<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 31, 1999
Citadel Broadcasting Company
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada
----------------------------------------------
(State of Other Jurisdiction of Incorporation)
333-36771 86-0703641
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
City Center West, Suite 400
7201 West Lake Mead Boulevard
Las Vegas, Nevada 89128
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(702) 804-5200
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
This report includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
are based largely on current expectations and projections about future events
and financial trends affecting Citadel Broadcasting Company's business. The
words intends, believes and similar words are intended to identify
forward-looking statements. The forward-looking statements in this report are
subject to risks, uncertainties and assumptions including, among other things:
o the realization of Citadel Broadcasting's business strategy,
o general economic and business conditions, both nationally and in
Citadel Broadcasting's radio markets,
o Citadel Broadcasting's expectations and estimates concerning future
financial performance, financing plans and the impact of competition,
o anticipated trends in Citadel Broadcasting's industry, and
o the impact of current or pending legislation and regulation and
antitrust considerations.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this report might not transpire. Citadel Broadcasting
undertakes no obligation to publicly update or revise any forward-looking
statements because of new information, future events or otherwise.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 31, 1999, Citadel Broadcasting Company completed its
acquisition of all of the issued and outstanding shares of capital stock of
Fuller-Jeffrey Broadcasting Companies, Inc. from Robert F. Fuller and Joseph N.
Jeffrey, Jr., the two former stockholders of Fuller-Jeffrey Broadcasting. At the
time of the closing, Fuller-Jeffrey Broadcasting was, directly or indirectly
through its subsidiaries, the licensee of and the operator of radio stations
WOKQ-FM, WXBB-FM, WPKQ-FM and WXBP-FM serving the Portsmouth/Dover/Rochester,
New Hampshire market and WBLM-FM, WCYI-FM, WCYY-FM, WHOM-FM, WJBQ-FM and
WCLZ-FM serving the Portland, Maine market. Citadel Broadcasting intends to
continue operating these stations. Immediately following the closing,
Fuller-Jeffrey Broadcasting and its subsidiaries were merged into Citadel
Broadcasting.
The aggregate purchase price was approximately $63.5 million, which
amount includes the repayment of approximately $16.4 million of indebtedness of
Fuller-Jeffrey Broadcasting, but does not include approximately $1.8 million
payable over a seven-year period related to a consulting and noncompetition
agreement entered into in connection
2
<PAGE> 3
with the acquisition. Of the purchase price, approximately $6.1 million was paid
using proceeds from the June 1999 public offering of common stock of Citadel
Broadcasting's parent, Citadel Communications Corporation, and the balance was
borrowed under Citadel Broadcasting's credit facility with FINOVA Capital
Corporation, as administrative agent, and FINOVA Capital Corporation,
BankBoston, N.A., The Bank of New York, Nationsbank of Texas, N.A. and Union
Bank of California, N.A., as lenders.
The parties completed this transaction prior to receipt of a final
order from the Federal Communications Commission. Until the order becomes final,
third parties may file a request for reconsideration or judicial review or the
FCC may reconsider the initial grant on its own motion. Such action could expose
the parties to a modification or set aside of the initial approval. There can be
no assurance that a modification or set aside will not occur.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements. The following financial statements are included
pursuant to Item 7(a):
FULLER-JEFFREY BROADCASTING COMPANIES, INC. AND SUBSIDIARIES
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1998 and
June 30, 1999 (unaudited)
Consolidated Statements of Operations for the year ended December 31, 1998 and
the six months ended June 30, 1998 and 1999 (unaudited)
Consolidated Statements of Stockholders' Deficiency for the year ended
December 31, 1998
Consolidated Statements of Cash Flows for the year ended December 31, 1998 and
the six months ended June 30, 1998 and 1999 (unaudited)
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information. The following pro forma financial
information is included herein pursuant to Item 7(b):
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six
months ended June 30, 1999
3
<PAGE> 4
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
twelve months ended December 31, 1998
(c) Exhibits. The following exhibits are filed as part of this report:
2.1 Stock Purchase Agreement dated April 30, 1999 by and between Robert F.
Fuller and Citadel Broadcasting Company.
2.2 Stock Purchase Agreement dated April 30, 1999 by and between Joseph N.
Jeffrey, Jr. and Citadel Broadcasting Company.
4
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Fuller-Jeffrey Broadcasting Companies, Inc.:
We have audited the accompanying consolidated balance sheet of
Fuller-Jeffrey Broadcasting Companies, Inc. and subsidiaries (the Company) as of
December 31, 1998, and the related consolidated statements of operations,
stockholders' deficiency, and cash flows for the year 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 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Fuller-Jeffrey Broadcasting Companies, Inc. and subsidiaries as of December 31,
1998, and the results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ KPMG LLP
April 7, 1999, except as to note 11,
which is as of August 31, 1999
5
<PAGE> 6
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS (NOTE 4)
Current assets:
Cash...................................................... $ 588,155 631,064
Receivables:
Accounts receivable, net of allowance for doubtful
accounts of $192,000 in 1998 and $209,793 as of June
30, 1999.............................................. 2,501,189 2,908,396
Other.................................................. 248,342 84,795
------------ -----------
Total receivables................................. 2,749,531 2,993,191
Prepaid expenses.......................................... 220,547 214,456
Deferred tax assets (note 6).............................. 270,856 227,624
------------ -----------
Total current assets.............................. 3,829,089 4,066,335
------------ -----------
Property, plant, and equipment:
Land and improvements..................................... 660,597 660,597
Buildings and improvements................................ 870,394 931,437
Equipment, antenna systems and furnishings................ 5,635,500 5,838,855
Construction in progress.................................. 746,940 1,726,894
------------ -----------
7,913,431 9,157,783
Less accumulated depreciation and amortization............ (3,699,952) (3,958,053)
------------ -----------
Net property, plant and equipment................. 4,213,479 5,199,730
------------ -----------
Other assets:
Due from officers, stockholders and employees............. 55,000 35,000
Deposits and other assets................................. 345,747 440,136
Intangible assets, net (notes 2 and 8).................... 5,700,247 5,468,163
Deferred tax assets (note 6).............................. 841,707 491,197
------------ -----------
$ 14,985,269 15,700,561
============ ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current installments of long-term debt (note 4)........... $ 1,158,822 1,106,455
Accounts payable.......................................... 668,643 616,608
Due to related parties (note 5)........................... 74,827 254,827
Deferred revenue (note 3)................................. 450,000 300,000
Accrued expenses:
Salaries and other..................................... 652,941 718,876
Interest............................................... 65,333 79,333
Income tax payable........................................ -- 211,148
------------ -----------
Total current liabilities......................... 3,070,566 3,287,247
Long-term debt (note 4)..................................... 14,408,918 14,453,869
Due to related parties (note 5)............................. 487,156 281,216
Deferred revenue (note 3)................................... 500,000 350,000
------------ -----------
Total liabilities................................. 18,466,640 18,372,332
------------ -----------
Stockholders' deficit:
Common stock, par value $1 per share, authorized 100,000
shares; issued and outstanding 45,000 shares (note
10).................................................... 45,000 45,000
Retained deficit.......................................... (2,526,371) (1,716,771)
------------ -----------
(2,481,371) (1,671,771)
Less treasury stock, 15,000 shares at cost................ (1,000,000) (1,000,000)
------------ -----------
Total stockholders' deficiency.............................. (3,481,371) (2,671,771)
Commitments and contingencies (notes 7, 9 and 11)
------------ -----------
$ 14,985,269 15,700,561
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------
1998 1998 1999
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenue:
Local sales....................................... $11,625,852 5,382,890 6,255,845
National sales.................................... 2,404,837 1,087,949 1,355,331
Other income...................................... 298,911 73,916 50,702
----------- ---------- ----------
14,329,600 6,544,755 7,661,878
Less agency commissions........................... 1,884,123 862,971 957,913
----------- ---------- ----------
Net revenue excluding trade revenue............ 12,445,477 5,681,784 6,703,965
----------- ---------- ----------
Operating expenses:
Technical......................................... 546,576 251,207 292,700
Programming....................................... 1,819,215 874,275 1,009,224
Promotional....................................... 506,229 226,339 225,958
Selling........................................... 2,085,844 903,417 1,233,178
General and administrative........................ 3,469,174 1,575,379 1,702,497
----------- ---------- ----------
8,427,038 3,830,617 4,463,557
----------- ---------- ----------
Gross margin from broadcasting activities,
excluding trades............................. 4,018,439 1,851,167 2,240,408
----------- ---------- ----------
Other operating expense (income):
Depreciation and amortization (note 2)............ 1,006,148 377,181 454,289
Noncompete expense (note 2)....................... 142,143 53,790 43,126
Noncompete income................................. (626,667) (313,333) (300,000)
----------- ---------- ----------
Other operating expense, net................... 521,624 117,638 197,415
----------- ---------- ----------
Net operating income before trades............. 3,496,815 1,733,529 2,042,993
----------- ---------- ----------
Trade revenue....................................... 1,196,257 541,808 597,603
Trade expense....................................... (1,093,491) (466,181) (551,233)
----------- ---------- ----------
Net trade revenue.............................. 102,766 75,627 46,370
----------- ---------- ----------
Net operating income........................... 3,599,581 1,809,156 2,089,363
Interest expense (note 4)........................... (1,399,236) (731,061) (630,819)
(Loss) gain on sale of assets....................... -- (2,779) 140,000
Other financing costs............................... (296,000) -- (161,634)
----------- ---------- ----------
Income before income taxes..................... 1,904,345 1,075,316 1,436,910
Income tax (benefit) expense (note 6)............... (54,765) 81,231 627,310
----------- ---------- ----------
Net income..................................... $ 1,959,110 994,085 809,600
=========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMMON RETAINED TREASURY
STOCK DEFICIT STOCK TOTAL
------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1997........... 45,000 (4,485,481) (1,000,000) (5,440,481)
Net income for year................ -- 1,959,110 -- 1,959,110
------- ----------- ----------- -----------
Balance, December 31, 1998........... $45,000 (2,526,371) (1,000,000) (3,481,371)
======= =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 9
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------
1998 1998 1999
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 1,959,110 994,085 809,600
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............. 1,006,148 377,181 454,289
Provision for bad debts................... 107,575 61,026 45,819
Noncompete income......................... (626,667) (313,333) (300,000)
Noncompete expense........................ 142,143 53,790 43,126
Net trade revenue......................... (102,766) (75,627) (46,370)
Loss (gain) on sale of assets............. -- 2,779 (140,000)
Decrease (increase) in deferred tax
assets................................. (173,423) 65,411 393,742
Change in assets and liabilities net of
effect of station sales:
Receivables............................ (430,318) 31,593 (243,109)
Prepaid expenses and other assets...... (117,831) (362,798) (95,528)
Accounts payable....................... 151,843 (361,812) (52,035)
Accrued expenses....................... (66,520) (183,366) 79,935
Income tax payable..................... -- -- 211,148
----------- --------- -----------
Total adjustments................... (109,816) (705,156) 351,017
Net cash provided by operating ----------- --------- -----------
activities........................
1,849,294 288,929 1,160,617
Cash flows from investing activities: ----------- --------- -----------
Capital expenditures........................... (1,188,926) (338,603) (1,244,352)
Loans collected from officers and employees.... -- -- 20,000
Loans made to officers and employees........... (40,000) (40,000) --
Purchases of stations.......................... (3,341,580) -- --
Deposit for pending station acquisition........ (10,000) -- --
Costs incurred for non-compete agreement....... (1,000) -- --
Proceeds from sale of assets................... -- -- 140,000
Net cash used in investing ----------- --------- -----------
activities........................ (4,581,506) (378,603) (1,084,352)
----------- --------- -----------
</TABLE>
9
<PAGE> 10
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------
1998 1998 1999
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from notes payable.................... $15,400,000 -- 600,000
Pay-off of debt upon refinancing............... (13,122,500) -- --
Payments of principal on notes payable......... (375,087) (540,374) (607,416)
Payments of principal on related party
borrowings.................................. (69,057) (23,804) (25,940)
Payment of loan fees........................... (343,973) -- --
----------- --------- ---------
Net cash provided by (used in)
financing activities.............. 1,489,383 (564,178) (33,356)
----------- --------- ---------
Net (decrease) increase in cash.................. (1,242,829) (653,853) 42,909
Cash, beginning of period........................ 1,830,984 1,830,984 588,155
----------- --------- ---------
Cash, end of period.............................. $ 588,155 1,177,132 631,064
=========== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest.................................. $ 1,508,992 641,279 599,055
=========== ========= =========
Income taxes.............................. $ 102,032 16,000 800
=========== ========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Fixed assets acquired through advertising
trades.................................... $ 44,469 -- --
=========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE> 11
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
(The information as of June 30, 1999 and for the
Six Months Ended June 30, 1998 and 1999 is Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Fuller-Jeffrey Broadcasting Companies,
Inc. and its wholly owned subsidiaries (the Company) conform with generally
accepted accounting principles and prevailing practices within the broadcasting
industry. In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and revenue and
expense for the period. Actual results could differ from those estimates applied
in the preparation of the consolidated financial statements. The following are
descriptions of the more significant accounting and reporting policies.
(a) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Fuller-Jeffrey
Broadcasting Companies, Inc. and its wholly owned subsidiaries. The
Company's subsidiaries are radio stations in Dover, New Hampshire
(WOKQ/WXBB/WXBP/WPKQ), and Portland, Maine (WBLM/WCYY/WCYI/WCLZ/WHOM/WJBQ/
WJAB) and a sign production and design company, Sign Pro, in Portland,
Maine. All significant intercompany balances and transactions have been
eliminated in consolidation.
(b) INTERIM FINANCIAL STATEMENTS
The accompanying consolidated balance sheet at June 30, 1999 and the
consolidated statements of operations and cash flows for the six month
periods ended June 30, 1998 and 1999, are unaudited and have been prepared
on the same basis as the audited financial statements included herein. In
the opinion of management, such unaudited financial statements include all
adjustments necessary to present fairly the information set forth therein,
which consist solely of normal recurring adjustments. The results of
operations for such interim periods are not necessarily indicative of
results for the full year.
(c) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is provided
by the straight-line method over the estimated useful lives of the
respective assets, which range from 5 to 25 years.
(d) INTANGIBLE ASSETS
The excess of total consideration paid for acquired radio stations over the
amounts assigned to identifiable assets is recorded as goodwill and
amortized on a straight-line basis over the estimated useful lives of the
respective assets, which range from 15 to 40 years.
11
<PAGE> 12
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Other intangibles consist of FCC licenses, lease rights, program formats,
noncompete agreements, and other items. These costs are being amortized by
the straight-line method over their respective useful lives, which range
from 3 to 40 years.
(e) DEFERRED REVENUE
In accordance with certain station sale agreements, the Company has entered
into agreements not to compete with the new owners. The income from
noncompete agreements is deferred and recognized by the straight-line method
over the life of the respective agreement.
(f) INCOME TAXES
The Company accounts for income taxes under the asset and liability method.
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 and operating loss and tax
credit carryforwards. 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.
(g) TRADE REVENUES AND EXPENSES
In the course of business the Company receives trades in exchange for
advertising time, some of which are given to various employees and
executives. These trades are recorded as revenue when placed on the air and
as expense when goods and services are used and, when given to employees,
are included in the employees' annual earnings at the fair market value of
the item.
(h) IMPAIRMENT OF LONG-LIVED ASSETS
The Company applies the provisions of Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of. This statement requires that
long-lived assets and certain identifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted net
cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount which the carrying value of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of carrying
amount or fair value less costs to sell.
12
<PAGE> 13
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(2) INTANGIBLE ASSETS
Intangible assets at December 31, 1998 consist of the following:
<TABLE>
<CAPTION>
ESTIMATED
LIFE
(IN YEARS)
----------
<S> <C> <C>
Licenses and goodwill.......................... 15 to 40 $5,717,602
Lease rights................................... 15 to 30 175,000
Noncompete agreements.......................... 3 to 6 568,530
Other.......................................... 4 to 40 298,425
----------
6,759,557
Less accumulated amortization.................. 1,059,310
----------
$5,700,247
==========
</TABLE>
Other intangible assets include costs relating to acquisitions. Amortization
expense related to intangible assets totaled $255,520 for the year ended
December 31, 1998, and $117,096 and $188,958 for the six months ended June 30,
1998 and 1999 (unaudited), respectively, and is included in depreciation and
amortization expense in the accompanying consolidated statements of operations.
Noncompete expense totaled $142,143 for the year ended December 31, 1998, and
$53,790 and $43,126 for the six months ended June 30, 1998 and 1999 (unaudited),
respectively.
(3) DEFERRED REVENUE
The income from noncompete agreements has been deferred and will be recognized
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
- ------------
<S> <C>
1999.................................................... $450,000
2000.................................................... 300,000
2001.................................................... 200,000
--------
$950,000
========
</TABLE>
(4) LONG-TERM DEBT
Long-term debt at December 31, 1998 consists of the following:
<TABLE>
<S> <C>
Term note (a)........................................... $15,140,000
Equipment notes payable (b)............................. 29,554
Other (c)............................................... 398,186
-----------
15,567,740
Less current installments............................... 1,158,822
-----------
$14,408,918
===========
</TABLE>
13
<PAGE> 14
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(a) On September 28, 1998, the Company entered into a debt agreement with a
new lender to refinance the term notes from the prior year. The term
loan provides for an $18,000,000 facility with $15,140,000 outstanding
and an additional $2,860,000 credit available. The terms call for
quarterly principal and interest payments at 7.63% per annum, maturing
in September, 2008. Substantially all assets of the Company have been
pledged as collateral to secure the term note. The Company was in
compliance with all debt covenants as of December 31, 1998.
(b) Equipment notes payable consist of various notes and capital leases on
tangible property and equipment with interest rates ranging from 8.5%
to 18.0% per annum. Such notes and leases mature at varying dates
through August 2000 and are secured by equipment.
Capitalized lease obligations total $29,554 at December 31, 1998. The
book value of equipment under capital leases is $37,104. Depreciation
expense related to capital leases is included in depreciation and
amortization in the accompanying statements of operations.
(c) On October 3, 1996, the Company entered into a consulting and
noncompete agreement whereby the seller of a station will provide
consulting services to the Company related to radio stations acquired
during 1996, and will not compete with the Company during a period of
six years. The contract payable will be fully paid off on October 3,
1999. The Company has issued a note to the seller in exchange for this
consulting and noncompete agreement.
During August 1996, the Company entered into a bonus agreement whereby
a former station owner would receive $350,000 upon the Company's sale
of the station. Principal and accrued interest at 8% are due on October
15, 2001.
The aggregate maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31:
- ------------
<S> <C>
1999.................................................... $ 1,158,822
2000.................................................... 1,186,581
2001.................................................... 1,619,045
2002.................................................... 1,368,678
2003.................................................... 1,476,135
Thereafter.............................................. 8,758,479
-----------
$15,567,740
===========
</TABLE>
14
<PAGE> 15
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Interest expense is comprised of the following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------
1998 1998 1999
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Term loan............................... $1,179,169 587,776 572,287
Subordinated note....................... 90,000 60,000 --
Other................................... 130,067 83,285 58,532
---------- -------- --------
$1,399,236 731,061 630,819
========== ======== ========
</TABLE>
(5) RELATED PARTIES
Amounts due to related parties include the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
Notes payable to former stockholders (a)............. $381,983 356,043
Notes payable to former station owner (b)............ 180,000 180,000
-------- --------
561,983 536,043
Less current installments............................ 74,827 254,827
-------- --------
Due to related parties, excluding current
installments....................................... $487,156 281,216
======== ========
</TABLE>
(a) The notes payable to former stockholders represent two notes owed in
connection with the Company's exercise of its option to acquire all the
common shares owned by such stockholders. The first note bears interest
at 10% per annum and provides for equal monthly installments through
December 2000. However, the Company has the option to defer four
monthly payments in any one note year. During 1997 and 1998, the
Company exercised this option and deferred four monthly payments.
