<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 19, 1998
-----------------------
Citadel Communications Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada
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(State of Other Jurisdiction of Incorporation)
000-24515 86-0748219
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(Commission File Number) (IRS Employer Identification No.)
140 South Ash Avenue
Tempe, Arizona 85281
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(Address of Principal Executive Offices) (Zip Code)
(602) 731-5222
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(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
ITEM 5. OTHER EVENTS.
As previously reported, on November 19, 1998, Citadel Broadcasting
Company ("CBC"), a subsidiary of Citadel Communications Corporation (the
"Company"), sold an aggregate of $115.0 million in principal amount of its 9-
1/4% Senior Subordinated Notes due 2008 (the "Notes") in a private placement
transaction. The aggregate sale price was $115.0 million, and the aggregate net
proceeds to CBC were approximately $111.0 million. CBC repaid all amounts
outstanding under its revolving credit facility, and it intends to use the
remaining net proceeds to finance acquisitions and for general corporate
purposes.
As previously announced, on November 23, 1998, CBC entered into an
Asset Purchase Agreement with Wicks Broadcast Group Limited Partnership and
certain related entities (collectively, "Wicks") to acquire a total of ten FM
and six AM radio stations in Charleston, South Carolina, Binghamton, New York
and Muncie and Kokomo, Indiana, each a market where CBC does not presently own
any other radio stations, for an aggregate purchase price of $77.0 million in
cash. CBC has delivered an irrevocable letter of credit in favor of Wicks in the
amount of $5.0 million to secure certain of CBC's obligations under the asset
purchase agreement. The asset purchase agreement contains customary
representations and warranties of the parties, and consummation of the
transaction is subject to certain conditions including (i) the receipt of the
Federal Communications Commission's consent to the transfer of the station
licenses to CBC or its subsidiary, Citadel License, Inc., (ii) the expiration or
termination of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and (iii) the receipt of
consents to the assignment to CBC of certain material contracts relating to the
stations.
This Current Report on Form 8-K/A (Amendment No. 1) has been filed in
order to file the asset purchase agreement as an exhibit and in order to
incorporate certain financial information of Wicks Radio Group (a division of
the Wicks Broadcast Group Limited Partnership) (collectively, the Financial
Statements) in the Company's Registration Statement No. 333-65279. The Financial
Statements are set forth below in Item 7 and are incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. The following Financial Statements are included
herein pursuant to Item 7(a):
Independent Auditors' Report
Balance sheets as of December 31, 1997 and September 30, 1998
(unaudited)
Statements of Operations and Changes in Division Equity for the year
ended December 31, 1997 and the nine months ended September 30, 1998
(unaudited)
Statements of Cash Flows for the year ended December 31, 1997 and for
the nine months ended September 30, 1998 (unaudited)
Notes to Financial Statements
(b) Pro Forma Financial Information. The following pro forma financial
information of Citadel Communications and Subsidiaries is included
herein pursuant to Item 7(b):
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the nine months ended September 30, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the nine months ended September 30, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations
Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations
Unaudited Pro Forma Condensed Consolidated Balance Sheet at September
30, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(c) The following exhibits are filed as part of this report pursuant to
Item 7(c):
<PAGE> 3
2.1 Asset Purchase Agreement dated November 23, 1998 by and among Wicks
Broadcast Group Limited Partnership, WBG License Co., L.L.C., Butternut
Broadcasting Company, Inc., WBG Binghamton License Co., Inc. and
Citadel Broadcasting Company.
4.1 Indenture dated as of November 19, 1998 among Citadel Broadcasting
Company, Citadel License, Inc. and The Bank of New York, as Trustee,
with the form of 9 1/4% Senior Subordinated Notes due 2008 included
therein (previously filed).
10.1 Tenth Amendment to Loan Instruments dated November 3, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
10.2 Eleventh Amendment to Loan Instruments dated November 17, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
10.3 Twelfth Amendment to Loan Instruments dated November 19, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
23.1 Consent of KPMG Peat Marwick LLP
99.1 Press Release dated November 19, 1998 (previously filed).
99.2 Press Release dated November 23, 1998 (previously filed).
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<PAGE> 4
INDEPENDENT AUDITORS' REPORT
The Partners
Wicks Radio Group
(a division of Wicks Broadcast Group Limited Partnership)
We have audited the accompanying balance sheet of Wicks Radio Group (a
division of Wicks Broadcast Group Limited Partnership) as of December 31, 1997,
and the related statements of operations and changes in division equity, and
cash flows for the year then ended. These financial statements are the
responsibility of Wicks Radio Group's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wicks Radio Group (a
division of Wicks Broadcast Group Limited Partnership) as of December 31, 1997
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
McLean, Virginia
December 15, 1998
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<PAGE> 5
WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 104,940 $ 326,168
Accounts receivable, net of allowance for doubtful accounts
of $286,811 at December 31, 1997 and $311,650 at
September 30, 1998........................................ 2,123,972 3,126,098
Prepaid expenses and other assets........................... 58,099 203,819
----------- -----------
Total current assets................................... 2,287,011 3,656,085
Property and equipment, net................................. 4,617,141 6,277,822
Intangible assets, net...................................... 25,047,120 38,242,931
----------- -----------
Total assets........................................... $31,951,272 $48,176,838
=========== ===========
LIABILITIES AND DIVISION EQUITY
Current liabilities -- accounts payable and accrued
expenses.................................................. $ 489,238 $ 513,650
Deferred income taxes....................................... 560,000 530,000
----------- -----------
Total liabilities...................................... 1,049,238 1,043,650
Division equity............................................. 30,902,034 47,133,188
----------- -----------
Total liabilities and division equity.................. $31,951,272 $48,176,838
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 6
WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS AND CHANGES IN DIVISION EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -----------------
<S> <C> <C>
Revenues:
Broadcast revenues........................................ $12,751,347 $13,837,308
Other revenue............................................. 346,790 500,346
----------- -----------
Gross revenues.............................................. 13,098,137 14,337,654
Less -- agency commissions................................ (1,320,388) (1,387,370)
----------- -----------
Net revenue................................................. 11,777,749 12,950,284
Operating costs:
Station operating expenses................................ 8,269,884 8,668,765
Depreciation and amortization............................. 2,301,180 3,052,064
Corporate overhead........................................ 1,008,602 587,049
----------- -----------
11,579,666 12,307,878
Net income before income taxes.............................. 198,083 642,406
Income taxes (benefit)...................................... (40,000) (30,000)
----------- -----------
Net income.................................................. 238,083 672,406
Division equity, beginning of period........................ 23,281,430 30,902,034
Net corporate transfers..................................... 7,382,521 15,558,748
----------- -----------
Division equity, end of period.............................. $30,902,034 $47,133,188
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE> 7
WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
----------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 238,083 $ 672,406
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 2,301,180 3,052,064
Deferred tax benefit................................... (40,000) (30,000)
(Increase) decrease in receivables..................... 65,154 (1,002,126)
Increase in prepaid expenses and other current
assets............................................... (50,794) (145,720)
Increase (decrease) in accounts payable and accrued
expenses............................................. (1,515,667) 24,412
----------- ------------
Net cash provided by operating activities............ 997,956 2,571,036
----------- ------------
Cash flows used in investing activities:
Purchase of property and equipment........................ (369,460) (145,157)
Acquisition of broadcast properties....................... (8,672,770) (17,763,399)
----------- ------------
Cash flows used in investing activities..................... (9,042,230) (17,908,556)
----------- ------------
Cash flows provided by financing activities -- net corporate
transfers................................................. 7,382,521 15,558,748
----------- ------------
Net increase (decrease) in cash and cash equivalents........ (661,753) 221,228
Cash and cash equivalents, beginning of period.............. 766,693 104,940
----------- ------------
Cash and cash equivalents, end of period.................... $ 104,940 $ 326,168
=========== ============
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE> 8
WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(1) BUSINESS DESCRIPTION
The Wicks Radio Group (the "Broadcast Group") is a division of Wicks
Broadcast Group Limited Partnership (the "Partnership"). The Broadcast Group
consists of the thirteen radio stations (8 FMs and 5 AMs) serving the
Charleston, SC and Binghamton, NY markets as of December 31, 1997. In January
1998, the Broadcast Group acquired an additional three stations (2 FMs and
1 AM). See note 3.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents consist
of highly liquid investments with original maturities of three months or less.
The fair market value of such investments approximates cost.
Property and Equipment
Property and equipment are stated at cost. Depreciation expense is computed
using the straight-line method over the estimated useful lives of the assets,
which range from three to twenty years.
Intangible Assets and Recovery of Long-Lived Assets
Intangible assets consist principally of network affiliation agreements,
broadcasting licenses, covenants not to compete and the excess of costs over the
fair value of net assets acquired. Amortization expense is computed on a
straight-line basis over the estimated lives of the assets which range from 2-15
years.
The Partnership's policy is to review its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. The Partnership recognizes an impairment loss when the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset. The measurement of the impairment losses to be recognized
is based upon the difference between the fair value and the carrying amount of
the assets.
Income Taxes
The Broadcast Group is generally not an entity subject to income taxes. The
Broadcast Group's income or loss is passed through to the Partnership and the
related tax attributes are deemed to be distributed to, and to be reportable by,
the partners of the Partnership on their respective income tax returns.
However, the Broadcast Group contains the Partnership's subsidiary,
Regional Group, Inc. Regional Group, Inc. and its subsidiaries are Subchapter C
corporations, and are, therefore, responsible for the income taxes attributable
to their profit and losses.
Income taxes for Regional Group, Inc. and its subsidiaries are accounted
for under the asset and liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating losses and tax credit
carryforwards. Deferred tax assets and liabilities are measured using the
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized
into income in the period that includes the enactment date. The income tax
benefit is a result of the amortization of the deferred tax liability.
Revenues
Broadcasting revenues are derived principally from the sale of program time
and spot announcements to local, regional, and national advertisers. Advertising
revenue is recognized in the period during which the program time and spot
announcements are broadcast.
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<PAGE> 9
WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Barter Transactions
Barter transactions are recorded at the estimated fair values of the
products and services received. Barter revenues are recognized when commercials
are broadcast. The assets or services received in exchange for broadcast time
are recorded when received or used.
Corporate Overhead
A number of overhead services are maintained centrally by the Partnership
and are allocated to its business units based on the benefits provided. These
services include most of the costs associated with the human resources function
and certain general and administrative costs of the corporate function such as
accounting and finance, treasury and legal.
In addition, the Partnership provides for the working capital needs of the
Broadcast Group. There is no borrowing arrangement between the Partnership and
the Broadcast Group. Accordingly, no interest expense is recorded in the
accompanying financial statements. However, all of the assets of the Broadcast
Group have been pledged as collateral on the Partnership's credit facility.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
A significant portion of the Broadcast's Group accounts receivable are due
from advertising agencies.
Unaudited Interim Financial Information
The unaudited balance sheet, statements of operations and changes in
division equity, and cash flows as of September 30, 1998 and for the nine months
then ended have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions of
Regulation S-X. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the interim period are not necessarily
indicative of the results that may be expected for any future period including
the year ending December 31, 1998.
(3) ACQUISITION OF BROADCAST RADIO STATIONS
In December 1997, the Partnership acquired certain broadcasting assets of
WBUB-FM (St. George, South Carolina) and WXTC-AM (Charleston, South Carolina)
and upgraded the frequency of one of its existing FM stations in the Charleston,
South Carolina, market through a swap of broadcast license rights.
In January 1998, the Partnership acquired certain broadcasting assets of
WMDH-FM and WMDH-AM (Muncie, Indiana) and WWKI-FM (Kokomo, Indiana).
-8-
<PAGE> 10
WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Total consideration paid for these acquisitions including costs of
acquisitions was approximately $8,673,000 in 1997 and $17,764,000 (unaudited) in
1998. These acquisitions have been accounted for under the purchase method of
accounting and, accordingly, the assets acquired and liabilities assumed have
been recorded at their estimated fair value as of the acquisition date, as
determined by an independent appraiser. The allocation of the purchase price is
summarized as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
1997 1998
---------- -----------
<S> <C> <C>
Land........................................................ $ 68,000 $ 107,000
Property and equipment...................................... 2,260,000 2,194,000
Intangible assets........................................... 6,345,000 15,463,000
---------- -----------
Total consideration paid.................................... $8,673,000 $17,764,000
========== ===========
</TABLE>
(4) PROPERTY AND EQUIPMENT
A summary of property and equipment is as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, September 30,
1997 1998
------------ -------------
<S> <C> <C>
Land........................................................ $ 168,615 $ 275,318
Building and improvements................................... 267,370 989,413
Office equipment, furniture, and fixtures................... 430,259 581,724
Broadcast and production equipment.......................... 4,980,885 6,432,008
Vehicles.................................................... 81,137 94,660
----------- -----------
5,928,266 8,373,123
Less accumulated depreciation............................... (1,311,125) (2,095,301)
----------- -----------
$ 4,617,141 $ 6,277,822
=========== ===========
</TABLE>
(5) INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are comprised of the following:
<TABLE>
<CAPTION>
(UNAUDITED)
USEFUL LIFE DECEMBER 31, September 30,
IN YEARS 1997 1998
----------- ------------ -------------
<S> <C> <C> <C>
FCC licenses................................................ 15 $14,548,860 $23,996,860
Network affiliations........................................ 15 1,372,056 2,869,114
Goodwill.................................................... 15 9,721,115 14,239,756
Non-compete agreements...................................... 2-5 725,000 725,000
Other intangibles........................................... 2-15 2,113,348 2,113,348
----------- -----------
28,480,379 43,944,078
Less accumulated amortization............................... (3,433,259) (5,701,147)
----------- -----------
$25,047,120 $38,242,931
=========== ===========
</TABLE>
(6) DEFERRED INCOME TAXES
The Partnership had established a deferred tax liability arising from the
acquisition of Regional Group, Inc. of $600,000. This liability was attributable
to the difference between the book basis of Regional Group, Inc. and the
carryover basis of the former shareholders at the acquisition date. As the
liability was principally attributable to the book/tax difference in long-term
tangible and intangible assets, the deferred tax liability was classified as a
long-term liability. The Broadcast Group recognized an income tax benefit of
$40,000 in 1997 and $30,000 for the nine months ended September 30, 1998 as a
result of amortization of the deferred tax liability.
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<PAGE> 11
WICKS RADIO GROUP
(A DIVISION OF WICKS BROADCAST GROUP LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(7) LEASES
The Broadcast Group leases certain property and equipment under
noncancelable operating lease agreements. Rental expense was approximately
$261,000 for the year ended December 31, 1997.
Future minimum lease payments under noncancelable operating leases are
approximately:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
- ------------------------
<S> <C>
1998.................................................... $ 308,000
1999.................................................... 239,000
2000.................................................... 188,000
2001.................................................... 153,000
2002.................................................... 153,000
Thereafter.............................................. 675,000
----------
$1,716,000
==========
</TABLE>
(8) SUBSEQUENT EVENT
In November 1998, the Partnership entered into an agreement with Citadel
Broadcasting Company ("Citadel") to sell the Wicks Radio Group to Citadel for
approximately $77 million, subject to approval from the Federal Communications
Commission.
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<PAGE> 12
PRO FORMA FINANCIAL INFORMATION
The following unaudited condensed consolidated financial statements
reflect the results of operations and balance sheet of Citadel Communications
Corporation and its subsidiaries (the "Company") after giving effect to (1) all
radio station acquisitions and dispositions completed after January 1, 1997, (2)
the July 1997 offering of $101.0 million principal amount of the Company's
10-1/4% Senior Subordinated Notes due 2007, the July 1997 offering of 1.0
million shares of the Company's 13-1/4% Exchangeable Preferred Stock and the use
of the net proceeds from such offerings (the "1997 Offerings"), (3) the
repayment of outstanding borrowings under the Company's credit facility with the
proceeds from Citadel Communications Corporation's July 1998 initial public
offering, (4) the November 1998 offering of $115.0 million principal amount of
the Company's 9-1/4% Senior Subordinated Notes due 2008 and the use of the net
proceeds from such offering (the "Original Offering") and (5) the pending
acquisitions by the Company of radio stations and related assets in Baton Rouge
and Lafayette, Louisiana, Saginaw/Bay City, Michigan, Harrisburg/Carlisle,
Pennsylvania, Charleston, South Carolina, Binghamton, New York and Muncie and
Kokomo, Indiana (the "Pending Acquisitions"). The transactions in clauses (1)
through (4) in the preceding sentence are collectively referred to as the
"Completed Transactions". The unaudited pro forma condensed consolidated
financial statements are based on the historical consolidated financial
statements of the Company and the financial statements of those entities
acquired, or from which assets were acquired, in connection with the Completed
Transactions, and should be read in conjunction with the financial statements
and notes thereto of (A)(i) the Company, (ii) Tele-Media Broadcasting Company
and its Partnership Interests, (iii) Deschutes River Broadcasting, Inc., (iv)
Snider Corporation, (v) Snider Broadcasting Corporation and Subsidiary and CDB
Broadcasting Corporation, (vi) Maranatha Broadcasting Company, Inc.'s, Radio
Broadcasting Division and (vii) Pacific Northwest Broadcasting Corporation and
Affiliates which are included in the Company's Registration Statement on Form
S-1 (file no. 333-51011); (B) the Company which are included in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1998;
and (C) the Wicks Radio Group (a division of the Wicks Broadcast Group Limited
Partnership) which are included elsewhere in this report.
