL
The Notes will mature on July 1, 2007, are limited to $101,000,000
aggregate principal amount and are subordinate and junior in right of payment to
all existing and future Senior Debt of the Company. Each Note bears interest at
the rate of 10 1/4% per annum. Interest on the Series B Notes will accrue from
and including their issuance date. Additionally, interest on the Series B Notes
will accrue from the last interest payment date on which interest was paid on
the Series A Notes surrendered in exchange therefor, or, if no interest has been
paid on the Series A Notes, from July 3, 1997, the date of original issuance of
the Series A Notes, to but not including the issuance date of the Series B
Notes. Holders whose Series A Notes are accepted for exchange will be deemed to
have waived the right to receive interest accrued on such Series A Notes.
Accordingly, holders who exchange their Series A Notes will receive the same
interest payment on the next interest payment date (expected to be January 1,
1998) that they would have received had they not accepted the Exchange Offer.
Interest on the Notes is payable semi-annually on January 1 and July 1 in each
year, commencing January 1, 1998, until the principal thereof is paid or duly
provided for, to the person in whose name the Note (or any predecessor Note) is
registered at the close of business on the December 15 or June 15 next preceding
such interest payment date. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
The principal of and premium, if any, and interest on the Notes is payable,
and the Notes are exchangeable and transferable, at the office or agency of the
Company in the City of New York maintained for such purposes (which initially
will be the office of the Trustee located at 101 Barclay Street, New York, New
York 10286); provided, however, that, at the option of the Company, interest may
be paid by check mailed to the address of the person entitled thereto as such
address appears in the security register for the Notes. The Notes will be issued
only in registered form without coupons and only in denominations of $1,000 and
any integral multiple thereof (unless the Company otherwise directs). No service
charge will be made for any registration of transfer or exchange or redemption
of Notes, but the Company may require payment in certain circumstances of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
As of the date hereof, the Company's only Subsidiary is a Restricted
Subsidiary and a Subsidiary Notes Guarantor. However, under certain
circumstances, the Company will be able to designate future Subsidiaries as
Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to any
of the restrictive covenants set forth in the Notes Indenture.
Any Series A Notes that remain outstanding after consummation of the
Exchange Offer and any Series B Notes issued in connection with the Exchange
Offer will be treated as a single class of securities under the Notes Indenture.
The Notes will not be entitled to the benefit of any sinking fund.
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<PAGE> 123
GUARANTEES
Payment of the principal of (and premium, if any, on) and interest on the
Notes, when and as the same become due and payable, is unconditionally
guaranteed, jointly and severally, on a senior subordinated basis by the
Subsidiary Notes Guarantors. The obligations of each Subsidiary Notes Guarantor
under its Subsidiary Notes Guarantee will be limited so as not to constitute a
fraudulent conveyance under applicable law. See "Risk Factors -- Fraudulent
Transfer Considerations."
The Notes Indenture requires that each Wholly Owned Restricted Subsidiary
be a Subsidiary Notes Guarantor, as well as each other Restricted Subsidiary
that guarantees any other Debt of the Company.
The Notes Indenture provides that no Subsidiary Notes Guarantor may
consolidate with or merge with or into any other person (other than the Company
or another Subsidiary Notes Guarantor) or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets in one or more
related transactions to another person unless: (a) subject to the provisions of
the following paragraph, the person formed by or surviving such consolidation or
merger or to which all or substantially all of such assets are disposed (if
other than the Company or a Subsidiary Notes Guarantor) assumes all of the
obligations of such Subsidiary Notes Guarantor under the Notes Indenture and its
Subsidiary Notes Guarantee, pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee and (b) immediately after
giving effect to such transaction, no Default or Event of Default has occurred
and is continuing.
The Notes Indenture provides that, in the event of (a) a sale, transfer or
other disposition of all of the Capital Stock of a Subsidiary Notes Guarantor to
a person that is not an Affiliate of the Company, (b) a sale, transfer or other
disposition of all or substantially all of the assets of a Subsidiary Notes
Guarantor to a person that is not an Affiliate of the Company or (c) the
designation of such Subsidiary Notes Guarantor as an Unrestricted Subsidiary, in
any such case in compliance with the terms of the Notes Indenture, then such
Subsidiary Notes Guarantor will be deemed automatically and unconditionally
released and discharged from all of its obligations under the Notes Indenture
and its Subsidiary Notes Guarantee without any further action on the part of the
Trustee or any holder of the Notes; provided that the Net Cash Proceeds of any
such sale, transfer or other disposition are applied in accordance with the
"Limitation on Certain Asset Sales" covenant.
SUBORDINATION
The Notes are, to the extent set forth in the Notes Indenture, subordinate
in right of payment to the prior payment in full of all Senior Debt. Upon any
payment or distribution of assets of the Company to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency or similar
proceedings of the Company (except in connection with the consolidation or
merger of the Company or its liquidation or dissolution following the
conveyance, transfer or lease of its properties and assets substantially as an
entirety, upon the terms and conditions described under "Consolidation, Merger
and Sale of Assets"), the holders of Senior Debt will first be entitled to
receive payment in full, in cash or cash equivalents, of all amounts due or to
become due on or in respect of such Senior Debt before the holders of Notes are
entitled to receive any payment of principal of (or premium, if any) or interest
on the Notes or on account of the purchase or redemption or other acquisition of
Notes by the Company or any Subsidiary of the Company. In the event that,
notwithstanding the foregoing, the Trustee or the holder of any Note receives
any payment or distribution of assets of the Company of any kind or character
(excluding equity or subordinated securities of the Company provided for in a
plan of reorganization or readjustment that, in the case of subordinated
securities, are subordinated in right of payment to all Senior Debt to at least
the same extent as the Notes are so subordinated), before all the Senior Debt is
paid in full, then such payment or distribution will be held in trust for the
holders of Senior Debt and will be required to be paid over or delivered
forthwith to the trustee in bankruptcy or other person making payment or
distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay the Senior Debt in
full.
The Company may not make any payments on account of the Notes or on account
of the purchase or redemption or other acquisition of Notes if a default in the
payment when due of principal of (or premium, if any) or interest on Specified
Senior Debt has occurred and is continuing or a default in the payment when due
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of commitment, facility or other fees, letter of credit fees or agency fees
under the Credit Facility, or a default in payments when due with respect to
letter of credit reimbursement arrangements with the Credit Facility Agent has
occurred and is continuing (a "Senior Payment Default"). In addition, if any
default (other than a Senior Payment Default) with respect to any Specified
Senior Debt permitting the holders thereof (or a trustee or agent on behalf
thereof) to accelerate the maturity thereof (a "Senior Nonmonetary Default") has
occurred and is continuing and the Company and the Trustee have received written
notice thereof from the Credit Facility Agent or from an authorized person on
behalf of any holder of Specified Senior Debt, then the Company may not make any
payments on account of the Notes or on account of the purchase or redemption or
other acquisition of Notes for a period (a "blockage period") commencing on the
date the Company and the Trustee receive such written notice (a "Blockage
Notice") and ending on the earliest of (x) 179 days after such date (the
"Initial Period"), (y) the date, if any, on which the Specified Senior Debt to
which such default relates is discharged or such default is waived or otherwise
cured and (z) the date, if any, on which such blockage period has been
terminated by written notice to the Company or the Trustee from the Credit
Facility Agent or from the person who gave the Blockage Notice. Any number of
additional payment blockage periods may be commenced during the Initial Period;
provided, however, that no such additional payment blockage periods shall extend
beyond the Initial Period. After the expiration of the Initial Period, no
payment blockage period may be commenced until at least 181 consecutive days
shall have elapsed from the last day of the Initial Period. No Senior
Nonmonetary Default that existed or was continuing on the date of the
commencement of any blockage period with respect to the Specified Senior Debt
initiating such blockage period will be, or can be, made the basis for the
commencement of a subsequent blockage period, unless such default has been cured
or waived for a period of not less than 90 consecutive days. In the event that,
notwithstanding the foregoing, the Company makes any payment to the Trustee or
the holder of any Note prohibited by these blockage provisions, then such
payment will be held in trust for the holders of Senior Debt and will be
required to be paid over and delivered forthwith to the holders of the Senior
Debt remaining unpaid, to the extent necessary to pay in full all the Senior
Debt.
The Subsidiary Notes Guarantees are, to the extent set forth in the Notes
Indenture, subordinated in right of payment to the prior payment in full of all
senior debt of the Subsidiary Notes Guarantors, upon terms substantially
comparable to the subordination of the Notes to all Senior Debt.
By reason of such subordination, in the event of insolvency, creditors of
the Company or a Subsidiary Notes Guarantor who are not holders of Senior Debt
or the Notes may recover less, ratably, than holders of Senior Debt and may
recover more, ratably, than the holders of the Notes.
The subordination provisions described above will cease to be applicable to
the Notes and the Subsidiary Notes Guarantees upon any defeasance or covenant
defeasance of the Notes as described under "-- Defeasance or Covenant Defeasance
of Notes Indenture."
As used herein, the term "Specified Senior Debt" means (i) all Senior Debt
under the Credit Facility and (ii) any other issue of Senior Debt having a
principal amount of at least $10,000,000.
At June 30, 1997, on a pro forma basis, after giving effect to the Recent
1997 Acquisitions, the Pending Transactions and the Original Offerings, the
aggregate principal amount of Senior Debt outstanding would have been
approximately $113.6 million. The Company may from time to time hereafter incur
additional Debt constituting Senior Debt under the Credit Facility or otherwise,
subject to the "Limitation on Debt" covenant described below.
OPTIONAL REDEMPTION
The Notes are redeemable (subject to contractual and other restrictions
with respect thereto and to the legal availability of funds therefor) at the
election of the Company, as a whole or from time to time in part, at any time on
or after July 1, 2002 on not less than 30 nor more than 60 days' prior notice,
at the redemption prices (expressed as percentages of the principal amount
thereof) set forth below, together with accrued and unpaid interest, if any, to
the redemption date, if redeemed during the 12-month period beginning on July 1
of
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the years indicated below (subject to the right of holders of record on the
relevant record date to receive interest due on an interest payment date):
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
--------------------------------------------- ----------------
<S> <C>
2002......................................... 105.125%
2003......................................... 104.100
2004......................................... 103.075
2005......................................... 102.050
2006......................................... 101.025
</TABLE>
In addition, at any time and from time to time prior to July 1, 2000, the
Company may at its option redeem Notes with the net proceeds of one or more
Public Equity Offerings at a redemption price equal to 110.25% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on an interest payment date); provided that,
immediately after giving effect to any such redemption, at least $75,000,000
aggregate principal amount of the Notes remains outstanding. Any such redemption
must be made within 90 days of the related Public Equity Offering.
If less than all the Notes are to be redeemed, the particular Notes to be
redeemed will be selected not more than 60 days prior to the redemption date by
the Trustee by such method as the Trustee deems fair and appropriate.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Notes Indenture. Reference is made to the full definition of all such terms as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Debt" means Debt of a person (a) existing at the time such person
is merged with or into the Company or becomes a Subsidiary, (b) assumed in
connection with the acquisition of assets from such person or (c) secured by a
Lien encumbering assets acquired from such person.
"Affiliate" means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control," when used with respect to any specified person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer") by the Company or a
Restricted Subsidiary, directly or indirectly, in one or a series of related
transactions, to any person other than the Company or a Restricted Subsidiary of
(a) any Capital Stock of any of its Restricted Subsidiaries, (b) all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries representing a division or line of business or (c) any other
properties or assets of the Company or any of its Restricted Subsidiaries, other
than in the ordinary course of business. For the purposes of this definition,
the term "Asset Sale" does not include any transfer of properties or assets (a)
that is governed by the provisions of the Notes Indenture described under (i)
"Consolidation, Merger and Sale of Assets" or (ii) "Limitation on Asset Swaps,"
(b) between or among the Company and any of its Restricted Subsidiaries pursuant
to transactions that do not violate any other provision of the Notes Indenture,
(c) to an Unrestricted Subsidiary, if permitted under the "Limitation on
Restricted Payments" covenant, (d) representing obsolete or permanently retired
equipment, (e) the gross proceeds of which (exclusive of indemnities) do not
exceed $100,000 for any particular item or $500,000 in the aggregate for any
fiscal year or (f) the transfer of up to $500,000 of property and assets,
including cash, to a joint venture in which the Company or a Restricted
Subsidiary has an equity interest, which joint venture is engaged in the
internet service provider business.
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"Asset Swap" means the execution of one or more definitive agreements,
subject only to FCC approval, if applicable, and other customary closing
conditions, which the Company in good faith believes will be satisfied, for a
substantially concurrent purchase and sale, or exchange, or "deferred exchange"
(for no more than 180 days) under section 1031(a)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"), of assets used in the broadcast or
related businesses between the Company or any of its Restricted Subsidiaries and
one or more other persons or groups of affiliated persons; provided that any
amendment to or waiver of any closing conditions that individually or in the
aggregate are material to the Asset Swap will be deemed to be a new Asset Swap.
"Banks" means the banks and other financial institutions that from time to
time are lenders under the Credit Facility.
"Capital Stock" of any person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents (however
designated) of such person's equity (however designated).
"Capitalized Lease Obligation" means, with respect to any person, an
obligation incurred or assumed under or in connection with any capital lease of
real or personal property that, in accordance with GAAP, has been recorded as a
capitalized lease on the balance sheet of such person.
"Change of Control" means the occurrence of any of the following events:
(a) Any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Lawrence R. Wilson, Scott E.
Smith, John E. von Schlegell, Baker, Fentress & Company, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., The Endeavour
Capital Fund Limited Partnership and any trustee, in its capacity as
trustee under the Voting Trust Agreement ("Permitted Holders") or Citadel
Communications, is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person will be deemed
to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than a majority
of the voting power of all classes of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of Directors,
or whose nomination for election by the stockholders of the Company, was
approved by a vote of at least 66-2/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of the
Company then in office; or
(c) The Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Closing Date" means July 3, 1997, the date on which the Series A Notes
were originally issued under the Notes Indenture.
"Consolidated Adjusted Net Income" means, for any period, the net income
(or net loss) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, adjusted to the
extent included in calculating such net income or loss by excluding (a) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (b) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (c) the portion of net income (or
loss) of any person (other than the Company or a Restricted Subsidiary),
including Unrestricted Subsidiaries, in which the Company or any of its
Restricted Subsidiaries has an ownership interest, except to the extent of the
amount of dividends or other distributions actually paid to the Company or any
of its Restricted Subsidiaries in cash during such period, (d) the net income
(or loss) of any person combined with the Company or any of its Restricted
Subsidiaries on a "pooling of interests" basis attributable to any period prior
to the date of combination, and (e) the net income (but not the net loss) of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is at the date of
determination restricted, directly or indirectly, except to the extent that such
net income could be paid to the Company or a Restricted Subsidiary thereof;
provided that, if any Restricted Subsidiary is not a
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Wholly Owned Restricted Subsidiary, Consolidated Adjusted Net Income will be
reduced (to the extent not otherwise reduced in accordance with GAAP) by an
amount equal to (A) the amount of the Consolidated Adjusted Net Income otherwise
attributable to such Restricted Subsidiary multiplied by (B) the quotient of (1)
the number of shares of outstanding common stock of such Restricted Subsidiary
not owned on the last day of such period by the Company or any of its Restricted
Subsidiaries divided by (2) the total number of shares of outstanding common
stock of such Restricted Subsidiary on the last day of such period.
"Consolidated Cash Flow" means, for any period, the sum of, without
duplication, Consolidated Adjusted Net Income for such period, plus (or, in the
case of clause (d) below, plus or minus) the following items to the extent
included in computing Consolidated Adjusted Net Income for such period: (a) the
aggregate interest expense and preferred stock dividends of the Company and its
Restricted Subsidiaries for such period, plus (b) the provision for federal,
state, local and foreign income taxes of the Company and its Restricted
Subsidiaries for such period, plus (c) the aggregate depreciation and
amortization expense of the Company and any of its Restricted Subsidiaries for
such period, plus (d) any other non-cash charges for such period, and minus
non-cash credits for such period, other than non-cash charges or credits
resulting from changes in prepaid assets or accrued liabilities in the ordinary
course of business; provided that income tax expense, interest expense and
preferred stock dividends, depreciation and amortization expense, and non-cash
charges and credits of a Restricted Subsidiary will be included in Consolidated
Cash Flow only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Adjusted Net
Income for such period. Solely for purposes of determining whether the Company
could incur Debt pursuant to the first paragraph of the "Limitation on Debt"
covenant, if the Company is permitted to give pro forma effect to an In-Market
Acquisition of a radio station pursuant to clause (iii) of the second paragraph
of such covenant, such calculation may also give pro forma effect to projected
quantifiable improvements in operating results of such radio station due to cost
reductions calculated in good faith by the Company and certified by an officers'
certificate filed with the Trustee. As used in the preceding sentence, the term
"In-Market Acquisition" means the acquisition of a radio station or group of
radio stations serving an MSA in which the Company or its Subsidiaries has
owned, or has operated under a LMA, one or more radio stations for at least the
preceding six months.
"Consolidated Cash Flow Ratio" means, at any date, the ratio of (i) the
aggregate amount of Debt of the Company and its Restricted Subsidiaries on a
consolidated basis as of the end of the immediately preceding four fiscal
quarters for which internal financial statements of the Company are available
(the "Reference Period") to (ii) the aggregate amount of Consolidated Cash Flow
for such Reference Period.
"Consolidated Fixed Charges" means, for any period, without duplication,
the sum of (a) the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a consolidated
statement of operations of the Company and its Restricted Subsidiaries for such
period, including, without limitation, (i) amortization of debt discount, (ii)
the net cost of interest rate contracts (including amortization of discounts),
(iii) the interest portion of any deferred payment obligation, (iv) amortization
of debt issuance costs, (v) the interest component of Capitalized Lease
Obligations of the Company and any of its Restricted Subsidiaries, and (vi) the
portion of any rental obligation of the Company and any of its Restricted
Subsidiaries in respect of any sale and leaseback transaction allocable during
such period to interest expense (determined as if it were treated as a
Capitalized Lease Obligation) plus (b) all interest on any Debt of any other
person guaranteed by the Company or any of its Restricted Subsidiaries;
provided, however, that Consolidated Fixed Charges will not include any gain or
loss from extinguishment of debt, including any write-off of debt issuance
costs.
"Credit Facility" means the loan agreement dated October 9, 1996, among the
Company, the Banks and the Credit Facility Agent, as amended, and as such
agreement may be amended, restated, supplemented, replaced or refinanced or
otherwise modified from time to time.
"Credit Facility Agent" means the then acting Agent as defined in and under
the Credit Facility or any successor thereto.
"Debt" means (without duplication), with respect to any person, whether
recourse is to all or a portion of the assets of such person and whether or not
contingent, (a) every obligation of such person for money
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borrowed, (b) every obligation of such person evidenced by bonds, debentures,
notes or other similar instruments, (c) every reimbursement obligation of such
person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such person, (d) every obligation of such
person issued or assumed as the deferred purchase price of property or services,
(e) every Capitalized Lease Obligation of such person, (f) all Disqualified
Stock of such person valued at its maximum fixed repurchase price, plus
accumulated and unpaid dividends, (g) all Hedging Obligations of such person,
and (h) every obligation of the types referred to in clauses (a) through (g) of
another person and all dividends of another person (i) the payment of which, in
either case, such person has guaranteed or (ii) which is secured by any Lien on
any property or asset of such person, the amount of such Debt being deemed to be
the lesser of the actual amount of the guarantee or the value of such property
or asset subject to such Lien, as the case may be, and the amount of the Debt so
guaranteed or secured, as the case may be. For purposes of this definition, the
"maximum fixed repurchase price" of any Disqualified Stock that does not have a
fixed repurchase price will be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were repurchased on any date on
which Debt is required to be determined pursuant to the Notes Indenture, and if
such price is based upon, or measured by, the fair market value of such
Disqualified Stock, such fair market value will be determined reasonably and in
good faith by the board of directors of the issuer of such Disqualified Stock.
Notwithstanding the foregoing, trade accounts payable and accrued liabilities
arising in the ordinary course of business, any liability for federal, state or
local taxes or other taxes owed by such person and the Exchangeable Preferred
Stock will not be considered Debt for purposes of this definition. The amount
outstanding at any time of any Debt issued with original issue discount is the
aggregate principal amount at maturity of such Debt, less the remaining
unamortized portion of the original issue discount of such Debt at such time, as
determined in accordance with GAAP.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors, to make a finding or otherwise
take action under the Notes Indenture, a member of the Board of Directors who
does not have any material direct or indirect financial interest in or with
respect to such transaction or series of transactions.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms or by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, (a) is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to one year
after the final Stated Maturity of the Notes, (b) is redeemable at the option of
the holder thereof at any time prior to one year after such final Stated
Maturity or (c) at the option of the holder thereof, is convertible into or
exchangeable for debt securities at any time prior to one year after such final
Stated Maturity; provided that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to cause the issuer thereof to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to one year
after the Stated Maturity of the Notes will not constitute Disqualified Stock if
the "asset sale" or "change of control" provisions applicable to such Capital
Stock are no more favorable to the holders of such Capital Stock than the
provisions contained in the "Limitation on Certain Asset Sales" and "Purchase of
Notes upon a Change of Control" covenants described below and such Capital Stock
specifically provides that the issuer will not repurchase or redeem any such
Capital Stock pursuant to such provision prior to the Company's repurchase of
such Notes as are required to be repurchased pursuant to the "Limitation on
Certain Asset Sales" and "Purchase of Notes upon a Change of Control" covenants
described below.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the Closing Date.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the
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practical effect of which is to assure in any way the payment or performance (or
payment of damages in the event of non-performance) of all or any part of such
obligation, including, without limitation, the payment of amounts drawn down
under letters of credit.
"Hedging Obligations" means the obligations of any person under (a)
interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements and (b) other agreements or arrangements designed to protect
such person against fluctuations in interest rates or the value of foreign
currencies.
"Investment" (in any person) means (a) directly or indirectly, any advance,
loan or other extension of credit (including, without limitation, by way of
guarantee or similar arrangement) or capital contribution to any person, the
purchase or other acquisition of any stock, bonds, notes, debentures or other
securities issued by such person or the acquisition (by purchase or otherwise)
of all or substantially all of the business or assets of such person or the
making of any investment in such person, (b) the designation of any Restricted
Subsidiary as an Unrestricted Subsidiary and (c) the transfer of any assets or
properties from the Company or a Restricted Subsidiary to any Unrestricted
Subsidiary, other than the transfer of assets or properties made in the ordinary
course of business. Investments will exclude extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices.
"License Subsidiary" means Citadel License, Inc.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation, assignment for security, claim,
preference, priority or other encumbrance upon or with respect to any property
of any kind, real or personal, movable or immovable, now owned or hereafter
acquired. A person will be deemed to own subject to a Lien any property that
such person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or cash equivalents, including payments in respect
of deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or cash equivalents (except to the extent that
such obligations are financed or sold with recourse to the Company or any of its
Restricted Subsidiaries), net of (a) brokerage commissions and other fees and
expenses (including fees and expenses of legal counsel and investment banks)
related to such Asset Sale, (b) provisions for all taxes payable as a result of
such Asset Sale, (c) payments made to retire Debt where payment of such Debt is
secured by the assets that are the subject of such Asset Sale, (d) amounts
required to be paid to any person (other than the Company or any of its
Restricted Subsidiaries) owning a beneficial interest in the assets that are
subject to the Asset Sale and (e) appropriate amounts to be provided by the
Company or any of its Restricted Subsidiaries, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with such
Asset Sale and retained by the seller after such Asset Sale, including pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Pari Passu Debt" means Debt of the Company that ranks pari passu in right
of payment with the Notes.
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of one year or less
issued or directly and fully guaranteed or insured by the United States or
any agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof); (ii)
certificates of deposit, time deposits, overnight bank deposits or bankers'
acceptances with a maturity of 270 days or less of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus of not less than $500,000,000; and (iii) commercial
paper with a maturity of 270 days or less issued by a corporation that is
not an Affiliate of the Company and is organized under the laws of any
state of the United States or the District of Columbia and having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard
& Poor's Ratings Services.
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(b) Investments by the Company or any of its Restricted Subsidiaries
in another person, if as a result of such Investment (i) such other person
becomes a Restricted Subsidiary that is a Subsidiary Notes Guarantor or
(ii) such other person is merged or consolidated with or into, or transfers
or conveys all or substantially all of its assets to, the Company or a
Restricted Subsidiary that is a Subsidiary Notes Guarantor.
(c) Investments by the Company or any of its Restricted Subsidiaries
in a Subsidiary Notes Guarantor and Investments by any Restricted
Subsidiary in the Company.
(d) Investments in assets owned or used in the ordinary course of
business.
(e) Investments in existence on the Closing Date.
(f) Promissory notes received as a result of Asset Sales permitted
under the "Limitation on Certain Asset Sales" covenant.
(g) Direct or indirect loans to employees, or to a trustee for the
benefit of such employees, of the Company or any of its Restricted
Subsidiaries in an aggregate amount outstanding at any time not exceeding
$1,000,000.
(h) Investments by the Company or any of its Restricted Subsidiaries
in a joint venture that is engaged in the internet service provider
business in an aggregate amount outstanding at any time not exceeding
$500,000.
(i) Other Investments that do not exceed $2,000,000 at any one time
outstanding.
"Public Equity Offering" means an underwritten public offering of Qualified
Equity Interests of either (a) the Company or (b) Citadel Communications the net
proceeds from which (after deducting any underwriting discounts and commissions)
are used by Citadel Communications to purchase Qualified Equity Interests of the
Company; provided that, in either case, such net proceeds exceed $10,000,000.
"Qualified Equity Interest" means any Qualified Stock and all warrants,
options or other rights to acquire Qualified Stock (but excluding any debt
security that is convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any person means any and all Capital Stock of such
person, other than Disqualified Stock.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Senior Debt" means the principal of and premium, if any, and interest on
(including interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law, whether or not allowed) and other
amounts due on or in connection with any Debt of the Company (other than the
Notes or Pari Passu Debt), whether outstanding on the Closing Date or thereafter
incurred, unless, in the case of any particular Debt, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Debt will be subordinate in right of payment to any Debt or
other general unsecured obligations of the Company. Without limiting the
generality of the foregoing, "Senior Debt" includes the principal of and
premium, if any, fees and interest (including interest accruing after the
occurrence of an event of default or after the filing of a petition initiating
any proceeding pursuant to any bankruptcy law, whether or not allowed) on all
obligations of every nature of the Company from time to time owed to the Banks
under the Credit Facility. Notwithstanding the foregoing, "Senior Debt" will not
include (a) Debt that is Disqualified Stock, (b) Debt consisting of trade
payables, (c) Debt of the Company to a Subsidiary or any other Affiliate of the
Company or any of such Affiliate's Subsidiaries and (d) that portion of any Debt
that, at the time of the incurrence, is incurred by the Company in violation of
the Notes Indenture other than any Debt incurred under the Credit Facility not
in excess of $150,000,000 (less any amounts applied to the permanent reduction
of such Debt pursuant to the "Limitation on Certain Asset Sales" covenant under
the Notes Indenture) if the Company has certified to the Credit Facility Agent,
at the time such Debt is incurred, that the Company is permitted to incur such
Debt under the Notes Indenture.
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"Significant Subsidiary" means any Restricted Subsidiary of the Company
that, together with its Subsidiaries, (a) for the most recent fiscal year of the
Company, accounted for more than 10% of the consolidated net sales of the
Company and its Restricted Subsidiaries, (b) as of the end of such fiscal year,
was the owner of more than 10% of the consolidated assets of the Company and its
Restricted Subsidiaries, in the case of either (a) or (b), as set forth on the
most recently available consolidated financial statements of the Company for
such fiscal year, (c) was organized or acquired after the beginning of such
fiscal year and would have been a Significant Subsidiary if it had been owned
during the entire fiscal year or (d) holds one or more licenses material to the
Company's business.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and, when used with respect to any other Debt, means the date
specified in the instrument governing such Debt as the fixed date on which the
principal of such Debt or any installment of interest thereon is due and
payable.
"Subordinated Debt" means Debt of the Company that is subordinated in right
of payment to the Notes.
"Subsidiary" means any person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by the Company
and/or one or more other Subsidiaries of the Company.
"Subsidiary Notes Guarantee" means a guarantee of the Notes by a Restricted
Subsidiary in accordance with the provisions of the Notes Indenture.
"Subsidiary Notes Guarantor" means the License Subsidiary and each other
Restricted Subsidiary that issues a Subsidiary Notes Guarantee as described
under the "Subsidiary Notes Guarantees" covenant.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary in
accordance with the "Unrestricted Subsidiaries" covenant and (b) any Subsidiary
of an Unrestricted Subsidiary.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any person (irrespective of whether or not, at the time, stock of
any other class or classes has, or might have, voting power by reason of the
happening of any contingency).
"Weighted Average Life" means, as of the date of determination with respect
to any Debt or Disqualified Stock, the quotient obtained by dividing (a) the sum
of the products of (i) the number of years from the date of determination to the
date or dates of each successive scheduled principal or liquidation value
payment of such Debt or Disqualified Stock, respectively, multiplied by (ii) the
amount of each such principal or liquidation value payment by (b) the sum of all
such principal or liquidation value payments.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary, all
of the outstanding voting securities (other than directors' qualifying shares or
an immaterial number of shares required to be owned by other persons pursuant to
applicable law) of which are owned, directly or indirectly, by the Company.
CERTAIN COVENANTS
The Notes Indenture contains, among others, the following covenants:
LIMITATION ON DEBT. (a) The Company will not, and will not permit any of
its Restricted Subsidiaries to, create, issue, assume, guarantee or in any
manner become directly or indirectly liable for the payment of, or otherwise
incur (collectively, "incur"), any Debt (including Acquired Debt and the
issuance of Disqualified Stock), except that the Company or a Subsidiary Notes
Guarantor may incur Debt or issue Disqualified Stock if, at the time of such
event, the Consolidated Cash Flow Ratio would have been less than 7.0 to 1.0.
In making the foregoing calculation, pro forma effect will be given to: (i)
the incurrence of such Debt and (if applicable) the application of the net
proceeds therefrom, including to refinance other Debt, as if such Debt had been
incurred and the application of proceeds therefrom occurred on the first day of
the four-fiscal quarter period used to calculate the Consolidated Cash Flow
Ratio, (ii) the incurrence, repayment or
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retirement of any other Debt by the Company or any of its Restricted
Subsidiaries since the first day of such four-quarter period as if such Debt was
incurred, repaid or retired at the beginning of such four-quarter period and
(iii) the acquisition (whether by purchase, merger or otherwise) or disposition
(whether by sale, merger or otherwise) of any company, entity or business
acquired or disposed of by the Company or any of its Restricted Subsidiaries, as
the case may be, since the first day of such four-quarter period, as if such
acquisition or disposition occurred at the beginning of such four-quarter
period. In making a computation under the foregoing clause (i) or (ii), the
amount of Debt under a revolving credit facility will be computed based upon the
average daily balance of such Debt during such four-quarter period.
(b) Notwithstanding the foregoing, the Company may, and may, to the extent
expressly permitted below, permit any of its Restricted Subsidiaries to, incur
any of the following Debt ("Permitted Debt"):
(i) Debt of the Company or any Subsidiary Notes Guarantor under the
Credit Facility (including guarantees thereof by the Subsidiaries) in an
aggregate principal amount at any one time outstanding not to exceed
$110,000,000 less any amounts applied to the permanent reduction of such
Debt pursuant to the "Limitation on Certain Asset Sales" covenant.
(ii) Debt of the Company or any of its Restricted Subsidiaries
outstanding on the Closing Date, other than Debt described under clause (i)
above.
(iii) Debt owed by the Company to any of its Restricted Subsidiaries
or owed by any Subsidiary to the Company or a Restricted Subsidiary
(provided that such Debt is Subordinated Debt and is held by the Company or
such Restricted Subsidiary) or owed to the Company or a Subsidiary Notes
Guarantor by a Restricted Subsidiary that is not a Subsidiary Notes
Guarantor, provided the incurrence of such Debt did not violate the
"Limitation on Restricted Payments" covenant.
(iv) Debt represented by the Notes and the Subsidiary Notes
Guarantees.
(v) Hedging Obligations of the Company or any of its Restricted
Subsidiaries incurred in the ordinary course of business.
(vi) Capitalized Lease Obligations of the Company or any of its
Restricted Subsidiaries in an aggregate amount not exceeding $3,000,000 at
any one time outstanding.
(vii) Debt under purchase money mortgages or secured by purchase money
security interests so long as (x) such Debt is not secured by any property
or assets of the Company or any of its Restricted Subsidiaries other than
the property or assets so acquired and (y) such Debt is created within 60
days of the acquisition of the related property; provided that the
aggregate principal amount of Debt under this clause (vii) does not exceed
$2,000,000 at any one time outstanding.
(viii) Debt of the Company or any Subsidiary Notes Guarantor, not
permitted by any other clause of this definition, in an aggregate principal
amount not to exceed $5,000,000 at any one time outstanding.
(ix) Debt of the Company or any of its Restricted Subsidiaries
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments in connection with the acquisition or disposition of
assets, including, without limitation, shares of Capital Stock.
(x) Acquired Debt of a person, other than Debt incurred in connection
with, or in contemplation of, such person becoming a Restricted Subsidiary
or the acquisition of assets from such person, as the case may be, provided
that the Company on a pro forma basis could incur $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of this
covenant.
(xi) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company or any Restricted Subsidiary of any outstanding Debt of the Company
or such Restricted Subsidiary, other than Debt incurred pursuant to clause
(i), (v), (vi), (vii), (viii) or (ix) of this definition, including any
successive refinancings thereof, so long as (A) any such new Debt is in a
principal amount that does not exceed the principal amount so refinanced,
plus the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Debt refinanced or the amount of
any premium reasonably determined by the Company as necessary to
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accomplish such refinancing, plus the amount of expenses of the Company
incurred in connection with such refinancing, (B) in the case of any
refinancing of Subordinated Debt, such new Debt is made subordinate to the
Notes at least to the same extent as the Debt being refinanced, (C) in the
case of any refinancing of the Notes or any Pari Passu Debt, such Debt is
Pari Passu Debt or Subordinated Debt and (D) such refinancing Debt does not
have a Weighted Average Life less than the Weighted Average Life of the
Debt being refinanced and does not have a final scheduled maturity earlier
than the final scheduled maturity, or permit redemption at the option of
the holder earlier than the earliest date of redemption at the option of
the holder, of the Debt being refinanced.
LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, take any
of the following actions:
(a) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Capital Stock of the Company or any of its
Restricted Subsidiaries, other than (i) dividends or distributions payable
solely in Qualified Equity Interests of the issuer of such shares of
Capital Stock, (ii) dividends or distributions by a Restricted Subsidiary
payable to the Company or another Restricted Subsidiary or (iii) pro rata
dividends or distributions on common stock of a Restricted Subsidiary held
by minority stockholders, provided that such dividends do not in the
aggregate exceed the minority stockholders' pro rata share of such
Restricted Subsidiary's net income from the first day of the Company's
fiscal quarter during which the Closing Date occurs;
(b) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of Capital Stock (or any options,
warrants or other rights to acquire shares of Capital Stock) of (i) the
Company or any of its Unrestricted Subsidiaries or (ii) any Restricted
Subsidiary that are held by any Affiliate of the Company (other than, in
either case, any such Capital Stock owned by the Company or any of its
Restricted Subsidiaries);
(c) make any principal payment on, or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Debt; and
(d) make any Investment (other than a Permitted Investment) in any
person
(such payments or other actions described in (but not excluded from) clauses (a)
through (d) being referred to as "Restricted Payments"), unless at the time of,
and immediately after giving effect to, the proposed Restricted Payment:
(i) no Default or Event of Default has occurred and is continuing,
(ii) the Company could incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of the
"Limitation on Debt" covenant, and
(iii) the aggregate amount of all Restricted Payments declared or
made after the Closing Date does not exceed the sum of:
(A) the remainder of (x) 100% of the aggregate Consolidated Cash
Flow for the period beginning on the first day of the Company's
fiscal quarter during which the Closing Date occurs and ending on the
last day of the Company's most recent fiscal quarter for which
internal financial statements are available ending prior to the date
of such proposed Restricted Payment (the "Computation Period") minus
(y) the product of 1.4 times the sum of (i) Consolidated Fixed
Charges for the Computation Period and (ii) all dividends or other
distributions paid in cash by the Company or any of its Restricted
Subsidiaries on any Disqualified Stock of the Company or any of its
Restricted Subsidiaries for the Computation Period; plus
(B) the aggregate net proceeds received by the Company after the
Closing Date (including the fair market value of property other than
cash as determined by the Company's Board of Directors, whose good
faith determination will be conclusive) from the issuance or sale
(other than to a Subsidiary) of Qualified Equity Interests of the
Company (excluding from
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this computation any net proceeds of a Public Equity Offering
received by the Company that are used by it to redeem the Notes, as
discussed above); plus
(C) the aggregate net proceeds received by the Company after the
Closing Date (including the fair market value of property other than
cash as determined by the Company's Board of Directors, whose good
faith determination will be conclusive) from the issuance or sale
(other than to a Subsidiary) of debt securities or Disqualified Stock
that have been converted into or exchanged for Qualified Stock of the
Company, together with the aggregate net cash proceeds received by
the Company at the time of such conversion or exchange; plus
(D) without duplication, the Net Cash Proceeds received by the
Company or a Wholly Owned Restricted Subsidiary upon the sale of any
of its Unrestricted Subsidiaries; plus
(E) $5,000,000.
Notwithstanding the foregoing, the Company and any of its Restricted
Subsidiaries may take any of the following actions, so long as (with respect to
clauses (f) and (g) below) no Default or Event of Default has occurred and is
continuing or would occur:
(a) The payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not have
been prohibited by the foregoing provision.
(b) The repurchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company, in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary) of, Qualified Equity Interests of the
Company.
(c) The purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Debt in exchange for, or out of the
net cash proceeds of a substantially concurrent issuance and sale (other
than to a Restricted Subsidiary) of shares of, Qualified Stock of the
Company.
(d) The purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Debt in exchange for, or out of the
net cash proceeds of a substantially concurrent issuance or sale (other
than to a Subsidiary) of, Subordinated Debt, so long as the Company or a
Restricted Subsidiary would be permitted to refinance such original
Subordinated Debt with such new Subordinated Debt pursuant to clause (xi)
of the definition of Permitted Debt.
(e) The repurchase of any Subordinated Debt at a purchase price not
greater than 101% of the principal amount of such Subordinated Debt in the
event of a "change of control" in accordance with provisions similar to the
"Purchase of Notes upon a Change of Control" covenant; provided that, prior
to such repurchase, the Company has made the Change of Control Offer as
provided in such covenant with respect to the Notes and has repurchased all
Notes validly tendered for payment in connection with such Change of
Control Offer.
(f) The payment by the Company to Citadel Communications for the
purpose of the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of Citadel Communications,
options on any such shares or related stock appreciation rights or similar
securities held by officers or employees or former officers or employees
(or their estates or beneficiaries under their estates) or by any employee
benefit plan, upon death, disability, retirement or termination of
employment or pursuant to the terms of any employee benefit plan or any
other agreement under which such shares of stock or related rights were
issued; provided that the aggregate cash consideration paid for such
purchase, redemption, acquisition, cancellation or other retirement of such
shares of Capital Stock after the date of the Closing Date does not exceed
$1,000,000 in any fiscal year.
(g) Loans or advances to officers, directors and employees of Citadel
Communications, the Company or any of its Restricted Subsidiaries made in
the ordinary course of business after the Closing Date in an aggregate
principal amount not to exceed $1,000,000 at any one time outstanding.
(h) Payments to or on behalf of Citadel Communications to pay its
operating and administrative expenses attributable to the Company
including, without limitation, legal and audit expenses, directors'
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fees, fees payable in respect of the trustee and back-up trustees under the
Voting Trust Agreement, and Commission compliance expenses, in an amount
not to exceed the greater of $1,000,000 per fiscal year and 1% of the net
revenues of the Company for the preceding fiscal year.
The payments described in clauses (b), (c), (e), (f) and (g) of this paragraph
will be Restricted Payments that will be permitted to be taken in accordance
with this paragraph but will reduce the amount that would otherwise be available
for Restricted Payments under the foregoing clause (iii), and the payments
described in clauses (a), (d) and (h) of this paragraph will be Restricted
Payments that will be permitted to be taken in accordance with this paragraph
and will not reduce the amount that would otherwise be available for Restricted
Payments under the foregoing clause (iii).
For the purpose of making any calculations under the Notes Indenture (i) if
a Restricted Subsidiary is designated an Unrestricted Subsidiary, the Company
will be deemed to have made an Investment in an amount equal to the fair market
value of the net assets of such Restricted Subsidiary at the time of such
designation as determined by the Board of Directors of the Company, whose good
faith determination will be conclusive, (ii) any property transferred to or from
an Unrestricted Subsidiary will be valued at fair market value at the time of
such transfer, as determined by the Board of Directors of the Company, whose
good faith determination will be conclusive and (iii) subject to the foregoing,
the amount of any Restricted Payment, if other than cash, will be determined by
the Board of Directors of the Company, whose good faith determination will be
conclusive.
If the aggregate amount of all Restricted Payments calculated under the
foregoing provision includes an Investment in an Unrestricted Subsidiary or
other person that thereafter becomes a Restricted Subsidiary, such Investment
will no longer be counted as a Restricted Payment for purposes of calculating
the aggregate amount of Restricted Payments.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision will be reduced by the amount of any net reduction in such Investment
(resulting from the payment of interest or dividends, loan repayment, transfer
of assets or otherwise), to the extent such net reduction is not included in
Consolidated Adjusted Net Income; provided that the total amount by which the
aggregate amount of all Restricted Payments may be reduced may not exceed the
lesser of (x) the cash proceeds received by the Company and any of its
Restricted Subsidiaries in connection with such net reduction and (y) the
initial amount of such Investment.
In computing Consolidated Adjusted Net Income for purposes of the foregoing
clause (iii)(A), (i) the Company may use audited financial statements for the
portions of the relevant period for which audited financial statements are
available on the date of determination and unaudited financial statements and
other current financial data based on the books and records of the Company for
the remaining portion of such period and (ii) the Company will be permitted to
rely in good faith on the financial statements and other financial data derived
from the books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment that, at the time of
the making of such Restricted Payment, would in the good faith determination of
the Company be permitted under the requirements of the Notes Indenture, such
Restricted Payment will be deemed to have been made in compliance with the Notes
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Adjusted Net Income of the
Company for any period.
PURCHASE OF NOTES UPON A CHANGE OF CONTROL. If a Change of Control occurs
at any time, then each holder of Notes will have the right to require that the
Company purchase such holder's Notes, in whole or in part in integral multiples
of $1,000, at a purchase price in cash equal to 101% of the principal amount of
such Notes, plus accrued and unpaid interest, if any, to the date of purchase,
pursuant to the offer described below (the "Change of Control Offer") and the
other procedures set forth in the Notes Indenture.
Within 30 days following any Change of Control, the Company will notify the
Trustee thereof and give written notice of such Change of Control to each holder
of Notes by first-class mail, postage prepaid, at its address appearing in the
security register, stating, among other things, (i) the purchase price and the
purchase date, which will be a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is
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mailed or such later date as is necessary to comply with requirements under the
Exchange Act; (ii) that any Notes not tendered will continue to accrue interest;
(iii) that, unless the Company defaults in the payment of the purchase price,
any Notes accepted for payment pursuant to the Change of Control Offer will
cease to accrue interest after the Change of Control purchase date; and (iv)
certain other procedures that a holder of Notes must follow to accept a Change
of Control Offer or to withdraw such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the purchase price for all
of the Notes that might be tendered by holders of the Notes seeking to accept
the Change of Control Offer. The Credit Facility prohibits the purchase of Notes
by the Company prior to full repayment of indebtedness under the Credit Facility
and, upon a Change of Control, all amounts outstanding under the Credit Facility
become due and payable. There can be no assurance that in the event of a Change
of Control the Company will be able to obtain the necessary consents from the
lenders under the Credit Facility to consummate a Change of Control Offer. The
failure of the Company to make or consummate the Change of Control Offer or pay
the applicable Change of Control purchase price when due would result in an
Event of Default and would give the Trustee and the holders of the Notes the
rights described under "Events of Default."
In addition to the obligations of the Company under the Notes Indenture
with respect to the Notes in the event of a Change of Control, the Credit
Facility contains a provision designating a change of control as described
therein as an event of default, which would obligate the Company to repay
amounts outstanding under the Credit Facility upon an acceleration of the
indebtedness outstanding thereunder.
The existence of a holder's right to require the Company to purchase such
holder's Notes upon a Change of Control may deter a third party from acquiring
the Company in a transaction that constitutes a Change of Control.
The definition of "Change of Control" in the Notes Indenture is limited in
scope. The provisions of the Notes Indenture may not afford holders of Notes the
right to require the Company to repurchase such Notes in the event of a highly
leveraged transaction or certain transactions with the Company's management or
its affiliates, including a reorganization, restructuring, merger or similar
transaction involving the Company (including, in certain circumstances, an
acquisition of the Company by management or its affiliates) that may adversely
affect holders of the Notes, if such transaction is not a transaction defined as
a Change of Control. See "Certain Definitions" above for the definition of
"Change of Control." A transaction involving the Company's management or its
affiliates, or a transaction involving a recapitalization of the Company, would
result in a Change of Control if it is the type of transaction specified in such
definition.
The Company will comply with the applicable tender offer rules including
Rule 14e-l under the Exchange Act, and any other applicable securities laws and
regulations in connection with a Change of Control Offer.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create any restriction (other than restrictions existing under
Debt as in effect on the Closing Date or in refinancings or replacements of such
Debt) that would materially impair the ability of the Company to make a Change
of Control Offer to purchase the Notes or, if such Change of Control Offer is
made, to pay for the Notes tendered for purchase.
LIMITATION ON CERTAIN ASSET SALES. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries to, engage in any Asset Sale unless
(i) the consideration received by the Company or such Restricted Subsidiary for
such Asset Sale is not less than the fair market value of the assets sold (as
determined by the Board of Directors of the Company, whose good faith
determination will be conclusive) and (ii) the consideration received by the
Company or the relevant Restricted Subsidiary in respect of such Asset Sale
consists of at least 80% (A) cash or cash equivalents and/or (B) the assumption
by the transferee of Debt of the Company or a Restricted Subsidiary ranked
senior to or pari passu with the Notes and release of the Company or such
Restricted Subsidiary from all liability on such Debt.
(b) If the Company or any of its Restricted Subsidiaries engages in an
Asset Sale, the Company may, at its option, within 12 months after such Asset
Sale, (i) apply all or a portion of such Net Cash Proceeds to the permanent
reduction of amounts outstanding under the Credit Facility or to the repayment
of other Senior Debt of the Company or a Subsidiary Notes Guarantor or (ii)
invest (or enter into one or more legally binding
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agreements to invest) all or a portion of such Net Cash Proceeds in properties
and assets to replace the properties and assets that were the subject of the
Asset Sale or in properties and assets that will be used in the broadcast
business or businesses reasonably related thereto. If any such legally binding
agreement to invest such Net Cash Proceeds is terminated, the Company may,
within 90 days of such termination or within 12 months of such Asset Sale,
whichever is later, invest such Net Cash Proceeds as provided in clause (i) or
(ii) (without regard to the parenthetical contained in such clause (ii)) above.
The amount of such Net Cash Proceeds not so used as set forth above in this
paragraph (b) constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $5,000,000, the
Company will, within 30 days thereafter, make an offer to purchase from all
holders of Notes, on a pro rata basis, in accordance with the procedures set
forth in the Notes Indenture, the maximum principal amount (expressed as a
multiple of $1,000) of Notes that may be purchased with the Excess Proceeds, at
a purchase price in cash equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date such offer to purchase is
consummated. To the extent that the aggregate principal amount of the Notes
tendered pursuant to such offer to purchase is less than the Excess Proceeds,
the Company may use such deficiency for general corporate purposes. If the
aggregate principal amount of the Notes validly tendered and not withdrawn by
holders thereof exceeds the Excess Proceeds, the Notes to be purchased will be
selected on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds will be reset to zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act to the extent applicable in connection with the repurchase of Notes
pursuant to an offer to purchase Notes.
LIMITATION ON ASSET SWAPS. The Notes Indenture provides that the Company
will not, and will not permit any of its Restricted Subsidiaries to, engage in
any Asset Swap, unless:
(i) at the time of entering into the Asset Swap and immediately after
giving effect to the proposed Asset Swap, no Default or Event of Default
has occurred and is continuing or would occur as a consequence thereof;
(ii) the Company would, at the time of entering into the Asset Swap
and after giving pro forma effect to the proposed Asset Swap, as if such
Asset Swap had occurred at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of the
"Limitation on Debt" covenant;
(iii) the respective aggregate fair market values of the assets being
purchased and sold by the Company or any of its Restricted Subsidiaries are
substantially the same at the time of entering into the Asset Swap (or any
difference in such aggregate fair market values is substantially
compensated for by an equalizing (i) payment of cash, (ii) assumption of
liabilities or (iii) taking of assets subject to liabilities); and
(iv) at the time of the consummation of the first to occur of the
relinquishment or the replacement of assets constituting part of the
proposed Asset Swap, the percentage of any decline in the fair market value
of the asset or assets being acquired by the Company and its Restricted
Subsidiaries shall not be significantly greater than the percentage of any
decline in the fair market value of the assets being disposed of by the
Company, calculated from the time the last agreement constituting part of
the Asset Swap was entered into.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or suffer to exist any transaction with, or for the benefit of, any
Affiliate of the Company unless (a) such transaction is on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could have been obtained in an arm's length transaction with
third parties who are not Affiliates and (b) either (i) with respect to any
transaction or series of transactions involving aggregate payments in excess of
$1,000,000, but less than $5,000,000, the Company delivers an officers'
certificate to the Trustee certifying that such transaction or transactions
comply with clause (a) above or (ii) with respect to a transaction or series of
transactions involving aggregate payments equal to or greater than $5,000,000,
such transaction or transactions have been approved by the Board of Directors
(including a majority of the Disinterested Directors) of the Company or
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the Company has obtained a written opinion from a nationally recognized
investment banking firm to the effect that such transaction or transactions are
fair to the Company or such Restricted Subsidiary from a financial point of
view.
The foregoing covenant does not restrict any of the following:
(A) Transactions among the Company and/or any of its Restricted
Subsidiaries.
(B) The Company from paying reasonable and customary regular
compensation, fees, indemnification and similar arrangements and payments
thereunder to directors of the Company or any of its Restricted
Subsidiaries who are not employees of the Company or any of its Restricted
Subsidiaries.
(C) Employment agreements or compensation or employee benefits
arrangements with any officer, director or employee of the Company or its
Restricted Subsidiaries entered into in the ordinary course of business
(including customary benefits thereunder) (it being understood that
benefits of the nature in place as of the Closing Date shall be deemed
permissible hereunder).
(D) The performance of the Company's obligations under (a) that
certain lease agreement effective December 29, 1995 with Wilson Aviation,
L.L.C. relating to the lease of an airplane, (b) that certain agreement not
to compete dated December 31, 1996 with DVS Management, Inc. and (c) that
certain Voting Trust Agreement dated March 17, 1997 among Citadel
Communications, ABRY II, ABRY/CIP and others and the related letter
agreement dated March 17, 1997 among Citadel Communications, ABRY II,
ABRY/CIP and others (the "Affiliate Agreements"); provided that any
amendments or modifications to the terms of the Affiliate Agreements (1)
are no less favorable to the Company than those that could have been
obtained in an arm's length transaction with third parties who are not
Affiliates and (2) are approved by the Board of Directors (including a
majority of the Disinterested Directors) of the Company.
(E) The Company from making payments to Citadel Communications to pay
its operating and administrative expenses attributable to the Company
including, without limitation, legal and audit expenses, directors' fees
and Commission compliance expenses, in an amount not to exceed the greater
of $1,000,000 million per fiscal year and 1% of the net revenues of the
Company for the preceding fiscal year.
(F) The Company or a Restricted Subsidiary from transferring up to
$500,000 of properties and assets, including cash, to a joint venture in
which the Company or a Restricted Subsidiary has an equity interest and in
which one or more directors or officers of the Company or Citadel
Communications has an equity interest, which joint venture is engaged in
the internet service provider business.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any of its Restricted Subsidiaries to (a) pay dividends, in
cash or otherwise, or make any other distributions on or in respect of its
Capital Stock, (b) pay any Debt owed to the Company or any other Restricted
Subsidiary, (c) make loans or advances to the Company or any other Restricted
Subsidiary or (d) transfer any of its properties or assets to the Company or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of any of the following:
(i) The Credit Facility and any agreement in effect on the Closing
Date and listed on a schedule attached to the Notes Indenture.
(ii) Customary non-assignment provisions of any lease governing a
leasehold interest of the Company or any of its Restricted Subsidiaries.
(iii) The refinancing or successive refinancings of Debt referred to
in clause (i) or (iv), so long as such encumbrances or restrictions are no
less favorable to the Company or any of its Restricted Subsidiaries than
those contained in such original agreement.
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(iv) Any agreement or other instrument of a person acquired by the
Company or any of its Restricted Subsidiaries in existence at the time of
such acquisition (but not created in contemplation thereof), which
encumbrance or restriction is not applicable to any person, or the
properties or assets of any person, other than the person, or the property
or assets of the person, so acquired.
(v) Any agreement providing for the incurrence of Debt by a Restricted
Subsidiary pursuant to paragraph (b) of the "Limitation on Debt" covenant,
provided that such Restricted Subsidiary becomes a Subsidiary Notes
Guarantor.
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not sell, and will not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants, or other
rights to purchase shares of such Capital Stock) except (i) to the Company or a
Wholly Owned Restricted Subsidiary, (ii) issuances or sales to foreign nationals
of shares of Capital Stock of foreign Restricted Subsidiaries, to the extent
required by applicable law, or issuances or sales to directors of directors'
qualifying shares, (iii) if, immediately after giving effect to such issuance or
sale, neither the Company nor any Subsidiary owns any shares of Capital Stock of
such Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) or (iv) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary and any Investment in such person remaining
after giving effect to such issuance or sale would have been permitted to be
made under the "Limitation on Restricted Payments" covenant if made on the date
of such issuance or sale.
In addition, the Company will not, and will not permit any of its
Restricted Subsidiaries to, sell, transfer or otherwise dispose of any of its
properties or assets to an Unrestricted Subsidiary other than in the ordinary
course of business.
UNRESTRICTED SUBSIDIARIES. (a) The Board of Directors of the Company may
designate any Subsidiary (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary so long as (i) neither the Company
nor any of its Restricted Subsidiaries is directly or indirectly liable for any
Debt of such Subsidiary, (ii) no default with respect to any Debt of such
Subsidiary would permit (upon notice, lapse of time or otherwise) any holder of
any other Debt of the Company or any of its Restricted Subsidiaries to declare a
default on such other Debt or cause the payment thereof to be accelerated or
payable prior to its stated maturity, (iii) any Investment in such Subsidiary
made as a result of designating such Subsidiary an Unrestricted Subsidiary will
not violate the provisions of the "Limitation on Restricted Payments" covenant,
(iv) neither the Company nor any of its Restricted Subsidiaries has a contract,
agreement, arrangement, understanding or obligation of any kind, whether written
or oral, with such Subsidiary other than those that might be obtained at the
time from persons who are not Affiliates of the Company and (v) neither the
Company nor any of its Restricted Subsidiaries has any obligation to subscribe
for additional shares of Capital Stock or other equity interest in such
Subsidiary, or to maintain or preserve such Subsidiary's financial condition or
to cause such Subsidiary to achieve certain levels of operating results.
Notwithstanding the foregoing, the Company may not designate the License
Subsidiary, or any Subsidiary to which any properties or assets (other than
current assets) owned by the Company or the License Subsidiary on the Closing
Date have been transferred, as an Unrestricted Subsidiary.
(b) The Board of Directors of the Company may designate any of its
Unrestricted Subsidiaries as a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation will only be permitted if (i) such Debt is permitted under the
"Limitation on Debt" covenant and (ii) no Default or Event of Default will have
occurred and be continuing following such designation.
LIMITATION ON OTHER SENIOR SUBORDINATED DEBT. The Company and each
Subsidiary Notes Guarantor will not, directly or indirectly, incur or otherwise
permit to exist any Debt that is subordinate in right of payment to any Debt of
the Company or such Subsidiary Notes Guarantor, as the case may be, unless such
Debt is also pari passu with the Notes or the Subsidiary Notes Guarantee of the
Notes by such Subsidiary Notes Guarantor, as the case may be, or subordinate in
right of payment to the Notes or such Subsidiary Notes Guarantee of the Notes,
as the case may be, to at least the same extent as the Notes or such Subsidiary
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Notes Guarantee are subordinate in right of payment to Senior Debt or all senior
debt of the Subsidiary Notes Guarantors, as the case may be, as set forth in the
Notes Indenture.
SUBSIDIARY NOTES GUARANTEES. The Subsidiary Notes Guarantors will, jointly
and severally, unconditionally guarantee the due and punctual payment of the
principal of, premium, if any, and interest on the Notes on a senior
subordinated basis pursuant to the Subsidiary Notes Guarantees as described
under "-- Subordination." The Subsidiary Notes Guarantors may be released from
their obligations under the Subsidiary Notes Guarantees as described under
"-- Defeasance and Covenant Defeasance of the Notes Indenture" and a Subsidiary
Notes Guarantor may be released from its obligations under its Subsidiary Notes
Guarantee as described under "Guarantees."
The Company will (i) cause each person that, after the Closing Date,
becomes a Wholly Owned Restricted Subsidiary of the Company, as well as each
other Restricted Subsidiary that guarantees any other Debt of the Company, to
execute and deliver a supplemental indenture and thereby become a Subsidiary
Notes Guarantor bound by the Subsidiary Notes Guarantee of the Notes in the form
set forth in the Notes Indenture (without such Subsidiary Notes Guarantor being
required to execute and deliver its Subsidiary Notes Guarantee endorsed on the
Notes) and (ii) deliver to the Trustee an opinion of counsel, in form and
substance reasonably satisfactory to the Trustee, that the Subsidiary Notes
Guarantee of such Subsidiary Notes Guarantor is a valid and legally binding
obligation of such Subsidiary Notes Guarantor.
GUARANTEES OF DEBT BY RESTRICTED SUBSIDIARIES. The Company will not permit
any of its Restricted Subsidiaries that is not a Subsidiary Notes Guarantor,
directly or indirectly, to guarantee, assume or in any other manner become
liable for the payment of any Debt of the Company or any Debt of any other
Restricted Subsidiary, unless (a) such Restricted Subsidiary simultaneously
executes and delivers a Subsidiary Notes Guarantee and (b) with respect to any
guarantee of Subordinated Debt by a Restricted Subsidiary, any such guarantee is
subordinated to such Restricted Subsidiary's Subsidiary Notes Guarantee at least
to the same extent as such Subordinated Debt is subordinated to the Notes,
provided that the foregoing provision will not be applicable to any guarantee by
any such Restricted Subsidiary that existed at the time such person became a
Restricted Subsidiary and was not incurred in connection with, or in
contemplation of, such person becoming a Restricted Subsidiary.
LIMITATION ON LIENS. The Company will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, affirm or suffer to exist any Lien of
any kind securing any Pari Passu Debt or Subordinated Debt (including any
assumption, guarantee or other liability with respect thereto by any Restricted
Subsidiary) upon any property or assets (including any intercompany notes) of
the Company or any of its Restricted Subsidiaries now owned or acquired after
the Closing Date, or any income or profits therefrom, unless the Notes are
directly secured equally and ratably with (or prior to in the case of
Subordinated Debt) the obligation or liability secured by such Lien; provided
that the foregoing will not apply to Liens securing Debt of a person acquired by
the Company or any of its Restricted Subsidiaries in existence at the time of
such acquisition (but not created in contemplation thereof), which Lien is not
applicable to any person, or the properties or assets of any person, other than
the person, or the property or assets of the person, so acquired.
REPORTS. At all times from and after the earlier of (i) the date of the
commencement of the Exchange Offer or the effectiveness of a Shelf Registration
Statement relating to the Series A Notes (the "Registration") and (ii) the date
180 days after the Closing Date, in either case, whether or not the Company is
then required to file reports with the Commission, the Company will file with
the Commission all such reports and other information as it would be required to
file with the Commission by Sections 13(a) or 15(d) under the Exchange Act if it
were subject thereto. The Company will supply the Trustee and each holder, or
will supply to the Trustee for forwarding to each such holder, without cost to
such holder, copies of such reports and other information. In addition, at all
times prior to the earlier of the date of the Registration and the date 180 days
after the Closing Date, the Company will, at its cost, deliver to each holder of
the Notes quarterly and annual reports substantially equivalent to those that
would be required by the Exchange Act. In addition, at all times prior to the
Registration, upon the request of any holder or any prospective purchaser of the
Notes designated by a holder, the Company will supply to such holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act.
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CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with or merge with or into any other
person or, directly or indirectly, convey, transfer or lease its properties and
assets substantially as an entirety to any person or persons, unless:
(a) Either (i) the Company is the surviving corporation or (ii) the
person (if other than the Company) formed by such consolidation or into
which the Company is merged or the person that acquires by sale,
assignment, transfer, lease or other disposition the properties and assets
of the Company substantially as an entirety (the "Surviving Entity") (A) is
a corporation, partnership or trust organized and validly existing under
the laws of the United States, any state thereof or the District of
Columbia and (B) expressly assumes, by a supplemental indenture in form
satisfactory to the Trustee, all of the Company's obligations under the
Notes Indenture and the Notes.
(b) Immediately after giving effect to such transaction and treating
any obligation of the Company or a Restricted Subsidiary in connection with
or as a result of such transaction as having been incurred at the time of
such transaction, no Default or Event of Default has occurred and is
continuing.
(c) Immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred at the beginning of
the most recently ended four full fiscal quarter period for which internal
financial statements are available), the Company (or the Surviving Entity
if the Company is not the continuing obligor under the Notes Indenture)
could incur at least $1.00 of additional Debt (other than Permitted Debt)
pursuant to the first paragraph of the "Limitation on Debt" covenant.
(d) If the Company is not the continuing obligor under the Notes
Indenture, each Subsidiary Notes Guarantor, unless it is the other party to
the transaction described above, has by supplemental indenture confirmed
that its Subsidiary Notes Guarantee applies to the Surviving Entity's
obligations under the Notes Indenture and the Notes.
(e) If any of the property or assets of the Company or any of its
Restricted Subsidiaries would thereupon become subject to any Lien, the
provisions of the "Limitation on Liens" covenant are complied with.
(f) The Company delivers, or causes to be delivered, to the Trustee,
in form and substance reasonably satisfactory to the Trustee, an officers'
certificate and an opinion of counsel, each stating that such transaction
complies with the requirements of the Notes Indenture.
In the event of any transaction described in and complying with the
conditions listed in the first paragraph of this covenant in which the Company
is not the continuing obligor under the Notes Indenture, the Surviving Entity
will succeed to, and be substituted for, and may exercise every right and power
of, the Company under the Notes Indenture, and thereafter the Company will,
except in the case of a lease, be discharged from all its obligations and
covenants under the Notes Indenture and Notes.
EVENTS OF DEFAULT
Each of the following are "Events of Default" under the Notes Indenture:
(a) Default in the payment of any interest on any Note when it becomes
due and payable, and continuance of such default for a period of 30 days.
(b) Default in the payment of the principal of (or premium, if any,
on) any Note when due.
(c) Failure to perform or comply with the Notes Indenture provisions
described under "Consolidation, Merger and Sale of Assets."
(d) Default in the performance, or breach, of any covenant or
agreement of the Company or any Subsidiary Notes Guarantor contained in the
Notes Indenture or any Subsidiary Notes Guarantee (other than a default in
the performance, or breach, of a covenant or agreement that is specifically
dealt with elsewhere herein), and continuance of such default or breach for
a period of 60 days after written notice
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has been given to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate principal amount of the
Notes then outstanding.
(e) (i) An event of default has occurred under any mortgage, bond,
indenture, loan agreement or other document evidencing an issue of Debt of
the Company or any Significant Subsidiary, which issue has an aggregate
outstanding principal amount of not less than $5,000,000, and such default
has resulted in such Debt becoming, whether by declaration or otherwise,
due and payable prior to the date on which it would otherwise become due
and payable or (ii) a default in any payment when due at final maturity of
any such Debt.
(f) Failure by the Company or any of its Restricted Subsidiaries to
pay one or more final judgments the uninsured portion of which exceeds in
the aggregate $5,000,000, which judgment or judgments are not paid,
discharged or stayed for a period of 60 days.
(g) Any Subsidiary Notes Guarantee ceases to be in full force and
effect or is declared null and void or any Subsidiary Notes Guarantor
denies that it has any further liability under any Subsidiary Notes
Guarantee, or gives notice to such effect (other than by reason of the
termination of the Notes Indenture or the release of any Subsidiary Notes
Guarantee in accordance with the Notes Indenture), and such condition has
continued for a period of 30 days after written notice of such failure
requiring the Subsidiary Notes Guarantor and the Company to remedy the same
has been given (x) to the Company by the Trustee or (y) to the Company and
the Trustee by the holders of 25% in the aggregate principal amount of the
Notes then outstanding.
(h) The occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company or any Significant Subsidiary.
If an Event of Default (other than as specified in clause (h) above) occurs
and is continuing, the Trustee or the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding may, and the Trustee at the
request of such holders shall, declare the principal of all of the outstanding
Notes immediately due and payable, by a notice in writing to the Company (and to
the Trustee if given by the Holders) and, if the Credit Facility is in effect,
to the Credit Facility Agent, and, upon any such declaration, such principal
will become due and payable immediately. If an Event of Default specified in
clause (h) above occurs and is continuing, then such principal will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holder of Notes.
At any time after a declaration of acceleration under the Notes Indenture,
but before a judgment or decree for payment of the money due has been obtained
by the Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to the Company and the Trustee, may rescind
such declaration and its consequences if (i) the Company has paid or deposited
with the Trustee a sum sufficient to pay (A) all overdue interest on all Notes,
(B) all unpaid principal of (and premium, if any, on) any outstanding Notes that
has become due otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Notes, (C) to the extent that payment of such
interest is lawful, interest upon overdue interest and overdue principal amount
at the rate borne by the Notes and (D) all sums paid or advanced by the Trustee
under the Notes Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel; and (ii) all
Events of Default, other than the non-payment of principal of (or premium, if
any, on) or interest on the Notes that have become due solely by such
declaration of acceleration, have been cured or waived. No such rescission will
affect any subsequent default or impair any right consequent thereon.
The holders of not less than a majority in aggregate principal amount of
the outstanding Notes may, on behalf of the holders of all of the Notes, waive
any past defaults under the Notes Indenture, except a default in the payment of
the principal of (and premium, if any) or interest on any Note, or in respect of
a covenant or provision that under the Notes Indenture cannot be modified or
amended without the consent of the holder of each Note outstanding.
If a Default or an Event of Default occurs and is continuing and is known
to the Trustee, the Trustee will mail to each holder of the Notes notice of the
Default or Event of Default within 90 days after the occurrence
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thereof. Except in the case of a Default or an Event of Default in payment of
principal of (and premium, if any, on) or interest on any Notes, the Trustee may
withhold the notice to the holders of the Notes if a committee of its trust
officers in good faith determines that withholding such notice is in the
interests of the holders of the Notes.
The Company is required to furnish to the Trustee annual statements as to
the performance by the Company and the Subsidiary Notes Guarantors of their
respective obligations under the Notes Indenture and as to any default in such
performance. The Company is also required to notify the Trustee within five days
of any officer of the Company having knowledge of any Default.
DEFEASANCE OR COVENANT DEFEASANCE OF NOTES INDENTURE
The Company may, at its option and at any time, terminate the obligations
of the Company and any Subsidiary Notes Guarantors with respect to the
outstanding Notes ("defeasance"). Such defeasance means that the Company will be
deemed to have paid and discharged the entire Debt represented by the
outstanding Notes, except for (i) the rights of holders of outstanding Notes to
receive payments in respect of the principal of (and premium, if any, on) and
interest on such Notes when such payments are due, (ii) the Company's
obligations to issue temporary Notes, register the transfer or exchange of any
Notes, replace mutilated, destroyed, lost or stolen Notes, maintain an office or
agency for payments in respect of the Notes and segregate and hold such payments
in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee
and (iv) the defeasance provisions of the Notes Indenture. In addition, the
Company may, at its option and at any time, elect to terminate the obligations
of the Company and any Subsidiary Notes Guarantor with respect to certain
covenants set forth in the Notes Indenture and described under "Certain
Covenants" above, and any omission to comply with such obligations would not
constitute a Default or an Event of Default with respect to the Notes ("covenant
defeasance").
In order to exercise either defeasance or covenant defeasance, (a) the
Company must irrevocably deposit or cause to be deposited with the Trustee, as
trust funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the holders of the Notes, money in an amount, or U.S.
government securities that through the scheduled payment of principal and
interest thereon will provide money in an amount, or a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay and discharge the principal of (and premium, if any, on) and
interest on the outstanding Notes at maturity (or upon redemption, if
applicable) of such principal or installment of interest; (b) no Default or
Event of Default has occurred and is continuing on the date of such deposit or,
insofar as an event of bankruptcy under clause (h) of "Events of Default" above
is concerned, at any time during the period ending on the 91st day after the
date of such deposit; (c) such defeasance or covenant defeasance must not result
in a breach or violation of, or constitute a default under, the Notes Indenture
or any material agreement or instrument to which the Company or any Subsidiary
Notes Guarantor is a party or by which it is bound or cause the Trustee or the
trust so created to be subject to the Investment Company Act of 1940, as
amended; (d) in the case of defeasance, the Company must deliver to the Trustee
an opinion of counsel stating that the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or since the date
hereof, there has been a change in applicable federal income tax law, to the
effect, and based thereon such opinion must confirm that, the holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred; (e) in the case of covenant
defeasance, the Company must have delivered to the Trustee an opinion of counsel
to the effect that the holders of the Notes outstanding will not recognize
income, gain or loss for federal income tax purposes as a result of such
covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred; and (f) the Company must have
delivered to the Trustee an officers' certificate and an opinion of counsel,
each stating that all conditions precedent provided for relating to either the
defeasance or the covenant defeasance, as the case may be, have been complied
with.
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SATISFACTION AND DISCHARGE
The Notes Indenture will cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of the Notes, as
expressly provided for in the Notes Indenture) and, upon the request of the
Company, the Trustee, at the expense of the Company, will execute proper
instruments acknowledging satisfaction and discharge of the Notes Indenture when
(a) either (i) all the Notes theretofore authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or paid and Notes that
have been subject to defeasance as described under "Defeasance or Covenant
Defeasance of Notes Indenture") have been delivered to the Trustee for
cancellation or (ii) all Notes not theretofore delivered to the Trustee for
cancellation (A) have become due and payable, (B) will become due and payable at
Stated Maturity within one year or (C) are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company has irrevocably deposited or caused to be deposited with the
Trustee funds in trust for the purpose in an amount sufficient to pay and
discharge the entire Debt on such Notes not theretofore delivered to the Trustee
for cancellation, for principal (and premium, if any, on) and interest to the
date of such deposit (in the case of Notes that have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be; (b) the Company
has paid or caused to be paid all sums payable under the Notes Indenture by the
Company; and (c) the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided in the Notes Indenture relating to the satisfaction and
discharge of the Notes Indenture have been complied with.
AMENDMENTS AND WAIVERS
Modifications and amendments of the Notes Indenture and any Subsidiary
Notes Guarantee may be made by the Company, any affected Subsidiary Notes
Guarantor and the Trustee with the consent of the holders of a majority in
aggregate outstanding principal amount of the Notes; provided, however, that no
such modification or amendment may, without the consent of the holder of each
outstanding Note affected thereby,
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, or reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where or change the coin or
currency in which, any Note or any premium or interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date);
(b) reduce the percentage in principal amount of outstanding Notes,
the consent of whose holders is required for any such amendment or for any
waiver of compliance with certain provisions of, or certain defaults and
their consequences provided for under, the Notes Indenture;
(c) modify any of the provisions of the Notes Indenture relating to
the subordination of the Notes or the Subsidiary Notes Guarantees in a
manner materially adverse to the holders; or
(d) waive a default in the payment of principal of, or premium, if
any, or interest on the Notes or reduce the percentage or aggregate
principal amount of outstanding Notes the consent of whose holders is
necessary for waiver of compliance with certain provisions of the Notes
Indenture or for waiver of certain defaults.
The holders of a majority in aggregate principal amount of the Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Notes Indenture.
Without the consent of any holders, the Company and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
to the Notes Indenture for any of the following purposes: (1) to evidence the
succession of another person to the Company and the assumption by any such
successor of the covenants of the Company in the Notes Indenture and in the
Notes; or (2) to add to the covenants of the Company for the benefit of the
holders, or to surrender any right or power herein conferred upon the Company;
or (3) to add additional Events of Default; or (4) to provide for uncertificated
Notes in addition to or in place of the certificated Notes; or (5) to evidence
and provide for the acceptance of appointment under
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the Notes Indenture by a successor Trustee; or (6) to secure the Notes; or (7)
to cure any ambiguity, to correct or supplement any provision in the Notes
Indenture that may be defective or inconsistent with any other provision in the
Notes Indenture, or to make any other provisions with respect to matters or
questions arising under the Notes Indenture, provided that such actions pursuant
to this clause do not adversely affect the interests of the holders in any
material respect; or (8) to comply with any requirements of the Commission in
order to effect and maintain the qualification of the Notes Indenture under the
Trust Indenture Act.
THE TRUSTEE
The Bank of New York, the Trustee under the Notes Indenture, is the initial
paying agent and registrar for the Notes. The Bank of New York is a lender under
the Credit Facility.
The Notes Indenture provides that, except during the continuance of an
Event of Default, the Trustee will perform only such duties as are specifically
set forth in the Notes Indenture. Under the Notes Indenture, the holders of a
majority in outstanding principal amount of the Notes will have the right to
direct the time, method and place of conducting any proceeding or exercising any
remedy available to the Trustee, subject to certain exceptions. If an Event of
Default has occurred and is continuing, the Trustee will exercise such rights
and powers vested in it under the Notes Indenture and use the same degree of
care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
The Notes Indenture and provisions of the Trust Indenture Act incorporated
by reference therein, contain limitations on the rights of the Trustee
thereunder, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided, however, that, if it acquires any
conflicting interest (as defined), it must eliminate such conflict or else
resign.
GOVERNING LAW
The Notes Indenture, the Notes and the Subsidiary Notes Guarantees are
governed by, and construed in accordance with, the laws of the State of New
York.
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DESCRIPTION OF THE EXCHANGEABLE PREFERRED STOCK
AND EXCHANGE DEBENTURES
EXCHANGEABLE PREFERRED STOCK
As used in this "Description of the Exchangeable Preferred Stock and
Exchange Debentures" section, the term "Company" refers to Citadel Broadcasting
Company, but not any current or future subsidiary (unless the context otherwise
requires). The following summary of the material provisions of the Exchangeable
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the Certificate of
Designation relating thereto, a copy of which is available from the Company. For
definitions of certain capitalized terms used in the following summary, see
"-- Certain Definitions" below. Other capitalized terms used herein and not
otherwise defined have the meanings set forth in the Certificate of Designation.
GENERAL
As of the date hereof, the Company is authorized to issue 4,000,000 shares
of preferred stock, no par value, and, as of the date hereof, there are
1,000,000 shares of preferred stock issued and outstanding and designated as
13 1/4% Series A Exchangeable Preferred Stock. Subject to certain conditions,
the Exchangeable Preferred Stock will be exchangeable for the Exchange
Debentures at the option of the Company on any dividend payment date. The Series
B Exchangeable Preferred Stock, when issued by the Company, will be fully paid
and non-assessable and the holders thereof will not have any subscription or
preemptive rights in connection therewith. The Bank of New York, 101 Barclay
Street, New York, New York 10286, is the transfer agent and registrar (the
"Transfer Agent") for the Exchangeable Preferred Stock. The Bank of New York is
a lender under the Credit Facility.
RANKING
The Exchangeable Preferred Stock, with respect to dividend rights and
rights on liquidation, winding-up and dissolution of the Company, ranks (i)
senior to all classes of common stock and to each other class of capital stock
or series of preferred stock established after June 30, 1997 by the Board of
Directors of the Company the terms of which expressly provide that it ranks
junior to the Exchangeable Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Company (collectively referred
to, together with all classes of common stock of the Company, as "Junior
Stock"); (ii) on a parity with each other class of capital stock or series of
preferred stock established after June 30, 1997 by the Board of Directors of the
Company the terms of which expressly provide that such class or series will rank
on a parity with the Exchangeable Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution of the Company (collectively
referred to as "Parity Stock"); and (iii) subject to certain conditions,
described below, junior to each class of capital stock or series of preferred
stock established after June 30, 1997 by the Board of Directors of the Company
the terms of which do not expressly provide that such class or series will rank
junior to, or on a parity with, the Exchangeable Preferred Stock as to dividend
rights and rights upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Stock").
The Company may not authorize any new class of Senior Stock (other than the
Exchangeable Preferred Stock) without the approval of the holders of at least a
majority of the shares of Exchangeable Preferred Stock then outstanding, voting
or consenting, as the case may be, as one class.
DIVIDENDS
Holders of the outstanding shares of Exchangeable Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefor, dividends on the Exchangeable
Preferred Stock. In the event that, after July 1, 2002, cash dividends on the
Exchangeable Preferred Stock are in arrears and unpaid for two or more
semi-annual dividend periods (whether or not consecutive), holders of
Exchangeable Preferred Stock will be entitled to certain voting rights. See
"-- Voting Rights" below. All dividends will be cumulative, whether or not
earned or declared. Dividends on the Series B
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Exchangeable Preferred Stock will accumulate from and including its issuance
date. Additionally, dividends on the Series B Exchangeable Preferred Stock will
accumulate from the last dividend payment date on which dividends were paid on
the Series A Exchangeable Preferred Stock surrendered in exchange therefor or,
if no dividends have been paid on the Series A Exchangeable Preferred Stock,
from July 3, 1997, the date of original issuance of the Series A Exchangeable
Preferred Stock, to but not including the issuance date of the Series B
Exchangeable Preferred Stock. Holders whose Series A Exchangeable Preferred
Stock is accepted for exchange will be deemed to have waived the right to
receive dividends accumulated on such Series A Exchangeable Preferred Stock.
Accordingly, holders who exchange their Series A Exchangeable Preferred Stock
will receive the same dividend payment on the next dividend payment date
(expected to be January 1, 1998) that they would have received had they not
accepted the Exchange Offer, except that if such dividend is not paid in cash,
it will be paid in shares of Series B Exchangeable Preferred Stock instead of
shares of Series A Exchangeable Preferred Stock. Dividends are payable
semi-annually in arrears on January 1 and July 1 of each year, commencing on
January 1, 1998, to holders of record on the December 15 or June 15 immediately
preceding the relevant dividend payment date. On or before July 1, 2002, the
Company may, at its option, pay dividends in cash or in additional fully paid
and non-assessable shares of Exchangeable Preferred Stock having an aggregate
liquidation preference equal to the amount of such dividends. After July 1,
2002, dividends may be paid only in cash. If any dividend (or portion thereof)
payable on any dividend payment date on or before July 1, 2002 is not declared
or paid in full in cash or in shares of Exchangeable Preferred Stock as
described above on such dividend payment date, the amount of the accumulated and
unpaid dividend will bear interest at the dividend rate on the Exchangeable
Preferred Stock, compounding semi-annually from such dividend payment date until
paid in full. If any dividend (or portion thereof) payable on any dividend
payment date after July 1, 2002 is not declared or paid in full in cash on such
dividend payment date, the amount of the accumulated and unpaid dividend will
bear interest at the dividend rate on the Exchangeable Preferred Stock,
compounding semi-annually from such dividend payment date until paid in full.
The Credit Facility and the Notes Indenture limit the Company's ability under
certain circumstances to pay cash dividends on its capital stock, and future
agreements may contain similar or more restrictive limitations. See "Description
of Indebtedness" and "Description of the Notes."
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Stock for any period unless full cumulative
dividends shall have been or contemporaneously are declared and paid (or are
deemed declared and paid) in full or declared and, if payable in cash, a sum in
cash sufficient for such payment set apart for such payment on the Exchangeable
Preferred Stock. If full dividends are not so paid, the Exchangeable Preferred
Stock will share dividends pro rata with the Parity Stock. No dividends may be
paid or set apart for such payment on Junior Stock (except dividends on Junior
Stock payable in additional shares of Junior Stock) and no Junior Stock or
Parity Stock may be repurchased, redeemed or otherwise retired nor may funds be
set apart for payment with respect thereto, if full cumulative dividends have
not been paid in full (or deemed paid) on the Exchangeable Preferred Stock.
Dividends on account of arrears for any past dividend period and dividends in
connection with any optional redemption may be declared and paid at any time,
without reference to any regular dividend payment date, to holders of record of
the Exchangeable Preferred Stock on such date, not more than 45 days prior to
the payment thereof, as may be fixed by the Board of Directors of the Company.
OPTIONAL REDEMPTION
The Exchangeable Preferred Stock is redeemable (subject to contractual and
other restrictions with respect thereto and to the legal availability of funds
therefor) at the election of the Company, as a whole or from time to time in
part, at any time on or after July 1, 2002 on not less than 30 nor more than 60
days' prior notice, at the redemption prices (expressed as percentages of the
then effective liquidation preference thereof) set forth below, plus, without
duplication, all accumulated and unpaid dividends, if any, to the redemption
date (including an amount in cash equal to a prorated dividend for the period
from the dividend payment date
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immediately prior to the redemption date to the redemption date), if redeemed
during the 12-month period beginning on July 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
------------------------------------------- ----------------
<S> <C>
2002....................................... 107.729%
2003....................................... 106.625
2004....................................... 105.521
2005....................................... 104.417
2006....................................... 103.313
2007....................................... 102.208
2008....................................... 101.104
</TABLE>
In addition, at any time and from time to time prior to July 1, 2000, the
Company may at its option redeem shares of Exchangeable Preferred Stock having
an aggregate liquidation preference of up to 35% of the aggregate liquidation
preference of all shares of Exchangeable Preferred Stock issued in this
Exchangeable Preferred Stock Offering or issued as dividends on the Exchangeable
Preferred Stock, with the net proceeds of one or more Public Equity Offerings at
a redemption price equal to 113.25% of the liquidation preference thereof, plus
without duplication, accumulated and unpaid dividends, if any, to the redemption
date (including an amount in cash equal to a prorated dividend for the period
from the dividend payment date immediately prior to the redemption date to the
redemption date), subject to the right of holders of record on the relevant
record date to receive dividends due on a dividend payment date; provided that,
immediately after giving effect to any such redemption, at least $75,000,000 in
aggregate liquidation preference of the Exchangeable Preferred Stock remains
outstanding. Any such redemption must be made within 90 days of the related
Public Equity Offering.
No optional redemption may be authorized or made unless on or prior to such
redemption full unpaid cumulative dividends shall have been paid or a sum set
apart for such payment on the Exchangeable Preferred Stock.
If less than all the Exchangeable Preferred Stock is to be redeemed, the
particular shares to be redeemed will be determined pro rata, except that the
Company may redeem such shares held by any holder of fewer than 100 shares
without regard to such pro rata redemption requirement. If any Exchangeable
Preferred Stock is to be redeemed in part, the notice of redemption that relates
to such Exchangeable Preferred Stock shall state the portion of the liquidation
preference to be redeemed. New shares of Exchangeable Preferred Stock having an
aggregate liquidation preference equal to the unredeemed portion will be issued
in the name of the holder thereof upon cancellation of the original shares of
Exchangeable Preferred Stock and, unless the Company fails to pay the redemption
price on the redemption date, after the redemption date dividends will cease to
accumulate on the Exchangeable Preferred Stock called for redemption. See
"Description of Indebtedness."
The Credit Facility and the Notes Indenture limit the Company's ability to
redeem the Exchangeable Preferred Stock, and future agreements may contain
similar or more restrictive limitations.
MANDATORY REDEMPTION
The Exchangeable Preferred Stock is also subject to mandatory redemption
(subject to the legal availability of funds therefor) in whole on July 1, 2009
(the "Mandatory Redemption Date"), at a redemption price equal to 100% of the
liquidation preference thereof, plus, without duplication, all accumulated and
unpaid dividends, if any, to the date of redemption. Future agreements of the
Company may restrict or prohibit the Company from redeeming the Exchangeable
Preferred Stock on such mandatory redemption date.
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PROCEDURE FOR REDEMPTION
On and after the redemption date, unless the Company defaults in the
payment of the applicable redemption price, dividends will cease to accumulate
on shares of Exchangeable Preferred Stock called for redemption and all rights
of holders of such shares will terminate except for the right to receive the
redemption price, without interest; provided, however, that if a notice of
redemption shall have been given and the funds necessary for redemption
(including an amount in respect of all dividends that will accrue to the
redemption date) shall have been segregated and irrevocably set apart by the
Company, in trust for the benefit of the holders of the shares called for
redemption, then dividends shall cease to accumulate on the redemption date on
the shares to be redeemed and, at the close of business on the day on which such
funds are segregated and set apart, the holders of the shares to be redeemed
shall cease to be stockholders of the Company and shall be entitled only to
receive the redemption price for such shares. The Company will send a written
notice of redemption by first class mail to each holder of record of shares of
Exchangeable Preferred Stock, no fewer than 30 days nor more than 60 days prior
to the date fixed for such redemption at its registered address. Shares of
Exchangeable Preferred Stock issued and reacquired will, upon compliance with
the applicable requirements of Nevada law, have the status of authorized but
unissued shares of preferred stock of the Company undesignated as to series and
may, with any and all other authorized but unissued preferred stock of the
Company, be designated or redesignated and issued or reissued, as the case may
be, as part of any series of preferred stock of the Company, except that any
issuance or reissuance of shares of Exchangeable Preferred Stock must be in
compliance with the Certificate of Designation.
EXCHANGE
The Company may, at its option, subject to certain conditions, on any
scheduled dividend payment date, exchange the Exchangeable Preferred Stock, in
whole but not in part, for the Exchange Debentures; provided that (i) on the
date of such exchange there are no accumulated and unpaid dividends on the
Exchangeable Preferred Stock (including the dividend payable on such date) or
other contractual impediments to such exchange; and (ii) immediately after
giving effect to such exchange, no Default or Event of Default (each as defined
in the Exchange Indenture) would exist under the Exchange Indenture and no
material breach or default would exist under the Credit Facility, the Notes
Indenture or the Securities Purchase and Exchange Agreement. The exchange of the
Exchangeable Preferred Stock into Exchange Debentures would be restricted by
covenants contained in the Credit Facility, the Notes Indenture and the
Securities Purchase and Exchange Agreement, in each case, relating, among other
things, to the incurrence of debt, and future agreements may contain similar or
more restrictive limitations.
Upon any exchange pursuant to the preceding paragraph, holders of
outstanding shares of Exchangeable Preferred Stock will be entitled to receive,
subject to the second succeeding sentence, $1.00 principal amount of Exchange
Debentures for each $1.00 of the then effective liquidation preference of
Exchangeable Preferred Stock held by them. The Exchange Debentures will be
issued in registered form, without coupons. Exchange Debentures issued in
exchange for Exchangeable Preferred Stock will be issued in principal amounts of
$1,000 and integral multiples thereof, and the Company shall pay cash in lieu of
issuing an Exchange Debenture in any other principal amount. The Company will
send a written notice of exchange by mail to each holder of record of shares of
Exchangeable Preferred Stock not fewer than 30 days nor more than 60 days before
the date fixed for such exchange. On and after the date of exchange, dividends
will cease to accumulate on the outstanding shares of Exchangeable Preferred
Stock, and all rights of the holders of Exchangeable Preferred Stock (except the
right to receive the Exchange Debentures, an amount in cash, to the extent
applicable, equal to the accumulated and unpaid dividends to the exchange date
and cash in lieu of any Exchange Debenture that is in a principal amount less
than $1,000) will terminate. The person entitled to receive the Exchange
Debentures issuable upon such exchange will be treated for all purposes as the
registered holder of such Exchange Debentures.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, holders of Exchangeable Preferred Stock will be entitled to be
paid, out of the assets of the Company available for
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distribution to stockholders, the then effective liquidation preference per
share of Exchangeable Preferred Stock (initially $100 per share), plus, without
duplication, an amount in cash equal to all accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up (including
an amount equal to a prorated dividend for the period from the last dividend
payment date to the date fixed for liquidation, dissolution or winding-up),
before any distribution is made on any Junior Stock, including, without
limitation, common stock of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to the Exchangeable Preferred Stock and all other Parity Stock are not
paid in full, the holders of the Exchangeable Preferred Stock and the Parity
Stock will share equally and ratably in any distribution of assets of the
Company in proportion to the full liquidation preference to which each is
entitled. After payment of the full amount of the liquidation preference and
accumulated and unpaid dividends to which they are entitled, the holders of
shares of Exchangeable Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company. However, neither the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with one or more
entities shall be deemed to be a liquidation, dissolution or winding-up of the
Company.
The Certificate of Designation for the Exchangeable Preferred Stock will
not contain any provision requiring funds to be set aside to protect the
liquidation preference of the Exchangeable Preferred Stock.
VOTING RIGHTS
The holders of Exchangeable Preferred Stock, except as otherwise required
under Nevada law or as set forth below, are not entitled or permitted to vote on
any matter required or permitted to be voted upon by the stockholders of the
Company.
The Certificate of Designation provides that if (i) after July 1, 2002,
cash dividends on the Exchangeable Preferred Stock are in arrears and unpaid for
two or more semi-annual dividend periods (whether or not consecutive); (ii) the
Company fails to redeem the Exchangeable Preferred Stock on July 1, 2009 or
fails to otherwise discharge any redemption obligation with respect to the
Exchangeable Preferred Stock; (iii) the Company fails to make a Change of
Control Offer if such offer is required by the provisions set forth under the
"Purchase of Exchangeable Preferred Stock upon a Change of Control" covenant
below or fails to purchase shares of Exchangeable Preferred Stock from holders
who elect to have such shares purchased pursuant to the Change of Control Offer;
(iv) a breach or violation of any other provisions described under the caption
"-- Certain Covenants" occurs and the breach or violation continues for a period
of 30 days or more after the Company receives notice thereof specifying the
default from the holders of at least 25% of the shares of Exchangeable Preferred
Stock then outstanding; or (v) the Company fails to pay at the final stated
maturity (giving effect to any extensions thereof) the principal amount of any
Debt of the Company or any Restricted Subsidiary of the Company, or the final
stated maturity of any such Debt is accelerated, if the aggregate principal
amount of such Debt, together with the aggregate principal amount of any other
such Debt in default for failure to pay principal at the final stated maturity
(giving effect to any extensions thereof) or which has been accelerated,
aggregates $5,000,000 or more at any time, then the number of directors
constituting the Board of Directors will be adjusted to permit the holders of a
majority of the then outstanding shares of Exchangeable Preferred Stock, voting
separately and as a class (together with the holders of any Parity Stock having
similar voting rights), to elect two directors to the Board of Directors of the
Company. Such voting rights will continue until such time as, in the case of a
dividend default, all dividends in arrears on the Exchangeable Preferred Stock
are paid in full in cash and, in all other cases, any failure, breach or default
giving rise to such voting rights is remedied or waived by the holders of at
least a majority of the shares of Exchangeable Preferred Stock then outstanding,
at which time the term of any directors elected pursuant to the provisions of
this paragraph shall terminate. Each such event described in clauses (i) through
(v) above is referred to herein as a "Voting Rights Triggering Event." The
voting rights provided herein shall be the holder's exclusive remedy at law or
in equity.
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The Certificate of Designation also provides that the Company will not
authorize any new class of Senior Stock without the affirmative vote or consent
of holders of at least a majority of the shares of Exchangeable Preferred Stock
then outstanding, voting or consenting, as the case may be, as one class.
Under Nevada law, holders of preferred stock are entitled to vote as a
class upon a proposed amendment to the certificate of incorporation, whether or
not entitled to vote thereon by the certificate of incorporation, if the
amendment would increase or decrease the par value of the shares of such class,
or alter or change the powers, preferences or special rights of the shares of
such class so as to affect them adversely.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Certificate of Designation and the Exchange Indenture. Reference is made to the
Certificate of Designation and the Exchange Indenture for the full definition of
all such terms as well as any other capitalized terms used herein for which no
definition is provided.
"Acquired Debt" means Debt of a person (a) existing at the time such person
is merged with or into the Company or becomes a Subsidiary, (b) assumed in
connection with the acquisition of assets from such person or (c) secured by a
Lien encumbering assets acquired from such person.
"Acquired Preferred Stock" means preferred stock of a person (a) existing
at the time such person is merged with or into the Company or becomes a
Subsidiary or (b) assumed in connection with the acquisition of assets from such
person.
"Affiliate" means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control," when used with respect to any specified person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer") by the Company or a
Restricted Subsidiary, directly or indirectly, in one or a series of related
transactions, to any person other than the Company or a Restricted Subsidiary of
(a) any Capital Stock of any of its Restricted Subsidiaries, (b) all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries representing a division or line of business or (c) any other
properties or assets of the Company or any of its Restricted Subsidiaries, other
than in the ordinary course of business. For the purposes of this definition,
the term "Asset Sale" does not include any transfer of properties or assets (a)
that is governed by the provisions of the Certificate of Designation or Exchange
Indenture, as applicable, described under (i) "Consolidation, Merger and Sale of
Assets" or (ii) the "Limitation on Asset Swaps" covenant, (b) between or among
the Company and any of its Restricted Subsidiaries pursuant to transactions that
do not violate any other provision of the Exchange Indenture, if applicable, (c)
to an Unrestricted Subsidiary, if permitted under the "Limitation on Restricted
Payments" covenant, (d) representing obsolete or permanently retired equipment,
(e) the gross proceeds of which (exclusive of indemnities) do not exceed
$100,000 for any particular item or $500,000 in the aggregate for any fiscal
year or (f) the transfer of up to $500,000 of properties and assets, including
cash, to a joint venture in which the Company or a Restricted Subsidiary has an
equity interest, which joint venture is engaged in the internet service provider
business.
"Asset Swap" means the execution of one or more definitive agreements,
subject only to FCC approval, if applicable, and other customary closing
conditions, which the Company in good faith believes will be satisfied, for a
substantially concurrent purchase and sale, or exchange, or "deferred exchange"
(for no more than 180 days) under section 1031(a)(3) of the Code, of assets used
in the broadcast or related businesses between the Company or any of its
Restricted Subsidiaries and one or more other persons or groups of affiliated
persons; provided that any amendment to or waiver of any closing conditions that
individually or in the aggregate are material to the Asset Swap will be deemed
to be a new Asset Swap.
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"Banks" means the banks and other financial institutions that from time to
time are lenders under the Credit Facility.
"Capital Stock" of any person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents (however
designated) of such person's equity (however designated).
"Capitalized Lease Obligation" means, with respect to any person, an
obligation incurred or assumed under or in connection with any capital lease of
real or personal property that, in accordance with GAAP, has been recorded as a
capitalized lease on the balance sheet of such person.
"Change of Control" means the occurrence of any of the following events:
(a) Any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Lawrence R. Wilson, Scott E.
Smith, John E. von Schlegell, Baker, Fentress & Company, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., The Endeavour
Capital Fund Limited Partnership and any trustee, in its capacity as
trustee under the Voting Trust Agreement ("Permitted Holders") or Citadel
Communications is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person will be deemed
to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than a majority
of the voting power of all classes of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of Directors,
or whose nomination for election by the stockholders of the Company, was
approved by a vote of at least 66 2/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of the
Company then in office; or
(c) The Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Closing Date" means July 3, 1997, the date on which the Series A
Exchangeable Preferred Stock was originally issued under the Certificate of
Designation.
"Consolidated Adjusted Net Income" means, for any period, the net income
(or net loss) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, adjusted to the
extent included in calculating such net income or loss by excluding (a) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (b) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (c) the portion of net income (or
loss) of any person (other than the Company or a Restricted Subsidiary),
including Unrestricted Subsidiaries, in which the Company or any of its
Restricted Subsidiaries has an ownership interest, except to the extent of the
amount of dividends or other distributions actually paid to the Company or any
of its Restricted Subsidiaries in cash during such period, (d) the net income
(or loss) of any person combined with the Company or any of its Restricted
Subsidiaries on a "pooling of interests" basis attributable to any period prior
to the date of combination, and (e) the net income (but not the net loss) of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is at the date of
determination restricted, directly or indirectly, except to the extent that such
net income could be paid to the Company or a Restricted Subsidiary thereof;
provided that, if any Restricted Subsidiary is not a Wholly Owned Restricted
Subsidiary, Consolidated Adjusted Net Income will be reduced (to the extent not
otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount
of the Consolidated Adjusted Net Income otherwise attributable to such
Restricted Subsidiary multiplied by (B) the quotient of (1) the number of shares
of outstanding common stock of such Restricted Subsidiary not owned on the last
day of such period by the Company or any of its Restricted Subsidiaries divided
by (2) the total number of shares of outstanding common stock of such Restricted
Subsidiary on the last day of such period.
"Consolidated Cash Flow" means, for any period, the sum of, without
duplication, Consolidated Adjusted Net Income for such period, plus (or, in the
case of clause (d) below, plus or minus) the following items to
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the extent included in computing Consolidated Adjusted Net Income for such
period: (a) the aggregate interest expense and preferred stock dividends of the
Company and its Restricted Subsidiaries for such period, plus (b) the provision
for federal, state, local and foreign income taxes of the Company and its
Restricted Subsidiaries for such period, plus (c) the aggregate depreciation and
amortization expense of the Company and any of its Restricted Subsidiaries for
such period, plus (d) any other non-cash charges for such period, and minus
non-cash credits for such period, other than non-cash charges or credits
resulting from changes in prepaid assets or accrued liabilities in the ordinary
course of business; provided that income tax expense, interest expense and
preferred stock dividends, depreciation and amortization expense, and non-cash
charges and credits of a Restricted Subsidiary will be included in Consolidated
Cash Flow only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Adjusted Net
Income for such period. Solely for purposes of determining whether the Company
could incur Debt pursuant to the first paragraph of the "Limitation on Debt"
covenant, if the Company is permitted to give pro forma effect to an In-Market
Acquisition of a radio station pursuant to clause (iii) of the second paragraph
of such covenant, such calculation may also give pro forma effect to projected
quantifiable improvements in operating results of such radio station due to cost
reductions calculated in good faith by the Company and certified by an officers'
certificate filed with the Transfer Agent or Debentures Trustee, as the case may
be. As used in the preceding sentence, the term "In-Market Acquisition" means
the acquisition of a radio station or group of radio stations serving an MSA in
which the Company or its Subsidiaries has owned, or has operated under a LMA,
one or more radio stations for at least the preceding six months.
"Consolidated Cash Flow Ratio" means, at any date, the ratio of (i) the
aggregate amount of Debt of the Company and its Restricted Subsidiaries on a
consolidated basis as of the end of the immediately preceding four fiscal
quarters for which internal financial statements of the Company are available
(the "Reference Period") to (ii) the aggregate amount of Consolidated Cash Flow
for such Reference Period.
"Consolidated Fixed Charges" means, for any period, without duplication,
the sum of (a) the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a consolidated
statement of operations of the Company and its Restricted Subsidiaries for such
period, including, without limitation, (i) amortization of debt discount, (ii)
the net cost of interest rate contracts (including amortization of discounts),
(iii) the interest portion of any deferred payment obligation, (iv) amortization
of debt issuance costs, (v) the interest component of Capitalized Lease
Obligations of the Company and any of its Restricted Subsidiaries, and (vi) the
portion of any rental obligation of the Company and any of its Restricted
Subsidiaries in respect of any sale and leaseback transaction allocable during
such period to interest expense (determined as if it were treated as a
Capitalized Lease Obligation) plus (b) all interest on any Debt of any other
person guaranteed by the Company or any of its Restricted Subsidiaries;
provided, however, that Consolidated Fixed Charges will not include any gain or
loss from extinguishment of debt, including any write-off of debt issuance
costs.
"Credit Facility" means the loan agreement dated October 9, 1996 among the
Company, the Banks and the Credit Facility Agent, as amended, and as such
agreement may be amended, restated, supplemented, replaced or refinanced or
otherwise modified from time to time.
"Credit Facility Agent" means the then acting Agent as defined in and under
the Credit Facility or any successor thereto.
"Debt" means (without duplication), with respect to any person, whether
recourse is to all or a portion of the assets of such person and whether or not
contingent, (a) every obligation of such person for money borrowed, (b) every
obligation of such person evidenced by bonds, debentures, notes or other similar
instruments, (c) every reimbursement obligation of such person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such person, (d) every obligation of such person issued or assumed as
the deferred purchase price of property or services, (e) every Capitalized Lease
Obligation of such person, (f) all Disqualified Stock of such person valued at
its maximum fixed repurchase price, plus accumulated and unpaid dividends, (g)
all Hedging Obligations of such person, and (h) every obligation of the type
referred to in clauses (a) through (g) of another person and all dividends of
another person (i) the payment of which, in either case, such person has
guaranteed or (ii) which is secured by any
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Lien on any property or asset of such person, the amount of such Debt being
deemed to be the lesser of the actual amount of the guarantee or the value of
such property or asset subject to such Lien, as the case may be, and the amount
of the Debt so guaranteed or secured, as the case may be. For purposes of this
definition, the "maximum fixed repurchase price" of any Disqualified Stock that
does not have a fixed repurchase price will be calculated in accordance with the
terms of such Disqualified Stock as if such Disqualified Stock were repurchased
on any date on which Debt is required to be determined pursuant to the
Certificate of Designation or Exchange Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified Stock, such
fair market value will be determined reasonably and in good faith by the board
of directors of the issuer of such Disqualified Stock. Notwithstanding the
foregoing, trade accounts payable and accrued liabilities arising in the
ordinary course of business and any liability for federal, state or local taxes
or other taxes owed by such person will not be considered Debt for purposes of
this definition. The amount outstanding at any time of any Debt issued with
original issue discount is the aggregate principal amount at maturity of such
Debt, less the remaining unamortized portion of the original issue discount of
such Debt at such time, as determined in accordance with GAAP.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors, to make a finding or otherwise
take action under the Exchange Indenture, a member of the Board of Directors who
does not have any material direct or indirect financial interest in or with
respect to such transaction or series of transactions.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms (or by the terms of any security into which it is
convertible or exchangeable by contract or otherwise), or upon the happening of
any event, matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of the
holder thereof, in whole or in part, prior to (i) one year after the Mandatory
Redemption Date, in the case of the Exchangeable Preferred Stock, or (ii) one
year after the Stated Maturity of the Exchange Debentures, in the case of the
Exchange Debentures; provided that (i) in the case of the Exchangeable Preferred
Stock, any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to cause the issuer thereof
to repurchase or redeem such Capital Stock upon occurrence of a "change of
control" occurring prior to the Mandatory Redemption Date will not constitute
Disqualified Stock if the "change of control" provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions contained in the "Purchase of Exchangeable Preferred Stock upon a
Change of Control" covenant of the Certificate of Designation described below
and such Capital Stock specifically provides that the issuer will not repurchase
or redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Exchangeable Preferred Stock as are required to be
repurchased pursuant to the "Purchase of Exchangeable Preferred Stock upon a
Change of Control" covenant of the Certificate of Designation described below or
(ii) in the case of the Exchange Debentures, any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to cause the issuer thereof to repurchase or redeem such Capital Stock
upon the occurrence of an "asset sale" or "change of control" occurring prior to
the Stated Maturity of the Exchange Debentures will not constitute Disqualified
Stock if the "asset sale" or "change of control" provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions contained in the "Limitation on Certain Asset Sales" and
"Purchase of Exchange Debentures upon a Change of Control" covenants of the
Exchange Indenture described below and such Capital Stock specifically provides
that the issuer will not repurchase or redeem any such Capital Stock pursuant to
such provision prior to the Company's repurchase of such Exchange Debentures as
are required to be repurchased pursuant to the "Limitation on Certain Asset
Sales" and "Purchase of Exchange Debentures upon a Change of Control" covenants
of the Exchange Indenture described below; provided further that "Disqualified
Stock" shall not include the Exchangeable Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the Closing Date.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limitation, the payment of
amounts drawn down under letters of credit.
"Hedging Obligations" means the obligations of any person under (a)
interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements and (b) other agreements or arrangements designed to protect
such person against fluctuations in interest rates or the value of foreign
currencies.
"Investment" (in any person) means (a) directly or indirectly, any advance,
loan or other extension of credit (including, without limitation, by way of
guarantee or similar arrangement) or capital contribution to any person, the
purchase or other acquisition of any stock, bonds, notes, debentures or other
securities issued by such person or the acquisition (by purchase or otherwise)
of all or substantially all of the business or assets of such person or the
making of any investment in such person, (b) the designation of any Restricted
Subsidiary as an Unrestricted Subsidiary and (c) the transfer of any assets or
properties from the Company or a Restricted Subsidiary to any Unrestricted
Subsidiary, other than the transfer of assets or properties made in the ordinary
course of business. Investments will exclude extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices.
"Junior Subordinated Debt" means Debt of the Company that is subordinated
in right of payment to the Subordinated Debt.
"License Subsidiary" means Citadel License, Inc.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation, assignment for security, claim,
preference, priority or other encumbrance upon or with respect to any property
of any kind, real or personal, movable or immovable, now owned or hereafter
acquired. A person will be deemed to own subject to a Lien any property that
such person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or cash equivalents, including payments in respect
of deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or cash equivalents (except to the extent that
such obligations are financed or sold with recourse to the Company or any of its
Restricted Subsidiaries), net of (a) brokerage commissions and other fees and
expenses (including fees and expenses of legal counsel and investment banks)
related to such Asset Sale, (b) provisions for all taxes payable as a result of
such Asset Sale, (c) payments made to retire Debt where payment of such Debt is
secured by the assets that are the subject of such Asset Sale, (d) amounts
required to be paid to any person (other than the Company or any of its
Restricted Subsidiaries) owning a beneficial interest in the assets that are
subject to the Asset Sale and (e) appropriate amounts to be provided by the
Company or any of its Restricted Subsidiaries, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with such
Asset Sale and retained by the seller after such Asset Sale, including pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Pari Passu Debt" means Debt of the Company that ranks pari passu in right
of payment with the Exchange Debentures.
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of one year or less
issued or directly and fully guaranteed or insured by the United States or
any agency or instrumentality thereof (provided that the
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full faith and credit of the United States is pledged in support thereof);
(ii) certificates of deposit, time deposits, overnight bank deposits or
bankers' acceptances with a maturity of 270 days or less of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus of not less than $500,000,000; and (iii) commercial
paper with a maturity of 270 days or less issued by a corporation that is
not an Affiliate of the Company and is organized under the laws of any
state of the United States or the District of Columbia and having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard
& Poor's Ratings Services.
(b) Investments by the Company or any of its Restricted Subsidiaries
in another person, if as a result of such Investment (i) such other person
becomes a Restricted Subsidiary that is or would be a Subsidiary Debentures
Guarantor under the Exchange Indenture or (ii) such other person is merged
or consolidated with or into, or transfers or conveys all or substantially
all of its assets to, the Company or a Restricted Subsidiary that is or
would be such a Subsidiary Debentures Guarantor.
(c) Investments by the Company or any of its Restricted Subsidiaries
in a Subsidiary Debentures Guarantor and Investments by any Restricted
Subsidiary in the Company.
(d) Investments in assets owned or used in the ordinary course of
business.
(e) Investments in existence on the Closing Date.
(f) Promissory notes received as a result of Asset Sales permitted
under the "Exchange Debentures -- Limitation on Certain Asset Sales"
covenant.
(g) Direct or indirect loans to employees, or to a trustee for the
benefit of such employees, of the Company or any of its Restricted
Subsidiaries in an aggregate amount outstanding at any time not exceeding
$1,000,000.
(h) Investments by the Company or any of its Restricted Subsidiaries
in a joint venture that is engaged in the internet service provider
business in an aggregate amount outstanding at any time not exceeding
$500,000.
(i) Other Investments that do not exceed $2,000,000 at any one time
outstanding.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Public Equity Offering" means an underwritten public offering of Qualified
Equity Interests of either (a) the Company or (b) Citadel Communications the net
proceeds from which (after deducting any underwriting discounts and commissions)
are used by Citadel Communications to purchase Qualified Equity Interests of the
Company; provided that, in either case, such net proceeds exceed $10,000,000.
"Qualified Equity Interest" means any Qualified Stock and all warrants,
options or other rights to acquire Qualified Stock (but excluding any debt
security that is convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any person means any and all Capital Stock of such
person, other than Disqualified Stock.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Senior Debt" means the principal of and premium, if any, and interest on
(including interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law, whether or not allowed) and other
amounts due on or in connection with any Debt of the Company, whether
outstanding on the Closing Date or thereafter incurred, unless, in the case of
any particular Debt, the instrument creating or evidencing the same or pursuant
to which the same is outstanding expressly provides that such Debt will be
subordinate in right of payment to any Debt or other general unsecured
obligations of the Company. Without limiting the generality of the foregoing,
"Senior Debt" includes the principal of and premium, if any, fees and interest
(including interest accruing after the occurrence of an event of default or
after the filing of a petition initiating any proceeding pursuant to any
bankruptcy law, whether or not allowed) on all obligations of every nature of
the Company from time to time owed to the Banks under the Credit Facility.
Notwithstanding the
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foregoing, "Senior Debt" will not include (a) Debt that is Disqualified Stock,
(b) Debt consisting of trade payables, (c) Debt of the Company to a Subsidiary
or any other Affiliate of the Company or any of such Affiliate's Subsidiaries
and (d) that portion of any Debt that, at the time of the incurrence, is
incurred by the Company in violation of the Exchange Indenture other than any
Debt incurred under the Credit Facility not in excess of $150,000,000 (less any
amounts applied to the permanent reduction of such Debt pursuant to the
"Limitation on Certain Asset Sales" covenant under the Exchange Indenture) if
the Company has certified to the Credit Facility Agent, at the time such Debt is
incurred, that the Company is permitted to incur such Debt under the Exchange
Indenture.
"Senior Subordinated Debt" means the principal of and premium, if any, and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, whether or not
allowed) and other amounts due on or in connection with any Debt of the Company
(including the Notes), whether outstanding on the Closing Date or thereafter
incurred, for which, in the case of any particular Debt, the instrument creating
or evidencing the same or pursuant to which the same is outstanding expressly
provides that such Debt will be subordinate in right of payment to any Senior
Debt or other general unsecured obligations of the Company, unless such
instrument expressly provides that such Debt will be subordinate in right of
payment to the Notes or any Debt that is pari passu in right of payment with the
Notes. Notwithstanding the foregoing, "Senior Subordinated Debt" will not
include (a) Debt that is represented by Disqualified Stock, (b) Debt consisting
of trade payables, (c) Debt of the Company to a Subsidiary or any other
Affiliate of the Company or any of such Affiliate's Subsidiaries and (d) that
portion of any Debt that, at the time of the incurrence, is incurred by the
Company in violation of the Exchange Indenture.
"Significant Subsidiary" means any Restricted Subsidiary of the Company
that, together with its Subsidiaries, (a) for the most recent fiscal year of the
Company, accounted for more than 10% of the consolidated net sales of the
Company and its Restricted Subsidiaries, (b) as of the end of such fiscal year,
was the owner of more than 10% of the consolidated assets of the Company and its
Restricted Subsidiaries, in the case of either (a) or (b), as set forth on the
most recently available consolidated financial statements of the Company for
such fiscal year, (c) was organized or acquired after the beginning of such
fiscal year and would have been a Significant Subsidiary if it had been owned
during the entire fiscal year or (d) that holds one or more licenses material to
the Company's business.
"Stated Maturity" means, when used with respect to any Exchange Debenture
or any installment of interest thereon, the date specified in such Exchange
Debenture as the fixed date on which the principal of such Exchange Debenture or
such installment of interest is due and payable, and, when used with respect to
any other Debt, means the date specified in the instrument governing such Debt
as the fixed date on which the principal of such Debt or any installment of
interest thereon is due and payable.
"Subordinated Debt" means the principal of and premium, if any, and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, whether or not
allowed) and other amounts due on or in connection with any Debt of the Company
(including the Exchange Debentures), whether outstanding on the Closing Date or
thereafter incurred, for which, in the case of any particular Debt, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Debt will be subordinate in right of
payment to any Senior Debt or other general unsecured obligations of the
Company, and to any Senior Subordinated Debt, unless such instrument expressly
provides that such Debt will be subordinate in right of payment to the Exchange
Debentures or any Debt that is pari passu in right of payment with the Exchange
Debentures. Notwithstanding the foregoing, "Subordinated Debt" will not include
(a) Debt that is represented by Disqualified Stock, (b) Debt consisting of trade
payables, (c) Debt of the Company to a Subsidiary or any other Affiliate of the
Company or any of such Affiliate's Subsidiaries and (d) that portion of any Debt
that, at the time of the incurrence, is incurred by the Company in violation of
the Exchange Indenture.
"Subsidiary" means any person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by the Company
and/or one or more other Subsidiaries of the Company.
"Subsidiary Debentures Guarantee" means a guarantee of the Exchange
Debentures by a Restricted Subsidiary in accordance with the provisions of the
Exchange Indenture.
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"Subsidiary Debentures Guarantor" means the License Subsidiary and each
other Restricted Subsidiary that issues a Subsidiary Debentures Guarantee as
described under the "Subsidiary Debentures Guarantees" covenant of the Exchange
Indenture.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary in
accordance with the "Unrestricted Subsidiaries" covenant and (b) any Subsidiary
of an Unrestricted Subsidiary.
"Voting Rights Triggering Event" shall have the meaning set forth above
under "-- Voting Rights."
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any person (irrespective of whether or not, at the time, stock of
any other class or classes has, or might have, voting power by reason of the
happening of any contingency).
"Weighted Average Life" means, as of the date of determination with respect
to any Debt or Disqualified Stock, the quotient obtained by dividing (a) the sum
of the products of (i) the number of years from the date of determination to the
date or dates of each successive scheduled principal or liquidation value
payment of such Debt or Disqualified Stock, respectively, multiplied by (ii) the
amount of each such principal or liquidation value payment by (b) the sum of all
such principal or liquidation value payments.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary, all
of the outstanding voting securities (other than directors' qualifying shares or
an immaterial number of shares required to be owned by other persons pursuant to
applicable law) of which are owned, directly or indirectly, by the Company.
CERTAIN COVENANTS
The Certificate of Designation contains, among others, the following
covenants:
LIMITATION ON DEBT. (a) The Company will not, and will not permit any of
its Restricted Subsidiaries to, create, issue, assume, guarantee or in any
manner become directly or indirectly liable for the payment of, or otherwise
incur (collectively, "incur"), any Debt (including Acquired Debt and the
issuance of Disqualified Stock), except that the Company or a Restricted
Subsidiary may incur Debt or issue Disqualified Stock if, at the time of such
event, the Consolidated Cash Flow Ratio would have been less than 7.0 to 1.0.
In making the foregoing calculation, pro forma effect will be given to: (i)
the incurrence of such Debt and (if applicable) the application of the net
proceeds therefrom, including to refinance other Debt, as if such Debt had been
incurred and the application of proceeds therefrom occurred on the first day of
the four-fiscal quarter period used to calculate the Consolidated Cash Flow
Ratio, (ii) the incurrence, repayment or retirement of any other Debt by the
Company or any of its Restricted Subsidiaries since the first day of such
four-quarter period as if such Debt was incurred, repaid or retired at the
beginning of such four-quarter period and (iii) the acquisition (whether by
purchase, merger or otherwise) or disposition (whether by sale, merger or
otherwise) of any company, entity or business acquired or disposed of by the
Company or any of its Restricted Subsidiaries, as the case may be, since the
first day of such four-quarter period, as if such acquisition or disposition
occurred at the beginning of such four-quarter period. In making a computation
under the foregoing clause (i) or (ii), the amount of Debt under a revolving
credit facility will be computed based upon the average daily balance of such
Debt during such four-quarter period.
(b) Notwithstanding the foregoing, the Company may, and may, to the extent
expressly permitted below, permit any of its Restricted Subsidiaries to, incur
any of the following Debt ("Permitted Debt"):
(i) Debt of the Company or any Restricted Subsidiary under the Credit
Facility (including guarantees thereof by Subsidiaries) in an aggregate
principal amount at any one time outstanding not to exceed $110,000,000.
(ii) Debt of the Company or any of its Restricted Subsidiaries
outstanding on the Closing Date, other than Debt described in clause (i)
above.
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(iii) Debt owed by the Company to any of its Restricted Subsidiaries
or owed by any Subsidiary to the Company or a Restricted Subsidiary
(provided that such Debt is Junior Subordinated Debt and is held by the
Company or such Restricted Subsidiary) or owed to the Company or a
Restricted Subsidiary by a Restricted Subsidiary, provided the incurrence
of such Debt did not violate the "Limitation on Restricted Payments"
covenant.
(iv) Debt represented by the Notes and the Subsidiary Notes
Guarantees.
(v) Hedging Obligations of the Company or any of its Restricted
Subsidiaries incurred in the ordinary course of business.
(vi) Capitalized Lease Obligations of the Company or any of its
Restricted Subsidiaries in an aggregate amount not exceeding $3,000,000 at
any one time outstanding.
(vii) Debt under purchase money mortgages or secured by purchase money
security interests so long as (x) such Debt is not secured by any property
or assets of the Company or any of its Restricted Subsidiaries other than
the property or assets so acquired and (y) such Debt is created within 60
days of the acquisition of the related property; provided that the
aggregate principal amount of Debt under this clause (vii) does not exceed
$2,000,000 at any one time outstanding.
(viii) Debt of the Company or any Restricted Subsidiary, not permitted
by any other clause of this definition, in an aggregate principal amount
not to exceed $5,000,000 at any one time outstanding.
(ix) Debt of the Company or any of its Restricted Subsidiaries
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments in connection with the acquisition or disposition of
assets, including, without limitation, shares of Capital Stock.
(x) Acquired Debt of a person, other than Debt incurred in connection
with, or in contemplation of, such person becoming a Restricted Subsidiary
or the acquisition of assets from such person, as the case may be, provided
that the Company on a pro forma basis could incur $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of this
covenant.
(xi) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company or any Restricted Subsidiary of any outstanding Debt of the Company
or such Restricted Subsidiary, other than Debt incurred pursuant to clause
(i), (v), (vi), (vii), (viii) or (ix) of this definition, including any
successive refinancings thereof, so long as (A) any such new Debt is in a
principal amount that does not exceed the principal amount so refinanced,
plus the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Debt refinanced or the amount of
any premium reasonably determined by the Company as necessary to accomplish
such refinancing plus the amount of expenses of the Company incurred in
connection with such refinancing and (B) such refinancing Debt does not
have a Weighted Average Life less than the Weighted Average Life of the
Debt being refinanced and does not have a final scheduled maturity earlier
than the final scheduled maturity, or permit redemption at the option of
the holder earlier than the earliest date of redemption at the option of
the holder, of the Debt being refinanced.
LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, take any
of the following actions:
(a) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Junior Stock of the Company or any of its
Restricted Subsidiaries, other than (i) dividends or distributions payable
solely in Qualified Equity Interests of the issuer of such shares of Junior
Stock, (ii) dividends or distributions by a Restricted Subsidiary payable
to the Company or another Restricted Subsidiary or (iii) pro rata dividends
or distributions on common stock of a Restricted Subsidiary held by
minority stockholders, provided that such dividends do not in the aggregate
exceed the minority stockholders' pro rata share of such Restricted
Subsidiary's net income from the first day of the Company's fiscal quarter
during which the Closing Date occurs;
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(b) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of (i) Junior Stock of the Company (or
any options, warrants or other rights to acquire shares of Junior Stock of
the Company (other than any such Junior Stock owned by Restricted
Subsidiaries)) or (ii) Capital Stock (or any options, warrants or other
rights to acquire shares of Capital Stock) of (A) any Unrestricted
Subsidiary or (B) any Restricted Subsidiary that are held by any Affiliate
of the Company (other than, in either case, any such Capital Stock owned by
the Company or any of its Restricted Subsidiaries);
(c) make any Investment (other than a Permitted Investment) in any
person
(such payments or other actions described in (but not excluded from)
clauses (a) through (c) being referred to as "Restricted Payments"), unless
at the time of, and immediately after giving effect to, the proposed
Restricted Payment:
(i) no Voting Rights Triggering Event has occurred and is
continuing,
(ii) the Company could incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of the
"Limitation on Debt" covenant, and
(iii) the aggregate amount of all Restricted Payments declared or
made after the Closing Date does not exceed the sum of:
(A) the remainder of (x) 100% of the aggregate Consolidated Cash
Flow for the period beginning on the first day of the Company's
fiscal quarter during which the Closing Date occurs and ending on
the last day of the Company's most recent fiscal quarter for which
internal financial statements are available ending prior to the
date of such proposed Restricted Payment (the "Computation Period")
minus (y) the product of 1.4 times the sum of (i) Consolidated
Fixed Charges for the Computation Period and (ii) all dividends or
other distributions paid in cash by the Company or any of its
Restricted Subsidiaries on any Disqualified Stock of the Company or
any of its Restricted Subsidiaries for the Computation Period; plus
(B) the aggregate net proceeds received by the Company after the
Closing Date (including the fair market value of property other
than cash as determined by the Company's Board of Directors, whose
good faith determination will be conclusive) from the issuance or
sale (other than to a Subsidiary) of Qualified Equity Interests of
the Company (excluding from this computation any net proceeds of a
Public Equity Offering received by the Company that are used by it
to redeem the Exchangeable Preferred Stock, as discussed above);
plus
(C) the aggregate net proceeds received by the Company after the
Closing Date (including the fair market value of property other
than cash as determined by the Company's Board of Directors, whose
good faith determination will be conclusive) from the issuance or
sale (other than to a Subsidiary) of debt securities or
Disqualified Stock that have been converted into or exchanged for
Qualified Stock of the Company, together with the aggregate net
cash proceeds received by the Company at the time of such
conversion or exchange; plus
(D) without duplication, the Net Cash Proceeds received by the
Company or a Wholly Owned Restricted Subsidiary upon the sale of
any of its Unrestricted Subsidiaries; plus
(E) $5,000,000.
Notwithstanding the foregoing, the Company and any of its Restricted
Subsidiaries may take any of the following actions, so long as (with respect to
clauses (c) and (d) below) no Voting Rights Triggering Event has occurred and is
continuing or would occur:
(a) The payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not have
been prohibited by the foregoing provision.
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(b) The repurchase, redemption or other acquisition or retirement for
value of any shares of Junior Stock of the Company, in exchange for, or out
of the net cash proceeds of a substantially concurrent issuance and sale
(other than to a Subsidiary) of, Qualified Equity Interests of the Company.
(c) The payment by the Company to Citadel Communications for the
purpose of the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of Citadel Communications,
options on any such shares or related stock appreciation rights or similar
securities held by officers or employees or former officers or employees
(or their estates or beneficiaries under their estates) or by any employee
benefit plan, upon death, disability, retirement or termination of
employment or pursuant to the terms of any employee benefit plan or any
other agreement under which such shares of stock or related rights were
issued; provided that the aggregate cash consideration paid for such
purchase, redemption, acquisition, cancellation or other retirement of such
shares of Capital Stock after the date of the Closing Date does not exceed
$1,000,000 in any fiscal year.
(d) Loans or advances to officers, directors and employees of Citadel
Communications, the Company or any of its Restricted Subsidiaries made in
the ordinary course of business after the Closing Date in an aggregate
principal amount not to exceed $1,000,000 at any one time outstanding.
(e) Payments to or on behalf of Citadel Communications to pay its
operating and administrative expenses attributable to the Company
including, without limitation, legal and audit expenses, directors' fees,
fees payable in respect of the trustee and the back-up trustees under the
Voting Trust Agreement, and Commission compliance expenses, in an amount
not to exceed the greater of $1,000,000 per fiscal year and 1% of the net
revenues of the Company for the preceding fiscal year.
The payments described in clauses (b), (c) and (d) of this paragraph will be
Restricted Payments that will be permitted to be taken in accordance with this
paragraph but will reduce the amount that would otherwise be available for
Restricted Payments under the foregoing clause (iii), and the payments described
in clauses (a) and (e) of this paragraph will be Restricted Payments that will
be permitted to be taken in accordance with this paragraph and will not reduce
the amount that would otherwise be available for Restricted Payments under the
foregoing clause (iii).
For the purpose of making any calculations under the Certificate of
Designation (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company will be deemed to have made an Investment in an amount
equal to the fair market value of the net assets of such Restricted Subsidiary
at the time of such designation as determined by the Board of Directors of the
Company, whose good faith determination will be conclusive, (ii) any property
transferred to or from an Unrestricted Subsidiary will be valued at fair market
value at the time of such transfer, as determined by the Board of Directors of
the Company, whose good faith determination will be conclusive and (iii) subject
to the foregoing, the amount of any Restricted Payment, if other than cash, will
be determined by the Board of Directors of the Company, whose good faith
determination will be conclusive.
If the aggregate amount of all Restricted Payments calculated under the
foregoing provision includes an Investment in an Unrestricted Subsidiary or
other person that thereafter becomes a Restricted Subsidiary, such Investment
will no longer be counted as a Restricted Payment for purposes of calculating
the aggregate amount of Restricted Payments.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision will be reduced by the amount of any net reduction in such Investment
(resulting from the payment of interest or dividends, loan repayment, transfer
of assets or otherwise), to the extent such net reduction is not included in
Consolidated Adjusted Net Income; provided that the total amount by which the
aggregate amount of all Restricted Payments may be reduced may not exceed the
lesser of (x) the cash proceeds received by the Company and any of its
Restricted Subsidiaries in connection with such net reduction and (y) the
initial amount of such Investment.
In computing Consolidated Adjusted Net Income for purposes of the foregoing
clause (iii)(A), (i) the Company may use audited financial statements for the
portions of the relevant period for which audited financial statements are
available on the date of determination and unaudited financial statements and
other
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current financial data based on the books and records of the Company for the
remaining portion of such period and (ii) the Company will be permitted to rely
in good faith on the financial statements and other financial data derived from
the books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment that, at the time of
the making of such Restricted Payment, would in the good faith determination of
the Company be permitted under the requirements of the Certificate of
Designation, such Restricted Payment will be deemed to have been made in
compliance with the Certificate of Designation notwithstanding any subsequent
adjustments made in good faith to the Company's financial statements affecting
Consolidated Adjusted Net Income of the Company for any period.
PURCHASE OF EXCHANGEABLE PREFERRED STOCK UPON A CHANGE OF CONTROL. If a
Change of Control occurs at any time, then each holder of Exchangeable Preferred
Stock will have the right to require that the Company purchase such holder's
Exchangeable Preferred Stock, in whole or in part, at a purchase price in cash
equal to 101% of the liquidation preference of such Exchangeable Preferred
Stock, plus accumulated and unpaid dividends, if any, to the date of purchase,
pursuant to the offer described below (the "Change of Control Offer") and the
other procedures set forth in the Certificate of Designation.
Within 30 days following any Change of Control, the Company will notify the
Transfer Agent thereof and give written notice of such Change of Control to each
holder of Exchangeable Preferred Stock by first-class mail, postage prepaid, at
its address appearing in the security register for the Exchangeable Preferred
Stock, stating, among other things, (i) the purchase price and the purchase
date, which will be a Business Day no earlier than 30 days nor later than 60
days from the date such notice is mailed or such later date as is necessary to
comply with requirements under the Exchange Act; (ii) that any Exchangeable
Preferred Stock not tendered will continue to accumulate dividends; (iii) that,
unless the Company defaults in the payment of the purchase price, any
Exchangeable Preferred Stock accepted for payment pursuant to the Change of
Control Offer will cease to accumulate dividends after the Change of Control
purchase date; and (iv) certain other procedures that a holder of Exchangeable
Preferred Stock must follow to accept a Change of Control Offer or to withdraw
such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the purchase price for all
of the Exchangeable Preferred Stock that might be tendered by holders of the
Exchangeable Preferred Stock seeking to accept the Change of Control Offer. The
Credit Facility prohibits the purchase of Exchangeable Preferred Stock by the
Company prior to full repayment of indebtedness under the Credit Facility and,
upon a Change of Control, all amounts outstanding under the Credit Facility
become due and payable. There can be no assurance that in the event of a Change
of Control the Company will be able to obtain the necessary consents from the
lenders under the Credit Facility to consummate a Change of Control Offer. The
failure of the Company to make or consummate the Change of Control Offer or pay
the applicable Change of Control purchase price when due would result in an
Voting Rights Triggering Event and would give the holders of the Exchangeable
Preferred Stock the rights described under "Voting Rights."
In addition to the obligations of the Company under the Certificate of
Designation with respect to the Exchangeable Preferred Stock in the event of a
Change of Control, the Credit Facility contains a provision designating a change
of control as described therein as an event of default, which would obligate the
Company to repay amounts outstanding under the Credit Facility upon an
acceleration of the indebtedness outstanding thereunder.
The existence of a holder's right to require the Company to purchase such
holder's Exchangeable Preferred Stock upon a Change of Control may deter a third
party from acquiring the Company in a transaction that constitutes a Change of
Control.
The definition of "Change of Control" in the Certificate of Designation is
limited in scope. The provisions of the Certificate of Designation may not
afford holders of Exchangeable Preferred Stock the right to require the Company
to repurchase such Exchangeable Preferred Stock in the event of a highly
leveraged transaction or certain transactions with the Company's management or
its affiliates, including a reorganization, restructuring, merger or similar
transaction involving the Company (including, in certain circumstances, an
acquisition of the Company by management or its affiliates) that may adversely
affect holders of the
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Exchangeable Preferred Stock, if such transaction is not a transaction defined
as a Change of Control. See "Certain Definitions" above for the definition of
"Change of Control." A transaction involving the Company's management or its
affiliates, or a transaction involving a recapitalization of the Company, would
result in a Change of Control if it is the type of transaction specified in such
definition.
The Company will comply with the applicable tender offer rules including
Rule 14e-l under the Exchange Act, and any other applicable securities laws and
regulations in connection with a Change of Control Offer.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create any restriction (other than restrictions existing under
Debt as in effect on the Closing Date or in refinancings or replacements of such
Debt) that would materially impair the ability of the Company to make a Change
of Control Offer to purchase the Exchangeable Preferred Stock or, if such Change
of Control Offer is made, to pay for the Exchangeable Preferred Stock tendered
for purchase.
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not sell, and will not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants, or other
rights to purchase shares of such Capital Stock) except (i) to the Company or a
Wholly Owned Restricted Subsidiary, (ii) issuances or sales to foreign nationals
of shares of Capital Stock of foreign Restricted Subsidiaries, to the extent
required by applicable law, or issuances or sales to directors of directors'
qualifying shares, (iii) if, immediately after giving effect to such issuance or
sale, neither the Company nor any Subsidiary owns any shares of Capital Stock of
such Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) or (iv) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary and any Investment in such person remaining
after giving effect to such issuance or sale would have been permitted to be
made under the "Limitation on Restricted Payments" covenant if made on the date
of such issuance or sale.
In addition, the Company will not, and will not permit any of its
Restricted Subsidiaries to, sell, transfer or otherwise dispose of any of its
properties or assets to an Unrestricted Subsidiary other than in the ordinary
course of business.
UNRESTRICTED SUBSIDIARIES. (a) The Board of Directors of the Company may
designate any Subsidiary (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary so long as (i) neither the Company
nor any of its Restricted Subsidiaries is directly or indirectly liable for any
Debt of such Subsidiary, (ii) no default with respect to any Debt of such
Subsidiary would permit (upon notice, lapse of time or otherwise) any holder of
any other Debt of the Company or any of its Restricted Subsidiaries to declare a
default on such other Debt or cause the payment thereof to be accelerated or
payable prior to its stated maturity, (iii) any Investment in such Subsidiary
made as a result of designating such Subsidiary an Unrestricted Subsidiary will
not violate the provisions of the "Limitation on Restricted Payments" covenant,
(iv) neither the Company nor any of its Restricted Subsidiaries has a contract,
agreement, arrangement, understanding or obligation of any kind, whether written
or oral, with such Subsidiary other than those that might be obtained at the
time from persons who are not Affiliates of the Company and (v) neither the
Company nor any of its Restricted Subsidiaries has any obligation to subscribe
for additional shares of Capital Stock or other equity interest in such
Subsidiary, or to maintain or preserve such Subsidiary's financial condition or
to cause such Subsidiary to achieve certain levels of operating results.
Notwithstanding the foregoing, the Company may not designate the License
Subsidiary, or any Subsidiary to which any properties or assets (other than
current assets) owned by the Company or the License Subsidiary on the Closing
Date have been transferred, as an Unrestricted Subsidiary.
(b) The Board of Directors of the Company may designate any of its
Unrestricted Subsidiaries as a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation will only be permitted if (i) such Debt is permitted under the
"Limitation on Debt" covenant and (ii) no Voting Rights Triggering Event will
have occurred and be continuing following such designation.
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LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES. The Company will not permit
any of its Subsidiaries to issue any Preferred Stock (other than to the Company
or to a Wholly Owned Restricted Subsidiary of the Company) or permit any person
(other than the Company or a Wholly Owned Restricted Subsidiary of the Company)
to own any Preferred Stock of a Subsidiary of the Company (other than Acquired
Preferred Stock; provided that at the time the issuer of such Acquired Preferred
Stock becomes a Subsidiary of the Company or merges with the Company or any of
its Subsidiaries, and after giving effect to such transaction, the Company shall
be able to incur $1.00 of additional Debt (other than Permitted Debt) in
compliance with the "Limitation on Debt" covenant).
REPORTS. At all times from and after the earlier of (i) the date of the
commencement of the Exchange Offer or the effectiveness of the Stock Shelf
Registration Statement relating to the Series A Exchangeable Preferred Stock
(the "Preferred Stock Registration") and (ii) the date 180 days after the
Closing Date, in either case, whether or not the Company is then required to
file reports with the Commission, the Company will file with the Commission all
such reports and other information as it would be required to file with the
Commission by Sections 13(a) or 15(d) under the Exchange Act if it were subject
thereto. The Company will supply the Transfer Agent and each holder, or will
supply to the Transfer Agent for forwarding to each such holder, without cost to
such holder, copies of such reports and other information. In addition, at all
times prior to the earlier of the date of the Preferred Stock Registration and
the date 180 days after the Closing Date, the Company will, at its cost, deliver
to each holder of the Exchangeable Preferred Stock quarterly and annual reports
substantially equivalent to those that would be required by the Exchange Act. In
addition, at all times prior to the Preferred Stock Registration, upon the
request of any holder or any prospective purchaser of the Exchangeable Preferred
Stock designated by a holder, the Company will supply to such holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Certificate of Designation provides that, without the affirmative vote
of the holders of a majority of the issued and outstanding shares of
Exchangeable Preferred Stock and any Parity Stock, voting or consenting, as the
case may be, as a separate class, the Company may not, in a single transaction
or a series of related transactions, consolidate with or merge with or into, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another person or adopt a plan of
liquidation unless:
(a) Either (i) the Company is the surviving corporation or (ii) the
person (if other than the Company) formed by such consolidation or into
which the Company is merged or the person that acquires by sale,
assignment, transfer, lease or other disposition the properties and assets
of the Company substantially as an entirety (the "Surviving Entity") (A) is
a corporation, partnership or trust organized and validly existing under
the laws of the United States or any state thereof or the District of
Columbia and (B) the Exchangeable Preferred Stock shall be converted into
or exchanged for and shall become shares of such Surviving Entity, having
in respect of such Surviving Entity the same powers, preferences and
relative participating, optional or other special rights and the
qualifications, limitations or restrictions thereon, that the Exchangeable
Preferred Stock had immediately prior to such transaction.
(b) Immediately after giving effect to such transaction and treating
any obligation of the Company or a Restricted Subsidiary in connection with
or as a result of such transaction as having been incurred at the time of
such transaction, no Voting Rights Triggering Event shall have occurred or
be continuing.
(c) Immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred at the beginning of
the most recently ended four full fiscal quarter period for which internal
financial statements are available), the Company (in the case of clause (i)
of paragraph (a) or such person (in the case of clause (ii) of paragraph
(a)) could incur at least $1.00 of additional Debt (other than Permitted
Debt) pursuant to the first paragraph of the "Limitation on Debt" covenant.
(d) The Company delivers, or causes to be delivered, to the Transfer
Agent an officers' certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer complies with the
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Certificate of Designation and that all conditions precedent in the
Certificate of Designation relating to such transaction have been
satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries, the
Capital Stock of which constitutes all or substantially all of the properties or
assets of the Company, will be deemed to be the transfer of all or substantially
all of the properties and assets of the Company.
EXCHANGE DEBENTURES
The Exchange Debentures, if issued, will be issued under the Exchange
Indenture, dated as of July 1, 1997, between the Company, the initial Subsidiary
Debentures Guarantor and The Bank of New York, trustee (the "Debentures
Trustee"), a copy of which is available from the Company. If the Exchange
Debentures are issued, the Exchange Indenture will be subject to and governed by
the Trust Indenture Act. The following summary of the material provisions of the
Exchange Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of the Exchange
Indenture, including the definitions of certain terms therein and those terms
made part of the Exchange Indenture by reference to the Trust Indenture Act. The
definitions of certain terms used in the following summary are set forth above
under "-- Exchangeable Preferred Stock -- Certain Definitions." The Credit
Facility, the Notes Indenture and the Securities Purchase and Exchange Agreement
limit the Company's ability to issue the Exchange Debentures, and future
agreements may contain similar or more restrictive limitations.
GENERAL
The Exchange Debentures will mature on July 1, 2009, will be general
unsecured obligations of the Company and will be limited in aggregate principal
amount to the liquidation preference of the Exchangeable Preferred Stock, plus,
without duplication, accumulated and unpaid dividends, on the Exchange Date of
the Exchangeable Preferred Stock into Exchange Debentures (plus any additional
Exchange Debentures issued in lieu of cash interest as described herein). Each
Exchange Debenture will bear interest at the rate of 13-1/4% per annum from the
Exchange Date or from the most recent interest payment date to which interest
has been paid or provided for. Interest will be payable semi-annually in cash
(or, on or prior to July 1, 2002, in additional Exchange Debentures having an
aggregate principal amount equal to the amount of such interest, at the option
of the Company) in arrears on each January 1 and July 1, commencing with the
first such date after the Exchange Date. Interest on the Exchange Debentures
will be computed on the basis of a 360-day year comprised of twelve 30-day
months. The Exchange Debentures will be subordinate and junior in right of
payment to all existing and future Senior Debt and Senior Subordinated Debt of
the Company.
The principal of and premium, if any, and interest on the Exchange
Debentures will be payable, and the Exchange Debentures will be exchangeable or
transferrable, at the office or agency of the Company in the City of New York
maintained for such purposes (which initially will be the office of the
Debentures Trustee located at 101 Barclay Street, New York, New York 10286);
provided, however, that, at the option of the Company, interest, to the extent
paid in cash, may be paid by check mailed to the address of the person entitled
thereto as such address appears in the security register for the Exchange
Debentures. The Exchange Debentures will be issued only in registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof. No service charge will be made for any registration of, transfer,
exchange or redemption of Exchange Debentures, but the Company may require
payment in certain circumstances of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
The Exchange Debentures will not be entitled to the benefit of any sinking
fund.
GUARANTEES
Payment of the principal of (and premium, if any, on) and interest on the
Exchange Debentures, when and as the same become due and payable, will be
unconditionally guaranteed, jointly and severally, on a senior subordinated
basis by the Subsidiary Debentures Guarantors. The obligations of each
Subsidiary Debentures
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Guarantor under its Subsidiary Debentures Guarantee will be limited so as not to
constitute a fraudulent conveyance under applicable law. See "Risk
Factors -- Fraudulent Transfer Considerations."
The Exchange Indenture requires that each Wholly Owned Restricted
Subsidiary be a Subsidiary Debentures Guarantor, as well as each other
Restricted Subsidiary that guarantees any other Debt of the Company.
The Exchange Indenture provides that no Subsidiary Debentures Guarantor may
consolidate with or merge with or into any other person (other than the Company
or another Subsidiary Debentures Guarantor) or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets in one or
more related transactions to another person unless: (a) subject to the
provisions of the following paragraph, the person formed by or surviving such
consolidation or merger or to which all or substantially all of such assets are
disposed (if other than the Company or a Subsidiary Debentures Guarantor)
assumes all of the obligations of such Subsidiary Debentures Guarantor under the
Exchange Indenture and its Subsidiary Debentures Guarantee, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Debentures Trustee and (b) immediately after giving effect to such transaction,
no Default or Event of Default has occurred and is continuing.
The Exchange Indenture provides that, in the event of (a) a sale, transfer
or other disposition of all of the Capital Stock of a Subsidiary Debentures
Guarantor to a person that is not an Affiliate of the Company, (b) a sale,
transfer or other disposition of all or substantially all of the assets of a
Subsidiary Debentures Guarantor to a person that is not an Affiliate of the
Company or (c) the designation of such Subsidiary Debentures Guarantor as an
Unrestricted Subsidiary, in any such case in compliance with the terms of the
Exchange Indenture, then such Subsidiary Debentures Guarantor will be deemed
automatically and unconditionally released and discharged from all of its
obligations under the Exchange Indenture and its Subsidiary Debentures Guarantee
without any further action on the part of the Debentures Trustee or any holder
of the Exchange Debentures; provided that the Net Cash Proceeds of any such
sale, transfer or other disposition are applied in accordance with the
"Limitation on Certain Asset Sales" covenant.
SUBORDINATION
The Exchange Debentures will, to the extent set forth in the Exchange
Indenture, be subordinate in right of payment to the prior payment in full of
all Senior Debt and Senior Subordinated Debt. Upon any payment or distribution
of assets of the Company to creditors upon any liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors, marshaling
of assets or any bankruptcy, insolvency or similar proceedings of the Company
(except in connection with the consolidation or merger of the Company or its
liquidation or dissolution following the conveyance, transfer or lease of its
properties and assets substantially as an entirety, upon the terms and
conditions described under "Consolidation, Merger and Sale of Assets"), the
holders of Senior Debt and Senior Subordinated Debt will first be entitled to
receive payment in full, in cash or cash equivalents, of all amounts due or to
become due on or in respect of such Senior Debt and Senior Subordinated Debt
before the holders of Exchange Debentures are entitled to receive any payment of
principal of (or premium, if any) or interest on the Exchange Debentures or on
account of the purchase or redemption or other acquisition of Exchange
Debentures by the Company or any Subsidiary of the Company. In the event that,
notwithstanding the foregoing, the Debentures Trustee or the holder of any
Exchange Debenture receives any payment or distribution of assets of the Company
of any kind or character (excluding equity or subordinated securities of the
Company provided for in a plan of reorganization or readjustment that, in the
case of subordinated securities, are subordinated in right of payment to all
Senior Debt and Senior Subordinated Debt to at least the same extent as the
Exchange Debentures are so subordinated), before all the Senior Debt and Senior
Subordinated Debt is paid in full, then such payment or distribution will be
held in trust for the holders of Senior Debt and Senior Subordinated Debt and
will be required to be paid over or delivered forthwith to the trustee in
bankruptcy or other person making payment or distribution of assets of the
Company for application to the payment of all Senior Debt and Senior
Subordinated Debt remaining unpaid, to the extent necessary to pay the Senior
Debt and Senior Subordinated Debt in full.
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The Company may not make any payments on account of the Exchange Debentures
or on account of the purchase or redemption or other acquisition of Exchange
Debentures if a default in the payment when due of principal of (or premium, if
any) or interest on Specified Senior Debt has occurred and is continuing or a
default in the payment when due of commitment, facility or other fees, letter of
credit fees or agency fees under the Credit Facility, or a default in payments
when due with respect to letter of credit reimbursement arrangements with the
Credit Facility Agent has occurred and is continuing (a "Senior Payment
Default"). In addition, if any default (other than a Senior Payment Default)
with respect to any Specified Senior Debt permitting the holders thereof (or a
trustee or agent on behalf thereof) to accelerate the maturity thereof (a
"Senior Nonmonetary Default") has occurred and is continuing and the Company and
the Debentures Trustee have received written notice thereof from the Credit
Facility Agent or from an authorized person on behalf of any holder of Specified
Senior Debt, then the Company may not make any payments on account of the
Exchange Debentures or on account of the purchase or redemption or other
acquisition of Exchange Debentures for a period (a "blockage period") commencing
on the date the Company and the Debentures Trustee receive such written note (a
"Blockage Notice") and ending on the earliest of (x) 179 days after such date
(the "Initial Period"), (y) the date, if any, on which the Specified Senior Debt
to which such default relates is discharged or such default is waived or
otherwise cured and (z) the date, if any, on which such blockage period has been
terminated by written notice to the Company or the Debentures Trustee from the
Credit Facility Agent or from the person who gave the Blockage Notice. Any
number of additional payment blockage periods may be commenced during the
Initial Period; provided, however, that no such additional payment blockage
periods shall extend beyond the Initial Period. After the expiration of the
Initial Period, no payment blockage period may be commenced until at least 181
consecutive days shall have elapsed from the last day of the Initial Period. No
Senior Nonmonetary Default that existed or was continuing on the date of the
commencement of any blockage period with respect to the Specified Senior Debt
initiating such blockage period will be, or can be, made the basis for the
commencement of a subsequent blockage period, unless such default has been cured
or waived for a period of not less than 90 consecutive days. In the event that,
notwithstanding the foregoing, the Company makes any payment to the Debentures
Trustee or the holder of any Exchange Debenture prohibited by these blockage
provisions, then such payment will be held in trust for the holders of Senior
Debt and Senior Subordinated Debt and will be required to be paid over and
delivered forthwith to the holders of the Senior Debt and Senior Subordinated
Debt remaining unpaid, to the extent necessary to pay in full all the Senior
Debt and Senior Subordinated Debt.
The Subsidiary Debentures Guarantees will, to the extent set forth in the
Exchange Indenture, be subordinated in right of payment to the prior payment in
full of all senior debt and senior subordinated debt of the Subsidiary
Debentures Guarantors, upon terms substantially comparable to the subordination
of the Exchange Debentures to all Senior Debt and Senior Subordinated Debt.
By reason of such subordination, in the event of insolvency, creditors of
the Company or a Subsidiary Debentures Guarantor who are not holders of Senior
Debt or Senior Subordinated Debt or the Exchange Debentures may recover less,
ratably, than holders of Senior Debt or Senior Subordinated Debt and may recover
more, ratably, than the holders of the Exchange Debentures.
The subordination provisions described above will cease to be applicable to
the Exchange Debentures and the Subsidiary Debentures Guarantees upon any
defeasance or covenant defeasance of the Exchange Debentures as described under
"-- Defeasance or Covenant Defeasance of Exchange Indenture."
As used herein, the term "Specified Senior Debt" means (i) all Senior Debt
under the Credit Facility and (ii) any other issue of Senior Debt having a
principal amount of at least $10,000,000.
At June 30, 1997, on a pro forma basis, after giving effect to the Recent
1997 Acquisitions, the Pending Transactions and the Original Offerings, the
aggregate principal amount of Senior Debt and Senior Subordinated Debt
(including the Notes) outstanding would have been approximately $214.6 million.
The Company may from time to time hereafter incur additional Debt constituting
Senior Debt and Senior Subordinated Debt under the Credit Facility or otherwise,
subject to the "Limitation on Debt" covenant described below.
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OPTIONAL REDEMPTION
The Exchange Debentures will be redeemable (subject to contractual and
other restrictions with respect thereto and to the legal availability of funds
therefor) at the election of the Company, as a whole or from time to time in
part, at any time on or after July 1, 2002, on not less than 30 nor more than 60
days' prior notice, at the redemption prices (expressed as percentages of the
principal amount thereof) set forth below, together with accrued and unpaid
interest, if any, to the redemption date, if redeemed during the 12-month period
beginning on July 1 of the years indicated below (subject to the right of
holders of record on the relevant record date to receive interest due on an
interest payment date):
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2002......................................... 107.729%
2003......................................... 106.625
2004......................................... 105.521
2005......................................... 104.417
2006......................................... 103.313
2007......................................... 102.208
2008......................................... 101.104
</TABLE>
In addition, at any time and from time to time prior to July 1, 2000, the
Company may, at its option, redeem Exchange Debentures having an aggregate
principal amount of up to 35% of the aggregate principal amount of Exchange
Debentures issued upon exchange of the Exchangeable Preferred Stock or in
payment of interest on the Exchange Debentures, at a redemption price equal to
113.25% of the aggregate principal amount thereof plus, without duplication,
accrued and unpaid interest, with proceeds of one or more Public Equity
Offerings, provided that, immediately after giving effect to any such
redemption, at least $75,000,000 of the aggregate principal amount of the
Exchange Debentures remains outstanding. Any such redemption must be made within
90 days of the related Public Equity Offering.
If less than all the Exchange Debentures are to be redeemed, the particular
Exchange Debentures to be redeemed will be selected not more than 60 days prior
to the redemption date by the Debentures Trustee by such method as the
Debentures Trustee deems fair and appropriate.
CERTAIN COVENANTS
The Exchange Indenture contains, among others, the following covenants:
LIMITATION ON DEBT. (a) The Company will not, and will not permit any of
its Restricted Subsidiaries to, create, issue, assume, guarantee or in any
manner become directly or indirectly liable for the payment of, or otherwise
incur (collectively, "incur"), any Debt (including Acquired Debt and the
issuance of Disqualified Stock), except that the Company or a Subsidiary
Debentures Guarantor may incur Debt or issue Disqualified Stock if, at the time
of such event, the Consolidated Cash Flow Ratio would have been less than 7.0 to
1.0.
In making the foregoing calculation, pro forma effect will be given to: (i)
the incurrence of such Debt and (if applicable) the application of the net
proceeds therefrom, including to refinance other Debt, as if such Debt had been
incurred and the application of proceeds therefrom occurred on the first day of
the four-fiscal quarter period used to calculate the Consolidated Cash Flow
Ratio, (ii) the incurrence, repayment or retirement of any other Debt by the
Company or any of its Restricted Subsidiaries since the first day of such
four-quarter period as if such Debt was incurred, repaid or retired at the
beginning of such four-quarter period and (iii) the acquisition (whether by
purchase, merger or otherwise) or disposition (whether by sale, merger or
otherwise) of any company, entity or business acquired or disposed of by the
Company or any of its Restricted Subsidiaries, as the case may be, since the
first day of such four-quarter period, as if such acquisition or disposition
occurred at the beginning of such four-quarter period. In making a computation
under the foregoing clause (i) or (ii), the amount of Debt under a revolving
credit facility will be computed based upon the average daily balance of such
Debt during such four-quarter period.
(b) Notwithstanding the foregoing, the Company may, and may, to the extent
expressly permitted below, permit any of its Restricted Subsidiaries to, incur
any of the following Debt ("Permitted Debt"):
(i) Debt of the Company or any Subsidiary Debentures Guarantor under
the Credit Facility (including guarantees thereof by Subsidiaries) in an
aggregate principal amount at any one time
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outstanding not to exceed $110,000,000 less any amounts applied to the
permanent reduction of such Debt pursuant to the "Limitation on Certain
Asset Sales" covenant.
(ii) Debt of the Company or any of its Restricted Subsidiaries
outstanding on the Closing Date, other than Debt described under clause (i)
above.
(iii) Debt owed by the Company to any of its Restricted Subsidiaries
or owed by any Subsidiary to the Company or a Restricted Subsidiary
(provided that such Debt is Junior Subordinated Debt and is held by the
Company or such Restricted Subsidiary) or owed to the Company or a
Subsidiary Debentures Guarantor by a Restricted Subsidiary that is not a
Subsidiary Debentures Guarantor, provided the incurrence of such Debt did
not violate the "Limitation on Restricted Payments" covenant.
(iv) Debt represented by the Notes and the Subsidiary Notes
Guarantees.
(v) Debt represented by the Exchange Debentures and the Subsidiary
Debentures Guarantees.
(vi) Hedging Obligations of the Company or any of its Restricted
Subsidiaries incurred in the ordinary course of business.
(vii) Capitalized Lease Obligations of the Company or any of its
Restricted Subsidiaries in an aggregate amount not exceeding $3,000,000 at
any one time outstanding.
(viii) Debt under purchase money mortgages or secured by purchase
money security interests so long as (x) such Debt is not secured by any
property or assets of the Company or any of its Restricted Subsidiaries
other than the property or assets so acquired and (y) such Debt is created
within 60 days of the acquisition of the related property; provided that
the aggregate principal amount of Debt under this clause (viii) does not
exceed $2,000,000 at any one time outstanding.
(ix) Debt of the Company or any Subsidiary Debentures Guarantor, not
permitted by any other clause of this definition, in an aggregate principal
amount not to exceed $5,000,000 at any one time outstanding.
(x) Debt of the Company or any of its Restricted Subsidiaries
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments in connection with the acquisition or disposition of
assets, including, without limitation, shares of Capital Stock.
(xi) Acquired Debt of a person, other than Debt incurred in connection
with, or in contemplation of, such person becoming a Restricted Subsidiary
or the acquisition of assets from such person, as the case may be, provided
that the Company on a pro forma basis could incur $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of this
covenant.
(xii) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company or any Restricted Subsidiary of any outstanding Debt of the Company
or such Restricted Subsidiary, other than Debt incurred pursuant to clause
(i), (vi), (vii), (viii), (ix) or (x) of this definition, including any
successive refinancings thereof, so long as (A) any such new Debt is in a
principal amount that does not exceed the principal amount so refinanced,
plus the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Debt refinanced or the amount of
any premium reasonably determined by the Company as necessary to accomplish
such refinancing, plus the amount of expenses of the Company incurred in
connection with such refinancing, (B) in the case of any refinancing of
Junior Subordinated Debt, such new Debt is made subordinate to the Exchange
Debentures at least to the same extent as the Debt being refinanced, (C) in
the case of any refinancing of the Exchange Debentures or any Pari Passu
Debt, such Debt is Pari Passu Debt or Junior Subordinated Debt and (D) such
refinancing Debt does not have a Weighted Average Life less than the
Weighted Average Life of the Debt being refinanced and does not have a
final scheduled maturity earlier than the final scheduled maturity, or
permit redemption at the option of the holder earlier than the earliest
date of redemption at the option of the holder, of the Debt being
refinanced.
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LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, take any
of the following actions:
(a) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Capital Stock of the Company or any of its
Restricted Subsidiaries, other than (i) dividends or distributions payable
solely in Qualified Equity Interests of the issuer of such shares of
Capital Stock, (ii) dividends or distributions by a Restricted Subsidiary
payable to the Company or another Restricted Subsidiary or (iii) pro rata
dividends or distributions on common stock of a Restricted Subsidiary held
by minority stockholders, provided that such dividends do not in the
aggregate exceed the minority stockholders' pro rata share of such
Restricted Subsidiary's net income from the first day of the Company's
fiscal quarter during which the Closing Date occurs;
(b) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of Capital Stock (or any options,
warrants or other rights to acquire shares of Capital Stock) of (i) the
Company or any of its Unrestricted Subsidiaries or (ii) any Restricted
Subsidiary that are held by any Affiliate of the Company (other than, in
either case, any such Capital Stock owned by the Company or any of its
Restricted Subsidiaries);
(c) make any principal payment on, or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Junior Subordinated Debt;
and
(d) make any Investment (other than a Permitted Investment) in any
person
(such payments or other actions described in (but not excluded from)
clauses (a) through (d) being referred to as "Restricted Payments"), unless
at the time of, and immediately after giving effect to, the proposed
Restricted Payment:
(i) no Default or Event of Default has occurred and is continuing,
(ii) the Company could incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of the
"Limitation on Debt" covenant, and
(iii) the aggregate amount of all Restricted Payments declared or
made after the Closing Date does not exceed the sum of:
(A) the remainder of (x) 100% of the aggregate Consolidated Cash
Flow for the period beginning on the first day of the Company's
fiscal quarter during which the Closing Date occurs and ending on the
last day of the Company's most recent fiscal quarter for which
internal financial statements are available ending prior to the date
of such proposed Restricted Payment (the "Computation Period") minus
(y) the product of 1.4 times the sum of (i) Consolidated Fixed
Charges for the Computation Period and (ii) all dividends or other
distributions paid in cash by the Company or any of its Restricted
Subsidiaries on any Disqualified Stock of the Company or any of its
Restricted Subsidiaries for the Computation Period; plus
(B) the aggregate net proceeds received by the Company after the
Closing Date (including the fair market value of property other than
cash as determined by the Company's Board of Directors, whose good
faith determination will be conclusive) from the issuance or sale
(other than to a Subsidiary) of Qualified Equity Interests of the
Company (excluding from this computation any net proceeds of a Public
Equity Offering received by the Company that are used by it to redeem
the Exchange Debentures, as discussed above); plus
(C) the aggregate net proceeds received by the Company after the
Closing Date (including the fair market value of property other than
cash as determined by the Company's Board of Directors, whose good
faith determination will be conclusive) from the issuance or sale
(other than to a Subsidiary) of debt securities or Disqualified Stock
that have been converted into or exchanged for Qualified Stock of the
Company, together with the aggregate net cash proceeds received by
the Company at the time of such conversion or exchange; plus
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(D) without duplication, the Net Cash Proceeds received by the
Company or a Wholly Owned Restricted Subsidiary upon the sale of any
of its Unrestricted Subsidiaries; plus
(E) $5,000,000.
Notwithstanding the foregoing, the Company and any of its Restricted
Subsidiaries may take any of the following actions, so long as (with respect to
clauses (f) and (g) below) no Default or Event of Default has occurred and is
continuing or would occur:
(a) The payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not have
been prohibited by the foregoing provision.
(b) The repurchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company, in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary) of, Qualified Equity Interests of the
Company.
(c) The purchase, redemption, defeasance or other acquisition or
retirement for value of Junior Subordinated Debt in exchange for, or out of
the net cash proceeds of, a substantially concurrent issuance and sale
(other than to a Restricted Subsidiary) of shares of Qualified Stock of the
Company.
(d) The purchase, redemption, defeasance or other acquisition or
retirement for value of Junior Subordinated Debt in exchange for, or out of
the net cash proceeds of, a substantially concurrent issuance or sale
(other than to a Subsidiary) of, Junior Subordinated Debt, so long as the
Company or a Restricted Subsidiary would be permitted to refinance such
original Junior Subordinated Debt with such new Junior Subordinated Debt
pursuant to clause (xii) of the definition of Permitted Debt.
(e) The repurchase of any Junior Subordinated Debt at a purchase price
not greater than 101% of the principal amount of such Junior Subordinated
Debt in the event of a "change of control" in accordance with provisions
similar to the "Purchase of Exchange Debentures upon a Change of Control"
covenant; provided that, prior to such repurchase, the Company has made the
Change of Control Offer as provided in such covenant with respect to the
Exchange Debentures and has repurchased all Exchange Debentures validly
tendered for payment in connection with such Change of Control Offer.
(f) The payment by the Company to Citadel Communications for the
purpose of the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of Citadel Communications,
options on any such shares or related stock appreciation rights or similar
securities held by officers or employees or former officers or employees
(or their estates or beneficiaries under their estates) or by any employee
benefit plan, upon death, disability, retirement or termination of
employment or pursuant to the terms of any employee benefit plan or any
other agreement under which such shares of stock or related rights were
issued; provided that the aggregate cash consideration paid for such
purchase, redemption, acquisition, cancellation or other retirement of such
shares of Capital Stock after the date of the Closing Date does not exceed
$1,000,000 in any fiscal year.
(g) Loans or advances to officers, directors and employees of Citadel
Communications, the Company or any of its Restricted Subsidiaries made in
the ordinary course of business after the Closing Date in an aggregate
principal amount not to exceed $1,000,000 at any one time outstanding.
(h) Payments to or on behalf of Citadel Communications to pay its
operating and administrative expenses attributable to the Company
including, without limitation, legal and audit expenses, directors' fees,
fees payable in respect of the trustee and the back-up trustees under the
Voting Trust Agreement, and Commission compliance expenses, in an amount
not to exceed the greater of $1,000,000 per fiscal year and 1% of the net
revenues of the Company for the preceding fiscal year.
The payments described in clauses (b), (c), (e), (f) and (g) of this paragraph
will be Restricted Payments that will be permitted to be taken in accordance
with this paragraph but will reduce the amount that would otherwise be available
for Restricted Payments under the foregoing clause (iii) and the payments
described in clauses (a), (d) and (h) of this paragraph will be Restricted
Payments that will be permitted to be taken in
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accordance with this paragraph and will not reduce the amount that would
otherwise be available for Restricted Payments under the foregoing clause (iii).
For the purpose of making any calculations under the Exchange Indenture (i)
if a Restricted Subsidiary is designated an Unrestricted Subsidiary, the Company
will be deemed to have made an Investment in amount equal to the fair market
value of the net assets of such Restricted Subsidiary at the time of such
designation as determined by the Board of Directors of the Company, whose good
faith determination will be conclusive, (ii) any property transferred to or from
an Unrestricted Subsidiary will be valued at fair market value at the time of
such transfer, as determined by the Board of Directors of the Company, whose
good faith determination will be conclusive and (iii) subject to the foregoing,
the amount of any Restricted Payment, if other than cash, will be determined by
the Board of Directors of the Company, whose good faith determination will be
conclusive.
If the aggregate amount of all Restricted Payments calculated under the
foregoing provision includes an Investment in an Unrestricted Subsidiary or
other person that thereafter becomes a Restricted Subsidiary, such Investment
will no longer be counted as a Restricted Payment for purposes of calculating
the aggregate amount of Restricted Payments.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision will be reduced by the amount of any net reduction in such Investment
(resulting from the payment of interest or dividends, loan repayment, transfer
of assets or otherwise), to the extent such net reduction is not included in
Consolidated Adjusted Net Income; provided that the total amount by which the
aggregate amount of all Restricted Payments may be reduced may not exceed the
lesser of (x) the cash proceeds received by the Company and any of its
Restricted Subsidiaries in connection with such net reduction and (y) the
initial amount of such Investment.
In computing Consolidated Adjusted Net Income for purposes of the foregoing
clause (iii)(A), (i) the Company may use audited financial statements for the
portions of the relevant period for which audited financial statements are
available on the date of determination and unaudited financial statements and
other current financial data based on the books and records of the Company for
the remaining portion of such period and (ii) the Company will be permitted to
rely in good faith on the financial statements and other financial data derived
from the books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment that, at the time of
the making of such Restricted Payment, would in the good faith determination of
the Company be permitted under the requirements of the Exchange Indenture, such
Restricted Payment will be deemed to have been made in compliance with the
Exchange Indenture notwithstanding any subsequent adjustments made in good faith
to the Company's financial statements affecting Consolidated Adjusted Net Income
of the Company for any period.
PURCHASE OF EXCHANGE DEBENTURES UPON A CHANGE OF CONTROL. If a Change of
Control occurs at any time, then each holder of Exchange Debentures will have
the right to require that the Company purchase such holder's Exchange
Debentures, in whole or in part in integral multiples of $1,000, at a purchase
price in cash equal to 101% of the principal amount of such Exchange Debentures,
plus accrued and unpaid interest, if any, to the date of purchase, pursuant to
the offer described below (the "Change of Control Offer") and the other
procedures set forth in the Exchange Indenture.
Within 30 days following any Change of Control, the Company will notify the
Debentures Trustee thereof and give written notice of such Change of Control to
each holder of Exchange Debentures by first-class mail, postage prepaid, at its
address appearing in the security register, stating, among other things, (i) the
purchase price and the purchase date, which will be a Business Day no earlier
than 30 days nor later than 60 days from the date such notice is mailed or such
later date as is necessary to comply with requirements under the Exchange Act;
(ii) that any Exchange Debenture not tendered will continue to accrue interest;
(iii) that, unless the Company defaults in the payment of the purchase price,
any Exchange Debenture accepted for payment pursuant to the Change of Control
Offer will cease to accrue interest after the Change of Control purchase date;
and (iv) certain other procedures that a holder of Exchange Debentures must
follow to accept a Change of Control Offer or to withdraw such acceptance.
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If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the purchase price for all
of the Exchange Debentures that might be tendered by holders of the Exchange
Debentures seeking to accept the Change of Control Offer. The Credit Facility
prohibits the purchase of Exchange Debentures by the Company prior to full
repayment of indebtedness under the Credit Facility and, upon a Change of
Control, all amounts outstanding under the Credit Facility become due and
payable. There can be no assurance that in the event of a Change of Control the
Company will be able to obtain the necessary consents from the lenders under the
Credit Facility to consummate a Change of Control Offer. The failure of the
Company to make or consummate the Change of Control Offer or pay the applicable
Change of Control purchase price when due would result in an Event of Default
and would give the Debentures Trustee and the holders of the Exchange Debentures
the rights described under "Events of Default."
In addition to the obligations of the Company under the Exchange Indenture
with respect to the Exchange Debentures in the event of a Change of Control, the
Credit Facility contains a provision designating a change of control as
described therein as an event of default, which would obligate the Company to
repay amounts outstanding under the Credit Facility upon an acceleration of the
indebtedness outstanding thereunder.
The existence of a holder's right to require the Company to purchase such
holder's Exchange Debentures upon a Change of Control may deter a third party
from acquiring the Company in a transaction that constitutes a Change of
Control.
The definition of "Change of Control" in the Exchange Indenture is limited
in scope. The provisions of the Exchange Indenture may not afford holders of
Exchange Debentures the right to require the Company to repurchase such Exchange
Debentures in the event of a highly leveraged transaction or certain
transactions with the Company's management or its affiliates, including a
reorganization, restructuring, merger or similar transaction involving the
Company (including, in certain circumstances, an acquisition of the Company by
management or its affiliates) that may adversely affect holders of the Exchange
Debentures, if such transaction is not a transaction defined as a Change of
Control. See "Certain Definitions" above for the definition of "Change of
Control." A transaction involving the Company's management or its affiliates, or
a transaction involving a recapitalization of the Company, would result in a
Change of Control if it is the type of transaction specified in such definition.
The Company will comply with the applicable tender offer rules including
Rule 14e-l under the Exchange Act, and any other applicable securities laws and
regulations in connection with a Change of Control Offer.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create any restriction (other than restrictions existing under
Debt as in effect on the Closing Date or in refinancings or replacements of such
Debt) that would materially impair the ability of the Company to make a Change
of Control Offer to purchase the Exchange Debentures or, if such Change of
Control Offer is made, to pay for the Exchange Debentures tendered for purchase.
LIMITATION ON CERTAIN ASSET SALES. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries to, engage in any Asset Sale unless
(i) the consideration received by the Company or such Restricted Subsidiary for
such Asset Sale is not less than the fair market value of the assets sold (as
determined by the Board of Directors of the Company, whose good faith
determination will be conclusive) and (ii) the consideration received by the
Company or the relevant Restricted Subsidiary in respect of such Asset Sale
consists of at least 80% (A) cash or cash equivalents and/or (B) the assumption
by the transferee of Debt of the Company or a Restricted Subsidiary ranked
senior to or pari passu with the Exchange Debentures and release of the Company
or such Restricted Subsidiary from all liability on such Debt.
(b) If the Company or any of its Restricted Subsidiaries engages in an
Asset Sale, the Company may, at its option, within 12 months after such Asset
Sale, (i) apply all or a portion of such Net Cash Proceeds to the permanent
reduction of amounts outstanding under the Credit Facility or to the repayment
of other Senior Debt or Senior Subordinated Debt of the Company or a Subsidiary
Debentures Guarantor or (ii) invest (or enter into one or more legally binding
agreements to invest) all or a portion of such Net Cash Proceeds in properties
and assets to replace the properties and assets that were the subject of the
Asset Sale or in
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properties and assets that will be used in the broadcast business or businesses
reasonably related thereto. If any such legally binding agreement to invest such
Net Cash Proceeds is terminated, the Company may, within 90 days of such
termination or within 12 months of such Asset Sale, whichever is later, invest
such Net Cash Proceeds as provided in clause (i) or (ii) (without regard to the
parenthetical contained in such clause (ii)) above. The amount of such Net Cash
Proceeds not so used as set forth above in this paragraph (b) constitutes
"Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $5,000,000, the
Company will, within 30 days thereafter, make an offer to purchase from all
holders of Exchange Debentures, on a pro rata basis, in accordance with the
procedures set forth in the Exchange Indenture, the maximum principal amount
(expressed as a multiple of $1,000) of Exchange Debentures that may be purchased
with the Excess Proceeds, at a purchase price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
such offer to purchase is consummated. To the extent that the aggregate
principal amount of the Exchange Debentures tendered pursuant to such offer to
purchase is less than the Excess Proceeds, the Company may use such deficiency
for general corporate purposes. If the aggregate principal amount of the
Exchange Debentures validly tendered and not withdrawn by holders thereof
exceeds the Excess Proceeds, the Exchange Debentures to be purchased will be
selected on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds will be reset to zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act to the extent applicable in connection with the repurchase of
Exchange Debentures pursuant to an offer to purchase Exchange Debentures.
LIMITATION ON ASSET SWAPS. The Exchange Indenture provides that the
Company will not, and will not permit any of its Restricted Subsidiaries to,
engage in any Asset Swap, unless:
(i) at the time of entering into the Asset Swap and immediately after
giving effect to the proposed Asset Swap, no Default or Event of Default
has occurred and is continuing or would occur as a consequence thereof;
(ii) the Company would, at the time of entering into the Asset Swap
and after giving pro forma effect to the proposed Asset Swap, as if such
Asset Swap had occurred at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of the
"Limitation on Debt" covenant;
(iii) the respective aggregate fair market values of the assets being
purchased and sold by the Company or any of its Restricted Subsidiaries are
substantially the same at the time of entering into the Asset Swap (or any
difference in such aggregate fair market values is substantially
compensated for by an equalizing (i) payment of cash, (ii) assumption of
liabilities or (iii) taking of assets subject to liabilities); and
(iv) at the time of the consummation of the first to occur of the
relinquishment or the replacement of assets constituting part of the
proposed Asset Swap, the percentage of any decline in the fair market value
of the asset or assets being acquired by the Company and its Restricted
Subsidiaries shall not be significantly greater than the percentage of any
decline in the fair market value of the assets being disposed of by the
Company, calculated from the time the last agreement constituting part of
the Asset Swap, was entered into.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or suffer to exist any transaction with, or for the benefit of, any
Affiliate of the Company unless (a) such transaction is on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could have been obtained in an arm's length transaction with
third parties who are not Affiliates and (b) either (i) with respect to any
transaction or series of transactions involving aggregate payments in excess of
$1,000,000, but less than $5,000,000, the Company delivers an officers'
certificate to the Debentures Trustee certifying that such transaction or
transactions comply with clause (a) above or (ii) with respect to a transaction
or series of transactions involving aggregate payments equal to or greater than
$5,000,000, such transaction or transactions
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have been approved by the Board of Directors (including a majority of the
Disinterested Directors) of the Company or the Company has obtained a written
opinion from a nationally recognized investment banking firm to the effect that
such transaction or transactions are fair to the Company or such Restricted
Subsidiary from a financial point of view.
The foregoing covenant does not restrict any of the following:
(A) Transactions among the Company and/or any of its Restricted
Subsidiaries.
(B) The Company from paying reasonable and customary regular
compensation, fees, indemnification and similar arrangements and payments
thereunder to directors of the Company or any of its Restricted
Subsidiaries who are not employees of the Company or any of its Restricted
Subsidiaries.
(C) Employment agreements or compensation or employee benefits
arrangements with any officer, director or employee of the Company or its
Restricted Subsidiaries entered into in the ordinary course of business
(including customary benefits thereunder) (it being understood that
benefits of the nature in place as of the Closing Date shall be deemed
permissible hereunder).
(D) The performance of the Company's obligations under (a) that
certain lease agreement effective December 29, 1995 with Wilson Aviation,
L.L.C. relating to the lease of an airplane, (b) that certain agreement not
to compete dated December 31, 1996 with DVS Management, Inc. and (c) that
certain Voting Trust Agreement dated March 17, 1997 among Citadel
Communications, ABRY II, ABRY/CIP and others and the related letter
agreement dated March 17, 1997 among Citadel Communications, ABRY II,
ABRY/CIP and others (the "Affiliate Agreements"); provided that any
amendments or modifications to the terms of the Affiliate Agreements (1)
are no less favorable to the Company than those that could have been
obtained in an arm's length transaction with third parties who are not
Affiliates and (2) are approved by the Board of Directors (including a
majority of the Disinterested Directors) of the Company.
(E) The Company from making payments to Citadel Communications to pay
its operating and administrative expenses attributable to the Company
including, without limitation, legal and audit expenses, directors' fees
and Commission compliance expenses, in an amount not to exceed the greater
of $1,000,000 per fiscal year and 1% of the net revenues of the Company for
the preceding fiscal year.
(F) The Company or a Restricted Subsidiary from transferring up to
$500,000 of properties and assets, including cash, to a joint venture in
which the Company or a Restricted Subsidiary has an equity interest and in
which one or more directors or officers of the Company or Citadel
Communications has an equity interest, which joint venture is engaged in
the internet service provider business.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any of its Restricted Subsidiaries to (a) pay dividends, in
cash or otherwise, or make any other distributions on or in respect of its
Capital Stock, (b) pay any Debt owed to the Company or any other Restricted
Subsidiary, (c) make loans or advances to the Company or any other Restricted
Subsidiary or (d) transfer any of its properties or assets to the Company or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of any of the following:
(i) The Credit Facility and any agreement in effect on the Closing
Date.
(ii) Customary non-assignment provisions of any lease governing a
leasehold interest of the Company or any of its Restricted Subsidiaries.
(iii) The refinancing or successive refinancings of Debt referred to
in clause (i) or (iv), so long as such encumbrances or restrictions are no
less favorable to the Company or any of its Restricted Subsidiaries than
those contained in such original agreement.
(iv) Any agreement or other instrument of a person acquired by the
Company or any of its Restricted Subsidiaries in existence at the time of
such acquisition (but not created in contemplation
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thereof), which encumbrance or restriction is not applicable to any person,
or the properties or assets of any person, other than the person, or the
property or assets of the person, so acquired.
(v) Any agreement providing for the incurrence of Debt by a Restricted
Subsidiary pursuant to paragraph (b) of the "Limitation on Debt" covenant,
provided that such Restricted Subsidiary becomes a Subsidiary Debentures
Guarantor.
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not sell, and will not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants, or other
rights to purchase shares of such Capital Stock) except (i) to the Company or a
Wholly Owned Restricted Subsidiary, (ii) issuances or sales to foreign nationals
of shares of Capital Stock of foreign Restricted Subsidiaries, to the extent
required by applicable law, or issuances or sales to directors of directors'
qualifying shares, (iii) if, immediately after giving effect to such issuance or
sale, neither the Company nor any Subsidiary owns any shares of Capital Stock of
such Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) or (iv) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary and any Investment in such person remaining
after giving effect to such issuance or sale would have been permitted to be
made under the "Limitation on Restricted Payments" covenant if made on the date
of such issuance or sale.
In addition, the Company will not, and will not permit any of its
Restricted Subsidiaries to, sell, transfer or otherwise dispose of any of its
properties or assets to an Unrestricted Subsidiary other than in the ordinary
course of business.
UNRESTRICTED SUBSIDIARIES. (a) The Board of Directors of the Company may
designate any Subsidiary (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary so long as (i) neither the Company
nor any of its Restricted Subsidiaries is directly or indirectly liable for any
Debt of such Subsidiary, (ii) no default with respect to any Debt of such
Subsidiary would permit (upon notice, lapse of time or otherwise) any holder of
any other Debt of the Company or any of its Restricted Subsidiaries to declare a
default on such other Debt or cause the payment thereof to be accelerated or
payable prior to its stated maturity, (iii) any Investment in such Subsidiary
made as a result of designating such Subsidiary an Unrestricted Subsidiary will
not violate the provisions of the "Limitation on Restricted Payments" covenant,
(iv) neither the Company nor any of its Restricted Subsidiaries has a contract,
agreement, arrangement, understanding or obligation of any kind, whether written
or oral, with such Subsidiary other than those that might be obtained at the
time from persons who are not Affiliates of the Company and (v) neither the
Company nor any of its Restricted Subsidiaries has any obligation to subscribe
for additional shares of Capital Stock or other equity interest in such
Subsidiary, or to maintain or preserve such Subsidiary's financial condition or
to cause such Subsidiary to achieve certain levels of operating results.
Notwithstanding the foregoing, the Company may not designate the License
Subsidiary, or any Subsidiary to which any properties or assets (other than
current assets) owned by the Company or the License Subsidiary on the Closing
Date have been transferred, as an Unrestricted Subsidiary.
(b) The Board of Directors of the Company may designate any of its
Unrestricted Subsidiaries as a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation will only be permitted if (i) such Debt is permitted under the
"Limitation on Debt" covenant and (ii) no Default or Event of Default will have
occurred and be continuing following such designation.
LIMITATION ON OTHER SUBORDINATED DEBT. The Company and each Subsidiary
Debentures Guarantor will not, directly or indirectly, incur or otherwise permit
to exist any Debt that is subordinate in right of payment to any Senior
Subordinated Debt of the Company or such Subsidiary Debentures Guarantor, as the
case may be, unless such Debt is also pari passu with the Exchange Debentures or
the Subsidiary Debentures Guarantee of the Exchange Debentures by such
Subsidiary Debentures Guarantor, as the case may be, or subordinate in right of
payment to the Exchange Debentures or such Subsidiary Debentures Guarantee of
the Exchange Debentures, as the case may be, to at least the same extent as the
Exchange Debentures or such Subsidiary Debentures Guarantee are subordinate in
right of payment to Senior Subordinated Debt or all senior
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subordinated debt of the Subsidiary Debentures Guarantors, as the case may be,
as set forth in the Exchange Indenture.
SUBSIDIARY DEBENTURES GUARANTEES. The Subsidiary Debentures Guarantors
will, jointly and severally, unconditionally guarantee the due and punctual
payment of the principal of, premium, if any, and interest on the Exchange
Debentures on a subordinated basis pursuant to the Subsidiary Debentures
Guarantees as described under "-- Subordination." The Subsidiary Debentures
Guarantors may be released from their obligations under the Subsidiary
Debentures Guarantees as described under "-- Defeasance and Covenant Defeasance
of the Exchange Indenture" and a Subsidiary Debentures Guarantor may be released
from its obligations under its Subsidiary Debentures Guarantee as described
under "Guarantees."
The Company will (i) cause each person that, after the Closing Date,
becomes a Wholly Owned Restricted Subsidiary of the Company, as well as each
other Restricted Subsidiary that guarantees any other Debt of the Company, to
execute and deliver a supplemental indenture and thereby become a Subsidiary
Debentures Guarantor bound by the Subsidiary Debentures Guarantee of the
Exchange Debentures in the form set forth in the Exchange Indenture (without
such Subsidiary Debentures Guarantor being required to execute and deliver its
Subsidiary Debentures Guarantee endorsed on the Exchange Debentures) and (ii)
deliver to the Debentures Trustee an opinion of counsel, in form and substance
reasonably satisfactory to the Debentures Trustee, that the Subsidiary
Debentures Guarantee of such Subsidiary Debentures Guarantor is a valid and
legally binding obligation of such Subsidiary Debentures Guarantor.
GUARANTEES OF DEBT BY RESTRICTED SUBSIDIARIES. The Company will not permit
any of its Restricted Subsidiaries that is not a Subsidiary Debentures
Guarantor, directly or indirectly, to guarantee, assume or in any other manner
become liable for the payment of any Debt of the Company or any Debt of any
other Restricted Subsidiary, unless (a) such Restricted Subsidiary
simultaneously executes and delivers a Subsidiary Debentures Guarantee and (b)
with respect to any guarantee of Junior Subordinated Debt by a Restricted
Subsidiary, any such guarantee is subordinated to such Restricted Subsidiary's
Subsidiary Debentures Guarantee at least to the same extent as such Junior
Subordinated Debt is subordinated to the Exchange Debentures, provided that the
foregoing provision will not be applicable to any guarantee by any such
Restricted Subsidiary that existed at the time such person became a Restricted
Subsidiary and was not incurred in connection with, or in contemplation of, such
person becoming a Restricted Subsidiary.
LIMITATION ON LIENS. The Company will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, affirm or suffer to exist any Lien of
any kind securing any Pari Passu Debt or Junior Subordinated Debt (including any
assumption, guarantee or other liability with respect thereto by any Restricted
Subsidiary) upon any property or assets (including any intercompany notes) of
the Company or any of its Restricted Subsidiaries now owned or acquired after
the Closing Date, or any income or profits therefrom, unless the Exchange
Debentures are directly secured equally and ratably with (or prior to in the
case of Junior Subordinated Debt) the obligation or liability secured by such
Lien; provided that the foregoing will not apply to Liens securing Debt of a
person acquired by the Company or any of its Restricted Subsidiaries in
existence at the time of such acquisition (but not created in contemplation
thereof), which Lien is not applicable to any person, or the properties or
assets of any person, other than the person, or the property or assets of the
person, so acquired.
REPORTS. At all times while the Exchange Debentures are issued and
outstanding, whether or not the Company is then required to file reports with
the Commission, the Company will file with the Commission all such reports and
other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Exchange Act if it were subject thereto. The
Company will supply the Debentures Trustee and each holder, or will supply to
the Debentures Trustee for forwarding to each such holder, without cost to such
holder, copies of such reports and other information.
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CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with or merge with or into any other
person or, directly or indirectly, convey, transfer or lease its properties and
assets substantially as an entirety to any person or persons, unless:
(a) Either (i) the Company is the surviving corporation or (ii) the
person (if other than the Company) formed by such consolidation or into
which the Company is merged or the person that acquires by sale,
assignment, transfer, lease or other disposition of the properties and
assets of the Company substantially as an entirety (the "Surviving Entity")
(A) is a corporation, partnership or trust organized and validly existing
under the laws of the United States, any state thereof or the District of
Columbia and (B) expressly assumes, by a supplemental indenture in form
satisfactory to the Debentures Trustee, all of the Company's obligations
under the Exchange Indenture and the Exchange Debentures.
(b) Immediately after giving effect to such transaction and treating
any obligation of the Company or a Restricted Subsidiary in connection with
or as a result of such transaction as having been incurred at the time of
such transaction, no Default or Event of Default has occurred and is
continuing.
(c) Immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred at the beginning of
the most recently ended four full fiscal quarter period for which internal
financial statements are available), the Company (or the Surviving Entity
if the Company is not the continuing obligor under the Exchange Indenture)
could incur at least $1.00 of additional Debt (other than Permitted Debt)
pursuant to the first paragraph of the "Limitation on Debt" covenant.
(d) If the Company is not the continuing obligor under the Exchange
Indenture, each Subsidiary Debentures Guarantor, unless it is the other
party to the transaction described above, has by supplemental indenture
confirmed that its Subsidiary Debentures Guarantee applies to the Surviving
Entity's obligations under the Exchange Indenture and the Exchange
Debentures.
(e) If any of the property or assets of the Company or any of its
Restricted Subsidiaries would thereupon become subject to any Lien, the
provisions of the "Limitation on Liens" covenant are complied with.
(f) The Company delivers, or causes to be delivered, to the Debentures
Trustee, in form and substance reasonably satisfactory to the Debentures
Trustee, an officers' certificate and an opinion of counsel, each stating
that such transaction complies with the requirements of the Exchange
Indenture.
In the event of any transaction described in and complying with the
conditions listed in the first paragraph of this covenant in which the Company
is not the continuing obligor under the Exchange Indenture, the Surviving Entity
will succeed to, and be substituted for, and may exercise every right and power
of, the Company under the Exchange Indenture, and thereafter the Company will,
except in the case of a lease, be discharged from all its obligations and
covenants under the Exchange Indenture and Exchange Debentures.
EVENTS OF DEFAULT
Each of the following are "Events of Default" under the Exchange Indenture:
(a) Default in the payment of any interest on any Exchange Debenture
when it becomes due and payable, and continuance of such default for a
period of 30 days.
(b) Default in the payment of the principal of (or premium, if any,
on) any Exchange Debenture when due.
(c) Failure to perform or comply with the Exchange Indenture
provisions described under "Consolidation, Merger and Sale of Assets."
(d) Default in the performance, or breach, of any covenant or
agreement of the Company or any Subsidiary Debentures Guarantor contained
in the Exchange Indenture or any Subsidiary Debentures Guarantee (other
than a default in the performance, or breach, of a covenant or agreement
that is specifically dealt with elsewhere herein), and continuance of such
default or breach for a period of 60
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days after written notice has been given to the Company by the Debentures
Trustee or to the Company and the Debentures Trustee by the holders of at
least 25% in aggregate principal amount of the Exchange Debentures then
outstanding.
(e) (i) An event of default has occurred under any mortgage, bond,
indenture, loan agreement or other document evidencing an issue of Debt of
the Company or any Significant Subsidiary, which issue has an aggregate
outstanding principal amount of not less than $5,000,000, and such default
has resulted in such Debt becoming, whether by declaration or otherwise,
due and payable prior to the date on which it would otherwise become due
and payable or (ii) a default in any payment when due at final maturity of
any such Debt.
(f) Failure by the Company or any of its Restricted Subsidiaries to
pay one or more final judgments the uninsured portion of which exceeds in
the aggregate $5,000,000, which judgment or judgments are not paid,
discharged or stayed for a period of 60 days.
(g) Any Subsidiary Debentures Guarantee ceases to be in full force and
effect or is declared null and void or any Subsidiary Debentures Guarantor
denies that it has any further liability under any Subsidiary Debentures
Guarantee, or gives notice to such effect (other than by reason of the
termination of the Exchange Indenture or the release of any Subsidiary
Debentures Guarantee in accordance with the Exchange Indenture), and such
condition has continued for a period of 30 days after written notice of
such failure requiring the Subsidiary Debentures Guarantor and the Company
to remedy the same has been given (x) to the Company by the Debentures
Trustee or (y) to the Company and the Debentures Trustee by the holders of
25% in the aggregate principal amount of the Exchange Debentures then
outstanding.
(h) The occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company or any Significant Subsidiary.
If an Event of Default (other than as specified in clause (h) above) occurs
and is continuing, the Debentures Trustee or the holders of not less than 25% in
aggregate principal amount of the Exchange Debentures then outstanding may, and
the Debentures Trustee at the request of such holders shall, declare the
principal of all of the outstanding Exchange Debentures immediately due and
payable, by a notice in writing to the Company (and to the Debentures Trustee if
given by the Holders) and, if the Credit Facility is in effect, to the Credit
Facility Agent, and, upon any such declaration, such principal will become due
and payable immediately. If an Event of Default specified in clause (h) above
occurs and is continuing, then such principal will ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Debentures Trustee or any holder of Exchange Debentures.
At any time after a declaration of acceleration under the Exchange
Indenture, but before a judgment or decree for payment of the money due has been
obtained by the Debentures Trustee, the holders of a majority in aggregate
principal amount of the outstanding Exchange Debentures, by written notice to
the Company and the Debentures Trustee, may rescind such declaration and its
consequences if (i) the Company has paid or deposited with the Debentures
Trustee a sum sufficient to pay (A) all overdue interest on all Exchange
Debentures, (B) all unpaid principal of (and premium, if any, on) any
outstanding Exchange Debentures that has become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the
Exchange Debentures, (C) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue principal amount at the rate borne by
the Exchange Debentures and (D) all sums paid or advanced by the Debentures
Trustee under the Exchange Indenture and the reasonable compensation, expenses,
disbursements and advances of the Debentures Trustee, its agents and counsel;
and (ii) all Events of Default, other than the non-payment of principal of (or
premium, if any, on) or interest on the Exchange Debentures that have become due
solely by such declaration of acceleration, have been cured or waived. No such
rescission will affect any subsequent default or impair any right consequent
thereon.
The holders of not less than a majority in aggregate principal amount of
the outstanding Exchange Debentures may, on behalf of the holders of all of the
Exchange Debentures, waive any past defaults under the Exchange Indenture,
except a default in the payment of the principal of (and premium, if any) or
interest on
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any Exchange Debenture, or in respect of a covenant or provision that under the
Exchange Indenture cannot be modified or amended without the consent of the
holder of each Exchange Debenture outstanding.
If a Default or an Event of Default occurs and is continuing and is known
to the Debentures Trustee, the Debentures Trustee will mail to each holder of
the Exchange Debentures notice of the Default or Event of Default within 90 days
after the occurrence thereof. Except in the case of a Default or an Event of
Default in payment of principal of (and premium, if any, on) or interest on any
Exchange Debentures, the Debentures Trustee may withhold the notice to the
holders of the Exchange Debentures if a committee of its trust officers in good
faith determines that withholding such notice is in the interests of the holders
of the Exchange Debentures.
The Company is required to furnish to the Debentures Trustee annual
statements as to the performance by the Company and the Subsidiary Debentures
Guarantors of their respective obligations under the Exchange Indenture and as
to any default in such performance. The Company is also required to notify the
Debentures Trustee within five days of any officer of the Company having
knowledge of any Default.
DEFEASANCE OR COVENANT DEFEASANCE OF EXCHANGE INDENTURE
The Company may, at its option and at any time, terminate the obligations
of the Company and any Subsidiary Debentures Guarantors with respect to the
outstanding Exchange Debentures ("defeasance"). Such defeasance means that the
Company will be deemed to have paid and discharged the entire Debt represented
by the outstanding Exchange Debentures, except for (i) the rights of holders of
outstanding Exchange Debentures to receive payments in respect of the principal
of (and premium, if any, on) and interest on such Exchange Debentures when such
payments are due, (ii) the Company's obligations to issue temporary Exchange
Debentures, register the transfer or exchange of any Exchange Debentures,
replace mutilated, destroyed, lost or stolen Exchange Debentures, maintain an
office or agency for payments in respect of the Exchange Debentures and
segregate and hold such payments in trust, (iii) the rights, powers, trusts,
duties and immunities of the Debentures Trustee and (iv) the defeasance
provisions of the Exchange Indenture. In addition, the Company may, at its
option and at any time, elect to terminate the obligations of the Company and
any Subsidiary Debentures Guarantor with respect to certain covenants set forth
in the Exchange Indenture and described under "-- Certain Covenants" above, and
any omission to comply with such obligations would not constitute a Default or
an Event of Default with respect to the Exchange Debentures ("covenant
defeasance").
In order to exercise either defeasance or covenant defeasance, (a) the
Company must irrevocably deposit or cause to be deposited with the Debentures
Trustee, as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of the Exchange Debentures,
money in an amount, or U.S. government securities that through the scheduled
payment of principal and interest thereon will provide money in an amount, or a
combination thereof, sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay and discharge the principal of (and
premium, if any, on) and interest on the outstanding Exchange Debentures at
maturity (or upon redemption, if applicable) of such principal or installment of
interest; (b) no Default or Event of Default has occurred and is continuing on
the date of such deposit or, insofar as an event of bankruptcy under clause (h)
of "Events of Default" above is concerned, at any time during the period ending
on the 91st day after the date of such deposit; (c) such defeasance or covenant
defeasance must not result in a breach or violation of, or constitute a default
under, the Exchange Indenture or any material agreement or instrument to which
the Company or any Subsidiary Debentures Guarantor is a party or by which it is
bound or cause the Debentures Trustee or the trust so created to be subject to
the Investment Company Act of 1940, as amended; (d) in the case of defeasance,
the Company must deliver to the Debentures Trustee an opinion of counsel stating
that the Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or since the date hereof, there has been a change in
applicable federal income tax law, to the effect, and based thereon such opinion
must confirm that, the holders of the outstanding Exchange Debentures will not
recognize income, gain or loss for federal income tax purposes as a result of
such defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred; (e) in the case of covenant defeasance, the Company
must have delivered to the Debentures Trustee an opinion of
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counsel to the effect that the holders of the Exchange Debentures outstanding
will not recognize income, gain or loss for federal income tax purposes as a
result of such covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and (f) the Company must
have delivered to the Debentures Trustee an officers' certificate and an opinion
of counsel, each stating that all conditions precedent provided for relating to
either the defeasance or the covenant defeasance, as the case may be, have been
complied with.
SATISFACTION AND DISCHARGE
The Exchange Indenture will cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of the Exchange
Debentures, as expressly provided for in the Exchange Indenture) and, upon the
request of the Company, the Debentures Trustee, at the expense of the Company,
will execute proper instruments acknowledging satisfaction and discharge of the
Exchange Indenture when (a) either (i) all the Exchange Debentures theretofore
authenticated and delivered (other than destroyed, lost or stolen Exchange
Debentures that have been replaced or paid and Exchange Debentures that have
been subject to defeasance as described under "Defeasance or Covenant Defeasance
of Exchange Indenture") have been delivered to the Debentures Trustee for
cancellation or (ii) all Exchange Debentures not theretofore delivered to the
Debentures Trustee for cancellation (A) have become due and payable, (B) will
become due and payable at Stated Maturity within one year or (C) are to be
called for redemption within one year under arrangements satisfactory to the
Debentures Trustee for the giving of notice of redemption by the Debentures
Trustee in the name, and at the expense, of the Company, and the Company has
irrevocably deposited or caused to be deposited with the Debentures Trustee
funds in trust for the purpose in an amount sufficient to pay and discharge the
entire Debt on such Exchange Debentures not theretofore delivered to the
Debentures Trustee for cancellation, for principal (and premium, if any, on) and
interest to the date of such deposit (in the case of Exchange Debentures that
have become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be; (b) the Company has paid or caused to be paid all sums payable
under the Exchange Indenture by the Company; and (c) the Company has delivered
to the Debentures Trustee an officers' certificate and an opinion of counsel,
each stating that all conditions precedent provided in the Exchange Indenture
relating to the satisfaction and discharge of the Exchange Indenture have been
complied with.
AMENDMENTS AND WAIVERS
Modifications and amendments of the Exchange Indenture and any Subsidiary
Debentures Guarantee may be made by the Company, any affected Subsidiary
Debentures Guarantor and the Debentures Trustee with the consent of the holders
of a majority in aggregate outstanding principal amount of the Exchange
Debentures; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding Exchange Debenture
affected thereby,
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Exchange Debenture, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where or change the coin
or currency in which, any Exchange Debenture or any premium or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date);
(b) reduce the percentage in principal amount of outstanding Exchange
Debentures, the consent of whose holders is required for any such amendment
or for any waiver of compliance with certain provisions of, or certain
defaults and their consequences provided for under, the Exchange Indenture;
(c) modify any of the provisions of the Exchange Indenture relating to
the subordination of the Exchange Debentures or the Subsidiary Debentures
Guarantees in a manner materially adverse to the holders; or
(d) waive a default in the payment of principal of, or premium, if
any, or interest on the Exchange Debentures or reduce the percentage or
aggregate principal amount of outstanding Exchange Debentures
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the consent of whose holders is necessary for waiver of compliance with
certain provisions of the Exchange Indenture or for waiver of certain
defaults.
The holders of a majority in aggregate principal amount of the Exchange
Debentures outstanding may waive compliance with certain restrictive covenants
and provisions of the Exchange Indenture.
Without the consent of any holders, the Company and the Debentures Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental to the Exchange Indenture for any of the following purposes: (1) to
evidence the succession of another person to the Company and the assumption by
any such successor of the covenants of the Company in the Exchange Indenture and
in the Exchange Debentures; or (2) to add to the covenants of the Company for
the benefit of the holders, or to surrender any right or power herein conferred
upon the Company; or (3) to add additional Events of Default; or (4) to provide
for uncertificated Exchange Debentures in addition to or in place of the
certificated Exchange Debentures; or (5) to evidence and provide for the
acceptance of appointment under the Exchange Indenture by a successor Debentures
Trustee; or (6) to secure the Exchange Debentures; or (7) to cure any ambiguity,
to correct or supplement any provision in the Exchange Indenture that may be
defective or inconsistent with any other provision in the Exchange Indenture, or
to make any other provisions with respect to matters or questions arising under
the Exchange Indenture, provided that such actions pursuant to this clause do
not adversely affect the interests of the holders in any material respect; or
(8) to comply with any requirements of the Commission in order to effect and
maintain the qualification of the Exchange Indenture under the Trust Indenture
Act.
THE DEBENTURES TRUSTEE
The Bank of New York is the Debentures Trustee under the Exchange
Indenture. The Bank of New York is a lender under the Credit Facility.
The Exchange Indenture provides that, except during the continuance of an
Event of Default, the Debentures Trustee will perform only such duties as are
specifically set forth in the Exchange Indenture. Under the Exchange Indenture,
the holders of a majority in outstanding principal amount of the Exchange
Debentures will have the right to direct the time, method and place of
conducting any proceeding or exercising any remedy available to the Debentures
Trustee, subject to certain exceptions. If an Event of Default has occurred and
is continuing, the Debentures Trustee will exercise such rights and powers
vested in it under the Exchange Indenture and use the same degree of care and
skill in its exercise as a prudent person would exercise under the circumstances
in the conduct of such person's own affairs.
The Exchange Indenture and provisions of the Trust Indenture Act
incorporated by reference therein, contain limitations on the rights of the
Debentures Trustee thereunder, should it become a creditor of the Company, to
obtain payment of claims in certain cases or to realize on certain property
received by it in respect of any such claims, as security or otherwise. The
Debentures Trustee is permitted to engage in other transactions; provided,
however, that, if it acquires any conflicting interest (as defined), it must
eliminate such conflict or else resign.
GOVERNING LAW
The Exchange Indenture is, and the Exchange Debentures and the Subsidiary
Debentures Guarantees will be, governed by, and construed in accordance with,
the laws of the State of New York.
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DESCRIPTION OF OTHER CAPITAL STOCK
The following summarizes certain provisions of the Company's Certificate of
Incorporation, the Company's Bylaws and certain provisions of the Nevada General
Corporation Law (the "NGCL"). Such summaries do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all of the
provisions of the Company's Certificate of Incorporation and Bylaws and the
NGCL, including the definitions therein of certain terms.
GENERAL
The authorized capital stock of the Company consists of 136,300 shares of
common stock, par value $0.001 per share, of which all outstanding shares are
owned by Citadel Communications, and, 4,000,000 shares of preferred stock, no
par value, of which 2,000,000 shares have been designated as 13-1/4% Series A
Exchangeable Preferred Stock and 2,000,000 shares have been designated as Series
B Exchangeable Preferred Stock. The only preferred stock currently outstanding
are 1,000,000 shares of Series A Exchangeable Preferred Stock. See "Description
of Exchangeable Preferred Stock and Exchange Debentures." Certain of the rights
and provisions summarized below are limited or modified by the Securities
Purchase and Exchange Agreement, the Stockholders Agreement and the Voting
Agreement. See "Management -- Board Composition and Governance Matters" and
"-- Compensation Committee Interlocks and Insider Participation."
Holders of the Company's common stock are entitled to one vote for each
share held of record on all matters to be submitted to a vote of the
shareholders. The Company's Certificate of Incorporation does not provide for
cumulative voting for the election of directors. Holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors of the Company out of funds legally available
therefor. The holders of common stock have no preemptive or other subscription
rights, and there are no conversion rights or redemption or sinking fund
provisions with respect to the common stock. All outstanding shares of common
stock are fully paid and nonassessable. In the event of any liquidation,
dissolution or winding-up of the affairs of the Company, holders of common stock
will be entitled to share ratably in the assets of the Company available for
distribution after payment in full of creditors and holders of the preferred
stock of the Company.
ANTI-TAKEOVER EFFECTS OF CERTAIN AGREEMENTS
The Company and/or Citadel Communications are party to certain agreements
which may be deemed to have anti-takeover effects. These agreements may have the
effect of discouraging a future takeover attempt which is not approved by the
Company and/or the Citadel Communications Board of Directors, but which
individual shareholders may deem to be in their best interests or in which
shareholders may receive a substantial premium for their shares over
then-current market prices. As a result, shareholders who might desire to
participate in such a transaction may not have an opportunity to do so. Such
agreements will also render the removal of the current Board of Directors of the
Company and/or Citadel Communications more difficult.
The Voting Agreement gives certain parties the right to designate the
directors of the Company and Citadel Communications, and provides that creation
of committees of the Board of Directors of either the Company or Citadel
Communications must be approved by at least three-quarters of the members of the
Citadel Communications Board. The Voting Agreement requires the prior vote or
written consent of not less than three-quarters of the members of the Citadel
Board for the taking by the Company or Citadel Communications of certain
actions, including transfers or other disposition of assets, mergers or
acquisitions. The Securities Purchase and Exchange Agreement, among other
things, requires the vote or consent of a majority of the Series D Preferred
Stock of Citadel Communications for the taking by the Company or Citadel
Communications of certain actions, including transfers or other dispositions of
assets, mergers or acquisitions. See "Management -- Board Composition and
Governance Matters."
Pursuant to the Stockholders Agreement, certain stockholders of Citadel
Communications have preemptive rights with respect to shares of capital stock of
the Company and Citadel Communications. See "Management -- Compensation
Committee Interlocks and Insider Participation."
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FOREIGN OWNERSHIP
The Company's Certificate of Incorporation permits restriction on the
ownership, voting and transfer of the Company's capital stock in accordance with
the Communications Act and the rules of the FCC, to prohibit ownership of more
than 20% of the Company's outstanding capital stock (or more than 20% of the
voting rights it represents) by or for the account of aliens or corporations
otherwise subject to domination or control by aliens. See "Business -- Federal
Regulation of Radio Broadcasting." The Certificate of Incorporation also
authorizes the Company's Board to prohibit any transfer of the Company's capital
stock that would cause the Company to violate this prohibition. The Company's
Board of Directors may also prohibit the ownership, voting or transfer of any
portion of its outstanding capital stock to the extent the ownership, voting or
transfer of such portion would cause the Company to violate, or would otherwise
result in violation of, any provision of the Communications Act or the rules,
regulations and policies promulgated by the FCC under the Communications Act. No
shareholders may exercise any voting rights the result of which would cause the
Company to be in violation of the rules, regulations, or policies of the FCC.
NEVADA GENERAL CORPORATION LAW
Under certain circumstances, the following provisions of the NGCL may delay
or make more difficult acquisitions or changes of control of the Company and may
make it more difficult to accomplish transactions that shareholders may
otherwise believe to be in their best interests. Such provisions may also have
the effect of preventing changes in the Company's management. The Company's
Certificate of Incorporation and Bylaws do not exclude it from these provisions
of the NGCL. However, since it is anticipated that the Company will have fewer
than 200 shareholders after giving effect to the Offerings, these provisions of
the NGCL will not apply to the Company immediately after the Offerings.
CONTROL SHARE ACQUISITIONS. Under Sections 78.378 to 78.3793 of the NGCL
(the "Control Share Act"), an "acquiring person," who acquires a "controlling
interest" in an "issuing corporation" may not exercise voting rights on any
"control shares" unless such voting rights are conferred by a majority vote of
the disinterested shareholders of the issuing corporation at an annual meeting
or at a special meeting of such shareholders held upon the request and at the
expense of the acquiring person. If the control shares are accorded full voting
rights and the acquiring person acquires control shares with a majority or more
of all the voting power, any shareholder, other than the acquiring person, who
does not vote for authorizing voting rights for the control shares, is entitled
to demand payment for the fair value of their shares, and the corporation must
comply with the demand. For the above provisions, "acquiring person" means
(subject to certain exceptions) any person who, individually or in association
with others, acquires or offers to acquire, directly or indirectly, a
controlling interest in an issuing corporation. "Controlling interest" means the
ownership of outstanding voting shares of an issuing corporation sufficient to
enable the acquiring person, individually or in association with others,
directly or indirectly, to exercise (i) one-fifth or more but less than
one-third, (ii) one-third or more but less than a majority, and/or (iii) a
majority or more of the voting power of the issuing corporation in the election
of directors. Voting rights must be conferred by a majority of the disinterested
shareholders as each threshold is reached and/or exceeded. "Control Shares"
means those outstanding voting shares of an issuing corporation which an
acquiring person (1) acquires or offers to acquire in an acquisition or (2)
acquires within 90 days immediately preceding the date when the acquiring person
became an acquiring person. "Issuing corporation" means a corporation that is
organized in Nevada, has 200 or more shareholders (at least 100 of whom are
shareholders of record and residents of Nevada) and does business in Nevada
directly or though an affiliated corporation. The above does not apply if the
articles of incorporation or bylaws of the corporation in effect on the 10th day
following the acquisition of a controlling interest by an acquiring person
provide that said provisions do not apply. The Company's Certificate of
Incorporation and Bylaws do not exclude it from the restrictions imposed by such
provisions.
CERTAIN BUSINESS COMBINATIONS. Sections 78.411 to 78.444 of the NGCL (the
"Business Combinations Act") restrict the ability of a "resident domestic
corporation" to engage in any combination with an "interested stockholder" for
three years following the interested stockholder's date of acquiring the shares
that cause such stockholder to become an interested stockholder, unless the
combination or the purchase of shares by the interested stockholder on the
interested stockholder's date of acquiring the shares that cause such
stockholder to become an interested stockholder is approved by the board of
directors of the resident domestic
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corporation before that date. If the combination was not previously approved,
the interested stockholder may effect a combination after the three-year period
only if such stockholder receives approval from a majority of the disinterested
shares or the offer meets certain fair price criteria. For the above provisions,
"resident domestic corporation" means a Nevada corporation that has 200 or more
shareholders. The provisions of the Business Combinations Act do not apply to
any combination of a resident domestic corporation which does not, as of the
date of acquiring shares, have a class of voting shares registered with the
Commission under Section 12 of the Exchange Act, unless the corporation's
articles of incorporation provide otherwise. "Interested stockholder," when used
in reference to any resident domestic corporation, means any person, or its
subsidiaries, who is (i) the beneficial owner, directly or indirectly, of 10% or
more of the voting power of the outstanding voting shares of the resident
domestic corporation or (ii) an affiliate or associate of the resident domestic
corporation and, at any time within three years immediately before the date in
question, was the beneficial owner, directly or indirectly, of 10% or more of
the voting power of the then outstanding shares of the resident domestic
corporation. The above does not apply to corporations that so elect in a charter
amendment approved by a majority of the disinterested shares. Such a charter
amendment, however, would not become effective for 18 months after its passage
and would apply only to stock acquisitions occurring after its effective date.
The Company's Certificate of Incorporation does not exclude it from the
restrictions imposed by such provisions.
DIRECTORS' DUTIES. Section 78.138 of the NGCL allows directors and
officers, in exercising their respective powers to further the interests of the
corporation, to consider the interests of the corporation's employees,
suppliers, creditors and customers. They can also consider the economy of the
state and the nation; the interests of the community and of society and the long
and short-term interests of the corporation and its shareholders, including the
possibility that these interests may be best served by the continued
independence of the corporation. Directors may resist a change or potential
change in control if the directors, by a majority vote of a quorum, determine
that the change or potential change is opposed to or not in the best interest of
the corporation. In so determining, the board of directors may consider the
interests described above or have reasonable grounds to believe that, within a
reasonable time, the debt created as a result of the change in control would
cause the assets of the corporation or any successor to be less than the
liabilities or would render the corporation or any successor insolvent or lead
to bankruptcy proceedings.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary discusses the material federal income tax
consequences of the purchase, holding and disposition of the Notes and the
Exchangeable Preferred Stock (the "Securities") by U.S. holders who hold such
Securities as capital assets. A U.S. holder is a beneficial owner of a Security
that is a citizen or resident of the United States or any state thereof, a
corporation or other entity created or organized under the laws of the United
States or any political subdivision thereof, an estate the income of which is
subject to United States federal income tax regardless of source, or a trust
with respect to which a court within the United States is able to exercise
primary supervision over its administration and one or more United States
fiduciaries have the authority to control all its substantial decisions. The
discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations, Internal Revenue Service ("IRS") rulings and
pronouncements and judicial decisions now in effect, all of which are subject to
change at any time by legislative, judicial or administrative action. Any such
change may be applied retroactively in a manner that could adversely affect a
holder of the Securities.
Although the matter is not entirely free from doubt, the Company intends to
treat the Exchange Debentures as indebtedness for federal income tax purposes,
and the balance of the discussion is based on the assumption that such treatment
will be respected. The discussion is not binding on the IRS or the courts. The
Company has not sought and will not seek any rulings from the IRS with respect
to the positions of the Company discussed herein, and there can be no assurance
that the IRS will not take a different position concerning the tax consequences
of the purchase, ownership or disposition of the Securities or that any such
position would not be sustained.
The tax treatment of a holder of the Securities may vary depending on his
particular situation or status. Certain holders (including S corporations,
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers and taxpayers subject to alternative minimum tax) may be subject
to special rules not discussed below. The following discussion does not consider
all aspects of United States federal income tax that may be relevant to the
purchase, ownership, and disposition of the Securities by such holders in light
of their particular circumstances. In addition, the discussion does not consider
the effect of any applicable foreign, state, local or other tax laws or estate
or gift tax considerations. ACCORDINGLY, PURCHASERS OF THE SECURITIES SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES TO THEM OF HOLDING AND DISPOSING OF THE SECURITIES.
THE EXCHANGE OFFER
The exchange of the Series B Securities for the Series A Securities
pursuant to the Exchange Offer will not be treated as an "exchange" for federal
income tax purposes because the Series B Securities will not be considered to
differ materially in kind or extent from the Series A Securities. Rather, the
Series B Securities received by a holder will be treated as a continuation of
the Series A Securities in the hands of such holder. As a result, there will be
no federal income tax consequences to holders exchanging Series A Securities for
Series B Securities pursuant to the Exchange Offer. Therefore, the same tax
consequences apply to the Series B Securities as are applicable to the Series A
Securities, and a holder should have the same adjusted tax basis and holding
period in the Series B Securities as it had in the Series A Securities
immediately before the exchange.
DISTRIBUTIONS ON EXCHANGEABLE PREFERRED STOCK
Distributions on the Exchangeable Preferred Stock paid in cash will be
taxable to the holder as ordinary income and treated as a dividend to the extent
of the Company's current and accumulated earnings and profits (as determined for
federal income tax purposes).
A distribution on the Exchangeable Preferred Stock made in the form of
additional shares of Exchangeable Preferred Stock ("PIK Shares") will be treated
as being in an amount equal to the fair market value of the PIK Shares and will
be a taxable distribution treated as a dividend to the extent of the Company's
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current and accumulated earnings and profits (as determined for federal income
tax purposes). The holding period of any such PIK Shares will commence on the
date of their distribution.
To the extent that the amount of any distribution paid on the Exchangeable
Preferred Stock (including distributions made in the form of PIK Shares) exceeds
the Company's current and accumulated earnings and profits allocable to such
distributions (as determined for federal income tax purposes), such distribution
will be treated as a return of capital, thus reducing the holder's adjusted tax
basis in such Exchangeable Preferred Stock. Any such excess distribution that is
greater than the holder's adjusted basis in the Exchangeable Preferred Stock
will be taxed as capital gain and will be long-term capital gain if the holder's
holding period for such Exchangeable Preferred Stock exceeds one year. For
purposes of the remainder of this discussion, the term "dividend" refers to a
distribution paid out of the Company's allocable earnings and profits, unless
the context indicates otherwise.
The Company does not now have any current or accumulated earnings and
profits and is unable to predict whether or when it will have sufficient
earnings and profits for distributions with respect to the Exchangeable
Preferred Stock to be treated as dividends. Until such time, if any, as such
distributions are treated as dividends, corporate holders of the Exchangeable
Preferred Stock will not be eligible for the dividends-received deduction
described below.
If the fair market value of any PIK Shares at the time of distribution is
less than the redemption price of such PIK Shares by more than a statutorily
defined de minimis amount (a "redemption premium"), then such redemption premium
will be required, pursuant to section 305(c) of the Code, to be accrued ratably
by the holder as a constructive distribution of additional PIK Shares over the
term of the PIK Shares in a manner similar to the accrual of original issue
discount as described below in the discussion "Taxation of Stated Interest and
Original Issue Discount on Exchange Debentures". To the extent that any PIK
Shares distributed bear a redemption premium, such shares might not be
interchangeable for trading purposes with PIK Shares distributed at other times
or with Exchangeable Preferred Stock.
Dividends received by corporate holders generally will be eligible for the
70% dividends-received deduction available under section 243 of the Code. The
availability of such dividends-received deduction is subject to numerous
exceptions and restrictions, including those relating to (i) the holding period
of the stock, (ii) stock treated as "debt-financed portfolio stock" within the
meaning of Section 246A of the Code, (iii) dividends treated as "extraordinary
dividends" for purposes of section 1059 of the Code and (iv) holders who pay
alternative minimum tax. Corporate stockholders should consult their own tax
advisors regarding the extent, if any, to which such exceptions and restrictions
may apply to their particular factual situations. In addition, recent
legislative proposals by the Clinton Administration would (i) reduce the 70%
dividends-received deduction to 50% and (ii) require a corporate holder to
satisfy a separate forty-six day holding period requirement with respect to each
dividend in order to be eligible for such dividends-received deduction. It is
not possible to predict whether such legislative proposals will ultimately be
enacted into law, and if so, the form or effective date of any such legislation.
SALE, REDEMPTION AND EXCHANGE OF EXCHANGEABLE PREFERRED STOCK
A redemption of shares of Exchangeable Preferred Stock for cash or in
exchange for Exchange Debentures would be a taxable event.
A redemption of shares of Exchangeable Preferred Stock for cash will
generally be treated as a sale or exchange if the holder does not own, actually
or constructively within the meaning of section 318 of the Code, any stock of
the Company other than the Exchangeable Preferred Stock. If a holder does own,
actually or constructively, other stock of the Company, a redemption of
Exchangeable Preferred Stock may be treated as a dividend to the extent of the
Company's current and accumulated earnings and profits (as determined for
Federal income tax purposes). Dividend treatment would not apply, however, if
the redemption is "not essentially equivalent to a dividend" with respect to the
holder under section 302(b)(1) of the Code. A distribution to a holder will be
"not essentially equivalent to a dividend" if it results in a "meaningful
reduction" in the holder's stock interest in the Company. For this purpose, a
redemption of Exchangeable Preferred Stock that results in a reduction in the
proportionate interest in the Company (taking into account
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any actual ownership of common stock of the Company and any stock constructively
owned) of a holder whose relative stock interest in the Company is minimal
should be regarded as a meaningful reduction in the holder's stock interest in
the Company.
If a redemption of the Exchangeable Preferred Stock for cash is not treated
as a distribution taxable as a dividend, the redemption would result in capital
gain or loss equal to the difference between the amount of cash received and the
holder's adjusted tax basis in the Exchangeable Preferred Stock redeemed, except
to the extent that the redemption price includes dividends which have been
declared by the Board of Directors of the Company prior to the redemption.
Similarly, upon the sale of the Exchangeable Preferred Stock (other than in a
redemption or in exchange for the Exchange Debentures), the difference between
the sum of the amount of cash and the fair market value of other property
received and the holder's adjusted basis in the Exchangeable Preferred Stock
would result in capital gain or loss. This gain or loss would be long-term
capital gain or loss if the holder's holding period for the Exchangeable
Preferred Stock exceeds one year. Under current law, capital gains recognized by
corporations are currently taxed at a maximum rate of 35% and the maximum rate
on net capital gains in the case of individuals is currently 28%. The
congressional budget reconciliation resolution adopted in May 1997 contemplates
potential reduction of the capital gains rate, particularly for individuals.
However, there can be no assurance that legislation reducing capital gains tax
rates will be enacted.
A redemption of Exchangeable Preferred Stock in exchange for Exchange
Debentures will be subject to the same general rules as a redemption for cash,
except that any gain or loss generally will be determined based upon the issue
price of the Exchange Debentures (as determined for purposes of computing the
original issue discount on such Exchange Debentures). See the discussion below
under "Original Issue Discount."
If a redemption of the Exchangeable Preferred Stock is treated as a
distribution that is taxable as a dividend, the amount of the distribution will
be measured by the amount of cash or the issue price of the Exchange Debentures,
as the case may be, received by the holder. It is possible, however, that the
fair market value of the Exchange Debentures (if different from their issue
price) may constitute the amount of the distribution. The holder's adjusted tax
basis in the redeemed Exchangeable Preferred Stock will be transferred to any
remaining stock holdings in the Company, subject to reduction or possible gain
recognition under Section 1059 of the Code in respect of the nontaxed portion of
such dividend. If the holder does not retain any actual stock ownership in the
Company (i.e., such holder is treated as having received a dividend because he
constructively owns stock in the Company but such holder does not actually own
any Company Stock), such holder may lose the benefit of his basis in the
Exchangeable Preferred Stock.
ORIGINAL ISSUE DISCOUNT
In the event that the Exchangeable Preferred Stock is exchanged for
Exchange Debentures and the "stated redemption price at maturity" of the
Exchange Debentures exceeds their "issue price" by more than a de minimis
amount, the Exchange Debentures will be treated as having original issue
discount ("OID") equal to the amount of such excess.
If the Exchange Debentures are traded on an established securities market
within the sixty-day period ending thirty days after the Exchange Date, the
issue price of the Exchange Debentures will be their fair market value as of
their issue date. Subject to certain limitations described in the Treasury
Regulations, the Exchange Debentures will be deemed to be traded on an
established securities market if, at a minimum, price quotations will be readily
available from dealers, brokers or traders. If the Exchangeable Preferred Stock,
but not the Exchange Debentures issued in exchange therefor, is traded on an
established securities market within the sixty-day period ending thirty days
after the Exchange Date, then the issue price of each Exchange Debenture should
be the fair market value of the Exchangeable Preferred Stock exchanged therefor
at the time of the exchange. The Exchangeable Preferred Stock generally will be
deemed to be traded on an established securities market if, at a minimum, it
appears on a system of general circulation that provides a reasonable basis to
determine fair market value based either on recent price quotations or recent
sales transactions. In the event that neither the Exchangeable Preferred Stock
nor the Exchange Debentures are traded on an established securities market
within the applicable period, the issue price of the Exchange
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Debentures will be their stated principal amount (i.e., their face value) unless
either (i) the Exchange Debentures do not bear "adequate stated interest" within
the meaning of section 1274 of the Code, which is unlikely, or (ii) the Exchange
Debentures are issued in a so-called "potentially abusive situation" as defined
in the Treasury Regulations under section 1274 of the Code (including a
situation involving a recent sales transaction), in which case the issue price
of such Exchange Debentures generally will be the fair market value of the
Exchangeable Preferred Stock surrendered in exchange therefor.
The "stated redemption price at maturity" of the Exchange Debentures should
equal the total of all payments under the Exchange Debentures, other than
payments of "qualified stated interest." "Qualified stated interest" generally
is stated interest that is unconditionally payable in cash or other property
(excluding additional Exchange Debentures) at least annually at a single fixed
rate. If the Exchange Debentures are issued prior to July 1, 2002, none of the
stated interest on the Exchange Debentures will be treated as qualified stated
interest because of the ability of the Company to pay interest on the Exchange
Debentures in the form of additional Exchange Debentures (the "PIK Debentures").
The "stated redemption price at maturity" would include any optional redemption
premium on the Exchange Debentures if assuming that such optional redemption
will occur would result in a lower yield to maturity on the Exchange Debentures.
TAXATION OF STATED INTEREST AND ORIGINAL ISSUE DISCOUNT ON EXCHANGE DEBENTURES
Each holder of an Exchange Debenture with OID will be required to include
in gross income an amount equal to the sum of the "daily portions" of the OID
for all days during the taxable year in which such holder holds the Exchange
Debenture. The daily portions of OID required to be included in a holder's gross
income in a taxable year will be determined under a constant yield method by
allocating to each day during the taxable year in which the holder holds the
Exchange Debenture a pro rata portion of the OID thereon which is attributable
to the "accrual period" in which such day is included. The amount of the OID
attributable to each accrual period will be the product of the "adjusted issue
price" of the Exchange Debenture at the beginning of such accrual period
multiplied by the "yield to maturity" of the Exchange Debenture (properly
adjusted for the length of the accrual period), less the amount of any qualified
stated interest allocable to the accrual period. The adjusted issue price of an
Exchange Debenture at the beginning of an accrual period is the original issue
price of the Exchange Debenture plus the aggregate amount of OID that accrued in
all prior accrual periods, and less any cash payments other than qualified
stated interest payments on the Exchange Debenture. The "yield to maturity" is
the discount rate that, when used in computing the present value of all
principal and interest payments to be made under the Exchange Debenture,
produces an amount equal to the issue price of the Exchange Debenture. An
"accrual period" may be of any length and may vary in length over the term of
the debt instrument, provided that each accrual period is no longer than one
year and each scheduled payment of principal or interest occurs either on the
final day or the first day of an accrual period.
In the event that the Exchange Debentures are issued before July 1, 2002,
the Company will have the option to pay interest thereon in PIK Debentures. The
issuance of PIK Debentures in lieu of cash interest is not treated as a payment
of interest. Instead, the underlying Exchange Debenture and any PIK Debenture
that may be issued thereon are treated as a single debt instrument under the OID
rules. Moreover, because the terms of the PIK Debentures and the underlying
Exchange Debentures are identical so that the two are fungible in all respects,
the issuance of a PIK Debenture should be treated simply as a division of the
underlying Exchange Debenture, so that the holder's tax basis and adjusted issue
price in the underlying Exchange Debenture should be allocated between the
underlying Exchange Debenture and the PIK Debenture in proportion to their
relative principal amounts.
For purposes of determining the stated redemption price at maturity and the
rate at which OID accrues on an Exchange Debenture issued before July 1, 2002,
applicable regulations require that it be assumed that the Company will pay
interest in the form of PIK Debentures to the maximum extent permitted under the
terms of the Exchange Debentures if doing so would reduce the yield to maturity
on such Exchange Debentures. In such a case, if the Company elects to pay in
cash an interest payment on such Exchange Debentures payable in cash or in PIK
Debentures, the cash payment will be treated as a pro rata prepayment on the
exchange debentures. As a result, the holder would realize gain in an amount
equal to the excess of the cash payment over the portion of the holder's tax
basis that would have been allocated to such PIK
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Debentures, and the holder's tax basis in the Exchange Debentures held would be
reduced by such allocated portion of the holder's tax basis.
For purposes of determining the stated redemption price at maturity and the
rate at which OID accrues on an Exchange Debenture issued before July 1, 2002,
applicable regulations require that it be assumed that the Company will pay
interest in cash and not in the form of PIK Debentures if paying interest in the
form of PIK Debentures would not reduce the yield to maturity on such Exchange
Debentures. In such a case, if the Company elects to pay in the form of PIK
Debentures an interest payment on such Exchange Debentures payable in cash or in
PIK Debentures, the future accruals of OID will be calculated based on a
redetermination of the stated redemption price at maturity and yield to maturity
made by treating the Exchange Debenture as if it were retired and reissued on
such payment date.
In the event that Exchange Debentures are issued on or after July 1, 2002
when the Company does not have the option to pay interest thereon in PIK
Debentures, stated interest would be included in income by a holder in
accordance with such holder's usual method of accounting. In all other cases,
all stated interest paid will be treated as payments on Exchange Debentures
under the rules discussed above.
BOND PREMIUM ON EXCHANGE DEBENTURES
If the holder's basis in the Exchange Debentures exceeds the amount payable
at the maturity date (or, in certain circumstances, the amount payable on an
earlier call date), such excess will be deductible by the holder of the Exchange
Debentures as amortizable bond premium over the term of the Exchange Debentures
(or the period ending on such earlier call date) under a yield-to-maturity
formula, if an election by the holder under section 171 of the Code is made or
is already in effect. An election under section 171 of the Code is available
only if the Exchange Debentures are held as capital assets. This election is
revocable only with the consent of the IRS and applies to all obligations owned
or acquired by the holder on or after the first day of the taxable year to which
the election applies. To the extent the excess is deducted as amortizable bond
premium, the holder's adjusted tax basis in the Exchange Debentures is reduced.
Except as may otherwise be provided in future Treasury Regulations, the
amortizable bond premium will be treated as an offset to interest income on the
Exchange Debentures rather than as a separate deduction item. Proposed Treasury
Regulations, which are not yet effective, would modify the rules described above
in order to coordinate such rules with the rules relating to OID.
ACQUISITION PREMIUM ON EXCHANGE DEBENTURES
A holder of an Exchange Debenture issued with OID who purchases such
Exchange Debenture for an amount that is greater than its then adjusted issue
price but equal to or less than the sum of all amounts payable on the Exchange
Debenture after the purchase date (other than payments, if any, of qualified
stated interest) will be considered to have purchased such Exchange Debenture at
an "acquisition premium." Under the acquisition premium rules, the amount of OID
that such holder must include in income with respect to such Exchange Debenture
for any taxable year will be reduced by the portion of such acquisition premium
properly allocable to such year.
MARKET DISCOUNT ON EXCHANGE DEBENTURES
Purchasers of Exchangeable Preferred Stock should be aware that the
disposition of Exchange Debentures may be affected by the market discount
provisions of the Code. The market discount rules generally provide that if a
holder of a debt instrument purchases it at a "market discount" and thereafter
realizes gain upon a disposition or a retirement of the debt instrument, the
lesser of such gain or the portion of the market discount that has accrued on a
straight-line basis (or, if the holder so elects under section 1276(b) of the
Code, on a constant interest rate basis) while the debt instrument was held by
such holder will be taxed as ordinary income at the time of such disposition.
"Market discount" with respect to the Exchange Debentures is the amount, if any,
by which the "revised issue price" of an Exchange Debenture (or its stated
redemption price at maturity if the Exchange Debenture does not have any OID)
exceeds the holder's basis in the Exchange Debenture immediately after such
holder's acquisition, subject to a de minimis exception. The
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"revised issue price" of an Exchange Debenture is its issue price increased by
the portion of OID previously includible in the gross income of prior holders
for periods prior to the acquisition of the Exchange Debenture by the holder
(without regard to any acquisition premium exclusion) and reduced by prior
payments other than payments of qualified stated interest.
A holder who acquires an Exchange Debenture at a market discount also may
be required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry such
Exchange Debenture until the holder disposes of the Exchange Debenture in a
taxable transaction. Moreover, any partial principal payment with respect to
Exchange Debentures will be includible as ordinary income to the extent of any
accrued market discount on such Exchange Debentures. Such accrued market
discount will also generally be includible as ordinary income upon the
occurrence of certain otherwise non-taxable transfers (such as gifts).
A holder of Exchange Debentures acquired at a market discount may elect for
federal income tax purposes to include market discount in gross income as the
discount accrues, either on a straight-line basis or on a constant interest rate
basis. This current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may not be revoked without the consent
of the IRS. If a holder of Exchange Debentures makes such an election, the
foregoing rules with respect to the recognition of ordinary income on sales and
other dispositions of such debt instruments, and with respect to the deferral of
interest deductions on indebtedness incurred or maintained to purchase or carry
such debt instruments, would not apply.
REDEMPTION OR SALE OF EXCHANGE DEBENTURES
Generally, any redemption or sale of Exchange Debentures by a holder would
result in taxable gain or loss equal to the difference between the sum of the
amount of cash and the fair market value of other property received (except to
the extent that cash received is attributable to accrued but previously untaxed
interest, which portion of the consideration would be taxed as ordinary income)
and the holder's adjusted tax basis in the Exchange Debentures. The adjusted tax
basis of a holder who receives an Exchange Debenture in exchange for
Exchangeable Preferred Stock will generally be equal to the issue price of the
Exchange Debenture increased by any OID with respect to the Exchange Debenture
included in the holder's income prior to sale or redemption of the Exchange
Debenture, reduced by any amortizable bond premium applied against the holder's
income prior to sale or redemption of the Exchange Debenture and by payments
other than payments of qualified stated interest. Subject to the above
discussion of market discount, such gain or loss would be long-term capital gain
or loss if the holder's holding period for the Exchange Debentures exceeds one
year.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND TO CORPORATE HOLDERS
It is possible that the Exchange Debentures will be treated as "applicable
high yield discount obligations" ("AHYDOs") for federal income tax purposes,
especially if the Exchange Debentures are issued before July 1, 2002. The
Exchange Debentures will constitute AHYDOs if they (i) have a term of more than
five years, (ii) have a yield to maturity equal to or greater than the sum of
the applicable federal rate (the "AFR") at the time of issuance of the Exchange
Debentures plus five percentages points and (iii) have "significant OID." A debt
instrument is treated as having "significant OID" if the aggregate amount that
would be includible in gross income with respect to such debt instrument for
periods before the close of any accrual period ending after the date five years
after the date of issue exceeds the sum of (i) the aggregate amount of interest
to be paid in cash under the debt instrument before the close of such accrual
period and (ii) the product of the initial issue price of such debt instrument
and its yield to maturity. In determining whether any Exchange Debentures issued
prior to July 1, 2002 are AHYDOs, it will be presumed that interest will be paid
in the form of PIK Debentures to the maximum extent permitted under the terms of
the Exchange Debentures. Because the amount of OID, if any, attributable to the
Exchange Debentures will be determined at the time such Exchange Debentures are
issued and the AFR at that point in time is not predictable, it is impossible
currently to determine whether Exchange Debentures will be treated as AHYDOs.
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If the Exchange Debentures are treated as AHYDOs, (i) as described in the
following paragraph, a portion of the OID that accrues on the Exchange
Debentures may be treated as a dividend generally eligible for the
dividends-received deduction in the case of corporate holders, (ii) the Company
would not be entitled to deduct the "disqualified portion" of the OID that
accrues on the Exchange Debentures and (iii) the Company would be allowed to
deduct the remainder of the OID only when it pays amounts attributable to such
OID in cash. (In particular, in the case of a payment in cash of an interest
payment payable on or before July 1, 2002 on an Exchange Debenture issued prior
to July 1, 2002 and interest on which (for purposes of accruing OID under
applicable regulations) is presumed to be paid in the form of PIK Debentures to
the maximum extent permitted under the terms of the Exchange Debentures, the
Company would be able to deduct only a small portion of such cash payment
attributable to OID because the payment as a whole would be treated as a
prepayment of a ratable portion of the Exchange Debentures.)
If an Exchange Debenture is treated as an AHYDO, a corporate holder would
be treated as receiving dividend income to the extent of the lesser of (i) an
allocable portion of the Company's current and accumulated earnings and profits
and (ii) the "disqualified portion" of the OID of such AHYDO. The "disqualified
portion" of the OID is equal to the lesser of (x) the amount of OID or (y) the
portion of the "total return" (i.e., the excess of all payments to be made with
respect to the Exchange Debenture over its issue price) with respect to the
Exchange Debenture in excess of the AFR at issuance plus six percentage points
per annum.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A holder of a Security may be subject to backup withholding at the rate of
31 percent with respect to distributions on the Exchangeable Preferred Stock,
interest on the Exchange Debentures or sales proceeds thereof, unless such
holder (a) is a corporation or comes within certain other exempt categories and,
when required, demonstrates its exempt status or (b) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A holder of a Security who does not provide the Company with
the holder's correct taxpayer identification number may be subject to penalties
imposed by the IRS. Any amount paid as backup withholding would be creditable
against the holder's federal income tax liability.
The Company will furnish annually to the IRS and to record holders of the
Exchangeable Preferred Stock (other than with respect to certain exempt holders)
information relating to dividends paid during the calendar year. In the case of
PIK Shares subject to section 305(c) of the Code, such information may be based
upon dividends accruing to the record holder of such PIK Shares at the time of
issuance.
The Company will furnish annually to the IRS and to record holders of the
Exchange Debentures (other than with respect to certain exempt holders)
information relating to the stated interest and the OID, if any, accruing during
the calendar year. Such information will be based on the amount of OID that
would have accrued to a holder who acquired the Exchange Debenture on original
issue. Accordingly, other holders will be required to determine for themselves
whether they are eligible to report a reduced amount of OID for federal income
tax purposes.
185
<PAGE> 193
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Series B Securities for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Series B Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Series B
Securities received in exchange for Series A Securities where such Series A
Securities were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 120 days after
the date of this Prospectus, it will make this Prospectus, as amended or
supplemented, available to any Participating Broker-Dealer for use in connection
with any such resale. In addition, for a period of 90 days after the date of
this Prospectus, all dealers effecting transactions in the Series B Securities
may be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of Series B
Securities by Participating Broker-Dealers. Series B Securities received by
Participating Broker-Dealers for their own account pursuant to the Exchange
Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Series B Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
Participating Broker-Dealer and/or the purchasers of any such Series B
Securities. Any Participating Broker-Dealer that resells the Series B Securities
that were received by it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of such Series B
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of Series B Securities and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letters of Transmittal
state that, by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 120 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letters of Transmittal.
186
<PAGE> 194
LEGAL MATTERS
Certain legal matters with respect to the Series B Notes and the Series B
Exchangeable Preferred Stock offered hereby, including federal income tax
consequences, will be passed upon for the Company by Eckert Seamans Cherin &
Mellott, LLC. As to matters of Nevada Law, Eckert Seamans Cherin & Mellott, LLC
will rely upon the opinion of Lionel Sawyer & Collins, Las Vegas, Nevada.
EXPERTS
The consolidated financial statements of Citadel Broadcasting Company and
Subsidiary as of December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996, have been included herein in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Deschutes River Broadcasting, Inc.
and Subsidiaries as of December 31, 1996 and 1995, and for each of the years in
the two-year period ended December 31, 1996, have been included herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Maranatha Broadcasting Company,
Inc's., Radio Broadcasting Division, as of December 31, 1996, and for the year
then ended, have been included herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of Tele-Media Broadcasting Company
and its partnership interests as of December 31, 1995 and 1996 and for each of
the three years in the period ended December 31, 1996 included in this
Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein, and have been included in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
The financial statements of Snider Corporation and Snider Broadcasting
Corporation and Subsidiary and CDB Broadcasting Corporation as of December 31,
1995 and 1996 and for each of the years in the two-year period ended December
31, 1996 have been included in this Prospectus in reliance upon the reports of
Erwin & Company, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
The combined financial statements of Pacific Northwest Broadcasting
Corporation and Affiliates as of December 31, 1996 and for the year ended
December 31, 1996, have been included in this Prospectus in reliance upon the
report of Balukoff, Lindstrom & Co., P.A., independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Series B Securities
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission, and to which reference is
hereby made. Statements contained in this Prospectus as to the contents of any
contract, agreement or any other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to such exhibit
to the Registration Statement for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
187
<PAGE> 195
The Registration Statement can be inspected and copied at the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices at Seven World Trade Center,
Suite 1300, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of the Registration Statement can be obtained
from the Public Reference Section of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20459, at prescribed rates. The Company is filing
the Registration Statement with the Commission electronically. The Commission
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of that Web site is http://www.sec.gov.
The Company intends, and is required by the terms of the Notes Indenture
and the Certificate of Designation, to furnish the holders of the Series B Notes
and Series B Exchangeable Preferred Stock, respectively, with annual reports
containing consolidated financial statements audited by its independent
certified public accountants and with quarterly reports containing unaudited
condensed consolidated financial statements for each of the first three quarters
of each fiscal year.
188
<PAGE> 196
GLOSSARY OF CERTAIN DEFINED TERMS
Following is a list of certain defined terms with their respective
definitions, as used in this Prospectus:
"A/C" means an adult contemporary radio programming format.
"AOR" means an album oriented rock radio programming format.
"Boise Acquisition" means the pending acquisition by the Company of the
Boise Stations.
"Boise Stations" means collectively radio stations KIZN-FM, KZMG-FM,
KKGL-FM, KQFC-FM and KBOI-AM, all serving the Boise, Idaho market, and which
stations the Company has entered into various agreements to acquire.
"Broadcast cash flow" means operating income (loss) before depreciation,
amortization and corporate expenses. Although broadcast cash flow is not a
measure of performance calculated in accordance with GAAP, management believes
that it is useful to an investor in evaluating the Company because it is a
measure widely used in the broadcast industry to evaluate a radio company's
operating performance. However, broadcast cash flow should not be considered in
isolation or as a substitute for net income, cash flows from operating
activities and other income or cash flow statement data prepared in accordance
with GAAP as a measure of liquidity or profitability.
"Certificate of Designation" means the certificate of designation governing
the Exchangeable Preferred Stock.
"CHR" means a contemporary hit radio programming format.
"Completed Transactions" means collectively the Company's June 1996
acquisitions of radio stations KTBL-FM, KHFM-FM and KNML-AM in Albuquerque, New
Mexico and KHOP-FM in Modesto, California; its October 1996 acquisitions of
radio station KKLI-FM in Colorado Springs, Colorado and radio station KRST-FM in
Albuquerque; its January 1997 acquisition of Deschutes; its February 1997
acquisition of radio station KENZ-FM in Salt Lake City, Utah; its April 1997
acquisition of radio station KBER-FM in Salt Lake City; the Recent 1997
Acquisitions; and the Original Offerings.
"DAB" means digital audio broadcasting.
"DARs" means satellite digital audio radio services.
"Deschutes" means Deschutes River Broadcasting, Inc., now merged with and
into the Company.
"EBITDA" means operating income (loss) before depreciation and
amortization. Although EBITDA is not a measure of performance calculated in
accordance with GAAP, management believes that it is useful to an investor in
evaluating the Company because it is a measure widely used in the broadcast
industry to evaluate a radio company's operating performance. However, EBITDA
should not be considered in isolation or as a substitute for net income, cash
flows from operating activities and other income or cash flow statement data
prepared in accordance with GAAP as a measure of liquidity or profitability.
"Exchange Debentures" means the Company's 13-1/4% Subordinated Exchange
Debentures due 2009 which are issuable upon conversion of the Exchangeable
Preferred Stock.
"Exchange Indenture" means the indenture governing the Exchange Debentures.
"Exchangeable Preferred Stock" means the outstanding 1.0 million shares of
13-1/4% Exchangeable Preferred Stock issued by the Company.
"Heritage" means a station or on-air show that is firmly established in its
format and market and has been so for many years.
"In-Market Acquisition Stations" means collectively radio stations WDGF-FM
in Providence, Rhode Island; WLEV-FM in Allentown/Bethlehem, Pennsylvania;
WEMR-FM, WSGD-FM, WDLS-FM, WEMR-AM and WCDL-AM in Wilkes-Barre/Scranton,
Pennsylvania; and KFNZ-AM and KBEE-FM in Salt Lake City, Utah, which stations
the Company has entered into agreements to purchase.
"In-Market Acquisitions" means the pending acquisitions pursuant to various
agreements the Company has entered into in order to purchase the In-Market
Acquisition Stations.
189
<PAGE> 197
"JSA" means a joint sales agreement or similar arrangement under which a
radio station operator sells advertising on behalf of a radio station it does
not own.
"Little Rock Acquisitions" means collectively the several transactions
which, if consummated, would result in the Company owning the Little Rock
Stations.
"Little Rock Shareholders" means the individuals who are to receive shares
of capital stock of Citadel Communications in connection with the Little Rock
Acquisitions.
"Little Rock Stations" means collectively radio stations KARN-FM, KARN-AM,
KKRN-FM, KRNN-AM, KIPR-FM, KESR-FM, KYTN-FM, KEZQ-AM, KURB-FM and KVLO-FM and
the license to construct KAFN-FM, all serving the Little Rock, Arkansas market
and/or surrounding communities, and which stations and construction permit the
Company has entered into various agreements to acquire.
"LMA" means a local marketing agreement or similar arrangement under which
a radio station operator sells advertising on behalf of, and provides
programming to, a radio station it does not own.
"MSA" means metropolitan statistical area.
"Notes" means the outstanding $101.0 million aggregate principal amount of
10-1/4% Senior Subordinated Notes due 2004, issued by the Company and guaranteed
by Citadel License.
"Notes Indenture" means that certain Indenture dated as of July 1, 1997
governing the Notes among the Company, Citadel License and The Bank of New York,
as trustee.
"Original Offerings" means the July 1997 sale by the Company of the Notes
and the Exchangeable Preferred Stock.
"Pending Acquisitions" means the In-Market Acquisitions, the Little Rock
Acquisitions and the Boise Acquisition.
"Pending Transactions" means collectively the Pending Acquisitions and the
agreements entered into by the Company to sell radio stations WQKK-FM and
WGLU-FM in Johnstown, Pennsylvania; WRSC-AM, WQWK-FM, WBLF-AM and WIKN-FM in
State College, Pennsylvania; and WEST-AM in Allentown/ Bethlehem, Pennsylvania.
"Predecessor" means collectively Citadel Associates Limited Partnership and
Citadel Associates Montana Limited Partnership.
"Recent 1997 Acquisitions" means the radio station acquisitions completed
by the Company since June 30, 1997.
"Subsidiary Merger" means the June 1997 merger of Deschutes with and into
the Company.
"Telecommunications Act" means the Telecommunications Act of 1996.
"Tele-Media" means Tele-Media Broadcasting Company.
"Tele-Media Acquisition" means the July 1997 acquisition by the Company of
Tele-Media Broadcasting Corporation.
"Tele-Media Bonds" means certain corporate bonds and warrants of Tele-Media
whose redemption was included in the purchase price for the July 1997
acquisition of Tele-Media by the Company.
190
<PAGE> 198
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
CITADEL BROADCASTING COMPANY AND SUBSIDIARY
Independent Auditors' Report....................................................... F-3
Consolidated Balance Sheets as of December 31, 1995 and 1996 and June 30, 1997
(unaudited)...................................................................... F-4
Consolidated Statements of Operations for the years ended December 31, 1994, 1995
and 1996 and the six months ended June 30, 1996 and 1997 (unaudited)............. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995
and 1996 and the six months ended June 30, 1996 and 1997 (unaudited)............. F-6
Notes to Consolidated Financial Statements......................................... F-8
DESCHUTES RIVER BROADCASTING, INC. AND SUBSIDIARIES
Independent Auditors' Report....................................................... F-25
Consolidated Balance Sheets as of December 31, 1996 and 1995....................... F-26
Consolidated Statements of Operations for the years ended December 31, 1996 and
1995............................................................................. F-27
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1996 and 1995.................................................................... F-28
Consolidated Statements of Cash Flows for the years ended December 31, 1996 and
1995............................................................................. F-29
Notes to Consolidated Financial Statements......................................... F-30
TELE-MEDIA BROADCASTING COMPANY AND ITS PARTNERSHIP INTERESTS
Independent Auditors' Report....................................................... F-38
Consolidated Balance Sheets as of December 31, 1995 and 1996....................... F-39
Consolidated Statements of Operations for the years ended December 31, 1994, 1995
and 1996......................................................................... F-40
Consolidated Statements of Deficiency in Net Assets for the years ended December
31, 1994,
1995 and 1996.................................................................... F-41
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995
and 1996......................................................................... F-42
Notes to Consolidated Financial Statements......................................... F-43
Condensed Consolidated Balance Sheet as of June 30, 1997 (unaudited)............... F-50
Condensed Consolidated Statements of Operations and Changes in Deficit for the six
months ended June 30, 1996 and 1997 (unaudited).................................. F-51
Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 1996 and 1997 (unaudited)............................................... F-52
Notes to Unaudited Condensed Consolidated Financial Statements..................... F-53
SNIDER CORPORATION
Independent Auditors' Report....................................................... F-54
Balance Sheets as of December 31, 1996 and 1995.................................... F-55
Statements of Income for the years ended December 31, 1996 and 1995................ F-56
Statements of Stockholders' Equity for the years ended December 31, 1996 and
1995............................................................................. F-57
Statements of Cash Flows for the years ended December 31, 1996 and 1995............ F-58
Notes to Financial Statements...................................................... F-59
Balance Sheet as of May 31, 1997 (unaudited)....................................... F-63
Statement of Income for the five months ended May 31, 1997 (unaudited)............. F-64
Statement of Stockholders' Equity for the five months ended May 31, 1997
(unaudited)...................................................................... F-65
Statement of Cash Flows for the five months ended May 31, 1997 (unaudited)......... F-66
Note to Financial Statements (unaudited)........................................... F-67
Balance Sheet as of June 30, 1996 (unaudited)...................................... F-68
Statement of Income for the six months ended June 30, 1996 (unaudited)............. F-69
Statement of Stockholders' Equity for the six months ended June 30, 1996
(unaudited)...................................................................... F-70
Statement of Cash Flows for the six months ended June 30, 1996 (unaudited)......... F-71
</TABLE>
F-1
<PAGE> 199
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY AND
CDB BROADCASTING CORPORATION
Independent Auditors' Report....................................................... F-72
Combined Balance Sheets as of December 31, 1996 and 1995........................... F-73
Combined Statements of Operations for the years ended December 31, 1996 and 1995... F-74
Combined Statements of Stockholders' Deficit for the years ended
December 31, 1996 and 1995....................................................... F-75
Combined Statements of Cash Flows for the years ended December 31, 1996 and 1995... F-76
Notes to Combined Financial Statements............................................. F-77
Combined Balance Sheet as of May 31, 1997 (unaudited).............................. F-82
Combined Statement of Operations for the five months ended May 31, 1997
(unaudited)...................................................................... F-83
Combined Statement of Stockholders' Deficit for the five months ended May 31, 1997
(unaudited)...................................................................... F-84
Combined Statement of Cash Flows for the five months ended May 31, 1997
(unaudited)...................................................................... F-85
Note to Combined Financial Statements (unaudited).................................. F-86
Combined Balance Sheet as of June 30, 1996 (unaudited)............................. F-87
Combined Statement of Operations for the six months ended June 30, 1996
(unaudited)...................................................................... F-88
Combined Statement of Stockholders' Deficit for the six months ended June 30, 1996
(unaudited)...................................................................... F-89
Combined Statement of Cash Flows for the six months ended June 30, 1996
(unaudited)...................................................................... F-90
MARANATHA BROADCASTING COMPANY, INC.'S RADIO BROADCASTING DIVISION
Independent Auditors' Report....................................................... F-91
Balance Sheet as of December 31, 1996 and June 30, 1997 (unaudited)................ F-92
Statement of Operations and Division Equity for the year ended December 31, 1996
and the six-month period ended June 30, 1997 (unaudited)......................... F-93
Statement of Cash Flows for the year ended December 31, 1996 and the six-month
period ended June 30, 1997 (unaudited)........................................... F-94
Notes to Financial Statements...................................................... F-95
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
Independent Auditors' Report....................................................... F-98
Combined Balance Sheet as of December 31, 1996..................................... F-99
Combined Statement of Operations for the year ended December 31, 1996.............. F-100
Combined Statement of Changes in Owners' Equity for the year ended
December 31, 1996................................................................ F-101
Combined Statement of Cash Flows for the year ended December 31, 1996.............. F-102
Notes to Combined Financial Statements............................................. F-103
Unaudited Combined Balance Sheets as of June 30, 1997 and 1996..................... F-110
Unaudited Combined Statements of Operations for the six months ended June 30, 1997
and 1996......................................................................... F-111
Unaudited Combined Statements of Changes in Owners' Equity for the six months ended
June 30, 1997 and 1996........................................................... F-112
Unaudited Combined Statements of Cash Flows for the six months ended June 30, 1997
and 1996......................................................................... F-113
Notes to Unaudited Combined Financial Statements................................... F-114
</TABLE>
F-2
<PAGE> 200
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Citadel Broadcasting Company:
We have audited the accompanying consolidated balance sheets of Citadel
Broadcasting Company (a wholly-owned subsidiary of Citadel Communications
Corporation) and subsidiary as of December 31, 1995 and 1996 and the related
consolidated statements of operations and cash flows for each of the years in
the three-year period ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Citadel
Broadcasting Company and subsidiary as of December 31, 1995 and 1996 and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1996, in conformity with generally accepted
accounting principles.
/s/ KPMG PEAT MARWICK LLP
Phoenix, Arizona
February 14, 1997, except as to
note 21 which is as of September 29, 1997
F-3
<PAGE> 201
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------- JUNE 30,
1995 1996 1997
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ 1,005,275 $ 1,588,366 $ 276,683
Accounts receivable, less allowance for
doubtful accounts of $514,533 in 1995,
$621,054 in 1996, and $831,176 in 1997...... 7,200,656 12,199,973 16,030,369
Notes receivable from related parties.......... 523,964 118,646 177,272
Prepaid expenses............................... 420,497 595,755 967,049
----------- ------------ -----------
Total current assets................... 9,150,392 14,502,740 17,451,373
Property and equipment, net...................... 12,667,530 15,208,569 19,058,433
Note receivable.................................. -- 18,251,402 --
Intangible assets, net........................... 15,093,134 51,801,835 84,282,815
Deposits for pending acquisitions................ 150,000 300,000 180,000
Other assets..................................... 311,290 2,179,039 2,448,027
----------- ------------ -----------
$ 37,372,346 $102,243,585 $123,420,648
=========== ============ ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable............................... $ 1,192,002 $ 1,286,019 $ 2,884,549
Accrued liabilities............................ 2,383,517 2,301,716 3,096,843
Current maturities of notes payable............ 1,919,808 2,500,000 7,500,000
Note payable to parent company................. -- 12,174,416 12,817,000
Current maturities of other long-term
obligations................................. 362,392 435,791 186,757
Due to related party........................... 365,000 -- --
----------- ------------ -----------
Total current liabilities.............. 6,222,719 18,697,942 26,485,149
Notes payable, less current maturities........... 29,390,577 75,084,060 82,084,060
Notes payable to related parties................. 10,777,525 -- --
Other long-term obligations, less current
maturities..................................... 230,718 877,600 1,053,109
Deferred tax liability........................... -- 1,585,333 2,889,778
Commitments and contingencies
Shareholder's (deficit) equity:
Common stock, $.001 par value; authorized
136,300 shares; issued and outstanding
40,000 shares............................... 40 40 40
Additional paid-in capital..................... 8,488,557 27,472,380 33,222,610
Accumulated deficit............................ (17,737,790) (21,473,770) (22,314,098)
----------- ------------ -----------
Total shareholder's (deficit) equity... (9,249,193) 5,998,650 10,908,552
----------- ------------ -----------
$ 37,372,346 $102,243,585 $123,420,648
=========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 202
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross broadcasting revenue...... $36,613,189 38,047,879 50,824,384 21,923,994 30,322,190
Less agency commissions....... 3,615,159 3,936,169 5,411,578 2,575,939 3,141,178
----------- ----------- ----------- ----------- -----------
Net broadcasting revenue... 32,998,030 34,111,710 45,412,806 19,348,055 27,181,012
----------- ----------- ----------- ----------- -----------
Operating expenses:
Station operating expenses.... 24,331,135 26,832,123 33,232,485 14,797,233 19,321,366
Depreciation and
amortization............... 7,434,666 4,890,517 5,158,206 1,974,239 3,907,149
Corporate general and
administrative............. 2,504,192 2,273,744 3,247,579 1,255,621 1,271,060
----------- ----------- ----------- ----------- -----------
Operating expenses......... 34,269,993 33,996,384 41,638,270 18,027,093 24,499,575
----------- ----------- ----------- ----------- -----------
Operating income (loss)......... (1,271,963) 115,326 3,774,536 1,320,962 2,681,437
----------- ----------- ----------- ----------- -----------
Nonoperating expenses (income):
Interest expense.............. 4,865,893 5,241,760 6,155,472 2,779,448 3,594,025
Interest income............... (49,941) (70,503) (407,581) (36,756) (39,411)
Loss (gain) on sale of
property and equipment..... (620,068) (707,286) 1,749 -- --
Other (income) expense, net... 13,295 (3,221) (8,124) 398 (32,849)
----------- ----------- ----------- ----------- -----------
Nonoperating expenses,
net...................... 4,209,179 4,460,750 5,741,516 2,743,090 3,521,765
----------- ----------- ----------- ----------- -----------
Loss before income taxes and
extraordinary item............ (5,481,142) (4,345,424) (1,966,980) (1,422,128) (840,328)
Income tax (benefit)............ -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Loss before extraordinary
item.......................... (5,481,142) (4,345,424) (1,966,980) (1,422,128) (840,328)
Extraordinary loss on
extinguishment of debt........ -- -- (1,769,000) -- --
----------- ----------- ----------- ----------- -----------
Net loss........................ $(5,481,142) (4,345,424) (3,735,980) (1,422,128) (840,328)
=========== =========== =========== =========== ===========
Net loss per common share....... $ (137) (109) (93) (36) (21)
=========== =========== =========== =========== ===========
Shares used in per share
calculation................... 40,000 40,000 40,000 40,000 40,000
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 203
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------- ---------------------------
1994 1995 1996 1996 1997
------------ ----------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss.................. $ (5,481,142) $(4,345,424) $ (3,735,980) $ (1,422,128) $ (840,328)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Extraordinary loss..... -- -- 1,769,000 -- --
Depreciation and 7,434,666 4,890,517 5,158,206 1,974,239 3,907,149
amortization.........
Amortization of debt
issuance costs and
debt discounts....... 286,715 131,752 370,652 301,988 38,031
Bad debt expense....... 383,275 484,702 421,378 325,694 267,250
Loss/(gain) on sale of
property and
equipment............ (620,068) (707,286) 1,749 -- --
Changes in assets and
liabilities, net of
acquisitions:
Increase in accounts
receivable and notes
receivable from
related parties...... (3,328,513) (1,069,681) (5,257,849) (2,835,403) (1,952,653)
(Increase) decrease in
prepaid expenses..... (146,972) 55,531 (175,058) (335,193) (208,583)
Decrease in other
assets............... 592,511 75,432 41,303 52,281 (201,099)
Increase (decrease) in
accounts payable..... (149,423) 651,247 94,017 920,573 1,212,794
Increase (decrease) in
accrued
liabilities.......... 1,352,692 (600,847) (81,801) 1,313,726 43,193
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) operating
activities........... 323,741 (434,057) (1,394,383) 295,777 2,265,754
----------- ----------- ----------- ----------- -----------
Cash flows from investing
activities:
Capital expenditures...... (2,857,007) (1,690,950) (2,037,840) (1,144,006) (896,820)
Capitalized acquisition
costs.................. (840,212) (33,480) (1,144,699) (716,339) (1,491,427)
Cash paid to acquire
stations............... (11,576,474) -- (38,805,036) (14,810,000) (12,550,119)
Deposits for pending
acquisitions........... -- (150,000) (930,000) (2,050,000) (550,000)
Increase in note
receivable............. -- -- (18,251,402) -- --
Proceeds from sales of
property and
equipment.............. 1,236,765 6,684,479 1,115 -- --
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities........... $(14,036,928) $ 4,810,049 $(61,167,862) $(18,720,345) $(15,488,366)
----------- ----------- ----------- ----------- -----------
</TABLE>
F-6
<PAGE> 204
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS -- CONTINUED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from financing
activities:
Principal payments on
notes
payable................ $ (2,298,413) $(6,866,198) $(50,970,385) $ (4,000,000) $ --
Proceeds from notes
payable................ 19,743,070 2,400,000 86,244,059 2,000,000 12,000,000
Payment of debt issuance
costs.................. -- (30,000) (2,283,124) -- --
Principal payments on
other
long-term
obligations............ (244,495) (412,066) (776,107) (727,898) (364,167)
Prepayment premium........ -- -- (420,000) -- --
Advances from (to) parent
company................ (2,806,725) -- 12,367,070 -- 275,096
Capital contribution from
parent company......... -- -- 18,983,823 23,663,787 --
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities........... 14,393,437 (4,908,264) 63,145,336 20,935,889 11,910,929
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
cash and cash
equivalents............... 680,250 (532,272) 583,091 2,511,321 (1,311,683)
Cash and cash equivalents,
beginning of period....... 857,297 1,537,547 1,005,275 1,005,275 1,588,366
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents,
end of period............. $ 1,537,547 $ 1,005,275 $ 1,588,366 $ 3,516,596 $ 276,683
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 205
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Citadel Broadcasting Company was formed August 21, 1991 as a Nevada
Corporation and is a wholly-owned subsidiary of Citadel Communications
Corporation ("Citadel Communications"). Citadel License, Inc. ("Citadel
License") is a wholly-owned subsidiary of Citadel Broadcasting Company. Citadel
Broadcasting Company and its subsidiary own and operate radio stations and hold
Federal Communications Commission (FCC) licenses in California, Colorado,
Nevada, New Mexico, and Utah.
Principles of Consolidation and Presentation
The accompanying consolidated financial statements include Citadel
Broadcasting Company and its wholly-owned subsidiary (Company). All significant
intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash equivalents.
Derivative Financial Instruments
The Company uses an interest rate swap agreement to hedge the effects of
fluctuations in interest rates. Amounts receivable or payable under the interest
rate swap agreement are recognized as interest expense or income.
Property and Equipment
Assets acquired in business combinations accounted for using the purchase
method of accounting are recorded at their estimated fair value upon acquisition
as determined by management or by independent appraisal. Property and equipment
additions are recorded at cost. Depreciation of property and equipment is
determined using the straight-line method over the estimated useful lives of the
related assets.
Intangible Assets
Intangible assets with determinable lives have been allocated among various
categories of customer-based or market-based intangibles at their estimated fair
value upon acquisition as determined by management or by independent appraisal.
Goodwill represents the excess of cost over the fair value of tangible assets
and intangible assets with determinable lives. Amortization is provided on the
straight-line method over the estimated useful lives of the related assets (see
note 5). The Company's policy is to write-off intangible assets once they have
become fully amortized. The useful lives and recoverability of intangible assets
and long-lived assets are evaluated at least annually. This evaluation
encompasses the undiscounted historical broadcast cash
F-8
<PAGE> 206
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
flow of each station and existing broadcast cash flow multiples for sales of
similar radio properties to estimate the potential selling price for the station
and, therefore, recoverability of the assets.
Barter Transactions
Barter contracts are agreements entered into under which the Company
provides commercial air time in exchange for goods and services used principally
for promotional, sales and other business activities. An asset and liability are
recorded at the fair market value of the goods or services received. Revenue is
recorded and the liability is relieved when commercials are broadcast and
expense is recorded and the asset is relieved when goods or services are used.
Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. The Company is included in the consolidated tax returns of its
parent company, Citadel Communications.
Income (Loss) Per Share of Common Stock
Net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period.
Revenue Recognition
Revenue is recognized as commercials are broadcast.
Local Marketing Agreements
Fees earned or incurred pursuant to various local marketing agreements are
recognized as gross broadcasting revenue or station operating expenses,
respectively, in the period that the services performed or received occur. The
Company's consolidated financial statements include broadcasting revenue and
station operating expenses of stations marketed under local marketing
agreements.
Business and Credit Concentrations
In the opinion of management, credit risk with respect to receivables is
limited due to the large number of customers and the geographic diversification
of the Company's customer base. The Company performs credit evaluations of its
customers and believes that adequate allowances for any uncollectible
receivables are maintained. At December 31, 1995 and 1996 and June 30, 1997, no
receivable from any customer exceeded five percent of shareholder's equity nor
did any customer's account exceed more than ten percent of net broadcasting
revenue for any of the periods presented.
F-9
<PAGE> 207
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
Recently Issued Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share" ("SFAS No. 128"). This statement establishes
standards for computing and presenting earnings per share ("EPS"), and
supersedes APB Opinion No. 15. The Statement replaces primary EPS with basic EPS
and requires dual presentation of basic and diluted EPS. The Statement is
effective for both interim and annual periods ending after December 15, 1997.
Earlier application is not permitted. After adoption, all prior period EPS data
shall be restated to conform to SFAS No. 128. The pro forma effect of the
Company adopting SFAS No. 128 is that both basic and diluted EPS would have been
$(137) for the year ended December 31, 1994, $(109) for the year ended December
31, 1995 and $(93) for the year ended December 31, 1996 and $(36) for the six
months ended June 30, 1996 and $(21) for the six months ended June 30, 1997.
Reclassifications
Certain 1994 and 1995 balances have been reclassified to conform to the
1996 presentation.
(2) ACQUISITIONS AND DISPOSITIONS
1994 Acquisitions and Dispositions
During 1994, the Company acquired the assets of three FM and two AM radio
stations from various parties as follows:
<TABLE>
<CAPTION>
MARKET PURCHASE
ACQUISITION DATE STATION SERVED PRICE
------------------------ ----------------- -------------------- ----------
<S> <C> <C> <C>
May 13, 1994............ KKOB-AM/KKOB-FM Albuquerque, NM $7,780,000
May 13, 1994............ KQEO-AM/KMGA-FM Albuquerque, NM 1,450,000
May 13, 1994............ KKMG-FM Colorado Springs, CO 912,500
</TABLE>
The acquisitions were accounted for by the purchase method of accounting
and, accordingly, the purchase price was allocated to current assets as well as
noncurrent tangible and intangible assets based on their fair values at the date
of acquisition. The acquisitions were funded with the proceeds from new notes
payable. The purchase price, including acquisition costs of $449,292, was
allocated as follows:
<TABLE>
<S> <C>
Property and equipment.......................... $ 3,655,000
Intangible assets............................... 6,909,958
Accounts receivable............................. 26,834
-----------
$10,591,792
===========
</TABLE>
On March 15, 1994, the Company acquired the call letters and the format,
along with certain tangible assets, of radio station KOH-AM in Reno, Nevada for
approximately $1,400,000. Property and equipment was allocated $100,000 of the
purchase price and the remaining $1,300,000 was allocated to intangible assets
based on their fair values at the date of acquisition. The Company replaced the
call letters of its existing KROW-AM station in Reno with the acquired call
letters.
On September 15, 1994, the Company sold the assets of KHEZ-FM in Boise,
Idaho for $550,000. A gain of approximately $116,000 was recognized on the sale.
F-10
<PAGE> 208
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
1995 Dispositions
On February 15, 1995, the Company sold the assets of KBOZ-AM, KBOZ-FM and
KATH-FM, and KCTR-FM, KDWG-AM, and KKBR-FM in Bozeman and Billings, Montana,
respectively, for $5,400,000. A gain of approximately $800,000 was recognized on
the sale.
1996 Acquisitions
During 1996, the Company acquired the assets of five FM and one AM radio
stations from various parties as follows:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
- -------------------- ------------------ --------------------- -----------
<S> <C> <C> <C>
June 28, 1996....... KHFM-FM/KHFN-AM Albuquerque, NM $ 5,500,000
June 28, 1996....... KASY-FM Albuquerque, NM 5,000,000
June 28, 1996....... KDJK-FM Modesto, CA 5,010,000
October 1, 1996..... KKLI-FM Colorado Springs, CO 3,450,000
October 9, 1996..... KRST-FM Albuquerque, NM 20,000,000
</TABLE>
The acquisitions were accounted for by the purchase method of accounting
and, accordingly, the purchase price was allocated to current assets as well as
noncurrent tangible and intangible assets based on their fair values at the date
of acquisition. The acquisitions were funded with the proceeds from new notes
payable and a securities purchase and exchange agreement. The purchase price,
including acquisition costs of $782,881, was allocated as follows:
<TABLE>
<S> <C>
Property and equipment.......................... $ 2,446,594
Intangible assets............................... 37,135,955
Accounts receivable............................. 160,332
-----------
$39,742,881
===========
</TABLE>
Pro Forma
The following summary, prepared on a pro forma basis, presents the results
of operations as if all the above noted radio stations had been acquired as of
January 1, 1994, after including the impact of the amortization of intangible
assets, depreciation of fixed assets and increased interest expense on the
acquisition debt since the date of acquisition.
<TABLE>
<CAPTION>
UNAUDITED
----------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net broadcasting revenue.................... $ 42,432,789 41,341,551 48,520,743
Operating income (loss)..................... (3,281,080) (1,407,363) 2,802,488
Net loss.................................... (9,834,603) (7,851,613) (6,017,738)
</TABLE>
The pro forma results are not necessarily indicative of what actually would
have occurred if the radio stations had been owned for the entire periods
presented. In addition, they are not intended to be a projection of future
results and do not reflect any synergies that might be achieved from combined
operations.
F-11
<PAGE> 209
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
1997 Acquisitions
On February 14, 1997, the Company acquired 100% of the stock of radio
station KENZ-FM in Salt Lake City, Utah for a purchase price of $5,590,000. The
acquisition was accounted for by the purchase method of accounting and,
accordingly, the purchase price was allocated to current assets as well as
noncurrent tangible and intangible assets based on their fair values at the date
of acquisition. The acquisition was funded with the proceeds from new notes
payable. The purchase price, including acquisition costs of $31,619 was
allocated as follows:
<TABLE>
<S> <C>
Property and equipment........................... $ 550,000
Intangible assets................................ 4,981,619
Accounts receivable.............................. 333,700
Prepaid expenses................................. 7,000
Accounts payable and accrued liabilities......... (250,700)
</TABLE>
Effective as of January 1, 1997, Citadel Communications acquired Deschutes
River Broadcasting, Inc. ("Deschutes"). At the time of the acquisition,
Deschutes owned 18 radio stations in Montana, Oregon and Washington. The total
consideration paid was approximately $26.0 million. Following the acquisition,
Deschutes was operated as a sister company to the Company until June 20, 1997
when Deschutes was merged with and into the Company.
(3) NOTE RECEIVABLE
During 1996 the Company made advances to Deschutes, to allow Deschutes to
acquire various radio stations and pay-off existing debt, in conjunction with
the acquisition of Deschutes by Citadel Communications. These advances were
funded through borrowings the Company made on the Senior Credit Facility and
advances from its parent company. As of December 31, 1996, $18,251,402 was due
under these advances; of this amount, approximately $8,600,000 is included in
note payable to parent company.
(4) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1995 and 1996 and June 30, 1997
consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30, ESTIMATED
1995 1996 1997 USEFUL LIFE
----------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Land............................. $ 567,785 569,638 882,402 --
Buildings and improvements....... 1,033,896 1,217,287 1,510,526 5-30 years
Transmitters, towers and
equipment...................... 12,585,421 15,509,084 19,618,327 5-15 years
Office furniture and equipment... 2,236,823 3,268,426 3,918,822 3-5 years
Construction in progress......... 225,587 577,289 413,783 --
----------- ---------- ----------
16,649,512 21,141,724 26,343,860
Less accumulated depreciation and
amortization................... (3,981,982) (5,933,155) (7,285,427)
----------- ---------- ----------
$12,667,530 15,208,569 19,058,433
=========== ========== ==========
</TABLE>
F-12
<PAGE> 210
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
(5) INTANGIBLE ASSETS
Intangible assets at December 31, 1995 and 1996 and June 30, 1997 consist
of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 30, ESTIMATED
1995 1996 1997 USEFUL LIFE
------------ ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Goodwill...................... $ 9,077,182 28,925,936 52,848,046 15 years
Broadcast licenses............ 7,244,983 26,262,983 38,757,464 15 years
Noncompetition agreements..... 4,977,018 5,168,854 5,600,364 3-10 years
Local marketing agreements.... 1,909,998 1,909,998 -- 5 years
Presold commercials........... -- 496,380 496,380 less than 1
year
Premium lease space........... 49,552 161,787 161,787 1-13 years
On-air talent contracts....... 1,231,634 1,383,323 351,689 1-3 years
Subcarrier antenna income..... 118,284 219,162 219,162 1-4 years
Programming contracts......... 500,000 503,000 503,000 3 years
----------- ---------- ----------
25,108,651 65,031,423 98,937,892
Less accumulated
amortization................ (10,015,517) (13,229,588) (14,655,077)
----------- ---------- ----------
$ 15,093,134 51,801,835 84,282,815
=========== ========== ==========
</TABLE>
(6) ACCRUED LIABILITIES
Accrued liabilities at December 31, 1995 and 1996 and June 30, 1997 consist
of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1995 1996 1997
---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Interest................................................... $ 891,155 -- --
Music license fees......................................... 66,471 245,715 90,028
Compensation and commissions............................... 621,748 1,237,392 1,648,080
Dividends.................................................. 246,198 -- --
Other...................................................... 557,945 818,609 1,358,735
---------- --------- ---------
$2,383,517 2,301,716 3,096,843
========== ========= =========
</TABLE>
F-13
<PAGE> 211
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
(7) NOTES PAYABLE
Notes payable at December 31, 1995 and 1996 and June 30, 1997 consist of
the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1995 1996 1997
----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to financial institution (Senior
Credit Facility), interest payable quarterly
at the prime rate (8.5% at December 31,
1995) plus 2.5%, principal due quarterly in
amounts ranging from $350,000 to $750,000
through April 1, 1999, at which time all
outstanding amounts are due in full, subject
to optional prepayments, paid in full in
1996........................................ $31,310,385 -- --
Note payable to financial institution (Senior
Credit Facility), interest payable at the
LIBOR rate (5.78% at December 31, 1996 and
5.69% at June 30, 1997) plus 2.75%,
principal due quarterly in amounts ranging
from $2,500,000 to $5,000,000 through June
30, 2003, at which time all outstanding
amounts are due in full, subject to optional
prepayments................................. -- 77,584,060 89,584,060
----------- ---------- ----------
31,310,385 77,584,060 89,584,060
Less current maturities....................... 1,919,808 2,500,000 7,500,000
----------- ---------- ----------
Long-term portion............................. $29,390,577 75,084,060 82,084,060
=========== ========== ==========
</TABLE>
In 1996, the Company entered into a financing agreement for a term loan up
to a maximum of $85,000,000. The agreement allows for additional borrowings of
$65,000,000 represented by a revolving loan, above the term loan maximum.
Maximum borrowings, including term and revolving loans, is $150,000,000 under
this Senior Credit Facility. The Company must pay, on a quarterly basis, an
unused commitment fee equal to the maximum revolving loan commitment less the
average of the outstanding principal balance for the preceding quarter,
multiplied by .125% or if the total leverage ratio (as defined in the agreement)
calculated as of the last day of the preceding quarter was less than 4.5, the
commitment fee is .09375%. Commitment fees paid in 1996 were $74,931 and
$158,246 in the six month period ended June 30, 1997. The agreement requires
that the Company enter into an interest rate swap agreement for a period of at
least two years. See note 20 for information on the interest rate swap
agreement.
The Senior Credit Facility is secured by a pledge of the common stock of
the Company. Various debt covenants place restrictions on, among other things,
indebtedness, acquisitions, dividends, capital expenditures and the sale or
transfer of assets and provide for certain minimum operating cash flows for the
Company and the individual radio markets. At December 31, 1996 and June 30,
1997, the Company was in compliance with all debt covenant provisions.
F-14
<PAGE> 212
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
The required aggregate principal payments as of December 31, 1996,
excluding the consideration of any payments required based upon annual excess
cash flow (as defined), are as follows:
<TABLE>
<S> <C>
1997............................................ $ 2,500,000
1998............................................ 10,000,000
1999............................................ 12,500,000
2000............................................ 14,000,000
2001............................................ 16,000,000
Thereafter...................................... 22,584,060
-----------
$77,584,060
===========
</TABLE>
On July 3, 1997, the payment terms of the Senior Credit Facility were
amended in connection with the issuance of the Senior Subordinated Notes, see
note 21.
(8) NOTES PAYABLE TO RELATED PARTIES
Notes payable to shareholders of Citadel Communications at December 31,
1995 consisted of the following:
<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Senior subordinated notes payable, face amount $4,000,000,
interest payable quarterly at the U.S. Treasury rate plus
4.15% (fixed at 10.4% until October 1, 1996), principal due in
full October 1, 1999, subject to optional prepayments, net of
unamortized discount of $222,475, paid in full in 1996........ $ 3,777,525
Junior subordinated note payable, interest only payments due
quarterly at 12%, principal due in full June 30, 2000, subject
to optional prepayments, paid in full in 1996................. 7,000,000
-----------
$10,777,525
===========
</TABLE>
F-15
<PAGE> 213
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
(9) OTHER LONG-TERM OBLIGATIONS
Other long-term obligations at December 31, 1995 and 1996 and June 30, 1997
consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996 1997
-------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Noncompetition agreement with former
shareholder of Citadel Communications
due June 1996, face amount $25,001,
non-interest bearing with interest
imputed at 8.5%, net of discount of
$609, paid in full in 1996............. $ 24,392 -- --
Various noncompetition and consulting
agreements with the sellers of radio
stations acquired, due at various dates
through July 2003, face amount of
$647,218 and $486,113 and $416,668 at
December 31, 1995 and 1996 and June 30,
1997, respectively, non-interest
bearing with interest imputed at 8.5%
to 9.0%, net of discount of $78,500,
$54,540 and $43,569 in 1995, 1996 and
1997, respectively..................... 568,718 431,573 373,099
Prepayment premium on extinguishment of
debt (a)............................... -- 881,818 820,806
Capital leases........................... -- -- 45,961
-------- --------- ---------
593,110 1,313,391 1,239,866
Less current maturities.................. 362,392 435,791 186,757
-------- --------- ---------
Long-term portion........................ $230,718 877,600 1,053,109
======== ========= =========
</TABLE>
The required aggregate principal payments as of December 31, 1996,
excluding the amortization of debt discount are as follows:
<TABLE>
<S> <C>
1997............................................. $ 186,757
1998............................................. 162,269
1999............................................. 124,716
2000............................................. 69,151
2001............................................. 46,793
Thereafter....................................... 723,705
----------
$1,313,391
==========
</TABLE>
- ---------------
(a) On October 9, 1996, the Company extinguished its long-term debt of
$31,310,385, payable to a financial institution, and its note payable to a
related party of $7,000,000. The early retirement of the long-term debt
resulted in a $1,769,000 extraordinary loss due to prepayment premiums and
the write-off of debt issuance costs. The prepayment premium can be reduced
on a quarterly basis dependent on the outstanding balance of the Senior
Credit Facility. The remaining balance of the prepayment premium is due upon
the repayment of the Senior Credit Facility.
F-16
<PAGE> 214
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
(10) LEASE COMMITMENTS
The Company leases certain tower sites, transmitters and equipment,
automobiles, office equipment and an airplane. The following is a schedule by
year of future minimum rental payments required under operating leases that have
an initial or remaining noncancelable lease term in excess of one year as of
December 31, 1996:
<TABLE>
<S> <C>
1997............................................ $ 1,425,503
1998............................................ 1,414,926
1999............................................ 1,389,561
2000............................................ 1,347,258
2001............................................ 1,340,597
Thereafter...................................... 4,173,404
-----------
$11,091,249
===========
</TABLE>
Total rental expense was $633,666, $744,395 and $1,101,237 for the years
ended December 31, 1994, 1995 and 1996, respectively, and $447,187 and $904,711
for the six months ended June 30, 1996 and 1997.
(11) INCOME TAXES
The Company is included in the consolidated tax returns of Citadel
Communications and calculates its tax provision or benefit as though it filed a
separate tax return. For the years ended December 31, 1994, 1995 and 1996, the
Company and Citadel Communications generated a net loss for both financial
reporting and income tax purposes, therefore no tax provision has been recorded.
At December 31, 1996, Citadel Communications has net operating loss
carryforwards for federal income tax purposes of approximately $16,800,000 which
begin to expire in 2007.
On June 28, 1996, Citadel Communications underwent an ownership change in
accordance with Section 382 of the Internal Revenue Code. Due to this change,
the net operating losses of Citadel Communications are subject to limitation in
future years. The approximate amount of the net operating loss which may be used
in any one year is $4,400,000.
The reconciliation of the expected income tax benefit calculated at the
U.S. federal statutory rate to the actual income tax benefit per the financial
statements for the years ended December 31, 1994, 1995 and 1996 and the six
months ended June 30, 1997 is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------- JUNE 30,
1994 1995 1996 ----------
----------- ---------- ---------- 1997
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
U.S. federal statutory rate applied to
the loss before income taxes and
extraordinary item..................... $(1,873,861) (1,487,717) (679,046) (289,910)
Amortization of goodwill................. 17,478 16,563 186,844 81,844
Net operating losses providing no current
benefit for federal income tax
purposes............................... 1,847,534 1,467,025 526,304 197,433
Other.................................... 8,849 4,129 (34,102) 10,633
----------- ---------- -------- -------
$ -- -- -- --
=========== ========== ======== =======
</TABLE>
F-17
<PAGE> 215
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets, liabilities and the valuation allowance are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------ 1997
1995 1996 ----------
----------- ---------- (UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets:
Receivables, principally due to valuation
allowances......................................... $ 195,360 248,422 332,470
Intangible assets..................................... 17,145 -- --
Net operating loss carryforward....................... 6,811,470 6,720,659 8,268,784
Accrued liabilities not deductible.................... 25,330 18,465 33,104
----------- ----------
Total deferred tax assets..................... 7,049,305 6,987,546 8,634,358
Valuation allowance................................... (6,590,905) (4,270,206) (5,302,974)
----------- ----------
Net deferred tax assets....................... 458,400 2,717,340 3,331,384
----------- ----------
Deferred tax liabilities:
Property and equipment, principally due to accelerated
depreciation....................................... (458,400) (1,883,269) (2,292,007)
Intangible assets..................................... -- (834,071) (1,039,377)
Differences between the tax basis and fair value of
intangibles and fixed assets acquired.............. -- (1,585,333) (2,889,778)
----------- ----------
Total deferred tax liabilities................ (458,400) (4,302,673) (6,221,162)
----------- ----------
Net deferred tax liability.............................. $ -- (1,585,333) (2,889,778)
=========== ==========
</TABLE>
The valuation allowance has been increased by $3,053,457 in 1995 and
decreased by $2,320,699 in 1996 and increased by $1,032,768 for the six months
ended June 30, 1997. The Company has established a valuation allowance for the
amount of the net deferred tax asset which management has determined that it is
more likely than not will not be realized.
(12) CITADEL COMMUNICATIONS FINANCIAL DATA
The operations of Citadel Communications (the parent company) include the
issuance of convertible preferred stock and obtaining a credit facility
including a revolving line of credit of $20 million, the proceeds of which were
advanced to the Company. Interest was charged on these advances in an amount
equal to the interest costs of Citadel Communications. There are no other costs
or expenses of Citadel Communications.
Advances from Citadel Communications, other than those representing draws
on Citadel Communications revolving line of credit, are recorded as capital
contributions from the parent company and are presented as additional paid-in
capital in the consolidated balance sheets.
On January 1, 1997, in a non-cash transaction, the Company transferred
$9,123,310 of debt under the Senior Credit Facility to Deschutes which reduced
the corresponding note receivable. In addition, on June 20, 1997, Citadel
Communications transferred the ownership of Deschutes to the Company resulting
in a non-cash credit to additional paid-in capital of $6,057,696. Interest paid
to Citadel Communications by the Company for the six months ended June 30, 1997
amounted to $307,466, resulting in a net increase to additional paid-in capital
of $5,750,230 for the six months ended June 30, 1997.
F-18
<PAGE> 216
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
The following is summary consolidated financial data for Citadel
Communications and its subsidiaries, including the Company:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Consolidated balance sheets:
Current assets................................. $ 14,502,740 17,451,373
Property and equipment, net.................... 15,208,569 19,058,433
Note receivable................................ 18,251,402 --
Intangible assets, net......................... 51,801,835 84,282,815
Other assets................................... 2,550,778 2,645,167
------------ -----------
Total assets........................... $102,315,324 123,437,788
============ ===========
Notes payable to related parties............... 11,817,000 12,817,000
Other current liabilities...................... 6,880,942 13,668,149
------------ -----------
Total current liabilities.............. 18,697,942 26,485,149
Notes payable, less current portion............ 75,084,060 82,084,060
Other liabilities.............................. 2,462,933 3,942,887
Shareholders' equity........................... 6,070,389 10,925,692
------------ -----------
Total liabilities and shareholders'
equity............................... $102,315,324 123,437,788
============ ===========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Consolidated statements of operations:
Net broadcasting revenue........................ $ 45,412,806 32,410,510
Operating income................................ $ 3,744,323 1,531,941
Interest expense................................ 6,155,472 4,477,395
Other (income) expense, net..................... (413,955) (91,537)
----------- -----------
Loss before income taxes and extraordinary
item......................................... (1,997,194) (2,853,917)
Extraordinary loss on extinguishment of debt.... (1,769,000) --
----------- -----------
Net loss................................ $ (3,766,194) (2,853,917)
=========== ===========
</TABLE>
(13) CITADEL LICENSE FINANCIAL DATA
The operations of Citadel License include holding FCC licenses for all
stations owned by the Company and the amortization of these licenses. There are
no costs or expenses of Citadel License that are borne by the Company.
F-19
<PAGE> 217
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
The following is summary financial data for Citadel License:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ ---------
(UNAUDITED)
<S> <C> <C>
Balance sheets:
Intangible assets, net (broadcast licenses)..... $ 24,035,920 35,675,125
Other assets.................................... 5,147 5,724
------------ -----------
Total assets................................. $ 24,041,067 35,680,849
============ ===========
Shareholder's equity............................ $ 24,041,067 35,680,849
------------ -----------
Total liabilities and shareholder's equity... $ 24,041,067 35,680,849
============ ===========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Statements of Operations:
Amortization expense............................ $ 991,901 968,649
------------ -----------
Net loss..................................... $ (991,901) (968,649)
============ ===========
</TABLE>
(14) DEFINED CONTRIBUTION PLAN
The Company has a defined contribution 401(k) plan for all employees who
are at least 21 years of age and have worked at least 1,000 hours in the year.
Under the 401(k) plan, employees can contribute up to 20% of their compensation,
subject to the maximum contribution allowed by the Internal Revenue Code.
Participants vest immediately in their contributions. The Company may make
discretionary contributions as approved by the Board of Directors. Participants'
rights to amounts contributed by the Company vest on a graded schedule over a
five-year period. During 1994, 1995, and 1996 the Company contributed $116,978,
$133,215, and $144,256, respectively, and $63,028 and $105,465 for the six
months ended June 30, 1996 and 1997, which represented a two percent matching of
employee contributions to the 401(k) plan.
(15) TRANSACTIONS WITH RELATED PARTIES
On December 29, 1995, the Company entered into a sale-leaseback transaction
with the principal shareholder of Citadel Communications. The Company sold an
airplane for its fair value of $1,275,000 to the shareholder resulting in a loss
of $74,327. The operating lease commenced on December 29, 1995 with monthly
payments of $17,250 due through December 31, 2001.
(16) LOCAL MARKETING AGREEMENTS
At December 31, 1996, the Company has local marketing agreements to market
stations KFNZ-AM, KBEE-FM, and KBER-FM in Salt Lake City, Utah. The agreements
principally provide for the Company to supply specified programming to the
brokered stations and enables the sales staff of the Company to sell advertising
time on the station for a fixed fee to be paid by the Company. The agreements
also provide the Company with the option to purchase the stations. The Company's
financial statements include the broadcasting revenue and station operating
expenses of the brokered stations.
F-20
<PAGE> 218
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
The local marketing agreements enable the Company to extend or terminate
the agreements at the Company's option through December 31, 1997. The fees paid
under the local marketing agreements amounted to $436,090, $350,000 and
$1,414,527 for the years ended December 31, 1994, 1995 and 1996 and $554,085 and
$611,030 for the six months ended June 30, 1996 and 1997, respectively.
(17) JOINT SALES AGREEMENTS
On January 15, 1996, the Company entered into a joint sales agreement (JSA)
to sell advertising for radio stations KEYF-AM/FM, KUDY-AM and KKZX-FM in
Spokane, Washington and radio stations KVOR-AM, KSPZ-FM, KTWK-AM, and KVUU-FM in
Colorado Springs, Colorado. As stated in the JSA agreement, JSA revenue is
calculated as 55% of the broadcast cash flows of these radio stations and all
Company owned radio stations in these markets, with the exception of KKLI in
Colorado Springs which is not included in the JSA calculation.
On April 22, 1996, the Company entered into a joint sales agreement for
radio station KENZ-FM in Salt Lake City, Utah. The Company's financial
statements include all sales expenses for the station as well as revenue for the
JSA fee calculated at 30% of net revenue of the station. On February 14, 1997
the Company acquired KENZ-FM. See note 2.
(18) SUPPLEMENTAL FINANCIAL INFORMATION
The Company paid cash of $3,440,392, $5,237,240 and $7,065,546 for interest
for the years ended December 31, 1994, 1995 and 1996 and $2,732,085 and
$3,709,972 for the six months ended June, 1996 and 1997, respectively.
Barter revenue included in gross broadcasting revenue and barter expenses
included in station operating expenses, amounted to $3,053,671, $3,087,871,
$3,335,024, $1,419,530 and $1,945,262, and $2,891,310, $3,214,284, $3,029,665,
$1,367,239 and $1,880,372 for the years ended December 31, 1994, 1995 and 1996
and the six months ended June 30, 1996 and 1997, respectively.
A summary of additions and deductions related to the allowance for accounts
receivable for the years ended December 31, 1994, 1995 and 1996 and for the six
months ended June 30, 1997 follows:
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF END OF
PERIOD ADDITIONS DEDUCTIONS PERIOD
------------ --------- ---------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1994................. $234,892 383,275 (237,636) 380,531
Year ended December 31, 1995................. $380,531 484,702 (350,700) 514,533
Year ended December 31, 1996................. $514,533 421,378 (314,857) 621,054
Six months ended June 30, 1997............... $621,054 318,247 (108,125) 831,176
</TABLE>
(19) LITIGATION
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Management believes that such litigation and claims
will be resolved without a material effect on the Company's financial position.
The Company has received two civil investigative demands ("CIDs") from the
Antitrust Division of the U.S. Department of Justice. One CID addresses the
Company's acquisition of station KRST in Albuquerque,
F-21
<PAGE> 219
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
New Mexico and the second CID addresses the joint sales agreement for stations
in Spokane, Washington and Colorado Springs, Colorado. The Company has provided
the requested information in response to each CID, and at present has been given
no indication from the Department of Justice regarding its intended future
actions.
(20) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," requires that the Company disclose
estimated fair values for its financial instruments. The following summary
presents a description of the methodologies and assumptions used to determine
such amounts.
Limitations
Fair value estimates are made at a specific point in time and are based on
relevant market information and information about the financial instrument; they
are subjective in nature and involve uncertainties, matters of judgment and,
therefore, cannot be determined with precision. These estimates do not reflect
any premium or discount that could result from offering for sale at one time the
Company's entire holdings of a particular instrument. Changes in assumptions
could significantly affect these estimates.
Since the fair value is estimated as of December 31, 1995 and 1996, the
amounts that will actually be realized or paid at settlement or maturity of the
instruments could be significantly different.
Cash equivalents
The carrying amount is assumed to be the fair value because of the
liquidity of these instruments.
Accounts receivable and notes receivable
The carrying amount is assumed to be the fair value because of the
short-term maturity of the portfolio. The carrying amount of the non-current
note receivable is assumed to be the fair value because the note receivable was
converted by Citadel Communications into a portion of the purchase price of
Deschutes on January 1, 1997 at the carrying value.
Accounts payable and accrued liabilities
The carrying amount approximates fair value because of the short-term
maturity of these instruments.
Notes payable, notes payable to related parties, note payable to parent
company and other long-term obligations
The fair value of the Company's notes payable, note payable to related
parties, notes payable to parent company and other long-term obligations
approximate the terms in the marketplace at which they could be replaced.
Therefore, the fair value approximates the carrying value of these financial
instruments.
In 1996, the Company entered into an interest rate swap agreement with a
financial institution in accordance with the terms of its Senior Credit
Facility. At December 31, 1996, the Company had accrued $1,900 in interest
expense related to the interest rate swap agreement. The fair value of the
interest rate swap as of December 31, 1996 was $190,000 as determined by the
financial institution and represents an unrealized gain. The fair value of the
interest rate swap is the estimated amount that the financial institution would
F-22
<PAGE> 220
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
receive or pay to terminate the swap agreement at the reporting date, taking
into account current interest rates and the current creditworthiness of the swap
counterparties.
(21) SUBSEQUENT EVENTS
On April 10, 1997, the Company acquired radio station KBER-FM in Salt Lake
City, Utah for a purchase price of $7,800,000. In conjunction with the
acquisition, the Company borrowed an additional $7,000,000 on its Senior Credit
Facility.
On April 21, 1997, the Company entered into an agreement of purchase and
sale to acquire radio stations KBEE and KFNZ in Salt Lake City, Utah for a
purchase price of $2,873,000.
On June 2, 1997, the Company entered into various agreements relating to
several transactions pursuant to which the Company has agreed to acquire (i)
radio stations KARN (AM & FM), KKRN, KRNN, KIPR, KESR and KYTN in Little Rock,
Arkansas and surrounding communities, (ii) the right to construct one radio
station, (iii) the Arkansas Radio Network and (iv) certain real estate
associated with station operations for the aggregate purchase price of
$26,500,000.
On June 20, 1997, Deschutes was merged with and into the Company. The net
worth of Deschutes as of the date of the merger was approximately $6,100,000.
The results of operations for the six months ended June 30, 1997 do not reflect
the 10 days of operations for Deschutes, as the activity was not material in
relation to the consolidated financial statements taken as a whole.
On July 3, 1997, the Company acquired all of the issued and outstanding
capital stock of Tele-Media Broadcasting Company, whose assets include fourteen
FM and nine AM radio stations in Pennsylvania, Rhode Island and Illinois, and
which operates two FM radio stations and one AM radio station in Wilkes-
Barre/Scranton, Pennsylvania under an LMA and a JSA, respectively (which
stations the Company has the option to purchase), for approximately
$114,400,000.
On July 3, 1997, the Company completed the issuance of $101,000,000 in
10 1/4% Senior Subordinated Notes (Notes) due 2007, and completed the sale of
$100,000,000 of Series A Exchangeable Preferred Stock (Exchangeable Preferred
Stock). The Notes will be redeemable at the option of the Company, in whole or
in part, at any time on or after July 1, 2002. In addition, at any time prior to
July 1, 2000, the Company may, at its option, redeem a portion of the Notes with
the net proceeds of one or more Public Equity Offerings, at a redemption price
equal to 110.25% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of redemption. The Exchangeable Preferred Stock
has a liquidation preference of $100 per share, plus accumulated and unpaid
dividends. Dividends on the Exchangeable Preferred Stock accrue at the rate of
13 1/4% per annum. All dividends will be payable semi-annually on January 1 and
July 1 of each year, commencing January 1, 1998. On or prior to July 1, 2002,
dividends are payable in additional shares of Exchangeable Preferred Stock.
Thereafter, all dividends will be payable only in cash. The Company will be
required to redeem the Exchangeable Preferred Stock on July 1, 2009 (subject to
the legal availability of funds therefore) at a redemption price equal to the
liquidation preference thereof, plus accumulated and unpaid dividends, if any,
to the date of redemption.
On July 3, 1997, the Senior Credit Facility was amended and restated such
that the principal payment structure is based on the outstanding balance. The
required annual aggregate principal payments, as amended, are $22,709,060,
$30,500,000 and $36,375,000 for 2001, 2002 and 2003, respectively.
On July 15, 1997, the Company entered into an asset purchase agreement with
Maranatha Broadcasting Company, Inc. to acquire radio station WLEV in Allentown,
Pennsylvania for $23,000,000.
F-23
<PAGE> 221
CITADEL BROADCASTING COMPANY
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DATA AS OF JUNE 30, 1997 AND FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
On July 17, 1997, the Company acquired radio station KNHK in Reno, Nevada
for $1,300,000.
On August 1, 1997, the Company entered into an asset purchase agreement
with GHB of Little Rock, Inc. to purchase substantially all of the assets of
radio stations KEZQ, KURB and KVLO in Little Rock, Arkansas for $11,400,000. The
purchase is subject to approval from the FCC.
On September 11, 1997, the Company entered into an asset purchase agreement
with Endless Mountain Broadcasting, Inc. to purchase substantially all of the
assets of radio stations WEMR (AM/FM) in Wilkes-Barre/Scranton, Pennsylvania for
$815,000. The purchase is subject to approval from the FCC.
On September 25, 1997, the Company acquired radio station KTHK in
Milton-Freewater, Oregon for a purchase price of $625,000.
On September 26, 1997, the Company entered into an asset purchase agreement
with S&P Broadcasting Limited Partnership I, S&P Broadcasting Limited
Partnership III and Swanson Holdings, Ltd. to purchase substantially all of the
assets of radio stations WSGD, WDLS and WCDL in Wilkes-Barre/Scranton,
Pennsylvania for $6,000,000. The purchase is subject to approval from the FCC.
On September 29, 1997, the Company acquired radio station WDGE and an
internet access business in Providence, Rhode Island for a purchase price of
$4,500,000. The Company also entered into a definitive agreement to purchase
radio station WDGF in Providence, Rhode Island for a purchase price of
$4,000,000.
On September 29, 1997, the Company entered into various agreements relating
to several transactions pursuant to which the Company has agreed to acquire (i)
all of the issued and outstanding capital stock of Pacific Northwest
Broadcasting Corporation, which owns radio stations KKGL, KQFC and KBOI in
Boise, Idaho, (ii) radio stations KIZN and KZMG in Boise and (iii) real estate
associated with station operations for the aggregate purchase price of
$28,500,000.
On September 29, 1997, the Company entered into an agreement with
Talleyrand Broadcasting, Inc. to sell substantially all of the assets of radio
stations WQKK and WGLU in Johnstown, Pennsylvania and radio stations WRSC, WQWK,
WBLF and WIKN in State College, Pennsylvania for $8,500,000.
F-24
<PAGE> 222
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Deschutes River Broadcasting, Inc.:
We have audited the accompanying consolidated balance sheets of Deschutes
River Broadcasting, Inc. and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Deschutes
River Broadcasting, Inc. and subsidiaries as of December 31, 1996 and 1995, and
the results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
Portland, Oregon
February 14, 1997
F-25
<PAGE> 223
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 823,968 $ --
Accounts receivable, less allowance for doubtful accounts of
$122,714 and $49,952 at December 31, 1996 and 1995,
respectively................................................. 1,856,984 1,283,847
Prepaid expenses and other current assets....................... 367,621 238,868
Current portion of note receivable.............................. 156,000 --
----------- -----------
Total current assets......................................... 3,204,573 1,522,715
Intangible assets, net (note 4)................................... 14,142,899 5,281,109
Long-term portion of note receivable.............................. 143,000 --
Property and equipment, net (notes 3 and 5)....................... 3,153,930 3,606,655
Deposits.......................................................... 3,026 6,542
----------- -----------
$20,647,428 $10,417,021
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft.................................................. -- 23,133
Line of credit (notes 7 and 13)................................. -- 418,168
Accounts payable................................................ 467,873 185,071
Accrued compensation and commissions............................ 542,502 313,734
Other accrued expenses.......................................... 147,985 128,510
Current portion of long-term debt (notes 7 and 13).............. -- 485,983
Accrued interest payable (notes 6, 12 and 13)................... 255,001 335,501
----------- -----------
Total current liabilities.................................... 1,413,361 1,890,100
Advance (note 13)................................................. 9,123,310 --
Note payable (notes 6 and 13)..................................... 8,867,000 --
Long-term debt, less current portion (notes 7 and 13)............. -- 2,886,033
Subordinated notes payable (notes 7, 12 and 13)................... -- 3,156,998
Other long-term liabilities....................................... 47,735 38,751
----------- -----------
Total liabilities....................................... 19,451,406 7,971,882
----------- -----------
Stockholders' equity (notes 9 and 13):
Convertible preferred stock, authorized 5,000,000 shares; issued
at stated value of $1 per share:
Series A preferred, no par value, issued and outstanding
643,000 shares.............................................. 643,000 643,000
Series B preferred, no par value, issued and outstanding
1,612,000 shares............................................ 1,612,000 1,612,000
Series C preferred, no par value, issued and outstanding
592,000 shares.............................................. 592,000 592,000
Series D preferred, no par value, issued and outstanding
95,000 shares............................................... 95,000 95,000
(Aggregate liquidation preference of $3,426,798 and
$3,172,962 at December 31, 1996 and 1995, respectively)
Common stock, authorized 10,000,000 shares; no par value;
1,096,902 and -0- shares issued and outstanding at December
31, 1996 and 1995, respectively.............................. 136,471 --
Accumulated deficit............................................. (1,882,449) (496,861)
----------- -----------
Total stockholders' equity.............................. 1,196,022 2,445,139
----------- -----------
Commitments and contingencies (notes 9, 10, 12 and 13)............ $20,647,428 $10,417,021
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-26
<PAGE> 224
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Revenues:
Net broadcasting revenues........................................ $ 8,843,074 $6,845,107
----------- ----------
Operating expenses:
Station operating expenses:
Selling, promoting, programming and engineering............... 5,554,632 4,053,145
General and administrative.................................... 1,780,584 1,297,835
Corporate general and administrative expenses.................... 488,831 374,158
Management fees (note 12)........................................ 215,938 171,128
Depreciation and amortization.................................... 1,173,349 765,200
----------- ---------
Income (loss) from operations............................ (370,260) 183,641
----------- ---------
Nonoperating income (expenses):
Interest expense (notes 12 and 13)............................... (1,143,893) (656,897)
Gain on sale of assets........................................... 97,097 --
Other, net....................................................... 30,162 1,591
Net trade income (expense)....................................... 1,306 (22,934)
----------- ---------
Nonoperating expenses, net............................... (1,015,328) (678,240)
----------- ---------
Loss before income taxes................................. (1,385,588) (494,599)
Income taxes (note 11)............................................. -- --
----------- ---------
Net loss................................................. $(1,385,588) $ (494,599)
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-27
<PAGE> 225
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK NOTE TOTAL
---------------------- --------------------- ACCUMULATED RECEIVABLE -- STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT DEFICIT OFFICER EQUITY
--------- ---------- --------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1994..................... 643,000 $ 643,000 102,000 $ 102,000 (2,262) (42,000) 700,738
Repayment of note
receivable -- officer... -- -- -- -- -- 42,000 42,000
Issuance of common
stock................. -- -- 95,000 95,000 -- -- 95,000
Conversion of common
stock to preferred
stock................. 197,000 197,000 (197,000) (197,000) -- -- --
Issuance of preferred
stock................. 2,102,000 2,102,000 -- -- -- -- 2,102,000
Net loss................. -- -- -- -- (494,599) -- (494,599)
--------- ---------- --------- --------- ---------- ------- ----------
Balance, December 31,
1995..................... 2,942,000 2,942,000 -- -- (496,861) -- 2,445,139
Issuance of common
stock................. -- -- 91,649 126,419 -- -- 126,419
Exercise of common stock
warrants.............. -- -- 1,005,253 10,052 -- -- 10,052
Net loss................. -- -- -- -- (1,385,588) -- (1,385,588)
--------- ---------- --------- --------- ---------- ------- ----------
Balance, December 31,
1996..................... 2,942,000 $2,942,000 1,096,902 $ 136,471 (1,882,449) -- 1,196,022
========= ========== ========= ========= ========== ======= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-28
<PAGE> 226
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................................. $(1,385,588) $ (494,599)
---------- ----------
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation.......................................................... 388,284 314,319
Amortization.......................................................... 785,065 450,881
Increase in allowance for doubtful accounts........................... 72,762 33,500
Gain on sale of assets................................................ (97,097) --
Changes in assets and liabilities, net of effect of acquisitions:
Increase in accounts receivable..................................... (645,898) (1,150,810)
Increase in prepaid expenses and other current assets............... (100,767) (86,257)
Increase in accounts payable and accrued expenses................... 315,973 414,911
Increase (decrease) in accrued interest payable..................... (59,287) 314,800
---------- ----------
Net cash used in operating activities............................ (726,553) (203,255)
---------- ----------
Cash flows from investing activities:
Proceeds from sale of assets............................................. 1,150,000 --
Capital expenditures for property and equipment.......................... (237,305) (171,177)
Capital expenditures for property and equipment related to
acquisitions.......................................................... (744,717) (2,898,359)
Purchase of intangible assets............................................ (9,532,047) (5,072,508)
Purchase of note receivable.............................................. (273,416) --
Other.................................................................... 2,340 11,454
---------- ----------
Net cash used in investing activities............................ (9,635,145) (8,130,590)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of note payable................................... 8,867,000 --
Proceeds from advance.................................................... 9,123,310 --
Increase (decrease) in bank overdraft.................................... (23,133) 22,992
Proceeds from note receivable -- officer................................. -- 42,000
Proceeds from issuance of long-term debt................................. -- 3,306,000
Principal payments on long-term debt..................................... (3,372,016) (284,649)
Proceeds from issuance of subordinated debt.............................. 2,600,000 2,710,998
Principal payments on subordinated debt.................................. (5,756,998) --
Net borrowings under line of credit...................................... (418,168) 315,719
Proceeds from exercise of common stock warrants.......................... 10,052 --
Proceeds from issuance of preferred stock................................ -- 2,197,000
Proceeds from issuance of common stock................................... 126,419 --
Increase in other long-term liabilities.................................. 29,200 23,785
---------- ----------
Net cash provided by financing activities........................ 11,185,666 8,333,845
---------- ----------
Net increase in cash and cash equivalents........................ 823,968 --
Cash and cash equivalents, beginning of year............................... -- --
---------- ----------
Cash and cash equivalents, end of year..................................... $ 823,968 $ --
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest................................... $ 1,244,393 $ 321,396
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-29
<PAGE> 227
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) NATURE OF BUSINESS AND ORGANIZATION
Deschutes River Broadcasting, Inc. was formed in 1994 and is a holding
company which wholly-owns eight subsidiaries located in Oregon, Washington and
Montana. The subsidiaries own and operate radio stations and hold Federal
Communications Commission (FCC) licenses.
The subsidiary companies which own and operate radio stations are Deschutes
River Broadcasting of Oregon, Inc., Deschutes River-Tri-Cities Operating
Company, Inc., Deschutes River Broadcasting of Billings, Inc. and Deschutes
River Broadcasting of Bozeman, Inc. The subsidiary companies which hold FCC
licenses are DRB Oregon License, Inc., Deschutes River-Tri-Cities Broadcasting,
Inc., DRB Billings License, Inc. and DRB Bozeman License, Inc.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All material intercompany items
and transactions have been eliminated in consolidation.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(c) Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable,
note receivable, accounts payable and other accrued expenses, accrued interest,
advance, note payable and the line of credit approximate fair value because of
the short-term or intercompany nature of these instruments.
Fair value estimates are made at a specific point in time, based on
relevant market information about the financial instrument. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
(d) Cash and Cash Equivalents
The Company considers all investments with a maturity of three months or
less at date of purchase to be a cash equivalent.
(e) Intangible Assets
Intangible assets are recorded at cost and amortized using the
straight-line method over the expected periods to be benefited, which range from
three to fifteen years. The Company assesses the recoverability of these
intangible assets by determining whether the balance can be recovered through
undiscounted future operating cash flows of the acquired asset. The amount of
asset impairment, if any, is measured based on
F-30
<PAGE> 228
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
projected discounted future operating cash flows using a discount rate
reflecting the Company's average cost of funds. The assessment of the
recoverability of the asset will be impacted if estimated future operating cash
flows are not achieved.
(f) Property and Equipment
Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated lives of the respective assets, which
range from five to twenty years. Maintenance and repairs are charged to
operations as incurred.
(g) Revenue
Net broadcast revenue is presented net of agency commissions and is
recognized when the advertisements are broadcast.
(h) Trade Transactions
Revenue from trade transactions (advertising provided in exchange for goods
and services) is recognized as income when advertisements are broadcast and
trade expense is recognized when merchandise is consumed or services are
performed. An asset and liability are recorded at the fair market value of the
goods or services received.
(i) Stock Option Plan
Prior to January 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees", and related interpretations.
As such, compensation expense would be recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation", which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income disclosure for
employee stock option grants as if the fair-value-based method defined in SFAS
No. 123 had been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions
of SFAS No. 123.
(j) Income Taxes
The Company accounts for taxes on the asset and liability method. Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Deferred income taxes are measured
using the enacted tax rates and laws that are anticipated to be in effect when
the differences are expected to reverse.
(k) Reclassifications
Certain 1995 amounts have been reclassified to conform with current year
presentation.
(3) ACQUISITIONS
During 1995, the Company acquired two stations in Medford, Oregon for
approximately $1.9 million and six stations in the Montana markets combined for
approximately $5.4 million.
F-31
<PAGE> 229
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 1996, the Company acquired ten new radio stations in various markets
and disposed of three stations in Bozeman, Montana. The acquisitions included
three stations in Eugene, Oregon, four stations in Medford, Oregon, two stations
in Billings, Montana and one station in Tri-Cities, Washington. The significant
acquisitions in Eugene and Medford, Oregon had total purchase prices of $7
million and $2 million, respectively. The remaining acquisitions and disposal
transaction included the transfer of a station valued at approximately $750,000
and did not result in significant net proceeds.
These acquisitions have been accounted for using the purchase method of
accounting and, accordingly, the purchase price has been allocated to the assets
purchased based upon the fair values at the date of acquisition. The excess of
the purchase price over the fair value of the assets acquired has been recorded
as goodwill and other identifiable intangibles. The consolidated financial
statements include the operating results of each business from the date of
acquisition. Pro forma unaudited consolidated operating results of the Company
and the acquired stations for the years ended December 31, 1996 and 1995,
assuming the acquisitions and dispositions had been made as of January 1, 1996
and 1995, are summarized below:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Net broadcasting revenues......................... $11,442,108 $11,316,910
Income (loss) from operations..................... (436,871) 423,053
Net loss.......................................... (2,215,299) (1,188,707)
</TABLE>
These pro forma results have been prepared for comparative purposes only
and include certain adjustments for operational expenses that the Company will
not incur in its operation of the stations, for interest expense that would have
been incurred to finance the purchases, additional depreciation expense based on
the fair market value of the property and equipment acquired, and the
amortization of intangibles arising from the transactions. The pro forma
financial information is not necessarily indicative of the results of operations
had the acquisitions and dispositions been consummated as of January 1, 1996 and
1995 or of future results of operations of the consolidated entities.
(4) INTANGIBLE ASSETS, NET
Intangible assets, net are as follows at December 31:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIFE 1996 1995
---------- ----------- ----------
<S> <C> <C> <C>
Goodwill................................. 15 years $ 5,037,425 $2,811,354
FCC licenses............................. 15 years 9,474,000 2,325,000
Covenants not to compete................. 3-5 years 456,000 295,000
Organizational costs..................... 5 years 252,970 255,319
Deferred financing costs................. Loan term -- 88,455
----------- ----------
15,220,395 5,775,128
Less accumulated amortization............ 1,077,496 494,019
----------- ----------
Intangible assets, net.............. $14,142,899 $5,281,109
=========== ==========
</TABLE>
F-32
<PAGE> 230
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) PROPERTY AND EQUIPMENT, NET
Property and equipment, net are as follows at December 31:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1996 1995
-------------- ---------- ----------
<S> <C> <C> <C>
Land................................. -- $ 312,764 $ 312,764
Buildings............................ 20 years 297,431 497,430
Leasehold improvements............... Life of lease 13,000 130,000
Tower and transmitter equipment...... 13 years 1,521,586 1,664,710
Vehicles............................. 5 years 28,724 13,260
Studio equipment..................... 7 years 1,153,715 1,089,163
Furniture and fixtures............... 5 - 7 years 352,179 236,859
---------- ----------
3,679,399 3,944,186
Less accumulated depreciation and
amortization....................... 525,469 337,531
---------- ----------
Property and equipment,
net...................... $3,153,930 $3,606,655
========== ==========
</TABLE>
(6) NOTE PAYABLE
During 1996, in contemplation of the merger discussed at note 13, the
Company obtained financing from Citadel Communications Corporation (CCC) in the
form of an $8.9 million note payable to assist in making current year
acquisitions (see note 3). The note bears interest at the higher of the Euro
dollar rate plus 300 basis points or 9% and is payable quarterly. Accrued
interest at December 31, 1996 was approximately $255,000. The note is secured by
the assets of the acquired stations and stock of the subsidiary corporations
that own the stations acquired with the note proceeds. The note payable was
required to be repaid by July 1, 1997 if the merger did not occur. On the date
of the merger, the note payable was reclassified as an intercompany liability,
therefore it is classified as a non-current liability at December 31, 1996.
(7) LINE OF CREDIT, LONG-TERM DEBT AND SUBORDINATED NOTES PAYABLE
At December 31, the Company had the following debt instruments outstanding:
<TABLE>
<CAPTION>
1996 1995
------ ----------
<S> <C> <C>
Line of credit, revolving; rate of prime plus 1.5%..... $ -- $ 418,168
Bank note payable; variable and fixed rates
of 8.5% to 10%....................................... -- 3,372,016
Subordinated notes payable; rate of 11%................ -- 3,156,998
------ ----------
---
Total........................................ $ -- $6,947,182
====== ==========
</TABLE>
Borrowings under the line of credit and bank note payable were
collateralized by substantially all assets of the Company, excluding assets
discussed in note 6.
In contemplation of the merger discussed at note 13, all debt instruments
were paid off on December 31, 1996. As the instruments were paid off by December
31, 1996, the Company did not have to comply with any financial covenants at or
for the year then ended.
F-33
<PAGE> 231
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(8) LEASES
The Company and its subsidiaries are obligated under certain noncancelable
operating leases for which future minimum payments are as follows:
<TABLE>
<S> <C>
Year ending December 31:
1997........................................................... $ 309,542
1998........................................................... 243,062
1999........................................................... 207,604
2000........................................................... 189,175
2001........................................................... 176,279
Subsequent to 2001............................................. 379,705
----------
$1,505,367
==========
</TABLE>
Rental expense, principally for office space, equipment and tower rentals,
amounted to $278,000 and $145,000 for the years ended December 31, 1996 and
1995.
(9) STOCKHOLDERS' EQUITY
Conversion of Stock at Time of Merger
As discussed in note 13, all equity instruments of the Company; preferred
stock, common stock and stock options, were converted into CCC equity
instruments on January 1, 1997, the merger date.
Convertible Preferred Stock
Each share of Deschutes River Broadcasting Series A, B, C and D preferred
stock is convertible at any time into common stock on a one-for-one basis
(subject to certain adjustments). Conversion of each series of preferred stock
is automatic upon the exchange of 51% or more of each series of preferred stock
into common stock.
Dividends are payable when and as declared by the Board of Directors and
are not cumulative. Dividends must be first paid on preferred stock before
amounts are paid on common stock. No dividends were declared or paid during 1996
or 1995.
Upon liquidation, dissolution, or winding up of the Company, holders of
convertible preferred stock have preference and priority over common shares for
payment out of the assets of the Company or proceeds thereof available for
distribution to stockholders of $1 per share plus a liquidation preference,
which accrues at an annual compounded rate of 8%.
Common Stock
At December 31, 1996 and 1995, the Company had reserved shares of common
stock for issuance as follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Conversion of preferred stock....................... 2,942,000 2,942,000
Issuance of warrants................................ -- 1,005,253
Issuance to employees, officers, directors and
consultants under stock incentive plan............ 708,843 708,843
--------- ---------
3,650,843 4,656,096
========= =========
</TABLE>
F-34
<PAGE> 232
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock Incentive Plan
During 1995, the Company adopted a Stock Incentive Plan (the Plan) for
selected employees, officers, directors and consultants. Under the terms of the
Plan, the option price is determined by the Board of Directors (the Board) at
the time the option is granted. The options generally expire ten years from date
of grant and are exercisable as determined by the Board. At December 31, 1995,
no shares had been granted under the Plan.
During 1996, the Company granted 246,569 options at $.60 and 332,926
options at $2.10. None of the options were exercised during the current year.
The options generally are either 100% vested at the time of grant or become 100%
vested at the time of a merger (see note 13). At December 31, 1996, 579,495
options were outstanding at a weighted average exercise price of $1.46, of which
238,095 options with an exercise price of $2.10 were exercisable.
During 1995, the Financial Accounting Standards Board issued "Accounting
for Stock-Based Compensation" (SFAS 123) which defines a fair value based method
of accounting for an employee stock option and similar equity instruments.
As permitted under SFAS 123, the Company has elected to continue to account
for its stock-based compensation plans under APB Opinion No. 25. The Company has
computed, for pro forma disclosure purposes, the value of all options granted
during 1996 using the minimum value method as prescribed by SFAS 123 using the
following assumptions for grants:
<TABLE>
<S> <C>
Risk-free interest rate..................... 6.04%
Expected dividend yield..................... 0%
Expected lives.............................. 5 years
</TABLE>
Using the minimum value methodology, the total value of options granted
during 1996 was $223,000 which would be amortized on a pro forma basis over the
vesting period of the options (one to five years). The weighted average fair
value per share of options granted during 1996 was $.38. If the Company had
accounted for its stock-based compensation plans in accordance with SFAS 123,
the Company's net loss would approximate the pro forma disclosure below for the
year ended December 31, 1996:
<TABLE>
<CAPTION>
AS PRO
REPORTED FORMA
---------- ----------
<S> <C> <C>
Net loss.................................. $1,385,588 $1,534,861
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure is not
indicative of future amounts.
Warrants
During 1995, the Company granted 1,005,253 warrants to purchase common
stock to subordinated debt holders at a price of $.01. All warrants granted in
1995 were exercised in 1996 for 1,005,253 shares of common stock. Management
determined that the value associated with these warrants at the date of grant
was not material.
During 1996, the Company granted 290,381 warrants to purchase common stock
to subordinated debt holders at a price of $.01. The warrants were to become
exercisable on January 1, 1997 if the warrant holders' portion of the
subordinated debt was not repaid by December 31, 1996. Due to the contingent
nature of these warrants, no value was assigned at the grant date. These
warrants expired on December 31, 1996, when the subordinated debt was repaid
(see notes 7 and 13).
F-35
<PAGE> 233
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(10) SALARY SAVINGS AND RETIREMENT PLAN
The Company has a salary savings and retirement plan. The plan covers
primarily all officers and employees of the Company who meet prescribed age and
service requirements. Employees may contribute up to 15% of their compensation.
Matching contributions are determined at the discretion of the Board of
Directors. There were no Company contributions made to the plan during the years
ended December 31, 1996 or 1995.
(11) INCOME TAXES
No income tax benefit was recorded by the Company in 1996 and 1995. Income
tax benefit for the year ended December 31, 1996 differed from the amounts
computed by applying the U.S. Federal income tax rate of 34% to pretax income
primarily due to an increase in the valuation allowance.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1996 and 1995 are presented below:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets:
Federal and state net operating loss carryforwards........... $912,219 $246,553
Allowance for doubtful accounts.............................. 48,983 19,160
Payroll accrual.............................................. 2,100 21,403
-------- --------
Total gross deferred tax assets...................... 963,302 287,116
Less valuation allowance..................................... 735,645 190,338
-------- --------
Net deferred tax assets.............................. 227,657 96,778
-------- --------
Deferred tax liabilities:
Book versus tax basis accumulated depreciation............... 227,657 96,778
-------- --------
Total gross deferred tax liabilities................. 227,657 96,778
-------- --------
Net deferred tax asset............................... $ -- $ --
======== ========
</TABLE>
As of December 31, 1996, the Company had a consolidated net operating loss
carryforward of approximately $2,280,000 for consolidated federal income tax
reporting purposes available to offset future taxable income through the year
2011. Based on the Company's history of operating losses, the more likely than
not criteria for recognizing the tax benefit primarily associated with the net
operating losses cannot be met and, therefore, the Company has recorded a
valuation allowance to the extent of net deferred tax assets.
(12) RELATED PARTY TRANSACTIONS
The preferred stockholders are considered related parties of the Company.
At December 31, 1995, the Company had approximately $3.2 million in notes
payable to subordinated debt holders and $308,000 in accrued interest payable.
During 1996, the Company borrowed an additional $2.6 million in subordinated
debt from the preferred stockholders. Interest expense on the subordinated debt
for fiscal 1996 and 1995 was $548,000 and $308,000, respectively.
One of the preferred stockholders provides certain management services to
the Company. Management fees accrued at December 31, 1996 and 1995 were
approximately $48,000 and $21,000 and expense for the years then ended was
approximately $216,000 and $171,000, respectively.
F-36
<PAGE> 234
DESCHUTES RIVER BROADCASTING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As part of the merger discussed in note 13, all subordinated debt and
accrued interest was repaid and management services will no longer be provided
to the Company.
(13) SUBSEQUENT EVENTS
The Company was merged with and into a wholly-owned subsidiary of CCC
effective 12:01 a.m. on January 1, 1997. Effective with the merger, the Company
(and its wholly-owned subsidiaries) ceased to exist. All of the Company's equity
instruments, preferred stock, common stock and stock options, existing at
December 31, 1996, were converted into CCC equity instruments at the conversion
multiple defined in the merger agreement, at a per share conversion rate of
.1222948. All options outstanding at December 31, 1996 became fully vested at
the time of the merger. To effectuate the merger, CCC made an advance to the
Company of approximately $9.1 million on December 31, 1996 to pay off
subordinated debt, line of credit, long-term debt and other accrued expenses of
the Company. The advance is considered a non-current liability at December 31,
1996 as the obligation was reclassified as an intercompany liability on the date
of the merger.
F-37
<PAGE> 235
DELOITTE &
TOUCHE LLP
[LOGO]
---------------------------------------------
2500 One PPG Place Telephone: (412)
338-7200
Pittsburgh,
Pennsylvania 15222-5401
Facsimile: (412)
338-7380
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Tele-Media Broadcasting Company:
We have audited the accompanying consolidated balance sheets of Tele-Media
Broadcasting Company and its partnership interests (collectively, the
"Companies" -- see Note 1) as of December 31, 1995 and 1996, and the related
consolidated statements of operations, deficiency in net assets and cash flows
for each of the three years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Companies as of December
31, 1995 and 1996, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
As discussed in Note 4 to the consolidated financial statements, at
December 31, 1996, the Companies were not in compliance with the terms of a debt
agreement.
/s/ DELOITTE & TOUCHE LLP
March 28, 1997
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
F-38
<PAGE> 236
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 1,904,258 $ 2,343,395
Accounts receivable:
Nonbarter -- less allowance for doubtful accounts of $531,000
and $612,000................................................ 4,599,032 5,262,484
Barter -- net................................................... 363,394 304,244
Other current assets............................................ 157,998 739,831
----------- -----------
Total current assets......................................... 7,024,682 8,649,954
----------- -----------
Property, plant and equipment:
Land............................................................ 1,372,571 1,372,571
Buildings and improvements...................................... 2,357,447 2,369,520
Broadcasting equipment.......................................... 10,653,182 11,169,533
----------- -----------
14,383,200 14,911,624
Less accumulated depreciation................................... 6,916,068 8,259,285
----------- -----------
Property, plant and equipment -- net......................... 7,467,132 6,652,339
----------- -----------
Intangibles -- Net of accumulated amortization.................... 29,036,404 26,904,288
----------- -----------
Other noncurrent assets........................................... 95,641 16,331
----------- -----------
$43,623,859 $42,222,912
=========== ===========
LIABILITIES AND DEFICIENCY IN NET ASSETS
Current liabilities:
Accounts payable and other accrued expenses..................... $ 1,466,387 $ 2,019,269
Accrued interest................................................ 999,880 1,895,889
Accrued sales commissions....................................... 330,561 358,513
Amounts due to affiliates -- net................................ 2,057,456 2,818,179
Current portion of long-term debt............................... 3,106,208 37,528,396
----------- -----------
Total current liabilities.................................... 7,960,492 44,620,246
----------- -----------
Long-term liabilities:
Long-term debt -- less current portion.......................... 64,417,869 32,382,419
Other........................................................... 32,772 31,266
----------- -----------
Total long-term liabilities.................................. 64,450,641 32,413,685
----------- -----------
Redeemable stock warrants......................................... 750,950 1,644,000
----------- -----------
Deficiency in net assets:
Common stock, voting, $0.01 par value per share; 25,000 shares
authorized, 15,000 shares outstanding........................ 150 150
Common stock, nonvoting, $0.01 par value per share; 10,000
shares authorized, none outstanding.......................... -- --
Additional paid-in capital...................................... 6,924,445 6,924,445
Deficit......................................................... (36,462,819) (43,379,614)
----------- -----------
Deficiency in net assets..................................... (29,538,224) (36,455,019)
----------- -----------
$43,623,859 $42,222,912
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-39
<PAGE> 237
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Local advertising................................. $17,637,256 $18,539,201 $20,968,055
National advertising.............................. 4,867,471 4,957,359 4,618,104
Barter............................................ 3,561,009 3,646,290 3,451,849
Other............................................. 576,607 511,827 370,932
----------- ----------- -----------
26,642,343 27,654,677 29,408,940
Less agency commissions........................... 2,648,183 2,811,738 2,984,574
----------- ----------- -----------
Net revenues.............................. 23,994,160 24,842,939 26,424,366
----------- ----------- -----------
Selling, general and administrative, programming,
barter and technical expenses:
Selling........................................ 4,719,103 5,154,097 5,001,176
General and administrative..................... 3,552,604 4,088,306 4,674,883
Programming.................................... 3,882,737 4,391,676 4,858,386
Barter......................................... 3,485,969 3,520,426 3,513,231
Technical...................................... 176,459 224,975 245,524
----------- ----------- -----------
15,816,872 17,379,480 18,293,200
----------- ----------- -----------
Operating income before management fees and
depreciation and amortization..................... 8,177,288 7,463,459 8,131,166
----------- ----------- -----------
Management fees and depreciation and amortization:
Management fees -- affiliates..................... 844,579 741,876 804,410
Depreciation and amortization..................... 4,690,730 3,708,809 3,493,509
----------- ----------- -----------
5,535,309 4,450,685 4,297,919
----------- ----------- -----------
Operating income.................................... 2,641,979 3,012,774 3,833,247
Interest expense.................................... 6,093,333 9,132,133 10,750,042
----------- ----------- -----------
Loss before extraordinary item...................... (3,451,354) (6,119,359) (6,916,795)
Extraordinary item -- Loss on extinguishment of
debt.............................................. (1,341,348) -- --
----------- ----------- -----------
Net loss.................................. $(4,792,702) $(6,119,359) $(6,916,795)
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-40
<PAGE> 238
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
CONSOLIDATED STATEMENTS OF DEFICIENCY IN NET ASSETS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------- PAID-IN
SHARES AMOUNT CAPITAL DEFICIT
------ ------ ---------- ------------
<S> <C> <C> <C> <C>
Balance, January 1, 1994................................ 2,000 $ 20 $7,125,383 $(25,550,758)
Stock dividend........................................ 13,000 130 (130) --
Capital contributions -- cash......................... -- -- 1,000 --
Distributions......................................... -- -- (400,000) --
Contribution of management fees -- affiliates......... -- -- 198,192 --
Net loss.............................................. -- -- -- (4,792,702)
------ ---- ---------- ------------
Balance, December 31, 1994.............................. 15,000 150 6,924,445 (30,343,460)
Net loss.............................................. -- -- -- (6,119,359)
------ ---- ---------- ------------
Balance, December 31, 1995.............................. 15,000 150 6,924,445 (36,462,819)
Net loss.............................................. -- -- -- (6,916,795)
------ ---- ---------- ------------
Balance, December 31, 1996.............................. 15,000 $150 $6,924,445 $(43,379,614)
====== ==== ========== ============
</TABLE>
See notes to consolidated financial statements.
F-41
<PAGE> 239
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss................................................... $(4,792,702) $(6,119,359) $(6,916,795)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization........................... 4,690,730 3,708,809 3,493,509
Interest deferral....................................... 1,343,351 5,114,170 4,932,565
Amortization of loan origination fees................... -- 311,916 300,795
Management fees -- affiliates........................... 198,192 741,876 804,410
Provision for losses on accounts receivable............. 376,732 367,522 387,291
Loss on write-off of intangible assets.................. 159,431 -- --
Net barter transactions................................. (75,040) (125,864) 61,382
Increase in fair value of redeemable stock warrants..... -- -- 893,050
Other................................................... 90,867 (36,420) (78,760)
Changes in operating assets and liabilities:
Accounts receivable -- nonbarter...................... (437,520) (938,846) (1,050,743)
Other current assets.................................. (249,489) 233,807 (581,833)
Accounts payable and other accrued expenses........... (96,561) 281,957 552,882
Affiliates activity -- net............................ 1,148,600 (407,409) (43,687)
Accrued interest...................................... 35,113 136,081 896,009
Accrued sales commissions............................. (38,885) (6,891) 27,952
---------- ---------- ----------
Net cash provided by operating activities.......... 2,352,819 3,261,349 3,678,027
---------- ---------- ----------
Cash flows from investing activities:
Capital expenditures....................................... (428,423) (520,440) (468,631)
Purchase of radio stations................................. (1,900,000) (5,100,000) (65,000)
Other...................................................... (4,809) 6,124 6,000
---------- ---------- ----------
Net cash used in investing activities.............. (2,333,232) (5,614,316) (527,631)
---------- ---------- ----------
Cash flows from financing activities:
Capital contributions...................................... 1,000 -- --
Borrowings................................................. 61,334,446 5,433,347 95,144
Payments of long-term debt................................. (57,323,706) (2,932,546) (2,640,971)
Loan origination fees and other intangible assets.......... (2,668,295) (271,271) (163,764)
Sale of redeemable stock warrants.......................... 750,950 -- --
Distributions to stockholders.............................. (400,000) -- --
Other...................................................... (12,180) (2,178) (1,668)
---------- ---------- ----------
Net cash provided by (used in) financing
activities....................................... 1,682,215 2,227,352 (2,711,259)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents......... 1,701,802 (125,615) 439,137
Cash and cash equivalents, beginning of year................. 328,071 2,029,873 1,904,258
---------- ---------- ----------
Cash and cash equivalents, end of year....................... $ 2,029,873 $ 1,904,258 $ 2,343,395
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-42
<PAGE> 240
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
1. BASIS OF PRESENTATION AND BUSINESS
Tele-Media Broadcasting Company (the "Company" or "TMBC") was incorporated
in 1988 under the name TMZ Broadcasting Company ("TMZ"). In April 1994, TMZ
changed its name to Tele-Media Broadcasting Company. Robert E. Tudek and Everett
I. Mundy each own 50% of the outstanding shares of TMBC. TMBC operates radio
stations principally in midsize markets in the eastern United States and in
Illinois.
In May 1989, TMZ acquired all of the outstanding common stock of Eastern
Broadcasting Company ("Eastern") and its wholly-owned subsidiaries: Lehigh
Valley Broadcasting ("Lehigh"), Penn Broadcasting Corporation ("Hershey"),
Providence Broadcasting Corporation ("Providence"), Quincy Communications
Corporation ("Quincy") and State College Communications Corporation ("State
College"). TMZ retained the assets acquired from State College and contributed
the assets acquired from the remaining subsidiaries of Eastern to limited
partnerships with the same names which TMZ had formed to facilitate the
acquisition. TMZ owned between a 95% and 99% general partnership interest in
each of the limited partnerships. With the exception of Quincy, the limited
partnership interests were owned by the shareholders of TMZ and employees of the
Companies (hereinafter defined). The limited partnership interest in Quincy (1%)
was owned by Tele-Media Holding Corporation ("Holding"), which is owned by
Messrs. Tudek and Mundy.
In April 1993, Messrs. Tudek and Mundy formed Tele-Media Broadcasting
Company of America ("America Corporation"), which purchased substantially all of
the assets of two radio stations in Rhode Island, WPRO(AM) and WPRO-FM, for
approximately $6 million, and in May 1993 formed Tele-Media Broadcasting Company
of Johnstown/Altoona ("Johnstown/Altoona Corporation"), which purchased all of
the common stock of Cambria County Broadcasting Company ("CCBC"). CCBC operated
radio station WIYQ(FM). Simultaneous with the purchase, CCBC was merged into
Johnstown/Altoona Corporation with Johnstown/Altoona Corporation being the
surviving corporation. WIYQ(FM)'s call letters were subsequently changed to
WQKK-FM.
In April 1994, Tele-Media Broadcasting Company of Cambria County ("Cambria
County Corporation") was formed by the shareholders of TMBC. Cambria County
Corporation purchased substantially all of the assets of a radio station,
WGLU(FM), in the Johnstown, PA market for approximately $1.9 million.
In June 1994, the companies were restructured in order to facilitate a
refinancing (see Note 4). In order to accomplish the restructuring, Tele-Media
Broadcasting Operating Company Limited Partnership ("Tele-Media Operating") was
formed by TMBC. Holding distributed its 1% limited partnership interest in
Quincy to the shareholders of TMBC. TMBC contributed its general partnership
interests in Lehigh, Hershey, Providence and Quincy to Tele-Media Operating. The
shareholders of TMBC contributed all of their limited partnership interests in
Lehigh, Hershey and Quincy to TMBC. TMBC contributed all of its limited
partnership interest in Lehigh and all but 1% of its limited partnership
interest in Hershey and Quincy to Tele-Media Operating. These limited
partnership interests were, by virtue of an amendment to the respective
partnership agreements, converted into general partnership interests. Tele-Media
Broadcasting Company of America Limited Partnership ("America LP"), Tele-Media
Broadcasting Company of Johnstown/Altoona Limited Partnership
("Johnstown/Altoona LP"), Tele-Media Broadcasting Company of State College
Limited Partnership ("State College LP") and Tele-Media Broadcasting Company of
Cambria County Limited Partnership ("Cambria County LP") were formed by
Tele-Media Operating, and America Corporation, Johnstown/Altoona Corporation and
Cambria County Corporation were merged with and into TMBC and the assets were
then contributed to Tele-Media Operating which in turn conveyed them to the
limited partnerships by the same names. TMBC then transferred all of the assets
acquired in the State College acquisition to Tele-Media Operating which in turn
conveyed them to State College LP.
F-43
<PAGE> 241
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
After the restructuring, TMBC owned a 99% general partnership interest in
Tele-Media Operating, and Tele-Media Operating owned between a 95% and 99%
general partnership interest in the following limited partnerships: Lehigh,
Hershey, Providence, Quincy, State College LP, America LP, Johnstown/Altoona LP
and Cambria County LP (collectively, the "Companies").
In March 1995, Quincy purchased substantially all of the assets of WZLZ-FM
for approximately $367,000 and the call letters were subsequently changed to
WMOS-FM. This acquisition was financed primarily with unsecured seller debt.
During 1994, Tele-Media Operating formed Tele-Media Broadcasting Company of
York Limited Partnership ("York LP"), of which Tele-Media Operating is 99%
general partner and TMBC is 1% limited partner. On May 1, 1995, the Companies
entered into Local Marketing Agreements ("LMAs") to operate WQXA-AM, WQXA-FM and
WIKN-FM. In November 1995, York LP acquired substantially all the assets of
WQXA-AM and WQXA-FM for approximately $5 million. This acquisition was financed
with additional borrowings under the Amended Loan Agreement (see Note 4).
