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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) December 17, 1999
Citadel Broadcasting Company
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(Exact Name of Registrant as Specified in its Charter)
Nevada
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(State or 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
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(Registrant's Telephone Number, Including Area Code)
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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. In addition, any statements that refer to
expectations or other characterizations of future events or circumstances are
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 December 23, 1999, Citadel Broadcasting completed its acquisition
of all the equity interests of Caribou Communications Co. from CAT
Communications, Inc. and Desert Communications III, Inc., the two former
equity holders of Caribou Communications. At the time of the closing,
Caribou Communications was the licensee, and the owner and operator, of
radio stations KATT-FM, KYIS-FM, KCYI-FM, KNTL-FM and WWLS-AM serving the
Oklahoma City, Oklahoma market. Citadel Broadcasting intends to continue
operating these stations.
The aggregate purchase price was approximately $61.5 million, which amount
includes the repayment of approximately $12.5 million of indebtedness of Caribou
Communications. Of the purchase price, approximately $56.0 million was paid in
cash at the time of closing, $250,000 is being held to secure certain
obligations of the sellers under the purchase agreement and the remainder was
evidenced by promissory notes of Citadel Broadcasting, which bear interest at
5.47% per annum. The principal balances of the promissory notes, together with
accrued and unpaid interest thereon, were paid on January 4, 2000. The cash
amount paid at closing and the amounts needed to pay the promissory notes were
borrowed under Citadel Broadcasting's credit facility with Credit Suisse First
Boston, as administrative agent, and Credit Suisse First Boston, Bank of
America, N.A., Bank of Montreal, The Bank of New York, Bank of Nova Scotia, The
Chase Manhattan Bank, Compagnie Financiere De Cic Et De L'Union Europeenne,
FINOVA Capital Corporation, First Union National Bank and Fleet National Bank,
as lenders. See Item 5 of this report for a description of Citadel
Broadcasting's credit facility.
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ITEM 5. OTHER EVENTS
New Credit Facility
On December 17, 1999, Citadel Broadcasting and its parent, Citadel
Communications Corporation, entered into a credit facility (the "Credit
Facility") provided pursuant to a Credit Agreement of even date therewith, by
and among Citadel Broadcasting and Citadel Communications, Credit Suisse First
Boston, as Lead Arranger, Administrative Agent and Collateral Agent, and Bank of
America, N.A., Bank of Montreal, The Bank of New York, Bank of Nova Scotia,
Credit Suisse First Boston, The Chase Manhattan Bank, Compagnie Financiere De
Cic Et De L'Union Europeenne, FINOVA Capital Corporation, First Union National
Bank and Fleet National Bank, as lenders (the "Credit Agreement").
The Credit Agreement provides for the making to Citadel Broadcasting,
by the lenders of (a) term loans at any time during the period from December 17,
1999 to December 15, 2000, in an aggregate principal amount not in excess of
$250.0 million (together with the additional term loans described below, the
"Term Loan Facility") and (b) revolving loans at any time and from time to time
prior to March 31, 2007 (subject to extension to December 31, 2007), in an
aggregate principal amount at any one time outstanding not in excess of $150.0
million (together with the additional revolving loans described below, the
"Revolving Credit Facility"). Of the $150.0 million which is available in the
form of revolving loans under the Revolving Credit Facility, (x) until March 31,
2000, up to $75.0 million of the Revolving Credit Facility may be made available
in the form of letters of credit, and (y) after March 31, 2000, up to $50.0
million of the Revolving Credit Facility may be made available in the form of
letters of credit. In addition, Citadel Broadcasting may request up to $300.0
million in additional term loans, which term loans may be made at the sole
discretion of the lenders. Of such additional $300.0 million amount, at the
request of Citadel Broadcasting, up to $100.0 million may be in the form of an
increase in the $150.0 million revolving credit commitment. The lenders are
under no obligation whatsoever to make such additional $300.0 million available,
whether in the form of term loans, revolving loans or otherwise. Citadel
Broadcasting and Citadel Communications are currently in compliance in all
material respects with the terms of the Credit Agreement.
Term Loans. Draws may be made under the Term Loan Facility solely to
(a) refinance Citadel Broadcasting's credit facility with FINOVA Capital
Corporation (the "Finova Credit Facility"), (b) to finance a portion of the
acquisitions currently planned by Citadel Broadcasting, (c) to finance a portion
of future permitted acquisitions, and (d) to pay related fees and expenses. The
Term Loan Facility must be repaid as follows:
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Repayment Date Percentage of Aggregate Amount of Term
- -------------- Loans Outstanding on December 17, 2002
--------------------------------------
March 31, 2003 3.75%
June 30, 2003 3.75%
September 30, 2003 3.75%
December 31, 2003 3.75%
March 31, 2004 5.00%
June 30, 2004 5.00%
September 30, 2004 5.00%
December 31, 2004 5.00%
March 31, 2005 5.00%
June 30, 2005 5.00%
September 30, 2005 5.00%
December 31, 2005 5.00%
March 31, 2006 5.00%
June 30, 2006 5.00%
September 30, 2006 5.00%
December 31, 2006 5.00%
March 31, 2007 6.25%
June 30, 2007 6.25%
September 30, 2007 6.25%
December 31, 2007 6.25%
In addition, the Credit Agreement requires that the following mandatory
prepayments be made under the Term Loan Facility:
(a) 100% of the cash proceeds in excess of $5.0 million (net of
transaction expenses, reserves and amounts used to repay indebtedness secured by
an asset being sold, hereinafter referred to as "Net Cash Proceeds") of a sale
of assets of Citadel Broadcasting (an "Asset Sale"), which proceeds are not
reinvested within 330 days of the Asset Sale, in productive assets of a kind
then used or usable in the business of Citadel Broadcasting, must be used to
prepay outstanding term loans and/or to permanently reduce the commitment of the
lenders to make revolving loans (the "Revolving Credit Commitment");
(b) if at the time of the issuance of equity securities by Citadel
Communications or Citadel Broadcasting (each an "Equity Issuance"), the
Consolidated Leverage Ratio (the ratio of total debt to consolidated EBITDA, and
for any rolling four-quarter period in which a permitted acquisition or Asset
Sale occurred, determined on a pro forma basis as if such permitted acquisition
or disposition had occurred at the beginning of such rolling four-quarter
period) is greater than 5.00 to 1.00, the lesser of (x) 50% of Net Cash Proceeds
received from such Equity Issuance, and (y) the amount of such Net Cash Proceeds
as shall be necessary to reduce the Consolidated Leverage Ratio to 5.00 to 1.00,
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must be used to prepay outstanding term loans and/or to permanently reduce the
Revolving Credit Commitment;
(c) beginning in calendar year 2001, if the Consolidated Leverage Ratio
as of the end of the immediately preceding fiscal year is greater than 5.00 to
1.00, an amount equal to 50% of excess cash flow for such fiscal year then
ended, must be used to prepay the term loans or to reduce the Revolving Credit
Commitment; and
(d) if at the time of the issuance of debt by Citadel Communications or
Citadel Broadcasting (each a "Debt Issuance"), the Consolidated Leverage Ratio
is greater than 5.00 to 1.00, 100% of the Net Cash Proceeds received from such
Debt Issuance must be used to prepay outstanding term loans and/or to
permanently reduce the Revolving Credit Commitment.
All of the foregoing required prepayments shall be applied as follows:
o first, pro rata against the remaining scheduled installments of
principal due in respect of term loans until all such principal
is paid in full, and
o thereafter, to permanently reduce the Revolving Credit Commitment
and, if necessary, prepay revolving loans and/or cash
collateralize letters of credit to the extent that letter of
credit exposure would exceed the total Revolving Credit Commitment
after giving effect to any such reduction.
Revolving Loans. Citadel Broadcasting used the proceeds of a $71.0
million revolving credit loan under the Credit Facility to refinance Citadel
Broadcasting's then existing $68.0 million of revolving credit loans under the
FINOVA Credit Facility (the "FINOVA Indebtedness") and to pay transaction
expenses incurred in connection with entry into the Credit Agreement and the
refinancing of the FINOVA Indebtedness (the "Refinancing"). Additional draws may
be made under the Revolving Credit Facility, subject to the satisfaction of
certain conditions, for general corporate purposes, including for working
capital, capital expenditures, and to finance a portion of certain acquisitions
contemplated by Citadel Broadcasting and for certain future permitted
acquisitions by Citadel Broadcasting. The Revolving Credit Facility must be paid
in full on or before March 31, 2007 (subject to extension until December 31,
2007). In addition, the Credit Agreement requires that the following mandatory
prepayments be made under the Revolving Credit Facility:
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(a) 100% of Net Cash Proceeds which are not reinvested within 330 days
of an Asset Sale, in productive assets of a kind then used or usable in the
business of Citadel Broadcasting, must be used to prepay outstanding term loans
and/or to permanently reduce the Revolving Credit Commitment;
(b) if at the time of an Equity Issuance, the Consolidated Leverage
Ratio is greater than 5.00 to 1.00, the lesser of (a) 50% of Net Cash Proceeds
received from such Equity Issuance, and (b) the amount of such Net Cash Proceeds
as shall be necessary to reduce the Consolidated Leverage Ratio to 5.00 to 1.00,
must be used to prepay outstanding term loans and/or to permanently reduce the
Revolving Credit Commitment;
(c) beginning in calendar year 2001, if the Consolidated Leverage
Ratio as of the end of the immediately preceding fiscal year is greater than
5.00 to 1.00, an amount equal to 50% of excess cash flow for such fiscal year
then ended, must be used to prepay the term loans or to reduce the Revolving
Credit Commitment; and
(d) if at the time of a Debt Issuance, the Consolidated Leverage Ratio
is greater than 5.00 to 1.00, 100% of the Net Cash Proceeds received from such
Debt Issuance must be used to prepay outstanding term loans and/or to
permanently reduce the Revolving Credit Commitment.
All of the foregoing required prepayments shall be applied as follows:
o first, pro rata against the remaining scheduled installments of
principal due in respect of term loans until all such principal
is paid in full, and
o thereafter, to permanently reduce the Revolving Credit Commitment
and, if necessary, prepay revolving loans and/or cash
collateralize letters of credit to the extent that letter of
credit exposure would exceed the total Revolving Credit Commitment
after giving effect to any such reduction.
At Citadel Broadcasting's option, any portion of the revolving loans which has
been prepaid or repaid may be reborrowed, and the maximum amount of the
Revolving Credit Commitment may be permanently reduced.
Letter of Credit Facility. The letter of credit facility ("Letter of
Credit Facility"), which is a subfacility of the Revolving Credit Facility,
provides for the issuance of letters of credit to be used by Citadel
Broadcasting as security for the obligations of Citadel Broadcasting under
agreements entered into in connection with certain radio station acquisitions
and for any other purposes related to the business of Citadel Broadcasting. The
Letter of Credit Facility requires the payment by Citadel Broadcasting of a
fronting fee of 1/8 of 1% on the face amount of each
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outstanding letter of credit. Such fronting fee is payable quarterly in arrears
to the bank issuing the letter of credit. Citadel Broadcasting is also required
to pay to each revolving credit lender (through the Administrative Agent), on
the last day of each quarter, a letter of credit participation fee equal to such
lender's pro rata portion of the outstanding letters of credit multiplied by the
then applicable margin for LIBOR advances under the Credit Facility. Standard
issuance and drawing fees are also payable to the bank or banks issuing the
letters of credit. As of December 31, 1999, letters of credit in the aggregate
amount of approximately $20.4 million are issued and outstanding in connection
with pending radio station acquisitions.
Prepayments. Voluntary prepayments of the Credit Facility are permitted
without premium or penalty, subject to minimum notice requirements and minimum
prepayment requirements and the payment of any applicable LIBOR breakage fees.
Mandatory prepayments are described above under the headings "Term Loans" and
"Revolving Loans."
Interest Rates. The Credit Facility bears interest at a rate equal to
the applicable margin plus (a) the greater of
o the per annum rate of interest publicly announced from time to
time by Credit Suisse First Boston in New York, New York, as its
prime rate of interest (the "Prime Rate") and which may be changed
automatically without notice, as the Prime Rate changes, and
o the federal funds effective rate as in effect from time to time
plus 1/2 of 1%, and which may be changed automatically without
notice, as the federal funds effective rate changes (with the
greater of (a) or (b) being referred to herein as the "Alternate
Base Rate"), or
(b) at the written election of Citadel Broadcasting, at a rate determined by the
Administrative Agent to be the Adjusted LIBO Rate for the respective interest
period. The LIBO Rate is determined by reference to the British Bankers'
Association Interest Settlement Rates for deposits in dollars (as set forth by
the Bloomberg Information Service or an appropriate successor) for a period
equal to the interest period selected by Citadel Broadcasting. The Adjusted LIBO
Rate is the product of (x) the LIBO Rate and (y) a fraction, the numerator of
which is 1.00 and the denominator of which is 1.00 minus the eurocurrency
reserve requirements as prescribed by the Federal Reserve Board or other
governmental body, in effect from time to time. The applicable margins for the
Credit Facility are expected to range between 0% and 1.5% for the Alternate Base
Rate and 0.75% to 2.5% for the Adjusted LIBO Rate, depending on the Consolidated
Leverage Ratio from time to time. Except as otherwise provided with respect to
voluntary and mandatory prepayments, interest on loans bearing interest at the
Alternate Base Rate plus the applicable margin, will be payable quarterly in
arrears on the last business day of each quarter, and interest on loans bearing
interest at the Adjusted LIBO Rate plus the applicable margin, will be payable
on the last day of the interest period applicable to such loan (unless the
interest period is greater than 3 months, in which event interest shall be
payable at the end of each successive 3 month period during which such interest
period is in effect). The interest rate after a payment default shall, in the
case of a default in the payment of principal, be 2% in excess
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of the otherwise applicable interest rate, and, in the case of any other payment
default, be 2% in excess of the Alternate Base Rate plus the applicable margin
at such time.
Other Fees. Citadel Broadcasting is required to pay other customary
fees under the Credit Facility.
Security and Guarantee. Subject to permitted liens, the Credit Facility
is secured by:
(a) a first priority pledge on all of Citadel Broadcasting's capital
stock other than Citadel Broadcasting's 13-1/4% Exchangeable Preferred Stock,
(b) a first priority security interest in all the existing and
after-acquired property of Citadel Communications and Citadel Broadcasting,
including, without limitation, accounts, machinery, equipment, inventory, real
estate, general intangibles and investment property, and
(c) all proceeds of the foregoing.
The Credit Facility is also guaranteed by Citadel Communications.
Change of Control. The Credit Facility provides that a change in
control or ownership will be an event of default under the Credit Facility. A
change in control or ownership shall occur if:
(a) any person or group of persons acting in concert shall own more
than 35% of the common stock of Citadel Communications;
(b) a majority of the seats (other than vacant seats) on the board of
directors of Citadel Communications shall at any time be occupied by persons who
were neither (i) nominated by the board of directors of Citadel Communications
nor (ii) appointed by directors so nominated;
(c) any change in control (or similar event, however denominated) with
respect to Citadel Communications or Citadel Broadcasting shall occur under and
as defined in any indenture or agreement in respect of material indebtedness; or
(d) Citadel Communications shall cease to own, directly or indirectly,
100% of the issuing and outstanding voting equity interests of Citadel
Broadcasting.
Covenants. The Credit Facility contains customary restrictive
covenants, which, among other things, and with exceptions, limit the ability of
Citadel Broadcasting and Citadel Communications to incur additional indebtedness
and liens, enter into transactions with affiliates, make acquisitions other than
Permitted Acquisitions, pay dividends, redeem or repurchase capital stock, enter
into certain sale and leaseback transactions, consolidate, merge or effect asset
sales, issue additional equity, make capital expenditures, make investments,
loans or
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prepayments or change the nature of their business. Citadel Broadcasting and
Citadel Communications are also required to satisfy financial covenants which
will require Citadel Communications and Citadel Broadcasting to maintain
specified financial ratios and to comply with financial tests, including ratios
with respect to maximum leverage, minimum interest coverage and minimum fixed
charge coverage.