In the opinion of management, all adjustments necessary to fairly
present this pro forma financial information have been made. For pro forma
purposes, the Company's consolidated statements of operations for the year ended
December 31, 1997 and the nine months ended September 30, 1997 and 1998 have
been adjusted to give effect to the Completed Transactions and the Pending
Acquisitions as if each occurred on January 1, 1997. The interest rate applied
to borrowings under, and repayments of, the Company's credit facility in the pro
forma consolidated statements of operations was 8.4375%, which represents the
interest rate in effect under the credit facility as of January 1, 1997. For pro
forma purposes, the Company's consolidated balance sheet as of September 30,
1998 has been adjusted to give effect to the October 1998 sale of four FM radio
stations and one AM radio station in Quincy, Illinois (the "Quincy Sale"), the
November 1998 purchase of one AM radio station and sale of one AM radio station
in Little Rock, Arkansas, the Original Offering and the Pending Acquisitions as
if each had occurred on September 30, 1998.
-11-
<PAGE> 13
The unaudited pro forma information is presented for illustrative
purposes only and is not indicative of the operating results or financial
position that would have occurred if the Completed Transactions and the Pending
Acquisitions had been consummated on the dates indicated, not is it indicative
of future operating results or financial position if the aforementioned
transactions are completed. The Company cannot predict whether consummation of
the Pending Acquisitions will conform to the assumptions used in the preparation
of the unaudited pro forma condensed consolidated financial statements.
-12-
<PAGE> 14
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL COMPLETED COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS ACQUISITIONS(2) THE COMPANY
----------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue............................... $ 98,821 $ (310) $ 98,511 $23,725 $122,236
Station operating expenses................ 69,412 (1,401) 68,011 15,574 83,585
Depreciation and amortization............. 20,005 519 20,524 8,526 29,050
Corporate general and administrative...... 3,351 -- 3,351 600 3,951
-------- ------- -------- ------- --------
Operating expenses...................... 92,768 (882) 91,886 24,700 116,586
-------- ------- -------- ------- --------
Operating income (loss)................... 6,053 572 6,625 (975) 5,650
Interest expense.......................... 13,590 (1,410) 12,180 8,385 20,565
Other (income) expense, net............... (94) -- (94) -- (94)
-------- ------- -------- ------- --------
Income (loss) before income taxes......... (7,443) 1,982 (5,461) (9,360) (14,821)
Income taxes (benefit).................... (1,163) -- (1,163) (347) (1,510)
Dividend requirement for
exchangeable preferred stock............ (10,822) -- (10,822) -- (10,822)
-------- ------- -------- ------- --------
Income (loss) from continuing operations
applicable to common shares............. $(17,102) $ 1,982 $(15,120) $(9,013) $(24,133)
======== ======= ======== ======= ========
</TABLE>
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<PAGE> 15
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the disposition of WEST-AM in
Allentown/Bethlehem, (b) the acquisitions of WEMR-AM, WEMR-FM, WSGD-FM,
WDLS-FM and WCDL-FM in Wilkes-Barre/Scranton (the "Wilkes-Barre/Scranton
Acquisitions"), (c) the acquisitions of KQFC-FM, KKGL-FM, KBOI-FM, KIZN-FM
and KZMG-FM in Boise (the "Boise Acquisition"), (d) the Quincy Sale, (e) the
acquisition of KAAY-AM and the disposition of KRNN-AM in Little Rock, (f)
the repayment of outstanding borrowings under the Credit Facility with the
proceeds from Citadel Communications' initial public offering and (g) the
consummation of the Original Offering as if each transaction had taken place
on January 1, 1997 (does not reflect radio station acquisitions completed in
1997 or the 1997 Offerings). Depreciation and amortization for such
acquisitions are based upon preliminary allocations of the purchase price to
property and equipment and intangible assets which will be amortized over
periods of 1-25 years. Actual depreciation and amortization may differ
depending on the final allocation of the purchase price; however, management
does not believe these differences will be material. Prior to the
acquisition dates, the Company operated many of the acquired stations under
a JSA or LMA. The Company receives fees for such services. Includes net
revenue and station operating expenses for stations operated under JSAs to
reflect ownership of the stations as of January 1, 1997. Net revenue and
station expenses for stations operated under LMAs are included in the
Company's historical consolidated financial statements. For those stations
operated under JSAs or LMAs and subsequently acquired, associated fees and
redundant expenses were eliminated and estimated occupancy costs were
included to adjust the results of operations to reflect ownership of the
stations as of January 1, 1997. Dollars in the table below are shown in
thousands.
<TABLE>
<CAPTION>
OTHER REPAYMENT OF THE ORIGINAL THE COMPLETED
ACQUISITIONS(a) CREDIT FACILITY(b) OFFERING(c) TRANSACTIONS
----------------- ------------------- ------------ -------------
<S> <C> <C> <C> <C>
Net revenue.......................................... $ (310) $ -- $ -- $ (310)
Station operating expenses........................... (1,401) -- -- (1,401)
Depreciation and amortization........................ 519 -- -- 519
------- ------- ------- -------
Operating expenses................................. (882) -- -- (882)
------- ------- ------- -------
Operating income..................................... 572 -- -- 572
Interest expense..................................... 445 (4,487) 2,632 (1,410)
------- ------- ------- -------
Income before income taxes........................... 127 4,487 (2,632) 1,982
Income taxes (benefit)............................... -- -- -- --
------- ------- ------- -------
Income from continuing operations.................... $ 127 $ 4,487 $(2,632) $ 1,982
======= ======= ======= =======
</TABLE>
- ---------------
(a) Represents the net effect of the Boise Acquisition, the
Wilkes-Barre/Scranton Acquisitions, the disposition of WEST-AM in
Allentown/Bethlehem, the Quincy Sale and the acquisition of KAAY-AM and
the disposition of KRNN-AM in Little Rock.
(b) Represents the repayment of outstanding borrowings under the Credit
Facility with the proceeds from Citadel Communications' initial public
offering.
(c) Reflects the recording of the net increase in interest expense and the
amortization of deferred financing costs of $4.0 million related to the
notes.
(2) Represents the net effect of (a) the acquisition of KQXL-FM, WXOK-AM,
WEMX-FM, WKJN-FM, WIBR-AM in Baton Rouge and KFXZ-FM, KRRQ-FM, KNEK-AM and
KNEK-FM in Lafayette (the "Baton Rouge/Lafayette Acquisition"), (b) the
acquisition of WKQZ-FM, WMJK-FM, WIOG-FM, WMJA-FM, WGER-FM and WSGW-AM in
Saginaw/Bay City (the "Saginaw/Bay City Acquisition"), (c) the acquisition
of WHYL-AM and WHYL-FM in Harrisburg/Carlisle (the "Carlisle Acquisition")
and (d) the acquisition of WSSX-FM, WWWZ-FM, WMGL-FM, WSUY-FM, WNKT-FM,
WTMA-AM, WTMZ-AM and WXTC-AM in Charleston, WHWK-FM, WYOS-FM, WAAL-FM,
WNBF-AM and WKOP-AM in Binghamton, WMDH-FM and WMDH-AM in Muncie and WWKI-FM
in Kokomo (the "Charleston/ Binghamton/Muncie/Kokomo Acquisition") as if
each transaction had taken place on January 1, 1997. Depreciation and
amortization for such acquisitions are based upon preliminary allocations of
the purchase price to property and equipment and intangible assets which
will be amortized over periods of 1-25 years. Actual depreciation and
amortization may differ
-14-
<PAGE> 16
depending on the final allocation of the purchase price; however, management
does not believe these differences will be material. Dollars in the table
below are shown in thousands.
<TABLE>
<CAPTION>
CHARLESTON/
BINGHAMTON/
MUNCIE/
BATON ROUGE/LAFAYETTE SAGINAW/BAY CITY CARLISLE KOKOMO
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ADJUSTMENTS(a)
--------------------- ---------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Net revenue................... $ 4,947 $ 5,192 $ 636 $12,950 $ --
Station operating expenses.... 3,447 3,384 414 8,669 (340)
Depreciation and
amortization................ 2,380 1,898 223 4,025 --
Corporate general and
administrative.............. -- -- -- -- 600
------- ------- ------ ------- -----
Operating expenses.......... 5,827 5,282 637 12,694 260
Operating income (loss)....... (880) (90) (1) 256 (260)
Interest expense.............. 2,088 2,215 285 3,797 --
------- ------- ------ ------- -----
Income (loss) before income
taxes....................... (2,968) (2,305) (286) (3,541) (260)
Income taxes (benefit)........ (347) -- -- -- --
------- ------- ------ ------- -----
Income (loss) from continuing
operations.................. $(2,621) $(2,305) $ (286) $(3,541) $(260)
======= ======= ====== ======= =====
<CAPTION>
PENDING
ACQUISITIONS
------------
<S> <C>
Net revenue................... $23,725
Station operating expenses.... 15,574
Depreciation and
amortization................ 8,526
Corporate general and
administrative.............. 600
-------
Operating expenses.......... 24,700
Operating income (loss)....... (975)
Interest expense.............. 8,385
-------
Income (loss) before income
taxes....................... (9,360)
Income taxes (benefit)........ (347)
-------
Income (loss) from continuing
operations.................. $(9,013)
=======
</TABLE>
- ---------------
(a) Includes the elimination of $208,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising and the elimination of
$132,000 of station management expenses, and additional corporate
overhead of $600,000 to reflect increase in costs to administer the
additional stations.
-15-
<PAGE> 17
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL COMPLETED COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS ACQUISITIONS(2) THE COMPANY
----------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue..................................... $60,025 $29,122 $ 89,147 $ 21,024 $110,171
Station operating expenses...................... 43,306 19,598 62,904 14,859 77,763
Depreciation and amortization................... 9,589 10,446 20,035 8,526 28,561
Corporate general and administrative............ 2,562 (334) 2,228 1,200 3,428
------- ------- -------- -------- --------
Operating expenses............................ 55,457 29,710 85,167 24,585 109,752
------- ------- -------- -------- --------
Operating income (loss)......................... 4,568 (588) 3,980 (3,561) 419
Interest expense................................ 8,470 2,516 10,986 8,385 19,371
Other (income) expense, net..................... (401) -- (401) -- (401)
------- ------- -------- -------- --------
Income (loss) before
income taxes.................................. (3,501) (3,104) (6,605) (11,946) (18,551)
Income taxes (benefit).......................... (105) (519) (624) (347) (971)
Dividend requirement for exchangeable preferred
stock......................................... (3,276) (7,225) (10,501) -- (10,501)
------- ------- -------- -------- --------
Income (loss) from continuing operations
applicable to common shares................... $(6,672) $(9,810) $(16,482) $(11,599) $(28,081)
======= ======= ======== ======== ========
</TABLE>
-16-
<PAGE> 18
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the Company's acquisition of Tele-Media
Broadcasting Company (the "Tele-Media Acquisition"), (b) the acquisitions of
KENZ-FM, KBER-FM, KBEE-FM and KFNZ-AM in Salt Lake City, (c) the acquisition
of KNHK-FM in Reno, (d) the acquisition of KTHK-FM in Tri-Cities, (e) the
acquisitions of WXEX-FM and WHKK-FM in Providence, (f) the Company's 1997
acquisition of various stations in Little Rock (the "Little Rock
Acquisitions"), (g) the acquisition of WLEV-FM in Allentown/Bethlehem, (h)
the disposition of WEST-AM in Allentown/Bethlehem, (i) the
Wilkes-Barre/Scranton Acquisitions, (j) the Boise Acquisition, (k) the
Quincy Sale, (l) the acquisition of KAAY-AM and the disposition of KRNN-AM
in Little Rock, (m) the consummation of the 1997 Offerings, (n) the
repayment of outstanding borrowings under the Credit Facility with the
proceeds from Citadel Communications' initial public offering and (o) the
consummation of the Original Offering as if each transaction had taken place
on January 1, 1997. Depreciation and amortization for such acquisitions are
based upon preliminary allocations of the purchase price to property and
equipment and intangible assets which will be amortized over periods of 1-25
years. Actual depreciation and amortization may differ depending on the
final allocation of the purchase price; however, management does not believe
these differences will be material. Prior to the acquisition dates, the
Company operated many of the acquired stations under a JSA or LMA. The
Company receives fees for such services. Includes net revenue and station
operating expenses for stations operated under JSAs to reflect ownership of
the stations as of January 1, 1997. Net revenue and station expenses for
stations operated under LMAs are included in the Company's historical
consolidated financial statements. For those stations operated under JSAs or
LMAs and subsequently acquired, associated fees and redundant expenses were
eliminated and estimated occupancy costs were included to adjust the results
of operations to reflect ownership of the stations as of January 1, 1997.
Dollars in the table below are shown in thousands.
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS FOR REPAYMENT OF
ACTUAL TELE-MEDIA LITTLE ROCK OTHER THE 1997 THE CREDIT
TELE-MEDIA(a) ACQUISITION ACQUISITIONS TRANSACTIONS(f) OFFERINGS FACILITY(i)
------------- --------------- --------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.......... $16,241 $ -- $5,293 $ 7,588 $ -- $ --
Station operating
expenses........... 12,679 (573)(b) 2,710 4,782 -- --
Depreciation and
amortization....... 2,208 2,278 (c) 2,037 3,923 -- --
Corporate general and
administrative..... 454 (788)(d) -- -- -- --
------- ------- ------ ------- ------- -------
Operating
expenses......... 15,341 917 4,747 8,705 -- --
------- ------- ------ ------- ------- -------
Operating income
(loss)............. 900 (917) 546 (1,117) -- --
Interest expense..... 10,375 (708)(e) 591 3,654 (7,298)(g) (6,730)
------- ------- ------ ------- ------- -------
Income (loss) before
income taxes....... (9,475) (209) (45) (4,771) 7,298 6,730
Income taxes
(benefit).......... -- (519) -- -- -- --
Dividend requirement
for exchangeable
preferred stock.... -- -- -- -- (7,225)(h) --
------- ------- ------ ------- ------- -------
Income (loss) from
continuing
operations......... $(9,475) $ 310 $ (45) $(4,771) $ 73 $ 6,730
======= ======= ====== ======= ======= =======
<CAPTION>
THE ORIGINAL THE COMPLETED
OFFERING(j) TRANSACTIONS
------------ -------------
<S> <C> <C>
Net revenue.......... $ -- $ 29,122
Station operating
expenses........... -- 19,598
Depreciation and
amortization....... -- 10,446
Corporate general and
administrative..... -- (334)
------- --------
Operating
expenses......... -- 29,710
------- --------
Operating income
(loss)............. -- (588)
Interest expense..... 2,632 2,516
------- --------
Income (loss) before
income taxes....... (2,632) (3,104)
Income taxes
(benefit).......... -- (519)
Dividend requirement
for exchangeable
preferred stock.... -- (7,225)
------- --------
Income (loss) from
continuing
operations......... $(2,632) $ (9,810)
======= ========
</TABLE>
- ---------------
(a) Represents the unaudited historical results of Tele-Media for the period
January 1, 1997 through July 3, 1997, including the historical operating
results of Wilkes-Barre/Scranton stations acquired by Tele-Media in
February and April 1997 which had been operated under LMA/JSA agreements
since August and December 1996. The operating results of Tele-Media are
included in the Company's results of operations beginning July 4, 1997,
the date of acquisition.
(b) Includes the elimination of $115,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising and the elimination of
$211,000 of LMA/JSA fees related to the Wilkes-Barre/Scranton stations
and $247,000 of expenses associated with the litigation between the
Company and Tele-Media. Had the Tele-Media Acquisition occurred on
January 1, 1997, these expenses would not have been incurred.
(c) Reflects increased depreciation and amortization resulting from the
purchase price allocation.
-17-
<PAGE> 19
(d) Reflects the elimination of the management fees paid to affiliates by
Tele-Media of $454,000 and the recording of corporate overhead of
$200,000 which represents the Company's estimate of the incremental
expense necessary to oversee the Tele-Media stations and the elimination
of $534,000 of expenses associated with the litigation between the
Company and Tele-Media. Had the 1997 Offerings and the Tele-Media
Acquisition occurred on January 1, 1997, these expenses would not have
been incurred.
(e) Reflects the elimination of Tele-Media interest expense of $5.5 million
and the recording of interest expense of $4.8 million that would have
been incurred if the acquisition of Tele-Media had occurred on January
1, 1997.
(f) Gives effect to the acquisitions of KENZ-FM, KBER-FM, KBEE-FM and
KFNZ-AM in Salt Lake City, KNHK-FM in Reno, KTHK-FM in Tri-Cities,
WXEX-FM and WHKK-FM in Providence, WLEV-FM in Allentown/Bethlehem, the
Boise Acquisition, the Wilkes-Barre/Scranton Acquisitions, the
disposition of WEST-AM in Allentown/Bethlehem, the Quincy Sale and the
acquisition of KAAY-AM and the disposition of KRNN-AM in Little Rock as
if each transaction had taken place on January 1, 1997.
(g) Reflects the reduction of the Company's pro forma interest expense, the
recording of interest expense related to the 10 1/4% Senior Subordinated
Notes (the "1997 Notes") and recording of the amortization of deferred
financing costs of $3.3 million related to the 1997 Notes.
(h) Reflects the recording of the dividends related to the Exchangeable
Preferred Stock as if the 1997 Offerings had taken place on January 1,
1997.
(i) Reflects the repayment of outstanding borrowings under the Credit
Facility with the proceeds from Citadel Communications' initial public
offering.
(j) Reflects the recording of the net increase in interest expense and the
amortization of deferred financing costs of $4.0 million related to the
notes.