On August 1, 1996, the Companies entered into an LMA to operate WBLF-AM. In
October 1996, State College LP acquired substantially all the assets of WBLF-AM
for approximately $215,000 (including forgiveness of a note receivable from the
seller and cash paid of $65,000).
During 1996, Tele-Media Operating formed Tele-Media Broadcasting Company of
Wilkes Barre/Scranton Limited Partnership ("Wilkes Barre LP") of which
Tele-Media Operating is 99% general partner and TMBC is 1% limited partner. On
August 1, 1996 Wilkes Barre LP entered into an asset purchase agreement to
acquire WAZL-AM and WZMT-FM and entered into an LMA to operate the stations. On
December 1, 1996, TMBC entered into an asset purchase agreement to acquire
WARM-AM and WMGS-FM along with the rights to purchase options for WBHT-FM,
WKQV-FM and WKQV-AM, all of which are located in the Wilkes-Barre market, and
which were being operated under LMAs and Joint Sales Agreements ("JSA's").
Subsequent to December 31, 1996, the Company consummated the acquisition of the
assets of WAZL-AM and WZMT-FM for approximately $3.5 million, which was financed
with borrowings under the Amended Loan Agreement. The Company expects to
consummate the acquisition of the assets of WARM-AM and WMGS-FM in 1997 for
approximately $11 million to be financed through additional borrowings under the
Amended Loan Agreement. The Company has made a nonrefundable escrow deposit of
$550,000 related to this acquisition. The escrow deposit is included in other
current assets and will be a reduction of the purchase price or, in the event
the acquisition is not consummated, paid to the seller.
The accompanying consolidated financial statements include the accounts of
TMBC and its partnership interests, including the acquisition of businesses from
their respective dates of purchase. All of the aforementioned acquisitions were
accounted for under the purchase method, and as such, the purchase price is
allocated among the assets and liabilities purchased based on their relative
fair market values at the date of acquisition. All material intercompany
transactions and balances have been eliminated in the consolidated financial
statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Cash and Cash Equivalents -- For purposes of the consolidated statements
of cash flows, the Companies consider highly liquid investments with original
maturities of three months or less to be cash equivalents.
b. Property, Plant and Equipment -- Property, plant and equipment, carried
at cost, is depreciated over the estimated useful lives of the related assets,
principally five to ten years. Depreciation is computed on the straight-line
method for financial statement purposes and on accelerated methods for federal
income tax
F-44
<PAGE> 242
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
purposes. Depreciation expense totaled $1,446,000, $1,499,000 and $1,358,000 for
the years ended December 31, 1994, 1995 and 1996, respectively.
c. Intangibles -- Broadcast licenses are amortized over 20 years. Loan
origination fees and non-compete agreements are amortized over the terms of the
related agreements, and organization costs are amortized over five years. The
Companies write-off these assets and related accumulated amortization when the
assets become fully amortized.
d. Impairment of Long-Lived Assets -- Management of the Companies reviews
long-lived assets (including property, plant and equipment and intangibles) for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Management considers the
undiscounted cash flow expected to be generated by the use of the asset and its
eventual disposition to determine when, and if, an impairment has occurred. Any
write-downs due to impairment are charged to operations at the time the
impairment is identified. During the year ended December 31, 1994, the Company
wrote-off loan origination fees with a net carrying value of approximately
$159,000 due to a refinancing of the debt. There were no such write-downs
required in 1995 or 1996.
e. Income Taxes -- No provision for income taxes has been made for the
taxable income of the partnerships included in the consolidated financial
statements as income taxes are the responsibility of the partners. TMBC has
Subchapter S status for federal income tax purposes and, therefore, the
shareholders, rather than the Company, have the responsibility for federal
income taxes and for state income taxes in those states that recognize the
equivalent of Subchapter S status.
f. Revenue Recognition -- Revenue is recognized as commercials are
broadcast. The Companies also enter into barter transactions in which
advertising time is traded for merchandise or services used principally for
promotional and other business purposes. Barter revenue is recorded as
commercials are broadcast at the estimated fair value of the air time. If
merchandise or services are received prior to the broadcast of commercials,
recognition of the related revenue is deferred and recognized as the commercials
are broadcast.
g. Reclassifications -- Certain reclassifications have been made to the
1994 and 1995 consolidated financial statements in order to conform to the 1996
presentation.
h. Use of Estimates in Preparation of the Consolidated Financial
Statements -- The preparation of these consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of assets and
liabilities as of the date of the consolidated financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
i. Local Marketing Agreements and Joint Sales Agreements -- The Companies
use property, plant and equipment of the radio stations operated under LMAs and
JSAs in exchange for a fee. Under provisions of the Company's LMAs and JSAs, the
expenses of operating the stations (other than depreciation or amortization of
assets) are the obligations of the Companies, and they are entitled to the
revenues generated by the stations. Revenues and expenses related to these
agreements are reflected in the consolidated statements of operations. The
Companies have recorded fees in respect to these agreements of $63,750 for the
year ended December 31, 1996 within general and administrative expenses on the
consolidated statement of operations. No such costs were incurred in 1994 or
1995.
F-45
<PAGE> 243
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. INTANGIBLES
Intangibles consist of the following:
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Broadcast licenses................................ $36,389,881 $36,440,231
Non-compete agreements............................ 1,487,500 265,000
Loan origination fees............................. 2,854,888 2,937,340
Organization costs................................ 250,387 284,633
----------- -----------
40,982,656 39,927,204
Less accumulated amortization..................... 11,946,252 13,022,916
----------- -----------
$29,036,404 $26,904,288
=========== ===========
</TABLE>
4. LONG-TERM DEBT AND REDEEMABLE STOCK WARRANTS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Senior:
Borrowings under Amended Loan Agreement....... $36,383,700 $33,935,700
Discount Notes................................ 30,698,371 35,630,986
Other........................................... 442,006 344,129
----------- -----------
67,524,077 69,910,815
Less current portion............................ 3,106,208 37,528,396
----------- -----------
$64,417,869 $32,382,419
=========== ===========
</TABLE>
The significant provisions of the Amended and Restated Loan Agreement dated
February 26, 1997 (the "Amended Loan Agreement"), Senior Discount Notes (the
"Notes"), and the Redeemable Stock Warrants (the "Warrants") are discussed
below. The debt arrangements discussed in the preceding sentence were entered
into in connection with a refinancing in June 1994 of substantially all of the
debt then outstanding, resulting in an extraordinary loss on the extinguishment
thereof of approximately $1,341,000 during the year ended December 31, 1994.
AMENDED LOAN AGREEMENT
The Amended Loan Agreement permits borrowings of up to approximately $49
million. The remaining permitted borrowings under the Amended Loan Agreement
($16 million at February 26, 1997) were provided to finance the 1997 planned
acquisitions described in Note 1. The Amended Loan Agreement modified principal
and interest payments, and certain financial covenants and requires the payment
of additional fees to the Lender of $250,000 in 1997 and 1998 in the event of a
failure to meet the leverage covenant in either year. Prior to the amendment on
February 26, 1997, and at December 31, 1996, the Companies were not in
compliance with the provisions of the loan agreement then in effect.
Principal is payable in quarterly installments with any remaining principal
due April 1999. The Lender has the option to require the Companies to make an
additional principal payment of up to approximately $8.9 million in 1997 and
$21.4 million in 1998. Prior to the date of the Amended Loan Agreement, interest
was payable quarterly at the prime rate plus 2%, or at the Companies' option,
LIBOR plus 4.75%. At December 31, 1996, the interest rate was 10.25% (prime plus
2%). The Amended Loan Agreement requires interest payments quarterly. Interest
under the Amended Loan Agreement is charged at the prime rate plus
F-46
<PAGE> 244
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2%, or at the Companies' option, LIBOR plus 4.5%, on borrowings up to
approximately $44 million; interest on the next $5 million borrowed will be
charged at the prime rate plus 3.75%. The Amended Loan Agreement requires the
Companies to enter into a two year interest hedge contract on or before
September 30, 1997 in a notional amount not less than $25 million, providing
protection should the prime rate exceed the prime rate at the date the interest
hedge contract is entered into by 2.5%. A penalty of between 2% and 4% is
assessed on any principal prepayment.
Borrowings under the Amended Loan Agreement are collateralized by
substantially all of the assets and partnership interests of Tele-Media
Operating and its partnerships. The Amended Loan Agreement provides for, among
other things, limitations on distributions, indebtedness, mergers, sale and
purchase of assets, capital expenditures, payment of management fees and payment
of interest on the Notes, and requires the achievement of certain minimum cash
flow amounts.
SENIOR DISCOUNT NOTES
The Notes are due June 15, 2004 and were issued with an original issue
discount based on an interest rate of 16%. TMBC did not make interest payments
on the Notes due June 15, 1995, December 15, 1995 and June 15, 1996 and did not
consummate the Exchange Offer by the date as set forth in the original
Registration Rights Agreement (as defined below). Consequently, TMBC and the
Note holders amended the existing agreements to convert the amount of cash
interest payments then due ($2,509,000) plus penalties of approximately
$1,260,000 to notes payable and, in consideration of the conversion, the Note
holders waived TMBC's default. Under the terms of the Note Agreement, as amended
to include the notes issued in 1995 and 1996, interest of approximately $920,000
is payable semi-annually through June 15, 1999, and the remainder of the
interest is deferred and added to principal. After June 15, 1999, semi-annual
interest payments will be made at an annual rate of 16% of the accreted value of
the Notes. The accreted value of the Notes will approximate $47,811,000 at June
15, 1999.
TMBC did not make the required interest payment of $920,585 on the Notes
which was due on December 15, 1996, and consequently it is in default of the
Note Agreement. The holders of the Notes have the right to require immediate
payment of all amounts due under the Note Agreement. The total amount due under
the Note Agreement at December 31, 1996, which is classified as a current
obligation, was $35,630,986. The shareholders of TMBC have negotiated an
agreement to sell their stock in the Company. As part of the transaction, the
holders of the Notes will be paid an amount sufficient to satisfy all
outstanding claims against TMBC, including settlement of claims relating to the
redeemable stock warrants discussed below (see Note 6). In the event the sale is
not consummated, TMBC plans to enter into discussions with the Note holders to
convert the delinquent amount, plus any penalties, into a note payable. If the
Note holders refuse to agree to the conversion or another acceptable
alternative, TMBC intends to search for replacement financing.
Payment under the Notes is restricted by the Amended Loan Agreement.
Redemption of the Notes prior to their scheduled maturity is subject to
prepayment premiums. If a Qualified Public Offering is consummated by June 15,
1999, the Notes may be redeemed at TMBC's option for between 110% to 120% of the
Accreted Value of the Notes. After June 15, 1999, the Notes may be redeemed at
TMBC's option for $47,811,000 plus a premium of up to 8%, which declines ratably
through the date of maturity. In addition, if a Change of Control occurs, the
Note holders have the option to require TMBC to repurchase the Notes at 101% of
the Accreted Value.
The Notes are unsecured and restrict, among other things, the declaration
or payment of any dividends or any other distributions to shareholders, the
incurrence of additional debt, transactions with affiliates, payment of
management fees, formation of additional subsidiaries, mergers, sales of assets
and capital expenditures. Pursuant to a Registration Rights Agreement between
TMBC and the Purchasers, TMBC filed an Exchange Offer Registration Statement
(the "Registration Statement") with the Securities and Exchange Commission
F-47
<PAGE> 245
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
on September 19, 1994. Under the terms of the Exchange Offer the holders of the
Notes may exchange the Old Notes for New Notes with identical terms, except that
the New Notes may be offered for resale, be resold or otherwise transferred,
under certain conditions by the holders without compliance with the registration
and prospectus delivery provisions of the Securities Act of 1933. Pursuant to
the terms of the Registration Rights Agreement, as amended, if the Registration
Statement does not become effective by May 1, 1997, additional interest of 1%
per annum will be charged from May 1, 1997 through December 1, 1997 and increase
.5% each six months thereafter, not to exceed an aggregate of 5% based on the
Accreted Value of the Notes until the Registration Statement becomes effective.
REDEEMABLE STOCK WARRANTS
The Warrants are exercisable at no additional cost to the Note holders for
between 3,750 and 5,290 shares of non-voting common stock representing 20% to
26% of the equity of TMBC, based on the achievement of certain levels of
Operating Cash Flow. The Warrant agreement provides registration rights to the
holders and restricts, among other things, the incurrence of additional debt,
payment of management fees, formation of additional subsidiaries, mergers, sale
of assets and distributions to stockholders. In addition, the Warrant holders
have put rights during the period from January 1, 2000 through March 31, 2000 or
upon a Change of Control, to require TMBC to redeem the Warrants for cash at
fair value.
The Warrants expire June 9, 2004 and are exercisable at any time on or
after January 1, 2000, or upon the occurrence of any of the following: the
conversion of TMBC to a Subchapter C corporation for federal income tax
purposes; an Initial Public Offering; a merger where TMBC is not the surviving
entity; a sale, lease, transfer or other disposition of all or substantially all
of the assets of TMBC or its subsidiaries; a liquidation or dissolution of TMBC;
or if Messrs. Tudek and Mundy own less than 50% of TMBC or a successor company.
Holders of the non-voting common stock will enter into a Registration
Rights Agreement providing them with unlimited piggy-back registration rights
and the right to participate in any Initial Public Offering. The non-voting
stock is convertible into voting common stock in connection with the sale of
shares in a public offering, in a brokers' transaction pursuant to Rule 144
under the Securities Act of 1933, and if, after conversion, the shareholder
would own 4.9% or less of the common stock. TMBC has reserved 10,000 shares of
non-voting stock and 10,000 shares of voting stock for exercise of the Warrants.
TMBC estimated the redemption price of the warrants at December 31, 1995
and 1996 as $750,950 and $7,000,000, respectively. Increases in the redemption
price are accounted for prospectively as an adjustment to periodic interest
expense from the date of the increase to January 1, 2000, the earliest date the
put can be exercised. The accreted value of the Warrants at December 31, 1995
and 1996, was $750,950 and $1,644,000, respectively, resulting in a charge to
interest expense for the year ended December 31, 1996 of $893,050. There was no
adjustment to interest expense for the years ended December 31, 1994 and 1995.
Minimum scheduled maturities of long-term debt during the next five years
considering the Amended Loan Agreement and the classification of the Notes as a
current liability resulting from the default are as follows:
<TABLE>
<S> <C>
1997............................................................ $37,528,000
1998............................................................ 2,595,000
1999............................................................ 33,744,000
2000............................................................ 19,000
2001............................................................ 3,000
</TABLE>
Interest paid on all debt in 1994, 1995 and 1996 was approximately
$4,616,000, $3,570,000 and $3,750,000, respectively.
F-48
<PAGE> 246
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. OPERATING AGREEMENT WITH AFFILIATE
Under terms of an operating agreement entered into in June 1994, Tele-Media
Corporation of Delaware (an affiliate) ("Tele-Media Delaware") provides certain
management and technical services to the Companies and charges a management fee
of 3.5% of revenues. Payment of the management fee is restricted by the Notes
and the Amended Loan Agreement. The operating agreement expires on June 9, 2004
and continues from year-to-year thereafter unless either party gives written
notice to the other at least 30 days in advance of an expiration date.
Prior to the June 1994 operating agreement discussed above, Tele-Media
Delaware charged a management fee ranging from 3.5% to 7% of revenues. As
required by the provisions of the debt arrangements then outstanding as
discussed in Note 4, Messrs. Tudek and Mundy assumed responsibility for the
payment of certain management fees in 1994. The liabilities assumed by Messrs.
Tudek and Mundy are treated as additional paid-in capital in the consolidated
financial statements.
6. CONTINGENCIES AND COMMITMENTS
In 1995, TMBC and its shareholders entered into a nonbinding letter of
intent to sell the stock of TMBC. TMBC terminated the letter of intent and the
proposed buyer filed suit for damages and specific performance. A motion to
dismiss the suit was heard in early 1996 and the court ruled to dismiss a
majority of the claims, including those for specific performance, as no
definitive agreement had been reached for sale of the stock. On March 28, 1997,
the shareholders of TMBC executed an agreement to sell the stock of the Company
to the plaintiff in this suit. As part of this transaction, the suit was
dismissed with prejudice, and upon motion of the parties, the dismissal of the
suit was approved by the court. As a result of the suit's dismissal, this action
cannot again be filed by the plaintiff.
General and administrative expenses for the year ended December 31, 1995
and 1996 include approximately $274,000 and $260,000, respectively, of legal
expenses incurred relating to the defense of the lawsuit and the proposed sale.
The shareholders have agreed to pay 5.5% of the net proceeds from a sale of
their stock to two key members of management.
* * * * * *
F-49
<PAGE> 247
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................... $ 3,708,373
Accounts receivable:
Nonbarter -- less allowance for doubtful accounts of $800,000............. 5,447,842
Barter -- net............................................................. 303,749
Other current assets......................................................... 303,620
------------
Total current assets................................................. 9,763,584
------------
Property, plant and equipment -- net........................................... 8,436,165
------------
Intangibles -- net............................................................. 38,326,412
------------
Other noncurrent assets........................................................ 16,331
------------
$ 56,542,492
===========
LIABILITIES AND DEFICIENCY IN NET ASSETS
Current liabilities:
Accounts payable and other accrued expenses.................................. $ 1,514,622
Accrued interest............................................................. 2,969,594
Amounts due to affiliates -- net............................................. 4,159,152
Current portion of long-term debt............................................ 39,491,064
------------
Total current liabilities............................................ 48,134,432
------------
Long-term liabilities:
Long-term debt -- less current portion....................................... 47,306,734
Other........................................................................ 31,266
------------
Total long-term liabilities.......................................... 47,338,000
------------
Redeemable stock warrants...................................................... 2,536,000
------------
Deficiency in net assets:
Common stock, voting, $0.01 par value per share; 25,000 shares authorized,
15,000 shares outstanding................................................. 150
Common stock, nonvoting, $0.01 par value per share; 10,000 shares authorized,
none outstanding.......................................................... --
Additional paid-in capital................................................... 6,924,445
Deficit...................................................................... (48,390,535)
------------
Deficiency in net assets............................................. (41,465,940)
------------
$ 56,542,492
===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
F-50
<PAGE> 248
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND CHANGES IN DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Revenues:
Local advertising............................................. $ 9,323,963 $ 12,557,493
National advertising.......................................... 2,052,723 2,710,273
Barter........................................................ 1,697,415 2,357,519
Other......................................................... 222,507 339,431
------------ ------------
13,296,608 17,964,716
Less agency commissions....................................... 1,346,551 1,723,832
------------ ------------
Net revenues.......................................... 11,950,057 16,240,884
------------ ------------
Selling, general and administrative, programming, barter and
technical expenses:
Selling....................................................... 2,441,926 3,287,451
General and administrative.................................... 2,008,273 3,366,246
Programming................................................... 2,337,296 3,491,639
Barter........................................................ 1,697,415 2,357,519
Technical..................................................... 127,977 176,110
------------ ------------
8,612,887 12,678,965
------------ ------------
Operating income before management fees and depreciation and
amortization.................................................. 3,337,170 3,561,919
------------ ------------
Management fees and depreciation and amortization:
Management fees -- affiliates................................. 358,113 454,258
Depreciation and amortization................................. 2,092,858 2,207,660
------------ ------------
2,450,971 2,661,918
------------ ------------
Operating income................................................ 886,199 900,001
Interest expense................................................ 4,955,734 5,910,922
------------ ------------
Net loss........................................................ (4,069,535) (5,010,921)
Deficit, beginning of period.................................... (36,462,819) (43,379,614)
------------ ------------
Deficit, end of period.......................................... $(40,532,354) $(48,390,535)
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
F-51
<PAGE> 249
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss....................................................... $(4,069,535) $ (5,010,921)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization............................... 2,092,858 2,207,660
Interest deferral........................................... 3,012,406 1,975,012
Management fees -- affiliates............................... 358,113 454,258
Provision for losses on accounts receivable................. 158,144 305,581
Increase in fair value of redeemable stock warrants......... -- 892,000
Other....................................................... 849 335
Changes in operating assets and liabilities:
Accounts receivable -- nonbarter.......................... (6,589) (490,939)
Other current assets...................................... (115,852) (114,795)
Accounts payable and other accrued expenses............... (587,980) (863,160)
Affiliates activity -- net................................ (135,961) 886,715
Accrued interest.......................................... 478,336 1,073,705
----------- -----------
Net cash provided by operating activities.............. 1,184,789 1,315,451
----------- -----------
Cash flows from investing activities:
Capital expenditures........................................... (255,344) (227,926)
Purchase of radio stations..................................... -- (14,170,000)
Other.......................................................... 2,500 1,500
----------- -----------
Net cash used in investing activities.................. (252,844) (14,396,426)
----------- -----------
Cash flows from financing activities:
Borrowings..................................................... 79,361 16,000,000
Payments of long-term debt..................................... (1,575,046) (1,408,350)
Loan origination fees and other intangible assets.............. (25,000) (145,334)
Other.......................................................... (1,714) (363)
----------- -----------
Net cash provided by (used in) financing activities.... (1,522,399) 14,445,953
----------- -----------
Net increase (decrease) in cash and cash equivalents............. (590,454) 1,364,978
Cash and cash equivalents, beginning of period................... 1,904,258 2,343,395
----------- -----------
Cash and cash equivalents, end of period......................... $ 1,313,804 $ 3,708,373
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-52
<PAGE> 250
TELE-MEDIA BROADCASTING COMPANY
AND ITS PARTNERSHIP INTERESTS
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997
1. BASIS OF PRESENTATION
The condensed consolidated balance sheet as of June 30, 1997 and the
condensed consolidated statements of operations and changes in deficit and cash
flows for the six month periods ended June 30, 1996 and 1997 are unaudited. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation for the periods presented
have been included. These interim unaudited condensed consolidated financial
statements for 1996 and 1997 should be read in conjunction with the audited
consolidated financial statements and notes thereto. The consolidated results of
operations for the six months ended June 30, 1997 are not necessarily indicative
of the results to be expected for the full year.
2. BUSINESS ACQUISITIONS
On February 27, 1997, the Company purchased substantially all of the assets
of two radio stations in the Wilkes-Barre/Scranton, Pennsylvania market for
approximately $3,400,000. The acquisition was accounted for under the purchase
method, with approximately $500,000 allocated to property, plant and equipment
and approximately $2,900,000 allocated to intangibles.
On April 18, 1997, the Company closed the acquisition of two additional
radio stations in the Wilkes-Barre/Scranton, Pennsylvania market for
approximately $11,000,000. The acquisition was financed by $12,000,000 of
additional borrowings under the Amended Loan Agreement. On May 5, 1997, the
Company closed the acquisition of a radio station in the Quincy, Illinois market
for approximately $300,000. The acquisition was financed primarily by an
unsecured seller note and assumption of capital leases.
3. SUBSEQUENT EVENTS
On July 3, 1997, all of the issued and outstanding stock of the Company was
acquired by Citadel Broadcasting Company, a subsidiary of Citadel Communications
Corporation for approximately $114,400,000.
F-53
<PAGE> 251
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Snider Corporation:
We have audited the accompanying balance sheet of Snider Corporation as of
December 31, 1996 and the related statements of income, stockholders' equity,
and cash flows for the year then ended. We have also audited the accompanying
consolidated balance sheet of Snider Corporation as of December 31, 1995 and the
related consolidated statements of income, stockholders' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Snider Corporation as of
December 31, 1996 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Also, in our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Snider Corporation as of December 31, 1995 and the consolidated results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
As discussed in Notes 3, 6 and 7, the Company has significant transactions
with related parties.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The combining information is
presented for purposes of additional analysis of the financial statements. The
combining information has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ ERWIN & COMPANY
Little Rock, Arkansas
April 1, 1997
F-54
<PAGE> 252
SNIDER CORPORATION
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 105,788 $ 44,870
Accounts receivable, net of allowance for doubtful accounts of
$34,461 in 1996 and $26,652 in 1995............................ 475,065 566,180
Due from affiliates............................................... 38,146 61,352
Other............................................................. 20,867 34,495
---------- ----------
Total current assets........................................... 639,866 706,897
Other assets:
Non-compete covenant.............................................. 45,833 --
Land held for investment, at cost, which approximates market
value.......................................................... 97,553 123,396
Other............................................................. 18,536 --
---------- ----------
Total other assets............................................. 161,922 123,396
Property and equipment, at cost less accumulated depreciation....... 874,992 666,934
----------
$1,676,780 $1,497,227
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable -- related party..................................... $ 50,000 $ 50,000
Accounts payable -- trade......................................... 152,388 128,416
-- other...................................... -- 385
Accrued expenses.................................................. 86,481 96,593
---------- ----------
Total current liabilities...................................... 288,869 275,394
Stockholders' equity:
Common stock, no par value; 1,000 shares authorized, 100 shares
issued and outstanding......................................... 143,000 143,000
Paid in capital................................................... 474,300 62,298
Retained earnings................................................. 770,611 1,016,535
---------- ----------
Total stockholders' equity..................................... 1,387,911 1,221,833
---------- ----------
$1,676,780 $1,497,227
========== ==========
</TABLE>
See accompanying notes.
F-55
<PAGE> 253
SNIDER CORPORATION
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Revenue:
Announcements and programs........................................ $3,583,944 $3,510,863
Barter accounts................................................... 428,129 360,616
---------- ----------
Total revenue............................................. 4,012,073 3,871,479
---------- ----------
Direct charges:
Commissions....................................................... 450,944 440,461
Royalties and franchise fees...................................... 140,303 93,744
---------- ----------
Total direct charges...................................... 591,247 534,205
---------- ----------
Gross profit........................................................ 3,420,826 3,337,274
---------- ----------
Operating expenses:
Technical department.............................................. 95,416 57,985
Program department................................................ 509,877 608,416
News department................................................... 255,458 264,837
Sales department.................................................. 859,674 839,461
General and administrative........................................ 974,815 926,945
Depreciation and amortization..................................... 186,723 81,232
---------- ----------
Total operating expenses.................................. 2,881,963 2,778,876
---------- ----------
Operating income.................................................... 538,863 558,398
Other income (expense):
Interest income................................................... 3,168 5,275
Interest expense.................................................. (6,917) (8,548)
Loss on sale of property and equipment............................ (59,024) --
Minority interest................................................. -- (48,004)
Operating agreement -- acquired stations.......................... (65,698) --
Other............................................................. (124,316) (30,540)
---------- ----------
Total other income (expense).............................. (252,787) (81,817)
---------- ----------
Net income.......................................................... $ 286,076 $ 476,581
========== ==========
</TABLE>
See accompanying notes
F-56
<PAGE> 254
SNIDER CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Balance -- December 31, 1994................. $143,000 $ 62,298 $ 868,958 $1,074,256
Net income................................. -- -- 476,581 476,581
Distributions to stockholders.............. -- -- (329,004) (329,004)
-------- -------- ---------- ----------
Balance -- December 31, 1995................. 143,000 62,298 1,016,535 1,221,833
Net income................................. -- -- 286,076 286,076
Capital contribution....................... -- 412,002 -- 412,002
Distributions to stockholders.............. -- -- (532,000) (532,000)
-------- -------- ---------- ----------
Balance -- December 31, 1996................. $143,000 $474,300 $ 770,611 $1,387,911
======== ======== ========== ==========
</TABLE>
See accompanying notes
F-57
<PAGE> 255
SNIDER CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $ 286,076 $ 476,581
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................................... 186,723 81,232
Loss on disposal of assets...................................... 59,023 --
Minority interest............................................... -- 48,004
Recognition of unearned income.................................. -- (107,813)
Bad debt provision.............................................. 34,461 30,636
Net changes in operating assets and liabilities:
Accounts receivable........................................... 56,654 (173,698)
Other current assets.......................................... 13,628 77,524
Other non-current assets...................................... (18,536) --
Accounts payable.............................................. 23,587 (15,065)
Accrued expenses.............................................. (10,112) 6,280
--------- ---------
Net cash provided by operating activities.................. 631,504 423,681
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment................................. (213,240) (192,120)
Purchase of land held for investment............................... -- (22,563)
Proceeds from sale of property and equipment....................... 262,800 --
Net advances to affiliate.......................................... (38,146) (49,064)
Payment under non-compete covenant................................. (50,000) --
--------- ---------
Net cash used in investing activities...................... (38,586) (263,747)
--------- ---------
Cash flows from financing activities:
Proceeds from repayments of notes receivable....................... -- 107,623
Repayment of note payable -- Bank.................................. -- (45,044)
Distributions to minority interest................................. -- (48,004)
Distributions to stockholders...................................... (532,000) (329,004)
--------- ---------
Net cash used in financing activities...................... (532,000) (314,429)
--------- ---------
Net increase (decrease) in cash and cash equivalents................. 60,918 (154,495)
Cash and cash equivalents:
Beginning of year.................................................. 44,870 199,365
--------- ---------
End of year........................................................ $ 105,788 $ 44,870
========= =========
Supplemental cash flows information:
Interest paid...................................................... $ 6,917 $ 8,548
Significant non-cash investing and financing activities:
Non-cash purchase of property and equipment from affiliate...... 473,353 --
Non-cash contribution of capital................................ 412,002 --
</TABLE>
See accompanying notes
F-58
<PAGE> 256
SNIDER CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of consolidation
The consolidated financial statements include the accounts of Snider
Corporation (the Company) and SMN Company (SMN), a 52% owned partnership. All
significant intercompany transactions and accounts have been eliminated in
consolidation. SMN was liquidated effective December 31, 1995.
Nature of operations
The Company operates an AM radio station and two FM radio stations in the
central Arkansas market area and provides news and information to other radio
stations throughout Arkansas. The activities of SMN were not material to 1995
consolidated financial position or results of operations.
Accounting estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Depreciation and amortization
Depreciation is calculated by the straight-line method. Estimated useful
lives are as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Transmitter building, antenna system, office machines and 3-25
equipment.........................................................
Furniture and fixtures.............................................. 5-10
Vehicles............................................................ 2- 4
Other............................................................... 3- 5
</TABLE>
Non-compete covenant
The non-compete covenant with the former owner of certain radio
broadcasting assets acquired in 1996 is being amortized on a straight-line basis
over a period of two years. Total amortization expense was for 1996 was $4,167.
Statement of cash flows
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents.
Concentrations of credit risk
Most of the Company's business activity is with customers located within
the state of Arkansas. The Company grants credit to its customers in the normal
course of business, ordinarily without collateral requirements.
The Company's exposure to credit risk from accounts receivable -- trade and
notes receivable is represented by the carrying value of those receivables. The
Company also periodically has demand deposit balances with a local financial
institution that exceed federally insured limits. Management periodically
reviews the soundness of this financial institution and does not believe the
Company is exposed to significant financial risk.
F-59
<PAGE> 257
SNIDER CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995 -- CONTINUED
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Reclassifications
Certain reclassifications have been made to the 1995 financial statements
to conform to the 1996 basis of presentation.
(2) PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1996 and 1995 consists of the
following:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Land............................................... $ 57,700 $ 301,252
Transmitter building............................... 87,879 87,879
Antenna system..................................... 91,736 91,736
Satellite equipment................................ 473,353 --
Equipment.......................................... 650,906 452,326
Office machines.................................... 339,616 325,787
Furniture and fixtures............................. 150,289 149,455
Vehicles........................................... 56,272 63,623
Other.............................................. 78,831 198,714
---------- ----------
1,986,582 1,670,772
Less accumulated depreciation...................... 1,111,590 1,003,838
---------- ----------
$ 874,992 $ 666,934
========== ==========
</TABLE>
(3) NOTE PAYABLE -- RELATED PARTY:
Note payable -- related party at December 31, 1996 and 1995 consists of an
unsecured note payable to a stockholder. The note bears interest at 8% and is
due on demand.
(4) INCOME TAXES:
The Company has elected to be treated as an S corporation for federal
income tax purposes and is subject to similar treatment for state income tax
purposes. Under this election, income and losses of the Company are reported in
the income tax returns of the stockholders. As a result, no income taxes are
reflected in the accompanying consolidated financial statements.
(5) ACQUISITIONS:
During 1996, the Company acquired the assets, including broadcast rights
for a local FM radio. Prior to FCC approval of the acquisition, the station was
operated by the Company under a license management agreement. Expenses incurred
under this agreement totaling $65,698 are included in the accompanying 1996
statement of income under the heading "Other Income (Expenses)."
F-60
<PAGE> 258
SNIDER CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995 -- CONTINUED
(5) ACQUISITION (CONTINUED):
The acquisition cost of the broadcast assets were allocated as follows:
<TABLE>
<S> <C>
Property and equipment.................................. $ 132,820
Non-compete covenant.................................... 50,000
---------
Total......................................... $ 182,820
=========
</TABLE>
(6) COMMITMENTS AND CONTINGENCIES:
The Company leases its office building and parking lot under an operating
lease from an officer and principal stockholder of the Company for $10,000 per
month. Additionally, the Company rented satellite space from an affiliate under
an informal lease agreement totaling $6,300 and $107,950 during the years ended
December 31, 1996 and 1995, respectively. Total rent expense was $140,400 and
$245,377 for the years ended December 31, 1996 and 1995, respectively. Rent
expense was offset by $48,320 in 1996 and $54,000 in 1995 by amounts received
from an affiliate under a month to month sublease agreement for office space.
Future minimum rentals under noncancelable operating leases, including
renewal options, at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997.................................................... $ 120,000
1998.................................................... 120,000
---------
$ 240,000
=========
</TABLE>
(7) RELATED PARTY TRANSACTIONS:
General and administrative expense has been reduced by $21,000 and $23,282
in 1996 and 1995, respectively, for shared office and overhead expenses charged
to an affiliate. The amounts shown in the accompanying balance sheets as due
from affiliates represent amounts owed to the Company for these and certain
other operating expenses paid by the Company on behalf of affiliates.
During 1996, the Company purchased satellite communications equipment from
an affiliate for $473,353. In connection with the purchase, the Company's
stockholders transferred certain assets of another affiliate with a fair value
of $412,002 to the Company. The transfer was recorded as a capital contribution.
These contributed assets, plus accounts receivable due from the affiliate
totaling $61,351 were exchanged for the satellite communications equipment.
Information concerning the note payable -- related party is contained in
Note 3. Information concerning lease and other rental income and expenses with
related parties is described in Note 5.
F-61
<PAGE> 259
SNIDER CORPORATION
SCHEDULE OF COMBINING OPERATING INCOME,
EXCLUDING DEPRECIATION AND AMORTIZATION
FOR BROADCASTING UNITS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
KARN ARN COMBINED
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Local announcements.................................. $1,604,785 $1,353,472 $2,958,257
National announcements............................... 135,805 -- 135,805
Political announcements.............................. 68,318 193,539 261,857
Network.............................................. 77,236 -- 77,236
Materials and facilities............................. 71,411 79,378 150,789
Barter accounts...................................... 289,797 138,332 428,129
---------- ---------- ----------
Total revenue................................ 2,247,352 1,764,721 4,012,073
Less direct charges:
Agency commissions................................... 156,538 187,616 344,154
National representative commissions.................. 16,676 90,114 106,790
Rights fees.......................................... 78,426 61,877 140,303
---------- ---------- ----------
Totals....................................... 251,640 339,607 591,247
---------- ---------- ----------
Gross profit........................................... 1,995,712 1,425,114 3,420,826
Operating expenses:
Technical department................................. 73,611 21,805 95,416
Program department................................... 356,247 153,630 509,877
News department...................................... 115,269 140,189 255,458
Sales department..................................... 480,476 379,198 859,674
General and administrative........................... 633,288 341,527 974,815
---------- ---------- ----------
Total operating expenses, excluding
depreciation and amortization.............. 1,658,891 1,036,349 2,695,240
---------- ---------- ----------
Operating income, excluding depreciation and
amortization......................................... $ 336,821 $ 388,765 $ 725,586
========== ========== ==========
</TABLE>
F-62
<PAGE> 260
SNIDER CORPORATION
BALANCE SHEET
MAY 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 45,972
Accounts receivable -- trade, net of allowance for doubtful accounts of
$38,228..................................................................... 780,901
Due from affiliates............................................................ 44,589
Other.......................................................................... 7,941
----------
Total current assets................................................... 879,403
Property and equipment, at cost less accumulated depreciation of $1,193,204...... 813,910
Other assets:
Non-compete agreement, less accumulated amortization of $14,583................ 35,417
Land held for investment, at cost, which approximates market value............. 97,553
Other.......................................................................... 25,692
----------
Total other assets..................................................... 158,662
----------
$1,851,975
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable -- related party.................................................. $ 50,000
Accounts payable -- trade...................................................... 190,990
Accrued expenses............................................................... 103,427
----------
Total current liabilities.............................................. 344,417
Stockholders' equity:
Common stock, no par value; 1,000 shares authorized, 100 shares issued and
outstanding................................................................. 143,000
Paid-in capital................................................................ 474,300
Retained earnings.............................................................. 890,258
----------
Total stockholders' equity............................................. 1,507,558
----------
$1,851,975
=========
</TABLE>
See accompanying notes to financial statements.
F-63
<PAGE> 261
SNIDER CORPORATION
STATEMENT OF INCOME
FIVE MONTHS ENDED MAY 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Revenue:
Announcements and programs................................................. $1,694,439
Barter accounts............................................................ 140,783
----------
Total revenue......................................................... 1,835,222
Direct charges:
Commissions................................................................ 261,257
Royalties and franchise fees............................................... 42,210
----------
Total direct charges.................................................. 303,467
----------
Gross profit.................................................................... 1,531,755
----------
Operating expenses:
Technical department....................................................... 52,958
Program department......................................................... 263,608
News department............................................................ 99,351
Sales department........................................................... 439,047
General and administrative................................................. 437,718
Depreciation and amortization.............................................. 92,030
----------
Total operating expenses.............................................. 1,384,712
----------
Operating income................................................................ 147,043
Other income (expense):
Interest income............................................................ 733
Interest expense........................................................... (1,677)
Other...................................................................... (26,452)
----------
Total other income (expense).......................................... (27,396)
----------
Net income...................................................................... $ 119,647
==========
</TABLE>
See accompanying notes to financial statements.
F-64
<PAGE> 262
SNIDER CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FIVE MONTHS ENDED MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Balance -- December 31, 1996.................. $143,000 $474,300 $770,611 $1,387,911
Net income.................................... -- -- 119,647 119,647
-------- -------- -------- ----------
Balance -- May 31, 1997....................... $143,000 $474,300 $890,258 $1,507,558
======== ======== ======== ==========
</TABLE>
See accompanying notes to financial statements.
F-65
<PAGE> 263
SNIDER CORPORATION
STATEMENT OF CASH FLOWS
FIVE MONTHS ENDED MAY 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income...................................................................... $119,647
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization................................................ 92,030
Bad debt provision........................................................... 12,155
Net changes in operating assets and liabilities:
Accounts receivable -- trade............................................... (317,991)
Other current assets....................................................... 12,926
Other non-current assets................................................... (7,156)
Accounts payable -- trade.................................................. 38,602
Accrued expenses........................................................... 16,946
--------
Net cash used in operating activities................................... (32,841)
--------
Cash flows from investing activities:
Capital expenditures............................................................ (20,532)
Net advances to affiliate....................................................... (6,443)
--------
Net cash used in investing activities................................... (26,975)
--------
Net decrease in cash and cash equivalents......................................... (59,816)
Cash and cash equivalents:
Beginning of period............................................................. 105,788
--------
End of period................................................................... $ 45,972
========
Supplemental cash flows information:
Interest paid................................................................... $ 1,677
========
</TABLE>
See accompanying notes to financial statements.
F-66
<PAGE> 264
SNIDER CORPORATION
NOTE TO FINANCIAL STATEMENTS
MAY 31, 1997
(UNAUDITED)
(1) SUBSEQUENT EVENT
On June 2, 1997, Snider Corporation (the "Company") entered into a local
marketing agreement ("LMA") with Citadel Broadcasting Company ("Citadel")
whereby Citadel pays a fixed fee to the Company in exchange for supplying
specified programming to the brokered stations and selling advertising time on
the stations. In compliance with the LMA, the broadcasting revenue and station
operating expenses of the Company for the month ended June 30, 1997 are included
in the financial statements of Citadel and are summarized as follows:
<TABLE>
<S> <C>
Net broadcasting revenues......................................... $270,289
Station operating expenses........................................ 304,259
</TABLE>
F-67
<PAGE> 265
SNIDER CORPORATION
BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 191,595
Accounts receivable--trade, net of allowance for doubtful accounts of
$45,546..................................................................... 800,790
Due from affiliates............................................................ 25,617
Other.......................................................................... 4,106
----------
Total current assets................................................... 1,022,108
Property and equipment, at cost less accumulated depreciation of $1,017,541...... 808,870
Other assets:
Land held for investment, at cost, which approximates market value............. 97,553
Other.......................................................................... 11,240
----------
Total other assets..................................................... 108,793
----------
$1,939,771
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable--related party.................................................... $ 50,000
Accounts payable--trade........................................................ 153,348
Accrued expenses............................................................... 132,907
----------
Total current liabilities.............................................. 336,255
Stockholders' equity:
Common stock, no par value; 1,000 shares authorized, 100 shares issued and
outstanding................................................................. 143,000
Paid-in capital................................................................ 474,300
Retained earnings.............................................................. 986,216
----------
Total stockholders' equity............................................. 1,603,516
----------
$1,939,771
=========
</TABLE>
F-68
<PAGE> 266
SNIDER CORPORATION
STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Revenue:
Announcements and programs..................................................... $1,893,131
Barter accounts................................................................ 214,064
----------
Total revenue.......................................................... 2,107,195
Direct charges:
Commissions.................................................................... 266,398
Royalties and franchise fees................................................... 65,599
----------
Total direct charges................................................... 331,997
----------
Gross profit..................................................................... 1,775,198
----------
Operating expenses:
Technical department........................................................... 35,290
Program department............................................................. 236,052
News department................................................................ 125,103
Sales department............................................................... 414,766
General and administrative..................................................... 511,160
Depreciation and amortization.................................................. 88,507
----------
Total operating expenses............................................... 1,410,878
----------
Operating income................................................................. 364,320
Other income (expense):
Loss on sale of property and equipment......................................... (59,024)
Interest expense............................................................... (2,541)
Operating agreement--stations under contract................................... (36,839)
Other.......................................................................... (39,235)
----------
Total other income (expense)........................................... (137,639)
----------
Net income....................................................................... $ 226,681
=========
</TABLE>
F-69
<PAGE> 267
SNIDER CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Balance--December 31, 1995......................... $143,000 $ 62,298 $1,016,535 $1,221,833
Net income......................................... 226,681 226,681
Capital contribution............................... 412,002 412,002
Distributions to stockholders...................... (257,000) (257,000)
-------- -------- ---------- ----------
Balance--June 30, 1996............................. $143,000 $474,300 $ 986,216 $1,603,516
======== ======== ========= =========
</TABLE>
F-70
<PAGE> 268
SNIDER CORPORATION
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income...................................................................... $226,681
Adjustments to reconcile net income to net cash provided by in operating
activities:
Depreciation and amortization................................................ 88,507
Loss on sale of property and equipment....................................... 59,024
Bad debt provision........................................................... 19,886
Net changes in operating assets and liabilities:
Accounts receivable--trade................................................. (254,496)
Other current assets....................................................... 19,149
Accounts payable--trade.................................................... 24,547
Accrued expenses........................................................... 36,314
--------
Net cash provided by operating activities............................... 219,612
--------
Cash flows from investing activities:
Capital expenditures............................................................ (53,071)
Proceeds from sale of assets.................................................... 262,800
Net advances to affiliate....................................................... (25,616)
--------
Net cash provided by investing activities............................... 184,113
--------
Cash flows from financing activities:
Distributions to stockholders................................................... (257,000)
--------
Net cash used in financing activities................................... (257,000)
--------
Net increase in cash and cash equivalents......................................... 146,725
Cash and cash equivalents:
Beginning of period............................................................. 44,870
--------
End of period................................................................... $191,595
========
Supplemental cash flows information:
Interest paid................................................................... $ 2,541
Significant non-cash investing and financing activities:
Non-cash purchase of property and equipment from affiliate................... 473,353
Non-cash contribution of capital............................................. 412,002
</TABLE>
F-71
<PAGE> 269
INDEPENDENT AUDITORS' REPORT
The Boards of Directors and Stockholders
Snider Broadcasting Corporation and Subsidiary
CDB Broadcasting Corporation:
We have audited the accompanying combined balance sheet of Snider
Broadcasting Corporation and Subsidiary, and CDB Broadcasting Corporation as of
December 31, 1996 and the related combined statements of operations,
stockholders' deficit and cash flows for the year then ended. We have also
audited the consolidated balance sheet of Snider Broadcasting Corporation and
Subsidiary as of December 31, 1995 and the related consolidated statements of
operations, stockholders' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The combined financial statements include the financial statements of
Snider Broadcasting Corporation and Subsidiary, and CDB Broadcasting
Corporation, which are related through common ownership and management.
As described in Notes 3, 5, and 10, the Company has significant
transactions with related parties.
In our opinion, the 1996 financial statements referred to above present
fairly, in all material respects, the combined financial position of Snider
Broadcasting Corporation and affiliate as of December 31, 1996 and the combined
results of their operations and cash flows for the year then ended in conformity
with generally accepted accounting principles. Also, in our opinion, the 1995
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Snider Broadcasting Corporation and
Subsidiary as of December 31, 1995 and the consolidated results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ ERWIN & COMPANY
Little Rock, Arkansas
April 23, 1997
F-72
<PAGE> 270
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash........................................................... $ 49,821 $ 30,813
Accounts receivable, net of allowance for doubtful accounts of
$7,000 in 1996 and $8,108 in 1995........................... 376,579 305,154
Other....................................................... 15,366 2,302
----------- -----------
Total current assets........................................ 441,766 338,269
Property and equipment, at cost less accumulated depreciation
(Note 2)....................................................... 292,286 59,706
Other assets:
Excess of cost over carrying value of net assets acquired, less
accumulated amortization of $130,936 in 1996 and $117,476 in
1995........................................................ 796,691 309,710
Start-up costs, net of accumulated amortization of $8,797 in
1996........................................................ 61,588 --
Non-compete agreement, net of accumulated amortization of
$2,083 in 1996.............................................. 97,917 --
Other assets................................................... 21,189 --
----------- -----------
Total other assets.......................................... 977,385 309,710
----------- -----------
$ 1,711,437 $ 707,685
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable -- stockholders (Note 3)......................... $ -- $ 52,698
Note payable -- bank (Note 4).................................. 2,637,408 --
Current maturities of long-term debt (Note 5).................. -- 206,781
Accounts payable -- trade...................................... 218,422 109,406
Income taxes payable........................................... 7,803 2,117
Accrued expenses............................................... 45,778 12,526
Accrued interest payable (Note 10)............................. 10,714 14,548
Deferred income taxes (Note 8)................................. 2,297 --
----------- -----------
Total current liabilities.............................. 2,922,422 398,076
Long-term debt, less current maturities (Note 5)................. -- 1,386,490
----------- -----------
Total liabilities...................................... 2,922,422 1,784,566
Stockholders' deficit:
Common stock (Note 6).......................................... 75,313 75,213
Retained deficit............................................... (1,286,298) (1,152,094)
----------- -----------
Total stockholders' deficit............................ (1,210,985) (1,076,881)
----------- -----------
$ 1,711,437 $ 707,685
=========== ===========
</TABLE>
See accompanying notes.
F-73
<PAGE> 271
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Revenue:
Announcements and programs....................................... $2,008,315 $2,097,623
Barter accounts.................................................. 137,963 145,608
---------- ----------
Total revenue............................................ 2,146,278 2,243,231
Less direct charges -- commissions................................. 264,907 286,944
---------- ----------
Gross profit....................................................... 1,881,371 1,956,287
---------- ----------
Operating expenses:
Technical department............................................. 55,616 45,339
Program department............................................... 384,480 305,344
Sales department................................................. 439,883 377,007
General and administrative....................................... 679,475 465,647
Ratings enhancement.............................................. 105,498 --
Time brokerage................................................... 60,470 --
Consulting and non-compete (Note 9).............................. 64,733 64,733
Goodwill amortization............................................ 13,460 10,680
Depreciation and amortization.................................... 78,820 27,046
---------- ----------
Total operating expenses................................. 1,882,435 1,295,796
---------- ----------
Operating income (loss)............................................ (1,064) 660,491
---------- ----------
Other income (expense):
Interest expense (Note 10)....................................... (150,553) (189,532)
Rent (Note 10)................................................... 30,000 12,000
Other............................................................ 39 --
---------- ----------
Total other income (expense)............................. (120,514) (177,532)
---------- ----------
Income (loss) before income taxes.................................. (121,578) 482,959
Provision for income taxes (Note 8)................................ 12,626 2,117
---------- ----------
Net income (loss).................................................. $ (134,204) $ 480,842
========== ==========
</TABLE>
See accompanying notes.
F-74
<PAGE> 272
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENTS OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK DEFICIT TOTAL
------- ----------- -----------
<S> <C> <C> <C>
Balance -- December 31, 1994.......................... $75,213 $(1,632,936) $(1,557,723)
Net income.......................................... -- 480,842 480,842
------- ----------- -----------
Balance -- December 31, 1995.......................... 75,213 (1,152,094) (1,076,881)
Common stock issued................................. 100 -- 100
Net loss............................................ -- (134,204) (134,204)
------- ----------- -----------
Balance -- December 31, 1996.......................... $75,313 $(1,286,298) $(1,210,985)
======= =========== ===========
</TABLE>
See accompanying notes.
F-75
<PAGE> 273
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................ $ (134,204) $ 480,842
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation.................................................. 42,899 27,046
Amortization.................................................. 49,381 10,680
Deferred income taxes......................................... 2,297 --
Loss on sale of property and equipment........................ 458 --
Net changes in operating assets and liabilities:
Accounts receivable......................................... (71,425) (56,489)
Other assets................................................ (59,294) 446
Accounts payable............................................ 99,824 2,896
Accrued expenses............................................ 38,938 12,707
Accrued interest payable.................................... (3,834) (113,269)
----------- ---------
Net cash provided by (used in) operating activities...... (34,960) 364,859
----------- ---------
Cash flows from investing activities:
Acquisition of business assets................................... (768,011) (14,921)
Non-compete agreement............................................ (100,000) --
Other............................................................ (69,560) --
----------- ---------
Net cash used in investing activities.................... (937,571) (14,921)
----------- ---------
Cash flows from financing activities:
Repayment of borrowings -- affiliates............................ (1,291,759) (186,825)
-- other............................. (494,210) (169,347)
Proceeds from borrowings......................................... 2,777,408 --
Common stock issued.............................................. 100 --
----------- ---------
Net cash provided by (used in) financing activities...... 991,539 (356,172)
----------- ---------
Net increase (decrease) in cash.................................... 19,008 (6,234)
Cash:
Beginning of year................................................ 30,813 37,047
----------- ---------
End of year...................................................... $ 49,821 $ 30,813
=========== =========
Supplemental information:
Interest paid.................................................... $ 154,387 $ 302,800
Income taxes paid................................................ 4,643 --
Non-cash investing activities:
Equipment acquired through trade.............................. 9,192 2,333
</TABLE>
See accompanying notes.
F-76
<PAGE> 274
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Reporting Entity
The accompanying 1995 financial statements include the accounts of Snider
Broadcasting Corporation and its wholly-owned subsidiary, Cornerstone
Broadcasting Corporation (Snider). The accompanying 1996 financial statements
include these accounts combined with those of CDB Broadcasting Corporation
(CDB), a company affiliated through common ownership and management. CDB was
incorporated and began operations May 17, 1996 . All significant intercompany
transactions and accounts have been eliminated.
Nature of Operations
Snider and CDB operate FM radio stations in the Central Arkansas market
area.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property and Equipment
Depreciation of property and equipment is calculated using the accelerated
and modified accelerated cost recovery systems. Depreciation calculated under
these methods does not differ significantly from amounts calculated under
methods and lives which conform to generally accepted accounting principles.
Estimated useful lives of property and equipment are as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Tower......................................................... 5-10
Radio, office and computer equipment.......................... 3- 7
Vehicle....................................................... 5
</TABLE>
Intangible Assets
The excess of cost over carrying value of assets acquired for Snider
Broadcasting Corporation is being amortized over 40 years using the
straight-line method. The excess of cost over carrying value of assets acquired
of CDB Broadcasting Corporation is being amortized over 15 years using the
straight-line method.
The non-compete agreement is being amortized over 24 months using the
straight-line method. Start-up costs are being amortized over five years using
the straight-line method.
Asset Impairment
In the event that facts and circumstances indicate that the carrying value
of long-lived assets may be impaired, an evaluation of recoverability would be
performed. If an evaluation is required, the estimated future undiscounted cash
flows associated with the asset would be compared to the asset's carrying amount
to determine if a write-down to fair value or a value based on discounted cash
flows is required.
F-77
<PAGE> 275
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Income Taxes
Snider incurred net operating losses from the date of its incorporation on
January 1, 1985 through 1991. At December 31, 1996 there are approximately
$610,000 of net operating loss carryforwards available for federal income tax
purposes. These loss carryforwards will expire beginning in the year 2000 if not
previously used to offset future net taxable income. In addition, Snider has
approximately $3,600 in general business credit carryforwards that expire in
2000 and 2001.
Snider provides for deferred income taxes under the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes." This
statement provides for a liability approach under which deferred income taxes
are based on enacted tax laws and rates applicable to the periods in which the
taxes become payable.
CDB has elected to be treated as an S corporation for federal income tax
purposes and is subject to similar treatment for state income tax purposes.
Under this election, income and losses of CDB are reported in the income tax
returns of the stockholders. As a result, no provision for income taxes for CDB
is reflected in the accompanying combined financial statements.
Statement of Cash Flows
For purposes of the statement of cash flows, the Companies consider cash on
hand and deposits in financial institutions with initial maturities of three
months or less as cash.
Concentrations of Credit Risk
Most of the Companies' business activity is with customers located within
the central region of Arkansas. The Companies' grant credit to their customers
in the normal course of business, ordinarily without collateral requirements.
Reclassifications
Certain reclassifications have been made to the 1995 financial statements
to conform to the 1996 basis of presentation.
(2) PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1996 and 1995 consists of the
following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Tower................................................. $104,642 $ 89,909
Radio equipment....................................... 404,648 186,059
Office equipment...................................... 95,921 67,357
Computer equipment.................................... 52,604 37,727
Vehicle............................................... 9,859 20,113
-------- --------
667,674 401,165
Less accumulated depreciation......................... 375,388 341,459
-------- --------
$292,286 $ 59,706
======== ========
</TABLE>
F-78
<PAGE> 276
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(3) NOTES PAYABLE -- STOCKHOLDERS:
Notes payable -- stockholders at December 31, 1995 consist of unsecured
demand notes payable to stockholders of Snider bearing interest at 10.25% at
December 31, 1995.
(4) NOTE PAYABLE -- BANK:
Note payable-bank represents a short-term, $3,000,000 credit facility
shared by Snider and CDB. The note matures June 12, 1997, and is secured by
substantially all assets of the Companies and by guarantees of the Companies
stockholders.
The agreement requires the maintenance of certain ratios related to
leverage and debt service. In addition, the agreement contains certain
covenants, the most restrictive of which prohibit or restrict the Companies'
ability to incur additional debt; pledge assets; merge, consolidate or sell
assets; make certain "restricted" investments or loans and advances; dispose of
certain assets; make distributions to its stockholders; and engage in
transactions with their affiliates.
At December 31, 1996, the Companies were in technical default with respect
to a required leverage ratio and certain reporting requirements, however the
Companies had not defaulted on any required principal or interest payments and
were in compliance with all other ratios required under the agreement. These
technical defaults permit the lender to accelerate the scheduled due date of the
debt. Management anticipates the note to be extended during June 1997 with a new
maturity date of December 1997.
(5) LONG-TERM DEBT:
Long-term debt at December 31, 1995 consists of the following:
<TABLE>
<CAPTION>
1995
----------
<S> <C>
Variable rate (9.0% at December 31, 1995); note payable to
Nationsbank of Texas, N.A...................................... $ 169,500
Variable rate (10.0% at December 31, 1995) unsecured,
subordinated note payable to Snider Communications Corporation,
an affiliate; payable on demand................................ 1,291,759
10.0% note payable; payable $4,067 monthly, including interest
through February 1999; secured by real estate and personal
property of Snider and guaranteed by stockholders of Snider and
by a member of the immediate family of Snider's majority
stockholder.................................................... 132,012
----------
1,593,271
Less current portion............................................. 206,781
----------
Long-term debt, less current portion............................. $1,386,490
==========
</TABLE>
The note payable to affiliate of $1,291,759 at December 31, 1995 was
classified as long-term due to such affiliate waiving its right to demand
payment during the immediately following year.
(6) STOCKHOLDERS EQUITY:
Snider Broadcasting Corporation has 1,000 shares of no par value common
stock authorized and 85 shares issued and outstanding.
CDB Broadcasting Corporation has 1,000 shares of no par value common stock
authorized, issued and outstanding.
F-79
<PAGE> 277
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(7) RETIREMENT PLAN:
During 1995, Snider adopted a 401(k) savings plan which covers
substantially all employees who have completed one year of service and attained
the age of 21. Participating employees may contribute from 1% to 15% of their
compensation. Snider matches 25% of the first 4% contributed by participating
employees. Matching contributions totaled $3,727 and $3,950 for the years ended
December 31, 1996 and 1995, respectively.
(8) INCOME TAXES:
The provision for income taxes at December 31, 1996 and 1995, consists of
the following:
<TABLE>
<CAPTION>
1996 1995
-------- ---------
<S> <C> <C>
Current:
Federal............................................ $ -- $ 2,117
State.............................................. 10,329 --
-------- ---------
10,329 2,117
-------- ---------
Deferred:
Federal............................................ 84,429 155,754
State.............................................. 4,709 32,802
Decrease in valuation allowance.................... (86,841) (188,556)
-------- ---------
2,297 --
-------- ---------
Provision for income taxes........................... $ 12,626 $ 2,117
======== =========
</TABLE>
The income tax provision computed at the federal statutory rate on pretax
income differs from the reported tax provision due to the decrease in the
valuation allowance, effect of graduated rates and non-deductible expenses, and
the results of operations of CDB reported to stockholders for income tax
purposes.
The components of the net deferred tax liability at December 31, 1996 and
1995 follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Deferred tax assets:
Federal........................................... $ 213,291 $ 295,680
State............................................. -- 4,319
--------- ---------
Valuation allowance............................... (213,158) (299,999)
--------- ---------
133 --
--------- ---------
Deferred tax liabilities:
Federal........................................... 2,040 --
State............................................. 390 --
--------- ---------
2,430 --
--------- ---------
Net deferred tax liability.......................... $ (2,297) $ --
========= =========
</TABLE>
F-80
<PAGE> 278
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(9) COMMITMENTS AND CONTINGENCIES:
The Companies lease office space, office equipment, broadcasting equipment
and tower facilities under operating leases expiring in 1993 through 1999. Total
rent expense under these agreements was $61,159 in 1996 and $61,939 in 1995.
Snider has commitments to pay the former owner of one of its radio stations
consulting fees and amounts due under a non-compete agreement. These commitments
extend through February 1999. Payments related to these commitments totaled
$64,733 for each of the years ended December 31, 1996 and 1995.
Future commitments under noncancelable operating leases, consulting and
non-compete agreements at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997...................................................... $138,557
1998...................................................... 75,607
1999...................................................... 20,569
2000...................................................... 9,780
--------
$244,513
========
</TABLE>
(10) RELATED PARTY TRANSACTIONS:
Interest expense in 1996 and 1995, respectively, includes $56,846 and
$144,132 related to the Company's note payable to an affiliate (Note 5).
Included in accrued expenses at December 31, 1995 is accrued interest payable of
$708 related to the note.
The Company leases a subcarrier bandwidth of Snider to an affiliate to
transmit paging and weather information under an operating lease, cancelable
upon six months written notice, expiring in 2000 and requiring monthly lease
payments. Total rental income recognized under this lease was $30,000 in 1996
and $12,000 in 1995.
F-81
<PAGE> 279
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED BALANCE SHEET
MAY 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash........................................................................... $ 16,874
Accounts receivable -- trade, net of allowance for doubtful accounts of
$13,110..................................................................... 539,057
Other.......................................................................... 16,652
----------
Total current assets................................................... 572,583
Property and equipment, at cost less accumulated depreciation of $421,330........ 284,067
Other assets:
Excess of cost over carrying value of net assets acquired, less accumulated
amortization of $149,287.................................................... 778,340
Start-up costs, net of accumulated amortization of $14,663..................... 55,723
Non-compete agreement, less accumulated amortization of $22,917................ 77,083
----------
Total other assets..................................................... 911,146
----------
$1,767,796
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Note payable -- bank........................................................... $2,635,000
Accounts payable -- trade...................................................... 277,793
-- affiliate................................................ 27,782
Income taxes payable........................................................... 2,461
Accrued expenses............................................................... 13,056
Accrued interest payable....................................................... 42,216
Deferred income taxes.......................................................... 4,245
----------
Total current liabilities.............................................. 3,002,553
Stockholders' deficit:
Common stock................................................................... 75,313
Retained deficit............................................................... (1,310,070)
----------
Total stockholders' deficit............................................ (1,234,757)
----------
$1,767,796
=========
</TABLE>
See accompanying notes to financial statements.
F-82
<PAGE> 280
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENT OF OPERATIONS
FIVE MONTHS ENDED MAY 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Revenue:
Announcements and programs..................................................... $ 937,865
Barter accounts................................................................ 65,293
----------
Total revenue.......................................................... 1,003,158
Less direct charges -- commissions............................................... 107,208
----------
Gross profit..................................................................... 895,950
----------
Operating expenses:
Technical department........................................................... 28,843
Program department............................................................. 193,887
Sales department............................................................... 222,007
General and administrative..................................................... 246,680
Consulting and non-compete..................................................... 26,972
Goodwill amortization.......................................................... 18,351
Depreciation and amortization.................................................. 91,903
----------
Total operating expenses............................................... 828,643
----------
Operating income................................................................. 67,307
----------
Other income (expense):
Interest expense............................................................... (90,723)
Rent........................................................................... 12,500
----------
Total other income (expense)........................................... (78,223)
----------
Loss before income taxes......................................................... (10,916)
Provision for income taxes....................................................... 12,856
----------
Net loss......................................................................... $ (23,772)
==========
</TABLE>
See accompanying notes to financial statements.
F-83
<PAGE> 281
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENT OF STOCKHOLDERS' DEFICIT
FIVE MONTHS ENDED MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK DEFICIT TOTAL
------- ----------- -----------
<S> <C> <C> <C>
Balance -- December 31, 1996........................... $75,313 $(1,286,298) $(1,210,985)
Net loss............................................... -- (23,772) (23,772)
------- ----------- -----------
Balance -- May 31, 1997................................ $75,313 $(1,310,070) $(1,234,757)
======= =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-84
<PAGE> 282
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENT OF CASH FLOWS
FIVE MONTHS ENDED MAY 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss.................................................................... $ (23,772)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation........................................................... 45,942
Amortization........................................................... 64,313
Deferred income taxes.................................................. 1,948
Net changes in operating assets and liabilities:
Accounts receivable -- trade........................................ (134,431)
Other assets........................................................ 640
Accounts payable -- trade........................................... 56,906
Accrued expenses.................................................... (38,064)
Accrued interest payable............................................ 31,502
--------
Net cash provided by operating activities......................... 4,984
--------
Cash flows from investing activities:
Capital expenditures........................................................ (35,523)
--------
Net cash used in investing activities............................. (35,523)
--------
Cash flows from financing activities:
Repayment of borrowings..................................................... (2,408)
--------
Net cash used in financing activities............................. (2,408)
--------
Net decrease in cash.......................................................... (32,947)
Cash:
Beginning of period......................................................... 49,821
--------
End of period............................................................... $ 16,874
========
Supplemental cash flows information:
Interest paid............................................................... $ 59,229
Income taxes paid........................................................... 16,250
Equipment acquired by trade................................................. 2,200
</TABLE>
See accompanying notes to financial statements.
F-85
<PAGE> 283
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
NOTE TO COMBINED FINANCIAL STATEMENTS
MAY 31, 1997
(UNAUDITED)
(1) SUBSEQUENT EVENT
On June 2, 1997, Snider Broadcasting Corporation and Subsidiary CDB
Broadcasting Corporation (the "Company") entered into a local marketing
agreement ("LMA") with Citadel Broadcasting Company ("Citadel") whereby Citadel
pays a fixed fee to the Company in exchange for supplying specified programming
to the brokered stations and selling advertising time on the stations. In
compliance with the LMA, the broadcasting revenue and station operating expenses
of the Company for the month ended June 30, 1997 are included in the financial
statements of Citadel and are summarized as follows:
<TABLE>
<S> <C>
Net broadcasting revenues......................................... $247,783
Station operating expenses........................................ 169,569
</TABLE>
F-86
<PAGE> 284
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash........................................................................... $ 74,209
Accounts receivable--trade, net of allowance for doubtful accounts of $6,000... 384,567
Other.......................................................................... 113,716
----------
Total current assets................................................... 572,492
Property and equipment, at cost less accumulated depreciation of $346,745........ 69,855
Other assets:
Excess of cost over carrying value of net assets acquired, less accumulated
amortization of $122,816.................................................... 304,370
Start-up costs, less accumulated amortization of $2,023........................ 78,900
----------
Total other assets..................................................... 383,270
----------
$1,025,617
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Note payable--bank............................................................. $1,737,408
Accounts payable--trade........................................................ 137,490
Income taxes payable........................................................... 3,889
Accrued expenses............................................................... 16,638
Accrued interest payable....................................................... 19,132
----------
Total current liabilities.............................................. 1,914,557
Stockholders' deficit:
Common stock................................................................... 75,313
Retained deficit............................................................... (964,253)
----------
Total stockholders' deficit............................................ (888,940)
----------
$1,025,617
=========
</TABLE>
F-87
<PAGE> 285
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Revenue:
Announcements and programs..................................................... $ 974,107
Barter accounts................................................................ 62,690
----------
Total revenue.......................................................... 1,036,797
Less direct charges--commissions................................................. 136,184
----------
Gross profit..................................................................... 900,613
----------
Operating expenses:
Technical department........................................................... 27,973
Program department............................................................. 156,515
Sales department............................................................... 181,298
General and administrative..................................................... 209,999
Ratings enhancement............................................................ 7,657
Consulting and non-compete..................................................... 32,366
Goodwill amortization.......................................................... 5,340
Depreciation and amortization.................................................. 18,925
----------
Total operating expenses............................................... 640,073
----------
Operating income................................................................. 260,540
Other income (expense):
Interest expense............................................................... (82,076)
Loss on sale of property and equipment......................................... (458)
Rent........................................................................... 15,000
----------
Total other income (expense)........................................... (67,534)
----------
Income before income taxes....................................................... 193,006
Provision for income taxes....................................................... 5,165
----------
Net income....................................................................... $ 187,841
=========
</TABLE>
F-88
<PAGE> 286
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENT OF STOCKHOLDERS' DEFICIT
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK DEFICIT TOTAL
------- ----------- -----------
<S> <C> <C> <C>
Balance--December 31, 1995................................. $75,213 $(1,152,094) $(1,076,881)
Common stock issued........................................ 100 100
Net income................................................. 187,841 187,841
------- ----------- -----------
Balance--June 30, 1996..................................... $75,313 $ (964,253) $ (888,940)
======= ========== ==========
</TABLE>
F-89
<PAGE> 287
SNIDER BROADCASTING CORPORATION AND SUBSIDIARY
CDB BROADCASTING CORPORATION
COMBINED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income..................................................................... $ 187,841
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation.............................................................. 14,256
Amortization.............................................................. 8,800
Loss on sale of property and equipment.................................... 458
Net changes in operating assets and liabilities:
Accounts receivable--trade............................................. (79,413)
Other assets........................................................... (62,851)
Accounts payable--trade................................................ 28,084
Accrued expenses....................................................... 5,884
Accrued interest payable............................................... 4,584
----------
Net cash provided by operating activities............................ 107,643
----------
Cash flows from investing activities:
Capital expenditures........................................................... (25,688)
Proceeds from sale of assets................................................... 825
Business acquisition costs..................................................... (50,000)
Start-up costs................................................................. (80,923)
----------
Net cash used in investing activities....................................... (155,786)
----------
Cash flows from financing activities:
Repayment of borrowings--bank.................................................. (169,500)
--affiliates........................................ (1,291,759)
--others............................................ (184,710)
Proceeds from borrowings....................................................... 1,737,408
Common stock issued............................................................ 100
----------
Net cash provided by financing activities................................... 91,539
----------
Net increase in cash............................................................. 43,396
Cash:
Beginning of period............................................................ 30,813
----------
End of period.................................................................. $ 74,209
=========
Supplemental cash flows information:
Interest paid.................................................................. $ 77,492
=========
</TABLE>
F-90
<PAGE> 288
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Maranatha Broadcasting Company, Inc.:
We have audited the accompanying balance sheet of Maranatha Broadcasting
Company, Inc.'s Radio Broadcasting Division (the "Company") as of December 31,
1996, and the related statements of operations and division equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Maranatha Broadcasting
Company, Inc.'s Radio Broadcasting Division as of December 31, 1996, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
Phoenix, Arizona
September 29, 1997
F-91
<PAGE> 289
MARANATHA BROADCASTING COMPANY, INC.
RADIO BROADCASTING DIVISION
BALANCE SHEET
DECEMBER 31, 1996 AND JUNE 30, 1997
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable.............................................. $ 386,278 $ 312,166
Equipment........................................................ 213,800 220,562
Accumulated depreciation......................................... (140,828) (150,828)
---------- ---------
72,972 69,734
Broadcast license................................................ 10,325 9,895
---------- ---------
Total assets.................................................. $ 469,575 $ 391,795
========== =========
LIABILITIES AND DIVISION EQUITY
Current Liabilities:
Accounts payable................................................. $ 11,944 $ 9,630
Trade payable.................................................... 10,000 --
Accrued compensation and commissions............................. 18,091 12,537
Customer deposits................................................ 16,447 16,964
---------- ---------
Total current liabilities..................................... 56,482 39,131
Commitments and contingencies
Division equity.................................................. 413,093 352,664
---------- ---------
Total liabilities and division equity......................... $ 469,575 $ 391,795
========== =========
</TABLE>
See accompanying notes to financial statements.
F-92
<PAGE> 290
MARANATHA BROADCASTING COMPANY, INC.
RADIO BROADCASTING DIVISION
STATEMENT OF OPERATIONS AND DIVISION EQUITY
YEAR ENDED DECEMBER 31, 1996 AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------
(UNAUDITED)
<S> <C> <C>
Revenue:
Net broadcasting revenue......................................... $2,066,271 $ 976,555
Subcarrier rental................................................ 48,796 24,889
---------- ----------
2,115,067 1,001,444
Operating expenses:
Technical expenses............................................... 75,265 37,677
Program expenses................................................. 191,363 87,784
Selling expenses................................................. 893,721 438,033
General and administrative expenses.............................. 279,090 148,975
Management fee and corporate overhead allocation................. 139,379 45,926
Bad debts........................................................ 62,868 50,619
Depreciation and amortization.................................... 20,148 10,430
---------- ----------
Total operating expenses................................. 1,661,834 819,444
---------- ----------
Net income......................................................... 453,233 182,000
Division equity, beginning of period............................... 441,384 413,093
Transfers to parent................................................ (481,524) (242,429)
---------- ----------
Division equity, end of period..................................... $ 413,093 $ 352,664
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-93
<PAGE> 291
MARANATHA BROADCASTING COMPANY, INC.
RADIO BROADCASTING DIVISION
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996 AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 453,233 $ 182,000
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................ 20,148 10,430
Changes in assets and liabilities:
Decrease in accounts receivable.............................. 25,809 74,112
Decrease in accounts payable and accruals.................... (740) (17,351)
----------- ---------
Net cash provided by operating activities................. 498,450 249,191
----------- ---------
Cash flows from investing activities:
Purchase of radio equipment....................................... (16,926) (6,762)
----------- ---------
Net cash used in investing activities..................... (16,926) (6,762)
----------- ---------
Cash flows from financing activities:
Cash transfers to parent.......................................... (481,524) (242,429)
----------- ---------
Net cash used in financing activities..................... (481,524) (242,429)
----------- ---------
Net change in cash................................................ -- --
Cash, beginning of period........................................... -- --
----------- ---------
Cash, end of period................................................. $ -- $ --
=========== =========
</TABLE>
See accompanying notes to financial statements.
F-94
<PAGE> 292
MARANATHA BROADCASTING COMPANY, INC.
RADIO BROADCASTING DIVISION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX-MONTH PERIOD THEN ENDED IS
UNAUDITED)
(1) NATURE OF BUSINESS AND ORGANIZATION
Radio Broadcasting (the "Company") is a division of the Maranatha
Broadcasting Company, Inc. ("Maranatha"). Maranatha is a television and radio
broadcaster with facilities located in Allentown, Pennsylvania. The Company's
operations and facilities are integrated with those of Maranatha. Maranatha
provides management, accounting and certain administrative services for the
Company and charges them for these services. Maranatha collects and retains all
cash generated by the Radio Broadcasting Division.
The Radio Broadcasting Division provides credit to customers, substantially
all of whom are regional businesses engaged in a variety of industries and
services. The Division broadcasts in the Allentown, Bethlehem, Easton region of
Eastern Pennsylvania as WLEV (formerly WFMZ) and broadcasts, through a
translator, in Reading, Pennsylvania as WLEV.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Equipment
Equipment is carried at cost, less accumulated depreciation. Depreciation
is provided on the straight-line method over the estimated useful lives of 5 to
7 years. Maintenance and repairs are charged to operations as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue
Net broadcasting revenue is presented net of agency commissions and is
recognized when the advertisements are broadcast.
Trade Transactions
Revenue from trade transactions (advertising provided in exchange for goods
and services) is recognized when advertisements are broadcast and trade expense
is recognized when merchandise is consumed or services are performed. An asset
and liability are recorded at the fair market value of the goods or services
received.
Accounts Receivable
Bad debts are accounted for using the direct write-off method where the
expense is recognized in the period in which the specific account is determined
to be uncollectible. Management believes the effects of using this method
approximates the allowance method of accounting for bad debts.
Broadcast License
The broadcast license and translator license were recorded at cost and
amortized over 15 years; the license has been fully amortized.
F-95
<PAGE> 293
MARANATHA BROADCASTING COMPANY, INC.
RADIO BROADCASTING DIVISION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Maranatha has elected by consent of its shareholders to be taxed under the
provisions of Subchapter S for federal and state income tax purposes. Under
those provisions, Maranatha does not pay corporate income taxes on its taxable
income. Instead, the shareholders are liable for individual income taxes on the
Company's taxable income. Accordingly, these financial statements do not contain
a provision for income taxes.
Interim Financial Information
The financial statements as of June 30, 1997 and for the six months ended
June 30, 1997 are unaudited; however, in the opinion of management, all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of the financial statements for the interim period have been
included. The results for the interim period are not necessarily indicative of
the results to be achieved for the full fiscal year.
Division Equity
Division equity at December 31, 1996 consists of accumulated earnings of
$5,629,473 less distributions to Maranatha of $5,216,380.
(3) CONTINGENT LIABILITIES AND COMMITMENTS
Maranatha has certain debt and a revolving line of credit, which is secured
by all the assets of Maranatha, including the assets of the Radio Broadcasting
Division, as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1996
------------ ----------
(UNAUDITED)
<S> <C> <C>
Total notes and debt payable........................ $506,886 $911,743
Less current portion................................ (190,286) (290,286)
-------- --------
Total long-term debt................................ $316,600 621,457
======== ========
Revolving line of credit............................ $ -- $ 65,000
======== ========
</TABLE>
The notes and line of credit bear interest primarily at the lender's prime
rate which was 8.25% and 8.50% at December 31, 1996 and June 30, 1997,
respectively. One of the notes bears interest at a fixed rate of 7.90%.
Maranatha is in compliance with the debt covenants as of June 30, 1997.
The Division leases its Reading translator site and Reading sales office
under operating leases with future minimum monthly payments of $800 through
November 1998. The Division has also entered into lease agreements to provide
sub-channel broadcast frequency to two lessees. The future revenue under the
lease terms is as follows:
<TABLE>
<S> <C>
1997...................................................... $ 48,796
1998...................................................... 50,516
1999...................................................... 39,121
2000...................................................... 39,817
2001...................................................... 23,891
---------
$ 202,141
=========
</TABLE>
F-96
<PAGE> 294
MARANATHA BROADCASTING COMPANY, INC.
RADIO BROADCASTING DIVISION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(4) AGREEMENT OF SALE
On July 15, 1997, Maranatha entered into an asset purchase agreement with
Citadel Broadcasting Company ("CBC") and a wholly-owned subsidiary of CBC to
sell the assets and broadcast license of the Radio Broadcasting Division to CBC
for $23,000,000 plus the broadcasting assets of a radio station owned by CBC and
a wholly-owned subsidiary of CBC.
F-97
<PAGE> 295
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Pacific Northwest Broadcasting Corporation
Boise, Idaho
We have audited the accompanying combined balance sheet of Pacific
Northwest Broadcasting Corporation and Affiliates as of December 31, 1996, and
the related combined statements of operations, changes in owners' equity, and
cash flows for the year then ended. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Pacific
Northwest Broadcasting Corporation and Affiliates as of December 31, 1996, and
the results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ BALUKOFF, LINDSTROM & CO., P.A.
Boise, Idaho
September 25, 1997
F-98
<PAGE> 296
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
COMBINED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash......................................................................... $ 220,381
Trade accounts receivable, net of allowance for doubtful accounts of
$25,000................................................................... 1,079,835
Other accounts receivable.................................................... 57,692
Prepaid expenses............................................................. 189,395
Accrued interest receivable.................................................. 18,169
Current portion of notes receivable.......................................... 488,880
----------
Total current assets...................................................... 2,054,352
Other assets:
AM and FM broadcast licenses................................................. 4,497,916
Notes receivable, less current portion....................................... 3,011,778
Noncompete agreements........................................................ 354,441
Equipment deposits and other assets.......................................... 39,250
Deferred taxes............................................................... 42,443
----------
7,945,828
Property and equipment, at cost
Land and improvements........................................................ 130,011
Leasehold improvements....................................................... 61,744
Towers and antennas.......................................................... 402,710
Transmitters and transmitter buildings....................................... 508,444
Studio and technical equipment............................................... 915,007
Automobiles.................................................................. 44,930
Furniture and office equipment............................................... 360,595
----------
2,423,441
Accumulated depreciation..................................................... (992,576)
----------
1,430,865
----------
$11,431,045
==========
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 268,401
Accrued expenses............................................................. 259,479
Accrued taxes payable........................................................ 12,520
Current portion of notes payable to related parties.......................... 106,868
Current portion of long-term debt............................................ 1,195,717
----------
Total current liabilities................................................. 1,842,985
Long-term debt:
Notes payable to related parties, less current portion....................... 1,155,817
Notes payable, less current portion.......................................... 7,184,057
----------
8,339,874
Deferred revenue............................................................... 235,395
Owners' equity:
Convertible preferred stock, nonvoting, par value $1,000 per share, 5% non
cumulative, authorized 3,500 shares, issued and outstanding 1,396.8
shares.................................................................... 1,396,800
Common stock, voting, no par value, authorized 10,000 shares, issued and
outstanding 3,766.6 shares................................................ 475,677
Members' equity.............................................................. 61,176
Accumulated deficit.......................................................... (920,862)
----------
1,012,791
----------
$11,431,045
==========
</TABLE>
See accompanying notes.
F-99
<PAGE> 297
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Revenues:
Revenues...................................................................... $5,404,307
Less agency and representative commissions.................................... 772,233
----------
4,632,074
Expenses:
Transmission.................................................................. 223,366
Programming and production.................................................... 1,476,235
Sales......................................................................... 816,459
General and administrative.................................................... 1,599,675
Advertising................................................................... 150,696
----------
4,266,431
----------
Income from operations..................................................... 365,643
Nonoperating income (expense)
Gain on sale of assets........................................................ 198,581
Noncompete revenue............................................................ 184,508
Interest income............................................................... 321,759
Interest expense.............................................................. (566,783)
----------
138,065
----------
Income before income taxes................................................. 503,708
Income tax expense.............................................................. 182,480
----------
Net income................................................................. $ 321,228
==========
</TABLE>
See accompanying notes.
F-100
<PAGE> 298
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
COMBINED STATEMENT OF CHANGES IN OWNERS' EQUITY
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PREFERRED COMMON ACCUMULATED MEMBERS'
STOCK STOCK DEFICIT EQUITY TOTAL
---------- --------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996........... $1,396,800 $ 591,302 $(1,180,914) $ -- $ 807,188
Common stock redemption, 125
shares.......................... -- (115,625) -- -- (115,625)
Net income......................... -- -- 260,052 61,176 321,228
-------- --------- ----------- -------- ----------
Balance at December 31, 1996......... $1,396,800 $ 475,677 $ (920,862) $61,176 $1,012,791
========== ========= =========== ======== ==========
</TABLE>
See accompanying notes.
F-101
<PAGE> 299
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income..................................................................... $ 321,228
Adjustments to reconcile net income to net cash provided by operating
activities Amortization..................................................... 55,427
Depreciation................................................................ 71,926
Noncompete revenue.......................................................... (134,508)
Noncompete expense.......................................................... 89,257
Provision for bad debts..................................................... 14,029
Gain on sale of assets...................................................... (198,581)
Legal expense paid directly by bank......................................... 10,200
Changes in operating assets and liabilities
Trade accounts receivable................................................. (604,884)
Other accounts receivable................................................. (5,319)
Prepaid expenses.......................................................... 21,658
Prepaid income tax........................................................ 7,739
Accrued interest receivable............................................... 9,794
Equipment deposits and other assets....................................... (14,258)
Deferred taxes............................................................ 169,936
Bank overdraft............................................................ (118,289)
Accounts payable.......................................................... 90,761
Accrued expenses.......................................................... 82,996
Accrued taxes payable..................................................... 12,520
Net cash used by operating activities.................................. (118,368)
Cash flows from investing activities:
Payments on receivable from shareholders....................................... 39
Loans made to shareholders..................................................... (527,896)
Payments on notes receivable................................................... 773,885
Payments for acquisition of stations........................................... (63,360)
Proceeds from sale of assets................................................... 190,244
Additions to property and equipment............................................ (115,660)
Net cash provided by investing activities.............................. 257,252
Cash flows from financing activities:
Payments on notes payable...................................................... (282,906)
Borrowings on notes payable to related parties................................. 400,000
Payment on notes payable to related parties.................................... (35,597)
Net cash provided by financing activities.............................. 81,497
Net increase in cash................................................... 220,381
Cash at beginning of year........................................................ --
Cash at end of year.................................................... $ 220,381
</TABLE>
See accompanying notes.
F-102
<PAGE> 300
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations
The Company operates AM and FM radio stations in southwestern Idaho.
Revenues received from local advertisers and national agencies advertising in
the southwestern Idaho market account for the majority of revenues.
Principles of Combination
The financial statements include the accounts of Pacific Northwest
Broadcasting Corporation (PNWB) and its wholly owned subsidiary, (Richardson
Broadcasting Company), and Wilson Group, LLC (Wilson), a limited liability
company which has common ownership. Wilson operates as an Idaho limited
liability company and its members have limited personal liability for the
obligations or debts of the entity. Wilson will terminate no later than December
31, 2072. Intercompany accounts and transactions have been eliminated in
combination.
Cash
For purposes of reporting cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents.
Depreciation
Depreciation of property and equipment is provided using the straight line
method over the estimated useful lives of the assets, which range from 3 to 50
years.
Amortization
Costs related to obtaining AM and FM broadcast licenses are amortized using
the straight line method over fifteen years. Accumulated amortization relating
to these licenses was $133,852 at December 31, 1996.
Costs related to the noncompete agreements are amortized using the
straight-line method over five years, the term of the agreement. Accumulated
amortization relating to the noncompete agreements was $171,848 at December 31,
1996.
Deferred Revenue
Deferred revenue consists of a noncompete agreement and will be earned over
the life of the agreement (7 years).
Revenue Recognition and Trade Transactions
Broadcast revenue is recognized when the advertisements are broadcast.
Revenue from trade transactions (advertising provided in exchange for goods and
services) is recognized as income when advertisements are broadcast and trade
expense is recognized when merchandise is consumed or services are performed.
Advertising
The Company expenses advertising costs as they are incurred.
Income Taxes
Income taxes are provided for the tax effects of PNWB transactions reported
in the financial statements and consist of taxes currently due or recoverable
and deferred taxes related primarily to differences between the bases of assets
and liabilities for financial and income tax reporting. Differences between
financial and
F-103
<PAGE> 301
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996 -- CONTINUED
income tax reporting relate to accumulated depreciation, installment sales,
basis in subsidiary's stock, allowance for doubtful accounts, deferred
compensation, noncompete amortization and shareholder interest payable.
No provision has been made for the tax effects of the Wilson transactions
since Wilson is taxed as a partnership and taxes are the responsibility of the
individual members.
Estimates
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
reported revenues and expenses. Actual results could differ from these
estimates.
Concentrations of Credit Risk
In the normal course of business, the Company extends unsecured credit to
customers principally national advertising agencies and companies in the
southwestern Idaho market. The Company also has demand deposits on hand in
financial institutions which exceed applicable FDIC insurance.
Acquisitions and Local Marketing Agreement
In October, 1996, the Company acquired two radio stations in Boise, Idaho
for $5,000,000. This acquisition was accounted for using the purchase method of
accounting. The purchase price has been allocated to the assets purchased based
upon fair values as agreed to with the seller.
The Company operated the two radio stations under a Local Marketing
Agreement (LMA) for six months prior to the acquisition. Under the terms of the
LMA, the expenses of operating the stations (other than depreciation or
amortization of assets) were the obligation of the Company and the Company
received the revenues generated by the stations.
NOTE B -- NOTES RECEIVABLE
The Company sold radio stations in Medford, Oregon, Chico, California, and
Eugene, Oregon in prior years and financed the sale of the radio stations to the
buyers. In 1996, the Company sold two radio stations and a building in
Pocatello, Idaho, and financed the sale. Each of the sales agreements included
provisions which restrict the Company from competing in markets served by the
radio stations which were sold. The noncompete agreements extend for periods up
to seven years from the dates of the sales. The terms of the notes are as
follows:
<TABLE>
<S> <C>
Note receivable from broadcasting company for Pocatello stations at $4,003 per
month through March 1997 and $11,592 per month thereafter including interest
at 8.5%, due March 2002, secured by substantially all assets of the Pocatello
stations...................................................................... $ 564,993
Note receivable from broadcasting company for Pocatello building at $2,405 per
month, including interest at 8.5%, due March 2002, secured by real estate..... 108,884
Note receivable from broadcasting company for Chico and Eugene stations at
monthly payments ranging from $37,033 to $53,204 including interest at 7.71%,
due September 2002, secured by substantially all assets of the stations....... 2,826,781
----------
3,500,658
Less current portion............................................................ 488,880
----------
$3,011,778
=========
</TABLE>
F-104
<PAGE> 302
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996 -- CONTINUED
NOTE C -- LONG-TERM DEBT
Long-term debt is summarized as follows:
To banks:
<TABLE>
<S> <C>
Note payable to bank, monthly payments of interest only at prime plus 1%,
secured by substantially all of the Company's assets. The interest rate at
December 31, 1996 was 9.25%................................................... $8,000,000
To individuals:
Note payable to former shareholder at $1,205 per month including interest at
8% through January 2003, unsecured............................................ 69,440
Note payable to former shareholder at $991 per month including interest at 10%
through June 2000, unsecured.................................................. 35,002
Note payable to former shareholder at $3,033 per month including interest at
8% through January 2006, unsecured............................................ 234,457
Note payable to former shareholder at $375 per month through January 2006..... 40,875
Unsecured notes payable to related party, due on demand....................... 7,772
Unsecured notes payable to related parties at $4,446 per month including
interest at 9% through August 2018............................................ 208,093
Unsecured notes payable to related party, due on demand including interest at
7.5%.......................................................................... 53,372
Notes payable to related parties, secured by certain notes receivable and
guaranteed by principal shareholder, payable in monthly installments,
including interest as follows:
</TABLE>
<TABLE>
<CAPTION>
MONTHLY INTEREST
INSTALLMENTS RATES DUE DATES
- ------------ -------- -----------------------------------
<C> <C> <S> <C>
$5,077 8.0% January 1, 2005.................... 679,945
$ 470 8.0% January 1, 2005.................... 58,820
$ 470 8.0% January 1, 2005.................... 58,820
$ 470 8.0% January 1, 2005.................... 58,821
$ 440 8.0% January 1, 2005.................... 58,956
$ 381 8.0% January 1, 2005.................... 50,989
Accrued interest due to related parties.......................... 27,097
----------
9,642,459
Less current portion............................................. 1,302,585
----------
$8,339,874
==========
</TABLE>
Maturities in future years are: 1997 -- $1,302,585, 1998 -- $2,589,369;
1999 -- $4,454,088; 2000 -- $106,077; 2001 -- $1,018,430 and
thereafter -- $171,910.
The note payable to the bank limits the amount of new debt and operating
leases to not more than a total of $50,000 without lender's approval.
The bank issued a commitment letter to refinance $7,000,000 of the
$8,000,000 obligation in 1997, including a bridge loan of $2,000,000 and a term
loan of $5,000,000. The bridge loan has terms which include interest at prime
plus 1% and a maturity date of February 28, 1998. Requirements of the term loan
include interest at prime plus 1%, due August 31, 1999 and monthly payments of
approximately $77,000 (using an
F-105
<PAGE> 303
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996 -- CONTINUED
interest rate of 9.25%). The current portion and scheduled maturities have been
adjusted to reflect the intended refinance.
NOTE D -- RELATED PARTY TRANSACTIONS
Interest expense paid to related parties amounted to $187,646 in 1996. The
Company leases land, office facilities, and equipment from certain shareholders
and officers of the Company. Rental expense paid to related parties amounted to
$99,588 in 1996.
NOTE E -- LEASE COMMITMENTS
The Company leases radio transmitter sites, buildings, music and airtime
under noncancellable leases with terms in excess of one year. Future minimum
payments, by year and in the aggregate, under noncancellable operating leases
with initial or remaining terms of one year or more consisted of the following
at December 31, 1996:
<TABLE>
<S> <C>
1997.............................................................. $206,120
1998.............................................................. 201,980
1999.............................................................. 133,202
2000.............................................................. 31,300
2001.............................................................. 11,150
Thereafter........................................................ 105,850
--------
Total minimum lease payments...................................... $689,602
========
</TABLE>
Rental expense amounted to $245,589 in 1996.
NOTE F -- INCOME TAXES
The provision for income taxes results from continuing operations and
includes the following components:
<TABLE>
<S> <C>
Federal
Current tax provision................................................... $ --
Deferred tax provision.................................................. 147,548
--------
147,548
State
Current tax provision................................................... 12,544
Deferred tax provision.................................................. 22,388
--------
34,932
--------
Total income tax expense.......................................................... $182,480
========
</TABLE>
The components of the net deferred tax asset at December 31, 1996 are as
follows:
F-106
<PAGE> 304
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996 -- CONTINUED
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
--------- -------- ---------
<S> <C> <C> <C>
Deferred tax liability from:
Taxable temporary differences............................. $(255,017) $(60,004) $(315,021)
Deferred tax asset from:
Deductible temporary differences.......................... 105,662 22,049 127,711
Operating loss carryforward............................... 205,289 -- 205,289
Tax credit carryforward................................... 83,214 2,793 86,007
Valuation allowance....................................... (61,543) -- (61,543)
--------- -------- ---------
332,622 24,842 357,464
--------- -------- ---------
Deferred tax asset (liability).............................. $ 77,605 $(35,162) $ 42,443
========= ======== =========
</TABLE>
The following reconciles the federal tax provision with the expected
provision by applying statutory rates to income before income taxes:
<TABLE>
<S> <C>
Federal tax expense at statutory rate............................. $171,261
Effect of state taxes............................................. (13,701)
Nondeductible expenses............................................ 2,861
Partnership income................................................ (20,800)
Other............................................................. 7,927
--------
Federal income tax expense........................................ $147,548
========
</TABLE>
For income tax purposes, operating losses and tax credit carryovers used
and available are as follows at December 31, 1996:
<TABLE>
<CAPTION>
USED AVAILABLE
-------- ---------
<S> <C> <C>
Net operating loss, federal............................. $379,789 $ 710,617
Alternative minimum tax credit.......................... -- 21,671
General business credit................................. -- 61,543
</TABLE>
The federal net operating losses expire during 2004 through 2010. The
general business credits expire during 1998 through 2000. The alternative
minimum tax credits can be carried forward indefinitely.
NOTE G -- DEFINED CONTRIBUTION PLAN
The Company maintains a 401(k) plan covering all employees over the age of
twenty-one who have completed one year of service. The Company matches 10% of an
employee's contribution. Contributions to the plan were $7,022 in 1996.
NOTE H -- CONVERTIBLE PREFERRED STOCK
The preferred stockholders have the option to convert the preferred stock
into common stock prior to December 31, 2002 on the basis of five shares of
common stock for each share of preferred stock redeemed. The holders of
preferred stock do not have voting rights. Preferred stock is redeemable at par.
Subsequent to year end, the preferred stockholders converted all of their
preferred stock to common stock at the ratio of five shares of common stock for
each share of preferred stock.
F-107
<PAGE> 305
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996 -- CONTINUED
NOTE I -- CASH FLOW INFORMATION
Supplemental cash flow information for the years ended December 31, 1996 is
as follows:
<TABLE>
<S> <C>
Interest paid.................................................. $ 347,933
Taxes paid (net of refunds).................................... $ (7,718)
Noncash financing and investing activities:
Purchase of shareholder's common stock and payment of
deferred compensation:
Common stock redeemed..................................... $ 115,625
New debt incurred......................................... (295,000)
Deferred compensation paid................................ 179,375
-----------
$ --
==========
Sale of assets:
Proceeds from sale of property and equipment.............. $ 689,000
Increase in notes receivable.............................. (689,000)
-----------
$ --
==========
Payment of shareholder receivable with reduction in
shareholder note payable:
Notes payable reduced..................................... $ 1,000,000
Note payable created...................................... (7,772)
Shareholder receivable paid............................... (992,228)
-----------
$ --
==========
Refinancing company and shareholder debt and acquisition of
radio stations:
Proceeds from new debt.................................... $ 8,000,000
Payments on existing debt................................. (2,557,188)
Broadcast licenses acquired............................... (4,100,000)
Property and equipment acquired........................... (800,000)
Noncompete agreement...................................... (100,000)
Debt repayment on behalf of shareholder................... (415,972)
Loan fees................................................. (80,000)
Legal fees................................................ (10,200)
-----------
Net cash paid for acquisition $ (63,360)
==========
</TABLE>
NOTE J -- SUBSEQUENT EVENTS
The Company has entered into an agreement to redirect certain of the
Company's broadcast signals in exchange for a payment of $2,000,000. The
agreement is subject to Federal Communications Commission (FCC) approval and is
secured by a letter of credit. Approval is expected in 1997 and the payment is
expected to be received subsequent to approval.
Subsequent to December 31, 1996, the shareholders of PNWB and the members
of Wilson have signed letters of intent to sell the capital stock of PNWB, the
operating assets of Wilson and a building owned by a shareholder to Citadel
Broadcasting Company (Citadel). The transactions are subject to approval of the
FCC. Under the letters of intent, the Company will enter into a LMA with Citadel
which will allow Citadel use of the property and equipment of the radio stations
in exchange for a fee. The LMA will continue until FCC approval is received to
close the sales of the stock of PNWB and the assets of Wilson. The sale of the
stock of
F-108
<PAGE> 306
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996 -- CONTINUED
PNWB will not close prior to January 1, 1998 and the sale of the assets of
Wilson will not close prior to April 18, 1998. The sale price of $28,500,000 for
the stock, assets and building is payable in cash totaling $25,650,000 and stock
of $2,850,000. The agreement to purchase the stock of PNWB requires, among other
things, that certain minimum levels of net asset value be met on the date of
closing.
The Company made payments of notes payable amounting to approximately
$1,800,000 subsequent to year end in advance of the payment due dates.
Additionally, the Company received approximately $2,600,000 in full payment of
certain notes receivables subsequent to December 31, 1996.
Subsequent to year end, the preferred stockholders converted all of their
preferred stock to common stock at the ratio of five shares of common stock for
each share of preferred stock.
F-109
<PAGE> 307
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
UNAUDITED COMBINED BALANCE SHEETS
JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................................... $ 223,280 $ 26,452
Trade accounts receivable, net of allowance for doubtful accounts of
$25,000 in 1997 and $20,000 in 1996..................................... 1,180,963 720,587
Receivable from shareholders.............................................. 87,640 184,772
Other accounts receivable................................................. -- 132,006
Prepaid expenses.......................................................... 119,301 55,198
Prepaid income tax........................................................ 1,930 --
Accrued interest receivable............................................... 17,042 42,065
Current portion of notes receivable....................................... 551,623 433,089
-----------
Total current assets............................................... 2,181,779 1,594,169
Other Assets:
AM and FM broadcast licenses.............................................. 4,428,368 433,295
Notes receivable, less current portion.................................... 2,735,799 3,692,472
Noncompete agreements..................................................... 301,477 300,736
Equipment deposits and other assets....................................... 43,510 34,991
Deferred taxes............................................................ 35,728 166,772
-----------
7,544,882 4,628,266
Property and equipment, at cost:
Land and improvements..................................................... 3,272 170,521
Leasehold improvements.................................................... 63,063 61,744
Towers and antennas....................................................... 402,710 319,489
Transmitters and transmitter buildings.................................... 508,916 251,408
Studio and technical equipment............................................ 947,674 444,892
Automobiles............................................................... 44,930 21,380
Furniture and office equipment............................................ 382,018 248,902
Construction in progress.................................................. 14,287 --
-----------
2,366,870 1,518,336
Accumulated depreciation.................................................. (1,062,352) (952,908)
-----------
1,304,518 565,428
-----------
$11,031,179 $ 6,787,863
===========
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable.......................................................... $ 165,262 $ 84,817
Accrued expenses.......................................................... 299,865 256,715
Accrued taxes payable..................................................... -- 13,492
Current portion of notes payable to related parties....................... 72,896 234,970
Current portion of long-term debt......................................... 3,438,732 648,769
-----------
Total current liabilities.......................................... 3,976,755 1,238,763
Long-term debt:
Notes payable to related parties, less current portion.................... 1,132,539 1,792,369
Notes payable, less current portion....................................... 4,921,013 2,652,725
-----------
6,053,552 4,445,094
Deferred revenue............................................................ 168,141 302,649
Owners' equity:
Convertible preferred stock, nonvoting, par value $1,000 per share, 5% non
cumulative, authorized 3,500 shares, issued and outstanding 1,396.8
shares.................................................................. 1,396,800 1,396,800
Common stock, voting, no par value, authorized 10,000 shares, issued and
outstanding 3,766.6 in 1997 and 1996, respectively...................... 475,677 475,677
Members' deficit.......................................................... (133,293) --
Accumulated deficit....................................................... (906,453) (1,071,120)
-----------
832,731 801,357
-----------
$11,031,179 $ 6,787,863
===========
</TABLE>
See accompanying notes.
F-110
<PAGE> 308
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
UNAUDITED COMBINED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Revenues:
Revenues.......................................................... $3,251,875 $1,983,207
Less agency and representative commissions........................ 471,266 284,195
---------- ----------
2,780,609 1,699,012
Expenses:
Transmission...................................................... 146,577 98,274
Programming and production........................................ 922,149 632,119
Sales............................................................. 514,444 296,329
General and administrative........................................ 954,199 700,322
Advertising....................................................... 96,845 79,330
---------- ----------
2,634,214 1,806,374
---------- ----------
Income (loss) from operations............................. 146,395 (107,362)
Nonoperating income (expense)
Gain (loss) on sale of assets..................................... (65,639) 217,444
Noncompete revenue................................................ 67,254 117,254
Interest income................................................... 142,847 171,188
Interest expense.................................................. (466,914) (229,607)
---------- ----------
(322,452) 276,279
---------- ----------
Income (loss) before income taxes......................... (176,057) 168,917
Income tax expense.................................................. 4,003 59,123
---------- ----------
Net income (loss)......................................... $ (180,060) $ 109,794
========== ==========
</TABLE>
See accompanying notes.
F-111
<PAGE> 309
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
UNAUDITED COMBINED STATEMENTS OF CHANGES IN OWNERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
PREFERRED COMMON ACCUMULATED MEMBERS'
STOCK STOCK DEFICIT DEFICIT TOTAL
---------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996... $1,396,800 $ 591,302 $(1,180,914) $ -- $ 807,188
Common stock redemption,
125 shares.............. -- (115,625) -- -- (115,625)
Net income................. -- -- 109,794 -- 109,794
--------- ---------- ---------- ---------- ----------
Balance at June 30, 1996..... $1,396,800 $ 475,677 $(1,071,120) $ -- $ 801,357
========= ========== ========== ========== ==========
Balance at January 1, 1997... $1,396,800 $ 475,677 $ (920,862) $ 61,176 $1,012,791
Net income (loss).......... -- -- 14,409 (194,469) (180,060)
--------- ---------- ---------- ---------- ----------
Balance at June 30, 1997..... $1,396,800 $ 475,677 $ (906,453) $(133,293) $ 832,731
========= ========== ========== ========== ==========
</TABLE>
See accompanying notes.
F-112
<PAGE> 310
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
UNAUDITED COMBINED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)....................................................... $(180,060) $ 109,794
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
Amortization.......................................................... 69,548 20,048
Depreciation.......................................................... 69,776 32,258
Noncompete revenue.................................................... (67,254) (67,254)
Noncompete expense.................................................... 52,964 42,962
Provision for bad debts............................................... 13,557 13,766
(Gain) loss on sale of assets......................................... 65,639 (217,597)
Changes in operating assets and liabilities
Trade accounts receivable.......................................... (114,685) (245,373)
Other accounts receivable.......................................... 57,692 (80,039)
Prepaid expenses................................................... 70,094 75,855
Prepaid income tax................................................. (1,930) 7,739
Accrued interest receivable........................................ 1,127 (14,102)
Equipment deposits and other assets................................ (4,260) (9,999)
Deferred taxes..................................................... 6,715 45,607
Accounts payable................................................... (103,139) (92,823)
Bank overdraft..................................................... -- (118,289)
Accrued expenses................................................... 40,386 80,232
Accrued taxes payable.............................................. (12,520) 13,492
--------- ---------
Net cash used by operating activities............................ (36,350) (403,723)
Cash flows from investing activities:
Loans made to shareholders.............................................. (87,640) (99,327)
Payments on notes receivable............................................ 213,236 148,982
Proceeds from sale of assets............................................ 61,100 168,750
Additions to property and equipment..................................... (70,168) (6,685)
--------- ---------
Net cash provided by investing activities........................ 116,528 211,720
Cash flows from financing activities:
Borrowings on notes payable............................................. -- 200,500
Payments on notes payable............................................... (20,029) (118,874)
Borrowings on notes payable to related parties.......................... -- 150,000
Payment on notes payable to related parties............................. (57,250) (13,171)
--------- ---------
Net cash provided (used) by financing activities................. (77,279) 218,455
--------- ---------
Net increase in cash............................................. 2,899 26,452
Cash at beginning of period............................................... 220,381 --
--------- ---------
Cash at end of period............................................ $ 223,280 $ 26,452
========= =========
Supplemental disclosure of cash flow information:
Interest paid........................................................... $ 229,413 $ 464,886
Taxes paid (net of refunds)............................................. $ 11,739 $ (7,718)
Noncash financing and investing activities:
Purchase of shareholder's common stock and related payment of deferred
compensation:
Common stock redeeemed............................................. $ -- $ 115,625
New debt incurred.................................................. $ -- $(295,000)
Deferred compensation paid......................................... 179,375
--------- ---------
$ -- $ --
========= =========
Sale of assets:
Proceeds from sale of property and equipment.......................... $ -- $ 689,000
Increase in notes receivable.......................................... -- (689,000)
--------- ---------
$ -- $ --
========= =========
</TABLE>
See accompanying notes.
F-113
<PAGE> 311
PACIFIC NORTHWEST BROADCASTING CORPORATION AND AFFILIATES
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
NOTE A -- UNAUDITED INTERIM FINANCIAL STATEMENTS
The combined balance sheet as of June 30, 1997 and 1996 and the combined
statements of operations, changes in owners' equity, and cash flows for the six
month periods ended June 30, 1997 and 1996 are unaudited. In the opinion of
management, the accompanying unaudited financial statements contain all
adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the financial position of Pacific Northwest Broadcasting
Corporation and Affiliates, (the Company) and the results of operations, changes
in owners' equity, and cash flows. These interim unaudited combined financial
statements should be read in conjunction with the audited combined financial
statements. The combined results of operations for the six months ended June 30,
1997 and 1996 are not necessarily indicative of results to be expected for the
full year.
NOTE B -- AGREEMENT TO REDIRECT SIGNAL
The Company has entered into an agreement to redirect certain of the
Company's broadcast signals in exchange for a payment of $2,000,000. The
agreement is subject to Federal Communications Commission (FCC) approval and is
secured by a letter of credit. Approval is expected in 1997 and payment is
expected subsequently.
NOTE C -- SUBSEQUENT EVENTS
Subsequent to June 30, 1997, the shareholders of Pacific Northwest
Broadcasting Corporation (PNWB) and the members of Wilson Group, LLC (Wilson)
have signed letters of intent to sell the capital stock of PNWB, the operating
assets of Wilson and a building owned by a shareholder to Citadel Broadcasting
Company (Citadel). The transactions are subject to approval of the FCC. Under
the letters of intent, the Company will enter into a Local Marketing Agreement
(LMA) with Citadel which will allow Citadel use of the property and equipment of
the radio stations in exchange for a fee. The LMA will continue until FCC
approval is received to close the sales of the stock of PNWB and the assets of
Wilson. The sale of the stock of PNWB will not close prior to January 1, 1998
and the sale of the assets of Wilson will not close prior to April 18, 1998. The
sales price of $28,500,000 for the stock, assets and building is payable in cash
totaling $25,650,000 and stock of $2,850,000. The agreement to purchase the
stock of PNWB requires, among other things, that certain minimum levels of net
asset value be met on the date of closing.
The Company made payments of notes payable amounting to approximately
$1,800,000 subsequent to June 30, 1997 in advance of the payment due dates.
Additionally, the Company received approximately $2,600,000 in full payment of
certain receivables subsequent to June 30, 1997.
Subsequent to June 30, 1997, the preferred stockholders converted all of
their preferred stock to common stock at the ratio of five shares of common
stock for each share of preferred stock.
F-114
<PAGE> 312
=======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN A CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS THE COMPANY SINCE THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary..................... 1
Risk Factors........................... 20
Use of Proceeds........................ 28
Capitalization......................... 29
Unaudited Pro Forma Condensed
Consolidated Financial Statements.... 30
Selected Historical Financial Data..... 45
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 47
Business............................... 52
The Pending Transactions............... 83
Management............................. 88
Certain Transactions................... 97
Security Ownership of Certain
Beneficial Owners.................... 99
Description of Indebtedness............ 103
The Exchange Offer..................... 106
Description of the Notes............... 115
Description of the Exchangeable
Preferred Stock and Exchange
Debentures........................... 139
Description of Other Capital Stock..... 176
Certain Federal Income Tax
Considerations....................... 179
Plan of Distribution................... 186
Legal Matters.......................... 187
Experts................................ 187
Available Information.................. 187
Glossary of Certain Defined Terms...... 189
Index to Financial Statements.......... F-1
</TABLE>
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
=======================================================
=======================================================
$201,000,000
CITADEL LOGO
OFFER TO EXCHANGE
10 1/4% SENIOR SUBORDINATED
NOTES DUE 2007
FOR
10 1/4% SERIES B SENIOR
SUBORDINATED NOTES DUE 2007
AND
13 1/4% SERIES A EXCHANGEABLE
PREFERRED STOCK
FOR
13 1/4% SERIES B EXCHANGEABLE
PREFERRED STOCK
-----------------
PROSPECTUS
-----------------
, 1997
=======================================================
<PAGE> 313
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada General Corporation Law (the "NGCL") empowers
a corporation to indemnify any person who was or is a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and with respect to any criminal proceeding, he had reasonable
cause to believe that his conduct was unlawful.
Section 78.751 of the NGCL also empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including amounts paid in settlement and attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation unless, and only to the extent
that, the court in which such action or suit was brought or other court of
competent jurisdiction shall determine upon application that in view of all the
circumstances of the case, that despite the adjudication of liability such
person is fairly and reasonably entitled to indemnity for such expenses which
the court shall deem proper.
Section 78.751 of the NGCL further provides that, to the extent that a
director or officer of a corporation has been successful on the merits or
otherwise, in the defense of any action, suit or proceeding referred to above or
in the defense of any claim, issue or matter therein, he must be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith and that indemnification provided for by Section
78.751 of the NGCL shall not be deemed exclusive of any other rights to which
the indemnified party may be entitled, except that such indemnification may not
be made to any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action, unless a court of competent
jurisdiction orders otherwise, utilizing the standard described in the
immediately preceding paragraph.
The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of the officers and directors incurred
in defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by the officer or
director to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation; these provisions do not affect any rights to advancement of
expenses to which corporate personnel other than officers and directors may be
entitled under any contract or otherwise by law.
Any indemnification referred to above, unless ordered by a court or paid as
incurred in advance of final disposition upon receipt of a proper undertaking to
repay the same, must be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances. The determination
must be made: (i) by the stockholders; (ii) by the
II-1
<PAGE> 314
board of directors by majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding; (iii) if a majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding so
orders, by independent legal counsel in a written opinion; or (iv) if a quorum
consisting of directors who were not parties to the act, suit, or proceeding
cannot be obtained, by independent legal counsel in a written opinion.
Article VI of Citadel Broadcasting Company's Amended and Restated Articles
of Incorporation provides as follows:
To the full extent permitted by law, the Corporation shall indemnify
any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he or she is or was a director of the Corporation
or any predecessor of the Corporation or serves or served any other
enterprise as director at the request of the Corporation or any predecessor
of the Corporation.
Citadel Broadcasting Company's Bylaws further implement the permissive
provisions of Section 78.751 of the NGCL discussed above.
As permitted by Section 78.037 of the NGCL, Article V of Citadel
Broadcasting Company's Amended and Restated Articles of Incorporation provides
as follows:
To the full extent permitted by General Corporation Law of State of
Nevada in effect from time to time and to no greater extent, no officer or
member of the Board of Directors shall be liable for monetary damages for
breach of fiduciary duty in his or her capacity as an officer or a director
in any action brought by or on behalf of the Corporation or any of its
shareholders.
Section 78.037 currently provides that any such provision of a corporation's
articles of incorporation may not eliminate or limit the liability of a director
or officer for (a) acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law; or (b) the payment of dividends in violation of
the NGCL.
Citadel Broadcasting Company maintains insurance to protect persons
entitled to indemnification pursuant to its Amended and Restated Articles of
Incorporation and Bylaws and the NGCL against expenses, judgments, fines and
amounts paid in settlement, to the fullest extent permitted by the NGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
2.1 Stock Purchase Agreement dated September 29, 1997 among Pacific Northwest
Broadcasting, Inc., Citadel Broadcasting Company and Citadel License, Inc.*
2.2 Asset Purchase Agreement dated September 29, 1997 among Wilson Group, LLC, Citadel
Broadcasting Company and Citadel License, Inc.*
2.3 Asset Purchase Agreement dated as of July 15, 1997 among Maranatha Broadcasting
Company, Inc., Citadel Broadcasting Company and Citadel License, Inc. (relating to
WFMZ-FM)
2.4 Asset Purchase Agreement dated as of July 15, 1997 among Maranatha Broadcasting
Company, Inc., Citadel Broadcasting Company and Citadel License, Inc. (relating to
WEST-AM)
2.5 Merger Agreement dated as of June 2, 1997 among Snider Corporation, Ted L. Snider,
Sr., Jane J. Snider, Citadel Communications Corporation and Citadel Broadcasting
Company
</TABLE>
II-2
<PAGE> 315
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
2.6 Merger Agreement dated as of June 2, 1997 among Snider Broadcasting Corporation,
Ted L. Snider, Jr., Calvin G. Arnold, Citadel Communications Corporation and
Citadel Broadcasting Company
2.7 Asset Purchase Agreement dated as of June 2, 1997 among CDB Broadcasting
Corporation, CDB License Corporation and Citadel Broadcasting Company
3(i)(a) Restated Articles of Incorporation of Citadel Broadcasting Company
3(i)(b) Amendment to Certificate of the Designations, Voting Powers Preferences and
Relative, Participating, Optional and Other Special Rights and Qualifications,
Limitations or Restrictions of the 13 1/4% Series A Exchangeable Preferred Stock
and the 13 1/4% Series B Exchangeable Preferred Stock of Citadel Broadcasting
Company
3(i)(c) Articles of Incorporation of Citadel License, Inc.
3(ii)(a) Bylaws of Citadel Broadcasting Company, as amended
3(ii)(b) Bylaws of Citadel License, Inc.
4.1 Indenture dated as of July 1, 1997 among Citadel Broadcasting Company, Citadel
License, Inc. and The Bank of New York, as Trustee, with the forms of 10 1/4%
Senior Subordinated Notes due 2007 and 10 1/4% Series B Senior Subordinated Notes
due 2007 included therein
4.2 Indenture dated as of July 1, 1997 among Citadel Broadcasting Company, Citadel
License, Inc. and The Bank of New York, as Trustee, with the forms of 13 1/4%
Exchange Debentures due 2009 and 13 1/4% Series B Exchange Debentures due 2009
included therein
4.3 Amendment to Certificate of the Designations, Voting Powers Preferences and
Relative, Participating, Optional and Other Special Rights and Qualifications,
Limitations or Restrictions of the 13 1/4% Series A Exchangeable Preferred Stock
and the 13 1/4% Series B Exchangeable Preferred Stock of Citadel Broadcasting
Company (filed as Exhibit 3(i)(b))
5.1 Opinion of Eckert Seamans Cherin & Mellott, including consent*
5.2 Opinion of Lionel Sawyer & Collins*
8 Opinion of Eckert Seamans Cherin & Mellott, LLC regarding certain Federal income
tax matters, including consent*
9 Voting Trust Agreement dated as of March 17, 1997 among Citadel Communications
Corporation, ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment Partners,
L.P., Christopher Hall as Initial Trustee, and J. Walter Corcoran and Harlan Levy
as initial Back-up Trustees
10.1 Employment Agreement dated as of June 28, 1996 among Lawrence R. Wilson, Citadel
Broadcasting Company and Citadel Communications Corporation
10.2 Citadel Communications Corporation 1996 Equity Incentive Plan, as amended
10.3 Citadel Communications Corporation Nonqualified Stock Option Agreement made and
entered into as of June 28, 1996 between Citadel Communications Corporation and
Lawrence R. Wilson
10.4 Form of Citadel Communications Corporation Stock Option Agreement for grants
effective as of December 21, 1994
10.5 Form of Citadel Communications Corporation Stock Option Agreement for grants
effective as of February 21, 1994
10.6 Joint Sales Agreement dated as of December 15, 1995 among Pourtales Radio
Partnership, Pourtales Holdings, Inc., Springs Radio, Inc., KVUU/KSSS, Inc. and
Citadel Broadcasting Company
</TABLE>
II-3
<PAGE> 316
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
10.7 Securities Purchase and Exchange Agreement dated as of June 28, 1996 among Citadel
Communications Corporation, Citadel Broadcasting Company, ABRY Broadcast Partners
II, L.P., ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company, Bank
of America Illinois, Oppenheimer & Co., Inc., Christopher J. Perry, Robert F.
Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary, and
Thomas E. Pelt, Jr.
10.8 First Amendment to the Securities Purchase Agreement dated as of December 31, 1996
among Citadel Communications Corporation, Citadel Broadcasting Company, Deschutes
Acquisition Corporation, ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment
Partners, L.P., Baker, Fentress & Company, Oppenheimer & Co., Inc., Bank of
America Illinois, Christopher J. Perry, Robert F. Perille, M. Ann O'Brien, Ford S.
Bartholow, Jeffrey M. Mann, Matthew W. Clary, Sheryl E. Bartol, Andrea P. Joselit,
The Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch
Family Trust u/a/d 2-15-94, Babson Capital Partners Limited Partnership, Tal
Johnson, Edward T. Hardy and Ralph W. McKee
10.9 Second Amendment to the Securities Purchase and Exchange Agreement dated as of
March 17, 1997 among Citadel Communications Corporation, Citadel Broadcasting
Company, Deschutes Acquisition Corporation, ABRY Broadcast Partners II, L.P.,
ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company, Oppenheimer &
Co., Inc., Bank of America Illinois, Christopher J. Perry, Robert F. Perille, M.
Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary, Sheryl E.
Bartol, Andrea P. Joselit, The Endeavour Capital Fund Limited Partnership, Joseph
P. Tennant, The Schafbuch Family Trust u/a/d/ 2-15-94, Babson Capital Partners
Limited Partnership, Tal Johnson, Edward T. Hardy and Ralph W. McKee
10.10 Third Amendment to the Securities Purchase and Exchange Agreement dated as of
September 29, 1997 among Citadel Communications Corporation, Citadel Broadcasting
Company, Deschutes Acquisition Corporation, ABRY Broadcast Partners II, L.P.,
ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company, Oppenheimer &
Co., Inc., Bank of America Illinois, Christopher J. Perry, Robert F. Perille, M.
Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary, Sheryl E.
Bartol, Andrea P. Joselit, The Endeavour Capital Fund Limited Partnership, Joseph
P. Tennant, The Schafbuch Family Trust u/a/d/ 2-15-94, Babson Capital Partners
Limited Partnership, Tal Johnson, Edward T. Hardy, Ralph W. McKee, Philip J. Urso,
Phillip Norton, Richard Poholek, Karen Kutniewski, Thomas Jenkins, Jeff Thompson,
Pat Bowen, Mark Urso, M. Linda Urso and Juliet Rice*
10.11 Second Amended and Restated Stockholders Agreement dated as of June 28, 1996,
among Citadel Communications Corporation, Baker, Fentress & Company, Bank of
America Illinois, Christopher J. Perry, Robert F. Perille, M. Ann O'Brien, Ford S.
Bartholow, Jeffrey M. Mann, Matthew W. Clary, Thomas E. Van Pelt, Jr., ABRY
Broadcast Partners II, L.P., ABRY Citadel Investment Partners, L.P., Oppenheimer &
Co., Inc., Finova Capital Corporation, Lawrence R. Wilson, Claire Wilson, Donna L.
Heffner and Stuart Stanek
10.12 First Amendment to the Second Amended Stockholders Agreement dated as of December
31, 1996 among Citadel Communications Corporation, ABRY Broadcast Partners II,
L.P., ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company,
Oppenheimer & Co., Inc., Bank of America Illinois, Christopher J. Perry, Robert F.
Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary,
Sheryl E. Bartol, Andrea P. Joselit, Finova Capital Corporation, The Endeavour
Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch Family Trust
u/a/d 2-15-94, Babson Capital Partners Limited Partnership, Tal Johnson, Edward T.
Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
</TABLE>
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<PAGE> 317
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
10.13 Second Amendment to the Second Amended and Restated Stockholders Agreement dated
as of March 17, 1997 among Citadel Communications Corporation, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Baker, Fentress &
Company, Oppenheimer & Co., Inc., Bank of America Illinois, Christopher J. Perry,
Robert F. Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W.
Clary, Sheryl E. Bartol, Andrea P. Joselit, Finova Capital Corporation, The
Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch
Family Trust, Babson Capital Partners Limited Partnership, Tal Johnson, Edward T.
Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
10.14 Third Amendment to the Second Amended and Restated Stockholders Agreement dated as
of September 29, 1997 among Citadel Communications Corporation, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Baker, Fentress &
Company, Oppenheimer & Co., Inc., Bank of America Illinois, Christopher J. Perry,
Robert F. Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W.
Clary, Sheryl E. Bartol, Andrea P. Joselit, Finova Capital Corporation, The
Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch
Family Trust, Babson Capital Partners Limited Partnership, Tal Johnson, Edward T.
Hardy, Ralph W. McKee, Philip J. Urso, Phillip Norton, Richard Poholek, Karen
Kutniewski, Thomas Jenkins, Jeff Thompson, Pat Bowen, Mark Urso, M. Linda Urso,
Juliet Rice, Lawrence R. Wilson and Claire Wilson*
10.15 Third Amended and Restated Voting Agreement dated as of March 17, 1997 among
Citadel Communications Corporation, Christopher Hall as initial under the Voting
Trust Agreement, Baker Fentress & Company, Finova Capital Corporation, Oppenheimer
& Co., Inc., The Endeavour Capital Fund Limited Partnership, Joseph P. Tennant,
The Schafbuch Family Trust, Babson Capital Partners Limited Partnership, Tal
Johnson, Edward T. Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
10.16 First Amendment to the Third Amended and Restated Voting Agreement dated as of
June 30, 1997 among Citadel Communications Corporation, ABRY Broadcast Partners
II, L.P., Baker Fentress & Company, Finova Capital Corporation, Oppenheimer & Co.,
Inc., The Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The
Schafbuch Family Trust, Babson Capital Partners Limited Partnership, Tal Johnson,
Edward T. Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
10.17 Second Amendment to the Third Amended and Restated Voting Agreement dated as of
September 29, 1997 among Citadel Communications Corporation, ABRY Broadcast
Partners II, L.P., Baker Fentress & Company, Finova Capital Corporation,
Oppenheimer & Co., Inc., The Endeavour Capital Fund Limited Partnership, Joseph P.
Tennant, The Schafbuch Family Trust, Babson Capital Partners Limited Partnership,
Tal Johnson, Edward T. Hardy, Ralph W. McKee, Philip J. Urso, Phillip Norton,
Richard Poholek, Karen Kutniewski, Thomas Jenkins, Jeff Thompson, Pat Bowen, Mark
Urso, M. Linda Urso and Juliet Rice, Lawrence R. Wilson and Claire Wilson*
10.18 Amended and Restated Loan Agreement dated as of July 3, 1997 among Citadel
Broadcasting Company, Citadel License, Inc., FINOVA Capital Corporation and the
Lenders party thereto
10.19 Agreement of Purchase and Sale dated March 17, 1997 by and among Tele-Media
Broadcasting Company, Tele-Media Broadcasting Company of Centre Region, Tele-Media
Broadcasting Holding Corporation and their respective shareholders and Citadel
Broadcasting Company and Citadel Communications Corporation
10.20 Agreement Not to Compete made as of December 31, 1996 between DVS Management Inc.
and Citadel Communications Corporation
10.21 Purchase Agreement dated June 30, 1997 by and among Citadel Broadcasting Company,
Citadel Communications Corporation, Prudential Securities Incorporated,
NationsBanc Capital Markets, Inc. and BancBoston Securities Inc.
</TABLE>
II-5
<PAGE> 318
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
10.22 Notes Registration Rights Agreement dated as of July 3, 1997 among Citadel
Broadcasting Company, Citadel License, Inc., Prudential Securities Incorporated,
NationsBanc Capital Markets, Inc. and BancBoston Securities, Inc.
10.23 Preferred Stock Registration Rights Agreement dated as of July 3, 1997 among
Citadel Broadcasting Company, Citadel License, Inc., Prudential Securities
Incorporated, NationsBanc Capital Markets, Inc. and BancBoston Securities, Inc.
21 Subsidiaries of Citadel Broadcasting Company
23.1 Consent of Eckert Seamans Cherin & Mellott, LLC (included in its opinions to be
filed as Exhibits 5.1 and 8)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of Deloitte & Touche, LLP
23.6 Consent of Erwin & Company
23.7 Consent of Balukoff, Lindstrom & Co., P.A.
23.8 Consent of Ted L. Snider, Sr.
24 Power of Attorney (included on signature page)
25.1 Statement of Eligibility on Form T-1 of Trustee (10 1/4% Series B Senior
Subordinated Notes Due 2007)
25.2 Statement of Eligibility on Form T-1 of Trustee (13 1/4% Exchange Debentures Due
2009)
27 Financial Data Schedule
99.1 Form of Letter of Transmittal to Tender for Exchange 10 1/4% Senior Subordinated
Notes due 2007
99.2 Form of Letter of Transmittal to Tender for Exchange 13 1/4% Series A Exchangeable
Preferred Stock
99.3 Form of Exchange Agency Agreement between Citadel Broadcasting Company and The
Bank of New York, as Exchange Agent*
</TABLE>
- ------------------
* To be Filed by Amendment
(B) FINANCIAL STATEMENT SCHEDULES
None
ITEM 22. UNDERTAKINGS.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any
II-6
<PAGE> 319
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities act, each such post-effective amendment shall be deemed to be a
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of other securities being registered which remain unsold at the
termination of the offering.
(4) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-7
<PAGE> 320
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Lawrence
R. Wilson and Donna L. Heffner and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, Citadel Broadcasting
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Bigfork, in the
State of Montana, on September 30, 1997.
CITADEL BROADCASTING COMPANY
By: /s/ LAWRENCE R. WILSON
------------------------------------
Lawrence R. Wilson
Chairman of the Board,
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on September 30, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ----------------------------------------- --------------------------------------------------
<S> <C>
/s/ LAWRENCE R. WILSON Chairman of the Board, Chief Executive Officer and
- ----------------------------------------- President (Principal Executive Officer)
Lawrence R. Wilson
/s/ DONNA L. HEFFNER Vice President and Chief Financial Officer
- ----------------------------------------- (Principal Financial and Accounting Officer)
Donna L. Heffner
/s/ MICHAEL J. AHEARN Director
- -----------------------------------------
Michael J. Ahearn
/s/ J. WALTER CORCORAN Director
- -----------------------------------------
J. Walter Corcoran
/s/ CHRISTOPHER P. HALL Director
- -----------------------------------------
Christopher P. Hall
/s/ MARK A. LEAVITT Director
- -----------------------------------------
Mark A. Leavitt
/s/ HARLAN A. LEVY Director
- -----------------------------------------
Harlan A. Levy
/s/ SCOTT E. SMITH Director
- -----------------------------------------
Scott E. Smith
/s/ JOHN E. VON SCHLEGELL Director
- -----------------------------------------
John E. von Schlegell
</TABLE>
II-8
<PAGE> 321
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Lawrence
R. Wilson and Donna L. Heffner and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, Citadel License, Inc.
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bigfork, in the State of
Montana, on September 30, 1997.
CITADEL LICENSE, INC.
By: /s/ LAWRENCE R. WILSON
------------------------------------
Lawrence R. Wilson
Chairman of the Board,
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on September 30, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ----------------------------------------- --------------------------------------------------
<S> <C>
/s/ LAWRENCE R. WILSON Chairman of the Board, Chief Executive Officer and
- ----------------------------------------- President (Principal Executive Officer)
Lawrence R. Wilson
/s/ DONNA L. HEFFNER Vice President and Chief Financial Officer
- ----------------------------------------- (Principal Financial and Accounting Officer)
Donna L. Heffner
/s/ MICHAEL J. AHEARN Director
- -----------------------------------------
Michael J. Ahearn
/s/ J. WALTER CORCORAN Director
- -----------------------------------------
J. Walter Corcoran
/s/ CHRISTOPHER P. HALL Director
- -----------------------------------------
Christopher P. Hall
/s/ MARK A. LEAVITT Director
- -----------------------------------------
Mark A. Leavitt
/s/ HARLAN A. LEVY Director
- -----------------------------------------
Harlan A. Levy
/s/ SCOTT E. SMITH Director
- -----------------------------------------
Scott E. Smith
/s/ JOHN E. VON SCHLEGELL Director
- -----------------------------------------
John E. von Schlegell
</TABLE>
II-9
<PAGE> 322
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
2.1 Stock Purchase Agreement dated September 29, 1997 among Pacific Northwest
Broadcasting, Inc., Citadel Broadcasting Company and Citadel License, Inc.*
2.2 Asset Purchase Agreement dated September 29, 1997 among Wilson Group, LLC, Citadel
Broadcasting Company and Citadel License, Inc.*
2.3 Asset Purchase Agreement dated as of July 15, 1997 among Maranatha Broadcasting
Company, Inc., Citadel Broadcasting Company and Citadel License, Inc. (relating to
WFMZ-FM)
2.4 Asset Purchase Agreement dated as of July 15, 1997 among Maranatha Broadcasting
Company, Inc., Citadel Broadcasting Company and Citadel License, Inc. (relating to
WEST-AM)
2.5 Merger Agreement dated as of June 2, 1997 among Snider Corporation, Ted L. Snider,
Sr., Jane J. Snider, Citadel Communications Corporation and Citadel Broadcasting
Company
2.6 Merger Agreement dated as of June 2, 1997 among Snider Broadcasting Corporation,
Ted L. Snider, Jr., Calvin G. Arnold, Citadel Communications Corporation and
Citadel Broadcasting Company
2.7 Asset Purchase Agreement dated as of June 2, 1997 among CDB Broadcasting
Corporation, CDB License Corporation and Citadel Broadcasting Company
3(i)(a) Restated Articles of Incorporation of Citadel Broadcasting Company
3(i)(b) Amendment to Certificate of the Designations, Voting Powers Preferences and
Relative, Participating, Optional and Other Special Rights and Qualifications,
Limitations or Restrictions of the 13 1/4% Series A Exchangeable Preferred Stock
and the 13 1/4% Series B Exchangeable Preferred Stock of Citadel Broadcasting
Company
3(i)(c) Articles of Incorporation of Citadel License, Inc.
3(ii)(a) Bylaws of Citadel Broadcasting Company, as amended
3(ii)(b) Bylaws of Citadel License, Inc.
4.1 Indenture dated as of July 1, 1997 among Citadel Broadcasting Company, Citadel
License, Inc. and The Bank of New York, as Trustee, with the forms of 10 1/4%
Senior Subordinated Notes due 2007 and 10 1/4% Series B Senior Subordinated Notes
due 2007 included therein
4.2 Indenture dated as of July 1, 1997 among Citadel Broadcasting Company, Citadel
License, Inc. and The Bank of New York, as Trustee, with the forms of 13 1/4%
Exchange Debentures due 2009 and 13 1/4% Series B Exchange Debentures due 2009
included therein
4.3 Amendment to Certificate of the Designations, Voting Powers Preferences and
Relative, Participating, Optional and Other Special Rights and Qualifications,
Limitations or Restrictions of the 13 1/4% Series A Exchangeable Preferred Stock
and the 13 1/4% Series B Exchangeable Preferred Stock of Citadel Broadcasting
Company (filed as Exhibit 3(i)(b))
5.1 Opinion of Eckert Seamans Cherin & Mellott, including consent*
5.2 Opinion of Lionel Sawyer & Collins*
8 Opinion of Eckert Seamans Cherin & Mellott, LLC regarding certain Federal income
tax matters, including consent*
9 Voting Trust Agreement dated as of March 17, 1997 among Citadel Communications
Corporation, ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment Partners,
L.P., Christopher Hall as Initial Trustee, and J. Walter Corcoran and Harlan Levy
as initial Back-up Trustees
10.1 Employment Agreement dated as of June 28, 1996 among Lawrence R. Wilson, Citadel
Broadcasting Company and Citadel Communications Corporation
10.2 Citadel Communications Corporation 1996 Equity Incentive Plan, as amended
</TABLE>
<PAGE> 323
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
10.3 Citadel Communications Corporation Nonqualified Stock Option Agreement made and
entered into as of June 28, 1996 between Citadel Communications Corporation and
Lawrence R. Wilson
10.4 Form of Citadel Communications Corporation Stock Option Agreement for grants
effective as of December 21, 1994
10.5 Form of Citadel Communications Corporation Stock Option Agreement for grants
effective as of February 21, 1994
10.6 Joint Sales Agreement dated as of December 15, 1995 among Pourtales Radio
Partnership, Pourtales Holdings, Inc., Springs Radio, Inc., KVUU/KSSS, Inc. and
Citadel Broadcasting Company
10.7 Securities Purchase and Exchange Agreement dated as of June 28, 1996 among Citadel
Communications Corporation, Citadel Broadcasting Company, ABRY Broadcast Partners
II, L.P., ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company, Bank
of America Illinois, Oppenheimer & Co., Inc., Christopher J. Perry, Robert F.
Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary, and
Thomas E. Pelt, Jr.
10.8 First Amendment to the Securities Purchase Agreement dated as of December 31, 1996
among Citadel Communications Corporation, Citadel Broadcasting Company, Deschutes
Acquisition Corporation, ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment
Partners, L.P., Baker, Fentress & Company, Oppenheimer & Co., Inc., Bank of
America Illinois, Christopher J. Perry, Robert F. Perille, M. Ann O'Brien, Ford S.
Bartholow, Jeffrey M. Mann, Matthew W. Clary, Sheryl E. Bartol, Andrea P. Joselit,
The Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch
Family Trust u/a/d 2-15-94, Babson Capital Partners Limited Partnership, Tal
Johnson, Edward T. Hardy and Ralph W. McKee
10.9 Second Amendment to the Securities Purchase and Exchange Agreement dated as of
March 17, 1997 among Citadel Communications Corporation, Citadel Broadcasting
Company, Deschutes Acquisition Corporation, ABRY Broadcast Partners II, L.P.,
ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company, Oppenheimer &
Co., Inc., Bank of America Illinois, Christopher J. Perry, Robert F. Perille, M.
Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary, Sheryl E.
Bartol, Andrea P. Joselit, The Endeavour Capital Fund Limited Partnership, Joseph
P. Tennant, The Schafbuch Family Trust u/a/d/ 2-15-94, Babson Capital Partners
Limited Partnership, Tal Johnson, Edward T. Hardy and Ralph W. McKee
10.10 Third Amendment to the Securities Purchase and Exchange Agreement dated as of
September 29, 1997 among Citadel Communications Corporation, Citadel Broadcasting
Company, Deschutes Acquisition Corporation, ABRY Broadcast Partners II, L.P.,
ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company, Oppenheimer &
Co., Inc., Bank of America Illinois, Christopher J. Perry, Robert F. Perille, M.
Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary, Sheryl E.
Bartol, Andrea P. Joselit, The Endeavour Capital Fund Limited Partnership, Joseph
P. Tennant, The Schafbuch Family Trust u/a/d/ 2-15-94, Babson Capital Partners
Limited Partnership, Tal Johnson, Edward T. Hardy, Ralph W. McKee, Philip J. Urso,
Phillip Norton, Richard Poholek, Karen Kutniewski, Thomas Jenkins, Jeff Thompson,
Pat Bowen, Mark Urso, M. Linda Urso and Juliet Rice*
10.11 Second Amended and Restated Stockholders Agreement dated as of June 28, 1996,
among Citadel Communications Corporation, Baker, Fentress & Company, Bank of
America Illinois, Christopher J. Perry, Robert F. Perille, M. Ann O'Brien, Ford S.
Bartholow, Jeffrey M. Mann, Matthew W. Clary, Thomas E. Van Pelt, Jr., ABRY
Broadcast Partners II, L.P., ABRY Citadel Investment Partners, L.P., Oppenheimer &
Co., Inc., Finova Capital Corporation, Lawrence R. Wilson, Claire Wilson, Donna L.
Heffner and Stuart Stanek
</TABLE>
<PAGE> 324
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
10.12 First Amendment to the Second Amended Stockholders Agreement dated as of December
31, 1996 among Citadel Communications Corporation, ABRY Broadcast Partners II,
L.P., ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company,
Oppenheimer & Co., Inc., Bank of America Illinois, Christopher J. Perry, Robert F.
Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary,
Sheryl E. Bartol, Andrea P. Joselit, Finova Capital Corporation, The Endeavour
Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch Family Trust
u/a/d 2-15-94, Babson Capital Partners Limited Partnership, Tal Johnson, Edward T.
Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
10.13 Second Amendment to the Second Amended and Restated Stockholders Agreement dated
as of March 17, 1997 among Citadel Communications Corporation, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Baker, Fentress &
Company, Oppenheimer & Co., Inc., Bank of America Illinois, Christopher J. Perry,
Robert F. Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W.
Clary, Sheryl E. Bartol, Andrea P. Joselit, Finova Capital Corporation, The
Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch
Family Trust, Babson Capital Partners Limited Partnership, Tal Johnson, Edward T.
Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
10.14 Third Amendment to the Second Amended and Restated Stockholders Agreement dated as
of September 29, 1997 among Citadel Communications Corporation, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Baker, Fentress &
Company, Oppenheimer & Co., Inc., Bank of America Illinois, Christopher J. Perry,
Robert F. Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W.
Clary, Sheryl E. Bartol, Andrea P. Joselit, Finova Capital Corporation, The
Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch
Family Trust, Babson Capital Partners Limited Partnership, Tal Johnson, Edward T.
Hardy, Ralph W. McKee, Philip J. Urso, Phillip Norton, Richard Poholek, Karen
Kutniewski, Thomas Jenkins, Jeff Thompson, Pat Bowen, Mark Urso, M. Linda Urso,
Juliet Rice, Lawrence R. Wilson and Claire Wilson*
10.15 Third Amended and Restated Voting Agreement dated as of March 17, 1997 among
Citadel Communications Corporation, Christopher Hall as initial under the Voting
Trust Agreement, Baker Fentress & Company, Finova Capital Corporation, Oppenheimer
& Co., Inc., The Endeavour Capital Fund Limited Partnership, Joseph P. Tennant,
The Schafbuch Family Trust, Babson Capital Partners Limited Partnership, Tal
Johnson, Edward T. Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
10.16 First Amendment to the Third Amended and Restated Voting Agreement dated as of
June 30, 1997 among Citadel Communications Corporation, ABRY Broadcast Partners
II, L.P., Baker Fentress & Company, Finova Capital Corporation, Oppenheimer & Co.,
Inc., The Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The
Schafbuch Family Trust, Babson Capital Partners Limited Partnership, Tal Johnson,
Edward T. Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
10.17 Second Amendment to the Third Amended and Restated Voting Agreement dated as of
September 29, 1997 among Citadel Communications Corporation, ABRY Broadcast
Partners II, L.P., Baker Fentress & Company, Finova Capital Corporation,
Oppenheimer & Co., Inc., The Endeavour Capital Fund Limited Partnership, Joseph P.
Tennant, The Schafbuch Family Trust, Babson Capital Partners Limited Partnership,
Tal Johnson, Edward T. Hardy, Ralph W. McKee, Philip J. Urso, Phillip Norton,
Richard Poholek, Karen Kutniewski, Thomas Jenkins, Jeff Thompson, Pat Bowen, Mark
Urso, M. Linda Urso and Juliet Rice, Lawrence R. Wilson and Claire Wilson*
</TABLE>
<PAGE> 325
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<S> <C>
10.18 Amended and Restated Loan Agreement dated as of July 3, 1997 among Citadel
Broadcasting Company, Citadel License, Inc., FINOVA Capital Corporation and the
Lenders party thereto
10.19 Agreement of Purchase and Sale dated March 17, 1997 by and among Tele-Media
Broadcasting Company, Tele-Media Broadcasting Company of Centre Region, Tele-Media
Broadcasting Holding Corporation and their respective shareholders and Citadel
Broadcasting Company and Citadel Communications Corporation
10.20 Agreement Not to Compete made as of December 31, 1996 between DVS Management Inc.
and Citadel Communications Corporation
10.21 Purchase Agreement dated June 30, 1997 by and among Citadel Broadcasting Company,
Citadel Communications Corporation, Prudential Securities Incorporated,
NationsBanc Capital Markets, Inc. and BancBoston Securities Inc.
10.22 Notes Registration Rights Agreement dated as of July 3, 1997 among Citadel
Broadcasting Company, Citadel License, Inc., Prudential Securities Incorporated,
NationsBanc Capital Markets, Inc. and BancBoston Securities, Inc.
10.23 Preferred Stock Registration Rights Agreement dated as of July 3, 1997 among
Citadel Broadcasting Company, Citadel License, Inc., Prudential Securities
Incorporated, NationsBanc Capital Markets, Inc. and BancBoston Securities, Inc.
21 Subsidiaries of Citadel Broadcasting Company
23.1 Consent of Eckert Seamans Cherin & Mellott, LLC (included in its opinions to be
filed as Exhibits 5.1 and 8)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of Deloitte & Touche, LLP
23.6 Consent of Erwin & Company
23.7 Consent of Balukoff, Lindstrom & Co., P.A.
23.8 Consent of Ted L. Snider, Sr.
24 Power of Attorney (included on signature page)
25.1 Statement of Eligibility on Form T-1 of Trustee (10 1/4% Series B Senior
Subordinated Notes Due 2007)
25.2 Statement of Eligibility on Form T-1 of Trustee (13 1/4% Exchange Debentures Due
2009)
27 Financial Data Schedule
99.1 Form of Letter of Transmittal to Tender for Exchange 10 1/4% Senior Subordinated
Notes due 2007
99.2 Form of Letter of Transmittal to Tender for Exchange 13 1/4% Series A Exchangeable
Preferred Stock
99.3 Form of Exchange Agency Agreement between Citadel Broadcasting Company and The
Bank of New York, as Exchange Agent*
</TABLE>
- ------------------
* To be Filed by Amendment
<PAGE> 1
Exhibit 2.3
ASSET PURCHASE AGREEMENT
AMONG
MARANATHA BROADCASTING COMPANY, INC.,
CITADEL BROADCASTING COMPANY
AND
CITADEL LICENSE, INC.
WFMZ(FM)
JULY 15, 1997
<PAGE> 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT"), made as of the 15th day
of July, 1997, by and among MARANATHA BROADCASTING COMPANY, INC., a
Pennsylvania corporation ("SELLER"); CITADEL BROADCASTING COMPANY, a Nevada
corporation ("CITADEL"); and CITADEL LICENSE, INC., a Nevada corporation
("LICENSE SUB").
RECITALS:
A. Seller is the licensee of and owns and operates radio station
WFMZ(FM) licensed to Allentown, Pennsylvania (the "STATION").
B. Citadel and License Sub are the licensees of and own and operate
radio station WEST(AM) licensed to Easton, Pennsylvania (the "EASTON STATION").
C. Seller desires to sell to Citadel and License Sub, and Citadel and
License Sub desire to purchase from Seller, certain of the assets of the Station
in exchange for cash and for certain of the assets of the Easton Station, on the
terms and subject to the conditions set forth in this Agreement and in the
Easton Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall have the
meanings assigned to them below:
"ACCOUNTS RECEIVABLE" has the meaning specified in Section 8.3.
"ACCOUNTS RECEIVABLE LIST" has the meaning specified in Section 8.3.
"ACCRUED TAXES" has the meaning specified in Section 4.6.
"ACT" means the Communications Act of 1934, as amended.
"AFFILIATE" of any Person means any other Person (a) that directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, the first Person, or (b) any interests of which are owned, in
whole or in part, directly or indirectly, by the first Person. For purposes of
this definition, the term "control" (including the correlative meanings of the
terms "controls," "controlled by," and "under direct or indirect control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct
<PAGE> 3
or cause the direction of the management policies of the Person, whether
through the ownership of voting securities or by contract or otherwise.
"ALLENTOWN ANTENNA LEASE" has the meaning specified in Section 9.9.
"ASSET SCHEDULE" has the meaning specified in Section 2.1(a).
"ASSIGNED CONTRACTS" has the meaning specified in Section 2.1(d).
"ASSUMED OBLIGATIONS" has the meaning specified in Section 2.3.
"BROKER" means Richard A. Foreman Associates Inc.
"BUSINESS" has the meaning specified in Section 4.1.
"CASH PURCHASE PRICE" has the meaning specified in Section 3.1.
"CITADEL COLLECTION PERIOD" has the meaning specified in Section 8.3.
"CITADEL'S DISCLOSURE SCHEDULE" has the meaning specified in
Section 5.3.
"CLOSING" means the consummation of the transactions contemplated in
this Agreement in accordance with the provisions of Section 10.
"CLOSING DATE" has the meaning specified in Section 10.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACTS" has the meaning specified in Section 4.9.
"CPR RULES" means the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes.
"DAMAGES" has the meaning specified in Section 13.1.
"DRAW CONDITION" has the meaning specified in Section 14.2(a).
"EASTON AGREEMENT" means that certain Asset Purchase Agreement dated
as of the date hereof among Seller, Citadel and License Sub relating to the
sale by Citadel and License Sub of the Easton Station.
"EASTON ASSUMED OBLIGATIONS" means the Assumed Obligations under, and
as defined in, the Easton Agreement.
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"EASTON PURCHASED ASSETS" means the Purchased Assets under, and as
defined in, the Easton Agreement.
"EASTON STATION" has the meaning specified in the recitals to this
Agreement.
"ENVIRONMENTAL CLAIMS" means and includes, without limitation: (a)
claims, demands, suits, causes of action for personal injury or lost use of
property, or consequential damages, to the extent any of the foregoing arise
directly or indirectly out of Environmental Conditions; (b) actual or
threatened damages to natural resources; (c) claims for the recovery of
response costs, or administrative or judicial orders directing the performance
of investigations, response or remedial actions under CERCLA, RCRA or other
Environmental Laws; (d) a requirement to implement "corrective action" pursuant
to any order or permit issued pursuant to RCRA; (e) claims for restitution,
contribution or equitable indemnity from third parties or any governmental
agency; (f) fines, penalties or Liens against property; (g) claims for
injunctive relief or other orders or notices of violation from Governmental
Authorities; and (h) with regard to any present or former employees, exposure
to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping, or threatened release of Hazardous
Materials by Seller. With respect to claims by employees, Environmental
Conditions also includes the exposure of Persons to Hazardous Materials within
work places on any real estate owned or occupied by Seller.
"ENVIRONMENTAL LAWS" has the meaning specified in the definition of
Hazardous Materials.
"ENVIRONMENTAL NONCOMPLIANCE" means, but is not limited to: (a) the
release or threatened release as a result of the activities of Seller of any
Hazardous Materials into the environment, any storm drain, sewer, septic system
or publicly owned treatment works, in violation of any effluent emission
limitations, standards or other criteria or guidelines established by any
federal, state or local law, regulation, rule, ordinance, plan or order; and
(b) any facility operations, procedures, designs, etc. which do not conform to
the statutory or regulatory requirements of the CAA, the CWA, the TSCA, the
RCRA or any other Environmental Laws intended to protect public health, welfare
and the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" has the meaning specified in Section 2.2.
"EXCLUDED EMPLOYEES" has the meaning specified in Section 4.10.
"FCC" means the Federal Communications Commission.
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"FCC APPLICATION" has the meaning specified in Section 9.1(a).
"FCC APPROVAL" has the meaning specified in Section 9.1(a).
"FCC LICENSES" means the main station license for the Station,
together with each of the other consents, rights, licenses, permits and other
authorizations issued by the FCC and held by Seller in connection with, or
pertaining to, the conduct of the business and operation of the Station,
together with any renewals and extensions thereof and any applications therefor
pending on the Closing Date, and any and all applications made by Seller for
such consents, rights, licenses, permits and other authorizations.
"FINAL ORDER" means a written action or order issued by the FCC or its
staff setting forth the FCC Approval (or a denial thereof), (a) which action or
order has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which action or order (i) no requests have
been filed and are pending for administrative or judicial review, rehearing,
reconsideration, appeal or stay, and the time period for filing any such
requests and for the FCC to set aside the action on its own motion under the
provisions of the Act or the rules, regulations and policies of the FCC has
expired, or (ii) in the event of review, reconsideration or appeal, the time
for further review, reconsideration or appeal has expired.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis during
the periods involved.
"GOVERNMENTAL AUTHORITY" means any government, whether federal, state
or local, or any other political subdivision thereof, or any agency, tribunal
or instrumentality of any such governmental or political subdivision, or any
other Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS MATERIALS" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases including but not limited to substances defined as "PCBs,"
"hazardous wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials," "petroleum," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C.
ss. 9601 ET SEQ.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C. ss. 2601
ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss.
9601; the Clean Water Act ("CWA"), 33 U.S.C. ss. 1251 ET SEQ.; the Safe
Drinking Water Act, 42 U.S.C.ss. 300f ET SEQ.; the Clean Air Act ("CAA"), 42
U.S.C. ss. 7401 ET SEQ.; or any similar state law; and in the plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar laws, regulations, rules or
ordinances now in effect (collectively, the "ENVIRONMENTAL LAWS"); and any
other substances, constituents or wastes subject to environmental regulations
under any applicable federal, state or local law, regulation or ordinance.
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"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended from time to time.
"HSR FILING" has the meaning specified in Section 9.8.
"INDEBTEDNESS FOR BORROWED MONEY" means (a) all indebtedness of Seller
in respect of money borrowed (including, without limitation, indebtedness which
represents the unpaid amount of the purchase price of any property), (b) all
indebtedness of Seller evidenced by a promissory note, bond or similar written
obligation to pay money, (c) all indebtedness guaranteed by Seller or for which
Seller is contingently liable, including, without limitation, guaranties in the
form of an agreement to repurchase or reimburse, and any commitment by which
any such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit, and (d) all
monetary obligations of Seller under any lease or similar arrangement, which
obligations would be classified and accounted for as capital obligations on a
balance sheet of Seller under GAAP.
"INDEMNITEE" has the meaning specified in Section 13.3.
"INDEMNITOR" has the meaning specified in Section 13.3.
"INTELLECTUAL PROPERTY" has the meaning specified in Section 2.1(e).
"LEASEHOLDS" has the meaning specified in Section 4.8.
"LETTER OF CREDIT" has the meaning specified in Section 3.2.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, claim, easement, transfer restriction, lien (statutory or
otherwise) or security interest of any kind or nature whatsoever.
"LOCAL MARKETING AGREEMENT" has the meaning specified in Section 9.7.
"OBLIGATIONS" means, without duplication, all (a) Indebtedness for
Borrowed Money, (b) Accrued Taxes, accounts payable, accrued liabilities and
all other liabilities and obligations of the type normally required by GAAP to
be reflected on a balance sheet, (c) commitments by which Seller assures a
creditor against loss, including the face amount of all letters of credit and,
without duplication, all drafts drawn thereunder, (d) obligations guaranteed in
any manner by Seller, (e) obligations under capitalized leases in respect of
which obligations Seller is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures
a creditor against loss, (f) obligations under acceptance facilities, (g)
obligations secured by a Lien on property of Seller, (h) obligations under
interest rate or currency exchange or swap agreements, (i) unsatisfied
obligations for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA, (j) indebtedness issued or obligation incurred in
substitution or exchange for any Obligations, (k) costs or expenses incurred
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by Seller of any nature, whether or not currently payable, and (l) other
liabilities or obligations of Seller, in each of the foregoing instances
whether absolute or contingent, known or unknown, and whether or not normally
required by GAAP to be reflected on a balance sheet.
"PERMITS" has the meaning specified in Section 4.17(b).
"PERSON" means an individual, corporation, partnership, joint venture,
joint stock seller, association, trust, business trust, unincorporated
organization, Governmental Authority, or any other entity of whatever nature.
"PERSONAL PROPERTY" has the meaning specified in Section 2.1(a).
"PURCHASED ASSETS" has the meaning specified in Section 2.1.
"PURCHASE PRICE" has the meaning specified in Section 3.1.
"REAL PROPERTY LEASES" has the meaning specified in Section 2.1(c).
"SELLER'S DISCLOSURE SCHEDULE" has the meaning specified in
Section 4.3.
"STATION" has the meaning specified in the recitals to this Agreement.
"SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified in
Section 6.10
"TAXES" means all taxes, charges, fees, levies, or other assessments,
including income, gross receipts, excise, property, sales, transfer, license,
payroll, and franchise taxes, any taxes required by law to be withheld, and any
taxes payable as a result of the consummation of the transactions contemplated
by this Agreement, which taxes are imposed by any Governmental Authority; and
such term shall include any interest, penalties, or additions to tax
attributable to such assessments.
"TRADE AGREEMENTS" has the meaning specified in Section 6.9.
"TRADE IMBALANCE" has the meaning specified in Section 6.9.
"TRADE LIABILITIES" has the meaning specified in Section 6.9.
"TRADE RECEIVABLES" has the meaning specified in Section 6.9.
"TRADE SCHEDULE" has the meaning specified in Section 6.9.
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SECTION 2
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF PURCHASED ASSETS. Subject to the terms
and conditions of this Agreement, and on the basis of the representations,
warranties, covenants and agreements contained in this Agreement, at the
Closing, Seller agrees to sell, assign and convey to Citadel (and, with respect
to clause (f) below, License Sub), and Citadel (and, with respect to clause (f)
below, License Sub) agrees to purchase, acquire and accept from Seller, all of
the Purchased Assets. The "PURCHASED ASSETS" consist of:
(a) All the tangible personal property, improvements
and fixtures described on SCHEDULE 2.1 to this Agreement (the "ASSET
SCHEDULE"), including, without limitation, the translator assets serving
Reading, Pennsylvania (the "PERSONAL PROPERTY");
(b) [intentionally omitted];
(c) The leasehold interests pursuant to the real
property leases described on the ASSET SCHEDULE (the "REAL PROPERTY LEASES");
(d) All of the right, title and interest of Seller or
any of its Affiliates in and to those contracts, leases, licenses, memberships,
agencies, permits and agreements, other than Real Property Leases, to which
Seller or any Affiliate thereof presently is a party or an assignee of a party
which are described on the ASSET SCHEDULE (the "ASSIGNED CONTRACTS"), including
the employment agreements listed on the ASSET SCHEDULE;
(e) All of the copyrights, trademarks, trade names and
other similar rights, including applications and registrations therefor, used
in connection with the past or present operation of the Station in which Seller
or any Affiliate thereof has any right, title or interest, including, without
limitation, those items listed on the ASSET SCHEDULE but excluding the call
letters of the Station (collectively, the "INTELLECTUAL PROPERTY");
(f) The FCC Licenses, a complete list of which is
included on the ASSET SCHEDULE;
(g) Copies of all books, records and accounts relating
to the operation of the Station, subject to the right of Seller to retain
originals thereof for Seller's personal use and reference and to obtain access
to such books, records and accounts in accordance with the provisions of
Section 2.2(a); and
(h) All other assets owned by Seller as of the date of
this Agreement which are needed in the broadcast chain of the Station as of the
date of this Agreement (i.e., from studio to transmission).
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2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in this Agreement, it is expressly understood and agreed that there
shall be excluded from the assets transferred or assigned to Citadel and
License Sub with respect to Station the following (collectively, the "EXCLUDED
ASSETS"):
(a) Except to the extent included in Section 2.1(g),
all of Seller's corporate books and records and other documents relating to the
internal corporate affairs of Seller, and all other corporate records or files
of Seller not relating to the business or operation of the Station;
(b) All cash, cash equivalents or similar type
investments held by Seller, such as certificates of deposit, treasury bills and
other marketable securities on hand as of the Closing;
(c) All accounts receivable existing as of Closing;
(d) Corporate assets and assets not used in connection
with the Station;
(e) Any and all claims of Seller with respect to
transactions occurring or arising prior to the Closing Date, including, without
limitation, claims for Tax refunds; and
(f) Those additional assets identified on SCHEDULE 2.2
as Excluded Assets.
Notwithstanding the foregoing, any asset which is described above but which is
actually listed on the ASSET SCHEDULE shall be a Purchased Asset and not an
Excluded Asset.
2.3 OBLIGATIONS. Neither Citadel nor License Sub shall assume, and they
shall purchase the Purchased Assets free and clear of, any and all Obligations
of Seller, except that Citadel shall assume those Obligations of Seller arising
from and after the Closing Date (other than any liability or obligation for
breach or default which occurred prior to the Closing Date) pursuant to each of
(a) the Real Property Leases, (b) the Assigned Contracts, (c) those items
subject to proration pursuant to Section 9.2, (d) the Trade Liabilities and (e)
those additional items expressly set forth on SCHEDULE 2.3 to this Agreement
(collectively, the "ASSUMED OBLIGATIONS").
2.4 TAX DEFERRED EXCHANGE. Seller hereby acknowledge that it is
the intention of Citadel to complete a tax deferred exchange under Section 1031
of the Code and that Citadel's rights and obligations under this Agreement may
be assigned to a qualified intermediary or qualified escrow agent (as such
terms are defined in the regulations under Section 1031 of the Code) for the
purpose of completing such exchange. Seller agrees to cooperate in any manner
reasonably necessary to complete such exchange and at no additional cost or
liability to Seller.
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SECTION 3
PURCHASE PRICE; LETTER OF CREDIT
3.1 PURCHASE PRICE. The purchase price for the Purchased Assets
shall consist of (a) $23,000,000, subject to adjustment as provided in Sections
6.9 and 9.2 (the "CASH PURCHASE PRICE"), and (b) the Easton Purchased Assets,
subject to the assumption by Seller of the Easton Assumed Obligations, as
provided in the Easton Agreement (collectively, the "PURCHASE PRICE"). At the
Closing, Citadel shall deliver to Seller immediately available funds in the
amount of the Cash Purchase Price.
3.2 LETTER OF CREDIT. Simultaneously with the execution of this
Agreement, Citadel shall deliver to Seller an irrevocable letter of credit in
favor of Seller, issued by a national banking association or other issuer
reasonably acceptable to Seller, in the amount of $1,750,000, which shall be in
the form attached as EXHIBIT A hereto (the "LETTER OF CREDIT"). The Letter of
Credit shall provide that the issuing bank shall make payment on the Letter of
Credit upon such bank's receipt of a certificate from the President of Seller
certifying that a Draw Condition has occurred. Upon the Closing, Seller shall
return the original Letter of Credit to Citadel for cancellation.
3.3 ALLOCATION OF THE PURCHASE PRICE. Citadel, License Sub and
Seller shall report the transactions contemplated by this Agreement for federal
and state tax purposes in a manner consistent with the allocation of the
Purchase Price mutually agreed upon by Citadel, License Sub and Seller.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF SELLER
In connection with the purchase and sale of the Purchased Assets under
this Agreement and in order to induce Citadel and License Sub to enter into and
consummate the transactions contemplated by this Agreement, Seller makes the
following representations and warranties to Citadel and License Sub, as of the
date of this Agreement and as of the date of the Closing (except for
representations and warranties expressly and specifically relating to a time or
times other than the date hereof or thereof, which shall be made as of the
specified time or times):
4.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and has full corporate power and authority (a) to
own its assets and properties and to conduct the business in which it is now
engaged (the "BUSINESS") and (b) to enter into this Agreement and to consummate
the transactions contemplated hereby. Seller has full power, authority and
legal right and all necessary approvals, permits, licenses and authorizations
to own its properties and to conduct the Business.
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4.2 AUTHORITY. The execution and delivery of this Agreement by Seller,
the performance by Seller of its covenants and agreements hereunder and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Seller. This Agreement
constitutes the valid and legally binding agreement of Seller, enforceable
against Seller in accordance with its terms.
4.3 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Articles of Incorporation or
Bylaws of Seller, or any law, rule, regulation, writ, judgment, injunction,
decree, determination, award or other order of any Governmental Authority, or
violates or will violate, or conflicts with or will conflict with, or will
result in any breach of any of the terms of, or constitutes or will constitute a
default under or results in or will result in the termination of or the creation
or imposition of any Lien pursuant to, the terms of any contract, commitment,
agreement, understanding or arrangement of any kind to which Seller is a party
or by which Seller or any of the assets of Seller is bound. Except for the FCC
Approval, compliance with the HSR Act and the consents disclosed in SCHEDULE 4.0
to this Agreement ("SELLER'S DISCLOSURE SCHEDULE"), no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
4.4 FINANCIAL STATEMENTS. Seller has delivered to Citadel the
following financial statements of Seller (which include all of Seller's
operations (including operations of the Station, as well as operations of
Seller's television station), except that Seller does maintain separate income
and expense statements with respect to the Station): (a) the reviewed balance
sheets as of December 31, 1995 and December 31, 1996 and the related statements
of income and cash flows for each of the years then ended; (b) the unaudited
balance sheet as of June 30, 1997 and the related statements of income and cash
flows for the six months then ended; and (c) the quarterly unaudited balance
sheets and income statements for each quarter in 1996 and the monthly unaudited
balance sheets and income statements for the first six months of 1997. Each of
the foregoing financial statements (including in all cases the notes thereto, if
any) (i) is accurate and complete in all material respects, (ii) is consistent
in all material respects with the books and records of Seller (which, in turn,
are accurate and complete in all material respects) and (iii) presents fairly in
all material respects the financial condition and results of operations of
Seller in accordance with GAAP (subject in the case of unaudited financial
statements to the lack of footnote disclosure and changes resulting from normal
year-end audit adjustments), consistently applied, as of the dates and for the
periods set forth therein. Seller shall cooperate with Citadel in obtaining, at
Citadel's expense, audited financial statements with respect to the Station for
periods commencing on or after January 1, 1996.
4.5 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, except as disclosed in SELLER'S DISCLOSURE SCHEDULE, there
has not been any (a) material adverse change in the condition of the Station,
financial or otherwise, or in the results of operations, assets, liabilities or
business of the Station; (b) damage or destruction, whether or not insured,
affecting the business operations of the Station; (c) labor dispute or
threatened labor
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dispute involving any of the employees of the Station; (d) actual or threatened
dispute pertaining to the Station with any material provider of software,
hardware or services; (e) material change in the customary methods of
operations of the Station; (f) except in the ordinary course of business or to
the extent not material to the Business or financial condition of the Station,
sale or transfer of any tangible or intangible asset used or useful in the
operation of the Station, mortgage, pledge or imposition of any Lien on any
such asset, lease of real property, machinery, equipment or buildings with
respect to the Station entered into or modification, amendment or cancellation
of any of its existing leases relating to the Station, or cancellation of any
debt or claim; or (g) liability or obligation (contingent or otherwise)
incurred under agreements or otherwise, except current liabilities entered into
or incurred in the ordinary course of business consistent with past practices.
4.6 TAXES. Except as disclosed in SELLER'S DISCLOSURE SCHEDULE, Seller
has filed or caused to be filed on a timely basis all federal, state, local and
other tax returns, reports and declarations required to be filed by it with
respect to the Station and has paid all Taxes (including, but not limited to,
income, franchise, sales, use, unemployment, withholding, social security and
workers' compensation taxes and estimated income and franchise tax payments,
penalties and fines) reflected as due on such returns, reports or declarations
(whether or not shown on such returns, reports or declarations), or pursuant to
any assessment received by it in connection with such returns, reports or
declarations. All returns, reports and declarations filed by or on behalf of
Seller are true, complete and correct in all material respects. No deficiency in
payment of any Taxes for any period has been asserted by any taxing authority
which remains unsettled at the date hereof, no written inquiries have been
received by Seller from any taxing authority with respect to possible claims for
taxes or assessments, and there is no basis for any additional claims or
assessments for Taxes.
Since December 31, 1996, Seller has not incurred any liability for
Taxes which materially affect the operation of the Station other than in the
ordinary course of business. All Taxes attributable to the Station or its
income, operations or properties accruing up to and including the Closing (the
"ACCRUED TAXES") have been or will be paid when due regardless of whether such
Taxes are due and payable as of the Closing.
4.7 ASSET SCHEDULE. The ASSET SCHEDULE includes complete and
accurate (a) listings of all Personal Property; (b) descriptions of all Real
Property Leases and Assigned Contracts, none of which requires any consent of
third parties in connection with the transactions contemplated hereby, except
otherwise as indicated in SELLER'S DISCLOSURE SCHEDULE; (c) descriptions of all
of the Intellectual Property; and (d) listings of all of the FCC Licenses, all
of the foregoing of which will, as of the Closing, be owned and held by Seller
as reflected in the ASSET SCHEDULE.
4.8 TITLE TO AND CONDITION OF PROPERTY.
(a) TITLE. Seller will as of the Closing have good, marketable and
exclusive title to and undisputed possession of all of the personal and tangible
property and improvements
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included in the Purchased Assets. Except as set forth on SELLER'S DISCLOSURE
SCHEDULE, the Purchased Assets are now free and clear of all Liens. The
Purchased Assets will, as of the Closing, be free and clear of all Liens.
(b) CONDITION. The Personal Property, prior to their removal (if
any) pursuant to Section 9.11, is structurally sound, in reasonably good
condition, ordinary wear and tear excepted, adequate and suitable for the
operation of the Station as it is currently being operated, and in proper
condition and repair so that the Station can operate according to its FCC
Licenses, the rules, regulations and policies of the FCC and in all other
respects in compliance with the Act and all other applicable federal and state
laws.
(c) INSURANCE. The Personal Property included among the Purchased
Assets is and will be insured through the Closing Date in amounts adequate to
replace or repair any casualty or other insurable loss to any of such property.
(d) SUFFICIENCY OF ASSETS. The Purchased Assets include all of the
assets, of a sufficient nature, condition and quantity, needed in the broadcast
chain of the Station (i.e., from studio to transmission). Seller has not, since
December 31, 1996, removed any material item of Personal Property from the
Station other than removals in the ordinary course of business which were not
done in contemplation of the transactions contemplated hereby.
(e) REAL PROPERTY LEASES.
(i) The ASSET SCHEDULE contains accurate
descriptions of the Real Property Leases and the location of the real estate
leased thereunder (the "LEASEHOLDS") and the type of facility located on the
Leaseholds. Seller will as of the Closing have a valid leasehold interest in
its respective Leaseholds.
(ii) None of the Leaseholds is subject to any
covenant or restriction preventing or limiting in any material respect the
consummation of the transactions contemplated hereby, except for any consent
listed on SELLER'S DISCLOSURE SCHEDULE required of the landlords under the Real
Property Leases. Seller's right, title and interest in and to the Leaseholds
will at the Closing be held by Seller free and clear of all Liens.
(iii) The use for which the Leaseholds are zoned
permits the use thereof for the business of the Station consistent with past
practices. The use and occupancy of the Leaseholds by Seller are in compliance
in all material respects with all regulations, codes, ordinances and statutes
applicable to Seller and Seller has not received any notice asserting any
material violation of sanitation laws and regulations, occupational safety and
health regulations, or electrical codes.
(iv) There are no facts relating to Seller, and
to the best of the knowledge of Seller, no facts relating to any other party,
that would prevent the Leaseholds from
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being occupied and used by Citadel and/or any assignee of Citadel after the
Closing Date in the same manner as immediately prior to the Closing.
(v) There is not under any Real Property Lease
any material default by Seller or any condition that with notice or the passage
of time or both would constitute such a default, and Seller has not received
any notice asserting the existence of any such default or condition.
(vi) Each Real Property Lease is valid and
binding and in full force and effect as to Seller, and to the best of the
knowledge of Seller, as to each other party thereto, and except as disclosed on
the ASSET SCHEDULE, has not been amended or otherwise modified.
(vii) The Leaseholds constitute all of the real
property in which Seller has a leasehold interest or other interest or right
(whether as lessor or lessee) and which is or will prior to the Closing be used
solely in the operation of the Station.
4.9 CONTRACTUAL AND OTHER OBLIGATIONS. Set forth in the ASSET
SCHEDULE is a description of all (a) Real Property Leases to which Seller is a
party; (b) all contracts, agreements, licenses, leases, arrangements and other
documents used solely in connection with the present operation of the Station
to which Seller is a party or by which Seller or any of the assets of Seller
are bound (including, in the case of loan agreements, a description of the
amounts of any outstanding borrowings thereunder and the collateral, if any,
for such borrowings); (c) uncompleted orders for the purchase by Seller of
materials, supplies, equipment and services for the requirements of the Station
existing as of the date hereof and with respect to which the remaining
obligation of Seller is in excess of $2,500; and (d) contingent contractual
obligations and liabilities of Seller known to Seller existing as of the date
hereof (all of the foregoing, collectively, the "CONTRACTS"). Each of the
Contracts is designated in the ASSET SCHEDULE either as an Assigned Contract,
or as a Contract that will not be assigned to Citadel. Neither Seller nor, to
the best of the knowledge of Seller, any other Person is in material default in
the performance of any covenant or condition under any Contract and no claim of
such a default has been made and no event has occurred which with the giving of
notice or the lapse of time would constitute such a default under any covenant
or condition under any Contract. Seller is not a party to any Contract which
would terminate or be materially adversely affected by the consummation of the
transactions contemplated by this Agreement. Originals or true, correct and
complete copies of all of the Assigned Contracts have been provided to Citadel
as of the date of this Agreement.
4.10 COMPENSATION. Set forth in SELLER'S DISCLOSURE SCHEDULE is
a list of (a) all agreements between Seller and its employees or other Persons
providing services for compensation with regard to the Station, whether
individually or collectively, and (b) all employees of Seller or other Persons
providing services for Seller with respect to the Station entitled to receive
annual compensation in excess of $5,000 and their respective positions, job
categories and salaries, other than employees of Seller who will remain with
Seller after the Closing (as specified in SELLER'S DISCLOSURE SCHEDULE) (the
"EXCLUDED EMPLOYEES"). The transactions contemplated by this Agreement will not
result in any liability for severance pay to
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any such employee or other Person. Seller has not informed any such employee or
other Person that such Person will receive any increase in compensation or
benefits or any ownership interest in Seller or its Business. Except as
disclosed in SELLER'S DISCLOSURE SCHEDULE, all of the employees of Seller
(other than the Excluded Employees) are "at will" employees and may be
terminated by Seller at any time, without liability or obligation except the
payment of normal compensation accrued up to the time of termination of
employment.
4.11 EMPLOYEE BENEFIT PLANS.
(a) Seller does not maintain or sponsor, and is not required
to make contributions to, any pension, profit-sharing, savings, bonus, incentive
or deferred compensation, severance pay, medical, life insurance, welfare or
other employee benefit plan which affects the employees working at the Station,
except as set forth in SELLER'S DISCLOSURE SCHEDULE. SELLER'S DISCLOSURE
SCHEDULE fully discloses all of the plans, funds, policies, programs,
arrangements or understandings sponsored or maintained by Seller pursuant to
which any employee of the Station (or any dependent or beneficiary of any such
employee) might be or become entitled to (1) retirement benefits; (2) severance
or separation from service benefits; (3) incentive, performance, stock, share
appreciation or bonus awards; (4) health care benefits; (5) disability income or
wage continuation benefits; (6) supplemental unemployment benefits; (7) life
insurance, death or survivor's benefits; (8) accrued sick pay or vacation pay;
(9) any type of benefit offered under any arrangement subject to
characterization as an "employee welfare benefit plan" within the meaning of
section 3(3) of ERISA; or (10) benefits of any other type offered through any
arrangement that could be characterized as providing for additional compensation
or fringe benefits. As to any such plan, fund, policy, program, arrangement or
understanding, all of the following are true: (A) all amounts due as
contributions, insurance premiums and benefits to the date hereof have been
fully paid by Seller; (B) all applicable material requirements of law have been
observed with respect to the operation thereof, and all applicable reporting and
disclosure requirements have been timely satisfied; and (C) Seller is not aware
of any claim or demand by any employee (or beneficiary or dependent of any
employee) for benefits (other than routine claims for benefits), or by any
taxing authority for taxes or penalties which has not been satisfied in full or
which may be or become subject to litigation or arbitration.
(b) Seller has no obligation to provide health or
other welfare benefits to former, retired or terminated employees, except as
specifically required under Section 4980B of the Code. Seller has substantially
complied with any applicable notice and continuation requirements of Section
4980B of the Code and the regulations thereunder.
4.12 LABOR RELATIONS. There have been no material violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions of, Seller, or the terms and conditions
of employment, wages (including overtime compensation) and hours. The Station is
not engaged in any unfair labor practice or other unlawful employment practice
and there are no charges of unfair labor practices or other employee-related
complaints pending or threatened against the Station before the National Labor
Relations Board, the Equal Employment
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Opportunity Commission, the Occupational Safety and Health Review Commission,
the Department of Labor or any other Governmental Authority. There is no
strike, picketing, slowdown or work stoppage or organizational attempt pending,
threatened against or involving the Station. No issue with respect to union
representation is pending or threatened with respect to the employees of the
Station.
4.13 INCREASES IN COMPENSATION OR BENEFITS. Subsequent to
December 31, 1996, there have been no increases in the compensation payable or
to become payable to any of the employees of Seller who work solely at the
Station (other than the Excluded Employees), nor has Seller paid or provided
for any awards, bonuses, stock options, loans, profit-sharing, pension,
retirement or welfare plans or similar or other payments or arrangements for or
on behalf of such employees in each case other than (a) pursuant to currently
existing plans or arrangements set forth in SELLER'S DISCLOSURE SCHEDULE or (b)
as was required from time to time by governmental legislation affecting wages.
The vacation policy of Seller is set forth in SELLER'S DISCLOSURE SCHEDULE. No
employee of Seller who works solely at the Station (other than the Excluded
Employees) is entitled to vacation time in excess of two weeks during the
current calendar year and no such employee has any accrued vacation time with
respect to any period prior to the current calendar year, except as set forth
in SELLER'S DISCLOSURE SCHEDULE.
4.14 INSURANCE. Seller maintains insurance policies covering all
of its properties and assets and the various occurrences which may arise in
connection with the operation of the Station, each of which policies is
summarized in SELLER'S DISCLOSURE SCHEDULE. Such policies are in full force and
effect and all installments of premiums due thereon have been paid in full.
Seller has complied with the provisions of such policies. There are no notices
of any pending or threatened termination or premium increases with respect to
any of such policies. There has been no casualty loss or occurrence which may
give rise to any claim of any kind not covered by insurance and Seller is not
aware of any casualty occurrence which may give rise to any claim of any kind
not covered by insurance. No third party has filed any claim against Seller for
personal injury or property damage of a kind for which liability insurance is
generally available which is not fully insured, subject only to the standard
deductible.
4.15 LITIGATION; DISPUTES. There are no claims, disputes,
actions, suits, investigations or proceedings pending or threatened against or
affecting the Station, and, to the best of the knowledge of Seller, there is no
basis for any such claim, dispute, action, suit, investigation or proceeding.
Seller has no knowledge of any default under any such action, suit or
proceeding. Seller is not in default in respect of any judgment, order, writ,
injunction or decree of any Governmental Authority with respect to the
operation of the Station.
4.16 ENVIRONMENTAL.
(a) Prior to the execution of this Agreement, Seller
has provided to Citadel a true and correct copy of all environmental site
assessments, studies, reports and communications relating to the Purchased
Assets.
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(b) Except as disclosed on SELLER'S DISCLOSURE
SCHEDULE, (i) there are no conditions, facilities, procedures or any other
facts or circumstances that constitute Environmental Noncompliance on any of
the Leaseholds and (ii) there is not constructed, placed, deposited, stored,
disposed of, nor located on any of the Leaseholds any asbestos in any form that
has released or, unless disturbed, threatens to release airborne asbestos
fibers in excess of applicable local, state and federal standards.
(c) Except as disclosed on SELLER'S DISCLOSURE SCHEDULE, no
structure, improvements, equipment, fixtures, activities or facilities located
on the Leaseholds uses Hazardous Materials except those used in the ordinary
course of the Business and in compliance with applicable Environmental Laws.
(d) Except as specifically described on SELLER'S DISCLOSURE
SCHEDULE, there have been no releases or threatened releases of Hazardous
Materials into the environment, or which otherwise contribute to Environmental
Conditions arising solely from the activities of Seller with respect to the
Station or the Purchased Assets, or to the best of the knowledge of Seller
arising from any other activities with respect to the Station or the Purchased
Assets, except to the extent that such releases or threatened releases do not
constitute a condition of Environmental Noncompliance relating to the
Leaseholds.
(e) Except as disclosed on SELLER'S DISCLOSURE SCHEDULE, there
are no underground storage tanks, or underground piping associated with tanks,
used for the management of Hazardous Materials at the Leaseholds and there are
no abandoned underground storage tanks at the Leaseholds which have not been
either abandoned in place or removed pursuant to a permit issued by a
Governmental Authority.
(f) Seller is not subject to any Environmental Claims against
the Station or the Purchased Assets, no such Environmental Claim has been
threatened, nor, to the best of the knowledge of Seller, is there any basis for
any such Environmental Claims.
4.17 PERMITS, COMPLIANCE WITH APPLICABLE LAW.
(a) GENERAL. Seller is not in default under any, and has
complied with all, statutes, ordinances, regulations, orders, judgments and
decrees of any Governmental Authority applicable to it or to the Business or the
assets and properties of Seller as to which a default or failure to comply might
result in any material adverse change in the condition, financial or otherwise,
assets or properties of Seller or the Business. Seller has no knowledge of any
basis for assertion of any violation of the foregoing or for any claim for
compensation or damages or otherwise arising out of any violation of the
foregoing. Seller has not received any notification of any asserted present or
past failure to comply with any of the foregoing which has not been
satisfactorily responded to in the time period required thereunder.
(b) PERMITS. Set forth in SELLER'S DISCLOSURE SCHEDULE
are complete and accurate lists of all FCC Licenses applicable to the Station,
and all other permits, licenses,
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approvals, franchises, notices and authorizations issued by any Governmental
Authorities (collectively, the "PERMITS"), held by Seller and applicable to the
Station. The Station is operating in accordance with the Act and its FCC
Licenses and is in compliance with the Act and the rules, regulations and
policies of the FCC. The Permits set forth in SELLER'S DISCLOSURE SCHEDULE are
all of the Permits required for the conduct of the Business. All of the Permits
set forth in SELLER'S DISCLOSURE SCHEDULE are in full force and effect, and
Seller has not engaged in any activity which would cause or permit revocation or
suspension of any such Permit, and no action or proceeding looking to or
contemplating the revocation or suspension of any such Permit is pending or
threatened. There are no existing defaults or events of default or events or
state of facts which with notice or lapse of time or both would constitute a
default by Seller under any such Permit. There is no default or claimed or
purported or alleged default or state of facts which with notice or lapse of
time or both would constitute a default on the part of any party in the
performance of any obligation to be performed or paid by any party under any
Permit set forth in SELLER'S DISCLOSURE SCHEDULE. Except for (1) the FCC
Approval, (2) compliance with the HSR Act and (3) as set forth in SELLER'S
DISCLOSURE SCHEDULE, the consummation of the transactions contemplated hereby
will in no way affect the continuation, validity or effectiveness of the Permits
set forth in SELLER'S DISCLOSURE SCHEDULE, or require the consent of any Person.
Except as set forth in SELLER'S DISCLOSURE SCHEDULE, Seller is not required to
be licensed by, and is not subject to the regulation of, any Governmental
Authority by reason of the Business.
4.18 INTELLECTUAL PROPERTY. The use of the Intellectual Property in
connection with the operation of the Station and in a manner consistent with
past practices does not infringe upon the proprietary rights of any other
Person. Citadel and License Sub will, upon consummation of the transactions
contemplated by this Agreement, possess adequate rights, licenses and other
authority to use the Intellectual Property used by the Station in the operation
of the Station following the Closing in the manner now operated, without
infringement or unlawful or improper use of any of the Intellectual Property,
except that the Station's call letters shall not constitute part of the
Intellectual Property. No director, officer or employee of Seller has any
interest in any of the Intellectual Property, all of which will, as of the
Closing, be free and clear of all Liens. Seller has no knowledge of any
infringement by any Person upon the rights of Seller with respect to the
Intellectual Property. Seller has not granted any outstanding licenses or other
rights to any of the copyrights, trademarks, trade names or other similar rights
with regard to any of the Intellectual Property.
4.19 BOOKS AND RECORDS. The books of account of Seller fairly and
accurately reflect its income, expenses, assets and liabilities and have been
maintained in accordance with good business practices. All of such books and
records, to the extent included within the Purchased Assets, will be located on
the date of the Closing on the business premises of the Station.
4.20 ACTS TO BE PERFORMED. Seller shall perform each of the covenants,
acts and undertakings of Seller to be performed on or before the Closing Date
pursuant to the terms of this Agreement.
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4.21 RELATED PARTY OBLIGATIONS. Except as set forth on the ASSET
SCHEDULE, no officer, director, shareholder or Affiliate of Seller, or any
individual related by blood or marriage to any such Person, or any entity in
which any such Person or individual owns any beneficial interest, is a party to
any agreement, contract, commitment, promissory note, loan, any other actual or
proposed transaction with Seller, or has any material interest in any material
property used by Seller, which is material to the operation of the Station.
4.22 DISCLOSURE. To the best of Seller's knowledge, no representation
or warranty made under this Section 4 and none of the information furnished by
Seller set forth in this Agreement or in the schedules or exhibits to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements in this Agreement or in the
schedules or exhibits to this Agreement not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF CITADEL AND LICENSE SUB
In connection with the purchase and sale of the Purchased Assets under
this Agreement and in order to induce Seller to enter into and consummate the
transactions contemplated by this Agreement, Citadel and License Sub make the
following representations and warranties to Seller, as of the date of this
Agreement and as of the date of the Closing (except for representations and
warranties expressly and specifically relating to a time or times other than the
date hereof or thereof, which shall be made as of the specified time or times):
5.1 ORGANIZATION AND QUALIFICATION. Each of Citadel and License Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, and each has full corporate power and authority (a)
to own its assets and properties and to conduct its business and (b) to enter
into this Agreement and consummate the transactions contemplated hereby. Citadel
has duly qualified to do business as a foreign corporation and is in good
standing under the laws of the Commonwealth of Pennsylvania. Each of Citadel and
License Sub has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct its business.
5.2 AUTHORITY. The execution and delivery of this Agreement by Citadel
and License Sub, the performance by Citadel and License Sub of their respective
covenants and agreements hereunder and the consummation by Citadel and License
Sub of the transactions contemplated hereby have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and legally
binding agreement of Citadel and License Sub, enforceable against each of them
in accordance with its terms.
5.3 NO LEGAL BAR: CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Articles of Incorporation or
Bylaws of Citadel or License Sub, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any
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Governmental Authority, or violates or will violate, or conflicts with or will
conflict with, or will result in any breach of any of the terms of, or
constitutes or will constitute a default under or results in or will result in
the termination of or the creation or imposition of any Lien pursuant to the
terms of, any contract, commitment, agreement, understanding or arrangement of
any kind to which Citadel or License Sub is a party or by which Citadel,
License Sub or any of the assets of Citadel or License Sub is bound. Except for
the FCC Approval, compliance with the HSR Act and the consents disclosed in
SCHEDULE 5.0 ("CITADEL'S DISCLOSURE SCHEDULE"), no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of Citadel or License Sub in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
5.4 ACTS TO BE PERFORMED. Citadel and License Sub shall perform each of
the covenants, acts and undertakings of Citadel and License Sub to be performed
on or before the Closing Date pursuant to the terms of this Agreement.
5.5 LITIGATION. There is no litigation, proceeding or investigation
pending or, to the best of Citadel's knowledge, threatened against or affecting
Citadel or License Sub that is reasonably likely to prevent or hinder the
consummation of the transactions contemplated by this Agreement.
5.6 DISCLOSURE. To the best of Citadel's knowledge, no representation
or warranty made under this Section 5 and none of the information furnished by
Citadel or License Sub set forth in this Agreement or in the schedules or
exhibits to this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements in this
Agreement or in the schedules or exhibits to this Agreement not misleading.
SECTION 6
AFFIRMATIVE COVENANTS OF SELLER
Seller covenants and agrees with Citadel and License Sub to:
6.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
6.2 PAYMENT OF OBLIGATIONS. Fully discharge all Obligations of Seller,
except the Assumed Obligations, on a timely basis.
6.3 ACCESS. Afford Citadel and its authorized representatives, upon
reasonable notice to Seller, reasonable access during normal business hours to
the Station and the Station's employees, and permit Citadel and its authorized
representatives to examine all operations, equipment, properties and other
assets, logs, books, relevant records, contracts and documents of Seller
pertinent to the Station; provided, however, that in each instance (a) mutually
satisfactory arrangements shall be made in advance in order to avoid
interruption and to minimize interference
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with the normal business and operations of the Station and (b) Citadel shall
comply with Section 9.12.
6.4 PRESERVATION OF ORGANIZATION. Exercise all reasonable efforts to
preserve the business organization of the Station intact, and assist Citadel, as
and when requested by Citadel, to preserve the present relationships of the
Station with employees, suppliers, advertisers and customers and others having
business relationships with the Station; provided, however, that nothing
contained in this Agreement shall require Seller to expend money in fulfillment
of its obligations set forth in this Section 6.4 other than those expenditures
that Seller would have made in the ordinary course of the business of the
Station and consistent with past practices.
6.5 BOOKS AND RECORDS. Maintain the books and records of Seller in
accordance with good business practices, on a basis consistent with past
practices, and promptly make available to Citadel the books, records, tax
returns, leases, contracts and other documents or agreements material to the
Station as Citadel, its counsel, accountants or other authorized representatives
may from time to time reasonably request.
6.6 EMPLOYEES. Pay as and when the same shall become due and payable
any amounts owed by Seller to its employees who have performed services up to
the time of Closing, whether fixed or accrued, for wages, vacation pay, sick
pay, severance pay, employee benefits, damages and otherwise.
6.7 COMPLIANCE WITH FCC MATTERS. Comply with the FCC Licenses
applicable to the Station and with the provisions of the Act, the rules,
regulations and policies of the FCC, and with all other laws, ordinances,
regulations, rules and orders of any Governmental Authority applicable to Seller
or to the Station.
6.8 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by Seller prior to the Closing, and
satisfy all Taxes related thereto, and either pay in full on or before the
Closing or effect a proration pursuant to Section 9.2 for all Accrued Taxes
attributable to Seller, or its income, operations or properties, accruing
through the Closing, regardless of whether such Taxes otherwise would have been
then due and payable.
6.9 TRADE-OUTS. Citadel shall assume as of the Closing the
Trade Agreements existing as of the Closing and that have not yet been
performed. To the extent that the aggregate liability of the Station as of the
Closing for unperformed time under the Trade Agreements (the "TRADE
LIABILITIES") exceeds the value of the goods and services to be received by the
Station or Citadel after the Closing under the Trade Agreements (the "TRADE
RECEIVABLES"), the Cash Purchase Price payable at the Closing shall be reduced
by the amount by which the Trade Liabilities exceeds the Trade Receivables (the
"TRADE IMBALANCE"). Seller shall deliver to Citadel at the Closing a schedule
of Trade Liabilities and Trade Receivables existing as of the Closing (the
"TRADE SCHEDULE"). Seller shall exercise reasonable efforts to minimize the
amount of additional Trade Liabilities incurred after execution of this
Agreement, and to prevent a Trade Imbalance. For purposes hereof, the term
"TRADE AGREEMENTS" means and includes those agreements entered into
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by Seller for the sale of advertising time on the Station for consideration
other than cash. For purposes hereof, the value of Trade Receivables and the
Trade Liabilities as of the Closing shall be the fair market value thereof, as
previously agreed to by Seller and the applicable vendor. Citadel shall assume
Seller's remaining obligations under such contracts.
6.10 SUPPLEMENTAL FINANCIAL STATEMENTS. Seller shall provide Citadel
with copies of the monthly unaudited income statements and balance sheets
applicable to the Station prepared by Seller from the date hereof until Closing
in the ordinary course of business (collectively, the "SUPPLEMENTAL FINANCIAL
STATEMENTS"). Seller shall provide such Supplemental Financial Statements to
Citadel promptly upon such Supplemental Financial Statements becoming available
to Seller. The Supplemental Financial Statements shall be subject to the
representations and warranties as set forth in Section 4.4.
6.11 CONSENTS. Exercise all reasonable efforts (not involving the
payment by Seller of any money to any party to any Assigned Contract) to obtain,
prior to the Closing the consent and approval of any third parties whose consent
or approval is necessary in connection with the consummation of the transactions
contemplated hereby, with respect to the Assigned Contracts set forth on
SELLER'S DISCLOSURE SCHEDULE and requiring such consent. If any such consent or
approval is not obtained, Seller will use commercially reasonable efforts (not
involving the payment of money to any Person) to secure an arrangement
satisfactory to Citadel intended to provide for Citadel following the Closing
the benefits under each Assigned Contract for which such consent or approval is
not obtained; provided, however, that Citadel shall have the right to terminate
this Agreement or to seek damages or other remedies from Seller as a result of
any failure by Seller to obtain any such consent or approval set forth on
SELLER'S DISCLOSURE SCHEDULE, if alternative arrangements are not satisfactory
to Citadel. Seller shall also execute a consent in a form provided by Citadel,
allowing Citadel to assign all of its rights under this Agreement and any
related documents to one or more of Citadel's lenders upon default by Citadel
under the relevant loan documents.
Nothing in this Agreement will constitute a transfer or an attempted
transfer of any Assigned Contract which by its terms or under applicable law or
governmental rules or regulations requires the consent or approval of a third
party (including, without limitation, a Governmental Authority) unless such
consent or approval is obtained.
6.12 FURTHER INFORMATION. Furnish to Citadel prior to the Closing such
financial (including tax), legal and other information with respect to Seller
and the Station as Citadel or its authorized representatives may from time to
time reasonably request.
6.13 NOTICE. Promptly notify Citadel in writing upon the occurrence or
the nonoccurrence of any event which does then, or which upon the passing of
time or the giving of notice would, constitute a breach of or default under, or
render misleading or untrue in any material respect, any agreement, covenant,
representation or warranty of Seller set forth in this Agreement.
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SECTION 7
NEGATIVE COVENANTS OF SELLER
From and after the date of this Agreement and until the Closing, Seller
shall not take, or cause to be taken, any of the following actions without
Citadel's prior approval, which may not be unreasonably withheld:
7.1 SALES, TRANSFERS AND LIENS. Make any sale, transfer, assignment,
conveyance, mortgage, hypothecation, encumbrance or other placement of any Lien
on any of the Purchased Assets, except in the ordinary course of business, which
do not materially interfere with the operations of the Station, and which in the
case of a sale, transfer or assignment, is replaced with an asset of equal or
greater value, and, in the case of a conveyance, mortgage, hypothecation,
encumbrance or other Lien, is released at or prior to the Closing.
7.2 ASSUMED OBLIGATIONS. Amend, terminate or renew any of the Assumed
Obligations (including any renewal or termination resulting from the failure to
provide, after the date of this Agreement, timely notice of nonrenewal or
termination as required by the terms of any of the Assumed Obligations).
7.3 BREACHES, DEFAULTS. Do any act or omit to do any act, or permit any
act or omission to occur, that will cause a breach of any contract, commitment
or obligation of it or them in any respect that would have a material adverse
effect on the Purchased Assets or the business operations of the Station as
presently conducted.
7.4 OBLIGATIONS. Incur any Obligations except in the ordinary course
of business in a manner consistent with past practices.
7.5 SALARY INCREASES. Increase any salary, other payments, disbursement
or distributions in any manner or form to any employees of Seller (other than
the Excluded Employees) except (A) in the ordinary course of business consistent
with past practices or (B) in accordance with the existing terms of contracts
entered into prior to the date of this Agreement.
7.6 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire Seller
or the Station in whole or in part.
SECTION 8
COVENANTS OF CITADEL AND LICENSE SUB
Citadel and License Sub hereby covenant as follows:
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8.1 COMPLIANCE WITH LAW. Citadel and License Sub shall comply with all
applicable laws and regulations required for the valid and effective
consummation of the transactions contemplated by this Agreement.
8.2 NOTICE. Citadel and License Sub shall promptly notify Seller in
writing upon the occurrence or the non-occurrence of any event which does then,
or which upon the passing of time or the giving of notice would, constitute a
breach of or default under, or render misleading or untrue in any material
respect, any agreement, covenant, representation or warranty of Citadel or
License Sub set forth in this Agreement.
8.3 ACCOUNTS RECEIVABLE. Subject to Citadel's receipt from Seller at
the Closing of a list (the "ACCOUNTS RECEIVABLE LIST") of accounts receivable of
the Station existing as of the Closing, exclusive of Trade Receivables, if any
(the "ACCOUNTS RECEIVABLE"), for a period of 120 days commencing with the
Closing Date (the "CITADEL COLLECTION PERIOD"), Citadel, as agent for Seller,
shall collect the Accounts Receivable in accordance with Citadel's normal
collection processes and procedures. In no event shall Citadel be required to
institute litigation or to retain third parties to institute collection
procedures with respect to the Accounts Receivable. All remittances will be
applied first to the oldest Accounts Receivable, unless the client asserts that
a dispute exists with respect to a particular account or the client specifies
the particular invoice to which the payment is to be applied, in which case the
remittances shall be applied to the specific account and Citadel shall promptly
notify Seller of any dispute. Remittances collected by Citadel on behalf of
Seller shall be remitted to Seller without offset of any kind within 10 days
after the end of each calendar month during the Citadel Collection Period, and
within five days after termination of the Citadel Collection Period. During the
Citadel Collection Period, at Seller's option, Seller shall be permitted to
collect the Accounts Receivable that remain outstanding after 60 days, or are
disputed in writing by the relevant account debtor. Each remittance by Citadel
to Seller shall be accompanied by a written report from Citadel setting forth
the aggregate amount of the Accounts Receivable and the aggregate amount of cash
collections of such Accounts Receivable during the period for which payment is
made, along with a breakdown by account debtor. At the end of the Citadel
Collection Period, Citadel shall account for all collected Accounts Receivable
and provide Seller with all documentation related to uncollected Accounts
Receivable, and Citadel shall have no further responsibilities with respect to
any uncollected Accounts Receivables except to remit promptly to Seller any
amounts subsequently received by Citadel. Citadel shall have no obligation with
respect to any Accounts Receivable it is unable to collect. After the end of
the Citadel Collection Period, Seller shall be entitled to collect any Accounts
Receivable that remain uncollected.
SECTION 9
ADDITIONAL COVENANTS OF THE PARTIES
9.1 APPLICATION FOR TRANSFER OF CONTROL. As promptly as practicable
after the date of this Agreement, and in no event later than three business days
after the date of this Agreement, Seller, Citadel and License Sub shall file an
application (the "FCC APPLICATION") with the FCC
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to approve the transfer of control of the Station from Seller to Citadel and
License Sub (the "FCC APPROVAL"). Citadel shall have primary responsibility for
filing and prosecuting the FCC Application. The parties agree that they shall
prosecute the FCC Application (and shall cooperate with each other in the timely
prosecution thereof), in good faith and with due diligence, and within the time
allowed therefor by the rules and regulations of the FCC. Seller and Citadel
shall each take all necessary actions on its part to obtain the FCC Approval.
Citadel shall advance the filing fee for the FCC Application, and Seller shall
reimburse Citadel for one-half of such filing fee at the Closing. All other
costs and expenses incurred by each party in connection with the filing and
prosecution of the FCC Application shall be paid by the party incurring the cost
or expense.
9.2 ADJUSTMENTS AT CLOSING. Without duplication, the following
items (in addition to similar items which are customarily prorated) shall be
prorated between Citadel and Seller through and including the Closing Date, and
the Cash Purchase Price appropriately increased or decreased as a result
thereof:
(a) Amounts payable under the Real Property Leases and the Assigned
Contracts;
(b) Power, utility and telephone charges incurred in connection
with the Station;
(c) Accrued Taxes existing as of the Closing; and
(d) FCC and HSR filing fees, as provided in Sections 9.1 and 9.8,
respectively.
Proration of real and personal property taxes shall be based upon the
most recent assessments available. Each of the parties shall duly cooperate with
the other in making the foregoing prorations, adjustments and payments. If, for
any reason beyond the reasonable control of the parties, information necessary
to calculate the required prorations is unavailable before the Closing Date,
such item shall be prorated after the Closing Date as soon as such information
is available, and Seller and Citadel shall cooperate with each other in regard
thereto and shall pay, each to the other, any amounts which may be owing as a
result of such subsequent prorations. If, at any time after the Closing Date,
errors are discovered in any prorations made pursuant to this Section 9.2,
Seller and Citadel shall correct such errors and pay, each to the other, any
sums owing as a result of such correction. All prorations to the extent feasible
shall be made on the Closing Date.
9.3 BROKERAGE. Seller, Citadel and License Sub represent and warrant to
each other that no Person (other than Broker) has provided services as a broker,
agent or finder in connection with the transactions contemplated by this
Agreement. Seller shall pay all fees, commissions, claims and expenses of Broker
in connection with the transactions contemplated hereby. Seller, Citadel and
License Sub shall each indemnify and hold harmless the other for any and all
claims or expenses, including attorneys' fees, asserted by any Person purporting
to act on
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behalf of the respective indemnitor as a broker, agent or finder in connection
with the transactions contemplated by this Agreement.
9.4 RISK OF LOSS. If any loss or damage to any of the Purchased Assets
occurs prior to the Closing (i) which has a material adverse effect on the
Station and (ii) such loss or damage is not susceptible of repair, replacement
or restoration with sufficient, collectible insurance proceeds available for
such purposes or by Seller at its sole cost and expense to substantially the
same condition as existed before such loss or damage, then the parties shall
adjust the Cash Purchase Price to reflect the diminution in value of the Station
attributable to the impairment of such assets.
9.5 ACTIONS WITH FCC. In the event any investigation, order to show
cause, notice of violation, notice of apparent liability or a forfeiture,
material complaint, petition to deny or informal objection is instituted or
filed against any party hereto (whether in connection with the proceedings to
approve the FCC Application or otherwise), such party shall promptly notify the
other party hereto in writing of such occurrence and shall thereafter
immediately take all reasonable measures to contest the same in good faith and
seek the removal or favorable resolution of such action, order, notice or
complaint.
9.6 COOPERATION. During the seven-year period immediately following the
Closing, Seller shall cooperate with Citadel in providing Citadel all
information reasonably requested and permitting Citadel access to all records
relating to the period of ownership of the Station by Seller prior to the
Closing. The cost and expense in providing or permitting access to information
hereunder shall be borne by Citadel. Citadel, as a condition to being provided
with access to information hereunder, shall, at the request of Seller, execute a
confidentiality agreement in form and substance acceptable to Seller in its
reasonable discretion. Notwithstanding the foregoing, Seller may discard any
such records during such seven-year period if (i) Seller notifies Citadel of
Seller's intent to discard such records and (ii) Citadel does not, within 10
days after receipt of such notice, retrieve such records from Seller's premises.
9.7 LOCAL MARKETING AGREEMENT. Concurrently with the execution
of this Agreement, Citadel and Seller shall execute and deliver a Local
Marketing Agreement for the Station in the form of EXHIBIT B attached hereto
(the "LOCAL MARKETING AGREEMENT"); provided, however, that the Local Marketing
Agreement shall not be effective, and neither party shall have any obligations
thereunder, until the later of (a) the date on which all applicable waiting
periods under the HSR Act shall have expired or been terminated or (b) the date
on which the FCC Approval shall have been obtained.
9.8 HSR FILING. As promptly as practicable after the date of
this Agreement, and in no event later than 10 days after the date of this
Agreement, the parties hereto shall complete and submit any filing that may be
required pursuant to the HSR Act (the "HSR FILING"). The parties hereto shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested, in order to
comply with the requirements of the HSR Act. The parties hereto shall use their
best efforts to resolve objections,
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if any, that may be asserted under the HSR Act or any other antitrust law in
connection with the transactions contemplated hereby. Citadel shall advance the
filing fee applicable to any HSR Filing, and Seller shall reimburse Citadel for
one-half of such filing fee at the Closing. All other costs and expenses
incurred by each party in connection with the filing and prosecution of any HSR
Filing shall be paid by the party incurring the cost or expense.
9.9 ALLENTOWN ANTENNA LEASE. At the Closing, Seller, as lessor, and
Citadel, as lessee, shall enter into an antenna lease at the Station's current
tower site (the "ALLENTOWN ANTENNA LEASE") containing the following terms: (a)
the term shall be 15 years; (b) rent shall be $1 per year during years 1 through
10 of such term, and $3,500 per month during years 11 through 15 of such term;
(c) Citadel shall have three options to renew such lease for consecutive terms
of five years, five years and four years and 11 months, respectively, with rent
during each such option period equal to $3,500 per month (plus a cost of living
adjustment made at the outset of each such option period); and (d) Seller may
relocate the Station's current antenna site plus or minus 70 feet from its
current location, so long as (i) the technical changes reflect the same coverage
provided by the Station and (ii) the technical changes are pre-approved by
Citadel in writing (which approval shall not be unreasonably withheld). Seller
and Citadel shall negotiate in good faith the Allentown Antenna Lease, which
shall contain the terms set forth in this Section 9.9 as well as such other
customary and appropriate terms and conditions.
9.10 UNITED EDUCATIONAL BROADCASTING. In consideration of the parties
entering into the Allentown Antenna Lease, Citadel shall provide antenna space
for a low power educational transmitter/antenna licensed to United Educational
Broadcasting, Inc. to share space on the Reading Courthouse Leasehold and on the
transmission tower used by Citadel for its radio station WLEV(FM); provided,
however, that this Section shall only remain in effect if (a) the Allentown
Antenna Lease is in effect, (b) United Educational Broadcasting, Inc. is
non-commercial and (c) the use of such transmitter/antenna does not interfere
with any signal transmitted by any of Citadel's radio stations.
9.11 REMOVAL OF PERSONAL PROPERTY. To the extent necessary or
appropriate, Citadel shall be responsible for removing, at its expense, the
Personal Property from Seller's premises within a reasonable time after the
Closing.
9.12 CONFIDENTIALITY. Citadel and License Sub shall maintain strict
confidentiality with respect to all documents and information furnished to
Citadel or License Sub by or on behalf of Seller. Notwithstanding the foregoing,
nothing shall be deemed to be confidential information that (a) is known to
Citadel or License Sub at the time of its disclosure to Citadel or License Sub;
(b) becomes publicly known or available other than through disclosure by Citadel
or License Sub; (c) is received by Citadel or License Sub from a third party not
actually known by Citadel or License Sub to be bound by a confidentiality
agreement with or obligation to Seller; or (d) is independently developed by
Citadel or License Sub as clearly evidenced by its records. Notwithstanding the
foregoing provisions of this Section, Citadel or License Sub may disclose such
confidential information (x) to the extent required or deemed advisable to
comply with applicable laws and regulations, (y) to its stockholders, officers,
directors, employees,
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representatives, financial advisors, attorneys, accountants and agents with
respect to the transactions contemplated hereby (so long as such parties are
informed of the confidentiality of such information), and (z) to any
governmental authority in connection with the transactions contemplated hereby.
In the event this Agreement is terminated, Citadel and License Sub will return
to Seller all confidential information prepared or furnished by Seller relating
to the transactions contemplated hereby, whether obtained before or after the
execution of this Agreement.
9.13 PUBLIC ANNOUNCEMENTS. The parties hereto shall consult with each
other before making any further public statements with respect to this Agreement
or the transactions contemplated hereby and shall not issue any such press
release or make any such public statement without the prior written consent of
the other parties, which shall not be unreasonably withheld, conditioned or
delayed; provided, however, that a party may, without the prior consultation
with or written consent of the other parties, issue such press release or make
such public statement as may be required by applicable law if it has used all
reasonable efforts to consult with the other parties and to obtain such parties'
consents but has been unable to do so in a timely manner.
SECTION 10
THE CLOSING
10.1 CLOSING DATE. The Closing shall occur on a date mutually selected
by Seller and Citadel which is within 10 business days following the later of
(a) the date on which the FCC Approval has become a Final Order or (b) the date
on which all applicable waiting periods under the HSR Act have expired or been
terminated. The Closing shall begin at 10:00 a.m., local time, on the date of
the Closing (the "CLOSING DATE") at the offices of Eckert Seamans Cherin &
Mellott, LLC, counsel for Citadel and License Sub, or at such other time and
place as the parties may agree in writing.
10.2 CLOSING DOCUMENTS. At the Closing:
(a) Seller shall deliver to Citadel all certificates, consents
(including any third party consents required as to the Assumed Obligations),
estoppels and other documents (including bills of sale, assignments and the
Letter of Credit) otherwise required to be delivered by Seller pursuant to this
Agreement or as a condition precedent to Citadel's and License Sub's fulfillment
of their obligations hereunder.
(b) Citadel shall deliver to Seller the following:
(i) immediately available funds in the aggregate amount of the
Cash Purchase Price as required by the provisions of this Agreement; and
(ii) all certificates and other documents (including an
assumption agreement relating to the Assumed Obligations) required to be
delivered by Citadel to Seller
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pursuant to this Agreement or as a condition precedent to Seller's fulfillment
of its obligations under this Agreement.
SECTION 11
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to consummate the transactions contemplated by this
Agreement at the Closing is subject to the following conditions precedent, any
or all of which may be waived by Seller in its sole discretion (other than
those set forth in Sections 11.7 and 11.8):
11.1 OPINION OF CITADEL'S AND LICENSE SUB'S COUNSEL. Seller shall
have received an opinion of counsel for Citadel and License Sub, dated the date
of the Closing, in form and substance reasonably satisfactory to Seller, to the
effect that:
(a) Each of Citadel and License Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada.
(b) Citadel is duly qualified and in good standing in the
Commonwealth of Pennsylvania.
(c) Each of Citadel and License Sub has full corporate power and
authority to own its assets and properties and to conduct its business and has
all necessary approvals, permits, licenses and authorizations to own its
properties and to conduct its business in the manner and in the locations
presently owned and conducted.
(d) This Agreement, together with all other documents and
instruments required to be executed or delivered by Citadel and License Sub in
connection with the transactions contemplated hereby, each has been duly
authorized, executed and delivered by Citadel and License Sub (to the extent a
party thereto), and constitutes a valid and legally binding obligation of
Citadel and License Sub (to the extent a party thereto), enforceable against
each of them in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitations on the availability of
equitable remedies.
(e) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, violates or will
violate any provision of the Articles of Incorporation or Bylaws of Citadel or
License Sub or, to the knowledge of such counsel, any law, rule, regulation,
writ, judgment, injunction, decree, determination, award or other order of any
Governmental Authority, or, to the knowledge of such counsel after due
investigation, violates or will violate, or conflicts with or will conflict with
or will result in any breach of any of the terms of, or constitutes or will
constitute a default under, or results or will result in the termination of or
the creation or imposition of any Lien pursuant to, the terms of any contract,
commitment, agreement, understanding or arrangement of any kind to which Citadel
or
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License Sub is a party or by which Citadel, License Sub or any of the assets of
Citadel or License Sub is bound and which is known to such counsel, all as set
forth on CITADEL'S DISCLOSURE SCHEDULE.
Nothing contained in this Section 11.1 shall require an opinion by such counsel
with respect to FCC matters.
11.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Citadel and License Sub contained herein shall be true and correct in all
material respects at and as of the Closing with the same effect as though all
such representations and warranties were made at and as of the Closing (except
for representations and warranties expressly and specifically relating to a time
or times other than the Closing, which shall be true and correct in all material
respects at and as of the time or times specified except for such inaccuracies
as do not, individually or in the aggregate, have a material effect on Citadel's
or License Sub's ability to consummate the transactions contemplated by this
Agreement) and Citadel and License Sub shall have delivered to Seller a
certificate to that effect, dated the date of the Closing, signed by the
President of Citadel and License Sub.
11.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against Seller relating to the consummation of any of the
transactions contemplated by this Agreement or any action by any Governmental
Authority shall have been issued.
11.4 OTHER CERTIFICATES. Seller shall have received certificates as to
the good standing of Citadel in the States of Nevada and Pennsylvania and of
License Sub in the State of Nevada, each as of a date not more than 20 days
before the Closing, and such other certificates, instruments and other
documents, in form and substance satisfactory to Seller, as Seller shall have
reasonably requested in connection with the transactions contemplated hereby.
11.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by Citadel and License Sub of this Agreement
and the transactions contemplated hereby shall have been duly and validly taken
by Citadel and License Sub, and Citadel and License Sub shall have delivered to
Seller certified copies of the resolutions of Citadel's and License Sub's board
of directors authorizing the execution and performance of this Agreement and
authorizing or ratifying the acts of its officers and employees in carrying out
the terms and provisions of this Agreement.
11.6 ACTS TO BE PERFORMED. Each of the covenants, acts and undertakings
of Citadel and License Sub to be performed on or before the Closing Date
pursuant to the terms hereof shall have been duly performed.
11.7 FCC APPROVAL. The FCC Approval shall have been obtained.
11.8 HSR CLEARANCE. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
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SECTION 12
CONDITIONS TO CITADEL'S AND LICENSE SUB'S OBLIGATION TO CLOSE
The obligation of Citadel and License Sub to consummate the
transactions contemplated by this Agreement at the Closing is subject to the
following conditions precedent, any or all of which may be waived by Citadel
and License Sub in their sole discretion (other than those set forth in
Sections 12.9 and 12.10):
12.1 OPINION OF SELLER'S COUNSEL. Citadel and License Sub shall have
received an opinion of counsel for Seller, dated the date of the Closing, in
form and substance reasonably satisfactory to Citadel and License Sub, to the
effect that:
(a) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania.
(b) Seller has full power and authority to own its assets and
properties and to conduct the Business and has all necessary approvals, permits,
licenses and authorizations to own its properties and to conduct the Business in
the manner and in the locations presently owned and conducted.
(c) This Agreement, together with all other documents and
instruments required to be executed or delivered by Seller in connection with
the transactions contemplated by this Agreement, each has been duly authorized,
executed and delivered by Seller (to the extent it is a party thereto), and
constitutes a valid and legally binding obligation of Seller (to the extent it
is party thereto), enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
laws affecting generally the enforceability of creditors' rights and by
limitations on the availability of equitable remedies.
(d) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, violates or will
violate any provision of the Articles of Incorporation or Bylaws of Seller or,
to the knowledge of such counsel, any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or, to the knowledge of such counsel after due investigation,
violates or will violate or conflicts with or will conflict with or will result
in any breach of any of the terms of, or constitutes or will constitute a
default under or results in or will result in the termination of or the creation
or imposition of any Lien pursuant to the terms of any contract, commitment,
agreement, understanding or arrangement of any kind to which Seller is a party
or by which Seller, or any of the assets of Seller is bound and which is known
to Seller's counsel, all as set forth on SELLER'S DISCLOSURE SCHEDULE. Except
for (1) the FCC Approval, (2) compliance with the HSR Act and (3) the consents
disclosed on SELLER'S DISCLOSURE SCHEDULE, no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of Seller, in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
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(e) To the knowledge of such counsel, except as disclosed on
SELLER'S DISCLOSURE SCHEDULE, there are no claims, disputes, actions, suits or
proceedings pending or threatened against Seller or any of the assets of Seller.
Nothing contained in this Section 12.1 shall require an opinion of such counsel
with respect to FCC matters.
12.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of Seller contained herein shall be true and correct in all material
respects at and as of the Closing (except for representations and warranties
expressly and specifically relating to a time or times other than the Closing,
which shall be true and correct in all material respects at and as of the time
or times specified except for such inaccuracies as do not, individually or in
the aggregate, have a material effect on the Station, Seller's ability to
consummate the transactions contemplated by this Agreement, or Seller's business
as a whole) with the same effect as though all such representations and
warranties were made at and as of the Closing and Seller shall have complied
with all its covenants contained herein; and Seller shall have delivered to
Citadel and License Sub a certificate to that effect, dated the date of the
Closing, signed by the President of Seller.
12.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against Seller, Citadel or License Sub relating to the consummation
of any of the transactions contemplated by this Agreement shall have been
issued.
12.4 OTHER CERTIFICATES. Citadel and License Sub shall have received a
certificate as to the good standing of Seller as a corporation in Pennsylvania
as of a date not more than 20 days before the Closing, and such other
certificates, instruments and other documents customary for transactions of the
nature provided for in this Agreement, in form and substance reasonably
satisfactory to Citadel and License Sub, as Citadel and License Sub shall have
reasonably requested in connection with the transactions contemplated by this
Agreement.
12.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by Seller of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by
Seller, and Seller shall have delivered to Citadel and License Sub certified
copies of the resolutions of Seller's board of directors authorizing the
execution and performance of this Agreement and authorizing or ratifying the
acts of its officers and employees in carrying out the terms and provisions of
this Agreement.
12.6 ACTS TO PERFORMED. Each of the covenants, acts and undertakings of
Seller to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed.
12.7 UCC SEARCHES. Seller shall have delivered to Citadel and License
Sub Uniform Commercial Code judgment and lien searches from the appropriate
county and state agencies showing all Liens on the Purchased Assets, which
searches shall be conducted not more than 30
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days prior to the Closing. Seller may cause such lien searches to be prepared by
a third party, in which case Seller shall not be responsible for any
inaccuracies in such lien searches unless Seller has actual knowledge of their
inaccuracy. Notwithstanding the foregoing, Seller shall remain responsible for
satisfying any Lien on the Purchased Assets even if such searches are
inaccurate.
12.8 FILINGS, CONSENTS, APPROVALS AND ESTOPPEL CERTIFICATES. All
filings, consents, approvals and estoppel certificates required by or reasonably
requested by Citadel and License Sub pursuant to this Agreement, or necessary to
consummate the transactions contemplated by this Agreement, shall have been
obtained.
12.9 FCC APPROVAL. The FCC Approval shall have been obtained.
12.10 HSR CLEARANCE. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
SECTION 13
INDEMNIFICATION
13.1 INDEMNIFICATION BY SELLER. Subject to the limitations and
procedures set forth in this Section 13, Seller shall indemnify and hold
harmless Citadel and License Sub from and against all losses, claims, demands,
damages, liabilities, obligations, costs and/or expenses, including, without
limitation, reasonable fees and disbursements of counsel (hereinafter referred
to collectively as "DAMAGES"), which are sustained or incurred by Citadel and
License Sub, to the extent that such Damages are sustained or incurred by reason
of the breach of any of the obligations, covenants or provisions of, or the
breach of any of the representations or warranties made by, Seller in this
Agreement.
13.2 INDEMNIFICATION BY CITADEL AND LICENSE SUB. Subject to the
limitations and procedures set forth in this Section 13, Citadel and License Sub
shall indemnify and hold harmless Seller from and against any and all Damages
sustained or incurred by Seller, to the extent such Damages are sustained or
incurred by Seller by reason of the breach of any of the obligations, covenants
or provisions of, or the breach of any of the representations or warranties made
by, Citadel or License Sub in this Agreement.
13.3 PROCEDURE FOR INDEMNIFICATION. In the event that any party to this
Agreement shall incur any Damages in respect of which indemnity may be sought by
such party pursuant to this Section 13 or any other provision of this Agreement,
the party indemnified hereunder (the "INDEMNITEE") shall notify the party
providing indemnification (the "INDEMNITOR") promptly. In the case of third
party claims, such notice shall in any event be given within 10 days of the
filing or assertion of any claim against the Indemnitee stating the nature and
basis of such claim; provided, however, that any delay or failure to notify any
Indemnitor of any claim shall not relieve it from any liability except to the
extent that the Indemnitor demonstrates that the defense
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of such action has been materially prejudiced by such delay or failure to
notify. In the case of third party claims, the Indemnitor shall, within 10 days
of receipt of notice of such claim, notify the Indemnitee of its intention to
assume the defense of such claim. If the Indemnitor assumes the defense of the
claim, the Indemnitor shall have the right and obligation (a) to conduct any
proceedings or negotiations in connection therewith and necessary or
appropriate to defend the Indemnitee, (b) to take all other required steps or
proceedings to settle or defend any such claims, and (c) to employ counsel to
contest any such claim or liability in the name of the Indemnitee or otherwise.
If the Indemnitor shall not assume the defense of any such claim or litigation
resulting therefrom, the Indemnitee may defend against any such claim or
litigation in such manner as it may deem appropriate and the Indemnitee may
settle such claim or litigation on such terms as it may deem appropriate, and
assert against the Indemnitor any rights or claims to which the Indemnitee is
entitled. Payment of Damages shall be made within 10 days of a final
determination of a claim.
A final determination of a disputed claim shall be (a) a judgment of
any court determining the validity of disputed claim, if no appeal is pending
from such judgment or if the time to appeal therefrom has elapsed, (b) an award
of any arbitration determining the validity of such disputed claim, if there is
not pending any motion to set aside such award or if the time within to move to
set such award aside has elapsed, (c) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys,
(d) a written acknowledgment of the Indemnitor that it no longer disputes the
validity of such claim, or (e) such other evidence of final determination of a
disputed claim as shall be acceptable to the parties.
SECTION 14
TERMINATION OF AGREEMENT: ADDITIONAL
REMEDIES 14.1 MANNER. This Agreement and the transactions contemplated
hereby may be terminated prior to completion of the Closing:
(a) by mutual written consent of Citadel, License Sub and Seller;
(b) by either Citadel and License Sub, on the one hand, or Seller,
on the other, upon providing written notice to the other party at any time after
June 30, 1998 if the FCC Approval has not been granted by the FCC, but only if
the party providing such notice is not then in material breach of this
Agreement;
(c) by Citadel and License Sub, upon providing written notice to
Seller, if as of the time set for Closing any of the conditions in Section 12 of
this Agreement (except Sections 12.9 and 12.10) has not been satisfied or waived
by Citadel and License Sub in writing, provided Citadel and License Sub are not
then in material breach of this Agreement;
(d) by Seller, upon providing written notice to Citadel and
License Sub, if as of the time set for Closing any of the conditions in Section
11 of this Agreement (except Sections
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11.7 and 11.8) has not been satisfied or waived by Seller in writing, provided
Seller is not then in material breach of this Agreement;
(e) by Seller, upon providing written notice to
Citadel and License Sub, if Citadel or License Sub fails to consummate the
transactions contemplated hereunder after all conditions in Section 12 of the
Agreement have been satisfied, provided Seller is not then in material breach
of this Agreement;
(f) by Citadel and License Sub, upon providing written
notice to Seller, if Seller fails to consummate the transactions contemplated
hereunder after all conditions in Section 11 of this Agreement have been
satisfied, provided Citadel and License Sub are not then in material breach of
this Agreement;
(g) subject to Section 9.1, by either party upon denial by the
FCC of the FCC Application; and
(h) by either party if any court of competent
jurisdiction in the United States or any other United States governmental body
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement, and such order, decree, ruling or other actions shall have
become final and non-appealable.
14.2 ADDITIONAL REMEDIES.
(a) In the event of the termination of this Agreement
by Seller pursuant to Section 14.1(d) or 14.1(e) (any such event being a "DRAW
CONDITION"), Seller shall be entitled to draw upon and receive the proceeds of
the Letter of Credit, but shall not retain any rights to recover any actual
damages it suffers as a result of such termination and the breach relating to
such damages. In the event of any other termination of this Agreement pursuant
to any other provision of Section 14.1, Citadel shall be entitled to a return
of, and Seller shall return to Citadel, the original Letter of Credit and, in
that event, Seller will no longer have any liability under this Agreement.
(b) The parties recognize and agree that Citadel and
License Sub have relied on this Agreement and expended considerable effort and
resources related to the transactions contemplated hereunder, that the rights
and benefits conferred upon Citadel and License Sub herein are unique, and that
damages may not be adequate to compensate Citadel and License Sub in the event
Seller improperly refuses to consummate the transactions contemplated
hereunder. The parties therefore agree that Citadel and License Sub shall be
entitled, at their option and in lieu of terminating this Agreement pursuant to
Section 14.1, to have this Agreement specifically enforced by a court of
competent jurisdiction; provided, however, that Citadel and License Sub may not
specifically enforce this Agreement if they have previously terminated this
Agreement and received the original Letter of Credit.
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SECTION 15
GENERAL
15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each representation
and warranty herein contained shall survive the Closing, notwithstanding any
investigation at any time made by or on behalf of any party to this Agreement.
15.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the laws of conflicts, of the
Commonwealth of Pennsylvania.
15.3 NOTICES. Any notices or other communications required or permitted
under this Agreement shall be delivered personally or sent by registered or
certified mail, postage prepaid, delivered by overnight delivery or sent by
facsimile, addressed as follows:
To Citadel or: Citadel Broadcasting Company
License Sub 1015 Eastman Drive
Bigfork, Montana 59911
Attn: Lawrence R. Wilson Fax: (406)
837-5373
With copy to: Citadel Broadcasting Company 140 South Ash
Avenue Tempe, Arizona 85281
Attn: Donna L. Heffner
Fax: (602) 731-5229
With a copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street
42nd Floor
Pittsburgh, Pennsylvania 15219
Attn: Bryan D.Rosenberger, Esq.
Fax: (412) 566-6099
To Seller: Maranatha Broadcasting Company, Inc.
East Rock Road
Allentown, PA 18103
Attn: Richard C. Dean
Fax: (610) 791-3000
35
<PAGE> 37
With a copy to: Malkames Law Offices
509 Linden Street
Allentown, PA 18101-1491
Attn: William G. Malkames, Esq.
Fax: (610) 821-5851
or such other addresses as shall be similarly furnished in writing by either
party. Such notices or communications shall be deemed to have been given as of
the date of personal delivery, or if mailed, the date the return receipt is
signed or the date on which delivery is refused, or if delivered by overnight
delivery or facsimile, on the date of receipt.
15.4 ENTIRE AGREEMENT. This instrument supersedes all prior
communications, understandings and agreements of or between the parties with
respect to the subject matter of this Agreement and, together with the Easton
Agreement, contains the entire agreement among the parties with respect to the
transactions contemplated in this Agreement.
15.5 HEADINGS. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
15.6 SCHEDULES, EXHIBITS. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
15.7 EXPENSES. Each party shall bear its own costs and expenses
incurred by it in connection with the transactions pursuant to this Agreement.
15.8 AMENDMENT. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed on behalf of all of
the parties or, in the case of a waiver, by the party waiving compliance.
15.9 WAIVER. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce that provision or any other provision of this Agreement at any
time thereafter.
15.10 ASSIGNMENT. Except as provided in Section 2.4, neither this
Agreement nor any of the rights or obligations under this Agreement may be
assigned by Seller without the prior written consent, in their sole discretion,
of Citadel and License Sub, or by Citadel or License Sub without the prior
written consent, in its sole discretion, of Seller. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, and no other person shall
have any right, benefit or obligation under this Agreement.
15.11 PRIOR CONTROL. Until the Closing, Seller shall maintain control
of the Station.
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<PAGE> 38
15.12 ATTORNEYS' FEES. In the event of any action arising out of this
Agreement, the prevailing party shall be entitled to recover its costs, expenses
and reasonable attorney's fees incurred in connection with the dispute from the
other party.
15.13 COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in
one or more counterparts, each of which together shall constitute a single
instrument. Signatures on this Agreement transmitted by facsimile shall be
deemed to be original signatures for all purposes of this Agreement.
15.14 DISPUTE RESOLUTION. Except as provided below, any dispute arising
out of or relating to this Agreement or the breach, termination or validity
hereof shall be finally settled by arbitration conducted expeditiously in
accordance with the CPR Rules. The Center for Public Resources shall appoint a
neutral advisor from its National CPR Panel. The arbitration shall be governed
by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon
the award rendered by the arbitrators may be entered by any court having
jurisdiction thereof. The place of arbitration shall be Allentown, Pennsylvania.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate; provided, however,
such proceedings shall be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be
accomplished within 45 days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three hours; such hearings to
take place on one or two days at a maximum; and
(d) decision to be rendered not more than 10 days following such
hearing.
The provisions of this Section 15.14 shall not apply with regard to any
equitable remedies to which a party may be entitled under this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
37
<PAGE> 39
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date above first written.
Maranatha Broadcasting Company, Inc.
By: /s/ Richard C. Dean
----------------------------
Its: President
----------------------------
Citadel Broadcasting Company
By: /s/ Lawrence R. Wilson
---------------------------
Its: President
---------------------------
Citadel License, Inc.
By: /s/ Lawrence Wilson
---------------------------
Its: President
---------------------------
38
<PAGE> 40
INDEX OF SCHEDULES AND EXHIBITS
Schedule 2.1 - Asset Schedule
Schedule 2.2 - Excluded Assets
Schedule 2.3 - Assumed Obligations
Schedule 4.0 - Seller's Disclosure Schedule
Schedule 5.0 - Citadel's Disclosure Schedule
Exhibit A - Letter of Credit
Exhibit B - Local Marketing Agreement
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules or exhibits to the Securities Exchange
Commission upon request.]
<PAGE> 1
EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
AMONG
MARANATHA BROADCASTING COMPANY, INC.,
CITADEL BROADCASTING COMPANY
AND
CITADEL LICENSE, INC.
WEST(AM)
JULY 15, 1997
<PAGE> 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT"), made as of the 15th day of
July, 1997, by and among MARANATHA BROADCASTING COMPANY, INC., a Pennsylvania
corporation ("PURCHASER"); CITADEL BROADCASTING COMPANY, a Nevada corporation
("CITADEL"); and CITADEL LICENSE, INC., a Nevada corporation ("LICENSE SUB").
RECITALS:
A. Citadel and License Sub own and operate, and License Sub is the
licensee of, radio station WEST(AM) licensed to Easton, Pennsylvania (the
"STATION").
B. Purchaser is the licensee of and owns and operates radio station
WFMZ(FM) licensed to Allentown, Pennsylvania (the "ALLENTOWN STATION").
C. Citadel and License Sub desire to sell to Purchaser, and Purchaser
desires to purchase from Citadel and License Sub, certain of the assets of the
Station, together with cash, in exchange for certain of the assets of the
Allentown Station, on the terms and subject to the conditions set forth in this
Agreement and in the Allentown Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall have the
meanings assigned to them below:
"ACCOUNTS RECEIVABLE" has the meaning specified in Section 8.3.
"ACCOUNTS RECEIVABLE LIST" has the meaning specified in Section 8.3.
"ACCRUED TAXES" has the meaning specified in Section 4.6.
"ACT" means the Communications Act of 1934, as amended.
"AFFILIATE" of any Person means any other Person (a) that directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, the first Person, or (b) any interests of which are owned, in
whole or in part, directly or indirectly, by the first Person. For purposes of
this definition, the term "control" (including the correlative meanings of the
terms "controls," "controlled by," and "under direct or indirect control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the
<PAGE> 3
direction of the management policies of the Person, whether through the
ownership of voting securities or by contract or otherwise.
"ALLENTOWN AGREEMENT" means that certain Asset Purchase Agreement
dated as of the date hereof among Purchaser, Citadel and License Sub relating
to the sale by Citadel and License Sub of the Allentown Station.
"ALLENTOWN ASSUMED OBLIGATIONS" means the Assumed Obligations under,
and as defined in, the Allentown Agreement.
"ALLENTOWN PURCHASED ASSETS" means the Purchased Assets under, and as
defined in, the Allentown Agreement.
"ALLENTOWN STATION" has the meaning specified in the recitals to this
Agreement.
"ASSET SCHEDULE" has the meaning specified in Section 2.1(a).
"ASSIGNED CONTRACTS" has the meaning specified in Section 2.1(d).
"ASSUMED OBLIGATIONS" has the meaning specified in Section 2.3.
"BROKER" means Richard A. Foreman Associates Inc.
"BUSINESS" has the meaning specified in Section 4.1.
"CASH PURCHASE PRICE" has the meaning specified in the Allentown
Agreement.
"CITADEL'S DISCLOSURE SCHEDULE" has the meaning specified in
Section 4.3.
"CLOSING" means the consummation of the transactions contemplated in
this Agreement in accordance with the provisions of Section 10.
"CLOSING DATE" has the meaning specified in Section 10.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACTS" has the meaning specified in Section 4.9.
"CPR RULES" means the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes.
"DAMAGES" has the meaning specified in Section 13.1.
"EASTON ANTENNA LEASE" has the meaning specified in Section 9.8.
3
<PAGE> 4
"ENVIRONMENTAL CLAIMS" means and includes, without limitation: (a)
claims, demands, suits, causes of action for personal injury or lost use of
property, or consequential damages, to the extent any of the foregoing arise
directly or indirectly out of Environmental Conditions; (b) actual or
threatened damages to natural resources; (c) claims for the recovery of
response costs, or administrative or judicial orders directing the performance
of investigations, response or remedial actions under CERCLA, RCRA or other
Environmental Laws; (d) a requirement to implement "corrective action" pursuant
to any order or permit issued pursuant to RCRA; (e) claims for restitution,
contribution or equitable indemnity from third parties or any governmental
agency; (f) fines, penalties or Liens against property; (g) claims for
injunctive relief or other orders or notices of violation from Governmental
Authorities; and (h) with regard to any present or former employees, exposure
to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping, or threatened release of Hazardous
Materials by Citadel. With respect to claims by employees, Environmental
Conditions also includes the exposure of Persons to Hazardous Materials within
work places on any real estate owned or occupied by Citadel.
"ENVIRONMENTAL LAWS" has the meaning specified in the definition of
Hazardous Materials.
"ENVIRONMENTAL NONCOMPLIANCE" means, but is not limited to: (a) the
release or threatened release as a result of the activities of Citadel of any
Hazardous Materials into the environment, any storm drain, sewer, septic system
or publicly owned treatment works, in violation of any effluent emission
limitations, standards or other criteria or guidelines established by any
federal, state or local law, regulation, rule, ordinance, plan or order; and
(b) any facility operations, procedures, designs, etc. which do not conform to
the statutory or regulatory requirements of the CAA, the CWA, the TSCA, the
RCRA or any other Environmental Laws intended to protect public health, welfare
and the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" has the meaning specified in Section 2.2.
"FCC" means the Federal Communications Commission.
"FCC APPLICATION" has the meaning specified in Section 9.1(a).
"FCC APPROVAL" has the meaning specified in Section 9.1(a).
"FCC LICENSES" means the main station license for the Station,
together with each of the other consents, rights, licenses, permits and other
authorizations issued by the FCC and held by
4
<PAGE> 5
Citadel and/or License Sub in connection with, or pertaining to, the conduct of
the business and operation of the Station, together with any renewals and
extensions thereof and any applications therefor pending on the Closing Date,
and any and all applications made by Citadel and/or License Sub for such
consents, rights, licenses, permits and other authorizations.
"FINAL ORDER" means a written action or order issued by the FCC or its
staff setting forth the FCC Approval (or a denial thereof), (a) which action or
order has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which action or order (i) no requests have
been filed and are pending for administrative or judicial review, rehearing,
reconsideration, appeal or stay, and the time period for filing any such
requests and for the FCC to set aside the action on its own motion under the
provisions of the Act or the rules, regulations and policies of the FCC has
expired, or (ii) in the event of review, reconsideration or appeal, the time
for further review, reconsideration or appeal has expired.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis during
the periods involved.
"GOVERNMENTAL AUTHORITY" means any government, whether federal, state
or local, or any other political subdivision thereof, or any agency, tribunal
or instrumentality of any such governmental or political subdivision, or any
other Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS MATERIALS" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases including but not limited to substances defined as "PCBs,"
"hazardous wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials," "petroleum," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C.
Section 9601 ET SEQ.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C.
Section 2601 ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 9601; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C.Section 300f ET SEQ.; the Clean Air
Act ("CAA"), 42 U.S.C. Section 7401 ET SEQ.; or any similar state law; and in
the plans, rules, regulations or ordinances adopted, or other criteria and
guidelines promulgated pursuant to the preceding laws or other similar laws,
regulations, rules or ordinances now in effect (collectively, the "ENVIRONMENTAL
LAWS"); and any other substances, constituents or wastes subject to
environmental regulations under any applicable federal, state or local law,
regulation or ordinance.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended from time to time.
"HSR FILING" has the meaning specified in Section 9.7.
5
<PAGE> 6
"INDEBTEDNESS FOR BORROWED MONEY" means (a) all indebtedness of
Citadel in respect of money borrowed (including, without limitation,
indebtedness which represents the unpaid amount of the purchase price of any
property), (b) all indebtedness of Citadel evidenced by a promissory note, bond
or similar written obligation to pay money, (c) all indebtedness guaranteed by
Citadel or for which Citadel is contingently liable, including, without
limitation, guaranties in the form of an agreement to repurchase or reimburse,
and any commitment by which any such Person assures a creditor against loss,
including contingent reimbursement obligations with respect to letters of
credit, and (d) all monetary obligations of Citadel under any lease or similar
arrangement, which obligations would be classified and accounted for as capital
obligations on a balance sheet of Citadel under GAAP.
"INDEMNITEE" has the meaning specified in Section 13.3.
"INDEMNITOR" has the meaning specified in Section 13.3.
"INTELLECTUAL PROPERTY" has the meaning specified in Section 2.1(e).
"LEASEHOLDS" has the meaning specified in Section 4.8.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, claim, easement, transfer restriction, lien (statutory or
otherwise) or security interest of any kind or nature whatsoever.
"OBLIGATIONS" means, without duplication, all (a) Indebtedness for
Borrowed Money, (b) Accrued Taxes, accounts payable, accrued liabilities and
all other liabilities and obligations of the type normally required by GAAP to
be reflected on a balance sheet, (c) commitments by which Citadel assures a
creditor against loss, including the face amount of all letters of credit and,
without duplication, all drafts drawn thereunder, (d) obligations guaranteed in
any manner by Citadel, (e) obligations under capitalized leases in respect of
which obligations Citadel is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures
a creditor against loss, (f) obligations under acceptance facilities, (g)
obligations secured by a Lien on property of Citadel, (h) obligations under
interest rate or currency exchange or swap agreements, (i) unsatisfied
obligations for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA, (j) indebtedness issued or obligation incurred in
substitution or exchange for any Obligations, (k) costs or expenses incurred by
Citadel of any nature, whether or not currently payable, and (l) other
liabilities or obligations of Citadel, in each of the foregoing instances
whether absolute or contingent, known or unknown, and whether or not normally
required by GAAP to be reflected on a balance sheet.
"PERMITS" has the meaning specified in Section 4.17(b).
"PERSON" means an individual, corporation, partnership, joint venture,
joint stock seller, association, trust, business trust, unincorporated
organization, Governmental Authority, or any other entity of whatever nature.
6
<PAGE> 7
"PERSONAL PROPERTY" has the meaning specified in Section 2.1(a).
"PURCHASED ASSETS" has the meaning specified in Section 2.1.
"PURCHASE PRICE" has the meaning specified in Section 3.1.
"PURCHASER COLLECTION PERIOD" has the meaning specified in
Section 8.3.
"PURCHASER'S DISCLOSURE SCHEDULE" has the meaning specified in
Section 5.3.
"REAL PROPERTY" has the meaning specified in Section 2.1(b)
"REAL PROPERTY LEASES" has the meaning specified in Section 2.1(c).
"STATION" has the meaning specified in the recitals to this Agreement.
"STUDIO" has the meaning specified in Section 9.13.
"SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified in
Section 6.10
"TAXES" means all taxes, charges, fees, levies, or other assessments,
including income, gross receipts, excise, property, sales, transfer, license,
payroll, and franchise taxes, any taxes required by law to be withheld, and any
taxes payable as a result of the consummation of the transactions contemplated
by this Agreement, which taxes are imposed by any Governmental Authority; and
such term shall include any interest, penalties, or additions to tax
attributable to such assessments.
"TRADE AGREEMENTS" has the meaning specified in Section 6.9.
"TRADE IMBALANCE" has the meaning specified in Section 6.9.
"TRADE LIABILITIES" has the meaning specified in Section 6.9.
"TRADE RECEIVABLES" has the meaning specified in Section 6.9.
"TRADE SCHEDULE" has the meaning specified in Section 6.9.
SECTION 2
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF PURCHASED ASSETS. Subject to the terms and
conditions of this Agreement, and on the basis of the representations,
warranties, covenants and agreements contained in this Agreement, at the
Closing, Citadel (and, with respect to clause (f) below,
7
<PAGE> 8
License Sub) agrees to sell, assign and convey to Purchaser, and Purchaser
agrees to purchase, acquire and accept from Citadel (and, with respect to clause
(f) below, License Sub), all of the Purchased Assets. The "PURCHASED ASSETS"
consist of:
(a) All the tangible personal property, improvements and
fixtures described on SCHEDULE 2.1 to this Agreement (the "ASSET SCHEDULE")
(the "PERSONAL PROPERTY");
(b) All of the right, title and interest of Citadel in and to
the real property described on the ASSET SCHEDULE (the "REAL PROPERTY");
(c) The leasehold interests pursuant to the real property
leases described on the ASSET SCHEDULE (the "REAL PROPERTY LEASES");
(d) All of the right, title and interest of Citadel in and to
those contracts, leases, licenses, memberships, agencies, permits and
agreements, other than Real Property Leases, to which Citadel presently is a
party or an assignee of a party which are described on the ASSET SCHEDULE (the
"ASSIGNED CONTRACTS"), including the employment agreements listed on the ASSET
SCHEDULE;
(e) The call letters of the Station and all of the
copyrights, trademarks, trade names and other similar rights, including
applications and registrations therefor, used in connection with the past or
present operation of the Station in which Citadel has any right, title or
interest, including, without limitation, those items listed on the ASSET
SCHEDULE (collectively, the "INTELLECTUAL PROPERTY");
(f) The FCC Licenses, a complete list of which is
included on the ASSET SCHEDULE;
(g) Copies of all books, records and accounts relating to the
operation of the Station, subject to the right of Citadel to retain originals
thereof for Citadel's personal use and reference and to obtain access to such
books, records and accounts in accordance with the provisions of Section
2.2(a); and
(h) All other assets owned by Citadel as of the date of this
Agreement which are needed in the broadcast chain of the Station as of the date
of this Agreement (i.e., from studio to transmission).
2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in this Agreement, it is expressly understood and agreed that there
shall be excluded from the assets transferred or assigned to Purchaser with
respect to Station the following (collectively, the "EXCLUDED ASSETS"):
(a) Except to the extent included in Section 2.1(g), all of
Citadel's and License Sub's corporate books and records and other documents
relating to the internal corporate affairs
8
<PAGE> 9
of Citadel and License Sub, and all other corporate records or files of Citadel
and License Sub not relating to the business or operation of the Station;
(b) All cash, cash equivalents or similar type investments held by
Citadel and License Sub, such as certificates of deposit, treasury bills and
other marketable securities on hand as of the Closing;
(c) All accounts receivable existing as of Closing;
(d) Corporate assets and assets not used in connection with the
Station;
(e) Any and all claims of Citadel and License Sub with respect to
transactions occurring or arising prior to the Closing Date, including, without
limitation, claims for Tax refunds; and
(f) Those additional assets identified on SCHEDULE 2.2 as Excluded
Assets.
Notwithstanding the foregoing, any asset which is described above but which is
actually listed on the ASSET SCHEDULE shall be a Purchased Asset and not an
Excluded Asset.
2.3 OBLIGATIONS. Purchaser shall not assume, and shall purchase the
Purchased Assets free and clear of, any and all Obligations of Citadel and
License Sub, except that Purchaser shall assume those Obligations of Citadel
arising from and after the Closing Date (other than any liability or obligation
for breach or default which occurred prior to the Closing Date) pursuant to
each of (a) the Real Property Leases, (b) the Assigned Contracts, (c) those
items subject to proration pursuant to Section 9.2, (d) the Trade Liabilities
and (e) those additional items expressly set forth on SCHEDULE 2.3 to this
Agreement (collectively, the "ASSUMED OBLIGATIONS").
SECTION 3
PURCHASE PRICE
3.1 PURCHASE PRICE. The purchase price for the Purchased Assets shall
consist of the Allentown Purchased Assets, subject to the assumption by Citadel
of the Allentown Assumed Obligations and the payment by Citadel of the Cash
Purchase Price, as provided in the Allentown Agreement (the "PURCHASE PRICE").
3.2 ALLOCATION OF THE PURCHASE PRICE. Citadel, License Sub and
Purchaser shall report the transactions contemplated by this Agreement for
federal and state tax purposes in a manner consistent with the allocation of
the Purchase Price mutually agreed upon by Citadel, License Sub and Purchaser.
9
<PAGE> 10
SECTION 4
REPRESENTATIONS AND WARRANTIES OF CITADEL AND LICENSE SUB
In connection with the purchase and sale of the Purchased Assets under
this Agreement and in order to induce Purchaser to enter into and consummate
the transactions contemplated by this Agreement, Citadel and License Sub make
the following representations and warranties to Purchaser, as of the date of
this Agreement and as of the date of the Closing (except for representations
and warranties expressly and specifically relating to a time or times other
than the date hereof or thereof, which shall be made as of the specified time
or times):
4.1 ORGANIZATION AND QUALIFICATION. Each of Citadel and License Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, and has full corporate power and authority (a) to
own its assets and properties and to conduct the business relating to the
Station (the "BUSINESS") and (b) to enter into this Agreement and to consummate
the transactions contemplated hereby. Citadel has duly qualified to do business
as a foreign corporation and is in good standing under the laws of the
Commonwealth of Pennsylvania. Each of Citadel and License Sub has full power,
authority and legal right and all necessary approvals, permits, licenses and
authorizations to own its properties and to conduct the Business.
4.2 AUTHORITY. The execution and delivery of this Agreement by Citadel
and License Sub, the performance by Citadel and License Sub of their respective
covenants and agreements hereunder and the consummation by Citadel and License
Sub of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of Citadel and License Sub. This Agreement
constitutes the valid and legally binding agreement of Citadel and License Sub,
enforceable against each of them in accordance with its terms.
4.3 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Articles of Incorporation or
Bylaws of Citadel or License Sub, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict with,
or will result in any breach of any of the terms of, or constitutes or will
constitute a default under or results in or will result in the termination of or
the creation or imposition of any Lien pursuant to, the terms of any contract,
commitment, agreement, understanding or arrangement of any kind to which Citadel
or License Sub is a party or by which Citadel, License Sub or any of the assets
of Citadel or License Sub is bound. Except for the FCC Approval, compliance with
the HSR Act and the consents disclosed in SCHEDULE 4.0 to this Agreement
("CITADEL'S DISCLOSURE SCHEDULE"), no consents, approvals or authorizations of,
or filings with, any Governmental Authority or any other Person are required in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
10
<PAGE> 11
4.4 FINANCIAL STATEMENTS. Citadel has delivered to Purchaser, with
respect to the Station, the monthly unaudited balance sheets and income
statements for each month in 1996 and the first six months of 1997. Each of the
foregoing financial statements (including in all cases the notes thereto, if
any) (i) is accurate and complete in all material respects, (ii) is consistent
in all material respects with the books and records of Citadel relating to the
Station (which, in turn, are accurate and complete in all material respects)
and (iii) presents fairly in all material respects the financial condition and
results of operations of the Station in accordance with GAAP (subject in the
case of unaudited financial statements to the lack of footnote disclosure and
changes resulting from normal year-end audit adjustments), consistently
applied, as of the dates and for the periods set forth therein.
4.5 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, except as disclosed in CITADEL'S DISCLOSURE SCHEDULE, there
has not been any (a) material adverse change in the condition of the Station,
financial or otherwise, or in the results of operations, assets, liabilities or
business of the Station; (b) damage or destruction, whether or not insured,
affecting the business operations of the Station; (c) labor dispute or
threatened labor dispute involving any of the employees of the Station; (d)
actual or threatened dispute pertaining to the Station with any material
provider of software, hardware or services; (e) material change in the
customary methods of operations of the Station; (f) except in the ordinary
course of business or to the extent not material to the Business or financial
condition of the Station, sale or transfer of any tangible or intangible asset
used or useful in the operation of the Station, mortgage, pledge or imposition
of any Lien on any such asset, lease of real property, machinery, equipment or
buildings with respect to the Station entered into or modification, amendment
or cancellation of any of its existing leases relating to the Station, or
cancellation of any debt or claim; or (g) liability or obligation (contingent
or otherwise) incurred under agreements or otherwise, except current
liabilities entered into or incurred in the ordinary course of business
consistent with past practices.
4.6 TAXES. Except as disclosed in CITADEL'S DISCLOSURE SCHEDULE,
Citadel has filed or caused to be filed on a timely basis all federal, state,
local and other tax returns, reports and declarations required to be filed by
it with respect to the Station and has paid all Taxes (including, but not
limited to, income, franchise, sales, use, unemployment, withholding, social
security and workers' compensation taxes and estimated income and franchise tax
payments, penalties and fines) reflected as due on such returns, reports or
declarations (whether or not shown on such returns, reports or declarations),
or pursuant to any assessment received by it in connection with such returns,
reports or declarations. All returns, reports and declarations filed by or on
behalf of Citadel relating to the Station are true, complete and correct in all
material respects. With respect to the Station, no deficiency in payment of any
Taxes for any period has been asserted by any taxing authority which remains
unsettled at the date hereof, no written inquiries have been received by Citadel
from any taxing authority with respect to possible claims for taxes or
assessments, and there is no basis for any additional claims or assessments for
Taxes.
Since December 31, 1996, Citadel has not incurred any liability for
Taxes which materially affect the operation of the Station other than in the
ordinary course of business. All
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Taxes attributable to the Station or its income, operations or properties
accruing up to and including the Closing (the "ACCRUED TAXES") have been or will
be paid when due regardless of whether such Taxes are due and payable as of the
Closing.
4.7 ASSET SCHEDULE. The ASSET SCHEDULE includes complete and accurate
(a) listings of all Real Property; (b) listings of all Personal Property; (c)
descriptions of all Real Property Leases and Assigned Contracts, none of which
requires any consent of third parties in connection with the transactions
contemplated hereby, except otherwise as indicated in CITADEL'S DISCLOSURE
SCHEDULE; (d) descriptions of all of the Intellectual Property; and (e)
listings of all of the FCC Licenses, all of the foregoing of which will, as of
the Closing, be owned and held by Citadel or License Sub as reflected in the
ASSET SCHEDULE.
4.8 TITLE TO AND CONDITION OF PROPERTY.
(a) TITLE. Citadel will as of the Closing have good, marketable and
exclusive title to and undisputed possession of all of the real, personal and
tangible property and improvements included in the Purchased Assets. Except as
set forth on CITADEL'S DISCLOSURE SCHEDULE, the Purchased Assets are now free
and clear of all Liens. The Purchased Assets will, as of the Closing, be free
and clear of all Liens.
(b) CONDITION. The Personal Property, prior to their removal (if
any) pursuant to Section 9.9, is structurally sound, in reasonably good
condition, ordinary wear and tear excepted, adequate and suitable for the
operation of the Station as it is currently being operated, and in proper
condition and repair so that the Station can operate according to its FCC
Licenses, the rules, regulations and policies of the FCC and in all other
respects in compliance with the Act and all other applicable federal and state
laws.
(c) INSURANCE. The Personal Property included among the Purchased
Assets is and will be insured through the Closing Date in amounts adequate to
replace or repair any casualty or other insurable loss to any of such property.
(d) SUFFICIENCY OF ASSETS. The Purchased Assets include all of the
assets, of a sufficient nature, condition and quantity, needed in the broadcast
chain of the Station (i.e., from studio to transmission). Citadel has not, since
December 31, 1996, removed any material item of Personal Property from the
Station other than removals in the ordinary course of business which were not
done in contemplation of the transactions contemplated hereby.
(e) REAL PROPERTY LEASES.
(i) The ASSET SCHEDULE contains accurate descriptions of the
Real Property Leases and the location of the real estate leased thereunder (the
"LEASEHOLDS") and the type of facility located on the Leaseholds. Citadel will
as of the Closing have a valid leasehold interest in its respective Leaseholds.
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(ii) None of the Leaseholds is subject to any covenant or
restriction preventing or limiting in any material respect the consummation of
the transactions contemplated hereby, except for any consent listed on CITADEL'S
DISCLOSURE SCHEDULE required of the landlords under the Real Property Leases.
Citadel's right, title and interest in and to the Leaseholds will at the Closing
be held by Citadel free and clear of all Liens.
(iii) The use for which the Leaseholds are zoned permits the
use thereof for the business of the Station consistent with past practices. The
use and occupancy of the Leaseholds by Citadel are in compliance in all material
respects with all regulations, codes, ordinances and statutes applicable to
Citadel and Citadel has not received any notice asserting any material violation
of sanitation laws and regulations, occupational safety and health regulations,
or electrical codes.
(iv) There are no facts relating to Citadel, and to the best
of the knowledge of Citadel, no facts relating to any other party, that would
prevent the Leaseholds from being occupied and used by Purchaser and/or any
assignee of Purchaser after the Closing Date in the same manner as immediately
prior to the Closing.
(v) There is not under any Real Property Lease any material
default by Citadel or any condition that with notice or the passage of time or
both would constitute such a default, and Citadel has not received any notice
asserting the existence of any such default or condition.
(vi) Each Real Property Lease is valid and binding and in full
force and effect as to Citadel, and to the best of the knowledge of Citadel, as
to each other party thereto, and except as disclosed on the ASSET SCHEDULE, has
not been amended or otherwise modified.
(vii) The Leaseholds constitute all of the real property in
which Citadel has a leasehold interest or other interest or right (whether as
lessor or lessee) and which is or will prior to the Closing be used solely in
the operation of the Station.
4.9 CONTRACTUAL AND OTHER OBLIGATIONS. Set forth in the ASSET SCHEDULE
is a description of all (a) Real Property Leases to which Citadel is a party;
(b) all contracts, agreements, licenses, leases, arrangements and other
documents used solely in connection with the present operation of the Station to
which Citadel is a party or by which Citadel or any of the assets of Citadel are
bound (including, in the case of loan agreements, a description of the amounts
of any outstanding borrowings thereunder and the collateral, if any, for such
borrowings); (c) uncompleted orders for the purchase by Citadel of materials,
supplies, equipment and services for the requirements of the Station existing as
of the date hereof and with respect to which the remaining obligation of Citadel
is in excess of $2,500; and (d) contingent contractual obligations and
liabilities of Citadel relating to the Station and known to Citadel existing as
of the date hereof (all of the foregoing, collectively, the "CONTRACTS"). Each
of the Contracts is designated in the ASSET SCHEDULE either as an Assigned
Contract, or as a Contract that will not be assigned to Purchaser. Neither
Citadel nor, to the best of the knowledge of Citadel, any other Person is in
material
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default in the performance of any covenant or condition under any Contract and
no claim of such a default has been made and no event has occurred which with
the giving of notice or the lapse of time would constitute such a default under
any covenant or condition under any Contract. Citadel is not a party to any
Contract which would terminate or be materially adversely affected by the
consummation of the transactions contemplated by this Agreement. Originals or
true, correct and complete copies of all of the Assigned Contracts have been
provided to Purchaser as of the date of this Agreement.
4.10 COMPENSATION. Set forth in CITADEL'S DISCLOSURE SCHEDULE is a
list of (a) all agreements between Citadel and its employees or other Persons
providing services for compensation with regard to the Station, whether
individually or collectively, and (b) all employees of Citadel or other Persons
providing services for Citadel with respect to the Station entitled to receive
annual compensation in excess of $5,000 and their respective positions, job
categories and salaries. The transactions contemplated by this Agreement will
not result in any liability for severance pay to any such employee or other
Person. Citadel has not informed any such employee that such employee will
receive any increase in compensation or benefits or any ownership interest in
Citadel or the Business. Except as disclosed in CITADEL'S DISCLOSURE SCHEDULE,
all of the employees of Citadel with respect to the Station are "at will"
employees and may be terminated by Citadel at any time, without liability or
obligation except the payment of normal compensation accrued up to the time of
termination of employment.
4.11 EMPLOYEE BENEFIT PLANS.
(a) Citadel does not maintain or sponsor, and is not required to
make contributions to, any pension, profit-sharing, savings, bonus, incentive or
deferred compensation, severance pay, medical, life insurance, welfare or other
employee benefit plan which affects the employees working at the Station, except
as set forth in CITADEL'S DISCLOSURE SCHEDULE. CITADEL'S DISCLOSURE SCHEDULE
fully discloses all of the plans, funds, policies, programs, arrangements or
understandings sponsored or maintained by Citadel pursuant to which any employee
of the Station (or any dependent or beneficiary of any such employee) might be
or become entitled to (1) retirement benefits; (2) severance or separation from
service benefits; (3) incentive, performance, stock, share appreciation or bonus
awards; (4) health care benefits; (5) disability income or wage continuation
benefits; (6) supplemental unemployment benefits; (7) life insurance, death or
survivor's benefits; (8) accrued sick pay or vacation pay; (9) any type of
benefit offered under any arrangement subject to characterization as an
"employee welfare benefit plan" within the meaning of section 3(3) of ERISA; or
(10) benefits of any other type offered through any arrangement that could be
characterized as providing for additional compensation or fringe benefits. As to
any such plan, fund, policy, program, arrangement or understanding, all of the
following are true: (A) all amounts due as contributions, insurance premiums and
benefits to the date hereof have been fully paid by Citadel; (B) all applicable
material requirements of law have been observed with respect to the operation
thereof, and all applicable reporting and disclosure requirements have been
timely satisfied; and (C) Citadel is not aware of any claim or demand by any
employee (or beneficiary or dependent of any employee) for benefits (other than
routine
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claims for benefits), or by any taxing authority for taxes or penalties which
has not been satisfied in full or which may be or become subject to litigation
or arbitration.
(b) Citadel has no obligation to provide health or other welfare
benefits to former, retired or terminated employees with respect to the Station,
except as specifically required under Section 4980B of the Code. Citadel has
substantially complied with any applicable notice and continuation requirements
of Section 4980B of the Code and the regulations thereunder.
4.12 LABOR RELATIONS. There have been no material violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions of, Citadel with respect to the
Station, or the terms and conditions of employment, wages (including overtime
compensation) and hours. The Station is not engaged in any unfair labor
practice or other unlawful employment practice and there are no charges of
unfair labor practices or other employee-related complaints pending or
threatened against the Station before the National Labor Relations Board, the
Equal Employment Opportunity Commission, the Occupational Safety and Health
Review Commission, the Department of Labor or any other Governmental Authority.
There is no strike, picketing, slowdown or work stoppage or organizational
attempt pending, threatened against or involving the Station. No issue with
respect to union representation is pending or threatened with respect to the
employees of the Station.
4.13 INCREASES IN COMPENSATION OR BENEFITS. Subsequent to December 31,
1996, there have been no increases in the compensation payable or to become
payable to any of the employees of Citadel who work solely at the Station, nor
has Citadel paid or provided for any awards, bonuses, stock options, loans,
profit-sharing, pension, retirement or welfare plans or similar or other
payments or arrangements for or on behalf of such employees in each case other
than (a) pursuant to currently existing plans or arrangements set forth in
CITADEL'S DISCLOSURE SCHEDULE or (b) as was required from time to time by
governmental legislation affecting wages. The vacation policy of Citadel with
respect to the Station is set forth in CITADEL'S DISCLOSURE SCHEDULE. No
employee of Citadel who works solely at the Station is entitled to vacation
time in excess of two weeks during the current calendar year and no such
employee has any accrued vacation time with respect to any period prior to the
current calendar year, except as set forth in CITADEL'S DISCLOSURE SCHEDULE.
4.14 INSURANCE. Citadel maintains insurance policies covering all
of the Station's properties and assets and the various occurrences which may
arise in connection with the operation of the Station, each of which policies is
summarized in CITADEL'S DISCLOSURE SCHEDULE. Such policies are in full force and
effect and all installments of premiums due thereon have been paid in full.
Citadel has complied with the provisions of such policies. There are no notices
of any pending or threatened termination or premium increases with respect to
any of such policies. There has been no casualty loss or occurrence which may
give rise to any claim of any kind not covered by insurance and Citadel is not
aware of any casualty occurrence which may give rise to any claim of any kind
not covered by insurance. No third party has filed any claim against Citadel
with respect to the Station for personal injury or property damage of a kind for
which
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liability insurance is generally available which is not fully insured,
subject only to the standard deductible.
4.15 LITIGATION; DISPUTES. There are no claims, disputes, actions,
suits, investigations or proceedings pending or threatened against or affecting
the Station, and, to the best of the knowledge of Citadel, there is no basis
for any such claim, dispute, action, suit, investigation or proceeding. Citadel
has no knowledge of any default under any such action, suit or proceeding.
Citadel is not in default in respect of any judgment, order, writ, injunction
or decree of any Governmental Authority with respect to the operation of the
Station.
4.16 ENVIRONMENTAL.
(a) Prior to the execution of this Agreement, Citadel has provided
to Purchaser a true and correct copy of all environmental site assessments,
studies, reports and communications relating to the Purchased Assets.
(b) Except as disclosed on CITADEL'S DISCLOSURE SCHEDULE, (i)
there are no conditions, facilities, procedures or any other facts or
circumstances that constitute Environmental Noncompliance on any of the
Leaseholds and (ii) there is not constructed, placed, deposited, stored,
disposed of, nor located on any of the Leaseholds any asbestos in any form that
has released or, unless disturbed, threatens to release airborne asbestos fibers
in excess of applicable local, state and federal standards.
(c) Except as disclosed on CITADEL'S DISCLOSURE SCHEDULE, no
structure, improvements, equipment, fixtures, activities or facilities located
on the Leaseholds uses Hazardous Materials except those used in the ordinary
course of the Business and in compliance with applicable Environmental Laws.
(d) Except as specifically described on CITADEL'S DISCLOSURE
SCHEDULE, there have been no releases or threatened releases of Hazardous
Materials into the environment, or which otherwise contribute to Environmental
Conditions arising solely from the activities of the Station, or to the best of
the knowledge of Citadel arising from any other activities, except to the extent
that such releases or threatened releases do not constitute a condition of
Environmental Noncompliance relating to the Leaseholds.
(e) Except as disclosed on CITADEL'S DISCLOSURE SCHEDULE, there
are no underground storage tanks, or underground piping associated with tanks,
used for the management of Hazardous Materials at the Leaseholds and there are
no abandoned underground storage tanks at the Leaseholds which have not been
either abandoned in place or removed pursuant to a permit issued by a
Governmental Authority.
(f) Citadel is not subject to any Environmental Claims against
Citadel with respect to the Station, no Environmental Claims with respect to the
Station have been threatened,
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nor, to the best of the knowledge of Citadel, is there any basis for any such
Environmental Claims with respect to the Station.
4.17 PERMITS, COMPLIANCE WITH APPLICABLE LAW.
(a) GENERAL. Neither Citadel nor License Sub is in default under
any, and each has complied with all, statutes, ordinances, regulations, orders,
judgments and decrees of any Governmental Authority applicable to it or to the
Business or the assets and properties of the Station as to which a default or
failure to comply might result in any material adverse change in the condition,
financial or otherwise, assets or properties of the Station or the Business.
Citadel has no knowledge of any basis for assertion of any violation of the
foregoing or for any claim for compensation or damages or otherwise arising out
of any violation of the foregoing. Citadel has not received any notification of
any asserted present or past failure to comply with any of the foregoing which
has not been satisfactorily responded to in the time period required thereunder.
(b) PERMITS. Set forth in CITADEL'S DISCLOSURE SCHEDULE are
complete and accurate lists of all FCC Licenses applicable to the Station, and
all other permits, licenses, approvals, franchises, notices and authorizations
issued by any Governmental Authorities (collectively, the "PERMITS"), held by
Citadel and/or License Sub and applicable to the Station. The Station is
operating in accordance with the Act and its FCC Licenses and is in compliance
with the Act and the rules, regulations and policies of the FCC. The Permits set
forth in CITADEL'S DISCLOSURE SCHEDULE are all of the Permits required for the
conduct of the Business. All of the Permits set forth in CITADEL'S DISCLOSURE
SCHEDULE are in full force and effect, and neither Citadel nor License Sub has
engaged in any activity which would cause or permit revocation or suspension of
any such Permit, and no action or proceeding looking to or contemplating the
revocation or suspension of any such Permit is pending or threatened. There are
no existing defaults or events of default or events or state of facts which with
notice or lapse of time or both would constitute a default by Citadel or License
Sub under any such Permit. There is no default or claimed or purported or
alleged default or state of facts which with notice or lapse of time or both
would constitute a default on the part of any party in the performance of any
obligation to be performed or paid by any party under any Permit set forth in
CITADEL'S DISCLOSURE SCHEDULE. Except for (1) the FCC Approval, (2) compliance
with the HSR Act and (3) as set forth in CITADEL'S DISCLOSURE SCHEDULE, the
consummation of the transactions contemplated hereby will in no way affect the
continuation, validity or effectiveness of the Permits set forth in CITADEL'S
DISCLOSURE SCHEDULE, or require the consent of any Person. Except as set forth
in CITADEL'S DISCLOSURE SCHEDULE, neither Citadel nor License Sub is required to
be licensed by, and neither is subject to the regulation of, any Governmental
Authority by reason of the Business.
4.18 INTELLECTUAL PROPERTY. The use of the Intellectual Property in
connection with the operation of the Station and in a manner consistent with
past practices does not infringe upon the proprietary rights of any other
Person. Purchaser will, upon consummation of the transactions contemplated by
this Agreement, possess adequate rights, licenses and other authority to use
the Intellectual Property used by the Station in the operation of the Station
following the Closing in the manner now operated, without infringement or
unlawful or improper use of any of the
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Intellectual Property. No director, officer or employee of Citadel or License
Sub has any interest in any of the Intellectual Property, all of which will, as
of the Closing, be free and clear of all Liens. Citadel has no knowledge of any
infringement by any Person upon the rights of Citadel or License Sub with
respect to the Intellectual Property. Neither Citadel nor License Sub has
granted any outstanding licenses or other rights to any of the call letters,
copyrights, trademarks, trade names or other similar rights with regard to any
of the Intellectual Property.
4.19 BOOKS AND RECORDS. The books of account of Citadel relating to
the Station fairly and accurately reflect its income, expenses, assets and
liabilities and have been maintained in accordance with good business
practices. All of such books and records, to the extent included within the
Purchased Assets, will be located on the date of the Closing on the business
premises of the Station.
4.20 ACTS TO BE PERFORMED. Citadel and License Sub shall perform each
of the covenants, acts and undertakings of Citadel and License Sub to be
performed on or before the Closing Date pursuant to the terms of this
Agreement.
4.21 RELATED PARTY OBLIGATIONS. Except as set forth on the ASSET
SCHEDULE, no officer, director, shareholder or Affiliate of Citadel, or any
individual related by blood or marriage to any such Person, or any entity in
which any such Person or individual owns any beneficial interest, is a party to
any agreement, contract, commitment, promissory note, loan, any other actual or
proposed transaction with Citadel, or has any material interest in any material
property used by Citadel, which is material to the operation of the Station.
4.22 DISCLOSURE. To the best of Citadel's knowledge, no representation
or warranty made under this Section 4 and none of the information furnished by
Citadel or License Sub set forth in this Agreement or in the schedules or
exhibits to this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements in this
Agreement or in the schedules or exhibits to this Agreement not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
In connection with the purchase and sale of the Purchased Assets under
this Agreement and in order to induce Citadel and License Sub to enter into and
consummate the transactions contemplated by this Agreement, Purchaser makes the
following representations and warranties to Citadel and License Sub, as of the
date of this Agreement and as of the date of the Closing (except for
representations and warranties expressly and specifically relating to a time or
times other than the date hereof or thereof, which shall be made as of the
specified time or times):
5.1 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and has full corporate power and authority (a) to
own its assets and properties and to conduct its business and
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(b) to enter into this Agreement and consummate the transactions contemplated
hereby. Purchaser has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct its business.
5.2 AUTHORITY. The execution and delivery of this Agreement by
Purchaser, the performance by Purchaser of its covenants and agreements
hereunder and the consummation by Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and legally binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms.
5.3 NO LEGAL BAR: CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Articles of Incorporation or
Bylaws of Purchaser, or any law, rule, regulation, writ, judgment, injunction,
decree, determination, award or other order of any Governmental Authority, or
violates or will violate, or conflicts with or will conflict with, or will
result in any breach of any of the terms of, or constitutes or will constitute
a default under or results in or will result in the termination of or the
creation or imposition of any Lien pursuant to the terms of, any contract,
commitment, agreement, understanding or arrangement of any kind to which
Purchaser is a party or by which Purchaser or any of the assets of Purchaser is
bound. Except for the FCC Approval, compliance with the HSR Act and the
consents disclosed in SCHEDULE 5.0 ("PURCHASER'S DISCLOSURE SCHEDULE"), no
consents, approvals or authorizations of, or filings with, any Governmental
Authority or any other Person are required on the part of Purchaser in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
5.4 ACTS TO BE PERFORMED. Purchaser shall perform each of the
covenants, acts and undertakings of Purchaser to be performed on or before the
Closing Date pursuant to the terms of this Agreement.
5.5 LITIGATION. There is no litigation, proceeding or investigation
pending or, to the best of Purchaser's knowledge, threatened against or
affecting Purchaser that is reasonably likely to prevent or hinder the
consummation of the transactions contemplated by this Agreement.
5.6 DISCLOSURE. To the best of Purchaser's knowledge, no
representation or warranty made under this Section 5 and none of the
information furnished by Purchaser set forth in this Agreement or in the
schedules or exhibits to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements in this Agreement or in the schedules or exhibits to this Agreement
not misleading.
SECTION 6
AFFIRMATIVE COVENANTS OF CITADEL AND LICENSE SUB
Citadel and License Sub covenant and agree with Purchaser to:
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6.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
6.2 PAYMENT OF OBLIGATIONS. Fully discharge all Obligations of Citadel
with respect to the Station, except the Assumed Obligations, on a timely basis.
6.3 ACCESS. Afford Purchaser and its authorized representatives, upon
reasonable notice to Citadel, reasonable access during normal business hours to
the Station and the Station's employees, and permit Purchaser and its
authorized representatives to examine all operations, equipment, properties and
other assets, logs, books, relevant records, contracts and documents of Citadel
and License Sub pertinent to the Station; provided, however, that in each
instance (a) mutually satisfactory arrangements shall be made in advance in
order to avoid interruption and to minimize interference with the normal
business and operations of the Station and (b) Purchaser shall comply with
Section 9.10.
6.4 PRESERVATION OF ORGANIZATION. Exercise all reasonable efforts to
preserve the business organization of the Station intact, and assist Purchaser,
as and when requested by Purchaser, to preserve the present relationships of
the Station with employees, suppliers, advertisers and customers and others
having business relationships with the Station; provided, however, that nothing
contained in this Agreement shall require Citadel or License Sub to expend
money in fulfillment of their obligations set forth in this Section 6.4 other
than those expenditures that Citadel or License Sub would have made in the
ordinary course of the business of the Station and consistent with past
practices.
6.5 BOOKS AND RECORDS. Maintain the books and records of Citadel
relating to the Station in accordance with good business practices, on a basis
consistent with past practices, and promptly make available to Purchaser the
books, records, tax returns, leases, contracts and other documents or agreements
material to the Station as Purchaser, its counsel, accountants or other
authorized representatives may from time to time reasonably request.
6.6 EMPLOYEES. Pay as and when the same shall become due and payable
any amounts owed by Citadel to Station employees who have performed services up
to the time of Closing, whether fixed or accrued, for wages, vacation pay, sick
pay, severance pay, employee benefits, damages and otherwise.
6.7 COMPLIANCE WITH FCC MATTERS. Comply with the FCC Licenses
applicable to the Station and with the provisions of the Act, the rules,
regulations and policies of the FCC, and with all other laws, ordinances,
regulations, rules and orders of any Governmental Authority applicable to the
Station.
6.8 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by Citadel with respect to the Station
prior to the Closing, and satisfy all Taxes related thereto, and either pay in
full on or before the Closing or effect a proration pursuant to Section 9.2 for
all Accrued Taxes attributable to Citadel with respect to the Station,
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or its income, operations or properties, accruing through the Closing,
regardless of whether such Taxes otherwise would have been then due and payable.
6.9 TRADE-OUTS. Purchaser shall assume as of the Closing the Trade
Agreements existing as of the Closing and that have not yet been performed. To
the extent that the aggregate liability of the Station as of the Closing for
unperformed time under the Trade Agreements (the "TRADE LIABILITIES") exceeds
the value of the goods and services to be received by the Station or Purchaser
after the Closing under the Trade Agreements (the "TRADE RECEIVABLES"), the
Cash Purchase Price shall be increased by the amount by which the Trade
Liabilities exceeds the Trade Receivables (the "TRADE IMBALANCE"). Citadel
shall deliver to Purchaser at the Closing a schedule of Trade Liabilities and
Trade Receivables existing as of the Closing (the "TRADE SCHEDULE"). Citadel
shall exercise reasonable efforts to minimize the amount of additional Trade
Liabilities incurred after execution of this Agreement, and to prevent a Trade
Imbalance. For purposes hereof, the term "TRADE AGREEMENTS" means and includes
those agreements entered into by Citadel for the sale of advertising time on
the Station for consideration other than cash. For purposes hereof, the value
of Trade Receivables and the Trade Liabilities as of the Closing shall be the
fair market value thereof, as previously agreed to by Citadel and the
applicable vendor. Purchaser shall assume Citadel's remaining obligations under
such contracts.
6.10 SUPPLEMENTAL FINANCIAL STATEMENTS. Citadel shall provide
Purchaser with copies of the monthly unaudited income statements and balance
sheets applicable to the Station prepared by Citadel from the date hereof until
Closing in the ordinary course of business (collectively, the "SUPPLEMENTAL
FINANCIAL STATEMENTS"). Citadel shall provide such Supplemental Financial
Statements to Purchaser promptly upon such Supplemental Financial Statements
becoming available to Citadel. The Supplemental Financial Statements shall be
subject to the representations and warranties as set forth in Section 4.4.
6.11 CONSENTS. Exercise all reasonable efforts (not involving the
payment by Citadel or License Sub of any money to any party to any Assigned
Contract) to obtain, prior to the Closing the consent and approval of any third
parties whose consent or approval is necessary in connection with the
consummation of the transactions contemplated hereby, with respect to the
Assigned Contracts set forth on CITADEL'S DISCLOSURE SCHEDULE and requiring
such consent. If any such consent or approval is not obtained, Citadel will use
commercially reasonable efforts (not involving the payment of money to any
Person) to secure an arrangement satisfactory to Purchaser intended to provide
for Purchaser following the Closing the benefits under each Assigned Contract
for which such consent or approval is not obtained; provided, however, that
Purchaser shall have the right to terminate this Agreement or to seek damages
or other remedies from Citadel as a result of any failure by Citadel to obtain
any such consent or approval set forth on CITADEL'S DISCLOSURE SCHEDULE, if
alternative arrangements are not satisfactory to Purchaser. Citadel shall also
execute a consent in a form provided by Purchaser, allowing Purchaser to assign
all of its rights under this Agreement and any related documents to one or more
of Purchaser's lenders upon default by Purchaser under the relevant loan
documents.
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Nothing in this Agreement will constitute a transfer or an attempted
transfer of any Assigned Contract which by its terms or under applicable law or
governmental rules or regulations requires the consent or approval of a third
party (including, without limitation, a Governmental Authority) unless such
consent or approval is obtained.
6.12 FURTHER INFORMATION. Furnish to Purchaser prior to the Closing
such financial (including tax), legal and other information with respect to the
Station as Purchaser or its authorized representatives may from time to time
reasonably request.
6.13 NOTICE. Promptly notify Purchaser in writing upon the occurrence
or the nonoccurrence of any event which does then, or which upon the passing of
time or the giving of notice would, constitute a breach of or default under, or
render misleading or untrue in any material respect, any agreement, covenant,
representation or warranty of Citadel or License Sub set forth in this
Agreement.
SECTION 7
NEGATIVE COVENANTS OF CITADEL AND LICENSE SUB
From and after the date of this Agreement and until the Closing,
Citadel and License Sub shall not take, or cause to be taken, any of the
following actions without Purchaser's prior approval, which may not be
unreasonably withheld:
7.1 SALES, TRANSFERS AND LIENS. Make any sale, transfer, assignment,
conveyance, mortgage, hypothecation, encumbrance or other placement of any Lien
on any of the Purchased Assets, except in the ordinary course of business, which
do not materially interfere with the operations of the Station, and which in the
case of a sale, transfer or assignment, is replaced with an asset of equal or
greater value, and, in the case of a conveyance, mortgage, hypothecation,
encumbrance or other Lien, is released at or prior to the Closing.
7.2 ASSUMED OBLIGATIONS. Amend, terminate or renew any of the Assumed
Obligations (including any renewal or termination resulting from the failure to
provide, after the date of this Agreement, timely notice of nonrenewal or
termination as required by the terms of any of the Assumed Obligations).
7.3 BREACHES, DEFAULTS. Do any act or omit to do any act, or permit
any act or omission to occur, that will cause a breach of any contract,
commitment or obligation of it or them in any respect that would have a
material adverse effect on the Purchased Assets or the business operations of
the Station as presently conducted.
7.4 OBLIGATIONS. Incur any Obligations with respect to the Station
except in the ordinary course of business in a manner consistent with past
practices.
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7.5 SALARY INCREASES. Increase any salary, other payments,
disbursement or distributions in any manner or form to any employees of Citadel
at the Station except (A) in the ordinary course of business consistent with
past practices or (B) in accordance with the existing terms of contracts
entered into prior to the date of this Agreement.
7.6 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire the
Station in whole or in part.
SECTION 8
COVENANTS OF PURCHASER
Purchaser hereby covenants as follows:
8.1 COMPLIANCE WITH LAW. Purchaser shall comply with all applicable
laws and regulations required for the valid and effective consummation of the
transactions contemplated by this Agreement.
8.2 NOTICE. Purchaser shall promptly notify Citadel in writing upon
the occurrence or the non-occurrence of any event which does then, or which
upon the passing of time or the giving of notice would, constitute a breach of
or default under, or render misleading or untrue in any material respect, any
agreement, covenant, representation or warranty of Purchaser set forth in this
Agreement.
8.3 ACCOUNTS RECEIVABLE. Subject to Purchaser's receipt from Citadel
at the Closing of a list (the "ACCOUNTS RECEIVABLE LIST") of accounts
receivable of the Station existing as of the Closing, exclusive of Trade
Receivables, if any (the "ACCOUNTS RECEIVABLE"), for a period of 120 days
commencing with the Closing Date (the "PURCHASER COLLECTION PERIOD"), Purchaser,
as agent for Citadel, shall collect the Accounts Receivable in accordance with
Purchaser's normal collection processes and procedures. In no event shall
Purchaser be required to institute litigation or to retain third parties to
institute collection procedures with respect to the Accounts Receivable. All
remittances will be applied first to the oldest Accounts Receivable, unless the
client asserts that a dispute exists with respect to a particular account or the
client specifies the particular invoice to which the payment is to be applied,
in which case the remittances shall be applied to the specific account and
Purchaser shall promptly notify Citadel of any dispute. Remittances collected by
Purchaser on behalf of Citadel shall be remitted to Citadel without offset of
any kind within 10 days after the end of each calendar month during the
Purchaser Collection Period, and within five days after termination of the
Purchaser Collection Period. During the Purchaser Collection Period, at
Citadel's option, Citadel shall be permitted to collect the Accounts Receivable
that remain outstanding after 60 days, or are disputed in writing by the
relevant account debtor. Each remittance by Purchaser to Citadel shall be
accompanied by a written report from Purchaser setting forth the aggregate
amount of the Accounts Receivable and the aggregate amount of cash collections
of such Accounts Receivable during the period for which payment is made, along
with a breakdown by account debtor. At the end of the Purchaser
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Collection Period, Purchaser shall account for all collected Accounts Receivable
and provide Citadel with all documentation related to uncollected Accounts
Receivable, and Purchaser shall have no further responsibilities with respect to
any uncollected Accounts Receivables except to remit promptly to Citadel any
amounts subsequently received by Purchaser. Purchaser shall have no obligation
with respect to any Accounts Receivable it is unable to collect. After the end
of the Purchaser Collection Period, Citadel shall be entitled to collect any
Accounts Receivable that remain uncollected.
SECTION 9
ADDITIONAL COVENANTS OF THE PARTIES
9.1 APPLICATION FOR TRANSFER OF CONTROL. As promptly as practicable
after the date of this Agreement, and in no event later than three business
days after the date of this Agreement, Purchaser, Citadel and License Sub shall
file an application (the "FCC APPLICATION") with the FCC to approve the
transfer of control of the Station from Citadel and License Sub to Purchaser
(the "FCC APPROVAL"). Purchaser shall have primary responsibility for filing
and prosecuting the FCC Application. The parties agree that they shall
prosecute the FCC Application (and shall cooperate with each other in the
timely prosecution thereof), in good faith and with due diligence, and within
the time allowed therefor by the rules and regulations of the FCC. Purchaser
and Citadel shall each take all necessary actions on its part to obtain the FCC
Approval. Purchaser shall advance the filing fee for the FCC Application, and
Citadel shall reimburse Purchaser for one-half of such filing fee at the
Closing. All other costs and expenses incurred by each party in connection with
the filing and prosecution of the FCC Application shall be paid by the party
incurring the cost or expense.
9.2 ADJUSTMENTS AT CLOSING. Without duplication, the following items
(in addition to similar items which are customarily prorated) shall be prorated
between Citadel and Purchaser through and including the Closing Date, and the
Cash Purchase Price appropriately increased or decreased as a result thereof:
(a) Amounts payable under the Real Property Leases and the
Assigned Contracts;
(b) Power, utility and telephone charges incurred in
connection with the Station;
(c) Accrued Taxes existing as of the Closing; and
(d) FCC and HSR filing fees, as provided in Sections 9.1 and
9.7, respectively.
Proration of real and personal property taxes shall be based upon the
most recent assessments available. Each of the parties shall duly cooperate
with the other in making the foregoing prorations, adjustments and payments.
If, for any reason beyond the reasonable control
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of the parties, information necessary to calculate the required prorations is
unavailable before the Closing Date, such item shall be prorated after the
Closing Date as soon as such information is available, and Purchaser and Citadel
shall cooperate with each other in regard thereto and shall pay, each to the
other, any amounts which may be owing as a result of such subsequent prorations.
If, at any time after the Closing Date, errors are discovered in any prorations
made pursuant to this Section 9.2, Purchaser and Citadel shall correct such
errors and pay, each to the other, any sums owing as a result of such
correction. All prorations to the extent feasible shall be made on the Closing
Date.
9.3 BROKERAGE. Purchaser, Citadel and License Sub represent and
warrant to each other that no Person (other than Broker) has provided services
as a broker, agent or finder in connection with the transactions contemplated
by this Agreement. Purchaser shall pay all fees, commissions, claims and
expenses of Broker in connection with the transactions contemplated hereby.
Purchaser, Citadel and License Sub shall each indemnify and hold harmless the
other for any and all claims or expenses, including attorneys' fees, asserted
by any Person purporting to act on behalf of the respective indemnitor as a
broker, agent or finder in connection with the transactions contemplated by
this Agreement.
9.4 RISK OF LOSS. If any loss or damage to any of the Purchased Assets
occurs prior to the Closing (i) which has a material adverse effect on the
Station and (ii) such loss or damage is not susceptible of repair, replacement
or restoration with sufficient, collectible insurance proceeds available for
such purposes or by Citadel at its sole cost and expense to substantially the
same condition as existed before such loss or damage, then the parties shall
adjust the Cash Purchase Price to reflect the diminution in value of the
Station attributable to the impairment of such assets.
9.5 ACTIONS WITH FCC. In the event any investigation, order to show
cause, notice of violation, notice of apparent liability or a forfeiture,
material complaint, petition to deny or informal objection is instituted or
filed against any party hereto (whether in connection with the proceedings to
approve the FCC Application or otherwise), such party shall promptly notify the
other party hereto in writing of such occurrence and shall thereafter
immediately take all reasonable measures to contest the same in good faith and
seek the removal or favorable resolution of such action, order, notice or
complaint.
9.6 COOPERATION. During the seven-year period immediately following
the Closing, Citadel shall cooperate with Purchaser in providing Purchaser all
information reasonably requested and permitting Purchaser access to all records
relating to the period of ownership of the Station by Citadel prior to the
Closing. The cost and expense in providing or permitting access to information
hereunder shall be borne by Purchaser. Purchaser, as a condition to being
provided with access to information hereunder, shall, at the request of
Citadel, execute a confidentiality agreement in form and substance acceptable
to Citadel in its reasonable discretion. Notwithstanding the foregoing, Citadel
may discard any such records during such seven-year period if (i) Citadel
notifies Purchaser of Citadel's intent to discard such records and
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(ii) Purchaser does not, within 10 days after receipt of such notice, retrieve
such records from Citadel's premises.
9.7 HSR FILING. As promptly as practicable after the date of this
Agreement, and in no event later than 10 days after the date of this Agreement,
the parties hereto shall complete and submit any filing that may be required
pursuant to the HSR Act (the "HSR FILING"). The parties hereto shall diligently
take, or fully cooperate in the taking of, all necessary and proper steps, and
provide any additional information reasonably requested, in order to comply
with the requirements of the HSR Act. The parties hereto shall use their best
efforts to resolve objections, if any, that may be asserted under the HSR Act
or any other antitrust law in connection with the transactions contemplated
hereby. Citadel shall advance the filing fee applicable to any HSR Filing, and
Purchaser shall reimburse Citadel for one-half of such filing fee at the
Closing. All other costs and expenses incurred by each party in connection with
the filing and prosecution of any HSR Filing shall be paid by the party
incurring the cost or expense.
9.8 EASTON ANTENNA LEASE. At the Closing, Purchaser, as lessor, and
Citadel, as lessee, shall enter into an antenna lease at the Station's current
tower site for Citadel's current WLEV(FM) "hop" at such site (the "ALLENTOWN
ANTENNA LEASE") containing the following terms: (a) the term shall be 50 years;
and (b) rent shall be $1 per year during the entire term. Purchaser and Citadel
shall negotiate in good faith the Easton Antenna Lease, which shall contain the
terms set forth in this Section 9.8, as well as such other customary and
appropriate terms and conditions.
9.9 REMOVAL OF PERSONAL PROPERTY. To the extent necessary or
appropriate, Purchaser shall be responsible for removing, at its expense, the
Personal Property from Citadel's premises within a reasonable time after the
Closing.
9.10 CONFIDENTIALITY. Purchaser shall maintain strict confidentiality
with respect to all documents and information furnished to Purchaser by or on
behalf of Citadel or License Sub. Notwithstanding the foregoing, nothing shall
be deemed to be confidential information that (a) is known to Purchaser at the
time of its disclosure to Purchaser; (b) becomes publicly known or available
other than through disclosure by Purchaser; (c) is received by Purchaser from a
third party not actually known by Purchaser to be bound by a confidentiality
agreement with or obligation to Citadel; or (d) is independently developed by
Purchaser as clearly evidenced by its records. Notwithstanding the foregoing
provisions of this Section, Purchaser may disclose such confidential
information (x) to the extent required or deemed advisable to comply with
applicable laws and regulations, (y) to its stockholders, officers, directors,
employees, representatives, financial advisors, attorneys, accountants and
agents with respect to the transactions contemplated hereby (so long as such
parties are informed of the confidentiality of such information), and (z) to
any governmental authority in connection with the transactions contemplated
hereby. In the event this Agreement is terminated, Purchaser will return to
Citadel all confidential information prepared or furnished by Citadel relating
to the transactions contemplated hereby, whether obtained before or after the
execution of this Agreement.
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9.11 PUBLIC ANNOUNCEMENTS. The parties hereto shall consult with each
other before making any further public statements with respect to this
Agreement or the transactions contemplated hereby and shall not issue any such
press release or make any such public statement without the prior written
consent of the other parties, which shall not be unreasonably withheld,
conditioned or delayed; provided, however, that a party may, without the prior
consultation with or written consent of the other parties, issue such press
release or make such public statement as may be required by applicable law if
it has used all reasonable efforts to consult with the other parties and to
obtain such parties' consents but has been unable to do so in a timely manner.
9.12 OPTION TO LEASE REAL PROPERTY. Purchaser may, at its cost and
expense, make or cause to be made such environmental assessment regarding the
Real Property as Purchaser deems appropriate. If such environmental assessment
(if any) uncovers any material environmental problem with respect to the Real
Property, Purchaser shall have the option (exercisable by providing written
notice to Citadel at least 30 days prior to the Closing) to lease the Real
Property from Citadel in lieu of taking title to the Real Property at the
Closing. If Purchaser exercises such option, Purchaser and Citadel shall
negotiate in good faith such lease, which shall be for a term of 29 years and
11 months, provide for rent of $1 per year during the entire term, and contain
such other customary and appropriate terms and conditions.
9.13 OPTION TO LEASE STUDIO SPACE. The studio currently used by the
Station (the "STUDIO") is owned by Citadel and not included in the Purchased
Assets. Purchaser shall have the option (exercisable by providing written notice
to Citadel at least 30 days prior to the Closing) to lease the Studio from
Citadel at the Closing. If Purchaser exercises such option, Purchaser and
Citadel shall negotiate in good faith such lease, which shall be for a term of
29 years and 11 months, provide for rent of $1 per year during the entire term,
and contain such other customary and appropriate terms and conditions.
SECTION 10
THE CLOSING
10.1 CLOSING DATE. The Closing shall occur on a date mutually selected
by Purchaser and Citadel which is within 10 business days following the later
of (a) the date on which the FCC Approval has become a Final Order or (b) the
date on which all applicable waiting periods under the HSR Act have expired or
been terminated. The Closing shall begin at 10:00 a.m., local time, on the date
of the Closing (the "CLOSING DATE") at the offices of Eckert Seamans Cherin &
Mellott, LLC, counsel for Citadel and License Sub, or at such other time and
place as the parties may agree in writing.
10.2 CLOSING DOCUMENTS. At the Closing:
(a) Citadel and License Sub shall deliver to Purchaser all
certificates, consents (including any third party consents required as to the
Assumed Obligations), estoppels and other documents (including bills of sale and
assignments) otherwise required to be delivered by Citadel
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and License Sub pursuant to this Agreement or as a condition precedent to
Purchaser's fulfillment of its obligations hereunder.
(b) Purchaser shall deliver to Citadel and License Sub all
certificates and other documents (including an assumption agreement relating to
the Assumed Obligations) required to be delivered by Purchaser to Citadel
and License Sub pursuant to this Agreement or as a condition precedent to
Citadel's and License Sub's fulfillment of their obligations under this
Agreement.
SECTION 11
CONDITIONS TO CITADEL'S AND LICENSE SUB'S OBLIGATION TO CLOSE
The obligation of Citadel and License Sub to consummate the
transactions contemplated by this Agreement at the Closing is subject to the
following conditions precedent, any or all of which may be waived by Citadel and
License Sub in their sole discretion (other than those set forth in Sections
11.7 and 11.8):
11.1 OPINION OF PURCHASER'S COUNSEL. Citadel and License Sub shall
have received an opinion of counsel for Purchaser, dated the date of the
Closing, in form and substance reasonably satisfactory to Citadel and License
Sub, to the effect that:
(a) Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania.
(b) Purchaser has full power and authority to own its assets and
properties and to conduct its business and has all necessary approvals, permits,
licenses and authorizations to own its properties and to conduct its business in
the manner and in the locations presently owned and conducted.
(c) This Agreement, together with all other documents and
instruments required to be executed or delivered by Purchaser in connection with
the transactions contemplated by this Agreement, each has been duly authorized,
executed and delivered by Purchaser (to the extent it is a party thereto), and
constitutes a valid and legally binding obligation of Purchaser (to the extent
it is party thereto), enforceable against Purchaser in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency or
other laws affecting generally the enforceability of creditors' rights and by
limitations on the availability of equitable remedies.
(d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates or will violate
any provision of the Articles of Incorporation or Bylaws of Purchaser or, to the
knowledge of such counsel, any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or, to the knowledge of such counsel after due investigation,
violates or will violate or conflicts with or will conflict with or will result
in any breach of any
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of the terms of, or constitutes or will constitute a default under or results in
or will result in the termination of or the creation or imposition of any Lien
pursuant to the terms of any contract, commitment, agreement, understanding or
arrangement of any kind to which Purchaser is a party or by which Purchaser, or
any of the assets of Purchaser, is bound and which is known to Purchaser's
counsel, all as set forth on PURCHASER'S DISCLOSURE SCHEDULE.
Nothing contained in this Section 11.1 shall require an opinion of such counsel
with respect to FCC matters.
11.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained herein shall be true and correct in all
material respects at and as of the Closing with the same effect as though all
such representations and warranties were made at and as of the Closing (except
for representations and warranties expressly and specifically relating to a
time or times other than the Closing, which shall be true and correct in all
material respects at and as of the time or times specified except for such
inaccuracies as do not, individually or in the aggregate, have a material
effect on Purchaser's ability to consummate the transactions contemplated by
this Agreement) and Purchaser shall have delivered to Citadel a certificate to
that effect, dated the date of the Closing, signed by the President of
Purchaser.
11.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against Citadel or License Sub relating to the consummation of any
of the transactions contemplated by this Agreement or any action by any
Governmental Authority shall have been issued.
11.4 OTHER CERTIFICATES. Citadel shall have received certificate as to
the good standing of Purchaser as a corporation in the Commonwealth of
Pennsylvania as of a date not more than 20 days before the Closing, and such
other certificates, instruments and other documents, in form and substance
satisfactory to Citadel, as Citadel shall have reasonably requested in
connection with the transactions contemplated hereby.
11.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by Purchaser of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by
Purchaser, and Purchaser shall have delivered to Citadel certified copies of
the resolutions of Purchaser's board of directors authorizing the execution and
performance of this Agreement and authorizing or ratifying the acts of its
officers and employees in carrying out the terms and provisions of this
Agreement.
11.6 ACTS TO BE PERFORMED. Each of the covenants, acts and
undertakings of Purchaser to be performed on or before the Closing Date
pursuant to the terms hereof shall have been duly performed.
11.7 FCC APPROVAL. The FCC Approval shall have been obtained.
11.8 HSR CLEARANCE. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
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11.9 ALLENTOWN AGREEMENT. All of the conditions set forth in Section
11 of the Allentown Agreement shall have been satisfied or waived, and the
transactions contemplated by the Allentown Agreement shall be consummated
simultaneously with the Closing.
SECTION 12
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement at the Closing is subject to the following
conditions precedent, any or all of which may be waived by Purchaser in its
sole discretion (other than those set forth in Sections 12.9 and 12.10):
12.1 OPINION OF CITADEL'S AND LICENSE SUB'S COUNSEL. Purchaser shall have
received an opinion of counsel for Citadel and License Sub, dated the date of
the Closing, in form and substance reasonably satisfactory to Purchaser, to the
effect that:
(a) Each of Citadel and License Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada.
(b) Citadel is duly qualified and in good standing in the
Commonwealth of Pennsylvania.
(c) Each of Citadel and License Sub has full corporate power and
authority to own its assets and properties and to conduct the Business and has
all necessary approvals, permits, licenses and authorizations to own its
properties and to conduct the Business in the manner and in the locations
presently owned and conducted.
(d) This Agreement, together with all other documents and
instruments required to be executed or delivered by Citadel and License Sub in
connection with the transactions contemplated hereby, each has been duly
authorized, executed and delivered by Citadel and License Sub (to the extent a
party thereto), and constitutes a valid and legally binding obligation of
Citadel and License Sub (to the extent a party thereto), enforceable against
each of them in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitations on the availability of
equitable remedies.
(e) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates or will violate
any provision of the Articles of Incorporation or Bylaws of Citadel or License
Sub or, to the knowledge of such counsel, any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any
Governmental Authority, or, to the knowledge of such counsel after due
investigation, violates or will violate, or conflicts with or will conflict with
or will result in any breach of any of the terms of, or constitutes or will
constitute a default under, or results or will
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result in the termination of or the creation or imposition of any Lien pursuant
to, the terms of any contract, commitment, agreement, understanding or
arrangement of any kind to which Citadel or License Sub is a party or by which
Citadel, License Sub or any of the assets of Citadel or License Sub is bound and
which is known to such counsel, all as set forth on CITADEL'S DISCLOSURE
SCHEDULE. Except for (1) the FCC Approval, (2) compliance with the HSR Act and
(3) the consents disclosed on CITADEL'S DISCLOSURE SCHEDULE, no consents,
approvals or authorizations of, or filings with, any Governmental Authority or
any other Person are required on the part of Citadel or License Sub, in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(f) To the knowledge of such counsel, except as disclosed on
CITADEL'S DISCLOSURE SCHEDULE, there are no claims, disputes, actions, suits or
proceedings pending or threatened against Citadel or License Sub with respect to
the Station.
Nothing contained in this Section 12.1 shall require an opinion by such counsel
with respect to FCC matters.
12.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Citadel and License Sub contained herein shall be true and
correct in all material respects at and as of the Closing (except for
representations and warranties expressly and specifically relating to a time or
times other than the Closing, which shall be true and correct in all material
respects at and as of the time or times specified except for such inaccuracies
as do not, individually or in the aggregate, have a material effect on the
Station or Citadel's or License Sub's ability to consummate the transactions
contemplated by this Agreement) with the same effect as though all such
representations and warranties were made at and as of the Closing, and Citadel
and License Sub shall have complied with all their covenants contained herein;
and Citadel and License Sub shall have delivered to Purchaser a certificate to
that effect, dated the date of the Closing, signed by the President of Citadel
and License Sub.
12.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against Purchaser, Citadel or License Sub relating to the
consummation of any of the transactions contemplated by this Agreement shall
have been issued.
12.4 OTHER CERTIFICATES. Purchaser shall have received certificates as
to the good standing of Citadel as a corporation in the States of Nevada and
Pennsylvania and of License Sub in the State of Nevada, each as of a date not
more than 20 days before the Closing, and such other certificates, instruments
and other documents customary for transactions of the nature provided for in
this Agreement, in form and substance reasonably satisfactory to Purchaser, as
Purchaser shall have reasonably requested in connection with the transactions
contemplated by this Agreement.
12.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by Citadel and License Sub of this
Agreement and the transactions contemplated hereby shall have been duly and
validly taken by Citadel and License Sub, and Citadel and License Sub shall
have delivered to Purchaser certified copies of the resolutions of
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Citadel's and License Sub's board of directors authorizing the execution and
performance of this Agreement and authorizing or ratifying the acts of its
officers and employees in carrying out the terms and provisions of this
Agreement.
12.6 ACTS TO PERFORMED. Each of the covenants, acts and undertakings
of Citadel and License Sub to be performed on or before the Closing Date
pursuant to the terms hereof shall have been duly performed.
12.7 UCC SEARCHES. Citadel shall have delivered to Purchaser Uniform
Commercial Code judgment and lien searches from the appropriate county and
state agencies showing all Liens on the Purchased Assets, which searches shall
be conducted not more than 30 days prior to the Closing. Citadel may cause such
lien searches to be prepared by a third party, in which case Citadel shall not
be responsible for any inaccuracies in such lien searches unless Citadel has
actual knowledge of their inaccuracy. Notwithstanding the foregoing, Citadel
and License Sub shall remain responsible for satisfying any Lien on the
Purchased Assets even if such searches are inaccurate.
12.8 FILINGS, CONSENTS, APPROVALS AND ESTOPPEL CERTIFICATES. All
filings, consents, approvals and estoppel certificates required by or
reasonably requested by Purchaser pursuant to this Agreement, or necessary to
consummate the transactions contemplated by this Agreement, shall have been
obtained.
12.9 FCC APPROVAL. The FCC Approval shall have been obtained.
12.10 HSR CLEARANCE. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
12.11 ALLENTOWN AGREEMENT. All of the conditions set forth in Section
12 of the Allentown Agreement shall have been satisfied or waived, and the
transactions contemplated by the Allentown Agreement shall be consummated
simultaneously with the Closing.
SECTION 13
INDEMNIFICATION
13.1 INDEMNIFICATION BY CITADEL AND LICENSE SUB. Subject to the
limitations and procedures set forth in this Section 13, Citadel and License
Sub shall indemnify and hold harmless Purchaser from and against any and all
Damages sustained or incurred by Purchaser, to the extent such Damages are
sustained or incurred by Purchaser by reason of the breach of any of the
obligations, covenants or provisions of, or the breach of any of the
representations or warranties made by, Citadel or License Sub in this
Agreement.
13.2 INDEMNIFICATION BY PURCHASER. Subject to the limitations and
procedures set forth in this Section 13, Purchaser shall indemnify and hold
harmless Citadel and License Sub from
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<PAGE> 33
and against all losses, claims, demands, damages, liabilities, obligations,
costs and/or expenses, including, without limitation, reasonable fees and
disbursements of counsel (hereinafter referred to collectively as "DAMAGES"),
which are sustained or incurred by Citadel and License Sub, to the extent that
such Damages are sustained or incurred by reason of the breach of any of the
obligations, covenants or provisions of, or the breach of any of the
representations or warranties made by, Purchaser in this Agreement.
13.3 PROCEDURE FOR INDEMNIFICATION. In the event that any party to
this Agreement shall incur any Damages in respect of which indemnity may be
sought by such party pursuant to this Section 13 or any other provision of this
Agreement, the party indemnified hereunder (the "INDEMNITEE") shall notify the
party providing indemnification (the "INDEMNITOR") promptly. In the case of
third party claims, such notice shall in any event be given within 10 days of
the filing or assertion of any claim against the Indemnitee stating the nature
and basis of such claim; provided, however, that any delay or failure to notify
any Indemnitor of any claim shall not relieve it from any liability except to
the extent that the Indemnitor demonstrates that the defense of such action has
been materially prejudiced by such delay or failure to notify. In the case of
third party claims, the Indemnitor shall, within 10 days of receipt of notice
of such claim, notify the Indemnitee of its intention to assume the defense of
such claim. If the Indemnitor assumes the defense of the claim, the Indemnitor
shall have the right and obligation (a) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnitee, (b) to take all other required steps or proceedings to settle or
defend any such claims, and (c) to employ counsel to contest any such claim or
liability in the name of the Indemnitee or otherwise. If the Indemnitor shall
not assume the defense of any such claim or litigation resulting therefrom, the
Indemnitee may defend against any such claim or litigation in such manner as it
may deem appropriate and the Indemnitee may settle such claim or litigation on
such terms as it may deem appropriate, and assert against the Indemnitor any
rights or claims to which the Indemnitee is entitled. Payment of Damages shall
be made within 10 days of a final determination of a claim.
A final determination of a disputed claim shall be (a) a judgment of
any court determining the validity of disputed claim, if no appeal is pending
from such judgment or if the time to appeal therefrom has elapsed, (b) an award
of any arbitration determining the validity of such disputed claim, if there is
not pending any motion to set aside such award or if the time within to move to
set such award aside has elapsed, (c) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys,
(d) a written acknowledgment of the Indemnitor that it no longer disputes the
validity of such claim, or (e) such other evidence of final determination of a
disputed claim as shall be acceptable to the parties.
SECTION 14
TERMINATION OF AGREEMENT: ADDITIONAL REMEDIES
14.1 MANNER. This Agreement and the transactions contemplated
hereby may be terminated prior to completion of the Closing:
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<PAGE> 34
(a) by mutual written consent of Citadel, License Sub and
Purchaser;
(b) by either Citadel and License Sub, on the one hand, or
Purchaser, on the other, upon providing written notice to the other party at any
time after June 30, 1998 if the FCC Approval has not been granted by the FCC,
but only if the party providing such notice is not then in material breach of
this Agreement;
(c) by Purchaser, upon providing written notice to Citadel and
License Sub, if as of the time set for Closing any of the conditions in Section
12 of this Agreement (except Sections 12.9 and 12.10) has not been satisfied or
waived by Purchaser in writing, provided Purchaser is not then in material
breach of this Agreement;
(d) by Citadel and License Sub, upon providing written notice to
Purchaser, if as of the time set for Closing any of the conditions in Section 11
of this Agreement (except Sections 11.7 and 11.8) has not been satisfied or
waived by Citadel and License Sub in writing, provided Citadel and License Sub
are not then in material breach of this Agreement;
(e) by Citadel and License Sub, upon providing written notice to
Purchaser, if Purchaser fails to consummate the transactions contemplated
hereunder after all conditions in Section 12 of this Agreement have been
satisfied, provided Citadel and License Sub are not then in material breach of
this Agreement;
(f) by Purchaser, upon providing written notice to Citadel and
License Sub, if Citadel or License Sub fails to consummate the transactions
contemplated hereunder after all conditions in Section 11 of the Agreement have
been satisfied, provided Purchaser is not then in material breach of this
Agreement;
(g) subject to Section 9.1, by either party upon denial by the FCC
of the FCC Application; and
(h) by either party if any court of competent jurisdiction in the
United States or any other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other actions shall have become final and
non-appealable.
14.2 ADDITIONAL REMEDIES. The parties recognize and agree that
Purchaser has relied on this Agreement and expended considerable effort and
resources related to the transactions contemplated hereunder, that the rights
and benefits conferred upon Purchaser herein are unique, and that damages may
not be adequate to compensate Purchaser in the event Citadel and/or License Sub
improperly refuses to consummate the transactions contemplated hereunder. The
parties therefore agree that Purchaser shall be entitled, at its option and in
lieu of terminating this Agreement pursuant to Section 14.1, to have this
Agreement specifically enforced by a court of
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<PAGE> 35
competent jurisdiction; provided, however, that Purchaser may not specifically
enforce this Agreement if it has previously terminated this Agreement.
SECTION 15
GENERAL
15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each representation
and warranty herein contained shall survive the Closing, notwithstanding any
investigation at any time made by or on behalf of any party to this Agreement.
15.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the laws of conflicts, of the
Commonwealth of Pennsylvania.
15.3 NOTICES. Any notices or other communications required or
permitted under this Agreement shall be delivered personally or sent by
registered or certified mail, postage prepaid, delivered by overnight delivery
or sent by facsimile, addressed as follows:
To Citadel or: Citadel Broadcasting Company
License Sub 1015 Eastman Drive
Bigfork, Montana 59911
Attn: Lawrence R. Wilson
Fax: (406) 837-5373
With copy to: Citadel Broadcasting Company
140 South Ash Avenue
Tempe, Arizona 85281
Attn: Donna L. Heffner
Fax: (602) 731-5229
With a copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street
42nd Floor
Pittsburgh, Pennsylvania 15219
Attn: Bryan D. Rosenberger, Esq.
Fax: (412) 566-6099
To Purchaser: Maranatha Broadcasting Company, Inc.
East Rock Road
Allentown, PA 18103
Attn: Richard C. Dean
Fax: (610) 791-3000
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<PAGE> 36
With a copy to: Malkames Law Offices
509 Linden Street
Allentown, PA 18101-1491
Attn: William G. Malkames, Esq.
Fax: (610) 821-5851
or such other addresses as shall be similarly furnished in writing by either
party. Such notices or communications shall be deemed to have been given as of
the date of personal delivery, or if mailed, the date the return receipt is
signed or the date on which delivery is refused, or if delivered by overnight
delivery or facsimile, on the date of receipt.
15.4 ENTIRE AGREEMENT. This instrument supersedes all prior
communications, understandings and agreements of or between the parties with
respect to the subject matter of this Agreement and, together with the
Allentown Agreement, contains the entire agreement among the parties with
respect to the transactions contemplated in this Agreement.
15.5 HEADINGS. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
15.6 SCHEDULES, EXHIBITS. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
15.7 EXPENSES. Each party shall bear its own costs and expenses
incurred by it in connection with the transactions pursuant to this Agreement.
15.8 AMENDMENT. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed on behalf of all of
the parties or, in the case of a waiver, by the party waiving compliance.
15.9 WAIVER. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce that provision or any other provision of this Agreement at any
time thereafter.
15.10 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by Purchaser without the prior
written consent, in their sole discretion, of Citadel and License Sub, or by
Citadel or License Sub without the prior written consent, in its sole
discretion, of Purchaser. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other person shall have any right,
benefit or obligation under this Agreement.
15.11 PRIOR CONTROL. Until the Closing, Citadel and License Sub shall
maintain control of the Station.
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<PAGE> 37
15.12 ATTORNEYS' FEES. In the event of any action arising
out of this Agreement, the prevailing party shall be entitled to recover its
costs, expenses and reasonable attorney's fees incurred in connection with the
dispute from the other party.
15.13 COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in
one or more counterparts, each of which together shall constitute a single
instrument. Signatures on this Agreement transmitted by facsimile shall be
deemed to be original signatures for all purposes of this Agreement.
15.14 DISPUTE RESOLUTION. Except as provided below, any dispute
arising out of or relating to this Agreement or the breach, termination or
validity hereof shall be finally settled by arbitration conducted expeditiously
in accordance with the CPR Rules. The Center for Public Resources shall appoint
a neutral advisor from its National CPR Panel. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The place of arbitration shall be Allentown,
Pennsylvania.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate; provided, however,
such proceedings shall be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within 45 days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three hours; such hearings to
take place on one or two days at a maximum; and
(d) decision to be rendered not more than 10 days following such
hearing.
The provisions of this Section 15.14 shall not apply with regard to any
equitable remedies to which a party may be entitled under this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date above first written.
Maranatha Broadcasting Company, Inc.
By: /s/ Richard C. Dean
---------------------------------
Its: President
---------------------------------
Citadel Broadcasting Company
By: /s/ Lawrence R. Wilson
---------------------------------
Its: President
---------------------------------
Citadel License, Inc.
By: /s/ Lawrence R. Wilson
---------------------------------
Its: President
---------------------------------
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<PAGE> 39
INDEX OF SCHEDULES
Schedule 2.1 - Asset Schedule
Schedule 2.2 - Excluded Assets
Schedule 2.3 - Assumed Obligations
Schedule 4.0 - Citadel's Disclosure Schedule
Schedule 5.0 - Purchaser's Disclosure Schedule
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules to the Securities Exchange Commission
upon request.]
<PAGE> 1
Exhibit 2.5
MERGER AGREEMENT
AMONG
SNIDER CORPORATION
TED L. SNIDER, SR., JANE J. SNIDER,
CITADEL COMMUNICATIONS CORPORATION
AND
CITADEL BROADCASTING COMPANY
JUNE 2, 1997
<PAGE> 2
MERGER AGREEMENT
THIS MERGER AGREEMENT ("AGREEMENT"), made as of the 2nd day of June,
1997, among SNIDER CORPORATION, an Arkansas corporation (the "COMPANY"); TED L.
SNIDER, SR. and JANE J. SNIDER (collectively, the "STOCKHOLDERS"); CITADEL
COMMUNICATIONS CORPORATION, a Nevada corporation ("PARENT"); and CITADEL
BROADCASTING COMPANY, a Nevada corporation ("CITADEL").
RECITALS:
A. The Company is the licensee of and owns and operates the following
radio stations: (i) KARN-AM, licensed to Little Rock, Arkansas, (ii) KARN-FM,
licensed to Cabot, Arkansas, (iii) KKRN-FM, licensed to Humnoke, Arkansas, (iv)
KRNN-AM, licensed to North Little Rock, Arkansas, and (v) KAFN-FM (CP), permit
licensed to Gould, Arkansas (collectively, the "STATIONS").
B. The Company is a party to the following contracts: (i) those
certain agreements between the Company and various third party stations
relating to the Arkansas Radio Network; (ii) that certain time brokerage
agreement under negotiation between the Company and Flinn Broadcasting which
has not been signed by the Company; (iii) that certain Construction Permit for
the construction of a transmission tower in Gould, Arkansas; and (iv) certain
options and rights to acquire land in Gould, Arkansas and North Little Rock,
Arkansas, for the construction and relocation of transmission towers.
C. The Stockholders own all of the issued and outstanding shares of
capital stock of the Company.
D. Citadel is a wholly-owned subsidiary of Parent.
E. The parties desire that the Company be merged with and into Citadel
(with Citadel surviving such merger) pursuant to the applicable laws of the
States of Arkansas and Nevada, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall have the
meanings assigned to them below:
"ACCOUNTS RECEIVABLE" means the accounts receivable of the Company,
exclusive of Trade Receivables, existing as of the Closing.
<PAGE> 3
"ACCOUNTS PAYABLE" means the Obligations, described in clause (b) of
the definition thereof, of the Company, exclusive of Trade Liabilities,
existing as of the Closing.
"ACCRUED TAXES" means all Taxes attributable to a Person or its
income, operations or properties accruing up to and including the Closing.
"ACT" means the Communications Act of 1934, as amended.
"AFFILIATE" of any Person means any other Person (a) that directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, the first Person, or (b) any interests of which are owned, in
whole or in part, directly or indirectly, by the first Person. For purposes of
this definition, the term "control" (including the correlative meanings of the
terms "controls," "controlled by," and "under direct or indirect control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of the Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGREEMENT NOT TO COMPETE" means the Agreement Not to Compete to be
executed and delivered by Citadel and Ted L. Snider, Sr. at the Closing,
substantially in the form attached to this Agreement as EXHIBIT A.
"AMENDED AND RESTATED CERTIFICATE OF INCORPORATION" means the Seventh
Amended and Restated Certificate of Incorporation of Parent, in the form
attached to this Agreement as EXHIBIT B.
"AMENDMENT TO REGISTRATION RIGHTS AGREEMENT" means the Amendment to
the Third Amended and Restated Registration Rights Agreement dated as of June
28, 1996, as amended, among Parent, the Investors and Wilson to be executed and
delivered at the Closing, substantially in the form attached to this Agreement
as EXHIBIT C.
"AMENDMENT TO SECURITIES PURCHASE AND EXCHANGE AGREEMENT" means the
Amendment to Securities Purchase and Exchange Agreement to be executed and
delivered at the Closing among the holders of the Series G Preferred Stock as
of the Closing Date and each of the original parties to the Securities Purchase
and Exchange Agreement dated as of June 28, 1996, as amended, among Parent,
Citadel, ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment Partners,
L.P., Baker, Fentress & Company, Oppenheimer & Co., Inc., Bank of America
Illinois, and certain other parties (the "SECURITIES PURCHASE AND EXCHANGE
AGREEMENT"), substantially in the form attached to this Agreement as EXHIBIT D.
"AMENDMENT TO STOCKHOLDERS AGREEMENT" means the Amendment to
Stockholders Agreement to be executed and delivered at the Closing among the
holders of the Series G Preferred Stock as of the Closing Date and each of the
original parties to the Second Amended and Restated Stockholders Agreement
dated as of June 28, 1996, as amended, among Parent,
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<PAGE> 4
the Investors, Wilson and certain other parties (the "STOCKHOLDERS AGREEMENT"),
substantially in the form attached to this Agreement as EXHIBIT E.
"AMENDMENT TO VOTING AGREEMENT" means the Amendment to Voting
Agreement to be executed and delivered at the Closing among the holders of the
Series G Preferred Stock as of the Closing Date and each of the original
parties to the Third Amended and Restated Voting Agreement dated as of March
17, 1997 among Parent, the Investors and Wilson, substantially in the form
attached to this Agreement as EXHIBIT F.
"ARTICLES OF MERGER" means the Articles of Merger to be executed and
delivered by Citadel and the Company at the Closing and filed with the
appropriate authorities in the States of Nevada and Arkansas, in form and
substance mutually agreed upon by Citadel and the Company.
"ASSETS" means all of the property of every kind or nature used in the
operation of the Stations, including but not limited to the Real Property, the
Real Property Leases, the Intellectual Property, the Personal Property, the
Trade Receivables, the Accounts Receivable and the Cash (other than the
Excluded Assets and the Excluded Real Property), and all books, records and
accounts relating to the operation of the Stations.
"BROKER" means NationsBanc Capital Markets, Inc.
"BUSINESS" means the business in which the Company is now engaged.
"CASH" means the cash and cash equivalents of the Company existing as
of the Closing.
"CDB BROADCASTING AGREEMENT" means that certain Asset Purchase
Agreement dated as of the date hereof among CDB Broadcasting Corporation, CDB
License Corporation and Citadel.
"CITADEL PERMITS" has the meaning specified in Section 4.8.
"CITADEL STATIONS" has the meaning specified in Section 4.5.
"CITADEL SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified
in Section 8.7.
"CITADEL'S CAP EXEMPT DAMAGES" has the meaning specified in Section
13.5(b).
"CITADEL'S DISCLOSURE SCHEDULE" means SCHEDULE 1 to this Agreement.
"CLOSING" means the consummation of the transactions contemplated in
this Agreement in accordance with the provisions of Section 10.
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<PAGE> 5
"CLOSING CERTIFICATE" means the certificate of the President of the
Company and the Stockholders dated the Closing Date and delivered to Parent and
Citadel, which sets forth a listing of the Excluded Assets.
"CLOSING DATE" has the meaning specified in Section 10.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY ASSET SCHEDULE" means SCHEDULE 2 to this Agreement.
"COMPANY COMMON STOCK" means the common stock, par value $1.00 per
share, of the Company.
"COMPANY SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified
in Section 5.9.
"COMPANY'S DISCLOSURE SCHEDULE" means SCHEDULE 3 to this Agreement.
"CONTRACTS" means all (a) contracts, agreements, licenses, leases,
arrangements and other documents to which the Company is a party or by which
the Company or the assets of the Company are bound (including, in the case of
loan agreements, a description of the amounts of any outstanding borrowings
thereunder and the collateral, if any, for such borrowings); (b) uncompleted
orders for the purchase by the Company of materials, supplies, equipment and
services for the requirements of the Stations existing as of the date hereof
and with respect to which the remaining obligation of the Company is in excess
of $2,500; and (c) contingent contractual obligations and liabilities of the
Company known to the Company existing as of the date hereof.
"CPR RULES" means the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes.
"DAMAGES" has the meaning specified in Section 13.1.
"DISSENTING SHARES" has the meaning specified in Section 2.4(b).
"DRAW CONDITION" has the meaning specified in Section 14.2(a).
"EFFECTIVE DATE" means the date upon which articles of merger, or an
equivalent document, reflecting the Merger have been filed with the appropriate
authorities of the States of Arkansas and Nevada pursuant to Section 2. The
parties intend that the Effective Date be on the Closing Date.
"ENVIRONMENTAL CLAIMS" means and includes, without limitation: (a)
claims, demands, suits, causes of action for personal injury or lost use of
property, or consequential damages, to the extent any of the foregoing arise
directly or indirectly out of Environmental Conditions;
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<PAGE> 6
(b) actual or threatened damages to natural resources; (c) claims for the
recovery of response costs, or administrative or judicial orders directing the
performance of investigations, response or remedial actions under CERCLA, RCRA
or other Environmental Laws; (d) a requirement to implement "corrective action"
pursuant to any order or permit issued pursuant to RCRA; (e) claims for
restitution, contribution or equitable indemnity from third parties or any
governmental agency; (f) fines, penalties or Liens against property; (g) claims
for injunctive relief or other orders or notices of violation from Governmental
Authorities; and (h) with regard to any present or former employees, exposure
to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping, or threatened release of Hazardous
Materials by a Person. With respect to claims by employees, Environmental
Conditions also includes the exposure of Persons to Hazardous Materials within
work places on any real estate owned or occupied by a Person.
"ENVIRONMENTAL LAWS" has the meaning specified in the definition of
Hazardous Materials.
"ENVIRONMENTAL NONCOMPLIANCE" means, but is not limited to: (a) the
release or threatened release as a result of the activities of a Person of any
Hazardous Materials into the environment, any storm drain, sewer, septic system
or publicly owned treatment works, in violation of any effluent emission
limitations, standards or other criteria or guidelines established by any
federal, state or local law, regulation, rule, ordinance, plan or order; and
(b) any facility operations, procedures, designs, etc. which do not conform to
the statutory or regulatory requirements of the CAA, the CWA, the TSCA, the
RCRA or any other Environmental Laws intended to protect public health, welfare
and the environment.
"EQUITY SECURITIES" has the meaning ascribed thereto in the Securities
Purchase and Exchange Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" means the excess, if any, of (a) the Cash and the
Accounts Receivable over (b) the Accounts Payable.
"EXCLUDED REAL PROPERTY" means those certain unimproved residential
lots in Southwest Little Rock, Arkansas which are owned by the Company and
further described in COMPANY'S DISCLOSURE SCHEDULE.
"FCC" means the Federal Communications Commission.
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<PAGE> 7
"FCC APPLICATION" has the meaning specified in Section 9.1.
"FCC APPROVAL" has the meaning specified in Section 9.1.
"FCC LICENSES" means the main station license for each Station,
together with each of the other consents, rights, licenses, permits and other
authorizations issued by the FCC and held by the Company in connection with, or
pertaining to, the conduct of the business and operation of the Stations,
together with any renewals and extensions thereof and any applications therefor
pending on the Closing Date, and any and all applications made by the Company
for such consents, rights, licenses, permits and other authorizations.
"FINAL ORDER" means a written action or order issued by the FCC or its
staff setting forth the FCC Approval (or a denial thereof), (a) which action or
order has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which action or order (i) no requests have
been filed and are pending for administrative or judicial review, rehearing,
reconsideration, appeal or stay, and the time period for filing any such
requests and for the FCC to set aside the action on its own motion under the
provisions of the Act or the rules, regulations and policies of the FCC has
expired, or (ii) in the event of review, reconsideration or appeal, the time
for further review, reconsideration or appeal has expired.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis during
the periods involved.
"GOVERNMENTAL AUTHORITY" means any government, whether federal, state
or local, or any other political subdivision thereof, or any agency, tribunal
or instrumentality of any such governmental or political subdivision, or any
other Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS MATERIALS" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases including but not limited to substances defined as "PCBs,"
"hazardous wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials," "petroleum," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C.
Section 9601 ET SEQ.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C.
Section 2601 ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 9601; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 300f ET SEQ.; the Clean
Air Act ("CAA"), 42 U.S.C. Section 7401 ET SEQ.; or any similar state law; and
in the plans, rules, regulations or ordinances adopted, or other criteria and
guidelines promulgated pursuant to the preceding laws or other similar laws,
regulations, rules or ordinances now in effect (collectively, the
"ENVIRONMENTAL LAWS"); and any other substances, constituents or wastes subject
to environmental regulations under any applicable federal, state or local law,
regulation or ordinance.
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<PAGE> 8
"INDEBTEDNESS FOR BORROWED MONEY" means (a) all indebtedness of a
Person in respect of money borrowed (including, without limitation,
indebtedness which represents the unpaid amount of the purchase price of any
property), (b) all indebtedness of a Person evidenced by a promissory note,
bond or similar written obligation to pay money, (c) all indebtedness
guaranteed by a Person or for which a Person is contingently liable, including,
without limitation, guaranties in the form of an agreement to repurchase or
reimburse, and any commitment by which any such Person assures a creditor
against loss, including contingent reimbursement obligations with respect to
letters of credit, and (d) all monetary obligations of a Person under any lease
or similar arrangement, which obligations would be classified and accounted for
as capital obligations on a balance sheet of such Person under GAAP.
"INDEMNITEE" has the meaning specified in Section 13.3.
"INDEMNITOR" has the meaning specified in Section 13.3.
"INTELLECTUAL PROPERTY" means the call letters of each Station and all
of the copyrights, trademarks, trade names and other similar rights, including
applications and registrations therefor, used in connection with the past or
present operation of each Station in which the Company has any right, title or
interest, including, without limitation, those items listed on the COMPANY
ASSET SCHEDULE.
"INVESTORS" shall have the meaning ascribed thereto in the Securities
Purchase and Exchange Agreement.
"LETTER OF CREDIT" has the meaning specified in Section 2.6.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, claim, easement, transfer restriction, lien (statutory or
otherwise) or security interest of any kind or nature whatsoever.
"LOCAL MARKETING AGREEMENTS" has the meaning specified in Section 9.2.
"MERGER" has the meaning specified in Section 2.1.
"MERGER CONSIDERATION" has the meaning specified in Section 2.4(a).
"NET LIABILITIES" means the excess, if any, of (a) the Account Payable
over (b) the Cash and the Accounts Receivable.
"OBLIGATIONS" means, without duplication, all (a) Indebtedness for
Borrowed Money, (b) Accrued Taxes, accounts payable, accrued liabilities and
all other liabilities and obligations of the type normally required by GAAP to
be reflected on a balance sheet, (c) commitments by which a Person assures a
creditor against loss, including the face amount of all letters of credit and,
without duplication, all drafts drawn thereunder, (d) obligations guaranteed in
any manner
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by a Person, (e) obligations under capitalized leases in respect of which
obligations a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures
a creditor against loss, (f) obligations under acceptance facilities, (g)
obligations secured by a Lien on property of a Person, (h) obligations under
interest rate or currency exchange or swap agreements, (i) unsatisfied
obligations for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA, (j) indebtedness issued or obligation incurred in
substitution or exchange for any Obligations, (k) costs or expenses incurred by
a Person of any nature, whether or not currently payable, and (l) other
liabilities or obligations of a Person, in each of the foregoing instances
whether absolute or contingent, known or unknown, and whether or not normally
required by GAAP to be reflected on a balance sheet.
"PERMITS" means all FCC Licenses applicable to the Stations, and all
other permits, licenses, approvals, franchises, notices and authorizations
applicable to the Stations issued by any Governmental Authorities.
"PERSON" means an individual, corporation, partnership, joint venture,
joint stock company, association, trust, business trust, unincorporated
organization, Governmental Authority, or any other entity of whatever nature.
"PERSONAL PROPERTY" means all of the tangible personal property,
improvements and fixtures of every kind or nature used in the operation of the
Stations in the ordinary course of business, including, without limitation, the
personal property described on the COMPANY ASSET SCHEDULE.
"PLAN OF MERGER" means the Plan of Merger to be executed and delivered
by Citadel and the Company at the Closing and filed with the appropriate
authorities in the States of Nevada and Arkansas, in form and substance
mutually agreed upon by Citadel and the Company.
"REAL ESTATE PURCHASE AGREEMENT" means that certain Agreement of Sale
dated as of the date hereof among Ted L. Snider, Sr., Jane J. Snider and
Citadel.
"REAL PROPERTY" means all of the right, title and interest of the
Company in and to any real property used in the operation of the Stations,
including but not limited to the real property described on the COMPANY ASSET
SCHEDULE.
"REAL PROPERTY LEASES" means the leasehold interests pursuant to the
real property leases described on the COMPANY ASSET SCHEDULE.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES G PREFERRED STOCK" means the Series G Convertible Preferred
Stock, par value $.001 per share, of Parent.
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"SNIDER BROADCASTING AGREEMENT" means that certain Merger Agreement
dated as of the date hereof among Snider Broadcasting Corporation, the
stockholders of Snider Broadcasting Corporation, Parent and Citadel.
"STATIONS" has the meaning set forth in the recitals to this
Agreement.
"STOCKHOLDERS' CAP EXEMPT DAMAGES" has the meaning specified in
Section 13.6(b).
"SURVIVING CORPORATION" has the meaning specified in Section 2.1.
"TAXES" means all taxes, charges, fees, levies, or other assessments,
including income, gross receipts, excise, property, sales, transfer, license,
payroll, and franchise taxes, any taxes required by law to be withheld, and any
taxes payable as a result of the consummation of the transactions contemplated
by this Agreement, which taxes are imposed by any Governmental Authority; and
such term shall include any interest, penalties, or additions to tax
attributable to such assessments.
"THRESHOLD" has the meaning specified in Section 13.5(a).
"TRADE AGREEMENTS" means and includes those agreements entered into by
the Company for the sale of advertising time on the Stations for consideration
other than cash, which agreements are in effect as of the Closing.
"TRADE LIABILITIES" means the fair market value of the Company's
liability as of the Closing for unperformed time under the Trade Agreements.
"TRADE RECEIVABLES" means the fair market value of goods and services
to be received by the Company after the Closing under the Trade Agreements.
"WILSON" means Lawrence R. Wilson.
SECTION 2
MERGER
2.1 THE MERGER. On the Closing Date, in accordance with this Agreement
and Arkansas and Nevada law, the Company shall be merged with and into Citadel
(the "MERGER"), the separate existence of the Company shall cease, and Citadel
shall continue as the surviving corporation under the corporate name it
possesses immediately prior to the Closing Date. Citadel hereinafter may
sometimes be referred to as the "SURVIVING CORPORATION."
2.2 EFFECT OF THE MERGER. On the Closing Date, the effect of the
Merger shall be that (i) the Surviving Corporation shall possess all the
rights, privileges and franchises possessed
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by each of the Company and Citadel, (ii) all of the property and assets of
whatsoever kind or description of each of the Company and Citadel, and all
debts due on whatever account to any of them, including subscriptions for
shares or other choses in action belonging to any of them, shall be taken and
be deemed to be transferred to, and vested in, the Surviving Corporation
without further act or deed, and (iii) the Surviving Corporation shall be
responsible for all of the liabilities and obligations of each of the Company
and Citadel, as provided by applicable law, in the same manner as if the
Surviving Corporation had itself incurred such liabilities or obligations; but
the liabilities of the Company and Citadel, or of their shareholders, directors
or officers, shall not be affected by, nor shall the rights of the creditors
thereof or of any persons dealing with such corporations be impaired by, the
Merger, and any claim existing, or action or proceeding pending, by or against
either of the Company or Citadel may be prosecuted to judgment as if the Merger
had not taken place, or the Surviving Corporation may be proceeded against, or
substituted, in place of the Company or Citadel, as the case may be.
2.3 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS. The
Articles of Incorporation of Citadel, as in effect immediately prior to the
Closing Date, shall be the Articles of Incorporation of the Surviving
Corporation after the Closing Date until thereafter amended as provided therein
and under Nevada law. The Bylaws of Citadel, as in effect immediately prior to
the Closing Date, shall be the Bylaws of the Surviving Corporation after the
Closing Date until thereafter amended as provided therein and under Nevada law.
The directors and officers of Citadel immediately prior to the Closing Date
shall be the initial directors and officers of the Surviving Corporation after
the Closing Date until their successors are elected and qualified.
2.4 MERGER CONSIDERATION; CONVERSION OF SECURITIES. On the Closing
Date, by virtue of the Merger and without any action on the part of Parent,
Citadel, the Company or the holder of any of the securities of such
corporations:
(a) MERGER CONSIDERATION. Each share of Company Common Stock issued
and outstanding immediately prior to the Closing Date shall be converted
automatically into (i) the number of shares of Series G Preferred Stock
determined pursuant to Section 2.4(b) and (ii) an amount of cash equal to (A)
$4,500,000 minus the Net Liabilities, if any, divided by (B) the number of
issued and outstanding shares of Company Common Stock on the Closing Date
(collectively, the "MERGER CONSIDERATION").
(b) SERIES G PREFERRED STOCK. Each share of Company Common Stock
issued and outstanding immediately prior to the Closing Date (other than shares
as to which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under applicable Arkansas law ("DISSENTING SHARES")) shall
be cancelled and extinguished and be converted into the right to receive (in
addition to the cash consideration specified in Section 2.4(a)) that number of
shares of Series G Preferred Stock equal to 162,286 divided by the number of
shares of Company Common Stock then issued and outstanding; provided, however,
that (i) in the event that Citadel's acquisition of all of the issued and
outstanding shares of capital stock of Tele-Media Broadcasting Company is not
consummated on or prior to the
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Closing Date, then the aggregate number of shares of Series G Preferred Stock
issuable as Merger Consideration shall be increased from 162,286 to 172,326 and
(ii) in the event after the date hereof and prior to the Closing Date the
shares of Series G Preferred Stock at any time outstanding shall be subdivided,
by reclassification, recapitalization, stock dividend or otherwise, into a
greater number of shares without the actual receipt by Parent of consideration
for the additional number of shares so issued, or the number of shares of
Series G Preferred Stock at any time outstanding shall be reduced, by
reclassification, recapitalization, reduction of capital stock or otherwise, or
the outstanding shares of Series G Preferred Stock shall be reclassified or
changed other than in such manner, then the number of shares of Series G
Preferred Stock that each holder of Company Common Stock shall be entitled to
as Merger Consideration shall be adjusted accordingly to the nearest share of
Series G Preferred Stock.
(c) TRANSFER BOOKS. On and after the Closing Date, there shall be
no transfers on the stock transfer books of the Company with respect to shares
of Company Common Stock issued and outstanding immediately prior to the Closing
Date. If, after the Closing Date, certificates formerly representing shares of
Company Common Stock are presented to Citadel or its transfer agent, they shall
be cancelled and exchanged for the Merger Consideration as provided in Section
2.5, subject to applicable law in the case of Dissenting Shares.
2.5 EXCHANGE OF CERTIFICATES. From and after the Closing Date, all
certificates representing shares of Company Common Stock, with the exception of
certificates representing Dissenting Shares or shares of Company Common Stock
held by the Company, shall represent the right to receive Merger Consideration
on the basis set forth above and upon the terms and conditions of this
Agreement, subject to applicable abandoned property, escheat and similar laws.
Upon delivery of certificates representing shares of Company Common Stock to
the transfer agent of Citadel, Citadel shall cause the transfer agent to issue
certificates representing the requisite number of shares of Series G Preferred
Stock for each share of Company Common Stock represented by the certificates
therefor properly delivered, and Citadel shall pay by certified or cashier's
check the cash consideration described in Section 2.4(a). Notwithstanding the
foregoing, neither Citadel's transfer agent nor any party hereto shall be
liable to a holder of shares of Company Common Stock for any of the Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
2.6 LETTER OF CREDIT. Simultaneously with the execution of this
Agreement, Citadel shall deliver to the Company an irrevocable letter of credit
in favor of the Company, issued by a national banking association or other
issuer acceptable to the Company, in the amount of $450,000, which shall be in
the form attached as EXHIBIT G hereto (the "LETTER OF CREDIT"). The Letter of
Credit shall provide that the issuing bank shall make payment on the Letter of
Credit upon such bank's receipt of a joint certificate from the President of
each of the Company and Citadel certifying that a Draw Condition has occurred.
Upon the Closing, the Company shall return the original Letter of Credit to
Citadel for cancellation.
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2.7 TAX-FREE REORGANIZATION. The parties hereto intend that the Merger
shall qualify as a tax-free reorganization and exchange of stock within the
terms of Sections 368(a)(1)(A), 368(a)(2)(D), 354(a), 356(a) and 361(a) of the
Code, and agree to take such actions as may be necessary to conform to the
provisions of said Sections and to do any and all things they deem necessary or
advisable to carry out the purposes and intent of this Agreement.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
In connection with the Merger and in order to induce Parent and
Citadel to enter into and consummate the transactions contemplated by this
Agreement, the Company makes the following representations and warranties to
Parent and Citadel, as of the date of this Agreement and as of the date of the
Closing (except for representations and warranties expressly and specifically
relating to a time or times other than the date hereof or thereof, which shall
be made as of the specified time or times):
3.1 ORGANIZATION AND QUALIFICATION; AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Arkansas and has full power and authority to own its
assets and properties and to conduct the BusineSection The Company has full
power, authority and legal right and all necessary approvals, permits, licenses
and authorizations to own its properties and to conduct the Business. The
execution and delivery of this Agreement by the Company, the performance by the
Company of its covenants and agreements hereunder and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of the Company. This Agreement constitutes the
valid and legally binding agreement of the Company and the Stockholders,
enforceable against each of them in accordance with its terms.