The second note bears interest at 10% per annum and provides for equal
monthly installments through January 2006.
(b) The note to a former station owner bears interest at the rate of 10%
per annum payable monthly with the principal due in January 2000.
15
<PAGE> 16
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The aggregate maturities of amounts due to related parties are as follows:
<TABLE>
<CAPTION>
DECEMBER 31:
- ------------
<S> <C>
1999.................................................... $ 74,827
2000.................................................... 255,156
2001.................................................... 38,534
2002.................................................... 42,569
2003.................................................... 47,027
Thereafter.............................................. 103,870
--------
$561,983
========
</TABLE>
(6) INCOME TAXES
Income tax expense (benefit) consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
-------- -------- --------
<S> <C> <C> <C>
Year ended December 31, 1998:
Federal..................................... $ 23,400 581,973 605,373
State....................................... 95,258 (755,396) (660,138)
-------- -------- --------
$118,658 (173,423) (54,765)
======== ======== ========
Six months ended June 30, 1998 (unaudited):
Federal..................................... $ -- 447,885 447,885
State....................................... 15,820 (382,474) (366,654)
-------- -------- --------
$ 15,820 65,411 81,231
======== ======== ========
Six months ended June 30, 1999 (unaudited):
Federal..................................... $183,444 302,458 485,902
State....................................... 50,124 91,284 141,408
-------- -------- --------
$233,568 393,742 627,310
======== ======== ========
</TABLE>
At December 31, 1998, the Company has net federal and state operating loss
carryforwards for financial and tax reporting purposes as follows:
<TABLE>
<S> <C>
Federal............................................ $ 725,000
State.............................................. $4,000,000
</TABLE>
These carryforwards expire at various times through 2017.
Temporary differences whose tax effects give rise to significant portions of
deferred tax assets and deferred tax liabilities include net operating loss
carryforwards; income from noncompete agreements that was recognized in the year
of sale for tax purposes but is being deferred and amortized for financial
reporting purposes; provisions for bad debts and amortization which
16
<PAGE> 17
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
are not deductible for income tax purposes; and differences between the
depreciation methods used for tax purposes and financial reporting purposes.
<TABLE>
<CAPTION>
TOTAL
CURRENT NONCURRENT DEFERRED
DEFERRED DEFERRED TAXES
-------- ---------- ---------
<S> <C> <C> <C>
December 31, 1998:
Deferred tax assets:
Federal................................ $236,131 1,304,269 1,540,400
State.................................. 34,725 659,892 694,617
-------- --------- ---------
Total deferred tax assets............ 270,856 1,964,161 2,235,017
Valuation allowance.................. -- (440,000) (440,000)
-------- --------- ---------
Total deferred tax assets............ 270,856 1,524,161 1,795,017
Deferred tax liabilities:
Federal................................ -- (590,396) (590,396)
State.................................. -- (92,058) (92,058)
-------- --------- ---------
Total deferred tax liabilities....... -- (682,454) (682,454)
-------- --------- ---------
Net deferred tax assets.............. $270,856 841,707 1,112,563
======== ========= =========
</TABLE>
Management believes that a valuation allowance of $440,000 for deferred tax
assets as of December 31, 1998 is adequate to reduce the deferred tax assets to
an amount that will more likely than not be realized. The net change in the
total valuation allowance was a decrease of $860,000 for the year ended December
31, 1998. A benefit of approximately $570,000 related to net operating loss
carryforwards is included in income tax expense for the year ended December 31,
1998.
(7) RETIREMENT PLANS
The Company has a nonqualified retirement agreement with a former
officer/stockholder which provides for annual payments of $25,000 for eighteen
years. The annual payments are expensed as incurred and will be made through
2005.
The Company maintains an Employee Savings 401(k) plan which covers all eligible
employees who have completed six months of service and have attained the age of
18. Company contributions are discretionary. The Company contributions totaled
$44,000 for the year ended December 31, 1998, and $23,626 and $27,515 for the
six months ended June 30, 1998 and 1999 (unaudited), respectively.
(8) SALES AND ACQUISITIONS OF STATION PROPERTIES
On September 28, 1998, the Company purchased the assets of existing AM/FM
stations, WCLZ-AM and WCLZ-FM. The net purchase price of the assets was
approximately $3,078,000 and included land, a building, tower/antenna, various
equipment, furniture and the FCC license. Also included in the purchase price
was a $1,000 one-year noncompete agreement. The financing for this purchase was
a component of the new debt agreement described in Note 4.
17
<PAGE> 18
FULLER-JEFFREY BROADCASTING
COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In September, 1997, the Company purchased the assets of an existing FM station,
WXBP, which consisted of a transmitter, antenna, license and equipment. The
purchase price of the assets was approximately $850,000. In addition to the
purchase price, the Company paid $150,000 in exchange for the seller's promise
not to compete with the Company for three years. The noncompete agreement has
been included in intangibles in the accompanying consolidated balance sheets.
(9) COMMITMENTS AND CONTINGENCIES
The Company leases, under operating leases, certain real property and equipment
with lease terms from one to thirty-nine years, with extensions available for
successive one-year periods. Rental expense amounted to $356,725 for the year
ended December 31, 1998, and $178,362 and $169,898 for the six months ended
June 30, 1998 and 1999 (unaudited), respectively.
The following is a schedule by year of future minimum rental payments required
under operating leases that have initial or remaining noncancelable lease terms
in excess of one year:
<TABLE>
<CAPTION>
DECEMBER 31,
- ------------
<S> <C>
1999.................................................... $ 339,796
2000.................................................... 309,698
2001.................................................... 237,766
2002.................................................... 224,631
2003.................................................... 214,083
Thereafter.............................................. 1,766,373
----------
$3,092,347
==========
</TABLE>
(10) STOCK OPTIONS
During 1990, the Company adopted a nonqualified stock option agreement to grant
stock options to certain key employees. Under the agreement, 12,859 shares were
available for grant. In 1990, options to purchase 12,859 shares were granted at
an exercise price of $10 per share. The options are exercisable upon grant, and
expire 10 years thereafter. No options were granted, exercised, or expired
during 1998 or for the six months ended June 30, 1999.
(11) SUBSEQUENT EVENTS
On April 30, 1999 the two stockholders of the Company signed definitive stock
purchase agreements with Citadel Broadcasting Company. In connection with this
transaction, Citadel Broadcasting Company acquired all of the outstanding
stock of the Company on August 31, 1999.
18
<PAGE> 19
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
statements reflect the results of operations and balance sheet of Citadel
Broadcasting Company after giving effect to:
(1) the following completed transactions (collectively, the "Completed
Transactions"):
o the January 2, 1998 acquisition of WEMR-FM and
WEMR-AM serving the Wilkes/Barre-Scranton market for
the purchase price of approximately $0.8 million and
the March 26, 1998 acquisition of WCTP-FM, WCTD-FM
and WKJN-AM serving the Wilkes/Barre-Scranton market
for the purchase price of approximately $6.0 million
(collectively, the "Wilkes/Barre Scranton
Acquisitions"),
o the February 12, 1998 acquisition of Pacific
Northwest Broadcasting Corporation which owned
KQFC-FM, KKGL-FM and KBOI-AM in Boise for the
purchase price of approximately $14.0 million and the
April 21, 1998 acquisition of KIZN-FM and KZMG-FM in
Boise for the purchase price of approximately $14.5
million (collectively, the "Boise Acquisition"),
o the November 17, 1998 acquisition of KAAY-AM in
Little Rock for the purchase price of approximately
$5.1 million,
o the February 9, 1999 acquisition of WKQZ-FM, WYLZ-FM,
WILZ-FM, WIOG-FM, WGER-FM and WSGW-AM in Saginaw/Bay
City for the purchase price of approximately $35.0
million (the "Saginaw/Bay City Acquisition"),
o the February 17, 1999 acquisition of WHYL-FM and
WHYL-AM in Harrisburg/Carlisle for the purchase price
of approximately $4.5 million (the "Carlisle
Acquisition"),
o the March 17, 1999 acquisition of Citywide
Communications, Inc., which owned KQXL-FM, WEMX-FM,
WCAC-FM, WXOK-AM and WIBR-AM serving the Baton Rouge
market and KFXZ-FM, KNEK-FM, KRRQ-FM and KNEK-AM
serving the Lafayette market for the purchase price
of approximately $31.5 million (the "Baton
Rouge/Lafayette Acquisition"),
19
<PAGE> 20
o the April 30, 1999 acquisition of KSPZ-FM serving the
Colorado Springs market in exchange for KKLI-FM in
Colorado Springs, the April 30, 1999 acquisition of
KVOR-AM and KTWK-AM serving the Colorado Springs
market and KEYF-FM and KEYF-AM serving the Spokane
market for the purchase price of approximately $10.0
million and the April 30, 1999 termination of a joint
sales agreement under which Citadel Broadcasting
operated certain other radio stations in Colorado
Springs and in Spokane (collectively, the "Capstar
Transactions"),
o the June 30, 1999 acquisition of WSSX-FM, WWWZ-FM,
WMGL-FM, WSUY-FM, WNKT-FM, WTMA-AM, WTMZ-AM and
WXTC-AM in Charleston, WHWK-FM, WYOS-FM, WAAL-FM,
WNBF-AM and WKOP-AM in Binghamton, WMDH-FM and
WMDH-AM in Muncie and WWKI-FM in Kokomo for the
purchase price of approximately $77.0 million (the
"Charleston/Binghamton/Muncie/Kokomo Acquisition"),
o the August 31, 1999 acquisition of Fuller-Jeffrey
Broadcasting Companies, Inc. which owned WOKQ-FM,
WPKQ-FM, WXBB-FM and WXBP-FM serving the
Portsmouth/Dover/Rochester market and WBLM-FM,
WCYI-FM, WCYY-FM, WHOM-FM, WJBQ-FM and WCLZ-FM
serving the Portland market for the purchase price of
approximately $65.3 million, which amount includes
approximately $1.8 million in consulting and
noncompetition payments payable over a seven-year
period (the "Portsmouth/Dover/Rochester/Portland
Acquisition"),
o the July 27, 1998 sale of WEST-AM in
Allentown/Bethlehem as a portion of the consideration
for the 1997 acquisition of WLEV-FM in
Allentown/Bethlehem,
o the October 7, 1998 sale of WQCY-FM, WTAD-AM, WMOS-FM
and WBJR-FM in Quincy for the sale price of
approximately $2.3 million (the "Quincy Sale"),
o the November 17, 1998 sale of KRNN-AM in Little Rock
for the sale price of approximately $0.2 million,
o the July 1998 initial public offering by Citadel
Broadcasting's parent, Citadel Communications
Corporation, of shares of its common stock and the
use of net proceeds from that offering,
20
<PAGE> 21
o the November 1998 sale by Citadel Broadcasting of
$115.0 million principal amount of its 9-1/4% Senior
Subordinated Notes due 2008 and the use of net
proceeds from that offering,
o the June 1999 public offering by Citadel
Communications of shares of its common stock and the
use of net proceeds from that offering, and
o the August 1999 redemption of a portion of Citadel
Broadcasting's outstanding 13-1/4% Exchangeable
Preferred Stock (the "Preferred Redemption");
(2) the pending acquisition of KATT-FM, KYIS-FM, KCYI-FM, KNTL-FM and
WWLS-AM in Oklahoma City for a purchase price of approximately $60.0 million
(the "Pending Acquisition"); and
(3) the pending disposition of KKTT-FM, KEHK-FM and KUGN-AM in Eugene,
KAKT-FM, KBOY-FM, KCMX-FM, KTMT-FM, KCMX-AM and KTMT-AM in Medford, KEYW-FM,
KORD-FM, KXRX-FM, KTHT-FM and KFLD-AM in Tri-Cities, KCTR-FM, KKBR-FM, KBBB-FM,
KMHK-FM and KBUL-AM in Billings, WQKK-AM and WGLU-FM in Johnstown and WQWK-FM,
WNCL-FM, WRSC-AM and WBLF-AM in State College for the sale price of
approximately $26.0 million (the "Pending Disposition").
The unaudited pro forma condensed consolidated financial statements are
based on Citadel Broadcasting's historical consolidated financial statements and
the financial statements of those entities acquired, or from which assets were
acquired, in connection with the Completed Transactions.
In the opinion of management, all adjustments necessary to fairly
present this pro forma information have been made. The interest rate applied to
borrowings under, and repayments of, Citadel Broadcasting's credit facility in
the pro forma consolidated statements of operations was 8.4375%, which
represents the interest rate in effect under the credit facility as of January
1, 1998.
Depreciation and amortization for the acquisitions are based upon
preliminary allocations of the purchase price to property and equipment and
intangible assets. 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.
For pro forma purposes, Citadel Broadcasting's balance sheet as of June
30, 1999 has been adjusted to give effect to the following transactions as if
each had occurred on June 30, 1999:
(1) the Portsmouth/Dover/Rochester/Portland Acquisition,
21
<PAGE> 22
(2) the Pending Acquisition,
(3) the Pending Disposition, and
(4) the Preferred Redemption.
The unaudited pro forma information is presented for illustrative
purposes only and does not indicate the operating results or financial position
that would have occurred if the transactions described above had been completed
on the dates indicated, nor is it indicative of future operating results or
financial position if the pending transactions described above are completed.
Citadel Broadcasting cannot predict whether the completion of the Pending
Acquisition and the Pending Disposition will conform to the assumptions used in
the preparation of the unaudited pro forma condensed consolidated financial
statements. Additionally, consummation of each of the Pending Acquisition and
the Pending Disposition is subject to certain conditions. Although Citadel
Broadcasting believes these closing conditions are customary for transactions
of this type, there can be no assurance that such conditions will be satisfied.
22
<PAGE> 23
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR
CITADEL THE PENDING
ADJUSTMENTS BROADCASTING ACQUISITION
ACTUAL FOR AS ADJUSTED AND PRO FORMA
CITADEL COMPLETED FOR COMPLETED THE PENDING CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS DISPOSITION (2) BROADCASTING
------------ ---------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 68,680 $ (57,096) $ 11,584 $ (500) $ 11,084
Accounts and notes receivable, net 41,218 4,752 45,970 2,629 48,599
Prepaid expenses 3,149 256 3,405 114 3,519
Assets held for sale 25,974 -- 25,974 (25,974) --
- --------------------------------------------- --------- --------- --------- --------- ---------
Total current assets 139,021 (52,088) 86,933 (23,731) 63,202
Property and equipment, net 59,659 4,650 64,309 3,120 67,429
Intangible assets, net 412,150 56,678 468,828 56,162 524,990
Other assets 4,377 405 4,782 -- 4,782
- --------------------------------------------- --------- --------- --------- --------- ---------
TOTAL ASSETS $ 615,207 $ 9,645 $ 624,852 $ 35,551 $ 660,403
========= ========= ========= ========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY
Accounts payable and accrued liabilities $ 15,383 $ 2,091 $ 17,474 $ -- $ 17,474
Current maturities of other long-term
obligations 212 1,750 1,962 360 2,322
- --------------------------------------------- --------- --------- --------- --------- ---------
Total current liabilities 15,595 3,841 19,436 360 19,796
Notes payable, less current maturities -- 42,236 42,236 34,000 76,236
10 1/4% Notes 98,657 -- 98,657 -- 98,657
9 1/4% Notes 111,638 -- 111,638 -- 111,638
Other long-term obligations, less current
maturities 1,004 15,264 16,268 1,165 17,433
Deferred tax liability 31,354 -- 31,354 -- 31,354
Exchangeable preferred stock 124,900 (51,696) 73,204 -- 73,204
Common stock and APIC 267,647 -- 267,647 -- 267,647
Deferred compensation (932) -- (932) -- (932)
Accumulated other comprehensive loss (52) -- (52) -- (52)
Accumulated deficit/retained earnings (34,604) -- (34,604) 26 (34,578)
- --------------------------------------------- --------- --------- --------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 615,207 $ 9,645 $ 624,852 $ 35,551 $ 660,403
========= ========= ========= ========= =========
</TABLE>
(1) Represents the net effect of the Portsmouth/Dover/Rochester/Portland
Acquisition and the Preferred Redemption as if each of the transactions had
taken place on June 30, 1999. In the Preferred Redemption Citadel
Broadcasting redeemed approximately 35% of its issued and outstanding
13-1/4% Exchangeable Preferred Stock. Approximately 452,000 shares were
redeemed at a redemption price of $113.25 per share for a total of
approximately $51.2 million. In addition Citadel Broadcasting paid
approximately $515,000 of accrued dividends on the shares redeemed.
(2) Represents the net effect of the Pending Acquisition and the Pending
Disposition.
23
<PAGE> 24
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL ADJUSTMENTS FOR
BROADCASTING THE PENDING
AS ADJUSTED ACQUISITION ADJUSTMENTS
ACTUAL ADJUSTMENTS FOR FOR AND THE FOR THE PRO FORMA
CITADEL COMPLETED COMPLETED PENDING PREFERRED CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS DISPOSITION (2) REDEMPTION BROADCASTING
------------ ---------------- --------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue ............................ 75,077 19,673 94,750 (2,257) -- 92,493
Station operating expenses ............. 51,706 13,686 65,392 (3,567) -- 61,825
Depreciation and amortization .......... 15,124 6,699 21,823 2,723 -- 24,546
Corporate general and administrative ... 2,886 -- 2,886 (88) -- 2,798
------- ------- ------- ------- ------- -------
Operating expenses .................. 69,716 20,385 90,101 (932) -- 89,169
------- ------- ------- ------- ------- -------
Operating income (loss) ................ 5,361 (712) 4,649 (1,325) -- 3,324
Interest expense ....................... 11,482 4,313 15,795 1,434 (1,850) 15,379
Other (income) expense, net ............ (709) -- (709) -- -- (709)
------- ------- ------- ------- ------- -------
Income (loss) before income taxes ...... (5,412) (5,025) (10,437) (2,759) 1,850 (11,346)
Income taxes (benefit) ................. (903) (790) (1,693) (566) -- (2,259)
Dividend requirement for Exchangeable
Preferred Stock ..................... (8,025) -- (8,025) -- 3,405 (4,620)
------- ------- ------- ------- ------- -------
Income (loss) from continuing operations
applicable to common shares .......... (12,534) (4,235) (16,769) (2,193) 5,255 (13,707)
======= ======= ======= ======= ======= =======
</TABLE>
24
<PAGE> 25
(1) Represents the net effect of the Completed Transactions that were
consummated after January 1, 1999, except the Preferred Redemption, as if each
transaction had taken place on January 1, 1998. Prior to the acquisition dates,
Citadel Broadcasting operated many of the acquired stations under a joint sales
agreement ("JSA") or local marketing agreement ("LMA"). Citadel Broadcasting
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, 1998. Net revenue and station expenses for stations operated
under LMAs are included in Citadel Broadcasting'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, 1998. Dollars in the table
below are shown in thousands.