(2) Represents the net effect of (a) the Baton Rouge/Lafayette Acquisition, (b)
the Saginaw/Bay City Acquisition, (c) the Carlisle acquisition and (d) the
Charleston/Binghamton/Muncie/Kokomo Acquisition as if each such transaction
had taken place on January 1, 1997. Depreciation and amortization for such
acquisitions are based upon preliminary allocations of the purchase price to
property and equipment and intangible assets which will be amortized over
periods of 1-25 years. Actual depreciation and amortization may differ
depending on the final allocation of the purchase price; however, management
does not believe these differences will be material. Dollars in the table
below are shown in thousands.
<TABLE>
<CAPTION>
CHARLESTON/BINGHAMTON/
BATON ROUGE/LAFAYETTE SAGINAW/BAY CITY CARLISLE MUNCIE/KOKOMO
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ADJUSTMENTS
--------------------- ---------------- ----------- ---------------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue................. $ 4,368 $ 4,934 $ 670 $11,052 $ --
Station operating
expenses.................. 3,323 3,322 392 8,156 (334)(a)
Depreciation and
amortization.............. 2,380 1,898 223 4,025 --
Corporate general and
administrative............ -- -- -- -- 1,200 (b)
------- ------- ------ ------- -----
Operating expenses........ 5,703 5,220 615 12,181 866
Operating income (loss)..... (1,335) (286) 55 (1,129) (866)
Interest expense............ 2,088 2,215 285 3,797 --
------- ------- ------ ------- -----
Income (loss) before income
taxes..................... (3,423) (2,501) (230) (4,926) (866)
Income taxes (benefit)...... (347) -- -- -- --
------- ------- ------ ------- -----
Income (loss) from
continuing operations..... $(3,076) $(2,501) $ (230) $(4,926) $(866)
======= ======= ====== ======= =====
<CAPTION>
PENDING
ACQUISITIONS
------------
<S> <C>
Net revenue................. $ 21,024
Station operating
expenses.................. 14,859
Depreciation and
amortization.............. 8,526
Corporate general and
administrative............ 1,200
--------
Operating expenses........ 24,585
Operating income (loss)..... (3,561)
Interest expense............ 8,385
--------
Income (loss) before income
taxes..................... (11,946)
Income taxes (benefit)...... (347)
--------
Income (loss) from
continuing operations..... $(11,599)
========
</TABLE>
- ---------------
(a) Includes the elimination of $202,000 of expenses to reflect lower fees,
as a percentage of national advertising sales paid by the Company to a
national representative for national advertising and the elimination of
$132,000 of station management expenses.
(b) Reflects increased corporate overhead to administer additional stations.
-18-
<PAGE> 20
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
ADJUSTMENTS FOR AS ADJUSTED FOR ADJUSTMENTS FOR
ACTUAL COMPLETED COMPLETED THE PENDING PRO FORMA
THE COMPANY TRANSACTIONS(1) TRANSACTIONS ACQUISITIONS(2) THE COMPANY
----------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue..................................... $ 89,803 $ 29,950 $119,753 $ 29,581 $149,334
Station operating expenses...................... 65,245 18,783 84,028 20,092 104,120
Depreciation and amortization................... 14,661 11,626 26,287 11,367 37,654
Corporate general and administrative............ 3,530 (334) 3,196 1,600 4,796
-------- -------- -------- -------- --------
Operating expenses.......................... 83,436 30,075 113,511 33,059 146,570
-------- -------- -------- -------- --------
Operating income (loss)......................... 6,367 (125) 6,242 (3,478) 2,764
Interest expense................................ 12,872 2,274 15,146 11,180 26,326
Other (income) expense, net..................... (451) -- (451) -- (451)
-------- -------- -------- -------- --------
Income (loss) before income taxes............... (6,054) (2,399) (8,453) (14,658) (23,111)
Income taxes (benefit).......................... (770) (1,048) (1,818) (463) (2,281)
Dividend requirement for Exchangeable Preferred
Stock......................................... (6,633) (7,225) (13,858) -- (13,858)
-------- -------- -------- -------- --------
Income (loss) from continuing operations
applicable to common shares................... $(11,917) $ (8,576) $(20,493) $(14,195) $(34,688)
======== ======== ======== ======== ========
</TABLE>
-19-
<PAGE> 21
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(1) Represents the net effect of (a) the Tele-Media Acquisition, (b) the
acquisitions of KENZ-FM, KBER-FM, KBEE-FM and KFNZ-AM in Salt Lake City, (c)
the acquisition of KNHK-FM in Reno, (d) the acquisition of KTHK-FM in
Tri-Cities, (e) the acquisitions of WXEX-FM and WHKK-FM in Providence, (f)
Wilkes-Barre/Scranton Acquisitions, (g) the Little Rock Acquisitions, (h)
the Boise Acquisition, (i) the acquisition of WLEV-FM in
Allentown/Bethlehem, (j) the sale of WEST-AM in Allentown/Bethlehem, (k) the
Quincy Sale, (l) the acquisition of KAAY-AM and the disposition of KRNN-AM
in Little Rock, (m) the consummation of the 1997 Offerings, (n) repayment of
outstanding borrowings under the Credit Facility with the proceeds from
Citadel Communications' initial public offering and (o) the consummation of
the Original Offering as if each transaction had taken place on January 1,
1997. Net revenue and station expenses for stations operated under LMAs are
included in the Company's historical consolidated financial statements. For
those stations operated under JSAs or LMAs and subsequently acquired,
associated fees and redundant expenses were eliminated and estimated
occupancy costs were included to adjust the results of operations to reflect
ownership of the stations as of January 1, 1997. Dollars in the table below
are shown in thousands.
<TABLE>
<CAPTION>
ADJUSTMENTS REPAYMENT
FOR OF THE
ACTUAL TELE-MEDIA LITTLE ROCK OTHER THE 1997 CREDIT
TELE-MEDIA(a) ACQUISITION ACQUISITIONS ACQUISITIONS(f) OFFERINGS FACILITY
-------------- ----------- ------------ ---------------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.......... $16,241 $ -- $5,596 $ 8,113 $ -- $ --
Station operating
expenses............ 12,679 (573)(b) 2,835 3,842 -- --
Depreciation and
amortization........ 2,208 2,278 (c) 2,358 4,782 -- --
Corporate general and
administrative...... 454 (788)(d) -- -- -- --
------- ------ ------ ------- ------- -------
Operating
expenses.......... 15,341 917 5,193 8,624 -- --
------- ------ ------ ------- ------- -------
Operating income
(loss).............. 900 (917) 403 (511) -- --
Interest expense..... 10,375 (708)(e) 591 4,779 (7,298)(g) (8,974)(i)
------- ------ ------ ------- ------- -------
Income (loss) before
income taxes........ (9,475) (209) (188) (5,290) 7,298 8,974
Income taxes
(benefit)........... -- (519) (225) (304) -- --
Dividend requirement
for exchangeable
preferred stock..... -- -- -- -- (7,225)(h) --
------- ------ ------ ------- ------- -------
Income (loss) from
continuing
operations.......... $(9,475) $ 310 $ 37 $(4,986) $ 73 $ 8,974
======= ====== ====== ======= ======= =======
<CAPTION>
THE
THE ORIGINAL COMPLETED
OFFERING(J) TRANSACTIONS
------------ ------------
<S> <C> <C>
Net revenue.......... $ -- $29,950
Station operating
expenses............ -- 18,783
Depreciation and
amortization........ -- 11,626
Corporate general and
administrative...... -- (334)
------- -------
Operating
expenses.......... -- 30,075
------- -------
Operating income
(loss).............. -- (125)
Interest expense..... 3,509 2,274
------- -------
Income (loss) before
income taxes........ (3,509) (2,399)
Income taxes
(benefit)........... -- (1,048)
Dividend requirement
for exchangeable
preferred stock..... -- (7,225)
------- -------
Income (loss) from
continuing
operations.......... $(3,509) $(8,576)
======= =======
</TABLE>
- ---------------
(a) Represents the unaudited historical results of Tele-Media for the period
January 1, 1997 through July 3, 1997, including the historical operating
results of Wilkes-Barre/Scranton stations acquired by Tele-Media in
February and April 1997 which had been operated under LMA/JSA agreements
since August and December 1996. The operating results of Tele-Media are
included in the Company's results of operations beginning July 3, 1997,
the date of acquisition.
(b) Includes the elimination of $115,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising, the elimination of
$211,000 of LMA/JSA fees related to the Wilkes-Barre/Scranton stations
and the elimination of $247,000 of expenses associated with the
litigation between the Company and Tele-Media. Had the Tele-Media
Acquisition occurred on January 1, 1997, these expenses would not have
been incurred.
(c) Reflects increased depreciation and amortization resulting from the
purchase price allocation.
(d) Reflects the elimination of the management fees paid to affiliates by
Tele-Media of $454,000 and the recording of corporate overhead of
$200,000 which represents the Company's estimate of the incremental
expense necessary to oversee the Tele-Media stations and the elimination
of $534,000 of expenses associated with the litigation between the
Company and Tele-Media. Had the 1997 Offerings and the Tele-Media
Acquisition occurred on January 1, 1997, these expenses would not have
been incurred.
-20-
<PAGE> 22
(e) Reflects the elimination of Tele-Media interest expense of $5.5 million
and the recording of interest expense of $4.8 million that would have
been incurred if the acquisition of Tele-Media had occurred on January
1, 1997.
(f) Gives effect to (i) the acquisitions of WLEV-FM in Allentown/Bethlehem;
KBOI-AM, KQFC-FM and KKGL-FM in Boise; KENZ-FM, KBER-FM, KBEE-FM and
KFNZ-AM in Salt Lake City, KNHK-FM in Reno, KTHK-FM in Tri-Cities;
WXEX-FM and WHKK-FM in Providence; WEMR-AM/FM, WCTP-FM, WCTD-FM and
WCDL-AM in Wilkes-Barre/Scranton, KIZN-FM and KZMG-FM in Boise and
KAAY-AM in Little Rock, (ii) the sale of WEST-AM in Allentown/Bethlehem
and KRNN-AM in Little Rock and (iii) the Quincy Sale as if such
transactions had taken place on January 1, 1997.
(g) Reflects the reduction of the Company's pro forma interest expense, the
recording of interest expense related to the 1997 Notes and the
amortization of deferred financings costs of $3.3 million related to the
1997 Notes.
(h) Reflects the recording of the dividends on the Exchangeable Preferred
Stock as if the 1997 Offerings had taken place on January 1, 1997.
(i) Reflects the reduction of interest expense due to the pay down of the
Credit Facility with the proceeds received from Citadel Communications'
initial public offering.
(j) Reflects the recording of the net increase in interest expense and the
amortization of deferred financing costs of $4.0 million related to the
notes.
(2) Represents the net effect of (a) the Baton Rouge/Lafayette Acquisition, (b)
the Saginaw/Bay City Acquisition, (c) the Carlisle Acquisition, and (d) the
Charleston/Binghamton/Muncie/Kokomo Acquisition, as if each transaction had
taken place on January 1, 1997. Depreciation and amortization for such
acquisitions are based upon preliminary allocations of the purchase price to
property and equipment and intangible assets which will be amortized over
periods of 1-25 years. Actual depreciation and amortization may differ
depending on the final allocation of the purchase price; however, management
does not believe these differences will be material. Dollars in the table
below are shown in thousands.
<TABLE>
<CAPTION>
CHARLESTON/
BINGHAMTON/
BATON ROUGE/LAFAYETTE SAGINAW/BAY CITY CARLISLE MUNCIE/KOKOMO
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ADJUSTMENTS
--------------------- ---------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue.................... $ 6,064 $ 6,616 $ 899 $16,002 $ --
Station operating expenses..... 4,649 4,445 528 10,917 (447)(a)
Depreciation and
amortization................. 3,173 2,530 297 5,367 --
Corporate general and
administrative............... -- -- -- -- 1,600 (b)
------- ------- ------ ------- -------
Operating expenses........... 7,822 6,975 825 16,284 1,153
Operating income (loss)........ (1,758) (359) 74 (282) (1,153)
Interest expense............... 2,784 2,953 380 5,063 --
------- ------- ------ ------- -------
Income (loss) before income
taxes........................ (4,542) (3,312) (306) (5,345) (1,153)
Income taxes (benefit)......... (463) -- -- -- --
------- ------- ------ ------- -------
Income (loss) from continuing
operations................... $(4,079) $(3,312) $ (306) $(5,345) $(1,153)
======= ======= ====== ======= =======
<CAPTION>
PENDING
ACQUISITIONS
------------
<S> <C>
Net revenue.................... $ 29,581
Station operating expenses..... 20,092
Depreciation and
amortization................. 11,367
Corporate general and
administrative............... 1,600
--------
Operating expenses........... 33,059
Operating income (loss)........ (3,478)
Interest expense............... 11,180
--------
Income (loss) before income
taxes........................ (14,658)
Income taxes (benefit)......... (463)
--------
Income (loss) from continuing
operations................... $(14,195)
========
</TABLE>
- ---------------
(a) Includes the elimination of $271,000 of expenses to reflect lower fees,
as a percentage of national advertising sales, paid by the Company to a
national representative for national advertising and the elimination of
$176,000 of station management expenses.
(b) Reflects increased corporate overhead to administer additional stations.
-21-
<PAGE> 23
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACQUISITION OF
KAAY-AM AND ADJUSTMENTS ADJUSTMENTS FOR
ACTUAL ADJUSTMENTS FOR DISPOSITION OF FOR THE PENDING THE ORIGINAL PRO FORMA THE
THE COMPANY THE QUINCY SALE KRNN-AM ACQUISITIONS(1) OFFERING(2) COMPANY
----------- ---------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents.............. $ 7,407 $ -- $ (4,909) $(17,000) $ 21,774 $ 7,272
Accounts and notes
receivable, net.......... 32,044 250 80 1,000 -- 33,374
Prepaid expenses........... 3,287 -- -- -- -- 3,287
-------- ------- -------- -------- -------- --------
Total current assets....... 42,738 250 (4,829) (16,000) 21,774 43,933
Property and equipment,
net...................... 36,834 (375) 220 14,500 -- 51,179
Intangible assets, net..... 290,405 (1,087) 4,620 142,449 -- 436,387
Other assets............... 3,376 -- -- -- 4,000(3) 7,376
-------- ------- -------- -------- -------- --------
$373,353 $(1,212) $ 11 $140,949 $ 25,774 $538,875
======== ======= ======== ======== ======== ========
LIABILITIES AND
SHAREHOLDER'S EQUITY
Accounts payable and
accrued liabilities...... $ 11,399 $ -- $ 11 $ -- $ -- $ 11,410
Current maturities of other
long-term obligations.... 282 -- -- -- -- 282
-------- ------- -------- -------- -------- --------
Total current
liabilities.............. 11,681 -- 11 -- -- 11,692
-------- ------- -------- -------- -------- --------
Notes payable, less current
maturities............... 18,726 (2,000) -- 132,500 (89,226)(4) 60,000
10 1/4% Notes.............. 98,461 -- -- -- -- 98,461
9 1/4% Notes............... -- -- -- -- 115,000 115,000
Other long-term
obligations, less current
maturities............... 1,011 -- -- 1,500 -- 2,511
Deferred tax liability..... 25,306 -- -- 6,949 -- 32,255
Exchangeable preferred
stock.................... 112,965 -- -- -- -- 112,965
Shareholder's equity:
Common stock and
additional paid-in
capital.................. 140,235 -- -- -- -- 140,235
Accumulated deficit...... (35,032) 788 -- -- -- (34,244)
-------- ------- -------- -------- -------- --------
$373,353 $(1,212) $ 11 $140,949 $ 25,774 $538,875
======== ======= ======== ======== ======== ========
</TABLE>
-22-
<PAGE> 24
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
(1) Represents the net effect of (i) the Baton Rouge/Lafayette Acquisition, (ii)
the Saginaw/Bay City Acquisition, (iii) the Carlisle Acquisition, and (iv)
the Charleston/Binghamton/Muncie/Kokomo Acquisition.
(2) Represents the issuance of the outstanding notes and the application of the
net proceeds from the Original Offering.
(3) Reflects the initial purchasers' discount and the expenses of the Original
Offering.
(4) Reflects the repayment of borrowings under the Credit Facility.
-23-
<PAGE> 25
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CITADEL COMMUNICATIONS
CORPORATION
December 15, 1998 /s/ Lawrence R. Wilson
- ------------------------------ --------------------------------------
Lawrence R. Wilson, Chairman and
Chief Executive Officer
-24-
<PAGE> 26
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Asset Purchase Agreement dated November 23, 1998 by and among Wicks
Broadcast Group Limited Partnership, WBG License Co., L.L.C., Butternut
Broadcasting Company, Inc., WBG Binghamton License Co., Inc. and
Citadel Broadcasting Company.
4.1 Indenture dated as of November 19, 1998 among Citadel Broadcasting
Company, Citadel License, Inc. and The Bank of New York, as Trustee,
with the form of 9-1/4% Senior Subordinated Notes due 2008 included
therein (previously filed).
10.1 Tenth Amendment to Loan Instruments dated November 3, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
10.2 Eleventh Amendment to Loan Instruments dated November 17, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
10.3 Twelfth Amendment to Loan Instruments dated November 19, 1998 among
Citadel Communications Corporation, Citadel Broadcasting Company,
Citadel License, Inc., FINOVA Capital Corporation and the Lenders party
thereto (previously filed).