3.2 SUBSIDIARIES. The Company does not own, of record or beneficially,
any capital stock or equity interest or investment in any Person.
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3.3 CAPITALIZATION.
(a) AUTHORIZED AND ISSUED SHARES OF COMPANY. The authorized capital
stock of the Company consists solely of 1,000 shares of Company Common Stock,
of which 100 shares are issued and outstanding. COMPANY'S DISCLOSURE SCHEDULE
lists the names of the beneficial holders of all the outstanding shares of
Company Common Stock, and the number of shares held by each of them. The issued
and outstanding shares of Company Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. The Company does not have
outstanding any stock or securities convertible or exchangeable for any stock
or securities.
(b) REPURCHASE AND OTHER OBLIGATIONS. The Company is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its stock or other securities. No Stockholder, nor the Company or
any other Person, is entitled to any preemptive right, right of first refusal
or similar right with respect to the Company. There are no agreements,
arrangements or trusts between or for the benefit of the Company or the
Stockholders with respect to the voting or transfer of stock or other
securities, or with respect to any other aspect of the Company's affairs. The
Company has not violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its stock or other
securities.
3.4 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Articles of Incorporation or
Bylaws of the Company, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict
with, or will result in any breach of any of the terms of, or constitutes or
will constitute a default under or results in or will result in the termination
of or the creation or imposition of any Lien pursuant to, the terms of any
contract, commitment, agreement, understanding or arrangement of any kind to
which the Company is a party or by which the Company or any of the Assets is
bound. Except for the FCC Approval and the consents disclosed in COMPANY'S
DISCLOSURE SCHEDULE, no consents, approvals or authorizations of, or filings
with, any Governmental Authority or any other Person are required in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
3.5 FINANCIAL STATEMENTS. The Company has delivered to Parent and
Citadel the following financial statements of the Company: (a) the audited
consolidated balance sheet as of December 31, 1995 and the related consolidated
statements of income and cash flows for the year then ended; (b) the audited
consolidated balance sheet as of December 31, 1996 and the related consolidated
statements of income and cash flows for the year then ended; (c) the unaudited
consolidated balance sheet as of April 30, 1997, and the related unaudited
consolidated statements of income and cash flows for the four months then
ended; and (d) the monthly unaudited balance sheets and income statements for
each month in 1996 and the first four months of 1997. Each of the foregoing
financial statements (including in all cases the
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notes thereto, if any) (i) is accurate and complete in all material respects,
(ii) is consistent in all material respects with the books and records of the
Company (which, in turn, are accurate and complete in all material respects),
and (iii) fairly presents in all material respects the financial condition and
results of operations of the Company in accordance with GAAP (subject in the
case of unaudited financial statements to the lack of footnote disclosure and
changes resulting from normal year-end audit adjustments), consistently
applied, as of the dates and for the periods set forth therein.
3.6 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, there has not been any of the following with respect to the
Company or any of the Stations: (a) material adverse change in condition,
financial or otherwise, or in the results of operations, assets, liabilities or
business; (b) damage or destruction, whether or not insured, affecting business
operations; (c) labor dispute or threatened labor dispute involving any
employees; (d) actual or threatened dispute with any material provider of
software, hardware or services; (e) material change in the customary methods of
operations; (f) except in the ordinary course of business or to the extent not
material to the Business or financial condition of any Station, sale or
transfer of any tangible or intangible asset used or useful in the operation of
any Station, mortgage, pledge or imposition of any Lien on any such asset,
lease of real property, machinery, equipment or buildings with respect to any
Station entered into or modification, amendment or cancellation of any of its
existing leases relating to any Station, or cancellation of any debt or claim;
or (g) liability or obligation (contingent or otherwise) incurred under
agreements or otherwise, except current liabilities entered into or incurred in
the ordinary course of business consistent with past practices.
3.7 TAXES. The Company has filed or caused to be filed on a timely
basis all federal, state, local and other tax returns, reports and declarations
required to be filed by it with respect to the Stations and has paid all Taxes
(including, but not limited to, income, franchise, sales, use, unemployment,
withholding, social security and workers' compensation taxes and estimated
income and franchise tax payments, penalties and fines) reflected as due on
such returns, reports or declarations (whether or not shown on such returns,
reports or declarations), or pursuant to any assessment received by it in
connection with such returns, reports or declarations. All returns, reports and
declarations filed by or on behalf of the Company are true, complete and
correct. No deficiency in payment of any Taxes for any period has been asserted
against the Company by any taxing authority which remains unsettled at the date
hereof, no written inquiries have been received by the Company any taxing
authority with respect to possible claims for taxes or assessments, and there
is no basis for any additional claims or assessments for Taxes. Since December
31, 1996, the Company has not incurred any liability for Taxes which materially
affect the operation of any Station other than in the ordinary course of
business.
3.8 COMPANY ASSET SCHEDULE. The COMPANY ASSET SCHEDULE includes
complete and accurate (a) listings of all Real Property; (b) listings of all
Personal Property; (c) descriptions of all Contracts, none of which requires
any consent of third parties in connection with the transactions contemplated
hereby, except otherwise as indicated in COMPANY'S DISCLOSURE
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SCHEDULE; (d) descriptions of all of the Intellectual Property; and (e)
listings of all of the FCC Licenses, all of the foregoing of which will, as of
the Closing, be owned and held by the Company as reflected in the COMPANY ASSET
SCHEDULE.
3.9 TITLE TO AND CONDITION OF PROPERTY.
(a) TITLE. The Company will as of the Closing have good, marketable
and exclusive title to and undisputed possession of all of the Assets. Except
as set forth on COMPANY'S DISCLOSURE SCHEDULE, the Assets are now free and
clear of all Liens. The Assets will, as of the Closing, be free and clear of
all Liens.
(b) CONDITION. The Personal Property is structurally sound, in
reasonably good condition, ordinary wear and tear excepted, adequate and
suitable for the operation of each Station as it is currently being operated,
and in proper condition and repair so that such Station can operate according
to the FCC Licenses, the rules, regulations and policies of the FCC and in all
other respects in compliance with the Act and all other applicable federal and
state laws.
(c) INSURANCE. The Assets are and will be insured through the
Closing Date in amounts adequate to replace or repair any casualty or other
insurable loss to any of such property.
(d) SUFFICIENCY OF ASSETS. The Assets include all of the assets
(other than the Excluded Assets and the Excluded Real Property), which are
sufficient in nature, condition and quantity, necessary to permit the Company
to operate each Station immediately upon the Closing in the ordinary course of
business and consistent with the past practices of the Company. The Company has
not, since December 31, 1996, removed any material item of Personal Property
from any Station other than (i) removals in the ordinary course of business
which were not done in contemplation of the transactions contemplated by this
Agreement and (ii) as contemplated by Section 10.2(c).
(e) REAL PROPERTY; REAL PROPERTY LEASES.
(i) The COMPANY ASSET SCHEDULE contains accurate descriptions of
the Real Property, and contains accurate descriptions of the Real Property
Leases and the location of the real estate leased thereunder and the type of
facility located thereon. The Company will as of the Closing have a valid
leasehold interest in each of the leaseholds created pursuant to the Real
Property Leases.
(ii) None of the Real Property or Real Property Leases is
subject to any covenant or restriction preventing or limiting in any material
respect the consummation of the transactions contemplated by this Agreement,
except for any consent listed on COMPANY'S DISCLOSURE SCHEDULE required of the
landlords under the Real Property Leases. The Company's right, title and
interest in and to the Real Property will at the Closing be held by the
Company,
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free and clear of all Liens, except those set forth in COMPANY'S DISCLOSURE
SCHEDULE. The Company's right, title and interest in and to the leaseholds
created pursuant to the Real Property Leases will at the Closing be held by the
Company free and clear of all Liens, except those set forth in COMPANY'S
DISCLOSURE SCHEDULE.
(iii) The use for which the Real Property and the leaseholds
existing under the Real Property Leases are zoned permits the use thereof for
the business of the Stations consistent with past practices. The use and
occupancy of the Real Property and the leaseholds created pursuant to the Real
Property Leases by the Company are in compliance in all material respects with
all regulations, codes, ordinances and statutes applicable to the Company, and
the Company has not received any notice asserting any material violation of
sanitation laws and regulations, occupational safety and health regulations or
electrical codes.
(iv) There are no facts relating to the Company, and to the best
of the knowledge of the Company, no facts relating to any other party, that
would prevent the Real Property and the leaseholds existing under the Real
Property Leases from being occupied and used by Citadel and/or any assignee of
Citadel after the Closing Date in the same manner as immediately prior to the
Closing.
(v) There is not under any Real Property Lease any material
default by the Company, or to the best of the knowledge of the Company, by any
other party, or any condition that with notice or the passage of time or both
would constitute such a default, and the Company has not received, and to the
best of the knowledge of the Company, no other party has received, any notice
asserting the existence of any such default or condition.
(vi) Each Real Property Lease is valid and binding and in full
force and effect as to the Company, and to the best of the knowledge of the
Company, as to each other party thereto, and except as disclosed on the COMPANY
ASSET SCHEDULE, has not been amended or otherwise modified.
(vii) The Real Property and the leaseholds existing under the
Real Property Leases constitute all of the real property in which the Company
has a fee simple interest, leasehold interest or other interest or right
(whether as lessor or lessee) and which is or will prior to the Closing be used
in the operation of the applicable Station, other than the Excluded Real
Property (which is not used in connection with the Business).
3.10 CONTRACTUAL AND OTHER OBLIGATIONS. Set forth in the COMPANY ASSET
SCHEDULE is a description of all (a) Real Property Leases and (b) Contracts.
Neither the Company, nor, to the best of the knowledge of the Company, any
other Person, is in material default in the performance of any covenant or
condition under any Contract, and no claim of such a default has been made and
no event has occurred which with the giving of notice or the lapse of time
would constitute such a default under any covenant or condition under any
Contract. The Company is not a party to any Contract which would terminate or
be materially adversely affected by the consummation of the transactions
contemplated by this Agreement. Originals
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or true, correct and complete copies of all Contracts have been provided to
Parent and Citadel as of the date of this Agreement.
3.11 COMPENSATION. Set forth in COMPANY'S DISCLOSURE SCHEDULE is a
list of (a) all agreements between the Company and its employees or other
Persons providing services for compensation with regard to the Stations,
whether individually or collectively, and (b) all employees of the Company or
other Persons providing services for the Company with respect to the Stations
entitled to receive annual compensation in excess of $5,000 and their
respective positions, job categories and salaries. The transactions
contemplated by this Agreement will not result in any liability for severance
pay to any such employee or other Person. The Company has not informed any such
employee or other Person that such Person will receive any increase in
compensation or benefits or any ownership interest in the Company, Parent,
Citadel, the Business or Citadel's business. Except as disclosed in COMPANY'S
DISCLOSURE SCHEDULE, all current employees of the Company are "at will"
employees and may be terminated by the Company at any time, without liability
or obligation except the payment of normal compensation accrued up to the time
of termination of employment.
3.12 EMPLOYEE BENEFIT PLANS.
(a) The Company does not maintain or sponsor, nor is it required to
make contributions to, any pension, profit-sharing, savings, bonus, incentive
or deferred compensation, severance pay, medical, life insurance, welfare or
other employee benefit plan which affects the employees working at any Station,
except as set forth in COMPANY'S DISCLOSURE SCHEDULE. COMPANY'S DISCLOSURE
SCHEDULE fully discloses all of the plans, funds, policies, programs,
arrangements or understandings sponsored or maintained by the Company pursuant
to which any employee of any Station (or any dependent or beneficiary of any
such employee) might be or become entitled to (1) retirement benefits; (2)
severance or separation from service benefits; (3) incentive, performance,
stock, share appreciation or bonus awards; (4) health care benefits; (5)
disability income or wage continuation benefits; (6) supplemental unemployment
benefits; (7) life insurance, death or survivor's benefits; (8) accrued sick
pay or vacation pay; (9) any type of benefit offered under any arrangement
subject to characterization as an "employee welfare benefit plan" within the
meaning of section 3(3) of ERISA; or (10) benefits of any other type offered
through any arrangement that could be characterized as providing for additional
compensation or fringe benefits. As to any such plan, fund, policy, program,
arrangement or understanding, all of the following are true with respect to
each Station: (A) all amounts due as contributions, insurance premiums and
benefits to the date hereof have been fully paid by the Company; (B) all
applicable material requirements of law have been observed with respect to the
operation thereof, and all applicable reporting and disclosure requirements
have been timely satisfied; and (C) no claim or demand has been made by any
employee (or beneficiary or dependent of any employee) for benefits (other than
routine claims for benefits), or by any taxing authority for taxes or penalties
which has not been satisfied in full or which may be or become subject to
litigation or arbitration.
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(b) The Company has no obligation to provide health or other
welfare benefits to any of its former, retired or terminated employees, except
as specifically required under Section 4980B of the Code. The Company has
substantially complied with any applicable notice and continuation requirements
of Section 4980B of the Code and the regulations thereunder.
3.13 LABOR RELATIONS. There have been no material violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions, or the terms and conditions of
employment, wages (including overtime compensation) and hours of, the Company.
No Station is engaged in any unfair labor practice or other unlawful employment
practice and there are no charges of unfair labor practices or other
employee-related complaints pending or threatened against any Station before
the National Labor Relations Board, the Equal Employment Opportunity
Commission, the Occupational Safety and Health Review Commission, the
Department of Labor or any other Governmental Authority. There is no strike,
picketing, slowdown or work stoppage or organizational attempt pending,
threatened against or involving any Station. No issue with respect to union
representation is pending or threatened with respect to the employees of any
Station.
3.14 INCREASES IN COMPENSATION OR BENEFITS. Subsequent to December 31,
1996, there have been no increases in the compensation payable or to become
payable to any of the employees of the Company, nor has the Company paid or
provided for any awards, bonuses, stock options, loans, profit-sharing,
pension, retirement or welfare plans or similar or other payments or
arrangements for or on behalf of such employees in each case other than (a)
pursuant to currently existing plans or arrangements set forth in COMPANY'S
DISCLOSURE SCHEDULE or (b) as was required from time to time by governmental
legislation affecting wages. The vacation policies of the Company are set
forth in COMPANY'S DISCLOSURE SCHEDULE. No employee of the Company is entitled
to vacation time in excess of two weeks (three weeks in the case of employees
with 10 years or more of service) during the current vacation year (fiscal May
1 through April 30) and no such employee has any accrued vacation time with
respect to any period prior to the current calendar year, except as set forth
in COMPANY'S DISCLOSURE SCHEDULE.
3.15 INSURANCE. The Company maintains insurance policies covering all
of its properties and assets and the various occurrences which may arise in
connection with the operation of the Stations, each of which policies is
summarized in COMPANY'S DISCLOSURE SCHEDULE. Such policies maintained by the
Company are in full force and effect and all installments of premiums due
thereon have been paid in full. There are no notices of any pending or
threatened termination or premium increases with respect to any of such
policies maintained by the Company. There has been no casualty loss or
occurrence to the Company which may give rise to any claim of any kind not
covered by insurance, and the Company is not aware of any casualty occurrence
to the Stations which may give rise to any claim of any kind not covered by
insurance. No third party has filed any claim against the Company for personal
injury or property damage of a kind for which liability insurance is generally
available
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which is not fully insured, subject only to the standard deductible. None of
the Company's insurance policies will terminate or be adversely affected by the
consummation of the transactions contemplated by this Agreement.
3.16 LITIGATION; DISPUTES. Except as set forth in COMPANY'S DISCLOSURE
SCHEDULE, there are no claims, disputes, actions, suits, investigations or
proceedings pending or threatened against or affecting the Company or any
Station and, to the best of the knowledge of the Company, there is no basis for
any such claim, dispute, action, suit, investigation or proceeding. The Company
has no knowledge of any default under any such action, suit or proceeding. The
Company is not in default in respect of any judgment, order, writ, injunction
or decree of any Governmental Authority with respect to the Company or the
operation of any Station.
3.17 TRADE RECEIVABLES AND ACCOUNTS RECEIVABLE. All Trade Receivables
and Accounts Receivable are reflected properly on the books and records of the
Company, are valid receivables subject to no setoffs or counterclaims, are
current and collectible, and will be collected in accordance with their terms
at their recorded amounts, subject only to the reserve for bad debts provided
for in the financial statements of the Company.
3.18 TRADE LIABILITIES. The Trade Liabilities do not, and as of the
Closing Date will not, exceed the Trade Receivables.
3.19 ENVIRONMENTAL.
(a) Prior to the execution of this Agreement, the Company has
provided to Parent and Citadel a true and correct copy of all environmental site
assessments, studies, reports and communications relating to the Real Property.
(b) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE, to the
best of the knowledge of the Company, (i) there are no conditions, facilities,
procedures or any other facts or circumstances that constitute Environmental
Noncompliance on the Real Property or any of the leaseholds existing under the
Real Property Leases and (ii) there is not constructed, placed, deposited,
stored, disposed of, nor located on any of the Real Property or any of the
leaseholds existing under the Real Property Leases, any asbestos in any form
that has released or, unless disturbed, threatens to release airborne asbestos
fibers in excess of applicable local, state and federal standards.
(c) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE, to the
best of the Company's knowledge, no structure, improvements, equipment,
fixtures, activities or facilities located on the Real Property or any of the
leaseholds existing under the Real Property Leases uses Hazardous Materials
except those used in the ordinary course of the Business and in compliance with
applicable Environmental Laws.
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(d) Except as specifically described on COMPANY'S DISCLOSURE
SCHEDULE, there have been no releases or threatened releases of Hazardous
Materials into the environment, or which otherwise contribute to Environmental
Conditions arising in whole or in part from the activities of the Company, or to
the best of the knowledge of the Company arising from any other activities,
except to the extent that such releases or threatened releases do not constitute
a condition of Environmental Noncompliance relating to the Real Property or any
of the leaseholds existing under the Real Property Leases.
(e) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE, there
are no underground storage tanks, or underground piping associated with tanks,
used for the management of Hazardous Materials, and no abandoned underground
storage tanks at the Real Property or any of the leaseholds existing under the
Real Property Leases.
(f) The Company is not subject to any Environmental Claims, and no
Environmental Claims have been threatened against the Company nor, to the best
of the knowledge of the Company, is there any basis for any such Environmental
Claims.
3.20 PERMITS, COMPLIANCE WITH APPLICABLE LAW.
(a) GENERAL. The Company is not in default under any statutes,
ordinances, regulations, orders, judgments and decrees of any Governmental
Authority applicable to it or to the Business or the Assets as to which a
default or failure to comply might result in any material adverse change in the
condition, financial or otherwise, of the Assets or the Business. The Company
has no knowledge of any basis for assertion of any violation of the foregoing or
for any claim for compensation or damages or otherwise arising out of any
violation of the foregoing. The Company has not received any notification of any
asserted present or past failure to comply with any of the foregoing which has
not been satisfactorily responded to in the time period required thereunder.
(b) PERMITS. Set forth in COMPANY'S DISCLOSURE SCHEDULE is a
complete and accurate list of all of the Permits held by the Company and
applicable to the Stations. Each Station is operating in accordance with the Act
and its FCC Licenses and in compliance with the Act and the rules, regulations
and policies of the FCC. The Permits set forth in COMPANY'S DISCLOSURE SCHEDULE
are all of the Permits required for the conduct of the Business conducted by the
Stations. All of the Permits held by the Company are in full force and effect,
and the Company has not engaged in any activity which would cause or permit
revocation or suspension of any such Permit, and to the best of the knowledge of
the Company, no action or proceeding looking to or contemplating the revocation
or suspension of any such Permit is pending or threatened. There are no existing
defaults or events of default or events or state of facts which with notice or
lapse of time or both would constitute a default by the Company or any other
Person under any such Permit. Except for (1) the FCC Approval and (2) as set
forth in COMPANY'S DISCLOSURE SCHEDULE, the consummation of the transactions
contemplated hereby will in no way affect the continuation, validity or
effectiveness of the Permits held by the Company or require the consent of any
Person. Except as set forth in COMPANY'S
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DISCLOSURE SCHEDULE, the Company is not required to be licensed by, and is not
subject to the regulation of, any Governmental Authority by reason of the
Business.
3.21 INTELLECTUAL PROPERTY. The use of the Intellectual Property in
connection with the operation of the Stations in a manner consistent with past
practices by the Company does not infringe upon the proprietary rights of any
other Person. Citadel will, upon consummation of the transactions contemplated
by this Agreement, possess adequate rights, licenses and other authority to use
the Intellectual Property used by the Stations in the operation of the Stations
following the Closing in the manner now operated, without infringement or
unlawful or improper use of any of the Intellectual Property. No director,
officer or employee of the Company has any interest in any of the Intellectual
Property, all of which will, as of the Closing, be free and clear of all Liens.
The Company has no knowledge of any infringement by any Person upon the rights
of the Company with respect to the Intellectual Property. The Company has not
granted any outstanding licenses or other rights to any of the call letters,
copyrights, trademarks, trade names or other similar rights with regard to any
of the Intellectual Property.
3.22 BOOKS AND RECORDS. The books of account of the Company fairly and
accurately reflect its income, expenses, assets and liabilities and have been
maintained in accordance with good business practices. All of such books and
records will be located on the date of the Closing on the business premises of
the Stations.
3.23 ACTS TO BE PERFORMED. The Company shall perform each of the
covenants, acts and undertakings of the Company to be performed on or before
the Closing Date pursuant to the terms of this Agreement.
3.24 RELATED PARTY OBLIGATIONS. Except as set forth on COMPANY'S
DISCLOSURE SCHEDULE, no officer, director, shareholder or Affiliate of the
Company, or any individual related by blood or marriage to any such Person, or
any entity in which any such Person or individual owns any beneficial interest
is a party to any agreement, contract, commitment, promissory note, loan, any
other actual or proposed transaction with the Company or has any material
interest in any material property used by the Company which is material to the
operation of the Stations.
3.25 DISCLOSURE. To the best of the Company's knowledge, no
representation or warranty made under this Section 3 and none of the
information furnished by the Company or the Stockholders set forth in this
Agreement or in the schedules or exhibits to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements in this Agreement or in the schedules or exhibits to this
Agreement not misleading.
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<PAGE> 23
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND CITADEL
In connection with the Merger and in order to induce the Company and
the Stockholders to enter into and consummate the transactions contemplated by
this Agreement, Parent and Citadel jointly and severally make the following
representations and warranties to the Company and the Stockholders, as of the
date of this Agreement and as of the date of the Closing (except for
representations and warranties expressly and specifically relating to a time or
times other than the date hereof or thereof, which shall be made as of the
specified time or times):
4.1 ORGANIZATION AND QUALIFICATION; AUTHORITY. Parent and Citadel are
corporations duly organized, validly existing and in good standing under the
laws of the State of Nevada and have full power and authority to own their
assets and properties and to conduct their respective businesses. Parent and
Citadel have full power, authority and legal right and all necessary approvals,
permits, licenses and authorizations to own their respective properties and to
conduct their respective businesses. Subject to the approval by the respective
boards of directors of Parent and Citadel of the transactions contemplated
hereby, (a) the execution and delivery of this Agreement by Parent and Citadel,
the performance by Parent and Citadel of their covenants and agreements
hereunder and the consummation by Parent and Citadel of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of Parent and Citadel; and (b) this Agreement constitutes the valid and
legally binding agreement of Parent and Citadel, enforceable against each of
them in accordance with its terms.
4.2 CAPITALIZATION.
(a) CURRENT EQUITY SECURITIES OF PARENT. The authorized and
outstanding Equity Securities of Parent are as set forth in Section 8.c. of the
Securities Purchase and Exchange Agreement. CITADEL'S DISCLOSURE SCHEDULE lists
the names of the beneficial holders of all the outstanding shares of capital
stock of Parent. Such issued and outstanding shares have been duly authorized
and validly issued, and are fully paid and nonassessable. None of Parent or
Citadel is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its Equity Securities, except as expressly
provided in the Stockholders Agreement.
(b) ISSUANCE OF SERIES G PREFERRED STOCK. The issuance of the
Series G Preferred Stock has been duly authorized by all necessary action on the
part of Parent. The Series G Preferred Stock, when issued to the Stockholders on
the Effective Date, will be validly issued, fully paid and non-assessable, and
will have the rights, preferences and privileges specified in the Amended and
Restated Certificate of Incorporation. No Series G Preferred Stock shall be
issued to any Person other than in connection with the consummation of the
transactions contemplated hereby and the transactions contemplated by the Snider
Broadcasting Agreement. The Series G Preferred Stock, when issued, will be free
and clear
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<PAGE> 24
of all Liens and restrictions, other than Liens that might have been created or
suffered solely by the holders thereof, and restrictions on transfer imposed by
the Securities Act or applicable state securities laws.
4.3 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Certificate of Incorporation or
Bylaws of Parent or Citadel, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict
with, or will result in any breach of any of the terms of, or constitutes or
will constitute a default under or results in or will result in the termination
of or the creation or imposition of any Lien pursuant to the terms of, any
contract, commitment, agreement, understanding or arrangement of any kind to
which Parent or Citadel is a party or by which Parent, Citadel or any of their
assets is bound. Except for the FCC Approval and the consents disclosed in
CITADEL'S DISCLOSURE SCHEDULE, no consents, approvals or authorizations of, or
filings with, any Governmental Authority or any other Person are required on
the part of Parent or Citadel in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
4.4 FINANCIAL STATEMENTS. Parent and Citadel have delivered to the
Company and the Stockholders the following financial statements of Parent: (a)
the audited consolidated balance sheet as of December 31, 1995 and the related
consolidated statements of income and cash flows for the year then ended; (b)
the audited consolidated balance sheet as of December 31, 1996 and the related
consolidated statements of income and cash flows for the year then ended; and
(c) the unaudited consolidated balance sheet as of March 31, 1997, and the
related unaudited consolidated statements of income and cash flows for the
three months then ended. Each of the foregoing financial statements (including
in all cases the notes thereto, if any) (i) is accurate and complete in all
material respects, (ii) is consistent in all material respects with the books
and records of Parent and Citadel (which, in turn, are accurate and complete in
all material respects), and (iii) fairly presents in all material respects the
financial condition and results of operations of Parent and Citadel in
accordance with GAAP (subject in the case of unaudited financial statements to
the lack of footnote disclosure and changes resulting from norman year-end
audit adjustments), consistently applied, as of the dates and for the periods
set forth therein.
4.5 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, there has not been any (a) material adverse change in the
condition of Citadel or Parent, financial or otherwise, or in the results of
operations, assets, liabilities or business of Citadel or Parent; (b) damage or
destruction, whether or not insured, affecting the business operations of
Citadel or Parent in any material respect; (c) labor dispute or threatened
labor dispute involving any of the employees of Citadel or Parent; (d) actual
or threatened dispute pertaining to Citadel or Parent with any material
provider of software, hardware or services; (e) material change in the
customary methods of operations of Citadel or Parent; (f) except in the
ordinary course of business or to the extent not material to the business or
financial
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<PAGE> 25
condition of Citadel or Parent, sale or transfer of any tangible or intangible
asset used or useful in the operation of radio stations owned and/or operated
by Citadel (the "CITADEL STATIONS"), mortgage, pledge or imposition of any Lien
on any such asset, lease of real property, machinery, equipment or buildings
with respect to Citadel or Parent, or modification, amendment or cancellation
of any of its existing leases relating to Citadel or Parent, or cancellation of
any debt or claim; or (g) material liability or obligation (contingent or
otherwise) incurred under agreements or otherwise, except current liabilities
entered into or incurred in the ordinary course of business consistent with
past practices and except as disclosed in CITADEL'S DISCLOSURE SCHEDULE.
4.6 TAXES. Citadel and Parent have filed or caused to be filed on a
timely basis all federal, state, local and other tax returns, reports and
declarations required to be filed by them with respect to each Citadel Station
and has paid all Taxes (including, but not limited to, income, franchise,
sales, use, unemployment, withholding, social security and workers'
compensation taxes and estimated income and franchise tax payments, penalties
and fines) reflected as due on such returns, reports or declarations (whether
or not shown on such returns, reports or declarations), or pursuant to any
assessment received by them in connection with such returns, reports or
declarations. All returns, reports and declarations filed by or on behalf of
Citadel or Parent are true, complete and correct in all material respects. No
deficiency in payment of any Taxes for any period has been asserted by any
taxing authority which remains unsettled at the date hereof, no written
inquiries have been received by Citadel or Parent from any taxing authority
with respect to possible claims for taxes or assessments, and there is no basis
for any additional claims or assessments for Taxes. Since December 31, 1996,
neither Citadel nor Parent has incurred any liability for Taxes which
materially affect the operation of Citadel or Parent other than in the ordinary
course of business.
4.7 CONTRACTUAL AND OTHER OBLIGATIONS WITH RESPECT TO PARENT STOCK.
Set forth in CITADEL'S DISCLOSURE SCHEDULE is a description of all contracts,
agreements, arrangements and other documents by and among Parent and its
shareholders or any lender or other third party which includes, warrants,
options, conversion rights or other obligations of Parent with respect to its
authorized stock.
4.8 PERMITS. Citadel and Parent have all the permits, licenses,
approvals, franchises, notices and authorizations issued by any Governmental
Authorities (collectively, the "CITADEL PERMITS") necessary to conduct the
operation of Citadel's business as currently conducted. Each Citadel Station is
operating in accordance with the Act and its FCC licenses and is in compliance
with the Act and the rules, regulations and policies of the FCC. The Citadel
Permits are in full force and effect, and Citadel and Parent have not engaged
in any activity which would cause or permit revocation or suspension of any
such Citadel Permit, and no action or proceeding looking to or contemplating
the revocation or suspension of any such Citadel Permit is pending or
threatened. There are no existing defaults or events of default or events or
state of facts which with notice or lapse of time or both would
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<PAGE> 26
constitute a default by Citadel or Parent under any such Citadel Permit. There
is no default or claimed or purported or alleged default or state of facts
which with notice or lapse of time or both would constitute a default on the
part of any party in the performance of any obligation to be performed or paid
by any party under any such Citadel Permit.
4.9 ACTS TO BE PERFORMED. Parent and Citadel shall perform each of the
covenants, acts and undertakings of Parent and Citadel to be performed on or
before the Closing Date pursuant to the terms of this Agreement.
4.10 LITIGATION. There is no litigation, proceeding or investigation
pending or, to the best knowledge of Parent and Citadel, threatened against or
affecting Parent or Citadel that is reasonably likely to prevent or hinder the
consummation of the transactions contemplated by this Agreement.
4.11 DISCLOSURE. To the best knowledge of Parent and Citadel, no
representation or warranty made under this Section 4 and none of the
information furnished by Parent or Citadel set forth in this Agreement or in
the schedules or exhibits to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements in this Agreement or in the schedules or exhibits to this Agreement
not misleading.
SECTION 5
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees with Parent and Citadel to:
5.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
5.2 PAYMENT OF OBLIGATIONS. Fully discharge all Obligations of the
Company on a timely basis so that the Obligations of the Company existing as of
the Closing Date shall consist solely of Accounts Payable and Trade
Liabilities.
5.3 ACCESS. Afford Parent and Citadel and their authorized
representatives, upon reasonable notice, reasonable access during normal
business hours to the Stations and the Stations' employees, and permit Parent
and Citadel and their authorized representatives to examine all operations,
equipment, properties and other assets, logs, books, relevant records,
contracts and documents pertinent to the Stations; provided, however, that in
each instance mutually satisfactory arrangements shall be made in advance in
order to avoid interruption and to minimize interference with the normal
business and operations of the Stations.
5.4 PRESERVATION OF ORGANIZATION. Exercise all reasonable efforts to
preserve the business organization of the Stations intact, and to preserve the
present relationships of the Stations with employees, suppliers, advertisers
and customers and others having business relationships with the Stations;
provided, however, that nothing contained in this Agreement
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<PAGE> 27
shall require the Company to expend money in fulfillment of its obligations set
forth in this Section 5.4 other than those expenditures that the Company would
have made in the ordinary course of the business of the Stations and consistent
with past practices.
5.5 BOOKS AND RECORDS. Maintain the books and records of the Company
in accordance with good business practices, on a basis consistent with past
practices, and promptly make available to Parent and Citadel the books,
records, tax returns, leases, contracts and other documents or agreements
material to the Stations as Parent, Citadel or their respective counsel,
accountants or other authorized representatives may from time to time
reasonably request.
5.6 EMPLOYEES. Pay as and when the same shall become due and payable
any amounts owed by the Company to its employees who have performed services up
to the time of Closing, whether fixed or accrued, for wages, vacation pay, sick
pay, severance pay, employee benefits, damages and otherwise.
5.7 COMPLIANCE WITH FCC MATTERS. Comply with the FCC Licenses
applicable to the Stations and with the provisions of the Act, the rules,
regulations and policies of the FCC, and with all other laws, ordinances,
regulations, rules and orders of any Governmental Authority applicable to the
Company or to any Station.
5.8 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by the Company prior to the Closing, and
satisfy all Taxes related thereto which are due on or before the Closing Date.
5.9 COMPANY SUPPLEMENTAL FINANCIAL STATEMENTS. Provide Parent and
Citadel with copies of the monthly unaudited income statements and balance
sheets applicable to the Stations prepared by the Company from the date hereof
until Closing in the ordinary course of business (collectively, the "COMPANY
SUPPLEMENTAL FINANCIAL STATEMENTS"). The Company shall provide such Company
Supplemental Financial Statements to Parent and Citadel promptly upon such
Company Supplemental Financial Statements becoming available to it. The Company
Supplemental Financial Statements shall be subject to the representations and
warranties as set forth in Section 3.5.
5.10 FURTHER INFORMATION. Furnish to Parent and Citadel prior to the
Closing such financial (including tax), legal and other information with
respect to the Company and the Stations as Parent, Citadel or their
representatives may from time to time reasonably request.
5.11 NOTICE. Promptly notify Parent and Citadel in writing upon the
occurrence or the nonoccurrence of any event which does then, or which upon the
passing of time or the giving of notice would, constitute a breach of or
default under, or render misleading or untrue in any material respect, any
agreement, covenant, representation or warranty made by the Company in this
Agreement.
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<PAGE> 28
5.12 CONSENTS. Exercise all reasonable efforts (not involving the
payment by the Company of any money to any party to any Contract) to obtain,
prior to the Closing, the consent and approval (in a form reasonably approved
by Parent) of any third parties whose consent or approval is necessary in
connection with the consummation of the transactions contemplated hereby, with
respect to the Contracts set forth on COMPANY'S DISCLOSURE SCHEDULE and
requiring such consent. If any such consent or approval is not obtained, the
Company will use commercially reasonable efforts (not involving the payment of
money to any Person) to secure an arrangement satisfactory to Citadel intended
to provide for Citadel following the Closing the benefits under each Contract
for which such consent or approval is not obtained; provided, however, that
Citadel shall have the right to terminate this Agreement as a result of any
failure by the Company to obtain any such consent or approval set forth on
COMPANY'S DISCLOSURE SCHEDULE, if alternative arrangements are not satisfactory
to Citadel. The Company shall also execute a consent, in a form provided by
Citadel, allowing Parent and Citadel to assign all of their rights under this
Agreement and any related documents to one or more of Parent's and Citadel's
lenders upon default by Parent or Citadel under the relevant loan documents.
Nothing in this Agreement will constitute a transfer or an attempted
transfer of any Contract which by its terms or under applicable law or
governmental rules or regulations requires the consent or approval of a third
party (including, without limitation, a Governmental Authority) unless such
consent or approval is obtained.
5.13 TRADE SCHEDULE. Deliver to Parent and Citadel at the Closing an
accurate schedule of Trade Liabilities and Trade Receivables existing as of the
Closing. The Company shall exercise reasonable efforts to minimize the amount
of additional Trade Liabilities incurred after execution of this Agreement.
5.14 IMPACT OF LOCAL MARKETING AGREEMENTS. From and after the
effective date of the Local Marketing Agreements, the covenants of the Company
relating to the operation of the Stations and the Assets from and after such
date shall be conditioned upon Citadel's performance, in all material respects,
of its obligations under the Local Marketing Agreements.
SECTION 6
NEGATIVE COVENANTS OF THE COMPANY
From and after the date of this Agreement and until the Closing, the
Company shall not take, or cause or permit to be taken, any of the following
actions without the prior approval of Parent and Citadel, which may not be
unreasonably withheld:
6.1 SALES, TRANSFERS AND LIENS. Make any sale, transfer, assignment,
conveyance, mortgage, hypothecation, encumbrance or other placement of any Lien
on any of the Assets, except in the ordinary course of business and which do
not materially interfere with the
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operations of the Stations, and which, in the case of a sale, transfer or
assignment, is replaced with an asset of equal or greater value, and, in the
case of a conveyance, mortgage, hypothecation, encumbrance or other Lien, is
released at or prior to the Closing.
6.2 CONTRACTS. Amend, terminate or renew any of the Contracts
(including any renewal or termination resulting from the failure to provide,
after the date of this Agreement, timely notice of nonrenewal or termination as
required by the terms of any of the Contracts).
6.3 BREACHES, DEFAULTS. Do any act or omit to do any act, or permit
any act or omission to occur, that will cause a breach of any contract,
commitment or obligation of it in any respect that would have a material
adverse effect on the Assets or the business operations of the Stations as
presently conducted.
6.4 OBLIGATIONS. Incur any Obligations (including but not limited to
any additional Indebtedness for Borrowed Money) except in the ordinary course
of business in a manner consistent with past practices.
6.5 SALARY INCREASES. Increase any salary, other payments,
disbursement or distributions in any manner or form to any employees of the
Company except (a) in the ordinary course of business consistent with past
practices or (b) in accordance with the existing terms of contracts entered
into prior to the date of this Agreement.
6.6 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire the
Company or any of the Stations in whole or in part.
SECTION 7
COVENANTS OF THE STOCKHOLDERS
The Stockholders jointly and severally covenant and agree with Parent
and Citadel to:
7.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
7.2 NOTICE. Promptly notify Parent and Citadel in writing upon the
occurrence or the nonoccurrence of any event which does then, or which upon the
passing of time or the giving of notice would, constitute a breach of or
default under, or render misleading or untrue in any material respect, any
agreement, covenant, representation or warranty made by the Stockholders in
this Agreement.
7.3 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire the
Company or any of the
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Stations in whole or in part. Prior to the Closing, the Stockholders shall not
sell, assign, pledge or otherwise transfer any of the Company Common Stock
owned by them.
7.4 COMMERCIALLY REASONABLE EFFORTS. The Stockholders shall use
commercially reasonable efforts to cause the Company to satisfy all of its
obligations hereunder.
SECTION 8
COVENANTS OF PARENT AND CITADEL
Parent and Citadel jointly and severally covenant and agree with the
Company and the Stockholders to:
8.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
8.2 NOTICE. Promptly notify the Company and the Stockholders in
writing upon the occurrence or the nonoccurrence of any event which does then,
or which upon the passing of time or the giving of notice would, constitute a
breach of or default under, or render misleading or untrue in any material
respect, any agreement, covenant, representation or warranty made by Parent or
Citadel in this Agreement.
8.3 PERFORMANCE OF LOCAL MARKETING AGREEMENTS. From and after the
effective date of the Local Marketing Agreements, Citadel shall perform and
discharge, in all material respects, its obligations in connection with the
operation of the Stations and the Assets from and after such date in accordance
with the terms of the Local Marketing Agreements.
8.4 BOOKS AND RECORDS. Maintain the books and records of Parent and
Citadel in accordance with good business practices, on a basis consistent with
past practices, and promptly make available to the Company the books, records,
tax returns, leases, contracts and other documents or agreements material to
the Citadel Stations as the Company or its counsel, accountants or other
authorized representatives may from time to time reasonably request.
8.5 COMPLIANCE WITH FCC MATTERS. Comply with the FCC licenses
applicable to the Citadel Stations and with the provisions of the Act, the
rules, regulations and policies of the FCC, and with all other laws,
ordinances, regulations, rules and orders of any Governmental Authority
applicable to Parent, Citadel or to any Citadel Station.
8.6 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by Parent and/or Citadel prior to the
Closing, and satisfy all Taxes related thereto which are due on or before the
Closing Date.
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8.7 CITADEL SUPPLEMENTAL FINANCIAL STATEMENTS. Provide the Company
with copies of the monthly unaudited income statements and balance sheets
applicable to the Citadel Stations prepared by Parent from the date hereof
until Closing in the ordinary course of business (collectively, the "CITADEL
SUPPLEMENTAL FINANCIAL STATEMENTS"). Parent and Citadel shall provide such
Citadel Supplemental Financial Statements to the Company promptly upon such
Citadel Supplemental Financial Statements becoming available to them. The
Citadel Supplemental Financial Statements shall be subject to the
representations and warranties as set forth in Section 4.4.
8.8 FURTHER INFORMATION. Furnish to the Company prior to the Closing
such financial (including tax), legal and other information with respect to
Parent, Citadel and the Citadel Stations as the Company or its representatives
may from time to time reasonably request.
SECTION 9
ADDITIONAL COVENANTS OF THE PARTIES
9.1 APPLICATION FOR TRANSFER OF CONTROL. As promptly as practicable
after the date of this Agreement, and in no event later than 10 days after the
execution of this Agreement, the Company and Citadel shall file an application
(the "FCC APPLICATION") with the FCC to approve the transfer of control of the
Stations from the Company to Citadel (the "FCC APPROVAL"). Citadel shall have
primary responsibility for filing the FCC Application. The parties agree that
they shall jointly prosecute the FCC Application (and shall cooperate with each
other in the timely prosecution thereof), in good faith and with due diligence,
and within the time allowed therefor by the rules and regulations of the FCC.
The Company and Citadel shall each take all necessary actions on its part to
obtain the FCC Approval. Citadel shall advance the filing fee for the FCC
Application, and the Stockholders shall reimburse Citadel for one-half of such
filing fee at the Closing. All other costs and expenses incurred by each party
in connection with the filing and prosecution of the FCC Application shall be
paid by the party incurring the cost or expense.
9.2 LOCAL MARKETING AGREEMENTS. Concurrently with the execution of
this Agreement, Citadel and the Company shall execute and deliver a Local
Marketing Agreement for each of the Stations in the form of EXHIBIT H attached
hereto (collectively, the "LOCAL MARKETING AGREEMENTS").
9.3 BROKERAGE. Each of the parties hereto represents and warrants to
each other that, except for Broker, no Person has provided services as a
broker, agent or finder in connection with the transactions contemplated by
this Agreement. As between the parties hereto, the Stockholders are fully
responsible for the payment of any fee, commission, claim or expense of Broker,
and the Stockholders shall indemnify and hold harmless the Company, Parent and
Citadel for any and all fees, commissions, claims or expenses, including
attorneys' fees asserted by Broker. Each of the parties hereto shall each
indemnify and hold harmless the
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other parties hereto for any and all claims or expenses, including attorneys'
fees, asserted by any Person other than Broker purporting to act on behalf of
the respective indemnitor as a broker, agent or finder in connection with the
transactions contemplated by this Agreement.
9.4 RISK OF LOSS. If any loss or damage to any of the Assets occurs
prior to the Closing (i) which has a material adverse effect on any Station and
(ii) such loss or damage is not susceptible of repair, replacement or
restoration with sufficient, collectible insurance proceeds available for such
purposes or by the Stockholders at their sole cost and expense to substantially
the same condition as existed before such loss or damage, then the parties
shall adjust the Merger Consideration to reflect the diminution in value of
such Station attributable to the impairment of such assets.
9.5 ACTIONS WITH FCC. In the event any investigation, order to show
cause, notice of violation, notice of apparent liability or a forfeiture,
material complaint, petition to deny or informal objection is instituted or
filed against any party hereto (whether in connection with the proceedings to
approve the FCC Application or otherwise), such party shall promptly notify the
other parties hereto in writing of such occurrence and shall thereafter
immediately take all reasonable measures to contest the same in good faith and
seek the removal or favorable resolution of such action, order, notice or
complaint.
9.6 COOPERATION. During the seven-year period immediately following
the Closing, Citadel shall cooperate with the Stockholders in providing the
Stockholders all information reasonably requested and permitting the
Stockholders access to all records relating to the period of ownership of the
Stations prior to the Closing. The cost and expense in providing or permitting
access to information hereunder shall be borne by the Stockholders. The
Stockholders, as a condition to being provided with access to information
hereunder, shall, at the request of Citadel, execute a confidentiality
agreement in form and substance acceptable to Citadel in its reasonable
discretion. Notwithstanding the foregoing, Citadel may discard any such
records during such seven-year period if (i) Citadel notifies the Stockholders
of Citadel's intent to discard such records and (ii) the Stockholders do not,
within 10 days after receipt of such notice, retrieve such records from
Citadel's premises.
SECTION 10
THE CLOSING
10.1 CLOSING DATE. The Closing shall occur on a date mutually selected
by the Company and Citadel which is within 10 business days following the date
on which the FCC Approval has become a Final Order. The Closing shall begin at
10:00 a.m., local time, on the date of the Closing (the "CLOSING DATE") at the
offices of Friday, Eldredge & Clark, 2000 First Commercial Building, 400 West
Capitol Avenue, Little Rock, Arkansas 72201, counsel for the Company and the
Stockholders, or at such other time and place as the parties may agree in
writing.
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10.2 ACTIONS TO BE TAKEN IMMEDIATELY PRIOR TO THE CLOSING. The
following actions shall be taken immediately prior to the Closing, and as a
condition precedent thereto:
(a) AMENDED AND RESTATED CERTIFICATE OF INCORPORATION. Parent
shall cause the Amended and Restated Certificate of Incorporation to be filed
with the Secretary of State of the State of Nevada.
(b) DIVIDEND OF EXCLUDED ASSETS AND EXCLUDED REAL PROPERTY. The
Company shall distribute to the Stockholders as a dividend the Excluded Assets,
if any, and the Excluded Real Property; provided, however, that the Stockholders
shall pay all costs, fees, expenses and Taxes resulting from such distributions.
10.3 ACTIONS TO BE TAKEN AT THE CLOSING. The following actions shall
be taken at the Closing:
(a) ARTICLES AND PLAN OF MERGER. The Articles of Merger, and if
required under applicable law, the Plan of Merger, shall be filed with the
appropriate authorities in the States of Nevada and Arkansas.
(b) DELIVERY OF MERGER CONSIDERATION. Citadel shall deliver the
Series G Preferred Stock and cash portion of the Merger Consideration to the
holders of the Company Common Stock in accordance with Section 2.4.
(c) DELIVERY OF DOCUMENTS. Each of the parties shall deliver to
the other parties all agreements, certificates and other documents required to
be delivered by it pursuant to the terms of this Agreement or as a condition
precedent to the other parties' obligations under this Agreement, including but
not limited to the following:
(i) The parties shall deliver to each other fully executed
originals of the Amendment to Securities Purchase Agreement, the Amendment to
Registration Rights Agreement, the Amendment to Stockholders Agreement and the
Amendment to Voting Agreement.
(ii) Citadel and Ted L. Snider, Sr. shall execute and deliver
the Agreement Not to Compete.
SECTION 11
CONDITIONS TO THE COMPANY'S AND
THE STOCKHOLDERS' OBLIGATION TO CLOSE
The obligation of the Company and the Stockholders to consummate the
transactions contemplated by this Agreement at the Closing is subject to the
following conditions precedent,
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any or all of which may be waived by the Company and the Stockholders in their
sole discretion (other than those set forth in Section 11.7):
11.1 OPINION OF PARENT'S AND CITADEL'S COUNSEL. The Company and the
Stockholders shall have received an opinion of counsel for Parent and Citadel,
dated the date of the Closing, in form and substance satisfactory to the
Company and the Stockholders, to the effect that:
(a) Parent and Citadel are corporations duly organized, validly
existing and in good standing under the laws of the State of Nevada.
(b) Citadel is duly qualified and in good standing in the State of
Arkansas.
(c) Parent and Citadel have full corporate power and authority to
own their assets and properties and to conduct their business and have all
necessary approvals, permits, licenses and authorizations to own their
properties and to conduct their business in the manner and in the locations
presently owned and conducted.
(d) This Agreement, together with all other documents and
instruments required to be executed or delivered by Parent or Citadel in
connection with the transactions contemplated hereby, each has been duly
authorized, executed and delivered by Parent and Citadel and constitutes a valid
and legally binding obligation of Parent and Citadel, enforceable against each
of them in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitations on the availability of
equitable remedies.
(e) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates or will violate
any provision of the Certificate of Incorporation or Bylaws of Parent or Citadel
or, to the knowledge of such counsel, any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or, to the knowledge of such counsel after due investigation,
violates or will violate, or conflicts with or will conflict with or will result
in any breach of any of the terms of, or constitutes or will constitute a
default under, or results or will result in the termination of or the creation
or imposition of any Lien pursuant to, the terms of any contract, commitment,
agreement, understanding or arrangement of any kind to which Parent or Citadel
is a party or by which Parent or Citadel or any of their assets is bound and
which is known to such counsel, all as set forth on CITADEL'S DISCLOSURE
SCHEDULE.
(f) The authorized and outstanding Equity Securities of Parent are
as set forth in Section 8.c. of the Securities Purchase and Exchange Agreement.
CITADEL'S DISCLOSURE SCHEDULE lists the names of the beneficial holders of all
the outstanding shares of Parent. Such issued and outstanding shares have been
duly authorized and validly issued, and are fully paid and nonassessable. To the
knowledge of such counsel, neither Parent nor Citadel is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of Parent's Equity Securities, except as expressly provided in the
Stockholders Agreement. The
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issuance of the Series G Preferred Stock has been duly authorized by all
necessary action on the part of Parent. The Series G Preferred Stock, when
issued to the holders of the Company Common Stock on the Effective Date, will
be validly issued, fully paid and non-assessable, and will have the rights,
preferences, and privileges specified in the Amended and Restated Certificate
of Incorporation. The Series G Preferred Stock, when issued, will be free and
clear of all Liens and restrictions, other than Liens that might have been
created or suffered solely by the holders thereof, and restrictions on transfer
imposed by the Securities Act or applicable state securities laws.
Nothing contained in this Section 11.1 shall require an opinion by such counsel
with respect to FCC matters.
11.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Citadel contained herein shall be true and correct in
all material respects at and as of the Closing with the same effect as though
all such representations and warranties were made at and as of the Closing
(except for representations and warranties expressly and specifically relating
to a time or times other than the Closing, which shall be true and correct in
all material respects at and as of the time or times specified except for such
inaccuracies as do not, individually or in the aggregate, have a material
effect on the ability of Parent or Citadel to consummate the transactions
contemplated by this Agreement) and Parent and Citadel shall have delivered to
the Company and the Stockholders a certificate to that effect, dated the date
of the Closing, signed by the President of Parent and Citadel.
11.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against Parent, Citadel, the Company or the Stockholders relating to
the consummation of any of the transactions contemplated by this Agreement or
any action by any Governmental Authority shall have been issued.
11.4 OTHER CERTIFICATES. The Company and the Stockholders shall have
received certificates as to the good standing of Parent in the State of Nevada,
and of Citadel in the States of Nevada and Arkansas, each as of a date not more
than 20 days before the Closing, and such other certificates, instruments and
other documents, in form and substance satisfactory to the Company and the
Stockholders, as the Company and the Stockholders shall have reasonably
requested in connection with the transactions contemplated hereby.
11.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by Parent and Citadel of this Agreement and
the transactions contemplated hereby shall have been duly and validly taken by
Parent and Citadel, and Parent and Citadel shall have delivered to the Company
and the Stockholders certified copies of the resolutions of Parent's and
Citadel's board of directors authorizing the execution and performance of this
Agreement and authorizing or ratifying the acts of their officers and employees
in carrying out the terms and provisions of this Agreement.
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11.6 ACTS TO BE PERFORMED. Each of the covenants, acts and
undertakings of Parent and Citadel to be performed on or before the Closing
Date pursuant to the terms hereof shall have been duly performed.
11.7 FCC APPROVAL. The FCC Approval shall have been obtained.
11.8 OTHER TRANSACTIONS. The transactions contemplated by the Real
Estate Purchase Agreement, the CDB Broadcasting Agreement and the Snider
Broadcasting Agreement shall be consummated on the Closing Date.
SECTION 12
CONDITIONS TO PARENT'S AND CITADEL'S OBLIGATION TO CLOSE
The obligation of Parent and Citadel to consummate the transactions
contemplated by this Agreement at the Closing is subject to the following
conditions precedent, any or all of which may be waived by Parent and Citadel
in their sole discretion (other than those set forth in Section 12.9):
12.1 OPINION OF THE COMPANY'S AND THE STOCKHOLDERS' COUNSEL. Parent
and Citadel shall have received an opinion of counsel for the Company and the
Stockholders, dated the date of the Closing, in form and substance satisfactory
to Parent and Citadel, to the effect that:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Arkansas.
(b) The Company has full power and authority to own its assets and
properties and to conduct the Business and has all necessary approvals, permits,
licenses and authorizations to own its properties and to conduct the Business in
the manner and in the locations presently owned and conducted.
(c) This Agreement, together with all other documents and
instruments required to be executed or delivered by the Company and the
Stockholders in connection with the transactions contemplated by this Agreement,
each has been duly authorized, executed and delivered by the Company and the
Stockholders and constitutes a valid and legally binding obligation of the
Company and the Stockholders, enforceable against each of them in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other laws affecting generally the enforceability of creditors'
rights and by limitations on the availability of equitable remedies.
(d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates or will violate
any provision of the Articles of Incorporation or Bylaws of the Company or, to
the knowledge of such
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counsel, any law, rule, regulation, writ, judgment, injunction, decree,
determination, award or other order of any Governmental Authority, or, to the
knowledge of such counsel after due investigation, violates or will violate or
conflicts with or will conflict with or will result in any breach of any of the
terms of, or constitutes or will constitute a default under or results in or
will result in the termination of or the creation or imposition of any Lien
pursuant to the terms of, any contract, commitment, agreement, understanding or
arrangement of any kind to which the Company or any of the Stockholders is a
party or by which the Company, any of the Stockholders or any of the Assets is
bound and which is known to such counsel, all as set forth on COMPANY'S
DISCLOSURE SCHEDULE. Except for (1) the FCC Approval and (2) the consents
disclosed on COMPANY'S DISCLOSURE SCHEDULE, no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of the Company or the Stockholders, in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(e) To the knowledge of such counsel, except as disclosed on
COMPANY'S DISCLOSURE SCHEDULE, there are no claims, disputes, actions, suits or
proceedings pending or threatened against the Company or any of the Assets.
(f) Prior to the Merger, the authorized capital stock of the
Company consists of 1,000 shares of Company Common Stock, of which 100 shares
are issued and outstanding. To the knowledge of such counsel, COMPANY'S
DISCLOSURE SCHEDULE lists the names of the beneficial holders of all the
outstanding shares of Company Common Stock, and the number of shares held by
each of them. The issued and outstanding shares of Company Common Stock have
been duly authorized and validly issued, and are fully paid and nonassessable.
The Company does not have outstanding any stock or securities convertible or
exchangeable for any stock or securities.
Nothing contained in this Section 12.1 shall require an opinion of such counsel
with respect to FCC matters.
12.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Company contained herein shall be true and correct in all
material respects at and as of the Closing (except for representations and
warranties expressly and specifically relating to a time or times other than
the Closing, which shall be true and correct in all material respects at and as
of the time or times specified except for such inaccuracies as do not,
individually or in the aggregate, have a material effect on the Stations, the
Company's or any Stockholder's ability to consummate the transactions
contemplated by this Agreement, or the Business as a whole) with the same
effect as though all such representations and warranties were made at and as of
the Closing, and the Company and the Stockholders shall have complied with all
of their respective covenants contained herein; and the Company and the
Stockholders shall have delivered to Parent and Citadel a certificate to that
effect, dated the date of the Closing, signed by the President of the Company
and by the Stockholders.
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12.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against the Company, the Stockholders, Parent or Citadel relating to
the consummation of any of the transactions contemplated by this Agreement
shall have been issued.
12.4 OTHER CERTIFICATES. Parent and Citadel shall have received a
certificate as to the good standing of the Company as a corporation in Arkansas
as of a date not more than 20 days before the Closing, and such other
certificates, instruments and other documents customary for transactions of the
nature provided for in this Agreement, in form and substance reasonably
satisfactory to Parent and Citadel, as Parent and Citadel shall have reasonably
requested in connection with the transactions contemplated by this Agreement.
12.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by the Company of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by the
Company, and the Company shall have delivered to Parent and Citadel certified
copies of the resolutions of the Company's board of directors and of the
Stockholders authorizing the execution and performance of this Agreement and
authorizing or ratifying the acts of its officers and employees in carrying out
the terms and provisions of this Agreement.
12.6 ACTS TO PERFORMED. Each of the covenants, acts and undertakings
of the Company and the Stockholders to be performed on or before the Closing
Date pursuant to the terms of this Agreement shall have been duly performed.
12.7 UCC SEARCHES. The Company and the Stockholders shall have
delivered to Parent and Citadel Uniform Commercial Code judgment and lien
searches from the appropriate county and state agencies showing all Liens on
the Assets, which searches shall be conducted not more than 30 days prior to
the Closing. The Company and the Stockholders may cause such lien searches to
be prepared by a third party, in which case the Company and the Stockholders
shall not be responsible for any inaccuracies in such lien searches unless the
Company and the Stockholders have actual knowledge of their inaccuracy.
Notwithstanding the foregoing, the Company and the Stockholders shall remain
responsible for satisfying any Lien on the Assets even if such searches are
inaccurate.
12.8 FILINGS, CONSENTS, APPROVALS AND ESTOPPEL CERTIFICATES. All
filings, consents, approvals and estoppel certificates required by or
reasonably requested by Parent and Citadel pursuant to this Agreement, or
necessary to consummate the transactions contemplated by this Agreement, shall
have been obtained.
12.9 FCC APPROVAL. The FCC Approval shall have been obtained.
12.10 OTHER TRANSACTIONS. The transactions contemplated by the Real
Estate Purchase Agreement, the CDB Broadcasting Agreement and the Snider
Broadcasting Agreement shall be consummated on the Closing Date.
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12.11 DISSENTING SHARES. There shall not be any Dissenting Shares.
SECTION 13
INDEMNIFICATION
13.1 INDEMNIFICATION BY THE COMPANY AND THE STOCKHOLDERS. Subject to
the limitations and procedures set forth in this Section 13, the Company and
the Stockholders shall jointly and severally indemnify and hold harmless Parent
and Citadel from and against all losses, claims, demands, damages, liabilities,
obligations, costs and/or expenses, including, without limitation, reasonable
fees and disbursements of counsel (hereinafter referred to collectively as
"DAMAGES"), which are sustained or incurred by Parent or Citadel, to the extent
that such Damages are sustained or incurred by reason of (i) the breach of any
of the obligations or covenants of the Company or the Stockholders in this
Agreement or (ii) the breach of any of the representations or warranties made
by the Company or the Stockholders in this Agreement. The foregoing
notwithstanding, from and after the Closing Date, the Stockholders shall be
solely responsible for any indemnification due under this Section 13.1 and
shall have no right to seek contribution or indemnification from the Company.
13.2 INDEMNIFICATION BY PARENT AND CITADEL. Subject to the limitations
and procedures set forth in this Section 13, Parent and Citadel shall jointly
and severally indemnify and hold harmless the Stockholders from and against any
and all Damages sustained or incurred by Stockholders, to the extent such
Damages are sustained or incurred by the Stockholders by reason of (i) the
breach of any of the obligations or covenants of Parent or Citadel in this
Agreement or (ii) the breach of any of the representations or warranties made
by Parent or Citadel in this Agreement.
13.3 PROCEDURE FOR INDEMNIFICATION. In the event that any party to
this Agreement shall incur any Damages in respect of which indemnity may be
sought by such party pursuant to this Section 13 or any other provision of this
Agreement, the party indemnified hereunder (the "INDEMNITEE") shall notify the
party providing indemnification (the "INDEMNITOR") promptly. In the case of
third party claims, such notice shall in any event be given within 10 days of
the filing or assertion of any claim against the Indemnitee stating the nature
and basis of such claim; provided, however, that any delay or failure to notify
any Indemnitor of any claim shall not relieve it from any liability except to
the extent that the Indemnitor demonstrates that the defense of such action has
been materially prejudiced by such delay or failure to notify. In the case of
third party claims, the Indemnitor shall, within 10 days of receipt of notice
of such claim, notify the Indemnitee of its intention to assume the defense of
such claim. If the Indemnitor assumes the defense of the claim, the Indemnitor
shall have the right and obligation (a) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnitee, (b) to take all other required steps or proceedings to settle or
defend any such claims, and (c) to employ counsel to contest any such claim or
liability in the name of the Indemnitee or otherwise. If the Indemnitor shall
not assume the
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defense of any such claim or litigation resulting therefrom, the Indemnitee may
defend against any such claim or litigation in such manner as it may deem
appropriate and the Indemnitee may settle such claim or litigation on such
terms as it may deem appropriate, and assert against the Indemnitor any rights
or claims to which the Indemnitee is entitled. Payment of Damages shall be made
within 10 days of a final determination of a claim.
A final determination of a disputed claim shall be (a) a judgment of
any court determining the validity of disputed claim, if no appeal is pending
from such judgment or if the time to appeal therefrom has elapsed, (b) an award
of any arbitration determining the validity of such disputed claim, if there is
not pending any motion to set aside such award or if the time within to move to
set such award aside has elapsed, (c) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys,
(d) a written acknowledgment of the Indemnitor that it no longer disputes the
validity of such claim, or (e) such other evidence of final determination of a
disputed claim as shall be acceptable to the parties.
13.4 SURVIVAL.
(a) COMPANY AND STOCKHOLDERS. Each of the representations and
warranties made by the Company and the Stockholders in this Agreement shall
survive for a period of 24 months after the Closing Date, notwithstanding any
investigation at any time made by or on behalf of Parent or Citadel, and upon
the expiration of such 24-month period such representations and warranties shall
expire except as follows: (i) the representations and warranties of the Company
contained in Sections 3.7 and 3.12 shall expire at the time the period of
limitations expires for the assessment by the taxing authority of additional
Taxes with respect to which the representations and warranties relate; (ii) the
representations and warranties of the Company contained in Sections 3.19 and
3.20 shall expire at the time the latest period of limitations expires for the
enforcement by an applicable Governmental Authority of any remedy with respect
to which the particular representation or warranty relates; and (iii) the
representations and warranties of the Company contained in Sections 3.1, 3.3,
3.4 and 3.9(a) shall not expire but shall continue indefinitely. No claim for
the recovery of Damages may be asserted by Parent or Citadel against the
Company, the Stockholders or their successors in interest after such
representations and warranties shall thus expire; provided, however, that claims
for Damages first asserted in writing within the applicable period shall not
thereafter be barred.
(b) PARENT AND CITADEL. Each of the representations and warranties
made by Parent and Citadel in this Agreement shall survive for a period of 24
months after the Closing Date, notwithstanding any investigation at any time
made by or on behalf of the Company or the Stockholders, and upon the expiration
of such 24-month period such representations and warranties shall expire except
as follows: (i) the representations and warranties of Parent and Citadel
contained in Section 4.6 shall expire at the time the period of limitations
expires for the assessment by the taxing authority of additional Taxes with
respect to which the representations and warranties relate; (ii) the
representations and warranties of Parent and
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Citadel contained in Section 4.8 shall expire at the time the latest period of
limitations expires for the enforcement by an applicable Governmental Authority
of any remedy with respect to which the particular representation or warranty
relates; and (iii) the representations and warranties of Parent and Citadel
contained in Sections 4.1, 4.2 and 4.3 shall not expire but shall continue
indefinitely. No claim for the recovery of Damages may be asserted by the
Company or the Stockholders against Parent, Citadel or their successors in
interest after such representations and warranties shall thus expire; provided,
however, that claims for Damages first asserted in writing within the
applicable period shall not thereafter be barred.
13.5 LIMITATION OF COMPANY'S AND STOCKHOLDERS' LIABILITY.
(a) THRESHOLD. Parent and Citadel shall not be entitled to recover
Damages pursuant to clause (ii) of Section 13.1 (other than Damages arising by
reason of a breach of the representations and warranties made in Sections 3.1,
3.3, 3.4, 3.7 and 3.9(a)) until the aggregate of all such Damages suffered by
Parent and Citadel exceeds $25,000 (the "THRESHOLD"); provided, however, that
once such aggregate exceeds the Threshold, Parent and Citadel may recover all
such Damages suffered since the Closing Date.
(b) CEILING. Parent and Citadel shall not be entitled to recover
Damages pursuant to clause (ii) of Section 13.1 (other than Damages arising by
reason of a breach of the representations and warranties made in Sections 3.7,
3.9(a), 3.12, 3.19 and 3.20 ("CITADEL'S CAP EXEMPT DAMAGES")) in excess of the
Merger Consideration. No maximum limitation shall apply, however, to the right
of Parent and Citadel to recover Citadel's Cap Exempt Damages or Damages
pursuant to clause (i) of Section 13.1.
(c) EXCEPTIONS. Paragraphs (a) and (b) above shall not apply with
respect to any claim for Damages relating to any intentional or fraudulent
breach of a representation or warranty by the Company or the Stockholders, nor
shall there be any survival limitation for any such claim.
13.6 LIMITATION OF PARENT'S AND CITADEL'S LIABILITY.
(a) THRESHOLD. The Company and the Stockholders shall not be
entitled to recover Damages pursuant to clause (ii) of Section 13.2 (other than
as a result of a breach of the representations and warranties made in Sections
4.1, 4.2, 4.3 and 4.6) until the aggregate of all such Damages suffered by the
Company and the Stockholders exceeds the Threshold; provided, however, that once
such aggregate exceeds the Threshold, the Company and the Stockholders may
recover all such Damages suffered since the Closing Date.
(b) CEILING. The Company and the Stockholders shall not be
entitled to recover Damages pursuant to clause (ii) of Section 13.2 (other than
Damages arising by reason of a breach of the representations and warranties made
in Sections 4.2, 4.6 and 4.8 ("STOCKHOLDERS' CAP EXEMPT DAMAGES")) in excess of
the Merger Consideration. No maximum
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limitation shall apply, however, to the right of the Company and the
Stockholders to recover Stockholders' Cap Exempt Damages or Damages pursuant to
clause (i) of Section 13.2.
(c) EXCEPTIONS. Paragraphs (a) and (b) above shall not apply with
respect to any claim for Damages relating to any intentional or fraudulent
breach of a representation or warranty by Parent or Citadel, nor shall there be
any survival limitation for any such claim.
SECTION 14
TERMINATION OF AGREEMENT; ADDITIONAL REMEDIES
14.1 MANNER. This Agreement and the transactions contemplated hereby
may be terminated prior to completion of the Closing:
(a) by mutual written consent of Citadel and the Company;
(b) by either Citadel or the Company upon providing written notice
to the other party at any time after December 31, 1997 if the FCC Approval has
not been granted by the FCC, but only if the party providing such notice is not
then in material breach of this Agreement;
(c) by Citadel, upon providing written notice to the Company, if
as of the time set for Closing any of the conditions in Section 12 of this
Agreement (except Section 12.9) has not been satisfied or waived by Citadel in
writing, provided Citadel is not then in material breach of this Agreement;
(d) by the Company, upon providing written notice to Citadel, if
as of the time set for Closing any of the conditions in Section 11 of this
Agreement (except Section 11.7) has not been satisfied or waived by the Company
in writing, provided the Company is not then in material breach of this
Agreement;
(e) by the Company, upon providing written notice to Citadel, if
Citadel fails to consummate the transactions contemplated hereunder after all
conditions in Section 12 of the Agreement have been satisfied, provided the
Company is not then in material breach of this Agreement;
(f) by Citadel, upon providing written notice to the Company, if
the Company fails to consummate the transactions contemplated hereunder after
all conditions in Section 11 of this Agreement have been satisfied, provided
Citadel is not then in material breach of this Agreement;
(g) by either party upon denial by the FCC of the FCC Application;
and
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(h) by either party if any court of competent jurisdiction in the
United States or any other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other actions shall have become final and
non-appealable.
The foregoing notwithstanding, in the event any party hereto elects to
terminate this Agreement in accordance with paragraphs (a) through (h) above,
then any party hereto shall have the right to terminate, or cause its Affiliate
to terminate, the Real Estate Purchase Agreement, the Snider Broadcasting
Agreement and the CDB Broadcasting Agreement.
14.2 ADDITIONAL REMEDIES.
(a) In the event of the termination of this Agreement by the
Company (i) pursuant to Section 14.1(d) or 14.1(e) (any such event being a "DRAW
CONDITION"), the Company shall be entitled to draw upon and receive the proceeds
of the Letter of Credit, but shall not retain any rights to recover any actual
damages it suffers as a result of such termination and the breach relating to
such damages. In the event of any other termination of this Agreement pursuant
to any other provision of Section 14.1, Citadel shall be entitled to a return
of, and the Company shall return to Citadel, the original Letter of Credit and,
in that event, the Company and the Stockholders will no longer have any
liability under this Agreement.
(b) The parties recognize and agree that Parent and Citadel have
relied on this Agreement and expended considerable effort and resources related
to the transactions contemplated hereunder, that the rights and benefits
conferred upon Parent and Citadel herein are unique, and that damages may not be
adequate to compensate Parent and Citadel in the event the Company and the
Stockholders improperly refuse to consummate the transactions contemplated
hereunder. The parties therefore agree that Parent and Citadel shall be
entitled, at their option and in lieu of terminating this Agreement pursuant to
Section 14.1, to have this Agreement specifically enforced by a court of
competent jurisdiction in addition all other remedies available at law or in
equity; provided, however, that Parent and Citadel may not specifically enforce
this Agreement if Citadel has previously terminated this Agreement and received
the original Letter of Credit.
SECTION 15
GENERAL
15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each representation
and warranty herein contained shall survive the Closing for the periods
described in Section 13.4, notwithstanding any investigation at any time made
by or on behalf of any party to this Agreement.
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15.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the laws of conflicts, of the
State of Arkansas.
15.3 NOTICES. Any notices or other communications required or
permitted under this Agreement shall be delivered personally or sent by
registered or certified mail, postage prepaid, delivered by overnight delivery
or sent by facsimile, addressed as follows:
To Parent or Citadel: Citadel Broadcasting Company
1015 Eastman Drive
Bigfork, Montana 59911
Attn: Lawrence R. Wilson
Fax: (406) 837-5373
With copy to: Citadel Broadcasting Company
140 South Ash Avenue
Tempe, Arizona 85281
Attn: Donna L. Heffner
Fax: (602) 731-5229
With copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street
42nd Floor
Pittsburgh, Pennsylvania 15219
Attn: Bryan D. Rosenberger, Esq.
Fax: (412) 566-6099
To the Company or Snider Corporation
the Stockholders: 4021 East Eighth Street
P.O. Box 251920
Little Rock, Arkansas 72225-1920
Attn: Ted L. Snider, Sr.
Fax: (501) 661-7506
With copy to: Friday, Eldredge & Clark
2000 First Commercial Building
400 West Capitol Avenue
Little Rock, Arkansas 72201
Attn: Price C. Gardner, Esq.
Fax: (501) 376-2147
or such other addresses as shall be similarly furnished in writing by either
party. Such notices or communications shall be deemed to have been given as of
the date of personal delivery, or if mailed, the date the return receipt is
signed or the date on which delivery is refused, or if delivered by overnight
delivery or facsimile, on the date of receipt.
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<PAGE> 45
15.4 ENTIRE AGREEMENT. This instrument supersedes all prior
communications, understandings and agreements of or between the parties with
respect to the subject matter of this Agreement and contains the entire
agreement between the parties with respect to the transactions contemplated in
this Agreement. Except as otherwise set forth in this Agreement, there are no
other representations, warranties or covenants of any party hereto with respect
to the subject matter of this Agreement.
15.5 HEADINGS. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
15.6 SCHEDULES, EXHIBITS. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
15.7 EXPENSES. Each party shall bear its own costs and expenses
incurred by it in connection with the transactions pursuant to this Agreement.
15.8 AMENDMENT. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed on behalf of all of
the parties or, in the case of a waiver, by the party waiving compliance.
15.9 WAIVER. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce that provision or any other provision of this Agreement at any
time thereafter.
15.10 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by any party without the prior
written consent, in its sole discretion, of each other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, and no other person
shall have any right, benefit or obligation under this Agreement.
15.11 PRIOR CONTROL. Until the Closing, the Company shall maintain
control of each Station.
15.12 ATTORNEYS' FEES. In the event of any action arising out of this
Agreement, the prevailing party shall be entitled to recover its costs,
expenses and reasonable attorney's fees incurred in connection with the dispute
from the other party.
15.13 COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in
one or more counterparts, each of which together shall constitute a single
instrument. Signatures on this Agreement transmitted by facsimile shall be
deemed to be original signatures for all purposes of this Agreement.
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<PAGE> 46
15.14 DISPUTE RESOLUTION. Except as provided below, any dispute
arising out of or relating to this Agreement or the breach, termination or
validity hereof shall be finally settled by arbitration conducted expeditiously
in accordance with the CPR Rules. The Center for Public Resources shall appoint
a neutral advisor from its National CPR Panel. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The place of arbitration shall be Little Rock,
Arkansas.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate; provided, however,
such proceedings shall be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within 45 days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three hours; such hearings
to take place on one or two days at a maximum; and
(d) decision to be rendered not more than 10 days following such
hearing.
The provisions of this Section 15.14 shall not apply with regard to any
equitable remedies to which a party may be entitled under this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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<PAGE> 47
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date above first written.
SNIDER CORPORATION
By: /s/ Ted L. Snider, Sr.
-----------------------------
Ted L. Snider, Sr., Chairman
/s/ Ted L. Snider, Sr.
--------------------------------
Ted L. Snider, Sr.
/s/ Jane J. Snider
--------------------------------
Jane J. Snider
CITADEL COMMUNICATIONS CORPORATION
By: /s/ Lawrence R. Wilson
-----------------------------
Its: President
----------------------------
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
-----------------------------
Its: President
----------------------------
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<PAGE> 48
INDEX OF SCHEDULES AND EXHIBITS
Schedule 1 - Citadel's Disclosure Schedule
Schedule 2 - Company Asset Schedule
Schedule 3 - Company's Disclosure Schedule
Exhibit A - Agreement Not to Compete
Exhibit B - Amended and Restated Certificate of Incorporation
Exhibit C - Amendment to Registration Rights Agreement
Exhibit D - Amendment to Securities Purchase and Exchange Agreement
Exhibit E - Amendment to Stockholders Agreement
Exhibit F - Amendment to Voting Agreement
Exhibit G - Letter of Credit
Exhibit H - Local Marketing Agreement
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules or exhibits to the Securities Exchange
Commission upon request.]
<PAGE> 1
Exhibit 2.6
MERGER AGREEMENT
AMONG
SNIDER BROADCASTING CORPORATION,
TED L. SNIDER, JR., CALVIN G. ARNOLD,
CITADEL COMMUNICATIONS CORPORATION
AND
CITADEL BROADCASTING COMPANY
JUNE 2, 1997
<PAGE> 2
MERGER AGREEMENT
THIS MERGER AGREEMENT ("AGREEMENT"), made as of the 2nd day of June,
1997, among SNIDER BROADCASTING CORPORATION, an Arkansas corporation (the
"COMPANY"); TED L. SNIDER, JR. and CALVIN G. ARNOLD (collectively, the
"STOCKHOLDERS"); CITADEL COMMUNICATIONS CORPORATION, a Nevada corporation
("PARENT"); and CITADEL BROADCASTING COMPANY, a Nevada corporation ("CITADEL").
RECITALS:
A. The Company, through its wholly-owned subsidiaries, is the licensee
of and owns and operates radio station KIPR-FM licensed to Pine Bluff, Arkansas
(the "STATION").
B. The Stockholders own all of the issued and outstanding shares of
capital stock of the Company.
C. Citadel is a wholly-owned subsidiary of Parent.
D. The parties desire that the Company be merged with and into Citadel
(with Citadel surviving such merger) pursuant to the applicable laws of the
States of Arkansas and Nevada, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall have the
meanings assigned to them below:
"ACCOUNTS RECEIVABLE" means the accounts receivable of the SBC
Companies, exclusive of Trade Receivables, existing as of the Closing.
"ACCOUNTS PAYABLE" means the Obligations, described in clause (b) of
the definition thereof, of the SBC Companies, exclusive of Trade Liabilities,
existing as of the Closing.
"ACCRUED TAXES" means all Taxes attributable to a Person or its
income, operations or properties accruing up to and including the Closing.
"ACT" means the Communications Act of 1934, as amended.
"AFFILIATE" of any Person means any other Person (a) that directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, the first Person, or (b) any interests of which are owned, in
whole or in part, directly or indirectly, by the first Person.
<PAGE> 3
For purposes of this definition, the term "control" (including the correlative
meanings of the terms "controls," "controlled by," and "under direct or
indirect control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of the Person, whether through the
ownership of voting securities or by contract or otherwise.
"AGREEMENT NOT TO COMPETE" means the Agreement Not to Compete to be
executed and delivered by Citadel and each of the Stockholders at the Closing,
substantially in the form attached to this Agreement as EXHIBIT A.
"AMENDED AND RESTATED CERTIFICATE OF INCORPORATION" means the Seventh
Amended and Restated Certificate of Incorporation of Parent, in the form
attached to this Agreement as EXHIBIT B.
"AMENDMENT TO REGISTRATION RIGHTS AGREEMENT" means the Amendment to
the Third Amended and Restated Registration Rights Agreement dated as of June
28, 1996, as amended, among Parent, the Investors and Wilson to be executed and
delivered at the Closing, substantially in the form attached to this Agreement
as EXHIBIT C.
"AMENDMENT TO SECURITIES PURCHASE AND EXCHANGE AGREEMENT" means the
Amendment to Securities Purchase and Exchange Agreement to be executed and
delivered at the Closing among the holders of the Series G Preferred Stock as
of the Closing Date and each of the original parties to the Securities Purchase
and Exchange Agreement dated as of June 28, 1996, as amended, among Parent,
Citadel, ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment Partners,
L.P., Baker, Fentress & Company, Oppenheimer & Co., Inc., Bank of America
Illinois, and certain other parties (the "SECURITIES PURCHASE AND EXCHANGE
AGREEMENT"), substantially in the form attached to this Agreement as EXHIBIT D.
"AMENDMENT TO STOCKHOLDERS AGREEMENT" means the Amendment to
Stockholders Agreement to be executed and delivered at the Closing among the
holders of the Series G Preferred Stock as of the Closing Date and each of the
original parties to the Second Amended and Restated Stockholders Agreement
dated as of June 28, 1996, as amended, among Parent, the Investors, Wilson and
certain other parties (the "STOCKHOLDERS AGREEMENT"), substantially in the form
attached to this Agreement as EXHIBIT E.
"AMENDMENT TO VOTING AGREEMENT" means the Amendment to Voting
Agreement to be executed and delivered at the Closing among the holders of the
Series G Preferred Stock as of the Closing Date and each of the original
parties to the Third Amended and Restated Voting Agreement dated as of March
17, 1997 among Parent, the Investors and Wilson, substantially in the form
attached to this Agreement as EXHIBIT F.
"ARTICLES OF MERGER" means the Articles of Merger to be executed and
delivered by Citadel and the Company at the Closing and filed with the
appropriate authorities in the States
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<PAGE> 4
of Nevada and Arkansas, in form and substance mutually agreed upon by Citadel
and the Company.
"ASSETS" means all of the property of every kind or nature used in the
operation of the Station, including but not limited to the Real Property, the
Real Property Leases, the Intellectual Property, the Personal Property, the
Trade Receivables, the Accounts Receivable and the Cash (other than the
Excluded Assets), and all books, records and accounts relating to the operation
of the Station.
"BROKER" means NationsBanc Capital Markets, Inc.
"BUSINESS" means the business in which the SBC Companies are now
engaged.
"CASH" means the cash and cash equivalents of the SBC Companies
existing as of the Closing.
"CDB BROADCASTING AGREEMENT" means that certain Asset Purchase
Agreement dated as of the date hereof among CDB Broadcasting Corporation, CDB
License Corporation and Citadel.
"CITADEL PERMITS" has the meaning specified in Section 4.8.
"CITADEL STATIONS" has the meaning specified in Section 4.5.
"CITADEL SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified
in Section 8.7.
"CITADEL'S CAP EXEMPT DAMAGES" has the meaning specified in Section
13.5(b).
"CITADEL'S DISCLOSURE SCHEDULE" means SCHEDULE 1 to this Agreement.
"CLOSING" means the consummation of the transactions contemplated in
this Agreement in accordance with the provisions of Section 10.
"CLOSING CERTIFICATE" means the certificate of the President of the
Company and the Stockholders dated the Closing Date and delivered to Parent and
Citadel, which sets forth the Debt Payoff Amount and a listing of the Excluded
Assets.
"CLOSING DATE" has the meaning specified in Section 10.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY ASSET SCHEDULE" means SCHEDULE 2 to this Agreement.
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<PAGE> 5
"COMPANY COMMON STOCK" means the common stock, par value $1.00 per
share, of the Company.
"COMPANY SHAREHOLDERS AGREEMENT" means the Shareholders Agreement
dated as of October 28, 1986 among the Company and the Stockholders.
"COMPANY SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified
in Section 5.9.
"COMPANY'S DISCLOSURE SCHEDULE" means SCHEDULE 3 to this Agreement.
"CONTRACTS" means all (a) contracts, agreements, licenses, leases,
arrangements and other documents to which any of the SBC Companies is a party
or by which any of the SBC Companies or any of the assets of the SBC Companies
are bound (including, in the case of loan agreements, a description of the
amounts of any outstanding borrowings thereunder and the collateral, if any,
for such borrowings); (b) uncompleted orders for the purchase by any of the SBC
Companies of materials, supplies, equipment and services for the requirements
of the Station existing as of the date hereof and with respect to which the
remaining obligation of any of the SBC Companies is in excess of $2,500; and
(c) contingent contractual obligations and liabilities of any of the SBC
Companies known to the Company existing as of the date hereof.
"CORNERSTONE" means Cornerstone Broadcasting Corporation, an Arkansas
corporation and a wholly-owned subsidiary of the Company.
"CORNERSTONE MERGER" has the meaning specified in Section 9.7.
"CPR RULES" means the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes.
"DAMAGES" has the meaning specified in Section 13.1.
"DEBT PAYOFF AMOUNT" means the amount of Indebtedness for Borrowed
Money of the SBC Companies as of the Closing Date, as certified by the
President of the Company and the Stockholders in the Debt Certificate.
"DISSENTING SHARES" has the meaning specified in Section 2.4(b).
"DRAW CONDITION" has the meaning specified in Section 14.2(a).
"EFFECTIVE DATE" means the date upon which articles of merger, or an
equivalent document, reflecting the Merger have been filed with the appropriate
authorities of the States of Arkansas and Nevada pursuant to Section 2. The
parties intend that the Effective Date be on the Closing Date.
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<PAGE> 6
"ENVIRONMENTAL CLAIMS" means and includes, without limitation: (a)
claims, demands, suits, causes of action for personal injury or lost use of
property, or consequential damages, to the extent any of the foregoing arise
directly or indirectly out of Environmental Conditions; (b) actual or
threatened damages to natural resources; (c) claims for the recovery of
response costs, or administrative or judicial orders directing the performance
of investigations, response or remedial actions under CERCLA, RCRA or other
Environmental Laws; (d) a requirement to implement "corrective action" pursuant
to any order or permit issued pursuant to RCRA; (e) claims for restitution,
contribution or equitable indemnity from third parties or any governmental
agency; (f) fines, penalties or Liens against property; (g) claims for
injunctive relief or other orders or notices of violation from Governmental
Authorities; and (h) with regard to any present or former employees, exposure
to or injury from Environmental Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping, or threatened release of Hazardous
Materials by a Person. With respect to claims by employees, Environmental
Conditions also includes the exposure of Persons to Hazardous Materials within
work places on any real estate owned or occupied by a Person.
"ENVIRONMENTAL LAWS" has the meaning specified in the definition of
Hazardous Materials.
"ENVIRONMENTAL NONCOMPLIANCE" means, but is not limited to: (a) the
release or threatened release as a result of the activities of a Person of any
Hazardous Materials into the environment, any storm drain, sewer, septic system
or publicly owned treatment works, in violation of any effluent emission
limitations, standards or other criteria or guidelines established by any
federal, state or local law, regulation, rule, ordinance, plan or order; and
(b) any facility operations, procedures, designs, etc. which do not conform to
the statutory or regulatory requirements of the CAA, the CWA, the TSCA, the
RCRA or any other Environmental Laws intended to protect public health, welfare
and the environment.
"EQUITY SECURITIES" has the meaning ascribed thereto in the Securities
Purchase and Exchange Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" means the excess, if any, of (a) the Cash and the
Accounts Receivable over (b) the Accounts Payable.
"FCC" means the Federal Communications Commission.
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<PAGE> 7
"FCC APPLICATION" has the meaning specified in Section 9.1.
"FCC APPROVAL" has the meaning specified in Section 9.1.
"FCC LICENSES" means the main station license for the Station,
together with each of the other consents, rights, licenses, permits and other
authorizations issued by the FCC and held by any of the SBC Companies in
connection with, or pertaining to, the conduct of the business and operation of
the Station, together with any renewals and extensions thereof and any
applications therefor pending on the Closing Date, and any and all applications
made by any of the SBC Companies for such consents, rights, licenses, permits
and other authorizations.
"FINAL ORDER" means a written action or order issued by the FCC or its
staff setting forth the FCC Approval (or a denial thereof), (a) which action or
order has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which action or order (i) no requests have
been filed and are pending for administrative or judicial review, rehearing,
reconsideration, appeal or stay, and the time period for filing any such
requests and for the FCC to set aside the action on its own motion under the
provisions of the Act or the rules, regulations and policies of the FCC has
expired, or (ii) in the event of review, reconsideration or appeal, the time
for further review, reconsideration or appeal has expired.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis during
the periods involved.
"GOVERNMENTAL AUTHORITY" means any government, whether federal, state
or local, or any other political subdivision thereof, or any agency, tribunal
or instrumentality of any such governmental or political subdivision, or any
other Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS MATERIALS" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases including but not limited to substances defined as "PCBs,"
"hazardous wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials," "petroleum," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C.
Section 9601 ET SEQ.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C.
Section 2601 ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 9601; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C.Section 300f ET SEQ.; the Clean Air
Act ("CAA"), 42 U.S.C. Section 7401 ET SEQ.; or any similar state law; and in
the plans, rules, regulations or ordinances adopted, or other criteria and
guidelines promulgated pursuant to the preceding laws or other similar laws,
regulations, rules or ordinances now in effect (collectively, the "ENVIRONMENTAL
LAWS"); and any other substances, constituents or wastes subject to
environmental regulations under any applicable federal, state or local law,
regulation or ordinance.
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<PAGE> 8
"INDEBTEDNESS FOR BORROWED MONEY" means (a) all indebtedness of a
Person in respect of money borrowed (including, without limitation,
indebtedness which represents the unpaid amount of the purchase price of any
property), (b) all indebtedness of a Person evidenced by a promissory note,
bond or similar written obligation to pay money, (c) all indebtedness
guaranteed by a Person or for which a Person is contingently liable, including,
without limitation, guaranties in the form of an agreement to repurchase or
reimburse, and any commitment by which any such Person assures a creditor
against loss, including contingent reimbursement obligations with respect to
letters of credit, and (d) all monetary obligations of a Person under any lease
or similar arrangement, which obligations would be classified and accounted for
as capital obligations on a balance sheet of such Person under GAAP.
"INDEMNITEE" has the meaning specified in Section 13.3.
"INDEMNITOR" has the meaning specified in Section 13.3.
"INTELLECTUAL PROPERTY" means the call letters of the Station and all
of the copyrights, trademarks, trade names and other similar rights, including
applications and registrations therefor, used in connection with the past or
present operation of the Station in which any of the SBC Companies has any
right, title or interest, including, without limitation, those items listed on
the COMPANY ASSET SCHEDULE.
"INVESTORS" shall have the meaning ascribed thereto in the Securities
Purchase and Exchange Agreement.
"LETTER OF CREDIT" has the meaning specified in Section 2.6.
"LICENSE SUB" means SBC License Corporation, an Arkansas corporation
and a wholly-owned subsidiary of Cornerstone.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, claim, easement, transfer restriction, lien (statutory or
otherwise) or security interest of any kind or nature whatsoever.
"LOCAL MARKETING AGREEMENT" has the meaning specified in Section 9.2.
"MERGER" has the meaning specified in Section 2.1.
"MERGER CONSIDERATION" has the meaning specified in Section 2.4(a).
"NET LIABILITIES" means the excess, if any, of (a) the Account Payable
over (b) the Cash and the Accounts Receivable.
"OBLIGATIONS" means, without duplication, all (a) Indebtedness for
Borrowed Money, (b) Accrued Taxes, accounts payable, accrued liabilities and
all other liabilities and obligations of
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<PAGE> 9
the type normally required by GAAP to be reflected on a balance sheet, (c)
commitments by which a Person assures a creditor against loss, including the
face amount of all letters of credit and, without duplication, all drafts drawn
thereunder, (d) obligations guaranteed in any manner by a Person, (e)
obligations under capitalized leases in respect of which obligations a Person
is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations such Person assures a creditor against loss, (f)
obligations under acceptance facilities, (g) obligations secured by a Lien on
property of a Person, (h) obligations under interest rate or currency exchange
or swap agreements, (i) unsatisfied obligations for "withdrawal liability" to a
"multiemployer plan" as such terms are defined under ERISA, (j) indebtedness
issued or obligation incurred in substitution or exchange for any Obligations,
(k) costs or expenses incurred by a Person of any nature, whether or not
currently payable, and (l) other liabilities or obligations of a Person, in
each of the foregoing instances whether absolute or contingent, known or
unknown, and whether or not normally required by GAAP to be reflected on a
balance sheet.
"PERMITS" means all FCC Licenses applicable to the Station, and all
other permits, licenses, approvals, franchises, notices and authorizations
applicable to the Station issued by any Governmental Authorities.
"PERSON" means an individual, corporation, partnership, joint venture,
joint stock company, association, trust, business trust, unincorporated
organization, Governmental Authority, or any other entity of whatever nature.
"PERSONAL PROPERTY" means all of the tangible personal property,
improvements and fixtures of every kind or nature used in the operation of the
Station in the ordinary course of business, including, without limitation, the
personal property described on the COMPANY ASSET SCHEDULE.
"PLAN OF MERGER" means the Plan of Merger to be executed and delivered
by Citadel and the Company at the Closing and filed with the appropriate
authorities in the States of Nevada and Arkansas, in form and substance
mutually agreed upon by Citadel and the Company.
"REAL ESTATE PURCHASE AGREEMENT" means that certain Agreement of Sale
dated as of the date hereof among Ted L. Snider, Sr., Jane J. Snider and
Citadel.
"REAL PROPERTY" means all of the right, title and interest of any of
the SBC Companies in and to any real property used in the operation of the
Station, including but not limited to the real property described on the
COMPANY ASSET SCHEDULE.
"REAL PROPERTY LEASES" means the leasehold interests pursuant to the
real property leases described on the COMPANY ASSET SCHEDULE.
"SBC COMPANIES" means, collectively, the Company, Cornerstone and
License Sub.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES G PREFERRED STOCK" means the Series G Convertible Preferred
Stock, par value $.001 per share, of Parent.
"SNIDER CORPORATION AGREEMENT" means that certain Merger Agreement
dated as of the date hereof among Snider Corporation, the stockholders of
Snider Corporation, Parent and Citadel.
"STATION" has the meaning set forth in the recitals to this Agreement.
"STOCKHOLDERS' CAP EXEMPT DAMAGES" has the meaning specified in Section
13.6(b).
"SURVIVING CORPORATION" has the meaning specified in Section 2.1.
"TAXES" means all taxes, charges, fees, levies, or other assessments,
including income, gross receipts, excise, property, sales, transfer, license,
payroll, and franchise taxes, any taxes required by law to be withheld, and any
taxes payable as a result of the consummation of the transactions contemplated
by this Agreement, which taxes are imposed by any Governmental Authority; and
such term shall include any interest, penalties, or additions to tax
attributable to such assessments.
"THRESHOLD" has the meaning specified in Section 13.5(a).
"TRADE AGREEMENTS" means and includes those agreements entered into by
any SBC Company for the sale of advertising time on the Station for
consideration other than cash, which agreements are in effect as of the
Closing.
"TRADE LIABILITIES" means the fair market value of the SBC Companies'
liability as of the Closing for unperformed time under the Trade Agreements.
"TRADE RECEIVABLES" means the fair market value of goods and services
to be received by the SBC Companies after the Closing under the Trade
Agreements.
"WILSON" means Lawrence R. Wilson.
SECTION 2
MERGER
2.1 THE MERGER. On the Closing Date, in accordance with this Agreement
and Arkansas and Nevada law, the Company shall be merged with and into Citadel
(the "MERGER"), the separate existence of the Company shall cease, and Citadel
shall continue as the surviving
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corporation under the corporate name it possesses immediately prior to the
Closing Date. Citadel hereinafter may sometimes be referred to as the
"SURVIVING CORPORATION."
2.2 EFFECT OF THE MERGER. On the Closing Date, the effect of the
Merger shall be that (i) the Surviving Corporation shall possess all the
rights, privileges and franchises possessed by each of the Company and Citadel,
(ii) all of the property and assets of whatsoever kind or description of each
of the Company and Citadel, and all debts due on whatever account to any of
them, including subscriptions for shares or other choses in action belonging to
any of them, shall be taken and be deemed to be transferred to, and vested in,
the Surviving Corporation without further act or deed, and (iii) the Surviving
Corporation shall be responsible for all of the liabilities and obligations of
each of the Company and Citadel, as provided by applicable law, in the same
manner as if the Surviving Corporation had itself incurred such liabilities or
obligations; but the liabilities of the Company and Citadel, or of their
shareholders, directors or officers, shall not be affected by, nor shall the
rights of the creditors thereof or of any persons dealing with such
corporations be impaired by, the Merger, and any claim existing, or action or
proceeding pending, by or against either of the Company or Citadel may be
prosecuted to judgment as if the Merger had not taken place, or the Surviving
Corporation may be proceeded against, or substituted, in place of the Company
or Citadel, as the case may be.
2.3 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS. The
Articles of Incorporation of Citadel, as in effect immediately prior to the
Closing Date, shall be the Articles of Incorporation of the Surviving
Corporation after the Closing Date until thereafter amended as provided therein
and under Nevada law. The Bylaws of Citadel, as in effect immediately prior to
the Closing Date, shall be the Bylaws of the Surviving Corporation after the
Closing Date until thereafter amended as provided therein and under Nevada law.
The directors and officers of Citadel immediately prior to the Closing Date
shall be the initial directors and officers of the Surviving Corporation after
the Closing Date until their successors are elected and qualified.
2.4 MERGER CONSIDERATION; CONVERSION OF SECURITIES. On the Closing
Date, by virtue of the Merger and without any action on the part of Parent,
Citadel, the Company or the holder of any of the securities of such
corporations:
(a) MERGER CONSIDERATION. Each share of Company Common Stock
issued and outstanding immediately prior to the Closing Date shall be converted
automatically into (i) the number of shares of Series G Preferred Stock
determined pursuant to Section 2.4(b) and (ii) an amount of cash equal to (A)
the Debt Payoff Amount minus the Net Liabilities, if any, divided by (B) the
number of issued and outstanding shares of Company Common Stock on the Closing
Date (collectively, the "MERGER CONSIDERATION").
(b) SERIES G PREFERRED STOCK. Each share of Company Common
Stock issued and outstanding immediately prior to the Closing Date (other than
shares as to which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under applicable Arkansas law ("DISSENTING SHARES")) shall
be cancelled and extinguished and be
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converted into the right to receive (in addition to the cash consideration
specified in Section 2.4(a)) that number of shares of Series G Preferred Stock
equal to 198,350 divided by the number of shares of Company Common Stock then
issued and outstanding; provided, however, that (i) in the event that Citadel's
acquisition of all of the issued and outstanding shares of capital stock of
Tele-Media Broadcasting Company is not consummated on or prior to the Closing
Date, then the aggregate number of shares of Series G Preferred Stock issuable
as Merger Consideration shall be increased from 198,350 to 210,620 and (ii) in
the event after the date hereof and prior to the Closing Date the shares of
Series G Preferred Stock at any time outstanding shall be subdivided, by
reclassification, recapitalization, stock dividend or otherwise, into a greater
number of shares without the actual receipt by Parent of consideration for the
additional number of shares so issued, or the number of shares of Series G
Preferred Stock at any time outstanding shall be reduced, by reclassification,
recapitalization, reduction of capital stock or otherwise, or the outstanding
shares of Series G Preferred Stock shall be reclassified or changed other than
in such manner, then the number of shares of Series G Preferred Stock that each
holder of Company Common Stock shall be entitled to as Merger Consideration
shall be adjusted accordingly to the nearest share of Series G Preferred Stock.
(c) TRANSFER BOOKS. On and after the Closing Date, there
shall be no transfers on the stock transfer books of the Company with respect
to shares of Company Common Stock issued and outstanding immediately prior to
the Closing Date. If, after the Closing Date, certificates formerly
representing shares of Company Common Stock are presented to Citadel or its
transfer agent, they shall be cancelled and exchanged for the Merger
Consideration as provided in Section 2.5, subject to applicable law in the case
of Dissenting Shares.
2.5 EXCHANGE OF CERTIFICATES. From and after the Closing Date, all
certificates representing shares of Company Common Stock, with the exception of
certificates representing Dissenting Shares or shares of Company Common Stock
held by the Company, shall represent the right to receive Merger Consideration
on the basis set forth above and upon the terms and conditions of this
Agreement, subject to applicable abandoned property, escheat and similar laws.
Upon delivery of certificates representing shares of Company Common Stock to
the transfer agent of Citadel, Citadel shall cause the transfer agent to issue
certificates representing the requisite number of shares of Series G Preferred
Stock for each share of Company Common Stock represented by the certificates
therefor properly delivered, and Citadel shall pay by certified or cashier's
check the cash consideration described in Section 2.4(a). Notwithstanding the
foregoing, neither Citadel's transfer agent nor any party hereto shall be
liable to a holder of shares of Company Common Stock for any of the Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
2.6 LETTER OF CREDIT. Simultaneously with the execution of this
Agreement, Citadel shall deliver to the Company an irrevocable letter of credit
in favor of the Company, issued by a national banking association or other
issuer acceptable to the Company, in the amount of $325,000, which shall be in
the form attached as EXHIBIT G hereto (the "LETTER OF CREDIT"). The
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Letter of Credit shall provide that the issuing bank shall make payment on the
Letter of Credit upon such bank's receipt of a joint certificate from the
President of each of the Company and Citadel certifying that a Draw Condition
has occurred. Upon the Closing, the Company shall return the original Letter of
Credit to Citadel for cancellation.
2.7 TAX-FREE REORGANIZATION. The parties hereto intend that the Merger
shall qualify as a tax-free reorganization and exchange of stock within the
terms of Sections 368(a)(1)(A), 368(a)(2)(D), 354(a), 356(a) and 361(a) of the
Code, and agree to take such actions as may be necessary to conform to the
provisions of said Sections and to do any and all things they deem necessary or
advisable to carry out the purposes and intent of this Agreement.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
In connection with the Merger and in order to induce Parent and
Citadel to enter into and consummate the transactions contemplated by this
Agreement, the Company makes the following representations and warranties to
Parent and Citadel, as of the date of this Agreement and as of the date of the
Closing (except for representations and warranties expressly and specifically
relating to a time or times other than the date hereof or thereof, which shall
be made as of the specified time or times):
3.1 ORGANIZATION AND QUALIFICATION; AUTHORITY. Each of the SBC
Companies is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arkansas and has full power and
authority to own its assets and properties and to conduct the Business. Each of
the SBC Companies has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business. The execution and delivery of this Agreement by the
Company, the performance by the Company of its covenants and agreements
hereunder and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company. This Agreement constitutes the valid and legally binding agreement of
the Company and the Stockholders, enforceable against each of them in
accordance with its terms.
3.2 SUBSIDIARIES. The Company does not own, of record or beneficially,
any capital stock or equity interest or investment in any Person other than
Cornerstone and License Sub.
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3.3 CAPITALIZATION.
(a) AUTHORIZED AND ISSUED SHARES OF COMPANY. The authorized
capital stock of the Company consists solely of 20,000 shares of Company Common
Stock, of which 85 shares are issued and outstanding. COMPANY'S DISCLOSURE
SCHEDULE lists the names of the beneficial holders of all the outstanding
shares of Company Common Stock, and the number of shares held by each of them.
The issued and outstanding shares of Company Common Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. The
Company does not have outstanding any stock or securities convertible or
exchangeable for any stock or securities.
(b) AUTHORIZED AND ISSUED SHARES OF CORNERSTONE. The
authorized capital stock of Cornerstone consists solely of 1,000 shares of
Common Stock, no par value per share, of which 100 shares are issued and
outstanding (all of which are owned, of record and beneficially, by the
Company). The issued and outstanding shares of Common Stock of Cornerstone have
been duly authorized and validly issued, and are fully paid and nonassessable.
Cornerstone does not have outstanding any stock or securities convertible or
exchangeable for any stock or securities.
(c) AUTHORIZED AND ISSUED SHARES OF LICENSE SUB. The
authorized capital stock of License Sub consists solely of 1,000 shares of
Common Stock, no par value per share, of which 100 shares are issued and
outstanding. The issued and outstanding shares of Common Stock of License Sub
have been duly authorized and validly issued, and are fully paid and
nonassessable. License Sub does not have outstanding any stock or securities
convertible or exchangeable for any stock or securities.
(d) REPURCHASE AND OTHER OBLIGATIONS. None of the SBC
Companies is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any of its stock or other securities. No
Stockholder, SBC Company or other Person is entitled to any preemptive right,
right of first refusal or similar right with respect to any of the SBC
Companies. Except for the Company Shareholders Agreement, there are no
agreements, arrangements or trusts between or for the benefit of any of the SBC
Companies or the Stockholders with respect to the voting or transfer of stock
or other securities, or with respect to any other aspect of any of the SBC
Companies' affairs. None of the SBC Companies has violated any applicable
federal or state securities laws in connection with the offer, sale or issuance
of any of its stock or other securities.
3.4 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Articles of Incorporation or
Bylaws of the Company, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict
with, or will result in any breach of any of the terms of, or constitutes or
will constitute a default under or results in or will result in the termination
of or the creation or imposition of any Lien
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pursuant to, the terms of any contract, commitment, agreement, understanding or
arrangement of any kind to which any of the SBC Companies is a party or by
which any of the SBC Companies or any of the Assets is bound. Except for the
FCC Approval and the consents disclosed in COMPANY'S DISCLOSURE SCHEDULE, no
consents, approvals or authorizations of, or filings with, any Governmental
Authority or any other Person are required in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
3.5 FINANCIAL STATEMENTS. The Company has delivered to Parent and
Citadel the following financial statements of the SBC Companies: (a) the
audited consolidated balance sheet as of December 31, 1995 and the related
consolidated statements of income and cash flows for the year then ended; (b)
the audited consolidated balance sheet as of December 31, 1996 and the related
consolidated statements of income and cash flows for the year then ended; (c)
the unaudited consolidated balance sheet as of April 30, 1997, and the related
unaudited consolidated statements of income and cash flows for the four months
then ended; and (d) the monthly unaudited balance sheets and income statements
for each month in 1996 and the first four months of 1997. Each of the foregoing
financial statements (including in all cases the notes thereto, if any) (i) is
accurate and complete in all material respects, (ii) is consistent in all
material respects with the books and records of the SBC Companies (which, in
turn, are accurate and complete in all material respects), and (iii) fairly
presents in all material respects the financial condition and results of
operations of the SBC Companies in accordance with GAAP (subject in the case of
unaudited financial statements to the lack of footnote disclosure and changes
resulting from normal year-end audit adjustments), consistently applied, as of
the dates and for the periods set forth therein.
3.6 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, there has not been any of the following with respect to any
of the SBC Companies or the Station: (a) material adverse change in condition,
financial or otherwise, or in the results of operations, assets, liabilities or
business; (b) damage or destruction, whether or not insured, affecting business
operations; (c) labor dispute or threatened labor dispute involving any
employees; (d) actual or threatened dispute with any material provider of
software, hardware or services; (e) material change in the customary methods of
operations; (f) except in the ordinary course of business or to the extent not
material to the Business or financial condition of the Station, sale or
transfer of any tangible or intangible asset used or useful in the operation of
the Station, mortgage, pledge or imposition of any Lien on any such asset,
lease of real property, machinery, equipment or buildings with respect to the
Station entered into or modification, amendment or cancellation of any of its
existing leases relating to the Station, or cancellation of any debt or claim;
or (g) liability or obligation (contingent or otherwise) incurred under
agreements or otherwise, except current liabilities entered into or incurred in
the ordinary course of business consistent with past practices.
3.7 TAXES. Each of the SBC Companies has filed or caused to be filed
on a timely basis all federal, state, local and other tax returns, reports and
declarations required to be filed by it with respect to the Station and has
paid all Taxes (including, but not limited to, income,
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franchise, sales, use, unemployment, withholding, social security and workers'
compensation taxes and estimated income and franchise tax payments, penalties
and fines) reflected as due on such returns, reports or declarations (whether
or not shown on such returns, reports or declarations), or pursuant to any
assessment received by it in connection with such returns, reports or
declarations. All returns, reports and declarations filed by or on behalf of
each of the SBC Companies are true, complete and correct. No deficiency in
payment of any Taxes for any period has been asserted against any of the SBC
Companies by any taxing authority which remains unsettled at the date hereof,
no written inquiries have been received by any of the SBC Companies any taxing
authority with respect to possible claims for taxes or assessments, and there
is no basis for any additional claims or assessments for Taxes. Since December
31, 1996, none of the SBC Companies has incurred any liability for Taxes which
materially affect the operation of the Station other than in the ordinary
course of business.
3.8 COMPANY ASSET SCHEDULE. The COMPANY ASSET SCHEDULE includes
complete and accurate (a) listings of all Real Property; (b) listings of all
Personal Property; (c) descriptions of all Contracts, none of which requires
any consent of third parties in connection with the transactions contemplated
hereby, except otherwise as indicated in COMPANY'S DISCLOSURE SCHEDULE; (d)
descriptions of all of the Intellectual Property; and (e) listings of all of
the FCC Licenses, all of the foregoing of which will, as of the Closing, be
owned and held by the SBC Companies as reflected in the COMPANY ASSET SCHEDULE.
3.9 TITLE TO AND CONDITION OF PROPERTY.
(a) TITLE. The SBC Companies will as of the Closing have
good, marketable and exclusive title to and undisputed possession of all of the
Assets. Except as set forth on COMPANY'S DISCLOSURE SCHEDULE, the Assets are
now free and clear of all Liens. The Assets will, as of the Closing, be free
and clear of all Liens.
(b) CONDITION. The Personal Property is structurally sound,
in reasonably good condition, ordinary wear and tear excepted, adequate and
suitable for the operation of the Station as it is currently being operated,
and in proper condition and repair so that the Station can operate according to
the FCC Licenses, the rules, regulations and policies of the FCC and in all
other respects in compliance with the Act and all other applicable federal and
state laws.
(c) INSURANCE. The Assets are and will be insured through the
Closing Date in amounts adequate to replace or repair any casualty or other
insurable loss to any of such property.
(d) SUFFICIENCY OF ASSETS. The Assets include all of the
assets (other than the Excluded Assets), which are sufficient in nature,
condition and quantity, necessary to permit the SBC Companies to operate the
Station immediately upon the Closing in the ordinary course of business and
consistent with the past practices of the SBC Companies. The SBC Companies have
not, since December 31, 1996, removed any material item of Personal Property
from the Station other than (i) removals in the ordinary course of business
which were not done in
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contemplation of the transactions contemplated by this Agreement and (ii) as
contemplated by Section 10.2(c).
(e) REAL PROPERTY; REAL PROPERTY LEASES.
(i) The COMPANY ASSET SCHEDULE contains accurate descriptions
of the Real Property, and contains accurate descriptions of the Real Property
Leases and the location of the real estate leased thereunder and the type of
facility located thereon. The SBC Companies will as of the Closing have a valid
leasehold interest in each of the leaseholds created pursuant to the Real
Property Leases.
(ii) None of the Real Property or Real Property Leases is
subject to any covenant or restriction preventing or limiting in any material
respect the consummation of the transactions contemplated by this Agreement,
except for any consent listed on COMPANY'S DISCLOSURE SCHEDULE required of the
landlords under the Real Property Leases. The SBC Companies' right, title and
interest in and to the Real Property will at the Closing be held by the SBC
Companies, free and clear of all Liens, except those set forth in COMPANY'S
DISCLOSURE SCHEDULE. The SBC Companies' right, title and interest in and to the
leaseholds created pursuant to the Real Property Leases will at the Closing be
held by the SBC Companies free and clear of all Liens, except those set forth
in COMPANY'S DISCLOSURE SCHEDULE.
(iii) The use for which the Real Property and the leaseholds
existing under the Real Property Leases are zoned permits the use thereof for
the business of the Station consistent with past practices. The use and
occupancy of the Real Property and the leaseholds created pursuant to the Real
Property Leases by the SBC Companies are in compliance in all material respects
with all regulations, codes, ordinances and statutes applicable to the SBC
Companies and none of the SBC Companies has received any notice asserting any
material violation of sanitation laws and regulations, occupational safety and
health regulations or electrical codes.
(iv) There are no facts relating to any of the SBC Companies,
and to the best of the knowledge of the Company, no facts relating to any other
party, that would prevent the Real Property and the leaseholds existing under
the Real Property Leases from being occupied and used by Citadel and/or any
assignee of Citadel after the Closing Date in the same manner as immediately
prior to the Closing.
(v) There is not under any Real Property Lease any material
default by any of the SBC Companies, or to the best of the knowledge of the
Company, by any other party, or any condition that with notice or the passage
of time or both would constitute such a default, and none of the SBC Companies
has received, and to the best of the knowledge of the Company, no other party
has received, any notice asserting the existence of any such default or
condition.
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(vi) Each Real Property Lease is valid and binding and in
full force and effect as to the SBC Company party to such lease, and to the
best of the knowledge of the Company, as to each other party thereto, and
except as disclosed on the COMPANY ASSET SCHEDULE, has not been amended or
otherwise modified.
(vii) The Real Property and the leaseholds existing under the
Real Property Leases constitute all of the real property in which any of the
SBC Companies has a fee simple interest, leasehold interest or other interest
or right (whether as lessor or lessee) and which is or will prior to the
Closing be used in the operation of the Station.
3.10 CONTRACTUAL AND OTHER OBLIGATIONS. Set forth in the
COMPANY ASSET SCHEDULE is a description of all (a) Real Property Leases and (b)
Contracts. None of the SBC Companies, nor, to the best of the knowledge of the
Company, any other Person, is in material default in the performance of any
covenant or condition under any Contract, and no claim of such a default has
been made and no event has occurred which with the giving of notice or the
lapse of time would constitute such a default under any covenant or condition
under any Contract. None of the SBC Companies is a party to any Contract which
would terminate or be materially adversely affected by the consummation of the
transactions contemplated by this Agreement. Originals or true, correct and
complete copies of all Contracts have been provided to Parent and Citadel as of
the date of this Agreement.
3.11 COMPENSATION. Set forth in COMPANY'S DISCLOSURE SCHEDULE is a
list of (a) all agreements between the SBC Companies and their respective
employees or other Persons providing services for compensation with regard to
the Station, whether individually or collectively, and (b) all employees of the
SBC Companies or other Persons providing services for the SBC Companies with
respect to the Station entitled to receive annual compensation in excess of
$5,000 and their respective positions, job categories and salaries. The
transactions contemplated by this Agreement will not result in any liability
for severance pay to any such employee or other Person. None of the SBC
Companies has informed any such employee or other Person that such Person will
receive any increase in compensation or benefits or any ownership interest in
any of the SBC Companies, Parent, Citadel, the Business or Citadel's business.
Except as disclosed in COMPANY'S DISCLOSURE SCHEDULE, all current employees of
the SBC Companies are "at will" employees and may be terminated by the SBC
Companies at any time, without liability or obligation except the payment of
normal compensation accrued up to the time of termination of employment.
3.12 EMPLOYEE BENEFIT PLANS.
(a) None of the SBC Companies maintains or sponsors, or is
required to make contributions to, any pension, profit-sharing, savings, bonus,
incentive or deferred compensation, severance pay, medical, life insurance,
welfare or other employee benefit plan which affects the employees working at
the Station, except as set forth in COMPANY'S DISCLOSURE SCHEDULE. COMPANY'S
DISCLOSURE SCHEDULE fully discloses all of the plans, funds, policies,
programs, arrangements or understandings sponsored or maintained by any of the
SBC
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Companies pursuant to which any employee of the Station (or any dependent or
beneficiary of any such employee) might be or become entitled to (1) retirement
benefits; (2) severance or separation from service benefits; (3) incentive,
performance, stock, share appreciation or bonus awards; (4) health care
benefits; (5) disability income or wage continuation benefits; (6) supplemental
unemployment benefits; (7) life insurance, death or survivor's benefits; (8)
accrued sick pay or vacation pay; (9) any type of benefit offered under any
arrangement subject to characterization as an "employee welfare benefit plan"
within the meaning of section 3(3) of ERISA; or (10) benefits of any other type
offered through any arrangement that could be characterized as providing for
additional compensation or fringe benefits. As to any such plan, fund, policy,
program, arrangement or understanding, all of the following are true with
respect to the Station: (A) all amounts due as contributions, insurance
premiums and benefits to the date hereof have been fully paid by the SBC
Companies; (B) all applicable material requirements of law have been observed
with respect to the operation thereof, and all applicable reporting and
disclosure requirements have been timely satisfied; and (C) no claim or demand
has been made by any employee (or beneficiary or dependent of any employee) for
benefits (other than routine claims for benefits), or by any taxing authority
for taxes or penalties which has not been satisfied in full or which may be or
become subject to litigation or arbitration.
(b) The SBC Companies have no obligation to provide health or
other welfare benefits to any of their former, retired or terminated employees,
except as specifically required under Section 4980B of the Code. The SBC
Companies have substantially complied with any applicable notice and
continuation requirements of Section 4980B of the Code and the regulations
thereunder.
3.13 LABOR RELATIONS. There have been no material violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions, or the terms and conditions of
employment, wages (including overtime compensation) and hours of, any of the
SBC Companies. The Station is not engaged in any unfair labor practice or other
unlawful employment practice and there are no charges of unfair labor practices
or other employee-related complaints pending or threatened against the Station
before the National Labor Relations Board, the Equal Employment Opportunity
Commission, the Occupational Safety and Health Review Commission, the
Department of Labor or any other Governmental Authority. There is no strike,
picketing, slowdown or work stoppage or organizational attempt pending,
threatened against or involving the Station. No issue with respect to union
representation is pending or threatened with respect to the employees of the
Station.
3.14 INCREASES IN COMPENSATION OR BENEFITS. Subsequent to December 31,
1996, there have been no increases in the compensation payable or to become
payable to any of the employees of the SBC Companies, nor has any of the SBC
Companies paid or provided for any awards, bonuses, stock options, loans,
profit-sharing, pension, retirement or welfare plans or similar or other
payments or arrangements for or on behalf of such employees in each case other
than (a) pursuant to currently existing plans or arrangements set forth in
COMPANY'S
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DISCLOSURE SCHEDULE or (b) as was required from time to time by
governmental legislation affecting wages. The vacation policies of the SBC
Companies are set forth in COMPANY'S DISCLOSURE SCHEDULE. No employee of any of
the SBC Companies is entitled to vacation time in excess of two weeks (three
weeks in the case of employees with 10 or more years of service) during the
current vacation year (fiscal May 1 through April 30) and no such employee has
any accrued vacation time with respect to any period prior to the current
calendar year, except as set forth in COMPANY'S DISCLOSURE SCHEDULE.
3.15 INSURANCE. The SBC Companies maintain insurance policies covering
all of their respective properties and assets and the various occurrences which
may arise in connection with the operation of the Station, each of which
policies is summarized in COMPANY'S DISCLOSURE SCHEDULE. Such policies
maintained by the SBC Companies are in full force and effect and all
installments of premiums due thereon have been paid in full. There are no
notices of any pending or threatened termination or premium increases with
respect to any of such policies maintained by any of the SBC Companies. There
has been no casualty loss or occurrence to any of the SBC Companies which may
give rise to any claim of any kind not covered by insurance, and the Company is
not aware of any casualty occurrence to the Station which may give rise to any
claim of any kind not covered by insurance. No third party has filed any claim
against any of the SBC Companies for personal injury or property damage of a
kind for which liability insurance is generally available which is not fully
insured, subject only to the standard deductible. None of the SBC Companies'
insurance policies will terminate or be adversely affected by the consummation
of the transactions contemplated by this Agreement.
3.16 LITIGATION; DISPUTES. Except as set forth in COMPANY'S DISCLOSURE
SCHEDULE, there are no claims, disputes, actions, suits, investigations or
proceedings pending or threatened against or affecting any of the SBC Companies
or the Station and, to the best of the knowledge of the Company, there is no
basis for any such claim, dispute, action, suit, investigation or proceeding.
The Company has no knowledge of any default under any such action, suit or
proceeding. None of the SBC Companies is in default in respect of any judgment,
order, writ, injunction or decree of any Governmental Authority with respect to
the SBC Companies or the operation of the Station.
3.17 TRADE RECEIVABLES AND ACCOUNTS RECEIVABLE. All Trade Receivables
and Accounts Receivable are reflected properly on the books and records of the
SBC Companies, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts
provided for in the financial statements of the SBC Companies.
3.18 TRADE LIABILITIES. The Trade Liabilities do not, and as of the
Closing Date will not, exceed the Trade Receivables.
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3.19 ENVIRONMENTAL.
(a) Prior to the execution of this Agreement, the Company has
provided to Parent and Citadel a true and correct copy of all environmental
site assessments, studies, reports and communications relating to the Real
Property.
(b) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE, to
the best of the knowledge of the Company, (i) there are no conditions,
facilities, procedures or any other facts or circumstances that constitute
Environmental Noncompliance on the Real Property or any of the leaseholds
existing under the Real Property Leases and (ii) there is not constructed,
placed, deposited, stored, disposed of, nor located on any of the Real Property
or any of the leaseholds existing under the Real Property Leases, any asbestos
in any form that has released or, unless disturbed, threatens to release
airborne asbestos fibers in excess of applicable local, state and federal
standards.
(c) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE, to
the best of the Company's knowledge, no structure, improvements, equipment,
fixtures, activities or facilities located on the Real Property or any of the
leaseholds existing under the Real Property Leases uses Hazardous Materials
except those used in the ordinary course of the Business and in compliance with
applicable Environmental Laws.
(d) Except as specifically described on COMPANY'S DISCLOSURE
SCHEDULE, there have been no releases or threatened releases of Hazardous
Materials into the environment, or which otherwise contribute to Environmental
Conditions arising in whole or in part from the activities of any of the SBC
Companies, or to the best of the knowledge of the Company arising from any
other activities, except to the extent that such releases or threatened
releases do not constitute a condition of Environmental Noncompliance relating
to the Real Property or any of the leaseholds existing under the Real Property
Leases.
(e) Except as disclosed on COMPANY'S DISCLOSURE SCHEDULE,
there are no underground storage tanks, or underground piping associated with
tanks, used for the management of Hazardous Materials, and no abandoned
underground storage tanks at the Real Property or any of the leaseholds
existing under the Real Property Leases.
(f) None of the SBC Companies is subject to any Environmental
Claims, and no Environmental Claims have been threatened against any of the SBC
Companies nor, to the best of the knowledge of the Company, is there any basis
for any such Environmental Claims.
3.20 PERMITS, COMPLIANCE WITH APPLICABLE LAW.
(a) GENERAL. None of the SBC Companies is in default under
any statutes, ordinances, regulations, orders, judgments and decrees of any
Governmental Authority applicable to it or to the Business or the Assets as to
which a default or failure to comply might result in any material adverse
change in the condition, financial or otherwise, of the
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Assets or the Business. The Company has no knowledge of any basis for assertion
of any violation of the foregoing or for any claim for compensation or damages
or otherwise arising out of any violation of the foregoing. None of the SBC
Companies has received any notification of any asserted present or past failure
to comply with any of the foregoing which has not been satisfactorily responded
to in the time period required thereunder.
(b) PERMITS. Set forth in COMPANY'S DISCLOSURE SCHEDULE is a
complete and accurate list of all of the Permits held by any of the SBC
Companies and applicable to the Station. The Station is operating in accordance
with the Act and its FCC Licenses and in compliance with the Act and the rules,
regulations and policies of the FCC. The Permits set forth in COMPANY'S
DISCLOSURE SCHEDULE are all of the Permits required for the conduct of the
Business conducted by the Station. All of the Permits held by the SBC Companies
are in full force and effect, and none of the SBC Companies has engaged in any
activity which would cause or permit revocation or suspension of any such
Permit, and to the best of the knowledge of the Company, no action or
proceeding looking to or contemplating the revocation or suspension of any such
Permit is pending or threatened. There are no existing defaults or events of
default or events or state of facts which with notice or lapse of time or both
would constitute a default by any of the SBC Companies or any other Person
under any such Permit. Except for (1) the FCC Approval and (2) as set forth in
COMPANY'S DISCLOSURE SCHEDULE, the consummation of the transactions
contemplated hereby will in no way affect the continuation, validity or
effectiveness of the Permits held by any of the SBC Companies or require the
consent of any Person. Except as set forth in COMPANY'S DISCLOSURE SCHEDULE,
none of the SBC Companies is required to be licensed by, and is not subject to
the regulation of, any Governmental Authority by reason of the Business.
3.21 INTELLECTUAL PROPERTY. The use of the Intellectual Property in
connection with the operation of the Station in a manner consistent with past
practices by the SBC Companies does not infringe upon the proprietary rights of
any other Person. Citadel will, upon consummation of the transactions
contemplated by this Agreement, possess adequate rights, licenses and other
authority to use the Intellectual Property used by the Station in the operation
of the Station following the Closing in the manner now operated, without
infringement or unlawful or improper use of any of the Intellectual Property.
No director, officer or employee of any of the SBC Companies has any interest
in any of the Intellectual Property, all of which will, as of the Closing, be
free and clear of all Liens. The Company has no knowledge of any infringement
by any Person upon the rights of any of the SBC Companies with respect to the
Intellectual Property. None of the SBC Companies has granted any outstanding
licenses or other rights to any of the call letters, copyrights, trademarks,
trade names or other similar rights with regard to any of the Intellectual
Property.
3.22 BOOKS AND RECORDS. The books of account of the SBC Companies
fairly and accurately reflect their respective income, expenses, assets and
liabilities and have been maintained in accordance with good business
practices. All of such books and records will be located on the date of the
Closing on the business premises of the Station.
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3.23 ACTS TO BE PERFORMED. The Company shall perform each of the
covenants, acts and undertakings of the Company to be performed on or before
the Closing Date pursuant to the terms of this Agreement.
3.24 RELATED PARTY OBLIGATIONS. Except as set forth on COMPANY'S
DISCLOSURE SCHEDULE, no officer, director, shareholder or Affiliate of any of
the SBC Companies, or any individual related by blood or marriage to any such
Person, or any entity in which any such Person or individual owns any
beneficial interest is a party to any agreement, contract, commitment,
promissory note, loan, any other actual or proposed transaction with any of the
SBC Companies or has any material interest in any material property used by any
of the SBC Companies which is material to the operation of the Station.
3.25 DISCLOSURE. To the best of the Company's knowledge, no
representation or warranty made under this Section 3 and none of the
information furnished by the Company or the Stockholders set forth in this
Agreement or in the schedules or exhibits to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements in this Agreement or in the schedules or exhibits to this
Agreement not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND CITADEL
In connection with the Merger and in order to induce the Company and
the Stockholders to enter into and consummate the transactions contemplated by
this Agreement, Parent and Citadel jointly and severally make the following
representations and warranties to the Company and the Stockholders, as of the
date of this Agreement and as of the date of the Closing (except for
representations and warranties expressly and specifically relating to a time or
times other than the date hereof or thereof, which shall be made as of the
specified time or times):
4.1 ORGANIZATION AND QUALIFICATION; AUTHORITY. Parent and Citadel are
corporations duly organized, validly existing and in good standing under the
laws of the State of Nevada and have full power and authority to own their
assets and properties and to conduct their respective businesses. Parent and
Citadel have full power, authority and legal right and all necessary approvals,
permits, licenses and authorizations to own their respective properties and to
conduct their respective businesses. Subject to the approval by the respective
boards of directors of Parent and Citadel of the transactions contemplated
hereby, (a) the execution and delivery of this Agreement by Parent and Citadel,
the performance by Parent and Citadel of their covenants and agreements
hereunder and the consummation by Parent and Citadel of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of Parent and Citadel; and (b) this Agreement constitutes the valid and
legally binding agreement of Parent and Citadel, enforceable against each of
them in accordance with its terms.
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4.2 CAPITALIZATION.
(a) CURRENT EQUITY SECURITIES OF PARENT. The authorized and
outstanding Equity Securities of Parent are as set forth in Section 8.c. of the
Securities Purchase and Exchange Agreement. CITADEL'S DISCLOSURE SCHEDULE lists
the names of the beneficial holders of all the outstanding shares of capital
stock of Parent. Such issued and outstanding shares have been duly authorized
and validly issued, and are fully paid and nonassessable. None of Parent or
Citadel is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its Equity Securities, except as expressly
provided in the Stockholders Agreement.
(b) ISSUANCE OF SERIES G PREFERRED STOCK. The issuance of the Series G
Preferred Stock has been duly authorized by all necessary action on the part of
Parent. The Series G Preferred Stock, when issued to the Stockholders on the
Effective Date, will be validly issued, fully paid and non-assessable, and will
have the rights, preferences and privileges specified in the Amended and
Restated Certificate of Incorporation. No Series G Preferred Stock shall be
issued to any Person other than in connection with the consummation of the
transactions contemplated hereby and the transactions contemplated by the
Snider Corporation Agreement. The Series G Preferred Stock, when issued, will
be free and clear of all Liens and restrictions, other than Liens that might
have been created or suffered solely by the holders thereof, and restrictions
on transfer imposed by the Securities Act or applicable state securities laws.
4.3 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Certificate of Incorporation or
Bylaws of Parent or Citadel, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict
with, or will result in any breach of any of the terms of, or constitutes or
will constitute a default under or results in or will result in the termination
of or the creation or imposition of any Lien pursuant to the terms of, any
contract, commitment, agreement, understanding or arrangement of any kind to
which Parent or Citadel is a party or by which Parent, Citadel or any of their
assets is bound. Except for the FCC Approval and the consents disclosed in
CITADEL'S DISCLOSURE SCHEDULE, no consents, approvals or authorizations of, or
filings with, any Governmental Authority or any other Person are required on
the part of Parent or Citadel in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
4.4 FINANCIAL STATEMENTS. Parent and Citadel have delivered to the
Company and the Stockholders the following financial statements of Parent: (a)
the audited consolidated balance sheet as of December 31, 1995 and the related
consolidated statements of income and cash flows for the year then ended; (b)
the audited consolidated balance sheet as of December 31, 1996 and the related
consolidated statements of income and cash flows for the year then ended; and
(c) the unaudited consolidated balance sheet as of March 31, 1997, and the
related
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unaudited consolidated statements of income and cash flows for the three months
then ended. Each of the foregoing financial statements (including in all cases
the notes thereto, if any) (i) is accurate and complete in all material
respects, (ii) is consistent in all material respects with the books and
records of Parent and Citadel (which, in turn, are accurate and complete in all
material respects), and (iii) fairly presents in all material respects the
financial condition and results of operations of Parent and Citadel in
accordance with GAAP (subject in the case of unaudited financial statements to
the lack of footnote disclosure and changes resulting from norman year-end
audit adjustments), consistently applied, as of the dates and for the periods
set forth therein.
4.5 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, there has not been any (a) material adverse change in the
condition of Citadel or Parent, financial or otherwise, or in the results of
operations, assets, liabilities or business of Citadel or Parent; (b) damage or
destruction, whether or not insured, affecting the business operations of
Citadel or Parent in any material respect; (c) labor dispute or threatened
labor dispute involving any of the employees of Citadel or Parent; (d) actual
or threatened dispute pertaining to Citadel or Parent with any material
provider of software, hardware or services; (e) material change in the
customary methods of operations of Citadel or Parent; (f) except in the
ordinary course of business or to the extent not material to the business or
financial condition of Citadel or Parent, sale or transfer of any tangible or
intangible asset used or useful in the operation of radio stations owned and/or
operated by Citadel (the "CITADEL STATIONS"), mortgage, pledge or imposition of
any Lien on any such asset, lease of real property, machinery, equipment or
buildings with respect to Citadel or Parent, or modification, amendment or
cancellation of any of its existing leases relating to Citadel or Parent, or
cancellation of any debt or claim; or (g) material liability or obligation
(contingent or otherwise) incurred under agreements or otherwise, except
current liabilities entered into or incurred in the ordinary course of business
consistent with past practices and except as disclosed in CITADEL'S DISCLOSURE
SCHEDULE.
4.6 TAXES. Citadel and Parent have filed or caused to be filed on a
timely basis all federal, state, local and other tax returns, reports and
declarations required to be filed by them with respect to each Citadel Station
and has paid all Taxes (including, but not limited to, income, franchise,
sales, use, unemployment, withholding, social security and workers'
compensation taxes and estimated income and franchise tax payments, penalties
and fines) reflected as due on such returns, reports or declarations (whether
or not shown on such returns, reports or declarations), or pursuant to any
assessment received by them in connection with such returns, reports or
declarations. All returns, reports and declarations filed by or on behalf of
Citadel or Parent are true, complete and correct in all material respects. No
deficiency in payment of any Taxes for any period has been asserted by any
taxing authority which remains unsettled at the date hereof, no written
inquiries have been received by Citadel or Parent from any taxing authority
with respect to possible claims for taxes or assessments, and there is no basis
for any additional claims or assessments for Taxes. Since December 31, 1996,
neither Citadel nor Parent has incurred any liability for Taxes which
materially affect the operation of Citadel or Parent other than in the ordinary
course of business.
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4.7 CONTRACTUAL AND OTHER OBLIGATIONS WITH RESPECT TO PARENT STOCK.
Set forth in CITADEL'S DISCLOSURE SCHEDULE is a description of all contracts,
agreements, arrangements and other documents by and among Parent and its
shareholders or any lender or other third party which includes, warrants,
options, conversion rights or other obligations of Parent with respect to its
authorized stock.
4.8 PERMITS. Citadel and Parent have all the permits, licenses,
approvals, franchises, notices and authorizations issued by any Governmental
Authorities (collectively, the "CITADEL PERMITS") necessary to conduct the
operation of Citadel's business as currently conducted. Each Citadel Station is
operating in accordance with the Act and its FCC licenses and is in compliance
with the Act and the rules, regulations and policies of the FCC. The Citadel
Permits are in full force and effect, and Citadel and Parent have not engaged
in any activity which would cause or permit revocation or suspension of any
such Citadel Permit, and no action or proceeding looking to or contemplating
the revocation or suspension of any such Citadel Permit is pending or
threatened. There are no existing defaults or events of default or events or
state of facts which with notice or lapse of time or both would constitute a
default by Citadel or Parent under any such Citadel Permit. There is no default
or claimed or purported or alleged default or state of facts which with notice
or lapse of time or both would constitute a default on the part of any party in
the performance of any obligation to be performed or paid by any party under
any such Citadel Permit.
4.9 ACTS TO BE PERFORMED. Parent and Citadel shall perform each of the
covenants, acts and undertakings of Parent and Citadel to be performed on or
before the Closing Date pursuant to the terms of this Agreement.
4.10 LITIGATION. There is no litigation, proceeding or investigation
pending or, to the best knowledge of Parent and Citadel, threatened against or
affecting Parent or Citadel that is reasonably likely to prevent or hinder the
consummation of the transactions contemplated by this Agreement.
4.11 DISCLOSURE. To the best knowledge of Parent and Citadel, no
representation or warranty made under this Section 4 and none of the
information furnished by Parent or Citadel set forth in this Agreement or in
the schedules or exhibits to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements in this Agreement or in the schedules or exhibits to this Agreement
not misleading.
SECTION 5
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees with Parent and Citadel to:
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5.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
5.2 PAYMENT OF OBLIGATIONS. Fully discharge all Obligations of the
Company on a timely basis so that the Obligations of the Company existing as of
the Closing Date shall consist solely of Accounts Payable, Trade Liabilities
and the Debt Payoff Amount.
5.3 ACCESS. Afford Parent and Citadel and their authorized
representatives, upon reasonable notice, reasonable access during normal
business hours to the Station and the Station's employees, and permit Parent
and Citadel and their authorized representatives to examine all operations,
equipment, properties and other assets, logs, books, relevant records,
contracts and documents pertinent to the Station; provided, however, that in
each instance mutually satisfactory arrangements shall be made in advance in
order to avoid interruption and to minimize interference with the normal
business and operations of the Station.
5.4 PRESERVATION OF ORGANIZATION. Exercise all reasonable efforts to
preserve the business organization of the Station intact, and to preserve the
present relationships of the Station with employees, suppliers, advertisers and
customers and others having business relationships with the Station; provided,
however, that nothing contained in this Agreement shall require the Company to
expend money in fulfillment of its obligations set forth in this Section 5.4
other than those expenditures that the SBC Companies would have made in the
ordinary course of the business of the Station and consistent with past
practices.
5.5 BOOKS AND RECORDS. Maintain the books and records of the SBC
Companies in accordance with good business practices, on a basis consistent
with past practices, and promptly make available to Parent and Citadel the
books, records, tax returns, leases, contracts and other documents or
agreements material to the Station as Parent, Citadel or their respective
counsel, accountants or other authorized representatives may from time to time
reasonably request.
5.6 EMPLOYEES. Pay as and when the same shall become due and payable
any amounts owed by any of the SBC Companies to its employees who have
performed services up to the time of Closing, whether fixed or accrued, for
wages, vacation pay, sick pay, severance pay, employee benefits, damages and
otherwise.
5.7 COMPLIANCE WITH FCC MATTERS. Comply with the FCC Licenses
applicable to the Station and with the provisions of the Act, the rules,
regulations and policies of the FCC, and with all other laws, ordinances,
regulations, rules and orders of any Governmental Authority applicable to any
of the SBC Companies or to the Station.
5.8 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by the SBC Companies prior to the
Closing, and satisfy all Taxes related thereto which are due on or before the
Closing Date.
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5.9 COMPANY SUPPLEMENTAL FINANCIAL STATEMENTS. Provide Parent and
Citadel with copies of the monthly unaudited income statements and balance
sheets applicable to the Station prepared by the Company from the date hereof
until Closing in the ordinary course of business (collectively, the "COMPANY
SUPPLEMENTAL FINANCIAL STATEMENTS"). The Company shall provide such Company
Supplemental Financial Statements to Parent and Citadel promptly upon such
Company Supplemental Financial Statements becoming available to it. The Company
Supplemental Financial Statements shall be subject to the representations and
warranties as set forth in Section 3.5.
5.10 FURTHER INFORMATION. Furnish to Parent and Citadel prior to the
Closing such financial (including tax), legal and other information with
respect to the SBC Companies and the Station as Parent, Citadel or their
representatives may from time to time reasonably request.
5.11 NOTICE. Promptly notify Parent and Citadel in writing upon the
occurrence or the nonoccurrence of any event which does then, or which upon the
passing of time or the giving of notice would, constitute a breach of or
default under, or render misleading or untrue in any material respect, any
agreement, covenant, representation or warranty made by the Company in this
Agreement.
5.12 CONSENTS. Exercise all reasonable efforts (not involving the
payment by the Company of any money to any party to any Contract) to obtain,
prior to the Closing, the consent and approval (in a form reasonably approved
by Parent) of any third parties whose consent or approval is necessary in
connection with the consummation of the transactions contemplated hereby, with
respect to the Contracts set forth on COMPANY'S DISCLOSURE SCHEDULE and
requiring such consent. If any such consent or approval is not obtained, the
Company will use commercially reasonable efforts (not involving the payment of
money to any Person) to secure an arrangement satisfactory to Citadel intended
to provide for Citadel following the Closing the benefits under each Contract
for which such consent or approval is not obtained; provided, however, that
Citadel shall have the right to terminate this Agreement as a result of any
failure by the Company to obtain any such consent or approval set forth on
COMPANY'S DISCLOSURE SCHEDULE, if alternative arrangements are not satisfactory
to Citadel. The Company shall also execute a consent, in a form provided by
Citadel, allowing Parent and Citadel to assign all of their rights under this
Agreement and any related documents to one or more of Parent's and Citadel's
lenders upon default by Parent or Citadel under the relevant loan documents.
Nothing in this Agreement will constitute a transfer or an attempted
transfer of any Contract which by its terms or under applicable law or
governmental rules or regulations requires the consent or approval of a third
party (including, without limitation, a Governmental Authority) unless such
consent or approval is obtained.
5.13 TRADE SCHEDULE. Deliver to Parent and Citadel at the Closing an
accurate schedule of Trade Liabilities and Trade Receivables existing as of the
Closing. The Company
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shall exercise reasonable efforts to minimize the amount of additional Trade
Liabilities incurred after execution of this Agreement.
5.14 IMPACT OF LOCAL MARKETING AGREEMENT. From and after the effective
date of the Local Marketing Agreement, the covenants of the Company relating to
the operation of the Station and the Assets from and after such date shall be
conditioned upon Citadel's performance, in all material respects, of its
obligations under the Local Marketing Agreement.
SECTION 6
NEGATIVE COVENANTS OF THE COMPANY
From and after the date of this Agreement and until the Closing, the
Company shall not take, or cause or permit to be taken, any of the following
actions without the prior approval of Parent and Citadel, which may not be
unreasonably withheld:
6.1 SALES, TRANSFERS AND LIENS. Make any sale, transfer, assignment,
conveyance, mortgage, hypothecation, encumbrance or other placement of any Lien
on any of the Assets, except in the ordinary course of business and which do
not materially interfere with the operations of the Station, and which, in the
case of a sale, transfer or assignment, is replaced with an asset of equal or
greater value, and, in the case of a conveyance, mortgage, hypothecation,
encumbrance or other Lien, is released at or prior to the Closing.
6.2 CONTRACTS. Amend, terminate or renew any of the Contracts
(including any renewal or termination resulting from the failure to provide,
after the date of this Agreement, timely notice of nonrenewal or termination as
required by the terms of any of the Contracts).
6.3 BREACHES, DEFAULTS. Do any act or omit to do any act, or permit
any act or omission to occur, that will cause a breach of any contract,
commitment or obligation of it in any respect that would have a material
adverse effect on the Assets or the business operations of the Station as
presently conducted.
6.4 OBLIGATIONS. Incur any Obligations (including but not limited to
any additional Indebtedness for Borrowed Money) except in the ordinary course
of business in a manner consistent with past practices.
6.5 SALARY INCREASES. Increase any salary, other payments,
disbursement or distributions in any manner or form to any employees of the SBC
Companies except (a) in the ordinary course of business consistent with past
practices or (b) in accordance with the existing terms of contracts entered
into prior to the date of this Agreement.
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6.6 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire any of
the SBC Companies or the Station in whole or in part.
SECTION 7
COVENANTS OF THE STOCKHOLDERS
The Stockholders jointly and severally covenant and agree with Parent
and Citadel to:
7.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
7.2 NOTICE. Promptly notify Parent and Citadel in writing upon the
occurrence or the nonoccurrence of any event which does then, or which upon the
passing of time or the giving of notice would, constitute a breach of or
default under, or render misleading or untrue in any material respect, any
agreement, covenant, representation or warranty made by the Stockholders in
this Agreement.
7.3 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire any of
the SBC Companies or the Station in whole or in part. Prior to the Closing, the
Stockholders shall not sell, assign, pledge or otherwise transfer any of the
Company Common Stock owned by them.
7.4 COMMERCIALLY REASONABLE EFFORTS. The Stockholders shall use
commercially reasonable efforts to cause the Company to satisfy all of its
obligations hereunder.
SECTION 8
COVENANTS OF PARENT AND CITADEL
Parent and Citadel jointly and severally covenant and agree with the
Company and the Stockholders to:
8.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
8.2 NOTICE. Promptly notify the Company and the Stockholders in
writing upon the occurrence or the nonoccurrence of any event which does then,
or which upon the passing of time or the giving of notice would, constitute a
breach of or default under, or render misleading or untrue in any material
respect, any agreement, covenant, representation or warranty made by Parent or
Citadel in this Agreement.
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8.3 PERFORMANCE OF LOCAL MARKETING AGREEMENT. From and after the
effective date of the Local Marketing Agreement, Citadel shall perform and
discharge, in all material respects, its obligations in connection with the
operation of the Station and the Assets from and after such date in accordance
with the terms of the Local Marketing Agreement.
8.4 BOOKS AND RECORDS. Maintain the books and records of Parent and
Citadel in accordance with good business practices, on a basis consistent with
past practices, and promptly make available to the Company the books, records,
tax returns, leases, contracts and other documents or agreements material to
the Citadel Stations as the Company or its counsel, accountants or other
authorized representatives may from time to time reasonably request.
8.5 COMPLIANCE WITH FCC MATTERS. Comply with the FCC licenses
applicable to the Citadel Stations and with the provisions of the Act, the
rules, regulations and policies of the FCC, and with all other laws,
ordinances, regulations, rules and orders of any Governmental Authority
applicable to Parent, Citadel or to any Citadel Station.
8.6 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by Parent and/or Citadel prior to the
Closing, and satisfy all Taxes related thereto which are due on or before the
Closing Date.
8.7 CITADEL SUPPLEMENTAL FINANCIAL STATEMENTS. Provide the Company
with copies of the monthly unaudited income statements and balance sheets
applicable to the Citadel Stations prepared by Parent from the date hereof
until Closing in the ordinary course of business (collectively, the "CITADEL
SUPPLEMENTAL FINANCIAL STATEMENTS"). Parent and Citadel shall provide such
Citadel Supplemental Financial Statements to the Company promptly upon such
Citadel Supplemental Financial Statements becoming available to them. The
Citadel Supplemental Financial Statements shall be subject to the
representations and warranties as set forth in Section 4.4.
8.8 FURTHER INFORMATION. Furnish to the Company prior to the Closing
such financial (including tax), legal and other information with respect to
Parent, Citadel and the Citadel Stations as the Company or its representatives
may from time to time reasonably request.
SECTION 9
ADDITIONAL COVENANTS OF THE PARTIES
9.1 APPLICATION FOR TRANSFER OF CONTROL. As promptly as practicable
after the date of this Agreement, and in no event later than 10 days after the
execution of this Agreement, the Company and Citadel shall file an application
(the "FCC APPLICATION") with the FCC to approve the transfer of control of the
Station from the Company to Citadel (the "FCC APPROVAL"). Citadel shall have
primary responsibility for filing the FCC Application. The parties agree that
they shall jointly prosecute the FCC Application (and shall cooperate with
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each other in the timely prosecution thereof), in good faith and with due
diligence, and within the time allowed therefor by the rules and regulations of
the FCC. The Company and Citadel shall each take all necessary actions on its
part to obtain the FCC Approval. Citadel shall advance the filing fee for the
FCC Application, and the Stockholders shall reimburse Citadel for one-half of
such filing fee at the Closing. All other costs and expenses incurred by each
party in connection with the filing and prosecution of the FCC Application
shall be paid by the party incurring the cost or expense.
9.2 LOCAL MARKETING AGREEMENT. Concurrently with the execution of this
Agreement, Citadel and the Company shall execute and deliver a Local Marketing
Agreement for the Station in the form of EXHIBIT H attached hereto (the "LOCAL
MARKETING AGREEMENT").
9.3 BROKERAGE. Each of the parties hereto represents and warrants to
each other that, except for Broker, no Person has provided services as a
broker, agent or finder in connection with the transactions contemplated by
this Agreement. As between the parties hereto, the Stockholders are fully
responsible for the payment of any fee, commission, claim or expense of Broker,
and the Stockholders shall indemnify and hold harmless the SBC Companies,
Parent and Citadel for any and all fees, commissions, claims or expenses,
including attorneys' fees asserted by Broker. Each of the parties hereto shall
each indemnify and hold harmless the other parties hereto for any and all
claims or expenses, including attorneys' fees, asserted by any Person other
than Broker purporting to act on behalf of the respective indemnitor as a
broker, agent or finder in connection with the transactions contemplated by
this Agreement.
9.4 RISK OF LOSS. If any loss or damage to any of the Assets occurs
prior to the Closing (i) which has a material adverse effect on the Station and
(ii) such loss or damage is not susceptible of repair, replacement or
restoration with sufficient, collectible insurance proceeds available for such
purposes or by the Stockholders at their sole cost and expense to substantially
the same condition as existed before such loss or damage, then the parties
shall adjust the Merger Consideration to reflect the diminution in value of the
Station attributable to the impairment of such assets.
9.5 ACTIONS WITH FCC. In the event any investigation, order to show
cause, notice of violation, notice of apparent liability or a forfeiture,
material complaint, petition to deny or informal objection is instituted or
filed against any party hereto (whether in connection with the proceedings to
approve the FCC Application or otherwise), such party shall promptly notify the
other parties hereto in writing of such occurrence and shall thereafter
immediately take all reasonable measures to contest the same in good faith and
seek the removal or favorable resolution of such action, order, notice or
complaint.
9.6 COOPERATION. During the seven-year period immediately following
the Closing, Citadel shall cooperate with the Stockholders in providing the
Stockholders all information reasonably requested and permitting the
Stockholders access to all records relating to the period of ownership of the
Station prior to the Closing. The cost and expense in providing or permitting
access to information hereunder shall be borne by the Stockholders. The
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Stockholders, as a condition to being provided with access to information
hereunder, shall, at the request of Citadel, execute a confidentiality
agreement in form and substance acceptable to Citadel in its reasonable
discretion. Notwithstanding the foregoing, Citadel may discard any such
records during such seven-year period if (i) Citadel notifies the Stockholders
of Citadel's intent to discard such records and (ii) the Stockholders do not,
within 10 days after receipt of such notice, retrieve such records from
Citadel's premises.
9.7 CORNERSTONE MERGER. If requested by Citadel, the Company shall, at
or prior to Closing, merge Cornerstone with and into the Company, with the
Company surviving such merger (the "CORNERSTONE MERGER"). The Cornerstone
Merger shall be effected (if requested by Citadel) in accordance with all
applicable laws and regulations and pursuant to documents in form and substance
satisfactory to Citadel in its reasonable discretion.
SECTION 10
THE CLOSING
10.1 CLOSING DATE. The Closing shall occur on a date mutually selected
by the Company and Citadel which is within 10 business days following the date
on which the FCC Approval has become a Final Order. The Closing shall begin at
10:00 a.m., local time, on the date of the Closing (the "CLOSING DATE") at the
offices of Friday, Eldredge & Clark, 2000 First Commercial Building, 400 West
Capitol Avenue, Little Rock, Arkansas 72201, counsel for the Company and the
Stockholders, or at such other time and place as the parties may agree in
writing.
10.2 ACTIONS TO BE TAKEN IMMEDIATELY PRIOR TO THE CLOSING. The
following actions shall be taken immediately prior to the Closing, and as a
condition precedent thereto:
(a) AMENDED AND RESTATED CERTIFICATE OF INCORPORATION. Parent
shall cause the Amended and Restated Certificate of Incorporation to be filed
with the Secretary of State of the State of Nevada.
(b) TERMINATION OF THE COMPANY SHAREHOLDERS AGREEMENT. The
parties to the Company Shareholders Agreement shall cause it to be terminated.
(c) DIVIDEND OF EXCLUDED ASSETS. The Company shall distribute to
the Stockholders as a dividend the Excluded Assets, if any.
10.3 ACTIONS TO BE TAKEN AT THE CLOSING. The following actions shall
be taken at the Closing:
(a) ARTICLES AND PLAN OF MERGER. The Articles of Merger, and if
required under applicable law, the Plan of Merger, shall be filed with the
appropriate authorities in the States of Nevada and Arkansas.
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(b) DELIVERY OF MERGER CONSIDERATION. Citadel shall deliver the
Series G Preferred Stock and cash portion of the Merger Consideration to the
holders of the Company Common Stock in accordance with Section 2.4.
(c) DELIVERY OF DOCUMENTS. Each of the parties shall deliver to
the other parties all agreements, certificates and other documents required to
be delivered by it pursuant to the terms of this Agreement or as a condition
precedent to the other parties' obligations under this Agreement, including but
not limited to the following:
(i) The parties shall deliver to each other fully executed
originals of the Amendment to Securities Purchase Agreement, the Amendment to
Registration Rights Agreement, the Amendment to Stockholders Agreement and the
Amendment to Voting Agreement.
(ii) Citadel and each of the Stockholders shall execute and
deliver an Agreement Not to Compete.
(d) REPAYMENT OF DEBT PAYOFF AMOUNT. Immediately after receipt of
the Merger Consideration, the Stockholders shall take all action necessary to
extinguish the Indebtedness for Borrowed Money represented by the Debt Payoff
Amount.
SECTION 11
CONDITIONS TO THE COMPANY'S AND
THE STOCKHOLDERS' OBLIGATION TO CLOSE
The obligation of the Company and the Stockholders to consummate the
transactions contemplated by this Agreement at the Closing is subject to the
following conditions precedent, any or all of which may be waived by the
Company and the Stockholders in their sole discretion (other than those set
forth in Section 11.7):
11.1 OPINION OF PARENT'S AND CITADEL'S COUNSEL. The Company and the
Stockholders shall have received an opinion of counsel for Parent and Citadel,
dated the date of the Closing, in form and substance satisfactory to the
Company and the Stockholders, to the effect that:
(a) Parent and Citadel are corporations duly organized, validly
existing and in good standing under the laws of the State of Nevada.
(b) Citadel is duly qualified and in good standing in the State
of Arkansas.
(c) Parent and Citadel have full corporate power and authority to
own their assets and properties and to conduct their business and have all
necessary approvals, permits,
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licenses and authorizations to own their properties and to conduct their
business in the manner and in the locations presently owned and conducted.
(d) This Agreement, together with all other documents and
instruments required to be executed or delivered by Parent or Citadel in
connection with the transactions contemplated hereby, each has been duly
authorized, executed and delivered by Parent and Citadel and constitutes a
valid and legally binding obligation of Parent and Citadel, enforceable against
each of them in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitations on the availability of
equitable remedies.
(e) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates or will violate
any provision of the Certificate of Incorporation or Bylaws of Parent or
Citadel or, to the knowledge of such counsel, any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any
Governmental Authority, or, to the knowledge of such counsel after due
investigation, violates or will violate, or conflicts with or will conflict
with or will result in any breach of any of the terms of, or constitutes or
will constitute a default under, or results or will result in the termination
of or the creation or imposition of any Lien pursuant to, the terms of any
contract, commitment, agreement, understanding or arrangement of any kind to
which Parent or Citadel is a party or by which Parent or Citadel or any of
their assets is bound and which is known to such counsel, all as set forth on
CITADEL'S DISCLOSURE SCHEDULE.
(f) The authorized and outstanding Equity Securities of Parent
are as set forth in Section 8.c. of the Securities Purchase and Exchange
Agreement. CITADEL'S DISCLOSURE SCHEDULE lists the names of the beneficial
holders of all the outstanding shares of Parent. Such issued and outstanding
shares have been duly authorized and validly issued, and are fully paid and
nonassessable. To the knowledge of such counsel, neither Parent nor Citadel is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of Parent's Equity Securities, except as expressly
provided in the Stockholders Agreement. The issuance of the Series G Preferred
Stock has been duly authorized by all necessary action on the part of Parent.
The Series G Preferred Stock, when issued to the holders of the Company Common
Stock on the Effective Date, will be validly issued, fully paid and
non-assessable, and will have the rights, preferences, and privileges specified
in the Amended and Restated Certificate of Incorporation. The Series G
Preferred Stock, when issued, will be free and clear of all Liens and
restrictions, other than Liens that might have been created or suffered solely
by the holders thereof, and restrictions on transfer imposed by the Securities
Act or applicable state securities laws.
Nothing contained in this Section 11.1 shall require an opinion by such counsel
with respect to FCC matters.
11.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Citadel contained herein shall be true and correct in
all material respects at and as of the
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Closing with the same effect as though all such representations and warranties
were made at and as of the Closing (except for representations and warranties
expressly and specifically relating to a time or times other than the Closing,
which shall be true and correct in all material respects at and as of the time
or times specified except for such inaccuracies as do not, individually or in
the aggregate, have a material effect on the ability of Parent or Citadel to
consummate the transactions contemplated by this Agreement) and Parent and
Citadel shall have delivered to the Company and the Stockholders a certificate
to that effect, dated the date of the Closing, signed by the President of
Parent and Citadel.
11.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against Parent, Citadel, the Company or the Stockholders relating to
the consummation of any of the transactions contemplated by this Agreement or
any action by any Governmental Authority shall have been issued.
11.4 OTHER CERTIFICATES. The Company and the Stockholders shall have
received certificates as to the good standing of Parent in the State of Nevada,
and of Citadel in the States of Nevada and Arkansas, each as of a date not more
than 20 days before the Closing, and such other certificates, instruments and
other documents, in form and substance satisfactory to the Company and the
Stockholders, as the Company and the Stockholders shall have reasonably
requested in connection with the transactions contemplated hereby.
11.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by Parent and Citadel of this Agreement and
the transactions contemplated hereby shall have been duly and validly taken by
Parent and Citadel, and Parent and Citadel shall have delivered to the Company
and the Stockholders certified copies of the resolutions of Parent's and
Citadel's board of directors authorizing the execution and performance of this
Agreement and authorizing or ratifying the acts of their officers and employees
in carrying out the terms and provisions of this Agreement.
11.6 ACTS TO BE PERFORMED. Each of the covenants, acts and
undertakings of Parent and Citadel to be performed on or before the Closing
Date pursuant to the terms hereof shall have been duly performed.
11.7 FCC APPROVAL. The FCC Approval shall have been obtained.
11.8 OTHER TRANSACTIONS. The transactions contemplated by the Real
Estate Purchase Agreement, the CDB Broadcasting Agreement and the Snider
Corporation Agreement shall be consummated on the Closing Date.
SECTION 12
CONDITIONS TO PARENT'S AND CITADEL'S OBLIGATION TO CLOSE
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The obligation of Parent and Citadel to consummate the transactions
contemplated by this Agreement at the Closing is subject to the following
conditions precedent, any or all of which may be waived by Parent and Citadel
in their sole discretion (other than those set forth in Section 12.9):
12.1 OPINION OF THE COMPANY'S AND THE STOCKHOLDERS' COUNSEL. Parent
and Citadel shall have received an opinion of counsel for the Company and the
Stockholders, dated the date of the Closing, in form and substance satisfactory
to Parent and Citadel, to the effect that:
(a) Each of the SBC Companies is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arkansas.
(b) Each of the SBC Companies has full power and authority to own
its assets and properties and to conduct the Business and has all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business in the manner and in the locations presently owned and
conducted.
(c) This Agreement, together with all other documents and
instruments required to be executed or delivered by the Company and the
Stockholders in connection with the transactions contemplated by this
Agreement, each has been duly authorized, executed and delivered by the Company
and the Stockholders and constitutes a valid and legally binding obligation of
the Company and the Stockholders, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other laws affecting generally the enforceability of
creditors' rights and by limitations on the availability of equitable remedies.
(d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates or will violate
any provision of the Articles of Incorporation or Bylaws of the Company or, to
the knowledge of such counsel, any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or, to the knowledge of such counsel after due investigation,
violates or will violate or conflicts with or will conflict with or will result
in any breach of any of the terms of, or constitutes or will constitute a
default under or results in or will result in the termination of or the
creation or imposition of any Lien pursuant to the terms of, any contract,
commitment, agreement, understanding or arrangement of any kind to which any of
the SBC Companies or any of the Stockholders is a party or by which any of the
SBC Companies, any of the Stockholders or any of the Assets is bound and which
is known to such counsel, all as set forth on COMPANY'S DISCLOSURE SCHEDULE.
Except for (1) the FCC Approval and (2) the consents disclosed on COMPANY'S
DISCLOSURE SCHEDULE, no consents, approvals or authorizations of, or filings
with, any Governmental Authority or any other Person are required on the part
of the SBC Companies or the Stockholders, in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
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(e) To the knowledge of such counsel, except as disclosed on COMPANY'S
DISCLOSURE SCHEDULE, there are no claims, disputes, actions, suits or
proceedings pending or threatened against the SBC Companies or any of the
Assets.
(f) Prior to the Merger, the authorized capital stock of the Company
consists of 20,000 shares of Company Common Stock, of which 85 shares are
issued and outstanding. To the knowledge of such counsel, COMPANY'S DISCLOSURE
SCHEDULE lists the names of the beneficial holders of all the outstanding
shares of Company Common Stock, and the number of shares held by each of them.
The issued and outstanding shares of Company Common Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. The
Company does not have outstanding any stock or securities convertible or
exchangeable for any stock or securities.
(g) The authorized capital stock of Cornerstone consists of 1,000
shares of Common Stock, no par value per share, of which 100 shares are issued
and outstanding. To the knowledge of such counsel, the Company owns, of record
and beneficially, all of the issued and outstanding shares of Common Stock of
Cornerstone. The issued and outstanding shares of Common Stock of Cornerstone
have been duly authorized and validly issued, and are fully paid and
nonassessable. Cornerstone does not have outstanding any stock or securities
convertible or exchangeable for any stock or securities.
(h) The authorized capital stock of License Sub consists of 1,000
shares of Common Stock, no par value per share, of which 100 shares are issued
and outstanding. To the knowledge of such counsel, Cornerstone owns, of record
and beneficially, all of the issued and outstanding shares of Common Stock of
License Sub. The issued and outstanding shares of Common Stock of License Sub
have been duly authorized and validly issued, and are fully paid and
nonassessable. License Sub does not have outstanding any stock or securities
convertible or exchangeable for any stock or securities.
Nothing contained in this Section 12.1 shall require an opinion of such counsel
with respect to FCC matters.
12.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects at and as of the Closing (except for representations and
warranties expressly and specifically relating to a time or times other than
the Closing, which shall be true and correct in all material respects at and as
of the time or times specified except for such inaccuracies as do not,
individually or in the aggregate, have a material effect on the Station, the
Company's or any Stockholder's ability to consummate the transactions
contemplated by this Agreement, or the Business as a whole) with the same
effect as though all such representations and warranties were made at and as of
the Closing, and the Company and the Stockholders shall have complied with all
of their respective covenants contained herein; and the Company and the
Stockholders shall have delivered to Parent and Citadel a certificate to that
effect, dated the date of the Closing, signed by the President of the Company
and by the Stockholders.
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12.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against the SBC Companies, the Stockholders, Parent or Citadel
relating to the consummation of any of the transactions contemplated by this
Agreement shall have been issued.
12.4 OTHER CERTIFICATES. Parent and Citadel shall have received a
certificate as to the good standing of each of the SBC Companies as a
corporation in Arkansas as of a date not more than 20 days before the Closing,
and such other certificates, instruments and other documents customary for
transactions of the nature provided for in this Agreement, in form and
substance reasonably satisfactory to Parent and Citadel, as Parent and Citadel
shall have reasonably requested in connection with the transactions
contemplated by this Agreement.
12.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by the Company of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by the
Company, and the Company shall have delivered to Parent and Citadel certified
copies of the resolutions of the Company's board of directors and of the
Stockholders authorizing the execution and performance of this Agreement and
authorizing or ratifying the acts of its officers and employees in carrying out
the terms and provisions of this Agreement.
12.6 ACTS TO PERFORMED. Each of the covenants, acts and undertakings
of the Company and the Stockholders to be performed on or before the Closing
Date pursuant to the terms of this Agreement shall have been duly performed.
12.7 UCC SEARCHES. The Company and the Stockholders shall have
delivered to Parent and Citadel Uniform Commercial Code judgment and lien
searches from the appropriate county and state agencies showing all Liens on
the Assets, which searches shall be conducted not more than 30 days prior to
the Closing. The Company and the Stockholders may cause such lien searches to
be prepared by a third party, in which case the Company and the Stockholders
shall not be responsible for any inaccuracies in such lien searches unless the
Company and the Stockholders have actual knowledge of their inaccuracy.
Notwithstanding the foregoing, the Company and the Stockholders shall remain
responsible for satisfying any Lien on the Assets even if such searches are
inaccurate.
12.8 FILINGS, CONSENTS, APPROVALS AND ESTOPPEL CERTIFICATES. All
filings, consents, approvals and estoppel certificates required by or
reasonably requested by Parent and Citadel pursuant to this Agreement, or
necessary to consummate the transactions contemplated by this Agreement, shall
have been obtained.
12.9 FCC APPROVAL. The FCC Approval shall have been obtained.
12.10 OTHER TRANSACTIONS. The transactions contemplated by the Real
Estate Purchase Agreement, the CDB Broadcasting Agreement and the Snider
Corporation Agreement shall be consummated on the Closing Date.
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12.11 DISSENTING SHARES. There shall not be any Dissenting Shares.
SECTION 13
INDEMNIFICATION
13.1 INDEMNIFICATION BY THE COMPANY AND THE STOCKHOLDERS. Subject to
the limitations and procedures set forth in this Section 13, the Company and
the Stockholders shall jointly and severally indemnify and hold harmless Parent
and Citadel from and against all losses, claims, demands, damages, liabilities,
obligations, costs and/or expenses, including, without limitation, reasonable
fees and disbursements of counsel (hereinafter referred to collectively as
"DAMAGES"), which are sustained or incurred by Parent or Citadel, to the extent
that such Damages are sustained or incurred by reason of (i) the breach of any
of the obligations or covenants of the Company or the Stockholders in this
Agreement or (ii) the breach of any of the representations or warranties made
by the Company or the Stockholders in this Agreement. The foregoing
notwithstanding, from and after the Closing Date, the Stockholders shall be
solely responsible for any indemnification due under this Section 13.1 and
shall have no right to seek contribution or indemnification from the Company.
13.2 INDEMNIFICATION BY PARENT AND CITADEL. Subject to the limitations
and procedures set forth in this Section 13, Parent and Citadel shall jointly
and severally indemnify and hold harmless the Stockholders from and against any
and all Damages sustained or incurred by Stockholders, to the extent such
Damages are sustained or incurred by the Stockholders by reason of (i) the
breach of any of the obligations or covenants of Parent or Citadel in this
Agreement or (ii) the breach of any of the representations or warranties made
by Parent or Citadel in this Agreement.
13.3 PROCEDURE FOR INDEMNIFICATION. In the event that any party to
this Agreement shall incur any Damages in respect of which indemnity may be
sought by such party pursuant to this Section 13 or any other provision of this
Agreement, the party indemnified hereunder (the "INDEMNITEE") shall notify the
party providing indemnification (the "INDEMNITOR") promptly. In the case of
third party claims, such notice shall in any event be given within 10 days of
the filing or assertion of any claim against the Indemnitee stating the nature
and basis of such claim; provided, however, that any delay or failure to notify
any Indemnitor of any claim shall not relieve it from any liability except to
the extent that the Indemnitor demonstrates that the defense of such action has
been materially prejudiced by such delay or failure to notify. In the case of
third party claims, the Indemnitor shall, within 10 days of receipt of notice
of such claim, notify the Indemnitee of its intention to assume the defense of
such claim. If the Indemnitor assumes the defense of the claim, the Indemnitor
shall have the right and obligation (a) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnitee, (b) to take all other required steps or proceedings to settle or
defend any such claims, and (c) to employ counsel to contest any such claim or
liability in the name of the Indemnitee or otherwise. If the Indemnitor shall
not assume the
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defense of any such claim or litigation resulting therefrom, the Indemnitee may
defend against any such claim or litigation in such manner as it may deem
appropriate and the Indemnitee may settle such claim or litigation on such
terms as it may deem appropriate, and assert against the Indemnitor any rights
or claims to which the Indemnitee is entitled. Payment of Damages shall be made
within 10 days of a final determination of a claim.
A final determination of a disputed claim shall be (a) a judgment of
any court determining the validity of disputed claim, if no appeal is pending
from such judgment or if the time to appeal therefrom has elapsed, (b) an award
of any arbitration determining the validity of such disputed claim, if there is
not pending any motion to set aside such award or if the time within to move to
set such award aside has elapsed, (c) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys,
(d) a written acknowledgment of the Indemnitor that it no longer disputes the
validity of such claim, or (e) such other evidence of final determination of a
disputed claim as shall be acceptable to the parties.
13.4 SURVIVAL.
(a) COMPANY AND STOCKHOLDERS. Each of the representations and
warranties made by the Company and the Stockholders in this Agreement shall
survive for a period of 24 months after the Closing Date, notwithstanding any
investigation at any time made by or on behalf of Parent or Citadel, and upon
the expiration of such 24-month period such representations and warranties
shall expire except as follows: (i) the representations and warranties of the
Company contained in Sections 3.7 and 3.12 shall expire at the time the period
of limitations expires for the assessment by the taxing authority of additional
Taxes with respect to which the representations and warranties relate; (ii) the
representations and warranties of the Company contained in Sections 3.19 and
3.20 shall expire at the time the latest period of limitations expires for the
enforcement by an applicable Governmental Authority of any remedy with respect
to which the particular representation or warranty relates; and (iii) the
representations and warranties of the Company contained in Sections 3.1, 3.3,
3.4 and 3.9(a) shall not expire but shall continue indefinitely. No claim for
the recovery of Damages may be asserted by Parent or Citadel against the
Company, the Stockholders or their successors in interest after such
representations and warranties shall thus expire; provided, however, that
claims for Damages first asserted in writing within the applicable period shall
not thereafter be barred.
(b) PARENT AND CITADEL. Each of the representations and
warranties made by Parent and Citadel in this Agreement shall survive for a
period of 24 months after the Closing Date, notwithstanding any investigation
at any time made by or on behalf of the Company or the Stockholders, and upon
the expiration of such 24-month period such representations and warranties
shall expire except as follows: (i) the representations and warranties of
Parent and Citadel contained in Section 4.6 shall expire at the time the period
of limitations expires for the assessment by the taxing authority of additional
Taxes with respect to which the representations and warranties relate; (ii) the
representations and warranties of Parent and
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Citadel contained in Section 4.8 shall expire at the time the latest period of
limitations expires for the enforcement by an applicable Governmental Authority
of any remedy with respect to which the particular representation or warranty
relates; and (iii) the representations and warranties of Parent and Citadel
contained in Sections 4.1, 4.2 and 4.3 shall not expire but shall continue
indefinitely. No claim for the recovery of Damages may be asserted by the
Company or the Stockholders against Parent, Citadel or their successors in
interest after such representations and warranties shall thus expire; provided,
however, that claims for Damages first asserted in writing within the
applicable period shall not thereafter be barred.
13.5 LIMITATION OF COMPANY'S AND STOCKHOLDERS' LIABILITY.
(a) THRESHOLD. Parent and Citadel shall not be entitled to
recover Damages pursuant to clause (ii) of Section 13.1 (other than Damages
arising by reason of a breach of the representations and warranties made in
Sections 3.1, 3.3, 3.4, 3.7 and 3.9(a)) until the aggregate of all such Damages
suffered by Parent and Citadel exceeds $25,000 (the "THRESHOLD"); provided,
however, that once such aggregate exceeds the Threshold, Parent and Citadel may
recover all such Damages suffered since the Closing Date.
(b) CEILING. Parent and Citadel shall not be entitled to
recover Damages pursuant to clause (ii) of Section 13.1 (other than Damages
arising by reason of a breach of the representations and warranties made in
Sections 3.7, 3.9(a), 3.12, 3.19 and 3.20 ("CITADEL'S CAP EXEMPT DAMAGES")) in
excess of the Merger Consideration. No maximum limitation shall apply, however,
to the right of Parent and Citadel to recover Citadel's Cap Exempt Damages or
Damages pursuant to clause (i) of Section 13.1.
(c) EXCEPTIONS. Paragraphs (a) and (b) above shall not apply
with respect to any claim for Damages relating to any intentional or fraudulent
breach of a representation or warranty by the Company or the Stockholders, nor
shall there be any survival limitation for any such claim.
13.6 LIMITATION OF PARENT'S AND CITADEL'S LIABILITY.
(a) THRESHOLD. The Company and the Stockholders shall not be
entitled to recover Damages pursuant to clause (ii) of Section 13.2 (other than
as a result of a breach of the representations and warranties made in Sections
4.1, 4.2, 4.3 and 4.6) until the aggregate of all such Damages suffered by the
Company and the Stockholders exceeds the Threshold; provided, however, that
once such aggregate exceeds the Threshold, the Company and the Stockholders may
recover all such Damages suffered since the Closing Date.
(b) CEILING. The Company and the Stockholders shall not be
entitled to recover Damages pursuant to clause (ii) of Section 13.2 (other than
Damages arising by reason of a breach of the representations and warranties
made in Sections 4.2, 4.6 and 4.8 ("STOCKHOLDERS' CAP EXEMPT DAMAGES")) in
excess of the Merger Consideration. No maximum
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<PAGE> 43
limitation shall apply, however, to the right of the Company and the
Stockholders to recover Stockholders' Cap Exempt Damages or Damages pursuant to
clause (i) of Section 13.2.
(c) EXCEPTIONS. Paragraphs (a) and (b) above shall not apply
with respect to any claim for Damages relating to any intentional or fraudulent
breach of a representation or warranty by Parent or Citadel, nor shall there be
any survival limitation for any such claim.
SECTION 14
TERMINATION OF AGREEMENT; ADDITIONAL REMEDIES
14.1 MANNER. This Agreement and the transactions contemplated hereby
may be terminated prior to completion of the Closing:
(a) by mutual written consent of Citadel and the Company;
(b) by either Citadel or the Company upon providing written
notice to the other party at any time after December 31, 1997 if the FCC
Approval has not been granted by the FCC, but only if the party providing such
notice is not then in material breach of this Agreement;
(c) by Citadel, upon providing written notice to the Company,
if as of the time set for Closing any of the conditions in Section 12 of this
Agreement (except Section 12.9) has not been satisfied or waived by Citadel in
writing, provided Citadel is not then in material breach of this Agreement;
(d) by the Company, upon providing written notice to Citadel,
if as of the time set for Closing any of the conditions in Section 11 of this
Agreement (except Section 11.7) has not been satisfied or waived by the Company
in writing, provided the Company is not then in material breach of this
Agreement;
(e) by the Company, upon providing written notice to Citadel,
if Citadel fails to consummate the transactions contemplated hereunder after
all conditions in Section 12 of the Agreement have been satisfied, provided the
Company is not then in material breach of this Agreement;
(f) by Citadel, upon providing written notice to the Company,
if the Company fails to consummate the transactions contemplated hereunder
after all conditions in Section 11 of this Agreement have been satisfied,
provided Citadel is not then in material breach of this Agreement;
(g) by either party upon denial by the FCC of the FCC
Application; and
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(h) by either party if any court of competent jurisdiction in
the United States or any other United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other actions shall have become
final and non-appealable.
The foregoing notwithstanding, in the event any party hereto elects to
terminate this Agreement in accordance with paragraphs (a) through (h) above,
then any party hereto shall have the right to terminate, or cause its Affiliate
to terminate, the Real Estate Purchase Agreement, the Snider Corporation
Agreement and the CDB Broadcasting Agreement.
14.2 ADDITIONAL REMEDIES.
(a) In the event of the termination of this Agreement by the
Company (i) pursuant to Section 14.1(d) or 14.1(e) (any such event being a
"DRAW CONDITION"), the Company shall be entitled to draw upon and receive the
proceeds of the Letter of Credit, but shall not retain any rights to recover
any actual damages it suffers as a result of such termination and the breach
relating to such damages. In the event of any other termination of this
Agreement pursuant to any other provision of Section 14.1, Citadel shall be
entitled to a return of, and the Company shall return to Citadel, the original
Letter of Credit and, in that event, the Company and the Stockholders will no
longer have any liability under this Agreement.
(b) The parties recognize and agree that Parent and Citadel
have relied on this Agreement and expended considerable effort and resources
related to the transactions contemplated hereunder, that the rights and
benefits conferred upon Parent and Citadel herein are unique, and that damages
may not be adequate to compensate Parent and Citadel in the event the Company
and the Stockholders improperly refuse to consummate the transactions
contemplated hereunder. The parties therefore agree that Parent and Citadel
shall be entitled, at their option and in lieu of terminating this Agreement
pursuant to Section 14.1, to have this Agreement specifically enforced by a
court of competent jurisdiction in addition all other remedies available at law
or in equity; provided, however, that Parent and Citadel may not specifically
enforce this Agreement if Citadel has previously terminated this Agreement and
received the original Letter of Credit.
SECTION 15
GENERAL
15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each representation and
warranty herein contained shall survive the Closing for the periods described
in Section 13.4, notwithstanding any investigation at any time made by or on
behalf of any party to this Agreement.
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15.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the laws of conflicts, of the
State of Arkansas.
15.3 NOTICES. Any notices or other communications required or
permitted under this Agreement shall be delivered personally or sent by
registered or certified mail, postage prepaid, delivered by overnight delivery
or sent by facsimile, addressed as follows:
To Parent or Citadel: Citadel Broadcasting Company
1015 Eastman Drive
Bigfork, Montana 59911
Attn: Lawrence R. Wilson
Fax: (406) 837-5373
With copy to: Citadel Broadcasting Company
140 South Ash Avenue
Tempe, Arizona 85281
Attn: Donna L. Heffner
Fax: (602) 731-5229
With copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street
42nd Floor
Pittsburgh, Pennsylvania 15219
Attn: Bryan D. Rosenberger, Esq.
Fax: (412) 566-6099
To the Company or Snider Broadcasting Corporation
the Stockholders: 124 West Capitol Avenue, Suite 200
Little Rock, Arkansas 72201
Attn: Ted L. Snider, Jr.
Fax: (501) 210-7628
With copy to: Friday, Eldredge & Clark
2000 First Commercial Building
400 West Capitol Avenue
Little Rock, Arkansas 72201
Attn: Price C. Gardner, Esq.
Fax: (501) 376-2147
or such other addresses as shall be similarly furnished in writing by either
party. Such notices or communications shall be deemed to have been given as of
the date of personal delivery, or if mailed, the date the return receipt is
signed or the date on which delivery is refused, or if delivered by overnight
delivery or facsimile, on the date of receipt.
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<PAGE> 46
15.4 ENTIRE AGREEMENT. This instrument supersedes all prior
communications, understandings and agreements of or between the parties with
respect to the subject matter of this Agreement and contains the entire
agreement between the parties with respect to the transactions contemplated in
this Agreement. Except as otherwise set forth in this Agreement, there are no
other representations, warranties or covenants of any party hereto with respect
to the subject matter of this Agreement.
15.5 HEADINGS. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
15.6 SCHEDULES, EXHIBITS. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
15.7 EXPENSES. Each party shall bear its own costs and expenses
incurred by it in connection with the transactions pursuant to this Agreement.
15.8 AMENDMENT. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed on behalf of all of
the parties or, in the case of a waiver, by the party waiving compliance.
15.9 WAIVER. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce that provision or any other provision of this Agreement at any
time thereafter.
15.10 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by any party without the prior
written consent, in its sole discretion, of each other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, and no other person
shall have any right, benefit or obligation under this Agreement.
15.11 PRIOR CONTROL. Until the Closing, the SBC Companies shall
maintain control of the Station.
15.12 ATTORNEYS' FEES. In the event of any action arising out of this
Agreement, the prevailing party shall be entitled to recover its costs,
expenses and reasonable attorney's fees incurred in connection with the dispute
from the other party.
15.13 COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in
one or more counterparts, each of which together shall constitute a single
instrument. Signatures on this Agreement transmitted by facsimile shall be
deemed to be original signatures for all purposes of this Agreement.
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<PAGE> 47
15.14 DISPUTE RESOLUTION. Except as provided below, any dispute
arising out of or relating to this Agreement or the breach, termination or
validity hereof shall be finally settled by arbitration conducted expeditiously
in accordance with the CPR Rules. The Center for Public Resources shall appoint
a neutral advisor from its National CPR Panel. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The place of arbitration shall be Little Rock,
Arkansas.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate; provided, however,
such proceedings shall be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within 45 days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three hours; such hearings
to take place on one or two days at a maximum; and
(d) decision to be rendered not more than 10 days following such
hearing.
The provisions of this Section 15.14 shall not apply with regard to any
equitable remedies to which a party may be entitled under this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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<PAGE> 48
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date above first written.
SNIDER BROADCASTING CORPORATION
By: /s/ Ted L. Snider
------------------------------
Ted L. Snider, Jr., President
Ted L. Snider
---------------------------
Ted L. Snider, Jr.
Calvin G. Arnold
---------------------------
Calvin G. Arnold
CITADEL COMMUNICATIONS CORPORATION
By: /s/ Lawrence R. Wilson
------------------------
Lawrence R. Wilson
Its: President
-----------------------
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
------------------------
Lawrence R. Wilson
Its: President
-----------------------
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<PAGE> 49
INDEX OF SCHEDULES AND EXHIBITS
Schedule 1 - Citadel's Disclosure Schedule
Schedule 2 - Company Asset Schedule
Schedule 3 - Company's Disclosure Schedule
Exhibit A - Agreement Not to Compete
Exhibit B - Amended and Restated Certificate of Incorporation
Exhibit C - Amendment to Registration Rights Agreement
Exhibit D - Amendment to Securities Purchase and Exchange Agreement
Exhibit E - Amendment to Stockholders Agreement
Exhibit F - Amendment to Voting Agreement
Exhibit G - Letter of Credit
Exhibit H - Local Marketing Agreement
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules or exhibits to the Securities Exchange
Commission upon request.]
<PAGE> 1
Exhibit 2.7
ASSET PURCHASE AGREEMENT
AMONG
CDB BROADCASTING CORPORATION,
CDB LICENSE CORPORATION
AND
CITADEL BROADCASTING COMPANY
JUNE 2, 1997
<PAGE> 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT"), made as of the 2nd day of
June, 1997, by and among CDB BROADCASTING CORPORATION, an Arkansas corporation
("CDB BROADCASTING"), CDB LICENSE CORPORATION, an Arkansas corporation ("CDB
LICENSE" and together with CDB Broadcasting, "SELLERS"), and CITADEL
BROADCASTING COMPANY, a Nevada corporation ("CITADEL").
RECITALS:
A. Sellers are the licensees of and own and operate radio station
KESR-FM licensed to Sherwood, Arkansas (the "STATION").
B. Pursuant to the Natural State Intent Letter (as herein defined),
CDB Broadcasting has expressed its intention to acquire (the "NATURAL STATE
ACQUISITION") all of the issued and outstanding shares of capital stock of
Natural State (as herein defined), which owns and operates radio station
KYTN-FM licensed to Wrightsville, Arkansas (the "PENDING STATION").
C. Sellers desire to sell to Citadel and Citadel desires to purchase
from Sellers substantially all of the assets of Sellers and the Station
(including CDB Broadcasting's rights under the Natural State Intent Letter and
the Natural State Definitive Agreement, if any), on the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall have the
meanings assigned to them below:
"ACCOUNTS RECEIVABLE" has the meaning specified in Section 8.3.
"ACCOUNTS RECEIVABLE LIST" has the meaning specified in Section 8.3.
"ACCRUED TAXES" has the meaning specified in Section 4.6.
"ACT" means the Communications Act of 1934, as amended.
"AFFILIATE" of any Person means any other Person (a) that directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, the first Person, or (b) any interests of which are owned, in
whole or in part, directly or indirectly, by the first Person.
<PAGE> 3
For purposes of this definition, the term "control" (including the correlative
meanings of the terms "controls," "controlled by," and "under direct or
indirect control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of the Person, whether through the
ownership of voting securities or by contract or otherwise.
"ASSET SCHEDULE" has the meaning specified in Section 2.1(a).
"ASSIGNED CONTRACTS" has the meaning specified in Section 2.1(d).
"ASSUMED OBLIGATIONS" has the meaning specified in Section 2.3.
"BROKER" means NationsBanc Capital Markets, Inc.
"BUSINESS" has the meaning specified in Section 4.1.
"CITADEL COLLECTION PERIOD" has the meaning specified in Section 8.3.
"CITADEL'S CAP EXEMPT DAMAGES" has the meaning specified in Section
13.5(b).
"CITADEL'S DISCLOSURE SCHEDULE" has the meaning specified in Section
5.3.
"CLOSING" means the consummation of the transactions contemplated in
this Agreement in accordance with the provisions of Section 10.
"CLOSING DATE" has the meaning specified in Section 10.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACTS" has the meaning specified in Section 4.9.
"CPR RULES" means the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes.
"DAMAGES" has the meaning specified in Section 13.1.
"DRAW CONDITION" has the meaning specified in Section 14.2(a).
"ENVIRONMENTAL CLAIMS" means and includes, without limitation: (a)
claims, demands, suits, causes of action for personal injury or lost use of
property, or consequential damages, to the extent any of the foregoing arise
directly or indirectly out of Environmental Conditions; (b) actual or
threatened damages to natural resources; (c) claims for the recovery of
response costs, or administrative or judicial orders directing the performance
of investigations, response or remedial actions under CERCLA, RCRA or other
Environmental Laws; (d) a requirement
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<PAGE> 4
to implement "corrective action" pursuant to any order or permit issued
pursuant to RCRA; (e) claims for restitution, contribution or equitable
indemnity from third parties or any governmental agency; (f) fines, penalties
or Liens against property; (g) claims for injunctive relief or other orders or
notices of violation from Governmental Authorities; and (h) with regard to any
present or former employees, exposure to or injury from Environmental
Conditions.
"ENVIRONMENTAL CONDITIONS" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping, or threatened release of Hazardous
Materials by either Seller. With respect to claims by employees, Environmental
Conditions also includes the exposure of Persons to Hazardous Materials within
work places on any real estate owned or occupied by either Seller.
"ENVIRONMENTAL LAWS" has the meaning specified in the definition of
Hazardous Materials.
"ENVIRONMENTAL NONCOMPLIANCE" means, but is not limited to: (a) the
release or threatened release as a result of the activities of either Seller of
any Hazardous Materials into the environment, any storm drain, sewer, septic
system or publicly owned treatment works, in violation of any effluent emission
limitations, standards or other criteria or guidelines established by any
federal, state or local law, regulation, rule, ordinance, plan or order; and
(b) any facility operations, procedures, designs, etc. which do not conform to
the statutory or regulatory requirements of the CAA, the CWA, the TSCA, the
RCRA or any other Environmental Laws intended to protect public health, welfare
and the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" has the meaning specified in Section 2.2.
"FCC" means the Federal Communications Commission.
"FCC APPLICATION" has the meaning specified in Section 9.1(a).
"FCC APPROVAL" has the meaning specified in Section 9.1(a).
"FCC LICENSES" means the main station license for the Station,
together with each of the other consents, rights, licenses, permits and other
authorizations issued by the FCC and held by Sellers in connection with, or
pertaining to, the conduct of the business and operation of the Station,
together with any renewals and extensions thereof and any applications therefor
pending on the Closing Date, and any and all applications made by Sellers for
such consents, rights, licenses, permits and other authorizations.
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<PAGE> 5
"FINAL ORDER" means a written action or order issued by the FCC or its
staff setting forth the FCC Approval (or a denial thereof), (a) which action or
order has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which action or order (i) no requests have
been filed and are pending for administrative or judicial review, rehearing,
reconsideration, appeal or stay, and the time period for filing any such
requests and for the FCC to set aside the action on its own motion under the
provisions of the Act or the rules, regulations and policies of the FCC has
expired, or (ii) in the event of review, reconsideration or appeal, the time
for further review, reconsideration or appeal has expired.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis during
the periods involved.
"GOVERNMENTAL AUTHORITY" means any government, whether federal, state
or local, or any other political subdivision thereof, or any agency, tribunal
or instrumentality of any such governmental or political subdivision, or any
other Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS MATERIALS" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases including but not limited to substances defined as "PCBs,"
"hazardous wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials," "petroleum," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C.
Section 9601 ET SEQ.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C.
Section 2601 ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 9601; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 300f ET SEQ.; the Clean Air
Act ("CAA"), 42 U.S.C. Section 7401 ET SEQ.; or any similar state law; and in
the plans, rules, regulations or ordinances adopted, or other criteria and
guidelines promulgated pursuant to the preceding laws or other similar laws,
regulations, rules or ordinances now in effect (collectively, the "ENVIRONMENTAL
LAWS"); and any other substances, constituents or wastes subject to
environmental regulations under any applicable federal, state or local law,
regulation or ordinance.
"INDEBTEDNESS FOR BORROWED MONEY" means (a) all indebtedness of either
Seller in respect of money borrowed (including, without limitation,
indebtedness which represents the unpaid amount of the purchase price of any
property), (b) all indebtedness of either Seller evidenced by a promissory
note, bond or similar written obligation to pay money, (c) all indebtedness
guaranteed by either Seller or for which either Seller is contingently liable,
including, without limitation, guaranties in the form of an agreement to
repurchase or reimburse, and any commitment by which any such Person assures a
creditor against loss, including contingent reimbursement obligations with
respect to letters of credit, and (d) all monetary obligations of either Seller
under any lease or similar arrangement, which obligations
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<PAGE> 6
would be classified and accounted for as capital obligations on a balance sheet
of either Seller under GAAP.
"INDEMNITEE" has the meaning specified in Section 13.3.
"INDEMNITOR" has the meaning specified in Section 13.3.
"INTELLECTUAL PROPERTY" has the meaning specified in Section 2.1(e).
"LEASEHOLDS" has the meaning specified in Section 4.8.
"LETTER OF CREDIT" has the meaning specified in Section 3.2.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, claim, easement, transfer restriction, lien (statutory or
otherwise) or security interest of any kind or nature whatsoever.
"LOCAL MARKETING AGREEMENT" has the meaning specified in Section 9.2.
"NATURAL STATE" means Natural State Communications Company, an
Arkansas corporation.
"NATURAL STATE ACQUISITION" has the meaning specified in the recitals
to this Agreement.
"NATURAL STATE CLOSING" has the meaning specified in Section 9.8.
"NATURAL STATE DEFINITIVE AGREEMENT" means a definitive Stock Purchase
Agreement, to be negotiated, executed and delivered by CDB Broadcasting
relating to the Natural State Acquisition, in form and substance satisfactory
to Citadel in its reasonable discretion.
"NATURAL STATE INTENT LETTER" means that certain Memorandum of Intent
dated April 30, 1997 among the stockholders of Natural State, Calvin G. Arnold,
Ted L. Snider, Jr. and CDB Broadcasting.
"OBLIGATIONS" means, without duplication, all (a) Indebtedness for
Borrowed Money, (b) Accrued Taxes, accounts payable, accrued liabilities and
all other liabilities and obligations of the type normally required by GAAP to
be reflected on a balance sheet, (c) commitments by which either Seller assures
a creditor against loss, including the face amount of all letters of credit
and, without duplication, all drafts drawn thereunder, (d) obligations
guaranteed in any manner by either Seller, (e) obligations under capitalized
leases in respect of which obligations either Seller is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person assures a creditor against loss, (f) obligations under
acceptance facilities, (g) obligations secured by a Lien on property of either
Seller, (h) obligations under interest rate or currency exchange or swap
agreements, (i) unsatisfied
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<PAGE> 7
obligations for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA, (j) indebtedness issued or obligation incurred in
substitution or exchange for any Obligations, (k) costs or expenses incurred by
either Seller of any nature, whether or not currently payable, and (l) other
liabilities or obligations of either Seller, in each of the foregoing instances
whether absolute or contingent, known or unknown, and whether or not normally
required by GAAP to be reflected on a balance sheet.
"PARENT" means Citadel Communications Corporation, a Nevada
corporation.
"PENDING STATION" has the meaning specified in the recitals to this
Agreement.
"PERMITS" has the meaning specified in Section 4.17(b).
"PERSON" means an individual, corporation, partnership, joint venture,
joint stock seller, association, trust, business trust, unincorporated
organization, Governmental Authority, or any other entity of whatever nature.
"PERSONAL PROPERTY" has the meaning specified in Section 2.1(a).
"PURCHASED ASSETS" has the meaning specified in Section 2.1.
"PURCHASE PRICE" has the meaning specified in Section 3.1.
"REAL ESTATE PURCHASE AGREEMENT" means that certain Agreement of Sale
dated as of the date hereof among Ted L. Snider, Sr., Jane J. Snider and
Citadel.
"REAL PROPERTY" has the meaning specified in Section 2.1(b)
"REAL PROPERTY LEASES" has the meaning specified in Section 2.1(c).
"SELLERS' DISCLOSURE SCHEDULE" has the meaning specified in Section
4.3.
"SNIDER BROADCASTING AGREEMENT" means that certain Stock Purchase
Agreement dated as of the date hereof among Snider Broadcasting Corporation,
the stockholders of Snider Broadcasting Corporation, Parent and Citadel.
"SNIDER CORPORATION AGREEMENT" means that certain Merger Agreement
dated as of the date hereof among Snider Corporation, the stockholders of
Snider Corporation, Parent and Citadel.
"STATION" has the meaning specified in the recitals to this Agreement.
"SUPPLEMENTAL FINANCIAL STATEMENTS" has the meaning specified in
Section 6.10
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<PAGE> 8
"TAXES" means all taxes, charges, fees, levies, or other assessments,
including income, gross receipts, excise, property, sales, transfer, license,
payroll, and franchise taxes, any taxes required by law to be withheld, and any
taxes payable as a result of the consummation of the transactions contemplated
by this Agreement, which taxes are imposed by any Governmental Authority; and
such term shall include any interest, penalties, or additions to tax
attributable to such assessments.
"THRESHOLD" has the meaning specified in Section 13.5(a).
"TRADE AGREEMENTS" has the meaning specified in Section 6.9.
"TRADE IMBALANCE" has the meaning specified in Section 6.9.
"TRADE LIABILITIES" has the meaning specified in Section 6.9.
"TRADE RECEIVABLES" has the meaning specified in Section 6.9.
"TRADE SCHEDULE" has the meaning specified in Section 6.9.
SECTION 2
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF PURCHASED ASSETS. Subject to the terms and
conditions of this Agreement, and on the basis of the representations,
warranties, covenants and agreements contained in this Agreement, at the
Closing, Sellers agree to sell, assign and convey to Citadel, and Citadel
agrees to purchase, acquire and accept from Sellers, all of the Purchased
Assets. The "PURCHASED ASSETS" consist of:
(a) All the tangible personal property, improvements and
fixtures of every kind or nature used in the operation of the Station in the
ordinary course of business and located at the Station (the "PERSONAL
PROPERTY"), including, without limitation, the personal property described on
SCHEDULE 2.1 to this Agreement (the "ASSET SCHEDULE")
(b) All of the right, title and interest of Sellers or any of
their Affiliates in and to any real property used in the operation of the
Station in the ordinary course of business which are described on the ASSET
SCHEDULE (the "REAL PROPERTY");
(c) The leasehold interests pursuant to the real property
leases described on the ASSET SCHEDULE (the "REAL PROPERTY LEASES");
(d) All of the right, title and interest of Sellers or any of
their Affiliates in and to those contracts, leases, licenses, memberships,
agencies, permits and agreements, other than Real Property Leases, to which
either Seller or any Affiliate thereof presently is a party
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<PAGE> 9
or an assignee of a party which are described on the ASSET SCHEDULE (the
"ASSIGNED CONTRACTS"), which Assigned Contracts include (i) the employment
agreements listed on the ASSET SCHEDULE and (ii) the Natural State Intent Letter
and the Natural State Definitive Agreement, if any;
(e) The call letters of the Station and all of the
copyrights, trademarks, trade names and other similar rights, including
applications and registrations therefor, used in connection with the past or
present operation of the Station in which either Seller or any Affiliate
thereof has any right, title or interest, including, without limitation, those
items listed on the ASSET SCHEDULE (collectively, the "INTELLECTUAL PROPERTY");
(f) The FCC Licenses, a complete list of which is included on
the ASSET SCHEDULE;
(g) All books, records and accounts relating to the operation
of the Station, subject to the right of Sellers to make and retain photocopies
thereof for Sellers' personal use and reference and to obtain access to such
books, records and accounts in accordance with the provisions of Section
2.2(a); and
(h) All other assets owned by Sellers as of the date of this
Agreement which are used in connection with the operation of the Station as of
the date of this Agreement, real and personal, tangible and intangible.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in this Agreement, it is expressly understood and agreed that there
shall be excluded from the assets transferred or assigned to Citadel with
respect to the Station the following (collectively, the "EXCLUDED ASSETS"):
(a) Except to the extent included in Section 2.1(g), all of
Sellers' corporate books and records and other documents relating to the
internal corporate affairs of Sellers, and all other corporate records or files
of Sellers not relating to the business or operation of the Station;
(b) All cash, cash equivalents or similar type investments
held by Sellers, such as certificates of deposit, treasury bills and other
marketable securities on hand as of the Closing;
(c) All accounts receivable existing as of Closing;
(d) Corporate assets and assets not used in connection with
the Station;
(e) Any and all claims of Sellers with respect to
transactions occurring or arising prior to the Closing Date, including, without
limitation, claims for Tax refunds; and
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(f) Those additional assets identified on SCHEDULE 2.2 as
Excluded Assets.
Notwithstanding the foregoing, any asset which is described above but which is
actually listed on the ASSET SCHEDULE shall be a Purchased Asset and not an
Excluded Asset.
2.3 OBLIGATIONS. Citadel shall not assume, and shall purchase the
Purchased Assets free and clear of, any and all Obligations of Sellers, except
those Obligations of Sellers arising from and after the Closing Date (other
than any liability or obligation for breach or default which occurred prior to
the Closing Date) pursuant to each of (a) the Real Property Leases, (b) the
Assigned Contracts, (c) those items subject to proration pursuant to Section
9.3, (d) the Trade Liabilities and (e) those additional items expressly set
forth on SCHEDULE 2.3 to this Agreement (collectively, the "ASSUMED
OBLIGATIONS").
2.4 DELIVERY OF FCC LICENSES. At or prior to the Closing, Citadel may,
in its sole and absolute discretion, instruct Sellers to deliver the FCC
Licenses at the Closing to Citadel License, Inc., a wholly owned subsidiary of
Citadel.
2.5 TAX DEFERRED EXCHANGE. Sellers hereby acknowledge that it is the
intention of Citadel to complete a tax deferred exchange under Section 1031 of
the Code and that Citadel's rights and obligations under this Agreement may be
assigned to a qualified intermediary or qualified escrow agent (as such terms
are defined in the regulations under Section 1031 of the Code) for the purpose
of completing such exchange. Sellers agree to cooperate in any manner
reasonably necessary to complete such exchange and at no additional cost or
liability to Sellers.
SECTION 3
PURCHASE PRICE; LETTER OF CREDIT
3.1 PURCHASE PRICE. Subject to adjustment as provided in Sections 6.9
and 9.3, the purchase price for the Purchased Assets (the "PURCHASE PRICE") is
equal to (i) $7,500,000, MINUS (ii) the amount of cash actually paid by Citadel
to the stockholders of Snider Broadcasting Corporation pursuant to Section
2.4(a) of the Snider Broadcasting Agreement, MINUS (iii) the amount of
liabilities constituting Assumed Obligations pursuant to clause (e) of the
definition thereof. At the Closing, Citadel shall deliver to Sellers
immediately available funds in the amount of the Purchase Price.
3.2 LETTER OF CREDIT. Simultaneously with the execution of this
Agreement, Citadel shall deliver to Sellers an irrevocable letter of credit in
favor of Sellers, issued by a national banking association or other issuer
acceptable to Sellers, in the amount of $325,000, which shall be in the form
attached as EXHIBIT A hereto (the "LETTER OF CREDIT"). The Letter of Credit
shall provide that the issuing bank shall make payment on the Letter of Credit
upon such bank's receipt of a joint certificate from the President of each
Seller and Citadel certifying that a Draw Condition has occurred. Upon the
Closing, Sellers shall return the original Letter of Credit to Citadel for
cancellation.
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3.3 ALLOCATION OF THE PURCHASE PRICE. Citadel and Sellers shall report
the transactions contemplated by this Agreement for federal and state tax
purposes in a manner consistent with the allocation of the Purchase Price made
by Citadel at the Closing (which allocation shall be reasonably acceptable to
Sellers).
SECTION 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
In connection with the purchase and sale of the Purchased Assets under
this Agreement and in order to induce Citadel to enter into and consummate the
transactions contemplated by this Agreement, Sellers jointly and severally make
the following representations and warranties to Citadel, as of the date of this
Agreement and as of the date of the Closing (except for representations and
warranties expressly and specifically relating to a time or times other than
the date hereof or thereof, which shall be made as of the specified time or
times):
4.1 ORGANIZATION AND QUALIFICATION. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas and has full power and authority to own its assets and properties and
to conduct the business in which it is now engaged (collectively, the
"BUSINESS"). Each Seller has full power, authority and legal right and all
necessary approvals, permits, licenses and authorizations to own its properties
and to conduct its Business.
4.2 AUTHORITY. The execution and delivery of this Agreement by
Sellers, the performance by Sellers of their covenants and agreements hereunder
and the consummation by Sellers of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of Sellers. This
Agreement constitutes the valid and legally binding agreement of Sellers,
enforceable against Sellers in accordance with its terms.
4.3 NO LEGAL BAR; CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Articles of Incorporation or
Bylaws of either Seller, or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict
with, or will result in any breach of any of the terms of, or constitutes or
will constitute a default under or results in or will result in the termination
of or the creation or imposition of any Lien pursuant to, the terms of any
contract, commitment, agreement, understanding or arrangement of any kind to
which either Seller is a party or by which either Seller or any of the assets
of either Seller is bound. Except for the FCC Approval and the consents
disclosed in SCHEDULE 4.0 to this Agreement ("SELLERS' DISCLOSURE SCHEDULE"),
no consents, approvals or authorizations of, or filings with, any Governmental
Authority or any other Person are required in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
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4.4 FINANCIAL STATEMENTS. Sellers have delivered to Citadel the
following financial statements for the Station: (a) the audited balance sheet
as of December 31, 1996 and the related statements of income and cash flows for
the year then ended; (b) the unaudited balance sheet as of April 30, 1997 and
the related statements of income and cash flows for the four months then ended;
and (c) the monthly unaudited balance sheets and income statements for each
month in 1996 and the first four months of 1997. Each of the foregoing
financial statements (including in all cases the notes thereto, if any) (i) is
accurate and complete in all material respects, (ii) is consistent in all
material respects with the books and records of Sellers (which, in turn, are
accurate and complete in all material respects) and (iii) presents fairly in
all material respects the financial condition and results of operations of
Sellers in accordance with GAAP (subject in the case of unaudited financial
statements to the lack of footnote disclosure and changes resulting from normal
year-end audit adjustments), consistently applied, as of the dates and for the
periods set forth therein.
4.5 ABSENCE OF CERTAIN CHANGES. Between December 31, 1996 and the date
of this Agreement, there has not been any (a) material adverse change in the
condition of the Station, financial or otherwise, or in the results of
operations, assets, liabilities or business of the Station; (b) damage or
destruction, whether or not insured, affecting the business operations of the
Station; (c) labor dispute or threatened labor dispute involving any of the
employees of the Station; (d) actual or threatened dispute pertaining to the
Station with any material provider of software, hardware or services; (e)
material change in the customary methods of operations of the Station; (f)
except in the ordinary course of business or to the extent not material to the
Business or financial condition of the Station, sale or transfer of any
tangible or intangible asset used or useful in the operation of the Station,
mortgage, pledge or imposition of any Lien on any such asset, lease of real
property, machinery, equipment or buildings with respect to the Station, or
modification, amendment or cancellation of any of its existing leases relating
to the Station, or cancellation of any debt or claim; or (g) liability or
obligation (contingent or otherwise) incurred under agreements or otherwise,
except current liabilities entered into or incurred in the ordinary course of
business consistent with past practices and obligations under the Natural State
Intent Letter.
4.6 TAXES. Each Seller has filed or caused to be filed on a timely
basis all federal, state, local and other tax returns, reports and declarations
required to be filed by it with respect to the Station and has paid all Taxes
(including, but not limited to, income, franchise, sales, use, unemployment,
withholding, social security and workers' compensation taxes and estimated
income and franchise tax payments, penalties and fines) reflected as due on
such returns, reports or declarations (whether or not shown on such returns,
reports or declarations), or pursuant to any assessment received by it in
connection with such returns, reports or declarations. All returns, reports and
declarations filed by or on behalf of each Seller are true, complete and
correct in all material respects. Except as disclosed in SELLERS' DISCLOSURE
SCHEDULE no deficiency in payment of any Taxes for any period has been asserted
by any taxing authority which remains unsettled at the date hereof, no written
inquiries have been received by either Seller from any taxing authority with
respect to possible claims for taxes or assessments, and there is no basis for
any additional claims or assessments for Taxes.
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Since December 31, 1996, neither Seller has incurred any liability for
Taxes which materially affect the operation of the Station other than in the
ordinary course of business. All Taxes attributable to the Station or its
income, operations or properties accruing up to and including the Closing (the
"ACCRUED TAXES") have been or will be paid when due regardless of whether such
Taxes are due and payable as of the Closing.
4.7 ASSET SCHEDULE. The ASSET SCHEDULE includes complete and accurate
(a) listings of all Real Property used in the operation of the Station; (b)
listings of all Personal Property owned by Sellers and used in the operation of
the Station; (c) descriptions of all Real Property Leases and Assigned
Contracts, none of which requires any consent of third parties in connection
with the transactions contemplated hereby, except otherwise as indicated in
SELLERS' DISCLOSURE SCHEDULE; (d) descriptions of all of the Intellectual
Property; and (e) listings of all of the FCC Licenses, all of the foregoing of
which will, as of the Closing, be owned and held by Sellers as reflected in the
ASSET SCHEDULE.
4.8 TITLE TO AND CONDITION OF PROPERTY.
(a) TITLE. Sellers will as of the Closing have good,
marketable and exclusive title to and undisputed possession of all of the real,
personal and tangible property and improvements included in the Purchased
Assets. Except as set forth on SELLERS' DISCLOSURE SCHEDULE, the Purchased
Assets are now free and clear of all Liens. The Purchased Assets will, as of
the Closing, be free and clear of all Liens.
(b) CONDITION. The Personal Property is structurally sound,
in reasonably good condition, ordinary wear and tear excepted, adequate and
suitable for the operation of the Station as it is currently being operated,
and in proper condition and repair so that the Station can operate according to
its FCC Licenses, the rules, regulations and policies of the FCC and in all
other respects in compliance with the Act and all other applicable federal and
state laws.
(c) INSURANCE. The Personal Property included among the
Purchased Assets is and will be insured through the Closing Date in amounts
adequate to replace or repair any casualty or other insurable loss to any of
such property.
(d) SUFFICIENCY OF ASSETS. The Purchased Assets include all
of the assets, of a sufficient nature, condition and quantity, necessary to
permit Citadel to operate the Station immediately upon the Closing in the
ordinary course of business and consistent with the past practices of Sellers.
Sellers have not, since December 31, 1996, removed any material item of
Personal Property from the Station other than removals in the ordinary course
of business which were not done in contemplation of the transactions
contemplated hereby.
(e) REAL PROPERTY LEASES.
(i) The ASSET SCHEDULE contains accurate
descriptions of the Real Property Leases and the location of the real estate
leased thereunder (the "LEASEHOLDS") and the
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type of facility located on the Leaseholds. Each Seller will as of the Closing
have a valid leasehold interest in its respective Leaseholds.
(ii) None of the Leaseholds is subject to any
covenant or restriction preventing or limiting in any material respect the
consummation of the transactions contemplated hereby, except for any consent
listed on SELLERS' DISCLOSURE SCHEDULE required of the landlords under the Real
Property Leases. Sellers' right, title and interest in and to the Leaseholds
will at the Closing be held by Sellers free and clear of all Liens.
(iii) The use for which the Leaseholds are zoned
permits the use thereof for the business of the Station consistent with past
practices. The use and occupancy of the Leaseholds by Sellers are in compliance
in all material respects with all regulations, codes, ordinances and statutes
applicable to Sellers and Sellers have not received any notice asserting any
material violation of sanitation laws and regulations, occupational safety and
health regulations, or electrical codes.
(iv) There are no facts relating to Sellers, and to
the best of the knowledge of Sellers, no facts relating to any other party,
that would prevent the Leaseholds from being occupied and used by Citadel
and/or any assignee of Citadel after the Closing Date in the same manner as
immediately prior to the Closing.
(v) There is not under any Real Property Lease any
material default by Sellers or any condition that with notice or the passage of
time or both would constitute such a default, and Sellers have not received any
notice asserting the existence of any such default or condition.
(vi) Each Real Property Lease is valid and binding
and in full force and effect as to Sellers, and to the best of the knowledge of
Sellers, as to each other party thereto, and except as disclosed on the ASSET
SCHEDULE, has not been amended or otherwise modified.
(vii) The Leaseholds constitute all of the real
property in which either Seller has a leasehold interest or other interest or
right (whether as lessor or lessee) and which is or will prior to the Closing
be used solely in the operation of the Station.
4.9 CONTRACTUAL AND OTHER OBLIGATIONS. Set forth in the ASSET SCHEDULE
is a description of all (a) Real Property Leases to which either Seller is a
party; (b) all contracts, agreements, licenses, leases, arrangements and other
documents used solely in connection with the present operation of the Station
to which either Seller is a party or by which either Seller or any of the
assets of either Seller are bound (including, in the case of loan agreements, a
description of the amounts of any outstanding borrowings thereunder and the
collateral, if any, for such borrowings); (c) uncompleted orders for the
purchase by either Seller of materials, supplies, equipment and services for
the requirements of the Station existing as of the date hereof and with respect
to which the remaining obligation of either Seller is in excess of
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$2,500; and (d) contingent contractual obligations and liabilities of either
Seller known to Sellers existing as of the date hereof (all of the foregoing,
collectively, the "CONTRACTS"). Each of the Contracts is designated in the
ASSET SCHEDULE either as an Assigned Contract, or as a Contract that will not
be assigned to Citadel. Neither Seller nor, to the best of the knowledge of
Sellers, any other Person is in material default in the performance of any
covenant or condition under any Contract and no claim of such a default has
been made and no event has occurred which with the giving of notice or the
lapse of time would constitute such a default under any covenant or condition
under any Contract. Neither Seller is a party to any Contract which would
terminate or be materially adversely affected by the consummation of the
transactions contemplated by this Agreement. Originals or true, correct and
complete copies of all of the Assigned Contracts have been provided to Citadel
as of the date of this Agreement.
4.10 COMPENSATION. Set forth in SELLERS' DISCLOSURE SCHEDULE is a list
of (a) all agreements between either Seller and its respective employees or
other Persons providing services for compensation with regard to the Station,
whether individually or collectively, and (b) all employees of either Seller or
other Persons providing services for either Seller with respect to the Station
entitled to receive annual compensation in excess of $5,000 and their
respective positions, job categories and salaries. The transactions
contemplated by this Agreement will not result in any liability for severance
pay to any such employee or other Person. Sellers have not informed any such
employee or other Person that such Person will receive any increase in
compensation or benefits or any ownership interest in either Seller or its
Business. Except as disclosed in SELLERS' DISCLOSURE SCHEDULE, all of the
employees of Sellers are "at will" employees and may be terminated by Sellers
at any time, without liability or obligation except the payment of normal
compensation accrued up to the time of termination of employment.
4.11 EMPLOYEE BENEFIT PLANS.
(a) Neither Seller maintains or sponsors, and neither Seller
is required to make contributions to, any pension, profit-sharing, savings,
bonus, incentive or deferred compensation, severance pay, medical, life
insurance, welfare or other employee benefit plan which affects the employees
working at the Station, except as set forth in SELLERS' DISCLOSURE SCHEDULE.
SELLERS' DISCLOSURE SCHEDULE fully discloses all of the plans, funds, policies,
programs, arrangements or understandings sponsored or maintained by either
Seller pursuant to which any employee of the Station (or any dependent or
beneficiary of any such employee) might be or become entitled to (1) retirement
benefits; (2) severance or separation from service benefits; (3) incentive,
performance, stock, share appreciation or bonus awards; (4) health care
benefits; (5) disability income or wage continuation benefits; (6) supplemental
unemployment benefits; (7) life insurance, death or survivor's benefits; (8)
accrued sick pay or vacation pay; (9) any type of benefit offered under any
arrangement subject to characterization as an "employee welfare benefit plan"
within the meaning of section 3(3) of ERISA; or (10) benefits of any other type
offered through any arrangement that could be characterized as providing for
additional compensation or fringe benefits. As to any such plan, fund, policy,
program,
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arrangement or understanding, all of the following are true: (A) all
amounts due as contributions, insurance premiums and benefits to the date
hereof have been fully paid by Sellers; (B) all applicable material
requirements of law have been observed with respect to the operation thereof,
and all applicable reporting and disclosure requirements have been timely
satisfied; and (C) neither Seller is aware of any claim or demand by any
employee (or beneficiary or dependent of any employee) for benefits (other than
routine claims for benefits), or by any taxing authority for taxes or penalties
which has not been satisfied in full or which may be or become subject to
litigation or arbitration.
(b) Neither Seller has any obligation to provide health or
other welfare benefits to former, retired or terminated employees, except as
specifically required under Section 4980B of the Code. Sellers have
substantially complied with any applicable notice and continuation requirements
of Section 4980B of the Code and the regulations thereunder.
4.12 LABOR RELATIONS. There have been no material violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions of, Sellers, or the terms and
conditions of employment, wages (including overtime compensation) and hours.
The Station is not engaged in any unfair labor practice or other unlawful
employment practice and there are no charges of unfair labor practices or other
employee-related complaints pending or threatened against the Station before
the National Labor Relations Board, the Equal Employment Opportunity
Commission, the Occupational Safety and Health Review Commission, the
Department of Labor or any other Governmental Authority. There is no strike,
picketing, slowdown or work stoppage or organizational attempt pending,
threatened against or involving the Station. No issue with respect to union
representation is pending or threatened with respect to the employees of the
Station.
4.13 INCREASES IN COMPENSATION OR BENEFITS. Subsequent to December 31,
1996, there have been no increases in the compensation payable or to become
payable to any of the employees of either Seller who work solely at the
Station, nor has either Seller paid or provided for any awards, bonuses, stock
options, loans, profit-sharing, pension, retirement or welfare plans or similar
or other payments or arrangements for or on behalf of such employees in each
case other than (a) pursuant to currently existing plans or arrangements set
forth in SELLERS' DISCLOSURE SCHEDULE or (b) as was required from time to time
by governmental legislation affecting wages. The vacation policy of each Seller
is set forth in SELLERS' DISCLOSURE SCHEDULE. No employee of either Seller who
works solely at the Station is entitled to vacation time in excess of two weeks
(three weeks in the case of employees with 10 years or more of service) during
the current vacation year (fiscal May 1 through April 30) and no such employee
has any accrued vacation time with respect to any period prior to the current
calendar year except as set forth in SELLERS' DISCLOSURE SCHEDULE.
4.14 INSURANCE. Each Seller maintains insurance policies covering all
of its properties and assets and the various occurrences which may arise in
connection with the operation of the Station, each of which policies is
summarized in SELLERS' DISCLOSURE SCHEDULE. Such policies
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are in full force and effect and all installments of premiums due thereon have
been paid in full. Sellers have complied with the provisions of such policies.
There are no notices of any pending or threatened termination or premium
increases with respect to any of such policies. There has been no casualty loss
or occurrence which may give rise to any claim of any kind not covered by
insurance and neither Seller is aware of any casualty occurrence which may give
rise to any claim of any kind not covered by insurance. No third party has
filed any claim against either Seller for personal injury or property damage of
a kind for which liability insurance is generally available which is not fully
insured, subject only to the standard deductible. None of Sellers' insurance
policies will terminate or be adversely affected by the consummation of the
transactions contemplated by this Agreement.
4.15 LITIGATION; DISPUTES. Except as disclosed in SELLERS' DISCLOSURE
SCHEDULE, there are no claims, disputes, actions, suits, investigations or
proceedings pending or threatened against or affecting the Station, and, to the
best of the knowledge of Sellers, there is no basis for any such claim,
dispute, action, suit, investigation or proceeding. Neither Seller has
knowledge of any default under any such action, suit or proceeding. Neither
Seller is in default in respect of any judgment, order, writ, injunction or
decree of any Governmental Authority with respect to the operation of the
Station.
4.16 ENVIRONMENTAL.
(a) Prior to the execution of this Agreement, Sellers have
provided to Citadel a true and correct copy of all environmental site
assessments, studies, reports and communications relating to the Real Property.
(b) Except as disclosed on SELLERS' DISCLOSURE SCHEDULE, (i)
there are no conditions, facilities, procedures or any other facts or
circumstances that constitute Environmental Noncompliance on any of the
Leaseholds and (ii) there is not constructed, placed, deposited, stored,
disposed of, nor located on any of the Leaseholds any asbestos in any form that
has released or, unless disturbed, threatens to release airborne asbestos
fibers in excess of applicable local, state and federal standards.
(c) Except as disclosed on SELLERS' DISCLOSURE SCHEDULE, no
structure, improvements, equipment, fixtures, activities or facilities located
on the Leaseholds uses Hazardous Materials except those used in the ordinary
course of the Business and in compliance with applicable Environmental Laws.
(d) Except as specifically described on SELLERS' DISCLOSURE
SCHEDULE, there have been no releases or threatened releases of Hazardous
Materials into the environment, or which otherwise contribute to Environmental
Conditions arising solely from the activities of either Seller, or to the best
of the knowledge of Sellers arising from any other activities, except to the
extent that such releases or threatened releases do not constitute a condition
of Environmental Noncompliance relating to the Leaseholds.
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(e) Except as disclosed on SELLERS' DISCLOSURE SCHEDULE,
there are no underground storage tanks, or underground piping associated with
tanks, used for the management of Hazardous Materials at the Leaseholds and
there are no abandoned underground storage tanks at the Leaseholds which have
not been either abandoned in place or removed pursuant to a permit issued by a
Governmental Authority.
(f) Neither Seller is subject to any Environmental Claims
against Sellers, no Environmental Claims have been threatened, nor, to the best
of the knowledge of Sellers, is there any basis for any such Environmental
Claims.
4.17 PERMITS; COMPLIANCE WITH APPLICABLE LAW.
(a) GENERAL. Neither Seller is in default under any, and each
Seller has complied with all, statutes, ordinances, regulations, orders,
judgments and decrees of any Governmental Authority applicable to it or to the
Business or the assets and properties of each Seller as to which a default or
failure to comply might result in any material adverse change in the condition,
financial or otherwise, assets or properties of either Seller or its Business.
Neither Seller has knowledge of any basis for assertion of any violation of the
foregoing or for any claim for compensation or damages or otherwise arising out
of any violation of the foregoing. Neither Seller has received any notification
of any asserted present or past failure to comply with any of the foregoing
which has not been satisfactorily responded to in the time period required
thereunder.
(b) PERMITS. Set forth in SELLERS' DISCLOSURE SCHEDULE are
complete and accurate lists of all FCC Licenses applicable to the Station, and
all other permits, licenses, approvals, franchises, notices and authorizations
issued by any Governmental Authorities (collectively, the "PERMITS"), held by
either Seller and applicable to the Station. The Station is operating in
accordance with the Act and its FCC Licenses and is in compliance with the Act
and the rules, regulations and policies of the FCC. The Permits set forth in
SELLERS' DISCLOSURE SCHEDULE are all of the Permits required for the conduct of
the Business. All of the Permits set forth in SELLERS' DISCLOSURE SCHEDULE are
in full force and effect, and neither Seller has engaged in any activity which
would cause or permit revocation or suspension of any such Permit, and no
action or proceeding looking to or contemplating the revocation or suspension
of any such Permit is pending or threatened. There are no existing defaults or
events of default or events or state of facts which with notice or lapse of
time or both would constitute a default by either Seller under any such Permit.
There is no default or claimed or purported or alleged default or state of
facts which with notice or lapse of time or both would constitute a default on
the part of any party in the performance of any obligation to be performed or
paid by any party under any Permit set forth in SELLERS' DISCLOSURE SCHEDULE.
Except for (1) the FCC Approval and (2) as set forth in SELLERS' DISCLOSURE
SCHEDULE, the consummation of the transactions contemplated hereby will in no
way affect the continuation, validity or effectiveness of the Permits set forth
in SELLERS' DISCLOSURE SCHEDULE, or require the consent of any Person. Except
as set forth in SELLERS' DISCLOSURE SCHEDULE, neither Seller is required to
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be licensed by, and is not subject to the regulation of, any Governmental
Authority by reason of its Business.
(c) CDB LICENSE. CDB License owns no assets other than the
FCC Licenses and has no liabilities.
4.18 INTELLECTUAL PROPERTY. The use of the Intellectual Property in
connection with the operation of the Station and in a manner consistent with
past practices does not infringe upon the proprietary rights of any other
Person. Citadel will, upon consummation of the transactions contemplated by
this Agreement, possess adequate rights, licenses and other authority to use
the Intellectual Property used by the Station in the operation of the Station
following the Closing in the manner now operated, without infringement or
unlawful or improper use of any of the Intellectual Property. No director,
officer or employee of either Seller has any interest in any of the
Intellectual Property, all of which will, as of the Closing, be free and clear
of all Liens. Neither Seller has knowledge of any infringement by any Person
upon the rights of Sellers with respect to the Intellectual Property. Neither
Seller has granted any outstanding licenses or other rights to any of the call
letters, copyrights, trademarks, trade names or other similar rights with
regard to any of the Intellectual Property.
4.19 BOOKS AND RECORDS. The books of account of Sellers fairly and
accurately reflect its income, expenses, assets and liabilities and have been
maintained in accordance with good business practices. All of such books and
records, to the extent included within the Purchased Assets, will be located on
the date of the Closing on the business premises of the Station.
4.20 ACTS TO BE PERFORMED. Sellers shall perform each of the
covenants, acts and undertakings of Sellers to be performed on or before the
Closing Date pursuant to the terms of this Agreement.
4.21 RELATED PARTY OBLIGATIONS. Except as set forth on the ASSET
SCHEDULE, no officer, director, shareholder or Affiliate of either Seller, or
any individual related by blood or marriage to any such Person, or any entity
in which any such Person or individual owns any beneficial interest, is a party
to any agreement, contract, commitment, promissory note, loan, any other actual
or proposed transaction with either Seller, or has any material interest in any
material property used by either Seller which is material to the operation of
the Station.
4.22 NATURAL STATE INTENT LETTER. The Natural State Intent Letter is
in full force and effect and enforceable against each of the parties thereto in
accordance with the provisions thereof. The Natural State Intent Letter has not
been amended, modified or otherwise altered and a true and correct copy of the
Natural State Intent Letter has been delivered by Sellers to Citadel. A true
and correct copy of the current draft of the Natural State Definitive Agreement
has been delivered by Sellers to Citadel.
4.23 DISCLOSURE. To the best of Sellers' knowledge, no representation
or warranty made under this Section 4 and none of the information furnished by
Sellers set forth in this
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Agreement or in the schedules or exhibits to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements in this Agreement or in the schedules or exhibits to this
Agreement not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF CITADEL
In connection with the purchase and sale of the Purchased Assets under
this Agreement and in order to induce Sellers to enter into and consummate the
transactions contemplated by this Agreement, Citadel makes the following
representations and warranties to Sellers, as of the date of this Agreement and
as of the date of the Closing (except for representations and warranties
expressly and specifically relating to a time or times other than the date
hereof or thereof, which shall be made as of the specified time or times):
5.1 ORGANIZATION AND QUALIFICATION. Citadel is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and has full corporate power and authority to own its assets and
properties, conduct its business and acquire the Purchased Assets. Citadel has
duly qualified to do business as a foreign corporation and is in good standing
under the laws of the State of Arkansas. Citadel has full power, authority and
legal right and all necessary approvals, permits, licenses and authorizations
to own its properties and to conduct its business.
5.2 AUTHORITY. Subject to the approval by Citadel's board of directors
of the transactions contemplated hereby, (a) the execution and delivery of this
Agreement by Citadel, the performance by Citadel of its covenants and
agreements hereunder and the consummation by Citadel of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action; and (b) this Agreement constitutes a valid and legally binding
agreement of Citadel, enforceable against Citadel in accordance with its terms.
5.3 NO LEGAL BAR: CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Certificate of Incorporation or
Bylaws of Citadel, or any law, rule, regulation, writ, judgment, injunction,
decree, determination, award or other order of any Governmental Authority, or
violates or will violate, or conflicts with or will conflict with, or will
result in any breach of any of the terms of, or constitutes or will constitute
a default under or results in or will result in the termination of or the
creation or imposition of any Lien pursuant to the terms of, any contract,
commitment, agreement, understanding or arrangement of any kind to which
Citadel is a party or by which Citadel or any of the assets of Citadel is
bound. Except for the FCC Approval and the consents disclosed in SCHEDULE 5.0
("CITADEL'S DISCLOSURE SCHEDULE"), no consents, approvals or authorizations of,
or filings with, any Governmental Authority or any other Person are required on
the part of Citadel in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
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5.4 ACTS TO BE PERFORMED. Citadel shall perform each of the covenants,
acts and undertakings of Citadel to be performed on or before the Closing Date
pursuant to the terms of this Agreement.
5.5 LITIGATION. There is no litigation, proceeding or investigation
pending or, to the best of Citadel's knowledge, threatened against or affecting
Citadel that is reasonably likely to prevent or hinder the consummation of the
transactions contemplated by this Agreement.
5.6 DISCLOSURE. To the best of Citadel's knowledge, no representation
or warranty made under this Section 5 and none of the information furnished by
Citadel set forth in this Agreement or in the schedules or exhibits to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements in this Agreement or in the
schedules or exhibits to this Agreement not misleading.
SECTION 6
AFFIRMATIVE COVENANTS OF SELLERS
Sellers jointly and severally covenant and agree with Citadel to:
6.1 COMPLIANCE WITH LAW. Comply with all applicable laws and
regulations required for the valid and effective consummation of the
transactions contemplated hereby.
6.2 PAYMENT OF OBLIGATIONS. Fully discharge all Obligations of
Sellers, except the Assumed Obligations, on a timely basis.
6.3 ACCESS. Afford Citadel and its authorized representatives, upon
reasonable notice to Sellers, reasonable access during normal business hours to
the Station and the Station's employees, and permit Citadel and its authorized
representatives to examine all operations, equipment, properties and other
assets, logs, books, relevant records, contracts and documents of Sellers
pertinent to the Station; provided, however, that in each instance mutually
satisfactory arrangements shall be made in advance in order to avoid
interruption and to minimize interference with the normal business and
operations of the Station.
6.4 PRESERVATION OF ORGANIZATION. Exercise all reasonable efforts to
preserve the business organization of the Station intact, and assist Citadel,
as and when requested by Citadel, to preserve the present relationships of the
Station with employees, suppliers, advertisers and customers and others having
business relationships with the Station; provided, however, that nothing
contained in this Agreement shall require either Seller to expend money in
fulfillment of its obligations set forth in this Section 6.4 other than those
expenditures that Sellers would have made in the ordinary course of the
business of the Station and consistent with past practices.
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6.5 BOOKS AND RECORDS. Maintain the books and records of Sellers in
accordance with good business practices, on a basis consistent with past
practices, and promptly make available to Citadel the books, records, tax
returns, leases, contracts and other documents or agreements material to the
Station as Citadel, its counsel, accountants or other authorized
representatives may from time to time reasonably request.
6.6 EMPLOYEES. Pay as and when the same shall become due and payable,
any amounts owed by either Seller to its employees who have performed services
up to the time of Closing, whether fixed or accrued, for wages, vacation pay,
sick pay, severance pay, employee benefits, damages and otherwise.
6.7 COMPLIANCE WITH FCC MATTERS. Comply with the FCC Licenses
applicable to the Station and with the provisions of the Act, the rules,
regulations and policies of the FCC, and with all other laws, ordinances,
regulations, rules and orders of any Governmental Authority applicable to
either Seller or to the Station.
6.8 TAXES. File all federal, state and municipal tax returns, reports
and declarations required to be filed by Sellers prior to the Closing, and
satisfy all Taxes related thereto, and either pay in full on or before the
Closing or effect a proration pursuant to Section 9.3 for all Accrued Taxes
attributable to either Seller, or its income, operations or properties,
accruing through the Closing, regardless of whether such Taxes otherwise would
have been then due and payable.
6.9 TRADE-OUTS. Citadel shall assume as of the Closing the Trade
Agreements existing as of the Closing and that have not yet been performed. To
the extent that the aggregate liability of the Station as of the Closing for
unperformed time under the Trade Agreements (the "TRADE LIABILITIES") exceeds
the value of the goods and services to be received by the Station or Citadel
after the Closing under the Trade Agreements (the "TRADE RECEIVABLES"), the
Purchase Price payable at the Closing shall be reduced by the amount by which
the Trade Liabilities exceeds the Trade Receivables (the "TRADE IMBALANCE").
Sellers shall deliver to Citadel at the Closing a schedule of Trade Liabilities
and Trade Receivables existing as of the Closing (the "TRADE SCHEDULE").
Sellers shall exercise reasonable efforts to minimize the amount of additional
Trade Liabilities incurred after execution of this Agreement, and to prevent a
Trade Imbalance. For purposes hereof, the term "TRADE AGREEMENTS" means and
includes those agreements entered into by either Seller for the sale of
advertising time on the Station for consideration other than cash. For purposes
hereof, the value of Trade Receivables and the Trade Liabilities as of the
Closing shall be the fair market value thereof, as previously agreed to by
Sellers and the applicable vendor. Citadel shall assume Sellers' remaining
obligations under such contracts.
6.10 SUPPLEMENTAL FINANCIAL STATEMENTS. Sellers shall provide Citadel
with copies of the monthly unaudited income statements and balance sheets
applicable to the Station prepared by Sellers from the date hereof until
Closing in the ordinary course of business (collectively, the "SUPPLEMENTAL
FINANCIAL STATEMENTS"). Sellers shall provide such Supplemental Financial
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Statements to Citadel promptly upon such Supplemental Financial Statements
becoming available to Sellers. The Supplemental Financial Statements shall be
subject to the representations and warranties as set forth in Section 4.4.
6.11 CONSENTS. Exercise all reasonable efforts (not involving the
payment by either Seller of any money to any party to any Assigned Contract) to
obtain, prior to the Closing the consent and approval of any third parties
whose consent or approval is necessary in connection with the consummation of
the transactions contemplated hereby, with respect to the Assigned Contracts
set forth on SELLERS' DISCLOSURE SCHEDULE and requiring such consent. If any
such consent or approval is not obtained, Sellers will use commercially
reasonable efforts (not involving the payment of money to any Person) to secure
an arrangement satisfactory to Citadel intended to provide for Citadel
following the Closing the benefits under each Assigned Contract for which such
consent or approval is not obtained; provided, however, that Citadel shall have
the right to terminate this Agreement or to seek damages or other remedies from
Sellers as a result of any failure by Sellers to obtain any such consent or
approval set forth on SELLERS' DISCLOSURE SCHEDULE, if alternative arrangements
are not satisfactory to Citadel. Sellers shall also execute a consent in a form
provided by Citadel, allowing Citadel to assign all of its rights under this
Agreement and any related documents to one or more of Citadel's lenders upon
default by Citadel under the relevant loan documents.
Nothing in this Agreement will constitute a transfer or an attempted
transfer of any Assigned Contract which by its terms or under applicable law or
governmental rules or regulations requires the consent or approval of a third
party (including, without limitation, a Governmental Authority) unless such
consent or approval is obtained.
6.12 FURTHER INFORMATION. Furnish to Citadel prior to the Closing such
financial (including tax), legal and other information with respect to Sellers
and the Station as Citadel or its authorized representatives may from time to
time reasonably request.
6.13 NOTICE. Promptly notify Citadel in writing upon the occurrence or
the nonoccurrence of any event which does then, or which upon the passing of
time or the giving of notice would, constitute a breach of or default under, or
render misleading or untrue in any material respect, any agreement, covenant,
representation or warranty of Sellers set forth in this Agreement.
6.14 IMPACT OF LOCAL MARKETING AGREEMENT. From and after the effective
date of the Local Marketing Agreement, the covenants of Sellers relating to the
operation of the Station and the Purchased Assets from and after such date
shall be conditioned upon Citadel's performance, in all material respects, of
its obligations under the Local Marketing Agreement.
SECTION 7
NEGATIVE COVENANTS OF SELLERS
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From and after the date of this Agreement and until the Closing,
neither Seller shall take, or cause to be taken, any of the following actions
without Citadel's prior approval, which may not be unreasonably withheld:
7.1 SALES, TRANSFERS AND LIENS. Make any sale, transfer, assignment,
conveyance, mortgage, hypothecation, encumbrance or other placement of any Lien
on any of the Purchased Assets, except in the ordinary course of business,
which do not materially interfere with the operations of the Station, and which
in the case of a sale, transfer or assignment, is replaced with an asset of
equal or greater value, and, in the case of a conveyance, mortgage,
hypothecation, encumbrance or other Lien, is released at or prior to the
Closing.
7.2 ASSUMED OBLIGATIONS. Amend, terminate or renew any of the Assumed
Obligations (including any renewal or termination resulting from the failure to
provide, after the date of this Agreement, timely notice of nonrenewal or
termination as required by the terms of any of the Assumed Obligations).
7.3 BREACHES, DEFAULTS. Do any act or omit to do any act, or permit
any act or omission to occur, that will cause a breach of any contract,
commitment or obligation of it in any respect that would have a material
adverse effect on the Purchased Assets or the business operations of the
Station as presently conducted.
7.4 OBLIGATIONS. Incur any Obligations except in the ordinary course
of business in a manner consistent with past practices.
7.5 SALARY INCREASES. Increase any salary, other payments,
disbursement or distributions in any manner or form to any employees of either
Seller except (A) in the ordinary course of business consistent with past
practices or (B) in accordance with the existing terms of contracts entered
into prior to the date of this Agreement.
7.6 NON-SOLICITATION. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire either
Seller or the Station in whole or in part.
SECTION 8
COVENANTS OF CITADEL
Citadel hereby covenants as follows:
8.1 COMPLIANCE WITH LAW. Citadel shall comply with all applicable laws
and regulations required for the valid and effective consummation of the
transactions contemplated by this Agreement.
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8.2 NOTICE. Citadel shall promptly notify Sellers in writing upon the
occurrence or the non-occurrence of any event which does then, or which upon
the passing of time or the giving of notice would, constitute a breach of or
default under, or render misleading or untrue in any material respect, any
agreement, covenant, representation or warranty of Citadel set forth in this
Agreement.
8.3 ACCOUNTS RECEIVABLE. Subject to Citadel's receipt from Sellers at
the Closing of a list (the "ACCOUNTS RECEIVABLE LIST") of accounts receivable
of the Station existing as of the Closing, exclusive of Trade Receivables, if
any (the "ACCOUNTS RECEIVABLE"), for a period of 120 days commencing with the
Closing Date (the "CITADEL COLLECTION PERIOD"), Citadel, as agent for Sellers,
shall collect the Accounts Receivable in accordance with Citadel's normal
collection processes and procedures. In no event shall Citadel be required to
institute litigation or to retain third parties to institute collection
procedures with respect to the Accounts Receivable. All remittances will be
applied first to the oldest Accounts Receivable, unless the client asserts that
a dispute exists with respect to a particular account or the client specifies
the particular invoice to which the payment is to be applied, in which case the
remittances shall be applied to the specific account and Citadel shall promptly
notify Sellers of any dispute. Remittances collected by Citadel on behalf of
Sellers shall be remitted to Sellers without offset of any kind within 10 days
after the end of each calendar month during the Citadel Collection Period, and
within five days after termination of the Citadel Collection Period. During the
Citadel Collection Period, at Sellers' option, Sellers shall be permitted to
collect the Accounts Receivable that remain outstanding after 60 days, or are
disputed in writing by the relevant account debtor. Each remittance by Citadel
to Sellers shall be accompanied by a written report from Citadel setting forth
the aggregate amount of the Accounts Receivable and the aggregate amount of
cash collections of such Accounts Receivable during the period for which
payment is made, along with a breakdown by account debtor. At the end of the
Citadel Collection Period, Citadel shall account for all collected Accounts
Receivable and provide Sellers with all documentation related to uncollected
Accounts Receivable, and Citadel shall have no further responsibilities with
respect to any uncollected Accounts Receivables except to remit promptly to
Sellers any amounts subsequently received by Citadel. Citadel shall have no
obligation with respect to any Accounts Receivable it is unable to collect.
After the end of the Citadel Collection Period, Sellers shall be entitled to
collect any Accounts Receivable that remain uncollected.
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8.4 PERFORMANCE OF LOCAL MARKETING AGREEMENT. From and after the
effective date of the Local Marketing Agreement, Citadel shall perform and
discharge, in all material respects, its obligations in connection with the
operation of the Station and the Purchased Assets from and after such date in
accordance with the terms of the Local Marketing Agreement.
SECTION 9
ADDITIONAL COVENANTS OF THE PARTIES
9.1 APPLICATION FOR TRANSFER OF CONTROL. As promptly as practicable
after the date of this Agreement, and in no event later than 10 days after the
date of this Agreement, Sellers and Citadel shall file an application (the "FCC
APPLICATION") with the FCC to approve the transfer of control of the Station
from Sellers to Citadel (or its designee pursuant to Section 2.4) (the "FCC
APPROVAL"). Citadel shall have primary responsibility for filing and
prosecuting the FCC Application. The parties agree that they shall prosecute
the FCC Application (and shall cooperate with each other in the timely
prosecution thereof), in good faith and with due diligence, and within the time
allowed therefor by the rules and regulations of the FCC. Sellers and Citadel
shall each take all necessary actions on its part to obtain the FCC Approval.
Citadel shall advance the filing fee for the FCC Application, and Sellers shall
reimburse Citadel for one-half of such filing fee at the Closing. All other
costs and expenses incurred by each party in connection with the filing and
prosecution of the FCC Application shall be paid by the party incurring the
cost or expense.
9.2 LOCAL MARKETING AGREEMENT. Concurrently with the execution of this
Agreement, Citadel and Sellers shall execute and deliver a Local Marketing
Agreement for the Station in the form of EXHIBIT B attached hereto (the "LOCAL
MARKETING AGREEMENT"); provided, however, that the Local Marketing Agreement
shall not be effective, and neither party shall have any obligations
thereunder, until the conditions set forth in Sections 11.8 and 12.10 have been
satisfied.
9.3 ADJUSTMENTS AT CLOSING. Without duplication, the following items
(in addition to similar items which are customarily prorated) shall be prorated
between Citadel and Sellers through and including the Closing Date, and the
Purchase Price appropriately increased or decreased as a result thereof:
(a) Amounts payable under the Real Property Leases and the
Assigned Contracts;
(b) Power, utility and telephone charges incurred in
connection with the Station;
(c) Accrued Taxes existing as of the Closing; and
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(d) FCC filing fees, as provided in Section 9.1.
Proration of real and personal property taxes shall be based upon the
most recent assessments available. Each of the parties shall duly cooperate
with the other in making the foregoing prorations, adjustments and payments.
If, for any reason beyond the reasonable control of the parties, information
necessary to calculate the required prorations is unavailable before the
Closing Date, such item shall be prorated after the Closing Date as soon as
such information is available, and Sellers and Citadel shall cooperate with
each other in regard thereto and shall pay, each to the other, any amounts
which may be owing as a result of such subsequent prorations. If, at any time
after the Closing Date, errors are discovered in any prorations made pursuant
to this Section 9.3, Sellers and Citadel shall correct such errors and pay,
each to the other, any sums owing as a result of such correction. All
prorations to the extent feasible shall be made on the Closing Date.
9.4 BROKERAGE. Sellers and Citadel represent and warrant to each other
that except for Broker and as disclosed in Section 9.8 with respect to the
Natural State Acquisition, no Person has provided services as a broker, agent
or finder in connection with the transactions contemplated by this Agreement.
As between Sellers and Citadel, Sellers are fully responsible for the payment
of any fee, commission, claim or expense of Broker, and Sellers shall indemnify
and hold harmless Citadel for any and all fees, commissions, claims or
expenses, including attorneys' fees asserted by Broker. Sellers and Citadel
shall each indemnify and hold harmless the other for any and all claims or
expenses, including attorneys' fees, asserted by any Person other than Broker
purporting to act on behalf of the respective indemnitor as a broker, agent or
finder in connection with the transactions contemplated by this Agreement.
9.5 RISK OF LOSS. If any loss or damage to any of the Purchased Assets
occurs prior to the Closing (i) which has a material adverse effect on the
Station and (ii) such loss or damage is not susceptible of repair, replacement
or restoration with sufficient, collectible insurance proceeds available for
such purposes or by Sellers at their sole cost and expense to substantially the
same condition as existed before such loss or damage, then the parties shall
adjust the Purchase Price to reflect the diminution in value of the Station
attributable to the impairment of such assets.
9.6 ACTIONS WITH FCC. In the event any investigation, order to show
cause, notice of violation, notice of apparent liability or a forfeiture,
material complaint, petition to deny or informal objection is instituted or
filed against any party hereto (whether in connection with the proceedings to
approve the FCC Application or otherwise), such party shall promptly notify the
other party hereto in writing of such occurrence and shall thereafter
immediately take all reasonable measures to contest the same in good faith and
seek the removal or favorable resolution of such action, order, notice or
complaint.
9.7 COOPERATION. During the seven-year period immediately following
the Closing, Citadel shall cooperate with Sellers in providing Sellers all
information reasonably requested and permitting Sellers access to all records
relating to the period of ownership of the Station
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by Sellers prior to the Closing. The cost and expense in providing or
permitting access to information hereunder shall be borne by Sellers. Sellers,
as a condition to being provided with access to information hereunder, shall,
at the request of Citadel, execute a confidentiality agreement in form and
substance acceptable to Citadel in its reasonable discretion. Notwithstanding
the foregoing, Citadel may discard any such records during such seven-year
period if (i) Citadel notifies Sellers of Citadel's intent to discard such
records and (ii) Sellers do not, within 10 days after receipt of such notice,
retrieve such records from Citadel's premises.
9.8 NATURAL STATE ACQUISITION. CDB Broadcasting shall comply with each
of its covenants under the Natural State Intent Letter and shall proceed, in
good faith, towards entering into the Natural State Definitive Agreement. From
and after the time, if any, at which the Natural State Definitive Agreement is
entered into, CDB Broadcasting shall comply with each of its covenants under
the Natural State Definitive Agreement and shall proceed towards closing the
Natural State Acquisition. Sellers and Citadel contemplate that (i) the Natural
State Definitive Agreement will be entered into promptly after the date of this
Agreement and (ii) the closing of the Natural State Acquisition (the "NATURAL
STATE CLOSING") will occur promptly following the Closing. In the event that
the Natural State Closing occurs prior to the Closing (and the Natural State
Acquisition is consummated in accordance with the Natural State Definitive
Agreement), (i) a copy of all deliveries made at the Natural State Closing
shall be delivered to Citadel; (ii) the Purchased Assets shall include the
capital stock of Natural State; (iii) for purposes of Sellers' representations,
warranties and covenants herein, the term "Station" shall be deemed to include
the Pending Station; (iv) the Purchase Price shall be increased by the cash
portion of the purchase price and non-competition payments actually paid by CDB
Broadcasting to the stockholders of Natural State at the Natural State Closing
and by the sum of (A) any commission paid by CDB Broadcasting to W.N. Kate and
Sunbelt Media and (B) reasonable closing costs paid by CDB Broadcasting in
connection therewith (which sum shall not exceed $65,000 in the aggregate); and
(v) the Assumed Obligations shall include (x) the promissory notes made by CDB
Broadcasting in favor of the stockholders of Natural State at the Natural State
Closing and (y) the non-competition agreements entered into by the stockholders
of Natural State in favor of CDB Broadcasting at the Natural State Closing.
Sellers shall keep Citadel apprised of the status of the Natural State
Definitive Agreement and the Natural State Acquisition and shall provide
Citadel with such information as it reasonably requests regarding Natural State
and the Natural State Acquisition. CDB Broadcasting, at its option, shall have
the right to assign its rights under the Natural State Definitive Agreement, if
any, to Citadel in exchange for (a) Citadel's assumption of CDB Broadcasting's
obligations thereunder and (b) Citadel granting CDB Broadcasting an option to
reacquire the capital stock of Natural State (on the same terms and conditions
as set forth in the Natural State Definitive Agreement) in the event this
Agreement is terminated; provided, however, that CDB Broadcasting shall not
make such assignment if it would delay the consummation of the Natural State
Acquisition or the transactions contemplated hereby.
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SECTION 10
THE CLOSING
10.1 CLOSING DATE. The Closing shall occur on a date mutually selected
by Sellers and Citadel which is within 10 business days following the date that
the FCC Approval has become a Final Order. The Closing shall begin at 10:00
a.m., local time, on the date of the Closing (the "CLOSING DATE") at the
offices of Friday, Eldredge & Clark, 2000 First Commercial Building, 400 West
Capitol Avenue, Little Rock, Arkansas 72201, counsel for Sellers, or at such
other time and place as the parties may agree in writing.
10.2 CLOSING DOCUMENTS. At the Closing:
(a) Sellers shall deliver to Citadel all certificates,
consents (including any third party consents required as to the Assumed
Obligations), estoppels and other documents (including bills of sale and
assignments) otherwise required to be delivered by Sellers pursuant to this
Agreement or as a condition precedent to Citadel's fulfillment of its
obligations hereunder.
(b) Citadel shall deliver to Sellers the following:
(i) immediately available funds in the aggregate
amount of the Purchase Price as required by the provisions of this Agreement;
and
(ii) all certificates and other documents (including
an assumption agreement relating to the Assumed Obligations) required to be
delivered by Citadel to Sellers pursuant to this Agreement or as a condition
precedent to Sellers' fulfillment of their obligations under this Agreement.
SECTION 11
CONDITIONS TO SELLERS' OBLIGATION TO CLOSE
The obligation of Sellers to consummate the transactions contemplated
by this Agreement at the Closing is subject to the following conditions
precedent, any or all of which may be waived by Sellers in their sole
discretion (other than those set forth in Section 11.7):
11.1 OPINION OF CITADEL'S COUNSEL. Sellers shall have received an
opinion of counsel for Citadel, dated the date of the Closing, in form and
substance satisfactory to Sellers, to the effect that:
(a) Citadel is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada.
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(b) Citadel is duly qualified and in good standing in the
State of Arkansas.
(c) Citadel has full corporate power and authority to own its
assets and properties and to conduct its business and has all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct its business in the manner and in the locations presently owned and
conducted.
(d) This Agreement, together with all other documents and
instruments required to be executed or delivered by Citadel in connection with
the transactions contemplated hereby, each has been duly authorized, executed
and delivered by Citadel to the extent Citadel is a party thereto and
constitutes a valid and legally binding obligation of Citadel to the extent
Citadel is a party thereto, enforceable against Citadel in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency
or other laws affecting generally the enforceability of creditors' rights and
by limitations on the availability of equitable remedies.
(e) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, violates or will
violate any provision of the Certificate of Incorporation or Bylaws of Citadel
or, to the knowledge of such counsel, any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any
Governmental Authority, or, to the knowledge of such counsel after due
investigation, violates or will violate, or conflicts with or will conflict
with or will result in any breach of any of the terms of, or constitutes or
will constitute a default under, or results or will result in the termination
of or the creation or imposition of any Lien pursuant to, the terms of any
contract, commitment, agreement, understanding or arrangement of any kind to
which Citadel is a party or by which Citadel or any of the assets of Citadel is
bound and which is known to Citadel's counsel, all as set forth on CITADEL'S
DISCLOSURE SCHEDULE.
Nothing contained in this Section 11.1 shall require an opinion by such counsel
with respect to FCC matters.
11.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Citadel contained herein shall be true and correct in all
material respects at and as of the Closing with the same effect as though all
such representations and warranties were made at and as of the Closing (except
for representations and warranties expressly and specifically relating to a
time or times other than the Closing, which shall be true and correct in all
material respects at and as of the time or times specified except for such
inaccuracies as do not, individually or in the aggregate, have a material
effect on Citadel's ability to consummate the transactions contemplated by this
Agreement) and Citadel shall have delivered to Sellers a certificate to that
effect, dated the date of the Closing, signed by the President of Citadel.
11.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against either Seller relating to the consummation of any of the
transactions contemplated by this Agreement or any action by any Governmental
Authority shall have been issued.
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11.4 OTHER CERTIFICATES. Sellers shall have received certificates as
to the good standing of Citadel in the States of Nevada and Arkansas, each as
of a date not more than 20 days before the Closing, and such other
certificates, instruments and other documents, in form and substance
satisfactory to Sellers, as Sellers shall have reasonably requested in
connection with the transactions contemplated hereby.
11.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by Citadel of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by
Citadel, and Citadel shall have delivered to Sellers certified copies of the
resolutions of Citadel's board of directors authorizing the execution and
performance of this Agreement and authorizing or ratifying the acts of its
officers and employees in carrying out the terms and provisions of this
Agreement.
11.6 ACTS TO BE PERFORMED. Each of the covenants, acts and
undertakings of Citadel to be performed on or before the Closing Date pursuant
to the terms hereof shall have been duly performed.
11.7 FCC APPROVAL. The FCC Approval shall have been obtained.
11.8 OTHER TRANSACTIONS. The transactions contemplated by the Real
Estate Purchase Agreement, the Snider Corporation Agreement and the Snider
Broadcasting Agreement shall be consummated on the Closing Date.
SECTION 12
CONDITIONS TO CITADEL'S OBLIGATION TO CLOSE
The obligation of Citadel to consummate the transactions contemplated
by this Agreement at the Closing is subject to the following conditions
precedent, any or all of which may be waived by Citadel in its sole discretion
(other than those set forth in Sections 12.9):
12.1 OPINION OF SELLERS' COUNSEL. Citadel shall have received an
opinion of counsel for Sellers, dated the date of the Closing, in form and
substance satisfactory to Citadel, to the effect that:
(a) Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Arkansas.
(b) Each Seller have full power and authority to own its
assets and properties and to conduct its Business and has all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct its Business in the manner and in the locations presently owned and
conducted.
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(c) This Agreement, together with all other documents and
instruments required to be executed or delivered by Sellers in connection with
the transactions contemplated by this Agreement, has been duly authorized,
executed and delivered by each Seller, to the extent it is a party thereto, and
constitutes a valid and legally binding obligation of each Seller to the extent
it is party thereto, enforceable against Sellers in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
laws affecting generally the enforceability of creditors' rights and by
limitations on the availability of equitable remedies.
(d) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, violates or will
violate any provision of the Articles of Incorporation or Bylaws of each Seller
or, to the knowledge of such counsel, any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any
Governmental Authority, or, to the knowledge of such counsel after due
investigation, violates or will violate or conflicts with or will conflict with
or will result in any breach of any of the terms of, or constitutes or will
constitute a default under or results in or will result in the termination of
or the creation or imposition of any Lien pursuant to the terms of any
contract, commitment, agreement, understanding or arrangement of any kind to
which either Seller is a party or by which either Seller, or any of the assets
of either Seller, is bound and which is known to Sellers' counsel, all as set
forth on SELLERS' DISCLOSURE SCHEDULE. Except for (1) the FCC Approvals and (2)
the consents disclosed on SELLERS' DISCLOSURE SCHEDULE, no consents, approvals
or authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of Sellers, in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
(e) To the knowledge of such counsel, except as disclosed on
SELLERS' DISCLOSURE SCHEDULE, there are no claims, disputes, actions, suits or
proceedings pending or threatened against Sellers or any of the assets of
Sellers.
Nothing contained in this Section 12.1 shall require an opinion of such counsel
with respect to FCC matters.
12.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Sellers contained herein shall be true and correct in all
material respects at and as of the Closing (except for representations and
warranties expressly and specifically relating to a time or times other than
the Closing, which shall be true and correct in all material respects at and as
of the time or times specified except for such inaccuracies as do not,
individually or in the aggregate, have a material effect on the Station,
Sellers' ability to consummate the transactions contemplated by this Agreement,
or the Business as a whole) with the same effect as though all such
representations and warranties were made at and as of the Closing and Sellers
shall have complied with all their covenants contained herein; and Sellers
shall have delivered to Citadel a certificate to that effect, dated the date of
the Closing, signed by the President of each Seller.
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12.3 NO LITIGATION. No injunction relating to any action, suit or
proceeding against either Seller or Citadel relating to the consummation of any
of the transactions contemplated by this Agreement shall have been issued.
12.4 OTHER CERTIFICATES. Citadel shall have received a certificate as
to the good standing of each Seller as a corporation in Arkansas as of a date
not more than 20 days before the Closing, and such other certificates,
instruments and other documents customary for transactions of the nature
provided for in this Agreement, in form and substance reasonably satisfactory
to Citadel, as Citadel shall have reasonably requested in connection with the
transactions contemplated by this Agreement.
12.5 CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance by each Seller of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by each
Seller, and Sellers shall have delivered to Citadel certified copies of the
resolutions of Sellers' boards of directors authorizing the execution and
performance of this Agreement and authorizing or ratifying the acts of its
officers and employees in carrying out the terms and provisions of this
Agreement.
12.6 ACTS TO PERFORMED. Each of the covenants, acts and undertakings
of Sellers to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed.
12.7 UCC SEARCHES. Sellers shall have delivered to Citadel Uniform
Commercial Code judgment and lien searches from the appropriate county and
state agencies showing all Liens on the Purchased Assets, which searches shall
be conducted not more than 30 days prior to the Closing. Sellers may cause such
lien searches to be prepared by a third party, in which case Sellers shall not
be responsible for any inaccuracies in such lien searches unless Sellers have
actual knowledge of their inaccuracy. Notwithstanding the foregoing, Sellers
shall remain responsible for satisfying any Lien on the Purchased Assets even
if such searches are inaccurate.
12.8 FILINGS, CONSENTS, APPROVALS AND ESTOPPEL CERTIFICATES. All
filings, consents, approvals and estoppel certificates required by or
reasonably requested by Citadel pursuant to this Agreement, or necessary to
consummate the transactions contemplated under this Agreement, shall have been
obtained.
12.9 FCC APPROVAL. The FCC Approval shall have been obtained.
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12.10 OTHER TRANSACTIONS. The transactions contemplated by the Real
Estate Purchase Agreement, the Snider Corporation Agreement and the Snider
Broadcasting Agreement shall be consummated on the Closing Date.
12.11 AGREEMENT NOT TO COMPETE. Ted L. Snider, Jr. and Calvin G.
Arnold shall each have executed and delivered an Agreement Not to Compete in
favor of Citadel, substantially in the form attached as EXHIBIT C hereto.
SECTION 13
INDEMNIFICATION
13.1 INDEMNIFICATION BY SELLERS. Subject to the limitations and
procedures set forth in this Section 13, Sellers shall jointly and severally
indemnify and hold harmless Citadel from and against all losses, claims,
demands, damages, liabilities, obligations, costs and/or expenses, including,
without limitation, reasonable fees and disbursements of counsel (hereinafter
referred to collectively as "DAMAGES"), which are sustained or incurred by
Citadel, to the extent that such Damages are sustained or incurred by reason of
(i) the breach of any of the obligations or covenants of either Seller in this
Agreement or (ii) the breach of any of the representations or warranties made
by either Seller in this Agreement.
13.2 INDEMNIFICATION BY CITADEL. Subject to the limitations and
procedures set forth in this Section 13, Citadel shall indemnify and hold
harmless Sellers from and against any and all Damages sustained or incurred by
Sellers, to the extent such Damages are sustained or incurred by Sellers by
reason of (i) the breach of any of the obligations or covenants of Citadel in
this Agreement or (ii) the breach of any of the representations or warranties
made by Citadel in this Agreement.
13.3 PROCEDURE FOR INDEMNIFICATION. In the event that any party to
this Agreement shall incur any Damages in respect of which indemnity may be
sought by such party pursuant to this Section 13 or any other provision of this
Agreement, the party indemnified hereunder (the "INDEMNITEE") shall notify the
party providing indemnification (the "INDEMNITOR") promptly. In the case of
third party claims, such notice shall in any event be given within 10 days of
the filing or assertion of any claim against the Indemnitee stating the nature
and basis of such claim; provided, however, that any delay or failure to notify
any Indemnitor of any claim shall not relieve it from any liability except to
the extent that the Indemnitor demonstrates that the defense of such action has
been materially prejudiced by such delay or failure to notify. In the case of
third party claims, the Indemnitor shall, within 10 days of receipt of notice
of such claim, notify the Indemnitee of its intention to assume the defense of
such claim. If the Indemnitor assumes the defense of the claim, the Indemnitor
shall have the right and obligation (a) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnitee, (b) to take all other required steps or proceedings to settle or
defend any such claims, and (c) to employ counsel to contest any such claim or
liability in the name of the Indemnitee or otherwise. If the Indemnitor shall
not assume the
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defense of any such claim or litigation resulting therefrom, the Indemnitee may
defend against any such claim or litigation in such manner as it may deem
appropriate and the Indemnitee may settle such claim or litigation on such
terms as it may deem appropriate, and assert against the Indemnitor any rights
or claims to which the Indemnitee is entitled. Payment of Damages shall be made
within 10 days of a final determination of a claim.
A final determination of a disputed claim shall be (a) a judgment of
any court determining the validity of a disputed claim, if no appeal is pending
from such judgment or if the time to appeal therefrom has elapsed, (b) an award
of any arbitration determining the validity of such disputed claim, if there is
not pending any motion to set aside such award or if the time within to move to
set such award aside has elapsed, (c) a written termination of the dispute with
respect to such claim signed by all of the parties thereto or their attorneys,
(d) a written acknowledgment of the Indemnitor that it no longer disputes the
validity of such claim, or (e) such other evidence of final determination of a
disputed claim as shall be acceptable to the parties.
13.4 SURVIVAL.
(a) SELLERS. Each of the representations and warranties made
by Sellers in this Agreement shall survive for a period of 24 months after the
Closing Date, notwithstanding any investigation at any time made by or on
behalf of Citadel, and upon the expiration of such 24-month period such
representations and warranties shall expire except as follows: (i) the
representations and warranties of Sellers contained in Sections 4.6 and 4.11
shall expire at the time the period of limitations expires for the assessment
by the taxing authority of additional Taxes with respect to which the
representations and warranties relate; (ii) the representations and warranties
of Sellers contained in Sections 4.16 and 4.17 shall expire at the time the
latest period of limitations expires for the enforcement by an applicable
Governmental Authority of any remedy with respect to which the particular
representation or warranty relates; and (iii) the representations and
warranties of Sellers contained in Sections 4.1, 4.2, 4.3 and 4.8(a) shall not
expire but shall continue indefinitely. No claim for the recovery of Damages
may be asserted by Citadel against Sellers or their successors in interest
after such representations and warranties shall thus expire; provided, however,
that claims for Damages first asserted in writing within the applicable period
shall not thereafter be barred.
(b) CITADEL. Each of the representations and warranties made
by Citadel in this Agreement shall survive for a period of 24 months after the
Closing Date, notwithstanding any investigation at any time made by or on
behalf of Sellers, and upon the expiration of such 24-month period such
representations and warranties shall expire, except that the representations
and warranties of Citadel contained in Sections 5.1, 5.2 and 5.3 shall not
expire but shall continue indefinitely. No claim for the recovery of Damages
may be asserted by Sellers against Citadel or its successors in interest after
such representations and warranties shall thus expire; provided, however, that
claims for Damages first asserted in writing within the applicable period shall
not thereafter be barred.
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13.5 LIMITATION OF SELLERS' LIABILITY.
(a) THRESHOLD. Citadel shall not be entitled to recover
Damages pursuant to clause (ii) of Section 13.1 (other than Damages arising by
reason of a breach of the representations and warranties made in Sections 4.1,
4.2, 4.3, 4.6 and 4.8(a)) until the aggregate of all such Damages suffered by
Citadel exceeds $25,000 (the "THRESHOLD"); provided, however, that once such
aggregate exceeds the Threshold, Citadel may recover all such Damages suffered
since the Closing Date.
(b) CEILING. Citadel shall not be entitled to recover Damages
pursuant to clause (ii) of Section 13.1 (other than Damages arising by reason
of a breach of the representations and warranties made in Sections 4.6, 4.8(a),
4.11, 4.16 and 4.17 ("CITADEL'S CAP EXEMPT DAMAGES")) in excess of the Purchase
Price. No maximum limitation shall apply, however, to the right of Citadel to
recover Citadel's Cap Exempt Damages or Damages pursuant to clause (i) of
Section 13.1.
(c) EXCEPTIONS. Paragraphs (a) and (b) above shall not apply
with respect to any claim for Damages relating to any intentional or fraudulent
breach of a representation or warranty by Sellers, nor shall there be any
survival limitation for any such claim.
13.6 LIMITATION OF CITADEL'S LIABILITY.
(a) THRESHOLD. Sellers shall not be entitled to recover
Damages pursuant to clause (ii) of Section 13.2 (other than as a result of a
breach of the representations and warranties made in Sections 5.1, 5.2 and 5.3)
until the aggregate of all such Damages suffered by Sellers exceeds the
Threshold; provided, however, that once such aggregate exceeds the Threshold,
Sellers may recover all such Damages suffered since the Closing Date.
(b) CEILING. Sellers shall not be entitled to recover Damages
pursuant to clause (ii) of Section 13.2 in excess of the Purchase Price. No
maximum limitation shall apply, however, to the right of Sellers to recover
Damages pursuant to clause (i) of Section 13.2.
(c) EXCEPTIONS. Paragraphs (a) and (b) above shall not apply
with respect to any claim for Damages relating to any intentional or fraudulent
breach of a representation or warranty by Citadel, nor shall there be any
survival limitation for any such claim.
SECTION 14
TERMINATION OF AGREEMENT: ADDITIONAL REMEDIES
14.1 MANNER. This Agreement and the transactions contemplated hereby
may be terminated prior to completion of the Closing:
(a) by mutual written consent of Citadel and Sellers;
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(b) by either Citadel or Sellers upon providing written
notice to the other party at any time after December 31, 1997 if the FCC
Approval has not been granted by the FCC, but only if the party providing such
notice is not then in material breach of this Agreement;
(c) by Citadel, upon providing written notice to Sellers, if
as of the time set for Closing any of the conditions in Section 12 of this
Agreement (except Section 12.9) has not been satisfied or waived by Citadel in
writing, provided Citadel is not then in material breach of this Agreement;
(d) by Sellers, upon providing written notice to Citadel, if
as of the time set for Closing any of the conditions in Section 11 of this
Agreement (except Section 11.7) has not been satisfied or waived by Sellers in
writing, provided Sellers are not then in material breach of this Agreement;
(e) by Sellers, upon providing written notice to Citadel, if
Citadel fails to consummate the transactions contemplated hereunder after all
conditions in Section 12 of the Agreement have been satisfied, provided Sellers
are not then in material breach of this Agreement;
(f) by Citadel, upon providing written notice to Sellers, if
Sellers fail to consummate the transactions contemplated hereunder after all
conditions in Section 11 of this Agreement have been satisfied, provided
Citadel is not then in material breach of this Agreement;
(g) by either party upon denial by the FCC of the FCC
Application; and
(h) by either party if any court of competent jurisdiction in
the United States or any other United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other actions shall have become
final and non-appealable.
The foregoing notwithstanding, in the event any party hereto elects to
terminate this Agreement in accordance with paragraphs (a) through (h) above,
then any party hereto shall have the right to terminate, or cause its Affiliate
to terminate, the Real Estate Purchase Agreement, the Snider Corporation
Agreement and the Snider Broadcasting Agreement.
14.2 ADDITIONAL REMEDIES.
(a) In the event of the termination of this Agreement by
Sellers (i) pursuant to Section 14.1(d) or 14.1(e) (any such event being a
"DRAW CONDITION"), Sellers shall be entitled to draw upon and receive the
proceeds of the Letter of Credit, but shall not retain any rights to recover
any actual damages they suffer as a result of such termination and the breach
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relating to such damages. In the event of any other termination of this
Agreement pursuant to any other provision of Section 14.1, Citadel shall be
entitled to a return of, and Sellers shall return to Citadel, the original
Letter of Credit and, in that event, Sellers will no longer have any liability
under this Agreement.
(b) The parties recognize and agree that Citadel has relied
on this Agreement and expended considerable effort and resources related to the
transactions contemplated hereunder, that the rights and benefits conferred
upon Citadel herein are unique, and that damages may not be adequate to
compensate Citadel in the event Sellers improperly refuse to consummate the
transactions contemplated hereunder. The parties therefore agree that Citadel
shall be entitled, at its option and in lieu of terminating this Agreement
pursuant to Section 14.1, to have this Agreement specifically enforced by a
court of competent jurisdiction; provided, however, that Citadel may not
specifically enforce this Agreement if it has previously terminated this
Agreement and received the original Letter of Credit.
SECTION 15
GENERAL
15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each representation
and warranty herein contained shall survive the Closing for the periods
described in Section 13.4, notwithstanding any investigation at any time made
by or on behalf of any party to this Agreement.
15.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the laws of conflicts, of the
State of Arkansas.
15.3 NOTICES. Any notices or other communications required or
permitted under this Agreement shall be delivered personally or sent by
registered or certified mail, postage prepaid, delivered by overnight delivery
or sent by facsimile, addressed as follows:
To Citadel: Citadel Broadcasting Company
1015 Eastman Drive
Bigfork, Montana 59911
Attn: Lawrence R. Wilson
Fax: (406) 837-5373
With copy to: Citadel Broadcasting Company
140 South Ash Avenue
Tempe, Arizona 85281
Attn: Donna L. Heffner
Fax: (602) 731-5229
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With copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street
42nd Floor
Pittsburgh, Pennsylvania 15219
Attn: Bryan D. Rosenberger, Esq.
Fax: (412) 566-6099
To Sellers: CDB Broadcasting Corporation
124 West Capitol Avenue, Suite 200
Little Rock, Arizona 72201
Attn: Ted L. Snider, Jr.
Fax: (501) 210-7628
With copy to: Friday, Eldredge & Clark
2000 First Commercial Building
400 West Capitol Avenue
Little Rock, Arkansas 72201
Attn: Price C. Gardner, Esq.
Fax: (501) 376-2147
or such other addresses as shall be similarly furnished in writing by either
party. Such notices or communications shall be deemed to have been given as of
the date of personal delivery, or if mailed, the date the return receipt is
signed or the date on which delivery is refused, or if delivered by overnight
delivery or facsimile, on the date of receipt.
15.4 ENTIRE AGREEMENT. This instrument supersedes all prior
communications, understandings and agreements of or between the parties with
respect to the subject matter of this Agreement and contains the entire
agreement between the parties with respect to the transactions contemplated in
this Agreement. Except as otherwise set forth in this Agreement, there are no
other representations, warranties or covenants of any party hereto with respect
to the subject matter of this Agreement.
15.5 HEADINGS. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
15.6 SCHEDULES, EXHIBITS. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
15.7 EXPENSES. Each party shall bear its own costs and expenses
incurred by it in connection with the transactions pursuant to this Agreement.
15.8 AMENDMENT. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived,
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only by a written instrument executed on behalf of all of the parties or, in
the case of a waiver, by the party waiving compliance.
15.9 WAIVER. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce that provision or any other provision of this Agreement at any
time thereafter.
15.10 ASSIGNMENT. Except as provided in Sections 2.4 and 2.5, neither
this Agreement nor any of the rights or obligations under this Agreement may be
assigned by Sellers without the prior written consent, in their sole
discretion, of Citadel, or by Citadel without the prior written consent, in
their sole discretion, of Sellers. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other person shall have any right,
benefit or obligation under this Agreement.
15.11 PRIOR CONTROL. Until the Closing, Sellers shall maintain control
of the Station.
15.12 ATTORNEYS' FEES. In the event of any action arising out of this
Agreement, the prevailing party shall be entitled to recover its costs,
expenses and reasonable attorney's fees incurred in connection with the dispute
from the other party.
15.13 COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in
one or more counterparts, each of which together shall constitute a single
instrument. Signatures on this Agreement transmitted by facsimile shall be
deemed to be original signatures for all purposes of this Agreement.
15.14 DISPUTE RESOLUTION. Except as provided below, any dispute
arising out of or relating to this Agreement or the breach, termination or
validity hereof shall be finally settled by arbitration conducted expeditiously
in accordance with the CPR Rules. The Center for Public Resources shall appoint
a neutral advisor from its National CPR Panel. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The place of arbitration shall be Little Rock,
Arkansas.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate; provided, however,
such proceedings shall be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within 45 days of the initiation of the procedure;
(b) no other discovery;
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(c) hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three hours; such hearings
to take place on one or two days at a maximum; and
(d) decision to be rendered not more than 10 days following such
hearing.
The provisions of this Section 15.14 shall not apply with regard to any
equitable remedies to which a party may be entitled under this Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date above first written.
CDB BROADCASTING CORPORATION
By: /s/ Ted Snider
------------------------------
Ted L. Snider, Jr., President
CDB LICENSE CORPORATION
By: /s/ Ted Snider
------------------------------
Ted L. Snider, Jr., President
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
------------------------------
Its: President
-----------------------------
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INDEX OF SCHEDULES AND EXHIBITS
Schedule 2.1 - Asset Schedule
Schedule 2.2 - Excluded Assets
Schedule 2.3 - Assumed Obligations
Schedule 4.0 - Sellers' Disclosure Schedule
Schedule 5.0 - Citadel's Disclosure Schedule
Exhibit A - Letter of Credit
Exhibit B - Local Marketing Agreement
Exhibit C - Agreement Not to Compete
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules or exhibits to the Securities Exchange
Commission upon request.]
<PAGE> 1
EXHIBIT 3(i)(a)
CERTIFICATE OF
RESTATED ARTICLES OF INCORPORATION
OF
CITADEL BROADCASTING COMPANY
The undersigned, being the President and Secretary, respectively, of Citadel
Broadcasting Company (the "Corporation"), a corporation organized and existing
under the laws of the State of Nevada, do hereby declare and state that:
FIRST: The name of the corporation is Citadel Broadcasting Company, the
date of filing of its original Certificate of Incorporation with the Secretary
of State of the State of Nevada was August 21, 1991; the date of filing of the
Certificate of Amended and Restated Certificate of Incorporation with the
Nevada Secretary of State was July 24, 1992; the date of filing of the
Certificate of Second Amended and Restated Certificate of Incorporation with
the Nevada Secretary of State was May 4, 1993; the date of filing of the
Certificate of Amendment to Certificate of Incorporation with the Nevada
Secretary of State was October 1, 1993; and the date of filing of the
Certificate of Amendment to Certificate of Incorporation with the Nevada
Secretary of State was April 26, 1994.
SECOND: These Amended and Restated Articles of Incorporation have been duly
adopted in accordance with the provisions of Sections 78.385, 78.390 and 78.403
of the Nevada Revised Statutes. The sole stockholder of the Corporation has
duly adopted a resolution to amend and restate the Certificate of
Incorporation, as set forth in these Restated Articles of Incorporation.
THIRD: The text of the Certificate of Incorporation is hereby amended and
restated to read as herein set forth in full:
ARTICLE I
NAME OF THE CORPORATION
The name of this corporation is Citadel Broadcasting Company.
ARTICLE II
REGISTERED AGENT AND REGISTERED OFFICE
The address of the Corporation's registered office in the State of Nevada is
c/o The Corporation Trust Company of Nevada, One East First Street, City of
Reno, County of Washoe, State of Nevada. The name of its resident agent at
such address is The Corporation Trust Company of Nevada.
<PAGE> 2
ARTICLE III
PURPOSE OF THE CORPORATION
The purpose of the Corporation is to engage in any or all lawful activity
for which corporations may be organized under the General Corporation Law of
the State of Nevada.
ARTICLE IV
CAPITAL STOCK; FCC MATTERS
4.1. Total Number of Shares of Stock. The total number of shares of stock
of all classes that the Corporation shall have authority to issue is 4,136,300.
The authorized capital stock is divided into 4,000,000 shares of Preferred
Stock, no par value (the "Preferred Stock"), and 136,300 shares of Common
Stock, $0.001 par value per share (the "Common Stock"). The shares of the
Corporation, after the subscription price therefor has been paid, shall not be
subject to assessment to pay the debts of the Corporation, and no shares issued
as fully paid up shall ever be assessable or assessed.
4.2 Preferred Stock.
(a) The shares of Preferred Stock of the Corporation may be issued from
time to time in one or more classes or series thereof, the shares of each class
or series thereof to have such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as are stated and expressed herein or in the resolution
or resolutions providing for the issuance of such class or series, adopted by
the Board of Directors as hereinafter provided. All shares of the same class
and series of Preferred Stock will be identical, but shares of different
classes or series of Preferred Stock need not be identical or rank equally
except as provided by law or herein.
(b) Authority is hereby expressly granted to the Board of Directors of the
Corporation, subject to the provisions of this Article IV and to the
limitations prescribed by the Nevada General Corporation Law, to authorize the
issue of one or more classes, or series thereof, of Preferred Stock and with
respect to each such class or series to fix by the resolution or resolutions
providing for the issue of such class or series the voting powers, full or
limited, if any, of the shares of such class or series and the designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof. The authority of the
Board of Directors with respect to each class or series thereof shall include,
but not be limited to, the determination or fixing of the following:
(i) the maximum number of shares to constitute such class or series,
which may subsequently be increased or decreased (but not below the number of
shares of
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<PAGE> 3
that class or series then outstanding) by resolution of the Board of Directors,
the distinctive designation thereof and the stated value thereof if different
than the par value thereof;
(ii) the dividend rate of such class or series, the conditions and dates
upon which such dividends shall be payable, the relation which such dividends
shall bear to the dividends payable on any other class or classes of stock or
any other series of any class of stock of the Corporation, and whether such
dividends shall be cumulative or noncumulative;
(iii) whether the shares of such class or series shall be subject to
redemption by the Corporation and, if made subject to such redemption, the
times, prices and other terms and conditions of such redemption;
(iv) the terms and amount of any sinking fund established for the purchase
or redemption of the shares of such class or series;
(v) whether or not the shares of such class or series shall be
convertible into or exchangeable for shares of any other class or classes of
any stock or any other series of any class of stock of the Corporation, and, if
provision is made for conversion or exchange, the times, prices, rates,
adjustments, and other terms and conditions of such conversion or exchange;
(vi) the extent, if any, to which the holders of shares of such class or
series shall be entitled to vote with respect to the election of directors or
otherwise;
(vii) the restrictions, if any, on the issue or reissue of any additional
shares of Preferred Stock;
(viii) whether or not the issue of any additional shares of any such class
or series or of any other class or series in addition to such class or series
shall be subject to restrictions in addition to the restrictions, if any, on
the issue of additional shares imposed in the resolution or resolutions fixing
the terms of any outstanding class or series of Preferred Stock theretofore
issued pursuant to this Section 4.2 and, if subject to additional restrictions,
the extent of such additional restrictions; and
(ix) the rights of the holders of the shares of such class or series upon
the dissolution, liquidation or winding up of, or upon the distribution of
assets of, the Corporation.
For purposes of this Section 4.2, the voluntary sale, conveyance, lease,
exchange or transfer of all or substantially all the property or assets of the
Corporation or a consolidation or merger of the Corporation with one or more
other corporations (whether or not the Corporation is the corporation surviving
such consolidation or merger) shall not be deemed
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<PAGE> 4
to be a liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.
The Board of Directors of the Corporation is further expressly vested with the
authority to make the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of any class or series of Preferred
Stock dependent upon facts ascertainable outside this Certificate of
Incorporation or of any amendment hereto, or outside the resolutions or
resolutions providing for the issuance of such stock adopted by the Board of
Directors, provided that the manner in which such facts shall operate upon the
voting powers, designations, preferences, rights and qualifications,
limitations or restrictions of such class or series of Preferred Stock is
clearly and expressly set forth in the resolution or resolutions providing for
the issue of such stock adopted by the Board of Directors of the Corporation.
(c) Before any dividends shall be declared or paid or any distribution
ordered or made upon the Common Stock (other than a dividend payable in Common
Stock), the Corporation shall comply with the dividend and sinking fund
provisions, if any, of any resolution or resolutions providing for the issuance
of any class or series of Preferred Stock any shares of which shall at the time
be outstanding. Subject to the foregoing sentence, the holders of Common Stock
shall be entitled, to the exclusion of the holders of Preferred Stock of any
and all classes and series, to receive such dividends as from time to time may
be declared by the Board of Directors of the Corporation.
4.3 Common Stock. Except as otherwise provided in this Certificate of
Incorporation, holders of Common Stock shall be entitled to one vote for each
share of Common Stock held by them on each matter on which they are entitled to
vote. The holders of Common Stock shall be entitled to participate share for
share in any cash dividend which may be declared from time to time on the
Common Stock of the Corporation by the Board of Directors and to receive pro
rata the net assets of the Corporation on dissolution, liquidation or winding
up of the Corporation, in both cases subject to all amounts to which the
holders of Preferred Stock are entitled to receive or have set aside.
4.4 FCC Matters. In accordance with the Federal Communications Act of
1934, as amended ("Communications Act"), and the rules, regulations and
policies promulgated by the FCC thereunder ("FCC Regulations"), the Board of
Directors of the Corporation may: (a) prohibit the ownership or voting of more
than 20% of the Corporation's outstanding capital stock by or for the account
of aliens or their representatives or by a foreign government or representative
thereof or by any corporation organized under the laws of a foreign country
(collectively "Aliens"), or by or for corporations of which any officer is an
Alien, more than one-fourth of its directors are Aliens, or of which more than
one-fourth of its capital stock is owned of record or voted by Aliens, or by
any other entity that is (i) subject to or deemed to be subject to management
influence by Aliens or (ii) the equity of which is owned, controlled by, or
held for the benefit of, Aliens in a manner that would cause the Corporation to
be in violation of the Communications Act or the FCC
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<PAGE> 5
Regulations; (b) prohibit any transfer of the Corporation's stock which would
cause more than 20% of the Corporation's outstanding capital stock to be owned
or voted by or for any person or entity designated in foregoing clause (a); and
(c) prohibit the ownership, voting or transfer of any portion of its
outstanding capital stock to the extent the ownership, voting or transfer of
such portion would cause the Corporation to violate or otherwise result in
violation of any provision of the Communications Act or the FCC Regulations.
Notwithstanding any provisions contained herein to the contrary, if prior
approvals must be obtained from the FCC (the "FCC Approvals"), (i) no
stockholder other than the holders of Common Stock shall possess any voting
rights except as permitted by law; (ii) no stockholder other than the holders
of Common Stock may nominate, appoint or designate any member of the Board of
Directors; and (iii) no stockholder shall be entitled to exercise any
conversion rights or voting rights, until the FCC Approvals have been obtained.
ARTICLE V
LIABILITY
To the full extent permitted by General Corporation Law of State of Nevada
in effect from time to time and to no greater extent, no officer or member of
the Board of Directors shall be liable for monetary damages for breach of
fiduciary duty in his or her capacity as an officer or a director in any action
brought by or on behalf of the Corporation or any of its shareholders.
ARTICLE VI
INDEMNIFICATION
To the full extent permitted by law, the Corporation shall indemnify any
person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he or she is or was a director of the Corporation or any predecessor of
the Corporation or serves or served any other enterprise as director at the
request of the Corporation or any predecessor of the Corporation.
ARTICLE VII
DURATION
The duration of the corporation shall be perpetual.
ARTICLE VIII
NO PREEMPTIVE RIGHTS
The shareholders of the corporation shall have no preemptive rights.
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<PAGE> 6
ARTICLE IX
BOARD OF DIRECTORS
The members of the governing board of the Corporation shall be styled as
directors. The number of directors constituting the current Board of Directors
is eight (8), and the number of directors shall be as fixed from time to time
pursuant to the provisions contained in the Bylaws. The names and addresses of
the current directors are:
<TABLE>
<S> <C> <C>
Lawrence R. Wilson John E. von Schlegell Michael J. Ahearn
1015 Eastman Drive The Endeavour Capital c/o Satloc, Inc.
Bigfork, MT 59911 Fund Limited 4670 South Ash Avenue
Partnership Tempe, AZ 85282
4380 SW Macadem
Suite 460
Portland, OR 97201
Scott E. Smith Christopher P. Hall J. Walter Corcoran
200 West Madison Street Piliero, Goldstein, Oxford Analytical
Suite 3510 Jenkins & Hall 200 Park Avenue
Chicago, IL 60606 392 Madison Avenue New York, NY 10166
New York, NY 10017
Mark A. Leavitt Harlan A. Levy
c/o Prudential 444 East 86th Street
Securities New York, NY 10028
Incorporated
1 New York Plaza
New York, NY 10273
</TABLE>
DATED: June 30, 1997.
(Signatures follow on next page)
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<PAGE> 7
CITADEL BROADCASTING
COMPANY, a Nevada corporation
By: /s/ Lawrence R. Wilson
----------------------
Lawrence R. Wilson
President
By: /s/ Donna L. Heffner
--------------------
Donna L. Heffner
Secretary
STATE OF N.Y. )
--------- ) SS:
COUNTY OF N.Y. )
--------
The foregoing instrument was acknowledged before me this 30th day of June,
1997, by Lawrence R. Wilson, President of Citadel Broadcasting Company.
Elaine Gerace
------------------------
Notary Public
[SEAL:
My Commission Expires: ELAINE GERACE
Notary Public, State of New York
01GE4996717
Qualified in Queens County
Commission Expires on May 18, 1998]
STATE OF N.Y. )
--------- ) SS:
COUNTY OF N.Y. )
--------
The foregoing instrument was acknowledged before me this 30th day of June,
1997, by Donna L. Heffner, Secretary of Citadel Broadcasting Company.
Elaine Gerace
------------------------
Notary Public
[SEAL:
ELAINE GERACE
Notary Public, State of New York
01GE4996717
My Commission Expires: Commission Expires May 18, 1998]
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<PAGE> 1
EXHIBIT 3(i)(b)
AMENDMENT TO CERTIFICATE OF THE DESIGNATIONS,
VOTING POWERS PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS OF THE 13-1/4% SERIES A EXCHANGEABLE PREFERRED STOCK
AND THE 13-1/4% SERIES B EXCHANGEABLE PREFERRED STOCK
OF CITADEL BROADCASTING COMPANY
("Amended Certificate of Designation")
The undersigned hereby certify that they are the duly elected and acting
President and Secretary, respectively, of CITADEL BROADCASTING COMPANY, a
Nevada corporation, (the "Company"), and pursuant to Nev. Rev. Stat. Section
78.1955, DO HEREBY CERTIFY:
I. That, a certificate of designation creating two series of Preferred Stock
of the Company designated as 13-1/4% Series A Exchangeable Preferred Stock and
13-1/4% Series B Exchangeable Preferred Stock, was filed with the Nevada
Secretary of State on July 2, 1997 (the "Original Designation"). The Original
Designation is as follows:
CERTIFICATE OF THE DESIGNATIONS,
VOTING POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS
AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF THE
13-1/4% SERIES A EXCHANGEABLE PREFERRED STOCK AND THE
13-1/4% SERIES B EXCHANGEABLE PREFERRED STOCK OF
CITADEL BROADCASTING COMPANY
The undersigned hereby certify that they are the duly elected and
acting President and Secretary of CITADEL BROADCASTING COMPANY, a Nevada
corporation (the "Company"), and pursuant to Nev. Rev. Stat. Section 78.1955,
DO HEREBY CERTIFY:
WHEREAS, pursuant to authority conferred upon the Board of Directors
by ARTICLE 4 of the Amended and Restated Articles of Incorporation of the
Company (the "Articles"), the Board of Directors of the Company by unanimous
written consent dated June 30, 1997 adopted the following resolution creating
two series of Preferred Stock designated as 13-1/4% Series A Exchangeable
Preferred Stock of Citadel Broadcasting Company and 13-1/4% Series B
Exchangeable Preferred Stock of Citadel Broadcasting Company:
RESOLVED, that pursuant to the authority expressly vested in the Board
of Directors in accordance with the provisions of the Articles, two series of
Preferred Stock of the Company, without par value, be and they hereby are,
created and that the designation and amount thereof and the voting powers,
preferences, and relative rights of the shares of each such series, and the
limitations and restrictions thereof, are as follows:
<PAGE> 2
I. Designation and Amount. The designations for the two series of
Preferred Stock authorized by this resolution shall be the 13-1/4% Series A
Exchangeable Preferred Stock without par value (the "Series A Preferred Stock")
and the 13-1/4% Series B Exchangeable Preferred Stock without par value (the
"Series B Preferred Stock" and together with the Series A Preferred Stock, the
"Exchangeable Preferred Stock"). The initial liquidation preference of the
Exchangeable Preferred Stock is $100.00 per share and the original issue price
for each such share is $100.00. The issue price per share or liquidation
preference of the Exchangeable Preferred Stock shall not for any purpose be
considered to be a determination by the Board of Directors with respect to the
capital and surplus of the Company. The maximum number of shares of Series A
Preferred Stock shall be 2,000,000 and the maximum number of shares of Series B
Preferred Stock shall be 2,000,000.
II. Dividends. (a) Holders of the outstanding shares of Exchangeable
Preferred Stock (the "Holders") will be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on the Exchangeable Preferred Stock at an annual rate of 13-1/4% (the
"Dividend Rate"). All dividends will be cumulative, whether or not earned or
declared, from the Closing Date and will be payable semi-annually in arrears on
each Dividend Payment Date, commencing on January 1, 1998, to Holders of record
on the June 15 or December 15 immediately preceding the relevant Dividend
Payment Date. On or before July 1, 2002, the Company may, at its option, pay
dividends in cash or in additional fully paid and non-assessable shares of
Exchangeable Preferred Stock having an aggregate liquidation preference equal
to the amount of such dividends, provided, however, that if the Company pays
dividends in additional shares of Exchangeable Preferred Stock, Holders of
Series A Preferred Stock shall be paid in additional shares of Series A
Preferred Stock and Holders of Series B Preferred Stock shall be paid in
additional shares of Series B Preferred Stock. After July 1, 2002, dividends
shall be paid only in cash. If any dividend (or portion thereof) payable on any
Dividend Payment Date on or before July 1, 2002 is not declared or paid in full
in cash or in shares of Exchangeable Preferred Stock as described above on such
Dividend Payment Date, the amount of the accumulated and unpaid dividend will
bear interest at the Dividend Rate, compounding semi-annually from such
Dividend Payment Date until paid in full. If any dividend (or portion thereof)
payable on any Dividend Payment Date after July 1, 2002 is not declared or paid
in full in cash on such Dividend Payment Date, the amount of the accumulated
and unpaid dividend that is payable and that is not paid in cash on such date
will bear interest at the Dividend Rate, compounding semi-annually from such
Dividend Payment Date until paid in full. Dividends shall cease to accumulate
in respect of the shares of Exchangeable Preferred Stock on the Exchange Date
or on the Redemption Date unless the Company shall have failed to issue the
appropriate aggregate principal amount of Exchange Debentures in respect of the
Exchangeable Preferred Stock on the Exchange Date or shall have failed to pay
the relevant redemption price on the Redemption Date.
(b) All dividends paid with respect to shares of the Exchangeable
Preferred Stock pursuant to Section II(a) of this Certificate of Designation
shall be paid pro rata to the Holders entitled thereto.
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<PAGE> 3
(c) Nothing contained in this Certificate of Designation shall in any
way or under any circumstances be construed or deemed to require the Board of
Directors to declare, or the Company to pay or set apart for payment, any
dividends on shares of the Exchangeable Preferred Stock at any time.
(d) Holders shall be entitled to receive the dividends provided for in
Section II(a) of this Certificate of Designation (including any accumulated and
unpaid cash dividends on the Exchangeable Preferred Stock) in preference to and
in priority over any dividends (including accumulated and unpaid dividends)
upon any of the Junior Stock.
(e) No full dividends may be declared or paid or funds set apart for
the payment of dividends on any Parity Stock for any period unless full
cumulative dividends shall have been or contemporaneously are declared and paid
(or are deemed declared and paid) in full or declared and, if payable in cash,
a sum in cash sufficient for such payment set apart for such payment on the
Exchangeable Preferred Stock. If full dividends are not so paid, the
Exchangeable Preferred Stock will share dividends pro rata with the Parity
Stock. No dividends may be paid or set apart for such payment on Junior Stock
(except dividends on Junior Stock payable in additional shares of Junior Stock)
and no Junior Stock or Parity Stock may be repurchased, redeemed or otherwise
retired nor may funds be set apart for payment with respect thereto, if full
cumulative dividends have not been paid in full (or deemed paid) on the
Exchangeable Preferred Stock.
(f) Dividends on account of arrears for any past dividend period and
dividends in connection with any optional redemption may be declared and paid
at any time, without reference to any regular Dividend Payment Date, to Holders
of record of the Exchangeable Preferred Stock on such date, not more than 45
days prior to the payment thereof, as may be fixed by the Board of Directors.
(g) Each fractional share of Exchangeable Preferred Stock outstanding
shall be entitled to a ratably proportionate amount of all dividends accruing
with respect to each outstanding share of Exchangeable Preferred Stock pursuant
to Section II(a), and all such dividends with respect to such outstanding
fractional shares shall accumulate at the Dividend Rate and shall be payable in
the same manner and at such times as provided for in Section II(a) with respect
to dividends on each outstanding share of Exchangeable Preferred Stock.
(h) Dividends payable on the Exchangeable Preferred Stock for any
period less than a year shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in the period for
which dividends are payable.
III. Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, Holders will be entitled
to be paid, out of the assets of the Company available for distribution to
stockholders, the then effective liquidation preference per share of
Exchangeable Preferred Stock, plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends thereon to the date fixed for
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<PAGE> 4
liquidation, dissolution or winding-up (including an amount equal to a prorated
dividend for the period from the last Dividend Payment Date to the date fixed
for liquidation, dissolution or winding-up), before any distribution is made on
any Junior Stock, including, without limitation, common stock of the Company.
If, upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, the amounts payable with respect to the Exchangeable Preferred
Stock and all other Parity Stock are not paid in full, the Holders of the
Exchangeable Preferred Stock and the holders of the Parity Stock will share
equally and ratably in any distribution of assets of the Company in proportion
to the full liquidation preference to which each is entitled. After payment of
the full amount of the liquidation preference and accumulated and unpaid
dividends to which they are entitled, Holders will not be entitled to any
further participation in any distribution of assets of the Company. For the
purposes of this Section III, neither the sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Company nor the
consolidation or merger of the Company with one or more entities shall be
deemed to be a liquidation, dissolution or winding-up of the Company.
The liquidation preference with respect to each outstanding fractional
share of Exchangeable Preferred Stock shall be equal to a ratably proportionate
amount of the liquidation payments with respect to each outstanding full share
of Exchangeable Preferred Stock.
IV. Exchange. (a) The Company may, at its option, subject to the
conditions described below, on any scheduled Dividend Payment Date, exchange
the Exchangeable Preferred Stock, in whole but not in part, for the Exchange
Debentures. At least 30 and not more than 60 days prior to the date fixed for
exchange, the Company shall send a written notice (the "Exchange Notice") of
exchange by mail to each Holder, which notice shall state:
(i) that the Company has elected to exchange the Exchangeable
Preferred Stock into Exchange Debentures pursuant to this Certificate of
Designation;
(ii) the date of such exchange (the "Exchange Date");
(iii) that the Holder is to surrender to the Company, at the place or
places and in the manner designated in the Exchange Notice, its
certificate or certificates representing the shares of Exchangeable
Preferred Stock;
(iv) that dividends on the shares of Exchangeable Preferred Stock to
be exchanged shall cease to accumulate at the close of business on the day
prior to the Exchange Date, whether or not certificates for shares of
Exchangeable Preferred Stock are surrendered for exchange on the Exchange
Date, unless the Company shall default in the delivery of Exchange
Debentures; and
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<PAGE> 5
(v) that interest on the Exchange Debentures shall accrue from the
Exchange Date whether or not certificates for shares of Exchangeable
Preferred Stock are surrendered for exchange on the Exchange Date.
On the Exchange Date, if the conditions set forth in clauses (A)
through (E) below are satisfied and if the exchange is then permitted under the
Exchange Indenture, the Company shall issue Exchange Debentures in exchange for
the Exchangeable Preferred Stock as provided in the next paragraph, provided
that on the Exchange Date: (A) there shall be legally available funds
sufficient for the exchange to occur (including, without limitation, legally
available funds sufficient therefor under Section 78.288 (or any successor
provisions), to the extent applicable, of the General Corporation Law of the
State of Nevada); (B) the Company shall have obtained a written opinion of
counsel acceptable to the Company that an exemption from the registration
requirements of the Securities Act is available for such exchange, and such
exemption is relied upon by the Company for such exchange or, alternatively,
that the Exchange Debentures have been registered thereunder; (C) the Exchange
Indenture and the Debentures Trustee shall have been qualified under the Trust
Indenture Act or the Company shall have obtained a written opinion of counsel
that such qualification is not required; (D) immediately after giving effect to
such exchange, no default or event of default would exist under the Exchange
Indenture, and no material breach or default would exist under the Credit
Facility, the Notes Indenture or the Securities Purchase and Exchange
Agreement; and (E) on the date of such exchange (the "Exchange Date") there are
no accumulated and unpaid dividends on the Exchangeable Preferred Stock
(including the dividend payable on such date). In the event that any of the
conditions set forth in clauses (A) through (E) of the preceding sentence are
not satisfied on the Exchange Date, then no shares of Exchangeable Preferred
Stock shall be exchanged, and in order to effect an exchange as provided for in
this Section IV, the Company shall be required to fix another date for the
exchange and issue a new Exchange Notice.
(b) Upon any exchange pursuant to this Section IV, Holders shall be
entitled to receive, subject to the provisions hereof, $1.00 principal amount
of Exchange Debentures for each $1.00 of the then effective liquidation
preference of the Exchangeable Preferred Stock, plus an amount in cash equal to
all accumulated and unpaid dividends thereon for the period from the
immediately preceding Dividend Payment Date to the day prior to the Exchange
Date; provided that the Company shall pay cash in lieu of issuing an Exchange
Debenture in a principal amount of less than $1,000 and provided further that
the Exchange Debentures will be issuable only in denominations of $1,000 and
integral multiples thereof.
(c) On or before the Exchange Date, each Holder shall surrender the
certificate or certificates representing such shares of the Exchangeable
Preferred Stock, in the manner and at the place designated in the Exchange
Notice. The Company shall cause the Exchange Debentures to be executed on the
Exchange Date and, upon surrender in accordance with the Exchange Notice of the
certificates for any shares of the Exchangeable Preferred Stock so exchanged
(properly endorsed or assigned for transfer, if the Exchange
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<PAGE> 6
Notice shall so state), such shares shall be exchanged by the Company into
Exchange Debentures as aforesaid. The Company shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein from the
Exchange Date.
(d) If the Exchange Notice has been mailed as aforesaid, and if before
the Exchange Date all Exchange Debentures necessary for such exchange shall
have been duly executed by the Company and delivered to the Debentures Trustee
with irrevocable instructions to authenticate the Exchange Debentures necessary
for such exchange, then the rights of the Holders as stockholders of the
Company shall cease (except the right to receive the Exchange Debentures, an
amount in cash, to the extent applicable, equal to the accumulated and unpaid
dividends to the Exchange Date and cash in lieu of any Exchange Debenture that
is in a principal amount less than $1,000), and the person or persons entitled
to receive the Exchange Debentures issuable upon exchange shall be treated for
all purposes as a registered holder or holders of such Exchange Debentures as
of the Exchange Date.
V. Voting Rights. (a) Holders, except as otherwise required under
Nevada law or as set forth below, shall not be entitled or permitted to vote on
any matter required or permitted to be voted upon by the stockholders of the
Company.
(b) If (i) after July 1, 2002, cash dividends on the Exchangeable
Preferred Stock are in arrears and unpaid for two or more semi-annual dividend
periods (whether or not consecutive) (a "Dividend Default"); (ii) the Company
fails to redeem the Exchangeable Preferred Stock on July 1, 2009 or fails to
otherwise discharge any redemption obligation set forth in this Certificate of
Designation with respect to the Exchangeable Preferred Stock; (iii) the Company
fails to make a Change of Control Offer if such offer is required by the
provisions set forth under the "Purchase of Exchangeable Preferred Stock upon a
Change of Control" covenant set forth in Section VIII below or fails to
purchase shares of Exchangeable Preferred Stock from Holders who elect to have
such shares purchased pursuant to the Change of Control Offer; (iv) a breach or
violation of any other provisions contained in Section VIII hereof occurs and
the breach or violation continues for a period of 30 days or more after the
Company receives notice thereof specifying the default from the Holders of at
least 25% of the shares of Exchangeable Preferred Stock then outstanding; or
(v) the Company fails to pay at the final stated maturity (giving effect to any
extensions thereof) the principal amount of any Debt of the Company or any
Restricted Subsidiary of the Company, or the final stated maturity of any such
Debt is accelerated, if the aggregate principal amount of such Debt, together
with the aggregate principal amount of any other such Debt in default for
failure to pay principal at the final stated maturity (giving effect to any
extensions thereof) or which has been accelerated, aggregates $5,000,000 or
more at any time (each such event described in clauses (i) through (v) above
being referred to herein as a "Voting Rights Triggering Event") then the number
of directors constituting the Board of Directors will be adjusted to permit the
Holders of a majority of the then outstanding shares of Exchangeable Preferred
Stock, voting separately and as a class (together with the holders of any
Parity Stock having similar voting rights), to elect two directors to the Board
of Directors. The voting rights provided herein shall be the Holders' exclusive
remedy at law
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<PAGE> 7
or in equity. Such voting rights will continue until such time as, in the case
of a Dividend Default, all dividends in arrears on the Exchangeable Preferred
Stock are paid in full in cash and, in all other cases, any failure, breach or
default giving rise to such voting rights is remedied or waived by the Holders
of at least a majority of the shares of Exchangeable Preferred Stock then
outstanding, at which time the term of any directors elected pursuant to the
provisions of this paragraph shall terminate.
(c) The Company shall not authorize any new class of Senior Stock or
modify, change, affect or amend the Articles or this Certificate of Designation
to affect materially and adversely the specified rights, preferences,
privileges or voting rights of the Exchangeable Preferred Stock without the
affirmative vote or consent of Holders of at least a majority of the shares of
Exchangeable Preferred Stock then outstanding, voting or consenting, as the
case may be, as one class.
(d) Immediately after voting power to elect directors shall have
become vested and be continuing in the Holders pursuant to Section V(b) or if
vacancies shall exist in the offices of directors elected by the Holders, a
proper officer of the Company shall call a special meeting of the Holders for
the purpose of electing the directors which such Holders are entitled to elect.
Any such meeting shall be held at the earliest practicable date, and the
Company shall provide Holders with access to the lists of Holders pursuant to
the provisions of this Section V(d). At any meeting held for the purpose of
electing directors at which the Holders shall have the right, voting separately
as a class, to elect directors, the presence in person or by proxy of the
Holders of at least a majority of the outstanding shares of Exchangeable
Preferred Stock shall be required to constitute a quorum of such Holders.
(e) Any vacancy occurring in the office of a director elected by the
Holders may be filled by the remaining director elected by the Holders unless
and until such vacancy shall be filled by the Holders.
(f) In any case in which the Holders shall be entitled to vote
pursuant to this Section V or pursuant to the General Corporation Law of the
State of Nevada, each Holder shall be entitled to one vote for each share of
Exchangeable Preferred Stock held.
(g) Holders of at least 66_% of the then outstanding shares of
Exchangeable Preferred Stock, voting or consenting, as the case may be,
separately as a class, may waive compliance with any provision of this
Certificate of Designation.
Further, Holders are entitled to vote as a class upon a proposed
amendment to the Articles, whether or not entitled to vote thereon by the
Articles, if the amendment would increase or decrease the par value of the
shares of, or alter or change the powers, preferences or special rights of the
shares of such class so as to affect them adversely. Except as set forth above,
(i) the creation, authorization or issuance of any shares of Junior Stock,
Parity Stock or Senior Stock, including the designation of series thereof
within the existing class of Preferred Stock, or (ii) the increase or decrease
in the amount of authorized Capital Stock of any class,
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<PAGE> 8
including any Preferred Stock, shall not require the consent of the Holders and
shall not be deemed to affect adversely the rights, preferences, privileges or
voting rights of Holders.
VI. Redemption. (a) Optional Redemption. (i) The Exchangeable
Preferred Stock will be redeemable (subject to contractual and other
restrictions with respect thereto and to the legal availability of funds
therefor) at the election of the Company, as a whole or from time to time in
part, at any time on or after July 1, 2002 on not less than 30 nor more than 60
days' prior notice, at the redemption prices (expressed as percentages of the
then effective liquidation preference thereof) set forth below, plus, without
duplication, all accumulated and unpaid dividends, if any, to the date of
redemption (the "Redemption Date") (including an amount in cash equal to a
prorated dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to the Redemption Date), if redeemed during the
12-month period beginning on July 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 107.729%
2003 106.625%
2004 105.521%
2005 104.417%
2006 103.313%
2007 102.208%
2008 101.104%
</TABLE>
(ii) In addition, at any time and from time to time prior to July 1,
2000, the Company may at its option redeem shares of Exchangeable Preferred
Stock having an aggregate liquidation preference of up to 35% of the aggregate
liquidation preference of all shares of Exchangeable Preferred Stock issued as
of the Closing Date or issued as dividends on the Exchangeable Preferred Stock,
with the net proceeds of one or more Public Equity Offerings at a redemption
price equal to 113.250% of the liquidation preference thereof, plus without
duplication, accumulated and unpaid dividends, if any, to the Redemption Date
(including an amount in cash equal to a prorated dividend for the period from
the Dividend Payment Date immediately prior to the Redemption Date to the
Redemption Date), subject to the right of Holders of record on the relevant
record date to receive dividends due on a Dividend Payment Date; provided that,
immediately after giving effect to any such redemption, at least $75,000,000 in
aggregate liquidation preference of the Exchangeable Preferred Stock remains
outstanding. Any such redemption must be made within 90 days of the related
Public Equity Offering.
(iii) No optional redemption may be authorized or made unless on or
prior to such redemption full unpaid cumulative dividends shall have been paid
or a sum set apart for such payment on the Exchangeable Preferred Stock. If
less than all the Exchangeable Preferred Stock is to be redeemed, the
particular shares to be redeemed will be determined pro rata, except that the
Company may redeem such shares held by any holder of fewer than 100 shares
without regard to such pro rata redemption requirement. If any Exchangeable
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<PAGE> 9
Preferred Stock is to be redeemed in part, the Redemption Notice that relates
to such Exchangeable Preferred Stock shall state the portion of the liquidation
preference to be redeemed. New shares of the same Series of Exchangeable
Preferred Stock having an aggregate liquidation preference equal to the
unredeemed portion will be issued in the name of the holder thereof upon
cancellation of the original shares of Exchangeable Preferred Stock and, unless
the Company fails to pay the redemption price on the Redemption Date, after the
Redemption Date dividends will cease to accumulate on the Exchangeable
Preferred Stock called for redemption.
(b) Mandatory Redemption. The Exchangeable Preferred Stock will also
be subject to mandatory redemption (subject to the legal availability of funds
therefor) in whole on the redemption date of July 1, 2009 (the "Mandatory
Redemption Date"), at a redemption price equal to 100% of the liquidation
preference thereof, plus, without duplication, all accumulated and unpaid
dividends, if any, to the date of redemption.
(c) Procedure for Redemption. (i) Not more than 60 and not less than
30 days prior to any Redemption Date, written notice (the "Redemption Notice")
shall be given by first-class mail, postage prepaid, to each Holder of record
of shares to be redeemed on the record date fixed for such redemption of the
Exchangeable Preferred Stock at such Holder's address as the same appears on
the stock ledger of the Company, provided, however, that no failure to give
such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Exchangeable Preferred Stock to
be redeemed except as to the Holder or Holders to whom the Company has failed
to give such notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:
(A) the Redemption Price;
(B) whether all or less than all the outstanding shares of the
Exchangeable Preferred Stock are to be redeemed and the total number of
shares of such Exchangeable Preferred Stock being redeemed;
(C) the number of shares of Exchangeable Preferred Stock held by the
Holder that the Company intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Company, at the place or
places, which shall be designated in such Redemption Notice, its
certificates representing the shares of Exchangeable Preferred Stock to be
redeemed;
(F) that dividends on the shares of the Exchangeable Preferred Stock
to be redeemed shall cease to accumulate on the day prior to such
Redemption Date unless the Company defaults in the payment of the
redemption price; and
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<PAGE> 10
(G) the name of any bank or trust company performing the duties
referred to in subsection (c)(v) below.
(ii) On or before the Redemption Date, each Holder of Exchangeable
Preferred Stock to be redeemed shall surrender the certificate or certificates
representing such shares of Exchangeable Preferred Stock to the Company, in the
manner and at the place designated in the Redemption Notice, and on the
Redemption Date the full redemption price for such shares shall be payable in
cash to the person whose name appears on such certificate or certificates as
the owner thereof, and each surrendered certificate shall be returned to
authorized but unissued shares. In the event that less than all of the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(iii) Unless the Company defaults in the payment in full of the
redemption price, dividends on the Exchangeable Preferred Stock called for
redemption shall cease to accumulate on the day prior to the Redemption Date,
and the Holders of such shares shall cease to have any further rights with
respect thereto on the Redemption Date, other than the right to receive the
redemption price, without interest.
(iv) If a Redemption Notice shall have been duly given, and if, on or
before the Redemption Date specified therein, all funds necessary for such
redemption shall have been set aside by the Company, separate and apart from
its other funds, in trust for the pro rata benefit of the Holders of the
Exchangeable Preferred Stock called for redemption so as to be and continue to
be available therefor, then, notwithstanding that any certificate for shares so
called for redemption shall not have been surrendered for cancellation, all
shares so called for redemption shall no longer be deemed outstanding, and all
rights with respect to such shares shall forthwith on such Redemption Date
cease and terminate, except only the right of the Holders thereof to receive
the amount payable on redemption thereof, without interest.
(v) If a Redemption Notice shall have been duly given or if the
Company shall have given to the bank or trust company hereinafter referred to
irrevocable authorization promptly to give such notice, and if on or before the
Redemption Date specified therein the funds necessary for such redemption shall
have been deposited by the Company with such bank or trust company in trust for
the pro rata benefit of the Holders of the Exchangeable Preferred Stock called
for redemption, then, notwithstanding that any certificate for shares so called
for redemption shall not have been surrendered for cancellation, from and after
the time of such deposit, all shares so called, or to be so called pursuant to
such irrevocable authorization, for redemption shall no longer be deemed to be
outstanding and all rights with respect of such shares shall forthwith cease
and terminate, except only the right of the Holders thereof to receive from
such bank or trust company at any time after the time of such deposit the funds
so deposited, without interest. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the United States of America
or of the State of New York, shall be doing business in the Borough of
Manhattan, The City of New York, shall have capital, surplus and undivided
profits aggregating at least $100,000,000 according to its last published
statement of condition, and shall be identified in the Redemption Notice.
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<PAGE> 11
Any interest accrued on such funds shall be paid to the Company from time to
time. Any funds so set aside or deposited, as the case may be, and unclaimed at
the end of three years from such Redemption Date shall, to the extent permitted
by law, be released or repaid to the Company, after which repayment the Holders
of the shares so called for redemption shall look only to the Company for
payment thereof.
VII. Ranking. The Exchangeable Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution of the
Company, rank (a) senior to all classes of common stock and to each other class
of Capital Stock or series of preferred stock established after the Closing
Date by the Board of Directors the terms of which expressly provide that it
ranks junior to the Exchangeable Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution of the Company (collectively
referred to, together with all classes of common stock of the Company, as
"Junior Stock"); (b) on a parity with each other class of Capital Stock or
series of preferred stock established after the Closing Date by the Board of
Directors the terms of which expressly provide that such class or series will
rank on a parity with the Exchangeable Preferred Stock as to dividend rights on
liquidation, winding-up and dissolution of the Company (collectively referred
to as "Parity Stock"); and (c) subject to the approval of the Holders in
accordance with Section V(c) hereof, junior to each class of Capital Stock or
series of preferred stock established after the Closing Date by the Board of
Directors the terms of which do not expressly provide that such class or series
will rank junior to, or on a parity with, the Exchangeable Preferred Stock as
to dividend rights and rights upon liquidation, winding-up and dissolution of
the Company (collectively referred to as "Senior Stock").
VIII. Certain Covenants.
(1) LIMITATION ON DEBT. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, create, issue, assume, guarantee or in
any manner become directly or indirectly liable for the payment of, or
otherwise incur (collectively, "incur"), any Debt (including Acquired Debt and
the issuance of Disqualified Stock), except that the Company or a Restricted
Subsidiary may incur Debt or issue Disqualified Stock if, at the time of such
event, the Consolidated Cash Flow Ratio would have been less than 7.0 to 1.0.
In making the foregoing calculation, pro forma effect will be given to: (i) the
incurrence of such Debt and (if applicable) the application of the net proceeds
therefrom, including to refinance other Debt as if the additional Debt had been
incurred and the application of proceeds therefrom occurred on the first day of
the four-fiscal quarter period used to calculate the Consolidated Cash Flow
Ratio, (ii) the incurrence, repayment or retirement of any other Debt by the
Company or any of its Restricted Subsidiaries since the first day of such
four-quarter period as if such Debt was incurred, repaid or retired at the
beginning of such four-quarter period and (iii) the acquisition (whether by
purchase, merger or otherwise) or disposition (whether by sale, merger or
otherwise) of any company, entity or business acquired or disposed of by the
Company or any of its Restricted Subsidiaries, as the case may be, since the
first day of such four-quarter period, as if such acquisition or disposition
occurred at the beginning of such four-quarter period. In making a computation
under the
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<PAGE> 12
foregoing clause (i) or (ii), the amount of Debt under a revolving credit
facility will be computed based upon the average daily balance of such Debt
during such four-quarter period.
(b) Notwithstanding the foregoing, the Company may, and may, to the
extent expressly permitted below, permit any of its Restricted Subsidiaries to,
incur any of the following Debt ("Permitted Debt"):
(i) Debt of the Company or any Restricted Subsidiary under the
Credit Facility (including guarantees thereof by Subsidiaries) in an
aggregate principal amount at any one time outstanding not to exceed
$110,000,000.
(ii) Debt of the Company or any of its Restricted Subsidiaries
outstanding on the Closing Date, other than Debt described in clause (i)
above.
(iii) Debt owed by the Company to any of its Restricted Subsidiaries
or owed by any Subsidiary to the Company or a Restricted Subsidiary or
owed to the Company or a Restricted Subsidiary by a Restricted Subsidiary,
provided the incurrence of such Debt did not violate Section VIII(2),
"Limitation on Restricted Payments," of this Certificate of Designation.
(iv) Debt represented by the Notes and the Subsidiary Notes
Guarantees.
(v) Hedging Obligations of the Company or any of its Restricted
Subsidiaries incurred in the ordinary course of business.
(vi) Capitalized Lease Obligations of the Company or any of its
Restricted Subsidiaries in an aggregate amount not exceeding $3,000,000 at
any one time outstanding.
(vii) Debt under purchase money mortgages or secured by purchase
money security interests so long as (x) such Debt is not secured by any
property or assets of the Company or any of its Restricted Subsidiaries
other than the property or assets so acquired and (y) such Debt is created
within 60 days of the acquisition of the related property; provided that
the aggregate principal amount of Debt under this clause (vii) does not
exceed $2,000,000 at any one time outstanding.
(viii) Debt of the Company or any Restricted Subsidiary, not permitted
by any other clause of this definition, in an aggregate principal amount
not to exceed $5,000,000 at any one time outstanding.
(ix) Debt of the Company or any of its Restricted Subsidiaries
consisting of guarantees, indemnities or obligations in respect of
purchase price adjustments in connection with the acquisition or
disposition of assets, including, without limitation, shares of Capital
Stock.
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<PAGE> 13
(x) Acquired Debt of a person, other than Debt incurred in
connection with, or in contemplation of, such person becoming a Restricted
Subsidiary or the acquisition of assets from such person, as the case may
be, provided that the Company on a pro forma basis could incur $1.00 of
additional Debt (other than Permitted Debt) pursuant to the first
paragraph of this covenant.
(xi) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company or any Restricted Subsidiary of any outstanding Debt of the
Company or such Restricted Subsidiary, other than Debt incurred pursuant
to clause (i), (v), (vi), (vii), (viii) or (ix) of this definition,
including any successive refinancings thereof, so long as (A) any such new
Debt is in a principal amount that does not exceed the principal amount so
refinanced, plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Debt
refinanced or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing plus the amount of
expenses of the Company incurred in connection with such refinancing and
(B) such refinancing Debt does not have a Weighted Average Life less than
the Weighted Average Life of the Debt being refinanced and does not have a
final scheduled maturity earlier than the final scheduled maturity, or
permit redemption at the option of the holder earlier than the earliest
date of redemption at the option of the holder, of the Debt being
refinanced.
(2) LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, take
any of the following actions:
(a) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Junior Stock of the Company or any of its
Restricted Subsidiaries, other than (i) dividends or distributions payable
solely in Qualified Equity Interests of the issuer of such shares of
Junior Stock, (ii) dividends or distributions by a Restricted Subsidiary
payable to the Company or another Restricted Subsidiary or (iii) pro rata
dividends or distributions on common stock of a Restricted Subsidiary held
by minority stockholders, provided that such dividends do not in the
aggregate exceed the minority stockholders' pro rata share of such
Restricted Subsidiary's net income from the first day of the Company's
fiscal quarter during which the Closing Date occurs;
(b) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of (i) Junior Stock of the Company (or
any options, warrants or other rights to acquire shares of Junior Stock of
the Company (other than any such Junior Stock owned by Restricted
Subsidiaries)) or (ii) Capital Stock (or any options, warrants or other
rights to acquire shares of Capital Stock) of (A) any Unrestricted
Subsidiary or (B) any Restricted Subsidiary that are held by any Affiliate
of the Company (other than, in either case, any such Capital Stock owned
by the Company or any of its Restricted Subsidiaries);
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<PAGE> 14
(c) make any Investment (other than a Permitted Investment) in any
person
(such payments or other actions described in (but not excluded from) clauses (a)
through (c) being referred to as "Restricted Payments"), unless at the time of,
and immediately after giving effect to, the proposed Restricted Payment:
(i) no Voting Rights Triggering Event has occurred and is
continuing,
(ii) the Company could incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to Section VIII(1)(a),
"Limitation on Debt," of this Certificate of Designation, and
(iii) the aggregate amount of all Restricted Payments declared or
made after the Closing Date does not exceed the sum of:
(A) the remainder of (x) 100% of the aggregate Consolidated
Cash Flow for the period beginning on the first day of the
Company's fiscal quarter during which the Closing Date occurs and
ending on the last day of the Company's most recent fiscal
quarter for which internal financial statements are available
ending prior to the date of such proposed Restricted Payment (the
"Computation Period") minus (y) the product of 1.4 times the sum
of (i) Consolidated Fixed Charges for the Computation Period and
(ii) all dividends or other distributions paid in cash by the
Company or any of its Restricted Subsidiaries on any Disqualified
Stock of the Company or any of its Restricted Subsidiaries for
the Computation Period; plus
(B) the aggregate net proceeds received by the Company
after the Closing Date (including the fair market value of
property other than cash as determined by the Board of Directors,
whose good faith determination will be conclusive) from the
issuance or sale (other than to a Subsidiary) of Qualified Equity
Interests of the Company (excluding from this computation any net
proceeds of a Public Equity Offering received by the Company that
are used by it to redeem the Exchangeable Preferred Stock, as
discussed in Section VI(a)(ii), "Redemption" above); plus
(C) the aggregate net proceeds received by the Company
after the Closing Date (including the fair market value of
property other than cash as determined by the Board of Directors,
whose good faith determination will be conclusive) from the
issuance or sale (other than to a Subsidiary) of debt securities
or Disqualified Stock that have been converted into or exchanged
for Qualified Stock of the Company,
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<PAGE> 15
together with the aggregate net cash proceeds received by the
Company at the time of such conversion or exchange; plus
(D) without duplication, the Net Cash Proceeds received by
the Company or a Wholly Owned Restricted Subsidiary upon the sale
of any of its Unrestricted Subsidiaries; plus
(E) $5,000,000.
Notwithstanding the foregoing, the Company and any of its Restricted
Subsidiaries may take any of the following actions, so long as (with respect to
clauses (c) and (d) below) no Voting Rights Triggering Event has occurred and
is continuing or would occur:
(a) The payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not
have been prohibited by the foregoing provision.
(b) The repurchase, redemption or other acquisition or retirement for
value of any shares of Junior Stock of the Company, in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary) of, Qualified Equity Interests of the
Company.
(c) The payment by the Company to Citadel Communications for the
purpose of the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of Citadel Communications,
options on any such shares or related stock appreciation rights or similar
securities held by officers or employees or former officers or employees
(or their estates or beneficiaries under their estates) or by any employee
benefit plan, upon death, disability, retirement or termination of
employment or pursuant to the terms of any employee benefit plan or any
other agreement under which such shares of stock or related rights were
issued; provided that the aggregate cash consideration paid for such
purchase, redemption, acquisition, cancellation or other retirement of
such shares of Capital Stock after the Closing Date does not exceed
$1,000,000 in any fiscal year.
(d) Loans or advances to officers, directors and employees of Citadel
Communications, the Company or any of its Restricted Subsidiaries made in
the ordinary course of business after the Closing Date in an aggregate
principal amount not to exceed $1,000,000 at any one time outstanding.
(e) Payments to or on behalf of Citadel Communications to pay its
operating and administrative expenses attributable to the Company,
including, without limitation, legal and audit expenses, directors' fees,
fees payable in respect of the trustee and the back-up trustees under the
Voting Trust Agreement, and Commission compliance expenses, in an amount
not to exceed the greater of $1,000,000 per fiscal year and 1% of the net
revenues of the Company for the preceding fiscal year.
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<PAGE> 16
(f) Repayment of the note payable of the Company to Citadel
Communications outstanding as of the Closing Date in an amount not to
exceed $12,817,000 plus accrued and unpaid interest thereon to the Closing
Date.
The payments described in clauses (b), (c) and (d) of this paragraph will be
Restricted Payments that will be permitted to be taken in accordance with this
paragraph but will reduce the amount that would otherwise be available for
Restricted Payments under the foregoing clause (iii), and the payments
described in clauses (a), (e) and (f) of this paragraph will be Restricted
Payments that will be permitted to be taken in accordance with this paragraph
and will not reduce the amount that would otherwise be available for Restricted
Payments under the foregoing clause (iii).
For the purpose of making calculations under this Certificate of
Designation (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company will be deemed to have made an Investment in an amount
equal to the fair market value of the net assets of such Restricted Subsidiary
at the time of such designation as determined by the Board of Directors, whose
good faith determination will be conclusive, (ii) any property transferred to
or from an Unrestricted Subsidiary will be valued at fair market value at the
time of such transfer, as determined by the Board of Directors, whose good
faith determination will be conclusive and (iii) subject to the foregoing, the
amount of any Restricted Payment, if other than cash, will be determined by the
Board of Directors, whose good faith determination will be conclusive.
If the aggregate amount of all Restricted Payments calculated under
the foregoing provision includes an Investment in an Unrestricted Subsidiary or
other person that thereafter becomes a Restricted Subsidiary, such Investment
will no longer be counted as a Restricted Payment for purposes of calculating
the aggregate amount of Restricted Payments.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision will be reduced by the amount of any net reduction in such Investment
(resulting from the payment of interest or dividends, loan repayment, transfer
of assets or otherwise), to the extent such net reduction is not included in
Consolidated Adjusted Net Income; provided that the total amount by which the
aggregate amount of all Restricted Payments may be reduced may not exceed the
lesser of (x) the cash proceeds received by the Company and any of its
Restricted Subsidiaries in connection with such net reduction and (y) the
initial amount of such Investment.
In computing Consolidated Adjusted Net Income for purposes of the
foregoing clause (iii) (A), (i) the Company may use audited financial
statements for the portions of the relevant period for which audited financial
statements are available on the date of determination and unaudited financial
statements and other current financial data based on the books and records of
the Company for the remaining portion of such period and (ii) the Company will
be permitted to rely in good faith on the financial statements and other
financial data derived from the books and records of the Company that are
available on the date of determination. If the Company makes a Restricted
Payment that, at the time of the
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<PAGE> 17
making of such Restricted Payment, would in the good faith determination of the
Company be permitted under the requirements of this Certificate of Designation,
such Restricted Payment will be deemed to have been made in compliance with
this Certificate of Designation notwithstanding any subsequent adjustments made
in good faith to the Company's financial statements affecting Consolidated
Adjusted Net Income of the Company for any period.
(3) PURCHASE OF EXCHANGEABLE PREFERRED STOCK UPON A CHANGE OF CONTROL.
If a Change of Control occurs at any time, then each Holder of Exchangeable
Preferred Stock will have the right to require that the Company purchase such
Holder's Exchangeable Preferred Stock, in whole or in part, at a purchase price
in cash equal to 101% of the liquidation preference of such Exchangeable
Preferred Stock, plus accumulated and unpaid dividends, if any, to the date of
purchase, pursuant to the offer described herein (the "Change of Control
Offer") and the other procedures set forth herein.
Within 30 days following any Change of Control, the Company will
notify the Transfer Agent thereof and give written notice of such Change of
Control to each Holder of Exchangeable Preferred Stock by first-class mail,
postage prepaid, at its address appearing in the security register of the
Exchangeable Preferred Stock, stating, among other things, (i) the purchase
price and the purchase date, which will be a Business Day no earlier than 30
days nor later than 60 days from the date such notice is mailed or such later
date as is necessary to comply with requirements under the Exchange Act; (ii)
that any Exchangeable Preferred Stock not tendered will continue to accumulate
dividends; (iii) that, unless the Company defaults in the payment of the
purchase price, any Exchangeable Preferred Stock accepted for payment pursuant
to the Change of Control Offer will cease to accumulate dividends after the
Change of Control purchase date; and (iv) certain other procedures that a
Holder of Exchangeable Preferred Stock must follow to accept a Change of
Control Offer or to withdraw such acceptance.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create any restriction (other than restrictions existing under
Debt as in effect on the Closing Date or in refinancings or replacements of
such Debt) that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Exchangeable Preferred Stock or, if
such Change of Control Offer is made, to pay for the Exchangeable Preferred
Stock tendered for purchase.
(4) LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not sell, and will not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue or sell, any shares
of Capital Stock of a Restricted Subsidiary (including options, warrants, or
other rights to purchase shares of such Capital Stock) except (i) to the
Company or a Wholly Owned Restricted Subsidiary, (ii) issuances or sales to
foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law, or issuances or sales
to directors of directors' qualifying shares, (iii) if, immediately after
giving effect to such issuance or sale, neither the Company nor any Subsidiary
owns any shares of Capital Stock of such Restricted Subsidiary (including
options, warrants or other rights to purchase shares of such Capital Stock) or
(iv) if,
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<PAGE> 18
immediately either giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment in such person remaining after giving effect to such issuance or
sale would have been permitted to be made under Section VIII(2), "Limitation on
Restricted Payments," of this Certificate of Designation if made on the date of
such issuance or sale.
In addition, the Company will not, and will not permit any of its
Restricted Subsidiaries to, sell, transfer or otherwise dispose of any of its
properties or assets to an Unrestricted Subsidiary other than in the ordinary
course of business.
(5) UNRESTRICTED SUBSIDIARIES. (a) The Board of Directors of the
Company may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary so long as (i) neither the
Company nor any of its Restricted Subsidiaries is directly or indirectly liable
for any Debt of such Subsidiary, (ii) no default with respect to any Debt of
such Subsidiary would permit (upon notice, lapse of time or otherwise) any
holder of any other Debt of the Company or any of its Restricted Subsidiaries
to declare a default on such other Debt or cause the payment thereof to be
accelerated or made payable prior to its stated maturity, (iii) any Investment
in such Subsidiary made as a result of designating such Subsidiary an
Unrestricted Subsidiary will not violate the provisions of Section VIII(2),
"Limitation on Restricted Payments," of this Certificate of Designation, (iv)
neither the Company nor any of its Restricted Subsidiaries has a contract,
agreement, arrangement, understanding or obligation of any kind, whether
written or oral, with such Subsidiary other than those that might be obtained
at the time from persons who are not Affiliates of the Company and (v) neither
the Company nor any of its Restricted Subsidiaries has any obligation to
subscribe for additional shares of Capital Stock or other equity interest in
such Subsidiary, or to maintain or preserve such Subsidiary's financial
condition or to cause such Subsidiary to achieve certain levels of operating
results. Notwithstanding the foregoing, the Company may not designate the
License Subsidiary, or any Subsidiary to which any properties or assets (other
than current assets) owned by the Company or the License Subsidiary on the
Closing Date have been transferred, as an Unrestricted Subsidiary.
(b) The Board of Directors of the Company may designate any of its
Unrestricted Subsidiaries as a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation will only be permitted if (i) such Debt is permitted under Section
VIII(1), "Limitation on Debt," of this Certificate of Designation and (ii) no
Voting Rights Triggering Event will have occurred and be continuing following
such designation.
(6) LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES. The Company will
not permit any of its Subsidiaries to issue any Preferred Stock (other than to
the Company or to a Wholly Owned Restricted Subsidiary of the Company) or
permit any person (other than the Company or a Wholly Owned Restricted
Subsidiary of the Company) to own any Preferred Stock of a Subsidiary of the
Company (other than Acquired Preferred Stock; provided that at the time the
issuer of such Acquired Preferred Stock becomes a Subsidiary of the Company or
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<PAGE> 19
merges with the Company or any of its Subsidiaries, and after giving effect to
such transaction, the Company shall be able to incur $1.00 of additional Debt
(other than Permitted Debt) in compliance with Section VIII(1), "Limitation on
Debt," of this Certificate of Designation).
(7) REPORTS. At all times from and after the earlier of (i) the date
of the commencement of the Preferred Stock Exchange Offer or the effectiveness
of the Preferred Stock Shelf Registration Statement (the "Preferred Stock
Registration") and (ii) the date 180 days after the Closing Date, in either
case, whether or not the Company is then required to file reports with the
Commission, the Company will file with the Commission all such reports and
other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Exchange Act if it were subject thereto. The
Company will supply the Transfer Agent and each Holder, or will supply to the
Transfer Agent for forwarding to each such Holder, without cost to such Holder,
copies of such reports and other information. In addition, at all times prior
to the earlier of the date of the Preferred Stock Shelf Registration Statement
and the date 180 days after the Closing Date, the Company will, at its cost,
deliver to each Holder of the Exchangeable Preferred Stock quarterly and annual
reports substantially equivalent to those that would be required by the
Exchange Act. In addition, at all times prior to the Preferred Stock
Registration, upon the request by any Holder or any prospective purchaser of
the Exchangeable Preferred Stock designated by a Holder, the Company will
supply to such Holder or such prospective purchaser the information required
under Rule 144A under the Securities Act.
(8) CONSOLIDATION, MERGER AND SALE OF ASSETS. Without the affirmative
vote of the Holders of a majority of the issued and outstanding shares of
Exchangeable Preferred Stock and the holders of any Parity Stock, voting or
consenting, as the case may be, as a separate class, the Company may not, in a
single transaction or a series of related transactions, consolidate with or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, another person or adopt a
plan of liquidation unless:
(a) Either (i) the Company is the surviving corporation or (ii) the
person (if other than the Company) formed by such consolidation or into
which the Company is merged or the person that acquires by sale,
assignment, transfer, lease or other disposition the properties and assets
of the Company substantially as an entirety (the "Surviving Entity") (A)
is a corporation, partnership or trust organized and validly existing
under the laws of the United States or any state thereof or the District
of Columbia and (B) the Exchangeable Preferred Stock shall be converted
into or exchanged for and shall become shares of such Surviving Entity,
having in respect of such Surviving Entity the same powers, preferences
and relative participating, optional or other special rights and the
qualifications, limitations or restrictions thereon, that the Exchangeable
Preferred Stock had immediately prior to such transaction.
(b) Immediately after giving effect to such transaction and treating
any obligation of the Company or a Restricted Subsidiary in connection
with or as a result
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<PAGE> 20
of such transaction as having been incurred at the time of such
transaction, no Voting Rights Triggering Event shall have occurred or be
continuing.
(c) Immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred at the beginning of
the most recently ended four full fiscal quarter period for which internal
financial statements are available), the Company (in the case of clause
(i) of paragraph (a) or such person (in the case of clause (ii) of
paragraph (a)) could incur at least $1.00 of additional Debt (other than
Permitted Debt) pursuant to Section VIII(1)(a), "Limitation on Debt," of
this Certificate of Designation.
(d) The Company delivers, or causes to be delivered, to the Transfer
Agent an officers' certificate and an opinion of counsel, each stating
that such consolidation, merger or transfer complies with this Certificate
of Designation and that all conditions precedent in this Certificate of
Designation relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of related transactions)
of all or substantially all of the properties or assets of one or more
Subsidiaries, the Capital Stock of which constitutes all or substantially all
of the properties or assets of the Company, will be deemed to be the transfer
of all or substantially all of the properties and assets of the Company.
IX. No Reissuance of Exchangeable Preferred Stock. None of the shares
of Exchangeable Preferred Stock acquired by the Company by reason of
redemption, purchase, or otherwise shall be reissued.
X. Business Day. If any payment or redemption shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment or
redemption shall be made on the immediately succeeding Business Day.
XI. Transfer Restrictions. (a) The Series A Preferred Stock will bear
a legend to the following effect (as applicable) unless otherwise agreed by the
Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE
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<PAGE> 21
HEREOF AND THE LAST DATE ON WHICH CITADEL BROADCASTING COMPANY (THE "COMPANY")
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE") ONLY
(A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR," WITHIN
THE MEANING OF SUBPARAGRAPH (A) (1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR
SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRANSFER
AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSES
(D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.
(b) The Transfer Agent shall refuse to register any transfer of Series
A Preferred Stock in violation of the restrictions contained in the legend
provided for in Section XI(a).
(c) The legend provided for in Section XI(a) may be removed if the
Series A Preferred Stock has been registered pursuant to a Preferred Stock
Shelf Registration Statement under the Securities Act. Unlegended Series B
Preferred Stock may be issued in exchange for Series A Preferred Stock pursuant
to a Preferred Stock Exchange Offer.
(d) At any time after one year following the Closing Date, upon
receipt by the Transfer Agent and the Company of a certificate substantially in
the form of Exhibit A hereto, the Transfer Agent shall authenticate and deliver
one or more shares of unlegended Series A Preferred Stock in the place of
shares of legended Series A Preferred Stock.
(e) In connection with proposed transfers of Series A Preferred Stock
described in Exhibit B or Exhibit C, the Transfer Agent or the Company may
require the transferor or transferee, as the case may be, to deliver the
appropriate letter attached hereto as Exhibits B or C. Each Holder of Series A
Preferred Stock shall notify the Company or the
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<PAGE> 22
Transfer Agent in the event of any transfer by such Holder of any shares of
Series A Preferred Stock to a foreign transferee.
XII. Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Acquired Debt" means Debt of a person (a) existing at the time such
person is merged with or into the Company or becomes a Subsidiary, (b) assumed
in connection with the acquisition of assets from such person or (c) secured by
a Lien encumbering assets acquired from such person.
"Acquired Preferred Stock" means preferred stock of a person (a)
existing at the time such person is merged with or into the Company or becomes
a Subsidiary or (b) assumed in connection with the acquisition of assets from
such person.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control," when used with respect to any specified person, means
the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer")
by the Company or a Restricted Subsidiary, directly or indirectly, in one or a
series of related transactions, to any person other than the Company or a
Restricted Subsidiary of (a) any Capital Stock of any of its Restricted
Subsidiaries, (b) all or substantially all of the properties and assets of the
Company and its Restricted Subsidiaries representing a division or line of
business or (c) any other properties or assets of the Company or any of its
Restricted Subsidiaries, other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" does not include any
transfer of properties or assets (a) that is governed by the provisions of
Section VIII(8), "Consolidation, Merger and Sale of Assets," of this
Certificate of Designation, (b) to an Unrestricted Subsidiary, if permitted
under Section VIII(2), "Limitation on Restricted Payments," of this Certificate
of Designation, (c) representing obsolete or permanently retired equipment, (d)
the gross proceeds of which (exclusive of indemnities) do not exceed $100,000
for any particular item or $500,000 in the aggregate for any fiscal year, or
(e) the transfer of up to $500,000 of properties and assets, including cash, to
a joint venture in which the Company or a Restricted Subsidiary has an equity
interest, which joint venture is engaged in the internet service provider
business.
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<PAGE> 23
"Banks" means the banks and other financial institutions that from
time to time are lenders under the Credit Facility.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means a day other than a Saturday, Sunday, national or
New York State holiday or other day on which commercial banks in New York City
are authorized or required by law to close.
"Capital Stock" of any person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents (however
designated) of such person's equity (however designated).
"Capitalized Lease Obligation" means, with respect to any person, an
obligation incurred or assumed under or in connection with any capital lease of
real or personal property that, in accordance with GAAP, has been recorded as a
capitalized lease on the balance sheet of such person.
"Change of Control" means the occurrence of any of the following
events:
(a) Any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Lawrence R. Wilson, Scott E.
