<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 000-24515
CITADEL COMMUNICATIONS CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada 86-0748219
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
140 South Ash Avenue, Tempe, Arizona 85281
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 731-5222
--------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]
As of July 31, 1998, there were 16,212,775 shares of common stock,
$.001 par value per share, outstanding.
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Citadel Communications Corporation
Form 10-Q
June 30, 1998
Index
<TABLE>
<CAPTION>
Part I Page
----
<S> <C>
Item 1 - Financial Statements ............................................... 3
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations ....................................... 7
Part II
Item 1 - Legal Proceedings .................................................. 11
Item 2 - Changes in Securities and Use of Proceeds .......................... 11
Item 4 - Submission of Matters to a Vote of Security Holders ................ 12
Item 6 - Exhibits and Reports on Form 8-K ................................... 13
</TABLE>
2
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CITADEL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
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(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,684,991 $ 4,211,115
Cash held in escrow 718,561 --
Accounts receivable, less allowance for doubtful
accounts of $808,942 in 1997 and $1,126,545 in 1998 25,744,137 30,564,759
Notes receivable from related parties 246,455 268,153
Prepaid expenses 1,532,227 2,627,645
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Total current assets 35,926,371 37,671,672
Property and equipment, net 35,242,284 36,683,624
Intangible assets, net 268,689,516 294,452,076
Deposits for pending acquisitions 650,000 --
Other assets 3,664,123 3,972,287
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$ 344,172,294 $ 372,779,659
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,001,194 $ 4,758,918
Accrued liabilities 9,060,129 9,980,946
Current maturities of other long-term obligations 271,352 343,938
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Total current liabilities 13,332,675 15,083,802
Notes payable, less current maturities 90,084,059 121,084,058
Senior subordinated notes payable 98,331,117 98,416,476
Other long-term obligations, less current maturities 1,012,649 1,094,325
Deferred tax liability 23,270,338 25,764,245
Exchangeable preferred stock 102,009,531 109,155,664
Shareholders' equity:
Series AA convertible preferred stock;
$.001 par value; issued and outstanding
9,506,561 shares in 1997 and 1998 9,507 9,507
Common stock; $.001 par value; issued
and outstanding 8,492,066
in 1997 and 8,516,361 shares in 1998 8,492 8,516
Additional paid-in capital 44,865,128 37,741,783
Accumulated deficit (28,751,202) (35,578,717)
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Total shareholders' equity 16,131,925 2,181,089
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$ 344,172,294 $ 372,779,659
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
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CITADEL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------------- --------------------------------
1997 1998 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross broadcasting revenue $ 19,937,042 $ 38,618,642 $ 36,008,264 $ 69,689,238
Less agency commissions (2,032,128) (3,834,197) (3,597,754) (6,765,589)
------------ ------------ ------------ ------------
Net broadcasting revenue 17,904,914 34,784,445 32,410,510 62,923,649
Operating expenses:
Station operating expenses 12,998,824 23,542,162 24,275,526 45,439,629
Depreciation and
amortization 2,442,803 7,016,620 4,971,439 12,962,958
Corporate general and
administrative 844,397 1,150,917 1,594,843 2,268,650
------------ ------------ ------------ ------------
Operating expenses 16,286,024 31,709,699 30,841,808 60,671,237
Operating income 1,618,890 3,074,746 1,568,702 2,252,412
Nonoperating expenses (income):
Interest expense 2,300,692 5,282,955 4,477,395 10,042,263
Other income, net (80,588) (42,017) (91,537) (79,375)
------------ ------------ ------------ ------------
Nonoperating expenses,
net 2,220,104 5,240,938 4,385,858 9,962,888
Loss before income taxes (601,214) (2,166,192) (2,817,156) (7,710,476)
Deferred income tax (benefit) (35,056) (453,555) (70,112) (882,961)
------------ ------------ ------------ ------------
Net loss (566,158) (1,712,637) (2,747,044) (6,827,515)
Dividend requirement for
exchangeable preferred stock
-- (3,572,347) -- (7,144,694)
------------ ------------ ------------ ------------
Net loss applicable to common
shares $ (566,158) $ (5,284,984) $ (2,747,044) $(13,972,209)
============ ============ ============ ============
Basic and diluted net loss per
common share $ (0.18) $ (1.52) $ (0.86) $ (4.18)
============ ============ ============ ============
Weighted average common shares
outstanding 3,193,581 3,468,449 3,193,581 3,344,798
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
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CITADEL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------
1997 1998
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,747,044) $ (6,827,515)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 4,971,439 12,962,958
Amortization of debt issuance costs and debt discounts 38,031 247,802
Bad debt expense 318,247 597,807
Deferred tax benefit (70,112) (882,961)
Changes in assets and liabilities, net of acquisitions:
Increase in accounts receivable and notes receivable from
related parties (1,971,862) (5,440,127)
Increase in prepaid expenses (428) (1,092,166)
(Increase) decrease in other assets (236,728) 875,674
Increase in accounts payable 1,121,256 757,724
(Decrease) increase in accrued liabilities (382,684) 772,127
------------ ------------
Net cash provided by operating activities 1,040,115 1,971,323
Cash flows from investing activities:
Capital expenditures (1,217,586) (641,727)
Capitalized acquisition costs (1,486,838) (1,682,685)
Cash paid to acquire stations (11,726,151) (34,530,411)
Deposits for pending acquisitions (550,000) 650,000
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Net cash used in investing activities (14,980,575) (36,204,823)
Cash flows from financing activities:
Proceeds from notes payable 13,000,000 30,999,999
Principal payments on other obligations (371,223) (193,667)
Exercise of stock options -- 40,656
Payment of debt issuance costs -- (87,364)
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Net cash provided by financing activities 12,628,777 30,759,624
Net decrease in cash and cash equivalents (1,311,683) (3,473,876)
Cash and cash equivalents, beginning of period 1,588,366 7,684,991
------------ ------------
Cash and cash equivalents, end of period $ 276,683 $ 4,211,115
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
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CITADEL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. 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 six months ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the consolidated financial
statements and notes thereto included in Citadel Communications Corporation's
Registration Statement on Form S-1 which became effective on June 30, 1998.
(2) 1998 Acquisitions
On January 2, 1998, the Company's wholly owned subsidiary, Citadel Broadcasting
Company ("CBC"), acquired radio stations WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, Pennsylvania for a purchase price of $815,000. The
acquisition was accounted for using the purchase method of accounting.
On February 12, 1998, CBC acquired radio stations KQFC-FM, KKGL-FM and KBOI-AM
and a parcel of land in Boise, Idaho for an aggregate purchase price of
approximately $14,400,000. The acquisition was accounted for using the purchase
method of accounting.
On March 26, 1998, CBC acquired radio stations WSGD-FM, WDLS-FM and WCDL-AM in
Wilkes-Barre/Scranton, Pennsylvania for a purchase price of $6,000,000. The
acquisition was accounted for using the purchase method of accounting.
On April 21, 1998, CBC acquired radio stations KIZN-FM and KZMG-FM in Boise,
Idaho for an aggregate purchase price of $14,600,000. The acquisition was
accounted for using the purchase method of accounting.
(3) Subsequent Events
On July 7, 1998, the Company consummated the initial public offering (the "IPO")
of 6,880,796 shares of its common stock at an initial public offering price of
$16.00 per share. Of such shares, 6.250,000 shares were sold by the Company and
630,796 shares were sold by certain stockholders of the Company. On July 14,
1998, the Company sold an additional 1,032,119 shares of its common stock at the
initial public offering price pursuant to the exercise of the underwriters'
over-allotment option. Total proceeds of the IPO, including the shares issued
under the over-allotment option, were $126,606,640, of which total proceeds to
the Company were $108,357,931, total proceeds to the selling stockholders were
$9,386,244, and total underwriting discounts and commissions were $8,862,465.
On July 15, 1998, CBC announced an agreement to purchase KAAY-FM in Little Rock,
Arkansas for an aggregate purchase price of $5,000,000. If consummated, the
acquisition will be accounted for using the purchase method of accounting.
On July 27, 1998, CBC exercised its option to purchase WBHT-FM in Wilkes-Barre,
Pennsylvania, and, on August 13, 1998, CBC entered into a definitive purchase
agreement to purchase WBHT for an approximate purchase price of $1,200,000. CBC
has operated WBHT under a local marketing agreement since July 3, 1997. The
acquisition will be accounted for using the purchase method of accounting.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BASIS OF PRESENTATION
Certain items in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Federal Private Securities Litigation Reform Act of
1995. Forward-looking statements are typically identified by the words
"believe," "expect," "anticipate," "intend," "estimate," and similar
expressions. Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and that matters referred to in such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, but are not limited to, risks and uncertainties relating to
leverage, the need for additional funds, consummation of the pending
acquisitions, integration of the recently completed acquisitions, the ability of
the Company to achieve certain cost savings, the management of growth, the
introduction of new technology, changes in the regulatory environment, the
popularity of radio as a broadcasting medium and changing consumer tastes. For
further discussion of these and other factors, refer to the Company's
Registration Statement on Form S-1 which became effective on June 30, 1998. The
Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
RESULTS OF OPERATIONS
The Company's unaudited consolidated financial statements tend not to
be directly comparable from period to period due to acquisition activity. The
major acquisitions in the first and second quarters of 1997 and 1998, all of
which have been accounted for using the purchase method of accounting, and the
results of operations of which have been included since the date of acquisition,
were as follows:
1997 First and Second Quarter Acquisitions: On January 1, 1997, the
Company acquired Deschutes River Broadcasting, Inc. ("Deschutes"). On June 20,
1997, Deschutes was merged with and into Citadel Broadcasting Company ("CBC").
The results of operations for the six months ended June 30, 1997 reflect six
months of operations of Deschutes. KENZ-FM in Salt Lake City, Utah was acquired
on February 14, 1997. KBER-FM in Salt Lake City, Utah was acquired on April 10,
1997.
1998 First and Second Quarter Acquisitions: WEMR-AM and WEMR-FM in
Wilkes-Barre/Scranton, Pennsylvania were acquired on January 2, 1998. KQFC-FM,
KKGL-FM and KBOI-AM in Boise, Idaho were acquired on February 12, 1998. WSGD-FM,
WDLS-FM and WCDL-AM in Wilkes-Barre/Scranton, Pennsylvania were acquired on
March 26, 1998.
KIZN-FM and KZMG-FM in Boise, Idaho were acquired on April 21, 1998.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Net Broadcasting Revenue. Net broadcasting revenue increased $16.9
million or 94.3% to $34.8 million for the three months ended June 30, 1998 from
$17.9 million for the three months ended June 30, 1997. The inclusion of revenue
from the acquisitions of radio stations and revenue generated from LMAs and JSAs
entered into during 1997 and 1998 provided $14.3 million of the increase. For
stations owned and operated over the comparable period in 1997 and 1998, net
broadcasting revenue improved $2.6 million or 15.0% to $20.0 million in 1998
from $17.4 million in 1997, primarily due to increased ratings and improved
selling efforts.
7
<PAGE> 8
Station Operating Expenses. Station operating expenses increased $10.5
million or 81.1% to $23.5 million for the three months ended June 30, 1998 from
$13.0 million for the three months ended June 30, 1997. The increase was
primarily attributable to the inclusion of station operating expenses of the
radio station acquisitions and the LMAs and JSAs entered into during 1997 and
1998.
Broadcast Cash Flow. As a result of the factors described above,
broadcast cash flow increased $6.3 million or 129.1% to $11.2 million for the
three months ended June 30, 1998 from $4.9 million for the three months ended
June 30, 1997. As a percentage of net broadcasting revenue, broadcast cash flow
improved to 32.3% for the three months ended June 30, 1998 compared to 27.4% for
the three months ended June 30, 1997.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased $0.3 million or 36.3% to $1.1 million for the
three months ended June 30, 1998 from $0.8 million for the three months ended
June 30, 1997. The increase was due primarily to an increase in staffing levels
needed to support the Company's growth.
EBITDA. As a result of the factors described above, EBITDA increased
$6.0 million or 148.5% to $10.1 million for the three months ended June 30, 1998
from $4.1 million for the three months ended June 30, 1997.
Depreciation and Amortization. Depreciation and amortization expense
increased $4.6 million or 187.2% to $7.0 million for the three months ended June
30, 1998 from $2.4 million for the three months ended June 30, 1997, primarily
due to radio station acquisitions consummated during 1997 and 1998.
Interest Expense. Interest expense increased approximately $3.0 million
or 129.6% to $5.3 million for the three months ended June 30, 1998 from $2.3
million for the three months ended June 30, 1997, primarily due to interest
expense associated with additional borrowings to fund acquisitions consummated
in 1997 and 1998.
Net Loss. As a result of the factors described above, net loss
increased $1.1 million or 202.5% to $1.7 million for the three months ended June
30, 1998 from $0.6 million for the three months ended June 30, 1997.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Net Broadcasting Revenue. Net broadcasting revenue increased $30.5
million or 94.1% to $62.9 million for the six months ended June 30, 1998 from
$32.4 million for the six months ended June 30, 1997. The inclusion of revenue
from the acquisitions of radio stations and revenue generated from LMAs and JSAs
entered into during 1997 and 1998 provided $26.8 million of the increase. For
stations owned and operated over the comparable period in 1997 and 1998, net
broadcasting revenue improved $3.7 million or 11.8% to $34.6 million in 1998
from $30.9 million in 1997, primarily due to increased ratings and improved
selling efforts.