<TABLE>
<CAPTION>
PORTSMOUTH/ CHARLESTON/
DOVER/ BINGHAMTON CARLISLE
ROCHESTER/ MUNCIE/ BATON ROUGE/ SAGINAW/ ACQUISITION
PORTLAND KOKOMO LAFAYETTE BAY CITY AND CAPSTAR THE COMPLETED
ACQUISITION ACQUISITION ACQUISITION ACQUISITION TRANSACTIONS TRANSACTIONS
----------- ----------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue 7,302 9,687 1,371 526 787 19,673
Station operating expenses 4,630 6,752 1,275 486 543 13,686
Depreciation and amortization 2,926 2,683 628 202 260 6,699
------- ------- ------- ------- ------- -------
Operating expenses 7,556 9,435 1,903 688 803 20,385
------- ------- ------- ------- ------- -------
Operating income (loss) (254) 252 (532) (162) (16) (712)
Interest expense 1,782 2,531 -- -- -- 4,313
------- ------- ------- ------- ------- -------
Income (loss) before income taxes (2,036) (2,279) (532) (162) (16) (5,025)
Income taxes (benefit) (664) -- (126) -- -- (790)
------- ------- ------- ------- ------- -------
Income (loss) from continuing operations (1,372) (2,279) (406) (162) (16) (4,235)
======= ======= ======= ======= ======= =======
</TABLE>
(2) Represents the net effect of the Pending Acquisition and the Pending
Disposition as if each transaction had taken place on January 1, 1998.
Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
PENDING
ACQUISITION AND
PENDING PENDING PENDING
DISPOSITION ACQUISITION DISPOSITION
----------- ------------- ---------------
<S> <C> <C> <C>
Net revenue (6,879) 4,622 (2,257)
Station operating expenses (6,723) 3,156 (3,567)
Depreciation and amortization -- 2,723 2,723
Corporate general and administrative (88) -- (88)
------ ------ ------
Operating expenses (6,811) 5,879 (932)
------ ------ ------
</TABLE>
25
<PAGE> 26
<TABLE>
<S> <C> <C> <C>
Operating income (loss) (68) (1,257) (1,325)
Interest expense (1,097) 2,531 1,434
------ ------ ------
Income (loss) before income taxes 1,029 (3,788) (2,759)
Income taxes (benefit) -- (566) (566)
------ ------ ------
Income (loss) from continuing operations 1,029 (3,222) (2,193)
====== ====== ======
</TABLE>
26
<PAGE> 27
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL ADJUSTMENTS FOR
BROADCASTING THE PENDING ADJUSTMENTS
ACTUAL ADJUSTMENTS FOR AS ADJUSTED ACQUISITION AND FOR THE PRO FORMA
CITADEL COMPLETED FOR COMPLETED THE PENDING PREFERRED CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS DISPOSITION (2) REDEMPTION BROADCASTING
------------ ---------------- ------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue .............................. 135,426 46,991 182,417 (7,179) -- 175,238
Station operating expenses ............... 93,485 30,742 124,227 (7,371) -- 116,856
Depreciation and amortization ............ 26,414 18,283 44,697 4,073 -- 48,770
Corporate general and administrative ..... 4,369 -- 4,369 (175) -- 4,194
-------- -------- -------- -------- -------- --------
Operating expenses .................... 124,268 49,025 173,293 (3,473) -- 169,820
-------- -------- -------- -------- -------- --------
Operating income (loss) .................. 11,158 (2,034) 9,124 (3,706) -- 5,418
Interest expense ......................... 18,126 7,753 25,879 2,869 (7,400) 21,348
Other (income) expense, net .............. (1,651) -- (1,651) (174) (1,825)
-------- -------- -------- -------- -------- --------
Income (loss) before income taxes ........ (5,317) (9,787) (15,104) (6,401) 7,400 (14,105)
Income taxes (benefit) ................... (1,386) (1,833) (3,219) (1,132) -- (4,351)
Dividend requirement for Exchangeable
Preferred Stock ....................... (14,586) -- (14,586) -- 138 (14,448)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations
applicable to common shares ............ (18,517) (7,954) (26,471) (5,269) 7,538 (24,202)
======== ======== ======== ======== ======== ========
</TABLE>
27
<PAGE> 28
(1) Represents the net effect of the Completed Transactions, except the
Preferred Redemption, as if each transaction had taken place on January 1, 1998.
Prior to the acquisition dates, Citadel Broadcasting operated many of the
acquired stations under a JSA or LMA. Citadel Broadcasting 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, 1998.
Net revenue and station expenses for stations operated under LMAs are included
in Citadel Broadcasting'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, 1998. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
PORTSMOUTH/ CHARLESTON/ REPAYMENT
DOVER/ BINGHAMTON/ BATON OTHER OF THE OFFERING THE
ROCHESTER/ MUNCIE/ ROUGE/ SAGINAW/ ACQUISITIONS CREDIT OF THE COMPLETED
PORTLAND KOKOMO LAFAYETTE BAY CITY AND DISPOSITIONS FACILITY 9-1/4% TRANS-
ACQUISITION ACQUISITION ACQUISITION ACQUISITION (a) (b) NOTES (c) ACTIONS
----------- ----------- ----------- ----------- ---------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue 13,642 16,500 7,331 6,981 2,537 -- -- 46,991
Station operating expenses 8,676 11,051 5,170 4,447 1,398 -- -- 30,742
Depreciation and amortization 5,853 5,367 2,914 2,421 1,729 -- -- 18,284
------- ------- ------- ------- ------- ------- ------- -------
Operating expenses 14,529 16,418 8,084 6,868 3,127 -- -- 49,026
Operating income (loss) (887) 82 (753) 113 (590) -- -- (2,035)
Interest expense 5,358 5,063 -- -- 445 (4,487) 1,374 7,753
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes (6,245) (4,981) (753) 113 (1,035) 4,487 (1,374) (9,788)
Income taxes (benefit) (1,328) -- (505) -- -- -- -- (1,833)
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations (4,917) (4,981) (248) 113 (1,035) 4,487 (1,374) (7,955)
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(a) Represents the net effect of the Carlisle Acquisition, the Capstar
Transactions, the Boise Acquisition, the Wilkes-Barre/Scranton Acquisitions,
the disposition of WEST-AM in Allentown/Bethlehem, the acquisition of KAAY-AM
and the disposition of KRNN-AM in Little Rock and the Quincy Sale.
(b) Represents the repayment of outstanding borrowings under Citadel
Broadcatings's credit facility with the proceeds from the Citadel
Communications' initial public offering.
28
<PAGE> 29
(c) Reflects the recording of the net increase in interest expense and the
amortization of deferred financing costs of $3.5 million related to Citadel
Broadcasting's 9-1/4% Senior Subordinated Notes due 2008.
(2) Represents the net effect of the Pending Acquisition and the Pending
Disposition as if each transaction had taken place on January 1, 1998.
Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
PENDING
ACQUISITION AND
PENDING PENDING PENDING
DISPOSITION ACQUISITION DISPOSITION
----------- ------------- ---------------
<S> <C> <C> <C>
Net revenue (15,379) 8,200 (7,179)
Station operating expenses (13,611) 6,240 (7,371)
Depreciation and amortization (1,372) 5,445 4,073
Corporate general and administrative (175) -- (175)
------- ------- -------
Operating expenses (15,158) 11,685 (3,473)
Operating income (loss) (221) (3,485) (3,706)
Interest expense (2,194) 5,063 2,869
Other (income) expense (174) -- (174)
------- ------- -------
Income (loss) before income taxes 2,147 (8,548) (6,401)
Income taxes (benefit) -- (1,132) (1,132)
------- ------- -------
Income (loss) from continuing operations 2,147 (7,416) (5,269)
======= ======= =======
</TABLE>
29
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CITADEL BROADCASTING COMPANY
Date: September 14, 1999 By: /s/ Lawrence R. Wilson
--------------------------
Lawrence R. Wilson
Chairman and Chief Executive Officer
30
<PAGE> 31
EXHIBIT INDEX
2.1 Stock Purchase Agreement dated April 30, 1999 by and between Robert F.
Fuller and Citadel Broadcasting Company.
2.2 Stock Purchase Agreement dated April 30, 1999 by and between Joseph N.
Jeffrey, Jr. and Citadel Broadcasting Company.
31
<PAGE> 1
Exhibit 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), made as of the 30th day of
April, 1999, by and between ROBERT F. FULLER (the "Stockholder") and CITADEL
BROADCASTING COMPANY, a Nevada corporation ("Citadel").
RECITALS:
A. The Company (as herein defined) is the licensee of and owns and
operates 12 radio stations identified on Schedule 1 to this Agreement
(collectively, the "Stations").
B. The Stockholder owns 15,001 shares (or approximately 50.003%) of the
issued and outstanding shares of common stock of Fuller-Jeffrey Broadcasting
Companies, Inc., a Maine corporation ("FJB").
C. Citadel desires to purchase from the Stockholder, and the
Stockholder desires to sell to Citadel, all of his shares of common stock of
FJB, 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.
"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
<PAGE> 2
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" means Schedule 2 to this Agreement.
"Assets" means all of the property of every kind or nature of the
Company, including without limitation the Real Property, the Real Property
Leases, the Intellectual Property, the Personal Property, the Trade Receivables,
the Accounts Receivable and the Cash, and all books, records and accounts of the
Company.
"Bonuses" shall mean any amount paid or agreed to be paid by the
Company at or prior to the Closing to any current or former employee of the
Company other than pursuant to clauses (a) or (b) of Section 6.5, or any other
amount or payment described in this Agreement or the schedules or exhibits
hereto as constituting "Bonuses," and provided that any such amount, alone or in
connection with other amounts paid to any such employee, will not constitute or
be considered an "excess parachute payment" under Section 280G of the Code.
"Broker" means Kalil & Co., Inc.
"Business" means the business in which the Company is now engaged.
"California Office" has the meaning specified in Section 3.24.
"Capital Expenditures Schedule" means Schedule 7 to this Agreement.
"Cash" means the cash and cash equivalents of the Company existing as
of the Closing.
"Citadel's Disclosure Schedule" means Schedule 3 to this Agreement.
"Closing" means the consummation of the transactions contemplated by
this Agreement in accordance with the provisions of Section 9.
"Closing Certificate" means the certificate of the Stockholder dated
the Closing Date and delivered to Citadel, which sets forth a true and correct
calculation, including supporting documentation, of (i) the Net Working Capital,
(ii) the Indebtedness for Borrowed Money of the Company as of the Closing and
(iii) the Bonuses.
"Closing Date" has the meaning specified in Section 9.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means, collectively, FJB and the Operating Subsidiaries, or
any of them.
-2-
<PAGE> 3
"Company Lender" means The CIT Group/Equipment Financing, Inc.
"Company Stock" means common stock, par value $1.00 per share, of FJB.
"Consulting Agreement" means the Contribution Agreement to be executed
and delivered by the Company and the Stockholder as of the Closing Date
substantially in the form of Exhibit F hereto.
"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 existing as of the date hereof, and in each case with respect to which
the remaining obligation of the Company is in excess of $5,000; and (c)
contingent contractual obligations and liabilities of the Company known to the
Company existing as of the date hereof.
"Contribution Agreement" means that certain Contribution Agreement
dated the date of this Agreement between the Stockholder and Jeffrey, an
executed copy of which has been delivered by the Stockholder to Citadel on the
date of this Agreement.
"Damages" has the meaning specified in Section 12.1.
"Debt Schedule" means Schedule 4 to this Agreement.
"Draw Condition" has the meaning specified in Section 13.2(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 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
-3-
<PAGE> 4
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; (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; and (c) any condition noted in any environmental site assessments,
studies, tests or reports performed or commissioned for the Real Property or
Leaseholds which is concluded therein to create or cause to exist a recognized
environmental condition (or words of similar import) or to pose an environmental
risk.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means those assets of the Company (a) identified on
the Excluded Assets Schedule or (b) used exclusively in the operation of radio
stations WJAE(AM), licensed to Westbrook, Maine, WJJB(AM), licensed to
Brunswick, Maine, and WRED(FM), licensed to Saco, Maine. The transfer of such
assets of WRED(FM) shall be made pursuant to that certain Asset Purchase
Agreement dated April 14, 1999 between Maine Sub and Jeffrey, a true and
complete copy of which has been delivered to Citadel.
"Excluded Assets Schedule" means Schedule 5 to this Agreement.
"FCC" means the Federal Communications Commission.
"FCC Application" has the meaning specified in Section 8.1.
"FCC Approval" has the meaning specified in Section 8.1.
"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
-4-
<PAGE> 5
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.
"FJB" has the meaning specified in the recitals to this Agreement.
"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 8.6.
-5-
<PAGE> 6
"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 12.3.
"Indemnitor" has the meaning specified in Section 12.3.
"Intellectual Property" means the call letters of each Station and all
of the copyrights, service marks, trademarks, trade names, patents and other
similar rights, including applications and registrations therefor, in which the
Company has any right, title or interest, including without limitation those
items listed on the Asset Schedule.
"Jeffrey" means Joseph N. Jeffrey, Jr.
"Jeffrey Transaction" means a transaction between Citadel and Jeffrey,
which is acceptable to Citadel in its complete discretion, whereby Citadel
acquires all of the shares of Company Stock owned by Jeffrey.
"Leaseholds" has the meaning specified in Section 3.11(e).
"Letter of Credit" has the meaning specified in Section 2.3.
"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.
"Maine Sub" means Fuller-Jeffrey Radio of Maine, Inc., a Maine
corporation.
"Material Contracts" has the meaning specified in Section 5.12.
"New England Office" has the meaning specified in Section 3.24.
"New England Sub" means Fuller-Jeffrey Radio of New England, Inc., a
Maine corporation.
-6-
<PAGE> 7
"Net Working Capital" means the current assets of the Company
(including without limitation Cash and Accounts Receivable) as of the Closing
Date minus the current liabilities of the Company as of the Closing Date,
determined in accordance with GAAP, but adjusted in accordance with the last
sentence of this paragraph, plus the amount of any Bonuses paid prior to the
Closing Date but only to the extent any such payment reduced the current assets
of the Company without a corresponding reduction in the current liabilities of
the Company incurred in the ordinary course of business consistent with past
practices. In determining Net Working Capital there shall be deducted from the
current assets of the Company determined in accordance with GAAP all amounts
included therein that are attributable to (a) deferred taxes and (b) Excluded
Assets, and there shall be deducted from the current liabilities of the Company
determined in accordance with GAAP all amounts included therein that are
attributable to (a) the current portion of Permitted Debt, (b) the current
portion of all indebtedness to be discharged as a condition to the obligations
of Citadel to proceed with the Closing, (c) accrued interest attributable to
either of the foregoing, (d) "deferred revenue current", and (e) Excluded
Assets.
"Net Working Capital Shortfall" means the amount, if any, by which
$2,500,000 exceeds Net Working Capital.
"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 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.
"Operating Subsidiaries" means, collectively, the Maine Sub and the New
England Sub.
"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.
-7-
<PAGE> 8
"Permitted Debt" means the Company's Indebtedness for Borrowed Money to
the Company Lender.
"Permitted Encumbrances" means the Liens in favor of the Company Lender
as of the Closing Date, which secure the Permitted Debt.
"Permitted Exceptions" means those certain title exceptions which do
not affect the Real Property in any material respect and which are acceptable to
Citadel in its reasonable discretion.
"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 of the Company, including without
limitation the personal property described on the Asset Schedule.
"Purchase Price" has the meaning specified in Section 2.2.
"Real Property" means all of the right, title and interest of the
Company in and to any real property of the Company, including without limitation
the real property described on the Asset Schedule.
"Real Property Leases" means all of the leasehold interests of the
Company pursuant to real property leases, including without limitation those
described on the Asset Schedule.
"Shares" has the meaning specified in Section 2.1.
"Stations" has the meaning set forth in the recitals to this Agreement.
"Stockholder's Disclosure Schedule" means Schedule 6 to this Agreement.
"Supplemental Financial Statements" has the meaning specified in
Section 5.9.
"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 12.5(a).
-8-
<PAGE> 9
"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.
SECTION 2
PURCHASE AND SALE OF SHARES; PURCHASE PRICE
2.1 Purchase and Sale of Shares. 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, the Stockholder
agrees to sell, assign and convey to Citadel, and Citadel agrees to purchase,
acquire and accept from the Stockholder, 15,001 shares of Company Stock (the
"Shares").
2.2 Purchase Price. The purchase price to be paid to the Stockholder
for the purchase of the Shares (the "Purchase Price") shall be (a) 62.5%
multiplied by (b) $63,500,000 minus (i) the aggregate amount of Indebtedness for
Borrowed Money of the Company as of the Closing Date (excluding any prepayment
penalty or premium payable to the Company Lender), (ii) the Net Working Capital
Shortfall and (iii) the amount by which the aggregate amount of Bonuses exceeds
the excess, if any, of Net Working Capital over $2,500,000. The Purchase Price
shall be paid at the Closing to the Stockholder in cash by wire transfer of
immediately available funds to an account designated by the Stockholder in
writing at least three days prior to the Closing Date.
2.3 Letter of Credit. Simultaneously with the execution of this
Agreement, Citadel shall deliver to the Stockholder an irrevocable letter of
credit in favor of the Stockholder, issued by BankBoston, N.A., in the amount of
$4,062,500 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 Chief Executive Officer of Citadel and the Stockholder certifying that
a Draw Condition has occurred. At the Closing, the Stockholder shall return the
original Letter of Credit to Citadel for cancellation.
-9-
<PAGE> 10
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
In connection with the purchase and sale of the Shares and in order to
induce Citadel to enter into and consummate the transactions contemplated by
this Agreement, the Stockholder makes the following representations and
warranties to Citadel, as of the date of this Agreement 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 and except as disclosed in
Stockholder's Disclosure Schedule):
3.1 FJB.
(a) Organization and Qualification; Authority. FJB is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maine and has full power and authority to own its assets and
properties and to conduct the Business. FJB is qualified to do business in, and
is in good standing under the laws of, the State of California, and is not
required to be qualified to do business as a foreign corporation in any other
state. FJB has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business.
(b) Capitalization. The authorized capital stock of FJB
consists solely of 100,000 shares of Company Stock, of which 30,000 shares are
issued and outstanding and all of which are owned, beneficially and of record,
by the Stockholder and Jeffrey as described on Stockholder's Disclosure
Schedule. The issued and outstanding shares of Company Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. FJB does
not have outstanding any options, warrants, stock or other securities
convertible or exchangeable for any stock or other securities of FJB.
(c) Repurchase and Other Obligations. FJB is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its stock or other securities. Neither the Stockholder, Jeffrey,
FJB nor any other Person is entitled to any preemptive right, right of first
refusal or similar right with respect to any stock or other securities of FJB.
There are no agreements, arrangements or trusts between or for the benefit of
FJB, the Stockholder or Jeffrey with respect to the voting or transfer of stock
or other securities, or with respect to any other aspect of FJB's affairs. FJB
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.
(d) Subsidiaries. FJB does not own, of record or beneficially,
any capital stock or equity interest or investment in any Person other than the
Operating Subsidiaries, which are wholly owned subsidiaries of FJB.
-10-
<PAGE> 11
3.2 Maine Sub.
(a) Organization and Qualification; Authority. The Maine Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Maine and has full power and authority to own its assets
and properties and to conduct the Business. The Maine Sub is qualified to do
business in, and is in good standing under the laws of, the State of New
Hampshire, and is not required to be qualified to do business as a foreign
corporation in any other state. The Maine 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.