23.1 Consent of KPMG Peat Marwick LLP
99.1 Press Release dated November 19, 1998 (previously filed).
99.2 Press Release dated November 23, 1998 (previously filed).
-25-
<PAGE> 1
Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
WICKS BROADCAST GROUP LIMITED PARTNERSHIP,
WBG LICENSE CO., L.L.C.,
BUTTERNUT BROADCASTING COMPANY, INC.,
WBG BINGHAMTON LICENSE CO., INC.
AND
CITADEL BROADCASTING COMPANY
NOVEMBER 23, 1998
<PAGE> 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
November 23, 1998, by and among CITADEL BROADCASTING COMPANY, a Nevada
corporation (the "Buyer"); WICKS BROADCAST GROUP LIMITED PARTNERSHIP, a Delaware
limited partnership ("Wicks" or the "Company"); WBG LICENSE CO., L.L.C., a
Delaware limited liability company ("WBG License"); BUTTERNUT BROADCASTING
COMPANY, INC., a New York corporation ("Butternut"); and WBG BINGHAMTON LICENSE
CO., INC., a Delaware corporation ("WBG Binghamton"). Wicks, WBG License,
Butternut and WBG Binghamton are collectively referred to herein as the
"Sellers." The Buyer and the Sellers are sometimes collectively referred to
herein as the "Parties." Other capitalized terms used and not otherwise defined
in this Agreement are defined in Article 19.
RECITALS
Together, the Sellers are the licensee and operator of 16 broadcast
radio stations licensed to cities in Indiana, New York and South Carolina, as
further identified on Schedule 7.4 attached hereto (collectively, the
"Stations"). The Sellers desire to sell to the Buyer, and the Buyer desires to
purchase from the Sellers, substantially all of the assets of the Stations
(other than the Excluded Assets (as defined below)), as going concerns, subject
to 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:
ARTICLE I
ASSETS TO BE CONVEYED
1.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Golenbock, Eiseman, Assor & Bell, 437 Madison
Avenue, New York, New York, or at such other place as may be agreed to by the
Parties, at 10:00 a.m., local time, within ten (10) business days after the
later of (i) the date on which the FCC Consent becomes a Final Order or (ii) the
date on which all waiting periods expire under the HSRA, or at such other time
and date mutually agreed upon in writing by the Parties.
1.2 Assets. At the Closing, the Sellers shall sell, assign, transfer
and convey to the Buyer, and the Buyer shall purchase from the Sellers, all of
the Sellers' right, title and interest in the assets, real, personal and mixed,
tangible and intangible (including the business of the Stations as a going
concern), owned or held by the Sellers and used primarily
-2-
<PAGE> 3
in the conduct of the business and operation of the Stations, including all such
property acquired by the Sellers between the date hereof and the Closing Date
(but excluding the Excluded Assets specified in Section 1.3), including, but not
limited to, the following:
(a) all of the Sellers' rights in and to the licenses, permits
and other authorizations issued to the Sellers by any governmental authority and
used primarily in the conduct of the business and operation of the Stations
listed on Schedule 7.4 (including the Station Licenses), together with any
additions thereto (including renewals or modifications of such licenses, permits
and authorizations and applications therefor) made between the date hereof and
the Closing Date, and all of the Sellers' rights in and to the call letters of
the Stations;
(b) all of the Owned Real Property and the Leases listed on
Schedule 7.5;
(c) all equipment, office furniture and fixtures, office
materials and supplies, inventory, spare parts, motor vehicles and other
tangible personal property of every kind and description, owned, leased or held
by the Sellers and used primarily in the conduct of the business and operation
of the Stations, including the items listed in Schedule 7.6, together with any
replacements thereof and additions thereto made between the date hereof and the
Closing Date;
(d) subject to the provisions of Article 3 hereof, all of the
Sellers' rights under and interest in the Contracts listed in Schedule 7.7
hereto and in purchase orders for goods and services (including the sale of
airtime on the Stations) entered into in the ordinary course of business of the
Stations, together with all of the Sellers' rights under and interest in all
Contracts related primarily to the Stations entered into or acquired by the
Sellers between the date hereof and the Closing Date in accordance with this
Agreement (including Section 9.1 hereof) (collectively, the "Assumed
Contracts");
(e) all programs and programming materials of whatever form or
nature owned by the Sellers and used primarily by any Station;
(f) all of the Sellers' rights in and to the trademarks, trade
names, service marks, franchises, copyrights, including registrations and
applications for registration of any of them, jingles, logos, slogans, and
non-governmental licenses, permits and privileges owned or held by the Sellers
and used primarily in the conduct of the business and operation of the Stations
and listed in Schedule 7.9, together with any additions thereto made between the
date hereof and the Closing Date;
(g) all files, records, books of account, computer programs
and software and logos owned or held by the Sellers relating primarily to the
operation of the Stations, including, without limitation, programming
information and studies, technical information and engineering data, news and
advertising studies and consultants' reports, ratings reports, marketing and
demographic data, promotional materials, budgets, financial reports, and
-3-
<PAGE> 4
projections, sales, operating and business plans, filings with the FCC and
original executed copies, if available, and otherwise true and correct copies of
all Assumed Contracts and receivable records, invoices, statements, traffic
material, sales correspondence, lists of advertisers and credit and sales
reports; and
(h) all of the Sellers' rights under manufacturers' and
vendors' warranties relating to items included in the Assets (as defined below)
and all similar rights against third parties relating to items included in the
Assets to the extent contractually assignable.
The assets to be transferred to the Buyer pursuant to this Section 1.2
are hereinafter collectively referred to as the "Assets." The Assets shall be
transferred to the Buyer free and clear of all Liens (except for Permitted
Liens).
It is acknowledged that Butternut and WBG Binghamton have entered into
an Option Agreement, dated as of December 12, 1996 (the "Option Agreement"), and
a Time Brokerage Agreement, dated as of December 12, 1996, with Wicks (the "Time
Brokerage Agreement"), relating to WAAL-FM and WKOP-AM, Binghamton, New York
(the "Binghamton Stations"). Included among the Assets are rights of Wicks under
the Option Agreement, as well as other Assets which are the subject of the
Option Agreement. Accordingly, it is hereby agreed that the portion of the
Purchase Price allocable to such rights under the Option Agreement shall be the
portion of the Purchase Price allocated to the Binghamton Stations and the
Assets pertaining exclusively thereto, less the purchase price called for by the
Option Agreement and that, effective upon the Closing, (i) the Option Agreement
shall be deemed to have been exercised and the assets and rights covered thereby
and included among the Assets shall be deemed to have been purchased pursuant to
this Agreement by reason of such exercise, (ii) any assets and rights covered by
the Option Agreement which would constitute Excluded Assets under this Agreement
shall for all purposes be deemed excluded from the Option Agreement, and (iii)
the Option Agreement and the Time Brokerage Agreement shall be deemed terminated
with any and all liabilities and obligations thereunder or arising therefrom
among the parties thereto being released and discharged in all respects (it
being understood that all rights and claims of Buyer and liabilities and
obligations of Sellers with respect to any of the assets and rights covered by
the Option Agreement shall be governed in all respects by this Agreement).
1.3 Excluded Assets. The Assets shall not include the following assets
(the "Excluded Assets"):
(a) the Sellers' books and records that pertain to the
organization, existence capitalization or financial operation of the Sellers,
other than as relate primarily to the operation of the Stations (copies of which
may be retained by Sellers), and duplicate copies of such records as are
necessary to enable the Sellers to file tax returns and reports;
-4-
<PAGE> 5
(b) all cash, cash equivalents or similar type investments of
the Sellers, such as certificates of deposit, Treasury bills and other
marketable securities on hand and/or in banks;
(c) all accounts receivable relating to or arising out of the
operations of the Stations prior to the Effective Time (the "Accounts
Receivable");
(d) assets not used in connection with the Stations;
(e) any and all claims of the Sellers with respect to
transactions occurring or arising prior to Closing Date, including, without
limitation, claims for tax refunds.
(f) any and all policies of insurance, including, without
limitation, any and all rights thereunder;
(g) all rights of any of the Sellers to enforce (i) the
obligations of Buyer to pay, perform or discharge the Assumed Liabilities and
(ii) all other obligations of Buyer under or in connection with, as well as all
other rights of any of the Sellers under or in connection with, this Agreement;
(h) any and all claims or causes of action against third
parties which may have accrued in favor of any of the Sellers prior to the
Closing Date;
(i) any assets of any compensation or benefit plan or
arrangement of any of the Sellers in effect as of the Closing Date;
(j) all shares of capital stock, partner interests and member
interests and all other equity interests and securities, of or in any of the
Sellers;
(k) the names Wicks, Wicks Broadcast Group, Wicks Group, WBG
and any and all variations thereof, and all goodwill related thereto; and
(l) any of the agreements referred to in Schedule 1.3 hereto
(the "Excluded Contracts").
ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price.
-5-
<PAGE> 6
(a) The total consideration to be paid by the Buyer for the
Assets (the "Purchase Price") shall be $77,000,000, subject to any adjustments
made pursuant to Sections 5.1 and 5.2 hereof.
(b) The Purchase Price shall be payable by the Buyer at
Closing by wire transfer of immediately available federal funds to an account at
a domestic U.S. bank or other financial institution pursuant to wire
instructions that the Sellers shall deliver to the Buyer.
2.2 Allocation. Within thirty (30) days following the Closing, the
Buyer and the Sellers agree to allocate the Purchase Price among the Assets in a
manner mutually agreed upon by the Sellers and the Buyer and consistent with the
applicable provisions of the Tax Code. The Buyer and the Sellers agree to file
(at such times and in such manner as required by applicable Legal Requirements)
all relevant returns and reports (including Forms 8594, Asset Acquisition
Statements, and all income and other tax returns) on the basis of such
allocation, in each case to the extent permitted by applicable Legal
Requirements.
2.3 Letter of Credit. Simultaneously with the execution of this
Agreement, Buyer shall deliver, or cause to be delivered, to the Sellers an
irrevocable letter of credit in favor of the Sellers, issued by Bank of Boston,
in the amount of $5,000,000, which shall be in the form attached as Exhibit A
hereto (the "Letter of Credit"). The Letter of Credit shall provide that the
issuing bank shall make payment on the Letter of Credit upon such bank's receipt
of a joint certificate from a Vice President of the general partner of Wicks and
the Chief Executive Officer of Buyer certifying that a Draw Condition has
occurred or pursuant to a court order. At the Closing, the Sellers shall return
the original Letter of Credit to Buyer for cancellation.
ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1 Assumption of Liabilities. Subject to the conditions specified in
this Agreement, except for the Assumed Liabilities (as hereinafter defined) from
and after the Closing Date, the Buyer will not assume or in any way be
responsible for any liabilities or obligations of the Sellers or any other
liabilities or obligations whatsoever related to the operation of the Stations
as conducted by the Sellers or the condition of the Assets at any time prior to
the Closing Date (the "Excluded Liabilities"). From and after the Closing Date,
the Buyer will assume and agree to pay, defend, discharge and perform as and
when due all liabilities and obligations arising after the Closing under the
Assumed Contracts (the "Assumed Liabilities"), and the Buyer shall not assume
any other obligations of the Sellers.
-6-
<PAGE> 7
ARTICLE 4
REQUIRED CONSENTS
4.1 FCC Application. The assignment of the Station Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC. The FCC Application will be filed by the Buyer and the Sellers with the
FCC within ten (10) days of the signing of this Agreement. The Sellers and the
Buyer shall prosecute the FCC Application with all reasonable diligence and
otherwise use their reasonable best efforts to obtain the grant of the FCC
Application as expeditiously as practicable. If the FCC Consent imposes any
condition on any Party hereto, such Party shall use its reasonable best efforts
to comply with such condition, including, but not limited to, any FCC Consent
conditioned upon the outcome of a pending FCC rulemaking proceeding. The Buyer
will provide the Sellers, and the Sellers will provide the Buyer, with a copy of
any pleading, order or other document served on such Person relating to the FCC
Application. Neither the Buyer nor the Sellers will, and each of them will use
its reasonable best efforts not to cause or permit any of its officers,
directors, partners or other Affiliates to, take any action which could
reasonably be expected to adversely affect the likelihood of the grant of the
FCC Consent. If reconsideration or judicial review is sought with respect to the
FCC Consent, the Party affected shall vigorously oppose such efforts for
reconsideration or judicial review; provided, however, that nothing herein shall
be construed to limit either Party's right to terminate this Agreement pursuant
to Article 16 hereof. In the event that the FCC denies the FCC Application and
such denial becomes a Final Order, this Agreement shall be terminated in
accordance with the express terms and conditions of Article 16 of this
Agreement.
4.2 HSRA. Each Party will use reasonable best efforts to prepare and,
at such time as the Buyer designates, which time will be no later than ten (10)
business days from the signing of this Agreement, file with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice (the "DOJ"), any materials and information required
to be filed with or provided to the FTC or the DOJ pursuant to the HSRA with
respect to the transactions contemplated by this Agreement. The Buyer, on the
one hand, and the Sellers, on the other hand, will share equally the payment of
the filing fees associated with any such filing. The Buyer and the Sellers each
will promptly supply any additional information which reasonably may be required
or requested by the FTC or the DOJ. The Buyer and the Sellers each will take all
such actions, and will file and use reasonable best efforts to have declared
effective or approved, all documents and notifications with any governmental or
regulatory bodies, as may be necessary or may reasonably be requested under
federal antitrust laws for the consummation of the transactions contemplated by
this Agreement, including expiration of the waiting period under the HSRA.
4.3 Other Governmental Consents. Promptly following the execution of
this Agreement, the Parties shall prepare and file with the appropriate
Governmental Entities any other requests for approval or waiver that are
required from such Governmental Entities in connection with the transactions
contemplated hereby and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers.
-7-
<PAGE> 8
4.4 Consent-Pending Contracts. An Assumed Contract is a
"Consent-Pending Contract" at any time after the Closing when any consent
relating to such Assumed Contract has not been obtained or is not in effect. As
an accommodation in order to permit the purchase and sale of the Assets to be
consummated in a timely manner, and based upon the Parties' mutual belief that
no other party to a Consent-Pending Contract will object to or be materially
harmed by the Buyer's enjoyment or use of the Sellers' rights or performance of
the Sellers' obligations under any Consent-Pending Contract and that each such
third party will grant any required consent, the Closing Transactions will be
consummated notwithstanding the fact that any required consent (other than the
Mandatory Consents) has not been obtained under one or more Consent-Pending
Contracts. In that event, the Buyer and the Sellers agree as follows with
respect to each Consent-Pending Contract:
(a) Following the Closing, the Sellers and the Buyer will
continue to attempt to obtain all consents with respect to such Contract in
accordance with Section 9.4.
(b) From and after the Closing Date, the Buyer and the Sellers
will cooperate with one another to provide the Buyer with the benefits of each
Consent-Pending Contract (and the Buyer may utilize such benefits), and the
Buyer will assume and agree to timely pay, satisfy, perform, and discharge the
Sellers' liabilities which arise under such Contract, unless and until such
Contract is a Consent-Denied Contract (as defined below). If such Contract
becomes a Consent-Denied Contract, then the Buyer may thereafter suspend its
performance of the Sellers' obligations arising thereafter under such Contract
until such time as such Consent-Pending Contract is no longer a Consent-Denied
Contract, and the Sellers will perform or otherwise satisfy such obligations. If
the Buyer is denied the benefits of any Consent-Pending Contract while it is a
Consent-Pending Contract, then the Sellers will be responsible for the
obligations of the Sellers pursuant to such Contract to the extent that they
relate to the period during which it is a Consent-Pending Contract or a
Consent-Denied Contract; provided that to the extent that the Buyer actually
receives or received the benefit of any Consent-Pending Contract or
Consent-Denied Contract while it is or was a Consent-Pending Contract or a
Consent-Denied Contract, the Buyer will be responsible for the performance of
the Sellers' obligations arising thereunder to the extent they relate to the
benefit received by the Buyer while such Consent-Pending Contract or
Consent-Denied Contract is or was a Consent-Pending Contract or a Consent-Denied
Contract.
(c) A Consent-Pending Contract becomes a "Consent-Denied
Contract" if (i) such Contract terminates according to its terms by reason of a
breach of such Contract which occurred prior to the Closing or (ii) any party to
such Contract other than the Sellers or the Buyer expressly terminates the
Buyer's enjoyment of the rights and benefits pursuant to such Contract on the
ground that such party's consent to the assignment of the Sellers' rights under
such Contract pursuant to this Agreement has not been obtained.
In addition, at the Buyer's request, the Sellers will cooperate with the Buyer
to the extent reasonably necessary to enforce all rights under each
Consent-Pending Contract.
-8-
<PAGE> 9
ARTICLE 5
PRORATIONS; ACCOUNTS RECEIVABLE
5.1 Proration of Income and Expenses. All income and expenses arising
from the conduct of the business and operation of the Stations shall be prorated
between the Buyer and the Sellers as of the Effective Time in accordance with
GAAP. Such prorations shall be based upon the principle that the Sellers shall
be entitled to all income earned and shall be responsible for all liabilities
incurred or accruing in connection with the operation of the Stations until the
Effective Time, and the Buyer shall be entitled to all income earned and be
responsible for such liabilities incurred or accruing by the Buyer thereafter.
Such prorations shall include, without limitation, all ad valorem, real estate
and other property Taxes (but excluding taxes arising by reason of the transfer
of the Assets as contemplated hereby, which shall be paid as set forth in
Article 14 of this Agreement), business and license fees, music and other
license fees, wages and salaries of employees, utility expenses, liabilities and
obligations under all Assumed Contracts (other than Trade Agreements), rents and
similar prepaid and deferred items and all other expenses attributable to the
ownership and operation of the Stations. Trade Agreements shall be prorated only
to the extent provided in Section 5.2 of this Agreement. To the extent not
known, real estate Taxes shall be apportioned on the basis of Taxes assessed for
the preceding year, with a reapportionment as soon as the new tax rate and
valuation can be ascertained, which covenant shall survive the Closing.