Smith, John E. von Schlegell, Baker, Fentress & Company, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., The Endeavour
Capital Fund Limited Partnership and any trustee, in its capacity as
trustee under the Voting Trust Agreement or Citadel Communications is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person will be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than a majority of the voting power
of all classes of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election to such Board of Directors or whose
nomination for election by the stockholders of the Company, was approved
by a vote of at least 66-2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors then in office; or
(c) The Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Change of Control Offer" has the meaning specified in Section VIII(3)
hereof.
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<PAGE> 24
"Citadel Communications" means Citadel Communications Corporation, a
Nevada corporation, and any successors thereof.
"Closing Date" means the date on which the Exchangeable Preferred
Stock is originally issued under this Certificate of Designation.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act.
"Computation Period" has the meaning specified in Section VIII(2)
hereof.
"Consolidated Adjusted Net Income" means, for any period, the net
income (or net loss) of the Company and its Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP, adjusted
to the extent included in calculating such net income or loss by excluding (a)
any net after-tax extraordinary gains or losses (less all fees and expenses
relating thereto), (b) any net after-tax gains or losses (less all fees and
expenses relating thereto) attributable to Asset Sales, (c) the portion of net
income (or loss) of any person (other than the Company or a Restricted
Subsidiary), including Unrestricted Subsidiaries, in which the Company or any
of its Restricted Subsidiaries has an ownership interest, except to the extent
of the amount of dividends or other distributions actually paid to the Company
or any of its Restricted Subsidiaries in cash during such period, (d) the net
income (or loss) of any person combined with the Company or any of its
Restricted Subsidiaries on a "pooling of interests" basis attributable to any
period prior to the date of combination, and (e) the net income (but not the
net loss) of any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Restricted Subsidiary is
at the date of determination restricted, directly or indirectly, except to the
extent that such net income could be paid to the Company or a Restricted
Subsidiary thereof; provided that, if any Restricted Subsidiary is not a Wholly
Owned Restricted Subsidiary, Consolidated Adjusted Net Income will be reduced
(to the extent not otherwise reduced in accordance with GAAP) by an amount
equal to (A) the amount of the Consolidated Adjusted Net Income otherwise
attributable to such Restricted Subsidiary multiplied by (B) the quotient of
(1) the number of shares of outstanding common stock of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of
its Restricted Subsidiaries divided by (2) the total number of shares of
outstanding common stock of such Restricted Subsidiary on the last day of such
period.
"Consolidated Cash Flow" means, for any period, the sum of, without
duplication, Consolidated Adjusted Net Income for such period, plus (or, in the
case of clause (d) below, plus or minus) the following items to the extent
included in computing Consolidated Adjusted Net Income for such period: (a) the
aggregate interest expense and preferred stock dividends of the Company and its
Restricted Subsidiaries for such period, plus (b) the provision for federal,
state, local and foreign income taxes of the Company and its Restricted
Subsidiaries for such period, plus (c) the aggregate depreciation and
amortization expense of the Company and any of its Restricted Subsidiaries for
such period, plus (d) any other non-cash charges for such period, and minus
non-cash credits for such period, other than
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<PAGE> 25
non-cash charges or credits resulting from changes in prepaid assets or accrued
liabilities in the ordinary course of business; provided that income tax
expense, interest expense and preferred stock dividends, depreciation and
amortization expense, and non-cash charges and credits of a Restricted
Subsidiary will be included in Consolidated Cash Flow only to the extent (and
in the same proportion) that the net income of such Restricted Subsidiary was
included in calculating Consolidated Adjusted Net Income for such period.
Solely for purposes of determining whether the Company could incur Debt
pursuant to Section VIII(1)(a), "Limitation on Debt," of this Certificate of
Designation, if the Company is permitted to give pro forma effect to an
In-Market Acquisition of a radio station pursuant to clause (iii) of the second
paragraph of such covenant, such calculation may also give pro forma effect to
projected quantifiable improvements in operating results of such radio station
due to cost reductions calculated in good faith by the Company and certified by
an officers' certificate filed with the Transfer Agent. As used in the
preceding sentence, the term "In-Market Acquisition" means the acquisition of a
radio station or group of radio stations serving a metropolitan statistical
area in which the Company or its Subsidiaries has owned, or has operated under
a local marketing agreement, one or more radio stations for at least the
preceding six months.
"Consolidated Cash Flow Ratio" means, at any date, the ratio of (i)
the aggregate amount of Debt of the Company and its Restricted Subsidiaries on
a consolidated basis as of the end of the immediately preceding four fiscal
quarters for which internal financial statements of the Company are available
(the "Reference Period") to (ii) the aggregate amount of Consolidated Cash Flow
for such Reference Period.
"Consolidated Fixed Charges" means, for any period, without
duplication, the sum of (a) the amount which, in conformity with GAAP, would be
set forth opposite the caption "interest expense" (or any like caption) on a
consolidated statement of operations of the Company and its Restricted
Subsidiaries for such period, including, without limitation, (i) amortization
of debt discount, (ii) the net cost of interest rate contracts (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) amortization of debt issuance costs, (v) the interest
component of Capitalized Lease Obligations of the Company and any of its
Restricted Subsidiaries, and (vi) the portion of any rental obligation of the
Company and any of its Restricted Subsidiaries in respect of any sale and
leaseback transaction allocable during such period to interest expense
(determined as if it were treated as a Capitalized Lease Obligation) plus (b)
all interest on any Debt of any other person guaranteed by the Company or any
of its Restricted Subsidiaries: provided, however, that Consolidated Fixed
Charges will not include any gain or loss from extinguishment of debt,
including any write-off of debt issuance costs.
"Credit Facility" means the loan agreement dated October 9, 1996 among
the Company and the financial institutions and banks named therein, as amended,
and as such agreement may be amended, restated, supplemented, replaced or
refinanced or otherwise modified from time to time.
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<PAGE> 26
"Debentures Trustee" means The Bank of New York, as Trustee under the
Exchange Indenture, or any successor Debentures Trustee appointed in accordance
with the terms of the Exchange Indenture.
"Debt" means (without duplication), with respect to any person,
whether recourse is to all or a portion of the assets of such person and
whether or not contingent, (a) every obligation of such person for money
borrowed, (b) every obligation of such person evidenced by bonds, debentures,
notes or other similar instruments, (c) every reimbursement obligation of such
person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such person, (d) every obligation of such
person issued or assumed as the deferred purchase price of property or
services, (e) every Capitalized Lease Obligation of such person, (f) all
Disqualified Stock of such person valued at its maximum fixed repurchase price,
plus accumulated and unpaid dividends, (g) all Hedging Obligations of such
person, and (h) every obligation of the type referred to in clauses (a) through
(g) of another person and all dividends of another person (i) the payment of
which, in either case, such person has guaranteed or (ii) which is secured by
any Lien on any property or asset of such person, the amount of such Debt being
deemed to be the lesser of the actual amount of the guarantee or the value of
such property or asset subject to such Lien, as the case may be, and the amount
of the Debt so guaranteed or secured, as the case may be. For purposes of this
definition, the "maximum fixed repurchase price" of any Disqualified Stock that
does not have a fixed repurchase price will be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
repurchased on any date on which Debt is required to be determined pursuant to
this Certificate of Designation, and if such price is based upon, or measured
by, the fair market value of such Disqualified Stock, such fair market value
will be determined reasonably and in good faith by the board of directors of
the issuer of such Disqualified Stock. Notwithstanding the foregoing, trade
accounts payable and accrued liabilities arising in the ordinary course of
business and any liability, for federal, state or local taxes or other taxes
owed by such person will not be considered Debt for purposes of this
definition. The amount outstanding at any time of any Debt issued with original
issue discount is the aggregate principal amount at maturity of such Debt, less
the remaining unamortized portion of the original issue discount of such Debt
at such time, as determined in accordance with GAAP.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms (or by the terms of any security into which it is
convertible or exchangeable by contract or otherwise), or upon the happening of
any event, matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of
the holder thereof, in whole or in part, prior to one year after the Mandatory
Redemption Date, provided that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to cause the issuer thereof to repurchase or redeem such Capital Stock upon
occurrence of a "change of control" occurring prior to the Mandatory Redemption
Date will not constitute Disqualified Stock if the "change of control"
provisions applicable to such Capital Stock are no more favorable to the
holders of such
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<PAGE> 27
Capital Stock than the provisions contained in Section VIII(3), "Purchase of
Exchangeable Preferred Stock upon a Change of Control," of this Certificate of
Designation and such Capital Stock specifically provides that the issuer will
not repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Exchangeable Preferred Stock as are required to be
repurchased pursuant to Section VIII(3), "Purchase of Exchangeable Preferred
Stock upon a Change of Control," of this Certificate of Designation; provided,
however, that "Disqualified Stock" shall not include the Exchangeable Preferred
Stock.
"Dividend Default" has the meaning specified in Section V(b) hereof.
"Dividend Payment Date" means each January 1 and July 1 of each year
on which dividends shall be paid or are payable, any Redemption Date and any
other date on which dividends in arrears may be paid.
"Dividend Rate" has the meaning specified in Section II(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Date" has the meaning specified in Section IV(a) hereof.
"Exchange Debentures" means the 13-1/4% Exchange Debentures due 2009
of the Company, issuable pursuant to the Exchange Indenture in exchange for the
Exchangeable Preferred Stock at the option of the Company.
"Exchange Indenture" means the Indenture dated as of July 1, 1997
among the Company, Citadel License, Inc. as guarantor, and The Bank of New
York, as trustee, relating to the Exchange Debentures.
"Exchange Notice" has the meaning specified in Section IV(a) hereof.
"Exchangeable Preferred Stock" has the meaning set forth in Section I
hereof.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the Closing Date.
"guarantee" means, as applied to any obligation, (a) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way, the payment
or performance (or payment of damages in the event of nonperformance) of all or
any part of such obligation, including without limitation, the payment of
amounts drawn down under letters of credit.
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"Hedging Obligations" means the obligations of any person under (a)
interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements and (b) other agreements or arrangements destined to protect
such person against fluctuations in interest rates or the value of foreign
currencies.
"Holder" has the meaning specified in Section II(a) hereof.
"Investment" (in any person) means (a) directly or indirectly, any
advance, loan or other extension of credit (including, without limitation, by
way of guarantee or similar arrangement) or capital contribution to any person,
the purchase or other acquisition of any stock, bonds, notes, debentures or
other securities issued by such person or the acquisition (by purchase or
otherwise) of all or substantially all of the business or assets of such person
or the making of any investment in such person, (b) the designation of any
Restricted Subsidiary as an Unrestricted Subsidiary and (c) the transfer of any
assets or properties from the Company or a Restricted Subsidiary to any
Unrestricted Subsidiary, other than the transfer of assets or properties made
in the ordinary course of business. Investments will exclude extension of trade
credit on commercially reasonable terms in accordance with normal trade
practices.
"Junior Stock" has the meaning specified in Section VII hereof.
"License Subsidiary" means Citadel License, Inc.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation, assignment for
security, claim, preference, priority or other encumbrance upon or with respect
to any property of any kind, real or personal, movable or immovable, now owned
or hereafter acquired. A person will be deemed to own subject to a Lien any
property that such person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Mandatory Redemption Date" has the meaning specified in Section VI(b)
hereof.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed of for, cash or cash equivalents (except to the
extent that such obligations are financed or sold with recourse to the Company
or any of its Restricted Subsidiaries), net of (a) brokerage commissions and
other fees and expenses (including fees and expenses of legal counsel and
investment banks) related to such Asset Sale, (b) provisions for all taxes
payable as a result of such Asset Sale, (c) payments made to retire Debt where
payment of such Debt is secured by the assets that are the subject of such
Asset Sale, (d) amounts required to be paid to any person (other than the
Company or any of its Restricted Subsidiaries) owning a beneficial interest in
the assets that are subject to the Asset Sale and (e) appropriate amounts to be
provided by the Company or any of its Restricted Subsidiaries, as the case may
be, as a
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reserve required in accordance with GAAP against any liabilities associated
with such Asset Sale and retained by the seller after such Asset Sale,
including pension and other post- employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"Notes" means the 10-1/4% Senior Subordinated Notes due 2007 of the
Company, issuable pursuant to the Notes Indenture.
"Notes Indenture" means the Indenture dated as of July 1, 1997 among
the Company, Citadel License, Inc., as guarantor, and The Bank of New York, as
trustee, relating to the 10-1/4% Senior Subordinated Notes due 2007 of the
Company.
"Original Issue Date" means the date on which the Company initially
issues any shares of Exchangeable Preferred Stock.
"Parity Stock" has the meaning specified in Section VII hereof.
"Permitted Debt" has the meaning specified in Section VIII(1)(b)
hereof.
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of one year or less
issued or directly and fully guaranteed or insured by the United States or
any agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof); (ii)
certificates of deposit, time deposits, overnight bank deposits or
bankers' acceptances with a maturity of 270 days or less of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus of not less than $500,000,000; and (iii) commercial
paper with a maturity of 270 days or less issued by a corporation that is
not an Affiliate of the Company and is organized under the laws of any
state of the United States or the District of Columbia and having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard
& Poor's Ratings Services.
(b) Investments by the Company or any of its Restricted Subsidiaries
in another person, if as a result of such Investment (i) such other person
becomes a Restricted Subsidiary that would be a Subsidiary Debentures
Guarantor under the Exchange Indenture or (ii) such other person is merged
or consolidated with or into, or transfers or conveys all or substantially
all of its assets to, the Company or a Restricted Subsidiary that would be
such a Subsidiary Debentures Guarantor.
(c) Investments by the Company or any of its Restricted Subsidiaries
in a Subsidiary Debentures Guarantor and Investments by any Restricted
Subsidiary in the Company.
(d) Investments in assets owned or used in the ordinary course of
business.
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(e) Investments in existence on the Closing Date.
(f) Promissory notes received as a result of Asset Sales provided that
(i) the consideration received by the Company or the relevant Restricted
Subsidiary for such Asset Sale is not less than the fair market value of
the assets sold (as determined by the Board of Directors, whose good faith
determination will be conclusive) and (ii) the consideration received by
the Company or the relevant Restricted Subsidiary in respect of such Asset
Sale consists of at least 80% (A) cash or cash equivalents and/or (B) the
assumption by the transferee of Debt of the Company or a Restricted
Subsidiary which would be ranked senior to or pari passu with the Exchange
Debentures and release of the Company or such Restricted Subsidiary from
all liability on such Debt.
(g) Direct or indirect loans to employees, or to a trustee for the
benefit of such employees, of the Company or any of its Restricted
Subsidiaries in an aggregate amount outstanding, at any time not exceeding
$1,000,000.
(h) Investments by the Company or any of its Restricted Subsidiaries
in a joint venture that is engaged in the internet service provider
business in an aggregate amount outstanding at any time not exceeding
$500,000.
(i) Other Investments that do not exceed $2,000,000 at any one time
outstanding.
"Preferred Stock" of any person means any Capital Stock of such person
that has preferential rights to any other Capital Stock of such person with
respect to dividends or redemptions or upon liquidation.
"Preferred Stock Exchange Offer" means an offer by the Company to
exchange the Series A Preferred Stock for the Series B Preferred Stock pursuant
to an effective registration statement.
"Preferred Stock Registration" has the meaning set forth in Section
VIII(7) hereof.
"Preferred Stock Shelf Registration Statement" means a shelf
registration statement which becomes effective and covers resales of the Series
A Preferred Stock.
"Public Equity Offering" means an underwritten public offering of
Qualified Equity Interests of either (a) the Company or (b) Citadel
Communications, the net proceeds from which (after deducting any underwriting
discounts and commissions) are used by Citadel Communications to purchase
Qualified Equity Interests of the Company; provided that, in either case, such
net proceeds exceed $10,000,000.
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"Qualified Equity Interest" means any Qualified Stock and all
warrants, options or other rights to acquire Qualified Stock (but excluding any
debt security that in convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any person means any and all Capital Stock of
such person, other than Disqualified Stock.
"Redemption Date" has the meaning specified in Section VI(a)(i)
hereof.
"Redemption Notice" has the meaning specified in Section VI(c)(i)
hereof.
"Redemption Price" means the price at which the Exchangeable Preferred
Stock may be redeemed.
"Restricted Payment" has the meaning specified in Section VIII(2)
hereof.
"Restricted Subsidiary" means any Subsidiary other than an
Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase and Exchange Agreement" means that certain
Securities Purchase and Exchange Agreement, dated June 28, 1996, as amended by
the First Amendment thereto dated December 31, 1996, and by the Second
Amendment thereto dated March 17, 1997 among Citadel Communications, the
Company and certain other parties.
"Senior Stock" has the meaning specified in Section VII hereof.
"Series A Preferred Stock" has the meaning set forth in Section I
hereof.
"Series B Preferred Stock" has the meaning set forth in Section I
hereof.
"Significant Subsidiary" means any Restricted Subsidiary of the
Company that together with its Subsidiaries, (a) for the most recent fiscal
year of the Company accounted for more than 10% of the consolidated net sales
of the Company and its Restricted Subsidiaries, (b) as of the end of such
fiscal year was the owner of more than 10% of the consolidated assets of the
Company and its Restricted Subsidiaries, in the case of either (a) or (b), as
set forth on the most recently available consolidated financial statements of
the Company for such fiscal year (c) was organized or acquired after the
beginning of such fiscal year and would have been a Significant Subsidiary if
it had been owned during the entire fiscal year or (d) that holds one or more
licenses material to the Company's business.
"Subsidiary" means any person a majority of the equity ownership or
Voting Stock of which is at the time owned, directly or indirectly, by the
Company and/or one or more other Subsidiaries of the Company.
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"Subsidiary Debentures Guarantee" means a guarantee of the Exchange
Debentures by a Restricted Subsidiary under the Exchange Indenture.
"Subsidiary Debentures Guarantor" means the License Subsidiary and
each other Restricted Subsidiary that issues a Subsidiary Debentures Guarantee
under the Exchange Indenture.
"Subsidiary Notes Guarantee" means a guarantee of the Notes by a
Restricted Subsidiary under the Notes Indenture.
"Transfer Agent" means The Bank of New York or any successor transfer
agent.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force on the date on which this Certificate of Designation was filed.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary in accordance with
Section VIII(5), "Unrestricted Subsidiaries," of this Certificate of
Designation and (b) any Subsidiary of an Unrestricted Subsidiary.
"Voting Rights Triggering Event" has the meaning set forth above in
Section V(b) hereof.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any person (irrespective of whether or not, at the time, stock
of any other class or classes has, or might have, voting power by reason of the
happening of any contingency).
"Voting Trust Agreement" means that certain Voting Trust Agreement
dated as of March 17, 1997 by and among Citadel Communications, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Christopher Hall, as
the initial Trustee thereunder and J. Walter Corcoran and Harlan Levy, each as
an initial Back-Up Trustee thereunder.
"Weighted Average Life" means, as of the date of determination with
respect to any Debt or Disqualified Stock, the quotient obtained by dividing
(a) the sum of the products of (i) the number of years from the date of
determination to the date or dates of each successive scheduled principal or
liquidation value payment of such Debt or Disqualified Stock, respectively,
multiplied by (ii) the amount of each such principal or liquidation value
payment by (b) the sum of all such principal or liquidation value payments.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary,
all of the outstanding voting securities (other than directors' qualifying
shares or an immaterial
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number of shares required to be owned by other persons pursuant to applicable
law) of which are owned, directly or indirectly, by the Company.
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<PAGE> 34
EXHIBIT A
---------
Form of Certificate as to
Completion of Distribution and
Termination of Restricted Period
--------------------------------
__________________, ____
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the "Company") 13-1/4%
Series A Exchangeable Preferred Stock (the "Series A
Preferred Stock") and 13-1/4% Series B Exchangeable
Preferred Stock (the "Series B Preferred Stock)
-----------------------------------------------------
Dear Ladies and Gentlemen:
This letter relates to ___ shares of Series A Preferred Stock
represented by the attached Certificate (the "Legended Certificate") which
bears a legend outlining restrictions upon transfer of such Legended
Certificate. Pursuant to Section XI(d) of the Certificate of Designation (the
"Certificate of Designation") filed with the Secretary of State of the State of
Nevada on July __, 1997 relating to the Series A Preferred Stock and the Series
B Preferred Stock, we hereby certify that we are a person outside the United
States to whom the Series A Preferred Stock could be transferred in accordance
with Rule 904 of Regulation S promulgated under the U.S. Securities Act of
1933, as amended. Accordingly, you are hereby requested to exchange the shares
of Series A Preferred Stock represented by the Legended Certificate for a like
number of shares of Series A Preferred Stock, which shall be represented by the
attached Certificate (the "Unlegended Certificate"), which does not bear a
legend outlining restrictions upon the transfer of such Unlegended Certificate,
all in the manner provided for in the Certificate of Designation.
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<PAGE> 35
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
------------------------------
Authorized Signature
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EXHIBIT B
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
_______________, ____
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the
"Company") 13-1/4% Series A Exchangeable
Preferred Stock (the "Securities)
----------------------------------------
Dear Sirs:
In connection with our proposed purchase of ___ shares of the
Securities, we confirm that:
1. The undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities, except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Securities, we will do so only (A) to the
Company or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C)
to an institutional "accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Company a signed letter substantially in the
form of this letter and, if requested by the Company, an opinion of counsel
acceptable to the Company that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act, or (F) pursuant to
an effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Securities from us a
notice advising such purchaser that resales of the Securities are restricted as
stated herein.
3. We understand that, on any proposed resale of any Securities or
Conversion Shares, we will be required to furnish to you and the Company such
certifications,
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<PAGE> 37
legal opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the effect set out in paragraph 2.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Holder]
By:
------------------------------
Authorized Signature
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<PAGE> 38
EXHIBIT C
---------
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
------------------------
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the
"Company") 13-1/4% Series A Exchangeable
Preferred Stock (the "Securities")
----------------------------------------
Dear Sirs:
In connection with our proposed sale of ____ shares of the Securities,
we confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended, and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States,
or (b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
In addition, if the sale is made during a restricted period and the provisions
of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the case
may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative
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<PAGE> 39
or legal proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Holder]
By:
---------------------------
Authorized Signature
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<PAGE> 40
II. That, pursuant to the authority conferred upon the Board of Directors of
the Company by ARTICLE 4 of the Restated Articles of Incorporation (the
"Articles"), and Section V of the Original Designation, the Board of Directors
of the Company by unanimous written consent adopted the following resolution
amending the Original Designation (the "New Designation"). The New Designation
is as follows:
RESOLVED, that pursuant to the authority expressly conferred upon the
Board of Directors of the Company by Article 4 of the Articles, and conferred
upon the Board of Directors of the Company pursuant to Section V of the
Original Designation, the Original Designation is hereby amended and restated
as follows:
CERTIFICATE OF THE DESIGNATIONS,
VOTING POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS
AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF THE
13-1/4% SERIES A EXCHANGEABLE PREFERRED STOCK AND THE
13-1/4% SERIES B EXCHANGEABLE PREFERRED STOCK OF
CITADEL BROADCASTING COMPANY
WHEREAS, pursuant to authority conferred upon the Board of Directors
by ARTICLE 4 of the Amended and Restated Articles of Incorporation of the
Company (the "Articles"), the Board of Directors of the Company by unanimous
written consent dated June 30, 1997 adopted the following resolution creating
two series of Preferred Stock designated as 13-1/4% Series A Exchangeable
Preferred Stock of Citadel Broadcasting Company and 13-1/4% Series B
Exchangeable Preferred Stock of Citadel Broadcasting Company:
RESOLVED, that pursuant to the authority expressly vested in the Board
of Directors in accordance with the provisions of the Articles, two series of
Preferred Stock of the Company, without par value, be and they hereby are,
created and that the designation and amount thereof and the voting powers,
preferences, and relative rights of the shares of each such series, and the
limitations and restrictions thereof, are as follows:
I. Designation and Amount. The designations for the two series of
Preferred Stock authorized by this resolution shall be the 13-1/4% Series A
Exchangeable Preferred Stock without par value (the "Series A Preferred Stock")
and the 13-1/4% Series B Exchangeable Preferred Stock without par value (the
"Series B Preferred Stock" and together with the Series A Preferred Stock, the
"Exchangeable Preferred Stock"). The initial liquidation preference of the
Exchangeable Preferred Stock is $100.00 per share and the
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<PAGE> 41
original issue price for each such share is $100.00. The issue price per share
or liquidation preference of the Exchangeable Preferred Stock shall not for any
purpose be considered to be a determination by the Board of Directors with
respect to the capital and surplus of the Company. The maximum number of shares
of Series A Preferred Stock shall be 2,000,000 and the maximum number of shares
of Series B Preferred Stock shall be 2,000,000.
II. Dividends. (a) Holders of the outstanding shares of Exchangeable
Preferred Stock (the "Holders") will be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on the Exchangeable Preferred Stock at an annual rate of 13-1/4% (the
"Dividend Rate"). All dividends will be cumulative, whether or not earned or
declared, from the Closing Date and will be payable semi-annually in arrears on
each Dividend Payment Date, commencing on January 1, 1998, to Holders of record
on the June 15 or December 15 immediately preceding the relevant Dividend
Payment Date. On or before July 1, 2002, the Company may, at its option, pay
dividends in cash or in additional fully paid and non-assessable shares of
Exchangeable Preferred Stock having an aggregate liquidation preference equal
to the amount of such dividends, provided, however, that if the Company pays
dividends in additional shares of Exchangeable Preferred Stock, Holders of
Series A Preferred Stock shall be paid in additional shares of Series A
Preferred Stock and Holders of Series B Preferred Stock shall be paid in
additional shares of Series B Preferred Stock. After July 1, 2002, dividends
shall be paid only in cash. If any dividend (or portion thereof) payable on any
Dividend Payment Date on or before July 1, 2002 is not declared or paid in full
in cash or in shares of Exchangeable Preferred Stock as described above on such
Dividend Payment Date, the amount of the accumulated and unpaid dividend will
bear interest at the Dividend Rate, compounding semi-annually from such
Dividend Payment Date until paid in full. If any dividend (or portion thereof)
payable on any Dividend Payment Date after July 1, 2002 is not declared or paid
in full in cash on such Dividend Payment Date, the amount of the accumulated
and unpaid dividend that is payable and that is not paid in cash on such date
will bear interest at the Dividend Rate, compounding semi-annually from such
Dividend Payment Date until paid in full. Dividends shall cease to accumulate
in respect of the shares of Exchangeable Preferred Stock on the Exchange Date
or on the Redemption Date unless the Company shall have failed to issue the
appropriate aggregate principal amount of Exchange Debentures in respect of the
Exchangeable Preferred Stock on the Exchange Date or shall have failed to pay
the relevant redemption price on the Redemption Date.
(b) All dividends paid with respect to shares of the Exchangeable
Preferred Stock pursuant to Section II(a) of this Certificate of Designation
shall be paid pro rata to the Holders entitled thereto.
(c) Nothing contained in this Certificate of Designation shall in any
way or under any circumstances be construed or deemed to require the Board of
Directors to declare, or the Company to pay or set apart for payment, any
dividends on shares of the Exchangeable Preferred Stock at any time.
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<PAGE> 42
(d) Holders shall be entitled to receive the dividends provided for in
Section II(a) of this Certificate of Designation (including any accumulated and
unpaid cash dividends on the Exchangeable Preferred Stock) in preference to and
in priority over any cash dividends (including accumulated and unpaid
dividends) upon any of the Junior Stock.
(e) No full dividends may be declared or paid or funds set apart for
the payment of dividends on any Parity Stock for any period unless full
cumulative dividends shall have been or contemporaneously are declared and paid
(or are deemed declared and paid) in full or declared and, if payable in cash,
a sum in cash sufficient for such payment set apart for such payment on the
Exchangeable Preferred Stock. If full dividends are not so paid, the
Exchangeable Preferred Stock will share dividends pro rata with the Parity
Stock. No dividends may be paid or set apart for such payment on Junior Stock
(except dividends on Junior Stock payable in additional shares of Junior Stock)
and no Junior Stock or Parity Stock may be repurchased, redeemed or otherwise
retired nor may funds be set apart for payment with respect thereto, if full
cumulative dividends have not been paid in full (or deemed paid) on any issued
and outstanding Exchangeable Preferred Stock.
(f) Dividends on account of arrears for any past dividend period and
dividends in connection with any optional redemption may be declared and paid
at any time, without reference to any regular Dividend Payment Date, to Holders
of record of the Exchangeable Preferred Stock on such date, not more than 45
days prior to the payment thereof, as may be fixed by the Board of Directors.
(g) Each fractional share of Exchangeable Preferred Stock outstanding
shall be entitled to a ratably proportionate amount of all dividends accruing
with respect to each outstanding share of Exchangeable Preferred Stock pursuant
to Section II(a), and all such dividends with respect to such outstanding
fractional shares shall accumulate at the Dividend Rate and shall be payable in
the same manner and at such times as provided for in Section II(a) with respect
to dividends on each outstanding share of Exchangeable Preferred Stock.
(h) Dividends payable on the Exchangeable Preferred Stock for any
period less than a year shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in the period for
which dividends are payable.
III. Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, Holders will be entitled
to be paid, out of the assets of the Company available for distribution to
stockholders, the then effective liquidation preference per share of
Exchangeable Preferred Stock, plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding-up (including an amount equal to a prorated
dividend for the period from the last Dividend Payment Date to the date fixed
for liquidation, dissolution or winding- up), before any distribution is made
on any Junior Stock, including, without limitation, common stock of the
Company. If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, the amounts payable with respect to the Exchangeable
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<PAGE> 43
Preferred Stock and all other Parity Stock are not paid in full, the Holders of
the Exchangeable Preferred Stock and the holders of the Parity Stock will share
equally and ratably in any distribution of assets of the Company in proportion
to the liquidation preference, together with all accumulated and unpaid
dividends, to which each is entitled. After payment of the full amount of the
liquidation preference and accumulated and unpaid dividends to which they are
entitled, Holders will not be entitled to any further participation in any
distribution of assets of the Company. For the purposes of this Section III,
neither the sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Company nor the consolidation or merger of the Company with
one or more entities shall be deemed to be a liquidation, dissolution or
winding-up of the Company.
The liquidation preference with respect to each outstanding fractional
share of Exchangeable Preferred Stock shall be equal to a ratably proportionate
amount of the liquidation payments with respect to each outstanding full share
of Exchangeable Preferred Stock.
IV. Exchange. (a) The Company may, at its option, subject to the
conditions described below, on any scheduled Dividend Payment Date, exchange
the Exchangeable Preferred Stock, in whole but not in part, for the Exchange
Debentures. At least 30 and not more than 60 days prior to the date fixed for
exchange, the Company shall send a written notice (the "Exchange Notice") of
exchange by mail to each Holder, which notice shall state:
(i) that the Company has elected to exchange the Exchangeable
Preferred Stock into Exchange Debentures pursuant to this Certificate of
Designation;
(ii) the date of such exchange (the "Exchange Date");
(iii) that the Holder is to surrender to the Company, at the place or
places and in the manner designated in the Exchange Notice, its
certificate or certificates representing the shares of Exchangeable
Preferred Stock;
(iv) that dividends on the shares of Exchangeable Preferred Stock to
be exchanged shall cease to accumulate at the close of business on the day
prior to the Exchange Date, whether or not certificates for shares of
Exchangeable Preferred Stock are surrendered for exchange on the Exchange
Date, unless the Company shall default in the delivery of Exchange
Debentures; and
(v) that interest on the Exchange Debentures shall accrue from the
Exchange Date whether or not certificates for shares of Exchangeable
Preferred Stock are surrendered for exchange on the Exchange Date.
On the Exchange Date, if the conditions set forth in clauses (A)
through (E) below are satisfied and if the exchange is then permitted under the
Exchange Indenture, the
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Company shall issue Exchange Debentures in exchange for the Exchangeable
Preferred Stock as provided in the next paragraph, provided that on the
Exchange Date: (A) there shall be legally available funds sufficient for the
exchange to occur (including, without limitation, legally available funds
sufficient therefor under Section 78.288 (or any successor provisions), to the
extent applicable, of the General Corporation Law of the State of Nevada); (B)
the Company shall have obtained a written opinion of counsel acceptable to the
Company that an exemption from the registration requirements of the Securities
Act is available for such exchange, and such exemption is relied upon by the
Company for such exchange or, alternatively, that the Exchange Debentures have
been registered thereunder; (C) the Exchange Indenture and the Debentures
Trustee shall have been qualified under the Trust Indenture Act or the Company
shall have obtained a written opinion of counsel that such qualification is not
required; (D) immediately after giving effect to such exchange, no default or
event of default would exist under the Exchange Indenture, and no material
breach or default would exist under the Credit Facility, the Notes Indenture or
the Securities Purchase and Exchange Agreement; and (E) on the date of such
exchange (the "Exchange Date") there are no accumulated and unpaid dividends on
the Exchangeable Preferred Stock (including the dividend payable on such date).
In the event that any of the conditions set forth in clauses (A) through (E) of
the preceding sentence are not satisfied on the Exchange Date, then no shares
of Exchangeable Preferred Stock shall be exchanged, and in order to effect an
exchange as provided for in this Section IV, the Company shall be required to
fix another date for the exchange and issue a new Exchange Notice.
(b) Upon any exchange pursuant to this Section IV, Holders shall be
entitled to receive, subject to the provisions hereof, $1.00 principal amount
of Exchange Debentures for each $1.00 of the aggregate of the liquidation
preference of the Exchangeable Preferred Stock and all accumulated and unpaid
dividends thereon, plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends thereon for the period from the immediately
preceding Dividend Payment Date to the day prior to the Exchange Date; provided
that the Company shall pay cash in lieu of issuing an Exchange Debenture in a
principal amount of less than $1,000 and provided further that the Exchange
Debentures will be issuable only in denominations of $1,000 and integral
multiples thereof.
(c) On or before the Exchange Date, each Holder shall surrender the
certificate or certificates representing such shares of the Exchangeable
Preferred Stock, in the manner and at the place designated in the Exchange
Notice. The Company shall cause the Exchange Debentures to be executed on the
Exchange Date and, upon surrender in accordance with the Exchange Notice of the
certificates for any shares of the Exchangeable Preferred Stock so exchanged
(properly endorsed or assigned for transfer, if the Exchange Notice shall so
state), such shares shall be exchanged by the Company into Exchange Debentures
as aforesaid. The Company shall pay interest on the Exchange Debentures at the
rate and on the dates specified therein from the Exchange Date.
(d) If the Exchange Notice has been mailed as aforesaid, and if before
the Exchange Date all Exchange Debentures necessary for such exchange shall
have been duly
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<PAGE> 45
executed by the Company and delivered to the Debentures Trustee with
irrevocable instructions to authenticate the Exchange Debentures necessary for
such exchange, then the rights of the Holders as stockholders of the Company
shall cease (except the right to receive the Exchange Debentures, an amount in
cash, to the extent applicable, equal to the accumulated and unpaid dividends
to the Exchange Date and cash in lieu of any Exchange Debenture that is in a
principal amount less than $1,000), and the person or persons entitled to
receive the Exchange Debentures issuable upon exchange shall be treated for all
purposes as a registered holder or holders of such Exchange Debentures as of
the Exchange Date.
V. Voting Rights. (a) Holders, except as otherwise required under
Nevada law or as set forth below, shall not be entitled or permitted to vote on
any matter required or permitted to be voted upon by the stockholders of the
Company.
(b) If (i) after July 1, 2002, cash dividends on the Exchangeable
Preferred Stock are in arrears and unpaid for two or more semi-annual dividend
periods (whether or not consecutive) (a "Dividend Default"); (ii) the Company
fails to redeem the Exchangeable Preferred Stock on July 1, 2009 or fails to
otherwise discharge any redemption obligation set forth in this Certificate of
Designation with respect to the Exchangeable Preferred Stock; (iii) the Company
fails to make a Change of Control Offer if such offer is required by the
provisions set forth under the "Purchase of Exchangeable Preferred Stock upon a
Change of Control" covenant set forth in Section VIII below or fails to
purchase shares of Exchangeable Preferred Stock from Holders who elect to have
such shares purchased pursuant to the Change of Control Offer; (iv) a breach or
violation of any other provisions contained in Section VIII hereof occurs and
the breach or violation continues for a period of 30 days or more after the
Company receives notice thereof specifying the default from the Holders of at
least 25% of the shares of Exchangeable Preferred Stock then outstanding; or
(v) the Company fails to pay at the final stated maturity (giving effect to any
extensions thereof) the principal amount of any Debt of the Company or any
Restricted Subsidiary of the Company, or the final stated maturity of any such
Debt is accelerated, if the aggregate principal amount of such Debt, together
with the aggregate principal amount of any other such Debt in default for
failure to pay principal at the final stated maturity (giving effect to any
extensions thereof) or which has been accelerated, aggregates $5,000,000 or
more at any time (each such event described in clauses (i) through (v) above
being referred to herein as a "Voting Rights Triggering Event") then the number
of directors constituting the Board of Directors will be adjusted to permit the
Holders of a majority of the then outstanding shares of Exchangeable Preferred
Stock, voting separately and as a class (together with the holders of any
Parity Stock having similar voting rights), to elect two directors to the Board
of Directors. The voting rights provided herein shall be the Holders' exclusive
remedy at law or in equity. Such voting rights will continue until such time
as, in the case of a Dividend Default, all dividends in arrears on the
Exchangeable Preferred Stock are paid in full in cash and, in all other cases,
any failure, breach or default giving rise to such voting rights is remedied or
waived by the Holders of at least a majority of the shares of Exchangeable
Preferred Stock then outstanding, at which time the term of any directors
elected pursuant to the provisions of this paragraph shall terminate.
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<PAGE> 46
(c) The Company shall not authorize any new class of Senior Stock or
modify, change, affect or amend the Articles or this Certificate of Designation
to affect materially and adversely the specified rights, preferences,
privileges or voting rights of the Exchangeable Preferred Stock without the
affirmative vote or consent of Holders of at least a majority of the shares of
Exchangeable Preferred Stock then outstanding, voting or consenting, as the
case may be, as one class.
(d) Immediately after voting power to elect directors shall have
become vested and be continuing in the Holders pursuant to Section V(b) or if
vacancies shall exist in the offices of directors elected by the Holders, a
proper officer of the Company shall call a special meeting of the Holders for
the purpose of electing the directors which such Holders are entitled to elect.
Any such meeting shall be held at the earliest practicable date, and the
Company shall provide Holders with access to the lists of Holders pursuant to
the provisions of this Section V(d). At any meeting held for the purpose of
electing directors at which the Holders shall have the right, voting separately
as a class, to elect directors, the presence in person or by proxy of the
Holders of at least a majority of the outstanding shares of Exchangeable
Preferred Stock shall be required to constitute a quorum of such Holders.
(e) Any vacancy occurring in the office of a director elected by the
Holders may be filled by the remaining director elected by the Holders unless
and until such vacancy shall be filled by the Holders.
(f) In any case in which the Holders shall be entitled to vote
pursuant to this Section V or pursuant to the General Corporation Law of the
State of Nevada, each Holder shall be entitled to one vote for each share of
Exchangeable Preferred Stock held.
(g) Holders of at least 66-2/3% of the then outstanding shares of
Exchangeable Preferred Stock, voting or consenting, as the case may be,
separately as a class, may waive compliance with any provision of this
Certificate of Designation.
Further, Holders are entitled to vote as a class upon a proposed
amendment to the Articles if the amendment would increase or decrease the par
value of the shares of, or alter or change the powers, preferences or special
rights of the shares of such class so as to affect them adversely. Except as
set forth above, (i) the creation, authorization or issuance of any shares of
Junior Stock, Parity Stock or Senior Stock, including the designation of series
thereof within the existing class of Preferred Stock of the Company, or (ii)
the increase or decrease in the amount of authorized Capital Stock of any
class, including any Preferred Stock of the Company, shall not require the
consent of the Holders and shall not be deemed to affect adversely the rights,
preferences, privileges or voting rights of Holders.
VI. Redemption. (a) Optional Redemption. (i) The Exchangeable
Preferred Stock will be redeemable (subject to contractual and other
restrictions with respect thereto and to the legal availability of funds
therefor) at the election of the Company, as a whole or from time to time in
part, at any time on or after July 1, 2002 on not less than 30 nor more than 60
days' prior notice, at the redemption prices (expressed as percentages of the
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<PAGE> 47
then effective liquidation preference thereof) set forth below, plus, without
duplication, all accumulated and unpaid dividends, if any, to the date of
redemption (the "Redemption Date") (including an amount in cash equal to a
prorated dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to the Redemption Date), if redeemed during the
12-month period beginning on July 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 107.729%
2003 106.625%
2004 105.521%
2005 104.417%
2006 103.313%
2007 102.208%
2008 101.104%
</TABLE>
(ii) In addition, at any time and from time to time prior to July 1,
2000, the Company may at its option redeem shares of Exchangeable Preferred
Stock having an aggregate liquidation preference of up to 35% of the aggregate
liquidation preference of all shares of Exchangeable Preferred Stock issued as
of the Closing Date or issued as dividends on the Exchangeable Preferred Stock,
with the net proceeds of one or more Public Equity Offerings at a redemption
price equal to 113.250% of the liquidation preference thereof, plus without
duplication, accumulated and unpaid dividends, if any, to the Redemption Date
(including an amount in cash equal to a prorated dividend for the period from
the Dividend Payment Date immediately prior to the Redemption Date to the
Redemption Date), subject to the right of Holders of record on the relevant
record date to receive dividends due on a Dividend Payment Date; provided that,
immediately after giving effect to any such redemption, at least $75,000,000 in
aggregate liquidation preference of the Exchangeable Preferred Stock remains
outstanding. Any such redemption must be made within 90 days of the related
Public Equity Offering.
(iii) No optional redemption may be authorized or made unless on or
prior to such redemption full unpaid cumulative dividends shall have been paid
or a sum set apart for such payment on the Exchangeable Preferred Stock. If
less than all the Exchangeable Preferred Stock is to be redeemed, the
particular shares to be redeemed will be determined pro rata, except that the
Company may redeem such shares held by any holder of fewer than 100 shares
without regard to such pro rata redemption requirement. If any Exchangeable
Preferred Stock is to be redeemed in part, the Redemption Notice that relates
to such Exchangeable Preferred Stock shall state the portion of the liquidation
preference to be redeemed. New shares of the same Series of Exchangeable
Preferred Stock having an aggregate liquidation preference equal to the
unredeemed portion will be issued in the name of the holder thereof upon
cancellation of the original shares of Exchangeable Preferred Stock and, unless
the Company fails to pay the redemption price on the Redemption Date, after the
Redemption Date dividends will cease to accumulate on the Exchangeable
Preferred Stock called for redemption.
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<PAGE> 48
(b) Mandatory Redemption. The Company shall redeem all outstanding
Exchangeable Preferred Stock (subject to the legal availability of funds
therefor) in whole on the redemption date of July 1, 2009 (the "Mandatory
Redemption Date"), at a redemption price equal to 100% of the liquidation
preference thereof, plus, without duplication, all accumulated and unpaid
dividends, if any, to the date of redemption.
(c) Procedure for Redemption. (i) Not more than 60 and not less than
30 days prior to any Redemption Date, written notice (the "Redemption Notice")
shall be given by first-class mail, postage prepaid, to each Holder of record
of shares to be redeemed on the record date fixed for such redemption of the
Exchangeable Preferred Stock at such Holder's address as the same appears on
the stock ledger of the Company, provided, however, that no failure to give
such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Exchangeable Preferred Stock to
be redeemed except as to the Holder or Holders to whom the Company has failed
to give such notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:
(A) the Redemption Price;
(B) whether all or less than all the outstanding shares of the
Exchangeable Preferred Stock are to be redeemed and the total number of
shares of such Exchangeable Preferred Stock being redeemed;
(C) the number of shares of Exchangeable Preferred Stock held by the
Holder that the Company intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Company, at the place or
places, which shall be designated in such Redemption Notice, its
certificates representing the shares of Exchangeable Preferred Stock to be
redeemed;
(F) that dividends on the shares of the Exchangeable Preferred Stock
to be redeemed shall cease to accumulate on the day prior to such
Redemption Date unless the Company defaults in the payment of the
redemption price; and
(G) the name of any bank or trust company performing the duties
referred to in subsection (c)(v) below.
(ii) On or before the Redemption Date, each Holder of Exchangeable
Preferred Stock to be redeemed shall surrender the certificate or certificates
representing such shares of Exchangeable Preferred Stock to the Company, in the
manner and at the place designated in the Redemption Notice, and on the
Redemption Date the full redemption price for such shares shall be payable in
cash to the person whose name appears on such certificate or certificates as
the owner thereof, and each surrendered certificate shall be returned to
authorized but unissued shares. In the event that less than all of the shares
represented by any
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<PAGE> 49
such certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares.
(iii) Unless the Company defaults in the payment in full of the
redemption price, dividends on the Exchangeable Preferred Stock called for
redemption shall cease to accumulate on the day prior to the Redemption Date,
and the Holders of such shares shall cease to have any further rights with
respect thereto on the Redemption Date, other than the right to receive the
redemption price, without interest.
(iv) If a Redemption Notice shall have been duly given, and if, on
or before the Redemption Date specified therein, all funds necessary for such
redemption shall have been set aside by the Company, separate and apart from
its other funds, in trust for the pro rata benefit of the Holders of the
Exchangeable Preferred Stock called for redemption so as to be and continue to
be available therefor, then, notwithstanding that any certificate for shares so
called for redemption shall not have been surrendered for cancellation, all
shares so called for redemption shall no longer be deemed outstanding, and all
rights with respect to such shares shall forthwith on such Redemption Date
cease and terminate, except only the right of the Holders thereof to receive
the amount payable on redemption thereof, without interest.
(v) If a Redemption Notice shall have been duly given or if the
Company shall have given to the bank or trust company hereinafter referred to
irrevocable authorization promptly to give such notice, and if on or before the
Redemption Date specified therein the funds necessary for such redemption shall
have been deposited by the Company with such bank or trust company in trust for
the pro rata benefit of the Holders of the Exchangeable Preferred Stock called
for redemption, then, notwithstanding that any certificate for shares so called
for redemption shall not have been surrendered for cancellation, from and after
the time of such deposit, all shares so called, or to be so called pursuant to
such irrevocable authorization, for redemption shall no longer be deemed to be
outstanding and all rights with respect of such shares shall forthwith cease
and terminate, except only the right of the Holders thereof to receive from
such bank or trust company at any time after the time of such deposit the funds
so deposited, without interest. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the United States of America
or of the State of New York, shall be doing business in the Borough of
Manhattan, The City of New York, shall have capital, surplus and undivided
profits aggregating at least $100,000,000 according to its last published
statement of condition, and shall be identified in the Redemption Notice. Any
interest accrued on such funds shall be paid to the Company from time to time.
Any funds so set aside or deposited, as the case may be, and unclaimed at the
end of three years from such Redemption Date shall, to the extent permitted by
law, be released or repaid to the Company, after which repayment the Holders of
the shares so called for redemption shall look only to the Company for payment
thereof.
VII. Ranking. The Exchangeable Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution of the
Company, rank (a) senior to all classes of common stock and to each other class
of Capital Stock or series of preferred stock established after the Closing
Date by the Board of Directors the terms of
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<PAGE> 50
which expressly provide that it ranks junior to the Exchangeable Preferred
Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Company (collectively referred to, together with all classes
of common stock of the Company, as "Junior Stock"); (b) on a parity with each
other class of Capital Stock or series of preferred stock established after the
Closing Date by the Board of Directors the terms of which expressly provide
that such class or series will rank on a parity with the Exchangeable Preferred
Stock as to dividend rights on liquidation, winding-up and dissolution of the
Company (collectively referred to as "Parity Stock"); and (c) subject to the
approval of the Holders in accordance with Section V(c) hereof, junior to each
class of Capital Stock or series of preferred stock established after the
Closing Date by the Board of Directors the terms of which do not expressly
provide that such class or series will rank junior to, or on a parity with, the
Exchangeable Preferred Stock as to dividend rights and rights upon liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Stock").
VIII. Certain Covenants.
(1) LIMITATION ON DEBT. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries to, create, issue, assume, guarantee
or in any manner become directly or indirectly liable for the payment of, or
otherwise incur (collectively, "incur"), any Debt (including Acquired Debt and
the issuance of Disqualified Stock), except that the Company or a Restricted
Subsidiary may incur Debt or issue Disqualified Stock if, at the time of such
event, the Consolidated Cash Flow Ratio would have been less than 7.0 to 1.0. In
making the foregoing calculation, pro forma effect will be given to: (i) the
incurrence of such Debt and (if applicable) the application of the net proceeds
therefrom, including to refinance other Debt as if the additional Debt had been
incurred and the application of proceeds therefrom occurred on the first day of
the four-fiscal quarter period used to calculate the Consolidated Cash Flow
Ratio, (ii) the incurrence, repayment or retirement of any other Debt by the
Company or any of its Restricted Subsidiaries since the first day of such
four-quarter period as if such Debt was incurred, repaid or retired at the
beginning of such four-quarter period and (iii) the acquisition (whether by
purchase, merger or otherwise) or disposition (whether by sale, merger or
otherwise) of any company, entity or business acquired or disposed of by the
Company or any of its Restricted Subsidiaries, as the case may be, since the
first day of such four-quarter period, as if such acquisition or disposition
occurred at the beginning of such four-quarter period. In making a computation
under the foregoing clause (i) or (ii), the amount of Debt under a revolving
credit facility will be computed based upon the average daily balance of such
Debt during such four-quarter period.
(b) Notwithstanding the foregoing, the Company may, and may, to the
extent expressly permitted below, permit any of its Restricted Subsidiaries to,
incur any of the following Debt ("Permitted Debt"):
(i) Debt of the Company or any Restricted Subsidiary under the
Credit Facility (including guarantees thereof by Subsidiaries) in an
aggregate principal amount at any one time outstanding not to exceed
$110,000,000.
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<PAGE> 51
(ii) Debt of the Company or any of its Restricted Subsidiaries
outstanding on the Closing Date, other than Debt described in clause (i)
above.
(iii) Debt owed by the Company to any of its Restricted Subsidiaries
or owed by any Subsidiary to the Company or a Restricted Subsidiary or
owed to the Company or a Restricted Subsidiary by a Restricted Subsidiary,
provided the incurrence of such Debt did not violate Section VIII(2),
"Limitation on Restricted Payments," of this Certificate of Designation.
(iv) Debt represented by the Notes and the Subsidiary Notes
Guarantees.
(v) Hedging Obligations of the Company or any of its Restricted
Subsidiaries incurred in the ordinary course of business.
(vi) Capitalized Lease Obligations of the Company or any of its
Restricted Subsidiaries in an aggregate amount not exceeding $3,000,000 at
any one time outstanding.
(vii) Debt under purchase money mortgages or secured by purchase
money security interests so long as (x) such Debt is not secured by any
property or assets of the Company or any of its Restricted Subsidiaries
other than the property or assets so acquired and (y) such Debt is created
within 60 days of the acquisition of the related property; provided that
the aggregate principal amount of Debt under this clause (vii) does not
exceed $2,000,000 at any one time outstanding.
(viii) Debt of the Company or any Restricted Subsidiary, not permitted
by any other clause of this definition, in an aggregate principal amount
not to exceed $5,000,000 at any one time outstanding.
(ix) Debt of the Company or any of its Restricted Subsidiaries
consisting of guarantees, indemnities or obligations in respect of
purchase price adjustments in connection with the acquisition or
disposition of assets, including, without limitation, shares of Capital
Stock.
(x) Acquired Debt of a person, other than Debt incurred in
connection with, or in contemplation of, such person becoming a Restricted
Subsidiary or the acquisition of assets from such person, as the case may
be, provided that the Company on a pro forma basis could incur $1.00 of
additional Debt (other than Permitted Debt) pursuant to the first
paragraph of this covenant.
(xi) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company or any Restricted Subsidiary of any outstanding Debt of the
Company or such Restricted Subsidiary, other than Debt incurred pursuant
to clause (i), (v), (vi), (vii), (viii) or (ix) of this definition,
including any successive refinancings thereof, so long as (A) any such new
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<PAGE> 52
Debt is in a principal amount that does not exceed the principal
amount so refinanced, plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the
Debt refinanced or the amount of any premium reasonably determined by
the Company as necessary to accomplish such refinancing plus the
amount of expenses of the Company incurred in connection with such
refinancing and (B) such refinancing Debt does not have a Weighted
Average Life less than the Weighted Average Life of the Debt being
refinanced and does not have a final scheduled maturity earlier than
the final scheduled maturity, or permit redemption at the option of
the holder earlier than the earliest date of redemption at the option
of the holder, of the Debt being refinanced.
(2) LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, take
any of the following actions:
(a) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Junior Stock of the Company or any of its
Restricted Subsidiaries, other than (i) dividends or distributions payable
solely in Qualified Equity Interests of the issuer of such shares of
Junior Stock, (ii) dividends or distributions by a Restricted Subsidiary
payable to the Company or another Restricted Subsidiary or (iii) pro rata
dividends or distributions on common stock of a Restricted Subsidiary held
by minority stockholders, provided that such dividends do not in the
aggregate exceed the minority stockholders' pro rata share of such
Restricted Subsidiary's net income from the first day of the Company's
fiscal quarter during which the Closing Date occurs;
(b) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of (i) Junior Stock of the Company (or
any options, warrants or other rights to acquire shares of Junior Stock of
the Company (other than any such Junior Stock owned by Restricted
Subsidiaries)) or (ii) Capital Stock (or any options, warrants or other
rights to acquire shares of Capital Stock) of (A) any Unrestricted
Subsidiary or (B) any Restricted Subsidiary that are held by any Affiliate
of the Company (other than, in either case, any such Capital Stock owned
by the Company or any of its Restricted Subsidiaries);
(c) make any Investment (other than a Permitted Investment) in any
person (such payments or other actions described in (but not excluded
from) clauses (a) through (c) being referred to as "Restricted Payments"),
unless at the time of, and immediately after giving effect to, the
proposed Restricted Payment:
(i) no Voting Rights Triggering Event has occurred and is
continuing,
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<PAGE> 53
(ii) the Company could incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to Section VIII(1)(a),
"Limitation on Debt," of this Certificate of Designation, and
(iii) the aggregate amount of all Restricted Payments declared
or made after the Closing Date does not exceed the sum of:
(A) the remainder of (x) 100% of the aggregate
Consolidated Cash Flow for the period beginning on the first day
of the Company's fiscal quarter during which the Closing Date
occurs and ending on the last day of the Company's most recent
fiscal quarter for which internal financial statements are
available ending prior to the date of such proposed Restricted
Payment (the "Computation Period") minus (y) the product of 1.4
times the sum of (i) Consolidated Fixed Charges for the
Computation Period and (ii) all dividends or other distributions
paid in cash by the Company or any of its Restricted Subsidiaries
on any Disqualified Stock of the Company or any of its Restricted
Subsidiaries for the Computation Period; plus
(B) the aggregate net proceeds received by the Company
after the Closing Date (including the fair market value of
property other than cash as determined by the Board of Directors,
whose good faith determination will be conclusive) from the
issuance or sale (other than to a Subsidiary) of Qualified Equity
Interests of the Company (excluding from this computation any net
proceeds of a Public Equity Offering received by the Company that
are used by it to redeem the Exchangeable Preferred Stock, as
discussed in Section VI(a)(ii), "Redemption" above); plus
(C) the aggregate net proceeds received by the Company
after the Closing Date (including the fair market value of
property other than cash as determined by the Board of Directors,
whose good faith determination will be conclusive) from the
issuance or sale (other than to a Subsidiary) of debt securities
or Disqualified Stock that have been converted into or exchanged
for Qualified Stock of the Company, together with the aggregate
net cash proceeds received by the Company at the time of such
conversion or exchange; plus
(D) without duplication, the Net Cash Proceeds received by
the Company or a Wholly Owned Restricted Subsidiary upon the sale
of any of its Unrestricted Subsidiaries; plus
(E) $5,000,000.
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<PAGE> 54
Notwithstanding the foregoing, the Company and any of its Restricted
Subsidiaries may take any of the following actions, so long as (with respect to
clauses (c) and (d) below) no Voting Rights Triggering Event has occurred and
is continuing or would occur:
(a) The payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not
have been prohibited by the foregoing provision.
(b) The repurchase, redemption or other acquisition or retirement for
value of any shares of Junior Stock of the Company, in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary) of, Qualified Equity Interests of the
Company.
(c) The payment by the Company to Citadel Communications for the
purpose of the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of Citadel Communications,
options on any such shares or related stock appreciation rights or similar
securities held by officers or employees or former officers or employees
(or their estates or beneficiaries under their estates) or by any employee
benefit plan, upon death, disability, retirement or termination of
employment or pursuant to the terms of any employee benefit plan or any
other agreement under which such shares of stock or related rights were
issued; provided that the aggregate cash consideration paid for such
purchase, redemption, acquisition, cancellation or other retirement of
such shares of Capital Stock after the Closing Date does not exceed
$1,000,000 in any fiscal year.
(d) Loans or advances to officers, directors and employees of Citadel
Communications, the Company or any of its Restricted Subsidiaries made in
the ordinary course of business after the Closing Date in an aggregate
principal amount not to exceed $1,000,000 at any one time outstanding.
(e) Payments to or on behalf of Citadel Communications to pay its
operating and administrative expenses attributable to the Company,
including, without limitation, legal and audit expenses, directors' fees,
fees payable in respect of the trustee and the back-up trustees under the
Voting Trust Agreement, and Commission compliance expenses, in an amount
not to exceed the greater of $1,000,000 per fiscal year and 1% of the net
revenues of the Company for the preceding fiscal year.
(f) Repayment of the note payable of the Company to Citadel
Communications outstanding as of the Closing Date in an amount not to
exceed $12,817,000 plus accrued and unpaid interest thereon to the Closing
Date.
The payments described in clauses (b), (c) and (d) of this paragraph will be
Restricted Payments that will be permitted to be taken in accordance with this
paragraph but will reduce the amount that would otherwise be available for
Restricted Payments under the foregoing clause (iii), and the payments
described in clauses (a), (e) and (f) of this paragraph will be
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<PAGE> 55
Restricted Payments that will be permitted to be taken in accordance with this
paragraph and will not reduce the amount that would otherwise be available for
Restricted Payments under the foregoing clause (iii).
For the purpose of making calculations under this Certificate of
Designation (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company will be deemed to have made an Investment in an amount
equal to the fair market value of the net assets of such Restricted Subsidiary
at the time of such designation as determined by the Board of Directors, whose
good faith determination will be conclusive, (ii) any property transferred to
or from an Unrestricted Subsidiary will be valued at fair market value at the
time of such transfer, as determined by the Board of Directors, whose good
faith determination will be conclusive and (iii) subject to the foregoing, the
amount of any Restricted Payment, if other than cash, will be determined by the
Board of Directors, whose good faith determination will be conclusive.
If the aggregate amount of all Restricted Payments calculated under
the foregoing provision includes an Investment in an Unrestricted Subsidiary or
other person that thereafter becomes a Restricted Subsidiary, such Investment
will no longer be counted as a Restricted Payment for purposes of calculating
the aggregate amount of Restricted Payments.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision will be reduced by the amount of any net reduction in such Investment
(resulting from the payment of interest or dividends, loan repayment, transfer
of assets or otherwise), to the extent such net reduction is not included in
Consolidated Adjusted Net Income; provided that the total amount by which the
aggregate amount of all Restricted Payments may be reduced may not exceed the
lesser of (x) the cash proceeds received by the Company and any of its
Restricted Subsidiaries in connection with such net reduction and (y) the
initial amount of such Investment.
In computing Consolidated Adjusted Net Income for purposes of the
foregoing clause (iii) (A), (i) the Company may use audited financial
statements for the portions of the relevant period for which audited financial
statements are available on the date of determination and unaudited financial
statements and other current financial data based on the books and records of
the Company for the remaining portion of such period and (ii) the Company will
be permitted to rely in good faith on the financial statements and other
financial data derived from the books and records of the Company that are
available on the date of determination. If the Company makes a Restricted
Payment that, at the time of the making of such Restricted Payment, would in
the good faith determination of the Company be permitted under the requirements
of this Certificate of Designation, such Restricted Payment will be deemed to
have been made in compliance with this Certificate of Designation
notwithstanding any subsequent adjustments made in good faith to the Company's
financial statements affecting Consolidated Adjusted Net Income of the Company
for any period.
(3) PURCHASE OF EXCHANGEABLE PREFERRED STOCK UPON A CHANGE OF CONTROL.
If a Change of Control occurs at any time, then each Holder of Exchangeable
Preferred Stock
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will have the right to require that the Company purchase such Holder's
Exchangeable Preferred Stock, in whole or in part, at a purchase price in cash
equal to 101% of the liquidation preference of such Exchangeable Preferred
Stock, plus accumulated and unpaid dividends, if any, to the date of purchase,
pursuant to the offer described herein (the "Change of Control Offer") and the
other procedures set forth herein.
Within 30 days following any Change of Control, the Company will
notify the Transfer Agent thereof and give written notice of such Change of
Control to each Holder of Exchangeable Preferred Stock by first-class mail,
postage prepaid, at its address appearing in the security register of the
Exchangeable Preferred Stock, stating, among other things, (i) the purchase
price and the purchase date, which will be a Business Day no earlier than 30
days nor later than 60 days from the date such notice is mailed or such later
date as is necessary to comply with requirements under the Exchange Act; (ii)
that any Exchangeable Preferred Stock not tendered will continue to accumulate
dividends; (iii) that, unless the Company defaults in the payment of the
purchase price, any Exchangeable Preferred Stock accepted for payment pursuant
to the Change of Control Offer will cease to accumulate dividends after the
Change of Control purchase date; and (iv) certain other procedures that a
Holder of Exchangeable Preferred Stock must follow to accept a Change of
Control Offer or to withdraw such acceptance.
On the date of purchase, the Company shall: (i) accept for payment the
Exchangeable Preferred Stock tendered pursuant to the Change of Control Offer;
(ii) deposit with the Transfer Agent money sufficient to pay the purchase price
of all Exchangeable Preferred Stock so accepted; and (iii) deliver, or cause to
be delivered, to the Transfer Agent, all Exchangeable Preferred Stock so
accepted together with an officers' certificate specifying the Exchangeable
Preferred Stock accepted for payment by the Company. The Company shall promptly
mail to the Holders a new certificate representing any shares not so purchased.
The Company shall publicly announce the results of the Change of Control Offer
on or as soon as practicable after the date of purchase.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create any restriction (other than restrictions existing under
Debt as in effect on the Closing Date or in refinancings or replacements of
such Debt) that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Exchangeable Preferred Stock or, if
such Change of Control Offer is made, to pay for the Exchangeable Preferred
Stock tendered for purchase.
(4) LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not sell, and will not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue or sell, any shares
of Capital Stock of a Restricted Subsidiary (including options, warrants, or
other rights to purchase shares of such Capital Stock) except (i) to the
Company or a Wholly Owned Restricted Subsidiary, (ii) issuances or sales to
foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law, or issuances or sales
to directors of directors' qualifying shares, (iii) if, immediately after
giving effect to such issuance or sale, neither the Company
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nor any Subsidiary owns any shares of Capital Stock of such Restricted
Subsidiary (including options, warrants or other rights to purchase shares of
such Capital Stock) or (iv) if, immediately either giving effect to such
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such person remaining after giving
effect to such issuance or sale would have been permitted to be made under
Section VIII(2), "Limitation on Restricted Payments," of this Certificate of
Designation if made on the date of such issuance or sale.
In addition, the Company will not, and will not permit any of its
Restricted Subsidiaries to, sell, transfer or otherwise dispose of any of its
properties or assets to an Unrestricted Subsidiary other than in the ordinary
course of business.
(5) UNRESTRICTED SUBSIDIARIES. (a) The Board of Directors of the
Company may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary so long as (i) neither the
Company nor any of its Restricted Subsidiaries is directly or indirectly liable
for any Debt of such Subsidiary, (ii) no default with respect to any Debt of
such Subsidiary would permit (upon notice, lapse of time or otherwise) any
holder of any other Debt of the Company or any of its Restricted Subsidiaries
to declare a default on such other Debt or cause the payment thereof to be
accelerated or made payable prior to its stated maturity, (iii) any Investment
in such Subsidiary made as a result of designating such Subsidiary an
Unrestricted Subsidiary will not violate the provisions of Section VIII(2),
"Limitation on Restricted Payments," of this Certificate of Designation, (iv)
neither the Company nor any of its Restricted Subsidiaries has a contract,
agreement, arrangement, understanding or obligation of any kind, whether
written or oral, with such Subsidiary other than those that might be obtained
at the time from persons who are not Affiliates of the Company and (v) neither
the Company nor any of its Restricted Subsidiaries has any obligation to
subscribe for additional shares of Capital Stock or other equity interest in
such Subsidiary, or to maintain or preserve such Subsidiary's financial
condition or to cause such Subsidiary to achieve certain levels of operating
results. Notwithstanding the foregoing, the Company may not designate the
License Subsidiary, or any Subsidiary to which any properties or assets (other
than current assets) owned by the Company or the License Subsidiary on the
Closing Date have been transferred, as an Unrestricted Subsidiary.
(b) The Board of Directors of the Company may designate any of its
Unrestricted Subsidiaries as a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation will only be permitted if (i) such Debt is permitted under Section
VIII(1), "Limitation on Debt," of this Certificate of Designation and (ii) no
Voting Rights Triggering Event will have occurred and be continuing following
such designation.
(6) LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES. The Company will
not permit any of its Subsidiaries to issue any Preferred Stock (other than to
the Company or to a Wholly Owned Restricted Subsidiary of the Company) or
permit any person (other than the Company or a Wholly Owned Restricted
Subsidiary of the Company) to own any Preferred
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Stock of a Subsidiary of the Company (other than Acquired Preferred Stock;
provided that at the time the issuer of such Acquired Preferred Stock becomes a
Subsidiary of the Company or merges with the Company or any of its
Subsidiaries, and after giving effect to such transaction, the Company shall be
able to incur $1.00 of additional Debt (other than Permitted Debt) in
compliance with Section VIII(1), "Limitation on Debt," of this Certificate of
Designation).
(7) REPORTS. At all times from and after the earlier of (i) the date
of the commencement of the Preferred Stock Exchange Offer or the effectiveness
of the Preferred Stock Shelf Registration Statement (the "Preferred Stock
Registration") and (ii) the date 180 days after the Closing Date, in either
case, whether or not the Company is then required to file reports with the
Commission, the Company will file with the Commission all such reports and
other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Exchange Act if it were subject thereto. The
Company will supply the Transfer Agent and each Holder, or will supply to the
Transfer Agent for forwarding to each such Holder, without cost to such Holder,
copies of such reports and other information. In addition, at all times prior
to the earlier of the date of the Preferred Stock Shelf Registration Statement
and the date 180 days after the Closing Date, the Company will, at its cost,
deliver to each Holder of the Exchangeable Preferred Stock quarterly and annual
reports substantially equivalent to those that would be required by the
Exchange Act. In addition, at all times prior to the Preferred Stock
Registration, upon the request by any Holder or any prospective purchaser of
the Exchangeable Preferred Stock designated by a Holder, the Company will
supply to such Holder or such prospective purchaser the information required
under Rule 144A under the Securities Act.
(8) CONSOLIDATION, MERGER AND SALE OF ASSETS. Without the affirmative
vote of the Holders of a majority of the issued and outstanding shares of
Exchangeable Preferred Stock and the holders of any Parity Stock, voting or
consenting, as the case may be, as a separate class, the Company may not, in a
single transaction or a series of related transactions, consolidate with or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, another person or adopt a
plan of liquidation unless:
(a) Either (i) the Company is the surviving corporation or (ii) the
person (if other than the Company) formed by such consolidation or into
which the Company is merged or the person that acquires by sale,
assignment, transfer, lease or other disposition the properties and assets
of the Company substantially as an entirety (the "Surviving Entity") (A)
is a corporation, partnership or trust organized and validly existing
under the laws of the United States or any state thereof or the District
of Columbia and (B) the Exchangeable Preferred Stock shall be converted
into or exchanged for and shall become shares of such Surviving Entity,
having in respect of such Surviving Entity the same powers, preferences
and relative participating, optional or other special rights and the
qualifications, limitations or restrictions thereon, that the Exchangeable
Preferred Stock had immediately prior to such transaction.
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(b) Immediately after giving effect to such transaction and treating
any obligation of the Company or a Restricted Subsidiary in connection
with or as a result of such transaction as having been incurred at the
time of such transaction, no Voting Rights Triggering Event shall have
occurred or be continuing.
(c) Immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred at the beginning of
the most recently ended four full fiscal quarter period for which internal
financial statements are available), the Company (in the case of clause
(i) of paragraph (a) or such person (in the case of clause (ii) of
paragraph (a)) could incur at least $1.00 of additional Debt (other than
Permitted Debt) pursuant to Section VIII(1)(a), "Limitation on Debt," of
this Certificate of Designation.
(d) The Company delivers, or causes to be delivered, to the Transfer
Agent an officers' certificate and an opinion of counsel, each stating
that such consolidation, merger or transfer complies with this Certificate
of Designation and that all conditions precedent in this Certificate of
Designation relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of related transactions)
of all or substantially all of the properties or assets of one or more
Subsidiaries, the Capital Stock of which constitutes all or substantially all
of the properties or assets of the Company, will be deemed to be the transfer
of all or substantially all of the properties and assets of the Company.
IX. No Reissuance of Exchangeable Preferred Stock. None of the shares
of Exchangeable Preferred Stock acquired by the Company by reason of
redemption, purchase, or otherwise shall be reissued.
X. Business Day. If any payment or redemption shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment or
redemption shall be made on the immediately succeeding Business Day.
XI. Transfer Restrictions. (a) The Series A Preferred Stock will bear
a legend to the following effect (as applicable) unless otherwise agreed by the
Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
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TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS
TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE
ON WHICH CITADEL BROADCASTING COMPANY (THE "COMPANY") OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
(THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY, (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR," WITHIN THE MEANING OF SUBPARAGRAPH
(A) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
(b) The Transfer Agent shall refuse to register any transfer of Series
A Preferred Stock in violation of the restrictions contained in the legend
provided for in Section XI(a).
(c) The legend provided for in Section XI(a) may be removed if the
Series A Preferred Stock has been registered pursuant to a Preferred Stock
Shelf Registration Statement under the Securities Act. Unlegended Series B
Preferred Stock may be issued in exchange for Series A Preferred Stock pursuant
to a Preferred Stock Exchange Offer.
(d) At any time after one year following the Closing Date, upon
receipt by the Transfer Agent and the Company of a certificate substantially in
the form of Exhibit A hereto, the Transfer Agent shall authenticate and deliver
one or more shares of unlegended Series A Preferred Stock in the place of
shares of legended Series A Preferred Stock.
(e) In connection with proposed transfers of Series A Preferred Stock
described in Exhibit B or Exhibit C, the Transfer Agent or the Company may
require the
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transferor or transferee, as the case may be, to deliver the appropriate letter
attached hereto as Exhibits B or C. Each Holder of Series A Preferred Stock
shall notify the Company or the Transfer Agent in the event of any transfer by
such Holder of any shares of Series A Preferred Stock to a foreign transferee.
XII. Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Acquired Debt" means Debt of a person (a) existing at the time such
person is merged with or into the Company or becomes a Subsidiary, (b) assumed
in connection with the acquisition of assets from such person or (c) secured by
a Lien encumbering assets acquired from such person.
"Acquired Preferred Stock" means preferred stock of a person (a)
existing at the time such person is merged with or into the Company or becomes
a Subsidiary or (b) assumed in connection with the acquisition of assets from
such person.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control," when used with respect to any specified person, means
the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer")
by the Company or a Restricted Subsidiary, directly or indirectly, in one or a
series of related transactions, to any person other than the Company or a
Restricted Subsidiary of (a) any Capital Stock of any of its Restricted
Subsidiaries, (b) all or substantially all of the properties and assets of the
Company and its Restricted Subsidiaries representing a division or line of
business or (c) any other properties or assets of the Company or any of its
Restricted Subsidiaries, other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" does not include any
transfer of properties or assets (a) that is governed by the provisions of
Section VIII(8), "Consolidation, Merger and Sale of Assets," of this
Certificate of Designation, (b) to an Unrestricted Subsidiary, if permitted
under Section VIII(2), "Limitation on Restricted Payments," of this Certificate
of Designation, (c) representing obsolete or permanently retired equipment, (d)
the gross proceeds of which (exclusive of indemnities) do not exceed $100,000
for any particular item or $500,000 in the aggregate for any fiscal year, or
(e) the transfer of up to $500,000 of properties and assets, including cash, to
a joint venture in which the Company or a Restricted Subsidiary has an equity
interest, which joint venture is engaged in the internet service provider
business.
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"Banks" means the banks and other financial institutions that from
time to time are lenders under the Credit Facility.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means a day other than a Saturday, Sunday, national or
New York State holiday or other day on which commercial banks in New York City
are authorized or required by law to close.
"Capital Stock" of any person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents (however
designated) of such person's equity (however designated).
"Capitalized Lease Obligation" means, with respect to any person, an
obligation incurred or assumed under or in connection with any capital lease of
real or personal property that, in accordance with GAAP, has been recorded as a
capitalized lease on the balance sheet of such person.
"Change of Control" means the occurrence of any of the following
events:
(a) Any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Lawrence R. Wilson, Scott E.
Smith, John E. von Schlegell, Baker, Fentress & Company, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., The Endeavour
Capital Fund Limited Partnership and any trustee, in its capacity as
trustee under the Voting Trust Agreement or Citadel Communications is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person will be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than a majority of the voting power
of all classes of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election to such Board of Directors or whose
nomination for election by the stockholders of the Company, was approved
by a vote of at least 66-2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors then in office; or
(c) The Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Change of Control Offer" has the meaning specified in Section VIII(3)
hereof.
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"Citadel Communications" means Citadel Communications Corporation, a
Nevada corporation, and any successors thereof.
"Closing Date" means July 3, 1997.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act.
"Computation Period" has the meaning specified in Section VIII(2)
hereof.
"Consolidated Adjusted Net Income" means, for any period, the net
income (or net loss) of the Company and its Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP, adjusted
to the extent included in calculating such net income or loss by excluding (a)
any net after-tax extraordinary gains or losses (less all fees and expenses
relating thereto), (b) any net after-tax gains or losses (less all fees and
expenses relating thereto) attributable to Asset Sales, (c) the portion of net
income (or loss) of any person (other than the Company or a Restricted
Subsidiary), including Unrestricted Subsidiaries, in which the Company or any
of its Restricted Subsidiaries has an ownership interest, except to the extent
of the amount of dividends or other distributions actually paid to the Company
or any of its Restricted Subsidiaries in cash during such period, (d) the net
income (or loss) of any person combined with the Company or any of its
Restricted Subsidiaries on a "pooling of interests" basis attributable to any
period prior to the date of combination, and (e) the net income (but not the
net loss) of any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Restricted Subsidiary is
at the date of determination restricted, directly or indirectly, except to the
extent that such net income could be paid to the Company or a Restricted
Subsidiary thereof; provided that, if any Restricted Subsidiary is not a Wholly
Owned Restricted Subsidiary, Consolidated Adjusted Net Income will be reduced
(to the extent not otherwise reduced in accordance with GAAP) by an amount
equal to (A) the amount of the Consolidated Adjusted Net Income otherwise
attributable to such Restricted Subsidiary multiplied by (B) the quotient of
(1) the number of shares of outstanding common stock of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of
its Restricted Subsidiaries divided by (2) the total number of shares of
outstanding common stock of such Restricted Subsidiary on the last day of such
period.
"Consolidated Cash Flow" means, for any period, the sum of, without
duplication, Consolidated Adjusted Net Income for such period, plus (or, in the
case of clause (d) below, plus or minus) the following items to the extent
included in computing Consolidated Adjusted Net Income for such period: (a) the
aggregate interest expense and preferred stock dividends of the Company and its
Restricted Subsidiaries for such period, plus (b) the provision for federal,
state, local and foreign income taxes of the Company and its Restricted
Subsidiaries for such period, plus (c) the aggregate depreciation and
amortization expense of the Company and any of its Restricted Subsidiaries for
such period, plus (d) any other non-cash charges for such period, and minus
non-cash credits for such period, other than non-cash charges or credits
resulting from changes in prepaid assets or accrued liabilities in
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the ordinary course of business; provided that income tax expense, interest
expense and preferred stock dividends, depreciation and amortization expense,
and non-cash charges and credits of a Restricted Subsidiary will be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Restricted Subsidiary was included in calculating
Consolidated Adjusted Net Income for such period. Solely for purposes of
determining whether the Company could incur Debt pursuant to Section
VIII(1)(a), "Limitation on Debt," of this Certificate of Designation, if the
Company is permitted to give pro forma effect to an In-Market Acquisition of a
radio station pursuant to clause (iii) of the second paragraph of such
covenant, such calculation may also give pro forma effect to projected
quantifiable improvements in operating results of such radio station due to
cost reductions calculated in good faith by the Company and certified by an
officers' certificate filed with the Transfer Agent. As used in the preceding
sentence, the term "In-Market Acquisition" means the acquisition of a radio
station or group of radio stations serving a metropolitan statistical area in
which the Company or its Subsidiaries has owned, or has operated under a local
marketing agreement, one or more radio stations for at least the preceding six
months.
"Consolidated Cash Flow Ratio" means, at any date, the ratio of (i)
the aggregate amount of Debt of the Company and its Restricted Subsidiaries on
a consolidated basis as of the end of the immediately preceding four fiscal
quarters for which internal financial statements of the Company are available
(the "Reference Period") to (ii) the aggregate amount of Consolidated Cash Flow
for such Reference Period.
"Consolidated Fixed Charges" means, for any period, without
duplication, the sum of (a) the amount which, in conformity with GAAP, would be
set forth opposite the caption "interest expense" (or any like caption) on a
consolidated statement of operations of the Company and its Restricted
Subsidiaries for such period, including, without limitation, (i) amortization
of debt discount, (ii) the net cost of interest rate contracts (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) amortization of debt issuance costs, (v) the interest
component of Capitalized Lease Obligations of the Company and any of its
Restricted Subsidiaries, and (vi) the portion of any rental obligation of the
Company and any of its Restricted Subsidiaries in respect of any sale and
leaseback transaction allocable during such period to interest expense
(determined as if it were treated as a Capitalized Lease Obligation) plus (b)
all interest on any Debt of any other person guaranteed by the Company or any
of its Restricted Subsidiaries: provided, however, that Consolidated Fixed
Charges will not include any gain or loss from extinguishment of debt,
including any write-off of debt issuance costs.
"Credit Facility" means the loan agreement dated October 9, 1996 among
the Company and the financial institutions and banks named therein, as amended,
and as such agreement may be amended, restated, supplemented, replaced or
refinanced or otherwise modified from time to time.
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"Debentures Trustee" means The Bank of New York, as Trustee under the
Exchange Indenture, or any successor Debentures Trustee appointed in accordance
with the terms of the Exchange Indenture.
"Debt" means (without duplication), with respect to any person,
whether recourse is to all or a portion of the assets of such person and
whether or not contingent, (a) every obligation of such person for money
borrowed, (b) every obligation of such person evidenced by bonds, debentures,
notes or other similar instruments, (c) every reimbursement obligation of such
person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such person, (d) every obligation of such
person issued or assumed as the deferred purchase price of property or
services, (e) every Capitalized Lease Obligation of such person, (f) all
Disqualified Stock of such person valued at its maximum fixed repurchase price,
plus accumulated and unpaid dividends, (g) all Hedging Obligations of such
person, and (h) every obligation of the type referred to in clauses (a) through
(g) of another person and all dividends of another person (i) the payment of
which, in either case, such person has guaranteed or (ii) which is secured by
any Lien on any property or asset of such person, the amount of such Debt being
deemed to be the lesser of the actual amount of the guarantee or the value of
such property or asset subject to such Lien, as the case may be, and the amount
of the Debt so guaranteed or secured, as the case may be. For purposes of this
definition, the "maximum fixed repurchase price" of any Disqualified Stock that
does not have a fixed repurchase price will be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
repurchased on any date on which Debt is required to be determined pursuant to
this Certificate of Designation, and if such price is based upon, or measured
by, the fair market value of such Disqualified Stock, such fair market value
will be determined reasonably and in good faith by the board of directors of
the issuer of such Disqualified Stock. Notwithstanding the foregoing, trade
accounts payable and accrued liabilities arising in the ordinary course of
business and any liability, for federal, state or local taxes or other taxes
owed by such person will not be considered Debt for purposes of this
definition. The amount outstanding at any time of any Debt issued with original
issue discount is the aggregate principal amount at maturity of such Debt, less
the remaining unamortized portion of the original issue discount of such Debt
at such time, as determined in accordance with GAAP.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms (or by the terms of any security into which it is
convertible or exchangeable by contract or otherwise), or upon the happening of
any event, matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of
the holder thereof, in whole or in part, prior to one year after the Mandatory
Redemption Date, provided that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to cause the issuer thereof to repurchase or redeem such Capital Stock upon
occurrence of a "change of control" occurring prior to the Mandatory Redemption
Date will not constitute Disqualified Stock if the "change of control"
provisions applicable to such Capital Stock are no more favorable to the
holders of such
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<PAGE> 66
Capital Stock than the provisions contained in Section VIII(3), "Purchase of
Exchangeable Preferred Stock upon a Change of Control," of this Certificate of
Designation and such Capital Stock specifically provides that the issuer will
not repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Exchangeable Preferred Stock as are required to be
repurchased pursuant to Section VIII(3), "Purchase of Exchangeable Preferred
Stock upon a Change of Control," of this Certificate of Designation; provided,
however, that "Disqualified Stock" shall not include the Exchangeable Preferred
Stock.
"Dividend Default" has the meaning specified in Section V(b) hereof.
"Dividend Payment Date" means each January 1 and July 1 of each year
on which dividends shall be paid or are payable, any Redemption Date and any
other date on which dividends in arrears may be paid.
"Dividend Rate" has the meaning specified in Section II(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Date" has the meaning specified in Section IV(a) hereof.
"Exchange Debentures" means the 13-1/4% Exchange Debentures due 2009
of the Company, issuable pursuant to the Exchange Indenture in exchange for the
Exchangeable Preferred Stock at the option of the Company.
"Exchange Indenture" means the Indenture dated as of July 1, 1997
among the Company, Citadel License, Inc. as guarantor, and The Bank of New
York, as trustee, relating to the Exchange Debentures.
"Exchange Notice" has the meaning specified in Section IV(a) hereof.
"Exchangeable Preferred Stock" has the meaning set forth in Section I
hereof.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the Closing Date.
"guarantee" means, as applied to any obligation, (a) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way, the payment
or performance (or payment of damages in the event of nonperformance) of all or
any part of such obligation, including without limitation, the payment of
amounts drawn down under letters of credit.
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<PAGE> 67
"Hedging Obligations" means the obligations of any person under (a)
interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements and (b) other agreements or arrangements destined to protect
such person against fluctuations in interest rates or the value of foreign
currencies.
"Holder" has the meaning specified in Section II(a) hereof.
"Investment" (in any person) means (a) directly or indirectly, any
advance, loan or other extension of credit (including, without limitation, by
way of guarantee or similar arrangement) or capital contribution to any person,
the purchase or other acquisition of any stock, bonds, notes, debentures or
other securities issued by such person or the acquisition (by purchase or
otherwise) of all or substantially all of the business or assets of such person
or the making of any investment in such person, (b) the designation of any
Restricted Subsidiary as an Unrestricted Subsidiary and (c) the transfer of any
assets or properties from the Company or a Restricted Subsidiary to any
Unrestricted Subsidiary, other than the transfer of assets or properties made
in the ordinary course of business. Investments will exclude extension of trade
credit on commercially reasonable terms in accordance with normal trade
practices.
"Junior Stock" has the meaning specified in Section VII hereof.
"License Subsidiary" means Citadel License, Inc.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation, assignment for
security, claim, preference, priority or other encumbrance upon or with respect
to any property of any kind, real or personal, movable or immovable, now owned
or hereafter acquired. A person will be deemed to own subject to a Lien any
property that such person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Mandatory Redemption Date" has the meaning specified in Section VI(b)
hereof.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed of for, cash or cash equivalents (except to the
extent that such obligations are financed or sold with recourse to the Company
or any of its Restricted Subsidiaries), net of (a) brokerage commissions and
other fees and expenses (including fees and expenses of legal counsel and
investment banks) related to such Asset Sale, (b) provisions for all taxes
payable as a result of such Asset Sale, (c) payments made to retire Debt where
payment of such Debt is secured by the assets that are the subject of such
Asset Sale, (d) amounts required to be paid to any person (other than the
Company or any of its Restricted Subsidiaries) owning a beneficial interest in
the assets that are subject to the Asset Sale and (e) appropriate amounts to be
provided by the Company or any of its Restricted Subsidiaries, as the case may
be, as a
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<PAGE> 68
reserve required in accordance with GAAP against any liabilities associated
with such Asset Sale and retained by the seller after such Asset Sale,
including pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"Notes" means the 10-1/4% Senior Subordinated Notes due 2007 of the
Company, issuable pursuant to the Notes Indenture.
"Notes Indenture" means the Indenture dated as of July 1, 1997 among
the Company, Citadel License, Inc., as guarantor, and The Bank of New York, as
trustee, relating to the 10-1/4% Senior Subordinated Notes due 2007 of the
Company.
"Original Issue Date" means July 3, 1997.
"Parity Stock" has the meaning specified in Section VII hereof.
"Permitted Debt" has the meaning specified in Section VIII(1)(b)
hereof.
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of one year or less
issued or directly and fully guaranteed or insured by the United States or
any agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof); (ii)
certificates of deposit, time deposits, overnight bank deposits or
bankers' acceptances with a maturity of 270 days or less of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus of not less than $500,000,000; and (iii) commercial
paper with a maturity of 270 days or less issued by a corporation that is
not an Affiliate of the Company and is organized under the laws of any
state of the United States or the District of Columbia and having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard
& Poor's Ratings Services.
(b) Investments by the Company or any of its Restricted Subsidiaries
in another person, if as a result of such Investment (i) such other person
becomes a Restricted Subsidiary that would be a Subsidiary Debentures
Guarantor under the Exchange Indenture or (ii) such other person is merged
or consolidated with or into, or transfers or conveys all or substantially
all of its assets to, the Company or a Restricted Subsidiary that would be
such a Subsidiary Debentures Guarantor.
(c) Investments by the Company or any of its Restricted Subsidiaries
in a Subsidiary Debentures Guarantor and Investments by any Restricted
Subsidiary in the Company.
(d) Investments in assets owned or used in the ordinary course of
business.
(e) Investments in existence on the Closing Date.
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<PAGE> 69
(f) Promissory notes received as a result of Asset Sales provided that
(i) the consideration received by the Company or the relevant Restricted
Subsidiary for such Asset Sale is not less than the fair market value of
the assets sold (as determined by the Board of Directors, whose good faith
determination will be conclusive) and (ii) the consideration received by
the Company or the relevant Restricted Subsidiary in respect of such Asset
Sale consists of at least 80% (A) cash or cash equivalents and/or (B) the
assumption by the transferee of Debt of the Company or a Restricted
Subsidiary which would be ranked senior to or pari passu with the Exchange
Debentures and release of the Company or such Restricted Subsidiary from
all liability on such Debt.
(g) Direct or indirect loans to employees, or to a trustee for the
benefit of such employees, of the Company or any of its Restricted
Subsidiaries in an aggregate amount outstanding, at any time not exceeding
$1,000,000.
(h) Investments by the Company or any of its Restricted Subsidiaries
in a joint venture that is engaged in the internet service provider
business in an aggregate amount outstanding at any time not exceeding
$500,000.
(i) Other Investments that do not exceed $2,000,000 at any one time
outstanding.
"Preferred Stock" of any person means any Capital Stock of such person
that has preferential rights to any other Capital Stock of such person with
respect to dividends or redemptions or upon liquidation.
"Preferred Stock Exchange Offer" means an offer by the Company to
exchange the Series A Preferred Stock for the Series B Preferred Stock pursuant
to an effective registration statement.
"Preferred Stock Registration" has the meaning set forth in Section
VIII(7) hereof.
"Preferred Stock Shelf Registration Statement" means a shelf
registration statement which becomes effective and covers resales of the Series
A Preferred Stock.
"Public Equity Offering" means an underwritten public offering of
Qualified Equity Interests of either (a) the Company or (b) Citadel
Communications, the net proceeds from which (after deducting any underwriting
discounts and commissions) are used by Citadel Communications to purchase
Qualified Equity Interests of the Company; provided that, in either case, such
net proceeds exceed $10,000,000.
"Qualified Equity Interest" means any Qualified Stock and all
warrants, options or other rights to acquire Qualified Stock (but excluding any
debt security that is convertible into or exchangeable for Capital Stock).
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<PAGE> 70
"Qualified Stock" of any person means any and all Capital Stock of
such person, other than Disqualified Stock.
"Redemption Date" has the meaning specified in Section VI(a)(i)
hereof.
"Redemption Notice" has the meaning specified in Section VI(c)(i)
hereof.
"Redemption Price" means the price at which the Exchangeable Preferred
Stock may be redeemed.
"Restricted Payment" has the meaning specified in Section VIII(2)
hereof.
"Restricted Subsidiary" means any Subsidiary other than an
Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase and Exchange Agreement" means that certain
Securities Purchase and Exchange Agreement, dated June 28, 1996, as amended by
the First Amendment thereto dated December 31, 1996, and by the Second
Amendment thereto dated March 17, 1997 among Citadel Communications, the
Company and certain other parties.
"Senior Stock" has the meaning specified in Section VII hereof.
"Series A Preferred Stock" has the meaning set forth in Section I
hereof.
"Series B Preferred Stock" has the meaning set forth in Section I
hereof.
"Significant Subsidiary" means any Restricted Subsidiary of the
Company that together with its Subsidiaries, (a) for the most recent fiscal
year of the Company accounted for more than 10% of the consolidated net sales
of the Company and its Restricted Subsidiaries, (b) as of the end of such
fiscal year was the owner of more than 10% of the consolidated assets of the
Company and its Restricted Subsidiaries, in the case of either (a) or (b), as
set forth on the most recently available consolidated financial statements of
the Company for such fiscal year, (c) was organized or acquired after the
beginning of such fiscal year and would have been a Significant Subsidiary if
it had been owned during the entire fiscal year or (d) that holds one or more
licenses material to the Company's business.
"Subsidiary" means any person a majority of the equity ownership or
Voting Stock of which is at the time owned, directly or indirectly, by the
Company and/or one or more other Subsidiaries of the Company.
"Subsidiary Debentures Guarantee" means a guarantee of the Exchange
Debentures by a Restricted Subsidiary under the Exchange Indenture.
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<PAGE> 71
"Subsidiary Debentures Guarantor" means the License Subsidiary and
each other Restricted Subsidiary that issues a Subsidiary Debentures Guarantee
under the Exchange Indenture.
"Subsidiary Notes Guarantee" means a guarantee of the Notes by a
Restricted Subsidiary under the Notes Indenture.
"Transfer Agent" means The Bank of New York or any successor transfer
agent.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force on the date on which this Certificate of Designation was filed.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary in accordance with
Section VIII(5), "Unrestricted Subsidiaries," of this Certificate of
Designation and (b) any Subsidiary of an Unrestricted Subsidiary.
"Voting Rights Triggering Event" has the meaning set forth above in
Section V(b) hereof.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any person (irrespective of whether or not, at the time, stock
of any other class or classes has, or might have, voting power by reason of the
happening of any contingency).
"Voting Trust Agreement" means that certain Voting Trust Agreement
dated as of March 17, 1997 by and among Citadel Communications, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Christopher Hall, as
the initial Trustee thereunder and J. Walter Corcoran and Harlan Levy, each as
an initial Back-Up Trustee thereunder.
"Weighted Average Life" means, as of the date of determination with
respect to any Debt or Disqualified Stock, the quotient obtained by dividing
(a) the sum of the products of (i) the number of years from the date of
determination to the date or dates of each successive scheduled principal or
liquidation value payment of such Debt or Disqualified Stock, respectively,
multiplied by (ii) the amount of each such principal or liquidation value
payment by (b) the sum of all such principal or liquidation value payments.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary,
all of the outstanding voting securities (other than directors' qualifying
shares or an immaterial number of shares required to be owned by other persons
pursuant to applicable law) of which are owned, directly or indirectly, by the
Company.
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<PAGE> 72
EXHIBIT A
---------
Form of Certificate as to
Completion of Distribution and
Termination of Restricted Period
--------------------------------
__________________, ____
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the "Company") 13-1/4%
Series A Exchangeable Preferred Stock (the "Series A
Preferred Stock") and 13-1/4% Series B Exchangeable
Preferred Stock (the "Series B Preferred Stock")
----------------------------------------------------
Dear Ladies and Gentlemen:
This letter relates to ___ shares of Series A Preferred Stock
represented by the attached Certificate (the "Legended Certificate") which
bears a legend outlining restrictions upon transfer of such Legended
Certificate. Pursuant to Section XI(d) of the Certificate of Designation (the
"Certificate of Designation") filed with the Secretary of State of the State of
Nevada on July __, 1997 relating to the Series A Preferred Stock and the Series
B Preferred Stock, we hereby certify that we are a person outside the United
States to whom the Series A Preferred Stock could be transferred in accordance
with Rule 904 of Regulation S promulgated under the U.S. Securities Act of
1933, as amended. Accordingly, you are hereby requested to exchange the shares
of Series A Preferred Stock represented by the Legended Certificate for a like
number of shares of Series A Preferred Stock, which shall be represented by the
attached Certificate (the "Unlegended Certificate"), which does not bear a
legend outlining restrictions upon the transfer of such Unlegended Certificate,
all in the manner provided for in the Certificate of Designation.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
----------------------------
Authorized Signature
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<PAGE> 73
EXHIBIT B
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
_______________, ____
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the
"Company") 13-1/4% Series A Exchangeable
Preferred Stock (the "Securities)
----------------------------------------
Dear Sirs:
In connection with our proposed purchase of ___ shares of the
Securities, we confirm that:
1. The undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities, except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Securities, we will do so only (A) to the
Company or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C)
to an institutional "accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Company a signed letter substantially in the
form of this letter and, if requested by the Company, an opinion of counsel
acceptable to the Company that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act, or (F) pursuant to
an effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Securities from us a
notice advising such purchaser that resales of the Securities are restricted as
stated herein.
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<PAGE> 74
3. We understand that, on any proposed resale of any Securities or
Conversion Shares, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Securities purchased by
us will bear a legend to the effect set out in paragraph 2.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Holder]
By:
-----------------------------
Authorized Signature
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<PAGE> 75
EXHIBIT C
---------
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
------------------------
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Re: Citadel Broadcasting Company (the
"Company") 13-1/4% Series A Exchangeable
Preferred Stock (the "Securities")
----------------------------------------
Dear Sirs:
In connection with our proposed sale of ____ shares of the Securities,
we confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended, and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States,
or (b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
In addition, if the sale is made during a restricted period and the provisions
of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the case
may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative
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<PAGE> 76
or legal proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Holder]
By:
-----------------------------
Authorized Signature
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<PAGE> 77
III. That, the shareholder approval requirement contained in Nev. Rev. Stat.
ss. 1955, subsection 3, does not apply to this Amended Certificate of
Designation, because Section V of the Original Designation provides otherwise,
and the changes to the Original Designation contained in this Amended
Certificate of Designation do not materially or adversely affect the specified
rights, preferences, privileges or voting rights of the Exchangeable Preferred
Stock.
[The remainder of this page left intentionally blank]
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<PAGE> 78
IN WITNESS WHEREOF, the Company has caused this Amended Certificate of
Designation to be duly executed in its corporate name on this _____ day of
July, 1997.
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
--------------------------------
Name: Lawrence R. Wilson
Its: President
By: /s/ Donna L. Heffner
--------------------------------
Name: Donna L. Heffner
Its: Secretary
STATE OF ARKANSAS
----------
COUNTY OF PULASKI
---------
This instrument was acknowledged before me on July 30, 1997 by
--
Lawrence R. Wilson, as President of Citadel Broadcasting Company.
[SEAL:
Sheila A. Hornecker
Notary Public /s/ Sheila H. Hornecker
Pulaski County, AR] --------------------------------
Notary Public
(Seal, if any) My Commission Expires 8-1-99
----------
STATE OF Arizona
------------
COUNTY OF Maricopa
-----------
This instrument was acknowledged before me on July 23, 1997 by Donna
--
L. Heffner, as Secretary of Citadel Broadcasting Company.
/s/ Susan M. Kaiser
------------------------------------
Notary Public
(Seal, if any) My Commission Expires April 24, 2000
--------------
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<PAGE> 1
Exhibit 3(i)(c)
ARTICLES OF INCORPORATION
OF
CITADEL LICENSE, INC.
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, for the purpose of forming a corporation under
the laws of the State of Nevada, hereby adopts the following Articles of
Incorporation.
ARTICLE I
NAME OF THE CORPORATION
The name of the Corporation shall be Citadel License, Inc.
ARTICLE II
REGISTERED AGENT AND REGISTERED ADDRESS
The address of the Corporation's registered office in the State of
Nevada is c/o The Corporation Trust Company of Nevada, One East First Street,
City of Reno, County of Washoe, State of Nevada. The name of the Corporation's
resident agent at such address is The Corporation Trust Company of Nevada.
ARTICLE III
PURPOSE OF THE CORPORATION
The purpose of the Corporation is to hold licenses relating to the
operation of radio stations, and to engage in any or all lawful activity for
which corporations may be organized under the General Corporation Law of the
State of Nevada.
ARTICLE IV
CAPITAL STOCK - IN GENERAL; FCC MATTERS
1. The total number of shares of capital which the Corporation shall
have the authority to issue is Forty Thousand (40,000) shares, all of which
shall be Common Stock. The par value of each share of Common Stock is $0.001.
The shares of the Corporation, after the subscription price therefore has been
paid, shall not be subject to assessment to pay
<PAGE> 2
the debts of the Corporation, and no shares issued as fully paid up shall ever
be assessable or assessed.
2. Notwithstanding any provisions contained herein to the contrary,
unless or until all requisite approvals have been obtained from the FCC (as
defined below) (the "FCC Approvals"), (i) no stockholders other than the
holders of Common Stock shall possess any voting rights except as permitted by
law; (ii) no stockholder other than the holders of Common Stock may nominate,
appoint or designate any Members of the Board of Directors; and (iii) no
stockholder shall be entitled to exercise any conversion rights or voting
rights, the result of which would cause the Corporation to be in violation of
the rules, regulations or policies of the FCC.
3. In accordance with the Federal Communications Act of 1934, as
amended ("Communications Act"), and the rules, regulations and policies
promulgated by the FCC thereunder ("FCC Regulations"), the Board of Directors
of the Corporation may; (a) prohibit the ownership or voting of more than 20%
of the Corporation's outstanding capital stock by or for the account of aliens
or their representatives or by a foreign government or representative thereof
or by any corporation organized under the laws of a foreign country
(collectively "Aliens"), or by or for corporations of which any officer is an
Alien, more than one-fourth of its directors are Aliens, or of which more than
one-fourth of its capital stock is owned of record or voted by Aliens, or any
other entity that is (i) subject to or deemed to be subject to management
influences by Aliens, or (ii) the equity of which is owned, controlled by, or
held for the benefit of, Aliens in a manner that would cause the Corporation to
be in violation of the Communications Act or the FCC Regulations; (b) prohibit
any transfer of the Corporation's stock which would cause more than 20% of the
Corporation's outstanding capital stock to be owned or voted by or for any
person or entity designated in foregoing clause (a); and (c) prohibit the
ownership, voting or transfer of any portion of its outstanding capital stock
to the extent the ownership, voting or transfer of such portion would cause the
Corporation to violate or otherwise result in violation of any provision of the
Communications Act or the FCC Regulations.
ARTICLE V
BOARD OF DIRECTORS
The business and affairs of this Corporation shall be conducted by a
Board of Directors, the size of which is initially set at seven (7) board
members. The size of the Board may be increased or decreased from time to time
as set forth in the Corporation's Bylaws. The following named persons shall
constitute the first Board of Directors of this Corporation until the first
annual meeting of the shareholders, or until their successors are elected and
qualify:
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<PAGE> 3
Lawrence R. Wilson Scott E. Smith Mark Leavitt
1015 Eastman Drive 200 West Madison Street Oppenheimer Tower
Bigfork, MT 59911 Suite 3510 World Financial Center
Chicago, IL 60606 New York, NY 10281
Jay Grossman
160 Commonwealth Ave. Royce Yudkoff Peggy Koenig
Apt. 708 188 Heath Street 209 Ridgeway Road
Boston, MA 02116 Chestnut Hills, MA 02167 Weston, MA 02193
Michael Ahearn
c/o Satloc, Inc.
4670 South Ash Avenue
Tempe, AZ 85285
The Board of Directors may establish, alter or dissolve committees
from time to time in accordance with applicable law.
ARTICLE VI
LIABILITY
To the fullest extent permitted by General Corporation Law of the
State of Nevada in effect from time to time and to no greater extent, no
officer or member of the Board of Directors shall be liable for monetary
damages for breach of fiduciary duty in his or her capacity as an officer or
director in any action brought by or on behalf of the Corporation or any of its
shareholders
ARTICLE VII
INDEMNIFICATION
To the fullest extent permitted by law, the Corporation shall
indemnify any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he or she is or was a director of the Corporation or any
predecessor of the Corporation or serves or served any other enterprise as
director at the request of the Corporation or any predecessor of the
Corporation
-3-
<PAGE> 4
ARTICLE VIII
INCORPORATOR
The name and address of the incorporator of the Corporation is John D.
Forster, c/o Osborn Maledon, P.A., 2929 North Central Avenue, 21st Floor,
Phoenix, AZ 85012.
ARTICLE IX
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE X
NO PREEMPTIVE RIGHTS
The shareholders of the Corporation shall have no preemptive rights.
IN WITNESS WHEREOF, the undersigned has caused these Articles to be
executed as of the 5th day of September, 1996.
/s/ John D. Forster
-------------------------
John D. Forster
Incorporator
STATE OF ARIZONA )
) SS.
County of Maricopa )
On this, the 5th day of September, 1996, before me, the undersigned
officer, personally appeared John D. Forster, known to me to be the person
whose name is subscribed to the within instrument and acknowledged to me that
he executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Verliann H. K. Davis
--------------------------
Notary Public
My Commission Expires:
OFFICIAL SEAL
VERLIANN H. K. DAVIS
NOTARY PUBLIC - ARIZONA
MARICOPY COUNTY
My Comm. expires Jan. 18, 2000
-4-
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EXHIBIT 3(ii)(a)
BYLAWS
OF
CITADEL COMMUNICATIONS CORPORATION
ARTICLE I
OFFICES
1. PRINCIPAL OFFICE.
The principal office shall be in the City of Reno, County of Washoe,
State of Nevada.
2. OTHER OFFICES.
The Corporation may also have offices at such other places both within
and without the State of Nevada as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the second
Tuesday of March of each year, or if that day is a legal holiday, then on the
next day thereafter which is not a legal holiday, or at such other date as the
Board of Directors shall determine, for the purpose of electing Directors and
for the transaction of such other business as may properly come before the
meeting. If the election of Directors is not held on the day designated herein
for any annual meeting of the stockholders, or any adjournment thereof, the
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as convenient.
2. SPECIAL MEETINGS.
Special meetings of the stockholders may be called for any purpose or
purposes at any time by the Board of Directors or the President, and shall be
called by the President at the request of the holders of not less than
one-tenth (1/10) of all outstanding stock of the
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Corporation entitled to vote at such meeting, or otherwise as provided by the
Nevada General Corporation Law and Section 13 of Article II of these Bylaws.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.
3. PLACE OF MEETINGS.
Annual and special meetings of the stockholders may be held at such
time and place within or without the State of Nevada as shall be stated in the
notice of the meeting, or in a duly executed waiver of notice thereof.
4. NOTICE OF MEETING.
Written notice stating the place, date and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered to each stockholder of record entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting. Notice may be delivered either personally or by first
class, certified or registered mail, postage prepaid, and signed by an officer
of the Corporation at the direction of the person or persons calling the
meeting. If mailed, notice shall be deemed to be delivered when mailed to the
stockholders at his or her address as it appears on the stock transfer books of
the Corporation. Delivery of any such notice to any officer of a corporation or
association, or to any member of a partnership shall constitute delivery of
such notice to such corporation, association or partnership. In the event of
the transfer of stock after delivery or mailing of the notice of and prior to
the holding of the meeting it shall not be necessary to deliver or mail notice
of the meeting to the transferee. Notice need not be given of an adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken, provided that such adjournment is for less than thirty
(30) days and further provided that a new record date is not fixed for the
adjourned meeting, in either of which events, written notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at such
meeting. At any adjourned meeting, any business may be transacted which might
have been transacted at the meeting as originally noticed. A written waiver of
notice, whether given before or after the meeting to which it relates, shall be
equivalent to the giving of notice of such meeting to the stockholder or
stockholders signing such waiver. Attendance of a stockholder at a meeting
shall constitute a waiver of notice of such meeting, except when the
stockholder attends for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened.
5. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the Corporation may determine the stockholders entitled
to notice of and to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or to receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of any other
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change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix in advance a record date, which shall
not be more than sixty (60) nor less than ten (10) days prior to the date of
such meeting or such action, as the case may be. If the Board of Directors has
not fixed a record date for determining the stockholders entitled to notice of
and to vote at a meeting of stockholders, the record date shall be at close of
business on the day next preceding the day on which notice is given, or if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. If the Board of Directors has not fixed a record
date for determining the stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is necessary, the record date shall be the day on which the first
written consent is expressed by any stockholder. If the Board of Directors has
not fixed a record date for determining stockholders for any other purpose, the
record date shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
6. RECORD OF STOCKHOLDERS.
The Secretary or other officer having charge of the stock transfer
books of the Corporation shall make, or cause to be made, at least ten (10)
days before every meeting of stockholders, a complete record of the
stockholders entitled to vote at a meeting of stockholders or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
7. QUORUM AND MANNER OF ACTING.
At any meeting of the stockholders, the presence, in person or by
proxy, of the holders of a majority of the outstanding stock entitled to vote
shall constitute a quorum for the transaction of business except as otherwise
provided by the Nevada General Corporation Law or by the Certificate of
Incorporation. All shares represented and entitled to vote on any single
subject matter which may be brought before the meeting shall be counted for
quorum purposes. Only those shares entitled to vote on a particular subject
matter shall be counted for the purpose of voting on that subject matter.
Business may be conducted once a quorum is present and may continue to be
conducted until adjournment SINE DIE, notwithstanding the withdrawal or
temporary absence of stockholders leaving less than a quorum. Except as
otherwise provided in the Nevada General Corporation Law or the Certificate of
Incorporation, the affirmative vote of the holders of a majority of the shares
of
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stock then represented at the meeting and entitled to vote thereat shall be the
act of the stockholders; provided, however, that if the shares of stock so
represented are less than the number required to constitute a quorum, the
affirmative vote must be such as would constitute a majority if a quorum were
present, except that the affirmative vote of the holders of a majority of the
shares of stock then present is sufficient in all cases to adjourn a meeting.
8. VOTING OF SHARES OF STOCK.
Each stockholder shall be entitled to one vote or corresponding
fraction thereof for each share of stock or fraction thereof standing in his,
her or its name on the books of the Corporation on the record date. A
stockholder may vote either in person or by valid proxy, as defined in Section
12 of this Article II, executed in writing by the stockholder or by his, her or
its duly authorized attorney in fact. Shares of its own stock belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly
or indirectly, by the Corporation, shall neither be entitled to vote nor
counted for quorum purposes; provided, however, that the foregoing shall not
limit the right of any corporation to vote stock, including but not limited to
its own stock, when held by it in a fiduciary capacity. Shares of stock
standing in the name of another corporation may be voted by such officer, agent
or proxy as the bylaws of such other corporation may prescribe or, in the
absence of such provision, as the Board of Directors of such other corporation
may determine. Unless demanded by a stockholder present in person or by proxy
at the meeting of the stockholders and entitled to vote thereat, or unless so
directed by the chairman of the meeting, the vote thereat on any question need
not be by ballot. If such demand or direction is made, a vote by ballot shall
be taken, and each ballot shall be signed by the stockholder voting, or by his
or her proxy, and shall state the number of shares voted.
9. ORGANIZATION.
At each meeting of the stockholders, the President, or, if he or she
is absent therefrom, another officer of the Corporation chosen as chairman of
such meeting by stockholders holding a majority of the shares present in person
or by proxy and entitled to vote thereat, or, if all the officers of the
Corporation are absent therefrom, a stockholder of record so chosen, shall act
as chairman of the meeting and preside thereat. The Secretary, or, if he or she
is absent from the meeting or is required pursuant to the provisions of this
Section 9 to act as chairman of such meeting, the person (who shall be an
Assistant Secretary, if any and if present) whom the chairman of the meeting
shall appoint shall act as secretary of the meeting and keep the minutes
thereof.
10. ORDER OF BUSINESS.
The order of business at each meeting of the stockholders shall be
determined by the chairman of such meeting, but the order of business may be
changed by the vote of
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stockholders holding a majority of the shares present in person or by proxy at
such meeting and entitled to vote thereat.
11. VOTING.
At all meetings of stockholders, each stockholder entitled to vote
thereat shall have the right to vote, in person or by proxy, and shall have,
for each share of stock registered in his, her or its name, the number of votes
provided by the Certificate of Incorporation in respect of stock of such class.
Stockholders shall not have cumulative voting rights with respect to the
election of Directors.
12. VOTING BY PROXY.
At any meeting of the stockholders, any stockholder may be represented
and vote by a proxy or proxies appointed by an instrument in writing, In the
event that any such instrument in writing shall designate two (2) or more
persons to act as proxies, a majority of such persons present at the meeting,
or, if only one shall be present, then that one shall have and may exercise all
of the powers conferred by such written instrument upon all of the persons so
designated unless the instrument shall otherwise provide. No such proxy shall
be valid after the expiration of six (6) months from the date of its execution,
unless coupled with an interest, or unless the person executing it specifies
therein the length of time for which it is to continue in force, which in no
case shall exceed seven (7) years from the date of it execution. Subject to the
above, any proxy duly executed is not revoked and continues in full force and
effect until an instrument revoking it or a duly executed proxy bearing a later
date is filed with the Secretary of the Corporation.
13. ACTION BY STOCKHOLDERS WITHOUT A MEETING.
Any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting, without notice and without a vote,
if a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding stock having not less than the number of votes that
would have been necessary to authorize such action at a meeting at which all
shares entitled to vote were present and voted. Such written consent shall not
be valid unless it is (a) signed by the stockholder, (b) dated, as to the date
of such stockholder's signature, and (c) delivered to the Corporation
personally or by certified or registered mail, return receipt requested, to the
Corporation's principal place of business, principal office in the State of
Nevada or officer or agent who has custody of the book in which the minutes of
meetings of stockholders are recorded, within sixty (60) days after the
earliest date that a stockholder signed the written consent. Prompt notice of
the taking of any such action shall be given to any such stockholders entitled
to vote who have not so consented in writing.
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ARTICLE III
BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the Corporation shall be managed by the
Board of Directors.
2. NUMBER, TERM OF OFFICE AND QUALIFICATIONS.
Subject to the requirements of the Nevada General Corporation Law or
the Certificate of Incorporation, the Board of Directors may from time to time
determine the number of Directors. Until the Board of Directors shall otherwise
determine, the number of Directors shall be that number comprising the initial
Board of Directors as set forth in the Certificate of Incorporation. Each
director shall hold office until his or her successor is duly elected or until
his or her earlier death or resignation or removal in the manner hereinafter
provided. Directors need not be stockholders.
3. PLACE OF MEETING.
The Board of Directors may hold its meetings, either within or without
the State of Nevada, at such place or places as it may from time to time by
resolution determine or as shall be designated in any notices or waivers of
notice thereof. Any such meeting, whether regular or special, may be held by
conference telephone or similar communications equipment by means of which all
persons in the meeting can hear each other, and participation in a meeting in
such manner shall constitute presence in person at such meeting. Each person
participating in a telephonic meeting shall sign the minutes thereof, which may
be signed in counterparts.
4. ANNUAL MEETINGS.
As soon as practicable after each annual election of Directors and on
the same day, the Board of Directors shall meet for the purpose of organization
and the transaction of other business at the place where regular meetings of
the Board of Directors are held, and no notice of such meeting shall be
necessary in order to legally hold the meeting, provided that a quorum is
present. If such meeting is not held as provided above, the meeting may be held
at such time and place as shall be specified in a notice given as hereinafter
provided for a special meeting of the Board of Directors, or in the event of
waiver of notice as specified in the written waiver of notice.
5. REGULAR MEETINGS.
Regular meetings of the Board of Directors may be held without notice
at such times as the Board of Directors shall from time to time by resolution
determine.
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6. SPECIAL MEETINGS; NOTICE.
Special meetings of the Board of Directors shall be held, either
within or without the State of Nevada, whenever called by the President or a
majority of the Directors at the time in office. Notice shall be given, in the
manner hereinafter provided, of each such special meeting, which notice shall
state: the time and place of such meeting, but need not state the purposes
thereof. Except as otherwise provided in Section 9 of this Article III, notice
of each such meeting shall be mailed to each Director, addressed to him or her
at his or her residence or usual place of business, at least two (2) days
before the day on which such meeting is to be held, or shall be sent addressed
to him or her at such place by telegraph, cable, wireless or other form of
recorded communication or delivered personally or by telephone not later than
the day before the day on which such meeting is to be held. A written waiver of
notice, whether given before or after the meeting to which it relates, shall be
equivalent to the giving of notice of such meeting to the Director or Directors
signing such waiver. Attendance of a Director at a special meeting of the Board
of Directors shall constitute a waiver of notice of such meeting, except when
he or she attends the meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
7. QUORUM AND MANNER OF ACTING.
A majority of the whole Board of Directors shall be present in person
at any meeting of the Board of Directors in order to constitute a quorum for
the transaction of business at such meeting, and except as otherwise specified
in these Bylaws, and except also as otherwise expressly provided by the Nevada
General Corporation Law, the vote of a majority of the Directors present at any
such meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum from any such meeting, a majority of the
Directors present thereat may adjourn such meeting from time to time to another
time or place, without notice other than announcement at the meeting, until a
quorum shall be present thereat. The Directors shall act only as a Board of
Directors and the individual Directors shall have no power as such.
8. ORGANIZATION.
At each meeting of the Board of Directors, the President, or if he or
she is absent therefrom, a Director chosen by a majority of the Directors
present thereat, shall act as chairman of such meeting and preside thereat. The
Secretary, or if he or she is absent, the person (who shall be an Assistant
Secretary, if any and if present) whom the chairman of such meeting shall
appoint, shall act as Secretary of such meeting and keep the minutes thereof.
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9. ACTION BY DIRECTORS WITHOUT A MEETING.
Any action required or permitted to be taken at a meeting of the Board
of Directors may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, is signed by
all Directors and such consent is filed with the minutes of the proceedings of
the Board of Directors.
10. RESIGNATIONS.
Any Director may resign at any time by giving written notice of his or
her resignation to the Corporation. Any such resignation shall take effect at
the time specified therein, or, if the time when it shall become effective is
not specified therein, it shall take effect immediately upon its receipt by the
President or the Secretary; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
11. REMOVAL OF DIRECTORS.
Directors may be removed, with or without cause, as provided from time
to time by the Nevada General Corporation Law as then in effect.
12. VACANCIES.
Vacancies and newly created directorships resulting from any increase
in the authorized number of Directors elected by all of the stockholders having
the right to vote as a single class may be filled by a majority of the
Directors then in office, although less than a quorum, or by a sole remaining
Director. If at any time, by reason of death or resignation or other cause, the
Corporation has no Directors in office, then any officer or any stockholder or
an executor, administrator, trustee or guardian of a stockholder, may call a
special meeting of stockholders for the purpose of filling vacancies in the
Board of Directors. If one or more Directors shall resign from the Board of
Directors, effective at a future date, a majority of the Directors then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each Director so chosen shall hold
office as provided in this section in the filling of other vacancies.
13. COMPENSATION.
Unless otherwise expressly provided by resolution adopted by the Board
of Directors, no Director shall receive any compensation for his or her
services as a Director. The Board of Directors may at any time and from time to
time by resolution provide that the Directors shall be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
Director. In addition, the Board of Directors may at any time and from time to
time by resolution provide that Directors shall be paid their actual expenses,
if any, of
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attendance at each meeting of the Board of Directors. Nothing in this section
shall be construed as precluding any Director from serving the Corporation in
any other capacity and receiving compensation therefor, but the Board of
Directors may by resolution provide that any Director receiving compensation
for his or her services to the Corporation in any other capacity shall not
receive additional compensation for his or her services as a Director.
ARTICLE IV
OFFICERS
1. NUMBER.
The Corporation shall have the following officers: a President, a
Secretary and a Treasurer. At the discretion of the Board of Directors, the
Corporation may also have a Chairman of the Board, one or more Vice Presidents,
one or more Assistant Vice Presidents, one or more Assistant Secretaries and
one or more Assistant Treasurers. Any two (2) or more offices may be held by
the same person.
2. ELECTION AND TERM OF OFFICE.
The officers of the Corporation shall be elected annually by the Board
of Directors. Each such officer shall hold office until his or her successor is
duly elected or until his or her earlier death or resignation or removal in the
manner hereinafter provided.
3. AGENTS.
In addition to the officers mentioned in Section 1 of this Article IV,
the Board of Directors may appoint such agents as the Board of Directors may
deem necessary or advisable, each of which agents shall have such authority and
perform such duties as are provided in these Bylaws or as the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any officer or to any committee the power to appoint or remove any such
agents.
4. REMOVAL.
Any officer may be removed, with or without cause, at any time by
resolution adopted by a majority of the whole Board of Directors.
5. RESIGNATIONS.
Any officer may resign at any time by giving written notice of his or
her resignation to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the times specified therein, or, if the
time when it shall become effective is not specified therein, it shall take
effect immediately upon its receipt by the Board of Directors,
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the President or the Secretary; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
6. VACANCIES.
A vacancy in any office due to death, resignation, removal,
disqualification or any other cause may be filled for the unexpired portion of
the term thereof by the Board of Directors.
7. CHAIRMAN OF THE BOARD.
The Board of Directors may elect a Chairman to serve as a general
executive officer of the Corporation, and, if specifically designated as such
by the Board, as the chief executive officer of the Corporation. If elected,
the Chairman will preside at all meetings of the Board of Directors and be
vested with such other powers and duties as the Board may from time to time
delegate to him or her.
8. PRESIDENT OR VICE PRESIDENTS.
Unless otherwise specified by resolution of the Board of Directors,
the President will be the chief executive officer of the Corporation. The
President will supervise the business and affairs of the Corporation and the
performance by all of its other officers of their respective duties, subject to
the control of the Board of Directors (and of its Chairman, if the Chairman has
been specifically designated as chief executive officer of the corporation).
One or more Vice Presidents shall be elected by the Board of Directors to
perform such duties as may be designated by the Board or be assigned or
delegated to them by the chief executive officer. Any one of the Vice
Presidents as authorized by the Board will be vested with all of the powers and
charged with all of the duties of the President in the event of his or her
absence or inability to act. Except as may otherwise be specifically provided
in a resolution of the Board of Directors, the President or any Vice President
will be a proper officer to sign on behalf of the Corporation any deed, bill of
sale, assignment, option, mortgage, pledge, note, bond, evidence of
indebtedness, application, consent, (to service of process or otherwise),
agreement, indenture or other instrument of any significant importance to the
Corporation. The President or any Vice President may represent the Corporation
at any meeting of the shareholders, and may vote this Corporation's shares in
such other corporation in person or by proxy appointed by him or her, provided
that the Board of Directors may from time to time confer the foregoing
authority upon any other person or persons.
9. SECRETARY.
The Secretary shall: (a) record all the proceedings of the meetings of
the stockholders, the Board of Directors and the Executive Committee, if any,
in one or more books kept for that purpose; (b) see that all notices are duly
given in accordance with the
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provisions of these Bylaws or as required by law; (c) be the custodian of all
contracts, deeds, documents, all other indicia of title to properties owned by
the Corporation and of its other corporate records (except accounting records)
and of the corporate seal, if any, and affix such seal to all documents the
execution of which on behalf of the Corporation under its seal is duly
authorized; (d) sign, with the President or a Vice President, certificates for
stock of the Corporation; (e) have charge, directly or through the transfer
clerk or transfer clerks, transfer agent or transfer agents and registrar or
registrars appointed as provided in Section 3 of Article VII of these Bylaws,
of the issue, transfer and registration of certificates for stock of the
Corporation and of the records thereof, such records to be kept in such manner
as to show at any time the amount of the stock of the Corporation issued and
outstanding, the manner in which and the time when such stock was paid for, the
names, alphabetically arranged, and the addresses of the holders of record
thereof, the number of shares held by each, and the time when each became a
holder of record; (f) upon request, exhibit or cause to be exhibited at all
reasonable times to any Director such records of the issue, transfer and
registration of the certificates for stock of the Corporation; (g) see that the
books, reports, statements, certificates and all other documents and records
required by law are properly kept and filed; and (h) see that the duties
prescribed by Section 6 of Article II of these Bylaws are performed. In
general, the Secretary shall perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him or
her by the President or the Board of Directors.
10. TREASURER.
If required by the Board of Directors, the Treasurer shall give a bond
for the faithful discharge of his or her duties in such sum and with such
surety or sureties as the Board of Directors shall determine. The Treasurer
shall: (a) have charge and custody of, and be responsible for, all funds,
securities, notes and valuable effects of the Corporation; (b) receive and give
receipt for moneys due and payable to the Corporation from any sources
whatsoever; (c) deposit all such moneys to the credit of the Corporation or
otherwise as the Board of Directors or the President shall direct in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article VI of these Bylaws; (d) cause such funds to be
disbursed by checks or drafts on the authorized depositories of the Corporation
signed as provided in Article VI of these Bylaws; (e) be responsible for the
accuracy of the amounts of, and cause to be preserved proper vouchers for, all
moneys so disbursed; (f) have the right to require from time to time reports or
statements giving such information as he or she may desire with respect to any
and all financial transactions of the Corporation from the officers or agents
transacting the same; (g) render to the Chairman of the Board, the President or
the Board of Directors, whenever they, respectively, shall request him or her
so to do, an account of the financial condition of the Corporation and of all
his or her transactions as Treasurer; and (h) upon request, exhibit or cause to
be exhibited at all reasonable times the cash books and other records to the
President or any of the Directors of the Corporation. In general, the Treasurer
shall perform all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him or her by the President or
the Board of Directors.
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11. ASSISTANT OFFICERS.
Any persons elected as assistant officers shall assist in the
performance of the duties of the designated office and such other duties as
shall be assigned to them by any Vice President, the Secretary or the
Treasurer, as the case may be, or by the Board of Directors or the President.
12. COMPENSATION.
The salaries of all officers and agents of the Corporation shall be
fixed by the Board of Directors.
ARTICLE V
COMMITTEES
1. EXECUTIVE COMMITTEE; HOW CONSTITUTED AND POWERS.
The Board of Directors, by resolution adopted by a majority of the
whole Board of Directors, may designate one or more of the Directors then in
office, to constitute an Executive Committee, which shall have and may exercise
between meetings of the Board of Directors all the delegable powers of the
Board of Directors to the extent not expressly prohibited by the Nevada General
Corporation Law or by resolution of the Board of Directors. The Board of
Directors may designate one or more Directors as alternate members of the
Committee who may replace any absent or disqualified member at any meeting of
the Committee. Each member of the Executive Committee shall continue to be a
member thereof only during the pleasure of a majority of the whole Board of
Directors.
2. EXECUTIVE COMMITTEE; ORGANIZATION.
The President shall act as chairman at all meetings of the Executive
Committee and the Secretary shall act as secretary thereof. In case of the
absence from any meeting of the President or the Secretary, the Committee may
appoint a chairman or secretary, as the case may be, of the meeting.
3. EXECUTIVE COMMITTEE; MEETINGS.
Regular meetings of the Executive Committee may be held without notice
on such days and at such places as shall be fixed by resolution adopted by a
majority of the Committee and communicated to all its members. Special meetings
of the Committee shall be held whenever called by the President or a majority
of the members thereof then in office. Notice of each special meeting of the
Committee shall be given in the manner provided in Section 6 of Article III of
these Bylaws for special meetings of the Board of Directors. Notice of any such
meeting of the Executive Committee, however, need not be given to any
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member of the Committee if waived by him or her in writing or by telegraph,
cable, wireless or other form of recorded communication either before or after
the meeting, or if he or she is present at such meeting, except when he or she
attends for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Subject to the
provisions of this Article V, the Committee, by resolution adopted by a
majority of the whole Committee, shall fix its own rules of procedure and it
shall keep a record of its proceedings and report them to the Board of
Directors at the next regular meeting thereof after such proceedings have been
taken. All such proceedings shall be subject to revision or alteration by the
Board of Directors; provided, however, that third parties shall not be
prejudiced by any such revision or alteration.
4. EXECUTIVE COMMITTEE; QUORUM AND MANNER OF ACTING.
A majority of the Executive Committee shall constitute a quorum for
the transaction of business, and, except as specified in Section 3 of this
Article V, the act of a majority of those present at a meeting thereof at which
a quorum is present shall be the act of the Committee. The members of the
Committee shall act only as a committee, and the individual members shall have
no power as such.
5. OTHER COMMITTEES.
The Board of Directors, by resolution adopted by a majority of the
whole Board, may constitute other committees, which shall in each case consist
of one or more of the Directors and, at the discretion of the Board of
Directors, such officers who are not Directors. The Board of Directors may
designate one or more Directors or officers who are not Directors as alternate
members of any committee who may replace any absent or disqualified member at
any meeting of the committee. Each such committee shall have and may exercise
such powers as the Board of Directors may determine and specify in the
respective resolutions appointing them; provided, however, that (a) unless all
of the members of any committee shall be Directors, such committee shall not
have authority to exercise any of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and (b) if any
committee shall have the power to determine the amounts of the respective fixed
salaries of the officers of the Corporation or any of them, such committee
shall consist of not less than three (3) members and none of its members shall
have any vote in the determination of the amount that shall be paid to him or
her as a fixed salary. A majority of all the members of any such committee may
fix its rules of procedure, determine its action and fix the time and place of
its meetings and specify what notice thereof, if any, shall be given, unless
the Board of Directors shall otherwise by resolution provide.
6. COMMITTEE MINUTES.
The Executive Committee and any other committee shall keep regular
minutes of their proceedings and report the same to the Board of Directors when
required.
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7. ACTION BY COMMITTEES WITHOUT A MEETING.
Any action required or permitted to be taken at a meeting of the
Executive Committee or any other committee of the Board of Directors may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, is signed by all members of the
committee and such consent is filed with the minutes of the proceedings of the
committee.
8. RESIGNATIONS.
Any member of the Executive Committee or any other committee may
resign therefrom at any time by giving written notice of his or her resignation
to the President or the Secretary. Any such resignation shall take effect at
the time specified therein, or if the time when it shall become effective is
not specified therein, it shall take effect immediately upon its receipt by the
President or the Secretary; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
9. VACANCIES.
Any vacancy in the Executive Committee or any other committee shall be
filled by the vote of a majority of the whole Board of Directors.
10. COMPENSATION.
Unless otherwise expressly provided by resolution adopted by the Board
of Directors, no member of the Executive Committee or any other committee shall
receive any compensation for his or her services as a committee member. The
Board of Directors may at any time and from time to time by resolution provide
that committee members shall be paid a fixed sum for attendance at each
committee meeting or a stated salary as a committee member. In addition, the
Board of Directors may at any time and from time to time by resolution provide
that such committee members shall be paid their actual expenses, if any, of
attendance at each committee meeting. Nothing in this section shall be
construed as precluding any committee member from serving the Corporation in
any other capacity and receiving compensation therefor, but the Board of
Directors may by resolution provide that any committee member receiving
compensation for his or her services to the Corporation in any other capacity
shall not receive additional compensation for his or her services as a
committee member.
11. DISSOLUTION OF COMMITTEES; REMOVAL OF COMMITTEE MEMBERS.
This Board of Directors, by resolution adopted by a majority of the
whole Board, may, with or without cause, dissolve the Executive Committee or
any other committee, and, with or without cause, remove any member thereof.
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ARTICLE VI
MISCELLANEOUS
1. EXECUTION OF CONTRACTS.
Except as otherwise required by law or by these Bylaws, any contract
or other instrument may be executed and delivered in the name of the
Corporation and on its behalf by the President or any Vice President. In
addition, the Board of Directors may authorize any other officer of officers or
agent or agents to execute and deliver any contract or other instrument in the
name of the Corporation and on its behalf, and such authority may be general or
confined to specific instances as the Board of Directors may by resolution
determine.
2. ATTESTATION.
Any Vice President, the Secretary, or any Assistant Secretary may
attest the execution of any instrument or document by the President, or any
other duly authorized officer or agent of the Corporation and may affix the
corporate seal, if any, in witness thereof, but neither such attestation nor
the affixing of a corporate seal shall be requisite to the validity of any such
document or instrument.
3. CHECKS, DRAFTS.
All checks, drafts, orders for the payment for money, bills of lading,
warehouse receipts, obligations, bills of exchange and insurance certificates
shall be signed or endorsed (except endorsements for collection for the account
of the Corporation or for deposit to its credit, which shall be governed by the
provisions of Section 4 of this Article VI) by such officer or officers or
agent or agents of the Corporation and in such manner as shall from time to
time be determined by resolution of the Board of Directors.
4. DEPOSITS.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation or otherwise as the Board of
Directors or the President shall direct in general or special accounts at such
banks, trust companies, savings and loan associations, or other depositories as
the Board of Directors may select or as may be selected by any officer or
officers or agent or agents of the Corporation to whom power in that respect
has been delegated by the Board of Directors. For the purpose of deposit and
for the purpose of collection for the account of the Corporation, checks,
drafts and other orders for the payment of money which are payable to the order
of the Corporation may be endorsed, assigned and delivered by any officer or
agent of the Corporation. The Board of Directors may make such special rules
and regulations with respect to such accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
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5. FISCAL YEAR.
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE VII
STOCK
1. CERTIFICATES.
Every holder of stock in the Corporation shall be entitled to have a
certificate signed by or in the name of the Corporation by the President, or a
Vice President and by the Secretary or an Assistant Secretary. The signatures
of such officers upon such certificate may be facsimiles if the certificate is
manually signed by a transfer agent or registered by a registrar, other than
the Corporation itself or one of its employees. If any officer who has signed
or whose facsimile signature has been placed upon a certificate has ceased for
any reason to be such officer prior to issuance of the certificate, the
certificate may be issued with the same effect as if that person were such
officer at the date of issue. All certificates for stock of the Corporation
shall be consecutively numbered, shall state the number of shares represented
thereby and shall otherwise be in such form as shall be determined by the Board
of Directors, subject to such requirements as are imposed by the Nevada General
Corporation Law. The names and addresses of the persons to whom the shares
represented by certificates are issued shall be entered on the stock transfer
books of the Corporation, together with the number of shares and the date of
issue, and in the case of cancellation, the date of cancellation. Certificates
surrendered to the Corporation for transfer shall be canceled, and no new
certificate shall be issued in exchange for such shares until the original
certificate has been canceled; except that in the case of a lost, stolen,
destroyed or mutilated certificate, a new certificate may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
2. TRANSFER OF STOCK.
Transfer of shares of stock of the Corporation shall be made only on
the stock transfer books of the Corporation by the holder of record thereof or
by his or her legal representative or attorney in fact, who shall furnish
proper evidence of authority to transfer to the Secretary, or a transfer clerk
or a transfer agent, and upon surrender of the certificate or certificates for
such shares properly endorsed and payment of all taxes thereon. The person in
whose name shares of stock stand on the books of the Corporation shall be
deemed the owner thereof for all purposes as regards the Corporation.
3. REGULATIONS.
The Board of Directors may make such rules and regulations as it may
deem
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expedient, not inconsistent with these Bylaws, concerning the issue, transfer
and registration of certificates for stock of the Corporation. The Board of
Directors may appoint, or authorize any officer or officers or any committee to
appoint, one or more transfer clerks or one or more transfer clerks or one or
more transfer agents and one or more registrars, and may require all
certificates for stock to bear the signature or signatures of any of them.
4. LOST CERTIFICATES.
The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of the fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against
the Corporation with respect to the certificate alleged to have been lost or
destroyed.
5. REGISTERED STOCKHOLDERS.
The Corporation shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Nevada.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares of stock in the manner
and upon the terms and conditions provided in the Nevada General Corporation
Law.
ARTICLE IX
SEAL
A corporate seal shall not be requisite to the validity of any
instrument executed by or on behalf of the Corporation. Nevertheless, if in any
instance a corporate seal is used, the same shall be in the form of a circle
and shall bear the full name of the Corporation and the year and state of
incorporation, or words and figures of similar import.
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ARTICLE X
INDEMNIFICATION OF DIRECTORS AND OFFICERS
1. GENERAL.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he acted
in good faith and in a matter he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. DERIVATIVE ACTIONS.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including amounts paid in
settlement and attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged by a court of competent jurisdiction after exhaustion of all
appeals therefrom to be liable to the Corporation or for amounts paid in
settlement to the Corporation unless and only to the extent that the court in
which such action or suit was brought or other court of competent jurisdiction
shall determine upon application that, in view of all the circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
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3. INDEMNIFICATION IN CERTAIN CASES.
To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 1 and 2 of this Article X,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith.
4. PROCEDURE.
Any indemnification under Sections 1 and 2 of this Article X (unless
ordered by a court or advanced pursuant to Section 5 of this Article X) shall
be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances. Such determination shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (b) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders.
5. ADVANCES FOR EXPENSES.
Expenses incurred by a director, officer, employee, or agent of the
Corporation in defending a civil or criminal action, suit or proceeding shall
be paid by the Corporation as they are incurred and in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay the amount
if it shall be ultimately determined by a court of competent jurisdiction that
he is not entitled to be indemnified by the Corporation as authorized in this
Article X.
6. RIGHTS NOT-EXCLUSIVE.
The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to the other Sections of this Article X shall not
be deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any law, bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, for either an
action in his official capacity or an action in another capacity while holding
such office, except that indemnification, unless ordered by a court pursuant to
Section 2 of this Article X or for advancement of expenses made pursuant to
Section 5 of this Article X, may not be made to or on behalf of any director or
officer if a final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
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7. INSURANCE.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and liability and expenses incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article X.
8. DEFINITION OF CORPORATION.
For the purposes of this Article X, references to "the Corporation"
include, in addition to the resulting corporation, all constituent corporations
(including any constituent of a constituent) absorbed in consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees and agents so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article X with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
9. OTHER DEFINITIONS.
For purposes of this Article X, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article X.
10. CONTINUATION OF RIGHTS.
The indemnification and advancement of expenses provided by, or
granted pursuant to this Article X shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person. No amendment to or
repeal of this Article X shall apply to or have any effect on, the rights of
any director, officer, employee or agent under this Article X which rights
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come into existence by virtue of acts or omissions of such director, officer,
employee or agent occurring prior to such amendment or repeal.
ARTICLE XI
AMENDMENTS
These Bylaws may be repealed, altered or amended by the affirmative
vote of the holders of a majority of the stock issued and outstanding and
entitled to vote at any meeting of Stockholders or by resolution duly adopted
by the affirmative vote of not less than a majority of the Directors in office
at any annual or regular meeting of the Board of Directors or at any special
meeting of the Board of Directors if notice of the proposed repeal, alteration
or amendment be contained in the notice of such special meeting, and new Bylaws
may be adopted, at any time only by the Board of Directors.
I, THE UNDERSIGNED, being the Secretary of Citadel Communications
Corporation, DO HEREBY CERTIFY the foregoing to be the Bylaws of the
Corporation, as adopted by the Board of Directors on the 21st of August, 1991.
/s/ Donna L. Heffner
------------------------------
Donna L. Heffner, Secretary
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AMENDMENT TO THE
BYLAWS
OF
CITADEL COMMUNICATIONS CORPORATION
I, THE UNDERSIGNED, being the Secretary of Citadel
Communications Corporation, DO HEREBY CERTIFY that the Bylaws of the
Corporation were amended on June 30, 1997 as follows:
The following sentence was added to end of Article VIII,
"Dividends": "The Board of Directors may appoint, or authorize any officer or
officers or any committee to appoint, one or more dividend paying agents."
/s/ Donna L. Heffner
----------------------------
Donna L. Heffner, Secretary
<PAGE> 1
Exhibit 3(ii)(b)
BYLAWS
OF
CITADEL LICENSE, INC.
ARTICLE I
OFFICES
1. Principal Office.
The principal office shall be in the City of Reno, County of Washoe, State
of Nevada.
2. Other Offices.
The Corporation may also have offices at such other places both within and
without the State of Nevada as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
1. Annual Meeting.
The annual meeting of the stockholders shall be held on the second Tuesday
of March of each year, or if that day is a legal holiday, then on the next day
thereafter which is not a legal holiday, or at such other date as the Board of
Directors shall determine, for the purpose of electing Directors and for the
transaction of such other business as may properly come before the meeting. If
the election of Directors is not held on the day designated herein for any
annual meeting of the stockholders, or any adjournment thereof, the Directors
shall cause the election to be held at a special meeting of the stockholders as
soon thereafter as convenient.
2. Special Meetings.
Special meetings of the stockholders may be called for any purpose or
purposes at any time by the Board of Directors or the President, and shall be
called by the President at the request of the holders of not less than one-tenth
(1/10) of all outstanding stock of the Corporation entitled to vote at such
meeting, or otherwise as provided by the Nevada General Corporation Law and
Section 13 of Article II of these Bylaws. Such request shall state the purpose
or purposes of the proposed meeting. Business transacted at any special meeting
of stockholders shall be limited to the purposes stated in the notice.
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3. Place of Meetings.
Annual and special meetings of the stockholders may be held at such time
and place within or without the State of Nevada as shall be stated in the notice
of the meeting, or in a duly executed waiver of notice thereof.
4. Notice of Meeting.
Written notice stating the place, date and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered to each stockholder of record entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting. Notice may be delivered either personally or by certified
or registered mail, postage prepaid, and signed by an officer of the Corporation
at the direction of the person or persons calling the meeting. If mailed,
notice shall be deemed to be delivered when mailed to the stockholders at his or
her address as it appears on the stock transfer books of the Corporation.
Delivery of any such notice to any officer of a corporation or association, or
to any member of a partnership shall constitute delivery of such notice to such
corporation, association or partnership. In the event of the transfer of stock
after delivery or mailing of the notice of and prior to the holding of the
meeting it shall not be necessary to deliver or mail notice of the meeting to
the transferee. Notice need not be given of an adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken, provided that such adjournment is for less than thirty (30) days and
further provided that a new record date is not fixed for the adjourned meeting,
in either of which events, written notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at such meeting. At any
adjourned meeting, any business may be transacted which might have been
transacted at the meeting as originally noticed. A written waiver of notice,
whether given before or after the meeting to which it relates, shall be
equivalent to the giving of notice of such meeting to the stockholder or
stockholders signing such waiver. Attendance of a stockholder at a meeting
shall constitute a waiver of notice of such meeting, except when the stockholder
attends for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
5. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to
notice of and to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or to
receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any other change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix in advance a record date, which shall not be more than sixty
(60) nor less than ten (10) days prior to the date of such meeting or such
action, as the case may be. If the Board of Directors has not fixed a record
date for determining the stockholders entitled to notice of and to vote at a
meeting of stockholders, the record date shall be at close of business on the
day next preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. If the Board of Directors has not fixed a record date for determining the
stockholders entitled to express consent to corporate action in writing without
a meeting, when no
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prior action by the Board of Directors is necessary, the record date shall be
the day on which the first written consent is expressed by any stockholder. If
the Board of Directors has not fixed a record date for determining stockholders
for any other purpose, the record date shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
6. Record of Stockholders.
The Secretary or other officer having charge of the stock transfer books of
the Corporation shall make, or cause to be made, at least ten (10) days before
every meeting of stockholders, a complete record of the stockholders entitled to
vote at a meeting of stockholders or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
7. Quorum and Manner of Acting.
At any meeting of the stockholders, the presence, in person or by proxy, of
the holders of a majority of the outstanding stock entitled to vote shall
constitute a quorum for the transaction of business except as otherwise provided
by the Nevada General Corporation Law or by the Certificate of Incorporation.
All shares represented and entitled to vote on any single subject matter which
may be brought before the meeting shall be counted for quorum purposes. Only
those shares entitled to vote on a particular subject matter shall be counted
for the purpose of voting on that subject matter. Business may be conducted once
a quorum is present and may continue to be conducted until adjournment sine die,
notwithstanding the withdrawal or temporary absence of stockholders leaving less
than a quorum. Except as otherwise provided in the Nevada General Corporation
Law or the Certificate of Incorporation, the affirmative vote of the holders of
a majority of the shares of stock then represented at the meeting and entitled
to vote thereat shall be the act of the stockholders; provided, however, that if
the shares of stock so represented are less than the number required to
constitute a quorum, the affirmative vote must be such as would constitute a
majority if a quorum were present, except that the affirmative vote of the
holders of a majority of the shares of stock then present is sufficient in all
cases to adjourn a meeting.
8. Voting of Shares of Stock.
Except as otherwise provided in the Certificate of Incorporation, each
stockholder shall be entitled to one vote or corresponding fraction thereof for
each share of stock or fraction thereof standing in his, her or its name on the
books of the Corporation on the record date. A stockholder may vote either in
person or by valid proxy, as defined in Section 12 of this Article II, executed
in
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writing by the stockholder or by his, her or its duly authorized attorney in
fact. Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor counted for quorum purposes;
provided, however, that the foregoing shall not limit the right of any
corporation to vote stock, including but not limited to its own stock, when held
by it in a fiduciary capacity. Shares of stock standing in the name of another
corporation may be voted by such officer, agent or proxy as the bylaws of such
other corporation may prescribe or, in the absence of such provision, as the
Board of Directors of such other corporation may determine. Unless demanded by
a stockholder present in person or by proxy at any meeting of the stockholders
and entitled to vote thereat, or unless so directed by the chairman of the
meeting, the vote thereat on any question need not be by ballot. If such demand
or direction is made, a vote by ballot shall be taken, and each ballot shall be
signed by the stockholder voting, or by his or her proxy, and shall state the
number of shares voted.
9. Organization.
At each meeting of the stockholders, the President, or, if he or she is
absent therefrom, another officer of the Corporation chosen as chairman of such
meeting by stockholders holding a majority of the shares present in person or by
proxy and entitled to vote thereat, or, if all the officers of the Corporation
are absent therefrom, a stockholder of record so chosen, shall act as chairman
of the meeting and preside thereat. The Secretary, or, if he or she is absent
from the meeting or is required pursuant to the provisions of this Section 9 to
act as chairman of such meeting, the person (who shall be an Assistant
Secretary, if any and if present) whom the chairman of the meeting shall appoint
shall act as secretary of the meeting and keep the minutes thereof.
10. Order of Business.
The order of business at each meeting of the stockholders shall be
determined by the chairman of such meeting, but the order of business may be
changed by the vote of stockholders holding a majority of the shares present in
person or by proxy at such meeting and entitled to vote thereat.
11. Voting.
At all meetings of stockholders, each stockholder entitled to vote thereat
shall have the right to vote, in person or by proxy, and shall have, for each
share of stock registered in his, her or its name, the number of votes provided
by the Certificate of Incorporation in respect of stock of such class.
Stockholders shall not have cumulative voting rights with respect to the
election of Directors.
12. Voting by Proxy.
At any meeting of the stockholders, any stockholder may be represented and
vote by a proxy or proxies appointed by an instrument in writing. In the event
that any such instrument in writing shall designate two (2) or more persons to
act as proxies, a majority of such persons present at the meeting, or, if only
one shall be present, then that one shall have and may exercise all of the
powers
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conferred by such written instrument upon all of the persons so designated
unless the instrument shall otherwise provide. No such proxy shall be valid
after the expiration of six (6) months from the date of its execution, unless
coupled with an interest, or unless the person executing it specifies therein
the length of time for which it is to continue in force, which in no case shall
exceed seven (7) years from the date of it execution. Subject to the above, any
proxy duly executed is not revoked and continues in full force and effect until
an instrument revoking it or a duly executed proxy bearing a later date is filed
with the Secretary of the Corporation.
13. Action By Stockholders Without a Meeting.
Any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting, without notice and without a vote,
if a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding stock having not less than the number of votes that would
have been necessary to authorize such action at a meeting at which all shares
entitled to vote were present and voted. Such written consent shall not be
valid unless it is (a) signed by the stockholder, (b) dated, as to the date of
such stockholder's signature, and (c) delivered to the Corporation personally or
by certified or registered mail, return receipt requested, to the Corporation's
principal place of business, principal office in the State of Nevada or officer
or agent who has custody of the book in which the minutes of meetings of
stockholders are recorded, within sixty (60) days after the earliest date that a
stockholder signed the written consent. Prompt notice of the taking of any such
action shall be given to any such stockholders entitled to vote who have not so
consented in writing.
ARTICLE III
BOARD OF DIRECTORS
1. General Powers.
The business and affairs of the Corporation shall be managed by the Board
of Directors.
2. Number, Term of Office and Qualifications.
Subject to the requirements of the Nevada General Corporation Law or the
Certificate of Incorporation, the Board of Directors may from time to time
determine the number of Directors. Until the Board of Directors shall otherwise
determine, the number of Directors shall be that number comprising the initial
Board of Directors as set forth in the Certificate of Incorporation. Each
director shall hold office until his or her successor is duly elected or until
his or her earlier death or resignation or removal in the manner hereinafter
provided. Directors need not be stockholders.
3. Place of Meeting.
The Board of Directors may hold its meetings, either within or without the
State of Nevada, at such place or places as it may from time to time by
resolution determine or as shall be designated
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in any notices or waivers of notice thereof. Any such meeting, whether regular
or special, may be held by conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting in such manner shall constitute
presence in person at such meeting. Each person participating in a telephonic
meeting shall sign the minutes thereof, which may be signed in counterparts.
4. Annual Meetings.
As soon as practicable after each annual election of Directors and on the
same day, the Board of Directors shall meet for the purpose of organization and
the transaction of other business at the place where regular meetings of the
Board of Directors are held, and no notice of such meeting shall be necessary in
order to legally hold the meeting, provided that a quorum is present. If such
meeting is not held as provided above, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for a
special meeting of the Board of Directors, or in the event of waiver of notice
as specified in the written waiver of notice.
5. Regular Meetings.
Regular meetings of the Board of Directors may be held without notice at
such times as the Board of Directors shall from time to time by resolution
determine.
6. Special Meetings; Notice.
Special meetings of the Board of Directors shall be held, either within or
without the State of Nevada, whenever called by the President or a majority of
the Directors at the time in office. Notice shall be given, in the manner
hereinafter provided, of each such special meeting, which notice shall state the
time and place of such meeting, but need not state the purposes thereof. Except
as otherwise provided in Section 9 of this Article III, notice of each such
meeting shall be mailed to each Director, addressed to him or her at his or her
residence or usual place of business, at least two (2) days before the day on
which such meeting is to be held, or shall be sent addressed to him or her at
such place by telegraph, cable, wireless or other form of recorded communication
or delivered personally or by telephone not later than the day before the day on
which such meeting is to be held. A written waiver of notice, whether given
before or after the meeting to which it relates, shall be equivalent to the
giving of notice of such meeting to the Director or Directors signing such
waiver. Attendance of a Director at a special meeting of the Board of Directors
shall constitute a waiver of notice of such meeting, except when he or she
attends the meeting for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened.
7. Quorum and Manner of Acting.
A majority of the whole Board of Directors shall be present in person at any
meeting of the Board of Directors in order to constitute a quorum for the
transaction of business at such meeting, and except as otherwise specified in
these Bylaws, and except also as otherwise expressly provided by the Nevada
General Corporation Law the vote of a majority of the Directors present at any
such meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of
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a quorum from any such meeting, a majority of the Directors present thereat may
adjourn such meeting from time to time to another time or place, without notice
other than announcement at the meeting, until a quorum shall be present thereat.
The Directors shall act only as a Board of Directors and the individual
Directors shall have no power as such.
8. Organization.
At each meeting of the Board of Directors, the President, or if he or she
is absent therefrom, a Director chosen by a majority of the Directors present
thereat, shall act as chairman of such meeting and preside thereat. The
Secretary, or if he or she is absent, the person (who shall be an Assistant
Secretary, if any and if present) whom the chairman of such meeting shall
appoint, shall act as Secretary of such meeting and keep the minutes thereof.
9. Action by Directors Without a Meeting.
Any action required or permitted to be taken at a meeting of the Board of
Directors may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, is signed by
all Directors and such consent is filed with the minutes of the proceedings of
the Board of Directors.
10. Resignations.
Any Director may resign at any time by giving written notice of his or her
resignation to the Corporation. Any such resignation shall take effect at the
time specified therein, or, if the time when it shall become effective is not
specified therein, it shall take effect immediately upon its receipt by the
President or the Secretary; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
11. Removal of Directors.
Directors may be removed, with or without cause, as provided from time to
time by the Nevada General Corporation Law as then in effect.
12. Vacancies.
Vacancies and newly created directorships resulting from any increase in
the authorized number of Directors elected by all of the stockholders having the
right to vote as a single class may be filled by a majority of the Directors
then in office, although less than a quorum, or by a sole remaining Director. If
at any time, by reason of death or resignation or other cause, the Corporation
has no Directors in office, then any officer or any stockholder or an executor,
administrator, trustee or guardian of a stockholder, may call a special meeting
of stockholders for the purpose of filling vacancies in the Board of Directors.
If one or more Directors shall resign from the Board of Directors, effective at
a future date, a majority of the Directors then in office, including those who
have so resigned, shall have the power to fill such vacancy or vacancies, the
vote thereon to take
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effect when such resignation or resignations shall become effective, and each
Director so chosen shall hold office as provided in this section in the filling
of other vacancies.
13. Compensation.
Unless otherwise expressly provided by resolution adopted by the Board of
Directors, no Director shall receive any compensation for his or her services as
a Director. The Board of Directors may at any time and from time to time by
resolution provide that the Directors shall be paid a fixed sum for attendance
at each meeting of the Board of Directors or a stated salary as Director. In
addition, the Board of Directors may at any time and from time to time by
resolution provide that Directors shall be paid their actual expenses, if any,
of attendance at each meeting of the Board of Directors. Nothing in this
section shall be construed as precluding any Director from serving the
Corporation in any other capacity and receiving compensation therefor, but the
Board of Directors may by resolution provide that any Director receiving
compensation for his or her services to the Corporation in any other capacity
shall not receive additional compensation for his or her services as a Director.
ARTICLE IV
OFFICERS
1. Number.
The Corporation shall have the following officers: a President, a
Secretary and a Treasurer. At the discretion of the Board of Directors, the
Corporation may also have a Chairman of the Board, one or more Vice Presidents,
one or more Assistant Vice Presidents, one or more Assistant Secretaries and one
or more Assistant Treasurers. Any two (2) or more offices may be held by the
same person.
2. Election and Term of Office.
The officers of the Corporation shall be elected annually by the Board of
Directors. Each such officer shall hold office until his or her successor is
duly elected or until his or her earlier death or resignation or removal in the
manner hereinafter provided.
3. Agents.
In addition to the officers mentioned in Section 1 of this Article IV, the
Board of Directors may appoint such agents as the Board of Directors may deem
necessary or advisable, each of which agents shall have such authority and
perform such duties as are provided in these Bylaws or as the Board of Directors
may from time to time determine. The Board of Directors may delegate to any
officer or to any committee the power to appoint or remove any such agents.
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4. Removal.
Any officer may be removed, with or without cause, at any time by
resolution adopted by a majority of the whole Board of Directors.
5. Resignations.
Any officer may resign at any time by giving written notice of his or her
resignation to the Board of Directors, the President or the Secretary. Any such
resignation shall take effect at the times specified therein, or, if the time
when it shall become effective is not specified therein, it shall take effect
immediately upon its receipt by the Board of Directors, the President or the
Secretary; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
6. Vacancies.
A vacancy in any office due to death, resignation, removal,
disqualification or any other cause may be filled for the unexpired portion of
the term thereof by the Board of Directors.
7. Chairman of the Board.
The Board of Directors may elect a Chairman to serve as a general executive
officer of the Corporation, and, if specifically designated as such by the
Board, as the chief executive officer of the Corporation. If elected, the
Chairman will preside at all meetings of the Board of Directors and be vested
with such other powers and duties as the Board may from time to time delegate to
him or her.
8. President or Vice Presidents.
Unless otherwise specified by resolution of the Board of Directors, the
President will be the chief executive officer of the Corporation. The President
will supervise the business and affairs of the Corporation and the performance
by all of its other officers of their respective duties, subject to the control
of the Board of Directors (and of its Chairman, if the Chairman has been
specifically designated as chief executive officer of the corporation). One or
more Vice Presidents shall be elected by the Board of Directors to perform such
duties as may be designated by the Board or be assigned or delegated to them by
the chief executive officer. Any one of the Vice Presidents as authorized by
the Board will be vested with all of the powers and charged with all of the
duties of the President in the event of his or her absence or inability to act.
Except as may otherwise be specifically provided in a resolution of the Board of
Directors, the President or any Vice President will be a proper officer to sign
on behalf of the Corporation any deed, bill of sale, assignment, option,
mortgage, pledge, note, bond, evidence of indebtedness, application, consent,
(to service of process or otherwise), agreement, indenture or other instrument
of any significant importance to the Corporation. The President or any Vice
President may represent the Corporation at any meeting of the shareholders, and
may vote this Corporation's shares in such other corporation in person or by
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proxy appointed by him or her, provided that the Board of Directors may from
time to time confer the foregoing authority upon any other person or persons.
9. Secretary.
The Secretary shall: (a) record all the proceedings of the meetings of the
stockholders, the Board of Directors and the Executive Committee, if any, in one
or more books kept for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be the
custodian of all contracts, deeds, documents, all other indicia of title to
properties owned by the Corporation and of its other corporate records (except
accounting records) and of the corporate seal, if any, and affix such seal to
all documents the execution of which on behalf of the Corporation under its seal
is duly authorized; (d) sign, with the President or a Vice President,
certificates for stock of the Corporation; (e) have charge, directly or through
the transfer clerk or transfer clerks, transfer agent or transfer agents and
registrar or registrars appointed as provided in Section 3 of Article VII of
these Bylaws, of the issue, transfer and registration of certificates for stock
of the Corporation and of the records thereof, such records to be kept in such
manner as to show at any time the amount of the stock of the Corporation issued
and outstanding, the manner in which and the time when such stock was paid for,
the names, alphabetically arranged, and the addresses of the holders of record
thereof, the number of shares held by each, and the time when each became a
holder of record; (f) upon request, exhibit or cause to be exhibited at all
reasonable times to any Director such records of the issue, transfer and
registration of the certificates for stock of the Corporation; (g) see that the
books, reports, statements, certificates and all other documents and records
required by law are properly kept and filed; and (h) see that the duties
prescribed by Section 6 of Article II of these Bylaws are performed. In
general, the Secretary shall perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him or
her by the President or the Board of Directors.
10. Treasurer.
If required by the Board of Directors, the Treasurer shall give a bond for
the faithful discharge of his or her duties in such sum and with such surety or
sureties as the Board of Directors shall determine. The Treasurer shall: (a)
have charge and custody of, and be responsible for, all funds, securities, notes
and valuable effects of the Corporation; (b) receive and give receipt for moneys
due and payable to the Corporation from any sources whatsoever; (c) deposit all
such moneys to the credit of the Corporation or otherwise as the Board of
Directors or the President shall direct in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of Article
VI of these Bylaws; (d) cause such funds to be disbursed by checks or drafts on
the authorized depositories of the Corporation signed as provided in Article VI
of these Bylaws; (e) be responsible for the accuracy of the amounts of, and
cause to be preserved proper vouchers for, all moneys so disbursed; (f) have the
right to require from time to time reports or statements giving such information
as he or she may desire with respect to any and all financial transactions of
the Corporation from the officers or agents transacting the same; (g) render to
the Chairman of the Board, the President or the Board of Directors, whenever
they, respectively, shall request him or her so to do, an account of the
financial condition of the Corporation and of all his or her transactions as
Treasurer; and (h) upon request, exhibit or cause to be exhibited at all
reasonable times the cash
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books and other records to the President or any of the Directors of the
Corporation. In general, the Treasurer shall perform all duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him or her by the President or the Board of Directors.
11. Assistant Officers.
Any persons elected as assistant officers shall assist in the performance
of the duties of the designated office and such other duties as shall be
assigned to them by any Vice President, the Secretary or the Treasurer, as the
case may be, or by the Board of Directors or the President.
12. Compensation.
The salaries of all officers and agents of the Corporation shall be fixed
by the Board of Directors.
ARTICLE V
COMMITTEES
1. Executive Committee; How Constituted and Powers.
The Board of Directors, by resolution adopted by a majority of the whole
Board of Directors, may designate one or more of the Directors then in office,
to constitute an Executive Committee, which shall have and may exercise between
meetings of the Board of Directors all the delegable powers of the Board of
Directors to the extent not expressly prohibited by the Nevada General
Corporation Law or by resolution of the Board of Directors. The Board of
Directors may designate one or more Directors as alternate members of the
Committee who may replace any absent or disqualified member at any meeting of
the Committee. Each member of the Executive Committee shall continue to be a
member thereof only during the pleasure of a majority of the whole Board of
Directors.
2. Executive Committee; Organization.
The President shall act as chairman at all meetings of the Executive
Committee and the Secretary shall act as secretary thereof. In case of the
absence from any meeting of the President or the Secretary, the Committee may
appoint a chairman or secretary, as the case may be, of the meeting.
3. Executive Committee; Meetings.
Regular meetings of the Executive Committee may be held without notice on
such days and at such places as shall be fixed by resolution adopted by a
majority of the Committee and communicated to all its members. Special meetings
of the Committee shall be held whenever called by the President or a majority of
the members thereof then in office. Notice of each special meeting
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of the Committee shall be given in the manner provided in Section 6 of Article
III of these Bylaws for special meetings of the Board of Directors. Notice of
any such meeting of the Executive Committee, however, need not be given to any
member of the Committee if waived by him or her in writing or by telegraph,
cable, wireless or other form of recorded communication either before or after
the meeting, or if he or she is present at such meeting, except when he or she
attends for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Subject to the
provisions of this Article V, the Committee, by resolution adopted by a majority
of the whole Committee, shall fix its own rules of procedure and it shall keep a
record of its proceedings and report them to the Board of Directors at the next
regular meeting thereof after such proceedings have been taken. All such
proceedings shall be subject to revision or alteration by the Board of
Directors; provided, however, that third parties shall not be prejudiced by any
such revision or alteration.
4. Executive Committee; Quorum and Manner of Acting.
A majority of the Executive Committee shall constitute a quorum for the
transaction of business, and, except as specified in Section 3 of this Article
V, the act of a majority of those present at a meeting thereof at which a quorum
is present shall be the act of the Committee. The members of the Committee
shall act only as a committee, and the individual members shall have no power as
such.
5. Other Committees.
The Board of Directors, by resolution adopted by a majority of the whole
Board, may constitute other committees, which shall in each case consist of one
or more of the Directors and, at the discretion of the Board of Directors, such
officers who are not Directors. The Board of Directors may designate one or
more Directors or officers who are not Directors as alternate members of any
committee who may replace any absent or disqualified member at any meeting of
the committee. Each such committee shall have and may exercise such powers as
the Board of Directors may determine and specify in the respective resolutions
appointing them; provided, however, that (a) unless all of the members of any
committee shall be Directors, such committee shall not have authority to
exercise any of the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and (b) if any committee shall have the
power to determine the amounts of the respective fixed salaries of the officers
of the Corporation or any of them, such committee shall consist of not less than
three (3) members and none of its members shall have any vote in the
determination of the amount that shall be paid to him or her as a fixed salary.
A majority of all the members of any such committee may fix its rules of
procedure, determine its action and fix the time and place of its meetings and
specify what notice thereof, if any, shall be given, unless the Board of
Directors shall otherwise by resolution provide.
6. Committee Minutes.
The Executive Committee and any other committee shall keep regular minutes
of their proceedings and report the same to the Board of Directors when
required.
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7. Action by Committees Without a Meeting.
Any action required or permitted to be taken at a meeting of the Executive
Committee or any other committee of the Board of Directors may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, is signed by all members of the committee and
such consent is filed with the minutes of the proceedings of the committee.
8. Resignations.
Any member of the Executive Committee or any other committee may resign
therefrom at any time by giving written notice of his or her resignation to the
President or the Secretary. Any such resignation shall take effect at the time
specified therein, or if the time when it shall become effective is not
specified therein, it shall take effect immediately upon its receipt by the
President or the Secretary; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
9. Vacancies.
Any vacancy in the Executive Committee or any other committee shall be
filled by the vote of a majority of the whole Board of Directors.
10. Compensation.
Unless otherwise expressly provided by resolution adopted by the Board of
Directors, no member of the Executive Committee or any other committee shall
receive any compensation for his or her services as a committee member. The
Board of Directors may at any time and from time to time by resolution provide
that committee members shall be paid a fixed sum for attendance at each
committee meeting or a stated salary as a committee member. In addition, the
Board of Directors may at any time and from time to time by resolution provide
that such committee members shall be paid their actual expenses, if any, of
attendance at each committee meeting. Nothing in this section shall be
construed as precluding any committee member from serving the Corporation in any
other capacity and receiving compensation therefor, but the Board of Directors
may by resolution provide that any committee member receiving compensation for
his or her services to the Corporation in any other capacity shall not receive
additional compensation for his or her services as a committee member.
11. Dissolution of Committees; Removal of Committee Members.
The Board of Directors, by resolution adopted by a majority of the whole
Board, may, with or without cause, dissolve the Executive Committee or any other
committee, and, with or without cause, remove any member thereof.
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ARTICLE VI
MISCELLANEOUS
1. Execution of Contracts.
Except as otherwise required by law or by these Bylaws, any contract or
other instrument may be executed and delivered in the name of the Corporation
and on its behalf by the President or any Vice President. In addition, the
Board of Directors may authorize any other officer of officers or agent or
agents to execute and deliver any contract or other instrument in the name of
the Corporation and on its behalf, and such authority may be general or confined
to specific instances as the Board of Directors may by resolution determine.
2. Attestation.
Any Vice President, the Secretary, or any Assistant Secretary may attest
the execution of any instrument or document by the President, or any other duly
authorized officer or agent of the Corporation and may affix the corporate seal,
if any, in witness thereof, but neither such attestation nor the affixing of a
corporate seal shall be requisite to the validity of any such document or
instrument.
3. Checks Drafts.
All checks, drafts, orders for the payment of money, bills of lading,
warehouse receipts, obligations, bills of exchange and insurance certificates
shall be signed or endorsed (except endorsements for collection for the account
of the Corporation or for deposit to its credit, which shall be governed by the
provisions of Section 4 of this Article VI) by such officer or officers or agent
or agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
4. Deposits.
All funds of the Corporation not otherwise employed shall be deposited from
time to time to the credit of the Corporation or otherwise as the Board of
Directors or the President shall direct in general or special accounts at such
banks, trust companies, savings and loan associations, or other depositories as
the Board of Directors may select or as may be selected by any officer or
officers or agent or agents of the Corporation to whom power in that respect has
been delegated by the Board of Directors. For the purpose of deposit and for
the purpose of collection for the account of the Corporation, checks, drafts and
other orders for the payment of money which are payable to the order of the
Corporation may be endorsed, assigned and delivered by any officer or agent of
the Corporation. The Board of Directors may make such special rules and
regulations with respect to such accounts, not inconsistent with the provisions
of these Bylaws, as it may deem expedient.
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5. Fiscal Year.
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE VII
STOCK
1. Certificates.
Every holder of stock in the Corporation shall be entitled to have a
certificate signed by or in the name of the Corporation by the President, or a
Vice President and by the Secretary or an Assistant Secretary. The signatures
of such officers upon such certificate may be facsimiles if the certificate is
manually signed by a transfer agent or registered by a registrar, other than the
Corporation itself or one of its employees. If any officer who has signed or
whose facsimile signature has been placed upon a certificate has ceased for any
reason to be such officer prior to issuance of the certificate, the certificate
may be issued with the same effect as if that person were such officer at the
date of issue. All certificates for stock of the Corporation shall be
consecutively numbered, shall state the number of shares represented thereby and
shall otherwise be in such form as shall be determined by the Board of
Directors, subject to such requirements as are imposed by the Nevada General
Corporation Law. The names and addresses of the persons to whom the shares
represented by certificates are issued shall be entered on the stock transfer
books of the Corporation, together with the number of shares and the date of
issue, and in the case of cancellation, the date of cancellation. Certificates
surrendered to the Corporation for transfer shall be canceled, and no new
certificate shall be issued in exchange for such shares until the original
certificate has been canceled; except that in the case of a lost, stolen,
destroyed or mutilated certificate, a new certificate may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
2. Transfer of Stock.
Transfers of shares of stock of the Corporation shall be made only on the
stock transfer books of the Corporation by the holder of record thereof or by
his or her legal representative or attorney in fact, who shall furnish proper
evidence of authority to transfer to the Secretary, or a transfer clerk or a
transfer agent, and upon surrender of the certificate or certificates for such
shares properly endorsed and payment of all taxes thereon. The person in whose
name shares of stock stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
3. Regulations.
The Board of Directors may make such rules and regulations as it may deem
expedient, not inconsistent with these Bylaws, concerning the issue, transfer
and registration of certificates--for stock of the Corporation. The Board of
Directors may appoint, or authorize any officer or officers or any committee to
appoint, one or more transfer clerks or one or more transfer agents and one or
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more registrars, and may require all certificates for stock to bear the
signature or signatures of any of them.
4. Lost Certificates.
The Board of Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of the fact by the person claiming the certificate of stock to be lost
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost or destroyed.
5. Registered Stockholders.
The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Nevada.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares of stock in the manner and upon the
terms and conditions provided in the Certificate of Incorporation and Nevada
General Corporation Law.
ARTICLE IX
SEAL
A corporate seal shall not be requisite to the validity of any instrument
executed by or on behalf of the Corporation. Nevertheless, if in any instance a
corporate seal is used, the same shall be in the form of a circle and shall bear
the full name of the Corporation and the year and state of incorporation, or
words and figures of similar import.
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ARTICLE X
INDEMNIFICATION OF DIRECTORS AND OFFICERS
1. General.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. Derivative Actions.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including amounts paid in
settlement and attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged by a court of competent jurisdiction after exhaustion of all
appeals therefrom to be liable to the Corporation or for amounts paid in
settlement to the Corporation unless and only to the extent that the court in
which such action or suit was brought or other court of competent jurisdiction
shall determine upon application that, in view of all the circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
3. Indemnification in Certain Cases.
To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in
17
<PAGE> 18
Sections 1 and 2 of this Article X, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
4. Procedure.
Any indemnification under Sections 1 and 2 of this Article X (unless
ordered by a court or advanced pursuant to Section 5 of this Article X) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances. Such determination shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (b) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders.
5. Advances for Expenses.
Expenses incurred by a director, officer, employee, or agent of the
Corporation in defending a civil or criminal action, suit or proceeding shall
be paid by the Corporation as they are incurred and in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay the
amount if it shall be ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the Corporation as
authorized in this Article X.
6. Rights Not-Exclusive.
The indemnification and advancement of expenses authorized in or ordered by
a court pursuant to the other Sections of this Article X shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding such
office, except that indemnification, unless ordered by a court pursuant to
Section 2 of this Article X or for advancement of expenses made pursuant to
Section 5 of this Article X, may not be made to or on behalf of any director or
officer if a final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was material
to the cause of action.
7. Insurance.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and liability and expenses incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article X.
18
<PAGE> 19
8. Definition of Corporation.
For the purposes of this Article X, references to "the Corporation"
include, in addition to the resulting corporation, all constituent corporations
(including any constituent of a constituent) absorbed in consolidation or merger
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees and agents so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article X with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
9. Other Definitions.
For purposes of this Article X, references to "other enterprises" shall
include employee benefit plans; references to fines shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; such a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article X.
10. Continuation of Rights.
The indemnification and advancement of expenses provided by, or granted
pursuant to this Article X shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person. No amendment to or repeal
of this Article X shall apply to or have any effect on, the rights of any
director, officer, employee or agent under this Article X which rights come into
existence by virtue of acts or omissions of such director, officer, employee or
agent occurring prior to such amendment or repeal.
ARTICLE XI
AMENDMENTS
These Bylaws may be repealed, altered or amended by the affirmative vote of
the holders of a majority of the stock issued and outstanding and entitled to
vote at any meeting of Stockholders or by resolution duly adopted by the
affirmative vote of not less than a majority of the Directors in office at any
annual or regular meeting of the Board of Directors or at any special meeting of
the
19
<PAGE> 20
Board of Directors if notice of the proposed repeal, alteration or amendment
be contained in the notice of such special meeting, and new Bylaws may be
adopted, at any time only by the Board of Directors.
I, THE UNDERSIGNED, being the Secretary of Citadel License, Inc., DO HEREBY
CERTIFY the foregoing to be the Bylaws of the Corporation, as adopted by the
Board of Directors on the 6th day of September, 1996.
/s/ Donna L. Heffner
----------------------------
Donna L. Heffner, Secretary
20
<PAGE> 1
Exhibit 4.1
CITADEL BROADCASTING COMPANY,
Issuer
CITADEL LICENSE, INC.,
Guarantor
and
THE BANK OF NEW YORK,
Trustee
--------------------
INDENTURE
Dated as of July 1, 1997
---------------------
$101,000,000
10-1/4% Senior Subordinated Notes due 2007
10-1/4% Series B Senior Subordinated Notes due 2007
- --------------------------------------------------------------------------------
<PAGE> 2
CITADEL BROADCASTING COMPANY
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT
OF 1939 AND INDENTURE, DATED AS OF JULY 1, 1997
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C>
Section 310(a)(1) .............................................................. 608
(a)(2) .............................................................. 608
(b) .............................................................. 609
Section 312(a) .............................................................. 701
(c) .............................................................. 702
Section 313(a) .............................................................. 703
(c) .............................................................. 703
Section 314(a)(4) .............................................................. 1010(a)
(c)(1) .............................................................. 102
(c)(2) .............................................................. 102
(e) .............................................................. 102
Section315(a) .............................................................. 601(a)
(b) .............................................................. 602
(c) .............................................................. 601(b)
(d) .............................................................. 601(c), 603
316(a)(last sentence) .............................................................. 101 ("Outstanding")
(a)(1)(A) .............................................................. 502, 512
(a)(1)(B) .............................................................. 513
(b) .............................................................. 508
(c) .............................................................. 104(d)
Section 317(a)(1) .............................................................. 503
(a)(2) .............................................................. 504
(b) .............................................................. 1003
Section 318(a) .............................................................. 111
</TABLE>
- --------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PARTIES...........................................................................................................1
RECITALS OF THE COMPANY...........................................................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions................................................................................... 1
Acquired Debt........................................................................ 2
Act ............................................................................ 2
Affiliate............................................................................ 2
Agent ............................................................................ 3
Asset Sale........................................................................... 3
Asset Sale Offer..................................................................... 3
Asset Swap........................................................................... 3
Authenticating Agent................................................................. 3
Bankruptcy Law....................................................................... 3
Banks ............................................................................ 4
Board of Directors................................................................... 4
Board Resolution..................................................................... 4
Business Day......................................................................... 4
Capital Stock........................................................................ 4
Capitalized Lease Obligation......................................................... 4
Change of Control.................................................................... 4
Change of Control Offer.............................................................. 5
Change of Control Payment............................................................ 5
Change of Control Purchase Date...................................................... 5
Citadel Communications............................................................... 5
Closing Date......................................................................... 5
Commission........................................................................... 5
Company ............................................................................ 5
Company Request or Company Order..................................................... 5
Consolidated Adjusted Net Income..................................................... 5
Consolidated Cash Flow............................................................... 6
Consolidated Cash Flow Ratio......................................................... 7
- --------
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE> 4
ii
<TABLE>
<CAPTION>
PAGE
<S> <C>
Consolidated Fixed Charges........................................................... 7
Corporate Trust Office............................................................... 7
Credit Facility...................................................................... 7
Credit Facility Agent................................................................ 7
Custodian............................................................................ 8
Debt ............................................................................ 8
Default ............................................................................ 8
Defaulted Interest................................................................... 8
Depositary........................................................................... 8
Disinterested Director............................................................... 8
Disqualified Stock................................................................... 9
Event of Default..................................................................... 9
Excess Proceeds...................................................................... 9
Exchange Act......................................................................... 9
FCC ............................................................................ 9
Generally Accepted Accounting Principles or GAAP..................................... 9
guarantee............................................................................ 9
Hedging Obligations.................................................................. 10
Holder ............................................................................ 10
Indenture............................................................................ 10
Indenture Obligations................................................................ 10
Initial Notes........................................................................ 10
Initial Purchasers................................................................... 10
Interest Payment Date................................................................ 10
Investment........................................................................... 10
Legal Defeasance..................................................................... 11
License Subsidiary................................................................... 11
Lien ............................................................................ 11
Net Cash Proceeds.................................................................... 11
New Notes............................................................................ 11
Note Register and Note Registrar..................................................... 11
Notes ............................................................................ 11
Notes Exchange Offer................................................................. 12
Notes Exchange Offer Registration Statement.......................................... 12
Notes Registration Rights Agreement.................................................. 12
Notes Shelf Registration Statement................................................... 12
Offered Price........................................................................ 12
Offering Memorandum.................................................................. 12
Officers' Certificate................................................................ 12
Opinion of Counsel................................................................... 12
</TABLE>
<PAGE> 5
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<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Outstanding.......................................................................... 12
Pari Passu Debt...................................................................... 13
Paying Agent......................................................................... 13
Permitted Debt....................................................................... 13
Permitted Investments................................................................ 13
Person ............................................................................ 14
Predecessor Note..................................................................... 14
Public Equity Offering............................................................... 15
QIB ............................................................................ 15
Qualified Equity Interest............................................................ 15
Qualified Stock...................................................................... 15
Redemption Date...................................................................... 15
Redemption Price..................................................................... 15
Regular Record Date.................................................................. 15
Responsible Officer.................................................................. 15
Restricted Subsidiary................................................................ 15
Rule 144A............................................................................ 15
Securities Act....................................................................... 16
Senior Debt.......................................................................... 16
Significant Subsidiary............................................................... 16
Special Record Date.................................................................. 16
Specified Senior Debt................................................................ 16
Stated Maturity...................................................................... 16
Subordinated Debt.................................................................... 17
Subsidiary........................................................................... 17
Subsidiary Guarantor Senior Debt..................................................... 17
Subsidiary Notes Guarantee........................................................... 17
Subsidiary Notes Guarantor........................................................... 17
Trust Indenture Act or TIA........................................................... 17
Trustee ............................................................................ 18
Unrestricted Subsidiary.............................................................. 18
U.S. Government Obligations.......................................................... 18
Voting Stock......................................................................... 18
Voting Trust Agreement............................................................... 18
Weighted Average Life................................................................ 18
Wholly Owned Restricted Subsidiary................................................... 19
SECTION 102. Compliance Certificates and Opinions.......................................................... 19
SECTION 103. Form of Documents Delivered to Trustee........................................................ 19
SECTION 104. Acts of Holders............................................................................... 20
</TABLE>
<PAGE> 6
iv
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 105. Notices, Etc., to Trustee, the Company and Subsidiary Notes
Guarantors........................................................................... 21
SECTION 106. Notice to Holders; Waiver..................................................................... 22
SECTION 107. Effect of Headings and Table of Contents...................................................... 22
SECTION 108. Successors and Assigns........................................................................ 23
SECTION 109. Separability Clause........................................................................... 23
SECTION 110. Benefits of Indenture......................................................................... 23
SECTION 111. Governing Law................................................................................. 23
SECTION 112. Legal Holidays................................................................................ 23
SECTION 113. No Personal Liability of Directors, Officers, Employees, Stockholders
or Incorporators..................................................................... 24
SECTION 114. Counterparts.................................................................................. 24
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally............................................................................... 24
SECTION 202. Restrictive Legends........................................................................... 25
SECTION 203. [INTENTIONALLY OMITTED]....................................................................... 27
SECTION 204. Form of Face of Note.......................................................................... 28
SECTION 205. Form of Reverse of Note....................................................................... 30
SECTION 206. Form of Trustee's Certificate of Authentication............................................... 38
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms............................................................................... 39
SECTION 302. Denominations................................................................................. 40
SECTION 303. Execution, Authentication, Delivery and Dating................................................ 40
SECTION 304. Temporary Notes............................................................................... 41
SECTION 305. Registration, Registration of Transfer and Exchange........................................... 42
SECTION 306. Book-Entry Provisions for the Global Note..................................................... 43
SECTION 307. Special Transfer Provisions................................................................... 44
SECTION 308. Form of Certificate to Be Delivered in Connection with Transfers to
Non-QIB Institutional Accredited Investors........................................... 47
SECTION 309. [INTENTIONALLY OMITTED]....................................................................... 49
SECTION 310. Mutilated, Destroyed, Lost and Stolen Notes................................................... 49
SECTION 311. Payment of Interest; Interest Rights Preserved................................................ 50
</TABLE>
<PAGE> 7
v
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 312. Persons Deemed Owners......................................................................... 51
SECTION 313. Cancellation.................................................................................. 51
SECTION 314. Computation of Interest....................................................................... 52
SECTION 315. CUSIP Numbers................................................................................. 52
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture....................................................... 52
SECTION 402. Application of Trust Money.................................................................... 53
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default............................................................................. 54
SECTION 502. Acceleration of Maturity; Rescission and Annulment............................................ 55
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee............................... 56
SECTION 504. Trustee May File Proofs of Claim.............................................................. 57
SECTION 505. Trustee May Enforce Claims Without Possession of Notes........................................ 58
SECTION 506. Application of Money Collected................................................................ 58
SECTION 507. Limitation on Suits........................................................................... 59
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest............................................................................. 60
SECTION 509. Restoration of Rights and Remedies............................................................ 60
SECTION 510. Rights and Remedies Cumulative................................................................ 60
SECTION 511. Delay or Omission Not Waiver.................................................................. 60
SECTION 512. Control by Holders............................................................................ 61
SECTION 513. Waiver of Past Defaults....................................................................... 61
SECTION 514. Waiver of Stay or Extension Laws.............................................................. 61
SECTION 515. Undertaking for Costs......................................................................... 62
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities........................................................... 62
SECTION 602. Notice of Defaults............................................................................ 63
SECTION 603. Certain Rights of Trustee..................................................................... 64
</TABLE>
<PAGE> 8
vi
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 604. Trustee Not Responsible for Recitals or Issuance of Notes..................................... 65
SECTION 605. May Hold Notes................................................................................ 65
SECTION 606. Money Held in Trust........................................................................... 65
SECTION 607. Compensation and Reimbursement................................................................ 66
SECTION 608. Corporate Trustee Required; Eligibility....................................................... 67
SECTION 609. Resignation and Removal; Appointment of Successor............................................. 67
SECTION 610. Acceptance of Appointment by Successor........................................................ 69
SECTION 611. Merger, Conversion, Consolidation or Succession to BusineSection.............................. 69
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE
SECTION 701. Company to Furnish Trustee Names and Addresses................................................ 70
SECTION 702. Disclosure of Names and Addresses of Holders.................................................. 70
SECTION 703. Reports by Trustee............................................................................ 70
ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.......................................... 71
SECTION 802. Successor Substituted......................................................................... 72
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. Supplemental Indentures Without Consent of Holders............................................ 72
SECTION 902. Supplemental Indentures with Consent of Holders............................................... 73
SECTION 903. Execution of Supplemental Indentures.......................................................... 74
SECTION 904. Effect of Supplemental Indentures............................................................. 74
SECTION 905. Conformity with Trust Indenture Act........................................................... 74
SECTION 906. Reference in Notes to Supplemental Indentures................................................. 74
SECTION 907. Notice of Supplemental Indentures............................................................. 75
SECTION 908. Effect on Senior Debt......................................................................... 75
</TABLE>
<PAGE> 9
vii
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest.......................................... 75
SECTION 1002. Maintenance of Office or Agency.............................................................. 75
SECTION 1003. Money for Note Payments to Be Held in Trust.................................................. 76
SECTION 1004. Corporate Existence.......................................................................... 77
SECTION 1005. Payment of Taxes and Other Claims............................................................ 77
SECTION 1006. Maintenance of Properties.................................................................... 78
SECTION 1007. Insurance.................................................................................... 78
SECTION 1008. Compliance with Laws......................................................................... 78
SECTION 1009. Limitation on Debt........................................................................... 79
SECTION 1010. Limitation on Restricted Payments............................................................ 81
SECTION 1011. Purchase of Notes upon a Change of Control................................................... 85
SECTION 1012. Limitation on Certain Asset Sales............................................................ 87
SECTION 1013. Limitation on Asset Swaps.................................................................... 89
SECTION 1014. Limitation on Transactions with Affiliates................................................... 90
SECTION 1015. Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries.............................................................. 91
SECTION 1016. Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries......................................................................... 92
SECTION 1017. Limitation on Unrestricted Subsidiaries...................................................... 93
SECTION 1018. Limitation on Other Senior Subordinated Debt................................................. 93
SECTION 1019. Subsidiary Notes Guarantees.................................................................. 94
SECTION 1020. Limitation on Guarantees of Debt by Restricted Subsidiaries.................................. 94
SECTION 1021. Limitation on Liens.......................................................................... 94
SECTION 1022. Commission Reports and Reports to Holders.................................................... 95
SECTION 1023. Statement as to Compliance................................................................... 95
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Redemption................................................................................... 96
SECTION 1102. Applicability of Article..................................................................... 97
SECTION 1103. Election to Redeem; Notice to Trustee........................................................ 97
SECTION 1104. Selection by Trustee of Notes to Be Redeemed................................................. 97
SECTION 1105. Notice of Redemption......................................................................... 97
SECTION 1106. Deposit of Redemption Price.................................................................. 99
</TABLE>
<PAGE> 10
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<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1107. Notes Payable on Redemption Date............................................................. 99
SECTION 1108. Notes Redeemed in Part....................................................................... 99
ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Legal Defeasance or Covenant
Defeasance...........................................................................100
SECTION 1202. Legal Defeasance and Discharge...............................................................100
SECTION 1203. Covenant Defeasance..........................................................................100
SECTION 1204. Conditions to Legal Defeasance or Covenant Defeasance........................................101
SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions................................................102
SECTION 1206. Reinstatement................................................................................103
ARTICLE THIRTEEN
SUBSIDIARY NOTES GUARANTEES
SECTION 1301. Subsidiary Guarantees........................................................................103
SECTION 1302. Guaranty Absolute............................................................................104
SECTION 1303. Waivers .....................................................................................106
SECTION 1304. Subrogation..................................................................................107
SECTION 1305. No Waiver; Remedies..........................................................................107
SECTION 1306. Continuing Guaranty; No Right of Set-Off; Independent Obligation.............................107
SECTION 1307. Subsidiary Notes Guarantors May Consolidate, Etc., on Certain
Terms................................................................................108
SECTION 1308. Additional Subsidiary Notes Guarantors.......................................................108
SECTION 1309. Releases.....................................................................................109
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. Notes and Subsidiary Notes Guarantees Subordinate to Senior Debt.............................110
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc...............................................110
SECTION 1403. No Payment When Certain Senior Debt in Default...............................................111
SECTION 1404. Payment Permitted If No Default..............................................................113
SECTION 1405. Subrogation to Rights of Holders of Senior Debt..............................................113
</TABLE>
<PAGE> 11
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<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1406. Provisions Solely to Define Relative Rights..................................................113
SECTION 1407. Trustee to Effectuate Subordination..........................................................114
SECTION 1408. No Waiver of Subordination Provisions........................................................114
SECTION 1409. Notice to Trustee............................................................................115
SECTION 1410. Reliance on Judicial Order or Certificate of Liquidation Agent...............................116
SECTION 1411. Trustee Not Fiduciary for Holders of Senior Debt.............................................116
SECTION 1412. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's
Rights...............................................................................116
SECTION 1413. Applicability to Paying Agents...............................................................117
SECTION 1414. Defeasance of this Article Fourteen..........................................................117
SECTION 1415. Subordination Provisions Controlling.........................................................117
SIGNATURES......................................................................................................118
</TABLE>
<PAGE> 12
INDENTURE, dated as of July 1, 1997, among CITADEL
BROADCASTING COMPANY, a corporation duly organized and existing under the laws
of the State of Nevada (the "Company"), having its principal office at 140
South Ash Avenue, Tempe, Arizona 85281, CITADEL LICENSE, INC., a wholly owned
subsidiary of the Company, as guarantor (the "Subsidiary Notes Guarantor"),
having its principal office at 140 South Ash Avenue, Tempe, Arizona 85281, and
THE BANK OF NEW YORK, a New York banking corporation, as trustee (the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issuance
of its 10-1/4% Senior Subordinated Notes due 2007 (the "Initial Notes"), and
10-1/4% Series B Senior Subordinated Notes due 2007 (the "New Notes," and
together with the Initial Notes, the "Notes"), of substantially the tenor and
amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
Upon the effectiveness of the Notes Exchange Offer
Registration Statement (as defined herein) or the Notes Shelf Registration
Statement (as defined herein), this Indenture shall be subject to, and shall be
governed by, the provisions of the Trust Indenture Act of 1939, as amended,
that are required or deemed to be part of and to govern indentures qualified
thereunder.
All things necessary have been done to make the Notes, when
executed and duly issued by the Company and authenticated and delivered
hereunder by the Trustee or the Authenticating Agent, the valid obligations of
the Company and to make this Indenture a valid agreement of the Company in
accordance with their and its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
<PAGE> 13
2
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and words in the singular include
the plural as well as the singular, and words in the plural include
the singular as well as the plural;
(b) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, or
defined by Commission rule and not otherwise defined herein have the
meanings assigned to them therein, and the terms "cash transaction"
and "self-liquidating paper," as used in TIA Section 311, shall have
the meanings assigned to them in the rules of the Commission adopted
under the Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with Generally Accepted
Accounting Principles;
(d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision;
(e) the word "or" is not exclusive; and
(f) provisions of this Indenture apply to successive events
and transactions.
Certain terms, used principally in Articles Two, Ten, Twelve,
Thirteen and Fourteen, are defined in those Articles.
"Acquired Debt" means Debt of a Person (a) existing at the
time such Person is merged with or into the Company or becomes a Subsidiary,
(b) assumed in connection with the acquisition of assets from such Person or
(c) secured by a Lien encumbering assets acquired from such Person.
"Act," when used with respect to any Holder, has the meaning
set forth in Section 104.
"Affiliate" means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, "control," when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
<PAGE> 14
3
"Agent" means any Paying Agent, Authenticating Agent and Note
Registrar under this Indenture.
"Asset Sale" means any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer")
by the Company or a Restricted Subsidiary, directly or indirectly, in one or a
series of related transactions, to any Person other than the Company or a
Restricted Subsidiary of (a) any Capital Stock of any of its Restricted
Subsidiaries, (b) all or substantially all of the properties and assets of the
Company and any of its Restricted Subsidiaries representing a division or line
of business or (c) any other properties or assets of the Company or any of its
Restricted Subsidiaries, other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" does not include any
transfer of properties or assets (a) that is governed by the provisions of this
Indenture described under (i) Article Eight or (ii) Section 1013, (b) between
or among the Company and any of its Restricted Subsidiaries pursuant to
transactions that do not violate any other provision of this Indenture, (c) to
an Unrestricted Subsidiary, if permitted under Section 1010, (d) representing
obsolete or permanently retired equipment, (e) the gross proceeds of which
(exclusive of indemnities) do not exceed $100,000 for any particular item or
$500,000 in the aggregate for any fiscal year or (f) the transfer of up to
$500,000 of property and assets, including cash, to a joint venture in which
the Company or a Restricted Subsidiary has an equity interest, which joint
venture is engaged in the internet service provider business.
"Asset Sale Offer" has the meaning set forth in Section 1012
herein.
"Asset Swap" means the execution of one or more definitive
agreements, subject only to FCC approval, if applicable, and other customary
closing conditions, which the Company in good faith believes shall be
satisfied, for a substantially concurrent purchase and sale, or exchange, or
"deferred exchange" (for no more than 180 days) under Section 1031(a)(3) of the
Internal Revenue Code of 1986, as amended, of assets used in the broadcast or
related businesses between the Company or any of its Restricted Subsidiaries
and one or more other Persons or groups of affiliated Persons; provided that
any amendment to or waiver of any closing conditions that individually or in
the aggregate are material to the Asset Swap shall be deemed to be a new Asset
Swap.
"Authenticating Agent" means the Person appointed, if any, by
the Trustee as an authenticating agent pursuant to the last paragraph of
Section 303.
"Bankruptcy Law" means Title 11, United States Bankruptcy
Code of 1978, as amended, or any similar United States federal or state or
foreign law relating to bankruptcy, insolvency, receivership, winding-up,
liquidation, reorganization or relief of debtors or any amendment to,
succession to or change in any such law.
<PAGE> 15
4
"Banks" means the banks and other financial institutions that
from time to time are lenders under the Credit Facility.
"Board of Directors" means, with respect to any Person,
either the board of directors of such Person or any duly authorized committee
thereof.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the secretary or an assistant secretary of such
Person to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in The
City of New York are authorized or obligated by law or executive order to
close.
"Capital Stock" of any Person means any and all shares,
interests, partnership interests, participations, rights in or other
equivalents (however designated) of such Person's equity (however designated).
"Capitalized Lease Obligation" means, with respect to any
Person, an obligation incurred or assumed under or in connection with any
capital lease of real or personal property that, in accordance with GAAP, has
been recorded as a capitalized lease on the balance sheet of such Person.
"Change of Control" means the occurrence of any of the
following events:
(a) Any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than Lawrence R.
Wilson, Scott E. Smith, Jon E. von Schlegell, Baker, Fentress &
Company, ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment
Partners, L.P., The Endeavour Capital Fund Limited Partnership and any
trustee, in its capacity as trustee under the Voting Trust Agreement
or Citadel Communications, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than a majority of the voting power of
all classes of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who
at the beginning of such period constituted the Board of Directors of
the Company (together with any new directors whose election to such
Board of Directors, or whose nomination for election by the
stockholders of the Company, was approved by a vote of at least 66-2/3%
of the
<PAGE> 16
5
directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or
(c) The Company is liquidated or dissolved or adopts a
plan of liquidation or dissolution.
"Change of Control Offer" has the meaning set forth in
Section 1011 herein.
"Change of Control Payment" has the meaning set forth in
Section 1011 herein.
"Change of Control Purchase Date" has the meaning set forth
in Section 1011 herein.
"Citadel Communications" means Citadel Communications
Corporation, a Nevada corporation, and any successors thereof.
"Closing Date" means the date on which the Notes are
originally issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the
first paragraph of this Indenture, until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company (i) by its chairman, a
vice-chairman, its president or any vice president and (ii) by its treasurer,
an assistant treasurer, its secretary or an assistant secretary and delivered
to the Trustee; provided, however, that such written request or order may be
signed by any two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed in such clause
(i) and one of the officers listed in clause (ii) above.
"Consolidated Adjusted Net Income" means, for any period, the
net income (or net loss) of the Company and its Restricted Subsidiaries for
such period as determined on a consolidated basis in accordance with GAAP,
adjusted to the extent included in calculating such net income or loss by
excluding (a) any net after-tax extraordinary gains or losses (less all fees
<PAGE> 17
6
and expenses relating thereto), (b) any net after-tax gains or losses (less all
fees and expenses relating thereto) attributable to Asset Sales, (c) the
portion of net income (or loss) of any Person (other than the Company or a
Restricted Subsidiary), including Unrestricted Subsidiaries, in which the
Company or any of its Restricted Subsidiaries has an ownership interest, except
to the extent of the amount of dividends or other distributions actually paid
to the Company or any of its Restricted Subsidiaries in cash during such
period, (d) the net income (or loss) of any Person combined with the Company or
any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, and (e) the net
income (but not the net loss) of any of its Restricted Subsidiaries to the
extent that the declaration or payment of dividends or similar distributions by
such Restricted Subsidiary is at the date of determination restricted, directly
or indirectly, except to the extent that such net income could be paid to the
Company or a Restricted Subsidiary thereof; provided that, if any Restricted
Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated Adjusted
Net Income shall be reduced (to the extent not otherwise reduced in accordance
with GAAP) by an amount equal to (A) the amount of the Consolidated Adjusted
Net Income otherwise attributable to such Restricted Subsidiary multiplied by
(B) the quotient of (1) the number of shares of outstanding common stock of
such Restricted Subsidiary not owned on the last day of such period by the
Company or any of its Restricted Subsidiaries divided by (2) the total number
of shares of outstanding common stock of such Restricted Subsidiary on the last
day of such period.
"Consolidated Cash Flow" means, for any period, the sum of,
without duplication, Consolidated Adjusted Net Income for such period, plus
(or, in the case of clause (d) below, plus or minus) the following items to the
extent included in computing Consolidated Adjusted Net Income for such period:
(a) the aggregate interest expense and preferred stock dividends of the Company
and its Restricted Subsidiaries for such period, plus (b) the provision for
federal, state, local and foreign income taxes of the Company and its
Restricted Subsidiaries for such period, plus (c) the aggregate depreciation
and amortization expense of the Company and any of its Restricted Subsidiaries
for such period, plus (d) any other non-cash charges for such period, and minus
non-cash credits for such period, other than non-cash charges or credits
resulting from changes in prepaid assets or accrued liabilities in the ordinary
course of business; provided that income tax expense, interest expense and
preferred stock dividends, depreciation and amortization expense, and non-cash
charges and credits of a Restricted Subsidiary shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Restricted Subsidiary was included in calculating
Consolidated Adjusted Net Income for such period. Solely for purposes of
determining whether the Company could incur Debt pursuant to the first
paragraph of Section 1009, if the Company is permitted to give pro forma effect
to an In-Market Acquisition of a radio station pursuant to clause (iii) of the
second paragraph of such Section, such calculation may also give pro forma
effect to projected quantifiable improvements in operating results of such
radio station due to cost reductions calculated in good faith by the Company
and certified by an Officers' Certificate filed with the Trustee. As used in
the preceding sentence, the term "In-Market Acquisition" means the acquisition
of a radio station or group of radio stations serving a metropolitan
statistical area in
<PAGE> 18
7
which the Company or its Subsidiaries has owned, or has operated under a local
marketing agreement, one or more radio stations for at least the preceding six
months.
"Consolidated Cash Flow Ratio" means, at any date, the ratio
of (i) the aggregate amount of Debt of the Company and its Restricted
Subsidiaries on a consolidated basis as of the end of the immediately preceding
four fiscal quarters for which internal financial statements of the Company are
available (the "Reference Period") to (ii) the aggregate amount of Consolidated
Cash Flow for such Reference Period.
"Consolidated Fixed Charges" means, for any period, without
duplication, the sum of (a) the amount which, in conformity with GAAP, would be
set forth opposite the caption "interest expense" (or any like caption) on a
consolidated statement of operations of the Company and its Restricted
Subsidiaries for such period, including, without limitation, (i) amortization
of debt discount, (ii) the net cost of interest rate contracts (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) amortization of debt issuance costs, (v) the interest
component of Capitalized Lease Obligations of the Company and any of its
Restricted Subsidiaries, and (vi) the portion of any rental obligation of the
Company and any of its Restricted Subsidiaries in respect of any sale and
leaseback transaction allocable during such period to interest expense
(determined as if it were treated as a Capitalized Lease Obligation), plus (b)
all interest on any Debt of any other Person guaranteed by the Company or any
of its Restricted Subsidiaries; provided, however, that Consolidated Fixed
Charges shall not include any gain or loss from extinguishment of debt,
including any write-off of debt issuance costs.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Indenture is located at 101 Barclay Street--21W, New York, NY 10286, except
that with respect to presentation of Notes for payment or for registration of
transfer or exchange, such term shall mean any office or agency of the Trustee
at which, at any particular time, its corporate agency business shall be
conducted.
"Covenant Defeasance" has the meaning set forth in Section
1203 herein.
"Credit Facility" means the loan agreement dated October 9,
1996 among the Company, the Banks and the Credit Facility Agent, as amended,
and as such agreement may be amended, restated, supplemented, replaced or
refinanced or otherwise modified from time to time.
"Credit Facility Agent" means the then acting Agent as
defined in and under the Credit Facility or any successor thereto.
<PAGE> 19
8
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.
"Debt" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person
and whether or not contingent, (a) every obligation of such Person for money
borrowed, (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (d) every obligation of such
Person issued or assumed as the deferred purchase price of property or
services, (e) every Capitalized Lease Obligation of such Person, (f) all
Disqualified Stock of such Person valued at its maximum fixed repurchase price,
plus accumulated and unpaid dividends, (g) all Hedging Obligations of such
Person, and (h) every obligation of the types referred to in clauses (a)
through (g) of another Person and all dividends of another Person (i) the
payment of which, in either case, such Person has guaranteed or (ii) which is
secured by any Lien on any property or asset of such Person, the amount of such
Debt being deemed to be the lesser of the actual amount of the guarantee or the
value of such property or asset subject to such Lien, as the case may be, and
the amount of the Debt so guaranteed or secured, as the case may be. For
purposes of this definition, the "maximum fixed repurchase price" of any
Disqualified Stock that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were repurchased on any date on which Debt is required to be
determined pursuant to this Indenture, and if such price is based upon, or
measured by, the fair market value of such Disqualified Stock, such fair market
value shall be determined reasonably and in good faith by the board of
directors of the issuer of such Disqualified Stock. Notwithstanding the
foregoing, trade accounts payable and accrued liabilities arising in the
ordinary course of business, any liability for federal, state or local taxes or
other taxes owed by such Person and the Exchangeable Preferred Stock shall not
be considered Debt for purposes of this definition. The amount outstanding at
any time of any Debt issued with original issue discount is the aggregate
principal amount at maturity of such Debt, less the remaining unamortized
portion of the original issue discount of such Debt at such time, as determined
in accordance with GAAP.
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 311
herein.
"Depositary" means The Depository Trust Company, its nominees
and successors.
"Disinterested Director" means, with respect to any
transaction or series of transactions in respect of which the Board of
Directors is required to deliver a resolution of the Board of Directors, to
make a finding or otherwise take action under this Indenture, a member
<PAGE> 20
9
of the Board of Directors who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of
transactions.
"Disqualified Stock" means any class or series of Capital
Stock that, either by its terms or by the terms of any security into which it
is convertible or exchangeable or by contract or otherwise, (a) is, or upon the
happening of an event or passage of time would be, required to be redeemed
prior to one year after the final Stated Maturity of the Notes, (b) is
redeemable at the option of the holder thereof at any time prior to one year
after such final Stated Maturity or (c) at the option of the holder thereof, is
convertible into or exchangeable for debt securities at any time prior to one
year after such final Stated Maturity; provided that any Capital Stock that
would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to cause the issuer thereof to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of
control" occurring prior to one year after the Stated Maturity of the Notes
shall not constitute Disqualified Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions contained in Sections
1011 and 1012 of this Indenture and such Capital Stock specifically provides
that the issuer shall not repurchase or redeem any such Capital Stock pursuant
to such provision prior to the Company's repurchase of such Notes as are
required to be repurchased pursuant to Sections 1011 and 1012 herein.
"Event of Default" has the meaning set forth in Section 501
herein.
"Excess Proceeds" has the meaning set forth in Section 1012
herein.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchangeable Preferred Stock" means the 13-1/4% Series A
Exchangeable Preferred Stock, no par value, of the Company.
"FCC" means the Federal Communications Commission, which has
jurisdiction over the ownership, operation and sale of the Company's broadcast
stations.
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, consistently
applied, that are in effect on the Closing Date.
"guarantee" means, as applied to any obligation, (a) a
guarantee (other than by endorsement of negotiable instruments for collection
in the ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation and (b) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
non-performance) of all or any
<PAGE> 21
10
part of such obligation, including, without limitation, the payment of amounts
drawn down under letters of credit.
"Hedging Obligations" means the obligations of any Person
under (a) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements and (b) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or the
value of foreign currencies.
"Holder" means the Person in whose name a Note is registered
in the Note Register.
"Indenture" means this instrument as originally executed and
as it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Indenture Obligations" means the obligations of the Company
and any other obligor hereunder or under the Notes, including the Subsidiary
Notes Guarantors, to pay principal of (and premium, if any) and interest on the
Notes when due and payable at maturity, and all other amounts due or to become
due under or in connection with this Indenture, the Notes and the performance
of all other obligations to the Trustee (including all amounts due to the
Trustee under Section 607 hereof) and the Holders under this Indenture and the
Notes, according to the terms hereof and thereof.
"Initial Notes" has the meaning set forth in the recitals to
this Indenture.
"Initial Purchasers" means Prudential Securities
Incorporated, NationsBanc Capital Markets, Inc. and BancBoston Securities Inc.,
as purchasers of the Initial Notes.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Notes.
"Investment" (in any Person) means (a) directly or
indirectly, any advance, loan or other extension of credit (including, without
limitation, by way of guarantee or similar arrangement) or capital contribution
to any Person, the purchase or other acquisition of any stock, bonds, notes,
debentures or other securities issued by such Person or the acquisition (by
purchase or otherwise) of all or substantially all of the business or assets of
such Person or the making of any investment in such Person, (b) the designation
of any Restricted Subsidiary as an Unrestricted Subsidiary and (c) the transfer
of any assets or properties from the Company or a Restricted Subsidiary to any
Unrestricted Subsidiary, other than the transfer of assets or properties made
in the ordinary course of business. Investments shall exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade
practices.
<PAGE> 22
11
"Legal Defeasance" has the meaning set forth in Section 1202
herein.
"License Subsidiary" means Citadel License, Inc.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation, assignment for
security, claim, preference, priority or other encumbrance upon or with respect
to any property of any kind, real or personal, movable or immovable, now owned
or hereafter acquired. A Person shall be deemed to own subject to a Lien any
property that such Person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Net Cash Proceeds" means, with respect to any Asset Sale,
the proceeds thereof in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations when received in the form
of, or stock or other assets when disposed of for, cash or cash equivalents
(except to the extent that such obligations are financed or sold with recourse
to the Company or any of its Restricted Subsidiaries), net of (a) brokerage
commissions and other fees and expenses (including fees and expenses of legal
counsel and investment banks) related to such Asset Sale, (b) provisions for
all taxes payable as a result of such Asset Sale, (c) payments made to retire
Debt where payment of such Debt is secured by the assets that are the subject
of such Asset Sale, (d) amounts required to be paid to any Person (other than
the Company or any of its Restricted Subsidiaries) owning a beneficial interest
in the assets that are subject to the Asset Sale and (e) appropriate amounts to
be provided by the Company or any of its Restricted Subsidiaries, as the case
may be, as a reserve required in accordance with GAAP against any liabilities
associated with such Asset Sale and retained by the seller after such Asset
Sale, including pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"New Notes" has the meaning stated in the first recital of
this Indenture and refers to any New Notes containing terms substantially
identical to the Initial Notes (except that (i) such New Notes shall not
contain terms with respect to transfer restrictions and shall be registered
under the Securities Act, and (ii) certain provisions relating to an increase
in the stated rate of interest thereon shall be eliminated) that are issued and
exchanged for the Initial Notes in accordance with the Notes Exchange Offer, as
provided for in the Notes Registration Rights Agreement and this Indenture.
"Note Register" and "Note Registrar" have the respective
meanings set forth in Section 305 herein.
"Notes" has the meaning stated in the first recital of this
Indenture and more particularly means any Notes authenticated and delivered
under this Indenture.
<PAGE> 23
12
"Notes Exchange Offer" means the offer by the Company to the
Holders of the Initial Notes to exchange all of the Initial Notes for New
Notes, as provided for in the Notes Registration Rights Agreement.
"Notes Exchange Offer Registration Statement" means the Notes
Exchange Offer Registration Statement as defined in the Notes Registration
Rights Agreement.
"Notes Registration Rights Agreement" means the Notes
Registration Rights Agreement, dated as of July 3, 1997, among the Company, the
Subsidiary Notes Guarantors and the Initial Purchasers.
"Notes Shelf Registration Statement" means the Notes Shelf
Registration Statement as defined in the Notes Registration Rights Agreement.
"Offered Price" has the meaning set forth in Section 1012
herein.
"Offering Memorandum" means the Offering Memorandum dated
June 30, 1997 with respect to the offering of, inter alia, the Notes.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company that meets the requirements set
forth in Section 102.
"Opinion of Counsel" means a written opinion of counsel,
which and who are reasonably acceptable to, and addressed to, the Trustee
complying with the requirements of Section 102. Unless otherwise required by
the TIA, such legal counsel may be an employee of or counsel to the Company or
the Trustee.
"Outstanding," when used with respect to Notes, means, as of
the date of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of
such Notes; provided that, if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
<PAGE> 24
13
(iii) Notes, except to the extent provided in Sections 1202
and 1203, with respect to which the Company has effected Legal
Defeasance and/or Covenant Defeasance as provided in Article Twelve;
and
(iv) Notes in exchange for or in lieu of which other Notes
(including pursuant to Section 310) have been authenticated and
delivered pursuant to this Indenture, other than any such Notes in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide purchaser
in whose hands the Notes are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Notes owned by
the Company, any Subsidiary Notes Guarantor or any other obligor upon the Notes
or any Affiliate of the Company, any Subsidiary Notes Guarantor or such other
obligor shall be disregarded and deemed not to be Outstanding (provided that,
in connection with any offer by the Company or any obligor to purchase the
Notes, Notes tendered for purchase shall be deemed to be Outstanding and held
by the tendering Holder until the date of purchase), except that, in
determining whether the Trustee shall be protected in making such calculation
or in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which the Trustee actually knows to be so owned
shall be so disregarded. Notes so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Notes and
that the pledgee is not the Company, any Subsidiary Notes Guarantor or any
other obligor upon the Notes or any Affiliate of the Company, any Subsidiary
Notes Guarantor or such other obligor.
"Pari Passu Debt" means Debt of the Company that ranks pari
passu in right of payment with the Notes.
"Paying Agent" means any Person (including the Company acting
as Paying Agent) authorized by the Company to pay the principal of (and
premium, if any) or interest on any Notes on behalf of the Company.
"Permitted Debt" has the meaning set forth in Section 1009.
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of one year
or less issued or directly and fully guaranteed or insured by the
United States or any agency or instrumentality thereof (provided that
the full faith and credit of the United States is pledged in support
thereof); (ii) certificates of deposit, time deposits, overnight bank
<PAGE> 25
14
deposits or bankers' acceptances with a maturity of 270 days or less
of any financial institution that is a member of the Federal Reserve
System having combined capital and surplus of not less than
$500,000,000; and (iii) commercial paper with a maturity of 270 days
or less issued by a corporation that is not an Affiliate of the
Company and is organized under the laws of any state of the United
States or the District of Columbia and having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Ratings Services.
(b) Investments by the Company or any of its Restricted
Subsidiaries in another Person, if as a result of such Investment (i)
such other Person becomes a Restricted Subsidiary that is a Subsidiary
Notes Guarantor or (ii) such other Person is merged or consolidated
with or into, or transfers or conveys all or substantially all of its
assets to, the Company or a Restricted Subsidiary that is a Subsidiary
Notes Guarantor.
(c) Investments by the Company or any of its Restricted
Subsidiaries in a Subsidiary Notes Guarantor and Investments by any
Restricted Subsidiary in the Company.
(d) Investments in assets owned or used in the ordinary
course of business.
(e) Investments in existence on the Closing Date.
(f) Promissory notes received as a result of Asset Sales
permitted under Section 1012.
(g) Direct or indirect loans to employees, or to a trustee
for the benefit of such employees, of the Company or any of its
Restricted Subsidiaries in an aggregate amount outstanding at any time
not exceeding $1,000,000.
(h) Investments by the Company or any of its Restricted
Subsidiaries in a joint venture that is engaged in the internet
service provider business in an aggregate amount outstanding at any
time not exceeding $500,000.
(i) Other Investments that do not exceed $2,000,000 at any
one time outstanding.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Predecessor Note" of any particular Note means every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purposes
<PAGE> 26
15
of this definition, any Note authenticated and delivered under Section 310 in
exchange for a mutilated, lost, destroyed or stolen Note.
"Public Equity Offering" means an underwritten public
offering of Qualified Equity Interests of either (a) the Company or (b) Citadel
Communications the net proceeds from which (after deducting any underwriting
discounts and commissions) are used by Citadel Communications to purchase
Qualified Equity Interests of the Company; provided that, in either case, such
net proceeds exceed $10,000,000.
"QIB" means a "Qualified Institutional Buyer" under Rule
144A.
"Qualified Equity Interest" means any Qualified Stock and all
warrants, options or other rights to acquire Qualified Stock (but excluding any
debt security that is convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any Person means any and all Capital
Stock of such Person, other than Disqualified Stock.
"Redemption Date," when used with respect to any Note to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the June 15 or December 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Responsible Officer," when used with respect to the Trustee,
means the chairman or any vice chairman of the board of directors, the chairman
or any vice chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above-designated officers,
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary other than an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
<PAGE> 27
16
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Senior Debt" means the principal of and premium, if any, and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any Bankruptcy Law, whether or not
allowed) and other amounts due on or in connection with any Debt of the Company
(other than the Notes or Pari Passu Debt), whether outstanding on the Closing
Date or thereafter incurred, unless, in the case of any particular Debt, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Debt shall be subordinate in right of
payment to any Debt or other general unsecured obligations of the Company.
Without limiting the generality of the foregoing, "Senior Debt" includes the
principal of and premium, if any, fees and interest (including interest
accruing after the occurrence of an event of default or after the filing of a
petition initiating any proceeding pursuant to any Bankruptcy Law, whether or
not allowed) on all obligations of every nature of the Company from time to
time owed to the Banks under the Credit Facility. Notwithstanding the
foregoing, "Senior Debt" shall not include (a) Debt that is Disqualified Stock,
(b) Debt consisting of trade payables, (c) Debt of the Company to a Subsidiary
or any other Affiliate of the Company or any of such Affiliate's Subsidiaries
and (d) that portion of any Debt that, at the time of the incurrence, is
incurred by the Company in violation of this Indenture, other than any Debt
incurred under the Credit Facility not in excess of $150,000,000 (less any
amounts applied to the permanent reduction of such Debt pursuant to Section
1012) if the Company has certified to the Credit Facility Agent, at the time
such Debt is incurred, that the Company is permitted to incur such Debt under
this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary of
the Company that, together with its Subsidiaries, (a) for the most recent
fiscal year of the Company, accounted for more than 10% of the consolidated net
sales of the Company and its Restricted Subsidiaries, (b) as of the end of such
fiscal year, was the owner of more than 10% of the consolidated assets of the
Company and its Restricted Subsidiaries, in the case of either (a) or (b), as
set forth on the most recently available consolidated financial statements of
the Company for such fiscal year, (c) was organized or acquired after the
beginning of such fiscal year and would have been a Significant Subsidiary if
it had been owned during the entire fiscal year or (d) holds one or more
licenses material to the Company's business.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 311.
"Specified Senior Debt" means (i) all Senior Debt under the
Credit Facility and (ii) any other issue of Senior Debt having a principal
amount of at least $10,000,000.
"Stated Maturity" means, when used with respect to any Note
or any installment of interest thereon, the date specified in such Note as the
fixed date on which the principal of
<PAGE> 28
17
such Note or such installment of interest is due and payable, and, when used
with respect to any other Debt, means the date specified in the instrument
governing such Debt as the fixed date on which the principal of such Debt or
any installment of interest thereon is due and payable.
"Subordinated Debt" means Debt of the Company that is
subordinated in right of payment to the Notes.
"Subsidiary" means any Person a majority of the equity
ownership or Voting Stock of which is at the time owned, directly or
indirectly, by the Company and/or one or more other Subsidiaries of the
Company.
"Subsidiary Guarantor Senior Debt" means, as to any
Subsidiary Notes Guarantor, the principal of and premium, if any, and interest
on (including interest accruing after the filing of a petition initiating any
proceeding pursuant to any Bankruptcy Law, whether or not allowed) and other
amounts due on or in connection with any Debt of such Subsidiary Notes
Guarantor (other than the Subsidiary Notes Guarantee made by such Subsidiary
Notes Guarantor), whether outstanding on the Closing Date or thereafter
incurred, unless, in the case of any particular Debt, the instrument creating
or evidencing the same or pursuant to which the same is outstanding expressly
provides that such Debt shall be subordinate in right of payment to any Debt or
other general unsecured obligations of such Subsidiary Notes Guarantor.
Notwithstanding the foregoing, "Subsidiary Guarantor Senior Debt" shall not
include (a) Debt that is Disqualified Stock, (b) Debt consisting of trade
payables, (c) Debt of such Subsidiary Notes Guarantor to the Company or any
Subsidiary or any other Affiliate of the Company or any of such Affiliate's
Subsidiaries and (d) that portion of any Debt that, at the time of the
incurrence, is incurred by such Subsidiary Notes Guarantor in violation of this
Indenture, other than any Debt incurred under the Credit Facility not in excess
of $150,000,000 (less any amounts applied to the permanent reduction of such
Debt pursuant to Section 1012) if the Company has certified to the Credit
Facility Agent, at the time such Debt is incurred, that the Subsidiary Notes
Guarantor is permitted to incur such Debt under this Indenture.
"Subsidiary Notes Guarantee" means a guarantee of the Notes
by a Restricted Subsidiary in accordance with the provisions of this Indenture.
"Subsidiary Notes Guarantor" means the License Subsidiary and
each other Restricted Subsidiary that issues a Subsidiary Notes Guarantee as
described in Article Thirteen herein.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date as of which this Indenture was executed, except
as provided in Section 905.
<PAGE> 29
18
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this Indenture until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means (a) any Subsidiary that is
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary in accordance with Section 1017 and (b) any Subsidiary of an
Unrestricted Subsidiary.
"U.S. Government Obligations" means obligations that are (a)
direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (b) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such U.S. Government Obligations or a specific payment of
principal of or interest on any such U.S. Government Obligations held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligations or the specific payment of principal of or interest on the U.S.
Government Obligations evidenced by such depository receipt.
"Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not, at the
time, stock of any other class or classes has, or might have, voting power by
reason of the happening of any contingency).
"Voting Trust Agreement" means that certain Voting Trust
Agreement dated as of March 17, 1997 by and among Citadel Communications, ABRY
Broadcast Partners II, L.P., ABRY/Citadel Investment Partners, L.P.,
Christopher Hall, as the initial Trustee thereunder and J. Walter Corcoran and
Harlan Levy, each as an initial Back-Up Trustee thereunder, as amended from
time to time.
"Weighted Average Life" means, as of the date of
determination with respect to any Debt or Disqualified Stock, the quotient
obtained by dividing (a) the sum of the products of (i) the number of years
from the date of determination to the date or dates of each successive
scheduled principal or liquidation value payment of such Debt or Disqualified
Stock, respectively, multiplied by (ii) the amount of each such principal or
liquidation value payment by (b) the sum of all such principal or liquidation
value payments.
<PAGE> 30
19
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary, all of the outstanding voting securities (other than directors'
qualifying shares or an immaterial number of shares required to be owned by
other Persons pursuant to applicable law) of which are owned, directly or
indirectly, by the Company.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company and any
Subsidiary Notes Guarantor and any other obligor on the Notes (if applicable)
shall furnish to the Trustee an Officers' Certificate in form and substance
reasonably acceptable to the Trustee stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual
or such firm, he or it has made such examination or investigation as
is necessary to enable him or it to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters
<PAGE> 31
20
and one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, any
Subsidiary Notes Guarantor or other obligor on the Notes may be based, insofar
as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company, any Subsidiary Notes
Guarantor or other obligor on the Notes stating that the information with
respect to such factual matters is in the possession of the Company, any
Subsidiary Notes Guarantor or other obligor on the Notes unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in Person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section 104.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
<PAGE> 32
21
(c) The principal amount and serial numbers of Notes held by
any Person, and the date of holding the same, shall be proved by the Note
Register.
(d) If the Company or any Subsidiary Notes Guarantor shall
solicit from the Holders of Notes any request, demand, authorization,
direction, notice, consent, waiver or other Act, the Company or any such
Subsidiary Notes Guarantor (as the case may be) may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company or any such
Subsidiary Notes Guarantor (as the case may be) shall have no obligation to do
so. Notwithstanding TIA Section 316(c), such record date shall be the record
date specified in or pursuant to such Board Resolution, which shall be a date
not earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close
of business on such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of Outstanding Notes
have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
Outstanding Notes shall be computed as of such record date; provided that no
such authorization, agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
(including in accordance with Section 310) in respect of anything done, omitted
or suffered to be done by the Trustee, any Paying Agent or the Company or any
Subsidiary Notes Guarantor in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 105. NOTICES, ETC., TO TRUSTEE, THE COMPANY AND
SUBSIDIARY NOTES GUARANTORS.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company or any
Subsidiary Notes Guarantor or any other obligor on the Notes shall be
sufficient for every purpose hereunder if made, given, furnished or
delivered in writing and mailed, first-class
<PAGE> 33
22
postage prepaid, or delivered by recognized overnight courier, to or
with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration; or
(2) the Company or any Subsidiary Notes Guarantor by the
Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if made, given,
furnished or delivered, in writing, or mailed, first-class postage
prepaid, or delivered by recognized overnight courier, to the Company
or such Subsidiary Notes Guarantor addressed to it at the address of
its principal office specified in the first paragraph of this
Indenture, or at any other address previously furnished in writing to
the Trustee by the Company or such Subsidiary Notes Guarantor.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice of any event to
Holders by the Company or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice.
In any case where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Any notice mailed to a Holder in the manner herein prescribed shall be
conclusively deemed to have been received by such Holder, whether or not such
Holder actually receives such notice. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause, it shall be impracticable
to mail notice of any event to Holders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice for every purpose hereunder.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
<PAGE> 34
23
SECTION 108. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
and any Subsidiary Notes Guarantor and their Subsidiaries shall bind their
successors and assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 110. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person (other than the parties hereto and their
successors hereunder, any Paying Agent, the Holders and the holders of Senior
Debt) any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 111. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND THE SUBSIDIARY NOTES GUARANTEES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK. UPON THE EFFECTIVENESS OF THE NOTES EXCHANGE OFFER REGISTRATION
STATEMENT OR THE NOTES SHELF REGISTRATION STATEMENT, THIS INDENTURE SHALL BE
SUBJECT TO, AND GOVERNED BY, THE PROVISIONS OF THE TRUST INDENTURE ACT OF 1939,
AS AMENDED, THAT ARE REQUIRED OR DEEMED TO BE PART OF AND TO GOVERN INDENTURES
QUALIFIED THEREUNDER.
SECTION 112. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, any date
established for payment of Defaulted Interest pursuant to Section 311 or
Redemption Date or Stated Maturity or other maturity of any Note shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or of
the Notes) payment of principal (or premium, if any) or interest need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date or date
established for payment of Defaulted Interest pursuant to Section 311,
Redemption Date, or at the Stated Maturity or other maturity; provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or date established for payment of Defaulted Interest pursuant
<PAGE> 35
24
to Section 311, Stated Maturity or other maturity, as the case may be, to the
next succeeding Business Day.
SECTION 113. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES, STOCKHOLDERS OR INCORPORATORS.
No director, officer, employee, incorporator or stockholders,
as such, of the Company or any Subsidiary Notes Guarantor shall have any
liability for any obligations of the Company or such Subsidiary Notes Guarantor
under the Notes, this Indenture or any Subsidiary Notes Guarantee or for any
claim based on, in respect of, or by reason of, such obligations or their
creations. Each Holder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
SECTION 114. COUNTERPARTS.
This Indenture may be executed in any number of counterparts,
each of which shall be original; but such counterparts shall together
constitute but one and the same instrument.
ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Notes and the Trustee's certificate of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such Notes,
as evidenced by their execution of the Notes. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note. Each Note shall be dated the date of its
authentication.
The definitive Notes shall be printed, lithographed or
engraved on steel-engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing such Notes, as evidenced
by their execution of such Notes.
Initial Notes offered and sold to "Qualified Institutional
Buyers" (as defined in Rule 144A in reliance on the exemption from the
registration requirements of the Securities Act provided by Rule 144A) shall
initially be issued in the form of one permanent global Note
<PAGE> 36
25
substantially in the form set forth in Sections 204 and 205 (the "Global Note")
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
Initial Notes offered and sold to "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) who are
not Qualified Institutional Buyers shall initially be issued in the form of
permanent certificated Notes in registered form in substantially the form set
forth in Sections 204 and 205 (the "Certificated Notes").
SECTION 202. RESTRICTIVE LEGENDS.
Unless and until (i) an Initial Note is sold under a Notes
Shelf Registration Statement or (ii) an Initial Note is exchanged for a New
Note in connection with an effective Notes Exchange Offer Registration
Statement, in each case pursuant to the Notes Registration Rights Agreement,
each such Global Note and Certificated Note shall bear the following legend
(the "Private Placement Legend") on the face thereof:
For each Global Note:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH CITADEL
BROADCASTING COMPANY (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
(THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY,
(B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"),
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN
<PAGE> 37
26
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT
OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT SUBJECT TO THE COMPANY'S, AND THE
TRUSTEE'S/TRANSFER AGENT'S, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (I) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE
THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT.
THIS LEGEND SHALL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
For each Certificated Note:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. NEITHER THE SECURITIES EVIDENCED BY THIS CERTIFICATE, NOR ANY
INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED OR
OTHERWISE DISPOSED OF UNLESS EITHER (I) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND LAWS RELATING THERETO OR
(II) THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO THE ISSUER, STATING THAT SUCH
REGISTRATION IS NOT REQUIRED.
Each Global Note, whether or not an Initial Note, shall also
bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS
<PAGE> 38
27
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE.
SECTION 203. [INTENTIONALLY OMITTED].
<PAGE> 39
28
SECTION 204. FORM OF FACE OF NOTE.
CITADEL BROADCASTING COMPANY
10 1/4% [Series B]* Senior Subordinated Note due 2007
CUSIP No. _____
No. __________ $________
CITADEL BROADCASTING COMPANY, a Nevada corporation (herein
called the "Company", which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to ____________________ or registered assigns, the principal sum of
____________________ Dollars on July 1, 2007, at the office or agency of the
Company referred to below, and to pay interest thereon on January 1, 1998 and
semi-annually thereafter, on July 1 and January 1 in each year, from January 1,
1998, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, at the rate of 10-1/4% per annum, until the
principal hereof is paid or duly provided for, and (to the extent lawful) to
pay on demand interest on any overdue interest at the rate borne by the Notes
from the date on which such overdue interest becomes payable to the date
payment of such interest has been made or duly provided for. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
shall, as provided in such Indenture, be paid to the Person in whose name this
Note (or one or more Predecessor Notes) is registered at the close of business
on the Regular Record Date for such interest, which shall be June 15 or
December 15 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date, and such defaulted interest, and (to the extent lawful) interest
on such defaulted interest at the rate borne by the Notes, may be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Notes not less than 10 days prior to such Special Record Date, or
may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
[The Holder of this Note is entitled to the benefits of the
Notes Registration Rights Agreement, dated as of July 3, 1997 (the "Notes
Registration Rights Agreement"), between the Company, the Subsidiary Notes
Guarantors and the Initial Purchasers named therein. In the event that either
(a) the Notes Exchange Offer Registration Statement is not filed with the
Commission on or prior to the 90th calendar day following the Closing Date or
(b) the Notes Exchange Offer is not consummated or a Notes Shelf Registration
Statement is not declared
- --------
* Include only for New Notes.
<PAGE> 40
29
effective on or prior to the 210th calendar day following the Closing Date, the
interest rate borne by the Notes shall be increased by 0.25% per annum for the
first 30 days following the 90-day period referred to in clause (a) above or
the first 90 days following the 210-day period referred to in clause (b) above.
Such interest shall increase by an additional 0.25% per annum at the beginning
of each subsequent 30-day period in the case of clause (a) above or 90-day
period in the case of clause (b) above; provided, however, that in no event
shall the interest rate borne by the Notes be increased by more than 1.5%. Upon
the filing of the Notes Exchange Offer Registration Statement, the consummation
of the Notes Exchange Offer or the effectiveness of a Notes Shelf Registration
Statement, as the case may be, the interest rate borne by the Notes from the
date of such filing, consummation or effectiveness, as the case may be, shall
be reduced to the original interest rate set forth in the first paragraph of
this Note; provided, however, that if, after any such reduction in interest
rate, a different event specified in clause (a) or (b) above occurs, the
interest rate may again be increased pursuant to the foregoing provisions.]*
[If the Company issues a notice that the Notes Shelf
Registration Statement is unusable pending the announcement of a material
corporate transaction or otherwise pursuant to Section 3(k) of the Notes
Registration Rights Agreement, or such a notice is required under applicable
securities laws to be issued by the Company, and the aggregate number of days
in any consecutive twelve-month period for which all such notices are issued or
required to be issued exceeds 30 days in the aggregate, then the interest rate
borne by the Notes shall be increased by one-quarter of one percent per annum
following the date that such Notes Shelf Registration Statement ceases to be
usable beyond the 30-day period permitted above, which rate shall be increased
by an additional one-quarter of one percent per annum for each 90-day period
that such additional interest continues to accrue; provided that the aggregate
increase in such annual interest rate may in no event exceed 1.5%. Upon the
Company declaring that the Notes Shelf Registration Statement is usable after
the interest rate has been increased pursuant to the preceding sentence, the
interest rate borne by the Notes shall be reduced to the original interest rate
if the Company is otherwise in compliance with this paragraph; provided,
however, that if after any such reduction in interest rate the Notes Shelf
Registration Statement again ceases to be usable beyond the period permitted
above, the interest rate shall again be increased and thereafter reduced
pursuant to the foregoing provisions.]*
The principal of and premium, if any, and interest on the
Notes shall be payable, and the Notes shall be exchangeable and transferable,
at the office or agency of the Company in The City of New York maintained for
such purposes (which initially shall be the office of the Trustee located at
101 Barclay Street--21W, New York, NY 10286); provided, however, that, at the
option of the Company, interest may be paid by check mailed to the address of
the Person entitled thereto as such address appears in the Note Register.
- --------
* Include only for Initial Notes.
<PAGE> 41
30
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee or the Authenticating Agent referred to on the reverse
hereof by manual signature, this Note shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: CITADEL BROADCASTING COMPANY
By
---------------------------------------
Name:
Title:
Attest: [SEAL]
- ---------------------------
Authorized Officer
SECTION 205. FORM OF REVERSE OF NOTE.
This Note is one of a duly authorized issue of securities of
the Company designated as its 10-1/4% [Series B]* Senior Subordinated Notes due
2007 (the "Notes"), limited (except as otherwise provided in the Indenture
referred to below) in aggregate principal amount to $101,000,000, which may be
issued under an indenture (the "Indenture") dated as of July 1, 1997 between
the Company, Citadel License, Inc., as guarantor (the "Subsidiary Notes
Guarantor"), and The Bank of New York, as trustee (the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Subsidiary Notes Guarantor, the Trustee and the
Holders of the Notes, and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
This Note is subordinated to the prior payment in full of all
Senior Debt in the manner and to the extent set forth in Article Fourteen of
the Indenture.
- --------
* Include only for the New Notes.
<PAGE> 42
31
On or before each payment date, the Company shall deliver or
cause to be delivered to the Trustee or the Paying Agent an amount in dollars
sufficient to pay the amount due on such payment date.
The Notes shall be redeemable (subject to contractual and
other restrictions with respect thereto and to the legal availability of funds
therefor) at the election of the Company, as a whole or from time to time in
part, at any time on or after July 1, 2002 on not less than 30 nor more than 60
days' prior notice, at the redemption prices (expressed as percentages of the
principal amount thereof) set forth below, together with accrued and unpaid
interest, if any, to the redemption date, if redeemed during the 12-month
period beginning on July 1 of the years indicated below (subject to the right
of Holders of record on the relevant record date to receive interest due on an
Interest Payment Date):
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- -----------------
<S> <C>
2002................................................... 105.125%
2003................................................... 104.100%
2004................................................... 103.075%
2005................................................... 102.050%
2006................................................... 101.025%
</TABLE>
In addition, at any time and from time to time prior to July
1, 2000, the Company may at its option redeem Notes with the net proceeds of
one or more Public Equity Offerings at a redemption price equal to 110.25% of
the principal amount thereof, together with accrued and unpaid interest, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on an Interest Payment Date);
provided that, immediately after giving effect to any such redemption, at least
$75,000,000 aggregate principal amount of the Notes remains outstanding. Any
such redemption must be made within 90 days of the related Public Equity
Offering.
If less than all the Notes are to be redeemed, the particular
Notes to be redeemed shall be selected not more than 60 days prior to the
redemption date by the Trustee by such method as the Trustee deems fair and
appropriate.
In the event of redemption or repurchase of this Note in part
only, a new Note or Notes for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
Upon the occurrence of a Change of Control, the Company shall
be required to make an offer to purchase on the Change of Control Purchase Date
all outstanding Notes at a purchase price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the date of purchase, in accordance with the Indenture.
<PAGE> 43
32
Holders of Notes that are subject to an offer to purchase shall receive a
Change of Control Offer from the Company prior to any related Change of Control
Purchase Date.
Under certain circumstances, in the event the Net Cash
Proceeds received by the Company from an Asset Sale, which proceeds are not
used (i) towards the permanent reduction of amounts outstanding under the
Credit Facility or to the repayment of other Senior Debt of the Company or a
Subsidiary Notes Guarantor or (ii) to invest (or enter into one or more legally
binding agreements to invest) in properties and assets to replace the
properties and assets that were the subject of the Asset Sale or in properties
and assets that shall be used in the broadcast business or businesses
reasonably related thereto, equal or exceed a specified amount, the Company
shall be required to make an offer to all Holders to purchase the maximum
principal amount of Notes, in an integral multiple of $1,000, that may be
purchased out of such amount at a purchase price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase, in accordance with the Indenture. Holders of Notes that are
subject to any offer to purchase shall receive an Asset Sale Offer from the
Company prior to any related Asset Sale Purchase Date.
In the case of any redemption or repurchase of Notes,
interest installments whose Stated Maturity is on or prior to the Redemption
Date or Asset Sale Purchase Date, as the case may be, shall be payable to the
Holders of such Notes, or one or more Predecessor Notes, of record at the close
of business on the relevant Regular Record Date or Special Record Date, as the
case may be, referred to on the face hereof. Notes (or portions thereof) for
whose redemption and payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption Date or Asset Sale
Purchase Date, as the case may be.
If an Event of Default shall occur and be continuing, the
principal of all the Notes may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (a) the entire indebtedness of the Company on this Note and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Note.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Subsidiary Notes Guarantors and the rights
of the Holders under the Indenture and the Notes and the Subsidiary Notes
Guarantees, if any, at any time by the Company, the Subsidiary Notes Guarantors
and the Trustee with the consent of the Holders of a specified percentage in
aggregate principal amount of the Notes at the time Outstanding. Additionally,
the Indenture permits that with certain exceptions as therein provided, without
notice to or consent of any Holder, the Company, any Subsidiary Notes Guarantor
and the Trustee together may amend or supplement the Indenture, any Subsidiary
Notes Guarantee or this Note (i) to evidence the
<PAGE> 44
33
succession of another Person to the Company and the assumption by any such
successor of the covenants of the Company in the Indenture and in the Notes; or
(ii) to add to the covenants of the Company for the benefit of the Holders, or
to surrender any right or power conferred upon the Company in the Indenture; or
(iii) to add additional Events of Default; or (iv) to provide for
uncertificated Notes in addition to or in place of the certificated Notes; or
(v) to evidence and provide for the acceptance of appointment under the
Indenture by a successor Trustee; or (vi) to secure the Notes; or (vii) to cure
any ambiguity, to correct or supplement any provision in the Indenture that may
be defective or inconsistent with any other provision in the Indenture, or to
make any other provisions with respect to matters or questions arising under
the Indenture, provided that such actions pursuant to this clause do not
adversely affect the interests of the Holders in any material respect; or
(viii) to comply with any requirements of the Commission in order to effect and
maintain the qualification of the Indenture under the Trust Indenture Act.
The Indenture also contains provisions permitting the Holders
of not less than a majority in aggregate principal amount of the Notes at the
time Outstanding, on behalf of the Holders of all the Notes, to waive any past
defaults by the Company with certain provisions of the Indenture, the Notes and
the Subsidiary Notes Guarantees, if any, and certain past Defaults under the
Indenture and the Notes and the Subsidiary Notes Guarantees, if any, and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company or
the Subsidiary Notes Guarantors or any other obligor on the Notes (in the event
any Subsidiary Notes Guarantor or other obligor is obligated to make payments
in respect of the Notes), which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest on this Note at the times,
place, and rate, and in the coin or currency, herein prescribed, subject to the
subordination provisions of the Indenture.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registerable on the
Note Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, shall be issued to the designated transferee or
transferees.
The Notes are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof (unless
the Company otherwise directs). As
<PAGE> 45
34
provided in the Indenture and subject to certain limitations therein set forth,
the Notes are exchangeable for a like aggregate principal amount of Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of
transfer or exchange or redemption of Notes, but the Company may require
payment of a sum sufficient to pay all documentary, stamp or similar issue or
transfer taxes or other governmental charge payable in connection therewith.
The Notes are entitled to the benefit of a Subsidiary Notes
Guarantee by each Subsidiary Notes Guarantor to the extent provided in each
such Subsidiary Notes Guarantee.
Prior to the time of due presentment of this Note for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Note is registered as
the owner hereof for all purposes, whether or not this Note be overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
Interest on this Note shall be computed on the basis of a
360-day year of twelve 30-day months.
All terms used in this Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
<PAGE> 46
35
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered Holder hereby
sell(s), assign(s) and transfer(s) unto
INSERT TAXPAYER IDENTIFICATION NO.
______________________________________________________________________________
______________________________________________________________________________
please print or typewrite name and address including zip code of assignee
______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________________
attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.
Your Signature:_______________________________________________________________
(sign exactly as your name appears on the other side of this
Note)
Signature Guarantee:__________________________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act.
<PAGE> 47
36
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior
to the date that is the earlier of the date of an effective Registration
Statement or July 3, 1999, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[CHECK ONE]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act of 1933,
as amended, provided by Rule 144A thereunder.
OR
[ ] (b) this Note is being transferred other than in accordance with
(a) above and documents are being furnished that comply with
the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked, the Trustee or other Note Registrar
shall not be obligated to register this Note in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 307 of the Indenture shall have
been satisfied.
Date: ____________________ ________________________________
NOTICE: The signature must
correspond with the name
as written upon the
face of the
within-mentioned
instrument in every
particular, without
alteration or any
change whatsoever.
Signature Guarantee:_________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
<PAGE> 48
37
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:__________________ ______________________________________
NOTICE: To be executed by an executive
officer.
<PAGE> 49
38
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant
to Section 1011 of the Indenture, check the Box: [ ].
If you wish to have a portion of this Note purchased by the
Company pursuant to Section 1012 of the Indenture, state the amount (in
original principal amount) below:
$_____________________.
Date: ____________________
Your Signature: ______________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: _________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act.
SECTION 206. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: ____________________
This is one of the Notes referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK, as Trustee
By______________________________
Authorized Signatory
<PAGE> 50
39
ARTICLE THREE
THE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $101,000,000,
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Section 303, 304,
305, 306, 307, 310, 906, 1011, 1012 or 1108 or pursuant to a Notes Exchange
Offer.
The Initial Notes shall be known and designated as the
"10- 1/4% Senior Subordinated Notes due 2007" and the New Notes shall be known
and designated as the "10-1/4% Series B Senior Subordinated Notes due 2007," in
each case, of the Company. The Stated Maturity of the Notes shall be July 1,
2007, and they shall bear interest at the rate of 10-1/4% per annum from July 3,
1997, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, payable on January 1, 1998 and semiannually
thereafter on July 1 and January 1 in each year, until the principal thereof is
paid in full and to the Person in whose name the Note (or any predecessor Note)
is registered at the close of business on the June 15 or December 15 next
preceding such Interest Payment Date. Interest shall be computed on the basis of
a 360-day year comprised of twelve 30-day months, until the principal thereof is
paid or duly provided for. Interest on any overdue principal, interest (to the
extent lawful) or premium, if any, shall be payable on demand.
The principal of and premium, if any, and interest on the
Notes shall be payable, and the Notes shall be exchangeable and transferable,
at the office or agency of the Company in The City of New York maintained for
such purposes (which initially shall be the office of the Trustee located at
101 Barclay Street--21W, New York, NY 10286); provided, however, that, at the
option of the Company, interest may be paid by check mailed to the address of
the Person entitled thereto as such address appears in the Note Register.
Holders shall have the right to require the Company to
purchase their Notes, in whole or in part, in the event of a Change of Control
pursuant to Section 1011.
The Notes shall be subject to repurchase by the Company
pursuant to an Asset Sale Offer as provided in Section 1012.
The Notes shall be redeemable as provided in Article Eleven
and in the Notes.
<PAGE> 51
40
SECTION 302. DENOMINATIONS.
Except at the direction of the Company, the Notes shall be
issuable only in registered form without coupons and only in denominations of
$1,000 and any integral multiple thereof; PROVIDED, however, the Company shall
be deemed to have so directed in respect of any Notes issued initially
hereunder in integral multiples of other than $1,000 and any Notes issued upon
exchange or transfer therefor.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
Chairman, its President or a Vice President, under its corporate seal
reproduced thereon and attested by its Secretary or an Assistant Secretary. The
signature of any of these officers on the Notes may be manual or facsimile
signatures of the present or any future such authorized officer and may be
imprinted or otherwise reproduced on the Notes.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such Notes or
did not hold such offices at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Initial Notes executed by
the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Notes, directing the Trustee to
authenticate the Notes and certifying that all conditions precedent to the
issuance of Notes contained herein have been fully complied with, and the
Trustee in accordance with such Company Order shall authenticate and deliver
such Initial Notes. On Company Order, the Trustee shall authenticate for
original issue New Notes in an aggregate principal amount not to exceed
$101,000,000; provided that such New Notes shall be issuable only upon the
valid surrender for cancellation of Initial Notes of a like aggregate principal
amount in accordance with a Notes Exchange Offer pursuant to the Notes
Registration Rights Agreement. In each case, the Trustee shall be entitled to
receive an Officers' Certificate and an Opinion of Counsel of the Company that
it may reasonably request in connection with such authentication of Notes. Such
order shall specify the amount of Notes to be authenticated and the date on
which the original issue of Initial Notes or New Notes is to be authenticated.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
duly executed by the Trustee by manual signature of an authorized signatory,
and such certificate upon any Note shall be conclusive evidence, and
<PAGE> 52
41
the only evidence, that such Note has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
In case the Company or any Subsidiary Notes Guarantor,
pursuant to Article Eight, shall be consolidated or merged with or into any
other Person or shall convey, transfer, lease or otherwise dispose of its
properties and assets substantially as an entirety to any Person, and the
successor Person resulting from such consolidation, or surviving such merger,
or into which the Company or such Subsidiary Notes Guarantor shall have been
merged, or the Person which shall have received a conveyance, transfer, lease
or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article Eight, any of the
Notes authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time to time, at the
request of the successor Person, be exchanged for other Notes executed in the
name of the successor Person with such changes in phraseology and form as may
be appropriate, but otherwise in substance of like tenor as the Notes
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Notes as specified in such request for the purpose of such exchange. If Notes
shall at any time be authenticated and delivered in any new name of a successor
Person pursuant to this Section 303 in exchange or substitution for or upon
registration of transfer of any Notes, such successor Person, at the option of
the Holders but without expense to them, shall provide for the exchange of all
Notes at the time Outstanding for Notes authenticated and delivered in such new
name.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes on behalf of the Trustee. Unless limited by
the terms of such appointment, an authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Note Registrar or Paying Agent
to deal with the Company and its Affiliates.
The Trustee shall have the right to decline to authenticate
and deliver any Notes under this Section if the Trustee, being advised by
counsel, reasonably determines that such action may not lawfully be taken.
SECTION 304. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as conclusively evidenced by their
execution of such Notes.
<PAGE> 53
42
If temporary Notes are issued, the Company shall cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Company designated for such purpose pursuant to Section 1002, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, the Company shall execute and the Trustee shall authenticate
and deliver in exchange therefor a like principal amount of definitive Notes of
authorized denominations. Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency designated pursuant to Section 1002 being herein
sometimes referred to as the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Note Register shall be in
written form or any other form capable of being converted into written form
within a reasonable time. At all reasonable times, the Note Register shall be
open to inspection by the Trustee. The Trustee is hereby initially appointed as
security registrar (the Trustee in such capacity, together with any successor
of the Trustee in such capacity, the "Note Registrar") for the purpose of
registering Notes and transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at
the office or agency of the Company designated pursuant to Section 1002, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Notes of any
authorized denomination or denominations of a like aggregate principal amount.
Furthermore, any Holder of the Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interest in
such Global Note may be effected only through a book-entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a book
entry.
At the option of the Holder, Notes may be exchanged for other
Notes of any authorized denomination and of a like aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange (including an exchange of Initial
Notes for New Notes), the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes which the Holder making the exchange is
entitled to receive; provided that no exchange of Initial Notes for New Notes
shall occur until a Notes Exchange Offer Registration Statement shall have been
declared effective by the Commission, the Trustee shall have received an
Officers' Certificate confirming that the Notes
<PAGE> 54
43
Exchange Offer Registration Statement has been declared effective by the
Commission and the Initial Notes to be exchanged for the New Notes shall be
cancelled by the Trustee.
All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Note
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer, in form satisfactory to the Company and the Note Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 304, 906, 1011, 1012 or 1108,
not involving any transfer.
SECTION 306. BOOK-ENTRY PROVISIONS FOR THE GLOBAL NOTE.
(a) The Global Note initially shall (i) be registered in the
name of Cede & Co. as nominee for the Depositary (the "Global Note Holder"),
(ii) be delivered to the Trustee as custodian for such Depositary and (iii)
bear legends as set forth in Section 202.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Notes
held on their behalf by the Depositary, or the Trustee as its custodian, or
under the Global Note, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by the Depositary or shall impair, as between
the Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to
transfers of such Global Note in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in the
Global Note may be transferred in accordance with the rules and procedures of
the Depositary and the provisions of Section 307. Beneficial owners may obtain
Certificated Notes in exchange for their beneficial interests in the Global
Note upon request in accordance with the Depositary's and the Note Registrar's
procedures. In addition, Certificated Notes shall be transferred to all
beneficial owners in exchange for their beneficial interests in the Global Note
if (i) the Company notifies the Trustee in writing that the Depositary
<PAGE> 55
44
is unwilling or unable to act as a depositary for the Global Note and the
Company is unable to locate a qualified successor within 90 days or (ii) the
Company, at its option, notifies the Trustee in writing that it elects to
change the issuance of Notes into the form of Certificated Securities under
this Indenture.
(c) In connection with any transfer of a portion of the
beneficial interest in the Global Note pursuant to subsection (b) of this
Section to beneficial owners, the Note Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the Global Note in
an amount equal to the principal amount of the beneficial interest in the
Global Note to be transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Certificated Notes of like tenor
and amount to each Person that the Global Note Holder and the Depositary
identify as being the beneficial owner of the related Notes.
(d) In connection with the transfer of the entire Global Note
to beneficial owners pursuant to subsection (b) of this Section, the Global
Note shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Global Note Holder and the Depositary in
exchange for its beneficial interest in the Global Note, an equal aggregate
principal amount of Certificated Notes of authorized denominations.
(e) Any Certificated Notes delivered in exchange for an
interest in the Global Note pursuant to subsection (c) or subsection (d) of
this Section shall, except as otherwise provided by paragraph (a)(i) of Section
307, bear the applicable legend regarding transfer restrictions applicable to
the Certificated Note set forth in Section 202.
(f) The registered holder of the Global Note may grant
proxies and otherwise authorize any Person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Notes.
SECTION 307. SPECIAL TRANSFER PROVISIONS.
Unless and until (i) an Initial Note is sold under an
effective Notes Shelf Registration Statement, or (ii) an Initial Note is
exchanged for a New Note in connection with an effective Notes Exchange Offer
Registration Statement, in each case pursuant to the Notes Registration Rights
Agreement, the following provisions shall apply:
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS.
The following provisions shall apply with respect to the registration
of any proposed transfer of an Initial Note to any institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7)
of Regulation D under the Securities Act) which is not a QIB:
<PAGE> 56
45
(i) The Note Registrar shall register the transfer
of any Initial Note, whether or not such Initial Note bears
the Private Placement Legend, if (x) the requested transfer
is at least two years after the original issue date of the
Initial Note or (y) the proposed transferee has delivered to
the Note Registrar a certificate substantially in the form
set forth in Section 308.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the Global Note, upon
receipt by the Note Registrar of (x) the documents, if any,
required by paragraph (i) and (y) instructions given in
accordance with the Depositary's and the Note Registrar's
procedures therefor, the Note Registrar shall reflect on its
books and records the date and a decrease in the principal
amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Certificated
Notes of like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall apply
with respect to the registration of any proposed transfer of an
Initial Note to a QIB:
(i) If the Note to be transferred consists of
Certificated Notes, the Note Registrar shall register the
transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form
of Initial Note stating, or has otherwise advised the Company
and the Note Registrar in writing, that the sale has been
made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on
the form of Initial Note stating, or has otherwise advised
the Company and the Note Registrar in writing, that it is
purchasing the Initial Note for its own account or an account
with respect to which it exercises sole investment discretion
and that it, or the Person on whose behalf it is acting with
respect to any such account, is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim
the exemption from registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member,
and the Initial Note to be transferred consists of
Certificated Notes, upon receipt by the Note Registrar of
instructions given in accordance with the Depositary's and
the Note Registrar's procedures therefor, the Note Registrar
shall reflect on its books and records the date and an
increase in the principal amount of the Global Note in an
<PAGE> 57
46
amount equal to the principal amount of the Certificated
Notes to be transferred, and the Trustee shall cancel the
Certificated Note so transferred.
(c) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the
Note Registrar shall deliver Notes that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Notes
bearing the Private Placement Legend, the Note Registrar shall deliver
only Notes that bear the Private Placement Legend unless either (i)
the circumstances contemplated by paragraph (a)(i) of this Section 307
exist or (ii) there is delivered to the Note Registrar an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) GENERAL. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and
in the Private Placement Legend and agrees that it shall transfer such
Note only as provided in this Indenture. The Trustee shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Indenture or
under applicable law with respect to any transfer of any interest in
any Note (including any transfers between or among Depositary
participants or beneficial owners of interests in any Global Note)
other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so
if and when expressly required by the terms of, this Indenture, and to
examine the same to determine substantial compliance as to form with
the express requirements hereof.
The Note Registrar shall retain copies of all letters,
notices and other written communications received pursuant to Section 306 or
this Section 307. The Company shall have the right to inspect and make copies
of all such letters, notices or other written communications at any reasonable
time upon the giving of reasonable written notice to the Note Registrar.
<PAGE> 58
47
SECTION 308. FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS.
Citadel Broadcasting Company
140 South Ash Avenue
Tempe, Arizona 85281
Prudential Securities Incorporated
NationsBanc Capital Markets, Inc.
BancBoston Securities Inc.
c/o Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
In connection with our proposed purchase of $ aggregate
principal amount of 10-1/4% [Series B]* Senior Subordinated Notes due 2007 (the
"Securities") of Citadel Broadcasting Company (the "Company"), we confirm that:
1. We have received a copy of the Offering Memorandum, dated
June 30, 1997, relating to the Securities and such other information
as we deem necessary in order to make our investment decision.
2. We understand that the Securities have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
and unless so registered, may not be sold except as permitted in the
following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Securities to offer, sell
or otherwise transfer such Securities prior to the date which is two
years after the later of the date of original issue and the last date
on which the Company or any affiliate or the Company was the owner of
such Securities (or any predecessor thereto) (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the
Securities Act, (c) for so long as the Securities are eligible for
resale pursuant to Rule 144A under the Securities Act, to a Person we
reasonably believe is a Qualified Institutional Buyer under Rule 144A
that purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the transfer is being
made in reliance on Rule 144A, (d) to an institutional "accredited
investor" (as defined in subparagraph (a)(1), (2), (3) or (7) of Rule
501 of Regulation D under the Securities Act) that is purchasing for
his own account or for the account of such an institutional
"accredited
- --------
* Include only for New Notes.
<PAGE> 59
48
investor" or (e) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of
the foregoing cases to any requirement of law that the disposition of
our property or the property of such investor account be at all times
within our or their control and to compliance with any applicable
state securities laws. The foregoing restrictions on sale shall not
apply subsequent to the Resale Restriction Termination Date. If any
resale or other transfer of the Securities is proposed to be made
pursuant to clause (d) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Company and
the trustee under the indenture relating to the Securities (the
"Trustee") which shall provide, among other things, that the
transferee is an institutional "accredited investor" and that it is
acquiring such Securities for investment purposes and not for
distribution in violation of the Securities Act. Each purchaser
acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer of the Securities prior to the
Resale Restriction Termination Date pursuant to clause (c), (d) or (e)
above to require the delivery of an opinion of counsel, certifications
or other information satisfactory to the Company and the Trustee.
3. We are an institutional "accredited investor" (as defined
above) purchasing for our own account or for the account of an
institutional "accredited investor" for which we exercise sole
investment discretion and we are acquiring the Securities for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act
and we have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any investor accounts for
which we are acting are each able to bear the economic risk of our or
its investments for an indefinite period.
4. You and the Trustee are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy
thereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered
hereby.
Very truly yours,
(Name of Purchaser)
By:________________________
Name: _____________________
Title:_____________________
Date:______________________
<PAGE> 60
49
Upon transfer, the Securities should be registered in the
name of the new beneficial owner as follows:
Name:_________________________________________________________________
Address: _____________________________________________________________
Taxpayer ID Number:___________________________________________________
SECTION 309. [INTENTIONALLY OMITTED]
SECTION 310. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If (i) any mutilated Note is surrendered to the Trustee, or
(ii) the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Company
and the Trustee such security or indemnity, in each case, as may be required by
them to save each of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon Company Order the Trustee shall
authenticate and deliver, in exchange for any such mutilated Note or in lieu of
any such destroyed, lost or stolen Note, a new Note of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, any Subsidiary Notes
Guarantor and any other obligor upon the Notes, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all benefits of this Indenture equally and proportionately
with any and all other Notes duly issued hereunder.
<PAGE> 61
50
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 311. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name such Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest at the office or
agency of the Company maintained for such purpose pursuant to Section 1002;
provided, however, that each installment of interest may at the Company's
option be paid by mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to Section 312, to the
address of such Person as it appears in the Note Register.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the Regular Record Date by
virtue of having been such Holder, and such defaulted interest and (to the
extent lawful) interest on such defaulted interest at the rate borne by the
Notes (such defaulted interest and interest thereon herein collectively called
"Defaulted Interest") shall be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date (not less than 30 days after such
notice) of the proposed payment (the "Special Record Date"), and at
the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date, and in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
given in the manner provided for in Section 106, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having
been so given,
<PAGE> 62
51
such Defaulted Interest shall be paid to the Persons in whose names
the Notes (or their respective Predecessor Notes) are registered at
the close of business on such Special Record Date and shall no longer
be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 312. PERSONS DEEMED OWNERS.
Prior to the due presentment of a Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Persons in whose names, including the Global Note, such Notes are
registered as the owners of such Note for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Sections 305 and 311)
interest on such Note and for all other purposes whatsoever, whether or not
such Note be overdue, and none of the Company, any Subsidiary Notes Guarantor,
the Trustee nor any agent of the Company, any Subsidiary Notes Guarantor or the
Trustee shall be affected by notice to the contrary.
SECTION 313. CANCELLATION.
All Notes surrendered for payment, redemption, registration
of transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it. If
the Company shall acquire any of the Notes other than as set forth in the
preceding sentence, the acquisition shall not operate as a redemption or
satisfaction of the Indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation pursuant to this Section
313. No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Notes held by the Trustee shall be disposed of by the
Trustee in accordance with its customary procedures unless by Company Order the
Company shall direct that cancelled Notes be returned to it.
<PAGE> 63
52
SECTION 314. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
SECTION 315. CUSIP NUMBERS.
The Company in issuing Notes may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such "CUSIP" numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Notes or as contained in any notice of a redemption or
repurchase and that reliance may be placed only on the serial or other
identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon request by the Company cease to be
of further effect (except as to surviving rights of registration of transfer or
exchange of Notes expressly provided for herein or pursuant hereto) and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture when:
(1) either
(a) all the Notes theretofore authenticated and
delivered (other than (i) Notes which have been lost, stolen
or destroyed and which have been replaced or paid as provided
in Section 310 and (ii) Notes for whose payment money has
theretofore been deposited in trust with the Trustee or any
Paying Agent or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to
the Trustee for cancellation, or
(b) all such Notes not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable or
<PAGE> 64
53
(ii) shall become due and payable at their
Stated Maturity within one year or
(iii) are to be called for redemption
within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of
the Company,
and the Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for such
purpose an amount sufficient to pay and discharge the entire
Debt on such Notes not theretofore delivered to the Trustee
for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Notes
which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Company or the Subsidiary Notes Guarantors have paid
or caused to be paid all sums payable hereunder by the Company or the
Subsidiary Notes Guarantors; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 607 and,
if money shall have been deposited with the Trustee pursuant to subclause (b)
of clause (1) of this Section, the obligations of the Trustee under Section 402
and the last paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401 shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
If the Trustee or Paying Agent is unable to apply any money
or U.S. Government Obligations in accordance with Section 401 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's and any Subsidiary Notes Guarantor's obligations
<PAGE> 65
54
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 401; provided that if the Company has
made any payment of principal of, premium, if any, or interest on any Notes
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or government body):
(a) default in the payment of any interest on any Note when
it becomes due and payable, and continuance of such default for a
period of 30 days;
(b) default in the payment of the principal of (or premium,
if any, on) any Note when due;
(c) failure to perform or comply with Article Eight;
(d) default in the performance, or breach, of any covenant or
agreement of the Company or any Subsidiary Notes Guarantor contained
in this Indenture or any Subsidiary Notes Guarantee (other than a
default in the performance, or breach, of a covenant or agreement that
is specifically dealt with elsewhere herein), and continuance of such
default or breach for a period of 60 days after written notice has
been given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding;
(e) (i) the occurrence of an event of default under any
mortgage, bond, indenture, loan agreement or other document evidencing
an issue of Debt of the Company or any Significant Subsidiary, which
issue has an aggregate outstanding principal amount of not less than
$5,000,000, and such default has resulted in such Debt becoming,
whether by declaration or otherwise, due and payable prior to the date
on which it would otherwise become due and payable or (ii) a default
in any payment when due at final maturity of any such Debt;
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(f) failure by the Company or any of its Restricted
Subsidiaries to pay one or more final judgments the uninsured portion
of which exceeds in the aggregate $5,000,000, which judgment or
judgments are not paid, discharged or stayed for a period of 60 days;
(g) any Subsidiary Notes Guarantee ceases to be in full force
and effect or is declared null and void or any Subsidiary Notes
Guarantor denies that it has any further liability under any
Subsidiary Notes Guarantee, or gives notice to such effect (other than
by reason of the termination of this Indenture or the release of any
Subsidiary Notes Guarantee in accordance with this Indenture), and
such condition has continued for a period of 30 days after written
notice of such failure requiring the Subsidiary Notes Guarantor and
the Company to remedy the same has been given (x) to the Company by
the Trustee or (y) to the Company and the Trustee by the Holders of
25% in aggregate principal amount of the Notes then outstanding;
(h) a court having jurisdiction in the premises enters a
decree or order for (i) relief in respect of the Company or any
Significant Subsidiary in an involuntary case under any applicable
Bankruptcy Law now or hereafter in effect, (ii) appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or any Significant Subsidiary or for
all or substantially all of the property and assets of the Company or
any Significant Subsidiary or (iii) the winding up or liquidation of
the affairs of the Company or any Significant Subsidiary and, in each
case, such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(i) the Company or any Significant Subsidiary (i) commences a
voluntary case under any applicable Bankruptcy Law now or hereafter in
effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (ii) consents to the appointment
of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or
any Significant Subsidiary or for all or substantially all of the
property and assets 1of the Company or any Significant Subsidiary or
(iii) effects any general assignment for the benefit of creditors.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.
If an Event of Default (other than as specified in Section
501(h) or (i)) occurs and is continuing, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding may, and
the Trustee at the request of such Holders shall, declare the principal of all
of the outstanding Notes immediately due and payable, by a notice in writing to
the Company (and to the Trustee if given by the Holders) and, if the Credit
Facility is in effect, to the Credit Facility Agent and, upon any such
declaration, such principal shall become due and payable immediately. If an
Event of Default specified in Section 501(h) or (i) above
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occurs and is continuing, then such principal shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder of Notes.
At any time after a declaration of acceleration under this
Indenture, but before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Holders of a majority in aggregate principal
amount of the outstanding Notes, by written notice to the Company and the
Trustee, may rescind such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Notes,
(B) all unpaid principal of (and premium, if any,
on) any outstanding Notes that has become due otherwise than
by such declaration of acceleration and interest thereon at
the rate borne by the Notes,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest and overdue principal
amount at the rate borne by the Notes, and
(D) all sums paid or advanced by the Trustee under
this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(ii) all Events of Default, other than the non-payment of
amounts of principal of (or premium, if any, on) or interest on the
Notes that have become due solely by such declaration of acceleration,
have been cured or waived.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.
The Company and each of the Subsidiary Notes Guarantors
covenants that if
(a) default is made in the payment of any interest on any
Note when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or
premium, if any, on) any Note at the Stated Maturity or other maturity
thereof,
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the Company and the Subsidiary Notes Guarantors shall, upon demand of the
Trustee, pay to the Trustee for the benefit of the Holders of such Notes, the
whole amount then due and payable on such Notes for principal (and premium, if
any) and interest, with interest upon the overdue principal (and premium, if
any) and, to the extent that payment of such interest shall be legally
enforceable, upon overdue installments of interest, at the rate borne by the
Notes; and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and all other amounts due to the Trustee under Section 607.
If the Company or any Subsidiary Notes Guarantor, as the case
may be, fails to pay such amounts forthwith upon such demand, the Trustee, in
its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid and may prosecute
such proceeding to judgment or final decree, and may enforce the same against
the Company, such Subsidiary Notes Guarantor or any other obligor upon the
Notes and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company, such Subsidiary Notes
Guarantor or any other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy subject, however, to Section 513. No recovery of any such judgment upon
any property of the Company or any Subsidiary Notes Guarantor shall affect or
impair any rights, powers or remedies of the Trustee or the Holders.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any Subsidiary Notes
Guarantor, upon the Notes or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal, premium,
if any, or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Notes, to take such other actions (including
participating as a member, voting or otherwise, of any official
committee of creditors appointed in such matter) and to file such
other papers or documents as may
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be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Notes or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of such Holders, vote for the election
of a trustee in bankruptcy or other similar official.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES.
All rights of action and claims under this Indenture, the
Notes or the Subsidiary Notes Guarantees may be prosecuted and enforced by the
Trustee without the possession of any of the Notes or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name and as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the Notes
in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Subject to Article Fourteen, any money collected by the
Trustee pursuant to this Article shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
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SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Notes in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Notes for principal
(and premium, if any) and interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company or any other obligor on the Notes, as
their interests may appear or as a court of competent jurisdiction may
direct, provided that all sums due and owing to the Holders and the
Trustee have been paid in full as required by this Indenture.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Notes shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 30-day period by the Holders of
a majority or more in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Note or any Subsidiary Notes Guarantee to affect, disturb
or prejudice the rights of any other Holders, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under
this Indenture, any Note or any Subsidiary Notes Guarantee, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders.
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SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional,
to receive payment, as provided herein (including, if applicable, Article
Eleven) and in such Note of the principal of (and premium, if any) and (subject
to Section 311) interest on such Note on the respective Stated Maturities
expressed in such Note (or, in the case of redemption or repurchase, on the
Redemption Date or repurchase) and to institute suit for the enforcement of any
such payment, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Subsidiary Notes
Guarantee and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, any Subsidiary Notes Guarantor, any other obligor on the Notes, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph
of Section 310, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
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SECTION 512. CONTROL BY HOLDERS.
The Holders of not less than a majority in principal amount
of the Outstanding Notes shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture or any Subsidiary Notes Guarantee;
(2) the Trustee need not take any action which might involve
it in personal liability or be unjustly prejudicial to the Holders not
consenting; and
(3) subject to the provisions of Section 315 of the Trust
Indenture Act, the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate
principal amount of the outstanding Notes may, on behalf of the Holders of all
of the Notes, waive any past defaults under this Indenture, except a default in
the payment of the principal of (and premium, if any) or interest on any Note,
or in respect of a covenant or provision that under this Indenture cannot be
modified or amended without the consent of the Holder of each Note outstanding.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
SECTION 514. WAIVER OF STAY OR EXTENSION LAWS.
Each of the Company and the Subsidiary Notes Guarantors
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company, any
Subsidiary Notes Guarantor or any such obligor from paying all or any portion
of the principal of, premium, if any, or interest on the Notes contemplated
herein or in the Notes or which may affect the covenants or the performance of
this Indenture; and each of the Company, any Subsidiary Notes Guarantor and any
such obligor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
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Trustee, but shall suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 515. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any
Note by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Notes, or to any suit instituted by any Holder for the enforcement
of the payment of the principal of (or premium, if any) or interest on any Note
on or after the respective Stated Maturities expressed in such Note (or, in the
case of redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default, (1)
the Trustee shall perform only such duties as are specifically set forth in
this Indenture and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and (2) in the absence of bad faith on its part,
the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture;
but in the case of any such certificates or opinions which by any provision
hereby are specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).
(b) In case a Default or an Event of Default shall have
occurred and be continuing of which a Responsible Officer of the Trustee has
actual knowledge or of which written notice of such Default or Event of Default
shall have been given to the Trustee by the Company, any other obligor of the
Notes or by any Holder, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill
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in their exercise, as a prudent Person would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, EXCEPT that
(1) this paragraph (c) shall not be construed to limit the
effect of paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a majority in aggregate principal
amount of the Outstanding Notes relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under
this Indenture; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. NOTICE OF DEFAULTS.
If a Default or an Event of Default occurs and is continuing
and is known to the Trustee, the Trustee shall mail to each Holder of the Notes
notice of the Default or Event of Default within 90 days after the occurrence
thereof. Except in the case of a Default or an Event of Default in payment of
principal of (and premium, if any, on) or interest on any Notes, the Trustee
may withhold the notice to the Holders if a committee of its trust officers in
good faith determines that withholding such notice is in the interests of the
Holders.
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SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of TIA Sections 315(a) through
315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, request and rely upon an
Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and
any written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(5) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney at the sole cost of the Company;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee
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shall not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it hereunder; and
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture; and the Trustee shall not be
deemed to have notice of any Default or Event of Default, except in
the case of an event of default involving failures by the Company to
pay principal, premium, if any, or interest on the Notes, unless a
Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Company, the Notes or this Indenture.
SECTION 604. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF NOTES.
The recitals contained herein and in the Notes, except for
the Trustee's certificates of authentication, shall be taken as the statements
of the Company and the Subsidiary Notes Guarantors, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Notes or of the
Subsidiary Notes Guarantees, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and
perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. The Trustee shall
not be accountable for the use or application by the Company of Notes or the
proceeds thereof.
SECTION 605. MAY HOLD NOTES.
The Trustee, any Paying Agent, any Note Registrar, any
Authenticating Agent or any other agent of the Company or of the Trustee, in
its individual or any other capacity, may become the owner or pledgee of Notes
and, subject to TIA Sections 310(b) and 311, may otherwise deal with the
Company with the same rights it would have if it were not Trustee, Paying
Agent, Note Registrar, Authenticating Agent or such other agent. The Trustee is
permitted to engage in other transactions; provided, however, that if it
acquires any conflicting interest it must eliminate such conflict or resign.
SECTION 606. MONEY HELD IN TRUST.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust hereunder for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed in
writing with the Company or any Subsidiary Notes Guarantor.
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SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation
as shall be agreed to in writing between the Company and the Trustee
for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel and costs and expenses of collection), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify each of the Trustee or any predecessor
Trustee (and their respective directors, officers, employees and
agents) for, and to hold it harmless against, any and all loss,
damage, claim, liability or expense, including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance
or administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to
compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the Holders
of the Notes upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the payment of principal of (and premium,
if any) or interest on particular Notes.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(h) or (i), the
expenses (including the reasonable charges and expenses of its counsel) of and
the compensation for such services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination
of this Indenture.
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SECTION 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall be at all times a Trustee hereunder which shall
be eligible to act as Trustee under TIA Section 310(a)(1) and which shall have
an office in The City of New York, and shall have a combined capital and
surplus of at least $100,000,000. If the Trustee does not have an office in The
City of New York, the Trustee may appoint an agent in The City of New York
reasonably acceptable to the Company to conduct any activities which the
Trustee may be required under this Indenture to conduct in The City of New
York. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of federal, state, territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section 608, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 608, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of this Section.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor Trustee by written instrument
executed by authority of the Board of Directors, a copy of which shall be
delivered to the resigning Trustee and a copy to the successor Trustee. If an
instrument of acceptance required by this Section shall not have been delivered
to the resigning Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of not less than a majority in principal amount of the Outstanding
Notes, delivered to the Trustee and to the Company. Upon such removal, the
Company shall promptly appoint a successor Trustee by written instrument
executed by authority of the Board of Directors of the Company, a copy of which
shall be delivered to the removed Trustee and a copy to the successor Trustee.
If an instrument of acceptance required by this Section shall not have been
delivered to the removed Trustee within 30 days after the giving of such notice
of removal, the removed Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
TIA Section 310(b) after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Note for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 608
and shall fail to resign after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Note for at
least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a Custodian of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Note for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to the
Holders of Notes in the manner provided for in Section 106. Each notice shall
include the name of the successor Trustee and the address of its Corporate
Trust Office.
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SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 611. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes. In case at
that time any of the Notes shall not have been authenticated, any successor
Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee. In all such cases such
certificates shall have the full force and effect which this Indenture provides
for the certificate of authentication of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion
or consolidation.
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ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES.
The Company shall furnish or cause to be furnished to the
Trustee
(a) semiannually, not more than 10 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date; and
(b) at such other times as the Trustee may reasonably request
in writing, within 30 days after receipt by the Company of any such
request, a list of similar form and content to that in Subsection (a)
hereof as of a date not more than 15 days prior to the time such list
is furnished;
provided, however, that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished.
SECTION 702. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Notes, by receiving and holding the same,
agrees with the Company and the Trustee that none of the Company or the Trustee
or any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with TIA Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA Section
312(b).
SECTION 703. REPORTS BY TRUSTEE.
Within 60 days after May 15 of each year commencing with the
first May 15 after the first issuance of Notes, the Trustee shall transmit to
the Holders, in the manner and to the extent provided in TIA Section 313(c), a
brief report dated as of such May 15 if required by TIA Section 313(a).
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ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS.
The Company shall not consolidate with or merge with or into
any other Person or, directly or indirectly, convey, transfer or lease its
properties and assets substantially as an entirety to any Person or Persons,
unless:
(a) Either (i) the Company is the surviving corporation or
(ii) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person that
acquires by sale, assignment, transfer, lease or other disposition the
properties and assets of the Company substantially as an entirety (the
"Surviving Entity") (A) is a corporation, partnership or trust
organized and validly existing under the laws of the United States,
any state thereof or the District of Columbia and (B) expressly
assumes, by a supplemental indenture in form satisfactory to the
Trustee, all of the Company's obligations under this Indenture and the
Notes.
(b) Immediately after giving effect to such transaction and
treating any obligation of the Company or a Restricted Subsidiary in
connection with or as a result of such transaction as having been
incurred at the time of such transaction, no Default or Event of
Default shall have occurred and be continuing.
(c) Immediately after giving effect to such transaction on a
pro forma basis, (on the assumption that the transaction occurred at
the beginning of the most recently ended four full fiscal quarter
period for which internal financial statements are available), the
Company (or the Surviving Entity if the Company is not the continuing
obligor under this Indenture) could incur at least $1.00 of additional
Debt (other than Permitted Debt) pursuant to the first paragraph of
Section 1009.
(d) If the Company is not the continuing obligor under this
Indenture, each Subsidiary Notes Guarantor, unless it is the other
party to the transaction described above, has by supplemental
indenture confirmed that its Subsidiary Notes Guarantee applies to the
Surviving Entity's obligations under this Indenture and the Notes.
(e) If any of the property or assets of the Company or any of
its Restricted Subsidiaries would thereupon become subject to any
Lien, the provisions of Section 1021 are complied with.
(f) The Company delivers, or causes to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee,
an Officers' Certificate and an
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Opinion of Counsel, each stating that such transaction complies with
the requirements of this Indenture.
SECTION 802. SUCCESSOR SUBSTITUTED.
In the event of any transaction described in and complying
with the conditions listed in Section 801 in which the Company is not the
continuing obligor under this Indenture, the Surviving Entity shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture, and thereafter the Company shall, except in the case of a
lease, be discharged from all its obligations and covenants under this
Indenture and the Notes.
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company in this Indenture and in the Notes; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(3) to add additional Events of Default; or
(4) to provide for uncertificated Notes in addition to or in
place of the Certificated Notes; or
(5) to evidence and provide for the acceptance of appointment
under this Indenture by a successor Trustee; or
(6) to secure the Notes; or
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(7) to cure any ambiguity, to correct or supplement any
provision in this Indenture that may be defective or inconsistent with
any other provision in this Indenture, or to make any other provisions
with respect to matters or questions arising under this Indenture,
provided that such actions pursuant to this clause do not adversely
affect the interests of the Holders in any material respect; or
(8) to comply with any requirements of the Commission in
order to effect and maintain the qualification of this Indenture under
the Trust Indenture Act.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF
HOLDERS.
With the consent of the Holders of at least a majority in
principal amount of the Outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes), by Act of such
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture
or of modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or change the place of payment where, or
change the coin or currency in which, any Note or any premium or
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date);
(b) reduce the percentage in principal amount of Outstanding
Notes, the consent of whose Holders is required for any amendment or
for any waiver of compliance with certain provisions of, or certain
defaults and their consequences provided for under, this Indenture;
(c) modify any of the provisions of this Indenture relating
to the subordination of the Notes or the Subsidiary Notes Guarantees
in a manner materially adverse to the Holders; or
(d) waive a default in the payment of principal of, or
premium, if any, or interest on the Notes.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record
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date is fixed, the Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to consent to such
supplemental indenture, whether or not such Holders remain Holders after such
record date.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustees own
rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby (except as provided in Section 902).
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to the Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
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SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee
of any supplemental indenture pursuant to the provisions of Section 902, the
Company shall give notice thereof to the Holders of each Outstanding Note
affected, in the manner provided for in Section 106, setting forth in general
terms the substance of such supplemental indenture.
SECTION 908. EFFECT ON SENIOR DEBT.
No supplemental indenture shall adversely affect the rights
of any holders of Senior Debt under Article Fourteen unless the requisite
holders of each issue of Senior Debt affected thereby shall have consented to
such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST.
The Company covenants and agrees for the benefit of the
Holders that it shall duly and punctually pay the principal of (and premium, if
any) and interest on the Notes in accordance with the terms of the Notes and
this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in The City of New York an office
or agency where Notes may be presented or surrendered for payment, where Notes
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Notes and this Indenture
may be served. The Corporate Trust Office of the Trustee shall be such office
or agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company shall give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York) where the
Notes may be presented or surrendered for any or all such purposes and may from
time to time rescind any such
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designation; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or
agency in The City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and any
change in the location of any such other office or agency.
SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent,
it shall, on or before each due date of the principal of (or premium, if any)
or interest on any of the Notes, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal of (or
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and shall promptly
notify the Trustee of its action or failure to so act.
Whenever the Company shall have one or more Paying Agents for
the Notes, it shall, on or before each due date of the principal of (or
premium, if any) or interest on any Notes, deposit with a Paying Agent a sum in
same day funds (or New York Clearing House funds if such deposit is made prior
to the date on which such deposit is required to be made) sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
shall promptly notify the Trustee of such action or any failure to so act.
The Company shall cause each Paying Agent (other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Notes in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Notes) in the making of any payment of
principal (and premium, if any) or interest; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying
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Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by the Company or such Paying Agent; and, upon such
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such sums.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (or
premium, if any) or interest on any Note and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment to the Company, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining shall be repaid to the Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect the
corporate existence and that of each Restricted Subsidiary and the corporate
rights (charter and statutory) licenses and franchises of the Company and each
Restricted Subsidiary; provided, however, that the Company shall not be
required to preserve any such existence (except the Company) right, license or
franchise if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and each of its Restricted Subsidiaries, taken as a whole, and that
the loss thereof is not, and shall not be, disadvantageous in any material
respect to the Holders.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Restricted Subsidiary or upon the income, profits or property of the Company or
any Restricted Subsidiary and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a material liability or lien
upon the property of the Company or any Restricted Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax,
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assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which appropriate
reserves, if necessary (in the good faith judgment of management of the
Company), are being maintained in accordance with GAAP.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company shall cause all material properties owned by the
Company or any Restricted Subsidiary or used or held for use in the conduct of
its business or the business of any Restricted Subsidiary to be maintained and
kept in normal condition, repair and working order and shall cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company or any of its Restricted Subsidiaries from discontinuing the
maintenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Restricted Subsidiary and not adverse in any material respect
to the Holders.
SECTION 1007. INSURANCE.
To the extent available at commercially reasonable rates, the
Company shall maintain, and shall cause each of its Restricted Subsidiaries to
maintain, insurance with responsible carriers against such risks and in such
amounts, and with such deductibles, retentions, self-insured amounts and
co-insurance provisions, as are customarily carried by similar businesses, of
similar size, including professional and general liability, property and
casualty loss, workers' compensation and interruption of business insurance.
SECTION 1008. COMPLIANCE WITH LAWS.
The Company shall comply, and shall cause each of its
Restricted Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all
states and municipalities thereof, and of any governmental regulatory
authority, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except for such noncompliances as
would not in the aggregate have a material adverse effect on the financial
condition or results of operations of the Company and its Subsidiaries, taken
as a whole.
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SECTION 1009. LIMITATION ON DEBT.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, issue, assume, guarantee or in any manner
become directly or indirectly liable for the payment of, or otherwise incur
(collectively, "incur"), any Debt (including Acquired Debt and the issuance of
Disqualified Stock), except that the Company or a Subsidiary Notes Guarantor
may incur Debt or issue Disqualified Stock if, at the time of such event, the
Consolidated Cash Flow Ratio would have been less than 7.0 to 1.0.
In making the foregoing calculation, pro forma effect shall
be given to: (i) the incurrence of such Debt and (if applicable) the
application of the net proceeds therefrom, including to refinance other Debt,
as if such Debt had been incurred and the application of proceeds therefrom
occurred on the first day of the four-fiscal quarter period used to calculate
the Consolidated Cash Flow Ratio, (ii) the incurrence, repayment or retirement
of any other Debt by the Company or any of its Restricted Subsidiaries since
the first day of such four-quarter period as if such Debt was incurred, repaid
or retired at the beginning of such four-quarter period and (iii) the
acquisition (whether by purchase, merger or otherwise) or disposition (whether
by sale, merger or otherwise) of any company, entity or business acquired or
disposed of by the Company or any of its Restricted Subsidiaries, as the case
may be, since the first day of such four-quarter period, as if such acquisition
or disposition occurred at the beginning of such four-quarter period. In making
a computation under the foregoing clause (i) or (ii), the amount of Debt under
a revolving credit facility shall be computed based upon the average daily
balance of such Debt during such four-quarter period.
(b) Notwithstanding the foregoing, the Company may, and may,
to the extent expressly permitted below, permit any of its Restricted
Subsidiaries to, incur any of the following Debt ("Permitted Debt"):
(i) Debt of the Company or any Subsidiary Notes Guarantor
under the Credit Facility (including guarantees thereof by
Subsidiaries) in an aggregate principal amount at any one time
outstanding not to exceed $110,000,000 less any amounts applied to the
permanent reduction of such Debt pursuant to Section 1012.
(ii) Debt of the Company or any of its Restricted
Subsidiaries outstanding on the Closing Date, other than Debt
described under clause (i) above.
(iii) Debt owed by the Company to any of its Restricted
Subsidiaries or owed by any Subsidiary to the Company or a Restricted
Subsidiary (provided that such Debt is Subordinated Debt and is held
by the Company or such Restricted Subsidiary) or owed to the Company
or a Subsidiary Notes Guarantor by a Restricted Subsidiary that is not
a Subsidiary Notes Guarantor, provided the incurrence of such Debt did
not violate the provisions of Section 1010.
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(iv) Debt represented by the Notes and the Subsidiary Notes
Guarantees.
(v) Hedging Obligations of the Company or any of its
Restricted Subsidiaries incurred in the ordinary course of business.
(vi) Capitalized Lease Obligations of the Company or any of
its Restricted Subsidiaries in an aggregate amount not exceeding
$3,000,000 at any one time outstanding.
(vii) Debt under purchase money mortgages or secured by
purchase money security interests so long as (x) such Debt is not
secured by any property or assets of the Company or any of its
Restricted Subsidiaries other than the property or assets so acquired
and (y) such Debt is created within 60 days of the acquisition of the
related property; provided that the aggregate principal amount of Debt
under this clause (vii) does not exceed $2,000,000 at any one time
outstanding.
(viii) Debt of the Company or any Subsidiary Notes Guarantor,
not permitted by any other clause of this definition, in an aggregate
principal amount not to exceed $5,000,000 at any one time outstanding.
(ix) Debt of the Company or any of its Restricted
Subsidiaries consisting of guarantees, indemnities or obligations in
respect of purchase price adjustments in connection with the
acquisition or disposition of assets, including, without limitation,
shares of Capital Stock.
(x) Acquired Debt of a Person, other than Debt incurred in
connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary or the acquisition of assets from such Person,
as the case may be, provided that the Company on a pro forma basis
could incur $1.00 of additional Debt (other than Permitted Debt)
pursuant to the first paragraph of this Section.
(xi) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by
the Company or any Restricted Subsidiary of any outstanding Debt of
the Company or such Restricted Subsidiary, other than Debt incurred
pursuant to clause (i), (v), (vi), (vii), (viii) or (ix) of this
Section, including any successive refinancings thereof, so long as (A)
any such new Debt is in a principal amount that does not exceed the
principal amount so refinanced, plus the amount of any premium
required to be paid in connection with such refinancing pursuant to
the terms of the Debt refinanced or the amount of any premium
reasonably determined by the Company as necessary to accomplish such
refinancing, plus the amount of expenses of the Company incurred in
connection with such refinancing, (B) in the case of any refinancing
of Subordinated Debt, such new Debt is made subordinate to the
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Notes at least to the same extent as the Debt being refinanced, (C) in
the case of any refinancing of the Notes or any Pari Passu Debt, such
Debt is Pari Passu Debt or Subordinated Debt and (D) such refinancing
Debt does not have a Weighted Average Life less than the Weighted
Average Life of the Debt being refinanced and does not have a final
scheduled maturity earlier than the final scheduled maturity, or
permit redemption at the option of the holder earlier than the
earliest date of redemption at the option of the holder, of the Debt
being refinanced.
SECTION 1010. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, take any of the following
actions:
(a) declare or pay any dividend on, or make any distribution
to holders of, any shares of the Capital Stock of the Company or any
of its Restricted Subsidiaries other than (i) dividends or
distributions payable solely in Qualified Equity Interests of the
issuer of such shares of Capital Stock, (ii) dividends or
distributions by a Restricted Subsidiary payable to the Company or
another Restricted Subsidiary or (iii) pro rata dividends or
distributions on common stock of a Restricted Subsidiary held by
minority stockholders, provided that such dividends do not in the
aggregate exceed the minority stockholders' pro rata share of such
Restricted Subsidiary's net income from the first day of the Company's
fiscal quarter during which the Closing Date occurs;
(b) purchase, redeem or otherwise acquire or retire for
value, directly or indirectly, any shares of Capital Stock (or any
options, warrants or other rights to acquire shares of Capital Stock)
of (i) the Company or any of its Unrestricted Subsidiaries or (ii) any
Restricted Subsidiary that are held by any Affiliate of the Company
(other than, in either case, any such Capital Stock owned by the
Company or any of its Restricted Subsidiaries);
(c) make any principal payment on, or repurchase, redeem,
defease or otherwise acquire or retire for value, prior to any
scheduled principal payment, sinking fund payment or maturity, any
Subordinated Debt; and
(d) make any Investment (other than a Permitted Investment)
in any Person
(such payments or other actions described in (but not excluded from) clauses
(a) through (d) being referred to as "Restricted Payments"), unless at the time
of, and immediately after giving effect to, the proposed Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing,
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(ii) the Company could incur at least $1.00 of additional
Debt (other than Permitted Debt) pursuant to Section 1009, and
(iii) the aggregate amount of all Restricted Payments
declared or made after the Closing Date does not exceed the sum of:
(A) the remainder of (x) 100% of the aggregate
Consolidated Cash Flow for the period beginning on the first
day of the Company's fiscal quarter during which the Closing
Date occurs and ending on the last day of the Company's most
recent fiscal quarter for which internal financial statements
are available ending prior to the date of such proposed
Restricted Payment (the "Computation Period") minus (y) the
product of 1.4 times the sum of (i) Consolidated Fixed
Charges for the Computation Period and (ii) all dividends or
other distributions paid in cash by the Company or any of its
Restricted Subsidiaries on any Disqualified Stock of the
Company or any of its Restricted Subsidiaries for the
Computation Period; plus
(B) the aggregate net proceeds received by the
Company after the Closing Date (including the fair market
value of property other than cash as determined by the
Company's Board of Directors, whose good faith determination
shall be conclusive) from the issuance or sale (other than to
a Subsidiary) of Qualified Equity Interests of the Company
(excluding from this computation any net proceeds of a Public
Equity Offering received by the Company that are used by it
to redeem the Notes, as discussed above); plus
(C) the aggregate net proceeds received by the
Company after the Closing Date (including the fair market
value of property other than cash as determined by the
Company's Board of Directors, whose good faith determination
shall be conclusive) from the issuance or sale (other than to
a Subsidiary) of debt securities or Disqualified Stock that
have been converted into or exchanged for Qualified Stock of
the Company, together with the aggregate net cash proceeds
received by the Company at the time of such conversion or
exchange; plus
(D) without duplication, the Net Cash Proceeds
received by the Company or a Wholly Owned Restricted
Subsidiary upon the sale of any of its Unrestricted
Subsidiaries; plus
(E) $5,000,000.
Notwithstanding the foregoing, the Company and any of its
Restricted Subsidiaries may take any of the following actions, so long as (with
respect to clauses (f) and (g) below) no Default or Event of Default shall have
occurred and be continuing or would occur:
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(a) The payment of any dividend within 60 days after the date
of declaration thereof, if at the declaration date such payment would
not have been prohibited by the foregoing provision.
(b) The repurchase, redemption or other acquisition or
retirement for value of any shares of Capital Stock of the Company, in
exchange for, or out of the net cash proceeds of a substantially
concurrent issuance and sale (other than to a Subsidiary) of,
Qualified Equity Interests of the Company.
(c) The purchase, redemption, defeasance or other acquisition
or retirement for value of Subordinated Debt in exchange for, or out
of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Restricted Subsidiary) of shares of, Qualified
Stock of the Company.
(d) The purchase, redemption, defeasance or other acquisition
or retirement for value of Subordinated Debt in exchange for, or out
of the net cash proceeds of a substantially concurrent issuance or
sale (other than to a Subsidiary) of, Subordinated Debt, so long as
the Company or a Restricted Subsidiary would be permitted to refinance
such original Subordinated Debt with such new Subordinated Debt
pursuant to clause (xi) of the definition of Permitted Debt.
(e) The repurchase of any Subordinated Debt at a purchase
price not greater than 101% of the principal amount of such
Subordinated Debt in the event of a "change of control" in accordance
with provisions similar to Section 1011; provided that, prior to such
repurchase, the Company has made the Change of Control Offer as
provided in such Section with respect to the Notes and has repurchased
all Notes validly tendered for payment in connection with such Change
of Control Offer.
(f) The payment by the Company to Citadel Communications for
the purpose of the purchase, redemption, acquisition, cancellation or
other retirement for value of shares of Capital Stock of Citadel
Communications, options on any such shares or related stock
appreciation rights or similar securities held by officers or
employees or former officers or employees (or their estates or
beneficiaries under their estates) or by any employee benefit plan,
upon death, disability, retirement or termination of employment or
pursuant to the terms of any employee benefit plan or any other
agreement under which such shares of stock or related rights were
issued; provided that the aggregate cash consideration paid for such
purchase, redemption, acquisition, cancellation or other retirement of
such shares of Capital Stock after the date of the Closing Date does
not exceed $1,000,000 in any fiscal year.
(g) Loans or advances to officers, directors and employees of
Citadel Communications, the Company or any of its Restricted
Subsidiaries made in the ordinary
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course of business after the Closing Date in an aggregate principal
amount not to exceed $1,000,000 at any one time outstanding.
(h) Payments to or on behalf of Citadel Communications to pay
its operating and administrative expenses attributable to the Company,
including, without limitation, legal and audit expenses, directors'
fees, fees payable in respect of the trustee and back-up trustees
under the Voting Trust Agreement, and Commission compliance expenses,
in an amount not to exceed the greater of $1,000,000 per fiscal year
and 1% of the net revenues of the Company for the preceding fiscal
year.
(i) Repayment of the note payable of the Company to Citadel
Communications outstanding as of the Closing Date in an amount not to
exceed $12,817,000 plus all accrued and unpaid interest thereon to the
Closing Date.
The payments described in clauses (b), (c), (e), (f) and (g)
of this paragraph shall be Restricted Payments that shall be permitted to be
taken in accordance with this paragraph but shall reduce the amount that would
otherwise be available for Restricted Payments under the foregoing clause
(iii), and the payments described in clauses (a), (d), (h) and (i) of this
paragraph shall be Restricted Payments that shall be permitted to be taken in
accordance with this paragraph and shall not reduce the amount that would
otherwise be available for Restricted Payments under the foregoing clause
(iii).
For the purpose of making any calculations under this
Indenture (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company shall be deemed to have made an Investment in an amount
equal to the fair market value of the net assets of such Restricted Subsidiary
at the time of such designation as determined by the Board of Directors of the
Company, whose good faith determination shall be conclusive, (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at fair
market value at the time of such transfer, as determined by the Board of
Directors of the Company, whose good faith determination shall be conclusive
and (iii) subject to the foregoing, the amount of any Restricted Payment, if
other than cash, shall be determined by the Board of Directors of the Company,
whose good faith determination shall be conclusive.
If the aggregate amount of all Restricted Payments calculated
under the foregoing provision includes an Investment in an Unrestricted
Subsidiary or other Person that thereafter becomes a Restricted Subsidiary,
such Investment shall no longer be counted as a Restricted Payment for purposes
of calculating the aggregate amount of Restricted Payments.
If an Investment resulted in the making of a Restricted
Payment, the aggregate amount of all Restricted Payments calculated under the
foregoing provision shall be reduced by the amount of any net reduction in such
Investment (resulting from the payment of interest or dividends, loan
repayment, transfer of assets or otherwise), to the extent such net reduction
is
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not included in Consolidated Adjusted Net Income; provided that the total
amount by which the aggregate amount of all Restricted Payments may be reduced
may not exceed the lesser of (x) the cash proceeds received by the Company and
any of its Restricted Subsidiaries in connection with such net reduction and
(y) the initial amount of such Investment.
In computing Consolidated Adjusted Net Income for purposes of
the foregoing clause (iii)(A), (i) the Company may use audited financial
statements for the portions of the relevant period for which audited financial
statements are available on the date of determination and unaudited financial
statements and other current financial data based on the books and records of
the Company for the remaining portion of such period and (ii) the Company shall
be permitted to rely in good faith on the financial statements and other
financial data derived from the books and records of the Company that are
available on the date of determination. If the Company makes a Restricted
Payment that, at the time of the making of such Restricted Payment, would in
the good faith determination of the Company be permitted under the requirements
of this Indenture, such Restricted Payment shall be deemed to have been made in
compliance with this Indenture notwithstanding any subsequent adjustments made
in good faith to the Company's financial statements affecting Consolidated
Adjusted Net Income of the Company for any period.
SECTION 1011. PURCHASE OF NOTES UPON A CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder shall
have the right to require the repurchase of its Notes by the Company, in whole
or in part in integral multiples of $1,000, in cash pursuant to the offer
described below (the "Change of Control Offer") at a purchase price equal to
101% of the principal amount thereof as of the Change of Control Purchase Date,
plus accrued and unpaid interest to such date (the "Change of Control
Payment").
Within 30 days following any Change of Control, the Company
shall notify the Trustee thereof and give written notice of such Change of
Control to each Holder of Notes by first-class mail, postage prepaid, at its
address appearing in the Note Register, stating:
(i) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this Section 1011 and that all
Notes validly tendered shall be accepted for payment;
(ii) the purchase price and the purchase date, which shall be
a Business Day no earlier than 30 days nor later than 60 days from the
date such notice is mailed or such later date as is necessary to
comply with requirements under the Exchange Act (the "Change of
Control Purchase Date");
(iii) that any Note not tendered shall continue to accrue
interest;
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(iv) that, unless the Company defaults in the payment of the
Change of Control Payment, any Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the
Change of Control Purchase Date;
(v) that a Holder electing to have any Note or a portion
thereof purchased pursuant to the Change of Control Offer shall be
required to surrender such Note to the Paying Agent at the address
specified in the notice prior to the close of business on the Business
Day immediately preceding the Change of Control Purchase Date;
(vi) that the Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than the close of
business on the third Business Day immediately preceding the Change in
Control Purchase Date, facsimile transmission, telex or letter setting
forth the name of such Holder, the principal amount of Notes delivered
for purchase and a statement that such Holder is withdrawing its
election to have such Notes purchased;
(vii) that the Holders whose Notes are being purchased only
in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of
$1,000 or an integral multiple thereof (unless the Company otherwise
directs); and
(viii) certain other procedures that a Holder must follow to
accept a Change of Control Offer or to withdraw such acceptance.
On the Change of Control Purchase Date, the Company shall:
(i) accept for payment Notes or portions thereof tendered pursuant to the
Change of Control Offer; (ii) deposit with the Paying Agent money sufficient to
pay the purchase price of all Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee, all Notes or portions
thereof so accepted together with an Officers' Certificate specifying the Notes
or portions thereof accepted for payment by the Company. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate and mail to
such Holders a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
issued shall be in a principal amount of $1,000 or an integral multiple thereof
(unless the Company otherwise directs).
The Company shall comply with the applicable tender offer
rules including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws and regulations to the extent such laws and regulations are
applicable in the event that a Change of Control occurs and the Company is
required to repurchase the Notes under this Section 1011.
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The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create any restriction (other than restrictions
existing under Debt as in effect on the Closing Date or in any renewals,
extensions, substitutions refinancings or replacements of such Debt that would
materially impair the ability of the Company to make a Change of Control Offer
to purchase the Notes or, if such Change of Control Offer is made, to pay for
the Notes tendered for purchase.
To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 1011, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Indenture.
SECTION 1012. LIMITATION ON CERTAIN ASSET SALES.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, engage in any Asset Sale unless (i) the
consideration received by the Company or such Restricted Subsidiary for such
Asset Sale is not less than the fair market value of the assets sold (as
determined by the Board of Directors of the Company, whose good faith
determination shall be conclusive) and (ii) the consideration received by the
Company or the relevant Restricted Subsidiary in respect of such Asset Sale
consists of at least 80% (A) cash or cash equivalents and/or (B) the assumption
by the transferee of Debt of the Company or a Restricted Subsidiary ranked
senior to or pari passu with the Notes and release of the Company or such
Restricted Subsidiary from all liability on such Debt.
(b) If the Company or any of its Restricted Subsidiaries
engages in an Asset Sale, the Company may, at its option, within 12 months
after such Asset Sale, (i) apply all or a portion of the Net Cash Proceeds to
the permanent reduction of amounts outstanding under the Credit Facility or to
the repayment of other Senior Debt of the Company or a Subsidiary Notes
Guarantor or (ii) invest (or enter into one or more legally binding agreements
to invest) all or a portion of such Net Cash Proceeds in properties and assets
to replace the properties and assets that were the subject of the Asset Sale or
in properties and assets that shall be used in the broadcast business or
businesses reasonably related thereto. If any such legally binding agreement to
invest such Net Cash Proceeds is terminated, the Company may, within 90 days of
such termination or within 12 months of such Asset Sale, whichever is later,
invest such Net Cash Proceeds as provided in clause (i) or (ii) (without regard
to the parenthetical contained in such clause (ii)) above. The amount of such
Net Cash Proceeds not so used as set forth above in this paragraph (b)
constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds
$5,000,000, the Company shall make an offer to all Holders of Notes (an "Asset
Sale Offer") to purchase, on a pro rata basis, the maximum principal amount of
Notes, that is an integral multiple of $1,000, that may be purchased with the
Excess Proceeds, at a purchase price in cash equal to 100% of
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the principal amount thereof, plus accrued and unpaid interest, if any, to the
date fixed for the closing of such offer (the "Offered Price"). Within 30 days
after the date on which the aggregate amount of Excess Proceeds exceeds
$5,000,000, the Company shall give to each Holder of the Notes, with a copy to
the Trustee, in the manner provided in Section 106 a notice stating:
(i) that the Holder has the right to require the Company to
repurchase such Holder's Notes at the Offered Price, subject to
proration in the event the Excess Proceeds are less than the aggregate
Offered Price of all Notes tendered;
(ii) the date of purchase of Notes pursuant to the Asset Sale
Offer (the "Asset Sale Purchase Date"), which shall be no earlier than
30 days nor later than 60 days from the date such notice is mailed;
(iii) that the Offered Price shall be paid to Holders
electing to have Notes purchased on the asset Sale Purchase Date,
provided that a Holder must surrender its Note to the Paying Agent at
the address specified in the notice prior to the close of business at
least five Business Days prior to the Asset Sale Purchase Date;
(iv) any Note not tendered shall continue to accrue interest
pursuant to its terms;
(v) that unless the Company defaults in the payment of the
Offered Price, any Note accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest on and after the Asset Sale
Purchase Date;
(vi) that Holders shall be entitled to withdraw their
tendered Notes and their election to require the Company to purchase
such Notes, provided that the Company receives, not later than the
close of business on the third Business Day preceding the Asset Sale
Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount and serial
numbers of the Notes tendered for purchase, and a statement that such
Holder is withdrawing its election to have such Notes purchased;
(vii) that the Holders whose Notes are being purchased only
in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered; which unpurchased
portion must be equal to $1,000 in principal amount or an integral
multiple thereof (unless the Company otherwise directs); and
(viii) the instructions a Holder must follow in order to have
his Notes purchased in accordance with this Section 1012.
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To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use the deficiency for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Notes to be purchased shall be selected on a pro rata
basis. Upon completion of any such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions
of this Section 1012, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Indenture.
SECTION 1013. LIMITATION ON ASSET SWAPS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, engage in any Asset Swap, unless:
(i) at the time of entering into the Asset Swap and
immediately after giving effect to the proposed Asset Swap, no Default
or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof;
(ii) the Company would, at the time of entering into the
Asset Swap and after giving pro forma effect to the proposed Asset
Swap, as if such Asset Swap had occurred at the beginning of the
applicable four-quarter period, have been permitted to incur at least
$1.00 of additional Debt (other than Permitted Debt) pursuant to the
first paragraph of Section 1009;
(iii) the respective aggregate fair market values of the
assets being purchased and sold by the Company or any of its
Restricted Subsidiaries are substantially the same at the time of
entering into the Asset Swap (or any difference in such aggregate fair
market value is substantially compensated for by an equalizing (i)
payment of cash, (ii) assumption of liabilities or (iii) taking of
assets subject to liabilities); and
(iv) at the time of the consummation of the first to occur of
the relinquishment or the replacement of assets constituting part of
the proposed Asset Swap, the percentage of any decline in the fair
market value of the asset or assets being acquired by the Company and
its Restricted Subsidiaries shall not be significantly greater than
the percentage of any decline in the fair market value of the assets
being disposed of the
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Company, calculated from the time the last agreement constituting part
of the Asset Swap was entered into.
SECTION 1014. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction with, or for the benefit of, any Affiliate of the Company
unless:
(a) such transaction is on terms that are no less favorable
to the Company or such Restricted Subsidiary, as the case may be, than
those that could have been obtained in an arm's length transaction
with third parties who are not Affiliates and
(b) either (i) with respect to any transaction or series of
transactions involving aggregate payments in excess of $1,000,000, but
less than $5,000,000, the Company delivers an Officers' Certificate to
the Trustee certifying that such transaction or transactions comply
with clause (a) above or (ii) with respect to a transaction or series
of transactions involving aggregate payments equal to or greater than
$5,000,000, such transaction or transactions have been approved by the
Board of Directors (including a majority of the Disinterested
Directors) of the Company or the Company has obtained a written
opinion from a nationally recognized investment banking firm to the
effect that such transaction or transactions are fair to the Company
or such Restricted Subsidiary from a financial point of view.
The foregoing provisions shall not restrict any of the
following:
(A) Transactions among the Company and/or any of its
Restricted Subsidiaries.
(B) The Company from paying reasonable and customary
regular compensation, fees, indemnification and similar
arrangements and payments thereunder to directors of the
Company or any of its Restricted Subsidiaries who are not
employees of the Company or any of its Restricted
Subsidiaries.
(C) Employment agreements or compensation or
employee benefits arrangements with any officer, director or
employee of the Company or its Restricted Subsidiaries
entered into in the ordinary course of business (including
customary benefits thereunder) (it being understood that
benefits of the nature in place as of the Closing Date shall
be deemed permissible hereunder).
(D) The performance of the Company's obligations
under (a) that certain lease agreement effective December 29,
1995 with Wilson Aviation,
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L.L.C. relating to the lease of an airplane, (b) that certain
agreement not to compete dated December 31, 1996 with DVS
Management, Inc. and (c) that certain Voting Trust Agreement
dated March 17, 1997 among Citadel Communications, ABRY
Broadcast Partners II, L.P., ABRY/Citadel Investment
Partners, L.P. and others and the related letter agreement
dated March 17, 1997 among Citadel Communications, ABRY
Broadcast Partners II, L.P., ABRY/Citadel Investment
Partners, L.P. and others (the "Affiliate Agreements");
provided that any amendments or modifications to the terms of
the Affiliate Agreements (1) are no less favorable to the
Company than those that could have been obtained in an arm's
length transaction with third parties who are not Affiliates
and (2) are approved by the Board of Directors (including a
majority of the Disinterested Directors) of the Company.
(E) The Company from making payments to Citadel
Communications to pay its operating and administrative
expenses attributable to the Company including, without
limitation, legal and audit expenses, directors' fees and
Commission compliance expenses, in an amount not to exceed
the greater of $1,000,000 per fiscal year and 1% of the net
revenues of the Company for the preceding fiscal year.
(F) The Company or a Restricted Subsidiary from
transferring up to $500,000 of properties and assets,
including cash, to a joint venture in which the Company or a
Restricted Subsidiary has an equity interest and in which one
or more directors or officers of the Company or Citadel
Communications has an equity interest, which joint venture is
engaged in the internet service provider business.
(G) The Company from repaying the note payable of
the Company to Citadel Communications outstanding as of the
Closing Date in an amount not to exceed $12,817,000 plus all
accrued and unpaid interest thereon to the Closing Date.
SECTION 1015. LIMITATION ON DIVIDENDS AND OTHER PAYMENT
RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any of its Restricted Subsidiaries to
(a) pay dividends, in cash or otherwise, or make any other distributions on or
in respect of its Capital Stock, (b) pay any Debt owed to the Company or any
other Restricted Subsidiary, (c) make loans or advances to the Company or any
other Restricted Subsidiary or
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(d) transfer any of its properties or assets to the Company or any other
Restricted Subsidiary, except for such encumbrances or restrictions existing
under or by reason of any of the following:
(i) The Credit Facility and any agreement in effect on the
Closing Date and listed on a schedule attached to this Indenture.
(ii) Customary non-assignment provisions of any lease
governing a leasehold interest of the Company or any of its Restricted
Subsidiaries.
(iii) The refinancing or successive refinancings of Debt
referred to in clause (i) or (iv), so long as such encumbrances or
restrictions are no less favorable to the Company or any of its
Restricted Subsidiaries than those contained in such original
agreement.
(iv) Any agreement or other instrument of a Person acquired
by the Company or any of its Restricted Subsidiaries in existence at
the time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired.
(v) Any agreement providing for the incurrence of Debt by a
Restricted Subsidiary in compliance with Section 1009 provided that
such Restricted Subsidiary becomes a Subsidiary Notes Guarantor.
SECTION 1016. LIMITATION ON ISSUANCES AND SALES OF CAPITAL
STOCK OF RESTRICTED SUBSIDIARIES.
The Company shall not sell, and shall not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue or sell, any shares
of Capital Stock of a Restricted Subsidiary (including options, warrants or
other rights to purchase shares of such Capital Stock) except (i) to the
Company or a Wholly Owned Restricted Subsidiary, (ii) issuances or sales to
foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law, or issuances or sales
to directors of directors' qualifying shares, (iii) if, immediately after
giving effect to such issuance or sale, neither the Company nor any Subsidiary
owns any shares of Capital Stock of such Restricted Subsidiary (including
options, warrants or other rights to purchase shares of such Capital Stock) or
(iv) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and
any Investment in such Person remaining after giving effect to such issuance or
sale would have been permitted to be made under Section 1010 if made on the
date of such issuance or sale.
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In addition, the Company shall not, and shall not permit any
of its Restricted Subsidiaries to, sell, transfer or otherwise dispose of any
of its properties or assets to an Unrestricted Subsidiary other than in the
ordinary course of business.
SECTION 1017. LIMITATION ON UNRESTRICTED SUBSIDIARIES.
(a) The Board of Directors of the Company may designate any
Subsidiary (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary so long as (i) neither the Company nor any of its
Restricted Subsidiaries is directly or indirectly liable for any Debt of such
Subsidiary, (ii) no default with respect to any Debt of such Subsidiary would
permit (upon notice, lapse of time or otherwise) any holder of any other Debt
of the Company or any of its Restricted Subsidiaries to declare a default on
such other Debt or cause the payment thereof to be accelerated or payable prior
to its stated maturity, (iii) any Investment in such Subsidiary made as a
result of designating such Subsidiary an Unrestricted Subsidiary shall not
violate Section 1010, (iv) neither the Company nor any of its Restricted
Subsidiaries has a contract, agreement, arrangement, understanding or
obligation of any kind, whether written or oral, with such Subsidiary other
than those that might be obtained at the time from Persons who are not
Affiliates of the Company and (v) neither the Company nor any Restricted
Subsidiary has any obligation to subscribe for additional shares of Capital
Stock or other equity interest in such Subsidiary, or to maintain or preserve
such Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results. Notwithstanding the foregoing, the Company
may not designate the License Subsidiary, or any Subsidiary to which any
properties or assets (other than current assets) owned by the Company or the
License Subsidiary on the Closing Date have been transferred, as an
Unrestricted Subsidiary.
(b) The Board of Directors of the Company may designate any
of its Unrestricted Subsidiaries as a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Debt is permitted under Section
1009 and (ii) no Default or Event of Default shall have occurred and be
continuing following such designation.
SECTION 1018. LIMITATION ON OTHER SENIOR SUBORDINATED DEBT.
The Company and each Subsidiary Notes Guarantor shall not,
directly or indirectly, incur or otherwise permit to exist any Debt that is
subordinate in right of payment to any Debt of the Company or such Subsidiary
Notes Guarantor, as the case may be, unless such Debt is also pari passu with
the Notes or the Subsidiary Notes Guarantee of the Notes by such Subsidiary
Notes Guarantor, as the case may be, or subordinate in right of payment to the
Notes or such Subsidiary Notes Guarantee of the Notes, as the case may be, to
at least the same extent as the Notes or such Subsidiary Notes Guarantee are
subordinate in right of payment to
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Senior Debt or all senior debt of the Subsidiary Notes Guarantors, as the case
may be, as set forth in this Indenture.
SECTION 1019. SUBSIDIARY NOTES GUARANTEES.
The Subsidiary Notes Guarantors shall, jointly and severally,
unconditionally guarantee the due and punctual payment of the principal of,
premium, if any, and interest on the Notes on a senior subordinated basis
pursuant to the Subsidiary Notes Guarantees as described in Article Thirteen.
The Subsidiary Notes Guarantors may be released from their obligations under
the Subsidiary Notes Guarantees as described in Article Twelve and a Subsidiary
Notes Guarantor may be released from its obligations under its Subsidiary Notes
Guarantee as described in Article Thirteen.
The Company shall (i) cause each Person that, after the
Closing Date, becomes a Wholly Owned Restricted Subsidiary of the Company, as
well as each other Restricted Subsidiary that guarantees any other Debt of the
Company, to execute and deliver a supplemental indenture and thereby become a
Subsidiary Notes Guarantor bound by the Subsidiary Notes Guarantee of the Notes
in the form set forth in this Indenture (without such Subsidiary Notes
Guarantor being required to execute and deliver its Subsidiary Notes Guarantee
endorsed on the Notes) and (ii) deliver to the Trustee an Opinion of Counsel,
in form and substance reasonably satisfactory to the Trustee, that the
Subsidiary Notes Guarantee of such Subsidiary Notes Guarantor is a valid and
legally binding obligation of such Subsidiary Notes Guarantor.
SECTION 1020. LIMITATION ON GUARANTEES OF DEBT BY RESTRICTED
SUBSIDIARIES.
The Company shall not permit any of its Restricted
Subsidiaries that is not a Subsidiary Notes Guarantor, directly or indirectly,
to guarantee, assume or in any other manner become liable for the payment of
any Debt of the Company or any Debt of any other Restricted Subsidiary, unless
(a) such Restricted Subsidiary simultaneously executes and delivers a
Subsidiary Notes Guarantee and (b) with respect to any guarantee of
Subordinated Debt by a Restricted Subsidiary, any such guarantee is
subordinated to such Restricted Subsidiary's Subsidiary Notes Guarantee at
least to the same extent as such Subordinated Debt is subordinated to the
Notes, provided that the foregoing provision shall not be applicable to any
guarantee by any such Restricted Subsidiary that existed at the time such
Person became a Restricted Subsidiary and was not incurred in connection with,
or in contemplation of, such Person becoming a Restricted Subsidiary.
SECTION 1021. LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur, affirm or suffer to exist any Lien
of any kind securing any Pari Passu Debt or Subordinated Debt (including any
assumption, guarantee or other liability with respect thereto
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by any Restricted Subsidiary) upon any property or assets (including any
intercompany notes) of the Company or any of its Restricted Subsidiaries now
owned or acquired after the Closing Date, or any income or profits therefrom,
unless the Notes are directly secured equally and ratably with (or prior to in
the case of Subordinated Debt) the obligation or liability secured by such
Lien; provided that the foregoing shall not apply to Liens securing Debt of a
Person acquired by the Company or any of its Restricted Subsidiaries in
existence at the time of such acquisition (but not created in contemplation
thereof), which Lien is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired.
SECTION 1022. COMMISSION REPORTS AND REPORTS TO HOLDERS.
At all times from and after the earlier of (i) the date of
the commencement of the Notes Exchange Offer or the effectiveness of the Notes
Shelf Registration Statement (the "Registration") and (ii) the date 180 days
after the Closing Date, in either case, whether or not the Company is then
required to file reports with the Commission, the Company shall file with the
Commission all such reports and other information as it would be required to
file with the Commission by Section 13(a) or 15(d) under the Exchange Act if it
were subject thereto. The Company shall supply the Trustee and each Holder, or
shall supply to the Trustee for forwarding to each such Holder, without cost to
such Holder, copies of such reports and other information. In addition, at all
times prior to the earlier of the date of the Registration and the date 180
days after the Closing Date, the Company shall, at its cost, deliver to each
Holder of the Notes quarterly and annual reports substantially equivalent to
those that would be required by the Exchange Act. In addition, at all times
prior to the Registration, upon the request of any Holder or any prospective
purchaser of the Notes designated by a Holder, the Company shall supply to such
Holder or such prospective purchaser the information required under Rule 144A
under the Securities Act.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder.
SECTION 1023. STATEMENT AS TO COMPLIANCE.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year, commencing with the fiscal year ending
December 31, 1997, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing officers with a view to
determining whether it has kept, observed, performed and fulfilled, and has
caused each of its Subsidiaries to keep, observe, perform and fulfill, its
obligations under this Indenture and further stating, as to each such officer
signing such certificate, that, to the best of his or her
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knowledge, the Company during such preceding fiscal year has kept, observed,
performed and fulfilled, and has caused each of its Subsidiaries to keep,
observe, perform and fulfill, each and every such covenant contained in this
Indenture and no Default or Event of Default occurred during such year and at
the date of such certificate there is no Default or Event of Default which
shall have occurred and be continuing or, if such signers do know of such
Default or Event of Default, the certificate shall describe its status, with
particularity and that, to the best of his or her knowledge, no event has
occurred and remains by reason of which payments on the account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action each is taking or
purposes to take with respect thereto. The Officers' Certificate shall also
notify the Trustee should the Company elect to change the manner in which it
fixes its fiscal year end. For purposes of this Section 1023(a), such
compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.
(b) When any Default shall have occurred and be continuing
under this Indenture, or if the trustee for or the holder of any other evidence
of Debt of the Company or any Subsidiary gives any notice or takes any other
action with respect to a claimed default (other than with respect to Debt in
the principal amount of less than $10 million), the Company shall deliver to
the Trustee by registered or certified mail or facsimile transmission an
Officers' Certificate specifying such event, notice or other action within five
days of any officer of the Company having knowledge of any Default.
SECTION 1024. DELIVERY OF CERTAIN INFORMATION.
If specified as contemplated by Section 301 with respect to a
series of Notes, at any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, upon the request of a Holder, the Company will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder or to a prospective purchaser of such Notes designated by
such Holder in connection with the resale of such Notes by such Holder. "Rule
144A Information" shall mean such information as is specified pursuant to Rule
144A(d)(4) under the Securities Act as in effect on the date hereof.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. REDEMPTION.
The Notes may or shall, as the case may be, be redeemed, as a
whole or from time to time in part, subject to the conditions and at the
Redemption Prices specified in the form of Note, together with accrued interest
to the Redemption Date.
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SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall
be made in accordance with such provision and this Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Notes to be redeemed and shall deliver to
the Trustee such documentation and records as shall enable the Trustee to
select the Notes to be redeemed pursuant to Section 1104.
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular
Notes to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Notes not previously
called for redemption, in compliance with the requirements of the principal
national securities exchange, if any, on which such Notes are listed, or, if
such Notes are not so listed, on a pro rata basis, by lot or by such other
method as the Trustee shall deem fair and appropriate (and in such manner as
complies with applicable legal requirements) and which may provide for the
selection for redemption of portions of the principal of Notes; provided,
however, that no such partial redemption shall reduce the portion of the
principal amount of a Note not redeemed to less than $1,000.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Notes shall
relate, in the case of any Note redeemed or to be redeemed only in part, to the
portion of the principal amount of such Note which has been or is to be
redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided
for in Section 106 not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Notes to be redeemed. The Trustee shall give
notice of redemption in the Company's name and at the
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Company's expense; provided, however, that the Company shall deliver to the
Trustee, at least 45 days prior to the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee), an Officers' Certificate requesting that
the Trustee give such notice and setting forth the information to be stated in
such notice as provided in the following items.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest
to the Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Notes are to be redeemed,
the identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption,
(4) in case any Note is to be redeemed in part only, the
notice which relates to such Note shall state that on and after the
Redemption Date, upon surrender of such Note, the Holder shall
receive, without charge, a new Note or Notes of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and
accrued interest, if any, to the Redemption Date payable as provided
in Section 1107) shall become due and payable upon each such Note, or
the portion thereof, to be redeemed, and, unless the Company defaults
in making the redemption payment, that interest on Notes called for
redemption (or the portion thereof) shall cease to accrue on and after
said date,
(6) the place or places where such Notes are to be
surrendered for payment of the Redemption Price and accrued interest,
if any,
(7) the name and address of the Paying Agent,
(8) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as
to the accuracy or correctness of the CUSIP number, if any, listed in
such notice or printed on the Notes, and
(10) the paragraph of the Notes pursuant to which the Notes
are to be redeemed.
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SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and accrued interest
on, all the Notes which are to be redeemed on that date.
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the
Notes so to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified (together with accrued interest, if
any, to the Redemption Date), and from and after such date (unless the Company
shall default in the payment of the Redemption Price and accrued interest) such
Notes shall cease to bear interest. Upon surrender of any such Note for
redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price, together with accrued interest, if any, to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes, or one or more Predecessor Notes, registered as such at the
close of business on the relevant Regular Record Date or Special Record Date,
as the case may be, according to their terms and the provisions of Section 311.
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Notes.
SECTION 1108. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part (pursuant to
the provisions of this Article) shall be surrendered at the office or agency of
the Company maintained for such purpose pursuant to Section 1002 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holders attorney duly authorized in writing),
and the Company shall execute, and the Trustee shall authenticate and deliver
to the Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered, provided, that each such new Note shall be in a
principal amount of $1,000 or integral multiple thereof (unless the Company
otherwise directs).
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ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR
COVENANT DEFEASANCE.
The Company and the Subsidiary Notes Guarantors may, at their
option by Board Resolution, at any time, with respect to the Notes, elect to
have either Section 1202 or Section 1203 be applied to all Outstanding Notes
upon compliance with the conditions set forth below in this Article Twelve.
SECTION 1202. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1201 of the option
applicable to this Section 1202, the Company and any Subsidiary Notes Guarantor
shall be deemed to have been discharged from their obligations with respect to
all Outstanding Notes on the date the conditions set forth in Section 1204 are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company and any such Guarantor shall be deemed to
have paid and discharged the entire Debt represented by the Outstanding Notes,
which shall thereafter be deemed to be "Outstanding" only for the purposes of
Section 1205 and the other Sections of this Indenture referred to in (A) and
(B) below, and to have satisfied all its other obligations under such Notes and
this Indenture insofar as such Notes are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of Outstanding Notes to
receive payments in respect of the principal of (and premium, if any, on) and
interest on such Notes when such payments are due, (B) the Company's
obligations to issue temporary Notes, register the transfer or exchange of any
Notes, replace mutilated, destroyed, lost or stolen Notes, maintain an office
or agency for payments in respect of the Notes and segregate and hold such
payments in trust, (C) the rights, powers, trusts, duties and immunities of the
Trustee and (D) the defeasance provisions of this Indenture.
Subject to compliance with this Article Twelve, the Company
may exercise its option under this Section 1202 notwithstanding the prior
exercise of its option under Section 1203 with respect to the Notes.
SECTION 1203. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1201 of the option
applicable to this Section 1203, the Company shall be released from its
obligations under any covenant contained in Section 801 and in Sections 1006
through 1022 with respect to the Outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
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and the Notes shall thereafter be deemed not to be "Outstanding" for the
purposes of any direction, waiver, consent or declaration or Act of Holders
(and the consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "Outstanding" for all other purposes hereunder (it
being understood that such Notes shall not be outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that, with respect
to the Outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
501(d), but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby.
SECTION 1204. CONDITIONS TO LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The following shall be the conditions to application of
either Section 1202 or Section 1203 to the Outstanding Notes:
(a) the Company must irrevocably deposit or cause to be
deposited with the Trustee, as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Notes, money in an amount, or U.S. Government
Obligations that through the scheduled payment of principal and
interest thereon shall provide money in an amount, or a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay and discharge the principal of
(and premium, if any, on) and interest on the outstanding Notes at
maturity (or upon redemption, if applicable) of such principal or
installment of interest;
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as an event of
bankruptcy under Section 501(h) or (i) is concerned, at any time
during the period ending on the 91st day after the date of such
deposit;
(c) such Legal Defeasance or Covenant Defeasance must not
result in a breach or violation of, or constitute a default under,
this Indenture or any material agreement or instrument to which the
Company or any Subsidiary Notes Guarantor is a party or by which it is
bound or cause the Trustee or the trust so created to be subject to
the Investment Company Act of 1940, as amended;
(d) in the case of Legal Defeasance, the Company must deliver
to the Trustee an Opinion of Counsel stating that the Company has
received from, or there has been published by, the Internal Revenue
Service a ruling, or since the date hereof, there has been a change in
applicable federal income tax law, to the effect, and based thereon
such
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opinion must confirm that, the Holders of the outstanding Notes shall
not recognize income, gain or loss for federal income tax purposes as
a result of such Legal Defeasance and shall be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not
occurred;
(e) in the case of Covenant Defeasance, the Company must have
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Notes outstanding shall not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant
Defeasance and shall be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; and
(f) the Company must have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance or the Covenant Defeasance, as the case may be, have been
complied with.
SECTION 1205. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS
TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 1205, the "Trustee") pursuant to Section 1204 in
respect of the Outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Notes of all sums due and to become due thereon in respect of principal
(and premium, if any) and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1204 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Notes.
Anything in this Article Twelve to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request any money or U.S. Government Obligations held by it
as provided in Section 1204 which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be
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required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance, as applicable, in accordance with this Article.
SECTION 1206. REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section 1205 by reason
of any legal proceeding or by any reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and each Subsidiary Notes Guarantor's
obligations under this Indenture, the Notes and the Subsidiary Notes Guarantees
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1202 or 1203, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1205; provided, however, that if the Company or any Subsidiary Notes Guarantor
makes any payment of principal of (or premium, if any) or interest on any Note
following the reinstatement of its obligations, the Company or such Guarantor,
as the case may be, shall be subrogated to the rights of the Holders of such
Notes to receive such payment from the money and U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE THIRTEEN
SUBSIDIARY NOTES GUARANTEES
SECTION 1301. SUBSIDIARY GUARANTEES.
(a) Each Subsidiary Notes Guarantor hereby, jointly and
severally, fully, absolutely, unconditionally and irrevocably guarantees to
each Holder of a Note authenticated and delivered by the Trustee, and to the
Trustee on behalf of each Holder, the punctual payment and performance when due
of all Indenture Obligations which, for purposes of its Subsidiary Notes
Guarantee, shall also be deemed to include all commissions, fees, charges,
costs and other expenses (including reasonable legal fees and disbursements of
counsel) arising out of or incurred by the Trustee or the Holders in connection
with the enforcement of any Subsidiary Notes Guarantee. Without limiting the
generality of the foregoing, each Subsidiary Notes Guarantor's liability shall
extend to all amounts that constitute part of the Indenture Obligations and
would be owed by the Company to such Holder or the Trustee under the Notes or
this Indenture but for the fact that they are unenforceable, reduced, limited,
suspended or not allowable due to the existence of a bankruptcy, reorganization
or similar proceeding involving the Company.
(b) Each Subsidiary Notes Guarantor and by its acceptance
hereof each Holder hereby confirms that it is the intention of all such parties
that the guarantee by such Subsidiary
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Notes Guarantor pursuant to its Subsidiary Notes Guarantee not constitute a
fraudulent transfer or conveyance for purposes of any federal or state law. To
effectuate the foregoing intention, the Holders and each Subsidiary Notes
Guarantor hereby irrevocably agree that the obligations of such Subsidiary
Notes Guarantor under its Subsidiary Notes Guarantee shall be limited to the
maximum amount as shall, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Notes Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary Notes
Guarantor in respect of the obligations of such other Subsidiary Notes
Guarantor under its Subsidiary Notes Guarantee or pursuant to paragraph (c) of
this Section 1301 result in the obligations of such Subsidiary Notes Guarantor
under its Subsidiary Notes Guarantee not constituting a fraudulent conveyance
or fraudulent transfer under federal or state law.
(c) In order to provide for just and equitable contribution
among the Subsidiary Notes Guarantors, the Subsidiary Notes Guarantors agree,
inter se, that in the event any payment or distribution is made by any
Subsidiary Notes Guarantor (a "Funding Guarantor") under its Subsidiary Notes
Guarantee, such Funding Guarantor shall be entitled to a contribution from each
other Subsidiary Notes Guarantor in a pro rata amount based on the Adjusted Net
Assets of each Subsidiary Notes Guarantor (including the Funding Guarantor) for
all payments, damages and expenses incurred by the Funding Guarantor in
discharging the Indenture Obligations of the Company or any other Subsidiary
Notes Guarantor's obligations with respect to its Subsidiary Notes Guarantee.
"Adjusted Net Assets" of such Subsidiary Notes Guarantor at any date shall mean
the lesser of (x) the amount by which the fair value of the property of such
Subsidiary Notes Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Subsidiary Notes Guarantee of such Subsidiary
Notes Guarantor at such date and (y) the amount by which the present fair
salable value of the assets of such Subsidiary Notes Guarantor at such date
exceeds the amount that shall be required to pay the probable liability of such
Subsidiary Notes Guarantor on its debts (after giving effect to all other fixed
and contingent liabilities incurred or assumed on such date), excluding debt in
respect of the Subsidiary Notes Guarantee, as they become absolute and matured.
SECTION 1302. GUARANTY ABSOLUTE.
Each Subsidiary Notes Guarantor guarantees that the Notes
shall be paid or performed strictly in accordance with the terms of the Notes
and this Indenture, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of any
Holder with respect thereto. The obligations of each Subsidiary Notes Guarantor
under its Subsidiary Notes Guarantee are independent of the obligations of the
Company under the Notes and this Indenture, and a separate action or actions
may be brought and prosecuted against such Subsidiary Notes Guarantor to
enforce its Subsidiary Notes Guarantee, irrespective of whether any action is
brought against the Company or any other
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Subsidiary Notes Guarantor or whether the Company or any other Subsidiary Notes
Guarantor is joined in any such action or actions. The liability of each
Subsidiary Notes Guarantor under its Subsidiary Notes Guarantee shall be
absolute and unconditional and the liability and obligations of such Subsidiary
Notes Guarantor hereunder shall not be released, discharged, mitigated, waived,
impaired or affected in whole or in part by:
(a) any lack of validity or enforceability of this Indenture
or the Notes with respect to the Company or any Subsidiary Notes
Guarantor or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Indenture Obligations, or any
other amendment or waiver of or any consent to departure from this
Indenture, including any increase in the Indenture Obligations
resulting from the extension of additional credit to the Company or
otherwise;
(c) the failure to give notice to the Subsidiary Notes
Guarantor of the occurrence of a Default under the provisions of this
Indenture or the Notes;
(d) any taking, release or amendment or waiver of or consent
to departure from any other guarantee, for all or any of the Indenture
Obligations;
(e) any failure, omission, delay by or inability on the part
of the Trustee or the Holders to assert or exercise any right, power
or remedy conferred on the Trustee or the Holders in this Indenture or
the Notes;
(f) any change in the corporate structure, or termination,
dissolution, consolidation or merger of the Company or any Subsidiary
Notes Guarantor with or into any other Person, the voluntary or
involuntary liquidation, dissolution, sale or other disposition of all
or substantially all the assets of the Company or any Subsidiary Notes
Guarantor, the marshalling of the assets and liabilities of the
Company or any Subsidiary Notes Guarantor, the receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with the creditors, or
readjustment of, or other similar proceedings affecting the Company or
any Subsidiary Notes Guarantor, or any of the assets of any of them;
(g) the assignment of any right, title or interest of the
Trustee or any Holder in this Indenture or the Notes to any other
Person; or
(h) any other event or circumstance (including any statute of
limitations), whether foreseen or unforeseen and whether similar or
dissimilar to any of the foregoing, that might otherwise constitute a
defense available to, or a discharge of, the Company
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or a Subsidiary Notes Guarantor, other than payment in full of the
Indenture Obligations; it being the intent of each Subsidiary Notes
Guarantor that its obligations hereunder shall not be discharged
except by payment of all amounts owing pursuant to this Indenture or
the Notes.
The Subsidiary Notes Guarantee of each Subsidiary Notes Guarantor shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Indenture Obligations is rescinded or must otherwise
be returned by any Holder or the Trustee upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made. Each Subsidiary Notes Guarantor further agrees, to the fullest
extent that it may lawfully do so, that, as between such Subsidiary Notes
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article Five of this Indenture for the purposes of this Subsidiary
Notes Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby, and (ii) in the event of any
declarations of acceleration of such obligations as provided in Article Five of
this Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Notes Guarantor for the
purpose of this Subsidiary Notes Guarantee.
SECTION 1303. WAIVERS.
(a) Each Subsidiary Notes Guarantor hereby expressly waives
(to the extent permitted by law) notice of the acceptance of its Subsidiary
Notes Guarantee and notice of the existence, renewal, extension or the
non-performance, non-payment, or non-observance on the part of the Company of
any of the terms, covenants, conditions and provisions of this Indenture or the
Notes or any other notice whatsoever to or upon the Company or such Subsidiary
Notes Guarantor with respect to the Indenture Obligations. Each Subsidiary
Notes Guarantor hereby acknowledges communication to it of the terms of this
Indenture and the Notes and all of the provisions herein contained and consents
to and approves the same. Each Subsidiary Notes Guarantor hereby expressly
waives (to the extent permitted by law) diligence, presentment and protest.
(b) Without prejudice to any of the rights or recourse which
the Trustee or the Holders may have against the Company, each Subsidiary Notes
Guarantor hereby expressly waives (to the extent permitted by law) any right to
require the Trustee or the Holders to:
(1) initiate or exhaust any rights, remedies or recourse
against the Company, any Subsidiary Notes Guarantor or any other
Person;
(2) value, realize upon, or dispose of any security of the
Company or any other Person held by the Trustee or the Holders; or
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(3) initiate or exhaust any other remedy which the Trustee or
the Holders may have in law or equity;
before requiring, becoming entitled to or demanding payment from such
Subsidiary Notes Guarantor under this Subsidiary Notes Guarantee.
SECTION 1304. SUBROGATION.
Each Subsidiary Notes Guarantor shall not exercise any rights
that it may acquire by way of subrogation under this Subsidiary Notes
Guarantee, by any payment made hereunder or otherwise, until all the Indenture
Obligations shall have been paid in full. If any amount shall be paid to any
Subsidiary Notes Guarantor on account of any such subrogation rights at any
time when all the Indenture Obligations shall not have been paid in full, such
amount shall be held in trust for the benefit of the Holders and the Trustees
and shall forthwith be paid to the Trustee, on behalf of the Holders, to be
credited and applied to the Indenture Obligations, whether matured or
unmatured.
SECTION 1305. NO WAIVER; REMEDIES.
No failure on the part of any Holder or the Trustee to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 1306. CONTINUING GUARANTY; NO RIGHT OF SET-OFF;
INDEPENDENT OBLIGATION.
(a) This Subsidiary Notes Guarantee is a continuing guarantee
of the payment and performance of all Indenture Obligations and shall remain in
full force and effect until the payment in full of all of the Indenture
Obligations and all other amounts payable under this Subsidiary Notes Guarantee
and shall apply to and secure any ultimate balance due or remaining unpaid to
the Trustee or the Holders under this Indenture or the Notes; and this
Subsidiary Notes Guarantee shall not be considered as wholly or partially
satisfied by the payment or liquidation at any time or from time to time of any
sum of money for the time being due or remaining unpaid to the Trustee or the
Holders.
(b) Each Subsidiary Notes Guarantor hereby guarantees that
the Indenture Obligations shall be paid to the Trustee without set-off or
counterclaim or other reduction whatsoever (whether for taxes, withholding or
otherwise) in lawful currency of the United States of America.
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(c) Each Subsidiary Notes Guarantor guarantees that the
Indenture Obligations shall be paid strictly in accordance with their terms
regardless of any lack of validity or enforceability of any of such terms or
the rights of the Holders with respect thereto.
(d) Each Subsidiary Notes Guarantor's liability to pay or
perform or cause the performance of the Indenture Obligations under this
Subsidiary Notes Guarantee shall arise forthwith after demand for payment or
performance by the Trustee has been given to such Subsidiary Notes Guarantor in
the manner prescribed in this Indenture.
SECTION 1307. SUBSIDIARY NOTES GUARANTORS MAY CONSOLIDATE,
ETC., ON CERTAIN TERMS.
(a) Nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Subsidiary Notes Guarantor
with or into the Company or another Subsidiary Notes Guarantor or shall prevent
any sale or conveyance of the property of a Subsidiary Notes Guarantor as an
entirety or substantially as an entirety to the Company or another Subsidiary
Notes Guarantor, which consolidation, merger, sale or conveyance is otherwise
in accordance with the terms of this Indenture.
(b) Other than as set forth in paragraph (a) of this Section,
no Subsidiary Notes Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Notes Guarantor is the surviving Person)
another Person whether or not affiliated with such Subsidiary Notes Guarantor
unless: (i) subject to the provisions of Section 1309, the Person formed by or
surviving such consolidation or merger (if other than such Subsidiary Notes
Guarantor) assumes all of the obligations of such Subsidiary Notes Guarantor
under this Indenture and its Subsidiary Notes Guarantee, pursuant to a
supplemental indenture in form and substance satisfactory to the Trustee, and
(b) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing.
SECTION 1308. ADDITIONAL SUBSIDIARY NOTES GUARANTORS.