(b) Capitalization. The authorized capital stock of the Maine
Sub consists solely of 5,000 shares of Common Stock, par value $10.00 per share,
of which 990 shares are issued and outstanding and all of which are owned,
beneficially and of record, by FJB. The issued and outstanding shares of Common
Stock of the Maine Sub have been duly authorized and validly issued, and are
fully paid and nonassessable. The Maine Sub does not have outstanding any
options, warrants, stock or other securities convertible or exchangeable for any
stock or other securities of the Maine Sub.
(c) Repurchase and Other Obligations. The Maine Sub is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its stock or other securities. Neither FJB, the Maine
Sub nor any other Person is entitled to any preemptive right, right of first
refusal or similar right with respect to any stock or other securities of the
Maine Sub. There are no agreements, arrangements or trusts between or for the
benefit of the Maine Sub or FJB with respect to the voting or transfer of stock
or other securities, or with respect to any other aspect of the Maine Sub's
affairs. The Maine Sub 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.
(d) Subsidiaries. The Maine Sub does not own, of record or
beneficially, any capital stock or equity interest or investment in any Person.
3.3 New England Sub.
(a) Organization and Qualification; Authority. The New England
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Maine and has full power and authority to own its
assets and properties and to conduct the Business. The New England Sub is
qualified to do business in, and is in good standing under the laws of, the
State of New Hampshire, and is not required to be qualified to do business as a
foreign corporation in any other state. The New England 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.
-11-
<PAGE> 12
(b) Capitalization. The authorized capital stock of the New
England Sub consists solely of 100,000 shares of Common Stock, par value $1.00
per share, of which 4,500 shares are issued and outstanding and all of which are
owned, beneficially and of record, by FJB. The issued and outstanding shares of
Common Stock of the New England Sub have been duly authorized and validly
issued, and are fully paid and nonassessable. The New England Sub does not have
outstanding any options, warrants, stock or other securities convertible or
exchangeable for any stock or other securities of the New England Sub.
(c) Repurchase and Other Obligations. The New England Sub is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its stock or other securities. Neither FJB,
the New England Sub nor any other Person is entitled to any preemptive right,
right of first refusal or similar right with respect to any stock or other
securities of the New England Sub. There are no agreements, arrangements or
trusts between or for the benefit of the New England Sub or FJB with respect to
the voting or transfer of stock or other securities, or with respect to any
other aspect of the New England Sub's affairs. The New England Sub 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.
(d) Subsidiaries. The New England Sub does not own, of record
or beneficially, any capital stock or equity interest or investment in any
Person.
3.4 Authority. The Stockholder has the legal capacity to execute and
deliver this Agreement, to perform his covenants and agreements hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Stockholder and constitutes the valid and legally
binding agreement of the Stockholder, enforceable against him in accordance with
its terms.
3.5 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 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 or the
Stockholder is a party or by which the Company, the Stockholder, the Shares, or
any of the assets of the Company or the Stockholder is bound. Except for the FCC
Approval, compliance with the HSR Act and the consents disclosed in
Stockholder'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 Stockholder in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
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3.6 Share Ownership. The Stockholder owns, beneficially and of record,
the Shares, free and clear of all Liens.
3.7 Financial Statements. The Stockholder has delivered to Citadel the
following financial statements of the Company: (a) the audited balance sheet as
of December 31, 1997 and the related audited statements of income and cashflow
for the year then ended; (b) the audited balance sheet as of December 31, 1998
and the related audited statements of income and cashflow for the year then
ended; (c) the balance sheet as of February 28, 1999 and the related statement
of income for the two months then ended; and (d) the monthly balance sheets and
income statements for each month in 1998 and the first two months of 1999. Each
of the foregoing financial statements (including in all cases the notes thereto,
if any) (i) is accurate in all material respects, (ii) is consistent in all
material respects with the books and records of the Company (which, in turn, are
accurate 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 to (i) the lack of footnote disclosure and (ii)
other than with respect to year-end financial statements, changes resulting from
normal year-end audit adjustments), consistently applied, as of the dates and
for the periods set forth therein.
3.8 Absence of Certain Changes. Since December 31, 1998, there has not
been any of the following with respect to the Company or any of the Stations:
(a) material adverse change in the 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; (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; or (h) dividend or other distribution
(of Cash or any other asset of the Company) declared, paid or made to the
Stockholder or Jeffrey in respect of their equity in the Company.
3.9 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 and has paid all Taxes (including without limitation
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
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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 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, 1998, the Company has not incurred
any liability for Taxes other than in the ordinary course of business.
3.10 Asset Schedule; Debt Schedule. The Asset Schedule includes
complete and accurate (a) listings of all Real Property; (b) listings of all
Personal Property having a value of $1,000 or more; (c) descriptions of all Real
Property Leases and Contracts, none of which requires any consent of third
parties in connection with the transactions contemplated hereby; (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 Asset Schedule. The Asset Schedule
contains a complete and accurate list of all of the Stations, and specifies
which Operating Subsidiary operates each Station. The Debt Schedule is a
complete and accurate list of all of the Company's Indebtedness for Borrowed
Money as of December 31, 1998 and includes the names of the holders of such debt
and a list of all documents governing or in any way related to such debt (true
and complete copies of which have been delivered to Citadel). As of the date of
this Agreement, no additional Indebtedness for Borrowed Money has been incurred,
and as of the date of the Closing not more than $600,000 of additional
Indebtedness for Borrowed Money will have been incurred, by the Company since
December 31, 1998. All of such debt can be prepaid on the terms described in the
Debt Schedule, including the terms of any prepayment penalties and premiums.
Upon the payment in full of such debt, all Liens secured in connection therewith
will be released.
3.11 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. The Assets are now owned by the Company free and clear of all Liens. The
Assets will, as of the Closing, be owned by the Company free and clear of all
Liens other than the Permitted Encumbrances.
(b) Condition. The Personal Property is structurally sound, in
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 pursuant to the insurance policies summarized in Stockholder's
Disclosure Schedule.
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(d) Sufficiency of Assets. The Assets include all of the
assets, which are sufficient in nature, condition and quantity, necessary to
permit Citadel 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, 1998, removed, or permitted the
removal of, any material item of Personal Property from any Station other than
removals in the ordinary course of business which were not done in contemplation
of the transactions contemplated by this Agreement.
(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. The Company will as of the Closing have a valid leasehold interest
in each of the Leaseholds.
(ii) None of the Leaseholds is subject to any
covenant or restriction preventing or limiting in any respect the consummation
of the transactions contemplated hereby. The Company's right, title and interest
in and to the Leaseholds will at the Closing be held by the Company free and
clear of all Liens other than the Permitted Encumbrances.
(iii) The use for which the Leaseholds are zoned
permits the use thereof for the Business consistent with past practices. The use
and occupancy of the Leaseholds by the Company are in compliance in all material
respects with all regulations, codes, ordinances and statutes applicable to the
Company and the Business, 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 Stockholder, no facts relating to any
other party, that would prevent the Leaseholds from being occupied and used by
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 any condition that with notice or the passage
of time or both would constitute such a default, and the Company 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 the Company, and to the best of the knowledge
of the Stockholder, as to each other party thereto, and except as disclosed on
the Asset Schedule, has not been amended or otherwise modified.
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(vii) The Leaseholds constitute all of the real
property in which the Company 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 the Stations.
(f) Real Property.
(i) The Asset Schedule contains an accurate
description of the location of each parcel of the Real Property and the type of
facility located on each such parcel. The Company will as of the Closing have
good and marketable title to the Real Property, in fee simple, subject only to
the Permitted Encumbrances and the Permitted Exceptions.
(ii) None of the Real Property is subject to any
covenant or restriction preventing or limiting in any respect the consummation
of the transactions contemplated hereby. The Company's right, title and interest
in and to the Real Property will at the Closing be held by the Company free and
clear of all Liens except the Permitted Encumbrances and the Permitted
Exceptions.
(iii) The use for which the Real Property is zoned
permits the use thereof for the Business consistent with past practices. The use
and occupancy of the Real Property by the Company are in compliance in all
material respects with all regulations, codes, ordinances and statutes
applicable to the Company and the Business, 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 condemnation proceedings or
eminent domain proceedings of any kind pending or, to the best of the knowledge
of the Stockholder, threatened against the Real Property.
(v) All of the Real Property is occupied under a
valid and current certificate of occupancy or similar permit. There are no facts
that would prevent the Real Property from being occupied and used by Citadel
after the Closing Date in the same manner as immediately prior to the Closing.
(vi) The Real Property constitutes all of the real
property which is owned by the Company and which is or will prior to Closing be
used in the operation of the Stations.
3.12 Contractual and Other Obligations. Set forth in the 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 Stockholder, 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
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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 or true, correct and complete copies of all Contracts have
been provided to Citadel as of the date of this Agreement.
3.13 Compensation. Set forth in Stockholder'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 $15,000 and their respective
positions, job categories and salaries. At the Closing, Stockholder shall
deliver to Citadel a list of all employees of the Company. 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, Citadel, the
Business or Citadel's business. 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.
3.14 Employee Benefit Plans.
(a) The Company does not maintain or sponsor, nor is it
required to make contributions to or to pay benefits from, 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, or who formerly worked, at any Station. None of
the plans, funds, policies, programs, arrangements or understandings of the
Company is a "multiemployer plan" (within the meaning of Section 3(37) of
ERISA). Neither the Company nor any ERISA affiliate of the Company has ever
contributed to or had the obligation to contribute to any multiemployer plan.
Stockholder's Disclosure Schedule fully discloses all of the plans, funds,
policies, programs, arrangements or understandings, whether oral or in writing,
sponsored or maintained by the Company pursuant to which any employee or former
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 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 requirements of
law have
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been observed with respect to the establishment, operation and, if applicable,
the termination thereof, and all applicable reporting and disclosure
requirements have been timely satisfied; (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; (D) any such plan represented by the Company to a
"qualified" retirement plan satisfies, in both form and operation, the
applicable requirements of Section 401(a) of the Code; and (E) any such plan may
be terminated at any time without material liability resulting from such action.
(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
complied with any applicable 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, or the terms and conditions of
employment, wages (including overtime compensation) and hours of, the Company.
The Company 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 Company or 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. The Company is not
bound by any collective bargaining agreement with respect to its employees.
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 the Company or any Station.
3.16 Increases in Compensation or Benefits. Subsequent to December 31,
1998, 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 Stockholder'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 Stockholder's
Disclosure Schedule. No employee of the Company 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.
3.17 Insurance. The Company maintains the insurance policies summarized
in Stockholder's Disclosure Schedule. Such policies maintained by the Company
are in full
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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 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.
3.18 Litigation; Disputes. There are no claims, disputes, actions,
suits, investigations or proceedings pending or threatened against or affecting
the Company, the Shares or any Station or that is reasonably likely to prevent
or hinder the consummation of the transactions contemplated hereby and, to the
best of the knowledge of the Stockholder, there is no basis for any such claim,
dispute, action, suit, investigation or proceeding. The Stockholder 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.
3.19 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.
3.20 Trade Liabilities. The Trade Liabilities do not, and as of the
Closing Date will not, exceed the Trade Receivables.
3.21 Environmental.
(a) Prior to the execution of this Agreement, the Company has
provided to Citadel a true and correct copy of all environmental site
assessments, studies, tests, reports and communications relating to the Real
Property and Leaseholds.
(b) To the best of the knowledge of the Stockholder, (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 and (ii) there is not constructed, placed, deposited, stored,
disposed of, nor located on any of the Real Property or 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.
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(c) To the best of the knowledge of the Stockholder, no
structure, improvements, equipment, fixtures, activities or facilities located
on the Real Property or any of the Leaseholds uses Hazardous Materials except
those used in the ordinary course of the Business and in compliance with
applicable Environmental Laws.
(d) 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 Stockholder 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.
(e) 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.
(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 Stockholder, is there any basis for any such
Environmental Claims.
3.22 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
Stockholder 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 Stockholder'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 Stockholder'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 Stockholder, 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 the
FCC
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Approval, 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. 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.
3.23 Intellectual Property. The use of the Intellectual Property in
connection with the operation of the Stations or otherwise by the Company does
not infringe upon the proprietary rights of any other Person. Subject to the
Permitted Encumbrances, 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 Stockholder 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.
3.24 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 and/or in the Company's offices in Newburyport, Massachusetts (the
"New England Office") and in Auburn, California (the "California Office");
provided, however, that any such books and records located in the Maine Office
and the California Office shall be delivered to the Stations or to Citadel (as
Citadel may direct) at or prior to the Closing. The Company's minute books and
stock ledgers accurately reflect all actions taken by the Company's board of
directors and stockholders, including all issuances and transfers of Company
Stock and capital stock of the Operating Subsidiaries. Stockholder's Disclosure
Schedule lists all of the current officers and directors of the Company. At the
Closing, the Company's minute books and stock ledgers shall be delivered to
Citadel.
3.25 Related Party Obligations. 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.
3.26 Year 2000 Compliance. The Company has made, and will on a
continuing basis make, such investigations and has obtained or will obtain such
certifications from suppliers as are practicable with respect to material items
of software and electronic hardware used by the Company and which the Company
reasonably anticipates could, if they failed to
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operate correctly, have a material adverse effect on the Business. Based on the
foregoing, the Company has no reason to believe that such software and hardware
will not be able to accurately process date/time data (including, but not
limited to, calculating, comparing and sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations to the extent that other information technology, used in
combination with the information technology being acquired, properly exchanges
date/time data with it.
3.27 Disclosure. To the best of the knowledge of the Stockholder, no
representation or warranty made under this Section 3 and none of the information
furnished by the Stockholder 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 CITADEL
In connection with the purchase and sale of the Shares and in order to
induce the Stockholder to enter into and consummate the transactions
contemplated by this Agreement, Citadel makes the following representations and
warranties to the Stockholder as of the date of this Agreement 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):
4.1 Organization and Qualification; Authority. Citadel is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has full power and authority (a) to own its assets and
properties and to conduct its business and (b) to enter into this Agreement and
to consummate the transactions contemplated hereby. 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 action on the
part of Citadel. This Agreement has been duly executed and delivered by Citadel
and constitutes the valid and legally binding agreement of Citadel, enforceable
against it in accordance with its terms.
4.2 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 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
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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 its assets is
bound. Except for the FCC Approval, compliance with the HSR Act 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 Citadel in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
4.3 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.
4.4 Disclosure. To the best knowledge of Citadel, no representation or
warranty made under this Section 4 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 5
AFFIRMATIVE COVENANTS OF THE STOCKHOLDER
From and after the date of this Agreement and until the Closing, the
Stockholder covenants and agrees to, and to cause the Company to, take the
actions set forth in Sections 5.1 through 5.16:
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 (including without limitation Indebtedness for Borrowed Money and other
long-term debt and capitalized lease obligations) on a timely basis so that (a)
the Obligations of the Company existing as of the Closing Date consist solely of
(i) current liabilities and obligations under executory contracts and
commitments which are reasonable and customary in the radio broadcasting
industry and (ii) Permitted Debt; (b) Permitted Debt does not exceed
$15,800,000; and (c) Net Working Capital is not less than $2,500,000. Not less
than five business days before the Closing Date, the Stockholder shall deliver
to Citadel a payoff letter from the Company Lender with respect to the Permitted
Debt. Such payoff letter shall be in form and substance satisfactory to Citadel
and shall include (x) the amount of Permitted Debt due as of the Closing Date,
(y) wire instructions for the payment thereof and (z) a statement that all
Permitted Encumbrances will be released immediately upon the payment in full of
such Permitted Debt (and a copy of all release documents shall be attached to
the payoff letter).
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5.3 Access. Afford Citadel and its authorized representatives, upon
reasonable notice, reasonable access during normal business hours to the
Stations and the Stations' employees, and permit Citadel and its 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. Operate the Business and the Stations
in the ordinary course, consistent with past practices, and 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
shall require the Company or the Stockholder to expend money in fulfillment of
the 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 Citadel the books, records, tax
returns, leases, contracts and other documents or agreements material to the
Stations as Citadel or its 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; provided, however,
that such items may be accrued (rather than paid) in the ordinary course of
business consistent with the Company's past practices.
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 Supplemental Financial Statements. Provide Citadel with copies of
the monthly unaudited income statements and balance sheets applicable to the
Stations prepared by the Company in the ordinary course of business commencing
with the month ended March 31, 1999 until Closing (collectively, the
"Supplemental Financial Statements"). The Stockholder
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shall provide such Supplemental Financial Statements to Citadel promptly upon
such Supplemental Financial Statements becoming available to the Company. The
Supplemental Financial Statements shall be subject to the representations and
warranties as set forth in Section 3.7.
5.10 Further Information. Furnish to Citadel such financial (including
tax), legal and other information with respect to the Company, the Business and
the Stations as Citadel or its representatives may from time to time reasonably
request.
5.11 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 made by the Stockholder in this Agreement.
5.12 Consents. Exercise all reasonable efforts to obtain, prior to the
Closing, the consent and approval (in a form reasonably approved by Citadel) 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 Stockholder's Disclosure Schedule and requiring such
consent. If any such consent or approval is not obtained, the Stockholder 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
Stockholder to obtain any consent with respect to a Contract identified as a
"Material Contract" on Stockholder's Disclosure Schedule (collectively, the
"Material Contracts"), if alternative arrangements are not satisfactory to
Citadel. The Stockholder 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 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 Citadel at the Closing an accurate
schedule of Trade Liabilities and Trade Receivables existing as of the Closing.
The Stockholder shall exercise reasonable efforts to minimize the amount of
additional Trade Liabilities incurred after the date of this Agreement.
5.14 Phase I Site Assessments and Other Reports. Perform or commission
Phase I Site Assessments of the Real Property and such other studies, tests or
reports of the Real Property and Leaseholds as Citadel and/or its lenders may
reasonably require and provide
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copies of the written reports and/or results to Citadel promptly after they
become available to the Company. Such assessments, studies, tests and reports
shall be performed by an environmental company reasonably acceptable to Citadel
and its lenders and at the cost and expense of the Stockholder. If any of the
assessments, studies, tests or reports indicate that any Real Property contains
one or more conditions of Environmental Noncompliance, the Stockholder shall
promptly commence remedial action to cure the conditions, and shall cure the
conditions, prior to Closing (at the cost and expense of the Stockholder).
5.15 Title Insurance and Surveys. Cause each parcel of the Real
Property to be surveyed by a registered professional surveyor (who shall be
reasonably acceptable to Citadel) and the Stockholder shall cause such ALTA
surveys (which shall be in form satisfactory to remove the standard survey
exception from the Owner's and Mortgagee's title insurance policies) to be
delivered to Citadel at least 10 days prior to the Closing. One-half of the cost
and expense of such surveys shall be borne by the Stockholder and/or Jeffrey and
the other half shall be borne by Citadel. In addition, the Stockholder shall
cooperate with Citadel in obtaining, at or prior to Closing, title insurance on
the Real Property from a nationally recognized title insurance company
acceptable to Citadel and its lenders in their reasonable judgment. Not later
than 30 days prior to Closing, the Stockholder shall furnish to such title
insurance company such documentation as may be reasonably required by it to
issue extended Owner's and Mortgagee's title insurance policies which shall
additionally be without exception as to the capacity, authority and execution of
instruments by the Company.