Permitted Acquisitions. A Permitted Acquisition is an
acquisition of (a) a radio station or radio stations (each a "Station"), or (b)
any business which is ancillary to the ownership or operation of a Station, or
(c) any business that is an internet service provider or ancillary to the
business of an internet service provider (provided that the aggregate
consideration for the acquisition of internet service providers or related
businesses shall not exceed $10.0 million). In addition, a Permitted Acquisition
is subject to pro forma compliance with the leverage, interest coverage and
fixed charge coverage ratios set forth below. All acquired assets will be
subject to a security interest in favor of the Administrative Agent for the
benefit of the lenders.
Maximum Leverage Test. The maximum leverage test requires that
Citadel Broadcasting and Citadel Communications not permit the ratio of (a)
their total debt as of the last day of the most recently ended quarter to (b)
their consolidated EBITDA, as adjusted for permitted acquisitions and
dispositions, for the rolling four-quarter period ending as of the last day of
such quarter, to be greater than the applicable ratio on that date. The
applicable ratios are as follows:
Period Ratio
- ------ -----
January 1, 2000 through March 31, 2000 7.25x
April 1, 2000 through June 30, 2000 7.00x
July 1, 2000 through September 30, 2000 6.75x
October 1,2000 through December 31, 2000 6.50x
January 1, 2001 through March 31, 2001 6.25x
April 1, 2001 through June 30, 2001 6.00x
July 1, 2001 through September 30, 2001 6.00x
October 1, 2001 through December 31, 2001 5.75x
January 1, 2002 through March 31, 2002 5.50x
April 1, 2002 through June 30, 2002 5.25x
July 1, 2002 through September 30, 2002 5.00x
October 1, 2002 through December 31, 2002 4.50x
Thereafter 4.00x
Minimum Interest Coverage Test. The minimum interest coverage
test requires that Citadel Broadcasting and Citadel Communications not permit
the ratio of (a) their consolidated EBITDA for any rolling four-quarter period
to (b) their consolidated interest expense for such period, to be less than the
applicable ratio on that date. The applicable ratios are as follows:
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Period Ratio
- ------ -----
January 1, 2000 through March 31, 2000 1.50x
April 1, 2000 through June 30, 2000 1.50x
July 1, 2000 through September 30, 2000 1.50x
October 1,2000 through December 31, 2000 1.50x
January 1, 2001 through March 31, 2001 1.75x
April 1, 2001 through June 30, 2001 1.75x
July 1, 2001 through September 30, 2001 1.75x
October 1, 2001 through December 31, 2001 2.00x
January 1, 2002 through March 31, 2002 2.00x
April 1, 2002 through June 30, 2002 2.25x
July 1, 2002 through September 30, 2002 2.25x
Thereafter 2.50x
Minimum Fixed Charges Coverage Test. The minimum fixed charges
coverage test requires that Citadel Broadcasting and Citadel Communications not
permit the ratio of (a) their consolidated EBITDA for any rolling four-quarter
period to (b) their fixed charges for such period to be less than 1.25 to 1.00.
Events of Default. The Credit Facility contains customary events of
default, including without limitation:
o breach of any representation or warranty and/or false or
misleading statements by Citadel Broadcasting or Citadel
Communications made in connection with the Credit Facility or
related documents;
o failure of Citadel Broadcasting to pay (a) when due under the
Credit Facility, all or any portion of the principal balance of
any loan or any reimbursement obligation with respect to letters
of credit or (b) within 5 business days after the same shall
become due and payable, any other of its obligations under the
Credit Facility (including interest obligations);
o failure of Citadel Broadcasting or Citadel Communications to
observe or perform (a) certain affirmative covenants or
agreements, specifically those pertaining to legal existence, use
of proceeds and notices of events of default, material litigation
and developments which have resulted in, or could reasonably be
expected to result in, a material adverse effect, and (b) negative
covenants;
o failure of Citadel Broadcasting or Citadel Communications to
observe or perform any other covenant or agreement contained in
the Credit Agreement or any other loan document which is not
remedied within 30 days after written notice thereof;
o certain defaults, including payment defaults, by Citadel
Broadcasting or Citadel Communications, under other agreements
relating to material indebtedness;
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o the insolvency of Citadel Broadcasting or Citadel Communications,
including the failure of Citadel Broadcasting or Citadel
Communications to generally pay debts as they become due;
o Citadel Broadcasting's or Citadel Communications' filing, or
consent to the filing against it, of a petition for relief or
reorganization or arrangement or any other petition in bankruptcy
or insolvency under the law of any jurisdiction or making of an
assignment for the benefit of creditors, or the appointment of a
custodian, receiver or trustee for Citadel Broadcasting or Citadel
Communications under certain circumstances;
o failure of Citadel Broadcasting or Citadel Communications to
discharge certain judgments against either of them;
o any security interest purported to be created by a loan document
entered into in connection with the Credit Facility shall cease to
be, or shall be asserted not to be, a valid, perfected, first
priority, security interest;
o existence of certain conditions which result in actual or
potential liability to Citadel Broadcasting or Citadel
Communications or any ERISA affiliate for its pension plan in an
amount in excess of $5.0 million;
o a change in control or ownership. See the discussion above under
the subheading "Change of Control;"
o failure of Citadel Communications' guaranty to remain in full
force and effect; and
o Citadel Communications' denial or disaffirmance of obligations
under its guaranty or its failure to make payment when due.
Upon the occurrence of an event of default, with certain limitations,
Citadel Broadcasting's and Citadel Communications' obligations under the Credit
Facility which are at that time outstanding may become accelerated.
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Additional Worcester Acquisition
On December 22, 1999, Citadel Broadcasting entered into an asset purchase
agreement with WBA, Inc. to acquire WWFX-FM serving the Worcester, Massachusetts
market for the purchase price of approximately $14.25 million in cash. The
closing of the transaction is subject to various conditions, including Federal
Communications Commission consent to the assignment of the station license to
Citadel Broadcasting. Although Citadel Broadcasting believes that the conditions
to closing are customary for transactions of this type, there can be no
assurance that such conditions will be satisfied.
Merger of Subsidiaries
On December 28, 1999, Citadel License, Inc. merged with and into Citadel
Broadcasting Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements. The following financial statements were previously
reported on Citadel Broadcasting Company's Current Report on Form 8-K
filed on December 10, 1999:
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CARIBOU COMMUNICATIONS CO.
Independent Auditors' Report
Balance Sheets as of December 31, 1997 and 1998
Statements of Operations for the years ended December 31, 1997 and 1998
Statements of Changes in Partners' Equity for the years ended December 31, 1997
and 1998
Statements of Cash Flows for the years ended December 31, 1997 and 1998
Notes to Financial Statements
The following financial statements are included in this report pursuant to Item
7(a):
CARIBOU COMMUNICATIONS CO.
Balance Sheets as of September 30, 1999 and 1998 (unaudited)
Statements of Operations for the nine months ended September 30, 1999 and 1998
(unaudited)
Statements of Changes in Partners' Equity for the nine months ended September
30, 1999 and 1998 (unaudited)
Statements of Cash Flows for the nine months ended September 30, 1999 and 1998
(unaudited)
Notes to Unaudited Financial Statements
(b) Pro Forma Financial Information. The following pro forma financial
information of Citadel Broadcasting Company and Subsidiary is included herein
pursuant to Item 7(b):
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30,
1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1999
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 Purchase Agreement dated August 23, 1999 by and among Cat
Communications, Inc., Desert Communications III, Inc. and Citadel
Broadcasting Company.
2.2 Amendment to Purchase Agreement dated December 22, 1999 by and among
Cat Communications, Inc., Desert Communications III, Inc. and Citadel
Broadcasting Company.
4.1 Credit Agreement dated as of December 17, 1999 among Citadel
Broadcasting Company, Citadel Communications Corporation, Citadel
License, Inc., Credit Suisse First Boston, as lead Arranger,
Administrative Agent and Collateral Agent, FINOVA Capital Corporation,
as Syndication Agent, First Union Securities, Inc. and Fleet National
Bank, as Co-Documentation Agents, and the lenders named therein
(incorporated by reference to Exhibit 4.1 to Citadel Communications
Corporation's Current Report on Form 8-K filed on January 6, 2000).
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BALANCE SHEETS (unaudited)
CARIBOU COMMUNICATIONS CO.
<TABLE>
<CAPTION>
September 30
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 321,063 $ 69,062
Accounts receivable, net of allowance for doubtful
accounts of $68,047 for 1999 and $80,093 for 1998 1,905,990 1,758,802
Prepaid expenses and other current assets 130,935 277,307
Deposit in escrow -- 350,000
----------- -----------
TOTAL CURRENT ASSETS 2,357,988 2,455,171
NET PROPERTY AND EQUIPMENT 1,905,007 1,525,079
OTHER ASSETS
Deposits 9,061 8,961
Intangible assets 15,680,035 13,654,571
----------- -----------
15,689,096 13,663,532
$19,952,091 $17,643,782
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 183,748 $ 329,738
Accrued expenses 737,869 487,995
Payroll taxes payable 58,292 70,205
Current portion of long-term debt 12,729,750 610,000
----------- -----------
TOTAL CURRENT LIABILITIES 13,709,659 1,497,938
LONG-TERM DEBT -- 8,878,846
PARTNERS' EQUITY 6,242,432 7,266,998
----------- -----------
$19,952,091 $17,643,782
=========== ===========
</TABLE>
See accompanying notes.
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STATEMENTS OF OPERATIONS (unaudited)
CARIBOU COMMUNICATIONS CO.
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1999 1998
----------- -----------
<S> <C> <C>
REVENUES
KATT-FM $ 3,101,820 $ 2,779,905
KYIS-FM 1,706,260 1,600,832
KCYI-FM (formerly KTNT-FM) 604,868 764,035
KNTL-FM and WWLS-AM 1,601,347 616,866
Other revenue 140,967 154,185
----------- -----------
TOTAL REVENUES 7,155,262 5,915,823
OPERATING EXPENSES
Program expenses 2,171,603 1,968,709
Technical expenses 217,277 226,835
Sales expenses 1,563,369 1,484,962
Advertising and promotion 157,389 192,400
KATT products 15,701 15,796
Corporate expenses 564,030 493,545
General and administrative 733,150 640,062
Loan fees 150,678 150,678
Amortization expense 1,040,361 730,257
Depreciation expense 360,134 293,268
----------- -----------
6,973,692 6,196,512
----------- -----------
INCOME (LOSS) FROM OPERATIONS 181,570 (280,689)
OTHER EXPENSE
Interest expense 836,742 588,752
Miscellaneous expense 182,215 75,793
----------- -----------
1,018,957 664,545
----------- -----------
NET LOSS $ (837,387) $ (945,234)
=========== ===========
</TABLE>
See accompanying notes.
14
<PAGE> 16
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (unaudited)
CARIBOU COMMUNICATIONS CO.
<TABLE>
<CAPTION>
CAT Desert
Communications, Communications
Inc. III, Inc. Total
--------------- -------------- -----------
<S> <C> <C> <C>
Partners' equity at January 1, 1998 $ 2,443,095 $ 1,769,137 $ 4,212,232
Capital contribution 2,320,000 1,680,000 4,000,000
Net loss (548,236) (396,998) (945,234)
----------- ----------- -----------
Partners' equity at September 30, 1998 $ 4,214,859 $ 3,052,139 $ 7,266,998
=========== =========== ===========
Partners' equity at January 1, 1999 $ 4,106,295 $ 2,973,524 $ 7,079,819
Net loss (485,684) (351,703) (837,387)
----------- ----------- -----------
Partners' equity at September 30, 1999 $ 3,620,611 $ 2,621,821 $ 6,242,432
=========== =========== ===========
</TABLE>
See accompanying notes.
15
<PAGE> 17
STATEMENTS OF CASH FLOWS (unaudited)
CARIBOU COMMUNICATIONS CO.
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1999 1998
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss (837,387) (945,234)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Bad debt expense 80,290 49,529
Depreciation 360,134 293,268
Amortization 1,040,361 730,257
Loan fees expense 150,678 150,678
Increase in accounts receivable (154,445) (514,742)
(Increase) decrease in prepaid expenses and other assets 78,230 (119,538)
Increase in accounts payable and accrued expenses 10,765 322,314
---------- ----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 728,626 (33,468)
INVESTING ACTIVITIES
Purchases of property and equipment (288,742) (131,482)
Cash paid for the purchase of WWLS-AM net assets (3,461,686) (5,846,162)
Cash paid for intangible assets (10,000) --
Net receipt of earnest money from escrow agent -- 150,000
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (3,760,428) (5,827,644)
FINANCING ACTIVITIES
Proceeds from long-term debt 3,485,000 3,269,608
Payments on long-term debt (310,000) (1,359,608)
Capital contribution by partners -- 4,000,000
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,175,000 5,910,000
---------- ----------
INCREASE IN CASH 143,198 48,888
CASH AT BEGINNING OF PERIOD 177,865 20,174
---------- ----------
CASH AT END OF PERIOD $ 321,063 $ 69,062
========== ==========
</TABLE>
See accompanying notes.
16
<PAGE> 18
NOTES TO UNAUDITED FINANCIAL STATEMENTS
CARIBOU COMMUNICATIONS CO.
September 30, 1999
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the Company's Business: Caribou Communications Co. (the "Partnership")
is an Oklahoma General Partnership, organized to engage in the radio
broadcasting business through the control and operation of KATT-FM, KYIS-FM,
KCYI-FM (formerly KTNT-FM), KNTL-FM, and WWLS-AM radio stations in Oklahoma
City. The Partnership was organized on December 29, 1994 and started business on
January 1, 1995. The Partnership's corporate offices are located in Denver,
Colorado, and operations facilities are located in Oklahoma City, Oklahoma.
Financial Statement Presentation: The Partnership prepares its financial
statements in accordance with generally accepted accounting principles. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Partnership Formation: The Partnership was formed through the contributions of
substantially all of the respective properties and assets at the appraised
values, subject to substantially all of the respective liabilities and
obligations of Cat Communications, Inc. ("CAT") and Desert Communications III,
Inc. ("DCI") to the capital account of the Partnership having an aggregate net
asset value of $6,769,378 on December 29, 1994. The Partnership equity was
divided $3,926,239 (58%) to CAT and $2,843,139 (42%) to DCI.
Earnings and losses of the Partnership are divided based on the aforementioned
percentages.
Property and Equipment: Property and equipment is recorded at cost and
depreciated by the straight-line method over the estimated useful life of the
assets. When assets are sold or retired, the costs and related accumulated
depreciation are removed from the accounts and any gain or loss is included in
operations.
Advertising Costs: All advertising costs of the Partnership are expensed as
incurred.
Income Taxes: No provision for income taxes is made in the financial statements
because, as a Partnership, any income or loss is included in the tax returns of
the partners. For income tax purposes, income or loss allocated to the partners
shall consider the effect of the difference in the basis of assets contributed
for income tax purposes and the amounts recorded for financial statement
purposes.
Concentration of Credit: Financial instruments which potentially subject the
Partnership to concentrations of credit risk consist primarily of trade
receivables. Such credit risk is considered by management to be limited due to
the large number of customers comprising the Partnership's customer base.
Generally, the Partnership does not require collateral or other security to
support customer accounts receivable.
The Partnership maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Partnership does not believe there is a
significant risk of loss to these deposits.
17
<PAGE> 19
NOTES TO UNAUDITED FINANCIAL STATEMENTS--Continued
CARIBOU COMMUNICATIONS CO.