The Company shall cause each Person that becomes a Wholly
Owned Restricted Subsidiary after the Closing Date to become a Subsidiary Notes
Guarantor with respect to the Indenture Obligations by executing and delivering
a supplemental indenture to this Indenture providing for a Subsidiary Notes
Guarantee by such Wholly Owned Restricted Subsidiary under Article Thirteen;
provided that any such Wholly Owned Restricted Subsidiary that is organized
outside of the United States shall not be required to provide a Subsidiary
Notes Guarantee so long as such Wholly Owned Restricted Subsidiary has not
guaranteed any other Debt of the Company or any other Restricted Subsidiary.
The Company shall deliver to the Trustee, together with the supplemental
indenture referred to above, an Opinion of Counsel that such Subsidiary Notes
Guarantee is a legal, valid, binding and enforceable obligation of such
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Subsidiary Notes Guarantor, subject to customary local law exceptions and
customary exceptions for bankruptcy and equitable principles.
SECTION 1309. RELEASES.
(a) Concurrently with any consolidation or merger of a
Subsidiary Notes Guarantor with or into the Company or another Subsidiary Notes
Guarantor or any sale or conveyance of the property of a Subsidiary Notes
Guarantor as an entirety or substantially as an entirety to the Company or
another Subsidiary Notes Guarantor, in each case as permitted by Section 1307,
and upon delivery by the Company to the Trustee of an Officers' Certificate and
an Opinion of Counsel, each to the effect that (i) such consolidation, merger,
sale or conveyance was or shall be made by a Subsidiary Notes Guarantor in
accordance with Section 1307, and (ii) all conditions precedent to such release
have been satisfied, the Trustee shall promptly execute any documents
reasonably required in order to evidence the release of such Subsidiary Notes
Guarantor from its obligations under its Subsidiary Notes Guarantee. Any
Subsidiary Notes Guarantor not released from its obligations under its
Subsidiary Notes Guarantee under this Article Thirteen shall remain liable for
the full amount of the Indenture Obligations under its Subsidiary Notes
Guarantee.
(b) Concurrently with the Legal Defeasance of the Notes under
Section 1202 hereof or the Covenant Defeasance of the Notes under Section 1203
hereof, the Subsidiary Notes Guarantors shall be released from all of their
obligations under their Subsidiary Notes Guarantees.
(c) Upon (i) the sale, transfer or other disposition of all
of the Capital Stock of a Subsidiary Notes Guarantor to a Person that is not an
Affiliate of the Company, (ii) the sale, transfer or other disposition of all
or substantially all of the assets of a Subsidiary Notes Guarantor to a Person
that is not an Affiliate of the Company, or (iii) the designation of such
Subsidiary Notes Guarantor as an Unrestricted Subsidiary, in any such case in
compliance with the terms of this Indenture, then such Subsidiary Notes
Guarantor shall be deemed automatically and unconditionally released and
discharged from all of its obligations under its Subsidiary Notes Guarantee
without any further action on the part of the Trustee or any Holder of the
Notes; provided that the Net Cash Proceeds of any such sale, transfer or other
disposition are applied in accordance with Section 1012.
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ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. NOTES AND SUBSIDIARY NOTES GUARANTEES
SUBORDINATE TO SENIOR DEBT.
(a) The Company covenants and agrees, and each Holder of a
Note, by his acceptance thereof, likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article Fourteen, the
indebtedness represented by the Notes and the payment of the principal of (and
premium, if any) and interest on each and all of the Notes (but not amounts
owing to the Trustee by the Company pursuant to Section 607 hereof) are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Debt.
(b) Each Subsidiary Notes Guarantor covenants and agrees, and
each Holder of a Note, by his acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set forth in this
Article Fourteen, the indebtedness represented by the Subsidiary Notes
Guarantee of such Subsidiary Notes Guarantor is hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Subsidiary Guarantor Senior Debt of such Subsidiary Notes Guarantor.
SECTION 1402. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of any payment or distribution of assets of the
Company or any Subsidiary Notes Guarantor to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency or similar
proceedings of the Company or any Subsidiary Notes Guarantor (the Company or
such Subsidiary Notes Guarantor being the "Affected Obligor"), then (except (x)
in connection with the consolidation or merger of the Company or its
liquidation or dissolution following the conveyance, transfer or lease of its
properties and assets substantially as an entirety, upon the terms and
conditions described in Article Eight or (y) in connection with the
consolidation or merger of a Subsidiary Notes Guarantor, or its liquidation or
dissolution, not in violation of any provision of this Indenture) (each such
event, if any, herein sometimes referred to as a "Proceeding"), (i) if the
Affected Obligor is the Company, the holders of Senior Debt shall first be
entitled to receive payment in full, in cash or cash equivalents, of all
amounts due or to become due on or in respect of such Senior Debt before the
Holders of the Notes are entitled to receive any payment of principal of (and
premium, if any) or interest on the Notes or on account of the purchase or
redemption or other acquisition of Notes by the Company or any Subsidiary of
the Company and (ii) if the Affected Obligor is a Subsidiary Notes Guarantor,
the holders of Subsidiary Guarantor Senior Debt of such Subsidiary Notes
Guarantor shall first be entitled to receive payment in full, in cash or cash
equivalents, of principal of (or premium,
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if any) and interest on such Subsidiary Guarantor Senior Debt, before the
Holders of the Notes are entitled to receive any payment pursuant to the
Subsidiary Notes Guarantee of such Subsidiary Notes Guarantor (any payment on
or purchase, redemption or acquisition of the Notes, referred to in clause (i),
and any payment on a Subsidiary Notes Guarantee, referred to in clause (ii),
being, individually and collectively, a "Notes Payment"), and, to that end, if
the Affected Obligor is the Company, the holders of Senior Debt and, if the
Affected Obligor is a Subsidiary Notes Guarantor, the holders of Subsidiary
Guarantor Senior Debt of such Subsidiary Notes Guarantor (such Senior Debt or
Subsidiary Guarantor Senior Debt, as the case may be, being "Affected Obligor
Senior Debt" of such Affected Obligor) shall be entitled to receive, for
application to the payment thereof, any payment or distribution of any kind or
character, whether in cash, property or securities which may be payable or
deliverable in respect of the Notes in any such Proceeding.
In the event that, notwithstanding the foregoing provisions
of this Section 1402, the Trustee or the Holder of any Note shall have received
any payment or distribution of assets of an Affected Obligor of any kind or
character, whether in cash, property or securities, before all Affected Obligor
Senior Debt is paid in full, then such payment or distribution, except for
amounts subject to the claim granted to the Trustee in Section 607 hereof,
shall be held in trust for the holders of Affected Obligor Senior Debt and
shall be paid over or delivered forthwith to the trustee in bankruptcy or other
Person making payment or distribution of assets of the Affected Obligor for
application to the payment of all Affected Obligor Senior Debt remaining
unpaid, to the extent necessary to pay all Affected Obligor Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of the Affected Obligor Senior Debt.
For purposes of this Article Fourteen only, the words "any
payment or distribution of any kind or character, cash, property or securities"
shall not be deemed to include a payment or distribution of equity or
subordinated securities of the Affected Obligor provided for by a plan of
reorganization or readjustment or of any other corporation provided for by such
plan of reorganization or readjustment that, in the case of subordinated
securities, are subordinated in right of payment to all then outstanding
Affected Obligor Senior Debt to at least the same extent as the Notes or
Subsidiary Notes Guarantees, as the case may be, are so subordinated as
provided in this Article Fourteen.
SECTION 1403. NO PAYMENT WHEN CERTAIN SENIOR DEBT IN DEFAULT.
In the event that any Senior Payment Default (as defined
below) shall have occurred and be continuing, then no Notes Payment shall be
made unless and until such Senior Payment Default shall have been cured or
waived or shall have ceased to exist or all amounts then due and payable in
respect of the Specified Senior Debt or other obligations that are the subject
of such Senior Payment Default shall have been paid in full. For purposes
hereof, "Senior Payment Default" means any default in the payment of principal
of (or premium, if
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any), or interest on, Specified Senior Debt, the payment of commitment,
facility or other fees, letter of credit fees or agency fees under the Credit
Facility, or payments with respect to letter of credit reimbursement
arrangements with the Credit Facility Agent, when due, whether at the Stated
Maturity of any such payment or by declaration of acceleration, call for
redemption or otherwise.
In the event that any Senior Nonmonetary Default (as defined
below) shall have occurred and be continuing, then, upon the receipt by the
Company and the Trustee of written notice of such Senior Nonmonetary Default
from the Credit Facility Agent or from an authorized Person on behalf of any
holder of Specified Senior Debt, no Notes Payment shall be made during the
period (the "Payment Blockage Period") commencing on the date of receipt of
such written notice (the "Blockage Notice") and ending on the earliest of (i)
the 179th day after the date of such receipt of the Blockage Notice (the
"Initial Period"), (ii) the date, if any, on which the Specified Senior Debt to
which such default relates is discharged or such default is waived or otherwise
cured and (iii) the date, if any, on which such Payment Blockage Period shall
have been terminated by written notice to the Company or the Trustee from the
Credit Facility Agent or from the Person who gave the Blockage Notice. Any
number of additional Payment Blockage Periods may be commenced during the
Initial Period; provided, however, that no such additional Payment Blockage
Periods shall extend beyond the Initial Period. After the expiration of the
Initial Period, no Payment Blockage Period may be commenced until at least 181
consecutive days shall have elapsed from the last day of the Initial Period. No
Senior Nonmonetary Default that existed or was continuing on the date of
commencement of any Payment Blockage Period with respect to the Specified
Senior Debt initiating such Payment Blockage Period shall be, or be made, the
basis for the commencement of a subsequent Payment Blockage Period unless such
Senior Nonmonetary Default shall have been cured or waived for a period of not
less than 90 consecutive days. For purposes hereof, "Senior Nonmonetary
Default" means the occurrence or existence of any event, circumstance,
condition or state of facts that, by the terms of any instrument pursuant to
which any Specified Senior Debt is outstanding, permits one or more holders of
such Specified Senior Debt (or a trustee or agent on behalf of the holders
thereof) to declare such Specified Senior Debt due and payable prior to the
date on which it would otherwise become due and payable, other than a Senior
Payment Default.
In the event that, notwithstanding the foregoing, the Company
or any Subsidiary Notes Guarantor shall make any payment to the Trustee or any
Holder prohibited by the foregoing provisions of this Section 1403, then such
payment shall be held in trust for the holders of the Affected Obligor Senior
Debt and shall be paid over and delivered forthwith to the holders of the
Affected Obligor Senior Debt remaining unpaid, to the extent necessary to pay
in full all the Affected Obligor Senior Debt.
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SECTION 1404. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article Fourteen or elsewhere in
this Indenture or in any of the Notes shall, at any time except during the
pendency of any Proceeding referred to in Section 1402 or under the conditions
described in Section 1403, prevent (a) the Company or any Subsidiary Notes
Guarantor from making Notes Payments, or (b) the application by the Trustee of
any money deposited with it hereunder to Notes Payments or the retention of
such payment by the Holders.
SECTION 1405. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
DEBT.
Subject to the payment in full of all Senior Debt, the rights
of the Holders of the Notes shall be subrogated to the rights of the holders of
such Senior Debt to receive payments and distributions of cash, property and
securities applicable to the Senior Debt until the principal of (and premium,
if any) and interest on the Notes shall be paid in full. Subject to the payment
in full of all Subsidiary Guarantor Senior Debt, the rights of the Holders of
the Notes shall be subrogated to the rights of the holders of such Subsidiary
Guarantor Senior Debt to receive payments and distributions of cash, property
and securities applicable to such Subsidiary Guarantor Senior Debt until the
principal of (and premium, if any) and interest on the Notes shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Debt or Subsidiary Guarantor Senior Debt of any cash,
property or securities to which the Holders of the Notes or the Trustee would
be entitled except for the provisions of this Article Fourteen, and no payments
over pursuant to the provisions of this Article Fourteen to the holders of
Senior Debt or Subsidiary Guarantor Senior Debt by Holders of the Notes or the
Trustee, shall, as among the Company, its creditors other than holders of
Senior Debt and the Subsidiary Guarantor Senior Debt and the Holders of the
Notes, be deemed to be a payment or distribution by the Company to or on
account of the Senior Debt. Neither the Holders of the Notes nor the Trustee
shall have any claim against the holders of the Senior Debt or the Credit
Facility Agent for any impairment of the subrogation rights herein granted
arising out of any release of Liens securing the Senior Debt or the Subsidiary
Guarantor Senior Debt.
SECTION 1406. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article Fourteen are and are intended
solely for the purpose of defining the relative rights of the Holders on the
one hand and the holders of Senior Debt and Subsidiary Guarantor Senior Debt on
the other hand. Nothing contained in this Article Fourteen or elsewhere in this
Indenture or in the Notes is intended to or shall (a) impair, as among the
Company, its creditors other than holders of Senior Debt and the Holders of the
Notes, the obligation of the Company, which is absolute and unconditional (and
which, subject to the rights under this Article Fourteen of the holders of
Senior Debt, is intended to rank equally with all other general obligations of
the Company) to pay to the Holders of the Notes the principal of
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(and premium, if any) and interest on the Notes as and when the same shall
become due and payable in accordance with their terms; or (b) impair, as among
the Subsidiary Notes Guarantors, their creditors other than holders of
Subsidiary Guarantor Senior Debt and the Holders of the Notes, the obligation
of the Subsidiary Notes Guarantors, which is absolute and unconditional (and
which, subject to the rights under this Article Fourteen of the holders of
Subsidiary Guarantor Senior Debt, is intended to rank equally with all other
general obligations of the Subsidiary Notes Guarantors) to pay to the Holders
of the Notes the principal of (and premium, if any) and interest on the Notes
as and when the same shall become due and payable in accordance with their
terms; or (c) affect the relative rights against the Company of the Holders of
the Notes and creditors of the Company other than the holders of Senior Debt or
the relative rights against the Subsidiary Notes Guarantors of the Holders of
the Notes and creditors of the Subsidiary Notes Guarantors other than the
Holders of Subsidiary Guarantor Senior Debt; or (d) prevent the Trustee or the
Holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article Fourteen of the holders of Senior Debt and Subsidiary
Guarantor Senior Debt to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder. The holders of the Senior
Debt and the Credit Facility Agent, as the case may be, shall be entitled to
enforce the provisions of this Article Fourteen against the Company, the
Subsidiary Notes Guarantors, the Holders of the Notes and the Trustee.
SECTION 1407. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Note by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to effectuate the subordination provided in this Article
Fourteen and appoints the Trustee his attorney-in-fact for any and all such
purposes.
SECTION 1408. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Debt
or Subsidiary Guarantor Senior Debt to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or any Subsidiary Notes Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance
by the Company or any Subsidiary Notes Guarantor with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such
Holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt or Subsidiary Guarantor Senior Debt, as
the case may be, may, at any time and from time to time, without the consent of
or notice to the Trustee or the Holders of the Notes, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Fourteen or the
obligations hereunder of
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the Holders of the Notes to the holders of Senior Debt or Subsidiary Guarantor
Senior Debt, as the case may be, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Debt or Subsidiary Guarantor Senior Debt, as the case
may be, or otherwise amend or supplement in any manner Senior Debt or
Subsidiary Guarantor Senior Debt, as the case may be, or any instrument
evidencing the same or any agreement under which Senior Debt or Subsidiary
Guarantor Senior Debt, as the case may be, is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt or any Subsidiary Guarantor Senior Debt, as the case may
be; (iii) release any Person liable in any manner for the collection of Senior
Debt or any Subsidiary Guarantor Senior Debt, as the case may be; and (iv)
exercise or refrain from exercising any rights against the Company or any
Subsidiary Notes Guarantor and any other Person.
SECTION 1409. NOTICE TO TRUSTEE.
The Company and each Subsidiary Notes Guarantor shall give
prompt written notice to the Trustee of any fact known to the Company which
would prohibit the making of any payment to or by the Trustee in respect of the
Notes and of any subsequent cure or waiver thereof. Notwithstanding the
provisions of this Article Fourteen or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to or by the Trustee in respect
of the Notes, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Debt or a holder of Subsidiary
Guarantor Senior Debt or from any trustee or agent therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 601, shall be entitled in all respects to assume that no such facts
exist.
Subject to the provisions of Section 601, the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Debt or a holder of Subsidiary
Guarantor Senior Debt (or a trustee or agent therefor) to establish that such
notice has been given by a holder of Senior Debt or a holder of Subsidiary
Guarantor Senior Debt (or a trustee or agent therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Debt or a holder of Subsidiary
Guarantor Senior Debt, as the case may be, to participate in any payment or
distribution pursuant to this Article Fourteen, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Debt or Subsidiary Guarantor Senior Debt, as the case may
be, held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article Fourteen, and if such evidence is
not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
<PAGE> 127
116
SECTION 1410. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATION AGENT.
Upon any payment or distribution of assets of the Company or
any Subsidiary Notes Guarantor referred to in this Article Fourteen, the
Trustee, subject to the provisions of Section 601, and the Holders of the Notes
shall be entitled to rely upon any order or decree entered by any court of
competent jurisdiction in a Proceeding, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Notes, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt, Subsidiary Guarantor Senior Debt
and other indebtedness of the Company and the Subsidiary Notes Guarantors, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Fourteen.
SECTION 1411. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
DEBT.
Except to the extent of its obligations under the penultimate
paragraph of Section 1402 and the last paragraph of Section 1403, the Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Debt or
Subsidiary Guarantor Senior Debt and shall not be liable to any such holders if
it shall in good faith mistakenly pay over or distribute to Holders of Notes or
to the Company or to any other Person cash, property or securities to which any
holders of Senior Debt or Subsidiary Guarantor Senior Debt shall be entitled by
virtue of this Article Fourteen or otherwise. The Trustee's duties with respect
to holders of Senior Debt and Subsidiary Guarantor Senior Debt are limited to
those specifically set forth in this Indenture, and no implied covenants or
obligations shall be construed by any provision hereof.
SECTION 1412. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT;
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article Fourteen with respect to any Senior
Debt or Subsidiary Guarantor Senior Debt which may at any time be held by it,
to the same extent as any other holder of Senior Debt or Subsidiary Guarantor
Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article Fourteen shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.
<PAGE> 128
SECTION 1413. APPLICABILITY TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article Fourteen shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if
such Paying Agent were named in this Article Fourteen in addition to or in
place of the Trustee; provided, however, that this Section 1413 shall not apply
to the Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
SECTION 1414. DEFEASANCE OF THIS ARTICLE FOURTEEN.
The subordination of the Notes and the Subsidiary Notes
Guarantees provided by this Article Fourteen is expressly made subject to the
provisions for Legal Defeasance or Covenant Defeasance in Article Twelve hereof
and, anything herein to the contrary notwithstanding, upon the effectiveness of
any such Legal Defeasance or Covenant Defeasance, the Notes and the Subsidiary
Notes Guarantees then outstanding shall thereupon cease to be subordinated
pursuant to this Article Fourteen.
SECTION 1415. SUBORDINATION PROVISIONS CONTROLLING.
Notwithstanding anything to the contrary contained in this
Indenture, to the extent that any provision contained in Articles One (other
than Section 101) through Thirteen of this Indenture conflicts with any
provision contained in Article Fourteen (including the definitions of certain
terms used in Article Fourteen) of this Indenture, the provisions contained in
Article Fourteen of this Indenture shall govern and control.
<PAGE> 129
118
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
CITADEL BROADCASTING COMPANY,
a Nevada corporation
By /s/ Lawrence R. Wilson
---------------------------
Name: Lawrence R. Wilson
Title: President
CITADEL LICENSE, INC.,
as Guarantor
By /s/ Lawrence R. Wilson
---------------------------
Name: Lawrence R. Wilson
Title: President
THE BANK OF NEW YORK,
as Trustee
By /s/ Steve Giurlando
---------------------------
Name: Steve Giurlando
Title: Assistant Vice-President
<PAGE> 1
Exhibit 4.2
===============================================================================
CITADEL BROADCASTING COMPANY,
Issuer
CITADEL LICENSE, INC.,
Guarantor
and
THE BANK OF NEW YORK,
Debentures Trustee
--------------------
INDENTURE
Dated as of July 1, 1997
---------------------
13-1/4% Exchange Debentures due 2009
13-1/4% Series B Exchange Debentures due 2009
===============================================================================
<PAGE> 2
CITADEL BROADCASTING COMPANY
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT
OF 1939 AND INDENTURE, DATED AS OF JULY 1, 1997
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C>
Section 310(a)(1) ............................... 608
(a)(2) ............................... 608
(b) ............................... 609
Section 312(a) ............................... 701
(c) ............................... 702
Section 313(a) ............................... 703
(c) ............................... 703
Section 314(a)(4) ............................... 1010(a)
(c)(1) ............................... 102
(c)(2) ............................... 102
(e) ............................... 102
Section 315(a) ............................... 601(a)
(b) ............................... 602
(c) ............................... 601(b)
(d) ............................... 601(c), 603
316(a)(last
sentence) ............................... 101 ("Outstanding")
(a)(1)(A) ............................... 502, 512
(a)(1)(B) ............................... 513
(b) ............................... 508
(c) ............................... 104(d)
Section 317(a)(1) ............................... 503
(a)(2) ............................... 504
(b) ............................... 1003
Section 318(a) ............................... 111
</TABLE>
- --------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PARTIES................................................................... 1
RECITALS OF THE COMPANY................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.................................................. 2
Acquired Debt.............................................. 2
Act........................................................ 3
Affiliate.................................................. 3
Agent...................................................... 3
Asset Sale................................................. 3
Asset Sale Offer........................................... 3
Asset Swap................................................. 3
Authenticating Agent....................................... 4
Bankruptcy Law............................................. 4
Banks .................................................... 4
Board of Directors......................................... 4
Board Resolution........................................... 4
Business Day............................................... 4
Capital Stock.............................................. 4
Capitalized Lease Obligation............................... 4
Certificate of Designation................................. 4
Change of Control.......................................... 5
Change of Control Offer.................................... 5
Change of Control Payment.................................. 5
Change of Control Purchase Date............................ 5
Citadel Communications..................................... 5
Closing Date............................................... 5
Commission................................................. 5
Company.................................................... 6
Company Request or Company Order........................... 6
Consolidated Adjusted Net Income........................... 6
Consolidated Cash Flow..................................... 6
Consolidated Cash Flow Ratio............................... 7
- --------
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 4
ii
<TABLE>
<CAPTION>
PAGE
<S> <C>
Consolidated Fixed Charges................................. 7
Corporate Trust Office..................................... 8
Covenant Defeasance........................................ 8
Credit Facility............................................ 8
Credit Facility Agent...................................... 8
Custodian.................................................. 8
Debentures Trustee......................................... 8
Debt....................................................... 8
Default.................................................... 9
Defaulted Interest......................................... 9
Depositary................................................. 9
Disinterested Director..................................... 9
Disqualified Stock......................................... 9
Event of Default........................................... 10
Excess Proceeds............................................ 10
Exchange Act............................................... 10
Exchange Date.............................................. 10
Exchange Debentures........................................ 10
Exchange Debentures Exchange Offer......................... 10
Exchange Debentures Exchange Offer Registration Statement.. 10
Exchange Debentures Register and Exchange Debentures Registrar 10
Exchange Debentures Registration Rights Agreement.......... 10
Exchange Debentures Shelf Registration Statement........... 10
Exchange Indenture......................................... 10
Exchangeable Preferred Stock............................... 10
FCC........................................................ 11
Generally Accepted Accounting Principles or GAAP........... 11
guarantee.................................................. 11
Hedging Obligations........................................ 11
Holder .................................................... 11
Indenture Obligations...................................... 11
Initial Exchange Debentures................................ 11
Initial Purchasers......................................... 11
Interest Payment Date...................................... 11
Investment................................................. 12
Junior Subordinated Debt................................... 12
Legal Defeasance........................................... 12
License Subsidiary......................................... 12
Lien....................................................... 12
Net Cash Proceeds.......................................... 12
</TABLE>
<PAGE> 5
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<TABLE>
<CAPTION>
PAGE
<S> <C>
New Exchange Debentures.................................... 13
Notes...................................................... 13
Offered Price.............................................. 13
Officers' Certificate...................................... 13
Opinion of Counsel......................................... 13
Outstanding................................................ 13
Pari Passu Debt............................................ 14
Paying Agent............................................... 14
Permitted Debt............................................. 14
Permitted Investments...................................... 15
Person..................................................... 16
Predecessor Exchange Debenture............................. 16
Preferred Stock............................................ 16
Public Equity Offering..................................... 16
QIB........................................................ 16
Qualified Equity Interest.................................. 16
Qualified Stock............................................ 16
Redemption Date............................................ 16
Redemption Price........................................... 16
Regular Record Date........................................ 16
Responsible Officer........................................ 16
Restricted Subsidiary...................................... 17
Rule 144A.................................................. 17
Securities Act............................................. 17
Senior Debt................................................ 17
Senior Subordinated Debt................................... 17
Significant Subsidiary..................................... 18
Special Record Date........................................ 18
Specified Senior Debt...................................... 18
Stated Maturity............................................ 18
Subordinated Debt.......................................... 18
Subsidiary................................................. 19
Subsidiary Debentures Guarantee............................ 19
Subsidiary Debentures Guarantor............................ 19
Subsidiary Guarantor Senior Debt........................... 19
Subsidiary Guarantor Senior Subordinated Debt.............. 19
Subsidiary Notes Guarantee................................. 20
Trust Indenture Act or TIA................................. 20
Unrestricted Subsidiary.................................... 20
U.S. Government Obligations................................ 20
</TABLE>
<PAGE> 6
iv
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Vice President............................................. 21
Voting Stock............................................... 21
Voting Trust Agreement..................................... 21
Weighted Average Life...................................... 21
Wholly Owned Restricted Subsidiary......................... 21
SECTION 102. Compliance Certificates and Opinions........................ 21
SECTION 103. Form of Documents Delivered to Debentures Trustee........... 22
SECTION 104. Acts of Holders............................................. 23
SECTION 105. Notices, Etc., to Debentures Trustee, the Company and
Subsidiary Debentures Guarantors.......................... 24
SECTION 106. Notice to Holders; Waiver................................... 25
SECTION 107. Effect of Headings and Table of Contents.................... 25
SECTION 108. Successors and Assigns...................................... 25
SECTION 109. Separability Clause......................................... 25
SECTION 110. Benefits of Indenture....................................... 26
SECTION 111. Governing Law............................................... 26
SECTION 112. Legal Holidays.............................................. 26
SECTION 113. No Personal Liability of Directors, Officers, Employees,
Stockholders or Incorporators............................. 26
SECTION 114. Counterparts................................................ 27
ARTICLE TWO
EXCHANGE DEBENTURE FORMS
SECTION 201. Forms Generally............................................. 27
SECTION 202. Restrictive Legends......................................... 28
SECTION 203. [INTENTIONALLY OMITTED]..................................... 30
SECTION 204. Form of Face of Exchange Debenture.......................... 30
SECTION 205. Form of Reverse of Exchange Debenture....................... 33
SECTION 206. Form of Debentures Trustee's Certificate
of Authentication......................................... 41
ARTICLE THREE
THE EXCHANGE DEBENTURES
SECTION 301. Title and Terms............................................. 42
SECTION 302. Denominations............................................... 43
SECTION 303. Execution, Authentication, Delivery and Dating.............. 43
SECTION 304. Temporary Exchange Debentures............................... 45
</TABLE>
<PAGE> 7
v
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 305. Registration, Registration of Transfer and Exchange.......... 45
SECTION 306. Book-Entry Provisions for the Global Exchange Debenture...... 47
SECTION 307. Special Transfer Provisions.................................. 48
SECTION 308. Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors.... 50
SECTION 309. [INTENTIONALLY OMITTED]...................................... 53
SECTION 310. Mutilated, Destroyed, Lost and Stolen Exchange Debentures.... 53
SECTION 311. Payment of Interest; Interest Rights Preserved............... 54
SECTION 312. Persons Deemed Owners........................................ 55
SECTION 313. Cancellation................................................. 55
SECTION 314. Computation of Interest...................................... 56
SECTION 315. CUSIP Numbers................................................ 56
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture...................... 56
SECTION 402. Application of Trust Money................................... 58
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default............................................ 58
SECTION 502. Acceleration of Maturity; Rescission and Annulment........... 60
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Debentures Trustee..................................... 61
SECTION 504. Debentures Trustee May File Proofs of Claim.................. 62
SECTION 505. Debentures Trustee May Enforce Claims Without Possession of
Exchange Debentures.................................... 63
SECTION 506. Application of Money Collected............................... 63
SECTION 507. Limitation on Suits.......................................... 64
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest................................................. 64
SECTION 509. Restoration of Rights and Remedies........................... 65
SECTION 510. Rights and Remedies Cumulative............................... 65
SECTION 511. Delay or Omission Not Waiver................................. 65
SECTION 512. Control by Holders........................................... 65
SECTION 513. Waiver of Past Defaults...................................... 66
</TABLE>
<PAGE> 8
vi
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 514. Waiver of Stay or Extension Laws............................. 66
SECTION 515. Undertaking for Costs........................................ 67
ARTICLE SIX
THE DEBENTURES TRUSTEE
SECTION 601. Certain Duties and Responsibilities.......................... 67
SECTION 602. Notice of Defaults........................................... 68
SECTION 603. Certain Rights of Debentures Trustee......................... 69
SECTION 604. Debentures Trustee Not Responsible for Recitals or
Issuance of Exchange Debentures.............................. 70
SECTION 605. May Hold Exchange Debentures................................. 70
SECTION 606. Money Held in Trust.......................................... 71
SECTION 607. Compensation and Reimbursement............................... 71
SECTION 608. Corporate Debentures Trustee Required; Eligibility........... 72
SECTION 609. Resignation and Removal; Appointment of Successor............ 72
SECTION 610. Acceptance of Appointment by Successor....................... 74
SECTION 611. Merger, Conversion, Consolidation or Succession to Business.. 74
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY DEBENTURES TRUSTEE
SECTION 701. Company to Furnish Debentures Trustee Names and Addresses.... 75
SECTION 702. Disclosure of Names and Addresses of Holders................. 75
SECTION 703. Reports by Debentures Trustee................................ 76
ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms......... 76
SECTION 802. Successor Substituted........................................ 77
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. Supplemental Indentures Without Consent of Holders........... 77
</TABLE>
<PAGE> 9
vii
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 902. Supplemental Indentures with Consent of Holders.............. 78
SECTION 903. Execution of Supplemental Indentures......................... 79
SECTION 904. Effect of Supplemental Indentures............................ 79
SECTION 905. Conformity with Trust Indenture Act.......................... 80
SECTION 906. Reference in Exchange Debentures to Supplemental Indentures.. 80
SECTION 907. Notice of Supplemental Indentures............................ 80
SECTION 908. Effect on Senior Debt and Senior Subordinated Debt........... 80
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and Interest.......... 80
SECTION 1002. Maintenance of Office or Agency.............................. 81
SECTION 1003. Money for Exchange Debenture Payments to Be Held in Trust.... 81
SECTION 1004. Corporate Existence.......................................... 83
SECTION 1005. Payment of Taxes and Other Claims............................ 83
SECTION 1006. Maintenance of Properties.................................... 83
SECTION 1007. Insurance ................................................... 84
SECTION 1008. Compliance with Laws......................................... 84
SECTION 1009. Limitation on Debt........................................... 84
SECTION 1010. Limitation on Restricted Payments............................ 87
SECTION 1011. Purchase of Exchange Debentures upon a Change of Control..... 91
SECTION 1012. Limitation on Certain Asset Sales............................ 93
SECTION 1013. Limitation on Asset Swaps.................................... 95
SECTION 1014. Limitation on Transactions with Affiliates................... 96
SECTION 1015. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries............................ 97
SECTION 1016. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries...................................... 98
SECTION 1017. Limitation on Unrestricted Subsidiaries...................... 99
SECTION 1018. Limitation on Other Subordinated Debt........................ 99
SECTION 1019. Subsidiary Debentures Guarantees.............................100
SECTION 1020. Limitation on Guarantees of Debt by Restricted Subsidiaries..100
SECTION 1021. Limitation on Liens..........................................100
SECTION 1022. Commission Reports and Reports to Holders....................101
SECTION 1023. Statement as to Compliance...................................101
SECTION 1024. Delivery of Certain Information..............................102
</TABLE>
<PAGE> 10
viii
ARTICLE ELEVEN
REDEMPTION OF EXCHANGE DEBENTURES
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1101. Redemption...................................................102
SECTION 1102. Applicability of Article.....................................102
SECTION 1103. Election to Redeem; Notice to Debentures Trustee.............103
SECTION 1104. Selection by Debentures Trustee of Exchange Debentures to Be
Redeemed................................................103
SECTION 1105. Notice of Redemption.........................................103
SECTION 1106. Deposit of Redemption Price..................................105
SECTION 1107. Exchange Debentures Payable on Redemption Date...............105
SECTION 1108. Exchange Debentures Redeemed in Part.........................105
ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Legal Defeasance or Covenant
Defeasance..............................................106
SECTION 1202. Legal Defeasance and Discharge...............................106
SECTION 1203. Covenant Defeasance..........................................107
SECTION 1204. Conditions to Legal Defeasance or Covenant Defeasance........107
SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions...................108
SECTION 1206. Reinstatement................................................109
ARTICLE THIRTEEN
SUBSIDIARY DEBENTURES GUARANTEES
SECTION 1301. Subsidiary Debentures Guarantees.............................110
SECTION 1302. Guaranty Absolute............................................111
SECTION 1303. Waivers ...................................................113
SECTION 1304. Subrogation..................................................114
SECTION 1305. No Waiver; Remedies..........................................114
SECTION 1306. Continuing Guaranty; No Right of Set-Off; Independent
Obligation..............................................114
SECTION 1307. Subsidiary Debentures Guarantors May Consolidate, Etc.
on Certain Terms........................................115
</TABLE>
<PAGE> 11
ix
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1308. Additional Subsidiary Debentures Guarantors..................115
SECTION 1309. Releases ...................................................116
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. Exchange Debentures and Subsidiary Debentures Guarantees
Subordinate to Senior Debt and Senior Subordinated Debt.117
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc...............117
SECTION 1403. No Payment When Certain Senior Debt and Senior Subordinated
Debt in Default.........................................119
SECTION 1404. Payment Permitted If No Default..............................120
SECTION 1405. Subrogation to Rights of Holders of Senior Debt and Senior
Subordinated Debt.......................................120
SECTION 1406. Provisions Solely to Define Relative Rights..................121
SECTION 1407. Debentures Trustee to Effectuate Subordination...............122
SECTION 1408. No Waiver of Subordination Provisions........................122
SECTION 1409. Notice to Debentures Trustee.................................123
SECTION 1410. Reliance on Judicial Order or Certificate of Liquidation
Agent...................................................123
SECTION 1411. Debentures Trustee Not Fiduciary for Holders of Senior Debt
and Senior Subordinated Deb..................................124
SECTION 1412. Rights of Debentures Trustee as Holder of Senior Debt and
Senior Subordinated Debt; Preservation of Debentures
Trustee's Rights.............................................124
SECTION 1413. Applicability to Paying Agents...............................124
SECTION 1414. Defeasance of this Article Fourteen..........................125
SECTION 1415. Subordination Provisions Controlling.........................125
SIGNATURES..................................................................126
</TABLE>
<PAGE> 12
INDENTURE, dated as of July 1, 1997, among CITADEL BROADCASTING COMPANY, a
corporation duly organized and existing under the laws of the State of Nevada
(the "Company"), having its principal office at 140 South Ash Avenue, Tempe,
Arizona 85281, CITADEL LICENSE, INC., a wholly owned subsidiary of the Company,
as guarantor (the "Subsidiary Debentures Guarantor"), having its principal
office at 140 South Ash Avenue, Tempe, Arizona 85281 and THE BANK OF NEW YORK,
a New York banking corporation, as trustee (the "Debentures Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of (and, with respect to clause
(a) below, the issuance of) (a) its 13-1/4% Exchange Debentures due 2009 (the
"Initial Exchange Debentures"), (b) its 13-1/4% Series B Exchange Debentures
due 2009 (the "New Exchange Debentures"), of substantially the tenor and amount
hereinafter set forth and (c) any additional 13-1/4% Exchange Debentures due
2009 issued in lieu of interest payments in money, as provided for in this
Exchange Indenture and in the Exchange Debentures (together with the Initial
Exchange Debentures and New Exchange Debentures, the "Exchange Debentures") and
to provide therefor the Company has duly authorized the execution and delivery
of this Exchange Indenture.
Upon the effectiveness of the Exchange Debentures Exchange Offer
Registration Statement (as defined herein) or the Exchange Debentures Shelf
Registration Statement (as defined herein), this Exchange Indenture shall be
subject to, and shall be governed by, the provisions of the Trust Indenture Act
of 1939, as amended, that are required or deemed to be part of and to govern
indentures qualified thereunder.
All things necessary have been done to make the Exchange Debentures, when
executed and duly issued by the Company and authenticated and delivered
hereunder by the Debentures Trustee or the Authenticating Agent, the valid
obligations of the Company and to make this Exchange Indenture a valid
agreement of the Company in accordance with their and its terms.
NOW, THEREFORE, THIS EXCHANGE INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Exchange
Debentures by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Exchange Debentures,
as follows:
<PAGE> 13
2
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Exchange Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article, and words in the singular include the plural as well as the
singular, and words in the plural include the singular as well as the plural;
(b) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, or defined by Commission rule
and not otherwise defined herein have the meanings assigned to them therein,
and the terms "cash transaction" and "self-liquidating paper," as used in TIA
Section 311, shall have the meanings assigned to them in the rules of the
Commission adopted under the Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with Generally Accepted Accounting Principles;
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Exchange Indenture as a whole and not to any
particular Article, Section or other subdivision;
(e) the word "or" is not exclusive; and
(f) provisions of this Exchange Indenture apply to successive events and
transactions.
Certain terms, used principally in Articles Two, Ten, Twelve, Thirteen and
Fourteen, are defined in those Articles.
"Acquired Debt" means Debt of a Person (a) existing at the time such Person
is merged with or into the Company or becomes a Subsidiary, (b) assumed in
connection with the acquisition of assets from such Person or (c) secured by a
Lien encumbering assets acquired from such Person.
<PAGE> 14
3
"Act," when used with respect to any Holder, has the meaning set forth in
Section 104.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Paying Agent, Authenticating Agent and Exchange Debenture
Registrar under this Exchange Indenture.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer") by the Company or
a Restricted Subsidiary, directly or indirectly, in one or a series of related
transactions, to any Person other than the Company or a Restricted Subsidiary
of (a) any Capital Stock of any of its Restricted Subsidiaries, (b) all or
substantially all of the properties and assets of the Company and any of its
Restricted Subsidiaries representing a division or line of business or (c) any
other properties or assets of the Company or any of its Restricted
Subsidiaries, other than in the ordinary course of business. For the purposes
of this definition, the term "Asset Sale" does not include any transfer of
properties or assets (a) that is governed by the provisions of this Exchange
Indenture described under (i) Article Eight or (ii) Section 1013, (b) between
or among the Company and any of its Restricted Subsidiaries pursuant to
transactions that do not violate any other provision of this Exchange
Indenture, (c) to an Unrestricted Subsidiary, if permitted under Section 1010,
(d) representing obsolete or permanently retired equipment, (e) the gross
proceeds of which (exclusive of indemnities) do not exceed $100,000 for any
particular item or $500,000 in the aggregate for any fiscal year or (f) the
transfer of up to $500,000 of property and assets, including cash, to a joint
venture in which the Company or a Restricted Subsidiary has an equity interest,
which joint venture is engaged in the internet service provider business.
"Asset Sale Offer" has the meaning set forth in Section 1012 herein.
"Asset Swap" means the execution of one or more definitive agreements,
subject only to FCC approval, if applicable, and other customary closing
conditions, which the Company in good faith believes shall be satisfied, for a
substantially concurrent purchase and sale, or exchange, or "deferred exchange"
(for no more than 180 days) under Section 1031(a)(3) of the Internal Revenue
Code of 1986, as amended, of assets used in the broadcast or related businesses
between the Company or any of its Restricted Subsidiaries and one or more other
Persons or groups of affiliated Persons; provided that any amendment to or
waiver of any
<PAGE> 15
4
closing conditions that individually or in the aggregate are material to the
Asset Swap shall be deemed to be a new Asset Swap.
"Authenticating Agent" means the Person appointed, if any, by the Debentures
Trustee as an authenticating agent pursuant to the last paragraph of Section
303.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state or foreign law relating
to bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or
change in any such law.
"Banks" means the banks and other financial institutions that from time to
time are lenders under the Credit Facility.
"Board of Directors" means, with respect to any Person, either the board of
directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a resolution
certified by the secretary or an assistant secretary of such Person to have
been duly adopted by the Board of Directors of such Person and to be in full
force and effect on the date of such certification, and delivered to the
Debentures Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"Capital Stock" of any Person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents (however
designated) of such Person's equity (however designated).
"Capitalized Lease Obligation" means, with respect to any Person, an
obligation incurred or assumed under or in connection with any capital lease of
real or personal property that, in accordance with GAAP, has been recorded as a
capitalized lease on the balance sheet of such Person.
"Certificate of Designation" means the document setting forth the terms of
the Exchangeable Preferred Stock, as filed with the Secretary of State of
Nevada on July 2, 1997, as amended from time to time.
<PAGE> 16
5
"Change of Control" means the occurrence of any of the following events:
(a) Any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than Lawrence R. Wilson, Scott E. Smith,
John E. von Schlegell, Baker, Fentress & Company, ABRY Broadcast Partners II,
L.P., ABRY/Citadel Investment Partners, L.P., The Endeavour Capital Fund
Limited Partnership and any trustee, in its capacity as trustee under the
Voting Trust Agreement or Citadel Communications, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have "beneficial ownership" of
all securities that such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than a majority of the voting power of all classes of
Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of Directors,
or whose nomination for election by the stockholders of the Company, was
approved by a vote of at least 66-2/3% of the directors then still in office
who were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors of the Company then in
office; or
(c) The Company is liquidated or dissolved or adopts a plan of liquidation
or dissolution.
"Change of Control Offer" has the meaning set forth in Section 1011 herein.
"Change of Control Payment" has the meaning set forth in Section 1011
herein.
"Change of Control Purchase Date" has the meaning set forth in Section 1011
herein.
"Citadel Communications" means Citadel Communications Corporation, a Nevada
corporation, and any successors thereof.
"Closing Date" means the date on which the Exchangeable Preferred Stock is
originally issued under the Certificate of Designation.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this
<PAGE> 17
6
Exchange Indenture such Commission is not existing and performing the duties
now assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this Exchange Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Exchange Indenture, and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order signed
in the name of the Company (i) by its chairman, a vice-chairman, its president
or any vice president and (ii) by its treasurer, an assistant treasurer, its
secretary or an assistant secretary and delivered to the Debentures Trustee;
provided, however, that such written request or order may be signed by any two
of the officers or directors listed in clause (i) above in lieu of being signed
by one of such officers or directors listed in such clause (i) and one of the
officers listed in clause (ii) above.
"Consolidated Adjusted Net Income" means, for any period, the net income (or
net loss) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, adjusted to the
extent included in calculating such net income or loss by excluding (a) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (b) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (c) the portion of net income
(or loss) of any Person (other than the Company or a Restricted Subsidiary),
including Unrestricted Subsidiaries, in which the Company or any of its
Restricted Subsidiaries has an ownership interest, except to the extent of the
amount of dividends or other distributions actually paid to the Company or any
of its Restricted Subsidiaries in cash during such period, (d) the net income
(or loss) of any Person combined with the Company or any of its Restricted
Subsidiaries on a "pooling of interests" basis attributable to any period prior
to the date of combination, and (e) the net income (but not the net loss) of
any of its Restricted Subsidiaries to the extent that the declaration or
payment of dividends or similar distributions by such Restricted Subsidiary is
at the date of determination restricted, directly or indirectly, except to the
extent that such net income could be paid to the Company or a Restricted
Subsidiary thereof; provided that, if any Restricted Subsidiary is not a Wholly
Owned Restricted Subsidiary, Consolidated Adjusted Net Income shall be reduced
(to the extent not otherwise reduced in accordance with GAAP) by an amount
equal to (A) the amount of the Consolidated Adjusted Net Income otherwise
attributable to such Restricted Subsidiary multiplied by (B) the quotient of
(1) the number of shares of outstanding common stock of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of
its Restricted Subsidiaries divided by (2) the total number of shares of
outstanding common stock of such Restricted Subsidiary on the last day of such
period.
"Consolidated Cash Flow" means, for any period, the sum of, without
duplication, Consolidated Adjusted Net Income for such period, plus (or, in the
case of clause (d) below,
<PAGE> 18
7
plus or minus) the following items to the extent included in computing
Consolidated Adjusted Net Income for such period: (a) the aggregate interest
expense and preferred stock dividends of the Company and its Restricted
Subsidiaries for such period, plus (b) the provision for federal, state, local
and foreign income taxes of the Company and its Restricted Subsidiaries for
such period, plus (c) the aggregate depreciation and amortization expense of
the Company and any of its Restricted Subsidiaries for such period, plus (d)
any other non-cash charges for such period, and minus non-cash credits for such
period, other than non-cash charges or credits resulting from changes in
prepaid assets or accrued liabilities in the ordinary course of business;
provided that income tax expense, interest expense and preferred stock
dividends, depreciation and amortization expense, and non-cash charges and
credits of a Restricted Subsidiary shall be included in Consolidated Cash Flow
only to the extent (and in the same proportion) that the net income of such
Restricted Subsidiary was included in calculating Consolidated Adjusted Net
Income for such period. Solely for purposes of determining whether the Company
could incur Debt pursuant to the first paragraph of Section 1009, if the
Company is permitted to give pro forma effect to an In-Market Acquisition of a
radio station pursuant to clause (iii) of the second paragraph of such Section,
such calculation may also give pro forma effect to projected quantifiable
improvements in operating results of such radio station due to cost reductions
calculated in good faith by the Company and certified by an Officers'
Certificate filed with the Debentures Trustee. As used in the preceding
sentence, the term "In-Market Acquisition" means the acquisition of a radio
station or group of radio stations serving a metropolitan statistical area in
which the Company or its Subsidiaries has owned, or has operated under a local
marketing agreement, one or more radio stations for at least the preceding six
months.
"Consolidated Cash Flow Ratio" means, at any date, the ratio of (i) the
aggregate amount of Debt of the Company and its Restricted Subsidiaries on a
consolidated basis as of the end of the immediately preceding four fiscal
quarters for which internal financial statements of the Company are available
(the "Reference Period") to (ii) the aggregate amount of Consolidated Cash Flow
for such Reference Period.
"Consolidated Fixed Charges" means, for any period, without duplication, the
sum of (a) the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a consolidated
statement of operations of the Company and its Restricted Subsidiaries for such
period, including, without limitation, (i) amortization of debt discount, (ii)
the net cost of interest rate contracts (including amortization of discounts),
(iii) the interest portion of any deferred payment obligation, (iv)
amortization of debt issuance costs, (v) the interest component of Capitalized
Lease Obligations of the Company and any of its Restricted Subsidiaries, and
(vi) the portion of any rental obligation of the Company and any of its
Restricted Subsidiaries in respect of any sale and leaseback transaction
allocable during such period to interest expense (determined as if it were
treated as a Capitalized Lease Obligation), plus (b) all interest on any Debt
of any other Person guaranteed by the Company or any of its Restricted
Subsidiaries; provided, however, that
<PAGE> 19
8
Consolidated Fixed Charges shall not include any gain or loss from
extinguishment of debt, including any write-off of debt issuance costs.
"Corporate Trust Office" means the principal corporate trust office of the
Debentures Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Exchange Indenture is located at 101 Barclay Street - 21W, New York New York
10286, except that with respect to presentation of Exchange Debentures for
payment or for registration of transfer or exchange, such term shall mean any
office or agency of the Debentures Trustee at which, at any particular time,
its corporate agency business shall be conducted.
"Covenant Defeasance" has the meaning set forth in Section 1203 herein.
"Credit Facility" means the loan agreement dated October 9, 1996 among the
Company, the Banks and the Credit Facility Agent, as amended, and as such
agreement may be amended, restated, supplemented, replaced or refinanced or
otherwise modified from time to time.
"Credit Facility Agent" means the then acting Agent as defined in and under
the Credit Facility or any successor thereto.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
"Debentures Trustee" means the Person named as the "Debentures Trustee" in
the first paragraph of this Exchange Indenture until a successor Debentures
Trustee shall have become such pursuant to the applicable provisions of this
Exchange Indenture, and thereafter "Debentures Trustee" shall mean such
successor Debentures Trustee.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (a) every obligation of such Person for money borrowed, (b) every
obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (d) every obligation of such Person issued or
assumed as the deferred purchase price of property or services, (e) every
Capitalized Lease Obligation of such Person, (f) all Disqualified Stock of such
Person valued at its maximum fixed repurchase price, plus accumulated and
unpaid dividends, (g) all Hedging Obligations of such Person, and (h) every
obligation of the types referred to in clauses (a) through (g) of another
Person and all dividends of another Person (i) the payment of which, in either
case, such Person has guaranteed or (ii) which is secured by any Lien on any
property or asset of such Person, the amount of such Debt being deemed to be
the lesser of the actual amount of the guarantee or the value of such
<PAGE> 20
9
property or asset subject to such Lien, as the case may be, and the amount of
the Debt so guaranteed or secured, as the case may be. For purposes of this
definition, the "maximum fixed repurchase price" of any Disqualified Stock that
does not have a fixed repurchase price shall be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
repurchased on any date on which Debt is required to be determined pursuant to
this Exchange Indenture, and if such price is based upon, or measured by, the
fair market value of such Disqualified Stock, such fair market value shall be
determined reasonably and in good faith by the board of directors of the issuer
of such Disqualified Stock. Notwithstanding the foregoing, trade accounts
payable and accrued liabilities arising in the ordinary course of business and
any liability for federal, state or local taxes or other taxes owed by such
Person shall not be considered Debt for purposes of this definition. The
amount outstanding at any time of any Debt issued with original issue discount
is the aggregate principal amount at maturity of such Debt, less the remaining
unamortized portion of the original issue discount of such Debt at such time,
as determined in accordance with GAAP.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 311.
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Disinterested Director" means, with respect to any transaction or series of
transactions in respect of which the Board of Directors is required to deliver
a resolution of the Board of Directors, to make a finding or otherwise take
action under this Exchange Indenture, a member of the Board of Directors who
does not have any material direct or indirect financial interest in or with
respect to such transaction or series of transactions.
"Disqualified Stock" means any class or series of Capital Stock that, either
by its terms (or by the terms of any security into which it is convertible or
exchangeable by contract or otherwise), or upon the happening of any event,
matures (excluding any maturity as the result of an optional redemption by the
issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof, in whole or in part, prior to one year after the Stated Maturity of
the Exchange Debentures; provided that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to cause the issuer thereof to repurchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" occurring
prior to one year after the Stated Maturity of the Exchange Debentures will
not constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the
holders of such Capital Stock than the provisions contained in Sections 1011
and 1012 of this Exchange Indenture and such Capital Stock specifically
provides that the issuer will not repurchase or redeem any such Capital Stock
pursuant to such provision prior to
<PAGE> 21
10
the Company's repurchase of such Exchange Debentures as are required to be
repurchased pursuant to Sections 1011 and 1012 of this Exchange Indenture.
"Event of Default" has the meaning set forth in Section 501 herein
"Excess Proceeds" has the meaning set forth in Section 1012 herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Date" means the date fixed by the Company for the exchange of the
Exchangeable Preferred Stock into the Exchange Debentures.
"Exchange Debentures" has the meaning stated in the first recital of this
Exchange Indenture and more particularly means any Exchange Debentures
authenticated and delivered under this Exchange Indenture.
"Exchange Debentures Exchange Offer" means the offer by the Company to the
Holders of the Initial Exchange Debentures to exchange all of the Initial
Exchange Debentures for New Exchange Debentures, as provided for in the
Exchange Debentures Registration Rights Agreement.
"Exchange Debentures Exchange Offer Registration Statement" means the
Exchange Debentures Exchange Offer Registration Statement as defined in the
Exchange Debentures Registration Rights Agreement.
"Exchange Debentures Register" and "Exchange Debentures Registrar" have the
respective meanings specified in Section 305.
"Exchange Debentures Registration Rights Agreement" means the Exchange
Debentures Registration Rights Agreement, dated as of July 1, 1997, among the
Company, the Subsidiary Debentures Guarantors and the Initial Purchasers.
"Exchange Debentures Shelf Registration Statement" means the Exchange
Debentures Shelf Registration Statement as defined in the Exchange Debentures
Registration Rights Agreement.
"Exchange Indenture" means this instrument as originally executed and as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Exchangeable Preferred Stock" means the 13-1/4% Series A Exchangeable
Preferred Stock, no par value, of the Company.
<PAGE> 22
11
"FCC" means the Federal Communications Commission, which has jurisdiction
over the ownership, operation and sale of the Company's broadcast stations.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the Closing Date.
"guarantee" means, as applied to any obligation, (a) a guarantee (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (b) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limitation, the payment of
amounts drawn down under letters of credit.
"Hedging Obligations" means the obligations of any Person under (a) interest
rate swap agreements, interest rate cap agreements and interest rate collar
agreements and (b) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or the value of foreign
currencies.
"Holder" means the Person in whose name an Exchange Debenture is registered
in the Exchange Debenture Register.
"Indenture Obligations" means the obligations of the Company and any other
obligor hereunder or under the Exchange Debentures, including the Subsidiary
Debentures Guarantors, to pay principal of (and premium, if any) and interest
on the Exchange Debentures when due and payable at maturity, and all other
amounts due or to become due under or in connection with this Exchange
Indenture, the Exchange Debentures and the performance of all other obligations
to the Debentures Trustee (including all amounts due to the Debentures Trustee
under Section 607 hereof) and the Holders under this Exchange Indenture and the
Exchange Debentures, according to the terms hereof and thereof.
"Initial Exchange Debentures" has the meaning specified in the recitals to
this Exchange Indenture.
"Initial Purchasers" means Prudential Securities Incorporated, NationsBanc
Capital Markets, Inc. and BancBoston Securities Inc., as purchasers of the
Initial Exchange Debentures.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Exchange Debentures.
<PAGE> 23
12
"Investment" (in any Person) means (a) directly or indirectly, any advance,
loan or other extension of credit (including, without limitation, by way of
guarantee or similar arrangement) or capital contribution to any Person, the
purchase or other acquisition of any stock, bonds, notes, debentures or other
securities issued by such Person or the acquisition (by purchase or otherwise)
of all or substantially all of the business or assets of such Person or the
making of any investment in such Person, (b) the designation of any Restricted
Subsidiary as an Unrestricted Subsidiary and (c) the transfer of any assets or
properties from the Company or a Restricted Subsidiary to any Unrestricted
Subsidiary, other than the transfer of assets or properties made in the
ordinary course of business. Investments shall exclude extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices.
"Junior Subordinated Debt" means Debt of the Company that is subordinated in
right of payment to the Subordinated Debt.
"Legal Defeasance" has the meaning set forth in Section 1202 herein.
"License Subsidiary" means Citadel License, Inc.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation, assignment for security, claim,
preference, priority or other encumbrance upon or with respect to any property
of any kind, real or personal, movable or immovable, now owned or hereafter
acquired. A Person shall be deemed to own subject to a Lien any property that
such Person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or cash equivalents, including payments in respect
of deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or cash equivalents (except to the extent
that such obligations are financed or sold with recourse to the Company or any
of its Restricted Subsidiaries), net of (a) brokerage commissions and other
fees and expenses (including fees and expenses of legal counsel and investment
banks) related to such Asset Sale, (b) provisions for all taxes payable as a
result of such Asset Sale, (c) payments made to retire Debt where payment of
such Debt is secured by the assets that are the subject of such Asset Sale, (d)
amounts required to be paid to any Person (other than the Company or any of its
Restricted Subsidiaries) owning a beneficial interest in the assets that are
subject to the Asset Sale and (e) appropriate amounts to be provided by the
Company or any of its Restricted Subsidiaries, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with such
Asset Sale and retained by the seller after such Asset Sale, including pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
<PAGE> 24
13
"New Exchange Debentures" has the meaning stated in the first recital of
this Exchange Indenture and refers to any New Exchange Debentures containing
terms substantially identical to the Initial Exchange Debentures (except that
(i) such New Exchange Debentures shall not contain terms with respect to
transfer restrictions and shall be registered under the Securities Act, and
(ii) certain provisions relating to an increase in the stated rate of interest
thereon shall be eliminated) that are issued and exchanged for the Initial
Exchange Debentures in accordance with the Exchange Debentures Exchange Offer,
as provided for in the Exchange Debentures Registration Rights Agreement and
this Exchange Indenture.
"Notes" means the $100,000,000 10-1/4% Senior Subordinated Notes of the
Company due 2007.
"Offered Price" has the meaning set forth in Section 1012 herein.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company that meets the requirements set forth in
Section 102.
"Opinion of Counsel" means a written opinion of counsel, which and who are
reasonably acceptable to, and addressed to, the Debentures Trustee complying
with the requirements of Section 102. Unless otherwise required by the TIA,
such legal counsel may be an employee of or counsel to the Company or the
Debentures Trustee.
"Outstanding," when used with respect to Exchange Debentures, means, as of
the date of determination, all Exchange Debentures theretofore authenticated
and delivered under this Exchange Indenture, except:
(i) Exchange Debentures theretofore cancelled by the Debentures Trustee or
delivered to the Debentures Trustee for cancellation;
(ii) Exchange Debentures, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited with
the Debentures Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Exchange Debentures;
provided that, if such Exchange Debentures are to be redeemed, notice of such
redemption has been duly given pursuant to this Exchange Indenture or
provision therefor satisfactory to the Debentures Trustee has been made;
<PAGE> 25
14
(iii) Exchange Debentures, except to the extent provided in Sections 1202
and 1203, with respect to which the Company has effected Legal Defeasance
and/or Covenant Defeasance as provided in Article Twelve; and
(iv) Exchange Debentures in exchange for or in lieu of which other Exchange
Debentures (including pursuant to Section 310) have been authenticated and
delivered pursuant to this Exchange Indenture, other than any such Exchange
Debentures in respect of which there shall have been presented to the
Debentures Trustee proof satisfactory to it that such Exchange Debentures are
held by a bona fide purchaser in whose hands the Exchange Debentures are
valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Exchange Debentures have given any request,
demand, authorization, direction, consent, notice or waiver hereunder, and for
the purpose of making the calculations required by TIA Section 313, Exchange
Debentures owned by the Company, any Subsidiary Debentures Guarantor or any
other obligor upon the Exchange Debentures or any Affiliate of the Company, any
Subsidiary Debentures Guarantor or such other obligor shall be disregarded and
deemed not to be Outstanding (provided that, in connection with any offer by
the Company or any obligor to purchase the Exchange Debentures, Exchange
Debentures tendered for purchase shall be deemed to be Outstanding and held by
the tendering Holder until the date of purchase), except that, in determining
whether the Debentures Trustee shall be protected in making such calculation or
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Exchange Debentures which the Debentures Trustee
actually knows to be so owned shall be so disregarded. Exchange Debentures so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Debentures Trustee the
pledgee's right so to act with respect to such Exchange Debentures and that the
pledgee is not the Company, any Subsidiary Debentures Guarantor or any other
obligor upon the Exchange Debentures or any Affiliate of the Company, any
Subsidiary Debentures Guarantor or such other obligor.
"Pari Passu Debt" means Debt of the Company that ranks pari passu in right
of payment with the Exchange Debentures.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (and premium, if any)
or interest on any Exchange Debentures on behalf of the Company.
"Permitted Debt" has the meaning set forth in Section 1009.
<PAGE> 26
15
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of one year or less
issued or directly and fully guaranteed or insured by the United States or
any agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof); (ii) certificates
of deposit, time deposits, overnight bank deposits or bankers' acceptances
with a maturity of 270 days or less of any financial institution that is a
member of the Federal Reserve System having combined capital and surplus of
not less than $500,000,000; and (iii) commercial paper with a maturity of 270
days or less issued by a corporation that is not an Affiliate of the Company
and is organized under the laws of any state of the United States or the
District of Columbia and having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Services.
(b) Investments by the Company or any of its Restricted Subsidiaries in
another Person, if as a result of such Investment (i) such other Person
becomes a Restricted Subsidiary that is or would be a Subsidiary Debentures
Guarantor under this Exchange Indenture or (ii) such other Person is merged
or consolidated with or into, or transfers or conveys all or substantially
all of its assets to, the Company or a Restricted Subsidiary that is a
Subsidiary Debentures Guarantor.
(c) Investments by the Company or any of its Restricted Subsidiaries in a
Subsidiary Debentures Guarantor and Investments by any Restricted Subsidiary
in the Company.
(d) Investments in assets owned or used in the ordinary course of
business.
(e) Investments in existence on the Closing Date.
(f) Promissory notes received as a result of Asset Sales permitted under
Section 1012.
(g) Direct or indirect loans to employees, or to a trustee for the benefit
of such employees, of the Company or any of its Restricted Subsidiaries in an
aggregate amount outstanding at any time not exceeding $1,000,000.
(h) Investments by the Company or any of its Restricted Subsidiaries in a
joint venture that is engaged in the internet service provider business in an
aggregate amount outstanding at any time not exceeding $500,000.
(i) Other Investments that do not exceed $2,000,000 at any one time
outstanding.
<PAGE> 27
16
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Predecessor Exchange Debenture" of any particular Exchange Debenture means
every previous Exchange Debenture evidencing all or a portion of the same debt
as that evidenced by such particular Exchange Debenture; and, for the purposes
of this definition, any Exchange Debenture authenticated and delivered under
Section 310 in exchange for a mutilated, lost, destroyed or stolen Exchange
Debenture.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Public Equity Offering" means an underwritten public offering of Qualified
Equity Interests of either (a) the Company or (b) Citadel Communications the
net proceeds from which (after deducting any underwriting discounts and
commissions) are used by Citadel Communications to purchase Qualified Equity
Interests of the Company; provided that, in either case, such net proceeds
exceed $10,000,000.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A.
"Qualified Equity Interest" means any Qualified Stock and all warrants,
options or other rights to acquire Qualified Stock (but excluding any debt
security that is convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any Person means any and all Capital Stock of such
Person, other than Disqualified Stock.
"Redemption Date," when used with respect to any Exchange Debenture to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Exchange Indenture.
"Redemption Price," when used with respect to any Exchange Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Exchange Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the June 15 or December 15 (whether or not a Business Day), as the case
may be, next preceding an Interest Payment Date.
"Responsible Officer," when used with respect to the Debentures Trustee,
means the chairman or any vice chairman of the board of directors, the chairman
or any vice chairman
<PAGE> 28
17
of the executive committee of the board of directors, the chairman of the trust
committee, the president, any vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any trust
officer or assistant trust officer, the controller or any assistant controller
or any other officer of the Debentures Trustee customarily performing functions
similar to those performed by any of the above-designated officers, and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of his knowledge of and familiarity
with the particular subject.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Senior Debt" means the principal of and premium, if any, and interest on
(including interest accruing after the filing of a petition initiating any
proceeding pursuant to any Bankruptcy Law, whether or not allowed) and other
amounts due on or in connection with any Debt of the Company, whether
outstanding on the Closing Date or thereafter incurred, unless, in the case of
any particular Debt, the instrument creating or evidencing the same or pursuant
to which the same is outstanding expressly provides that such Debt shall be
subordinate in right of payment to any Debt or other general unsecured
obligations of the Company. Without limiting the generality of the foregoing,
"Senior Debt" includes the principal of and premium, if any, fees and interest
(including interest accruing after the occurrence of an event of default or
after the filing of a petition initiating any proceeding pursuant to any
Bankruptcy Law, whether or not allowed) on all obligations of every nature of
the Company from time to time owed to the Banks under the Credit Facility.
Notwithstanding the foregoing, "Senior Debt" shall not include (a) Debt that is
Disqualified Stock, (b) Debt consisting of trade payables, (c) Debt of the
Company to a Subsidiary or any other Affiliate of the Company or any of such
Affiliate's Subsidiaries and (d) that portion of any Debt that, at the time of
the incurrence, is incurred by the Company in violation of this Exchange
Indenture, other than any Debt incurred under the Credit Facility not in excess
of $150,000,000 (less any amounts applied to the permanent reduction of such
Debt pursuant to Section 1012) if the Company has certified to the Credit
Facility Agent, at the time such Debt is incurred, that the Company is
permitted to incur such Debt under this Exchange Indenture.
"Senior Subordinated Debt" means the principal of and premium, if any, and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, whether or not
allowed) and other amounts due on or in connection with any Debt of the Company
(including the Notes), whether outstanding on the Closing Date or thereafter
incurred, for which, in the case of any particular Debt, the instrument
<PAGE> 29
18
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Debt shall be subordinate in right of payment to
any Senior Debt or other general unsecured obligations of the Company, unless
such instrument expressly provides that such Debt will be subordinate in right
of payment to the Notes or any Debt that is pari passu in right of payment with
the Notes. Notwithstanding the foregoing, "Senior Subordinated Debt" shall not
include (a) Debt that is represented by Disqualified Stock, (b) Debt consisting
of trade payables, (c) Debt of the Company to a Subsidiary or any other
Affiliate of the Company or any of such Affiliate's Subsidiaries and (d) that
portion of any Debt that, at the time of the incurrence, is incurred by the
Company in violation of this Exchange Indenture.
"Significant Subsidiary" means any Restricted Subsidiary of the Company
that, together with its Subsidiaries, (a) for the most recent fiscal year of
the Company, accounted for more than 10% of the consolidated net sales of the
Company and its Restricted Subsidiaries, (b) as of the end of such fiscal year,
was the owner of more than 10% of the consolidated assets of the Company and
its Restricted Subsidiaries, in the case of either (a) or (b), as set forth on
the most recently available consolidated financial statements of the Company
for such fiscal year, (c) was organized or acquired after the beginning of such
fiscal year and would have been a Significant Subsidiary if it had been owned
during the entire fiscal year or (d) holds one or more licenses material to the
Company's business.
"Special Record Date" for the payment of any Defaulted Interest means a date
fixed by the Debentures Trustee pursuant to Section 311.
"Specified Senior Debt" means (i) all Senior Debt under the Credit Facility
and Senior Subordinated Debt under the Notes and (ii) any other issue of Senior
Debt having a principal amount of at least $10,000,000.
"Stated Maturity" means, when used with respect to any Exchange Debenture or
any installment of interest thereon, the date specified in such Exchange
Debenture as the fixed date on which the principal of such Exchange Debenture
or such installment of interest is due and payable, and, when used with respect
to any other Debt, means the date specified in the instrument governing such
Debt as the fixed date on which the principal of such Debt or any installment
of interest thereon is due and payable.
"Subordinated Debt" means the principal of and premium, if any, and interest
on (including interest accruing after the filing of a petition initiating any
proceeding pursuant to any Bankruptcy Law, whether or not allowed) and other
amounts due on or in connection with any Debt of the Company (including the
Exchange Debentures), whether outstanding on the Closing Date or thereafter
incurred, for which, in the case of any particular Debt, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Debt will be subordinate in right of payment to
any Senior Debt or other general unsecured obligations of the Company, and to
any Senior Subordinated Debt, unless such instrument
<PAGE> 30
19
expressly provides that such Debt will be subordinate in right of payment to
the Exchange Debentures or any Debt that is pari passu in right of payment with
the Exchange Debentures. Notwithstanding the foregoing, "Subordinated Debt"
will not include (a) Debt that is represented by Disqualified Stock, (b) Debt
consisting of trade payables, (c) Debt of the Company to a Subsidiary or any
other Affiliate of the Company or any of such Affiliate's Subsidiaries and (d)
that portion of any Debt that, at the time of the incurrence, is incurred by
the Company in violation of this Exchange Indenture.
"Subsidiary" means any Person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by the Company
and/or one or more other Subsidiaries of the Company.
"Subsidiary Debentures Guarantee" means a guarantee of the Exchange
Debentures by a Restricted Subsidiary in accordance with the provisions of this
Exchange Indenture.
"Subsidiary Debentures Guarantor" means the License Subsidiary and each
other Restricted Subsidiary that issues a Subsidiary Debentures Guarantee as
described in Article Thirteen herein.
"Subsidiary Guarantor Senior Debt" means, as to any Subsidiary Debentures
Guarantor, the principal of and premium, if any, and interest on (including
interest accruing after the filing of a petition initiating any proceeding
pursuant to any Bankruptcy Law, whether or not allowed) and other amounts due
on or in connection with any Debt of such Subsidiary Debentures Guarantor
(other than the Subsidiary Debentures Guarantee made by such Subsidiary
Debentures Guarantor), whether outstanding on the Closing Date or thereafter
incurred, unless, in the case of any particular Debt, the instrument creating
or evidencing the same or pursuant to which the same is outstanding expressly
provides that such Debt shall be subordinate in right of payment to any Debt or
other general unsecured obligations of such Subsidiary Debentures Guarantor.
Notwithstanding the foregoing, "Subsidiary Guarantor Senior Debt" shall not
include (a) Debt that is Disqualified Stock, (b) Debt consisting of trade
payables, (c) Debt of such Subsidiary Debentures Guarantor to the Company or
any Subsidiary or any other Affiliate of the Company or any of such Affiliate's
Subsidiaries and (d) that portion of any Debt that, at the time of the
incurrence, is incurred by such Subsidiary Debentures Guarantor in violation
of this Exchange Indenture, other than any Debt incurred under the Credit
Facility not in excess of $150,000,000 (less any amounts applied to the
permanent reduction of such Debt pursuant to Section 1012) if the Company has
certified to the Credit Facility Agent, at the time such Debt is incurred, that
the Subsidiary Debentures Guarantor is permitted to incur such Debt under this
Exchange Indenture.
"Subsidiary Guarantor Senior Subordinated Debt" means, as to any Subsidiary
Debentures Guarantor, the principal of and premium, if any, and interest on
(including interest
<PAGE> 31
20
accruing after the filing of a petition initiating any proceeding pursuant to
any Bankruptcy Law, whether or not allowed) and other amounts due on or in
connection with any Debt of such Subsidiary Debentures Guarantor (other than
the Subsidiary Debentures Guarantee made by such Subsidiary Debentures
Guarantor), whether outstanding on the Closing Date or thereafter incurred, for
which, in the case of any particular Debt, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Debt shall be subordinate in right of payment to any Senior
Debt or other general unsecured obligations of the Company, unless such
instrument expressly provides that such Debt will be subordinate in right of
payment to the Notes or any Debt that is pari passu in right of payment with
the Notes. Notwithstanding the foregoing, "Subsidiary Guarantor Senior
Subordinated Debt" shall not include (a) Debt that is Disqualified Stock, (b)
Debt consisting of trade payables, (c) Debt of such Subsidiary Debentures
Guarantor to the Company or any Subsidiary or any other Affiliate of the
Company or any of such Affiliate's Subsidiaries and (d) that portion of any
Debt that, at the time of the incurrence, is incurred by such Subsidiary
Debentures Guarantor in violation of this Exchange Indenture.
"Subsidiary Notes Guarantee" means a guarantee of the Notes by a Restricted
Subsidiary in accordance with the provisions of the Indenture, dated July 1,
1997, governing the Notes.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date as of which this Exchange Indenture was executed, except as
provided in Section 905.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by the
Board of Directors of the Company as an Unrestricted Subsidiary in accordance
with Section 1017 and (b) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" means obligations that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligations or a specific payment of principal of or interest on any
such U.S. Government Obligations held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligations or the specific
payment of principal of or interest on the U.S. Government Obligations
evidenced by such depository receipt.
<PAGE> 32
21
"Vice President," when used with respect to the Company or the Debentures
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
any Person (irrespective of whether or not, at the time, stock of any other
class or classes has, or might have, voting power by reason of the happening of
any contingency).
"Voting Trust Agreement" means that certain Voting Trust Agreement dated as
of March 17, 1997 by and among Citadel Communications, ABRY Broadcast Partners
II, L.P., ABRY/Citadel Investment Partners, L.P., Christopher Hall, as the
initial Trustee thereunder and J. Walter Corcoran and Harlan Levy, each as an
initial Back-Up Trustee thereunder, as amended from time to time.
"Weighted Average Life" means, as of the date of determination with respect
to any Debt or Disqualified Stock, the quotient obtained by dividing (a) the
sum of the products of (i) the number of years from the date of determination
to the date or dates of each successive scheduled principal or liquidation
value payment of such Debt or Disqualified Stock, respectively, multiplied by
(ii) the amount of each such principal or liquidation value payment by (b) the
sum of all such principal or liquidation value payments.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary, all of
the outstanding voting securities (other than directors' qualifying shares or
an immaterial number of shares required to be owned by other Persons pursuant
to applicable law) of which are owned, directly or indirectly, by the Company.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Debentures Trustee to
take any action under any provision of this Exchange Indenture, the Company and
any Subsidiary Debentures Guarantor and any other obligor on the Exchange
Debentures (if applicable) shall furnish to the Debentures Trustee an Officers'
Certificate in form and substance reasonably acceptable to the Debentures
Trustee stating that all conditions precedent, if any, provided for in this
Exchange Indenture (including any covenant compliance with which constitutes a
condition precedent) relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Exchange Indenture relating
to such particular application or request, no additional certificate or opinion
need be furnished.
<PAGE> 33
22
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Exchange Indenture shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual or such firm,
he or it has made such examination or investigation as is necessary to enable
him or it to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Debentures Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, any Subsidiary
Debentures Guarantor or other obligor on the Exchange Debentures may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company, any Subsidiary
Debentures Guarantor or other obligor on the Exchange Debentures stating that
the information with respect to such factual matters is in the possession of
the Company, any Subsidiary Debentures Guarantor or other obligor on the
Exchange Debentures unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
<PAGE> 34
23
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Exchange Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Exchange Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in Person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Debentures Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Exchange Indenture and conclusive in favor of the
Debentures Trustee and the Company, if made in the manner provided in this
Section 104.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Debentures Trustee deems sufficient.
(c) The principal amount and serial numbers of Exchange Debentures held by
any Person, and the date of holding the same, shall be proved by the Exchange
Debenture Register.
(d) If the Company or any Subsidiary Debentures Guarantor shall solicit
from the Holders of Exchange Debentures any request, demand, authorization,
direction, notice, consent, waiver or other Act, the Company or any such
Subsidiary Debentures Guarantor (as the case may be) may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company or any such
Subsidiary Debentures Guarantor (as the case may be) shall have no obligation
to do so. Notwithstanding TIA Section 316(c), such record date shall be the
record date specified in or pursuant to such Board Resolution, which shall be a
date not earlier than the date 30 days prior to the first solicitation of
Holders generally in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such request,
demand,
<PAGE> 35
24
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close
of business on such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of Outstanding
Exchange Debentures have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Exchange Debentures shall be computed as of such
record date; provided that no such authorization, agreement or consent by the
Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Exchange Indenture not later than
six months after the record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Exchange Debenture shall bind every future
Holder of the same Exchange Debenture and the Holder of every Exchange
Debenture issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof (including in accordance with Section 310) in
respect of anything done, omitted or suffered to be done by the Debentures
Trustee, any Paying Agent or the Company or any Subsidiary Debentures Guarantor
in reliance thereon, whether or not notation of such action is made upon such
Exchange Debenture.
SECTION 105. Notices, Etc., to Debentures Trustee, the Company and
Subsidiary Debentures Guarantors.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Exchange
Indenture to be made upon, given or furnished to, or filed with:
(1) the Debentures Trustee by any Holder or by the Company or any
Subsidiary Debentures Guarantor or any other obligor on the Exchange
Debentures shall be sufficient for every purpose hereunder if made, given,
furnished or delivered in writing and mailed, first-class postage prepaid, or
delivered by recognized overnight courier, to or with the Debentures Trustee
at its Corporate Trust Office, Attention: Corporate Trust Administration, or
(2) the Company or any Subsidiary Debentures Guarantor by the Debentures
Trustee or by any Holder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if made, given, furnished or
delivered, in writing, or mailed, first-class postage prepaid, or delivered
by recognized overnight courier, to the Company or such Subsidiary Debentures
Guarantor addressed to it at the address of its principal office specified in
the first paragraph of this Exchange Indenture, or at any other address
previously furnished in writing to the Debentures Trustee by the Company or
such Subsidiary Debentures Guarantor.
<PAGE> 36
25
SECTION 106. Notice to Holders; Waiver.
Where this Exchange Indenture provides for notice of any event to Holders by
the Company or the Debentures Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Exchange Debenture Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice. Where this Exchange Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Debentures Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given
pursuant to any provision of this Exchange Indenture, then any manner of giving
such notice as shall be satisfactory to the Debentures Trustee shall be deemed
to be a sufficient giving of such notice for every purpose hereunder.
SECTION 107. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. Successors and Assigns.
All covenants and agreements in this Exchange Indenture by the Company and
any Subsidiary Debentures Guarantor and their Subsidiaries shall bind their
successors and assigns, whether so expressed or not.
SECTION 109. Separability Clause.
In case any provision in this Exchange Indenture or in the Exchange
Debentures shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
<PAGE> 37
26
SECTION 110. Benefits of Indenture.
Nothing in this Exchange Indenture or in the Exchange Debentures, express or
implied, shall give to any Person (other than the parties hereto, any Agent and
their successors hereunder, any Paying Agent, the Holders and the holders of
Senior Debt and Senior Subordinated Debt) any benefit or any legal or equitable
right, remedy or claim under this Exchange Indenture.
SECTION 111. Governing Law.
THIS EXCHANGE INDENTURE, THE EXCHANGE DEBENTURES AND THE SUBSIDIARY
DEBENTURES GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. UPON THE EFFECTIVENESS OF THE EXCHANGE
DEBENTURES EXCHANGE OFFER REGISTRATION STATEMENT OR THE EXCHANGE DEBENTURES
SHELF REGISTRATION STATEMENT, THIS EXCHANGE INDENTURE SHALL BE SUBJECT TO, AND
GOVERNED BY, THE PROVISIONS OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED,
THAT ARE REQUIRED OR DEEMED TO BE PART OF AND TO GOVERN INDENTURES QUALIFIED
THEREUNDER.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, any date established for
payment of Defaulted Interest pursuant to Section 311 or Redemption Date or
Stated Maturity or other maturity of any Exchange Debenture shall not be a
Business Day, then (notwithstanding any other provision of this Exchange
Indenture or of the Exchange Debentures) payment of principal (or premium, if
any) or interest need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or date established for payment of Defaulted Interest
pursuant to Section 311, Redemption Date, or at the Stated Maturity or other
maturity; provided that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date or date established for payment of
Defaulted Interest pursuant to Section 311, Stated Maturity or other maturity,
as the case may be, to the next succeeding Business Day.
SECTION 113. No Personal Liability of Directors, Officers, Employees,
Stockholders or Incorporators.
No director, officer, employee, incorporator or stockholders, as such, of
the Company or any Subsidiary Debentures Guarantor shall have any liability for
any obligations of the Company or such Subsidiary Debentures Guarantor under
the Exchange Debentures, this Exchange Indenture or any Subsidiary Debentures
Guarantee or for any claim based on, in respect of, or by reason of, such
obligations or their creations. Each Holder by accepting an
<PAGE> 38
27
Exchange Debenture waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Exchange
Debentures.
SECTION 114. Counterparts.
This Exchange Indenture may be executed in any number of counterparts, each
of which shall be original; but such counterparts shall together constitute but
one and the same instrument.
ARTICLE TWO
EXCHANGE DEBENTURE FORMS
SECTION 201. Forms Generally.
The Exchange Debentures and the Debentures Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Exchange Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Exchange Debentures, as evidenced by their execution of
the Exchange Debentures. Any portion of the text of any Exchange Debenture may
be set forth on the reverse thereof, with an appropriate reference thereto on
the face of the Exchange Debenture. Each Exchange Debenture shall be dated the
date of its authentication.
The definitive Exchange Debentures shall be printed, lithographed or
engraved on steel-engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing such Exchange
Debentures, as evidenced by their execution of such Exchange Debentures.
Initial Exchange Debentures offered and sold to "Qualified Institutional
Buyers" (as defined in Rule 144A in reliance on the exemption from the
registration requirements of the Securities Act provided by Rule 144A) shall
initially be issued in the form of one permanent global Exchange Debenture
substantially in the form set forth in Sections 204 and 205 (the "Global
Exchange Debenture") deposited with the Debentures Trustee, as custodian for
the Depositary, duly executed by the Company and authenticated by the
Debentures Trustee as hereinafter provided. The aggregate principal amount of
the Global Exchange Debenture may from time to time be increased or decreased
by adjustments made on the records of the Debentures Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.
<PAGE> 39
28
Initial Exchange Debentures offered and sold to "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) who are
not Qualified Institutional Buyers shall initially be issued in the form of
permanent certificated Exchange Debentures in registered form in substantially
the form set forth in Sections 204 and 205 (the "Certificated Exchange
Debentures").
SECTION 202. Restrictive Legends.
Unless and until (i) an Initial Exchange Debenture is sold under an
Exchange Debentures Shelf Registration Statement or (ii) an Initial Exchange
Debenture is exchanged for a New Exchange Debenture in connection with an
effective Exchange Debentures Exchange Offer Registration Statement, in each
case pursuant to the Exchange Debentures Registration Rights Agreement, each
such Global Exchange Debenture and Certificated Exchange Debenture shall bear
the following legend (the "Private Placement Legend") on the face thereof:
For each Global Exchange Debenture:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
CITADEL BROADCASTING COMPANY (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE
"RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
<PAGE> 40
29
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT SUBJECT TO THE COMPANY'S, AND
THE DEBENTURES TRUSTEE'S/TRANSFER AGENT'S, RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND SHALL BE
REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
For each Certificated Exchange Debenture:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
NEITHER THE SECURITIES EVIDENCED BY THIS CERTIFICATE, NOR ANY INTEREST
THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED
OF UNLESS EITHER (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT AND LAWS RELATING THERETO OR (II) THE ISSUER HAS RECEIVED AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE ISSUER, STATING
THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Global Exchange Debenture, whether or not an Initial Exchange
Debenture, shall also bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF DTC AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
<PAGE> 41
30
AUTHORIZED REPRESENTATIVE OF THE DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 306 AND 307 OF THE INDENTURE.
SECTION 203. [INTENTIONALLY OMITTED].
SECTION 204. Form of Face of Exchange Debenture.
CITADEL BROADCASTING COMPANY
13-1/4% [Series B]* Exchange Debenture due 2009
CUSIP No. _____
No. __________
$________
CITADEL BROADCASTING COMPANY, a Nevada corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________________ or registered assigns, the principal sum of___________
____________________ Dollars on July 1, 2009, at the office or agency of the
Company referred to below, and to pay interest thereon semi-annually, on July 1
and January 1 in each year, commencing on the first such date after the
Exchange Date, or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, at the rate of 13-1/4% per annum, until the
principal hereof is paid or duly provided for, and (to the extent lawful) to
pay on demand interest on any overdue interest at the rate borne by the
Exchange Debentures from the date on which such overdue interest becomes
payable to the date payment of such interest has been made or duly provided
for. On or prior to July 1, 2002, interest is payable in additional Exchange
Debentures having an aggregate principal amount equal to the amount of such
interest, or, at the option of the Company, in cash. Thereafter, all interest
will be payable only in cash. Interest on the Exchange Debentures will accrue
from the date of issuance thereof. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date shall, as provided in
such Indenture, be paid to the Person in whose name this Exchange Debenture (or
one or more Predecessor Exchange Debentures) is registered
__________________________________
* Include only for New Exchange Debentures.
<PAGE> 42
31
at the close of business on the Regular Record Date for such interest, which
shall be the June 15 or December 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for shall forthwith cease to be payable to
the Holder on such Regular Record Date, and such defaulted interest, and (to
the extent lawful) interest on such defaulted interest at the rate borne by the
Exchange Debentures, may be paid to the Person in whose name this Exchange
Debenture (or one or more Predecessor Exchange Debentures) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Debentures Trustee, notice whereof shall be given
to Holders of Exchange Debentures not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Exchange Debentures may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
[The Holder of this Exchange Debenture is entitled to the benefits of the
Exchange Debentures Registration Rights Agreement, dated as of July 1, 1997
(the "Exchange Debentures Registration Rights Agreement"), between the Company,
the Subsidiary Debentures Guarantors and the Initial Purchasers named therein.
In the event that either (a) the Exchange Debentures Exchange Offer
Registration Statement is not filed with the Commission on or prior to the 90th
calendar day following the Closing Date or (b) the Exchange Debentures Exchange
Offer is not consummated or an Exchange Debentures Shelf Registration Statement
is not declared effective on or prior to the 210th calendar day following the
Closing Date, the interest rate borne by the Exchange Debentures shall be
increased by 0.25% per annum for the first 30 days following the 90-day period
referred to in clause (a) above or the first 90 days following the 210-day
period referred to in clause (b) above. Such interest shall increase by an
additional 0.25% per annum at the beginning of each subsequent 30-day period in
the case of clause (a) above or 90-day period in the case of clause (b) above;
provided, however, that in no event shall the interest rate borne by the
Exchange Debentures be increased by more than 1.5%. Upon the filing of the
Exchange Debentures Exchange Offer Registration Statement, the consummation of
the Exchange Debentures Exchange Offer or the effectiveness of an Exchange
Debentures Shelf Registration Statement, as the case may be, the interest rate
borne by the Exchange Debentures from the date of such filing, consummation or
effectiveness, as the case may be, shall be reduced to the original interest
rate set forth in the first paragraph of this Exchange Debenture; provided,
however, that, if after any such reduction in interest rate, a different event
specified in clause (a) or (b) above occurs, the interest rate may again be
increased pursuant to the foregoing provisions.]*
[If the Company issues a notice that the Exchange Debentures Shelf
Registration Statement is unusable pending the announcement of a material
corporate transaction or otherwise pursuant to Section 3(k) of the Exchange
Debentures Registration Rights Agreement, or such a notice is required under
applicable securities laws to be issued by the Company, and the aggregate
number of days in any consecutive twelve-month period for which all such
notices are
<PAGE> 43
32
issued or required to be issued exceeds 30 days in the aggregate, then the
interest rate borne by the Exchange Debentures shall be increased by
one-quarter of one percent per annum following the date that such Exchange
Debentures Shelf Registration Statement ceases to be usable beyond the 30-day
period permitted above, which rate shall be increased by an additional
one-quarter of one percent per annum for each 90-day period that such
additional interest continues to accrue; provided that the aggregate increase
in such annual interest rate may in no event exceed one percent. Upon the
Company declaring that the Exchange Debentures Shelf Registration Statement is
usable after the interest rate has been increased pursuant to the preceding
sentence, the interest rate borne by the Exchange Debentures shall be reduced
to the original interest rate if the Company is otherwise in compliance with
this paragraph; provided, however, that if after any such reduction in interest
rate the Exchange Debentures Shelf Registration Statement again ceases to be
usable beyond the period permitted above, the interest rate shall again be
increased and thereafter reduced pursuant to the foregoing provisions.]*
The principal of and premium, if any, and interest on the Exchange
Debentures shall be payable, and the Exchange Debentures shall be exchangeable
and transferable, at the office or agency of the Company in The City of New
York maintained for such purposes (which initially shall be the office of the
Debentures Trustee located at 101 Barclay Street - 21W, New York, New York
10286); provided, however, that, at the option of the Company, interest may be
paid by check (or, if an Exchange Debenture has been issued as payment of
interest in lieu of money, by such Exchange Debenture) mailed to the address of
the Person entitled thereto as such address appears in the Exchange Debentures
Register.
Reference is hereby made to the further provisions of this Exchange
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Debentures Trustee or the Authenticating Agent referred to on the reverse
hereof by manual signature, this Exchange Debenture shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for any purpose.
__________________________________
* Include only for the Initial Exchange Debentures.
<PAGE> 44
33
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: CITADEL BROADCASTING COMPANY
By
______________________________
Name:
Title:
Attest: [SEAL]
___________________________
Authorized Officer
SECTION 205. Form of Reverse of Exchange Debenture.
This Exchange Debenture is one of a duly authorized issue of
securities of the Company designated as its 13-1/4% [Series B]* Exchange
Debentures due 2009 (the "Exchange Debentures"), limited (except as otherwise
provided in the Indenture referred to below) in aggregate principal amount to
$400,000,000, which may be issued under an indenture (the "Indenture") dated as
of July 1, 1997 between the Company, Citadel License, Inc., as guarantor (the
"Subsidiary Debentures Guarantor"), and The Bank of New York, as trustee (the
"Debentures Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Subsidiary Debentures Guarantor, the Debentures Trustee and the Holders of the
Exchange Debentures, and of the terms upon which the Exchange Debentures are,
and are to be, authenticated and delivered.
This Exchange Debenture is subordinated to the prior payment
in full of all Senior Debt and Senior Subordinated Debt in the manner and to
the extent set forth in Article Fourteen of the Indenture.
On or before each payment date, the Company shall deliver or
cause to be delivered to the Debentures Trustee or the Paying Agent an amount
in dollars sufficient to pay the amount due on such payment date, or, if
Exchange Debentures have been issued as payment of interest in lieu of money,
Exchange Debentures sufficient to pay the amount due on such payment date.
__________________________________
* Include only for the New Exchange Debentures.
<PAGE> 45
34
The Exchange Debentures shall be redeemable (subject to
contractual and other restrictions with respect thereto and to the legal
availability of funds therefor) at the election of the Company, as a whole or
from time to time in part, at any time on or after July 1, 2002 on not less
than 30 nor more than 60 days' prior notice, at the redemption prices
(expressed as percentages of the principal amount thereof) set forth below,
together with accrued and unpaid interest, if any, to the redemption date, if
redeemed during the 12-month period beginning on July 1 of the years indicated
below (subject to the right of Holders of record on the relevant record date to
receive interest due on an Interest Payment Date):
<TABLE>
<S> <C>
REDEMPTION
YEAR PRICE
---- ----------------------
2002 . . . . . . . . . . . . . . . . . . . . . . . 107.729%
2003 . . . . . . . . . . . . . . . . . . . . . . . 106.625%
2004 . . . . . . . . . . . . . . . . . . . . . . . 105.521%
2005 . . . . . . . . . . . . . . . . . . . . . . . 104.417%
2006 . . . . . . . . . . . . . . . . . . . . . . . 103.313%
2007 . . . . . . . . . . . . . . . . . . . . . . . 102.208%
2008 . . . . . . . . . . . . . . . . . . . . . . . 101.104%
</TABLE>
In addition, at any time and from time to time prior to July
1, 2000, the Company may at its option redeem Exchange Debentures having an
aggregate principal amount of up to 35% of the aggregate principal amount of
Exchange Debentures issued upon exchange of the Exchangeable Preferred Stock or
in payment of interest on the Exchange Debentures, at a redemption price equal
to 113.25% of the principal amount thereof, together with accrued and unpaid
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on an Interest
Payment Date); provided that, immediately after giving effect to any such
redemption, at least $75,000,000 aggregate principal amount of the Exchange
Debentures remains outstanding. Any such redemption must be made within 90
days of the related Public Equity Offering.
If less than all the Exchange Debentures are to be redeemed,
the particular Exchange Debentures to be redeemed shall be selected not more
than 60 days prior to the redemption date by the Debentures Trustee by such
method as the Debentures Trustee deems fair and appropriate.
In the event of redemption or repurchase of this Exchange
Debenture in part only, a new Exchange Debenture or Exchange Debentures for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
Upon the occurrence of a Change of Control, the Company shall
be required to make an offer to purchase on the Change of Control Purchase Date
all outstanding Exchange Debentures at a purchase price in cash equal to 101%
of the aggregate principal amount thereof,
<PAGE> 46
35
plus accrued and unpaid interest thereon, if any, to the date of purchase, in
accordance with the Indenture. Holders of Exchange Debentures that are subject
to an offer to purchase shall receive a Change of Control Offer from the
Company prior to any related Change of Control Purchase Date.
Under certain circumstances, in the event the Net Cash
Proceeds received by the Company from an Asset Sale, which proceeds are not
used (i) towards the permanent reduction of amounts outstanding under the
Credit Facility or to the repayment of other Senior Debt or Senior Subordinated
Debt of the Company or a Subsidiary Debentures Guarantor or (ii) to invest (or
enter into one or more legally binding agreements to invest) in properties and
assets to replace the properties and assets that were the subject of the Asset
Sale or in properties and assets that shall be used in the broadcasting
business or businesses reasonably related thereto, equal or exceed a specified
amount, the Company shall be required to make an offer to all Holders to
purchase the maximum principal amount of Exchange Debentures, in an integral
multiple of $1,000, that may be purchased out of such amount at a purchase
price in cash equal to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase, in accordance with the
Indenture. Holders of Exchange Debentures that are subject to any offer to
purchase shall receive an Asset Sale Offer from the Company prior to any
related Asset Sale Purchase Date.
In the case of any redemption or repurchase of Exchange
Debentures, interest installments whose Stated Maturity is on or prior to the
Redemption Date or Asset Sale Purchase Date, as the case may be, shall be
payable to the Holders of such Exchange Debentures, or one or more Predecessor
Exchange Debentures, of record at the close of business on the relevant Regular
Record Date or Special Record Date, as the case may be, referred to on the face
hereof. Exchange Debentures (or portions thereof) for whose redemption and
payment provision is made in accordance with the Indenture shall cease to bear
interest from and after the Redemption Date or Asset Sale Purchase Date, as the
case may be.
If an Event of Default shall occur and be continuing, the
principal of all the Exchange Debentures may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (a) the entire indebtedness of the Company on this Exchange Debenture and
(b) certain restrictive covenants and the related Defaults and Events of
Default, upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Exchange Debenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Subsidiary Debentures Guarantors and the
rights of the Holders under the Indenture and the Exchange Debentures and the
Subsidiary Debentures Guarantees, if any, at any time by the Company, the
<PAGE> 47
36
Subsidiary Debentures Guarantors and the Debentures Trustee with the consent of
the Holders of a specified percentage in aggregate principal amount of the
Exchange Debentures at the time Outstanding. Additionally, the Indenture
permits that with certain exceptions as therein provided, without notice to or
consent of any Holder, the Company, any Subsidiary Debentures Guarantor and the
Debentures Trustee together may amend or supplement the Indenture, any
Subsidiary Debentures Guarantee or this Exchange Debenture (i) to evidence the
succession of another Person to the Company and the assumption by any such
successor of the covenants of the Company in the Indenture and in the Exchange
Debentures; or (ii) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power conferred upon the Company in
the Indenture; or (iii) to add additional Events of Default; or (iv) to provide
for uncertificated Exchange Debentures in addition to or in place of the
certificated Exchange Debentures; or (v) to evidence and provide for the
acceptance of appointment under the Indenture by a successor Debentures
Trustee; or (vi) to secure the Exchange Debentures; or (vii) to cure any
ambiguity, to correct or supplement any provision in the Indenture that may be
defective or inconsistent with any other provision in the Indenture, or to make
any other provisions with respect to matters or questions arising under the
Indenture, provided that such actions pursuant to this clause do not adversely
affect the interests of the Holders in any material respect; or (viii) to
comply with any requirements of the Commission in order to effect and maintain
the qualification of the Indenture under the Trust Indenture Act.
The Indenture also contains provisions permitting the Holders
of not less than a majority in aggregate principal amount of the Exchange
Debentures at the time Outstanding, on behalf of the Holders of all the
Exchange Debentures, to waive any past defaults by the Company with certain
provisions of the Indenture, the Exchange Debentures and the Subsidiary
Debentures Guarantees, if any, and certain past Defaults under the Indenture
and the Exchange Debentures and the Subsidiary Debentures Guarantees, if any,
and their consequences. Any such consent or waiver by or on behalf of the
Holder of this Exchange Debenture shall be conclusive and binding upon such
Holder and upon all future Holders of this Exchange Debenture and of any
Exchange Debenture issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Exchange Debenture.
No reference herein to the Indenture and no provision of this
Exchange Debenture or of the Indenture shall alter or impair the obligation of
the Company or the Subsidiary Debentures Guarantors or any other obligor on the
Exchange Debentures (in the event any Subsidiary Debentures Guarantor or other
obligor is obligated to make payments in respect of the Exchange Debentures),
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Exchange Debenture at the times, place, and rate, and
in the coin or currency, herein prescribed, subject to the subordination
provisions of the Indenture.
<PAGE> 48
37
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Exchange Debenture is
registerable on the Exchange Debenture Register of the Company, upon surrender
of this Exchange Debenture for registration of transfer at the office or agency
of the Company maintained for such purpose in The City of New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Exchange Debenture Registrar duly executed
by, the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Exchange Debentures, of authorized denominations and for the
same aggregate principal amount, shall be issued to the designated transferee
or transferees.
The Exchange Debentures are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, the Exchange Debentures are exchangeable for a like aggregate principal
amount of Exchange Debentures of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any registration of
transfer or exchange or redemption of Exchange Debentures, but the Company may
require payment of a sum sufficient to pay all documentary, stamp or similar
issue or transfer taxes or other governmental charge payable in connection
therewith.
The Exchange Debentures are entitled to the benefit of a
Subsidiary Debentures Guarantee by each Subsidiary Debentures Guarantor to the
extent provided in each such Subsidiary Debentures Guarantee.
Prior to the time of due presentment of this Exchange
Debenture for registration of transfer, the Company, the Debentures Trustee and
any agent of the Company or the Debentures Trustee may treat the Person in
whose name this Exchange Debenture is registered as the owner hereof for all
purposes, whether or not this Exchange Debenture be overdue, and neither the
Company, the Debentures Trustee nor any agent shall be affected by notice to
the contrary.
THIS EXCHANGE DEBENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Interest on this Exchange Debenture shall be computed on the
basis of a 360-day year of twelve 30-day months.
All terms used in this Exchange Debenture which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.
<PAGE> 49
38
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered Holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
________________________________________________________________________________
________________________________________________________________________________
please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Exchange Debenture and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
attorney to transfer said Exchange Debenture on the books of the Company with
full power of substitution in the premises
Your Signature:_________________________________________________________
(sign exactly as your name appears on the other side of this Exchange
Debenture)
Signature Guarantee:_____________________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Exchange Debentures Registrar,
which requirements include membership or participation in the Security Transfer
Agent Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Exchange Debentures Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Exchange Act.
<PAGE> 50
39
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATED EXCHANGE DEBENTURES]
In connection with any transfer of this Exchange Debenture
occurring prior to the date that is the earlier of the date of an effective
Registration Statement or July 3, 1999, the undersigned confirms that without
utilizing any general solicitation or general advertising that:
[Check One]
-----------
[ ] (a) this Exchange Debenture is being transferred in compliance
with the exemption from registration under the Securities Act
of 1933, as amended, provided by Rule 144A thereunder.
or
--
[ ] (b) this Exchange Debenture is being transferred other than in
accordance with (a) above and documents are being furnished
that comply with the conditions of transfer set forth in this
Exchange Debenture and the Indenture.
If none of the foregoing boxes is checked, the Debentures Trustee or other
Exchange Debenture Registrar shall not be obligated to register this Exchange
Debenture in the name of any Person other than the Holder hereof unless and
until the conditions to any such transfer of registration set forth herein and
in Section 307 of the Indenture shall have been satisfied.
Date: ____________________ __________________________________________
NOTICE: The signature must correspond
with the name as written upon
the face of the within-
mentioned instrument in every
particular, without
alteration or any change
whatsoever.
Signature Guarantee: _______________________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Exchange Debentures Registrar,
which requirements include membership or participation in the Security Transfer
Agent Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Exchange Debentures Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Exchange Act.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Exchange Debenture for its own account or an account with respect to which
it exercises sole investment
<PAGE> 51
40
discretion and that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act of 1933, as
amended, and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: ________________________ ______________________________
NOTICE: To be executed
by an executive officer.
<PAGE> 52
41
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Exchange Debenture purchased by the
Company pursuant to Section 1011 of the Indenture, check the Box: [ ].
If you wish to have a portion of this Exchange Debenture
purchased by the Company pursuant to Section 1012 of the Indenture, state the
amount (in original principal amount) below:
$_____________________.
Date: _________________________________________________
Your Signature: __________________________________________________________
(Sign exactly as your name appears on the other side of this Exchange
Debenture)
Signature Guarantee: _____________________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Exchange Debentures Registrar,
which requirements include membership or participation in the Security Transfer
Agent Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Exchange Debentures Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Exchange Act.
SECTION 206. Form of Debentures Trustee's Certificate of
Authentication.
The Debentures Trustee's certificate of authentication shall be
in substantially the following form:
DEBENTURES TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: ____________________
This is one of the Exchange Debentures referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK, as
Debentures Trustee
By___________________________
Authorized Signatory
<PAGE> 53
42
ARTICLE THREE
THE EXCHANGE DEBENTURES
SECTION 301. Title and Terms.
The aggregate principal amount of Exchange Debentures which
may be authenticated and delivered under this Exchange Indenture is limited to
$400,000,000, except for Exchange Debentures authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Exchange
Debentures pursuant to Section 303, 304, 305, 306, 307, 310, 906, 1011, 1012 or
1108 or pursuant to an Exchange Debentures Exchange Offer.
The Initial Exchange Debentures shall be known and designated
as the "13-1/4% Exchange Debentures due 2009" and the New Exchange Debentures
shall be known and designated as the "13-1/4% Series B Exchange Debentures due
2009," in each case, of the Company. The Stated Maturity of the Exchange
Debentures shall be July 1, 2009, and they shall bear interest at the rate of
13-1/4% per annum from the Exchange Date, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, payable
semiannually on July 1 and January 1 in each year, commencing on the first such
date after the Exchange Date until the principal thereof is paid in full and to
the Person in whose name the Exchange Debenture (or any predecessor Exchange
Debenture) is registered at the close of business on the June 15 or December 15
next preceding such Interest Payment Date. Interest shall be computed on the
basis of a 360-day year comprised of twelve 30-day months, until the principal
thereof is paid or duly provided for. Interest on any overdue principal,
interest (to the extent lawful) or premium, if any, shall be payable on demand.
On or prior to July 1, 2002, interest is payable in additional Exchange
Debentures having an aggregate principal amount equal to the amount of such
interest, or, at the option of the Company, in cash. Thereafter, all interest
will be payable only in cash. Interest on the Exchange Debentures will accrue
from the date of issuance thereof.
The principal of and premium, if any, and interest on the
Exchange Debentures shall be payable, and the Exchange Debentures shall be
exchangeable and transferable, at the office or agency of the Company in The
City of New York maintained for such purposes (which initially shall be the
office of the Debentures Trustee located at 101 Barclay Street - 21W, New York,
New York 10286); provided, however, that, at the option of the Company,
interest may be paid by check (or, if Exchange Debentures have been issued as
payment of interest in lieu of money, by such Exchange Debentures) mailed to
the address of the Person entitled thereto as such address appears in the
Exchange Debentures Register.
Holders shall have the right to require the Company to
purchase their Exchange Debentures, in whole or in part, in the event of a
Change of Control pursuant to Section 1011.
<PAGE> 54
43
The Exchange Debentures shall be subject to repurchase by the
Company pursuant to an Asset Sale Offer as provided in Section 1012.
The Exchange Debentures shall be redeemable as provided in
Article Eleven and in the Exchange Debentures.
SECTION 302. Denominations.
The Exchange Debentures shall be issuable only in registered
form without coupons and only in denominations of $1,000 and any integral
multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Exchange Debentures shall be executed on behalf of the
Company by its Chairman, its President or a Vice President, under its corporate
seal reproduced thereon and attested by its Secretary or an Assistant
Secretary. The signature of any of these officers on the Exchange Debentures
may be manual or facsimile signatures of the present or any future such
authorized officer and may be imprinted or otherwise reproduced on the Exchange
Debentures.
Exchange Debentures bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Exchange Debentures or did not hold such offices at the date of such Exchange
Debentures.
At any time and from time to time after the execution and
delivery of this Exchange Indenture, the Company may deliver (i) Initial
Exchange Debentures and (ii) any additional Exchange Debentures issued in lieu
of interest payments in money as provided in this Exchange Indenture and in the
Exchange Debentures, in each case executed by the Company to the Debentures
Trustee for authentication, together with a Company Order for the
authentication and delivery of such Exchange Debentures, directing the
Debentures Trustee to authenticate the Exchange Debentures and certifying that
all conditions precedent to the issuance of Exchange Debentures contained
herein have been fully complied with, and the Debentures Trustee in accordance
with such Company Order shall authenticate and deliver such Initial Exchange
Debentures and Exchange Debentures issued in lieu of interest payments in
money, as the case may be. On Company Order, the Debentures Trustee shall
authenticate for original issue New Exchange Debentures in an aggregate
principal amount not to exceed $400,000,000; provided that New Exchange
Debentures shall be issuable only upon the valid surrender for cancellation of
Initial Exchange Debentures of a like aggregate principal amount in accordance
with an Exchange Debentures Exchange Offer pursuant to the Exchange Debentures
Registration Rights Agreement. In each case, the Debentures Trustee shall be
entitled to receive an Officers' Certificate and an Opinion of Counsel of the
Company that it may reasonably request in
<PAGE> 55
44
connection with such authentication of Exchange Debentures. Such order shall
specify the amount of Exchange Debentures to be authenticated and the date on
which the original issue of Initial Exchange Debentures or New Exchange
Debentures is to be authenticated.
Each Exchange Debenture shall be dated the date of its
authentication.
No Exchange Debenture shall be entitled to any benefit under
this Exchange Indenture or be valid or obligatory for any purpose unless there
appears on such Exchange Debenture a certificate of authentication
substantially in the form provided for herein duly executed by the Debentures
Trustee by manual signature of an authorized signatory, and such certificate
upon any Exchange Debenture shall be conclusive evidence, and the only
evidence, that such Exchange Debenture has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Exchange Indenture.
In case the Company or any Subsidiary Debentures Guarantor,
pursuant to Article Eight, shall be consolidated or merged with or into any
other Person or shall convey, transfer, lease or otherwise dispose of its
properties and assets substantially as an entirety to any Person, and the
successor Person resulting from such consolidation, or surviving such merger,
or into which the Company or such Subsidiary Debentures Guarantor shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Debentures Trustee pursuant to Article Eight, any
of the Exchange Debentures authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Exchange Debentures executed in the name of the successor Person with
such changes in phraseology and form as may be appropriate, but otherwise in
substance of like tenor as the Exchange Debentures surrendered for such
exchange and of like principal amount; and the Debentures Trustee, upon Company
Request of the successor Person, shall authenticate and deliver Exchange
Debentures as specified in such request for the purpose of such exchange. If
Exchange Debentures shall at any time be authenticated and delivered in any new
name of a successor Person pursuant to this Section 303 in exchange or
substitution for or upon registration of transfer of any Exchange Debentures,
such successor Person, at the option of the Holders but without expense to
them, shall provide for the exchange of all Exchange Debentures at the time
Outstanding for Exchange Debentures authenticated and delivered in such new
name.
The Debentures Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Exchange Debentures on behalf of the
Debentures Trustee. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Exchange Debentures whenever the
Debentures Trustee may do so. Each reference in this Exchange Indenture to
authentication by the Debentures Trustee includes authentication by such agent.
An authenticating agent has the same rights as any Exchange Debenture Registrar
or Paying Agent to deal with the Company and its Affiliates.
<PAGE> 56
45
The Debentures Trustee shall have the right to decline to authenticate
and deliver any Exchange Debentures under this Section if the Debentures
Trustee, being advised by counsel, reasonably determines that such action may
not lawfully be taken.
SECTION 304. Temporary Exchange Debentures.
Pending the preparation of definitive Exchange Debentures, the
Company may execute, and upon Company Order the Debentures Trustee shall
authenticate and deliver, temporary Exchange Debentures which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Exchange
Debentures in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Exchange Debentures may determine, as conclusively evidenced by
their execution of such Exchange Debentures.
If temporary Exchange Debentures are issued, the Company shall
cause definitive Exchange Debentures to be prepared without unreasonable delay.
After the preparation of definitive Exchange Debentures, the temporary Exchange
Debentures shall be exchangeable for definitive Exchange Debentures upon
surrender of the temporary Exchange Debentures at the office or agency of the
Company designated for such purpose pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Exchange Debentures, the Company shall execute and the Debentures Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Exchange Debentures of authorized denominations. Until so
exchanged, the temporary Exchange Debentures shall in all respects be entitled
to the same benefits under this Exchange Indenture as definitive Exchange
Debentures.
SECTION 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Debentures Trustee a register (the register maintained in such
office and in any other office or agency designated pursuant to Section 1002
being herein sometimes referred to as the "Exchange Debenture Register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Exchange Debentures and of transfers of
Exchange Debentures. The Exchange Debenture Register shall be in written form
or any other form capable of being converted into written form within a
reasonable time. At all reasonable times, the Exchange Debenture Register
shall be open to inspection by the Debentures Trustee. The Debentures Trustee
is hereby initially appointed as security registrar (the Debentures Trustee in
such capacity, together with any successor of the Debentures Trustee in such
capacity, the "Exchange Debenture Registrar") for the purpose of registering
Exchange Debentures and transfers of Exchange Debentures as herein provided.
<PAGE> 57
46
Upon surrender for registration of transfer of any Exchange
Debenture at the office or agency of the Company designated pursuant to Section
1002, the Company shall execute, and the Debentures Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Exchange Debentures of any authorized denomination or denominations of
a like aggregate principal amount.
Furthermore, any Holder of the Global Exchange Debenture
shall, by acceptance of such Global Exchange Debenture, agree that transfers of
beneficial interest in such Global Exchange Debenture may be effected only
through a book-entry system maintained by the Holder of such Global Exchange
Debenture (or its agent), and that ownership of a beneficial interest in the
Exchange Debenture shall be required to be reflected in a book entry.
At the option of the Holder, Exchange Debentures may be
exchanged for other Exchange Debentures of any authorized denomination and of a
like aggregate principal amount, upon surrender of the Exchange Debentures to
be exchanged at such office or agency. Whenever any Exchange Debentures are so
surrendered for exchange (including an exchange of Initial Exchange Debentures
for New Exchange Debentures), the Company shall execute, and the Debentures
Trustee shall authenticate and deliver, the Exchange Debentures which the
Holder making the exchange is entitled to receive; provided that no exchange of
Initial Exchange Debentures for New Exchange Debentures shall occur until an
Exchange Debentures Exchange Offer Registration Statement shall have been
declared effective by the Commission, the Debentures Trustee shall have
received an Officers' Certificate confirming that the Exchange Debentures
Exchange Offer Registration Statement has been declared effective by the
Commission and the Initial Exchange Debentures to be exchanged for the New
Exchange Debentures shall be cancelled by the Debentures Trustee.
All Exchange Debentures issued upon any registration of
transfer or exchange of Exchange Debentures shall be the valid obligations of
the Company, evidencing the same debt, and entitled to the same benefits under
this Exchange Indenture, as the Exchange Debentures surrendered upon such
registration of transfer or exchange.
Every Exchange Debenture presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company
or the Exchange Debenture Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer, in form satisfactory to the Company and the
Exchange Debenture Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Exchange Debentures, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Exchange Debentures, other than exchanges pursuant to Section 304,
906, 1011, 1012 or 1108, not involving any transfer.
<PAGE> 58
47
SECTION 306. Book-Entry Provisions for the Global Exchange
Debenture.
(a) The Global Exchange Debenture initially shall (i) be
registered in the name of Cede & Co. as nominee for the Depositary (the "Global
Exchange Debenture Holder"), (ii) be delivered to the Debentures Trustee as
custodian for such Depositary and (iii) bear legends as set forth in Section
202.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Exchange Indenture with respect to
any Exchange Debentures held on their behalf by the Depositary, or the
Debentures Trustee as its custodian, or under the Global Exchange Debenture,
and the Depositary may be treated by the Company, the Debentures Trustee and
any agent of the Company or the Debentures Trustee as the absolute owner of
such Global Exchange Debenture for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Debentures Trustee
or any agent of the Company or the Debentures Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of any
Exchange Debenture.
(b) Transfers of the Global Exchange Debenture shall be
limited to transfers of such Global Exchange Debenture in whole, but not in
part, to the Depositary, its successors or their respective nominees.
Interests of beneficial owners in the Global Exchange Debenture may be
transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 307. Beneficial owners may obtain Certificated
Exchange Debentures in exchange for their beneficial interests in the Global
Exchange Debenture upon request in accordance with the Depositary's and the
Exchange Debenture Registrar's procedures. In addition, Certificated Exchange
Debentures shall be transferred to all beneficial owners in exchange for their
beneficial interests in the Global Exchange Debenture if (i) the Company
notifies the Debentures Trustee in writing that the Depositary is unwilling or
unable to act as a depositary for the Global Exchange Debenture and the Company
is unable to locate a qualified successor within 90 days or (ii) the Company,
at its option, notifies the Debentures Trustee in writing that it elects to
change the issuance of Exchange Debentures into the form of Certificated
Securities under this Exchange Indenture.
(c) In connection with any transfer of a portion of the
beneficial interest in the Global Exchange Debenture pursuant to subsection (b)
of this Section to beneficial owners, the Exchange Debenture Registrar shall
reflect on its books and records the date and a decrease in the principal
amount of the Global Exchange Debenture in an amount equal to the principal
amount of the beneficial interest in the Global Exchange Debenture to be
transferred, and the Company shall execute, and the Debentures Trustee shall
authenticate and deliver, one or more Certificated Exchange Debentures of like
tenor and amount to each Person that the Global
<PAGE> 59
48
Exchange Debenture Holder and the Depositary identify as being the beneficial
owner of the related Exchange Debentures.
(d) In connection with the transfer of the entire Global
Exchange Debenture to beneficial owners pursuant to subsection (b) of this
Section, the Global Exchange Debenture shall be deemed to be surrendered to the
Debentures Trustee for cancellation, and the Company shall execute, and the
Debentures Trustee shall authenticate and deliver, to each beneficial owner
identified by the Global Exchange Debenture Holder and the Depositary in
exchange for its beneficial interest in the Global Exchange Debenture, an equal
aggregate principal amount of Certificated Exchange Debentures of authorized
denominations.
(e) Any Certificated Exchange Debentures delivered in
exchange for an interest in the Global Exchange Debenture pursuant to
subsection (c) or subsection (d) of this Section shall, except as otherwise
provided by paragraph (a)(i) of Section 307, bear the applicable legend
regarding transfer restrictions applicable to the Certificated Exchange
Debenture set forth in Section 202.
(f) The registered holder of the Global Exchange
Debenture may grant proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Exchange Indenture or the
Exchange Debentures.
SECTION 307. Special Transfer Provisions.
Unless and until (i) an Initial Exchange Debenture is sold
under an effective Exchange Debentures Shelf Registration Statement, or (ii) an
Initial Exchange Debenture is exchanged for a New Exchange Debenture in
connection with an effective Exchange Debentures Exchange Offer Registration
Statement, in each case pursuant to the Exchange Debentures Registration Rights
Agreement, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the
registration of any proposed transfer of an Initial Exchange Debenture to any
institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) which is not a QIB:
(i) The Exchange Debenture Registrar shall register the
transfer of any Initial Exchange Debenture, whether or not such
Initial Exchange Debenture bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the original issue
date of the Initial Exchange Debenture or (y) the proposed transferee
has delivered to the Exchange Debenture Registrar a certificate
substantially in the form set forth in Section 308.
<PAGE> 60
49
(ii) If the proposed transferor is an Agent Member holding
a beneficial interest in the Global Exchange Debenture, upon receipt
by the Exchange Debenture Registrar of (x) the documents, if any,
required by paragraph (i) and (y) instructions given in accordance
with the Depositary's and the Exchange Debenture Registrar's
procedures therefor, the Exchange Debenture Registrar shall reflect on
its books and records the date and a decrease in the principal amount
of the Global Exchange Debenture in an amount equal to the principal
amount of the beneficial interest in the Global Exchange Debenture to
be transferred, and the Company shall execute, and the Debentures
Trustee shall authenticate and deliver, one or more Certificated
Exchange Debentures of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of an Initial
Exchange Debenture to a QIB:
(i) If the Exchange Debenture to be transferred consists
of Certificated Exchange Debentures, the Exchange Debenture Registrar
shall register the transfer if such transfer is being made by a
proposed transferor who has checked the box provided for on the form
of Initial Exchange Debenture stating, or has otherwise advised the
Company and the Exchange Debenture Registrar in writing, that the sale
has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form
of Initial Exchange Debenture stating, or has otherwise advised the
Company and the Exchange Debenture Registrar in writing, that it is
purchasing the Initial Exchange Debenture for its own account or an
account with respect to which it exercises sole investment discretion
and that it, or the Person on whose behalf it is acting with respect
to any such account, is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, and
the Initial Exchange Debenture to be transferred consists of
Certificated Exchange Debentures, upon receipt by the Exchange
Debenture Registrar of instructions given in accordance with the
Depositary's and the Exchange Debenture Registrar's procedures
therefor, the Exchange Debenture Registrar shall reflect on its books
and records the date and an increase in the principal amount of the
Global Exchange Debenture in an amount equal to the principal amount
of the Certificated Exchange Debentures to be transferred, and the
Debentures Trustee shall cancel the Certificated Exchange Debenture so
transferred.
(c) Private Placement Legend. Upon the transfer,
exchange or replacement of Exchange Debentures not bearing the Private
Placement Legend, the Exchange Debenture
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50
Registrar shall deliver Exchange Debentures that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Exchange
Debentures bearing the Private Placement Legend, the Exchange Debenture
Registrar shall deliver only Exchange Debentures that bear the Private
Placement Legend unless either (i) the circumstances contemplated by paragraph
(a)(i) of this Section 307 exist or (ii) there is delivered to the Exchange
Debenture Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Debentures Trustee to the effect that neither such legend nor
the related restrictions on transfer are required in order to maintain
compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Exchange Debenture
bearing the Private Placement Legend, each Holder of such an Exchange
Debenture acknowledges the restrictions on transfer of such Exchange Debenture
set forth in this Exchange Indenture and in the Private Placement Legend and
agrees that it shall transfer such Exchange Debenture only as provided in this
Exchange Indenture. The Debentures Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Exchange Indenture or under applicable law with
respect to any transfer of any interest in any Exchange Debenture (including
any transfers between or among Depositary participants or beneficial owners of
interests in any Global Exchange Debenture) other than to require delivery of
such certificates and other documentation or evidence as are expressly required
by, and to do so if and when expressly required by the terms of, this Exchange
Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
The Exchange Debenture Registrar shall retain copies of all
letters, notices and other written communications received pursuant to Section
306 or this Section 307. The Company shall have the right to inspect and make
copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to the Exchange
Debenture Registrar.
SECTION 308. Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB Institutional Accredited Investors.
Citadel Broadcasting Company
140 South Ash Avenue
Tempe, Arizona 85281
Prudential Securities Incorporated
NationsBanc Capital Markets, Inc.
BancBoston Securities Inc.
c/o Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
<PAGE> 62
51
Ladies and Gentlemen:
In connection with our proposed purchase of $
aggregate principal amount of 13-1/4% [Series B]* Exchange Debentures due 2009
(the "Securities") of Citadel Broadcasting Company (the "Company"), we confirm
that:
1. We have received a copy of the Offering Memorandum,
dated June 30, 1997, relating to the Securities and such other
information as we deem necessary in order to make our investment
decision.
2. We understand that the Securities have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on
behalf of any investor account for which we are purchasing Securities
to offer, sell or otherwise transfer such Securities prior to the date
which is two years after the later of the date of original issue and
the last date on which the Company or any affiliate or the Company was
the owner of such Securities (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant
to a registration statement which has been declared effective under
the Securities Act, (c) for so long as the Securities are eligible for
resale pursuant to Rule 144A under the Securities Act, to a Person we
reasonably believe is a Qualified Institutional Buyer under Rule 144A
that purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the transfer is being
made in reliance on Rule 144A, (d) to an institutional "accredited
investor" (as defined in subparagraph (a)(1), (2), (3) or (7) of Rule
501 of Regulation D under the Securities Act) that is purchasing for
his own account or for the account of such an institutional
"accredited investor" or (e) pursuant to any other available exemption
from the registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account
be at all times within our or their control and to compliance with any
applicable state securities laws. The foregoing restrictions on sale
shall not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Securities is proposed to be
made pursuant to clause (d) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Company and
the trustee under the indenture relating to the Securities (the
"Debentures Trustee") which shall provide, among other things, that
the transferee is an institutional "accredited investor" and that it
is acquiring such Securities for investment purposes and not for
distribution in violation of the Securities Act. Each purchaser
acknowledges that the Company and the Debentures Trustee reserve the
right prior to any offer, sale or other transfer of the Securities
prior to the Resale
__________________________________
* Include only for New Exchange Debentures.
<PAGE> 63
52
Restriction Termination Date pursuant to clauses (c), (d) or (e) above
to require the delivery of an opinion of counsel, certifications or
other information satisfactory to the Company and the Debentures
Trustee.
3. We are an institutional "accredited investor" (as
defined above) purchasing for our own account or for the account of an
institutional "accredited investor" for which we exercise sole
investment discretion and we are acquiring the Securities for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act
and we have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any investor accounts for
which we are acting are each able to bear the economic risk of our or
its investments for an indefinite period.
4. You and the Debentures Trustee are entitled to rely
upon this letter and are irrevocably authorized to produce this letter
or a copy thereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters
covered hereby.
Very truly yours,
(Name of Purchaser)
By:________________________________________
Name:_____________________________
Title:_____________________________________
Date:______________________________________
Upon transfer, the Securities should be registered in the name
of the new beneficial owner as follows:
Name:___________________________________________________________________________
<PAGE> 64
53
Address:________________________________________________________________________
Taxpayer ID
Number:_________________________________________________________________________
SECTION 309. [INTENTIONALLY OMITTED]
SECTION 310. Mutilated, Destroyed, Lost and Stolen Exchange
Debentures.
If (i) any mutilated Exchange Debenture is surrendered to the
Debentures Trustee, or (ii) the Company and the Debentures Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Exchange Debenture, and there is delivered to the Company and the Debentures
Trustee such security or indemnity, in each case, as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or
the Debentures Trustee that such Exchange Debenture has been acquired by a bona
fide purchaser, the Company shall execute and upon Company Order the Debentures
Trustee shall authenticate and deliver, in exchange for any such mutilated
Exchange Debenture or in lieu of any such destroyed, lost or stolen Exchange
Debenture, a new Exchange Debenture of like tenor and principal amount, bearing
a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Exchange
Debenture has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Exchange Debenture, pay such Exchange
Debenture.
Upon the issuance of any new Exchange Debenture under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Debentures Trustee)
in connection therewith.
Every new Exchange Debenture issued pursuant to this Section
in lieu of any mutilated, destroyed, lost or stolen Exchange Debenture shall
constitute an original additional contractual obligation of the Company, any
Subsidiary Debentures Guarantor and any other obligor upon the Exchange
Debentures, whether or not the mutilated, destroyed, lost or stolen Exchange
Debenture shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Exchange Indenture equally and proportionately with any
and all other Exchange Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Exchange
Debentures.
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SECTION 311. Payment of Interest; Interest Rights Preserved.
Interest on any Exchange Debenture which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name such Exchange Debenture (or one or more
Predecessor Exchange Debentures) is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose pursuant to Section 1002; provided, however, that
each installment of interest may, if the installment of interest is payable in
money, at the Company's option be paid by mailing a check for such interest,
payable to or upon the written order of the Person entitled thereto pursuant to
Section 312, to the address of such Person as it appears in the Exchange
Debenture Register.
Any interest on any Exchange Debenture which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the Regular Record Date by
virtue of having been such Holder, and such defaulted interest and (to the
extent lawful) interest on such defaulted interest at the rate borne by the
Exchange Debentures (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest") shall be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Exchange
Debentures (or their respective Predecessor Exchange Debentures) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Debentures Trustee in
writing of the amount of Defaulted Interest proposed to be paid on
each Exchange Debenture and the date (not less than 30 days after such
notice) of the proposed payment (the "Special Record Date"), and at
the same time the Company shall deposit with the Debentures Trustee an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest (or, if an Exchange Debenture has
been issued as payment of interest in lieu of money, the Company shall
deposit such Exchange Debenture in principal amount equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest) or shall make arrangements satisfactory to the Debentures
Trustee for such deposit prior to the date of the proposed payment,
such money (or, if an Exchange Debenture has been issued as payment of
interest, such Exchange Debenture) when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as
in this clause provided. Thereupon the Debentures Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Debentures Trustee of the notice of the proposed
payment. The Debentures Trustee shall promptly notify the Company of
such Special Record Date, and in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
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Defaulted Interest and the Special Record Date therefor to be given in
the manner provided for in Section 106, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
given, such Defaulted Interest shall be paid to the Persons in whose
names the Exchange Debentures (or their respective Predecessor
Exchange Debentures) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Exchange
Debentures may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Debentures
Trustee of the proposed payment pursuant to this clause, such manner
of payment shall be deemed practicable by the Debentures Trustee.
Subject to the foregoing provisions of this Section, each
Exchange Debenture delivered under this Exchange Indenture upon registration of
transfer of or in exchange for or in lieu of any other Exchange Debenture shall
carry the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Exchange Debenture.
SECTION 312. Persons Deemed Owners.
Prior to the due presentment of an Exchange Debenture for
registration of transfer, the Company, the Debentures Trustee and any agent of
the Company or the Debentures Trustee may treat the Persons in whose names,
including the Global Exchange Debenture, such Exchange Debentures are
registered as the owners of such Exchange Debenture for the purpose of
receiving payment of principal of (and premium, if any) and (subject to
Sections 305 and 311) interest on such Exchange Debenture and for all other
purposes whatsoever, whether or not such Exchange Debenture be overdue, and
none of the Company, any Subsidiary Debentures Guarantor, the Debentures
Trustee nor any agent of the Company, any Subsidiary Debentures Guarantor or
the Debentures Trustee shall be affected by notice to the contrary.
SECTION 313. Cancellation.
All Exchange Debentures surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Debentures Trustee, be delivered to the Debentures Trustee and shall
be promptly cancelled by it. If the Company shall acquire any of the Exchange
Debentures other than as set forth in the preceding sentence, the acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Exchange Debentures unless and until the same are
surrendered to the Debentures Trustee for cancellation pursuant to this Section
313. No Exchange Debentures shall be authenticated in lieu of or in exchange
for any Exchange Debentures cancelled as provided in this Section,
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except as expressly permitted by this Exchange Indenture. All cancelled
Exchange Debentures held by the Debentures Trustee shall be disposed of by the
Debentures Trustee in accordance with its customary procedures unless by
Company Order the Company shall direct that cancelled Exchange Debentures be
returned to it.
SECTION 314. Computation of Interest.
Interest on the Exchange Debentures shall be computed on the
basis of a 360-day year of twelve 30-day months.
SECTION 315. CUSIP Numbers.
The Company in issuing Exchange Debentures may use "CUSIP"
numbers (if then generally in use) in addition to serial numbers; if so, the
Debentures Trustee shall use such "CUSIP" numbers in addition to serial numbers
in notices of redemption and repurchase as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such CUSIP numbers either as printed on the Exchange Debentures
or as contained in any notice of a redemption or repurchase and that reliance
may be placed only on the serial or other identification numbers printed on the
Exchange Debentures, and any such redemption or repurchase shall not be
affected by any defect in or omission of such CUSIP numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Exchange Indenture shall upon request by the Company
cease to be of further effect (except as to surviving rights of registration of
transfer or exchange of Exchange Debentures expressly provided for herein or
pursuant hereto) and the Debentures Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Exchange Indenture when:
(1) either
(a) all the Exchange Debentures theretofore
authenticated and delivered (other than (i) Exchange
Debentures which have been lost, stolen or destroyed and which
have been replaced or paid as provided in Section 310 and (ii)
Exchange Debentures for whose payment money has theretofore
been deposited in trust with the Debentures Trustee or any
Paying Agent or segregated
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and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 1003) have been
delivered to the Debentures Trustee for cancellation, or
(b) all such Exchange Debentures not theretofore
delivered to the Debentures Trustee for cancellation
(i) have become due and payable or
(ii) shall become due and payable at
their Stated Maturity within one year or
(iii) are to be called for redemption
within one year under arrangements satisfactory to
the Debentures Trustee for the giving of notice of
redemption by the Debentures Trustee in the name, and
at the expense, of the Company,
and the Company has irrevocably deposited or caused to be
deposited with the Debentures Trustee as trust funds in trust
for such purpose an amount sufficient to pay and discharge the
entire Debt on such Exchange Debentures not theretofore
delivered to the Debentures Trustee for cancellation, for
principal (and premium, if any) and interest to the date of
such deposit (in the case of Exchange Debentures which have
become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company or the Subsidiary Debentures Guarantors
have paid or caused to be paid all sums payable hereunder by the
Company or the Subsidiary Debentures Guarantors; and
(3) the Company has delivered to the Debentures Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent herein provided for relating to the
satisfaction and discharge of this Exchange Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this
Exchange Indenture, the obligations of the Company to the Debentures Trustee
under Section 607 and, if money shall have been deposited with the Debentures
Trustee pursuant to subclause (b) of clause (1) of this Section, the
obligations of the Debentures Trustee under Section 402 and the last paragraph
of Section 1003 shall survive.
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SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Debentures Trustee pursuant to Section 401
shall be held in trust and applied by it, in accordance with the provisions of
the Exchange Debentures and this Exchange Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Debentures Trustee may determine, to the Persons entitled
thereto, of the principal (and premium, if any) and interest for whose payment
such money has been deposited with the Debentures Trustee; but such money need
not be segregated from other funds except to the extent required by law.
If the Debentures Trustee or Paying Agent is unable to apply
any money or U.S. Government Obligations in accordance with Section 401 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's and any Subsidiary Debentures Guarantor's
obligations under this Exchange Indenture and the Exchange Debentures shall be
revived and reinstated as though no deposit had occurred pursuant to Section
401; provided that if the Company has made any payment of principal of,
premium, if any, or interest on any Exchange Debentures because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Exchange Debentures to receive such payment from the
money or U.S. Government Obligations held by the Debentures Trustee or Paying
Agent.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or government body):
(a) Default in the payment of any interest on any
Exchange Debenture when it becomes due and payable, and continuance of
such default for a period of 30 days.
(c) Default in the payment of the principal of (or
premium, if any, on) any Exchange Debenture when due.
(c) Failure to perform or comply with Article Eight.
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(d) Default in the performance, or breach, of any
covenant or agreement of the Company or any Subsidiary Debentures
Guarantor contained in this Exchange Indenture or any Subsidiary
Debentures Guarantee (other than a default in the performance, or
breach, of a covenant or agreement that is specifically dealt with
elsewhere herein), and continuance of such default or breach for a
period of 60 days after written notice has been given to the Company
by the Debentures Trustee or to the Company and the Debentures Trustee
by the Holders of at least 25% in aggregate principal amount of the
Exchange Debentures then outstanding.
(e) (i) The occurrence of an event of default under any
mortgage, bond, indenture, loan agreement or other document evidencing
an issue of Debt of the Company or any Significant Subsidiary, which
issue has an aggregate outstanding principal amount of not less than
$5,000,000, and such default has resulted in such Debt becoming,
whether by declaration or otherwise, due and payable prior to the date
on which it would otherwise become due and payable or (ii) a default
in any payment when due at final maturity of any such Debt.
(f) Failure by the Company or any of its Restricted
Subsidiaries to pay one or more final judgments the uninsured portion
of which exceeds in the aggregate $5,000,000, which judgment or
judgments are not paid, discharged or stayed for a period of 60 days.
(g) Any Subsidiary Debentures Guarantee ceases to be in
full force and effect or is declared null and void or any Subsidiary
Debentures Guarantor denies that it has any further liability under
any Subsidiary Debentures Guarantee, or gives notice to such effect
(other than by reason of the termination of this Exchange Indenture or
the release of any Subsidiary Debentures Guarantee in accordance with
this Exchange Indenture), and such condition has continued for a
period of 30 days after written notice of such failure requiring the
Subsidiary Debentures Guarantor and the Company to remedy the same has
been given (x) to the Company by the Debentures Trustee or (y) to the
Company and the Debentures Trustee by the Holders of 25% in aggregate
principal amount of the Exchange Debentures then outstanding.
(h) A court having jurisdiction in the premises enters a
decree or order for (i) relief in respect of the Company or any
Significant Subsidiary in an involuntary case under any applicable
Bankruptcy Law now or hereafter in effect, (ii) apointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or any Significant Subsidiary or for
all or substantially all of the property and assets of the Company or
any Significant Subsidiary or (iii) the winding up or liquidation of
the affairs of the Company or any Significant Subsidiary and, in each
case, such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days.
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(i) The Company or any Significant Subsidiary (A)
commences a voluntary case under any applicable Bankruptcy Law now or
hereafter in effect, or consents to the entry of an order for relief
in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Company or any Significant Subsidiary or for all or substantially all
of the property and assets of the Company or any Significant
Subsidiary or (C) effects any general assignment for the benefit of
creditors.
SECTION 502. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default (other than as specified in Section
501(h) or (i)) occurs and is continuing, the Debentures Trustee or the Holders
of not less than 25% in aggregate principal amount of the Exchange Debentures
then outstanding may, and the Debentures Trustee at the request of such Holders
shall, declare the principal of all of the outstanding Exchange Debentures
immediately due and payable, by a notice in writing to the Company (and to the
Debentures Trustee if given by the Holders) and, if the Credit Facility is in
effect, to the Credit Facility Agent, and, upon any such declaration, such
principal shall become due and payable immediately. If an Event of Default
specified in Section 501(h) or (i) above occurs and is continuing, then such
principal shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Debentures Trustee or any
Holder of Exchange Debentures.
At any time after a declaration of acceleration under this
Exchange Indenture, but before a judgment or decree for payment of the money
due has been obtained by the Debentures Trustee, the Holders of a majority in
aggregate principal amount of the outstanding Exchange Debentures, by written
notice to the Company and the Debentures Trustee, may rescind such declaration
and its consequences if:
(i) the Company has paid or deposited with the
Debentures Trustee a sum sufficient to pay
(A) all overdue interest on all Exchange
Debentures,
(B) all unpaid principal of (and premium, if any,
on) any outstanding Exchange Debentures that has become due
otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Exchange Debentures,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest and overdue
principal amount at the rate borne by the Exchange Debentures,
and
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(D) all sums paid or advanced by the Debentures
Trustee under this Exchange Indenture and the reasonable
compensation, expenses, disbursements and advances of the
Debentures Trustee, its agents and counsel; and
(ii) all Events of Default, other than the non-payment of
amounts of principal of (or premium, if any, on) or interest on the
Exchange Debentures that have become due solely by such declaration of
acceleration, have been cured or waived.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Debentures Trustee.
The Company and each of the Subsidiary Debentures Guarantors
covenants that if
(a) default is made in the payment of any interest on any
Exchange Debenture when such interest becomes due and payable and such
default continues for a period of 30 days, or
(b) default is made in the payment of the principal of
(or premium, if any, on) any Exchange Debenture at the Stated Maturity
or other maturity thereof,
the Company and the Subsidiary Debentures Guarantors shall, upon demand of the
Debentures Trustee, pay to the Debentures Trustee for the benefit of the
Holders of such Exchange Debentures, the whole amount then due and payable on
such Exchange Debentures for principal (and premium, if any) and interest, with
interest upon the overdue principal (and premium, if any) and, to the extent
that payment of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Exchange Debentures; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Debentures Trustee, its agents and counsel
and all other amounts due to the Debentures Trustee under Section 607.
If the Company or any Subsidiary Debentures Guarantor, as the
case may be, fails to pay such amounts forthwith upon such demand, the
Debentures Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company, such Subsidiary Debentures Guarantor or
any other obligor upon the Exchange Debentures and collect the moneys adjudged
or decreed to be payable in the manner provided by law out of the property of
the Company, such Subsidiary Debentures Guarantor or any other obligor upon the
Exchange Debentures, wherever situated.
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If an Event of Default occurs and is continuing, the
Debentures Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders by such appropriate judicial proceedings
as the Debentures Trustee shall deem most effectual to protect and enforce such
rights, whether for the specific enforcement of any covenant or agreement in
this Exchange Indenture or in aid of the exercise of any power granted herein,
or to enforce any other proper remedy subject, however, to Section 512. No
recovery of any such judgment upon any property of the Company or any
Subsidiary Debentures Guarantor shall affect or impair any rights, powers or
remedies of the Debentures Trustee or the Holders.
SECTION 504. Debentures Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any Subsidiary
Debentures Guarantor, upon the Exchange Debentures or the property of the
Company or of such other obligor or their creditors, the Debentures Trustee
(irrespective of whether the principal of the Exchange Debentures shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Debentures Trustee shall have made any demand on
the Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Exchange Debentures, to take such other actions
(including participating as a member, voting or otherwise, of any
official committee of creditors appointed in such matter) and to file
such other papers or documents as may be necessary or advisable in
order to have the claims of the Debentures Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Debentures Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Debentures Trustee and, in the event that
the Debentures Trustee shall consent to the making of such payments directly to
the Holders, to pay the Debentures Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Debentures Trustee,
its agents and counsel, and any other amounts due the Debentures Trustee under
Section 607.
Nothing herein contained shall be deemed to authorize the
Debentures Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization,
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arrangement, adjustment or composition affecting the Exchange Debentures or the
rights of any Holder thereof, or to authorize the Debentures Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Debentures Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or other similar official.
SECTION 505. Debentures Trustee May Enforce Claims Without
Possession of Exchange Debentures.
All rights of action and claims under this Exchange Indenture,
the Exchange Debentures or the Subsidiary Debentures Guarantees may be
prosecuted and enforced by the Debentures Trustee without the possession of any
of the Exchange Debentures or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Debentures Trustee shall be
brought in its own name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Debentures Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Exchange Debentures
in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to Article Fourteen, any money collected by the
Debentures Trustee pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Debentures Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Exchange Debentures and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Debentures
Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Exchange
Debentures in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Exchange
Debentures for principal (and premium, if any) and interest,
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company or any other obligor on the Exchange
Debentures, as their interests may appear or as a court of competent
jurisdiction may direct, provided that all sums due and owing to the
Holders and the Debentures Trustee have been paid in full as required
by this Exchange Indenture.
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SECTION 507. Limitation on Suits.
No Holder of any Exchange Debentures shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Exchange
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to
the Debentures Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount
of the Outstanding Exchange Debentures shall have made written request
to the Debentures Trustee to institute proceedings in respect of such
Event of Default in its own name as Debentures Trustee hereunder;
(3) such Holder or Holders have offered to the Debentures
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Debentures Trustee for 30 days after its receipt
of such notice, request and offer of indemnity has failed to institute
any such proceeding; and
(5) no direction inconsistent with such written request
has been given to the Debentures Trustee during such 30-day period by
the Holders of a majority or more in principal amount of the
Outstanding Exchange Debentures;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Exchange Indenture, any Exchange Debenture or any Subsidiary Debentures
Guarantee to affect, disturb or prejudice the rights of any other Holders, or
to obtain or to seek to obtain priority or preference over any other Holders or
to enforce any right under this Exchange Indenture, any Exchange Debenture or
any Subsidiary Debentures Guarantee, except in the manner herein provided and
for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Exchange
Indenture, the Holder of any Exchange Debenture shall have the right, which is
absolute and unconditional, to receive payment, as provided herein (including,
if applicable, Article Eleven) and in such Exchange Debenture of the principal
of (and premium, if any) and (subject to Section 311) interest on such Exchange
Debenture on the respective Stated Maturities expressed in such Exchange
Debenture (or, in the case of redemption or repurchase, on the Redemption Date
or repurchase) and to
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institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Debentures Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Exchange Indenture or any
Subsidiary Debentures Guarantee and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Debentures
Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, any Subsidiary Debentures
Guarantor, any other obligor on the Exchange Debentures, the Debentures Trustee
and the Holders shall be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Debentures
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Exchange Debentures in the
last paragraph of Section 310, no right or remedy herein conferred upon or
reserved to the Debentures Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Debentures Trustee or of any
Holder of any Exchange Debenture to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Article or by law to the Debentures Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Debentures Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of not less than a majority in principal amount of
the Outstanding Exchange Debentures shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debentures Trustee, or exercising any trust or power conferred on the
Debentures Trustee, provided that
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(1) such direction shall not be in conflict with any rule
of law or with this Exchange Indenture or any Subsidiary Debentures
Guarantee;
(2) the Debentures Trustee need not take any action which
might involve it in personal liability or be unjustly prejudicial to
the Holders not consenting; and
(3) subject to the provisions of Section 315 of the Trust
Indenture Act, the Debentures Trustee may take any other action deemed
proper by the Debentures Trustee which is not inconsistent with such
direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the outstanding Exchange Debentures may, on behalf of the Holders of
all of the Exchange Debentures, waive any past defaults under this Exchange
Indenture, except a default in the payment of the principal of (and premium, if
any) or interest on any Exchange Debenture, or in respect of a covenant or
provision that under this Exchange Indenture cannot be modified or amended
without the consent of the Holder of each Exchange Debenture outstanding.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Exchange Indenture; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
Each of the Company and the Subsidiary Debentures Guarantors
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company, any
Subsidiary Debentures Guarantor or any such obligor from paying all or any
portion of the principal of, premium, if any, or interest on the Exchange
Debentures contemplated herein or in the Exchange Debentures or which may
affect the covenants or the performance of this Exchange Indenture; and each of
the Company, any Subsidiary Debentures Guarantor and any such obligor (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it shall not hinder, delay or
impede the execution of any power herein granted to the Debentures Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
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SECTION 515. Undertaking for Costs.
All parties to this Exchange Indenture agree, and each Holder
of any Exchange Debenture by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Exchange Indenture, or in any
suit against the Debentures Trustee for any action taken, suffered or omitted
by it as Debentures Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by
the Debentures Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Exchange Debentures, or to any suit instituted by any Holder for
the enforcement of the payment of the principal of (or premium, if any) or
interest on any Exchange Debenture on or after the respective Stated Maturities
expressed in such Exchange Debenture (or, in the case of redemption, on or
after the Redemption Date).
ARTICLE SIX
THE DEBENTURES TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Debentures Trustee shall perform only such duties as are specifically
set forth in this Exchange Indenture and no implied covenants or obligations
shall be read into this Exchange Indenture against the Debentures Trustee; and
(2) in the absence of bad faith on its part, the Debentures Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Debentures Trustee and conforming to the requirements of this Exchange
Indenture; but in the case of any such certificates or opinions which by any
provision hereby are specifically required to be furnished to the Debentures
Trustee, the Debentures Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Exchange
Indenture (but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein).
(b) In case a Default or an Event of Default shall have
occurred and be continuing of which a Responsible Officer of the Debentures
Trustee has actual knowledge or of which written notice of such Default or
Event of Default shall have been given to the Debentures Trustee by the
Company, any other obligor of the Exchange Debentures or by any Holder, the
Debentures Trustee shall exercise such of the rights and powers vested in it by
this
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Exchange Indenture, and use the same degree of care and skill in their
exercise, as a prudent Person would exercise or use under the circumstances in
the conduct of his own affairs.
(c) No provision of this Exchange Indenture shall be
construed to relieve the Debentures Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that
(1) this paragraph (c) shall not be construed to limit
the effect of paragraph (a) of this Section;
(2) the Debentures Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Debentures Trustee was negligent in
ascertaining the pertinent facts;
(3) the Debentures Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of a majority in
aggregate principal amount of the Outstanding Exchange Debentures
relating to the time, method and place of conducting any proceeding
for any remedy available to the Debentures Trustee, or exercising any
trust or power conferred upon the Debentures Trustee, under this
Exchange Indenture; and
(4) no provision of this Exchange Indenture shall require
the Debentures Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Exchange Indenture relating to the conduct or affecting the
liability of or affording protection to the Debentures Trustee shall be subject
to the provisions of this Section.
SECTION 602. Notice of Defaults.
If a Default or an Event of Default occurs and is continuing
and is known to the Debentures Trustee, the Debentures Trustee shall mail to
each Holder of the Exchange Debentures notice of the Default or Event of
Default within 90 days after the occurrence thereof. Except in the case of a
Default or an Event of Default in payment of principal of (and premium, if any,
on) or interest on any Exchange Debentures, the Debentures Trustee may withhold
the notice to the Holders if a committee of its trust officers in good faith
determines that withholding such notice is in the interests of the Holders.
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SECTION 603. Certain Rights of Debentures Trustee.
Subject to the provisions of TIA Sections 315(a) through
315(d):
(1) the Debentures Trustee may rely and shall be
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(3) whenever in the administration of this Exchange
Indenture the Debentures Trustee shall deem it desirable that a matter
be proved or established prior to taking, suffering or omitting any
action hereunder, the Debentures Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate;
(4) the Debentures Trustee may consult with counsel of
its selection and any written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(5) the Debentures Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Exchange
Indenture at the request or direction of any of the Holders pursuant
to this Exchange Indenture, unless such Holders shall have offered to
the Debentures Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(6) the Debentures Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Debentures Trustee,
in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Debentures
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney at the sole cost of the
Company;
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(7) the Debentures Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Debentures Trustee shall not
be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder; and
(8) the Debentures Trustee shall not be liable for any
action taken, suffered or omitted by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Exchange Indenture; and they
Debentures Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Debentures
Trustee has actual knowledge thereof or unless written notice of any
event which is in fact such a default is received by the Debentures
Trustee at the Corporate Trust Office of the Debentures Trustee, and
such notice references the Company, the Exchange Debentures or this
Exchange Indenture.
(c) The Debentures Trustee shall not be required to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
SECTION 604. Debentures Trustee Not Responsible for Recitals
or Issuance of Exchange Debentures.
The recitals contained herein and in the Exchange Debentures,
except for the Debentures Trustee's certificates of authentication, shall be
taken as the statements of the Company and the Subsidiary Debentures
Guarantors, and the Debentures Trustee assumes no responsibility for their
correctness. The Debentures Trustee makes no representations as to the
validity or sufficiency of this Exchange Indenture or of the Exchange
Debentures or of the Subsidiary Debentures Guarantees, except that the
Debentures Trustee represents that it is duly authorized to execute and deliver
this Exchange Indenture, authenticate the Exchange Debentures and perform its
obligations hereunder and that the statements made by it in a Statement of
Eligibility on Form T-1 supplied to the Company are true and accurate, subject
to the qualifications set forth therein. The Debentures Trustee shall not be
accountable for the use or application by the Company of Exchange Debentures or
the proceeds thereof.
SECTION 605. May Hold Exchange Debentures.
The Debentures Trustee, any Paying Agent, any Exchange
Debenture Registrar, any Authenticating Agent or any other agent of the Company
or of the Debentures Trustee, in its individual or any other capacity, may
become the owner or pledgee of Exchange Debentures and, subject to TIA Sections
310(b) and 311, may otherwise deal with the Company with the
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same rights it would have if it were not Debentures Trustee, Paying Agent,
Exchange Debenture Registrar, Authenticating Agent or such other agent. The
Debentures Trustee is permitted to engage in other transactions; provided,
however, that if it acquires any conflicting interest it must eliminate such
conflict or resign.
SECTION 606. Money Held in Trust.
All moneys received by the Debentures Trustee shall, until
used or applied as herein provided, be held in trust hereunder for the purposes
for which they were received, but need not be segregated from other funds
except to the extent required by law. The Debentures Trustee shall be under no
liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company or any Subsidiary Debentures
Guarantor.
SECTION 607. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Debentures Trustee from time to time
such compensation as shall be agreed to in writing between the Company
and the Debentures Trustee for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Debentures Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Debentures Trustee in accordance with any provision of this Exchange
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel and costs and expenses of
collection), except any such expense, disbursement or advance as may
be attributable to its negligence or bad faith; and
(3) to indemnify each of the Debentures Trustee or any
predecessor Debentures Trustee (and their respective directors,
officers, employees and agents) for, and to hold it harmless against,
any and all loss, damage, claim, liability or expense, including taxes
(other than taxes based on the income of the Debentures Trustee)
incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
The obligations of the Company under this Section to
compensate the Debentures Trustee, to pay or reimburse the Debentures Trustee
for expenses, disbursements and advances and to indemnify and hold harmless the
Debentures Trustee shall constitute additional indebtedness hereunder and shall
survive the satisfaction and discharge of this Exchange
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Indenture. As security for the performance of such obligations of the Company,
the Debentures Trustee shall have a claim prior to the Holders of the Exchange
Debentures upon all property and funds held or collected by the Debentures
Trustee as such, except funds held in trust for the payment of principal of
(and premium, if any) or interest on particular Exchange Debentures.
When the Debentures Trustee incurs expenses or renders
services in connection with an Event of Default specified in Section 501(h) or
(i), the expenses (including the reasonable charges and expenses of its
counsel) of and the compensation for such services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Exchange Indenture.
SECTION 608. Corporate Debentures Trustee Required;
Eligibility.
There shall be at all times a Debentures Trustee hereunder
which shall be eligible to act as Debentures Trustee under TIA Section
310(a)(1) and which shall have an office in The City of New York, and shall
have a combined capital and surplus of at least $100,000,000. If the
Debentures Trustee does not have an office in The City of New York, the
Debentures Trustee may appoint an agent in The City of New York reasonably
acceptable to the Company to conduct any activities which the Debentures
Trustee may be required under this Exchange Indenture to conduct in The City of
New York. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then for the
purposes of this Section 608, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the
Debentures Trustee shall cease to be eligible in accordance with the provisions
of this Section 608, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article.
SECTION 609. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Debentures Trustee
and no appointment of a successor Debentures Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Debentures Trustee in accordance with the applicable requirements of this
Section.
(b) The Debentures Trustee may resign at any time by
giving written notice thereof to the Company. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor Debentures Trustee
by written instrument executed by authority of the Board of Directors, a copy
of which shall be delivered to the resigning Debentures Trustee and a copy
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to the successor Debentures Trustee. If an instrument of acceptance required
by this Section shall not have been delivered to the Debentures Trustee within
30 days after the giving of such notice of resignation, the resigning
Debentures Trustee may petition any court of competent jurisdiction for the
appointment of a successor Debentures Trustee.
(c) The Debentures Trustee may be removed at any time by
Act of the Holders of not less than a majority in principal amount of the
Outstanding Exchange Debentures, delivered to the Debentures Trustee and to the
Company. Upon such removal, the Company shall promptly appoint a successor
Debentures Trustee by written instrument executed by authority of the Board of
Directors of the Company, a copy of which shall be delivered to the removed
Debentures Trustee and a copy to the successor Debentures Trustee. If an
instrument of acceptance required by this Section shall not have been delivered
to the resigning Debentures Trustee within 30 days after the giving of such
notice of removal, the removed Debentures Trustee may petition any court of
competent jurisdiction for the appointment of a successor Debentures Trustee.
(d) If at any time:
(1) the Debentures Trustee shall fail to comply with the
provisions of TIA Section 310(b) after written request therefor by the
Company or by any Holder who has been a bona fide Holder of an
Exchange Debenture for at least six months, or
(2) the Debentures Trustee shall cease to be eligible
under Section 608 and shall fail to resign after written request
therefor by the Company or by any Holder who has been a bona fide
Holder of an Exchange Debenture for at least six months, or
(3) the Debentures Trustee shall become incapable of
acting or shall be adjudged a bankrupt or insolvent or a Custodian of
the Debentures Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Debentures Trustee
or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Debentures Trustee, or (ii) subject to TIA Section 315(e), any Holder who has
been a bona fide Holder of an Exchange Debenture for at least six months may,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Debentures Trustee and the
appointment of a successor Debentures Trustee.
(e) If the Debentures Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of
Debentures Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Debentures Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of such
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vacancy, a successor Debentures Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Exchange
Debentures delivered to the Company and the retiring Debentures Trustee, the
successor Debentures Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Debentures Trustee and supersede the
successor Debentures Trustee appointed by the Company. If no successor
Debentures Trustee shall have been so appointed by the Company or the Holders
and accepted appointment in the manner hereinafter provided, any Holder who has
been a bona fide Holder of an Exchange Debenture for at least six months may,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Debentures Trustee.
(f) The Company shall give notice of each resignation and
each removal of the Debentures Trustee and each appointment of a successor
Debentures Trustee to the Holders of Exchange Debentures in the manner provided
for in Section 106. Each notice shall include the name of the successor
Debentures Trustee and the address of its Corporate Trust Office.
SECTION 610. Acceptance of Appointment by Successor.
Every successor Debentures Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the retiring Debentures
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Debentures Trustee shall become effective and such
successor Debentures Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Debentures Trustee; but, on request of the Company or the successor
Debentures Trustee, such retiring Debentures Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Debentures Trustee all the rights, powers and trusts of the retiring Debentures
Trustee and shall duly assign, transfer and deliver to such successor
Debentures Trustee all property and money held by such retiring Debentures
Trustee hereunder. Upon request of any such successor Debentures Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Debentures Trustee all such rights,
powers and trusts.
No successor Debentures Trustee shall accept its appointment
unless at the time of such acceptance such successor Debentures Trustee shall
be qualified and eligible under this Article.
SECTION 611. Merger, Conversion, Consolidation or Succession
to Business.
Any corporation into which the Debentures Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Debentures
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Debentures Trustee, shall be the
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successor of the Debentures Trustee hereunder, provided such corporation shall
be otherwise qualified and eligible under this Article, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto. In case any Exchange Debentures shall have been authenticated, but not
delivered, by the Debentures Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Debentures Trustee may adopt
such authentication and deliver the Exchange Debentures so authenticated with
the same effect as if such successor Debentures Trustee had itself
authenticated such Exchange Debentures. In case at that time any of the
Exchange Debentures shall not have been authenticated, any successor Debentures
Trustee may authenticate such Exchange Debentures either in the name of any
predecessor hereunder or in the name of the successor Debentures Trustee. In
all such cases such certificates shall have the full force and effect which
this Exchange Indenture provides for the certificate of authentication of the
Debentures Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Debentures Trustee or to
authenticate Exchange Debentures in the name of any predecessor Debentures
Trustee shall apply only to its successor or successors by merger, conversion
or consolidation.
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY DEBENTURES TRUSTEE
SECTION 701. Company to Furnish Debentures Trustee Names and
Addresses.
The Company shall furnish or cause to be furnished to the
Debentures Trustee
(a) semiannually, not more than 10 days after each
Regular Record Date, a list, in such form as the Debentures Trustee
may reasonably require, of the names and addresses of the Holders as
of such Regular Record Date; and
(b) at such other times as the Debentures Trustee may
reasonably request in writing, within 30 days after receipt by the
Company of any such request, a list of similar form and content to
that in Subsection (a) hereof as of a date not more than 15 days prior
to the time such list is furnished;
provided, however, that if and so long as the Debentures Trustee shall be the
Exchange Debenture Registrar, no such list need be furnished.
SECTION 702. Disclosure of Names and Addresses of Holders.
Every Holder of Exchange Debentures, by receiving and holding
the same, agrees with the Company and the Debentures Trustee that none of the
Company or the Debentures Trustee or any agent of either of them shall be held
accountable by reason of the disclosure of
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any such information as to the names and addresses of the Holders in accordance
with TIA Section 312, regardless of the source from which such information was
derived, and that the Debentures Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA Section
312(b).
SECTION 703. Reports by Debentures Trustee.
Within 60 days after May 15 of each year commencing with the
first May 15 after the first issuance of Exchange Debentures, the Debentures
Trustee shall transmit to the Holders, in the manner and to the extent provided
in TIA Section 313(c), a brief report dated as of such May 15 if required by
TIA Section 313(a).
ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain
Terms.
The Company shall not consolidate with or merge with or into
any other Person or, directly or indirectly, convey, transfer or lease its
properties and assets substantially as an entirety to any Person or Persons,
unless:
(a) Either (i) the Company is the surviving corporation
or (ii) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person that
acquires by sale, assignment, transfer, lease or other disposition the
properties and assets of the Company substantially as an entirety (the
"Surviving Entity") (A) is a corporation, partnership or trust
organized and validly existing under the laws of the United States,
any state thereof or the District of Columbia and (B) expressly
assumes, by a supplemental indenture in form satisfactory to the
Debentures Trustee, all of the Company's obligations under this
Exchange Indenture and the Exchange Debentures.
(b) Immediately after giving effect to such transaction
and treating any obligation of the Company or a Restricted Subsidiary
in connection with or as a result of such transaction as having been
incurred at the time of such transaction, no Default or Event of
Default shall have occurred and be continuing.
(c) Immediately after giving effect to such transaction
on a pro forma basis, (on the assumption that the transaction occurred
at the beginning of the most recently ended four full fiscal quarter
period for which internal financial statements are available), the
Company (or the Surviving Entity if the Company is not the continuing
obligor under
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this Exchange Indenture) could incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of Section
1009.
(d) If the Company is not the continuing obligor under
this Exchange Indenture, each Subsidiary Debentures Guarantor, unless
it is the other party to the transaction described above, has by
supplemental indenture confirmed that its Subsidiary Debentures
Guarantee applies to the Surviving Entity's obligations under this
Exchange Indenture and the Exchange Debentures.
(e) If any of the property or assets of the Company or
any of its Restricted Subsidiaries would thereupon become subject to
any Lien, the provisions of Section 1021 are complied with.
(f) The Company delivers, or causes to be delivered, to
the Debentures Trustee, in form and substance reasonably satisfactory
to the Debentures Trustee, an Officers' Certificate and an Opinion of
Counsel, each stating that such transaction complies with the
requirements of this Exchange Indenture.
SECTION 802. Successor Substituted.
In the event of any transaction described in and complying
with the conditions listed in Section 801 in which the Company is not the
continuing obligor under this Exchange Indenture, the Surviving Entity shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Exchange Indenture, and thereafter the Company shall,
except in the case of a lease, be discharged from all its obligations and
covenants under this Exchange Indenture and the Exchange Debentures.
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Debentures Trustee, at any time and
from time to time, may enter into one or more indentures supplemental hereto,
in form satisfactory to the Debentures Trustee, for any of the following
purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company in this Exchange Indenture and in the Exchange Debentures;
or
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(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company; or
(3) to add additional Events of Default; or
(4) to provide for uncertificated Exchange Debentures in
addition to or in place of the Certificated Exchange Debentures; or
(5) to evidence and provide for the acceptance of
appointment under this Exchange Indenture by a successor Debentures
Trustee; or
(6) to secure the Exchange Debentures; or
(7) to cure any ambiguity, to correct or supplement any
provision in this Exchange Indenture that may be defective or
inconsistent with any other provision in this Exchange Indenture, or
to make any other provisions with respect to matters or questions
arising under this Exchange Indenture, provided that such actions
pursuant to this clause do not adversely affect the interests of the
Holders in any material respect; or
(8) to comply with any requirements of the Commission in
order to effect and maintain the qualification of this Exchange
Indenture under the Trust Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of at least a majority in
principal amount of the Outstanding Exchange Debentures (including consents
obtained in connection with a tender offer or exchange offer for the Exchange
Debentures), by Act of such Holders delivered to the Company and the Debentures
Trustee, the Company, when authorized by a Board Resolution, and the Debentures
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Exchange Indenture or of modifying in any manner
the rights of the Holders under this Exchange Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Exchange Debenture affected thereby:
(a) change the Stated Maturity of the principal of, or
any installment of interest on, any Exchange Debenture, or reduce the
principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the place of
payment where, or change the coin or currency in which, any Exchange
Debenture or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment after
the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date);
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(b) reduce the percentage in principal amount of
Outstanding Exchange Debentures, the consent of whose Holders is
required for any such amendment or for any waiver of compliance with
certain provisions of, or certain defaults and their consequences
provided for under, this Exchange Indenture;
(c) modify any of the provisions of this Exchange
Indenture relating to the subordination of the Exchange Debentures or
the Subsidiary Debentures Guarantees in a manner materially adverse to
the Holders; or
(d) waive a default in the payment of principal of, or
premium, if any, or interest on the Exchange Debentures.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such Holders
remain Holders after such record date.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Exchange Indenture, the Debentures
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Exchange Indenture. The
Debentures Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Debentures Trustees own rights, duties
or immunities under this Exchange Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Exchange Indenture shall be modified in accordance therewith, and
such supplemental indenture shall form a part of this Exchange Indenture for
all purposes; and every Holder of Exchange Debentures theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby (except as
provided in Section 902).
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SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to the Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Exchange Debentures to Supplemental
Indentures.
Exchange Debentures authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Debentures Trustee, bear a notation in form approved by the
Debentures Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Exchange Debentures so
modified as to conform, in the opinion of the Debentures Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Debentures Trustee in exchange
for Outstanding Exchange Debentures.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Debentures
Trustee of any supplemental indenture pursuant to the provisions of Section
902, the Company shall give notice thereof to the Holders of each Outstanding
Exchange Debenture affected, in the manner provided for in Section 106, setting
forth in general terms the substance of such supplemental indenture.
SECTION 908. Effect on Senior Debt and Senior Subordinated
Debt.
No supplemental indenture shall adversely affect the rights of
any holders of Senior Debt and Senior Subordinated Debt under Article Fourteen
unless the requisite holders of each issue of Senior Debt and Senior
Subordinated Debt affected thereby shall have consented to such supplemental
indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and
Interest.
The Company covenants and agrees for the benefit of the
Holders that it shall duly and punctually pay the principal of (and premium, if
any) and interest on the Exchange Debentures in accordance with the terms of
the Exchange Debentures and this Exchange Indenture.
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SECTION 1002. Maintenance of Office or Agency.
The Company shall maintain in The City of New York an office
or agency where Exchange Debentures may be presented or surrendered for
payment, where Exchange Debentures may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Exchange Debentures and this Exchange Indenture may be served.
The Corporate Trust Office of the Debentures Trustee shall be such office or
agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company shall
give prompt written notice to the Debentures Trustee of any change in the
location of any such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Debentures Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Debentures Trustee, and the Company hereby appoints the Debentures Trustee as
its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York) where the
Exchange Debentures may be presented or surrendered for any or all such
purposes and may from time to time rescind any such designation; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in The City of New
York for such purposes. The Company shall give prompt written notice to the
Debentures Trustee of any such designation or rescission and any change in the
location of any such other office or agency.
SECTION 1003. Money for Exchange Debenture Payments to Be
Held in Trust.
If the Company shall at any time act as its own Paying Agent,
it shall, on or before each due date of the principal of (or premium, if any)
or interest on any of the Exchange Debentures, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the
principal of (or premium, if any) or interest so becoming due (or, in the case
of interest, Exchange Debentures issued in lieu of payment thereof in money in
accordance with the Exchange Debentures and this Exchange Indenture) until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and shall promptly notify the Debentures Trustee of its action or failure to so
act.
Whenever the Company shall have one or more Paying Agents for
the Exchange Debentures, it shall, on or before each due date of the principal
of (or premium, if any) or interest on any Exchange Debentures, deposit with a
Paying Agent a sum in same day funds (or New York Clearing House funds if such
deposit is made prior to the date on which such deposit is required to be made)
sufficient to pay the principal (and premium, if any) or interest so becoming
due (or, in the case of interest, Exchange Debentures issued in lieu of payment
thereof
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in money in accordance with the Exchange Debentures and this Exchange
Indenture), such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Debentures Trustee) the Company shall promptly notify the Debentures
Trustee of such action or any failure to so act.
The Company shall cause each Paying Agent (other than the
Debentures Trustee) to execute and deliver to the Debentures Trustee an
instrument in which such Paying Agent shall agree with the Debentures Trustee,
subject to the provisions of this Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest (or, in the case of
interest, Exchange Debentures issued in lieu of payment thereof in
money in accordance with the Exchange Debentures and this Exchange
Indenture) on Exchange Debentures in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
(2) give the Debentures Trustee notice of any default by
the Company (or any other obligor upon the Exchange Debentures) in the
making of any payment of principal (and premium, if any) or interest;
and
(3) at any time during the continuance of any such
default, upon the written request of the Debentures Trustee, forthwith
pay to the Debentures Trustee all sums so held in trust by such Paying
Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Exchange Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Debentures
Trustee all sums held in trust by the Company or such Paying Agent, such sums
to be held by the Debentures Trustee upon the same trusts as those upon which
such sums were held by the Company or such Paying Agent; and, upon such payment
by any Paying Agent to the Debentures Trustee, such Paying Agent shall be
released from all further liability with respect to such sums.
Any money deposited with the Debentures Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal
of (or premium, if any) or interest (or, in the case of interest, Exchange
Debentures issued in lieu of payment thereof in money in accordance with the
Exchange Debentures and this Exchange Indenture) on any Exchange Debenture and
remaining unclaimed for two years after such principal, premium or interest has
become due and payable shall be paid to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust; and the Holder
of such Exchange Debenture shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the
Debentures Trustee or such Paying Agent
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with respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Debentures Trustee
or such Paying Agent, before being required to make any such repayment to the
Company, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City
of New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining shall be repaid
to the Company.
SECTION 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect the
corporate existence and that of each Restricted Subsidiary and the corporate
rights (charter and statutory) licenses and franchises of the Company and each
Restricted Subsidiary; provided, however, that the Company shall not be
required to preserve any such existence (except the Company) right, license or
franchise if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and each of its Restricted Subsidiaries, taken as a whole, and that
the loss thereof is not, and shall not be, disadvantageous in any material
respect to the Holders.
SECTION 1005. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Restricted Subsidiary or upon the income, profits or property of the Company or
any Restricted Subsidiary and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a material liability or lien
upon the property of the Company or any Restricted Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which appropriate reserves, if necessary (in the good faith
judgment of management of the Company), are being maintained in accordance with
GAAP.
SECTION 1006. Maintenance of Properties.
The Company shall cause all material properties owned by the
Company or any Restricted Subsidiary or used or held for use in the conduct of
its business or the business of any Restricted Subsidiary to be maintained and
kept in normal condition, repair and working order and shall cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
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business carried on in connection therewith may be properly conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company or any of its Restricted Subsidiaries from discontinuing the
maintenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Restricted Subsidiary and not adverse in any material respect
to the Holders.
SECTION 1007. Insurance.
To the extent available at commercially reasonable rates, the
Company shall maintain, and shall cause each of its Restricted Subsidiaries to
maintain, insurance with responsible carriers against such risks and in such
amounts, and with such deductibles, retentions, self-insured amounts and
co-insurance provisions, as are customarily carried by similar businesses, of
similar size, including professional and general liability, property and
casualty loss, workers' compensation and interruption of business insurance.
SECTION 1008. Compliance with Laws.
The Company shall comply, and shall cause each of its
Restricted Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all
states and municipalities thereof, and of any governmental regulatory
authority, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except for such noncompliances as
would not in the aggregate have a material adverse effect on the financial
condition or results of operations of the Company and its Subsidiaries, taken
as a whole.
SECTION 1009. Limitation on Debt.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, create, issue, assume, guarantee or in any
manner become directly or indirectly liable for the payment of, or otherwise
incur (collectively, "incur"), any Debt (including Acquired Debt and the
issuance of Disqualified Stock), except that the Company or a Subsidiary
Debentures Guarantor may incur Debt or issue Disqualified Stock if, at the time
of such event, the Consolidated Cash Flow Ratio would have been less than 7.0
to 1.0.
In making the foregoing calculation, pro forma effect shall be
given to: (i) the incurrence of such Debt and (if applicable) the application
of the net proceeds therefrom, including to refinance other Debt, as if such
Debt had been incurred and the application of proceeds therefrom occurred on
the first day of the four-fiscal quarter period used to calculate the
Consolidated Cash Flow Ratio, (ii) the incurrence, repayment or retirement of
any other Debt by the Company or any of its Restricted Subsidiaries since the
first day of such four-quarter period as if such Debt was incurred, repaid or
retired at the beginning of such four-quarter period and (iii) the acquisition
(whether by purchase, merger or otherwise) or disposition
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(whether by sale, merger or otherwise) of any company, entity or business
acquired or disposed of by the Company or any of its Restricted Subsidiaries,
as the case may be, since the first day of such four-quarter period, as if such
acquisition or disposition occurred at the beginning of such four-quarter
period. In making a computation under the foregoing clause (i) or (ii), the
amount of Debt under a revolving credit facility shall be computed based upon
the average daily balance of such Debt during such four-quarter period.
(b) Notwithstanding the foregoing, the Company may, and
may, to the extent expressly permitted below, permit any of its Restricted
Subsidiaries to, incur any of the following Debt ("Permitted Debt"):
(i) Debt of the Company or any Subsidiary Debentures
Guarantor under the Credit Facility (including guarantees thereof by
the Subsidiaries) in an aggregate principal amount at any one time
outstanding not to exceed $110,000,000 less any amounts applied to the
permanent reduction of such Debt pursuant to Section 1012.
(ii) Debt of the Company or any of its Restricted
Subsidiaries outstanding on the Closing Date, other than Debt
described under clause (i) above.
(iii) Debt owed by the Company to any of its Restricted
Subsidiaries or owed by any Subsidiary to the Company or a Restricted
Subsidiary (provided that such Debt is Junior Subordinated Debt and is
held by the Company or such Restricted Subsidiary) or owed to the
Company or a Subsidiary Debentures Guarantor by a Restricted
Subsidiary that is not a Subsidiary Debentures Guarantor, provided the
incurrence of such Debt did not violate the provisions of Section
1010.
(iv) Debt represented by the Notes and the Subsidiary
Notes Guarantees.
(v) Debt represented by the Exchange Debentures and the
Subsidiary Debentures Guarantees.
(vi) Hedging Obligations of the Company or any of its
Restricted Subsidiaries incurred in the ordinary course of business.
(vii) Capitalized Lease Obligations of the Company or any
of its Restricted Subsidiaries in an aggregate amount not exceeding
$3,000,000 at any one time outstanding.
(viii) Debt under purchase money mortgages or secured by
purchase money security interests so long as (x) such Debt is not
secured by any property or assets of the Company or any of its
Restricted Subsidiaries other than the property or assets so acquired
and (y) such Debt is created within 60 days of the acquisition of the
related
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property; provided that the aggregate principal amount of Debt under
this clause (viii) does not exceed $2,000,000 at any one time
outstanding.
(ix) Debt of the Company or any Subsidiary Debentures
Guarantor, not permitted by any other clause of this definition, in an
aggregate principal amount not to exceed $5,000,000 at any one time
outstanding.
(x) Debt of the Company or any of its Restricted
Subsidiaries consisting of guarantees, indemnities or obligations in
respect of purchase price adjustments in connection with the
acquisition or disposition of assets, including, without limitation,
shares of Capital Stock.
(xi) Acquired Debt of a Person, other than Debt incurred
in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary or the acquisition of assets from such Person,
as the case may be, provided that the Company on a pro forma basis
could incur $1.00 of additional Debt (other than Permitted Debt)
pursuant to the first paragraph of this Section.
(xii) Any renewals, extensions, substitutions, refinancings
or replacements (each, for purposes of this clause, a "refinancing")
by the Company or any Restricted Subsidiary of any outstanding Debt of
the Company or such Restricted Subsidiary, other than Debt incurred
pursuant to clause (i), (vi), (vii), (viii), (ix) or (x) of this
Section, including any successive refinancings thereof, so long as (A)
any such new Debt is in a principal amount that does not exceed the
principal amount so refinanced, plus the amount of any premium
required to be paid in connection with such refinancing pursuant to
the terms of the Debt refinanced or the amount of any premium
reasonably determined by the Company as necessary to accomplish such
refinancing, plus the amount of expenses of the Company incurred in
connection with such refinancing, (B) in the case of any refinancing
of Junior Subordinated Debt, such new Debt is made subordinate to the
Exchange Debentures at least to the same extent as the Debt being
refinanced, (C) in the case of any refinancing of the Exchange
Debentures or any Pari Passu Debt, such Debt is Pari Passu Debt or
Junior Subordinated Debt and (D) such refinancing Debt does not have a
Weighted Average Life less than the Weighted Average Life of the Debt
being refinanced and does not have a final scheduled maturity earlier
than the final scheduled maturity, or permit redemption at the option
of the holder earlier than the earliest date of redemption at the
option of the holder, of the Debt being refinanced.
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SECTION 1010. Limitation on Restricted Payments.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, take any of the following
actions:
(a) declare or pay any dividend on, or make any
distribution to holders of, any shares of the Capital Stock of the
Company or any of its Restricted Subsidiaries other than (i) dividends
or distributions payable solely in Qualified Equity Interests of the
issuer of such shares of Capital Stock, (ii) dividends or
distributions by a Restricted Subsidiary payable to the Company or
another Restricted Subsidiary or (iii) pro rata dividends or
distributions on common stock of a Restricted Subsidiary held by
minority stockholders, provided that such dividends do not in the
aggregate exceed the minority stockholders' pro rata share of such
Restricted Subsidiary's net income from the first day of the Company's
fiscal quarter during which the Closing Date occurs;
(b) purchase, redeem or otherwise acquire or retire for
value, directly or indirectly, any shares of Capital Stock (or any
options, warrants or other rights to acquire shares of Capital Stock)
of (i) the Company or any of its Unrestricted Subsidiaries or (ii) any
Restricted Subsidiary that are held by any Affiliate of the Company
(other than, in either case, any such Capital Stock owned by the
Company or any of its Restricted Subsidiaries);
(c) make any principal payment on, or repurchase, redeem,
defease or otherwise acquire or retire for value, prior to any
scheduled principal payment, sinking fund payment or maturity, any
Junior Subordinated Debt; and
(d) make any Investment (other than a Permitted
Investment) in any Person
(such payments or other actions described in (but not excluded from) clauses
(a) through (d) being referred to as "Restricted Payments"), unless at the time
of, and immediately after giving effect to, the proposed Restricted Payment:
(i) no Default or Event of Default shall have occurred
and be continuing,
(ii) the Company could incur at least $1.00 of additional
Debt (other than Permitted Debt) pursuant to Section 1009, and
(iii) the aggregate amount of all Restricted Payments
declared or made after the Closing Date does not exceed the sum of:
(A) the remainder of (x) 100% of the aggregate
Consolidated Cash Flow for the period beginning on the first
day of the Company's fiscal quarter
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during which the Closing Date occurs and ending on the last day
of the Company's most recent fiscal quarter for which internal
financial statements are available ending prior to the date of
such proposed Restricted Payment (the "Computation Period")
minus (y) the product of 1.4 times the sum of (i) Consolidated
Fixed Charges for the Computation Period and (ii) all dividends
or other distributions paid in cash by the Company or any of
its Restricted Subsidiaries on any Disqualified Stock of the
Company or any of its Restricted Subsidiaries for the
Computation Period; plus
(B) the aggregate net proceeds received by the
Company after the Closing Date (including the fair market
value of property other than cash as determined by the
Company's Board of Directors, whose good faith determination
shall be conclusive) from the issuance or sale (other than to
a Subsidiary) of Qualified Equity Interests of the Company
(excluding from this computation any net proceeds of a Public
Equity Offering received by the Company that are used by it to
redeem the Exchange Debentures, as discussed above); plus
(C) the aggregate net proceeds received by the
Company after the Closing Date (including the fair market
value of property other than cash as determined by the
Company's Board of Directors, whose good faith determination
shall be conclusive) from the issuance or sale (other than to
a Subsidiary) of debt securities or Disqualified Stock that
have been converted into or exchanged for Qualified Stock of
the Company, together with the aggregate net cash proceeds
received by the Company at the time of such conversion or
exchange; plus
(D) without duplication, the Net Cash Proceeds
received by the Company or a Wholly Owned Restricted
Subsidiary upon the sale of any of its Unrestricted
Subsidiaries; plus
(E) $5,000,000.
Notwithstanding the foregoing, the Company and any of its
Restricted Subsidiaries may take any of the following actions, so long as (with
respect to clauses (f) and (g) below) no Default or Event of Default shall
have occurred and be continuing or would occur:
(a) The payment of any dividend within 60 days after the
date of declaration thereof, if at the declaration date such payment
would not have been prohibited by the foregoing provision.
(b) The repurchase, redemption or other acquisition or
retirement for value of any shares of Capital Stock of the Company, in
exchange for, or out of the net cash
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proceeds of a substantially concurrent issuance and sale (other than
to a Subsidiary) of, Qualified Equity Interests of the Company.
(c) The purchase, redemption, defeasance or other
acquisition or retirement for value of Junior Subordinated Debt in
exchange for, or out of the net cash proceeds of a substantially
concurrent issuance and sale (other than to a Restricted Subsidiary)
of shares of, Qualified Stock of the Company.
(d) The purchase, redemption, defeasance or other
acquisition or retirement for value of Junior Subordinated Debt in
exchange for, or out of the net cash proceeds of a substantially
concurrent issuance or sale (other than to a Subsidiary) of, Junior
Subordinated Debt, so long as the Company or a Restricted Subsidiary
would be permitted to refinance such original Junior Subordinated Debt
with such new Junior Subordinated Debt pursuant to clause (xii) of the
definition of Permitted Debt.
(e) The repurchase of any Junior Subordinated Debt at a
purchase price not greater than 101% of the principal amount of such
Junior Subordinated Debt in the event of a "change of control" in
accordance with provisions similar to Section 1011; provided that,
prior to such repurchase, the Company has made the Change of Control
Offer as provided in such Section with respect to the Exchange
Debentures and has repurchased all Exchange Debentures validly
tendered for payment in connection with such Change of Control Offer.
(f) The payment by the Company to Citadel Communications
for the purpose of the purchase, redemption, acquisition, cancellation
or other retirement for value of shares of Capital Stock of Citadel
Communications, options on any such shares or related stock
appreciation rights or similar securities held by officers or
employees or former officers or employees (or their estates or
beneficiaries under their estates) or by any employee benefit plan,
upon death, disability, retirement or termination of employment or
pursuant to the terms of any employee benefit plan or any other
agreement under which such shares of stock or related rights were
issued; provided that the aggregate cash consideration paid for such
purchase, redemption, acquisition, cancellation or other retirement of
such shares of Capital Stock after the date of the Closing Date does
not exceed $1,000,000 in any fiscal year.
(g) Loans or advances to officers, directors and
employees of Citadel Communications, the Company or any of its
Restricted Subsidiaries made in the ordinary course of business after
the Closing Date in an aggregate principal amount not to exceed
$1,000,000 at any one time outstanding.
(h) Payments to or on behalf of Citadel Communications to
pay its operating and administrative expenses attributable to the
Company, including, without limitation,
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legal and audit expenses, directors' fees, fees payable in respect of
the trustee and back-up trustees under the Voting Trust Agreement, and
Commission compliance expenses, in an amount not to exceed the greater
of $1,000,000 per fiscal year and 1% of the net revenues of the
Company for the preceding fiscal year.
(i) Repayment of the note payable of the Company to
Citadel Communications outstanding as of the Closing Date in an amount
not to exceed $12,817,000 plus all accrued and unpaid interest thereon
to the Closing Date.
The payments described in clauses (b), (c), (e), (f) and (g)
of this Section shall be Restricted Payments that shall be permitted to be
taken in accordance with this Section but shall reduce the amount that would
otherwise be available for Restricted Payments under the foregoing clause
(iii), and the payments described in clauses (a), (d), (h) and (i) of this
section shall be Restricted Payments that shall be permitted to be taken in
accordance with this section and shall not reduce the amount that would
otherwise be available for Restricted Payments under the foregoing clause
(iii).
For the purpose of making any calculations under this Exchange
Indenture (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company shall be deemed to have made an Investment in an amount
equal to the fair market value of the net assets of such Restricted Subsidiary
at the time of such designation as determined by the Board of Directors of the
Company, whose good faith determination shall be conclusive, (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at fair
market value at the time of such transfer, as determined by the Board of
Directors of the Company, whose good faith determination shall be conclusive
and (iii) subject to the foregoing, the amount of any Restricted Payment, if
other than cash, shall be determined by the Board of Directors of the Company,
whose good faith determination shall be conclusive.
If the aggregate amount of all Restricted Payments calculated
under the foregoing provision includes an Investment in an Unrestricted
Subsidiary or other Person that thereafter becomes a Restricted Subsidiary,
such Investment shall no longer be counted as a Restricted Payment for purposes
of calculating the aggregate amount of Restricted Payments.
If an Investment resulted in the making of a Restricted
Payment, the aggregate amount of all Restricted Payments calculated under the
foregoing provision shall be reduced by the amount of any net reduction in such
Investment (resulting from the payment of interest or dividends, loan
repayment, transfer of assets or otherwise), to the extent such net reduction
is not included in Consolidated Adjusted Net Income; provided that the total
amount by which the aggregate amount of all Restricted Payments may be reduced
may not exceed the lesser of (x) the cash proceeds received by the Company and
any of its Restricted Subsidiaries in connection with such net reduction and
(y) the initial amount of such Investment.
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In computing Consolidated Adjusted Net Income for purposes of
the foregoing clause (iii)(A), (i) the Company may use audited financial
statements for the portions of the relevant period for which audited financial
statements are available on the date of determination and unaudited financial
statements and other current financial data based on the books and records of
the Company for the remaining portion of such period and (ii) the Company shall
be permitted to rely in good faith on the financial statements and other
financial data derived from the books and records of the Company that are
available on the date of determination. If the Company makes a Restricted
Payment that, at the time of the making of such Restricted Payment, would in
the good faith determination of the Company be permitted under the requirements
of this Exchange Indenture, such Restricted Payment shall be deemed to have
been made in compliance with this Exchange Indenture notwithstanding any
subsequent adjustments made in good faith to the Company's financial statements
affecting Consolidated Adjusted Net Income of the Company for any period.
SECTION 1011. Purchase of Exchange Debentures upon a Change
of Control.
Upon the occurrence of a Change of Control, each Holder shall
have the right to require the repurchase of its Exchange Debentures by the
Company, in whole or in part in integral multiples of $1,000, in cash pursuant
to the offer described below (the "Change of Control Offer") at a purchase
price equal to 101% of the principal amount thereof as of the Change of Control
Purchase Date, plus accrued and unpaid interest to such date (the "Change of
Control Payment").
Within 30 days following any Change of Control, the Company
shall notify the Trustee thereof and give written notice of such Change of
Control (a "Change of Control Offer") to each Holder of Exchange Debentures by
first-class mail, postage prepaid, at its address appearing in the Exchange
Debentures Register, stating:
(i) that a Change of Control has occurred, that the
Change of Control Offer is being made pursuant to this Section 1011
and that all Exchange Debentures validly tendered shall be accepted
for payment;
(ii) the purchase price and the purchase date, which shall
be a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed or such later date as is necessary to
comply with requirements under the Exchange Act (the "Change of
Control Purchase Date");
(iii) that any Exchange Debenture not tendered shall
continue to accrue interest;
(iv) that, unless the Company defaults in the payment of
the Change of Control Payment, any Exchange Debentures accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
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(v) that a Holder electing to have any Exchange Debenture
or a portion thereof purchased pursuant to the Change of Control Offer
shall be required to surrender such Exchange Debenture to the Paying
Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Change of
Control Purchase Date;
(vi) that the Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than the close of
business on the third Business Day immediately preceding the Change in
Control Purchase Date, facsimile transmission, telex or letter setting
forth the name of such Holder, the principal amount of Exchange
Debentures delivered for purchase and a statement that such Holder is
withdrawing its election to have such Exchange Debentures purchased;
(vii) that the Holders whose Exchange Debentures are being
purchased only in part shall be issued new Exchange Debentures equal
in principal amount to the unpurchased portion of the Exchange
Debentures surrendered; provided that each Exchange Debenture
purchased and each new Exchange Debenture issued shall be in a
principal amount of $1,000 or an integral multiple thereof; and
(viii) certain other procedures that a Holder must follow to
accept a Change of Control Offer or to withdraw such acceptance.
On the Change of Control Purchase Date, the Company shall:
(i) accept for payment Exchange Debentures or portions thereof tendered
pursuant to the Change of Control Offer; (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all Exchange Debentures or
portions thereof so accepted; and (iii) deliver, or cause to be delivered, to
the Trustee, all Exchange Debentures or portions thereof so accepted together
with an Officers' Certificate specifying the Exchange Debentures or portions
thereof accepted for payment by the Company. The Paying Agent shall promptly
mail to the Holders of Exchange Debentures so accepted payment in an amount
equal to the purchase price, and the Trustee shall promptly authenticate and
mail to such Holders a new Exchange Debenture equal in principal amount to any
unpurchased portion of the Exchange Debentures surrendered; provided that each
Exchange Debenture purchased and each new Exchange Debenture issued shall be in
a principal amount of $1,000 or an integral multiple thereof.
The Company shall comply with the applicable tender offer
rules including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws and regulations to the extent such laws and regulations are
applicable in the event that a Change of Control occurs and the Company is
required to repurchase the Exchange Debentures under this Section 1011.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create any restriction (other than restrictions
existing under Debt as in effect on the Closing Date
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or in any renewals, extensions, substitutions refinancings or replacements of
such Debt that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Exchange Debentures or, if such Change
of Control Offer is made, to pay for the Exchange Debentures tendered for
purchase.
To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 1011, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Exchange Indenture.
SECTION 1012. Limitation on Certain Asset Sales.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, engage in any Asset Sale unless (i) the
consideration received by the Company or such Restricted Subsidiary for such
Asset Sale is not less than the fair market value of the assets sold (as
determined by the Board of Directors of the Company, whose good faith
determination shall be conclusive) and (ii) the consideration received by the
Company or the relevant Restricted Subsidiary in respect of such Asset Sale
consists of at least 80% (A) cash or cash equivalents and/or (B) the assumption
by the transferee of Debt of the Company or a Restricted Subsidiary ranked
senior to or pari passu with the Exchange Debentures and release of the Company
or such Restricted Subsidiary from all liability on such Debt.
(b) If the Company or any of its Restricted Subsidiaries
engages in an Asset Sale, the Company may, at its option, within 12 months
after such Asset Sale, (i) apply all or a portion of the Net Cash Proceeds to
the permanent reduction of amounts outstanding under the Credit Facility or to
the repayment of other Senior Debt or Senior Subordinated Debt of the Company
or a Subsidiary Debentures Guarantor or (ii) invest (or enter into one or more
legally binding agreements to invest) all or a portion of such Net Cash
Proceeds in properties and assets to replace the properties and assets that
were the subject of the Asset Sale or in properties and assets that shall be
used in the broadcast business or businesses reasonably related thereto. If
any such legally binding agreement to invest such Net Cash Proceeds is
terminated, the Company may, within 90 days of such termination or within 12
months of such Asset Sale, whichever is later, invest such Net Cash Proceeds as
provided in clause (i) or (ii) (without regard to the parenthetical contained
in such clause (ii)) above. The amount of such Net Cash Proceeds not so used as
set forth above in this paragraph (b) constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds
$5,000,000, the Company shall make an offer to all Holders of Exchange
Debentures (an "Asset Sale Offer") to purchase, on a pro rata basis, the
maximum principal amount of Exchange Debentures, that is an integral multiple
of $1,000, that may be purchased with the Excess Proceeds, at a purchase price
in cash equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date fixed for the closing of such offer (the "Offered
Price"). Within 30 days after
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the date on which the aggregate amount of Excess Proceeds exceeds $5,000,000,
the Company shall give to each Holder of the Exchange Debentures, with a copy
to the Debentures Trustee, in the manner provided in Section 106 a notice
stating:
(i) that the Holder has the right to require the Company
to repurchase such Holder's Exchange Debentures at the Offered Price,
subject to proration in the event the Excess Proceeds are less than
the aggregate Offered Price of all Exchange Debentures tendered;
(ii) the date of purchase of Exchange Debentures pursuant
to the Asset Sale Offer (the "Asset Sale Purchase Date"), which shall
be no earlier than 30 days nor later than 60 days from the date such
notice is mailed;
(iii) that the Offered Price shall be paid to Holders
electing to have Exchange Debentures purchased on the Asset Sale
Purchase Date, provided that a Holder must surrender its Exchange
Debenture to the Paying Agent at the address specified in the notice
prior to the close of business at least five Business Days prior to
the Asset Sale Purchase Date;
(iv) any Exchange Debenture not tendered shall continue to
accrue interest pursuant to its terms;
(v) that unless the Company defaults in the payment of
the Offered Price, any Exchange Debenture accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue interest on and
after the Asset Sale Purchase Date;
(vi) that Holders shall be entitled to withdraw their
tendered Exchange Debentures and their election to require the Company
to purchase such Exchange Debentures, provided that the Company
receives, not later than the close of business on the third Business
Day preceding the Asset Sale Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount and serial numbers of the Exchange Debentures
tendered for purchase, and a statement that such Holder is withdrawing
its election to have such Exchange Debentures purchased;
(vii) that the Holders whose Exchange Debentures are being
purchased only in part shall be issued new Exchange Debentures equal
in principal amount to the unpurchased portion of the Exchange
Debentures surrendered; which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof; and
(viii) the instructions a Holder must follow in order to
have his Exchange Debentures purchased in accordance with this Section
1012.
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To the extent that the aggregate amount of Exchange Debentures
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use the deficiency for general corporate purposes. If the
aggregate principal amount of Exchange Debentures surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Exchange Debentures to be
purchased shall be selected on a pro rata basis. Upon completion of any such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Exchange Debentures pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Section 1012, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Exchange Indenture.
SECTION 1013. Limitation on Asset Swaps.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, engage in any Asset Swap, unless:
(i) at the time of entering into the Asset Swap and
immediately after giving effect to the proposed Asset Swap, no Default
or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof;
(ii) the Company would, at the time of entering into the
Asset Swap and after giving pro forma effect to the proposed Asset
Swap, as if such Asset Swap had occurred at the beginning of the
applicable four-quarter period, have been permitted to incur at least
$1.00 of additional Debt (other than Permitted Debt) pursuant to the
first paragraph of Section 1009;
(iii) the respective aggregate fair market values of the
assets being purchased and sold by the Company or any of its
Restricted Subsidiaries are substantially the same at the time of
entering into the Asset Swap (or any difference in such aggregate fair
market value is substantially compensated for by an equalizing (i)
payment of cash, (ii) assumption of liabilities or (iii) taking of
assets subject to liabilities); and
(iv) at the time of the consummation of the first to occur
of the relinquishment or the replacement of assets constituting part
of the proposed Asset Swap, the percentage of any decline in the fair
market value of the asset or assets being acquired by the Company and
its Restricted Subsidiaries shall not be significantly greater than
the percentage of any decline in the fair market value of the assets
being disposed of the
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Company, calculated from the time the last agreement constituting part
of the Asset Swap, was entered into.
SECTION 1014. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction with, or for the benefit of, any Affiliate of the Company
unless:
(a) such transaction is on terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case
may be, than those that could have been obtained in an arm's-length
transaction with third parties who are not Affiliates and
(b) either (i) with respect to any transaction or series
of transactions involving aggregate payments in excess of $1,000,000,
but less than $5,000,000, the Company delivers an Officers'
Certificate to the Debentures Trustee certifying that such transaction
or transactions comply with clause (a) above or (ii) with respect to a
transaction or series of transactions involving aggregate payments
equal to or greater than $5,000,000, such transaction or transactions
have been approved by the Board of Directors (including a majority of
the Disinterested Directors) of the Company or the Company has
obtained a written opinion from a nationally recognized investment
banking firm to the effect that such transaction or transactions are
fair to the Company or such Restricted Subsidiary from a financial
point of view.
The foregoing provisions shall not restrict any of the
following:
(A) Transactions among the Company and/or any of its
Restricted Subsidiaries.
(B) The Company from paying reasonable and customary
regular compensation, fees, indemnification and similar arrangements
and payments thereunder to directors of the Company or any of its
Restricted Subsidiaries who are not employees of the Company or any of
its Restricted Subsidiaries.
(C) Employment agreements or compensation or employee
benefits arrangements with any officer, director or employee of the
Company or its Restricted Subsidiaries entered into in the ordinary
course of business (including customary benefits thereunder) (it being
understood that benefits of the nature in place as of the Closing Date
shall be deemed permissible hereunder).
(D) The performance of the Company's obligations under
(a) that certain lease agreement effective December 29, 1995 with
Wilson Aviation, L.L.C. relating to the lease of an airplane, (b) that
certain agreement not to compete dated December 31, 1996
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with DVS Management, Inc. and (c) that certain Voting Trust Agreement
dated March 17, 1997 among Citadel Communications, ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P. and others
and the related letter agreement dated March 17, 1997 among Citadel
Communications, ABRY Broadcast Partners II, L.P., ABRY/Citadel
Investment Partners, L.P. and others (the "Affiliate Agreements");
provided that any amendments or modifications to the terms of the
Affiliate Agreements (1) are no less favorable to the Company than
those that could have been obtained in an arm's-length transaction
with third parties who are not Affiliates and (2) are approved by the
Board of Directors (including a majority of the Disinterested
Directors) of the Company.
(E) The Company from making payments to Citadel
Communications to pay its operating and administrative expenses
attributable to the Company including, without limitation, legal and
audit expenses, directors' fees and Commission compliance expenses, in
an amount not to exceed the greater of $1,000,000 per fiscal year and
1% of the net revenues of the Company for the preceding fiscal year.
(F) The Company or a Restricted Subsidiary from
transferring up to $500,000 of properties and assets, including cash,
to a joint venture in which the Company or a Restricted Subsidiary has
an equity interest and in which one or more directors or officers of
the Company or Citadel Communications has an equity interest, which
joint venture is engaged in the internet service provider business.
(G) The Company from repaying the note payable of the
Company to Citadel Communications outstanding as of the Closing Date
in an amount not to exceed $12,817,000 plus all accrued and unpaid
interest thereon to the Closing Date.
SECTION 1015. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any of its Restricted Subsidiaries to
(a) pay dividends, in cash or otherwise, or make any other distributions on or
in respect of its Capital Stock, (b) pay any Debt owed to the Company or any
other Restricted Subsidiary, (c) make loans or advances to the Company or any
other Restricted Subsidiary or (d) transfer any of its properties or assets to
the Company or any other Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of any of the following:
(i) The Credit Facility and any agreement in effect on
the Closing Date.
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(ii) Customary non-assignment provisions of any lease
governing a leasehold interest of the Company or any of its Restricted
Subsidiaries.
(iii) The refinancing or successive refinancings of Debt
referred to in clause (i) or (iv), so long as such encumbrances or
restrictions are no less favorable to the Company or any of its
Restricted Subsidiaries than those contained in such original
agreement.
(iv) Any agreement or other instrument of a Person
acquired by the Company or any of its Restricted Subsidiaries in
existence at the time of such acquisition (but not created in
contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so
acquired.
(v) Any agreement providing for the incurrence of Debt by
a Restricted Subsidiary in compliance with Section 1009 provided that
such Restricted Subsidiary becomes a Subsidiary Debentures Guarantor.
SECTION 1016. Limitation on Issuances and Sales of Capital
Stock of Restricted Subsidiaries.
The Company shall not sell, and shall not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue or sell, any shares
of Capital Stock of a Restricted Subsidiary (including options, warrants or
other rights to purchase shares of such Capital Stock) except (i) to the
Company or a Wholly Owned Restricted Subsidiary, (ii) issuances or sales to
foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law, or issuances or sales
to directors of directors' qualifying shares, (iii) if, immediately after
giving effect to such issuance or sale, neither the Company nor any Subsidiary
owns any shares of Capital Stock of such Restricted Subsidiary (including
options, warrants or other rights to purchase shares of such Capital Stock) or
(iv) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and
any Investment in such Person remaining after giving effect to such issuance or
sale would have been permitted to be made under Section 1010 if made on the
date of such issuance or sale.
In addition, the Company shall not, and shall not permit any
of its Restricted Subsidiaries to, sell, transfer or otherwise dispose of any
of its properties or assets to an Unrestricted Subsidiary other than in the
ordinary course of business.
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SECTION 1017. Limitation on Unrestricted Subsidiaries.
(a) The Board of Directors of the Company may designate
any Subsidiary (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary so long as (i) neither the Company nor any of its
Restricted Subsidiaries is directly or indirectly liable for any Debt of such
Subsidiary, (ii) no default with respect to any Debt of such Subsidiary would
permit (upon notice, lapse of time or otherwise) any holder of any other Debt
of the Company or any of its Restricted Subsidiaries to declare a default on
such other Debt or cause the payment thereof to be accelerated or payable prior
to its stated maturity, (iii) any Investment in such Subsidiary made as a
result of designating such Subsidiary an Unrestricted Subsidiary shall not
violate Section 1010, (iv) neither the Company nor any of its Restricted
Subsidiaries has a contract, agreement, arrangement, understanding or
obligation of any kind, whether written or oral, with such Subsidiary other
than those that might be obtained at the time from Persons who are not
Affiliates of the Company and (v) neither the Company nor any Restricted
Subsidiary has any obligation to subscribe for additional shares of Capital
Stock or other equity interest in such Subsidiary, or to maintain or preserve
such Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results. Notwithstanding the foregoing, the
Company may not designate the License Subsidiary, or any Subsidiary to which
any properties or assets (other than current assets) owned by the Company or
the License Subsidiary on the Closing Date have been transferred, as an
Unrestricted Subsidiary.
(b) The Board of Directors of the Company may designate
any of its Unrestricted Subsidiaries as a Restricted Subsidiary; provided that
such designation shall be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Debt is permitted under Section
1009 and (ii) no Default or Event of Default shall have occurred and be
continuing following such designation.
SECTION 1018. Limitation on Other Subordinated Debt.
The Company and each Subsidiary Debentures Guarantor shall
not, directly or indirectly, incur or otherwise permit to exist any Debt that
is subordinate in right of payment to any Senior Subordinated Debt of the
Company or such Subsidiary Debentures Guarantor, as the case may be, unless
such Debt is also pari passu with the Exchange Debentures or the Subsidiary
Debentures Guarantee of the Exchange Debentures by such Subsidiary Debentures
Guarantor, as the case may be, or subordinate in right of payment to the
Exchange Debentures or such Subsidiary Debentures Guarantee of the Exchange
Debentures, as the case may be, to at least the same extent as the Exchange
Debentures or such Subsidiary Debentures Guarantee are subordinate in right of
payment to Senior Subordinated Debt or all senior subordinated debt of the
Subsidiary Debentures Guarantors, as the case may be, as set forth in this
Exchange Indenture.
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SECTION 1019. Subsidiary Debentures Guarantees.
The Subsidiary Debentures Guarantors shall, jointly and
severally, unconditionally guarantee the due and punctual payment of the
principal of, premium, if any, and interest on the Exchange Debentures on a
subordinated basis pursuant to the Subsidiary Debentures Guarantees as
described in Article Thirteen. The Subsidiary Debentures Guarantors may be
released from their obligations under the Subsidiary Debentures Guarantees as
described in Article Twelve and a Subsidiary Debentures Guarantor may be
released from its obligations under its Subsidiary Debentures Guarantee as
described in Article Thirteen.
The Company shall (i) cause each Person that, after the
Closing Date, becomes a Wholly Owned Restricted Subsidiary of the Company, as
well as each other Restricted Subsidiary that guarantees any other Debt of the
Company, to execute and deliver a supplemental indenture and thereby become a
Subsidiary Debentures Guarantor bound by the Subsidiary Debentures Guarantee of
the Exchange Debentures in the form set forth in this Exchange Indenture
(without such Subsidiary Debentures Guarantor being required to execute and
deliver its Subsidiary Debentures Guarantee endorsed on the Exchange
Debentures) and (ii) deliver to the Debentures Trustee an Opinion of Counsel,
in form and substance reasonably satisfactory to the Debentures Trustee, that
the Subsidiary Debentures Guarantee of such Subsidiary Debentures Guarantor is
a valid and legally binding obligation of such Subsidiary Debentures Guarantor.
SECTION 1020. Limitation on Guarantees of Debt by Restricted
Subsidiaries.
The Company shall not permit any of its Restricted
Subsidiaries that is not a Subsidiary Debentures Guarantor, directly or
indirectly, to guarantee, assume or in any other manner become liable for the
payment of any Debt of the Company or any Debt of any other Restricted
Subsidiary, unless (a) such Restricted Subsidiary simultaneously executes and
delivers a Subsidiary Debentures Guarantee and (b) with respect to any
guarantee of Junior Subordinated Debt by a Restricted Subsidiary, any such
guarantee is subordinated to such Restricted Subsidiary's Subsidiary Debentures
Guarantee at least to the same extent as such Junior Subordinated Debt is
subordinated to the Exchange Debentures, provided that the foregoing provision
shall not be applicable to any guarantee by any such Restricted Subsidiary that
existed at the time such Person became a Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary.
SECTION 1021. Limitation on Liens.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur, affirm or suffer to exist any Lien
of any kind securing any Pari Passu Debt or Junior Subordinated Debt (including
any assumption, guarantee or other liability with respect thereto by any
Restricted Subsidiary) upon any property or assets (including any intercompany
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notes) of the Company or any of its Restricted Subsidiaries now owned or
acquired after the Closing Date, or any income or profits therefrom, unless the
Exchange Debentures are directly secured equally and ratably with (or prior to
in the case of Junior Subordinated Debt) the obligation or liability secured by
such Lien; provided that the foregoing shall not apply to Liens securing Debt
of a Person acquired by the Company or any of its Restricted Subsidiaries in
existence at the time of such acquisition (but not created in contemplation
thereof), which Lien is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired.
SECTION 1022. Commission Reports and Reports to Holders.
At all times while the Exchange Debentures are issued and
outstanding, whether or not the Company is then required to file reports with
the Commission, the Company will file with the Commission all such reports and
other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Exchange Act if it were subject thereto. The
Company will supply the Debentures Trustee and each Holder, or will supply to
the Debentures Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information.
Delivery of such reports, information and documents to the
Debentures Trustee is for informational purposes only and the Debentures
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants
hereunder.
SECTION 1023. Statement as to Compliance.
(a) The Company shall deliver to the Debentures Trustee,
within 90 days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing officers with a view to determining whether it has kept, observed,
performed and fulfilled, and has caused each of its Subsidiaries to keep,
observe, perform and fulfill its obligations under this Exchange Indenture and
further stating, as to each such officer signing such certificate, that, to the
best of his or her knowledge, the Company during such preceding fiscal year has
kept, observed, performed and fulfilled, and has caused each of its
Subsidiaries to keep, observe, perform and fulfill each and every such covenant
contained in this Exchange Indenture and no Default or Event of Default
occurred during such year and at the date of such certificate there is no
Default or Event of Default which shall have occurred and be continuing or, if
such signers do know of such Default or Event of Default, the certificate shall
describe its status, with particularity and that, to the best of his or her
knowledge, no event has occurred and remains by reason of which payments on the
account of the principal of or interest, if any, on the Exchange Debentures is
prohibited or if such event has occurred, a
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description of the event and what action each is taking or purposes to take
with respect thereto. The Officers' Certificate shall also notify the
Debentures Trustee should the Company elect to change the manner in which it
fixes its fiscal year end. For purposes of this Section 1023(a), such
compliance shall be determined without regard to any period of grace or
requirement of notice under this Exchange Indenture.
(b) When any Default shall have occurred and be
continuing under this Exchange Indenture, or if the trustee for or the holder
of any other evidence of Debt of the Company or any Subsidiary gives any notice
or takes any other action with respect to a claimed default (other than with
respect to Debt in the principal amount of less than $10 million), the Company
shall deliver to the Debentures Trustee by registered or certified mail or
facsimile transmission an Officers' Certificate specifying such event, notice
or other action within five days of any officer of the Company having knowledge
of any Default.
SECTION 1024. Delivery of Certain Information.
If specified as contemplated by Section 301 with respect to a
series of Exchange Debentures, at any time when the Company is not subject to
Section 13 or 15(d) of the Exchange Act, upon the request of a Holder, the
Company will promptly furnish or cause to be furnished Rule 144A Information
(as defined below) to such Holder or to a prospective purchaser of such
Exchange Debentures by such Holder. "Rule 144A Information" shall mean such
information as is specified pursuant to Rule 144A(d)(4) under the Securities
Act as in effect on the date hereof.
ARTICLE ELEVEN
REDEMPTION OF EXCHANGE DEBENTURES
SECTION 1101. Redemption.
The Exchange Debentures may or shall, as the case may be, be
redeemed, as a whole or from time to time in part, subject to the conditions
and at the Redemption Prices specified in the form of Exchange Debenture,
together with accrued interest to the Redemption Date.
SECTION 1102. Applicability of Article.
Redemption of Exchange Debentures at the election of the
Company or otherwise, as permitted or required by any provision of this
Exchange Indenture, shall be made in accordance with such provision and this
Article.
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SECTION 1103. Election to Redeem; Notice to Debentures
Trustee.
The election of the Company to redeem any Exchange Debentures
pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of
any redemption at the election of the Company, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Debentures Trustee), notify the Debentures Trustee
of such Redemption Date and of the principal amount of Exchange Debentures to
be redeemed and shall deliver to the Debentures Trustee such documentation and
records as shall enable the Debentures Trustee to select the Exchange
Debentures to be redeemed pursuant to Section 1104.
SECTION 1104. Selection by Debentures Trustee of Exchange
Debentures to Be Redeemed.
If less than all the Exchange Debentures are to be redeemed,
the particular Exchange Debentures to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Debentures Trustee, from the
Outstanding Exchange Debentures not previously called for redemption, in
compliance with the requirements of the principal national securities exchange,
if any, on which such Exchange Debentures are listed, or, if such Exchange
Debentures are not so listed, on a pro rata basis, by lot or by such other
method as the Debentures Trustee shall deem fair and appropriate (and in such
manner as complies with applicable legal requirements) and which may provide
for the selection for redemption of portions of the principal of Exchange
Debentures; provided, however, that no such partial redemption shall reduce the
portion of the principal amount of an Exchange Debenture not redeemed to less
than $1,000.
The Debentures Trustee shall promptly notify the Company in
writing of the Exchange Debentures selected for redemption and, in the case of
any Exchange Debentures selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Exchange Indenture, unless the
context otherwise requires, all provisions relating to redemption of Exchange
Debentures shall relate, in the case of any Exchange Debenture redeemed or to
be redeemed only in part, to the portion of the principal amount of such
Exchange Debenture which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given in the manner provided for
in Section 106 not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Exchange Debentures to be redeemed. The Debentures
Trustee shall give notice of redemption in the Company's name and at the
Company's expense; provided, however, that the Company shall deliver to the
Debentures Trustee, at least 45 days prior to the Redemption Date (unless a
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shorter notice shall be satisfactory to the Debentures Trustee), an Officers'
Certificate requesting that the Debentures Trustee give such notice and setting
forth the information to be stated in such notice as provided in the following
items.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued
interest to the Redemption Date payable as provided in Section 1107,
if any,
(3) if less than all Outstanding Exchange Debentures are
to be redeemed, the identification of the particular Exchange
Debentures (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Exchange Debentures to be redeemed and
the aggregate principal amount of Exchange Debentures to be
outstanding after such partial redemption,
(4) in case any Exchange Debenture is to be redeemed in
part only, the notice which relates to such Exchange Debenture shall
state that on and after the Redemption Date, upon surrender of such
Exchange Debenture, the Holder shall receive, without charge, a new
Exchange Debenture or Exchange Debentures of authorized denominations
for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and
accrued interest, if any, to the Redemption Date payable as provided
in Section 1107) shall become due and payable upon each such Exchange
Debenture, or the portion thereof, to be redeemed, and, unless the
Company defaults in making the redemption payment, that interest on
Exchange Debentures called for redemption (or the portion thereof)
shall cease to accrue on and after said date,
(6) the place or places where such Exchange Debentures
are to be surrendered for payment of the Redemption Price and accrued
interest, if any,
(7) the name and address of the Paying Agent,
(8) that Exchange Debentures called for redemption must
be surrendered to the Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made
as to the accuracy or correctness of the CUSIP number, if any, listed
in such notice or printed on the Exchange Debentures, and
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(10) the paragraph of the Exchange Debentures pursuant to
which the Exchange Debentures are to be redeemed.
SECTION 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with
the Debentures Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money sufficient to pay the Redemption Price of, and accrued
interest on, all the Exchange Debentures which are to be redeemed on that date.
SECTION 1107. Exchange Debentures Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Exchange Debentures so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified (together with accrued
interest, if any, to the Redemption Date), and from and after such date (unless
the Company shall default in the payment of the Redemption Price and accrued
interest) such Exchange Debentures shall cease to bear interest. Upon
surrender of any such Exchange Debenture for redemption in accordance with said
notice, such Exchange Debenture shall be paid by the Company at the Redemption
Price, together with accrued interest, if any, to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Exchange
Debentures, or one or more Predecessor Exchange Debentures, registered as such
at the close of business on the relevant Regular Record Date or Special Record
Date, as the case may be, according to their terms and the provisions of
Section 311.
If any Exchange Debenture called for redemption shall not be
so paid upon surrender thereof for redemption, the principal (and premium, if
any) shall, until paid, bear interest from the Redemption Date at the rate
borne by the Exchange Debentures.
SECTION 1108. Exchange Debentures Redeemed in Part.
Any Exchange Debenture which is to be redeemed only in part
(pursuant to the provisions of this Article) shall be surrendered at the office
or agency of the Company maintained for such purpose pursuant to Section 1002
(with, if the Company or the Debentures Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Debentures Trustee duly executed by, the Holder thereof or such Holders
attorney duly authorized in writing), and the Company shall execute, and the
Debentures Trustee shall authenticate and deliver to the Holder of such
Exchange Debenture without service charge, a new Exchange Debenture or Exchange
Debentures, of any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the
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unredeemed portion of the principal of the Exchange Debenture so surrendered,
provided, that each such new Exchange Debenture shall be in a principal amount
of $1,000 or integral multiple thereof.
ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Legal Defeasance or
Covenant Defeasance.
The Company and the Subsidiary Debentures Guarantors may, at
their option by Board Resolution, at any time, with respect to the Exchange
Debentures, elect to have either Section 1202 or Section 1203 be applied to all
Outstanding Exchange Debentures upon compliance with the conditions set forth
below in this Article Twelve.
SECTION 1202. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 1201 of the option
applicable to this Section 1202, the Company and any Subsidiary Debentures
Guarantor shall be deemed to have been discharged from their obligations with
respect to all Outstanding Exchange Debentures on the date the conditions set
forth in Section 1204 are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, such Legal Defeasance means that the Company and any such
Subsidiary Debentures Guarantor shall be deemed to have paid and discharged the
entire Debt represented by the Outstanding Exchange Debentures, which shall
thereafter be deemed to be "Outstanding" only for the purposes of Section 1205
and the other Sections of this Exchange Indenture referred to in (A) and (B)
below, and to have satisfied all its other obligations under such Exchange
Debentures and this Exchange Indenture insofar as such Exchange Debentures are
concerned (and the Debentures Trustee, at the expense of the Company, shall
execute proper instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged hereunder: (A)
the rights of Holders of Outstanding Exchange Debentures to receive payments in
respect of the principal of (and premium, if any, on) and interest on such
Exchange Debentures when such payments are due, (B) the Company's obligations
to issue temporary Exchange Debentures, register the transfer or exchange of
any Exchange Debentures, replace mutilated, destroyed, lost or stolen Exchange
Debentures, maintain an office or agency for payments in respect of the
Exchange Debentures and segregate and hold such payments in trust, (C) the
rights, powers, trusts, duties and immunities of the Debentures Trustee and (D)
the defeasance provisions of this Exchange Indenture.
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Subject to compliance with this Article Twelve, the Company
may exercise its option under this Section 1202 notwithstanding the prior
exercise of its option under Section 1203 with respect to the Exchange
Debentures.
SECTION 1203. Covenant Defeasance.
Upon the Company's exercise under Section 1201 of the option
applicable to this Section 1203, the Company shall be released from its
obligations under any covenant contained in Section 801 and in Sections 1006
through 1022 with respect to the Outstanding Exchange Debentures on and after
the date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Exchange Debentures shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "Outstanding" for all other purposes
hereunder (it being understood that such Exchange Debentures shall not be
outstanding for accounting purposes). For this purpose, such Covenant
Defeasance means that, with respect to the Outstanding Exchange Debentures, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision
herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 501(d), but, except
as specified above, the remainder of this Exchange Indenture and such Exchange
Debentures shall be unaffected thereby.
SECTION 1204. Conditions to Legal Defeasance or Covenant
Defeasance.
The following shall be the conditions to application of either
Section 1202 or Section 1203 to the Outstanding Exchange Debentures:
(a) the Company must irrevocably deposit or cause to be
deposited with the Debentures Trustee, as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Exchange Debentures, money in an amount,
or U.S. Government Obligations that through the scheduled payment of
principal and interest thereon shall provide money in an amount, or a
combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay and
discharge the principal of (and premium, if any, on) and interest on
the outstanding Exchange Debentures at maturity (or upon redemption,
if applicable) of such principal or installment of interest;
(b) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or, insofar as an event
of bankruptcy under Section 501(h) or
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(i) is concerned, at any time during the period ending on the 91st
day after the date of such deposit;
(c) such Legal Defeasance or Covenant Defeasance must not
result in a breach or violation of, or constitute a default under,
this Exchange Indenture or any material agreement or instrument to
which the Company or any Subsidiary Debentures Guarantor is a party or
by which it is bound or cause the Debentures Trustee or the trust so
created to be subject to the Investment Company Act of 1940, as
amended;
(d) in the case of Legal Defeasance, the Company must
deliver to the Debentures Trustee an Opinion of Counsel stating that
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or since the date hereof, there has
been a change in applicable federal income tax law, to the effect, and
based thereon such opinion must confirm that, the Holders of the
outstanding Exchange Debentures shall not recognize income, gain or
loss for federal income tax purposes as a result of such Legal
Defeasance and shall be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(e) in the case of Covenant Defeasance, the Company must
have delivered to the Debentures Trustee an Opinion of Counsel to the
effect that the Holders of the Exchange Debentures outstanding shall
not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and shall be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred; and
(f) the Company must have delivered to the Debentures
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating to either
the Legal Defeasance or the Covenant Defeasance, as the case may be,
have been complied with.
SECTION 1205. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Debentures Trustee (or other qualifying trustee,
collectively for purposes of this Section 1205, the "Debentures Trustee")
pursuant to Section 1204 in respect of the Outstanding Exchange Debentures
shall be held in trust and applied by the Debentures Trustee, in accordance
with the provisions of such Exchange Debentures and this Exchange Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Debentures Trustee may determine, to the
Holders of such Exchange Debentures of all
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sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other funds
except to the extent required by law.
The Company shall pay and indemnify the Debentures Trustee
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 1204 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding
Exchange Debentures.
Anything in this Article Twelve to the contrary
notwithstanding, the Debentures Trustee shall deliver or pay to the Company
from time to time upon Company Request any money or U.S. Government
Obligations held by it as provided in Section 1204 which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Debentures Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance, as applicable, in
accordance with this Article.
SECTION 1206. Reinstatement.
If the Debentures Trustee or any Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with Section 1205
by reason of any legal proceeding or by any reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's and each Subsidiary Debentures
Guarantor's obligations under this Exchange Indenture, the Exchange Debentures
and the Subsidiary Debentures Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to Section 1202 or 1203, as the case
may be, until such time as the Debentures Trustee or Paying Agent is permitted
to apply all such money in accordance with Section 1205; provided, however,
that if the Company or any Subsidiary Debentures Guarantor makes any payment of
principal of (or premium, if any) or interest on any Exchange Debenture
following the reinstatement of its obligations, the Company or such Guarantor,
as the case may be, shall be subrogated to the rights of the Holders of such
Exchange Debentures to receive such payment from the money and U.S. Government
Obligations held by the Debentures Trustee or Paying Agent.
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ARTICLE THIRTEEN
SUBSIDIARY DEBENTURES GUARANTEES
SECTION 1301. Subsidiary Debentures Guarantees.
(a) Each Subsidiary Debentures Guarantor hereby, jointly
and severally, fully, absolutely, unconditionally and irrevocably guarantees to
each Holder of an Exchange Debenture authenticated and delivered by the
Debentures Trustee, and to the Debentures Trustee on behalf of each Holder, the
punctual payment and performance when due of all Indenture Obligations which,
for purposes of its Subsidiary Debentures Guarantee, shall also be deemed to
include all commissions, fees, charges, costs and other expenses (including
reasonable legal fees and disbursements of counsel) arising out of or incurred
by the Debentures Trustee or the Holders in connection with the enforcement of
any Subsidiary Debentures Guarantee. Without limiting the generality of the
foregoing, each Subsidiary Debentures Guarantor's liability shall extend to all
amounts that constitute part of the Indenture Obligations and would be owed by
the Company to such Holder or the Debentures Trustee under the Exchange
Debentures or this Exchange Indenture but for the fact that they are
unenforceable, reduced, limited, suspended or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Company.
(b) Each Subsidiary Debentures Guarantor and by its
acceptance hereof each Holder hereby confirms that it is the intention of all
such parties that the guarantee by such Subsidiary Debentures Guarantor
pursuant to its Subsidiary Debentures Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any federal or state law. To effectuate
the foregoing intention, the Holders and each Subsidiary Debentures Guarantor
hereby irrevocably agree that the obligations of such Subsidiary Debentures
Guarantor under its Subsidiary Debentures Guarantee shall be limited to the
maximum amount as shall, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Debentures Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Subsidiary
Debentures Guarantor in respect of the obligations of such other Subsidiary
Debentures Guarantor under its Subsidiary Debentures Guarantee or pursuant to
paragraph (c) of this Section 1301 result in the obligations of such Subsidiary
Debentures Guarantor under its Subsidiary Debentures Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law.
(c) In order to provide for just and equitable
contribution among the Subsidiary Debentures Guarantors, the Subsidiary
Debentures Guarantors agree, inter se, that in the event any payment or
distribution is made by any Subsidiary Debentures Guarantor (a "Funding
Guarantor") under its Subsidiary Debentures Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Debentures
Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Debentures Guarantor (including
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the Funding Guarantor) for all payments, damages and expenses incurred by the
Funding Guarantor in discharging the Indenture Obligations of the Company or
any other Subsidiary Debentures Guarantor's obligations with respect to its
Subsidiary Debentures Guarantee. "Adjusted Net Assets" of such Subsidiary
Debentures Guarantor at any date shall mean the lesser of (x) the amount by
which the fair value of the property of such Subsidiary Debentures Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
the Subsidiary Debentures Guarantee of such Subsidiary Debentures Guarantor at
such date and (y) the amount by which the present fair salable value of the
assets of such Subsidiary Debentures Guarantor at such date exceeds the amount
that shall be required to pay the probable liability of such Subsidiary
Debentures Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), excluding debt in
respect of the Subsidiary Debentures Guarantee, as they become absolute and
matured.
SECTION 1302. Guaranty Absolute.
Each Subsidiary Debentures Guarantor guarantees that the
Exchange Debentures shall be paid or performed strictly in accordance with the
terms of the Exchange Debentures and this Exchange Indenture, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Holder with respect thereto.
The obligations of each Subsidiary Debentures Guarantor under its Subsidiary
Debentures Guarantee are independent of the obligations of the Company under
the Exchange Debentures and this Exchange Indenture, and a separate action or
actions may be brought and prosecuted against such Subsidiary Debentures
Guarantor to enforce its Subsidiary Debentures Guarantee, irrespective of
whether any action is brought against the Company or any other Subsidiary
Debentures Guarantor or whether the Company or any other Subsidiary Debentures
Guarantor is joined in any such action or actions. The liability of each
Subsidiary Debentures Guarantor under its Subsidiary Debentures Guarantee shall
be absolute and unconditional and the liability and obligations of such
Subsidiary Debentures Guarantor hereunder shall not be released, discharged,
mitigated, waived, impaired or affected in whole or in part by:
(a) any lack of validity or enforceability of this
Exchange Indenture or the Exchange Debentures with respect to the
Company or any Subsidiary Debentures Guarantor or any agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Indenture Obligations,
or any other amendment or waiver of or any consent to departure from
this Exchange Indenture, including any increase in the Indenture
Obligations resulting from the extension of additional credit to the
Company or otherwise;
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(c) the failure to give notice to the Subsidiary
Debentures Guarantor of the occurrence of a Default under the
provisions of this Exchange Indenture or the Exchange Debentures;
(d) any taking, release or amendment or waiver of or
consent to departure from any other guarantee, for all or any of the
Indenture Obligations;
(e) any failure, omission, delay by or inability on the
part of the Debentures Trustee or the Holders to assert or exercise
any right, power or remedy conferred on the Debentures Trustee or the
Holders in this Exchange Indenture or the Exchange Debentures;
(f) any change in the corporate structure, or
termination, dissolution, consolidation or merger of the Company or
any Subsidiary Debentures Guarantor with or into any other Person, the
voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets of the Company or
any Subsidiary Debentures Guarantor, the marshalling of the assets and
liabilities of the Company or any Subsidiary Debentures Guarantor, the
receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with the
creditors, or readjustment of, or other similar proceedings affecting
the Company or any Subsidiary Debentures Guarantor, or any of the
assets of any of them;
(g) the assignment of any right, title or interest of the
Debentures Trustee or any Holder in this Exchange Indenture or the
Exchange Debentures to any other Person; or
(h) any other event or circumstance (including any
statute of limitations), whether foreseen or unforeseen and whether
similar or dissimilar to any of the foregoing, that might otherwise
constitute a defense available to, or a discharge of, the Company or a
Subsidiary Debentures Guarantor, other than payment in full of the
Indenture Obligations; it being the intent of each Subsidiary
Debentures Guarantor that its obligations hereunder shall not be
discharged except by payment of all amounts owing pursuant to this
Exchange Indenture or the Exchange Debentures.
The Subsidiary Debentures Guarantee of each Subsidiary Debentures Guarantor
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Indenture Obligations is rescinded or must
otherwise be returned by any Holder or the Debentures Trustee upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made. Each Subsidiary Debentures Guarantor
further agrees, to the fullest extent that it may lawfully do so, that, as
between such Subsidiary Debentures Guarantor, on the one hand, and the Holders
and the Debentures Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as
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provided in Article Five of this Exchange Indenture for the purposes of this
Subsidiary Debentures Guarantee, notwithstanding any stay, injunction or other
prohibition extant under any applicable bankruptcy law preventing such
acceleration in respect of the obligations guarantied hereby, and (ii) in the
event of any declarations of acceleration of such obligations as provided in
Article Five of this Exchange Indenture, such obligations (whether or not due
and payable) shall forthwith become due and payable by the Subsidiary
Debentures Guarantor for the purpose of this Subsidiary Debentures Guarantee.
SECTION 1303. Waivers.
(a) Each Subsidiary Debentures Guarantor hereby expressly
waives (to the extent permitted by law) notice of the acceptance of its
Subsidiary Debentures Guarantee and notice of the existence, renewal, extension
or the non-performance, non-payment, or non-observance on the part of the
Company of any of the terms, covenants, conditions and provisions of this
Exchange Indenture or the Exchange Debentures or any other notice whatsoever to
or upon the Company or such Subsidiary Debentures Guarantor with respect to the
Indenture Obligations. Each Subsidiary Debentures Guarantor hereby
acknowledges communication to it of the terms of this Exchange Indenture and
the Exchange Debentures and all of the provisions herein contained and consents
to and approves the same. Each Subsidiary Debentures Guarantor hereby
expressly waives (to the extent permitted by law) diligence, presentment and
protest.
(b) Without prejudice to any of the rights or recourse
which the Debentures Trustee or the Holders may have against the Company, each
Subsidiary Debentures Guarantor hereby expressly waives (to the extent
permitted by law) any right to require the Debentures Trustee or the Holders
to:
(1) initiate or exhaust any rights, remedies or recourse
against the Company, any Subsidiary Debentures Guarantor or any other
Person;
(2) value, realize upon, or dispose of any security of
the Company or any other Person held by the Debentures Trustee or the
Holders; or
(3) initiate or exhaust any other remedy which the
Debentures Trustee or the Holders may have in law or
equity;
before requiring, becoming entitled to or demanding payment from such
Subsidiary Debentures Guarantor under this Subsidiary Debentures Guarantee.
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SECTION 1304. Subrogation.
Each Subsidiary Debentures Guarantor shall not exercise any
rights that it may acquire by way of subrogation under this Subsidiary
Debentures Guarantee, by any payment made hereunder or otherwise, until all the
Indenture Obligations shall have been paid in full. If any amount shall be
paid to any Subsidiary Debentures Guarantor on account of any such subrogation
rights at any time when all the Indenture Obligations shall not have been paid
in full, such amount shall be held in trust for the benefit of the Holders and
the Debentures Trustees and shall forthwith be paid to the Debentures Trustee,
on behalf of the Holders, to be credited and applied to the Indenture
Obligations, whether matured or unmatured.
SECTION 1305. No Waiver; Remedies.
No failure on the part of any Holder or the Debentures Trustee
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 1306. Continuing Guaranty; No Right of Set-Off;
Independent Obligation.
(a) This Subsidiary Debentures Guarantee is a continuing
guarantee of the payment and performance of all Indenture Obligations and shall
remain in full force and effect until the payment in full of all of the
Indenture Obligations and all other amounts payable under this Subsidiary
Debentures Guarantee and shall apply to and secure any ultimate balance due or
remaining unpaid to the Debentures Trustee or the Holders under this Exchange
Indenture or the Exchange Debentures; and this Subsidiary Debentures Guarantee
shall not be considered as wholly or partially satisfied by the payment or
liquidation at any time or from time to time of any sum of money for the time
being due or remaining unpaid to the Debentures Trustee or the Holders.
(b) Each Subsidiary Debentures Guarantor hereby
guarantees that the Indenture Obligations shall be paid to the Debentures
Trustee without set-off or counterclaim or other reduction whatsoever (whether
for taxes, withholding or otherwise) in lawful currency of the United States of
America.
(c) Each Subsidiary Debentures Guarantor guarantees that
the Indenture Obligations shall be paid strictly in accordance with their terms
regardless of any lack of validity or enforceability of any of such terms or
the rights of the Holders with respect thereto.
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(d) Each Subsidiary Debentures Guarantor's liability to
pay or perform or cause the performance of the Indenture Obligations under this
Subsidiary Debentures Guarantee shall arise forthwith after demand for payment
or performance by the Debentures Trustee has been given to such Subsidiary
Debentures Guarantor in the manner prescribed in this Exchange Indenture.
SECTION 1307. Subsidiary Debentures Guarantors May
Consolidate, Etc. on Certain Terms.
(a) Nothing contained in this Exchange Indenture or in
any of the Exchange Debentures shall prevent any consolidation or merger of a
Subsidiary Debentures Guarantor with or into the Company or another Subsidiary
Debentures Guarantor or shall prevent any sale or conveyance of the property of
a Subsidiary Debentures Guarantor as an entirety or substantially as an
entirety to the Company or another Subsidiary Debentures Guarantor, which
consolidation, merger, sale or conveyance is otherwise in accordance with the
terms of this Exchange Indenture.
(b) Other than as set forth in paragraph (a) of this
Section, no Subsidiary Debentures Guarantor may consolidate with or merge with
or into (whether or not such Subsidiary Debentures Guarantor is the surviving
Person) another Person whether or not affiliated with such Subsidiary
Debentures Guarantor unless: (i) subject to the provisions of Section 1309,
the Person formed by or surviving such consolidation or merger (if other than
such Subsidiary Debentures Guarantor) assumes all of the obligations of such
Subsidiary Debentures Guarantor under this Exchange Indenture and its
Subsidiary Debentures Guarantee, pursuant to a supplemental indenture in form
and substance satisfactory to the Debentures Trustee, and (b) immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing.
SECTION 1308. Additional Subsidiary Debentures Guarantors.
The Company shall cause each Person that becomes a Wholly
Owned Restricted Subsidiary after the date of this Exchange Indenture to become
a Subsidiary Debentures Guarantor with respect to the Indenture Obligations by
executing and delivering a supplemental indenture to this Exchange Indenture
providing for a Subsidiary Debentures Guarantee by such Wholly Owned
Restricted Subsidiary under Article Thirteen; provided that any such Wholly
Owned Restricted Subsidiary that is organized outside of the United States
shall not be required to provide a Subsidiary Debentures Guarantee so long as
such Wholly Owned Restricted Subsidiary has not guaranteed any other Debt of
the Company or any other Restricted Subsidiary. The Company shall deliver to
the Debentures Trustee, together with the supplemental indenture referred to
above, an Opinion of Counsel that such Subsidiary Debentures Guarantee is a
legal, valid, binding and enforceable obligation of such Subsidiary
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Debentures Guarantor, subject to customary local law exceptions and customary
exceptions for bankruptcy and equitable principles.
SECTION 1309. Releases.
(a) Concurrently with any consolidation or merger of a
Subsidiary Debentures Guarantor with or into the Company or another Subsidiary
Debentures Guarantor or any sale or conveyance of the property of a Subsidiary
Debentures Guarantor as an entirety or substantially as an entirety to the
Company or another Subsidiary Debentures Guarantor, in each case as permitted
by Section 1307, and upon delivery by the Company to the Debentures Trustee of
an Officers' Certificate and an Opinion of Counsel, each to the effect that (i)
such consolidation, merger, sale or conveyance was or shall be made by a
Subsidiary Debentures Guarantor in accordance with Section 1307, and (ii) all
conditions precedent to such release have been satisfied, the Debentures
Trustee shall promptly execute any documents reasonably required in order to
evidence the release of such Subsidiary Debentures Guarantor from its
obligations under its Subsidiary Debentures Guarantee. Any Subsidiary
Debentures Guarantor not released from its obligations under its Subsidiary
Debentures Guarantee under this Article Thirteen shall remain liable for the
full amount of the Indenture Obligations under its Subsidiary Debentures
Guarantee.
(b) Concurrently with the Legal Defeasance of the
Exchange Debentures under Section 1202 hereof or the Covenant Defeasance of the
Exchange Debentures under Section 1203 hereof, the Subsidiary Debentures
Guarantors shall be released from all of their obligations under their
Subsidiary Debentures Guarantees.
(c) Upon (i) the sale, transfer or other disposition of
all of the Capital Stock of a Subsidiary Debentures Guarantor to a Person that
is not an Affiliate of the Company, (ii) the sale, transfer or other
disposition of all or substantially all of the assets of a Subsidiary
Debentures Guarantor to a Person that is not an Affiliate of the Company, or
(iii) the designation of such Subsidiary Debentures Guarantor as an
Unrestricted Subsidiary, in any such case in compliance with the terms of this
Exchange Indenture, then such Subsidiary Debentures Guarantor shall be deemed
automatically and unconditionally released and discharged from all of its
obligations under its Subsidiary Debentures Guarantee without any further
action on the part of the Debentures Trustee or any Holder of the Exchange
Debentures; provided that the Net Cash Proceeds of any such sale, transfer or
other disposition are applied in accordance with Section 1012.
<PAGE> 128
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ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. Exchange Debentures and Subsidiary Debentures
Guarantees Subordinate to Senior Debt and Senior Subordinated Debt.
(a) The Company covenants and agrees, and each Holder of
an Exchange Debenture, by his acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set forth in this
Article Fourteen, the indebtedness represented by the Exchange Debentures and
the payment of the principal of (or premium, if any) and interest on each and
all of the Exchange Debentures (but not amounts owing to the Debentures Trustee
by the Company pursuant to Section 607 hereof) are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Senior Debt and Senior Subordinated Debt.
(b) Each Subsidiary Debentures Guarantor covenants and
agrees, and each Holder of an Exchange Debenture, by his acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article Fourteen, the indebtedness represented by
the Subsidiary Debentures Guarantee of such Subsidiary Debentures Guarantor is
hereby expressly made subordinate and subject in right of payment to the prior
payment in full of all Subsidiary Guarantor Senior Debt and Subsidiary
Guarantor Senior Subordinated Debt of such Subsidiary Debentures Guarantor.
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of any payment or distribution of assets of the
Company or any Subsidiary Debentures Guarantor to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency or
similar proceedings of the Company or any Subsidiary Debentures Guarantor (the
Company or such Subsidiary Debentures Guarantor being the "Affected Obligor"),
then (except (x) in connection with the consolidation or merger of the Company
or its liquidation or dissolution following the conveyance, transfer or lease
of its properties and assets substantially as an entirety, upon the terms and
conditions described in Article Eight or (y) in connection with the
consolidation or merger of a Subsidiary Debentures Guarantor, or its
liquidation or dissolution, not in violation of any provision of this Exchange
Indenture) (each such event, if any, herein sometimes referred to as a
"Proceeding"), (i) if the Affected Obligor is the Company, the holders of
Senior Debt and Senior Subordinated Debt shall first be entitled to receive
payment in full, in cash or cash equivalents, of all amounts due or to become
due on or in respect of such Senior Debt and Senior Subordinated Debt before
the Holders of the Exchange Debentures are entitled to receive any payment of
principal of (or premium, if any) or interest on the Exchange Debentures or on
account of the purchase or redemption or other acquisition of Exchange
Debentures by the Company or any Subsidiary of the Company and (ii) if the
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Affected Obligor is a Subsidiary Debentures Guarantor, the holders of
Subsidiary Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated
Debt of such Subsidiary Debentures Guarantor shall first be entitled to
receive payment in full, in cash or cash equivalents, of principal of (and
premium, if any) and interest on such Subsidiary Guarantor Senior Debt and
Subsidiary Guarantor Senior Subordinated Debt, before the Holders of the
Exchange Debentures are entitled to receive any payment pursuant to the
Subsidiary Debentures Guarantee of such Subsidiary Debentures Guarantor (any
payment on or purchase, redemption or acquisition of the Exchange Debentures,
referred to in clause (i), and any payment on a Subsidiary Debentures
Guarantee, referred to in clause (ii), being, individually and collectively, an
"Exchange Debentures Payment"), and, to that end, if the Affected Obligor is
the Company, the holders of Senior Debt and Senior Subordinated Debt and, if
the Affected Obligor is a Subsidiary Debentures Guarantor, the holders of
Subsidiary Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated
Debt of such Subsidiary Debentures Guarantor (such Senior Debt and Senior
Subordinated Debt or Subsidiary Guarantor Senior Debt and Subsidiary Guarantor
Senior Subordinated Debt, as the case may be, being "Affected Obligor Senior
Debt" of such Affected Obligor) shall be entitled to receive, for application
to the payment thereof, any payment or distribution of any kind or character,
whether in cash, property or securities which may be payable or deliverable in
respect of the Exchange Debentures in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of
this Section 1402, the Debentures Trustee or the Holder of any Exchange
Debenture shall have received any payment or distribution of assets of an
Affected Obligor of any kind or character, whether in cash, property or
securities, before all Affected Obligor Senior Debt is paid in full, then such
payment or distribution, except for amounts subject to the claim granted to the
Debentures Trustee in Section 607 hereof, shall be held in trust for the
holders of Affected Obligor Senior Debt and shall be paid over or delivered
forthwith to the trustee in bankruptcy or other Person making payment or
distribution of assets of the Affected Obligor for application to the payment
of all Affected Obligor Senior Debt remaining unpaid, to the extent necessary
to pay all Affected Obligor Senior Debt in full, after giving effect to any
concurrent payment or distribution to or for the holders of the Affected
Obligor Senior Debt.
For purposes of this Article Fourteen only, the words "any
payment or distribution of any kind or character, cash, property or securities"
shall not be deemed to include a payment or distribution of equity or
subordinated securities of the Affected Obligor provided for by a plan of
reorganization or readjustment or of any other corporation provided for by such
plan of reorganization or readjustment that, in the case of subordinated
securities, are subordinated in right of payment to all then outstanding
Affected Obligor Senior Debt to at least the same extent as the Exchange
Debentures or Subsidiary Debentures Guarantees, as the case may be, are so
subordinated as provided in this Article Fourteen.
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119
SECTION 1403. No Payment When Certain Senior Debt and Senior
Subordinated Debt in Default.
In the event that any Senior Payment Default (as defined
below) shall have occurred and be continuing, then no Exchange Debentures
Payment shall be made unless and until such Senior Payment Default shall have
been cured or waived or shall have ceased to exist or all amounts then due and
payable in respect of the Specified Senior Debt or other obligations that are
the subject of such Senior Payment Default shall have been paid in full. For
purposes hereof, "Senior Payment Default" means any default in the payment of
principal of (or premium, if any) or interest on Specified Senior Debt, the
payment of commitment, facility or other fees, letter of credit fees or agency
fees under the Credit Facility, or payments with respect to letter of credit
reimbursement arrangements with the Credit Facility Agent, when due, whether at
the Stated Maturity of any such payment or by declaration of acceleration, call
for redemption or otherwise.
In the event that any Senior Nonmonetary Default (as defined
below) shall have occurred and be continuing, then, upon the receipt by the
Company and the Debentures Trustee of written notice of such Senior Nonmonetary
Default from the Credit Facility Agent or from an authorized Person on behalf
of any holder of Specified Senior Debt, no Exchange Debentures Payment shall be
made during the period (the "Payment Blockage Period") commencing on the date
of receipt of such written notice (the "Blockage Notice") and ending on the
earliest of (i) the 179th day after the date of such receipt of the Blockage
Notice (the "Initial Period"), (ii) the date, if any, on which the Specified
Senior Debt to which such default relates is discharged or such default is
waived or otherwise cured and (iii) the date, if any, on which such Payment
Blockage Period shall have been terminated by written notice to the Company or
the Debentures Trustee from the Credit Facility Agent or from the Person who
gave the Blockage Notice. Any number of additional payment blockage periods
may be commenced during the Initial Period; provided, however, that no such
additional payment blockage periods shall extend beyond the Initial Period.
After the expiration of the Initial Period, no payment blockage period may be
commenced until at least 181 consecutive days shall have elapsed from the last
day of the Initial Period. No Senior Nonmonetary Default that existed or was
continuing on the date of commencement of any Payment Blockage Period with
respect to the Specified Senior Debt initiating such Payment Blockage Period
shall be, or be made, the basis for the commencement of a subsequent Payment
Blockage Period unless such Senior Nonmonetary Default shall have been cured or
waived for a period of not less than 90 consecutive days. For purposes hereof,
"Senior Nonmonetary Default" means the occurrence or existence of any event,
circumstance, condition or state of facts that, by the terms of any instrument
pursuant to which any Specified Senior Debt is outstanding, permits one or more
holders of such Specified Senior Debt (or a trustee or agent on behalf of the
holders thereof) to declare such Specified Senior Debt due and payable prior to
the date on which it would otherwise become due and payable, other than a
Senior Payment Default.
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In the event that, notwithstanding the foregoing, the Company
or any Subsidiary Debentures Guarantor shall make any payment to the Debentures
Trustee or any Holder prohibited by the foregoing provisions of this Section
1403, then such payment shall be held in trust for the holders of the Affected
Obligor Senior Debt and shall be paid over and delivered forthwith to the
holders of the Affected Obligor Senior Debt remaining unpaid, to the extent
necessary to pay in full all the Affected Obligor Senior Debt.
SECTION 1404. Payment Permitted If No Default.
Nothing contained in this Article Fourteen or elsewhere in
this Exchange Indenture or in any of the Exchange Debentures shall, at any time
except during the pendency of any Proceeding referred to in Section 1402 or
under the conditions described in Section 1403, prevent (a) the Company or any
Subsidiary Debentures Guarantor from making Exchange Debentures Payments, or
(b) the application by the Debentures Trustee of any money deposited with it
hereunder to Exchange Debentures Payments or the retention of such payment by
the Holders.
SECTION 1405. Subrogation to Rights of Holders of Senior Debt
and Senior Subordinated Debt.
Subject to the payment in full of all Senior Debt and Senior
Subordinated Debt, the rights of the Holders of the Exchange Debentures shall
be subrogated to the rights of the holders of such Senior Debt and Senior
Subordinated Debt to receive payments and distributions of cash, property and
securities applicable to the Senior Debt and Senior Subordinated Debt until the
principal of (and premium, if any) and interest on the Exchange Debentures
shall be paid in full. Subject to the payment in full of all Subsidiary
Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated Debt, the
rights of the Holders of the Exchange Debentures shall be subrogated to the
rights of the holders of such Subsidiary Guarantor Senior Debt and Subsidiary
Guarantor Senior Subordinated Debt to receive payments and distributions of
cash, property and securities applicable to such Subsidiary Guarantor Senior
Debt and Subsidiary Guarantor Senior Subordinated Debt until the principal of
(and premium, if any) and interest on the Exchange Debentures shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Debt and Senior Subordinated Debt or Subsidiary Guarantor
Senior Debt and Subsidiary Guarantor Senior Subordinated Debt of any cash,
property or securities to which the Holders of the Exchange Debentures or the
Debentures Trustee would be entitled except for the provisions of this Article
Fourteen, and no payments over pursuant to the provisions of this Article
Fourteen to the holders of Senior Debt and Senior Subordinated Debt or
Subsidiary Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated
Debt by Holders of the Exchange Debentures or the Debentures Trustee, shall, as
among the Company, its creditors other than holders of Senior Debt and Senior
Subordinated Debt and the Subsidiary Guarantor Senior Debt and Subsidiary
Guarantor Senior Subordinated Debt and the Holders of the Exchange Debentures,
be deemed to be a payment or distribution by the
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Company to or on account of the Senior Debt and Senior Subordinated Debt.
Neither the Holders of the Exchange Debentures nor the Debentures Trustee shall
have any claim against the holders of the Senior Debt or the Credit Facility
Agent for any impairment of the subrogation rights herein granted arising out
of any release of Liens securing the Senior Debt or the Subsidiary Guarantor
Senior Debt.
SECTION 1406. Provisions Solely to Define Relative Rights.
The provisions of this Article Fourteen are and are intended
solely for the purpose of defining the relative rights of the Holders on the
one hand and the holders of Senior Debt and Senior Subordinated Debt and
Subsidiary Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated
Debt on the other hand. Nothing contained in this Article Fourteen or
elsewhere in this Exchange Indenture or in the Exchange Debentures is intended
to or shall (a) impair, as among the Company, its creditors other than holders
of Senior Debt and Senior Subordinated Debt and the Holders of the Exchange
Debentures, the obligation of the Company, which is absolute and unconditional
(and which, subject to the rights under this Article Fourteen of the holders of
Senior Debt and Senior Subordinated Debt, is intended to rank equally with all
other general obligations of the Company) to pay to the Holders of the Exchange
Debentures the principal of (and premium, if any) and interest on the Exchange
Debentures as and when the same shall become due and payable in accordance with
their terms; or (b) impair, as among the Subsidiary Debentures Guarantors,
their creditors other than holders of Subsidiary Guarantor Senior Debt and
Subsidiary Guarantor Senior Subordinated Debt and the Holders of the Exchange
Debentures, the obligation of the Subsidiary Debentures Guarantors, which is
absolute and unconditional (and which, subject to the rights under this Article
Fourteen of the holders of Subsidiary Guarantor Senior Debt and Subsidiary
Guarantor Senior Subordinated Debt, is intended to rank equally with all other
general obligations of the Subsidiary Debentures Guarantors) to pay to the
Holders of the Exchange Debentures the principal of (and premium, if any) and
interest on the Exchange Debentures as and when the same shall become due and
payable in accordance with their terms; or (c) affect the relative rights
against the Company of the Holders of the Exchange Debentures and creditors of
the Company other than the holders of Senior Debt and Senior Subordinated Debt
or the relative rights against the Subsidiary Debentures Guarantors of the
Holders of the Exchange Debentures and creditors of the Subsidiary Debentures
Guarantors other than the Holders of Subsidiary Guarantor Senior Debt and
Subsidiary Guarantor Senior Subordinated Debt; or (d) prevent the Debentures
Trustee or the Holder of any Exchange Debenture from exercising all remedies
otherwise permitted by applicable law upon default under this Exchange
Indenture, subject to the rights, if any, under this Article Fourteen of the
holders of Senior Debt and Senior Subordinated Debt and Subsidiary Guarantor
Senior Debt and Subsidiary Guarantor Senior Subordinated Debt to receive cash,
property and securities otherwise payable or deliverable to the Debentures
Trustee or such Holder. The holders of the Senior Debt and the Credit Facility
Agent, as the case may be, shall be entitled to enforce the provisions of this
Article Fourteen against the Company, the Subsidiary Notes Guarantors, the
Holders of the Exchange Debentures and the Debentures Trustee.
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SECTION 1407. Debentures Trustee to Effectuate Subordination.
Each Holder of an Exchange Debenture by his acceptance thereof
authorizes and directs the Debentures Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Fourteen and appoints the Debentures Trustee his attorney-in-fact
for any and all such purposes.
SECTION 1408. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt
and Senior Subordinated Debt or Subsidiary Guarantor Senior Debt and Subsidiary
Guarantor Senior Subordinated Debt to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or any Subsidiary Debentures Guarantor or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company or any Subsidiary Debentures Guarantor with the
terms, provisions and covenants of this Exchange Indenture, regardless of any
knowledge thereof any such Holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt and Senior Subordinated Debt or
Subsidiary Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated
Debt, as the case may be, may, at any time and from time to time, without the
consent of or notice to the Debentures Trustee or the Holders of the Exchange
Debentures, without incurring responsibility to the Debentures Trustee or the
Holders of the Exchange Debentures and without impairing or releasing the
subordination provided in this Article Fourteen or the obligations hereunder of
the Holders of the Exchange Debentures to the holders of Senior Debt and Senior
Subordinated Debt or Subsidiary Guarantor Senior Debt and Subsidiary Guarantor
Senior Subordinated Debt, as the case may be, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Debt and Senior Subordinated Debt or
Subsidiary Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated
Debt, as the case may be, or otherwise amend or supplement in any manner Senior
Debt and Senior Subordinated Debt or Subsidiary Guarantor Senior Debt and
Subsidiary Guarantor Senior Subordinated Debt, as the case may be, or any
instrument evidencing the same or any agreement under which Senior Debt and
Senior Subordinated Debt or Subsidiary Guarantor Senior Debt and Subsidiary
Guarantor Senior Subordinated Debt, as the case may be, is outstanding; (ii)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Debt and Senior Subordinated Debt or any
Subsidiary Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated
Debt, as the case may be; (iii) release any Person liable in any manner for the
collection of Senior Debt and Senior Subordinated Debt or any Subsidiary
Guarantor Senior Debt and Subsidiary Guarantor Senior Subordinated Debt, as the
case may be; and (iv) exercise or refrain from exercising any rights against
the Company or any Subsidiary Debentures Guarantor and any other Person.
<PAGE> 134
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SECTION 1409. Notice to Debentures Trustee.
The Company and each Subsidiary Debentures Guarantor shall
give prompt written notice to the Debentures Trustee of any fact known to the
Company which would prohibit the making of any payment to or by the Debentures
Trustee in respect of the Exchange Debentures and of any subsequent cure or
waiver thereof. Notwithstanding the provisions of this Article Fourteen or any
other provision of this Exchange Indenture, the Debentures Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Debentures Trustee in respect of the
Exchange Debentures, unless and until the Debentures Trustee shall have
received written notice thereof from the Company or a holder of Senior Debt and
Senior Subordinated Debt or a holder of Subsidiary Guarantor Senior Debt and
Subsidiary Guarantor Senior Subordinated Debt or from any trustee or agent
therefor; and, prior to the receipt of any such written notice, the Debentures
Trustee, subject to the provisions of Section 601, shall be entitled in all
respects to assume that no such facts exist.
Subject to the provisions of Section 601, the Debentures
Trustee shall be entitled to rely on the delivery to it of a written notice by
a Person representing himself to be a holder of Senior Debt and Senior
Subordinated Debt or a holder of Subsidiary Guarantor Senior Debt and
Subsidiary Guarantor Senior Subordinated Debt (or a trustee or agent therefor)
to establish that such notice has been given by a holder of Senior Debt and
Senior Subordinated Debt or a holder of Subsidiary Guarantor Senior Debt and
Subsidiary Guarantor Senior Subordinated Debt (or a trustee or agent therefor).
In the event that the Debentures Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Debt and Senior Subordinated Debt or a holder of Subsidiary Guarantor
Senior Debt and Subsidiary Guarantor Senior Subordinated Debt, as the case may
be, to participate in any payment or distribution pursuant to this Article
Fourteen, the Debentures Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Debentures Trustee as to the amount of
Senior Debt and Senior Subordinated Debt or Subsidiary Guarantor Senior Debt
and Subsidiary Guarantor Senior Subordinated Debt, as the case may be, held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Fourteen, and if such evidence is not furnished, the
Debentures Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 1410. Reliance on Judicial Order or Certificate of
Liquidation Agent.
Upon any payment or distribution of assets of the Company or
any Subsidiary Debentures Guarantor referred to in this Article Fourteen, the
Debentures Trustee, subject to the provisions of Section 601, and the Holders
of the Exchange Debentures shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in a Proceeding, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for
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the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Debentures Trustee or to the Holders of Exchange
Debentures, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Debt and Senior
Subordinated Debt, Subsidiary Guarantor Senior Debt and Subsidiary Guarantor
Senior Subordinated Debt and other indebtedness of the Company and the
Subsidiary Debentures Guarantors, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Fourteen.
SECTION 1411. Debentures Trustee Not Fiduciary for Holders of
Senior Debt and Senior Subordinated Debt.
Except to the extent of its obligations under the penultimate
paragraph of Section 1402 and the last paragraph of Section 1403, the
Debentures Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Debt and Senior Subordinated Debt or Subsidiary Guarantor Senior Debt
and Subsidiary Guarantor Senior Subordinated Debt and shall not be liable to
any such holders if it shall in good faith mistakenly pay over or distribute to
Holders of Exchange Debentures or to the Company or to any other Person cash,
property or securities to which any holders of Senior Debt and Senior
Subordinated Debt or Subsidiary Guarantor Senior Debt and Subsidiary Guarantor
Senior Subordinated Debt shall be entitled by virtue of this Article Fourteen
or otherwise. The Debentures Trustee's duties with respect to holders of
Senior Debt and Senior Subordinated Debt or Subsidiary Guarantor Senior Debt
and Subsidiary Guarantor Senior Subordinated Debt are limited to those
specifically set forth in this Exchange Indenture, and no implied covenants or
obligations shall be construed by any provision hereof.
SECTION 1412. Rights of Debentures Trustee as Holder of
Senior Debt and Senior Subordinated Debt; Preservation of Debentures Trustee's
Rights.
The Debentures Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article Fourteen with respect to
any Senior Debt and Senior Subordinated Debt or Subsidiary Guarantor Senior
Debt and Subsidiary Guarantor Senior Subordinated Debt which may at any time be
held by it, to the same extent as any other holder of Senior Debt and Senior
Subordinated Debt or Subsidiary Guarantor Senior Debt and Subsidiary Guarantor
Senior Subordinated Debt, and nothing in this Exchange Indenture shall deprive
the Debentures Trustee of any of its rights as such holder.
Nothing in this Article Fourteen shall apply to claims of, or
payments to, the Debentures Trustee under or pursuant to Section 607.
SECTION 1413. Applicability to Paying Agents.
In case at any time any Paying Agent other than the Debentures
Trustee shall have been appointed by the Company and be then acting hereunder,
the term "Debentures Trustee"
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as used in this Article Fourteen shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article Fourteen in addition to or in place of
the Debentures Trustee; provided, however, that this Section 1413 shall not
apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as Paying Agent.
SECTION 1414. Defeasance of this Article Fourteen.
The subordination of the Exchange Debentures and the
Subsidiary Debentures Guarantees provided by this Article Fourteen is expressly
made subject to the provisions for Legal Defeasance or Covenant Defeasance in
Article Twelve hereof and, anything herein to the contrary notwithstanding,
upon the effectiveness of any such Legal Defeasance or Covenant Defeasance, the
Exchange Debentures and the Subsidiary Debentures Guarantees then outstanding
shall thereupon cease to be subordinated pursuant to this Article Fourteen.
SECTION 1415. Subordination Provisions Controlling.
Notwithstanding anything to the contrary contained in this
Exchange Indenture, to the extent that any provision contained in Articles One
(other than Section 101) through Thirteen of this Exchange Indenture conflicts
with any provision contained in Article Fourteen (including the definitions of
certain terms used in Article Fourteen) of this Exchange Indenture, the
provisions contained in Article Fourteen of this Exchange Indenture shall
govern and control.
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IN WITNESS WHEREOF, the parties hereto have caused this
Exchange Indenture to be duly executed as of the day and year first above
written.
CITADEL BROADCASTING COMPANY, a Nevada
corporation
By /s/ Lawrence R. Wilson
--------------------------------
Name: Lawrence R. Wilson
Title: President
CITADEL LICENSE, INC., as Guarantor
By /s/ Lawrence R. Wilson
-------------------------------
Name: Lawrence R. Wilson
Title: President
THE BANK OF NEW YORK,
as Debentures Trustee
By /s/ S. Giurlando
--------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
<PAGE> 1
Exhibit 9
VOTING TRUST AGREEMENT
This VOTING TRUST AGREEMENT is made as of March 17, 1997, by and
among Citadel Communications Corporation, a Nevada corporation (the "Company"),
ABRY BROADCAST PARTNERS II, L.P., a Delaware limited partnership ("ABRY"),
ABRY/CITADEL INVESTMENT PARTNERS, L.P., a Delaware limited partnership
("ABRY/CIP"), Christopher Hall (together with his successors-in-interest as
trustee, the "Trustee"), as the initial Trustee hereunder, and J. Walter
Corcoran and Harlan Levy, each an initial Back-Up Trustee hereunder. ABRY and
ABRY/CIP are collectively referred to herein as the "Stockholders". Certain
capitalized terms used herein are defined in Section 4.1.
WHEREAS, the Company and certain other Persons are parties to, and the
Stockholders are express third-party beneficiaries of, that certain Third
Amended and Restated Voting Agreement dated as of the date hereof (as in effect
from time to time, the "Voting Agreement"); and
WHEREAS, the Company, the Stockholders and certain other Persons have
entered into that certain Securities Purchase and Exchange Agreement dated as
of June 28, 1996, as amended through and in effect on the date hereof (as in
effect from time to time, the "Securities Purchase Agreement"), that certain
Second Amended and Restated Stockholders Agreement, dated as of June 28, 1996,
as amended through and in effect on the date hereof (as in effect from time to
time, the "Stockholders Agreement"), that certain Third Amended and Restated
Registration Rights Agreement, dated as of June 28, 1996, as amended through
and in effect on the date hereof (as in effect from time to time, the
"Registration Rights Agreement"), and that certain letter agreement dated as of
March 17, 1997 pursuant to which the Stockholders agreed to enter into this
Voting Trust Agreement and deposit their Shares hereunder (as in effect from
time to time, the "March 1997 Letter Agreement").
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and for the mutual agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
VOTING TRUST
1.1 CREATION OF VOTING TRUST. Subject to the terms and conditions of
this Agreement, a voting trust (the "Voting Trust") is hereby created and
established in accordance with Section 78.365 of the Nevada Revised Statutes.
The Trustee accepts the trust created by this Agreement and agrees to its
appointment his Trustee (with all attendant rights and duties hereunder). Upon
the
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execution of this Agreement by all the parties hereto, the Trustee shall
file an executed counterpart of this Agreement (and of every supplemental or
amendatory agreement) at the Company's registered office in the State of Nevada.
The copy of this Agreement so filed shall be open to inspection at any
reasonable time by any stockholder of the Company, the holder of any Voting
Trust Certificate(s) or any holder of a beneficial interest in the Voting Trust,
in person or by agent or attorney, as provided in Section 78.365 of the Nevada
Revised Statutes. The Trustee shall also maintain, or cause to be maintained,
such other records and books as are necessary or appropriate to enable the
Trustee to carry out the terms and provisions of this Agreement. By his
execution and delivery of this Agreement, each of the initial Trustee and the
initial Back-Up Trustees certifies to the Company that he has no familial or
extra-trust business relationship (within the meaning of the rules and policies
of the FCC under the Communications Act) with any Stockholder or any Affiliate
of any Stockholder.
1.2 DEPOSIT OF SHARES; VOTING TRUST CERTIFICATES.
(a) Upon execution and delivery of this Agreement by the parties
hereto, each of the Stockholders shall deposit with the Trustee certificates
representing all of the outstanding Capital Stock then owned by such
Stockholder. The Stockholders shall deposit additional shares of Capital Stock
with the Trustee from time-to-time as necessary to ensure that the Shares
subject hereto at all times represent all of the shares of Capital Stock owned
by all of the Stockholders. Each such deposit shall be accompanied by stock
powers duly executed in blank or such other instrument as may be reasonably
requested by the Trustee to enable the Trustee to transfer the Shares to the
Trustee's name, as trustee. Upon each such deposit, all certificates
representing the Shares so deposited shall be surrendered by the Trustee to the
Company or its transfer agent and canceled and new certificates representing the
Shares shall be issued to and in the name of the Trustee, as Trustee of the
Voting Trust. Except as hereinafter provided, such Share certificates shall at
all times be and remain in the possession, and under the control, of the Trustee
or his agent.
(b) In addition to any other legends required by the Stockholders
Agreement, each new certificate for Shares issued to the Trustee shall bear a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ISSUED PURSUANT TO AND ARE SUBJECT TO THE TERMS OF A
CERTAIN VOTING TRUST AGREEMENT, DATED MARCH 17, 1997
AMONG THE ISSUER, THE TRUSTEE OF THE VOTING TRUST
AND THE BENEFICIAL OWNER OF THESE SECURITIES. THESE
SECURITIES MAY NOT BE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE TERMS OF THE VOTING TRUST
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE
ISSUER'S REGISTERED OFFICE IN THE STATE OF NEVADA.
A like notation shall be made in the Company's stock transfer records with
respect to such Shares.
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(c) Upon receipt of the new certificate representing the Shares,
the Trustee shall deliver to the Stockholders one or more voting trust
certificates therefor, each substantially in the form of Exhibit A hereto (each,
a "Voting Trust Certificate"). Each Voting Trust Certificate shall specify the
number of Shares in respect of which it is issued, shall be dated the date of
its issuance and shall be signed manually by the Trustee.
(d) The Trustee shall retain and hold the certificates
representing the Shares only in accordance with, and subject to the terms and
conditions set forth in, this Agreement. The Trustee shall have no authority to,
and shall not, Transfer the Shares, except to the extent otherwise specifically
required by this Agreement. All Shares and all cash, securities or other
property distributed in respect of the Shares that is held by Trustee shall be
held in trust for the benefit of the Stockholders and no creditors of the
Trustee shall have any right to or claim against any of the assets of the Voting
Trust.
(e) The Stockholders will not communicate with the Voting Trustee
regarding the management or operation of the Company's and its Subsidiaries'
radio broadcast stations.
1.3 TRANSFER OR EXCHANGE OF VOTING TRUST CERTIFICATES.
(a) The Trustee will maintain an office or agency at the address
specified for the Trustee in Section 4.4 (or at such other address as the
Trustee may indicate to the Stockholders from time to time in accordance with
Section 4.4) at which Voting Trust Certificates may be presented or surrendered
for registration of transfer or for exchange (the "Registrar"). The Registrar
shall keep a register of the Voting Trust Certificates and of their transfer and
exchange. The Trustee may appoint any Person to act as the Registrar on its
behalf, but in the absence of an effective appointment, the Trustee shall act as
the Registrar hereunder.
(b) When Voting Trust Certificates are presented to the Registrar
with a request to register the transfer of such Voting Trust Certificates, or to
exchange them for Voting Trust Certificates of different denominations which in
the aggregate represent the Shares for which such Voting Trust Certificates are
being exchanged, in each case, accompanied by a duly executed instrument of
assignment or exchange substantially in the form attached as Exhibit B hereto,
then the Registrar shall register the transfer or make the exchange as
requested; provided that the Registrar shall require, as a condition to
registering a transfer of Voting Trust Certificates, that the transferee execute
and deliver to the Trustee its written agreement to be bound by the terms of
this Agreement as a Stockholder hereunder and to be bound by the terms of the
Stockholders Agreement as a Stockholder thereunder, substantially in the form of
Exhibit C hereto.
1.4 REGISTRATION OF HOLDERS. The Trustee may treat the registered
holder of a Voting Trust Certificate as the owner thereof for all purposes.
Every transferee of a Voting Trust Certificate shall be required to become a
party to this Agreement, with the same force and effect as if such transferee
had signed this Agreement, and each such transferee shall for all purposes be
considered a Stockholder hereunder.
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1.5 REPLACEMENT OF VOTING TRUST CERTIFICATE. Upon receipt of
evidence reasonably satisfactory to the Trustee (and an affidavit of the
registered holder will be satisfactory) of the ownership and the loss, theft,
destruction or mutilation of a Voting Trust Certificate, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Trustee (provided that if the registered holder is ABRY,
ABRY/CIP or a financial institution or other institutional investor, its own
agreement will be satisfactory), or, in the case of any such mutilation, upon
surrender of such certificate, the Trustee shall (at the registered holder's
expense) execute and deliver in lieu of such certificate a new Voting Trust
Certificate of like kind representing the number of Shares represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
ARTICLE II
THE TRUSTEE
2.1 VOTING OF SHARES. During the term of this Agreement and for so
long as the Trustee shall hold the Shares pursuant to this Agreement, the
Trustee shall possess and in his sole discretion shall be entitled to and have,
the duty to exercise, in person or by his nominees or proxies, all of the
Stockholders' voting rights and voting powers in respect of the Shares, and to
take part in any stockholders' meetings, including the right to vote the Shares
for the election of directors of the Company (subject to any limitations imposed
by law, the Company's certificate of incorporation or bylaws or this Agreement).
In discharging such duty, the Trustee shall, with respect to matters covered by
Section 2.1 of the Voting Agreement, vote all of the Shares in the manner
required by such Section 2.1; provided that any Person's right to direct the
Trustee's action pursuant to Section 2.1 of the Voting Agreement shall be
subject to the limitations on such right as are expressed in the Voting
Agreement. This Section 2.1 shall not be deemed to empower the Trustee to
exercise any other rights of the Stockholders with respect to ownership of the
Shares, including but not limited to (i) pursuant to Section 11 or Section 13.a.
of the Securities Purchase Agreement, (ii) pursuant to all provisions of the
Stockholders Agreement, (iii) pursuant to Sections 2, 3 and 12(c) of the
Registration Rights Agreement, or (iv) pursuant to Section 7.2 of the Voting
Agreement, and with respect to any of the matters set forth in clauses (i)
through (iv) above, the Company agrees to submit such matters solely to the
holders of the Voting Trust Certificates.
2.2 DIVIDENDS AND DISTRIBUTIONS.
(a) Subject to Section 2.2(b) below, the Stockholders shall be
entitled to receive dividends or distributions of money, securities, or other
property, if any, collected or received by the Trustee with respect to the
Shares represented by the Voting Trust Certificates. Any such payments received
by the Trustee shall be held in trust for the benefit of the Stockholders and
shall be paid over to the Stockholders by Trustee promptly upon the Trustee's
receipt of such dividends or distributions. In lieu of receiving dividends or
distributions and paying them to the Stockholders, the Trustee may instruct the
Company in writing to pay the dividends or distributions (other than dividends
consisting of Capital Stock) directly to the Stockholders. In the event any such
instruction is given to the Company, all liability of the Trustee with regard to
the payment of such dividends or distributions shall cease, unless and until
such instruction is revoked.
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(b) Notwithstanding Section 2.2(a) above, in the event that the
Trustee receives any additional shares of Capital Stock through a dividend or
other distribution with respect to any Shares, the Trustee shall hold such
Capital Stock subject to this Agreement for the benefit of the Stockholders and
such Capital Stock shall become subject to all of the terms and conditions of
this Agreement to the same extent as if it were originally deposited as Shares
hereunder. The Trustee shall issue Voting Trust Certificates in respect of such
Capital Stock to the Stockholders as soon as practicable after the Trustee's
receipt of such Capital Stock.
2.3 EXPENSES; EXCULPATION; ETC. The Trustee, and each Person who is at
any time a Back-Up Trustee, shall be entitled to receive compensation for his
services as Trustee and availability as a Back-Up Trustee hereunder or agreement
to provide services hereunder in the amount of $25,000 per annum. The Trustee is
expressly authorized to incur and pay and be promptly reimbursed by the
Stockholders for all reasonable charges and other expenses which the Trustee
deems necessary and proper in the performance of his duties under this
Agreement. The Trustee need only perform such duties as are specifically set
forth in this Agreement and no covenants or obligations shall be implied in this
Agreement that are adverse to the Trustee. The Trustee shall not be liable for
his action or failure to act hereunder, unless such action or failure to act
constitutes gross negligence or willful misconduct on its part. The Trustee
shall not be required to give any bond or other security for the discharge of
its duties under this Agreement.
2.4 SUCCESSOR TRUSTEE. The Trustee may assign his rights and delegate
his obligations to a successor Trustee, who shall be a Back-Up Trustee or
another Person appointed in the same manner as an additional Back-Up Trustee
would be appointed hereunder, so long as such successor Trustee is not an
Affiliate of any Stockholder, is a U.S. citizen and otherwise is qualified to be
the Trustee under the Communications Act of 1934, as amended (the
"Communications Act"), and the rules and policies of Federal Communications
Commission (the "FCC") thereunder; provided that if the Trustee is unable to
perform as Trustee hereunder, the Stockholders and the Company hereby designate
J. Walter Corcoran to serve as the successor Trustee, and if J. Walter Corcoran
is unable or unwilling to perform as Trustee hereunder, the Company and the
Stockholders hereby designate Harlan Levy to serve as the successor Trustee.
Each individual named in the preceding proviso is referred to as a "Back-Up
Trustee"; if at any time any individual which is a Back-Up Trustee becomes
ineligible to serve as the Trustee or becomes the Trustee, then the Trustee (or,
if there is no Trustee or Back-Up Trustee, then the Company (by action approved
by not fewer than three-fourths (3/4) of the members of the Company's board of
directors) and Majority Beneficial Owners) shall appoint one or more additional
Back-Up Trustees so that, as nearly as practicable, at all times there are two
Back-Up Trustees. As a condition to any such appointment of any additional
Back-Up Trustee, the Company may require that such additional Back-Up Trustee
certify that he or she is an independent person having no familial or
extra-trust business relationship (within the meaning of the rules and policies
of the FCC under the Communications Act) with any Stockholder or any Affiliate
of any Stockholder. Any successor Trustee appointed as herein provided shall
indicate his or her acceptance of such appointment by executing a counterpart of
this Agreement and thereupon such successor shall be vested with all the rights,
powers, duties and immunities herein conferred upon the Trustee as though such
successor had been originally a party to this Agreement as Trustee. Upon
assignment of his rights and delegation of his duties pursuant to this Section
2.4 and such acceptance, the assigning Trustee's authority to vote or otherwise
exercise any rights with respect
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to the Shares shall immediately terminate, and the assigning Trustee shall
immediately surrender all certificates for Shares held by him to the Company
accompanied by stock powers duly executed in blank. The Company shall cancel
such certificates and shall issue new certificates representing the Shares to
and in the name of the successor Trustee, as Trustee of this Voting Trust.
ARTICLE III
TERM OF VOTING TRUST;
RELEASE OF SECURITIES
3.1 TERM OF VOTING TRUST; TRANSFER OF SHARES.
(a) The Voting Trust shall commence upon the execution of this
Agreement by the parties hereto and shall continue until terminated in
accordance with Section 3.1(b).
(b) This Agreement and/or the Voting Trust shall terminate upon
the written agreement of the Company (by action approved by not fewer than
three-fourths (3/4) of the members of the Company's board of directors) and
Majority Beneficial Owners; provided, that the Voting Trust shall terminate with
respect to any Shares upon any Transfer of such Shares to a Person which is not
an Affiliate of either Stockholder or upon a distribution of Shares by a
Stockholder to its partners. Upon any termination of the Voting Trust for any
reason (other than pursuant to the foregoing proviso), the Shares will revert to
the Stockholders which hold the Voting Trust Certificates which relate to the
Shares. Upon and as a condition to any such termination (other than pursuant to
the foregoing proviso), each Stockholder will execute and deliver to the Company
and the other Stockholders (as that term is defined in the Voting Agreement) a
counterpart of the Voting Agreement; until such a Stockholder has done so, the
Company will not record such reversion on its books or treat for any purpose
such Stockholder as the owner of the Shares which are to revert to such
Stockholder.
(c) Upon the termination of the Voting Trust by written agreement
pursuant to Section 3.1(b) above, and the surrender by the Stockholders to the
Trustee of the Voting Trust Certificates issued by the Trustee in respect of the
Shares, the Trustee shall surrender the certificates representing the Shares to
the Company properly endorsed for transfer to the Stockholders, shall take all
other actions appropriate to effectuate the transfer of the Shares to the
Stockholders and shall distribute all other property held in trust for the
Stockholders.
(d) Upon the termination of the Voting Trust with respect to any
Shares pursuant to the proviso to Section 3.1(b) above, and the surrender by the
Stockholders to the Trustee of the Voting Trust Certificates issued by the
Trustee in respect of such Shares, the Trustee shall surrender the Certificates
representing such Shares to the Company properly endorsed for transfer to
transferee in question and shall take all other actions appropriate to
effectuate the transfer of such Shares to such transferee. If less than all of
the Shares which are represented by a stock certificate are involved in the
Transfer in question, then the Company shall, or shall cause its transfer agent
to, issue and deliver to the Trustee a certificate for the Shares which were not
involved in such Transfer. If less than all of the Shares represented by a
Voting Trust Certificate are involved in the Transfer
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in question, then the Trustee shall issue and deliver to the surrendering holder
a Voting Trust Certificate representing the Shares which were not involved in
such Transfer.
(e) At any time when the Voting Agreement has not been
terminated, it shall be a condition to any Transfer of any Shares (other than in
a Public Sale or to a Successor Trustee in such Person's capacity as a Successor
Trustee) that the prospective transferee execute and deliver to the Company and
the other Stockholders (as that term is defined in the Voting Agreement) a
counterpart of the Voting Agreement. Any Transfer or attempted Transfer of any
Shares in violation of the preceding sentence will be void, and the Company will
not record such Transfer on its books or treat any purported transferee of such
Shares as the owner of such Shares for any purpose.
3.2 RELEASE OF SECURITIES FOR PUBLIC SALE. If at any time after
the Company has effected an initial public offering of its equity securities, a
Stockholder desires to effect a Public Sale of Shares which are held in the
Voting Trust, such Stockholder shall give notice to the Trustee of such sale
prior to the proposed date of sale, specifying the intended method of
distribution and the number of shares to be sold, and shall surrender to the
Trustee the Voting Trust Certificates issued by the Trustee in respect of the
Shares proposed to be sold. Upon receipt of such notice and the related Voting
Trust Certificates, the Trustee shall deliver the certificates representing the
Shares to be sold, endorsed in blank, to the Company or its transfer agent for
registration of transfer to the purchaser (or its intermediary) in such Public
Sale. If less than all the Shares represented by a particular certificate are
being sold in such Public Sale, the Company shall, or shall cause its transfer
agent to, issue and deliver to the Trustee a certificate for the Shares not
being sold. If less than all of the Shares represented by a Voting Trust
Certificate are to be sold in such Public Sale, then the Trustee will issue and
deliver to the surrendering holder a Voting Trust Certificate representing the
Shares which are not involved in such Public Sale.
ARTICLE IV
MISCELLANEOUS
4.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" of a particular Person means any other Person that
directly or indirectly controls, is controlled by, or is under common
control with such first Person, or with respect to an individual, such
individual's spouse and descendants (whether natural or adopted) and
any trust for the benefit of such individual and/or his or her spouse
and/or descendants.
"AGREEMENT" has the meaning given such term in the preface.
"CAPITAL STOCK" means the Company's Series C Convertible Preferred
Stock, par value $.001 per share (the "Series C Preferred"), the
Company's Series D Convertible Preferred Stock, par value $.001 per
share (the "Series D Preferred"), the Company's Class A Common Stock,
par value $.001 per share (the "Class A Common"), and the Company's
Class B Common Stock, par value $.001 per share (the "Class B Common").
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"COMPANY" has the meaning given such term in the preface.
"FACILITY A NOTE" means the Convertible Promissory Notes issued by
the Company to ABRY and ABRY/CIP on or after June 28, 1996 pursuant to
the terms and conditions of the Securities Purchase Agreement.
"MAJORITY BENEFICIAL OWNERS" means holders of Voting Trust
Certificates which represent a majority of the Shares held in the
Voting Trust at the time in question (assuming the conversion in full
into Common Stock of all Shares which are Series C Preferred or Series
D Preferred immediately prior to such time).
"PERSON" means an individual, a partnership, a joint venture,
a corporation, an association, a joint stock company, a limited
liability company, a trust, an unincorporated organization or a
government or any department or agency or political subdivision
thereof.
"PUBLIC SALE" means any sale of Shares (i) to the public
pursuant to an offering registered under the Securities Act or (ii) to
the public pursuant to the provisions of Rule 144 under the Securities
Act of 1933, as amended.
"REGISTRAR" has the meaning given such term in Section 1.3(a).
"REGISTRATION RIGHTS AGREEMENT" has the meaning given such
term in the preface.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SECURITIES PURCHASE AGREEMENT" has the meaning given such
term in the preface.
"SHARES" means and includes all shares of Capital Stock deposited
by the Stockholders with the Trustee pursuant to this Agreement and any
additional shares of Capital Stock of the Company issued or distributed
by the Company to the Trustee by way of a dividend or distribution on
other Shares or issued by the Company to the Stockholders upon the
conversion of any Series C Preferred, Series D Preferred, Class B
Common or Facility A Note.
"STOCKHOLDERS" has the meaning given such term in the
preface.
"STOCKHOLDERS AGREEMENT" has the meaning given such term in
the preface.
"TRANSFER" means to sell, transfer, assign, pledge,
hypothecate or otherwise dispose of any interest in any securities.
"TRUSTEE" has the meaning given such term in the preface.
"VOTING AGREEMENT" has the meaning given such term in the preface.
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"VOTING TRUST" has the meaning given such term in Section 1.1.
"VOTING TRUST CERTIFICATE" has the meaning given such term in
Section 1.2(c).
4.2 MERGER; AMENDMENT. This Agreement, the March 1997 Letter
Agreement, the Voting Agreement, the Stockholders Agreement, the Securities
Purchase Agreement and the Registration Rights Agreement constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein. This Agreement
shall not be amended, altered or modified except by a written instrument that
expressly refers to this Agreement, is signed by each of the Company, the
Trustee and the Stockholders and is filed with the Company's registered office
within the State of Nevada.
4.3 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
permitted successors and permitted assigns. The rights and duties of any party
to this Agreement shall not be assigned or delegated, except in connection with
the resignation of any Trustee and the appointment of a successor Trustee in
accordance with Section 2.4 hereof or the Transfer of any Voting Trust
Certificate effected in accordance with the terms hereof.
4.4 NOTICES. All notices and other communications given under
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered in person or mailed by first class, registered or certified
mail, postage prepaid or telegram and addressed to the parties hereto as
follows:
(i) If to the Company:
Citadel Communications Corporation
140 South Ash Avenue
Tempe, Arizona 85281
Attention: Ms. Donna Hefner
and
Lawrence R. Wilson
1015 Eastman Drive
Bigfork, Montana 59911
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with a copy, which shall not constitute notice, to:
Osborn Maledon, P.A.
2929 North Central
Suite 2100
Phoenix, Arizona 85012
Attention: Michelle M. Matiski, Esq.
(ii) If to Trustee:
Christopher Hall, Esq.
Piliero, Goldstein, Jenkins & Hall
292 Madison Avenue
New York, New York 10017-6307
(iii) If to the Stockholders:
c/o Paradigm Consulting Ltd.
22 Church Street, 2nd Floor
Hamilton HM11
Bermuda
Attention: Mr. Andrew Banks
with a copy, which shall not constitute notice, to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: John L. Kuehn, Esq.
and to any subsequent holder of Voting Trust Certificates at the address as
indicated in the Registrar's records, or in each case to such other address as
any of them by written notice to the sending party may from time to time
designate, with copies also sent to such attorney as the parties hereto may from
time to time designate. Each notice or other communication which shall be
personally delivered, mailed or transmitted in the manner described above shall
be deemed sufficiently received for all purposes at such time as it is delivered
to the addressee (with any return receipt on delivery receipt being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
4.5 SEVERABILITY. If any provision of this Agreement or any
other agreement, document or writing given pursuant to or in connection with
this Agreement shall be found by a court of competent jurisdiction to be
invalid or unenforceable under applicable law, such provision shall be
ineffective to the extent of such invalidity only, without in any way affecting
the remainder of such provision or the remaining provisions of this Agreement.
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4.6 SPECIFIC ENFORCEMENT. The Company, the Trustee and the
Stockholders shall be entitled to enforce their rights under this Agreement
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights existing in their favor. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that the Company,
the Trustee or any Stockholder may in its or his sole discretion apply to any
court of law or equity of competent jurisdiction for specific performance or
injunctive relief (without posting a bond or other security) in order to
enforce or prevent any violation of the provisions of this Agreement.
4.7 HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience of reference only and do not form a part or affect the
meaning hereof.
4.8 GOVERNING LAW. This Agreement, the rights and obligations
of the parties hereto, and any claims and disputes relating thereto, shall be
governed by and construed in accordance with the local laws (and not the laws
of conflicts) of the State of Nevada.
4.9 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which shall be deemed to be one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO VOTING TRUST AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
/s/ Christopher P. Hall
------------------------------------------
Christopher Hall, as the initial Trustee
/s/ J. Walter Corcoran
------------------------------------------
J. Walter Corcoran, as an initial
Back-Up Trustee
/s/ Harlan Levy
------------------------------------------
Harlan Levy, as an initial Back-Up Trustee
CITADEL COMMUNICATIONS CORPORATION
By: /s/ Lawrence R. Wilson
----------------------------------------
Name: Larry Wilson
Title: President
STOCKHOLDERS:
ABRY BROADCAST PARTNERS II, L.P.
By: ABRY CAPITAL, L.P.
Its General Partner
By: ABRY HOLDINGS, INC.
Its General Partner
By: /s/ Royce Yudkoff
----------------------------------------
Name: Royce Yudkoff
Title: President
<PAGE> 13
ABRY/CITADEL INVESTMENT
PARTNERS, L.P.
By: ABRY CAPITAL, L.P.
Its General Partner
By: ABRY HOLDINGS, INC.
Its General Partner
By: /s/ Royce Yudkoff
----------------------------------------
Name: Royce Yudkoff
Title: President
<PAGE> 14
Exhibit A to
Voting Trust Agreement
THIS VOTING TRUST CERTIFICATE IS ISSUED PURSUANT TO AND IS SUBJECT TO THE TERMS
OF A CERTAIN VOTING TRUST AGREEMENT, DATED MARCH __, 1997 BY AND AMONG CITADEL
COMMUNICATIONS CORPORATION (THE "COMPANY"), THE TRUSTEE OF THE VOTING TRUST AND
THE BENEFICIAR(Y)(IES) OF THE VOTING TRUST. THE BENEFICIAL INTEREST IN SHARES
OF THE CAPITAL STOCK OF THE COMPANY REPRESENTED BY THIS VOTING TRUST
CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE
VOTING TRUST AGREEMENT, A COPY OF WHICH IS ON FILE AT THE ISSUER'S REGISTERED
OFFICE IN THE STATE OF NEVADA.
THE SECURITIES REPRESENTED BY THIS VOTING TRUST CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAW AND THE SECURITIES REPRESENTED HEREBY CANNOT BE TRANSFERRED
UNLESS IT IS REGISTERED OR QUALIFIED UNDER SUCH FEDERAL AND ANY APPLICABLE
STATE SECURITIES LAW OR UNLESS AN EXEMPTION FROM REGISTRATION OR QUALIFICATION
IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE CONSTITUTE ABRY STOCK UNDER A
CERTAIN SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF JUNE 28,
1996, AS AMENDED, AND CERTAIN OF THE COMPANY'S STOCKHOLDERS AND, AS SUCH, ARE
SUBJECT TO CERTAIN VOTING PROVISIONS, PURCHASE RIGHTS AND RESTRICTIONS ON
TRANSFER SET FORTH IN THE STOCKHOLDERS AGREEMENT. A COPY OF SUCH STOCKHOLDERS
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.
Certificate No. VTC - Date of Issuance:
------ ------
Number of Shares Beneficially
Represented Hereby: shares
------
of stock, par value
------
$ per share
------
VOTING TRUST CERTIFICATE
This Voting Trust Certificate (this "Certificate") certifies
that the undersigned Trustee has received certificate(s) representing
____________ shares of ________ stock, par value $_____ per share (the "Shares")
of Citadel Communications Corporation, a Nevada corporation (the "Company"), on
behalf of (the "Holder"), duly registered in the name of the undersigned
Trustee, on the following terms and conditions:
RIGHTS OF HOLDERS
The Holder agrees to, accepts and ratifies all of the terms,
conditions and covenants of that certain Voting Trust Agreement dated March __,
1997 (the "Agreement") which is hereby incorporated herein by reference.
Capitalized terms used but not otherwise defined in this Certificate shall have
the meanings given such terms in the Agreement. The Holder shall possess and be
entitled to rights of ownership of the Shares only as provided in the
Agreement. The Holder of this Certificate shall transfer or replace this
Certificate only as provided in the Agreement.
A-1
<PAGE> 15
VOTING AND OTHER RIGHTS
The Trustee during the term of the Agreement shall have sole
voting rights and certain other rights with respect to the Shares as specified
in the Agreement (subject to the limitations imposed by the Company's
certificate of incorporation, bylaws or any Agreement to which the Shares may
be subject).
DIVIDENDS AND DISTRIBUTIONS
The Holder of this Certificate shall be entitled to receive
all dividends or other distributions of cash, securities or other property by
the Company received by the undersigned Trustee in respect of the Shares,
except that in the event of dividends or distributions of shares of Capital
Stock the Trustee shall receive and hold any such dividends or distributions
pursuant to the terms of the Agreement and shall issue to the Holder hereof
additional Certificates representing such additional Shares. In lieu of the
Trustee receiving dividends and distributions and paying them to the Holder of
this Certificate, the Trustee may instruct the Company to pay the dividends or
distributions directly to the Holder, as provided in the Agreement.
TERMINATION
The Voting Trust shall terminate as provided in the Agreement.
SUBJECT TO VOTING TRUST AGREEMENT
This Certificate is governed in all respects by the
Agreement. In the event of any inconsistency between the terms and conditions
of this Certificate and the Agreement, the Agreement shall control.
A-2
<PAGE> 16
IN WITNESS WHEREOF, this Certificate is executed and issued
to the Holder by the undersigned Trustee as of the date first written above.
-------------------------
------------------------- , as Trustee
A-3
<PAGE> 17
Exhibit B to
Voting Trust Agreement
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers its right, title and interest in and to the attached Voting Trust
Certificate, certificate number __, the beneficial interest in the shares of
capital stock of Citadel Communications Corporation, a Nevada corporation (the
"Company") represented thereby and all related rights under the Voting Trust
Agreement dated as of March __, 1997 (the "Voting Trust Agreement"), among
Christopher Hall or his successor-in-interest, as trustee (the "Trustee") and
the other parties thereto, to ______________________ and authorizes
_______________________ to surrender the attached Voting Trust Certificate to
the Trustee or its designee for registration of transfer.
Date:
------------------------- ----------------------------------
[SIGNATURE OF STOCKHOLDER]
B-1
<PAGE> 18
Exhibit C to
Voting Trust Agreement
JOINDER
This Joinder is made as of the date written below by the
undersigned (the "Joining Party") in favor of and for the benefit of
________________, or its successor-in-interest (the "Voting Trustee") and the
other Persons party to the Voting Trust Agreement, dated as of March __, 1997
(the "Voting Trust Agreement"), among the Voting Trustee and Citadel
Communications Corporation, a Nevada corporation (the "Company"), and the other
Persons party to the Second Amended and Restated Stockholders Agreement, dated
as of June 28, 1996, as amended (the "Stockholders Agreement") among the Company
and such other Persons. Capitalized terms used but not defined herein shall have
the meanings given such terms in the Voting Trust Agreement.
Accordingly, the Joining Party hereby agrees as follows:
1. The Joining Party hereby acknowledges, agrees and confirms
that, by its execution of this Joinder, the Joining Party will be deemed to be a
party to the Voting Trust Agreement and shall have all of the obligations of a
party thereunder as if it had executed the Voting Trust Agreement. The Joining
Party hereby ratifies, as of the date hereof, and agrees to be bound by, all of
the terms, provisions and conditions contained in the Voting Trust Agreement.
2. The Joining Party hereby acknowledges, agrees and confirms
that, by its execution of this Joinder, the Joining Party will be deemed to be a
party to the Stockholders Agreement and shall have all of the obligations of a
Stockholder and a holder of ABRY Stock thereunder as if it had executed the
Stockholders Agreement. The Joining Party hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Stockholders Agreement.
C-1
<PAGE> 19
IN WITNESS WHEREOF, the undersigned has executed this Joinder as of
the date written below.
Date:
------------------------- ----------------------------------
By:
-------------------------------
Name:
Title:
Accepted and agreed as of the date
first above written:
- ----------------------------------
- --------------------- , as Trustee
CITADEL COMMUNICATIONS CORPORATION
By:
-------------------------------
Name:
Title:
C-2
<PAGE> 1
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of June 28, 1996, by and between CITADEL BROADCASTING COMPANY, a Nevada
corporation ("Citadel"), CITADEL COMMUNICATIONS CORPORATION, a Nevada
corporation ("Parent") and LAWRENCE R. WILSON, an individual ("Executive").
WITNESSETH:
WHEREAS, Citadel desires to retain the services of Executive, and
Executive desires to be employed by Citadel, on the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, Citadel, Parent and Executive,
intending to be legally bound, hereby agree as follows:
1. Employment. Citadel hereby employs Executive as Chief Executive
Officer of Parent and Citadel, and Executive accepts such employment and agrees
to perform services for Parent and Citadel subject always to such resolutions
as are established from time to time by the respective Boards of Directors of
Parent and Citadel (each, a "Board"), for the period and upon the other terms
and conditions set forth in this Agreement.
2. Term. The term of Executive's employment hereunder shall commence
on the date hereof, and shall continue for a term of five (5) years (the
"Initial Term"), unless terminated earlier pursuant to Section 5. After the
expiration of the Initial Term, the term of Executive's employment pursuant to
this Agreement shall automatically be renewed for successive one-year terms
unless terminated (i) as of the end of such five-year term or any such one-year
term by the Executive, or by the Company by written notice to the other (in the
case of the Company, following Two-Thirds Board Action (as defined in Section
5.c. below) to terminate Executive's employment pursuant to this Agreement), or
(ii) otherwise pursuant to the terms hereof.
3. Position and Duties.
a. Service with Citadel. During the term of Executive's
employment pursuant to this Agreement, Executive shall be the President and
Chief Executive Officer of Parent and Citadel, and the Chairman of each Board.
Executive agrees to perform such executive employment duties as either Board
shall assign to him from time to time and which are commensurate with his
position as chief executive officer. Executive will devote his best efforts to
his employment with Parent and Citadel and shall devote substantially all of
his business time and attention to the performance of his duties under this
Agreement.
b. No Conflicting Duties; Other Activities. Executive hereby
confirms that he is under no contractual commitments inconsistent with his
obligations set forth in this Agreement,
<PAGE> 2
and that during the term of his employment pursuant to this Agreement, he will
not (i) render or perform services, or enter into any contract to do so, for
any natural person, corporation, partnership, joint venture, or other entity (a
"Person") which are inconsistent with the provisions of this Agreement, or (ii)
engage in any business or be employed by, act as a consultant to or act as a
director of any Person, other than on behalf of Parent, Citadel or any of their
subsidiaries. Except as provided in the preceding sentence, nothing in this
Agreement shall prohibit Executive from having investment interests (including
acting as a director of one or more non-broadcast companies) as long as those
interests do not require Executive to spend substantial time or effort and do
not interfere with Executive's performance of the duties assigned him pursuant
to Section 3.a. of this Agreement and compliance with the final sentence of
Section 3.a. of this Agreement. Executive, however, shall not have any interest
as a beneficial owner or creditor in any Person that owns, operates or manages
radio or television properties other than beneficial ownership of five percent
(5%) or less (by vote and value) of any class of equity or debt securities of
one or more publicly held radio companies which are not affiliated with one
another.
4. Compensation.
a. Base Salary. As compensation for services to be rendered
by Executive under this Agreement, during the term of Executive's employment
pursuant to this Agreement (and thereafter, to the extent provided in this
Agreement), Citadel shall pay to Executive a base annual salary of Three
Hundred Twenty Five Thousand Dollars ($325,000) (the "Base Salary"), which
shall be paid on a regular basis in accordance with Citadel's normal payroll
procedures and policies. The amount of the Base Salary shall increase effective
each January 1, beginning January 1, 1997, so that the new Base Salary will be
105% of Base Salary for the previous calendar year.
b. Performance Bonus. As additional compensation for
Executive's services, with respect to each calendar year at the end of which
Executive is employed by Parent and Citadel pursuant to this Agreement,
Executive shall receive an annual performance bonus (the "Performance Bonus")
calculated as a percentage of Executive's Base Salary in effect at the end of
such calendar year, which percentage will depend on whether certain benchmarks
relating to Citadel's annual performance are met, as follows:
i. For calendar year 1996, the benchmark shall be
Citadel's broadcast cash flow ("BCF"), which shall mean (A) Citadel's gross
revenues from radio station operations (other than revenues from trade and
barter transactions), less (B) radio station operating expenses (other than
expenses from trade and barter transactions) of the radio stations owned or
operated by Citadel or any subsidiary or for which Citadel or any subsidiary
sells advertising time, excluding depreciation, amortization, interest, taxes
and corporate overhead. Citadel and Executive have projected Citadel's BCF for
calendar year 1996 to be $12,291,094. Payment of the Performance Bonus shall be
made according to the following scale:
2
<PAGE> 3
<TABLE>
<CAPTION>
1996 BCF Bonus as a % of
-------- Executive's Base
Salary
------
<S> <C>
Less than $11,676,539 -0-
$11,676,539 ( 95% of projected BCF) or more, but less than $12,291,094 25.0%
$12,291,094 (100% of projected BCF) or more, but less than $12,905,649 37.5%
$12,905,649 (105% of projected BCF) or more, but less than $13,520,203 50.0%
$13,520,203 (110% of projected BCF) or more 62.5%
</TABLE>
ii. For each calendar year following 1996, the
benchmark shall be Citadel's operating cash flow ("OCF"), which shall mean
Citadel's BCF minus Corporate Overhead (as defined below). Executive shall
propose a budget of OCF for Parent and its subsidiaries prepared on a monthly
basis for the succeeding calendar year at least 30 days prior to the close of
each calendar year during the term of Executive's employment pursuant to this
Agreement. The Performance Bonus for a calendar year after 1996 shall be
calculated and paid based on Citadel's operating results as a percentage of the
budgeted OCF reflected in the budget for such calendar year approved by the
Parent's Board, as follows:
<TABLE>
<CAPTION>
Applicable Year's OCF Bonus as a Percentage of
--------------------- Executive's Base Salary
-----------------------
<S> <C>
Less than 95% of budgeted OCF -0-
95% or more of budgeted OCF but less than 100% 25.0%
100% or more of budgeted OCF but less than 105% 37.5%
105% or more of budgeted OCF but less than 110% 50.0%
110% or more of budgeted OCF 62.5%
</TABLE>
For purposes of this Section 4, "Corporate Overhead" means during any period,
the aggregate of all compensation, rent, traveling, aircraft, entertainment and
automobile expenses of personnel of Parent, Citadel and their subsidiaries and
all other costs and expenses which are not allocable or are not incurred
directly in the operation of any of the radio stations owned or operated by
Parent, Citadel or their subsidiaries, or for which Parent, Citadel or a
subsidiary sells advertising, but excluding (i) the management fees paid and
all expense reimbursements made to ABRY Partners, Inc. pursuant to the
Management and Consulting Services Agreement dated as of June 28, 1996 between
Citadel and ABRY Partners, Inc., (ii) transaction-related legal and accounting
expenses, (iii) fees and other charges paid to obtain financing, and (iv) any
other items not customarily included in corporate overhead.
In any calendar year in which (x) Citadel, Parent or any subsidiary commences
or ceases the ownership, operation or management of one or more radio stations
(including commencing or ceasing selling advertising time therefor), or (y) any
local marketing, joint sales or other arrangement pursuant to which Parent,
Citadel or any subsidiary sells advertising time on any radio station commences
or ceases, the benchmark for OCF or BCF for such calendar year shall be
equitably adjusted by the Compensation Committee of the Parent's Board to take
into account such commencement or cessation.
3
<PAGE> 4
Except to the extent expressly provided to the contrary in this Section 4
(e.g., the exclusion of trade revenues and expenses from BCF), the calculations
provided for in this Section shall be made on a consolidated basis and in
accordance with generally accepted accounting principles and shall reflect the
results of the Parent's and its subsidiaries' operations set forth in Parent's
audited consolidated financial statements for the calendar year in question.
c. Stock Options.
i. 1993 Performance Bonus Options. In October of
1993, the Board of Parent granted Executive annual performance stock options
for the years 1993 to 1997 for the annual purchase of a certain number of
shares of Parent's Class A Common Stock to be determined based the Performance
Bonus received by Executive. The terms of this grant are documented in that
certain Citadel Communications Corporation Nonqualified Stock Option Agreement
of even date herewith.
ii. 1996 Equity Incentive Plan. Contemporaneous with
the execution of this Agreement, Parent will grant Executive an option to
purchase up to 150,000 shares of Parent's Class A Common Stock at an exercise
price of $17.17 per share. Such option shall be granted pursuant to Parent's
1996 Equity Incentive Plan (the "Plan") and Award Agreements setting forth the
terms and conditions of this option, including without limitation vesting
conditions and restrictions on transfer of such stock. A portion of such option
shall be a "qualified" incentive stock option, and the balance of such option
shall be a "non-qualified" stock option.
iii. 1994 Stock Options. Parent granted Executive an
option to purchase 28,568 shares of Parent's Class A Common Stock pursuant to
that certain Citadel Communications Corporation Nonqualified Stock Option
Agreement dated December 21, 1994. Such option fully vested on that date and
must be exercised on or before December 21, 2004.
d. Participation in Benefit Plans. During the term of
Executive's employment pursuant to this Agreement, Executive shall be included
to the extent eligible thereunder in any and all plans of Citadel providing
general benefits for Citadel's employees, including but not limited to
insurance, 401(k) plan, vacation, sick days, and holidays. Executive's
participation in any such plan or program shall be subject to the provisions,
rules and regulations applicable thereto.
e. Business Expenses. In accordance with Citadel's policies
established from time to time, Citadel will pay or reimburse Executive for all
reasonable and necessary out-of- pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers.
4
<PAGE> 5
5. Termination.
a. Death of Executive. Executive's employment shall terminate
immediately upon the death of Executive.
b. Disability. Executive's employment shall terminate upon
Executive's becoming totally permanently disabled. For purposes of this
Agreement, the term "totally permanently disabled" or "total permanent
disability" means Executive's inability on account of sickness or accident,
whether or not job-related, to engage in regularly or to perform adequately his
assigned duties under this Agreement.
c. Termination for Cause. Parent may terminate Executive's
employment at any time for "Cause" (as hereinafter defined) immediately upon
the affirmative vote or written consent of not less than 66-2/3% of the members
of the Board of Parent ("Two-Thirds Board Action"), followed by written notice
to Executive. Such written notice shall set forth with reasonable specificity
the basis for such termination. As used herein, the term "Cause" shall mean
that Executive shall have (i) performed an act or failed to act, which if he
were prosecuted and convicted for such act or failure to act, would constitute
a crime or offense involving money or property of Parent, Citadel or any of
their subsidiaries or would cause substantial harm to the standing or
reputation of Parent, Citadel or any of their subsidiaries, (ii) engaged in
fraudulent conduct with respect to the business of Parent, Citadel or any of
their subsidiaries, (iii) been convicted of a felony involving dishonesty,
fraud, theft or embezzlement, or (iv) used illegal drugs or other illegal
substances.
d. Resignation. Executive's employment shall be terminated on
the earlier of (i) the date that is three (3) months following the written
submission of Executive's resignation to the Board of Parent and (ii) the date
such resignation is accepted by the Board of Parent.
e. Sale of Company. Executive's employment shall terminate
immediately and without further action on the part of any party upon (i) a
liquidation or dissolution of the Parent, (ii) a sale, transfer or other
disposition of all or substantially all of the assets of Citadel on a
consolidated basis, or (iii) any transaction or series of transactions whereby
any Person, excluding affiliates of the Company and Citadel and excluding ABRY
Broadcast Partners II, L.P. or its affiliates, is or becomes the beneficial
owner (as that term is used in Section 13(d) of the Securities Exchange Act)
directly or indirectly of securities of Parent or Citadel representing 50% or
more of the combined voting power of Parent's or Citadel's then outstanding
securities.
f. Termination Without Cause. Executive's employment shall
terminate for any reason other than a reason set forth above in this Section 5,
or for no reason, only upon Two-Thirds Board Action.
6. Compensation Upon the Termination of Executive's Employment by
Citadel.
a. In the event Executive's employment terminates pursuant to
Section 5.a, 5.b, 5.d. or 5.e, any of Executive, Executive's beneficiary or a
beneficiary designated by Executive
5
<PAGE> 6
in writing to Citadel, or in the absence of such beneficiary, Executive's
estate, shall be entitled to receive Executive's then current monthly Base
Salary through the end of the month in which termination occurs.
b. In the event that Executive's employment terminates
pursuant to Section 5.c, then Executive shall be entitled to receive
Executive's then current monthly Base Salary through the date his employment is
terminated.
c. In the event that Executive's employment terminates
pursuant to Section 5.f, Executive shall be entitled to receive Executive's
then current monthly Base Salary through the end of the then-current term of
this Agreement.
Executive hereby waives any claim for severance compensation except as
expressly set forth in this Section 6. All payments required to be made by
Citadel to Executive pursuant to this Section 6 shall be paid in the manner and
at the times specified in Section 4.a hereof.
7. Covenants of Executive.
a. During any period described in Section 7.b. (the "Covenant
Period"), Executive covenants and agrees that Executive will not, whether
directly or indirectly, with or without compensation:
(1) engage in the business of radio or television
broadcasting in any radio or television broadcast market in which, as of the
date Executive's employment pursuant to this Agreement terminates, Parent,
Citadel or a subsidiary owned, operated or sold advertising for a radio
property, or in which an acquisition of a radio station or the commencement of
any such operating or advertising sales arrangement by Parent, Citadel or a
subsidiary was pending pursuant to an executed agreement or executed letter of
intent (the "Covenant Territory");
(2) be employed by, act as a consultant to, act as a
director of or own beneficially five percent (5%) or more of any class of
equity or debt securities of any Person engaged in the business of radio or
television broadcasting that operates any radio or television property in the
Covenant Territory; provided, however, that Executive may be employed by, act
as a consultant to, act as a director of or own beneficially five percent (5%)
or more of any class of equity or debt securities of any such Person as long as
Executive's new responsibilities do not include responsibility for or require
any contact (and Executive does not have any contact) with any radio station in
the Covenant Territory;
(3) solicit or do any business in the Covenant
Territory with respect to radio or television broadcasting with any customers
of Parent, Citadel or a subsidiary who were customers of Parent, Citadel or a
subsidiary as of the date Executive's employment pursuant to this Agreement
terminates;
6
<PAGE> 7
(4) solicit himself or through his affiliates or any
other Person the employment or independent contracting with of any person who
was an officer, employee or independent contractor of Parent, Citadel or a
subsidiary as of the date of Executive's termination; or
(5) interfere with any significant consulting
arrangement of Parent, Citadel or any of their subsidiaries.
b. For purposes of Sections 7.a.(1) and 7.a.(2), "Covenant
Period" means (i) the longer of one year and the duration of the then-current
term of Executive's employment pursuant to this Agreement if such employment
had not terminated, if Executive's employment terminated pursuant to Section
5.c. or 5.d., or 5.f, or (ii) one year following termination of Executive's
employment pursuant to Section 2(i) as of the end of the Initial Term or any
one-year term described in Section 2, if the Board of Parent, by the
affirmative vote or written consent of a majority of the members of the Board
of Citadel, authorizes Citadel to pay, and Citadel pays, Executive's Base
Salary during such one-year period at the rate paid immediately prior to the
termination of such employment. For purposes of Sections 7.a.(3), 7.a.(4) and
7.a.(5), "Covenant Period" means the longer of (a) one year following the
termination of Executive's employment pursuant to any provision of this
Agreement other than Section 5.e., or (b) the period, if any, for which
Executive is entitled to receive Base Salary payments pursuant to Section 6 of
this Agreement.
c. Except as expressly set forth below, Executive agrees,
whether during his employment pursuant to this Agreement or thereafter, except
as authorized or directed by Citadel in writing or pursuant to the normal
exercise of his responsibilities hereunder, not to disclose to others, or use
for his benefit or the benefit of any Person other than Parent, Citadel or any
subsidiary, any information of or relating to the business, activities or
facilities of Citadel which may come to his knowledge during his employment
pursuant to this Agreement or thereafter if the use or disclosure of such
information could damage Citadel, Parent or any subsidiary, unless;
(i) the information disclosed has become part of the
public domain by publication or otherwise through no fault of Executive;
(ii) the information disclosed has been previously
disclosed to the recipient by a third party and Executive reasonably believes
such third party is in lawful possession of the knowledge or information and
has the lawful right to make disclosure thereof; or
(iii) Executive is required to disclose such
information pursuant to applicable law or by a court of competent jurisdiction.
d. The parties understand and agree that the remedies at law
for breach of the covenants in this Section 7 would be inadequate and that
Citadel shall be entitled to injunctive or such other equitable relief as a
court may deem appropriate for any breach of these covenants. If
7
<PAGE> 8
any of these covenants shall at any time be adjudged invalid to any extent by
any court of competent jurisdiction, such covenant shall be deemed modified to
the extent necessary to render it enforceable.
e. Executive, Parent and Citadel acknowledge and mutually
agree that (i) the covenants set forth in Section 7.a. and 7.c. are reasonable
in all respects, (ii) the covenants contained herein have been made to induce
Parent and Citadel to enter into this Agreement and (iii) Parent and Citadel
would not have entered into this Agreement and certain of Parent's investors
would not have invested in Parent but for the covenants of Executive contained
herein.
8. Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party.
9. Miscellaneous.
a. Key Man Insurance. Executive shall cooperate fully,
including answering all questions and submitting to one or more physical
examinations, requested by Citadel to assist Citadel in satisfying its
obligations to obtain key man life insurance pursuant to a Securities Purchase
and Exchange Agreement dated June 28, 1996 to which Citadel and the Company are
party.
b. Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the internal laws, and not the
laws of conflicts of, of the State of Arizona.
c. Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understanding with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth
herein.
d. Withholding Taxes. Citadel may withhold from any amount
payable under this Agreement all federal, state, city or other taxes as shall
be required pursuant to any law or governmental regulation or ruling.
e. Amendments. No amendment or modification of this Agreement
shall be deemed effective unless made in writing signed by the parties hereto.
Any amendment or modification of this agreement shall be signed by a duly
authorized officer of each of Citadel and Parent other than Executive.
f. No Waiver. No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or
8
<PAGE> 9
estoppel is sought. Any written waiver shall not be deemed a continuing waiver
unless specifically stated, shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition
for the future or as to any act other than that specifically waived.
g. Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
here from and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
h. Counterparts. This Agreement may be executed in any number
of counterparts, all such counterparts shall be deemed to constitute one and
the same instrument, and each of the executed counterparts shall be deemed an
original hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
9
<PAGE> 10
[SIGNATURE PAGE FOR EMPLOYMENT AGREEMENT]
CITADEL BROADCASTING COMPANY
By /s/ Donna L. Heffner
-------------------------------------
Its Secretary
--------------------------------
"CITADEL"
CITADEL COMMUNICATIONS COMPANY
By /s/ Donna L. Heffner
-------------------------------------
Its Secretary
--------------------------------
"PARENT"
/s/ Lawrence R. Wilson
----------------------------------------
Lawrence R. WILSON
"EXECUTIVE"
9
<PAGE> 1
Exhibit 10.2
CITADEL COMMUNICATIONS CORPORATION
1996 EQUITY INCENTIVE PLAN, AS AMENDED
ARTICLE 1: PURPOSE
1.1 General. The purpose of the CITADEL COMMUNICATIONS CORPORATION
1996 EQUITY INCENTIVE PLAN (the "Plan") is to promote the interests of Citadel
Communications Corporation (the "Company"), by enabling the Company to
motivate, attract, and retain the services of persons upon whose judgment,
efforts, and contributions the success of the Company's business depends. The
plan is further intended to align the personal interests of such persons with
the interests of shareholders of the Company through equity participation in
the Company's growth and success. Capitalized terms not otherwise defined in
the text are defined in Article 15.
ARTICLE 2: EFFECTIVE DATE; TERM
2.1 Effective Date. The effective date of the Plan is June 28, 1996
(the "Effective Date"), which is the date as of which the Plan was approved by
the Board of Directors and stockholders of the Company.
2.2 Term. This Plan shall terminate on the tenth (10th) anniversary
of the Effective Date, subject to Article 13.
ARTICLE 3: SHARES SUBJECT TO THE PLAN
3.1 Number of Shares. The aggregate number of shares of Stock
reserved and available for Awards or which may be used to provide a basis of
measurement or valuation of an Award (such as a Performance Unit Award) shall be
Five Hundred and Thirty-Two Thousand Seven Hundred and Forty Three (532,743)
(the "Shares").
3.2 Lapsed Awards. To the extent that an Award terminates, expires
or lapses for any reason, any shares of Stock subject to the Award will again
be available for the grant of an Award under the Plan, in each case to the full
extent available pursuant to the applicable rules and interpretations of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
3.3 Payments in Stock. Any shares of Stock tendered to or withheld
by the Company in connection with payment for Stock purchased pursuant to the
Plan or withholding taxes thereon shall be deducted from the aggregate number
of shares reserved and available for Awards under the Plan.
<PAGE> 2
3.4 Stock Distributed. Any Stock distributed pursuant to an Award
may consist, in whole or in part, of authorized and unissued Stock, treasury
Stock, or Stock purchased on the open market.
ARTICLE 4: ELIGIBILITY
4.1 General. Awards may be granted only to an individual who is an
employee (including an employee who also is an officer or director), officer,
director, consultant, inde pendent contractor, or adviser of the Company or a
Subsidiary, as determined by the Board; provided, however, that if the Board
shall appoint a Committee to administer the Plan as provided in Article 5,
non-employee directors shall no longer be eligible to receive Awards hereunder.
ARTICLE 5: ADMINISTRATION
5.1 Board. The Plan shall be administered by the Board or a
Committee appointed by the Board to administer the Plan at any time or from
time to time; provided, however, that all matters relating to Awards of current
directors shall be administered by a committee appointed by the Board in
accordance with that certain Amended and Restated Voting Agreement dated as of
June 28, 1996 among the company and certain shareholders of the Company. If the
Company has a class of equity securities registered under Section 12 of the
Exchange Act, the Plan shall be administered by the Board or a Committee of the
Board in accordance with Rule 16b-3, or successor legislation, under the
Exchange Act. Once appointed, the Committee shall continue to serve until
otherwise directed by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause), appoint new members in substitution therefor, and fill
vacancies however caused; provided, however, that at no time may any person
serve on the Committee if the Company has a class of equity securities
registered under Section 12 of the Exchange Act and that person's membership
would cause the Committee not to satisfy the "disinterested administration"
requirements of Rule 16b-3 or successor legislation.
5.2 Authority of Board. The Board has the exclusive power,
authority, and discretion, subject to the terms hereof, to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted
to each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock subject to an Award;
1996 EQUITY INCENTIVE PLAN 2
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(d) Prescribe the form of each Award Agreement, which
need not be identical for each Participant;
(e) Determine the terms and conditions of any Award
granted under the Plan, including but not limited to, the exercise
price, grant price, or purchase price, any restrictions or
limitations on the Award, any schedule for lapse of forfeiture
restrictions or restrictions on the exercisability of an Award and
accelerations or waivers thereof, and any modification or amendment
of any Award previously granted, based in each case on such
considerations as the Board in its sole discretion determines;
(f) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of
an Award may be paid in, cash, Stock, other Awards, or other
property, or an Award may be canceled, forfeited, or surrendered;
(g) Decide all other matters that must be determined in
connection with an Award;
(h) Establish, adopt, or revise any rules and regulations
as it may deem necessary or advisable to administer the Plan;
(i) Interpret the Plan, any Award, and any Award
Agreement in its discretion; and
(j) Make all other decisions and determinations that may
be required under the Plan or as the Board deems necessary or
advisable to administer the Plan.
5.3 Decisions Binding. All decisions, interpretations, and
determinations by the Board with respect to the Plan, any Award, and any Award
Agreement are final, binding, and conclusive on all parties.
ARTICLE 6: STOCK OPTIONS
6.1 General. The Board is authorized to grant Options to
Participants on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
under an Option shall be determined by the Board.
1996 EQUITY INCENTIVE PLAN 3
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(b) Payment. Payment for Stock issued upon exercise of an
Option shall be made in accordance with Article 10 of the Plan.
(c) Time and Conditions of Exercise. The Board shall
determine the time or times at which an Option may be exercised in
whole or in part, provided that, if the Company has a class of
equity registered under the Exchange Act, no Option may be
exercisable prior to six months following the date of the grant of
such Option. The Board also shall determine the expiration date of
each Option and the performance or other conditions, if any, that
must be satisfied before all or part of an Option may be exercised.
(d) Evidence of Option. All Options shall be evidenced by
a written Award Agreement between the Company and the Participant.
The Award Agreement shall include such provisions as may be
specified by the Board.
6.2 Incentive Stock Options. The terms of any Incentive Stock
Options granted under the Plan must comply with the following additional rules:
(a) Employees Only. Incentive Stock Options may only be
granted to employees (including officers and directors who are also
employees) of the Company or a Subsidiary.
(b) Exercise Price. The exercise price per share of Stock
shall be set by the Board, provided that the exercise price for any
Incentive Stock Option may not be less than the Fair Market Value as
of the date of the grant.
(c) Exercise. In no event may any Incentive Stock Option
be exercisable for more than ten years from the date of its grant.
(d) Individual Dollar Limitation. The aggregate Fair
Market Value (determined as of the time an Award is made) of all
shares of Stock with respect to which Incentive Stock Options are
first exercisable by a Participant in any calendar year may not
exceed $100,000.00.
(e) Ten Percent Owners. An Incentive Stock Option may be
granted to a Ten Percent Owner, provided that at the time such
option is granted the exercise price per share of Stock shall not be
less than 110% of the Fair Market Value and such option by its terms
is not exercisable after the expiration of five (5) years from the
date of its grant.
1996 EQUITY INCENTIVE PLAN 4
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(f) Expiration of Incentive Stock Options. No Award of an
Incentive Stock Option may be made pursuant to this Plan after the
expiration of ten (10) years from the Effective Date.
(g) Right to Exercise. During a Participant's lifetime,
an Incentive Stock Option may be exercised only by the Participant.
6.3 Termination of Participant. Notwithstanding the exercise periods
set forth in any Award Agreement, Options shall be subject to the following:
(a) An Option shall lapse ten years after it is granted,
unless an earlier time is set in the Award Agreement.
(b) If a Participant's employment is terminated due to
(i) Disability, (ii) Retirement, or (iii) for any other reason, such
Participant may exercise his or her Incentive Stock Options only to
the extent that such Incentive Stock Options would have been
exercisable on the Termination Date; provided, that such exercise is
made prior to the earlier of (i) the expiration of three (3) months
(six (6) months in the case of Disability) after the Termination
Date or (ii) the expiration date of the Option set forth in the
Award Agreement.
(c) If a Participant's employment, contractual or other
relationship with the Company is terminated due to (i) Disability,
(ii) Retirement, or (iii) for any other reason, such Participant may
exercise his or her Non-Qualified Stock Options, only to the extent
that such Options would have been exercisable on the Termination
Date; provided, that such exercise is made within the applicable
time period for exercise as set forth in the Award Agreement.
(d) If a Participant dies before his or her Options lapse
pursuant to this Section, then the Participant's Options may be
exercised, only to the extent that such Options would have been
exercisable on the date of the Participant's death; provided that
such exercise is made prior to the earlier of (i) the first
anniversary of such Participant's death or (ii) the expiration date
of the Option set forth in the Award Agreement. Upon the
Participant's death, any exercisable Options may be exercised by the
Participant's legal representative or representatives.
1996 EQUITY INCENTIVE PLAN 5
<PAGE> 6
ARTICLE 7: PERFORMANCE UNITS
7.1 Grant of Performance Units. The Board is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Board. The Board shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.
7.2 Right Under Performance Units. A grant of Performance Units
gives the Participant rights, valued as determined by the Board, and payable
to, or exercisable by, the Participant to whom the Performance Units are
granted, in whole or in part, as the Board shall establish at grant or
thereafter. The Board shall set performance goals and other terms or conditions
to payment of the Performance Units in its discretion which, depending on the
extent to which they are met, will determine the amount and value of cash,
Stock, Awards, and/or other property that will be paid to the Participant;
provided, however, that if the Company has a class of equity registered under
Section 12 of the Exchange Act, the time period during which the performance
goals must be met shall, in all cases, exceed six months.
7.3 Other Terms. Performance Units may be payable in cash, Stock, or
other Awards or property, or any combination thereof, and have such other terms
and conditions as determined by the Board and reflected in the Award Agreement.
ARTICLE 8: RESTRICTED STOCK AWARDS
8.1 Restricted Stock Awards. The Board is authorized to make Awards
of Restricted Stock to Participants either in the form of a grant of Stock or
an offer to sell Stock to a Participant, in such amounts and subject to such
terms, conditions and restrictions as may be selected by the Board. All Awards
of Restricted Stock shall be evidenced by an Award Agreement.
8.2 Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, including without
limitation "vesting" or forfeiture restrictions, as the Board may impose. These
restrictions may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Board determines at
the time of the grant of the Award or thereafter.
8.3 Forfeiture. Except as otherwise determined by the Board at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the Company;
provided, however, that the Board may provide in any Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in specified circumstances, and the Board may in
other cases waive in whole or in part restrictions or forfeiture conditions
relating to Restricted Stock.
1996 EQUITY INCENTIVE PLAN 6
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8.4 Payment and Certificates for Restricted Stock. If a Restricted
Stock Award provides for the purchase of Stock by a Participant, payment shall
be made pursuant to Article 10 of the Plan. Restricted Stock granted under the
Plan may be evidenced in such manner as the Board shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock,
and the Company shall retain physical possession of the certificate until such
time as all applicable restrictions lapse.
ARTICLE 9: GRANT OF STOCK-REFERENCE AWARDS
9.1 Grant of Stock-Reference Awards. The Board is authorized,
subject to limitations under applicable law, to grant to Participants such
other Awards that are payable in, valued in whole or in part by reference to,
or otherwise based on or related to shares of Stock, as deemed by the Board to
be consistent with the purposes of the Plan, including without limitation
shares of Stock awarded purely as a "bonus" and not subject to any restrictions
or conditions, other rights convertible or exchangeable into shares of Stock,
and awards valued by reference to book value of shares of Stock or the value of
securities of or the performance of specified divisions or Subsidiaries of the
Company. The Board shall determine the terms and conditions of such Awards.
ARTICLE 10: PAYMENT FOR STOCK PURCHASES;
WITHHOLDING TAXES
10.1 Payment. Payment for Stock purchased pursuant to the Plan may
be made in cash (by check) or, where expressly approved for the Participant by
the Board in an Award Agreement or otherwise in writing and where permitted by
law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of Stock that either: (1) has been owned
by the Participant for more than six (6) months and has been paid
for within the meaning of Rule 144 promulgated under the Securities
Act; (2) was obtained by the Participant in the public market; or
(3) is otherwise acceptable to the Board in its discretion;
(c) by waiver of compensation due or accrued to
Participant for services rendered;
(d) by tender of property acceptable to the Board;
1996 EQUITY INCENTIVE PLAN 7
<PAGE> 8
(e) with respect only to purchases upon exercise of an
Option, and provided that a public market for the Company's stock
then exists:
(1) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of the
National Association of Securities Dealers (a "NASD
Dealer") whereby Participant irrevocably elects to
exercise the Option and to sell a portion of the Stock so
purchased to pay for the exercise price, and whereby the
NASD Dealer irrevocably commits upon receipt of such
Stock to forward the exercise price directly to the
Company;
(2) through a "margin" commitment from
Participant and a NASD Dealer whereby Participant
irrevocably elects to exercise the Option and to pledge
the Stock so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in
the amount of the exercise price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Stock to
forward the exercise price directly to the Company; or
(3) through any other "cashless exercise"
procedure approved by the Board; or
(f) by any combination of the foregoing, or any other
method of payment acceptable to the Board in its sole discretion.
10.2 Loan Guarantees. The Board may, in its discretion and
consistent with its obligations to its existing lenders and all other
applicable restrictions, help the Participant pay for Shares purchased under
the Plan by authorizing a guarantee by the Company of a third-party loan to the
Participant.
10.3 Tax Withholding. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of this Plan.
Whenever, under the Plan, payments in satisfaction of Awards are to be made in
cash, such payment shall be net of an amount sufficient to satisfy federal,
state, and local withholding tax requirements. With respect to withholding
required upon any taxable event relating to the issuance of Stock under the
Plan, Participants may elect, subject to the Board's approval and any rules or
policies adopted by the Board from time to time, to satisfy the withholding
requirement, in whole or in part, by having the Company or any Subsidiary
withhold shares of Stock having a Fair Market Value on the date of withholding
equal to the amount to be withheld for tax
1996 EQUITY INCENTIVE PLAN 8
<PAGE> 9
purposes. The Board may, at the time any Award is granted, require that any and
all applicable tax withholding requirements be satisfied by the withholding of
shares of Stock as set forth above.
ARTICLE 11: PROVISIONS APPLICABLE TO AWARDS
11.1 Stand-Alone, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Board, be granted either alone or
in addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. Awards granted in addition to or in tandem with other Awards
may be granted either at the same time as or at a different time from the grant
of such other Awards.
11.2 Exchange Provisions. The Board may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award, based on the terms and conditions the Board determines and
communicates to the Participant at the time the offer is made. Any shares so
exchanged or purchased shall be deducted from the aggregate number of shares
reserved and available for Awards under the Plan.
11.3 Term of Award. The term of each Award shall be for the period
as determined by the Board, provided that in no event shall the term of any
Incentive Stock Option exceed a period of ten years from the date of its grant.
11.4 Form of Payment for Awards. Subject to the terms of the Plan
and any applicable law or Award Agreement, payments or transfers to be made by
the Company or a Subsidiary on the grant or exercise of an Award may be made in
such forms as the Board determines at or after the time of grant, including
without limitation, cash, Stock, other Awards, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules
adopted by, and at the discretion of, the Board.
11.5 Limits on Transfer. No right or interest of a Participant in
any Award may be pledged, encumbered, or hypothecated to or in favor of any
party other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided below, no Award shall be
assignable or transferable by a Participant other than by will or the laws of
descent and distribution or, except in the case of an Incentive Stock Option,
pursuant to a qualified domestic relations order as defined in Section
414(p)(1)(A) of the Code or Title I of the Employee Retirement Income Security
Act, or the rules thereunder. In the Award Agreement for any Award other than
an Award that includes an Incentive Stock Option, the Board may allow a
Participant to assign or otherwise transfer all or a portion of the rights
represented by the Award to specified individuals or classes of individuals, or
to a trust benefitting such individuals or classes of individuals, subject to
such restrictions, limitations, or conditions as the Board deems appropriate.
At the discretion of the Board, the Company may reserve to itself or its
assignees in
1996 EQUITY INCENTIVE PLAN 9
<PAGE> 10
any Award (a) a right of first refusal to purchase any Stock which a
Participant may propose to transfer to a third party and/or (b) a right to
repurchase any and all Stock held by a Participant upon the Participant's
termination of employment or other relationship with the Company or its Parent
or Subsidiary for any reason, including Death or Disability, at a price for
such Stock as determined by the Board.
11.6 Lock-up Agreement. In addition to any other restrictions on
transfer, a Participant shall not, without the prior written consent of the
Board and any underwriters in their discretion, offer or sell any Stock
acquired pursuant to the Plan for at least one hundred eighty (180) days after
the closing of the initial public offering of securities of the Company
registered under the Securities Act of 1993.
11.7 Stock Certificates. All Stock certificates delivered under the
Plan are subject to any stop-transfer orders and other restrictions as the
Board deems necessary or advisable to comply with federal or state securities
laws, rules, and regulations and the rules of any national securities exchange
or automated quotation system on which the Stock is listed, quoted, or traded.
The Board may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
ARTICLE 12: CHANGES IN CAPITAL STRUCTURE; LIQUIDATION;
DISSOLUTION
12.1 General. In the event a stock dividend, stock-split or reverse
stock split is declared after the Effective Date upon the Stock, the shares of
Stock then subject to each Award and the number of shares which have been
authorized for issuance under the Plan but for which no Awards have yet been
granted, shall be increased or decreased proportionately without any change in
the aggregate purchase price therefor. In the event that after the Effective
Date the Stock shall be changed into or exchanged for a different number or
class of shares of Stock, without receipt of material consideration, whether
through reorganization, recapitalization, stock split-up, combination of
shares, merger, consolidation, or any other increase or decrease in the number
issued shares of common stock effected without consideration (provided, that
conversion of any convertible securities shall not be deemed to have been
"effected without receipt of consideration") there shall be substituted for
each such share of Stock then subject to each Award and each share of Stock
issuable under the Plan the number and class of shares of Stock into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof, shall be made with respect to the
number or price of Awards hereunder.
1996 EQUITY INCENTIVE PLAN 10
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ARTICLE 13: AMENDMENT, MODIFICATION, AND TERMINATION
13.1 Amendment, Modification, and Termination. With the approval of
the Board, at any time and from time to time, the Board may terminate, amend,
or modify the Plan. However, without approval of the shareholders of the
Company (if required in accordance with the Code, the Exchange Act, the rules
and regulations thereunder or other applicable law and rules), no such
termination, amendment, or modification may:
(a) Increase the total number of shares of Stock that may
be issued under the Plan, except as provided in Section 12.1;
(b) Materially modify the eligibility requirements for
participation in the Plan; or
(c) Materially increase the benefits accruing to
Participants under the Plan.
Any such termination, amendment, or modification shall comply with such other
requirements as may be required by the Code, by the rules under Section 16 of
the Exchange Act, by any national securities exchange or system on which the
Stock is listed or reported, or by a regulatory body having jurisdiction.
13.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 14: GENERAL PROVISIONS
14.1 No Rights to Awards. No Participant or employee shall have any
claim to be granted any Award under the Plan, and neither the Company nor the
Board is obligated to treat Participants and employees uniformly.
14.2 No Stockholders Rights. No Award gives the Participant any of
the rights of a shareholder of the Company unless and until shares of Stock are
in fact issued to such person in connection with such Award.
14.3 No Right to Employment. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment or other relationship
with the Company at any time, nor confer upon any Participant any right to
continue in the employment or any other relationship of the Company or any
Subsidiary.
1996 EQUITY INCENTIVE PLAN 11
<PAGE> 12
14.4 Unfunded Status of Awards. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Subsidiary.
14.5 Relationship to Other Benefits. No payment under the Plan shall
be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary.
14.6 Expenses. The expenses of administering the Plan shall be borne
by the Company and its Subsidiaries.
14.7 Titles and Headings. The titles and headings of the Articles
and Sections in the Plan are for convenience of reference only, and in the
event of any conflict, the text of the Plan, rather than such titles or
headings, shall control.
14.8 Fractional Shares. No fractional shares of stock shall be
issued and the Board shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
14.9 Securities Law Compliance. With respect to any person who is,
on the relevant date, obligated to file reports under Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
To the extent any provision of the Plan or any Award Agreement or any action by
the Board fails to so comply, it shall be void to the extent permitted by law
and voidable as deemed advisable by the Board.
14.10 Government and Other Regulations. The obligation of the
Company to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act, any of the shares of Stock paid under the
Plan. If the shares of Stock paid under the Plan may in certain circumstances
be exempt from registration under the Securities Act, the Company may restrict
the transfer of such shares in such manner as it deems advisable to ensure the
availability of any such exemption.
14.11 Governing Law. The Plan and all Award Agreements shall be
construed in accordance with and governed by the internal laws, and not the
laws of conflicts, of the State of Arizona.
1996 EQUITY INCENTIVE PLAN 12
<PAGE> 13
ARTICLE 15: DEFINITIONS
15.1 Definitions. The following words and phrases shall have the
following meanings for purposes of this Plan:
(a) "Award" means any Option, Restricted Stock Award,
Performance Unit, Stock-Reference Award or any other right or
interest relating to Stock, cash or property, granted to a
Participant under the Plan.
(b) "Award Agreement" means any written agreement,
contract, or other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company
or, if the context so requires, a Committee thereof appointed
pursuant to Article 5.
(d) "Cause" means (i) conviction of any crime (other than
a misdemeanor offense not involving fraud or moral turpitude), (ii)
noncompliance with reasonable directives of the Board or its
designees, (iii) violation of Company rules, policies or procedures
or of the Plan or any applicable Award Agreement.
(e) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(f) "Committee" means the committee of the Board
described in Article 5.
(g) "Disability" means the following: A Participant shall
be disabled if he or she is unable to perform the duties of his or
her customary position of employment by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which can be expected to last for a continuous
period of not less than 12 months. The Board may require such
medical or other evidence as it deems necessary to judge the nature
and permanency of the Participant's condition.
(h) "Fair Market Value" with respect to Stock shall be
the mean between the bid and asked quotations for the Stock on that
date as reported by the Nasdaq National Market System or, if there
are no bid or asked quotations on such date, the mean between the
bid and asked quotations on the next preceding date for which
quotations are available. If the Stock is subsequently listed and
traded upon a recognized securities exchange or shall be quoted on a
recognized national market system, the Fair Market Value shall be
the closing
1996 EQUITY INCENTIVE PLAN 13
<PAGE> 14
price on such date or, if no closing price is so reported for that
date, the closing price on the next preceding date for which a
closing price was reported. If at any time the Stock is not listed
upon a recognized securities exchange, or with respect to any other
property, Fair Market Value shall be the fair market value of such
Stock or other property determined by the Board in good faith using
such methods or procedures as may be established from time to time
by the Board in its discretion.
(i) "Incentive Stock Option" means an Option that is
intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.
(j) "Non-Qualified Stock Option" means an Option that is
not intended to be an Incentive Stock Option.
(k) "Option" means a right granted to a Participant under
Article 6 of the Plan to purchase Stock at a specified price during
specified time periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(l) "Participant" means a person who, as an officer,
employee, consultant, independent contractor, or adviser of the
Company or any Subsidiary, has been granted an Award under the Plan.
(m) "Performance Unit" means a right granted to a
Participant under Article 7 to receive cash, Stock, or other Awards.
(n) "Plan" means the Citadel Communications Corporation
1996 Equity Incentive Plan, as amended from time to time.
(o) "Restricted Stock Award" means Stock granted to a
Participant or offered for sale to a Participant under Article 8.
(p) "Retirement" means a Participant's termination of
employment with the Company after attaining any normal or early
retirement age specified in any pension, profit sharing, or other
retirement program sponsored by the Company, if any.
(q) "Securities Act" means the Securities Act of 1933, as
amended.
1996 EQUITY INCENTIVE PLAN 14
<PAGE> 15
(r) "Stock" means Class A Stock ($.001 par value) of the
Company and such other securities of the Company that may be
substituted for Stock pursuant to Article 12.
(s) "Stock-Reference Award" means a right, granted to a
Participant under Article 9.
(t) "Subsidiary" means any corporation of which a
majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company.
(u) "Ten Percent Owner" means any individual who, at the
date of grant of an Incentive Stock Option, owns stock possessing
more than ten percent of the total combined voting power of all
classes of Stock of the Company or a Subsidiary. For purposes of
determining such percentage, the following rules shall apply:
(1) the individual with respect to whom such
percentage is being determined shall be considered as
owning the Stock owned, directly or indirectly, by or for
his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and
(2) Stock owned, directly or indirectly, by or
for a corporation, partnership, estate, or trust, shall
be considered as being owned proportionately by or for
its shareholders, partners, or beneficiaries.
(v) "Termination Date" means the date on which the
employment (or other service or relationship in the case of a
Participant who is not an employee of the Company) of a Participant
terminates for any reason or no reason.
1996 EQUITY INCENTIVE PLAN 15
<PAGE> 1
EXHIBIT 10.3
CITADEL COMMUNICATIONS CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
This Option Agreement is made and entered into by and between CITADEL
COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company") and Lawrence
R. Wilson ("Wilson") as of June 28, 1996.
WHEREAS, in October of 1993, the Company's Board of Directors (the
"Board") granted Wilson annual performance stock options for the years 1993 to
1997 for the annual purchase 17,187 shares of the Company's Class A Common
Stock (the "Stock") per year at the Purchase Price (as that term is defined in
Section 2 below) for each year in which he receives a Performance Bonus (as that
term is defined in that certain Employment Agreement of even date herewith
between Citadel Broadcasting Company, a Nevada corporation, and Wilson);
WHEREAS, because Wilson received a Performance Bonus during the calendar
years 1993 and 1994 he is entitled to options to purchase 17,187 shares of the
Stock for each year, for a total of 34,374 shares (the "Vested Options");
WHEREAS, during the calendar year 1995 Wilson did not receive a
Performance Bonus; and
WHEREAS, the Company and Wilson now wish to document the terms and
conditions of the Company's grant of all performance stock options to Wilson,
including the Vested Options and any options Wilson might earn during the
calendar years 1996 and 1997;
THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth and for good and valuable consideration, the Company and
Wilson agree as follows:
1. Grant of Option.
a. Vested Options. The Company acknowledges that Wilson has a
vested right to purchase a total of 34,374 shares of the Stock at the Purchase
Price based on his Performance Bonuses during 1993 and 1994.
b. Future Options. For the calendar years 1996 and 1997, the
Company grants to Wilson the right and option to purchase 17,187 shares of Stock
per year at the Purchase Price for each year in which he receives a Performance
Bonus (the "Future Options," and together with the Vested Options, the "Options"
or "Option").
2. Purchase Price. The price at which Wilson shall be entitled to
purchase the Stock covered by the Options shall be $2.9091 per share (the
"Purchase Price").