5.2 Trade Agreements. In the event that liabilities and obligations
under Trade Agreements exceed by more than $10,000 the total value (as of the
date of each Trade Agreement) of the property to be received by the Buyer under
such agreements after the Effective Time, as of the Closing the Purchase Price
shall be reduced by the amount so in excess of $10,000. The liability of any
Station for unperformed time under a Trade Agreement as of the Effective Time
shall be valued according to such Station's prevailing rate as of the date of
such Trade Agreement.
5.3 Payment of Proration Items. Within five (5) days prior to the
Closing Date, the Sellers shall deliver to the Buyer their reasonable good faith
estimate of a schedule of their prorations, including all estimated accrued
liabilities (the "Estimated Proration Schedule") based upon the proration as
described in Section 5.1 above. The Purchase Price payable at Closing will be
adjusted by the amount of the prorations allocable to the Sellers or the Buyer
as set forth on the Estimated Proration Schedule.
5.4 Further Adjustments. Within 60 days after the Closing Date, the
Buyer shall prepare and deliver to the Sellers an itemized list (the "Adjustment
List") of its determination of the prorations as described in Section 5.1. Such
list shall show the net amount of the increase or decrease, as applicable, to
the Purchase Price (the "Adjustment Amount"). The Adjustment List shall be
conclusive and binding upon the Sellers unless the Sellers provide the Buyer
with written notice of objection (the "Notice of Disagreement") within thirty
(30) days after the Sellers' receipt of the Adjustment List, which notice shall
state the adjustments
-9-
<PAGE> 10
proposed by the Sellers (the "Sellers' Adjustment Amount"). The Buyer shall have
fifteen (15) days from receipt of a Notice of Disagreement to accept or reject
the Sellers' Adjustment Amount. If the Buyer rejects the Sellers' Adjustment
Amount and the amount in dispute exceeds five thousand dollars ($5,000), the
dispute shall be submitted within ten (10) days to an independent "Big Five"
public accounting firm mutually agreed upon by the Buyer and the Sellers (the
"Referee") for resolution, such resolution to be made within thirty (30) days
after submission to the Referee and to be final, conclusive and binding on the
Sellers and the Buyer. In the event the Buyer and the Sellers fail to select a
Referee within ten (10) days after the Buyer's rejection of the Sellers'
Adjustment Amount, the Referee will be selected at random from the "Big Five"
public accounting firms through a lottery drawing; provided, that KPMG Peat
Marwick shall be excluded from such lottery drawing. The Buyer and the Sellers
agree to share equally the cost and expenses of the Referee, but each Party
shall bear its own legal and other expenses, if any. If the amount in dispute is
equal to or less than five thousand dollars ($5,000), such amount shall be
divided equally between the Buyer and the Sellers. Payment by the Buyer or the
Sellers, as the case may be, of the Adjustment Amount determined pursuant to
this Section 5.4 shall be due fifteen (15) days after the last to occur of (i)
the Sellers' acceptance of the Adjustment List or failure to give the Buyer a
timely Notice of Disagreement; (ii) the Buyer's acceptance of the Sellers'
Adjustment Amount or failure to reject the Sellers' Adjustment Amount within
fifteen (15) days of receipt of a Notice of Disagreement; (iii) the Sellers'
rejection of the Adjustment Amount in the event amount in dispute equals or is
less than five thousand dollars ($5,000); and (iv) notice to the Sellers and the
Buyer of the resolution of the disputed amount by the Referee in the event that
the amount in dispute exceeds five thousand dollars ($5,000). Any payment
required by the Buyer to the Sellers under this Section 5.4 shall be paid by
wire transfer of immediately available federal funds to the account of the
Sellers with a financial institution in the United States as designated by the
Sellers in the Sellers' Notice of Disagreement (or by separate notice in the
event that the Sellers do not send a Notice of Disagreement).
5.5 Collection of Accounts Receivable. At the Closing, the Sellers will
deliver to the Buyer a schedule of Accounts Receivable. The Buyer agrees to use
commercially reasonable efforts to collect the Accounts Receivable for the
benefit of the Sellers. Prior to the Closing, the Sellers shall collect the
Accounts Receivable, and from the Closing Date through the one hundred twenty
(120) day period following the Effective Time (the "Collection Period"), the
Buyer shall collect the cash proceeds from the Accounts Receivable (the
"Collections"). Any Collections with respect to the Accounts Receivable of the
Sellers shall be credited against the account of the payor in the order such
receivables were invoiced by the Sellers unless a legitimate dispute exists with
respect to a particular account and the Buyer promptly notifies the Sellers of
such dispute. Within fifteen (15) days after the end of each broadcast month
during the Collection Period, the Buyer shall deliver to the Sellers (i) a
statement or report (the "Monthly Collection Report") showing all Collections
during such broadcast month, (ii) a wire transfer in an amount equal to the
aggregate amount of the Collections during such broadcast month, and (iii) all
records of uncollected Accounts Receivable. Within fifteen (15) days after the
end of the Collection Period, the Buyer shall
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deliver to the Sellers (i) a final statement or report showing all Collections
made during the Collection Period, (ii) a wire transfer in an amount equal to
any remaining Collections which had not been previously remitted to the Sellers,
and (iii) all records of uncollected Accounts Receivable and Buyer shall have no
further obligations with respect thereto. The Buyer shall not agree to any
settlement, discount or reduction of any Account Receivable without the prior
written consent of the Sellers. The Buyer shall also promptly remit to the
Sellers on a monthly basis all Collections received after the Collection Period.
The Buyer's collection obligation under this Section 5.5 shall not include any
obligation to bring suit or take other legal action for the collection of the
Accounts Receivable. The Buyer shall not assign, pledge or grant a security
interest in any of the Accounts Receivable to any third party or claim a
security interest or right in and to any of the Accounts Receivable and payment
of the Collections shall not be subject to set-off.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers as follows:
6.1 Organization and Standing. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and will, prior to Closing, be qualified to do business in the States of
Indiana, New York and South Carolina.
6.2 Authorization and Binding Obligation. The Buyer has all necessary
corporate power and authority to enter into and perform under this Agreement and
the other Transaction Documents to which the Buyer is a party and to consummate
the transactions contemplated hereby and thereby, and the Buyer's execution,
delivery and performance of this Agreement and the other Transaction Documents
to which the Buyer is a party have been duly and validly authorized by all
necessary corporate action on its part. Each of this Agreement and the other
Transaction Documents to which the Buyer is a party has been duly executed and
delivered by the Buyer and constitutes its valid and binding obligation,
enforceable against the Buyer in accordance with its terms, except as limited by
laws affecting creditors' rights generally or the application of equitable
principles.
6.3 FCC and HSRA Qualifications. The Buyer, including its wholly-owned
subsidiary, is qualified as, and is not presently taking action or contemplating
taking action which might disqualify it from being, under present or pending law
(including the Communications Act) and present or pending rules, regulations,
policies and practices of the FCC, DOJ or FTC, the holder of the Station
Licenses or an owner or operator of the Stations. The Buyer further represents
and warrants that it is financially qualified to meet all terms, conditions and
undertakings contemplated by this Agreement, including the payment of the
Purchase Price.
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6.4 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 4 with respect to the FCC, the HSRA and other governmental
consents, or as disclosed on Schedule 6.4 attached hereto, neither the
execution, delivery and performance of this Agreement or any other Transaction
Document to which the Buyer is a party, nor the consummation of the transactions
contemplated hereby or thereby by the Buyer: (a) does or will require the
consent of any third party; (b) does or will violate any provisions of the
Buyer's organizational documents; (c) does or will violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
Governmental Entity to which the Buyer is a party or by which the Buyer is
bound; and (d) does or will, either alone or with the giving of notice or the
passage of time, or both, conflict with, constitute grounds for termination of
or result in a breach of the terms, conditions or provisions of, or constitute a
default under any contract, agreement or other instrument to which the Buyer is
now subject.
6.5 Litigation. There is no claim, litigation, proceeding or
investigation pending or, to Buyer's Knowledge, threatened against the Buyer
which seeks to enjoin or prohibit, or which otherwise questions the validity of,
any action taken or to be taken in connection with this Agreement or any
Transaction Document to which the Buyer is a party.
6.6 Brokerage. There are no, and there will not be any, claims for
brokerage commissions, finders' fees or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Buyer.
6.7 Available Funds. The Buyer has, or will have on the Closing Date,
sufficient funds available to pay the Purchase Price on the Closing Date.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF WICKS
Wicks represents and warrants to the Buyer as follows:
7.1 Organization and Standing.
(a) Wicks is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware, and is
qualified to do business in every jurisdiction in which the nature of its
business or its ownership of property requires it to be qualified (including
Indiana, New York and South Carolina), except where the failure to so qualify
could not reasonably be expected to have a Material Adverse Effect.
(b) WBG License is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to do business in every jurisdiction in which the nature of its
business or its ownership of property
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requires it to be qualified except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect.
(c) Butternut is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and is
qualified to do business in every jurisdiction in which the nature of its
business or its ownership of property requires it to be qualified, except where
the failure to so qualify could not reasonably be expected to have a Material
Adverse Effect.
(d) WBG Binghamton is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
qualified to do business in every jurisdiction in which the nature of its
business or its ownership of property requires it to be qualified except where
the failure to so qualify could not reasonably be expected to have a Material
Adverse Effect.
(e) The Sellers have all necessary corporate, limited
partnership or limited liability company, as the case may be, power and
corporate, limited partnership or limited liability company, as the case may be,
authority to own, lease and operate the Stations and the Assets and to carry on
the business of each Station as such business is now being conducted.
7.2 Authorization and Binding Obligation. The Sellers have all
necessary corporate, limited partnership or limited liability company, as the
case may be, power and corporate, limited partnership or limited liability
company, as the case may be, authority to enter into and perform their
obligations under this Agreement and the other Transaction Documents to which
any of the Sellers is a party and to consummate the transactions contemplated
hereby and thereby, and the Sellers' execution, delivery and performance of each
of this Agreement and the other Transaction Documents to which any of the
Sellers is a party and the transactions contemplated hereby and thereby has been
duly and validly authorized by all necessary corporate, limited partnership or
limited liability company, as the case may be, action on each of their part.
Each of this Agreement and the other Transaction Documents to which the Sellers
is a party has been duly executed and delivered by the Sellers and constitutes
their valid and binding obligation, enforceable against the Sellers in
accordance with its respective terms, except as limited by laws affecting the
enforcement of creditors' rights generally or the application of equitable
principles.
7.3 Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 4 with respect to the FCC, the HSRA and other governmental
consents, and except as disclosed on Schedule 7.3 attached hereto, neither the
execution, delivery and performance of this Agreement and the other Transaction
Documents to which the Sellers are a party, nor the consummation of the
transactions contemplated hereby and thereby by the Sellers: (a) does or will
require the consent of any third party (except as disclosed on Schedule 7.7);
(b) does or will violate any provisions of the Sellers' organizational
documents; (c) does or will violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of
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any Governmental Entity to which the Sellers are a party or by which they or the
Assets are bound; (d) except due to the failure to obtain required consent to
the assignment of any Contract, does or will, either alone or with the giving of
notice or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions of,
or constitute a default under any Contract; and (e) except due to the failure to
obtain required consent to the assignment of any Contract, does result 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 Sellers are a party or by which the Sellers
or any of the assets of the Sellers are bound.
7.4 Licenses. Schedule 7.4 attached hereto includes a true and complete
list of the Station Licenses. The Station Licenses were validly issued with the
holder designated on Schedule 7.4 being the authorized legal holder thereof and
are in compliance with the Communications Act and the rules, regulations and
policies of the FCC. The Station Licenses comprise all of the licenses, permits
and other authorizations required from the FCC for the lawful conduct of the
operation of the Stations as presently operated and are in full force and
effect. The Sellers have no reason to believe that the Station Licenses will not
be renewed by the FCC in the ordinary course when such Station Licenses are due
for renewal. The Stations are operating in accordance with the Communications
Act and the rules, regulations and policies of the FCC.
7.5 Real Property.
(a) Schedule 7.5 attached hereto lists all of the Owned Real
Property. With respect to each parcel of Owned Real Property: (i) the Sellers
have good and marketable fee simple title to such parcel, which as of Closing
shall be free and clear of all Liens (other than any Permitted Lien); (ii)
except as set forth on Schedule 7.5, there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any Person the
right of use or occupancy of any portion of such parcel; and (iii) there are no
outstanding options or rights of first refusal to purchase such parcel or any
portion thereof or interest therein. The use for which the Owned Real Property
is zoned permits the use thereof for the business consistent with past
practices. The use and occupancy of the Owned Real Property by Sellers are in
compliance in all material respects with all regulations, codes, ordinances and
statutes applicable to Sellers and the business. There are no condemnation
proceedings or eminent domain proceedings of any kind pending or, to the
Sellers' Knowledge, threatened against the Owned Real Property.
(b) The licenses, leases and subleases listed on Schedule 7.5
constitute all of the agreements for the use or occupancy of real property to
which the Sellers are a party (collectively, the "Leases"). With respect to each
Lease: (i) such Lease is legal, valid, binding, enforceable and in full force
and effect and (ii) no party to such Lease is in breach or default under such
Lease, and no event has occurred which, with notice or lapse of time, would
constitute such a breach or default under such Lease. The Sellers have not
assigned, transferred, conveyed, mortgaged, deeded in trust or caused any Lien
(other than any
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<PAGE> 15
Permitted Lien) to exist with respect to any interest of the Sellers in such
Lease. The use for which the Leases are zoned permits the use thereof for the
business of the Stations consistent with past practices. The use and occupancy
of the Leases by the Sellers are in compliance in all material respects with all
regulations, codes, ordinances and statutes applicable to the Sellers and the
business.
(c) The Owned Real Property and the Leases listed on Schedule
7.5 include all real property necessary to conduct the business and operation of
the Stations as now conducted.
7.6 Personal Property.
(a) Schedule 7.6 attached hereto includes a list of the
material tangible personal property owned, leased or held by the Sellers as of
the date of this Agreement and used primarily in the conduct of the business and
operation of the Stations ("Personal Property"). Except as set forth on Schedule
7.6, the Sellers have good and marketable title or valid leasehold interest in
all Assets free and clear of all Liens (other than any Permitted Lien).
(b) Except as set forth on Schedule 7.6, the Personal Property
is in reasonably good condition, ordinary wear and tear excepted, adequate and
suitable for the operation of the Stations as they are currently being operated,
and in proper condition and repair so that the Stations can operate according to
their FCC Licenses, the rules, regulations and policies of the FCC and in all
other respects in compliance with the Communications Act and all other
applicable federal and state laws.
7.7 Contracts.
(a) Except for (i) the Transaction Documents, the Excluded
Contracts and any Contract described on Schedule 7.7 attached hereto and (ii)
any purchase order for goods or services (including the sale of air time on the
Stations) entered into in the ordinary course of business, as of the date of
this Agreement the Sellers are not a party to or bound by, and neither the
Sellers nor any Station is subject to, any of the following Contracts relating
to the operation of the Stations, whether written or oral:
(i) collective bargaining agreement or contract with any labor
union or any bonus, pension, profit sharing, retirement or any other form of
deferred compensation plan or any hospitalization insurance or similar plan or
practice;
(ii) contract for the employment or engagement of any
individual employee or other Person (including as an independent contractor or
on a consulting basis) other than at the will of the Sellers, or any agreement
to provide severance benefits upon any termination of employment or other
engagement;
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<PAGE> 16
(iii) agreement, indenture or other Contract placing a Lien
(other than any Permitted Lien) on any Asset;
(iv) agreement with respect to the lending or investing of
funds by the Sellers;
(v) network affiliation, license or royalty agreement;
(vi) sales representation agreement;
(vii) agreement with any rating service or intellectual
property licensing organization;
(viii) lease or agreement under which it is lessee of, or
holds or operates, any personal property owned by any other party calling for
payments in excess of $4,000 annually or entered into outside of the ordinary
course of business;
(ix) lease or agreement under which it is lessor of or permits
any third party to hold or operate any personal property owned or controlled by
it;
(x) agreement, contract or understanding pursuant to which the
Sellers subcontract work to third parties;
(xi) any Trade Agreement; or
(xii) other agreement material to the business or operation of
the Stations, whether or not entered into in the ordinary course of business.
(b) Except as set forth on the Schedule 7.7, (i) no consent of
any third party is required under any of the foregoing Contracts as a result of
or in connection with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby; (ii) none of the
Sellers is in default and, to Sellers' Knowledge, no other party is in default
under any of the foregoing Contracts that has not been heretofore cured; and
(iii) to the Sellers' Knowledge, 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 of the Assumed Contracts have been provided to the Buyer as of the date
of this Agreement and all such Assumed Contracts are legal, valid, binding,
enforceable and in full force and effect.
7.8 Employee Benefits.
(a) Schedule 7.8 attached hereto contains a true and complete
list of all persons employed at each Station as of the date of this Agreement,
each such person's job title or the capacity in which employed and each such
person's salary as of the date hereof.
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Except as described on Schedule 7.8, the Sellers have no Knowledge that any
employee identified on Schedule 7.8 currently plans to terminate employment,
whether by reason of the transactions contemplated by this Agreement or
otherwise.