Station Operating Expenses. Station operating expenses increased $21.1
million or 87.2% to $45.4 million for the six months ended June 30, 1998 from
$24.3 million for the six months ended June 30, 1997. The increase was primarily
attributable to the inclusion of station operating expenses of the radio station
acquisitions and the LMAs and JSAs entered into during 1997 and 1998.
Broadcast Cash Flow. As a result of the factors described above,
broadcast cash flow increased $9.4 million or 114.9% to $17.5 million for the
six months ended June 30, 1998 from $8.1 million for the six months ended June
30, 1997. As a percentage of net broadcasting revenue, broadcast cash flow
improved to 27.8% for the six months ended June 30, 1998 compared to 25.1% for
the six months ended June 30, 1997.
8
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Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased $0.7 million or 42.2% to $2.3 million for the
six months ended June 30, 1998 from $1.6 million for the six months ended June
30, 1997. The increase was due primarily to an increase in staffing levels
needed to support the Company's growth.
EBITDA. As a result of the factors described above, EBITDA increased
$8.7 million or 132.6% to $15.2 million for the six months ended June 30, 1998
from $6.5 million for the six months ended June 30, 1997.
Depreciation and Amortization. Depreciation and amortization expense
increased $8.0 million or 160.7% to $13.0 million for the six months ended June
30, 1998 from $5.0 million for the six months ended June 30, 1997, primarily due
to radio station acquisitions consummated during 1997 and 1998.
Interest Expense. Interest expense increased approximately $5.6 million
or 124.3% to $10.0 million for the six months ended June 30, 1998 from $4.4
million for the six months ended June 30, 1997, primarily due to interest
expense associated with additional borrowings to fund acquisitions consummated
in 1997 and 1998.
Net Loss. As a result of the factors described above, net loss
increased $4.1 million or 148.5% to $6.8 million for the six months ended June
30, 1998 from $2.7 million for the six months ended June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1998, net cash provided by operations
increased to $2.0 million from $1.0 million for the comparable 1997 period
primarily due to increases in accounts receivable and prepaid expenses offset by
a decrease in other assets and an increase in accrued liabilities.
For the six months ended June 30, 1998, net cash used in investing
activities, primarily for station acquisitions, increased to $36.2 million from
$15.0 million in the comparable 1997 period.
For the six months ended June 30, 1998, net cash provided by financing
activities was $30.8 million compared to $12.6 million in the comparable 1997
period. This increase is the result of increased borrowings in the 1998 period
for station acquisitions.
The Company used the net proceeds from its initial public offering of
shares of its common stock in July 1998 to repay indebtedness under the Credit
Facility of CBC. Immediately following this repayment, CBC had approximately
$130.3 million available under the Credit Facility.
In addition to acquisitions and debt service, the Company's principal
liquidity requirements will be for working capital and general corporate
purposes, including capital expenditures, which are not expected to be material
in amount. Management believes that cash from operating activities and revolving
loans under the Company's credit facility should be sufficient to permit the
Company to meet its financial obligations and to fund its operations for at
least the next 12 months, although additional capital resources may be required
in connection with the further implementation of the Company's acquisition
strategy.
YEAR 2000 MATTERS
Many existing computer programs use only two digits to identify a year
(for example, "98" is used to represent "1998"). Such programs may read "00" as
the year 1900, thus incorrectly recognizing dates beginning with the year 2000,
or may otherwise produce erroneous results or cease processing when dates after
1999 are encountered. Such failures could cause disruptions in normal business
operations.
9
<PAGE> 10
In each of its markets, the Company employs centralized accounting and
traffic (advertising scheduling) systems for all of its stations in the market.
Although not directly related to the year 2000 problem, the Company has
undertaken to replace its accounting and traffic software in each market. The
Company expects that this program will minimize or eliminate year 2000 problems
associated with the software for such systems. This software upgrade is expected
to be completed by the end of the third quarter of 1998 at a cost of
approximately $0.3 million in 1998, which consists primarily of the annual lease
rental payment of $0.2 million for software and $0.1 million in related one-time
costs. The operating lease for the computer software is anticipated to be for a
period of five years. In connection with this software upgrade, the Company
expects that its accounting and traffic hardware systems will be assessed by the
software vendor for both compatibility with the new software and year 2000
compliance, and that the Company may also engage outside consultants, as
necessary and as available, for such purpose. Much of the total cost of the
hardware upgrade will be subject to trade agreements and, as such, will be
expensed in accordance with the Company's policy of accounting for barter
transactions.
The Company has assembled a task force consisting of the Company's
three regional Presidents, Chief Financial Officer, regional engineers and two
internal information systems employees to inventory and assess the Company's
other internal information and operating systems, including its broadcast and
related support systems which may contain embedded microprocessors, in order to
develop a strategy to address the computer software and hardware changes and
facility upgrades that may be required to remedy the year 2000-related
deficiencies of those systems. The Company recognizes that it must also conduct
an assessment of year 2000-related problems originating with third parties
outside of the Company's control, including vendors of programming software and
providers of satellite programming.
Until the task force makes substantial progress in identifying problem
areas, it is not possible to estimate the extent of year 2000 deficiencies in
the Company's systems, the costs to the Company of correcting such deficiencies
and the time frame in which any required corrections will be made. In addition,
numerous uncertainties relating to such matters exist, including the ability to
locate, test and correct or replace relevant computer codes in software and
embedded microprocessors, the availability and cost of personnel trained in this
area, if required, and the extent to which third parties will be able to timely
correct year 2000 problems which may originate with such third parties, but
which impact the Company's operations. Given such uncertainties and the
preliminary nature of the Company's investigations to date, there can be no
assurances that year 2000-related deficiencies and required corrective measures
will not have a material adverse effect on the Company's business, financial
condition and results of operations.
10
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PART II
ITEM 1. LEGAL PROCEEDINGS
The Company currently and from time to time is involved in litigation
incidental to the conduct of its business, but the Company is not a party to any
lawsuit or proceeding which, in the opinion of the Company, is likely to have a
material adverse effect on the Company.
The Company has received civil investigative demands ("CIDs") from the
Department of Justice ("DOJ") pursuant to which the DOJ has requested
information from the Company to determine whether the Company has violated
certain antitrust laws. The first CID was issued on September 27, 1996 and
concerns the Company's acquisition of all of the assets of KRST-FM in
Albuquerque, New Mexico on October 9, 1996 (the "KRST Acquisition"). The CID
requested written answers to interrogatories and the production of certain
documents concerning the radio station market in Albuquerque, in general, and
the KRST Acquisition, in particular, to enable the DOJ to determine, among other
things, whether the KRST Acquisition would result in excessive concentration in
the market. The Company has responded to the CID. The DOJ requested supplemental
information on January 27, 1997, to which the Company also responded. There have
been no communications since that time and, at present, the Company has been
given no indication from the DOJ regarding its intended future actions. If the
DOJ were to proceed with and successfully challenge the KRST Acquisition, the
Company may be required to divest one or more radio stations in Albuquerque.
A second CID was issued on October 9, 1996 and concerned the Company's
Joint Sales Agreement (the "JSA") relating to a total of eight radio stations in
Spokane, Washington and Colorado Springs, Colorado and which became effective in
January 1996. Pursuant to such CID, the DOJ has requested information to
determine whether the JSA constituted a de facto merger or amounted to a
combination or contract in restraint of trade. The Company responded to the CID,
and has met with the DOJ concerning this matter. If the DOJ were to proceed with
and successfully challenge the JSA, the Company may be required to terminate the
JSA.
A third CID was received on June 29, 1998 and concerned the proposed
sale by the Company of stations WQWK, WRSC, WBLF and WIKN in State College,
Pennsylvania to Talleyrand Broadcasting. The Company is currently preparing its
response to the CID. If the DOJ were to successfully challenge the transaction
prior to its closing, the parties may be required to abandon the proposed sale.
Additionally, there are other delays in connection with this transaction
unrelated to the DOJ.
At this time, the Company cannot predict the impact on the Company, if
any, of these proceedings or any future DOJ demands.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 26, 1998, the Company consummated a recapitalization of its
capital stock pursuant to which each then outstanding share of the Company's
Class A Common Stock, Class B Common Stock, Class C Common Stock, Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series E
Convertible Preferred Stock, Series F Convertible Preferred Stock and Series G
Convertible Preferred Stock was converted into three shares of Common Stock
(rounded to the nearest whole share) and each then outstanding share of the
Company's Series C Convertible Preferred Stock and Series D Convertible
Preferred Stock was converted into three shares of Series AA Convertible
Preferred Stock (rounded to the nearest whole share). The issuance of such
shares was exempt from registration under Section 3(a)(9) of the Securities Act
of 1933, as amended.
11
<PAGE> 12
The Company filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission (Commission file number 333-51011), which
became effective on June 30, 1998. The Registration Statement related to a total
of 7,912,915 shares of the Company's common stock, par value $.001 per share,
7,282,119 shares of which were registered for sale by the Company and 630,796
shares of which were registered for sale by certain stockholders of the Company.
All shares registered have been sold.
On July 7, 1998, the Company consummated the initial public offering of
6,880,796 shares of its common stock at an initial public offering price of
$16.00 per share. Of such shares, 6,250,000 shares were sold by the Company and
630,796 shares were sold by the selling stockholders. On July 14, 1998, the
Company sold an additional 1,032,119 shares of common stock at an initial public
offering price of $16.00 per share pursuant to the exercise of the underwriters'
over-allotment option. The aggregate price of the shares sold, including those
shares sold pursuant to the exercise of the underwriters' over-allotment option,
was $126,606,640, of which $116,513,904 was attributable to the shares sold by
the Company and $10,092,736 was attributable to the shares sold by the selling
stockholders. Prudential Securities Incorporated acted as lead manager and
Donaldson, Lufkin & Jenrette Securities Corporation, Goldman, Sachs & Co. and
NationsBanc Montgomery Securities LLC acted as co-managers of the offering.
The following is a list of the net proceeds to the Company:
<TABLE>
<S> <C>
Aggregate offering price
attributable to shares sold by
the Company $ 116,513,904
Underwriting discounts and
commissions (8,155,973)
Other offering expenses (2,000,000)
-------------
Net proceeds to the Company $ 106,357,931
=============
</TABLE>
Other expenses represent the Company's estimate of the amount of expenses
incurred by the Company in connection with the offering. All expenses, other
than $802 which was paid by the Company as the registration fee for the shares
registered for one of the selling stockholders affiliated with the Company,
represent direct payments to parties other than directors, officers, ten percent
or more owners of the Company's common stock, and their affiliates.
The Company used the $106,357,931 of net proceeds from the offering to
repay indebtedness under the Credit Facility of CBC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The holders of each class of then outstanding capital stock of the
Company acted by written consent (the "Written Consent") in lieu of a
Special Meeting of Stockholders dated as of June 24, 1998.
(b) Not applicable.
(c) The matter acted upon by the stockholders pursuant to the Written
Consent was the approval of the adoption of (i) a Certificate of Eighth
Amended and Restated Certificate of Incorporation of the Company and
(ii) Amended and Restated Bylaws of the Company. The Written Consent
was signed by all of the holders of each then outstanding class of
capital stock of the Company.
(d) Not applicable.
12
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<S> <C>
3(i) Amended and Restated Certificate of Incorporation of
Citadel Communications Corporation
3(ii) Amended and Restated Bylaws of Citadel Communications
Corporation
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
None.
13
<PAGE> 14
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 thereunto duly authorized.
CITADEL COMMUNICATIONS CORPORATION
Date: August 14, 1998 By: /s/ Lawrence R. Wilson
------------------- --------------------------------------------
Lawrence R. Wilson
Chairman of the Board
Chief Executive Officer and President
(Principal Executive Officer)
Date: August 14, 1998 By: /s/ Donna L. Heffner
------------------- --------------------------------------------
Donna L. Heffner
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
3(i) Amended and Restated Certificate of Incorporation of
Citadel Communications Corporation
3(ii) Amended and Restated Bylaws of Citadel Communications
Corporation
27 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 3(i)
CERTIFICATE OF EIGHTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CITADEL COMMUNICATIONS CORPORATION
The undersigned, being the President and Secretary, respectively, of
Citadel Communications Corporation (the "Corporation"), a corporation organized
and existing under the laws of the State of Nevada, do hereby declare and state
that:
FIRST: The name of the Corporation is Citadel Communications
Corporation; the date of filing of its original Certificate of Incorporation
with the Nevada Secretary of State is March 24, 1993; the date of filing of the
Certificate of Amendment to Certificate of Incorporation with the Nevada
Secretary of State is April 30, 1993; the date of filing the Certificate of
Second Amended and Restated Certificate of Incorporation with the Nevada
Secretary of State is May 27, 1993; the date of filing the Certificate of Third
Amended and Restated Certificate of Incorporation with the Nevada Secretary of
State is October 1, 1993; the date of filing the Certificate of Amendment to
Certificate of Incorporation is April 29, 1994; the date of filing the
Certificate of Fourth Amended and Restated Certificate of Incorporation with the
Nevada Secretary of State is December 21, 1994; the date of filing the
Certificate of Fifth Amended and Restated Certificate of Incorporation with the
Nevada Secretary of State is June 27, 1996; the date of filing the Certificate
of Sixth Amended and Restated Certificate of Incorporation with the Nevada
Secretary of State is December 31, 1996; the date of filing the Certificate of
Seventh Amended and Restated Certificate of Incorporation with the Nevada
Secretary of State is October 16, 1997 and the date of filing of the Certificate
of Amendment to Certificate of Incorporation is November 3, 1997.