3. Exercise of Option. The Vested Options may be exercised by Wilson
as of the date hereof. The Future Options vest, if earned, as of January 1,
1997 for the Options based on the
<PAGE> 2
Company's performance during 1996 and January 1, 1998 for the Options based on
the Company's performance during 1997 (the "Vesting Dates"), but such options
shall not be exercisable until the Company has determined, based on its
internal accounting records, that a Performance Bonus was earned for each
preceding calendar year. Such determination shall be made by the Company as
soon as practical after the end of each calendar year. The Options may be
exercised from time to time, as to all or any part of the shares covered
hereby, by delivery to the Company of written notice of exercise and payment of
the Purchase Price.
4. Method of Exercising Option. Subject to the terms and conditions
of this Agreement, the Options may be exercised by timely delivery to the
Company of a written notice, which notice shall be effective on the date
received by the Company. The written notice shall state Wilson's election to
exercise the Options, the number of shares in respect of which an election to
exercise has been made, the method of payment elected, the exact name or names
in which the shares will be registered and Wilson's Social Security number.
Such notice shall be signed by Wilson and shall be accompanied by payment of the
purchase price of such shares. In the event the Options shall be exercised by a
person or persons other than Wilson pursuant to Section 6 hereof, such notice
shall be signed by such other person or persons and shall be accompanied by
proof acceptable to the Company of the legal right of such person or persons to
exercise the Options. All shares delivered by the Company upon exercise of the
Options as provided herein shall be fully paid and nonassessable upon delivery.
5. Method of Payment for Options. Upon the exercise of all or any
part of an Option, the Purchase Price shall be payable in full by check, or, in
the event the Company is at the time of exercise a reporting Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in shares of
Stock owned by Wilson to the extent permitted by law, or in any combination
thereof at the election of Wilson. Payment of the Purchase Price with shares of
Stock owned by Wilson, to the extent permitted under this Agreement, shall be
made by assigning and delivering such shares to the Company. The shares shall
be valued at Fair Market Value on the exercise date of the Option. For purposes
of this Agreement, the "Fair Market Value" of the Stock as of any date shall be
the average of the closing bid and asked prices for the Stock as reported on the
Nasdaq National Market System (or on any national securities exchange on which
the Stock is then listed) for the date or, if no prices are so reported for that
date, such prices on the next preceding date for which closing bid and asked
prices were reported. If at any time the Stock is not listed on any national
securities exchange, the Fair Market Value shall be the fair market value
determined by the Board in good faith and in its reasonable discretion using
such methods or procedures as may be established from time to time by the Board
in its reasonable discretion.
To the extent permitted under this Agreement, if Wilson elects to pay
for all or part of the shares purchased upon the exercise of the Option in
Stock, a share certificate or certificates, together with a duly executed stock
power authorizing the transfer of such shares to the Company, shall be delivered
to the Company with the notice of exercise. Should the number of such shares
delivered for credit against the purchase price have a Fair Market Value less
than the full purchase price, Wilson shall pay the difference between the Fair
Market Value of the Stock to be conveyed to the
2
<PAGE> 3
Company and the full purchase price by check. Should the share certificate
delivered be for a number of shares in excess of that number to be conveyed to
the Company for credit against the full purchase price, the Company will issue
to Wilson a new share certificate representing the number of shares in excess
of the nearest whole number of shares having a Fair Market Value not in excess
of the amount required to pay the full purchase price. No fractional shares
shall be accepted in payment or be reissued by the Company under this
provision.
6. Death of Wilson. In the event of the death of Wilson, the Option
shall lapse unless it is exercised within one hundred eighty days (180) days
after the date of Wilson's death by Wilson's legal representative or
representatives or by the person or persons entitled to do so under Wilson's
last will and testament or if Wilson fails to make a testamentary disposition of
such Option or shall die intestate, by the person or persons entitled to receive
such Option under the applicable laws of descent and distribution. The Company
shall have the right to require evidence satisfactory to it of the rights of any
person or persons seeking to exercise the Option under this Section 6 to
exercise the Option.
7. Nontransferability. The Options granted by this Agreement shall
be exercisable, except as provided in Section 6 above, only by Wilson during his
lifetime. No Option granted by this Agreement shall be transferable by Wilson
other than by will or pursuant to applicable laws of descent and distribution.
The Options, and any rights and privileges in connection therewith, shall not be
transferred, assigned, pledged or hypothecated by Wilson, or by any other person
or persons, in any way, whether by operation of law, or otherwise, and shall not
be subject to execution, attachment, garnishment or similar process. In the
event of such an occurrence, the Options shall automatically be terminated and
shall thereafter be null and void.
8. Adjustments in Number of Shares and Purchase Price. In the event
a stock dividend is declared upon the Stock, the remaining shares of Stock then
subject to Options under this Agreement shall be adjusted proportionately
without any change in the aggregate purchase price therefor. In the event the
Stock shall be changed into or exchanged for a different number or class of
shares of stock of the Company or of another corporation, whether through
reorganization, recapitalization, stock split, combination of shares, merger or
consolidation, there shall be substituted for each such remaining share of Stock
then subject to Options granted under this Agreement the number and class of
shares of stock into which each outstanding share of Stock shall be so
exchanged, all without any change in the aggregate purchase price for the shares
then subject to Options granted under this Agreement.
9. Delivery of Shares. No shares of Stock shall be delivered upon
exercise of the Options unless and until (i) the purchase price shall have been
paid in full in the manner herein provided; (ii) applicable taxes required to be
withheld have been paid or withheld in full; (iii) approval of any governmental
authority required in connection with the Options, or the issuance of shares
thereunder, has been received by the Company; (iv) Wilson has complied with all
terms and conditions of this Agreement; and (v) if required by the Committee,
Wilson has delivered to the
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<PAGE> 4
Committee an Investment Letter in form and content satisfactory to the Company
as provided for in Section 10 hereof.
10. Securities Act. The Company shall have the right, but not the
obligation, to cause the shares of Stock issuable upon exercise of the Options
to be registered under the appropriate rules and regulations of the Securities
and Exchange Commission.
The Company shall not be required to deliver any shares of Stock
pursuant to the exercise of all or any part of the Options if, in the opinion of
counsel for the Company, such issuance would violate the Securities Act of 1933,
as amended (the "Securities Act"), or any other applicable federal or state
securities laws or regulations. The Company may require that Wilson, prior to
the issuance of any such shares pursuant to exercise of the Options, sign and
deliver to the Company a written statement ("Investment Letter") stating (i)
that Wilson is acquiring the shares for investment and not with a view to the
sale or distribution thereof; (ii) that Wilson will not sell any shares received
upon exercise of the Options or any other shares of the Company that Wilson may
then own or thereafter acquire except either (a) through a broker on a national
securities exchange or (b) with the prior written approval of the Company; and
(iii) containing such other terms and conditions as counsel for the Company may
reasonably require to assure compliance with the Securities Act or other
applicable federal or state securities laws and regulations. Such Investment
Letter shall be in form and content acceptable to the Committee in its sole
discretion.
If shares of Stock or other securities issuable pursuant to the exercise
of the Options have not been registered under the Securities Act of 1933 or
other applicable federal or state securities laws or regulations, the
certificates representing such shares shall bear a legend restricting the
transferability thereof, such legend to be substantially in the following form:
The Securities evidenced by this certificate have not
been registered under the Securities Act of 1993, as
amended (the "Act"), or qualified under any applicable
state securities laws. They have been acquired for
investment and not with a view to distribution thereof
within the meaning of the Act and regulations
thereunder. They may not be sold or otherwise
transferred unless (a) there is an effective
registration statement under such Act and applicable
state securities laws covering such transaction
involving said securities or (b) this Corporation
receives an opinion of legal counsel for the holder of
these securities (concurred in by legal counsel for this
Corporation) stating that such transaction is exempt
from registration or this Corporation otherwise
satisfies itself that such transaction is exempt from
resolution.
Any such shares of Stock shall also bear the restrictive legends, in
substantially the same form, that are contained in: (a) that certain Second
Amended and Restated Stockholders Agreement among the Company, Wilson, and
certain other stockholders; and (b) that certain Amended and Restated Voting
Agreement among the Company, Wilson, and certain other stockholders.
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<PAGE> 5
11. Federal and State Taxes. Upon exercise of the Options, or any
part thereof, Wilson may incur certain liabilities for federal, state or local
taxes and the Company may be required by law to withhold such taxes for payment
to taxing authorities. Upon determination by the Company of the amount of taxes
required to be withheld, if any, with respect to the shares to be issued
pursuant to the exercise of the Options, Wilson shall pay to the Company by
check by authorizing the Company to withhold from monies owing by the Company to
Wilson an amount equal to the amount of any taxes which the Company is required
to withhold with respect to such Stock.
In the event the Company becomes a reporting Company under the Exchange
Act, Wilson may pay taxes with shares of Stock owned by Wilson. Payment of
taxes with shares of Stock owned by Wilson shall be made by assigning and
delivering such shares to the Company. Such shares shall be valued at Fair
Market Value on the business day coinciding with or immediately preceding the
date on which such shares are assigned or delivered. Except as otherwise
provided by law, any taxes which are required to be withheld with respect to an
exercised Option may also be paid by Wilson directing the Company to withhold
from the shares of Stock that would otherwise be issued pursuant to the Option,
that number of shares having a Fair Market Value on the date the Option is
exercised (the "Applicable Date") equal to the taxes due. In the event of such
an election, Wilson shall notify the Company in writing of his intent to do so
and shall receive the number of shares of Stock determined pursuant to the
following formula:
Number Number of Shares Fair Market Value _ Taxes
of = Subject to Award X on Applicable Date Due
Shares -----------------------------------------------------------------
Fair Market Value on
Applicable Date
Authorization of Wilson to the Company to withhold taxes pursuant to
this Section 11 shall be in form and content acceptable to the Company. Payment
or authorization to withhold taxes by Wilson shall be completed prior to the
delivery of any shares pursuant to this Agreement. An authorization to withhold
taxes pursuant to this provision shall be irrevocable unless and until the tax
liability of Wilson has been fully paid.
12. Administration. This Agreement shall in all respects be
administered by the Committee. The Committee shall have the sole and complete
discretion with respect to all matters under this Agreement and decisions of the
majority of the Committee with respect to this Agreement shall be final and
binding upon Wilson and the Company.
13. Continuation of Employment. This Agreement shall not be
construed to confer upon Wilson any right to continue in the employ of the
Company or its subsidiaries and shall not limit any right of the Company to
terminate the employment of Wilson. Wilson shall not be entitled to any Future
Option based on performance during the year in which his employment terminates
for any reason or for no reason. Except as provided in Section 7, however,
termination shall not affect Wilson's entitlement to any Options that were
exercisable pursuant to Section 3 prior to his termination.
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<PAGE> 6
14. Obligation to Exercise. Wilson shall have no obligation to
exercise any Option granted by this Agreement.
15. Governing Law. This Agreement shall be interpreted and
administered under the internal laws, and not the laws of conflicts, of the
State of Arizona.
16. Amendment and Termination. Except as otherwise provided in this
Agreement, this Agreement may be amended or terminated only by a written
agreement executed by the Company and Wilson. Any amendment or modification of
this agreement shall be signed by a duly authorized officer of the Company other
than Wilson.
17. Counterparts. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the
same instrument, and each of the executed counterparts shall be deemed an
original hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
6
<PAGE> 7
[SIGNATURE PAGE FOR CITADEL COMMUNICATIONS
CORPORATION NONQUALIFIED STOCK OPTION AGREEMENT]
CITADEL COMMUNICATIONS
CORPORATION
By /s/ Donna L. Heffner
---------------------
Its Secretary
-----------------
/s/ Lawrence R. Wilson
----------------------
LAWRENCE R. WILSON
The undersigned, as spouse of Lawrence R. Wilson, hereby confirms that the
community property of Lawrence R. Wilson and the undersigned is subject to and
bound by the agreement set forth above.
/s/ Claire Wilson
- --------------------
CLAIRE WILSON
7
<PAGE> 1
Exhibit 10.4
FORM OF
CITADEL COMMUNICATIONS CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
This Option Agreement is made and entered into by and between
CITADEL COMMUNICATIONS CORPORATION, a Nevada corporation ("Company") and
________________________ ("Employee"), effective as of the 21st day of
December, 1994.
The Company has elected to provide an incentive to encourage
key employees and officers of the Company and its wholly-owned subsidiaries to
remain in the employment of such companies and to enhance the ability of the
Company and its subsidiaries to attract new employees whose services are
considered unusually valuable by providing an opportunity to have a proprietary
interest in the success of the Company. The Company believes that the granting
of the Option herein described to Employee is consistent with the foregoing
goals. The Company and Employee desire to enter into an Agreement reflecting
the terms and conditions of the Option granted to Employee.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions hereinafter set forth and for other good and valuable consideration,
the Company and Employee agree as follows:
1. Grant of Option. The Company hereby grants to Employee the
right and option (the "Option") to purchase an aggregate of __________ shares
(such number being subject to adjustment as provided in Paragraph 10 hereof) of
the Class A Common Stock of the Company (the "Stock") on the terms and
conditions herein set forth. This Option may be exercised in whole or in part
and from time to time as hereinafter provided.
2. Purchase Price. The price at which Employee shall be
entitled to purchase the Stock covered by the Option shall be $5.37 per share.
3. Term of Option. The Option hereby granted shall remain in
force and effect for a period of ten (10) years from December 21, 1994 (the
"Date of Grant"), through and including the normal close of business of the
Company on December 21, 2004 (the "Expiration Date"), subject to earlier
termination as provided in Paragraphs 7, 8, 9, 10 and 18 hereof.
4. Exercise of Option. The Option may be exercised by
Employee with respect to the shares specified below beginning on the dates
specified below and ending on the Expiration Date as to all or any part of the
shares covered hereby by delivery to the Company of written notice of exercise
and payment of the purchase price, and by execution of a Stock Transfer
Agreement in the form attached hereto as Exhibit A (or in such similar form as
the Company may hereafter require), as provided in Paragraphs 5 and 6 hereof.
The Option shall vest and become exercisable as of the dates specified below:
<PAGE> 2
(i) December 21, 1995, with respect to one-fifth (1/5) of the shares of
the Stock subject to the Option;
(ii) December 21, 1996, with respect to one-fifth (1/5) of the shares of
Stock subject to the Option;
(iii) December 21, 1997, with respect to one-fifth (1/5) of the shares of
the Stock subject to the Option;
(iv) December 21, 1998, with respect to one-fifth (1/5) of the shares of
the Stock subject to the Option;
(v) December 21, 1999, with respect to the remaining one-fifth (1/5) of
the shares of the Stock subject to the Option.
The Option shall cease to be exercisable as to any share when
Employee exercises the Option and purchases the share or when the Option lapses
as provided in Paragraph 3.
In the event of a public tender for all or any portion of the
Stock of the Company, or in the event that a proposal to merge, consolidate, or
otherwise combine with another company is submitted for shareholder approval,
the Committee (as defined in Paragraph 14) may in its sole discretion declare
the Option immediately exercisable even if the original date for the exercise
of the Option, as set forth in the first paragraph of this Paragraph 4, has not
yet passed.
5. Method of Exercising Option. Subject to the terms and
conditions of this Option Agreement, the Option may be exercised by timely
delivery to the Company of (i) written notice, which notice shall be effective
on the date received by the Company (the "Effective Date"), and (ii) execution
and delivery by Employee (or another permitted person or persons other than
Employee pursuant to Paragraph 8 hereof) to Company, contemporaneously with the
written notice described in the next sentence, of a Stock Transfer Restriction
Agreement in the form attached hereto as Exhibit A (or in such similar form as
the Company may hereafter require). The written notice pursuant to subparagraph
(i) of this Paragraph shall state Employee's election to exercise the Option,
the number of shares in respect of which an election to exercise has been made,
the method of payment elected, the exact name or names in which the shares will
be registered and Employee's Social Security number. Such notice shall be
signed by Employee and shall be accompanied by payment of the purchase price of
such shares. In the event the Option shall be exercised by a person or persons
other than Employee pursuant to Paragraph 8 hereof, such notice shall be signed
by such other person or persons and shall be accompanied by proof acceptable to
the Company of the legal right of such person or persons to exercise the
Option. All shares delivered by the Company upon exercise of the Option as
provided herein shall be fully paid and nonassessable upon delivery.
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<PAGE> 3
6. Method of Payment for Options. Upon the exercise of all or
any part of an Option, the option price shall be payable in full by check, or,
in the event the Company is at the time of exercise a reporting Company under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in shares
of Stock owned by Employee to the extent permitted by law, or in any
combination thereof at the election of Employee. Payment of the option price
with shares of Stock owned by Employee, to the extent permitted under this
Agreement, shall be made by assigning and delivering such shares to the
Company. The shares shall be valued at Fair Market Value on the exercise date
of the Option. For purposes of this Agreement, the "Fair Market Value" of the
Stock as of any date shall be the average of the closing bid and asked prices
for the Stock as reported on the NASDAQ National Market System (or on any
national securities exchange on which the Stock is then listed) for the date
or, if no prices are so reported for that date, such prices on the next
preceding date for which closing bid and asked prices were reported.
In the event the Company becomes a reporting Company under
the Exchange Act, Employee may also pay on the option price, to the extent
permitted by applicable law, and subject to the approval of the Committee to
the extent required by Rule 16b-3(e)(2)(ii) of the Exchange Act, by directing
the Company to withhold from the shares of Stock that would otherwise be issued
upon exercise of the Option that number of shares having a Fair Market Value on
the exercise date equal to the option price. If Employee elects to exercise all
or any part of his or her Option by directing the Company to withhold shares
subject to the exercised Option, Employee must notify the Company in writing of
his or her intent to do so. In such case, the number of shares of Stock
received by Employee shall be determined pursuant to the following formula:
<TABLE>
<S> <C> <C> <C>
Number of Shares Fair Market Value - Purchase
Number = as to which the on Exercise Date Price
of Shares Option is to be ------------------------------
Received Exercised X Fair Market Value on
Exercise Date
</TABLE>
To the extent permitted under this Agreement, if Employee
elects to pay for all or part of the shares purchased upon the exercise of the
Option in Stock, a share certificate or certificates, together with a duly
executed stock power authorizing the transfer of such shares of the Company,
shall be delivered to the Company with the notice of exercise. Should the
number of such shares delivered for credit against the purchase price have a
Fair Market Value less than the full purchase price, the Company will issue to
Employee a new share certificate representing the number of shares in excess of
the nearest whole number of shares having a Fair Market Value not in excess of
the amount required to pay the full purchase price. No fractional shares shall
be accepted in payment or be reissued by the Company under this provision.
7. Termination of Employee. In the event that the employment of
Employee is terminated, either by Employee or by Company, for any reason other
than death of Employee, including a termination with or without cause, any
unexercised Option shall
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<PAGE> 4
lapse and terminate on the effective date of the Employee's termination unless
the Committee elects, in its sole and absolute discretion, to allow the
Employee to exercise it for a period of 90 days following his termination. In
no event shall the Option, or any part thereof, be exercisable after the
Expiration Date.
8. Death of Employee. In the event of the death of Employee
within a period during which the Option, or any part thereof, could have been
exercised by Employee (the "Option Period"), the Option shall lapse unless it
is exercised within the Option Period, and in no event later than ninety (90)
days after the date of Employee's death, by Employee's legal representative or
representatives or by the person or persons entitled to do so under Employee's
last will and testament or if Employee fails to make a testamentary disposition
of such Option or shall die intestate, by the person or persons entitled to
receive such Option under the applicable laws of descent and distribution. An
Option may be exercised following the death of Employee only if the Option was
exercisable by Employee immediately prior to his death. In no event shall the
Option, or any part thereof, be exercisable after the Expiration Date. The
Company shall have the right to require evidence satisfactory to it of the
rights of any person or persons seeking to exercise the Option under this
Paragraph 8 to exercise the Option.
9. Nontransferability. The Option granted by this Agreement
shall be exercisable only during the term of the Option provided in Paragraph 3
hereof and, except as provided in Paragraphs 7 and 8 above, only by Employee
during his lifetime and while an employee of the Company. No Option granted by
this Agreement shall be transferable by Employee other than by will or pursuant
to applicable laws of descent and distribution. The Option, and any rights and
privileges in connection therewith, shall not be transferred, assigned, pledged
or hypothecated by Employee, or by any other person or persons, in any way,
whether by operation of law, or otherwise, and shall not be subject to
execution, attachment, garnishment or similar process. In the event of such an
occurrence, the Option shall automatically be terminated and shall thereafter
be null and void.
10. Adjustment in Number of Shares and Option Price. In the
event a stock dividend is declared upon the Stock, the remaining shares of
Stock then subject to this Option shall be adjusted proportionately without any
change in the aggregate purchase price therefor. In the event the Stock shall
be changed into or exchanged for a different number or class of shares of stock
of the Company or of another corporation, whether through reorganization,
recapitalization, stock split, combination of shares, merger or consolidation,
there shall be substituted for each such remaining share of Stock then subject
to this Option the number and class of shares of stock into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to the Option.
Subject to any required action by the stockholders, if the
Company shall be the surviving or resulting corporation in any merger or
consolidation, the Option granted hereunder shall pertain to and apply to the
securities or rights to which a holder of the
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<PAGE> 5
number of shares of Stock subject to the Option would have been entitled; but a
dissolution or liquidation of the Company, or a merger or consolidation in
which the Company is not the surviving or resulting corporation, shall, in the
sole discretion of the Committee:
(a) Cause the Option outstanding hereunder to
terminate as of the date specified by the Committee, except
that the surviving or resulting corporation, in its absolute
and uncontrolled discretion, may tender an option to purchase
its shares or exercise such rights on terms and conditions,
as to the number of shares and rights and otherwise, which
shall substantially preserve the rights and benefits of the
Option then outstanding hereunder; or
(b) Give Employee the right to exercise this Option
prior to the occurrence of the event otherwise terminating
the Option over such period as the Committee, in its sole and
absolute discretion, shall determine.
11. Delivery of Shares. No shares of Stock shall be delivered
upon exercise of the Option unless and until (i) the purchase price shall have
been paid in full in the manner herein provided; (ii) applicable taxes required
to be withheld have been paid or withheld in full; (iii) approval of any
governmental authority required in connection with the Option, or the issuance
of shares thereunder; has been received by the Company; (iv) Employee has
complied with all terms and conditions of this Agreement; and (v) if required
by the Committee, Employee has delivered to the Committee an Investment Letter
in form and content satisfactory to the Company as provided in Paragraph 12
hereof.
12. Securities Act. The Company shall have the right, but not
the obligation, to cause the shares of Stock issuable upon exercise of the
Option to be registered under the appropriate rules and regulations of the
Securities and Exchange Commission.
The Company shall not be required to deliver any shares of
Stock pursuant to the exercise of all or any part of the Option if, in the
opinion of counsel for the Company, such issuance would violate the Securities
Act of 1933, as amended (the "Securities Act") or any other applicable federal
or state securities laws or regulations. The Company may require that Employee,
prior to the issuance of any such shares pursuant to exercise of the Option,
sign and deliver to the Company a written statement ("Investment Letter")
stating (i) that Employee is acquiring the shares for investment and not with a
view to the sale or distribution thereof; (ii) that Employee will not sell any
shares received upon exercise of the Option or any other shares of the Company
that Employee may then own or thereafter acquire except either (a) through a
broker on a national securities exchange or (b) with the prior written approval
of the Company; and (iii) containing such other terms and conditions as counsel
for the Company may reasonably require to assure compliance with the Securities
Act or other applicable federal or state securities laws and regulations. Such
Investment Letter shall be in form and content acceptable to the Committee in
its sole discretion.
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<PAGE> 6
If shares of Stock or other securities issuable pursuant to
the exercise of the Option have not been registered under the Securities of
1933 or other applicable federal or state securities laws or regulations, the
certificates representing such shares shall bear a legend restricting the
transferability thereof, such legend to be substantially in the following form:
The Securities evidenced by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
qualified under any applicable state securities laws. They
have been acquired for investment and not with a view to
distribution thereof within the meaning of the Act and
regulations thereunder. They may not be sold or otherwise
transferred unless (a) there is an effective registration
statement under such Act and applicable state securities laws
covering such transaction involving said securities or (b)
this Corporation receives an opinion of legal counsel for the
holder of these securities (concurred in by legal counsel for
this Corporation) stating that such transaction is exempt
from registration or this Corporation otherwise satisfies
itself that such transaction is exempt from resolution.
The sale, transfer, assignment or encumbrance of the shares
represented by this certificate is restricted by the
provisions of that certain Agreement dated December 21, 1994
and a Stock Transfer Restriction Agreement dated December
___, 1994. The Corporation will mail to any shareholder a
copy of such Agreement within five days after receipt of
written request therefor.
13. Federal and State Taxes. Upon exercise of the Option, or
any part thereof, Employee may incur certain liabilities for federal, state or
local taxes and the Company may be required by law to withhold such taxes for
payment to taxing authorities. Upon determination by the Company of the amount
of taxes required to be withheld, if any, with respect to the shares to be
issued pursuant to the exercise of the Option, Employee shall pay to the
Company by check by authorizing the Company to withhold from monies owing by
the Company to Employee or in shares of Stock owned by Employee an amount equal
to the amount of any taxes which the Company is required to withhold with
respect to such Stock.
In the event the Company becomes a reporting Company under
the Exchange Act, Employee may pay taxes with shares of stock owned by
Employee. Payment of taxes with shares of Stock owned by Employee shall be
made by assigning and delivering such shares to the Company. Such shares shall
be valued at Fair Market Value on the business day coinciding with or
immediately preceding the date on which such shares are assigned or
-6-
<PAGE> 7
delivered. Except as otherwise provided by law, any taxes which are required to
be withheld with respect to an exercised Option may also be paid by Employee
directing the Company to withhold from the shares of Stock that would otherwise
be issued pursuant to the Option, that number of shares having a Fair Market
Value on the date the Option is exercised (the "Applicable Date") equal to the
taxes due. In the event of such an election, Employee shall notify the Company
in writing of his intent to do so and shall receive the number of shares of
Stock determined pursuant to the following formula.
<TABLE>
<S> <C> <C> <C> <C>
Number Number of Fair Market Value - Taxes
of Shares Subject X on Applicable Date Due
Shares to Award -------------------------------------
Fair Market Value on
Applicable Date
</TABLE>
Authorization of Employee to the Company to withhold taxes
pursuant to this Paragraph 13 shall be in form and content acceptable to the
Company. Payment or authorization to withhold taxes by Employee shall be
completed prior to the delivery of any shares pursuant to this Option
Agreement. An authorization to withhold taxes pursuant to this provision shall
be irrevocable unless and until the tax liability of Employee has been fully
paid.
14. Administration. This Agreement shall in all respects be
administered by the Compensation Committee of the Board of Directors of the
Company (the "Committee"). The Committee shall have the sole and complete
discretion with respect to all matters under this Agreement and decisions of
the majority of the Committee with respect to this Agreement shall be final and
binding upon Employee and the Company.
15. Continuation of Employment. This Agreement shall not be
construed to confer upon Employee any right to continue in the employ of the
Company and shall not limit the right of the Company, in its sole discretion,
to terminate the employment of Employee at any time.
16. Obligation to Exercise. Employee shall have no obligation
to exercise any option granted by this Agreement.
17. Governing Law. This Agreement shall be interpreted and
administered under the laws of the State of Nevada.
18. Amendment and Termination. Except as otherwise provided
in this Agreement, this Agreement may be amended or terminated only by a
written agreement executed by the Company and Employee. The Company may amend
or terminate this Agreement without the written consent of Employee to the
extent necessary to comply with applicable federal or state securities or other
laws.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed by its officers thereunto duly authorized, and Employee has
hereunto set his (her) hand as of the day and year first above written.
CITADEL COMMUNICATIONS CORPORATION
By: _________________________________
Its: _________________________________
__________________________________
-8-
<PAGE> 1
Exhibit 10.5
FORM OF
CITADEL COMMUNICATIONS CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
This Option Agreement is made and entered into by and between CITADEL
COMMUNICATIONS CORPORATION, a Nevada corporation ("Company") and
________________________ ("Employee"), effective as of the 21st day of
February, 1994.
The Company has elected to provide an incentive to encourage
key employees and officers of the Company and its wholly-owned subsidiaries to
remain in the employment of such companies and to enhance the ability of the
Company and its subsidiaries to attract new employees whose services are
considered unusually valuable by providing an opportunity to have a proprietary
interest in the success of the Company. The Company believes that the granting
of the Option herein described to Employee is consistent with the foregoing
goals. The Company and Employee desire to enter into an Agreement reflecting
the terms and conditions of the Option granted to Employee.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions hereinafter set forth and for other good and valuable consideration,
the Company and Employee agree as follows:
1. Grant of Option. The Company hereby grants to Employee the
right and option (the "Option") to purchase an aggregate of __________ shares
(such number being subject to adjustment as provided in Paragraph 10 hereof) of
the Class A Common Stock of the Company (the "Stock") on the terms and
conditions herein set forth. This Option may be exercised in whole or in part
and from time to time as hereinafter provided.
2. Purchase Price. The price at which Employee shall be
entitled to purchase the Stock covered by the Option shall be $11.6363 per
share.
3. Term of Option. The Option hereby granted shall remain in
force and effect for a period of ten (10) years from February 21, 1994 (the
"Date of Grant"), through and including the normal close of business of the
Company on February 21, 2004 (the "Expiration Date"), subject to earlier
termination as provided in Paragraphs 7, 8, 9, 10 and 18 hereof.
4. Exercise of Option. The Option may be exercised by
Employee with respect to the shares specified below beginning on the dates
specified below and ending on the Expiration Date as to all or any part of the
shares covered hereby by delivery to the Company of written notice of exercise
and payment of the purchase price, and by execution of a Stock Transfer
Agreement in the form attached hereto as Exhibit A (or in such similar form as
the Company may hereafter require), as provided in Paragraphs 5 and 6 hereof.
The Option shall vest and become exercisable as of the dates specified below:
<PAGE> 2
(i) February 21, 1995, with respect to one-fifth (1/5) of the shares of
the Stock subject to the Option;
(ii) February 21, 1996, with respect to one-fifth (1/5) of the shares of
Stock subject to the Option;
(iii) February 21, 1997, with respect to one-fifth (1/5) of the shares of
the Stock subject to the Option;
(iv) February 21, 1998, with respect to one-fifth (1/5) of the shares of
the Stock subject to the Option;
(v) February 21, 1999, with respect to the remaining one-fifth (1/5) of
the shares of the Stock subject to the Option.
The Option shall cease to be exercisable as to any share when
Employee exercises the Option and purchases the share or when the Option lapses
as provided in Paragraph 3.
In the event of a public tender for all or any portion of the
Stock of the Company, or in the event that a proposal to merge, consolidate, or
otherwise combine with another company is submitted for shareholder approval,
the Committee (as defined in Paragraph 14) may in its sole discretion declare
the Option immediately exercisable even if the original date for the exercise
of the Option, as set forth in the first paragraph of this Paragraph 4, has not
yet passed.
5. Method of Exercising Option. Subject to the terms and
conditions of this Option Agreement, the Option may be exercised by timely
delivery to the Company of (i) written notice, which notice shall be effective
on the date received by the Company (the "Effective Date"), and (ii) execution
and delivery by Employee (or another permitted person or persons other than
Employee pursuant to Paragraph 8 hereof) to Company, contemporaneously with the
written notice described in the next sentence, of a Stock Transfer Restriction
Agreement in the form attached hereto as Exhibit A (or in such similar form as
the Company may hereafter require). The written notice pursuant to subparagraph
(i) of this Paragraph shall state Employee's election to exercise the Option,
the number of shares in respect of which an election to exercise has been made,
the method of payment elected, the exact name or names in which the shares will
be registered and Employee's Social Security number. Such notice shall be
signed by Employee and shall be accompanied by payment of the purchase price of
such shares. In the event the Option shall be exercised by a person or persons
other than Employee pursuant to Paragraph 8 hereof, such notice shall be signed
by such other person or persons and shall be accompanied by proof acceptable to
the Company of the legal right of such person or persons to exercise the
Option. All shares delivered by the Company upon exercise of the Option as
provided herein shall be fully paid and nonassessable upon delivery.
-2-
<PAGE> 3
6. Method of Payment for Options. Upon the exercise of all or
any part of an Option, the option price shall be payable in full by check, or,
in the event the Company is at the time of exercise a reporting Company under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in shares
of Stock owned by Employee to the extent permitted by law, or in any
combination thereof at the election of Employee. Payment of the option price
with shares of Stock owned by Employee, to the extent permitted under this
Agreement, shall be made by assigning and delivering such shares to the
Company. The shares shall be valued at Fair Market Value on the exercise date
of the Option. For purposes of this Agreement, the "Fair Market Value" of the
Stock as of any date shall be the average of the closing bid and asked prices
for the Stock as reported on the NASDAQ National Market System (or on any
national securities exchange on which the Stock is then listed) for the date
or, if no prices are so reported for that date, such prices on the next
preceding date for which closing bid and asked prices were reported.
In the event the Company becomes a reporting Company under
the Exchange Act, Employee may also pay on the option price, to the extent
permitted by applicable law, and subject to the approval of the Committee to
the extent required by Rule 16b-3(e)(2)(ii) of the Exchange Act, by directing
the Company to withhold from the shares of Stock that would otherwise be issued
upon exercise of the Option that number of shares having a Fair Market Value on
the exercise date equal to the option price. If Employee elects to exercise all
or any part of his or her Option by directing the Company to withhold shares
subject to the exercised Option, Employee must notify the Company in writing of
his or her intent to do so. In such case, the number of shares of Stock
received by Employee shall be determined pursuant to the following formula:
<TABLE>
<S> <C> <C><C>
Number of Shares Fair Market Value - Purchase
Number = as to which the on Exercise Date Price
of Shares Option is to be ------------------------------------
Received Exercised X Fair Market Value on
Exercise Date
</TABLE>
To the extent permitted under this Agreement, if Employee
elects to pay for all or part of the shares purchased upon the exercise of the
Option in Stock, a share certificate or certificates, together with a duly
executed stock power authorizing the transfer of such shares of the Company,
shall be delivered to the Company with the notice of exercise. Should the
number of such shares delivered for credit against the purchase price have a
Fair Market Value less than the full purchase price, the Company will issue to
Employee a new share certificate representing the number of shares in excess of
the nearest whole number of shares having a Fair Market Value not in excess of
the amount required to pay the full purchase price. No fractional shares shall
be accepted in payment or be reissued by the Company under this provision.
7. Termination of Employee. In the event that the employment
of Employee is terminated, either by Employee or by Company, for any reason
other than death of Employee, including a termination with or without cause,
any unexercised Option shall
-3-
<PAGE> 4
lapse and terminate on the effective date of the Employee's termination unless
the Committee elects, in its sole and absolute discretion, to allow the
Employee to exercise it for a period of 90 days following his termination. In
no event shall the Option, or any part thereof, be exercisable after the
Expiration Date.
8. Death of Employee. In the event of the death of Employee
within a period during which the Option, or any part thereof, could have been
exercised by Employee (the "Option Period"), the Option shall lapse unless it
is exercised within the Option Period, and in no event later than ninety (90)
days after the date of Employee's death, by Employee's legal representative or
representatives or by the person or persons entitled to do so under Employee's
last will and testament or if Employee fails to make a testamentary disposition
of such Option or shall die intestate, by the person or persons entitled to
receive such Option under the applicable laws of descent and distribution. An
Option may be exercised following the death of Employee only if the Option was
exercisable by Employee immediately prior to his death. In no event shall the
Option, or any part thereof, be exercisable after the Expiration Date. The
Company shall have the right to require evidence satisfactory to it of the
rights of any person or persons seeking to exercise the Option under this
Paragraph 8 to exercise the Option.
9. Nontransferability. The Option granted by this Agreement
shall be exercisable only during the term of the Option provided in Paragraph 3
hereof and, except as provided in Paragraphs 7 and 8 above, only by Employee
during his lifetime and while an employee of the Company. No Option granted by
this Agreement shall be transferable by Employee other than by will or pursuant
to applicable laws of descent and distribution. The Option, and any rights and
privileges in connection therewith, shall not be transferred, assigned, pledged
or hypothecated by Employee, or by any other person or persons, in any way,
whether by operation of law, or otherwise, and shall not be subject to
execution, attachment, garnishment or similar process. In the event of such an
occurrence, the Option shall automatically be terminated and shall thereafter
be null and void.
10. Adjustment in Number of Shares and Option Price. In the
event a stock dividend is declared upon the Stock, the remaining shares of
Stock then subject to this Option shall be adjusted proportionately without any
change in the aggregate purchase price therefor. In the event the Stock shall
be changed into or exchanged for a different number or class of shares of stock
of the Company or of another corporation, whether through reorganization,
recapitalization, stock split, combination of shares, merger or consolidation,
there shall be substituted for each such remaining share of Stock then subject
to this Option the number and class of shares of stock into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to the Option.
Subject to any required action by the stockholders, if the
Company shall be the surviving or resulting corporation in any merger or
consolidation, the Option granted hereunder shall pertain to and apply to the
securities or rights to which a holder of the
-4-
<PAGE> 5
number of shares of Stock subject to the Option would have been entitled; but a
dissolution or liquidation of the Company, or a merger or consolidation in
which the Company is not the surviving or resulting corporation, shall, in the
sole discretion of the Committee:
(a) Cause the Option outstanding hereunder to
terminate as of the date specified by the Committee, except
that the surviving or resulting corporation, in its absolute
and uncontrolled discretion, may tender an option to purchase
its shares or exercise such rights on terms and conditions,
as to the number of shares and rights and otherwise, which
shall substantially preserve the rights and benefits of the
Option then outstanding hereunder; or
(b) Give Employee the right to exercise this Option
prior to the occurrence of the event otherwise terminating
the Option over such period as the Committee, in its sole and
absolute discretion, shall determine.
11. Delivery of Shares. No shares of Stock shall be delivered
upon exercise of the Option unless and until (i) the purchase price shall have
been paid in full in the manner herein provided; (ii) applicable taxes required
to be withheld have been paid or withheld in full; (iii) approval of any
governmental authority required in connection with the Option, or the issuance
of shares thereunder; has been received by the Company; (iv) Employee has
complied with all terms and conditions of this Agreement; and (v) if required
by the Committee, Employee has delivered to the Committee an Investment Letter
in form and content satisfactory to the Company as provided in Paragraph 12
hereof.
12. Securities Act. The Company shall have the right, but not
the obligation, to cause the shares of Stock issuable upon exercise of the
Option to be registered under the appropriate rules and regulations of the
Securities and Exchange Commission.
The Company shall not be required to deliver any shares of
Stock pursuant to the exercise of all or any part of the Option if, in the
opinion of counsel for the Company, such issuance would violate the Securities
Act of 1933, as amended (the "Securities Act") or any other applicable federal
or state securities laws or regulations. The Company may require that Employee,
prior to the issuance of any such shares pursuant to exercise of the Option,
sign and deliver to the Company a written statement ("Investment Letter")
stating (i) that Employee is acquiring the shares for investment and not with a
view to the sale or distribution thereof; (ii) that Employee will not sell any
shares received upon exercise of the Option or any other shares of the Company
that Employee may then own or thereafter acquire except either (a) through a
broker on a national securities exchange or (b) with the prior written approval
of the Company; and (iii) containing such other terms and conditions as counsel
for the Company may reasonably require to assure compliance with the Securities
Act or other applicable federal or state securities laws and regulations. Such
Investment Letter shall be in form and content acceptable to the Committee in
its sole discretion.
-5-
<PAGE> 6
If shares of Stock or other securities issuable pursuant to
the exercise of the Option have not been registered under the Securities of
1933 or other applicable federal or state securities laws or regulations, the
certificates representing such shares shall bear a legend restricting the
transferability thereof, such legend to be substantially in the following form:
The Securities evidenced by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
qualified under any applicable state securities laws. They
have been acquired for investment and not with a view to
distribution thereof within the meaning of the Act and
regulations thereunder. They may not be sold or otherwise
transferred unless (a) there is an effective registration
statement under such Act and applicable state securities laws
covering such transaction involving said securities or (b)
this Corporation receives an opinion of legal counsel for the
holder of these securities (concurred in by legal counsel for
this Corporation) stating that such transaction is exempt
from registration or this Corporation otherwise satisfies
itself that such transaction is exempt from resolution.
The sale, transfer, assignment or encumbrance of the shares
represented by this certificate is restricted by the
provisions of that certain Agreement dated February 21, 1994
and a Stock Transfer Restriction Agreement dated December
___, 1994. The Corporation will mail to any shareholder a
copy of such Agreement within five days after receipt of
written request therefor.
13. Federal and State Taxes. Upon exercise of the Option, or
any part thereof, Employee may incur certain liabilities for federal, state or
local taxes and the Company may be required by law to withhold such taxes for
payment to taxing authorities. Upon determination by the Company of the amount
of taxes required to be withheld, if any, with respect to the shares to be
issued pursuant to the exercise of the Option, Employee shall pay to the
Company by check by authorizing the Company to withhold from monies owing by
the Company to Employee or in shares of Stock owned by Employee an amount equal
to the amount of any taxes which the Company is required to withhold with
respect to such Stock.
In the event the Company becomes a reporting Company under
the Exchange Act, Employee may pay taxes with shares of stock owned by
Employee. Payment of taxes with shares of Stock owned by Employee shall be
made by assigning and delivering such shares to the Company. Such shares shall
be valued at Fair Market Value on the business day coinciding with or
immediately preceding the date on which such shares are assigned or
-6-
<PAGE> 7
delivered. Except as otherwise provided by law, any taxes which are required to
be withheld with respect to an exercised Option may also be paid by Employee
directing the Company to withhold from the shares of Stock that would otherwise
be issued pursuant to the Option, that number of shares having a Fair Market
Value on the date the Option is exercised (the "Applicable Date") equal to the
taxes due. In the event of such an election, Employee shall notify the Company
in writing of his intent to do so and shall receive the number of shares of
Stock determined pursuant to the following formula.
<TABLE>
<S> <C> <C> <C> <C>
Number Number of Fair Market Value - Taxes
of Shares Subject X on Applicable Date Due
Shares to Award -------------------------------------
Fair Market Value on
Applicable Date
</TABLE>
Authorization of Employee to the Company to withhold taxes
pursuant to this Paragraph 13 shall be in form and content acceptable to the
Company. Payment or authorization to withhold taxes by Employee shall be
completed prior to the delivery of any shares pursuant to this Option
Agreement. An authorization to withhold taxes pursuant to this provision shall
be irrevocable unless and until the tax liability of Employee has been fully
paid.
14. Administration. This Agreement shall in all respects be
administered by the Compensation Committee of the Board of Directors of the
Company (the "Committee"). The Committee shall have the sole and complete
discretion with respect to all matters under this Agreement and decisions of
the majority of the Committee with respect to this Agreement shall be final and
binding upon Employee and the Company.
15. Continuation of Employment. This Agreement shall not be
construed to confer upon Employee any right to continue in the employ of the
Company and shall not limit the right of the Company, in its sole discretion,
to terminate the employment of Employee at any time.
16. Obligation to Exercise. Employee shall have no obligation
to exercise any option granted by this Agreement.
17. Governing Law. This Agreement shall be interpreted and
administered under the laws of the State of Nevada.
18. Amendment and Termination. Except as otherwise provided
in this Agreement, this Agreement may be amended or terminated only by a
written agreement executed by the Company and Employee. The Company may amend
or terminate this Agreement without the written consent of Employee to the
extent necessary to comply with applicable federal or state securities or other
laws.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed by its officers thereunto duly authorized, and Employee has
hereunto set his (her) hand as of the day and year first above written.
CITADEL COMMUNICATIONS CORPORATION
By: __________________________________
Its: __________________________________
__________________________________
-8-
<PAGE> 1
EXHIBIT 10.6
EXECUTION COPY
JOINT SALES AGREEMENT
between
POURTALES RADIO PARTNERSHIP;
POURTALES HOLDINGS, INC.;
SPRINGS RADIO, INC.;
KVUU/KSSS, INC.;
AND
CITADEL BROADCASTING COMPANY
December 15, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. Certain Definitions.................................................1
Additional Station..............................................1
Additional Station Acquisition..................................2
Change of Control...............................................2
Citadel Colorado Springs Stations...............................2
Citadel Spokane Stations........................................2
Citadel Stations................................................2
Collection Period...............................................2
Colorado Springs Market.........................................2
Commencement Date...............................................2
Delinquent Accounts.............................................2
FCC.............................................................2
FCC Laws........................................................2
Foreclosure.....................................................2
Independent Third Party.........................................3
Initial Term....................................................3
JSA Fee.........................................................3
Lender..........................................................3
Liquidation.....................................................3
Permitted Designee..............................................3
Person..........................................................3
Pourtales Colorado Springs Station..............................3
Pourtales Existing Accounts Receivable..........................3
Pourtales Future Accounts Receivable............................3
Pourtales Spokane Stations......................................3
Pourtales Stations..............................................4
Reorganizing Transaction........................................4
Sale of a Station...............................................4
Spokane Market..................................................4
Station.........................................................4
Station Collateral..............................................4
Term............................................................4
Termination Date................................................4
Trade Agreements................................................4
Trade Expenses..................................................4
Trade Imbalance.................................................5
Trade Liabilities...............................................5
Trade Receivables...............................................5
Trade Revenue...................................................5
Trade Schedule..................................................5
Triathlon Agreement.............................................5
2. Exclusive Right to Sell Advertising.................................5
3. Term................................................................5
4. Certain Matters Relating to Citadel Sales Functions.................6
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
5. Traffic; Invoicing..................................................7
6. Trade...............................................................8
7. Accounts Receivable.................................................9
8. JSA Fee............................................................10
9. Termination........................................................11
10. Acquisitions and Transfers.........................................12
11. Representations and Warranties.....................................14
12. Additional Covenants of the Parties................................15
13. Triathlon Agreement Consummation...................................16
14. Relationship of Parties............................................17
15. General Provisions.................................................18
</TABLE>
ii
<PAGE> 4
JOINT SALES AGREEMENT
This Joint Sales Agreement (the "Agreement") is made and entered
into as of the 15th day of December, 1995, by and between Pourtales Radio
Partnership, a Colorado partnership ("Pourtales"); Pourtales Holdings, Inc., a
Colorado corporation ("PHI"); Springs Radio, Inc., a Colorado corporation
("SRI") and KVUU/KSSS, Inc., a Colorado corporation ("KKI"), on the one hand;
and Citadel Broadcasting Company, a Nevada corporation ("Citadel"), on the
other hand, with agreement by Triathlon Broadcasting Company, a Delaware
corporation ("Triathlon"), for purposes of Section 13. Pourtales, PHI, SRI and
KKI and sometimes referred to herein collectively as the "Pourtales Entities,"
and individually as a "Pourtales Entity."
PREAMBLE
Citadel is the licensee of the Citadel Stations (as such term is
defined below). Pourtales is the licensee of the Pourtales Spokane Stations (as
such term is defined below), SRI is the licensee of radio stations KVOR-AM and
KSPZ-FM, each licensed to Colorado Springs, Colorado and KKI is the licensee of
radio stations KTWK-AM and KUVV-FM, each licensed to Colorado Springs,
Colorado. PHI owns all of the outstanding capital stock of SRI. The Pourtales
Entities and Citadel desire to enter into an arrangement whereby Citadel will
provide certain sales and services to Pourtales with respect to the Pourtales
Stations (as such term is defined below), and the parties are entering into
this Agreement for that purpose.
The Pourtales Entities and Triathlon intend to enter into an
Amended and Restated Purchase and Sale Agreement dated as of August 12, 1995,
which will be amended and restated after the date hereof, under which Triathlon
will agree to purchase, among others, all of the Pourtales Stations. The
parties to this Agreement intend that if Triathlon becomes the licensee of any
of the Pourtales Stations, Triathlon will, with respect to such radio stations,
be entitled to the benefits and be subject to the obligations of the Pourtales
Entities under this Agreement as and to the same extent as if Triathlon were an
original party hereto in place of the Pourtales Entities.
Therefore, for and in consideration of the foregoing and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings ascribed to them below:
"Additional Station" means a radio station acquired, programmed or
marketed by a party pursuant to an Additional Station Acquisition.
<PAGE> 5
"Additional Station Acquisition" means the purchase of, or the
entering into of an agreement to program or market, a radio station, directly
or indirectly, by a party to this Agreement, which radio station is licensed to
either the Colorado Springs Market or the Spokane Market; provided, however,
that the purchase of any of the Pourtales Stations by Triathlon pursuant to the
Triathlon Agreement shall not be deemed an Additional Station Acquisition.
"Change of Control" with respect to a party to this Agreement
means (a) the sale of such party to an Independent Third Party or group of
Independent Third Parties pursuant to which the Independent Third Party or
group of Independent Third Parties acquires capital stock of such party
possessing the voting power under normal circumstances to elect a majority of
such party's board of directors (whether by merger, consolidation or sale or
transfer of such party's capital stock) or (b) the sale or other transfer of
all or substantially all of such party's assets determined on a consolidated
basis; provided, however, that a Change of Control shall not be deemed to occur
with respect to any of the Pourtales Entities solely by reason of the purchase
of any of the Pourtales Stations by Triathlon pursuant to the Triathlon
Agreement.
"Citadel Colorado Springs Stations" means radio stations KKFM-FM
and KKMG-FM, each licensed to Citadel.
"Citadel Spokane Stations" means radio stations KGA-AM, KJRB-AM,
KDRK-FM and KEZE-FM (application pending to change call sign to KAEP-FM), each
licensed to Citadel.
"Citadel Stations" means the Citadel Colorado Springs Stations and
the Citadel Spokane Stations.
"Collection Period" has the meaning provided in Section 7(a).
"Colorado Springs Market" means the Arbitron Metro Survey Area
that includes Colorado Springs, Colorado, as published by The Arbitron Company
from time to time.
"Commencement Date" means January 1, 1996.
"Delinquent Accounts" has the meaning provided in Section 7(b).
"FCC" means the Federal Communications Commission.
"FCC Laws" has the meaning provided in Section 9(d).
"Foreclosure" means and includes a foreclosure by a lender on its
security interest, an assignment of collateral to a
2
<PAGE> 6
lender in lieu of foreclosure, or any other realization on collateral by a
lender.
"Independent Third Party" with respect to any party to this
Agreement means any Person who, immediately prior to the contemplated
transaction, does not own (assuming the conversion, exchange or exercise of all
outstanding options, warrants, convertible securities and similar rights held
by such Person, regardless of whether currently exercisable) in excess of 5% of
the common stock on a fully diluted basis of such party (a "5% Owner"), who is
not controlling, controlled by or under common control with any such 5% Owner
and who is not the spouse or descendant (by birth or adoption) of any such 5%
Owner or a trust for the benefit of such 5% Owner and/or any of such other
Persons.
"Initial Term" has the meaning provided in Section 3.
"JSA Fee" has the meaning provided in Section 8.
"Lender" means any Person holding a security interest in or to any
of the Station Collateral.
"Liquidation" of a party to this Agreement means the dissolution
of such party in accordance with applicable law and the liquidation of such
party's assets following dissolution.
"Permitted Designee" has the meaning provided in Section 10(d).
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization or governmental entity or any
department, agency or political subdivision thereof.
"Pourtales Colorado Springs Stations" means radio stations
KTWK-AM, KVOR-AM, KVUU-FM and KSPZ-FM, each licensed to Pourtales Entities as
set forth in the Preamble.
"Pourtales Existing Accounts Receivable" means the accounts
receivable, other than Trade Receivables, of the Pourtales Stations existing as
of the Commencement Date.
"Pourtales Future Accounts Receivable" means the accounts
receivable, other than Trade Receivables, of the Pourtales Stations, and all
other revenue from the sale of advertising time on any of the Pourtales
Stations, arising from and after the Commencement Date.
"Pourtales Spokane Stations" means radio stations KEYF-AM/FM,
KUDY-AM and KKZX-FM, each licensed to Pourtales.
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"Pourtales Stations" means the Pourtales Colorado Springs Stations
and the Pourtales Spokane Stations.
"Reorganizing Transaction" with respect to a party to this
Agreement means any assignment, sale or other transfer by such party to any
Person other than an Independent Third Party (a) of capital stock of such party
possessing the voting power under normal circumstances to elect a majority of
such party's board of directors (whether by merger, consolidation or sale or
transfer of directors (whether by merger, consolidation or sale or transfer of
such party's capital stock) or (b) of all or substantially all of such party's
assets determined on a consolidated basis; provided, however, that a
Reorganizing Transaction shall not be deemed to occur by reason of the
distribution of assets of any party pursuant to the Liquidation of such party,
or (c) with respect to which the parties to the transaction would be entitled
to obtain required FCC approval pursuant to a "pro forma" transfer or
assignment application (FCC Form 316).
"Sale of a Station" means and includes (a) the sale of, or the
entering into of an agreement with another Person to program, a Station by any
party to this Agreement, other than (i) pursuant to a Change of Control, (ii) a
Foreclosure or (iii) a sale of any of the Pourtales Stations to Triathlon
pursuant to the Triathlon Agreement, and (b) the distribution or other transfer
of any Station pursuant to the Liquidation of a party.
"Spokane Market" means the Arbitration Metro Survey Area that
includes Spokane, Washington, as published by The Arbitron Company from time to
time.
"Station" means one of the Citadel Stations or the Pourtales
Stations, as required by the context.
"Station Collateral" has the meaning provided in Section 10(b).
"Term" has the meaning provided in Section 3.
"Termination Date" has the meaning provided in Section 9(c).
"Trade Agreements" of a radio station means all barter agreements,
arrangements, commitments or understandings, whether written or oral, requiring
the licensee of such radio station to provide advertising time on such radio
station.
"Trade Expenses" of a radio station means expenses of such radio
station which have been paid through the use of goods or services received by
such radio station pursuant to a Trade Agreement.
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"Trade Imbalance" of a radio station means, at any point in time,
the amount by which the Trade Receivables of the radio station exceed the
amount of its Trade Liabilities.
"Trade Liabilities" of a radio station means the unperformed
obligation of the radio station to run advertising time pursuant to one or more
Trade Agreements, valued in accordance with the historical practices of the
radio station.
"Trade Receivables" of a radio station means the value of the
goods and services received or to be received but not yet used by the radio
station in exchange for advertising that has been or is required to be run on
the radio station pursuant to a Trade Agreement, which value is determined in
accordance with historical practices of the radio station.
"Trade Revenue" of a radio station means revenue of the radio
station received pursuant to a Trade Agreement.
"Trade Schedule" has the meaning provided in Section 6(a).
"Triathlon Agreement" means that certain Amended and Restated
Purchase and Sale Agreement dated as of August 12, 1995 among Triathlon and the
Pourtales Entities to be entered into by such parties.
2. Exclusive Right to Sell Advertising. The Pourtales Entities
hereby grant Citadel the exclusive right to sell advertising on their
respective Pourtales Stations, as sales agent for the Pourtales Entities,
during the Term to local, regional or national advertisers pursuant to the
terms and conditions set forth herein. Citadel agrees at all times during the
Term to exercise the same efforts it historically has exercised for the Citadel
Stations to sell advertising on the Pourtales Stations to local, regional and
national advertisers. The Pourtales Entities agree to exercise reasonable
efforts at all times during the Term to program and promote their respective
Pourtales Stations so as to enhance their ratings.
3. Term. The term of this Agreement (the "Initial Term") shall
commence on the Commencement Date and, unless sooner terminated or extended in
accordance with any of the remaining provisions of this Agreement, shall expire
on December 31, 2000. The Initial Term may be extended for up to two additional
consecutive five year terms by Citadel or the Pourtales Entities upon written
notice to the other prior to expiration of the then existing term. Such
extension or consent thereto by any of the Pourtales Entities shall bind all of
the Pourtales Entities. The Initial Term, as so extended, if applicable, is
referred to herein as the "Term." Notwithstanding any provision contained in
this Agreement to the contrary, either Citadel or the Pourtales Entities may,
upon written notice to the other parties hereto, terminate
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this Agreement prior to the Commencement Date, in which event none of the
parties hereto shall have any further liability or obligation to any other
party, unless, prior to such date, (a) Citadel has approved the Triathlon
Agreement as contemplated by Section 13(b) and (b) each of the parties hereto
has obtained the consent of their lender as contemplated by Section 10(c). Such
a termination by any of the Pourtales Entities shall be deemed a termination by
all of the Pourtales Entities.
4. Certain Matters Relating to Citadel Sales Functions.
(a) Citadel shall have the right to offer advertising spots
on the Pourtales Stations to advertisers individually and in combination with
advertising on any or all of the Citadel Stations.
(b) The Pourtales Entities shall prepare a rate card for
their respective Pourtales Stations presenting the rates of each such Station
for all classes of time and day-parts it makes available to advertisers and
provide such rate cards to Citadel. Citadel shall be entitled to rely on the
rates contained on such rate cards in offering to sell advertising on the
Pourtales Stations. When offering the rates of any of the Pourtales Stations
in combination with any or all of the Citadel Stations, Citadel may offer a
discount of not more than 25% from the stated rates. The Pourtales Entities
shall have the right to change the rates listed on their respective rate cards,
but shall promptly provide written notice of all such changes to Citadel. Such
rate changes shall be effective only after Citadel has received written notice
thereof. The Pourtales Entities agree to honor all advertising arranged by
Citadel that is based on rates in effect prior to any changes for 30 days
following the date such rate change becomes effective.
(c) In offering to sell advertising on any of the Pourtales
Stations, Citadel shall have the right, in its sole discretion, to determine
the particular spot packages that shall be offered to advertisers and to decide
on a case-by-case basis whether to offer a particular spot packages that shall
be offered to advertisers and to decide on a case-by-case basis whether to
offer a particular potential advertiser the opportunity to purchase time on any
of the Pourtales Stations in combination with any of the Citadel Stations;
provided, however, that the parties agree that all advertisers offered the
opportunity to purchase spots in combination will also be provided the
opportunity to purchase time on the Pourtales Stations individually. Upon
request of any of the Pourtales Entities, Citadel shall provide the requesting
party with information concerning the packages Citadel is offering or has
offered for sale to any advertisers. The Pourtales Entities agree to provide
Citadel with any information in their possession with respect to the
programming, demographics and ratings of the Pourtales Stations to assist
Citadel in its efforts to solicit advertising sales.
(d) All advertising placed on the Pourtales Stations by
Citadel shall be governed by this Agreement. Citadel
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shall be permitted to solicit advertising for the Pourtales Stations directly
from current clients of and agencies customarily dealing with the Pourtales
Stations. Citadel shall have full authority to handle all advertising sales for
such accounts unless the advertiser or agency with which Citadel is dealing
subsequently instructs Citadel that accounts must be handled by one of the
Pourtales Entities.
(e) Citadel and the Pourtales Entities agree that any
advertising offer to any candidates for political office to air on the
Pourtales Stations will be handled in strict accordance with the Communications
Act of 1934, as amended, and the rules and regulations of the FCC, and will be
supported by documentation as required by the FCC and the Pourtales Entities.
Citadel shall promptly provide all required related documentation to the
Pourtales Entities for inclusion in their respective public inspection files at
the Pourtales Stations. The parties acknowledge that although the appropriate
Pourtales Entities, under applicable FCC laws, have sole authority and
responsibility to assure that all candidate advertising on their respective
Pourtales Stations complies with FCC rules and regulations, it shall be
Citadel's responsibility to conduct itself at all times in a manner that will
permit the Pourtales Entities to be and remain in compliance with such rules
and regulations.
(f) During the term of this Agreement, Citadel shall maintain
books and records relating to its activities hereunder in accordance with
commercially reasonable practices, and afford any of the Pourtales Entities or
Triathlon, at their sole cost and expense and at a mutually convenient time,
the right to review and inspect such books and records; provided, that such
inspection shall be conducted in a manner that does not disrupt the normal
business operations of the Stations.
5. Traffic; Invoicing.
(a) Citadel shall perform all traffic functions for the
Pourtales Stations. All orders sold by Citadel shall be run unless the relevant
Pourtales Entity has previously sold out all of the inventory of the relevant
Pourtales Stations for a day-part that is included in a particular advertising
buy; provided, however, that each Pourtales Entity shall at all times have the
right to reject any advertising spot containing matter which, in its sole
opinion, is unsatisfactory, unsuitable, contrary to the public interest or
violative of any federal, state or local law, including, without limitation,
the rules and regulations of the FCC.
(b) Citadel shall be responsible for sending in a timely
manner invoices and billing statements to clients and agencies for all
advertising run on the Pourtales Stations, and copies of all invoices shall be
provided to the Pourtales Entities along with weekly pacing reports, monthly
account summaries and
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other billing information reasonably requested by the Pourtales Entities.
(c) Citadel shall use commercially reasonable efforts to
ensure that advertisers and agencies pay the Pourtales Entities separately from
Citadel for advertising purchased to air on the Pourtales Stations, whether
such advertising is carried independently on the Pourtales Stations or in
combination with one or more Citadel Stations. Citadel shall collect and hold
such payments, as agent for the Pourtales Entities, pursuant to Section 7(b).
(d) Citadel will ensure that the Pourtales Stations receive
individual tapes and traffic orders from all advertisers on their respective
Stations, including providing copies of such tapes and orders from other
Stations that may be involved in combination buys in the event that the
Station's copies do not arrive on schedule. The Pourtales Entities and Citadel
shall keep each other informed as to the status of all production materials for
advertising sold by Citadel to air on the Pourtales Stations.
6. Trade.
(a) The Pourtales Entities shall exercise reasonable efforts
between the date hereof and the Commencement Date to eliminate any Trade
Imbalance existing at any of the Pourtales Stations. On or before the
Commencement Date, the Pourtales Entities shall deliver to Citadel a schedule
(the "Trade Schedule"), certified by the chief financial officer of the
appropriate Pourtales Entities as true and correct, setting forth, as of the
Commencement Date, (i) a description of each of the Trade Agreements then in
effect with respect to each of the Pourtales Stations, (ii) the Trade
Receivables of each of the Pourtales Stations and (iii) the Trade Liabilities
of each of the Pourtales Stations. The Trade Liabilities set forth on the Trade
Schedule shall be run in accordance with the terms of the applicable Trade
Agreement set forth on the Trade Schedule. Citadel shall be entitled to all the
Trade Receivables of the Pourtales Stations existing as of the Commencement
Date for use in satisfying its obligations under this Agreement and otherwise
operating the Citadel Stations.
(b) Citadel may in its discretion enter into Trade Agreements
during the Term which require advertising time to be run on the Pourtales
Stations; provided, however, that Citadel shall obtain the prior written
approval of the Pourtales Entities before entering into any Trade Agreements
that will result in Trade Receivables that will not be used by Citadel for the
sole purpose of satisfying its obligations under this Agreement or otherwise
operating the Citadel Stations. Trade Liabilities resulting from such Trade
Agreements shall be run on the Pourtales Stations, as appropriate, in
accordance with the terms of the applicable Trade Agreements. Citadel shall be
entitled to all of the resulting
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Trade Receivables for use in satisfying its obligations under this Agreement
and otherwise operating the Citadel Stations.
7. Accounts Receivable.
(a) On or before the Commencement Date, the Pourtales
Entities shall deliver to Citadel a list of the Pourtales Existing Accounts
Receivable. Citadel, for a period of 120 days commencing with the Commencement
Date (the "Collection Period", as agent for the Pourtales Entities, shall
collect the Pourtales Existing Accounts Receivable in accordance with Citadel's
normal collection processes and procedures. In no event shall Citadel be
required to institute litigation or to retain third parties to institute
litigation or to retain third parties to institute collection procedures with
respect to the Pourtales Existing Accounts Receivable. All remittances will be
applied first to the oldest Pourtales Existing Accounts Receivable.
One-half of the remittances on the Pourtales Existing
Accounts Receivable collected by Citadel on behalf of the Pourtales Entities
shall be remitted to the appropriate Pourtales Entities on or before the
expiration of each 15-day period during the Collection Period, and the balance
of all remittances on Pourtales Existing Accounts Receivable collected by
Citadel on behalf of the Pourtales during the Collection Period shall be
remitted to the appropriate Pourtales Entities within five days after
termination of the Collection Period. Citadel shall be under no obligation to
segregate any remittances prior to their payment to the Pourtales Entities, and
Citadel may commingle and otherwise use such funds in its sole discretion.
During the Collection Period, at the option of the Pourtales Entities, the
Pourtales Entities shall be permitted to collect their respective Pourtales
Existing Accounts Receivable that remain outstanding after 60 days, or are
disputed in writing by the relevant account debtor. Each remittance by Citadel
to the Pourtales Entities shall be accompanied by a written report by Citadel
setting forth the aggregate amount of the Pourtales Existing Accounts
Receivable during the period for which payment is made, along with a breakdown
by account debtor. At the end of the Collection Period, Citadel shall account
for all collected Pourtales Existing Accounts Receivable and provide the
Pourtales Entities with all documentation relating to their respective
uncollected Pourtales Existing Accounts Receivable. Citadel shall have no
obligation with respect to Pourtales Existing Accounts Receivable that it is
unable to collect. After the end of the Collection Period, the Pourtales
Entities shall be entitled to collect any of their respective Pourtales
Existing Accounts Receivable that remain uncollected.
(b) The Pourtales Entities hereby grant Citadel the exclusive
right, as agent for the Pourtales Entities, to collect the Pourtales Future
Accounts Receivable. Citadel shall make such collections in accordance with
Citadel's normal collection processes and procedures. In no event shall Citadel
be required to
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institute litigation or to retain third parties to institute collection efforts
with respect to the Pourtales Future Accounts Receivable. All remittances will
be applied first to the oldest Pourtales Future Accounts Receivable.
Citadel shall be entitled to deduct from all remittances on
Pourtales Future Accounts Receivable collected on behalf of the Pourtales
Entities the JSA Fee payable to Citadel. All remittances on Pourtales Future
Accounts Receivable collected by Citadel on behalf of their appropriate
Pourtales Entities net of the JSA Fee shall be remitted to the appropriate
Pourtales Entities in accordance with Exhibit A annexed hereto. Citadel shall
be under no obligation to segregate any remittances prior to their payment to
the Pourtales Entities, and Citadel may commingle and otherwise use such funds
in its sole discretion. During the Term, at option of the Pourtales Entities,
the Pourtales Entities shall be permitted to collect their respective Pourtales
Future Accounts Receivable that remain outstanding after 60 days, or are
disputed in writing by the relevant account debtor ("Delinquent Accounts". Each
remittance by Citadel to the Pourtales Entities shall be accompanied by a
written report from Citadel setting forth the aggregate amount of the Pourtales
Future Accounts Receivable and the aggregate amount of cash collections of such
Pourtales Future Accounts Receivable during the period for which payment is
made, along with a breakdown by account debtor. Promptly after the end of the
Term, Citadel shall account for all collected Pourtales Future Accounts
Receivable and provide the Pourtales Entities with all documentation relating
to their respective uncollected Pourtales Future Accounts Receivable. Citadel
shall have no obligation with respect to any Pourtales Future Accounts
Receivable that it is unable to collect.
8. JSA Fee. In consideration for its services under this
Agreement, Citadel shall be entitled to a fee (the "JSA Fee"), calculated in
accordance with Exhibit A. The parties acknowledge and agree that (a) Citadel,
as the joint sales agent for both the Citadel Stations and the Pourtales
Stations, will possess certain discretionary authority in directing advertising
opportunities to the Stations, (b) it would be impracticable for the Pourtales
Entities to monitor each of the discretionary decisions of Citadel in making
such allocations and (c) to ensure that advertising opportunities of the
Stations are allocated to the Citadel Stations and the Pourtales Stations
equitably, the parties have established the formula set forth on Exhibit A for
determining the JSA Fee. The parties acknowledge and agree that the formula set
forth on Exhibit A fairly reflects the apportionment of advertising among the
Stations that could reasonably be expected in light of the relative market
positions of the Citadel Stations and the Pourtales Stations. The JSA Fee shall
be payable within ten days after the end of each calendar month during the Term
(the first payment to commence in February 1996), and within ten days after
termination of the Agreement, except where a different time is permitted by the
provisions of Exhibit A.
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9. Termination.
(a) Subject to clause (c) below, the Pourtales Entities on
one hand, and Citadel on the other hand, may terminate this Agreement upon the
occurrence of any of the following events:
(i) The breach by the non-terminating party of any
material provision in this Agreement, other than a payment breach of the type
described in clause (b) below, which remains uncured as of the expiration of
the 30-day period following written notice of breach to the non-terminating
party by the terminating party;
(ii) Any representation or warranty by the
non-terminating party herein shall be incorrect in any material respect; or
(iii) The non-terminating party shall (A) make a general
assignment for the benefit of its creditors, (B) have filed against it a
petition in bankruptcy which is not dismissed within 60 days after the filing
thereof, (C) be adjudicated as bankrupt or insolvent, (D) have appointed a
receiver or other custodian (permanent or temporary) of the assets of its
company or property, or any portion thereof, by any court of competent
jurisdiction, (E) have filed against it any proceedings for a composition with
creditors under any state or federal law, which proceedings are not dismissed
within 60 days after the filing thereof, or (F) file a petition under any
federal or state bankruptcy law or similar law affording protection with
respect to its creditors.
(b) Subject to clause (c) below, any of the Pourtales
Entities may terminate this Agreement upon the breach by Citadel of its
remittance obligations under Section 7 of this Agreement or Exhibit A, which
breach remains uncured as of the expiration of the five-day period following
written notice of breach to Citadel by any of the Pourtales Entities.
(c) Termination of this Agreement by any party pursuant to
Sections 9(a) or 9(b) shall be effective as of a date ("Termination Date")
specified in a written notice by the terminating party to the other; provided,
however, that in the event of any termination pursuant to Section 9(a), the
Termination Date shall be a date not sooner than 180 days after the date of
such written notice. Such termination right may be exercised in addition to and
not in lieu of any other right or remedy to which the terminating party may be
entitled, at law or in equity.
(d) If for any reason this Agreement or the parties'
relationship contemplated hereunder is determined to be in violation of the
Communications Act of 1934, as amended, or the rules, regulations or policies
of the FCC (collectively, the "FCC Laws"), this Agreement shall promptly
terminate without further
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obligation on the part of any party except as provided in Section 9(h).
(e) This Agreement shall be terminated automatically and
without notice to or further action by any party upon the consummation of
Citadel's purchase of the Pourtales Stations pursuant to Section 13(b).
(f) In the event of the termination of this Agreement by any
party pursuant to this Section 9 (other than Section 9(e)), or the expiration
of the Term, Citadel shall exercise commercially reasonable efforts to
encourage its then existing sales staff for the Pourtales Stations to accept
employment offers from the Pourtales Entities, if any.
(g) Any termination of this Agreement by any of the Pourtales
Entities pursuant to this Section 9 shall effect a termination of this
Agreement by all of the Pourtales Entities. Any termination of this Agreement
by Citadel with respect to any of the Pourtales Entities shall constitute a
termination of this Agreement by Citadel with respect to all of the Pourtales
Entities.
(h) Upon termination of this Agreement pursuant to this
Section 9, no further rights, obligations or liabilities shall accrue from and
after the date of termination with respect to any party, except (i) to the
extent permitted by FCC Laws, the parties shall perform those obligations
arising through and including the date of termination, (ii) the obligation of
each party to cooperate reasonably and in good faith to effect the transfer to
the other, as appropriate, of the obligations theretofore undertaken by such
party pursuant to this Agreement, (ii) the obligations imposed upon Citadel by
Section 9(f) and (iv) the obligation of the Pourtales Entities to collect the
Pourtales Future Accounts Receivable existing as of the date of termination and
the obligation of the parties to make post-termination payments pursuant to
Exhibit A, each of which obligations shall survive the termination of this
Agreement notwithstanding any other provision contained herein to the contrary.
10. Acquisitions and Transfers.
(a) In the event any party to this Agreement effects an
Additional Station Acquisition, the Additional Station shall be subject to all
of the provisions of this Agreement. In such event, the parties agree to
negotiate in good faith any modifications to this Agreement required to
preserve for the parties, following the addition of the Additional Station to
this Agreement, the relative benefits and obligations of the parties
contemplated hereby.
(b) In the event of a Foreclosure on any of the Stations, any
of the assets related thereto, or any interest in this Agreement (the "Station
Collateral") by any Lender, such
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Lender shall be bound by each of the provisions of this Agreement, from and
after the date of Foreclosure, as and to the same extent as if an original
party hereto in place of the party against whom such Foreclosure was effected.
If such Lender, in effecting a Foreclosure, elects to take possession of or
title to any of the Station Collateral through a trust or other entity, such
Lender shall cause such other entity, prior to taking possession or title and
as a condition thereto, to execute a written agreement to be bound by the
provisions of this Agreement, in form and substance reasonably acceptable to
the party against whom the Foreclosure has not been effected.
(c) Citadel and the Pourtales Entities shall exercise
commercially reasonable efforts to obtain prior to the Commencement Date, and
shall at all times thereafter maintain in full force and effect, for the
benefit of each of the other parties to this Agreement, a written agreement
executed by each of the Lenders of such party (including both existing and
future Lenders) to comply with the provisions of clause (b) above, such
agreement to be in form and substance reasonably acceptable to each of the
parties to this Agreement.
(d) If any party to this Agreement desires to effect a Sale
of a Station, the selling party shall first deliver to the other party (the
"Other Party") a written offer to sell to the Other Party the Station on the
terms and conditions set forth in the written offer. The Other Party shall have
the right, exercisable by written notice delivered to the selling party within
45 days from the date of delivery of such offer to the Other Party, to purchase
the Station for the price and on the terms and conditions contained in such
written offer. If the Other Party is at the time of such written action
prohibited by the ownership limitations imposed by the FCC Laws from purchasing
the Station, the Other Party may designate another Person (a "Permitted
Designee") to accept the written offer in place of the Other Party. If the
Other Party or a Permitted Designee accepts the offer, the parties shall
promptly negotiate and execute a definitive purchase agreement and file the
appropriate applications with the FCC for transfer of the Station. The
definitive purchase agreement shall include customary representations and
warranties for transactions of this type.
If the Other Party or a Permitted Designee does not accept
the written offer within the foregoing time, the selling party may sell the
Station to a third party pursuant to and on the terms contained in such written
offer; provided that if an agreement is not entered into within 120 days after
delivery of the written offer to the Other Party, or if there is a material
change in the terms of sales from those contained in the written offer, the
selling party shall again offer the Other Party the right to purchase the
Station, within the foregoing time periods and subject to the foregoing terms,
before effecting any Sale of a Station to another party. Upon the Sale of a
Station to a third party in
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accordance with the provisions of this Section 10(d), such third party shall be
subject to each of the provisions of this Agreement as and to the same extent
if an original party hereto in place of the selling party. In the event of a
sale to a third party permitted by this Section 10(d), as a condition to the
consummation thereof, such third party shall, at the request of the Other
Party, provide written assurance, in form and substance reasonably acceptable
to the Other Party, that the provisions of this Agreement shall be binding upon
such third party effective upon its purchase of the Station.
(e) For purposes of this Section 10, the Pourtales Entities
shall be treated as a single party, and unless otherwise agreed in a writing
executed by all of the Pourtales Entities and delivered to Citadel, Pourtales
shall act as the representative of all of the Pourtales Entities, with full
power and authority to bind them with respect to any actions taken under this
Section 10.
(f) This Agreement shall be binding upon the parties and
their successors and assigns notwithstanding any Change of Control or
Reorganizing Transaction with respect to any party hereto. Any party effecting
a Change of Control or Reorganizing Transaction shall provide written notice
thereof to the other party at least 30 days prior to the consummation of such
transaction and prior to such consummation shall provide written assurance, in
form and substance reasonably acceptable to the other party, that the
provisions of this Agreement shall remain binding upon the party effecting a
Change of Control or Reorganizing Transaction and/or its successor
notwithstanding the consummation thereof.
11. Representations and Warranties. Citadel represents and
warrants to the Pourtales Entities and Triathlon, and the Pourtales Entities
and Triathlon each represent and warrant to Citadel, as follows:
(a) Such Person is duly organized, validly existing and in
good standing under the laws of the state of its formation, with all requisite
power to own all of its property and assets and to carry on its business as it
is now being conducted, and to execute, perform and deliver this Agreement and
related agreements, documents and instruments referred to herein. The
execution, performance and delivery of this Agreement have been duly and
validly authorized by all necessary action on the part of such Person, all
requisite stockholder or partner consents and approvals have been obtained by
such Person to the execution and such related agreements, documents and
instruments are and will be the valid and binding obligations of such Person,
enforceable against such Person in accordance with the terms hereof.
(b) The execution, performance and delivery of this Agreement
in accordance with the terms hereof by such Person will not, as of the date
hereof or as of the Commencement Date (i) violate any existing provision of any
law or violate any existing
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term or provision of any order, writ, judgment, injunction or decree applicable
to such Person, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of the formation or organizational documents of such
Person or any other material agreement or instrument to which such Person is a
party by which such Person is bound or subject, (iii) constitute a breach or
default of or an acceleration under, or an event that with the passing of time
or the giving of notice or both would constitute a breach or default of or
acceleration under, any material agreement or instrument to which such Person
is a party or by which such Person is bound or (iv) result in a creation or
imposition of any lien, charge, security interest, encumbrance or claim upon or
in any of the Stations of such Person.
(c) The execution, performance and delivery by such Person of
this Agreement and the related agreements, instruments and documents referred
to herein do not require the consent, approval or action of, or any filing
with, or notice to, any Person except for consents or approvals previously
disclosed in writing by such Person to the other parties to this Agreement,
which consents shall, in any event, be obtained on or before the Commencement
Date.
12. Additional Covenants of the Parties.
(a) Each party shall, at all times during the Term, comply
with all federal, state and local laws, ordinances, requirements and
regulations, and all judgments, orders, injunctions and decrees applicable to
such party and its operations, the failure to comply with which would have a
material adverse effect on such party's ability to perform its obligations
under this Agreement.
(b) Each party shall, at all times during the Term, maintain
in full force and effect, and apply in a timely manner for the renewal of, all
licenses, trademarks, trade names and agreements necessary for the operation of
its business, the loss of any of which would have a material adverse effect on
such party's ability to perform its obligations under this Agreement.
(c) Each party shall keep confidential the terms and
conditions of this Agreement and all information obtained by it with respect to
the other in connection with the performance of this Agreement, except for
disclosures to such party's employees, investors, lenders, agents and other
representatives as may be necessary in connection with the business operations
of such party, and except for such disclosures as may be required on the part
of any party to comply with the disclosure requirements imposed upon such party
by applicable securities laws. Upon expiration or termination of this
Agreement, each Party shall return to the other, without retaining any copy
thereof, all confidential documents, correspondence and other information
relating to the other party.
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<PAGE> 19
(d) All rights, powers and remedies herein may be exercised
only to the extent that the exercise thereof does not violate any applicable
law, and are intended to be limited to the extent necessary so they will not
render this Agreement invalid or unenforceable, in whole or in part, under
applicable law.
(e) Each party shall, at the request of the other, execute
and deliver to the other such further instruments and perform all such further
actions as may be reasonably requested in order to effectuate the purposes of
this Agreement.
13. Triathlon Agreement Consummation.
(a) Upon becoming a licensee of any of the Pourtales Stations
pursuant to consummation of the Triathlon Agreement, Triathlon shall, with
respect to such radio stations, be entitled to the benefits and be subject to
the obligations of the Pourtales Entities under this Agreement as and to the
same extent as if Triathlon were an original party hereto in place of the
Pourtales Entities. Upon becoming a licensee of any of the Pourtales Stations,
Triathlon shall, upon request of Citadel, deliver to Citadel a certificate in
form and substance satisfactory to Citadel setting forth (a) the
representations and warranties on behalf of the Pourtales Entities as set forth
in Section 11, dated as of the date Triathlon becomes the licensee of the
Pourtales Station, and (b) the written agreement of Triathlon to be bound by
this Agreement. In addition, Triathlon shall, prior to purchasing any of the
Pourtales Stations, deliver to Citadel the written consent of Triathlon's
Lenders, if any, as required by Section 10(c). At such time as Triathlon
becomes the licensee of all of the Pourtales Stations, the Pourtales Entities
shall automatically be released from any liability or obligation accruing under
this Agreement from and after such date, without notice to or further action by
any party hereto.
(b) Citadel shall have the right to review the Triathlon
Agreement promptly following its execution. Subject to Citadel's written
approval of such Triathlon Agreement, and to the occurrence of a "Law Change"
or the obtaining by Citadel of a "Waiver," as each of such terms is defined
below, in the event Triathlon for any reason fails to consummate the
acquisition of the Pourtales Stations in accordance with the provisions of the
Triathlon Agreement (a "Triathlon Breach"), the Pourtales Entities agree to
sell to Citadel, and Citadel agrees to purchase from the Pourtales Entities,
the Pourtales Stations on the terms and conditions set forth in the Triathlon
Agreement, except that (i) the date for the consummation thereof shall be
delayed for a commercially reasonable time in order to permit Citadel to obtain
the appropriate FCC approvals for such purchase and as further provided in
Section 13(d), (ii) the aggregate $18,500,000 purchase price payable under the
Triathlon Agreement shall be allocated $17.0 million to the Pourtales Stations
and the balance to assets unrelated to the Pourtales Stations and (iii) the
Pourtales
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<PAGE> 20
Entities shall be entitled to retain any liquidated damages (and related
deposits and letter of credit proceeds) to which they are entitled from
Triathlon as a result of the Triathlon Breach. The Pourtales Entities shall
provide Citadel with written notice of a Triathlon Breach (the "Breach
Notice"), and Triathlon hereby agrees that Citadel shall be permitted to rely
conclusively upon such Breach Notice and may proceed in accordance with this
Section 13(b) and Section 13(c) without interference from Triathlon. The term
"Law Change" means a change in the Communications Act of 1934, as amended, or
the rules, regulations and policies of the FCC, which would permit Citadel to
own the Pourtales Stations in addition to the radio stations owned, marketed
and/or programmed by Citadel. The term "Waiver" means a waiver from the FCC
that would permit Citadel to own the Pourtales Stations in addition to the
other radio stations owned, marketed and/or Programmed by Citadel.
(c) If a Law Change has not occurred as of the date of a
Breach Notice, Citadel shall promptly and diligently attempt to obtain a
Waiver. If, despite such efforts, Citadel is unable to obtain a Waiver, and as
a result Citadel is unable to purchase the Pourtales Stations pursuant to
Section 13(b), Citadel shall have the right and the obligation to exercise
commercially reasonable efforts to identify a purchaser (a "Substitute
Purchaser") to purchase the Pourtales Stations pursuant to Section 13(b) in
place of Citadel. The Triathlon Entities agree to accept any Substitute
Purchaser so identified by Citadel.
(d) In the event Citadel or a Substitute Purchaser purchases
the Pourtales Stations pursuant to Sections 13(b) or 13(c), the purchaser and
the Pourtales Entities shall enter into an agreement in the form of the
Triathlon Agreement, modified only to reflect the substitution of parties and
any changes contemplated by this Section 13 (a "Substitute Purchase
Agreement"). If a Law Change has not occurred as of the date of a Breach
Notice, Citadel shall have a period of 180 days from the date of the Breach
Notice within which to enter into a Substitute Purchase Agreement, or to cause
a Substitute Purchaser to enter into a Substitute Purchase Agreement, and a
commercially reasonable time thereafter within which to obtain the appropriate
FCC approvals for such purchase.
14. Relationship of Parties. Citadel shall serve solely as an
independent contractor and agent for the sale of advertising time in the
performance of its duties hereunder, and except as expressly provided in this
Agreement, shall not be authorized to act as an agent of or otherwise represent
any of the Pourtales Entities in any capacity or manner. Nothing in this
Agreement shall constitute a partnership or joint venture between the Pourtales
Entities and Citadel. The parties acknowledge that the call letters, trademarks
and other intellectual property of each shall at all times remain the property
of the respective parties and that neither party shall obtain any ownership
interest in the other's intellectual property by virtue of this Agreement.
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<PAGE> 21
15. General Provisions.
(a) No modification or waiver of any provision of this
Agreement shall in any event be effective unless such modification or waiver is
made in a writing signed by the party against whom such modification or waiver
is sought to be enforced, and then only in the specific instance and for the
specific purpose for which consent has been given.
(b) No failure or delay on the part of any party in
exercising any right or power under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the parties provided in this
Agreement are cumulative and are not exclusive of any right or remedy which
either may otherwise have under applicable law.
(c) This Agreement shall be construed in accordance with the
laws of the State of Arizona without regard to its principles of choice or
conflicts of laws.
(d) This Agreement and the obligations of the parties
hereunder shall at all times be subject to the FCC Laws and the parties shall
at all times operate under this Agreement so as to be and remain in compliance
with the FCC Laws.
(e) This Agreement may be signed in one or more counterparts,
each or which shall be deemed a duplicate original, binding on the parties
hereto notwithstanding that the parties are not signatory to the same original
or the same counterpart.
(f) Any notice, demand, consent, approval or request required
or permitted to be given under the provisions of this Agreement shall be in
writing, addressed to the following addresses, or to such other addresses as
any party may request in writing:
To Citadel: Citadel Broadcasting Company
1015 Eastman Drive
Bigfork, Montana 59911
Attn: Lawrence R. Wilson
With copy to: Donna L. Heffner
1839 South Alma School Road
Suite 264
Mesa, Arizona 85210
18
<PAGE> 22
With copies to: Michael J. Ahearn, Esq.
GALLAGHER & KENNEDY, P.A.
2600 North Central Avenue
Phoenix, Arizona 85004-3020
and
Peter D. O'Connell, Esq.
REED, SMITH, SHAW & McCLAY
1301 K Street, N.W.
Suite 1100-East Tower
Washington, DC 20005-3317
To the Pourtales c/o Pourtales Radio Partnership
Entities: 205 East Cheyenne Mountain Boulevard
Suite 100
Colorado Springs, Colorado 80906
Attn: C. T. Robinson
With copy to: HOGAN & HARTSON, L.L.P.
Two North Cascade Avenue
Suite 1300
Colorado Springs, Colorado 80903
Attn: Scott A. Blackmun, Esq.
To Triathlon: Triathlon Broadcasting Company
750 B Street, Suite 1920
San Diego, California 92101
Attn: Norman Feuer
With copy to: Howard J. Tytel, Esq.
The Sillerman Companies, Inc.
150 East 58th Street, 19th Floor
New York, New York 10155
All notices shall be deemed to have been duly delivered and received on the
date of personal delivery, on the date of receipt if mailed by registered or
certified mail, postage prepaid and return receipt requested, or on the date of
the signed receipt if sent by a nationally recognized overnight delivery
service.
(g) Subject to the provisions of Section 10, this Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
the parties.
(h) Exhibit A annexed hereto is hereby incorporated herein by
this reference.
(i) This Agreement embodies the complete and entire agreement
and understanding of the parties with respect to the subject matter hereof. No
alteration, modification or change of
19
<PAGE> 23
this Agreement shall be valid unless made in writing and signed by all parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date above first written.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
20
<PAGE> 24
[SIGNATURE PAGE TO JOINT SALES AGREEMENT]
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
---------------------------
Its: President
POURTALES RADIO PARTNERSHIP
By: /s/ Terry Robinson
---------------------------
Its: General Partner
POURTALES HOLDINGS, INC.
By: /s/ Terry Robinson
---------------------------
Its: ______________________
SPRINGS RADIO, INC.
By: /s/ Terry Robinson
---------------------------
Its: ______________________
KVUU/KSSS, INC.
By: /s/ Terry Robinson
---------------------------
Its: ______________________
TRIATHLON BROADCASTING COMPANY
(for purposes of Section 13)
By: /s/ Norman Fever
---------------------------
Its: President
21
<PAGE> 25
EXHIBIT A
The JSA Fee payable to Citadel shall be determined as follows:
1. Incorporation By Reference. The provisions of the Joint
Sales Agreement (the "Agreement") of even date, to which this Exhibit A is
annexed, are incorporated herein by this reference in their entirety, with the
same force and effect as if fully set forth herein.
2. Certain Definitions. For purposes of this Exhibit A, the
following terms will have the meanings set forth below:
"Applicable Multiplier" means, for each calendar month
during the Term through and including June 1997, 55%, and for each calendar
month during the Term from and after July 1997, 60%.
"Broadcast Cash Flow" for a specified period means (a) the
aggregate revenue of the Citadel Stations and the Pourtales Stations for the
period, inclusive of Trade Revenues, reduced by (b) the aggregate Citadel
Operating Expenses and Pourtales Operating Expenses for the period.
"Citadel Accounts Receivable" means (a) the accounts
receivable of the Citadel Stations, including Trade Receivables, and all other
revenue from the sale of advertising time on any of the Citadel Stations,
arising from and after the Commencement Date and (b) the Trade Receivables of
the Pourtales Stations arising from and after the Commencement Date.
"Citadel Operating Expenses" means (a) the aggregate
expenses, whether cash expenses or Trade Expenses, incurred by Citadel directly
in connection with the operation of the Citadel Stations and in the performance
of its functions for the Pourtales Stations as contemplated by the Agreement,
excluding (b) Citadel's Corporate Overhead.
"Corporate Overhead" of a Person means (a) costs and
expenses of such Person not incurred solely and directly in connection with the
operation of one or more of the Stations and (b) the compensation expense of
any employees of such Person not employed for the exclusive purpose of
rendering services to one or more of the Stations in connection with its
operations.
"Monthly BCF Report" has the meaning set forth in Section
3.
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<PAGE> 26
"Monthly Receivable Collections" means the total
collections by Citadel of the Pourtales Future Accounts Receivable and the
Citadel Accounts Receivable during a calendar month within the Term.
"Pourtales Operating Expenses" means (a) the aggregate
expenses, whether cash expenses or Trade Expenses, incurred by Pourtales
directly in connection with the operation of the Pourtales Stations, including
programming costs, music license fees, rating service, promotion expenses,
occupancy costs, broadcast tower leases, engineering costs, telephone and power
costs and compensation expenses to Pourtales for a general manager/program
director, engineer and receptionist/office manager in each of the Colorado
Springs Market and the Spokane Market, excluding (b) Pourtales' Corporate
Overhead and any severance expenses incurred by Pourtales in connection with
the termination of any of its employees resulting from the commencement of the
Agreement.
"Pourtales Operating Report" has the meaning set forth in
Section 3.
3. Calculation and Payment of JSA Fee.
(a) Promptly (and in any event within five days) after the
last day of each month during the Term, the Pourtales Entities shall deliver to
Citadel a statement setting forth in reasonable detail the Pourtales Operating
Expenses for the month most recently ended and any revenue of the Pourtales
Stations received directly by the Pourtales Entities during such month
(including any revenue resulting from the collection of any Delinquent
Accounts) (the "Pourtales Operating Report"). Citadel shall prepare and deliver
to the Pourtales Entities, on or before five days after Citadel's receipt of
the Pourtales Operating Report, a statement (the "Monthly BCF Report") setting
forth in reasonable detail the Broadcast Cash Flow for such month. Each
Pourtales Operating Report and Monthly BCF Report shall be prepared in
accordance with generally accepted accounting principles consistently applied.
The Pourtales Entities and Citadel, by signature of their respective chief
financial officers, shall certify that each Pourtales Operating Report and
Monthly BCF Report delivered by such Person pursuant to this Agreement is true
and correct in all material respects and prepared in conformity with this
Section 3(a).
(b) Citadel shall be entitled, as its JSA Fee, to an
amount equal to the Broadcast Cash Flow for the period covered by each Monthly
BCF Report, as reported thereon, multiplied by the Applicable Multiplier in
effect during the month covered by such Monthly BCF Report.
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<PAGE> 27
(c) The Pourtales Operating Expenses and the Broadcast
Cash Flow included in the initial Pourtales Operating Report and the initial
Monthly BCF Report shall reflect the results of operations of the Stations
beginning on the Commencement Date and continuing through the last day of the
first month of the Term, and the parties shall appropriately prorate, as of the
Commencement Date, all expenses included in the Broadcast Cash Flow calculation
for such period.
4. Payment of Pourtales Operating Expenses. Citadel shall
remit payment to the Pourtales Entities, on the 15th day and on the last day of
each calendar month during the Term, in an amount equal to one-half of the
Pourtales Operating Expenses incurred and to be incurred for such calendar
month, as estimated by the Pourtales Entities in good faith.
5. Additional Payments. Subject to the adjustments
contemplated by Section 6:
(a) Contemporaneously with Citadel's preparation of each
Monthly BCF Report. Citadel shall determine the Monthly Receivable Collections
for such month and set forth the amount of such Monthly Receivable Collections
on such Monthly BCF Report. Contemporaneously with Citadel's delivery of each
Monthly BCF Report, (i) Citadel shall deliver to the Pourtales Entities, from
such Monthly Receivable Collections, an amount equal to the Pourtales Operating
Expenses reflected on the Pourtales Operating Report for such month which have
not already been advanced to Pourtales pursuant to Section 4 and (ii) Citadel
shall retain from such Monthly Receivable Collections, an amount equal to the
Pourtales Operating Expenses reflected on the Pourtales Operating Report for
such month equal to the amount advanced by Citadel for such month pursuant to
Section 4.
(b) Upon making the payments described in Section 5(a),
Citadel shall deduct from the Monthly Receivable Collections an amount equal to
the Citadel Operating Expenses for such month as reflected on the Monthly BCF
Report.
(c) Upon making the payments described in Sections 5(a)
and 5(b), (i) Citadel shall deduct from the remaining Monthly Receivable
Collections an amount equal to its JSA Fee for such month and (ii) Citadel
shall remit to the Pourtales Entities an amount equal to the Broadcast Cash
Flow for such month as reflected on the Monthly BCF Report, reduced by the JSA
Fee payable to Citadel for such month.
(d) If the Monthly Receivable Collections for any month
are insufficient to pay the amounts described in Sections 5(a), 5(b) and 5(c)
for such month, the Monthly Receivable Collections shall be applied in the
following order of priority: (i) first, to the payments required by Section
5(a), (ii) second,
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<PAGE> 28
to the payments required by Section 5(b) and (iii) third, to the payments
described in Section 5(c), on a pro rata basis based upon the relative amounts
owed to the parties.
(e) If, as a result of the application of the provisions
of Section 5(d), the amounts owed to any of the parties pursuant to Sections
5(a), 5(b) and 5(c) are not fully paid out of Monthly Receivable Collections
during any calendar month (the "Unpaid Amounts"), the Unpaid Amounts shall be
paid from the Monthly Receivable Collections during the immediately following
month after the payments required to be made for such following month described
in Sections 5(a) and 5(b) and prior to the payments required to be made for
such following month described in 5(c).
6. Notwithstanding any provision contained in Section 5 to
the contrary:
(a) If in any month during the Term any of the Pourtales
Entities receives directly any revenue from any of the Pourtales Stations, the
amounts otherwise payable to any of the Pourtales Entities under Section 5
shall be reduced by the amount of such payment.
(b) If the Pourtales Entities receive payment pursuant to
Section 4 for any month in an amount which exceeds the Pourtales Operating
Expenses actually incurred by the Pourtales Entities for such month, such
excess shall be deducted from the payment otherwise due to the Pourtales
Entities for such month pursuant to Section 5(c)(ii).
(c) If Monthly Receivable Collections for any month are
insufficient to permit Citadel to make the payments required by Section
5(a)(i), Citadel shall nevertheless make such payment directly to the Pourtales
Entities (a "Citadel Expense Payment"). Citadel shall be entitled to recover
any Citadel Expense Payment from available Monthly Receivable Collections, and
prior to making any further payments under Section 5.
7. Promptly (and in any event within five days) after
termination of the Agreement, the Pourtales Entities shall deliver to Citadel a
Pourtales Operating Report covering any period during the Term for which
Citadel has not previously been paid a JSA Fee (the "Termination Period").
Within five days after receiving the Pourtales Operating Report, Citadel shall
prepare and deliver to the Pourtales Entities a Monthly BCF Report covering the
Termination Period. Notwithstanding the termination of the Agreement, the
Pourtales Entities shall continue to collect the Pourtales Future Accounts
Receivable existing as of the date of termination and each of the parties shall
remain obligated to pay to the other, from their collection of the Pourtales
Future Accounts Receivable and Citadel Accounts Receivable, respectively,
25
<PAGE> 29
the payments to which the parties are entitled for the Termination Period
pursuant to Section 5.
8. Within 20 days of the date of execution of the Agreement,
the Pourtales Entities shall deliver to Citadel a budget setting forth their
budgeted Pourtales Operating Expenses for calendar year 1996, and Citadel shall
deliver to the Pourtales Entities a budget setting forth the budgeted Broadcast
Cash Flow, exclusive of the Pourtales Operating Expenses, for the calendar year
1996. Commencing in 1996 and continuing during each successive year within the
Term, the Pourtales Entities shall deliver to Citadel, on or before November 15
of such year, a budget setting forth the budgeted Pourtales Operating Expenses
for the immediately following year, and on or before December 1 of such year,
Citadel shall deliver to the Pourtales Entities a budget setting forth the
budgeted Broadcast Cash Flow (incorporating the budget provided by the
Pourtales Entities) for the immediately following year. Each party shall
prepare its budget reasonably and in good faith. The parties shall exercise
commercially reasonable efforts to perform their respective obligations under
the Agreement so as to achieve the results set forth in their respective
budgets, subject to the right of any party to deviate from its budget as it
reasonably deems appropriate to respond to competitive conditions.
26
<PAGE> 1
Exhibit 10.7
CITADEL COMMUNICATIONS CORPORATION
----------------------
SECURITIES PURCHASE AND EXCHANGE AGREEMENT
----------------------
AMONG
CITADEL COMMUNICATIONS CORPORATION
CITADEL BROADCASTING COMPANY,
ABRY BROADCAST PARTNERS II, L.P.,
ABRY/CITADEL INVESTMENT PARTNERS, L.P.
BAKER, FENTRESS & COMPANY,
BANK OF AMERICA ILLINOIS,
OPPENHEIMER & CO., INC.,
AND
CERTAIN OTHER PARTIES
----------------------
DATED AS OF JUNE 28, 1996
<PAGE> 2
SECURITIES PURCHASE AND EXCHANGE AGREEMENT
THIS AGREEMENT is made as of June 28, 1996 among CITADEL
COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company"), CITADEL
BROADCASTING COMPANY, a Nevada corporation ("Citadel"), ABRY BROADCAST PARTNERS
II, L.P., a Delaware limited partnership ("ABRY"), ABRY/CITADEL INVESTMENT
PARTNERS, L.P., a Delaware limited partnership ("ABRY/CIP"), BAKER, FENTRESS &
COMPANY, a Delaware corporation ("BFC"), OPPENHEIMER & CO., INC., a Delaware
corporation ("Oppenheimer"), BANK OF AMERICA ILLINOIS, an Illinois banking
corporation formerly known as Continental Bank, N.A. ("BofA"), and CHRISTOPHER
J. PERRY, ROBERT F. PERILLE, M. ANN O'BRIEN, FORD S. BARTHOLOW, JEFFREY M.
MANN, MATTHEW W. CLARY and THOMAS E. VAN PELT, JR. (collectively, the "BofA
Co-Investors"). Except as otherwise indicated herein or the context otherwise
requires, capitalized terms used herein are defined in Section 1 hereof.
PREAMBLE
A. Citadel has agreed to make the Acquisitions pursuant to
the KASY Purchase Agreement, the KDJK Purchase Agreement and the KHFM/KHFN
Purchase Agreement.
B. The Company holds all of the issued and outstanding
capital stock of Citadel.
C. Citadel (under its former name, Citadel Communications
Corporation), BFC, AMEV, AMEV International, Oppenheimer, and Old Citadel
entered into the Class A Note Agreement as of July 24, 1992, pursuant to which
Citadel issued and BFC purchased the Class A Notes and certain other
subordinated notes which have been redeemed by Citadel, Citadel issued and BFC
purchased 40,500 shares of the Original Series A Preferred Stock of Citadel,
and Citadel issued and AMEV, AMEV International and Oppenheimer purchased an
aggregate of 20,100 shares of the Original Series B Convertible Preferred Stock
of Citadel.
D. The Company (under its former name CCC Holdings, Inc.) was
formed as the parent of Citadel on March 24, 1993.
E. The Company, Citadel, BFC, AMEV, AMEV International and
Oppenheimer entered into a Purchase Agreement dated as of May 3, 1993, which
Purchase Agreement was amended and restated pursuant to the Series A/B Purchase
Agreement. Pursuant to the Series A/B Purchase Agreement, the Original Series A
Preferred Stock was exchanged for 40,500 shares of Old Series A Preferred Stock
and the Original Series B Preferred Stock was exchanged for 20,100 shares of
Old Series B Preferred Stock. The Company subsequently repurchased the Old
Series B Preferred Stock owned by AMEV and AMEV International. After giving
effect to the Stock Splits, on the date of this Agreement, Baker Fentress owns
(immediately prior to the consummation of the transactions contemplated herein)
972,000 shares of Old Series A Preferred Stock and Oppenheimer owns 14,400
shares of Old Series B Preferred Stock, which are convertible into 1,353,598
and 17,201, respectively, shares of Class A Common Stock.
F. The Company, Citadel and BFC entered into the Series C
Purchase Agreement as of May 28, 1993, pursuant to which the Company issued and
BFC purchased 11,496 shares of Old Series C Preferred Stock, and warrants to
purchase 2,250 shares of Old Series C Preferred Stock,
1
<PAGE> 3
which warrants have subsequently lapsed. As a result of the Stock Splits, BFC
owns (immediately prior to the consummation of the transactions contemplated by
this Agreement) 275,904 shares of Old Series C Preferred Stock on the date of
this Agreement, which are convertible into 384,221 shares of Class A Common
Stock or Old Class B Common Stock.
G. The Company, Citadel, BofA and the BofA Co-Investors
entered into the Note and Warrant Purchase Agreement as of October 1, 1993,
pursuant to which Citadel issued and BofA and the BofA Co-Investors purchased
the Senior Subordinated Notes, and the Company issued and BofA and the BofA
Co-Investors purchased the BofA Warrants to purchase 91,344 shares of Old Class
C Common Stock. Upon consummation of the purchase of the BofA Co-Investor
Warrants, the BofA Co-Investors exercised their warrants, and, as a result of
the Second Stock Split, the BofA Co-Investors now own an aggregate of 43,845.12
shares of Old Class C Common Stock. As a result of the Second Stock Split, the
BofA Warrants now entitle BofA to purchase 321,530.88 shares of Old Class C
Common Stock.
H. The Company, Citadel and Mesirow entered into the Series D
Purchase Agreement as of October 1, 1993, pursuant to which the Company issued
and Mesirow purchased 171,876 shares of Old Series D Preferred Stock. As a
result of the Second Stock Split, Mesirow owns 687,504 shares of Old Series D
Preferred Stock, which are convertible into that number of shares of Class A
Common Stock.
I. The Selling Investors have requested that the Company make
the Redemptions of certain of the Preferred Stock owned by them, for an
aggregate redemption price of $29,455,362.99 and the Company desires to make
the Redemptions, as more particularly described below. The Company further
desires to prepay the Senior Subordinated Notes.
J. The Company has borrowed the sum of $2,000,000 from ABRY
under the Bridge Note. The Bridge Note provides that it is due and payable upon
the consummation of the transactions contemplated by this Agreement.
K. The Company desires to finance the Acquisitions, the
Redemptions, the prepayment of the Senior Subordinated Notes, the payment of
the Bridge Note and working capital requirements through the issuance to ABRY
and ABRY/CIP of Series C Preferred Stock and Series D Preferred Stock, and
through borrowings from ABRY and ABRY/CIP under the Facility A Loan.
L. Simultaneously with the purchase by ABRY and ABRY/CIP of
Series C Preferred Stock and Series D Preferred Stock by ABRY and ABRY/CIP, the
Company, and the Investors desire to effect the Reclassification and the
Exchange.
The parties hereto agree as follows:
1. Definitions. Except as otherwise expressly provided in this
Agreement, all accounting terms used in this Agreement, whether or not defined
in this Section 1, shall be construed in accordance with GAAP. At any time that
the Company has one or more Subsidiaries, such accounting terms shall be
determined on a consolidated basis for the Company and each of its
2
<PAGE> 4
Subsidiaries, and the financial statements and other financial information to
be furnished by the Company pursuant to this Agreement shall be consolidated
and presented with consolidating financial statements of the Company and each
of its Subsidiaries.
"ABRY Directors" means Peggy Koenig and Jay Grossman, or such other
individuals elected to serve as a member of the Board of Directors of each of
the Company and Citadel as designated by ABRY pursuant to the Voting Agreement.
"ABRY/CIP Director" means Royce Yudkoff, or such other individual
elected to serve as a member of the Board of Directors of each of the Company
and Citadel as designated by ABRY/CIP pursuant to the Voting Agreement.
"ABRY Holders"means the Holders of (i) Investor Stock described in any
of clauses (ix) through (xi) of the definition of the term "Investor Stock,"
(ii) Facility A Notes Conversion Stock, and (iii) Equity Securities of the
Company issued or issuable with respect to any Equity Securities referred to in
clause (i) or clause (ii) above or this clause (iii) by way of any stock
dividend or stock split, or in connection with a combination or exchange of
shares, recapitalization, merger, consolidation, reorganization or otherwise.
"Acquisition Agreements" means, collectively, the KASY Purchase
Agreement, the KDJK Purchase Agreement and the KHFM/KHFN Purchase Agreement.
"Acquisitions" means Citadel's acquisition of substantially all of the
assets of radio station KASY-FM, Albuquerque, New Mexico pursuant to the KASY
Asset Purchase Agreement, substantially all of the assets of radio station
KDJK-FM, Oakdale, California pursuant to the KDJK Purchase Agreement, and all
of the stock of the New Mexico Corporations, which own radio stations KHFM-FM,
Albuquerque, New Mexico and KHFN-AM, Los Ranchos, New Mexico, pursuant to the
KHFN/KHFN Purchase Agreement.
"Affiliate" of a Person means any Person that directly or indirectly
controls, is controlled by, or is under common control with, such Person and,
with respect to an individual, such individual's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of such
individual and/or his or her spouse and/or descendants.
"Agreement" means this Agreement.
"Amended and Restated BofA Warrants" means the Amended and Restated
Warrant of even date with this Agreement issued by the Company to BofA, in the
form attached to this Agreement as Exhibit "A".
"Amended and Restated Certificate of Incorporation" means the Fifth
Amended and Restated Certificate of Incorporation of the Company, in the form
attached to this Agreement as Exhibit "B".
"Amended and Restated Class A Note Agreement" means the Amended and
Restated Class A Note Agreement of even date with this Agreement among the
Company, Citadel and BFC, in the form attached to this Agreement as Exhibit
"C".
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<PAGE> 5
"AMEV" means AMEV Venture Associates III, L.P.
"AMEV International" means AMEV Venture Associates III International,
L.P.
"Board of Directors" means the Board of Directors of the Company or
Citadel, as the case may be.
"BofA Proxy" shall mean the Security Holder Agreement of even date
herewith, by and among BofA, the BofA Co-Investors, the Company and Citadel, in
the form attached to the Voting Agreement as Exhibit "A".
"BofA Warrants" means the warrants issued pursuant to the Note and
Warrant Purchase Agreement and owned beneficially and of record by BofA as of
the date of this Agreement, and prior to their amendment and restatement
pursuant to the Amended and Restated BofA Warrants.
"Bridge Note" means the Junior Subordinated Convertible Note Due 1996
in the principal amount of $2,000,000, dated May 24, 1996, issued by Citadel to
ABRY.
"Change of Control" means the sale of the Company or Citadel to an
Independent Third Party or group of Independent Third Parties pursuant to which
such party or parties acquire (i) Equity Securities of the Company or Citadel
possessing the voting power under normal circumstances to elect a majority of
the Company's or Citadel's board of directors (whether by merger, consolidation
or sale or transfer of the Company's or Citadel's Equity Securities) or (ii)
all or substantially all of the Company's or Citadel's assets determined on a
consolidated basis.
"Change of Control Payment" means any payment to or other
consideration transferred to any officer or employee of the Company, Citadel or
any of their Subsidiaries who holds or owns beneficially or otherwise Equity
Securities of the Company by any Person whatsoever in connection with any
transaction resulting in a Change of Control of the Company or Citadel
including, without limitation, payments in respect of (i) employment agreements
or consulting agreements in excess of such employee's historical ordinary cash
compensation as an officer or employee of the Company, Citadel or any of their
Subsidiaries (as the case may be) prior to such transaction, (ii)
non-competition agreements, (iii) licenses or (iv) forbearances of any kind;
provided, however, that payments in respect of such officer's or employee's
Equity Securities of the Company shall not constitute a Change of Control
Payment if such payments do not exceed the price per share of Common Stock
(adjusted to reflect any applicable exercise price or the like) paid to Holders
of Equity Securities of the Company who are not employees.
"Class A Common Stock" means the Class A Common Stock of the Company,
par value $.001 per share.
"Class A Note Agreement" means the Purchase Agreement dated as of July
24, 1992, as amended, among the Company (under its former name, Citadel
Communications Corporation), Old Citadel, BFC, AMEV, AMEV International,
Oppenheimer, as amended and in effect on the date of this Agreement and prior
to its amendment and restatement pursuant to the Amended and Restated Class A
Note Agreement.
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<PAGE> 6
"Class A Notes" means the 12% Subordinated Notes due June 30, 2000,
Class A, in the aggregate principal amount of $7,000,000 issued by Citadel to
BFC.
"Class B Common Stock" means the Class B Common Stock of the Company,
par value $.001 per share, existing after the Reclassification.
"Class C Common Stock" means the Class C Common Stock of the Company,
par value $.001 per share, existing after the Reclassification.
"Closing" shall have the meaning assigned to it in Section 5.
"Closing Advance" shall have the meaning assigned to it in Section
7.d.(iii).
"Closing Date" shall have the meaning assigned to it in Section 5.
"Common Stock" means, collectively, the Class A Common Stock, the
Class B Common Stock and the Class C Common Stock.
"Commission" shall mean the Securities and Exchange Commission.
"Compensation Committee" means the compensation committee of the Board
of Directors of the Company.
"Corporate Overhead" shall have the meaning assigned to such term in
the FINOVA Credit Agreement; provided, however, that (i) all determinations
shall be made with respect to the Company on a consolidated basis, (ii)
references to specific individuals shall be deemed to include other individuals
who succeed to the responsibilities of such individuals, and (iii) the term
"Station" as used in such definition shall include radio stations owned by the
Company, Citadel or any other Subsidiary.
"Employee Incentive Securities" means and includes (a) options
exercisable for Class A Common Stock, in an aggregate amount not in excess of
62,942 shares of Class A Common Stock (assuming the full exercise of all such
issued stock options without regard to any restrictions or limitations on
exercise) issued or granted to LRW prior to the date of this Agreement under
the Wilson Option Agreement or pursuant to a separate grant of options made to
LRW on December 21, 1994, (b) options exercisable for Class A Common Stock, in
an aggregate amount not in excess of 34,374 shares of Class A Common Stock
(assuming the full exercise of all such stock options without regard to any
restrictions or limitations on exercise) to which LRW may become eligible after
the date of this Agreement pursuant to the Wilson Option Agreement, (c) options
exercisable for Class A Common Stock, in an aggregate amount not in excess of
150,000 shares of Class A Common Stock (assuming the full exercise of all such
stock options without regard to any restrictions or limitations on exercise)
granted to LRW as of the date of this Agreement pursuant to the 1996 Equity
Incentive Plan, (d) options exercisable for Class A Common Stock, in an
aggregate amount not in excess of 380,892 shares of Class A Common Stock
(assuming the full exercise of all such issued stock options without regard to
any restrictions or limitations on exercise) issued or granted to other
employees of Citadel prior to the date of this Agreement, (e) options
exercisable for Class A Common Stock, in an aggregate amount not in excess of
150,000 shares of Class A Common Stock (assuming the full
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<PAGE> 7
exercise of all such stock options without regard to any restrictions or
limitations on exercise) granted to other employees of Citadel as of the date
of this Agreement pursuant to the 1996 Equity Incentive Plan, and (f) options
exercisable for Class A Common Stock, in an aggregate amount not in excess of
114,000 shares of Class A Common Stock (assuming the full exercise of all such
stock options without regard to any restrictions or limitations on exercise)
granted by the Compensation Committee to LRW and/or by the Board of Directors
to other employees of Citadel after the date of this Agreement pursuant to the
1996 Equity Incentive Plan.
"Employment Agreement" means the Employment Agreement between Citadel
and LRW of even date herewith, in the form attached to this Agreement as
Exhibit "D".
"Equity Securities" of any Person means (i) any capital stock,
partnership, membership, joint venture or other ownership or equity interest,
participation or securities (whether voting or non voting, whether preferred,
common or otherwise, and including any stock appreciation, contingent interest
or similar right) and (ii) any option, warrant, security or other right
(including debt securities) directly or indirectly convertible into or
exercisable or exchangeable for, or otherwise to acquire directly or
indirectly, any stock, interest, participation or security described in clause
(i) above.
"Event of Default" has the meaning assigned to such term in the FINOVA
Credit Agreement as in effect from time to time (including, for purposes of
this definition, all amendments to the FINOVA Credit Agreement after the
Closing Date which are effectuated in accordance with this Agreement).
"Exchange" means the physical exchange of certificates representing
Old Class C Common Stock for certificates representing Class B Common Stock,
and of certificates representing Old Class B Common Stock for certificates
representing Class C Common Stock upon the Reclassification.
"Existing Investors" means BFC, Oppenheimer, BofA, and the BofA
Co-Investors.
"Facility A Commitments" means the revolving credit facilities
established by ABRY and ABRY/CIP in favor of the Company, as provided for in
Section 4.e. below.
"Facility A Advance" means an advance made to the Company by ABRY and
ABRY/CIP in separate pro rata advances based upon their proportionate
commitment under the Facility A Commitment, including but not limited to the
Closing Advance, each of which shall be evidenced by the issuance by the
Company of a Facility A Note to each of ABRY and ABRY/CIP.
"Facility A Notes" mean the Convertible Promissory Notes issued by the
Company to ABRY and ABRY/CIP on or after the date of this Agreement pursuant to
the terms and conditions of this Agreement, in the form attached to this
Agreement as Exhibit "E".
"Facility A Notes Conversion Stock" means (i) Preferred Stock issued
or issuable upon the conversion of any Facility A Note, (ii) Preferred Stock
issued or issuable upon the conversion of any Preferred Stock described in
clause (i) above or in this clause (ii), (iii) Common Stock issued or issuable
upon the conversion of any Preferred Stock described in clause (i) or clause
(ii) above,
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<PAGE> 8
(iv) Common Stock issued or issuable upon the conversion or exchange of any
Common Stock described in clause (iii) above or in this clause (iv), and (v)
Equity Securities of the Company issued or issuable with respect to any Equity
Securities referred to in any of clauses (i) through (iv) above or this clause
(v) by way of any stock dividend or stock split, or in connection with a
combination or exchange of shares, recapitalization, merger, consolidation,
reorganization or otherwise. As to any particular securities constituting
Facility A Notes Conversion Stock, such securities shall continue to constitute
Facility A Notes Conversion Stock in the hands of any permitted transferee
thereof, but will cease to constitute Facility A Notes Conversion Stock when
they have been disposed of in a Public Sale.
"FCC" means the Federal Communications Commission.
"FINOVA" means FINOVA Capital Corporation, a Delaware corporation,
formerly known as Greyhound Financial Corporation.
"FINOVA Amendment" means the Fifth Amendment of Loan Instruments of
even date herewith executed by FINOVA with respect to certain provisions of the
FINOVA Credit Agreement, in the form attached to this Agreement as Exhibit "F".
"FINOVA Credit Agreement" means mean the Amended and Restated Loan
Agreement by and between Citadel and FINOVA, dated as of May 12, 1994, as
amended and in effect on the Closing Date.
"First Stock Split" means the 6:1 stock split of the Company's stock,
effective on October 1, 1993.
"Fully Diluted Basis" refers to the outstanding Common Stock, assuming
the conversion, exercise, exchange and acquisition to the fullest extent
possible of or under all Equity Securities which are directly or indirectly
convertible into, are directly or indirectly exercisable or exchangeable for,
or provide for the acquisition directly or indirectly of, Common Stock, in each
case without regard to any limitation or restriction on any such conversion,
exercise, exchange or acquisition, but in each case other than (i) any such
Equity Security for which the conversion, exercise, exchange or acquisition
price is greater than the fair market value at the time in question of the
Common Stock so issuable (i.e., not assuming the conversion, exercise, exchange
or acquisition of any "out of the money" security) or (ii) the conversion of
any Facility A Note on or prior to the Maturity Date of such Facility A Note.
"Funds Flow Memorandum" means a summary of the flow of money on the
Closing Date identifying by name, amount and date, the sources and uses of all
funds to be received or paid by the Company on, immediately prior to, or
immediately following the Closing Date, or otherwise in connection with the
Closing and the closings of the transactions occurring on or about the Closing
Date pursuant to the Acquisitions, the Redemptions, the prepayment of the
Senior Subordinated Notes, the payment of the Bridge Note, and any other
agreement, document or instrument contemplated hereby or thereby.
"GAAP" means United States generally accepted accounting principles
consistently applied.
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<PAGE> 9
"Hart-Scott Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Hart-Scott Filing" means any filing with the Department of Justice
and the Federal Trade Commission required under the Hart-Scott Act.
"Holder" of any security means the record or beneficial owner of such
security.
"Indebtedness for Borrowed Money" means (a) all indebtedness of the
Company or any Subsidiary of the Company in respect of money borrowed
(including, without limitation, indebtedness which represents the unpaid amount
of the purchase price of any property and is incurred in lieu of borrowing
money or using available funds to pay such amounts and not constituting an
account payable or expense accrual incurred or assumed in the ordinary course
of business of the Company or any Subsidiary), (b) all indebtedness of the
Company or any Subsidiary of the Company evidenced by a promissory note, bond
or similar written obligation to pay money, (c) all indebtedness directly or
indirectly guaranteed in any manner by the Company or any Subsidiary or for
which the Company or any Subsidiary is otherwise contingently liable,
including, without limitation, guarantees in the form of an agreement to
repurchase, reimburse or provide funds, and any commitment by which the Company
or any Subsidiary assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit, and (d) all
obligations under capitalized leases in respect of which obligations the
Company or any Subsidiary is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations the Company or any
Subsidiary assures a creditor against loss.
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a Fully-Diluted Basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or any of such other persons.
"Investment" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, Equity Securities, or other securities or ownership interest of
any other Person and (ii) any capital contribution by such Person to any other
Person.
"Investor Stock" means (i) the Amended and Restated BofA Warrants,
(ii) Class B Common Stock held by the BofA Co-Investors on the date hereof
after giving effect to the Redemptions and the Reclassification, (iii) Class B
Common Stock issued or issuable upon the exercise of the Amended and Restated
BofA Warrants, (iv) Class A Common Stock issued or issuable upon the conversion
of Class B Common Stock described in clause (ii) or clause (iii) above, (v)
Series A Preferred Stock held by BFC on the date hereof after giving effect to
the Redemptions and the Reclassification, (vi) Class A Common Stock issued or
issuable upon the conversion of any Series A Preferred Stock described in
clause (v) above, (vii) Series B Preferred Stock held by Oppenheimer on the
date of this Agreement after giving effect to the Redemptions and the
Reclassification, (viii) Class A Common Stock issued or issuable upon the
conversion of any Series B Preferred Stock described in clause (viii) above,
(ix) the Shares, (x) Common Stock issued or issuable upon the conversion of any
Share,
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<PAGE> 10
(xi) Common Stock issued or issuable upon the conversion or exchange of any
Common Stock described in clause (x) above or this clause (xi), (xii) Facility
A Notes Conversion Stock, and (xiii) Equity Securities of the Company issued or
issuable with respect to any Equity Securities referred to in any of clauses
(i) through (xii) above or this clause (xii) by way of any stock dividend or
stock split, or in connection with a combination or exchange of shares,
recapitalization, merger, consolidation, reorganization or otherwise. As to any
particular securities constituting Investor Stock, such securities shall
continue to constitute Investor Stock in the hands of any permitted transferee
thereof, but will cease to constitute Investor Stock when they have been
disposed of in a Public Sale.
"Investors" means ABRY, ABRY/CIP and the Existing Investors, and their
respective heirs, personal representatives, successors and assigns.
"KASY Purchase Agreement" means the Asset Purchase Agreement dated
September 18, 1995, between Ramar Communications Company and Citadel as amended
pursuant to First Amendment to Asset Purchase Agreement dated as of June 1,
1996, and Second Amendment to Asset Purchase Agreement dated as of June 28,
1996.
"KDJK Purchase Agreement" means the Asset Purchase Agreement dated
April 13, 1996 between Photosphere Broadcasting Limited Partnership and
Citadel.
"KHFM/KHFN Purchase Agreement" means the Agreement of Purchase and
Sale dated February 15, 1996 among New Mexico News Radio, Inc. New Mexico
Classical Radio, Inc., Peter Besheer and F. Michael Langner and Citadel.
"Latest Balance Sheet" has the meaning assigned to it in Section
8.d.(ii).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under
the Uniform Commercial Code of any jurisdiction and including any lien or
charge arising by statute or other law, which secures the payment of a debt
(including, without limitation, any tax) or the performance of an obligation.
"LRW" means Lawrence R. Wilson.
"Management and Consulting Services Agreement" means the Management
and Consulting Services Agreement of even date herewith between ABRY Partners,
Inc. and Citadel, in the form attached to this Agreement as Exhibit "G".
"Maturity Date" of any Facility A Note has the meaning assigned to it
in such Facility A Note.
"Mesirow" means Mesirow Capital Partners VI, an Illinois limited
partnership.
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<PAGE> 11
"Mesirow Repurchase Agreement" means the Repurchase Agreement of even
date with this Agreement between the Company and Mesirow, in the form attached
to this Agreement as Exhibit "H".
"New Mexico Corporations" means New Mexico Classical Radio, Inc., a
New Mexico corporation, and New Mexico News Radio, Inc., a New Mexico
corporation.
"New Mexico Stock Pledge Agreement" means the Stock Pledge Agreement
of even date herewith executed and delivered by Citadel to FINOVA, pursuant to
which Citadel has agreed to pledge all of the issued and outstanding stock of
the New Mexico Corporations to FINOVA, as provided for in the FINOVA Amendment.
"New Mexico Subsidiary Mergers" means the mergers to be consummated
between Citadel and each of the New Mexico Corporations following the Closing
Date, pursuant to which each of the New Mexico Corporations shall be merged
with and into Citadel, and Citadel shall be the surviving corporation.
"1996 Equity Incentive Plan" means the Citadel Communications
Corporation 1996 Equity Incentive Plan of even date with this Agreement
together with the LRW ISO Award Agreement Under 1996 Equity Incentive Plan, LRW
Nonqualified Stock Option Award Agreement Under 1996 Equity Incentive Plan,
Form ISO Award Agreement For Employees Under 1996 Equity Incentive Plan and
Form Non-Qualified Stock Option Award Agreement For Employees Under 1996 Equity
Incentive Plan, in the form attached to this Agreement as Exhibit "I".
"Note Conversion Price" for any Facility A Note shall have the meaning
assigned to it in such Facility A Note.
"Note and Warrant Purchase Agreement" means the Senior Subordinated
Note and Warrant Purchase Agreement dated as of October 1, 1993, among the
Company, Citadel, BofA, and the BofA Co-Investors, as amended and in effect
immediately prior to the Closing.
"Officers Certificate" means a certificate signed on behalf of the
Company by the Company's president or its chief financial officer, stating that
(i) the officer signing such certificate has made or has caused to be made such
investigations as are necessary to permit him or her to verify the accuracy of
the information set forth in such certificate and (ii) to the best of such
officer's knowledge, such certificate does not misstate any material fact and
does not omit to state any fact necessary to make the certificate not
misleading.
"Old Citadel" means Citadel Associates Limited Partnership, an Arizona
limited partnership, and Citadel Associates Montana Limited Partnership, a
Montana Limited Partnership.
"Old Class B Common Stock" means the Class B Common Stock of the
Company, par value $.001 per share, existing immediately prior to the
Reclassification.
"Old Class C Common Stock" means the Class C Common Stock of the
Company, par value $.001 per share, existing immediately prior to the
Reclassification.
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"Old Series A Preferred Stock" means the Series A Convertible
Preferred Stock of the Company, par value $.001 per share, existing immediately
prior to the Reclassification.
"Old Series B Preferred Stock" means the Series B Convertible
Preferred Stock of the Company, par value $.001 per share, existing immediately
prior to the Reclassification.
"Old Series C Preferred Stock" means the Series C Convertible
Preferred Stock of the Company, par value $.001 per share, existing immediately
prior to the Reclassification.
"Old Series D Preferred Stock" means the Series D Convertible
Preferred Stock of the Company, par value $.001 per share, existing immediately
prior to the Reclassification.
"Operating Cash Flow" shall have the meaning set forth in the FINOVA
Credit Agreement; provided, however, that all determinations shall be made with
respect to the Company on a consolidated basis.
"Original Series A Preferred Stock" means the Series A Convertible
Preferred Stock of Citadel purchased by BFC pursuant to the Class A Note
Agreement.
"Original Series B Preferred Stock" means the Series B Convertible
Preferred Stock of Citadel purchased by AMEV, AMEV International and
Oppenheimer pursuant to the Class A Note Agreement.
"Other Documents" means the Registration Rights Agreement, the
Stockholders Agreement, the Voting Agreement, the Employment Agreement, the
1996 Equity Incentive Plan, the Wilson Option Agreement, the Amended and
Restated Certificate of Incorporation, the Amended and Restated Class A Note
Agreement, the Amended and Restated Warrant, the Mesirow Repurchase Agreement,
the Facility A Notes, the Wilson Note Forgiveness Agreement, the Management and
Consulting Services Agreement, and the New Mexico Stock Pledge Agreement.
"Pending Acquisition Stations" shall have the meaning assigned to such
term in Section 8.w. below.
"Permitted Increase" means any increase in the Indebtedness for
Borrowed Money permitted by Section 11.e.(i); provided, however, that the
aggregate amount of such increase outstanding at any one time shall not exceed
$500,000.
"Permitted Liens" means:
i. the Security Interests (as defined in the Senior Credit
Agreement);
ii. the Permitted Senior Indebtedness Liens (as defined in
the Senior Credit Agreement);
iii. Liens for taxes or assessments and similar charges which
either are (A) not delinquent or (B) being contested diligently and in good
faith by appropriate proceedings, and as to
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<PAGE> 13
which the Company has set aside reserves on its books which are satisfactory to
Holders of 66-2/3% of the Underlying Common Stock;
iv. Liens securing any Permitted Senior Substitution; and
v. Liens securing any Permitted Increase.
"Person" shall include all natural persons, corporations, business
trusts, limited liability companies, associations, companies, partnerships,
joint ventures, governments, agencies, political subdivisions and other
entities.
"Permitted Senior Substitution" shall have the meaning assigned to
such term in the Subordination Agreement; provided however, that for purposes
of this Agreement and the Stockholders Agreement, the following shall be
substituted for Clause (A) of subparagraph (iv): "(A) terms and conditions
which, whether directly or indirectly, are more onerous with respect to
Citadel, the Company or the rights of the Investors, including, without
limitation, terms which may further limit or restrict the rights of the
Investors to receive payments of the Put Price pursuant to Section 4.5 of the
Stockholders Agreement."
"Preferred Stock" means the Preferred Stock of the Company, par value
$.001 per share.
"Public Sale" means any sale of Equity Securities to the public
pursuant to an offering registered under the Securities Act, following a
Qualified Public Offering, or to the public pursuant to the provisions of Rule
144 under the Securities Act (or any similar provision then in force).
"Purchase Price" shall have the meaning set forth in Section 4.a.
hereof.
"Qualified Public Offering" means the closing of the issuance and sale
of Common Stock in an underwritten public offering which is registered pursuant
to the Securities Act and which results in the receipt by the Company of cash
proceeds of at least $25,000,000 (net of applicable commissions, discounts and
expenses).
"Reclassification" means the amendment and restatement of the
Company's certificate of incorporation pursuant to which (i) each share of Old
Class B Common Stock is automatically converted into the right to receive one
share of Class C Common Stock, (ii) each share of Old Class C Common Stock is
automatically converted into the right to receive one share of Class B Common
Stock, (iii) each share of Old Series A Preferred Stock is automatically
converted into the right to receive 1.3925899 shares of Series A Preferred
Stock, and (iv) each share of Old Series B Preferred Stock is automatically
converted into the right to receive 1.1944947 shares of Series B Preferred
Stock.
"Redemption Payment" shall have the meaning assigned to such term in
Section 4.b. hereof.
"Redemptions" means the repurchase by the Company of the Redemption
Shares from the Selling Investors.
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<PAGE> 14
"Redemption Shares" means an aggregate of 1,887,353.7 shares on a
Common Stock equivalent basis of the Old Class C Common Stock and the Company's
Preferred Stock and warrants to purchase Preferred Stock, as set forth on
Schedule 1 to this Agreement.
"Registration Rights Agreement" means the Third Amended and Restated
Registration Rights Agreement of even date herewith among the Company, the
Investors, and Wilson, in the form attached to this Agreement as Exhibit "J".
"Second Stock Split" means the 4:1 stock split of the Company's stock,
effective on December 21, 1994.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Investors" means BFC, BofA, the BofA Co-Investors and
Mesirow.
"Senior Credit Agreement" shall have the meaning assigned to it in the
Stockholders Agreement.
"Senior Subordinated Notes" means Citadel's Senior Subordinated Notes
due 1999 in the aggregate original principal amount of $4,000,000 issued to
BofA and the BofA Co-Investors.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Company, par value $.001 per share, existing after the effective
time of the Reclassification.
"Series A/B Purchase Agreement" means the Amended and Restated
Purchase Agreement dated as of May 3, 1993 by and among the Company, Citadel,
BFC, AMEV, AMEV International and Oppenheimer, as in effect immediately prior
to the Closing.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock of the Company, par value $.001 per share, existing after the effective
time of the Reclassification.
"Series C Preferred Stock" means the Series C Convertible Preferred
Stock of the Company, par value $.001 per share, existing after the effective
time of the Reclassification.
"Series C Purchase Agreement" means the Purchase Agreement dated as of
May 28, 1993 by and among the Company, Citadel and BFC, as in effect
immediately prior to the Closing.
"Series D Preferred Stock" means the Series D Convertible Preferred
Stock of the Company, par value $.001 per share, existing after the effective
time of the Reclassification.
"Series D Purchase Agreement" means the Purchase Agreement dated as of
October 1, 1993 by and among the Company, Citadel and Mesirow, as in effect
immediately prior to the Closing.
"Shares" shall have the meaning assigned to such term in Section 3.a.
hereof. If any Series C Preferred Stock or Series D Preferred Stock which
constitute "Shares" (including by reason of this
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sentence) is converted into Series D Preferred Stock or Series C Preferred
Stock, then the Preferred Stock issued upon such conversion shall thereafter
constitute "Shares."
"Stockholders Agreement" means the Second Amended and Restated
Stockholders Agreement of even date herewith by and among the Company, the
Investors, FINOVA, Wilson and certain other parties , in the form attached as
Exhibit "K".
"Stock Splits" means, collectively, the First Stock Split and the
Second Stock Split.
"Subordination Agreement" means the Subordination Agreement dated May
12, 1994 by and among FINOVA, BFC, BofA and the BofA Co-Investors, as amended
and in effect on the Closing Date.
"Subsidiary" shall mean any Person at least a majority of the
outstanding voting Equity Securities of which is at the time owned or
controlled directly or indirectly by the Company or by one or more Subsidiaries
or both, and with respect to the Company shall include without limitation
Citadel, and upon consummation of the acquisition of the stock of the New
Mexico Corporations, with respect to both the Company and Citadel shall include
the New Mexico Corporations.
"Termination of Agreement Re Section 5 Issuances" means the letter
dated of even date herewith terminating the letter agreement dated October 1,
1993 among the Company and the BofA Co-Investors, in the form attached to this
Agreement as Exhibit "L".
"Transactions Contemplated by this Agreement" means the execution,
delivery and performance of this Agreement and the Other Documents, the
Reclassification, the Exchange, the Redemptions, the payment of all accrued and
unpaid dividends on the Old Series B Preferred Stock and the Old Series D
Preferred Stock, the prepayment of the Senior Subordinated Notes and payment of
the Bridge Note, the issuance of the Facility A Notes and authorizing
borrowings thereunder, the issuance and sale of the Shares, the reservation for
issuance upon conversion of the Shares of an aggregate of 725,818.444 shares of
Series C Preferred Stock for issuance upon conversion of Series C Preferred
Stock into Series D Preferred Stock and 2,443,035.256 shares of Series D
Preferred Stock for issuance upon the conversion of Series D Preferred Stock
into Series C Preferred Stock from time to time as permitted and/or required by
this Agreement, the reservation for issuance of 3,168,853.70 shares of Class A
Common Stock and the reservation for issuance of 3,168,853.70 shares of Class C
Common Stock upon conversion of the Shares into either Class A Common Stock or
Class C Common Stock, the reservation for issuance of 325,463 shares of Series
C Preferred Stock and 325,463 shares of Series D Preferred Stock upon
conversion of the Facility A Notes issued on the Closing Date, the reservation
for issuance of 325,463 shares of Class A Common Stock and 325,463 shares of
Class C Common Stock upon conversion of any Series C Preferred Stock and/or
Series D Preferred Stock received upon the conversion of the Facility A Notes
issued on the Closing Date, the New Mexico Stock Pledge Agreement, the New
Mexico Subsidiary Mergers, and the consummation of all other transactions
contemplated by this Agreement and the Other Documents.
"Underlying Common Stock" means all Investor Stock which is Class A
Common Stock. For purposes of this Agreement, any Person who holds any Investor
Stock which is not Class A Common Stock will be deemed to be the Holder of the
Class A Common Stock obtainable upon the
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<PAGE> 16
conversion, exercise or exchange to the fullest extent possible of such
Investor Stock (including the conversion, exercise or exchange of all other
Investor Stock directly or indirectly obtainable upon any such conversion,
exercise or exchange), without regard to any restriction or limitation on any
such conversion, exercise or exchange; provided that no Holder of any Facility
A Note, on or prior to the Maturity Date of such Facility A Note, shall be
deemed to be the Holder of any such Class A Common Stock by reason of holding
such Facility A Note.
"Voting Agreement" shall mean the Amended and Restated Voting
Agreement of even date herewith by and among the Company, the Investors, and
Wilson, in the form attached to this Agreement as Exhibit "M".
"Wilson" means, collectively, LRW and Claire Wilson.
"Wilson Note Forgiveness Agreement" means the Agreement of even date
herewith between LRW and Citadel, pursuant to which Citadel shall forgive
certain indebtedness of LRW to Citadel in the amount of $408,637, in the form
attached to this Agreement as Exhibit "N".
"Wilson Option Agreement" means the Citadel Communications
Nonqualified Stock Option Agreement between the Company and LRW of even date
herewith, in the form attached to this Agreement as Exhibit "O".
2. Simultaneous Transactions; Amendment, Restatement and Consolidation
of Purchase Agreements. Each of the transactions provided for in this
Agreement, including but not limited to the Reclassification, the Exchange, the
Redemptions, ABRY's and ABRY/CIP's purchase of the Shares and issuance of the
Facility A Notes in connection with the Closing Advance, is dependent upon the
occurrence of each of the other transactions provided for in this Agreement,
and each such transaction shall and shall be deemed to occur simultaneously.
Each of the Series A/B Purchase Agreement, the Series C Purchase Agreement and
the Note and Warrant Purchase Agreement is hereby amended, restated and
consolidated into this Agreement, and from and after the date of this
Agreement, the existing Series A/B Purchase Agreement, Series C Purchase
Agreement and the Note and Warrant Purchase Agreement shall be of no further
force or effect; provided, however, that no novation with respect to such
existing agreements shall occur as a result of the Transactions Contemplated by
this Agreement.
3. Authorization of Securities. The Company has authorized the
issuance and sale of the following securities:
a. Authorization of Shares. The Company has authorized the
issuance and sale of 3,168,853.70 shares of Preferred Stock (the "Shares"), as
follows:
i. ABRY Series C Preferred Stock. The issuance and
sale to ABRY of 1,473,857.714 shares of Series C Preferred Stock having the
rights, preferences and privileges set forth in the Amended and Restated
Certificate of Incorporation. The Series C Preferred Stock is convertible into
the Class A Common Stock (voting), Class C Common Stock (voting) or Series D
Preferred Stock (non-voting).
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<PAGE> 17
ii. ABRY/CIP Series C Preferred Stock. The issuance
and sale to ABRY/CIP of 182,162.193 shares of Series C Preferred Stock having
the rights, preferences and privileges set forth in the Amended and Restated
Certificate of Incorporation.
iii. ABRY Series D Preferred Stock. The issuance and
sale to ABRY of 1,346,422.052 shares of Series D Preferred Stock having the
rights, preferences and privileges set forth in the Amended and Restated
Certificate of Incorporation. The Series D Preferred Stock is non-voting and is
convertible into Class A Common Stock (voting), Class C Common Stock
(non-voting) or Series C Preferred Stock (voting).
iv. ABRY/CIP Series D Preferred Stock. The issuance
and sale to ABRY/CIP of 166,411.714 shares of Series D Preferred Stock having
the rights, preferences and privileges set forth in the Amended and Restated
Certificate of Incorporation.
b. Authorization of Stock Issuable Upon Conversion of Shares.
Additionally, the Company has authorized the issuance of 3,168,853.7 shares of
Class A Common Stock, 3,168,853.70 shares of Class C Common Stock,
1,512,833.766 shares of Series C Preferred Stock and 1,656,019.934 shares of
Series D Preferred Stock, which shares shall be available for the conversion of
the Shares, as permitted by the Certificate of Incorporation, and subject to
the limitations set forth in Section 12 of this Agreement.
4. Transactions to be Consummated at the Closing. At the Closing, upon
the terms and subject to the conditions herein contained, and in reliance upon
the representations, warranties and agreements set forth herein:
a. Sale of Shares. The Company agrees to sell the Shares to
ABRY and ABRY/CIP, and ABRY and ABRY/CIP agree to purchase the Shares from the
Company, for $15.6067 per share, for an aggregate purchase price of
$49,455,349.04 (the "Purchase Price"), which shall be paid $44,015,260.65 by
ABRY and $5,440,088.39 by ABRY/CIP.
b. Redemptions. The Company agrees to repurchase the
Redemption Shares from the Selling Investors, and the Selling Investors other
than Mesirow agree (and Mesirow has separately agreed), to sell the Redemption
Shares to the Company for an aggregate purchase price of $29,455,362.99 (the
"Redemption Payment"). The Redemption Shares to be repurchased by the Company
from each Selling Investor and the payments to be made therefor to each Selling
Investor are set forth on Schedule 1 to this Agreement.
c. Reclassification and Exchange. The Company shall effect
the Reclassification by adopting the Amended and Restated Certificate of
Incorporation, and the Exchange by physically exchanging the Old Class C Common
Stock for an identical number of shares of Class B Common Stock, and the Old
Class B Common Stock for an identical number of shares of Class C Common Stock.
The Investor Stock to be held by the Existing Investors immediately following
the Redemptions, the Reclassification and the Exchange will be as set forth on
Schedule 2 to this Agreement.
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<PAGE> 18
d. Payment of Accrued Dividends. The Company agrees to pay
all accrued and unpaid dividends on the Old Series B Preferred Stock and the
Old Series D Preferred Stock.
e. Payment of Bridge Note. The Company agrees to pay the
principal balance and all accrued interest on the Bridge Note.
f. Prepayment of Senior Subordinated Notes. The Company
agrees to prepay all principal and accrued interest on the Senior Subordinated
Notes, and BofA and the BofA Co- Investors agree to accept such prepayment, and
waive all rights to receive any Additional Premium Amount (as defined in the
Senior Subordinated Notes) pursuant to Section 2(b) of the Senior Subordinated
Notes.
g. Establishment of Facility A Commitment. ABRY and ABRY/CIP
shall establish the Facility A Commitment as revolving lines of credit against
which ABRY and ABRY/CIP will make Facility A Advances. Subject to the terms of
this Agreement, the aggregate commitment of ABRY and ABRY/CIP shall be in the
principal amount of $20,000,000 and each of ABRY and ABRY/CIP shall have a
commitment to make its portion of Facility A Advances under the Facility A
Commitment of which ABRY's commitment to make its portion of Facility A
Advances will be in the principal amount of not more than $17,800,000
outstanding at any one time, and ABRY/CIP's commitment to make its portion of
Facility A Advances will be in the principal amount of not more than $2,200,000
outstanding at any one time, (in each case reduced by the amount of any
Facility A Note issued to it to the extent such Facility A Note is not paid in
full on or prior to the Maturity Date). Subject to the terms of this Agreement,
the Company shall have the right to obtain Facility A Advances from time to
time, to repay Facility A Advances, and to obtain additional Facility A
Advances including Facility A Advances made following the conversion of earlier
Facility A Notes into Facility A Notes Conversion Stock. Interest shall accrue
on the unpaid balance of each Facility A Note from time to time at the rate
specified in such Facility A Note. Each Facility A Advance shall be made pro
rata by ABRY and ABRY/CIP based on the amounts of their respective commitments,
and shall be evidenced by the Company's delivery to ABRY and ABRY/CIP of
Facility A Notes in the respective principal amounts of the portion of such
Facility A Advance made by them to the Company.
i. Closing Advance. At the Closing, ABRY and
ABRY/CIP shall make the Closing Advance to the Company as specified in the
Funds Flow Memorandum.
ii. Conversion. If any Facility A Note is not paid
in full on or prior to its Maturity Date, the principal balance and all accrued
and unpaid interest thereon shall automatically convert into Preferred Stock of
the Company, as more particularly described in such Facility A Note, which
Preferred Stock shall be Facility A Note Conversion Stock. The Note Conversion
Price shall be $15.6067 (as such amount may be proportionately adjusted for
stock splits, stock dividends and the like effected after the date hereof and
prior to the making of the related Facility A Advance) for any Facility A Note
issued in connection with a Facility A Advance made before January 1, 1998.
iii. Subsequent Facility A Advances. Facility A
Advances made after the Closing Date shall be available to the Company for the
purpose of funding the purchase prices of
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<PAGE> 19
acquisitions of radio stations. The obligation of ABRY and ABRY/CIP to make
Facility A Advances following the Closing Date shall be conditioned upon the
following:
(1) No Event of Default described in Section 10 of
any Facility A Notes shall have occurred and be continuing;
(2) The Company shall have reserved sufficient
Preferred Stock and Common Stock to permit the issuance of the Facility A Notes
Conversion Stock upon the conversion of all or part of the Facility A Notes
issued in connection with such Facility A Note Advance or any other related
Facility A Notes Conversion Stock.
(3) For any Facility A Advance to be made on or after
January 1, 1998:
(a) The Company and ABRY and ABRY/CIP shall
have agreed in writing to the Note Conversion Price for Facility A Notes issued
with respect to that Facility A Advance; and
(b) If the Note Conversion Price with
respect to a particular Facility A Advance is different from $15.6067 (as such
amount may be proportionately adjusted for stock splits, stock dividends and
the like effected after the date hereof and prior to the making of such
Facility A Advance), the Company shall have (I) authorized in a Certificate of
Designation (as defined in the Amended and Restated Certificate of
Incorporation) which is then in full force and effect two new series of
Preferred Stock having designations, powers, preferences, rights,
qualifications, limitations and restrictions identical in all respects to the
Series C Preferred Stock and the Series D Preferred Stock, respectively, except
that each share of Preferred Stock of such new series of Preferred Stock shall
have an initial Conversion Price (as defined in the Certificate of
Incorporation) equal to the initial Note Conversion Price agreed to with
respect to the applicable advance, and (II) authorized the issuance of
sufficient shares of the new series of Preferred Stock so created so as to
provide for the maximum number of shares of such series as would be issuable
upon the conversion of the applicable Facility A Notes or the conversion or
exchange of the Preferred Stock so issued.
iv. Maturity. The Maturity Date for each Facility A Note will
be the earlier of the first anniversary of the date on which the related
Facility A Advance is made, and June 30, 1999. Neither ABRY nor ABRY/CIP shall
be required to make its portion of any Facility A Advance after June 29, 1999.
v. Facility A Advances. The Company will be limited to one
Facility A Advance per calendar quarter. The Company will give ABRY and
ABRY/CIP not less than fifteen (15) business days' prior written notice in
advance of the date on which any Facility A Advance is to be made, specifying
the amount of the Facility A Advance requested, the purpose thereof, the date
on which the Facility A Advance is requested to be made, and if the advance is
to be made on or after January 1, 1998, the proposed Note Conversion Price with
respect to the Facility A Advance.
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<PAGE> 20
5. Closing. Subject to the satisfaction of the conditions specified in
Section 6 hereof, the closing of the transactions contemplated by this
Agreement (the "Closing") shall occur on June 28, 1996, at the offices of
Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois, commencing at
10:00 local time, or at such other place or on such other date as may be
mutually agreeable to the Company and the Investors. The date and time of the
Closing as finally determined pursuant to this Section 5 are referred to herein
as the "Closing Date."
6. Conditions to the Investors' Obligations. The obligation of the
Investors to consummate the transactions provided for in this Agreement is
subject to the fulfillment prior to or as of the Closing of the following
conditions:
a. Representations and Warranties. The representations and
warranties of the Company and Citadel under this Agreement shall be true and
correct at and as of the Closing Date as though then made. The representations
and warranties of Citadel contained in the Acquisition Agreements, and, to the
best knowledge of the Company and Citadel, the representations and warranties
of the sellers contained in the Acquisition Agreements shall be true and
correct at and as of the Closing Date.
b. Compliance with Agreement. Each of the Company and Citadel
shall have performed and complied in all material respects with all agreements
and conditions required by this Agreement.
c. Third Party Consents and Filings. No permit, consent,
approval or authorization of, or declaration to or filing with, any
governmental authority (including, without limitation, the FCC) or other third
party (including, without limitation, waivers of statutory or contractual
preemptive rights or rights of first refusal) is required in connection with
the execution, delivery and performance by the Company of this Agreement, the
Other Documents or any other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby except as for such consents, approvals, authorizations, declarations or
filings which have been received or made prior to the Closing and copies of
which have been delivered to the Investors. The Company and ABRY shall have
received early termination of the waiting period under the Hart-Scott Act with
respect to the Hart-Scott Filing made by them on June 10, 1996.
d. No Default. There shall not exist any failure by the
Company or Citadel to observe or perform in any material respect, any covenant,
condition or agreement to be observed or performed pursuant to the terms of the
FINOVA Credit Agreement, the Note and Warrant Purchase Agreement, the Class A
Note Agreement, the Series A/B Purchase Agreement, or the Series C Purchase
Agreement.
e. Amendment and Restatement of Class A Note Agreement. The
Company, Citadel and BFC shall have executed and delivered the Amended and
Restated Class A Note Agreement, and the Amended and Restated Class A Note
Agreement shall be in full force and effect as of the Closing.
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<PAGE> 21
f. Amendment and Restatement of BofA Warrants. The Company
shall have issued the Amended and Restated BofA Warrant to BofA, and the
Amended and Restated BofA Warrant shall be in full force and effect as of the
Closing.
g. 1996 Equity Incentive Plan. The Company shall have adopted
the 1996 Equity Incentive Plan, and shall have granted options thereunder to
purchase an aggregate of 300,000 shares of Class A Common Stock at an exercise
price of $17.17, of which options to purchase 150,000 shares of Class A Common
Stock shall have been granted to LRW, and the remainder of the initial grant
shall have been made to the persons and in the numbers of shares set forth on
Schedule 3 to this Agreement.
h. LRW Agreements. The Company and LRW shall have entered
into the Wilson Option Agreement, and the Company, Citadel and LRW shall have
entered into the Employment Agreement, and the Wilson Note Forgiveness
Agreement, and each of the Wilson Option Agreement, the Employment Agreement
and the Wilson Note Forgiveness Agreement shall be in full force and effect as
of the Closing.
i. BofA Agreements. BofA and the BofA Co-Investors shall have
entered into the BofA Proxy, and the BofA Proxy shall be in full force and
effect as of the Closing. The Company and the BofA Co-Investors shall have
executed the Termination of Letter Agreement Re Section 5 Issuances.
j. Mesirow Repurchase Agreement. The Company and Mesirow
shall have entered into the Mesirow Repurchase Agreement, and the Mesirow
Repurchase Agreement shall be in full force and effect as of the Closing.
k. Investor Documents. The parties to the Registration Rights
Agreement, the Stockholders Agreement, and the Voting Agreement shall have
entered into those agreements, and each of the Registration Agreement, the
Stockholders Agreement and the Voting Agreement shall be in full force and
effect as of the Closing.
l. Management and Consulting Services Agreement. Citadel and
ABRY Partners, Inc. shall have entered into the Management and Consulting
Services Agreement, and the Management and Consulting Services Agreement shall
be in full force and effect as of the Closing.
m. Amendment of Certificate of Incorporation. The Amended and
Restated Certificate of Incorporation shall be in full force and effect under
the laws of Nevada as of the Closing as so amended and restated, and shall not
have been further amended or modified.
n. FINOVA Amendment and Exchange. FINOVA shall have delivered
the FINOVA Amendment, and the FINOVA Amendment shall be in full force and
effect as of the Closing; and FINOVA shall have exchanged its certificates
representing the Old Class B Common Stock for certificates representing the
same number of shares of Class C Common Stock.
o. Opinions of the Company's Counsels. The Investors and
Mesirow shall have received from Osborn Maledon, P.A., counsel for the Company,
Hartman & Armstrong, Ltd., special
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<PAGE> 22
Nevada counsel for the Company, and Reed, Smith, Shaw & McClay, special FCC
counsel for the Company, the legal opinions dated the Closing Date
substantially in the form of Exhibits P-R, respectively.
p. Acquisition Agreements. The Acquisition Agreements shall
be in full force and effect as of the Closing and shall not have been amended
or modified. As of the Closing, the conditions precedent to Citadel's
obligations set forth in the Acquisition Agreements shall have been satisfied
in full (without reliance on any waiver by the Company or Citadel), and the
acquisitions contemplated by the Acquisition Agreements shall have been
consummated in accordance with its terms in all material respects.
q. Qualification Under State Securities Laws. All
registrations, qualifications, permits and approvals required under applicable
state securities laws shall have been obtained for the lawful execution,
delivery and performance of this Agreement, the effectiveness of the Amended
and Restated Certificate of Incorporation, the Redemptions, the
Reclassification, the Exchange, the prepayment of the Senior Subordinated
Notes, the offer and sale of the Series C Preferred Stock and the Series D
Preferred Stock, the issuance of, and borrowings under, the Facility A Notes,
and any issuance of Investor Stock.
r. Closing Deliveries. The Company and Citadel shall have
made the deliveries listed in Section 7, in form and substance satisfactory to
the Investors and their counsel.
s. Proceedings and Documents. All corporate and other
proceedings and actions taken in connection with the transactions contemplated
hereby and all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transactions, shall be reasonably
satisfactory in form and substance to the Investors.
t. Resignation of Director. William P. Sutter, Jr. shall have
resigned as a member of the Board of Directors of each of the Company and
Citadel.
u. Fees and Expenses. The Company shall have reimbursed the
Investors for the fees and expenses provided in Section 13.i. hereof, to the
extent the Investors have requested such reimbursement.
v. Waiver. Any condition specified in this Section 6 may be
waived if consented to in writing by the Investors.
7. Closing Deliveries.
a. Deliveries By the Company to ABRY and ABRY/CIP. At the
Closing, the Company shall deliver the documents to ABRY and ABRY/CIP:
i. certificates representing the Shares, duly
authorized and issued by the Company; and
ii. Facility A Notes in the aggregate amount of the
Closing Advance.
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b. Deliveries By the Company to the Selling Investors. At the
Closing, the Company shall deliver the following to the Selling Investors:
i. the Redemption Payment to be paid for Redemption
Shares held by the Selling Investors;
ii. all accrued and unpaid dividends on the Old
Series B Preferred Stock and the Old Series D Preferred Stock; and
iii. all outstanding principal and interest on the
Senior Subordinated Notes.
Each payment to be made pursuant to this Section 7.b. shall be by a cashier's
or certified check, or by wire transfer of immediately available funds to the
payee's account pursuant to wire transfer instructions to be provided by the
payee at least two days prior to the Closing Date, or such other account as the
payee shall direct.
c. Deliveries By the Company to the Investors. At the
Closing, the Company shall deliver the following to the Investors:
i. each of the documents and agreements listed in
Sections 6.e. through 6.p., inclusive;
ii. an Officer's Certificate dated the Closing Date,
stating that the conditions specified in Sections 6.a. through 6.v., inclusive,
have been fully satisfied;
iii. certified copies of (A) the resolutions duly
adopted by the Board of Directors and the stockholders of the Company and the
Board of Directors of Citadel authorizing the Transactions Contemplated By This
Agreement, including, (1) waivers of statutory and contractual preemptive
rights or rights of first refusal with respect to the issuance and sale of the
Shares, the issuance of the Facility A Notes and the issuance of any Investor
Stock, and (2) the election of the ABRY Directors and the ABRY/CIP Director as
directors of the Company and of Citadel, and (B) the resolutions duly adopted
by the Company's stockholders adopting the Amended and Restated Certificate of
Incorporation;
iv. certified copies of the Amended and Restated
Certificate of Incorporation, all amendments thereto and the Company and
Citadel's Bylaws, each as in effect at the Closing;
v. certified copies of (A) the Acquisition
Agreements, and (B) the Funds Flow Memorandum, each as in effect at the Closing
and with all other agreements, documents or instruments related thereto;
vi. certificates of good standing of the Company and
Citadel from their state of incorporation;
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<PAGE> 24
vii. an officer's certificate listing (A) the name
of each of the Company's and Citadel's directors as of the Closing, (B) the
name and title of each of the Company's officers as of the Closing and (C)
after giving effect to the transactions contemplated by this Agreement, the
name of each stockholder of the Company, Citadel, and Citadel's Subsidiaries
setting forth the number and class of shares held and the percentage of the
total of such shares held;
viii. copies of all third party and governmental
consents, approvals and filings required in connection with the consummation of
the transactions hereunder (including, without limitation, all filings with the
FCC and similar state regulatory authorities, blue sky law filings and waivers
of all preemptive rights and rights of first refusal); and
ix. such other documents relating to the
transactions contemplated by this Agreement as the Investor may reasonably
request.
d. Deliveries Among the Company and the Investors.
i. Delivery of Stock Certificates and Warrants. At
the Closing, the BofA Co-Investors shall deliver to the Company their stock
certificates representing the Old Class C Common Stock, duly endorsed, for
exchange in connection with the redemption of the Old Class C Common Stock
being redeemed in the Redemptions, and the Company shall deliver to the BofA
Co- Investors certificates for their Class B Common Stock. The Selling
Investors other than the BofA Co-Investors shall deliver to the Company stock
certificates, duly endorsed, representing the shares of Preferred Stock and
BofA Warrants to be repurchased by the Company in the Redemptions, and the
Company shall deliver to the Selling Investors other than the BofA Co-Investors
and Mesirow their Investor Stock to be held by them immediately after the
Redemptions, the Reclassification and the Exchange. Upon presentation by FINOVA
of its certificate representing the Old Class B Common Stock, the Company shall
deliver to FINOVA its certificate for Class C Common Stock.
ii. Payment of the Purchase Price. The Company's
delivery of the Shares to ABRY and ABRY/CIP at the Closing shall be against
delivery to the Company of the Purchase Price by a cashier's or certified
check, or by wire transfers of immediately available funds to the account or
accounts designated by the Company as set forth in the Funds Flow Memorandum.
iii. Closing Advance. ABRY shall advance to the
Company the sum of $4,147,400 under its Facility A Commitment, and ABRY/CIP
shall advance to the Company the sum of $512,600 under its Facility A
Commitment (collectively, the "Closing Advance").
8. Representations and Warranties by Company and Citadel. Each of the
Company and Citadel represents and warrants to the Investors as follows as of
the date hereof:
a. Organization and Standing: Certificate of Incorporation
and Bylaws.
i. Each of the Company and Citadel is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada. Each of the Company and Citadel has all requisite corporate
power and authority to own its properties and conduct its business, enter into
this Agreement and each of the Other Documents to which it is a party, and
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<PAGE> 25
consummate the transactions contemplated hereby and thereby. The copies of the
charter documents and bylaws of the Company and Citadel which have been
furnished to the Investors reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete. Each of the
New Mexico Corporations is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Mexico. Each of the New
Mexico Corporations has all requisite corporate power and authority to own its
properties and conduct its business. The copies of the charter documents and
bylaws of the New Mexico Corporations which have been furnished to the
Investors reflect all amendments made thereto at any time prior to the date of
this Agreement and are true and correct.
ii. The Company and each of the Subsidiaries is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which the character and location of its properties (owned or leased) or the
nature of its business activities makes such qualification necessary, except
for such jurisdictions where the failure to be so qualified would not have a
material adverse effect on its business, properties, financial condition or
results of operations.
b. Subsidiaries. Neither the Company nor Citadel has any
Subsidiary (other than Citadel, with respect to the Company) or owns or holds
the right to acquire (directly or indirectly) any Equity Securities in any
other Person, except for its rights to acquire the stock of the New Mexico
Corporations pursuant to the KHFM/KHFN Purchase Agreement. The Company owns all
of the issued and outstanding Equity Securities of Citadel free and clear of
any Liens other than the Lien in favor of FINOVA. Upon its acquisition of the
stock of the New Mexico Corporations, Citadel shall own all of the issued and
outstanding Equity Securities of the New Mexico Corporations free and clear of
any Liens.
c. Equity Securities of the Company. As of the Closing and
immediately thereafter, the authorized Equity Securities of the Company will
consist of (a) 26,906,933 shares of Common Stock, (i) of which (A) 14,750,000
shares are voting shares of Class A Common Stock, (B) 156,933 shares are
non-voting shares of Class B Common Stock, and (C) 12,000,000 shares are
non-voting shares of Class C Common Stock, and (ii) of which 960,000 shares of
Class A Common Stock, 18,831.954 shares of Class B Common Stock and 74,488
shares of Class C Common Stock will be issued and outstanding, and (b)
24,767,201 shares of Preferred Stock, of which (w) 750,000 shares will have
been designated as the Company's Series A Preferred Stock, of which 746,411.86
shares will be issued and outstanding, (x) 17,201 shares will have been
designated as the Company's Series B Preferred Stock, of which 17,200.724
shares will be issued and outstanding, (y) 12,000,000 shares will have been
designated as the Company's Series C Preferred Stock, of which 1,656,019.934
shares will be issued and outstanding, and (z) 12,000,000 shares will have been
designated as the Company's Series D Preferred Stock, of which 1,512,833.766
shares will be issued and outstanding. Schedule 4 lists the names of the
beneficial holders of all the outstanding shares of Class A Common Stock, Class
B Common Stock, Class C Common Stock, Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock as of
the Closing. Such issued and outstanding shares of Class A Common Stock, Class
B Common Stock, Class C Common Stock, Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock will be,
as of the Closing and immediately thereafter, duly authorized, validly issued,
fully paid and nonassessable. As of the Closing and immediately thereafter,
neither the Company nor Citadel will have outstanding any stock or securities
convertible or exchangeable for any shares of
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<PAGE> 26
its Equity Securities, except for the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and the Series D Preferred Stock,
each of which is convertible into Common Stock, the Series C Preferred Stock,
which is convertible into Series D Preferred Stock, the Series D Preferred
Stock, which is convertible into Series C Preferred Stock, the Class B Common
Stock and the Class C Common Stock, which is convertible into Class A Common
Stock, the BofA Warrants, which are exercisable for shares of Class B Common
Stock, the Facility A Notes issued in connection with the Closing Advance, and
Employee Incentive Securities which are exercisable for Class A Common Stock.
As of the Closing, neither the Company nor Citadel shall be
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its Equity Securities, except as expressly provided in
the Stockholders Agreement.
No holder of Equity Securities or any other security of the
Company or Citadel and no other Person is entitled to any preemptive right,
right of first refusal or similar right as a result of the issuance and sale of
the Shares and the issuance of Investor Stock. Except for the Stockholders
Agreement, the Voting Agreement, the BofA Proxy, the options previously granted
to employees of Citadel, the Wilson Stock Options and the 1996 Equity Incentive
Plan, there are no agreements, arrangements or trusts between or for the
benefit of the Company's or any Subsidiary's stockholders with respect to the
voting or transfer of the Company's or such Subsidiary's Equity Securities or
with respect to any other aspect of the Company's or such Subsidiary's affairs.
Neither the Company nor Citadel have violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
Equity Securities.
The Common Stock and Preferred Stock of the Company, when
issued pursuant to the terms of this Agreement, will have the rights,
preferences, and privileges specified in the Amended and Restated Certificate
of Incorporation and will be free and clear of all Liens and restrictions,
other than Liens that might have been created or suffered solely by the Holders
thereof, and restrictions on transfer imposed by the Securities Act or
applicable state securities laws.
The Investor Stock is duly authorized and has been reserved
for issuance upon conversion of the Investor Stock and the Facility A Notes,
and when issued upon such conversion in accordance with the terms of the
Amended and Restated Certificate of Incorporation, or the Facility A Notes, as
the case may be, will be duly authorized, validly issued, fully paid and
nonassessable, and free and clear of all Liens and restrictions, other than
Liens that might have been created or suffered solely by the Holders thereof.
d. Delivery of Documents. The Company has delivered to the
Investors complete and accurate copies of all amendments to each of the
documents listed on Schedule 5, relating to indebtedness of the Company and/or
Citadel, each of which amendments are also listed on Schedule 5. Each of the
documents listed on Schedule 5, as amended as provided on Schedule 5, is in
full force and effect, without default on the part of the Company or Citadel.
e. Financial Condition. The Company has delivered to the
Investors complete and accurate copies of the financial statements of the
Company and Citadel consisting of:
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i. the audited consolidated balance sheets of the
Company and Citadel as of December 31, 1992, 1993, 1994 and 1995 and the
related statements of income and cash flows (or the equivalent) for the period
then ended; and
ii. the unaudited consolidated balance sheet of the
Company and Citadel as of May 31, 1996, (the "Latest Balance Sheet"), and the
related statements of income and cash flows (or the equivalent) for the
five-month period then ended.
Each of the foregoing financial statements (including in all
cases the notes thereto) is accurate and complete in all material respects, is
consistent with the books and records of the Company and Citadel (which, in
turn, are accurate and complete in all material respects), presents fairly the
consolidated financial condition, results of operations and, in the case of the
statements described in Section 8.e.(i) above, changes in financial position of
the Company and Citadel in accordance with GAAP, consistently applied, as of
the dates and for the periods set forth therein, subject in the case of the
unaudited financial statements to the lack of footnote disclosure and changes
resulting from normal year-end audit adjustments (none of which would, alone or
in the aggregate, be materially adverse to the financial condition, operating
results, assets, operations or business prospects of the Company and Citadel
taken as a whole). There has been no material adverse change in the business,
operations, assets, liabilities, condition (financial or other) or prospects of
the Company or any Subsidiary since May 31, 1996.
f. Absence of Undisclosed Liabilities. Neither the Company
nor any Subsidiary has any obligation or liability (whether accrued, absolute,
contingent, liquidated or otherwise, including without limitation any tax
liabilities due or to become due) which is not fully disclosed and adequately
provided for in the financial statements delivered by the Company to the
Investors prior to the date hereof, fully disclosed on Schedules to this
Agreement, or in the Funds Flow Memorandum, except current liabilities incurred
and obligations under agreements entered into in the usual and ordinary course
of business since the date of such financial statements, none of which
(individually or in the aggregate) is material to the business, properties,
financial condition or results of operations of the Company or the
Subsidiaries, and contingent liabilities that are not (individually or in the
aggregate) material to the business, properties, financial condition or results
of operations of the Company or the Subsidiaries.
g. Other Agreements. The representations and warranties made
by Citadel in the Acquisition Agreements, and, to the best knowledge of the
Company and Citadel, the representations and warranties made by the other
parties to the Acquisition Agreements in the Acquisition Agreements, are true
and correct in all material respects, in each case regardless of any limitation
on survival set forth in the Acquisition Agreements.
h. Indebtedness. The table on Schedule 6 sets forth all
outstanding short-term and long-term indebtedness of the Company and Citadel,
and identifies specifically any such indebtedness in excess of $25,000. Neither
of the Company nor any Subsidiary has any outstanding Indebtedness for Borrowed
Money nor is a guarantor or otherwise contingently liable for any Indebtedness
for Borrowed Money except as disclosed on Schedule 6. There exists no default,
or event or condition which with the giving of notice and/or the passage of
time, would constitute a
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default, under the provisions of any instrument evidencing such Indebtedness
for Borrowed Money or of any agreement relating thereto.
i. Authorization; No Conflicts.
i. All corporate actions and proceedings on the part
of each of the Company and Citadel and their respective directors and
stockholders necessary for the authorization, execution, filing, delivery and
performance by the Company and Citadel of the Transactions Contemplated by This
Agreement, have been lawfully and validly conducted. The execution, delivery
and performance of this Agreement, the Other Documents, the Acquisition
Agreements and the filing of the Amended and Restated Certificate of
Incorporation have been duly authorized by the Company and Citadel, as the case
may be.
ii. Neither the execution, delivery and performance
by each of the Company and Citadel of this Agreement, the Other Documents, the
Acquisition Agreements or the other agreements contemplated hereby and thereby,
nor the consummation of the Transactions Contemplated by This Agreement, do or
shall (i) result in any violation of, (ii) conflict with, (iii) result in a
breach of, (iv) constitute a default under, (v) result in the creation of any
Lien upon the Company's or any Subsidiary's Equity Securities or assets
pursuant to, (vi) give any third party the right to accelerate any obligation
under, (vii) require any authorization, consent, approval, exemption or other
action by or notice to or filing with any third party or any court or
administrative or governmental body pursuant to, any of the terms of (A) any
provision of federal or state law, (B) any judgment, decree, order, rule or
regulation to which the Company or any Subsidiary is subject, (C) the
certificate of incorporation or bylaws of the Company or any Subsidiary, (D)
any mortgage, indenture, agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or any of their respective assets
is bound (including, without limitation, any preemptive or other rights in
favor of any holders of Equity Securities of the Company or Citadel), except
for any such authorizations, consents, approvals, exemptions and other actions
by or notices to or filings with third parties which have been made or
received; provided, however, that with respect to the immediately preceding
clause (vii), no disclosures need be made pursuant to this Section with respect
to consents required pursuant to the Acquisition Agreements. None of the
Subsidiaries are subject to any restrictions upon making loans or advances or
paying dividends to, transferring property to, or repaying any Indebtedness
owed to, the Company or another Subsidiary, except pursuant to the FINOVA
Credit Agreement and the Amended and Restated Class A Note Agreement.
j. Binding Obligations. This Agreement, the Other Documents
and the other agreements contemplated thereby constitute the legal, valid and
binding obligations of the Company and Citadel and are enforceable against the
Company and Citadel in accordance with their respective terms.
k. Securities Laws. Assuming the accuracy and completeness of
the representations and warranties of the Investors under this Agreement, the
offer and sale of the Shares, and the issuance of the Facility A Notes and any
Investor Stock (including any Investor Stock issuable upon conversion of the
Facility A Notes) are and will be exempt from the registration and prospectus
delivery requirements of the Securities Act.
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l. No Brokers or Finders. No Person has, or as a result of
the transactions contemplated herein will have, any right or valid claim
against the Company, Citadel or the Investors for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, except as
expressly provided in the Acquisition Agreements. The Company and Citadel shall
pay, and hold the Investors harmless against, any liability, loss or expense
(including, without limitation, attorneys' fees and out-of-pocket expenses)
arising in connection with any claim for any such commission, fee or other
compensation, whether or not disclosed.
m. Holding Company Status. The Company's sole asset consists
of the Equity Securities of Citadel. The Company has no employees and conducts
no business operations.
n. Litigation. Except as disclosed on Schedule 7, there is no
legal action, suit, arbitration or other legal, administrative or other
governmental investigation, inquiry or proceeding (whether federal, state,
local or foreign) pending or threatened against or affecting the Company or any
Subsidiary, any of their respective properties, assets or businesses, or the
consummation of the Transactions Contemplated by this Agreement. Neither the
Company nor any Subsidiary is in default with respect to any order, writ,
judgment, injunction, decree, determination or award of any court or of any
governmental agency or instrumentality (whether federal, state, local or
foreign). Neither the Company nor any Subsidiary has knowledge of any
unasserted claim, the assertion of which is likely and that, if asserted, will
be for legal or equitable relief that, if granted, would have a material
adverse effect on the business, properties, financial condition or results of
operations of the Company or such Subsidiary. No injunction, stay or
restraining order is in affect prohibiting the consummation of any of the
Transactions Contemplated by this Agreement.
o. Interested Party Transactions. Except as disclosed on
Schedule 8, no officer, director or shareholder of the Company or any
Subsidiary or any Affiliate or "associate" (as such term is defined in Rule 405
of the Commission under the Securities Act) of any such Person or the Company
or any Subsidiary has or has had, either directly or indirectly, (a) an
interest in any Person which (i) furnishes or sells services or products which
are furnished or sold or are proposed to be furnished or sold by the Company or
any Subsidiary, or (ii) purchases from or sells or furnishes to, or proposes to
purchase from, sell to or furnish to, the Company or any Subsidiary any goods
or securities, or (b) a beneficial interest in any contract or agreement to
which the Company or any Subsidiary is a party or by which any of them may be
bound or affected.
p. Company not an "Investment Company". The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
q. Compliance with Applicable Laws. Neither the Company nor
any Subsidiary is in default in respect of any judgment, order, writ,
injunction, decree or decision of any governmental body, which default would
have a material adverse effect on the business, properties, financial condition
or results of operations of the Company or any Subsidiary. The Company and the
Subsidiaries are in compliance in all material respects with all applicable
statutes and regulations of all governmental bodies, a violation of which would
have a material adverse effect on the business, properties, financial condition
or results of operations of the Company or any Subsidiary. No condemnation,
eminent domain or expropriation has been commenced or, to the best knowledge of
the Company and Citadel, threatened against the property which the Company or
any Subsidiary will
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own upon the Closing. Neither the Company nor any Subsidiary has at any time
made any payments for political contributions or made any bribes, kickback
payments or other illegal payments. All necessary Federal Aviation Authority
("FAA") authorizations have been obtained with respect to the towers on which
the Company's or any Subsidiary's equipment is located.
r. FCC Matters. The Company and the Subsidiaries (i) have
duly and timely filed all reports and other filings which are required to be
filed by such Persons under the Communications Act of 1934 or any other
applicable law, rule or regulation of any governmental body, the non-filing of
which would have a material adverse effect on the business, properties,
financial condition or results of operations of the Company or any Subsidiary,
and (ii) are in compliance with all such laws, rules and regulations, the
noncompliance with which would have a material adverse effect on the business,
properties, financial condition or results of operations of the Company or any
Subsidiary. All information provided by or on behalf of the Company or any
Subsidiary in any material filing with the FCC was, at the time of filing,
true, complete and correct in all material respects when made, and the FCC has
been notified of any substantial or significant changes in such information as
may be required in accordance with applicable laws, rules and regulations.
s. Licenses and Permits. Schedule 9 contains a complete and
accurate list and summary description of all material licenses, permits,
franchises, certificates, approvals and other authorizations of federal, state
and local governments or other similar rights (collectively, the "Licenses")
used by the Company or any of its Subsidiaries (assuming for this purpose
consummation of the Acquisition Agreements) in the conduct of its businesses.
Except as indicated on Schedule 9, each of the Company and its Subsidiaries has
or possesses all right, title and interest in and to all of the Licenses which
are necessary to conduct its businesses. Each of the Company and its
Subsidiaries has taken all necessary action to maintain such Licenses. No loss
or expiration of any such License is threatened, pending or reasonably
foreseeable (other than expiration upon the end of the term thereof) if the
Company or such Subsidiary has complied with all of the terms thereof.
t. Insurance. Schedule 10 contains a description of each
insurance policy maintained by the Company or its Subsidiaries with respect to
its properties, assets and businesses, and each such policy is in full force
and effect as of the Closing. Neither the Company nor any Subsidiary is in
default with respect to its obligations under any insurance policy maintained
by it. The insurance coverage of the Company and its Subsidiaries is customary
for well-insured corporations of similar size engaged in similar lines of
business.
u. Employees and ERISA.
i. Employees. Neither the Company nor Citadel is
aware that any executive or key employee of the Company or any Subsidiary or
any group of employees of the Company or any Subsidiary has any plans to
terminate employment with the Company or any Subsidiary. Neither the Company,
any of its Subsidiaries nor any of their employees is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreements relating to, affecting or in conflict with the present or proposed
business activities of the Company and its Subsidiaries, except for agreements
between the Company or Citadel, on the one hand, and its present and former
employees, on the other hand.
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ii. No ERISA Plans. Neither the Company nor any of
its Subsidiaries has any obligation to contribute to, or any other liability
with respect to (i) any "multiemployer plan" (as defined in Section 3(37) of
ERISA), (ii) any plan or arrangement, whether or not terminated, which provides
medical, health, life insurance or other welfare-type benefits for current or
future terminated or retired employees (except for limited continued medical
benefit coverage required to be provided under the Consolidated Omnibus Budget
Reconciliation Act, as amended), (iii) any employee plan which is a "defined
benefit plan" (as defined in Section 3(35) of ERISA), whether or not
terminated, or (iv) except as disclosed on Schedule 11 any employee plan which
is a "defined contribution plan" (as defined in Section 3(34) of ERISA),
whether or not terminated.
iii. Other Plans, Agreements or Arrangements. Except
as set forth on Schedule 11, neither the Company nor any of its Subsidiaries
maintains or has any obligation to contribute to, or any other liability with
respect to, any plan or arrangement providing benefits to current or former
employees, including any bonus plan or plan for deferred compensation, or
pursuant to any employment agreement, consulting agreement, noncompetition
agreement or otherwise. True and complete copies of each such plan, agreement
or other arrangement are attached to and included as part of Schedule 11.
v. Taxes. Each of the Company and its Subsidiaries has filed
all tax returns which it is required to file, or filed extensions pursuant to
which such tax returns are not yet due, and, except as disclosed on Schedule 12
with respect to certain potential tax liabilities relating to the use of net
operating losses by the New Mexico Corporations (which liabilities are being
retained by the sellers of the stock of the New Mexico Corporations) all such
tax returns are true and correct in all material respects. Except as disclosed
on Schedule 12 with respect to certain potential tax liabilities relating to
the use of net operating losses by the New Mexico Corporations (which
liabilities are being retained by the sellers of the stock of the New Mexico
Corporations), each of the Company and its Subsidiaries has paid to the
appropriate taxing authorities all taxes owed by it and has properly withheld
and paid over all taxes which it is obligated to withhold from amounts owing to
any employee, creditor or third party. Neither the Company nor any of its
Subsidiaries has waived any statute of limitations with respect to taxes or
agreed to any extension of time with respect to a tax assessment or deficiency.
The assessment of any additional taxes for periods for which tax returns have
been filed is not expected. The federal income tax returns of each of the
Company and its Subsidiaries have never been audited and are closed for all tax
years through December 31, 1992. There are no pending federal or state tax
audits being conducted or which any of the Company and its Subsidiaries has
notice. Neither the Company nor any Subsidiary is liable for taxes incurred by
any Person other than the Company or such Subsidiary. Neither the Company nor
any Subsidiary has entered into any tax allocation or taxsharing agreement.
w. Pending Acquisitions. Citadel has agreed to acquire the
radio stations listed on Schedule 13 (the "Pending Acquisition Stations"),
pursuant to the purchase agreements listed on Schedule 13. Citadel's
acquisition of each Pending Acquisition Station is expected to occur during the
periods listed on Schedule 13. Each of the acquisitions of the Pending
Acquisition Stations is subject only to customary closing conditions, and
neither the Company nor Citadel has any knowledge of any impediments to the
closing of Citadel's acquisition of the Pending Acquisition Stations pursuant
to the terms of the applicable purchase agreement.
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x. Disclosure. The representations and warranties contained
in this Agreement or incorporated herein by reference and the information
appearing in the writings furnished by the Company or Citadel to the Investors
pursuant hereto taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
herein or therein not misleading. There is no fact which the Company and
Citadel have not disclosed to the Investors in writing which materially and
adversely affects the properties, business, prospects, results of operation or
condition (financial or other) of the Company or any Subsidiary or the ability
of the Company or Citadel to perform this Agreement or the Other Documents or
observe the terms of the Amended and Restated Certificate of Incorporation.
9. Representations, Warranties and Covenants of the Investors.
a. Representations and Warranties of the Investors. Each
Investor hereby represents, warrants and covenants on behalf of himself,
herself or itself, severally and not jointly, to and with the Company as
follows:
i. Power to Execute Agreements. Each Investor has
full power and authority to execute, deliver and perform this Agreement and
each of the Other Documents to which such Investor is a party, all of which are
valid and binding obligations of such Investor, enforceable against such
Investor in accordance with their respective terms, except as such enforcement
may be limited by insolvency, bankruptcy, reorganization, or other laws
relating to the enforcement of creditors, rights or by general equity
principles, and to consummate the Transactions Contemplated by this Agreement.
ii. Agreements Not in Breach of Other Instruments.
The execution, delivery and performance by each Investor of this Agreement and
the Other Documents to which such Investor is a party and the consummation of
the Transactions Contemplated by this Agreement will not result in any
violation of, conflict with, result in a breach of any of the terms of, or
constitute a default under, any federal or state law or any judgment, decree,
rule or regulation to which such Investor is subject or any agreement or other
instrument to which such Investor is a party or by which such Investor is
bound.
iii. Securities to be Restricted. Each Investor
understands that all Investor Stock held by such Investor is, and all Investor
Stock to be received by such Investor will constitute, when issued,"restricted
securities" within the meaning of Rule 144 under the Securities Act. Each
Investor understands that the Investor Stock has not been registered under the
Securities Act and must be held indefinitely without any transfer, sale or
other disposition unless such Investor Stock is subsequently registered under
the Securities Act or registration is not required under the Securities Act as
the result of an available exemption. Each Investor acknowledges that such
Investor must bear the economic risk of its investment in the Investor Stock
for an indefinite period of time since they have not been registered under the
Securities Act and therefore cannot be sold unless they are subsequently
registered or an exemption from registration is available.
iv. Reliance Upon Information. Each Investor
understands that the Investor Stock is being issued in reliance on specific
exemptions from the registration requirements of federal and state securities
laws and that the Company is relying upon the truth and accuracy of
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such Investor's representations, warranties, agreements, acknowledgments and
understandings set forth herein to determine such Investor's suitability to
acquire the Investor Stock to be acquired by it.
v. No Brokers or Finders. Such Investor has not
contracted for or otherwise arranged for the services of any Person who has, or
as a result of the transactions contemplated herein will have, any right or
valid claim against the Company, any Subsidiary or any Investor for any
commission, fee or other compensation as a finder to broker, or in any similar
capacity.
b. Additional Representations and Warranties of ABRY and
ABRY/CIP. Each of ABRY and ABRY/CIP hereby represents and warrants on behalf of
itself, severally and not jointly, to the Company as follows:
i. No Distribution. It is acquiring the Shares for
its own account without a view to public distribution and, except as
contemplated by this Agreement, the Other Documents and the Amended and
Restated Certificate of Incorporation, such Investor has no contract,
undertaking, agreement or arrangement to transfer, sell or otherwise dispose of
any of the Investor Stock issued to it or any interest therein to any other
Person.
ii. Accredited Investor. It is an accredited
investor, as that term is defined in Regulation D, Section 501 of the
Securities Act.
c. Additional Representations and Warranties of the Existing
Investors. Each of the Existing Investors hereby represents and warrants on
behalf of itself, severally and not jointly, to the Company as follows:
i. Title to Shares. Such Existing Investor has, and
will deliver to the Company at the Closing, good and marketable title to all of
the Redemption Shares owned by it, free and clear of any pledge or other
encumbrance arising out of the acts or omissions of any Person other than acts
or omissions of the Company.
ii. Accredited Investor; Suitability; No
Distribution. Each of BofA and BFC hereby certifies that it is an accredited
investor, as that term is defined in Regulation D, Section 501 of the
Securities Act. Each of the BofA Co-Investors represents that he or she is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the Investor Stock being acquired. Each Existing Investor
understands that the Investor Stock being acquired is being delivered in
reliance on exemptions from the registration requirements of federal and state
securities laws and that the Company is relying upon the truth and accuracy of
such Existing Investor's representations, warranties, agreements,
acknowledgments and understandings set forth herein to determine its
suitability to acquire the Investor Stock. Each Existing Investor (other than
Thomas E. Van Pelt, who intends to transfer his Class B Common Stock to Cheryl
Bartol and Andrea P. Joselit) and has acquired and/or is acquiring the Investor
Stock being acquired by it for such Investor's own accounts without a view to
public distribution and, except as contemplated by this Agreement, the Other
Documents and the Amended and Restated Certificate of Incorporation, such
Investor has no
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contract, undertaking, agreement or arrangement to transfer, sell or otherwise
dispose of any Investor Stock or any interest therein to any other Person.
10. Affirmative Covenants. Unless any of the following (other than the
covenants set forth in Section 10.b., which may not be waived with respect to a
Person without that Person's consent) is waived in writing by the Holders of a
majority of the Underlying Stock, until the consummation of a Qualified Public
Offering, the Company covenants as follows:
a. Business Maintenance. The Company shall, and the Company
shall cause each Subsidiary to:
i. at all times cause to be done all things
necessary to maintain, preserve and renew their existence and will use their
best efforts to maintain, preserve and renew all material licenses,
authorizations and permits necessary to the conduct of their business
including, without limitation, all broadcast licenses, whether federal, state
or otherwise;
ii. maintain and keep their properties that are used
in and necessary to their business taken as a whole in good repair, working
order and condition in all material respects, and from time to time make all
necessary or desirable repairs, renewals and replacements, so that their
businesses may be properly and advantageously conducted at all times;
iii. apply for and continue in force with good and
responsible insurance companies insurance policies covering risks of such types
and in such amounts as are customary for corporations of similar size engaged
in similar lines of business, provided, that the Company and its Subsidiaries
may self-insure in accordance with good business practice;
iv. pay and discharge when payable all taxes,
assessments and governmental charges imposed upon their properties or upon the
income or profits therefrom (in each case before the same becomes delinquent
and before penalties accrue thereon) and all claims for labor, materials or
supplies that if unpaid might by law become a lien upon any of their property,
unless and to the extent that (i) the same are being contested in good faith
and by appropriate proceedings and adequate reserves (as determined in
accordance with generally accepted accounting principles, consistently applied)
have been established on the books with respect thereto or (ii) such failure to
pay or discharge does not have, and cannot reasonably be expected to have, a
material adverse effect upon the business, properties, financial condition or
results of operations of the Company or such Subsidiary;
v. comply with all other obligations that the
Company or any Subsidiary incurs pursuant to any material contract or
agreement, whether oral or written, express or implied, as such obligations
become due, unless and to the extent that the same are being contested in good
faith and by appropriate proceedings and adequate reserves (as determined in
accordance with generally accepted accounting principles, consistently applied)
have been established on the books with respect thereto;
vi. comply with all applicable laws, rules and
regulations of all governmental authorities including, without limitation, the
rules and regulations of the FCC, the
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violation of which might reasonably be expected to have a material adverse
effect on the business, properties, financial condition or results of
operations of the Company or such Subsidiary;
vii. maintain proper books of record and account
that fairly present its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves as in each
case are required in accordance with generally accepted accounting principles,
consistently applied;
viii. use reasonable efforts to consummate the
acquisition of each of the Pending Acquisitions Stations in an expedient manner
pursuant to the terms of the applicable purchase agreement; and
ix. use best efforts to cause the Company's holders
of stock options (which such options are granted pursuant to the 1996 Equity
Incentive Plan or any prior or future plan or grant) to enter into an agreement
to be bound by the provisions of Section 3 (restrictions on transfer) and
Section 6 (drag along rights) of the Stockholders Agreement.
b. Financial Statements, Other Information, Inspection of
Property; Board of Directors' Meetings. As to each of BofA, BFC, ABRY and
ABRY/CIP, as long as such Investor holds any Equity Securities of the Company,
and as to any Holder of 10% or more of the Underlying Common Stock:
i. Financial Statements. The Company shall deliver:
(1) as soon as available but in any event
within 30 days after the end of each monthly accounting period in each fiscal
year, unaudited consolidated statements of income of the Company and its
Subsidiaries for such monthly period and for the period from the beginning of
the fiscal year to the end of such month, and consolidated balance sheets of
the Company and its Subsidiaries as of the end of such monthly period, setting
forth in each case comparison to the annual budget referred to in Section
10.b(i)(4) and to the corresponding period in the preceding year, and all such
statements will be prepared in accordance with generally accepted accounting
principles, consistently applied, except for the omission of footnotes thereto;
(2) within 120 days after the end of each
fiscal year, audited consolidated statements of income and cash flow of the
Company and its Subsidiaries for such fiscal year, and consolidated balance
sheets of the Company and its Subsidiaries as of the end of such fiscal year,
all prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by an opinion (not qualified as to the
going concern nature of the Company) of an independent accounting firm of
recognized national standing, which opinion must be accompanied by a written
statement stating whether, in connection with their audit examination, any
Event of Default has come to their attention and specifying the nature and
period of existence thereof, and a copy of such firm's annual management letter
to the Board of Directors;
(3) promptly upon receipt thereof, any
additional reports, management letters or other detailed information concerning
significant aspects of the Company's
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operations and financial affairs given to the Company by its independent
accountants (and not otherwise contained in other materials provided
hereunder);
(4) as soon as available, and in any event
no later than 30 days before the close of each fiscal year, an annual budget
prepared on a monthly basis for the Company and its Subsidiaries for the
succeeding fiscal year (displaying anticipated statements of income and cash
flows), and promptly upon preparation thereof any other significant budgets
prepared by the Company or any of its Subsidiaries and any revisions of such
annual or other budgets;
(5) promptly (but in any event within five
business days) after the discovery or receipt of notice of any event of
default, any default by the Company or any Subsidiary under any other material
agreement to which it or any of its Subsidiaries is a party or any other
material adverse event or circumstance affecting the Company or any Subsidiary
(including, without limitation, threatened or actual governmental
investigations or proceedings and the filing of any material litigation against
the Company or any Subsidiary or the existence of any dispute with any Person
which involves threatened or probable material litigation being commenced), an
Officer's Certificate specifying the nature and period of existence thereof and
what actions the Company has taken and proposes to take with respect thereto;
and
(6) concurrently with the transmission
thereof, copies of all financial statements, proxy statements, reports and any
other general written communications which the Company sends to its
stockholders, copies of all written notices given by the Company or any of its
Subsidiaries to its senior lenders, and copies of all registration statements
and all regular, special or periodic reports which it files, or any of its
officers or directors file with respect to the Company, with the Commission or
with any securities exchange or other agency or entity on which any of its
securities are then listed or quoted and copies of all press releases and other
statements made available generally by the Company to the public concerning
material developments in the Company's or any of its Subsidiary's businesses.
Each of the financial statements referred to in subsection (1) and (2) will be
true and correct in all material respects as of the dates and for the periods
stated therein, subject in the case of the unaudited financial statements to
changes resulting from normal year-end audit adjustments (none of which would,
alone or in the aggregate, have a material adverse effect on the business,
properties, financial condition or results of operations of the Company,
Citadel or any of their Subsidiaries).
ii. Inspection of Property. The Company will permit
any representatives designated by such Investor or Holder upon reasonable prior
notice, during normal business hours and at such party's expense to (a) visit
and inspect any of the properties of the Company and its Subsidiaries, (b)
examine the corporate and financial records of the Company and its Subsidiaries
and make copies thereof or extracts therefrom and (c) discuss the affairs,
finances and accounts of any such corporations with the directors, officers,
key employees and independent accountants of the Company and its Subsidiaries.
The presentation of an executed copy of this Agreement by an Investor to the
Company's independent accountants shall constitute the Company's and each of
its Subsidiary's permission to its independent accountants to participate in
discussions with such Persons.
iii. Board Meetings. Each of the Company and Citadel
shall hold no fewer than four meetings of its Board of Directors per year, and
shall hold at least one such meeting during
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<PAGE> 37
every 120-day period. Each of the Company and Citadel will give each such
Investor and Holder written notice of each meeting of the Board of Directors
and each committee thereof at least five business days prior to the date of
each such meeting, and each of the Company and Citadel shall permit a
representative of each such Person to attend as an observer all meetings of its
Board of Directors and all committees thereof, provided that in the case of
telephonic meetings conducted in accordance with the Company's bylaws and
applicable law, each such Person need receive only actual notice thereof at
least 48 hours prior to any such meeting, and each such Person's representative
shall be given the opportunity to listen to such telephonic meetings. Each
representative shall be entitled to receive all written materials and other
information (including, without limitation, copies of meeting minutes) given to
directors in connection with such meetings at the same time such materials and
information are given to the directors. If the Company proposes to take any
action by written consent in lieu of a meeting of its Board of Directors or of
any committee thereof, the Company shall give written notice thereof to each
such Person prior to the effective date of such consent describing in
reasonable detail the nature and substance of such action.
c. Removal of Transfer Restrictions. Any legend endorsed on a
certificate evidencing Equity Securities of the Company and any stop transfer
instructions or notations on the Company's records with respect to Equity
Securities of the Company issued hereunder directly or indirectly shall be
removed or lifted and the Company shall issue a certificate without such legend
to the Holder of such Equity Securities (i) if the transfer of such Equity
Securities has been registered under the Securities Act, (ii) if such Equity
Securities may be sold under Rule 144(k) of the Commission under the Securities
Act or (iii) if such Holder provides the Company with an opinion of counsel
(which counsel and opinion are reasonably satisfactory to the Company) stating
that a sale or transfer of such Equity Securities may be made without
registration under the Securities Act.
d. Loss, Theft and Destruction of Securities. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Equity Securities of the Company and, in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation, upon
surrender and cancellation of any Equity Securities of the Company, the Company
will make and deliver, in lieu of such lost, stolen, destroyed or mutilated
Equity Securities, a new certificate of like number of shares.
e. Agreements with Employees.
i. Agreements Governing Disposition of Common Stock.
As of the Closing Date, and thereafter, the Company and, if applicable, each
Subsidiary, shall enter into an agreement with each employee of any such Person
who owns Equity Securities of the Company (excluding LRW), which agreement
shall provide, in substance, that such employee shall not transfer Equity
Securities of the Company owned by him or her to any Person who is not a member
of the immediate family of such employee unless such employee shall first offer
to sell his or her Equity Securities to the Company for a price per share of
Common Stock equivalent equal to (x) 7.5 times the sum of (1) Operating Cash
Flow and (2) Corporate Overhead, in each case for the twelve calendar months
most recently concluded, plus (y) Consolidated Cash (as defined in the
Stockholders Agreement) as of the end of the most recently concluded calendar
month, minus (z) consolidated indebtedness of the Company (determined in
accordance with GAAP) as of the end of the most
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<PAGE> 38
recently concluded calendar month, divided by the number of shares of Common
Stock outstanding on the date of such offer (counted as if all outstanding
Equity Securities of the Company were exercised, converted or exchanged on such
date). The Company shall provide the Investors with a true and complete copy of
each such agreement no later than 10 days after the receipt of such agreement
by the Company from any employee.
ii. Agreements Governing Consideration upon Sale of
Equity Securities. As of the Closing Date, and thereafter, the Company and, if
applicable, each Subsidiary, shall enter into an agreement (the form of which
shall be reasonably satisfactory to the Investor) with each employee of any
such Person who owns Equity Securities of the Company, which agreement shall
provide, in substance, that if such employee shall receive any Change of
Control Payment, such employee shall transfer such Change of Control Payment to
the Company for disposition in accordance with the next sentence. The Company
shall deem any such Change of Control Payment received by it to constitute
additional consideration (i) payable to the Company (in the case of a sale of
assets of the Company) or (ii) payable to all the holders of Equity Securities
of the Company in accordance with the respective terms of such Equity
Securities (in the case of a merger or sale of part or all of the Equity
Securities of the Company), and shall pay or distribute such funds accordingly.
The Company shall provide any Investor with true and complete copies of each
such agreement upon the request of such Investor.
f. Cooperation in Obtaining Regulatory Approvals. The parties
hereto shall cooperate fully to prepare expeditiously, and cause to be filed
with the FCC, the Department of Justice and the Federal Trade Commissions, such
applications and other instruments as may be necessary (i) in connection with
the change of control of the Company or any of its Subsidiaries if at any time
an Investor notifies the Company that it desires to sell or otherwise transfer,
shares of Equity Securities owned by it or to convert Equity Securities, or
(ii) to take any other action requiring the approval or consent of the FCC, or
a Hart Scott filing, at the request of the Investor.
g. Reservation of Common Stock. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Class A Common Stock, Class B Common Stock, Class C Common Stock, Series C
Preferred Stock and Series D Preferred Stock solely for the purpose of issuance
upon the conversion of Investor Stock, such number of shares of Investor Stock
issuable upon any such conversion. All shares of Investor Stock which are so
issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, Liens and charges. The Company shall
take all such actions as may be necessary to assure that all such shares of
Investor Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities
exchange.
h. Further Senior Credit Agreement. Upon any senior financing
with a lender other than the FINOVA Credit Agreement, the Company and Citadel
shall use reasonable efforts to cause the senior credit agreement not to
prohibit payment of the principal and interest of the Facility A Notes or the
payment of amounts by Citadel to the Company to enable the Company to pay such
principal and interest.
i. Market Revenue, Pacing Reports and Ratings Reports.
Promptly following their receipt by Citadel, the Company shall deliver to ABRY
and BFC copies of all Miller Kaplan
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<PAGE> 39
Monthly Market Revenue Reports subscribed to by Citadel. Promptly upon
preparation thereof, Citadel shall deliver to ABRY and BFC copies of Citadel's
weekly revenue pacing reports and quarterly rating reports.
j. Key Man Insurance. Citadel shall use best efforts to
obtain and maintain key man life insurance on the life of LRW in such amounts
as may be reasonably requested by the Investors from time to time.
11. Negative Covenants. Unless any of the following is waived in
writing by the Holders of a majority of the Underlying Common Stock, until the
consummation of a Qualified Public Offering, the Company shall not, and the
Company shall not permit any of its Subsidiaries to:
a. Merger; Consolidation. Merge or consolidate with any
Person or permit any Subsidiary to merge, consolidate with or to exchange
shares with any Person (other than the Company or a wholly-owned Subsidiary of
the Company), or acquire, directly or indirectly all or substantially all of
the Equity Securities, equity interests or assets of any Person or business
(other than a wholly-owned Subsidiary).
b. Sale or Transfer of Assets. Sell, lease or otherwise
dispose of, or permit any Subsidiary to sell, lease or otherwise dispose of any
assets in violation of the FINOVA Credit Agreement or sell or otherwise dispose
of any Equity Securities of any Subsidiary.
c. Distributions. With respect to the Company, make any
dividends, distributions or other shareholder expenditures with respect to its
Equity Securities or apply any of its assets to the purchase, redemption or
other retirement of, or set apart any sum for the payment of, or make any other
distributions or reduction of capital or otherwise in respect of any of its
Equity Securities, except pursuant to the Stockholders Agreement; provided,
however, that this Section 11.c. (1) shall not apply to any Subsidiary, and (2)
shall not prevent the Company from prepaying any of the Facility A Notes to the
extent permitted under the FINOVA Credit Agreement and the Amended and Restated
Class A Note Agreement.
d. Investments. Make, or permit any Subsidiary to make, any
loans or advances to, guarantees for the benefit of, or Investments in, any
Person (other than a wholly-owned Subsidiary), except for (x) reasonable
advances to employees in the ordinary course of business and (y) Investments
having a stated maturity no greater than 180 days from the date the Company (or
any Subsidiary) makes such Investment in (A) obligations of the United States
government or any agency thereof or obligations guaranteed by the United States
government, (B) certificates of deposit of commercial banks having combined
capital and surplus of at least $100 million or (C) commercial paper with a
rating from a nationally recognized credit rating agency in such agency's
highest rating category. Notwithstanding the foregoing, no provision of this
Section 11.d shall operate to prevent (i) advances in the ordinary course of
business, not to exceed in aggregate of $25,000 at any time, in connection with
local marketing arrangements to which the Company (or any Subsidiary) may be
party from time to time; or (ii) Investments in Citadel.
e. Limitations on Indebtedness for Borrowed Money. Create,
incur, issue, assign, become liable with respect to, or extend the maturity of,
or permit any Subsidiary to create, incur,
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<PAGE> 40
issue, assume, become liable with respect to, or extend the maturity of any
Indebtedness for Borrowed Money except:
i. any Indebtedness for Borrowed Money outstanding
as of the date hereof pursuant to the FINOVA Credit Agreement and any notes
issued pursuant thereto, and all Indebtedness for Borrowed Money outstanding as
of the date hereof and disclosed on Schedule 6, plus up to $500,000 in
aggregate amount outstanding at any one time;
ii. the Amended and Restated Class A Note;
iii. the Facility A Notes; and
iv. any Indebtedness for Borrowed Money pursuant to
a Permitted Senior Substitution; provided, however, that neither the Company
nor any of its Subsidiaries shall extend the maturity of any Indebtedness for
Borrowed Money described in the immediately preceding clauses (i) or (ii)
without the prior written consent of the Holders of a majority of the
Underlying Common Stock.
f. Liens. Create, incur, assume or suffer to exist any Liens
except Permitted Liens.
g. Amendment to Certificate of Incorporation and Bylaws.
Except as contemplated by this Agreement, make any amendment to the certificate
or articles of incorporation or the bylaws of the Company or any of its
Subsidiaries, or file any resolution of the Board of Directors of the Company
or Citadel with the Nevada Secretary of State designating any series of
Preferred Stock or amending the same.
h. Subsidiaries. Establish or acquire by investment or
expenditure any Subsidiaries other than wholly-owned Subsidiaries, establish or
acquire any Subsidiaries organized outside of the United States and its
territorial possessions, or permit any Subsidiary to be other than wholly-owned
by the Company.
i. Sale of Securities. Except as expressly contemplated by
this Agreement, (a) authorize, issue or enter into any agreement providing for
the issuance (contingent or otherwise) of, (i) any notes or debt securities
containing equity features (including, without limitation, any notes or debt
securities convertible into or exchangeable for Equity Securities, issued in
connection with the issuance of Equity Securities or containing profit
participation features) or (ii) any Equity Securities (or any securities
convertible into or exchangeable for any Equity Securities) which are senior to
or on a parity with the Preferred Stock with respect to redemptions or
distributions upon liquidation or otherwise, or (b) sell any securities for
consideration other than cash except shares of Common Stock issued pursuant to
Employee Incentive Securities.
j. Fundamental Business Change. Materially change the nature
of its business or engage in any business other than directly or indirectly
owning and/or operating radio stations and related ancillary activities, or
permit any Subsidiary to do so.
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<PAGE> 41
k. Affiliated Transactions. Enter into or permit any
Subsidiary to enter into any material transaction with an Affiliate of the
Company or stockholders of the Company or their Affiliates (each an "Affiliated
Person") (1) except for employment arrangements on terms that are comparable to
the terms of the employment arrangements the Company and Citadel have with
employees who are not affiliated persons, and (2) Citadel shall be entitled to
renew the current lease and/or enter into new leases from time to time with
Wilson Aviation, L.L.C.
l. Amendment of Debt Documents. Amend, supplement, modify or
waive, any term or provision of (a) the FINOVA Credit Agreement, the Class A
Notes, or the Facility A Notes, if the effect of any such amendment, supplement
modification or waiver would be to (i) increase the principal or interest
payable on such indebtedness or change the date on which any such Indebtedness
shall be or become due and payable, other than the Permitted Increase (ii)
shorten the term of any such indebtedness or (iii) create any additional
defaults under any of the FINOVA Credit Agreement, the Class A Notes or the
Facility A Notes or impose any additional obligation on any obligor thereto
(whether affirmative or negative covenants, or otherwise), the failure to
comply with which would cause an event of default under any of such documents,
or (b) the Acquisition Agreements.
12. ABRY and ABRY/CIP Covenants Regarding Conversion of Shares and
Facility A Notes.
a. 49% Limitation. Subject to Section 12.c. below, ABRY and
ABRY/CIP agree that neither they nor any ABRY Holders shall hold in the
aggregate more than 49% of the voting Equity Securities of the Company on a
non-diluted basis. Except as provided in Section 12.c., below, if, by virtue of
any repurchases of Equity Securities of the Company or for any other reason,
ABRY, ABRY/CIP and/or any ABRY Holders hold in the aggregate more than 49% of
the voting securities of the Company on a non-diluted basis, ABRY, ABRY/CIP
and/or the other ABRY Holders shall immediately convert or exchange such number
of voting Equity Securities into or for non-voting Equity Securities as is
necessary to result in ABRY, ABRY/CIP and the ABRY Holders holding in the
aggregate no more than 49% of the voting Equity Securities of the Company. In
addition, none of ABRY, ABRY/CIP or any ABRY Holders shall convert non-voting
Equity Securities into voting Equity Securities in an amount which would result
in ABRY, ABRY/CIP and/or any ABRY Holders owning, in the aggregate, more than
49% of the voting Equity Securities of the Company on an undiluted basis.
b. Cooperation by Company, ABRY and ABRY/CIP. If the Company,
ABRY, ABRY/CIP and/or any other ABRY Holder determines that it will be
necessary for ABRY, ABRY/CIP and/or the other ABRY Holders to convert or
exchange voting Equity Securities into or for non-voting Equity Securities in
order to comply with Section 12.a., or that ABRY, ABRY/CIP and/or the other
ABRY Holders would be entitled to convert or exchange non-voting Equity
Securities into or for voting Equity Securities and maintain compliance with
Section 12.a. (and, in the latter case, ABRY, ABRY/CIP and/or the other ABRY
Holders desire to convert or exchange non-voting Equity Securities into or for
voting Equity Securities), the Company, ABRY, ABRY/CIP, the other ABRY Holders
and all other Investors shall take all such actions as are reasonably necessary
in order to (1) effectuate and facilitate the conversion or exchange of
non-voting Equity Securities into or for voting Equity Securities or voting
Equity Securities into or for non-voting Equity Securities, as the case may be,
(2) implement the conversion or exchange of non-voting Equity
40
<PAGE> 42
Securities into or for voting Equity Securities or voting Equity Securities
into or for non-voting Equity Securities, as the case may be, and (3) amend the
Amended and Restated Certificate of Incorporation to effectuate and reflect the
foregoing, including but not limited to increasing the number of authorized
shares of one or more classes of Equity Securities, or designating one or more
series of Preferred Stock.
c. Exception. The foregoing limitation on ownership of voting
Equity Securities of the Company shall not apply from and after any time at
which (i) any Facility A Note is not paid in full on or prior to its Maturity
Date, (ii) LRW ceases for any reason to be the chief executive officer of the
Company and Citadel, or (iii) LRW no longer owns at least 650,000 shares of
Class A Common Stock (as such amount may be proportionately adjusted for any
stock splits, stock dividends and the like effected after the date hereof and
prior to the determination of LRW's stock ownership).
13. Miscellaneous.
a. Waivers and Amendments. With the written consent of the
Holders of a majority of the Underlying Common Stock, (a) the obligations of
the Company and the rights of the Holders of the Investor Stock (other than the
obligations of the Company pursuant to Section 10.b. to each of BofA, BFC,
ABRY, ABRY/CIP which shall not be waived as against any of BofA, BFC, ABRY and
ABRY/CIP without the prior written consent of such Person) under this Agreement
may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely), and (b) the Company may enter into a supplementary agreement for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of any supplemental
agreement or modifying in any manner the rights and obligations hereunder of
the Holders of the Investor Stock, on the one hand, and the Company and
Citadel, on the other hand. The foregoing notwithstanding, no such waiver or
supplemental agreement shall affect any of the rights of any Holder of Investor
Stock created by the Amended and Restated Certificate of Incorporation or by
the applicable law of corporations without compliance with all applicable
provisions of the Amended and Restated Certificate of Incorporation and such
applicable law of corporations.
b. Rights of Holders Inter Se. Except as provided in Section
12.a., each Holder of Investor Stock shall have the absolute right to exercise
or refrain from exercising any right or rights which such Holder may have by
reason of this Agreement or its status as a Holder of Investor Stock,
including, without limitation, the right to consent to the waiver of any
obligation of the Company under this Agreement and to enter into an agreement
with the Company for the purpose of modifying this Agreement or any agreement
effecting any such modification, and such Holder shall not incur any liability
to any other Holder or Holders of Investor Stock with respect to exercising or
refraining from exercising any such right or rights. Notwithstanding the
foregoing, ABRY and ABRY/CIP shall jointly exercise all of their rights under
this Agreement and under all of the Other Documents, except that (1) they may
individually exercise their "Put" rights under the Stockholders Agreement, and
(2) each has the right to cause directors to be elected to the Board of
Directors of each of the Company and Citadel, as provided in the Voting
Agreement.
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<PAGE> 43
c. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
hand delivered or mailed postage prepaid by registered or certified mail,
i. if to any Holder of Investor Stock, addressed to
such Holder at its address shown on the signature pages hereof, or at such
other address as such Holder may specify by written notice to the Company, or
ii. if to the Company or Citadel at 1839 South Alma
School Road, Suite 264, Mesa, Arizona 85210, with a copy to 1015 Eastman Drive,
Bigfork, Montana 59911,
and each such notice, request, consent and other communication shall for all
purposes of the Agreement be treated as being effective or having been given
when delivered if delivered personally, or, if sent by mail, at the earlier of
its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of United States mail, addressed and
postage prepaid as aforesaid.
d. Survival of Representations and Warranties etc. All
representations and warranties made in, pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement
(including, without limitation, the representations and warranties of the
Investor), any investigation at any time made by or on behalf of the Investors,
and the issuance of Investor Stock and the Facility A Notes. All statements
contained in any certificate, instrument or other writing delivered by or on
behalf of the Company pursuant hereto shall constitute representations and
warranties by the Company.
e. Severability. Should any one or more of the provisions of
this Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
f. Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by the Holder or Holders at the time of any of the Investor Stock.
This Agreement shall not run to the benefit of or enforceable by any Person
other than a party to this Agreement and its successors and assigns.
g. Headings. The headings of the sections and paragraphs of
this Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
h. Choice of Law. It is the intention of the parties that the
internal laws, and not the laws of conflicts, of Arizona should govern the
enforceability and validity of this Agreement, the construction of its terms
and the interpretation of the rights and duties of the parties; provided,
however, that the laws of the State of Nevada shall govern the relationship
between the Company and its stockholders.
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<PAGE> 44
i. Expenses. The Company agrees, whether or not the
transactions contemplated hereby are consummated, to pay, and hold each of the
Investors harmless from liability for the payment of,
i. the fees and expenses of each Investor's special
counsel arising in connection with the negotiation and execution of this
Agreement and the related documents and the consummation of the transactions
contemplated hereby including, without limitation, in connection with
application for necessary or appropriate approvals from the FCC relating to the
acquisition or approval of voting of the Investor Stock;
ii. stamp and other taxes, excluding income taxes,
which may be payable with respect to the execution and delivery of this
Agreement or the issuance, delivery or acquisition of the Facility A Notes or
Investor Stock; and
iii. all costs of compliance with this Agreement,
the Other Documents, the Amended and Restated Certificate of Incorporation and
any other agreements, documents or instruments contemplated hereby or thereby;
provided, however, that the Company's obligation to reimburse ABRY and ABRY/CIP
in connection with the Closing of the Transactions Contemplated by this
Agreement shall be limited in the aggregate to $200,000; provided, further,
that such limitations shall not apply to the out-of-pocket disbursements made
by ABRY and ABRY/CIP for services and disbursements of their non-affiliated
advisors.
j. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
k. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of the
Agreement.
l. Integration. This Agreement, together with the Annexes and
Schedules hereto represent the entire understanding and agreement among the
parties with respect to the subject matter hereof and shall supersede any prior
writings, understandings or agreements among the parties with respect to the
subject matter hereof.
m. FCC Matters. In order to comply with the rules,
regulations and policies of the FCC, each of ABRY, ABRY/CIP and BFC hereby
represents, warrants, covenants and agrees on behalf of itself, severally and
not jointly, as follows:
i. Each of the Investors represents and warrants
that it does not own in excess of 5 percent (5%) of the voting stock in, or
serve as an officer or director of, any company engaged in the ownership or
operation of one or more radio stations, television stations or daily
newspapers, or serve as a general partner in any partnership engaged in the
ownership or operation of one or more radio stations, television stations or
daily newspapers, except as disclosed in Schedule
43
<PAGE> 45
14. If an Investor acquires in excess of 5 percent (5%) of the voting stock in,
or serves as an officer or director of, any company engaged in the ownership or
operation of one or more radio stations, television stations or daily
newspapers, or serves as a partner in any partnership engaged in the ownership
or operation of one or more radio stations, television stations or daily
newspapers after the date of this Agreement, such Investor shall promptly give
written notice of its acquisition or service to the Company, and shall provide
the Company and its FCC counsel with such details about the acquisition or
service as the Company or its FCC counsel may reasonably request from time to
time.
ii. Notwithstanding anything contained to the
contrary herein or in any of the Other Documents, no party hereto (i) shall
exercise any voting right, take any action or exercise any right or remedy that
would constitute or result in the transfer or assignment of any FCC license or
a transfer of control over any such license, permit or authorization, if such
assignment or transfer would require the prior approval of and/or notice to the
FCC, without such party first having notified the FCC of any such assignments
or transfer and, if required, obtained the approval of the FCC therefore, or
(ii) seek to influence decisions by or membership on the Board of Directors if
the rules and regulations of the FCC would prohibit such action, or otherwise
violate any rules or regulations of the FCC.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
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[SIGNATURE PAGE FOR SECURITIES PURCHASE AND EXCHANGE AGREEMENT]
CITADEL COMMUNICATIONS CORPORATION
By /s/ Lawrence R. Wilson
----------------------------------
Its President
-------------------------------
CITADEL BROADCASTING COMPANY
By /s/ Lawrence R. Wilson
----------------------------------
Its President
-------------------------------
ABRY BROADCAST PARTNERS II, L.P.
By ABRY CAPITAL, L.P.
----------------------------------
Its General Partner
-------------------------------
By ABRY HOLDINGS, INC.
----------------------------------
Its General Partner
-------------------------------
By /s/ Jay M. Grossman
----------------------------------
Its Attorney-In-Fact
-------------------------------
ABRY/CITADEL INVESTMENT PARTNERS, L.P.
By ABRY CAPITAL, L.P.
----------------------------------
Its General Partner
-------------------------------
by ABRY HOLDINGS, INC.
----------------------------------
Its General Partner
-------------------------------
By /s/ Jay M. Grossman
----------------------------------
Its Attorney-In-Fact
-------------------------------
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[SIGNATURE PAGE FOR SECURITIES PURCHASE AND EXCHANGE AGREEMENT]
BAKER, FENTRESS & COMPANY
By /s/ Scott E. Smith
----------------------------------
Its Executive Vice President
-------------------------------
OPPENHEIMER & CO., INC.
By /s/ Mark Leavitt
----------------------------------
Its Managing Director
-------------------------------
BANK OF AMERICA ILLINOIS
By /s/ Robert F. Perille
----------------------------------
Its Managing Director
-------------------------------
BofA CO-INVESTORS:
*
-------------------------------------
Christopher J. Perry
*
-------------------------------------
Robert F. Perille
*
-------------------------------------
M. Ann O'Brien
*
-------------------------------------
Ford S. Bartholow
*
-------------------------------------
Jeffrey M. Mann
*
-------------------------------------
Matthew W. Clary
*
-------------------------------------
Thomas E. Van Pelt, Jr.
By: /s/ Robert F. Perille
----------------------------------
Name: Robert F. Perille
Attorney-In-Fact
46
<PAGE> 48
LIST OF EXHIBITS
(To Securities Purchase and Exchange Agreement)
Exhibit "A" - Amended and Restated Warrant
Exhibit "B" - Amended and Restated Certificate of Incorporation
Exhibit "C" - Amended and Restated Class A Note Agreement
Exhibit "D" - Employment Agreement
Exhibit "E" - FINOVA Consent and Amendment
Exhibit "F" - Facility A Notes
Exhibit "G" - Management and Consulting Services Agreement
Exhibit "H" - Mesirow Repurchase Agreement
Exhibit "I" - 1996 Equity Incentive Plan
Exhibit "J" - Registration Rights Agreement
Exhibit "K" - Stockholders Agreement
Exhibit "L" - Termination of Agreement Re Section 5 Issuances
Exhibit "M" - Voting Agreement
Exhibit "N" - Wilson Note Forgiveness Agreement
Exhibit "O" - Wilson Option Agreement
Exhibit "P" - Opinion of Osborn Maledon, P.A.
Exhibit "Q" - Opinion of Hartman & Armstrong, Ltd.
Exhibit "R" - Opinion of Reed, Smith, Shaw & McClay
47
<PAGE> 49
LIST OF SCHEDULES
(To Securities Purchase and Exchange Agreement)
Schedule 1 - Stock Repurchases
Schedule 2 - Reclassification and Exchange
Schedule 3 - 1996 Equity Incentive Plan Initial Option Grants
Schedule 4 - Capitalization
Schedule 5 - Delivery of Documents
Schedule 6 - Indebtedness
Schedule 7 - Litigation
Schedule 8 - Interested Party Transactions
Schedule 9 - Licenses and Permits
Schedule 10 - Insurance
Schedule 11 - Employee Benefits
Schedule 12 - Tax Matters
Schedule 13 - Pending Acquisitions
Schedule 14 - Investor Ownership of Media Interests
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules or exhibits to the Securities Exchange
Commission upon request.]
48
<PAGE> 1
Exhibit 10.8
FIRST AMENDMENT TO
SECURITIES PURCHASE AND EXCHANGE AGREEMENT
This FIRST AMENDMENT TO SECURITIES PURCHASE AND EXCHANGE AGREEMENT
(this "First Amendment") is made as of December 31, 1996 by and among CITADEL
COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company"); CITADEL
BROADCASTING COMPANY, a Nevada corporation ("Citadel"); DESCHUTES ACQUISITION
CORPORATION, a Nevada corporation ("DAC"); ABRY BROADCAST PARTNERS II, L.P., a
Delaware limited partnership ("ABRY"); ABRY/CITADEL INVESTMENT PARTNERS, L.P.,
a Delaware limited partnership ("ABRY/CIP"); BAKER, FENTRESS & COMPANY, a
Delaware corporation ("BFC"); OPPENHEIMER & CO., INC., a Delaware corporation
("Oppenheimer") BANK OF AMERICA ILLINOIS, an Illinois banking corporation
formerly known as Continental Bank, N.A. ("BofA"); CHRISTOPHER J. PERRY, ROBERT
F. PERILLE, M. ANN O'BRIEN, FORD S. BARTHOLOW, JEFFREY M. MANN, MATTHEW W.
CLARY, SHERYL E. BARTOL, and ANDREA P. JOSELIT (Bartol and Joselit being
successors in interest to Thomas E. Van Pelt, Jr.) (collectively, the "BofA
Co-Investors"); THE ENDEAVOUR CAPITAL FUND LIMITED PARTNERSHIP, an Oregon
limited partnership ("Endeavour"); and JOSEPH P. TENNANT, THE SCHAFBUCH FAMILY
TRUST u/a/d 2-15-94, BABSON CAPITAL PARTNERS LIMITED PARTNERSHIP, an Oregon
limited partnership; TAL JOHNSON, EDWARD T. HARDY, and RALPH W. MCKEE
(collectively, the "Endeavour Co-Investors").
RECITALS
A. As of June 28, 1996, certain parties to this agreement entered into
that certain Securities Purchase and Exchange Agreement (the "Securities
Purchase and Exchange Agreement"). Capitalized terms that are not otherwise
defined herein shall have the meanings ascribed to those terms in the
Securities Purchase and Exchange Agreement.
B. Endeavour and the Endeavour Co-Investors are the sole owners of all
of the outstanding preferred stock of Deschutes River Broadcasting Inc., an
Oregon corporation ("Deschutes"). As of August 30, 1996, the Company, Citadel
Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary of
the Company ("CAC"), and Deschutes entered into that certain Merger Agreement
(the "Merger Agreement"). As of September 17, 1996, CAC changed its name to
Deschutes License, Inc. ("DLI"), and as of December 18, 1996 DLI assigned its
rights under the Merger Agreement to DAC. Pursuant to the Merger Agreement,
Deschutes and DAC will merge, with DAC to be the surviving corporation. In
consideration of such merger, Endeavour, the Endeavour Co-Investors and the
holders of the Common Stock of Deschutes will receive Class A Common Stock,
Series E Preferred Stock and/or options to purchase Class A Common Stock.
C. In order to induce Endeavour and the Endeavour Co-Investors to
permit the transactions contemplated by the Merger Agreement, the parties to
this First Amendment wish to amend the Securities Purchase and Exchange
Agreement to (i) grant Endeavour and the
<PAGE> 2
Endeavour Co-Investors all of the rights (and make Endeavour and the Endeavour
Co-Investors subject to all of the obligations) as Investors under the
Securities Purchase and Exchange Agreement and (ii) make Endeavour and the
Endeavour Co-Investors parties to the Securities Purchase and Exchange
Agreement.
D. In connection with the transactions contemplated by the Merger
Agreement, the Company, Endeavour, the Endeavour Co-Investors, and certain
other parties have also agreed to enter into the following agreements, each of
even date: that certain First Amendment to Third Amended and Restated
Registration Rights Agreement; that certain First Amendment to Second Amended
and Restated Stockholders Agreement; that certain First Amendment to Amended
and Restated Voting Agreement; and that certain Security Holder Agreement (the
"Endeavour Proxy") (together with this First Amendment, the Merger Agreement,
and the transactions contemplated thereby, the "Contemplated Transactions").
ACCORDINGLY, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this First Amendment agree as follows:
1. Consents and Waivers. Each of the parties hereto hereby consents to
this First Amendment and the inclusion of Endeavour and the Endeavour
Co-Investors as "Investors" under the Securities Purchase and Exchange
Agreement pursuant to the terms and conditions of this First Amendment.
Further, each of the parties hereto waives in connection with the Contemplated
Transactions any rights he/she/it may possess pursuant to the negative
covenants contained in Sections 11.a, 11.d, 11.e, 11.f, 11.g, 11.i, 11.k and
11.l of the Securities Purchase and Exchange Agreement. No other provisions are
waived.
2. Amendments.
2.1. Section 1 of the Securities Purchase and Exchange
Agreement is amended by adding the following definitions in
appropriate alphabetical order:
2.1.1. "Deschutes Option Exchange Agreements" shall
mean those award agreements between the Company and certain
former employees of Deschutes pursuant to which such
employees receive Parent Options upon conversion of the
Deschutes Options (as those terms are defined in the Merger
Agreement), in the form attached to the Securities Purchase
and Exchange Agreement as Exhibit I.iii. for incentive stock
options and in the form "Deschutes Option Exchange Agreement"
attached hereto as Exhibit A for nonqualified stock options.
2.1.2. "Endeavour" shall mean and refer to The
Endeavour Capital Fund Limited Partnership, an Oregon limited
partnership.
2.1.3. "Endeavour Co-Investors" shall mean and
refer, individually and collectively, to those individuals
who are designated on the Signature Pages to the First
Amendment as the "Endeavour Co-Investors."
2
<PAGE> 3
2.1.4. "Endeavour Proxy" means the Security Holder
Agreement of even date herewith, by and among Endeavour, the
Endeavour Co-Investors, the Company, Citadel and DAC.
2.1.5. "Endeavour Stock" means (i) Series E
Preferred Stock held by Endeavour or by the Endeavour
Co-Investors on the date of the First Amendment, (ii) Class A
Common Stock issued or issuable upon conversion of any Series
E Preferred Stock described in clause (i) above, (iii) Equity
Securities of the Company issued or issuable with respect to
any Equity Securities referred to in any of clauses (i)
through (ii) above or this clause (iii) by way of any stock
dividend or stock split, or in connection with a combination
or exchange of shares, recapitalization, merger,
consolidation, reorganization or otherwise.
2.1.6. "First Amendment" shall mean that First
Amendment to this Agreement dated as of December 31, 1996
among Endeavour, the Endeavour CoInvestors and the Original
Investors.
2.1.7. "Series E Preferred Stock" shall mean the
Series E Convertible Preferred Stock of the Company, par
value $.001 per share.
2.2. Section 1 of the Securities Purchase and
Exchange Agreement is further amended by modifying and/or adding the following
language to the following definitions:
2.2.1. FINOVA Credit Agreement. The current
definition is deleted and replaced with:
"FINOVA Credit Agreement" means the Loan Agreement
by and between Citadel, DAC, DLI, Citadel License
Inc, FINOVA and certain other Lenders (as that term
is defined therein), dated as of October 9, 1996, as
amended and in effect as of December 31, 1996.
2.2.2. Sixth Amended and Restated Certificate of
Incorporation. The following definition is added:
"Sixth Amended and Restated Certificate of
Incorporation" means the Certificate of
Incorporation of the Company as amended and in
effect on the date of the First Amendment
(immediately after the Sixth Amendment and
Restatement thereof).
2.2.3. Change of Control. The current definition is
deleted and replaced with:
"Change of Control" means the sale of the Company or
any of its Subsidiaries to an Independent Third
Party or group of Independent Third Parties pursuant
to which such party or parties acquire (i) Equity
Securities of the Company or any of its Subsidiaries
possessing the voting power
3
<PAGE> 4
under normal circumstances to elect a majority of
the Company's or any of its Subsidiaries' boards of
directors (whether by merger, consolidation or sale
or transfer of the Company's or any of its
Subsidiaries' Equity Securities) or (ii) all or
substantially all of the Company's or any of its
Subsidiaries' assets determined on a consolidated
basis.
2.2.4. Change of Control Payment. The current
definition is deleted and replaced with:
"Change of Control Payment" means any payment to or
other consideration transferred to any officer or
employee of the Company, or any of its Subsidiaries
who holds or owns beneficially or otherwise Equity
Securities of the Company by any Person whatsoever
in connection with any transaction resulting in a
Change of Control of the Company or any of its
Subsidiaries, including, without limitation,
payments in respect of (i) employment agreements or
consulting agreements in excess of such employee's
historical ordinary cash compensation as an officer
or employee of the Company or any of its
Subsidiaries (as the case may be) prior to such
transaction, (ii) non-competition agreements, (iii)
licenses or (iv) forbearances of any kind; provided,
however, that payments in respect of such officer's
or employee's Equity Securities of the Company shall
not constitute a Change of Control Payment if such
payments do not exceed the price per share of Common
Stock (adjusted to reflect any applicable exercise
price or the like) paid to Holders of Equity
Securities of the Company who are not employees.
2.2.5. Employee Incentive Securities. The current
definition is deleted and replaced with:
"Employee Incentive Securities" means and
includes (a) options exercisable for Class A Common
Stock, in an aggregate amount not in excess of
62,942 shares of Class A Common Stock (assuming the
full exercise of all such issued stock options
without regard to any restrictions or limitations on
exercise) issued or granted to LRW prior to the date
of this Agreement under the Wilson Option Agreement
or pursuant to a separate grant of options made to
LRW on December 21, 1994, (b) options exercisable
for Class A Common Stock, in an aggregate amount not
in excess of 34,374 shares of Class A Common Stock
(assuming the full exercise of all such stock
options without regard to any restrictions or
limitations on exercise) to which LRW may become
eligible after the date of this Agreement pursuant
to the Wilson Option Agreement, (c) options
exercisable for Class A Common Stock, in an
aggregate amount not in excess of 150,000 shares of
Class A Common Stock (assuming the full exercise of
all such stock options without regard to any
restrictions or limitations on exercise) granted to
LRW as of the date of this Agreement pursuant to the
1996 Equity Incentive Plan, (d) options exercisable
for
4
<PAGE> 5
Class A Common Stock, in an aggregate amount not in
excess of 414,783 shares of Class A Common Stock
(assuming the full exercise of all such issued stock
options without regard to any restrictions or
limitations on exercise) issued or granted to other
employees of Citadel prior to the date of the First
Amendment, (e) options exercisable for Class A
Common Stock, in an aggregate amount not in excess
of 236,578 shares of Class A Common Stock (assuming
the full exercise of all such stock options without
regard to any restrictions or limitations on
exercise) granted to other employees of Citadel as
of the date of the First Amendment pursuant to the
1996 Equity Incentive Plan, and (f) options
exercisable for Class A Common Stock, in an
aggregate amount not in excess of 146,165 shares of
Class A Common Stock (assuming the full exercise of
all such stock options without regard to any
restrictions or limitations on exercise) granted by
the Compensation Committee to LRW and/or by the
Board of Directors to other employees of Citadel
after the date of the First Amendment pursuant to
the 1996 Equity Incentive Plan.
2.2.6. Investor Stock. The current definition is
deleted and replaced with:
"Investor Stock" means (i) the Amended and Restated
BofA Warrants, (ii) Class B Common Stock held by the
BofA Co-Investors on the date hereof, (iii) Class B
Common Stock issued or issuable upon the exercise of
the Amended and Restated BofA Warrants, (iv) Class A
Common Stock issued or issuable upon the conversion
of Class B Common Stock described in clause (ii) or
clause (iii) above, (iv)(a) Series E Preferred Stock
held by Endeavour or by the Endeavour Co-Investors
on the date of the First Amendment, (iv)(b) Class A
Common Stock issued or issuable upon conversion of
any Series E Preferred Stock described in clause
(iv)(a) above, (v) Series A Preferred Stock held by
BFC on the date hereof, (vi) Class A Common Stock
issued or issuable upon the conversion of any Series
A Preferred Stock described in clause (v) above,
(vii) Series B Preferred Stock held by Oppenheimer
on the date of this Agreement, (viii) Class A Common
Stock issued or issuable upon the conversion of any
Series B Preferred Stock described in clause (viii)
above, (ix) the Shares, (x) Common Stock issued or
issuable upon the conversion of any Share, (xi)
Common Stock issued or issuable upon the conversion
or exchange of any Common Stock described in clause
(x) above or this clause (xi), (xii) Facility A
Notes Conversion Stock, and (xiii) Equity Securities
of the Company issued or issuable with respect to
any Equity Securities referred to in any of clauses
(i) through (xii) above or this clause (xii) by way
of any stock dividend or stock split, or in
connection with a combination or exchange of shares,
recapitalization, merger, consolidation,
reorganization or otherwise. As to any particular
securities constituting Investor Stock, such
securities shall continue to constitute Investor
Stock in the hands of any permitted transferee
thereof, but will cease to constitute Investor Stock
when they have been disposed of in a Public Sale.
5
<PAGE> 6
2.2.7. Investors. The current definition is deleted
and replaced with:
"Investors" means ABRY, ABRY/CIP, the Existing
Investors, Endeavour and the Endeavour Co-Investors,
and their respective heirs, personal
representatives, successors and assigns.
2.2.8. Registration Rights Agreement. The current
definition is deleted and replaced with:
"Registration Rights Agreement" shall mean the Third
Amended and Restated Stockholders Agreement dated as
of June 28, 1996 among the Corporation and the
persons signatory thereto, as amended as of December
31, 1996.
2.2.9. Stockholders Agreement. The current
definition is deleted and replaced with:
"Stockholders Agreement" shall mean the Second
Amended and Restated Stockholders Agreement dated as
of June 28, 1996 among the Corporation and the
persons signatory thereto, as amended as of December
31, 1996.
2.2.10. Voting Agreement. The current definition is
deleted and replaced with:
"Voting Agreement" shall mean the Second Amended and
Restated Voting Agreement dated as of December 31,
1996.
2.3. Equity Securities of the Company. Section 8.c. of the
Securities Purchase and Exchange Agreement is amended by adding the
following at the end of Section 8.c:
c.1 Equity Securities of the Company Upon Closing of the
Merger Agreement. As of the Closing (as that term is defined in the
Merger Agreement) and immediately thereafter, the authorized Equity
Securities of the Company will consist of (a) 27,553,504 shares of
Common Stock, (i) of which (A) 15,396,571 shares are voting shares of
Class A Common Stock, (B) 156,933 shares are non-voting shares of
Class B Common Stock, and (C) 12,000,000 shares are non-voting shares
of Class C Common Stock, and (ii) of which 971,208 shares of Class A
Common Stock, 18,831.954 shares of Class B Common Stock and 74,488
shares of Class C Common Stock will be issued and outstanding, and (b)
25,249,930 shares of Preferred Stock, of which (v) 750,000 shares will
have been designated as the Company's Series A Preferred Stock, of
which 746,411.86 shares will be issued and outstanding, (w) 17,201
shares will have been designated as the Company's Series B Preferred
Stock, of which 17,200.724 shares will be issued and outstanding, (x)
12,000,000 shares will have been designated as the Company's Series C
Preferred Stock, of which 1,656,019.934 shares will be issued and
outstanding, (y) 12,000,000 shares will have been designated as the
Company's Series D Preferred Stock, of which
6
<PAGE> 7
1,512,833.766 shares will be issued and outstanding, and (z) 482,729
shares will have been designated as the Company's Series E Preferred
Stock, of which 482,729 shares will be issued and outstanding.
Schedule 4 to the First Amendment lists the names of the beneficial
holders of all the outstanding shares of Class A Common Stock, Class B
Common Stock, Class C Common Stock, Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock as of the date of the First Amendment.
Such issued and outstanding shares of Class A Common Stock, Class B
Common Stock, Class C Common Stock, Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock will be, as of the date of the First
Amendment and immediately thereafter, duly authorized, validly issued,
fully paid and nonassessable. As of the date of the First Amendment
and immediately thereafter, neither the Company, Citadel nor DAC will
have outstanding any stock or securities convertible or exchangeable
for any shares of its Equity Securities, except for the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock, each of which
is convertible into Common Stock, the Series C Preferred Stock, which
is convertible into Series D Preferred Stock, the Series D Preferred
Stock, which is convertible into Series C Preferred Stock, the Class B
Common Stock and the Class C Common Stock, which are convertible into
Class A Common Stock, the BofA Warrants, which are exercisable for
shares of Class B Common Stock, the Facility A Notes issued in
connection with the Closing Advance, and Employee Incentive Securities
which are exercisable for Class A Common Stock.
As of the Closing (as that term is defined in the Merger
Agreement), neither the Company, Citadel nor DAC shall be subject to
any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its Equity Securities, except as expressly
provided in the Stockholders Agreement, as amended as of the date of
the First Amendment.
As of the Closing (as that term is defined in the Merger
Agreement), no holder of Equity Securities or any other security of
the Company, Citadel or DAC and no other Person is entitled to any
preemptive right, right of first refusal or similar right as a result
of the issuance and sale of the Shares and the issuance of Investor
Stock, except for certain preemptive rights of the Original Investors
in connection with the issuance of the Endeavour Stock that are
enumerated in Section 2 of the Stockholders Agreement, which have been
waived. Except for the Stockholders Agreement, the Voting Agreement,
the BofA Proxy, the Endeavour Proxy, the options previously granted to
employees of Citadel, the Wilson Stock Options, the 1996 Equity
Incentive Plan and options granted pursuant to the Deschutes Option
Exchange Agreements, there are no agreements, arrangements or trusts
between or for the benefit of the Company's or any Subsidiary's
stockholders with respect to the voting or transfer of the Company's
or such Subsidiary's Equity Securities or with respect to any other
aspect of the Company's or such Subsidiary's affairs. Neither the
Company, Citadel nor DAC have violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any
of its Equity Securities.
7
<PAGE> 8
The Common Stock and Preferred Stock of the Company, when
issued pursuant to the terms of this Agreement and pursuant to the
terms of the Merger Agreement, will have the rights, preferences, and
privileges specified in the Sixth Amended and Restated Certificate of
Incorporation and will be free and clear of all Liens and
restrictions, other than Liens that might have been created or
suffered solely by the Holders thereof, and restrictions on transfer
imposed by the Securities Act or applicable state securities laws.
The Investor Stock is duly authorized and has been reserved
for issuance upon conversion of the Investor Stock and the Facility A
Notes, and when issued upon such conversion in accordance with the
terms of the Sixth Amended and Restated Certificate of Incorporation,
or the Facility A Notes, as the case may be, will be duly authorized,
validly issued, fully paid and nonassessable, and free and clear of
all Liens and restrictions, other than Liens that might have been
created or suffered solely by the Holders thereof.
3. Representations and Warranties by Company and Citadel. Each of the
Company and Citadel remakes each of the representations and warranties
contained in Section 8 of the Securities Purchase and Exchange Agreement, as
amended by this First Amendment, to the Investors as of the date hereof.
4. Representations, Warranties and Covenants of the Investors. Each of
Endeavour and the Endeavour Co-Investors on behalf of himself, herself or
itself, severally and not jointly, makes each of the representations,
warranties and covenants contained in Section 9.a of the Securities Purchase
and Exchange Agreement, as amended by this First Amendment, to and with the
Company as of the date hereof. For purposes of the representations made by
Endeavour and the Endeavour Co-Investors pursuant to Section 9.a of the
Securities Purchase and Exchange Agreement and this Section 4 the term
"Agreement" shall mean this First Amendment and the term "Other Documents"
shall mean the Merger Agreement and the other agreements contemplated by the
Merger Agreement. Endeavour hereby certifies that it is an accredited investor,
as that term is defined in Regulation D, Section 501 of the Securities Act.
Each of the Endeavour Co-Investors represents and warrants that he or she is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the Endeavour Investor Stock being acquired. Each of Endeavour and
the Endeavour Co-Investors understands that the Endeavour Investor Stock is
being delivered in reliance on exemptions from the registration requirements of
federal and state securities laws and that the Company is relying upon the
truth and accuracy of the representations, warranties, agreements, and
acknowledgments of Endeavour and the Endeavour Co-Investors set forth herein to
determine each such Investor's suitability to acquire the Endeavour Investor
Stock. Each of Endeavour and the Endeavour Co-Investors is acquiring the
Endeavour Investor Stock for such Investor's own accounts without a view to
public distribution and, except as contemplated by this Agreement, the Other
Documents and the Sixth Amended and Restated Certificate of Incorporation, such
Investor has no contract, undertaking, agreement or arrangement to transfer,
sell or otherwise dispose of any Endeavour Investor Stock or any interest
therein to any Person.
5. Schedules. Schedules 4 through 13 of the schedules to the
Securities Purchase and Exchange Agreement, as amended as of the date hereof,
are attached to this First Amendment as Schedules 4 through 13. Each of the
Company, Citadel and DAC represent and warrant that the information contained
in Schedules 4 through 13 is complete and accurate. Each of Endeavour
8
<PAGE> 9
and the Endeavour Co-Investors represent and warrant that, other than
Deschutes, he/she/it does not own in excess of 5 percent (5%) of the voting
stock in, or serve as an officer or director of, any company engaged in the
ownership or operation of one or more radio stations, television stations or
daily newspapers, or serve as a general partner in any partnership engaged in
the ownership or operation of one or more radio stations, television stations
or daily newspapers.
6. Notice. All notices and other communications provided for or
permitted under the Registration Rights Agreement shall be made pursuant to
Section 12(d) thereof to Endeavour and the Endeavour Co-Investors at the
following initial addresses:
To Endeavour: The Endeavour Capital Fund Limited Partnership
4380 SW Macadam
Suite 460
Portland, Oregon 97201
Attn: John von Schlegell
Facsimile: (503) 223-1384
With copy to: Stephen E. Babson, Esq.
Stoel Rives, LLP
900 S.W. Fifth Avenue
Suite 2300
Portland, Oregon 97204
Facsimile: (503) 220-2480
To Endeavour
Co-Investors: The Endeavour Capital Fund Limited Partnership
4380 SW Macadam
Suite 460
Portland, Oregon 97201
Attn: John von Schlegell
Facsimile: (503) 223-1384
With copy to: Stephen E. Babson, Esq.
Stoel Rives, LLP
900 S.W. Fifth Avenue
Suite 2300
Portland, Oregon 97204
Facsimile: (503) 220-2480
To DAC: The same addresses listed for the
Company and Citadel in Section 13.c.ii of
the Securities Purchase and Exchange
Agreement.
7. Incorporation of Recitals. The Recitals set forth in this First
Amendment are incorporated herein.
9
<PAGE> 10
8. Choice of Law. It is the intention of the parties that the internal
laws, and not the laws of conflicts, of Arizona should govern the
enforceability and validity of this First Amendment, the construction of its
terms and the interpretation of the rights and duties of the parties; provided,
however, that the laws of the State of Nevada shall govern the relationship
between the Company and its stockholders.
5. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
6. Fees and Expenses. The Company shall pay the reasonable legal fees
and expenses of the Investors (excluding Endeavour and the Endeavour
Co-Investors) incurred in the preparation of this First Amendment, review of
the documents and agreements in connection with the transactions described in
the Recital hereof and the preparation of additional documents and agreements
related to such transactions.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
10
<PAGE> 11
[SIGNATURE PAGE FOR FIRST AMENDMENT TO SECURITIES
PURCHASE AND EXCHANGE AGREEMENT]
CITADEL COMMUNICATIONS CORPORATION
By /s/ Lawrence R. Wilson
----------------------------
Its
----------------------------
ABRY BROADCAST PARTNERS II, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
-----------------------
Its
-----------------------
ABRY/CITADEL INVESTMENT PARTNERS, L.P.
By ABRY CAPITAL, L.P.
-----------------------
Its General partner
By ABRY HOLDINGS, INC.
-----------------------
Its General Partner
By /s/ Royce Yudkoff
----------------------------
Its
----------------------------
11
<PAGE> 12
[SIGNATURE PAGE FOR FIRST AMENDMENT TO SECURITIES
PURCHASE AND EXCHANGE AGREEMENT]
BAKER, FENTRESS & COMPANY
By /s/ Scott E. Smith
-----------------------------
Its Executive Vice President
--------------------------
OPPENHEIMER & CO., INC.
By
-------------------------------
Its
----------------------------
BANK OF AMERICA ILLINOIS
By /s/ Robert F. Perille
------------------------------
Its
----------------------------
BOFA CO-INVESTORS:
*
---------------------------------
Christopher J. Perry
*
---------------------------------
Robert F. Perille
*
---------------------------------
M. Ann O'Brien
*
---------------------------------
Ford S. Bartholow
*
---------------------------------
Jeffrey M. Mann
*
---------------------------------
Matthew W. Clary
*
---------------------------------
Sheryl E. Bartol
*
---------------------------------
Andrea P. Joselit
* By: /s/ Robert F. Perille
----------------------------
Name:
Attorney-In-Fact
12
<PAGE> 13
[SIGNATURE PAGE FOR FIRST AMENDMENT TO SECURITIES
PURCHASE AND EXCHANGE AGREEMENT]
ENDEAVOUR:
THE ENDEAVOUR CAPITAL FUND LIMITED
PARTNERSHIP
By DVS Management, Inc.
Its General Partner
By /s/ John W. Dixon
------------------------
Its Chairman
------------------------
ENDEAVOUR CO-INVESTORS:
/s/ Joseph P. Tennant
--------------------------------
Joseph P. Tennant
THE SCHAFBUCH FAMILY TRUST u/a/d 2-15-94
By: /s/ Richard M. Schafbuch
-------------------------
Richard M. Schafbuch, Trustee
By: /s/ Susan P. Schafbuch
-------------------------
Susan P. Schafbuch, Trustee
BABSON CAPITAL PARTNERS LIMITED
PARTNERSHIP
By /s/ Stephen E. Babson
-------------------------
Its General Partner
-----------------------
/s/ Tal Johnson
-------------------------
Tal Johnson
/s/ Edward T. Hardy
-------------------------
Edward T. Hardy
/s/ Ralph W. McKee
-------------------------
Ralph W. McKee
13
<PAGE> 14
EXHIBIT A
(To First Amendment to Securities Purchase and Exchange Agreement)
FORM OF
DESCHUTES OPTION EXCHANGE AGREEMENT
<PAGE> 15
LIST OF SCHEDULES
(To First Amendment to Securities Purchase and Exchange Agreement
As of December 31, 1996)
Schedule 4 - Capitalization
Schedule 5 - Delivery of Documents
Schedule 6 - Indebtedness
Schedule 7 - Litigation
Schedule 8 - Interested Party Transactions
Schedule 9 - Licenses and Permits
Schedule 10 - Insurance
Schedule 11 - Employee Benefits
Schedule 12 - Tax Matters
Schedule 13 - Pending Acquisitions
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules or exhibits to the Securities Exchange
Commission upon request.]
<PAGE> 1
Exhibit 10.9
SECOND AMENDMENT TO
SECURITIES PURCHASE AND EXCHANGE AGREEMENT
This SECOND AMENDMENT TO SECURITIES PURCHASE AND EXCHANGE AGREEMENT
(this "Second Amendment") is made as of March 17, 1997 by and among CITADEL
COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company"); CITADEL
BROADCASTING COMPANY, a Nevada corporation ("Citadel"); DESCHUTES ACQUISITION
CORPORATION, a Nevada corporation ("DAC"); ABRY BROADCAST PARTNERS II, L.P., a
Delaware limited partnership ("ABRY"); ABRY/CITADEL INVESTMENT PARTNERS, L.P., a
Delaware limited partnership ("ABRY/CIP"); BAKER, FENTRESS & COMPANY, a Delaware
corporation ("BFC"); OPPENHEIMER & CO., INC., a Delaware corporation
("Oppenheimer") BANK OF AMERICA ILLINOIS, an Illinois banking corporation
formerly known as Continental Bank, N.A. ("BofA"); CHRISTOPHER J. PERRY, ROBERT
F. PERILLE, M. ANN O'BRIEN, FORD S. BARTHOLOW, JEFFREY M. MANN, MATTHEW W.
CLARY, SHERYL E. BARTOL, and ANDREA P. JOSELIT (Bartol and Joselit being
successors in interest to Thomas E. Van Pelt, Jr.) (collectively, the "BofA
Co-Investors"); THE ENDEAVOUR CAPITAL FUND LIMITED PARTNERSHIP, an Oregon
limited partnership ("Endeavour"); and JOSEPH P. TENNANT, THE SCHAFBUCH FAMILY
TRUST u/a/d 2-15-94, BABSON CAPITAL PARTNERS LIMITED PARTNERSHIP, an Oregon
limited partnership; TAL JOHNSON, EDWARD T. HARDY, and RALPH W. MCKEE
(collectively, the "Endeavour Co-Investors").
RECITALS
A. As of June 28, 1996, certain parties to this Second Amendment
entered into that certain Securities Purchase and Exchange Agreement (as amended
by the First Amendment thereto dated as of December 31, 1996 and as supplemented
by the Agreement Regarding Facility A Advances dated as of the date of this
Second Amendment among the Company, ABRY and ABRY/CIP, the "Securities Purchase
and Exchange Agreement"). Capitalized terms that are not otherwise defined
herein shall have the meanings ascribed to those terms in the Securities
Purchase and Exchange Agreement.
B. In connection with their entry into a letter agreement dated the
date of this Agreement, the parties to the Securities Purchase and Exchange
Agreement have agreed to make certain changes to the terms thereof.
ACCORDINGLY, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Second Amendment agree as follows:
1. AMENDMENTS.
(a) Section 1 of the Securities Purchase and Exchange Agreement
is amended to add the following additional defined terms and the accompanying
definitions:
<PAGE> 2
"BACK-UP TRUSTEE" means a "Back-Up Trustee," as
that term is defined in the Voting Trust Agreement.
A "QUALIFIED STATION ACQUISITION" means
(a) the Tele-Media Acquisition,
(b) the Sabre Communications Acquisition, or
(c) any other direct or indirect acquisition by the
Company or any Subsidiary of all or substantially all of the
assets of any radio station by means of a transaction of a
type described in clause (b)(i) or (b)(ii) of Section 11, or
any arrangement by the Company or any Subsidiary of a type
described in clause (b)(iii) of Section 11 with respect to any
radio station, which is consummated after March 17, 1997, so
long as (i) the aggregate fair value of the consideration
payable by the Company and the Subsidiaries in connection with
such transaction and all related transactions of any such type
with any single Person or two or more affiliated Persons is
not greater than $30,000,000, (ii) if such aggregate fair
value is greater than $10,000,000, then the amount of such
aggregate fair value is not greater than the product of 12
multiplied by the net operating cash flow of the radio station
in question (together with the net operating cash flow of all
radio stations which are the subject of such transaction or
any related transaction of any such type with any single
Person or two or more affiliated Persons, and in each case
giving pro forma effect to all cost and expense reductions or
increases reasonably expected to be realized following such
acquisition, to the extent such pro forma adjustments are
approved by holders of a majority of the Series D Preferred
Stock) for the twelve full calendar months ending prior to the
date upon which the Company or the Subsidiary in question
entered into a definitive agreement to consummate such
transaction, and (iii) such transaction or series of related
transactions is consummated solely with the proceeds of
Indebtedness which the Company or any Subsidiary incurs in a
manner which does not require a Consent pursuant to clause (f)
above and cash on hand.
For purposes of this definition, the "net operating cash
flow" of any radio station for any period will have the same
meaning with respect to such radio station as Operating Cash
Flow (as that term is defined in the Stockholders Agreement)
has with respect to the Company for any period. No holder of
Series D Preferred Stock
2
<PAGE> 3
will unreasonably withhold the approval of pro forma
adjustments described in the preceding paragraph.
A "QUALIFIED STATION DISPOSITION" means any sale,
conveyance, lease, exchange or other disposition by the Company or any
Subsidiary (in each case, a "DISPOSITION TRANSACTION") of any assets
of any broadcast radio station, or the equity securities of any
Subsidiary which owns only the assets of one or more broadcast radio
stations, which were the subject of a Qualified Station Acquisition,
so long as the fair value of the consideration received by the Company
and its Subsidiaries (other than any Subsidiary the equity securities
of which are being so disposed of), net of related fees, taxes and
expenses, is not less than the fair value of the consideration
furnished by the Company and/or its Subsidiaries with respect to such
radio station in the Acquisition Transaction for such radio station,
plus the amount of fees and expenses incurred by the Company and the
Subsidiaries in connection with such Qualified Station Acquisition.
For purposes of this definition, if more than one radio station is
acquired or disposed of by the Company or any Subsidiary in any
Qualified Station Acquisition or Disposition Transaction or in any
series of related Qualified Station Acquisitions or Disposition
Transactions, then, for purposes of this definition, the consideration
paid or received by the Company and the Subsidiaries in such
transaction(s), and the fees and expenses incurred by them in
connection with such transaction(s), shall be deemed to have been
paid, received or incurred by them pro rata, in proportion to the
respective fair values of such radio stations at the time of such
transaction(s). For purposes of this definition, the fair value of any
consideration will be based upon any independent appraisal thereof
performed in connection with the transaction in question; if no such
appraisal has been performed, the same will be based on any reasonable
allocation made by the parties thereto, if their interests with
respect to such allocation are adverse; and if no such appraisal or
allocation is performed, then such fair value will be the amount
determined by the Company and approved by the holders of a majority of
the Series D Preferred Stock. No holder of Series D Preferred Stock
will unreasonably withhold any approval described in the preceding
sentence.
"SABRE COMMUNICATIONS ACQUISITION" means the
acquisition by a Subsidiary of the Company of all of the
then-outstanding capital stock and other equity securities of Sabre
Communications, Inc. ("Sabre") for aggregate consideration consisting
solely of shares of a series of the Company's preferred stock (the
shares being so issued being the "Sabre Shares"), so long as:
(a) Sabre and/or one or more of its
Subsidiaries then owns and operates radio stations WHTO FM
and WZXR FM (each, Williamsport, Pennsylvania), WRQK FM
(Canton, Ohio), WPIG FM and WHDL AM (each, Olean, New York),
and WNKI FM, WPGI AM and WQIX AM (each, Elmira, New York),
and operates under local marketing or similar arrangements
and has options to acquire radio stations WILQ FM, WLYC
3
<PAGE> 4
FM and WLYC AM (each, Williamsport, Pennsylvania) and WCXR FM
(Lewisburg, Pennsylvania);
(b) the Sabre Shares are issued in a quantity
and have terms such that the Sabre Shares are convertible
into not more than 275,000 shares of Class A Common (subject
to antidilution adjustments which are comparable to those
applicable to the Series E Preferred) and the aggregate
initial liquidation value of the Sabre Shares is not greater
than $5,500,000;
(c) the terms and conditions relating to the
Sabre Shares and their issuance, including rights granted to
the holders thereof by contract or otherwise, are not less
favorable to the Company, its Subsidiaries and its other
stockholders than the terms and conditions relating to the
issuance of Class E Common pursuant to the Merger Agreement;
(d) the sum of the consolidated indebtedness
for borrowed money of Sabre and its Subsidiaries, the
aggregate amount of any deferred purchase price payable by
them in connection with any radio station acquisition and the
aggregate exercise price payable in connection with the
exercise of the options described in clause (a) above
(whether or not any such option has been exercised) at the
time of such acquisition does not exceed $11,300,000; and
(e) such acquisition has been approved by the
prior vote or written consent of a majority of the members of
the Board of Directors.
"SABRE COMMUNICATIONS FINANCING" means the issuance
of the Sabre Shares as described in the definition of the term "Sabre
Communications Acquisition."
"SABRE SHARES" has the meaning set forth in the
definition of the term "Sabre Communications Acquisition."
"TELE-MEDIA ACQUISITION" means the purchase and sale
of certain capital stock proposed to be consummated by the Company
and/or its Subsidiaries on material terms and conditions which are not
less favorable to the Company and its Subsidiaries than those set
forth in the draft (dated March 13, 1997) of the Agreement of Purchase
and Sale proposed to be entered into among the Company, Citadel,
Tele-Media Broadcasting Company, Tele-Media Broadcasting Company of
Centre Region, Tele-Media Broadcasting Holding Corporation and the
shareholders of the latter three corporations, so long as such
purchase and sale is consummated on or prior to February 28, 1998.
4
<PAGE> 5
"TELE-MEDIA FINANCING" means transactions necessary
for the Company and its Subsidiaries to obtain the funds necessary to
pay the purchase price and expenses to be incurred by them in
connection with the Tele-Media Acquisition, by means of the issuance
of approximately $100,000,000 in face amount of Senior Subordinated
Notes, and approximately $100,000,000 in face amount of Exchangeable
Preferred Stock, of the Company, as such financing transactions are
more particularly described in the Citadel Communications Corporation,
Presentation to The Board of Directors dated February 14, 1997
prepared by Prudential Securities, so long as such financing
transactions are consummated on or prior to February 28, 1998.
"VOTING TRUSTEE" means the "Trustee," as that term
is defined in the Voting Trust Agreement.
"VOTING TRUST AGREEMENT" means the Voting Trust
Agreement dated as of March 17, 1997 among the Company, ABRY,
ABRY/CIP, the initial Trustee named therein and the initial
Back-Up Trustees named therein, as in effect from time to
time.
(b) Section 1 of the Securities Purchase and Exchange
Agreement is further amended by amending and restating in its entirety the
definition of the term "FINOVA Credit Agreement" as follows:
"FINOVA CREDIT AGREEMENT" means the Loan Agreement
dated as of October 9, 1996 among Citadel, certain other
Borrowers referred to therein, NationsBank of Texas, N.A.,
The First National Bank of Boston, Union Bank, The Bank of
New York and FINOVA Capital Corporation, a Delaware
corporation, in its individual capacity and as agent for all
lenders, as amended by First Amendment to Loan Instruments
dated as of December 31, 1996 and Second Amendment to Loan
Instruments dated February 14, 1997, and as the same may be
further amended, supplemented or modified in a manner which
is not prohibited by either this Agreement or the Voting
Agreement.
(c) Section 10.b.iii. of the Securities Purchase and
Exchange Agreement is amended and restated in its entirety to read as set forth
on the attached Exhibit A.
(d) Section 11 of the Securities Purchase and Exchange
Agreement is amended and restated in its entirety to read as set forth on the
attached Exhibit B.
(e) Section 13.c.ii. of the Securities Purchase and Exchange
Agreement is amended and restated to read in its entirety as follows:
5
<PAGE> 6
ii. if to the Company or Citadel, at 140 South Ash
Avenue, Tempe, Arizona 85281, and to 1015 Eastman Drive,
Bigfork, Montana 59911.
2. FACILITY A NOTES.
(a) ABRY and ABRY/CIP have made, or soon after the date hereof
will make, Facility A Advances in the aggregate amount of $1,000,000,
the proceeds of which Facility A Advances have been or will be used to
make certain non-refundable payments to the sellers in connection with
Citadel's entry into a definitive agreement to consummate the
Tele-Media Acquisition and thereafter as required by such agreement.
ABRY and ABRY/CIP hereby waive the fifteen (15) business days' prior
written notice requirement set forth in Section 4.g.v of the Securities
Purchase and Exchange Agreement with respect to such Facility A
Advances, so long as such Facility A Advances are made on or prior to
March 31, 1997. ABRY and ABRY/CIP agree that such Facility A Advances
will not be deemed to have been made for purposes of the application of
the first sentence of Section 4.g.v. of the Securities Purchase and
Exchange Agreement.
(b) ABRY, ABRY/CIP and the Company anticipate that the Company
will request that ABRY and ABRY/CIP provide Facility A Advances in the
aggregate amount of not greater than $1,000,000, the proceeds of which
Facility A Advances will be used to make a deposit in escrow in
connection with the Company's (and/or one or more Subsidiaries') entry
into a definitive agreement to consummate the Sabre Communications
Acquisition. ABRY and ABRY/CIP agree that such Facility A Advances will
not be deemed to have been made for purposes of the application of the
first sentence of Section 4.g.v. of the Securities Purchase and
Exchange Agreement.
(c) Notwithstanding the terms and conditions of the Securities
Purchase and Exchange Agreement and the Facility A Notes: (i)
contemporaneously with the consummation of the Tele-Media Acquisition,
the Company and Citadel will cause a portion of the proceeds of the
related financing to be applied to the prepayment in full of the entire
unpaid principal amount of, and all unpaid accrued interest in respect
of, all Facility A Notes which are then outstanding, and (ii) effective
at the time of such consummation, the Facility A Commitments shall
terminate and be of no further effect, and ABRY and ABRY/CIP shall have
no further obligations to make Facility A Advances to the Company.
3. VOTING TRUST. On the date hereof, ABRY and ABRY/CIP have
contributed the shares of the Company's capital stock which are held by them,
and have agreed to contribute all other shares of the Company's capital stock
which hereafter may be acquired by them, to a voting trust (the "Voting Trust")
established pursuant to a Voting Trust Agreement dated as of the date hereof
among the Company, ABRY, ABRY/CIP and the initial Voting Trustee thereunder. For
purposes of the Securities Purchase and Exchange Agreement, ABRY and ABRY/CIP
(and any Persons who from time to time may hold Voting Trust Certificates
6
<PAGE> 7
issued in respect of capital stock of the Company held in the Voting Trust), as
the beneficial owners of the capital stock in the Voting Trust, will be deemed
to hold the capital stock of the Company which is held in the Voting Trust.
4. CHOICE OF LAW. It is the intention of the parties that the
internal laws, and not the laws of conflicts, of Arizona should govern the
enforceability and validity of this Second Amendment, the construction of its
terms and the interpretation of the rights and duties of the parties; provided,
however, that the laws of the State of Nevada shall govern the relationship
between the Company and its stockholders.
5. COUNTERPARTS. This Second Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be
construed together and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Second Amendment
to be duly executed and delivered by their respective duly authorized officers
on the day and year first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
7
<PAGE> 8
[SIGNATURE PAGE FOR SECOND AMENDMENT TO SECURITIES
PURCHASE AND EXCHANGE AGREEMENT]
CITADEL COMMUNICATIONS CORPORATION
By /s/ Lawrence R. Wilson
-------------------------------
Its President
----------------------------
CITADEL BROADCASTING COMPANY
By /s/ Lawrence R. Wilson
-------------------------------
Its President
----------------------------
ABRY BROADCAST PARTNERS II, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
-------------------------
Its President
-------------------------
ABRY/CITADEL INVESTMENT PARTNERS, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
-------------------------
Its President
-------------------------
<PAGE> 9
[SIGNATURE PAGE FOR SECOND AMENDMENT TO SECURITIES
PURCHASE AND EXCHANGE AGREEMENT]
BAKER, FENTRESS & COMPANY
By /s/ Scott E. Smith
-------------------------------------
Its
---------------------------------
OPPENHEIMER & CO., INC.
By /s/ Rob Blum
-------------------------------------
Its Assistant Secretary
---------------------------------
BANK OF AMERICA ILLINOIS
By /s/ Robert F. Perille
-------------------------------------
Its
---------------------------------
BOFA CO-INVESTORS:
*
---------------------------------------
Christopher J. Perry
*
---------------------------------------
Robert F. Perille
*
---------------------------------------
M. Ann O'Brien
*
---------------------------------------
Ford S. Bartholow
*
---------------------------------------
Jeffrey M. Mann
*
---------------------------------------
Matthew W. Clary
*
---------------------------------------
Sheryl E. Bartol
*
---------------------------------------
Andrea P. Joselit
* By: Robert F. Perille
------------------------------------
Name:
Attorney-In-Fact
<PAGE> 10
[SIGNATURE PAGE FOR SECOND AMENDMENT TO SECURITIES
PURCHASE AND EXCHANGE AGREEMENT]
ENDEAVOUR:
THE ENDEAVOUR CAPITAL FUND LIMITED PARTNERSHIP
By DVS Management, Inc.
Its General Partner
By /s/ John von Schlegell
---------------------------------------
Its Managing Partner
-----------------------------------
ENDEAVOUR CO-INVESTORS:
/s/ Joseph P. Tennant
-----------------------------------------
Joseph P. Tennant
THE SCHAFBUCH FAMILY TRUST u/a/d 2-15-94
By: /s/ Richard M. Schafbuch
--------------------------------------
Richard M. Schafbuch, Trustee
By: /s/ Susan P. Schafbuch
--------------------------------------
Susan P. Schafbuch, Trustee
BABSON CAPITAL PARTNERS LIMITED PARTNERSHIP
By /s/ Stephen E. Babson
--------------------------------------
Its General Partner
----------------------------------
/s/ Tal Johnson
-----------------------------------------
Tal Johnson
/s/ Edward T. Hardy
-----------------------------------------
Edward T. Hardy
/s/ Ralph W. McKee
-----------------------------------------
Ralph W. McKee
<PAGE> 11
EXHIBIT A
11. ACTIONS REQUIRING SUPERMAJORITY APPROVAL. Without the
prior vote or written consent of the holders of a majority of the Series D
Preferred Stock (each a "Consent"), the Company shall not take and shall not
permit any Subsidiary to take any of the following actions:
(A) TRANSFERS; DISPOSITIONS. Other than pursuant to
Section 6 of the Stockholders Agreement, sell, convey, lease (as lessor),
exchange or otherwise dispose of or transfer in any fiscal year, any portion of
or any interest in any property of the Company or any Subsidiary in the
aggregate having a fair market value of more than $5,000,000; provided that no
Consent shall be required for any Qualified Station Disposition (as that term
is defined below).
(B) ACQUISITIONS; INVESTMENTS; CERTAIN OTHER TRANSACTIONS.
Other than in a Qualified Station Acquisition:
(i) directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire, directly or
indirectly, all or any substantial portion of the assets, Equity
Securities or business of any Person or any radio station, or otherwise
combine with any Person (in each case other than the Company or any
wholly owned Subsidiary of the Company);
(ii) Purchase or otherwise directly or indirectly acquire,
hold or invest in the Equity Securities of any other Person (other than
any wholly-owned Subsidiary of the Company), or make any loan to, or
enter into any arrangement for the purpose of directly or indirectly
providing funds or credit to, or make any other investment, whether by
way of capital contribution, time deposit or otherwise, in, through or
with any Person (other than any wholly owned Subsidiary of the
Company), other than up to $100,000 in aggregate principal amount
outstanding at any time of loans made to other Persons in the ordinary
course of business; or
(iii) Enter into any joint venture agreement, or enter into
local marketing, time brokerage or similar arrangement if such
arrangement is entered into in connection with the grant of an option
to purchase or agreement to purchase the station that is the subject of
such arrangement.
(C) ISSUANCE OR REPURCHASE OF EQUITY SECURITIES. Except for
any issuance described in any of clauses (ii) through (vi) of Section 2.4 of the
Stockholders Agreement or any issuance of Equity Securities as part of the
Tele-Media Financing or the Sabre Communications Financing, any issuance upon
the conversion, exercise or exchange in accordance with its terms of any Equity
Security issued in accordance with this Section 1(c), the grant of any option
pursuant to the 1996 Equity Incentive Plan or any other stock option plan which
is approved by
11
<PAGE> 12
the holders of a majority of the Series C Preferred Stock after the date
hereof, or any repurchase pursuant to any of Sections 3, 4 and 5 of the
Stockholders Agreement:
(i) authorize, issue or enter into any agreement,
stock option, incentive, compensation or other plan or arrangement
providing for the issuance (contingent or otherwise) of any Equity
Securities, whether for cash or for non-cash consideration (provided
that this clause (i) will not apply to any issuance of Equity
Securities of any Subsidiary of the Company to the Company or any
wholly-owned Subsidiary of the Company),
(ii) redeem, repurchase or otherwise retire any of the
Company's Equity Securities, other than (A) the Class A Common Stock
owned by certain members of management of the Company or any
Subsidiary (other than Wilson) upon the termination of the employment
thereof (which such repurchases shall not in the aggregate exceed
$500,000 in an amount during any twelve-month period) or (B) any
payment in respect of any Facility A Note, or
(iii) with respect to the Company, make any dividend,
distribution or other stockholder expenditures with respect to any
Equity Securities or apply any of its assets to the purchase,
redemption or other retirement of, or set apart any sum or any
non-cash consideration for the payment of, or make any other
distributions or reduction or capital or otherwise in respect of any
of its Equity Securities or in respect of any Facility A Note;
provided, that this clause (iii) shall not apply to any Subsidiary.
(D) AMENDMENT OF CERTIFICATE OF INCORPORATION; BYLAWS.
Except as contemplated by Section 4(g) of the Securities Purchase and Exchange
Agreement, make any amendment to the certificate or articles of incorporation
or the bylaws of the Company or any of its Subsidiaries, or file any resolution
of the Board or the board of directors of any Subsidiary designating or
amending the terms of any Additional Preferred Stock.
(E) PUBLIC OFFERINGS. Except as part of the Tele-Media
Financing, issue, sell or offer to sell any of the securities of the Company or
any Subsidiary in a public offering that is registered under the Securities
Act.
(F) INDEBTEDNESS; AMENDMENT OF DEBT DOCUMENTS.
(i) Create, incur, issue, assume, become liable with
respect to, or extend that maturity of, or permit any Subsidiary to
create, incur, issue, assume, become liable with respect to, or extend
the maturity of any Indebtedness for Borrowed Money (as defined in the
Securities Purchase and Exchange Agreement) except:
1) Up to $150,000,000 in principal amount of
Indebtedness for Borrowed Money outstanding at any time and incurred
pursuant to the FINOVA Credit Agreement (or pursuant to a replacement
facility entered into in connection with the
12
<PAGE> 13
Tele-Media Acquisition which (i) permits all or a portion of the
amounts of prior borrowings which have been repaid to be reborrowed to
pay the purchase price and expenses associated with radio station
acquisitions, and (ii) otherwise has terms and conditions not less
favorable to the Company and its Subsidiaries than the terms and
conditions of the FINOVA Credit Agreement) and any notes issued
pursuant thereto, and all Indebtedness for Borrowed Money outstanding
as of the date hereof and disclosed on Schedule to this Agreement;
2) the Facility A Notes;
3) any Indebtedness for Borrowed Money pursuant to a
Permitted Senior Substitution (as defined in the Securities Purchase
and Exchange Agreement);
4) Indebtedness for Borrowed Money incurred as part
of the Tele- Media Financing or the Sabre Communications Financing; and
5) other Indebtedness for Borrowed Money in an
aggregate principal which does not exceed $3,000,000 at any time; and
the Company will not, and will not permit any Subsidiary to, extend
the maturity of any Indebtedness for Borrowed Money described in
clause (A) or (C) above without Consent.
(ii) Amend, supplement, modify or waive in any material
respect, any term or provision of the FINOVA Credit Agreement, the
Facility A Notes or any other agreement or arrangement relating to
Indebtedness for Borrowed Money (other than (A) to add any wholly-owned
Subsidiary of the Company as a party thereto or as an additional
guarantor of the Indebtedness for Borrowed Money incurred thereunder,
(B) to identify, refer to or reflect any Person, radio station or
assets acquired, or to effect any required deletion so that such
agreement or arrangement no longer identifies, refers to or reflects
any Person, radio station or assets disposed of, in any Qualified
Station Acquisition or Qualified Station Disposition), (C) to amend
Exhibit 1E to the FINOVA Credit Agreement to remove Peggy Koenig, Royce
Yudkoff and Jay Grossman and to refer to the members of the Board of
Directors the expenses of whom are reimbursed by the Company, each
Observer, the Voting Trustee and the Back-Up Trustees, or (D) to modify
the exhibits to the FINOVA Credit Agreement to reflect the addition of
liabilities and expenses undertaken in connection with any Qualified
Station Acquisition, to the extent such liabilities and expenses are
not material to the acquired stations(s) in question); or
(G) AGREEMENT; COMMITMENT. Agree or commit to take any
action which, by reason of any of clauses (a) through (f) above, would require
Consent.
13
<PAGE> 14
EXHIBIT B
iii. Attendance at Board Meetings.
A. For purposes of this Section, a "Qualifying
Investor" means any holder of Underlying Common Stock which at the time in
question, either alone or together with its Affiliates, holds Underlying Common
Stock which is neither BFC Underlying Common Stock (as that term is defined in
the Voting Agreement) nor Endeavour Underlying Common Stock (as that term is
defined in the Voting Agreement) and which represents not less than 10% of the
Underlying Common Stock.
B. The Company will give each Qualifying Investor
written notice of each meeting of the Board of Directors, the board of directors
of any Subsidiary (each a "Sub Board") or any committee of the Board of
Directors or of any Sub Board, at the same time and in the same manner as notice
is given to the directors who are members thereof (which notice shall be
promptly confirmed in writing to each Qualifying Investor if such notice is not
given to such directors in writing) and, in any event, a sufficient time to
permit a person designated by such Qualifying Investor a reasonable opportunity
to attend such meeting (or to listen to such meeting by telephone, in the case
of a telephonic meeting).
C. The Company shall permit, and shall cause each
Subsidiary to permit, a representative of each Qualifying Investor (each an
"Observer") to attend (or, in the case of a telephonic meeting, to listen by
telephone to) each meeting of its board of directors or any committee thereof as
an observer. The Company shall pay the reasonable out-of-pocket expenses
incurred by each Observer in connection with attending the meetings of the Board
of Directors, any Sub Board and any committees thereof.
D. Each Observer shall be entitled to receive all
written materials and other information (including, without limitation, copies
of meeting minutes) given to directors in connection with any such meeting at
the same time as such materials and information are given to the directors in
question and, in any event, will be informed by the Company as to the material
terms and conditions of each Qualified Station Acquisition or Qualified Station
Disposition which is effected or proposed to be effected.
E. If the Company or any Subsidiary proposes to take
any action by written consent in lieu of a meeting of its board of directors or
of any committee thereof, then the Company shall give written notice of such
action to the person then most-recently designated by each Qualified Investor as
an Observer, prior to the effective date of such consent, describing in
reasonable detail the nature and substance of such action.
F. Nothing contained herein shall be construed to
entitle an Observer to do any more than monitor the meeting activities of the
Board of Directors, any Sub Board or any committee thereof; no Observer shall be
entitled to participate in any such meeting by voicing comments or suggestions
with respect to matters being considered in the meeting or documents relating
thereto.
14
<PAGE> 1
Exhibit 10.11
EXECUTION COPY
SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT is
dated as of June 28, 1996, by and among CITADEL COMMUNICATIONS CORPORATION, a
Nevada corporation (the "Company"), BAKER, FENTRESS & COMPANY, a Delaware
corporation ("BFC"), BANK OF AMERICA ILLINOIS (an Illinois banking corporation
f/k/a Continental Bank, N.A., the "Bank"), certain individuals listed on the
Bank Co-Investor Signature Page attached hereto (the "Bank Co-Investors"), ABRY
BROADCAST PARTNERS II, L.P., a Delaware limited partnership ("ABRY"),
ABRY/CITADEL INVESTMENT PARTNERS, L.P., a Delaware limited partnership
("ABRY/CIP"), OPPENHEIMER & CO., INC., a Delaware corporation ("Oppenheimer"),
FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA"), LAWRENCE R.
WILSON (the "Executive"), CLAIRE WILSON ("CW") and certain members of
management listed on the Management Signature Page attached hereto (the
"Managers"). The Executive and CW sometimes are referred to herein collectively
as "Wilson." Wilson and the Managers sometimes are referred to herein
collectively as "Management". The Bank and the Bank Co-Investors sometimes are
referred to herein collectively as "BofA." BFC, BofA, ABRY, ABRY/CIP and
Oppenheimer sometimes are referred to herein collectively as the "Investors"
and individually as an "Investor." The Investors, FINOVA, and Management
sometimes are referred to herein collectively as the "Stockholders" and
individually as a "Stockholder." Capitalized terms used and not otherwise
defined in this Agreement shall have the meanings ascribed to such terms in
Section 1 hereof.
WHEREAS, upon consummation of the Securities Purchase and
Exchange Agreement, the Stockholders will own, respectively, beneficially and
of record, that number and type of the Company's Equity Securities indicated
opposite each Stockholder's name on Schedule A attached hereto; and
WHEREAS, the Company and the Stockholders desire to enter
into this Agreement for the purposes, among others, of (i) assuring continuity
in the ownership of the Company, (ii) limiting the manner and terms by which
Wilson's Stockholder Shares may be transferred and (iii) providing for the sale
of the Company under certain circumstances; and
WHEREAS, certain parties hereto executed and delivered an
Amended and Restated Stockholders Agreement dated as of December 21, 1994 (the
"Previous Stockholders Agreement"), and in connection with the Securities
Purchase and Exchange Agreement, the parties hereto desire to amend and restate
the Previous Stockholders Agreement and are entering into this Agreement for
that purpose; and
WHEREAS, the execution and delivery of this Agreement is a
condition to the closing of the transactions contemplated by the Securities
Purchase and Sale Agreement.
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree that the Previous Stockholders Agreement is amended and restated
in its entirety as follows:
1. Definitions. For purposes of this Agreement, the following
terms have the meanings set forth below.
"ABRY" has the meaning set forth in the preamble to this
Agreement.
"ABRY/CIP" has the meaning set forth in the preamble to this
Agreement.
"ABRY Stock" means (i) Shares (as that term is defined in the
Securities Purchase and Exchange Agreement), (ii) Common Stock issued or
issuable upon the conversion of any such Share, (iii) Common Stock issued or
issuable upon the conversion or exchange of any Common Stock described in
clause (ii) above or this clause (iii), (iv) Facility A Notes Conversion Stock
(as that term is defined in the Securities Purchase and Exchange Agreement),
and (v) Equity Securities of the Company issued or issuable with respect to any
Equity Securities referred to in any of clauses (i) through (iv) above or this
clause (v) by way of any stock dividend or stock split, or in connection with a
combination or exchange of shares, recapitalization, merger, consolidation,
reorganization or otherwise. As to any particular securities constituting ABRY
Stock, such securities shall continue to constitute ABRY Stock in the hands of
any permitted transferee thereof, but will cease to constitute ABRY Stock when
they have been disposed of in a Public Sale.
"ABRY Underlying Common Stock" means all ABRY Stock which is
Class A Common Stock. For purposes of this Agreement, any Person who holds any
ABRY Stock which is not Class A Common Stock will be deemed to be the Holder of
the Class A Common Stock obtainable upon the conversion, exercise or exchange
to the fullest extent possible of such ABRY Stock (including the conversion,
exercise or exchange of all other ABRY Stock directly or indirectly obtainable
upon any such conversion, exercise or exchange), without regard to any
restriction or limitation on any such conversion, exercise or exchange;
provided that no Holder of any Facility A Note, on or prior to the Maturity
Date of such Facility A Note, shall be deemed to be the Holder of any such
Class A Common Stock by reason of holding such Facility A Note.
"Additional Preferred Stock" means any additional shares of
preferred stock issued by the Company other than the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock.
"Affiliate" of a particular Person means any other Person
that directly or indirectly controls, is controlled by, or is under common
control with such first Person, and, with respect to an individual, such
individual's spouse and descendants (whether natural or adopted) and any trust
solely for the benefit of such individual and/or his or her spouse and/or
descendants. For purposes hereof, each of the Bank, the Bank Co-Investors and
the officers of the Bank shall be deemed
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<PAGE> 3
"Affiliates" of one another. For purposes hereof ABRY and ABRY/CIP shall be
deemed "Affiliates" of one another.
"Agreement" means this Agreement.
"Approved Sale"
(i) prior to a Put Default means:
the sale of the Company, in a single transaction or
a series of related transactions, to one or more Independent Third
Parties (a) pursuant to which such Independent Third Party or Parties
proposes to acquire all or substantially all of the outstanding
Stockholder Shares (whether by merger, consolidation,
recapitalization, reorganization, purchase of the outstanding Equity
Securities or otherwise) or all or substantially all of the
consolidated assets of the Company, (b) which has been approved by
affirmative vote or written consent of not less than two-thirds of the
members of the Board and by holders of a majority of the Underlying
Common Stock, and (c) pursuant to which all holders of Common Stock
and Underlying Common Stock will receive with respect thereto (whether
in such transaction(s) or, with respect to an asset sale, upon a
subsequent liquidation) the same form and amount (adjusted for any
applicable exercise price) of consideration per share of Common Stock
and Underlying Common Stock or, if any holders of any class of Common
Stock or Underlying Common Stock are given an option as to the form
and amount of consideration to be received, all holders of Common
Stock or Underlying Common Stock of such class are given the same
option; and
(ii) following a Put Default means:
the sale of the Company, in a single transaction or
a series of related transactions, to one or more Independent Third
Parties (a) pursuant to which such Independent Third Party or Parties
proposes to acquire all or substantially all of the outstanding
Stockholder Shares (whether by merger, consolidation,
recapitalization, reorganization, purchase of the outstanding Equity
Securities or otherwise) or all or substantially all of the
consolidated assets of the Company, (b) which has been approved by
holders of a majority of the ABRY Underlying Common Stock, and (c)
pursuant to which all holders of Common Stock and Underlying Common
Stock will receive with respect thereto (whether in such
transaction(s) or, with respect to an asset sale, upon a subsequent
liquidation) the same form and amount (adjusted for any applicable
exercise price) of consideration per share of Common Stock and
Underlying Common Stock or, if any holders of any class of Common
Stock or Underlying Common Stock are given an option as to the form
and amount of consideration to be received, all holders of Common
Stock or Underlying Common Stock of such class are given the same
option;
"Bank" has the meaning set forth in the Preamble to this Agreement.
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<PAGE> 4
"Bank Co-Investors" has the meaning set forth in the Preamble
to this Agreement.
"BFC" has the meaning set forth in the Preamble to this
Agreement.
"BFC Stock" means (i) Series A Preferred Stock held by BFC on
the date of this Agreement after giving effect to the "Redemptions" and the
"Reclassification" (as those terms are defined in the Securities Purchase and
Exchange Agreement), (ii) Class A Common Stock issued or issuable upon the
conversion of any Series A Preferred Stock described in clause (i) above, and
(iii) Equity Securities of the Company issued or issuable with respect to any
Equity Securities referred to in any of clauses (i) and (ii) above or this
clause (iii) by way of any stock dividend or stock split, or in connection with
a combination or exchange of shares, recapitalization, merger, consolidation,
reorganization or otherwise. As to any particular securities constituting BFC
Stock, such securities shall continue to constitute BFC Stock in the hands of
any permitted transferee thereof, but will cease to constitute BFC Stock when
they have been disposed of in a Public Sale.
"BFC Underlying Common Stock" means all BFC Stock which is
Class A Common Stock. For purposes of this Agreement, any Person who holds any
BFC Stock which is not Class A Common Stock will be deemed to be the Holder of
the Class A Common Stock obtainable upon the conversion, exercise or exchange
to the fullest extent possible of such BFC Stock (including the conversion,
exercise or exchange of all other BFC Stock directly or indirectly obtainable
upon any such conversion, exercise or exchange), without regard to any
restriction or limitation on any such conversion, exercise or exchange.
"Board" means the Board of Directors of the Company.
"BofA" has the meaning set forth in the Preamble to this
Agreement.
"BofA Stock" means (i) the BofA Warrants, (ii) Class B Common
Stock held by the BofA Co-Investors on the date hereof after giving effect to
the "Redemptions" and the "Reclassification" (as those terms are defined in the
Securities Purchase and Exchange Agreement), (iii) Class B Common Stock issued
or issuable upon the exercise of the BofA Warrants, (iv) Class A Common Stock
issued or issuable upon the conversion of Class B Common Stock described in
clause (ii) or clause (iii) above, and (v) Equity Securities of the Company
issued or issuable with respect to any Equity Securities referred to in any of
clauses (i) through (iv) above or this clause (v) by way of any stock dividend
or stock split, or in connection with a combination or exchange of shares,
recapitalization, merger, consolidation, reorganization or otherwise. As to any
particular securities constituting BofA Stock, such securities shall continue
to constitute BofA Stock in the hands of any permitted transferee thereof, but
will cease to constitute BofA Stock when they have been disposed of in a Public
Sale.
"BofA Underlying Common Stock" means all BofA Stock which is
Class A Common Stock. For purposes of this Agreement, any Person who holds any
BofA Stock which is not Class A Common Stock will be deemed to be the Holder of
the Class A Common Stock obtainable upon the conversion, exercise or exchange
to the fullest extent possible of such BofA Stock (including
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<PAGE> 5
the conversion, exercise or exchange of all other BofA Stock directly or
indirectly obtainable upon any such conversion, exercise or exchange), without
regard to any restriction or limitation on any such conversion, exercise or
exchange.
"BofA Warrants" means the warrants issued by the Company
pursuant to the Senior Subordinated Note and Warrant Purchase Agreement dated
October 1, 1993 among the Company, Citadel, the Bank and the BofA Co-Investors,
as amended and restated and in effect on the date hereof.
"Call" has the meaning set forth in Section 5.3 hereof.
"Call Closing" has the meaning set forth in Section 5.5
hereof.
"Call Price" has the meaning set forth in Section 5.2
hereof.
"Call Notice" has the meaning set forth in Section 5.3
hereof.
"Call Shares" has the meaning set forth in Section 5.3
hereof.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as amended and in effect on the date hereof
(immediately after the Fifth Amendment and Restatement thereof).
"Citadel" means Citadel Broadcasting Company, a Nevada
corporation and wholly owned Subsidiary of the Company.
"Class A Common Stock" means the voting Class A Common Stock
of the Company, par value $.001 per share.
"Class A Note Agreement" means the Amended and Restated Class
A Note Agreement dated as of the date hereof by and between Citadel and BFC, as
amended and in effect on the date hereof.
"Class B Common Stock" means the nonvoting Class B Common
Stock of the Company, par value $.001 per share.
"Class C Common Stock" means the nonvoting Class C Common
Stock of the Company, par value $.001 per share.
"Common Stock" means, collectively, the Company's Class A
Common Stock, Class B Common Stock and Class C Common Stock, and is sometimes
used to refer to any such Common Stock.
"Company" has the meaning set forth in the Preamble to this
Agreement.
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<PAGE> 6
"Company's First Notice" has the meaning set forth in Section
4.2 hereof.
"Consolidated Cash" means the sum of all cash, amounts in
deposit accounts and securities maturing within six months as shown on the
consolidated balance sheet of the Company prepared and dated as of the
appropriate Determination Date.
"Corporate Overhead" means during any period, the aggregate
of all compensation, traveling, aircraft, entertainment and automobile expenses
of personnel of the Company and Citadel and all other costs and expenses which
are not allocable or are not incurred directly in the operation of any of the
Stations, including, but not limited to (i) the management fee payable to ABRY
Partners, Inc. pursuant to the Management and Consulting Services Agreement
between Citadel and ABRY Partners, Inc., (ii) rent, and (iii) any legal
expenses and auditing fees. For purposes of determining Corporate Overhead (1)
all determinations shall be made with respect to the Company and on a
consolidated basis, (2) references to specific individuals shall be deemed to
include other individuals who succeed to the responsibilities to such
individuals, (3) the term "Station" shall include radio stations owned or
operated by the Company, Citadel or any other Subsidiary, or for which the
Company, Citadel or any other Subsidiary sells advertising, and (4) Corporate
Overhead shall be calculated for the 12-month period ending on the appropriate
Determination Date.
"CW" has the meaning set forth in the Preamble to this
Agreement.
"Date of Receipt" has the meaning set forth in Section 4.2
hereof.
"Debt" means the Company's consolidated indebtedness
(determined in accordance with GAAP consistently applied) as reflected on the
consolidated balance sheet of the Company dated as of the Determination Date.
"Demand Registration Notice" has the meaning set forth in
Section 5.2 hereof.
"Demand Registration" has the meaning set forth in Section
5.2 hereof.
"Determination Date" means (i) in the case of a Put, the last
day of the month immediately preceding the date of any Put Notice, (ii) in the
case of a Call, the last day of the month immediately preceding the date of any
Call Notice, and (iii) in the case of a Look-Back Event, the date of
consummation of the Transaction relating to the Look-Back Event.
"Election Period" has the meaning set forth in Section 3.1
hereof.
"Equity Securities" of any Person means (i) any capital
stock, partnership, membership, joint venture or other ownership or equity
interest, participation or securities (whether voting or non-voting, whether
preferred, common or otherwise, and including any stock appreciation,
contingent interest or similar right) and (ii) any option, warrant, security or
other right (including debt securities) directly or indirectly convertible into
or exercisable or exchangeable for,
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<PAGE> 7
or otherwise to acquire directly or indirectly, any stock, interest,
participation or security described in clause (i) above.
"Executive" has the meaning set forth in the preamble to this
Agreement.
"Family Group" means for any member of Management, such
member's spouse and descendants (whether natural or adopted) and any trust
solely for the benefit of such member and/or such member's spouse and/or
descendants.
"Facility A Note" has the meaning ascribed to such term in
the Securities Purchase and Exchange Agreement.
"Fair Market Value" means the fair market value on the
Determination Date of the Company's Common Stock outstanding on a Fully Diluted
Basis determined on a going concern basis and assuming a sale of 100% of the
Company's Common Stock on a Fully Diluted Basis between a willing buyer and a
willing seller and taking into account all relevant factors determinative of
value; provided, however, that in the case of a Look-Back Event, "Fair Market
Value" with respect to such Look-Back Event shall be determined in accordance
with Section 5.7 below. Unless otherwise agreed by the Company and the
Holder(s) who are then exercising, or are then (or in the case of a Look-Back
Event, were) subject to, a Repurchase Option, Fair Market Value shall be
determined by an investment banking firm reasonably acceptable to the Company
and the holders of a majority of the Investor Underlying Common Stock
exercising, or subject to, a Repurchase Option (the "Selection Majority
Holders"), which firm shall submit to the Company and the Holders a written
report setting forth such determination. If the Company and the Selection
Majority Holders are unable to agree on an investment banking firm within 5
business days after the Holders Meeting Date, a firm shall be selected by lot
from the top-tier New York-based investment banking firms (other than any
top-tier New York based investment banking firm with whom ABRY has had a
significant relationship or Oppenheimer or any of its Affiliates), after the
Company and the Selection Majority Holders have each eliminated one such firm.
The expenses of such selected firm will be borne by the Company, and the
determination of such firm will be final and binding upon all parties, except
that any Holder may rescind its exercise of a Put after the determination of
Fair Market Value following the exercise of such Put.
"FINOVA" has the meaning set forth in the Preamble to this
Agreement.
"Fully Diluted Basis" refers to the outstanding Common Stock,
assuming the conversion, exercise, exchange and acquisition to the fullest
extent possible of or under all Equity Securities which are directly or
indirectly convertible into, are directly or indirectly exercisable or
exchangeable for, or provide for the acquisition directly or indirectly of,
Common Stock, in each case without regard to any limitation or restriction on
any such conversion, exercise, exchange or acquisition, but in each case other
than (i) any such Equity Security for which the conversion, exercise, exchange
or acquisition price is greater than the fair market value at the time in
question of the Common Stock so issuable (i.e., not assuming the conversion,
exercise, exchange or
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<PAGE> 8
acquisition of any "out of the money" security) or (ii) the conversion of any
Facility A Note on or prior to the Maturity Date of such Facility A Note.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Holders" has the meaning set forth in Section 4.2 hereof.
"Holders Meeting Date" has the meaning set forth in Section
4.2 hereof.
"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Company's Common Stock on a Fully Diluted Basis (a "5% Owner"), who is not
controlling, controlled by or under common control with any such 5% Owner, and
who is not the spouse or descendent (by birth or adoption) of any such 5% Owner
or a trust for the benefit of such 5% Owner and/or any of such other Persons.
"Investor" and "Investors" have the meanings set forth in the
Preamble to this Agreement.
"Investor Stock" means (i) the BofA Warrants, (ii) Class B
Common Stock held by the BofA Co-Investors on the date hereof after giving
effect to the "Redemptions" and the "Reclassification" (as those terms are
defined in the Securities Purchase and Exchange Agreement), (iii) Class B
Common Stock issued or issuable upon the exercise of the BofA Warrants, (iv)
Class A Common Stock issued or issuable upon the conversion of Class B Common
Stock described in clause (ii) or clause (iii) above, (v) Series A Preferred
Stock held by BFC on the date hereof after giving effect to such Redemptions
and such Reclassification, (vi) Class A Common Stock issued or issuable upon
the conversion of any Series A Preferred Stock described in clause (v) above,
(vii) Series B Preferred Stock held by Oppenheimer on the date of this
Agreement after giving effect to such Redemptions and such Reclassification,
(viii) Class A Common Stock issued or issuable upon the conversion of any
Series B Preferred Stock described in clause (viii) above, (ix) the Shares (as
that term is defined in the Securities Purchase and Exchange Agreement), (x)
Common Stock issued or issuable upon the conversion of any such Share, (xi)
Common Stock issued or issuable upon the conversion or exchange of any Common
Stock described in clause (x) above or this clause (xi), (xii) Facility A Notes
Conversion Stock (as that term is defined in the Securities Purchase and
Exchange Agreement), (xiii) Equity Securities issued or issuable with respect
to any Equity Securities referred to in any of clauses (i) through (xii) above
or in this clause (xiii) by way of any stock dividend or stock split, or in
connection with a combination or exchange of shares, recapitalization, merger,
consolidation, reorganization or otherwise, and (xiv) for purposes of Section 4
only, (A) Class C Common Stock held by FINOVA on the date of this Agreement
after giving effect to such Redemptions and such Reclassification, (B) Common
Stock issued upon the conversion of Common Stock described in clause (A) above,
and (C) Equity Securities issued or issuable with respect to any Equity
Securities referred to in clause (A) or clause (B) above or in this clause (C)
by way of any stock dividend or stock split, or in connection with a
combination or exchange of shares, recapitalization, merger, consolidation,
reorganization or otherwise. As to any
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<PAGE> 9
particular securities constituting Investor Stock, such securities shall
continue to constitute Investor Stock in the hands of any permitted transferee
thereof, but will cease to constitute Investor Stock when they have been
disposed of in a Public Sale.
"Investor Underlying Common Stock" means all Investor Stock
which is Class A Common Stock. For purposes of this Agreement, any Person who
holds any Investor Stock which is not Class A Common Stock will be deemed to be
the Holder of the Class A Common Stock obtainable upon the conversion, exercise
or exchange to the fullest extent possible of such Investor Stock (including
the conversion, exercise or exchange of all other Investor Stock directly or
indirectly obtainable upon any such conversion, exercise or exchange), without
regard to any restriction or limitation on any such conversion, exercise or
exchange; provided that no Holder of any Facility A Note, on or prior to the
Maturity Date of such Facility A Note, shall be deemed to be the Holder of any
such Class A Common Stock by reason of holding such Facility A Note.
"Look-Back Call Price" has the meaning set forth in Section
5.7 hereof.
"Look-Back Event" has the meaning set forth in Section 5.7
hereof.
"Look-Back Fair Market Value" has the meaning set forth in
Section 5.7 hereof.
"Majority Bank Holders" means, at any time, holders of a
majority of the BofA Underlying Common Stock.
"Management" and "Managers" have the meanings set forth in
the preamble to this Agreement.
"Maturity Date" for any Facility A Note has the meaning set
forth in such Facility A Note.
"Offer Notice" has the meaning set forth in Section 3.2
hereof.
"Operating Cash Flow" means for any period, the consolidated
net income of the Company for such period:
(i) plus the sum of the following, to the extent deducted in
determining such net income for such period:
(a) losses from sales, transaction, exchanges and other
dispositions of property not in the ordinary course of
business;
(b) interest, fees or other charges paid or accrued on
indebtedness, including, without limitation, interest on
capitalized leases that is imputed in accordance with GAAP;
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<PAGE> 10
(c) depreciation and amortization of assets;
(d) income taxes which are accrued during such period;
(e) expenses incurred in connection with exchanges of
advertising time for non-cash consideration;
(f) non-cash compensation to employees of the Company; and
(g) extraordinary losses;
(ii) minus the sum of the following, to the extent included in
determining such net income for such period:
(a) revenue received in connection with exchanges of
advertising time for non-cash consideration;
(b) proceeds of any insurance;
(c) gains from sales, transactions, exchanges and other
dispositions of property not in the ordinary course of
business; and
(d) extraordinary gains.
For purposes of determining Operating Cash Flow, (1) all determinations shall
be made with respect to the Company on a consolidated basis, (2) Operating Cash
Flow shall be calculated for the 12-month period ending on the appropriate
Determination Date, and (3) any acquisitions or divestitures during such
12-month period shall be treated on a pro forma basis as though such
acquisition or divestiture, as the case may be, had occurred on the first day
of such 12-month period. Certain terms used in the foregoing definition but not
defined therein shall have the meaning assigned to such terms by GAAP.
"Oppenheimer" has the meaning set forth in the Preamble to this
Agreement.
"Ordinary Call" has the meaning set forth in Section 5.1
hereof.
"Ordinary Call Price" has the meaning set forth in Section 5.1
hereof.
"Ordinary Repurchase Price" means the sum of (a) the greater
of:
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(i) the sum of [8.0 x (OCF + CO)] + CC - D as of the
Determination Date, where:
OCF = Operating Cash Flow
CC = Consolidated Cash
CO = Corporate Overhead, and
D = Debt; and
(ii) the Fair Market Value of the Company, plus
(b) the exercise or conversion price, if any, payable upon
exercise of any options, warrants or other Equity Securities directly or
indirectly convertible into, exercisable, or exchangeable for or permitting the
acquisition of Common Stock which are outstanding as of the Determination Date
(assuming full conversion, exercise, exchange and acquisition as contemplated
by the definition of the term "Fully Diluted Basis").
For purposes of computing the Ordinary Repurchase Price for any Puts
pursuant to the penultimate sentence of Section 4.1, any Facility A Note which
is outstanding on the Determination Date but for which the Maturity Date is
prior to the date upon which the related Put Notice is given will be deemed not
to have been outstanding on the Determination Date but will be deemed instead
to have been converted into Preferred Stock immediately prior to such
Conversion Date, unless such Facility A Note was paid in full on or prior to
its Maturity Date (in which case such Facility A Note will be deemed to have
been outstanding on the Determination Date). In calculating the Ordinary
Repurchase Price, all accounting determinations shall be made in accordance
with GAAP consistently applied.
"Other Stockholders" has the meaning set forth in Section 3.2
hereof.
"Permitted Transfer" has the meaning set forth in Section 3.4
hereof.
"Permitted Transferees" has the meaning set forth in Section
3.4 hereof.
"Preferred Stock" means, collectively, the Company's Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Additional Preferred Stock, and is sometimes used to refer
to any of such Preferred Stock.
"Premium Repurchase Price" has the same meaning as the Ordinary
Repurchase Price, except that "9.0" shall be substituted for "8.0" in clause
(a)(i) of such definition.
"Process Agent" has the meaning set forth in Section 6.14
hereof.
"Pro Rata Share" has the meaning set forth in Section 3.2
hereof.
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"Public Sale" means any sale of Stockholder Shares (i) to the
public pursuant to an offering registered under the Securities Act or (ii)
following a Qualified Public Offering, to the public pursuant to the provisions
of Rule 144 under the Securities Act (or any similar provision then in force).
"Put" has the meaning set forth in Section 4.1 hereof.
"Put Closing" has the meaning set forth in Section 4.4 hereof.
"Put Default" has the meaning set forth in Section 4.7 hereof.
"Put Election Notice" has the meaning set forth in Section 4.3
hereof.
"Put Notice" has the meaning set forth in Section 4.1 hereof.
"Put Price" has the meaning set forth in Section 4.6 hereof.
"Put Shares" has the meaning set forth in Section 4.3 hereof.
"Qualified Public Offering" means the closing of the issuance
and sale of Common Stock in an underwritten public offering which is registered
pursuant to the Securities Act and which results in the receipt by the Company
of cash proceeds of at least $25,000,000 (net of applicable commissions,
discounts and expenses).
"Registration Agreement" means the Third Amended and Restated
Registration Rights Agreement of even date herewith by and among the Company,
the Investors and certain other parties thereto, as in effect from time to
time.
"Repurchase" means the repurchase of any of the Equity
Securities of any Investor pursuant to a Repurchase Option.
"Repurchase Fraction" means a fraction, the numerator of which
is the number of shares of Underlying Common Stock to be repurchased pursuant
to a Repurchase Option and the denominator of which is the total number of
shares of Common Stock on a Fully Diluted Basis outstanding as of the
Determination Date.
"Repurchase Majority Holders" means, at any time, any of the
(a) holders of a majority of the BFC Underlying Common Stock, (b) holders of a
majority of the ABRY Underlying Common Stock then in existence and (c) the
Majority Bank Holders.
"Repurchase Notice" means a Put Notice or a Call Notice.
"Repurchase Option" means a Put or a Call.
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"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Purchase and Exchange Agreement" means that certain
Securities Purchase and Exchange Agreement dated as of the date hereof by and
among the Company and the Investors, as in effect from time to time.
"Senior Credit Agreement" means the Loan Agreement by and
between Citadel and FINOVA (f/k/a Greyhound Financial Corporation) dated as of
May 12, 1994, as amended and in effect on the date hereof, as the same may be
further amended from time to time in accordance with the Voting Agreement, or
any other senior debt facility, whether with FINOVA and/or one or more other
lenders, which represents the senior secured debt of Citadel or the Company and
is entered into in accordance with the Voting Agreement.
"Senior Lender" means FINOVA or any other senior lender of the
Company or Citadel pursuant to the Senior Credit Agreement.
"Series A Preferred Stock" means the Series A Convertible
Preferred Stock of the Company, par value $.001 per share.
"Series B Preferred Stock" means the Series B Convertible
Preferred Stock of the Company, par value $.001 per share.
"Series C Preferred Stock" means the Series C Convertible
Preferred Stock of the Company, par value $.001 per share.
"Series D Preferred Stock" means the Series D Convertible
Preferred Stock of the Company, par value $.001 per share.
"Special Call" has the meaning set forth in Section 5.2 hereof.
"Special Call Price" has the meaning set forth in Section 5.2
hereof.
"Stockholder" and "Stockholders" have the meanings set forth in
the Preamble to this Agreement.
"Stockholder Shares" means (i) Investor Stock described in
clauses (i) through (xii) of the definition of the term "Investor Stock," (ii)
Common Stock held by Management on the date hereof, (iii) Common Stock held by
FINOVA on the date hereof, (iv) Common Stock issued or issuable upon the
conversion of Common Stock described in clause (iii) above, (v) options or
other rights to acquire Common Stock issued prior to, on or after the date of
this Agreement to Management, (vi) Common Stock issued or issuable upon the
exercise of any option or other right described in clause (v) above, and (vii)
Equity Securities of the Company issued or issuable with respect to any Equity
Securities referred to in any of clauses (i) through (vi) above or in this
clause (vii) by way of any stock dividend or stock split, or in connection with
a combination or exchange
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of shares, recapitalization, merger, consolidation, reorganization or
otherwise. As to any particular securities constituting Stockholder Shares,
such securities will continue to constitute Stockholder Shares in the hands of
any Permitted Transferee thereof, but will cease to constitute Stockholder
Shares when they have been disposed of in a Public Sale.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (a) if a corporation, a majority of the total voting
power of Equity Securities entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of the Person or a combination thereof,
or (b) if a partnership, limited liability company, association or other
business entity, a majority of the partnership or other Equity Securities
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes of this Agreement, a Person or Persons will be deemed to have a
majority ownership interest in a partnership, limited liability company,
association or other business entity if such Person or Persons are allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or control the managing director or general
partner of such Partnership, association or other business entity.
"Transaction" has the meaning set forth in Section 5.7
hereof.
"Transfer" means to sell, transfer, assign, pledge,
hypothecate or otherwise dispose of any interest in any Stockholder Shares.
"Underlying Common Stock" means all Stockholder Shares which
are Class A Common Stock. For purposes of this Agreement, any Person who holds
any Stockholder Shares which are not Class A Common Stock will be deemed to be
the Holder of the Class A Common Stock obtainable upon the conversion, exercise
or exchange to the fullest extent possible of such Stockholder Shares
(including the conversion, exercise or exchange of all other Stockholder Shares
directly or indirectly obtainable upon any such conversion, exercise or
exchange), without regard to any restriction or limitation on any such
conversion, exercise or exchange; provided that no Holder of any Facility A
Note, on or prior to the Maturity Date of such Facility A Note, shall be deemed
to be the Holder of any such Class A Common Stock by reason of holding such
Facility A Note.
"Voting Agreement" means the Amended and Restated Voting
Agreement by and among the Company, the Investors, Wilson and certain other
parties thereto, as in effect from time to time.
"Wilson" has the meaning set forth in the Preamble to this
Agreement.
"Wilson Employment Agreement" means the Employment Agreement
by and among the Company, Citadel and the Executive dated as of the date
hereof.
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<PAGE> 15
2. Limited Preemptive Rights.
2.1 First Refusal Rights. Prior to the completion of a
Qualified Public Offering, if the Company or any of its Subsidiaries authorizes
the issuance or sale of any Equity Securities of the Company or such
Subsidiary, the Company shall first deliver a written notice to each holder of
Investor Underlying Common Stock and Wilson (i) describing in reasonable detail
the Equity Securities being offered, the purchase price thereof, the payment
and other terms of purchase thereof and (ii) offering to sell to such holder a
portion of such Equity Securities equal to the quotient determined by dividing
(1) the number of shares of Investor Underlying Common Stock, or, in the case
of Wilson, Common Stock, held by such holder by (2) the total number of shares
of Investor Underlying Common Stock and the number of shares of Common Stock
held by Wilson. Wilson and each holder of Investor Underlying Common Stock (or
an Affiliate of any such holder designated by such holder), shall be entitled
to purchase such Equity Securities at the price most favorable to a purchaser
thereof and on the terms most favorable to a purchaser thereof as such Equity
Securities are to be offered to any other Person; provided that, at the request
of any holder of Investor Underlying Common Stock, the Company shall offer to
such holder Equity Securities which have no voting rights and are convertible
into voting securities on the same terms as the Class B Common Stock or the
Class C Common Stock is convertible into Class A Common Stock but which are
otherwise identical (other than for any changes required to avoid a "Regulatory
Problem" as such term is defined in the Certificate of Incorporation) to the
Equity Securities being offered (or, if the Equity Securities to be offered are
nonvoting but convertible into or exercisable or exchangeable for voting
securities, the Company shall offer to any such holder Equity Securities which
are convertible into voting securities on the same terms as the Class B Common
Stock or Class C Common Stock, as applicable, is convertible into Class A
Common Stock). The purchase price for all Equity Securities offered to Wilson
and the holders of Investor Underlying Common Stock shall be payable in cash
or, to the extent otherwise required hereunder, notes issued by such offerees.
2.2 Exercise of Rights. In order to exercise its purchase
rights hereunder, a holder of Investor Underlying Common Stock or Wilson, as
the case may be, must deliver a written notice to the Company within 15 days
after receipt of written notice from the Company, describing such Person's
election hereunder to purchase all or any portion of the Equity Securities so
offered to such Person. If all of the Equity Securities offered to the holders
of Investor Underlying Common Stock and Wilson are not fully subscribed by such
Persons, the remaining Equity Securities shall be reoffered by the Company to
the Persons purchasing their full allotment upon the terms set forth in this
Section 2, except that any such Person who wishes to purchase any of the
remaining Equity Securities must notify the Company of such Person's intention
to exercise his or its purchase rights within five days after receipt of such
reoffer. The closing of the purchases and sales by the Persons electing to
purchase such Equity Securities shall occur at least 10 days after the
completion of such 15-day (or, if applicable, such 5-day) response period.
Upon the expiration of the offering periods described above
and for a period of 90 days following such expiration, the Company shall be
entitled to sell the Equity Securities which the holders of Investor Underlying
Common Stock and Wilson have not elected to purchase on terms
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<PAGE> 16
and conditions no more favorable to the purchasers thereof than those offered
to such Persons. Any Equity Securities offered or sold by the Company after
such 90-day period must first be reoffered to Wilson and the holders of
Investor Underlying Common Stock pursuant to the terms of this Section 2.
2.3 Termination of Preemptive Rights. The rights under this
Section 2 shall terminate upon the consummation of a Qualified Public Offering.
2.4 Exceptions. The foregoing provisions of this Section 2
shall not apply to (i) any issuance of Class A Common Stock or options
exercisable for shares of Class A Common Stock to employees or directors of the
Company or any Subsidiary of the Company pursuant to employee compensation
plans in effect as of the date hereof or approved by the Company's Board of
Directors in accordance with the Voting Agreement, (ii) any issuance of Common
Stock upon conversion or exchange of any other Common Stock, (iii) any issuance
of Common Stock upon the conversion of any Preferred Stock or the exercise of
any BofA Warrant, (iv) any issuance of Common Stock pursuant to a public
offering registered under the Securities Act, or (v) any issuance of any
Facility A Note or any issuance of Preferred Stock upon the conversion of any
Facility A Note, or (vi) any issuance of Preferred Stock upon the conversion of
any other Preferred Stock.
3. Restrictions on Transfers. All Transfers of Stockholder
Shares shall be subject to the terms and conditions of this Section 3.
3.1 Transfer of Wilson's Stockholder Shares. Wilson will not
Transfer any interest in any Stockholder Shares except pursuant to the
provisions of this Section 3. Wilson agrees not to consummate any Transfer
(other than a Permitted Transfer or a Transfer permitted by Section 3.8) until
30 days after the delivery to the Company and the other Stockholders of an
Offer Notice unless the parties to the Transfer have been finally determined
pursuant to this Section 3 prior to the expiration of such 30-day period (the
"Election Period").
3.2 First Offer Right. At least 30 days prior to making any
Transfer of any Stockholder Shares (other than a Permitted Transfer or a
Transfer permitted by Section 3.8), Wilson will deliver a written notice (the
"Offer Notice") to the Company and the holders of Investor Underlying Common
Stock (the "Other Stockholders"). The Offer Notice will disclose in reasonable
detail the proposed number of Stockholder Shares to be transferred and the
proposed terms and conditions of the Transfer. First, the Company may elect to
purchase all, but not less than all, of the Stockholder Shares specified in the
Offer Notice at the price and on the terms specified therein by delivering
written notice of such election to the Executive and the Other Stockholders as
soon as practicable, but in any event within 10 days after the Company's
receipt of the Offer Notice. If the Company has not elected to purchase all of
the Stockholder Shares within such 10-day period, each Other Stockholder may
elect to purchase (directly or through an Affiliate designated by such Other
Stockholder) all, but not less than all, of such Other Stockholder's Pro Rata
Share of the Stockholder Shares specified in the Offer Notice at the price and
on the terms specified therein by delivering written notice of such election to
the Executive as soon as practicable, but in any event within 20 days after
delivery of the Offer Notice. Any Stockholder Shares not elected to be
purchased by the
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<PAGE> 17
end of such 20-day period will be reoffered for the 10-day period prior to the
expiration of the Election Period by Wilson on a pro rata basis to the Other
Stockholders who have elected to purchase their respective Pro Rata Shares. If
the Company or any Other Stockholders have so elected to purchase Stockholder
Shares from Wilson, the Transfer of such shares will be consummated as soon as
practicable after the delivery of the election notices, but in any event within
15 days after the expiration of the Election Period. In the event that the
Company and the Other Stockholders have not elected to purchase all of the
Stockholder Shares being offered, Wilson may, within 90 days after the
expiration of the Election Period and subject to the provisions of Section 3.3,
Transfer to one or more third parties at a price no less than the price per
share specified in the Offer Notice and on other terms no more favorable to the
transferees than offered to the Company and the Other Stockholders in the Offer
Notice the number of such Stockholder Shares which the Company and the Other
Stockholders have not elected to purchase. The purchase price specified in any
Offer Notice will be payable solely in cash at the closing of the transaction
or in installments over time, as specified pursuant to the Offer Notice. No
Stockholder Shares may be pledged, hypothecated or in any other manner
encumbered by Wilson without the prior written consent of the holders of a
majority of the Investor Underlying Common Stock, which consent may be withheld
in each such holder's sole discretion. Each Other Stockholder's "Pro Rata
Shares" will be the percentage which reflects such Other Stockholder's
proportionate ownership of all Investor Underlying Common Stock.
3.3 Participation Rights. The Other Stockholders who have not
elected to purchase any of the Stockholder Shares specified in the Offer Notice
may elect to participate in the contemplated Transfer by Wilson by delivering
written notice to the Executive within 30 days after delivery of the Offer
Notice. If any Other Stockholders have so elected to participate in such
Transfer, each of Wilson and such Other Stockholders will be entitled to sell
in the contemplated Transfer, at the same price and on the same terms, Equity
Securities which are, or which are convertible into or exercisable for, shares
of Common Stock and Investor Underlying Common Stock in a quantity equal to the
product of (a) the quotient determined by dividing the number of shares of
Investor Underlying Common Stock and Common Stock, without duplication, held by
such Stockholder by the aggregate number of shares of Investor Underlying
Common Stock and Common Stock held by Wilson and the Other Stockholders
(including the number of shares of Investor Underlying Common Stock held by
such Stockholder) participating in such sale and (b) the sum of the number of
shares of Common Stock and the number of shares of Underlying Common Stock to
be sold in the contemplated Transfer. The Executive will use reasonable efforts
to obtain the agreement of the prospective transferee to the participation of
the Other Stockholders in any contemplated Transfer and to the inclusion of a
transfer of Investor Stock which is not Class A Common Stock in the
contemplated Transfer, and Wilson will not Transfer any of such Stockholder
Shares to the prospective transferee if the prospective transferee declines to
allow the participation of the Other Stockholders or the inclusion of the
Investor Stock which is not Class A Common Stock. If any portion of the BofA
Warrants is included in any Transfer of Stockholder Shares under this Section
3.3, the purchase price for the BofA Warrants shall be equal to the full
purchase price determined hereunder for the Stockholder Shares covered by the
portion of the BofA Warrants to be transferred, reduced by the aggregate
exercise price for such shares.
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<PAGE> 18
3.4 Permitted Transferees. The restrictions contained in
Section 3.1 through 3.3 apply only with respect to any Transfer of Stockholder
Shares by Wilson and do not apply to any Transfer of Stockholder Shares by
Wilson (i) pursuant to a Public Sale or Section 6 hereof, or (ii) pursuant to
applicable laws of descent and distribution or among Wilson's Family Group or
as contemplated by Section 3.8 hereof. Transfers of the type described in
clauses (i) and (ii) above and Transfers by any Stockholder other than Wilson
are referred to collectively herein as "Permitted Transfers" and individually
as a "Permitted Transfer." Prior to any such Permitted Transfer (other than in
a Public Sale), the transferees of such Stockholder Shares will agree in
writing, in form and substance reasonably acceptable to the Company and
delivered to the Company and each of the holders of Investor Underlying Common
Stock, to be bound by the provisions of this Agreement affecting such
Transferring Stockholder and such Stockholder Shares so Transferred. The
restrictions contained in this Section 3 will continue to be applicable to the
Stockholder Shares and to the transferee after any Permitted Transfer to the
extent applicable to such Stockholder Shares and the Transferring Stockholder
prior to such Transfer. Without limiting the foregoing, transferees who
receive Stockholder Shares in accordance with this Section 3.4 shall be deemed
a "Stockholder" (and an "Investor," if the Transferring Stockholder is an
Investor, or a member of "Management," if the Transferring Stockholder is a
member of Management, or a or a "BofA Co-Investor" if the Transferring
Stockholder is a BofA Co-Investor and so on) for purposes of this Agreement and
are referred to collectively herein as "Permitted Transferees".
3.5 Legend. Each certificate for Stockholder Shares will be
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THE SECOND AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT DATED AS OF JUNE 28, 1996, BY
AND AMONG THE ISSUER (THE "COMPANY") AND CERTAIN OF ITS
STOCKHOLDERS, AND THE COMPANY RESERVES THE RIGHT TO REFUSE
THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER
HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST."
3.6 Termination of Restrictions. The provisions of this
Section 3 will terminate upon the consummation of a Qualified Public Offering.
3.7 Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement will be void, and the
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<PAGE> 19
Company will not record such Transfer on its books or treat any purported
transferee of such Stockholder Shares as the owner of such shares for any
purpose.
3.8 Permitted Pledge. Notwithstanding the provisions of this
Section 3, Wilson may pledge any shares of Wilson's Common Stock (a) to the
Company to secure indebtedness to Company incurred by Wilson in connection with
the purchase of Common Stock by Wilson from Company and (b) to a reputable
financial institution to secure a loan to Wilson not to exceed $500,000 in
principal amount at any time outstanding; provided, however, that any such
pledge is made expressly subject to the terms, restrictions and conditions
contained in this Agreement and the pledgee executes and delivers to the
holders of Investor Underlying Common Stock prior thereto the agreement
required pursuant to Section 3.4 above.
4. Put Arrangements.
4.1 Basic Put Rights. At any time beginning August 1, 2000,
any of the Repurchase Majority Holders shall have the right to require the
Company to repurchase all or any portion of the Preferred Stock or BofA
Warrants held by such Investor(s) (the "Put") at the Put Price by delivering a
written notice to the Company specifying the quantity of such securities to be
purchased (the "Put Notice"). Subject to Section 4.3 hereof (regarding Puts
deemed to have been exercised as of the Date of Receipt), other than a Put
exercised by the holders of a majority of the ABRY Underlying Common Stock, no
additional Put(s) shall be exercised within the one-year period beginning on
the Date of Receipt. For so long as the Bank or any Affiliate thereof
(excluding from the definition of "Affiliate" for such purposes the last two
sentences of such definition) holds the BofA Warrants, the BofA Co-Investors
and the Class B Common Stock held by the BofA Co- Investors shall be subject to
the provisions of this Section 4 and the Class B Common Stock held by the BofA
Co-Investors shall be treated the same as the BofA Warrants held by the Bank or
such Affiliate for all purposes of this Section 4, except that the reduction
described in clause (b) of Section 4.6 shall not apply to such Class B Common
Stock. Notwithstanding the foregoing, if at any time (a) ABRY delivers written
notice to the Company requesting the Company to terminate the Executive's
employment pursuant to the Wilson Employment Agreement and (b) the Company
fails within 20 business days to terminate the Executive's employment in
accordance with the terms thereof, then ABRY and ABRY/CIP shall be entitled to
exercise a Put. Furthermore, in the event of a Put pursuant to the immediately
preceding sentence, (i) notwithstanding the provisions of Section 4(g) of the
Securities Purchase and Exchange Agreement, neither ABRY nor ABRY/CIP shall
have any further obligation to make any Facility A Advance and (ii)
notwithstanding the provisions of any Facility A Note, none of the Facility A
Notes thereafter shall be converted into Preferred Stock.
4.2 The Company's First Notice. Within five business days
after receipt (the "Date of Receipt" for purposes of this Section 4) of the Put
Notice, the Company shall deliver a written notice (the "Company's First
Notice") to all holders of Investor Stock which is Preferred Stock, a BofA
Warrant or held by FINOVA (with respect to such Put, the "Eligible Holders")
informing them of the receipt of the Put Notice, the Date of Receipt, the
quantity of Investor Stock requested to be purchased pursuant to the Put
Notice, the number of shares of Investor Underlying
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Common Stock then existing with respect to outstanding shares of Preferred
Stock, BofA Warrants and shares held by FINOVA and number of shares of Common
Stock on a Fully Diluted Basis in existence at the close of business on the Date
of Receipt. The Company's First Notice will also specify a place, date and time
for a meeting of all Eligible Holders who deliver a Put Notice and all Eligible
Holders who deliver a Put Election Notice pursuant to Section 4.3 (collectively,
the "Put Holders") to participate in the selection of an investment banking firm
for purposes of determining Fair Market Value, which date (the "Holders Meeting
Date") shall not be less than five business days nor more than 30 days after the
Date of Receipt.
4.3 Put Election. Within 10 business days after delivery of
the Company's First Notice, any Eligible Holder who desires to Put any
Preferred Stock, BofA Warrants or Investor Stock which is held by FINOVA shall
deliver written notice of such election to the Company indicating the number,
class and type of such Equity Securities such Eligible Holder elects to sell
(the "Put Election Notice"). By timely delivery of such Put Election Notice,
the Eligible Holder shall be deemed for all purposes of this Section 4 to have
exercised a Put as of the Date of Receipt of the Put Notice giving rise to the
Company's First Notice. All shares of Preferred Stock, BofA Warrants or
Investor Stock which is held by FINOVA with respect to which a Put has been
exercised are referred to herein collectively as the "Put Shares."
4.4 Put Closing. Upon the delivery of the Put Notice and all
Put Election Notices, the Company and the Put Holders shall in good faith
promptly determine the Put Price as provided in this Agreement, and subject to
the provisions hereof, within 10 days after the determination of the Put Price,
the Company will purchase and each Put Holder will sell the number of such Put
Holder's Put Shares specified in such Put Holder's Put Notice or Put Election
Notice at a time and place mutually agreeable to the Company and the Selection
Majority Holders (the "Put Closing").
4.5 Payment of Put Price. At the Put Closing, each Put Holder
shall deliver to the Company certificates representing such Put Holder's Put
Shares to be Repurchased by the Company and the Company shall deliver to such
Put Holder the Put Price for such Put Shares by cashier's or certified check
payable to such Put Holder or by wire transfer of immediately available funds
to an account designated by such Put Holder to the extent any such Repurchase
for cash is not prohibited (either directly or by prohibition of distributions
from Citadel to the Company) by (i) the provisions of applicable state law,
(ii) the provisions of the Senior Credit Agreement, the Class A Note Agreement
or the Voting Agreement or (iii) the terms and provisions of any refinancing of
the principal amount outstanding pursuant to the Senior Credit Agreement at the
time of such refinancing and the note(s) issued pursuant to the Senior Credit
Agreement at the time of such refinancing, to the extent any such refinancing
does not increase the principal amount which would otherwise then be
outstanding under the Senior Credit Agreement and the related note(s) by more
than $500,000; provided that such Put Holder shall be entitled to rescind any
portion of the exercised Put if any portion of the Put Price for such Put
Holder's Put Shares is not paid in cash during the 10- day period described in
Section 4.4. The Company agrees to (x) use best efforts, and to cause Citadel
to use best efforts, to request after the exercise of a Put that the Senior
Lender, the lenders under the Class A Note Agreement, and any lender under any
refinancing permitted pursuant to clause (iii) in the immediately preceding
sentence, allow the Company to pay the Put Price for all
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<PAGE> 21
Put Shares in full (and allow Citadel to make distributions to the Company for
said purpose) within 10 days after determination of the Put Price. If the
Company is not able to Repurchase all of the Put Shares, the Company shall
Repurchase the maximum number of Put Shares that it has the funds and is legally
entitled to Repurchase, pro rata from each Put Holder on the basis of the number
of shares of Underlying Common Stock held by each Put Holder. At any time
thereafter when additional funds become actually and legally available to the
Company for the Repurchase of its capital stock, such funds will immediately be
used to purchase the balance of the Put Shares (or as much of such balance as
may be Repurchased with such available funds, allocated as set forth in the
immediately preceding sentence), provided, however, that (a) with respect to any
portion of the Put Price to be paid within one year after the Date of Receipt,
the price to be paid for Put Shares shall be increased by interest accrued on
such amount, from and including the Date of Receipt through and including the
date such price is paid, at the Prime Rate of interest as published in the
"Money Rates" Section of the Wall Street Journal from time to time and (b) with
respect to any portion of the Put Price to be paid at any time after one year
after the Date of Receipt, the price to be paid for Put Shares shall be the
greater of the Put Price determined in connection with the original
Determination Date and the Put Price which would have been payable if the
Ordinary Repurchase Price was determined as of the last day of the Company's
fiscal quarter most recently ended prior to or upon the date when such
additional funds became actually and legally available for such Repurchase.
4.6 Determination of Put Price. Subject to Section 4.8 below,
the "Put Price" for shares of the Preferred Stock, BofA Warrants or shares of
Investor Stock held by FINOVA to be repurchased shall mean the sum of (a) the
product of (i) the Ordinary Repurchase Price multiplied by (ii) the Repurchase
Fraction, less (b) in the case of any BofA Warrants, the exercise price, if
any, payable upon the exercise of such BofA Warrant.
4.7 Put Default. In the event of the failure of the Company
within 180 days of the Company's receipt of the Put Notice to pay in full the
Put Price for all ABRY Stock pursuant to a Put with respect to the ABRY Stock
(a "Put Default"), the holders of a majority of the ABRY Underlying Common
Stock shall have certain affirmative rights in connection with an Approved Sale
as set forth in Section 6 hereof.
4.8 Termination of Put Rights. The rights to exercise a Put
hereunder shall terminate upon the consummation of a Qualified Public Offering.
5. Call Options.
5.1 Ordinary Call. At any time beginning August 1, 2000 the
Company may, at its option (the "Ordinary Call"), require all holders of
Preferred Stock and BofA Warrants to sell to the Company all, but not less than
all, of the Preferred Stock and BofA Warrants held by such holders at the
Ordinary Call Price. Subject to Section 5.7 below, the "Ordinary Call Price"
for shares of Preferred Stock or BofA Warrants to be Repurchased pursuant to
the Ordinary Call shall be sum of (a) the product of (i) the Ordinary
Repurchase Price multiplied by (ii) the Repurchase Fraction, less (b) in the
case of any BofA Warrants, the exercise price, if any, payable upon the
exercise of such BofA Warrants. For so long as the Bank or any Affiliate
thereof (excluding from
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the definition of "Affiliate" for such purposes the last two sentences of such
definition) holds the BofA Warrants, the BofA Co-Investors and the Class B
Common Stock held by the BofA Co-Investors shall be subject to the provisions of
this Section 5 and the Class B Common Stock held by the BofA Co-Investors shall
be treated the same as BofA Warrants held by the Bank or such Affiliate for all
purposes of this Section 5, except that the reductions described in clause (b)
above and clause (b) of Section 5.2 shall not apply to such Class B Common
Stock.
5.2 Special Call. Upon receipt of notice (the "Demand
Registration Notice") of a demand for registration of Investor Underlying
Common Stock pursuant to Section 2 of the Registration Agreement (a "Demand
Registration"), the Company may, at its option (the "Special Call"), require
the party or parties requiring such Demand Registration to sell to the Company
all, but not less than all, of the Investor Underlying Common Stock identified
in the Demand Registration Notice as the Investor Underlying Common Stock to be
registered pursuant to such Demand Registration, at the Special Call Price. The
"Special Call Price" for shares of Investor Underlying Common Stock to be
repurchased pursuant to the Special Call shall be sum of (a) the product of (i)
the Premium Repurchase Price multiplied by (ii) the Repurchase Fraction, less
(b) in the case of any BofA Warrants, the exercise price, if any, payable upon
the exercise of such BofA Warrants. The term "Call Price" shall mean the
Ordinary Call Price or the Special Call Price, as the case may be.
5.3 Call Procedure. If the Company elects to exercise the
Ordinary Call or the Special Call (each, a "Call"), the Company shall deliver
written notice (the "Call Notice") of its exercise of the Call to each holder
of Investor Underlying Common Stock. The "Call Holders" refers to the Persons
which are subject to any particular Call. In the case of the Special Call, the
Call Notice shall be delivered to each Call Holder no later than five business
days after the Company's receipt of the Demand Registration Notice. The Call
Notice shall indicate whether the Call being exercised is an Ordinary Call or a
Special Call, the quantity of Investor Underlying Common Stock subject to the
Call (collectively, the "Call Shares"), the number of shares of Investor
Underlying Common Stock then existing with respect to the Call Shares and the
number of shares of Common Stock on a Fully Diluted Basis in existence at the
close of business on the date of the Call Notice. The Call Notice shall also
specify a Call Holders Meeting Date (which shall not be less than 10 business
days after the date of the Call Notice) for a meeting of the Call Holders to
participate in the selection of an investment banking firm for purposes of
determining Fair Market Value.
5.4 Call Election. Within 10 business days after delivery of
the Call Notice, any Holder of Investor Underlying Common Stock who desires to
participate in the Special Call shall deliver written notice of such election
to the Company (the "Call Election Notice"). By timely delivery of such Call
Election Notice, the Holder shall be deemed for all purposes of this Section 5
to be subject to such Special Call as if such Holder had been the party or one
of the parties requiring the applicable Demand Registration.
5.5 Call Closing. Upon delivery of the Call Notice, the
Company and the Call Holders shall in good faith promptly determine the Call
Price and in not less than 10 nor more than 30 days after determination of the
Call Price, the Company shall purchase and each Call Holder shall
-22-
<PAGE> 23
sell such Call Holder's Call Shares at a time and place mutually agreeable to
the Company and the Selection Majority Holders (the "Call Closing").
5.6 Payment of Call Price. At the Call Closing, each Call
Holder shall deliver to the Company certificates representing the Call Holder's
Call Shares to be Repurchased by the Company and the Company shall deliver to
the Call Holder the Call Price for such Call Shares by cashier's or certified
check payable to the Call Holder or by wire transfer of immediately available
funds to an account designated by the Call Holder. Should the Company for any
reason not deliver the Call Price to any Call Holder within 10 days after
determination of the Call Price, the Call shall be null and void as to such
Call Holder.
5.7 Look-Back Provisions. If within one year following the
Call Closing, (a) there is a Change of Control or a public offering of any of
the Company's Equity Securities registered under the Securities Act (each, a
"Transaction"), or the Company takes any actions intended to result in a Change
of Control or a public offering (for example, entering into a letter of intent
or negotiations with a potential purchaser of the Company's assets or capital
stock, or retaining an investment banking firm for purposes of a public
offering) (a "Look-Back Event") and (b) the Fair Market Value determined by or
in relation to any such Transaction (including for this purpose (x) the payment
of the Call Price to the Call Holders, and (y) the payment of any Put Price by
the Company and the aggregate fair market value of all dividends and
distributions declared or paid by the Company to its stockholders from the
Determination Date of the Call Price to and including the date of the
consummation of such Transaction) (the "Look-Back Fair Market Value") exceeds
the Fair Market Value used in the determination of the Call Price for such
exercise of the Call, the Call Holders shall be entitled to receive the benefit
of such higher valuation for the Call Shares sold pursuant to the Call. The
Call Price of the Call Shares sold pursuant to the Call shall be redetermined
by substituting the Look-Back Fair Market Value for the Fair Market Value
originally used in determination of the Call Price for such exercise of the
Call (the "Look-Back Call Price"). The excess, if any, of (i) the Look-Back
Call Price over (ii) the Call Price received by the Holders upon exercise of
the Call shall be paid to Call Holders who had previously sold securities to
the Company pursuant to such Call immediately upon consummation of any such
Transaction.
5.8 Voidability of the Ordinary Call. Notwithstanding any
other provision of this Agreement, the Ordinary Call shall become null and void
with respect to any Call Shares upon (a) the conversion to Common Stock of any
such Call Shares which are shares of Preferred Stock, or (b) the exercise of
any Call Shares which are BofA Warrants, and the Ordinary Call shall be null
and void with respect to any Investor Underlying Common Stock which is issued
upon such conversion (and shall be null and void with respect to all Class B
Common Stock held by the BofA Co-Investors, in the case of an exercise
described in clause (b) above).
5.9 Termination of Call Rights. The Company's rights to
exercise any Call hereunder shall terminate upon the consummation of a
Qualified Public Offering.
-23-
<PAGE> 24
6. Sale of the Company.
6.1 In the event of an Approved Sale, each Stockholder agrees
to (i) consent to and raise no objections against the Approved Sale or the
process pursuant to which the Approved Sale was arranged, (ii) waive any
dissenter's rights and other similar rights, and (iii) sell its Stockholder
Shares, if the Approved Sale is structured as a sale of Equity Securities, on
the terms and conditions of the Approved Sale. Each Stockholder will take all
commercially reasonable actions as directed by the Board (or, following a Put
Default, as directed by holders of a majority of the ABRY Underlying Common
Stock) in connection with the consummation of any Approved Sale, including
without limitation executing the applicable purchase agreement and granting
identical indemnification rights; provided, that the liability of each
Stockholder shall be no greater than the dollar amount of the proceeds received
by such Stockholder in connection with such Approved Sale. Subject to the
proviso in the immediately preceding sentence, each Stockholder required to
make indemnification payments in connection with any Approved Sale shall have a
right to recover from all the other Stockholders to the extent that the amount
required to be paid by such Stockholder was disproportionate to the proportion
of the Common Stock or Underlying Common Stock (without duplication) held by
such Stockholder as compared to the total Common Stock on a Fully Diluted Basis
immediately prior to the consummation of such Approved Sale.
6.2 If the Company or the holders of the Company's securities
enter into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) under the Securities Act may be available with respect to
such negotiation or transaction (including a merger, consolidation or other
reorganization), the Stockholders who are not accredited investors (as such
term is defined in Rule 501) will, at the request of the Company, appoint a
purchaser representative (as such term is defined in Rule 501) reasonably
acceptable to the Company. If any Stockholder appoints a purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Stockholder declines to appoint the
purchaser representative designated by the Company such holder will appoint
another purchaser representative (reasonably acceptable to the Company), and
such holder will be responsible for the fees of the purchaser representative so
appointed.
6.3 All Stockholders will bear their pro rata share (based,
without duplication, upon the number of shares of Common Stock on a Fully
Diluted Basis immediately prior to the consummation of such Approved Sale) of
the reasonable costs of any sale of Stockholder Shares pursuant to an Approved
Sale to the extent such costs are incurred for the benefit of or on behalf of
the Company or all selling Stockholders and are not otherwise paid by the
acquiring party or paid or payable by the Company pursuant to the Securities
Purchase and Exchange Agreement. Costs incurred by any Stockholder on its own
behalf will not be considered costs of the transaction hereunder.
6.4 Upon the occurrence of a Put Default, a Person designated
by the holders of a majority of the ABRY Underlying Common Stock (the "ABRY
Representative") shall have the right to (i) solicit offers from and make
presentations and proposals to prospective buyers of the Company, (ii)
disseminate information regarding the Company, including any financial
information,
-24-
<PAGE> 25
marketing pieces or offering memoranda, for the purposes of arranging a sale of
the Company, (iii) enter into negotiations and/or agreements regarding the
potential sale of the Company, and (iv) hire an investment banking firm to
handle any or all of the foregoing; provided, that ABRY shall have no interest,
whether direct or indirect, in any such prospective buyers. In furtherance of
this Section 6.4, the Company agrees that it will (a) provide access to the
ABRY Representative to the books and records of the Company (including access
to the Company's personnel) to enable the ABRY Representative to perform the
responsibilities set forth in clauses (i), (ii) and (iii) above, (b) use its
best efforts to cause the Company's management to participate fully in the sale
process, including, without limitation, the preparation and delivery of any
presentations to buyers and (c) pay all expenses incurred by the Company or the
ABRY Representative in connection with the foregoing clauses (a) and (b) and
the immediately preceding sentence. The Executive, for so long as he is
employed by the Company or any of its Subsidiaries, agrees to participate fully
in the sale process, including, without limitation, the preparation and
delivery of any such presentations to buyers.
6.5 This Section 6 shall automatically terminate upon a
Qualified Public Offering.
7. Miscellaneous.
7.1 Remedies. Each holder of Stockholder Shares will have all
rights and remedies set forth in this Agreement, the Certificate of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any Person having any rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, without posting a bond or other security, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
7.2 Consent to Amendments. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
will be effective against the Company or the Stockholders unless such
modification, amendment or waiver is approved in writing by the Company, Wilson
(for so long as he holds any Common Stock) and each of the Repurchase Majority
Holders, respectively; provided, however, that no amendment or waiver with
respect to any provision of Section 2 or Section 3 hereof that would adversely
affect any rights or benefits of FINOVA hereunder shall be effective as to
FINOVA unless also approved in writing by FINOVA. The failure of any party to
enforce any of the provisions of this Agreement will in no way be construed as
a waiver of such provisions and will not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms. No amendment to Section 6 of this Agreement that would
materially and adversely affect Management shall be made without the prior
written consent of the Executive.
7.3 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any party
in connection herewith will survive the execution and delivery of this
Agreement, regardless of any investigation made by any party.
-25-
<PAGE> 26
7.4 Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any party of the parties hereto will bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not. In addition, and whether or not any express assignment has
been made, the provisions of this Agreement which are for any Stockholder's
benefit as a purchase or holder of Stockholder Shares are also for the benefit
of, and enforceable by, any subsequent holder of such Stockholders Shares.