September 30, 1999
NOTE B--PROPERTY AND EQUIPMENT
Property and equipment at September 30, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Land $ 180,000 $ 30,000
Buildings 257,200 167,200
Automobiles 40,806 40,806
Computers and office equipment 173,493 162,431
Furniture and fixtures 342,813 342,813
Leasehold improvements 509,665 508,635
Studio and technical equipment 1,019,189 843,099
Tower and transmitter equipment 1,024,746 688,410
Projects in-process 77,734 --
---------- ----------
3,625,646 2,783,394
Less accumulated depreciation 1,720,639 1,258,315
---------- ----------
$1,905,007 $1,525,079
========== ==========
</TABLE>
NOTE C--INTANGIBLE ASSETS
Goodwill consists of: (1) the difference between the appraised fair market value
of the KATT-FM and KYIS-FM radio stations under a hypothetical scenario of the
stations operating as a duopoly in the Oklahoma City radio market and the fair
market values of the stations' assets at the date of the Partnership agreement,
(2) the excess of the purchase price over the net assets of the KCYI-FM,
KNTL-FM, and WWLS-AM stations, and (3) the entire purchase price of SportsTalk
Communications L.L.C.
Intangible assets at September 30, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
Useful Life 1999 1998
----------- ----------- ------------
<S> <C> <C> <C>
Goodwill 15 $15,235,583 $11,880,408
FCC License 15 4,261,002 4,261,002
Organization costs 5 309,698 309,698
----------- -----------
19,806,283 16,451,108
Less accumulated amortization 4,126,248 2,796,537
----------- -----------
$15,680,035 $13,654,571
=========== ===========
</TABLE>
Total amortization provided for in 1999 and 1998 was $1,040,361 and $730,257,
respectively.
18
<PAGE> 20
NOTES TO UNAUDITED FINANCIAL STATEMENTS--Continued
CARIBOU COMMUNICATIONS CO.
September 30, 1999
NOTE D--LONG-TERM DEBT
The following is a summary of long-term debt at September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Notes payable to Finova Capital Corporation bearing interest at 1% above
the prime rate, interest payable monthly, secured by all assets of the
Partnership $11,830,000 $8,790,000
Accrued and unpaid loan fees, payable to Finova Capital Corporation, due
January 31, 2000, secured by all assets of the Partnership 899,750 698,846
----------- ----------
12,729,750 9,488,846
Less current maturities 12,729,750 610,000
----------- ----------
$ -- $8,878,846
=========== ==========
</TABLE>
The notes payable (excluding the loan fees) are due in monthly installments as
follows:
<TABLE>
<CAPTION>
<S> <C>
June 1, 1997 to March 1, 1998 $35,000
April 1, 1998 to February 1, 1999 45,000
March 1, 1999 to January 1, 2000 55,000
January 31, 2000 Full payment of remaining principal
</TABLE>
Loan fees of $950,000 are being accrued at $16,742 per month through December 1,
1999. Full payment is due January 31, 2000.
Final payment on all debt is due January 31, 2000; however, repayment of the
debt will be made at the time of closing of the proposed sale of the
Partnership, as discussed in Note J.
In addition, the Partnership will pay a "recapture amount" following the end of
each year upon the demand of the lender. The "recapture amount" is equal to 50%
of excess cash flows (as defined in the debt agreement) for the preceding year,
and reduces the principal payments due on the long-term debt. However, the
"recapture amount" will not be made or will be reduced to the extent necessary
so that the Partnership's cash on hand plus the outstanding amount available on
the line of credit will not be less than $300,000. There were no excess cash
flows at September 30, 1999 and 1998 and, therefore, no recapture amount is due.
The loan agreement, dated December 29, 1994 (as amended), requires the
Partnership to maintain certain financial ratios and other covenants.
19
<PAGE> 21
NOTES TO UNAUDITED FINANCIAL STATEMENTS--Continued
CARIBOU COMMUNICATIONS CO.
September 30, 1999
NOTE D--LONG-TERM DEBT--Continued
Finova Capital Corporation is a related party in that it owns 100% of Desert
Communications III, Inc., which owns a 42% interest in the Partnership.
Interest payments for the nine months ended September 30, 1999 and 1998 totaled
$857,125 and $519,176, respectively.
NOTE E--OPERATING LEASES
As of September 30, 1999, the Partnership is leasing office space, certain
equipment, and computer software under various noncancelable operating leases.
Rental expense for the nine months ended September 30, 1999 and 1998 was
approximately $244,000 and $227,000, respectively.
Approximate future minimum lease payments required under these operating leases
are as follows:
2000 $ 239,000
2001 227,000
2002 242,000
2003 242,000
2004 232,000
Thereafter 405,000
-------------
$ 1,587,000
-------------
NOTE F--TRADE TRANSACTIONS
In accordance with accounting practices in the broadcast industry, trade
transactions (the exchange of unsold advertising time for products or services)
are recorded at the Partnership's standard rates for air time at the time the
spot is broadcast, net of expenses of the same amount representing the value of
the products or services received. Such transactions approximated $430,000 and
$398,000 for the nine months ended September 30, 1999 and 1998, respectively.
20
<PAGE> 22
NOTES TO UNAUDITED FINANCIAL STATEMENTS--Continued
CARIBOU COMMUNICATIONS CO.
September 30, 1999
NOTE G--RESERVED NET PROFITS AGREEMENT
On November 28, 1995, the Board of Managers approved a Reserved Net Profits
Agreement for key employees and consultants of the Partnership. The Reserved Net
Profit Amount would equal twenty-five percent of the difference on the
termination date of the Partnership between the value of the Partnership's
business and the capital invested by the Partners, including interest at the
rate of 6.4% per annum on such capital compounded annually from January 1, 1995,
up to $8 million plus twelve and one-half percent of any amounts over $8
million. The Board also authorized the President of the Partnership to allocate
the Reserved Net Profits among the key employees and consultants of the
Partnership as he, in his sole discretion, deems appropriate.
The term "value of the business" means the business sales price plus the net
current assets of the Partnership on the termination date less the legal and
brokerage expenses incurred from the sale of the assets and the Partnership's
long-term liabilities and deferred loan fees.
The Agreement also provides a means for calculating the Net Profit Amount if one
of the key employees or consultants dies, becomes permanently disabled, or
ceases to be an employee of the Partnership after December 31, 2004. In these
circumstances, the "value of the business" would be ten times the Partnership's
trailing twelve month's cash flow (as defined) less three percent for cost of
sale.
NOTE H--STATION AND OTHER ACQUISITIONS
On May 4, 1998, the Partnership acquired substantially all of the assets of the
KNTL-FM radio station ("KNTL") from Bott Communications, Inc ("Bott"). For
financial statement purposes, the acquisition was accounted for as a purchase
and, accordingly, KNTL's results of operations are included in the financial
statements since the date of acquisition. The aggregate purchase price was
approximately $5,890,000, which includes costs of acquisition. The aggregate
purchase price, which was financed primarily through capital contributions from
the partners and a note from Finova Capital Corporation, has been allocated to
the assets of KNTL, based on their respective estimated fair market values. The
excess of the purchase price over assets acquired approximated $5,050,000 and is
being amortized over fifteen years (see Note C).
On January 14, 1998, the Partnership signed an agreement with SportsTalk
Communications L.L.C. to acquire all of its assets, including its sports talk
format, for $530,000, plus incentives. This format began broadcasting on KNTL-FM
on January 17, 1998 through a time brokerage agreement with Bott. The
transaction closed on May 4, 1998. The total cost of $560,000 is considered
goodwill for financial statement purposes, and is being amortized over fifteen
years (see Note C).
21
<PAGE> 23
NOTES TO UNAUDITED FINANCIAL STATEMENTS--Continued
CARIBOU COMMUNICATIONS CO.
September 30, 1999
NOTE H--STATION AND OTHER ACQUISITIONS--Continued
On July 22, 1998, the Partnership agreed to purchase WWLS-AM radio station
("WWLS") from Fox Broadcasting Co., Inc. In connection with this purchase, the
Partnership deposited earnest money with an escrow agent in the amount of
$350,000. At September 30, 1998, the purchase was awaiting approval of the
Federal Communications Commission, and approval was subsequently granted and
closing of the purchase occurred on January 7, 1999. The aggregate purchase
price of approximately $3,800,000, which includes costs of acquisition, was
financed through a note from Finova Capital Corporation and has been allocated
to the assets of WWLS, based on their respective estimated fair market values.
The excess of the purchase price over assets acquired approximated $3,280,000
and is being amortized over fifteen years (see Note C).
NOTE I--OTHER RELATED PARTY TRANSACTIONS
Effective January 1, 1997, the Partnership entered into a management agreement
with Caribou Broadcasting, L.P. ("Broadcasting") to manage three radio stations
in Honolulu, Hawaii. Under the five year agreement, the Partnership will earn
$100,000 each year. Desert Communications II, Inc. ("Desert II") is a 98.99%
limited partner in Broadcasting, and CAT Communications II, Inc. ("CAT II") is a
1.01% general partner in Broadcasting. Desert II and CAT II ownership is
primarily the same as that of DCI and CAT.
Effective August 1, 1998, the management agreement discussed above was
reassigned to New Wave Broadcasting, L.P. ("New Wave"). New Wave, also a debtor
of Finova Capital Corporation, operates an otherwise unrelated group of radio
stations.
The Partnership earned $50,000 in management fees for 1998. At September 30,
1998, $41,667 was due from Broadcasting and is included in prepaid expenses and
other current assets on the balance sheet. In accordance with the management
agreement, the Partnership is to be reimbursed by Broadcasting for expenses
incurred in managing these stations. At September 30, 1998, the Partnership was
due approximately $53,000 from Broadcasting for unreimbursed expenses, which is
included in prepaid expenses and other current assets on the balance sheet.
These amounts were received from Broadcasting in 1999.
The President of the Partnership earns a bonus each year based upon attaining
certain operating results. Bonus expense reflected in the financial statements
is $75,000 for 1999 and $50,000 for 1998.
22
<PAGE> 24
NOTES TO UNAUDITED FINANCIAL STATEMENTS--Continued
CARIBOU COMMUNICATIONS CO.
September 30, 1999
NOTE J--SUBSEQUENT EVENTS
In August 1999, the Partnership entered into an agreement with Citadel
Broadcasting Company ("Citadel") to sell all of the equity interest in the
Partnership to Citadel for approximately $60 million. This amount includes
repayment of the debt listed in Note D that may be outstanding at the time of
closing. The transaction is expected to close in December 1999.
In connection with the sale, a key employee's contract was not assumed by
Citadel. The employee's employment agreement provides for a severance payment of
$100,000. This amount has been recorded at September 30, 1999 and is included in
accrued expenses.
In addition, approximately $350,000 of the sale proceeds will be set aside to
pay liabilities of the Partnership not assumed by Citadel. These include the
bonus discussed in Note I, the severance payment discussed above, lease and
other general expenses, and payments to certain officers and employees to
administer the closing of the Partnership's business.
23
<PAGE> 25
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 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 (the "Wilkes-Barre/Scranton Acquisition"),
o the February 12, 1998 acquisition of Pacific Northwest Broadcasting
Corporation which owned KQFC-FM, KKGL-FM and KBOI-AM in Boise, Idaho
for the purchase price of approximately $14.4 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
Acquisitions"),
o the November 17, 1998 acquisition of KAAY-AM in Little Rock, Arkansas
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, Michigan 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, Pennsylvania 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, Louisiana market and KFXZ-FM, KNEK-FM, KRRQ-FM and KNEK-AM
serving the Lafayette, Louisiana market for the purchase price of
approximately $31.5 million (the "Baton Rouge/Lafayette Acquisition"),
o the April 30, 1999 acquisition of KSPZ-FM serving the Colorado Springs,
Colorado market in exchange for KKLI-FM in Colorado Springs, the April
30, 1999 acquisition of KVOR-AM and KTWK-AM serving the Colorado
Springs, Colorado market and KEYF-FM and KEYF-AM serving the Spokane,
Washington market for the purchase price of approximately $10.0 million
and the April 30, 1999 termination of a joint sales agreement under
which Citadel Communications 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, South Carolina,
WHWK-FM, WYOS-FM, WAAL-FM, WNBF-AM and WKOP-AM in Binghamton, New York,
WMDH-FM and WMDH-AM in Muncie, Indiana and WWKI-FM in Kokomo, Indiana
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, New Hampshire market and
WBLM-FM, WCYI-FM, WCYY-FM, WHOM-FM, WJBQ-FM and WCLZ-FM serving the
Portland, Maine market for the purchase price of approximately $65.3
million, which amount includes the repayment of certain indebtedness of
Fuller-Jeffrey Broadcasting and approximately $1.8 million in
consulting and noncompetition payments payable over a seven-year period
(the "Portsmouth/Dover/Rochester/Portland Acquisition"),
o the November 1, 1999 acquisition of KOOJ-FM in Baton Rouge, Louisiana
for the purchase price of approximately $9.5 million,
o the December 23, 1999 acquisition of Caribou Communications Co. which
owned KATT-FM, KYIS-FM, KCYI-FM, KNTL-FM and WWLS-AM in Oklahoma City,
Oklahoma for a purchase price of approximately $61.5 million, which
amount includes the repayment of certain indebtedness of Caribou
Communications (the "Oklahoma City Acquisition"),
o the July 27, 1998 sale of WEST-AM in Allentown/Bethlehem, Pennsylvania
as a portion of the consideration for the 1997 acquisition of WLEV-FM
in Allentown/Bethlehem,
24
<PAGE> 26
o the October 7, 1998 sale of WQCY-FM, WTAD-AM, WMOS-FM and WBJR-FM in
Quincy, Illinois for the sale price of approximately $2.3 million (the
"Quincy Sale"),
o the November 9, 1999 disposition of KKTT-FM, KEHK-FM and KUGN-AM in
Eugene, Oregon, KAKT-FM, KBOY-FM, KCMX-FM, KTMT-FM, KCMX-AM and KTMT-AM
in Medford, Oregon, KEYW-FM, KORD-FM, KXRX-FM, KTHT-FM and KFLD-AM in
Tri-Cities, Washington, KCTR-FM, KKBR-FM, KBBB-FM, KMHK-FM and KBUL-AM
in Billings, Montana, WQKK-AM and WGLU-FM in Johnstown, Pennsylvania
and WQWK-FM, WNCL-FM, WRSC-AM and WBLF-AM in State College,
Pennsylvania for the sale price of approximately $26.0 million (the
"Marathon Disposition"),
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,
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 (the
"1999 Offering"),
o the August 1999 redemption of a portion of Citadel Broadcasting's
outstanding 13-1/4% Exchangeable Preferred Stock (the "Preferred
Redemption"), and
(2) the following pending acquisitions (collectively, the "Pending
Acquisitions'):
o the pending acquisition of WGRF-FM, WEDG-FM, WHIT-FM, WMNY-AM and
WHLD-AM in Buffalo, New York, WAQX-FM, WLTI-FM, WNSS-AM, and WNTQ-FM in
Syracuse, New York, WIII-FM and WKRT-AM in Ithaca, New York, WMME-FM,
WEZW-FM, WEBB-FM and WTVL-AM in Augusta-Waterville, Maine, WBPW-FM,
WOZI-FM and WQHR-FM in Presque Isle-Caribou, Maine, WCRQ-FM in
Dennysville-Calais, Maine, KMYY-FM, KYEA-FM, KZRZ-FM and KTJC-FM in
Monroe, Louisiana, KDOK-FM, KTBB-FM, KEES-AM, KYZS-AM and KGLD-AM in
Tyler-Longview, Texas, WFPG-AM, WFPG-FM and WPUR-FM in Atlantic City,
New Jersey, WFHN-FM and WBSM-AM in New Bedford, Massachusetts, WQGN-FM,
WSUB-AM and WVVE-FM in New London, Connecticut and the right to operate
WKOE-FM in Atlantic City under a program service and time brokerage
agreement for the aggregate purchase price of approximately $190.0
million (the "BPH Acquisition"),
o the pending acquisition of KSMB-FM, KDYS-AM, KVOL-FM and KVOL-AM in
Lafayette, Louisiana for the purchase price of approximately $8.5
million (the "Lafayette Acquisition"),
o the pending acquisition of WMMQ-FM, WJIM-FM, WFMK-FM, WITL-FM, WVFN-AM
and WJIM-AM in Lansing, Michigan, WHNN-FM and WTCF-FM in Saginaw,
Michigan and WFBE-FM in Flint, Michigan for the aggregate purchase
price of approximately $120.5 million, of which, subject to certain
conditions, approximately $10.1 million would be paid in shares of
Citadel Communications' common stock valued at $50.375 per share (the
"Michigan" Acquisition"), and
o the pending acquisitions of WXLO-FM, WORC-FM and WWFX-FM in Worcester,
Massachusetts for the aggregate purchase price of approximately $38.75
million (the "Worcester Acquisitions").