SECOND: This Eighth Amended and Restated Certificate of Incorporation
has been duly adopted in accordance with the provisions of Sections 78.385,
78.390 and 78.403 of the Nevada Revised Statutes. The stockholders of the
Corporation have duly adopted a resolution to amend and restate the Certificate
of Incorporation of the Corporation, as set forth in this Eighth Amended and
Restated Certificate of Incorporation.
THIRD: The text of the Certificate of Incorporation is hereby amended
and restated to read as herein set forth in full:
ARTICLE I
NAME OF THE CORPORATION
The name of this corporation is Citadel Communications Corporation.
<PAGE> 2
ARTICLE II
REGISTERED AGENT AND REGISTERED OFFICE
The address of the Corporation's registered office in the State of
Nevada is c/o The Corporation Trust Company of Nevada, One East First Street,
City of Reno, County of Washoe, State of Nevada. The name of its resident agent
at such address is The Corporation Trust Company of Nevada.
ARTICLE III
PURPOSE OF THE CORPORATION
The purpose of the Corporation is to engage in any or all lawful
activity for which corporations may be organized under the General Corporation
Law of the State of Nevada.
ARTICLE IV
CAPITAL STOCK - IN GENERAL; FCC MATTERS
1. The total number of shares of capital stock which the Corporation
shall have authority to issue is 219,033,122 shares, having a par value of
$0.001 per share, of which 200,000,000 shares shall be Common Stock and
19,033,122 shares shall be Preferred Stock. Of the Preferred Stock so
authorized, 19,013,122 shares shall be Series AA Convertible Preferred Stock and
20,000 shares shall be undesignated at this time. The designations, preferences,
qualifications, limitations, restrictions and the special or relative rights in
respect of each class of stock and, if applicable, each series thereof, shall be
as hereinafter set forth, except as provided in a Certificate of Designation, as
defined in Article VII. The shares of the Corporation, after the subscription
price therefor has been paid, shall not be subject to assessment to pay the
debts of the Corporation and no shares issued as fully paid up shall ever be
assessable or assessed.
2. In accordance with the Communications Act, and the FCC Regulations,
the Board of Directors of the Corporation may (a) prohibit the ownership or
voting of more than 20% of the Corporation's outstanding capital stock by or for
the account of aliens or their representatives or by a foreign government or
representative thereof or by any corporation organized under the laws of a
foreign country (collectively "Aliens"), or by any other entity (i) that is
subject to or deemed to be subject to management influence by Aliens or (ii) the
equity of which is owned, controlled by, or held for the benefit of, Aliens in a
manner that would cause the Corporation to be in violation of the Communications
Act or the FCC Regulations; (b) prohibit any transfer of the Corporation's stock
which would cause more than 20% of the Corporation's outstanding capital stock
to be owned or voted by or for any person or entity designated in foregoing
clause (a); and (c) prohibit the ownership, voting or transfer of any portion of
its outstanding capital stock to the extent the ownership, voting or transfer of
such portion would cause the Corporation to violate or otherwise result in
violation of any provision of the Communications Act or the FCC Regulations. For
-2-
<PAGE> 3
purposes of this paragraph 2, the "Communications Act" shall mean the Federal
Communications Act of 1934, as amended, as in effect from time to time, and the
"FCC Regulations" shall mean the rules, regulations or policies promulgated by
the Federal Communications Commission and in effect from time to time.
Notwithstanding any provisions contained herein to the contrary, if prior
approvals must be obtained from the Federal Communications Commission (the "FCC
Approvals"), (i) no stockholder shall possess any voting rights except as
permitted by law; (ii) no stockholder may nominate, appoint or designate any
member of the Board of Directors; and (iii) no stockholder shall be entitled to
exercise any conversion rights or voting rights, until the FCC Approvals have
been obtained.
ARTICLE V
COMMON STOCK
1. Voting Rights. Except as otherwise provided in this Certificate or
as otherwise required by applicable law, the holders of Common Stock shall be
entitled to one vote for each share held by them on each matter on which they
are entitled to vote.
2. Dividends. As and when dividends are declared or paid thereon,
whether in cash, property or securities of the Corporation, the holders of
Common Stock and Series AA Convertible Preferred Stock shall be entitled to
participate in such dividends ratably on a per share basis; provided that, if
dividends are declared which are payable in shares of Common Stock or Series AA
Convertible Preferred Stock, dividends shall be declared which are payable at
the same rate on each class of stock and the dividends payable in shares shall
be payable to holders in shares of the class of stock held. The right of the
holders of Common Stock to receive dividends is subject to the preference, if
any, of the Preferred Stock as provided in Article VII.
3. Liquidation. Subject to the liquidation preferences of the Preferred
Stock as provided in Articles VI and VII, the holders of Common Stock and the
holders of Series AA Convertible Preferred Stock shall be entitled to
participate ratably on a per share basis in all distributions to the holders of
Common Stock and the holders of Series AA Convertible Preferred Stock in any
liquidation, dissolution or winding up of the Corporation.
4. Stock Splits. If the Corporation in any manner subdivides or
combines the outstanding shares of Series AA Convertible Preferred Stock, the
outstanding shares of Common Stock shall be proportionately subdivided or
combined in a similar manner.
5. Merger or Consolidation. In the event of a merger or consolidation
to which the Corporation is a party, holders of Common Stock and Series AA
Convertible Preferred Stock shall be entitled to receive the same consideration,
if any, for each share of Common Stock or Series AA Convertible Preferred Stock
held.
-3-
<PAGE> 4
ARTICLE VI
SERIES AA CONVERTIBLE PREFERRED STOCK
1. Designation. Nineteen Million Thirteen Thousand One Hundred Twenty
Two (19,013,122) shares of the Preferred Stock are designated as Series AA
Convertible Preferred Stock.
2. Voting Rights.
a. General. Except as otherwise provided in this Certificate
or as otherwise required by applicable law, the holders of Series AA Convertible
Preferred Stock shall be entitled to one vote for each share held by them on
each matter on which they are entitled to vote. Except as otherwise provided in
this Certificate or by applicable law, the holders of Series AA Convertible
Preferred Stock shall possess full voting rights and power equal to the voting
rights and powers of the holders of Common Stock and shall be entitled to notice
of stockholders' meetings in accordance with the Bylaws of the Corporation.
Except as otherwise provided in this Certificate or by applicable law, the
holders of Series AA Convertible Preferred Stock shall vote together with the
holders of Common Stock (and any other capital stock of the Corporation at that
time entitled to thereto) as a single class on all matters upon which
stockholders are entitled to vote such that each holder of Series AA Convertible
Preferred Stock may vote pursuant to this paragraph 2a. as if each share of the
Series AA Convertible Preferred Stock owned by such holder had been converted
into a share of the Common Stock of the Corporation.
b. Class Vote. The holders of the Series AA Convertible
Preferred Stock shall be entitled to vote as a single, separate class for the
election and for the removal of the Class B Director (as defined in Article XI).
Neither the holders of Common Stock nor holders of any other class of capital
stock of the Corporation shall be entitled to vote for the election or for the
removal of the Class B Director.
3. Dividends. As and when dividends are declared or paid thereon,
whether in cash, property or securities of the Corporation, the holders of
Common Stock and Series AA Convertible Preferred Stock shall be entitled to
participate in such dividends ratably on a per share basis; provided that, if
dividends are declared which are payable in shares of Common Stock or Series AA
Convertible Preferred Stock, dividends shall be declared which are payable at
the same rate on each class of stock and the dividends payable in shares shall
be payable to holders in shares of the class of stock held. The right of the
holders of Series AA Convertible Preferred Stock to receive dividends is subject
to the preference, if any, of the Preferred Stock as provided in Article VII.
4. Liquidation.
a. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, subject to the liquidation
preferences of the
-4-
<PAGE> 5
other Preferred Stock as provided in Article VII, before any payment or
distribution of the assets of the Corporation (whether capital, surplus or
earnings) or proceeds therefrom shall be made to or set apart for the holders of
Common Stock, the holders of shares of Series AA Convertible Preferred Stock
shall be entitled to receive payment of $0.001 per share (the "Liquidation
Value") held by them. If upon any liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the holders of the
Series AA Convertible Preferred Stock are insufficient to permit payment to such
holders of the aggregate amount which they are entitled to be paid, then the
entire assets to be distributed will be distributed ratably among such holders
based upon the aggregate Liquidation Value of the Series AA Convertible
Preferred Stock held by each such holder. Neither the consolidation nor merger
of the Corporation into or with any other corporation or corporations, nor the
sale or transfer by the Corporation of all or any part of its assets, nor the
reduction of the capital stock of the Corporation, will be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this paragraph 4a.
b. After payment of the Liquidation Value thereof, the holders
of Series AA Convertible Preferred Stock and the holders of Common Stock will be
entitled to participate ratably on a per share basis in all distributions to the
holders of Series AA Convertible Preferred Stock or the holders of Common Stock
in any liquidation, dissolution or winding up of the Corporation.
5. Stock Splits; Additional Issuances. If the Corporation in any manner
subdivides or combines the outstanding shares of Common Stock, the outstanding
shares of Series AA Convertible Preferred Stock shall be proportionately
subdivided or combined in a similar manner. From and after the date on which
this Eighth Amended and Restated Certificate of Incorporation and the
Reclassification contemplated by Article VIII become effective, additional
shares of Series AA Convertible Preferred Stock may only be issued on a pro rata
basis to then record holders of shares of issued and outstanding Series AA
Convertible Preferred Stock.
6. Merger or Consolidation. In the event of a merger or consolidation
to which the Corporation is a party, holders of Common Stock and Series AA
Convertible Preferred Stock shall be entitled to receive the same consideration,
if any, for each share of Common Stock or Series AA Convertible Preferred Stock
held.
7. Conversion.
a. Optional Conversion. Subject to and upon compliance with
the provisions of this paragraph 7, any holder of Series AA Convertible
Preferred Stock may, at any time and at its option, convert its shares of Series
AA Convertible Preferred Stock, in whole or in part, into fully paid and
nonassessable shares of Common Stock of the Corporation, at the conversion ratio
specified herein.
-5-
<PAGE> 6
b. Mandatory Conversion Upon Transfer. In the event and at the
time that voting and dispositive power with respect to a share of Series AA
Convertible Preferred Stock are held by a person other than ABRY Broadcast
Partners II, L.P., ABRY/Citadel Investment Partners, L.P. or an affiliate of
ABRY Broadcast Partners II, L.P. or ABRY/Citadel Investment Partners, L.P., then
such share of Series AA Convertible Preferred Stock shall be automatically
converted, with or without action on the part of any holder, into fully paid and
nonassessable shares of Common Stock of the Corporation, at the conversion ratio
specified herein.
c. Mandatory Conversion Based on Aggregate Ownership. In the
event and at the time that ABRY Broadcast Partners II, L.P., ABRY/Citadel
Investment Partners, L.P. and their respective affiliates, in the aggregate, no
longer exercise sole or shared dispositive control over at least 50% of the
shares of Series AA Convertible Preferred Stock that ABRY Broadcast Partners II,
L.P. and ABRY/Citadel Investment Partners, L.P. beneficially own at the time
this Eighth Amended and Restated Certificate of Incorporation becomes effective
under Nevada law, then all outstanding shares of Series AA Convertible Preferred
Stock shall be automatically converted, with or without action on the part of
any holder, into fully paid and nonassessable shares of Common Stock of the
Corporation, at the conversion ratio specified herein.
d. Conversion Ratio. Each of the shares of the Series AA
Convertible Preferred Stock shall be convertible pursuant to this paragraph into
one share of Common Stock.
e. Procedure for Optional Conversion. In order to convert
shares of Series AA Convertible Preferred Stock, the holder of each share of
Series AA Convertible Preferred Stock to be converted shall surrender the
certificate or certificates evidencing such share, duly endorsed or assigned to
the Corporation or in blank, at the office of the Corporation, accompanied by
written notice to the Corporation at such office that such holder elects to
convert such Series AA Convertible Preferred Stock. Shares of Series AA
Convertible Preferred Stock shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such shares for
conversion in accordance with the foregoing provisions, and the person or
persons entitled to receive the Common Stock issuable upon conversion (the
"Conversion Stock") shall be treated for all purposes as the record holder or
holders of such Conversion Stock at such time. As promptly as practicable on or
after the conversion date, the Corporation shall issue and shall deliver to such
holder a certificate or certificates representing the Conversion Stock.
f. Corporation to Reserve Common Stock. The Corporation shall
at all times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of Series AA Convertible Preferred Stock, the full number of shares
of Common Stock then issuable upon the conversion of all outstanding shares of
Series AA Convertible Preferred Stock.