7.5 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
7.6 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
7.7 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
7.8 Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally to the recipient one business day after the date when sent to the
recipient by reputable express courier service (charges prepaid) or five
business days after the date when mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notice,
demands and other communications will be sent to the Purchaser and to the
Company at the addresses indicated below:
If to the Company:
Citadel Communications Corporation
1839 South Alma School Road, Suite 264
Mesa, Arizona 85210
Attn: Ms. Donna L. Heffner
With a copy (which will not constitute notice) to:
Osborn Maledon, P.A.
2929 North Central Avenue
Suite 2100
Phoenix, Arizona 85012-2794
Attn: Michelle M. Matiski, Esq.
-26-
<PAGE> 27
If to a Stockholder:
To the respective
address set forth on
the Schedule A attached
to this Agreement,
including any copies to
be provided in accordance
with such Schedule A.
or to such other address or to the attention of such Person as the recipient
party has specified by prior written notice to the sending party.
7.9 No Third-Party Beneficiaries. This Agreement will not
confer any rights or remedies upon any Person other than the Company and the
Stockholders and their respective successors and permitted assigns.
7.10 Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the
parties and supersedes any prior understandings, agreements, or representations
by or among the parties, written or oral, that may have related in any way to
the subject matter hereof, including, without limitation, the Previous
Stockholders Agreement.
7.11 Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any reference to any federal, state, local, or foreign statute or law will be
deemed also to refer to text requires otherwise. The use of the word
"including" in this Agreement is intended by the parties to be by way of
example rather than limitation.
7.12 Incorporation of Schedules. The Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.
7.13 Governing Law. The General Corporation Law of the State
of Nevada will govern all issues concerning the relative rights of the Company
and its stockholders. All other questions concerning the construction, validity
and interpretation of this Agreement and the schedules hereto will be governed
by the internal law, and not the law of conflicts, of the State of Illinois.
7.14 Submission to Jurisdiction. Each of the parties to this
Agreement submits to the jurisdiction of any state or federal court sitting in
either of Chicago, Illinois, Boston, Massachusetts, Nevada or Arizona in any
action or proceeding arising out of or relating to his Agreement, agrees that
all claims in respect of the action or proceeding may be heard and determined
in any such court, and agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the parties to
this Agreement waives any
-27-
<PAGE> 28
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required
of any other party with respect thereto. Each party to this Agreement appoints
CT Corporation System (the "Process Agent"), with addresses of 208 South
LaSalle Street, Chicago, Illinois 60604, 2 Oliver Street, Boston, Massachusetts
02109, One East First Street, Reno, Nevada and Suite 1601, 3225 North Central
Avenue, Phoenix Arizona 85012, as its agent to receive on its behalf service of
copies of the summons and complaint and any other process that might be served
in the action or proceeding. Any party to this Agreement may make service on
any other party by sending or delivering a copy of the process (a) to the party
to be served at the address and in the manner provided for the giving of
notices in Section 7.8 or (b) to the party to be served in care of the Process
Agent at the address and in the manner provided for the giving of notices in
Section 7.8. Nothing in this Section, however, will affect the right of any
party to serve legal process in any other manner permitted by law. Each party
agrees that a final judgment in any action or proceeding so brought will be
conclusive and may be enforced by suit on the judgment or in other manner
provided by law.
7.15 Bank Action on behalf of Bank Co-Investors. Each of the
parties hereto agrees that Bank, or any Affiliate thereof (excluding from the
definition of "Affiliate" for such purposes the last two sentences thereof)
holding any Stockholder Shares, may exercise the rights of the Bank
Co-Investors for all Stockholders Shares initially issued to the Bank
Co-Investors.
7.16 FCC Matters. Notwithstanding any provision contained
herein to the contrary, no party hereto may exercise any of its rights or
remedies hereunder, or take any actions permitted hereby, if prior thereto the
Company receives a written opinion from its nationally recognized FCC counsel
that after consultation with the staff of the Federal communications Commission
("FCC") such exercise or action will violate the Communication Act of 1934 or
the rules, regulations, or policies promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written
* * * * *
[SIGNATURES APPEAR ON FOLLOWING PAGES]
-28-
<PAGE> 29
SIGNATURES PAGES FOR SECOND AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
CITADEL COMMUNICATIONS CORPORATION
By: /s/ Lawrence R. Wilson
--------------------------------
Name: Lawrence R. Wilson
---------------------------
Title: President
--------------------------
BAKER, FENTRESS & COMPANY
By: /s/ Scott E. Smith
--------------------------------
Name: Scott E. Smith
---------------------------
Title: Executive Vice President
--------------------------
BANK OF AMERICA ILLINOIS
By: /s/ Robert F. Perille
--------------------------------
Name: Robert F. Perille
---------------------------
Title: Managing Director
--------------------------
OPPENHEIMER & CO., INC.
By: /s/ Mark Leavitt
--------------------------------
Name: Mark Leavitt
---------------------------
Title: Managing Director
--------------------------
FINOVA CAPITAL CORPORATION
By: /s/ Matthew H. Breyne
--------------------------------
Name: Matthew H. Breyne
--------------------------
Title: Group Vice President
--------------------------
<PAGE> 30
ABRY BROADCAST PARTNERS II, L.P.
By: ABRY CAPITAL, L.P.
Its General Partner
By: ABRY HOLDINGS, INC.
Its General Partner
By: /s/ Jay M. Grossman
-----------------------
Name: Jay M. Grossman
------------------
Title: Attorney-in-Fact
------------------
ABRY/CITADEL INVESTMENT PARTNERS, L.P.
By: ABRY CAPITAL, L.P.
Its General Partner
By: ABRY HOLDINGS, INC.
Its General Partner
By: /s/ Jay M. Grossman
-------------------------
Name: Jay M. Grossman
----------------------
Title: Attorney-in-Fact
--------------------
/s/ Lawrence R. Wilson
-------------------------
Lawrence R. Wilson
-------------------------
/s/ Claire Wilson
-------------------------
Claire Wilson
-30-
<PAGE> 31
BANK CO-INVESTORS SIGNATURE PAGE
*
--------------------------------
Christopher J. Perry
*
--------------------------------
Robert F. Perille
*
--------------------------------
M. Ann O'Brien
*
--------------------------------
Ford S. Bartholow
*
--------------------------------
Jeffrey M. Mann
*
--------------------------------
Matthew W. Clary
*
--------------------------------
Thomas E. Van Pelt, Jr.
*
By: /s/ Robert F. Perille
-----------------------------
Name: Robert F. Perille
------------------------
Attorney-in-Fact
- 31-
<PAGE> 32
MANAGEMENT SIGNATURE PAGE
/s/ Donna L. Heffner
------------------------------
Donna L. Heffner
/s/ Stuart Stanek
------------------------------
Stuart Stanek
-32-
<PAGE> 33
SCHEDULE A OF THE
AMENDED AND RESTATED STOCKHOLDERS'S AGREEMENT
<TABLE>
<CAPTION>
SHARES OF CLASS A
COMMON STOCK ON A
NAME SHARES FULLY DILUTED BASIS
---- ------ -------------------
<S> <C> <C>
ABRY Broadcast Partners II, L.P. 1,473,857.741 Shares of Series C 2,820,279.793
Attn: Penny Koenig and Royce Preferred Stock and
Yudkoff 1,346,422.052 Shares of Series D
18 Newbury Street Preferred Stock
Boston, Massachusetts 02116
With a copy (which will not
constitute notice) to:
John L. Kuehn, Esq.
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
ABRY Broacast Partners II, L.P. 182,162.193 Shares of Series C 348,573.907
Attn: Penny Koenig and Royce Preferred Stock and 166,411.714
Yudkoff Shares of Series D Preferred
18 Newbury Street Stock
Boston, Massachusetts 02116
With a copy (which will not
constitute notice) to:
John L. Kuehn, Esq.
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
<S> <C> <C>
Baker, Fentress & Company 746,411.860 Shares of Series A 746,411.860
Attn: Scott Smith Preferred Stock
200 West Madison Suite 3510
Chicago, Illinois 60602
With a copy (which will not
constitute notice) to:
Carl Witschy, Esq.
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Bank of America Illinois Warrant to Purchase 138,100.993 138,100.993
Attn: Bob Perille Shares of Class B Common Stock
231 South LaSalle Street
Chicago, Illinois 60606
With a copy (which will not
constitute notice) to:
Carl Witschy, Esq.
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
If to any of:
Christopher J. Perry 8,042.814 Shares of Class B 8,042.814
Common Stock
Robert F. Perille 4,511.822 Shares of Class B 4,511.822
Common Stock
M. Ann O'Brien 4,119.490 Shares of Class B 4,119.490
Common Stock
Ford S. Bartholow 784.665 Shares of Class B 784.665
Common Stock
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
<S> <C> <C>
Jeffrey M. Mann 588.499 Shares of Class B 588.499
Common Stock
Thomas E. Van Pelt, Jr. 392.332 Shares of Class B 392.332
Common Stock
Matthew W. Clary 392.332 Shares of Class B 392.332
Common Stock
With a copy (which will not
constitute notice) to:
Carl Witschy, Esq.
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Oppenheimer & Co., Inc. 17,200.724 Shares of Series B 17,200.724
Attn: Mark Leavitt Preferred Stock
Oppenheimer Tower
World Financial Center
New York, New York 10281
With a copy (which will not
constitute notice) to:
Carl Witschy, Esq.
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
<S> <C> <C>
FINOVA Capital Corporation 74,488.000 Shares of Class C
Attn: Vice President Law Common Stock 74,488.000
Dial Tower, Dial Corporate Center
Phoenix, Arizona 85077
With copies (which will not
constitute notices) to:
FINOVA Capital Corporation
Attn: Matthew M. Byrne
311 South Wacker Drive
Suite 2725
Chicago, Illinois 60604
Maurice Jacobs, Esq.
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Lawrence R. Wilson 756,225.000 Shares of Class A 756,225.000
Claire Wilson Common Stock
1015 Eastman Drive
Bigfork, Montana 59911
With a copy (which will not
constitute notice) to:
Michelle Matiski, Esq.
Osborn Maledon, P.A.
2929 North Central Avenue
Suite 2100
Phoenix, Arizona 85012
Donna L. Heffner 11,820.000 Shares of Class A 11,820.000
Common Stock
3260 South Holly Court
Chandler AZ 85248
Stuart Stanek 20,994.000 Shares of Class A 20,994.000
Common Stock
7408 Tall Oaks Dr.
Park City, UT 84060
TOTAL 4,952,926.231
</TABLE>
<PAGE> 1
Exhibit 10.12
FIRST AMENDMENT TO SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT
This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT (this "First Amendment") is made as of December 31, 1996 by and
among CITADEL COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company");
ABRY BROADCAST PARTNERS II, L.P., a Delaware limited partnership ("ABRY");
ABRY/CITADEL INVESTMENT PARTNERS, L.P., a Delaware limited partnership
("ABRY/CIP"); BAKER, FENTRESS & COMPANY, a Delaware corporation ("BFC");
OPPENHEIMER & CO., INC., a Delaware corporation ("Oppenheimer") BANK OF AMERICA
ILLINOIS, an Illinois banking corporation formerly known as Continental Bank,
N.A. ("BofA"); CHRISTOPHER J. PERRY, ROBERT F. PERILLE, M. ANN O'BRIEN, FORD S.
BARTHOLOW, JEFFREY M. MANN, MATTHEW W. CLARY, SHERYL E. BARTOL, and ANDREA P.
JOSELIT (Bartol and Joselit being successors in interest to Thomas E. Van Pelt,
Jr.) (collectively, the "BofA Co-Investors"); FINOVA CAPITAL CORPORATION, a
Delaware corporation ("FINOVA"); THE ENDEAVOUR CAPITAL FUND LIMITED
PARTNERSHIP, an Oregon limited partnership ("Endeavour"); JOSEPH P. TENNANT,
THE SCHAFBUCH FAMILY TRUST u/a/d 2-15-94, BABSON CAPITAL PARTNERS LIMITED
PARTNERSHIP, an Oregon limited partnership; TAL JOHNSON, EDWARD T. HARDY, and
RALPH W. MCKEE (collectively, the "Endeavour Co-Investors"); and LAWRENCE R.
WILSON (the "Executive"), and CLAIRE WILSON ("CW").
RECITALS
A. As of June 28, 1996, the Company and certain other parties entered
into that certain Securities Purchase and Exchange Agreement (the "Securities
Purchase and Exchange Agreement"). In connection with the execution of the
Securities Purchase and Exchange Agreement, that certain Second Amended and
Restated Stockholders Agreement as of June 28, 1996 (the "Stockholders
Agreement") was executed by the parties thereto. Capitalized terms that are not
otherwise defined herein shall have the meanings ascribed to those terms in the
Stockholders Agreement.
B. Endeavour and the Endeavour Co-Investors are the sole owners of all
of the outstanding preferred stock of Deschutes River Broadcasting Inc., an
Oregon corporation ("Deschutes"). As of August 30, 1996, the Company, Citadel
Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary of
the Company ("CAC"), and Deschutes entered into that certain Merger Agreement
(the "Merger Agreement"). As of September 17, 1996, CAC changed its name to
Deschutes License, Inc. ("DLI"), and as of December 18, 1996 DLI assigned its
rights under the Merger Agreement to Deschutes Acquisition Corporation, a
Nevada corporation and wholly-owned subsidiary of the Company ("DAC"). Pursuant
to the Merger Agreement, Deschutes and DAC will merge, with DAC to be the
surviving corporation. In consideration of such merger, Endeavour, the
Endeavour Co-Investors and the holders of the Common Stock of Deschutes will
receive Class A Common Stock, Series E Preferred Stock and/or options to
purchase Class A Common Stock.
<PAGE> 2
C. In order to induce Endeavour and the Endeavour Co-Investors to
permit the transactions contemplated by the Merger Agreement, the parties to
this First Amendment wish to amend the Stockholders Agreement to grant
Endeavour and the Endeavour Co-Investors all of the rights (and make Endeavour
and the Endeavour Co-Investors subject to all of the obligations) as Investors
under the Stockholders Agreement by amending the Stockholders Agreement to make
Endeavour and the Endeavour Co-Investors parties to the Stockholders Agreement.
D. In connection with the transactions contemplated by the Merger
Agreement, the Company, Endeavour, the Endeavour Co-Investors, and certain
other parties have also agreed to enter into the following agreements, each of
even date herewith: that certain First Amendment to Third Amended and Restated
Registration Rights Agreement; that certain First Amendment to Securities
Purchase and Exchange Agreement; that certain First Amendment to Amended and
Restated Voting Agreement; and that certain Security Holder Agreement (the
"Endeavour Proxy") (together with this First Amendment, the Merger Agreement,
and the transactions contemplated thereby, the "Contemplated Transactions").
ACCORDINGLY, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this First Amendment agree as follows:
1. Consents and Waivers. Each of the parties hereto hereby consents to
this First Amendment and the inclusion of Endeavour and the Endeavour
Co-Investors as "Investors" under the Stockholders Agreement pursuant to the
terms and conditions of this First Amendment. Further, each of the parties
hereto waives in connection with the Contemplated Transactions any preemptive
rights he/she/it may possess pursuant to Section 2 of the Stockholders
Agreement.
2. Amendments.
2.1. Section 1 of the Stockholders Agreement is amended by
adding the following definitions in appropriate alphabetical order:
"Endeavour" shall mean and refer to The Endeavour Capital
Fund Limited Partnership, an Oregon limited partnership.
"Endeavour Co-Investors" shall mean and refer, individually
and collectively, to those individuals who are designated on
the Signature Pages to the First Amendment as the "Endeavour
Co-Investors."
"Endeavour Stock" means (i) Series E Preferred Stock held by
Endeavour or by the Endeavour Co-Investors on the date of the
First Amendment, (ii) Class A Common Stock issued or issuable
upon conversion of any Series E Preferred Stock described in
clause (i) above, (iii) Equity Securities of the Company
issued or issuable with respect to any Equity Securities
referred to in any of clauses (i)
2
<PAGE> 3
through (ii) above or this clause (iii) by way of any stock
dividend or stock split, or in connection with a combination
or exchange of shares, recapitalization, merger,
consolidation, reorganization or otherwise. As to any
particular securities constituting Endeavour Stock, such
securities shall continue to constitute Endeavour Stock in
the hands of any permitted transferee thereof, but will cease
to constitute Endeavour Stock when they have been disposed of
in a Public Sale.
"Endeavour Underlying Common Stock" means all Endeavour Stock
which is Class A Common Stock. For purposes of this
Agreement, any Person who holds any Endeavour Stock which is
not Class A Common Stock will be deemed to be the Holder of
the Class A Common Stock obtainable upon the conversion,
exercise or exchange to the fullest extent possible of such
Endeavour Stock (including the conversion, exercise or
exchange of all other Endeavour Stock directly or indirectly
obtainable upon any such conversion, exercise or exchange),
without regard to any restriction or limitation on any such
conversion, exercise or exchange.
"First Amendment" shall mean that First Amendment to this
Agreement dated as of December ___, 1996 between the Company,
Endeavour, the Endeavour Co- Investors and certain original
parties to this Agreement.
"Majority Endeavour Holders" means, at any time, holders of a
majority of the Endeavour Underlying Common Stock.
"Series E Preferred Stock" shall mean the Series E
Convertible Preferred Stock of the Company, par value $.001
per share.
2.2. Section 1 of the Stockholders Agreement is further
amended by modifying and/or adding the following language to the following
definitions:
2.2.1. Additional Preferred Stock. The current
definition is deleted and replaced with:
"Additional Preferred Stock" shall mean any
additional shares of preferred stock issued by the
Company other than the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred
Stock.
2.2.2. Affiliate. Add the following sentence at
the end of the definition:
For purposes hereof, each of Endeavour and the
Endeavour Co-Investors shall be deemed "Affiliates"
of one another.
3
<PAGE> 4
2.2.3. Certificate of Incorporation. The current
definition is deleted and replaced with:
"Certificate of Incorporation" means the Certificate
of Incorporation of the Company as amended and in
effect on the date of the First Amendment
(immediately after the Sixth Amendment and
Restatement thereof).
2.2.4. Investor and Investors. The current
definition is deleted and replaced with:
"Investor" and "Investors" shall mean BFC, BofA,
ABRY, ABRY/CIP, Oppenheimer, Endeavour and the
Endeavour Co-Investors.
2.2.5. Investor Stock. Add the following new
subsections (iv)(a) and (iv)(b) immediately following
subsection (iv) and preceding subsection (v) in the current
definition:
(iv)(a) Series E Preferred Stock held by Endeavour
or by the Endeavour Co-Investors on the date of the
First Amendment, (iv)(b) Class A Common Stock issued
or issuable upon conversion of any Series E
Preferred Stock described in clause (iv)(a) above,
2.2.6. Preferred Stock. The current definition is
deleted and replaced with:
"Preferred Stock" means, collectively, the Company's
Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock and Additional Preferred
Stock, and is sometimes used to refer to any of such
Preferred Stock.
2.2.7. Repurchase Majority Holders. The current
definition is deleted and replaced with:
"Repurchase Majority Holders" means, at any time,
any of the (a) holders of a majority of the BFC
Underlying Common Stock, (b) holders of a majority
of the ABRY Underlying Common Stock then in
existence, (c) the Majority Bank Holders and (d) the
Majority Endeavour Holders.
4
<PAGE> 5
2.2.8. Stockholder and Stockholders. The current
definition is deleted and replaced with:
"Stockholder" and "Stockholders" shall mean the
Investors, FINOVA and Management.
2.3. Section 7.15 of the Stockholders Agreement is amended by
deleting the current 7.15 and replacing it with the following:
7.15 Action on behalf of Co-Investors. Each of the
parties hereto agrees that:
(a) Bank, or any Affiliate thereof (excluding from
the definition of "Affiliate" for such purposes the last
three sentences thereof) holding any Stockholder Shares, may
exercise the rights of the Bank Co-Investors for all
Stockholders Shares initially issued to the Bank
Co-Investors; and
(b) Endeavour, or any Affiliate thereof (excluding
from the definition of "Affiliate" for such purposes the last
three sentences thereof) holding any Stockholder Shares, may
exercise the rights of the Endeavour Co-Investors for all
Stockholders Shares initially issued to the Endeavour
Co-Investors.
2.4. Schedule A of the Stockholders Agreement is amended to
include the Endeavour and the Endeavour Co-Investors as set forth in
the First Addendum to Schedule A of the Second Amended and Restated
Stockholders Agreement, a copy of which is attached to this First
Amendment as Exhibit A.
2.5. The parties listed on Exhibit A attached hereto shall be
deemed parties to the Stockholders Agreement, as amended, and are
deemed added to Schedule A of the Stockholders Agreement, as amended.
2.6. The following additional Section 7.17 is added to
Section 7 of the Stockholders Agreement:
7.17 Incorporation of Recitals. The Recitals set
forth in the First Amendment are incorporated
herein.
3. Notice. All notices and other communications provided for or
permitted under the Registration Rights Agreement shall be made pursuant to
Section 12(d) thereof to Endeavour and the Endeavour Co-Investors at the
following initial addresses:
5
<PAGE> 6
To Endeavour: The Endeavour Capital Fund Limited Partnership
4380 SW Macadam
Suite 460
Portland, Oregon 97201
Attn: John von Schlegell
Facsimile: (503) 223-1384
With copy to: Stephen E. Babson, Esq.
Stoel Rives, LLP
900 S.W. Fifth Avenue
Suite 2300
Portland, Oregon 97204
Facsimile: (503) 220-2480
To Endeavour
Co-Investors: The Endeavour Capital Fund Limited Partnership
4380 SW Macadam
Suite 460
Portland, Oregon 97201
Attn: John von Schlegell
Facsimile: (503) 223-1384
With copy to: Stephen E. Babson, Esq.
Stoel Rives, LLP
900 S.W. Fifth Avenue
Suite 2300
Portland, Oregon 97204
Facsimile: (503) 220-2480
4. Choice of Law. The General Corporation Law of the State of Nevada
will govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this First Amendment and the schedules hereto will be
governed by the internal law, and not the law of conflicts, of the State of
Illinois.
5. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
6. Fees and Expenses. The Company shall pay the reasonable legal fees
and expenses of the Investors (excluding Endeavour and the Endeavour
Co-Investors) incurred in the preparation of this First Amendment, review of
the documents and agreements in connection with
6
<PAGE> 7
the transactions described in the Recital hereof and the preparation of
additional documents and agreements related to such transactions.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
7
<PAGE> 8
[SIGNATURE PAGE FOR FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT]
CITADEL COMMUNICATIONS CORPORATION
By /s/ Lawrence R. Wilson
-------------------------------------
Its
--------------------------------
/s/ Lawrence R. Wilson
-------------------------------------
Lawrence R. Wilson
(for purposes of Section 4(a) of the Registration
Rights Agreement only)
/s/ Claire Wilson
-------------------------------------
Claire Wilson
(for purposes of Section 4(a) of the Registration
Rights Agreement only)
ABRY BROADCAST PARTNERS II, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
-------------------------------------
Its
--------------------------------
ABRY/CITADEL INVESTMENT PARTNERS, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
-------------------------------------
Its
--------------------------------
8
<PAGE> 9
[SIGNATURE PAGE FOR FIRST AMENDMENT TO SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT]
BAKER, FENTRESS & COMPANY
By /s/ Scott E. Smith
-------------------------------------
Its Executive Vice President
----------------------------------
OPPENHEIMER & CO., INC.
By
-------------------------------------
Its
----------------------------------
BANK OF AMERICA ILLINOIS
By /s/ Robert F. Perille
-------------------------------------
Its
----------------------------------
FINOVA CAPITAL CORPORATION
By /s/ Matthew M. Grey
-------------------------------------
Its Group Vice President
----------------------------------
9
<PAGE> 10
[SIGNATURE PAGE FOR FIRST AMENDMENT TO SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT]
BOFA CO-INVESTORS:
*
--------------------------------
Christopher J. Perry
*
--------------------------------
Robert F. Perille
*
--------------------------------
M. Ann O'Brien
*
--------------------------------
Ford S. Bartholow
*
--------------------------------
Jeffrey M. Mann
*
--------------------------------
Matthew W. Clary
*
--------------------------------
Sheryl E. Bartol
*
--------------------------------
Andrea P. Joselit
* By: /s/ Robert F. Perille
--------------------------
Name:
Attorney-In-Fact
10
<PAGE> 11
[SIGNATURE PAGE FOR FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT]
ENDEAVOUR:
THE ENDEAVOUR CAPITAL FUND LIMITED
PARTNERSHIP
By DVS Management, Inc.
Its General Partner
By /s/ John W. Dixon
-------------------------------------
Its Chairman
----------------------------------
ENDEAVOUR CO-INVESTORS:
/s/ Joseph P. Tennant
----------------------------------------
Joseph P. Tennant
THE SCHAFBUCH FAMILY TRUST u/a/d 2-15-94
By /s/ Richard M. Schafbuch
-------------------------------------
Richard M. Schafbuch, Trustee
By /s/ Susan P. Schafbuch
-------------------------------------
Susan P. Schafbuch, Trustee
BABSON CAPITAL PARTNERS LIMITED
PARTNERSHIP
By /s/ Stephen E. Babson
-------------------------------------
Its General Partner
---------------------------------
/s/ Tal Johnson
----------------------------------------
Tal Johnson
/s/ Edward T. Hardy
----------------------------------------
Edward T. Hardy
/s/ Ralph W. McKee
----------------------------------------
Ralph W. McKee
11
<PAGE> 12
EXHIBIT A
FIRST ADDENDUM TO SCHEDULE A OF THE SECOND
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
<TABLE>
<CAPTION>
SHARES OF CLASS A
COMMON STOCK ON
NAME SHARES A
---- ------ FULLY DILUTED BASIS
-------------------
<S> <C> <C>
The Endeavour Capital Fund Limited 418,612 shares of Series E 418,612
Partnership Preferred Stock
Attn: John von Schlegell
4380 SW Macadam
Suite 460
Portland, Oregon 97201
Facsimile: (503) 223-1384
With copy (which will not constitute
notice) to:
Stephen E. Babson, Esq.
Stoel Rives, LLP
900 S.W. Fifth Avenue
Suite 2300
Portland, Oregon 97204
Facsimile: (503) 220-2480
If any of: 32,700
- ----------
Joseph P. Tennant 32,700 Shares of Series E
937 SW 14th, Suite 200 Preferred Stock
Portland, OR 97205
Facsimile: (503) 299-6653
The Schafbuch Family Trust U/a/d 9,894 Shares of Series E 9,894
2-15-94 Preferred Stock
c/o Richard M. Schafbuch
4444 W. Burnside
Portland, OR 97210-1084
Facsimile: (503) 241-7422
Babson Capital Partners Limited 3,956 Shares of Series E 3,956
Partnership Preferred Stock
c/o Stephen E. Babson
900 SW Fifth Ave., Suite 2300
Portland, OR 97202
Facsimile: (503) 220-2480
</TABLE>
<PAGE> 13
<TABLE>
<S> <C> <C>
Tal Johnson 1,977 Shares of Series E 1,977
3401 SE 8th Ave. Preferred Stock
Portland, OR 97202
Facsimile: (503) 231-8801
Edward T. Hardy 12,029 Shares of Series E 12,029
Deschutes River Broadcasting, Inc. Preferred Stock
6420 SW Macadam, Suite 206
Portland, OR 97201
Facsimile: (503) 244-7953
Ralph W. McKee 3,561 Shares of Series E 3,561
223 Pacific Court Preferred Stock
Ridgeland, WA 99352
With copy (which will not constitute
notice) to:
Stephen E. Babson, Esq.
Stoel Rives, LLP
900 S.W. Fifth Avenue, Suite 2300
Portland, Oregon 97204
Facsimile: (503) 220-2480
TOTAL (this Addendum only): 482,729
</TABLE>
<PAGE> 1
Exhibit 10.13
SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT
This SECOND AMENDMENT TO SECOND AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT (this "Second Amendment") is made as of March 17, 1997 by and among
CITADEL COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company"); ABRY
BROADCAST PARTNERS II, L.P., a Delaware limited partnership ("ABRY");
ABRY/CITADEL INVESTMENT PARTNERS, L.P., a Delaware limited partnership
("ABRY/CIP"); BAKER, FENTRESS & COMPANY, a Delaware corporation ("BFC");
OPPENHEIMER & CO., INC., a Delaware corporation ("Oppenheimer") BANK OF AMERICA
ILLINOIS, an Illinois banking corporation formerly known as Continental Bank,
N.A. ("BofA"); CHRISTOPHER J. PERRY, ROBERT F. PERILLE, M. ANN O'BRIEN, FORD S.
BARTHOLOW, JEFFREY M. MANN, MATTHEW W. CLARY, SHERYL E. BARTOL, and ANDREA P.
JOSELIT (Bartol and Joselit being successors in interest to Thomas E. Van Pelt,
Jr.) (collectively, the "BofA Co-Investors"); FINOVA CAPITAL CORPORATION, a
Delaware corporation ("FINOVA"); THE ENDEAVOUR CAPITAL FUND LIMITED
PARTNERSHIP, an Oregon limited partnership ("Endeavour"); JOSEPH P. TENNANT,
THE SCHAFBUCH FAMILY TRUST u/a/d 2-15-94, BABSON CAPITAL PARTNERS LIMITED
PARTNERSHIP, an Oregon limited partnership; TAL JOHNSON, EDWARD T. HARDY, and
RALPH W. MCKEE (collectively, the "Endeavour Co-Investors"); and LAWRENCE R.
WILSON (the "Executive"), and CLAIRE WILSON ("CW").
RECITALS
A. As of June 28, 1996, the Company and certain other parties entered
into that certain Stockholders Agreement (as amended by the First Amendment
thereto dated as of December 31, 1996, the "Stockholders Agreement").
B. In connection with their entry into a letter agreement dated the
date of this Agreement, the parties to the Stockholders Agreement have agreed
to make certain changes to the terms thereof.
ACCORDINGLY, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Second Amendment agree as follows:
1. AMENDMENTS.
1.1. Section 1 of the Stockholders Agreement is amended by
adding thereto the following defined term and accompanying definition:
<PAGE> 2
"Eligible Firm" at any time means the media-industry
investment banking group, subsidiary or division of any of CS First
Boston, Donaldson Lufkin & Jenrette, Furman Selz LLC, Goldman Sachs &
Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated,
Prudential Securities Inc. and Salomon Brothers Inc. or any
then-existing successor to any such group, subsidiary or division.
1.2. Section 1 of the Stockholders Agreement is amended by
adding thereto the following references:
"Call Holders" has the meaning set forth in Section 5.3.
"Eligible Holders" has the meaning set forth in Section 4.2.
"Put Holders" has the meaning set forth in Section 4.2.
1.3. Section 1 of the Stockholders Agreement is amended by
amending and restating in its entirety the definition of the term "Fair Market
Value" as follows:
"Fair Market Value" means the fair market value on
the Determination Date of the Company's Common Stock outstanding on a
Fully Diluted Basis determined on a going concern basis and assuming a
sale of 100% of the Company's Common Stock on a Fully Diluted Basis
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value; provided, however, that
in the case of a Look-Back Event, "Fair Market Value" with respect to
such Look-Back Event shall be determined in accordance with Section
5.7 below. With respect to the determination of Fair Market Value:
(a) For purposes of Section 4, unless otherwise
agreed by the Company and the Eligible Holder(s) who are then
exercising the Put in question, Fair Market Value shall be
determined by the Eligible Firm specified by the Company in
the Company's First Notice, which firm shall submit to the
Company and the Put Holders a written report setting forth
such determination.
(b) For purposes of Section 5, unless otherwise
agreed by the Company and the Call Holder(s) who are then (or
in the case of a Look-Back Event, were) subject to the Call
in question, Fair Market Value shall be determined by an
investment banking firm reasonably acceptable to the Company
and holders of a majority of the Investor Underlying Common
Stock which are then (or in the case of a Look-Back Event,
which were) subject to the Call (the "Selection Majority
Holders"), which firm shall submit to the Company and the
Call Holders a written report setting forth such
determination. If the Company and such Selection Majority
Holders are unable to agree on an investment banking firm
within 5 business days after
2
<PAGE> 3
the date of the meeting described in Section 5.3, then a firm
shall be selected by lot from the top-tier New York-based
investment banking firms (other than any top-tier New York
based investment banking firm with whom ABRY has had a
significant relationship or Oppenheimer or any of its
Affiliates), after the Company and such Selection Majority
Holders have each eliminated one such firm.
In either case, the expenses of such selected firm will be borne by
the Company, and the determination of such firm will be final and
binding upon all parties, except that any Holder may rescind its
exercise of a Put after the determination of Fair Market Value
following the exercise of such Put.
1.4. Section 1 of the Stockholders Agreement is amended by
deleting from such Section the definitions of the terms "Holders" and "Holders
Meeting Date."
1.5. Sections 4.1, 4.2, 4.4 and 4.7 of the Stockholders
Agreement are amended and restated in their entirety as follows:
4.1 Basic Put Rights. At any time beginning August
1, 2000, any of the Repurchase Majority Holders shall have the right
to require the Company to repurchase all or any portion of the
Preferred Stock or BofA Warrants held by such Investor(s) (the "Put")
at the Put Price by delivering a written notice to the Company
specifying the quantity of such securities to be purchased (the "Put
Notice"). Such notice will indicate not more than two (2) Eligible
Firms (the "Excluded Firms") which are to be excluded by the Company
from consideration in selecting an Eligible Firm to determine the Fair
Market Value for the relevant Determination Date. Subject to Section
4.3 hereof (regarding Puts deemed to have been exercised as of the
Date of Receipt), other than a Put exercised by the holders of a
majority of the ABRY Underlying Common Stock, no additional Put(s)
shall be exercised within the one-year period beginning on the Date of
Receipt. For so long as the Bank or any Affiliate thereof (excluding
from the definition of "Affiliate" for such purposes the last two
sentences of such definition) holds the BofA Warrants, the BofA Co-
Investors and the Class B Common Stock held by the BofA Co-Investors
shall be subject to the provisions of this Section 4 and the Class B
Common Stock held by the BofA Co-Investors shall be treated the same
as the BofA Warrants held by the Bank or such Affiliate for all
purposes of this Section 4, except that the reduction described in
clause (b) of Section 4.6 shall not apply to such Class B Common
Stock.
4.2 The Company's First Notice. Within five (5) business days
after receipt (the "Date of Receipt" for purposes of this Section 4)
of the Put Notice, the Company shall deliver a written notice (the
"Company's First Notice") to all holders of Investor Stock which is
Preferred Stock, a BofA Warrant or held by FINOVA (with respect to
such Put, the "Eligible Holders") informing them of (a) the receipt of
the Put Notice, (b) the Date of Receipt, (c) the quantity of Investor
Stock
3
<PAGE> 4
requested to be purchased pursuant to the Put Notice, (d) the number
of shares of Investor Underlying Common Stock then existing with
respect to outstanding shares of Preferred Stock, BofA Warrants and
shares held by FINOVA, (e) the number of shares of Common Stock on a
Fully Diluted Basis in existence at the close of business on the Date
of Receipt, and (f) the name of the Eligible Firm (which shall not be
an Excluded Firm identified in such Put Notice) which the Company has
selected to determine the Fair Market Value. The Eligible Holders who
delivered the Put Notice and all Eligible Holders who deliver a
related Put Election Notice pursuant to Section 4.3 are referred to as
the "Put Holders."
4.4 Put Closing. Upon the delivery of the Put Notice and all
Put Election Notices, the Company and the Put Holders shall in good
faith promptly determine the Put Price as provided in this Agreement,
and subject to the provisions hereof, within 10 days after the
determination of the Put Price, the Company will purchase and each Put
Holder will sell the number of such Put Holder's Put Shares specified
in such Put Holder's Put Notice or Put Election Notice at a time and
place mutually agreeable to the Company and holders of a majority of
the Investor Underlying Common Stock as to which the Put is being
exercised (the "Put Closing").
4.7 Put Default. In the event of the failure of the Company
within 210 days of the Company's receipt of the Put Notice to pay in
full the Put Price for all ABRY Stock pursuant to a Put with respect
to the ABRY Stock (a "Put Default"), the holders of a majority of the
ABRY Underlying Common Stock shall have certain affirmative rights in
connection with an Approved Sale as set forth in Section 6 hereof.
1.6. Section 7.8 of the Stockholders Agreement is amended to
change the address for notices of the Company to 140 South Ash Avenue, Tempe,
AZ 85281, and 1015 Eastman Drive, Bigfork, Montana 59911.
2. VOTING TRUST. On the date hereof, ABRY and ABRY/CIP have
contributed the shares of the Company's capital stock which are held by them,
and have agreed to contribute all other shares of the Company's capital stock
which hereafter may be acquired by them, to a voting trust (the "Voting Trust")
established pursuant to a Voting Trust Agreement dated as of the date hereof
among the Company, ABRY, ABRY/CIP and the initial Voting Trustee thereunder.
For purposes of the Stockholders Agreement, ABRY and ABRY/CIP (and any Persons
who from time to time may hold Voting Trust Certificates issued in respect of
capital stock of the Company held in the Voting Trust), as the beneficial
owners of the capital stock in the Voting Trust, will be deemed to hold the
capital stock of the Company which is held in the Voting Trust.
3. CHOICE OF LAW. The General Corporation Law of the State of Nevada
will govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Second Amendment and the schedules hereto will be
governed by the internal law, and not the law of conflicts, of the State of
Illinois.
4
<PAGE> 5
4. COUNTERPARTS. This Second Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Second Amendment
to be duly executed and delivered by their respective duly authorized officers
on the day and year first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
5
<PAGE> 6
[SIGNATURE PAGE FOR SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT]
CITADEL COMMUNICATIONS CORPORATION
By /s/ Lawrence R. Wilson
---------------------------------
Its President
-----------------------------
/s/ Lawrence R. Wilson
-------------------------------------
Lawrence R. Wilson
/s/ Claire Wilson
-------------------------------------
Claire Wilson
ABRY BROADCAST PARTNERS II, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
-------------------------
Its President
-------------------------
ABRY/CITADEL INVESTMENT PARTNERS, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
-------------------------
Its President
-------------------------
6
<PAGE> 7
[SIGNATURE PAGE FOR SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT]
BAKER, FENTRESS & COMPANY
By /s/ Scott E. Smith
----------------------------------
Its Executive Vice President
------------------------------
OPPENHEIMER & CO., INC.
By /s/ Rob Blum
----------------------------------
Its Assistant Secretary
------------------------------
BANK OF AMERICA ILLINOIS
By /s/ Robert F. Perille
----------------------------------
Its
------------------------------
FINOVA CAPITAL CORPORATION
By /s/ Matthew M. Grey
----------------------------------
Its Group Vice President
------------------------------
7
<PAGE> 8
[SIGNATURE PAGE FOR SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT]
BOFA CO-INVESTORS:
*
-------------------------------------
Christopher J. Perry
*
-------------------------------------
Robert F. Perille
*
-------------------------------------
M. Ann O'Brien
*
-------------------------------------
Ford S. Bartholow
*
-------------------------------------
Jeffrey M. Mann
*
-------------------------------------
Matthew W. Clary
*
-------------------------------------
Sheryl E. Bartol
*
-------------------------------------
Andrea P. Joselit
* By: /s/ Robert F. Perille
------------------------------
Name:
Attorney-In-Fact
8
<PAGE> 9
[SIGNATURE PAGE FOR SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT]
ENDEAVOUR:
THE ENDEAVOUR CAPITAL FUND LIMITED
PARTNERSHIP
By DVS Management, Inc.
Its General Partner
By /s/ John von Schlegell
---------------------------------
Its
-----------------------------
ENDEAVOUR CO-INVESTORS:
/s/ Joseph P. Tennant
----------------------------------------
Joseph P. Tennant
THE SCHAFBUCH FAMILY TRUST u/a/d 2-15-94
By: /s/ Richard M. Schafbuch
---------------------------------
Richard M. Schafbuch, Trustee
By: /s/ Susan P. Schafbuch
---------------------------------
Susan P. Schafbuch, Trustee
BABSON CAPITAL PARTNERS LIMITED
PARTNERSHIP
By /s/ Stephen E. Babson
-------------------------------------
Its General Partner
---------------------------------
/s/ Tal Johnson
----------------------------------------
Tal Johnson
/s/ Edward T. Hardy
----------------------------------------
Edward T. Hardy
/s/ Ralph W. McKee
----------------------------------------
Ralph W. McKee
9
<PAGE> 1
Exhibit 10.15
THIRD AMENDED AND RESTATED VOTING AGREEMENT
This THIRD AMENDED AND RESTATED VOTING AGREEMENT dated as of March 17,
1997 (the "Agreement"), by and among CITADEL COMMUNICATIONS CORPORATION, a
Nevada corporation (the "Company"), Christopher Hall, as the initial trustee
pursuant to the Voting Trust Agreement described below (including any
additional or successor trustee thereunder, the "Voting Trustee"), BAKER
FENTRESS & COMPANY, a Delaware corporation ("BFC"), FINOVA CAPITAL CORPORATION,
a Delaware corporation ("FINOVA"), OPPENHEIMER & CO., INC., a Delaware
corporation ("Oppenheimer"), THE ENDEAVOUR CAPITAL FUND LIMITED PARTNERSHIP, an
Oregon limited partnership ("Endeavour"), JOSEPH P. TENNANT ("Tennant"), THE
SCHAFBUCH FAMILY TRUST u/a/d 2-15-94 (the "Schafbuch Trust"), BABSON CAPITAL
PARTNERS LIMITED PARTNERSHIP, an Oregon limited partnership ("Babson"); TAL
JOHNSON ("Johnson"), EDWARD T. HARDY ("Hardy"), and RALPH W. MCKEE ("McKee")
and, collectively with Tennant, the Schafbuch Trust, Babson, Johnson and Hardy,
the "Endeavour Co-Investors"), LAWRENCE R WILSON ("LRW") and CLAIRE WILSON
("CW"). LRW and CW sometimes are herein collectively referred to as "Wilson."
The Voting Trustee, BFC, FINOVA, Oppenheimer, Endeavour and the Endeavour
Co-Investors are sometimes collectively referred to herein as the "Investors"
and individually as an "Investor." The Investors and Wilson are sometimes
collectively referred to herein as "Stockholders" and individually as a
"Stockholder." Capitalized terms used and not otherwise defined in this
Agreement shall have the meanings ascribed to such terms in Section 1 hereof.
RECITALS
A. As of June 28, 1996, the Company and certain other parties entered
into that certain Securities Purchase and Exchange Agreement (as amended
pursuant to the First Amendment thereto dated as of December 31, 1996 and the
Second Amendment thereto dated as of the date hereof and as supplemented by the
Agreement Regarding Facility A Advances dated as of the date hereof among the
Company, ABRY and ABRY/CIP, the "Securities Purchase and Exchange Agreement").
As of December 31, 1996, the Company and certain other parties entered into
that certain Second Amended and Restated Voting Agreement dated as of such date
(the "Voting Agreement").
B. On the date hereof, ABRY Broadcast Partners II, L.P., a Delaware
limited partnership ("ABRY"), and ABRY/Citadel Investment Partners, L.P., a
Delaware limited partnership ("ABRY/CIP"), have contributed the shares of the
Company's capital stock which are held by them, and have agreed to contribute
all other shares of the Company's capital stock which hereafter may be acquired
by them, to a voting trust (the "Voting Trust") established pursuant to a
Voting Trust Agreement dated as of the date hereof among the Company, ABRY,
ABRY/CIP and the initial Voting Trustee (the "Voting Trust Agreement"). ABRY
and ABRY/CIP are express third-party beneficiaries of this Agreement. For
purposes of this Agreement, the Voting Trustee will be deemed to hold the
capital stock of the Company which is in the Voting Trust.
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C. As of the date hereof, the following Stockholders own, beneficially
and (except in the case of ABRY and ABRY/CIP) of record the following Equity
Securities in the Company: ABRY -- 1,896,222.301 shares of the Series C
Preferred Stock (which are held of record by the Voting Trustee) and
924,057.492 shares of the Series D Preferred Stock (which are held of record by
ABRY); ABRY/CIP -- 234,364.555 shares of the Series C Preferred Stock (which
are held of record by the Voting Trustee) and 114,209.352 shares of the Series
D Preferred Stock (which are held of record by ABRY/CIP); BFC -- 746,411.860
shares of the Series A Preferred Stock; FINOVA -- 74,488.000 shares of the
Class C Common Stock; Oppenheimer -- 17,200.724 shares of the Series B
Preferred Stock; Endeavour -- 418,612 shares of Series E Preferred Stock;
Tennant -- 32,700 shares of Series E Preferred Stock; the Schafbuch Trust --
9,894 shares of Series E Preferred Stock; Babson -- 3,956 shares of Series E
Preferred Stock; Johnson -- 1,977 shares of Series E Preferred Stock; Hardy --
12,029 shares of Series E Preferred Stock; McKee -- 3,561 shares of Series E
Preferred Stock; and Wilson -- 756,225.000 shares of the Class A Common Stock.
D. The parties to the Voting Agreement have agreed that, in view of
the establishment of the Voting Trust, ABRY and ABRY/CIP should cease to be
parties to the Voting Agreement (but should be third-party beneficiaries
thereof) and the Voting Trustee should become a party to the Voting Agreement.
In addition, the parties to the Voting Agreement have agreed to make certain
other changes thereto.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree
that the Voting Agreement is amended and restated in its entirety as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings set forth below.
"AGREEMENT" shall mean this Agreement.
"ABRY" has the meaning set forth in the preamble to this
Agreement.
"ABRY/CIP" has the meaning set forth in the preamble to this
Agreement.
"ADDITIONAL PREFERRED STOCK" means any Preferred Stock which
may be issued upon the conversion of any Facility A Note.
"AFFILIATE" of any Person means any Person that directly or
indirectly controls, is controlled by, or is under common control with such
Person and, with respect to an individual, such individual's spouse and
descendants (whether natural or adopted) and any trust solely for the benefit
of such individual and/or his or her spouse and/or descendants.
"AIRPLANE LEASE" means that Aircraft Lease Agreement between
Wilson Aviation, L.L.C. as lessor and Citadel as lessee, dated as of December
29, 1995.
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"BFC" has the meaning set forth in the preamble to this
Agreement.
"BFC DIRECTOR" has the meaning set forth in Section
2.1(b)(iii).
"BFC STOCK" means (i) Series A Preferred Stock held by BFC on
the date of this Agreement after giving effect to the "Redemptions" and the
"Reclassification" (as those terms are defined in the Securities Purchase and
Exchange Agreement), (ii) Class A Common Stock issued or issuable upon the
conversion of any Series A Preferred Stock described in clause (i) above, and
(iii) Equity Securities issued or issuable with respect to any Equity
Securities referred to in any of clauses (i) and (ii) above or this clause
(iii) by way of any stock dividend or stock split, or in connection with a
combination or exchange of shares, recapitalization, merger, consolidation,
reorganization or otherwise. As to any particular securities constituting BFC
Stock, such securities shall continue to constitute BFC Stock in the hands of
any permitted transferee thereof, but will cease to constitute BFC Stock when
they have been disposed of in a Public Sale.
"BFC UNDERLYING COMMON STOCK" means all BFC Stock which is
Class A Common Stock. For purposes of this Agreement, any Person who holds any
BFC Stock which is not Class A Common Stock will be deemed to be the Holder of
the Class A Common Stock obtainable upon the conversion, exercise or exchange
to the fullest extent possible of such BFC Stock (including the conversion,
exercise or exchange of all other BFC Stock directly or indirectly obtainable
upon any such conversion, exercise or exchange), without regard to any
restriction or limitation on any such conversion, exercise or exchange.
"BOARD" means the Company's board of directors.
"CERTIFICATE OF INCORPORATION" means the Sixth Amended and
Restated Certificate of Incorporation of the Company as in effect on the date
hereof.
"CLASS A COMMON STOCK" means the voting Class A Common Stock
of the Company, par value $.001 per share.
"CLASS B COMMON STOCK" means the nonvoting Class B Common
Stock of the Company, par value $.001 per share.
"CLASS C COMMON STOCK" means the nonvoting Class C Common
Stock of the Company, par value $.001 per share.
"COMMON STOCK" means, collectively, the Company's Class A
Common Stock, Class B Common Stock and Class C Common Stock.
"COMPANY" has the meaning set forth in the preamble to this
Agreement.
"CW" has the meaning set forth in the recitals to this
Agreement.
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"DESCHUTES OPTION EXCHANGE AGREEMENT" shall mean any
agreements between the Company and certain former employees of Deschutes
pursuant to which such employees receive Parent Options upon conversion of the
Deschutes Options (as those terms are defined in the Merger Agreement dated as
of August 30, 1996 among the Company, Citadel Acquisition Corporation and
Deschutes).
"DESCHUTES" means Deschutes River Broadcasting Inc., an
Oregon corporation which has merged with and into Deschutes Acquisition
Corporation.
"EMPLOYMENT AND INCENTIVE AGREEMENTS" means collectively, the
Employment Agreement between Citadel and Wilson dated as of June 28, 1996, the
1996 Equity Incentive Plan of the Company, any option grants under the 1996
Equity Incentive Plan dated as of June 28, 1996, any option agreements with
Wilson on or prior June 28, 1996 and any option grants pursuant to a Deschutes
Option Exchange Agreement made as of December 31, 1996.
"ENDEAVOUR" has the meaning set forth in the preamble to this
Agreement.
"ENDEAVOUR CO-INVESTORS" has the meaning set forth in the
preamble to this Agreement.
"ENDEAVOUR DIRECTOR" has the meaning set forth in Section
2.1(b)(v) hereof.
"ENDEAVOUR STOCK" means (i) Series E Preferred Stock held by
Endeavour or by the Endeavour Co-Investors on the date of this Agreement, (ii)
Class A Common Stock issued or issuable upon conversion of any Series E
Preferred Stock described in clause (i) above, (iii) Equity Securities of the
Company issued or issuable with respect to any Equity Securities referred to in
clauses (i) or (ii) above or this clause (iii) by way of any stock dividend or
stock split, or in connection with a combination or exchange of shares,
recapitalization, merger, consolidation, reorganization or otherwise. As to any
particular securities constituting Endeavour Stock, such securities shall
continue to constitute Endeavour Stock in the hands of any permitted transferee
thereof, but will cease to constitute Endeavour Stock when they have been
disposed of in a Public Sale.
"ENDEAVOUR UNDERLYING COMMON STOCK" means all Endeavour Stock
which is Class A Common Stock. For purposes of this Agreement, any Person who
holds any Endeavour Stock which is not Class A Common Stock will be deemed to
be the Holder of the Class A Common Stock obtainable upon the conversion,
exercise or exchange to the fullest extent possible of such Endeavour Stock
(including the conversion, exercise or exchange of all other Endeavour Stock
directly or indirectly obtainable upon any such conversion, exercise or
exchange), without regard to any restriction or limitation on any such
conversion, exercise or exchange.
"EQUITY SECURITIES" of any Person means (i) any capital
stock, partnership, membership, joint venture or other ownership or equity
interest, participation or securities (whether voting or non-voting, whether
preferred, common or otherwise, and including any stock
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appreciation, contingent interest or similar right) and (ii) any option,
warrant, security or other right (including debt securities) directly or
indirectly convertible into or exercisable or exchangeable for, or otherwise
directly or indirectly to acquire, any stock, interest, participation or
security described in clause (i) above.
"EXECUTIVE DIRECTORS" has the meaning set forth in Section
2.1(b)(iv) hereof.
"FACILITY A NOTE" shall have the meaning assigned to such
term in the Securities Purchase and Exchange Agreement.
"FINOVA" has the meaning set forth in the preamble to this
Agreement.
"FINOVA CREDIT AGREEMENT" means the Loan Agreement dated as
of October 9, 1996 among Citadel, certain other Borrowers referred to therein,
NationsBank of Texas, N.A., The First National Bank of Boston, Union Bank, The
Bank of New York and FINOVA Capital Corporation, a Delaware corporation, in its
individual capacity and as agent for all lenders, as amended by First Amendment
to Loan Instruments dated as of December 31, 1996 and Second Amendment to Loan
Instruments dated as of February 14, 1997, and as the same may be further
amended, supplemented or modified in a manner which is not prohibited by this
Agreement or the Securities Purchase and Exchange Agreement.
"INVESTOR" and "INVESTORS" have the meanings set forth in the
preamble to this Agreement.
"INVESTOR STOCK" means (i) Series A Preferred Stock held by
BFC on the date hereof after giving effect to the "Redemptions" and the
"Reclassification" (as those terms are defined in the Securities Purchase and
Exchange Agreement), (ii) Class A Common Stock issued or issuable upon the
conversion of any Series A Preferred Stock described in clause (i) above, (iii)
Series B Preferred Stock held by Oppenheimer on the date of this Agreement
after giving effect to such Redemptions and such Reclassification, (iv) Class A
Common Stock issued or issuable upon the conversion of any Series B Preferred
Stock described in clause (iii) above, (v) Series E Preferred Stock held by
Endeavour or by the Endeavour Co-Investors on the date of this Agreement, (vi)
Class A Common Stock issued or issuable upon conversion of any Series E
Preferred Stock described in clause (v) above, (vii) the Shares (as that term
is defined in the Securities Purchase and Exchange Agreement), (viii) Common
Stock issued or issuable upon the conversion of any such Share, (ix) Common
Stock issued or issuable upon the conversion or exchange of any Common Stock
described in clause (viii) above or this clause (ix), (x) Facility A Notes
Conversion Stock (as that term is defined in the Securities Purchase and
Exchange Agreement), and (xi) Equity Securities issued or issuable with respect
to any Equity Securities referred to in any of clauses (i) through (x) above or
this clause (xi) by way of any stock dividend or stock split, or in connection
with a combination or exchange of shares, recapitalization, merger,
consolidation, reorganization or otherwise. As to any particular securities
constituting Investor Stock, such securities shall continue to constitute
Investor Stock in the hands of any permitted transferee thereof, but will cease
to constitute Investor Stock when they have been disposed of in a Public Sale.
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"LRW" has the meaning set forth in the preamble to this
Agreement.
"1996 EQUITY INCENTIVE PLAN" means the Company's 1996 Equity
Incentive Plan.
"OPPENHEIMER" has the meaning set forth in the preamble to
this Agreement.
"PERSON" means any individual, corporation, association,
limited liability company, partnership, governmental agency or entity or any
other entity.
"PREFERRED STOCK" means, collectively, the Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
and any other preferred stock authorized by the Company pursuant to the terms
of the Certificate of Incorporation (including pursuant to any "Certificate of
Designation" referred to therein).
"PROCESS AGENT" has the meaning set forth in Section 6.13
hereof.
"PUBLIC SALE" means any sale of Stockholder Shares (i) to the
public pursuant to a public offering registered under the Securities Act or
(ii) following a Qualified Public Offering, to the public pursuant to the
provisions of Rule 144 under the Securities Act (or any similar provision then
in force).
"QUALIFIED PUBLIC OFFERING" means the closing of the issuance
and sale of Common Stock in an underwritten public offering which is registered
pursuant to the Securities Act and which results in the receipt by the Company
of cash proceeds of at least $25,000,000 (net of applicable commissions,
discounts and expenses).
A "QUALIFIED STATION ACQUISITION" means
(a) the Tele-Media Acquisition,
(b) the Sabre Communications Acquisition, or
(c) any other direct or indirect acquisition by the Company
or any Subsidiary of all or substantially all of the assets of any
radio station by means of a transaction of a type described in clause
(b)(i) or (b)(ii) of Section 11 of the Securities Purchase and
Exchange Agreement, or any arrangement by the Company or any
Subsidiary of a type described in clause (b)(iii) of Section 11 of the
Securities Purchase and Exchange Agreement with respect to any radio
station, which is consummated after March 17, 1997, so long as (i) the
aggregate fair value of the consideration payable by the Company and
the Subsidiaries in connection with such transaction and all related
transactions of any such type with any single Person or two or more
affiliated Persons is not greater than $30,000,000, (ii) if such
aggregate fair value is greater than $10,000,000, then the amount of
such aggregate fair value is not greater than the product of 12
multiplied by the net operating cash flow of the radio station in
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question (together with the net operating cash flow of all radio
stations which are the subject of such transaction or any related
transaction of any such type with any single Person or two or more
affiliated Persons , and in each case giving pro forma effect to all
cost and expense reductions or increases reasonably expected to be
realized following such acquisition, to the extent such pro forma
adjustments are approved by holders of a majority of the Series D
Preferred Stock) for the twelve full calendar months ending prior to
the date upon which the Company or the Subsidiary in question entered
into a definitive agreement to consummate such transaction, and (iii)
such transaction or series of related transactions is consummated
solely with the proceeds of Indebtedness which the Company or any
Subsidiary incurs in a manner which does not require a Consent
pursuant to clause (f) above and cash on hand.
For purposes of this definition, the "net operating cash flow" of any radio
station for any period will have the same meaning with respect to such radio
station as Operating Cash Flow (as that term is defined in the Stockholders
Agreement) has with respect to the Company for any period. No holder of Series
D Preferred Stock will unreasonably withhold the approval of pro forma
adjustments described in the preceding paragraph.
A "QUALIFIED STATION DISPOSITION" means any sale, conveyance,
lease, exchange or other disposition by the Company or any Subsidiary (in each
case, a "DISPOSITION TRANSACTION") of any assets of any broadcast radio
station, or the equity securities of any Subsidiary which owns only the assets
of one or more broadcast radio stations, which were the subject of a Qualified
Station Acquisition, so long as the fair value of the consideration received by
the Company and its Subsidiaries (other than any Subsidiary the equity
securities of which are being so disposed of), net of related fees, taxes and
expenses, is not less than the fair value of the consideration furnished by the
Company and/or its Subsidiaries with respect to such radio station in the
Acquisition Transaction for such radio station, plus the amount of fees and
expenses incurred by the Company and the Subsidiaries in connection with such
Qualified Station Acquisition. For purposes of this definition, if more than
one radio station is acquired or disposed of by the Company or any Subsidiary
in any Qualified Station Acquisition or Disposition Transaction or in any
series of related Qualified Station Acquisitions or Disposition Transactions,
then, for purposes of this definition, the consideration paid or received by
the Company and the Subsidiaries in such transaction(s), and the fees and
expenses incurred by them in connection with such transaction(s), shall be
deemed to have been paid, received or incurred by them pro rata, in proportion
to the respective fair values of such radio stations at the time of such
transaction(s). For purposes of this definition, the fair value of any
consideration will be based upon any independent appraisal thereof performed in
connection with the transaction in question; if no such appraisal has been
performed, the same will be based on any reasonable allocation made by the
parties thereto, if their interests with respect to such allocation are
adverse; and if no such appraisal or allocation is performed, then such fair
value will be the amount determined by the Company and approved by the holders
of a majority of the Series D Preferred Stock. No holder of Series D Preferred
Stock will unreasonably withhold any approval described in the preceding
sentence.
"SABRE COMMUNICATIONS ACQUISITION" means the acquisition by a
Subsidiary of the Company of all of the then-outstanding capital stock and
other equity securities of Sabre
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Communications, Inc. ("Sabre") for aggregate consideration consisting solely of
shares of a series of the Company's preferred stock (the shares being so issued
being the "Sabre Shares"), so long as:
(a) Sabre and/or one or more of its Subsidiaries then owns
and operates radio stations WHTO FM and WZXR FM (each, Williamsport,
Pennsylvania), WRQK FM (Canton, Ohio), WPIG FM and WHDL AM (each,
Olean, New York), and WNKI FM, WPGI AM and WQIX AM (each, Elmira, New
York), and operates under local marketing or similar arrangements and
has options to acquire radio stations WILQ FM, WLYC FM and WLYC AM
(each, Williamsport, Pennsylvania) and WCXR FM (Lewisburg,
Pennsylvania);
(b) the Sabre Shares are issued in a quantity and have terms
such that the Sabre Shares are convertible into not more than 275,000
shares of Class A Common Stock (subject to antidilution adjustments
which are comparable to those applicable to the Series E Preferred
Stock) and the aggregate initial liquidation value of the Sabre Shares
is not greater than $5,500,000;
(c) the terms and conditions relating to the Sabre Shares and
their issuance, including rights granted to the holders thereof by
contract or otherwise, are not less favorable to the Company, its
Subsidiaries and its other stockholders than the terms and conditions
relating to the issuance of Class E Common Stock pursuant to the
Merger Agreement;
(d) the sum of the consolidated indebtedness for borrowed
money of Sabre and its Subsidiaries, the aggregate amount of any
deferred purchase price payable by them in connection with any radio
station acquisition and the aggregate exercise price payable in
connection with the exercise of the options described in clause (a)
above (whether or not any such option has been exercised) at the time
of such acquisition does not exceed $11,300,000; and
(e) such acquisition has been approved by the prior vote or
written consent of a majority of the members of the Board.
"SABRE COMMUNICATIONS FINANCING" means the issuance of the
Sabre Shares as described in the definition of the term "Sabre Communications
Acquisition."
"SABRE SHARES" has the meaning set forth in the definition of
the term "Sabre Communications Acquisition."
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SECURITIES PURCHASE AND EXCHANGE AGREEMENT" has the meaning
set forth in the recitals to this Agreement.
"SERIES A PREFERRED STOCK" shall mean the voting Series A
Convertible Preferred Stock of the Company, par value $.001 per share.
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"SERIES B PREFERRED STOCK" shall mean the voting Series B
Convertible Preferred Stock of the Company, par value $.001 per share.
"SERIES C PREFERRED STOCK" shall mean the voting Series C
Convertible Preferred Stock of the Company, par value $.001 per share.
"SERIES D PREFERRED STOCK" shall mean the nonvoting Series D
Convertible Preferred Stock of the Company, par value $.001 per share.
"SERIES E PREFERRED STOCK" shall mean the voting Series E
Convertible Preferred Stock of the Company, par value $.001 per share.
"STOCKHOLDER" and "STOCKHOLDERS" have the meaning set forth
in the preamble to this Agreement.
"STOCKHOLDER SHARES" means (i) Investor Stock described in
clauses (i) through (x) of the definition of the term "Investor Stock," (ii)
Common Stock held by Wilson on the date hereof, (iii) options or other rights
to acquire Common Stock issued prior to, on or after the date of this Agreement
to Wilson, (iv) Common Stock issued or issuable upon the exercise of any option
or other right described in clause (iii) above, and (v) Equity Securities
issued or issuable with respect to any Equity Securities referred to in any of
clauses (i) through (iv) above or this clause (v) by way of any stock dividend
or stock split, or in connection with a combination or exchange of shares,
recapitalization, merger, consolidation, reorganization or otherwise. As to any
particular securities constituting Stockholder Shares, such securities will
continue to constitute Stockholder Shares in the hands of any permitted
transferee thereof, but will cease to constitute Stockholder Shares when they
have been disposed of in a Public Sale.
"SUB BOARD" has the meaning set forth in Section 2.1(c)
hereof.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, association, limited liability company or other
business entity of which (a) if a corporation, a majority of the total voting
power of Equity Securities entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (b) if a partnership, association or other business entity, a majority of
the partnership or other Equity Securities thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more Subsidiaries
of that Person or a combination thereof. For purposes of this Agreement, a
Person or Persons will be deemed to have a majority ownership interest in a
partnership, association or other business entity if such Person or Persons are
allocated a majority of partnership, association or other business entity gains
or losses or control the managing director or general partner of such
partnership, association or other business entity.
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"TELE-MEDIA ACQUISITION" means the purchase and sale of
shares of capital stock proposed to be consummated by the Company and/or its
Subsidiaries on material terms and conditions which are not less favorable to
the Company and its Subsidiaries than those set forth in the draft (dated March
13, 1997) of the Agreement of Purchase and Sale proposed to be entered into
among the Company, Citadel, Tele-Media Broadcasting Company, Tele-Media
Broadcasting Company of Centre Region, Tele-Media Broadcasting Holding
Corporation and the shareholders of the latter three corporations, so long as
such purchase and sale is consummated on or prior to February 28, 1998.
"TELE-MEDIA FINANCING" means transactions necessary for the
Company and its Subsidiaries to obtain the funds necessary to pay the purchase
price and expenses to be incurred by them in connection with the Tele-Media
Acquisition, by means of the issuance of approximately $100,000,000 in face
amount of Senior Subordinated Notes, and approximately $100,000,000 in face
amount of Exchangeable Preferred Stock, of the Company, as such financing
transactions are more particularly described in the Citadel Communications
Corporation Presentation to the Board of Directors dated February 14, 1997
prepared by Prudential Securities, so long as such financing transactions are
consummated on or prior to February 28, 1998.
"TRANSFER" means to sell, transfer, assign, pledge,
hypothecate or otherwise dispose of, in any manner whatsoever.
"UNDERLYING COMMON STOCK" means all Stockholder Shares which
are Class A Common Stock. For purposes of this Agreement, any Person who holds
any Stockholder Shares which are not Class A Common Stock will be deemed to be
the Holder of the Class A Common Stock obtainable upon the conversion, exercise
or exchange to the fullest extent possible of such Stockholder Shares
(including the conversion, exercise or exchange of all other Stockholder Shares
directly or indirectly obtainable upon any such conversion, exercise or
exchange), without regard to any restriction or limitation on any such
conversion, exercise or exchange; provided that no Holder of any Facility A
Note, on or prior to the Maturity Date (as that term is defined in such
Facility A Note) of such Facility A Note, shall be deemed to be the Holder of
any such Class A Common Stock by reason of holding such Facility A Note.
"VOTING TRUST" has the meaning set forth in the preamble to
this Agreement.
"VOTING TRUST AGREEMENT" has the meaning set forth in the
preamble to this Agreement.
"VOTING TRUST DIRECTORS" has the meaning set forth in Section
2.1(b)(i) hereof.
"VOTING TRUSTEE" has the meaning set forth in the preamble to
this Agreement.
"VOTING TRUST STOCK" means (i) Shares (as that term is
defined in the Securities Purchase and Exchange Agreement) issued to ABRY or
ABRY/CIP pursuant to the Securities Purchase and Exchange Agreement or directly
or indirectly upon the conversion or exchange of any
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such Share, (ii) Common Stock issued or issuable upon the conversion of any
such Share, (iii) Common Stock issued or issuable upon the conversion or
exchange of any Common Stock described in clause (ii) above or this clause
(iii), (iv) Facility A Notes Conversion Stock (as that term is defined in the
Securities Purchase and Exchange Agreement) directly or indirectly resulting
from the conversion of any Facility A Note issued to ABRY or ABRY/CIP pursuant
to the Securities Purchase and Exchange Agreement, and (v) Equity Securities
issued or issuable with respect to any Equity Securities referred to in any of
clauses (i) through (iv) above or this clause (v) by way of any stock dividend
or stock split, or in connection with a combination or exchange of shares,
recapitalization, merger, consolidation reorganization or otherwise. As to any
particular securities constituting Voting Trust Stock, such securities shall
continue to constitute Voting Trust Stock in the hands of any permitted
transferee thereof, but will cease to constitute Voting Trust Stock when they
have been disposed of in a Public Sale.
"VOTING TRUST UNDERLYING COMMON STOCK" means all Voting Trust
Stock which is Class A Common Stock. For purposes of this Agreement, any Person
who holds any Voting Trust Stock which is not Class A Common Stock will be
deemed to be the Holder of the Class A Common Stock obtainable upon the
conversion, exercise or exchange to the fullest extent possible of such Voting
Trust Stock (including the conversion, exercise or exchange of all other Voting
Trust Stock directly or indirectly obtainable upon any such conversion,
exercise or exchange), without regard to any restriction or limitation on any
such conversion, exercise or exchange; provided that no Holder of any Facility
A Note, on or prior to the Maturity Date (as that term is defined in such
Facility A Note) of such Facility A Note, shall be deemed to be the Holder of
any such Class A Common Stock by reason of holding such Facility A Note.
"WILSON" has the meaning set forth in the preamble to this
Agreement.
"YUDKOFF" has the meaning set forth in Section 2.1(b)(ii)
hereof.
2. BOARD OF DIRECTORS.
2.1 BOARD COMPOSITION. From and after the date of
this Agreement and until the provisions of this Section 2 cease to be
effective, each Stockholder will vote all of such Stockholder's Stockholder
Shares and any other voting securities of the Company over which such
Stockholder has voting control and will take all other necessary or desirable
actions within such Stockholders control ((x) whether in such Stockholder's
capacity as a voting trustee, stockholder, director, member of a board
committee or officer of the Company or otherwise, and including attendance at
meetings in person or by proxy for purposes of obtaining a quorum and execution
of written consents in lieu of meetings, and (y) but excluding conversion of
shares or exercise of options or warrants), and the Company will take all
necessary and desirable actions within its control (including calling special
meetings of the Board or any Sub Board or the stockholders of the Company or
any Subsidiary), so that:
(a) the authorized number of directors comprising the Board
will be established at eight (8) directors;
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<PAGE> 12
(b) the following persons shall be elected to the Board:
(i) three representatives designated by the holders
of a majority of the Voting Trust Underlying Common Stock
(collectively, the "Voting Trust Directors"), none of whom at any time
shall be an Affiliate of ABRY or ABRY/CIP (and by his execution and
delivery of this Agreement, the Voting Trustee hereby designates
himself, J. Walter Corcoran and Harlan Levy as the initial Voting
Trust Directors);
(ii) [RESERVED.]
(iii) one representative designated by the holders
of a majority of the BFC Underlying Common Stock (the "BFC Director"),
who initially shall be Scott Smith;
(iv) three representatives designated by LRW
(collectively, the "Executive Directors"), one of whom shall be LRW,
one of whom initially shall be Michael Ahearn, and the other of whom
initially shall be Mark Leavitt; and
(v) one representative designated by the holders of
a majority of the Endeavour Underlying Common Stock (the "Endeavour
Director"), who initially shall be John von Schlegell;
(c) the composition of the board of directors of each of the
Company's Subsidiaries (a "Sub Board") will be the same as that of the Board;
(d) any committees of the Board or a Sub Board will be
created only upon the approval of not less than three-quarters of the members
of the Board;
(e) the Company shall have a Compensation Committee and it
will consist of three Board members, comprised of (i) one designee from among
the Voting Trust Directors, (ii) the BFC Director, and (iii) one of the
Executive Directors (other than LRW), and the initial Compensation Committee
shall consist of Christopher Hall (Chairman), Scott Smith and Mark Leavitt;
(f) the removal from the Board or a Sub Board (with or
without cause) of any representative designated pursuant to Section 2.1(b)(i),
2.1(b)(iii), 2.1(b)(iv) or 2.1(b)(v) will be at the written request of the
Person(s) entitled to designate directors under each such respective provision,
but only upon such written request and under no other circumstances;
(g) in the event that any representative designated pursuant
to Section 2.1(b)(i), 2.1(b)(iii), 2.1(b)(iv), or 2.1(b)(v) for any reason
ceases to serve as a member of the Board or a Sub Board during his or her term
of office, the resulting vacancy on the Board or the Sub Board will be filled
by a representative designated by the Person(s) and in the manner described in
such respective Section;
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<PAGE> 13
(h) for so long as LRW is employed by the Company he shall
have the rights set forth in Sections 2.1(b)(iv); provided, that if at any time
LRW should cease to own at least 5% of the Stockholder Shares then outstanding,
then LRW shall continue to be an Executive Director, but shall automatically
lose the right set forth in Section 2.1(b)(iv) to designate the two Executive
Directors other than himself;
(i) if LRW ceases to be employed by the Company at any time,
he shall cease to have the rights set forth in Sections 2.1(b)(iv); provided,
that for so long as he holds equal to or greater than 5% of the Stockholder
Shares then outstanding, he shall be entitled to remain an Executive Director;
and
(j) the election of individuals to fill any directorships
described in Section 2.1(b)(iv) which LRW is not entitled to designate by
reason of Section 2.1(h) or (i) thereafter will be accomplished in accordance
with the Company's or the applicable Subsidiary's bylaws and applicable law.
2.2 MEETINGS, EXPENSES. The Company will pay the
reasonable out-of- pocket expenses incurred by each director in connection with
attending the meetings of the Board, any Sub Board and any committee thereof.
The Board and each Sub Board shall meet at least four times a year and shall
meet once within each 120-day period.
2.3 TERMINATION OF RIGHTS. The rights and
obligations of a Stockholder or group of Stockholders under this Section 2 will
terminate upon consummation of a Qualified Public Offering. In addition, the
provisions of this Section 2 shall terminate automatically and be of no further
force and effect upon the fifteenth anniversary of the date hereof, unless
extended in accordance with the General Corporation Law of the State of Nevada.
2.4 FAILURE TO DESIGNATE OR REPLACE. If any party
fails to timely designate or replace a representative to fill a directorship
pursuant to the terms of this Section 2, the election of an individual to such
directorship will be accomplished in accordance with the Company's or the
applicable Subsidiary's bylaws and applicable law.
3. ACTIONS REQUIRING SUPERMAJORITY APPROVAL. Other than any
Qualified Acquisition Transaction or Qualified Disposition Transaction (as to
which only the prior vote or written consent of a majority of the members of
the Board shall be required by reason of this Agreement), without the prior
vote or written consent of not less than three-quarters of the members of the
Board the Company shall not take and shall not permit any Subsidiary to take
any of the following actions:
(A) TRANSFERS: DISPOSITIONS. Other than pursuant to
Section 6 of the Stockholder Agreement, sell, option, convey, lease (as
lessor), exchange or otherwise dispose of or transfer in any fiscal year, any
portion of or any interest in any property of the Company or any Subsidiary in
the aggregate having a fair market value of more than (i) $1,000,000, unless
the same
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<PAGE> 14
has been approved by the prior vote or written consent of a majority of the
members of the board, or (ii) $5,000,000, whether or not such majority approval
has been obtained;
(B) MERGERS: ACQUISITIONS. Directly or indirectly,
by operation of law or otherwise, merge with, consolidate with, acquire,
directly or indirectly, all or any substantial portion of the assets, Equity
Securities or business of any Person or any radio station, or otherwise combine
with any Person (in each case other than the Company or any wholly owned
Subsidiary of the Company);
(C) INVESTMENTS. Purchase or otherwise directly or
indirectly acquire, hold or invest in the Equity Securities of any other Person
(other than any wholly owned Subsidiary of the Company), or make any loan to,
or enter into any arrangement for the purpose of directly or indirectly
providing funds or credit to, or make any other investment, whether by way of
capital contribution, time deposit or otherwise, in, through or with any Person
(other than any wholly owned Subsidiary of the Company);
(D) JOINT VENTURES: CONTRACTS. Enter into any joint
venture agreement, or enter into local marketing, time brokerage or similar
arrangement if such arrangement is entered into in connection with the grant of
an option to purchase or agreement to purchase the station that is the subject
of such arrangement;
(E) BANKRUPTCY. Make, execute or deliver on behalf
of the Company or any Subsidiary an assignment for the benefit of creditors' or
cause the Company, any Subsidiary or any part thereof or interest therein to be
subject to the authority of any trustee, custodian or receiver or to be subject
to any proceeding for bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution or liquidation, or similar
proceedings with respect to the Company or any Subsidiary;
(F) ISSUANCE OR REPURCHASE OF EQUITY SECURITIES.
Except for any issuance described in any of clauses (ii) through (vi) of
Section 2.4 of the Stockholders Agreement or any issuance as part of the
Tele-Media Financing or the Sabre Communications Financing (either of which
shall require only the prior vote or written consent of a majority of the
members of the Board by reason of this Agreement), any issuance upon the
conversion, exercise or exchange in accordance with its terms of any Equity
Security issued in accordance with this Section 3(f), the grant of any option
pursuant to the 1996 Equity Incentive Plan or any other stock option plan which
is approved by not less than three-quarters of the members of the Board after
the date hereof, or any repurchase pursuant to any of Sections 3, 4 and 5 of
the Stockholders Agreement,
(i) authorize, issue or enter into any
agreement, stock option, incentive, compensation or other
plan or arrangement providing for the issuance (contingent or
otherwise) of any Equity Securities, whether for cash or for
non-cash consideration (provided that this clause (i) will
not apply to any issuance of Equity Securities of any
Subsidiary of the Company to the Company or any wholly owned
Subsidiary of the Company),
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<PAGE> 15
(ii) redeem, repurchase or otherwise retire
any of the Company's Equity Securities, other than (A) the
Class A Common Stock owned by certain members of management
of the Company or any Subsidiary (other than Wilson) upon the
termination of the employment thereof (which such repurchases
shall not in the aggregate exceed $500,000 in an amount
during any twelve-month period) or (B) any payment in respect
of any Facility A Note, or
(iii) with respect to the Company, make any
dividend, distribution or other stockholder expenditures with
respect to any Equity Securities or apply any of its assets
to the purchase, redemption or other retirement of, or set
apart any sum or any non-cash consideration for the payment
of, or make any other distributions or reduction or capital
or otherwise in respect of any of its Equity Securities or in
respect of any Facility A Note; provided, that this clause
(iii) shall not apply to any Subsidiary;
(G) TRANSACTIONS WITH AFFILIATES. (i) Employ or
contract with Wilson or any Investor or any Affiliate of Wilson or any
Investor, other than as contemplated in the Employment and Incentive
Agreements, (ii) modify, amend, accelerate, cancel or grant any waivers under
any Employment and Incentive Agreements, or (iii) employ or contract with any
Affiliate other than (A) renewal of the Airplane Lease on or after December 31,
2001, on the terms in effect as of June 28, 1996, (B) employment or
compensation arrangements entered into in the ordinary course of business with
Persons other than Wilson on terms which are comparable to the terms of the
employment of employees of the Company and its Subsidiaries having similar
duties or (C) customary banking arrangements with Bank of America Illinois, an
Illinois banking corporation, or any of its Affiliates; however, with respect
to clauses (i) through (iii) above, transactions with Wilson or any Affiliate
of Wilson shall require the approval of five (5) of seven (7) members of the
Board or any Sub Board (with Wilson recusing himself from such vote);
(H) AMENDMENT OF CERTIFICATE OF INCORPORATION:
BYLAWS. Except as contemplated by Section 4(g) of the Securities Purchase and
Exchange Agreement, make any amendment to the certificate or articles of
incorporation or the bylaws of the Company or any of its Subsidiaries, or file
any resolution of the Board or the board of directors of any Subsidiary
designating or amending the terms of any Additional Preferred Stock;
(I) PUBLIC OFFERINGS. Issue, sell or offer to sell
any of the securities of the Company or any Subsidiary in a public offering
that is registered under the Securities Act;
(J) INDEBTEDNESS: AMENDMENT OF DEBT DOCUMENTS. (i)
Create, incur, issue, assume, become liable with respect to, or extend that
maturity of, or permit any Subsidiary to create, incur, issue, assume, become
liable with respect to, or extend the maturity of any Indebtedness for Borrowed
Money (as defined in the Securities Purchase and Exchange Agreement) except:
15
<PAGE> 16
A. up to $150,000,000 in principal amount of
Indebtedness for Borrowed Money outstanding at any time and incurred
pursuant to the FINOVA Credit Agreement (or pursuant to a replacement
facility entered into in connection with the Tele-Media Acquisition
(i) which permits all or a portion of the amounts of prior borrowings
which have been repaid to be reborrowed to pay the purchase price and
expenses associated with radio station acquisitions, (ii) which
otherwise has terms and conditions not less favorable to the Company
and its Subsidiaries than the terms and conditions of the FINOVA
Credit Agreement, and (iii) the establishment of which is approved by
the prior vote or written consent of a majority of the members of the
Board) and any notes issued pursuant thereto, and all Indebtedness for
Borrowed Money outstanding as of the date hereof and disclosed on
Schedule 6 to the Securities Purchase and Exchange Agreement;
B. the Facility A Notes;
C. Indebtedness for Borrowed Money incurred as part
of the Tele-Media Financing or the Sabre Communications Financing;
D. Other Indebtedness for Borrowed Money which does
not exceed $3,000,000 in principal amount outstanding at any time and the
incurrence of which is approved by the prior vote or written consent of a
majority of the members of the Board; and
E. any Indebtedness for Borrowed Money pursuant to a
Permitted Senior Substitution (as defined in the Securities Purchase and
Exchange Agreement);
and the Company will not extend the maturity of any Indebtedness for Borrowed
Money described in clause (A) or (C) above without the prior vote or written
consent of not less than three-quarters of the members of the Board;
or (ii) amend, supplement, modify or waive any term or provision of the FINOVA
Credit Agreement the Facility A Notes or any other agreement or arrangement
relating to Indebtedness for Borrowed Money (other than (A) to add any
wholly-owned Subsidiary of the Company as a party thereto or as an additional
guarantor of the Indebtedness for Borrowed Money thereunder, (B) to identify,
refer to or reflect any Person, radio station or assets acquired, or to effect
any required deletion so that such agreement or arrangement no longer
identifies, refers to or reflects any Person, radio station or assets disposed
of, in any Qualified Station Acquisition or Qualified Station Disposition, (C)
to amend Exhibit 1E to the FINOVA Credit Agreement to remove Peggy Koenig,
Royce Yudkoff and Jay Grossman and to refer to the members of the Board the
expenses of whom are reimbursed by the Company, each Observer, the Voting
Trustee and the Back-Up Trustees (as that term is defined in the Voting Trust
Agreement), or (D) to modify the exhibits to the FINOVA Credit Agreement to
reflect the addition of liabilities and expenses undertaken in connection with
any Qualified Station Acquisition, to the extent such liabilities and expenses
in the aggregate are not material to the acquired station(s) in question
(provided that, in the case of any amendment, supplement, modification or
waiver described in clause (B), (C) or (D) above, the same has been approved by
the prior vote or written consent of a majority of the members of the Board));
or
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<PAGE> 17
(K) AGREEMENT; COMMITMENT. Agree or commit to take
any action which, by reason of any of clauses (a) through (j) above, requires
the vote or written consent of not less than three-quarters of the members of
the Board.
4. CONFLICTING AGREEMENTS. Each Stockholder represents that
such Stockholder has not granted and is not a party to any proxy, voting trust
or other agreement which is inconsistent with or conflicts with the provisions
of this Agreement, and no holder of Stockholder Shares will grant any proxy or
become party to any voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement.
5. LEGEND. Each certificate for Stockholder Shares will be
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF THE THIRD AMENDED AND RESTATED
VOTING AGREEMENT DATED AS OF MARCH 17, 1997, AS AMENDED AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF
THE COMPANY'S STOCKHOLDERS, AND THE COMPANY RESERVES THE
RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH
TERMS AND CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER. A COPY OF SUCH VOTING AGREEMENT WILL BE FURNISHED
BY THE COMPANY TO THE HOLDER HEREOF WITHOUT CHARGE UPON
WRITTEN REQUEST.
The legend forth set forth above shall be removed from the certificates
evidencing shares which cease to be Stockholder Shares upon (a) the date on
which such Stockholder Share has been transferred in a Public Sale, (b) the
fifteenth anniversary of the date of this Agreement (unless extended in
accordance with the General Corporation Law of Nevada), or (c) the consummation
of a Qualified Public Offering.
6. TRANSFERS. Prior to Transferring any Stockholder Shares
(other than in a Public Sale), to any Person, the transferring Stockholder
shall cause the prospective transferee to execute and deliver to the Company
and the other Stockholders a counterpart of this Agreement. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement will be void, and the Company will not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
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<PAGE> 18
7. MISCELLANEOUS.
7.1 REMEDIES. Each holder of Stockholder Shares will
have all rights and remedies set forth in this Agreement, the Certificate of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any Person having any rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, without posting a bond or other security, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any Stockholder may in his, her or its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violation of the provisions of this Agreement.
7.2 CONSENT TO AMENDMENTS. Except as otherwise
provided herein, no modification, amendment or waiver of any provision of this
Agreement will be effective against the Company or any holder of Stockholder
Shares unless such modification, amendment or waiver is approved in writing by
the Company, the beneficial owners (meaning ABRY and ABRY/CIP, in the case of
Voting Trust Stock which is held in the Voting Trust) of a majority of the
Voting Trust Underlying Common Stock, the holders of a majority of the BFC
Underlying Common Stock, the holders of a majority of the Endeavour Underlying
Common Stock and LRW, respectively. The failure of any party to enforce any of
the provisions of this Agreement will in no way be construed as a waiver of
such provisions and will not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its
terms.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, and whether or not any express
assignment has been made, the provisions of this Agreement which are for any
Stockholder's benefit as a purchaser or holder of Stockholder Shares are also
for the benefit of, enforceable by, and binding upon, any subsequent holder of
such Stockholder Shares.
7.4 ENTIRE AGREEMENT. Except as otherwise expressly
set forth herein, this document embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, including the Voting
Agreement dated October 1, 1993 and the Amended and Restated Voting Agreement
dated as of June 28, 1996 and the Voting Agreement (as defined herein), which
may have related to the subject matter hereof in any way.
7.5 SEVERABILITY. Whenever possible, each provision
of this Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to
be prohibited by or invalid under applicable law, such
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<PAGE> 19
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
7.7 DESCRIPTIVE HEADINGS. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
part of this Agreement.
7.8 NOTICES. Notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement will be in writing and will be deemed to have been given when
delivered personally to the recipient, one business day after the date when
sent to the recipient by reputable express courier service (charges prepaid) or
five business days after the date when mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to the Stockholders and to the
Company at the addresses indicated below:
If to the Company:
Citadel Communications Corporation
140 South Ash Avenue
Tempe, Arizona 85281
Attention: Donna Hefner
and
Lawrence R. Wilson
1015 Eastman Drive
Bigfork, Montana 59911
With a copy (which will not constitute notice) to:
Osborn Maledon, P.A.
2929 North Central
Suite 2100
Phoenix, Arizona 85012
Attention: Michelle M. Matiski, Esq.
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<PAGE> 20
If to the Voting Trustee:
Christopher Hall, Esq.
Piliero, Goldstein, Jenkins & Hall
292 Madison Avenue
New York, New York 10017-6307
With a copy (which shall not constitute notice) to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: John L. Kuehn, Esq.
If to any other Stockholder:
To the respective address set forth on
Schedule A to the Stockholders Agreement, as
amended from time to time, including copies
as indicated in Schedule A to the
Stockholders Agreement
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
7.9 NO OTHER THIRD-PARTY BENEFICIARIES. This
Agreement will not confer any rights or remedies upon any Person other than the
Company, the Stockholders, ABRY, ABRY/CIP and their respective successors and
permitted assigns.
7.10 CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction will be applied against
any party. Any reference to any federal, state, local, or foreign statute or
law will be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The use of the word
"including" in this Agreement is intended by the parties to be by way of
example rather than limitation.
7.12 GOVERNING LAW. THE GENERAL CORPORATION LAW OF
THE STATE OF NEVADA WILL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF
THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY
THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF NEVADA.
7.13 SUBMISSION TO JURISDICTION. Each of the parties
to this Agreement submits to the jurisdiction of any state or federal court
sitting in Boston, Massachusetts, Chicago,
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<PAGE> 21
Illinois, Nevada or Arizona in any action or proceeding arising out of or
relating to this Agreement, agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court, and agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court. Each of the parties to this Agreement waives any defense of
inconvenient forum to be maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
party with respect thereto. Each party to this Agreement appoints CT
Corporation System (the "Process Agent"), with addresses of 208 South LaSalle
Street, Chicago, Illinois 60604, One East First Street, Reno, Nevada, Suite
1601, 3225 North Central Avenue, Phoenix, Arizona 85012, and 2 Oliver Street,
Boston, Massachusetts 02109, as its agent to receive on its behalf service of
copies of the summons and complaint and any other process that might be served
in the action or proceeding. Any party to this Agreement may make service on
any other party by sending or delivering a copy of the process (a) to the party
to be served at the address and in the manner provided for the giving of
notices in Section 7.8 or (b) to the party to be served in care of the Process
Agent at the address and in the manner provided for the giving of notices in
Section 7.8. Nothing in this Section, however, will affect the right of any
party to serve legal process in any other manner permitted by law. Each party
agrees that a final judgment in any action or proceeding so brought will be
conclusive and may be enforced by suit on the judgment or in any other manner
provided by law.
7.14 FCC MATTERS. Notwithstanding any provision
contained herein to the contrary, no party hereto may exercise any of its
rights or remedies hereunder, or take any actions permitted hereby, if prior
thereto the Company receives a written opinion from its nationally recognized
FCC counsel that after consultation with the staff of the Federal
Communications Commission ("FCC") such exercise or action will violate the
Communication Act of 1934 or the rules, regulations, or policies promulgated
thereunder.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
[SIGNATURES APPEAR ON THE FOLLOWING PAGES]
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<PAGE> 22
[SIGNATURE PAGE FOR THIRD AMENDED]
AND RESTATED VOTING AGREEMENT]
CITADEL COMMUNICATIONS CORPORATION
By /s/ Lawrence R. Wilson
-------------------------------------
Its President
---------------------------------
/s/ Lawrence R. Wilson
------------------------------------------
Lawrence R. Wilson
/s/ Claire Wilson
------------------------------------------
Claire Wilson
/s/ Christopher P. Hall
------------------------------------------
Christopher Hall, as Trustee pursuant to the Voting
Trust Agreement referred to above
22
<PAGE> 23
[SIGNATURE PAGE FOR THIRD AMENDED]
AND RESTATED VOTING AGREEMENT]
BAKER, FENTRESS & COMPANY
By /s/ Scott E. Smith
-------------------------------------
Its Executive Vice President
---------------------------------
OPPENHEIMER & CO., INC.
By /s/ Rob Blum
-------------------------------------
Its Assistant Secretary
---------------------------------
FINOVA CAPITAL CORPORATION
By /s/ Matthew M. Grey
-------------------------------------
Its Group Vice President
---------------------------------
23
<PAGE> 24
[SIGNATURE PAGE FOR THIRD AMENDED]
AND RESTATED VOTING AGREEMENT]
ENDEAVOUR:
THE ENDEAVOUR CAPITAL FUND LIMITED
PARTNERSHIP
By DVS Management, Inc.
Its General Partner
By /s/ John von Schlegell
----------------------------------
Its Managing Partner
-----------------------------
ENDEAVOUR CO-INVESTORS:
/s/ Joseph P. Tennant
------------------------------------------
Joseph P. Tennant
THE SCHAFBUCH FAMILY TRUST u/a/d 2-15-94
By: /s/ Richard M. Schafbuch
----------------------------------
Richard M. Schafbuch, Trustee
By: /s/ Susan P. Schafbuch
----------------------------------
Susan P. Schafbuch, Trustee
BABSON CAPITAL PARTNERS LIMITED
PARTNERSHIP
By /s/ Stephen E. Babson
-------------------------------------
Its General Partner
---------------------------------
/s/ Tal Johnson
------------------------------------------
Tal Johnson
/s/ Edward T. Hardy
------------------------------------------
Edward T. Hardy
/s/ Ralph W. McKee
------------------------------------------
Ralph W. McKee
24
<PAGE> 25
Acknowledged:
ABRY BROADCAST PARTNERS II, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
------------------------------------------
Its President
-----------------------------------------
ABRY/CITADEL INVESTMENT PARTNERS, L.P.
By ABRY CAPITAL, L.P.
Its General partner
By ABRY HOLDINGS, INC.
Its General Partner
By /s/ Royce Yudkoff
------------------------------------------
Its President
-----------------------------------------
25
<PAGE> 1
Exhibit 10.16
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED VOTING AGREEMENT
This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED VOTING AGREEMENT is
dated as of June __, 1997 (the "Amendment"), and is entered into by and among
CITADEL COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company"), ABRY
BROADCAST PARTNERS II, L.P., a Delaware limited partnership ("ABRY"), BAKER
FENTRESS & COMPANY, a Delaware corporation ("BFC"), FINOVA CAPITAL CORPORATION,
a Delaware corporation ("FINOVA"), OPPENHEIMER & CO., INC., a Delaware
corporation ("Oppenheimer"), THE ENDEAVOUR CAPITAL FUND LIMITED PARTNERSHIP, an
Oregon limited partnership ("Endeavour"), JOSEPH P. TENNANT, THE SCHAFBUCH
FAMILY TRUST u/a/d 2-15-94, BABSON CAPITAL PARTNERS LIMITED PARTNERSHIP, an
Oregon limited partnership; TAL JOHNSON, EDWARD T. HARDY, and RALPH W. MCKEE
(collectively, the "Endeavour Co-Investors") and LAWRENCE R. WILSON ("LRW")
and CLAIRE WILSON.
RECITALS
A. As of March 17, 1997, the parties to this Amendment and certain
other persons entered into a Third Amended and Restated Voting Agreement (the
"Voting Agreement"). Each capitalized term which is used and not otherwise
defined in this Amendment and which is defined in the Voting Agreement has the
meaning which the Voting Agreement assigns to that term.
B. In connection with the anticipated offering and issuance by the
Company's wholly-owned subsidiary, Citadel Broadcasting Company, of certain
exchangeable preferred stock, the parties to this Amendment have agreed to make
certain changes to the terms of the Voting Agreement.
ACCORDINGLY, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Amendment agree as follows:
1. AMENDMENTS.
1.1 Section 1 of the Voting Agreement is amended by adding
thereto the following defined terms and accompanying definitions:
"Citadel Broadcasting" means Citadel Broadcasting Company, a
Nevada corporation.
"Exchangeable Preferred Stock" means certain exchangeable
preferred stock of Citadel Broadcasting, as described in a certain "re-herring"
Offering Memorandum dated June 11, 1997.
<PAGE> 2
1.2 Section 2.1(c) of the Voting Agreement is hereby amended and
restated in its entirety as follows:
(c) the composition of the board of directors of each of the
Company's subsidiaries (a "Sub Board") will be the same as
that of the Board provided that, in addition to the
individuals who are then members of the Board, from time to
time as may be required by the articles or certificate of
incorporation of Citadel Broadcasting the members of the
board of directors of Citadel Broadcasting will also include
up to two individuals elected by the holders of Exchangeable
Preferred Stock as provided in such articles or certificate
of incorporation);
2. EFFECTIVENESS; CERTIFICATIONS. This Amendment shall be effective
when it has been executed and delivered by each of the Company, ABRY, BFC,
Endeavour and LRW. As a material inducement to each of the other parties hereto
to execute and deliver this Amendment: (a) ABRY certifies that it is the
beneficial owner of a majority of the Voting Trust Underlying Common Stock; (b)
BFC certifies that it is the holder of a majority of the BFC Underlying Common
Stock; and (c) Endeavour certifies that it is the holder of majority of the
Endeavour Underlying Common Stock.
3. CHOICE OF LAW. The General Corporation Law of the State of Nevada
will govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Amendment will be governed by the internal law, and not
the law of conflicts, of the State of Illinois.
4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this First Amendment
to be duly executed and delivered by their respective duly authorized officers
on the day and year first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
-2-
<PAGE> 3
[SIGNATURE PAGE FOR FIRST AMENDMENT
TO THIRD AMENDED AND RESTATED VOTING AGREEMENT]
CITADEL COMMUNICATIONS CORPORATION
By /s/ Lawrence R. Wilson
-----------------------
Its President
----------------------
/s/Lawrence R. Wilson
-----------------------
Lawrence R. Wilson
/s/ Claire Wilson
-----------------------
Claire Wilson
/s/ Christopher P. Hall
-----------------------
Christopher Hall, as Trustee pursuant to the
Voting Trust Agreement referred to above
-3-
<PAGE> 4
[SIGNATURE PAGE FOR FIRST AMENDMENT
TO THIRD AMENDED AND RESTATED VOTING AGREEMENT]
BAKER, FENTRESS & COMPANY
By /s/ Scott E. Smith
--------------------------
Its Executive Vice President
-------------------------
OPPENHEIMER & CO., INC.
By /s/ Matthew Maryles
--------------------------
Its Managing Director
-------------------------
FINOVA CAPITAL CORPORATION
By /s/ Matthew M. Grey
--------------------------
Its Group Vice President
-------------------------
-4-
<PAGE> 5
[SIGNATURE PAGE FOR FIRST AMENDMENT
TO THIRD AMENDED AND RESTATED VOTING AGREEMENT]
ENDEAVOUR:
THE ENDEAVOUR CAPITAL FUND LIMITED PARTNERSHIP
By DVS Management, Inc., Its General Partner
By /s/ John E. von Schlegell
-----------------------------
Its President
----------------------------
ENDEAVOUR CO-INVESTORS:
*
--------------------------------
Joseph P. Tennant
THE SCHAFBUCH FAMILY TRUST u/a/d 2-15-94
By: *
--------------------------------
Richard M. Schafbuch, Trustee
By: *
--------------------------------
Susan P. Schafbuch, Trustee
BABSON CAPITAL PARTNERS LIMITED PARTNERSHIP
By *
--------------------------------
Its ____________________________
*
--------------------------------
Tal Johnson
*
--------------------------------
Edward T. Hardy
*
--------------------------------
Ralph W. McKee
* By: /s/ John E. von Schlegell
---------------------------
Name: John E. von Schlegell for DVS Management,
Inc. for The Endeavour Capital Fund
Limited Partnership
Attorney-In-Fact
-5-
<PAGE> 1
Exhibit 10.18
AMENDED AND RESTATED LOAN AGREEMENT
AMONG
CITADEL BROADCASTING COMPANY AND
CITADEL LICENSE, INC.
AND
LENDERS
DATED JULY 3, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PRELIMINARY STATEMENT.................................................................................. 1
ARTICLE I.............................................................................................. 1
DEFINITIONS AND DETERMINATIONS......................................................................... 1
1.1 Definitions.......................................................................... 1
1.2 Time Periods......................................................................... 28
1.3 Accounting Terms and Determinations.................................................. 28
1.4 References........................................................................... 29
1.5 Borrowers' Knowledge................................................................. 29
1.6 Benefit of Lenders................................................................... 29
ARTICLE II............................................................................................. 29
LOANS AND TERMS OF PAYMENT............................................................................. 29
2.1 Existing Loans; Outstanding L/C Guaranty Obligations................................. 29
2.2 Additional Loans; Issuance of L/C Guaranties......................................... 29
2.2.1 Obligation of Lenders....................................................... 29
2.2.2 Obligations of Borrowers.................................................... 30
2.3 Conditions to Additional Loans; L/C Guaranties....................................... 30
2.4 Procedures for Additional Loans and Issuance of L/C Guaranties....................... 31
2.4.1 Making Additional Loans Other Than in Connection With L/C
Guaranties.................................................................. 31
2.4.2 L/C Guaranties.............................................................. 31
2.4.3 Additional Loans in Connection with L/C Guaranties.......................... 31
2.5 Interest; Default Rate, Late Charges, Loan Fees and Agent's Fees............ 32
2.5.1 Interest.................................................................... 32
2.5.2 Late Charges................................................................ 33
2.5.3 Amendment Fee............................................................... 33
2.5.4 Agent's Fee................................................................. 33
2.5.5 Unused Commitment Fee....................................................... 33
2.5.6 Letter of Credit Fees....................................................... 34
2.5.7 Computation of Interest, Unused Commitment Fees and Letter of
Credit Fees................................................................. 34
2.6 LIBOR Loans.......................................................................... 34
2.6.1 Election by Borrowers....................................................... 34
2.6.2 LIBOR Limitations........................................................... 35
</TABLE>
i
<PAGE> 3
<TABLE>
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2.6.3 Eurodollar Deposits Unavailable or Interest Rate
Unascertainable............................................................. 35
2.6.4 Tax and Other Laws.......................................................... 35
2.6.5 Changes in Law Rendering LIBOR Loans Unlawful............................... 35
2.6.6 Indemnity................................................................... 36
2.6.7 Option to Replace Affected Lender........................................... 36
2.7 Reductions of Commitments, Principal Payments............................... 36
2.7.1 Mandatory Reductions of Commitments and Principal Payments.................. 36
2.7.2 Other Mandatory Reductions of Commitments; Prepayments of the
Loans....................................................................... 36
2.8 Voluntary Reductions in Commitments and Prepayments; Prepayment
Premiums............................................................................. 37
2.8.1 Voluntary Reduction of Commitments.......................................... 37
2.8.2 Voluntary Prepayments....................................................... 37
2.8.3 Premiums.................................................................... 38
2.9 Payment at Maturity.................................................................. 38
2.10 Letter of Credit Fund................................................................ 38
2.11 Payments after Event of Default...................................................... 38
2.12 Method and Distribution of Payments.................................................. 38
2.12.1 Method of Payment; Good Funds............................................... 38
2.12.2 Distribution of Payments.................................................... 38
2.12.3 Distributions by Agent to Lenders........................................... 39
ARTICLE III............................................................................................ 39
SECURITY; GUARANTY..................................................................................... 39
3.1 Security............................................................................. 39
3.2 Guaranty............................................................................. 39
ARTICLE IV............................................................................................. 39
CONDITIONS OF CLOSINGS; ACQUISITIONS; TELE-MEDIA MERGER................................................ 39
4.1 Closing.............................................................................. 39
4.1.1 Representations and Warranties.............................................. 39
4.1.2 Consummation of Mergers; Tele-Media Acquisition............................. 39
4.1.3 Delivery of Documents....................................................... 40
4.1.4 Performance; No Default..................................................... 41
4.1.5 Opinions of Counsel......................................................... 41
4.1.6 Approval of Instruments and Security Interests.............................. 41
4.1.7 Security Interests.......................................................... 42
4.1.8 FCC Licenses................................................................ 42
4.1.9 LMA Agreements.............................................................. 42
</TABLE>
ii
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<TABLE>
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4.1.10 Financial Statements, Reports and Projections............................... 42
4.1.11 Material Adverse Change..................................................... 42
4.1.12 Use of Assets............................................................... 42
4.1.13 Broker Fees................................................................. 42
4.1.14 Insurance................................................................... 43
4.1.15 Payment of Amendment Fee and Other Fees..................................... 43
4.2 Tele-Media Merger.................................................................... 43
4.2.1 Consummation of Tele-Media Merger........................................... 43
4.2.2 Delivery of Documents....................................................... 43
4.2.3 Opinions of Counsel......................................................... 44
4.2.4 Security Interests.......................................................... 44
4.2.5 Insurance................................................................... 44
4.3. Acquisitions......................................................................... 44
4.3.1 Consummation of Acquisitions................................................ 44
4.3.2 Delivery of Documents....................................................... 45
4.3.3 Financial Statements, Reports and Projections............................... 45
4.3.4 Compliance with Applicable Ratio............................................ 45
4.3.5 Opinions of Counsel......................................................... 45
4.3.6 FCC Licenses................................................................ 45
4.3.7 Security Interest........................................................... 46
4.3.8 Environmental Audit......................................................... 46
4.3.9 Insurance; Survey........................................................... 46
4.3.10 Engineer's Certificate...................................................... 46
4.3.11 Payment of Fees............................................................. 46
4.3.12 Representations and Warranties.............................................. 46
4.3.13 Performance; No Default..................................................... 46
4.4 Landlord's Consent................................................................... 47
ARTICLE V.............................................................................................. 47
REPRESENTATIONS AND WARRANTIES......................................................................... 47
5.1 Corporate Existence and Power........................................................ 47
5.2 Corporate Authority.................................................................. 47
5.3 Capital Stock, Senior Subordinated Notes and Related Matters......................... 47
5.3.1 Capitalization of Borrowers................................................. 47
5.3.2 Restrictions................................................................ 47
5.4 Binding Agreements................................................................... 48
5.5 Business, Property and Licenses of Borrower.......................................... 48
5.5.1 Business and Property....................................................... 48
5.5.2 FCC Licenses................................................................ 48
5.5.3 LMA Agreements.............................................................. 48
5.5.4 Operating Agreements........................................................ 48
</TABLE>
iii
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<TABLE>
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<S> <C>
5.5.5 Business Locations.......................................................... 49
5.5.6 Real Property; Leases....................................................... 49
5.5.7 Operation and Maintenance of Equipment...................................... 49
5.6 Title to Property; Liens............................................................. 49
5.7 Projections and Financial Statements................................................. 49
5.7.1 Financial Statements........................................................ 49
5.7.2 Projections................................................................. 50
5.8 Litigation........................................................................... 50
5.9 Defaults in Other Agreements; Consents; Conflicting Agreements....................... 50
5.10 Taxes................................................................................ 51
5.11 Compliance with Applicable Laws...................................................... 51
5.12 Patents, Trademarks and Franchises................................................... 51
5.13 FCC Matters.......................................................................... 51
5.14 Environmental Matters................................................................ 52
5.15 Application of Certain Laws and Regulations.......................................... 52
5.15.1 Investment Company Act...................................................... 52
5.15.2 Holding Company Act......................................................... 52
5.15.3 Foreign or Enemy Status..................................................... 52
5.15.4 Regulations as to Borrowing................................................. 52
5.16 Margin Regulations................................................................... 52
5.17 Other Indebtedness................................................................... 53
5.18 No Misrepresentation................................................................. 53
5.19 Employee Benefit Plans............................................................... 53
5.19.1 No Other Plans.............................................................. 53
5.19.2 ERISA and Code Compliance and Liability..................................... 53
5.19.3 Funding..................................................................... 53
5.19.4 Prohibited Transactions and Payments........................................ 54
5.19.5 No Termination Event........................................................ 54
5.19.6 ERISA Litigation............................................................ 54
5.20 Employee Matters..................................................................... 54
5.20.1 Collective Bargaining Agreements; Grievances................................ 54
5.20.2 Claims Relating to Employment............................................... 54
5.21 Burdensome Obligations............................................................... 54
5.22 Insurance............................................................................ 55
5.23 Representation as to Acquisition Instruments......................................... 55
ARTICLE VI............................................................................................. 55
AFFIRMATIVE COVENANTS.................................................................................. 55
6.1 Legal Existence; Good Standing....................................................... 55
6.2 Inspection........................................................................... 55
6.3 Financial Statements and Other Information........................................... 56
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
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6.3.1 Monthly Statements.......................................................... 56
6.3.2 Quarterly Statements........................................................ 56
6.3.3 Annual Statements........................................................... 57
6.3.4 Officer's Certificates...................................................... 57
6.3.5 Accountants' Certificate.................................................... 58
6.3.6 Audit Reports............................................................... 58
6.3.7 Business Plans.............................................................. 58
6.3.8 Notice of Defaults; Loss.................................................... 58
6.3.9 Notice of Suits, Adverse Events............................................. 58
6.3.10 Reports to Shareholders, Creditors and Governmental
Bodies...................................................................... 59
6.3.11 ERISA Notices and Requests.................................................. 59
6.3.12 Rating Books................................................................ 60
6.3.13 Other Information........................................................... 60
6.4 Reports to Governmental Bodies and Other Persons..................................... 60
6.5 Maintenance of Licenses and Other Agreements......................................... 61
6.6 Insurance............................................................................ 61
6.6.1 Key Man Life Insurance...................................................... 61
6.6.2 Business Insurance.......................................................... 61
6.6.3 Business Insurance, Claims and Proceeds..................................... 61
6.6.4 Flood Insurance............................................................. 62
6.7 Future Leases........................................................................ 62
6.8 Future Acquisitions of Real Property................................................. 62
6.9 Environmental Audit.................................................................. 62
6.10 Environmental Matters................................................................ 62
6.10.1 Compliance.................................................................. 62
6.10.2 Certification............................................................... 63
6.11 Interest Hedge Contract.............................................................. 63
6.12 Compliance with Laws................................................................. 63
6.13 Taxes and Claims..................................................................... 63
6.14 Maintenance of Properties............................................................ 63
ARTICLE VII............................................................................................ 63
NEGATIVE COVENANTS..................................................................................... 63
7.1 Borrowing............................................................................ 64
7.2 Liens................................................................................ 64
7.3 Merger and Acquisition............................................................... 64
7.4 Contingent Liabilities............................................................... 64
7.5 Distributions........................................................................ 64
7.6 Limitation of Corporate Overhead and Capital Expenditures............................ 64
7.6.1 Corporate Overhead.......................................................... 64
</TABLE>
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<PAGE> 7
<TABLE>
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7.6.2 Capital Expenditures........................................................ 65
7.7 Payments of Indebtedness for Borrowed Money.......................................... 65
7.8 Obligations as Lessee Under Operating Leases......................................... 65
7.9 Investments.......................................................................... 65
7.10 Fundamental Business Changes; Limitations on Non-Operating
Companies..................................................................................... 65
7.11 Sale or Transfer of Assets........................................................... 66
7.12 Amendment of Instruments............................................................. 66
7.13 Acquisition of Additional Properties................................................. 66
7.14 Issuance of Capital Stock; Debt Securities........................................... 66
7.15 Transactions with Affiliates......................................................... 66
7.16 Compliance with ERISA................................................................ 66
7.17 LMA Agreements....................................................................... 67
7.18 Business Locations................................................................... 67
7.19 Maximum Leverage Test................................................................ 67
7.20 Senior Debt Leverage................................................................. 68
7.21 Minimum Interest Coverage............................................................ 68
7.22 Minimum Fixed Charges................................................................ 68
ARTICLE VIII........................................................................................... 68
DEFAULT AND REMEDIES................................................................................... 68
8.1 Events of Default.................................................................... 68
8.1.1 Default in Payment.......................................................... 69
8.1.2 Breach of Covenants......................................................... 69
8.1.3 Breach of Warranty.......................................................... 69
8.1.4 Default Under Other Indebtedness for Borrowed Money......................... 69
8.1.5 Bankruptcy.................................................................. 69
8.1.6 Judgments................................................................... 70
8.1.7 Impairment of Licenses; Other Agreements.................................... 70
8.1.8 Collateral.................................................................. 70
8.1.9 Interruption of Operations.................................................. 70
8.1.10 Plans....................................................................... 71
8.1.11 Change in Control; Cessation of Wilson's Activities......................... 71
8.1.12 Guaranty.................................................................... 71
8.2 Acceleration of Borrower's Obligations............................................... 71
8.3 Rescission of Acceleration........................................................... 72
8.4 Remedies on Default.................................................................. 72
8.4.1 Remedies upon Acceleration.................................................. 72
(a) Enforcement of Security Interests........................................... 72
(b) Other Remedies.............................................................. 72
8.4.2 Blockage Notice............................................................. 72
</TABLE>
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<TABLE>
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8.5 Application of Funds................................................................. 72
8.5.1 Expenses.................................................................... 72
8.5.2 Existing Prepayment Premium................................................. 72
8.5.3 Borrowers' Obligations...................................................... 73
8.5.4 Surplus..................................................................... 73
8.6 Performance of Borrower's Obligations................................................ 73
8.7 Right of Setoff...................................................................... 73
ARTICLE IX............................................................................................. 73
THE AGENT.............................................................................................. 73
9.1 Appointment.......................................................................... 73
9.2 Delegation of Duties................................................................. 74
9.3 Nature of Duties; Independent Credit Investigation................................... 74
9.4 Instructions from Lenders............................................................ 74
9.5 Exculpatory Provisions............................................................... 74
9.6 Reimbursement and Indemnification by Lenders of the Agent............................ 75
9.7 Reliance by Agent.................................................................... 75
9.8 Notice of Default.................................................................... 75
9.9 Release of Collateral................................................................ 75
9.10 Lenders in Their Individual Capacities............................................... 75
9.11 Holders of Notes..................................................................... 76
9.12 Successor Agent...................................................................... 76
9.13 Delivery of Information.............................................................. 76
9.14 Beneficiaries........................................................................ 76
ARTICLE X.............................................................................................. 77
LOAN ASSIGNMENT AND PARTICIPATION...................................................................... 77
10.1 Assignment to Other Lenders.......................................................... 77
10.1.1 Assignment.................................................................. 77
10.1.2 Effect of Assignment........................................................ 77
10.1.3 Register.................................................................... 77
10.1.4 Substitution of Notes....................................................... 77
10.2 Participations....................................................................... 78
ARTICLE XI............................................................................................. 78
CLOSING................................................................................................ 78
ARTICLE XII............................................................................................ 78
</TABLE>
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<TABLE>
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EXPENSES AND INDEMNITY................................................................................. 78
12.1 Attorney's Fees and Other Fees and Expenses.......................................... 78
12.1.1 Fees and Expenses for Preparation of Loan Instruments....................... 78
12.1.2 Fees and Expenses in Enforcement of Rights or Defense of
Loan Instruments..................................................................... 79
12.2 Indemnity............................................................................ 79
12.2.1 Brokerage Fees.............................................................. 79
12.2.2 General..................................................................... 79
12.2.3 Operation of Collateral; Joint Venturers.................................... 79
12.2.4 Environmental Indemnity..................................................... 79
ARTICLE XIII........................................................................................... 80
MISCELLANEOUS.......................................................................................... 80
13.1 Notices.............................................................................. 80
13.2 Survival of Loan Agreement; Indemnities.............................................. 81
13.3 Further Assurance.................................................................... 82
13.4 Taxes and Fees....................................................................... 82
13.5 Severability......................................................................... 82
13.6 Waivers and Amendments............................................................... 82
13.7 Joint and Several Liability.......................................................... 82
13.8 Captions............................................................................. 83
13.9 Successors and Assigns............................................................... 83
13.10 Remedies Cumulative.................................................................. 83
13.11 Entire Agreement; Conflict........................................................... 83
13.12 APPLICABLE LAW....................................................................... 83
13.13 JURISDICTION AND VENUE............................................................... 83
13.14 WAIVER OF RIGHT TO JURY TRIAL........................................................ 84
13.15 TIME OF ESSENCE...................................................................... 84
13.16 Estoppel Certificate................................................................. 84
13.17 Consequential Damages................................................................ 85
13.18 Counterparts......................................................................... 85
13.19 No Fiduciary Relationship............................................................ 85
13.20 Notice of Breach by Agent and Lenders................................................ 85
13.21 Confidentiality...................................................................... 85
13.22 Governmental Approval................................................................ 85
</TABLE>
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<PAGE> 10
AMENDED AND RESTATED LOAN AGREEMENT
AMENDED AND RESTATED LOAN AGREEMENT, dated as of July 3, 1997, among
CITADEL BROADCASTING COMPANY, CITADEL LICENSE, INC. and FINOVA CAPITAL
CORPORATION, a Delaware corporation ("FINOVA"), in its individual capacity and
as agent for all Lenders (this and all other capitalized terms used herein are
defined in Section 1.1 below) and the other Lenders which are parties hereto.
PRELIMINARY STATEMENT:
A. The Original Borrowers and FINOVA, in its individual capacity and
as Agent for all Lenders, entered into a Loan Agreement dated as of October 9,
1996, which agreement was amended by amendments dated as of December 31, 1996,
February 14, 1997, April 10, 1997 and May 30, 1997 (collectively, the "Original
Loan Agreement").
B. Borrowers have requested Lenders' consent to, inter alia, (i) the
DAC Merger, the DLI Merger, the Tele-Media Acquisition and the Tele-Media
Merger, (ii) the issuance of the Senior Subordinated Notes and the Exchangeable
Preferred Stock, (iii) the consolidation of the Term Loan and Revolving Loan
into a revolving loan and (iv) the modification of certain of the covenants and
other provisions of the Original Loan Agreement.
C. Lenders are willing to grant such consent subject to the terms and
conditions set forth herein.
NOW THEREFORE, the Original Loan Agreement is amended and restated in
its entirety as follows:
ARTICLE I
DEFINITIONS AND DETERMINATIONS
1.1 Definitions. As used in this Loan Agreement and in the
other Loan Instruments, unless otherwise expressly indicated herein or therein,
the following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of the terms defined):
Accountants: KPMG Peat Marwick or any other independent certified
public accounting firm selected by Borrowers and reasonably
satisfactory to Required Lenders.
Accounting Changes: as defined in Section 1.3.
<PAGE> 11
Accounts Decrease: for any period, the excess of the Eligible
Accounts at the beginning of such period over the Eligible Accounts at
the end of such period.
Accounts Increase: for any period, the excess of Eligible
Accounts at the end of such period over the Eligible Accounts at the
beginning of such period.
Acquisition: an Asset Acquisition or an Equity Acquisition.
Acquisition Closing. the consummation of a Permitted Acquisition.
Acquisition Closing Date: the date of a Permitted Acquisition
Closing.
Acquisition Instruments: the purchase agreement and all
other documents executed in connection with a Permitted Acquisition.
Acquisition Loan Instruments: collectively, the following
documents to be executed and delivered in connection with a Permitted
Acquisition:
(i) any amendments to the Loan Instruments and any Mortgages,
Security Agreements, UCC Financing Statements and other
agreements required by Agent to (A) reflect the effect of
such Acquisition and (B) grant to Agent a perfected Lien,
subject only to Permitted Prior Liens, upon all Property
acquired by CBC upon the consummation (x) of such
Acquisition, if such acquisition is an Asset Acquisition or
(y) the Acquisition Merger, if such Acquisition is an
Equity Acquisition, and (z) to the extent permitted by
applicable law, the FCC Licenses (and the proceeds thereof)
transferred to CLI in connection with such Acquisition;
(ii) Assignment of Acquisition Instruments;
(iii) a Landlord's Consent executed by each Landlord under each
Lease assumed or executed by CBC in connection with such
Acquisition;
(iv) a Seller's Consent with respect to such Acquisition if such
consent is required to the applicable Assignment of
Acquisition Instruments; and
(v) such other instruments, documents, certificates, consents,
waivers, and opinions as Agent may reasonably require in
connection with such Acquisition.
Acquisition Merger: as defined in subsection 4.3.1.
Additional Closing: the disbursement of an Additional Loan.
2
<PAGE> 12
Additional Closing Date: the date of an Additional Closing.
Additional Loan: a loan made by Lenders to Borrowers on any
Additional Closing Date.
Adjusted Leverage Ratio: as of the end of any month the ratio of
the Adjusted Total Debt as of such date to Adjusted Operating Cash Flow
for the 12-month period ending on such date.
Adjusted Operating Cash Flow: for any twelve-month period or
Four-Quarter Period, as applicable, the Operating Cash Flow of CBC for
such period,
(i) plus the sum of the following:
(A) if a Permitted Acquisition has been made during
such period, the Operating Cash Flow of each
Station or Related Business which has been acquired
by CBC pursuant to such Acquisition, either
directly or as a result of an Acquisition Merger,
from the beginning of such period until the date
such Acquisition or Acquisition Merger was
consummated;
(B) when determining whether a proposed Acquisition
will be a Permitted Acquisition the Operating Cash
Flow for such period of the Station or Related
Business to be acquired, whether directly or as a
result of an Acquisition Merger, as determined to
the satisfaction of the Required Lenders based on
financial and other information submitted to Agent
by Borrowers; and
(C) such adjustments to the Operating Cash Flow of CBC
and such Station or Related Business for such
period as the Required Lenders reasonably deem
appropriate, based on information furnished to
Agent by Borrowers, to take into account reductions
or increases in expenses for said period which
would have been effected if such Acquisition had
been consummated at the beginning of such period.
(ii) minus the sum of the following:
(A) with respect to any Permitted Disposition made
within such period, the Operating Cash Flow of the
Station or Related Business which is the subject of
such Disposition from the beginning of such period
until the date of the consummation of such
Disposition; and
3
<PAGE> 13
(B) when determining whether a proposed Disposition
will be a Permitted Disposition the Operating Cash
Flow for such period of the Station or Related
Business which is the subject of such proposed
Disposition.
In calculating the Adjusted Operating Cash Flow for any period from
January 1, 1997 to the Closing Date the Operating Cash Flow of DAC for
such period shall be included.
Adjusted Total Debt: as of any applicable date, the Total Debt as
of such date (i) plus, when determining whether a proposed Acquisition
shall be a Permitted Acquisition or whether Borrowers are entitled to a
disbursement of an Additional Loan requested by Borrowers (A) the
amount of the Additional Loan requested by Borrowers and (B) in case of
a proposed Acquisition, the amount of Indebtedness for Borrowed Money
to be assumed by Borrowers in connection with such Acquisition or
Acquisition Merger, as applicable, and (ii) minus, when determining
whether a proposed Disposition shall be a Permitted Disposition, the
Principal Balance to be repaid from the proceeds of such Disposition.
Adjusted Total Leverage Ratio: as of the end of any month the
ratio of the Adjusted Total Debt as of such date to the Adjusted
Operating Cash Flow for the twelve-month period ending on such date.
Affiliate: any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common
control with another Person. The term "control" means 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 or equity interests, by contract or
otherwise. For the purposes hereof, any Person which owns or controls,
directly or indirectly, 10% or more of the securities or equity
interests, as applicable, whether voting or non-voting, of any other
Person shall be deemed to "control" such Person.
Agent: FINOVA, as agent for the Lenders.
Agent's Fee: as defined in subsection 2.5.4.
Amended and Restated Assignment of Leases: the Amended and
Restated Assignment of Leases executed by CBC in the form of
EXHIBIT 1A.
Amended and Restated Contribution Agreement: the Amended and
Restated Contribution Agreement between the Borrowers in the form of
EXHIBIT 1B.
Amended and Restated Guaranty: the Amended and Restated Guaranty
executed by Guarantor in the form of EXHIBIT 1C.
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<PAGE> 14
Amended and Restated Security Agreement (CBC): the Amended and
Restated Security Agreement executed by CBC in the form of EXHIBIT 1D.
Amended and Restated Security Agreement (CLI): the Amended and
Restated Security Agreement executed by CLI in the form of EXHIBIT 1E.
Amended and Restated Stock Pledge Agreement (CBC Common Stock):
the Amended and Restated Stock Pledge Agreement executed by Guarantor
(CBC Common Stock) in the form of EXHIBIT 1F.
Amended and Restated Trademark Security Agreement: the Amended
and Restated Trademark Security Agreement executed by CBC in the form
of EXHIBIT 1G.
Amended and Restated Use Agreement: the Amended and Restated Use
Agreement among Borrowers and Tele-Media in form and substance
reasonably acceptable to Agent.
Amendment Fee: as defined in subsection 2.5.3.
Applicable Margin: as defined in subsection 2.5.1.
Applicable Ratio: on the last day of any month during the period
set forth below the ratio set forth opposite such period:
<TABLE>
<CAPTION>
Each Month During Period Ratio
------------------------ -----
<S> <C>
Closing Date through November 1997 6.75
December 1997 through May 1998 6.5
June 1998 through November 1998 6.25
December 1998 through May 1999 6.0
June 1999 through November 1999 5.75
December 1999 through May 2000 5.5
June 2000 through November 2000 5.25
December 2000 through May 2001 5.0
June 2001 through November 2001 4.75
December 2001 through May 2002 4.5
June 2002 through November 2002 4.25
December 2002 through June 2003 4.0
</TABLE>
Asset Acquisition: an acquisition of Station Assets and the
related FCC Licenses or of Related Business Assets.
Assignee: any Person to which a Loan Assignment is made in
compliance with the provisions of subsection 10.1.1.
5
<PAGE> 15
Assignment and Acceptance: an Assignment and Acceptance Agreement
to be executed in connection with each Loan Assignment in the form of
EXHIBIT 1H.
Assignment of Acquisition Instruments: an Assignment of
Acquisition Instruments to be executed in connection with each
Permitted Acquisition in the form of EXHIBIT 1I.
Assignment of Interest Hedge Contract: the Assignment of Interest
Hedge Contract executed by the Original Borrowers pursuant to the
Original Loan Agreement.
Assignment of Key Man Life Insurance: the Assignment of the Key
Man Life Insurance executed by CBC pursuant to the Original Loan
Agreement.
Bankruptcy Code: the United States Bankruptcy Code and any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
Base Rate: the per annum rate of interest announced or published
publicly from time to time by Citibank, N.A. in New York, New York as
its corporate base (or equivalent) rate of interest, which rate shall
change automatically without notice and simultaneously with each change
in such corporate base rate. The Base Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to
any customer by Citibank, N.A. in New York, New York.
Base Rate Portion: the Principal Balance other than the portion
thereof consisting of LIBOR Loans.
Basic Financial Statements: as defined in subsection 6.3.3.
Borrower: either of the Borrowers.
Borrowers: CBC and CLI.
Borrowers' Obligations: (i) any and all Indebtedness due or to
become due, whether contingent or otherwise, now existing or hereafter
arising, of Borrowers to Lenders and/or Agent pursuant to the terms of
this Loan Agreement or any other Loan Instrument, including the
Existing Prepayment Premium and (ii) the performance of the covenants
of Borrowers contained in the Loan Instruments.
Broadcast Market: Each of the Stations or group of the CBC
Stations of a Borrower serving a specific geographical area or market
as set forth in EXHIBIT 1J.
Broadcasting Business: the business of owning and/or operating (i)
a Station, including the operation of a Station pursuant to an LMA,
(ii) the sale of advertising time for a Station pursuant to a JSA,
(iii) a Related Business and (iv) related ancillary activities.
6
<PAGE> 16
Business Day: (i) except as provided in clause (ii), any day other
than a Saturday, Sunday or other day on which banks in Chicago,
Illinois, are required or authorized to close, and (ii) with respect to
all notices, determinations, fundings and payments in connection with a
LIBOR Loan, any day which is a Business Day described in clause (i) and
which is also a day for trading by and between banks in Dollar deposits
in the applicable interbank eurodollar market.
Business Insurance: such property, casualty, business interruption
and other insurance, other than the Key Man Life Insurance and flood
insurance, as Agent from time to time reasonably requires CBC to
maintain.
Capital Expenditures: collectively, payments that are made or
liabilities that are incurred by CBC and DAC (but as to DAC only for
the period from January 1, 1997 through the Closing Date), other than
for a Permitted Acquisition, for the lease, purchase, improvement,
construction or use of any Property, the value or cost of which under
GAAP is required to be capitalized and appear on such Person's balance
sheet in the category of property, plant or equipment, without regard
to the manner in which such payments or the instruments pursuant to
which they are made are characterized by such Person or any other
Person. Except for the purpose of determining Excess Cash Flow, a
Capital Expenditure shall be deemed to be made as of the time the
Property which is the subject thereof is put into service by such
Person.
Capitalized Lease: any lease of Property, the obligations for the
rental of which are required to be capitalized in accordance with GAAP.
Cash Equivalents: collectively, the aggregate of each CBC's (i)
cash on hand or in any bank or trust company, and checks on hand and in
transit, (ii) monies on deposit in any money market account, and (iii)
treasury bills, certificates of deposit, commercial paper and readily
marketable securities at current market value having, in each instance,
a maturity of not more than 180 days.
CBC: Citadel Broadcasting Company.
CBC Common Stock: all of the issued and outstanding common stock
of CBC and all warrants, options and other equity interests issued and
outstanding with respect thereto.
CBC Stations: each of the Stations listed on EXHIBIT 1K.
Chief Financial Officer: the treasurer of CBC or any other Person
designated by CBC as its chief financial officer.
Certificate of Designation: the Certificate of Designation filed
on or prior to the Closing Date by CBC with the Secretary of State of
Nevada with respect to the Exchangeable Preferred Stock.
7
<PAGE> 17
CLI Capital Stock: all of the issued and outstanding capital
stock, warrants, options and other equity interests of CLI.
Closing: this Loan Agreement being deemed to becoming effective
pursuant to Section 4.1.
Closing Certificate: a Closing Certificate signed by the
President of each Borrower in form and substance reasonably acceptable
to Agent.
Closing Date: July 3, 1997.
Code: the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
Collateral: (i) all existing and after-acquired Property of
Borrowers, including without limitation (A) all existing and
after-acquired accounts, equipment, general intangibles, (B) the Key
Man Life Insurance and (C) the Real Estate, (ii) the CBC Common Stock,
(iii) the CLI Capital Stock, (iv) the Tele-Media Capital Stock and (v)
all proceeds of the foregoing.
Commitment: shall mean, as to any Lender, the amount initially set
forth opposite its name in the column labeled "Commitment" on Schedule
I, less any reductions made pursuant to Sections 2.7 and subsection
2.8.1, as adjusted from time to time to reflect any Assignment and
Acceptances.
Commitments: at any time, the aggregate of each Lender's
Commitment.
Communications Act: the Communications Act of 1934 and the rules
and regulations issued thereunder, as amended and in effect from time
to time.
Compliance Certificate: a Compliance Certificate executed by the
Chief Financial Officer in the form of EXHIBIT 1L.
Corporate Overhead: during any period, the aggregate of all
compensation, traveling, entertainment, automobile and airplane
expenses of the Persons listed on EXHIBIT 1M incurred by the Obligors
and all other costs and expenses incurred by the Obligors which are not
allocable or are not incurred directly in the operation of any of the
CBC Stations, Related Businesses, any JSA Station or any LMA Station,
including, but not limited to any legal expenses and auditing fees,
minus the revenues received by the Obligors from users of the trade
name "Cat Country," but excluding the IPO Expenses.
DAC: Deschutes River Broadcasting, Inc., a Nevada corporation.
DAC Leases: each Lease described as a "DAC Lease" in EXHIBIT 1S.
8
<PAGE> 18
DAC Merger: the merger of DAC into CBC with CBC being the
surviving corporation.
DAC Merger Instruments: the articles of merger and all other
documents executed and/or filed in connection with the DAC Merger.
DAC Real Estate: each parcel of Real Estate described as "DAC
Real Estate" in EXHIBIT 1X.
Debt Service: during any period, all payments by Borrowers during
such period of principal, interest, loan fees and other charges made
with respect to Indebtedness for Borrowed Money, which payments are
required or permitted to be made pursuant to this Loan Agreement and
are due and payable during such period, but excluding payments made
pursuant to subsection 2.7.2.
Default Rate: with respect to (i) the Base Rate Portion and all
of the other of Borrowers' Obligations other than LIBOR Loans, a per
annum rate equal to the Base Rate in effect from time to time plus the
Applicable Margin plus 2.0% per annum and (ii) each LIBOR Loan, a per
annum rate equal to the LIBOR Rate applicable thereto plus the
Applicable Margin plus 2.0% per annum.
Default Rate Period: a period of time commencing on the date that
an Event of Default has occurred and ending on the date that such Event
of Default is cured or waived.
Disposition: any sale, lease, assignment, transfer or other
disposition of any Property by Borrowers of Station Assets and the
related FCC Licenses or Related Business Assets.
DLI: Deschutes License, Inc., a Nevada corporation.
DLI Licenses: the FCC Licenses issued to DLI with respect to the
Stations operated by DAC immediately prior to the DLI Merger.
DLI Merger: the merger of DLI into CLI with CLI being the
surviving corporation.
DLI Merger Instruments: the articles of merger and all other
documents executed in connection with the DLI Merger.
Eligible Accounts: at any given time, the aggregate of the face
amount of the accounts receivable of CBC, exclusive of any accounts
receivable over 60 days past due, net of applicable reserves and Trade
Out Transactions.
9
<PAGE> 19
Employee Benefit Plan: any employee benefit plan within the
meaning of Section 3(3) of ERISA which (i) is maintained for employees
of any Obligor or any ERISA Affiliate, or (ii) has at any time within
the preceding six years been maintained for the employees of any
Obligor or any current or former ERISA Affiliate.
Engineer: an engineer or engineers selected by CBC and acceptable
to Agent.
Environmental Audit: (i) a Phase I audit report with respect to a
parcel of real estate and such other studies and reports as Agent
reasonably deems necessary after review of the results of said Phase I
audit, including, if reasonably required by Agent, soil and ground
water tests, each such report and study to be in form and content and
issued by Persons reasonably acceptable to Agent and (ii) a letter from
each Person issuing each such report or study entitling Lenders to rely
thereon.
Environmental Certificate: the Environmental Certificate executed
by CBC in form and substance acceptable to Agent.
Environmental Compliance Certificate: an Environmental Compliance
Certificate executed by CBC in form and substance acceptable to Agent.
Environmental Laws: any and all federal, state and local laws that
relate to or impose liability or standards of conduct concerning public
or occupational health and safety or protection of the environment, as
now or hereafter in effect and as have been or hereafter may be amended
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 USC Section 9601 et seq.),
the Hazardous Materials Transportation Act (42 U.S.C. Section 1802 et
seq.), the Resources Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Clean Air Act (42 U.S.C. Section 7901 et
seq.), the National Environmental Policy Act (42 U.S.C. Section 4231,
et seq.), the Refuse Act (33 U.S.C. Section 407, et seq.), the Safe
Drinking Water Act (42 U.S.C. Section 300(f) et seq.), the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.), and all rules,
regulations, codes, ordinances and guidance documents promulgated or
published thereunder, and the provisions of any licenses, permits,
orders and decrees issued pursuant to any of the foregoing.
Equity Acquisition: an acquisition of the capital stock or other
equity interest of the Person or Persons which own Station Assets and
the related FCC Licenses or Related Business Assets.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, and the rules and
regulations issued thereunder, as in effect from time to time.
10
<PAGE> 20
ERISA Affiliate: any Person who is a member of a group which is
under common control with any Obligor, who together with any Obligor is
treated as a single employer within the meaning of Section 414(b),(c),
and (m) of the Code.
Eurocurrency Reserve Requirements: for any day as applied to a
LIBOR Loan, the aggregate (without duplication) of the rates (expressed
as a decimal rounded upward to the nearest 1/100th of 1%) as determined
by Agent of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal
Reserve System of the United States or other Governmental Body, or any
successor thereto, having jurisdiction with respect thereto) prescribed
for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank
of the Federal Reserve System.
Event of Default: any of the Events of Default set forth in
Section 8.1.
Excess Cash Flow: (i) for any period, the aggregate for such
period of the (A) Operating Cash Flow of CBC and (B) Accounts Decrease,
(ii) minus, the aggregate of the following for such period: (w) Debt
Service, (x) amounts actually paid for Capital Expenditures permitted
to be incurred pursuant to this Loan Agreement, whether or not under
the definition "Capital Expenditures" such Capital Expenditures were
deemed to be made during such period, but excluding amounts paid from
the proceeds of Permitted Senior Indebtedness, (y) the Accounts
Increase, and (z) distributions for Corporate Overhead, subject to the
limitations set forth in subsection 7.6.1 and (iii) plus, for the year
1997, the Operating Cash Flow of DAC for the period from January 1,
1997 to the Closing Date.
Excess Interest: as defined in subsection 2.5.1(d).
Exchange Indenture: the Indenture dated as of July 1, 1997 among
Borrowers and The Bank of New York, as trustee, relating to the
Exchangeable Debentures.
Exchangeable Debentures: the Exchangeable Debentures due 2009
issued in exchange for Exchangeable Preferred Stock.
Exchangeable Debenture Indebtedness: the Indebtedness evidenced
by the Exchangeable Debentures.
Exchangeable Preferred Stock: the Series A Exchangeable Preferred
Stock issued by CBC on the Closing Date, any exchangeable preferred
stock issued in exchange therefor pursuant to the Preferred Stock
Registration Rights Agreement, and any exchangeable preferred stock
issued by CBC as dividends in accordance with the Certificate of
Designation.
11
<PAGE> 21
Exchangeable Preferred Stock Instruments: collectively, the
Certificate of Designation, the Preferred Stock Registration Rights
Agreement, the Exchange Indenture and the form of each of the
Exchangeable Preferred Stock and Exchange Debentures to be issued by
CBC, and the forms of the Exchangeable Preferred Stock certificates and
Exchangeable Debentures.
Existing Loan Instruments: collectively, the (i) Existing
Mortgages, (ii) Existing UCC Financing Statements, (iii) Assignment of
Interest Hedge Contract, (iv) Assignment of Key Man Life Insurance, (v)
Stock Pledge Agreement (CLI Capital Stock) and (vi) Existing
Assignments of Acquisition Instruments.
Existing Assignments of Acquisition Instruments: the Assignments
of Acquisition Instruments described in EXHIBIT 1N.
Existing Mortgages: the Mortgages described in EXHIBIT 1O.
Existing Prepayment Premium: the Prepayment Premium (as defined in
the Loan Agreement dated as of May 12, 1994 between CBC and FINOVA)
owed by CBC to FINOVA on the Original Closing Date in the amount of
$909,312, which was deemed to be fully earned on such date and which
shall be reduced on the last day of each quarter until the quarter
immediately preceding the quarter in which Borrowers' Obligations are
paid in full and the Commitments are terminated by an amount equal to
(i) 56.7% multiplied by the Principal Balance as of the last day of the
applicable quarter, the product of which is multiplied by (ii) .0625%
Existing UCC Financing Statements: the UCC Financing Statements
filed pursuant to the Original Loan Agreement.
FCC: the Federal Communications Commission or any Governmental
Body succeeding to its functions.
FCC Licenses: the Licenses issued by the FCC.
Fixed Charges: for any period, the sum for such period of (i)
Interest Expense, (ii) taxes paid, (iii) the amount actually paid
during such period for Capital Expenditures, whether or not under the
definition of "Capital Expenditures" such Capital Expenditure were
deemed to be made during such period and (iv) principal payments on the
Loans required pursuant to subsections 2.7.1 and 2.8.1.
Four-Quarter Period: the four quarters ending on the date
indicated.
Funding Date: the date of disbursement of an Additional Loan.
12
<PAGE> 22
GAAP: generally accepted accounting principles as in effect from
time to time, which shall include but shall not be limited to the
official interpretations thereof by the Financial Accounting Standards
Board or any successor thereto.
Good Funds: United States Dollars available in Federal funds to
Agent at or before 12:00 P.M., Chicago time, on a Business Day.
Governmental Body: any foreign, federal, state, municipal or
other government, or any department, commission, board, bureau, agency,
public authority or instrumentality thereof or any court or arbitrator.
Guarantor: Citadel Communications Corporation, a Nevada
corporation.
Guarantor's Obligations: any and all Indebtedness, due or to
become due, now existing or howsoever arising of Guarantor to Lenders
pursuant to the Amended and Restated Guaranty.
Hazardous Materials: any hazardous, toxic, dangerous or other
waste, substance or material defined as such in, regulated by or for
purposes of any Environmental Law.
Incipient Default: any event or condition which, with the giving
of notice or the lapse of time, or both, would become an Event of
Default.
Indebtedness: all liabilities, obligations and reserves,
contingent or otherwise, which, in accordance with GAAP, would be
reflected as a liability on a balance sheet or would be required to be
disclosed in a financial statement, including, without duplication: (i)
Indebtedness for Borrowed Money, (ii) obligations secured by any Lien
upon Property, except to the extent such obligation exceeds the value
of the Property which is subject to such Lien and is a non-recourse
obligation, (iii) the Reimbursement Obligation, (iv) guaranties,
letters of credit and other contingent obligations, and (v) liabilities
in respect of unfunded vested benefits under any Pension Plan or in
respect of withdrawal liabilities incurred under ERISA by CBC or any
ERISA Affiliate to any Multiemployer Plan.
Indebtedness for Borrowed Money: without duplication, all
Indebtedness (i) in respect of money borrowed, (ii) evidenced by a
note, debenture or other like written obligation to pay money
(including, without limitation, all of Borrowers' Obligations, the
Senior Subordinated Indebtedness, the Exchangeable Debenture
Indebtedness, and Permitted Senior Indebtedness), (iii) in respect of
rent or hire of Property under Capitalized Leases or for the deferred
purchase price of Property, (iv) in respect of obligations under
conditional sales or other title retention agreements, and (v) all
guaranties of any or all of the foregoing.
Initial Loan Instruments: collectively, the following documents:
13
<PAGE> 23
(i) Loan Agreement;
(ii) Notes;
(iii) Amended and Restated Assignment of Leases;
(iv) Assignment of Acquisition Instruments with respect
to Tele-Media Acquisition and Seller's Consent;
(v) Amended and Restated Security Agreement (CBC);
(vi) Amended and Restated Security Agreement (CLI);
(vii) Amended and Restated Trademark Security Agreement;
(viii) a Mortgage on each parcel of DAC Real Estate;
(ix) Amended and Restated Guaranty;
(x) Amended and Restated Stock Pledge Agreement (CBC
Common Stock);
(xi) Stock Pledge Agreement (Tele-Media Capital Stock);
(xii) UCC Financing Statements to cover the Property
(other than real estate) acquired by CBC pursuant to
the DAC Merger and the Property (other than real
estate) to be acquired by CBC upon the consummation
of the Tele-Media Merger;
(xiii) Closing Certificate;
(xiv) Solvency Certificate;
(xv) Environmental Certificate;
(xvi) Amended and Restated Contribution Agreement; and
(xvii) such other instruments and documents as Agent or
Lenders may require.
Instruments: collectively, the (i) Loan Instruments, (ii)
Amended and Restated Use Agreement, (iii) Senior Subordinated Debt
Documents, (iv) Exchangeable Preferred Stock Instruments, (v) DAC
Merger Instruments, (vi) DLI Merger Instruments, (vii) Tele-Media
Acquisition Instruments and (viii) Tele-Media Merger Instruments.
14
<PAGE> 24
Interest Expense: (i) for any period, the interest accrued during
such period on the Indebtedness for Borrowed Money of Borrowers,
excluding the Existing Prepayment Premium and (ii) in calculating
Interest Expense for any period from January 1, 1997 to the Closing
Date, the interest on any Indebtedness for Borrower Money of DAC shall,
without duplication, be included.
Interest Hedge Contract: an interest rate swap agreement between
Union Bank of California, N.A. and CBC dated December 12, 1996.
Interest Period: a period (i) commencing (A) on the applicable
Funding Date, if Borrowers prior thereto have elected pursuant to
subsection 2.6.1 to have all or a portion of the Loans to be disbursed
on such date bear interest from such date at a LIBOR Rate, (B) with
respect to the conversion of all or a portion of the Base Rate Portion
to a LIBOR Loan, on the Business Day specified by Borrowers in the
applicable LIBOR Election Notice and (C) with respect to the
continuation as a LIBOR Loan of all or a portion of a then existing
LIBOR Loan after the expiration of the Interest Period applicable to
such existing LIBOR Loan, on the day after the last day of the Interest
Period applicable to such existing LIBOR Loan, and (ii) ending 30, 90
or 180 days thereafter, as selected by Borrower in its LIBOR Election
Notice; provided, however:
(1) if any Interest Period otherwise would end on a day
that is not a Business Day, such Interest Period shall end on the
next succeeding Business Day, unless the result of such extension
would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the
immediately preceding Business Day; and
(2) any Interest Period that otherwise would extend
beyond the latest possible Maturity Date shall end on such date.
Interest Rate Determination Date: the date for determining a
LIBOR Rate, which date shall be two Business Days prior to the date of
commencement of the applicable Interest Period.
IPO: the unconsummated 1996 initial public offering of the
securities of Guarantor.
IPO Expenses: all legal and accounting expenses and all other
costs and expenses directly incurred in connection with the IPO in the
amount of $780,327.
Issuer: the Lender which issues a Permitted Letter of Credit.
Joint Sales Agreement: an agreement in which (i) two or more
licensees of Stations join to market air time or (ii) a licensee of a
Station sells air time to a broker.
15
<PAGE> 25
JSA Agreements: the Joint Sales Agreements described on
EXHIBIT 1P.
JSA Stations: the Stations listed on EXHIBIT 1Q.
Key Man Life Insurance: the life insurance on the life of Wilson
required pursuant to subsection 6.6.1.
KUBL Adjustment: the addition to Operating Cash Flow of $58,887
for June, 1996 and deduction from Operating Cash Flow of $63,157 for
July, 1996, $58,337 for August, 1996, $63,550 for September, 1996 and
$33,473 for October, 1996.
Landlord: each lessor under each Lease.
Landlord's Consent: a consent from each Landlord in form and
substance reasonably satisfactory to Agent.
L/C Expiration Date: the earlier of (i) September 30, 2002 or
(ii) the date on which the payment of Borrowers' Obligations are
accelerated.
L/C Guaranty: a guaranty in the form of EXHIBIT 1R pursuant to
which each Lender, in proportion to its Ratable Share, guarantees the
obligations of Borrowers to an Issuer.
L/C Guaranty Obligations: the obligations of Lenders pursuant to
L/C Guaranties.
L/C Issuance Date: the date as of which the applicable L/C
Guaranty is to be delivered to the Issuer, as set forth in the
applicable notice referred to in subsection 2.3(d).
Leases: the leases of real property described in EXHIBIT 1S.
Leasehold Property: any real estate which is the subject of a
Lease under which CBC is the lessee.
Lender Addition Agreement: an agreement executed by a Lender and
an Assignee pursuant to which a Loan Assignment is made.
Lenders: the financial institutions named on Schedule I and each
Assignee thereof.
Letter of Credit Fee: as defined in subsection 2.5.6.
Letter of Credit Fund: as defined in Section 2.10.
LIBOR Election Notice: a notice by Borrowers to Agent to have a
portion of the Principal Balance bear interest at a LIBOR Rate, in the
form of EXHIBIT 1T.
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<PAGE> 26
LIBOR Loan: each portion of the Principal Balance which
bears interest determined by reference to a LIBOR Rate.
LIBOR Rate: for each Interest Period, a rate of interest
equal to (i) the rate per annum determined by Agent by dividing (the
resulting quotient rounded upward to the nearest 1/16 of 1% per annum)
(i) the rate of interest determined by Agent in accordance with its
usual procedures (which determination shall be conclusive absent
manifest error) to be the average of the London interbank offered
rates set forth on the "LIBO" page of the Bloomberg Service (or an
appropriate successor), or if Bloomberg Service or its successor
ceases to provide such quotes, a comparable replacement determined by
Agent on the Interest Rate Determination Date for an amount comparable
to the requested LIBOR Loan and having a maturity comparable to such
Interest Period by (ii) a number equal to 1.00 minus the Eurocurrency
Reserve Requirements. The LIBOR Rate may also be expressed by the
following formula:
Average of London interbank offered rates
on LIBO page of Bloomberg Service or
appropriate successor
-----------------------------------------
LIBOR Rate = 1.00 - Eurocurrency Reserve Requirements
The LIBOR Rate shall be adjusted with respect to any LIBOR Loan
outstanding on the effective date of any change in the Eurocurrency
Reserve Requirements as of such effective date. Agent shall give
prompt notice to Borrowers of the LIBOR Rate as determined or adjusted
in accordance herewith, which determination shall be conclusive absent
manifest error.
Licenses: all licenses, permits, consents, approvals and
authority issued by any Governmental Body which authorize a Person to
operate a Station.
Lien: any mortgage, pledge, assignment, lien, charge,
encumbrance or security interest of any kind, or the interest of a
vendor or lessor under any conditional sale agreement, Capitalized
Lease or other title retention agreement.
LMA: a local marketing arrangement, sale agreement, time
brokerage agreement, management agreement or similar arrangement
pursuant to which a Person, subject to customary preemption rights and
other limitations (i) obtains the right to sell at least a majority of
the advertising inventory of a radio station of which another Person
is the licensee, (ii) obtains the right to exhibit programming and
sell advertising time during a majority of the air time of a Station
or (iii) manages the selling operations of a Station with respect to
at least a majority of the advertising inventory of such Station.
LMA Agreements: each LMA described on EXHIBIT 1U.
LMA Stations: the Stations described on EXHIBIT 1V.
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<PAGE> 27
Loan Agreement: this Amended and Restated Loan Agreement
and any amendments or supplements hereto.
Loan Assignment: as defined in subsection 10.1.1.
Loan Fees: collectively, the Agent's Fee, the Amendment
Fee, the Unused Commitment Fee and the Letter of Credit Fees.
Loan Instruments: collectively, the (i) Initial Loan
Instruments (ii) the Existing Loan Instruments, (iii) the Tele-Media
Loan Instruments and (iv) all Additional Loan Instruments.
Loan Year: a period of time from the Original Closing Date
or any anniversary of the Original Closing Date to the immediately
succeeding anniversary of the Original Closing Date.
Loans: the Revolving Loans and the Term Loan which shall be
consolidated into a revolving loan on the Closing Date and the
Additional Loans.
Market Cash Flow: for any Broadcast Market for any period:
(i) the revenues of the Stations of CBC in such Broadcast Market for
such period, exclusive of revenues from Trade Out Transactions, minus
(ii) the expenses of operating such Stations for such period,
exclusive of (A) expenses incurred in connection with Trade Out
Transactions, (B) Corporate Overhead, (C) Debt Service, (D) non-cash
compensation to employees of Borrowers and (E) depreciation and other
non-cash charges.
Material Adverse Effect: (i) a material adverse effect upon
the business, operations, Property, prospects, profits or condition
(financial or otherwise) of the Obligors, taken as a whole, or (ii) a
material impairment of the ability of any such Person to perform its
material obligations under any Loan Instrument to which it is a party
or of Agent or any Lender to enforce or collect any of Borrowers'
Obligations or Guarantor's Obligations.
Maturity Date: the earlier of (i) September 30, 2003 or
(ii) the date on which the payment of Borrowers' Obligations are
accelerated.
Maximum Rate: as defined in subsection 2.5.1(d).
Mortgage: a mortgage or deed of trust to be executed by CBC
in favor of Agent upon each parcel of Real Estate owned by CBC, in
form and substance reasonably acceptable to Agent.
Multiemployer Plan: any multiemployer plan as defined
pursuant to Section 3(37) of ERISA to which any Obligor or any ERISA
Affiliate makes, or accrues an obligation
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to make contributions, or has made, or been obligated to make,
contributions within the preceding six years.
Net Fee: As defined in subsection 2.5.6.
Net Sale Proceeds: the proceeds of any Permitted Disposition
less (i) the reasonable costs and expenses of any such Permitted
Disposition and (ii) such taxes as the Required Lenders reasonably
determine will be actually paid by the Obligors as a result of such
Permitted Disposition.
Notes: the promissory notes executed by Borrowers payable to
the order of each Lender, dated as of the Closing Date, in the amount
of such Lender's Loan Commitment, in form attached as EXHIBIT 1W, and
any notes issued in substitution thereof pursuant to subsection
10.1.4.
Note Indenture: the Indenture dated as of July 1, 1997
among Borrowers and The Bank of New York, as trustee, relating to the
issuance of the Senior Subordinated Notes.
Notes Registration Rights Agreement: the Registration
Rights Agreement entered into on or prior to the Closing Date among
Borrowers and the initial purchasers of the Subordinated Notes.
Obligor: any of the Obligors.
Obligors: collectively, the Borrowers and Guarantor.
Operating Agreement: any tower site lease, tower license,
office lease, studio lease, equipment lease, network affiliation
agreement, programming agreement, time brokerage agreement or other
similar agreement relating to the operation of a Station.
Operating Cash Flow: for any period, the net income of a
CBC, a Station or a Related Business, as applicable, for such period:
(i) plus the sum of the following (without
duplication), to the extent deducted in
determining such net income for such period:
(A) losses from sales, transactions,
exchanges and other dispositions of
Property not in the ordinary course of
business;
(B) interest, fees or other charges paid
or accrued on Indebtedness, including,
without limitation, interest on Capitalized
Leases that is imputed in accordance with
GAAP;
(C) depreciation and amortization;
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(D) income taxes which are accrued but not paid
during such period;
(E) non-cash expenses incurred in connection
with Trade Out Transactions;
(F) for the year 1996, the KUBL Adjustment and
the IPO Expenses;
(G) extraordinary and non-recurring losses not
in the ordinary course of business;
(H) casualty losses; and
(I) any other non-cash item deducted in
determining such net income;
(ii) minus the sum of the following (without
duplication), to the extent included in
determining such net income for such period:
(A) revenue received in connection with
Trade Out Transactions;
(B) proceeds of any insurance, other
than business interruption
insurance; and
(C) gains from sales, transactions,
exchanges and other dispositions
of Property not in the ordinary
course of business.
Operating Lease: any lease which, under GAAP, is not
required to be capitalized.
Original Borrowers: CBC, DAC, CLI and DLI.
Original Closing Date: October 9, 1996.
Original Loan Agreement: as defined in the Preliminary
Statement.
Participant: any Person to which a Lender sells or assigns
a Participation.
Participation: a sale or an assignment by a Lender of a
participating interest in (i) any portion of such Lender's interest in
Borrowers' Obligations and (ii) any of such Lender's other rights
under any of the Loan Instruments.
Participation Agreement: an agreement executed by a Lender
and a Participant pursuant to Section 10.2.
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PBGC: the Pension Benefit Guaranty Corporation or any
Governmental Body succeeding to the functions thereof.
Pension Plan: any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Part 3 of
Title I of ERISA, Title IV of ERISA, or Section 412 of the Code and
which (i) is maintained for employees of any Obligor or any ERISA
Affiliate, or (ii) has at any time within the preceding six years been
maintained for the employees of any Obligor or any of their current or
former ERISA Affiliates.
Permitted Acquisitions: an Acquisition (i) after the
consummation of which the Adjusted Leverage Ratio will not exceed the
Applicable Ratio as calculated as of the last day of the most recent
month preceding the closing date of such Acquisition for which
Borrowers have delivered to Lenders the financial statements and other
information reasonably necessary to enable Lenders to make such
calculation, provided that such delivery shall occur not less than 30
days prior to such closing date, (ii) if such Acquisition is of a
Related Business, the aggregate purchase price for such Acquisition
and any prior Acquisitions of Related Business Assets shall not exceed
$5,000,000, (iii) if such Acquisition is of one or more Stations,
either directly or as a result of an Acquisition Merger, such
Acquisition or Acquisition Merger would not result in more than 25% of
the aggregate of the Operating Cash Flow of CBC Stations to thereafter
be derived from Small Markets, as determined by Agent in its
reasonable discretion and (iv) if the conditions of Section 4.3 are
satisfied.
Permitted Dispositions: a Disposition after the consummation
of which the Adjusted Leverage Ratio calculated as of the last day of
the second month preceding the date of the projected closing of such
Disposition would not exceed the Applicable Ratio on such date.
Permitted Letter of Credit: An irrevocable stand-by letter
of credit (i) issued by an Issuer for the account of Borrowers, after
Borrowers have satisfied the requirements of Section 2.3 for the
issuance of an L/C Guaranty with respect thereto and subject to the
limitations of Section 2.2, (ii) to be used solely to secure the
obligations of Borrowers pursuant to agreements entered into by
Borrowers with respect to a proposed Acquisition or for such other
purposes as shall be approved by Agent and (iii) expiring no later
than one year after the applicable L/C Issuance Date.
Permitted Liens: any of the following Liens:
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness Liens;
(iii) Liens for taxes or assessments and similar
charges, which either are (A) not delinquent or (B)
being contested diligently and in good faith by
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appropriate proceedings, and as to which CBC has set
aside reserves on its books which are required by
GAAP;
(iv) statutory Liens, such as mechanic's, material-man's,
warehouseman's, carrier's or other like Liens,
incurred in good faith in the ordinary course of
business, provided that the underlying obligations
relating to such Liens are paid in the ordinary
course of business, or are being contested
diligently and in good faith by appropriate
proceedings and as to which CBC has set aside
reserves on its books required by GAAP, or the
payment of which obligations are otherwise secured
in a manner satisfactory to Required Lenders;
(v) zoning ordinances, easements, licenses,
reservations, provisions, covenants, conditions,
waivers or restrictions on the use of Property and
other title exceptions, in each case, that are
reasonably acceptable to Required Lenders;
(vi) Liens in respect of appeal bonds, judgments or
awards with respect to which no Event of Default
would exist pursuant to subsection 8.1.6;
(vii) Liens to secure payment of insurance premiums
(A) to be paid in accordance with applicable laws in
the ordinary course of business relating to payment
of worker's compensation, or (B) that are required
for the participation in any fund in connection with
worker's compensation, unemployment insurance,
old-age pensions or other social security programs;
(viii) Liens to secure Indebtedness (other than
Indebtedness for Borrowed Money) not in excess of
$500,000 at any one time;
(ix) banker's Liens in respect to deposit accounts;
(x) statutory landlords' Liens and rights of
tenants under leases and subleases granted by CBC to
others, in each case not interfering in any material
respect with the business of CBC and arising in the
ordinary course of business;
(xi) deposits to secure the performance of bids, trade
contracts, government contracts, operating leases,
statutory obligations, surety and appeal bonds,
performance and return-of-money bonds or to secure
liabilities to insurance carriers under insurance or
self-insurance arrangements and other obligations of
a like nature, so long as, in each case with respect
to this clause (xi), such Liens do not secure
obligations constituting Indebtedness and are
incurred in the ordinary course of business; and
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(xii) Liens of any seller which is a party to a
proposed Acquisition by CBC with respect to any
escrow deposits to be maintained in connection with
such proposed Acquisition.
Permitted Prior Liens: the following:
(i) the Permitted Senior Indebtedness Liens;
(ii) the Permitted Liens described in clauses (iii)
and (iv) of such definition that are accorded
priority to the Security Interests by law; and
(iii) the Permitted Liens described in clauses (vi),
(vii), (viii), (x), (xi) and (xii) of such
definition, subject to the limitations set forth
therein.
Permitted Senior Indebtedness: Indebtedness, other than
Borrowers' Obligations, incurred to purchase tangible personal
property or Indebtedness incurred to lease tangible personal property
pursuant to Capitalized Leases, provided that (i) the amount of such
Indebtedness at any time outstanding shall not exceed $750,000 and
(ii) no Event of Default will exist after giving effect to the
incurrence of any such Indebtedness.
Permitted Senior Indebtedness Liens: Liens that secure
Permitted Senior Indebtedness, provided that (i) such Liens attach
only to the Property so purchased or leased and (ii) Agent is granted
a perfected Lien upon such Property, subject only to Permitted Prior
Liens.
Person: any individual, firm, corporation, limited liability
company or partnership, business enterprise, trust, association, joint
venture, partnership, Governmental Body or other entity, whether
acting in an individual, fiduciary or other capacity.
Preferred Stock Registration Rights Agreement: the
Preferred Stock Registration Rights Agreement entered into on or prior
to the Closing Date among the Borrowers and the initial purchasers of
the Exchangeable Preferred Stock.
Principal Balance: the unpaid principal balance of the
Loans or any specified portion thereof outstanding from time to time.
Prohibited Amendment. any proposed amendment after the
Closing Date to the Exchangeable Preferred Stock Instruments, the
Senior Subordinated Debt Instruments or the articles of incorporation
of either Borrower which adversely affects the Lenders, including:
(i) As to the Exchangeable Preferred Stock
Instruments, any amendment which:
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(A) changes the voting rights or the
conditions under which such rights may be exercised
by the holders of the Exchangeable Preferred Stock;
(B) increases the dividend or any other
payment payable to such holders, increases the rate
of interest or the amount of any other payment
payable with respect to the Exchangeable
Debentures, or accelerates the time of payment of
any such dividend, interest or other payment;
(C) has the effect of making the covenants
and restrictions set forth in the Exchangeable
Preferred Stock Instruments more restrictive;
(D) has the effect of increasing the
remedies of the holders of the Exchangeable
Preferred Stock or the Exchangeable Debentures upon
the occurrence of an event of default under the
Exchangeable Preferred Stock Instruments; or
(E) alters the provisions regarding
subordination or notice to the Agent of
acceleration set forth therein;
(ii) As to the Senior Subordinated Debt
Instruments, any amendment which:
(A) increases the rate of interest or the
amount of any other payment payable with respect to
the Senior Subordinated Notes or accelerates the
time of any such payment;
(B) has the effect of making the covenants
and restrictions set forth in the Senior
Subordinated Instruments more restrictive;
(C) has the effect of increasing the
remedies of the holders of the Senior Subordinated
Notes or the trustee under the Notes Indenture upon
the occurrence of an event of default under the
Senior Subordinated Debt Instruments; or
(D) alters the provisions regarding
subordination or notice to the Agent of
acceleration set forth therein.
Property: all types of real, personal or mixed property and
all types of tangible or intangible property.
Qualified Depository: a member bank of the Federal Reserve
System having a combined capital and surplus of at least $100,000,000.
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Ratable Share: at any time the proportion that a Lender's
Commitment bears to the total Commitments of all Lenders at such time.
Real Estate: the real property owned by CBC described on
EXHIBIT 1X.
Register: as defined in subsection 10.1.3.
Reimbursement Obligation: as defined in subsection 2.2.2.
Related Business: any business ancillary to the ownership
or operation of a Station or any business in which the majority of the
revenues are derived from the sale of advertising.
Related Business Assets: all Property used in the operation
of a Related Business.
Required Lenders: at any time, two or more Lenders who hold
not less than 66-2/3% of the Ratable Shares of all Lenders.
Remaining Excess Cash Flow: for any period, any Excess Cash
Flow remaining after any payment due for such period pursuant to
subsection 2.7.2(a) is paid to Agent.
Revolving Loan: as defined in the Original Loan Agreement.
SEC: the Securities and Exchange Commission and any
Governmental Body succeeding to any of its functions.
Securities Act: the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the SEC
promulgated thereunder, as in effect from time to time.
Security Interests: the Liens in the Collateral granted to
Agent pursuant to the Loan Instruments.
Seller's Consent: a consent to an Assignment of Acquisition
Instruments, in form and substance reasonably satisfactory to Agent,
to be executed by the Seller of the Property which is the subject of a
Permitted Acquisition.
Seller Debt: the unsecured Indebtedness in the original
principal amount of $160,000 assumed by CBC in connection with the
Tele-Media Merger.
Senior Subordinated Debt Instruments: collectively, the
Note Indenture, the Notes Registration Rights Agreement, the form of
the Senior Subordinated Notes to be issued by CBC.
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Senior Subordinated Indebtedness: the Indebtedness in the
principal amount of $101,000,000 evidenced by the Senior Subordinated
Notes.
Senior Subordinated Notes: the Senior Subordinate Notes due
2007 in the aggregate principal amount of $ issued by CBC on
the Closing Date and the senior subordinated notes issued in exchange
therefor pursuant to the Notes Registration Rights Agreement.
Small Markets: Areas of "Dominant Influence" of size 150 or
smaller as determined in accordance with criteria established by The
Arbitron Company.
Solvency Certificate: a Solvency Certificate executed by
the Chief Financial Officer in form and substance reasonably
acceptable to Agent.
Stated Rate: as defined in subsection 2.5.1(d).
Station: a radio station operated to transmit over the
airwaves radio signals within a geographic area for the purpose of
providing commercial broadcasting radio programming.
Station Assets: all Property, other than the FCC Licenses,
used in operation of a Station.
Stock Pledge Agreement (CLI Capital Stock): the Stock
Pledge Agreement dated October 9, 1996 executed by CBC relating to the
CLI Capital Stock.
Stock Pledge Agreement (Tele-Media Capital Stock): the
Stock Pledge Agreement executed by CBC in form and substance
satisfactory to Agent relating to the Tele-Media Capital Stock.
Tele-Media: Tele-Media Broadcasting Company, a Delaware
corporation.
Tele-Media Acquisition: the Acquisition by CBC of all of the
Tele-Media Capital Stock pursuant to the Tele-Media Acquisition
Instruments following the (i) merger of Tele-Media Broadcasting
Holding Corporation and Tele-Media Broadcasting Company of Centre
Region into Tele-Media, (ii) dissolution and liquidation of all
Subsidiary Partnerships (as defined in the Tele-Media Acquisition
Instruments) and (iii) acquisition by Tele-Media of the Tele-Media
Property.
Tele-Media Acquisition Instruments: the Agreement of
Purchase and Sale dated March 28, 1997 among Tele-Media, Tele-Media
Broadcasting Company of Centre Region, Tele-Media Broadcasting Holding
Company, Robert E. Tudek, Everett I. Mundy and Borrowers and documents
executed pursuant thereto.
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Tele-Media Capital Stock: all of the issued and outstanding
capital stock, warrants, options and other equity interests of
Tele-Media.
Tele-Media Leases: each Lease described in EXHIBIT 1Y.
Tele-Media Licenses: the FCC Licenses used to operate the
Tele-Media Stations.
Tele-Media Loan Instruments: the documents to be executed
and delivered by CBC to Agent pursuant to Section 4.2.
Tele-Media Merger: the merger of Tele-Media into CBC with
CBC being the surviving corporation.
Tele-Media Merger Instruments: the articles of merger and
all other documents executed and/or filed in connection with the
Tele-Media Merger.
Tele-Media Property: all of the Purchased Assets, except
the Excluded Asset Schedule (each as defined in the Tele-Media
Acquisition Instruments) and the Tele-Media Licenses.
Tele-Media Real Estate: each parcel of Real Estate
described in EXHIBIT 1Z(i).
Tele-Media Stations: the Stations described in
EXHIBIT 1Z(ii).
Term Loan: as defined in the Original Loan Agreement.
Termination Event: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder; or (ii)
the withdrawal of any Obligor or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2); or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate, or the appointment of a trustee with respect to, any
Pension Plan by the PBGC; or (v) any other event or condition which
would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan; or (vi) the partial or complete withdrawal of any
Obligor or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a lien pursuant to Section 412 of the Code or Section
302 of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections
4241 or 4245 of ERISA; or (ix) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA
or the institution by the PBGC of proceedings to terminate a
Multiemployer Plan under Section 4042 of ERISA.
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Total Debt: at any time, the aggregate (i) principal amount
of the Indebtedness for Borrowed Money of Borrowers and (ii) the
outstanding L/C Guaranty Obligations.
Total Leverage Ratio: the ratio of the Total Debt as of the
last day of any quarter to the Adjusted Operating Cash Flow for the
Four-Quarter Period ending on such day.
Trade Out Transaction: an exchange of advertising time for
non-cash consideration, such as goods, services or program material.
UCC Financing Statements: Uniform Commercial Code financing
statements as defined in the Uniform Commercial Code.
Unused Commitment Fee: as defined in subsection 2.5.5.
Wilson: Lawrence R. Wilson
Window Period: with respect to each Permitted Disposition,
a period of 180 days following the date of receipt by Lenders of the
Net Sale Proceeds thereof.
1.2 TIME PERIODS. In this Loan Agreement and the other Loan
Instruments, in the computation of periods of time from a specified date to a
later specified date, (i) the word "from" means "from and including," (ii) the
words "to" and "until" each mean "to, but excluding" and (iii) the words
"through," "end of" and "expiration" each mean "through and including." Unless
otherwise specified, all references in this Loan Agreement and the other Loan
Instruments to (i) a "month" shall be deemed to refer to a calendar month, (ii)
a "quarter" shall be deemed to refer to a calendar quarter and (iii) a "year"
shall be deemed to refer to a calendar year.
1.3 ACCOUNTING TERMS AND DETERMINATIONS. All accounting terms
not specifically defined herein shall be construed, all accounting
determinations and all computations hereunder shall be made and all financial
statements required to be delivered pursuant hereto shall be prepared in
accordance with GAAP as in effect at the time of such interpretation,
determination or preparation, as applicable. In the event that any Accounting
Changes (as hereinafter defined) occur and such changes result in a change in
the method of calculation of financial covenants, standards or terms contained
in this Loan Agreement, then Borrowers and Agent agree to enter into
negotiations to amend such provisions of this Loan Agreement so as to reflect
such Accounting Changes with the desired result that the criteria for
evaluating the financial condition of Borrowers shall be the same after such
Accounting Changes as if such Accounting Changes had not been made. Until such
amendments are agreed upon, all determination shall be based upon GAAP prior to
such Accounting Changes. For purposes hereof, "Accounting Changes" shall mean
(i) changes in generally accepted accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or any successor thereto) or other
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appropriate authoritative body and (ii) changes in accounting principles as
approved by the Accountants.
1.4 REFERENCES. All references in this Loan Agreement to
"Article," "Section," "subsection," "subparagraph," "clause" or "Exhibit,"
unless otherwise indicated, shall be deemed to refer to an Article, Section,
subsection, subparagraph, clause or Exhibit, as applicable, of this Loan
Agreement.
1.5 BORROWERS' KNOWLEDGE. Any statements, representations or
warranties that are based upon the best knowledge of a Borrower or an officer
thereof shall be deemed to have been made after due inquiry by such Borrower or
such officer, as applicable, with respect to the matter in question.
1.6 BENEFIT OF LENDERS. All Liens granted to Agent and all
payments made to Agent pursuant to the Loan Instruments, except payments made
of the Agent's Fee and the Existing Prepayment Premium, shall be deemed to be
granted and made, as applicable, for the benefit of the Lenders.
ARTICLE II
LOANS AND TERMS OF PAYMENT
2.1 EXISTING LOANS; OUTSTANDING L/C GUARANTY OBLIGATIONS. On
the Closing Date (i) the Revolving Loan and Term Loan shall be consolidated
into the Loans and Borrowers shall make a principal payment to Agent of
$39,000,000, thereby reducing the Principal Balance to $50,584,043 and (ii) the
aggregate of the outstanding L/C Guaranty Obligations is $1,500,000.
2.2 ADDITIONAL LOANS; ISSUANCE OF L/C GUARANTIES.
2.2.1 OBLIGATION OF LENDERS. Subject to the conditions set forth
in Section 2.3, each Lender severally agrees to make Additional Loans
to Borrowers and to issue L/C Guaranties in behalf of Borrowers from
time to time on or after the Closing Date to the Maturity Date, in the
case of Additional Loans, and to the L/C Expiration Date, in the case
of L/C Guaranties (i) except Additional Loans shall be made pursuant to
subsection 2.4.3 after the Maturity Date (by acceleration) to pay L/C
Guaranty Obligations incurred pursuant to L/C Guaranties issued prior
to the L/C Expiration Date and (ii) provided at no time shall the
aggregate amount of (A) such Lender's Loans and L/C Guaranties exceed
such Lender's Commitment and the L/C Obligations of all Lenders exceed
$5,000,000. The failure of any Lender to perform its obligations
hereunder or under any other Loan Instrument shall not affect the
obligations of Borrowers under this Loan Agreement or any other Loan
Instrument nor shall any other Lender or Agent be liable for the
failure of such Lender to perform its obligations hereunder or under
such other Loan Instrument.
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2.2.2 OBLIGATIONS OF BORROWERS. Borrowers hereby agree to
protect, indemnify and save each Lender harmless from and against any
and all claims, demands, liabilities, damages, costs and expenses
(including reasonable attorneys fees) such Lender may incur or be
subject to as a consequence, direct or indirect, of the issuance of any
L/C Guaranty (the "Reimbursement Obligation").
2.3 CONDITIONS TO ADDITIONAL LOANS; L/C GUARANTIES. The
obligation of each Lender to make any Additional Loan or issue an L/C Guaranty
shall be subject to the satisfaction of each of the following conditions:
(a) no Event of Default shall exist after giving effect to the
disbursement of such Additional Loan or the issuance of such L/C
Guaranty;
(b) each Additional Loan shall be in a minimum amount of
$2,000,000 and integral multiples of $500,000 in excess of that amount;
(c) if an Additional Loan is requested, Agent shall have received
a Notice of Borrowing/Disbursement Request from Borrowers in the form
of EXHIBIT 2.3(c) with respect to each requested advance no later than
12:00 p.m., Chicago time, at least two Business Days in advance of the
proposed Funding Date with respect to such advance, which Funding Date
shall be on a Business Day;
(d) if Lenders are requested to issue an L/C Guaranty, Agent
shall have received a Notice of Issuance of L/C Guaranties from
Borrowers in the form of EXHIBIT 2.3(d) with respect to each such
request not later than 12:00 noon Chicago time at least three Business
Days in advance of the proposed L/C Issuance Date, which L/C Issuance
Date shall be a Business Day.
(e) if the proceeds of the Additional Loan are to be used to
consummate an Acquisition, the terms and conditions of Section 4.3
shall have been satisfied;
(f) the Adjusted Total Leverage Ratio shall not exceed the
Applicable Ratio as calculated as of the last day of the most recent
month preceding the applicable Funding Date or L/C Issuance Date for
which Borrowers have delivered to Lenders the financial statements and
other information reasonably necessary to enable Lenders to make such
calculation, provided that such delivery shall occur not less than 15
days prior to such Funding Date or L/C Issuance Date, as applicable;
(g) on the applicable Funding Date or L/C Issuance Date the
representations and warranties of each Obligor set forth in the Loan
Instruments to which such Obligor is a party shall be true and correct
when made and at and as of the time of such Funding Date or L/C
Issuance Date, except to the extent that such representations and
warranties expressly relate to an earlier date;
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(h) the terms and conditions of Section 4.2 shall have been
satisfied; and
(i) a certificate executed by the Chief Financial Officer that
the Borrowers are not prohibited by the Senior Subordinated Debt
Instruments from incurring the Indebtedness in connection with such
Additional Loan or L/C Guaranty, as applicable.
2.4 PROCEDURES FOR ADDITIONAL LOANS AND ISSUANCE OF L/C GUARANTIES.
2.4.1 MAKING ADDITIONAL LOANS OTHER THAN IN CONNECTION WITH L/C
GUARANTIES. Promptly after receipt by Agent of a request from Borrowers
for an Additional Loan, if the applicable conditions of Section 2.3
have been satisfied, subject to the limitations set forth in subsection
2.2.1, Agent shall notify each Lender of Agent's receipt of such
request and the satisfaction of such conditions, specifying: (i) the
proposed Funding Date, (ii) the amount of such Additional Loan and the
applicable Interest Period, if any, and (iii) the apportionment among
Lenders of such Additional Loan. Each Lender shall remit its Ratable
Share of such Additional Loan in Good Funds to Agent by 10:00 a.m.,
Chicago time, on the Funding Date and Agent shall thereupon remit the
funds received by Agent to or at the direction of Borrowers.
2.4.2 L/C GUARANTIES. Promptly after receipt by Agent of a
request from Borrowers for the issuance of an L/C Guaranty, if the
applicable conditions set forth in Section 2.3 have been satisfied,
subject to the limitations set forth in subsection 2.2.1, Agent shall
notify each Lender of Agent's receipt of such request and the
satisfaction of such conditions, specifying (i) the proposed L/C
Issuance Date, (ii) the amount of such L/C Guaranty, and (iii) the
apportionment among Lenders of the obligations under such L/C Guaranty
in accordance with their Ratable Shares. Each Lender shall execute such
L/C Guaranty and deliver such L/C Guaranty to Agent in Chicago, not
later than 11:00 a.m. Chicago time, one Business Day preceding the
applicable L/C Issuance Date and Agent shall thereupon deliver such L/C
Guaranty to the applicable Issuer.
2.4.3 ADDITIONAL LOANS IN CONNECTION WITH L/C GUARANTIES.
Promptly after receipt by Agent from an Issuer of any demand for
payment of any L/C Guaranty Agent shall notify each Lender of such
demand, specifying (i) the proposed Funding Date, (ii) the
apportionment among Lenders of the L/C Guaranty Obligations with
respect to such L/C Guaranty and (iii) the Interest Period, if any,
applicable to the Additional Loan to be made by Lenders to satisfy such
L/C Guaranty Obligations. Each Lender shall remit its Ratable Share of
such L/C Guaranty Obligations in Good Funds to Agent by 10:00 a.m.
Chicago time on the Funding Date and each such Lender shall be deemed
to have made an Additional Loan to Borrowers on such date in the amount
remitted. Agent shall on the Funding Date remit the funds received by
Agent to the applicable Issuer in payment of such L/C Guaranty
Obligations.
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2.5 INTEREST; DEFAULT RATE, LATE CHARGES, LOAN FEES AND AGENT'S FEES.
2.5.1 INTEREST.
(A) INTEREST RATE. Except as provided in subparagraph
(c) below, the Base Rate Portion shall bear interest at the
Base Rate in effect from time to time plus the Applicable
Margin and each LIBOR Loan shall bear interest at the
applicable LIBOR Rate plus the Applicable Margin. As used in
this Loan Agreement, the term "Applicable Margin" shall be
determined on the first day of each quarter and shall mean
with respect to the Base Rate Portion and each LIBOR Loan the
percentage set forth opposite the applicable Total Leverage
Ratio as calculated as of the last day of the second quarter
preceding such quarter:
<TABLE>
<CAPTION>
Total Base Rate LIBOR Loan
Leverage Applicable Applicable
Ratio Margin Margin
-------- ---------- ----------
<S> <C> <C>
greater than 1.75% 2.75%
or equal to 5.5
greater than
or equal to 5.0 1.50% 2.50%
but less than 5.5
greater than
or equal to 4.5 1.00% 2.00%
but less than 5.0
less than 4.5 0.50% 1.50%
</TABLE>
(B) INTEREST PAYMENTS. Interest shall be payable
quarterly in arrears on the last Business Day of each quarter
commencing with the third quarter of 1997.
(C) DEFAULT RATE. During a Default Rate Period,
Borrowers' Obligations shall bear interest at the applicable
Default Rate.
(D) MAXIMUM INTEREST. Notwithstanding any provision to
the contrary contained herein or in any other Loan
Instrument, Lenders shall not collect a rate of interest on
any obligation or liability due and owing by Borrowers to
Lenders in excess of the maximum contract rate of interest
permitted by applicable law ("Excess Interest"). Lenders and
Borrowers agree that the interest laws of the State of
Arizona govern the relationship among them, but in the event
of a final
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adjudication to the contrary, Borrowers shall be obligated
to pay, nunc pro tunc, to Lenders only such interest as then
shall be permitted by the laws of the state found to govern
the contract relationship among Lenders and Borrower. If any
Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this
Loan Agreement or any other Loan Instrument, then in such
event (i) no Obligor shall be obligated to pay such Excess
Interest, (ii) any Excess Interest collected by Lenders
shall be, at Lenders' option, (A) applied to the Principal
Balance or to accrued and unpaid interest not in excess of
the maximum rate permitted by applicable law or (B) refunded
to the payor thereof, (iii) the interest rates provided for
herein (collectively, the "Stated Rate") shall be
automatically reduced to the maximum rate allowed from time
to time under applicable law (the "Maximum Rate") and this
Loan Agreement and the other Loan Instruments, as
applicable, shall be deemed to have been, and shall be,
modified to reflect such reduction, and (iv) neither any
Borrower nor any other Obligor shall have any action against
Lenders for any damages arising out of the payment or
collection of such Excess Interest; provided, however, that
if at any time thereafter the Stated Rate is less than the
Maximum Rate, Borrowers shall, to the extent permitted by
law, continue to pay interest at the Maximum Rate until such
time as the total interest received by Lenders is equal to
the total interest which Lenders would have received had the
Stated Rate been (but for the operation of this provision)
the interest rate payable. Thereafter, the interest rate
payable shall be the Stated Rate unless and until the Stated
Rate again exceeds the Maximum Rate, in which event the
provisions contained in this subsection 2.5.1(d) shall again
apply.
2.5.2 LATE CHARGES. If a payment of principal or interest to be
made pursuant to this Loan Agreement becomes past due for a period in
excess of five days, Borrowers shall pay on demand to Agent a late
charge of 2% of the amount of such overdue payment.
2.5.3 AMENDMENT FEE. Borrowers shall pay to Agent on the Closing
Date a fee of $100,000 (the "Amendment Fee"), which shall be deemed to
be fully earned upon the Closing.
2.5.4 AGENT'S FEE. Borrowers agree to pay to Agent for its own
benefit a fee (the "Agent's Fee") of $50,000 for each Loan Year or any
portion thereof elapsing during the period from the Closing Date
through the Maturity Date. The Agent's Fee shall be deemed fully earned
by Agent on the first Business Day of each Loan Year.
2.5.5 UNUSED COMMITMENT FEE. Borrowers shall pay to Agent a fee
(the "Unused Commitment Fee") on the last Business Day of each quarter,
commencing with the third quarter of 1997, in an amount equal to the
product of the (i) (A) average outstanding Commitments for the
preceding quarter, minus (B) the average of the
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<PAGE> 43
outstanding Principal Balance of the Loans during such preceding
quarter, multiplied by (ii) 0.125%; provided, however, that such
percentage shall be reduced to 0.09375% for a quarter if the Total
Leverage Ratio calculated as of the last day of quarter preceding such
quarter was less than 4.5.
2.5.6 LETTER OF CREDIT FEES. Borrowers shall pay a fee to each
Issuer of 1.25% of the amount from time to time outstanding of each
Permitted Letter of Credit issued by such Issuer (the "Letter of Credit
Fee"). Letter of Credit Fees shall be payable to the applicable Issuer
quarterly in arrears on the last Business Day of each quarter. The
Issuer shall retain 10% of each such payment as compensation for its
issuance of the applicable Permitted Letter of Credit and shall remit
the balance of such payment (the "Net Fee") to Agent for distribution
to Lenders pursuant to subsection 2.12.2.
2.5.7 COMPUTATION OF INTEREST, UNUSED COMMITMENT FEES AND LETTER
OF CREDIT FEES. Interest, the Unused Commitment Fee and Letter of
Credit Fees shall be computed on the basis of a year consisting of 360
days and charged for the actual number of days during the period for
which interest or such fees are being charged. In computing interest,
the Funding Date shall be included and the date of payment shall be
excluded.
2.6 LIBOR LOANS.
2.6.1 ELECTION BY BORROWERS. Subject to the provisions of
subsection 2.6.2 and provided no Event of Default then exists,
Borrowers from time to time may elect to have all or a portion of the
Principal Balance bear or continue to bear interest at a LIBOR Rate,
such election to be exercised by delivery of a LIBOR Election Notice to
Agent c/o Andrew J. Pluta, FINOVA Capital Corporation, 311 S. Wacker
Drive, Chicago, Illinois 60606, Telecopy No. (312) 322-3533, by
facsimile transmission not less than three Business Days prior to the
commencement of the applicable Interest Period. Agent shall promptly
thereafter send a copy of such notice to each Lender. Agent shall
determine (which determination shall, absent manifest error, be
presumptively correct) the LIBOR Rate applicable to the relevant LIBOR
Loan on the applicable Interest Rate Determination Date and promptly
shall give notice thereof to Borrowers. Agent and Lenders shall have
the right without further confirmation to assume that any LIBOR
Election Notice received by Agent has been given by a person duly
authorized to act on behalf of Borrowers. Upon the expiration of an
Interest Period the applicable LIBOR Loan shall be converted to and
become part of the Base Rate Portion unless such LIBOR Loan has been
continued as a LIBOR Loan in accordance with this subsection 2.6.1. If
Borrowers deliver a LIBOR Election Notice to Agent and thereafter
withdraw such election before it becomes effective, Borrowers shall
reimburse Lenders on demand for the amount of any loss, cost and/or
expense incurred by Lenders as a result of Lenders' reliance on such
notice, including without limitation, any loss, cost or expense
resulting from Lenders' contractual obligations in connection with the
applicable Dollar deposits.
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<PAGE> 44
2.6.2 LIBOR LIMITATIONS. Each LIBOR Loan shall be in the amount
of not less than $25,000,000 or in integral multiples of $1,000,000 in
excess thereof. At no time shall more than six LIBOR Loans be in
effect.
2.6.3 EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. If, prior to the commencement of any Interest Period,
the Required Lenders determine that Dollar deposits of the relevant
amount for the relevant Interest Period are not available in the London
Interbank Market or the rate at which such Dollar deposits are being
offered will not adequately and fairly reflect the cost to the Lenders
of maintaining a LIBOR Rate for such Interest Period, or that by reason
of circumstances affecting such market, adequate and reasonable means
do not exist for ascertaining the LIBOR Rate applicable to such
Interest Period, Agent promptly shall give notice of such determination
to Borrowers and Lenders and any LIBOR Election Notice previously given
by Borrowers which has not yet become effective shall be deemed to be
cancelled.
2.6.4 TAX AND OTHER LAWS. In the event that by reason of any law,
regulation or requirement or interpretation thereof by any Governmental
Body, or the imposition of any requirement of any such Governmental
Body, whether or not having the force of law, including the imposition
of any reserve and/or special deposit requirement (other than reserves
included in the Eurocurrency Reserve Requirements), any Lender shall be
subjected to any tax, levy, impost, charge, fee, duty, deduction or
withholding of any kind whatsoever (other than any tax imposed upon the
total net income of such Lender) and if any such measures or any other
similar measure shall result in an increase in the cost to any Lender
of maintaining its share of any LIBOR Loan or in a reduction in the
amount of principal or interest receivable by any Lender in respect
thereof, then Borrowers shall pay to the affected Lender within 10 days
after receipt of a notice from such Lender (which notice shall be
accompanied by a statement in reasonable detail setting forth the basis
for the calculation thereof, which calculation, in the absence of
demonstrable error, shall be conclusive and binding and a copy of such
notice concurrently therewith shall be delivered to Agent), an amount
equal to such increased cost or reduced amount. At any time after
receipt of such notice, Borrowers may convert all LIBOR Loans to the
Base Rate Portion, and such conversion shall be effective three
Business Days after the Agent has received notice from Borrowers of
such conversion.
2.6.5 CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any
time any law, treaty or regulation, or any interpretation thereof by
any Governmental Body shall make it unlawful for any Lender to fund or
maintain its share of any LIBOR Loan with monies obtained in the London
Interbank Market, such Lender, upon the occurrence of such event, shall
notify Borrower thereof (and a copy of such notice concurrently shall
be delivered to Agent) and thereupon the (i) right of Borrowers to make
any LIBOR Election shall be suspended for the duration of such
illegality and (ii) if required by such law, regulation or
interpretation, on such date as shall be specified in such notice all
Interest Periods then in effect with respect to the affected Lender
shall be terminated, and
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<PAGE> 45
thereafter all LIBOR Loans with respect to the affected Lender shall
be deemed converted to the Base Rate Portion.
2.6.6 INDEMNITY. In addition to any other payments payable by
Borrowers to Lenders pursuant to the Loan Instruments, Borrowers shall
indemnify and reimburse each Lender on demand for any loss or expense
which such Lender may sustain as a consequence of any prepayment of any
LIBOR Loan prior to the expiration of the Interest Period applicable
thereto and/or any failure by Borrowers to (i) make any payment when
due of any amount payable with respect to any LIBOR Loan or (ii) borrow
the amount set forth in any LIBOR Election Notice on the date specified
therefor.
2.6.7 OPTION TO REPLACE AFFECTED LENDER. Within 15 days after
receipt by Borrowers of notice from Agent or any Lender for payment of
additional costs as provided in subsection 2.6.4 or for suspension
pursuant to subsection 2.6.5 of Borrowers' right to have all or a
portion of the Principal Balance bear interest with reference to a
LIBOR Rate, Borrowers may, at their option, notify Agent and the Lender
giving such notice of their intention to obtain, at Borrowers' expense,
a replacement Lender for the Lender giving such notice, which
replacement Lender shall be reasonably satisfactory to Agent and
Borrowers. In the event Borrowers obtain such replacement Lender within
90 days following notice of their intention to do so, the Lender giving
such notice shall sell and assign its Commitments to such replacement
Lender, provided that Borrowers reimburse the Lender giving such notice
for the increased costs for which it is entitled to reimbursement under
this Loan Agreement through the date of such sale and assignment.
2.7 REDUCTIONS OF COMMITMENTS, PRINCIPAL PAYMENTS.
2.7.1 MANDATORY REDUCTIONS OF COMMITMENTS AND PRINCIPAL PAYMENTS.
The Commitments shall be permanently reduced on the last Business Day
of each quarter commencing with the last quarter of the year 1997 in
accordance with EXHIBIT 2.7.1. On each such Business Day, Borrowers
shall pay to the Agent, for application to the Principal Balance, the
amount, if any, by which the aggregate of the Principal Balance and the
L/C Guaranty Obligations outstanding exceeds the Commitments, as
reduced on such Business Day.
2.7.2 OTHER MANDATORY REDUCTIONS OF COMMITMENTS; PREPAYMENTS OF
THE LOANS. In addition to the permanent reductions in the Commitments
pursuant to subsection 2.7.1, Borrowers shall make the following
payments to Agent which shall be applied to the Principal Balance and
permanently reduce the Commitments.
(a) EXCESS CASH FLOW PAYMENTS. For each year commencing
with the year 1997 with respect to which the Total Leverage
Ratio as of the end of such year is 4.5 or greater, Borrowers
shall pay to Agent an amount equal to the
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<PAGE> 46
lesser of (i) (A) if the Total Leverage Ratio as of the end
of such year exceeds 5.5, then 66-2/3% of the Excess Cash
Flow for such year and (B) if the Total Leverage Ratio as of
the end of such year is 4.5 or greater, but less than or
equal to 5.5, then 50% of the Excess Cash Flow for such
year, or (ii) an amount by which the Cash Equivalents as of
the last day of March following such year exceeds
$5,000,000. Each such payment shall be made within 30 days
after the date that Borrowers are required to deliver to
Lenders the financial statements for such year pursuant to
subsection 6.3.3. Each Borrower agrees that it will not take
any actions primarily intended to decrease the amount
payable under this subsection 2.7.2(a) in anticipation of
the calculation referred to herein.
(b) PROCEEDS OF KEY MAN LIFE INSURANCE. Proceeds of Key
Man Life Insurance.
(c) NET SALE PROCEEDS. Net Sale Proceeds, but only to the
extent that such Net Sale Proceeds exceed the aggregate of
the Additional Loans made for Permitted Acquisitions during
the Window Period applicable to the Permitted Disposition
from which such Net Sale Proceeds arose.
2.8 VOLUNTARY REDUCTIONS IN COMMITMENTS AND PREPAYMENTS;
PREPAYMENT PREMIUMS.
2.8.1 VOLUNTARY REDUCTION OF COMMITMENTS. Borrowers may
permanently reduce the Commitments at any time and from time to time,
in whole or in part, by notice to Agent accompanied by payment to Agent
of an amount equal to the excess, if any, of the aggregate of the
Principal Balance and the L/C Guaranty Obligations at the time of such
notice over the Commitments at such time, after giving effect to the
applicable reduction. Each reduction shall be in an amount not less
than $5,000,000 or multiples of $1,000,000 in excess thereof.
2.8.2 VOLUNTARY PREPAYMENTS. Borrowers may prepay (i) all or any
portion of the Base Rate Portion of the Loans at any time and (ii) all
of any Loan which is a LIBOR Loan on the last day of the Interest
Period applicable thereto, in each case without premium or penalty, but
in each case subject to the following conditions:
(a) NOTICE OF PREPAYMENT; NUMBER AND AMOUNT OF
PREPAYMENTS. Not less than 10 days prior to the date upon
which Borrowers desire to make any voluntary prepayment of
the Loans, Borrowers shall deliver to Lenders notice of their
intention to prepay, which notice shall state the prepayment
date, the amount of the Principal Balance to be prepaid. The
amount of any partial prepayment of the Principal Balance
shall be not less than $5,000,000 or multiples of $1,000,000
in excess thereof. A prepayment of the Principal Balance
shall not be made more frequently than once each month. If
Borrowers
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deliver to Lenders a notice of prepayment and fail to make
such prepayment, such notice shall be deemed to be revoked
and Borrowers shall reimburse Lenders on demand in the
amount of any loss, cost and/or expense incurred by Lenders
as a result of Lenders' reliance on such notice, including
without limitation, any loss, cost or expense resulting from
Lenders' contractual obligations in connection with the
reinvestment of the amount indicated in such notice of
prepayment.
(b) ADDITIONAL PAYMENTS. Concurrently with any
prepayment in full of the Principal Balance pursuant to this
subsection 2.8.2, Borrowers shall pay to Agent all of the
other of Borrowers' Obligations.
2.8.3 PREMIUMS. No prepayment premium or other charge shall be
payable with respect to any payments or prepayments of Borrowers'
Obligations, except (i) as provided in subsection 2.6.6 and (ii) the
Existing Prepayment Premium.
2.9 PAYMENT AT MATURITY. All of Borrower's Obligations not previously
paid shall be due and payable on the Maturity Date.
2.10 LETTER OF CREDIT FUND. To the extent that any payment of
Borrowers' Obligations includes payment of the Reimbursement Obligation with
respect to L/C Guaranty Obligations outstanding on the date of such payment,
Agent shall deposit in a segregated interest bearing account selected by and
under the control of Agent an amount equal to such payment of such
Reimbursement Obligation (the "Letter of Credit Fund"). The Letter of Credit
Fund shall be used to make any payments required to be made to any Issuer with
respect to such L/C Guaranty Obligations. Any funds remaining on deposit in the
Letter of Credit Fund, including earnings thereon, shall be remitted to
Borrower after all of such L/C Guaranty Obligations have been satisfied.
2.11 PAYMENTS AFTER EVENT OF DEFAULT. All payments received by
Lenders during the existence of an Event of Default shall be applied in
accordance with Section 8.5.
2.12 METHOD AND DISTRIBUTION OF PAYMENTS.
2.12.1 METHOD OF PAYMENT; GOOD FUNDS. All payments to be made
pursuant to the Loan Instruments by Borrowers shall be made by wire
transfer of Good Funds on or prior to the date due to the account of
Agent, for the ratable benefit of Lenders, at Citibank, N.A., 399 Park
Avenue, New York, New York, ABA 021000089, Credit: FINOVA Capital
Corporation, Credit Account No. 40680477, Reference Citadel No. 20995,
or to such other account as Agent shall notify Borrowers.
2.12.2 DISTRIBUTION OF PAYMENTS. All payments received by Agent
of the Agent's Fee and the Existing Prepayment Premium shall be
retained by FINOVA. All
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other payments with respect to Borrowers' Obligations shall be
allocated among the Lenders in accordance with their respective
Ratable Shares.
2.12.3 DISTRIBUTIONS BY AGENT TO LENDERS. All payments which are
received by Agent which are to be distributed to Lenders and which
constitute Good Funds on or prior to 12:00 p.m. Chicago time on any
date shall be distributed by Agent to Lenders on the same date in
immediately available funds.
ARTICLE III
SECURITY; GUARANTY
3.1 SECURITY. Borrowers' Obligations shall be secured by a
Lien upon all of the Collateral, which at all times shall be superior and prior
to all other Liens, except Permitted Prior Liens.
3.2 GUARANTY. Payment and performance of Borrowers' Obligations
shall be guaranteed by Guarantor in accordance with the terms of the Guaranty.
ARTICLE IV
CONDITIONS OF CLOSINGS; ACQUISITIONS; TELE-MEDIA MERGER
4.1 CLOSING. This Loan Agreement shall not be deemed to
be effective until all of the following conditions are satisfied in a manner
satisfactory to Lenders:
4.1.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date the
representations and warranties of each Obligor set forth in the Loan
Instruments to which such Obligor is a party shall be true and correct
when made and at and as of the time of the Closing, except to the
extent that such representations and warranties expressly relate to an
earlier date.
4.1.2 CONSUMMATION OF MERGERS; TELE-MEDIA ACQUISITION. Agent
shall have received evidence of the following:
(a) DAC MERGER. the consummation of the DAC Merger
and the acquisition by CBC as a result thereof of good and
marketable title to all Property of DAC, free and clear of
all Liens and Indebtedness, except Permitted Liens and
current trade indebtedness incurred in the normal course of
business;
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<PAGE> 49
(b) DLI MERGER. the consummation of the DLI
Merger and the acquisition by CLI as a result thereof of all
FCC Licenses held by DLI prior to the DLI Merger, free and
clear of all liens, except Permitted Liens;
(c) TELE-MEDIA ACQUISITION. the consummation of
the Tele-Media Acquisition and the payment of the Bond
Pay-Off Amount and FINOVA Pay-Off Amount (each as defined in
the Tele-Media Acquisition Instruments);
(d) SENIOR SUBORDINATED NOTES. the execution of
the Senior Subordinated Debt Instruments, the issuance of the
Senior Subordinated Notes and the receipt by CBC of the
proceeds of such sale, which shall not be less than
$100,000,000, less applicable fees and expenses;
(e) EXCHANGEABLE PREFERRED STOCK. the execution
of the Exchangeable Preferred Stock Instruments, the sale of
the Exchangeable Preferred Stock and the receipt by CBC of
the proceeds of such sale, which shall not be less than
$100,000,000, less applicable fees and expenses.
4.1.3 DELIVERY OF DOCUMENTS. The following shall have been
delivered to Agent, each duly authorized and executed, where
applicable:
(a) the Initial Loan Instruments;
(b) signature and incumbency certificates for
each Obligor;
(c) a certificate of good standing or similar
certification for each Obligor from the respective states in
which each such Person is organized and from all states in
which the laws thereof require any such Person to be
licensed and/or qualified to do business, in each case dated
not more than 10 days prior to the Closing Date;
(d) certified copies of the corporate charter and
by-laws for each Obligor, together with all effective and
proposed amendments thereto;
(e) certified copies of resolutions adopted
by the board of directors of each Obligor authorizing the
execution and delivery of the Instruments to which such
Person is a party and the consummation of the transactions
contemplated therein;
(f) certified or executed original copies of
each of the following, the terms and conditions of all of
which shall be satisfactory to Agent:
(i) Tele-Media Acquisition Instruments;
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<PAGE> 50
(ii) DAC Merger Instruments;
(iii) DLI Merger Instruments;
(iv) all of the following, except to the extent
previously delivered to Agent:
(A) all instruments and documents evidencing
Permitted Senior Indebtedness;
(B) JSA Agreements;
(C) LMA Agreements;
(D) Leases;
(v) Amended and Restated Contribution Agreement;
(vi) Amended and Restated Use Agreement;
(vii) such other instruments, documents, certificates,
consents, waivers and opinions as Agent may
reasonably request; and
(viii) certificates representing all of the Tele-Media
Capital Stock and executed stock powers in form
acceptable to Agent.
4.1.4 PERFORMANCE; NO DEFAULT. Each Obligor shall have performed
and complied with all agreements and conditions contained in the
Initial Loan Instruments to be performed by or complied with by such
Person prior to or at the Closing, and no Event of Default or Incipient
Default shall then exist or result from the making of the Initial Loan.
4.1.5 OPINIONS OF COUNSEL. Agent shall have received opinions
dated the Closing Date from (i) Osborn Maledon and Eckert Seamans
Cherin & Mellott, counsel to Obligors, (ii) Hartman & Armstrong, Ltd.,
Nevada special counsel to Obligors, (iii) Reed, Smith, Shaw & McClay,
FCC counsel to each Borrower, and (iv) Adler, Pollack & Sheehans in
each case addressed to Agent for the benefit of Lenders, and in such
form and covering such matters as Agent may reasonably require.
4.1.6 APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS. Agent shall
have received evidence that the approval or consent shall have been
obtained from all Governmental Bodies, including, without limitation,
the FCC, and all other Persons whose approval or consent is required to
enable Obligors to (i) enter into and perform
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their respective obligations under the Instruments to which each such
Person is a party and (ii) grant Agent the Security Interests.
4.1.7 SECURITY INTERESTS. All filings of UCC Financing
Statements, all recordings of Mortgages and all other filings and
actions necessary to perfect and maintain the Security Interests as
first, valid and perfected Liens in the Property covered thereby,
subject only to Permitted Prior Liens, shall have been filed or taken
and Agent shall have received such Uniform Commercial Code and other
Lien searches as it deems necessary to confirm the foregoing.
4.1.8 FCC LICENSES. Agent shall have received (i) evidence that
the FCC Licenses described in Exhibit 5.52 constitute all FCC Licenses
which are necessary to enable CBC to conduct its Broadcasting Business
with respect to the CBC Stations, (ii) such FCC Licenses are in full
force and effect as of the Closing Date, (iii) no event has occurred
that could result in the termination, revocation or non-renewal of any
such FCC License and (iv) the FCC has approved the transfer to CLI of
the DLI Licenses and the Tele-Media Licenses and no objection has been
filed to such approval.
4.1.9 LMA AGREEMENTS. Agent shall have received evidence that (i)
all of the LMA Agreements are in full force and effect, and (ii) the
approval or consent shall have been obtained from all Governmental
Bodies, including, without limitation, the FCC, and all other Persons
whose approval or consent is required to enable CBC to perform its
obligations and receive the benefits of such LMA Agreements.
4.1.10 FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS. Lenders
shall have received the financial statements and reports described in
EXHIBIT 5.7.1 and the projections described in EXHIBIT 5.7.2.
4.1.11 MATERIAL ADVERSE CHANGE. No event shall have occurred
since May 31, 1997, which has had or reasonably could be expected to
have a Material Adverse Effect.
4.1.12 USE OF ASSETS. Agent shall be satisfied that each Borrower
at all times shall be entitled to the use and quiet enjoyment of all
Property necessary for the continued ownership and operation of its
business, including, without limitation, the use of equipment,
fixtures, FCC Licenses, offices and means of ingress and egress
thereto, and any easements or rights-of-way necessary to reach any
equipment or other items necessary for the operation of such business.
4.1.13 BROKER FEES. If the services of a broker or other agent
have been used in connection with the Loans, all fees owed to such
broker or agent shall have been paid by Borrowers and Agent shall have
received evidence of such payment.
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4.1.14 INSURANCE.
(A) TITLE POLICIES. Agent shall have received an ALTA
mortgagee's policy of title insurance (ALTA Revised 1987 Form or
such other form acceptable to Agent) in favor of Agent with
respect to each parcel of DAC Real Estate, issued by a title
company or companies and in an amount satisfactory to Agent,
showing that CBC is the owner of such parcel, and has good and
marketable title thereto and insuring that the Mortgage covering
such parcel constitutes a valid Lien on such parcel, subject only
to Permitted Prior Liens and other matters approved by Agent, each
such policy to be in such form and containing such endorsements as
may be required by Agent.
(B) PREMIUMS. Agent shall have received evidence that all
premiums with respect to such title policies have been paid by
Borrowers.
(C) OTHER INSURANCE. Prior to the Closing Date, Borrowers
shall have delivered to Agent evidence satisfactory to Agent (i)
of flood insurance, in form and substance satisfactory to Agent,
with respect to each parcel of Real Estate, other than a parcel as
to which Borrowers have supplied to Agent evidence that such
parcel is not in a flood hazard area, (ii) that all insurance
coverage required pursuant to Section 6.6 is in full force and
effect and all premiums then due thereon have been paid in full
and (iii) an original or certified copy of each policy of
insurance.
4.1.15 PAYMENT OF AMENDMENT FEE AND OTHER FEES. Borrowers shall
have paid the Amendment Fee and all fees and expenses described in
subsection 12.1.1 incurred in connection with the transactions
contemplated by this Loan Agreement.
4.2 TELE-MEDIA MERGER. The Borrowers shall satisfy each of the
following conditions on or before July 18, 1997 in a manner satisfactory to
Agent:
4.2.1 CONSUMMATION OF TELE-MEDIA MERGER. Agent shall have
received (i) evidence of the consummation of the Tele-Media Merger and
the acquisition by CBC as a result thereof of good and marketable title
to all of the Tele-Media Property, free and clear of all Liens and
Indebtedness, except Assumed Obligations (as defined in the Tele-Media
Acquisition Instruments) and (ii) certified copies of the Tele-Media
Merger Instruments.
4.2.2 DELIVERY OF DOCUMENTS. The following shall have been
delivered to Agent, each duly authorized and executed:
(a) a duly executed Mortgage on each parcel of
Tele-Media Real Estate; and
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(b) any amendments to the Loan Instruments required by
Agent to reflect the effect of the Tele-Media Merger.
4.2.3 OPINIONS OF COUNSEL. Agent shall have received such
opinions of counsel for Borrowers, in such form and covering such
matters as Agent may reasonably require, relating to the Tele-Media
Merger and the Liens granted by CBC on the Tele-Media Property, in each
case addressed to Agent for the benefit of Lenders.
4.2.4 SECURITY INTERESTS. All filings of UCC financing
statements, all recordings of the Mortgages and all other filings and
actions necessary to perfect and maintain the Security Interests
granted to Agent on the Tele-Media Property as first, valid and
perfected liens, subject only to Permitted Prior Liens, shall have been
filed or taken, and Agent shall have received such Uniform Commercial
Code and other lien searches as it deems necessary to confirm the
foregoing.
4.2.5 INSURANCE. Borrowers shall have delivered to Agent such
title and other insurance and such evidence with respect to each parcel
of Tele-Media Real Estate as is required pursuant to subsection 4.1.14
with respect to the Real Estate owned by CBC at the time of Closing.
4.3. ACQUISITIONS. The right of any Borrower to make an
Acquisition (other than the Tele-Media Acquisition), whether or not the
proceeds of an Additional Loan are used to consummate such Acquisition, shall
be subject to the satisfaction of all of the following conditions in a manner
satisfactory to the Required Lenders:
4.3.1 CONSUMMATION OF ACQUISITIONS. Prior to or concurrently with
each Acquisition Closing, Agent shall have received evidence that (i)
such Acquisition is in accordance with the terms of the applicable
Acquisition Instruments, (ii) if such Acquisition is an Asset
Acquisition, CBC will acquire concurrently with the Acquisition Closing
good and marketable title to all of the Station Assets, or Related
Business Assets which are being purchased pursuant to such Acquisition
Instruments, except the applicable FCC Licenses which shall be
transferred to CLI simultaneously with the Acquisition Closing, free
and clear of all Liens and Indebtedness except Permitted Liens and
Indebtedness which CBC has agreed to assume or take subject to pursuant
to such Acquisition Instruments, subject to the limitations set forth
in Sections 7.1, 7.2 and 7.4, (iii) if such Acquisition is an Equity
Acquisition, (A) the Property owned by the Person which owns the
capital stock or equity interests which are the subject of such
Acquisition shall be free and clear of all Liens and Indebtedness,
except such Liens and Indebtedness as CBC has agreed to assume or take
subject to pursuant to such Acquisition Instruments, subject to the
limitations set forth in Sections 7.1, 7.2 and 7.4 (B) the Required
Lenders shall be reasonably satisfied that adequate provision has been
made to protect CBC against the assumption of material undisclosed
liabilities, (C) simultaneously with the Acquisition Closing such
Person is merged into CBC with CBC being the surviving entity (an
"Acquisition Merger") and (D) simultaneously with the consummation of
such
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Acquisition the applicable FCC Licenses shall be transferred to CLI
and (iv) any consent, authorization or approval which is required from
any Governmental Body or other Person as a condition to the
consummation of such Acquisition, the failure to obtain which would
prevent the applicable Borrower from operating the Station or Related
Business which is the subject of such Acquisition, has been obtained.
4.3.2 DELIVERY OF DOCUMENTS. The following shall have been
delivered to Agent, each duly authorized and executed where applicable:
(a) the Acquisition Loan Instruments;
(b) such certificates of incumbency, good-standing
and corporate resolutions as Agent may reasonably require in
connection with such Acquisition;
(c) certified or executed original copies of each of the
following, the terms and conditions of all of which shall be
reasonably satisfactory to Agent:
(i) the applicable Acquisition Instruments; and
(ii) the Leases assumed or entered into by CBC in
connection with such Acquisition; and
(d) such other instruments, documents, certificates,
consents, waivers and opinions as Agent may reasonably require.
4.3.3 FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS. Agent shall
have received such financial statements, reports and projections with
respect to the operation of the business which is the subject of the
Acquisition as Agent may reasonably require.
4.3.4 COMPLIANCE WITH APPLICABLE RATIO. After giving effect to
such Acquisition, the Adjusted Leverage Ratio shall not exceed the
Applicable Ratio as calculated as of the most recent month preceding
the Acquisition Closing Date for which Borrowers have delivered to
Lenders the financial statements and other information reasonably
necessary to enable Lenders to make such calculation, provided that
such delivery shall occur not less than 15 days prior to such date of
closing.
4.3.5 OPINIONS OF COUNSEL. Agent shall have received such
opinions of counsel as Agent may reasonably require in connection with
such Acquisition and the Liens to be granted to Agent upon the Property
acquired in connection therewith.
4.3.6 FCC LICENSES. Agent shall have received (i) certified
copies of all FCC licenses issued with respect to the operation of each
Station to be acquired in connection with such Acquisition or the
Acquisition Merger, (ii) evidence that upon the Acquisition Closing CLI
will be the licensee of all such FCC Licenses and that the approval by
the
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FCC of the transfer of such Licenses to CLI has become final and
non-appealable, (iii) evidence that CBC is authorized to make use of
such FCC licenses pursuant to the Amended and Restated Use Agreement
and any amendment to such agreement necessary to effect the foregoing,
(iv) such FCC Licenses are all licenses which are necessary to enable
CBC to conduct its Broadcasting Business with respect to each such
Station, (v) such FCC Licenses are in full force and effect as of the
Acquisition Closing Date, and (vi) no event has occurred that could
result in the termination, revocation or non-renewal of any such
license.
4.3.7 SECURITY INTEREST. Agent shall have received evidence that
it has or will acquire upon the Acquisition Closing Date a perfected
first lien on all of the Property which is the subject of such
Acquisition or the Acquisition Merger, as applicable, subject only to
Permitted Prior Liens.
4.3.8 ENVIRONMENTAL AUDIT. Agent shall have received an
Environmental Audit with respect to any real estate which is being
acquired by CBC pursuant to such Acquisition or Acquisition Merger and,
at the request of Agent, any real estate which is the subject of a
Lease which is being assumed or entered into by CBC in connection with
such Acquisition or Acquisition Merger.
4.3.9 INSURANCE; SURVEY. Borrowers shall deliver to Agent (i)
such title and other insurance with respect to each parcel of real
estate being acquired in connection with such Acquisition as is
required pursuant to subsection 4.1.14 with respect to the Real Estate
owned by CBC at the time of the Closing and (ii) a recent survey of
each such parcel in sufficient detail to permit the elimination of
survey exceptions to each title policy.
4.3.10 ENGINEER'S CERTIFICATE. There shall have been delivered to
Agent a Certificate of an Engineer for each Station being acquired in
connection with such Acquisition or Acquisition Merger.
4.3.11 PAYMENT OF FEES. Borrowers shall have paid all fees and
expenses described in subsection 12.1.1 incurred in connection with
such Acquisition and any Additional Loan made in connection therewith.
4.3.12 REPRESENTATIONS AND WARRANTIES. On each Acquisition
Closing Date the representations and warranties of each Obligor set
forth in the Loan Instruments to which such Obligor is a party shall be
true and correct when made and at and as of the time of the Acquisition
Closing, except to the extent that such representations and warranties
expressly relate to an earlier date.
4.3.13 PERFORMANCE; NO DEFAULT. Each Obligor shall have
performed and complied with all agreements and conditions contained in
the Loan Instruments to be performed by or complied with by such Person
prior to or at the applicable Acquisition
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Closing, and no Event of Default or Incipient Default shall exist
after giving effect to such Acquisition and, if applicable, the
related Acquisition Merger.
4.4 LANDLORD'S CONSENT. Except to the extent previously
delivered to Agent, Borrowers shall use their best efforts to obtain and
deliver to Agent within 60 days after the Closing Date a Landlords' Consent
with respect to each Lease and each Tele-Media Lease.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to Lenders as follows:
5.1 CORPORATE EXISTENCE AND POWER. Each Borrower is a
corporation duly formed, validly existing and in good standing under the laws
of the State of Nevada, has all requisite power and authority to own its
Property and to carry on its business as now conducted and as proposed to be
conducted following the Closing Date, and is in good standing and authorized to
do business in each jurisdiction in which the failure so to qualify would have
a Material Adverse Effect, including in any event each jurisdiction in which
any Station or LMA Station of such Borrower is operated.
5.2 CORPORATE AUTHORITY. Each Borrower has full power and
authority to enter into, execute, deliver and carry out the terms of the
Instruments to which it is a party and to incur the obligations provided for
therein, all of which have been duly authorized by all proper and necessary
action and are not prohibited by the organizational instruments of such
Borrower.
5.3 CAPITAL STOCK, SENIOR SUBORDINATED NOTES AND RELATED MATTERS.
5.3.1 CAPITALIZATION OF BORROWERS. There is set forth in EXHIBIT
5.3.1 a complete description of the capitalization of each Borrower,
after giving effect to the issuance of the Exchangeable Preferred
Stock. All of the capital stock of each Borrower is validly issued,
fully paid and non-assessable, and all of such capital stock and the
Senior Subordinated Notes have been issued and sold in compliance with
all applicable federal and state laws, rules and regulations,
including, without limitation, all so-called "Blue-Sky" laws. All of
the CBC Common Stock is owned beneficially and of record by Guarantor
and all of the CLI Capital Stock is owned beneficially and of record by
CBC, in each case free and clear of all Liens except the Security
Interests.
5.3.2 RESTRICTIONS. Except for the applicable Instruments,
neither Borrower (i) is a party to or has knowledge of any agreements
restricting the transfer of its capital stock, (ii) has issued any
rights which can be convertible into or exchangeable or exercisable for
any of its capital stock or debt securities, or any rights to subscribe
for or to purchase, or any options for the purchase of, or any
agreements providing for the
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issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, any of its capital stock or any
securities convertible into or exchangeable or exercisable for any of
its capital stock or debt securities and (iii) is subject to any
obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its capital stock, convertible rights or
options or debt securities. Except as provided in the applicable
Instruments, no Borrower is required to file, and no Borrower has
filed, pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended, a registration statement relating to any class of debt or
equity securities.
5.4 BINDING AGREEMENTS. This Loan Agreement and the other Loan
Instruments, when executed and delivered, will constitute the valid and legally
binding obligations of each Obligor to the extent such Obligor is a party
thereto, enforceable against each Obligor in accordance with their respective
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the enforcement of creditors' rights generally
and (ii) equitable principles (whether or not any action to enforce such
document is brought at law or in equity).
5.5 BUSINESS, PROPERTY AND LICENSES OF BORROWER.
5.5.1 BUSINESS AND PROPERTY. CBC is, or upon the Closing will be,
the owner of all Property and will have the right, pursuant to the
Amended and Restated Use Agreement, to make use of all FCC Licenses
necessary to conduct the operations of each of CBC's Stations and to
perform its obligations pursuant to the LMA Agreements. CBC does not
engage or propose to engage in any business or activity other than the
Broadcasting Business or Related Businesses and CLI does not engage or
propose to engage in any business or activity other than being the
licensee under FCC Licenses.
5.5.2 FCC LICENSES. There is set forth in EXHIBIT 5.5.2 a
description of all FCC Licenses which have been issued or assigned to
CLI and which are being used by CBC. All of such FCC Licenses are in
full force and effect and have been duly issued in the name of, or
validly assigned to CLI and no default or breach exists thereunder.
5.5.3 LMA AGREEMENTS. The LMA Agreements are in full force and
effect and no default or breach exists under any such agreement. The
approval or consent has been obtained from all Governmental Bodies,
including, without limitation, the FCC, and all other Persons whose
approval or consent is required to enable the applicable Borrower to
perform its obligations and receive the benefits of the LMA Agreements.
5.5.4 OPERATING AGREEMENTS. All Operating Agreements are in full
force and effect and no event has occurred which could result in the
cancellation or termination of any such Operating Agreement which, if
cancelled or terminated, would have a Material Adverse Effect, or the
imposition thereunder of any liability upon any Borrower which could
reasonably be expected to have a Material Adverse Effect.
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5.5.5 BUSINESS LOCATIONS. There is set forth in EXHIBIT 5.5.5 the
location of each Borrower's chief executive office, the locations of
all of such Borrower's Property, the places where such Borrower's books
and records are kept, and the locations of all transmitters, antennae,
studios and offices used in the operation of each of the CBC Stations
or Related Businesses.
5.5.6 REAL PROPERTY; LEASES. There is set forth in EXHIBIT 1X a
complete and accurate description of the Real Estate owned by CBC.
There is set forth in EXHIBIT 1S a list of all Leases under which CBC
is lessee. Each Lease is in full force and effect, there has been no
material default in the performance of any of its terms or conditions
by CBC, or, to the best knowledge of CBC, any other party thereto, and
no claims of default have been asserted with respect thereto. The
present and contemplated use of the Real Estate and the Leasehold
Property is in compliance with all applicable zoning ordinances and
regulations and other laws and regulations, except for any
noncompliance which would not have a Material Adverse Effect.
5.5.7 OPERATION AND MAINTENANCE OF EQUIPMENT. To the best of
Borrowers' knowledge, no Person owning or operating any equipment
necessary for the operation of any of Borrowers' Stations or any LMA
Station has used, operated or maintained the same in a manner which now
or hereafter could result in the cancellation or termination of the
right of CBC to use or make use of the same or which could result in
any material liability of CBC for damages in connection therewith. All
of the equipment and other tangible personal property which is now
owned or which will be owned by CBC is or will be, upon the acquisition
thereof, in good operating condition and repair (subject to normal wear
and tear considering the age thereof) and has while owned or operated
by CBC, been used, operated and maintained in substantial compliance
with all applicable laws, rules and regulations.
5.6 TITLE TO PROPERTY; LIENS. CBC has (i) good and marketable
title to all of its Property, except the portion thereof consisting of a
leasehold estate and (ii) a valid leasehold estate in each portion of its
Property which consists of a leasehold estate, except for any defects in title
which would not have a Material Adverse Effect. Upon the proper filing with the
appropriate Governmental Bodies of the Mortgages and appropriate UCC Financing
Statements, the applicable Loan Instruments will create valid and perfected
first Liens on the Property described therein, subject only to Permitted Prior
Liens.
5.7 PROJECTIONS AND FINANCIAL STATEMENTS.
5.7.1 FINANCIAL STATEMENTS. The financial statements and reports
of CBC and, for the period beginning January 1, 1997, DAC described in
EXHIBIT 5.7.1 present fairly in all material respects the results of
operations of such Person for the periods covered thereby and the
financial condition of each such Person as of the dates indicated
therein. Borrowers have no reason to believe that the financial
statements described in EXHIBIT 5.7.1 with respect to Snider
Corporation, Snider Broadcasting Corporation and
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Subsidiary, CDB Broadcasting Corporation, the Tele-Media Stations and
the DAC Stations prior to January 1, 1997, do not present fairly in
all material respects the results of operations of such Stations for
the periods covered thereby and the financial condition of such
Stations as of the dates indicated therein. All of the foregoing
financial statements pertaining to the Borrowers and, to the best
knowledge of Borrowers, the financial statements with respect to the
Tele-Media Stations, have been prepared in conformity with GAAP,
except in the case of the unaudited statements for the absence of
footnotes and normal year-end adjustments. Since May 31, 1997, there
has been no change which has had a Material Adverse Effect as compared
with the state of affairs on such date. Borrowers also have delivered
to Agent a pro-forma balance sheet as of the Closing Date. Such
pro-forma balance sheet, which assumes the consummation of the
transactions contemplated by the Instruments, presents fairly in all
material respects the anticipated financial condition of Borrowers as
of the Closing Date.
5.7.2 PROJECTIONS. The projections described in EXHIBIT 5.7.2 of
the future operations of CBC represent the best estimates of Borrowers
as of the Closing Date of CBC's future financial performance.
5.8 LITIGATION. There is set forth in EXHIBIT 5.8 a
description of all actions and suits, arbitration proceedings and claims
pending or, to the best knowledge of Borrowers, threatened against any Borrower
or maintained by either Borrower at law or in equity or before any Governmental
Body. None of the matters set forth in such EXHIBIT 5.8, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
5.9 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING
AGREEMENTS. No Borrower is in default under any agreement to which such
Borrower is a party or by which it or any of its Property is bound, the effect
of which default could have a Material Adverse Effect. No authorization,
consent, approval or other action by, and no notice to or filing with, any
Governmental Body or any other Person which has not already been obtained,
taken or filed, as applicable, is required (i) for the due execution, delivery
or performance by any Borrower of any of the Instruments to which such Borrower
is a party, (ii) the consummation of the Tele-Media Acquisition or (iii) as a
condition to the validity or enforceability of any of the Instruments to which
any Borrower is a party or any of the transactions contemplated thereby or the
priority of the Security Interests, except for (A) certain filings to establish
and perfect the Security Interests and (B) filing of certain of the Loan
Instruments with the FCC. No provision of any material mortgage, indenture,
contract, agreement, statute, rule, regulation, judgment, decree or order
binding on either Borrower or affecting the Property of either Borrower
conflicts with, or requires any consent which has not already been obtained
under, or would in any way prevent the execution, delivery or performance of
the terms of any of the Instruments or affect the validity or priority of the
Security Interests. The execution, delivery or performance of the terms of the
Instruments will not constitute a default under, or result in the creation or
imposition of, or obligation to create, any Lien upon the Property of either
Borrower pursuant to the terms of any such material mortgage, indenture,
contract or agreement.
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5.10 TAXES. Borrowers have filed all tax returns required to be
filed, and have paid, or made adequate provision for the payment of, all taxes
shown to be due and payable on such returns or in any assessments made against
either Borrower, and no tax liens have been filed and, to the best knowledge of
Borrowers, no claims are being asserted in respect of such taxes which are
required by GAAP to be reflected in the financial statements of either Borrower
and are not so reflected therein. The charges, accruals and reserves on the
books of each Borrower with respect to all federal, state, local and other
taxes are considered by the management of Borrowers to be adequate, and
Borrowers do not know of any unpaid assessment which is or might be due and
payable against either Borrower or any of its Property, except such assessments
as are being contested in good faith and by appropriate proceedings diligently
conducted, and for which adequate reserves have been set aside in accordance
with GAAP. None of the tax returns of any Obligor are under any audit, which
could result in any determination of any tax liability which could reasonably
be expected to have a Material Adverse Effect.
5.11 COMPLIANCE WITH APPLICABLE LAWS. Neither Borrower is in
default in respect of any judgment, order, writ, injunction, decree or decision
of any Governmental Body, which default could reasonably be expected to have a
Material Adverse Effect. Each Borrower is in compliance in all material
respects with all applicable statutes and regulations, including, without
limitation, the Communications Act, all Environmental Laws, ERISA, ADA and all
laws and regulations relating to unfair labor practices, equal employment
opportunity and employee safety, of all Governmental Bodies, a violation of
which would have a Material Adverse Effect. No material condemnation, eminent
domain or expropriation has been commenced or, to the best knowledge of
Borrowers, threatened against the Property which Borrowers will own upon the
Closing.
5.12 PATENTS, TRADEMARKS AND FRANCHISES. CBC owns, possesses or
has a right to use all patents, trademarks, service marks, tradenames,
copyrights, franchises and rights with respect thereto, including the patents,
trademarks, service marks, tradenames, copyrights, franchises and rights
described in EXHIBIT 5.12, necessary for the conduct of its Broadcasting
Business, without any known conflict with the rights of others and, in each
case, free of any Liens, except for any defects in title, conflicts with rights
of others and Liens which would not have a Material Adverse Effect.
5.13 FCC MATTERS. Borrowers (i) have duly and timely filed all
reports and other filings which are required to be filed under the
Communications Act or any other applicable law, rule or regulation of any
Governmental Body, the non-filing of which would have a Material Adverse
Effect, and (ii) are in compliance with all such laws, rules and regulations,
the noncompliance with which could reasonably be expected to have a Material
Adverse Effect. All information provided by or on behalf of either Borrower in
any material filing with the FCC was, at the time of filing, true, complete and
correct in all material respects when made, and the FCC has been notified of
any substantial or significant changes in such information as may be required
in accordance with applicable laws, rules and regulations.
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5.14 ENVIRONMENTAL MATTERS. Except as set forth in EXHIBIT
5.14, CBC is in compliance with all applicable Environmental Laws, and no
portion of any of the Real Estate or any of the Leasehold Property subject to
Leases has been used as a land fill. None of the items set forth in EXHIBIT
5.14 could reasonably be expected to have a Material Adverse Effect. CBC shall
not cause or permit to be, and, to the best of CBC's knowledge, there currently
are not, any known Hazardous Materials generated, manufactured, released,
stored, buried or deposited over, beneath, in or on (or used in the
construction and/or renovation of), transported to or from, the Real Estate or
Leasehold Property in violation of applicable Environmental Laws.
5.15 APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Obligor or
any Affiliate of any Obligor is:
5.15.1 INVESTMENT COMPANY ACT. An "investment company," or a
company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
5.15.2 HOLDING COMPANY ACT. A "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as
amended.
5.15.3 FOREIGN OR ENEMY STATUS. (i) An "enemy" or an "ally of an
enemy" within the meaning of Section 2 of the Trading with the Enemy
Act, (ii) a "national" of a foreign country designated in Executive
Order No. 8389, as amended, or of any "designated enemy country" as
defined in Executive Order No. 9095, as amended, of the President of
the United States of America, in each case within the meaning of such
Executive Orders, as amended, or of any regulation issued thereunder,
(iii) a "national of any designated foreign country" within the meaning
of the Foreign Assets Control Regulations or of the Cuban Assets
Control Regulations of the United States of America (Code of Federal
Regulations, Title 31, Chapter V, Part 515, Subpart B, as amended), or
(iv) an alien or a representative of any alien or foreign government
within the meaning of Section 310 of Title 47 of the United States
Code.
5.15.4 REGULATIONS AS TO BORROWING. Subject to any statute or
regulation which regulates the incurrence of any Indebtedness for
Borrowed Money, including, without limitation, statutes or regulations
relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public
utility services.
5.16 MARGIN REGULATIONS. None of the transactions contemplated
by this Loan Agreement or any of the other Loan Instruments, including the use
of the proceeds of the Loans, will violate or result in a violation of Section
7 of the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations
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G, T, U and X, and Borrower does not own or intend to carry or purchase any
"margin security" within the meaning of such Regulation U or G.
5.17 OTHER INDEBTEDNESS. Upon the Closing there will be no
Indebtedness for Borrowed Money, except (i) Borrowers' Obligations, (ii)
Permitted Senior Indebtedness, (iii) Senior Subordinated Indebtedness and (iv)
Seller Debt.
5.18 NO MISREPRESENTATION. Neither this Loan Agreement nor any
other Loan Instrument, certificate, information or report furnished or to be
furnished by or on behalf of any Obligor to any Lender or Agent in connection
with any of the transactions contemplated hereby or thereby, contains or will
contain a misstatement of material fact, or omits or will omit to state a
material fact required to be stated in order to make the statements contained
herein or therein, taken as a whole, not misleading in the light of the
circumstances under which such statements were made. There is no fact, other
than information known to the public generally, known to or reasonably foreseen
by either Borrower after diligent inquiry, that would be expected to have a
Material Adverse Effect that has not expressly been disclosed to Lenders in
writing.
5.19 EMPLOYEE BENEFIT PLANS.
5.19.1 NO OTHER PLANS. No Obligor or any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Employee
Benefit Plan other than those identified on EXHIBIT 5.19.1 Borrowers
have provided Agent accurate and complete copies of all contracts,
agreements and documents described on EXHIBIT 5.19.1.
5.19.2 ERISA AND CODE COMPLIANCE AND LIABILITY. Each Obligor and
each ERISA Affiliate is in compliance with all applicable provisions of
ERISA and the regulations and published interpretations thereunder with
respect to all Employee Benefit Plans except where failure to comply
would not result in a material liability to any Obligor and except for
any required amendments for which the remedial amendment period as
defined in Section 401(b) of the Code has not yet expired. Each
Employee Benefit Plan that is intended to be qualified under Section
401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 401(a) of the Code. No material
liability has been incurred by any Obligor or ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to any
Employee Benefit Plan or any Multiemployer Plan.
5.19.3 FUNDING. No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been insured (without regard to any waiver granted under Section 412 of
the Code), nor has any funding waiver from the IRS been received or
requested with respect to any Pension Plan, nor has any Obligor or any
ERISA Affiliate failed to make any contributions or to pay any amounts
due and owing as required by Section 412 of the Code, Section 302 of
ERISA or the terms of any Pension Plan prior to the due dates of such
contributions
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under Section 412 of the Code or Section 302 of ERISA, nor has there
been any event requiring any disclosure under Section 4041(c)(3)(C),
4063(a) or 4068 of ERISA with respect to any Pension Plan.
5.19.4 PROHIBITED TRANSACTIONS AND PAYMENTS. No Obligor nor any
ERISA Affiliate has: (i) engaged in a nonexempt "prohibited
transaction" as such term is defined in Section 406 of ERISA or Section
4975 of the Code; (ii) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid; (iii) failed to make a required
contribution or payment to a Multiemployer Plan; or (iv) failed to make
a required installment or other required payment under Section 412 of
the Code.
5.19.5 NO TERMINATION EVENT. No Termination Event has occurred
or is reasonably expected to occur.
5.19.6 ERISA LITIGATION. No material proceeding, claim, lawsuit
and/or investigation is existing or, to the best knowledge of
Borrowers, threatened concerning or involving any (i) employee welfare
benefit plan (as defined in Section 3(1) of ERISA) currently maintained
or contributed to by any Obligor, or any ERISA Affiliate, (ii) Pension
Plan or (iii) Multiemployer Plan.
5.20 EMPLOYEE MATTERS.
5.20.1 COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES. (i) None of
the employees of CBC is subject to any collective bargaining agreement,
(ii) no petition for certification or union election is pending with
respect to the employees of CBC and no union or collective bargaining
unit has sought such certification or recognition with respect to the
employees of CBC and (iii) there are no strikes, slowdowns, work
stoppages, unfair labor practice complaints, grievances, arbitration
proceedings or controversies pending or, to the best knowledge of
Borrowers, threatened against CBC by any of its employees, other than
employee grievances or controversies arising in the ordinary course of
business that would not in the aggregate be expected to have a Material
Adverse Effect.
5.20.2 CLAIMS RELATING TO EMPLOYMENT. Except as set forth on
EXHIBIT 5.20.2, neither CBC nor, to Borrowers' best knowledge, any
shareholder or employee of any CBC is subject to any employment
agreement or non-competition agreement with any former employer or any
other Person which agreement would have a Material Adverse Effect due
to (i) any information which CBC would be prohibited from using under
the terms of such agreement or (ii) any legal considerations relating
to unfair competition, trade secrets or proprietary information.
5.21 BURDENSOME OBLIGATIONS. After giving effect to the transactions
contemplated by the Instruments, (i) neither Borrower (A) will be a party to or
be bound by any franchise,
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agreement, deed, lease or other instrument, or be subject to any restriction,
which is so unusual or burdensome so as to cause, in the foreseeable future, a
Material Adverse Effect and (B) intends to incur, or believes that it will
incur, debts beyond its ability to pay such debts as they become due, and (ii)
Borrowers (A) own and will own Property, the fair saleable value of which is
(I) greater than the total amount of their liabilities (including contingent
liabilities) and (II) greater than the amount that will be required to pay the
probable liabilities of its then existing debts as they become absolute and
matured, and (B) have and will have capital that is not unreasonably small in
relation to their businesses as presently conducted and as proposed to be
conducted. Borrowers do not presently anticipate that future expenditures
needed to meet the provisions of federal or state statutes, orders, rules or
regulations will be so burdensome so as to have a Material Adverse Effect.
5.22 INSURANCE. No notice of cancellation has been received with
respect to any insurance policies required pursuant to Section 4.1.15 and
Borrowers are in material compliance with all conditions contained in such
policies.
5.23 REPRESENTATION AS TO ACQUISITION INSTRUMENTS. To the best
knowledge of Borrowers, the representations and warranties made by the seller
pursuant to the Tele-Media Acquisition Instruments are true and correct as of
the Closing Date and no defaults exist thereunder.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until all of Borrowers' Obligations are paid and performed in full and
all of the Commitments have been terminated, except as provided in Section
6.11, each Borrower agrees that it will:
6.1 LEGAL EXISTENCE; GOOD STANDING. Maintain its existence and
its good standing in the jurisdiction of its formation and maintain its
qualification in each jurisdiction in which the failure so to qualify would
have a Material Adverse Effect, and in any event in each jurisdiction in which
any one Station or Related Business is owned or operated by CBC.
6.2 INSPECTION. Permit representatives of each Lender to (i)
visit its offices, (ii) examine its books and records and Accountants' reports
relating thereto, (iii) make copies or extracts therefrom, (iv) discuss its
affairs with its employees, (v) examine and inspect its Property and (vi) meet
and discuss its affairs with the Accountants, and such Accountants, as a
condition to their retention by such Borrower, are hereby irrevocably
authorized by such Borrower to fully discuss and disclose all such affairs with
each Lender. The representatives of each Lender shall conduct the activities
described in this Section 6.2 at reasonable times and upon reasonable notice,
provided, however, if an Event of Default or Incipient Default exists, such
activities may be conducted at any time without notice.
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6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a standard
system of accounting in accordance with GAAP and furnish to each Lender:
6.3.1 MONTHLY STATEMENTS. As soon as available and in any event
within 30 days after the close of each month:
(a) the consolidated balance sheet of Obligors and
the consolidating balance sheet of each Borrower as of the
end of such month,
(b) the consolidated statements of operations of Obligors,
the consolidated statements of Operating Cash Flow of Borrowers,
the statement of Excess Cash Flow, and the consolidating
statements of operations and Cash Flow for each Borrower for such
month and for the period from the beginning of the then current
year to the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding
period in the preceding year,
(c) a statement of the Adjusted Operating Cash Flow for
such month and for the period from the beginning of the then
current year to the end of such month, and
(d) a statement of the Market Cash Flow for each Broadcast
Market for such month and for the period from the beginning of the
then current year to the end of such month, and showing a
comparison with the budget for such period,
all in reasonable detail, containing such information as any Lender
reasonably may require, and certified by the Chief Financial Officer
as complete and correct, subject to normal year-end adjustments.
6.3.2 QUARTERLY STATEMENTS. As soon as available and in
any event within 45 days after the close of each quarter of each year:
(a) the consolidated balance sheet of Obligors
and the consolidating balance sheet of each Borrower as of
the end of such quarter,
(b) the consolidated statements of operations
of Obligors, the consolidated statements of Operating Cash
Flow of Borrowers, the statement of Excess Cash Flow, and
the consolidating statements of operations and Operating
Cash Flow for each Borrower for such quarter and for the
period from the beginning of the then current year to the
end of such quarter, setting forth in each case in
comparative form the corresponding figures for the
corresponding period in the preceding year, and showing a
comparison with the budget for such period,
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(c) a statement of the Adjusted Operating Cash
Flow of Borrowers for such quarter and for the immediately
preceding three quarters, and
(d) a statement of the Market Cash Flow for
each Broadcast Market for such quarter and for the period
from the beginning of the then current year to the end of
such quarter,
all in reasonable detail, containing such information as any Lender
reasonably may require, and certified by the Chief Financial Officer
as complete and correct, subject to normal year-end adjustments.
6.3.3 ANNUAL STATEMENTS. As soon as available and in any
event within 120 days after the close of each year:
(a) the consolidated balance sheet of
Borrowers as of the end of such year, the statements of
operations, cash flows, stockholders' equity of Borrowers,
the consolidating balance sheet of each Borrower as of the
end of such year, the consolidating statements of
operations, cash flows and stockholders' equity for each
Borrower for such year (collectively, the "Basic Financial
Statements"), the statements of Excess Cash Flow and of the
consolidated and consolidating Operating Cash Flow for
Borrowers for such year, setting forth in each case in
comparative form the corresponding figures for the preceding
year,
(b) a statement of the Market Cash Flow for
each Broadcast Market for such year, in each case certified
by the Chief Financial Officer as complete and correct, and
showing a comparison with the budget for such period,
(c) an opinion of the Accountants which shall
accompany the Basic Financial Statements, which opinion
shall be unqualified as to going concern and scope of audit,
stating that (i) the examination by the Accountants in
connection with such Basic Financial Statements has been
made in accordance with generally accepted auditing
standards, (ii) such Basic Financial Statements have been
prepared in conformity with GAAP and in a manner consistent
with prior periods, and (iii) such Basic Financial
Statements fairly present in all material respects the
financial position and results of operations of the
Borrowers, and
(d) a letter from the Accountants stating
that the statements of Operating Cash Flow, Market Cash Flow
and Excess Cash Flow were computed in accordance with the
requirements of this Loan Agreement.
6.3.4 OFFICER'S CERTIFICATES. The financial statements
described in subsections 6.3.1, 6.3.2 and 6.3.3 shall be accompanied
by a Compliance Certificate signed by the Chief Financial Officer.
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6.3.5 ACCOUNTANTS' CERTIFICATE. Simultaneously with
the delivery of the certified Basic Financial Statements required by
subsection 6.3.3, copies of a certificate of the Accountants stating
that (i) they have checked the computations delivered by Borrowers in
compliance with subsection 6.3.3, and (ii) in making the examination
necessary for their audit of the Basic Financial Statements of
Borrowers for such year nothing came to their attention of a financial
or accounting nature that caused them to believe that (A) either
Borrower was not in compliance with the terms, covenants, provisions
or conditions of any of the Loan Instruments or (B) there shall have
occurred any condition or event which would constitute an Event of
Default, or, if so, specifying in such certificate all such instances
of non-compliance and the nature and status thereof.
6.3.6 AUDIT REPORTS. Promptly upon receipt thereof, a
copy of each report, other than the reports referred to in subsection
6.3.3, including any so-called "Management Letter" or similar report,
submitted to Obligors by the Accountants in connection with any
annual, interim or special audit made by the Accountants of the books
of any Obligor.
6.3.7 BUSINESS PLANS. Not later than 30 days
before the end of each year, a business plan for the following year
setting forth in reasonable detail the projected operations budget of
each Broadcast Market for such year and such other information as any
Lender may reasonably request, for such following year.
6.3.8 NOTICE OF DEFAULTS; LOSS. Prompt written notice
if: (i) any Indebtedness for Borrowed Money of either Borrower is
declared or shall become due and payable prior to its declared or
stated maturity, or called and not paid when due, (ii) an event has
occurred that enables the holder of any note, or other evidence of
such Indebtedness for Borrowed Money of either Borrower to declare
such Indebtedness for Borrowed Money due and payable prior to its
stated maturity, (iii) there shall occur and be continuing an
Incipient Default or Event of Default, accompanied by a statement of
the Chief Financial Officer setting forth what action Borrowers
propose to take in respect thereof, or (iv) any event shall occur
which could reasonably be expected to have a Material Adverse Effect,
including the amount or the estimated amount of any loss or
depreciation or adverse effect.
6.3.9 NOTICE OF SUITS, ADVERSE EVENTS. Prompt written
notice of: (i) any citation, summons, subpoena, order to show cause or
other order naming either Borrower a party to any proceeding before
any Governmental Body which could reasonably be expected to have a
Material Adverse Effect and include with such notice a copy of such
citation, summons, subpoena, order to show cause or other order, (ii)
any lapse or other termination of any license, permit, franchise,
agreement or other authorization issued to either Borrower by any
Governmental Body or any other Person, the result of which could
reasonably be expected to have a Material Adverse Effect, (iii) any
refusal by any Governmental Body or any other Person to renew or
extend any such license, permit, franchise, agreement or other
authorization and (iv) any dispute between either Borrower
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and any Governmental Body or any other Person, which lapse,
termination, refusal or dispute referred to in clauses (ii) and (iii)
above or in this clause (iv) could reasonably be expected to have a
Material Adverse Effect.
6.3.10 REPORTS TO SHAREHOLDERS, CREDITORS AND
GOVERNMENTAL BODIES.
(a) Promptly upon becoming available, copies of all
financial statements, reports, notices and other statements sent
or made available generally by any Obligor to its shareholders, of
all regular and periodic reports and all registration statements
and prospectuses filed by any Obligor with any securities exchange
or with the SEC, and of all statements generally made available by
any Obligor or others concerning material developments in CBC's
Broadcasting Business.
(b) Promptly upon becoming available, copies of any
periodic or special reports filed by any Obligor with any
Governmental Body or Person, if such reports indicate any material
change in the business, operations, affairs or condition of such
Obligor, or if copies thereof are requested by any Lender, and
copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to any
Obligor.
6.3.11 ERISA NOTICES AND REQUESTS.
(a) With reasonable promptness, and in any
event within 30 days after occurrence of any of the
following, Borrowers will give notice of and/or deliver to
Agent copies of: (i) the establishment of any new Employee
Benefit Plan, Pension Plan or Multiemployer Plan; (ii) the
commencement of contributions to any Employee Benefit Plan,
Pension Plan or Multiemployer Plan to which any Obligor or
any of its ERISA Affiliates was not previously contributing
or any increase in the benefits of any existing Employee
Benefit Plan, Pension Plan or Multi-employer Plan; (iii)
each funding waiver request filed with respect to any
Employee Benefit Plan and all communications received or
sent by any Obligor or any ERISA Affiliate with respect to
such request; and (iv) the failure of any Obligor or ERISA
Affiliate to make a required installment or payment under
Section 302 of ERISA or Section 412 of the Code by the due
date.
(b) Promptly and in any event within 10 days
of becoming aware of the occurrence of or forthcoming
occurrence of any (i) Termination Event or (ii) "prohibited
transaction", as such term is defined in Section 406 of
ERISA or Section 4975 of the Code, in connection with any
Pension Plan or any trust created thereunder, Borrowers will
deliver to Agent a notice specifying the nature thereof,
what action the applicable Obligor has taken, is taking or
proposes to take with respect thereto and, when known, any
action taken or
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threatened by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto.
(c) With reasonable promptness but in any
event within 10 days after the occurrence of any of the
following, Borrowers will deliver to Agent copies of: (i)
any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an
Employee Benefit Plan under Section 401(a) of the Code; (ii)
all notices received by any Obligor or any ERISA Affiliate
of the PBGC's intent to terminate any Pension Plan or to
have a trustee appointed to administer any Pension Plan;
(iii) each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) filed by any Obligor or any ERISA
Affiliate with the Internal Revenue Service with respect to
each Pension Plan; and (iv) all notices received by any
Obligor or any ERISA Affiliate from a Multiemployer Plan
sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA. Borrowers will
notify Agent in writing within two Business Days of any
Obligor or any ERISA Affiliate that has filed or intends to
file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041(c)
of ERISA.
6.3.12 RATING BOOKS. Promptly upon receipt thereof and
upon request therefor by any Lender, copies of all station rating
books to the extent permitted by applicable law and the agreements
with the publishers thereof.
6.3.13 OTHER INFORMATION.
(a) Immediate notice of any material change
in, or termination of, the employment of Wilson or the Chief
Financial Officer, any change in the location of any
Property of either Borrower which is material to or
necessary for the continued operation of CBC's Broadcasting
Business, including without limitation any change in the
location of any transmitting tower, any change in the name
of either Borrower and any sale or purchase of Property
outside the regular course of business of either Borrower
other than the sales described in Section 7.11(i).
(b) Promptly upon request therefor, such
other information and reports relating to the past, present
or future financial condition, operations, plans and
projections of Borrowers as any Lender may reasonably
request from time to time.
6.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Timely
file all material reports, applications, documents, instruments and information
required to be filed pursuant to all rules, regulations or requests of any
Governmental Body or other Person having jurisdiction over the operation of the
business of CBC, including, but not limited to, such of the Loan
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Instruments as are required to be filed with any such Governmental Body or
other Person pursuant to applicable rules and regulations promulgated by such
Governmental Body or other Person.
6.5 MAINTENANCE OF LICENSES AND OTHER AGREEMENTS. Maintain in
full force and effect at all times, and apply in a timely manner for renewal
of, all Licenses, trademarks, tradenames and agreements necessary for the
operation of CBC's Broadcasting Business, the loss of any of which would have a
Material Adverse Effect, and deliver to Agent (i) at least 30 days' prior
written notice of the proposed amendment of any FCC License, and (ii) (A)
evidence of the filing of any application for renewal of any FCC Licenses not
less than the earlier of (x) 60 days prior to the expiration of such FCC
License or (y) the last day such application may be filed in accordance with
applicable law and (B) copies of any petition filed to deny any such renewal
application promptly after receipt thereof by either Borrower.
6.6 INSURANCE.
6.6.1 KEY MAN LIFE INSURANCE. Maintain in full force and effect
at all times policies of insurance in such form and issued by such
insurers as shall be reasonably acceptable to Agent, insuring the life
of Wilson in the amount of $5,000,000 and deliver to Agent, from time
to time as Agent may reasonably request, evidence of compliance with
this subsection 6.6.1.
6.6.2 BUSINESS INSURANCE. Maintain in full force and effect at
all times Business Insurance as required by the insurance letter, a
copy of which is attached hereto as EXHIBIT 6.6.2, all of which shall
be written by insurers and in amounts and forms reasonably satisfactory
to Agent and otherwise comply with the terms of such insurance letter,
and deliver to Agent, from time to time as Agent may reasonably
request, evidence of compliance with this subsection 6.6.2.
6.6.3 BUSINESS INSURANCE, CLAIMS AND PROCEEDS. Borrowers hereby
directs all insurers under all policies of Business Insurance to pay
all proceeds payable thereunder directly to Agent and Borrowers hereby
authorizes Agent to collect all such proceeds, subject to Borrowers'
rights as described below in this Section 6.6.3 to receive certain
proceeds. Borrowers irrevocably appoints Agent (and all officers,
employees or agents designated by Agent) as Borrowers' true and lawful
attorney and agent in fact for the purpose of and with power to make,
settle and adjust claims under such policies of insurance, endorse the
name of any Borrower on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance, and to make all
determinations and decisions with respect to such policies of
insurance. Borrowers acknowledge that such appointment as attorney and
agent in fact is a power, coupled with an interest, and therefore is
irrevocable. Borrowers shall notify Agent and Lenders promptly of any
loss, damage, destruction or other casualty to the Collateral in excess
of $250,000. If the proceeds of a casualty do not exceed $500,000 and
no Event of Default exists, at the option of Borrowers, such proceeds
shall be paid to Borrowers and
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either (i) applied to repair or replace the Property which is the
subject of such casualty or (ii) applied to the payment of the
Principal Balance. If the proceeds of a casualty exceed $500,000 or an
Event of Default exists, at the option of the Required Lenders, such
proceeds shall be (i) applied to the payment of Borrowers' Obligations
in such manner as the Required Lenders determine. In the event the
proceeds are to be applied to the repair or replacement of Collateral,
the Collateral shall be repaired or replaced so as to be of at least
equal value and substantially the same character as prior to such
loss, damage, destruction or other casualty. If at the election of the
Required Lenders proceeds of a casualty are not applied to the repair
or replacement of the applicable Collateral, Borrowers shall not be
obligated to repair or replace such Collateral.
6.6.4 FLOOD INSURANCE. Maintain in full force and effect at all
times any flood insurance required to be provided pursuant to Article
IV and deliver to Agent, from time to time as Agent may reasonably
request, evidence of compliance with this subsection 6.6.4.
6.7 FUTURE LEASES. Except if delivered pursuant to Article IV,
deliver to Agent, concurrently with the execution by CBC, as lessee, of any
lease pertaining to real property, (i) an executed copy thereof, (ii) at the
option of Agent, either a leasehold mortgage upon or a collateral assignment of
such lease in favor of Agent, in either case in a form reasonably acceptable to
Agent, and (iii) a Landlord's Consent from the Landlord under such lease.
6.8 FUTURE ACQUISITIONS OF REAL PROPERTY. Except if delivered
pursuant to Article IV, deliver to Agent concurrently with the (i) execution by
CBC of any contract relating to the purchase by CBC of real property, an
executed copy of such contract and (ii) closing of the purchase of such real
property, (A) a first mortgage or deed of trust in favor of Agent on such real
property, in form and content reasonably satisfactory to Agent, (B) a lender's
policy of title insurance, in such form and amount and containing such
endorsements as shall be reasonably satisfactory to Agent, and (C) such other
documents and assurances with respect to such real property as Agent may
reasonably require.
6.9 ENVIRONMENTAL AUDIT. At the request of Agent deliver to
Agent an Environmental Audit with respect to any real property leased or
acquired by CBC referred to in Sections 6.7 and 6.8.
6.10 ENVIRONMENTAL MATTERS.
6.10.1 COMPLIANCE. At all times comply with, and be responsible
for, its obligations under all Environmental Laws applicable to the
Real Estate, the Leasehold Property and any other Property owned by CBC
or used by CBC in the operation of its Broadcasting Business or any
Related Business. At their sole cost and expense, Borrowers shall (i)
comply in all respects with (A) any notice of any violation or
administrative or judicial complaint or order having been filed against
CBC, any portion of the Real Estate, any Leasehold Property or any
other Property owned by CBC or used
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by CBC in the operation of its Broadcasting Business or any Related
Business alleging violations of any law, ordinance and/or regulation
requiring CBC to take any action in connection with the release,
transportation and/or clean-up of any Hazardous Materials, and (B) any
notice from any Governmental Body or any other Person alleging that
CBC is or may be liable for costs associated with a response or
clean-up of any Hazardous Materials or any damages resulting from such
release or transportation, or (ii) diligently contest in good faith by
appropriate proceedings any demands set forth in such notices,
provided (A) reserves in an amount required by GAAP to pay the costs
associated with complying with any such notice are established by CBC
and (B) no Lien would or will attach to the Property which is the
subject of any such notice as a result of any compliance by CBC which
is delayed during any such contest. Promptly upon receipt of any
notice described in the foregoing clause (i), CBC shall deliver a copy
thereof to Agent.
6.10.2 CERTIFICATION. Deliver to Agent, not later than January
1 of each year, an Environmental Compliance Certificate.
6.11 INTEREST HEDGE CONTRACT. Maintain an Interest Hedge
Contract in full force and effect during the term thereof.
6.12 COMPLIANCE WITH LAWS. Comply with all federal, state and
local laws, ordinances, requirements and regulations and all judgments, orders,
injunctions and decrees applicable to either Borrower and its operations, the
failure to comply with which would have a Material Adverse Effect.
6.13 TAXES AND CLAIMS. Pay and discharge all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any Property belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become
a Lien (other than a Permitted Lien) upon its Property, provided that Borrowers
shall not be required to pay any such amount if the same is being contested
diligently and in good faith by appropriate proceedings and as to which the
applicable Borrower has set aside reserves on its books in an amount required
by GAAP.
6.14 MAINTENANCE OF PROPERTIES. Maintain all of its Properties
necessary in the operation of CBC's Broadcasting Business in good working order
and condition.
ARTICLE VII
NEGATIVE COVENANTS
Until all of Borrowers' Obligations are paid and performed in full and
all of the Commitments have been terminated, neither Borrower shall:
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7.1 BORROWING. Create, incur, assume or suffer to exist or
permit Tele-Media to create, incur, assume or suffer to exist any liability for
Indebtedness for Borrowed Money, except (i) Borrowers' Obligations, (ii)
Permitted Senior Indebtedness, (iii) Senior Subordinated Indebtedness, (iv)
Indebtedness pursuant to the Interest Hedge Contract, (v) Seller Debt, (vi)
unsecured Indebtedness assumed by CBC in connection with a Permitted
Acquisition or Acquisition Merger in an aggregate amount not to exceed at any
time $1,000,000, (vii) Indebtedness evidenced by the Exchangeable Debentures,
provided Exchangeable Debentures shall not be issued unless no Event of Default
will exist, after giving effect to such issuance and assuming such issuance
occurred on the last day of the most recent month for which there has been
delivered to Agent the financial statements required pursuant to subsection
6.3.1.
7.2 LIENS. Create, incur, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired, except
Permitted Liens.
7.3 MERGER AND ACQUISITION. Consolidate with or merge with or
into any Person, or make any Acquisition, except (i) a Permitted Acquisition,
(ii) the DAC Merger, (iii) the DLI Merger, (iv) the Tele-Media Merger or (v) an
Acquisition Merger.
7.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse,
contingently agree to purchase, become liable in respect of any letter of
credit, or otherwise become liable upon the obligation of any Person, except
(i) liabilities arising from the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business (ii) obligations assumed pursuant to a Permitted Acquisition, subject
to reasonable limitations imposed by the Required Lenders and (iii) obligations
with respect to Permitted Letters of Credit.
7.5 DISTRIBUTIONS. Make any dividends, distributions or other
shareholder expenditures with respect to its capital stock or apply any of its
Property to the purchase, redemption or other retirement of, or set apart any
sum for the payment of, or make any other distribution by reduction of capital
or otherwise in respect of, any of its capital stock, except (i) distributions
necessary to pay Corporate Overhead, subject to the limitations set forth in
subsection 7.6.1, (ii) dividends on the Exchangeable Preferred Stock by the
issuance of new Exchangeable Preferred Stock and (iii) so long as no Event of
Default will exist after giving effect thereto, cash dividends on the
Exchangeable Preferred Stock (A) in any year in an amount which, together with
any cash payments of interest in such year on Exchangeable Debentures, do not
exceed the Remaining Excess Cash Flow for the preceding year and (B) commencing
in January, 2003, so long as after giving effect to such payments CBC shall
have Cash Equivalents of not less than $5,000,000.
7.6 LIMITATION OF CORPORATE OVERHEAD AND CAPITAL EXPENDITURES.
7.6.1 CORPORATE OVERHEAD. Make expenditures or incur
obligations for Corporate Overhead which in the aggregate for all
Obligors are in excess of the amounts set forth in EXHIBIT 7.6.1.
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7.6.2 CAPITAL EXPENDITURES. Make Capital Expenditures which in
the aggregate for all Borrowers are in excess of the amounts set forth
in EXHIBIT 7.6.2.
7.7 PAYMENTS OF INDEBTEDNESS FOR BORROWED MONEY. Make any (i)
voluntary or optional prepayment of any Indebtedness for Borrowed Money other
than Borrowers' Obligations and the Indebtedness in the principal amount of
$12,817,000 and interest thereon owing by CBC to guarantor, (ii) payment of
interest on the Senior Subordinated Notes (A) so long as Borrowers are in
default in the payment of interest, principal or any Loan Fees under this Loan
Agreement or (B) during any Payment Blockage Period (as defined in the Note
Indenture), (iii) payment of principal on the Senior Subordinated Notes, (iv)
payment on the Exchangeable Debentures, except cash payments of interest may be
made on such Exchangeable Debentures if (A) no Event of Default will exist
after giving effect to such payments and (B) the amount of such payments and
the cash dividends on the Exchangeable Preferred Stock do not in the aggregate
exceed in any year the Remaining Excess Cash Flow for the preceding year.
7.8 OBLIGATIONS AS LESSEE UNDER OPERATING LEASES. Enter into
any arrangement as lessee of Property under any Operating Lease if the
aggregate rentals for all such Operating Leases for Borrowers during any year
would exceed the applicable amount set forth in EXHIBIT 7.8.
7.9 INVESTMENTS. At any time purchase or otherwise acquire,
hold or invest in the capital stock of, or any other interest in, any Person,
or make any loan or advance to, or enter into any arrangement for the purpose
of providing funds or credit to, or make any other investment, whether by way
of capital contribution or otherwise, in or with any Person, including, without
limitation, any Affiliate, except (i) investments in direct obligations of, or
instruments unconditionally guaranteed by, the United States of America or in
certificates of deposit issued by a Qualified Depository, (ii) investments in
commercial or finance paper which, at the time of investment, is rated "A," or
better by Moody's Investors Service, Inc., or Standard & Poor's Corporation,
respectively, or at the equivalent rate by any of their respective successors,
(iii) any interests in any money market account maintained, at the time of
investment, with a Qualified Depository, the investments of which, at the time
of investment, are restricted to the types specified in clause (i) above, (iv)
Permitted Acquisitions, (v) loans from one Operating Company to another
Operating Company, (vi) loans to employees of Borrowers or Parent in an
aggregate amount not to exceed $50,000 for all Obligors outstanding at any time
and (vii) the formation and capitalization of Permitted Subsidiaries. All
investments permitted pursuant to clauses (i), (ii) and (iii) of this Section
7.9 shall have a maturity not exceeding one year.
7.10 FUNDAMENTAL BUSINESS CHANGES; LIMITATIONS ON NON-OPERATING
COMPANIES. Permit (i) any Operating Company to materially change the nature of
its business or engage in any business other than the Broadcasting Business and
Related Businesses or (ii) any Non-Operating Company to (A) engage in any
business other than being the licensee of FCC Licenses or (B) incur any
Indebtedness except Borrowers' Obligations.
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7.11 SALE OR TRANSFER OF ASSETS. Sell, lease, assign, transfer
or otherwise dispose of any Property (other than in the ordinary course of
business) except for (i) the sale or disposition of (A) Property which is not
material to or necessary for the continued operation of CBC's Broadcasting
Business and (B) obsolete or unusable items of equipment which promptly are
replaced with new items of equipment of like function and comparable value to
the unusable items of equipment when the same were new or not obsolete or
unusable, provided such replacement items of equipment shall become subject to
the Security Interests and (ii) Permitted Dispositions.
7.12 AMENDMENT OF INSTRUMENTS; ARTICLES OF INCORPORATION. Enter
into any Prohibited Amendment.
7.13 ACQUISITION OF ADDITIONAL PROPERTIES. Enter into an
agreement with respect to a proposed Acquisition unless such agreement provides
that the only remedy against the Borrower entering into such agreement in the
event of default by CBC thereunder is liquidated damages in an amount not to
exceed 10% of the purchase price, or acquire any additional Property except (i)
such Property as necessary to or useful in the operation of its business,
provided such acquisitions shall be subject to the conditions and limitations
set forth in this Loan Agreement and (ii) such acquisitions of Property as are
permitted pursuant to Section 7.3 or 7.9.
7.14 ISSUANCE OF CAPITAL STOCK; DEBT SECURITIES. Issue or permit
to be issued any additional capital stock or any interests convertible into or
exercisable for any such additional capital stock or any debt securities.
7.15 TRANSACTIONS WITH AFFILIATES. Sell, lease, assign,
transfer or otherwise dispose of any Property to any Affiliate of any Obligor,
render or receive services or purchase assets from any such Affiliate, or
otherwise enter into any contractual relationship with any Affiliate of any
Obligor, except as set forth in EXHIBIT 7.15.
7.16 COMPLIANCE WITH ERISA.
(i) permit the occurrence of any Termination Event which would
result in a liability to any Obligor or ERISA Affiliate in excess of
$100,000;
(ii) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities by more than
$100,000;
(iii) permit any accumulated funding deficiency in
excess of $100,000 (as defined in Section 302 of ERISA and Section 412
of the Code) with respect to any Pension Plan, whether or not waived;
(iv) fail to make any contribution or payment to any
Multiemployer Plan which any Obligor or ERISA Affiliate may be
required to make under any agreement
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relating to such Multiemployer Plan, or any law pertaining thereto
which results in or is likely to result in a liability in excess of
$100,000;
(v) engage, or permit any Obligor or ERISA Affiliate
to engage, in any "prohibited transaction" as such term is defined in
Section 406 of ERISA or Section 4975 of the Code for which a civil
penalty pursuant to Section 502(i) of ERISA or a tax pursuant to
Section 4975 of the Code in excess of $100,000 is imposed;
(vi) permit the establishment of any Employee Benefit
Plan providing post-retirement welfare benefits or establish or amend
any Employee Benefit Plan which establishment or amendment could
result in liability to any Obligor or ERISA Affiliate or increase the
obligation of any Obligor or ERISA Affiliate to a Multiemployer Plan
which liability or increase, individually or together with all similar
liabilities and increases, is material to any Obligor or ERISA
Affiliate; or
(vii) fail, or permit any Obligor or ERISA Affiliate
to fail to establish, maintain and operate each Employee Benefit Plan
in compliance in all material respects with ERISA, the Code and all
other applicable laws and regulations and interpretations thereof.
7.17 LMA AGREEMENTS. Enter into, renew or extend an LMA, except
(i) the LMA Agreements, (ii) an LMA to operate a Station in a then existing
Broadcast Market, (iii) an LMA to operate a Station in other than a then
existing Broadcast Market, but only if Borrowers have demonstrated to the
reasonable satisfaction of the Required Lenders that Borrowers would not suffer
operating losses as a result of the operation of the Station or Stations which
are the subject of such agreement.
7.18 BUSINESS LOCATIONS. Change the location of its chief
executive office, any of its Property or any studio, transmitter, antennae, or
offices used in the operation of any of the CBC Stations, or the place where
its books and records are kept unless (i) Agent shall have received at least 30
days' prior written notice thereof, (ii) Borrowers shall have complied with all
applicable laws, rules and regulations and shall have received all required
consents and approvals from any Governmental Body, including, without
limitation, the FCC, (iii) Agent shall have received satisfactory evidence that
such change could not reasonably be expected to affect adversely the operations
or business prospects of Borrowers and (iv) Borrowers shall have executed and
delivered to Agent any documents Agent may reasonably require in order to
maintain the validity and priority of the Security Interests.
7.19 MAXIMUM LEVERAGE TEST. Permit the ratio of Total Debt as
of the last day of any month to the Adjusted Operating Cash Flow for the
12-month period ending as of the last day of such month to be greater than the
Applicable Ratio on such date.
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7.20 SENIOR DEBT LEVERAGE. Permit the ratio of the Principal
Balance as of the last day of any month to the Adjusted Operating Cash Flow for
the 12-month period ending on such date to be greater than the ratios set forth
below:
<TABLE>
<CAPTION>
Each Month During Period Ratio
------------------------ -----
<S> <C>
Closing Date - November, 1997 5.25
December, 1997 - May, 1998 5.00
June, 1998 - November, 1998 4.75
December, 1998 - May, 1999 4.50
June, 1999 - November, 1999 4.25
December, 1999 - May, 2000 4.00
June, 2000 - November, 2000 3.75
December, 2000 - May 2001 3.50
June, 2001 - November, 2001 3.25
December, 2001 - May, 2002 3.00
June, 2002 - November, 2002 2.75
December, 2002 - June, 2003 2.50
</TABLE>
7.21 MINIMUM INTEREST COVERAGE. Permit the ratio of
consolidated Operating Cash Flow of Borrowers for any Four-Quarter Period
ending as of the end of any quarter set forth below to Interest Expense and
cash dividends on the Exchangeable Preferred Stock for such Four-Quarter Period
to be less than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
Four Quarter Period Ending Ratio
-------------------------- -----
<S> <C>
September, 1997, December, 1997 1.75
March, 1998, June, 1998, 2.00
September, 1998, December, 1998
March, 1999 and each quarter 2.25
thereafter
</TABLE>
7.22 MINIMUM FIXED CHARGES. Permit the ratio of the consolidated
Operating Cash Flow of Borrowers for any Four-Quarter Period to Fixed Charges
for such Four-Quarter Period to be less than 1.1 to 1.
ARTICLE VIII
DEFAULT AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under the Loan Instruments:
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8.1.1 DEFAULT IN PAYMENT. If Borrowers shall fail to
pay all or any portion of the Principal Balance when the same becomes
due and payable or any other of the Borrowers' Obligations within five
days after the same become due and payable.
8.1.2 BREACH OF COVENANTS.
(a) If Borrowers shall fail to observe or
perform any covenant or agreement made by Borrowers
contained in Section 4.2, 6.1, 6.2, 6.6, 6.10, 6.11 or in
Article VII;
(b) If any Obligor shall fail to observe or
perform any covenant or agreement (other than those referred
to in subparagraph (a) above or specifically addressed
elsewhere in this Section 8.1) made by such Person in any of
the Loan Instruments to which such Person is a party, and
such failure shall continue for a period of 30 days after
written notice of such failure is given by Agent.
8.1.3 BREACH OF WARRANTY. If any representation or
warranty made by or on behalf of any Obligor in or pursuant to any of
the Loan Instruments or in any instrument or document furnished in
compliance with the Loan Instruments shall prove to be false or
misleading in any material respect on the date as of which made.
8.1.4 DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED
MONEY. If (i) either Borrower at any time shall be in default (as
principal or guarantor or other surety) in the payment of any
principal of or premium or interest on any Indebtedness for Borrowed
Money (other than Borrowers' Obligations) beyond the grace period, if
any, applicable thereto and the aggregate amount of such payments then
in default beyond such grace period shall exceed $250,000 or (ii) any
default shall occur in respect of any issue of Indebtedness for
Borrowed Money of either Borrower (other than Borrowers' Obligations)
outstanding in a principal amount of at least $250,000, or in respect
of any agreement or instrument relating to any such issue of
Indebtedness for Borrowed Money, and such default shall continue
beyond the grace period, if any, applicable thereto.
8.1.5 BANKRUPTCY.
(a) If Guarantor or either Borrower shall (i)
generally not be paying its debts as they become due, (ii)
file, or consent, by answer or otherwise, to the filing
against it of a petition for relief or reorganization or
arrangement or any other petition in bankruptcy or
insolvency under the laws of any jurisdiction, (iii) make an
assignment for the benefit of creditors, (iv) consent to the
appointment of a custodian, receiver, trustee or other
officer with similar powers for it or for any substantial
part of its Property, or (v) be adjudicated insolvent.
(b) If any Governmental Body of competent
jurisdiction shall enter an order appointing, without consent
of the applicable Borrower or Guarantor, a
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custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial
part of such Person's Property, or if an order for relief
shall be entered in any case or proceeding for liquidation
or reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of
either Borrower or Guarantor or if any petition for any such
relief shall be filed against any such Person and such
petition shall not be dismissed or stayed within 60 days.
8.1.6 JUDGMENTS. If there shall exist final judgments
or awards against any Obligor which shall have been outstanding for a
period of 60 days or more from the date of the entry thereof and shall
not have been discharged in full or stayed pending appeal, if (i) any
such judgment or award not covered by insurance exceeds $50,000 or
(ii) the aggregate amount of all such judgments and awards against
Obligors not covered by insurance exceeds $500,000.
8.1.7 IMPAIRMENT OF LICENSES; OTHER AGREEMENTS. If (i)
any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any License of either Borrower, the continuation of
which is material to the continuation of the Broadcasting Business of
CBC, or (B) schedule or conduct a hearing on the renewal of any FCC
License necessary for the continuation of such Broadcasting Business
or (ii) there shall exist any violation or default in the performance
of, or a material failure to comply with any agreement, or condition
or term of any FCC License, which violation, default or failure could
reasonably be expected to have a Material Adverse Effect, or (iii) any
agreement which is necessary to the operation of such Broadcasting
Business shall be revoked or terminated and not replaced by a
substitute acceptable to the Required Lenders within 30 days after the
date of such revocation or termination, and such revocation or
termination and non-replacement could reasonably be expected to have a
Material Adverse Effect.
8.1.8 COLLATERAL. If any material portion of the
Collateral shall be seized or taken by a Governmental Body or Person,
or Borrowers shall fail to maintain or cause to be maintained the
Security Interests and priority of the Loan Instruments as against any
Person, or the title and rights of any Obligor to any material portion
of the Collateral shall have become the subject matter of litigation
which could reasonably be expected to result in impairment or loss of
the security provided by the Loan Instruments.
8.1.9 INTERRUPTION OF OPERATIONS. If the on-the-air
broadcasting operations of CBC Stations in two or more markets shall
cease completely at any time for more than 72 hours during any period
of 10 consecutive days, unless (i) the broadcasting operations of all
or substantially all of the radio stations in the relevant market also
are interrupted for a like period of time or (ii) Borrowers shall be
receiving during such period proceeds of business interruption
insurance sufficient to assure that the per diem consolidated
Operating Cash Flow of CBC during such period is at least equal to the
average per diem consolidated Operating Cash Flow of CBC preceding the
initial date of interruption;
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provided, however, that, notwithstanding the provisions of clause (ii)
to the contrary, an Event of Default shall be deemed to occur
hereunder if the default described in of this subsection 8.1.9
continues for a period of 120 hours during any period of 20
consecutive days.
8.1.10 PLANS. If an event or condition specified in
subsection 6.3.10 hereof shall occur or exist with respect to any
Pension Plan or Multiemployer Plan and, as a result of such event or
condition, together with all other such events or conditions, either
Borrower or any ERISA Affiliate shall incur, or in the opinion of the
Required Lenders be reasonably likely to incur, a liability to a
Pension Plan or Multiemployer Plan or the PBGC (or any of them) which,
in the reasonable judgment of the Required Lenders, would have a
Material Adverse Effect.
8.1.11 CHANGE IN CONTROL; CESSATION OF WILSON'S
ACTIVITIES. If at any time (i) Guarantor shall cease to own or control
all of the CBC Common Stock, (ii) CBC shall cease to own or control
all of the capital stock of CLI, (iii) any Person or Affiliate of such
Person, other than ABRY Broadcast Partners II, a Delaware limited
partnership, and Wilson or their respective Affiliates, own capital
stock possessing more than 35% of the voting power of all voting stock
of Guarantor, (iv) Wilson shall die, become permanently disabled or
cease, for a period in excess of 60 days, to devote his full business
time to the operation of CBC's Broadcasting Business, unless Wilson is
replaced by a person reasonably acceptable to the Required Lenders
within 90 days after such death, disability or cessation or (v) a
Change of Control (as defined in the Senior Subordinated Debt
Instruments and the Exchangeable Preferred Stock Instruments) shall
occur.
8.1.12 GUARANTY. If (i) the Guaranty shall cease to be
in full force and effect, (ii) Guarantor shall deny or disaffirm its
obligations thereunder or (iii) Guarantor shall fail to make any
payment thereunder when due.
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the occurrence of:
(a) any Event of Default described in clauses (ii),
(iii), (iv) and (v) of subsection 8.1.5(a) or in 8.1.5(b), the
Commitments shall automatically terminate and all of Borrowers'
Obligations at that time outstanding automatically shall mature and
become due, and
(b) any other Event of Default, upon the written
request of the Required Lenders, and by delivery of written notice to
Borrowers from the Agent (unless such Event of Default shall have been
waived in writing or remedied), all Commitments shall terminate and
all of Borrowers' Obligations shall become immediately due and
payable, whereupon all Commitments shall immediately terminate and
Borrowers' Obligations immediately shall mature and become due and
payable,
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all without presentment, demand, protest or notice (other than notice of the
declaration referred to in clause (b) above), all of which hereby are waived.
8.3 RESCISSION OF ACCELERATION. After acceleration of the
maturity of Borrowers' Obligations, if all interest, principal and other
amounts which are then due (other than by reason of acceleration) are paid and
all Events of Default then existing are waived in accordance with Section 13.6,
the Lenders may elect in their sole discretion to rescind the acceleration.
8.4 REMEDIES ON DEFAULT.
8.4.1 REMEDIES UPON ACCELERATION. If Borrowers'
Obligations have been accelerated pursuant to Section 8.2, upon the
written request and at the direction of the Required Lenders the
Agent may:
(a) ENFORCEMENT OF SECURITY INTERESTS. Enforce
its rights and remedies under the Loan Instruments in
accordance with their respective terms.
(b) OTHER REMEDIES. Enforce any of the rights or
remedies accorded to Lenders and/or Agent at equity or law,
by virtue of statute or otherwise.
8.4.2 BLOCKAGE NOTICE. Upon the occurrence and during
the existence of an Event of Default, other than a default in the
payment of principal, interest or any Loan Fees, whether or not
Borrowers' Obligations have been accelerated pursuant to Section 8.2,
upon the written request and the direction of the Required Lenders,
the Agent shall, subject to the limitations set forth in the Note
Indenture, send a Blockage Notice (as defined in the Note Indenture)
to the trustee under the Note Indenture and the Borrowers imposing a
Payment Blockage Period (as defined in the Indenture).
8.5 APPLICATION OF FUNDS. At any time an Event of Default
exists, any funds received by Lenders or Agent pursuant to the exercise of any
rights accorded to Lenders and/or Agent pursuant to, or by the operation of any
of the terms of, any of the Loan Instruments, including, without limitation,
insurance proceeds, condemnation proceeds or proceeds from the sale of
Collateral, shall be applied to Borrowers' Obligations in the following order
of priority:
8.5.1 EXPENSES. First, to the payment of (i) all fees
and expenses actually incurred, including, without limitation, court
costs, fees of appraisers, title charges, costs of maintaining and
preserving the Collateral, costs of sale, and all other costs incurred
by Agent and Lenders, in exercising any rights accorded to such
Persons pursuant to the Loan Instruments or by applicable law,
including, without limitation, reasonable attorney's fees, and (ii)
all Liens superior to the Liens of Agent except such superior Liens
subject to which any sale of the Collateral may have been made.
8.5.2 EXISTING PREPAYMENT PREMIUM. Next, to FINOVA in
payment of the Existing Prepayment Premium.
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8.5.3 BORROWERS' OBLIGATIONS. Next, to the Lenders in
proportion to their respective Ratable Shares of the remaining portion
of Borrowers' Obligations.
8.5.4 SURPLUS. Any surplus, to the Person or Persons
entitled thereto.
8.6 PERFORMANCE OF BORROWER'S OBLIGATIONS. If Borrowers fail
to (i) maintain in force and pay for any insurance policy or bond which
Borrowers are required to provide pursuant to any of the Loan Instruments, (ii)
keep the Collateral free from all Liens except for Permitted Liens, (iii) pay
when due all taxes, levies and assessments on or in respect of the Collateral,
except as otherwise permitted pursuant to the terms hereof, (iv) make all
payments and perform all acts on the part of Borrowers to be paid or performed
in the manner required by the terms hereof and by the terms of the other Loan
Instruments with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring,
handling and maintaining the Collateral, (v) keep fully and perform promptly
any other of the obligations of Borrowers hereunder or under any of the other
Loan Instruments, and (vi) keep fully and perform promptly the obligations of
Borrowers with respect to any issue of Indebtedness for Borrowed Money secured
by a Permitted Prior Lien, then Agent may (but shall not be required to)
procure and pay for such insurance policy or bond, place such Collateral in
good repair and operating condition, pay, contest or settle such Liens or taxes
or any judgments based thereon or otherwise make good any other aforesaid
failure of Borrowers. Borrowers shall reimburse Agent immediately upon demand
for all sums paid or advanced on behalf of Borrowers for any such purpose,
together with costs and expenses (including reasonable attorney's fees) paid or
incurred by Agent in connection therewith and interest on all sums advanced
from the date of advancement until repaid to Agent at the Default Rate. All
such sums advanced by Agent, with interest thereon, immediately upon
advancement thereof, shall be deemed to be part of Borrowers' Obligations.
8.7 RIGHT OF SETOFF. In addition to and not in limitation of
all rights of offset that any Lender may have under applicable law, upon the
occurrence of any Event of Default, and whether or not any Lender has made any
demand or the Borrowers' Obligations have matured, each Lender shall have the
right to appropriate and apply to the payment of Borrowers' Obligations all
deposits and other obligations then or thereafter owing by such Lender to any
Borrower. Each Lender exercising such rights shall notify the Agent thereof and
any amount received as a result of the exercise of such rights shall be shared
by the Lenders in accordance with their Ratable Shares.
ARTICLE IX
THE AGENT
9.1 APPOINTMENT. Each Lender hereby irrevocably appoints and
authorizes FINOVA to act as Agent for such Lender under this Loan Agreement and
to execute and deliver or accept the other Loan Instruments on behalf of such
Lender. Each Lender hereby irrevocably
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authorizes, and each holder of any Note by the acceptance of a Note shall be
deemed irrevocably to authorize, the Agent to take such action on its behalf
under the provisions of this Loan Agreement and the other Loan Instruments and
any other instruments and agreements referred to herein and therein, and to
exercise such powers and to perform such duties hereunder as are specifically
delegated to or required of the Agent by the terms of this Loan Agreement,
together with such powers as are reasonably incidental thereto. FINOVA agrees
to act as the Agent on behalf of the Lenders to the extent provided in this
Loan Agreement.
9.2 DELEGATION OF DUTIES. The Agent may perform any of its
respective duties hereunder by or through agents or employees and shall be
entitled to engage and pay for the advice or services of any attorneys,
accountants or other experts concerning all matters pertaining to its duties
hereunder and to rely upon any advice so obtained.
9.3 NATURE OF DUTIES; INDEPENDENT CREDIT INVESTIGATION. The
Agent shall have no duties or responsibilities except those expressly set forth
in this Loan Agreement and no implied covenants, functions, responsibilities,
duties, obligations, or liabilities shall be read into this Loan Agreement or
otherwise exist. The duties of the Agent shall be mechanical and administrative
in nature. Agent shall not have by reason of this Loan Agreement a fiduciary or
trust relationship in respect of any Lender, and nothing in this Loan Agreement
express or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Loan Agreement except as expressly
set forth herein. Each Lender expressly acknowledges that (i) the Agent has not
made any representations or warranties to it and that no act by the Agent
hereafter taken, including any review of the affairs of any of the Obligors
shall be deemed to constitute any representation or warranty by the Agent to
any Lender and (ii) it has made and will continue to make, without reliance
upon the Agent, its own independent investigation of the financial condition
and affairs and its own appraisal of the creditworthiness of each of the
Obligors and the condition and value of the Collateral in connection with this
Loan Agreement and the making of the Loans.
9.4 INSTRUCTIONS FROM LENDERS. The Agent shall have the right
to request instructions from the Required Lenders by notice to each of the
Lenders. If the Agent shall request instructions from the Lenders with respect
to any act or action (including the failure to act) in connection with this
Loan Agreement, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions from
the Required Lenders, and the Agent shall not incur liability to any Person by
reason of so refraining. No Lender shall have any right of action against the
Agent as a result of the Agent acting or refraining from acting in accordance
with the instructions of the Required Lenders.
9.5 EXCULPATORY PROVISIONS. None of the Agent or any of its
respective directors, officers, employees, agents, attorneys or Affiliates
shall (i) be liable to any Lender for any action taken or omitted to be taken
by it or them pursuant to any Loan Instruments unless caused by it or its
respective directors, officers, employees, agents, attorneys or Affiliates own
gross negligence or willful misconduct, (ii) be responsible in any manner to
any of the Lenders for the effectiveness, enforceability, genuineness, validity
or due execution of this Loan Agreement
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or any other Loan Instruments or for any recital, representation, warranty,
document, certificate, report or statement herein or made or furnished under or
in connection with this Loan Agreement or any other Loan Instruments, or (iii)
be under any obligation to any of the Lenders to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions
hereof or thereof on the part of the Obligors, the financial condition of the
Obligors, or the existence or possible existence of any Event of Default or
Incipient Default.
9.6 REIMBURSEMENT AND INDEMNIFICATION BY LENDERS OF THE AGENT.
Each Lender agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by Borrowers and without limiting the obligation of Borrowers to do
so) in proportion to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in its capacity as such, in any
way relating to or arising out of this Loan Agreement or any other Loan
Instruments or any action taken or omitted by the Agent hereunder or
thereunder, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct.
9.7 RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any writing, telegram, telex or teletype message, resolution, notice,
consent, certificate, letter, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons, and upon
the advice and opinions of counsel and other professional advisers selected by
the Agent. The Agent shall be fully justified in failing or refusing to take
any action hereunder unless it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense (other than a
liability or expense relating to gross negligence or willful misconduct) which
may be incurred by it by reason of taking or continuing to take any such
action.
9.8 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Incipient Default or Event of
Default unless the Agent has received written notice from a Lender or the
Borrowers referring to this Loan Agreement, describing such Incipient Default
or Event of Default and stating that such notice is a "notice of default."
9.9 RELEASE OF COLLATERAL. The Lenders hereby authorize the
Agent to release any Lien granted to Agent upon any Collateral upon (i)
termination of the Commitments and payment and satisfaction of all of
Borrowers' Obligations or (ii) the request of Borrowers if such release is
required pursuant to the terms of any of the Loan Instruments.
9.10 LENDERS IN THEIR INDIVIDUAL CAPACITIES. With respect to
the Commitments and the Loans made by it, the Agent shall have the same rights
and powers as any other Lender and may exercise the same as thought it were not
the Agent, and the term "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent and its
Affiliates and each of the Lenders and their respective Affiliates may, without
liability to account, except as prohibited herein, make loans to, accept
deposits from, discount drafts for,
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<PAGE> 85
act as trustee under indentures of, and generally engage in any kind of banking
or trust business with, the Obligors and their Affiliates as though such Lender
were not a Lender hereunder.
9.11 HOLDERS OF NOTES. The Agent may deem and treat any payee
of any Note as the owner hereof for all purposes unless and until the Agent
receives an Assignment and Acceptance with respect thereto. Any request,
authority or consent of any Person who at the time of making such request or
giving such authority or consent is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any Note or Notes issued in exchange therefor.
9.12 SUCCESSOR AGENT. The Agent may resign at any time by
giving not less than 30 days' prior written notice to the Borrowers and the
other Lenders and the Agent may be removed at any time with or without cause by
the Required Lenders. The Required Lenders shall have the right to appoint a
successor Agent with the consent of Borrowers, which consent shall not be
unreasonably withheld. If a successor Agent is not appointed within 30 days
following the Agent's notice of its resignation or its removal, the Agent shall
appoint a successor agent who shall serve as Agent until such time as the
Required Lenders appoint a successor Agent. Upon its appointment, such
successor Agent shall succeed to the rights, powers and duties of the Agent and
the term "Agent" shall mean such successor effective upon its appointment, and
the former Agent's rights, powers and duties as Agent shall be terminated
without any other or further act or deed on the part of such former Agent or
any of the parties to this Agreement. After the resignation of any Agent, the
provisions of this Article IX shall inure to the benefit of such former Agent
and such former Agent shall not by reason of such resignation be deemed to be
released from liability for any actions taken or not taken by it while it was
the Agent.
9.13 DELIVERY OF INFORMATION. The Agent shall not be required
to deliver to any Lender originals or copies of any documents, instruments,
reports, notices, communications or other information received by the Agent
from the Obligors or any other Person under or in connection with any Loan
Instruments except (i) as specifically provided in the Loan Instruments or (ii)
as specifically requested from time to time in writing by any Lender with
respect to a specific document, instrument, notice or other written
communication received by and in the possession of the Agent at the time of
receipt of such request and then only in accordance with such specific request.
9.14 BENEFICIARIES. Except as expressly provided in this Loan
Agreement, the provisions of this Article IX are solely for the benefit of the
Agent and the Lenders, and the Obligors shall not have any rights to rely on or
enforce any of the provisions hereof. In performing its functions and duties
under this Loan Agreement, the Agent shall act solely as agent of the Lenders
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any of the Obligors.
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ARTICLE X
LOAN ASSIGNMENT AND PARTICIPATION
10.1 ASSIGNMENT TO OTHER LENDERS.
10.1.1 ASSIGNMENT. Each Lender may assign to one of its
affiliates and may, with the written consent of Borrowers which shall
not be unreasonably withheld, assign to one or more other financial
institutions all or any portion of its Commitment and its rights and
obligations under this Loan Agreement with respect thereto (a "Loan
Assignment"), provided, however, that (i) each Loan Assignment shall
be of a constant, and not a varying, percentage of all rights and
obligations of such Lender under this Loan Agreement, (ii) the amount
of the Commitment of the assigning Lender being assigned pursuant to
each such Loan Assignment shall not be less than the lesser of
$5,000,000 or the remaining amount of such Lender's Commitment and
shall be in integral multiples of $1,000,000 in excess thereof, and
(iii) the parties to each such Loan Assignment shall execute and
deliver to the Agent an Assignment and Acceptance, together with any
Note or Notes subject to such assignment.
10.1.2 EFFECT OF ASSIGNMENT. Upon the execution,
delivery, acceptance and recording of an Assignment and Acceptance (i)
the Assignee thereunder shall be a party to this Loan Agreement and,
to the extent that rights and obligations hereunder have been assigned
to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (ii) the Lender thereunder
shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Loan
Agreement.
10.1.3 REGISTER. The Agent shall maintain a copy of
each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names, addresses, and Commitments
of the Lenders (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and
the Borrowers, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for
inspection by the Borrowers or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
10.1.4 SUBSTITUTION OF NOTES. Simultaneously with the
delivery by Agent to Borrowers of any Note which is the subject of a
Loan Assignment which is marked "canceled," Borrowers shall execute
and deliver to Agent for delivery to (i) the applicable Assignee, a
Note payable to the order of such Assignee in an amount equal to the
amount assigned to such Assignee, and (ii) the assigning Lender, a
Note payable to the order of such Lender in an amount equal to the
amount retained by such Lender, each such Note to be substantially in
the form of the canceled Note.
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<PAGE> 87
10.2 PARTICIPATIONS. Each Lender shall have the right to sell
Participations in all or any portion of its rights and obligations under this
Loan Agreement. In the event of the sale of a Participation, the obligations of
the Lender selling such a Participation shall remain unchanged, such Lender
shall remain solely responsible to the other parties to this Loan Agreement for
the performance thereof, such Lender shall remain the holder of any Note which
previously has been delivered to Lender pursuant to the terms of this Loan
Agreement, and Borrowers shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this Loan
Agreement.
ARTICLE XI
CLOSING
The Closing Date shall be such date as the parties shall determine,
and the Closing shall take place on such date, provided all conditions for the
Closing as set forth in this Loan Agreement have been satisfied or otherwise
waived by the Lenders. The Closing shall occur at such place as the parties
hereto shall agree. Unless the Closing occurs on or before July 31, 1997, this
Loan Agreement shall terminate and be of no further force or effect and, except
for any obligation of Borrowers to Agent and Lenders pursuant to Article XII,
none of the parties hereto shall have any further obligation to any other
party.
ARTICLE XII
EXPENSES AND INDEMNITY
12.1 ATTORNEY'S FEES AND OTHER FEES AND EXPENSES. Whether or
not any of the transactions contemplated by this Loan Agreement shall be
consummated, Borrowers agree to pay to Agent and Lenders on demand all expenses
incurred by Agent and Lenders in connection with the transactions contemplated
hereby and in connection with any amendments, modifications or waivers (whether
or not the same become effective) under or in respect of any of the Loan
Instruments, including, without limitation:
12.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN
INSTRUMENTS. All expenses and disbursements (including, without
limitation, charges for required mortgagee's title insurance, lien
searches, reproduction of documents, long distance telephone calls,
overnight express carriers, appraisal fees, recording charges and
environmental audit fees) and reasonable attorney's fees actually
incurred by Agent and Lenders in connection with the (i) preparation,
review and negotiation of the Loan Instruments or any amendments,
modifications or waivers thereto or any documents delivered pursuant
thereto and (ii) administration of the Loans.
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<PAGE> 88
12.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR
DEFENSE OF LOAN INSTRUMENTS. Any expenses or other costs, including
reasonable attorney's fees and expert witness fees, actually incurred
by Agent and Lenders in connection with the enforcement or collection
against any Obligor of any provision of any of the Loan Instruments,
and in connection with or arising out of any litigation, investigation
or proceeding instituted by any Governmental Body or any other Person
with respect to any of the Loan Instruments, whether or not suit is
instituted, including, but not limited to, such costs or expenses
arising from the enforcement or collection against any Obligor of any
provision of any of the Loan Instruments in workout or restructuring
or in any state or federal bankruptcy or reorganization proceeding.
12.2 INDEMNITY. Borrowers agree to indemnify and save Agent and
Lenders harmless of and from the following:
12.2.1 BROKERAGE FEES. The fees, if any, of brokers and
finders engaged by Borrowers.
12.2.2 GENERAL. Any loss, cost, liability, damage or
expense (including reasonable attorney's fees and expenses) incurred
by Agent and Lenders in investigating, preparing for, defending
against, providing evidence, producing documents or taking other
action in respect of any commenced or threatened litigation,
administrative proceeding, suit instituted by any Person or
investigation under any law, including any federal securities law, the
Bankruptcy Code, any relevant state corporate statute or any other
securities law, bankruptcy law or law affecting creditors generally of
any jurisdiction, or any regulation pertaining to any of the
foregoing, or at common law or otherwise, relating, directly or
indirectly, to the transactions contemplated by or referred to in, or
any other matter related to, the Loan Instruments, whether or not
Agent or any Lender is a party to such litigation, proceeding or suit,
or is subject to such investigation.
12.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS. Any
loss, cost, liability, damage or expense (including reasonable
attorney's fees and expenses) incurred in connection with the
ownership, operation or maintenance of the Collateral, the
construction of Agent or any Lender and Borrowers as having the
relationship of joint venturers or partners or the determination that
Agent or any Lender has acted as agent for any Borrower.
12.2.4 ENVIRONMENTAL INDEMNITY. Any and all claims,
losses, damages, response costs, clean-up costs and expenses suffered
and/or incurred at any time by Agent and any Lender arising out of or
in any way relating to the existence at any time of any Hazardous
Materials in, on, under, at, transported to or from, or used in the
construction and/or renovation of, any of the Real Property or
Leasehold Property, or otherwise with respect to any Environmental
Law, and/or the failure of either Borrower to perform its obligations
and covenants hereunder with respect to environmental matters,
including, but not limited to: (i) claims of any Persons for damages,
penalties, response
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costs, clean-up costs, injunctive or other relief, (ii) costs of
removal and restoration, including fees of attorneys and experts, and
costs of reporting the existence of Hazardous Materials to any
Governmental Body, and (iii) any expenses or obligations, including
attorney's fees and expert witness fees, incurred at, before and after
any trial or other proceeding before any Governmental Body or appeal
therefrom whether or not taxable as costs, including, without
limitation, witness fees, deposition costs, copying and telephone
charges and other expenses, all of which shall be paid by Borrowers to
Agent or such Lender, when incurred by Agent or such Lender.
ARTICLE XIII
MISCELLANEOUS
13.1 NOTICES. All notices and communications under this Loan
Agreement shall be in writing and shall be (i) delivered in person, (ii) sent
by telecopy, or (iii) mailed, postage prepaid, either by registered or
certified mail, return receipt requested, or by overnight express carrier,
addressed in each case as follows:
To Borrowers: c/o Citadel Broadcasting Company
140 South Ash Avenue
Tempe, Arizona 85281
Attention: Donna L. Heffner
Chief Financial Officer
Telecopy No.: (602) 731-5229
Copy (which shall Osborn Maledon
not constitute 2929 North Central Avenue
notice hereunder) to: Suite 2100
Phoenix, Arizona 85012
Attention: Michelle M. Matiski, Esq.
Telecopy No.: (602) 640-6060
and
Eckert Seamans Cherin & Mellott
600 Grant Street
42nd Floor Pittsburgh, Pennsylvania 15219
Attention: Bryan D. Rosenberger, Esq.
Telecopy No.: (412) 566-6099
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<PAGE> 90
To Agent: FINOVA Capital Corporation
311 South Wacker Drive
Suite 4400
Chicago, Illinois 60606
Attention: Matthew M. Breyne
Group Vice President
Telecopy No.: (312) 322-3530
Copy (which shall not FINOVA Capital Corporation
constitute notice 1850 N. Central Avenue
hereunder) to: Phoenix, Arizona 85002-2209
Attention: Vice President, Law
Telecopy No.: (602) 207-5036
Copy (which shall not Katten Muchin & Zavis
constitute notice 525 West Monroe Street, Suite 1600
hereunder) to: Chicago, Illinois 60661
Attention: Maurice Jacobs, Esq.
Telecopy No.: (312) 902-1061
To Any Other Lender: Its address indicated on the signature page
hereto, an Assignment and Acceptance or a
notice to the other parties hereto.
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 13.1 shall be deemed
received (i) if personally delivered, then on the Business Day of delivery,
(ii) if sent by telecopy before 2:00 p.m. Chicago time, on the day sent if a
Business Day or if such day is not a Business Day or if sent after 2:00 p.m.
Chicago time, then on the next Business Day, (iii) if sent by overnight,
express carrier, on the next Business Day immediately following the day sent,
or (iv) if sent by registered or certified mail, on the earlier of the fifth
Business Day following the day sent or when actually received. Any notice by
telecopy shall be followed by delivery on the next Business Day by overnight,
express carrier or by hand.
13.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES. All covenants,
agreements, representations and warranties made in this Loan Agreement and in
the certificates delivered pursuant hereto shall survive the making by Lender
of the Loans and the execution and delivery to Lenders of the Notes and of all
other Loan Instruments, and shall continue in full force and effect so long as
any of Borrowers' Obligations remain outstanding, unperformed or unpaid.
Notwithstanding the repayment of all amounts due under the Loan Instruments,
the cancellation of the Notes and the release and/or cancellation of any and
all of the Loan Instruments or the foreclosure of any Liens on the Collateral,
the obligations of Borrowers to indemnify Agent and Lenders with respect to the
expenses, damages, losses, costs and liabilities described in
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Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions which may be brought against Agent or any Lender have
run.
13.3 FURTHER ASSURANCE. From time to time, Borrowers shall
execute and deliver to Agent and Lenders such additional documents as Agent or
such Lenders reasonably may require to carry out the purposes of the Loan
Instruments and to protect the rights of the Agent and Lenders thereunder,
including, without limitation, using their best efforts in the event any
Collateral is to be sold to secure the approval by any Governmental Body of any
application required by such Governmental Body in connection with such sale,
and not take any action inconsistent with such sale or the purposes of the Loan
Instruments.
13.4 TAXES AND FEES. Should any tax (other than taxes based
upon the net income of any Lender), recording or filing fees become payable in
respect of any of the Loan Instruments, or any amendment, modification or
supplement thereof, Borrowers agree to pay the same on demand, together with
any interest or penalties thereon attributable to any delay by Borrowers in
meeting any Lender's demand, and agrees to hold Lenders harmless with respect
thereto.
13.5 SEVERABILITY. In the event that any provision of this Loan
Agreement is deemed to be invalid by reason of the operation of any law,
including, but not limited to, any of the rules and regulations and policies of
the FCC, or by reason of the interpretation placed thereon by any court or the
FCC or any other Governmental Body, as applicable, this Loan Agreement shall be
construed as not containing such provision and the invalidity of such provision
shall not affect the validity of any other provisions hereof, and any and all
other provisions hereof which otherwise are lawful and valid shall remain in
full force and effect.
13.6 WAIVERS AND AMENDMENTS. No delay on the part of Agent or
any Lender in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, and no single or partial exercise of any right, power or
privilege hereunder shall preclude other or further exercise thereof, or be
deemed to establish a custom or course of dealing or performance between the
parties hereto, or preclude the exercise of any other right, power or
privilege. No modification or waiver of any provision of any of the Loan
Instruments shall be effective unless in writing and signed by the Required
Lenders or the Agent on their behalf, except that the written consent of all
the Lenders is required to (i) increase the Commitments; (ii) reduce the
principal of or interest on any Note or any Loan Fee; (iii) postpone any date
fixed for any payment of principal on or interest on any Note or any fee due
hereunder; (iv) amend or waive this Section 13.6, Section 13.9 or the
definition of "Required Lenders"; (v) release Guarantor from its obligations
under the Guaranty; or (vi) release any liens upon the Collateral, except such
release upon the sale of any Collateral in a Permitted Disposition, as
permitted by clause (i) of Section 7.11 and as otherwise expressly provided in
this Loan Agreement.
13.7 JOINT AND SEVERAL LIABILITY. The obligations of the Borrowers
are joint and several.
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13.8 CAPTIONS. The headings in this Loan Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
13.9 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, subject to the limitations set
forth in Article X. Borrowers may not assign any of their rights or obligations
hereunder without the consent of all Lenders
13.10 REMEDIES CUMULATIVE. All rights and remedies of Agent and
Lenders pursuant to this Loan Agreement, any other Loan Instruments or
otherwise, shall be cumulative and non-exclusive, and may be exercised
singularly or concurrently. Neither Agent nor any Lender shall be required to
prosecute collection, enforcement or other remedies against any Obligor before
proceeding against any other Obligor or to enforce or resort to any security,
liens, collateral or other rights of Agent or Lenders. One or more successive
actions may be brought against Obligors, either in the same action or in
separate actions, as often as Lenders deem advisable, until all of Borrowers'
Obligations are paid and performed in full.
13.11 ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and the
other Loan Instruments executed prior or pursuant hereto constitute the entire
agreement among the parties hereto with respect to the transactions
contemplated hereby or thereby and supersede any prior agreements, whether
written or oral, relating to the subject matter hereof. In the event of a
conflict between the terms and conditions set forth herein and the terms and
conditions set forth in any other Loan Instrument, the terms and conditions set
forth herein shall govern.
13.12 APPLICABLE LAW. THE LOAN INSTRUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ARIZONA.
FOR PURPOSES OF THIS SECTION 13.12, THE LOAN INSTRUMENTS SHALL BE DEEMED TO BE
PERFORMED AND MADE IN THE STATE OF ARIZONA.
13.13 JURISDICTION AND VENUE. BORROWERS HEREBY AGREE THAT ALL
ACTIONS OR PROCEEDINGS INITIATED BY ANY BORROWER AND ARISING DIRECTLY OR
INDIRECTLY OUT OF THE LOAN INSTRUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT
OF MARICOPA COUNTY, OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA OR, IF AGENT OR ANY LENDER INITIATES SUCH ACTION, IN ADDITION TO THE
FOREGOING COURTS, ANY COURT IN WHICH AGENT OR SUCH LENDER SHALL INITIATE OR TO
WHICH AGENT OR SUCH LENDER SHALL REMOVE SUCH ACTION, TO THE EXTENT SUCH COURT
HAS JURISDICTION. BORROWERS HEREBY EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY AGENT OR ANY LENDER
IN OR REMOVED BY AGENT OR ANY LENDER TO ANY OF SUCH COURTS, AND HEREBY AGREE
THAT PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS
ISSUED THEREIN MAY BE SERVED IN THE MANNER
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PROVIDED FOR NOTICES HEREIN, AND AGREE THAT SERVICE OF SUCH SUMMONS AND
COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWERS AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT
PURSUANT TO SECTION 13.1. BORROWERS WAIVE ANY CLAIM THAT MARICOPA COUNTY,
ARIZONA OR THE DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM OR AN IMPROPER
FORUM BASED ON LACK OF VENUE. TO THE EXTENT PROVIDED BY LAW, SHOULD ANY
BORROWER, AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS,
COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY
LAW AFTER THE MAILING THEREOF, SUCH BORROWER SHALL BE DEEMED IN DEFAULT AND AN
ORDER AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST SUCH BORROWER AS
DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE
EXCLUSIVE CHOICE OF FORUM FOR BORROWERS SET FORTH IN THIS SECTION 13.13 SHALL
NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANY
JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING BY AGENT OR ANY LENDER OF
ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND
BORROWERS HEREBY WAIVE THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR
ACTION.
13.14 WAIVER OF RIGHT TO JURY TRIAL. AGENT, LENDERS AND BORROWERS
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE
LOAN INSTRUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD
BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE
THAT ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT
OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
13.15 TIME OF ESSENCE. TIME IS OF THE ESSENCE FOR THE PERFORMANCE
BY BORROWERS OF THE OBLIGATIONS SET FORTH IN THIS LOAN AGREEMENT AND THE OTHER
LOAN INSTRUMENTS.
13.16 ESTOPPEL CERTIFICATE. Within 15 days after Agent requests
Borrowers to do so, Borrowers will execute and deliver to Agent or such Lender
as Agent may direct a statement certifying (i) that this Loan Agreement is in
full force and effect and has not been modified except as described in such
statement, (ii) the date to which interest on the Notes has been paid, (iii)
the Principal Balance, (iv) whether or not to its knowledge an Event of Default
has occurred and is continuing, and, if so, specifying in reasonable detail
each such Event of Default of which it has knowledge, (v) whether to its
knowledge it has any defense, setoff or counterclaim to the payment of the Note
in accordance with its terms, and, if so, specifying each defense, setoff or
counterclaim of which it has knowledge in reasonable detail (including where
applicable the amount thereof), and (vi) as to any other matter reasonably
requested by Agent.
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<PAGE> 94
13.17 CONSEQUENTIAL DAMAGES. Neither Agent nor any Lender nor
any agent or attorney of Agent or such Lender shall be liable to Borrowers for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Borrowers'
Obligations.
13.18 COUNTERPARTS. This Loan Agreement may be executed by the
parties hereto in several counterparts and each such counterpart shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same agreement.
13.19 NO FIDUCIARY RELATIONSHIP. No provision in this Loan
Agreement or in any other Loan Instrument, and no course of dealing among the
parties hereto, shall be deemed to create any fiduciary duty by Agent or any
Lender to Borrowers.
13.20 NOTICE OF BREACH BY AGENT AND LENDERS. Borrowers agree to
give Agent and each Lender written notice of (i) any action or inaction by
Agent or any Lender or any agent or attorney of Agent or such Lender in
connection with the Loan Instruments that may be actionable against Agent or
such Lender or any agent or attorney of Agent or such Lender or (ii) any
defense to the payment of Borrowers' Obligations for any reason, including, but
not limited to, commission of a tort or violation of any contractual duty
implied by law.
13.21 CONFIDENTIALITY. Except as provided for in the Loan
Instruments and except as necessary to enable Lender to realize upon Borrowers'
Obligations and except as necessary in connection with the administration or
enforcement of Agent's and Lenders' rights under the Loan Instruments, neither
Agent nor any Lender shall disclose any information relative to the
Broadcasting Business or Related Business of any Borrower designated by such
Borrower as confidential to any Person without the prior written consent of
such Borrower, except that Agent and Lenders may disclose any such information
(i) in connection with any proposed Loan Assignment or Participation as long as
Agent and Lenders require each of the Persons to whom such information is
disclosed to keep it confidential in accordance with this Section 13.21, (ii)
which otherwise is in the public domain, (iii) to the extent required by
applicable law or any rule, regulation, decree, order or injunction of any
Governmental Body or (iv) which is obtained by Agent or any Lender from a third
party not known to Agent or any Lender to be under an obligation of
confidentiality to Borrowers.
13.22 GOVERNMENTAL APPROVAL. Notwithstanding anything to the
contrary contained herein or in any other Loan Instrument, no party hereto
shall take any action that would constitute or result in the transfer or
assignment of any FCC license, or other license, permit or authority issued by
any Governmental Body, or a transfer of control over any such license, permit
or authorization, if such assignment or transfer would require the prior
approval of and/or notice to any Governmental Body, without such party first
having notified such Governmental Body of any such assignment or transfer and,
if required, obtaining the approval of such Governmental Body therefor.
[remainder of page intentionally blank]
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IN WITNESS WHEREOF, this Loan Agreement has been executed and
delivered by each of the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
CITADEL BROADCASTING COMPANY, a Nevada
corporation, and CITADEL LICENSE, INC.,
a Nevada corporation
By: /s/ Lawrence R. Wilson
------------------------------------
Lawrence R. Wilson
President of each corporation
FINOVA CAPITAL CORPORATION, a Delaware
corporation, individually and as Agent
By: /s/ Matthew M. Breyne
------------------------------------
Matthew M. Breyne
Group Vice President
BANKBOSTON, N.A.
By: /s/ M. S. Denomme
------------------------------------
Name: Mark S. Denomme
------------------------------
Title: Director
-----------------------------
NATIONSBANK OF TEXAS, N.A.
By: /s/ Roselyn Reid
------------------------------------
Name: Roselyn Reid
------------------------------
Title: Vice President
-----------------------------
(Signatures continued on next page)
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<PAGE> 96
(Signatures continued from previous page)
THE BANK OF NEW YORK
By: /s/ Geoffrey Brooks
---------------------------------
Name: Geoffrey C. Brooks
---------------------------
Title: Vice President
--------------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Bryan G. Peterman
---------------------------------
Name: Bryan G. Peterman
---------------------------
Title: Vice President
--------------------------
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<PAGE> 1
Exhibit 10.19
AGREEMENT OF PURCHASE AND SALE
By and Among
TELE-MEDIA BROADCASTING COMPANY,
TELE-MEDIA BROADCASTING COMPANY OF CENTRE REGION,
TELE-MEDIA BROADCASTING HOLDING CORPORATION,
and
THE SHAREHOLDERS OF
TELE-MEDIA BROADCASTING COMPANY, OF
TELE-MEDIA BROADCASTING COMPANY OF CENTRE REGION, AND
OF TELE-MEDIA BROADCASTING HOLDING CORPORATION,
and
CITADEL BROADCASTING COMPANY and
CITADEL COMMUNICATIONS CORPORATION
Dated as of March 17, 1997 but executed,
delivered and effective as of March 28, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1.......................................................................................................-2-
DEFINITIONS............................................................................................-2-
1996 Cash Flow................................................................................-2-
Accounts Receivable...........................................................................-3-
Acquisition Agreements........................................................................-3-
Acquisition Debt..............................................................................-3-
Acquisitions..................................................................................-3-
Acquisition Purchase Price....................................................................-3-
Act...........................................................................................-3-
Additional Radio Stations.....................................................................-3-
Affiliate.....................................................................................-4-
Ancillary FCC Applications....................................................................-4-
Ancillary FCC Grants of Consent...............................................................-4-
Assigned Contracts............................................................................-4-
Assumed Obligations...........................................................................-4-
Audited Financial Statements..................................................................-4-
Bonds.........................................................................................-4-
Bond Payoff Amount............................................................................-4-
Bond Payoff Agreement.........................................................................-4-
Business .....................................................................................-4-
Centre Pledge.................................................................................-5-
Centre Shares.................................................................................-5-
Closing.......................................................................................-5-
Closing Date..................................................................................-5-
Code..........................................................................................-5-
Covenant......................................................................................-5-
Effective Time................................................................................-5-
Environmental Claims..........................................................................-5-
Environmental Conditions......................................................................-5-
Environmental Laws............................................................................-5-
Environmental Noncompliance...................................................................-6-
Escrow Agent..................................................................................-6-
Escrow Agreement..............................................................................-6-
Escrow Deposit................................................................................-6-
Existing Radio Stations.......................................................................-6-
Existing Financing Documents..................................................................-6-
Expiration Date...............................................................................-6-
FCC...........................................................................................-7-
FCC Application...............................................................................-7-
FCC Grant of Consent..........................................................................-7-
FCC Licenses..................................................................................-7-
Final Distribution............................................................................-7-
Final Order...................................................................................-7-
Finova........................................................................................-7-
Finova Payoff Amount..........................................................................-7-
Finova Payoff Letter..........................................................................-7-
Finova Prepayment Penalty.....................................................................-7-
GAAP..........................................................................................-8-
Governmental Authority........................................................................-8-
Guaranteed Receivables........................................................................-8-
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Hazardous Materials...........................................................................-8-
Holding Shares................................................................................-8-
HSR Act.......................................................................................-8-
HSR Filing....................................................................................-8-
Indebtedness for Borrowed Money...............................................................-8-
Intellectual Property.........................................................................-9-
Knowledge of Purchaser........................................................................-9-
Knowledge of Sellers..........................................................................-9-
Lien..........................................................................................-9-
Litigation....................................................................................-9-
Metro Area....................................................................................-9-
Non-Refundable Payment........................................................................-9-
Obligations...................................................................................-9-
Option Termination...........................................................................-10-
Options......................................................................................-10-
Other Acquisition Costs......................................................................-10-
Owned Real Property..........................................................................-10-
Permitted Exceptions.........................................................................-10-
Person.......................................................................................-10-
Personal Property............................................................................-10-
Providence Payment...........................................................................-11-
Purchased Assets.............................................................................-11-
Purchased Radio Stations.....................................................................-11-
Purchased Real Estate........................................................................-11-
Quick Assets.................................................................................-11-
Real Property Leases.........................................................................-11-
Release Documents............................................................................-11-
Reorganization...............................................................................-11-
Restated Certificate of Incorporation of TMBC................................................-11-
Sellers' FCC Problem.........................................................................-11-
Senior Credit Agreement......................................................................-12-
Senior Debt..................................................................................-12-
Shares.......................................................................................-12-
Station......................................................................................-12-
Subsidiary Partnerships......................................................................-12-
Supplemental Financial Statements............................................................-12-
Taxes........................................................................................-12-
TMBC Shares..................................................................................-13-
Trade Agreements.............................................................................-13-
Trade Liabilities............................................................................-13-
Trade Receivables............................................................................-13-
Trade Schedule...............................................................................-13-
Warrant Agreement............................................................................-13-
Warrants.....................................................................................-13-
SECTION 2......................................................................................................-13-
PURCHASE AND SALE OF THE SHARES; RELATED MATTERS......................................................-13-
2.1 Purchase and Sale of the Shares..........................................................-13-
2.2 Purchase Price and Payment...............................................................-13-
2.3 Purchased Radio Stations.................................................................-14-
2.4 Assumed Obligations......................................................................-16-
2.5 Real Property............................................................................-16-
Title to Real Property..............................................................-16-
Environmental Reports...............................................................-16-
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
2.6 Covenant Not to Compete..................................................................-17-
2.7 Final Distribution.......................................................................-17-
2.8 Non-Refundable Payment...................................................................-17-
2.9 Escrow Deposit...........................................................................-18-
SECTION 3......................................................................................................-18-
REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND THE SELLERS...........................................................-18-
3.1 Organization and Qualification...........................................................-18-
3.2 Authority................................................................................-19-
3.3 No Legal Bar; Conflicts..................................................................-19-
3.4 Capitalization...........................................................................-20-
3.5 Financial Statements.....................................................................-20-
3.6 Absence of Certain Changes...............................................................-21-
3.7 Taxes....................................................................................-22-
3.8 Asset Schedule...........................................................................-23-
3.9 Title to and Condition of Property.......................................................-23-
Title...............................................................................-23-
Condition...........................................................................-23-
Insurance...........................................................................-23-
Sufficiency of Assets...............................................................-24-
Purchased Real Estate...............................................................-24-
3.10 Accounts Receivable.....................................................................-25-
3.11 Contractual and Other Obligations.......................................................-25-
3.12 Existing Financing Documents; Senior Credit Agreement...................................-26-
3.13 Compensation............................................................................-26-
3.14 Employee Benefit Plans..................................................................-27-
3.15 Labor Relations.........................................................................-29-
3.16 Increases in Compensation or Benefits...................................................-29-
3.17 Insurance...............................................................................-30-
3.18 Litigation; Disputes....................................................................-30-
3.19 Environmental...........................................................................-30-
3.20 Permits; Compliance with Applicable Law.................................................-31-
General.............................................................................-31-
Permits.............................................................................-31-
3.21 Intellectual Property...................................................................-32-
3.22 Books and Records.......................................................................-33-
3.23 Trade Schedule..........................................................................-33-
3.24 Acts to be Performed....................................................................-33-
3.25 Other Agreements........................................................................-33-
3.26 Disclosure..............................................................................-33-
SECTION 4......................................................................................................-33-
REPRESENTATIONS AND WARRANTIES OF THE SELLERS.........................................................-33-
4.1 Authority................................................................................-33-
4.2 Ownership of the Shares, Etc.............................................................-34-
4.3 No Legal Bar; Conflicts..................................................................-34-
4.4 Option Agreement.........................................................................-34-
4.5 Other Agreements.........................................................................-34-
4.6 Disclosure...............................................................................-34-
SECTION 5......................................................................................................-35-
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................................................-35-
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
5.1 Organization and Qualification...........................................................-35-
5.2 Authority................................................................................-35-
5.3 No Legal Bar; Conflicts..................................................................-35-
5.4 Purchaser's FCC Qualifications...........................................................-36-
5.5 Bond Payoff Agreement....................................................................-36-
5.6 Disclosure...............................................................................-36-
SECTION 6......................................................................................................-36-
AFFIRMATIVE COVENANTS OF THE COMPANIES AND THE SELLERS................................................-36-
6.1 Certain Transactions.....................................................................-36-
6.2 Senior Credit Agreement..................................................................-37-
6.3 Payment of Obligations...................................................................-37-
6.4 Access...................................................................................-37-
6.5 Operations in the Regular Course.........................................................-37-
6.6 Maintenance..............................................................................-38-
6.7 Preservation of Organization.............................................................-38-
6.8 Accounts Receivable......................................................................-38-
6.9 Books and Records........................................................................-38-
6.10 Employees...............................................................................-38-
6.11 Compliance with FCC.....................................................................-39-
6.12 Taxes...................................................................................-39-
6.13 Consents; Estoppel Certificates.........................................................-39-
6.14 Supplemental Financial Statements.......................................................-39-
6.15 Obligations with Respect to ............................................................-40-
6.16 Delivery of Acquisition Documents.......................................................-40-
6.17 Delivery of Other Agreements............................................................-40-
6.18 Further Information.....................................................................-40-
6.19 Notice..................................................................................-40-
6.20 Employee Benefits.......................................................................-41-
SECTION 7......................................................................................................-41-
NEGATIVE COVENANTS OF THE COMPANIES AND THE SELLERS...................................................-41-
7.1 Sales, Transfers and Liens...............................................................-41-
7.2 Assumed Obligations......................................................................-41-
7.3 Breaches; Defaults.......................................................................-41-
7.4 Indebtedness for Borrowed Money; Obligations.............................................-42-
7.5 Loans; Advances..........................................................................-42-
7.6 [Intentionally Omitted]..................................................................-42-
7.7 Dividends; Distributions.................................................................-42-
7.8 Salary Increases.........................................................................-42-
7.9 Nonsolicitation..........................................................................-42-
SECTION 8......................................................................................................-42-
ADDITIONAL COVENANTS OF THE PARTIES...................................................................-42-
8.1 Trade....................................................................................-42-
8.2 Accounts Receivable......................................................................-43-
8.3 Providence Payment Proceeds..............................................................-44-
8.4 Application for Transfer of Control......................................................-44-
8.5 Adjustments at Closing...................................................................-45-
8.6 Brokerage................................................................................-46-
8.7 Risk of Loss.............................................................................-46-
8.8 Actions With FCC.........................................................................-46-
8.9 Purchaser's Financing....................................................................-47-
8.10 Cooperation.............................................................................-47-
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
8.11 Dismissal of Litigation.................................................................-47-
8.12 HSR Filing..............................................................................-47-
8.13 Name Changes............................................................................-47-
8.14 Agreement Not to Employ.................................................................-48-
8.16 Bond Payoff Agreement...................................................................-48-
8.17 Public Announcements....................................................................-48-
8.18 Notice of Breaches......................................................................-48-
8.19 Assignments.............................................................................-48-
8.20 Finova Prepayment.......................................................................-48-
8.21 Control.................................................................................-48-
8.22 Purchaser's Employee Benefit Plans......................................................-48-
SECTION 9......................................................................................................-49-
THE CLOSING...........................................................................................-49-
9.1 Closing Date.............................................................................-49-
9.2 Closing Documents........................................................................-49-
9.3 Extension of Closing Date................................................................-50-
SECTION 10.....................................................................................................-50-
CONDITIONS TO THE SELLERS' OBLIGATIONS TO CLOSE.......................................................-50-
10.1 Opinion of the Purchaser's Counsel......................................................-50-
10.2 Representations and Warranties..........................................................-51-
10.3 No Litigation...........................................................................-51-
10.4 Other Certificates......................................................................-51-
10.5 Corporate Action........................................................................-52-
10.6 Acts to be Performed....................................................................-52-
10.7 FCC Grant of Consent....................................................................-52-
10.8 HSR Clearance...........................................................................-52-
10.9 Sellers' Representations and Warranties.................................................-52-
SECTION 11.....................................................................................................-52-
CONDITIONS TO THE PURCHASER'S OBLIGATION TO CLOSE.....................................................-52-
11.1 Opinion of the Companies' and the Sellers' Counsel......................................-52-
11.2 Representations, Warranties and Covenants...............................................-55-
11.3 No Litigation...........................................................................-55-
11.4 Other Certificates......................................................................-55-
11.5 Corporate Action........................................................................-56-
11.6 Acts to Performed.......................................................................-56-
11.7 No Material Loss........................................................................-56-
11.8 Filings, Consents, Approvals and Estoppel Certificates..................................-56-
11.9 FCC Grant of Consent....................................................................-56-
11.10 Senior Credit Agreement................................................................-56-
11.11 Certain Transactions...................................................................-56-
11.12 Sale of All TMBC Shares................................................................-56-
11.13 HSR Clearance..........................................................................-56-
SECTION 12.....................................................................................................-57-
INDEMNIFICATION.......................................................................................-57-
12.1 Indemnification by the Sellers..........................................................-57-
12.2 Indemnification by the Purchaser........................................................-57-
12.3 Procedure for Indemnification...........................................................-57-
12.4 Limitation Period.......................................................................-58-
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
12.5 Basket..................................................................................-58-
SECTION 13.....................................................................................................-59-
TERMINATION, EXPIRATION, REPUDIATION; REMEDIES........................................................-59-
13.1 Termination.............................................................................-59-
13.2 Specific Performance....................................................................-60-
13.3 Disputes Regarding Termination..........................................................-60-
13.4 Limitation of the Purchaser's and Citadel's
Liability...............................................................................-60-
13.5 Limitation of the Seller's and the Companies'
Liability...............................................................................-61-
SECTION 14.....................................................................................................-61-
GENERAL .............................................................................................-61-
14.1 Governing Law...........................................................................-61-
14.2 Dispute Resolution; Consent to Jurisdiction
and Venue...............................................................................-61-
14.3 Notices.................................................................................-61-
14.4 Entire Agreement........................................................................-62-
14.5 Headings................................................................................-62-
14.6 Schedules; Exhibits.....................................................................-62-
14.7 Expenses................................................................................-62-
14.8 Amendment...............................................................................-63-
14.9 Waiver..................................................................................-63-
14.10 Assignment.............................................................................-63-
14.11 Prior Control..........................................................................-63-
14.12 Legal Representation...................................................................-63-
14.13 Counterparts...........................................................................-63-
</TABLE>
<PAGE> 8
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement"), dated as of the
17th day of March, 1997, but executed, delivered and effective as of the 28th
day of March, 1997, by and among (i) TELE-MEDIA BROADCASTING COMPANY, a
Delaware corporation ("TMBC"), TELE-MEDIA BROADCASTING COMPANY OF CENTRE
REGION, a Delaware corporation ("Centre"), and TELE-MEDIA BROADCASTING HOLDING
CORPORATION, a [Delaware] corporation ("Holding") (each a "Company" and
collectively, the "Companies"); (ii) ROBERT E. TUDEK and EVERETT I. MUNDY (each
a "Seller" and collectively, the "Sellers"); and (iii) CITADEL BROADCASTING
COMPANY, a Nevada corporation (the "Purchaser"), and CITADEL COMMUNICATIONS
CORPORATION, a Nevada corporation ("Citadel").
PREAMBLE:
WHEREAS, each of the Companies, directly or through various
subsidiaries, is the licensee of and owns and operates pursuant to FCC Licenses
the Existing Radio Stations; and
WHEREAS, the Sellers are the holders of an aggregate of 15,000 shares
of voting common stock, $0.01 par value per share, which constitute all of the
issued and outstanding shares of capital stock of TMBC (the "TMBC Shares"); and
WHEREAS, the Sellers are the holders of an aggregate of 1,000 shares
of voting common stock, $0.10 par value per share, which constitute all of the
issued and outstanding shares of capital stock of Centre (the "Centre Shares");
and
WHEREAS, the Sellers are the holders of an aggregate of 1,000 shares
of voting common stock, $1.00 par value per share, which constitute all of the
issued and outstanding shares of capital stock of Holding (the "Holding
Shares"); and
WHEREAS, on or before the Effective Time, all of the Options shall be
terminated, TMBC, Holding and Centre shall be merged so that TMBC will be the
survivor, and as a result thereof, upon the Closing, the TMBC Shares will
constitute all of the outstanding equity securities of the Companies; and
WHEREAS, subject to the terms and conditions hereinafter set forth,
the Sellers desire to sell to the Purchaser, and the Purchaser desires to
acquire from the Sellers, for the consideration hereinafter provided, the TMBC
Shares.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
<PAGE> 9
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall have the
meanings assigned to them below:
"1996 Cash Flow" means for the fiscal year ended December 31, 1996,
the net income of the Existing Radio Stations for such period:
(i) plus the sum of the following, to the
extent deducted in determining such net
income for such period:
(A) losses from sales, transactions,
exchanges and other dispositions of
Property not in the ordinary course
of business;
(B) interest, fees or other charges
paid or accrued on Indebtedness for
Borrowed Money, including, without
limitation, interest on capitalized
leases that is imputed in
accordance with GAAP;
(C) depreciation and amortization of
assets;
(D) income taxes;
(E) the costs and expenses of the
Litigation;
(F) expenses incurred in connection
with Trade Agreements;
(G) management fees and general
corporate overhead; and
(H) payments made pursuant to the
Non-Competition and Consultation
Agreement dated as of August 1,
1996 by and between Tele-Media
Broadcasting Company of State
College and Doris Clark;
(ii) minus the sum of the following, to the
extent included in determining such net
income for such period:
(A) gains from sales, transactions,
exchanges and other dispositions of
-2-
<PAGE> 10
property not in the ordinary course
of business;
(B) proceeds of any insurance; and
(C) revenue received in connection with
Trade Agreements.
"Accounts Receivable" means the accounts receivable of each of the
Companies and/or the Subsidiary Partnerships, other than the Trade Receivables
and the Providence Payment.
"Acquisition Agreements" means and includes that certain undated Asset
Purchase Agreement by and between Tele-Media Broadcasting of Quincy Limited
Partnership and Magnum Broadcasting, Inc.; that certain proposed Asset Purchase
Agreement by and between Tele-Media Broadcasting Company and Music
Broadcasting, Inc. relating to WVAM-AM and WPRR-FM; that certain Asset Purchase
Agreement dated August 1, 1996 by and between Tele-Media Broadcasting Company
and 4M Broadcasting, Inc.; and that certain undated Asset Purchase Agreement by
and between Tele-Media Broadcasting Company and WARM Broadcasting Company, Inc.
"Acquisition Debt" means the principal amount of Indebtedness for
Borrowed Money advanced to the Companies or any of the Subsidiary Partnerships
after the date hereof and used by them to pay the Acquisition Purchase Price,
or any portion thereof, for an Acquisition, associated working capital and
other costs incurred for Acquisitions.
"Acquisitions" means the purchase by the Companies or one or more of
the Subsidiary Partnerships of the Additional Radio Stations pursuant to the
Acquisition Agreements. The term "Acquisition" refers to any of the
Acquisitions, as required by the context.
"Acquisition Purchase Price" means the total cash purchase price paid
by the Companies and/or the Subsidiary Partnerships for the Acquisitions
pursuant to the Acquisition Agreements, including any partial payments or
deposits made by the Companies to the sellers of any of the Additional Radio
Stations.
"Act" means the Communications Act of 1934, as amended from time to
time.
"Additional Radio Stations" means, to the extent to be purchased or
already purchased by a Company or one of its Affiliates before the Closing,
radio stations WPRR-FM and WVAM-AM, each licensed to Altoona, Pennsylvania;
radio station WARM-AM licensed to Scranton, Pennsylvania; radio station WKQV-AM
licensed to Pittston, Pennsylvania; radio station WKQV-FM licensed to
-3-
<PAGE> 11
Olyphant, Pennsylvania; radio station WBHT-FM licensed to Mountain-Top,
Pennsylvania; radio station WMGS-FM licensed to Wilkes-Barre, Pennsylvania;
radio stations WAZL-FM and WZMT-FM, each licensed to Hazleton, Pennsylvania;
and radio station WBRJ-FM licensed to Mt. Sterling, Illinois.
"Affiliate" (a) of any Person means any other Person that directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, such first Person and (b) of a Company includes any Affiliate as
defined in clause (a) above and, in addition, to the extent not otherwise
deemed an Affiliate by clause (a) above, each of the Subsidiary Partnerships.
For purposes of this definition, the term "control" (including the correlative
meanings of the terms "controls," "controlled by," and "under direct or
indirect control with") as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Ancillary FCC Applications" has the meaning given thereto in Section
8.4.
"Ancillary FCC Grants of Consent" has the meaning given thereto in
Section 8.4.
"Assigned Contracts" has the meaning given thereto in Section 2.3(d).
"Assumed Obligations" has the meaning given thereto in Section 2.4.
"Audited Financial Statements" has the meaning given thereto in
Section 6.14.
"Bonds" means the Senior Discount Notes due June 15, 2004 in the face
amount at maturity of $47,811,000.00 issued by TMBC pursuant to Purchase
Agreement dated as of June 9, 1994, as amended on June 15, 1995, December 15,
1995 and June 15, 1996 (the "Bond Purchase Agreement").
"Bond Payoff Amount" means the aggregate amount due pursuant to the
Bond Payoff Agreement.
"Bond Payoff Agreement" means the agreement by and between Purchaser
and the holders of the Bonds and Warrants setting forth the amounts necessary
to extinguish all obligations to the holders of the Bonds and Warrants from the
Sellers, the Companies and the Subsidiary Partnerships.
"Business" has the meaning given thereto in Section 3.1.
-4-
<PAGE> 12
"Centre Pledge" means the Stock Pledge and Security Agreement between
the Sellers and STS Broadcasting, Inc. dated June 30, 1995.
"Centre Shares" has the meaning given thereto in the Preamble.
"Closing" means the consummation of the transactions contemplated
herein in accordance with the provisions of Section 9.
"Closing Date" has the meaning given thereto in Section 9.1.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Covenant" has the meaning given thereto in Section 2.6.
"Effective Time" means at 11:59 p.m., Eastern Time, on the Closing
Date.
"Environmental Claims" means and includes, without limitation: claims,
demands, suits, causes of action for personal injury or lost use of property,
or consequential damages to the extent any of the foregoing arise directly or
indirectly out of Environmental Conditions; actual or threatened damages to
natural resources; claims for the recovery of response costs, or administrative
or judicial orders directing the performance of investigations, response or
remedial actions under CERCLA, RCRA, or other Environmental Laws; a requirement
to implement "corrective action" pursuant to any order or permit issued
pursuant to RCRA; claims for restitution, contribution or equitable indemnity
from third parties or any governmental agency; fines, penalties, Liens against
property; claims for injunctive relief or other orders or notices of violation
from Governmental Authorities; and, with regard to any present or former
employees, exposure to or injury from Environmental Conditions.
"Environmental Conditions" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping or threatened release of Hazardous
Materials by the Companies. With respect to claims by employees, Environmental
Conditions also includes the exposure of Persons to Hazardous Materials within
work places on any real estate owned or occupied by the Companies and/or the
Subsidiary Partnerships.
"Environmental Laws" has the meaning given thereto in the definition
of Hazardous Materials.
-5-
<PAGE> 13
"Environmental Noncompliance" means (a) the release or threatened
release as a result of the activities of the Companies or any of the Subsidiary
Partnerships of any Hazardous Materials into the environment, any storm drain,
sewer, septic system or publicly owned treatment works, in violation of any
effluent or emission limitations, standards or other criteria or guidelines
established by any federal, state or local law, regulation, rule, ordinance,
plan or order; and (b) any facility operations, procedures, designs, etc. which
do not conform to the statutory or regulatory requirements of the CAA, the CWA,
the TSCA, the RCRA or any other Environmental Laws intended to protect public
health, welfare and the environment.
"Escrow Agent" means PNC Bank, National Association.
"Escrow Agreement" means that certain Escrow Agreement dated as of the
date hereof among the Purchaser, the Sellers and the Escrow Agent.
"Escrow Deposit" has the meaning given thereto in Section 2.9.
"Existing Radio Stations" means radio stations WLKW-AM, WWLI-FM and
WPRO-FM, each licensed to Providence, Rhode Island; radio station WPRO-AM
licensed to East Providence, Rhode Island; radio station WRKZ-FM licensed to
Hershey, Pennsylvania; radio stations WEST-AM and WLEV-FM, each licensed to
Easton, Pennsylvania; radio station WQKK-FM licensed to Ebensburg,
Pennsylvania; radio station WGLU-FM licensed to Johnstown, Pennsylvania; radio
station WQWK-FM licensed to University Park, Pennsylvania; radio station
WIKN-FM licensed to Port Matilda, Pennsylvania; radio station WRSC-AM licensed
to State College, Pennsylvania; radio station WBLF-AM licensed to Bellefonte,
Pennsylvania; radio stations WQCY-FM, WTAD-AM and WMOS-FM, each licensed to
Quincy, Illinois; and radio stations WQXA-AM and WQXA-FM, each licensed to
York, Pennsylvania.
"Existing Financing Documents" means, collectively, the (a) Bond
Purchase Agreement, (b) Bonds, (c) Warrants, (d) Indenture dated as of June 9,
1994 between TMBC and Bank of Montreal Trust Company, (e) Warrant Agreement
dated June 9, 1994 between TMBC and the "Purchasers" defined therein (the
"Warrant Agreement"), (f) Registration Rights Agreement dated as of June 9,
1994 by TMBC for the benefit of the holders of the Bonds, (g) Registration
Agreement dated as of June 9, 1994 for the benefit of the holders of the
Warrants, (h) Participation Agreement dated June 9, 1994 among TMBC, the
holders of the Bonds and the Sellers, and (i) all other agreements,
certificates, exhibits, schedules and other written instruments executed or
delivered by any of the parties to any of the agreements described in clauses
(a)-(h) above in connection with any of the transactions contemplated thereby.
"Expiration Date" means November 15, 1997.
-6-
<PAGE> 14
"FCC" means the Federal Communications Commission.
"FCC Application" has the meaning given thereto in Section 8.4.
"FCC Grant of Consent" has the meaning given thereto in Section 8.4.
"FCC Licenses" means, with respect to a Station, the main station
license issued by the FCC for such Station, together with each of the other
consents, rights, licenses, permits and other authorizations issued by the FCC
and held by either of the Companies or a Subsidiary Partnership in connection
with, or pertaining to, the conduct of the business and operation of such
Station, together with any renewals and extensions thereof and any applications
therefor pending on the Closing Date, and any and all applications made by the
Companies for such consents, rights, licenses, permits and other
authorizations.
"Final Distribution" has the meaning given thereto in Section 2.7.
"Final Order" means a written action or order issued by the FCC or its
staff setting forth the FCC Grant of Consent (or a denial thereof) for purposes
of Section 8.4, (a) which action or order has not been vacated, reversed,
stayed, enjoined, set aside, annulled or suspended, and (b) with respect to
which action or order (i) no timely requests have been filed and are pending
for administrative or judicial review, rehearing, reconsideration, appeal or
stay, and the time period for filing any such requests and for the FCC to set
aside the action on its own motion under the provisions of the Act or the FCC
Rules has expired, or (ii) in the event of review, reconsideration or appeal,
the time for further review, reconsideration or appeal under the Act or rules
promulgated under the Act has expired.
"Finova" means FINOVA Capital Corporation.
"Finova Payoff Amount" means the aggregate amount of indebtedness,
including principal, interest and prepayment penalties, due under the Senior
Credit Agreement as of the Closing Date.
"Finova Payoff Letter" has the meaning given thereto in Section 6.2.
"Finova Prepayment Penalty" means the amount due to Finova as a
prepayment penalty under the Senior Credit Agreement as a result of the payment
of the Finova Payoff Amount on the Closing Date, as set forth in the Finova
Payoff Letter.
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"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis during
the periods involved.
"Governmental Authority" means any government, whether federal, state
or local, or any other political subdivision thereof, or any agency, tribunal
or instrumentality of any such governmental or political subdivision, or any
other Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Receivables" has the meaning given thereto in Section
3.10.
"Hazardous Materials" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases, including but not limited to substances defined as "PCBs,"
"hazardous wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials," "petroleum," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C.
Section 9601 et seq.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C.
Section 2601 et seq.; the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. Section 9601 et seq.; the Clean Water Act ("CWA"), 33 U.S.C.
Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f
et seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq. or any
similar state law; and in the plans, rules, regulations or ordinances adopted,
or other criteria and guidelines promulgated pursuant to the preceding laws
or other similar laws, regulations, rules or ordinances now in effect
(collectively, the "Environmental Laws"); and any other substances, constituents
or wastes subject to environmental regulations under any applicable federal,
state or local law, regulation or ordinance.
"Holding Shares" has the meaning given thereto in the Preamble.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended from time to time.
"HSR Filing" has the meaning given thereto in Section 8.12.
"Indebtedness for Borrowed Money" means (a) all indebtedness of any
Company or any Subsidiary Partnership in respect of money borrowed (including,
without limitation, indebtedness which represents the unpaid amount of the
purchase price of any property), (b) all indebtedness of any Company or any
Subsidiary Partnership evidenced by a promissory note, bond or similar written
obligation to pay money, (c) all indebtedness guaranteed by a
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Company or any Subsidiary Partnership or for which a Company or any Subsidiary
Partnership is contingently liable, including, without limitation, guaranties
in the form of an agreement to repurchase or reimburse, and any commitment by
which any such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit and (d) all
monetary obligations of a Company or any Subsidiary Partnership under a lease
or similar arrangement, which obligations are appropriately classified and
accounted for as capital obligations on a balance sheet of such Person under
GAAP.