The unaudited pro forma condensed consolidated financial statements are
based on Citadel Broadcasting's historical consolidated financial statements,
the financial statements of those entities acquired, or from which assets were
acquired, in connection with the Completed Transactions, and the financial
statements of those entities to be acquired, or from which assets will be
acquired, in connection with the Pending Acquisitions.
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 then existing credit facility
as of January 1, 1998. Pro forma financial information has been adjusted to
reflect the following, when applicable:
o Prior to the acquisition dates, Citadel Broadcasting operated some of the
acquired stations under a joint sales agreement ("JSA") or local marketing
agreement ("LMA"). Citadel Broadcasting receives or pays fees for such
services accordingly. Net revenue and station operating expenses for
stations operated under JSAs are included to reflect ownership of the
stations as of January 1, 1998. Net revenue and station operating expenses
for stations operated under LMAs are included in Citadel Broadcasting's
historical consolidated financial statements. For those stations operated
under JSAs and LMAs and subsequently acquired, associated fees and
redundant expenses were eliminated and estimated occupancy costs were
included to adjust the results of the operations to reflect ownership of
the stations as of January 1, 1998.
o Elimination of revenue and operating expenses from the entities acquired,
or from which assets were acquired, in connection with the Completed
Transactions, and the entities to be acquired, or from which assets will be
acquired, in connection with the Pending Acquisitions, which would not have
been incurred if the acquisition had occurred on January 1, 1998. The
eliminated items were deemed redundant and therefore are not reflected 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
September 30, 1999 has been adjusted to give effect to the following
transactions as if each had occurred on September 30, 1999:
(1) the Marathon Disposition,
(2) the acquisition of KOOJ-FM,
(3) the Oklahoma City Acquisition, and
25
<PAGE> 27
(3) the Pending Acquisitions.
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
Acquisitions 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 Acquisitions is subject to certain
conditions. Although Citadel Broadcasting believes these closing conditions
are generally customary for transactions of this type, there can be no assurance
that such conditions will be satisfied.
26
<PAGE> 28
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL
BROADCASTING
AS ADJUSTED
FOR
ADJUSTMENTS OKLAHOMA CITY
FOR ACQUISITION,
MARATHON MARATHON ADJUSTMENTS
ACTUAL ADJUSTMENTS FOR DISPOSITION DISPOSITION FOR PRO FORMA
CITADEL OKLAHOMA CITY AND ACQUISITION AND ACQUISITION THE PENDING CITADEL
BROADCASTING ACQUISITION(1) OF KOOJ-FM(2) OF KOOJ-FM ACQUISITIONS(3) BROADCASTING
-------------- --------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 8,798 $ 321 -- $ 9,119 $ -- $ 9,119
Restricted cash -- -- 26,000 26,000 -- 26,000
Accounts and notes receivable,
net 48,208 1,906 -- 50,114 -- 50,114
Prepaid expenses 3,808 131 (110) 3,829 -- 3,829
Assets held for sale 25,991 -- (25,991) -- -- --
-------- ------- -------- -------- -------- ----------
Total current assets 86,805 2,358 (101) 89,062 -- 89,062
Property and equipment, net 68,088 1,826 679 70,593 15,871 86,464
Intangible assets, net 480,431 59,462 8,572 548,465 341,879 890,344
Other assets 4,205 -- -- 4,205 -- 4,205
-------- ------- -------- -------- -------- ----------
TOTAL ASSETS $639,529 $63,646 $ 9,150 $712,325 $357,750 $1,070,075
======== ======= ======== ======== ======== ==========
LIABILITIES AND SHAREHOLDER'S
EQUITY
Accounts payable and accrued
liabilities $ 15,021 $ 980 $ -- $ 16,001 $ -- $ 16,001
Current maturities of other
long-term Obligations 994 250 -- 1,244 -- 1,244
-------- ------- -------- -------- -------- ----------
Total current liabilities 16,015 1,230 -- 17,245 -- 17,245
Notes payable, less current
maturities 57,500 61,416 9,500 128,416 347,675 476,091
10-1/4% Notes 210,401 -- -- 210,401 -- 210,401
9-1/4% Notes
Other long-term obligations,
less current Maturities 2,685 1,000 -- 3,685 -- 3,685
Deferred tax liability 46,964 -- -- 46,964 -- 46,964
Exchangeable preferred stock 82,526 -- -- 82,526 -- 82,526
Common stock and APIC 260,927 -- -- 260,927 10,075 271,002
Deferred compensation (3,329) -- -- (3,329) -- (3,329)
Accumulated other comprehensive
loss (12) -- -- (12) -- (12)
Accumulated deficit/retained
earnings (34,148) -- (350) (34,498) -- (34,498)
-------- ------- -------- -------- -------- ----------
TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY $639,529 $63,646 $ 9,150 $712,325 $357,750 $1,070,075
======== ======= ======== ======== ======== ==========
</TABLE>
(1) Represents the net effect of the Oklahoma City Acquisition as if the
transaction had taken place on September 30, 1999.
(2) Represents the net effect of the Marathon Disposition and the acquisition
of KOOJ-FM as if each transaction had taken place on September 30, 1999.
(3) Represents the net effect of the Pending Acquisitions as if each transaction
had taken place on September 30, 1999.
27
<PAGE> 29
CITADEL BROADCASTING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CITADEL
BROADCASTING
AS ADJUSTED ADJUSTMENTS
ACTUAL ADJUSTMENTS FOR FOR FOR PRO FORMA
CITADEL COMPLETED COMPLETED THE PENDING CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS ACQUISITIONS(2) BROADCASTING
-------------- ---------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue...................... $126,521 $19,382 $145,903 $ 50,690 $196,593
Station operating expenses....... 85,124 10,241 95,365 35,347 130,712
Depreciation and amortization.... 25,589 11,206 36,795 18,126 54,921
Corporate general and
administrative................ 4,921 (131) 4,790 -- 4,790
-------- ------- -------- -------- --------
Operating expenses............ 115,634 21,316 136,950 53,473 190,423
-------- ------- -------- -------- --------
Operating income (loss).......... 10,887 (1,934) 8,953 (2,783) 6,170
Interest expense................. 17,502 4,918 22,420 22,001 44,421
Other (income) expense, net...... (1,187) 350 (837) -- (837)
-------- ------- -------- -------- --------
Income (loss) before income
taxes......................... (5,428) (7,202) (12,630) (24,784) (37,414)
Income taxes (benefit)........... (1,376) (850) (2,226) -- (2,226)
Dividend requirement for
Exchangeable Preferred Stock.. (11,322) 2,812 (8,510) -- (8,510)
-------- ------- -------- -------- --------
Income (loss) from
continuing operations
applicable to common shares... $(15,374) $(3,540) $(18,914) $(24,784) $(43,698)
======== ======= ======== ======== ========
</TABLE>
(1) Represents the net effect of the Completed Transactions that were
consummated after January 1, 1999 as if each transaction had taken place on
January 1, 1998. Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
PORTSMOUTH/ CHARLESTON/
DOVER/ BINGHAMTON
OKLAHOMA ROCHESTER/ MUNCIE/ BATON ROUGE/
CITY PORTLAND KOKOMO LAFAYETTE
ACQUISITION ACQUISITION ACQUISITION ACQUISITION
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net revenue $ 7,155 $10,642 $ 9,543 $1,371
Station operating expenses 4,831 6,021 6,711 1,275
Depreciation and
amortization 3,292 3,628 2,685 628
Corporate general and
administrative -- -- -- --
------- ------- ------- ------
Operating expenses 8,123 9,649 9,396 1,903
------- ------- ------- ------
Operating income (loss) (968) 993 147 (532)
Interest expense 3,897 3,234 2,531 --
Other (income) expenses,
net -- -- -- --
------- ------- ------- ------
Income (loss) before
income taxes (4,865) (2,241) (2,384) (532)
Income taxes (benefit) (724) -- (126)
Dividend requirement for
Exchangeable Preferred
Stock -- -- -- --
------- ------- ------- ------
Income (loss) from
continuing operations $(4,865) $(1,517) $(2,384) $ (406)
======= ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
CARLISLE
ACQUISITION, ADJUSTMENTS
CAPSTAR FOR THE
TRANSACTIONS, 1999 OFFERING
SAGINAW/ KOOJ ACQUISITION AND THE
BAY CITY AND MARATHON PREFERRED THE COMPLETED
ACQUISITION DISPOSITION REDEMPTION TRANSACTIONS
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Net revenue $ 526 $(9,855) $ -- $19,382
Station operating expenses 486 (9,083) -- 10,241
Depreciation and
amortization 202 771 -- 11,206
Corporate general and
administrative -- (131) -- (131)
----- ------- ------- -------
Operating expenses 688 (8,443) -- 21,316
----- ------- ------- -------
Operating income (loss) (162) (1,412) -- (1,934)
Interest expense -- (1,044) (3,700) 4,918
Other (income) expenses,
net -- 350 -- 350
----- ------- ------- -------
Income (loss) before
income taxes (162) (718) 3,700 (7,202)
Income taxes (benefit) -- -- -- (850)
Dividend requirement for
Exchangeable Preferred
Stock -- -- 2,812 2,812
----- ------- ------- -------
Income (loss) from
continuing operations $(162) $ (718) $ 6,512 $(3,540)
===== ======= ======= =======
</TABLE>
(2) Represents the net effect of the Pending Acquisitions as if each
transaction had taken place on January 1, 1998. Dollars in the table below
are shown in thousands.
<TABLE>
<CAPTION>
BPH LAFAYETTE MICHIGAN WORCESTER PENDING
ACQUISITION ACQUISITION ACQUISITION ACQUISITIONS ACQUISITIONS
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenue $ 31,231 $1,749 $14,092 $ 3,618 $ 50,690
Station operating expenses 23,328 1,331 7,851 2,837 35,347
Depreciation and amortization 9,649 474 6,039 1,964 18,126
-------- ------ ------- ------- --------
Operating expenses 32,977 1,805 13,890 4,801 53,473
-------- ------ ------- ------- --------
Operating income (loss) (1,746) (56) 202 (1,183) (2,783)
Interest expense 12,023 538 6,988 2,452 22,001
-------- ------ ------- ------- --------
Income (loss) from continuing
operations $(13,769) $ (594) $(6,786) $(3,635) $(24,784)
======== ====== ======= ======= ========
</TABLE>
28
<PAGE> 30
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
BROADCASTING ADJUSTMENTS
ACTUAL ADJUSTMENTS FOR AS ADJUSTED FOR THE PRO FORMA
CITADEL COMPLETED FOR COMPLETED PENDING CITADEL
BROADCASTING TRANSACTIONS (1) TRANSACTIONS ACQUISITIONS(2) BROADCASTING
-------------- ---------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
Net revenue....................... $135,426 $41,137 $176,563 $ 61,247 $237,810
Station operating expenses........ 93,485 25,056 118,541 42,689 161,230
Depreciation and amortization..... 26,414 21,591 48,005 23,211 71,216
Corporate general and
administrative.................. 4,369 (349) 4,020 -- 4,020
-------- ------- -------- -------- --------
Operating expenses.............. 124,268 46,298 170,566 65,900 236,466
-------- ------- -------- -------- --------
Operating income (loss)........... 11,158 (5,161) 5,997 (4,653) 1,344
Interest expense.................. 18,126 3,651 21,777 28,132 49,909
Other (income) expense, net....... (1,651) 350 (1,301) -- (1,301)
-------- ------- -------- -------- --------
Income (loss) before income
taxes........................... (5,317) (9,162) (14,479) (32,785) (47,264)
Income taxes (benefit)............ (1,386) (1,591) (2,977) -- (2,977)
Dividend requirement for --
Exchangeable Preferred Stock.... (14,586) 138 (14,448) -- (14,448)
-------- ------- -------- -------- --------
Income (loss) from continuing
operations applicable to common
shares.......................... $(18,517) $(7,433) $(25,950) $(32,785) $(58,735)
======== ======= ======== ======== ========
</TABLE>
(1) Represents the net effect of the Completed Transactions as if each
transaction had taken place on January 1, 1998. Dollars in the table
below are shown in thousands.
<TABLE>
<CAPTION>
PORTSMOUTH/ CHARLESTON/
DOVER/ BINGHAMTON/ BATON
OKLAHOMA ROCHESTER/ MUNCIE/ ROUGE/ SAGINAW/
CITY PORTLAND KOKOMO LAFAYETTE BAY CITY
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITION
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue $ 8,250 $13,642 $17,421 $7,331 $6,981
Station operating
expenses 6,240 8,676 12,100 5,170 4,447
Depreciation and
amortization 4,390 5,441 5,369 2,914 2,421
Corporate general and
administrative -- -- -- -- --
------- ------- ------- ------ ------
Operating expenses 10,630 14,117 17,469 8,084 6,868
Operating income (loss) (2,380) (475) (48) (753) 113
Interest expense 5,196 4,852 5,063 -- --
Other (income) expense,
net -- -- -- -- --
------- ------- ------- ------ ------
Income (loss) before
income taxes (7,576) (5,327) (5,111) (753) 113
Income taxes (benefit) -- (1,086) -- (505) --
Dividend requirement for
Exchangeable Preferred
Stock -- -- -- -- --
------- ------- ------- ------ ------
Income (loss) from
continuing
Operations $(7,576) $(4,241) $(5,111) $ (248) $ 113
======= ======= ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
ADJUSTMENTS
OTHER REPAYMENT FOR THE
ACQUISITIONS OF THE OFFERING 1999 OFFERING THE
AND CREDIT OF THE AND THE COMPLETED
DISPOSITIONS FACILITY 9-1/4% PREFERRED TRANS-
(a) (b) NOTES(c) REDEMPTION(d) ACTIONS
------------ ------- -------- ------------- -------
<S> <C> <C> <C> <C> <C>
Net revenue $(12,488) $ -- $ -- $ -- $41,137
Station operating
expenses (11,577) -- -- -- 25,056
Depreciation and
amortization 1,056 -- -- -- 21,591
Corporate general and
administrative (349) -- -- -- (349)
-------- ------- ------- ------- -------
Operating expenses (10,870) -- -- -- 46,298
Operating income (loss) (1,618) -- -- -- (5,161)
Interest expense (947) (4,487) 1,374 (7,400) 3,651
Other (income) expense,
net 350 -- -- 350
-------- ------- ------- ------- -------
Income (loss) before
income taxes (1,021) 4,487 (1,374) 7,400 (9,162)
Income taxes (benefit) -- -- -- -- (1,591)
Divided requirement for
Exchangeable
Preferred Stock -- -- -- 138 138
-------- ------- ------- ------- -------
Income (loss) from
continuing
Operations $ (1,021) $ 4,487 $(1,374) $ 7,538 $(7,433)
======== ======= ======= ======= =======
</TABLE>
(a) Represents the net effect of the Marathon Disposition, the Carlisle
Acquisition, the Capstar Transactions, the Boise Acquisitions, the
Wilkes-Barre/Scranton Acquisition, the acquisition of KOOJ-FM in Baton
Rouge, the disposition of WEST-AM in Allentown/Bethlehem, the acquisition
of KAAY-AM in Little Rock and the Quincy Sale.
(b) Represents the repayment of outstanding borrowings under Citadel
Broadcasting's credit facility with the proceeds from the Citadel
Communications' initial public offering.