-6-
<PAGE> 7
g. Taxes on Conversions. The Corporation will pay any and all
taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Series AA Convertible Preferred Stock. The
Corporation shall not, however, be required to pay any taxes which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that of the record holder of the shares of
Series AA Convertible Preferred Stock to be converted, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Corporation the amount of any such tax, or has established to the
satisfaction of the Corporation that such tax has been paid.
h. Cancellation of Converted and Purchased Shares of Preferred
Stock. All shares of Series AA Convertible Preferred Stock delivered for
conversion shall be cancelled by the Corporation.
i. Notices. All notices referred to herein shall be in
writing, shall be delivered personally or by first class mail, postage prepaid,
and shall be deemed to have been given when so delivered or mailed to any
stockholder at such holder's address as it appears in the stock records of the
Corporation (unless otherwise specified in a written notice to the Corporation
by such holder).
ARTICLE VII
PREFERRED STOCK
1. Undesignated Preferred Stock.
a. For the purposes of this Article VII, the term "Preferred
Stock" does not include the Series AA Convertible Preferred Stock. The shares of
Preferred Stock of the Corporation may be issued from time to time in one or
more classes or series thereof, the shares of each class or series thereof to
have such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as are stated
and expressed herein or in the resolution or resolutions providing for the
issuance of such class or series, adopted by the Board of Directors as
hereinafter provided. All shares of the same class and series of Preferred Stock
will be identical, but shares of different classes or series of Preferred Stock
need not be identical or rank equally except as provided by law or herein.
b. Authority is hereby expressly granted to the Board of
Directors of the Corporation, subject to the provisions of this Article VII and
to the limitations prescribed by Nevada law, to authorize the issue of one or
more classes, or series thereof, of Preferred Stock and with respect to each
such class or series to fix by the resolution or resolutions providing for the
issue of such class or series the voting powers, full or limited, if any, of the
shares of such class or series and the designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions
-7-
<PAGE> 8
thereof. The authority of the Board of Directors with respect to each class or
series thereof shall include, but not be limited to, the determination or fixing
of the following:
i. the maximum number of shares to constitute such
class or series, which may subsequently be increased or decreased (but not below
the number of shares of that class or series then outstanding) by resolution of
the Board of Directors, the distinctive designation thereof and the stated value
thereof if different than the par value thereof;
ii. the dividend rate of such class or series, the
conditions and dates upon which such dividends shall be payable, the relation
which such dividends shall bear to the dividends payable on any other class or
classes of stock or any other series of any class of stock of the Corporation,
and whether such dividends shall be cumulative or noncumulative;
iii. whether the shares of such class or series shall
be subject to redemption by the Corporation and, if made subject to such
redemption, the times, prices and other terms and conditions of such redemption;
iv. the terms and amount of any sinking fund
established for the purchase or redemption of the shares of such class or
series;
v. whether or not the shares of such class or series
shall be convertible into or exchangeable for shares of any other class or
classes of any stock or any other series of any class of stock of the
Corporation, and, if provision is made for conversion or exchange, the times,
prices, rates, adjustments, and other terms and conditions of such conversion or
exchange;
vi. the extent, if any, to which the holders of
shares of such class or series shall be entitled to vote with respect to the
election of directors or otherwise;
vii. the restrictions, if any, on the issue or
reissue of any additional shares of Preferred Stock;
viii. whether or not the issue of any additional
shares of any such class or series or of any other class or series in addition
to such class or series shall be subject to restrictions in addition to the
restrictions, if any, on the issue of additional shares imposed in the
resolution or resolutions fixing the terms of any outstanding class or series of
Preferred Stock theretofore issued pursuant to this Article VII and, if subject
to additional restrictions, the extent of such additional restrictions; and
ix. the rights of the holders of the shares of such
class or series upon the dissolution, liquidation or winding up of, or upon the
distribution of assets of, the Corporation.
-8-
<PAGE> 9
c. For purposes of this Article VII, the voluntary sale,
conveyance, lease, exchange or transfer of all or substantially all the property
or assets of the Corporation or a consolidation or merger of the Corporation
with one or more other corporations (whether or not the Corporation is the
corporation surviving such consolidation or merger) shall not be deemed to be a
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.
d. The Board of Directors of the Corporation is further
expressly vested with the authority to make the voting powers, designations,
preferences, rights and qualifications, limitations or restrictions of any class
or series of Preferred Stock dependent upon facts ascertainable outside this
Certificate of Incorporation or of any amendment hereto, or outside the
resolutions or resolutions providing for the issuance of such stock adopted by
the Board of Directors, provided that the manner in which such facts shall
operate upon the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of such class or series of Preferred
Stock is clearly and expressly set forth in the resolution or resolutions
providing for the issue of such stock adopted by the Board of Directors of the
Corporation.
e. Any specification for a class or series of Preferred Stock
of designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof,
pursuant to this Article VII shall be defined in this Certificate of
Incorporation as a "Certificate of Designation."
f. Before any dividends shall be declared or paid or any
distribution ordered or made upon the Common Stock (other than a dividend
payable in Common Stock) or the Series AA Convertible Preferred Stock (other
than a dividend payable in Series AA Convertible Preferred Stock), the
Corporation shall comply with the dividend and sinking fund provisions, if any,
of any resolution or resolutions providing for the issuance of any class or
series of Preferred Stock any shares of which shall at the time be outstanding.
Subject to the foregoing sentence, the holders of Common Stock and Series AA
Convertible Preferred Stock shall be entitled, to the exclusion of the holders
of Preferred Stock of any and all classes and series, to receive such dividends
as from time to time may be declared by the Board of Directors of the
Corporation.
ARTICLE VIII
RECLASSIFICATION
1. On the date this Eighth Amended and Restated Certificate of
Incorporation becomes effective, without further action of the Corporation or
the holder thereof:
a. each share of Class A Common Stock of the Corporation then
issued and outstanding shall automatically be converted into 3.000 fully paid
and nonassessable shares of Common Stock;
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<PAGE> 10
b. each share of Class B Common Stock of the Corporation then
issued and outstanding shall automatically be converted into 3.000 fully paid
and nonassessable shares of Common Stock;
c. each share of Class C Common Stock of the Corporation then
issued and outstanding shall automatically be converted into 3.000 fully paid
and nonassessable shares of Common Stock;
d. each share of Series A Convertible Preferred Stock of the
Corporation then issued and outstanding shall automatically be converted into
3.000 fully paid and nonassessable shares of Common Stock;
e. each share of Series B Convertible Preferred Stock of the
Corporation then issued and outstanding shall automatically be converted into
3.000 fully paid and nonassessable shares of Common Stock;
f. each share of Series C Convertible Preferred Stock of the
Corporation then issued and outstanding shall automatically be converted into
3.000 fully paid and nonassessable shares of Series AA Convertible Preferred
Stock;
g. each share of Series D Convertible Preferred Stock of the
Corporation then issued and outstanding shall automatically be converted into
3.000 fully paid and nonassessable shares of Series AA Convertible Preferred
Stock;
h. each share of Series E Convertible Preferred Stock of the
Corporation then issued and outstanding shall automatically be converted into
3.000 fully paid and nonassessable shares of Common Stock;
i. each share of Series F Convertible Preferred Stock of the
Corporation then issued and outstanding shall automatically be converted into
3.000 fully paid and nonassessable shares of Common Stock; and
j. each share of Series G Convertible Preferred Stock of the
Corporation then issued and outstanding shall automatically be converted into
3.000 fully paid and nonassessable shares of Common Stock.
2. Each stockholder shall deliver to the Corporation his, her or its
stock certificates representing shares of Class A Common Stock, Class B Common
Stock, Class C Common Stock, Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock, Series E Convertible Preferred Stock, Series F
Convertible Preferred Stock and Series G Convertible Preferred Stock
(collectively, the "Old Stock") and the proper officers of the Corporation shall
execute, issue and deliver to each such stockholders certificates representing
the reclassified shares of Old Stock. Until delivery by such stockholders, a
certificate
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<PAGE> 11
representing Old Stock will represent the shares of Common Stock or Series AA
Convertible Stock into which the shares represented by such certificate have
been converted hereunder.
ARTICLE IX
BOARD OF DIRECTORS
1. Number of Directors.
a. The members of the governing board of the Corporation shall
be styled as directors. For so long as any shares of Series AA Convertible
Preferred Stock are outstanding, such Board of Directors shall consist of one
Class B Director elected by the holders of the Series AA Convertible Preferred
Stock and up to six Class A Directors elected by the holders of all classes of
capital stock of the Corporation entitled to vote for the election of directors,
which number of Class A Directors may be fixed from time to time pursuant to the
provisions contained in the Bylaws of the Corporation. The directors' names and
addresses are set forth below:
Class A Directors:
Lawrence R. Wilson
1015 Eastman Drive
Bigfork, MT 59911
John E. von Schlegell
The Endeavour Capital Fund
Limited Partnership
4380 SW Macadam, Suite 460
Portland, OR 97201
Scott E. Smith
Baker, Fentress & Company
200 West Madison Street
Suite 3510
Chicago, IL 60606
Ted L. Snider, Sr.
571 Valley Club Circle
Little Rock, AR 72212
Class B Director:
Patricia Diaz Dennis
SBC Communications, Inc.
Legal Department
175 East Houston, Room 4-A-70
San Antonio, TX 78205
b. At such time that there are no shares of Series AA
Convertible Preferred Stock outstanding, the Board of Directors shall consist of
up to seven directors of the same class, which number of directors may be fixed
from time to time pursuant to the provisions contained in the Bylaws of the
Corporation.
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<PAGE> 12
2. Term. Each director shall serve until his or her successor is
elected and qualified or until his or her earlier resignation, retirement,
disqualification, removal from office or death.
3. Removal. Class A Directors may be removed from office only for cause
by the affirmative vote of the holders of a majority of the outstanding shares
of capital stock of the Company then entitled to vote at an election of
directors. The Class B Director may be removed from office with or without cause
by the affirmative vote of the holders of a majority of the outstanding shares
of Series AA Convertible Preferred Stock. Removal action may be taken at any
stockholders' meeting with respect to which notice of such purpose has been
given, and a removed director's successor may be elected at the same meeting to
serve the unexpired term.
4. Vacancies. A Class A Director vacancy occurring on the board,
however occurring, whether by increase in the number of directors, death,
resignation, retirement, disqualification, removal from office or otherwise, may
be filled, until the next election of directors, either by a vote of the
stockholders or by the affirmative vote of at least a majority of the total
number of directors then remaining in office, though they may constitute less
than a quorum of the Board. A Class B Director vacancy occurring on the board,
however occurring, whether by death, resignation, retirement, disqualification,
removal from office or otherwise, may be filled, until the next election of
directors, by a vote of the holders of the Series AA Convertible Preferred
Stock.
5. Election of Directors by Holders of Preferred Stock. Whenever the
holders of any one or more classes of Preferred Stock or series thereof issued
by the Company other than the Series AA Convertible Preferred Stock shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the number of such directors, and the
election, term of office, filling of vacancies and other features of each such
directorship, shall be governed by the terms of this Certificate of
Incorporation and any Certificate of Designation applicable thereto.
ARTICLE X
LIABILITY
To the full extent permitted by the General Corporation Law of the
State of Nevada in effect from time to time and to no greater extent, no officer
or member of the Board of Directors shall be liable for monetary damages for
breach of fiduciary duty in his or her capacity as an officer or a director in
any action brought by or on behalf of the Corporation or any of its
stockholders.
-12-
<PAGE> 13
ARTICLE XI
INDEMNIFICATION
To the full extent permitted by law, the Corporation shall indemnify
any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he or she is or was a director of the Corporation or any predecessor of the
Corporation or serves or served any other enterprise as director at the request
of the Corporation or any predecessor of the Corporation.
ARTICLE XII
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE XIII
NO PREEMPTIVE RIGHTS
The stockholders of the Corporation shall have no preemptive rights.
DATED: as of June 24, 1998
* * * *
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-13-
<PAGE> 14
CITADEL COMMUNICATIONS
CORPORATION, a Nevada corporation
By:/s/ Lawrence R. Wilson
-------------------------------
Lawrence R. Wilson
President
By:/s/ Donna L. Heffner
-------------------------------
Donna L. Heffner
Secretary
STATE OF New York )
) SS:
COUNTY OF Suffolk )
The foregoing instrument was acknowledged before me this 24 day of
June, 1998, by Lawrence R. Wilson, President of Citadel Communications
Corporation.
/s/ Lisa S. Guerra
-------------------------------
Notary Public
My Commission Expires:
STATE OF New York )
) SS:
COUNTY OF Suffolk )
The foregoing instrument was acknowledged before me this 24 day of
June, 1998, by Donna L. Heffner, Secretary of Citadel Communications
Corporation.