5.16 Real Property Expenses. Ensure that all matters of title clearance
and any necessary subdivision or lot-split are completed (at the cost and
expense of the Stockholder) to the satisfaction of Citadel. Citadel shall be
responsible for the cost of title insurance premiums.
SECTION 6
NEGATIVE COVENANTS OF THE STOCKHOLDER
From and after the date of this Agreement and until the Closing, the
Stockholder shall not take, or cause or permit to be taken, and shall cause the
Company (to the extent within the Stockholder's control) not to take, or cause
or permit to be taken, any of the following actions without the prior approval
of 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 (a) in the case of a sale, transfer or assignment,
(i) in the ordinary course of business and which does not materially interfere
with the operations of the Stations or (ii) obsolete assets which are replaced
with assets of equal or greater value; and (b) in the case of a conveyance,
mortgage, hypothecation, encumbrance or other Lien, where released at or prior
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to the Closing; provided, however, that the Company shall be permitted to
transfer the Excluded Assets to the Stockholder.
6.2 Contracts. Amend, terminate or renew any of the Contracts, other
than in the ordinary course of business where prior written notice is provided
to Citadel.
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 of the Company (including
without limitation 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 or make any other payments,
disbursements 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, (b) in accordance with the existing terms of contracts entered into
and disclosed to Citadel prior to the date of this Agreement or (c) as Bonuses.
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, including without limitation
an acquisition of all or substantially all of the assets of the Company or any
equity in the Company (including the Shares). Prior to the Closing, the
Stockholder shall not sell, assign, pledge or otherwise transfer any of the
Shares, and shall cause FJB not to sell, assign, pledge or otherwise transfer
any of the capital stock of the Operating Subsidiaries.
6.7 Issuance of Securities. Issue any shares of capital stock or any
other securities of FJB or any of the Operating Subsidiaries.
6.8 Dividends. Declare or pay any dividend or make any other
distribution (of Cash or any other asset of the Company) to the Stockholder or
Jeffrey in respect of their equity in the Company; provided, however, that the
Company shall be permitted to transfer the Excluded Assets to Jeffrey.
SECTION 7
COVENANTS OF CITADEL
From and after the date of this Agreement and until the Closing,
Citadel covenants and agrees with the Stockholder to:
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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 the Stockholder 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 Citadel in this Agreement.
7.3 Consents. Obtain all third party consents identified on Citadel's
Disclosure Schedule.
SECTION 8
ADDITIONAL COVENANTS OF THE PARTIES
8.1 Application for Transfer of Control. As promptly as practicable
after the date of this Agreement, and in no event later than 10 business days
after the date of this Agreement, the Stockholder shall cause the Company (to
the extent within the Stockholder's control) to file, together with Citadel, 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 Stockholder and Citadel shall each take all
necessary actions on its or his part to obtain the FCC Approval. Citadel shall
advance the filing fee for the FCC Application, and the Stockholder shall
reimburse Citadel for one-half of such filing fee at the Closing (or upon the
earlier termination of this Agreement). Subject to Section 14.7, 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.
8.2 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, Citadel is fully responsible for the
payment of, and shall pay at the Closing, the entire broker's fee due to Broker
in connection with the transactions contemplated hereby. 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.
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8.3 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 Stockholder at his 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 such Station
attributable to the impairment of such assets.
8.4 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.
8.5 Cooperation. During the seven-year period immediately following the
Closing, Citadel shall cooperate with the Stockholder in providing him all
information reasonably requested and permitting him 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 Stockholder. The Stockholder, 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
Stockholder of Citadel's intent to discard such records and (ii) the Stockholder
does not, within 10 days after receipt of such notice, retrieve such records
from Citadel's premises.
8.6 HSR Filing. As promptly as practicable after the date of this
Agreement, and in no event later than 10 business 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
the Stockholder and/or Jeffrey shall reimburse Citadel for one-half of such
filing fee at the Closing (or upon the earlier termination of this Agreement).
Subject to Section 14.7, 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.
8.7 Confidentiality. Each of the parties hereto will hold in
confidence, and will cause its respective directors, officers, employees,
accountants, counsel, financial advisors and
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other representatives and Affiliates to hold in confidence, all non-public
information received from another party hereto.
8.8 Public Announcements. Citadel and the Stockholder will consult with
each other before issuing, and provide each other the opportunity to review,
comment upon and concur with, any press release or other public statements with
respect to the transactions contemplated by this Agreement, and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or the National Association of Securities Dealers, Inc. The parties
agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
8.9 No Inconsistent Action. No party hereto shall take any action (a)
inconsistent with his or its obligations under this Agreement or (b) that would
hinder or delay the consummation of the transactions contemplated by this
Agreement.
8.10 Employment Agreements. Promptly following the Closing, Citadel
will offer employment with Citadel to Martin R. Lessard and Michael Sambrook on
terms no less favorable to such employees than those contained in the forms of
Employment Agreements set forth as Exhibits B and C hereto, respectively.
8.11 Completion of Capital Expenditures Projects. The Stockholder
covenants and agrees to cause the completion prior to the Closing Date of each
of the items described on the Capital Expenditures Schedule and to pay or
perform or cause the Company prior to the Closing Date to pay or perform all
obligations or liabilities of the Company related to such items.
SECTION 9
THE CLOSING
9.1 Closing Date. The Closing shall occur on a date mutually selected
by the Stockholder 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, 600 Grant Street, 44th Floor, Pittsburgh, Pennsylvania 15219,
counsel for Citadel, or at such other time and place as the parties may agree in
writing.
9.2 Actions to be Taken at the Closing. The following actions shall be
taken at the Closing:
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(a) Delivery of Purchase Price. Citadel shall deliver to the
Stockholder the Purchase Price in accordance with Section 2.2.
(b) 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 or him pursuant to the terms of this Agreement or as a
condition precedent to the other parties' obligations under this Agreement,
including without limitation the following:
(i) The Stockholder shall execute and deliver the
Closing Certificate.
(ii) The Stockholder shall deliver stock certificates
evidencing the Shares, together with duly executed stock powers.
(iii) The Stockholder shall deliver his resignation
as an officer and director of FJB and each of the Operating Subsidiaries.
SECTION 10
CONDITIONS TO THE OBLIGATION OF THE STOCKHOLDER
The obligation of the Stockholder 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 him in his sole
discretion (other than those set forth in Sections 10.7 and 10.8):
10.1 Opinion of Citadel's Counsel. The Stockholder shall have received
an opinion of counsel for Citadel, dated the Closing Date, in form and substance
reasonably satisfactory to the Stockholder, as to the matters set forth on
Exhibit D hereto.
10.2 Representations, Warranties and Covenants. The representations and
warranties of Citadel contained herein shall be true and correct in all material
respects (determined without regard to materiality qualifications within all
such representations and warranties) 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 (determined without regard to
materiality qualifications within all such representations and warranties) at
and as of the time or times specified), and Citadel shall have complied with all
of its covenants contained herein; and Citadel shall have delivered to the
Stockholder a certificate to that effect, dated the Closing Date, signed by an
officer of Citadel.
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10.3 No Litigation. No injunction relating to any action, suit or
proceeding against Citadel, the Company or the Stockholder relating to the
consummation of any of the transactions contemplated by this Agreement or any
action by any Governmental Authority shall have been issued.
10.4 Other Certificates. The Stockholder shall have received
certificates as to the good standing of Citadel in the States of Nevada, Maine
and New Hampshire, 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 reasonably satisfactory to the Stockholder, as the Stockholder shall
have reasonably requested in connection with the transactions contemplated
hereby.
10.5 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 the Stockholder 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 their
officers and employees in carrying out the terms and provisions of this
Agreement.
10.6 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.
10.7 FCC Approval. The FCC Approval shall have been obtained and shall
have become a Final Order.
10.8 HSR Clearance. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
10.9 Consulting Agreement. Citadel shall have executed and delivered
the Consulting Agreement.
SECTION 11
CONDITIONS TO THE OBLIGATION OF CITADEL
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 11.8 and 11.9):
11.1 Opinion of the Company's and the Stockholder's Counsel. Citadel
shall have received an opinion of counsel for the Company and the Stockholder
dated the Closing Date,
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in form and substance reasonably satisfactory to Citadel, as to the matters set
forth on Exhibit E hereto.
11.2 Representations, Warranties and Covenants. The representations and
warranties of the Stockholder contained herein shall be true and correct in all
material respects (determined without regard to materiality qualifications
within all such representations and warranties) 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 (determined without regard to
materiality qualifications within all such representations and warranties) at
and as of the time or times specified), and the Stockholder shall have complied
with all of his covenants contained herein; and the Stockholder shall have
delivered to Citadel a certificate to that effect, dated the Closing Date,
signed by him.
11.3 No Litigation. No injunction relating to any action, suit or
proceeding against the Company, the Stockholder or Citadel 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 a certificate as
to the good standing of FJB and each of the Operating Subsidiaries as a
corporation in the States of Maine, New Hampshire and California (as the case
may be), 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
reasonably satisfactory to Citadel, as Citadel shall have reasonably requested
in connection with the transactions contemplated by this Agreement.
11.5 Acts to Performed. Each of the covenants, acts and undertakings of
the Stockholder to be performed on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed.
11.6 Lien Searches. The Stockholder shall have delivered to Citadel
lien (including UCC and tax) and judgment (including litigation) searches from
county and state agencies where Assets are located or the Business is conducted,
showing all Liens on the Assets, which searches shall be conducted not more than
30 days prior to the Closing. Such searches shall include the name of the
Company, the call letters of each of the Stations, predecessors of any of the
foregoing during the past five years and any other names under which the Company
has done business during the past five years. The Stockholder may cause such
searches to be prepared by a third party, in which case the Stockholder shall
not be responsible for any inaccuracies in such searches unless the Stockholder
has actual knowledge of their inaccuracy. Notwithstanding the foregoing, the
Stockholder shall remain responsible for satisfying any Lien (other than
Permitted Encumbrances) on the Assets and Shares even if such searches are
inaccurate.
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11.7 Consents. All consents with respect to Material Contracts shall
have been obtained.
11.8 FCC Approval. The FCC Approval shall have been obtained and shall
have become a Final Order.
11.9 HSR Clearance. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
11.10 Transfer of Excluded Assets. Pursuant to binding agreements in
form and substance reasonably satisfactory to Citadel, the Excluded Assets,
together with all liabilities relating thereto, shall have been transferred to
Jeffrey.
11.11 Closing of Jeffrey Transaction. The closing of the Jeffrey
Transaction shall occur simultaneously with the Closing.
11.12 Termination of Leases and Bock Agreement. The lease for the New
England Office and the lease for the California Office shall have been
terminated without expense or liability to the Company, and that certain
Retirement Agreement dated December 9, 1987 between the Company and Edward F.
Bock shall have been terminated with any expense or liability to the Company in
connection therewith being deemed to constitute Bonuses.
11.13 Cancellation of Options. The options held by the Stockholder and
Martin R. Lessard described in Section 3.1 of the Stockholder's Disclosure
Schedule shall have been cancelled and terminated without consideration from the
Company.
11.14 Shareholder Approval Regarding Certain Payments. Shareholders of
FJB and of each of the Operating Subsidiaries owning more than 75% of the voting
power of all outstanding stock of each such respective entity, after disclosure
of all material facts, shall have approved the payment of any and all Bonuses or
other amounts payable pursuant to this Agreement or any agreement referred to in
this Agreement, the payment of which would otherwise constitute or be considered
a "parachute payment" under Code section 280G.
11.15 Consulting Agreement. The Stockholder shall have executed and
delivered the Consulting Agreement.
SECTION 12
INDEMNIFICATION
12.1 Indemnification by the Stockholder. Subject to the limitations and
procedures set forth in this Section 12, the Stockholder shall indemnify and
hold harmless Citadel from and against all losses, claims, demands, damages,
liabilities, obligations, costs and/or
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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 (a) the breach of any of the obligations or covenants of
the Stockholder in this Agreement, (b) the breach of any of the representations
or warranties made by the Stockholder in this Agreement or (c) any inaccuracy in
the Closing Certificate.
12.2 Indemnification by Citadel. Subject to the limitations and
procedures set forth in this Section 12, Citadel shall indemnify and hold
harmless the Stockholder from and against any and all Damages sustained or
incurred by him, to the extent that such Damages are sustained or incurred by
reason of (a) the breach of any of the obligations or covenants of Citadel in
this Agreement or (b) the breach of any of the representations or warranties
made by Citadel in this Agreement.
12.3 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 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 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, subject to the consent of the Indemnitor which
consent will not be unreasonably withheld or delayed, 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,
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(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.
12.4 Survival.
(a) The Stockholder. Each of the representations and
warranties made by the Stockholder in this Agreement shall survive until April
30, 2001, notwithstanding any investigation at any time made by or on behalf of
Citadel, and upon such date such representations and warranties shall expire
except as follows: (i) the representations and warranties contained in Sections
3.9 and 3.14 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
contained in Sections 3.21 and 3.22 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 contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.11(a) and 3.11(f)(i) shall not expire
but shall continue indefinitely. No claim for the recovery of Damages may be
asserted by Citadel against the Stockholder 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 until April 30, 2001, notwithstanding
any investigation at any time made by or on behalf of the Stockholder, and upon
such date such representations and warranties shall expire, except that the
representations and warranties of Citadel contained in Sections 4.1 and 4.2
shall not expire but shall continue indefinitely. No claim for the recovery of
Damages may be asserted by the Stockholder 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.
12.5 Limitation of Stockholder's Liability. Notwithstanding anything in
this Agreement to the contrary, the obligation of the Stockholder to indemnify
Citadel shall be subject to the following:
(a) Threshold. Citadel shall not be entitled to recover
Damages pursuant to clause (b) of Section 12.1 (other than Damages arising by
reason of a breach of the representations and warranties made in Sections 3.1,
3.2, 3.3, 3.4, 3.5, 3.6, 3.11(a) and 3.11(f)(i)) until the aggregate of all such
Damages suffered by Citadel exceeds $200,000 (the "Threshold"); provided,
however, that once such aggregate exceeds the Threshold, Citadel may recover all
such Damages suffered since the Closing Date without regard to the Threshold.
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(b) Ceiling. Citadel shall not be entitled to recover Damages
pursuant to Section 12.1 in excess of the sum of $20,000,000 less the aggregate
amount of Damages theretofore actually recovered by Citadel from Jeffrey.
(c) Exclusive Remedy. Except as provided in Section 13 and
except with respect to any claim for Damages relating to any intentional or
fraudulent breach of a representation, warranty or covenant of the Stockholder,
subsequent to the Closing, indemnification under this Section 12 shall be the
exclusive remedy of Citadel with respect to any legal, equitable or other claim
for relief based upon this Agreement.
(d) Exceptions. The limitations set forth in this Section 12.5
shall not apply with respect to any claim for Damages relating to any
intentional or fraudulent breach of a representation, warranty or covenant of
the Stockholder, nor shall there be any survival limitation for any such claim.
(e) Disclosed Exceptions. If Citadel in its sole discretion
waives the condition set forth in Section 11.2 to its obligation to consummate
the transactions contemplated by this Agreement by proceeding with the Closing
notwithstanding that the certificate delivered by the Stockholder with reference
to Section 11.2 sets forth one or more exceptions, Citadel shall not be entitled
to recover Damages with respect to any exception so disclosed in such
certificate delivered by the Stockholder.
12.6 Limitation of Citadel's Liability. Notwithstanding anything in
this Agreement to the contrary, the obligation of Citadel to indemnify the
Stockholder shall be subject to the following:
(a) Threshold. The Stockholder shall not be entitled to
recover Damages pursuant to clause (b) of Section 12.2 (other than as a result
of a breach of the representations and warranties made in Sections 4.1 and 4.2)
until the aggregate of all such Damages suffered by him exceeds the Threshold;
provided, however, that once such aggregate exceeds the Threshold, the
Stockholder may recover all such Damages suffered since the Closing Date without
regard to the Threshold.
(b) Ceiling. The Stockholder shall not be entitled to recover
Damages pursuant to Section 12.2 in excess of $12,500,000.
(c) Exclusive Remedy. Except as provided in Section 13 and
except with respect to any claim for Damages relating to any intentional or
fraudulent breach of a representation, warranty or covenant of Citadel,
subsequent to the Closing, indemnification under this Section 12 shall be the
exclusive remedy of the Stockholder with respect to any legal, equitable or
other claim for relief based upon this Agreement.
(d) Exceptions. The limitations set forth in this Section 12.6
shall not apply with respect to any claim for Damages relating to any
intentional or fraudulent breach of a
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representation, warranty or covenant of Citadel, nor shall there be any survival
limitation for any such claim.
(e) Disclosed Exceptions. If Stockholder in his sole
discretion waives the condition set forth in Section 10.2 to his obligation to
consummate the transactions contemplated by this Agreement by proceeding with
the Closing notwithstanding that the certificate delivered by Citadel with
reference to Section 10.2 sets forth one or more exceptions, Stockholder shall
not be entitled to recover Damages with respect to any exception so disclosed in
such certificate delivered by Citadel.
SECTION 13
TERMINATION OF AGREEMENT; ADDITIONAL REMEDIES
13.1 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 Stockholder;
(b) by either Citadel or the Stockholder upon providing
written notice to the other party at any time after April 30, 2000 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
Stockholder, if as of the time set for Closing any of the conditions in Section
11 (except Section 11.8 or 11.9) has not been satisfied or waived by Citadel in
writing, provided Citadel is not then in material breach of this Agreement;
(d) by the Stockholder, upon providing written notice to
Citadel, if as of the time set for Closing any of the conditions in Section 10
(except Section 10.7 or 10.8) has not been satisfied or waived by the
Stockholder in writing, provided the Stockholder is not then in material breach
of this Agreement and the condition set forth in Section 11.11 has been
satisfied;
(e) by the Stockholder, upon providing written notice to
Citadel, if Citadel fails to consummate the transactions contemplated hereby
after all conditions in Section 11 have been satisfied, provided the Stockholder
is not then in material breach of this Agreement;
(f) by Citadel, upon providing written notice to the
Stockholder, if the Stockholder fails to consummate the transactions
contemplated hereby after all conditions in Section 10 have been satisfied,
provided Citadel is not then in material breach of this Agreement;
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(g) by Citadel or the Stockholder upon denial by the FCC of
the FCC Application;
(h) by Citadel or the Stockholder 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; and
(i) by Citadel in the event the definitive agreement relating
to the Jeffrey Transaction dated the date of this Agreement and heretofore
executed and delivered and the Contribution Agreement cease to be in full force
and effect at any time prior to the Closing.
13.2 Additional Remedies.
(a) In the event of the termination of this Agreement by the
Stockholder pursuant to Section 13.1(d) or 13.1(e) (any such event being a "Draw
Condition"), the Stockholder 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 he 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 13.1, Citadel shall be
entitled to a return of, and the Stockholder shall return to Citadel, the
original Letter of Credit for cancellation. Upon the occurrence of a Draw
Condition, Citadel shall execute the joint certificate referenced in Section
2.3.
(b) The parties recognize and agree that Citadel has relied on
this Agreement and expended considerable effort and resources related to the
transactions contemplated hereby, that the rights and benefits conferred upon
Citadel herein are unique, and that damages may not be adequate to compensate
Citadel in the event the Stockholder improperly refuses to consummate the
transactions contemplated hereby. The parties therefore agree that Citadel shall
be entitled, at its option and in lieu of terminating this Agreement pursuant to
Section 13.1, to have this Agreement specifically enforced by a court of
competent jurisdiction in addition to all other remedies available at law or in
equity; provided, however, that Citadel may not specifically enforce this
Agreement if Citadel has previously terminated this Agreement and received the
original Letter of Credit.