(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.
(d) Represents the use of proceeds from the 1999 Offering, including the
redemption of approximately 35% of Citadel Broadcasting's issued and
outstanding Exchangeable Preferred Stock.
29
<PAGE> 31
(2) Represents the net effect of the Pending Acquisitions as if each transaction
had taken place on January 1, 1998. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
BPH LAFAYETTE MICHIGAN WORCESTER PENDING
ACQUISITION ACQUISITION ACQUISITION(a) ACQUISITIONS(b) ACQUISITIONS
----------- ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue $ 38,628 $ 2,383 $ 16,900 $ 3,336 $ 61,247
Station operating expenses 28,842 1,984 9,322 2,541 42,689
Depreciation and amortization 12,865 631 8,052 1,663 23,211
-------- -------- -------- -------- --------
Operating expenses 41,707 2,615 17,374 4,204 65,900
Operating income (loss) (3,079) (232) (474) (868) (4,653)
Interest expense 16,031 717 9,317 2,067 28,132
-------- -------- -------- -------- --------
Income (loss) from continuing
operations $(19,110) $ (949) $ (9,791) $ (2,935) $(32,785)
======== ======== ======== ======== ========
</TABLE>
(a) Citadel Broadcasting expects to sell one or more of its stations serving
the Saginaw market to comply with the ownership limits of the
Telecommunications Act of 1996. However, Citadel Broadcasting is unable
to include the effect of the divestiture in this pro forma financial
information until it determines the station or stations required to
be sold.
(b) The current owner of WWFX-FM purchased the station in January 1999. Citadel
Broadcasting is unable to provide operating results for the year ended
December 31, 1998 as the information is not currently available. In the
opinion of management, the 1998 operations are not significant to the pro
forma condensed consolidated statement of operations.
30
<PAGE> 32
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: January 6, 1999 By: /s/ Lawrence R. Wilson
------------------ ------------------------------------
Lawrence R. Wilson
Chairman and Chief Executive Officer
31
<PAGE> 33
EXHIBIT INDEX
2.1 Purchase Agreement dated August 23, 1999 by and among Cat Communications,
Inc., Desert Communications III, Inc. and Citadel Broadcasting Company.
2.2 Amendment to Purchase Agreement dated December 22, 1999 by and among Cat
Communications, Inc., Desert Communications III, Inc. and Citadel
Broadcasting Company.
4.1 Credit Agreement dated as of December 17, 1999 among Citadel Broadcasting
Company, Citadel Communications Corporation, Citadel License, Inc.,
Credit Suisse First Boston, as lead Arranger, Administrative Agent and
Collateral Agent, FINOVA Capital Corporation, as Syndication Agent, First
Union Securities, Inc. and Fleet National Bank, as Co-Documentation
Agents, and the lenders named therein (incorporated by reference to
Exhibit 4.1 to Citadel Communications Corporation's Current Report on
Form 8-K filed on January 6, 2000).
32
<PAGE> 1
Exhibit 2.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement"), made as of the 23rd day of
August, 1999, by and among (i) CAT COMMUNICATIONS, INC., an Oklahoma corporation
("CAT"); (ii) DESERT COMMUNICATIONS III, INC., a Delaware corporation
("Desert"); and (iii) CITADEL BROADCASTING COMPANY, a Nevada corporation
("Citadel").
RECITALS:
A. Caribou Communications Co., an Oklahoma general partnership (the
"Company"), is the licensee of and owns and operates five radio stations serving
the Oklahoma City, Oklahoma market and identified on Schedule 1 to this
Agreement (collectively, the "Stations").
B. CAT and Desert (collectively, the "Partners") own all of the
partnership interests in the Company.
C. Citadel desires to purchase from the Partners, and the Partners
desire to sell to Citadel, all of the partnership interests in the Company, 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
<PAGE> 2
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.
"Arbitrator" has the meaning specified in Section 2.2(b).
"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 Contracts, the Intellectual Property, the Personal Property, the
Trade Receivables, the Accounts Receivable and the Cash, and all books, records
and accounts of the Company.
"Broker" means Kalil & Co., Inc.
"Business" means the business in which the Company is now engaged.
"Cash" means the cash and cash equivalents of the Company existing as
of the Closing.
"CCC" means Citadel Communications Corporation, a Nevada corporation.
"Citadel's Certificate" has the meaning specified in Section 2.2(b).
"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 11.
"Closing Date" has the meaning specified in Section 11.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning specified in the recitals to this Agreement.
"Confidential Information" has the meaning specified in Section 10.7.
"Consulting Agreement" means that certain Consulting Agreement dated as
of the Closing Date between Citadel and J. Kent Nichols, substantially in the
form of Exhibit A attached hereto.
-2-
<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 with respect to which the remaining
obligation of the Company is in excess of $2,500; and (c) contingent contractual
obligations and liabilities of the Company known to the Company existing as of
the date hereof.
"Damages" has the meaning specified in Section 14.1.
"Debt Schedule" means Schedule 4 to this Agreement.
"Draw Condition" has the meaning specified in Section 15.2(a).
"Environmental Claims" means and includes (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) claims for 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 which relate to the
environment; (f) fines, penalties or Liens against property which relate to the
environment; (g) claims for injunctive relief or other orders or notices of
violation from Governmental Authorities which relate to the environment; and (h)
with regard to any present or former employees, claims for exposure to or injury
from Environmental Conditions.
"Environmental Conditions" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation, transportation, release,
spilling, leaking, pumping, pouring, emptying, discharging, injecting, escaping,
leaching, disposal, dumping, or threatened release of Hazardous Materials by a
Person. With respect to claims by employees, Environmental Conditions also
includes the exposure of Persons to Hazardous Materials within work places on
any real estate owned or occupied by a Person.
"Environmental Laws" has the meaning specified in the definition of
Hazardous Materials.
"Environmental Noncompliance" means and includes (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
-3-
<PAGE> 4
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.
"Estimated Net Working Capital" means the Partners' good faith estimate
of Net Working Capital, as reflected in the Partners' Certificate.
"Excluded Assets" means, collectively, (a) the name "Caribou"; (b) the
assets located at the Company's office in Denver, Colorado, all of which are
identified on Schedule 5 attached hereto; (c) that certain Lease dated June 15,
1994 between Constellation Properties, Inc. and the Company, as amended, for the
Company's office in Denver, Colorado; (d) that certain Employment Agreement
dated as of September 1, 1996 between the Company and John Stevens, as amended;
and (e) that certain Lease Agreement (Contract No. 0709365202) dated March 12,
1997 between the Company and Xerox Corporation.
"FCC" means the Federal Communications Commission.
"FCC Application" has the meaning specified in Section 10.1.
"FCC Approval" has the meaning specified in Section 10.1.
"FCC Licenses" means the main station license for each Station,
together with each of the other consents, rights, licenses, permits and other
authorizations issued by the FCC and held by the Company in connection with, or
pertaining to, the conduct of the business and operation of the Stations,
together with any renewals and extensions thereof and any applications therefor
pending on the Closing Date, and any and all applications made by the Company
for such consents, rights, licenses, permits and other authorizations.
"Final Order" means a written action or order issued by the FCC or its
staff setting forth the FCC Approval (or a denial thereof), (a) which action or
order has not been vacated, reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which action or order (i) no requests have
been filed and are pending for administrative or judicial review, rehearing,
reconsideration, appeal or stay, and the time period for filing any such
requests and for the FCC to set aside the action on its own motion under the
provisions of the Act or the rules, regulations and policies of the FCC has
expired, or (ii) in the event of review, reconsideration or appeal, the time for
further review, reconsideration or appeal has expired.
-4-
<PAGE> 5
"FINOVA" means FINOVA Capital Corporation.
"FINOVA Liens" means the Liens in favor of FINOVA as of the Closing
Date, which secure the Permitted Debt.
"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.
"Held Back Amount" means $250,000, to be retained by Citadel from the
Purchase Price in accordance with Section 2.2.
"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 10.6.
"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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a promissory note, bond or similar written obligation to pay money, (c) all
indebtedness guaranteed by a Person 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.
"Indemnification Guaranty" has the meaning specified in Section 10.14.
"Indemnitee" has the meaning specified in Section 14.4.
"Indemnitor" has the meaning specified in Section 14.4.
"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 3.7(e).
"Letter of Credit" has the meaning specified in Section 2.3(a).
"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.
"Mandatory Consents" has the meaning specified in Section 7.12.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise) or on the results of operations, assets,
liabilities or business of the Company or the Stations, taken as a whole.
"Net Profits Agreements" means, collectively, the six agreements
entitled "Net Profits Interests" between the Company and each of J. Kent
Nichols, John Stevens, Patricia York, Larry Bastida, Michael Gumb and Carol
Millwater.
"Net Profits Amount" means the aggregate amount due at the Closing
under the Net Profits Agreements, as specified in the Net Profits Certificate.
"Net Profits Certificate" has the meaning specified in Section 10.11.
"Net Working Capital" means the current assets of the Company
(including without limitation Cash, Accounts Receivable and Trade Receivables)
as of the Closing Date minus the current liabilities of the Company (including
without limitation Trade Liabilities but excluding the current portion of any
Indebtedness for Borrowed Money) as of the Closing Date, determined in
accordance with GAAP.
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"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.
"Partners" has the meaning specified in the recitals to this Agreement.
"Partners' Certificate" means the certificate of the Partners delivered
to Citadel at least three business days prior to the Closing, which sets forth a
true and correct calculation, including supporting documentation, of (i) the
Estimated Net Working Capital and (ii) the Indebtedness for Borrowed Money of
the Company as of the Closing.
"Partners' Disclosure Schedule" means Schedule 6 to this Agreement.
"Partnership Agreement" means that certain Partnership Agreement dated
December 29, 1994 between the Partners relating to the Company, as amended on
May 1, 1998.
"Partnership Interests" has the meaning specified in Section 2.1.
"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
FINOVA, including any prepayment penalty, premium or other fees payable to
FINOVA upon repayment of such debt.
"Permitted Exceptions" means, collectively, (a) Liens for Taxes not yet
due and payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books and records of the Company in accordance with GAAP, (b) liens of carriers,
warehousemen, mechanics and materialmen
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incurred in the ordinary course of business, that individually and in the
aggregate do not have Material Adverse Effect, provided that the underlying
obligations relating to such Liens are paid in the ordinary course of business,
or are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books and records of the
Company in accordance with GAAP, (c) with respect to the Real Property only,
easements, rights of way, covenants, conditions, restrictions and other similar
charges and encumbrances listed on Schedule 7 to this Agreement that,
individually and in the aggregate, do not materially detract from or materially
interfere with the present use of the Asset or Assets affected thereby
(provided, however, that if the Closing occurs, all items listed on Schedule 7
shall constitute "Permitted Exceptions"), (d) the FINOVA Liens and (e) with
respect to the FCC Licenses only, provisions of the Act and the rules and
regulations promulgated thereunder.
"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 owned 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.
"Recipient" has the meaning specified in Section 10.7.
"Stations" has the meaning set forth in the recitals to this Agreement.
"Supplemental Financial Statements" has the meaning specified in
Section 7.9.
"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 14.6(a).
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"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 PARTNERSHIP INTERESTS; PURCHASE PRICE
2.1 Purchase and Sale of Partnership Interests. 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 Partners agree to sell, assign and convey to Citadel, and Citadel
agrees to purchase, acquire and accept from the Partners, all of the partnership
interests in the Company (collectively, the "Partnership Interests").
2.2 Purchase Price. The purchase price to be paid to the Partners for
the purchase of the Partnership Interests (the "Purchase Price") shall be
$60,000,000 minus (i) the aggregate amount of Indebtedness for Borrowed Money of
the Company as of the Closing Date (including any prepayment penalty, premium or
other fees payable to FINOVA upon repayment of the Permitted Debt), minus (ii)
the Net Profits Amount, plus (iii) the Net Working Capital.
(a) Payment. The Purchase Price, less the Held Back Amount,
shall be paid at the Closing to the Partners (58% to CAT and 42% to Desert) in
cash by wire transfer of immediately available funds to accounts designated by
the Partners in writing at least three days prior to the Closing Date. At the
Closing, the Partners shall direct Citadel to, and Citadel shall, pay the Net
Profits Amount in accordance with the instructions provided in the Net Profits
Certificate.
(b) Estimated Net Working Capital; Citadel's Certificate. For
purposes of calculating the Purchase Price on the Closing Date, it shall be
assumed that Net Working Capital is equal to Estimated Net Working Capital.
Within 60 days after the Closing Date, Citadel shall deliver to the Partners a
certificate which sets forth a true and correct calculation, including
supporting documentation, of Net Working Capital ("Citadel's Certificate"). The
Partners shall deliver to Citadel a statement of any objections relating to
Citadel's calculation of Net Working Capital as soon as practicable, but in any
event not later than 30 days, after the date of delivery of Citadel's
Certificate. In the event of any dispute or any failure to reach agreement with
respect to the objections of the Partners relating to
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Citadel's Certificate and the related calculation of Net Working Capital within
30 days after the date of delivery to the Partners of Citadel's Certificate, the
items in dispute will be submitted to, and the calculation of the Net Working
Capital will be determined by, arbitration by PricewaterhouseCoopers, LLP (the
"Arbitrator"), independent certified public accountants. The determination of
the Arbitrator shall in all respects be final, binding and conclusive on the
parties hereto.
(c) Final Settlement. If Net Working Capital is greater than
Estimated Net Working Capital, then Citadel shall pay to the Partners the amount
of such excess and shall pay to the Partners the Held Back Amount. If Net
Working Capital is less than Estimated Net Working Capital, then Citadel shall
permanently retain a portion of the Held Back Amount equal to such deficiency
and shall pay to the Partners the remainder, if any, of the Held Back Amount;
provided, however, that if such deficiency exceeds the Held Back Amount, then
Citadel shall permanently retain the entire Held Back Amount and the Partners
shall pay to Citadel the amount by which such deficiency exceeds the Held Back
Amount. To the extent that any amounts payable under this Section 2.2(c) are not
affected by objections of the Partners, such amounts shall be paid not more than
35 days after delivery of Citadel's Certificate to the Partners. To the extent
that any amounts payable under this Section 2.2(c) are affected by objections of
the Partners, such amounts shall be paid not more than five days after the
mutual agreement of the Partners and Citadel or the final determination of the
Arbitrator, as the case may be. Any payments due to or from the Partners
pursuant to this Section 2.2(c) shall be (i) paid by wire transfer of
immediately available funds and (ii) allocated between the Partners in
accordance with the percentages set forth in Section 2.2(a).
2.3 Letter of Credit.
(a) Simultaneously with the execution of this Agreement,
Citadel shall deliver to the Partners an irrevocable letter of credit in favor
of the Partners, issued by BankBoston, N.A., in the amount of $3,000,000 which
shall be in the form attached as Exhibit B 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 (i) a joint certificate from the
Chief Executive Officer of Citadel and the President of each of the Partners
certifying that a Draw Condition has occurred or (ii) a final non-appealable
order of a court of competent jurisdiction concluding that a Draw Condition has
occurred. At the Closing, the Partners shall return the original Letter of
Credit to Citadel for cancellation.
(b) In the event a good faith dispute exists as to whether a
Draw Condition has occurred and the Letter of Credit would, by its terms, expire
in seven days, Citadel shall take such action as is necessary to either, in
Citadel's discretion, (i) extend the expiration date of the Letter of Credit or
(ii) place $3,000,000 in escrow (pursuant to an escrow agreement reasonably
satisfactory to Citadel and the Partners), until such time as such dispute is
resolved. The parties agree that the Partners may, at their option, have
Citadel's obligations under this Section 2.3(b) specifically enforced by a court
of competent jurisdiction.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE PARTNERS
In connection with the purchase and sale of the Partnership Interests
and in order to induce Citadel to enter into and consummate the transactions
contemplated by this Agreement, the Partners jointly and severally make the
following representations and warranties to Citadel as of the date of this
Agreement (except (i) for representations and warranties expressly and
specifically relating to a time or times other than the date hereof, which shall
be made as of the specified time or times, and (ii) with respect to any
representation and warranty, to the extent expressly and specifically disclosed
in the section of Partners' Disclosure Schedule which corresponds to such
representation and warranty):
3.1 Company.
(a) Formation and Qualification; Authority. The Company is a
general partnership duly formed and validly existing under the laws of the State
of Oklahoma and has full power and authority to own its assets and properties
and to conduct the Business. The Company has full power, authority and legal
right and all necessary approvals, permits, licenses and authorizations to own
its properties and to conduct the Business.