/s/ Lisa S. Guerra
-------------------------------
Notary Public
My Commission Expires:
-14-
<PAGE> 1
Exhibit 3(ii)
AMENDED AND RESTATED
BYLAWS
OF
CITADEL COMMUNICATIONS CORPORATION
<PAGE> 2
EXHIBIT B
Table of Contents
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
1. STOCKHOLDERS....................................................... 1
1.1 Place of Stockholders' Meetings........................... 1
1.2 Day and Time of Annual Meetings of Stockholders........... 1
1.3 Purposes of Annual Meetings............................... 1
1.4 Special Meetings of Stockholders.......................... 2
1.5 Notice of Meetings of Stockholders........................ 2
1.6 Quorum of Stockholders.................................... 2
1.7 Chairman and Secretary of Meeting......................... 3
1.8 Voting by Stockholders.................................... 3
1.9 Proxies................................................... 3
1.10 Inspectors................................................ 4
1.11 List of Stockholders...................................... 4
1.12 Confidential Voting....................................... 4
1.13 Action by Written Consent................................. 5
1.14 Nevada Control Shares Act................................. 5
2. DIRECTORS.......................................................... 5
2.1 Powers of Directors....................................... 5
2.2 Number, Method of Election, Terms of Office of Directors.. 5
2.3 Vacancies on Board........................................ 7
2.4 Meetings of the Board..................................... 7
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
2.5 Quorum and Action......................................... 8
2.6 Presiding Officer and Secretary of Meeting................ 8
2.7 Action by Consent Without Meeting......................... 8
2.8 Committees................................................ 8
2.9 Compensation of Directors................................. 8
3. OFFICERS........................................................... 9
3.1 Officers, Titles, Elections, Terms........................ 9
3.2 General Powers of Officers................................ 10
3.3 Powers and Duties of Chairman............................. 10
3.4 Powers and Duties of the President........................ 10
3.5 Powers and Duties of Executive Vice Presidents,
Senior Vice Presidents and Vice Presidents................ 10
3.6 Powers and Duties of the Chief Financial Officer.......... 10
3.7 Powers and Duties of the Controller and
Assistant Controllers..................................... 10
3.8 Powers and Duties of the Treasurer and
Assistant Treasurers...................................... 11
3.9 Powers and Duties of the Secretary and
Assistant Secretaries..................................... 11
4. INDEMNIFICATION.................................................... 12
4.1 Right to Indemnification and Effect of Amendments......... 12
4.2 Insurance, Contracts and Funding.......................... 13
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
4.3 Indemnification; Not Exclusive Right...................... 13
4.4 Advancement of Expenses, Procedures;
Presumptions and Effect of Certain
Proceedings; Remedies..................................... 13
4.5 Indemnification of Employees and Agents................... 17
4.6 Severability.............................................. 17
5. CAPITAL STOCK...................................................... 17
5.1 Stock Certificates........................................ 17
5.2 Record Ownership.......................................... 18
15.3 Transfer of Record Ownership.............................. 18
5.4 Lost, Stolen, or Destroyed Certificates................... 18
5.5 Transfer Agent; Registrar; Rules
Respecting Certificates................................... 18
5.6 Fixing Record Date for Determination of
Stockholders of Record.................................... 18
6. SECURITIES HELD BY THE CORPORATION................................. 19
6.1 Voting.................................................... 19
6.2 General Authorization to Transfer Securities
Held by the Corporation................................... 19
7. DEPOSITARIES AND SIGNATORIES....................................... 20
7.1 Depositaries.............................................. 20
7.2 Signatories............................................... 20
8. SEAL............................................................... 20
9. FISCAL YEAR........................................................ 20
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
10. WAIVER OF OR DISPENSING WITH NOTICE................................ 21
11. POLITICAL CONTRIBUTIONS BY THE CORPORATION......................... 21
12. TRANSFER OF SHARES TO ALIENS....................................... 21
13. AMENDMENT OF BYLAWS................................................ 22
14. OFFICES AND AGENT.................................................. 22
</TABLE>
<PAGE> 6
AMENDED AND RESTATED BYLAWS
of
CITADEL COMMUNICATIONS CORPORATION
(a Nevada corporation which was originally incorporated
as: CCC Holdings, Inc., the "Corporation")
1. STOCKHOLDERS.
1.1 Place of Stockholders' Meetings. All meetings of the stockholders
of the Corporation shall be held at such place or places, within or outside the
State of Nevada, as may be fixed by the Corporation's Board of Directors (the
"Board", and each member thereof a "Director") from time to time or as shall be
specified in the respective notices thereof.
1.2 Day and Time of Annual Meetings of Stockholders. An annual meeting
of stockholders shall be held at such place (within or outside the State of
Nevada), date and hour as shall be determined by the Board and designated in the
notice thereof. Failure to hold an annual meeting of stockholders at such
designated time shall not affect otherwise valid corporate acts or work a
forfeiture or dissolution of the Corporation.
1.3 Purposes of Annual Meetings. (a) At each annual meeting, the
stockholders shall elect the members of the Board for the succeeding year. At
any such annual meeting any business properly brought before the meeting may be
transacted.
(b) To be properly brought before an annual meeting, business must be
(i) specified in the notice of the meeting (or any supplement thereto) given by
or at the direction of the Board, (ii) otherwise properly brought before the
meeting by or at the direction of the Board or (iii) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given written
notice thereof, either by personal delivery or by United States mail, postage
prepaid, to the Secretary, not later than ninety (90) days in advance of the
anniversary date of the immediately preceding annual meeting. Any such notice
shall set forth as to each matter the stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting
and in the event that such business includes a proposal to amend either the
Articles of Incorporation or Bylaws of the Corporation, the language of the
proposed amendment, (ii) the name and address of the stockholder proposing such
business, (iii) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to propose such business, and (iv) any
material interest of the stockholder in such business. No business shall be
conducted at an annual meeting of stockholders except in accordance with
<PAGE> 7
this Section 1.3(b), and the chairman of any annual meeting of stockholders may
refuse to permit any business to be brought before an annual meeting without
compliance with the foregoing procedures.
1.4 Special Meetings of Stockholders. Except as otherwise expressly
required by applicable law, special meetings of the stockholders or of any class
or series entitled to vote may be called for any purpose or purposes by the
Chairman or by a majority vote of the entire Board, to be held at such place
(within or outside the State of Nevada), date and hour as shall be determined by
the Board and designated in the notice thereof. Unless otherwise required by
law, only such business as is specified in the notice of any special meeting of
the stockholders shall come before such meeting.
1.5 Notice of Meetings of Stockholders. Except as otherwise expressly
required or permitted by applicable law, not less than ten (10) days nor more
than sixty (60) days before the date of every stockholders' meeting the
Secretary shall give to each stockholder of record entitled to vote at such
meeting written notice stating the place, day and time of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called. Except as provided in Section 1.6(d) or as otherwise expressly required
by applicable law, notice of any adjourned meeting of stockholders need not be
given if the time and place thereof are announced at the meeting at which the
adjournment is taken. Any notice, if mailed, shall be deemed to be given when
deposited in the United States mail, postage prepaid, addressed to the
stockholder at the address for notices to such stockholder as it appears on the
records of the Corporation.
1.6 Quorum of Stockholders. (a) Unless otherwise expressly required by
applicable law, at any meeting of the stockholders, the presence in person or by
proxy of stockholders entitled to cast a majority of votes thereat shall
constitute a quorum for the entire meeting; provided, however, that where a
matter is to be voted on by the holders of a class of capital stock of the
Corporation voting as a single class, the presence in person or by proxy of
holders of such class entitled to cast a majority of votes at such meeting shall
be required to constitute a quorum for such meeting with respect to such matter,
in each case, notwithstanding the withdrawal of stockholders entitled to cast a
sufficient number of votes in person or by proxy to reduce the number of votes
represented at the meeting below a quorum. Shares of the Corporation's stock
belonging to the Corporation or to another corporation, if a majority of the
shares entitled to vote in an election of the directors of such other
corporation is held by the Corporation, shall neither be counted for the purpose
of determining the presence of a quorum nor entitled to vote at any meeting of
the stockholders.
(b) At any meeting of the stockholders at which a quorum shall be
present, a majority of those present in person or by proxy may adjourn the
meeting from time to time without notice other than an announcement at the
meeting. In the absence of a quorum, the officer presiding thereat shall have
the power to adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting other than an announcement at
2
<PAGE> 8
the meeting shall not be required to be given, except as provided in Section
1.6(d) below and except where expressly required by applicable law.
(c) At any adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting
originally called, but only those stockholders entitled to vote at the meeting
as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof unless a new record date is fixed by the Board.
(d) If an adjournment is for more than thirty (30) days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given in the manner specified in Section 1.5
to each stockholder of record entitled to vote at the meeting.
1.7 Chairman and Secretary of Meeting. The Chairman or, in his or her
absence, another officer of the Corporation designated by the Chairman, shall
preside at meetings of the stockholders. The Secretary shall act as secretary of
the meeting, or in the absence of the Secretary, an Assistant Secretary shall so
act, or if neither is present, then the presiding officer may appoint a person
to act as secretary of the meeting.
1.8 Voting by Stockholders. (a) Except as otherwise expressly required
by applicable law, at every meeting of the stockholders each stockholder shall
be entitled to the number of votes specified in the Articles of Incorporation,
in person or by proxy, for each share of stock standing in his or her name on
the books of the Corporation on the date fixed pursuant to the provisions of
Section 5.6 of these Bylaws as the record date for the determination of the
stockholders who shall be entitled to receive notice of and to vote at such
meeting.
(b) When a quorum is present at any meeting of the stockholders, all
questions shall be decided by the vote of a majority in voting power of the
stockholders present in person or by proxy and entitled to vote at such meeting
on the matter or matters presented for a vote, unless a question is one upon
which by express provision of law, the Articles of Incorporation or these
Bylaws, a different vote is required, in which case such express provision shall
govern and control the decision of such question.
(c) Except as required by applicable law, the vote at any meeting of
stockholders on any question need not be by ballot, unless so directed by the
chairman of the meeting. On a vote by ballot, each ballot shall be signed by the
stockholder voting, or by his or her proxy, if there be such proxy, and shall
state the number of shares voted.
1.9 Proxies. Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by his or her attorney-in-fact. Every
proxy shall be in writing and shall be subscribed by the stockholder or his or
her duly authorized attorney-in-fact, but need not be sealed, witnessed or
acknowledged.
3
<PAGE> 9
1.10 Inspectors. (a) The election of Directors and any other vote by
ballot at any meeting of the stockholders shall be supervised by one or more
inspectors. Such inspectors may be appointed by the Chairman before or at the
meeting. If the Chairman shall not have so appointed such inspectors or if such
inspectors so appointed shall refuse to serve or shall not be present, such
appointment shall be made by the officer presiding at the meeting. Each
inspector, before entering upon the discharge of his or her duties, shall take
and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability.
(b) The inspectors shall (i) ascertain the number of shares of the
Corporation outstanding and the voting power of each, (ii) determine the shares
represented at any meeting of stockholders and the validity of the proxies and
ballots, (iii) count all proxies and ballots, (iv) determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors, and (v) certify their determination of the
number of shares represented at the meeting, and their count of all proxies and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors.
1.11 List of Stockholders. (a) At least ten (10) days before every
meeting of stockholders, the Secretary shall cause to be prepared and made a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder.
(b) During ordinary business hours for a period of at least ten (10)
days prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the Corporation's registered
office.
(c) The list shall also be produced and kept at the time and place of
the meeting during the whole time of the meeting, and it may be inspected by any
stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section 1.11 or the books of the Corporation, or to vote in person or by proxy
at any meeting of stockholders.
1.12 Confidential Voting. (a) Proxies and ballots that identify the
votes of specific stockholders shall be kept in confidence by the tabulators and
the inspectors of election unless (i) there is an opposing solicitation with
respect to the election or removal of Directors, (ii) disclosure is required by
applicable law, (iii) a stockholder expressly requests or otherwise authorizes
disclosure, or (iv) the Corporation concludes in good faith that a
4
<PAGE> 10
bona fide dispute exists as to the authenticity of one or more proxies, ballots
or votes, or as to the accuracy of any tabulation of such proxies, ballots or
votes.
(b) The tabulators and inspectors of election and any authorized agents
or other persons engaged in the receipt, count and tabulation of proxies and
ballots shall be advised of this By-law and instructed to comply herewith.
(c) The inspectors of election shall certify, to the best of their
knowledge based on due inquiry, that proxies and ballots have been kept in
confidence as required by this Section 1.12.
1.13 Action by Written Consent. Any action required or permitted to be
taken by the stockholders of the Corporation must be effected at a duly called
annual or special stockholders' meeting and may not be effected by consent in
writing by such stockholders, except with respect to matters to be voted on by
the holders of the Series AA Convertible Preferred Stock voting as a separate
class. Any action to be determined by the holders of the Series AA Convertible
Preferred Stock voting as a separate class and required or permitted to be taken
at a meeting of the Series AA Convertible Preferred Stock may be taken without a
meeting, without notice and without a vote, if a consent in writing, setting
forth the action taken, is signed by the holders of outstanding Series AA
Convertible Preferred Stock having not less than the number of votes that would
be necessary to authorize such action at a meeting at which all shares entitled
to vote were present. Such written consent shall not be valid unless it is (a)
signed by the stockholder, (b) dated, as of the date of such stockholder's
signature, and (c) delivered to the Corporation personally or by mail to the
Corporation's principal place of business, principal office in the State of
Nevada or officer or agent who has custody of the book in which the minutes of
meetings of stockholders are recorded, within sixty (60) days after the earliest
date that a stockholder signed the written consent. Prompt notice of the taking
of any such action shall be given to any such stockholders entitled to vote who
have not so consented in writing.