(b) Schedule 7.8 contains a list of all employee benefit plans
and policies maintained by the Sellers for the employees of the Stations (the
"Employee Plans"). For purposes of this Agreement, the term "employee benefit
plan" includes all pension, retirement, disability, medical, dental or other
health insurance plans, life insurance or other death benefit plans, profit
sharing, deferred compensation, stock option, bonus or other incentive plans,
vacation benefit plans, severance plans, any pension plan as defined in Section
3(2) of ERISA ("Pension Plan") and any welfare plan as defined in Section 3(1)
of ERISA ("Welfare Plan"), whether or not funded, and any plan which is a
multiemployer plan as defined in Section 3(37) of ERISA ("Multiemployer Plan").
(c) The Sellers have not incurred any liability to the Pension
Benefit Guaranty Corporation ("PBGC"), the IRS or any Multiemployer Plan with
respect to any Employee Plan that has not been satisfied in full.
(d) With respect to the Employee Plans, all of the following
are true: (i) all amounts due as contributions, insurance premiums and benefits
to the date hereof have been fully paid by Sellers; (ii) all applicable material
requirements of law have been observed with respect to the operation thereof,
and all applicable reporting and disclosure requirements have been timely
satisfied; and (iii) Sellers are not aware of any claim or demand by any
employee (or beneficiary or dependent of any employee) for benefits (other than
routine claims for benefits), or by any taxing authority for taxes or penalties
which has not been satisfied in full or which may be or become subject to
litigation or arbitration.
7.9 Intellectual Property. Schedule 7.9 attached hereto lists all
copyrights, trademarks, trade names, service marks, patents, permits, jingles,
privileges and other similar intangible property rights and interests (exclusive
of those required to be listed in the other Disclosure Schedules hereto) applied
for by, or issued to, the Sellers, or under which the Sellers are licensed or
franchised, and used primarily in the conduct of the business and operation of
the Stations ("Intellectual Properly"), all of which rights and interests,
except as set forth on Schedule 7.9, are issued to or owned by the Sellers, or
if licensed or franchised to the Sellers (as indicated on Schedule 7.9), are
valid and uncontested. There is no pending or, to the Sellers' Knowledge,
threatened proceeding or litigation affecting or with respect to the
Intellectual Property. To the Sellers' Knowledge, the use of the Intellectual
Property in connection with the operation of the Stations and in a manner
consistent with past practices does not infringe upon the proprietary rights of
any other Person. The Sellers have no Knowledge of any infringement by any
Person upon the rights of the Sellers with respect to the Intellectual Property.
The Sellers have 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.
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7.10 Litigation. Except as disclosed on Schedule 7.10 attached hereto,
there is no claim, litigation, proceeding or to the Sellers' Knowledge,
investigation pending or threatened against the Sellers or the Stations in any
federal, state or local court, or before any administrative agency, arbitrator
or other tribunal authorized to resolve disputes. The Sellers are not in default
of any judgment, order, writ, injunction or decree of any Governmental Authority
with respect to the operation of the Stations.
7.11 Compliance With Laws. The Sellers are not in default under any,
and have complied with all, statutes, ordinances, regulations, orders, judgments
and decrees of any Governmental Entity applicable to them or to the business,
assets and properties of the Sellers as to which a default or failure to comply
might result in a Material Adverse Effect. The Sellers 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 which might result in a Material Adverse Effect. The Sellers have not
received any notification of any asserted failure to comply with any of the
foregoing which has not been satisfactorily responded to in the time period
required thereunder. The Sellers hold all Governmental Approvals necessary for
the conduct of their business as currently conducted, except where the failure
to have obtained such Governmental Approval could not reasonably be expected to
have a Material Adverse Effect. All such Governmental Approvals are in full
force and effect, and the Sellers are in material compliance with each such
Governmental Approval.
7.12 Financial Statements. The Sellers have supplied the Buyer with
copies of (a) the audited balance sheet of the Sellers as of December 31, 1997
and the related audited income statement for the year then ended; (b) the
unaudited balance sheets of the Sellers pertaining to the Stations as of
September 30, 1998 and the related unaudited income statements for the nine
months then ended; and (c) the monthly unaudited income statements pertaining to
the Stations for each month in 1997 and the first nine months of 1998
(collectively, the "Financial Statements"). The Financial Statements accurately
reflect and present fairly the financial position and the results of operations
of the Stations, taken as a whole, as of the dates and/or the periods indicated
and have been prepared in accordance with GAAP consistently applied pursuant to
the Sellers' accounting policies, except for the absence of footnotes and except
as noted in Schedule 7.12 hereto. The books and records of Sellers are accurate
and complete in all material respects.
7.13 Taxes. Except as set forth on Schedule 7.13 attached hereto:
(a) the Sellers have timely filed all Tax Returns required to
be filed by them with respect to their business (taking into account all
extensions of due dates) and all Taxes shown as due thereon have been paid;
(b) no deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been proposed, asserted
or assessed against the
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Sellers and the Sellers have not consented to extend the time in which any Tax
may be assessed collected by any taxing authority;
(c) the Sellers have not requested or been granted an
extension of time for filing any Tax Return to a date later than the Closing
Date and the Sellers have not received any written notification of any action,
suit, taxing authority proceeding or audit now in progress, pending or
threatened against the Sellers;
(d) the Sellers have withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party
with respect to their business;
(e) no claim has been made in writing by a taxing authority in
a jurisdiction where the Seller does not file Tax Returns that the Sellers are
or may be subject to Taxes assessed by such jurisdiction; and
(f) there are no Liens for Taxes (other than for current Taxes
either not yet due and payable or being contested in good faith) upon the assets
of the Sellers.
7.14 Insurance. Schedule 7.14 attached hereto contains a true and
complete list of all insurance policies of the Sellers pertaining to the
Stations which are currently in force. All policies of insurance listed on
Schedule 7.14 are in full force and effect. Since January 1, 1998, no insurance
policy of the Sellers with respect to the Stations has been canceled by the
insurer. The Sellers maintain insurance policies covering all of their tangible
properties and assets pertaining to the Stations and various occurrences which
may be reasonably anticipated to arise in connection with the operation of the
Stations.
7.15 Environmental Matters. Except as set forth on Schedule 7.15
attached hereto, as relates to the Stations:
(a) the Sellers have complied in all material respects and are
in compliance in all material respects with all Environmental Requirements;
(b) without limiting the generality of the foregoing, the
Sellers have obtained and complied in all material respects, and are in material
compliance with all permits, licenses and other authorizations that are required
pursuant to Environmental Requirements;
(c) the Sellers have not received any written notice, report
or other written information regarding any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations arising under
Environmental Requirements;
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(d) the Sellers have not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled or released any
toxic or otherwise hazardous material, substance or waste, nor has any toxic or
otherwise hazardous material, substance or waste been released at the Owned Real
Property or real property under the Leases, so as to give rise to liabilities of
the Sellers, whether for response costs, natural resource damages, attorneys
fees or otherwise, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Solid Waste
Disposal Act, as amended ("SWDA"), or any other Environmental Requirements; and
(e) neither this Agreement nor the consummation of the
transactions contemplated hereby will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental Requirements.
Notwithstanding anything to the contrary contained in this Agreement, this
Section 7.15 contains the sole representations and warranties of the Sellers
with respect to environmental matters.
7.16 Conduct of the Business in the Ordinary Course.
(a) Except as set forth on Schedule 7.16 attached hereto,
since September 30, 1998, (i) the Sellers have conducted the operations of the
Stations only in the ordinary course and have not suffered any material loss or
casualty in the assets of the Stations, (ii) there has not been any material
adverse change in the condition of the Stations, financial or otherwise, or in
the results of operations of the Stations, (iii) there has not been any material
adverse change in the customary methods of operations of the Stations, and (iv)
except in the ordinary course of business or to the extent not material to the
business or financial condition of the Stations, there has not been any sale or
transfer of any tangible or intangible asset used or useful in the operation of
the Stations.
(b) In the event the Buyer or its parent enters into a
definitive agreement relating to a change of control of Buyer or its parent or a
sale of all or substantially all of the assets of the Buyer, clause (a)(ii)
above shall be deemed to be restated as follows:
"there has not been any material adverse change in the condition of the
Stations, financial or otherwise, or in the results of operations of the
Stations (other than due to changes in general economic conditions which affect
the radio broadcasting industry as a whole in the Stations' markets),"
7.17 Brokerage. Other than fees owing to Merrill Lynch & Co. or as set
forth on Schedule 7.17 attached hereto, which fees will be paid by the Sellers,
there are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the
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transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Sellers.
7.18 Related Party Obligations. Except as set forth on Schedule 7.18
attached hereto, no officer, director, shareholder or Affiliate of the Sellers,
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 Sellers or has any material interest in any
material property used by the Sellers which is material to the operation of the
Stations.
7.19 Labor Relations.
(a) The Sellers are not a party to any collective bargaining
agreement covering any of their employees at the Stations. The Sellers are not a
party to any contract with any labor organization, nor have the Sellers agreed
to recognize any union or other collective bargaining unit, nor has any union or
other collective bargaining unit been certified as representing any of the
Sellers' employees at the Stations. The Sellers have no Knowledge of any
organizational effort currently being made or threatened by or on behalf of any
labor union with respect to any employees of the Sellers at the Stations.
(b) Except as set forth in Schedule 7.19 attached hereto,
there have been no material violations of any federal, state or local statutes,
laws, ordinances, rules, regulations, orders or directives with respect to the
employment of individuals by, or the employment practices or work conditions of,
the Sellers with respect to the Stations, or the terms and conditions of
employment, wages (including overtime compensation) and hours. The Stations are
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 Stations 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 Entity.
7.20 Disclosure. To the Sellers' Knowledge, no representation or
warranty made under this Article 7, and none of the information furnished by the
Sellers 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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ARTICLE 8
COVENANTS OF THE BUYER
8.1 Notification. The Buyer shall promptly notify the Sellers of (i)
any change in any information contained in the representations and warranties
made in this Agreement or (ii) any litigation, arbitration or administrative
proceeding pending or, to its Knowledge, threatened against the Buyer which
challenges the transactions contemplated hereby, including any challenges to the
FCC Application, and shall use its reasonable best efforts to remove any such
impediment to the transactions contemplated by this Agreement.
8.2 No Inconsistent Action. The Buyer shall not take any action (i)
inconsistent with its obligations or representations and warranties under this
Agreement, including, without limitation, Section 6.3, or (ii) that would hinder
or delay the consummation of the transactions contemplated by this Agreement.
8.3 Non-Solicitation. If this Agreement is terminated, the Buyer will
not, beginning on the date hereof and continuing for a period of two (2) years
thereafter, without the prior written approval of the Sellers, directly or
indirectly, hire, solicit, encourage, entice or induce any Person who is
employed by the Sellers at the date hereof or at any time hereafter that
precedes such termination, to terminate his or her employment with the Sellers.
The Buyer agrees that any remedy at law for any breach by it of this Section 8.3
would be inadequate, and the Sellers would be entitled to injunctive relief in
such a case. If it is ever held that the restrictions placed on the Buyer by
this Section 8.3 are too onerous and are not necessary for the protection of the
Sellers, the Parties hereto agree that any court of competent jurisdiction may
reduce the duration or scope hereof, or delete specific words or phrases, and in
its reduced form such provision will then be enforceable and will be enforced.
ARTICLE 9
COVENANTS OF THE SELLERS
9.1 Interim Operation. Between the date of this Agreement and the
Closing Date, except as expressly permitted by this Agreement or with the prior
written consent of Larry Wilson, on behalf of the Buyer, such consent not to be
unreasonably withheld:
(a) the Sellers shall conduct the business and operations of
the Stations, including entering into Contracts relating to the Stations, solely
in the ordinary course of business and consistent with past practices, with the
intent of preserving the ongoing operations and assets of the Stations;
(b) the Sellers shall not sell, assign, lease or otherwise
transfer or dispose of any of the Assets, except for assets consumed or disposed
of in the ordinary course of business, where no longer used or useful in the
business or operation of the Stations;
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(c) the Sellers shall not increase or agree to increase the
compensation, bonuses or other benefits for employees of the Stations, except as
may be required under Assumed Contracts disclosed in Schedule 7.7 or for changes
or promotions in the ordinary course of business, and shall pay all commissions
due with respect to accounts receivable in the ordinary course of business; and
(d) the Sellers shall promptly inform the Buyer in writing of
any variances from the representations and warranties contained in Article 7
hereof or any breach of any covenant hereunder by the Sellers.
9.2 Access to Stations. Upon reasonable prior notice from the Buyer to
the Sellers, between the date of this Agreement and the Closing Date, the
Sellers shall give the Buyer and the Buyer's counsel, accountants, financing
parties, engineers and other representatives and each of their respective
agents, reasonable access during normal business hours to all of the Sellers'
properties, records, employees, sales representatives, current and former
independent accountants of the Sellers, in each case relating to the Stations,
and shall furnish the Buyer with all information related to the Stations that
the Buyer reasonably request. The Buyer's access under this Section 9.2 shall be
exercised in such a manner as to not interfere unreasonably with the business of
the Stations.
9.3 Notification. The Sellers shall notify the Buyer of any litigation,
arbitration or administrative proceeding pending or, to their Knowledge,
threatened against the Sellers or the Stations which challenges the transactions
contemplated hereby, including any challenges to the FCC Application, and shall
use its reasonable best efforts to take such steps as may be necessary to remove
any such impediment to the transactions contemplated by this Agreement.
9.4 Third-Party Consents. The Sellers shall use reasonable best efforts
to obtain the consent of any third parties necessary for the assignment to the
Buyer of any Assumed Contract.
9.5 Payment of Indebtedness. The Sellers shall secure the release of
all Liens (other than Permitted Liens) on the Assets, which Liens secure the
payment of any indebtedness or otherwise.
9.6 No Inconsistent Action. The Sellers shall not take any action (i)
inconsistent with their obligations under this Agreement or (ii) that would
hinder or delay the consummation of the transactions contemplated by this
Agreement.
9.7 Supplemental Financial Statements. The Sellers shall provide the
Buyer with copies of the monthly unaudited income statements applicable to the
Stations prepared by the Sellers in the ordinary course of business commencing
with the month ending October 31, 1998 until Closing (collectively, the
"Supplemental Financial Statements"). The Sellers shall provide such
Supplemental Financial Statements to the Buyer promptly upon such
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Supplemental Financial Statements becoming available to the Sellers. The
Supplemental Financial Statements shall be subject to the representations and
warranties as set forth in Section 7.12.
9.8 Compliance With Law. The Sellers shall comply in all material
respects with all laws applicable to the business of the Sellers, except for the
Communications Act and the rules, regulations and policies of the FCC which the
Sellers shall comply with in all respects.
9.9 Non-Solicitation. The Sellers will not, beginning on the Closing
Date and continuing for a period of two (2) years thereafter, without the prior
written approval of the Buyer, directly or indirectly, hire, solicit, encourage,
entice or induce any Transferred Employee to terminate his or her employment
with the Buyer. The Sellers agree that any remedy at law for any breach by it of
this Section 9.9 would be inadequate, and the Buyer would be entitled to
injunctive relief in such a case. If it is ever held that the restrictions
placed on the Sellers by this Section 9.9 are too onerous and are not necessary
for the protection of the Buyer, the Parties hereto agree that any court of
competent jurisdiction may reduce the duration or scope hereof, or delete
specific words or phrases, and in its reduced form such provision will then be
enforceable and will be enforced.
9.10 Environmental Reports. The Sellers agree to deliver to the Buyer,
as soon as practicable after the date hereof, such updates to the Phase I
environmental reports (or a new report if there is no prior report) with respect
to (i) each of its Owned Real Properties and (ii) Leases (to the extent
permitted under the Lease) as are reasonably required by Buyer and prepared by
an environmental consulting firm reasonably acceptable to Buyer and its Lenders.
The cost of such reports shall be borne equally by the Buyer, on the one hand,
and the Sellers, on the other. In addition, prior to the Closing, Buyer shall
cause the Owned Real Property, and such of the real property relating to Leases
as is set forth on Schedule 9.10, to be surveyed by a registered professional
surveyor selected by Buyer. Such surveys shall be in ALTA form and shall conform
to such additional standards and requirements as Buyer may reasonably request,
and shall be certified to Buyer, its lender and the title company selected by
Buyer. The costs and expense of such surveys shall be shared equally by Buyer
and Seller.
9.11 No Shop. The Sellers agree that during the term of this Agreement
they will not enter into discussion with any Person regarding the sale of any of
the Stations or the sale of the Sellers to any Person.
9.12 Contracts. The Sellers agree to deliver to the Buyer, as soon as
practicable after the date of execution thereof, complete and accurate copies of
any contracts, leases or other agreements related to the Stations entered into
in the ordinary course of business from and after the date hereof until the
Closing Date.
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ARTICLE 10
JOINT COVENANTS
10.1 Best Efforts. Between the date of this Agreement and the Closing,
each Party shall use its commercially reasonable best efforts to cause the
fulfillment at the earliest practicable date of all of the conditions to the
obligations of the other Party to consummate the sale and purchase under this
Agreement, it being understood that time is of the essence. The covenants,
obligations and agreements contained in this Section 10.1 shall expire at
Closing and thereafter no Party shall have any liability or obligation to any
other Party under or by virtue of this Section 10.1.
10.2 Control of Stations. Between the date of this Agreement and the
Closing, the Buyer shall not, directly or indirectly, control, supervise or
direct the operations of the Stations. Such operations shall be the sole
responsibility of the Sellers prior to Closing and, subject to the provisions of
Article 9, shall be in their complete discretion.