(b) Partnership Interests. The Partners are the sole partners
in the Company. CAT and Desert have a 58% and 42%, respectively, partnership
interest in the Company. The Company does not have outstanding any options,
warrants or other securities convertible or exchangeable for any partnership
interests in or other securities of the Company.
(c) Repurchase and Other Obligations. The Company is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its partnership interests or other securities. Neither
the Company, the Partners nor any other Person is entitled to any preemptive
right, right of first refusal or similar right with respect to any partnership
interests or other securities of the Company. Other than the Partnership
Agreement, there are no agreements, arrangements or trusts between or for the
benefit of the Company or the Partners with respect to the voting or transfer of
partnership interests or other securities, or with respect to any other aspect
of the Company's affairs. The Company has not violated any applicable federal or
state securities laws in connection with the offer, sale or issuance of any of
its partnership interests or other securities.
(d) Subsidiaries. The Company does not own, of record or
beneficially, any capital stock or equity interest or investment in any Person.
3.2 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 organizational documents of the Company (including
without limitation the Partnership
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Agreement), or any law, rule, regulation, writ, judgment, injunction, decree,
determination, award or other order of any Governmental Authority, or violates
or will violate, or conflicts with or will conflict with, or will result in any
breach of any of the terms of, or constitutes or will constitute a default under
or results in or will result in the termination of or the creation or imposition
of any Lien pursuant to the terms of, any contract, commitment, agreement,
understanding or arrangement of any kind to which the Company is a party or by
which the Company or any of the assets of the Company is bound. Except for the
FCC Approval and compliance with the HSR Act, no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of the Company in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
3.3 Financial Statements. The Partners have delivered to Citadel the
following financial statements of the Company: (a) the audited balance sheet as
of December 31, 1997 and the related statements of income and cash flow for the
year then ended; (b) the audited balance sheet as of December 31, 1998 and the
related statements of income and cash flow for the year then ended; (c) the
unaudited balance sheet as of June 30, 1999 and the related statements of income
and cash flow for the six months then ended; and (d) the unaudited monthly
balance sheets and income statements for each month in 1998 and the first six
months of 1999. Each of the foregoing financial statements (including in all
cases the notes thereto, if any) (i) is accurate and complete in all material
respects, (ii) is consistent in all material respects with the books and records
of the Company (which, in turn, are accurate and complete in all material
respects), and (iii) fairly presents in all material respects the financial
condition and results of operations of the Company in accordance with GAAP
(subject to (i) the lack of footnote disclosure in the unaudited financial
statements 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.
3.4 Absence of Certain Changes. Since December 31, 1998, there has not
been any of the following with respect to the Company or the Stations, taken as
a whole: (a) change which had, or could reasonably be expected to have, a
Material Adverse Effect; (b) damage or destruction, whether or not insured,
affecting business operations; (c) labor dispute or threatened labor dispute
involving any employees; (d) actual or threatened dispute with any material
provider of software, hardware or services; (e) material change in the customary
methods of operations; (f) except in the ordinary course of business or to the
extent not material to the Business or financial condition of any Station, sale
or transfer of any tangible or intangible asset used or useful in the operation
of any Station, mortgage, pledge or imposition of any Lien on any such asset,
lease of real property, machinery, equipment or buildings with respect to any
Station entered into or modification, amendment or cancellation of any of its
existing leases relating to any Station, or cancellation of any debt or claim;
or (g) liability or obligation (contingent or otherwise) incurred under
agreements or otherwise, except current liabilities entered into or incurred in
the ordinary course of business consistent with past practices.
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3.5 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.
3.6 Asset Schedule; Debt Schedule. Except for the Excluded Assets, the
Asset Schedule includes complete and accurate (a) listings of all Real Property;
(b) listings of all material Personal Property; (c) descriptions of all Real
Property Leases and Contracts (other than any advertising Contract for air time
entered into in the ordinary course and any Contract which (i) is not material,
(ii) involves future payments of less than $5,000 and (iii) may be terminated or
cancelled by the Company without penalty or other adverse consequences on 30
days or less notice), none of which requires any consent of third parties in
connection with the transactions contemplated hereby; (d) descriptions of all of
the material Intellectual Property; and (e) listings of all of the FCC Licenses.
Schedule 1 contains a complete and accurate list of all of the Stations. The
Debt Schedule is a complete and accurate list of all of the Company's
Indebtedness for Borrowed Money as of July 31, 1999 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). 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.
3.7 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
(other than the Real Property, the Real Property Leases, the Contracts, the
Permits and the Intellectual Property, which are covered by other
representations and warranties in this Agreement). The Assets are now owned by
the Company free and clear of all Liens other than the Permitted Exceptions. The
Assets will, as of the Closing, be owned by the Company free and clear of all
Liens other than the Permitted Exceptions.
(b) Condition. The Personal Property is in reasonably good
condition, ordinary wear and tear excepted, adequate and suitable for the
operation of each Station as it
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is currently being operated, and in proper condition and repair so that such
Station can operate according to the FCC Licenses, the rules, regulations and
policies of the FCC and in all other respects in compliance with the Act and all
other applicable federal and state laws.
(c) Insurance. The Assets are and will be insured through the
Closing Date in amounts adequate to replace or repair any casualty or other
insurable loss to any of such property.
(d) Sufficiency of Assets. Except for the Excluded 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 Exceptions.
(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 knowledge of the Partners, 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.
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(vi) Each Real Property Lease is valid and binding
and in full force and effect as to the Company, and to the knowledge of the
Partners, 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 non-fee 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 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 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 knowledge of the Partners,
threatened against the Real Property.
(v) All of the Real Property is occupied under a
valid and current certificate of occupancy or similar permit (to the extent
required by applicable law). To the knowledge of the Partners, 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.
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3.8 Contractual and Other Obligations. Neither the Company, nor, to the
knowledge of the Partners, 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. Originals or true, correct and complete copies
of all written Contracts listed in the Asset Schedule have been provided to
Citadel as of the date of this Agreement.
3.9 Compensation. Set forth in Partners' Disclosure Schedule is a list
of (a) all agreements between the Company and its employees or other Persons
providing services for compensation with regard to the Stations, whether
individually or collectively, and (b) all employees of the Company or other
Persons providing services for the Company with respect to the Stations entitled
to receive annual compensation in excess of $5,000 and their respective
positions, job categories and salaries. The transactions contemplated by this
Agreement will not result in any liability for severance pay to any such
employee or other Person. The Company has not informed any such employee or
other Person that such Person will receive any increase in compensation or
benefits or any ownership interest in the Company, 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.
3.10 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.
Partners' 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
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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.
3.11 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 against or, to the knowledge of the Partners, threatened against
or involving any Station. No issue with respect to union representation is
pending or, to the knowledge of the Partners, threatened with respect to the
employees of the Company or any Station.
3.12 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 Partners' 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 Partners' 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.
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3.13 Insurance. The Company maintains insurance policies covering all
of its properties and assets and the various occurrences which may arise in
connection with the operation of the Stations, each of which policies is
summarized in Partners' 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.
3.14 Litigation; Disputes. There are no claims, disputes, actions,
suits, investigations or proceedings pending or, to the knowledge of the
Partners, threatened against or affecting the Company, the Partnership Interests
or any Station or that is reasonably likely to prevent or hinder the
consummation of the transactions contemplated hereby and, to the knowledge of
the Partners, there is no basis for any such claim, dispute, action, suit,
investigation 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.
3.15 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
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.
3.16 Environmental.
(a) Prior to the execution of this Agreement, the Partners
have provided to Citadel a true and correct copy of all environmental site
assessments, studies, tests, reports and communications which the Company or the
Partners have received relating to the Real Property and Leaseholds.
(b) To the knowledge of the Partners, (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 knowledge of the Partners, no structure,
improvements, equipment, fixtures, activities or facilities located on the Real
Property or any of the
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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 knowledge of the Partners, arising from any other activities
relating to the Real Property or any of the Leaseholds, except to the extent
that such releases or threatened releases do not constitute a condition of
Environmental Noncompliance.
(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, to the
knowledge of the Partners, at any of the Leaseholds.
(f) The Company is not subject to any Environmental Claims,
and to the knowledge of the Partners no Environmental Claims have been
threatened against the Company nor, to the knowledge of the Partners, is there
any basis for any such Environmental Claims.
3.17 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 Partners
have 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 Partners' Disclosure Schedule is a
complete and accurate list of the FCC Licenses and all other material 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
Partners' Disclosure Schedule are all of the material 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 knowledge of the Partners, 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.
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3.18 Intellectual Property. To the knowledge of the Partners, 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. To the knowledge of the Partners, 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 Partner, 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 Partners have 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.
3.19 Books and Records. The books of account of the Company fairly and
accurately reflect in all material respects 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. The Company's partnership books and records
accurately reflect in all material respects all actions taken by the Company's
partners, including all issuances and transfers of partnership interests in the
Company. Partners' Disclosure Schedule lists all of the current officers of the
Company.
3.20 Related Party Obligations. No officer, partner 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 interest in any
property used by the Company which is material to the operation of the Stations.
3.21 Year 2000 Compliance. All hardware and software constituting part
of the Assets shall be able to accurately process date/time data (including, but
not limited to, calculating, comparing and sequencing) from, into, and between
dates within 1995 and 2005 inclusive and, to the knowledge of the Partners, 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.
3.22 Disclosure. To the knowledge of the Partners, no representation or
warranty made under this Section 3 and none of the information furnished by the
Partners 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
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF CAT
In connection with the purchase and sale of CAT's Partnership Interest
and in order to induce Citadel to enter into and consummate the transactions
contemplated by this Agreement, CAT makes the following representations and
warranties to Citadel as of the date of this Agreement (except (i) for
representations and warranties expressly and specifically relating to a time or
times other than the date hereof, which shall be made as of the specified time
or times, and (ii) with respect to any representation and warranty, to the
extent expressly and specifically disclosed in the section of Partners'
Disclosure Schedule which corresponds to such representation and warranty):
4.1 CAT. CAT is a corporation duly organized, validly existing and in
good standing under the laws of the State of Oklahoma 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 CAT, the performance by
CAT of its covenants and agreements hereunder and the consummation by CAT of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of CAT. This Agreement has been duly executed and delivered
by CAT and constitutes the valid and legally binding agreement of CAT,
enforceable against it in accordance with its terms. Set forth in Partners'
Disclosure Schedule is a list of the current record and beneficial owners of
shares of capital stock of CAT, including their percentage ownership of CAT.
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 organizational documents of CAT, 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 CAT is a party or by which CAT or any of the assets of CAT
(including its Partnership Interest) is bound. Except for the FCC Approval and
compliance with the HSR Act, no consents, approvals or authorizations of, or
filings with, any Governmental Authority or any other Person are required on the
part of CAT in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
4.3 Ownership of Partnership Interest. CAT owns, beneficially and of
record, its Partnership Interest (representing a 58% partnership interest in the
Company), free and clear of all Liens.
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<PAGE> 22
4.4 Disclosure. To the knowledge of CAT, no representation or warranty
made under this Section 4 and none of the information furnished by CAT 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
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF DESERT
In connection with the purchase and sale of Desert's Partnership
Interest and in order to induce Citadel to enter into and consummate the
transactions contemplated by this Agreement, Desert makes the following
representations and warranties to Citadel as of the date of this Agreement
(except (i) for representations and warranties expressly and specifically
relating to a time or times other than the date hereof, which shall be made as
of the specified time or times, and (ii) with respect to any representation and
warranty, to the extent expressly and specifically disclosed in the section of
Partners' Disclosure Schedule which corresponds to such representation and
warranty):
5.1 Desert. Desert is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware 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 Desert, the
performance by Desert of its covenants and agreements hereunder and the
consummation by Desert of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Desert. This Agreement has
been duly executed and delivered by Desert and constitutes the valid and legally
binding agreement of Desert, enforceable against it in accordance with its
terms. FINOVA owns all of the issued and outstanding shares of capital stock of
Desert.
5.2 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 organizational documents of Desert, 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 Desert is a party or by which Desert or any of
the assets of Desert (including its Partnership Interest) is bound. Except for
the FCC Approval and compliance with the HSR Act, no consents, approvals or
authorizations of, or filings with, any Governmental Authority or any other
Person are required on the part of Desert in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
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5.3 Ownership of Partnership Interest. Desert owns, beneficially and of
record, its Partnership Interest (representing a 42% partnership interest in the
Company), free and clear of all Liens.
5.4 Disclosure. To the knowledge of Desert, no representation or
warranty made under this Section 5 and none of the information furnished by
Desert set forth in this Agreement or in the schedules or exhibits to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements in this Agreement or in the
schedules or exhibits to this Agreement not misleading.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF CITADEL
In connection with the purchase and sale of the Partnership Interests
and in order to induce the Partners to enter into and consummate the
transactions contemplated by this Agreement, Citadel makes the following
representations and warranties to the Partners as of the date of this Agreement
(except for representations and warranties expressly and specifically relating
to a time or times other than the date hereof, which shall be made as of the
specified time or times):
6.1 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.
6.2 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.
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<PAGE> 24
6.3 Litigation. There is no litigation, proceeding or investigation
pending or, to the knowledge of Citadel, threatened against or affecting Citadel
that is reasonably likely to prevent or hinder the consummation of the
transactions contemplated by this Agreement.
6.4 Qualifications. To the knowledge of Citadel, there is no fact that
would, under present law (including without limitation the Act) and the present
rules, regulations and policies of the FCC and the U.S. Department of Justice,
disqualify Citadel or Citadel License, Inc., a wholly owned subsidiary of
Citadel, from being the assignee of the FCC Licenses or the owner and operator
of the Stations.
6.5 Available Funds. Citadel has, or will have on the Closing Date,
sufficient funds available to pay the Purchase Price on the Closing Date.
6.6 Disclosure. To the knowledge of Citadel, no representation or
warranty made under this Section 6 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 7
AFFIRMATIVE COVENANTS OF THE PARTNERS
From and after the date of this Agreement and until the Closing, the
Partners jointly and severally covenant and agree to, and to cause the Company
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 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, obligations under Contracts listed on the Asset
Schedule and obligations under other executory contracts and commitments which
are reasonable and customary in the radio broadcasting industry, (ii) Permitted
Debt and (iii) the Net Profits Amount; (b) Permitted Debt does not exceed
$15,000,000; (c) the Net Profits Amount does not exceed $8,000,000; and (d) Net
Working Capital is not less than zero. Not less than five business days before
the Closing Date, the Partners shall deliver to Citadel a payoff letter from
FINOVA with respect to the Permitted Debt. Such payoff letter shall be in form
and substance satisfactory to Citadel and shall
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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 FINOVA Liens
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).
7.3 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.
7.4 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 Partners to expend money in fulfillment of the
obligations set forth in this Section 7.4 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.
7.5 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.
7.6 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, except to the
extent such items constitute current liabilities reflected in Net Working
Capital.
7.7 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 comply in all material respects with
all other laws, ordinances, regulations, rules and orders of any Governmental
Authority applicable to the Company or to any Station.
7.8 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.
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<PAGE> 26
7.9 Supplemental Financial Statements. Provide Citadel with copies of
the monthly unaudited income statements and balance sheets of the Company
prepared by the Company in the ordinary course of business commencing with the
month ended July 31, 1999 until Closing (collectively, the "Supplemental
Financial Statements"). The Partners 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 3.3.