"Intellectual Property" has the meaning given thereto in Section
2.3(e).
"Knowledge of Purchaser" as used herein with respect to Purchaser
means the actual knowledge of Lawrence R. Wilson, Donna Heffner, Stuart R.
Stanek and/or R. Stephen Campbell.
"Knowledge of Sellers" as used herein with respect to the Sellers, the
Companies, and the Subsidiary Partnerships means the actual knowledge of Robert
E. Tudek, Everett I. Mundy, Ira D. Rosenblatt, Scott E. Cody and/or Allen
Jacobson.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, easement, transfer restriction, lien (statutory or otherwise) or
security agreement of any kind or nature whatsoever.
"Litigation" means the action captioned Citadel Communications Corp.
v. Tele-Media Broadcasting Co., Robert E. Tudek, Everett I. Mundy, Scott Cody
and Ira Rosenblatt pending before the United States District Court for the
Middle District of Pennsylvania at Action No. 4:CV-95-1870.
"Metro Area" shall have the meaning given to that term by Arbitron.
"Non-Refundable Payment" has the meaning given thereto in Section 2.8.
"Obligations" means, without duplication, all (a) Indebtedness for
Borrowed Money, (b) accounts payable, accrued liabilities and other liabilities
and obligations of the type normally required by GAAP to be reflected on a
balance sheet, (c) commitments by which a Company or any Subsidiary Partnership
assures a creditor against loss, including the face amount of all letters of
credit and, without duplication, all drafts drawn thereunder, (d) obligations
guaranteed in any manner by a Company or any Subsidiary Partnership, (e)
obligations under capitalized leases in respect of which obligations a Company
or any Subsidiary Partnership is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures
a creditor against loss, (f) obligations under acceptance
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facilities, (g) obligations secured by a Lien on property of a Company or any
Subsidiary Partnership, (h) obligations under interest rate or currency
exchange or swap agreements, (i) unsatisfied obligations for "withdrawal
liability" to a "multiemployer plan" as such terms are defined under ERISA, (j)
indebtedness issued or obligation incurred in substitution or exchange for any
Obligations, (k) costs or expenses incurred by a Company or any Subsidiary
Partnership of any nature, whether or not currently payable and (l) other
liabilities or obligations of a Company or any Subsidiary Partnership, absolute
or contingent, known or unknown, whether or not normally required by GAAP to be
reflected on a balance sheet.
"Option Termination" means the termination of all of the Options and
the termination of the Option Agreement and all other agreements, certificates,
exhibits, schedules, and other written instruments executed or delivered in
connection with any of the transactions contemplated by the Option Agreement.
"Options" means those certain options to purchase shares of Common
Stock pursuant to Amended and Restated Option Agreement dated as of September
30, 1992 and amended and restated in its entirety as of June 9, 1994 (the
"Option Agreement"), by and among the Sellers and Alta Subordinated Debt
Partners, II, L.P., Customs House Partners, Fleet Mezzanine Capital, Inc.,
Fleet Mezzanine Partners and Brinson Trust Company, as Trustee of Institutional
Venture Capital Fund II (each, together with any other "Holders" as defined in
the Option Agreement, an "Option Holder").
"Other Acquisition Costs" means the actual out-of-pocket costs paid to
third parties by the Companies or the Subsidiary Partnerships for expenses
incurred by the Companies in connection with the Acquisitions, including but
not limited to the fees of its outside legal counsel and fees paid to Finova
for the financing for the Acquisitions, all with supporting documentation
reasonably satisfactory to the Purchaser.
"Owned Real Property" has the meaning given thereto in Section 2.3(b).
"Permitted Exceptions" has the meaning given thereto in Section
2.5(a).
"Person" means an individual, corporation, partnership, joint venture,
joint stock company, association, trust, business trust, unincorporated
organization, Governmental Authority, or any other entity of whatever nature.
"Personal Property" has the meaning given thereto in Section 2.3(a).
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"Providence Payment" means any and all amounts which may become
payable to Tele-Media Broadcasting Company of Providence Limited Partnership
from Marlin Broadcasting, Inc. pursuant to those certain Agreements dated
October 1, 1996 between Tele-Media Broadcasting Company of Providence Limited
Partnership and Marlin Broadcasting, Inc.
"Purchased Assets" has the meaning given thereto in Section 2.3.
"Purchased Radio Stations" means the Existing Radio Stations and the
Additional Radio Stations.
"Purchased Real Estate" has the meaning given thereto in Section
2.3(c).
"Quick Assets" means the cash, securities and other cash equivalents
of the Companies and the Subsidiary Partnerships and the Accounts Receivable
except for the Guaranteed Receivables, the Trade Receivables and the Providence
Payment.
"Real Property Leases" has the meaning given thereto in Section
2.3(c).
"Release Documents" has the meaning given thereto in Section 6.2.
"Reorganization" means a reorganization pursuant to which the
Companies are merged so that TMBC is the survivor and each of the Subsidiary
Partnerships thereby are dissolved and liquidated under applicable law, on
terms and conditions set forth in a written plan and agreement provided to the
Purchaser prior to effecting the Reorganization, without causing the Companies
or any of the Subsidiary Partnerships to recognize gain or loss for federal or
state income taxes purposes as a result thereof and without imposition of any
Obligations (other than Obligations of the Companies and the Subsidiary
Partnerships in existence prior to the Reorganization) which would be binding
upon the Companies from and after the Effective Time on the Closing Date such
that upon the effectiveness of the Reorganization TMBC will be the licensee and
the owner and operator pursuant to the FCC Licenses of each of the Existing
Radio Stations and to the extent acquired, the Additional Radio Stations.
"Restated Certificate of Incorporation of TMBC" means the Restated
Certificate of Incorporation of TMBC filed in the office of the State of
Delaware, Secretary of State, Division of Corporations on June 9, 1994.
"Sellers' FCC Problem" means any action, inaction, status or condition
of the Sellers, any Company, any Subsidiary Partnership or any of the Stations
now or hereafter owned by a Company or any
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Subsidiary Partnership, or the assertion of any charges or claims other than by
the Purchaser against any of the foregoing Persons or Stations, the result of
which is to delay, postpone, cause the FCC to set for hearing, or cause the
denial of, the FCC Approval of any or the Ancillary FCC Approvals.
"Senior Credit Agreement" means the Amended and Restated Loan
Agreement dated as of February 26, 1997 between Finova and the Subsidiary
Partnerships.
"Senior Debt" means the aggregate principal amount of indebtedness,
including accrued and unpaid interest, of any or all of the Companies and the
Subsidiary Partnerships outstanding pursuant to the Senior Credit Agreement.
"Shares" means the TMBC Shares, the Centre Shares and the Holding
Shares.
"Station" means any one of the Purchased Radio Stations.
"Subsidiary Partnerships" means and includes Tele-Media Broadcasting
Company of Hershey Limited Partnership, a Pennsylvania limited partnership;
Tele-Media Broadcasting Company of Lehigh Valley Limited Partnership, a
Pennsylvania limited partnership; Tele-Media Broadcasting Company of Providence
Limited Partnership, a Rhode Island limited partnership; Tele-Media
Broadcasting of Quincy Limited Partnership, an Illinois limited partnership;
Tele-Media Broadcasting Company of State College Limited Partnership, a
Pennsylvania limited partnership; Tele-Media Broadcasting Company of America
Limited Partnership, a Rhode Island limited partnership; Tele-Media
Broadcasting Company of Johnstown/Altoona Limited Partnership, a Pennsylvania
limited partnership; Tele-Media Broadcasting Company of Cambria County Limited
Partnership, a Pennsylvania limited partnership; Tele-Media Broadcasting
Company of York Limited Partnership, a Pennsylvania limited partnership;
Tele-Media Broadcasting Operating Company Limited Partnership, a Delaware
limited partnership; Tele-Media Broadcasting Company of Wilkes-Barre/Scranton
Limited Partnership, a Pennsylvania limited partnership and proposed licensee
of radio stations WARM-AM, WKQV-AM, WKQV-FM, WBHT-FM and WMGS-FM. The term
"Subsidiary Partnership" refers to any of the Subsidiary Partnerships, as the
context requires.
"Supplemental Financial Statements" has the meaning given thereto in
Section 6.14.
"Taxes" means all taxes, charges, fees, levies, or other assessments,
including income, gross receipts, excise, property, sales, transfer, license,
payroll, and franchise taxes, any taxes required by law to be withheld and any
taxes payable as a result of the consummation of the transactions contemplated
by this Agreement, which taxes are imposed by any Governmental Authority;
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and such term shall include any interest, penalties, or additions to taxes
attributable to such assessments.
"TMBC Shares" has the meaning given thereto in the Preamble.
"Trade Agreements" means those agreements entered into by the
Companies or any of the Subsidiary Partnerships (and with respect to any
Additional Radio Station, those agreements assumed by the Companies or the
Subsidiary Partnerships pursuant to the appropriate Acquisition Agreement) for
the sale of advertising time on any of the Purchased Radio Stations for
consideration other than cash.
"Trade Liabilities" means the aggregate liability of the Companies and
the Subsidiary Partnerships as of the Closing for unperformed time under the
Trade Agreements.
"Trade Receivables" means the value of the goods and services to be
received by the Companies and the Subsidiary Partnerships after the Closing
under the Trade Agreements, valued pursuant to Section 8.1.
"Trade Schedule" has the meaning given thereto in Section 8.1.
"Warrant Agreement" means the Warrant Agreement dated as of June 9,
1994 between TMBC and the holders of the Warrants.
"Warrants" means those 1,000 warrants to purchase an aggregate of
10,000 shares of non-voting common stock of TMBC issued by TMBC pursuant to the
Warrant Agreement.
SECTION 2
PURCHASE AND SALE OF THE SHARES; RELATED MATTERS
2.1 Purchase and Sale of the Shares. Subject to the terms and
conditions of this Agreement, and on the basis of the representations,
warranties, covenants and agreements herein contained, at the Closing, the
Sellers agree to sell, assign and convey to the Purchaser, and the Purchaser
agrees to purchase, acquire and accept from the Sellers, all of the TMBC
Shares.
2.2 Purchase Price and Payment.
(a) Subject to adjustment as provided in Section 8.5, the
aggregate purchase price for the TMBC Shares is equal to (i) the product of 11
times 1996 Cash Flow; plus (ii) the Acquisition Purchase Price paid by the
Companies prior to the Closing; plus (iii) the lesser of $1,200,000 or the sum
of (A) one-half of the Finova Prepayment Penalty and (B) the Other Acquisition
Costs; plus (iv) the amount by which the Bond Payoff Amount exceeds
$37,221,000; minus (v) $1,000,000; minus (vi) the aggregate amount
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of Indebtedness for Borrowed Money of the Companies and the Subsidiary
Partnerships as of the Effective Time on the Closing Date which is not
satisfied and paid off as of the Closing.
(b) At the Closing, the Purchaser shall deposit in
immediately available funds the cash portion of the aggregate purchase price
net of (i) the Non-Refundable Payment and (ii) the Escrow Deposit, only if it
has been delivered to the Sellers pursuant to Section 9.3, into an attorney
escrow account maintained by Pietragallo, Bosick and Gordon, Sellers' counsel,
and shall deliver the non-cash portion of the aggregate purchase price, if any,
pursuant to the Bond Payoff Agreement to Pietragallo, Bosick and Gordon.
Immediately thereafter, the Sellers shall commence and consummate the
Reorganization, the Sellers and the Purchaser shall make the deliveries set
forth in Section 9.2 and the purchase price shall be distributed on behalf of
the Purchaser with respect to subparagraphs (ii) and (v) and the Sellers as
follows:
(i) the Finova Payoff Amount to Finova;
(ii) the Bond Payoff Amount to the holders of
the Bonds and the Warrants;
(iii) the aggregate amount due the Option Holders
in respect of the Options;
(iv) to the extent not already paid off and
satisfied, the aggregate amount due the
holders of the Centre Pledge in respect
thereof;
(v) the aggregate amount of Indebtedness for
Borrowed Money of the Companies and the
Subsidiary Partnerships which is to be
satisfied and paid off as of the Closing to
the obligees on such Indebtedness for
Borrowed Money; and
(v) the balance to each of the Sellers in the
proportion or percentage set forth opposite
each Seller's name on Schedule 2.2 annexed
hereto.
2.3 Purchased Radio Stations. Following consummation of the
Acquisitions (to the extent consummated before the Closing) and the
Reorganization, each in accordance with Section 6.1, and after giving effect to
the Final Distribution described in Section 2.7, TMBC will not have any
Subsidiary Partnerships or other subsidiaries other than the Sellers, and as of
the Closing TMBC will own directly the following assets, and no others, subject
only to additions or deletions made in the ordinary course of business which
are permitted by the remaining provisions of this Agreement
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(the "Purchased Assets") but excluding those certain items of tangible personal
property described on Schedule 2.3X annexed hereto (the "Excluded Asset
Schedule"):
(a) All the tangible personal property, improvements and
fixtures of every kind or nature used or useful in the operation of the
Purchased Radio Stations in the ordinary course of business (the "Personal
Property"), including, without limitation, the personal property described on
Schedule 2.3 annexed hereto (the "Asset Schedule");
(b) The real property described on the Asset Schedule as
being owned by any Company or any of the Subsidiary Partnerships, and any real
property purchased by any Company or any of the Subsidiary Partnerships
pursuant to any of the Acquisitions (the "Owned Real Property");
(c) The leasehold interests pursuant to the real property
leases described on the Asset Schedule and any additional leasehold interests
acquired by any Company or any of the Subsidiary Partnerships pursuant to any
of the Acquisition Agreements (the "Real Property Leases" and collectively with
the Owned Real Property, the "Purchased Real Estate");
(d) All of the right, title and interest of any Company or
any of the Subsidiary Partnerships in and to those contracts, leases, licenses,
memberships, agencies, permits and agreements, other than the Real Property
Leases, to which (i) any Company or any of the Subsidiary Partnerships
presently is a party or an assignee of a party, which are described on the
Asset Schedule, or (ii) any Company or any of the Subsidiary Partnerships
becomes a party or an assignee of a party pursuant to any of the Acquisition
Agreements (the "Assigned Contracts");
(e) The call letters of the Purchased Radio Stations and all
of the copyrights, trademarks, trade names and other similar rights, including
applications and registrations therefor, used or useful in the past or present
operation of the Purchased Radio Stations in which any Company or any of the
Subsidiary Partnerships has any right, title or interest (or with respect to
each of the Additional Radio Stations will, upon consummation of the
Acquisition thereof, have any right, title or interest) including, without
limitation, those items listed on the Asset Schedule but excluding any right to
use, possess, control or otherwise obtain value from the name "Tele-Media"
(collectively, the "Intellectual Property");
(f) The Guaranteed Receivables;
(g) The Trade Receivables existing as of the Closing;
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(h) All of the right, title and interest of any Company or
any of the Subsidiary Partnerships in and to the Providence Payment, all as set
forth in Section 8.3;
(i) The FCC Licenses of the Purchased Radio Stations, a
complete list of which is included on the Asset Schedule;
(j) All financial and corporate records of each Company or
any of the Subsidiary Partnerships, and all books, records and accounts
relating to the operation of the Purchased Radio Stations, subject in each case
to the right of the Sellers to make and retain photocopies thereof for the
Sellers' personal use and reference and to obtain access to such books, records
and accounts in accordance with the provisions of Section 8.10;
(k) As of the date hereof, all other assets owned by each
Company or any Subsidiary Partnership which are used and useful in, and in the
case of any Affiliate other than the Subsidiary Partnerships which are used in,
connection with the operation of any of the Purchased Radio Stations as of the
date hereof, real and personal, tangible and intangible, but excluding any
documents relating to the Litigation; and
(l) All other assets acquired by any Company or any of their
Affiliates pursuant to the Acquisitions.
2.4 Assumed Obligations. Following consummation of the Acquisitions
and the Reorganization, each in accordance with Section 6.1, no Company and
none of the Subsidiary Partnerships will, as of the Effective Time on the
Closing Date, have any Obligations except (a) amounts due under the Bonds
(which amounts will be paid at the Closing as provided in Section 2.2(b)), (b)
amounts due under the Senior Credit Agreement (which amounts will be paid at
the Closing as provided in Section 2.2(b)), (c) the Trade Liabilities and (d)
those additional liabilities and obligations specifically identified on
Schedule 2.4 annexed hereto. The liabilities described in clauses (c) and (d)
above are collectively referred to herein as the "Assumed Obligations."
2.5 Real Property.
(a) Title to Real Property. As of the Closing, title to the
Owned Real Property shall be vested in fee simple in TMBC and each parcel of
Owned Real Property shall be in conformity with the representations and
warranties contained in Section 3.9(e) and shall be subject only to those title
exceptions expressly set forth in the Asset Schedule (the "Permitted
Exceptions") subject to the recording of the appropriate documents.
(b) Environmental Reports. Sellers and the Companies have
provided to the Purchaser copies of any and all written analyses, evaluations,
reports, surveys and similar writings in the
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possession of the Companies or any of their Affiliates, including, without
limitation, any "Phase I," "Phase II" or "Phase III" reports and any
environmental reports delivered by either Company or any of their Affiliates to
Finova pursuant to the Senior Credit Agreement, relating to the Environmental
Conditions of any of the Purchased Real Estate, all as described on Schedule
2.5 annexed hereto (the "Environmental Reports Schedule").
2.6 Covenant Not to Compete. At the Closing, each of the Sellers shall
execute a Covenant Not to Compete in the form annexed hereto as Exhibit 2.6
(the "Covenant") pursuant to which each Seller shall agree that neither he nor
any of his Affiliates (excluding Scott Cody and Ira C. Rosenblatt) shall
operate a radio station licensed to the Metro Area in which any of the
Purchased Radio Stations is licensed for a period of two years immediately
following the Closing.
2.7 Final Distribution. Subject to the provisions of Section 8.2 with
regard to the post-Closing collection of the Accounts Receivable, the Companies
shall distribute to the Sellers, on the Closing Date and immediately prior to
the Closing, the Quick Assets of the Companies existing as of such time after
the payment by the Companies, on or before the Effective Time on the Closing
Date, of (a) all of the Obligations of the Companies and the Subsidiary
Partnerships existing as of the Closing excepting only the Assumed Obligations
and the obligations to be satisfied pursuant to Section 2.2(b) (including
pay-off of the Options), and (b) without limiting the generality of clause (a)
above, (i) all payments, costs, expenses and other amounts required for the
consummation by the Companies of the Acquisitions, Option Termination and
Reorganization and (ii) the payment by the Companies of all of the costs and
expenses incurred by or on behalf of any Company or any of the Subsidiary
Partnerships or the Sellers in connection with the performance by any Company
or the Sellers of any of their obligations under this Agreement (the "Final
Distribution"). Prior to making the Final Distribution, the Companies shall
provide the Purchaser with a written statement thereof setting forth in
reasonable detail the manner in which the Final Distribution has been
determined and each of the foregoing payments has been taken into account. In
order to expedite delivery of the Final Distribution to the Sellers, the
parties shall cooperate in transferring the bank accounts of the Companies and
the Subsidiary Partnerships to the Sellers.
2.8 Non-Refundable Payment. Contemporaneously with the execution of
this Agreement, the Purchaser has paid the Sellers $500,000 in immediately
available funds. Promptly, but in no event later than two (2) business days,
after the Sellers submit the FCC Application to the FCC, all as set forth in
Section 8.4, the Purchaser shall pay the Sellers $250,000. Promptly, but in no
event later than two (2) business days, after the Sellers submit the filings
required of the Sellers pursuant to the HSR Act, all as
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set forth in Section 8.12, the Purchaser shall pay the Sellers $250,000. Each
of the above-described payments (collectively, the "Non-Refundable Payments")
will be fully earned by the Sellers as of, in the case of the first payment,
when the Sellers execute and deliver this Agreement, in the case of the second
payment, when the Sellers execute and submit the FCC Application, and in the
case of the third payment, when the Sellers execute and submit the filings
required of them pursuant to the HSR Act. The Non-Refundable Payments are not
refundable by the Sellers to the Purchaser under any circumstances.
2.9 Escrow Deposit. Contemporaneously with the execution of this
Agreement, the Purchaser has deposited an irrevocable letter of credit in the
amount of $2,000,000 (the "Escrow Deposit") with the Escrow Agent. The Escrow
Agent shall hold and distribute the Escrow Deposit in accordance with the terms
of the Escrow Agreement. In the event this Agreement is terminated, the Escrow
Deposit shall be distributed pursuant to the terms of Section 13.1.
SECTION 3
REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND THE SELLERS
In connection with the purchase and sale of the TMBC Shares hereunder,
and in order to induce the Purchaser to enter into and consummate the
transactions contemplated by this Agreement, the Companies and the Sellers
hereby jointly and severally represent and warrant to the Purchaser, as of the
date hereof and as of the Closing Date (except for representations and
warranties expressly and specifically relating to a time or times other than
the date hereof or thereof, which shall be made as of the specified time or
times), that, with respect to the Existing Stations, and with respect to the
Additional Radio Stations solely from and after the date of purchase of any
such Additional Radio Station, except as set forth in Schedule 3.0 annexed
hereto (the "Sellers' Disclosure Schedule"):
3.1 Organization and Qualification. The Companies are duly organized,
validly existing and in good standing under the laws of the State of Delaware
and have full corporate power and authority to own their respective assets and
properties and to conduct the business in which they are now engaged (the
business in which the Companies are now engaged and the business in which the
Companies will as of the Closing be engaged are referred to in this Agreement,
collectively, as the "Business"). Each of the Companies is in good standing in
each other jurisdiction wherein the failure to so qualify would have a material
adverse effect on the Business or the properties of such Company. Each
Subsidiary Partnership is duly organized, validly existing and in good standing
under the laws of its state of formation and has full power and authority to
own its assets and property and to conduct the business in which it
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is now engaged. Each Subsidiary Partnership is in good standing in each of the
jurisdictions wherein the failure to so qualify would have a material adverse
effect on the Business or the properties of such Subsidiary Partnership. Except
for the Sellers and the Subsidiary Partnerships, the Companies do not have any
Affiliates or any other subsidiaries or own any capital stock or other
proprietary interest, directly or indirectly, in any other corporation,
association, trust, partnership, joint venture or other entity with an interest
in any of the Purchased Radio Stations and do not have any agreement with any
Person to acquire any such capital stock or other proprietary interest. The
beneficial ownership of each Subsidiary Partnership is fully and accurately
disclosed on the Sellers' Disclosure Schedule. As of the Effective Time, each
of the Subsidiary Partnerships will have been dissolved and liquidated in
accordance with applicable law, without further liability or obligation on the
part of the Companies and no Person will have any interest, absolute or
contingent, vested or unvested, in any of the Existing Radio Stations and to
the extent acquired, the Additional Radio Stations, or the assets thereof
except the interest of the Sellers pursuant to the ownership of the TMBC
Shares, the interest of the warrant holders pursuant to the Warrants and the
interest of the lender under the Senior Credit Agreement by virtue of the Lien
securing the Senior Debt. Each of the Companies has full power, authority and
legal right and all necessary approvals, permits, licenses and authorizations
to own its properties and to conduct the Business. The copies of the Restated
Certificate of Incorporation of TMBC, the Certificate of Incorporation of
Centre as amended, the Certificate of Incorporation of Holding, and the Bylaws
of the Companies including all amendments thereto and restatements thereof have
been delivered to the Purchaser and are true, complete and correct. The copies
of the partnership agreements and the certificates of limited partnership of
each of the Subsidiary Partnerships have been delivered to the Purchaser and
are true, complete and correct.
3.2 Authority. The execution and delivery of this Agreement by each
Company, the performance by each Company of its covenants and agreements
hereunder and the consummation by each Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action. This
Agreement has been duly authorized, executed and delivered by each Seller. This
Agreement constitutes the valid and legally binding agreement of each Company
and each Seller, enforceable against each Company and each Seller in accordance
with its terms.
3.3 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Restated Certificate of
Incorporation of TMBC, the Certificate of Incorporation of Centre, as amended,
the Certificate of Incorporation of Holding, or the Bylaws of any Company, or
any
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law, rule, regulation, writ, judgment, injunction, decree, determination, award
or other order of any Governmental Authority, or violates or will violate, or
conflicts with or will conflict with, or will result in any breach of any of
the terms of, or constitutes or will constitute a default under or results in
or will result in the termination of or the creation or imposition of any Lien
pursuant to, the terms of any contract, commitment, agreement, understanding or
arrangement of any kind to which any Seller or Company or any of the Subsidiary
Partnerships is a party or by which any Seller or Company or any of the
Subsidiary Partnerships or any of the assets of any Seller or Company or any of
the Subsidiary Partnerships is bound. Except for the FCC Approval, filing and
expiration of the applicable waiting period under the HSR Act and the consents
disclosed on the Sellers' Disclosure Schedule, no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
3.4 Capitalization. The authorized capital stock of TMBC consists of
35,000 shares of common stock, of which 25,000 shares are shares of voting
common stock and 10,000 shares are shares of non-voting common stock of which
15,000 share of voting stock are issued and outstanding. The authorized capital
stock of Centre consists of 1,000 shares of common stock, all of which are
voting common stock. 1,000 shares of common stock constitute all of the
outstanding shares of capital stock of Centre. The authorized capital stock of
Holding consists of 1,000 shares of common stock. 1,000 shares of common stock
constitute all of the outstanding shares of capital stock of Holding. All of
the Shares have been duly and validly authorized and issued and are fully paid
and non-assessable and are owned beneficially and of record by the Sellers.
Except for the Warrants (which will be terminated at the Closing as provided in
Section 2.2(b)(ii)) and the Options (which will be terminated before or
contemporaneously with the Closing in accordance with Section 6.1), there are
no outstanding subscriptions, warrants, options, calls, commitments or other
equity securities, or rights or agreements with respect to any of the
foregoing, to which the Companies or the Sellers are bound relating to the
issuance, sale or redemption of the Shares or any other shares of capital stock
or other securities of the Companies and no other Persons (other than the
holders of the Warrants and the Options pursuant to the provisions thereof)
other than the Sellers have any interest, absolute or contingent, vested or
unvested, in the capital stock of the Companies. No shares of capital stock or
other securities of the Companies are reserved for any purpose (other than for
issuance upon exercise of the Options and the Warrants).
3.5 Financial Statements. The Companies and the Sellers have
delivered to the Purchaser the following financial statements: (a)
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the audited consolidated balance sheets of TMBC as of December 31, 1995 and the
related consolidated statements of income and cash flows for the period then
ended; (b) the audited consolidated balance sheets of TMBC as of December 31,
1994 and the related consolidated statements of income and cash flows for the
period then ended; (c) the audited consolidated balance sheets of TMBC as of
December 31, 1993 and the related consolidated statements of income and cash
flows for the period then ended; and (d) the unaudited consolidated balance
sheets of TMBC as of December 31, 1996 (the "Latest Balance Sheets") and the
related consolidated statements of income for the twelve-month period then
ended. Each of the foregoing financial statements (including in all cases the
notes thereto, if any) (i) is (and with respect to the Supplemental Financial
Statements will upon delivery thereof by TMBC to the Purchaser be) accurate and
complete in all material respects, (ii) is (and with respect to the
Supplemental Financial Statements will upon delivery thereof by the Companies
to the Purchaser be) consistent with the books and records of the Companies and
their Affiliates (which, in turn, are accurate and complete in all material
respects), and (iii) presents (and with respect to the Supplemental Financial
Statements will upon delivery thereof by the Companies to the Purchaser
present) fairly the consolidated balance sheets and results of operations of
TMBC and its subsidiaries, in accordance with GAAP, consistently applied, as of
the dates and for the periods set forth therein, subject in the case of the
unaudited financial statements to the lack of footnote disclosure and changes
resulting from normal year-end audit adjustments (none of which would, alone or
in the aggregate, be materially adverse to the financial condition, operating
results, assets, operations or business prospects of TMBC taken as a whole).
3.6 Absence of Certain Changes. Subsequent to December 31, 1996, there
has not been any (a) material adverse change in the condition of any Company or
any of the Subsidiary Partnerships, financial or otherwise, or in the results
of operations, assets, liabilities or business of any Company or any of the
Subsidiary Partnerships; (b) damage or destruction, whether or not insured,
materially affecting the business operations of any Company or any of the
Subsidiary Partnerships; (c) labor dispute (meaning a grievance or protest by
more than two employees acting in concert with other employees regarding
conditions or terms of employment) or threatened labor dispute involving any of
the employees of any Company or any of the Subsidiary Partnerships; (d) actual
or threatened dispute pertaining to any Company or any of the Subsidiary
Partnerships with the suppliers of any Company or any of the Subsidiary
Partnerships which may materially affect the business of such Company or
Subsidiary Partnership; (e) change in the methods or procedures of any Company
or any of the Subsidiary Partnerships for billing or collection of customer
accounts or recording of customer accounts receivable or reserves for doubtful
accounts; (f) except for operational changes encompassed by the provisions of
Sections 6, 7 and 8, other material change in the
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customary methods of operations of any Company or any of the Subsidiary
Partnerships; (g) except in the ordinary course of business or to the extent
not material to the Business or financial condition of any Company or any of
the Subsidiary Partnerships, Accounts Receivable written off as uncollectable
or reserve for any Accounts Receivable established, sale or transfer of any
tangible or intangible asset used or useful in the operation of any of the
Purchased Radio Stations, mortgage, pledge or imposition of any Lien on any
such asset, lease of real property, machinery, equipment or building with
respect to any of the Purchased Radio Stations entered into or modification,
amendment or cancellation of any of its existing leases relating to any of the
Purchased Radio Stations, or cancellation of any debt or claim; (h) except for
the Final Distribution to be made on the Closing Date in accordance with
Section 2.7 and as otherwise set forth on the Sellers' Disclosure Schedule,
declaration or payment of any dividend or any other distribution in respect of
the capital stock or other securities or equity interests of any Company or any
of the Subsidiary Partnerships, or, directly or indirectly, any purchase,
redemption, issuance, or other acquisition or disposition by any Company or any
of the Subsidiary Partnerships of any shares of capital stock or other
securities or equity interests or grant of any option or making of any
commitment relating to its authorized shares of capital stock or equity
interests; (i) payment or discharge of any outstanding Obligations (except in
the ordinary course of business); (j) except for the incurrence of Acquisition
Debt, incurrence of any Indebtedness for Borrowed Money; or (k) liability or
obligation (contingent or otherwise) incurred under agreements or otherwise,
except current liabilities entered into or incurred in the ordinary course of
business consistent with past practices.
3.7 Taxes. Each Company and each of the Subsidiary Partnerships has
filed or caused to be filed on a timely basis all federal, state, local and
other tax returns, reports and declarations required to be filed by it and each
Company and each of the Subsidiary Partnerships has paid all Taxes which each
is required to pay (including, but not limited to, income, franchise, sales,
use, unemployment, withholding, social security and workers' compensation taxes
and estimated income and franchise tax payments, and penalties and fines) due
and payable with respect to the periods covered by such returns, reports or
declarations and all subsequent periods up to and including the Closing Date,
including any Taxes relating to or resulting from the Reorganization, or
pursuant to any assessment received by it in connection with such returns,
reports or declarations. All returns, reports and declarations filed by or on
behalf of each Company and each of the Subsidiary Partnerships are true,
complete and correct in all material respects. No deficiency in payment of any
Taxes for any period has been asserted by any taxing authority which remains
unsettled at the date hereof, no written inquiries have been received by any
Company or any of the Subsidiary Partnerships from
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any taxing authority with respect to possible claims for taxes or assessments,
and there is no basis for any additional claims or assessments for Taxes. Since
the date of the Latest Balance Sheets, no Company and none of the Subsidiary
Partnerships has incurred any liability for Taxes other than in the ordinary
course of business and all Taxes attributable to any Company or any of the
Subsidiary Partnerships or their respective income, operations or properties
accruing through the Closing shall have been paid in full by the Companies and
the Subsidiary Partnerships prior to the Closing (or reflected as a proration
pursuant to Section 8.5), regardless of whether such Taxes otherwise would have
been then due and payable. No tax returns of any Company or any of the
Subsidiary Partnerships have ever been audited. No Company and none of the
Subsidiary Partnerships has agreed to the extension of the statute of
limitations with respect to any tax return. There are no assessments relating
to any Company's past tax returns or any Subsidiary tax return pending or
threatened. The Companies and each of the Subsidiary Partnerships have
delivered to the Purchaser copies of the federal and state income (or
franchise) tax returns filed by the Companies for the last three years.
3.8 Asset Schedule. The Asset Schedule includes a complete and
accurate (a) listing of all of the Personal Property; (b) description of all
Assigned Contracts, none of which requires any consent of third parties in
connection with the transactions contemplated hereby except as indicated in the
Seller's Disclosure Schedule; (c) description of all of the Intellectual
Property; and (d) listing of all of the FCC Licenses of the Existing Radio
Stations, and to the extent acquired, the Additional Radio Stations, all of the
foregoing of which will, as of the Closing, be owned and held directly by the
TMBC.
3.9 Title to and Condition of Property.
(a) Title. TMBC will as of the Effective Time have good,
marketable and exclusive title to and undisputed possession of all of the real
and tangible personal property and improvements included in the Purchased
Assets. The Purchased Assets will, as of the Closing, be free and clear of all
Liens, subject only to the Assumed Obligations, the Liens in favor of Finova
under the Senior Credit Agreement securing the Senior Debt (all of which shall
be released at or immediately after the Closing) and the Permitted Exceptions.
The Companies will not, as of the Closing, own any assets other than the
Purchased Assets.
(b) Condition. The Personal Property is as-is, where-is and
in such condition and state of repair so that the Existing Radio Stations can
operate consistent with past practices.
(c) Insurance. The Owned Real Property and Personal Property
included among the Purchased Assets are and will be insured through the Closing
Date in the amounts and pursuant to the
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coverages contained in the existing policies of insurance set forth in Sellers'
Disclosure Schedule.
(d) Sufficiency of Assets. The Purchased Assets include all
of the assets, in sufficient nature, condition and quantity, to permit the
Purchaser to operate the Existing Radio Stations and to the extent acquired,
the Additional Radio Stations, immediately upon the Closing in the ordinary
course of business and consistent with the past practices of the Companies and
the Subsidiary Partnerships at the Existing Radio Stations. Neither the
Companies nor any of their Affiliates has, since December 31, 1996, removed any
material item of Personal Property from any of the Purchased Radio Stations
other than removals in the ordinary course of business which were not done in
contemplation of the transactions contemplated hereby.
(e) Purchased Real Estate.
(i) The Asset Schedule contains an accurate
description of the location of the Purchased Real Estate, the type of facility
located on such Purchased Real Estate and whether such Purchased Real Estate is
owned or leased. TMBC will as of the Effective Time have good title to the
Purchased Real Estate, in fee simple in the case of Owned Real Property, and a
valid leasehold interest in the case of the Real Property Leases, subject, with
respect to the Owned Real Property and as of the Closing, only to the Permitted
Exceptions.
(ii) The Purchased Real Estate (A) is not subject to
any covenant or restriction preventing or limiting in any material respect the
consummation of the transactions contemplated hereby, except for any consent
listed on the Asset Schedule required of the landlords under the Real Property
Leases and (B) will at the Effective Time be held by TMBC free and clear of all
Liens except, as to the Owned Real Property, the Permitted Exceptions.
(iii) The use for which the Owned Real Property and
the property leased by the Companies or any of the Subsidiary Partnerships
pursuant to the Real Property Leases is zoned, permits the use thereof for the
business of each of the Purchased Radio Stations consistent with past
practices. The use and occupancy of the Purchased Real Estate by the Companies
and the Subsidiary Partnerships are in compliance in all material respects with
all regulations, codes, ordinances and statutes applicable to the Companies and
their Affiliates and neither the Companies nor their Affiliates has received
any notice asserting any material violation of sanitation laws and regulations,
occupational safety and health regulations, and electrical codes.
(iv) There are no condemnation proceedings or
eminent domain proceedings of any kind pending or, to the Knowledge of Sellers,
threatened against the Owned Real Property.
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(v) All of the Owned Real Property is occupied under
a valid and current certificate of occupancy or similar permit. There are no
facts that would prevent the Owned Real Property, or to the Knowledge of
Sellers, the property leased by the Companies and/or the Subsidiary
Partnerships pursuant to the Real Property Leases, from being occupied and used
by the Purchaser or TMBC after the Closing Date in the same manner as
immediately prior to the Closing.
(vi) There is not under any Real Property Lease any
default by the Companies or any of the Subsidiary Partnerships thereunder or
any condition that with notice or the passage of time or both would constitute
such a default, and neither the Companies nor the Subsidiary Partnerships has
received notice asserting the existence of any such default or condition.
(vii) Each Real Property Lease is valid and binding
and in full force and effect, and except as disclosed on the Asset Schedule,
has not been amended or otherwise modified.
(viii) The Purchased Real Estate constitutes all of
the real property which is owned by the Companies or any of the Subsidiary
Partnerships and includes all of the real property in which the Companies or
any of the Subsidiary Partnerships has a leasehold interest or other interest
or right (whether as lessor or lessee) and which is or will prior to the
Closing be used in the operation of any of the Existing Radio Stations and to
the extent acquired, the Additional Radio Stations.
3.10 Accounts Receivable. The accounts receivable of the Companies and
the Subsidiary Partnerships, other than the Trade Receivables (the "Accounts
Receivable"), are bona fide, valid accounts receivable and are not subject to
any actions or, to the Knowledge of Sellers, claims, defenses or set-offs of
any nature. An aggregate amount of not less than $2,000,000 of Accounts
Receivable are fully collectible within 120 days immediately following the
Closing in accordance with the Companies' standard invoicing practices and
without resort to any collection procedures (the "Guaranteed Receivables").
Neither the Companies nor any of the Subsidiary Partnerships shall have engaged
in any practices prior to the Closing to accelerate or delay the collection of
any of the Accounts Receivable and all invoicing and collection efforts with
respect to the Accounts Receivable shall have been consistent with past
practices in the ordinary course of business.
3.11 Contractual and Other Obligations. Set forth in the Asset
Schedule are a list and brief description of all (a) Real Property Leases to
which any Company or any of the Subsidiary Partnerships is a party; (b) all
contracts, agreements (including local marketing agreements and joint sales
agreements), licenses, leases, arrangements (written or oral) used or useful in
the present or future operation of any of the Purchased Radio Stations
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to which any Company or any of the Subsidiary Partnerships is a party or by
which the Company or any of the Subsidiary Partnerships or any of the assets of
the Company or any of the Subsidiary Partnerships are bound (including, in the
case of loan agreements, a description of the amounts of any outstanding
borrowings thereunder and the collateral, if any, for such borrowings); (c)
uncompleted orders for the purchase by any Company or any of the Subsidiary
Partnerships of materials, supplies, equipment and services for the
requirements of the Purchased Radio Stations existing as of the date hereof and
with respect to which the remaining obligation of any Company or any of the
Subsidiary Partnerships is in excess of $10,000; and (d) contingent contractual
obligations and liabilities of any Company or any of the Subsidiary
Partnerships existing as of the date hereof (all of the foregoing being
hereinafter referred to as the "Contracts"). No Company, none of the Subsidiary
Partnerships and to the Knowledge of Sellers, no other party to any of the
Contracts is in material default in the performance of any covenant or
condition under any Contract and no claim of such a default has been made and
no event has occurred which with the giving of notice or the lapse of time
would constitute such a default under any covenant or condition under any
Contract. No Company and none of the Subsidiary Partnerships is a party to any
Contract which would terminate or be materially adversely affected by the
consummation of the transactions contemplated by this Agreement. All of the
Contracts shall be in full force and effect at the Closing. Originals or true,
correct and complete copies of all of the Contracts included within the
Purchased Assets have been provided to the Purchaser as of the date hereof.
3.12 Existing Financing Documents; Senior Credit Agreement. True and
correct copies of each of the Existing Financing Documents and Senior Credit
Agreement will be delivered by the Sellers and the Companies to the Purchaser
on or before April 30, 1997.
3.13 Compensation. Set forth in the Sellers' Disclosure Schedule is a
list of (a) all agreements between any Company or any of the Subsidiary
Partnerships and their employees or other Persons providing services for them
with regard to compensation, whether individually or collectively, except oral
agreements terminable by any Company or any of the Subsidiary Partnerships on
not more than 30 days' notice without penalty, and (b) all employees of any
Company or any of the Subsidiary Partnerships or other Persons providing
services for them entitled to receive annual compensation in excess of $15,000
and their respective positions and salaries. The transactions contemplated by
this Agreement will not result in any liability for severance pay to any such
employee or other Person. Neither Company nor any of the Subsidiary
Partnerships has informed any such employee or other Person that such Person
will receive any increase in compensation or benefits or any ownership interest
in any Company or any of the Subsidiary Partnerships or the Business other than
increases in salary which are consistent
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with past practices in the ordinary course of business and, to the extent
applicable to Persons subject to any agreement described in clause (a) above,
consistent with such agreement. The Sellers shall have the right to pay
one-time bonuses from their own accounts as they determine to employees to
maintain employee morale and interest through the Closing Date.
3.14 Employee Benefit Plans. The Company maintains and sponsors the
employee welfare benefit plans, as described under Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended, or "ERISA" (hereinafter
referred to as "Welfare Plans") described in the Seller's Disclosure Schedule
for the benefit of the employees of the Companies and the Subsidiary
Partnerships. In addition, the Companies and the Subsidiary Partnerships make
contributions on behalf of their employees to the employee pension plan benefit
plan (as described under ERISA Section 3(2)(A)) (hereinafter referred to as the
"Pension Plan") which is sponsored, maintained, and administered by Tele-Media
Corporation of Delaware.
The Welfare Plans have been maintained and operated in
compliance with the material requirements of ERISA and the Code, and each
"fiduciary" (within the meaning of ERISA Section 3(21)(A)) of the Welfare Plans
has carried out its duties in compliance with the material requirements of
ERISA. To the Knowledge of Sellers, the Pension Plan has been maintained and
operated in compliance with the material requirements of ERISA and the Code,
and each "fiduciary" (within the meaning of ERISA Section 3(21)(A)) of the
Pension Plan has carried out its duties in compliance with the material
requirements of ERISA. The Companies have furnished to the Purchaser copies of
all Welfare Plans and the Pension Plan and all financial statements, actuarial
reports and annual reports and returns filed with the Internal Revenue Service
with respect to the Welfare Plans for a period of three years prior to the date
hereof. With respect to the Welfare Plans, such financial statements and
actuarial reports and annual reports and returns are true and correct in all
material respects, and none of the actuarial assumptions underlying such
documents have changed since the respective dates thereof. In addition:
(a) To the extent the Pension Plan has received a favorable
determination letter from the Internal Revenue Service as to its qualification
under Section 401(a) of the Code, it will be provided to the Purchaser when and
if available;
(b) Except as described above and listed in the Seller's
Disclosure Schedule, no Company and none of the Subsidiary Partnerships
sponsor, have an obligation to make contributions to or have an obligation to
make payment under (i) any other welfare benefit plan, as described under
Section 3(1) of ERISA, (ii) any other tax-qualified retirement plan and trust
which is intended to meet the requirements of Code Section 401 and 501,
respectively, or
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(iii) any other non-qualified plan program or arrangement, including, without
limitation, any individual employment contract, deferred compensation
agreement, or severance arrangement;
(c) No Company and none of the Subsidiary Partnerships
(including any entity that within the past five years would be considered a
member of the same controlled group under ERISA and Section 414 of the Code
with any Company, or any Affiliate) have or have had an obligation to
contribute to a multi-employer plan (within the meaning of ERISA Section
3(37)(A)) or maintain, contribute to or have maintained or contributed to a
defined benefit plan (within the meaning of ERISA Section 3(35) that is subject
to Title IV of ERISA;
(d) To the Knowledge of Sellers, no "prohibited transaction"
(within the meaning of Section 406 of ERISA or Section 4975(c) of the Code) has
occurred with respect to any Welfare Plan or Pension Plan;
(e) No provisions of any Welfare Plan, and no act or omission
of any Company, in any way limits, impairs, modifies or otherwise affects the
right of any Company or any of the Subsidiary Partnerships or the Purchaser
unilaterally to amend or terminate any Welfare Plan after the Closing, subject
to the requirements of applicable law;
(f) Except for employee elective deferrals under Code Section
401(k), there are no contributions which are or hereafter will be required to
have been made to trusts in connection with any Pension Plan that would
constitute a "defined contribution plan" (within the meaning of Section 3(34)
of ERISA), with respect to services rendered by employees of the Companies or
any of the Subsidiary Partnerships prior to the Closing Date;
(g) Except as described in the Seller's Disclosure Schedule,
other than claims in the ordinary course for benefits with respect to the
Welfare and Pension Plans, there are no actions, suits or claims (including
claims for income taxes, interest, penalties, fines or excise taxes with
respect thereto) pending with respect to the Welfare or Pension Plan or any
circumstances which might give rise to any such action, suit or claim
(including claims for income taxes, interest, penalties, fines or excise taxes
with respect thereto);
(h) Except as described in the Seller's Disclosure Schedule,
all reports, returns and similar documents with respect to the Welfare Plans
required to be filed with any governmental agency have so been filed and, to
the Knowledge of Sellers, all reports, returns and similar documents with
respect to the Pension Plan required to be filed with any governmental agency
have so been filed;
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(i) No Company and none of the Subsidiary Partnerships or
Affiliates has incurred any liability to the Pension Benefit Guaranty
Corporation;
(j) No Company and none of the Subsidiary Partnerships has
any obligation to provide health or other welfare benefits to former, retired
or terminated employees, except as specifically required under Section 4980B of
the Code. The Companies and the Subsidiary Partnerships have substantially
complied with the notice and continuation requirements of Section 4980B of the
Code and the regulations thereunder.
3.15 Labor Relations. There have been no material violations of any
Federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with respect to the employment of individuals by, or the
employment practices or work conditions of, any Company or any of the
Subsidiary Partnerships, or the terms and conditions of employment, wages
(including overtime compensation) and hours. No Company and none of the
Subsidiary Partnerships is engaged in any unfair labor practice or other
unlawful employment practice and there are no charges of unfair labor practices
or other employee related complaints pending or threatened against any Company
or any of the Subsidiary Partnerships before the National Labor Relations
Board, the Equal Employment Opportunity Commission, the Occupational Safety and
Health Review Commission, the Department of Labor or any other Governmental
Authority. There is no strike, picketing, slowdown or work stoppage or
organizational attempt pending, threatened against or involving any Company or
any of the Subsidiary Partnerships. No issue with respect to union
representation is pending or threatened with respect to the employees of any
Company or any of the Subsidiary Partnerships.
3.16 Increases in Compensation or Benefits. Subsequent to December 31,
1996 and other than in the ordinary course of business consistent with past
practices, there have been no increases in the compensation payable or to
become payable to any of the employees of any Company or any of their
Affiliates or paid or provided for any awards, bonuses, stock options, loans,
profit-sharing, pension, retirement or welfare plans or similar or other
payments or arrangements for or on behalf of such employees in each case other
than (a) pursuant to currently existing plans or arrangements set forth in the
Sellers' Disclosure Schedule, (b) as was required from time to time by
governmental legislation affecting wages, or (c) as paid or agreed to be paid
by Sellers from their own accounts as permitted by the last sentence of Section
3.13. The vacation policy of the Companies and their Affiliates is set forth in
the Sellers' Disclosure Schedule. No such employee is entitled to vacation time
in excess of three weeks during the current calendar year and no such employee
has any accrued vacation time with respect to any period prior to twelve months
before the Closing except as set forth in the Sellers' Disclosure Schedule.
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3.17 Insurance. The Companies and the Subsidiary Partnerships maintain
insurance policies covering all of their properties and assets, each of which
is summarized in the Sellers' Disclosure Schedule. Such policies are in full
force and effect and all premiums due thereon have been paid in full. The
Companies and the Subsidiary Partnerships have complied in all material
respects with the provisions of such policies. There are no notices of any
pending or threatened termination or premium increases with respect to any of
such policies. To the Knowledge of Sellers, there has been no casualty loss or
occurrence which may give rise to any claim of any kind not covered by
insurance, there has been no casualty occurrence which may give rise to any
claim of any kind not covered by insurance, and no third party has filed any
claim against any Company or any of the Subsidiary Partnerships for personal
injury or property damage of a kind for which liability insurance is generally
available which is not fully insured, subject only to the standard deductible.
None of the Companies' insurance policies will terminate or be adversely
affected by the consummation of the transactions contemplated by this
Agreement.
3.18 Litigation; Disputes. There are no claims, disputes, actions,
suits, investigations or proceedings pending or threatened against or affecting
any Company or any of the Subsidiary Partnerships or any of their respective
properties or assets, and, to the Knowledge of the Sellers, there is no basis
for any such claim, dispute, action, suit, investigation or proceeding. No
Company and no Seller has knowledge of any default under any such action, suit
or proceeding. No Company and no Subsidiary Partnership is in default in
respect of any judgment, order, writ, injunction or decree of any Governmental
Authority.
3.19 Environmental. To the Knowledge of Sellers, with respect to the
Existing Radio Stations and, from and after the purchase of each, the
Additional Radio Stations,
(a) There are no conditions, facilities, procedures or any
other facts or circumstances that constitute Environmental Noncompliance on any
of the Purchased Real Estate.
(b) Except as set forth in the reports listed on Schedule
2.5, there is not constructed, placed, deposited, stored, disposed of, nor
located on the Purchased Real Estate, any asbestos in any form.
(c) No structure, improvements, equipment, fixtures,
activities or facilities located on the Purchased Real Estate uses Hazardous
Materials except those customarily used in the course of the Business;
provided, however, that such Hazardous Materials have been used in compliance
with applicable Environmental Laws.
(d) There have been no releases or threatened releases of
Hazardous Materials into the environment, or which otherwise
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contribute to Environmental Conditions arising from the activities of the
Companies or the Subsidiary Partnerships, or to the knowledge of the Companies
and the Sellers arising from any other activities, except to the extent that
such releases or threatened releases do not constitute a condition of
Environmental Noncompliance relating to the Purchased Real Estate.
(e) There are no underground storage tanks, or underground
piping associated with tanks, used for the management of Hazardous Materials at
the Purchased Real Estate and there are no abandoned underground storage tanks
at the Purchased Real Estate which have not been either abandoned in place or
removed in accordance with the applicable environmental law.
(f) No Company and none of the Subsidiary Partnerships is
subject to any Environmental Claims with respect to the Existing Radio Stations
nor have any such Environmental Claims been threatened. No Company and no
Seller is aware of any basis for any such Environmental Claims.
(g) The Companies and the Subsidiary Partnerships have
completed all environmental analyses, evaluations, investigations, reports,
remedial actions and other actions required under the Senior Credit Agreement
or by the lender thereunder.
3.20 Permits; Compliance with Applicable Law.
(a) General. In respect of all statutes, ordinances,
regulations, orders, judgments and decrees of any Governmental Authority
applicable to any Company or any Subsidiary Partnership or to the Business or
the assets and properties of the Companies and the Subsidiary Partnerships as
to which a default or failure to comply might result in any material adverse
change in the condition, financial or otherwise, assets or properties of the
Companies or the Business: (i) no Company and none of the Subsidiary
Partnerships is in default; (ii) each of them has complied therewith; (iii) to
the Knowledge of Sellers, there is no basis for assertion of any violation of
the foregoing or for any claim for compensation or damages or otherwise arising
out of any violation of the foregoing; and (iv) no Company and no Seller has
received any notification of any asserted present or past failure to comply
with any of the foregoing which has not been satisfactorily responded to in the
time period required thereunder.
(b) Permits. Set forth in the Sellers' Disclosure Schedule is
a complete and accurate list of all FCC Licenses applicable to the Purchased
Radio Stations. Set forth in the Sellers' Disclosure Schedule is a complete and
accurate list of all other permits, licenses, approvals, franchises, notices
and authorizations issued by any Governmental Authorities (collectively, the
"Permits"), held by any Company or any of the
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Subsidiary Partnerships and applicable to the Existing Radio Stations. To the
Knowledge of Sellers, the Purchased Radio Stations are operating in accordance
with the Act and their FCC Licenses and are in material compliance with the Act
and the rules and regulations of the FCC. The Permits set forth in the Sellers'
Disclosure Schedule are all the Permits required for the conduct of the Business
of the Existing Radio Stations. All of the Permits set forth in the Sellers'
Disclosure Schedule are in full force and effect, and no Company and none of the
Subsidiary Partnerships has engaged in any activity which would cause or permit
revocation or suspension of any such Permit, and to the Knowledge of Sellers no
action or proceeding looking to or contemplating the revocation or suspension of
any such Permit is pending or threatened. To the Knowledge of Sellers, there are
no existing defaults or events of default or events or state of facts which with
notice or lapse of time or both would constitute a default by any Company or any
of the Subsidiary Partnerships under any such Permit. To the Knowledge of
Sellers, there is no default or claimed or purported or alleged default or state
of facts which with notice or lapse of time or both would constitute a default
on the part of any party in the performance of any obligation to be performed or
paid by any party under any Permit set forth in the Sellers' Disclosure
Schedule. Except for the FCC Approval and as set forth in the Sellers'
Disclosure Schedule, the consummation of the transactions contemplated hereby
will in no way affect the continuation, validity or effectiveness of the Permits
set forth in the Sellers' Disclosure Schedule or require the consent of any
Person. Except as set forth in the Sellers' Disclosure Schedule, no Company and
none of the Subsidiary Partnerships is required to be licensed by, or is subject
to the regulation of, any Governmental Authority by reason of the Business.
3.21 Intellectual Property. To the Knowledge of Sellers, the use of
the Intellectual Property in connection with the operation of the Existing
Radio Stations and in a manner consistent with past practices does not infringe
upon the proprietary rights of any other Person. The Purchaser will, upon
consummation of the Agreement, possess adequate rights, licenses and other
authority to use the Intellectual Property as necessary to operate the Existing
Radio Stations as now operated, without infringement or unlawful or improper
use of any of the Intellectual Property. No director, officer or employee of
any Company or any of the Subsidiary Partnerships has any interest in any of
the Intellectual Property, all of which will, as of the Closing, be free and
clear of any Lien. To the Knowledge of Sellers, there is no infringement by any
Person upon the Sellers' rights with respect to the Intellectual Property. No
Company and none of the Subsidiary Partnerships has granted any outstanding
licenses or other rights to any of the call letters, copyrights, trademarks,
trade names or other similar rights with regard to any of the Intellectual
Property. This Section does not apply in any manner to the name "Tele-Media".
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3.22 Books and Records. The books of account of the Companies and the
Subsidiary Partnerships fairly and accurately reflect their respective income,
expenses, assets and liabilities and have been maintained in accordance with
good business practices. All of such books and records, to the extent included
within the Purchased Assets, will be located on the Closing Date on the
business premises of TMBC.
3.23 Trade Schedule. The Trade Schedule will, as of the Closing,
accurately set forth all of the Trade Liabilities and Trade Receivables
existing as of the Closing. The Trade Receivables disclosed on the Trade
Schedule will be accurately valued in the manner described in Section 8.1.
3.24 Acts to be Performed. As of the Closing, each of the covenants,
acts and undertakings of the Sellers and the Companies to be performed on or
before the Closing Date pursuant to the terms of this Agreement shall have been
duly performed by the Sellers and the Companies.
3.25 Other Agreements. Each of the Acquisition Agreements and the
Option Agreement is in full force and effect and enforceable against each of
the parties thereto in accordance with the provisions thereof. None of the
Acquisition Agreements or the Option Agreement has been amended, modified or
otherwise altered in any material respect and true and correct copies of each
of the Acquisition Agreements and the Option Agreement have been delivered by
the Sellers and the Companies to the Purchaser.
3.26 Disclosure. To the Knowledge of Sellers, no representation or
warranty made under this Section 3 and none of the information furnished by the
Companies or any of the Sellers set forth herein or in the schedules or
exhibits hereto contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein not
misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers jointly and severally represents and warrants to
the Purchaser, as of the date hereof and as of the Closing Date, that, except
as set forth in the Sellers' Disclosure Schedule:
4.1 Authority. Such Seller has the full power, authority and legal
right to execute and deliver this Agreement and to perform such Seller's
covenants and agreements hereunder, and this Agreement constitutes a valid and
legally binding obligation of such Seller, enforceable against such Seller in
accordance with its terms.
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4.2 Ownership of the Shares, Etc. Other than the Lien pursuant to the
Option Agreement and the Lien pursuant to the Centre Pledge, both of which will
be terminated before or contemporaneously with the Closing, the Sellers own all
of the Shares, free and clear of any Lien, and have the legal right to sell and
transfer the Shares to the Purchaser. Upon transfer of the TMBC Shares to the
Purchaser hereunder, the Purchaser will acquire good and marketable title to
the TMBC Shares, free and clear of any Lien. Upon acquisition of the TMBC
Shares hereunder, the Purchaser will own all rights and ownership interests in
the capital stock of the Companies.
4.3 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any statute, ordinance, regulation, order, judgment or
decree of any Governmental Authority, or violates or will violate, or conflicts
with or will conflict with or will result in any breach of any of the terms of,
or constitutes or will constitute a default under or result in the termination
of or the creation of any Lien pursuant to the terms of any contract,
commitment, agreement, understanding or arrangement of any kind to which either
Seller is a party or by which such Seller or any of either Seller's assets is
bound.
4.4 Option Agreement. Neither of the Sellers is in breach of or
default under any provision of the Option Agreement or any other agreements,
certificates, exhibits, schedules or other written instruments executed or
delivered in connection with any of the transactions contemplated by the Option
Agreement, nor has any event occurred that, with the passage of time or the
giving of notice, would constitute a breach of or default under any provision
of any of the foregoing. Before or contemporaneously with the Closing, each of
the Options, the Option Agreement, and the other agreements, certificates,
exhibits, schedules and other written instruments executed or delivered in
connection with the Option Agreement shall have been terminated, without any
further obligation on the part of the Sellers, the Companies or any other
Person.
4.5 Other Agreements. Each of the Acquisition Agreements, the Centre
Pledge and the Option Agreement is in full force and effect and enforceable
against each of the parties thereto in accordance with the provisions thereof.
None of the Acquisition Agreements, the Centre Pledge or the Option Agreement
has been amended, modified or otherwise altered in any material respect and
true and correct copies of each of the Acquisition Agreements, the Centre
Pledge and the Option Agreement have been delivered by the Sellers and the
Companies to the Purchaser.
4.6 Disclosure. No representation or warranty made under this Section
4 and none of the information furnished by either of the Sellers set forth
herein or in the schedules or exhibits hereto
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contains any untrue statements of a material fact or omits to state a material
fact necessary to make the statements herein or therein not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
In connection with the purchase and sale of the Shares hereunder, and
in order to induce the Companies and the Sellers to enter into and consummate
the transactions contemplated by this Agreement, the Purchaser hereby
represents and warrants to the Companies and the Sellers as of the date hereof
and as of the Closing Date (except for representations and warranties expressly
and specifically relating to a time or times other than the date hereof or
thereof, which shall be made as of the specified time or times), that, except
as set forth in Schedule 5.0 (the "Purchaser's Disclosure Schedule"):
5.1 Organization and Qualification. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada, and has full corporate power and authority to own its assets
and properties, conduct its business and acquire the Shares. The Purchaser is
in good standing in each other jurisdiction wherein the failure so to qualify
would have a material adverse effect on the business or properties of the
Purchaser. The Purchaser has full power, authority and legal right and all
necessary approvals, permits, licenses and authorizations to own its properties
and to conduct its business.
5.2 Authority. The execution and delivery of this Agreement by the
Purchaser, the performance by the Purchaser of its covenants and agreements
hereunder and the consummation by the Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action. This Agreement constitutes a valid and legally binding agreement of the
Purchaser, enforceable against the Purchaser in accordance with its terms.
5.3 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
violates or will violate any provision of the Certificate of Incorporation or
Bylaws of the Purchaser or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any Governmental
Authority, or violates or will violate, or conflicts with or will conflict
with, or will result in any breach of any of the terms of, or constitutes or
will constitute a default under or results in or will result in the termination
of or the creation or imposition of any Lien pursuant to the terms of any
contract, commitment, agreement, understanding or arrangement of any kind to
which the Purchaser is a party or by which the Purchaser or any of the assets
of the Purchaser is bound. Except for the FCC Approval, filing and
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expiration of the applicable working period under the HSR Act, and the consents
disclosed on the Purchaser's Disclosure Schedule, no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of the Purchaser in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
5.4 Purchaser's FCC Qualifications. To the Knowledge of Purchaser,
Purchaser is fully qualified to hold the FCC Licenses and there is no reason
why anyone would oppose the FCC Application or why the FCC Grant of Consent
would not issue.
5.5 Bond Payoff Agreement. The Bond Payoff Agreement is in full force
and effect and enforceable against each of the parties thereto in accordance
with the provisions thereof. The Bond Payoff Agreement has not been amended,
modified or otherwise altered in any material respect and attached to the
Purchaser's Disclosure Schedule is a true, complete and correct copy thereof.
5.6 Disclosure. No representation or warranty made under this Section
5 and none of the information furnished by the Purchaser set forth herein or in
the schedules or exhibits hereto contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading.
SECTION 6
AFFIRMATIVE COVENANTS OF THE COMPANIES AND THE SELLERS
The Companies and the Sellers jointly and severally covenant and agree
with the Purchaser to:
6.1 Certain Transactions. (a) Consummate the Option Termination, each
of the Acquisitions pursuant to the written agreements provided to date to the
Purchaser, and the Reorganization pursuant to written agreements provided in
advance in writing to the Purchaser, (b) if the Companies elect to enter into
an appropriate agreement, consummate the acquisition of WPRR-FM and WVAM-FM for
not more than $2,700,000 pursuant to a written agreement containing terms and
conditions consistent with those used by the Sellers and the Companies for
similar acquisitions and reasonably acceptable to the Purchaser, (c) to the
extent that the Purchaser consummates any of the Acquisitions, do so in
accordance with the provisions of the appropriate Acquisition Agreement, (d)
refrain from making any amendment, modification or other alteration to any of
the agreements described in clauses (a), (b) and (c) above, (e) strictly
enforce the provisions of each of the agreements described in clauses (a), (b)
and (c) above, and (f) consummate each of the Acquisitions (to the extent
consummated before the Closing) and Reorganization without the imposition upon
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any Company or any of the Subsidiary Partnerships of any Taxes or of any
Obligations (other than Obligations of the Companies and the Subsidiary
Partnerships in existence prior to the Reorganization) which would be binding
upon the Companies from and after the Closing.
6.2 Senior Credit Agreement. Obtain, at least five business days prior
to the Closing Date, a letter from Finova (the "Finova Payoff Letter") setting
forth the Finova Payoff Amount. In the Finova Payoff Letter, Finova shall agree
that, upon its receipt of the Finova Payoff Amount (a) no additional amounts
shall be due under the Senior Credit Agreement, (b) the Senior Credit Agreement
and all related documents entered into in connection therewith shall be
terminated, and (c) Finova shall deliver all UCC-3 termination statements,
mortgage satisfactions, releases and other documents necessary to terminate its
security interest in the Purchased Assets and the Companies and their
Affiliates (collectively, the "Release Documents").
6.3 Payment of Obligations. Pay and otherwise fully discharge all
Obligations of the Companies and the Subsidiary Partnerships on a timely basis,
and in any event pay and otherwise fully discharge, on or before the Closing,
any and all Obligations of the Company and the Subsidiary Partnerships existing
as of the Closing except the Assumed Obligations and amounts to be paid
pursuant to Section 2.2(b).
6.4 Access. Pursuant to the Due Diligence and Cooperation Outline
attached hereto as Schedule 6.4, the parties agree to, afford the Purchaser and
its authorized representatives reasonable access during normal business hours
to each of the Purchased Radio Stations (including the Additional Radio
Stations to the extent owned by the Companies or any of their Affiliates) and
such Stations' employees, and permit the Purchaser and its authorized
representatives to examine all operations, equipment, properties and other
assets, logs, books, relevant records, contracts and documents of the Companies
and the Subsidiary Partnerships pertinent to such Stations. The Purchaser and
the Companies shall cooperate in good faith in arranging schedules for Station
visits and in efforts to minimize interference with the normal business and
operations of such Stations.
6.5 Operations in the Regular Course. Until the Closing, (a) operate
the Existing Radio Stations and carry on its related business including the
joint sales agreements and the local marketing agreements in the ordinary
course, refrain from entering into any material agreements with respect to such
Stations except in the ordinary course, maintain normal staffing, sales
efforts, managerial, promotion and programming efforts on a basis at least
equivalent to the manner in which such Stations have been operated during the
last 12 months, and make advertising, promotional and marketing expenditures
for such Stations in nature and amount at
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least equivalent to the manner in which such expenditures have been made during
the last 12 months; (b) to the extent acquired, operate the Additional Radio
Stations without making any material changes in the operations of such
Stations, including implementing any overall or general format changes or
entering into any individual contract obligation exceeding $50,000 per year, or
$150,000 per year in the aggregate as to all such contract obligations for the
period from the date hereof until July 31, 1997, and if the Closing shall not
have occurred by July 31, 1997, $250,000 per year in the aggregate for the
period from the date hereof to the date of Closing, without the prior written
consent of the Purchaser, such consent not to be unreasonably withheld; (c)
exercise reasonable efforts to cause existing management personnel to continue
to supervise and manage the operations of the Stations; (d) exercise reasonable
efforts to maintain the integrity and reputation of the Stations; (e) refrain
from making any additions, alterations or other changes to any broadcast
equipment of the Stations in excess of $10,000 per item without the prior
written consent of the Purchaser; and (f) exercise reasonable efforts to ensure
that the representations and warranties set forth in Section 3 are true and
correct as of the Closing Date as if then made.
6.6 Maintenance. Maintain and repair the Purchased Assets through the
Closing Date in a manner consistent with the maintenance and repair practices
which historically have been utilized at the Existing Radio Stations.
6.7 Preservation of Organization. Exercise hereafter reasonable
efforts to preserve the business organization of the Purchased Radio Stations
intact, and preserve for the Purchaser the present relationships with
employees, suppliers, advertisers and customers and others having business
relationships with such Stations.
6.8 Accounts Receivable. Maintain the Accounts Receivable in
accordance with the representations and warranties set forth in Section 3.10.
6.9 Books and Records. Maintain the books and records of the Companies
and their Affiliates in accordance with good business practices, on a basis
consistent with past practices, and make available to the Purchaser the books,
records, tax returns, leases, contracts and other documents or agreements
material to the Purchased Radio Stations (including the Additional Radio
Stations to the extent owned by the Companies or their Affiliates) as the
Purchaser, its counsel, accountants or other authorized representatives may
from time to time reasonably request.
6.10 Employees. Pay as and when the same shall become due and payable
any amounts owed by any Company or any of the Subsidiary Partnerships to their
respective employees who have performed services up to the time of Closing,
whether fixed or accrued, for
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wages, vacation pay, sick pay, severance pay, employee benefits, damages and
otherwise.
6.11 Compliance with FCC. Materially comply with the FCC Licenses
applicable to the Existing Radio Stations and, to the extent acquired, any
Additional Radio Station with the provisions of the Act, the rules, regulations
and policies of the FCC, and with all other laws, ordinances, regulations,
rules and orders of any Governmental Authority applicable to the Companies and
the Subsidiary Partnerships or to any of the Existing Radio Stations consistent
with past practices.
6.12 Taxes. File all Federal, state and municipal tax returns, reports
and declarations required to be filed by the Sellers, any Company or any of the
Subsidiary Partnerships as and when such returns are due, and satisfy all Taxes
related thereto, and pay in full as and when due all Taxes attributable to the
Sellers, any Company or any of the Subsidiary Partnerships, or their respective
income, operations or properties, accruing through the Closing unless contested
in good faith.
6.13 Consents; Estoppel Certificates. Exercise reasonable efforts to
obtain, prior to the Closing, (a) the consent and approval of any third parties
whose consent or approval is materially necessary in connection with the
consummation of the transactions contemplated hereby, including, without
limitation, those consents and approvals set forth on the Sellers' Disclosure
Schedule and (b) estoppel certificates in form and substance reasonably
acceptable to the Purchaser from those parties to the Assumed Obligations for
which estoppel certificates are customarily requested.
6.14 Supplemental Financial Statements. Provide the Purchaser with (a)
copies of the unaudited income statements and balance sheets applicable to the
Purchased Radio Stations for the month of January 1997 no later than March 31,
1997; (b) copies of the unaudited income statements and balance sheets
applicable to the Purchased Radio Stations for the month of February 1997,
using their best efforts by April 4, 1997 (but realistically believed to be by
April 10, 1997), but in no event later than April 15, 1997; (c) copies of the
monthly unaudited income statements and balance sheets applicable to the
Purchased Radio Stations (including the Additional Radio Stations to the extent
owned by the Companies or their Affiliates) which are prepared from and after
the date hereof until Closing in the ordinary course of business, promptly upon
their becoming available to the Companies or any of their Affiliates but in no
event later than 30 days after the end of the applicable month and (d) audited
consolidated balance sheets dated as of December 31, 1996 and as of December
31, 1995 and the related statements of income and cash flow for the periods
then ended and for the period ended December 31, 1994 for the Companies (the
"Audited Financial Statements") no event later than April 15, 1997
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(the Audited Financial Statement and collectively with the financial statement
described in clauses (a), (b) and (c) the "Supplemental Financial Statements").
Such Supplemental Financial Statements shall be subject to the representations
and warranties set forth in Section 3.5.
6.15 Obligations with Respect to Subsidiary Partnerships. Cause each
of the Subsidiary Partnerships to take such actions and to refrain from taking
such actions as may be necessary or appropriate in order to cause the Companies
and the Sellers to be in compliance with each of the representations,
warranties, covenants and agreements applicable to them under this Agreement
(the Companies and the Sellers hereby representing and warranting to, and
agreeing with, the Purchaser that the Companies do now and shall at all times
prior to the Closing maintain sufficient authority and control over the
Subsidiary Partnerships to comply with this Section 6.15).
6.16 Delivery of Acquisition Documents. Promptly upon consummation of
any Acquisition and as soon as such documents are received by the Companies,
deliver to the Purchaser a copy of the appropriate Acquisition Agreement
together with any and all additional agreements, documents and other written
instruments executed or delivered by the parties to the Acquisition in
connection with such Acquisition Agreement or the consummation of the
transactions contemplated thereby.
6.17 Delivery of Other Agreements. Promptly upon consummation of the
Option Termination and the Reorganization, deliver to the Purchaser a copy of
any and all agreements, documents and other written instruments executed or
delivered by the parties to such transactions in connection therewith or with
the consummation of the transactions contemplated thereby.
6.18 Further Information. Furnish to the Purchaser prior to the
Closing such financial (including tax), legal and other information with
respect to the Companies and their Affiliates and the Purchased Radio Stations
as the Purchaser or its authorized representatives may from time to time
reasonably request except that the Sellers and the Companies shall not be
required to furnish information with respect to the Additional Radio Stations
which is not otherwise available to the Sellers, the Companies, or the
Subsidiary Partnerships.
6.19 Notice. Promptly notify Purchaser in writing upon the occurrence
or the nonoccurrence of any event which does then, or which upon the passing of
time or the giving of notice would, constitute a material breach of or default
under, or render untrue in any material respect, any agreement, covenant,
representation or warranty of the Companies or the Sellers set forth in this
Agreement.
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6.20 Employee Benefits. (a) Pay all claims incurred under any Welfare
Plan prior to the Closing Date that have not been paid as of the Closing Date,
(b) take any and all necessary action to terminate each Welfare Plan, effective
as of the Effective Time, and (c) take any and all necessary action to
terminate the Companies' and each Subsidiary Partnership's participation in the
Pension Plan, effective as of the Effective Time.
SECTION 7
NEGATIVE COVENANTS OF THE COMPANIES AND THE SELLERS
From and after the date hereof and until the Closing, neither the
Companies nor the Sellers shall take, or cause to be taken, or permit any of
the Subsidiary Partnerships to take, without the prior written consent of
Purchaser, such consent not to be unreasonably withheld, any of the following
actions:
7.1 Sales, Transfers and Liens. Make any sale, transfer, assignment,
conveyance, mortgage, hypothecation, encumbrance or other placement of any Lien
on any of the Purchased Assets other than (a) the granting of security
interests pursuant to the Senior Credit Agreement for the purpose of securing
Acquisition Debt and (b) the replacement of immaterial items in the ordinary
course of business consistent with past practices.
7.2 Assumed Obligations. Materially amend, terminate or renew any of
the Assumed Obligations or obligations under the Bonds or the Senior Credit
Agreement (including any renewal or termination resulting from the failure to
provide, after the date hereof, timely notice of nonrenewal or termination as
required by the terms of any of the Assumed Obligations or any of such
obligations but excluding any amendment to the Senior Credit Agreement required
in connection with the financing for any Acquisition) or the Acquisition
Agreements without the Purchaser's prior approval; provided, however, that with
respect to the contracts listed on Sellers' Disclosure Schedule 2.3(d), this
provision shall apply to not more than twenty (20) contracts to be identified
in writing by the Purchaser within twenty (20) days after the execution and
delivery of this Agreement; provided further however, that this provision shall
apply to the renewal of any Assumed Obligation on materially different terms.
7.3 Breaches; Defaults. Do any act or omit to do any act, or permit
any act or omission to occur, that will cause a breach of any contract,
commitment or obligation of it or them in any respect that would have a
material adverse effect on the Purchased Assets or the business operations of
the Existing Radio Stations as presently conducted and to the extent acquired,
any Additional Radio Stations.
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7.4 Indebtedness for Borrowed Money; Obligations. Incur (a) any
additional Indebtedness for Borrowed Money other than Acquisition Debt or (b)
any other Obligations except in the ordinary course of business in a manner
consistent with past practices or as contemplated by the Acquisitions, the
Option Termination or the Reorganization.
7.5 Loans; Advances. Make any loans or advances, directly or
indirectly, to any employees of any Company or any of its Affiliates, or to any
relatives of any such Person.
7.6 [Intentionally Omitted]
7.7 Dividends; Distributions. Except for the Final Distribution and
the distributions contemplated by the Option Termination, declare or pay any
dividend or make any other distribution in respect of the capital stock or
other securities of the Companies or, directly or indirectly, any purchase,
redemption or other acquisition or disposition of any shares of the capital
stock or any of the other securities of the Companies.
7.8 Salary Increases. Increase any salary, other payments,
disbursement or distributions in any manner or form to any employees of any
Company or any of the Subsidiary Partnerships other than increases in salary
which are consistent with past practices in the ordinary course of business
and, to the extent applicable to any Person subject to any agreement described
in Section 3.13(a) consistent with such agreement.
7.9 Nonsolicitation. Directly or indirectly solicit or negotiate with
any Person (other than a party hereto) or accept any proposal to acquire any
Company or any of the Subsidiary Partnerships, any of the Purchased Radio
Stations or any of the Shares.
SECTION 8
ADDITIONAL COVENANTS OF THE PARTIES
8.1 Trade. To the extent that the aggregate liability of the Purchased
Radio Stations as of the Closing for unperformed time under the Trade
Agreements exceeds the value of the Trade Receivables to be received by the
Purchased Radio Stations or the Companies after the Closing, the parties agree
that the purchase price shall be reduced by the amount by which such Trade
Liabilities exceed such Trade Receivables. For purposes of this Section 8.1,
the value of the Trade Receivables as of the Closing shall be the fair market
value thereof, as determined by the Companies in accordance with their normal,
customary practices.
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The Companies and the Sellers shall deliver to the Purchaser at the Closing a
schedule of Trade Liabilities and Trade Receivables existing as of the Closing
and attributable to the Purchased Radio Stations (the "Trade Schedule").
Neither Company nor any of its Affiliates shall enter into any Trade Agreements
with regard to the Purchased Radio Stations from the date hereof until the
Closing except in the ordinary course of business.
8.2 Accounts Receivable. At the Closing, the Sellers shall deliver to
the Purchaser a list (the "Accounts Receivable List") of the Accounts
Receivable existing as of the Closing including amounts for run but as yet
unbilled services (the "Unbilled A/R"). If, as of the Closing, the aggregate
face amount of the Accounts Receivable (including the Unbilled A/R) disclosed
on the Accounts Receivable List is less than $2,000,000, the purchase price and
the Guaranteed Receivables shall each be reduced by the amount of such
deficiency. During the period of 120 days following the Closing Date (the
"Collection Period"), the Purchaser shall exercise, or cause the Companies to
exercise, reasonable efforts to collect and receive the Accounts Receivable in
accordance with the normal collection processes and procedures of the
Purchaser, and all collected Accounts Receivable (including the Unbilled A/R)
shall be applied first by the Purchaser toward the Guaranteed Receivables.
Notwithstanding anything contained in the foregoing to the contrary, the
Purchaser shall not be required to institute legal proceedings, retain counsel
or retain collection agents or other third parties to enforce the collection of
any Accounts Receivable (including the Unbilled A/R). Within 10 days after the
end of the month in which the Closing occurs, the Purchaser will provide a
report to the Sellers setting forth by Station, the order number, the invoice
number, the invoice amount, the amount due the Purchaser and the amount due the
Sellers, in such reasonable detail as to enable the Sellers to cross-reference
the report to the Unbilled A/R. After the end of each month during the
Collection Period, the Purchaser shall furnish the Sellers with an accounting
of the collection of the Guaranteed Receivables. If, at the end of the
Collection Period, the Purchaser has not collected the full amount of the
Guaranteed Receivables, the Sellers shall thereupon pay the Purchaser, as a
post-Closing adjustment to the purchase price, an amount equal to such deficit.
From and after such time during the Collection Period as the Purchaser has
collected the Guaranteed Receivables, the Purchaser shall act as agent for the
Sellers during the remainder of the Collection Period and exercise reasonable
efforts to collect the Accounts Receivable in accordance with the normal
collection processes and procedures of the Purchaser. All of such Accounts
Receivable (including the Unbilled A/R) in excess of the Guaranteed Receivables
collected by the Purchaser during the Collection Period shall be collected by
the Purchaser, as agent for the Sellers, and be remitted to the Sellers within
seven days after the expiration of each calendar month within the Collection
Period, except that the last remittance shall be made within seven days after
the end of the calendar month
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during which the Collection Period ends. Upon expiration of the Collection
Period and receipt by the Purchaser of any purchase price adjustment required
by the provisions of this Section 8.2, the Purchaser shall turn back to the
Sellers any uncollected Guaranteed Receivables and other Accounts Receivable.
In any event, the Purchaser's responsibility and liability for the collection
of the Accounts Receivable shall cease upon termination of the Collection
Period and the Sellers shall be solely responsible for the collection of the
balance of their Accounts Receivable. During the Collection Period, payments
received from any account debtor shall, unless otherwise designated for
application by the account debtor, be applied first to obligations of such
account debtor incurred before the Effective Time (in the order in which they
were incurred) and then to any obligations incurred by such account debtor
after the Effective Time, until the amount of such Account Receivable
(including any Unbilled A/R) has been paid in full. Any Accounts Receivable
disputed by the account debtor immediately shall be turned back to the Sellers
for resolution. The Purchaser shall furnish the Sellers with an accounting of
the Accounts Receivable (including any Unbilled A/R) at the time it remits
payment thereof to the Sellers, including such additional information which the
Sellers reasonably request to enable the Sellers to identify, by invoice
number, the Accounts Receivables and their status. For a period of 180 days
after the expiration of the Collection Period, the Purchaser will remit within
seven days after the close of each month any collections of Unbilled A/R along
with an accounting of such collections. The parties acknowledge that this
extended period is desirable because it would be impractical for the Purchaser
to turn back to the Sellers any Unbilled A/R at the end of the Collection
Period. After the final remittance at the end of the extended collection
period, any uncollected Unbilled A/R shall become the property of the Purchaser
and shall be in addition to the Guaranteed Receivables.
8.3 Providence Payment Proceeds. If the Sellers and/or any of the
Companies and/or any of the Subsidiary Partnerships receive the Providence
Payment prior to the Closing, then the Sellers shall cause the Companies to
have immediately following the Closing, in addition to the Guaranteed
Receivables, cash in the amount received by Sellers and/or the Companies in
respect of the Providence Payment. In the event that the Sellers and/or the
Companies have not received the Providence Payment at or prior to the Closing,
then the Companies shall retain, in addition to the Guaranteed Receivables, all
rights in and to the Providence Payment.
8.4 Application for Transfer of Control. Within four business days
after execution and delivery of this Agreement, the Sellers and the Purchaser
shall file applications (the "FCC Application") with the FCC to obtain the
FCC's grant of consent to the transfer of control of the Companies from the
Sellers to the Purchaser (the "FCC Grant of Consent"). Contemporaneously with
the filing of the
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FCC Application, the Sellers and the Companies shall file all appropriate
applications (the "Ancillary FCC Applications") with the FCC to approve the
transfers contemplated by the Reorganization (the "Ancillary FCC Grants of
Consent"). The parties agree that they shall prosecute the FCC Application, and
the Sellers and the Companies agree that they shall prosecute (and shall
cooperate with each other in the timely prosecution of) the Ancillary FCC
Applications, in good faith and with due diligence, and within the time allowed
therefor by the rules and regulations of the FCC. Each of the Sellers, the
Companies and the Purchaser shall take all necessary actions on its part to
obtain the FCC Grant of Consent and the Sellers and the Companies shall take
all reasonably necessary actions on their part to obtain the Ancillary FCC
Grants of Consent. The Purchaser shall advance the filing fee applicable to the
FCC Application (excluding any fees attributable to the Ancillary FCC
Applications or the radio stations covered thereby) and the Sellers shall
reimburse the Purchaser for one-half of such filing fee promptly upon request
of the Purchaser. All other costs and expenses incurred by each party in
connection with the filing and prosecution of the FCC Application shall be paid
by the party incurring the cost or expense.
8.5 Adjustments at Closing. Without duplication, the following items
shall be prorated through and including the Closing Date, and the purchase
price appropriately increased or decreased as a result thereof:
(a) Amounts payable under the Real Property Leases and the
Assigned Contracts;
(b) Power and utility charges incurred in connection with the
Purchased Radio Stations and with any Purchased Real Estate;
(c) Real and personal property taxes pertaining to the
Purchased Assets;
(d) Salaries (including bonuses and commissions), accrued
vacation pay, health insurance, FICA, FUTA, Medicare and other employee payroll
costs due to or in respect of any employees of the Companies and the Subsidiary
Partnerships who, in the Purchaser's discretion, continue in the employ of the
Companies after the Closing; and
(e) Other payments due under any of the Assumed Obligations,
including but not limited to prepaid expenses and deposits.
Proration of real and personal property taxes shall be based upon the most
recent assessments available. Each of the parties shall duly cooperate with the
other in making the foregoing prorations, adjustments and payments. If, for any
reason beyond the reasonable control of the parties, information necessary to
calculate the
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required prorations is unavailable before the Closing Date, such item shall be
prorated after the Closing Date as soon as such information is available, and
the Sellers and the Purchaser shall cooperate with each other in regard thereto
and shall pay, each to the other, any amounts which may be owing as a result of
such subsequent prorations. If, at any time after the Closing Date, errors are
discovered in any prorations made pursuant to this Section 8.5, the Sellers and
the Purchaser shall correct such errors and pay, each to the other, any sums
owing as a result of such correction. All prorations to the extent feasible
shall be made on the Closing Date.
8.6 Brokerage. The Sellers and the Companies, on one hand, and the
Purchaser, on the other, represent and warrant to each other that no Person has
provided services as a broker, agent or finder in this transaction. The Sellers
and the Companies, on one hand, and the Purchaser, on the other, shall each
indemnify and hold harmless the other for any and all claims or expenses,
including reasonable attorneys' fees, asserted by any Person purporting to act
on behalf of the respective indemnitor as a broker, agent or finder in
connection with this transaction.
8.7 Risk of Loss. If (a) any loss or damage to any of the Purchased
Assets occurs prior to the Closing which has a material adverse effect on any
of the Existing Radio Stations or to the extent acquired, any of the Additional
Radio Stations, and such loss or damage is not repaired, replaced or restored
by the Sellers at their sole cost and expense to the same condition as existed
before such loss or damage, or (b) any loss or damage occurs to any of the
Purchased Assets before the Closing which prevents or will prevent broadcast
transmission of any Existing Radio Station or to the extent acquired, any of
the Additional Radio Stations, for more than 10 consecutive days, regardless of
whether such loss or damage is repaired or restored, then, in either event, the
Purchaser may in its sole discretion refuse to consummate the transactions
contemplated under this Agreement and terminate its obligations under this
Agreement. In the event that the Purchaser terminates its obligations under
this Agreement pursuant to this Section, the Escrow Deposit shall be
distributed as set forth in Section 13.1(f).
8.8 Actions With FCC. In the event any investigation, order to show
cause, notice of violation, notice of apparent liability or a forfeiture,
material complaint, petition to deny or informal objection is instituted or
filed against any party hereto (whether in connection with the proceedings to
approve the FCC Application or otherwise), such party shall promptly notify the
other party hereto in writing of such occurrence and, subject to the right of
either party to terminate this Agreement pursuant to Section 13, shall
thereafter immediately take all reasonable measures to contest the same in good
faith and seek the removal or favorable resolution of such action, order,
notice or complaint.
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8.9 Purchaser's Financing. From and after the date hereof, the
Purchaser and Citadel shall exercise diligent efforts to arrange financing to
complete the transaction contemplated pursuant to this Agreement as
expeditiously as possible, and in any event prior to the Closing.
Notwithstanding the foregoing, the Sellers and the Purchaser acknowledge and
agree that if Citadel and the Purchaser are unable to arrange the financing
necessary to consummate the transaction contemplated hereunder, the Sellers
shall be entitled as their sole and exclusive remedy to the Escrow Deposit.
8.10 Cooperation. During the seven-year period immediately following
the Closing, the Purchaser shall cooperate with the Sellers in providing the
Sellers all information reasonably requested and permitting the Sellers access
to all records relating to the period of ownership of the Companies by the
Sellers prior to the Closing. The cost and expense of copies of such
information hereunder shall be borne by the Sellers. The Sellers, as a
condition to being provided with access to information hereunder, shall, at the
request of the Purchaser, execute a confidentiality agreement in form and
substance acceptable to the Purchaser in its reasonable discretion.
8.11 Dismissal of Litigation. Contemporaneously with the execution and
delivery of this Agreement, the parties hereto shall take all actions
(including the making of all appropriate court filings) necessary to dismiss
the Litigation with prejudice and to execute and deliver a mutual release
relating to the Litigation in a mutually agreed upon form.
8.12 HSR Filing. Within 21 days after the execution and delivery of
this Agreement, the parties hereto shall complete and submit any filing that
may be required pursuant to the HSR Act (the "HSR Filing"). The parties hereto
shall diligently take, or fully cooperate in the taking of, all necessary and
proper steps, and provide any additional information reasonably requested, in
order to comply with the requirements of the HSR Act. The parties hereto shall
use their best efforts to resolve objections, if any, that may be asserted
under the HSR Act or any other antitrust law in connection with the
transactions contemplated hereby. The Purchaser shall pay any filing fee
applicable to any HSR Filing. All other costs and expenses incurred by each
party in connection with the filing and prosecution of any HSR Filing shall be
paid by the party incurring the cost or expense.
8.13 Name Changes. Prior to the Closing, the parties shall cooperate
to effectuate a change to the name of TMBC on or before the Closing and to take
all actions reasonably necessary to eliminate the use of the name "Tele-Media"
by TMBC as of the Closing Date.
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8.14 Agreement Not to Employ. In the event that the transactions
contemplated by this Agreement are not consummated for any reason, neither
Purchaser or any of its Affiliates will employ any person who was an employee
of the Companies or any Subsidiary Partnership within six (6) months prior to
the date of termination of this Agreement, for a period of one (1) year from
the date of such termination.
8.15 Purchase of Bonds and Warrants. So long as this Agreement has not
been terminated pursuant to Section 13, the Purchaser and its Affiliates shall
not acquire the Bonds and/or the Warrants.
8.16 Bond Payoff Agreement. The Purchaser shall not amend or modify
the Bond Payoff Agreement, and the Sellers and the Companies agree to execute
and deliver at the Closing the mutual releases specified in the Bond Payoff
Agreement.
8.17 Public Announcements. No public announcement concerning the
subject matter of this Agreement shall be made by any party hereto without the
prior approval of the other parties as to the content and timing of such
announcement, which approval shall not be unreasonably withheld or conditioned.
8.18 Notice of Breaches. The Purchaser agrees to provide written
notice to the Sellers reasonably promptly after any of Lawrence R. Wilson,
Donna Heffner, Stuart R. Stanek and/or R. Stephen Campbell obtain knowledge of
any fact or circumstance which may constitute a material breach by the Sellers
and/or the Companies of any representation, warranty or covenant of this
Agreement. Anything herein to the contrary notwithstanding, the providing of or
the failure to provide any such notice shall not relieve the Sellers and/or the
Companies from their obligations under this Agreement, nor shall the failure of
the Sellers and the Companies to fulfill their obligations under this Agreement
relieve the Purchaser of its obligations under this Section 8.18.
8.19 Assignments. The parties agree to cooperate to obtain any
material third party consents and to execute and deliver any material
assignments or agreements required to transfer rights and obligations under the
Assumed Obligations and the Contracts.
8.20 Finova Prepayment. The Purchaser agrees to cooperate with the
Sellers and the Companies in their request to obtain a reduction in the Finova
Prepayment Penalty.
8.21 Control. The Purchaser agrees not to seek to control the Stations
prior to the Closing.
8.22 Purchaser's Employee Benefit Plans. Any individual who becomes
an employee of the Purchaser as a result of this transaction on the Closing
Date, shall be eligible to participate
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in the employee benefit plans maintained for the Purchaser's other employees in
accordance with the terms and conditions contained therein, as the same may be
amended or modified from time to time.
SECTION 9
THE CLOSING
9.1 Closing Date. Subject to Section 9.3, the Closing shall occur
within 10 business days following the later of (a) the date that the FCC Grant
of Consent has become a Final Order and (b) the date upon which the applicable
waiting period under the HSR Act expires, on a date mutually selected by the
Sellers and the Purchaser. The Closing shall begin at 9:00 a.m., local time, on
the date of the Closing (the "Closing Date") at the offices of Pietragallo,
Bosick & Gordon, One Oxford Centre, 38th Floor, Pittsburgh, Pennsylvania 15219,
or at such other time and place as the parties may agree in writing. It is
recognized that the Closing may require one or more days to complete the
activities contemplated for Closing.
9.2 Closing Documents. At the Closing:
(a) The Purchaser shall deliver the following:
(i) the aggregate amount of the purchase price, in
the form and as required by the provisions of this Agreement; and
(ii) all certificates and other documents required
to be delivered by the Purchaser to the Sellers pursuant to this
Agreement or as a condition precedent to the Sellers' fulfillment of
their obligations hereunder.
(b) The Sellers shall deliver to the Purchaser the following:
(i) certificates in negotiable form representing the
TMBC Shares, each such certificate to be duly executed by the
appropriate Seller and to be accompanied by any requisite stock
transfer tax stamps;
(ii) all certificates, consents (including any third
party consents required as to the Assumed Obligations), estoppels and
other documents otherwise required to be delivered by the Sellers
pursuant to this Agreement or as a condition precedent to the
Purchaser's fulfillment of its obligations hereunder (including the
Release Documents);
(iii) the duly executed Covenant;
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(iv) the Trade Schedule and the Accounts Receivable
List; and
(v) evidence reasonably satisfactory to the
Purchaser that each of the Acquisitions (to the extent consummated
before the Closing), Option Termination and Reorganization has been
consummated in accordance with the provisions of this Agreement.
9.3 Extension of Closing Date. Notwithstanding any other provision
contained herein to the contrary, the Purchaser may, in its sole discretion, at
any time prior to the Closing Date otherwise required by Section 9.1, to the
extent that the FCC Grant of Consent or the Ancillary FCC Grants of Consent
have not been obtained because of a Sellers' FCC Problem, extend the Closing
Date to a date sufficient for the Sellers and the Companies to remedy the
Sellers' FCC Problem and for the FCC Grant of Consent and the Ancillary Grants
of Consent to be obtained. Furthermore, once the FCC Approval, the Ancillary
FCC Approvals and the approval under the HSR Act have been obtained, the
Purchaser may, in its sole discretion, extend the Closing Date for a period not
to exceed 60 days by giving written notice thereof to the Sellers and
simultaneously giving written notice to the Escrow Agent authorizing the
delivery to the Sellers of the Escrow Deposit which shall be credited against
the purchase price in which case the Escrow Amount will be considered to have
been fully earned and properly paid and will in no event be returned to the
Escrow Agent or the Purchaser. Anything herein to the contrary notwithstanding,
the Closing Date cannot be extended by Purchaser to a date later than the
Expiration Date.
SECTION 10
CONDITIONS TO THE SELLERS' OBLIGATIONS TO CLOSE
The obligation of the Sellers to sell the Shares and otherwise
consummate the transactions contemplated by this Agreement at the Closing is
subject to the following conditions precedent, any or all of which may be
waived by the Sellers in their sole discretion:
10.1 Opinion of the Purchaser's Counsel. The Sellers shall have
received an opinion of Eckert Seamans Cherin & Mellott, LLC, counsel for the
Purchaser, dated the Closing Date, in form and substance satisfactory to the
Sellers, to the effect that:
(a) The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.
(b) This Agreement, together with all other documents and
instruments required to be executed or delivered by the Purchaser in connection
with the transactions contemplated hereby and thereby
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each has been duly authorized, executed and delivered by the Purchaser to the
extent the Purchaser is a party thereto and constitutes a valid and legally
binding obligation of the Purchaser to the extent the Purchaser is a party
thereto, enforceable against the Purchaser in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency
or other laws affecting generally the enforceability of creditors' rights and
by limitations on the availability of equitable remedies.
(c) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, violates or will
violate any provision of the Certificate of Incorporation or Bylaws of the
Purchaser or, to the knowledge of such counsel, any law, rule, regulation,
writ, judgment, injunction, decree, determination, award or other order of any
Governmental Authority, or, to the knowledge of such counsel after due
investigation, violates or will violate, or conflicts with or will conflict
with or will result in any breach of any of the terms of, or constitutes or
will constitute a default under, or results or will result in the termination
of or the creation or imposition of any Lien pursuant to, the terms of any
contract, commitment, agreement, understanding or arrangement of any kind to
which the Purchaser is a party or by which the Purchaser or any of the assets
of the Purchaser is bound. Nothing contained in this Section 10.1 shall require
an opinion by such counsel with respect to FCC matters.
10.2 Representations and Warranties. The representations and
warranties of the Purchaser contained herein shall be true and correct in all
material respects at and as of the Closing with the same effect as though all
such representations and warranties were made at and as of the Closing (except
for representations and warranties expressly and specifically relating to a
time or times other than the Closing, which shall be true and correct in all
material respects at and as of the time or times specified) and the Purchaser
shall have delivered to the Sellers a certificate to that effect, dated the
date of the Closing, signed by the President of the Purchaser.
10.3 No Litigation. No action, suit or proceeding against any of the
Companies or any of the Sellers relating to the consummation of any of the
transactions contemplated by this Agreement or any action by any Governmental
Authority seeking to delay or enjoin any such transactions shall be pending or
threatened.
10.4 Other Certificates. The Sellers shall have received such
additional certificates, instruments and other documents, in form and substance
satisfactory to the Sellers, as the Sellers shall have reasonably requested in
connection with the transactions contemplated hereby.
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10.5 Corporate Action. All corporate action necessary to authorize the
execution, delivery and performance by the Purchaser of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by the
Purchaser, and the Purchaser shall have delivered to the Sellers certified
copies of the resolutions of the Purchaser's board of directors authorizing the
execution and performance of this Agreement and authorizing or ratifying the
acts of its officers and employees in carrying out the terms and provisions
hereof.
10.6 Acts to be Performed. Each of the covenants, acts and
undertakings of the Purchaser to be performed on or before the Closing Date
pursuant to the terms hereof shall have been duly performed.
10.7 FCC Grant of Consent. The FCC Grant of Consent shall have been
obtained.
10.8 HSR Clearance. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
10.9 Sellers' Representations and Warranties. The Sellers shall have
received a certificate of the Purchaser setting forth, to the Knowledge of
Purchaser, any fact or circumstance which may constitute a material breach by
the Sellers and/or the Companies of any representation, warranty or covenant of
this Agreement.
SECTION 11
CONDITIONS TO THE PURCHASER'S OBLIGATION TO CLOSE
The obligation of the Purchaser to purchase the Shares and otherwise
consummate the transactions contemplated by this Agreement at the Closing is
subject to the following conditions precedent, any or all of which may be
waived by the Purchaser in its sole discretion:
11.1 Opinion of the Companies' and the Sellers' Counsel. The Purchaser
shall have received an opinion of Pietragallo, Bosick & Gordon, counsel for the
Companies, and the Sellers, dated the Closing Date, solely for the use of the
Purchaser, in form and substance satisfactory to the Purchaser to the effect
that:
(a) Each Company is a corporation duly organized, validly
existing and in good standing under the laws of the state in which it is
organized.
(b) Each Company is duly qualified and in good standing in
each other jurisdiction wherein the failure so to qualify would have a material
adverse effect on the Business or the properties of such Company.
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(c) Each Company has full corporate power and authority to
own its assets and properties and to conduct the Business and has all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business in the manner and in the locations presently owned and
conducted.
(d) This Agreement, together with all other documents and
instruments required to be executed or delivered by the Companies or the
Sellers in connection with the transactions contemplated hereby and thereby
each has been duly authorized, executed and delivered by the Companies and duly
executed and delivered by each of the Sellers, to the extent any of the
foregoing is a party thereto, and constitutes a valid and legally binding
obligation of each of the Companies and each of the Sellers to the extent they
are a party thereto, enforceable against each of the Companies and each of the
Sellers in accordance with their respective terms, except as such
enforceability may limited by bankruptcy, insolvency or other laws affecting
generally the enforceability of creditors' rights and by limitations on the
availability of equitable remedies.
(e) The authorized capital stock of TMBC consists of 35,000
shares of common stock, of which 25,000 shares are shares of voting common
stock. The TMBC Shares constitute all of the outstanding shares and 10,000 are
shares of non-voting common stock of capital stock in TMBC. All of the TMBC
Shares have been duly and validly authorized and issued and are fully paid and
non-assessable and are owned beneficially and of record by the Sellers. After
consummation of the transactions contemplated by this Agreement, there are no
outstanding subscriptions, warrants, options, calls, commitments or other
equity securities, or rights or agreements with respect to any of the
foregoing, to which TMBC or the Sellers are bound relating to the issuance,
sale or redemption of the TMBC Shares or of any other shares of the capital
stock or other securities of TMBC. No other Persons other than the Sellers have
any interest, absolute or contingent, vested or unvested, in the capital stock
of TMBC. No shares of capital stock or other securities of TMBC are reserved
for any purpose.
(f) The authorized capital stock of Centre consists of 1,000
shares of common stock, of which 1,000 shares are shares of voting common
stock. The Centre Shares constitute all of the outstanding shares of capital
stock in Centre. All of the Centre Shares have been duly and validly authorized
and issued and are fully paid and non-assessable and are owned beneficially and
of record by the Sellers. After consummation of the transactions contemplated
by this Agreement, there are no outstanding subscriptions, warrants, options,
calls, commitments or other equity securities, or rights or agreements with
respect to any of the foregoing, to which Centre or the Sellers are bound
relating to the issuance, sale or redemption of the Centre Shares or of any
other shares of the capital stock or other securities of Centre.
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No other Persons other than the Sellers have any interest, absolute or
contingent, vested or unvested, in the capital stock of Centre. No shares of
capital stock or other securities of Centre are reserved for any purpose.
(g) The authorized capital stock of Holding consists of 1,000
shares of common stock, of which 1,000 shares are shares of voting common
stock. The Holding Shares constitute all of the outstanding shares of capital
stock in Holding. All of the Holding Shares have been duly and validly
authorized and issued and are fully paid and non-assessable and are owned
beneficially and of record by the Sellers. After consummation of the
transactions contemplated by this Agreement, there are no outstanding
subscriptions, warrants, options, calls, commitments or other equity
securities, or rights or agreements with respect to any of the foregoing, to
which Holding or the Sellers are bound relating to the issuance, sale or
redemption of the Holding Shares or of any other shares of the capital stock or
other securities of Holding. No other Persons other than the Sellers have any
interest, absolute or contingent, vested or unvested, in the capital stock of
Centre. No shares of capital stock or other securities of Holding are reserved
for any purpose.
(h) To the knowledge of such counsel no Company has any
subsidiaries except for the Subsidiary Partnerships or owns any capital stock
or other proprietary interest, directly or indirectly, in any other
corporation, association, trust, partnership, joint venture or other entity,
and neither Company has any agreement with any Person to acquire any such
capital stock or other proprietary interest.
(i) At the Closing, the Purchaser will acquire title to the
TMBC Shares, free and clear of any Lien.
(j) The Option Termination has been duly consummated as set
forth in the applicable provisions of this Agreement.
(k) The Reorganization has been duly consummated in
accordance with the applicable provisions of this Agreement.
(l) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, violates or will
violate any provision of the respective Certificate of Incorporation or Bylaws
of the Companies or, to the knowledge of such counsel, any law, rule,
regulation, writ, judgment, injunction, decree, determination, award or other
order of any Governmental Authority, or, to the knowledge of such counsel
violates or will violate or conflicts with or will conflict with or will result
in any breach of any of the terms of, or constitutes or will constitute a
default under or results in or will result in the termination of or the
creation or imposition of any Lien pursuant to the terms of any contract,
commitment, agreement, understanding
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or arrangement of any kind to which any of the Companies or any of the Sellers
is a party or by which any of the Companies or any of the Sellers, or any of
the assets of any of the Companies or any of the Sellers is bound. Except for
the FCC Approval and the consents disclosed on the Sellers' Disclosure
Schedule, to the knowledge of such counsel, no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of the Sellers, the Companies or any of their
Affiliates in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
(n) To the knowledge of such counsel and except as set forth
on Sellers' Disclosure Schedule, there are no claims, disputes, actions, suits
or proceedings pending or threatened against any of the Companies, any of the
assets of the Companies or any of the Sellers. Nothing contained in this
Section 11.1 shall require an opinion of such counsel with respect to FCC
matters.
11.2 Representations, Warranties and Covenants. The representations
and warranties of each of the Companies and each of the Sellers contained
herein shall be true and correct in all material respects at and as of the
Closing (except for representations and warranties expressly and specifically
relating to a time or times other than the Closing, which shall be true and
correct in all material respects at and as of the time or times specified) with
the same effect as though all such representations and warranties were made at
and as of the Closing and each of the Companies and each of the Sellers shall
have complied in all material respects with all their respective covenants
contained herein; and each of the Companies and each of the Sellers shall each
have delivered to the Purchaser a certificate to that effect, dated the date of
the Closing, signed by each of the Sellers, and in the case of the Companies,
by the President of the Companies.
11.3 No Litigation. No action, suit or proceeding against any of the
Companies, any of the Sellers or the Purchaser relating to the consummation of
any of the transactions contemplated by this Agreement nor any action by any
Governmental Authority seeking to delay or enjoin any such transactions shall
be pending or threatened.
11.4 Other Certificates. The Purchaser shall have received a
certificate as to the good standing of each Company in the State of Delaware
and in each state where the Purchased Radio Stations are located, each as of a
date not more than 20 days before the Closing, and such other certificates,
instruments and other documents, in form and substance satisfactory to the
Purchaser, as the Purchaser shall have reasonably requested in connection with
the transactions contemplated hereby.
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11.5 Corporate Action. All corporate action necessary to authorize the
execution, delivery and performance by the Companies of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by the
Companies, and the Sellers shall have delivered to the Purchaser certified
copies of the resolutions of the board of directors of each of the Companies
authorizing the execution and performance of this Agreement and authorizing or
ratifying the acts of the officers and employees of each of the Companies
carrying out the terms and provisions hereof.
11.6 Acts to Performed. Each of the covenants, acts and undertakings
of the Companies and the Sellers to be performed on or before the Closing Date
pursuant to the terms hereof shall have been duly performed.
11.7 No Material Loss. None of the conditions permitting the
Purchaser to terminate the Agreement pursuant to Section 8.7 shall exist.
11.8 Filings, Consents, Approvals and Estoppel Certificates. All
filings, consents, approvals and estoppel certificates required by the
Purchaser pursuant to this Agreement or necessary to consummate the
transactions contemplated under this Agreement shall have been obtained.
11.9 FCC Grant of Consent. The FCC Grant of Consent shall have been
obtained and shall have become a Final Order.
11.10 Senior Credit Agreement. The Finova Payoff Letter shall have
been delivered as provided in Section 6.2.
11.11 Certain Transactions. Each of the Acquisitions (to the extent
consummated before the Closing) and substantially contemporaneously with the
deposit of the purchase price with Pietragallo, Bosick & Gordon pursuant to
Section 2.2(b) each of the Option Termination and the Reorganization shall have
been effected or consummated, as the case may be, in accordance with the
provisions of this Agreement.
11.12 Sale of All TMBC Shares. Both the Sellers shall simultaneously
sell to the Purchaser all of their TMBC Shares in accordance with this
Agreement.
11.13 HSR Clearance. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
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SECTION 12
INDEMNIFICATION
12.1 Indemnification by the Sellers. Subject to the limitations and
procedures set forth in this Section 12, each of the Sellers shall, jointly and
severally, indemnify and hold harmless the Purchaser and the Companies from and
against all losses, claims, demands, damages, liabilities, obligations, costs
and/or expenses, including, without limitation, reasonable fees and
disbursements of counsel (hereinafter referred to collectively as "Damages"),
which are sustained or incurred by the Purchaser or the Companies, to the
extent that such Damages are sustained or incurred by reason of the breach of
any of the obligations, covenants or provisions of, or the breach of any of the
representations or warranties made by, either of the Sellers or the Companies
herein.
12.2 Indemnification by the Purchaser. Subject to the limitations and
procedures set forth in this Section 12, the Purchaser shall indemnify and hold
harmless each of the Sellers from and against all losses, claims, demands,
damages, liabilities, obligations, costs and/or expenses, including, without
limitation, reasonable fees and disbursements of counsel (hereinafter referred
to collectively as "Damages"), which are sustained or incurred by each such
Seller, to the extent such Damages are sustained or incurred by such Seller by
reason of the breach of any of the obligations, covenants or provisions of, or
the breach of any of the representations or warranties made by, the Purchaser
herein.
12.3 Procedure for Indemnification. In the event that any party hereto
shall incur any Damages in respect of which indemnity may be sought by such
party pursuant to this Section 12 or any other provision of this Agreement, the
party indemnified hereunder (the "Indemnitee") shall notify the party providing
indemnification (the "Indemnitor") promptly; in the case of third party claims,
such notice shall in any event be given within 10 days of the filing or
assertion of any claim against the Indemnitee stating the nature and basis of
such claim; provided, however, that any delay or failure to notify any
Indemnitor of any claim shall not relieve it from any liability except to the
extent that the Indemnitor demonstrates that the defense of such action is
materially prejudiced by such delay or failure to notify. In the case of third
party claims, the Indemnitor shall, within 10 days of receipt of notice of such
claim, notify the Indemnitee of its intention to assume the defense of such
claim. If the Indemnitor shall assume the defense of the claim, the Indemnitor
shall have the right and obligation (a) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnitee, (b) to take all other required steps or proceedings to settle or
defend any such claims, and (c) to employ counsel to contest any such claim or
liability in the name of the Indemnitee
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or otherwise. If defendants in any action include the Indemnitee and the
Indemnitor, and the Indemnitee shall have been advised by its counsel that there
may be legal defenses available to the Indemnitee which are different from or in
addition to those available to the Indemnitor, the Indemnitee shall have the
right to employ its own counsel in such action, and, in such event, the fees and
expenses of such counsel shall be borne by the Indemnitor. If the Indemnitor
shall not assume the defense of any such claim or litigation resulting
therefrom, the Indemnitee may defend against any such claim or litigation in
such manner as it may deem appropriate and the Indemnitor may settle such claim
or litigation on such terms as it may deem appropriate. If it shall be finally
determined that the Indemnitor failed to assume the defense of any claim for
which the Indemnitor is liable to the Indemnitee for Damages, then the expense
of defending the claim shall be borne by the Indemnitor. Payment of Damages
shall be made within 10 days of a final determination of a claim. A final
determination of a disputed claim shall be (a) a judgment of any court
determining the validity of disputed claim, if no appeal is pending from such
judgment or if the time to appeal therefrom has elapsed, (b) an award of any
arbitration determining the validity of such disputed claim, if there is not
pending any motion to set aside such award or if the time within which to move
to set such award aside has elapsed, (c) a written termination of the dispute
with respect to such claim signed by all of the parties thereto, (d) a written
acknowledgement of the Indemnitor that it no longer disputes the validity of
such claim, or (e) such other evidence of final determination of a disputed
claim as shall be acceptable to the parties.
12.4 Limitation Period. Except as hereinafter provided, no Person
shall be entitled to indemnification pursuant to this Section 12 except with
respect to claims made in accordance with the provisions of this Section 12
before the expiration of two years after the Closing Date (the "Limitation
Period"). The Limitation Period shall not apply with respect to claims made by
the Purchaser arising out of a breach by the Sellers or the Companies of any of
the representations and warranties contained in Sections 3.4 and 3.7, or any of
the covenants contained in Section 6.12.
12.5 Basket. Notwithstanding any provision herein to the contrary, no
Person shall be entitled to indemnification pursuant to this Section 12 except
and to the extent that the aggregate of all Damages to which such Person is
entitled pursuant to this Section 12 exceeds $100,000 (the "Threshold") but
only for that portion of any Damages in excess of the Threshold. The Threshold
shall not apply with respect to claims arising out of a breach of any of the
representation or warranties contained in Sections 3.4 and 3.7, or any of the
covenants contained in Sections 6.12. Furthermore, the Threshold shall not
diminish or offset the
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obligations of the parties to pay or deliver funds pursuant to Sections 8.1,
8.2 and 8.3.
SECTION 13
TERMINATION, EXPIRATION, REPUDIATION; REMEDIES
13.1 Termination. The parties agree that this Agreement and the
transactions contemplated hereby may be terminated prior to completion of the
Closing as follows and that the consequences thereof, subject to Section 13.3,
are as follows:
(a) Termination by mutual written consent of the
Purchaser and the Sellers, in which event the Escrow Deposit shall be
distributed to the Sellers;
(b) Termination by either the Purchaser or the
Sellers if the Final Order and clearance under the HSR Act are not obtained for
any reason on or before the Expiration Date, in which event $750,000 of the
Escrow Deposit shall be distributed to the Sellers and the remainder of the
Escrow Deposit shall revert to the Purchaser;
(c) Termination by the Purchaser if it is unable to
obtain the financing to consummate the transactions contemplated hereunder on
or before the Expiration Date, in which event the Escrow Deposit shall be
distributed to the Sellers;
(d) If there has been a material breach by any of
the Sellers or the Companies of any representation, warranty or covenant, or a
material failure by the Sellers and/or the Companies to satisfy the conditions
set forth in Section 11 which is not willful or intentional, the Purchaser
shall elect, as its sole and exclusive remedy, either (i) to consummate the
transactions contemplated hereunder pursuant to the terms of this Agreement
(including the Purchaser's right to specific performance thereof as set forth
in Section 13.2), including payment of the purchase price set forth in Section
2.2, and to pursue its rights of indemnification for Damages pursuant to
Section 12 or (ii) to terminate this Agreement. If the Purchaser elects to so
terminate, the Escrow Deposit shall revert to and be delivered to the
Purchaser;
(e) If there has been a material breach by any of
the Sellers or the Companies of any representation, warranty or covenant or a
material failure by the Sellers and/or the Companies to satisfy the conditions
set forth in Section 11 which is willful or intentional, the Purchaser shall
elect, as its sole and exclusive remedy, either (i) to consummate the
transactions contemplated hereunder pursuant to the terms of this Agreement
(including the Purchaser's right to specific performance thereof as set forth
in Section 13.2), including payment of the purchase price
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set forth in Section 2.2, and to pursue its rights of indemnification for
Damages pursuant to Section 12 or (ii) to terminate this Agreement. If the
Purchaser elects to so terminate, the Escrow Deposit shall revert to and be
delivered to the Purchaser. Furthermore, if the Purchaser elects to so
terminate, the Sellers immediately shall pay Citadel liquidated damages in the
amount of $250,000 as liquidated damages in respect of Citadel's dismissal of
the Litigation;
(f) Termination by the Purchaser if there has been
a material adverse change in the condition of the Companies, financial or
otherwise, or in the results of operations, assets, liabilities or business of
the Companies, in which event $750,000 of the Escrow Deposit shall be
distributed to the Sellers and the remainder of the Escrow Deposit shall revert
to the Purchaser; and
(g) Termination by the Sellers upon providing
written notice to the Purchaser at any time after the Expiration Date if the
Closing has not occurred and the Agreement has not been terminated for any of
the reasons set forth in Section 13.1(a) through (f), in which event the Escrow
Deposit shall be distributed to the Sellers.
13.2 Specific Performance. The parties recognize and agree that the
Purchaser has relied on this Agreement and expended considerable effort and
resources related to the transactions contemplated hereunder, that the rights
and benefits conferred upon the Purchaser herein are unique, and that damages
may not be adequate to compensate the Purchaser in the event the Sellers or the
Companies improperly refuse to consummate the transactions contemplated
hereunder. The parties hereto therefor agree that the Purchaser shall be
entitled, at its option and in lieu of terminating this Agreement pursuant to
Section 13.1, to have this Agreement specifically enforced pursuant to its
terms, including payment of the purchase price set forth in Section 2.2, by a
court of competent jurisdiction, and to pursue its rights of indemnification
for Damages pursuant to Section 12.
13.3 Disputes Regarding Termination. If this Agreement is terminated
and the parties do not agree upon the reason for such termination and the
consequences thereof, they hereby agree to proceed in accordance with Section
14.2 and, that portion of the Escrow Deposit which otherwise would revert to or
be delivered to the Purchaser pursuant to Section 13.1 shall remain in escrow
with the Escrow Agent until the reason or basis for such termination is
conclusively determined.
13.4 Limitation of the Purchaser's and Citadel's Liability. The
Sellers and the Companies acknowledge and agree that the liability of both the
Purchaser and Citadel for the failure of either or both of them to consummate
the transactions contemplated
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pursuant to this Agreement shall be limited to the Escrow Deposit, as set forth
in Section 13.1, and the Non-Refundable Payments.
13.5 Limitation of the Seller's and the Companies' Liability. The
Purchaser acknowledges and agrees if the Purchaser terminates this Agreement
and does not consummate the transactions contemplated under this Agreement or
seek specific performance by the Sellers and/or the Companies of their
obligations hereunder, that it shall not be entitled to assert a claim for
damages against the Sellers and/or the Companies except for its right to
liquidated damages as set forth in Section 13.1(e).
SECTION 14
GENERAL
14.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the laws of conflicts, of the
Commonwealth of Pennsylvania.
14.2 Dispute Resolution; Consent to Jurisdiction and Venue. Each of
the parties hereto acknowledges and agrees that any and all actions or
proceedings arising out of or related to this Agreement shall be brought and
maintained in the United States District Court for the Western District of
Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania in
accordance with the provisions of this Section. Each of the parties hereto
acknowledges and agrees that they irrevocably submit and consent to the
jurisdiction of the United States District Court for the Western District of
Pennsylvania in any action or proceeding arising out of or related to this
Agreement. In the event that any party hereto in good faith determines that
subject matter jurisdiction is lacking in the United States District Court for
the Western District of Pennsylvania, or if the United States District Court
for the Western District of Pennsylvania determines that subject matter
jurisdiction is lacking, then each of the parties hereto irrevocably submits
and consents to the jurisdiction of the Court of Common Pleas of Allegheny
County, Pennsylvania in any action or proceeding arising out of or related to
this Agreement. Except as expressly stated herein, the parties hereto
irrevocably waive the defenses of lack of personal jurisdiction, improper venue
and inconvenient forum to the maintenance of such action or proceeding.
14.3 Notices. Any notices or other communications required or
permitted hereunder shall be delivered personally or sent by registered or
certified mail, postage prepaid, addressed as follows:
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To Purchaser: Citadel Broadcasting Company
1015 Eastman Drive
Bigfork, Montana 59911
Attn: Lawrence R. Wilson
With copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street, 42nd Floor
Pittsburgh, Pennsylvania 15219
Attn: Timothy P. Ryan
To Sellers or Mr. Robert E. Tudek
the Companies: Mr. Everett I. Mundy
320 West College Avenue
Pleasant Gap, PA 16823
Tele-Media Broadcasting Company
804 Jacksonville Road
P. O. Box 39
Bellefonte, Pennsylvania 16823
Attn: Scott E. Cody
With copy to: Pietragallo, Bosick & Gordon
One Oxford Centre, 38th Floor
Pittsburgh, Pennsylvania 15219
Attn: William Pietragallo, II
Or such other addresses as shall be similarly furnished in writing by either
party. Such notices or communications shall be deemed to have been given as of
the date of personal delivery, or if mailed, the date the return receipt is
signed.
14.4 Entire Agreement. This instrument supersedes all prior
communications, understandings and agreements of or between the parties hereto
with respect to the subject matter hereof and contains the entire agreement
between the parties hereto with respect to the transactions contemplated
herein. This Agreement may not be amended, modified or otherwise altered in
any respect, and no waiver by any party hereto of any right or benefit
hereunder shall be binding upon such party, unless in writing and duly executed
by the party against whom such amendment, modification, alteration or waiver is
sought to be enforced.
14.5 Headings. The headings of this Agreement are inserted for
convenience only and shall not constitute a part hereof.
14.6 Schedules; Exhibits. All schedules and exhibits annexed hereto
are hereby incorporated herein by this reference.
14.7 Expenses. Except as otherwise specified in this Agreement, all
of the costs and expenses incurred by or on behalf of the Companies or any
Subsidiary Partnerships, or the Sellers, in connection with the Litigation, the
Acquisitions, Option
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Termination and Reorganization, and in otherwise negotiating, executing and
performing this Agreement, shall, together with all of the other obligations of
the Companies, other than the Assumed Obligations and the obligations to be paid
pursuant to Section 2.2(b), be paid in full by the Companies or the Sellers on
or before the Closing and prior to the Companies making the Final Distribution
to the Sellers. The Purchaser shall bear its own costs and expenses incurred in
connection with the negotiation, execution and performance of this Agreement and
the performance by the Purchaser of the actions required of it hereunder.
14.8 Amendment. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed on behalf of all of
the parties hereto or, in the case of a waiver, by the party waiving
compliance.
14.9 Waiver. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce that provision or any other provision hereof at any time
thereafter.
14.10 Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that, except as hereinafter provided in this Section 14.10,
no party may assign any of its obligations hereunder. The Purchaser may assign
its rights and obligations under this Agreement to any entity that is under
common control with the Purchaser or controls or is controlled by the
Purchaser, including, without limitation, any entity eligible to file a
consolidated federal income tax return with the Purchaser, but any such
assignment shall not relieve the Purchaser of its obligations hereunder.
14.11 Prior Control. Until the Closing, the Sellers shall maintain
control of each of the Companies and the Subsidiary Partnerships.
14.12 Legal Representation. Each of the parties hereto acknowledges
and agrees that any law firm serving as counsel to another party with respect
to the transactions contemplated hereby shall be entitled to serve as legal
counsel and to represent such party in any dispute involving the parties. No
law firm shall be treated as being in a conflict situation with respect to its
representation of a party hereunder by virtue of any dispute which may arise
between or among the parties.
14.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which together shall constitute a single instrument.
[The remainder of this page left intentionally blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date above first written.
TELE-MEDIA BROADCASTING COMPANY
By:__________________________________
Its:________________________
TELE-MEDIA BROADCASTING COMPANY
OF CENTRE REGION
By:__________________________________
Its:________________________
TELE-MEDIA BROADCASTING HOLDING
CORPORATION
By:__________________________________
Its:________________________
WITNESS:
_____________________________ _________________________________________
Robert E. Tudek
WITNESS:
_____________________________ _________________________________________
Everett I. Mundy
[Signatures continued on next page.]
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<PAGE> 72
[Signatures continued from preceding page.]
CITADEL BROADCASTING COMPANY
By:_________________________________
Lawrence R. Wilson, President
CITADEL COMMUNICATIONS CORPORATION
By:_________________________________
Lawrence R. Wilson, President
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<PAGE> 73
JOINDER TO AGREEMENT OF PURCHASE AND SALE
AND NOW, this 28th day of March, 1997, CITADEL COMMUNICATIONS
CORPORATION ("Citadel"), desiring to be legally bound, hereby acknowledges that
the Sellers' willingness to enter into the Agreement of Purchase and Sale (the
"Agreement") to which this joinder is attached and to sell the TMBC Shares to
CITADEL BROADCASTING COMPANY for the purchase price and pursuant to the other
terms and conditions set forth in the Agreement, constitutes adequate
consideration for the joinder herein set forth and for Citadel's performance of
the obligations of settling the Litigation and executing a joint and mutual
release as set forth in the Agreement. Further Citadel acknowledges that the
Sellers would not have entered into the Agreement but for Citadel's joinder and
agreement to perform said obligations.
CITADEL COMMUNICATIONS CORPORATION
By:_______________________________
<PAGE> 74
SCHEDULES AND EXHIBITS
TO
AGREEMENT OF PURCHASE AND SALE
Schedule 2.2 - Sellers' Percentages
Schedule 2.3 - Asset Schedule
Schedule 2.3X - Excluded Asset Schedule
Schedule 2.4 - Assumed Obligations
Schedule 2.5 - Environmental Reports Schedule
Schedule 3.0 - Sellers' Disclosure Schedule
Schedule 5.0 - Purchaser's Disclosure Schedule
Schedule 6.4 - Due Diligence and Cooperation
Exhibit 2.6 - Covenant Not to Compete
<PAGE> 1
Exhibit 10.20
AGREEMENT NOT TO COMPETE
THIS AGREEMENT NOT TO COMPETE ("Agreement") is made as of December 31,
1996, between DVS Management, Inc., an Oregon corporation ("DVS"), and Citadel
Communications Corporation, a Nevada corporation ("Parent").
RECITALS:
A. Parent, Deschutes River Broadcasting, Inc., an Oregon corporation
("Deschutes") and Citadel Acquisition Corporation, a Nevada corporation and
wholly-owned subsidiary of Parent ("CAC") are parties to that certain Merger
Agreement dated as of August 30, 1996 (the "Merger Agreement"), which provides
for the merger of Deschutes with and into CAC. As of September 17, 1996, CAC
changed its name to Deschutes License, Inc. ("DLI"), and as of December 18,
1996 DLI assigned its rights under the Merger Agreement to Deschutes
Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary of
the Company ("DAC"). Unless otherwise defined in this Agreement, all
capitalized terms shall have the meanings given them in the Merger Agreement.
B. The Endeavour Capital Fund Limited Partnership, an Oregon limited
partnership ("Endeavour") holds Deschutes Preferred Stock and Deschutes
Warrants, and as a result of the Merger Agreement, Endeavour shall receive
shares of Series E Preferred Stock of Parent.
C. DVS is the general partner of Endeavour.
D. To induce Parent to enter into the Merger Agreement, DVS has agreed
to forego its rights to compete with Parent and its subsidiaries, on the terms
and subject to the conditions set forth in this Agreement.
ACCORDINGLY, for good and valuable consideration the receipt and
sufficiency of which are acknowledged by Parent and DVS, the parties agree as
follows:
ARTICLE I
NON-COMPETE COVENANTS
1.1 DVS covenants that for a period of two (2) years following the
Closing Date, it shall not, without the prior written consent of Parent in each
instance, which consent may be withheld by Parent in its sole and absolute
discretion, directly or indirectly engage, advise, manage, operate,
participate, invest in or assist (collective, "Compete"), as owner, part owner,
lender, investor, shareholder, partner, director, officer, trustee, employee,
agent or consultant, or in any other capacity, any AM or FM radio broadcast
station or any company that owns or operates a radio station, in any geographic
area or market served or competed in by one or more of the Citadel Stations or
the
1
<PAGE> 2
Deschutes Stations (all of such stations collectively, the "Stations", and all
of such geographic areas and markets collectively, the "Territory").
1.2 DVS acknowledges that it has or may have become acquainted with
confidential or proprietary information relating to Parent and Deschutes, or
the strategic operations and plans of Parent and Deschutes. DVS shall not,
without the prior written consent of Parent, disclose or make use of any such
confidential information except any information which (a) is now or hereafter
becomes generally available to the public other than as a result of a
disclosure by DVS, or (b) is required to be disclosed by law.
1.3 Each restriction or covenant contained in this Article I is
severable from all other restrictions and covenants contained in this Article.
In addition, if the time period, geographical area or market served specified,
or any of the substantive provisions in this Article is adjudicated as
unreasonable in any proceeding, then the time period shall be reduced by such
number of months or years, the geographical area shall be reduced by the
elimination of such portion thereof, or the substance shall be reduced in
scope, or a combination of the foregoing, so that each such restriction or
covenant may be enforced for such time period, in such geographical area and to
the extent as is adjudicated to be reasonable.
ARTICLE II
PAYMENT
As full consideration for DVS entering into this Agreement, Parent
shall pay to DVS a total of Two Hundred Thousand Dollars ($200,000) in
twenty-four (24) equal monthly installments of Eight Thousand Three Hundred and
Thirty-Three Dollars and Thirty-Three Cents ($8,333.33) each, payable on the
first day of each month for the twenty-four (24) months immediately following
the Closing Date.
ARTICLE III
REMEDIES
If a party defaults under this agreement, then Parent or DVS, as the
case may be, shall be entitled to (a) injunctive relief, and such other relief
including damages as may be provided at law or in equity; and (b) reimbursement
for its reasonable attorney's fees and costs incurred thereby in an action at
law or in equity. Without limiting the foregoing, each party acknowledges that
any breach by it of this Agreement is likely to result in an injury of a nature
which would justify the entry of an injunction and a temporary restraining
order against it to restrain such breach, and it further agrees that Parent or
DVS, as the case may be, shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either in law or
in equity, to enforce the specific performance of the Agreement against the
other party, or to enjoin the other party from activities in violation of this
Agreement.
2
<PAGE> 3
ARTICLE IV
GENERAL PROVISIONS
This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon. This Agreement
shall be binding upon and inure to the benefit of the parties, and their
respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first set forth above.
DVS MANAGEMENT, INC.,
an Oregon corporation
By: /s/ John W. Dixon
-------------------------------------
Name: John W. Dixon
Title: Chairman
CITADEL COMMUNICATIONS CORPORATION,
a Nevada corporation
By: /s/ Lawrence R. Wilson
-------------------------------------
Lawrence R. Wilson, President
3
<PAGE> 1
Exhibit 10.21
CITADEL BROADCASTING COMPANY
(a Nevada corporation)
$100,000,000 10-1/4% Senior Subordinated Notes due 2007
1,000,000 Shares of 13-1/4% Series A Exchangeable Preferred Stock
PURCHASE AGREEMENT
June 30, 1997
PRUDENTIAL SECURITIES INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
BANCBOSTON SECURITIES INC.
c/o Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Dear Sirs:
Citadel Broadcasting Company, a Nevada corporation (the "Company") and
wholly-owned subsidiary of Citadel Communications Corporation ("Parent"),
proposes, subject to the terms and conditions set forth herein, to issue and
sell to Prudential Securities Incorporated, NationsBanc Capital Markets, Inc.
and BancBoston Securities Inc. (each an "Initial Purchaser" and collectively
the "Initial Purchasers") (i) $100,000,000 aggregate principal amount of its
10-1/4% Senior Subordinated Notes due 2007 (the "Notes") and (ii) 1,000,000
shares of 13-1/4% Series A Exchangeable Preferred Stock, liquidation preference
$100 per share (including additional shares payable in lieu of cash dividends,
the "Exchangeable Preferred Stock" and together with the Notes, the
"Securities"). The Notes are to be issued pursuant to an indenture to be dated
as of July 1, 1997 (the "Indenture") among the Company, Citadel License, Inc.
(the "Subsidiary") and the Bank of New York, trustee (the "Trustee"), and the
Exchangeable Preferred Stock is to be issued pursuant to a certificate of
designation (the "Certificate of Designation") of the Company with respect to
such stock. Subject to certain conditions, the Exchangeable Preferred Stock is
exchangeable in whole, but not in part, at the option of the Company, for the
Company's 13-1/4% Subordinated Exchange Debentures due 2009 (including
additional securities payable in lieu of cash interest, the "Exchange
Debentures") to be issued pursuant to an indenture to be dated as of July 1,
1997, (the "Exchange Indenture") among the Company, the Subsidiary and the Bank
of New York, trustee (the "Debenture Trustee" and together with the Trustee, the
"Trustees"). The Securities, the Indenture, the Certificate of Designation and
the Exchange Indenture are more fully described in the Offering Memorandum (as
hereinafter defined). Capitalized terms used herein and not otherwise defined
herein have the respective meanings specified in the Offering Memorandum.
The Securities will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance on an exemption from the registration requirements of the 1933 Act.
The Company has prepared a
<PAGE> 2
preliminary offering memorandum, dated June 11, 1997 (such preliminary offering
memorandum being hereinafter referred to as the "Preliminary Offering
Memorandum"), and is preparing a final offering memorandum, dated June 30, 1997
(such final offering memorandum, in the form first furnished to the Initial
Purchasers for use in connection with the offering of the Securities, being
hereinafter referred to as the "Offering Memorandum"), each setting forth
information regarding the Company and the Securities. The Company hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchasers in accordance with the terms hereof.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms set forth in the Offering Memorandum,
as soon as they deem advisable after this Agreement has been executed and
delivered, (i) to persons in the United States whom the Initial Purchasers
reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the 1933 Act, as such rule
may be amended from time to time ("Rule 144A"), in transactions under Rule 144A
and (ii) to a limited number of other institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under Regulation D ("Regulation D")
of the 1933 Act ("Accredited Investors")) in exempt private sales exempt from
registration under the 1933 Act.
The Initial Purchasers and other holders of Exchangeable Preferred Stock
(including subsequent transferees) will be entitled to the benefits of a
Registration Rights Agreement, in substantially the form attached hereto as
Exhibit A, with such changes as shall be agreed to by the parties hereto (the
"Preferred Stock Registration Rights Agreement"). In addition, the Initial
Purchasers and other holders of Notes (including subsequent transferees) will
be entitled to the benefits of a Registration Rights Agreement, in
substantially the form attached hereto as Exhibit B, with such changes as shall
be agreed to by the parties hereto (the "Notes Registration Rights Agreement"
and together with the Preferred Stock Registration Rights Agreement, the
"Registration Rights Agreements"). Pursuant to the Registration Rights
Agreements, the Company and the Subsidiary will agree that the Company shall
file with the Securities and Exchange Commission (the "Commission") under the
circumstances set forth therein, either (i) a registration statement under the
1933 Act registering the New Notes and the New Preferred Stock (collectively,
the "New Securities") to be offered in exchange for the Securities and use its
best efforts to cause such registration statement to be declared effective or
(ii) under certain circumstances set forth therein, a shelf registration
statement pursuant to Rule 415 under the 1933 Act relating to the resale of the
New Securities, and use its best efforts to cause such shelf registration
statement to be declared effective.
Concurrently with the sale of the Securities, the Company will enter into an
amended and restated Credit Agreement (the "New Credit Facility"), to be dated
as of July 3, 1997, among the Company, FINOVA Capital Corporation, as
administrative agent and Lender thereunder, and other lending institution
parties thereto, which will provide for loans up to $150,000,000 and will
permit the issuance and sale of the Securities. In addition, as soon as
practicable following the Closing, but subject to FCC approval in the case of
all but
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<PAGE> 3
the Tele-Media Acquisition, the Company expects to consummate its purchase of
(i) all of the issued and outstanding capital stock of Tele-Media, which
currently owns or operates 16 FM and 10 AM radio stations (the "Tele-Media
Acquisition"), (ii) four radio stations which the Company currently operates
under LMAs (the "In-Market Acquisitions"), (iii) two additional radio stations
in Providence, Rhode Island (the "Providence Acquisition"), and (iv) an
aggregate of five FM and two AM radio stations and one FM license in Little
Rock, Arkansas (the "Little Rock Acquisition" and together with the Tele-Media
Acquisition, the In-Market Acquisitions and the Providence Acquisition, the
"Pending Acquisitions").
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. (a) Each of the
Company and Parent jointly and severally represents and warrants to, and agrees
with, each of the Initial Purchasers that:
(i) As of their respective dates and as of the time (the "Closing Time")
of the Closing hereunder, (x) none of the Preliminary Offering Memorandum,
the Offering Memorandum or any amendment or supplement thereto includes or
will include an untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
(y) all reasonable inquiries have been made to ascertain such facts and to
verify the accuracy of all such information and statements and (z) any
opinions and intentions expressed in the Preliminary Offering Memorandum, the
Offering Memorandum or any amendment or supplement thereto with respect to
the Company are honestly held and are based on reasonable assumptions;
PROVIDED, HOWEVER, that the Company makes no representation or warranty as to
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Initial Purchasers
expressly for use in the Preliminary Offering Memorandum, the Offering
Memorandum or any amendment or supplement thereto.
(ii) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada with corporate power and
authority under such laws to own, lease and operate its properties and
conduct its business as now conducted and described in the Offering
Memorandum; and the Company is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts business of a
type, that would make such qualification necessary, except to the extent that
the failure to so qualify or be in good standing would not have a material
adverse effect on the business, results of operations, financial condition or
properties of the Company and the Subsidiary (as defined below) taken as a
whole (a "Material Adverse Effect").
(iii) The Company's only subsidiary (either direct or indirect) as of the
date hereof is Citadel License, Inc. (the "Subsidiary"). The Subsidiary is
duly incorporated and validly existing and in good standing under the laws of
the State of Nevada, with corporate power and authority under such laws to
own, lease and operate its properties and to conduct its business as now
conducted and as described
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<PAGE> 4
in the Offering Memorandum; and the Subsidiary is duly qualified to do
business as a foreign corporation in good standing in each other jurisdiction
in which it owns or leases property of a nature or transacts business of a
type that would make such qualification necessary, except to the extent that
the failure to be so qualified or in good standing would not have a Material
Adverse Effect.
(iv) The Company has a duly authorized, issued and outstanding
capitalization as of the date hereof of 136,300 shares of common stock, par
value $0.001 per share. All of the outstanding capital stock of the Company
is owned directly by Parent, has been duly authorized and validly issued, is
fully paid and nonassessable and was not issued in violation of any
preemptive or similar rights (whether provided contractually or pursuant to
any of its articles of incorporation, by-laws or other organizational
documents) free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability or voting of such capital stock, except as
set forth in the Offering Memorandum. All of the outstanding capital stock
of the Subsidiary is owned directly by the Company, has been duly authorized
and validly issued, is fully paid and nonassessable and was not issued in
violation of any preemptive or similar rights (whether provided contractually
or pursuant to any of its articles of incorporation, by-laws or other
organizational documents) free and clear of all liens, encumbrances, equities
and claims or restrictions on transferability or voting of such capital
stock, except as set forth in the Offering Memorandum. Immediately after the
filing of the Certificate of Designation, the Company will have a duly
authorized capitalization of 136,300 shares of common stock, par value $0.001
per share, and 4,000,000 shares of preferred stock, no par value, of which
2,000,000 shares shall be designated 13-1/4% Series A Exchangeable Preferred
Stock and 2,000,000 shares shall be designated 13-1/4% Series B Exchangeable
Preferred Stock.
(v) The execution and delivery of this Agreement have been duly
authorized by each of the Company and Parent and this Agreement has been duly
executed and delivered by each of them, and constitutes the valid and binding
agreement of each of them, enforceable against each of them in accordance
with its terms.
(vi) The execution and delivery of the Registration Rights Agreements have
been duly authorized by each of the Company and the Subsidiary and, on and as
of the Closing Time, the Registration Rights Agreements will have been duly
executed and delivered by the Company and the Subsidiary, and will be legal,
valid and binding obligations of the Company and the Subsidiary, enforceable
against them in accordance with their terms.
(vii) The execution and delivery of the Indenture have been duly
authorized by the Company and the Subsidiary, and, on and as of the Closing
Time, the Indenture will have been duly executed and delivered by the Company
and the Subsidiary, and when duly executed and delivered by the Company, the
Subsidiary and the Trustee, will constitute a valid and binding obligation
of the Company and the Subsidiary, enforceable against the Company and the
Subsidiary in accordance with its terms.
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<PAGE> 5
(viii) The issuance, execution and delivery of the Notes and the New
Notes have been duly authorized by the Company. When executed,
authenticated, issued and delivered in the manner provided for in the
Indenture and sold and paid for as provided in this Agreement, the Notes will
constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in accordance
with their terms. The New Notes, when executed, authenticated, issued and
delivered in exchange for the Notes, will constitute valid and binding
obligations of the Company, entitled to the benefits of the Indenture,
enforceable against the Company in accordance with the terms thereof. The
Notes conform to the description thereof in the Offering Memorandum.
(ix) The issuance and delivery of the Exchangeable Preferred Stock and the
New Preferred Stock have been duly authorized by the Company. The filing of
the Certificate of Designation relating to the Exchangeable Preferred Stock
and the New Preferred Stock has been duly authorized and, when issued and
delivered against payment therefor in accordance with the terms hereof or the
Certificate of Designation, the Exchangeable Preferred Stock will be validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights. As of the Closing, the Articles of Incorporation of the Company by
virtue of the Certificate of Designation will set forth the rights,
preferences and priorities of the Exchangeable Preferred Stock. The
certificates for the Exchangeable Preferred Stock that are being sold by the
Company are in due and proper form and the holders of such Exchangeable
Preferred Stock will not be subject to personal liability by reason of being
such holders.
(x) The execution and delivery of the Exchange Indenture have been duly
authorized by the Company and the Subsidiary, and, on and as of the Closing
Time, the Exchange Indenture will have been duly executed and delivered by
the Company and the Subsidiary, and when duly executed and delivered by the
Company, the Subsidiary and the Debenture Trustee, will constitute a valid
and binding obligation of the Company and the Subsidiary, enforceable against
the Company and the Subsidiary in accordance with its terms.
(xi) The Exchange Debentures have been duly authorized by the Company for
issuance, subject to further action by the Board with respect to the due
execution and delivery thereof. The Exchange Debentures, when executed by
the Company and authenticated by the Debenture Trustee in accordance with the
provisions of the Exchange Indenture and delivered upon the exchange of the
Exchangeable Preferred Stock, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of the
Company, entitled to the benefits of the Exchange Indenture and enforceable
against the Company in accordance with their terms.
(xii) The financial statements of the Company included in the
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<PAGE> 6
Offering Memorandum, together with the related schedules and notes, present
fairly (1) the financial position of the Company and the Subsidiary on a
consolidated basis as of the dates indicated and (2) the results of operations
and cash flows of the Company and the Subsidiary on a consolidated basis for
the periods specified, subject, in the case of unaudited financial statements
of the Company, to normal year-end adjustments which shall not be materially
adverse to the business, results of operations, financial condition or
properties of the Company and the Subsidiary, taken as a whole. Such
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. The financial statement schedules of the Company, if any, included
in the Offering Memorandum present fairly the information required to be
stated therein. The selected financial data included in the Offering
Memorandum present fairly the information shown therein and have been compiled
on a basis consistent with that of the audited consolidated financial
statements included in the Offering Memorandum.
(xiii) KPMG Peat Marwick LLP ("KPMG"), which is reporting upon the
audited financial statements and related notes of the Company and Deschutes
(as defined below) included in the Offering Memorandum, is an independent
public accountant with respect to the Company and its subsidiaries within the
meaning of the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder.
(xiv) The financial statements of Deschutes River Broadcasting, Inc. and
subsidiaries ("Deschutes") included in the Offering Memorandum, together with
the related schedules and notes, present fairly (1) the financial position of
Deschutes on a consolidated basis as of the dates indicated and (2) the
results of operations, stockholders' equity and cash flows of Deschutes on a
consolidated basis for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved. The financial
statement schedules of Deschutes, if any, included in the Offering Memorandum
present fairly the information required to be stated therein.
(xv) The financial statements of Tele-Media Broadcasting Company and its
partnership interests ("Tele-Media") included in the Offering Memorandum,
together with the related schedules and notes, present fairly (1) the
financial position of Tele-Media on a consolidated basis as of the dates
indicated and (2) the results of operations, deficiency in net assets and cash
flows of Tele-Media on a consolidated basis for the periods specified,
subject, in the case of unaudited financial statements of Tele-Media, to
normal year-end adjustments which shall not be materially adverse to the
condition (financial or otherwise), earnings, business affairs or business
prospects of Tele-Media. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the period involved. The financial statement
schedules of Tele-Media, if any, included in the Offering memorandum present
fairly the information required to be stated therein.
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<PAGE> 7
(xvi) Deloitte & Touche LLP, which is reporting upon the audited
financial statements and related notes of Tele-Media included in the Offering
Memorandum, is an independent public accountant with respect to Tele-Media
within the meaning of the 1933 Act, the Exchange Act and the rules and
regulations promulgated thereunder.
(xvii) The financial statements of Snider Corporation ("Snider")
included in the Offering Memorandum, together with the related schedules and
notes, present fairly (1) the financial position of Snider as of the dates
indicated and (2) the statements of income, stockholders' equity and cash
flows of Snider for the periods specified, subject, in the case of unaudited
financial statements, to normal year-end adjustments which shall not be
materially adverse to the condition (financial or otherwise), earnings,
business affairs or business prospects of Snider. Such financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved.
The financial statement schedules of Snider, if any, included in the Offering
Memorandum present fairly the information required to be stated therein.
(xviii) Erwin & Company, which is reporting upon the audited financial
statements and related notes of Snider and Snider Broadcasting (as defined
below) included in the Offering Memorandum, is an independent public
accountant with respect to Snider and Snider Broadcasting within the meaning
of the 1933 Act, the Exchange Act and the rules and regulations of the
Commission thereunder.
(xix) The financial statements of Snider Broadcasting Corporation and
Subsidiary and CDB Broadcasting Corporation (collectively "Snider
Broadcasting") included in the Offering Memorandum, together with the related
schedules and notes, present fairly (1) the financial position of Snider
Broadcasting on a combined consolidated basis as of the dates indicated and
(2) the results of operations, stockholders' deficit and cash flows of Snider
Broadcasting on a combined consolidated basis for the periods specified,
subject, in the case of unaudited financial statements of Snider
Broadcasting, to normal year-end adjustments which shall not be materially
adverse to the condition (financial or otherwise), earnings, business affairs
or business prospects of Snider Broadcasting. Such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved. The financial
statement schedules of Snider Broadcasting, if any, included in the Offering
Memorandum present fairly the information required to be stated therein.
(xx) The pro forma condensed consolidated financial statements and other
pro forma financial information (including the notes thereto) included in the
Offering Memorandum (1) present fairly in all material respects the
information shown therein; (2) have been prepared in accordance with the
applicable requirements of Regulation S-X promulgated under the 1933 Act; (3)
have been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements; and (4) have been properly
computed on the basis described
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<PAGE> 8
therein. The assumptions used in the preparation of the pro forma financial
statements and other pro forma condensed consolidated financial information
included in the Offering Memorandum are reasonable and the adjustments used
therein are reasonably appropriate to give effect to the transactions or
circumstances referred to therein.
(xxi) Except as disclosed in the Offering Memorandum, there is no action,
suit or proceeding before or by any government, governmental instrumentality
or court, domestic or foreign, now pending or, to the knowledge of the
Company, threatened against the Company or the Subsidiary or any of their
respective officers, in their capacity as such, that could result in a
Material Adverse Effect, or that could adversely affect the consummation of
the transactions contemplated in this Agreement or the Offering Memorandum;
the aggregate of all pending legal or governmental proceedings that are not
described in the Offering Memorandum to which the Company or the Subsidiary is
a party or which affect any of their respective properties, including ordinary
routine litigation incidental to the business of the Company or the
Subsidiary, could not reasonably be expected to have a Material Adverse
Effect.
(xxii) Except as disclosed in the Offering Memorandum, to the Company's
knowledge, there is no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now pending or
threatened against Tele-Media or any of its respective officers, in their
capacity as such, that could result in a Material Adverse Effect, or that
could adversely affect the consummation of the transactions contemplated in
this Agreement or the Offering Memorandum; to the knowledge of the Company,
the aggregate of all pending legal or governmental proceedings that are not
described in the Offering Memorandum to which Tele-Media is a party or which
affect any of its respective properties, including ordinary routine litigation
incidental to the business of Tele-Media, could not reasonably be expected to
have a Material Adverse Effect.
(xxiii) No authorization, approval, consent or license of any government,
governmental instrumentality or court, domestic or foreign (including, without
limitation, the Federal Communications Commission (the "FCC") (other than
under the 1933 Act and the rules and regulations thereunder with respect to
the Registration Rights Agreements and the transactions contemplated
thereunder and the securities or "blue sky" laws of the various states) is
required for the valid authorization, issuance, sale and delivery of the
Securities, for the execution, delivery or performance by the Company, Parent
or the Subsidiary, as applicable, of this Agreement, the Registration Rights
Agreements, the Indenture, the Exchange Indenture and the transactions and
actions contemplated thereby (except as set forth in the last sentence of the
fifth paragraph of this Agreement). In addition, no consent, approval,
authorization or order of any court or governmental agency or body (except for
such consents, approvals or authorizations as are required by the FCC or under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976) is required for the
performance by the Company of the transactions contemplated by the Pending
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<PAGE> 9
Acquisitions, and the Company has no reasonable basis to believe that the
transactions contemplated by the Pending Acquisitions will not be consummated
in accordance with their terms.
(xxiv) Except as disclosed in the Offering Memorandum, the Company and the
Subsidiary validly hold all material licenses, certificates, permits,
consents, authorizations and approvals for the Existing Stations (as defined
below) (collectively, "Licenses") from governmental authorities which are
necessary to the conduct of their businesses and operations in the manner and
to the full extent now operated or proposed to be operated as described in the
Offering Memorandum; such Licenses were issued and are in full force and
effect and no complaint, action, litigation or other proceeding has been
instituted or is pending or, to the knowledge of the Company, is threatened
which in any manner affects or questions the validity or effectiveness
thereof; such Licenses contain no materially burdensome conditions or
restrictions not customarily imposed by the FCC on radio stations of the same
class and type; the operation of the radio stations identified in the table
under "Existing Markets" in the Offering Memorandum under the caption
"Business -- General" (collectively, the "Existing Stations") in the manner
and to the full extent now operated or proposed to be operated as described in
the Offering Memorandum, is in compliance with the Communications Act of 1934,
as amended (the "Communications Act"), the Telecommunications Act of 1996, and
all orders, rules, regulations, and policies of the FCC, except for such
noncompliance as would not have a Material Adverse Effect; no event has
occurred which permits (nor has an event occurred which with notice or lapse
of time or both would permit) the revocation or termination of such Licenses
or the imposition of any material adverse restriction or condition thereon or
which might result in any other material impairment of the rights of the
Company or the Subsidiary therein; the Company and the Subsidiary are in
compliance with all statutes, orders, rules, and policies of the FCC relating
to or affecting the broadcasting operations of any of the Existing Stations,
except for such noncompliance as would not have a Material Adverse Effect.
(xxv) To the Company's knowledge, (i) Tele-Media validly holds all
material licenses, certificates, permits, consents, authorizations and
approvals for the Existing Tele-Media Stations (as defined below)
(collectively, "Tele-Media Licenses") from governmental authorities which are
necessary to the operation of the Existing Tele-Media Stations (as defined
below) in the manner and to the full extent now operated; such Licenses were
issued and are in full force and effect and no complaint, action, litigation
or other proceeding has been instituted or is pending or threatened which in
any manner affects or questions the validity or effectiveness thereof; (ii)
such Tele-Media Licenses contain no materially burdensome conditions or
restrictions not customarily imposed by the FCC on radio stations of the same
class and type; (iii) the operation of the radio stations identified in the
table under "Tele-Media Markets" in the Offering Memorandum under the caption
"Business -- General" (collectively, the "Existing Tele-Media Stations") in
the manner and to the full extent now operated is in compliance with the
Communications Act, the Telecommunications Act of 1996, and all orders, rules,
regulations, and policies of the FCC, except for such
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<PAGE> 10
noncompliance as would not have a Material Adverse Effect; (iv) no event has
occurred which permits (nor has an event occurred which with notice or lapse
of time or both would permit) the revocation or termination of the Tele-Media
Licenses or the imposition of any material adverse restriction or condition
thereon or which might result in any other material impairment of the rights
of Tele-Media therein; and (v) Tele-Media is in compliance with all statutes,
orders, rules, and policies of the FCC relating to or affecting the
broadcasting operations of any of the Existing Tele-Media Stations, except for
such noncompliance as would not have a Material Adverse Effect.
(xxvi) Neither the Company nor the Subsidiary is in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which it is a party or by which it may be
bound or to which any of its properties may be subject, except for such
defaults that would not have a Material Adverse Effect. Each of (i) the
execution and delivery by the Company, Parent and the Subsidiary, as
applicable, of this Agreement, the Registration Rights Agreements, the
Indenture and the Exchange Indenture, (ii) the issuance, sale and delivery of
the Securities by the Company, (iii) the consummation by the Company, Parent
and Subsidiary, as applicable, of the Pending Acquisitions, (iv) the
compliance by the Company, Parent and the Subsidiary, as applicable, with the
terms of this Agreement, the Registration Rights Agreements, the Indenture,
the Certificate of Designation, the Exchange Indenture and (v) the
transactions contemplated hereby and thereby, (A) have been duly authorized by
all necessary corporate action on the part of the Company, Parent and the
Subsidiary, as applicable, (B) do not and will not result in any violation of
the charter or by-laws of the Parent, Company and the Subsidiary, as
applicable and (C) except as would not have a Material Adverse Effect, do not
and will not conflict with, or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company, Parent and the Subsidiary, as applicable under, (I) any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which the Company, Parent and the Subsidiary, as applicable, is
a party or by which they may be bound or to which any of their respective
properties may be subject or (II) any existing applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company, Parent and the Subsidiary, as applicable, or any of their respective
properties.
(xxvii) Except as disclosed in the Offering Memorandum, and other than with
respect to the Licenses and the Tele-Media Licenses, each of the Company and
the Subsidiary and to the knowledge of the Company, Tele-Media, owns,
possesses or has obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other authorizations necessary
to own or lease, as the case may be, and to operate its properties and to
carry on its business as presently conducted, and neither the Company nor the
Subsidiary has any reason to believe that any governmental agency or body is
considering limiting, suspending or
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<PAGE> 11
revoking any such approval, license, permit, certificate, franchise,
authorization or right.
(xxviii) Each of the Company and the Subsidiary has good and marketable
title to all properties and assets described in the Offering Memorandum as
owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as (A) are described in the Offering Memorandum or
(B) are neither material in amount nor materially significant in relation to
the business of the Company and the Subsidiary, considered as one enterprise;
all of the leases and subleases material to the business of the Company and
the Subsidiary, considered as one enterprise, and under which the Company or
the Subsidiary holds properties described in the Offering Memorandum, are in
full force and effect, and neither the Company nor the Subsidiary has received
any notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or the Subsidiary under any of the leases
or subleases mentioned above, or affecting or questioning the rights of such
corporation to the continued possession of the leased or subleased premises
under any such lease or sublease.
(xxix) Each of the Company and the Subsidiary carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and is customary for companies engaged in similar businesses in
similar industries.
(xxx) Each of the Company and the Subsidiary owns or possesses adequate
patents, patent licenses, trademarks, service marks and trade names necessary
to carry on its business as presently conducted, and neither the Company nor
the Subsidiary has received any notice of infringement of or conflict with
asserted rights of others with respect to any patents, patent licenses,
trademarks, service marks or trade names that in the aggregate, if the subject
of an unfavorable decision, ruling or finding, could have a Material Adverse
Effect.
(xxxi) No material event of default exists under any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to
which the Company or the Subsidiary is a party or to which the Company or the
Subsidiary is subject.
(xxxii) There are no contracts or documents of a character that would be
required to be described in the Offering Memorandum, if it were a prospectus
filed as part of a registration statement on Form S-1 under the 1933 Act, that
are not described as would be so required. All such contracts which are so
described in the Offering Memorandum to which the Company or the Subsidiary is
a party have been duly authorized, executed and delivered by the Company or
the Subsidiary, constitute valid and binding agreements of the Company or the
Subsidiary and are enforceable against the Company or the Subsidiary in
accordance with the terms thereof.
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<PAGE> 12
(xxxiii) To the best knowledge of the Company, no labor problem exists with
its employees or with the employees of the Subsidiary or is imminent that
could materially adversely affect the Company and the Subsidiary, considered
as one enterprise, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of the Subsidiary's principal
suppliers, contractors or customers that could have a Material Adverse Effect.
(xxxiv) All United States federal income tax returns of the Company and the
Subsidiary required by law to be filed have been filed and all United States
federal income taxes which are due and payable have been paid, except
assessments against which appeals have been or will be promptly taken and as
to which adequate reserves have been provided. The Company and the Subsidiary
each has filed all other tax returns that are required to have been filed by
it pursuant to applicable foreign, state, local or other law except insofar as
the failure to file such returns would not have a Material Adverse Effect, and
has paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company and the Subsidiary, except for such taxes, if any, as
are being contested in good faith and as to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Company in
respect of any income and corporation tax liability for any years not finally
determined are adequate to meet any assessments or re-assessments for
additional income tax for any years not finally determined, except to the
extent of any inadequacy that would not have a Material Adverse Effect.
(xxxv) Each of the Company and the Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company and the Subsidiary have not
made, and, to the knowledge of the Company, no employee or agent of the
Company or the Subsidiary has made, any payment of the Company's funds or the
Subsidiary's funds or received or retained any funds in violation of any
applicable law, regulation or rule or that would be required to be disclosed
in the Offering Memorandum if it were a prospectus filed as part of a
registration statement on Form S-1 under the 1933 Act.
(xxxvi) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (A) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (B) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as
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<PAGE> 13
amended, including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
(xxxvii) The Company has been advised that the Securities have been
designated PORTAL securities in accordance with the rules and regulations of
the National Association of Securities Dealers, Inc. ("NASD").
(xxxviii) None of the Company or any affiliate of the Company (as defined
in Rule 501(b) under the 1933 Act) has directly or through any agent, sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect
of, any security (as defined in the 1933 Act) of the Company that is of the
same or similar class as the Securities (other than with respect to the
Exchange Securities) in a manner that would require the registration of the
Securities under the 1933 Act.
(xxxix) None of the Company or any affiliate of the Company or any person
acting on their behalf has (A) engaged, in connection with the offering of the
Securities, in any form of general solicitation or general advertising (as
those terms are used within the meaning of Regulation D) or (B) solicited
offers for, or offered or sold, such Securities by means of any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the 1933 Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the 1933 Act.
(xxxx) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sold (except pursuant to this Agreement), bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(xxxxi) Assuming (A) the accuracy of the representations and warranties of
the Initial Purchasers in Section 2 hereof and (B) the due performance by the
Initial Purchasers of the covenants and agreements set forth in Section 2
hereof, it is not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchasers under, or in connection with the
initial resale of such Securities by the Initial Purchasers in accordance
with, this Agreement to register the Securities under the 1933 Act or to
qualify any indenture in respect of the Securities under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").
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<PAGE> 14
(xxxxii) No relationship, direct or indirect, exists between or among the
Company or the Subsidiary, on the one hand, and the directors, officers,
securityholders, customers or suppliers of the Company or the Subsidiary, on
the other hand, that is of a character that would be required to be described
in the Offering Memorandum if it were a prospectus filed as part of a
registration statement on Form S-1 under the 1933 Act, that is not described
as would be so required.
(xxxxiii) The Company is not an "investment company" or a company
controlled by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxxxiv) Neither the Company nor the Subsidiary, nor any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or the Subsidiary, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(xxxxv) All offers and sales by the Company of the Company's securities
which have taken place within the past three years were at all relevant times
exempt from the registration requirements of the 1933 Act or duly registered
under the 1933 Act, and were duly registered or the subject of an available
exemption from the requirements of applicable state securities laws.
(xxxxvi) Since the respective dates as of which information is given in the
Offering Memorandum, except as otherwise stated therein or contemplated
thereby, there has not been (A) any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company and the Subsidiary, considered as one enterprise, whether or not
arising in the ordinary course of business, (B) any transaction entered into
by the Company or the Subsidiary, other than in the ordinary course of
business, that is material to the Company and the Subsidiary, considered as
one enterprise, or (C) any dividend or distribution of any kind declared, paid
or made by the Company on its capital stock.
(xxxxvii) Except as disclosed in the Offering Memorandum and except as
would not individually or in the aggregate have a Material Adverse Effect, (A)
the Company and the Subsidiary are each in compliance with all applicable
Environmental Laws, (B) the Company and the Subsidiary have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending
or threatened Environmental Claims against the Company or the Subsidiary, and
(D) there are no circumstances with respect to any property or operations of
the Company or the Subsidiary that could reasonably be anticipated to form the
basis of an Environmental Claim against the Company or the Subsidiary.
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<PAGE> 15
For purposes of this Agreement, the following terms shall have
the following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigations or proceedings relating in any way to any
Environmental Law.
(xxxxvi) The statistical and market-related data included in the Offering
Memorandum are based on or derived from sources which the Company believes to
be reliable and accurate in all material respects or represents the Company's
good faith estimates that are made on the basis of data derived from such
sources.
(xxxxvii) The Subsidiary Merger (as defined in the Offering Memorandum) has
become effective under applicable law.
(b) Any certificate signed by any officer of the Company or the
Subsidiary and delivered to the Initial Purchasers or to counsel for the Initial
Purchasers shall be deemed a representation and warranty by the Company to the
Initial Purchasers as to the matters covered thereby.
Section 2. Purchase, Sale and Resale of the Securities;
Closing; Representations and Warranties of the Initial Purchasers. (a) On the
basis of the representations and warranties herein contained, and subject to the
terms and conditions herein set forth, the Company agrees to sell to each of the
Initial Purchasers, severally and not jointly, and each of the Initial
Purchasers, severally and not jointly, agrees to purchase from the Company (i)
at a purchase price of 97.250% of the principal amount thereof, the principal
amount of the Notes, and (ii) at a purchase price of $96.85 per share, the
number of shares of Exchangeable Preferred Stock set forth opposite its name on
Schedule I.
(b) Payment of the purchase price for, and delivery of, the
Securities shall be made at the offices of Schulte Roth & Zabel LLP, 900 Third
Avenue, New York, New York 10022, or at such other place as shall be agreed upon
by the Company and you, at 10:00 A.M., New York time, on July 3, 1997, or at
such other time not more than two business days thereafter as the Initial
Purchasers and the Company shall agree (such date and time of payment and
delivery being herein called the "Closing Time"). The Securities shall be in
such denominations and registered in such names as you may request in writing at
least two business days before the Closing Time. The Securities, which may be
in temporary form, will be made available in New York City for examination and
packaging by you not later than 10:00 A.M. on the last business day prior to the
Closing Time.
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<PAGE> 16
(c) At the Closing Time, payment shall be made to the
Company in the aggregate amount of $194,100,000 immediately available funds
payable to the order of the Company against delivery of the Securities to you
and the Company shall promptly reimburse you for your costs in obtaining
immediately available funds.
(d) The Initial Purchasers have advised the Company that
they propose to offer the Securities for sale, upon the terms and conditions
set forth in this Agreement and in the Offering Memorandum. Each Initial
Purchaser hereby represents and warrants to the Company that it is a Qualified
Institutional Buyer as defined in Rule 144A and an "Accredited Investor" as
defined in Rule 501 of Regulation D. Each Initial Purchaser agrees with the
Company that it (i) has not solicited and will not solicit offers for, or offer
or sell, the Securities by means of any form of general solicitation or general
advertising or in any manner involving a public offering within the meaning of
Section 4(2) of the 1933 Act and (ii) has solicited and will solicit offers for
the Securities only from, and will offer, sell or deliver the Securities, as
part of its initial offering, only to (A) persons whom it reasonably believes
to be Qualified Institutional Buyers or, if any such person is buying for one
or more institutional accounts for which such person is acting as fiduciary or
agent, only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in a
transaction under Rule 144A and (B) other institutional investors that it
reasonably believes to be Accredited Investors or, if any such person is buying
for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to the relevant
Initial Purchaser that each such account is an Accredited Investor; provided
that, with respect to clause (B), each such transfer of Securities is effected
by the delivery to such purchaser of Securities in definitive form and
registered in its name (or its nominee's name) on the books maintained by the
Trustee or the Transfer Agent, as the case may be.
Section 3. Certain Covenants of the Company. The Company
covenants and agrees with each of the Initial Purchasers as follows:
(a) The Company will not at any time make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not have previously been advised and furnished a copy
for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers or their counsel
shall reasonably object.
(b) The Company will promptly deliver to the Initial
Purchasers, without charge, during the period from the date hereof to
the date of the completion of the distribution of the Securities by the
Initial Purchasers, such number of copies of the Offering Memorandum,
as it may then be amended or supplemented, or the Preliminary Offering
Memorandum, as it may then be amended or supplemented, as the Initial
Purchasers and their counsel may reasonably request.
(c) If, at any time prior to completion of the
distribution of the Securities by the Initial Purchasers, any event
shall occur or condition exist as a result
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<PAGE> 17
of which it is necessary, in the opinion of their counsel or counsel
for the Company, to amend or supplement the Offering Memorandum in
order that the Offering Memorandum will not include an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading or
if, in the opinion of counsel to the Initial Purchasers or counsel for
the Company, it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, the Company, at its own
expense, will promptly prepare such amendment or supplement as may be
necessary so that the statements in the Offering Memorandum as so
amended or supplemented will not, in the light of the circumstances
existing at the time it is delivered to a purchaser, be misleading or
so that such Offering Memorandum as so amended or supplemented will
comply with applicable law, as the case may be, and furnish the Initial
Purchasers such number of copies as they may reasonably request.
(d) The Company will endeavor, in cooperation with the
Initial Purchasers, to qualify the Securities for offering and sale
under the applicable securities laws of such states and other
jurisdictions as the Initial Purchasers may designate and to maintain
such qualifications in effect for as long as may be necessary to
complete the resale of the Securities by the Initial Purchasers;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Securities have
been qualified as above provided. The Company will also supply the
Initial Purchasers with such information as is necessary for the
determination of the legality of the Securities for investment under
the laws of such jurisdictions as the Initial Purchasers may request.
(e) Except following the effectiveness of the
Registration Statement, neither the Company nor any of its affiliates
(as such term is defined in Rule 501(b) of Regulation D) will solicit
any offer to buy or offer to sell the Securities by means of any form
of general solicitation or general advertising (within the meaning of
Rule 502(C) of Regulation D) or in any manner involving a public
offering within the meaning of Section 4(2) of the 1933 Act.
(f) Neither the Company nor any of its affiliates (as
such term is defined in Rule 501(b) of the 1933 Act) will offer, sell
or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the 1933 Act) the offering of which security
could be integrated with the sale of the Securities in a manner that
would require the registration of any of the Securities under the 1933
Act.
(g) The Company will not be or become an open-end
investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under the 1940 Act, and
will not be or become a closed-end
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<PAGE> 18
investment company required to be registered thereunder.
(h) During the period from the Closing Time to the
earlier of (i) two years after the Closing Time or (ii) the date of
effectiveness of the Registration Statement, the Company will not, and
will not permit any of its affiliates (as such term is defined in Rule
144 under the 1933 Act) to, resell any of the Securities that have been
reacquired thereby, except for Securities purchased by the Company or
any of its affiliates and resold in a transaction registered under the
1933 Act.
(i) The Company will, so long as the Securities are
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the 1933 Act, either (i) file reports and other
information with the Commission under Section 13 or Section 15(d) of
the 1934 Act, or (ii) in the event the Company is not subject to
Section 13 or Section 15(d) of the 1934 Act, furnish to holders of the
Securities and prospective purchasers of the Securities designated by
such holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule
144A(d)(4) under the 1933 Act to permit compliance with Rule 144A in
connection with resale of the Securities. For a period of five years
after the Closing Time, the Company will make available to the Initial
Purchasers upon request copies of all such reports and information,
together with such other documents, reports and information as shall be
furnished by the Company to the holders of the Securities issued by it.
(j) If requested by the Initial Purchasers, the
Company will use its best efforts in cooperation with the Initial
Purchasers to permit the Securities sold in transactions described in
Section 2(d)(ii)(A) hereof to be eligible for clearance and settlement
through The Depository Trust Company.
(k) Each Security will bear the following legend
until such legend shall no longer be necessary or advisable because
such Security is no longer subject to the restrictions on transfer
described therein:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY
ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
WHICH IS TWO YEARS AFTER THE
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<PAGE> 19
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH CITADEL BROADCASTING COMPANY ("THE
COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE"),
ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT
TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IS COMPLETED AND DELIVERED BY THE TRANSFEROR
TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
(l) The Company will apply the net proceeds from
the sale of the Securities as set forth in the Offering Memorandum
under the heading "Use of Proceeds."
(m) Prior to the Closing Time, the Company will
not issue any press release or other communications directly or
indirectly or hold any press conference with respect to the Company,
the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company, without the prior
written consent of Prudential Securities Incorporated, unless in the
judgment of the Company and its counsel, and after notification to the
Initial Purchasers, such press release or communication is required by
law.
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<PAGE> 20
(n) During the period beginning from the date of
the Offering Memorandum and continuing to and including the date 180
days after the date of the Offering Memorandum, the Company will not
offer, sell, contract to sell or otherwise dispose of, without the
prior written consent of the Initial Purchasers, any securities of the
Company that are substantially similar to the New Securities, or any
securities of the Company convertible or exchangeable into securities
of the Company substantially similar to the New Securities; provided,
however, the foregoing shall not apply to (i) notes or preferred stock
issued in the Notes Exchange Offer or the Preferred Stock Exchange
Offer; (ii) Exchangeable Preferred Stock or New Preferred Stock issued
in lieu of cash dividends; or (iii) the Notes issued to the
Bondholders.
(o) Prior to the Closing Date, the Company will
furnish to the Initial Purchasers, as soon as they have been prepared
by or are available to the Company, a copy of any unaudited interim
consolidated financial statements of the Company for any period
subsequent to the period covered by the most recent financial
statements appearing in the Offering Memorandum.
Section 4. Payment of Expenses. (a) The Company will pay
all costs and expenses incident to the performance of its obligations under
this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to Section 9 hereof,
including all costs and expenses incident to (i) the preparation and printing
or other production of documents with respect to the transactions, including
any costs of printing the Preliminary Offering Memorandum, the Offering
Memorandum and any amendments or supplements thereto, the Indenture, the
Certificate of Designation and the Exchange Indenture, this Agreement, the
Registration Rights Agreements, and any blue sky memoranda, (ii) all
arrangements relating to the delivery to the Initial Purchasers of copies of
the foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Initial Purchasers of any
certificates evidencing the Securities, including transfer agent's and
registrar's fees, (v) the qualification of the Securities under state
securities and blue sky laws in accordance with Section 3(d), in each case
including filing fees and reasonable fees and disbursements of counsel for the
Initial Purchasers relating thereto and in connection with the preparation of
any "blue sky" or legal investment memoranda, (vi) the fees and disbursements
of the Trustees, including the fees and disbursements of counsel for the
Trustees, in connection with the Indenture, the Exchange Indenture and the
Securities, (vii) any meetings with prospective investors in the Securities
(other than as shall have been specifically approved by the Initial Purchasers
to be paid for by the Initial Purchasers), (viii) any fees charged by
investment rating agencies for the rating of Securities and (ix) the fees
associated with any listing of the Securities on any securities exchange,
including the cost of obtaining approval for the trading of the Securities
through PORTAL. If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 5 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 9 (a)(i) hereof or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder other
than by reason of a default by any of the Initial Purchasers, the Company will
reimburse the Initial
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<PAGE> 21
Purchasers severally upon demand for all out-of-pocket expenses (including fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities. The Company
shall not in any event be liable to any of the Initial Purchasers for the loss
of anticipated profits from the transactions covered by this Agreement.
(b) In addition to its obligations under Section 6(a)
hereof, the Company agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any loss, claim, damage or liability described in Section 6(a)
hereof, it will reimburse the Initial Purchasers, and each of them, on a
monthly basis against submission of invoices and such additional information as
the Company reasonably may request for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
obligations of the Company to reimburse the Initial Purchasers for such
expenses and the possibility that such payments might later be held to have
been improper by a court of jurisdiction. To the extent that any portion, or
all, of any such interim reimbursement payments are so held to have been
improper, the Initial Purchasers receiving the same shall promptly return such
amounts to the party or parties who have paid such amounts together with
interest, compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Bankers Trust Company (the "Prime Rate"). Any such
interim reimbursement payments that are not made to the Initial Purchasers
within 30 days of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request until the date paid.
(c) In addition to their obligations under Section 6(a)
hereof, the Initial Purchasers agree that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any loss, claim, damage or liability described in
Section 6(b)(i) or 6(b)(ii) hereof, (in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by one or more of the Initial Purchasers
specifically for use in the Preliminary Offering Memorandum, the Offering
Memorandum and any amendments or supplements thereto), they will reimburse the
Company on a monthly basis, against submission of invoices and such additional
information as the Initial Purchasers reasonably may request, for all reasonable
legal or other expenses incurred by the Company in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Initial Purchasers' obligation to reimburse the Company
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that any
portion, or all, of any such interim reimbursement payments are so held to have
been improper, the Company shall promptly return such amounts to the Initial
Purchasers together with interest, compounded daily, determined on the basis of
the Prime Rate. Any such interim reimbursement payments that are not made to the
Company within 30 days of a request for reimbursement shall bear
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<PAGE> 22
interest at the Prime Rate from the date of such request until the date paid.
(d) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections 4 (b)
and 4 (c) above, including the amounts of any requested reimbursement payments,
the method of determining such amounts and the basis on which such amounts
shall be apportioned among the indemnifying parties, shall be settled by
arbitration conducted pursuant to the Code of Arbitration Procedure of the
NASD. Any such arbitration must be commenced by service of a written demand
for arbitration or a written notice of intention to arbitrate, therein electing
the arbitration tribunal. If the party demanding arbitration does not make
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the interpretation and obligations of the
parties under the interim reimbursement provisions contained in Sections 4(b)
and 4(c) hereof and will not resolve the ultimate propriety or enforceability
of the obligation to indemnify for expenses that is created by the provisions
of Section 6 hereof.
Section 5. Conditions of Initial Purchasers' Obligations.
The obligation of each Initial Purchaser to purchase and pay for the Securities
that it has severally agreed to purchase hereunder is subject to the accuracy
of the representations and warranties of the Company contained herein and in
certificates of any officer of the Company and the Subsidiary delivered
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following further conditions:
(a) At the Closing Time, each of the Initial
Purchasers shall have received a signed opinion of Eckert Seamans
Cherin & Mellott, LLC, counsel for the Company, dated as of the
Closing Time, in substantially the form attached hereto as Exhibit
C-1. Such opinion shall be to such further effect with respect to
other legal matters relating to this Agreement and the sale of the
Securities pursuant to this Agreement as counsel for the Initial
Purchasers may reasonably request.
(b) At the Closing Time, each of the Initial
Purchasers shall have received a signed opinion of Reed Smith Shaw &
McClay, FCC counsel to the Company, dated as of the Closing Time, in
substantially the form attached hereto as Exhibit C-2. Such opinion
shall be to such further effect with respect to other legal matters
relating to this Agreement and the sale of the Securities pursuant to
this Agreement as counsel for the Initial Purchasers may reasonably
request.
(c) At the Closing Time, each of the Initial
Purchasers shall have received the favorable opinion of Schulte Roth &
Zabel LLP, counsel for the Initial Purchasers, dated as of the Closing
Time, to the effect that the opinions delivered pursuant to Sections
5(a) and 5(b) appear on their face to be appropriately responsive to
the requirements of this Agreement except, specifying the same, to the
extent waived by the Initial Purchasers, and with respect to the
incorporation and legal existence of the Company, the Securities, this
Agreement, the Indenture, the Exchange Indenture, the Registration
Rights Agreements, the Offering Memorandum and such other related
matters as the Initial Purchasers may require.
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<PAGE> 23
(d) At the time that this Agreement is executed
by the Company and at the Closing Date, each of the Initial Purchasers
shall have received from KPMG, independent auditors for the Company, a
letter, dated respectively as of the date of this Agreement and as of
the Closing Time, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent public accountants
with respect to the Company within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder, and setting
forth certain matters customarily included in accountants' "comfort
letters," in form and substance satisfactory to the Initial Purchasers
and counsel to the Initial Purchasers.
(e) The Company shall have furnished to the
Initial Purchasers a certificate, signed by the Chief Executive
Officer and the principal financial officer of the Company, dated as
of the Closing Time, to the effect that the signers of such
certificate have examined the Offering Memorandum, any amendment or
supplement to the Offering Memorandum, and this Agreement and that:
(i) the representations and warranties
of the Company in this Agreement are true and correct
in all material respects on and as of the Closing
Time with the same effect as if made at the Closing
Time, the Offering Memorandum, as it may then be
amended or supplemented, does not contain an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, and the Company has complied with all the
agreements and satisfied all the conditions under
this Agreement on its part to be performed or
satisfied at or prior to the Closing Time; and
(ii) since the respective dates as of
which information is given in the Offering Memorandum
(exclusive of any amendments or supplements thereto),
neither the Company nor the Subsidiary has sustained
any material loss or interference with its respective
business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or
governmental proceeding, and there has not been any
material adverse change, or any development involving
a prospective material adverse change, in the
business, results of operations, financial condition
or properties of the Company and the Subsidiary,
taken as a whole, except in each case as described in
or contemplated by the Offering Memorandum (exclusive
of any amendment or supplement thereto). As used in
this subparagraph, the term "Offering Memorandum"
means the Offering Memorandum in the form first used
to confirm sales of the Securities.
(f) The closing under the New Credit Facility shall
have occurred on or prior to the Closing Date.
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<PAGE> 24
(g) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Time, there shall not have been any
downgrading, nor any notice given of any intended or potential
downgrading or of a possible change that does not indicate the
direction of the possible change, in the rating accorded the
Securities, by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the 1933 Act.
(h) Subsequent to the date hereof or, if earlier, the
dates as of which information is given in the Offering Memorandum
(exclusive of any amendment or supplement thereto), there shall not
have been any change, or any development involving a prospective
change, in or affecting the business or properties of the Company the
effect of which is, in the sole judgment of the Initial Purchasers, so
material and adverse as to make it impractical or inadvisable to
proceed with the purchase and the delivery of the Securities as
contemplated by the Offering Memorandum (exclusive of any amendment or
supplement thereto).
(i) On or before the Closing Time, the Securities
shall have been designated for trading on PORTAL.
(j) At the Closing Time, each of the Indenture
and the Exchange Indenture shall have been fully executed and shall be
in full force and effect.
(k) At the Closing Time, the Certificate of
Designation shall have been filed with the Secretary of the State of
the State of Nevada and shall be in full force and effect.
(l) At the Closing Time, the Registration Rights
Agreements shall have been fully executed and be in full force and
effect.
(m) The issuance and sale of the Securities
pursuant to this Agreement shall not be enjoined (temporarily or
permanently) and no restraining order or other injunctive order shall
have been issued or any action, suit or proceeding shall have been
commenced with respect to this Agreement before any Court or
governmental authority (including, without limitation, the FCC).
(n) On or before the Closing Time, counsel for
the Initial Purchasers shall have been furnished with all such
documents, certificates and opinions as they may have reasonably
requested from the Company.
(o) The FCC grant of the pro forma assignment of
the licenses of Tele-Media to the Subsidiary shall not have been
modified or set aside.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement, this Agreement may
be terminated by the Initial Purchasers on notice to the Company at any time at
or prior to the Closing Time, and such termination shall be without liability
of any party to any other party, except as provided in Section 4.
Notwithstanding any such termination, the provisions of Sections 4, 6, 7 and 14
shall remain in effect.
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<PAGE> 25
Section 6. Indemnification and Contribution. (a) Each of
the Company and Parent jointly and severally agrees to indemnify and hold
harmless each Initial Purchaser and each person, if any, who controls any
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section
20 of the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which such Initial Purchaser or such controlling person
may become subject under the 1933 Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue
statement made by the Company in Section 1 of this Agreement,
(ii) any untrue statement or alleged untrue
statement of any material fact contained in (A) the Preliminary
Offering Memorandum or the Offering Memorandum or any amendments or
supplements thereto or (B) any application or other document, or any
amendments or supplements thereto, executed by the Company or based
upon written information furnished by or on behalf of the Company filed
in any jurisdiction in order to qualify the Securities under the
securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each an "Application"),
or
(iii) the omission or alleged omission to state in
the Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading,
and will reimburse, as incurred, each Initial Purchaser and each such
controlling person for any legal or other expenses reasonably incurred by such
Initial Purchaser or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the
Preliminary Offering Memorandum, the Offering Memorandum or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information furnished to the Company by any Initial Purchaser
specifically for use therein. This indemnity agreement will be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of the Initial Purchaser or Initial
Purchasers purchasing, in the aggregate, more than fifty percent (50%) of the
Securities, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Initial
Purchaser or any person who controls any such Initial Purchaser within the
meaning of Section 15 of the 1933 Act or Section 20 of the Exchange Act is a
party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of all of the Initial
Purchasers and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
-25-
<PAGE> 26
(b) Each Initial Purchaser, severally and not jointly,
will indemnify and hold harmless the Company, each of its directors, each of
its executive officers and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which the Company, any
such director, officer or controlling person may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Preliminary Offering Memorandum, the Offering Memorandum or any amendment or
supplement thereto or any Application or (ii) the omission or alleged omission
to state therein a material fact required to be stated in the Preliminary
Offering Memorandum, the Offering Memorandum or any amendment or supplement
thereto, or any Application or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by any Initial Purchaser specifically for use therein; and,
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or any
action in respect thereof. This indemnity agreement will be in addition to any
liability which any Initial Purchaser may otherwise have. The Initial
Purchasers will not, without the prior written consent of the Parent or
Company, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not Parent, the Company or
any person who controls Parent or the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of all of the Parent, the Company and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 6. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel approved by such indemnified party (which approval will not be
unreasonably withheld); provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the
-26-
<PAGE> 27
indemnifying party, the indemnifying party shall not have the right to direct
the defense of such action on behalf of such indemnified party or parties and
such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof and approval by such indemnified party of
counsel appointed to defend such action (which approval will not be unreasonably
withheld), the indemnifying party will not be liable to such indemnified party
under this Section 6 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel, if any) in any one action or
separate but substantially similar actions arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 6, representing the indemnified parties under
such paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel approved by the indemnified
party (which approval will not be unreasonably withheld), or (iii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the written consent of the
indemnifying party.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 6 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
(i) the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party on the other from the offering of the
Securities or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Initial Purchasers on the other shall be deemed
to be in the same proportion as the total proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Initial Purchasers. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Initial Purchasers, the parties' relative
intents, knowledge, access to
-27-
<PAGE> 28
information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances. The
Company and the Initial Purchasers agree that it would not be equitable if the
amount of such contribution were determined by pro rata or per capita allocation
(even if the Initial Purchasers were treated as one entity for such purpose) or
by any other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), no Initial Purchaser shall be obligated
to make contributions hereunder that in the aggregate exceed the total offering
price of the Securities purchased by such Initial Purchaser under this
Agreement, less the aggregate amount of any damages that such Initial Purchaser
has otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute hereunder are several in proportion to
their respective underwriting obligations and not joint, and contributions among
Initial Purchasers shall be governed by the provisions of the Prudential
Securities Incorporated Master Agreement Among Underwriters. For purposes of
this paragraph (d), each person, if any, who controls an Initial Purchaser
within the meaning of Section 15 of the 1933 Act or Section 20 of the Exchange
Act shall have the same rights to contribution as such Initial Purchaser, and
each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company.
(e) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of Sections 4(b), 4(c) and 4(d) hereof and this
Section 6, and are fully informed regarding said provisions. They further
acknowledge that the provisions of Sections 4(b), 4(c) and 4(d) hereof and this
Section 6 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Offering Memorandum as required by the 1933 Act.
Section 7. Survival. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, its officers, and the several Initial Purchasers set forth in or made
pursuant to this Agreement, respectively, shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, any Initial Purchaser or any
person who controls the Company or the Initial Purchasers within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the Exchange Act and (ii)
delivery of and payment for the Securities. The respective agreements,
covenants, indemnities and other statements set forth in Sections 4, 6 and 14
hereof shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
Section 8. Default of Underwriters. If one of the Initial
Purchasers defaults in its obligation to purchase Securities hereunder and the
aggregate principal amount of such
-28-
<PAGE> 29
Securities that such defaulting Initial Purchaser agreed but failed to purchase
is ten percent or less of the aggregate principal amount of Securities to be
purchased by all of the Initial Purchasers at such time hereunder, the other
Initial Purchasers may make arrangements satisfactory to the Initial Purchaser
for the purchase of such Securities by other persons, but if no such
arrangements are made by the Closing Time, the other Initial Purchasers shall be
obligated to purchase the Securities that such defaulting Initial Purchaser
agreed but failed to purchase. If one of the Initial Purchasers so defaults
with respect to an aggregate principal amount of Securities that is more than
ten percent of the aggregate principal amount of Securities to be purchased by
all of the Initial Purchasers at such time hereunder, and if arrangements
satisfactory to the Initial Purchaser are not made within 36 hours after such
default for the purchase by other persons, of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Initial Purchaser or the Company other than as
provided in Section 7 hereof. In the event of any default by one of the Initial
Purchasers as described in this Section 8, the Initial Purchasers shall have the
right to postpone the Closing Time established as provided in Section 2 hereof
for not more than seven business days in order that any necessary changes may be
made in the arrangements or documents for the purchase and delivery of the
Securities. As used in this Agreement, the term "Initial Purchaser" includes
any person substituted for a Initial Purchaser under this Section 8. Nothing
herein shall relieve any defaulting Initial Purchaser from liability for its
default.
Section 9. Termination of Agreement. (a) This agreement may
be terminated with respect to the Securities in the sole discretion of the
Initial Purchasers by notice to the Company given prior to the Closing Time, in
the event that the Company shall have failed, refused or been unable to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Closing Time,
(i) the Company or the Subsidiary shall have, in
the sole judgment of the Initial Purchasers, sustained any material
loss or interference with its respective business or properties from
fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any material adverse
change, or any development involving a prospective material adverse
change (including without limitation a change in management or control
of the Company), in the business, results of operations, financial
condition or properties of the Company and the Subsidiary, taken as a
whole, except in each case as described in or contemplated by the
Offering Memorandum (exclusive of any amendment or supplement
thereto);
(ii) a banking moratorium shall have been declared
by New York or United States authorities; or
(iii) there shall have been (A) an outbreak or
escalation of hostilities between the United States and any foreign
power, (B) an outbreak or escalation of any other insurrection or armed
conflict involving the United States or (C) any other calamity or
crisis or material adverse change in general economic, political or
financial conditions having an effect on the financial markets or the
market for the
-29-
<PAGE> 30
Securities that, in the sole judgment of the Initial Purchasers, makes
it impractical or inadvisable to proceed with the public offering or
the delivery of the Securities as contemplated by the Registration
Statement, as amended as of the date hereof.
(b) If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party, except to the extent provided in Section 4. Notwithstanding any such
termination, the provisions of Sections 6 and 7 shall remain in effect.
Section 10. Information Supplied by the Initial Purchasers.
The statements set forth in the fourth paragraph on page ii and the last
paragraph under the heading "Plan of Distribution" in the Preliminary Offering
Memorandum and the Offering Memorandum (to the extent such statements relate to
the Initial Purchasers) constitute the only information furnished by the
Initial Purchasers to the Company for the purposes of Sections 1(a)(i) and 6
hereof. The Initial Purchasers confirm that such statements (to such extent)
are correct.
Section 11. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication to the applicable party at the addresses indicated below:
If to the Initial Purchasers:
c/o Prudential Securities Incorporated
One New York Plaza-18th Floor,
New York, NY 10292-2018,
attention: Peter Horan
with copies to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
attention: Marc Weingarten
If to the Company or Parent:
Citadel Broadcasting Company
140 South Ash Street
Tempe, AZ 85281
attention: Donna Heffner
-30-
<PAGE> 31
with copies to:
Eckert Seamans Cherin & Mellott, LLC
600 Grant Street - 42nd Floor
Pittsburgh, PA 15219
attention: Bryan D. Rosenberger
Section 12. Parties. This Agreement is made solely for the
benefit of the Initial Purchasers, the Company and, to the extent expressed,
any person who controls the Company or any Initial Purchaser within the meaning
of Section 15 of the 1933 Act or Section 20 of the Exchange Act, and the
directors of the Company, its officers and their respective executors,
administrators, successors and assigns and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such purchaser, from the Initial
Purchasers of the Securities. No purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason merely of such purchase.
Section 13. Governing Law and Time. This Agreement shall be
governed by the laws of the State of New York applicable to contracts made and
to be performed entirely within such State. Specified times of the day refer
to New York City time.
Section 14. Counterparts. This Agreement may be executed in
one or more counterparts and when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and the same
agreement.
Section 15. Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 16. Headings. The Section headings used or contained
in this Agreement are for convenience of reference only and shall not affect
the construction of this Agreement.
<PAGE> 32
If the foregoing correctly sets forth our understanding,
please sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement between the Company and the Initial Purchasers
in accordance with its terms.
Very truly yours,
CITADEL BROADCASTING COMPANY
By
----------------------------------
Name:
Title:
CITADEL COMMUNICATIONS CORPORATION
By
----------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By
----------------------------------------
Name:
Title:
NATIONSBANC CAPITAL MARKETS, INC.
By
----------------------------------------
Name:
Title:
BANCBOSTON SECURITIES INC.
By
----------------------------------------
Name:
Title:
<PAGE> 33
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount Number of Shares of
of Notes Exchangeable Preferred
Initial Purchasers to be Purchased Stock to be Purchased
------------------ --------------- ---------------------
<S> <C> <C>
Prudential Securities Incorporated
$ 85,000,000 850,000
NationsBanc Capital Markets, Inc.
$ 10,000,000 100,000
BancBoston Securities Inc. $ 5,000,000 50,000
Total $100,000,000 1,000,000
</TABLE>
<PAGE> 1
Exhibit 10.22
NOTES REGISTRATION RIGHTS AGREEMENT
THIS NOTES REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made and entered into as of July 3, 1997, among Citadel Broadcasting Company, a
Nevada corporation (the "Company"), Citadel License, Inc. (the "Subsidiary")
and Prudential Securities Incorporated, NationsBanc Capital Markets, Inc. and
BancBoston Securities Inc. (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement
dated June 30, 1997 among the Company, Parent and the Initial Purchasers (the
"Purchase Agreement"), which provides for, in relevant part, the sale by the
Company to the Initial Purchasers of $100,000,000 aggregate principal amount of
the Company's 10-1/4% Senior Subordinated Notes due 2007 (the "Notes"). In
order to induce the Initial Purchasers to enter into the Purchase Agreement,
each of the Company and the Subsidiary has agreed to provide to the Initial
Purchasers and their direct and indirect transferees and assigns the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree
as follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"Closing Time" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble of
this Agreement and also includes the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any
other depositary appointed by the Company, provided, however, that any such
depositary must have an address in the Borough of Manhattan, in the City of New
York.
"Holders" shall mean the Initial Purchasers, for so long as
they own any Registrable Notes, and each of their successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Notes under the Indenture.
"Indenture" shall mean the Indenture relating to the Notes
dated as of July 1, 1997 among the Company and the Bank of New York, a New York
banking corporation and trust
<PAGE> 2
company, trustee, as the same may be amended from time to time in accordance
with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the
preamble of this Agreement.
"Majority Holders" shall mean the Holders of a majority of
the aggregate principal amount of outstanding Registrable Notes; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the Company
or any of its affiliates (as such term is defined in Rule 405 under the 1933
Act) (other than the Initial Purchasers or subsequent holders of Registrable
Notes if such subsequent holders are deemed to be such affiliates solely by
reason of their holding of such Registrable Notes) shall be disregarded in
determining whether such consent or approval was given by the Holders of such
required percentage or amount.
"New Notes" shall mean 10-1/4% Senior Subordinated Notes due
2007 issued by the Company under the Indenture containing terms identical in
all respects to the Notes (except that (i) interest thereon shall accrue from
the last date on which interest was paid on the Notes or, if no such interest
has been paid, from July 3, 1997, (ii) the transfer restrictions thereon shall
be eliminated and (iii) certain provisions relating to an increase in the
stated rate of interest thereon shall be eliminated) to be offered to Holders
of Notes in exchange for New Notes pursuant to the Notes Exchange Offer.
"Notes Exchange Offer" shall mean the exchange offer by the
Company of Registrable Notes for New Notes pursuant to Section 2(a) hereof.
"Notes Exchange Offer Registration" shall mean a registration
under the 1933 Act effected pursuant to Section 2(a) hereof.
"Notes Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Notes Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 2(b)
of this Agreement which covers all of the then Registrable Notes on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule that may
be adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Person" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
-2-
<PAGE> 3
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Notes covered by a Notes Shelf Registration Statement, and
by all other amendments and supplements to a prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble of this Agreement.
"Registrable Notes" shall mean the Notes; provided, however,
that the Notes shall cease to be Registrable Notes when (i) a Registration
Statement with respect to such Notes shall have been declared effective under
the 1933 Act and such Notes shall have been disposed of pursuant to such
Registration Statement, (ii) such Notes shall have been sold to the public
pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A)
under the 1933 Act, (iii) such Notes shall have ceased to be outstanding or (iv)
such Notes have been exchanged for New Notes upon consummation of the Notes
Exchange Offer.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company and the Subsidiary with
this Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. ("NASD") registration and
filing fees, (ii) all fees and expenses incurred in connection with compliance
with state or other securities or blue sky laws and compliance with the rules of
the NASD (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with state or other securities or blue sky
qualification of any of the New Notes or Registrable Notes), (iii) all expenses
of any Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, certificates representing the New Notes and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Notes on any securities exchange or
exchanges, (vi) all fees and disbursements relating to the qualification of the
Indenture under applicable securities laws, (vii) the reasonable fees and
disbursements of counsel for the Company and, in the case of a Notes Shelf
Registration Statement, the reasonable fees and disbursements (including the
expenses of preparing and distributing any underwriting or securities sales
agreement) of one counsel (in addition to appropriate local counsel, if any) for
the Holders (which counsel shall be selected in writing by the Majority
Holders), (viii) the fees and expenses of the independent public accountants of
the Company, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, (ix) the
fees and expenses of a "qualified independent underwriter" as defined by Conduct
Rule 2720 of the NASD (if required by the NASD rules) in connection with the
offering of the Registrable Notes, (x) the fees and expenses of the trustee,
including its counsel, and any escrow agent or custodian and (xi) any reasonable
fees and disbursements of the underwriters customarily required to be paid by
issuers or sellers of securities and the reasonable fees and expenses of any
special experts retained by the Company in connection with any Registration
Statement, but excluding underwriting discounts
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<PAGE> 4
and commissions and transfer taxes, if any, relating to the sale or disposition
of Registrable Notes by a Holder.
"Registration Statement" shall mean any registration
statement of the Company which covers any of the New Notes or Registrable Notes
pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Subsidiary" shall have the meaning set forth in the preamble
of this Agreement and also includes the Subsidiary's successors.
"Trustee" shall mean the trustee with respect to the Notes
under the Indenture.
2. Registration Under the 1933 Act. (a) Notes
Exchange Offer Registration. To the extent not prohibited by any applicable
law or applicable interpretation of the Staff of the SEC, the Company shall
(A) file on or prior to the 90th calendar day following the date hereof a Notes
Exchange Offer Registration Statement covering the offer by the Company to the
Holders to exchange all of the Registrable Notes for New Notes, (B) use its
best efforts to cause such Notes Exchange Offer Registration Statement to be
declared effective by the SEC on or prior to the 180th calendar day following
the date hereof, (C) use its best efforts to cause such Notes Exchange Offer
Registration Statement to remain effective until the closing of the Notes
Exchange Offer and (D) use its best efforts to consummate the Notes Exchange
Offer on or prior to the 210th calendar day following the date hereof. The New
Notes will be issued under the Indenture. Upon the effectiveness of the Notes
Exchange Offer Registration Statement, the Company shall promptly commence the
Notes Exchange Offer, it being the objective of such Notes Exchange Offer to
enable each Holder (other than Notes Participating Brokers (as defined in
Section 3(f) hereof)), eligible and electing to exchange Registrable Notes for
New Notes (assuming that such Holder is not an affiliate of the Company within
the meaning of Rule 405 under the 1933 Act, acquires the New Notes in the
ordinary course of such Holder's business and has no arrangements or
understandings with any Person to participate in the Notes Exchange Offer for
the purpose of distributing the New Notes) to trade such New Notes from and
after their receipt without any limitations or restrictions under the 1933 Act
and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
In connection with the Notes Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Notes Exchange Offer Registration Statement, together with
an appropriate letter of transmittal and related documents;
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<PAGE> 5
(ii) keep the Notes Exchange Offer open for not less than
30 days and not more than 45 days after the date notice thereof is
mailed to the Holders (or longer if required by applicable law);
(iii) use the services of the Depositary for the Notes
Exchange Offer with respect to Notes evidenced by global certificates;
(iv) permit Holders to withdraw tendered Registrable
Notes at any time prior to the close of business, New York City time,
on the last business day on which the Notes Exchange Offer shall
remain open, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the principal amount of Registrable Notes
delivered for exchange, and a statement that such Holder is
withdrawing his election to have such Notes exchanged; and
(v) otherwise comply in all respects with all applicable
laws relating to the Notes Exchange Offer.
As soon as practicable after the close of the Notes Exchange
Offer, the Company shall:
(i) accept for exchange Registrable Notes duly tendered
and not validly withdrawn pursuant to the Notes Exchange Offer in
accordance with the terms of the Notes Exchange Offer Registration
Statement and the letter of transmittal which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee
for cancellation all Registrable Notes so accepted for exchange by the
Company; and
(iii) cause the Trustee promptly to authenticate and
deliver New Notes to each Holder of Registrable Notes equal in amount
to the Registrable Notes of such Holder so accepted for exchange.
Interest on each New Note will accrue from the last date on
which interest was paid on the Registrable Notes surrendered in exchange
therefor or, if no interest has been paid on the Registrable Notes, from July
3, 1997. The Notes Exchange Offer shall not be subject to any conditions,
other than that the Notes Exchange Offer, or the making of any exchange by a
Holder, does not violate applicable law or any applicable interpretation of the
Staff of the SEC. Each Holder of Registrable Notes (other than Notes
Participating Brokers) who wishes to exchange such Registrable Notes for New
Notes in the Notes Exchange Offer shall have represented that (i) any New Notes
to be received by it were acquired in the ordinary course of business, (ii) at
the time of the commencement of the Notes Exchange Offer it has no arrangement
with any Person to participate in the distribution (within the meaning of the
1933 Act) of the New Notes, (iii) it is not an affiliate (as defined in Rule 405
under the 1933 Act) of the Company, or if it is an affiliate it will comply with
the registration and prospectus delivery requirements of the 1933 Act to the
extent applicable and (iv) it is not acting on behalf of any Person who could
not make the representations in clauses (i) through (iii) above. The Company
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<PAGE> 6
shall inform the Initial Purchasers of the names and addresses of the Holders to
whom the Notes Exchange Offer is made, and the Initial Purchasers shall have the
right to contact such Holders and otherwise facilitate the tender of Registrable
Notes in the Notes Exchange Offer.
(b) Shelf Registration. (i) If, because of any change
in law or applicable interpretations thereof by the Staff of the SEC, the
Company is not permitted to effect the Notes Exchange Offer as contemplated by
Section 2(a) hereof, or (ii) if for any other reason the Notes Exchange Offer
cannot be consummated within 210 days following the date hereof, or (iii) if
any Holder (other than an Initial Purchaser) is not eligible to participate in
the Notes Exchange Offer or (iv) upon the request of any Initial Purchaser
(with respect to any Registrable Notes which it acquired directly from the
Company) following the consummation of the Notes Exchange Offer if any such
Initial Purchaser shall hold Registrable Notes which it acquired directly from
the Company and if such Initial Purchaser is not permitted, in the reasonable
opinion of counsel to such Initial Purchaser, pursuant to applicable law or
applicable interpretation of the Staff of the SEC to participate in the Notes
Exchange Offer, the Company shall, at its cost:
(A) as promptly as practicable, and in any event within
90 days after the date on which such filing obligation arises, file
with the SEC a Notes Shelf Registration Statement relating to the
offer and sale of the then outstanding Registrable Notes by the
Holders from time to time in accordance with the methods of
distribution elected by the Majority Holders of such Registrable Notes
and set forth in such Notes Shelf Registration Statement, and use its
best efforts to cause such Notes Shelf Registration Statement to be
declared effective by the SEC on or prior to 45 days after the date on
which such filing occurs (or promptly in the event of a request by any
Initial Purchaser pursuant to clause (iv) above). In the event that
the Company is required to file a Notes Shelf Registration Statement
upon the request of any Holder (other than an Initial Purchaser) not
eligible to participate in the Notes Exchange Offer pursuant to clause
(iii) above or upon the request of any Initial Purchaser pursuant to
clause (iv) above, the Company shall file and have declared effective
by the SEC both a Notes Exchange Offer Registration Statement pursuant
to Section 2(a) with respect to all Registrable Notes and a Notes
Shelf Registration Statement (which may be a combined Registration
Statement with the Notes Exchange Offer Registration Statement) with
respect to offers and sales of Registrable Notes held by such Holder
or such Initial Purchaser after completion of the Notes Exchange
Offer;
(B) use its best efforts to keep the Notes Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period
of two years after its effective date (or one year from the date the
Notes Shelf Registration Statement is declared effective if such Notes
Shelf Registration Statement is filed upon the request of any Initial
Purchaser pursuant to clause (iv) above) or such shorter period which
will terminate when all of the Registrable Notes covered by the Notes
Shelf Registration Statement have been sold pursuant to the Notes Shelf
Registration Statement or all of the Registrable Notes become eligible
for resale pursuant to Rule 144 under the 1933 Act without volume
restrictions; and
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<PAGE> 7
(C) notwithstanding any other provisions hereof, use its
best efforts to ensure that (i) any Notes Shelf Registration Statement
and any amendment thereto and any Prospectus forming a part thereof
and any supplement thereto complies in all material respects with the
1933 Act and the rules and regulations thereunder, (ii) any Notes
Shelf Registration Statement and any amendment thereto does not, when
it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Notes Shelf Registration Statement, and
any supplement to such Prospectus (as amended or supplemented from
time to time), does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements, in light of the circumstances under which they were made,
not misleading.
The Company further agrees, if necessary, to supplement or
amend the Notes Shelf Registration Statement if reasonably requested by the
Majority Holders with respect to information relating to the Holders and
otherwise as required by Section 3(b) below, to use all reasonable efforts to
cause any such amendment to become effective and such Shelf Registration to
become usable as soon as practicable thereafter and to furnish to the Holders
of Registrable Notes copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) and 2(b).
Each Holder shall pay all expenses of its counsel other than as set forth in
the preceding sentence, underwriting discounts and commissions (prior to the
reduction thereof with respect to selling concessions, if any) and transfer
taxes, if any, relating to the sale or disposition of such Holder's Registrable
Notes pursuant to the Notes Shelf Registration Statement.
(d) Effective Registration Statement. (i) The Company
will be deemed not to have used its best efforts to cause a Registration
Statement to become, or to remain, effective during the requisite period if the
Company voluntarily takes any action that would result in any such Registration
Statement not being declared effective or in the Holders of Registrable Notes
covered thereby not being able to exchange or offer and sell such Registrable
Notes during that period unless (A) such action is required by applicable law
or (B) such action is taken by the Company in good faith and for valid business
reasons (but not including avoidance of the Company#s obligations hereunder),
including a material corporate transaction, so long as the Company promptly
complies with the requirements of Section 3(k) hereof, if applicable.
(ii) A Notes Exchange Offer Registration Statement
pursuant to Section 2(a) hereof or a Notes Shelf Registration Statement pursuant
to Section 2(b) hereof will not be deemed to have become effective unless it has
been declared effective by the SEC; provided, however, that if, after it has
been declared effective, the offering of Registrable Notes pursuant to a
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement
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<PAGE> 8
will be deemed not to have been effective during the period of such
interference, until the offering of Registrable Notes pursuant to such
Registration Statement may legally resume.
(e) Increase in Interest Rate. In the event that either
(i) the Notes Exchange Offer Registration Statement is not filed with the SEC
on or prior to the 90th day following the date hereof, (ii) the Notes Exchange
Offer is not consummated within 210 days following the date hereof or a Notes
Shelf Registration Statement with respect to the Registrable Notes is not
declared effective on or prior to the 210th day following the date hereof, or
(iii) either (A) the Notes Exchange Offer Registration Statement ceases to be
effective at any time prior to the time that the Notes Exchange Offer is
consummated or (B) if applicable, the Notes Shelf Registration Statement has
been declared effective and such Notes Shelf Registration Statement ceases to
be effective at any time prior to the second anniversary of its effective date,
the interest rate borne by the Notes shall be increased by one-quarter of one
percent per annum following such 90-day period in the case of clause (i) above,
following such 210-day period in the case of clause (ii) above, or immediately
in the case of clause (iii) above, which rate will be increased by an
additional one-quarter of one percent per annum for each 30-day period that any
such additional interest continues to accrue in the case of clause (i) above or
for each 90-day period that any such additional interest continues to accrue in
the case of clauses (ii) and (iii) above; provided that the aggregate increase
in such interest rate will in no event exceed one and one-half percent. Upon
(w) the filing of the Notes Exchange Offer Registration Statement after the
90-day period described in clause (i) above, (x) consummation of the Notes
Exchange Offer or the effectiveness of a Notes Shelf Registration Statement, as
the case may be, after the 210-day period described in clause (ii) above, or
(y) the effectiveness of the Notes Exchange Offer Registration Statement or the
Notes Shelf Registration Statement following an event described in clause (iii)
above, the interest rate borne by the Notes from the date of such filing,
effectiveness or consummation, as the case may be, will be reduced to the
original interest rate if the Company is otherwise in compliance with this
paragraph; provided, however, that, if after any such reduction in interest
rate, a different event specified in clauses (i), (ii) or (iii) above occurs,
the interest rate will again be increased and thereafter reduced pursuant to
the foregoing conditions. If the Company issues a notice that the Notes Shelf
Registration Statement is unusable pending the announcement of a material
corporate transaction or otherwise pursuant to Section 3(k) hereof, or such a
notice is required under applicable securities laws to be issued by the
Company, and the aggregate number of days in any consecutive twelve-month
period for which all such notices are issued or required to be issued exceeds
30 days in the aggregate, then the interest rate borne by the Notes will be
increased by one-quarter of one percent per annum following the date that such
Notes Shelf Registration Statement ceases to be usable beyond the 30-day period
permitted above, which rate shall be increased by an additional one-quarter of
one percent per annum for each 90-day period that such additional interest
continues to accrue; provided that the aggregate increase in such annual
interest rate may in no event exceed one and one-half percent. Upon the Company
declaring that the Notes Shelf Registration Statement is usable after the
interest rate has been increased pursuant to the preceding sentence, the
interest rate borne by the Notes will be reduced to the original interest rate
if the Company is otherwise in compliance with this paragraph; provided,
however, that if after any such reduction in interest rate the Notes Shelf
Registration Statement again ceases to be usable beyond the period permitted
above, the interest rate will again be increased and thereafter reduced pursuant
to the foregoing provisions.
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<PAGE> 9
(f) Specific Enforcement. Without limiting the remedies
available to the Initial Purchasers and the Holders, each of the Company and
the Subsidiary acknowledges that any failure by each of the Company and the
Subsidiary to comply with its respective obligations under Sections 2(a) and
2(b) hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it will not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Purchasers or any Holder may obtain such
relief as may be required to specifically enforce the Company's obligations
under Sections 2(a) and 2(b) hereof.
3. Registration Procedures. In connection with the
obligations of the Company and the Subsidiary with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration
Statement, within the time period specified in Section 2, on the
appropriate form under the 1933 Act, which form (i) shall be selected
by the Company, (ii) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Notes by the selling Holders
thereof and (iii) shall comply as to form in all material respects
with the requirements of the applicable form and include or
incorporate by reference all financial statements required by the SEC
to be filed therewith, and use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to (i) the Notes Exchange Offer Registration
Statement as may be necessary under applicable law to keep such Notes
Exchange Offer Registration Statement effective for the period
required to comply with Section 2(a) (except to the extent the Company
is unable to consummate the Notes Exchange Offer and the Company
complies with Section 2(b), subject in all respects to Section 3(f)
hereof), and (ii) the Notes Shelf Registration Statement as may be
necessary under applicable law to keep such Notes Shelf Registration
Statement effective for the period required pursuant to Section 2(b)
hereof; cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the 1933 Act; and comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by
each Registration Statement during the applicable period in accordance
with the intended method or methods of distribution by the selling
Holders thereof;
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Registration Statement with respect to the
Registrable Notes is being Notes, at least ten days prior to filing,
that a Notes Shelf filed and advising such Holders that the
distribution of Registrable Notes will be made in accordance with the
method elected by the Majority Holders; and (ii) furnish to each Holder
of Registrable Notes, to counsel for the Initial Purchasers, to counsel
for the Holders and to each underwriter of an underwritten offering of
Registrable Notes, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
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<PAGE> 10
supplement thereto and such other documents as such Holder or
underwriter may reasonably request, including financial statements and
schedules and, if the Holder so requests, all exhibits (including
those incorporated by reference) in order to facilitate the public
sale or other disposition of the Registrable Notes; and (iii) subject
to the last paragraph of Section 3, hereby consent to the use of the
Prospectus, including each preliminary Prospectus, or any amendment or
supplement thereto by each of the selling Holders of Registrable Notes
in connection with the offering and sale of the Registrable Notes
covered by the Prospectus or any amendment or supplement thereto;
(d) use its best efforts to register or qualify the
Registrable Notes under all applicable state securities or "blue sky"
laws of such jurisdictions as any Holder of Registrable Notes covered
by a Registration Statement and each underwriter of an underwritten
offering of Registrable Notes shall reasonably request by the time the
applicable Registration Statement is declared effective by the SEC, to
cooperate with the Holders in connection with any filings required to
be made with the NASD, keep each such registration or qualification
effective during the period such Registration Statement is required to
be effective and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in each such jurisdiction of such Registrable Notes
owned by such Holder; provided, however, that the Company shall not be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d) or (ii) take any action
which would subject it to general service of process or taxation in
any such jurisdiction if it is not then so subject;
(e) in the case of a Shelf Registration, notify each
Holder of Registrable Notes and counsel for such Holders promptly and,
if requested by such Holder or counsel, confirm such advice in writing
promptly (i) when a Registration Statement has become effective and
when any post-effective amendments and supplements thereto become
effective, (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a
Registration Statement and Prospectus or for additional information
after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if, between the
effective date of a Registration Statement and the closing of any sale
of Registrable Notes covered thereby, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating
to such offering cease to be true and correct in all material respects,
(v) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Notes for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, (vi) of the happening of any event or the discovery
of any facts during the period a Notes Shelf Registration Statement is
effective which makes any statement made in such Notes Shelf
Registration Statement or the related Prospectus untrue in any material
respect or which requires the making of any changes in such Notes Shelf
Registration Statement or Prospectus in order to make
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<PAGE> 11
the statements therein not misleading and (vii) of any determination by
the Company that a post-effective amendment to a Registration Statement
would be appropriate;
(f) (A) in the case of the Notes Exchange Offer, (i)
include in the Notes Exchange Offer Registration Statement a "Plan of
Distribution" section covering the use of the Prospectus included in
the Notes Exchange Offer Registration Statement by broker-dealers who
have exchanged their Registrable Notes for New Notes for the resale of
such New Notes, (ii) furnish to each broker-dealer who desires to
participate in the Notes Exchange Offer, without charge, as many
copies of each Prospectus included in the Notes Exchange Offer
Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, as such broker-dealer may reasonably
request, (iii) include in the Notes Exchange Offer Registration
Statement a statement that any broker- dealer who holds Registrable
Notes acquired for its own account as a result of market- making
activities or other trading activities (a "Notes Participating
Broker"), and who receives New Notes for Registrable Notes pursuant to
the Notes Exchange Offer, may be a statutory underwriter and must
deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of such New Notes, (iv) subject to the last
paragraph of Section 3, hereby consent to the use of the Prospectus
forming part of the Notes Exchange Offer Registration Statement or any
amendment or supplement thereto, by any broker-dealer in connection
with the sale or transfer of the New Notes covered by the Prospectus
or any amendment or supplement thereto, and (v) include in the
transmittal letter or similar documentation to be executed by an
exchange offeree in order to participate in the Notes Exchange Offer
(x) the following provision:
"If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to
engage in, a distribution of New Notes. If the undersigned
is a broker-dealer that will receive New Notes for its own
account in exchange for Registrable Notes, it represents that
the Registrable Notes to be exchanged for New Notes were
acquired by it as a result of market-making activities or
other trading activities and acknowledges that it will
deliver a prospectus meeting the requirements of the 1933 Act
in connection with any resale of such New Notes pursuant to
the Notes Exchange Offer; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of
the 1933 Act";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in subclause (x) and by delivering a
Prospectus in connection with the exchange of Registrable Notes, the
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the 1933 Act; and
(B) to the extent any Notes Participating
Broker participates in the Notes Exchange Offer, the Company shall use
its best efforts to cause to be delivered at the request of an entity
representing the Notes Participating Brokers (which entity shall be
one of the Initial Purchasers, unless it elects not to act as such
representative) only one, if any, "cold comfort" letter with respect
to the Prospectus in the form existing on the last
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<PAGE> 12
date for which exchanges are accepted pursuant to the Notes Exchange
Offer and with respect to each subsequent amendment or supplement, if
any, effected during the period specified in clause (C) below; and
(C) to the extent any Notes Participating
Broker participates in the Notes Exchange Offer, the Company shall use
its best efforts to maintain the effectiveness of the Notes Exchange
Offer Registration Statement for a period of 120 days following the
closing of the Notes Exchange Offer; and
(D) the Company shall not be required to amend
or supplement the Prospectus contained in the Notes Exchange Offer
Registration Statement as would otherwise be contemplated by
Section 3(b), or take any other action as a result of this
Section 3(f), for a period exceeding 120 days after the last date for
which exchanges are accepted pursuant to the Notes Exchange Offer (as
such period may be extended by the Company) and Notes Participating
Brokers shall not be authorized by the Company to, and shall not,
deliver such Prospectus after such period in connection with resales
contemplated by this Section 3;
(g) (A) in the case of a Notes Exchange Offer, furnish
counsel for the Initial Purchasers and (B) in the case of a Shelf
Registration, furnish counsel for the Holders of Registrable Notes
copies of any request by the SEC or any state securities authority for
amendments or supplements to a Registration Statement and Prospectus
or for additional information;
(h) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a Registration
Statement as soon as practicable and provide immediate notice to each
Holder of the withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each
Holder of Registrable Notes, without charge, at least one conformed
copy of each Registration Statement and any post-effective amendment
thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
(j) in the case of a Shelf Registration, cooperate with
the selling Holders of Registrable Notes to facilitate the timely
preparation and delivery of certificates representing Registrable
Notes to be sold and not bearing any restrictive legends; and cause
such Registrable Notes to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the
selling Holders or the underwriters, if any, may reasonably request at
least one business day prior to the closing of any sale of Registrable
Notes;
(k) in the case of a Shelf Registration, upon the
occurrence of any event or the discovery of any facts, each as
contemplated by Section 3(e)(vi) hereof, use its best efforts to
prepare a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of the
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<PAGE> 13
Registrable Notes, such Prospectus will not contain at the time of such
delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
agrees to notify each Holder to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and each
Holder hereby agrees to suspend use of the Prospectus until the Company
has amended or supplemented the Prospectus to correct such misstatement
or omission. At such time as such public disclosure is otherwise made
or the Company determines that such disclosure is not necessary, in
each case to correct any misstatement of a material fact or to include
any omitted material fact, the Company agrees promptly to notify each
Holder of such determination and to furnish each Holder such numbers of
copies of the Prospectus, as amended or supplemented, as such Holder
may reasonably request;
(l) obtain a CUSIP number for all New Notes, or
Registrable Notes, as the case may be, not later than the effective
date of a Registration Statement, and provide the Trustee with printed
certificates for the New Notes or the Registrable Notes, as the case
may be, in a form eligible for deposit with the Depositary;
(m) (i) cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended (the "TIA"), in connection
with the registration of the New Notes, or Registrable Notes, as the
case may be, (ii) cooperate with the Trustee and the Holders to effect
such changes to the Indenture as may be required for the Indenture to
be so qualified in accordance with the terms of the TIA and
(iii) execute, and use its best efforts to cause the Trustee to
execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to
enable the Indenture to be so qualified in a timely manner;
(n) in the case of a Shelf Registration, enter into
agreements (including underwriting agreements) and take all other
customary and appropriate actions (including those reasonably
requested by the Majority Holders) in order to expedite or facilitate
the disposition of such Registrable Notes and in such connection
whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration:
(i) make such representations and warranties to
the Holders of such Registrable Notes and the underwriters, if
any, in form, substance and scope as are customarily made by
issuers to underwriters in similar underwritten offerings as
may be reasonably requested by them;
(ii) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority
in principal amount of the Registrable Notes being sold)
addressed to each selling Holder and the underwriters, if
any, covering the matters customarily covered in opinions
requested in sales of securities or underwritten offerings;
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<PAGE> 14
(iii) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants addressed to the underwriters, if any, and will
use best efforts to have such letters addressed to the
selling Holders of Registrable Notes, such letters to be in
customary form and covering matters of the type customarily
covered in "cold comfort" letters to underwriters in
connection with similar underwritten offerings;
(iv) enter into a securities sales agreement
with the Holders and an agent of the Holders providing for,
among other things, the appointment of such agent for the
selling Holders for the purpose of soliciting purchases of
Registrable Notes, which agreement shall be in form,
substance and scope customary for similar offerings; and
(v) deliver such documents and certificates as
may be reasonably requested and as are customarily delivered
in similar offerings.
The above shall be done at (i) the effectiveness of such Notes Shelf
Registration Statement (and, if appropriate, each post-effective
amendment thereto) and (ii) each closing under any underwriting or
similar agreement as and to the extent required thereunder. In the
case of any underwritten offering, the Company shall provide written
notice to the Holders of all Registrable Notes of such underwritten
offering at least 30 days prior to the filing of a prospectus
supplement for such underwritten offering. Such notice shall (x)
offer each such Holder the right to participate in such underwritten
offering, (y) specify a date, which shall be no earlier than 10 days
following the date of such notice, by which such Holder must inform
the Company of its intent to participate in such underwritten offering
and (z) include the instructions such Holder must follow in order to
participate in such underwritten offering;
(o) in the case of a Shelf Registration, make available
for inspection by representatives of the Holders of the Registrable
Notes and any underwriters participating in any disposition pursuant to
a Notes Shelf Registration Statement and any counsel or accountant
retained by such Holders or underwriters, at reasonable times and in a
reasonable manner, all financial and other records, pertinent corporate
documents and properties of the Company reasonably requested by any
such Persons, and cause the respective officers, directors, employees,
and any other agents of the Company to supply all information
reasonably requested by any such representative, underwriter, special
counsel or accountant in connection with such Notes Shelf Registration
Statement; provided, however, that such Persons shall first agree in
writing with the Company that any information that is reasonably and in
good faith designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by such
Persons, unless (i) disclosure of such information is required by court
or administrative order or is necessary to respond to inquiries of
regulatory authorities, (ii) disclosure of such information is required
by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of such Notes Shelf
Registration Statement or the use of any Prospectus), (iii) such
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<PAGE> 15
information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard such information by such
Person or (iv) such information becomes available to such Person from a
source other than the Company and its subsidiaries and such source is
not bound by a confidentiality agreement; provided, further, that the
foregoing investigation shall be coordinated on behalf of the Holders
by one representative designated by and on behalf of such Holders and
any such confidential information shall be available from such
representative to such Holders so long as any Holder agrees to be bound
by such confidentiality agreement;
(p) (i) a reasonable time prior to the filing of any
Notes Exchange Offer Registration Statement, any Prospectus forming a
part thereof, any amendment to a Notes Exchange Offer Registration
Statement or amendment or supplement to a Prospectus, provide copies
of such document to the Initial Purchasers, and make such changes in
any such document prior to the filing thereof as any of the Initial
Purchasers or their counsel may reasonably request; (ii) in the case
of a Shelf Registration, a reasonable time prior to filing any Notes
Shelf Registration Statement, any Prospectus forming a part thereof,
any amendment to such Notes Shelf Registration Statement or amendment
or supplement to such Prospectus, provide copies of such document to
the Holders of Registrable Notes, to the Initial Purchasers, to
counsel on behalf of the Holders and to the underwriter or
underwriters of an underwritten offering of Registrable Notes, if any,
and make such changes in any such document prior to the filing thereof
as the Holders of Registrable Notes, the Initial Purchasers on behalf
of such Holders, their counsel and any underwriter may reasonably
request; and (iii) cause the representatives of the Company to be
available for discussion of such document as shall be reasonably
requested by the Holders of Registrable Notes, the Initial Purchasers
on behalf of such Holders or any underwriter and shall not at any time
make any filing of any such document of which such Holders, the
Initial Purchasers on behalf of such Holders, their counsel or any
underwriter shall not have previously been advised and furnished a
copy or to which such Holders, the Initial Purchasers on behalf of
such Holders, their counsel or any underwriter shall reasonably
object, each of which actions in this clause (iii) by the Holders
shall be coordinated by one representative for all the Holders at
reasonable times and in a reasonable manner;
(q) in the case of a Shelf Registration, use its best
efforts to cause all Registrable Notes to be listed on any securities
exchange on which similar debt securities issued by the Company are
then listed if requested by the Majority Holders or by the underwriter
or underwriters of an underwritten offering of Registrable Notes, if
any;
(r) in the case of a Shelf Registration, unless the
rating in effect for the Notes applies to the New Notes and the Notes
to be sold pursuant to a Shelf Registration, use its best efforts to
cause the Registrable Notes to be rated with the appropriate rating
agencies, if so requested by the Majority Holders or by the
underwriter or underwriters of an underwritten offering of Registrable
Notes, if any, unless the Registrable Notes are already so rated;
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<PAGE> 16
(s) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering at least 12 months which shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;
and
(t) cooperate and assist in any filings required to be
made with the NASD.
In the case of a Notes Shelf Registration Statement, the
Company may (as a condition to such Holder's participation in the Shelf
Registration) require each Holder of Registrable Notes to furnish to the
Company such information regarding such Holder and the proposed distribution by
such Holder of such Registrable Notes and make such representations, in each
case, as the Company may from time to time reasonably request in writing.
In the case of a Notes Shelf Registration Statement, each
Holder agrees that, upon receipt of any notice from the Company of the
happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(ii)-(vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Notes pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all
copies in its possession, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Notes current
at the time of receipt of such notice. If the Company shall give any such
notice to suspend the disposition of Registrable Notes pursuant to a Notes
Shelf Registration Statement as a result of the happening of any event or the
discovery of any facts, each of the kind described in Section 3(e)(vi) hereof,
the Company shall be deemed to have used its best efforts to keep the Notes
Shelf Registration Statement effective during such period of suspension
provided that the Company shall use its best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement
to the Notes Shelf Registration Statement and shall extend the period during
which the Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from and including the date
of the giving of such notice to and including the date when the Holders shall
have received copies of the supplemented or amended Prospectus necessary to
resume such dispositions.
4. Underwritten Registrations. If any of the
Registrable Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will manage the offering will be selected by the Majority
Holders of such Registrable Notes included in such offering and shall be
reasonably acceptable to the Company.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
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<PAGE> 17
5. Indemnification and Contribution. (a) Each of the
Company and the Subsidiary agrees to indemnify and hold harmless each Holder
and each Person, if any, who controls any Holder within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act against any losses, claims,
damages or liabilities, joint or several, to which such Holder or such
controlling Person may become subject under the 1933 Act, the 1934 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of
any material fact contained in (A) any Registration Statement or
Prospectus or any amendments or supplements thereto or (B) any
application or other document, or any amendments or supplements
thereto, executed by the Company or the Subsidiary or based upon
written information furnished by or on behalf of the Company or the
Subsidiary filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws thereof or filed with
the SEC or any securities association or securities exchange (each an
"Application") or
(ii) the omission or alleged omission to state in any
Registration Statement or Prospectus or any amendment or supplement
thereto, or any Application a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse, as incurred, each Holder and each such controlling Person
for any legal or other expenses reasonably incurred by such Holder or such
controlling Person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company and the
Subsidiary will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Registration Statement or Prospectus or any amendment or supplement thereto
or any Application in reliance upon and in conformity with written information
relating to any Holder furnished to the Company by any Holder specifically for
use therein. This indemnity agreement will be in addition to any liability
which the Company and the Subsidiary may otherwise have. The Company will not,
without the prior written consent of each Holder, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not any Holder or any Person who controls any such Holder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
is a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of all of such Holder
and such controlling Persons from all liability arising out of such claim,
action, suit or proceeding.
(b) Each Holder, severally and not jointly, agrees to
indemnify and hold harmless each of the Company and the Subsidiary, each of
their respective directors, each of their respective executive officers and
each Person, if any, who controls the Company or the Subsidiary within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
losses, claims, damages or liabilities to which the Company, the Subsidiary or
any
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<PAGE> 18
such director, officer or controlling Person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement or Prospectus or any amendment or supplement thereto or
any Application or (ii) the omission or alleged omission to state therein a
material fact required to be stated in any Registration Statement or Prospectus
or any amendment or supplement thereto, or any Application or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information relating to any Holder furnished to the Company by such Holder
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company, the Subsidiary or any such
director, officer or controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability which
such Holder may otherwise have. The Holders will not, without the prior
written consent of the Company or the Subsidiary, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceedings in respect of which indemnification may be sought
hereunder (whether or not the Company, the Subsidiary or any person who
controls the Company or the Subsidiary within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act is a party to such claim, action, suit
or proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Company, the Subsidiary and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
(c) Promptly after receipt by an indemnified party under
this Section 5 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 5, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 5. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel approved by such indemnified party (which approval will not be
unreasonably withheld); provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action (which approval will not be unreasonably withheld), the indemnifying
party will not be liable to such indemnified party under this Section 5 for any
legal or other expenses, other than reasonable costs of investigation,
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<PAGE> 19
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel, if any) in any one action or separate but
substantially similar actions in the same jurisdiction arising out of the same
general allegations or circumstances, designated by such Holder in the case of
paragraph (a) of this Section 5, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel approved by the indemnified
party (which approval will not be unreasonably withheld) or (iii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the written consent of the
indemnifying party.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 5 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
(i) the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party on the other from the offering of the
Securities or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Subsidiary on the one hand and such Holder on the other shall
be deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company and the Subsidiary bear to
the total underwriting discounts and commissions received by such Holder. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or such Holder, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Subsidiary, on the one hand, and each Holder
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to above in this paragraph (d). Notwithstanding any other provision of this
paragraph (d), no Holder shall be obligated to make contributions hereunder that
in the aggregate exceed the total offering price of the Securities purchased by
such Holder, less the aggregate amount of any damages that such Holder has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f)
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<PAGE> 20
of the 1933 Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each Person, if any, who controls a Holder within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Holder, and each director of the Company or the Subsidiary,
each officer of the Company or the Subsidiary who signed the Registration
Statement and each Person, if any, who controls the Company or the Subsidiary
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
shall have the same rights to contribution as the Company and the Subsidiary.
(e) The parties to this Agreement hereby acknowledge
that they are sophisticated business Persons who were represented by counsel
during the negotiations regarding the provisions of this Agreement, including,
without limitation, the provisions of this Section 5, and are fully informed
regarding said provisions. They further acknowledge that the provisions of
this Section 5 fairly allocate the risks in light of the ability of the parties
to investigate each of the Company and the Subsidiary and its business in order
to assure that adequate disclosure is made in the Offering Memorandum as
required by the 1933 Act.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so
long as the Company is subject to the reporting requirements of Section 13 or
15 of the 1934 Act, the Company covenants that it will file the reports
required to be filed by it under Section 13(a) or 15(d) of the 1934 Act and the
rules and regulations adopted by the SEC thereunder, that if it ceases to be so
required to file such reports, it will upon the request of any Holder of
Registrable Notes (i) make publicly available such information as is necessary
to permit sales pursuant to Rule 144 under the 1933 Act, (ii) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant
to Rule 144A under the 1933 Act and it will take such further action as any
Holder of Registrable Notes may reasonably request, and (iii) take such further
action that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Registrable Notes
without registration under the 1933 Act within the limitation of the exemptions
provided by (x) Rule 144 under the 1933 Act, as such Rule may be amended from
time to time, (y) Rule 144A under the 1933 Act, as such Rule may be amended
from time to time, or (z) any similar rules or regulations hereafter adopted by
the SEC. Upon the request of any Holder of Registrable Notes, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
(b) No Inconsistent Agreements. Neither the Company nor
the Subsidiary has entered into nor will the Company or the Subsidiary on or
after the date of this Agreement enter into any agreement which is inconsistent
with the rights granted to the Holders of Registrable Notes in this Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has
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<PAGE> 21
obtained the written consent of Holders of at least a majority in aggregate
principal amount of the outstanding Registrable Notes affected by such
amendment, modification, supplement, waiver or departure; provided, however,
that no amendment, modification, supplement or waiver or consent to any
departure from the provisions of Section 5 hereof shall be effective as against
any Holder of Registrable Notes unless consented to in writing by such Holder.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder (other than an Initial Purchaser), at the most
current address set forth on the records of the Registrar under the Indenture,
(ii) if to an Initial Purchaser, at the most current address given by such
Initial Purchaser to the Company by means of a notice given in accordance with
the provisions of this Section 6(d), which address initially is the address set
forth in the Purchase Agreement; and (iii) if to the Company or the Subsidiary,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(d).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged, if telecopied; and on the next business day if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee,
at the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and transferees
of each of the parties, including, without limitation and without the need for
an express assignment, subsequent Holders; provided that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of
Registrable Notes in violation of the terms hereof or of the Purchase Agreement
or the Indenture. If any transferee of any Holder shall acquire Registrable
Notes, in any manner, whether by operation of law or otherwise, such Registrable
Notes shall be held subject to all of the terms of this Agreement, and by taking
and holding such Registrable Notes, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. The Holders shall be third
party beneficiaries to the agreements made hereunder between the Company and
the Subsidiary, on the one hand, and the Initial Purchasers, on the other hand,
and shall have the right to enforce such agreements directly to the extent it
deems such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
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<PAGE> 22
(g) Counterparts. 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.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.
(j) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
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<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
--------------------------
Name: Lawrence R. Wilson
Title: President
CITADEL LICENSE, INC.
By: /s/ Lawrence R. Wilson
---------------------------
Name: Lawrence R. Wilson
Title: President
Confirmed and accepted as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Benjamin Shapiro
-------------------------
Authorized Signatory
NATIONSBANC CAPITAL MARKETS, INC.
By: /s/ Stuart B. Gleichenhaus
--------------------------
Authorized Signatory
Stuart B. Gleichenhaus
Managing Director
BANCBOSTON SECURITIES INC.
By: /s/ David Weinstein
--------------------------
Authorized Signatory
<PAGE> 1
Exhibit 10.23
PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT
THIS PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is made and entered into as of July 3, 1997, among Citadel
Broadcasting Company, a Nevada corporation (the "Company"), Citadel License,
Inc. (the "Subsidiary") and Prudential Securities Incorporated, NationsBanc
Capital Markets, Inc. and BancBoston Securities Inc. (collectively, the
"Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement
dated June 30, 1997 among the Company, Parent and the Initial Purchasers (the
"Purchase Agreement"), which provides for, in relevant part, the sale by the
Company to the Initial Purchasers of 1,000,000 shares of 13 1/4% Series A
Exchangeable Preferred Stock, liquidation preference $100 per share (including
additional shares payable in lieu of cash dividends, the "Exchangeable
Preferred Stock"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, each of the Company and the Subsidiary has agreed to
provide to the Initial Purchasers and their direct and indirect transferees and
assigns the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the closing under the Purchase
Agreement.
In consideration of the foregoing, the parties hereto agree
as follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"Certificate of Designation" shall mean the Certificate of
Designation of the Company relating to the Exchangeable Preferred Stock.
"Closing Time" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble of
this Agreement and also includes the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any
other depositary appointed by the Company, provided, however, that any such
depositary must have an address in the Borough of Manhattan, in the City of New
York.
<PAGE> 2
"Holders" shall mean the Initial Purchasers, for so long as
they own any Registrable Preferred Stock, and each of their successors, assigns
and direct and indirect transferees who become registered owners of Registrable
Preferred Stock.
"Initial Purchasers" shall have the meaning set forth in the
preamble of this Agreement.
"Majority Holders" shall mean the Holders of a majority of
the outstanding Registrable Preferred Stock; provided that whenever the consent
or approval of Holders of a specified percentage of Registrable Preferred Stock
is required hereunder, Registrable Preferred Stock held by the Company or any
of its affiliates (as such term is defined in Rule 405 under the 1933 Act)
(other than the Initial Purchasers or subsequent holders of Registrable
Preferred Stock if such subsequent holders are deemed to be such affiliates
solely by reason of their holding of such Registrable Preferred Stock) shall be
disregarded in determining whether such consent or approval was given by the
Holders of such required percentage or amount.
"New Preferred Stock" shall mean 13-1/4% Series A
Exchangeable Preferred Stock, no par value, issued by the Company under the
Certificate of Designation containing terms identical in all respects to the
Exchangeable Preferred Stock (except that (i) dividends thereon shall
accumulate from the last dividend payment date or, if no such dividends have
been paid, from July 3, 1997, (ii) the transfer restrictions thereon shall be
eliminated and (iii) certain provisions relating to an increase in the stated
dividend rate thereon shall be eliminated) to be offered to Holders of
Exchangeable Preferred Stock in exchange for Exchangeable Preferred Stock
pursuant to the Preferred Stock Exchange Offer.
"Person" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Preferred Stock Exchange Offer" shall mean the exchange
offer by the Company of Registrable Preferred Stock for New Preferred Stock
pursuant to Section 2(a) hereof.
"Preferred Stock Exchange Offer Registration" shall mean a
registration under the 1933 Act effected pursuant to Section 2(a) hereof.
"Preferred Stock Exchange Offer Registration Statement" shall
mean an exchange offer registration statement on Form S-4 (or, if applicable,
on another appropriate form), and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Preferred Stock Shelf Registration Statement" shall mean a
"shelf" registration statement of the Company pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the then Registrable
Preferred Stock on an appropriate form under Rule 415 under the 1933 Act, or
any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case
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<PAGE> 3
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Preferred Stock covered by a Preferred Stock Shelf
Registration Statement, and by all other amendments and supplements to a
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble of this Agreement.
"Registrable Preferred Stock" shall mean the Exchangeable
Preferred Stock; provided, however, that the Exchangeable Preferred Stock shall
cease to be Registrable Preferred Stock when (i) a Registration Statement with
respect to such Exchangeable Preferred Stock shall have been declared effective
under the 1933 Act and such Exchangeable Preferred Stock shall have been
disposed of pursuant to such Registration Statement, (ii) such Exchangeable
Preferred Stock shall have been sold to the public pursuant to Rule 144 (or any
similar provision then in force, but not Rule 144A) under the 1933 Act, (iii)
such Exchangeable Preferred Stock shall have ceased to be outstanding or (iv)
such Exchangeable Preferred Stock has been exchanged for New Preferred Stock
upon consummation of the Preferred Stock Exchange Offer.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company and the Subsidiary with
this Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. ("NASD") registration and
filing fees, (ii) all fees and expenses incurred in connection with compliance
with state or other securities or blue sky laws and compliance with the rules
of the NASD (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with state or other securities or blue
sky qualification of any of the New Preferred Stock or Registrable Preferred
Stock), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, certificates
representing the New Preferred Stock and other documents relating to the
performance of and compliance with this Agreement, (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Preferred Stock on any securities exchange or exchanges, (v) the reasonable
fees and disbursements of counsel for the Company and, in the case of a
Preferred Stock Shelf Registration Statement, the reasonable fees and
disbursements (including the expenses of preparing and distributing any
underwriting or securities sales agreement) of one counsel (in addition to
appropriate local counsel, if any) for the Holders (which counsel shall be
selected in writing by the Majority Holders), (vi) the fees and expenses of the
independent public accountants of the Company, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, (vii) the fees and expenses of a "qualified
independent underwriter" as defined by Conduct Rule 2720 of the NASD (if
required
3
<PAGE> 4
by the NASD rules) in connection with the offering of the Registrable
Preferred Stock, (viii) the fees and expenses of the Transfer Agent (as defined
below), including its counsel, and any escrow agent or custodian and (ix) any
reasonable fees and disbursements of the underwriters customarily required to
be paid by issuers or sellers of securities and the reasonable fees and
expenses of any special experts retained by the Company in connection with any
Registration Statement, but excluding underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of Registrable
Preferred Stock by a Holder.
"Registration Statement" shall mean any registration
statement of the Company which covers any of the New Preferred Stock or
Registrable Preferred Stock pursuant to the provisions of this Agreement, and
all amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Subsidiary" shall have the meaning set forth in the preamble
of this Agreement and also includes the Subsidiary's successors.
"Transfer Agent" shall mean the transfer agent with respect
to the Exchangeable Preferred Stock.
2. Registration Under the 1933 Act. (a) Preferred Stock
Exchange Offer Registration. To the extent not prohibited by any applicable law
or applicable interpretation of the Staff of the SEC, the Company shall (A)
file on or prior to the 90th calendar day following the date hereof a Preferred
Stock Exchange Offer Registration Statement covering the offer by the Company
to the Holders to exchange all of the Registrable Preferred Stock for New
Preferred Stock, (B) use its best efforts to cause such Preferred Stock
Exchange Offer Registration Statement to be declared effective by the SEC on or
prior to the 180th calendar day following the date hereof, (C) use its best
efforts to cause such Preferred Stock Exchange Offer Registration Statement to
remain effective until the closing of the Preferred Stock Exchange Offer and
(D) use its best efforts to consummate the Preferred Stock Exchange Offer on or
prior to the 210th calendar day following the date hereof. The New Preferred
Stock will be issued under the Certificate of Designation. Upon the
effectiveness of the Preferred Stock Exchange Offer Registration Statement, the
Company shall promptly commence the Preferred Stock Exchange Offer, it being
the objective of such Preferred Stock Exchange Offer to enable each Holder
(other than Preferred Stock Participating Brokers (as defined in Section 3(f)
hereof)), eligible and electing to exchange Registrable Preferred Stock for New
Preferred Stock (assuming that such Holder is not an affiliate of the Company
within the meaning of Rule 405 under the 1933 Act, acquires the New Preferred
Stock in the ordinary course of such Holder's business and has no arrangements
or understandings with any Person to participate in the Preferred Stock
Exchange Offer for the purpose of distributing the New Preferred Stock) to
trade such New Preferred Stock from and after their receipt without any
limitations or restrictions under the 1933 Act and without
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<PAGE> 5
material restrictions under the securities laws of a substantial proportion of
the several states of the United States.
In connection with the Preferred Stock Exchange Offer, the
Company shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Preferred Stock Exchange Offer Registration Statement, together
with an appropriate letter of transmittal and related documents;
(ii) keep the Preferred Stock Exchange Offer open for not
less than 30 days (or longer if required by applicable law) after the date
notice thereof is mailed to the Holders;
(iii) use the services of the Depositary for the Preferred
Stock Exchange Offer with respect to Exchangeable Preferred Stock evidenced by
global certificates;
(iv) permit Holders to withdraw tendered Registrable
Preferred Stock at any time prior to the close of business, New York
City time, on the last business day on which the Preferred Stock
Exchange Offer shall remain open, by sending to the institution
specified in the notice, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Registrable Preferred Stock delivered for exchange, and a statement
that such Holder is withdrawing his election to have such Exchangeable
Preferred Stock exchanged; and
(v) otherwise comply in all respects with all applicable
laws relating to the Preferred Stock Exchange Offer.
As soon as practicable after the close of the Preferred Stock
Exchange Offer, the Company shall:
(i) accept for exchange Registrable Preferred Stock duly
tendered and not validly withdrawn pursuant to the Preferred Stock
Exchange Offer in accordance with the terms of the Preferred Stock
Exchange Offer Registration Statement and the letter of transmittal
which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Transfer
Agent for cancellation all Registrable Preferred Stock so accepted for exchange
by the Company; and
(iii) cause the Transfer Agent promptly to deliver New
Preferred Stock to each Holder of Registrable Preferred Stock equal in amount
to the Registrable Preferred Stock of such Holder so accepted for exchange.
Dividends on the New Preferred Stock will accumulate from the
last dividend payment date on which dividends were distributed on the
Registrable Preferred Stock surrendered in exchange therefor or, if no
dividends have been distributed on the Registrable Preferred Stock, from July
3, 1997. The Preferred Stock Exchange Offer shall not be subject to any
conditions, other than that the Preferred Stock Exchange Offer, or the making
of any
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<PAGE> 6
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the Staff of the SEC. Each Holder of Registrable Preferred
Stock (other than Preferred Stock Participating Brokers) who wishes to exchange
such Registrable Preferred Stock for New Preferred Stock in the Preferred Stock
Exchange Offer shall have represented that (i) any New Preferred Stock to be
received by it were acquired in the ordinary course of business, (ii) at the
time of the commencement of the Preferred Stock Exchange Offer it has no
arrangement with any Person to participate in the distribution (within the
meaning of the 1933 Act) of the New Preferred Stock, (iii) it is not an
affiliate (as defined in Rule 405 under the 1933 Act) of the Company, or if it
is an affiliate it will comply with the registration and prospectus delivery
requirements of the 1933 Act to the extent applicable and (iv) it is not acting
on behalf of any Person who could not make the representations in clauses (i)
through (iii) above. The Company shall inform the Initial Purchasers of the
names and addresses of the Holders to whom the Preferred Stock Exchange Offer
is made, and the Initial Purchasers shall have the right to contact such
Holders and otherwise facilitate the tender of Registrable Preferred Stock in
the Preferred Stock Exchange Offer.
(b) Shelf Registration. (i) If, because of any change in law
or applicable interpretations thereof by the Staff of the SEC, the Company is
not permitted to effect the Preferred Stock Exchange Offer as contemplated by
Section 2(a) hereof, or (ii) if for any other reason the Preferred Stock
Exchange Offer cannot be consummated within 210 days following the date hereof,
or (iii) if any Holder (other than an Initial Purchaser) is not eligible to
participate in the Preferred Stock Exchange Offer or (iv) upon the request of
any Initial Purchaser (with respect to any Registrable Preferred Stock which it
acquired directly from the Company) following the consummation of the Preferred
Stock Exchange Offer if any such Initial Purchaser shall hold Registrable
Preferred Stock which it acquired directly from the Company and if such Initial
Purchaser is not permitted, in the reasonable opinion of counsel to such
Initial Purchaser, pursuant to applicable law or applicable interpretation of
the Staff of the SEC to participate in the Preferred Stock Exchange Offer, the
Company shall, at its cost:
(A) as promptly as practicable, and in any event within 90
days after the date on which such filing obligation arises, file with
the SEC a Preferred Stock Shelf Registration Statement relating to the
offer and sale of the then outstanding Registrable Preferred Stock by
the Holders from time to time in accordance with the methods of
distribution elected by the Majority Holders of such Registrable
Preferred Stock and set forth in such Preferred Stock Shelf
Registration Statement, and use its best efforts to cause such
Preferred Stock Shelf Registration Statement to be declared effective
by the SEC on or prior to 45 days after the date on which such filing
occurs (or promptly in the event of a request by any Initial Purchaser
pursuant to clause (iv) above). In the event that the Company is
required to file a Preferred Stock Shelf Registration Statement upon
the request of any Holder (other than an Initial Purchaser) not
eligible to participate in the Preferred Stock Exchange Offer pursuant
to clause (iii) above or upon the request of any Initial Purchaser
pursuant to clause (iv) above, the Company shall file and have
declared effective by the SEC both a Preferred Stock Exchange Offer
Registration Statement pursuant to Section 2(a) with respect to all
Registrable Preferred Stock and a Preferred Stock Shelf Registration
Statement (which may be a combined Registration Statement
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<PAGE> 7
with the Preferred Stock Exchange Offer Registration Statement) with
respect to offers and sales of Registrable Preferred Stock held by such
Holder or such Initial Purchaser after completion of the Preferred
Stock Exchange Offer;
(B) use its best efforts to keep the Preferred Stock Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period
of two years after its effective date (or one year from the date the
Preferred Stock Shelf Registration Statement is declared effective if
such Preferred Stock Shelf Registration Statement is filed upon the
request of any Initial Purchaser pursuant to clause (iv) above) or
such shorter period which will terminate when all of the Registrable
Preferred Stock covered by the Preferred Stock Shelf Registration
Statement have been sold pursuant to the Preferred Stock Shelf
Registration Statement or all of the Registrable Preferred Stock
become eligible for resale pursuant to Rule 144 under the 1933 Act
without volume restrictions; and
(C) notwithstanding any other provisions hereof, use its best
efforts to ensure that (i) any Preferred Stock Shelf Registration
Statement and any amendment thereto and any Prospectus forming a part
thereof and any supplement thereto complies in all material respects
with the 1933 Act and the rules and regulations thereunder, (ii) any
Preferred Stock Shelf Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Preferred Stock Shelf
Registration Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading.
The Company further agrees, if necessary, to supplement or
amend the Preferred Stock Shelf Registration Statement if reasonably requested
by the Majority Holders with respect to information relating to the Holders and
otherwise as required by Section 3(b) below, to use all reasonable efforts to
cause any such amendment to become effective and such Shelf Registration to
become usable as soon as practicable thereafter and to furnish to the Holders
of Registrable Preferred Stock copies of any such supplement or amendment
promptly after its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses
in connection with the registration pursuant to Section 2(a) and 2(b). Each
Holder shall pay all expenses of its counsel other than as set forth in the
preceding sentence, underwriting discounts and commissions (prior to the
reduction thereof with respect to selling concessions, if any) and transfer
taxes, if any, relating to the sale or disposition of such Holder's Registrable
Preferred Stock pursuant to the Preferred Stock Shelf Registration Statement.
(d) Effective Registration Statement. (i) The Company will be
deemed not to have used its best efforts to cause a Registration Statement to
become, or to remain, effective
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<PAGE> 8
during the requisite period if the Company voluntarily takes any action that
would result in any such Registration Statement not being declared effective or
in the Holders of Registrable Preferred Stock covered thereby not being able to
exchange or offer and sell such Registrable Preferred Stock during that period
unless (A) such action is required by applicable law or (B) such action is taken
by the Company in good faith and for valid business reasons (but not including
avoidance of the Company's obligations hereunder), including a material
corporate transaction, so long as the Company promptly complies with the
requirements of Section 3(k) hereof, if applicable.
(ii) A Preferred Stock Exchange Offer Registration Statement
pursuant to Section 2(a) hereof or a Preferred Stock Shelf Registration
Statement pursuant to Section 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; provided, however,
that if, after it has been declared effective, the offering of Registrable
Preferred Stock pursuant to a Registration Statement is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not to
have been effective during the period of such interference, until the offering
of Registrable Preferred Stock pursuant to such Registration Statement may
legally resume.
(e) Increase in Dividend Rate. In the event that either (i)
the Preferred Stock Exchange Offer Registration Statement is not filed with the
SEC on or prior to the 90th day following the date hereof, (ii) the Preferred
Stock Exchange Offer is not consummated within 210 days following the date
hereof or a Preferred Stock Shelf Registration Statement with respect to the
Registrable Preferred Stock is not declared effective on or prior to the 210th
day following the date hereof, or (iii) either (A) the Preferred Stock Exchange
Offer Registration Statement ceases to be effective at any time prior to the
time that the Preferred Stock Exchange Offer is consummated or (B) if
applicable, the Preferred Stock Shelf Registration Statement has been declared
effective and such Preferred Stock Shelf Registration Statement ceases to be
effective at any time prior to the second anniversary of its effective date,
the dividend rate borne by the Exchangeable Preferred Stock shall be increased
by one-quarter of one percent per annum following such 90-day period in the
case of clause (i) above, following such 210-day period in the case of clause
(ii) above, or immediately in the case of clause (iii) above, which rate will
be increased by an additional one-quarter of one percent per annum for each
30-day period that any such additional dividends continue to accumulate in the
case of clause (i) above or for each 90-day period that any such additional
dividends continue to accumulate in the case of clauses (ii) and (iii) above;
provided that the aggregate increase in such dividend rate will in no event
exceed one and one-half percent. Upon (w) the filing of the Preferred Stock
Exchange Offer Registration Statement after the 90-day period described in
clause (i) above, (x) consummation of the Preferred Stock Exchange Offer or the
effectiveness of a Preferred Stock Shelf Registration Statement, as the case
may be, after the 210-day period described in clause (ii) above, or (y) the
effectiveness of the Preferred Stock Exchange Offer Registration Statement or
the Preferred Stock Shelf Registration Statement following an event described
in clause (iii) above, the dividend rate borne by the Exchangeable Preferred
Stock from the date of such filing, effectiveness or consummation, as the case
may be, will be reduced to the original dividend rate if the Company is
otherwise in compliance with this paragraph; provided, however, that, if after
8
<PAGE> 9
any such reduction in dividend rate, a different event specified in clauses
(i), (ii) or (iii) above occurs, the dividend rate will again be increased and
thereafter reduced pursuant to the foregoing conditions. If the Company issues
a notice that the Preferred Stock Shelf Registration Statement is unusable
pending the announcement of a material corporate transaction or otherwise
pursuant to Section 3(k) hereof, or such a notice is required under applicable
securities laws to be issued by the Company, and the aggregate number of days
in any consecutive twelve-month period for which all such notices are issued or
required to be issued exceeds 30 days in the aggregate, then the dividend rate
borne by the Exchangeable Preferred Stock will be increased by one-quarter of
one percent per annum following the date that such Preferred Stock Shelf
Registration Statement ceases to be usable beyond the 30-day period permitted
above, which rate shall be increased by an additional one-quarter of one
percent per annum for each 90-day period that such additional dividends
continue to accumulate; provided that the aggregate increase in such annual
dividend rate may in no event exceed one and one-half percent. Upon the Company
declaring that the Preferred Stock Shelf Registration Statement is usable after
the dividend rate has been increased pursuant to the preceding sentence, the
dividend rate borne by the Exchangeable Preferred Stock will be reduced to the
original dividend rate if the Company is otherwise in compliance with this
paragraph; provided, however, that if after any such reduction in dividend rate
the Preferred Stock Shelf Registration Statement again ceases to be usable
beyond the period permitted above, the dividend rate will again be increased
and thereafter reduced pursuant to the foregoing provisions.
(f) Specific Enforcement. Without limiting the remedies
available to the Initial Purchasers and the Holders, each of the Company and
the Subsidiary acknowledges that any failure by each of the Company and the
Subsidiary to comply with its respective obligations under Sections 2(a) and
2(b) hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it will not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Purchasers or any Holder may obtain such
relief as may be required to specifically enforce the Company's obligations
under Sections 2(a) and 2(b) hereof.
3. Registration Procedures. In connection with the
obligations of the Company and the Subsidiary with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement,
within the time period specified in Section 2, on the appropriate form
under the 1933 Act, which form (i) shall be selected by the Company,
(ii) shall, in the case of a Shelf Registration, be available for the
sale of the Registrable Preferred Stock by the selling Holders thereof
and (iii) shall comply as to form in all material respects with the
requirements of the applicable form and include or incorporate by
reference all financial statements required by the SEC to be filed
therewith, and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to (i) the Preferred Stock Exchange Offer
Registration Statement as may be
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<PAGE> 10
necessary under applicable law to keep such Preferred Stock Exchange
Offer Registration Statement effective for the period required to
comply with Section 2(a) (except to the extent the Company is unable to
consummate the Preferred Stock Exchange Offer and the Company complies
with Section 2(b), subject in all respects to Section 3(f) hereof), and
(ii) the Preferred Stock Shelf Registration Statement as may be
necessary under applicable law to keep such Preferred Stock Shelf
Registration Statement effective for the period required pursuant to
Section 2(b) hereof; cause each Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the 1933 Act; and comply with the provisions
of the 1933 Act with respect to the disposition of all securities
covered by each Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
selling Holders thereof;
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Preferred Stock, at least ten days prior to
filing, that a Preferred Stock Shelf Registration Statement with
respect to the Registrable Preferred Stock is being filed and advising
such Holders that the distribution of Registrable Preferred Stock will
be made in accordance with the method elected by the Majority Holders;
and (ii) furnish to each Holder of Registrable Preferred Stock, to
counsel for the Initial Purchasers, to counsel for the Holders and to
each underwriter of an underwritten offering of Registrable Preferred
Stock, if any, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or supplement
thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and,
if the Holder so requests, all exhibits (including those incorporated
by reference) in order to facilitate the public sale or other
disposition of the Registrable Preferred Stock; and (iii) subject to
the last paragraph of Section 3, hereby consent to the use of the
Prospectus, including each preliminary Prospectus, or any amendment or
supplement thereto by each of the selling Holders of Registrable
Preferred Stock in connection with the offering and sale of the
Registrable Preferred Stock covered by the Prospectus or any amendment
or supplement thereto;
(d) use its best efforts to register or qualify the
Registrable Preferred Stock under all applicable state securities or
"blue sky" laws of such jurisdictions as any Holder of Registrable
Preferred Stock covered by a Registration Statement and each
underwriter of an underwritten offering of Registrable Preferred Stock
shall reasonably request by the time the applicable Registration
Statement is declared effective by the SEC, to cooperate with the
Holders in connection with any filings required to be made with the
NASD, keep each such registration or qualification effective during
the period such Registration Statement is required to be effective and
do any and all other acts and things which may be reasonably necessary
or advisable to enable such Holder to consummate the disposition in
each such jurisdiction of such Registrable Preferred Stock owned by
such Holder; provided, however, that the Company shall not be required
to (i) qualify as a foreign corporation or as a dealer in securities
in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d) or (ii) take any action which
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<PAGE> 11
would subject it to general service of process or taxation in any such
jurisdiction if it is not then so subject;
(e) in the case of a Shelf Registration, notify each Holder
of Registrable Preferred Stock and counsel for such Holders promptly
and, if requested by such Holder or counsel, confirm such advice in
writing promptly (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements
thereto become effective, (ii) of any request by the SEC or any state
securities authority for post-effective amendments and supplements to
a Registration Statement and Prospectus or for additional information
after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop
order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if, between the
effective date of a Registration Statement and the closing of any sale
of Registrable Preferred Stock covered thereby, the representations
and warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any,
relating to such offering cease to be true and correct in all material
respects, (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Preferred Stock for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (vi) of the happening
of any event or the discovery of any facts during the period a
Preferred Stock Shelf Registration Statement is effective which makes
any statement made in such Preferred Stock Shelf Registration
Statement or the related Prospectus untrue in any material respect or
which requires the making of any changes in such Preferred Stock Shelf
Registration Statement or Prospectus in order to make the statements
therein not misleading and (vii) of any determination by the Company
that a post-effective amendment to a Registration Statement would be
appropriate;
(f) (A) in the case of the Preferred Stock Exchange Offer,
(i) include in the Preferred Stock Exchange Offer Registration
Statement a "Plan of Distribution" section covering the use of the
Prospectus included in the Preferred Stock Exchange Offer Registration
Statement by broker-dealers who have exchanged their Registrable
Preferred Stock for New Preferred Stock for the resale of such New
Preferred Stock, (ii) furnish to each broker-dealer who desires to
participate in the Preferred Stock Exchange Offer, without charge, as
many copies of each Prospectus included in the Preferred Stock
Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such
broker-dealer may reasonably request, (iii) include in the Preferred
Stock Exchange Offer Registration Statement a statement that any
broker-dealer who holds Registrable Preferred Stock acquired for its
own account as a result of market-making activities or other trading
activities (a "Preferred Stock Participating Broker"), and who
receives New Preferred Stock for Registrable Preferred Stock pursuant
to the Preferred Stock Exchange Offer, may be a statutory underwriter
and must deliver a prospectus meeting the requirements of the 1933 Act
in connection with any resale of such New Preferred Stock, (iv)
subject to the last paragraph of Section 3, hereby consent to the use
of the Prospectus forming part of the Preferred Stock Exchange Offer
Registration Statement or any amendment or supplement thereto, by any
broker-
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<PAGE> 12
dealer in connection with the sale or transfer of the New Preferred
Stock covered by the Prospectus or any amendment or supplement thereto,
and (v) include in the transmittal letter or similar documentation to
be executed by an exchange offeree in order to participate in the
Preferred Stock Exchange Offer (x) the following provision:
"If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to
engage in, a distribution of New Preferred Stock. If the
undersigned is a broker-dealer that will receive New
Preferred Stock for its own account in exchange for
Registrable Preferred Stock, it represents that the
Registrable Preferred Stock to be exchanged for New Preferred
Stock was acquired by it as a result of market-making
activities or other trading activities and acknowledges that
it will deliver a prospectus meeting the requirements of the
1933 Act in connection with any resale of such New Preferred
Stock pursuant to the Preferred Stock Exchange Offer;
however, by so acknowledging and by delivering a prospectus,
the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the 1933 Act";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in subclause (x) and by delivering a
Prospectus in connection with the exchange of Registrable Preferred
Stock, the broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the 1933 Act; and
(B) to the extent any Preferred Stock Participating Broker
participates in the Preferred Stock Exchange Offer, the Company shall
use its best efforts to cause to be delivered at the request of an
entity representing the Preferred Stock Participating Brokers (which
entity shall be one of the Initial Purchasers, unless it elects not to
act as such representative) only one, if any, "cold comfort" letter
with respect to the Prospectus in the form existing on the last date
for which exchanges are accepted pursuant to the Preferred Stock
Exchange Offer and with respect to each subsequent amendment or
supplement, if any, effected during the period specified in clause (C)
below; and
(C) to the extent any Preferred Stock Participating Broker
participates in the Preferred Stock Exchange Offer, the Company shall
use its best efforts to maintain the effectiveness of the Preferred
Stock Exchange Offer Registration Statement for a period of 120 days
following the closing of the Preferred Stock Exchange Offer; and
(D) the Company shall not be required to amend or supplement
the Prospectus contained in the Preferred Stock Exchange Offer
Registration Statement as would otherwise be contemplated by Section
3(b), or take any other action as a result of this Section 3(f), for a
period exceeding 120 days after the last date for which exchanges are
accepted pursuant to the Preferred Stock Exchange Offer (as such period
may be extended by the Company) and Preferred Stock Participating
Brokers shall not be authorized by the Company to, and shall not,
deliver such Prospectus after such period in connection with resales
contemplated by this Section 3;
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<PAGE> 13
(g) (A) in the case of a Preferred Stock Exchange Offer,
furnish counsel for the Initial Purchasers and (B) in the case of a
Shelf Registration, furnish counsel for the Holders of Registrable
Preferred Stock copies of any request by the SEC or any state
securities authority for amendments or supplements to a Registration
Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement as
soon as practicable and provide immediate notice to each Holder of the
withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each
Holder of Registrable Preferred Stock, without charge, at least one
conformed copy of each Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(j) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Preferred Stock to facilitate the
timely preparation and delivery of certificates representing
Registrable Preferred Stock to be sold and not bearing any restrictive
legends; and cause such Registrable Preferred Stock to be in such
denominations (consistent with the provisions of the Certificate of
Designation) and registered in such names as the selling Holders or
the underwriters, if any, may reasonably request at least one business
day prior to the closing of any sale of Registrable Preferred Stock;
(k) in the case of a Shelf Registration, upon the occurrence
of any event or the discovery of any facts, each as contemplated by
Section 3(e)(vi) hereof, use its best efforts to prepare a supplement
or post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Preferred Stock, such Prospectus will
not contain at the time of such delivery any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The Company agrees to notify each Holder to
suspend use of the Prospectus as promptly as practicable after the
occurrence of such an event, and each Holder hereby agrees to suspend
use of the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission. At such time
as such public disclosure is otherwise made or the Company determines
that such disclosure is not necessary, in each case to correct any
misstatement of a material fact or to include any omitted material
fact, the Company agrees promptly to notify each Holder of such
determination and to furnish each Holder such numbers of copies of the
Prospectus, as amended or supplemented, as such Holder may reasonably
request;
(l) obtain a CUSIP number for all New Preferred Stock, or
Registrable Preferred Stock, as the case may be, not later than the
effective date of a Registration Statement, and provide the Transfer
Agent with printed certificates for the New Preferred
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<PAGE> 14
Stock or the Registrable Preferred Stock, as the case may be, in a form
eligible for deposit with the Depositary;
(m) in the case of a Shelf Registration, enter into
agreements (including underwriting agreements) and take all other
customary and appropriate actions (including those reasonably
requested by the Majority Holders) in order to expedite or facilitate
the disposition of such Registrable Preferred Stock and in such
connection whether or not an underwriting agreement is entered into
and whether or not the registration is an underwritten registration:
(i) make such representations and warranties to the
Holders of such Registrable Preferred Stock and the
underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in similar
underwritten offerings as may be reasonably requested by
them;
(ii) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority
in principal amount of the Registrable Preferred Stock being
sold) addressed to each selling Holder and the underwriters,
if any, covering the matters customarily covered in opinions
requested in sales of securities or underwritten offerings;
(iii) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants addressed to the underwriters, if any, and will
use best efforts to have such letters addressed to the
selling Holders of Registrable Preferred Stock, such letters
to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters
in connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with
the Holders and an agent of the Holders providing for, among
other things, the appointment of such agent for the selling
Holders for the purpose of soliciting purchases of
Registrable Preferred Stock, which agreement shall be in
form, substance and scope customary for similar offerings;
and
(v) deliver such documents and certificates as
may be reasonably requested and as are customarily delivered
in similar offerings.
The above shall be done at (i) the effectiveness of such Preferred
Stock Shelf Registration Statement (and, if appropriate, each
post-effective amendment thereto) and (ii) each closing under any
underwriting or similar agreement as and to the extent required
thereunder. In the case of any underwritten offering, the Company
shall provide written notice to the Holders of all Registrable
Preferred Stock of such underwritten offering at least 30 days prior
to the filing of a prospectus supplement for such underwritten
offering. Such notice shall (x) offer each such Holder the right to
participate in such underwritten offering, (y) specify a date, which
shall be no earlier than 10 days following the date of
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<PAGE> 15
such notice, by which such Holder must inform the Company of its intent
to participate in such underwritten offering and (z) include the
instructions such Holder must follow in order to participate in such
underwritten offering;
(n) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable
Preferred Stock and any underwriters participating in any disposition
pursuant to a Preferred Stock Shelf Registration Statement and any
counsel or accountant retained by such Holders or underwriters, at
reasonable times and in a reasonable manner, all financial and other
records, pertinent corporate documents and properties of the Company
reasonably requested by any such persons, and cause the respective
officers, directors, employees, and any other agents of the Company to
supply all information reasonably requested by any such representative,
underwriter, special counsel or accountant in connection with such
Preferred Stock Shelf Registration Statement; provided, however, that
such Persons shall first agree in writing with the Company that any
information that is reasonably and in good faith designated by the
Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such Persons, unless (i)
disclosure of such information is required by court or administrative
order or is necessary to respond to inquiries of regulatory
authorities, (ii) disclosure of such information is required by law
(including any disclosure requirements pursuant to Federal securities
laws in connection with the filing of such Preferred Stock Shelf
Registration Statement or the use of any Prospectus), (iii) such
information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard such information by such
Person or (iv) such information becomes available to such Person from a
source other than the Company and its subsidiaries and such source is
not bound by a confidentiality agreement; provided, further, that the
foregoing investigation shall be coordinated on behalf of the Holders
by one representative designated by and on behalf of such Holders and
any such confidential information shall be available from such
representative to such Holders so long as any Holder agrees to be bound
by such confidentiality agreement;
(o) (i) a reasonable time prior to the filing of any
Preferred Stock Exchange Offer Registration Statement, any Prospectus
forming a part thereof, any amendment to a Preferred Stock Exchange
Offer Registration Statement or amendment or supplement to a
Prospectus, provide copies of such document to the Initial Purchasers,
and make such changes in any such document prior to the filing thereof
as any of the Initial Purchasers or their counsel may reasonably
request; (ii) in the case of a Shelf Registration, a reasonable time
prior to filing any Preferred Stock Shelf Registration Statement, any
Prospectus forming a part thereof, any amendment to such Preferred
Stock Shelf Registration Statement or amendment or supplement to such
Prospectus, provide copies of such document to the Holders of
Registrable Preferred Stock, to the Initial Purchasers, to counsel on
behalf of the Holders and to the underwriter or underwriters of an
underwritten offering of Registrable Preferred Stock, if any, and make
such changes in any such document prior to the filing thereof as the
Holders of Registrable Preferred Stock, the Initial Purchasers on
behalf of such Holders, their counsel and any underwriter may
reasonably request; and (iii) cause the representatives of the Company
to be
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<PAGE> 16
available for discussion of such document as shall be reasonably
requested by the Holders of Registrable Preferred Stock, the Initial
Purchasers on behalf of such Holders or any underwriter and shall not
at any time make any filing of any such document of which such Holders,
the Initial Purchasers on behalf of such Holders, their counsel or any
underwriter shall not have previously been advised and furnished a copy
or to which such Holders, the Initial Purchasers on behalf of such
Holders, their counsel or any underwriter shall reasonably object, each
of which actions in this clause (iii) by the Holders shall be
coordinated by one representative for all the Holders at reasonable
times and in a reasonable manner;
(p) in the case of a Shelf Registration, use its best efforts
to cause all Registrable Preferred Stock to be listed on any
securities exchange on which similar equity securities issued by the
Company are then listed if requested by the Majority Holders or by the
underwriter or underwriters of an underwritten offering of Registrable
Preferred Stock, if any;
(q) in the case of a Shelf Registration, unless the rating in
effect for the Exchangeable Preferred Stock applies to the New
Preferred Stock and the Exchangeable Preferred Stock to be sold
pursuant to a Shelf Registration, use its best efforts to cause the
Registrable Preferred Stock to be rated with the appropriate rating
agencies, if so requested by the Majority Holders or by the
underwriter or underwriters of an underwritten offering of Registrable
Preferred Stock, if any, unless the Registrable Preferred Stock are
already so rated;
(r) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering at least 12 months which shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;
and
(s) cooperate and assist in any filings required to be made
with the NASD.
In the case of a Preferred Stock Shelf Registration
Statement, the Company may (as a condition to such Holder's participation in
the Shelf Registration) require each Holder of Registrable Preferred Stock to
furnish to the Company such information regarding such Holder and the proposed
distribution by such Holder of such Registrable Preferred Stock and make such
representations, in each case, as the Company may from time to time reasonably
request in writing.
In the case of a Preferred Stock Shelf Registration
Statement, each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(ii)-(vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Preferred Stock pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if
so directed by the Company, such Holder will deliver to the Company (at its
expense) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Preferred
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<PAGE> 17
Stock current at the time of receipt of such notice. If the Company shall give
any such notice to suspend the disposition of Registrable Preferred Stock
pursuant to a Preferred Stock Shelf Registration Statement as a result of the
happening of any event or the discovery of any facts, each of the kind described
in Section 3(e)(vi) hereof, the Company shall be deemed to have used its best
efforts to keep the Preferred Stock Shelf Registration Statement effective
during such period of suspension provided that the Company shall use its best
efforts to file and have declared effective (if an amendment) as soon as
practicable an amendment or supplement to the Preferred Stock Shelf Registration
Statement and shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions.
4. Underwritten Registrations. If any of the Registrable
Preferred Stock covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will manage the offering will be selected by the Majority
Holders of such Registrable Preferred Stock included in such offering and shall
be reasonably acceptable to the Company.
No Holder of Registrable Preferred Stock may participate in
any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Registrable Preferred Stock on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
5. Indemnification and Contribution. (a) Each of the Company
and the Subsidiary agrees to indemnify and hold harmless each Holder and each
Person, if any, who controls any Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any losses, claims, damages or
liabilities, joint or several, to which such Holder or such controlling Person
may become subject under the 1933 Act, the 1934 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in (A) any Registration Statement or
Prospectus or any amendments or supplements thereto or (B) any
application or other document, or any amendments or supplements
thereto, executed by the Company or the Subsidiary or based upon
written information furnished by or on behalf of the Company or the
Subsidiary filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws thereof or filed with
the SEC or any securities association or securities exchange (each an
"Application") or
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<PAGE> 18
(ii) the omission or alleged omission to state in any
Registration Statement or Prospectus or any amendment or supplement thereto, or
any Application a material fact required to be stated therein or necessary to
make the statements therein not misleading,
and will reimburse, as incurred, each Holder and each such controlling Person
for any legal or other expenses reasonably incurred by such Holder or such
controlling Person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company and the
Subsidiary will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in any
Registration Statement or Prospectus or any amendment or supplement thereto or
any Application in reliance upon and in conformity with written information
relating to any Holder furnished to the Company by any Holder specifically for
use therein. This indemnity agreement will be in addition to any liability which
the Company and the Subsidiary may otherwise have. The Company will not, without
the prior written consent of each Holder, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any Holder or any Person who controls any such Holder within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of all of such Holder and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
(b) Each Holder, severally and not jointly, agrees to
indemnify and hold harmless each of the Company and the Subsidiary, each of
their respective directors, each of their respective executive officers and
each Person, if any, who controls the Company or the Subsidiary within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
losses, claims, damages or liabilities to which the Company, the Subsidiary,
any such director, officer or controlling Person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement or Prospectus or any amendment or supplement thereto or
any Application or (ii) the omission or alleged omission to state therein a
material fact required to be stated in any Registration Statement or Prospectus
or any amendment or supplement thereto, or any Application or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information relating to any Holder furnished to the Company by any Holder
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company, the Subsidiary or any such
director, officer or controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability which
such Holder may otherwise have. The Holders will not, without the prior written
consent of the Company or the Subsidiary, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
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<PAGE> 19
proceeding in respect of which indemnification may be sought hereunder (whether
or not the Company, the Subsidiary or any person who controls the Company or
the Subsidiary within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of all
of the Company, the Subsidiary and such controlling persons from all liability
arising out of such claim, action, suit or proceeding.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 5, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section 5. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel approved by
such indemnified party (which approval will not be unreasonably withheld);
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof and approval by
such indemnified party of counsel appointed to defend such action (which
approval will not be unreasonably withheld), the indemnifying party will not be
liable to such indemnified party under this Section 5 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred
by such indemnified party in connection with the defense thereof, unless (i)
the indemnified party shall have employed separate counsel in accordance with
the proviso to the next preceding sentence (it being understood, however, that
in connection with such action the indemnifying party shall not be liable for
the expenses of more than one separate counsel (in addition to local counsel,
if any) in any one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or circumstances,
designated by such Holder in the case of paragraph (a) of this Section 5,
representing the indemnified parties under such paragraph (a) who are parties
to such action or actions) or (ii) the indemnifying party does not promptly
retain counsel approved by the indemnified party (which approval will not be
unreasonably withheld) or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the written consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 5 is unavailable or
insufficient, for any reason, to hold
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<PAGE> 20
harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Subsidiary on the one hand and such Holder on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company and the Subsidiary bear to
the total underwriting discounts and commissions received by such Holder. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or such Holder, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Subsidiary, on the one hand, and each Holder
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to above in this paragraph (d). Notwithstanding any other provision of this
paragraph (d), no Holder shall be obligated to make contributions hereunder that
in the aggregate exceed the total offering price of the Securities purchased by
such Holder, less the aggregate amount of any damages that such Holder has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each Person, if any, who controls a Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as such Holder, and each director of the Company
or the Subsidiary, each officer of the Company or the Subsidiary who signed the
Registration Statement and each Person, if any, who controls the Company or the
Subsidiary within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act, shall have the same rights to contribution as the Company.
(e) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of this Section 5, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 5
fairly allocate the risks in light of the ability of the parties to investigate
each of the Company and the Subsidiary and its business in order to assure that
adequate disclosure is made in the Offering Memorandum as required by the 1933
Act.
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6. Miscellaneous. (a) Rule 144 and Rule 144A. For so long as
the Company is subject to the reporting requirements of Section 13 or 15 of the
1934 Act, the Company covenants that it will file the reports required to be
filed by it under Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to be so required
to file such reports, it will upon the request of any Holder of Registrable
Preferred Stock (i) make publicly available such information as is necessary to
permit sales pursuant to Rule 144 under the 1933 Act, (ii) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant
to Rule 144A under the 1933 Act and it will take such further action as any
Holder of Registrable Preferred Stock may reasonably request, and (iii) take
such further action that is reasonable in the circumstances, in each case, to
the extent required from time to time to enable such Holder to sell its
Registrable Preferred Stock without registration under the 1933 Act within the
limitation of the exemptions provided by (x) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (y) Rule 144A under the 1933 Act,
as such Rule may be amended from time to time, or (z) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Preferred Stock, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. Neither the Company nor the
Subsidiary has entered into nor will the Company or the Subsidiary on or after
the date of this Agreement enter into any agreement which is inconsistent with
the rights granted to the Holders of Registrable Preferred Stock in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Preferred Stock affected by such amendment, modification,
supplement, waiver or departure; provided, however, that no amendment,
modification, supplement or waiver or consent to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Preferred Stock unless consented to in writing by such Holder.
(d) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder (other than an Initial Purchaser), at the most
current address set forth on the records of the Transfer Agent, (ii) if to an
Initial Purchaser, at the most current address given by such Initial Purchaser
to the Company by means of a notice given in accordance with the provisions of
this Section 6(d), which address initially is the address set forth in the
Purchase Agreement and (iii) if to the Company or the Subsidiary, initially at
the Company's address set forth in the Purchase Agreement and thereafter at
such other address, notice of which is given in accordance with the provisions
of this Section 6(d).
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All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged, if telecopied; and on the next business day if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Transfer
Agent, at the address specified by the Company.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Preferred Stock in violation of the terms hereof or of the Purchase Agreement
or the Certificate of Designation. If any transferee of any Holder shall
acquire Registrable Preferred Stock, in any manner, whether by operation of law
or otherwise, such Registrable Preferred Stock shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Preferred Stock, such Person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Subsidiary, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) Counterparts. 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.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
22
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
--------------------------
Name: Lawrence R. Wilson
Title: President
CITADEL LICENSE, INC.
By: /s/ Lawrence R. Wilson
--------------------------
Name: Lawrence R. Wilson
Title: President
Confirmed and accepted as of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Benjamin Shapiro
------------------------------
Authorized Signatory
NATIONSBANC CAPITAL MARKETS, INC.
By: /s/ Stuart B. Gleichenhaus
------------------------------
Authorized Signatory
Stuart B. Gleichenhaus
Managing Director
BANCBOSTON SECURITIES INC.
By: /s/ David Weinstein
------------------------------
Authorized Signatory
<PAGE> 1
Exhibit 21
Subsidiary of Citadel Broadcasting Company
Name State of Incorporation
- ---- ----------------------
Citadel License, Inc. Nevada
<PAGE> 1
Exhibit 23.2
KPMG PEAT MARWICK LLP
One Arizona Center Telephone 602 253 2000 Telefax 602 252 0011
400 E. Van Buren Street
Suite 1100
Phoenix, AZ 85004
The Board of Directors
Citadel Broadcasting Company
We consent to the use of our report dated February 14, 1997, except as to note
21 which is as of September 29, 1997, on the consolidated balance sheet of
Citadel Broadcasting Company and subsidiary as of December 31, 1995 and 1996 and
the related consolidated statements of operations and cash flows for each of the
years in the three-year period ended December 31, 1996 included herein and to
the reference to our firm under the heading "Experts" in the registration
statement.
/s/ KPMG PEAT MARWICK LLP
Phoenix, Arizona
September 30, 1997
<PAGE> 1
Exhibit 23.3
KPMG PEAT MARWICK LLP
One Arizona Center Telephone 503-221-6500 Telefax 503-796-7650
Suite 2000
1211 Southwest 5th Avenue
Portland, OR 97204
The Board of Directors
Citadel Broadcasting Company
We consent to the use of our report dated February 14, 1997 on the consolidated
balance sheet of Deschutes River Broadcasting, Inc. and subsidiaries as of
December 31, 1996 and 1995 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended
included herein and to the reference to our firm under the heading "Experts" in
the registration statement.
/s/ KPMG PEAT MARWICK LLP
-----------------------------------
Portland, Oregon
September 30, 1997
<PAGE> 1
Exhibit 23.4
KPMG PEAT MARWICK LLP
One Arizona Center Telephone 602 253 2000 Telefax 602 252 0011
400 E. Van Buren Street
Suite 1100
Phoenix, AZ 85004
The Board of Directors
Citadel Broadcasting Company
We consent to the use of our report dated September 29, 1997 on the balance
sheet of Maranatha Broadcasting Company, Inc.'s Radio Broadcasting Division as
of December 31, 1996 and the related statements of operations and division
equity and cash flows for the year then ended included herein and to the
reference to our firm under the heading "Experts" in the registration statement.
/s/ KPMG PEAT MARWICK LLP
Phoenix, Arizona
September 30, 1997
<PAGE> 1
Exhibit 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Citadel Broadcasting
Company on Form S-4 of our report dated March 28, 1997 relating to the
consolidated financial statements of Tele-Media Broadcasting Company and its
partnership interests, appearing in the Prospectus, which is part of this
registration statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche, LLP
Pittsburgh, Pennsylvania
September 30, 1997
<PAGE> 1
EXHIBIT 23.6
ERWIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
900 South Shackleford
Suite 515
Three Financial Centre
Little Rock, AR 72211
(501) 225-5441
(501) 225-6763 (FAX)
The Board of Directors
Citadel Broadcasting Company
We consent to the use of our reports dated April 1, 1997 on the balance sheet
of Snider Corporation as of December 31, 1996 and the related statements of
income, stockholders' equity and cash flows for the year then ended and April
23, 1997 on the combined balance sheet of Snider Broadcasting Corporation and
subsidiary and CDB Broadcasting Corporation as of December 31, 1996 and the
related combined statements of operations, stockholders' deficit and cash flows
for the year then ended included herein and to the reference to our firm under
the heading "Experts" in the registration statement.
/s/ ERWIN & COMPANY
Little Rock, Arkansas
September 30, 1997
<PAGE> 1
Exhibit 23.7
BALUKOFF LINDSTROM & CO., P.A.
Certified Public Accountants
Wells Fargo Building
877 West Main Street, Suite 805
Boise, Idaho 83702
(208) 344-7150
FAX: (208) 344-7435
We consent to the use of our independent auditors' report on the combined
financial statements of Pacific Northwest Broadcasting Corporation and
Affiliates as of and for the year ended December 31, 1996 in the prospectus for
the Form S-4 for Citadel Broadcasting Company and Citadel License, Inc.
/s/ Balukoff, Lindstrom & Co., P.A.
September 30, 1997
<PAGE> 1
Exhibit 23.8
CONSENT OF TED L. SNIDER, SR.
I consent to being named as about to become a director under
the captions "Management," "Certain Transactions" and "Security Ownership
of Certain Beneficial Owners" in the Registration Statement (Form S-4) of
Citadel Broadcasting Company, the related Prospectus and any amendments thereto.
Little Rock, Arkansas /s/ TED L. SNIDER, SR.
September 29, 1997 -----------------------
Ted L. Snider, Sr.
<PAGE> 1
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) __
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CITADEL BROADCASTING COMPANY
(Exact name of obligor as specified in its charter)
Nevada 86-0703641
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1015 Eastman Drive
Bigfork, Montana 59911
(Address of principal executive offices) (Zip code)
----------------------
10 14% Series B Senior Subordinated Notes due 2007
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 19th day of September, 1997.
THE BANK OF NEW YORK
By: /s/ MARY JANE MORRISSEY
-----------------------
Name: MARY JANE MORRISSEY
Title: VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 8,249,820
Interest-bearing balances .......... 1,031,026
Securities:
Held-to-maturity securities ........ 1,118,463
Available-for-sale securities ...... 3,005,838
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,100,281
Loans and lease financing receivables:
Loans and leases, net of unearned
income ............................. 32,895,077
LESS: Allowance for loan and
lease losses ....................... 633,877
LESS: Allocated transfer risk
reserve............................. 429
Loans and leases, net of unearned
income, allowance, and reserve 32,260,771
Assets held in trading accounts ........ 1,715,214
Premises and fixed assets (including
capitalized leases) .................. 684,704
Other real estate owned ................ 21,738
Investments in unconsolidated
subsidiaries and associated
companies ............................ 195,761
Customers' liability to this bank on
acceptances outstanding .............. 1,152,899
Intangible assets ...................... 683,503
Other assets ........................... 1,526,113
-----------
Total assets ........................... $54,746,131
===========
LIABILITIES
Deposits:
In domestic offices .................. $25,614,961
Noninterest-bearing .................. 10,564,652
Interest-bearing ..................... 15,050,309
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ..... 15,103,615
Noninterest-bearing .................. 560,944
Interest-bearing ..................... 14,542,671
Federal funds purchased and Securities
sold under agreements to repurchase. 2,093,286
Demand notes issued to the U.S.
Treasury ........................... 239,354
Trading liabilities .................. 1,399,064
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,075,092
With remaining maturity of more than
one year ......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,160,012
Subordinated notes and debentures .... 1,014,400
Other liabilities .................... 1,840,245
-----------
Total liabilities .................... 50,560,708
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,544,303
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 19,449)
Cumulative foreign currency transla-
tion adjustments .................. ( 13,034)
------------
Total equity capital ................ 4,185,423
-----------
Total liabilities and equity
capital ........................... $54,746,131
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Alan R. Griffith )
J. Carter Bacot ) Directors
Thomas A. Renyi )
<PAGE> 1
Exhibit 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) __
-----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CITADEL BROADCASTING COMPANY
(Exact name of obligor as specified in its charter)
Nevada 86-0703641
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1015 Eastman Drive
Bigfork, Montana 59911
(Address of principal executive offices) (Zip code)
----------------------
13-1/4% Exchangeable Debentures due 2009
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 19th day of September, 1997.
THE BANK OF NEW YORK
By: /s/ MARY JANE MORRISSEY
--------------------------
Name: MARY JANE MORRISSEY
Title: VICE PRESIDENT
-4-
<PAGE> 5
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 8,249,820
Interest-bearing balances .......... 1,031,026
Securities:
Held-to-maturity securities ........ 1,118,463
Available-for-sale securities ...... 3,005,838
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,100,281
Loans and lease financing receivables:
Loans and leases, net of unearned
income ............................. 32,895,077
LESS: Allowance for loan and
lease losses ....................... 633,877
LESS: Allocated transfer risk
reserve............................. 429
Loans and leases, net of unearned
income, allowance, and reserve 32,260,771
Assets held in trading accounts ........ 1,715,214
Premises and fixed assets (including
capitalized leases) .................. 684,704
Other real estate owned ................ 21,738
Investments in unconsolidated
subsidiaries and associated
companies ............................ 195,761
Customers' liability to this bank on
acceptances outstanding .............. 1,152,899
Intangible assets ...................... 683,503
Other assets ........................... 1,526,113
-----------
Total assets ........................... $54,746,131
===========
LIABILITIES
Deposits:
In domestic offices .................. $25,614,961
Noninterest-bearing ..................10,564,652
Interest-bearing .....................15,050,309
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ..... 15,103,615
Noninterest-bearing .................. 560,944
Interest-bearing ..................... 14,542,671
Federal funds purchased and Securities
sold under agreements to repurchase. 2,093,286
Demand notes issued to the U.S.
Treasury ........................... 239,354
Trading liabilities .................. 1,399,064
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,075,092
With remaining maturity of more than
one year ......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,160,012
Subordinated notes and debentures .... 1,014,400
Other liabilities .................... 1,840,245
-----------
Total liabilities .................... 50,560,708
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,544,303
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 19,449)
Cumulative foreign currency transla-
tion adjustments .................. ( 13,034)
------------
Total equity capital ................ 4,185,423
-----------
Total liabilities and equity
capital ........................... $54,746,131
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Alan R. Griffith )
J. Carter Bacot ) Directors
Thomas A. Renyi )
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001044404
<NAME> CITADEL LICENSE, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,588,366
<SECURITIES> 0
<RECEIVABLES> 12,199,973
<ALLOWANCES> 621,054
<INVENTORY> 0
<CURRENT-ASSETS> 14,502,740
<PP&E> 15,208,569
<DEPRECIATION> (5,933,155)
<TOTAL-ASSETS> 102,243,585
<CURRENT-LIABILITIES> 18,697,942
<BONDS> 0
0
0
<COMMON> 40
<OTHER-SE> 5,998,610
<TOTAL-LIABILITY-AND-EQUITY> 102,243,585
<SALES> 45,412,806
<TOTAL-REVENUES> 45,412,806
<CGS> 33,232,485
<TOTAL-COSTS> 41,638,270
<OTHER-EXPENSES> 413,956
<LOSS-PROVISION> 421,378
<INTEREST-EXPENSE> 6,155,472
<INCOME-PRETAX> (1,966,980)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,966,980)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,769,000)
<CHANGES> 0
<NET-INCOME> (3,735,980)
<EPS-PRIMARY> (93)
<EPS-DILUTED> (93)
</TABLE>
<PAGE> 1
Exhibit 99.1
FORM OF
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10-1/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
CITADEL BROADCASTING COMPANY
PURSUANT TO THE PROSPECTUS DATED __________, 1997
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON _________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should
be completed, signed and submitted as follows:
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
(THE "EXCHANGE AGENT")
For Information by Telephone:
(212) 815-2742
By Registered or Certified Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
(7 East) Corporate Trust Services Window
New York, New York 10286 Ground Level
Attention: Reorganization Section New York, New York 10286
Attention: Reorganization Section, 7 East
By Facsimile Transmission:
(212) 815-6339
(Facsimile Confirmation)
(212) 815-2742
(ORIGINALS OF ALL DOCUMENTS SENT BY FACSIMILE SHOULD BE
SENT PROMPTLY BY REGISTERED OR CERTIFIED MAIL, BY HAND, OR
BY OVERNIGHT DELIVERY SERVICE.)
<PAGE> 2
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION
OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY.
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1997 (the "Prospectus") of Citadel Broadcasting Company, a Nevada
corporation (the "Issuer"), and this Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Issuer's offer (the "Exchange
Offer") to exchange its Series B 10-1/4% Senior Subordinated Notes due 2007
(the "Exchange Notes"), which have been registered under the Securities Act (as
hereinafter defined) pursuant to a Registration Statement, for an equal
principal amount of its outstanding 10-1/4% Senior Subordinated Notes due 2007
(the "Notes"), of which $101,000,000 aggregate principal amount is outstanding.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" accompanying
this Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the
Tendered Notes, the undersigned hereby exchanges, assigns, and transfers to, or
upon the order of, the Issuer, all rights, title and interest in, to and under
the Tendered Notes.
Please issue the Exchange Notes exchanged for Tendered Notes in the
Name(s) of the undersigned. Similarly, unless otherwise indicated under
"Special Delivery Instructions" below (Box 3), please send or cause to be sent
the certificates for the Exchange Notes (and accompanying documents, as
appropriate) to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as the true and lawful agent and attorney-in-fact of the
undersigned with respect to the Tendered Notes, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver the Tendered Notes to the Issuer or cause ownership
of the Tendered Notes to be transferred to, or upon the order of, the Issuer,
on the books of the registrar for the Notes and deliver all accompanying
evidences of transfer and authenticity to, or upon the order of, the Issuer
upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange
Notes to which the undersigned is entitled upon acceptance by the Issuer of the
Tendered Notes pursuant to the Exchange Offer, and (ii) receive all benefits
and otherwise exercise all rights of beneficial ownership of the Tendered
Notes, all in accordance with the terms of the Exchange Offer.
-2-
<PAGE> 3
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Issuer upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer --Withdrawal of
Tenders." All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any Beneficial Owner(s),
and every obligation of the undersigned or any Beneficial Owners hereunder
shall be binding upon the heirs, representatives, successors and assigns of the
undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, exchange, assign and transfer the
Tendered Notes and that the Issuer will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances and
adverse claims when the Tendered Notes are acquired by the Issuer as
contemplated herein. The undersigned and each Beneficial Owner will, upon
request, execute and deliver any additional documents reasonably requested by
the Issuer or the Exchange Agent as necessary or desirable to complete and give
effect to the transactions contemplated hereby.
The undersigned hereby represents and warrants that the information
set forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Issuer or
any of its subsidiaries and (iv) the undersigned and each Beneficial Owner
acknowledge and agree that any person participating in the Exchange Offer with
the intention or for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities
Act of 1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), in connection with a secondary resale of the
Exchange Notes acquired by such person and cannot rely on the position of the
staff of the Securities and Exchange Commission (the "Commission") set forth in
the no-action letters that are discussed in the section of the Prospectus
entitled "The Exchange Offer."
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Notes, it represents that
the Notes to be exchanged for the Exchange Notes
-3-
<PAGE> 4
were acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes pursuant to the Exchange Offer; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
By making the foregoing representation and by delivering a prospectus
in connection with the exchange of Notes, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
_ CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
_ CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE
EXCHANGE AGENT AND COMPLETE "Use of Guaranteed Delivery"
BELOW (Box 4).
_ CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE "Use of Book-Entry Transfer"
BELOW (Box 5).
_ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS AND COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ____________________________
Address: _________________________
Number of Copies Requested: ______
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
BOX 1
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
DESCRIPTION OF NOTES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED AGGREGATE
NOTE HOLDER(S), EXACTLY AS NAME(S) CERTIFICATE PRINCIPAL AMOUNT AGGREGATE
APPEAR(S) ON NOTE CERTIFICATE(S) NUMBER(S) OF REPRESENTED BY PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NOTES* CERTIFICATE(S) TENDERED**
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
TOTAL
</TABLE>
-4-
<PAGE> 5
- -------------------------------------------------------------------------------
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes.
All other tenders must be in integral multiples of $1,000 of principal
amount. However, a holder holding any Note in a denomination of other
than an integral multiple of $1,000 may tender the principal amount of
such Note that is not an integral multiple of $1,000 in addition to
tendering in integral multiples of $1,000, the remaining principal
amount, if any, of such Note. Unless otherwise indicated in this
column, the principal amount of all Note Certificates identified in
this Box 1 or delivered to the Exchange Agent herewith shall be deemed
tendered. See Instruction 4.
- --------------------------------------------------------------------------------
BOX 2
- -------------------------------------------------------------------------------
BENEFICIAL OWNER(S)
- -------------------------------------------------------------------------------
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
-5-
<PAGE> 6
BOX 3
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED NOTES
ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE UNDERSIGNED AT
AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Note(s) and any untendered Notes to:
Name(s): ______________________________________________________________________
(PLEASE PRINT)
Address: ______________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)
Tax Identification or Social Security No.:
_______________________________________________________________________________
BOX 4
- --------------------------------------------------------------------------------
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
_____________________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Institution which Guaranteed Delivery: ______________________________
-6-
<PAGE> 7
BOX 5
- --------------------------------------------------------------------------------
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering Institution: ______________________________________________
Account Number: _____________________________________________________________
Transaction Code Number: ____________________________________________________
- --------------------------------------------------------------------------------
-7-
<PAGE> 8
BOX 6
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
- ------------------------------------------------------------------------------------------------------------------------
X ___________________________________ Signature Guarantee
(IF REQUIRED BY INSTRUCTION 5)
X ___________________________________
(SIGNATURE OF REGISTERED HOLDER(S) OR Authorized Signature
AUTHORIZED SIGNATORY)
X ________________________________
Note: The above lines must be signed by the Name: ____________________________
registered holder(s) of Notes as their name(s) (PLEASE PRINT)
appear(s) on the Notes or by person(s)
authorized to become registered holder(s)
(evidence of which authorization must be Title: ___________________________
transmitted with this Letter of Transmittal). Name of Firm: ____________________
If signature is by a trustee, executor, (MUST BE AN ELIGIBLE INSTITUTION
administrator, guardian, attorney-in-fact, AS DEFINED IN INSTRUCTION 2)
officer, or other person acting in a fiduciary
or representative capacity, such person must Address: _________________________
set forth his or her full title below. See _________________________
instruction 5. _________________________
(INCLUDE ZIP CODE)
Name(s): ______________________________ Area Code and Telephone Number:
Capacity: _____________________________ __________________________________
_____________________________ Dated: ___________________________
Street Address: _______________________
_____________________________
_____________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
__________________________________________
Tax Identification or Social Security Number:
________________________________________________
</TABLE>
-8-
<PAGE> 9
SUBSTITUTE FORM W-9
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: CITADEL BROADCASTING COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN _________________________________
THE BOX AT RIGHT AND CERTIFY BY Social security number
FORM W-9 SIGNING AND DATING BELOW
OR
PLEASE FILL IN YOUR NAME
AND ADDRESS BELOW. _________________________________
Employer identification number
- -------------------------
NAME
_________________________
ADDRESS (NUMBER AND
STREET)
_________________________
CITY, STATE AND ZIP
CODE
DEPARTMENT OF THE
TREASURY INTERNAL
REVENUE SERVICE
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER (TIN)
PART 2--Certification--Under Penalties of Perjury, I certify that:
PART 3 --
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be Awaiting TIN _
issued to me) and
(2) I am not subject to back-up withholding
either because (a) I am exempt from back-up
withholding or (b) I have not been notified
by the Internal Revenue Service ("IRS")
that I am subject to back-up withholding as
a result of failure to report all interest PART 4 --
or dividends or (c) the IRS has notified me Exempt _
that I am no longer subject to back-up
withholding.
Certification Instructions--you must cross out
item (2) in Part 2 above if you have been
notified by the IRS that you are subject to
back-up withholding because of underreporting
interest or dividends on your tax return.
However, if after being notified by the IRS that
you were subject to back-up withholding, you
received another notification from the IRS
stating that you are no longer subject to
back-up withholding, do not cross out item (2).
If you are exempt from backup withholding, check
the box in Part 4 above.
SIGNATURE _________________________________ DATE _______ , 1997
- -----------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACK-UP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT
HERETO. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
__________________________________________ ___________________________, 1997
Signature Date
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
-9-
<PAGE> 10
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES. A properly completed
and duly executed copy of this Letter of Transmittal, including Substitute Form
W-9, and any other documents required by this Letter of Transmittal must be
received by the Exchange Agent at its address set forth herein, and either
certificates for Tendered Notes must be received by the Exchange Agent at its
address set forth herein or such Tendered Notes must be transferred pursuant to
the procedures for book-entry transfer described in the Prospectus under the
caption "The Exchange Offer -- Procedures for Tendering" (and a confirmation of
such transfer received by the Exchange Agent), in each case prior to 5:00 p.m.,
New York City time, on the Expiration Date. The method of delivery of
certificates for Tendered Notes, this Letter of Transmittal and all other
required documents to the Exchange Agent is at the election and risk of the
tendering holder and the delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail with
return-receipt requested, properly insured, is recommended. Instead of delivery
by mail, it is recommended that the holder use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Transmittal or Notes should be sent to the Issuer.
Neither the Issuer nor the registrar is under any obligation to notify any
tendering holder of the Issuer's acceptance of Tendered Notes prior to the
closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes
but whose Notes are not immediately available, and who cannot deliver their
Notes, this Letter of Transmittal or any other documents required hereby to the
Exchange Agent prior to the Expiration Date must tender their Notes according
to the guaranteed delivery procedures set forth below, including completion of
Box 4. Pursuant to such procedures: (i) such tender must be made by or through
a firm which is a member of a recognized Medallion Program approved by the
Securities Transfer Association Inc. (an "Eligible Institution") and the Notice
of Guaranteed Delivery must be signed by the holder; (ii) prior to the
Expiration Date, the Exchange Agent must have received from the holder and the
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by mail or hand delivery) setting forth the name and
address of the holder, the certificate number(s) of the Tendered Notes and the
principal amount of Tendered Notes, stating that the tender is being made
thereby and guaranteeing that, within five New York Stock Exchange trading days
after the Expiration Date, this Letter of Transmittal together with the
certificate(s) representing the Tendered Notes and any other required documents
will be deposited by the Eligible Institution with the Exchange Agent; and
(iii) such properly completed and executed Letter of Transmittal, as well as
all other documents required by this Letter of Transmittal and the
certificate(s) representing all Tendered Notes in proper form for transfer,
must be received by the Exchange Agent within five New York Stock Exchange
trading days after the Expiration Date. Any holder who wishes to tender Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery relating to such
Notes prior to 5:00 p.m., New York City time, on the Expiration Date. Failure
to complete the guaranteed delivery procedures outlined above will not, of
itself, affect the validity or effect a revocation of any Letter of Transmittal
form properly completed and executed by an eligible holder who attempted to use
the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered Notes
who is not the registered holder must arrange promptly with the registered
holder to execute and deliver this Letter of Transmittal on his or her behalf
through the execution and
-10-
<PAGE> 11
delivery to the registered holder of the Instructions to Registered Holder
and/or Book-Entry Transfer Facility Participant from Beneficial Owner form
accompanying this Letter of Transmittal.
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount; provided, however, that a holder
holding any Note in a denomination of other than an integral multiple of $1,000
may tender the principal amount of such Note that is not an integral multiple
of $1,000 in addition to tendering, in integral multiples of $1,000, the
remaining principal amount, if any, of such Note. If less than the entire
principal amount of Notes held by the holder is tendered, the tendering holder
should fill in the principal amount tendered in the column labeled "Aggregate
Principal Amount Tendered" of the box entitled "Description of Notes Tendered"
(Box 1) above. The entire principal amount of Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated. If the
entire principal amount of all Notes held by the holder is not tendered, then
Notes for the principal amount of Notes not tendered and Exchange Notes issued
in exchange for any Notes tendered and accepted will be sent to the holder at
his or her registered address, unless a different address is provided in the
appropriate box on this Letter of Transmittal, as soon as practicable following
the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Notes, the signature must correspond with
the name(s) as written on the face of the Tendered Notes without alteration,
enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be issued
(and any untendered principal amount of Notes is to be reissued) in the name of
the registered holder(s), then such registered holder(s) need not and should
not endorse any Tendered Notes, nor provide a separate bond power. In any other
case, such registered holder(s) must either properly endorse the Tendered Notes
or transmit a properly completed bond power with this Letter of Transmittal,
with the signature(s) on the endorsement or bond power guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be
endorsed or accompanied by appropriate bond powers, in each case, signed as the
name(s) of the registered holder(s) appear(s) on the Tendered Notes, with the
signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by
the Issuer, evidence satisfactory to the Issuer of their authority to so act
must be submitted with this Letter of Transmittal.
Endorsements on Tendered Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless the Tendered Notes are tendered (i) by a registered holder
who has not completed the box set forth herein entitled "Special Delivery
Instructions" (Box 3) or (ii) by an Eligible Institution.
-11-
<PAGE> 12
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate, in the
applicable box (Box 3), the name and address to which the Exchange Notes and/or
substitute Notes for principal amounts not tendered or not accepted for
exchange are to be sent, if different from the name and address of the person
signing this Letter of Transmittal. In the case of issuance in a different
name, the taxpayer identification or social security number of the person named
must also be indicated.
7. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer.
If, however, a transfer tax is imposed for any reason other than the transfer
and exchange of Tendered Notes pursuant to the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter
of Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide
the Issuer (as payor) with its correct taxpayer identification number ("TIN"),
which, in the case of a holder who is an individual, is her or her social
security number. If the Issuer is not provided with the correct TIN, the holder
may be subject to backup withholding and a $50 penalty imposed by the Internal
Revenue Service. (If withholding results in an over-payment of taxes, a refund
may be obtained.) Certain holders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements.
To prevent backup withholding, each holder of Tendered Notes must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result
of failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding.
The Issuer reserves the right in its sole discretion to take whatever steps
are necessary to comply with the Issuer's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of Tendered Notes will
be determined by the Issuer in its sole discretion, which determination will be
final and binding. The Issuer reserves the right to reject any and all Notes
not validly tendered or any Notes the Issuer's acceptance of which would, in
the opinion of the Issuer or its counsel, be unlawful. The Issuer also reserves
the right to waive any conditions of the Exchange Offer or defects or
irregularities in tenders of Notes as to any ineligibility of any holder who
seeks to tender Notes in the Exchange Offer. The interpretation of the terms
and conditions of the Exchange Offer (including this Letter of Transmittal and
the instructions hereto) by the Issuer shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of Notes must be cured within such time as the Issuer shall determine.
Neither the Issuer, the Exchange Agent nor any other person shall be under any
duty to give notification of defects or irregularities with respect to tenders
of Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering
holders, unless otherwise provided in this Letter of Transmittal, as soon as
practicable following the Expiration Date.
-12-
<PAGE> 13
10. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to amend,
waive or modify any of the conditions in the Exchange Offer in the case of any
Tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular or
contingent tender of Notes or transmittal of this Letter of Transmittal will be
accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any tendering holder whose
Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated herein for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address indicated
herein. Holders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF EXCHANGE NOTES; RETURN OF
NOTES. Subject to the terms and conditions of the Exchange Offer, the Issuer
will accept for exchange all validly tendered Notes as soon as practicable
after the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Issuer shall be
deemed to have accepted tendered Notes when, as and if the Issuer has given
written or oral notice (immediately followed in writing) thereof to the
Exchange Agent. If any Tendered Notes are not exchanged pursuant to the
Exchange Offer for any reason, such unexchanged Notes will be returned, without
expense, to the undersigned at the address shown in Box 1 or at a different
address as may be indicated herein under "Special Delivery Instructions" (Box
3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures set
forth in the Prospectus under the caption "The Exchange Offer."
-13-
<PAGE> 14
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
10-1/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
CITADEL BROADCASTING COMPANY
PURSUANT TO THE PROSPECTUS DATED __________, 1997
This form must be used by a holder of 10-1/4% Senior Subordinated Notes due
2007 (the "Notes") of Citadel Broadcasting Company, a Nevada corporation (the
"Company"), who wishes to tender Notes to the Exchange Agent pursuant to the
guaranteed delivery procedures described in "The Exchange Offer -- Guaranteed
Delivery Procedures" of the Company's Prospectus dated __________, 1997 (the
"Prospectus") and in Instruction 2 to the related Letter of Transmittal. Any
holder who wishes to tender Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date of the Exchange Offer.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON _________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
(THE "EXCHANGE AGENT")
For Information by Telephone:
(212) 815-2742
By Registered or Certified Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
(7 East) Corporate Trust Services Window
New York, New York 10286 Ground Level
Attention: Reorganization Section New York, New York 10286
Attention: Reorganization Section, 7
East
By Facsimile Transmission:
(212) 815-6339
(Facsimile Confirmation)
(212) 815-2742
-14-
<PAGE> 15
(ORIGINALS OF ALL DOCUMENTS SENT BY FACSIMILE SHOULD BE
SENT PROMPTLY BY REGISTERED OR CERTIFIED MAIL, BY HAND, OR
BY OVERNIGHT DELIVERY SERVICE.)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR TRANSMISSION
OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus, and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Notes listed below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER(S) (IF KNOWN) OF NOTES OR AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Signatures of Registered Holder(s) or
Authorized Signatory: __________________________________ Date: _______________________, 1997
________________________________________________________ Address: __________________________________
________________________________________________________ ___________________________________________
Name(s) of Registered Holder(s): _______________________ Area Code and Telephone No. _______________
________________________________________________________
________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
-15-
<PAGE> 16
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the holder(s) exactly
as their name(s) appear on certificates for Notes or on a security position
listing as the owner of Notes, or by person(s) authorized to become holder(s)
by endorsements and documents transmitted with this Notice of Guaranteed
Delivery. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): _________________________________________________________________
__________________________________________________________________________
Capacity: ________________________________________________________________
Address(es): _____________________________________________________________
__________________________________________________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Notes tendered hereby in
proper form for transfer (or confirmation of the book-entry transfer of such
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility
described in the Prospectus under the caption "The Exchange Offer --Guaranteed
Delivery Procedures" and in the Letter of Transmittal) and any other required
documents, all by 5:00 p.m., New York City time, on the fifth New York Stock
Exchange trading day following the Expiration Date.
Name of firm ________________________ __________________________________
(Authorized Signature)
Address _____________________________ Name _____________________________
(Please Print)
_________________________ Title __________________________
(Include Zip Code)
Area Code and Tel. No. ______________ Dated ___________, 1997
-16-
<PAGE> 17
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by
the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of this Notice of Guaranteed Delivery and any
other required documents to the Exchange Agent is at the election and sole risk
of the holder, and the delivery will be deemed made only when actually received
by the Exchange Agent. If delivery is by mail, registered mail with
return-receipt requested, properly insured, is recommended. As an alternative
to delivery by mail, the holders may wish to consider using an overnight or
hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. For a description of the guaranteed delivery
procedures, see Instruction 2 of the Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Notes referred
to herein, the signature must correspond with the name(s) written on the face
of the Notes without alteration, enlargement, or any change whatsoever. If this
Notice of Guaranteed Delivery is signed by a participant of the Book-Entry
Transfer Facility whose name appears on a security position listing as the
owner of the Notes, the signature must correspond with the name shown on the
security position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Notes or signed as the name of the participant is shown on the
Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Request for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus or the Letter
of Transmittal may be directed to the Exchange Agent at the address specified
in the Prospectus. Holders may also contact their broker, dealer, commercial
bank, trust company, or other nominee for assistance concerning the Exchange
Offer.
-17-
<PAGE> 18
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
CITADEL BROADCASTING COMPANY
10-1/4% SENIOR SUBORDINATED NOTES DUE 2007
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1997 (the "Prospectus") of Citadel Broadcasting Company, a Nevada
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus or the Letter of Transmittal.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the 10-1/4% Senior Subordinated Notes due 2007 (the
"Notes") held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (FILL IN AMOUNT):
$__________ of the 10-1/4% Senior Subordinated Notes due 2007.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
_ TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY):
$__________.
_ NOT TO TENDER any Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in
the Letter of Transmittal that are to be made with respect to the undersigned
as a beneficial owner, including but not limited to the representations that
(i) the undersigned's principal residence is in the state of (FILL IN STATE)
________________________, (ii) the undersigned is acquiring the Exchange Notes
in the ordinary course of business of the undersigned, (iii) the undersigned is
not participating, does not participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
Exchange Notes, (iv) the undersigned acknowledges that any person participating
in the Exchange Offer for the purpose of distributing the Exchange Notes must
comply with the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "Act"), in connection with a secondary
resale transaction of the Exchange Notes acquired by such person and cannot
rely on the position of the staff of the Securities and Exchange Commission set
forth in no-action letters that are discussed in the
-18-
<PAGE> 19
section of the Prospectus entitled "The Exchange Offer -- Resale of the Series
B Notes," and (v) the undersigned is not an "affiliate," as defined in Rule 405
under the Act, of the Company or any of its subsidiaries; (b) to agree on
behalf of the undersigned, as set forth in the Letter of Transmittal, and (c)
to take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of such Notes.
- --------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s): _____________________________________________
Signature(s): ____________________________________________________________
Name (please print): _____________________________________________________
Address: _________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Telephone number: ________________________________________________________
Taxpayer Identification or Social Security Number: _______________________
Date: ____________________________________________________________________
- --------------------------------------------------------------------------------
-19-
<PAGE> 1
Exhibit 99.2
FORM OF
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
13-1/4% SERIES A EXCHANGEABLE PREFERRED STOCK
OF
CITADEL BROADCASTING COMPANY
PURSUANT TO THE PROSPECTUS DATED __________, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON _________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should
be completed, signed and submitted as follows:
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
(THE "EXCHANGE AGENT")
For Information by Telephone:
(212) 815-2742
By Registered or Certified Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
(7 East) Corporate Trust Services Window
New York, New York 10286 Ground Level
Attention: Reorganization Section New York, New York 10286
Attention: Reorganization Section, 7 East
By Facsimile Transmission:
(212) 815-6339
(Facsimile Confirmation)
(212) 815-2742
(ORIGINALS OF ALL DOCUMENTS SENT BY FACSIMILE SHOULD BE
SENT PROMPTLY BY REGISTERED OR CERTIFIED MAIL, BY HAND, OR
BY OVERNIGHT DELIVERY SERVICE.)
<PAGE> 2
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION
OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY.
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1997 (the "Prospectus") of Citadel Broadcasting Company, a Nevada
corporation (the "Issuer"), and this Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Issuer's offer (the "Exchange
Offer") to exchange one share of its 13-1/4% Series B Exchangeable Preferred
Stock (the "Exchange Shares"), which have been registered under the Securities
Act (as hereinafter defined) pursuant to a Registration Statement, for each
share outstanding of its 13-1/4% Series A Exchangeable Preferred Stock (the
"Preferred Shares"), 1,000,000 shares of which are outstanding. Capitalized
terms used but not defined herein have the meanings ascribed to them in the
Prospectus.
The undersigned hereby tenders the Preferred Shares described in Box 1
below (the "Tendered Shares") pursuant to the terms and conditions described in
the Prospectus and this Letter of Transmittal. The undersigned is the
registered owner of all the Tendered Shares and the undersigned represents that
it has received from each beneficial owner of the Tendered Shares ("Beneficial
Owners") a duly completed and executed form of "Instruction to Registered
Holder and/or Book-Entry Transfer Facility Participant from Beneficial Owner"
accompanying this Letter of Transmittal, instructing the undersigned to take
the action described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the
Tendered Shares, the undersigned hereby exchanges, assigns, and transfers to,
or upon the order of, the Issuer, all rights, title and interest in, to and
under the Tendered Shares.
Please issue the Exchange Shares exchanged for Tendered Shares in the
Name(s) of the undersigned. Similarly, unless otherwise indicated under
"Special Delivery Instructions" below (Box 3), please send or cause to be sent
the certificates for the Exchange Shares (and accompanying documents, as
appropriate) to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as the true and lawful agent and attorney-in-fact of the
undersigned with respect to the Tendered Shares, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver the Tendered Shares to the Issuer or
cause ownership of the Tendered Shares to be transferred to, or upon the order
of, the Issuer, on the books of the registrar for the Preferred Shares and
deliver all accompanying evidences of transfer and authenticity to, or upon the
order of, the Issuer upon receipt by the Exchange Agent, as the undersigned's
agent, of the Exchange Shares to which the undersigned is entitled upon
acceptance by the Issuer of the Tendered Shares pursuant to the Exchange Offer,
and (ii) receive all benefits and otherwise exercise all rights of beneficial
ownership of the Tendered Shares, all in accordance with the terms of the
Exchange Offer.
-2-
<PAGE> 3
The undersigned understands that tenders of Preferred Shares pursuant
to the procedures described under the caption "The Exchange Offer" in the
Prospectus and in the instructions hereto will constitute a binding agreement
between the undersigned and the Issuer upon the terms and subject to the
conditions of the Exchange Offer, subject only to withdrawal of such tenders on
the terms set forth in the Prospectus under the caption "The Exchange Offer --
Withdrawal of Tenders." All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the undersigned and any
Beneficial Owner(s), and every obligation of the undersigned or any Beneficial
Owners hereunder shall be binding upon the heirs, representatives, successors
and assigns of the undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, exchange, assign and transfer the
Tendered Shares and that the Issuer will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances and
adverse claims when the Tendered Shares are acquired by the Issuer as
contemplated herein. The undersigned and each Beneficial Owner will, upon
request, execute and deliver any additional documents reasonably requested by
the Issuer or the Exchange Agent as necessary or desirable to complete and give
effect to the transactions contemplated hereby.
The undersigned hereby represents and warrants that the information
set forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Shares to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Exchange Shares, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Issuer or
any of its subsidiaries and (iv) the undersigned and each Beneficial Owner
acknowledge and agree that any person participating in the Exchange Offer with
the intention or for the purpose of distributing the Exchange Shares must
comply with the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), in connection with a secondary
resale of the Exchange Shares acquired by such person and cannot rely on the
position of the staff of the Securities and Exchange Commission (the
"Commission") set forth in the no-action letters that are discussed in the
section of the Prospectus entitled "The Exchange Offer."
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Shares. If the undersigned is a broker-dealer that will receive
Exchange Shares for its own account in exchange for Preferred Shares, it
represents that the Preferred Shares to be exchanged for the
-3-
<PAGE> 4
Exchange Shares were acquired by it as a result of market-making activities or
other trading activities and acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Shares pursuant to the Exchange Offer; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
By making the foregoing representation and by delivering a prospectus
in connection with the exchange of Preferred Shares, a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
_ CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED HEREWITH.
_ CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE "Use of Guaranteed Delivery" BELOW (Box 4).
_ CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE "Use of Book-Entry Transfer"
BELOW (Box 5).
_ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ___________________________
Address: ________________________
Number of Copies Requested: _____
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
BOX 1
- --------------------------------------------------------------------------------
DESCRIPTION OF PREFERRED SHARES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED NUMBER OF
HOLDER(S), EXACTLY AS NAME(S) APPEAR(S) PREFERRED SHARES NUMBER OF
ON CERTIFICATE(S) FOR PREFERRED SHARES CERTIFICATE REPRESENTED BY PREFERRED SHARES
(Please fill in, if blank) NUMBER(S)* CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL
</TABLE>
- --------------------------------------------------------------------------------
-4-
<PAGE> 5
- --------------------------------------------------------------------------------
* Need not be completed by persons tendering by book-entry transfer.
** Unless otherwise indicated in this column, the number of Preferred
Shares represented by all Certificates for Preferred Shares identified
in this Box 1 or delivered to the Exchange Agent herewith shall be
deemed tendered. See Instruction 4.
BOX 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
BENEFICIAL OWNER(S)
- ------------------------------------------------------------------------------------------------------------------------
STATE OF PRINCIPAL RESIDENCE OF EACH NUMBER OF TENDERED SHARES HELD
BENEFICIAL OWNER OF TENDERED SHARES FOR ACCOUNT OF BENEFICIAL OWNER
- --------------------------------------------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
BOX 3
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE SHARES EXCHANGED FOR PREFERRED SHARES AND
UNTENDERED PREFERRED SHARES ARE TO BE SENT TO SOMEONE OTHER THAN THE
UNDERSIGNED, OR TO THE UNDERSIGNED AT AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Shares and any untendered Preferred Shares to:
Name(s):
_________________________________________________________________________
(PLEASE PRINT)
Address:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
(INCLUDE ZIP CODE)
Tax Identification or Social Security No.:
_________________________________________________________________________
- --------------------------------------------------------------------------------
-5-
<PAGE> 6
BOX 4
- --------------------------------------------------------------------------------
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF PREFERRED SHARES ARE BEING TENDERED BY MEANS OF A
NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
_____________________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Institution which Guaranteed Delivery: ______________________________
- --------------------------------------------------------------------------------
BOX 5
- --------------------------------------------------------------------------------
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED SHARES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering Institution: ______________________________________________
Account Number: _____________________________________________________________
Transaction Code Number: ____________________________________________________
- --------------------------------------------------------------------------------
-6-
<PAGE> 7
BOX 6
- --------------------------------------------------------------------------------
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
X ___________________________________ Signature Guarantee
(IF REQUIRED BY INSTRUCTION 5)
X ___________________________________
(SIGNATURE OF REGISTERED HOLDER(S) OR Authorized Signature
AUTHORIZED SIGNATORY)
X ________________________________
Note: The above lines must be signed by the Name: ____________________________
registered holder(s) of Preferred Shares as (PLEASE PRINT)
their name(s) appear(s) on the Certificate(s)
for Preferred Shares or by person(s)
authorized to become registered holder(s)
(evidence of which authorization must be Title: ___________________________
transmitted with this Letter of Transmittal). Name of Firm: ____________________
If signature is by a trustee, executor, (MUST BE AN ELIGIBLE INSTITUTION
administrator, guardian, attorney-in-fact, AS DEFINED IN INSTRUCTION 2)
officer, or other person acting in a fiduciary
or representative capacity, such person must Address: _________________________
set forth his or her full title below. See _________________________
instruction 5. _________________________
(INCLUDE ZIP CODE)
Name(s): ______________________________ Area Code and Telephone Number:
______________________________
Capacity: _____________________________ __________________________________
_____________________________ Dated: ___________________________
Street Address: _______________________
_____________________________
_____________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
_______________________________________
Tax Identification or Social Security Number:
_____________________________________________
</TABLE>
-7-
<PAGE> 8
SUBSTITUTE FORM W-9
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: CITADEL BROADCASTING COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN _________________________________
THE BOX AT RIGHT AND CERTIFY BY Social security number
FORM W-9 SIGNING AND DATING BELOW
OR
PLEASE FILL IN YOUR NAME
AND ADDRESS BELOW. _________________________________
Employer identification number
- -------------------------
NAME
_________________________
ADDRESS (NUMBER AND
STREET)
_________________________
CITY, STATE AND ZIP
CODE
DEPARTMENT OF THE
TREASURY INTERNAL
REVENUE SERVICE
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER (TIN)
- -----------------------------------------------------------------------------------------------------------------------------
PART 2--Certification--Under Penalties of Perjury, I certify that:
PART 3 --
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be Awaiting TIN _
issued to me) and
(2) I am not subject to back-up withholding
either because (a) I am exempt from back-up
withholding or (b) I have not been notified
by the Internal Revenue Service ("IRS")
that I am subject to back-up withholding as
a result of failure to report all interest PART 4 --
or dividends or (c) the IRS has notified me Exempt _
that I am no longer subject to back-up
withholding.
Certification Instructions--you must cross out
item (2) in Part 2 above if you have been
notified by the IRS that you are subject to
back-up withholding because of underreporting
interest or dividends on your tax return.
However, if after being notified by the IRS that
you were subject to back-up withholding, you
received another notification from the IRS
stating that you are no longer subject to
back-up withholding, do not cross out item (2).
If you are exempt from backup withholding, check
the box in Part 4 above.
SIGNATURE _________________________________ DATE ______, 1997
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACK-UP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT HERETO.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within 60 days, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a number.
__________________________________________ ___________________________, 1997
Signature Date
- --------------------------------------------------------------------------------
-8-
<PAGE> 9
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND PREFERRED SHARES. A properly
completed and duly executed copy of this Letter of Transmittal, including
Substitute Form W-9, and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at its address set forth
herein, and either certificates for Tendered Shares must be received by the
Exchange Agent at its address set forth herein or such Tendered Shares must be
transferred pursuant to the procedures for book-entry transfer described in the
Prospectus under the caption "The Exchange Offer -- Procedures for Tendering"
(and a confirmation of such transfer received by the Exchange Agent), in each
case prior to 5:00 p.m., New York City time, on the Expiration Date. The method
of delivery of certificates for Tendered Shares, this Letter of Transmittal and
all other required documents to the Exchange Agent is at the election and risk
of the tendering holder and the delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail with
return-receipt requested, properly insured, is recommended. Instead of delivery
by mail, it is recommended that the holder use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Transmittal or Preferred Shares should be sent to the
Issuer. Neither the Issuer nor the registrar is under any obligation to notify
any tendering holder of the Issuer's acceptance of Tendered Shares prior to the
closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their
Preferred Shares but whose Preferred Shares are not immediately available, and
who cannot deliver their Preferred Shares, this Letter of Transmittal or any
other documents required hereby to the Exchange Agent prior to the Expiration
Date must tender their Preferred Shares according to the guaranteed delivery
procedures set forth below, including completion of Box 4. Pursuant to such
procedures: (i) such tender must be made by or through a firm which is a member
of a recognized Medallion Program approved by the Securities Transfer
Association Inc. (an "Eligible Institution") and the Notice of Guaranteed
Delivery must be signed by the holder; (ii) prior to the Expiration Date, the
Exchange Agent must have received from the holder and the Eligible Institution
a properly completed and duly executed Notice of Guaranteed Delivery (by mail
or hand delivery) setting forth the name and address of the holder, the
certificate number(s) of the Tendered Shares and number of Tendered Shares,
stating that the tender is being made thereby and guaranteeing that, within
five New York Stock Exchange trading days after the Expiration Date, this
Letter of Transmittal together with the certificate(s) representing the
Tendered Shares and any other required documents will be deposited by the
Eligible Institution with the Exchange Agent; and (iii) such properly completed
and executed Letter of Transmittal, as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all Tendered
Shares in proper form for transfer, must be received by the Exchange Agent
within five New York Stock Exchange trading days after the Expiration Date. Any
holder who wishes to tender Preferred Shares pursuant to the guaranteed
delivery procedures described above must ensure that the Exchange Agent
receives the Notice of Guaranteed Delivery relating to such Preferred Shares
prior to 5:00 p.m., New York City time, on the Expiration Date. Failure to
complete the guaranteed delivery procedures outlined above will not, of itself,
affect the validity or effect a revocation of any Letter of Transmittal form
properly completed and executed by an eligible holder who attempted to use the
guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name Tendered Shares are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered Shares
who is not the registered holder must arrange promptly with the registered
-9-
<PAGE> 10
holder to execute and deliver this Letter of Transmittal on his or her behalf
through the execution and delivery to the registered holder of the Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner form accompanying this Letter of Transmittal.
4. PARTIAL TENDERS. If less than all Preferred Shares held by the holder are
tendered, the tendering holder should fill in the number of Preferred Shares
tendered in the column labeled "Number of Preferred Shares Tendered" of the box
entitled "Description of Preferred Shares Tendered" (Box 1) above. All
Preferred Shares delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. If all Preferred Shares held by the holder
are not tendered, then Preferred Shares for the Preferred Shares not tendered
and Exchange Shares issued in exchange for any Preferred Shares tendered and
accepted will be sent to the holder at his or her registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal, as soon as practicable following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Shares, the signature must correspond with
the name(s) as written on the face of the certificate for the Tendered Shares
without alteration, enlargement or any change whatsoever.
If any of the Tendered Shares are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Shares are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Shares are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Shares, and Exchange Shares issued in exchange therefor are to be
issued (and any untendered Preferred Shares to be reissued) in the name of the
registered holder(s), then such registered holder(s) need not and should not
endorse any Tendered Shares, nor provide a separate stock power. In any other
case, such registered holder(s) must either properly endorse the Tendered
Shares or transmit a properly completed stock power with this Letter of
Transmittal, with the signature(s) on the endorsement or stock power guaranteed
by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Shares, such Tendered Shares must be
endorsed or accompanied by appropriate stock powers, in each case, signed as
the name(s) of the registered holder(s) appear(s) on the Tendered Shares, with
the signature(s) on the endorsement or stock power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Tendered Shares or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by
the Issuer, evidence satisfactory to the Issuer of their authority to so act
must be submitted with this Letter of Transmittal.
Endorsements on Tendered Shares or signatures on stock powers required by
this Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless the Tendered Shares are tendered (i) by a registered holder
who has not completed the box set forth herein entitled "Special Delivery
Instructions" (Box 3) or (ii) by an Eligible Institution.
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate, in the
applicable box (Box 3), the name and address to which the Exchange Shares
and/or substitute Preferred Shares for
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<PAGE> 11
Preferred Shares not tendered or not accepted for exchange are to be sent, if
different from the name and address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated.
7. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the exchange of Tendered Shares pursuant to the Exchange Offer.
If, however, a transfer tax is imposed for any reason other than the transfer
and exchange of Tendered Shares pursuant to the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Shares listed in this Letter
of Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Shares which are accepted for exchange must provide
the Issuer (as payor) with its correct taxpayer identification number ("TIN"),
which, in the case of a holder who is an individual, is her or her social
security number. If the Issuer is not provided with the correct TIN, the holder
may be subject to backup withholding and a $50 penalty imposed by the Internal
Revenue Service. (If withholding results in an over-payment of taxes, a refund
may be obtained.) Certain holders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements.
To prevent backup withholding, each holder of Tendered Shares must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result
of failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding.
The Issuer reserves the right in its sole discretion to take whatever steps
are necessary to comply with the Issuer's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of Tendered Shares will
be determined by the Issuer in its sole discretion, which determination will be
final and binding. The Issuer reserves the right to reject any and all
Preferred Shares not validly tendered or any Preferred Shares the Issuer's
acceptance of which would, in the opinion of the Issuer or its counsel, be
unlawful. The Issuer also reserves the right to waive any conditions of the
Exchange Offer or defects or irregularities in tenders of Preferred Shares as
to any ineligibility of any holder who seeks to tender Preferred Shares in the
Exchange Offer. The interpretation of the terms and conditions of the Exchange
Offer (including this Letter of Transmittal and the instructions hereto) by the
Issuer shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Preferred Shares must be cured
within such time as the Issuer shall determine. Neither the Issuer, the
Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Preferred
Shares, nor shall any of them incur any liability for failure to give such
notification. Tenders of Preferred Shares received by the Exchange Agent that
are not properly tendered and as to which the defects or irregularities have
not been cured or waived will be returned by the Exchange Agent to the
tendering holders, unless otherwise provided in this Letter of Transmittal, as
soon as practicable following the Expiration Date.
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<PAGE> 12
10. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to amend,
waive or modify any of the conditions in the Exchange Offer in the case of any
Tendered Shares.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular or
contingent tender of Preferred Shares or transmittal of this Letter of
Transmittal will be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. Any tendering holder
whose certificate(s) for Preferred Shares have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated herein for
further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address indicated
herein. Holders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED SHARES AND ISSUANCE OF EXCHANGE SHARES; RETURN OF
PREFERRED SHARES. Subject to the terms and conditions of the Exchange Offer,
the Issuer will accept for exchange all validly tendered Preferred Shares as
soon as practicable after the Expiration Date and will issue Exchange Shares
therefor as soon as practicable thereafter. For purposes of the Exchange Offer,
the Issuer shall be deemed to have accepted tendered Preferred Shares when, as
and if the Issuer has given written or oral notice (immediately followed in
writing) thereof to the Exchange Agent. If any Tendered Shares are not
exchanged pursuant to the Exchange Offer for any reason, such unexchanged
Preferred Shares will be returned, without expense, to the undersigned at the
address shown in Box 1 or at a different address as may be indicated herein
under "Special Delivery Instructions" (Box 3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures set
forth in the Prospectus under the caption "The Exchange Offer."
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<PAGE> 13
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
13-1/4% SERIES A EXCHANGEABLE PREFERRED STOCK
OF
CITADEL BROADCASTING COMPANY
PURSUANT TO THE PROSPECTUS DATED __________, 1997
This form must be used by a holder of 13-1/4% Series A Exchangeable
Preferred Stock (the "Preferred Shares") of Citadel Broadcasting Company, a
Nevada corporation (the "Company"), who wishes to tender Preferred Shares to
the Exchange Agent pursuant to the guaranteed delivery procedures described in
"The Exchange Offer -- Guaranteed Delivery Procedures" of the Company's
Prospectus dated __________, 1997 (the "Prospectus") and in Instruction 2 to
the related Letter of Transmittal. Any holder who wishes to tender Preferred
Shares pursuant to such guaranteed delivery procedures must ensure that the
Exchange Agent receives this Notice of Guaranteed Delivery prior to the
Expiration Date of the Exchange Offer. Capitalized terms used but not defined
herein have the meanings ascribed to them in the Prospectus or the Letter of
Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON _________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
(THE "EXCHANGE AGENT")
For Information by Telephone:
(212) 815-2742
By Registered or Certified Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
(7 East) Corporate Trust Services Window
New York, New York 10286 Ground Level
Attention: Reorganization Section New York, New York 10286
Attention: Reorganization Section, 7 East
By Facsimile Transmission:
(212) 815-6339
(Facsimile Confirmation)
(212) 815-2742
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<PAGE> 14
(ORIGINALS OF ALL DOCUMENTS SENT BY FACSIMILE SHOULD BE
SENT PROMPTLY BY REGISTERED OR CERTIFIED MAIL, BY HAND, OR
BY OVERNIGHT DELIVERY SERVICE.)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR TRANSMISSION
OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus, and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the Preferred Shares set
forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Preferred Shares listed below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER(S) (IF KNOWN OF NUMBER OF PREFERRED SHARES REPRESENTED NUMBER OF PREFERRED
PREFERRED SHARES OR ACCOUNT NUMBER SHARES TENDERED
AT THE BOOK-ENTRY FACILITY
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Signatures of Registered Holder(s) or
Authorized Signatory: _________________________ Date: ________, 1997
_______________________________________________ Address: __________________________________
_______________________________________________ ___________________________________________
Name(s) of Registered Holder(s): ______________ Area Code and Telephone No. _______________
_______________________________________________
_______________________________________________
</TABLE>
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<PAGE> 15
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the holder(s) exactly
as their name(s) appear on certificates for Preferred Shares or on a security
position listing as the owner of Preferred Shares, or by person(s) authorized
to become holder(s) by endorsements and documents transmitted with this Notice
of Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): _________________________________________________________________
__________________________________________________________________________
Capacity: ________________________________________________________________
Address(es): _____________________________________________________________
__________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the certificates for
Preferred Shares tendered hereby in proper form for transfer (or confirmation
of the book-entry transfer of such Preferred Shares into the Exchange Agent's
account at the Book-Entry Transfer Facility described in the Prospectus under
the caption "The Exchange Offer -- Guaranteed Delivery Procedures" and in the
Letter of Transmittal) and any other required documents, all by 5:00 p.m., New
York City time, on the fifth New York Stock Exchange trading day following the
Expiration Date.
Name of firm ________________________ ____________________________________
(Authorized Signature)
Address _____________________________ Name _______________________________
(Please Print)
_________________________ Title ______________________________
(Include Zip Code)
Area Code and Tel. No. ______________ Dated ___________________, 1997
- --------------------------------------------------------------------------------
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<PAGE> 16
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by
the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of this Notice of Guaranteed Delivery and any
other required documents to the Exchange Agent is at the election and sole risk
of the holder, and the delivery will be deemed made only when actually received
by the Exchange Agent. If delivery is by mail, registered mail with
return-receipt requested, properly insured, is recommended. As an alternative
to delivery by mail, the holders may wish to consider using an overnight or
hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. For a description of the guaranteed delivery
procedures, see Instruction 2 of the Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Preferred
Shares referred to herein, the signature must correspond with the name(s)
written on the face of the certificate for the Preferred Shares without
alteration, enlargement, or any change whatsoever. If this Notice of Guaranteed
Delivery is signed by a participant of the Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of the Preferred
Shares, the signature must correspond with the name shown on the security
position listing as the owner of the Preferred Shares.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Preferred Shares listed or a participant of the
Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate stock powers, signed as the name of the registered
holder(s) appears on the Preferred Shares or signed as the name of the
participant is shown on the Book-Entry Transfer Facility's security position
listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Request for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus or the Letter
of Transmittal may be directed to the Exchange Agent at the address specified
in the Prospectus. Holders may also contact their broker, dealer, commercial
bank, trust company, or other nominee for assistance concerning the Exchange
Offer.
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<PAGE> 17
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
CITADEL BROADCASTING COMPANY
13-1/4% SERIES A EXCHANGEABLE PREFERRED STOCK
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1997 (the "Prospectus") of Citadel Broadcasting Company, a Nevada
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus or the Letter of Transmittal.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the shares of 13-1/4% Series A Exchangeable Preferred
Stock (the "Preferred Shares") held by you for the account of the undersigned.
The number of Preferred Shares held by you for the account of the
undersigned is (FILL IN NUMBER):
__________ shares of the 13-1/4% Series A Exchangeable Preferred Stock.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
_ TO TENDER the following Preferred Shares held by you for the account
of the undersigned (INSERT NUMBER OF PREFERRED SHARES TO BE TENDERED,
IF ANY): ______________________
_ NOT TO TENDER any Preferred Shares held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Preferred Shares held by you
for the account of the undersigned, it is understood that you are authorized
(a) to make, on behalf of the undersigned (and the undersigned, by its
signature below, hereby makes to you), the representations and warranties
contained in the Letter of Transmittal that are to be made with respect to the
undersigned as a beneficial owner, including but not limited to the
representations that (i) the undersigned's principal residence is in the state
of (FILL IN STATE) ________________________, (ii) the undersigned is acquiring
the Exchange Shares in the ordinary course of business of the undersigned,
(iii) the undersigned is not participating, does not participate, and has no
arrangement or understanding with any person to participate, in the
distribution of the Exchange Shares, (iv) the undersigned acknowledges that any
person participating in the Exchange Offer for the purpose of distributing the
Exchange Shares must comply with the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the "Act"), in
connection with a secondary resale transaction of the
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<PAGE> 18
Exchange Shares acquired by such person and cannot rely on the position of the
staff of the Securities and Exchange Commission set forth in no-action letters
that are discussed in the section of the Prospectus entitled "The Exchange
Offer -- Resale of the Series B Preferred Shares," and (v) the undersigned is
not an "affiliate," as defined in Rule 405 under the Act, of the Company or any
of its subsidiaries; (b) to agree on behalf of the undersigned, as set forth in
the Letter of Transmittal, and (c) to take such other action as necessary under
the Prospectus or the Letter of Transmittal to effect the valid tender of such
Preferred Shares.
- --------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s): _______________________________________________
Signature(s): ______________________________________________________________
Name (please print): _______________________________________________________
Address: ___________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
Telephone number: __________________________________________________________
Taxpayer Identification or Social Security Number: _________________________
Date: ______________________________________________________________________
- --------------------------------------------------------------------------------
-18-