1.14 Nevada Control Share Act. The provisions of Nevada's Control Share
Act, NRS 78.378-.3793 shall not apply to the holders of capital stock of the
Corporation as a result of such holders' acquisition of shares of capital stock
of the Corporation on the date that these Bylaws first become effective.
2. DIRECTORS.
2.1 Powers of Directors. The business and affairs of the Corporation
shall be managed by or under the direction of the Board, which may exercise all
the powers of the Corporation except such as are by applicable law, the Articles
of Incorporation or these By-laws required to be exercised or performed by the
stockholders.
2.2 Number, Method of Election, Terms of Office of Directors. The
number of Directors which shall constitute the whole Board shall be such as from
time to time shall be
5
<PAGE> 11
determined by resolution adopted by a majority of the entire Board, but the
total number shall not be less than one (1) nor more than seven (7); provided
that the tenure of a Director shall not be affected by any decrease in the
number of Directors so made by the Board. For so long as any shares of Series AA
Convertible Preferred Stock of the Corporation are outstanding, the Board shall
consist of one (1) Class B Director elected by the holders of the Series AA
Convertible Preferred Stock and up to six (6) Class A Directors elected by the
holders of all classes of capital stock of the Corporation entitled to vote for
the election of Directors as determined by resolution adopted by a majority of
the entire Board. Each Director shall hold office until the next annual meeting
of stockholders and until his or her successor is elected and qualified or until
his or her earlier death, retirement, resignation or removal. Directors need not
be stockholders of the Corporation or citizens of the United States of America.
Nominations of persons for election as Directors may be made by the
Board or by any stockholder entitled to vote for the election of Directors. Any
stockholder entitled to vote for the election of Directors may nominate a person
or persons for election as Directors only if written notice of such
stockholder's intent to make such nomination is given in accordance with the
procedures for bringing business before the meeting set forth in Section 1.3(b)
of these Bylaws, either by personal delivery or by United States mail, postage
prepaid, to the Secretary not later than (i) with respect to an election to be
held at an annual meeting of stockholders, ninety (90) days in advance of the
anniversary date of the immediately preceding annual meeting and (ii) with
respect to an election to be held at a special meeting of stockholders for the
election of Directors, the close of business on the seventh (7th) day following
the date on which notice of such meeting is first given to stockholders;
provided, however, that only a stockholder entitled to vote for the election of
the Class B Director may nominate a person for election as a Class B Director.
Each such notice shall set forth: (a) the name and address of the stockholder
who intends to make the nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
each nominee been nominated, or intended to be nominated, by the Board; and (e)
the consent of each nominee to serve as a Director if so elected. The chairman
of any meeting of stockholders to elect Directors and the Board may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
At each meeting of the stockholders for the election of Directors at
which a quorum is present, the persons receiving the greatest number of votes,
up to the number of Directors to be elected, shall be the Directors.
6
<PAGE> 12
2.3 Vacancies on Board. (a) Any Director may resign from office at any
time by delivering a written resignation to the Chairman or the Secretary. The
resignation will take effect at the time specified therein, or, if no time is
specified, at the time of its receipt by the Corporation. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
(b) Except as provided in the Articles of Incorporation, any vacancy
and any newly created directorship resulting from any increase in the authorized
number of Directors may be filled by vote of a majority of the Directors then in
office, though less than a quorum, and any Director so chosen shall hold office
until the next annual election of Directors by the stockholders and until a
successor is duly elected and qualified or until his or her earlier death,
retirement, resignation or removal. If there are no Directors in office, then an
election of Directors may be held in the manner provided by applicable law.
2.4 Meetings of the Board. (a) The Board may hold its meetings, both
regular and special, either within or outside the State of Nevada, at such
places as from time to time may be determined by the Board or as may be
designated in the respective notices or waivers of notice thereof.
(b) Regular meetings of the Board shall be held at such times and at
such places as from time to time shall be determined by the Board.
(c) The first meeting of each newly elected Board shall be held as soon
as practicable after the annual meeting of the stockholders and shall be for the
election of officers and the transaction of such other business as may come
before it.
(d) Special meetings of the Board shall be held whenever called by
direction of the Chairman or at the request of Directors constituting one-third
of the number of Directors then in office.
(e) Members of the Board or any Committee of the Board may participate
in a meeting of the Board or Committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
(f) The Secretary, or an Assistant Secretary designated by the
Secretary, shall give notice to each Director of any meeting of the Board by
mailing the same at least two (2) days before the meeting or by telegraphing or
delivering the same not later than the day before the meeting. Such notice need
not include a statement of the business to be transacted at, or the purpose of,
any such meeting. Any and all business may be transacted at any meeting of the
Board. No notice of any adjourned meeting need be given. No notice to or waiver
by any Director shall be required with respect to any meeting at which the
Director is present.
7
<PAGE> 13
2.5 Quorum and Action. Except as otherwise expressly required by
applicable law, the Articles of Incorporation or these Bylaws, at any meeting of
the Board, the presence of at least one-third (1/3) of the entire Board shall
constitute a quorum for the transaction of business; but if there shall be less
than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. Unless otherwise provided by applicable
law, the Articles of Incorporation or these Bylaws, the vote of a majority of
the Directors present (and not abstaining) at any meeting at which quorum is
present shall be necessary for the approval and adoption of any resolution or
the approval of any act of the Board.
2.6 Presiding Officer and Secretary of Meeting. The Chairman or, in the
absence of the Chairman, a member of the Board selected by the members present,
shall preside at meetings of the Board. The Secretary, or an Assistant Secretary
designated by the Secretary, shall act as secretary of the meeting, but in the
absence of the Secretary, or an Assistant Secretary designated by the Secretary,
the presiding officer may appoint a secretary of the meeting.
2.7 Action by Consent Without Meeting. Any action required or permitted
to be taken at any meeting of the Board or of any Committee thereof may be taken
without a meeting if all members of the Board or Committee, as the case may be,
consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board or the Committee.
2.8 Committees. By resolution adopted by a majority of the entire
Board, the Board may designate members of the Board to constitute committees
which shall in each case consist of such number of directors, and shall have and
may execute such powers as may be determined and specified in the respective
resolutions appointing them. Any such committee may fix its rules of procedure,
determine its manner of acting and the time and place, whether within or without
the State of Nevada, of its meetings and specify what notice thereof, if any,
shall be given, unless the Board shall otherwise by resolution provide. Unless
otherwise provided by the Board or such committee, the quorum, voting and other
procedures shall be the same as those applicable to actions taken by the Board.
A majority of the members of the Board then in office shall have the power to
change the membership of any such committee at any time to fill vacancies
therein and to discharge any such committee or to remove any member thereof,
either with or without cause, at any time.
2.9 Compensation of Directors. Unless otherwise restricted by the
Articles of Incorporation or these Bylaws, Directors shall receive for their
services on the Board or any Committee thereof such compensation and benefits,
including the granting of options; together with expenses, if any, as the Board
may from time to time determine. The Directors may be paid a fixed sum for
attendance at each meeting of the Board or Committee thereof and/or a stated
annual sum as a Director, together with expenses, if any, of attendance at each
meeting of the Board or Committee thereof. Nothing herein contained
8
<PAGE> 14
shall be construed to preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.
3. OFFICERS.
3.1 Officers, Titles, Elections, Terms. (a) The Board may from time to
time elect a Chairman and Chief Executive Officer, a President, one or more
Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice
Presidents, a Chief Financial Officer, a Controller, a Treasurer, a Secretary, a
General Counsel, one or more Assistant Controllers, one or more Assistant
Treasurers, one or more Assistant Secretaries, and one or more Associate or
Assistant General Counsels, to serve at the pleasure of the Board or otherwise
as shall be specified by the Board at the time of such election and until their
successors are elected and qualified or until their earlier death, retirement,
resignation or removal.
(b) The Board may elect or appoint at any time such other officers or
agents with such duties as it may deem necessary or desirable. Such other
officers or agents shall serve at the pleasure of the Board or otherwise as
shall be specified by the Board at the time of such election or appointment and,
in the case of such other officers, until their successors are elected and
qualified or until their earlier death, retirement, resignation or removal. Each
such officer or agent shall have such authority and shall perform such duties as
may be provided herein or as the Board may prescribe. The Board may from time to
time authorize any officer or agent to appoint and remove any other such officer
or agent and to prescribe such person's authority and duties.
(c) No person may be elected or appointed an officer who is not a
citizen of the United States of America if such election or appointment is
prohibited by applicable law or regulation.
(d) Any vacancy in any office may be filled for the unexpired portion
of the term by the Board. Each officer elected or appointed during the year
shall hold office until the next annual meeting of the Board at which officers
are regularly elected or appointed and until his or her successor is elected or
appointed and qualified or until his or her earlier death, retirement,
resignation or removal.
(e) Any officer or agent elected or appointed by the Board may be
removed at any time by the affirmative vote of a majority of the entire Board.
(f) Any officer may resign from office at any time. Such resignation
shall be made in writing and given to the President or the Secretary. Any such
resignation shall take effect at the time specified therein, or, if no time is
specified, at the time of its receipt by the Corporation. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
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3.2 General Powers of Officers. Except as may be otherwise provided by
applicable law or in Article 6 or 7 of these Bylaws, the Chairman and Chief
Executive Officer, the President, any Executive Vice President, any Senior Vice
President, any Vice President, the Chief Financial Officer, the General Counsel,
the Controller, the Treasurer and the Secretary, or any of them, may (i) execute
and deliver in the name of the Corporation, in the name of any Division of the
Corporation or in both names any agreement, contract, instrument, power of
attorney or other document pertaining to the business or affairs of the
Corporation or any Division of the Corporation, including without limitation
agreements or contracts with any government or governmental department, agency
or instrumentality, and (ii) delegate to any employee or agent the power to
execute and deliver any such agreement, contract, instrument, power of attorney
or other document.
3.3 Powers and Duties of the Chairman. The Chairman shall be the Chief
Executive Officer of the Corporation and shall report directly to the Board.
Except in such instances as the Board may confer powers in particular
transactions upon any other officer, and subject to the control and direction of
the Board, the Chairman shall manage and direct the business and affairs of the
Corporation and shall communicate to the Board and any Committee thereof
reports, proposals and recommendations for their respective consideration or
action. He or she may do and perform all acts on behalf of the Corporation and
shall preside at meetings of the Board and the stockholders.
3.4 Powers and Duties of the President. The President shall have such
powers and perform such duties as the Board or the Chairman may from time to
time prescribe or as may be prescribed in these Bylaws.
3.5 Powers and Duties of Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents. Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents shall have such powers and perform such duties as
the Board or the Chairman may from time to time prescribe or as may be
prescribed in these Bylaws.
3.6 Powers and Duties of the Chief Financial Officer. The Chief
Financial Officer shall have such powers and perform such duties as the Board or
the Chairman may from time to time prescribe or as may be prescribed in these
Bylaws.
3.7 Powers and Duties of the Controller and Assistant Controllers. (a)
The Controller shall be responsible for the maintenance of adequate accounting
records of all assets, liabilities, capital and transactions of the Corporation.
The Controller shall prepare and render such balance sheets, income statements,
budgets and other financial statements and reports as the Board or the Chairman
may require, and shall perform such other duties as may be prescribed or
assigned pursuant to these Bylaws and all other acts incident to the position of
Controller.
(b) Each Assistant Controller shall perform such duties as from time to
time may be assigned by the Controller or by the Board. In the event of the
absence, incapacity or
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inability to act of the Controller, then any Assistant Controller may perform
any of the duties and may exercise any of the powers of the Controller.
3.8 Powers and Duties of the Treasurer and Assistant Treasurers. (a)
The Treasurer shall have the care and custody of all the funds and securities of
the Corporation, except as may be otherwise ordered by the Board, and shall
cause such funds (i) to be invested or reinvested from time to time for the
benefit of the Corporation as may be designated by the Board, the Chairman, the
President, the Chief Financial Officer or the Treasurer or (ii) to be deposited
to the credit of the Corporation in such banks or depositories as may be
designated by the Board, the Chairman, the President, the Chief Financial
Officer or the Treasurer, and shall cause such securities to be placed in
safekeeping in such manner as may be designated by the Board, the Chairman, the
President, the Chief Financial Officer or the Treasurer.
(b) The Treasurer, any Assistant Treasurer or such other person or
persons as may be designated for such purpose by the Board, the Chairman, the
President, the Chief Financial Officer or the Treasurer may endorse in the name
and on behalf of the Corporation all instruments for the payment of money, bills
of lading, warehouse receipts, insurance policies and other commercial documents
requiring such endorsement.
(c) The Treasurer, any Assistant Treasurer or such other person or
persons as may be designated for such purpose by the Board, the Chairman, the
President, the Chief Financial Officer or the Treasurer (i) may sign all
receipts and vouchers for payments made to the Corporation; (ii) shall render a
statement of the cash account of the Corporation to the Board as often as it
shall require the same; and (iii) shall enter regularly in books to be kept for
that purpose full and accurate account of all moneys received and paid on
account of the Corporation and of all securities received and delivered by the
Corporation.