7.10 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.
7.11 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 Partners in this Agreement.
7.12 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 Partners' Disclosure Schedule and requiring such consent.
If any such consent or approval is not obtained, the Partners 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 Partners
to obtain a consent or approval for each of the Contracts marked with an
asterisk on Partners' Disclosure Schedule (collectively, the "Mandatory
Consents"), if alternative arrangements are not satisfactory to Citadel. The
Partners 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.
7.13 Trade Schedule. Deliver to Citadel at the Closing an accurate
schedule of Trade Liabilities and Trade Receivables existing as of the Closing.
The Partners shall exercise reasonable efforts to minimize the amount of
additional Trade Liabilities incurred after the date of this Agreement.
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7.14 Phase I Site Assessments and Other Reports. Permit Citadel to
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. Copies of the written reports and/or
results shall be delivered to the Partners and to Citadel promptly after they
become available to any party. Such assessments, studies, tests and reports
shall be performed by an environmental company reasonably acceptable to Citadel
and its lenders, and the cost and expense shall be paid by Citadel. If any of
the assessments, studies, tests or reports indicate that additional testing
should be done, such testing shall be done prior to the Closing at the cost and
expense of the Partners. If any of the assessments, studies, tests or reports
indicate that any Real Property contains one or more conditions of Environmental
Noncompliance, the Partners shall promptly commence remedial action to cure the
conditions, and shall cure the conditions, prior to Closing (at the cost and
expense of the Partners); provided, however, that if the estimated cost and
expense of such remedial action(s) exceed in the aggregate $500,000, then the
Partners shall not be obligated to commence such remedial action to cure the
conditions, and Citadel shall be permitted, at its option, to terminate this
Agreement (without any party having liability as a result of such termination).
7.15 Title Insurance and Surveys. Permit Citadel to cause each parcel
of the Real Property to be surveyed by a registered professional surveyor (who
shall be reasonably acceptable to Citadel). 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) shall be delivered to Citadel and the
Partners at least 10 days prior to the Closing. The cost and expense of such
surveys shall be paid by Citadel. In addition, the Partners 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. Prior to the Closing, the
Partners 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.
7.16 Real Property Expenses. Ensure that all matters of title clearance
(other than the Permitted Exceptions) are completed (at the cost and expense of
the Partners) to the reasonable satisfaction of Citadel. Citadel shall be
responsible for the cost of title insurance premiums. Any and all realty
transfer taxes and documentary stamps (if any) payable to the State of Oklahoma
or any other Governmental Authority in connection with the Real Property and
arising out of the transactions contemplated hereby shall be split equally by
the Partners, on the one hand, and Citadel, on the other.
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SECTION 8
NEGATIVE COVENANTS OF THE PARTNERS
From and after the date of this Agreement and until the Closing, the
Partners shall not take, or cause or permit to be taken, and shall cause the
Company 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:
8.1 Sales, Transfers and Liens. Make any sale, transfer, assignment,
conveyance, mortgage, hypothecation, encumbrance or other placement of any Lien
on any of the Assets, except in the ordinary course of business and which do not
materially interfere with the operations of the Stations, and which, in the case
of a sale, transfer or assignment, is replaced with an asset of equal or greater
value, and, in the case of a conveyance, mortgage, hypothecation, encumbrance or
other Lien, is released at or prior to the Closing; provided, however, that the
Company shall be permitted to transfer the Excluded Assets.
8.2 Contracts. Amend, terminate or renew any of the Contracts listed on
Partners' Disclosure Schedule (including any renewal resulting from the failure
to provide, after the date of this Agreement, timely notice of nonrenewal as
required by the terms of any of such Contracts), other than in the ordinary
course of business (so long as notice is provided to Citadel).
8.3 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.
8.4 Obligations. Incur any Obligations (including without limitation
any additional Indebtedness for Borrowed Money) except in the ordinary course of
business in a manner consistent with past practices.
8.5 Salary Increases. Increase any salary, other payments, disbursement
or distributions in any manner or form to any employees of the Company except
(a) in the ordinary course of business consistent with past practices, (b) in
accordance with the existing terms of contracts entered into prior to the date
of this Agreement or (c) bonuses to be paid to certain employees as described in
Section 3.9 of Partners' Disclosure Schedule.
8.6 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 Partnership Interests). Prior to the
Closing, the Partners shall not sell, assign, pledge or otherwise transfer any
of the Partnership Interests.
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8.7 Issuance of Securities. Issue any partnership interests in or any
other securities of the Company.
SECTION 9
COVENANTS OF CITADEL
From and after the date of this Agreement and until the Closing,
Citadel covenants and agrees with the Partners as follows:
9.1 Compliance with Law. Citadel shall comply with all applicable laws
and regulations required for the valid and effective consummation of the
transactions contemplated hereby.
9.2 Notice. Citadel shall promptly notify the Partners 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.
9.3 Retention of Employees. Citadel currently anticipates retaining
substantially all of the employees of the Company from and after the Closing.
9.4 Non-Solicitation of Employees. In the event this Agreement is
terminated for any reason, Citadel shall not, for a period of one year after
such termination, solicit for employment, attempt to employ or actively assist
any other Person in employing or soliciting for employment any Person who is
employed by the Company at or within six months prior to the time of such
termination.
SECTION 10
ADDITIONAL COVENANTS OF THE PARTIES
10.1 Application for Transfer of Control. As promptly as practicable
after the date of this Agreement, and in no event later than 10 days after the
date of this Agreement, the Partners shall cause the Company 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 Partners and Citadel shall
each take all necessary actions on its part to
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obtain the FCC Approval. Citadel shall advance the filing fee for the FCC
Application, and the Partners shall reimburse Citadel for one-half of such
filing fee at the Closing (or upon the earlier termination of this Agreement).
Subject to Section 16.7, 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.
10.2 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, the Partners are 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 purporting to act on behalf of the respective indemnitor as a broker,
agent or finder in connection with the transactions contemplated by this
Agreement.
10.3 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 Partners at their sole cost and expense to substantially the
same condition as existed before such loss or damage, then the parties shall
adjust the Purchase Price to reflect the diminution in value of such Station
attributable to the impairment of such assets.
10.4 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.
10.5 Cooperation. During the seven-year period immediately following
the Closing, Citadel shall cooperate with the Partners in providing them all
information reasonably requested and permitting them 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 Partners. The Partners, 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 Partners
of Citadel's intent to discard such records and (ii) the Partners do not, within
10 days after receipt of such notice, retrieve such records from Citadel's
premises. Notwithstanding anything to the contrary herein, the Partners may
retain, subject to the confidentiality provisions set forth in Section 10.7,
copies of such books and records of the Company as are necessary for the
Partners' tax reporting purposes and to calculate Net Working Capital.
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10.6 HSR Filing. As promptly as practicable after the date of this
Agreement, and in no event later than 30 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
Partners shall reimburse Citadel for one-half of such filing fee at the Closing
(or upon the earlier termination of this Agreement). Subject to Section 16.7,
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.
10.7 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 (collectively, "Confidential Information"); provided,
however, that the term "Confidential Information" does not include any
information which (a) at the time of disclosure or thereafter is generally
available to and known by the public (other than as a result of a disclosure
directly or indirectly by the party hereto which received such information (the
"Recipient")), (b) was available to the Recipient from a source other than the
other parties hereto or (c) has been independently acquired or developed by the
Recipient without violating any of its obligations under this Agreement. The
obligation to keep Confidential Information confidential shall not apply to any
information that is required to be disclosed pursuant to any court action or any
proceeding before a Governmental Authority. In the event this Agreement is
terminated for reason, each party hereto, upon the request of another party
hereto, shall promptly return to the requesting party all copies of Confidential
Information in its possession and shall destroy all analysis, studies and
documents prepared by it which contain any Confidential Information.
10.8 Public Announcements. Citadel and the Partners 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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10.9 No Inconsistent Action. No party hereto shall take any action (a)
inconsistent with its obligations under this Agreement or (b) that would hinder
or delay the consummation of the transactions contemplated by this Agreement.
10.10 Transfer of Excluded Assets. Immediately prior to the Closing,
the Partners shall cause the Company to transfer the Excluded Assets to CAT or
otherwise satisfy all obligations relating to the Excluded Assets, pursuant to
binding agreements in form and substance reasonably satisfactory to Citadel.
10.11 Net Profits Interest. At least three business days before the
Closing Date, the Partners shall deliver to Citadel a certificate of the
Partners (the "Net Profits Certificate") which sets forth a true and correct
calculation of the amount due at the Closing under each Net Profits Agreement.
At the Closing, the Partners shall deliver to Citadel an agreement (in form and
substance reasonably acceptable to Citadel) executed by each Person who is a
party to a Net Profits Agreement (other than the Company), which agreement,
effective immediately upon receipt by such Person of the payment specified in
the Net Profits Certificate, (a) terminates such Person's Net Profits Agreement
and (b) releases the Company and Citadel from any and all obligations and
liability relating to such Person's Net Profits Agreement.
10.12 Termination of Plans. Prior to the Closing, the Partners shall
cause the Company to terminate, effective no later than immediately prior to the
Closing, the Caribou Communications C.L. Employees 401(k) Plan. No distributions
shall be made from such plan until receipt of a favorable determination letter
from the Internal Revenue Service. In addition, prior to the Closing, the
Partners shall cause the Company to terminate, effective as of the Closing, all
"employee welfare benefit plans" as defined in Section 3(1) of ERISA and all
insurance contracts attendant to such plans. Such terminations shall be made in
accordance with the applicable plans and all applicable law.
10.13 Audited Financial Statements. The Partners recognize that Citadel
and its parent, CCC, are public reporting companies and agree that Citadel shall
be entitled at its expense to cause audited and unaudited financial statements
of the Stations to be prepared for such periods and filed with the Securities
and Exchange Commission, and included in a prospectus distributed to prospective
investors, as required by laws and regulations applicable to Citadel and CCC as
public reporting companies or registrants. The Partners agree to cooperate, and
to cause the Company to cooperate, with Citadel and the auditing accountants as
reasonably required by Citadel in connection with the preparation and filing of
such financial statements, including providing a customary management
representation letter in the form prescribed by GAAP.
10.14 CAT Distributions. From and after the Closing, CAT shall not
distribute to any Person all or any portion of the Purchase Price it receives
pursuant to this Agreement unless such Person (or a substitute Person acceptable
to Citadel in its reasonable discretion) agrees, in a written instrument in
favor of Citadel and in form and substance reasonably satisfactory to Citadel
(an "Indemnification Guaranty"), to unconditionally guarantee the
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payment when due of all of CAT's indemnification obligations under Section 14;
provided, however, such Person's (or, if applicable, such substitute Person's)
obligations under the Indemnification Guaranty shall not exceed the greater of
(a) the sum of (i) the aggregate amount distributed by CAT to such Person from
the Purchase Price and (ii) the Net Profits Amount received by such Person, if
any, or (b) an amount equal to such Person's current percentage ownership of CAT
as set forth on Partners' Disclosure Schedule, multiplied by 58%, multiplied by
the sum of the Purchase Price and the Net Profits Amount. Prior to Closing, CAT
shall obtain and deliver to Citadel an executed Indemnification Guaranty from
each of J. Kent Nichols, J. Larry Nichols, John W. Nichols and Betty Street. For
purposes of this Section 10.14, a "distribution" shall be deemed to include any
payment made by CAT, including without limitation a dividend, loan, advance,
return of capital and repayment of indebtedness.
SECTION 11
THE CLOSING
11.1 Closing Date. The Closing shall occur on the later of (a) January
6, 2000 or (b) a date mutually selected by the Partners and Citadel which is
within 10 business days following the later of (i) the date on which the FCC
Approval has become a Final Order or (ii) 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.
11.2 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
Partners 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 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 Partners shall execute and deliver
assignments with respect to the Partnership Interests.
(ii) The Partners shall deliver the executed
resignation of each officer of the Company.
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SECTION 12
CONDITIONS TO THE OBLIGATION OF THE PARTNERS
The obligation of the Partners 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 them in their sole
discretion (other than those set forth in Sections 12.7 and 12.8):
12.1 Opinion of Citadel's Counsel. The Partners shall have received an
opinion of counsel for Citadel, dated the Closing Date, in form and substance
reasonably satisfactory to the Partners, as to the matters set forth on Exhibit
C hereto.
12.2 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 in all
material respects (determined without regard to materiality qualifications
within all such covenants) with all of its covenants contained herein; and
Citadel shall have delivered to the Partners a certificate to that effect, dated
the Closing Date, signed by an officer of Citadel.
12.3 Adverse Proceedings. No order, decree or judgment of any court,
agency or other Governmental Authority shall have been rendered against Citadel,
the Company or the Partners prohibiting the consummation of any of the
transactions contemplated by this Agreement in accordance with its terms.
12.4 Other Certificates. The Partners shall have received certificates
as to the good standing of Citadel in the States of Nevada and Oklahoma, 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 Partners, as the Partners shall have reasonably requested in connection
with the transactions contemplated hereby.
12.5 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 Partners 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.
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12.6 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 in all material respects.
12.7 FCC Approval. The FCC Approval shall have been obtained and shall
have become a Final Order.
12.8 HSR Clearance. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
12.9 Consulting Agreement. Citadel shall have executed and delivered
the Consulting Agreement.
SECTION 13
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 13.9 and 13.10):
13.1 Opinions of the Company's and the Partners' Counsel. Citadel shall
have received opinions of counsel for the Company and the Partners, dated the
Closing Date, in form and substance reasonably satisfactory to Citadel, as to
the matters set forth on Exhibit D hereto.
13.2 Representations, Warranties and Covenants. The representations and
warranties of the Partners 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 Partners shall have complied in
all material respects (determined without regard to materiality qualifications
within all such covenants) with all of their covenants contained herein; and the
Partners shall have delivered to Citadel a certificate to that effect, dated the
Closing Date, signed by an officer of each of the Partners.
13.3 Adverse Proceedings. No order, decree or judgment of any court,
agency or other Governmental Authority shall have been rendered against Citadel,
the Company or the Partners prohibiting the consummation of any of the
transactions contemplated by this Agreement in accordance with its terms.
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13.4 Other Certificates. Citadel shall have received a certificate as
to the good standing of CAT as a corporation in the State of Oklahoma and a
certificate as to the good standing of Desert as a corporation in the State of
Delaware, 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.
13.5 Corporate Action. All corporate action necessary to authorize the
execution, delivery and performance by each of the Partners of this Agreement
and the transactions contemplated hereby shall have been duly and validly taken
by each of the Partners, and each of the Partners shall have delivered to
Citadel certified copies of the resolutions of the board of directors of each of
the Partners 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.
13.6 Acts to be Performed. Each of the covenants, acts and undertakings
of the Partners to be performed on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed in all material respects.
13.7 Lien Searches. The Partners shall have delivered to Citadel lien
(including UCC and tax) and judgment (including litigation) searches from the
appropriate county and state agencies showing all Liens on the Assets, which
searches shall be conducted not more than 30 days prior to the Closing. Such
searches shall include the name of the Company, the Partners, 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 Partners may cause such searches to be prepared by a
third party, in which case the Partners shall not be responsible for any
inaccuracies in such searches unless the Partners have actual knowledge of their
inaccuracy. Notwithstanding the foregoing, the Partners shall remain responsible
for satisfying any Lien (other than Permitted Exceptions) on the Assets and the
Partnership Interests even if such searches are inaccurate.
13.8 Mandatory Consents. All Mandatory Consents shall have been
obtained.
13.9 FCC Approval. The FCC Approval shall have been obtained and shall
have become a Final Order.
13.10 HSR Clearance. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
13.11 Consulting Agreement. J. Kent Nichols shall have executed and
delivered the Consulting Agreement.
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13.12 Net Profits Releases. The agreements of Persons party to the Net
Profit Agreements shall be executed and delivered as provided in Section 10.11.