(c) No person other than Citadel and Stockholder may rely upon
or assert any rights arising under or pursuant to this Agreement, including in
respect of Section 8.10. Citadel agrees that Stockholder shall have the right to
have the agreements of Citadel set forth in Section 8.10 specifically enforced
by a court of competent jurisdiction in addition to all other remedies available
at law or in equity.
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SECTION 14
GENERAL
14.1 Survival of Representations and Warranties. Each representation
and warranty herein contained shall survive the Closing for the periods
described in Section 12.4, notwithstanding any investigation at any time made by
or on behalf of any party to this Agreement.
14.2 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 Nevada.
14.3 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
7201 West Lake Mead Boulevard
Suite 400
Las Vegas, Nevada 89128
Attn: Lawrence R. Wilson
Fax: (702) 804-5936
With copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street, 44th Floor
Pittsburgh, Pennsylvania 15219
Attn: Bryan D. Rosenberger, Esq.
Fax: (412) 566-6099
To the Stockholder: 10940 Sunrise Ridge Circle
Auburn, California 95603
Attn: Robert F. Fuller
Fax: (530) 887-9040
With copies to: Nutter McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
Attn: Michael J. Bohnen, Esq.
Fax: (617) 973-9748
and
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Fuller-Jeffrey Broadcasting Companies, Inc.
10940 Sunrise Ridge Circle
Auburn, California 95603
Attn: Robert F. Fuller
Fax: (530) 887-9040
and
Choate, Hall & Stewart
Exchange Place
Boston, MA 02109-2891
Attn: Andrew L. Nichols, Esq.
Fax: (617) 248-4000
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.
14.4 Entire Agreement. This instrument, together with the Contribution
Agreement, supersede all prior communications, understandings and agreements of
or among the parties with respect to the subject matter of this Agreement and
contain the entire agreement among the parties with respect to the transactions
contemplated by this Agreement. Except as otherwise set forth in this Agreement
and in the Contribution Agreement, there are no other representations,
warranties or covenants of any party hereto with respect to the subject matter
of this Agreement.
14.5 Headings. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
14.6 Schedules and Exhibits. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
14.7 Expenses. Each party shall bear its or his own costs and expenses
incurred by it or him in connection with the transactions contemplated by this
Agreement; provided, however, that the Stockholder shall bear all of the actual
out-of-pocket costs and expenses incurred by the Company in connection with the
transactions contemplated hereby.
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 or, in the case of a waiver, by the party waiving compliance.
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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 of this Agreement at any
time thereafter.
14.10 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 or his 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.
14.11 Prior Control. Until the Closing, the Company shall maintain
control of each Station.
14.12 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.
14.13 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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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
/s/ Robert F. Fuller
----------------------------
Robert F. Fuller
CITADEL COMMUNICATIONS CORPORATION
By: /s/ Lawrence R. Wilson
---------------------------
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Index of Schedules and Exhibits
Schedule 1 - Stations
Schedule 2 - Asset Schedule
Schedule 3 - Citadel's Disclosure Schedule
Schedule 4 - Debt Schedule
Schedule 5 - Excluded Assets Schedule
Schedule 6 - Stockholder's Disclosure Schedule
Schedule 7 - Capital Expenditures Schedule
Exhibit A - Letter of Credit
Exhibit B - Form of Employment Agreement for Martin R. Lessard
Exhibit C - Form of Employment Agreement for Michael Sambrook
Exhibit D - Form of Opinion of Counsel for Citadel
Exhibit E - Form of Opinion of Counsel for the Company and the Stockholder
Exhibit F - Form of Consulting Agreement
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules and exhibits to the Securities and
Exchange Commission upon request.]
<PAGE> 1
Exhibit 2.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), made as of the 30th day
of April, 1999, by and between JOSEPH N. JEFFREY, JR. (the "Stockholder") and
CITADEL BROADCASTING COMPANY, a Nevada corporation ("Citadel").
RECITALS:
A. The Company (as herein defined) is the licensee of and owns and
operates 12 radio stations identified on Schedule 1 to this Agreement
(collectively, the "Stations").
B. The Stockholder owns 14,999 shares (or approximately 49.997%) of the
issued and outstanding shares of common stock of Fuller-Jeffrey Broadcasting
Companies, Inc., a Maine corporation ("FJB").
C. Citadel desires to purchase from the Stockholder, and the
Stockholder desires to sell to Citadel, all of his shares of common stock of
FJB, 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.
"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.
<PAGE> 2
"Asset Schedule" means Schedule 2 to this Agreement.
"Assets" means all of the property of every kind or nature of the
Company, including without limitation the Real Property, the Real Property
Leases, the Intellectual Property, the Personal Property, the Trade Receivables,
the Accounts Receivable and the Cash, and all books, records and accounts of the
Company.
"Bonuses" shall mean any amount paid or agreed to be paid by the
Company at or prior to the Closing to any current or former employee of the
Company other than pursuant to clauses (a) or (b) of Section 6.5, or any other
amount or payment described in this Agreement or the schedules or exhibits
hereto as constituting "Bonuses," and provided that any such amount, alone or in
connection with other amounts paid to any such employee, will not constitute or
be considered an "excess parachute payment" under Section 280G of the Code.
"Broker" means Kalil & Co., Inc.
"Business" means the business in which the Company is now engaged.
"California Office" has the meaning specified in Section 3.24.
"Capital Expenditures Schedule" means Schedule 7 to this Agreement.
"Cash" means the cash and cash equivalents of the Company existing as
of the Closing.
"Citadel's Disclosure Schedule" means Schedule 3 to this Agreement.
"Closing" means the consummation of the transactions contemplated by
this Agreement in accordance with the provisions of Section 9.
"Closing Certificate" means the certificate of the Stockholder dated
the Closing Date and delivered to Citadel, which sets forth a true and correct
calculation, including supporting documentation, of (i) the Net Working Capital,
(ii) the Indebtedness for Borrowed Money of the Company as of the Closing and
(iii) the Bonuses.
"Closing Date" has the meaning specified in Section 9.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means, collectively, FJB and the Operating Subsidiaries, or
any of them.
"Company Lender" means The CIT Group/Equipment Financing, Inc.
"Company Stock" means common stock, par value $1.00 per share, of FJB.
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<PAGE> 3
"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 existing as of the date hereof, and in each case with respect to which
the remaining obligation of the Company is in excess of $5,000; and (c)
contingent contractual obligations and liabilities of the Company known to the
Company existing as of the date hereof.
"Contribution Agreement" means that certain Contribution Agreement
between the Stockholder and Fuller, a copy of which in the form to be executed
has been delivered by the Stockholder to Citadel on the date of this Agreement.
"Damages" has the meaning specified in Section 12.1.
"Debt Schedule" means Schedule 4 to this Agreement.
"Draw Condition" has the meaning specified in Section 13.2(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 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.
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"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; (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; and (c) any condition noted in any environmental site assessments,
studies, tests or reports performed or commissioned for the Real Property or
Leaseholds which is concluded therein to create or cause to exist a recognized
environmental condition (or words of similar import) or to pose an environmental
risk.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means those assets of the Company (a) identified on
the Excluded Assets Schedule or (b) used exclusively in the operation of radio
stations WJAE(AM), licensed to Westbrook, Maine, WJJB(AM), licensed to
Brunswick, Maine, and WRED(FM), licensed to Saco, Maine. The transfer of such
assets of WRED(FM) shall be made pursuant to that certain Asset Purchase
Agreement dated April 14, 1999 between Maine Sub and the Stockholder, a true and
complete copy of which has been delivered to Citadel.
"Excluded Assets Schedule" means Schedule 5 to this Agreement.
"FCC" means the Federal Communications Commission.
"FCC Application" has the meaning specified in Section 8.1.
"FCC Approval" has the meaning specified in Section 8.1.
"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
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<PAGE> 5
review, reconsideration or appeal, the time for further review, reconsideration
or appeal has expired.
"FJB" has the meaning specified in the recitals to this Agreement.
"Fuller" means Robert F. Fuller.
"Fuller Transaction" means a transaction between Citadel and Fuller,
which is acceptable to Citadel in its complete discretion, whereby Citadel
acquires all of the shares of Company Stock owned by Fuller.
"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 8.6.
"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
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<PAGE> 6
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 12.3.
"Indemnitor" has the meaning specified in Section 12.3.
"Intellectual Property" means the call letters of each Station and all
of the copyrights, service marks, trademarks, trade names, patents and other
similar rights, including applications and registrations therefor, in which the
Company has any right, title or interest, including without limitation those
items listed on the Asset Schedule.
"Leaseholds" has the meaning specified in Section 3.11(e).
"Letter of Credit" has the meaning specified in Section 2.3.
"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.
"Maine Sub" means Fuller-Jeffrey Radio of Maine, Inc., a Maine
corporation.
"Material Contracts" has the meaning specified in Section 5.12.
"New England Office" has the meaning specified in Section 3.24.
"New England Sub" means Fuller-Jeffrey Radio of New England, Inc., a
Maine corporation.
"Net Working Capital" means the current assets of the Company
(including without limitation Cash and Accounts Receivable) as of the Closing
Date minus the current liabilities of the Company as of the Closing Date,
determined in accordance with GAAP, but adjusted in accordance with the last
sentence of this paragraph, plus the amount of any Bonuses paid prior to the
Closing Date but only to the extent any such payment reduced the current assets
of the Company without a corresponding reduction in the current liabilities of
the Company incurred in the ordinary course of business consistent with past
practices. In determining Net Working Capital there shall be deducted from the
current assets of the Company determined in accordance with GAAP all amounts
included therein that are attributable to (a) deferred taxes and (b) Excluded
Assets, and there shall be deducted from the current liabilities of the
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Company determined in accordance with GAAP all amounts included therein that are
attributable to (a) the current portion of Permitted Debt, (b) the current
portion of all indebtedness to be discharged as a condition to the obligations
of Citadel to proceed with the Closing, (c) accrued interest attributable to
either of the foregoing, (d) "deferred revenue current", and (e) Excluded
Assets.
"Net Working Capital Shortfall" means the amount, if any, by which
$2,500,000 exceeds Net Working Capital.
"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 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.
"Operating Subsidiaries" means, collectively, the Maine Sub and the New
England Sub.
"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.
"Permitted Debt" means the Company's Indebtedness for Borrowed Money to
the Company Lender.
"Permitted Encumbrances" means the Liens in favor of the Company Lender
as of the Closing Date, which secure the Permitted Debt.
"Permitted Exceptions" means those certain title exceptions which do
not affect the Real Property in any material respect and which are acceptable to
Citadel in its reasonable discretion.
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"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 of the Company, including without
limitation the personal property described on the Asset Schedule.
"Purchase Price" has the meaning specified in Section 2.2.
"Real Property" means all of the right, title and interest of the
Company in and to any real property of the Company, including without limitation
the real property described on the Asset Schedule.
"Real Property Leases" means all of the leasehold interests of the
Company pursuant to real property leases, including without limitation those
described on the Asset Schedule.
"Shares" has the meaning specified in Section 2.1.
"Stations" has the meaning set forth in the recitals to this Agreement.
"Stockholder's Disclosure Schedule" means Schedule 6 to this Agreement.
"Supplemental Financial Statements" has the meaning specified in
Section 5.9.
"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 12.5(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.
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SECTION 2
PURCHASE AND SALE OF SHARES; PURCHASE PRICE
2.1 Purchase and Sale of Shares. 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, the Stockholder
agrees to sell, assign and convey to Citadel, and Citadel agrees to purchase,
acquire and accept from the Stockholder, 14,999 shares of Company Stock (the
"Shares").
2.2 Purchase Price. The purchase price to be paid to the Stockholder
for the purchase of the Shares (the "Purchase Price") shall be (a) 37.5%
multiplied by (b) $63,500,000 minus (i) the aggregate amount of Indebtedness for
Borrowed Money of the Company as of the Closing Date (excluding any prepayment
penalty or premium payable to the Company Lender), (ii) the Net Working Capital
Shortfall and (iii) the amount by which the aggregate amount of Bonuses exceeds
the excess, if any, of Net Working Capital over $2,500,000. The Purchase Price
shall be paid at the Closing to the Stockholder in cash by wire transfer of
immediately available funds to an account designated by the Stockholder in
writing at least three days prior to the Closing Date.
2.3 Letter of Credit. Simultaneously with the execution of this
Agreement, Citadel shall deliver to the Stockholder an irrevocable letter of
credit in favor of the Stockholder, issued by BankBoston, N.A., in the amount of
$2,437,500 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 Chief Executive Officer of Citadel and the Stockholder certifying that
a Draw Condition has occurred. At the Closing, the Stockholder shall return the
original Letter of Credit to Citadel for cancellation.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
In connection with the purchase and sale of the Shares and in order to
induce Citadel to enter into and consummate the transactions contemplated by
this Agreement, the Stockholder makes the following representations and
warranties to Citadel, as of the date of this Agreement 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 and except as disclosed in
Stockholder's Disclosure Schedule):
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3.1 FJB.
(a) Organization and Qualification; Authority. FJB is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maine and has full power and authority to own its assets and
properties and to conduct the Business. FJB is qualified to do business in, and
is in good standing under the laws of, the State of California, and is not
required to be qualified to do business as a foreign corporation in any other
state. FJB has full power, authority and legal right and all necessary
approvals, permits, licenses and authorizations to own its properties and to
conduct the Business.
(b) Capitalization. The authorized capital stock of FJB
consists solely of 100,000 shares of Company Stock, of which 30,000 shares are
issued and outstanding and all of which are owned, beneficially and of record,
by the Stockholder and Fuller as described on Stockholder's Disclosure Schedule.
The issued and outstanding shares of Company Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. FJB does not have
outstanding any options, warrants, stock or other securities convertible or
exchangeable for any stock or other securities of FJB.
(c) Repurchase and Other Obligations. FJB is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its stock or other securities. Neither the Stockholder, Fuller,
FJB nor any other Person is entitled to any preemptive right, right of first
refusal or similar right with respect to any stock or other securities of FJB.
There are no agreements, arrangements or trusts between or for the benefit of
FJB, the Stockholder or Fuller with respect to the voting or transfer of stock
or other securities, or with respect to any other aspect of FJB's affairs. FJB
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.
(d) Subsidiaries. FJB does not own, of record or beneficially,
any capital stock or equity interest or investment in any Person other than the
Operating Subsidiaries, which are wholly owned subsidiaries of FJB.
3.2 Maine Sub.
(a) Organization and Qualification; Authority. The Maine Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Maine and has full power and authority to own its assets
and properties and to conduct the Business. The Maine Sub is qualified to do
business in, and is in good standing under the laws of, the State of New
Hampshire, and is not required to be qualified to do business as a foreign
corporation in any other state. The Maine 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.
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(b) Capitalization. The authorized capital stock of the Maine
Sub consists solely of 5,000 shares of Common Stock, par value $10.00 per share,
of which 990 shares are issued and outstanding and all of which are owned,
beneficially and of record, by FJB. The issued and outstanding shares of Common
Stock of the Maine Sub have been duly authorized and validly issued, and are
fully paid and nonassessable. The Maine Sub does not have outstanding any
options, warrants, stock or other securities convertible or exchangeable for any
stock or other securities of the Maine Sub.
(c) Repurchase and Other Obligations. The Maine Sub is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its stock or other securities. Neither FJB, the Maine
Sub nor any other Person is entitled to any preemptive right, right of first
refusal or similar right with respect to any stock or other securities of the
Maine Sub. There are no agreements, arrangements or trusts between or for the
benefit of the Maine Sub or FJB with respect to the voting or transfer of stock
or other securities, or with respect to any other aspect of the Maine Sub's
affairs. The Maine Sub 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.
(d) Subsidiaries. The Maine Sub does not own, of record or
beneficially, any capital stock or equity interest or investment in any Person.
3.3 New England Sub.
(a) Organization and Qualification; Authority. The New England
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Maine and has full power and authority to own its
assets and properties and to conduct the Business. The New England Sub is
qualified to do business in, and is in good standing under the laws of, the
State of New Hampshire, and is not required to be qualified to do business as a
foreign corporation in any other state. The New England 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.
(b) Capitalization. The authorized capital stock of the New
England Sub consists solely of 100,000 shares of Common Stock, par value $1.00
per share, of which 4,500 shares are issued and outstanding and all of which are
owned, beneficially and of record, by FJB. The issued and outstanding shares of
Common Stock of the New England Sub have been duly authorized and validly
issued, and are fully paid and nonassessable. The New England Sub does not have
outstanding any options, warrants, stock or other securities convertible or
exchangeable for any stock or other securities of the New England Sub.
(c) Repurchase and Other Obligations. The New England Sub is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its stock or other securities. Neither FJB,
the New England Sub nor any other Person is entitled to any preemptive right,
right of first refusal or similar right with respect to any
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<PAGE> 12
stock or other securities of the New England Sub. There are no agreements,
arrangements or trusts between or for the benefit of the New England Sub or FJB
with respect to the voting or transfer of stock or other securities, or with
respect to any other aspect of the New England Sub's affairs. The New England
Sub 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.
(d) Subsidiaries. The New England Sub does not own, of record
or beneficially, any capital stock or equity interest or investment in any
Person.
3.4 Authority. The Stockholder has the legal capacity to execute and
deliver this Agreement, to perform his covenants and agreements hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Stockholder and constitutes the valid and legally
binding agreement of the Stockholder, enforceable against him in accordance with
its terms.
3.5 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 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 or the
Stockholder is a party or by which the Company, the Stockholder, the Shares, or
any of the assets of the Company or the Stockholder is bound. Except for the FCC
Approval, compliance with the HSR Act and the consents disclosed in
Stockholder'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 Stockholder in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
3.6 Share Ownership. The Stockholder owns, beneficially and of record,
the Shares, free and clear of all Liens.
3.7 Financial Statements. The Stockholder has delivered to Citadel the
following financial statements of the Company: (a) the audited balance sheet as
of December 31, 1997 and the related audited statements of income and cashflow
for the year then ended; (b) the audited balance sheet as of December 31, 1998
and the related audited statements of income and cashflow for the year then
ended; (c) the balance sheet as of February 28, 1999 and the related statement
of income for the two months then ended; and (d) the monthly balance sheets and
income statements for each month in 1998 and the first two months of 1999. Each
of the foregoing financial statements (including in all cases the notes thereto,
if any) (i) is accurate in all material respects, (ii) is consistent in all
material respects with the books and records of the Company (which, in turn, are
accurate in all material respects), and (iii) fairly
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presents in all material respects the financial condition and results of
operations of the Company in accordance with GAAP (subject to (i) the lack of
footnote disclosure and (ii) other than with respect to year-end financial
statements, changes resulting from normal year-end audit adjustments),
consistently applied, as of the dates and for the periods set forth therein.
3.8 Absence of Certain Changes. Since December 31, 1998, there has not
been any of the following with respect to the Company or any of the Stations:
(a) material adverse change in the 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; (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; or (h) dividend or other distribution
(of Cash or any other asset of the Company) declared, paid or made to the
Stockholder or Fuller in respect of their equity in the Company.
3.9 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 and has paid all Taxes (including without limitation
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 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, 1998, the Company has not incurred
any liability for Taxes other than in the ordinary course of business.