10.3 Confidentiality. The Buyer and the Sellers shall each keep
confidential all information obtained by them with respect to the other in
connection with this Agreement, and if the transactions contemplated hereby are
not consummated for any reason, each shall return to the other without retaining
a copy thereof, any schedules, documents or other written information, including
all financial information, obtained from the other in connection with this
Agreement and the transactions contemplated hereby, except where such
information is known or available through other lawful sources or where such
Party is advised by counsel that its disclosure is required in accordance with
applicable law.
10.4 Continued Employment of Stations Employees.
(a) On the Closing Date, all active employees of the Sellers
at the Stations who are either identified on Schedule 7.8 or are employed by
Sellers following the date hereof in the ordinary course of business for the
Stations consistent with past practice shall become employees of the Buyer
("Transferred Employees"). The terms and conditions of the Buyer's employment of
the Transferred Employees shall be at will employment with such benefits as the
Buyer deems appropriate; provided, that the Buyer shall comply with the terms of
any Assumed Contract relating to any Transferred Employee listed on Schedule 7.7
and assumed by the Buyer pursuant to Section 3.1.
(b) Except for the amount of accrued but unused vacation
expense of Transferred Employees as of the Closing Date allocated against
Sellers pursuant to Section 5.1 and for which Buyer will assume responsibility
as of the Closing Date, the Sellers shall be solely responsible for all wages,
salaries and benefits (including all accrued vacation and sick days) which will
or may become payable to any Transferred Employee in respect of any period of
employment by the Sellers prior to the Effective Time, and, subject to Section
5.1, the Buyer shall be solely responsible for any wages, salaries and benefits
(including all
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accrued vacation and sick days) which will or may become payable to any
Transferred Employee in respect of any period on and after the Effective Time.
(c) Subject to Section 5.1, for purposes of determining the
amount of any entitlement of any Transferred Employee under the Buyer's vacation
policy, the Buyer will take into account and credit such Transferred Employee's
length of service with the Sellers and its predecessor, as well as with the
Buyer. With respect to all Transferred Employees to the extent required by law,
Buyer shall cause to be waived all limitations on benefits relating to any
pre-existing conditions and recognize, for purposes of annual deductible and
out-of-pocket limits under its medical and dental plans, deductible and
out-of-pocket expenses paid by such Transferred Employees and their dependents
under the medical and dental plans in which they participate in the calendar
year in which the Closing occurs.
(d) No provisions of this Agreement shall create any third
party beneficiary rights of any employee or former employee (including any
beneficiary or dependent thereof) of the Sellers in respect of continued
employment (or resumed employment) with the Sellers or with the Buyer.
(e) The Sellers shall cooperate with the Buyer in all
reasonable respects in connection with the Buyer's employment of the Transferred
Employees.
(f) With respect to the 401(k) plan maintained by the Sellers
(the "Sellers' 401(k) Plan"), all Transferred Employees shall be fully vested in
their account balances as of the Closing Date to the full extent permitted by
applicable law. Within a reasonable time following the Closing Date, the Sellers
shall cause the account balances of the Transferred Employees under the Sellers'
401(k) Plan to be distributed to each Transferred Employee who requests such a
distribution, in accordance with the terms of such plan and Section 401(k)(10)
of the Code. For a reasonable period following the Closing Date, the Sellers
shall continue to administer loans under the Sellers' 401(k) Plan with respect
to accounts not transferred to the Buyer in a direct rollover to a plan, if any,
maintained by the Buyer (the "Buyer's Plan") and, to the extent a Transferred
Employee elects a direct rollover to the Buyer's Plan and if the Buyer's Plan so
permits, the Sellers shall cause any outstanding loans held in the Transferred
Employee's account to be transferred to the Buyer's Plan.
ARTICLE 11
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO CLOSE
The obligations of the Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1 Representations, Warranties and Covenants.
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(a) All representations and warranties of the Sellers made in
this Agreement shall be true and complete on and as of the Closing Date as if
made on and as of that date and as though the Closing Date were substituted for
the date of this Agreement, except (i) to the extent that any such
representations and warranties were made as of a specified date, and as to such
representations and warranties the same shall continue on the Closing Date to
have been true and correct as of the specified date, and (ii) where the breach
of any such representations or warranties does not, either individually or in
the aggregate, have a Material Adverse Effect (except that for purposes of
application of this clause (ii) all materiality qualifications within all such
representations and warranties shall be deemed omitted).
(b) All of the covenants to be complied with and performed by
the Sellers on or prior to Closing Date shall have been complied with or
performed, in all material respects (except that for purposes of application of
this subsection (b) all materiality qualifications within all such covenants
shall be deemed omitted.
11.2 Governmental Consents. The FCC Consent shall have been granted
(and shall have become a Final Order), all other conditions of Section 4.2 shall
have been satisfied and any other governmental consents required to consummate
the transactions hereunder shall have been obtained.
11.3 Adverse Proceedings. No order, decree or judgement of any court,
agency or other governmental authority shall have been rendered against any
Party hereto relating to the consummation of the transactions contemplated by
this Agreement in accordance with its terms.
11.4 Deliveries. The Sellers shall have made or stand willing to make
all the deliveries required under Section 13.1, together with an opinion of
Sellers' counsel in form and substance reasonably satisfactory to Buyer.
11.5 Mandatory Consents. The Sellers shall have received the consents
listed on Schedule 11.5 (the "Mandatory Consents").
ARTICLE 12
CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATION TO CLOSE
The obligations of the Sellers hereunder are, at their option, subject
to satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1 Representations, Warranties and Covenants.
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(a) All representations and warranties of the Buyer made in
this Agreement shall be true and complete on and as of the Closing Date as if
made on and as of that date and as though the Closing Date were substituted for
the date of this Agreement, except (i) to the extent that any such
representations and warranties were made as of a specified date, and as to such
representations and warranties the same shall continue on the Closing Date to
have been true and correct as of the specified date, and (ii) where the breach
of any such representations or warranties does not, either individually or in
the aggregate, have a material adverse effect on Buyer's ability to consummate
the transactions contemplated hereby (except that for purposes of application of
this clause (ii) all materiality qualifications within all such representations
and warranties shall be deemed omitted).
(b) All of the covenants to be complied with and performed by
the Buyer on or prior to Closing Date shall have been complied with or
performed, in all material respects (except that for purposes of application of
this subsection (b) all materiality qualifications within all such covenants
shall be deemed omitted.
12.2 Governmental Consents. The FCC Consent shall have been granted
(and shall have become a Final Order), all other conditions of Section 4.2 shall
have been satisfied and any other governmental consents required to consummate
the transactions hereunder shall have been obtained.
12.3 Adverse Proceedings. No order, decree or judgment of any court,
agency or other governmental authority shall have been rendered against any
Party hereto relating to the consummation of the transactions contemplated by
this Agreement in accordance with its terms.
12.4 Deliveries. The Buyer shall have made or stand willing to make all
the deliveries required under Section 13.2, together with an opinion of Buyer's
counsel in form and substance reasonably satisfactory to the Sellers.
ARTICLE 13
DOCUMENTS TO BE DELIVERED AT THE CLOSING
13.1 Documents to be Delivered by the Sellers. At the Closing, the
Sellers shall deliver to the Buyer the following (the "Buyer's Closing
Transactions"):
(a) The Transaction Documents to which each Seller is a party;
(b) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to the Buyer, effecting the sale,
transfer, assignment and conveyance of the Assets to the Buyer, including, but
not limited to, the following:
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(i) assignments of the Station Licenses;
(ii) bills of sale for all Assets other than the
Owned Real Property;
(iii) warranty deeds for all Owned Real Property;
(iv) assignments of the Assumed Contracts; and
(v) assignments of all intangible personal property
including all books, records, logs and similar assets;
(c) resolutions of the Sellers, authorizing the execution,
delivery and performance of this Agreement, certified by the Sellers;
(d) good standing certificates of each of the Sellers from
their respective states of formation and from the States of Indiana, New York
and South Carolina, as applicable, in each case dated not more than 10 days
prior to the Closing;
(e) an officer's certificate of each of the Sellers certifying
that the conditions set forth in Section 11.1 have been met; and
(f) such other documents as may reasonably be requested by the
Buyer's counsel in order to effectuate the Closing of the transactions
contemplated by this Agreement.
13.2 Documents to be Delivered by the Buyer. At the Closing, the Buyer
shall deliver to the Sellers the following (the "Sellers' Closing Transactions"
and together with the Buyer's Closing Transactions, the "Closing Transactions"):
(a) immediately available wire-transferred federal funds as
provided in Section 2.1;
(b) the Transaction Documents to which the Buyer is a party;
(c) instruments, in form and substance reasonably satisfactory
to the Sellers and their counsel, pursuant to which the Buyer assumes the
Assumed Liabilities;
(d) good standing certificates of the Buyer from the States of
Nevada, Indiana, New York and South Carolina, in each case dated not more than
10 days prior to the Closing;
(e) an officer's certificate of the Buyer certifying that the
conditions set forth in Section 12.1 have been met; and
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(f) such other documents as may reasonably be requested by the
Sellers' counsel in order to effectuate the Closing of the transactions
contemplated by this Agreement.
ARTICLE 14
TRANSFER TAXES; FEES AND EXPENSES
14.1 Transfer Taxes and Similar Charges. Except as set forth in Section
14.3 hereof, all costs of transferring the Assets in accordance with this
Agreement, including recordation, transfer and documentary taxes and fees, and
any excise, sales or use taxes, shall be borne equally by the Buyer, on the one
hand, and the Sellers, on the other hand.
14.2 Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority, the consent of which is required for the
transactions contemplated hereby, including all filing fees incurred pursuant to
Article 4 shall be borne equally by the Buyer, on the one hand, and the Sellers,
on the other hand.
14.3 Expenses. Each Party hereto shall be solely responsible for and
shall pay all costs and expenses incurred by it in connection with the
negotiation, preparation and performance of and compliance with the terms of
this Agreement; provided, that (i) any HSRA filing fees and (ii) any FCC filing
fees with regard to the FCC Application shall be borne equally by the Buyer, on
the one hand, and the Sellers, on the other hand.
ARTICLE 15
INDEMNIFICATION
15.1 Indemnification.
(a) By the Sellers. After the Closing occurs, and subject to
the terms and provisions of this Agreement, Wicks will indemnify the Buyer and
hold it harmless against any loss, liability, deficiency, damage or expense
(including reasonable legal fees and expenses) which the Buyer may suffer,
sustain or become subject to (a "Buyer Loss") as a result of (i) any breach of
any representation or warranty made by the Sellers hereunder; (ii) the failure
of the Sellers to perform any covenant or agreement hereunder and (iii) any
liability of Sellers not expressly assumed by Buyer hereunder. Subject to the
other limitations contained in this Agreement, including this Article 15,
neither Seller shall be required to indemnify the Buyer with respect to any
breaches of representations and warranties: (i) unless the Buyer gives the
Sellers written notice of such Buyer Loss in accordance with Article 17, and in
case of any claim made by the Buyer by reason of a third party claim, such
notice shall be accompanied by a copy of such written notice of the third
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party claimant, and in the case of any claim made by the Buyer other than by
reason of a third party claim, some damages or loss shall have been incurred in
good faith at or prior to the date of such notice, and (ii) unless and until the
aggregate amount of all Buyer Losses for which the Sellers are liable under this
Article 15 exceeds $200,000, if such aggregate amount is calculated prior to the
first anniversary of the Closing Date or $300,000 if calculated on or after such
first anniversary, and in either such event the Sellers will be liable for all
Buyer Losses; provided, that the foregoing threshold shall not apply to Buyer
Losses arising out of a breach of an Exempt Rep. Notwithstanding anything to the
contrary contained herein, the maximum amount of indemnification for any Buyer
Losses for which the Sellers are required to indemnify the Buyer under this
Article 15 shall not exceed an amount equal to (i) the Purchase Price less (ii)
any amounts previously paid by the Sellers to the Buyer to cover such Buyer
Losses in the aggregate.
(b) By the Buyer. After the Closing occurs, and subject to the
terms and provisions of this Agreement, the Buyer will indemnify the Sellers and
hold each of them harmless against any loss, liability, deficiency, damage or
expense (including reasonable legal fees and expenses) which the Sellers may
suffer, sustain or become subject to (a "Seller Loss" and together with a Buyer
Loss, a "Loss") as a result of (i) any breach of any representation or warranty
made by the Buyer herein; (ii) any failure of the Buyer to perform any covenant
or agreement hereunder; or (iii) any losses, liability or damage to third
parties resulting from the operation or ownership of the Stations by the Buyer
on and after the Effective Time, including but not limited to any and all
liability arising under the Station Licenses or the Assumed Contracts which
accrue or relate to events occurring after the Effective Time. Subject to the
other limitations contained in this Agreement, including this Article 15, the
Buyer shall not be required to indemnify the Sellers with respect to breaches of
representations and warranties: (i) unless the Sellers give the Buyer written
notice of such Seller Loss in accordance with Article 17, and in case of any
claim made by the Sellers by reason of a third party claim, such notice shall be
accompanied by a copy of such written notice of the third party claimant, and in
the case of any claim made by the Sellers other than by reason of a third party
claim, some damages or loss shall have been incurred in good faith at or prior
to the date of such notice, and (ii) unless and until the aggregate amount of
all Seller Losses for which the Buyer is liable under this Article 15 exceeds
$200,000 if such aggregate amount is calculated prior to the first anniversary
of the Closing Date or $300,000 if calculated on or after such first
anniversary, and in either such event the Buyer will be liable for all Seller
Losses; provided, that the foregoing threshold shall not apply to Seller Losses
arising out of a breach of an Exempt Rep. Notwithstanding anything to the
contrary contained herein, the maximum amount of indemnification for any Seller
Losses for which the Buyer is required to indemnify the Sellers under this
Article 15 shall not exceed an amount equal to (i) the Purchase Price less (ii)
any amounts previously paid by the Buyer to the Sellers to cover such Seller
Losses in the aggregate.
(c) Third Party Claims. 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 party identified hereunder (the "Indemnitee")
stating the nature and basis of such claim; provided,
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however, that any delay or failure to notify any party providing indemnification
hereunder (the "Indemnitor") of any claim shall not relieve it from any
liability except to the extent that the Indemnitor demonstrates that the defense
of such action has been materially prejudiced by such delay or failure to
notify. In the case of third party claims, the Indemnitor shall, within a
reasonable period under the circumstances but in any event not more than 20 days
after receipt by the Indemnitor 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 and control 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. In the event an Indemnitor shall be actively defending
any claim, the Indemnitee shall not make any settlement of such claim without
the written consent of the Indemnitor and shall accept any settlement thereof
recommended by the Indemnitor so long as the amount of the claim and all costs
and expenses of the Indemnitee in connection therewith are paid or discharged in
full by the Indemnitor and the settlement imposes no other burden on the
Indemnitee. 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 but the Indemnitee may
only settle such claim or litigation with the consent of Indemnitor, which
consent cannot be unreasonably withheld.
(d) Adjustment to Indemnification Payments.
(i) Any payment made by an Indemnifying Party to an
Indemnified Party pursuant to this Section 15.1 in respect of any claim shall be
reduced by an amount equal to any Tax benefits attributable to such claim
actually recognized by the Indemnified Party.
(ii) Any payment made by an Indemnifying Party to an
Indemnified Party pursuant to this Section 15.1 shall be reduced by an amount
equal to any insurance coverage available with respect to such claim actually
received by the Indemnified Party. The Parties shall be obligated to prosecute,
or to cause its appropriate Affiliate to prosecute, diligently and in good faith
any claim for Losses with any applicable insurer. In any case where an
Indemnified Party or any of its Affiliates recovers from third parties any
amount in respect of a matter with respect to which an Indemnifying Party has
indemnified and paid to it pursuant to this Article 15, such Indemnified Party
shall promptly pay over to the Indemnifying Party the amount so recovered (after
deducting therefrom the full amount of the expenses reasonably incurred by it in
procuring such recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnifying Party to or on behalf of the Indemnified
Party in respect of such matter and (ii) any reasonable amount expended by the
Indemnifying Party and its Affiliates in pursuing or defending any claim arising
out of such matter.
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15.2 Limitations on Indemnification Provisions; Exclusive Remedy.
(a) Waiver of Non-Compensatory Damages. No Indemnified Party
shall be entitled to recover from an Indemnifying Party for any Losses as to
which indemnification is provided under this Agreement any amount in excess of
the actual compensatory damages, court costs and reasonable attorney fees
suffered by such party; and the Buyer and the Sellers waive any right to recover
punitive, special, exemplary and consequential damages arising in connection
with or with respect to Losses under the indemnification provisions hereof.
(b) Exclusive Remedy; Waiver and Release. Notwithstanding
anything to the contrary contained in this Agreement, after the Closing, the
indemnification provided under this Article 15 shall be the Buyer's and the
Sellers' sole and exclusive remedy for claims for money damages, against the
other, with respect to matters arising under this Agreement, of any kind or
nature, or relating to the business of the Sellers and/or the ownership,
operation, management, use or control of the Stations.
(c) Wicks Liability. Buyer acknowledges and agrees that
notwithstanding anything contained to the contrary in this Agreement except in
respect of equitable remedies pursuant to Section 16.4, Wicks shall be solely
and exclusively responsible and liable for all obligations of the Sellers
arising under this Agreement and the transactions contemplated hereby and none
of the other Sellers shall have or incur any liability whatsoever, arising out
of this Agreement or any of the transactions contemplated hereby.