(d) The Treasurer shall perform such other duties as may be prescribed
or assigned pursuant to these Bylaws and all other acts incident to the position
of Treasurer. Each Assistant Treasurer shall perform such duties as may from
time to time be assigned by the Treasurer or by the Board. In the event of the
absence, incapacity or inability to act of the Treasurer, then any Assistant
Treasurer may perform any of the duties and may exercise any of the powers of
the Treasurer.
3.9 Powers and Duties of the Secretary and Assistant Secretaries. (a)
The Secretary, or an Assistant Secretary designated by the Secretary, shall keep
the minutes of all proceedings of the stockholders, the Board and the Committees
of the Board. The Secretary, or an Assistant Secretary designated by the
Secretary, shall attend to the giving and serving of all notices of the
Corporation, in accordance with the provisions of these Bylaws and as required
by applicable law. The Secretary, or an Assistant Secretary designated by the
Secretary, shall be the custodian of the seal of the Corporation. The Secretary
shall affix or cause to be affixed the seal of the Corporation to such
contracts, instruments and other documents requiring the seal of the
Corporation, and when so affixed may attest the same
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and shall perform such other duties as may be prescribed or assigned pursuant to
these By-laws and all other acts incident to the position of Secretary.
(b) The Secretary shall cause to be prepared and maintained (i) a stock
ledger containing the names and addresses of all stockholders and the number of
shares held by each and (ii) the list of stockholders for each meeting of the
stockholders as required by Section 1.11 of these By-laws. The Secretary shall
be responsible for the custody of all stock books and of all unissued stock
certificates.
(c) Each Assistant Secretary shall perform such duties as may from time
to time be assigned by the Secretary or by the Board. In the event of the
absence, incapacity or inability to act of the Secretary, then any Assistant
Secretary may perform any of the duties and may exercise any of the powers of
the Secretary.
4. INDEMNIFICATION.
4.1 (a) Right to Indemnification. The Corporation, to the fullest
extent permitted by applicable law as then in effect, shall indemnify any person
who is or was a Director or officer of the Corporation and who is or was
involved in any manner (including, without limitation, as a party or a witness)
or is threatened to be made so involved in any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative (including, without limitation, any action, suit
or proceeding by or in the right of the Corporation to procure a judgment in its
favor) (a "Proceeding") by reason of the fact that such person is or was a
Director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including, without limitation, any employee benefit plan) (a
"Covered Entity"), against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such Proceeding. Any Director or officer of the
Corporation entitled to indemnification as provided in this Section 4.1(a) is
hereinafter called an "Indemnitee." Any right of an Indemnitee to
indemnification shall be a contract right and shall include the right to
receive, prior to the conclusion of any Proceeding, payment of any expenses
incurred by the Indemnitee in connection with such Proceeding, consistent with
the provisions of applicable law as then in effect and the other provisions of
this Article 4.
(b) Effect of Amendments. Neither the amendment or repeal of, nor the
adoption of a provision inconsistent with, any provision of this Article 4
(including, without limitation, this Section 4.1(b)) shall adversely affect the
rights of any Director or officer under this Article 4: (i) with respect to any
Proceeding commenced or threatened prior to such amendment, repeal or adoption
of an inconsistent provision or (ii) after the occurrence of a Change in
Control, with respect to any Proceeding arising out of any action or omission
occurring prior to such amendment, repeal or adoption of an inconsistent
provision, in either case without the written consent of such Director or
officer.
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4.2 Insurance, Contracts and Funding. The Corporation may purchase and
maintain insurance to protect itself and any indemnified person against any
expenses, judgments, fines and amounts paid in settlement as specified in
Section 4.1(a) or Section 4.5 of this Article 4 or incurred by any indemnified
person in connection with any Proceeding referred to in such Sections, to the
fullest extent permitted by applicable law as then in effect. The Corporation
may enter into contracts with any Director, officer, employee or agent of the
Corporation or any director, officer, employee, fiduciary or agent of any
Covered Entity in furtherance of the provisions of this Article 4 and may create
a trust fund or use other means (including, without limitation, a letter of
credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article 4.
4.3 Indemnification; Not Exclusive Right. The right of indemnification
provided in this Article 4 shall not be exclusive of any other rights to which
any indemnified person may otherwise be entitled, and the provisions of this
Article 4 shall inure to the benefit of the heirs and legal representatives of
any indemnified person under this Article 4 and shall be applicable to
Proceedings commenced or continuing after the adoption of this Article 4,
whether arising from acts or omissions occurring before or after such adoption.
4.4 Advancement of Expenses; Procedures; Presumptions and Effect of
Certain Proceedings; Remedies. In furtherance, but not in limitation, of the
foregoing provisions, the following procedures, presumptions and remedies shall
apply with respect to the advancement of expenses and the right to
indemnification under this Article 4:
(a) Advancement of Expenses. All reasonable expenses incurred by or on
behalf of an Indemnitee in connection with any Proceeding shall be advanced to
the Indemnitee by the Corporation within twenty (20) days after the receipt by
the Corporation of a statement or statements from the Indemnitee requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Any such statement or statements shall
reasonably evidence the expenses incurred by the Indemnitee and shall include
any written affirmation or undertaking required by applicable law in effect at
the time of such advance.
(b) Procedures for Determination of Entitlement to Indemnification. (i)
To obtain indemnification under this Article 4, an Indemnitee shall submit to
the Secretary of the Corporation a written request, including such documentation
and information as is reasonably available to the Indemnitee and reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to
indemnification (the "Supporting Documentation"). The determination of the
Indemnitee's entitlement to indemnification shall be made not later than sixty
(60) days after receipt by the Corporation of the written request for
indemnification together with the Supporting Documentation. The Secretary of the
Corporation shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that the Indemnitee has requested indemnification.
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(ii) The Indemnitee's entitlement to indemnification under this Article
4 shall be determined in one of the following ways: (A) by a majority vote of
the Disinterested Directors (as hereinafter defined), if they constitute a
quorum of the Board; (B) by a written opinion of Independent Counsel (as
hereinafter defined) if (x) a Change in Control shall have occurred and the
Indemnitee so requests or (y) a quorum of the Board consisting of Disinterested
Directors is not obtainable or, even if obtainable, a majority of such
Disinterested Directors so directs; (C) by the stockholders of the Corporation
(but only if a majority of the Disinterested Directors, if they constitute a
quorum of the Board, presents the issue of entitlement to indemnification to the
stockholders for their determination); or (D) as provided in Section 4.4(c) of
this Article 4.
(iii) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 4.4(b)(ii), a majority
of the Disinterested Directors shall select the Independent Counsel, but only an
Independent Counsel to which the Indemnitee does not reasonably object;
provided, however, that if a Change in Control shall have occurred, the
Indemnitee shall select such Independent Counsel, but only an Independent
Counsel to which a majority of the Disinterested Directors does not reasonably
object.
(c) Presumptions and Effect of Certain Proceedings. Except as otherwise
expressly provided in this Article 4, if a Change in Control shall have
occurred, the Indemnitee shall be presumed to be entitled to indemnification
under this Article 4 (with respect to actions or failures to act occurring prior
to such Change in Control) upon submission of a request for indemnification
together with the Supporting Documentation in accordance with Section 4.4(b) of
this Article 4, and thereafter the Corporation shall have the burden of proof to
overcome that presumption in reaching a contrary determination. In any event, if
the person or persons empowered under Section 4.4(b) of this Article 4 to
determine entitlement to indemnification shall not have been appointed or shall
not have made a determination within sixty (60) days after receipt by the
Corporation of the request therefor together with the Supporting Documentation,
the Indemnitee shall be deemed to be, and shall be, entitled to indemnification
unless (A) the Indemnitee misrepresented or failed to disclose a material fact
in making the request for indemnification or in the Supporting Documentation or
(B) such indemnification is prohibited by law. The termination of any Proceeding
described in Section 4.1 of this Article 4, or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, adversely affect the right
of the Indemnitee to indemnification or create a presumption that the Indemnitee
did not act in good faith and in a manner which the Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation or,
with respect to any criminal Proceeding, that the Indemnitee had reasonable
cause to believe that his or her conduct was unlawful.
(d) Remedies of Indemnitee. (i) In the event that a determination is
made pursuant to Section 4.4(b) of this Article 4 that the Indemnitee is not
entitled to indemnification under this Article 4, (A) the Indemnitee shall be
entitled to seek an
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adjudication of his or her entitlement to such indemnification either, at the
Indemnitee's sole option, in (x) an appropriate court of the State of Nevada or
any other court of competent jurisdiction or (y) an arbitration to be conducted
by a single arbitrator pursuant to the rules of the American Arbitration
Association; (B) any such judicial proceeding or arbitration shall be de novo
and the Indemnitee shall not be prejudiced by reason of such adverse
determination; and (C) if a Change in Control shall have occurred, in any such
judicial proceeding or arbitration the Corporation shall have the burden of
proving that the Indemnitee is not entitled to indemnification under this
Article 4 (with respect to actions or failures to act occurring prior to such
Change in Control).
(ii) If a determination shall have been made or deemed to have been
made, pursuant to Section 4.4(b) or (c) of this Article 4, that the Indemnitee
is entitled to indemnification, the Corporation shall be obligated to pay the
amounts constituting such indemnification within five (5) days after such
determination has been made or deemed to have been made and shall be
conclusively bound by such determination unless (A) the Indemnitee
misrepresented or failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation or (B) such indemnification
is prohibited by law. In the event that (x) advancement of expenses is not
timely made pursuant to Section 4.4(a) of this Article 4 or (y) payment of
indemnification is not made within five (5) days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to Section 4.4(b) or (c) of this Article 4, the Indemnitee shall be
entitled to seek judicial enforcement of the Corporation's obligation to pay to
the Indemnitee such advancement of expenses or indemnification. Notwithstanding
the foregoing, the Corporation may bring an action, in an appropriate court in
the State of Nevada or any other court of competent jurisdiction, contesting the
right of the Indemnitee to receive indemnification hereunder due to the
occurrence of an event described in subclause (A) or (B) of this clause (ii) (a
"Disqualifying Event"); provided, however, that in any such action the
Corporation shall have the burden of proving the occurrence of such
Disqualifying Event.
(iii) The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 4.4(d) that the
procedures and presumptions of this Article 4 are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Corporation is bound by all the provisions of this Article 4.
(iv) In the event that the Indemnitee, pursuant to this Section 4.4(d),
seeks a judicial adjudication of or an award in arbitration to enforce his or
her rights under, or to recover damages for breach of, this Article 4, the
Indemnitee shall be entitled to recover from the Corporation, and shall be
indemnified by the Corporation against, any expenses actually and reasonably
incurred by the Indemnitee if the Indemnitee prevails in such judicial
adjudication or arbitration.
If it shall be determined in such judicial adjudication or arbitration that the
Indemnitee is entitled to receive part but not all of the indemnification or
advancement of expenses sought,
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the expenses incurred by the Indemnitee in connection with such judicial
adjudication or arbitration shall be prorated accordingly.
(e) Definitions. For purposes of this Article 4:
(i) "Change in Control" means a change in control of the Corporation of
a nature that would be required to be reported in response to Item 6(e) (or any
successor provision) of Schedule 14A of Regulation 14A (or any amendment or
successor provision thereto) promulgated under the Securities Exchange Act of
1934 (the "Act"), whether or not the Corporation is then subject to such
reporting requirement; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the voting power of
all outstanding shares of stock of the Corporation entitled to vote generally in
an election of Directors without the prior approval of at least two-thirds (2/3)
of the members of the Board in office immediately prior to such acquisition; (B)
the Corporation is a party to any merger or consolidation in which the
Corporation is not the continuing or surviving corporation or pursuant to which
shares of the Corporation's common stock would be converted into cash,
securities or other property, other than a merger of the Corporation in which
the holders of the Corporation's common stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; (C) there is a sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, the assets of the Corporation, or liquidation or
dissolution of the Corporation; (D) the Corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board in office immediately prior to such
transaction or event constitute less than a majority of the Board thereafter; or
(E) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board (including for this purpose any
new Director whose election or nomination for election by the stockholders was
approved by a vote of at least two-thirds (2/3) of the Directors then still in
office who were Directors at the beginning of such period) cease for any reason
to constitute at least a majority of the Board.
(ii) "Disinterested Director" means a Director who is not or was not a
party to the Proceeding in respect of which indemnification is sought by the
Indemnitee.
(iii) "Independent Counsel" means a law firm or a member of a law firm
that neither presently is, nor in the past five (5) years has been, retained to
represent: (a) the Corporation or the Indemnitee in any matter material to
either such party or (b) any other party to the Proceeding giving rise to a
claim for indemnification under this Article 4. Notwithstanding the foregoing,
the term "Independent Counsel" shall not include any person who, under
applicable standards of professional conduct, would have a conflict of interest
in representing either the Corporation or the Indemnitee in an action to
determine the Indemnitee's rights under this Article 4.