3.10 Asset Schedule; Debt Schedule. The Asset Schedule includes
complete and accurate (a) listings of all Real Property; (b) listings of all
Personal Property having a value of $1,000 or more; (c) descriptions of all Real
Property Leases and Contracts, none of which requires any consent of third
parties in connection with the transactions contemplated hereby; (d)
descriptions of all of the Intellectual Property; and (e) listings of all of the
FCC Licenses,
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all of the foregoing of which will, as of the Closing, be owned and held by the
Company as reflected in the Asset Schedule. The Asset Schedule contains a
complete and accurate list of all of the Stations, and specifies which Operating
Subsidiary operates each Station. The Debt Schedule is a complete and accurate
list of all of the Company's Indebtedness for Borrowed Money as of December 31,
1998 and includes the names of the holders of such debt and a list of all
documents governing or in any way related to such debt (true and complete copies
of which have been delivered to Citadel). As of the date of this Agreement, no
additional Indebtedness for Borrowed Money has been incurred, and as of the date
of the Closing not more than $600,000 of additional Indebtedness for Borrowed
Money will have been incurred, by the Company since December 31, 1998. All of
such debt can be prepaid on the terms described in the Debt Schedule, including
the terms of any prepayment penalties and premiums. Upon the payment in full of
such debt, all Liens secured in connection therewith will be released.
3.11 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. The Assets are now owned by the Company free and clear of all Liens. The
Assets will, as of the Closing, be owned by the Company free and clear of all
Liens other than the Permitted Encumbrances.
(b) Condition. The Personal Property is structurally sound, in
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 pursuant to the insurance policies summarized in Stockholder's
Disclosure Schedule.
(d) Sufficiency of Assets. The Assets include all of the
assets, which are sufficient in nature, condition and quantity, necessary to
permit Citadel 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, 1998, removed, or permitted the
removal of, any material item of Personal Property from any Station other than
removals in the ordinary course of business which were not done in contemplation
of the transactions contemplated by this Agreement.
(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
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the type of facility located on the Leaseholds. The Company will as of the
Closing have a valid leasehold interest in each of the Leaseholds.
(ii) None of the Leaseholds is subject to any
covenant or restriction preventing or limiting in any respect the consummation
of the transactions contemplated hereby. The Company's right, title and interest
in and to the Leaseholds will at the Closing be held by the Company free and
clear of all Liens other than the Permitted Encumbrances.
(iii) The use for which the Leaseholds are zoned
permits the use thereof for the Business consistent with past practices. The use
and occupancy of the Leaseholds by the Company are in compliance in all material
respects with all regulations, codes, ordinances and statutes applicable to the
Company and the Business, 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 Stockholder, no facts relating to any other
party, that would prevent the Leaseholds from being occupied and used by 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 any condition that with notice or the passage
of time or both would constitute such a default, and the Company 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 the Company, and to the best of the knowledge
of the Stockholder, 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 the Company 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 the Stations.
(f) Real Property.
(i) The Asset Schedule contains an accurate
description of the location of each parcel of the Real Property and the type of
facility located on each such parcel. The Company will as of the Closing have
good and marketable title to the Real Property, in fee simple, subject only to
the Permitted Encumbrances and the Permitted Exceptions.
(ii) None of the Real Property is subject to any
covenant or restriction preventing or limiting in any respect the consummation
of the transactions
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contemplated hereby. The Company's right, title and interest in and to the Real
Property will at the Closing be held by the Company free and clear of all Liens
except the Permitted Encumbrances and the Permitted Exceptions.
(iii) The use for which the Real Property is zoned
permits the use thereof for the Business consistent with past practices. The use
and occupancy of the Real Property by the Company are in compliance in all
material respects with all regulations, codes, ordinances and statutes
applicable to the Company and the Business, 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 condemnation proceedings or eminent
domain proceedings of any kind pending or, to the best of the knowledge of the
Stockholder, threatened against the Real Property.
(v) All of the Real Property is occupied under a
valid and current certificate of occupancy or similar permit. There are no facts
that would prevent the Real Property from being occupied and used by Citadel
after the Closing Date in the same manner as immediately prior to the Closing.
(vi) The Real Property constitutes all of the real
property which is owned by the Company and which is or will prior to Closing be
used in the operation of the Stations.
3.12 Contractual and Other Obligations. Set forth in the 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 Stockholder, 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 or true, correct and complete copies of all Contracts have been
provided to Citadel as of the date of this Agreement.
3.13 Compensation. Set forth in Stockholder'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 $15,000 and their respective
positions, job categories and salaries. At the Closing, Stockholder shall
deliver to Citadel a list of all employees of the Company. 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
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will receive any increase in compensation or benefits or any ownership interest
in the Company, Citadel, the Business or Citadel's business. 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.
3.14 Employee Benefit Plans.
(a) The Company does not maintain or sponsor, nor is it
required to make contributions to or to pay benefits from, 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, or who formerly worked, at any Station. None of
the plans, funds, policies, programs, arrangements or understandings of the
Company is a "multiemployer plan" (within the meaning of Section 3(37) of
ERISA). Neither the Company nor any ERISA affiliate of the Company has ever
contributed to or had the obligation to contribute to any multiemployer plan.
Stockholder's Disclosure Schedule fully discloses all of the plans, funds,
policies, programs, arrangements or understandings, whether oral or in writing,
sponsored or maintained by the Company pursuant to which any employee or former
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 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 requirements of
law have been observed with respect to the establishment, operation and, if
applicable, the termination thereof, and all applicable reporting and disclosure
requirements have been timely satisfied; (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; (D) any such plan represented by the Company to a
"qualified" retirement plan satisfies, in both form and operation, the
applicable requirements of Section 401(a) of the Code; and (E) any such plan may
be terminated at any time without material liability resulting from such action.
(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
complied with any applicable notice and continuation requirements of Section
4980B of the Code and the regulations thereunder.
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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, or the terms and conditions of
employment, wages (including overtime compensation) and hours of, the Company.
The Company 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 Company or 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. The Company is not
bound by any collective bargaining agreement with respect to its employees.
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 the Company or any Station.
3.16 Increases in Compensation or Benefits. Subsequent to December 31,
1998, 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 Stockholder'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 Stockholder's
Disclosure Schedule. No employee of the Company 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.
3.17 Insurance. The Company maintains the insurance policies summarized
in Stockholder'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 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.
3.18 Litigation; Disputes. There are no claims, disputes, actions,
suits, investigations or proceedings pending or threatened against or affecting
the Company, the Shares or any Station or that is reasonably likely to prevent
or hinder the consummation of the transactions contemplated hereby and, to the
best of the knowledge of the Stockholder, there is no basis
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for any such claim, dispute, action, suit, investigation or proceeding. The
Stockholder 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.
3.19 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.
3.20 Trade Liabilities. The Trade Liabilities do not, and as of the
Closing Date will not, exceed the Trade Receivables.
3.21 Environmental.
(a) Prior to the execution of this Agreement, the Company has
provided to Citadel a true and correct copy of all environmental site
assessments, studies, tests, reports and communications relating to the Real
Property and Leaseholds.
(b) To the best of the knowledge of the Stockholder, (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 and (ii) there is not constructed, placed, deposited, stored,
disposed of, nor located on any of the Real Property or 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) To the best of the knowledge of the Stockholder, no
structure, improvements, equipment, fixtures, activities or facilities located
on the Real Property or any of the Leaseholds uses Hazardous Materials except
those used in the ordinary course of the Business and in compliance with
applicable Environmental Laws.
(d) 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 Stockholder 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.
(e) 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.
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(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 Stockholder, is there any basis for any such
Environmental Claims.
3.22 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
Stockholder 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 Stockholder'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 Stockholder'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 Stockholder, 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 the
FCC Approval, 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. 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.
3.23 Intellectual Property. The use of the Intellectual Property in
connection with the operation of the Stations or otherwise by the Company does
not infringe upon the proprietary rights of any other Person. Subject to the
Permitted Encumbrances, 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 Stockholder 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
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rights to any of the call letters, copyrights, trademarks, trade names or other
similar rights with regard to any of the Intellectual Property.
3.24 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 and/or in the Company's offices in Newburyport, Massachusetts (the
"New England Office") and in Auburn, California (the "California Office");
provided, however, that any such books and records located in the Maine Office
and the California Office shall be delivered to the Stations or to Citadel (as
Citadel may direct) at or prior to the Closing. The Company's minute books and
stock ledgers accurately reflect all actions taken by the Company's board of
directors and stockholders, including all issuances and transfers of Company
Stock and capital stock of the Operating Subsidiaries. Stockholder's Disclosure
Schedule lists all of the current officers and directors of the Company. At the
Closing, the Company's minute books and stock ledgers shall be delivered to
Citadel.
3.25 Related Party Obligations. 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.
3.26 Year 2000 Compliance. The Company has made, and will on a
continuing basis make, such investigations and has obtained or will obtain such
certifications from suppliers as are practicable with respect to material items
of software and electronic hardware used by the Company and which the Company
reasonably anticipates could, if they failed to operate correctly, have a
material adverse effect on the Business. Based on the foregoing, the Company has
no reason to believe that such software and hardware will not be able to
accurately process date/time data (including, but not limited to, calculating,
comparing and sequencing) from, into, and between the twentieth and twenty-first
centuries, and the years 1999 and 2000 and leap year calculations to the extent
that other information technology, used in combination with the information
technology being acquired, properly exchanges date/time data with it.
3.27 Disclosure. To the best of the knowledge of the Stockholder, no
representation or warranty made under this Section 3 and none of the information
furnished by the Stockholder 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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SECTION 4
REPRESENTATIONS AND WARRANTIES OF CITADEL
In connection with the purchase and sale of the Shares and in order to
induce the Stockholder to enter into and consummate the transactions
contemplated by this Agreement, Citadel makes the following representations and
warranties to the Stockholder as of the date of this Agreement 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):
4.1 Organization and Qualification; Authority. Citadel is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has full power and authority (a) to own its assets and
properties and to conduct its business and (b) to enter into this Agreement and
to consummate the transactions contemplated hereby. 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 action on the
part of Citadel. This Agreement has been duly executed and delivered by Citadel
and constitutes the valid and legally binding agreement of Citadel, enforceable
against it in accordance with its terms.
4.2 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 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 its assets is bound. Except for the FCC Approval,
compliance with the HSR Act 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 Citadel
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
4.3 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.
4.4 Disclosure. To the best knowledge of Citadel, no representation or
warranty made under this Section 4 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
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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 STOCKHOLDER
From and after the date of this Agreement and until the Closing, the
Stockholder covenants and agrees to (a) take the actions set forth in Sections
5.1, 5.2 (second and third sentences only), 5.11 and 5.12 and, insofar as the
assumption of certain costs as stated therein, Sections 5.14, 5.15 and 5.16; and
(b) cause the Company (to the extent within the Stockholder's control) to take
the actions set forth in Sections 5.1 through 5.16:
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 (including without limitation Indebtedness for Borrowed Money and other
long-term debt and capitalized lease obligations) on a timely basis so that (a)
the Obligations of the Company existing as of the Closing Date consist solely of
(i) current liabilities and obligations under executory contracts and
commitments which are reasonable and customary in the radio broadcasting
industry and (ii) Permitted Debt; (b) Permitted Debt does not exceed
$15,800,000; and (c) Net Working Capital is not less than $2,500,000. Not less
than five business days before the Closing Date, the Stockholder shall deliver
to Citadel a payoff letter from the Company Lender with respect to the Permitted
Debt. Such payoff letter shall be in form and substance satisfactory to Citadel
and shall include (x) the amount of Permitted Debt due as of the Closing Date,
(y) wire instructions for the payment thereof and (z) a statement that all
Permitted Encumbrances will be released immediately upon the payment in full of
such Permitted Debt (and a copy of all release documents shall be attached to
the payoff letter).
5.3 Access. Afford Citadel and its authorized representatives, upon
reasonable notice, reasonable access during normal business hours to the
Stations and the Stations' employees, and permit Citadel and its 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. Operate the Business and the Stations
in the ordinary course, consistent with past practices, and 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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shall require the Company or the Stockholder to expend money in fulfillment of
the 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 Citadel the books, records, tax
returns, leases, contracts and other documents or agreements material to the
Stations as Citadel or its 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; provided, however,
that such items may be accrued (rather than paid) in the ordinary course of
business consistent with the Company's past practices.
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 Supplemental Financial Statements. Provide Citadel with copies of
the monthly unaudited income statements and balance sheets applicable to the
Stations prepared by the Company in the ordinary course of business commencing
with the month ended March 31, 1999 until Closing (collectively, the
"Supplemental Financial Statements"). The Stockholder shall provide such
Supplemental Financial Statements to Citadel promptly upon such Supplemental
Financial Statements becoming available to the Company. The Supplemental
Financial Statements shall be subject to the representations and warranties as
set forth in Section 3.7.
5.10 Further Information. Furnish to Citadel such financial (including
tax), legal and other information with respect to the Company, the Business and
the Stations as Citadel or its representatives may from time to time reasonably
request.
5.11 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
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material respect, any agreement, covenant, representation or warranty made by
the Stockholder in this Agreement.
5.12 Consents. Exercise all reasonable efforts to obtain, prior to the
Closing, the consent and approval (in a form reasonably approved by Citadel) 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 Stockholder's Disclosure Schedule and requiring such
consent. If any such consent or approval is not obtained, the Stockholder 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
Stockholder to obtain any consent with respect to a Contract identified as a
"Material Contract" on Stockholder's Disclosure Schedule (collectively, the
"Material Contracts"), if alternative arrangements are not satisfactory to
Citadel. The Stockholder 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 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 Citadel at the Closing an accurate
schedule of Trade Liabilities and Trade Receivables existing as of the Closing.
The Stockholder shall exercise reasonable efforts to minimize the amount of
additional Trade Liabilities incurred after the date of this Agreement.
5.14 Phase I Site Assessments and Other Reports. Perform or commission
Phase I Site Assessments of the Real Property and such other studies, tests or
reports of the Real Property and Leaseholds as Citadel and/or its lenders may
reasonably require and provide copies of the written reports and/or results to
Citadel promptly after they become available to the Company. Such assessments,
studies, tests and reports shall be performed by an environmental company
reasonably acceptable to Citadel and its lenders and at the cost and expense of
the Stockholder. If any of the assessments, studies, tests or reports indicate
that any Real Property contains one or more conditions of Environmental
Noncompliance, the Stockholder shall promptly commence remedial action to cure
the conditions, and shall cure the conditions, prior to Closing (at the cost and
expense of the Stockholder).
5.15 Title Insurance and Surveys. Cause each parcel of the Real
Property to be surveyed by a registered professional surveyor (who shall be
reasonably acceptable to Citadel) and the Stockholder shall cause such ALTA
surveys (which shall be in form satisfactory to remove the standard survey
exception from the Owner's and Mortgagee's title insurance
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policies) to be delivered to Citadel at least 10 days prior to the Closing.
One-half of the cost and expense of such surveys shall be borne by the
Stockholder and/or Fuller and the other half shall be borne by Citadel. In
addition, the Stockholder shall cooperate with Citadel in obtaining, at or prior
to Closing, title insurance on the Real Property from a nationally recognized
title insurance company acceptable to Citadel and its lenders in their
reasonable judgment. Not later than 30 days prior to Closing, the Stockholder
shall furnish to such title insurance company such documentation as may be
reasonably required by it to issue extended Owner's and Mortgagee's title
insurance policies which shall additionally be without exception as to the
capacity, authority and execution of instruments by the Company.
5.16 Real Property Expenses. Ensure that all matters of title clearance
and any necessary subdivision or lot-split are completed (at the cost and
expense of the Stockholder) to the satisfaction of Citadel. Citadel shall be
responsible for the cost of title insurance premiums.
SECTION 6
NEGATIVE COVENANTS OF THE STOCKHOLDER
From and after the date of this Agreement and until the Closing, the
Stockholder shall not take, or cause or permit to be taken, and shall cause the
Company (to the extent within the Stockholder's control) not to take, or cause
or permit to be taken, any of the following actions without the prior approval
of 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 (a) in the case of a sale, transfer or assignment,
(i) in the ordinary course of business and which does not materially interfere
with the operations of the Stations or (ii) obsolete assets which are replaced
with assets of equal or greater value; and (b) in the case of a conveyance,
mortgage, hypothecation, encumbrance or other Lien, where released at or prior
to the Closing; provided, however, that the Company shall be permitted to
transfer the Excluded Assets to the Stockholder.
6.2 Contracts. Amend, terminate or renew any of the Contracts, other
than in the ordinary course of business where prior written notice is provided
to Citadel.
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 of the Company (including
without limitation any additional Indebtedness for Borrowed Money) except in the
ordinary course of business in a manner consistent with past practices.
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6.5 Salary Increases. Increase any salary or make any other payments,
disbursements 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, (b) in accordance with the existing terms of contracts entered into
and disclosed to Citadel prior to the date of this Agreement or (c) as Bonuses.
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, including without limitation
an acquisition of all or substantially all of the assets of the Company or any
equity in the Company (including the Shares). Prior to the Closing, the
Stockholder shall not sell, assign, pledge or otherwise transfer any of the
Shares, and shall cause FJB not to sell, assign, pledge or otherwise transfer
any of the capital stock of the Operating Subsidiaries.
6.7 Issuance of Securities. Issue any shares of capital stock or any
other securities of FJB or any of the Operating Subsidiaries.
6.8 Dividends. Declare or pay any dividend or make any other
distribution (of Cash or any other asset of the Company) to the Stockholder or
Fuller in respect of their equity in the Company; provided, however, that the
Company shall be permitted to transfer the Excluded Assets to the Stockholder.
SECTION 7
COVENANTS OF CITADEL
From and after the date of this Agreement and until the Closing,
Citadel covenants and agrees with the Stockholder 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 the Stockholder 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 Citadel in this Agreement.
7.3 Consents. Obtain all third party consents identified on Citadel's
Disclosure Schedule.
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SECTION 8
ADDITIONAL COVENANTS OF THE PARTIES
8.1 Application for Transfer of Control. As promptly as practicable
after the date of this Agreement, and in no event later than 10 business days
after the date of this Agreement, the Stockholder shall cause the Company (to
the extent within the Stockholder's control) to file, together with Citadel, 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 Stockholder and Citadel shall each take all
necessary actions on its or his part to obtain the FCC Approval. Citadel shall
advance the filing fee for the FCC Application, and the Stockholder shall
reimburse Citadel for one-half of such filing fee at the Closing (or upon the
earlier termination of this Agreement). Subject to Section 14.7, 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.
8.2 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, Citadel is fully responsible for the
payment of, and shall pay at the Closing, the entire broker's fee due to Broker
in connection with the transactions contemplated hereby. 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.
8.3 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 Stockholder at his 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 such Station
attributable to the impairment of such assets.
8.4 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
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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.
8.5 Cooperation. During the seven-year period immediately following the
Closing, Citadel shall cooperate with the Stockholder in providing him all
information reasonably requested and permitting him 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 Stockholder. The Stockholder, 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
Stockholder of Citadel's intent to discard such records and (ii) the Stockholder
does not, within 10 days after receipt of such notice, retrieve such records
from Citadel's premises.
8.6 HSR Filing. As promptly as practicable after the date of this
Agreement, and in no event later than 10 business 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
the Stockholder and/or Fuller shall reimburse Citadel for one-half of such
filing fee at the Closing (or upon the earlier termination of this Agreement).