13.13 Material Adverse Change. Between the date of this Agreement and
the Closing Date, there shall not have been any change which had a Material
Adverse Effect.
SECTION 14
INDEMNIFICATION
14.1 Indemnification by CAT. Subject to the limitations and procedures
set forth in this Section 14, CAT shall indemnify and hold harmless Citadel from
and against any and 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 CAT in this Agreement or (b) the breach of any of
the representations or warranties made by CAT in this Agreement.
14.2 Indemnification by Desert. Subject to the limitations and
procedures set forth in this Section 14, Desert shall indemnify and hold
harmless Citadel from and against any and all Damages 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 Desert in this
Agreement or (b) the breach of any of the representations or warranties made by
Desert in this Agreement.
14.3 Indemnification by Citadel. Subject to the limitations and
procedures set forth in this Section 14, Citadel shall indemnify and hold
harmless the Partners from and against any and all Damages sustained or incurred
by them, 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, (b) the breach of any of the representations or warranties made by
Citadel in this Agreement or (c) the failure by Citadel to satisfy obligations
of the Company from and after the Closing (except to the extent the Partners are
otherwise responsible for such obligations as provided herein).
14.4 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 14 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
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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 20 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 obtaining the consent of the Indemnitor (which consent
shall 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.
14.5 Survival.
(a) The Partners. Each of the representations and warranties
made by the Partners in this Agreement shall survive for a period of 18 months
after the Closing Date, notwithstanding any investigation at any time made by or
on behalf of Citadel, and upon the expiration of such 18-month period such
representations and warranties shall expire except as follows: (i) the
representations and warranties contained in Sections 3.5 and 3.10 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
3.16 and 3.17 shall expire on the fifth anniversary of the Closing Date; and
(iii) the representations and warranties contained in Sections 3.1, 3.2, 3.7(a),
3.7(f)(i), 4.1, 4.2, 4.3, 5.1, 5.2 and 5.3 shall not expire but shall continue
indefinitely. Each of the covenants of the Partners in this Agreement shall
survive for a period of 36 months after the Closing Date, notwithstanding any
investigation at any time made by or on behalf of Citadel, and upon the
expiration of such 36-month period, such covenants shall expire, except for the
covenants in Section 10.5 (which shall survive until the seventh anniversary of
the Closing Date) and Section 14 (which shall survive as provided in this
Section 14.5(a)). No claim for the recovery of Damages may be asserted by
Citadel
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against the Partners after such representations, warranties and covenants shall
thus expire; provided, however, that claims for Damages first asserted in
writing within the applicable period shall not thereafter be barred.
(b) Citadel. Each of the representations and warranties made
by Citadel in this Agreement shall survive for a period of 18 months after the
Closing Date, notwithstanding any investigation at any time made by or on behalf
of the Partners, and upon the expiration of such 18-month period such
representations and warranties shall expire, except that the representations and
warranties of Citadel contained in Sections 6.1 and 6.2 shall not expire but
shall continue indefinitely. Each of the covenants of Citadel in this Agreement
shall survive for a period of 36 months after the Closing Date, notwithstanding
any investigation at any time made by or on behalf of the Partners, and upon the
expiration of such 36-month period, such covenants shall expire, except for the
covenants in Section 10.5 (which shall survive until the seventh anniversary of
the Closing Date) and Section 14 (which shall survive as provided in this
Section 14.5(b), except for clause (c) of Section 14.3, which shall survive
indefinitely). No claim for the recovery of Damages may be asserted by the
Partners against Citadel or its successors in interest after such
representations, warranties and covenants shall thus expire; provided, however,
that claims for Damages first asserted in writing within the applicable period
shall not thereafter be barred.
14.6 Limitation of CAT's Liability. Notwithstanding anything in this
Agreement to the contrary, the obligation of CAT to indemnify Citadel shall be
subject to the following:
(a) Threshold. Citadel shall not be entitled to recover
Damages from CAT pursuant to clause (b) of Section 14.1 (other than Damages
arising by reason of a breach of the representations and warranties made in
Sections 3.1, 3.2, 3.7(a), 3.7(f)(i), 4.1, 4.2 and 4.3) until the aggregate of
all such Damages suffered by Citadel exceeds $150,000 (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
from CAT pursuant to Section 14.1 in excess of 58% of the sum of the Purchase
Price and the Net Profits Amount.
(c) Exclusive Remedy. Except with respect to any claim for
Damages relating to any fraudulent breach of a representation, warranty or
covenant of CAT, subsequent to the Closing, indemnification under this Section
14 shall be the exclusive remedy of Citadel against CAT with respect to any
legal, equitable or other claim for relief based upon this Agreement.
(d) Exceptions. The limitations set forth in Sections 14.5 and
14.6 shall not apply with respect to any claim for Damages relating to any
fraudulent breach of a representation, warranty or covenant of CAT.
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14.7 Limitation of Desert's Liability. Notwithstanding anything in this
Agreement to the contrary, the obligation of Desert to indemnify Citadel shall
be subject to the following:
(a) Threshold. Citadel shall not be entitled to recover
Damages from Desert pursuant to clause (b) of Section 14.2 (other than Damages
arising by reason of a breach of the representations and warranties made in
Sections 3.1, 3.2, 3.7(a), 3.7(f)(i), 5.1, 5.2 and 5.3) until the aggregate of
all such Damages suffered by Citadel exceeds 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
from Desert pursuant to Section 14.2 in excess of 42% of the sum of the Purchase
Price and the Net Profits Amount.
(c) Exclusive Remedy. Except with respect to any claim for
Damages relating to any fraudulent breach of a representation, warranty or
covenant of Desert, subsequent to the Closing, indemnification under this
Section 14 shall be the exclusive remedy of Citadel against Desert with respect
to any legal, equitable or other claim for relief based upon this Agreement.
(d) Exceptions. The limitations set forth in Sections 14.5 and
14.7 shall not apply with respect to any claim for Damages relating to any
fraudulent breach of a representation, warranty or covenant of Desert.
14.8 Limitation of Citadel's Liability. Notwithstanding anything in
this Agreement to the contrary, the obligation of Citadel to indemnify the
Partners shall be subject to the following:
(a) Threshold. The Partners shall not be entitled to recover
Damages pursuant to clause (b) of Section 14.3 (other than as a result of a
breach of the representations and warranties made in Sections 6.1 and 6.2) until
the aggregate of all such Damages suffered by them exceeds the Threshold;
provided, however, that once such aggregate exceeds the Threshold, the Partners
may recover all such Damages suffered since the Closing Date without regard to
the Threshold. Notwithstanding anything to the contrary herein, the final
settlement of the Purchase Price in accordance with Sections 2.2(b) and 2.2(c),
and the application of the Held Back Amount, shall not be considered in
determining whether the Threshold has been reached.
(b) Ceiling. The Partners shall not be entitled to recover
Damages pursuant to Section 14.3 in excess of the sum of the Purchase Price and
the Net Profits Amount.
(c) Exclusive Remedy. Except with respect to any claim for
Damages relating to any fraudulent breach of a representation, warranty or
covenant of Citadel, subsequent to the Closing, indemnification under this
Section 14 shall be the exclusive remedy of the Partners with respect to any
legal, equitable or other claim for relief based upon this Agreement.
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(d) Exceptions. The limitations set forth in Sections 14.5 and
14.8 shall not apply with respect to any claim for Damages relating to any
fraudulent breach of a representation, warranty or covenant of Citadel.
SECTION 15
TERMINATION OF AGREEMENT; ADDITIONAL REMEDIES
15.1 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 Partners;
(b) by either Citadel or the Partners upon providing written
notice to the other parties at any time after the first anniversary of the date
of this Agreement;
(c) by the Partners, if there has been a material
misrepresentation or breach on the part of Citadel in the representations,
warranties or covenants set forth in this Agreement and such material
misrepresentation or breach shall not have been cured or waived within 10 days
(or such longer period of time as may be reasonable in the circumstances) after
the occurrence thereof;
(d) by Citadel, if there has been a material misrepresentation
or breach on the part of the Partners in the representations, warranties or
covenants set forth in this Agreement and such material misrepresentation or
breach shall not have been cured or waived within 10 days (or such longer period
of time as may be reasonable in the circumstances) after the occurrence thereof;
(e) by Citadel or the Partners upon denial by the FCC of the
FCC Application; and
(f) by Citadel or the Partners 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.
Notwithstanding the foregoing, no party hereto may terminate this Agreement if
such party is in material default or breach of this Agreement.
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15.2 Additional Remedies.
(a) In the event of the termination of this Agreement by the
Partners pursuant to Section 15.1(c) (any such event being a "Draw Condition"),
the Partners shall be entitled to recover any actual damages they suffer as a
result of such termination and the breach relating to such damages (up to a
maximum amount of $6,000,000) and, for such purpose, may draw upon the proceeds
of the Letter of Credit and retain such proceeds to the extent of such actual
damages (subject to such $6,000,000 cap); provided, however, such right to draw
upon the Letter of Credit shall not be construed as liquidated damages. In the
event of any other termination of this Agreement pursuant to any other provision
of Section 15.1, Citadel shall be entitled to a return of, and the Partners
shall return to Citadel, the original Letter of Credit for cancellation.
(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 Partners improperly refuse 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 15.1, to have this Agreement specifically enforced by a court of
competent jurisdiction in addition all other remedies available at law or in
equity; provided, however, that Citadel may not specifically enforce this
Agreement if Citadel has previously terminated this Agreement and received the
original Letter of Credit.
SECTION 16
GENERAL
16.1 Survival of Representations and Warranties. Each representation
and warranty herein contained shall survive the Closing for the periods
described in Section 14.5, notwithstanding any investigation at any time made by
or on behalf of any party to this Agreement.
16.2 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 Oklahoma.
16.3 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:
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<PAGE> 43
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 Partners: CAT Communications, Inc.
518 17th Street, Suite 980
Denver, Colorado 80202
Attn: J. Kent Nichols
Fax: (303) 436-1889
and
Desert Communications III, Inc.
311 S. Wacker Drive
Suite 600
Chicago, Illinois 60606-2556
Attn: Jeffrey S. Kilrea
Fax: (312) 322-3533
With copies to: Ireland Stapleton Pryor & Pascoe, P.C.
1675 Broadway
Suite 2600
Denver, Colorado 80202
Attn: William E. Tanis, Esq.
Fax: (303) 623-2062
and
Finova Financial Innovators
311 S. Wacker Drive
Suite 6000
Chicago, Illinois 60606-2556
Attn: Mike Rogers, Esq.
Fax: (312) 322-3533
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<PAGE> 44
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.
16.4 Entire Agreement. This instrument supersedes all prior
communications, understandings and agreements of or among the parties with
respect to the subject matter of this Agreement and contains the entire
agreement among the parties with respect to the transactions contemplated by
this Agreement. There are no representations, warranties or covenants of any
party hereto with respect to the subject matter of this Agreement other than
those set forth in this Agreement.
16.5 Headings. The headings of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
16.6 Schedules and Exhibits. All schedules and exhibits annexed to this
Agreement are hereby incorporated in this Agreement by this reference.
16.7 Expenses. Each party shall bear its own costs and expenses
incurred by it in connection with the transactions contemplated by this
Agreement; provided, however, that the Company may bear the costs and expenses
incurred by the Partners in connection with the transactions contemplated
hereby.
16.8 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.
16.9 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.
16.10 Assignment. Neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by any party without the prior
written consent, in its sole discretion, of each other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, and no other Person
shall have any right, benefit or obligation under this Agreement.
16.11 Prior Control. Until the Closing, the Company shall maintain
control of each Station.
16.12 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.
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<PAGE> 45
16.13 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.
[Signatures appear on next page]
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<PAGE> 46
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
CAT COMMUNICATIONS, INC.
By: /s/ James Kent Nichols
---------------------------------
Title: President
------------------------------
DESERT COMMUNICATIONS III, INC.
By: /s/ Jeffrey S. Kilrea
---------------------------------
Title: Vice President
------------------------------
CITADEL BROADCASTING COMPANY
By: /s/ Donna L. Heffner
---------------------------------
Title: Vice President
------------------------------
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<PAGE> 47
JOINDER OF DESERT STOCKHOLDER
The undersigned, which owns all of the issued and outstanding shares of
capital stock of Desert, hereby joins in the foregoing Agreement for the sole
purpose of unconditionally guaranteeing the payment when due of all of Desert's
indemnification obligations under Section 14 of such Agreement.
FINOVA CAPITAL CORPORATION
By: /s/ Jeffrey S. Kilrea
---------------------------------
Title: Senior Vice President
------------------------------
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<PAGE> 48
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 6 - Partners' Disclosure Schedule
Schedule 7 - Permitted Exceptions
Exhibit A - Consulting Agreement
Exhibit B - Letter of Credit
Exhibit C - Form of Opinion of Counsel for Citadel
Exhibit D - Form of Opinion of Counsel for the Company and the Partners
[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
AMENDMENT TO PURCHASE AGREEMENT
On this 22nd day of December, 1999, CAT COMMUNICATIONS, INC., an
Oklahoma corporation ("CAT"), DESERT COMMUNICATIONS III, INC., a Delaware
corporation ("Desert"), and CITADEL BROADCASTING COMPANY, a Nevada corporation
("Citadel"), herein amend the Purchase Agreement among them dated as of August
23, 1999 (the "Purchase Agreement").
RECITALS:
The parties hereto desire to amend the Purchase Agreement in certain
respects.
NOW, THEREFORE, the parties agree as follows:
1. Section 2.2(a) of the Purchase Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"(a) Payment. The Purchase Price, less the Held Back Amount,
shall be paid at the Closing to the Partners (58% to CAT and 42% to
Desert) in cash by wire transfer of immediately available funds to
accounts designated by the Partners in writing at least three days
prior to the Closing Date. In addition, the Partners hereby direct
Citadel to, and Citadel shall, pay the Net Profits Amount at the
Closing by delivery of six promissory notes, dated the Closing Date,
executed by Citadel in favor of each of the six holders of the Net
Profits Agreements, in the principal amount of the Net Profits Amount
for such holders as set forth on the Net Profits Certificate and in the
form of Exhibit E attached hereto."
2. Section 11.1 of the Purchase Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"11.1 Closing Date. The Closing shall occur on the later of
(a) December 23, 1999 or (b) a date mutually selected by the Partners
and Citadel in writing, provided that FCC Approval has become a Final
Order. The Closing shall begin at 10:00 a.m., local time, on the date
of the Closing (the "Closing Date") at the offices of Eckert Seamans
Cherin & Mellott, LLC, 600 Grant Street, 44th Floor, Pittsburgh,
Pennsylvania 15219, counsel for Citadel."
3. The Purchase Agreement is in all other respects unamended.
4. This Amendment to Purchase Agreement may be executed in one or more
counterparts, each of which together shall constitute a single instrument.
Signatures on this Amendment to Purchase Agreement transmitted by facsimile
shall be deemed to be original signatures for all purposes of this Amendment to
Purchase Agreement.
<PAGE> 2
5. This Amendment to Purchase Agreement shall be governed by and
construed in accordance with the internal laws, and not the laws of conflicts,
of the State of Oklahoma.
[remainder of this page intentionally left blank]
2
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Purchase Agreement effective as of the date first written above.
CAT COMMUNICATIONS, INC.
By: /s/ Michael L. Gumb
---------------------------------
Name: Michael L. Gumb
-------------------------------
Title: Vice President
------------------------------
DESERT COMMUNICATIONS III, INC.
By: /s/ Jeffrey S. Kilrea
---------------------------------
Name: Jeffrey S. Kilrea
-------------------------------
Title: Vice President
------------------------------
CITADEL BROADCASTING COMPANY
By: /s/ Donna L. Heffner
---------------------------------
Name: Donna L. Heffner
-------------------------------
Title: Vice President
------------------------------
<PAGE> 4
EXHIBIT E
FORM OF PROMISSORY NOTE
See attached.
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of this exhibit to the Securities and Exchange Commission
upon request.]