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4.5 Indemnification of Employees and Agents. Notwithstanding any other
provision of this Article 4, the Corporation, to the fullest extent permitted by
applicable law as then in effect, may indemnify any person other than a Director
or officer of the Corporation who is or was an employee or agent of the
Corporation and who is or was involved in any manner (including, without
limitation, as a party or a witness) or is threatened to be made so involved in
any threatened, pending or completed Proceeding by reasons of the fact that such
person is or was an employee or agent of the Corporation or, at the request of
the Corporation, a director, officer, employee, fiduciary or agent of a Covered
Entity against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such Proceeding. The Corporation may also advance expenses
incurred by such employee, fiduciary or agent in connection with any such
Proceeding, consistent with the provisions of applicable law as then in effect.
4.6 Severability. If any of this Article 4 shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (i) the validity, legality
and enforceability of the remaining provisions of this Article 4 (including,
without limitation, all portions of any Section of this Article 4 containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall not in any way be affected
or impaired thereby; and (ii) to the fullest extent possible, the provisions of
this Article 4 (including, without limitation, all portions of any section of
this Article 4 containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
be construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
5. CAPITAL STOCK.
5.1 Stock Certificates. (a) Every holder of stock in the Corporation
shall be entitled to have a certificate certifying the number of shares owned by
him or her in the Corporation and designating the class and series of stock to
which such shares belong, which certificate shall otherwise be in such form as
the Board shall prescribe and as provided in Section 5.1(d). Each such
certificate shall be signed by, or in the name of, the Corporation by the
Chairman or the President or any Vice President, and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary.
(b) If such certificate is countersigned by a transfer agent other than
the Corporation or its employee, or by a registrar other than the Corporation or
its employee, the signatures of the officers of the Corporation may be
facsimiles, and, if permitted by applicable law, any other signature on the
certificate may be a facsimile.
(c) In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer at the date of issue.
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(d) Certificates of stock shall be issued in such form not inconsistent
with the Articles of Incorporation. They shall be numbered and registered in the
order in which they are issued. No certificate shall be issued until fully paid.
(e) All certificates surrendered to the Corporation shall be cancelled
(other than treasury shares) with the date of cancellation and shall be retained
by the Chief Financial Officer, together with the powers of attorney to transfer
and the assignments of the shares represented by such certificates, for such
period of time as such officer shall designate.
5.2 Record Ownership. A record of the name of the person, firm or
corporation and address of such holder of each certificate, the number of shares
represented thereby and the date of issue thereof shall be made on the
Corporation's books. The Corporation shall be entitled to treat the holder of
record of any share of stock as the holder in fact thereof, and accordingly
shall not be bound to recognize any equitable or other claim to or interest in
any share on the part of any person, whether or not it shall have express or
other notice thereof, except as required by applicable law.
5.3 Transfer of Record Ownership. Transfers of stock shall be made on
the books of the Corporation only by direction of the person named in the
certificate or such person's attorney, lawfully constituted in writing, and only
upon the surrender of the certificate therefor and a written assignment of the
shares evidenced thereby. Whenever any transfer of stock shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer if, when the certificates are presented to the Corporation for
transfer, both the transferor and transferee request the Corporation to do so.
5.4 Lost, Stolen or Destroyed Certificates. Certificates representing
shares of the Stock of the Corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed in such manner and on
such terms and conditions as the Board from time to time may authorize in
accordance with applicable law.
5.5 Transfer Agent; Registrar; Rules Respecting Certificates. The
Corporation shall maintain one or more transfer offices or agencies where stock
of the Corporation shall be transferable. The Corporation shall also maintain
one or more registry offices where such stock shall be registered. The Board may
adopt such rules and regulations as it may deem proper concerning the issue,
transfer and registration of stock certificates in accordance with applicable
law.
5.6 Fixing Record Date for Determination of Stockholders of Record. (a)
The Board may fix, in advance, a date as the record date for the purpose of
determining the stockholders entitled to notice of, or to vote at, any meeting
of the stockholders or any adjournment thereof, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board, and which record date shall not be more than sixty (60) days nor less
than ten (10) days before the date of a meeting of the stockholders. If no
record date is fixed by the Board, the record date for determining the
stockholders
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entitled to notice of or to vote at a stockholders' meeting shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
(b) The Board may fix, in advance, a date as the record date for the
purpose of determining the stockholders entitled to receive payment of any
dividend or other distribution or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or in order to make a determination of the stockholders for the purpose of any
other lawful action, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which record date
shall not be more than sixty (60) calendar days prior to such action. If no
record date is fixed by the Board, the record date for determining the
stockholders for any such purpose shall be at the close of business on the day
on which the Board adopts the resolution relating thereto.
6. SECURITIES HELD BY THE CORPORATION.
6.1 Voting. Unless the Board shall otherwise order, the Chairman, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Chief Financial Officer, the Controller, the Treasurer or the
Secretary shall have full power and authority, on behalf of the Corporation, to
attend, act and vote at any meeting of the stockholders of any corporation in
which the Corporation may hold stock and at such meeting to exercise any or all
rights and powers incident to the ownership of such stock, and to execute on
behalf of the Corporation a proxy or proxies empowering another or others to act
as aforesaid. The Board from time to time may confer like powers upon any other
person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation. (a) Any of the following officers, to wit: the Chairman, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Chief Financial Officer, the Controller, the Treasurer, any
Assistant Controller, any Assistant Treasurer, and each of them, hereby is
authorized and empowered to transfer, convert, endorse, sell, assign, set over
and deliver any and all shares of stock, bonds, debentures, notes, subscription
warrants, stock purchase warrants, evidences of indebtedness, or other
securities now or hereafter standing in the name of or owned by the Corporation,
and to make, execute and deliver any and all written instruments of assignment
and transfer necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of assignment and
transfer executed pursuant to and in accordance with the foregoing Section
6.2(a), a certificate of the Secretary or any Assistant Secretary in office at
the date of such certificate setting forth the
19
<PAGE> 25
provisions hereof and stating that they are in full force and effect and setting
forth the names of persons who are then officers of the Corporation, all persons
to whom such instrument and annexed certificate shall thereafter come shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that (i)
the shares of stock or other securities named in such instrument were
theretofore duly and properly transferred, endorsed, sold, assigned, set over
and delivered by the Corporation, and (ii) with respect to such securities, the
authority of these provisions of these Bylaws and of such officers is still in
full force and effect.
7. DEPOSITARIES AND SIGNATORIES.
7.1 Depositaries. The Chairman, the President, the Chief Financial
Officer and the Treasurer are each authorized to designate depositaries for the
funds of the Corporation deposited in its name or that of a Division of the
Corporation, or both, and the signatories with respect thereto in each case, and
from time to time, to change such depositaries and signatories, with the same
force and effect as if each such depositary and the signatories with respect
thereto and changes therein had been specifically designated or authorized by
the Board; and each depositary designated by the Board or by the Chairman, the
President, the Chief Financial Officer or the Treasurer shall be entitled to
rely upon the certificate of the Secretary or any Assistant Secretary of the
Corporation or of a Division of the Corporation setting forth the fact of such
designation and of the appointment of the officers of the Corporation or of the
Division or of both or of other persons who are to be signatories with respect
to the withdrawal of funds deposited with such depositary, or from time to time
the fact of any change in any depositary or in the signatories with respect
thereto.
7.2 Signatories. Unless otherwise designated by the Board or by the
Chairman, the President, the Chief Financial Officer or the Treasurer, all
notes, drafts, checks, acceptances, orders for the payment of money and all
other negotiable instruments obligating the Corporation for the payment of money
shall be (a) signed by the Treasurer or any Assistant Treasurer and (b)
countersigned by the Controller or any Assistant Controller, or (c) either
signed or countersigned by the Chairman, the President, any Executive Vice
President, any Senior Vice President or any Vice President in lieu of either of
the officers designated in clause (a) or the officers designated in clause (b)
of this Section 7.2.
8. SEAL.
The seal of the Corporation shall be in such form and shall have such
content as the Board shall from time to time determine.
9. FISCAL YEAR.
The fiscal year of the Corporation shall end on December 31 in each
year, or on such other date as the Board shall determine.
20
<PAGE> 26
10. WAIVER OF OR DISPENSING WITH NOTICE.
(a) Whenever any notice of the time, place or purpose of any meeting of
the stockholders is required to be given by applicable law, the Articles of
Incorporation or these By-laws, a written waiver of notice, signed by a
stockholder entitled to notice of a stockholders' meeting, whether by telegraph,
cable or other form of recorded communication, whether signed before or after
the time set for a given meeting, shall be deemed equivalent to notice of such
meeting. Attendance of a stockholder in person or by proxy at a stockholders'
meeting shall constitute a waiver of notice to such stockholder of such meeting,
except when the stockholder attends the meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
because the meeting was not lawfully called or convened.
(b) Whenever any notice of the time or place of any meeting of the
Board or Committee of the Board is required to be given by applicable law, the
Articles of Incorporation or these Bylaws, a written waiver of notice signed by
a Director, whether by telegraph, cable or other form of recorded communication,
whether signed before or after the time set for a given meeting, shall be deemed
equivalent to notice of such meeting. Attendance of a Director at a meeting
shall constitute a waiver of notice to such Director of such meeting.
(c) No notice need be given to any person with whom communication is
made unlawful by any law of the United States or any rule, regulation,
proclamation or executive order issued under any such law.
11. POLITICAL CONTRIBUTIONS BY THE CORPORATION.
The Corporation and its direct and indirect subsidiaries shall be
permitted to make contributions or expenditures (a) in connection with the
election of any candidate for state or local political office in jurisdictions
which permit such contributions, including contributions to any committee
supporting such a candidate, to the extent such contributions or expenditures
are permitted by applicable law, and (b) to the extent necessary to permit in
the United States the expenditure of corporate assets for the payment of
expenses for establishing, registering and administering any political action
committee and of soliciting contributions thereto, all as may be authorized by
federal or state laws.
12. TRANSFER OF SHARES TO ALIENS.
Except as otherwise provided by law, not more than twenty percent (20%)
of the aggregate number of shares of stock outstanding shall at any time be
owned of record by or for the account of aliens or their representatives, a
foreign government or representative thereof or any corporation organized under
the laws of a foreign country.
21
<PAGE> 27
Shares of stock shall be transferable on the books of the Corporation
to aliens and their representatives, foreign governments and representatives
thereof, and corporations organized under the laws of foreign countries (or to
any persons holding for the account of aliens and their representatives, foreign
governments and representatives thereof, and corporations organized under the
laws of foreign countries) only, if after giving effect to such transfer, the
aggregate number of shares of voting stock owned by or for the account of aliens
and their representatives, foreign governments and representatives thereof and
corporations organized under the laws of foreign countries, would be not more
than twenty percent (20%) of the number of shares of stock then outstanding.
The Board of Directors may from time to time make such rules and
regulations as it may deem necessary or appropriate to enforce the foregoing
provisions of this Section 12.
13. AMENDMENT OF BYLAWS.
These Bylaws, or any of them, may from time to time be supplemented,
amended or repealed, or new Bylaws may be adopted, by the Board at any regular
or special meeting of the Board, if such supplement, amendment, repeal or
adoption is approved by a majority of the entire Board. These Bylaws, or any of
them, may from time to time be supplemented, amended or repealed, or new Bylaws
may be adopted, by the stockholders at any regular or special meeting of the
stockholders at which a quorum is present, if such supplement, amendment, repeal
or adoption is approved by the affirmative vote of the holders of at least a
majority of the voting power of all outstanding shares of stock of the
Corporation entitled to vote generally in an election of directors.
14. OFFICES AND AGENT.
(a) Registered Office and Agent. The registered office of the
Corporation in the State of Nevada shall be c/o The Corporation Trust Company of
Nevada, One East First Street, City of Reno, County of Washoe, State of Nevada.
The name of the registered agent is The Corporation Trust Company of Nevada. The
registered agent has a business office identical with such registered office.
(b) Other Offices. The Corporation may also have offices at other
places, either within or outside the State of Nevada, as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS IN CITADEL COMMUNICATIONS CORPORATION'S FORM 10-Q FOR THE SIX MONTHS
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 4,211,115
<SECURITIES> 0
<RECEIVABLES> 31,691,304
<ALLOWANCES> (1,126,545)
<INVENTORY> 0
<CURRENT-ASSETS> 37,671,672
<PP&E> 48,055,452
<DEPRECIATION> (11,371,828)
<TOTAL-ASSETS> 372,779,659
<CURRENT-LIABILITIES> 15,083,802
<BONDS> 220,594,859
109,155,664
0
<COMMON> 8,516
<OTHER-SE> 2,172,573
<TOTAL-LIABILITY-AND-EQUITY> 372,779,659
<SALES> 0
<TOTAL-REVENUES> 62,923,649<F1>
<CGS> 0
<TOTAL-COSTS> 47,110,472
<OTHER-EXPENSES> 12,962,958
<LOSS-PROVISION> 597,807
<INTEREST-EXPENSE> 10,042,263
<INCOME-PRETAX> (7,710,476)
<INCOME-TAX> (882,961)
<INCOME-CONTINUING> (6,827,515)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,827,515)
<EPS-PRIMARY> (4.18)
<EPS-DILUTED> (4.18)
<FN>
<F1>COMPRISED OF NET REVENUES (GROSS REVENUES NET OF AGENCY COMMISSIONS).
</FN>
</TABLE>