Subject to Section 14.7, 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.
8.7 Confidentiality. Each of the parties hereto will hold in
confidence, and will cause its respective directors, officers, employees,
accountants, counsel, financial advisors and other representatives and
Affiliates to hold in confidence, all non-public information received from
another party hereto.
8.8 Public Announcements. Citadel and the Stockholder will consult with
each other before issuing, and provide each other the opportunity to review,
comment upon and concur with, any press release or other public statements with
respect to the transactions contemplated by this Agreement, and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or the National Association of Securities Dealers, Inc. The parties
agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
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8.9 No Inconsistent Action. No party hereto shall take any action (a)
inconsistent with his or its obligations under this Agreement or (b) that would
hinder or delay the consummation of the transactions contemplated by this
Agreement.
8.10 Employment Agreements. Promptly following the Closing, Citadel
will offer employment with Citadel to Martin R. Lessard and Michael Sambrook on
terms no less favorable to such employees than those contained in the forms of
Employment Agreements set forth as Exhibits B and C hereto, respectively.
8.11 Completion of Capital Expenditure Projects. The Stockholder
covenants and agrees to cause (to the extent within the Stockholder's control)
the completion prior to the Closing Date of each of the items described on the
Capital Expenditures Schedule and to pay or perform or cause (to the extent
within the Stockholder's control) the Company prior to the Closing Date to pay
or perform all obligations or liabilities of the Company related to such items.
SECTION 9
THE CLOSING
9.1 Closing Date. The Closing shall occur on a date mutually selected
by the Stockholder 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, 600 Grant Street, 44th Floor, Pittsburgh, Pennsylvania 15219,
counsel for Citadel, or at such other time and place as the parties may agree in
writing.
9.2 Actions to be Taken at the Closing. The following actions shall be
taken at the Closing:
(a) Delivery of Purchase Price. Citadel shall deliver to the
Stockholder the Purchase Price in accordance with Section 2.2.
(b) 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 or him pursuant to the terms of this Agreement or as a
condition precedent to the other parties' obligations under this Agreement,
including without limitation the following:
(i) The Stockholder shall execute and deliver the
Closing Certificate.
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(ii) The Stockholder shall deliver stock certificates
evidencing the Shares, together with duly executed stock powers.
(iii) The Stockholder shall deliver his resignation
as an officer and director of FJB and each of the Operating Subsidiaries.
SECTION 10
CONDITIONS TO THE OBLIGATION OF THE STOCKHOLDER
The obligation of the Stockholder 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 him in his sole
discretion (other than those set forth in Sections 10.7 and 10.8):
10.1 Opinion of Citadel's Counsel. The Stockholder shall have received
an opinion of counsel for Citadel, dated the Closing Date, in form and substance
reasonably satisfactory to the Stockholder, as to the matters set forth on
Exhibit D hereto.
10.2 Representations, Warranties and Covenants. The representations and
warranties of Citadel contained herein shall be true and correct in all material
respects (determined without regard to materiality qualifications within all
such representations and warranties) 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 (determined without regard to
materiality qualifications within all such representations and warranties) at
and as of the time or times specified), and Citadel shall have complied with all
of its covenants contained herein; and Citadel shall have delivered to the
Stockholder a certificate to that effect, dated the Closing Date, signed by an
officer of Citadel.
10.3 No Litigation. No injunction relating to any action, suit or
proceeding against Citadel, the Company or the Stockholder relating to the
consummation of any of the transactions contemplated by this Agreement or any
action by any Governmental Authority shall have been issued.
10.4 Other Certificates. The Stockholder shall have received
certificates as to the good standing of Citadel in the States of Nevada, Maine
and New Hampshire, 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 reasonably satisfactory to the Stockholder, as the Stockholder 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 Citadel of this Agreement and the
transactions contemplated hereby shall have been duly and validly taken by
Citadel, and Citadel shall have delivered to the Stockholder 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 their
officers and employees in carrying out the terms and provisions of this
Agreement.
10.6 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.
10.7 FCC Approval. The FCC Approval shall have been obtained and shall
have become a Final Order.
10.8 HSR Clearance. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
SECTION 11
CONDITIONS TO THE OBLIGATION OF CITADEL
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 11.8 and 11.9):
11.1 Opinion of the Company's and the Stockholder's Counsel. Citadel
shall have received an opinion of counsel for the Company and the Stockholder
dated the Closing Date, in form and substance reasonably satisfactory to
Citadel, as to the matters set forth on Exhibit E hereto.
11.2 Representations, Warranties and Covenants. The representations and
warranties of the Stockholder contained herein shall be true and correct in all
material respects (determined without regard to materiality qualifications
within all such representations and warranties) 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 (determined without regard to
materiality qualifications within all such representations and warranties) at
and as of the time or times specified), and the Stockholder shall have complied
with all of his covenants contained herein; and the Stockholder shall have
delivered to Citadel a certificate to that effect, dated the Closing Date,
signed by him.
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11.3 No Litigation. No injunction relating to any action, suit or
proceeding against the Company, the Stockholder or Citadel 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 a certificate as
to the good standing of FJB and each of the Operating Subsidiaries as a
corporation in the States of Maine, New Hampshire and California (as the case
may be), 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
reasonably satisfactory to Citadel, as Citadel shall have reasonably requested
in connection with the transactions contemplated by this Agreement.
11.5 Acts to Performed. Each of the covenants, acts and undertakings of
the Stockholder to be performed on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed.
11.6 Lien Searches. The Stockholder shall have delivered to Citadel
lien (including UCC and tax) and judgment (including litigation) searches from
county and state agencies where Assets are located or the Business is conducted,
showing all Liens on the Assets, which searches shall be conducted not more than
30 days prior to the Closing. Such searches shall include the name of the
Company, the call letters of each of the Stations, predecessors of any of the
foregoing during the past five years and any other names under which the Company
has done business during the past five years. The Stockholder may cause such
searches to be prepared by a third party, in which case the Stockholder shall
not be responsible for any inaccuracies in such searches unless the Stockholder
has actual knowledge of their inaccuracy. Notwithstanding the foregoing, the
Stockholder shall remain responsible for satisfying any Lien (other than
Permitted Encumbrances) on the Assets and Shares even if such searches are
inaccurate.
11.7 Consents. All consents with respect to Material Contracts shall
have been obtained.
11.8 FCC Approval. The FCC Approval shall have been obtained and shall
have become a Final Order.
11.9 HSR Clearance. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
11.10 Transfer of Excluded Assets. Pursuant to binding agreements in
form and substance reasonably satisfactory to Citadel, the Excluded Assets,
together with all liabilities relating thereto, shall have been transferred to
the Stockholder.
11.11 Closing of Fuller Transaction. The closing of the Fuller
Transaction shall occur simultaneously with the Closing.
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11.12 Termination of Leases and Bock Agreement. The lease for the New
England Office and the lease for the California Office shall have been
terminated without expense or liability to the Company, and that certain
Retirement Agreement dated December 9, 1987 between the Company and Edward F.
Bock shall have been terminated with any expense or liability to the Company in
connection therewith being deemed to constitute Bonuses.
11.13 Cancellation of Options. The options held by Fuller and Martin R.
Lessard described in Section 3.1 of the Stockholder's Disclosure Schedule shall
have been cancelled and terminated without consideration from the Company.
11.14 Shareholder Approval Regarding Certain Payments. Shareholders of
FJB and of each of the Operating Subsidiaries owning more than 75% of the voting
power of all outstanding stock of each such respective entity, after disclosure
of all material facts, shall have approved the payment of any and all Bonuses or
other amounts payable pursuant to this Agreement or any agreement referred to in
this Agreement, the payment of which would otherwise constitute or be considered
a "parachute payment" under Code section 280G.
SECTION 12
INDEMNIFICATION
12.1 Indemnification by the Stockholder. Subject to the limitations and
procedures set forth in this Section 12, the Stockholder shall 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 (a) the breach
of any of the obligations or covenants of the Stockholder in this Agreement, (b)
the breach of any of the representations or warranties made by the Stockholder
in this Agreement or (c) any inaccuracy in the Closing Certificate.
12.2 Indemnification by Citadel. Subject to the limitations and
procedures set forth in this Section 12, Citadel shall indemnify and hold
harmless the Stockholder from and against any and all Damages sustained or
incurred by him, to the extent that such Damages are sustained or incurred by
reason of (a) the breach of any of the obligations or covenants of Citadel in
this Agreement or (b) the breach of any of the representations or warranties
made by Citadel in this Agreement.
12.3 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 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
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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, subject to the consent of the
Indemnitor which consent will not be unreasonably withheld or delayed, 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.
12.4 Survival.
(a) The Stockholder. Each of the representations and
warranties made by the Stockholder in this Agreement shall survive until April
30, 2001, notwithstanding any investigation at any time made by or on behalf of
Citadel, and upon such date such representations and warranties shall expire
except as follows: (i) the representations and warranties contained in Sections
3.9 and 3.14 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
contained in Sections 3.21 and 3.22 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 contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.11(a) and 3.11(f)(i) shall not expire
but shall continue indefinitely. No claim for the recovery of Damages may be
asserted by Citadel against the Stockholder after such representations and
warranties shall thus expire; provided,
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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 until April 30, 2001, notwithstanding
any investigation at any time made by or on behalf of the Stockholder, and upon
such date such representations and warranties shall expire, except that the
representations and warranties of Citadel contained in Sections 4.1 and 4.2
shall not expire but shall continue indefinitely. No claim for the recovery of
Damages may be asserted by the Stockholder 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.
12.5 Limitation of Stockholder's Liability. Notwithstanding anything in
this Agreement to the contrary, the obligation of the Stockholder to indemnify
Citadel shall be subject to the following:
(a) Threshold. Citadel shall not be entitled to recover
Damages pursuant to clause (b) of Section 12.1 (other than Damages arising by
reason of a breach of the representations and warranties made in Sections 3.1,
3.2, 3.3, 3.4, 3.5, 3.6, 3.11(a) and 3.11(f)(i)) until the aggregate of all such
Damages suffered by Citadel exceeds $200,000 (the "Threshold"); provided,
however, that once such aggregate exceeds the Threshold, Citadel may recover all
such Damages suffered since the Closing Date without regard to the Threshold.
(b) Ceiling. Citadel shall not be entitled to recover Damages
pursuant to Section 12.1 in excess of the sum of $20,000,000 less the aggregate
amount of Damages theretofore actually recovered by Citadel from Fuller.
(c) Exclusive Remedy. Except as provided in Section 13 and
except with respect to any claim for Damages relating to any intentional or
fraudulent breach of a representation, warranty or covenant of the Stockholder,
subsequent to the Closing, indemnification under this Section 12 shall be the
exclusive remedy of Citadel with respect to any legal, equitable or other claim
for relief based upon this Agreement.
(d) Exceptions. The limitations set forth in this Section 12.5
shall not apply with respect to any claim for Damages relating to any
intentional or fraudulent breach of a representation, warranty or covenant of
the Stockholder, nor shall there be any survival limitation for any such claim.
(e) Disclosed Exceptions. If Citadel in its sole discretion
waives the condition set forth in Section 11.2 to its obligation to consummate
the transactions contemplated by this Agreement by proceeding with the Closing
notwithstanding that the certificate delivered by the Stockholder with reference
to Section 11.2 sets forth one or more
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exceptions, Citadel shall not be entitled to recover Damages with respect to any
exception so disclosed in such certificate delivered by the Stockholder.
12.6 Limitation of Citadel's Liability. Notwithstanding anything in
this Agreement to the contrary, the obligation of Citadel to indemnify the
Stockholder shall be subject to the following:
(a) Threshold. The Stockholder shall not be entitled to
recover Damages pursuant to clause (b) of Section 12.2 (other than as a result
of a breach of the representations and warranties made in Sections 4.1 and 4.2)
until the aggregate of all such Damages suffered by him exceeds the Threshold;
provided, however, that once such aggregate exceeds the Threshold, the
Stockholder may recover all such Damages suffered since the Closing Date without
regard to the Threshold.
(b) Ceiling. The Stockholder shall not be entitled to recover
Damages pursuant to Section 12.2 in excess of $7,500,000.
(c) Exclusive Remedy. Except as provided in Section 13 and
except with respect to any claim for Damages relating to any intentional or
fraudulent breach of a representation, warranty or covenant of Citadel,
subsequent to the Closing, indemnification under this Section 12 shall be the
exclusive remedy of the Stockholder with respect to any legal, equitable or
other claim for relief based upon this Agreement.
(d) Exceptions. The limitations set forth in this Section 12.6
shall not apply with respect to any claim for Damages relating to any
intentional or fraudulent breach of a representation, warranty or covenant of
Citadel, nor shall there be any survival limitation for any such claim.
(e) Disclosed Exceptions. If Stockholder in his sole
discretion waives the condition set forth in Section 10.2 to his obligation to
consummate the transactions contemplated by this Agreement by proceeding with
the Closing notwithstanding that the certificate delivered by Citadel with
reference to Section 10.2 sets forth one or more exceptions, Stockholder shall
not be entitled to recover Damages with respect to any exception so disclosed in
such certificate delivered by Citadel.
SECTION 13
TERMINATION OF AGREEMENT; ADDITIONAL REMEDIES
13.1 Manner. This Agreement and the transactions contemplated hereby
may be terminated prior to completion of the Closing:
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(a) by mutual written consent of Citadel and the Stockholder;
(b) by either Citadel or the Stockholder upon providing
written notice to the other party at any time after April 30, 2000 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
Stockholder, if as of the time set for Closing any of the conditions in Section
11 (except Section 11.8 or 11.9) has not been satisfied or waived by Citadel in
writing, provided Citadel is not then in material breach of this Agreement;
(d) by the Stockholder, upon providing written notice to
Citadel, if as of the time set for Closing any of the conditions in Section 10
(except Section 10.7 or 10.8) has not been satisfied or waived by the
Stockholder in writing, provided the Stockholder is not then in material breach
of this Agreement and the condition set forth in Section 11.11 has been
satisfied;
(e) by the Stockholder, upon providing written notice to
Citadel, if Citadel fails to consummate the transactions contemplated hereby
after all conditions in Section 11 have been satisfied, provided the Stockholder
is not then in material breach of this Agreement;
(f) by Citadel, upon providing written notice to the
Stockholder, if the Stockholder fails to consummate the transactions
contemplated hereby after all conditions in Section 10 have been satisfied,
provided Citadel is not then in material breach of this Agreement;
(g) by Citadel or the Stockholder upon denial by the FCC of
the FCC Application;
(h) by Citadel or the Stockholder 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; and
(i) by Citadel in the event a definitive agreement relating to
the Fuller Transaction (in form and substance acceptable to Citadel in its
complete discretion) and the Contribution Agreement are not executed and
delivered within two business days after the date of this Agreement or cease to
be in full force and effect at any time prior to the Closing.
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13.2 Additional Remedies.
(a) In the event of the termination of this Agreement by the
Stockholder pursuant to Section 13.1(d) or 13.1(e) (any such event being a "Draw
Condition"), the Stockholder 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 he 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 13.1, Citadel shall be
entitled to a return of, and the Stockholder shall return to Citadel, the
original Letter of Credit for cancellation. Upon the occurrence of a Draw
Condition, Citadel shall execute the joint certificate referenced in Section
2.3.
(b) The parties recognize and agree that Citadel has relied on
this Agreement and expended considerable effort and resources related to the
transactions contemplated hereby, that the rights and benefits conferred upon
Citadel herein are unique, and that damages may not be adequate to compensate
Citadel in the event the Stockholder improperly refuses to consummate the
transactions contemplated hereby. The parties therefore agree that Citadel shall
be entitled, at its option and in lieu of terminating this Agreement pursuant to
Section 13.1, to have this Agreement specifically enforced by a court of
competent jurisdiction in addition to all other remedies available at law or in
equity; provided, however, that Citadel may not specifically enforce this
Agreement if Citadel has previously terminated this Agreement and received the
original Letter of Credit.
(c) No person other than Citadel and Stockholder may rely upon
or assert any rights arising under or pursuant to this Agreement, including in
respect of Section 8.10. Citadel agrees that Stockholder shall have the right to
have the agreements of Citadel set forth in Section 8.10 specifically enforced
by a court of competent jurisdiction in addition to all other remedies available
at law or in equity.
SECTION 14
GENERAL
14.1 Survival of Representations and Warranties. Each representation
and warranty herein contained shall survive the Closing for the periods
described in Section 12.4, notwithstanding any investigation at any time made by
or on behalf of any party to this Agreement.
14.2 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 Nevada.
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14.3 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
7201 West Lake Mead Boulevard
Suite 400
Las Vegas, Nevada 89128
Attn: Lawrence R. Wilson
Fax: (702) 804-5936
With copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street, 44th Floor
Pittsburgh, Pennsylvania 15219
Attn: Bryan D. Rosenberger, Esq.
Fax: (412) 566-6099
To the Stockholder: 10940 Sunrise Ridge Circle
Auburn, California 95603
Attn: Joseph N. Jeffrey, Jr.
Fax: (530) 887-9040
With copies to: Nutter McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
Attn: Michael J. Bohnen, Esq.
Fax: (617) 973-9748
and
Fuller-Jeffrey Broadcasting Companies, Inc.
10940 Sunrise Ridge Circle
Auburn, California 95603
Attn: Robert F. Fuller
Fax: (530) 887-9040
and
Choate, Hall & Stewart
Exchange Place
Boston, MA 02109-2891
Attn: Andrew L. Nichols, Esq.
Fax: (617) 248-4000
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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.
14.4 Entire Agreement. This instrument, together with the Contribution
Agreement, supersede all prior communications, understandings and agreements of
or among the parties with respect to the subject matter of this Agreement and
contain the entire agreement among the parties with respect to the transactions
contemplated by this Agreement. Except as otherwise set forth in this Agreement
and in the Contribution Agreement, there are no other representations,
warranties or covenants of any party hereto with respect to the subject matter
of this Agreement.
14.5 Headings. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
14.6 Schedules and Exhibits. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
14.7 Expenses. Each party shall bear its or his own costs and expenses
incurred by it or him in connection with the transactions contemplated by this
Agreement; provided, however, that the Stockholder shall bear all of the actual
out-of-pocket costs and expenses incurred by the Company in connection with the
transactions contemplated hereby.
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 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 of this Agreement at any
time thereafter.
14.10 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 or his 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.
14.11 Prior Control. Until the Closing, the Company shall maintain
control of each Station.
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14.12 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.
14.13 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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
/s/ Joseph N. Jeffrey, Jr.
--------------------------------
Joseph N. Jeffrey, Jr.
CITADEL COMMUNICATIONS CORPORATION
By: /s/ Lawrence R. Wilson
----------------------------
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Index of Schedules and Exhibits
Schedule 1 - Stations
Schedule 2 - Asset Schedule
Schedule 3 - Citadel's Disclosure Schedule
Schedule 4 - Debt Schedule
Schedule 5 - Excluded Assets Schedule
Schedule 6 - Stockholder's Disclosure Schedule
Schedule 7 - Capital Expenditures Schedule
Exhibit A - Letter of Credit
Exhibit B - Form of Employment Agreement for Martin R. Lessard
Exhibit C - Form of Employment Agreement for Michael Sambrook
Exhibit D - Form of Opinion of Counsel for Citadel
Exhibit E - Form of Opinion of Counsel for the Company and the Stockholder
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of these schedules and exhibits to the Securities and
Exchange Commission upon request.]