ARTICLE 16
TERMINATION RIGHTS
16.1 Termination. This Agreement may be terminated at any time prior to
the Closing only as follows:
(a) automatically, without the need for any further action on
the part of any Party hereto, upon the first date on which the denial of the FCC
Consent becomes a Final Order;
(b) by mutual written agreement of the Buyer and the Sellers;
(c) by the Sellers, if there has been a material
misrepresentation or breach on the part of the Buyer in the representations,
warranties or covenants set forth in this Agreement and other related documents
and such material misrepresentation or breach shall not have been cured or
waived within ten (10) days (or such longer period of time as may be reasonable
in the circumstances) after the occurrence thereof;
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(d) by either Buyer, on the one hand, or the Sellers, on the
other hand, by written notice to the other at any time after nine months have
elapsed since the date on which the FCC accepts the filing of the FCC
Application;
(e) by the Buyer, if there has been a material
misrepresentation or breach on the part of the Sellers 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 ten (10)
days (or such longer period of time as may be reasonable in the circumstances)
after the occurrence thereof. Notwithstanding the foregoing, no Party hereto may
effect a termination hereof if such party is in material default or breach of
this Agreement.
16.2 Effect of Termination. If this Agreement is terminated as provided
in Section 16.1, then this Agreement will forthwith become void and there will
be no liability on the part of any Party to any other Party or any other Person
in respect thereof, provided, that if this Agreement is terminated pursuant to
Section 16.1(c) hereof (a "Draw Condition"), the Sellers shall be entitled to
draw upon and receive the proceeds of the Letter of Credit; and provided
further, that if this Agreement is terminated pursuant to any other provision of
Section 16.1, Buyer shall be entitled to a return of, and Sellers shall return
to Buyer, the original Letter of Credit. THE SELLERS' RIGHTS TO DRAW UPON THE
LETTER OF CREDIT AS DESCRIBED ABOVE SHALL NOT BE CONSTRUED AS LIQUIDATED DAMAGES
OR IN ANY WAY LIMIT THE SELLERS' RIGHTS TO SEEK MONETARY DAMAGES. Notwithstand-
ing any termination of this Agreement pursuant to Section 16.1, the obligations
of the Parties described in Section 14.3 (Expenses) and Section 10.3
(Confidentiality) will survive any such termination. Notwithstanding any
termination of this Agreement pursuant to Section 16.1, no such termination of
this Agreement will relieve any Party from liability for any misrepresentation
or breach of any representation, warranty, covenant or agreement set forth in
this Agreement prior to such termination.
16.3 Waiver of Right to Terminate. Each of the Parties hereto shall be
deemed to have waived their respective rights to terminate this Agreement upon
consummation of the Closing.
16.4 Specific Performance. The Parties recognize and agree that Buyer
and Sellers have both relied on this Agreement and expended considerable effort
and resources related to the transactions contemplated hereunder, that the right
and benefits conferred upon both Buyer and Sellers herein are unique, and that
damages may not be adequate to compensate either Buyer or Sellers in the event
the other Party improperly refuses to consummate the transactions contemplated
hereunder. The Parties therefore agree that Buyer and Sellers shall be entitled,
at their option and in lieu of terminating this Agreement pursuant to Section
16.1, to have this Agreement specifically enforced by a court of competent
jurisdiction; provided, however, that Buyer and Sellers may not specifically
enforce this Agreement if they have previously terminated this Agreement and
received the original Letter of Credit.
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ARTICLE 17
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties contained in this Agreement or in
any certificate, document or instrument delivered pursuant to this Agreement are
and will be deemed and construed to be continuing representations and warranties
and shall survive the Closing for a period of eighteen (18) months; provided,
that (i) the representations and warranties contained in Sections 7.8 and 7.13
shall survive until the end of the statutory limitation period applicable to
such claim, (ii) the representations and warranties contained in Section 7.15
shall survive until the fifth anniversary of the Closing Date, and (iii) there
shall be no limit on the survival of the representations and warranties
contained in Sections 6.1, 6.2, 6.4, 7.1, 7.2, 7.3, 7.5(a)(i) and the second
sentence of 7.6(a) (the "Exempt Reps"). No claim for breach of representations
and warranties may be brought under this Agreement or any other certificate,
document or instrument delivered pursuant to this Agreement unless written
notice describing in reasonable detail the nature and basis of such claim is
given on or prior to the last day of the applicable survival period. In the
event such a notice is given, the right to indemnification with respect thereto
shall survive the applicable survival period until such claim is finally
resolved and any obligations thereto are fully satisfied. Any investigation by
or on behalf of any Party hereto shall not constitute a waiver as to enforcement
of any representation and warranty.
ARTICLE 18
OTHER PROVISIONS
18.1 Benefit and Assignment. This Agreement shall be binding and shall
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns. Neither the Buyer nor the Sellers may assign this Agreement
without the prior written consent of the other Party hereto except that (i) the
Sellers may assign their rights (but not their obligations) under this Agreement
to an Affiliate of the Sellers after the Closing, and to their financing sources
as collateral security at any time, and (ii) the Buyer may assign its rights
(but not its obligations) under this Agreement prior to submission of the FCC
Application to its wholly owned subsidiary Citadel License Inc., to any other
Affiliate of the Buyer after the Closing and to its financing sources as
collateral security at any time.
18.2 Entire Agreement. This Agreement (the "Transaction Documents") and
the Exhibits and Disclosure Schedules hereto and thereto embody the entire
agreement and understanding of the Parties hereto and supersede any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein. No amendment, waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the Party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
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18.3 Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
18.4 Computation of Time. If after making computations of time provided
for in this Agreement, a time for action or notice falls on Saturday, Sunday or
a Federal holiday, then such time shall be extended to the next business day.
18.5 Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.
18.6 Press Releases and Announcements. Except for any public disclosure
which either Party in good faith believes is required by applicable law (in
which case, if practicable, the disclosing Party will give the other Party an
opportunity to review and comment upon such disclosure before it is made):
(a) prior to the Closing, no press releases related to this
Agreement or any Closing Transaction or other announcements generally to the
employees, customers or other Persons having business relationships with the
Sellers (it being understood that the Buyer will have the right to contact such
Persons in connection with its investigation of the business of the Sellers and
the Stations as provided in Section 9.2 and as the Sellers may otherwise consent
(which consent the Sellers will not unreasonably withhold)) will be issued or
made without the mutual approval of the Sellers and the Buyer;
(b) after the Closing, the Sellers will not make any press
release or other public announcement of or with respect to the Stations, this
Agreement or any Closing Transaction without the Buyer's consent (which consent
the Buyer will not unreasonably withhold); and
(c) after the Closing, the Buyer will not make any press
release or other public announcement of or with respect to this Agreement or any
Closing Transaction without the Sellers' consent (which consent the Sellers will
not unreasonably withhold).
18.7 Parties in Interest. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties and their
respective successors and permitted assigns any rights or remedies under or by
virtue of this Agreement.
18.8 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, addressed to
the following addresses, or to such other address as any Party may request in
writing.
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If to the Sellers: c/o The Wicks Group of Companies, Inc.
405 Park Avenue, 7th Floor
New York, NY 10022
Attn: Craig B. Klosk
Fax: (212) 223-2109
with a copy to: Golenbock, Eiseman, Assor & Bell
437 Madison Avenue
New York, NY 10022
Attn: Nathan E. Assor, Esq.
Fax: (212) 754-0330
If to the Buyer: Citadel Broadcasting Company
1015 Eastman Drive
Bigfork, MT 59911
Attn: Lawrence R. Wilson
Fax: (406) 837-5373
with a copy to: Citadel Broadcasting Company
140 South Ash Avenue
Tempe, AZ 85281
Attn: Donna L. Heffner
Fax: (602) 731-5229
with a copy to: Eckert Seamans Cherin & Mellott, LLC
600 Grant Street, 44th Floor
Pittsburgh, PA 15219
Attn: Bryan D. Rosenberger, Esq.
Fax: (412) 566-6099
Any such notice, demand or request shall be deemed to have been duly delivered
and received (i) on the date of personal delivery, or (ii) on the date of
receipt, if mailed by registered or certified mail, postage prepaid and return
receipt requested, or (iii) on the date of a signed receipt, if sent by an
overnight delivery service, but only if sent in the same manner to all persons
entitled to receive notice or a copy.
18.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
18.10 Further Assurances. The Sellers and the Buyer shall at any time
and from time to time after the Closing execute and deliver to the other such
further conveyances, assignments, assumptions of Assumed Liabilities and other
written assurances as the other may reasonably request in order to vest and
confirm in the Buyer (or its assignees) the title
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and rights to and in all of the Assets to be and intended to be transferred,
assigned and conveyed hereunder and to confirm the assumption by the Buyer of
the Assumed Liabilities.
18.11 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
18.12 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent. In the event an ambiguity or question of intent or interpretation
arises, this Agreement will be construed as if drafted jointly by the parties,
and no presumption or burden of proof will arise favoring or disfavoring any
Person by virtue of the authorship of any of the provisions of this Agreement.
18.13 LIMITATION OF WARRANTIES. THE EXPRESS REPRESENTATIONS OF THE
SELLERS CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE. EXCEPT AS SET FORTH IN THIS
AGREEMENT, THE SELLERS DO NOT MAKE OR PROVIDE, AND THE BUYER HEREBY WAIVES, ANY
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE QUALITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO SAMPLES, OR
CONDITION OF ANY OF THE ASSETS COMPRISING THE BUSINESS OF THE SELLERS OR ANY
PART THERETO. THE SELLERS DISCLAIM AND NEGATE, AND THE BUYER HEREBY WAIVES, ALL
OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED OR STATUTORY. THERE ARE
NO WARRANTIES THAT EXTEND BEYOND THE FACE OF THIS AGREEMENT.
ARTICLE 19
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms when
used herein shall have the meanings assigned to them below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"Affiliate" shall mean any person or entity that is controlling,
controlled by or under common control with the named person or entity.
"Applicable Law" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Entity and (ii)
Governmental Approvals.
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<PAGE> 39
"Business Day" whether or not capitalized, shall mean every day of the
week excluding Saturdays, Sundays and Federal holidays.
"Closing Date" shall mean the date on which the Closing is completed.
"Communications Act" shall mean the Communications Act of 1934, as
amended, as in effect from time to time.
"Contracts" shall mean any oral or written agreement, instrument,
document, lease, employee benefit or welfare plan or other business or
commercial arrangement, times sales agreement or Trade Agreement (in each case,
including any extension, renewal, amendment or other modification thereof) to
which any of the Sellers is a party or is subject or by which any of the Sellers
is bound which pertains to the business or properties of the Stations, including
any of the foregoing entered into between the date of this Agreement and the
Closing Date as permitted by the terms of this Agreement.
"Effective Time" shall mean 12:01 a.m., New York, New York time, on the
Closing Date.
"Environmental Requirements" shall mean all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, and all judicial and administrative orders and determinations
which are binding upon the Sellers concerning pollution or protection of the
environment, including without limitation all those relating to the generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
discharge, release, threatened release, control or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation as such of the foregoing
are promulgated and in effect on or prior to the date hereof.
"FCC" shall mean the Federal Communications Commission.
"FCC Application" shall mean the application or applications that the
Sellers and the Buyer must file with the FCC requesting its consent to the
assignment of the Station Licenses.
"FCC Consent" shall mean the action by the FCC granting the FCC
Application.
"FCC Regulations" shall mean all regulations and policies promulgated
by the FCC, under the Communications Act or otherwise, as in effect from time to
time.
"Final Order" shall mean action by the FCC (i) which has not been
vacated, reversed, stayed, set aside, annulled or suspended (whether under
Section 402 or 405 of the Communications Act or otherwise), (ii) with respect to
which no timely appeal, request for
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<PAGE> 40
stay or petition for rehearing, reconsideration or review by any Party or by the
FCC on its own motion, is pending, and (iii) as to which the time for filing any
such appeal, request, petition, or similar document or for the reconsideration
or review by the FCC on its own motion under the Communications Act and the
rules and regulations of the FCC has expired.
"GAAP" shall mean generally accepted accounting principles,
consistently applied, as in effect on the date hereof.
"Governmental Approval" shall mean any consent, approval,
authorization, waiver, permit, grant, franchise, concession, agreement, license,
exemption or order of registration, certificate, declaration or filing with, or
report or notice with or to any Governmental Entity.
"Governmental Entity" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof, any tribunal or
arbitrators) of competent jurisdiction and any self-regulatory organization.
"HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations adopted thereunder.
"Knowledge" shall mean actual knowledge.
"Legal Requirements" shall mean any of the Communications Act, the FCC
Regulations, and all other federal, state, foreign and local laws, statutes,
codes, rules, regulations, ordinances, judgments, orders, decrees and the like
of any Governmental Entity, including common law.
"Liens" shall mean any mortgage, pledge, hypothecation, lien (statutory
or otherwise), security interest or other encumbrance of any kind or nature
whatsoever.
"Material Adverse Effect" shall mean a material adverse effect on the
condition (financial or otherwise) or operating results of the Stations taken as
a whole or any Seller's ability to consummate the transactions contemplated
hereby.
"Owned Real Property" shall mean all land, together with all buildings
and any improvements located thereon, and all easements and other rights with
respect thereto owned by the Sellers and used primarily in the conduct of the
business and operation of the Stations.
"Permitted Liens" shall mean (i) 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 Sellers in accordance with GAAP, (ii) liens of
carriers, warehousemen, mechanics and materialmen incurred in the
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<PAGE> 41
ordinary course of business, that individually and in the aggregate do not have
a Material Adverse Effect, (iii) zoning, entitlements, land use restrictions and
other legal requirements with respect to Owned Real Property 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, (iv) easements,
rights of way, covenants, conditions, restrictions and other similar charges and
encumbrances with respect to the Owned Real Property that are of record and 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, and (v)
Liens included on Schedule 7.5 or 7.6 hereto none of which, individually or in
the aggregate, materially detract from or materially interfere with the present
use of the Asset or Assets affected thereby.
"Person" shall mean an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or any Governmental Entity.
"Station Licenses" shall mean the licenses, permits and other
authorizations, including any temporary waiver or special temporary
authorization, issued by the FCC to the Sellers in connection with the conduct
of the business and operation of the Stations.
"Tax" (and, with correlative meaning, "Taxes", "Taxable" and "Taxing")
means any (A) federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profits, environmental (including under Section
59A of the Tax Code), customs, duties, real property, real property gains,
personal property, capital stock, social security, unemployment, disability,
payroll, license, employee or other withholding, or other tax of any kind
whatsoever, including any interest, penalties or additions to tax or additional
amounts in respect of the foregoing; (B) liability of any corporation for the
payment of any amounts of the type described in clause (A) arising as a result
of being (or ceasing to be) a member of any "affiliated group" (as that term is
defined in Section 1504(a) of the Tax Code) (or being included in any Tax Return
relating thereto); and (C) liability for the payment of any amounts of the type
described in clause (A) or (B) as a result of any express or implied obligation
to indemnify or otherwise assume or succeed to the liability of any other
Person.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended.
"Tax Return" shall mean any return, declaration, report, claim for
refund, information return or other document (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
Person or the administration of any Legal Requirement relating to any Taxes.
"Trade Agreements" mean all trade, barter or similar arrangements for
the sale of advertising time other than for cash on the Stations.
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<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
BUYER:
CITADEL BROADCASTING COMPANY
By: /s/ Lawrence R. Wilson
Title: Chairman and Chief Executive Officer
SELLERS:
WICKS BROADCAST GROUP LIMITED PARTNERSHIP
By: WBG MANAGEMENT, INC. (its general
partner)
By: /s/ Craig B. Klosh
Title: Vice President
WBG LICENSE CO., L.L.C.
By: /s/ Craig B. Klosh
Title: Vice President
BUTTERNUT BROADCASTING COMPANY, INC.
By: /s/ Craig B. Klosh
Title: Vice President
WBG BINGHAMTON LICENSE CO., INC.
By: /s/ Craig B. Klosh
Title: Vice President
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<PAGE> 43
EXHIBIT A
LETTER OF CREDIT
<PAGE> 44
DISCLOSURE SCHEDULES
Schedule A - Stations
Schedule 6.4 - Conflicts - Buyer
Schedule 6.5 - Litigation - Buyer
Schedule 7.3 - Conflicts
Schedule 7.4 - Licenses
Schedule 7.5 - Real Property
Schedule 7.6 - Personal Property
Schedule 7.7 - Contracts
Schedule 7.8 - Employee Benefits
Schedule 7.9 - Intellectual Property
Schedule 7.10 - Litigation
Schedule 7.11 - Compliance with Laws
Schedule 7.13 - Taxes
Schedule 7.14 - Insurance
Schedule 7.15 - Environmental Matters
Schedule 7.16 - Conduct of the Business in the Ordinary Course
Schedule 7.18 - Related Party Transactions
Schedule 11.5 - Mandatory Consents
[Pursuant to Regulation S-K, Item 601(b)(2), Registrant agrees to furnish
supplementally a copy of the exhibit and these schedules to the Securities and
Exchange Commission upon request.]
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
The Partners
Wicks Broadcast Group Limited Partnership:
We consent to incorporation by reference in the registration statement
(No. 333-65279) on Form S-8 of Citadel Communications Corporation of our report
dated December 15, 1998, relating to the balance sheet of Wicks Radio Group (a
division of the Wicks Broadcast Group Limited Partnership) as of December 31,
1997 and the related statements of operations and changes in division equity,
and cash flows for the year then ended, which report appears in the Form 8-K/A
of Citadel Communications Corporation dated November 19, 1998.
/s/ KPMG Peat Marwick LLP
- ----------------------------
McLean, Virginia
December 15, 1998
